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Havelock Europa PLC (HVE)

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Wednesday 15 January, 2003

Havelock Europa PLC

Disposal / Trading Update

Havelock Europa PLC
15 January 2003

                             HAVELOCK EUROPA PLC

     £2.9m disposal of 49% interest in Bahraini JV at a £0.9m net profit/
                            positive trading update

Havelock Europa, whose businesses are educational and retail interiors (in which
it is the UK market leader) and point of sale display, announces the conditional
disposal to Phaedra Holdings Limited ('Phaedra'), a British Virgin Islands
incorporated company set up by HSBC Private Equity Middle East ('HPEME'), of its
49% interest in Havelock AHI WLL, its retail and hotel interiors business based
in Bahrain. Part of the proceeds will be invested in a 17% interest in Phaedra,
which will pursue similar activities but benefit from the strong regional
involvement and contacts of a new majority local shareholder, HPEME.

Havelock AHI WLL was established as a start up four years ago and has been a
highly successful venture for Havelock Europa. The disposal is expected to give
rise, after expenses, to a non-taxable profit of approximately £0.9m.  In
addition, the two transactions are expected to result in a net £2.0m of cash
being received by Havelock Europa, which will be applied towards an acceleration
of the reduction in its gearing, whilst providing Havelock Europa with continued
exposure to the busy retail and hotels interiors markets of the Gulf, but on a
lower risk basis.


Phaedra will purchase the interests in Havelock AHI WLL, a Bahraini incorporated
company, of Havelock Europa (49%) and its JV partner, the Bahraini-based Sana
International WLL (51%).

The consideration, to each of Havelock Europa and Sana, is US $4,675,000
(£2.91m), payable in cash on completion. This is expected to take place in late
January 2003 and is conditional, principally, on the approval of the Bahraini
Ministry of Commerce.

Havelock Europa's Interim Announcement of 17 September 2002 stated 'The joint
venture in the Middle East had a solid first half. The Group's share of
turnover, at £2.18 m (2001: £2.66 m), was down by 17.8%, reflecting a
significant slide in the exchange rate of the Bahraini Dinar and a slightly
lower level of activity in the retail sector.   The contribution to profit of
£269,000 (2001: £373,000) was similarly affected. As anticipated, the share of
profit from the Middle East joint venture in the current year will be lower than
the excellent result achieved in 2001.'  The unaudited management accounts for
the 11 months ended 30 November 2002 showed a profit of Bahraini Dinar 621,000
(£1.02m), of which Havelock Europa's share amounted to £512,000.

At 31 December 2001, the investment in the joint venture was stated in Havelock
Europa's accounts at £1,213,000 (2000: £786,000). No dividend was paid during
2002. The net gain on disposal of investment in the joint venture will be taken
on completion which is expected to be within the next three weeks.

In the year ended 31 December 2001, Havelock Europa's share of the JV
contributed a turnover of £6,206,000 (2000: £3,364,000) and an operating profit
after interest of £1,080,000 (2000: £374,000), which was not subject to


Havelock Europa and Sana will each purchase a 17% interest in Phaedra for a cash
consideration of US $907,800 (£564,600), payable on completion, which will
follow immediately after that of the Disposal.  HPEME will hold a 57.3% stake
and two members of the Havelock AHI WLL management team an initial stake of 8.7%
in aggregate.

Phaedra will be funded by equity and debt, in approximately equal proportions.

As part of the Phaedra Shareholder Agreement, Havelock AHI WLL will pay to
Havelock Europa an annual management fee, which in the first year has been
agreed at US $ 200,000. Hew Balfour, Chief Executive of Havelock Europa, will be
appointed as Chairman of Phaedra.

Chief Executive's remarks on the disposal and current trading

Hew Balfour commented 'Since its inception four years ago, the Havelock AHI WLL
joint venture has served Havelock Europa well, making a material contribution to
Group results, especially in 2001, and this transaction will generate both cash
and a further profit. I am pleased to be able to report that Havelock Europa's
other businesses are also doing well and that the year just passed will show a
marked change in the performance of the Group, with further good progress
expected to follow in 2003.'


Havelock Europa PLC                                               01383-820 044
   Hew Balfour (Chief Executive)                           Mobile: 07801-683851
   Graham MacSporran (Finance Director)                    Mobile: 07801-683803

Bankside Consultants Limited
   Charles Ponsonby                                               020-7444 4166

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