1st Sep 2015 07:36
LONDON (Alliance News) - Havelock Europa PLC Tuesday said it is cutting down the size of its workforce and selling its Teacherboards business to Sundeala Ltd for GBP1.4 million in order to streamline and simplify its business model, as it revealed that its full-year results for 2015 will be below guidance.
Shares in Havelock were trading down 27% at 12.53 pence following the announcement on Tuesday morning.
The furniture and interiors services company said it recently undertook a business structure review and concluded that it would need to "right-size" the business to a level and cost structure that will enable it to "deliver a sustainable, consistent level of profit on a more modest sales target".
As a result, Havelock is cutting its staffing levels by 10% and selling educational supplies business Teacherboards.
The company said that the sale of Teacherboards will reduce group operating profit in the short term, but that in the long term the planned changes will reduce operational gearing and deliver annualised cost savings of GBP3 million. The money from the sale of Teacherboards will be used to reduce the group's net debt, Havelock said.
Havelock added that demand in the retail and financial services sectors is "subdued" with limited forward visibility in the second half. It therefore expects results for the full year to be "materially below" previous guidance.
"Our customer survey and review of the business demonstrates that these changes are necessary. We are re-basing 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," Chief Executive David Ritchie said in a statement.
"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," he added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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