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Lakehouse – having disappointed thus far on the main market… proposed move to AIM

By Steve Moore | Wednesday 8 March 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Having IPO’d on the main market at 89p per share less than two years ago, support services group Lakehouse (LAKE) has announced a proposed move to AIM (along with a “New Contract Win & Update on Trading”).

The contract is for metering in the West Midlands, expanding the company’s relationship with Scottish Power and “anticipated to be worth £39m over its four year term”. It is added that “elsewhere the group is performing to the board's expectations as a result of the strategic initiatives implemented in each division… We remain focused on restoring shareholder value by delivering against our organic growth strategy”.

The need for value restoration follows a disastrous profit warning in early 2016 and subsequent boardroom change.

The resultant new perspective includes that, given the company’s size (current circa £70 million market cap) and that it offers greater flexibility with regard strategic actions, a move to AIM is currently most appropriate – and the shares have risen towards 45p on the latest news – up from 32p at the commencement of 2017.

It is also added “we expect a strong second half performance from the group”, suggesting further recovery from last year’s trading lows. Whilst I’d want to see further hard evidence of this – including in the next few months its results announcement for its half year ending this month, this looks one for recovery watchlists.

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