HAVELOCK Europa, the Fife-based retail and educational interiors group, declared its recovery plan was on track after seeing pre-tax losses from continuing operations narrow from £2.9 million to £483,000.

The group reported a 20% increase in revenue to £92.5m, up from £76.9m in 2011.

Havelock said the improving results were driven by recovery in the education sector and an increase in work for major retail clients.

On an operating level the business, which employs 650 staff across sites in Dalgety Bay and Kirkcaldy, posted a £256,000 profit in the year to December 31, 2012, compared with a £1.7m loss in the prior period.

Net debt was slashed to £2.4m after £13.4m was raised by the sale of Showcard Print and Clean Air. The debt previously stood at £13.7m.

Including the figures from Showcard and Clean Air before they were sold, overall revenue edged up from £99.5m to £100.8m with a £4.5m pre-tax loss turned into a £34,000 profit after exceptional items.

Havelock Europa also said it would be hiring 12 apprentice joiners from the local community this year with the launch of the Havelock Academy.

Chief executive Eric Prescott said good progress was being made on a recovery plan put in place after the firm was hit by a "perfect storm" at the start of the recession.

Profit warnings were issued as the company faced downturns in its core retail, government projects, education and printing markets, as well as internal challenges brought by the merger of two sites.

Mr Prescott said: "We have demonstrated we are on track and we are keeping that pace. I think that is really important. The further good news is that we're investing in apprentices.This week I was able to sit down in front of 22 trainees, at least 12 of whom will be offered proper apprenticeships. That's really exciting.

"We've got people there that are fourth and fifth generation joining the business."

Havelock said overall revenue generated by its interiors arm, which covers the education and retail sectors, increased by 22% to £85.3m, up from £70.1m in 2011, with higher volumes bringing about a return to profit.

The company, which provides furniture, fixtures and equipment to schools, said the recovery in the education sector last year came on the back of a framework agreement with Balfour Beatty struck in 2011.

Mr Prescott said its prospects in education were "holding up" as the government continued to invest in school building, adding that Havelock was well-placed as "one of the go-to places" for major contractors.

However, he noted that conditions in the retail sector looked set to remain challenging, saying: "UK retail, it's tough. We can't kid ourselves. But again we're managing to maintain our position there. We've got good customers in Marks [and Spencer], Primark and people like that. They're continuing to share business with us and we're developing new customers.

"Lloyds Bank continues to be a very significant customer and they are very busy this year as part of a framework we are in."

Havelock is poised to invest £750,000 in a new laser cutter for its metal workshop in June, a purchase Mr Prescott said secures a lot of jobs.

He said the current economic conditions dictate that customers will continue to demand products and solutions that are innovative and cost effective.

Mr Prescott added: "Do I see our customers still being cautious with their spending? Yes I do. But they key thing is that there are two parts to that phrase. It's cautious spending. They are spending, they still want excellent value for money and they still want innovation."