SHARES in Havelock Europa have surged around 16 per cent from a low base after the interior fit-out specialist said it had lined up £3 million additional funding following what it described as a difficult year.
Fife-based Havelock said it has reached agreement on a package of proposals which directors expect will give the firm the resources needed to help implement the strategic plan announced by new chief executive Shaun Ormrod in October.
The former boss of the Farnborough International Airshow said then he wanted Havelock to focus on higher margin business and a stronger sales culture.
He also said he wanted Havelock to grow its business in the corporate and retail sectors as the official austerity drive impacted on the key public sector market. Havelock has done lots of work in schools and supplied equipment under its ESA McIntosh brand.
The company, which employs 300 people in Kirkcaldy, underlined the scale of the challenge it faced in an update on trading in 2017 included with news of the progress achieved on funding.
Havelock said trading had improved in the second half but the company expected to record a loss for the six months to December.
After announcing a £2.6m interim loss in September, Havelock directors said they expected results for the year would fall significantly below 2016 but felt the group would trade profitably in the second half.
Mr Ormrod said yesterday 2017 was a difficult year for Havelock but the business was fully aligned behind the plan set out in October. He took charge in September after David Ritchie resigned to pursue other interests.
“With a renewed commercial focus and with the backing of our funders, I am confident that the business can return to a position of market leadership in the medium term,” said Mr Ormrod.
He has said Havelock could grow sales from an expected £60m this year to £100m.
The company did not provide any information on the progress achieved towards implementing Mr Ormrod’s plan.
The agreement of the funding package, subject to confirmation, appears to represent an advance.
The additional £3m debt under discussion would be for a six year term, signalling faith in the company’s prospects.
Mr Ormrod has developed a two year stabilisation plan and outlined a longer term vision under which the company would expand its footprint in England and pursue international opportunities.
The company has won agreement in principle to extend £5m existing debt facilities for a further two years. Havelock said it has also revised the deficit reduction contributions payable to the pension scheme, without giving details.
The funding changes will result in a £0.5m hit to the bottom line per annum for the next two years.
However, Havelock said the effect will be “to provide sufficient funding to support the delivery of the new strategic and short term operational plan”.
Havelock shares closed up 0.6p at 4.4p.
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