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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Havelock Europa | LSE:HVE | London | Ordinary Share | GB0004149356 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.30 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHVE
RNS Number : 2181D
Havelock Europa PLC
25 April 2017
HAVELOCK EUROPA PLC
("Havelock" or the "Group")
Final Results and New Financing Arrangements
Havelock Europa (HVE.L), the international interiors solutions group, announces its results for the year to 31 December 2016.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
Financial Highlights
-- Pre-tax profit before exceptional items of GBP0.4m (2015: loss of GBP0.8m).
-- Like for like revenue, excluding the loss of business from a major financial services client announced in November 2015, was 21% ahead of 2015 at GBP59.4m (2015: GBP49.2m).
-- Group operating profit before exceptional items of GBP0.5m (2015: operating loss GBP0.6m) reflecting higher contract margins and improved efficiency following the restructuring in 2015.
-- Earnings per share before exceptional items of 0.7p (2015: loss per share of 3.0p).
-- Net assets per share 14.1p (2015: 31.6p) due mainly to the impact of lower corporate bond yields on the pension scheme deficit which rose to GBP9.4m.
-- Net debt of GBP2.7m (2015: net cash GBP1.1m) due to investment in the ERP system and increased working capital.
Operational Highlights
-- Business now organised into three market-focused divisions, Retail & Lifestyle, Corporate Services and Public Sector.
-- Leadership teams strengthened.
-- Strong progress in broadening the customer base across all sectors, with a number of new clients secured.
-- Within the Public Sector, Healthcare and "early years" Education products updated and launched.
-- International activity accounted for 20% of Group turnover (2015: 15%).
Financing
-- New overdraft facility agreed which provides GBP6.0m of funding over the traditional busy summer period, reducing to GBP5.0m on 1 November 2017.
-- A two year unsecured GBP0.3m loan facility, obtained from Godden Associates Pension Fund, an associate of Ian Godden, Chairman of the Company, which represents a related party transaction in accordance with AIM Rule 13.
-- Agreement reached with the trustees of the Company's pension fund regarding the deferral of deficit funding payments of GBP0.7m scheduled in 2017 into 2018.
Outlook
-- Drive to make the business more agile and able to respond to customer demand, which is showing clear results.
-- Strong pipeline of opportunities in Retail & Lifestyle and Corporate Services.
-- Project delays in Public Sector will result in the 2017 result being heavily weighted to the second half of the year.
-- New major national customers won through strengthening commercial team. -- ERP system, live from early 2017, will deliver ongoing efficiency improvements.
-- Current order book for 2017 delivery of GBP32m secured, in addition to work expected from existing framework contracts, slightly lower than last year (GBP35m).
-- Major review of longer term vision, mission and strategy underway.
Ian Godden, Havelock Chairman, said:
"2016 was a challenging year due to the significant reduction in revenue. Nevertheless we have made considerable progress in realising the benefits from the restructuring of the business with a substantial improvement in margins and a return to profitability. The business continues to concentrate on simplifying its structure and processes and on improving its commercial skills to make it more agile and to generate more operating profit and cash flow."
Enquiries
Havelock Europa www.havelockeuropa.com
David Ritchie, Chief Executive Tel. 01592 648480
Ciaran Kennedy, Finance Director
WH Ireland Group plc (Nomad) Tel. 020 7220 1650
Chris Fielding
Charlotte Street Partners (media enquiries) Tel. 0131 516 5310
Rob Ballantyne
David Gaffney
CHAIRMAN'S STATEMENT
During 2016, the benefits of the restructuring and right sizing of the business that we initiated in late summer 2015 have been recognised in the substantial improvement in operating margins during the year from 10.2% to 13.2%. Consequently, the Group is able to report an operating profit despite the reduction in turnover. The business continues to concentrate on simplifying its structure and on improving its commercial skills to make it more agile and better able to generate profit and cash flow.
Financial overview
Total revenue for the year was GBP60.8m (2015:GBP70.3m). There was a major increase in public sector sales in 2016, especially in the education sector. Financial sector sales were much lower following the decision by a major customer in 2015 to reduce its refurbishment and development spend. On a like for like basis, after eliminating the loss of sales from this customer, as detailed in the reconciliation below, revenue for 2016 was 21% higher than in 2015. Profit before tax was GBP0.2m (2015: loss GBP2.7m). This is stated after exceptional restructuring costs of GBP0.2m (2015: GBP1.9m).With the management action to increase margin and reduce costs, an operating profit before exceptional items of GBP0.5m was earned (2015: loss of GBP0.6m) as shown below.
Reconciliation of underlying measures
The table below shows like for like revenue excluding sales to a major financial services customer.
Hot Features
Premium
2016 2015
GBP000 GBP000
Total revenue 60,809 70,263
Sales to major financial services customer (1,410) (21,076)
______ _______
Like for like revenue 59,399 49,187
______ ______
Operating profit
Profit/(loss) before tax 183 (2,682)
Finance costs 174 273
Exceptional costs 174 1,883
Discontinued activities - ( 41)
_____ ______
Result before exceptional items from
continuing operations 531 (567)
_____ ______
Financial position
On 24 April 2017, the Group agreed a new overdraft facility of GBP6.0m over the traditionally busy summer period through to 31 October 2017, reducing to GBP5.0m thereafter. The overdraft facility remains repayable on demand and is subject to review in April 2018.
We continued to develop our new Enterprise Resource Planning ("ERP") system and costs in the year totalled GBP1.7m. A phased implementation of the system commenced in June 2016 and the system became fully operational in February 2017. As well as offering cost and efficiency benefits, this system should provide a platform for better implementation of the new operational plan and enable the business to become more agile and responsive.
In common with many UK companies the pension deficit has widened. This is principally as a result of reduced corporate bond rates. As at 31 December the pension deficit rose to GBP9.4m (2015:GBP1.0m), this being the principal reason for the reduction in shareholders' funds from GBP12.2m to GBP5.4m.
Dividends
No dividend is proposed for this year. When the Group's trading performance has improved, the Board will consider the resumption of dividend payments.
Future strategy
The newly refreshed Board is conducting a major review of its longer term vision, mission and strategy. This strategy will be shared with the shareholder base later in 2017, showing leaner processes, with the objective of achieving a stronger operating cash flow and profit growth. Havelock is seeking to re-establish market leadership and a much higher level of design innovation in each of its three UK market sectors. The Board and executive team are also exploring this year how they can create a growth strategy by "following the wealth" in the UK and in selected international markets where Havelock has profitable entry or expansion opportunities. The addition of two very experienced business-oriented non-executive directors, a new CFO and the upgrading of the senior market-facing executive team are crucial first steps in that direction. Despite the political uncertainties in the UK and the prospect of accelerated inflation and interest rates, the Board is confident of finding a path to growth in profits.
The Board
Hew Balfour, Chief Executive of the Company from 1989 to 2010, was appointed a non-executive director on 28 April 2016 and replaced Alastair Kerr, who resigned on 10 June 2016, having been a non-executive director for four years.
David MacLellan resigned as a non-executive director on 25 January 2017. David had been a director for six years and chairman for the last four years.
I was appointed a non-executive director and chairman after the EGM on 25 January 2017 to replace David. I would like to thank David and Alastair, on behalf of the Board, for their contribution to the business during a very difficult period in Havelock's history.
Ciaran Kennedy, Group Finance Director, resigned from the Board on 25 April to take up his new position as Director for Scotland at Clancy Docwra. He departs with our heartfelt thanks and best wishes.
Donald Borland will succeed Ciaran as CFO on 26 April 2017. His overall experience and success and his particular experience in adjacent construction and property markets will be very valuable for Havelock's future positioning.
In what was a challenging year, I would like to pay tribute to the continued positive attitude and focus on customer delivery displayed by our staff as they undertook the restructuring process and, on behalf of the Board, I would like to register our thanks to all members of the Havelock team for their contribution during this difficult time.
Outlook for 2017
The first half of the year will, as usual, be challenging, with orders secured of GBP32m, slightly lower than last year's GBP35m, albeit with increased expectations from our framework agreements. Although the business is continuing to progress, it still retains a high dependence on second half orders which restricts our visibility for the full year outturn. Nevertheless the prospects for the full year are encouraging with a stronger order book in the Retail & Lifestyle sector and signs of growth potential in the corporate sector. The current emphasis on simplifying the business, embedding benefits from the new ERP system, maximising the customer experience and upgrading the commercial skills and focus in the Company are starting to pay off.
Ian Godden
Chairman
CHIEF EXECUTIVE'S REVIEW
Operational review
Revenues in the year totalled GBP60.8m (2015: GBP70.3m), as a result of the reduction in activity by one of our financial services customers. Excluding sales to this customer in 2015, revenue on a like for like basis rose by 21% in 2016, as detailed in the reconciliation in the Chairman's Statement.
Despite the overall reduction in sales, the Group achieved an operating profit before exceptional items from continuing operations of GBP0.5m (2015: loss GBP0.6m) as detailed in the reconciliation in the Chairman's Statement. The principal reasons for this were the improved margins on major public sector contracts in the year and the impact of operational efficiencies following the restructuring exercise at the end of 2015.
Retail & Lifestyle sales fell slightly in 2016. Whilst one of our clothing retail customers continued to open new stores in the UK and Europe, some of our major UK customers reduced their activity. We continued to broaden the Retail & Lifestyle customer base and initial orders were received from the leading health food retailer and an electrical goods retailer during the year. International retail sales had another successful year, recording sales of 20% of Group revenue (2015: 15%), substantially above target.
With the reduced level of business from our largest financial services customer, Corporate Services had a disappointing year. Excluding sales to this customer, sales in 2016 were comparable to those in 2015. We continue to target opportunities for both furniture and fit out contracting in this sector and we are pleased to report that work has recently been secured from a major new financial services customer.
Public sector sales improved substantially in 2016, following major contract wins in the education sector throughout Great Britain.
We continued to develop our new Enterprise Resource Planning ("ERP") system during the year and costs in the year totalled GBP1.7m.
A phased implementation of the system commenced in June 2016 and the system became fully operational in February 2017. As well as offering cost and efficiency benefits, this system should provide a framework for the better implementation of the new business strategy and enable the business to become more agile and responsive.
Management and staff
I am pleased that throughout the last 9 months we have strengthened the leadership team with the addition of senior appointments in Manufacturing and Operational Excellence and a new Leader in the Corporate Sector. I look forward to working with our new CFO and this enhanced leadership team in the next year.
Despite the challenges, we maintained investment in our graduate and apprentice programmes and hope to invest further this year. We are also continuing to invest in training for our key staff to ensure that we are fully responsive to our customers' requirements. It is pleasing to note that we fully comply with the UK and Scottish Governments' programme of paying the living wage to our UK colleagues.
Current trading and prospects
We are pleased to have benefitted from improving the customer experience in the last year, thereby securing new major national customers and starting to generate a stronger pipeline for 2017.
We continue to pursue opportunities that will include new sector activity. We are now targeting these opportunities to build on the new customers that we have successfully secured within the year and we are working towards converting these opportunities to secure this year's revenue. We remain cautiously optimistic for the full year and I appreciate the efforts made by colleagues to move the company forward in continuing challenging times.
David Ritchie
Chief Executive
FINANCE DIRECTOR'S REVIEW
Results for the year and financial position
Revenues, from continuing operations, for the year were GBP60.8 million. This represents a 13% reduction on 2015 levels (2015:GBP70.3m) with the reduced activity in the Financial Services sector being the main driver. Profit before tax was GBP0.2m (2015:loss GBP2.7m). Despite the reduction in sales, the business made an operating profit of GBP0.5m (2015:loss of GBP0.6m) through operational efficiencies, particularly on public sector contracts, as detailed in the Chairman's Statement.
Exceptional costs of GBP0.2m were incurred in the year and these related largely to restructuring and redundancy costs. Overall, the Group made an operating profit of GBP0.4m (2015:GBP2.4m loss) for the year on sales of GBP60.8m (2015:GBP73.1m).
An increase of GBP8.4m in the pension scheme deficit had a significant impact on the net assets of the Group which finished the year at GBP5.4m (2015:GBP12.2m)
Taxation
The Group continues to carry forward substantial losses and does not expect to be in a tax paying position for some time.
Cash flow
Despite the continued focus on working capital management, the Group has absorbed cash from operating activities of GBP2.0m in the year to 31 December 2016 (2015:cash generated GBP1.1m). This was due to the payment of restructuring costs and the working capital impact of the loss of business from a major financial services customer. Capital expenditure of GBP1.8m (2015:GBP2.3m) represented the continued investment in the ERP project and other capital expenditure.
Net debt and bank facilities
On 31 December 2016, total debt was GBP2.7m, of which bank debt was GBP2.2 and hire purchase / leasing debt was GBP0.5m. (2015: net cash GBP2.0m, leases GBP0.9m).
The Group has the support of the following facilities:
-- An overdraft facility which is subject to review in April 2018. This provides GBP6.0m of funding over the traditionally busy summer period, reducing to GBP5.0m on 1 November 2017;
-- Finance lease facilities of GBP0.5m which are fully drawn;
-- On 24 April 2017, the Company entered into a GBP0.3m loan facility with a pension fund associated with the Chairman. The loan carries interest at 6% pa, payable quarterly following the first anniversary of drawdown, and has the right to be converted into equity in the event of any equity issue by the Company during its term, on the same terms as are available to all other shareholders. The Directors of the Company, other than Mr Godden, consider, having consulted with WH Ireland Limited, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.
Going concern accounting basis
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Statement and the Chief Executive's Review. The financial position of the Group, its cash flows and liquidity position are set out in the financial statements.
During the year, the Group operated with bank facilities which included HP finance and an overdraft facility which was subject to review in April 2017. On 24 April 2017, the Group's overdraft facility was extended for a further year and the facility is now subject to review in April 2018. The revised facility allows for an increased overdraft of GBP6.0m over the traditionally busy summer period through to 31 October 2017, reducing to GBP5.0m thereafter. As set out in Note 1 (Basis of Preparation), the Group expects to be able to comply with the conditions of the Group's bank facilities based on its forecasts. In addition, on 24 April 2017, the Group agreed a GBP0.3m loan facility with the Chairman and agreed with the trustees of the Company's pension fund the deferral of deficit funding payments of GBP0.7m, scheduled in 2017, into 2018.
The Directors, therefore, have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the annual report and accounts.
Principal risks and uncertainties
The Group must operate within its bank facilities. As set out in Note 1, the Group's financial forecast shows that this can be achieved. A material disruption to the Company's business or a shortfall in operational or financial performance or a reduction in the ability to secure appropriate credit terms could mean that the Group's ability to operate within its overdraft facility would be at risk. The Group addresses this risk by detailed monitoring of financial performance and of the expected outcome for each measurement period.
The Group's business has a strong seasonal element, with a peak of activity in the middle and second half of the year. This could result in peak output requirements exceeding the available capacity. The Group manages this risk by detailed and regular capacity planning reviews, with additional shifts and early production being planned.
In 2016, the Group had one client which constituted more than 10% of revenue. The loss of a major client would adversely impact the Group's profitability and cash flow. The business focusses on maintaining a good working relationship with all its customers. We are continuing to pursue our strategy of diversifying the business across and within sectors to increase resilience and reduce dependence on particular markets and customers.
The Group operates in highly competitive markets and deals with major customers which increasingly employ procurement strategies designed to ensure that all purchases, and not just those of stock items, are acquired at the lowest possible cost. The business is addressing this risk by seeking production cost savings including, where appropriate, procurement from lower cost overseas suppliers.
The Group is involved as a supplier to major construction projects which can be subject to time delays and slippage caused by both commercial and weather-related issues. The business addresses this risk by building allowance for slippage into its production forecasts and budgets.
The Group undertakes work as a sub-contractor under industry standard written contracts. The risks involved in working under such contracts are controlled by the employment of qualified and knowledgeable contract managers and quantity surveyors.
The largest element of working capital employed by the Group is trade receivables and accrued income. These are subject to credit risk and, as a consequence, the Group employs credit insurance to cover the risk on most of its commercial debtors. However, in addition to debt owed by the public sector and local government, the Group bears the credit risk on a proportion of receivables where its credit insurers are unwilling to provide cover. The Group's procedures require that material uninsured credit limits are approved by the Board. The Group also monitors the credit status of its major customers.
Key performance indicators
Havelock Europa's Board and Group Management monitor a range of financial and non-financial indicators, reported on a periodic basis, to measure the Group's performance over time.
Of these, the key performance indicators (KPIs) are:
2016 2015
Revenue per employee -
GBP000's 146 141
Opening order book for
in year delivery - GBPm 22 25
Net (debt)/cash - GBPm
(at year end) (2.7) 1.1
Pension scheme
Lower corporate bond rates, which place a higher value on the liabilities, were the main driver in the GBP8.4m increase in the pension deficit to GBP9.4m. Given the large volatility associated with the scheme's liabilities, the trustees are continuing to review options within the market place to hedge better some of this risk. The final salary pension scheme has been closed to both new entrants and further accrual for some time. On 24 April 2017, the trustees agreed to defer the deficit funding payments due in 2017 into the following year.
Ciaran Kennedy
Group Finance Director
Consolidated Income Statement
for the year ended 31 December 2016
Result Exceptional Total
before
exceptional costs
costs
Note GBP000 GBP000 GBP000
Revenue 60,809 - 60,809
Cost of sales (52,753) (52,753)
_______ _______ ________
Gross profit 8,056 - 8,056
Administrative
expenses (7,525) (174) (7,699)
______ _______ ________
Operating profit/(loss) 531 (174) 357
Net finance costs (174) - (174)
_______ ______ ______
Profit/(loss)
before income
tax 357 (174) 183
Income tax charge 5 (99) 35 (64)
_______ _______ _______
Profit/(loss)
for the year
(attributable
to equity holders
of the parent) 258 (139) 119
_______ _______ _________
Basic earnings
per share 6 0.7p 0.3p
Diluted earnings
per share 6 0.7p 0.3p
Consolidated Income Statement
for the year ended 31 December 2015
Continuing Discontinued Result Exceptional Total
before
operations activities exceptional costs
costs
Note GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 70,263 2,862 73,125 - 73,125
Cost of sales (63,093) (1,965) (65,058) (65,058)
_______ _______ _______ _______ ________
Gross profit 7,170 897 8,067 - 8,067
Administrative
expenses (7,737) (856) (8,593) (1,883) (10,476)
_______ _______ ______ _______ ________
Operating (loss)/profit (567) 41 (526) (1,883) (2,409)
Net finance costs (273) - (273) - (273)
_______ _______ _______ ______ ______
(Loss)/profit
before income
tax (840) 41 (799) (1,883) (2,682)
Income tax charge 5 (283) - (283) - (283)
_______ _______ _______ _______ _______
(Loss)/profit
after income
tax (1,123) 41 (1,082) (1,883) (2,965)
Gain on disposal
of discontinued
activities net
of tax - 285 285 - 285
_______ _______ _______ _______ _______
(Loss) /profit
for the year
(attributable
to equity holders
of the parent) (1,123) 326 (797) (1,883) (2,680)
_______ _______ _______ _______ _________
Basic loss per
share 6 (3.0p) (7.1p)
Diluted loss
per share 6 (3.0p) (7.1p)
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2016
2016 2015
GBP000 GBP000
Profit/(loss)for the year 119 (2,680)
_______ _______
Items that will not be reclassified
to profit or loss
Remeasurement of defined benefit
pension scheme (8,420) 2,326
Tax on items taken directly
to equity 1,516 (493)
_______ _______
Other comprehensive income
net of tax (6,904) 1,833
Total comprehensive income
(attributable to equity holders
of the parent) (6,785) (847)
Balance Sheet
as at 31 December 2016
2016 2015
GBP000 GBP000
Note
Assets
Non-current assets
Property, plant and equipment 2,999 3,234
Intangible assets 9,577 8,066
Deferred tax assets 3,046 1,480
_______ _______
Total non-current assets 15,622 12,780
_______ _______
Current assets
Inventories 7 4,654 6,054
Trade and other receivables 8 10,374 9,433
Cash and cash equivalents - 1,961
_______ _______
Total current assets 15,028 17,448
_______ _______
Total assets 30,650 30,228
_______ _______
Liabilities
Current liabilities
Interest-bearing loans
and borrowings 9 (2,620) (391)
Trade and other payables 10 (13,109) (16,154)
_______ _______
Total current liabilities (15,729) (16,545)
_______ _______
Non-current liabilities
Interest-bearing loans
and borrowings 9 (123) (461)
Retirement benefit obligations (9,356) (1,031)
_______ _______
Total non-current liabilities (9,479) (1,492)
_______ _______
Total liabilities (25,208) (18,037)
_______ _______
Net assets 5,442 12,191
_______ _______
Equity
Issued share capital 3,853 3,853
Share premium 7,013 7,013
Other reserves 2,184 2,184
Revenue reserves (7,608) (859)
_______ _______
Total equity attributable
to equity holders of
the parent 5,442 12,191
_______ ______
Cash Flow Statement
for the year ended 31 December 2016
2016 2015
GBP000 GBP000
Cash flows from operating Note
activities
Profit/(loss) for the
year 119 (2,680)
Adjustments for:
Depreciation of property,
plant and equipment 366 442
Amortisation of intangible
assets 188 227
Gain on disposal of
subsidiary - (285)
Loss on disposal of
property, plant and
equipment - 1
Net financing costs 174 273
Deferred tax on R&D
credit (114) -
Non-cash exceptional
charges 91 1,069
IFRS 2 charge and net
movements relating to
equity-settled plans 36 107
Income tax charge 5 64 283
_______ _______
Operating cash flows
before changes in working
capital and provisions 924 (563)
(Increase)/decrease
in trade and other receivables (941) 2,964
Decrease in inventories 1,400 1,259
Decrease in trade and
other payables (3,146) (1,881)
Cash contributions to
defined benefit pension
scheme (134) (489)
_______ _______
Cash (used in)/ from
operations (1,897) 1,290
_______ _______
Interest paid (125) (162)
_______ _______
Net cash (used in)/
from operating activities (2,022) 1,128
_______ _______
Cash flows from investing
activities
Net proceeds from sale
of assets held for sale - 750
Net proceeds from sale
of subsidiary net of
overdraft disposed of - 1,252
Acquisition of property,
plant and equipment (131) (709)
Acquisition of intangible
assets (1,699) (1,564)
_______ _______
Net cash used in investing
activities (1,830) (271)
_______ _______
Cash flows from financing
activities
Repayment of bank borrowings - (3,952)
Repayment of finance
lease/HP liabilities (402) (392)
New finance leases 63 34
_______ _______
Net cash used in financing
activities (339) (4,310)
_______ _______
Net decrease in cash
and cash equivalents (4,191) (3,453)
Cash and cash equivalents
at 1 January 1,961 5,414
_______ _______
Cash and cash equivalents
at 31 December (2,230) 1,961
_______ _______
Statement of Changes in Equity
for the year ended 31 December 2016
Share Share Merger Other Revenue
capital premium reserve reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Current period
At 1 January 2016 3,853 7,013 2,184 - (859) 12,191
Profit for the year - - - - 119 119
Other comprehensive income for the year - - - - (6,904) (6,904)
Movements relating to share-based payments and the
ESOP trust - - - - 36 36
At 31 December 2016 3,853 7,013 2,184 - (7,608) 5,442
--------- --------- --------- --------- --------- --------
Previous period
At 1 January 2015 3,853 7,013 2,184 994 (1,113) 12,931
Loss for the year - - - - (2,680) (2,680)
Other comprehensive income for the year - - - - 1,833 1,833
Transfer on disposal of property - - - (994) 994 -
Movements relating to share-based payments and the
ESOP trust - - - - 107 107
--------- --------- --------- --------- --------- --------
At 31 December 2015 3,853 7,013 2,184 - (859) 12,191
--------- --------- --------- --------- --------- --------
Notes to the financial statements
1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015 but is derived from the 2016 accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered in due course. The auditor has reported on those accounts; his reports (i) were unqualified, (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying his reports and (iii) did not contain statements under either section 498(2) or section 498(3) of the Companies Act 2006.
Basis of preparation
The consolidated financial statements comprise Havelock Europa PLC and its subsidiaries. The financial statements of subsidiaries are prepared to the same reporting date using accounting policies consistent with those of the parent company. Intra-group transactions and balances, including any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in full.
Cash flow forecasts have been prepared for the period through to 31 December 2018, including sensitivity analyses, taking account of the risks and uncertainties facing the Group as detailed in the Finance Director's Review. Since the year end, the Group has agreed with its bankers a renewal of the existing GBP4.75m overdraft facility in place at the year-end. The renewal allows for an increased facility of GBP6.0m over the traditionally busy summer period, through to 31 October 2017, reducing to GBP5.0m thereafter. The facility has no covenants, is repayable on demand and is subject to review in April 2018. The cash flow forecast incorporates certain mitigating actions which have been implemented by the Board. Specifically as set out in the notes the Chairman has provided a loan facility of GBP0.3m and the pension Trustees have agreed to a deferral of pension deficit payments of GBP0.67m.
The Group is projected to operate within this facility for the foreseeable future although mitigating action may be required during periods when headroom is tight. These mitigating actions may include, as in previous years, that the payment terms with some of the Group's debtors and creditors will be carefully managed during the periods of peak working capital requirement.
While the directors cannot envisage all possible circumstances that may impact the Group in the future, the directors believe that, taking account of the forecasts, sensitised forecasts, future plans and committed funding levels, the Group has sufficient resources to meet all debts as they fall due for the foreseeable future.
Accordingly, after making reasonable enquiries, the directors have a reasonable expectation that the Group can continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing the financial statements.
Further information regarding the Company's business activities, together with the factors likely to affect its future development, performance and position, is set out in the Chief Executive's Review.
2. Segment reporting
No segmental analysis has been presented as, following the sale of Teacherboards (1985) Limited in the prior year, continuing operations consist of a single segment and therefore segmental disclosure has, in effect, been presented on the face of the income statement with the continuing operations representing the interiors segment and the discontinued operations representing the educational supplies segment.
No geographical analysis has been presented as exports constitute less than 20% of revenue. Sales to Primark represent 14% of revenue in 2016. Sales in 2015 to Lloyds Banking Group plc represented 30% of revenue. No other client represents more than 10% of revenue.
3. Profit/(loss) before tax
Cost of Administrative Total
sales costs
2016 2015 2016 2015 2016 2015
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit/(loss) before
tax is stated after charging:
Depreciation of property,
plant and equipment 164 210 202 232 366 442
Amortisation of intangible
assets - - 188 227 188 227
Loss on sale of property,
plant and equipment - - - 1 - 1
Operating lease charges:
- plant and machinery 114 144 - 2 114 146
- others 297 430 505 637 802 1,067
4. Exceptional costs
An analysis of exceptional
costs is as follows:
2016 2015
Note GBP000 GBP000
Restructuring costs a 174 1,495
Severance payments in
relation to Board change b - 388
Total exceptional costs 174 1,883
------- -------
(a) Redundancy and other costs incurred in the restructuring of the Interiors and Educational Supplies businesses.
(b) Compensation for loss of office.
5. Income tax expense
Recognised in the income statement
2016 2015
Note GBP000 GBP000
Current tax expense
Current year - -
Adjustments for prior years - -
- -
------- -------
Deferred tax charge
Origination and reversal of
temporary differences
* non-exceptional (94) (38)
35 -
* exceptional
Adjustments for prior years - (95)
Adjustments for change in deferred
tax rate (5) (150)
(64) (283)
------- -------
Total income tax charge recognised
in the consolidated income
statement (64) (283)
------- -------
6. Earnings per share
The calculation of basic earnings per share and underlying earnings per share at 31 December 2016 is based on the profit attributable to ordinary shareholders as follows:
2016 2015 2016 2015
Profit Loss per per
share share
GBP000 GBP000 pence pence
Basic 119 (2,680) 0.3 (7.1)
Adjusted for:
Discontinued activities - (326) - (0.9)
------- -------- ------- -------
119 (3,006) 0.3 (8.0)
Exceptional costs (net of
associated tax credit) 139 1,883 0.4 5.0
------- -------- ------- -------
Continuing operations before
exceptional costs 258 (1,123) 0.7 (3.0)
------- -------- ------- -------
Diluted basic profit/(loss)
per share 0.3 (7.1)
Adjusted diluted profit/(loss)
per share - continuing operations 0.7 (3.0)
The weighted average number of shares used in each calculation is as follows:
Undiluted earnings per share
In thousands of shares
2016 2015
Issued ordinary shares at 1 January 38,532 38,532
Effect of own shares held (165) (693)
------- -------
Weighted average number of ordinary
shares for the year ended 31 December 38,367 37,839
------- -------
Diluted earnings per share
In thousands of shares
2016 2015
Weighted average number of ordinary
shares for the year ended 31 December 38,367 37,839
Effect of share options in issue 1,182 1,314
------- -------
Weighted average number of ordinary
shares (diluted) for the year ended
31 December 39,549 39,153
------- -------
7. Inventories
2016 2015
GBP000 GBP000
Raw materials and consumables 1,647 1,858
Work in progress 1,883 2,871
Finished goods 1,124 1,325
------- -------
4,654 6,054
------- -------
8. Trade and other receivables
2016 2015
GBP000 GBP000
Trade receivables and accrued
income 9,438 8,652
Other receivables 380 195
Prepayments 556 586
10,374 9,433
------- -------
9. Interest-bearing loans and borrowings
Current liabilities 2016 2015
GBP000 GBP000
Overdraft 2,230 -
Obligations under hire purchase
contracts and finance leases 390 391
------- -------
2,620 391
------- -------
Non-current liabilities 2016 2015
GBP000 GBP000
Obligations under hire purchase
contracts and finance leases 123 461
------- -------
10. Trade and other payables
Amounts disclosed in current liabilities
2016 2015
GBP000 GBP000
Trade payables 8,944 10,354
Other taxes and social
security 1,251 2,113
Accruals 2,914 3,687
13,109 16,154
------- -------
11. Post balance sheet events
On 31 January 2017, 3,000,000 new ordinary shares were issued to the Chairman in consideration for cash. The number of ordinary shares in issue has, therefore, increased to 41,532,050.
During April 2017, the Chairman agreed to provide an unsecured loan of GBP0.3m to the company. The loan carries an interest rate of 6%, is for a two year term and can be converted into shares in the event of a future rights issue or placing.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEASIIFWSEDL
(END) Dow Jones Newswires
April 25, 2017 02:01 ET (06:01 GMT)
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