Fife-based Havelock Europa restricted its loss to £600,000 last year after a “restructuring and right-sizing” which saw more than 100 staff leave the company.
The Kirkcaldy shop fitting and interiors firm announced a major cost-cutting exercise in September last year in a bid to save £3 million on an annualised basis.
The move involved cutting around 50 jobs from the 530-strong workforce, but the axe fell again in November after the company missed out on renewing a key £14m contract with Lloyds Banking Group.
Management moved to cut a further 50 jobs from the workforce and warned that its 2016 financial performance was likely to be materially impacted by the loss.
In its results for 2015 published today, the group revenue was down by £8.9 million to £70.3m, and the group operating loss from continuing operations was £0.6m compared to a profit of £0.4m a year ago.
The business was debt-free at the end of last year with a cash balance of £2m and an unused overdaft of £4.75m.
Chairman David MacLellan said: “The restructuring and right sizing of the business initiated in late summer 2015 is progressing well and the headcount reductions indicated in September and November 2015 were all completed by the end of the year.
“The business continues to concentrate on simplifying its structure and processes to make it more agile and better able to maximise the customer experience.”
The chairman said 2015 was challenging with a significant restructuring of the business led by David Ritchie, the new chief executive.
“The scale of this work is reflected in the exceptional costs incurred during the year, with the full benefit of these management actions expected to accrue in 2016,” he explained.
“Despite this restructuring and the cash impact it had, the business ended the year with a materially larger net cash balance than the previous year.
“I am pleased with the progress that David and his team have made and the increased opening order book gives encouragement for 2016.”
Reduced UK retail activity and delayed public sector contracts were cited as the main reasons why sales from continuing operations fell by 11% in the year to £70.3m.
Exceptional costs amounted to £1.9m mostly relating to the business restructuring, as a result of which the business recorded an operating loss of £2.4m.
The announcement by Havelock’s largest financial services customer Lloyds Banking Group about its reduced activity for 2016 reinforced the need for change and intensified the right sizing process.
As a result, the workforce at the end of 2015 was reduced to 425, an overall cut of 111.
The sale of Havelock’s former Dalgety Bay headquarters for £0.7m financed the fitting out of a new modern head office facility at John Smith Business Park in Kirkcaldy, and the chairman said the benefits of the new site are being realised.
Havelock sold Teacherboards Limited to Sundeala Limited in September 2015 for £1.447m, and the sale gave rise to a profit of £0.3m.
Havelock continued to develop its Enterprise Resource Planning (“ERP”) system with costs in the year of £1.5m. It will be implemented from June 2016 and, as well as offering cost and efficiency benefits, will enable the business to become more agile and responsive.
Havelock is now organised into three divisions: retail and lifestyle, corporate services and public sector, the goal is to create a balance with no one customer responsible for more than 10% of sales.
No dividend is proposed for this year but will be considered when the group’s trading performance has improved.