Interim Announcement

25th Aug 2009 09:12



Tuesday 25 August 2009

HAVELOCK EUROPA PLC - INTERIM ANNOUNCEMENT

Havelock, the educational and retail interiors and point of sale printing group, announces, as expected, a reduction in revenue and a loss before tax in the half year to 30 June 2009, the first half being historically much the quieter of the two halves.   

This Interim Announcement is being made today, rather than on 27 August 2009 as previously indicated.

FINANCIAL HIGHLIGHTS

Revenue from continuing operations decreased by 8% to £49.2m.

The underlying pre-tax loss was £1.3m (2008: profit from continuing operations £1.2m) and the reported pre-tax loss was £1.8m (2008: profit from continuing operations £1.0m)

Net debt at the period end, a seasonal high-point, was virtually unchanged at £15.3m (30 June 2008: £15.2m)

The interim dividend per share is maintained at 1.2p

COMMERCIAL HIGHLIGHTS

Revenue from Educational Interiors was up 37% at £27.2m as a result of ESA McIntosh's activity on Private Finance Initiative (PFI)) and Building Schools for the Future (BSF) projects. Activity levels remain strong. 

Retail Interiors, as expected, had a difficult first half, with revenue declining by 42% to £12.5m as a result of delays by customers in agreeing and implementing their plans for 2009. Divisional costs were reduced. Activity levels in the second half will be much lower than for many years. 

Revenue from Point of Sale were down 22% at £9.5m as a result of a generally lower level of promotional spend by customers as they looked to control costs and preserve margin. In the second half, the shortfall will be less than that experienced in the first half.

REORGANISATION

It is proposed to combine the manufacturing activities and key operational functions of the ESA McIntosh and Retail Interiors businesses on one site at Kirkcaldy (Fife) and to merge the overall management of the two businesses into a single Interiors business.

The integration will generate an exceptional charge of around £2.7m in 2009, of which £0.4m was incurred in the first half, and is expected to yield annualised benefits of £1.4m from 2010. 

OVERALL PROSPECTS

Malcolm Gourlay, Chairman, said, with regard to 2009, "Whilst the outlook for the second half of the year is uncertain, in particular for Retail Interiors, and although the second half of the year will, as usual, be considerably stronger than the first, it has become clear that the result for the year will be below our earlier expectations." 

In relation to 2010, Mr Gourlay added "With a cost base benefiting from savings as a result of the completion of the integration of ESA McIntosh and Retail Interiors, the Board believes that Havelock's prospects for 2010 are more encouraging."

Enquiries:
Havelock Europa PLC	01383-820 044
Hew Balfour (Chief Executive)	07801-683 851
Grant Findlay (Finance Director)	07768-745 960
Bankside Consultants Limited
Charles Ponsonby Rose Oddy	020-7367 8851 020-7367 8853

  INTERIM STATEMENT

As outlined at the Group's AGM in June, the first half of the year has proved to be challenging, with Group revenues running below the levels of the same period last year. In what is historically much the quieter of the two halves, this shortfall in revenue has, as expected, resulted in a loss before tax.

FINANCIAL REVIEW

Group revenue from continuing operations, for the six months ended 30 June 2009, decreased by 8% to £49.2 million (2008 : £53.7 million). The underlying pre-tax loss was £1.3 million (2008 : profit from continuing operations £1.2 million), after adding back exceptional costs of £0.4 million (2008: £nil) and the amortisation of intangibles (other than IT software) of £0.1 million (2008 : £0.2 million). The exceptional costs related to the integration of the Educational and Retail Interiors businesses which is described in more detail below. The loss before tax was £1.8 million (2008 : profit £1.0 million). The underlying fully diluted loss per share was 2.4p (2008 : earnings of 1.4p).

Continuing tight working capital controls resulted in net debt remaining unchanged at 30 June 2009 at £15.3 million (30 June 2008 : £15.2 million). Net debt is usually substantially higher at the half year end than at the year end and committed bank facilities continue to provide a comfortable amount of headroom. At 31 December 2008, net debt stood at £11.7 million.

DIVIDEND

The Board is pleased to declare an interim dividend of 1.2p per share (2008 : 1.2p). This dividend will be paid on 28 December 2009 to shareholders on the register on 6 November 2009.

TRADING REVIEW

Educational Interiors

Revenue in this Division was 37% ahead of last year at £27.2 million (2008 : £19.9 million). All of this increase was accounted for by activity on Private Finance Initiative (PFI) and Building Schools for the Future (BSF) projects. Progress on improving the operational efficiency of this Division has been significant and in consequence the Group intends to undertake a further step in the integration of its operations (other than the three smaller Educational Supplies businesses) with the rest of the Group, as set out below.

Retail Interiors

The Retail Interiors Division, as expected, had a difficult first half with revenue declining by 42% to £12.5 million (2008 : £21.7 million), as a result of delays by customers in agreeing and implementing their plans for 2009. Programmes, when agreed, have also been generally smaller, with no significant new builds underway, unlike last year, or immediately in prospect. Both the High Street retailing and retail banking categories have been quiet. Against this background, steps have been taken to ensure our cost base is kept in line with activity levels and, as a consequence, a programme of redundancies took place with additional spare capacity and resources directed to work on Educational projects.

Point of Sale 

The Point of Sale Division achieved revenues of £9.5 million, a decline of 22% compared to the same period of the previous year (2008 continuing operations : £12.1 million). This resulted from a generally lower level of promotional spend by customers as they looked to control costs and preserve margin. Following investment in new digital printing technology, we have continued to add new customers. 

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties which could have a material impact on Havelock's performance over the remainder of the financial year have not changed from those set out in the Annual Report for 2008.

REORGANISATION

Retail and Educational Interiors

The nature of many of the Group's educational interiors projects continues to underline the benefit of creating an integrated Interiors Division, embracing the Retail Interiors and ESA McIntosh businesses, with a common business process and common project management skills.

In the first half, a common IT platform has been successfully put in place and the two businesses are now ready to accelerate the process of integration. Manufacturing at the two production sites at Dalgety Bay and Kirkcaldy has become increasingly interchangeable, with staff moving to support different clients on different sites, according to customer demand, illustrating the opportunity for further efficiencies.

As a consequence, we intend to combine the manufacturing activities and key operational functions of the two businesses on one site at Kirkcaldy, and to merge the overall management of Retail Interiors and ESA McIntosh into a single Interiors business, with Richard Lowery as its Chief Executive. 

This will allow the Group to be more flexible in its allocation of resources and will ensure that the Educational Interiors sector benefits from the standards of contract management, procurement and distribution performance that have enabled the Retail Interiors Division to improve its revenues and margins in each of the last four years.

This integration, together with other cost saving measures, will create a one-off exceptional charge in the full year 2009 of around £2.7 million, of which £0.4 million was incurred in the first six months of the year on the initial stages of the integration, involving the alignment of IT systems. It is expected to yield annualised benefits of £1.4 million from 2010, primarily as a result of reducing headcount, as duplication is eliminated and the efficiency savings of operating from one production and distribution site are realised. The Group will enter into a period of consultation with Trade Union and staff representatives over the next few weeks before proceeding to implementation.

PROSPECTS

2009

There is little sign, to date, of any improvement in the sectors of the economy in which Havelock operates. Nevertheless, the second half of the year is traditionally considerably stronger for Havelock and 2009 will be no exception.

In the Educational Interiors Division, activity levels remain strong, particularly in relation to PFI and BSF projects, where Havelock remains the market leader. There has been steady growth in the amount of business won in England. In the current year, thirteen PFI and seven BSF projects are already in progress or due to be commenced. However, prices are under pressure, as the construction sector competes for a reduced supply of building work, and this is likely to have some effect on margins in the second half.

In the Retail Interiors Division, the level of activity in the second half will be significantly higher than in the first half but, nevertheless, is likely to be at a much lower level than for many years. In the current climate, the risks of delay and cancellation remain higher than normal and visibility is very limited.

In the Point of Sale Division, whilst the level of order intake in the second half is expected to be lower than that experienced in 2008, a record year, the shortfall will be less than that experienced in the first half but again, as usual, visibility is limited.

Whilst the outlook for the second half of the year is uncertain, in particular in the Retail sector, it has become clear that the result for the year will be below our earlier expectations.

2010

Looking forward into 2010, against a background of continuing economic uncertainty, the Group is budgeting on the basis that there is unlikely to be a significant increase in the volume of work available in any of the sectors in which it operates. Nevertheless, the forward order book for Educational Interiors exhibits good visibility, with an increasing success rate in the conversion of BSF enquiries to confirmed contracts.

In Retail Interiors, whilst levels of activity are likely to remain muted in the High Street, the volume of enquiries and requests for survey suggest that the reorganisation of the retail banking sector is likely to produce some increase in the amount of work available, particularly towards the end of 2010 and into 2011. There are also signs that department store activity may recover from the very low volumes experienced in the current year.

In the Point of Sale Division, the contraction of the competitor supply base, coupled with the additional capacity created by Havelock's investment programme over the last four years, bodes well for an improved market share in what will otherwise be a fairly static market.

Accordingly, with a cost base benefiting from savings as a result of the completion of the integration of ESA McIntosh and Retail Interiors, the Board believes that Havelock's prospects for 2010 are more encouraging. 

Malcolm Gourlay 25 August 2009

Chairman

  

CONDENSED CONSOLIDATED INCOME STATEMENT

for the 6 months ended 30 June 2009 

		6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000
Continuing operations:	Note
Revenue	3	49,207	53,687	137,577
Cost of sales		(41,436)	(42,649)	(109,733)
Gross profit		7,771	11,038	27,844
Administrative expenses		(9,108)	(9,495)	(19,066)
Operating (loss)/profit		(1,337)	1,543	8,778
Analysed as:
Operating (loss)/profit before exceptional items		(952)	1,543	8,778
Exceptional items	12	(385)	-	-
Operating (loss)/profit		(1,337)	1,543	8,778
Expected return on defined benefit pension plan assets		696	940	1,871
Financial expenses - on bank borrowings and finance leases		(290)	(585)	(1,132)
Interest on defined benefit pension scheme liabilities		(860)	(930)	(1,842)
Net financing costs		(454)	(575)	(1,103)
(Loss)/profit before income tax		(1,791)	968	7,675
Income tax credit/(expense)	4	528	(293)	(2,230)
(Loss)/profit from continuing operations		(1,263)	675	5,445
Discontinued operation:
Loss from discontinued operation, net of tax		-	(309)	(375)
(Loss)/profit for the period (attributable to equity holders of the parent)		(1,263)	366	5,070
Basic (loss)/earnings per share	5	(3.4p)	1.0p	13.5p
Diluted (loss)/earnings per share	5	(3.4p)	0.9p	13.1p
Continuing operations:
Basic (loss)/earnings per share	5	(3.4p)	1.8p	14.5p
Diluted (loss)/earnings per share	5	(3.4p)	1.7p	14.1p

  CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 6 months ended 30 June 2009 

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000
Other comprehensive income
Actuarial gain/(loss) on defined benefit pension plan	379	(2,400)	(2,169)
Tax on items taken directly to equity	(106)	672	607
Cash flow hedges:
Effective portion of changes in fair value	47	167	(348)
Other comprehensive income for the period	320	(1,561)	(1,910)
(Loss)/profit for the period	(1,263)	366	5,070
Total comprehensive income for the period
(attributable to equity holders of the parent)	(943)	(1,195)	3,160

  CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 June 2009 

		as at 30.06.09 £000	as at 30.06.08 £000	as at 31.12.08 £000
	Note
Assets
Non-current assets
Property, plant and equipment	7	12,608	13,611	13,025
Intangible assets	8	14,704	14,581	14,714
Deferred tax asset		1,708	2,089	1,803
		29,020	30,281	29,542
Current assets
Inventories		16,487	15,279	12,593
Trade and other receivables		24,824	25,312	32,233
Income tax repayable	4	403	-	-
Derivative financial instruments		-	116	-
Cash and cash equivalents	9	808	2,914	4,736
		42,522	43,621	49,562
Total assets		71,542	73,902	79,104
Liabilities
Current liabilities
Interest-bearing loans and borrowings	9	(1,552)	(1,987)	(1,531)
Derivative financial instruments		(352)	-	(399)
Income tax payable	4	-	(731)	(1,148)
Trade and other payables		(24,714)	(25,008)	(28,240)
		(26,618)	(27,726)	(31,318)
Non-current liabilities
Interest-bearing loans and borrowings	9	(14,598)	(16,144)	(14,880)
Retirement benefit obligations		(6,100)	(7,500)	(6,441)
Deferred tax liabilities		(918)	(1,007)	(907)
		(21,616)	(24,651)	(22,228)
Total liabilities		(48,234)	(52,377)	(53,546)
Net assets		23,308	21,525	25,558
Equity
Issued share capital		3,853	3,853	3,853
Share premium		7,013	7,013	7,013
Other reserves		2,826	3,294	2,779
Revenue reserves		9,616	7,365	11,913
Total equity (attributable to equity holders of the parent)		23,308	21,525	25,558

   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the 6 months ended 30 June 2009 

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000
Cash flows from operating activities
(Loss)/profit for the period	(1,263)	366	5,070
Adjustments for:
Depreciation of property, plant and equipment	903	899	1,811
Amortisation of intangible assets	220	263	441
(Gain)/loss on sale of property, plant and equipment	-	(2)	1
Loss on sale of asset held for resale	-	300	379
Impairment losses on assets classified as held for sale	-	168	244
Net financing costs	454	575	1,103
IFRS 2 charge relating to equity settled plans	4	70	210
Income tax (credit)/expense	(528)	160	2,084
Operating cash flows before changes in working capital
and provisions	(210)	2,799	11,343
Decrease/(increase) in trade and other receivables	7,409	1,060	(5,861)
Increase in inventories	(3,894)	(3,946)	(1,260)
(Decrease)/increase in trade and other payables	(4,837)	(2,332)	2,214
Movement relative to defined benefit pension scheme	(126)	(58)	(867)
Cash (absorbed by)/generated from operations	(1,658)	(2,477)	5,569
Interest paid	(290)	(567)	(1,121)
Income taxes paid	(1,023)	(519)	(1,905)
Net cash from operating activities	(2,971)	(3,563)	2,543
Cash flows from investing activities
Acquisition of property, plant and equipment	(486)	(320)	(720)
Acquisition of intangible assets	(210)	(191)	(502)
Disposal of discontinued operation net of cash disposed of	-	273	192
Net cash outflow from investing activities	(696)	(238)	(1,030)
Cash flows from financing activities
Repayment of loan notes	-	-	(476)
New finance leases	-	2,350	2,350
Repayment of bank borrowings	-	-	(997)
Repayment of finance lease liabilities	(261)	(82)	(329)
Dividends paid	-	-	(1,772)
Net cash from financing activities	(261)	2,268	(1,224)
Net (decrease)/increase in cash and cash equivalents	(3,928)	(1,533)	289
Cash and cash equivalents at 1 January	4,736	4,447	4,447
Cash and cash equivalents at end of period	808	2,914	4,736

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 6 months ended 30 June 2009

	Share capital £000	Share premium £000	Merger Reserve £000	Hedging Reserve £000	Other Reserve £000	Revenue Reserve £000	Total £000
Current interim period
At 1 January 2009	3,853	7,013	2,184	(399)	994	11,913	25,558
Total comprehensive income for the period	-	-	-	47	-	(990)	(943)
Ordinary dividends	-	-	-	-	-	(1,310)	(1,310)
Movements relating to share-based payments
and ESOP Trust	-	-	-	-	-	3	3
At 30 June 2009	3,853	7,013	2,184	(352)	994	9,616	23,308

Previous interim period
At 1 January 2008	3,853	7,013	2,184	(51)	994	9,967	23,960
Total comprehensive income for the period	-	-	-	167	-	(1,362)	(1,195)
Ordinary dividends	-	-	-	-	-	(1,310)	(1,310)
Movements relating to share-based payments
and ESOP Trust	-	-	-	-	-	70	70
At 30 June 2008	3,853	7,013	2,184	116	994	7,365	21,525

Prior year
At 1 January 2008	3,853	7,013	2,184	(51)	994	9,967	23,960
Total comprehensive income for the year	-	-	-	(348)	-	3,508	3,160
Ordinary dividends	-	-	-	-	-	(1,772)	(1,772)
Movements relating to share-based payments
and ESOP Trust	-	-	-	-	-	210	210
At 31 December 2008	3,853	7,013	2,184	(399)	994	11,913	25,558

  NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation

These interim financial statements represent the condensed consolidated financial information of the company and its subsidiaries (together referred to as "the Group") for the 6 months ended 30 June 2009. They have been prepared in accordance with the Disclosure and Transparency Rules of the UK's Financial Services Authority and the requirements of IAS 34 Interim Financial Reporting as adopted by the EU. The interim financial statements were approved by the Board of Directors on 26 August 2009. The interim financial statements do not constitute financial statements as defined in section 240 of the Companies Act 1985 and do not include all of the information and disclosures required for full annual financial statements. They should be read in conjunction with the Annual Report 2008 which is available on request from the company's registered office or to download from www.havelockeuropa.com

The financial information contained in this report in respect of the year ended 31 December 2008 has been extracted from the Annual Report 2008 which has been filed with the Registrar of Companies. The auditors report on these financial statements was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

The interim financial statements for the current and comparative periods are unaudited. The auditors have carried out a review of the interim financial statements and their report is set out below.

 2. Significant accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group as disclosed in its consolidated financial statements as at and for the year ended 31 December 2008 except for the impact of the standards disclosed below:

New standards

IFRS 8 'Operating Segments' 

IFRS 8 replaces IAS 14, Segment reporting. It requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes to the chief operating decision maker which has been identified as the board. The adoption of IFRS 8 has led to a change in the segmental information disclosed, but has had no impact on the Group's reportable segments or on the reported results or financial position of the group. Further information can be found at note 3. 

IAS 1 (revised) 'Presentation of Financial Statements'  

The revised standard has resulted in a number of changes in presentation and disclosure, most significantly changing the title of the Consolidated Statement of Recognised Income and Expense to Consolidated Statement of Comprehensive Income and the introduction of the Statement of Changes in Equity as a primary statement. It has had no impact on the reported results or financial position of the group.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year ending 31 December 2009 but have had no impact on the results of the group.

● IAS 23 (amendment) Borrowing costs. 

● IFRS 2 (amendment) Share-based payment. 

● IAS 32 (amendment) Financial instruments: Presentation. 

● IFRIC 13 Customer loyalty programmes. 

● IFRIC 15 Agreements for the construction of real estate. 

● IFRIC 16 Hedges of a net investment in a foreign operation. 

● IAS 39 (amendment) Financial instruments: Recognition and measurement.

3. Segmental reporting

The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. After undertaking an exercise to assess the impact of the new standard, the Group has concluded that there is currently no change to the previously reported segments. Management information is presented to the main board (the chief operating decision maker) based upon business segments and comprises the following segments:

Retail Interiors - design, manufacture and installation of interiors for retailers, financial services, hotels and healthcare premises;
Educational Interiors - design, manufacture and installation of classrooms, fitted and loose furniture, teaching aids, display boards and fume cupboards for the education sector;
Point of Sale - printing of promotional graphics for use in retail, financial services and branded goods businesses.
		6 months ended 30.06.09	6 months ended 30.06.08	year ended 31.12.08
		£000	£000	£000
Total revenue from external customers
Retail Interiors		12,518	21,682	60,449
Educational Interiors		27,230	19,856	52,055
Point of Sale		9,459	12,149	25,073
Total revenue from external customers		49,207	53,687	137,577
Inter-segment revenue
Retail Interiors		318	318	1,380
Educational Interiors		392	141	551
Point of Sale		14	14	39
Total inter-segment revenue		724	473	1,970
Total revenue
Retail Interiors		12,836	22,000	61,829
Educational Interiors		27,622	19,997	52,606
Point of Sale		9,473	12,163	25,112
Total revenue		49,931	54,160	139,547
Eliminate inter-segment revenue		(724)	(473)	(1,970)
Discontinued operations		-	1,001	1,001
Consolidated revenue		49,207	54,688	138,578
Segment result
Retail Interiors		(1,016)	1,025	3,728
Educational Interiors		(309)	(876)	2,939
Point of Sale		1,460	2,497	4,665
Amortisation of intangibles (all relating to Education segment)		(112)	(186)	(296)
Total segment result from continuing operations		23	2,460	11,036
Unallocated expenses		(975)	(917)	(2,258)
Operating (loss)/profit from continuing operations		(952)	1,543	8,778
Net financing costs		(454)	(575)	(1,103)
(Loss)/profit before income tax and exceptional costs		(1,406)	968	7,675
Exceptional costs		(385)	-	-
(Loss)/profit before income tax		(1,791)	968	7,675
Income tax		528	(293)	(2,230)
Discontinued operations, net of tax		-	(309)	(375)
(Loss)/profit for the period		(1,263)	366	5,070

Segment assets
Retail Interiors		15,497	18,091	21,816
Educational Interiors		41,175	34,927	37,788
Point of Sale		10,216	14,836	12,024
Unallocated		4,654	6,048	7,476
Total assets		71,542	73,902	79,104

4. Income tax

A charge for current taxation has been included at 29.5% (2008 half year: 30%, 2008 full year: 28.5%), being the effective rate likely to be applied to the result for the full year to 31 December 2009.

5. Earnings per share

The calculation of basic earnings per share and underlying earnings per share for the period ended 30 June 2009 is based on the profit attributable to ordinary shareholders as follows:

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000	6 months ended 30.06.09 EPS (pence)	6 months ended 30.06.08 EPS (pence)	year ended 31.12.08 EPS(pence)
Basic	(1,263)	366	5,070	(3.4)	1.0	13.5
Adjusted for:
Amortisation of intangibles that attract no tax deduction	112	186	296	0.3	0.5	0.7
Exceptional costs	385	-	-	1.0	-	-
Tax relief on exceptional costs	(108)	-	-	(0.3)	-	-
Adjusted	(874)	552	5,366	(2.4)	1.5	14.2
Diluted basic (loss)/earnings per share				(3.4)	0.9	13.1
Diluted adjusted (loss)/earnings per share				(2.4)	1.4	13.9

Continuing operations

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000	6 months ended 30.06.09 EPS (pence)	6 months ended 30.06.08 EPS (pence)	year ended 31.12.08 EPS(pence)
Basic	(1,263)	675	5,445	(3.4)	1.8	14.5
Adjusted for:
Amortisation of intangibles that attract no tax deduction	112	186	296	0.3	0.5	0.7
Exceptional costs	385	-	-	1.0	-	-
Tax relief on exceptional costs	(108)	-	-	(0.3)	-	-
Adjusted	(874)	861	5,741	(2.4)	2.3	15.2
Diluted basic (loss)/earnings per share				(3.4)	1.7	14.1
Diluted adjusted (loss)/earnings per share				(2.4)	2.2	14.9

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

Basic earnings per share

	6 months ended 30.06.09	6 months ended 30.06.08	year ended 31.12.08
In thousands of shares
Issued ordinary shares at 1 January	38,532	38,532	38,532
Effect of own shares held	(1,267)	(802)	(852)
Weighted average number of ordinary shares for the period	37,265	37,730	37,680

Diluted earnings per share

	6 months ended 30.06.09	6 months ended 30.06.08	year ended 31.12.08
In thousands of shares
Weighted average number of ordinary shares	37,265	37,730	37,680
Effect of share options in issue	1,080	1,009	985
Weighted average number of ordinary shares (diluted) for the period	38,345	38,739	38,665

6. Equity dividends

The directors declared an interim dividend per equity share of 1.2p after the balance sheet date. In accordance with IFRS accounting requirements, this dividend has not been accrued in the interim consolidated financial statements.

Amounts recognised as distributions to equity holders in the period	6 months ended 30.06.09	6 months ended 30.06.08	year ended 31.12.08
	£000	£000	£000
Final dividend for the year ended 31 December 2008 of 3.4p per share	1,310	-	-
Final dividend for the year ended 31 December 2007 of 3.4p per share	-	1,310	1,310
Interim dividend for the year ended 31 December 2008 of 1.2 per share	-	-	462
	1,310	1,310	1,772

7. Property, plant and equipment

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000
Carrying amount
At beginning of the period	13,025	14,117	14,117
Additions at cost	486	320	720
Transferred from assets held for sale	-	73	-
Disposals	-	-	(1)
Depreciation charge for the period	(903)	(899)	(1,811)
At end of the period	12,608	13,611	13,025

Contracts placed for future capital expenditure not provided in the financial statements amount to £1,013,000 (30 June 2008 £391,000 , December 2008: £220,000)

8. Intangible assets

	6 months ended 30.06.09 £000	6 months ended 30.06.08 £000	year ended 31.12.08 £000
Carrying amount
At beginning of the period	14,714	14,653	14,653
Additions	210	191	502
Amortisation for the period	(220)	(263)	(441)
At end of the period	14,704	14,581	14,714

9. Analysis of net cash and financial liabilities

	as at 30.06.09 £000	as at 30.06.08 £000	as at 31.12.08 £000
Cash and cash equivalents per cash flow	808	2,914	4,736
Secured bank loans	(1,000)	(1,000)	(1,000)
Loan notes	-	(476)	-
Finance lease obligations	(552)	(511)	(531)
Current financial liabilities (excluding bank overdrafts)	(1,552)	(1,987)	(1,531)
Secured bank loans	(12,977)	(13,974)	(12,977)
Finance lease obligations	(1,621)	(2,170)	(1,903)
Non-current financial liabilities	(14,598)	(16,144)	(14,880)
Net cash and financial liabilities	(15,342)	(15,217)	(11,675)

10. Related parties

Transactions with key management personnel

Group key management personnel receive compensation in the form of salaries and short-term benefits, post-employment benefits and share-based payments. Group key management received total compensation of £ 878,000 for the six months ended 30 June 2009 (six months ended 30 June 2008: £ 895,000)

11. Pension liabilities

During the period, the pension deficit, net of deferred tax, fell to £4.4 million (December 2008 : £4.6 million) as a result of an increase in the value of the fund's investments.

12. Exceptional costs

Costs relating to the integration of the Retail Interiors and ESA businesses

Redundancies and other related costs £385,000  

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union; 

the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Hew Balfour Grant Findlay

Chief Executive Finance Director

25 August 2009

A list of current directors and their respective responsibilities can be found on page 15 of the Annual Report 2008.  INDEPENDENT REVIEW REPORT TO HAVELOCK EUROPA PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement, the Condensed Consolidated Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

M Ross

for and on behalf of KPMG Audit PlcChartered Accountants191 West George Street

Glasgow

G2 2LJ

25 August 2009

ENDIR EAPPSAENNEEE

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