Havelock Europa Regulatory News (HVE)

17 Nov 2009 07:00



Tuesday 17 November 2009

HAVELOCK EUROPA PLC

Interim Management Statement

Havelock, the Educational and Retail Interiors and Point of Sale Printing Group, announces its Interim Management Statement relating to the period from 1 July 2009 to 16 November 2009.

In a difficult economic climate, the Group's order intake remains well below that of last year. In the ten month period to the end of October, orders received were £81 million (2008: £117 million), a 31% decrease.

Whilst the rate of decline in Quarter 3 within Retail Interiors has been broadly similar to that experienced in the first two quarters, within the Point of Sale Printing Division the decline moderated markedly in comparison to the first half of the year.

In Education, orders in Quarter 3 were some 35% up on the same period last year, resulting from a healthy order in-flow from the Building Schools for the Future programme.

In aggregate, Group revenue for the same period amounted to £82.2 million (2008: £108.6 million), down 24%.

The integration of the Retail and Educational Interiors business is progressing. The physical moves and relocation of staff will be completed in January. Considerable challenges have been encountered in the integration of the IT systems, particularly in respect of those elements dealing with production planning and distribution for Educational projects, and these have had a knock-on effect on operational performance. These issues are being resolved. Despite the disruption resulting from such problems, the Group expects to contain the costs of integration within the one-off exceptional charge of £2.7 million for the full year, announced in the Interim Report in August.

Net debt at 16 November is showing a normal seasonal increase over the level at 30 June 2009, but at a higher level than in 2008 due to the increase in the proportion of work carried out in the Educational sector which has higher working capital requirements. The costs of integration are also adding to debt levels.

Whilst there is some encouragement from recent enquiry levels, revenue booked to date is running below forecast and it is unlikely that any improvement in order intake will compensate for this in the period to 31 December 2009.  As a consequence, the Group's results for 2009 are likely to fall below expectations.

Although the Board is not expecting a return to normal trading conditions in 2010, particularly in the Retail sector, the cost savings generated from the integration of the Group's Retail and Education Interiors businesses, together with a realistic expectation of orders for the year ahead, give the Board reason to believe that there will be an improvement in trading in 2010.