14th Apr 2016 09:03
LONDON (Alliance News) - Havelock Europa PLC said Thursday its pretax loss narrowed in 2015, as cost saving measures offset lower sales, whilst the group noted its intentions to even out the proportion of revenue coming from each of its divisions.
The furniture and interior services company said revenue fell 11% to GBP70.3 million for the year ended December 31 from GBP79.2 million a year earlier on reduced activity in the UK retail sector, primarily from one of its major UK retail customers, and delayed public sector contracts.
However, pretax loss narrowed in the year to GBP2.7 million from GBP5.8 million, due to management action in the second half of the financial year to reduce costs and "simplify the business".
The reduced cost of sales to GBP65.1 million from GBP76.4 million meant that, despite the fall in revenue, gross profit widened during to year to GBP8.1 million from GBP7.0 million.
Havelock said its headcount was reduced 20% in the second half of the year and the business was organised into three divisions - retail and lifestyle (including international), corporate services and public sector.
"Over the long term, our goal is to create a balance between divisions and to have a diversified spread of customers within each division with no one customer responsible for more than 10% of sales," Havelock said.
Havelock noted its corporate services division had seen a strong year, with both sales and margin coming in above target, and the company said it had completed substantial restructuring at the end of the year to reflect ongoing opportunities.
However, Havelock added that in its largest division, public sector, sales had improved but the scale of the increase and the margins achieved were "disappointing".
"Action has been taken to address these issues as part of our restructuring plan and education now forms an integral and large element of our public services division. The public sector division will be focused on securing work from those markets where the final customer is government funded, primarily education, healthcare and student accommodation," Havelock added.
The company had not proposed a dividend for 2015, in line with the year earlier, saying it will consider resuming payments when the group's profitability has improved.
Havelock said its order book at the year-end was GBP25.0 million, up from GBP20.0 million a year earlier.
The company added that current trading is in line with market expectations, which looks to continue throughout the first half.
"Although the business is continuing to progress and diversify, it still retains a high dependence on second half orders which restricts our visibility for the full year outturn," said Chairman David MacLellan.
Shares in Havelock were up 8.4% at 13.28 pence.
By Hannah Boland; [email protected]; @Hannaheboland
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