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Havelock Europa PLC (HVE)

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Thursday 26 April, 2001

Havelock Europa PLC

Final Results

Havelock Europa PLC
26 April 2001

                             HAVELOCK EUROPA PLC
                             PRELIMINARY RESULTS


                                                                 26 April 2001

               Encouraging recovery, further progress expected

*         Havelock Europa, the retail interiors and point of sale display
          business, announces an encouraging recovery for 2000, with pre-tax    
          profit up 68% at £1.5 m:

                         y/e 31 December     2000        1999          Increase

                           Turnover (£m)     71.5        58.2             22.9%
                               PBIT (£m)      2.7         2.0             33.1%
                     Pre-tax profit (£m)      1.5         0.9             67.7%
                  Earnings per share (p)      4.0         1.6            150.0%
                 Dividends per share (p)     1.75         1.5             16.7%

*         The final dividend per share is increased by 25% to 1.25p.

*         Good underlying cash flow and effective management of working
          capital reduced net debt at 31 December 2000 by £3.9 m to £9.6 m.

*         The Retail Interiors Division traded markedly better, achieving a
          turnover up 52% at  £47.0 m, reflecting a sharply improved level of   
          business with Marks & Spencer and a strong recovery in the banking and
          financial services market, particularly in relation to Lloyds TSB and 
          Bank of Scotland.

*         Turnover in the Point of Sale Display Division fell by 18% to £21.7
          m.  As previously reported, two of Havelock's major customers in this 
          sector cut back significantly their levels of expenditure on          
          promotional items, considerably impacting the overall results of the  
          Group.  However, the first quarter gives ground for optimism that a   
          useful recovery in this Division, together with a broadening of the   
          customer base, will take place in 2001.

*         In buoyant economic conditions, Havelock's share of the Middle East
          Joint Venture's results in 2000, its second year, moved from loss to  
          an operating profit of £408,000.

*         Michael Kennedy, Chairman, stated of prospects 'Although expenditure
          levels on storefitting by retailers remain very hard to predict and   
          the Group's results for 2001 will be affected by the usual pronounced 
          seasonal bias in favour of the second half, the Board believes that,  
          overall, further progress will be made in the current year'.

Enquiries:

Havelock Europa PLC                                                01383-820044
  Hew Balfour  (Chief Executive)                           Mobile: 07801-683851

Bankside Consultants Limited                                    020-72 20 74 77
  Charles Ponsonby



                              HAVELOCK EUROPA PLC

                           PRELIMINARY ANNOUNCEMENT


The Board is pleased to announce that Havelock achieved an encouraging
recovery in 2000.  Pre-tax profit for the year ended 31 December 2000 rose to
£1,513,000 (1999: £902,000).  On turnover of £71.5 million (1999: £58.2
million), profit before interest and tax amounted to £2.7 million (1999: £2.0
million).  Reflecting a lower tax charge, basic earnings per share were 4.0p
(1999: 1.6p).



The Retail Interiors Division experienced sharply improved trading conditions
compared with those in the previous year whilst the Point of Sale Display
Division suffered as a result of the well publicised difficulties of two of
its major retail customers.  The Joint Venture in the Middle East produced an
excellent result.



DIVIDEND



The Board is proposing a 25% increase in the final dividend to 1.25p per share
(1999: 1.0p per share). If approved at the AGM on 29 June 2001, the dividend
will be paid on 2 July 2001 to shareholders on the register at the close of
business on 8 June 2001.  Including the interim dividend of 0.5p per share
(1999: 0.5p per share) paid on 29 December 2000, the proposed dividends for
the year total 1.75p per share (1999: 1.50p per share).



TRADING



Retail Interiors



The Division traded markedly better, achieving a turnover of £47.0 million
(1999:
£30.9 million) reflecting a sharply improved level of business with Marks &
Spencer and a strong recovery in the banking and financial services market,
particularly in relation to Lloyds TSB and Bank of Scotland.  The return of
House of Fraser to the Company's client list was welcome as was the volume of
business transacted with Woolworths, Boots The Chemists and the two large
Irish retailers, Primark and Dunnes.  Export volumes improved over the
previous year. Useful progress was made in the market for the manufacture of
casings for self-service kiosks and terminals.



Point of Sale Display



Turnover in this Division fell to £21.7 million  (1999: £26.5 million).  As
previously reported,  two of our major customers in this sector cut back
significantly their levels of expenditure on promotional items.  The efforts
to find new customers to make up a major shortfall in the level of activity
have been very considerable and towards the end of the year a number of
encouraging developments took place, the benefits of which will largely fall
in the current year.



The management team deserves much credit for its performance in sustaining
gross margin percentages in what have been testing trading conditions.
Nevertheless the impact of the volume shortfall on the overall results of the
Group has been considerable.




Middle East Joint Venture



After a very challenging first year in the Middle East, the Group's
determination to persevere in this new market has been vindicated.  In buoyant
economic conditions the Group expanded its bridgehead in both the retail and
hotel furniture markets.  With a slimmed-down and sharply focused management
team, the Group's share of the Joint Venture's result was turned from an
operating loss in 1999 of £386,000 to a profit in 2000 of £408,000.  The
business also generated a  substantial positive cash flow during the course of
the year.



FINANCE



Good underlying cash flow and effective management of working capital reduced
net debt by £3.9 million to £9.6 million (1999: £13.5 million).  Stocks fell
by 26.8% whilst debtor days, during the course of the year, averaged 56 as
against 71 in 1999.  The Group's gearing fell to 100% from 172%.



PROSPECTS



The obvious uncertainties facing many businesses operating in the retail
fashion sector suggest that the Retail Interiors Division will have a slow
first half. Nevertheless, useful progress has been made with Post Office
Counters, with which the Group signed a three year contract last year, and
good volumes of work are in hand with the Irish retailer Primark, with five
new stores to be completed by mid-May.



Within the Joint Venture, the volume of business in hand and the level of
contribution to profit is already well up on last year with a new Debenhams
store in Qatar completed this month and a further one in Riyadh due to finish
in September.  A number of new retail customers have been added in the last
three months, including, for the first time, penetration of the supermarket
sector.  Negotiations are in hand for a move to new and larger premises to
enable expansion of the manufacturing facilities.



The Point of Sale Display Division has increased its efforts to diversify away
from a dependence on one or two major retailers and the first quarter gives
grounds for optimism that a useful recovery in this Division together with a
broadening of the customer base will take place in 2001.  Efforts to improve
the flow of display equipment business from the global brands arena have been
encouraging with the landing of a major contract to supply equipment to Reebok
distributors throughout Europe, the Middle East and Africa as well as a useful
bridgehead being established in the leisure and homewares markets.



Although expenditure levels on storefitting by retailers remain very hard to
predict and the Group's results for 2001 will be affected by the usual
pronounced seasonal bias in favour of the second half, the Board believes
that, overall, further progress will be made in the current year.



SHAREHOLDER VALUE



The Board is committed to maximising shareholder value and is continuing to
pursue actively the various options for achieving this.


                    CONSOLIDATED PROFIT AND LOSS ACCOUNT
                     for the year ended 31 December 2000


                                                                2000       1999
                                                    Notes       £000       £000
Turnover

Group and share of Joint Venture                              71,511     58,191
Less:  share of Joint Venture's turnover                     (3,364)    (1,585)

                                                              ______     ______

Group turnover                                                68,147     56,606
                                                              ______     ______


Operating profit before exceptional items                      2,266      2,578
Exceptional reorganisation costs                                   -      (183)
                                                              ______     ______

Operating profit after exceptional items                       2,266      2,395
Share of Joint Venture's operating profit/(loss)                 408      (386)
                                                              ______     ______

Total operating profit:
Group and share of Joint Venture                               2,674      2,009

Net interest payable and other similar items
Group                                                        (1,127)    (1,078)
Joint Venture                                                   (34)       (29)
                                                              ______     ______

Profit on ordinary activities before taxation                  1,513        902
Tax charge on profit on ordinary activities             3      (412)      (441)
                                                              ______     ______

Profit for the financial year                                  1,101        461
Dividend                                                       (490)      (420)
                                                              ______     ______

Retained profit for the year                                     611         41
                                                              ______     ______

Basic and diluted earnings per share                    4       4.0p       1.6p
                                                              ______     ______

Dividends per share                                            1.75p       1.5p
                                                              ______     ______



There is no material difference between the reported profit for 2000 and 1999
and the profit for those years restated on an historical cost basis.


All operations are continuing.


                              GROUP BALANCE SHEET

                            as at 31 December 2000


                                                                 2000     1999
                                                       Notes     £000     £000

                                         Fixed assets
                         Intangible assets - goodwill             154      192
                                      Tangible assets          13,511   13,544

                             Investment in own shares             221        -

                          Investment in Joint Venture
                                           - goodwill             160      184
                                    - share of assets           1,503      949
                               - share of liabilities           (877)    (716)
                                                               ______   ______

                                                                  786      417
                                                               ______   ______

                                                               14,672   14,153
                                                               ______   ______



                                       Current assets
                                               Stocks      5    4,835    6,604
                                              Debtors      6   14,729   14,399
                             Cash at bank and in hand           2,417       12
                                                               ______   ______

                                                               21,981   21,015

      Creditors:  Amounts falling due within one year      7 (16,109) (15,940)

                                                               ______   ______

                                   Net current assets           5,872    5,075
                                                               ______   ______


                Total assets less current liabilities          20,544   19,228

   Creditors: amounts falling due after more than one
                                                 year
                                                           8 (10,388) (10,781)

                Provision for liabilities and charges           (564)    (610)

                                                               ______   ______

                                           Net assets           9,592    7,837

                                                               ______   ______


                                 Capital and reserves
                              Called up share capital           2,803    2,803
                                Share premium account      9      242      242
                                  Revaluation reserve      9    1,762      637
                              Profit and loss account      9    4,785    4,155

                                                               ______   ______

                           Equity shareholders' funds           9,592    7,837
                                                               ______   ______



               STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                     for the year ended 31 December 2000


                                                          2000       1999
                                                          £000       £000

Profit for the financial year                             1,101      461
Exchange gain on investment in Joint Venture              19         25
Surplus on revaluation of fixed assets                    1,125      -
                                                          ______     ______

Total recognised gains relating to the year               2,245      486
                                                          ______     ______



               RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
                     for the year ended 31 December 2000


                                                               2000        1999
                                                               £000        £000

Profit for the financial year                                 1,101         461
Dividend                                                      (490)       (420)
                                                             ______      ______

Retained profit for the financial year                          611          41
Other recognised gains and losses                                19          25
Revaluation surplus                                           1,125           -
                                                             ______      ______

Net increase in shareholders' funds                           1,755          66
Opening shareholders' funds                                   7,837       7,771
                                                             ______      ______

Closing shareholders' funds                                   9,592       7,837
                                                             ______      ______



                       CONSOLIDATED CASH FLOW STATEMENT
                     for the year ended 31 December 2000


                                                                   2000    1999
                                                                   £000    £000

Cash inflow from operating activities                     10(a)   6,946   3,947

Return on investments and servicing of finance
Interest received                                                    16      10
Interest paid                                                   (1,078) (1,268)
                                                                 ______ _______

                                                                (1,062) (1,258)
                                                                 ______  ______

Taxation                                                          (442)   (368)
                                                                 ______  ______

Capital expenditure and financial investment
Purchases of tangible fixed assets                                (988) (1,907)
Proceeds from sale of tangible fixed assets                          49     356
                                                                 ______  ______

                                                                  (939) (1,551)
                                                                 ______  ______

Acquisitions
Acquisition of business                                               -   (640)
Joint Venture costs                                                   -   (162)
                                                                 ______  ______

                                                                      -   (802)
                                                                 ______  ______

Equity dividends paid                                             (420)   (351)
                                                                 ______  ______



Cash inflow/(outflow) before use of liquid resources and
financing
                                                                  4,083   (383)
                                                                 ______  ______



Financing and management of liquid resources

Repayment of loan notes issued on acquisition of subsidiaries     (115)   (130)
Capital element of finance lease rental payments                  (358)   (370)
Loan to ESOP trust                                                (221)       -

                                                                 ______  ______

                                                                  (694)   (500)
                                                                 ______  ______

Increase/(decrease) in cash for the year                  10(b)   3,389   (883)

                                                                 ______  ______



NOTES TO THE STATEMENT

1.      The profit and loss account, balance sheet and abridged cash flow
statement do not constitute the Company's statutory accounts for 2000 or 1999
but are derived from those accounts.  The statutory accounts for 1999, on
which the auditors have given an unqualified report, have been delivered to
the Registrar of Companies.  Those for 2000 will be delivered following the
Annual General Meeting.  The auditors have reported on those accounts which
were unqualified and did not contain a statement under Section 237(2) of the
Companies Act 1985.

2.   Basis of consolidation

The consolidated profit and loss account and balance sheet include the
financial statements of the Company, its subsidiaries and its interests in a
joint venture made up to 31 December 2000.  The Company owns subsidiaries,
which are dormant , and all figures in the statement, unless otherwise
indicated, are for both the Company and the Group.

3.  Tax charge on profit on ordinary activities

                                                               2000        1999
                                                              £ 000       £ 000

UK corporation tax
- current year at 30% (1999: 30.25%)                          (504)       (489)
- prior year                                                     46          20
Deferred tax
- current year credit                                            58          28
- prior year                                                   (12)           -
                                                             ______      ______

                                                              (412)       (441)
                                                             ______      ______


     The tax charge for the current year differs from 30% mainly because the
Joint Venture profit of £374,000 is not subject to taxation, and there are
permanent differences between profit for account purposes and profits subject
to taxation.


4.  Earnings per share



Based on a profit after tax of £1,101,000 (1999: £461,000) and 27,522,989
(1999: 28,033,849) shares, being the weighted average number of shares in
issue during the year, the basic earnings per share were 4.0p (1999 : 1.6p).
Diluted earnings per share based on a profit after tax of £1,101,000 (1999: £
461,000) and 27,522,989 shares (1999:28,033,849) were 4.0p (1999: 1.6p).



Earnings per share are calculated for the issued shares excluding those held
by the Employee Share Scheme in accordance with U.I.T.F. 13.


5.  Stocks
                                                             2000          1999
                                                             £000          £000



Raw materials and consumables                               1,588         2,320
Work in progress                                            1,082         1,346
Less:  payments to account                                      -           (4)
Finished goods                                              2,165         2,942
                                                            _____         _____

                                                            4,835         6,604
                                                            _____        ______


6.  Debtors


Trade debtors                                      13,671                13,221
Other debtors                                         348                   206
Prepayments                                           710                   972
                                                   ______                ______

                                                   14,729                14,399

                                                   ______                ______


7    Creditors: amounts falling due within one year


Bank overdraft (secured)                                         -          984
Loan notes                                                   1,244        1,359
Trade creditors                                              8,281        7,864
Corporation tax                                                359          343
Other taxes and social security                              2,943        2,241
Accruals                                                     2,539        2,511
Dividend proposed                                              350          280
Obligations under finance leases                               393          358

                                                            ______       ______

                                                            16,109       15,940

                                                            ______       ______


     The loan notes are repayable at par on the holder giving one month's
notice.  The Company's obligations under these notes are guaranteed by the
Bank of Scotland.  In so far as the notes have not already been redeemed, they
will be redeemed in full by the Company on 5 January 2003 at par.



8.  Creditors: amounts falling due after more than one year


Bank loans (secured)                                        10,000       10,000
Obligations under finance leases                               388          781

                                                            ______       ______

                                                            10,388       10,781

                                                            ______       ______


9.  Reserves




                                     Share      Revaluation          Profit and
                                   premium          reserve        loss account
                                      £000             £000                £000



At 1 January 2000                      242              637               4,155
Retained profit for the year             -                -                 611
Exchange gain on investment              -                -                  19
Property revaluation                                  1,125
                                    ______           ______              ______

At 31 December 2000                    242            1,762               4,785

                                    ______           ______              ______




10. Cash Flow Statement

                                                                 2000      1999
                                                                 £000      £000
(a)  Reconciliation of operating profit to net cash inflow
from operating activities

      Operating profit after exceptional items                  2,266     2,395
      Depreciation and amortisation charges                     2,166     2,065
      Loss/(gain) on disposal of fixed tangible assets             10      (22)
      Decrease in stocks                                        1,769       588
      (Increase)/decrease in debtors                            (330)     1,732
      Increase/(decrease) in creditors                          1,065   (2,811)
                                                               ______    ______
      Net cash inflow from operating activities                 6,946     3,947
                                                               ______    ______

(b) Reconciliation of net cash flow to movement in net debt

      Increase/(decrease) in cash for the year                  3,389     (883)
      Finance lease payments                                      358       370
      Inception of new finance leases                               -     (188)
      Loan notes repaid                                           115       130
                                                               ______    ______
      Movement in net debt in the year                          3,862     (571)
      Opening net debt                                       (13,470)  (12,899)
                                                               ______    ______
      Closing net debt                                        (9,608)  (13,470)
                                                               ______    ______





(c)  Analysis of net debt
                                      At 1 January             Other      At 31
                                              2000     Cash non-cash   December
                                              £000     flow  changes       2000
                                                       £000     £000       £000

       Cash at bank and in hand                 12    2,405               2,417
                      Overdraft              (984)      984        -          -
                                            ______   ______   ______     ______
                          Total              (972)    3,389        -      2,417
                                            ______   ______   ______     ______
       Debt due within one year
                     Loan notes            (1,359)      115        -    (1,244)
         Finance lease creditor              (358)      358    (393)      (393)
                                            ______   ______   ______     ______
                                           (1,717)      473    (393)    (1,637)
                                            ______   ______   ______     ______

        Debt due after one year
         Finance lease creditor              (781)        -      393      (388)
                     Bank loans           (10,000)        -        -   (10,000)
                                            ______   ______   ______     ______
                                          (10,781)        -      393   (10,388)
                                            ______   ______   ______     ______
                 Total net debt           (13,470)    3,862        -    (9,608)
                                            ______   ______   ______     ______



11. The accounts for the year ended 31 December 2000 were approved by the
Directors on      25 April 2001.