A major Fife employer is relocating its headquarters operation after the local authority agreed to a £750,000 deal to buy its ageing industrial unit base.
Interior solutions group Havelock Europa will move into new smaller offices in Kirkcaldy after Fife Council signed up to take on its sprawling warehouse and office complex at Hillend Industrial Park at Dalgety Bay.
Havelock’s new modern headquarters building will be at John Smith Business Park and at 23,600 square feet it is almost exactly five times smaller than its present location.
Despite the downsizing, Havelock confirmed it was not making any redundancies among its workforce and was instead intending to reduce its space requirement by cutting the amount of stock it carried.
Keith Winter, executive director of Fife Council’s environment, enterprise and communities directorate, said: “We are not in a position to discuss commercially sensitive business transactions but obviously we would be keen to support the company to continue it’s operations in Fife.”
Havelock yesterday said its Dalgety Bay premises needed significant investment to bring it up to modern standards and a move to Kirkcaldy was advantageous as it was closer to its existing manufacturing site in the town.
The company, which does contract interior fit-outs for major retailers including Primark and Marks & Spencer and which is also a significant player in the educational interiors market, said it had entered an initial 10-year lease agreement with Fife Council for the new offices, with a further five-year option to extend also built in.
Havelock said it anticipated costs of £700,000 to fit out its new offices and complete the relocation process, but said overheads going forward would be lower.
The effect of the changes to its stock itinerary will be a £2.1 million provision against its carrying value.
“Proceeds from the sale of the site at Dalgety Bay will cover the costs of fitting out and moving to the new head office in Kirkcaldy,” the company told investors.
“Accordingly, the net effect of the sale of the Dalgety Bay site, the move to the new head office and the stock rationalisation are expected to be cash neutral.”
The divestment of the headquarters site and the signing of the new lease are expected to be completed by March with Havelock moving into their new home in May.
The company also used its statement to shareholders to update on significantly higher exceptional costs than previously guided.
The firm had previously said it expected costs of £380,000 for the restructuring the Stage Systems business and £520,000 of outlays in relation to management changes.
However, total outlay on exceptionals for the year will now be £4m once property disposal charges of £1m and £2.1m of stock rationalisation costs are taken into account.
Havelock said that aside from the changes to exceptional costs, the company was trading in line with expectations.
Havelock Europa chief executive Eric Prescott said: “The disposal of Dalgety Bay and the change in stock holding policy will increase operational efficiencies and are the next steps in the process we have initiated to make the company more efficient and better able to deliver sustainable profitability.”
Stock in Havelock Europa closed the session up 3% at 17p on Monday.