Havelock Europa Regulatory News (HVE)

HAVELOCK EUROPA SELLS TEACHERBOARDS, REFOCUSES BUSINESS

Havelock Europa plc (AIM:HVE.L)("Havelock"), the international interior solutions provider, today announces the outcome of a business structure review including the sale of Teacherboards to Sundeala Limited and a trading update in respect of the year ending 31 December 2015.

On appointment to his role of Chief Executive in May, David Ritchie initiated a review of the business which included a "voice of the customer" survey. This review has identified the need for immediate change and accordingly the Company announces:-

· A proposed "right-sizing" of the business to reflect changes in Havelock's various market places which will include staffing levels being reduced by approximately 10%.

· A streamlining and simplification of the business model designed to focus on and maximise the customer experience across the business.

· The sale of Teacherboards to Sundeala Limited for a total consideration of £1.358m

These changes are designed to right-size the business to a level and cost structure that will enable the Company to deliver a sustainable, consistent level of profit on a more modest sales target.

The planned changes will reduce operational gearing and deliver expected annualised cost savings of £3m. Havelock is entering into a period of consultation with its workforce from today.

Teacherboards is an educational supplies business that manufactures, procures and distributes display boards, presentation equipment and other related products. Teacherboards is based in Skipton, Yorkshire, and was acquired by Havelock in 2004.

In the year to 31 December 2014, Teacherboards made a profit before tax of £0.14m on sales of £4.4m. As at 31 December 2014, Teacherboards had net assets of £1.6m comprising £0.7m of operating assets and £0.9m of cash and amounts due to other group companies. Immediately prior completion Teacherboards paid, in cash, a pre completion dividend of £0.678m to Group. The sale of Teacherboards is expected to reduce the group operating profits in the short term.

The consideration will be used to reduce the group's net debt, which at 30 June 2015 was £3.1m. £1.258m of the consideration was paid on completion and the balance is due on finalisation of the completion accounts.

As part of the AGM statement on 5th June 2015 Havelock referred to demand in the Retail and Financial Services sectors as being subdued with forward visibility for the second half being limited. The Company has now reviewed its order book for the rest of the current year. Demand in the Retail and Financial Services sectors remains subdued and the Board now considers that the results for the year ending 31 December 2015 will be materially below previous guidance.

David Ritchie Chief Executive said: "Our customer survey and review of the business demonstrates that these changes are necessary. We are rebasing the business to reflect the more competitive market place. No decision to reduce jobs is ever taken lightly, and we will do everything possible to support those colleagues affected.

"I am confident that the sale of our non-core business brings more focus to the group as a whole. The simplified business model will enable us to maximise the customer experience and allow us to continue to diversify our customer base and achieve future growth."

Enquiries:-

Havelock Europa plc - 01592 648480

David Ritchie, Chief Executive

Ciaran Kennedy, Finance Director

Stifel Nicolaus Europe Limited (Nomad) - 020 7710 7600

James Grace

David Arch

Charlotte Street Partners - 0131 516 5310

Robert Ballantyne

Patrick Galbraith