Tuesday 26th June 2007

Havelock Europa PLC, Chairman's AGM Statement

Further overall progress in the full year is anticipated

At the AGM of Havelock Europa, the educational furniture and supply, point of sale display and retail interiors group, the Chairman, Malcolm Gourlay, made the following remarks with regard to current trading and prospects.

Profits for the first six months of the year are expected to be a little ahead of budget, with strong performances from Retail Interiors and Point of Sale Display.

Revenue in the Educational Furniture and Supplies business, whilst ahead of last year, has been a little below expectation, as a result of slower than anticipated sales in the higher margin "Direct to Schools" sector of education furniture. Although orders have picked up in June, the effect of decision making delays resulting from the Local Elections, in May, and the late release of budgets, means that, in comparative terms, the contribution from this sector of the division is presently a little behind that of last year. However, growth within the PFI sector continues and ESA McIntosh has work in hand on 15 separate PFI contracts, of which 2 are projects which had originally been "let” to competitors but which have subsequently been re-captured. In addition, design work is in progress on 4 Scottish PFIs, 2 Northern Irish PFIs, 2 English PFIs and 2 Building Schools for the Future contracts. Some of the revenue from this design work should fall in 2007 with manufacturing and on site activity following in 2008.

Orders and revenue at TeacherBoards, the Group's classroom accessories subsidiary, at Clean Air, the Group's fume cupboard business, and at Stage Systems, a business designing and producing demountable stages and postural furniture which was acquired in February, are all running at an encouraging level.

The Retail Interiors Division has had a buoyant first half, helped by strong sales to Marks & Spencer. An additional PFI education contract is also in progress under the management of this division. With many of Britain's banks involved in significant M & A activity, work in this sector has been quieter than normal but is likely to be partly compensated for, in the second half of the year, by a new stream of work targeted at the corporate office sector of major financial institutions.

Existing customers in the point of sale display market have been extremely active, with sizeable increases in revenue from Tesco and BHS helping to offset a decline in revenues from Somerfield, following last year’s disposal of Kwik Save. The new KBA large format digital litho printing press started its live testing programme last week and will play a major part, in the coming year, in the Group's drive to expand its capacity in the point of sale display market.

The Group has continued to strengthen its senior management team and is in the process of consolidating further the synergies available between the education, healthcare and retail interiors operations. In this connection the programme to relocate the Group's metal working facilities from Dalgety Bay to vacant space at ESA McIntosh's Kirkcaldy site was completed on time in April. The Group continues to expand its "low cost country" procurement activities and will have a team of 5 full time staff operating in Shanghai, by the end of the year.

The Board continues to be optimistic about the growth opportunities in the markets in which it is active. A substantial uplift in the volume of work from large educational furniture projects is expected in 2008, as the Building Schools for the Future programme in England gets into full stride, alongside a further sizeable programme of PFI work in Scotland. Within the retail sector, there are encouraging signs of a major programme of work for 2008, particularly in the department store sector, where several substantial new stores are under construction.

The Board anticipates further overall progress in the full year with more growth to follow in 2008 and 2009. The Group continues to review opportunities for appropriate acquisitions.”

Enquiries:

Havelock Europa PLC 01383 820 044
Hew Balfour (Chief Executive) 07801 683 851
Grant Findlay (Finance Director) 07768 745 960

Bankside Consultants
Charles Ponsonby 020 7367 8851