Havelock shares leap on Green hopes

Published on Saturday 10 July 2004 02:33

HAVELOCK Europa, the Fife-based schools-to-shops outfitter, has seen its shares soar to an all-time high as key customer Philip Green homes in on Marks & Spencer.

The company enjoyed another 1.3 per cent or 1.5p climb to 110.5p yesterday as investors anticipated a jump in business if Green wins the battle. The shares have increased from 95p a month ago.

The Dalgety Bay firm supplies price and product hangings to the billionaire’s Bhs chain - its third biggest customer. It might be awarded new contracts if the Green bid comes out on top.

The shares have also received a boost from the latest education bill, which was unveiled by the government on Thursday.

Prime Minister Tony Blair revealed that public spending on school infrastructure in England and Wales would rise from 3.5 billion to 4.5bn next year, with some estimates putting the figure at 8bn by 2008.

Chief executive Hew Balfour said: "The level of government spending in this area is extraordinary. When Labour came into power in 1997 the level was just 700 million."

On M&S, finance director Graham MacSporran admitted "it may be a possibility" that Green could expand his relationship with Havelock if he won control of the M&S stores.

MacSporran said: "We have a strong relationship with Bhs - it is a very good customer - although it’s maybe too early to predict the outcome."

Balfour said he would not like to make any predictions about future dealings with the chain - describing any market predictions as "pure speculation". He said: "Put it this way, we would be very happy to work with M&S whoever is in charge. We already do some work for their international business."

Havelock has been boosted by its exposure to schools since it bought ESA McIntosh in 2001, and recently completed the acquisition of Yorkshire equipment manufacturer Teacherboards for 6.1m.

Balfour said: "There is a wall of money out there in this sector. I can’t think of any faster growing industry in my lifetime, except perhaps personal computers and telecoms." One of the group’s specialities is kitting out school science labs, and Balfour said he had detected a growing emphasis on science refurbishment both in secondary and tertiary education.

Another gold mine is PFIs. Havelock has secured work on every public-private contract to be tendered in Scotland, while it has won 27 per cent of those south of the Border.

Broker Teather & Greenwood expects a near 30 per cent jump in pre-tax profits between 2004 to 2005 - up from 4.4m to 6.1m.