Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Havelock Europa PLC (HVE)

  Print      Mail a friend       Annual reports

Thursday 03 May, 2012

Havelock Europa PLC

Final Results

RNS Number : 6178C
Havelock Europa PLC
03 May 2012
 



 

HAVELOCK EUROPA PLC

PRELIMINARY ANNOUNCEMENT

 

Havelock Europa (the 'Group'), (AIM:HVE.L), the retail and educational interiors provider announces its results for the year to 31 December 2011.

 

Financial Highlights

·      Group revenue was level with last year at £99.5m (2010: £99.2m)

·      The Group made an operating profit before exceptional items of £1.4m (2010: £0.6m)

·      The reported pre-tax loss was £4.5m (2010: £4.6m loss)

·      Cash generated from operating activities of £6.6m (2010: £0.4m)

·      Post year end, the Group divested its Point of Sale Division, Showcard Print, for a consideration of £15.3m.  The proceeds from the sale have been used to reduce indebtedness.

 

Operational Highlights

·      Interiors revenue increased by 2% to £70.1m (£69.0m)

·      Successfully awarded retendered framework agreements with Boots and Lloyds Banking Group

·      Secured £20m education framework agreement with Balfour Beatty Construction Scottish & Southern Limited

·      Disposed of its Point of Sale Division to focus on the Group's core business; interior fittings and fit out services

 

Outlook

·     Encouraging levels of activity in the retail and educational sectors with committed orders in 2012 larger  than in recent years

·     Strengthened sales team with new appointment of a Sales and Business Development Director which has generated positive results

·     Sale of the Point of Sale division will substantially reduce the Group's interest charge in 2012 and in future years

·     Market conditions expected to remain challenging

 

 

Eric Prescott, CEO of Havelock Europa said:

 

"This has been a year of significant progress for the Group.  The strengthening of the sales and marketing team together with key operational changes has generated new business ensuring we have a solid order book for 2012.  While we expect the market environment to remain challenging, our strategy to focus on our core activities only and with a stronger balance sheet we are in a better position than we have been in previous years.  We look to the future with increased confidence."

 

Enquiries

Havelock Europa

01383 820044

Eric Prescott, Chief Executive

Grant Findlay, Finance Director

www.havelockeuropa.com

 


Investec

James Grace

Keith Anderson

 

020 7597 4000

 

 

Cardew Group

Rob Ballantyne

Shan Shan Willenbrock

 

020 7930 0777

 

CHAIRMAN'S STATEMENT

 

Despite another difficult trading year in 2011, considerable progress was made in reshaping the Havelock Group to be profitable in the main markets in which it operates. As announced on 10 April 2012, and subsequently approved by shareholders on 23 April, the Group has disposed of its Point of Sale business, Showcard Print, which will improve the Group's financial position by very significantly reducing the level of gearing in the business. The Group will now be focussed on its Interiors business and closely related activities where the rationalisation carried out over the past two years and an improved order book provide the foundations capable of delivering profitable growth in the future.

 

Financial Overview

 

Group revenue for the 12 months ended 31 December 2011 was little changed from 2010 at £99.5m (2010: £99.2m). Revenue from continuing operations was £78.7m (2010: £78.2m). The Group made an operating profit before exceptional items of £1.4m (2010: £0.6m). The continuing operations lost £1.8m (2010: £2.2m loss). The Group made an underlying profit before exceptional items and taxation of £0.2m (2010: £0.6m loss) which is reflected in a fully diluted earnings per share of 0.1p (2010: 1.8p loss).  The reported pre-tax loss was £4.5m (2010: £4.6m loss) and, on this basis, the fully diluted loss per share amounted to 11.6p (2010: 10.9p loss).  The continuing businesses made a reduced loss of £3.0m (2010: £3.4m loss).

 

The Group incurred net exceptional items of £4.7m (2010: £3.9m), which comprise a charge of £3.6m for impairment relating to the Educational Supplies Division which has continued to operate in  a weak direct to school market  and charges of £1.1m relating to the reorganisation of the Group comprising redundancy, property closure and refinancing costs.

 

Mainly as a result of continuing improvements in the management of working capital, the Group generated net cash from operating activities of £6.6m (2010: £0.4m) and year end net debt decreased substantially to stand at £13.7m (2010: £19.7m).

 

Post Balance Sheet Event

 

Since the year end, the Group has announced its intention to sell its Point of Sale Division, Showcard Print, for a consideration of £15.3m. The sale has subsequently been completed and the proceeds from sale have been used to reduce indebtedness. As a consequence, the results to December 2011 are presented on the basis that the Point of Sale Division is a discontinued activity.

 

The Board thanks the Showcard management team and staff for their valuable contribution over the years.

 

Dividends

 

No dividend is proposed for this year.  When the Group returns to profitability and debt levels have reduced, the Board will consider the resumption of dividend payments.

 

Financial Position

 

The Group's bankers remain supportive and, subsequent to the year end following the disposal of Showcard Print, have agreed a renewal of its revolving credit facility until the end of December 2014. The Group's existing term loan has been repaid and an annual overdraft has also been agreed.

 

The Board

 

As indicated in my statement last year, Richard Lowery retired from the Board on June 30 2011. During the year, two senior appointments were made to the Interiors management team; a sales and marketing director and a commercial director, both well experienced in the markets in which the Group operates.

 

Last year I also announced my intention to stand down from the Board in 2012 and I am very pleased to say that David MacLellan will take on the role as Chairman in my place following the Annual General Meeting when I will resign from the Board. The sale of Showcard Print places the Group on a much firmer financial footing. However, it still faces challenging markets which will mean that a return to full health and profitability still requires more work. David's background and energy make him well placed to assist the Group in the next phase of its recovery and I wish him and my other Board colleagues all success in returning the Group to meaningful profitability. It is the intention of the Board to appoint a further non-executive director shortly.

 

Outlook

 

The reshaping of the business over the past two years has resulted in a business that is much better placed to offer customers the service delivery they require at a competitive price. I would like to pay tribute to the Group's management and staff for the positive way in which they have embraced change over this period and thank them for the efforts they have made to achieve a turnaround.

 

Although the Interiors market is likely to remain muted for some time yet and there are still further operational improvements to embed in the business, the Board detects an increasing opportunity for the restoration of top-line growth and the profits that should follow.

 

J Malcolm Gourlay

Chairman



CHIEF EXECUTIVE'S REVIEW

 

Trading Review

Interiors

During the year, a promising first half was followed by a disappointing second half with activity not reaching its normal peak. This was due both to the general economic conditions but also to two major customers re-tendering their framework agreements. I am pleased to say that our tenders were successful for both customers and we have expectations of increased volumes in the future as a result.

 

Overall revenue increased by 2% to £70.1m (2010: £69.0m).  Within this, the revenue from education was slightly reduced but revenue from Retail customers continued to show a recovery. During the year, the level of committed orders increased and the business enters 2012 with a larger order book than in any recent year. A number of customers retendered framework agreements in the year and subsequent to the year end both Boots and Lloyds Banking Group have awarded the Interiors business  new arrangements which offer the prospect of increased levels of work. 

 

The Division made a reduced loss, before exceptional costs, of £0.8m (2010: £1.3m).   Operationally, further benefit will be seen from cost savings in future years.

 

Educational Supplies

Revenue from the three educational supplies businesses fell by 7% to £8.6m (2010: £9.2m).  This continued to reflect lower direct sales to schools. Continuing pressure on this higher margin sales segment led to a decline in contribution to £0.1m (2010: £0.6m). These businesses have identified new sources of revenue to counteract this trend in direct to school sales. For example, Stage Systems now provides a complete solution for drama facilities in schools including lights, curtains and sound as well as the core staging product. These efforts will bear fruit in the future.

 

Point of Sale

Revenue in the now discontinued Point of Sale Division remained unchanged at £20.8m (2010: £20.9m) with increases in sales to certain customers offset by lower activity at others. Margins have been maintained and with the benefit of a full year of cost savings from the closure of the Bristol plant in 2010, contribution from the division increased to £3.2m (2010: £2.8m). 

 

Disposal of Point of Sale Division

The Group's principal activities are the supply of interior fittings and fit out services.  The Point of Sale Division is not core to this strategy and, as the business is operating at close to capacity, further development of its business would require significant new investment. As the Group's stated aim is to reduce debt levels, the Board concluded it was unlikely to be able to make the necessary investment in the near future.

 

On 10 April 2012, the Group announced that it had entered into a conditional contract to sell its Showcard Print business, which comprises the Point of Sale Division, for £15.3m on a cash and debt free basis. The Group will retain the long leasehold property in Letchworth occupied by the business and it has entered into a lease for the use of this building.

 

The contract was conditional on the approval of shareholders at a general meeting which was held on 23 April 2012. The sale was approved and the other conditions in the contract were also completed with the consequence that the sale of the business was completed on 26 April and generated net cash proceeds of £12.9m. All of the net proceeds have been used to reduce the Group's indebtedness. The accounts to 31 December 2011 have therefore been presented on the basis that the Point of Sale Division is a discontinued activity. The sale will generate an exceptional gain in 2012.

 

Current Trading and Prospects

The Group expects market conditions to remain challenging in 2012. However, the Group entered 2012 with an increased order book in comparison with 2011, the bulk of the additional orders representing projects in the Educational sector, particularly as a result of the framework agreement with Balfour Beatty. Activity levels with Retail customers continue to improve and the renewed framework agreements with its largest customer Lloyds Banking Group and with Boots support this. 

 

Without the contribution of the now discontinued Point of Sale Division, the Group made a loss at both operating and pre-tax levels in 2011. The sale proceeds will substantially reduce the Group's interest charge in the remainder of 2012 and in future years. The Board is looking to restore the Group to profitability through further cost savings but more importantly by boosting the top line revenues. The increased order book in 2012 gives a foundation to this aim and, in addition, the Group has bolstered its sales and marketing activities.

 

Overall, I am encouraged by the trading performance to date and expect to make further progress on improving the order book and operational efficiency. 

 

Eric Prescott

Chief Executive

 


FINANCE DIRECTOR'S REVIEW

 

 

Results for the year

 

Group revenue for the 12 months ended 31 December 2011 was little changed from 2010 at £99.5m (2010: £99.2m). Revenue from continuing operations was £78.7m (2010: £78.2m). The Group made an operating profit before exceptional items of £1.4m (2010: £0.6m). The continuing operations lost £1.8m (2010: £2.2m loss). The Group made an underlying profit before exceptional items and taxation of £0.2m (2010: £0.6m loss) which is reflected in fully diluted earnings per share of 0.1p (2010: 1.8p loss).  The reported pre-tax loss was £4.5m (2010: £4.6m loss) and, on this basis, the fully diluted loss per share amounted to 11.6p (2010: 10.9p loss).  The continuing businesses made a reduced loss of £3.0m (2010: £3.4m loss).

 

The Group incurred net exceptional items of £4.7m (2010: £3.9m), which comprise a charge of £3.6m for impairment relating to the Educational Supplies Division which has continued to operate in a weak direct to school market and charges of £1.1m relating to the reorganisation of the Group comprising redundancy, property closure and refinancing costs.

 

Taxation

 

The Group has not paid any corporation tax due to the losses incurred in the year. Losses carried forward of some £4m will ensure that no taxation is likely to be payable for some time in the future.

 

Dividends

 

Given the results for the year, the Board is not recommending the payment of dividends.  

 

Cash flow

 

The Group generated cash from operating activities of £6.6m (2010: £0.4m) as a result of continuing improvements in the control of working capital. Capital expenditure during the year totalled £1.3m, of which the largest part was the payment for a digital press at the Point of Sale business. This was partly offset by the proceeds of sale of £0.7m from the disposal of the Group's surplus Bristol premises.

 

Net debt and Bank Facilities

 

Net debt (which comprises both loans and obligations under finance leases net of cash) at 31 December was substantially reduced at £13.7m (2010: £19.7m).  Since the year end, the Group's debt has been further reduced by the disposal of the Point of Sale Division. As a result of that, the Group has agreed new borrowing facilities which are as follows: 

 

·     A committed working capital facility is available until 31 May 2013 when it will be subject to review. The initial limit is £3.25m reducing to £1.25m on 1 November 2012 and increasing to £2.05m on 1 January 2013.

 

·     A committed revolving credit facility is available until 31 December 2014. The initial limit is £6.25m reducing by £0.5m on 30 June 2013, by £0.5m on 31 December 2013 and a further £0.5m on 30 June 2014.

 

The Group's term loan and HP borrowings were repaid in full from the proceeds of sale.

 

The interest margin that the Group pays for its bank facilities has increased and, in the case of the revolving credit, is based on LIBOR interest rates. The overdraft continues to be linked to base rate. 

 

Going concern accounting basis

 

The Group's business activities, together with the factors likely to affect its future development performance and position, are set out in the Chairman's Statement and Chief Executive's Review. The current economic conditions create uncertainty over the level of demand for the Group's products and services.  The financial position of the Group, its cash flows and liquidity position are set out in the financial statements.

 

During the year, the Group operated under a bank facility which included a term loan, a revolving credit, HP finance and an overdraft facility.  Since the year end, the facilities have been reduced with the term loan and part of the revolving credit being repaid from the proceeds of the sale of Showcard Print Limited (Note 13). The remaining overdraft and revolving credit facilities have been amended and, in the case of the revolving credit, continue until the end of December 2014. As set out in Note 2 (Basis of Preparation) the Group expects to be able to comply with the conditions of the Group's bank facilities based on its forecasts.

 

The directors, therefore, have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and accounts.

 

Principal risks and uncertainties

 

The Group's loan facilities contain covenants as to EBITDA, asset cover and cash performance. These covenants are tested quarterly and failure to meet these constitutes an event of default under the facility agreement, giving the Bank the right to require immediate repayment of all amounts loaned. The Group's financial forecasts show that these covenants can be met. However, any material disruption to operational and financial performance could result in a shortfall against the standard of performance required. The Group addresses this risk by detailed monitoring of financial performance and the expected outcome for each measurement period.

 

The Group's businesses have a strong seasonal element, with a peak of activity in the middle and second half of the year. This could result in peak output requirements exceeding the available capacity. The Group manages this risk by detailed and regular capacity planning reviews, with additional shifts and early production being planned.

 

In the current economic climate, there is less certainty for all businesses about future trading. This is particularly true in the retail sector, where customers may change their plans and programmes at short notice. The Group manages this risk by reviewing trading outlook more frequently, including the review of weekly order intake figures.

 

The Group operates in highly competitive markets and deals with major customers which increasingly employ procurement strategies designed to ensure that all purchases, and not just those of stock items, are acquired at the lowest possible cost. The business is addressing this risk by seeking production cost savings including, where appropriate, procurement from lower cost overseas suppliers.

 

The Group is involved as a supplier to major construction projects which can be subject to time delays and slippage caused by both commercial and weather-related issues. The business addresses this risk by building allowance for slippage into its production forecasts and budgets.

 

The Group undertakes work as sub-contractors under industry standard written contracts. The risks involved in working under such contracts are controlled by the employment of qualified and knowledgeable contract managers and quantity surveyors.

 

The largest element of working capital employed by the Group is trade receivables. These are subject to credit risk and, as a consequence, the Group employs credit insurance to cover the risk on most of its commercial debtors. However, in addition to debt owed by the public sector and local government, the Group bears the credit risk on a proportion of receivables where its credit insurers are unwilling to provide cover. At present, credit insurers continue to be prudent with the amount of cover they are willing to provide and consequently the level of uninsured debtors has increased. The Group's procedures require that material uninsured credit limits are approved by the Board. The Group also monitors the credit status of its major customers.

 

Pension scheme

 

In the year, the deficit on the Group's final salary pension scheme increased from £3.0m to £4.1m reflecting lower bond yields which impacted the discount rates used to calculate the present value of the scheme's liabilities.  The scheme is closed to further accrual and all benefits are based on inflation measured by the Consumer Prices Index. These changes, introduced at the start of 2011, have limited the impact on the scheme of record low Gilt bond yields.

 

 

 

Grant Findlay

Group Finance Director

 

 



 Consolidated Income Statement

 

for the year ended 31 December 2011

 



Continuing

Discontinued

Result

Exceptional

Total



operations

activities

before

costs and






exceptional

goodwill






costs and

impairment






goodwill

(note 5)






impairment




Note

£000

£000

£000

£000

£000

Revenue

3

78,689

20,792

99,481

-

99,481

Cost of sales


(69,824)

(13,840)

(83,664)

     (3,931)

(87,595)



______

______

______

______

______

Gross profit


 8,865

6,952

15,817

      (3,931)

11,886

Administrative expenses


(10,663)

(3,779)

(14,442)

(  655)

(15,097)










______

______

______

______

______

Operating (loss)/profit


(1,798)

3,173

1,375

(  4,586)

 (3,211)








Finance costs


(1,200)

-

(1,200)

(92)

(1,292)



______

______

______

______

______

(Loss)/profit before income tax

4

(2,998)

3,173

175

( 4,678)

(4,503)








Income tax credit/(charge)

6

715

(840)

(125)

292

167



______

______

______

______

______

(Loss)/profit for the year (attributable to equity holders of the parent)


(2,283)

 

 

2,333

50

(4,386)

 (4,336)



______

______

______

______

______








Basic loss per share

7





( 11.6p)








Diluted loss per share

7





( 11.6p)








Basic loss per share - continuing operations

7





(17.8p)








Diluted loss per share - continuing operations

7





(17.8p)

 

for the year ended 31 December 2010

 



Continuing

Discontinued

Result

Exceptional

Total



operations

activities

before

costs and






exceptional

goodwill






costs and

impairment






goodwill

(note 5)






impairment




Note

£000

£000

£000

£000

£000

Revenue

3

78,230

20,949

99,179

-

99,179

Cost of sales


(69,045)

(14,735)

(83,780)

(2,443)

(86,223)



______

______

______

______

______

Gross profit


 9,185

6,214

15,399

(2,443)

12,956

Administrative expenses


(11,423)

(3,401)

(14,824)

(1,048)

(15,872)










______

______

______

______

______

Operating (loss)/profit


(2,238)

2,813

575

(3,491)

(2,916)








Finance costs


(1,202)

-

(1,202)

(437)

(1,639)



______

______

______

______

______

(Loss)/profit before income tax

4

(3,440)

2,813

(627)

(3,928)

(4,555)








Income tax credit/(charge)

6

    750

(809)

(59)

552

493



______

______

______

______

______

(Loss)/profit for the year (attributable to equity holders of the parent)


(2,690)

 

 

2,004

 

 

(686)

 (3,376)

(4,062)



______

______

______

______

______








Basic loss per share

7





(10.9p)








Diluted loss per share

7





(10.9p)








Basic loss per share - continuing operations

7





(16.3p)








Diluted loss per share - continuing operations

7





(16.3p)

 



 

Consolidated Statement of Comprehensive Income

 
for the year ended 31 December 2011

 

 


2011

2010


£000

£000




Loss for the year

      (4,336)

     (4,062)


_______

_______

Actuarial (loss)/gain on defined benefit pension plan

      (1,590)

       251

Tax on items taken directly to equity

    338 

 (121)

Cash flow hedges:



Effective portion of changes in fair value

      227

      124


_______

_______

Other comprehensive income net of tax

      (1,025)

      254




Total comprehensive income (attributable to equity holders of the parent)

(5,361)

(3,808)


_______

_______

 

 



Consolidated Balance Sheet         

as at 31 December 2011

 



        



2011

2010



£000

£000


Note



Assets




Non-current assets




Property, plant and equipment

 

6,520

10,745

Intangible assets


8,194

12,265

Deferred tax assets


2,231

1,981



_______

_______

Total non-current assets


16,945

24,991



_______

_______

Current assets




Inventories

8

 7,874

11,056

Assets classified as held for sale

9

 8,272

773

Trade and other receivables

10

17,410

25,756

Cash and cash equivalents


7,657

4,830



_______

_______

Total current assets


41,213

42,415







_______

_______

Total assets  


58,158

67,406



_______

_______

Liabilities




Current liabilities




Interest-bearing loans and borrowings

11

(15,022)

(2,581)

Derivative financial instruments


    -

(227)

Liabilities classified as held for sale

9

(3,903)

-

Trade and other payables

12

(17,875)

(23,096)



_______

_______

Total current liabilities


(36,800)

(25,904)



_______

_______

Non-current liabilities




Interest-bearing loans and borrowings

11

(6,307)

(21,937)

Retirement benefit obligations


(4,087)

(2,992)

Deferred tax liabilities


(246)

(501)



_______

_______

Total non-current liabilities


(10,640)

(25,430)



_______

_______

Total liabilities


(47,440)

(51,334)



_______

_______

Net assets


10,718

16,072



_______

_______

Equity




Issued share capital


3,853

3,853

Share premium


7,013

7,013

Other reserves


       3,178

       2,951

Revenue reserves


  (3,326)

2,255



_______

_______

Total equity attributable to equity holders of the parent


10,718

16,072



_______

_______

 



Consolidated Cash Flow Statement

 

for the year ended 31 December 2011

 

 

                        





2011

2010



£000

£000

Cash flows from operating activities




Loss for the year


(4,336)

(4,062)

Adjustments for:




Depreciation of property, plant and equipment


1,580

1,803

Amortisation of intangible assets


545

561

Loss/(gain) on sale of property, plant and equipment


164

(34)

Loss on assets held for sale


61

-

Net financing costs (before exceptional items)

 

1,200

1,202

   IFRS 2 charge and net movements relating to equity-     settled plans


 7

18

Non-recurring pension credit


       -

(1,205)

Impairment of goodwill/investment/intangible assets


     3,574

2,000

Income tax credit


(167)

(493)



_______

_______

Operating cash flows before changes in working capital and provisions

 


 

2,628

 

(210)

Decrease in trade and other receivables


3,118

2,675

Decrease/(increase) in inventories


2,872

(505)

Decrease in trade and other payables


(393)

(1,266)

Movement relative to defined benefit pension scheme


(500)

(869)



_______

_______

Cash from/(used in) operations


7,725

(175)



_______

_______





Interest paid


(1,120)

(1,184)

Income taxes repaid


     -

1,785



_______

_______

Net cash from operating activities


6,605

426



_______

_______

Cash flows from investing activities




Proceeds from sale of property, plant and equipment


 -

34

Proceeds from sales of assets held for sale


712

-

Acquisition of property, plant and equipment


(1,214)

(541)

Acquisition of intangible assets


(87)

(185)



_______

_______

Net cash used in investing activities


(589)

(692)



_______

_______

Cash flows from financing activities




Increase in bank loans


    -

7,500

Repayment of bank borrowings


(2,608)

(2,293)

Repayment of finance lease/HP liabilities


(581)

(572)



_______

_______

Net cash (used in)/from financing activities


(3,189)

4,635



_______

_______

Net increase in cash and cash equivalents


2,827

4,369

Cash and cash equivalents at 1 January


4,830

461



_______

_______

Cash and cash equivalents at 31 December


7,657

4,830



_______

_______



Consolidated Statement of Changes in Equity

 


Share

capital

Share

premium

Hedging

reserve

Other

reserve

Revenue

reserve

Total


£000

£000

£000

£000

£000

£000

Current period







At 1 January 2011

3,853

7,013

(227)

994

2,255

16,072

Loss for the year

-

-

-

-

(4,336)

(4,336)

Other comprehensive income for the year

-

-

227

-

(1,252)

(1,025)

Movements relating to share-based payments and the ESOP trust

-

-

-

-

 7

 7

At 31 December 2011

3,853

7,013

2,184

    -

994

  (3,326)

10,718








Previous period







At 1 January 2010

3,853

7,013

(351)

994

6,169

19,862

Loss for the year

-

-

-

-

(4,062)

(4,062)

Other comprehensive income for the year

-

-

124

-

130

254

Movements relating to share-based payments and the ESOP trust

-

-

-

-

18

18

At 31 December 2010

3,853

7,013

2,184

(227)

994

2,255

16,072

 



Notes to the financial statements

 

 

1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010 but is derived from the 2011 accounts.  Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered in due course.  The auditors have reported on those accounts; their reports  (i) were unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under either section 498(2) or section 498(3) of the Companies Act 2006.

 

2. Basis of preparation

 

The consolidated financial statements comprise Havelock Europa PLC and its subsidiaries. The financial statements of subsidiaries are prepared to the same reporting date using accounting policies consistent with those of the parent company.  Intra-group transactions and balances, including any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in full.

The group has reported an operating loss for the year ended 31 December 2011 of £3.2 million and the current economic environment remains challenging. As at 31 December 2011, the net debt position was £13.7 million with headroom of £11.2 million on committed facilities at that point. 

Cash flow forecasts have been prepared for the period through to 31 December 2013, including sensitivity analyses, taking account of the risks and uncertainties facing the group as detailed in the Finance Director's Review.  The group's bankers remain supportive and, subsequent to the year end, the directors have agreed amended bank facilities which took effect on completion of the disposal of Showcard Print Limited as set out in note 13. The group continues to operate within its facility requirements and is forecast to be covenant compliant during the relevant forecast period, albeit there are periods when the headroom is small and therefore the group has identified mitigating steps to be taken during those periods.

While the directors cannot envisage all possible circumstances that may impact the group in the future, the directors believe that, taking account of the forecasts, sensitised forecasts, future plans and committed funding levels, the group has sufficient resources to remain compliant with the relevant covenants and conditions attached to the group's banking facilities and to meet all debts as they fall due for the foreseeable future.

Accordingly, after making reasonable enquiries the directors have a reasonable expectation that the group can continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing the financial statements.



3. Segment reporting

 

Management information is presented to the main board (the chief operating decision maker) based upon business segments. There has been no change to the operating segments during the year.  The reported segments are:

 

·     Interiors - design, manufacture and installation of interiors for schools, retail, financial services, hotels and other accommodation premises;


·     Educational Supplies - design, manufacture, supply and installation of teaching aids, display boards and fume cupboards for the education sector; the Educational Supplies segment includes the three Supplies businesses: Teacherboards, Clean Air and Stage Systems.


·     Point of Sale - printing of promotional graphics for use in retail, financial services and branded goods businesses.

 


Interiors

Educational Supplies

Point
of Sale

Elimination

Total


2011

2010

2011

2010

2011

2010

2011

2010

2011

2010


£000

£000

£000

£000

£000

£000

£000

£000

£000

£000












External sales

70,095

69,037

8,594

9,193

20,792

20,949

-

-

99,481

99,179

Inter-segment sales

1

6

1,421

1,410

 -

11

(1,422)

(1,427)

-

-


70,096

69,043

10,015

10,603

20,792

20,960

(1,422)

(1,427)

99,481

99,179

Operating (loss)/profit before net exceptional costs, impairment of goodwill and unallocated costs

(839)

(1,321)

 75

572

3,173

2,813

-

-

2,409

2,064

Net exceptional costs (excluding central exceptional  costs)

(469)

(326)

(107)

(62)

(240)

(329)

-

-

(816)

(717)

Impairment of goodwill/intangibles



(3,574)

(2,000)





(3,574)

(2,000)

Central exceptional costs









(196)

(774)

Other unallocated costs









( 1,034)

(1,489)

Operating (loss)/profit

(1,308)

(1,647)

(3,606)

(1,490)

2,933

2,484

-

-

   (3,211)

(2,916)

 

Depreciation and amortisation

 1,010

1,109

303

345

748

865

-

-

2,061

2,319

Unallocated depreciation









64

45

Total  amortisation and depreciation









2,125

2,364

 

 

 

  Segment assets



Interiors

Educational Supplies

Point
of Sale

     Unallocated

Total


2011

2010

2011

2010

2011

2010

2011

2010

2011

2010


£000

£000

£000

£000

£000

£000

£000

£000

£000

£000












Stock and debtors

22,096

28,637

2,657

2,592

    -

5,227

531

356

25,284

36,812

Property, plant, equipment, software

4,645

5,496

227

295

1,500

5,147

510

470

6,882

11,408

Assets held for sale

-

-

-

-

8,272

773

-

-

8,272

773

Total segment assets

26,741

34,133

2,884

2,887

9,772

11,147

1,041

826

40,438

48,993












Intangible assets (excluding software)









 7,832

11,602

Deferred tax assets









2,231

1,981

Cash and cash equivalents









7,657

4,830

Total assets









58,158

67,406

 

 

 

4. Loss before tax



    Cost of

     Sales

Administrative

Total



  costs





 2011

2010

2011

2010

2011

2010



£000

£000

£000

£000

£000

£000

Loss before tax is stated after charging/(crediting):
















Depreciation of property, plant and equipment


1,164

1,257

416

546

1,580

1,803

Amortisation of intangible assets


        -

        -

545

561

545

561

Loss/(gain) on sale of property, plant and equipment


      164

      (34)

-

-

164         

(34)        

Goodwill impairment


3,383

2,000

-

-

3,383

2,000

Impairment of intangibles


191

-

-

-

191

-

Operating lease charges:








   - plant and machinery


      154

     189

5

5

159

194

   - others


       305

    311

803

999

1,108

1,310











5. Exceptional costs

 

An analysis of exceptional costs is as follows:     




2011

2010


£000

£000




Re-organisation of Interiors business (note (a))

640

-

Other restructuring costs (note (b))

372

933

Cost of integration of business units (note(c))

-

1,301

Re-organisation of the Board (note (d))     

  -

  462

Impairment of intangible assets

191

-

Goodwill impairment

          3,383

          2,000

Non-recurring pension curtailment gain

-

(1,205)


          4,586

          3,491




Charged to financing costs (note (e))

92

437

Total exceptional costs

4,678

3,928







 

(a) Costs arising from Project Horizon including redundancy, stock rationalisation and other costs

 

(b) Redundancy and other costs were incurred in the closure of the Bristol Point of Sale Printing facility and the Paisley administration centre and in the restructuring of the Educational Supplies businesses.

 

(c) The integration of the Havelock Interiors business with ESA McIntosh, which commenced in 2009, was completed during 2010. The costs comprise exceptional operating costs directly related to the integration.

 

(d) Compensation for loss of office and fees related to recruitment of Chief Executive.

 

(e) Fees relating to and in connection with the renewal of banking facilities.

 

 

6. Income tax expense

 

Recognised in the income statement

 


2011

2010


£000

£000

Current tax expense



Current year

-

-

Adjustments for prior years

-

(186)


       -

(186)




Deferred tax credit



Origination and reversal of temporary differences

196

535

Adjustments for prior years

40

107

Adjustments for change in deferred tax rate - prior year

(69)

37


167

679

Total income tax credit recognised in the consolidated income statement

167

493

 



7. Earnings per share

 

The calculation of basic earnings per share and underlying earnings per share at 31 December 2011 is based on the profit attributable to ordinary shareholders as follows:

 


2011

2010

2011

2010


Loss

Loss

per share

per share


£000

£000

pence

pence

Basic

(4,336)

(4,062)

( 11.6)

(10.9)

Adjusted for:





Exceptional costs  (net of associated tax credit)

4,386

3,376

11.7

9.1






Adjusted

50

(686)

 0.1

(1.8)

Diluted loss per share



( 11.6)

(10.9)

Diluted adjusted earnings/(loss) per share



 0.1

(1.8)






 

 

Continuing operations

 


2011

2010

2011

2010


Loss

Loss

per share

per share


£000

£000

pence

pence

Basic

(4,336)

(4,062)

(11.6)

(10.9)

Adjusted for:





Discontinued activities

(2,333)

(2,004)

(6.2)

(5.4)

Exceptional costs (net of associated tax credit)

4,386

3,376

11.7

9.1






Adjusted

(2,283)

(2,690)

(6.1)

(7.2)

Diluted loss per share



(17.8)

(16.3)

Diluted adjusted loss per share



(6.1)

(7.2)

 

 

The weighted average number of shares used in each calculation is as follows:

 

Undiluted earnings per share

 

In thousands of shares






2011

2010





Issued ordinary shares at 1 January


38,532

38,532

Effect of own shares held


  (1,225)

  (1,254)

Weighted average number of ordinary shares for the year ended 31 December


37,307

37,278

 

Diluted earnings per share

 

In thousands of shares






2011

2010





Weighted average number of ordinary shares for the year ended 31 December


37,307

37,278

Effect of share options in issue


587

632

Weighted average number of ordinary shares (diluted) for the year ended 31 December


37,894

37,910

                                     



8. Inventories


      


      


2011

2010


£000

£000

Raw materials and consumables 

2,241

3,459

Work in progress      

2,508

2,208

Finished goods

3,125

5,389


 7,874

11,056

 

9. Assets held for sale

 

On 31 December 2011, the Point of Sale Division, met the criteria for classification as a non-current asset held for sale under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. As such, the relevant carrying values have been reclassified to Assets classified as held for sale or Liabilities classified as held for sale from the following categories (the table below also shows the effect of the discontinuing operation on the financial position):

 

Category

Carrying value


£000

Property, plant and equipment

2,695

Intangible assets

39

Inventories

310

Trade and other receivables

5,228

Assets classified as held for sale

8,272

Trade and other payables - liabilities classified as held for sale

(3,903)


4,369



 

 

Cash flows from discontinued operation

 


2011

2010


£000

£000

Net cash from operating activities

3,835

3,610

Net cash from investing activities

(288)

-


 3,547

3,610

 

The income statement, including the comparatives, has been restated to show the discontinued activities separately from continuing operations.

 

On 31 December 2010, a property at Cater Road in Bristol and certain items of machinery met the criteria for classification as non-current assets held for sale under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. As such, the relevant carrying values were reclassified from Property, plant and equipment to Assets classified as held for sale.

 

 

10. Trade and other receivables


  

 


2011

2010


£000

£000

Trade receivables and accrued income

16,170

24,565

Other receivables     

102

209

Prepayments

1,138

982


   17,410

   25,756

 



11. Interest-bearing loans and borrowings


     

Current liabilities

2011

2010


£000

£000

Secured bank loans

14,500

2,000

Obligations under hire purchase contracts and finance leases

522

581


15,022

2,581

 

Non-current liabilities

2011

2010


£000

£000

Secured bank loans

 6,300

21,500

Arrangement fees to be amortised over term of loans

(220)

(312)

Obligations under hire purchase contracts and finance leases

227

749


  6,307

21,937

 

12. Trade and other payables

 

Amounts disclosed in current liabilities


        


2011

2010


£000

£000

Trade payables

12,633

15,553

Other taxes and social security

2,473

2,810

Accruals

2,769

4,733


17,875

23,096

 

 

13. Post balance sheet event

 

On 10 April 2012, the Group announced that it had entered into a conditional contract to sell its Showcard Print business, which comprises the Point of Sale Division, for £15.25m on a cash and debt free basis. The Group will retain the long leasehold property in Letchworth that is occupied by the business and it has entered into a lease for the use of this building.

 

The contract was conditional on the approval of shareholders at a general meeting which was held on 23 April 2012. The sale was approved and the other conditions in the contract were also completed with the consequence that the sale of the business was completed on 26 April and generated net cash proceeds of £12.9m.

 

All of the net proceeds have been used to reduce the Group's indebtedness. New bank facilities have been entered into which are for a period of three years and comprise:

 

·     A committed working capital facility which is available until 31 May 2013 when it will be subject to review. The initial limit is £3.25m reducing to £1.25m on 1 November 2012 and increasing to £2.05m on 1 January 2013.

 

·     A committed revolving credit facility which is available until 31 December 2014. The initial limit is £6.25m reducing by £0.5m on 30 June 2013, by £0.5m on 31 December 2013 and a further £0.5m on 30 June 2014.

 

The new bank facilities contain covenants covering interest cover, net debt against EBITDA, cash flow generation and trade debtor cover.

 

The accounts to 31 December 2011 have been presented on the basis that the Point of Sale Division is a discontinued activity. The sale will generate an exceptional gain in  2012.

 

14. The accounts for the year ended 31 December 2011 were approved by the Directors on 3 May 2012.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR BKBDDABKDDPK