SHOPFITTING and interiors business Havelock Europa managed to more than halve its first-half loss in the six months to 30 June despite its turnover taking a £3.5 million hit after a major banking client pulled a branch-refurbishment contract.

The Fife-based firm, which saw turnover fall from £28.9 million in the first six months of 2015 to £25.4m in the same period this year, saw a reduction in its pre-tax loss from £1.6m to £700,000.

The figures reflect the fact that the business, which fits out the interiors of hospitals, schools, offices and retail premises, was hit by a client that is believed to be Lloyds Banking Group slashing its budget for branch refurbishment at the end of 2015.

While this pulled the plug on a multi-million pound revenue stream, finance director Ciaran Kennedy noted that a redundancy round put in place during 2015 helped the firm achieve the £900,000 reduction in the size of its loss.

“This time last year we put in place a restructuring that took 20 per cent of the workforce – about 100 people - out of the business,” he said.

“That was put in place in quarter three and was complete by the end of 2015.

“At the same time we took a decision to be more focused on the type of work we go for.

“Both those things are now beginning to come through in the results.”

With the amount of work the company gets from the financial services as well as corporate ad retail sectors falling, it is increasing its focus on the public sector, where it supplies furniture and fits out interiors for schools, hospitals and universities.

As part of the drive to diversify its revenue stream, the company plans to launch a London design office at the end of this year and has also embarked on an enterprise resource planning (ERP) project aimed at retaining clients in the business.

Chief executive David Ritchie said the ERP project “creates the framework upon which we run and administrate the business”.

“It provides the opportunity for us to be a lot more agile and slick in terms of business processes,” he said.

“It means that we are stripping out some of the complicated things that we had 10 years ago in terms of how we take orders and get them out so that the customer gets a better experience.

“Now the individual they are speaking to can make a decision [rather than having to refer it on first]. Customers appreciate that level of service and feel they get much more involvement.

“They know that when they phone us they will get an answer and that leads to much more repeat business.”

Mr Ritchie added that the London office, which will be based in the Farringdon area and is due to open before the end of the year, is expected to make the business “more responsive” because it will be near customers’ “decision makers”.

While he admitted that the office is likely to be a small operation, Mr Ritchie said it would be home to a small number of designers and sales people and would also offer a base from where staff from elsewhere in the business can meet clients.

In terms of financials, while Havelock Europa’s cost-cutting measures helped reduce its loss, the impact of the volatility in the wider markets saw its pension deficit increase from £1m at the end of 2015 to £3.5m at the end of June.

The company is in the processes of review the scheme’s asset allocation in a bid to reduce its volatility.

The business is also upping its focus on eradicating any first-half losses in future years.

“If you look at our business, if you go back to year dot, we’ve been loss making in the first half and recovered that in the second half,” Mr Ritchie said.

“We’re trying to get away from that pattern and the reduction in the loss in the first half helps take us some way with regard to that.”