CSLT.L Regulatory News (CSLT)

1 Feb 2005 07:00

Cosalt PLC01 February 2005 Cosalt plc("Cosalt" or "the Group") Preliminary Results for the fifty-three weeks ended 31 October 2004 Cosalt, a market leading manufacturer and supplier of Industrial Services andLeisure Products in the UK, announces increases in turnover and operatingprofits from both its Divisions for the year to 31 October 2004 and anotherincrease in its annual dividend. Financial Highlights • Turnover from continuing activities of £145.4 million (2003: £141.7 million), up 2.6% • Operating profit of £8.68 million* (2003: £8.25 million), up 5.2% • Profit before tax of £7.28 million* (2003: £6.76 million), up 7.7% • Earnings per share of 38.14p* (2003: 37.18p), up 2.6% • Recommended final dividend of 12.75p per share (2003: 12.50p), making total dividend for the year of 18.75p (2003: 18.25p), up 2.7% * before goodwill and exceptional items and losses on discontinued activities Operational Highlights • Good recovery at Cosalt:Ballyclare o Strong margin growth o Substantial improvement in working capital • Group's re-organisation delivering improved quality of earnings o Closure of loss-making retail concessions and Distinctive Childrenswear fashions o Integration of Schoolwear businesses • Building on market-leading position in marine safety and protection market o Acquisition of Aberdeen Inflatables • Group's activities becoming more focused o Sale of Knox Fibres and Netting businesses • Another good performance from Holiday Homes o Current year impacted by temporary slowdown in retail sales due to industry-wide over-supply o Signs of demand returning to more normalised levels Commenting on the results, David Bolton, Chairman said: "I am pleased to report another year of good progress for the Group. However, asforecast previously, the result for the current year will be held back by thesoftening in the holiday home market. Having achieved a satisfactory exit fromthe non-core Knox businesses, closed the loss-making retail concessions and theDistinctive Childrenswear fashion business, and managed a speedy recovery atCosalt:Ballyclare, the quality of the Group's earnings going forward isstrengthened." 1 February 2005 ENQUIRIES: Cosalt plc Tel: 020 7457 2020 (today)Bill Wood, Managing Director Tel: 01472 504504 (thereafter)Neil Carrick, Finance Director College Hill Tel: 020 7457 2020Mark Garraway Email: mark.garraway@collegehill.comMatthew Gregorowski Email: matthew.gregorowski@collegehill.com COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 CHAIRMAN'S STATEMENT INTRODUCTION I am pleased to report another year of good progress for the Group. Totalturnover for the 53 weeks ended 31 October 2004 increased to £154.68 million (52weeks to 26 October 2003 - £151.60 million). Turnover from continuingbusinesses increased to £145.37 million for the year ended 31 October 2004 (2003- £141.70 million). Profit before tax, excluding the amortisation of goodwill, exceptional items andlosses on discontinued activities, increased to £7.28 million, compared to £6.76million for the 52 weeks to 26 October 2003. This resulted in earnings pershare of 38.14p (2003 - 37.18p). Pre-tax profit of the Group, after charging theamortisation of goodwill, exceptional items and losses on discontinuedactivities, was £5.05 million (2003 - £6.00 million). Earnings per share,after goodwill, exceptional items and losses on discontinued activities, were27.74p (52 weeks to 26 October 2003 - 33.74p). These results reflect both the good progress made in the Group's principalactivities, in particular a strong recovery in Cosalt:Ballyclare following thedisappointing results in 2003, and the further rationalisation of the Group'sactivities. DIVIDENDS We are pleased to recommend a final dividend increased to 12.75p per ordinaryshare (2003 - 12.50p), making the total dividend for the year 18.75p, comparedwith 18.25p for the 52 weeks to 26 October 2003. The total dividend is coveredtwice by profits on continuing activities. CORE ACTIVITIES The Group's activities focus on two business areas; Industrial Services,comprising Safety & Protection, Workwear/Corporatewear and Schoolwear/Childrenswear, and Leisure Products, being our holiday home activities. Asdetailed in the Group Managing Director's Review, good progress has been made ineach of these areas. Turnover from continuing activities in Industrial Servicesincreased from £81.76 million to £83.53 million and its operating profits to£4.25 million (2003 - £4.00 million). Likewise, the turnover of LeisureProducts increased from £59.93 million to £61.84 million and its operatingprofits to £4.43 million (2003 - £4.25 million). We expect to make further progress during the coming year in the IndustrialServices businesses and we are reviewing the opportunity of pooling certain ofthe activities of the Cosalt:Ballyclare Workwear/Corporatewear business andBanner Schoolwear/Childrenswear. As we have previously announced, we anticipateweaker trading conditions in our Holiday Homes business in the first half ofthis year. DISPOSAL AND REORGANISATION In our pre-close period trading statement of 22 November 2004, we announced thesale of the Knox businesses and outlined other cost-saving initiatives atCosalt:Ballyclare and Childrenswear. Disposal of Knox Businesses The Board had, for some time, been seeking a way to exit from the non-core KnoxFibres and Netting businesses. The sale of part of the Knox Group site inAyrshire to Tesco Stores Limited earlier in the year for £1.2 million cash(realising a profit of £1 million, with proceeds being received in September)enabled this to take place in November, shortly after the year-end. The businesses were sold to the Knox management team for £3.35 million, of which£2.03 million was received in cash on completion. A further £1 million ofconsideration is deferred, with the issue to the Group of £750,000 8% RedeemablePreference Shares 2007-2012 and £250,000 8% Loan Notes 2007-2012. The balanceof £326,000 is payable shortly on the finalisation of completion accounts.Additionally, in the event that within the next six years the Knox managementteam sell all or part of the freehold of the Knox Group site, Cosalt willreceive 30% of the profit on sale, subject to a cap of £2 million. Prior to the sale of the Knox businesses, exceptional operating costs ofapproximately £1 million were incurred, arising largely from the strategicreview undertaken earlier in the year. Whilst these costs were higher thanoriginally anticipated, encompassing the impairment of the associated assets,the costs of preparing the business for sale and certain redundancy costs priorto sale, the Board is pleased with the outcome. Workwear/Corporatewear We outlined at the interim stage our strategy to improve customer service andexit from low margin business at Cosalt:Ballyclare. We have now effected asignificant re-organisation of this business, the exceptional cost of which, allincurred in the second half, was £600,000. I am pleased to say that thisinitiative has led to a significant increase in Cosalt:Ballyclare's operatingmargin. Childrenswear We also indicated in the interim statement that we were examining ways ofreducing the cost base of the Childrenswear activity. As a result, theDistinctive Childrenswear fashion business was closed in November 2004 and the19 Michael De Leon retail concessions will close early in 2005. The closure ofthese two business segments has resulted in exceptional costs of £786,000. ACQUISITION On 1 November 2004 the Group completed the acquisition of Aberdeen Inflatablesfor an initial cash consideration of £807,000. Further consideration of up to£300,000 will be payable dependent upon the operating performance of AberdeenInflatables for the period ending 30 October 2005. In the 13 months ended 31October 2004, Aberdeen Inflatables recorded a net profit, before tax, of£285,000. The acquisition of this marine safety business, based in Grimsby andAberdeen, further strengthens the Group's expertise and leading position in themarine safety market. FINANCE Cash generation has continued to be good, resulting in gearing at 31 October2004, in line with management expectations, at 37% (2003 - 58%). We haveadequate facilities and cash management continues to be a top priority. Further information on the key financial aspects of the Group is given in thereport of the Group Finance Director. MANAGEMENT, STAFF AND EMPLOYEES I would like to thank Bill Wood and his management team, together with allstaff, for their continued commitment to enhancing the level of service weprovide to our customers and to the success of the Cosalt Group. My thanks alsogo to Jim Traynor, Roger Dehany and the Knox management team for theircommitment over many years within the Group - I wish them every success in theirnew venture. OUTLOOK Fundamentally, the Group is in good order. However, as forecast previously, theresult for the current year will be held back by the softening in the holidayhome market. The Board believes that this is a temporary downturn, typical ofthe four to five year cyclical fluctuation experienced across the industry, andit is already seeing signs of an improvement in demand for the second half,albeit not at sufficient levels to make up the first half shortfall. The Group's performance is highly seasonal with a concentration of profits inthe second half. Since Cosalt Holiday Homes ordinarily accounts for the bulk ofprofits generated in the first half, it is expected that the result for the sixmonths to 1 May 2005 will be significantly lower than in the prior period. However, having achieved a satisfactory exit from the non-core Knox businesses,closed the loss-making retail concessions and the Distinctive Childrenswearfashion business, and managed a speedy recovery at Cosalt:Ballyclare, thequality of the Group's earnings going forward is strengthened. David BoltonChairman 31 January 2005 GROUP MANAGING DIRECTOR'S REVIEW OF OPERATIONS Overview The Group's activities focus on two business areas: Industrial Services andLeisure Products. A summary of their financial performance is set out below. 53 weeks ended 52 weeks ended 31 October 2004 26 October 2003 £m £m £m £mTurnoverIndustrial Services - continuing 83.53 cont. 81.77 - discontinued 9.31 92.84 discont. 9.90 91.67Leisure Products 61.84 59.93 154.68 151.60Operating profitIndustrial Services - continuing 4.25 cont. 4.00 - discontinued (0.31) 3.94 discont. 0.30 4.30Leisure Products 4.43 4.25 8.37 8.55Goodwill and exceptional itemsIndustrial - continuing (0.76) cont. (1.09) - discontinued (1.80) (2.56) discont. (1.09) Total operating profit 5.81 7.46Loss on disposal of business (0.23) (0.21)Profit on disposal of fixedassets 1.08 0.47 Profit before interest and tax 6.66 7.72 INDUSTRIAL SERVICES DIVISION Safety & Protection This business is involved in the manufacture, supply and servicing of marine andindustrial safety products and apparel, with the principal brands being Cosalt,Crewsaver, Yak and Perry. Whilst turnover increased in the 53 weeks to 31 October 2004 to £35.36 million(52 weeks to 26 October 2003 - £33.70 million), operating profits were slightlyreduced at £1.70 million (2003 - £1.88 million). Had it not been for lower than expected margins on a large fire systeminstallation, the profitability of this business would have continued its upwardprogression. Whilst this was an unexpected setback, as part of the Group'sre-organisation, the focus of the marine fire safety activity has beenstrengthened with the formation of a new central team, which will look tofurther increase market share in marine fire servicing across our UK branchnetwork. Good progress is being made in providing packages of marine safety equipment foroffshore projects and the level of activity in the defence market has been good.Additionally, Crewsaver, with its brand-leading lifejackets and safetyapparel, had another good year. The Safety & Protection business is widely spread geographically, offers a broadrange of products and services and operates principally in the marine market.The quality of management information is paramount in this type of business andI am pleased to see the recent implementation of a first-class IT system and theadoption of Key Performance Indicators to drive business improvement across thespectrum of activities. The acquisition, on 1 November 2004, of Aberdeen Inflatables, with businesses inAberdeen and Grimsby, further strengthens Cosalt's market leading position inmarine safety and we continue to appraise and seek other opportunities in thismarket. This, together with the strengthening of management in recent years,augers well for the future development of this business, albeit in anincreasingly competitive international environment. Workwear/Corporatewear Cosalt:Ballyclare designs, manufactures and procures high visibility protectiveclothing, high tech fire protection garments, image workwear and corporatewear,which it supplies to a wide range of markets, including motor dealerships, therail maintenance industry, the defence industry, regional fire brigades, policeforces and utility companies . Following the difficulties of the 2003 year, on which I reported in some detailtwelve months ago, we undertook a significant re-organisation of this businesswhich I am pleased to report has exceeded expectations in both the strength andspeed of its recovery. As a result, whilst turnover is very similar to that ofthe previous year at £27.48 million (2003 - £27.43 million), operating profitsincreased significantly to £1.22 million (2003 - £498,000). The management team has successfully exited most of its low margin contracts andnegotiated significant price increases in both the fire and defence markets.Additionally, there has been a marked improvement in customer service,notwithstanding that stock levels in the business have been reduced by over £4million. We have continued to develop our market leading position in supplying motordealerships and in the rail maintenance activity, where consolidation of theindustry has taken place under the control of Network Rail. Our two long-termsupply and management contracts in the fire market continue to operate well. We now have a strong management team in this business and whilst we anticipate aperiod of consolidation in the current year, several important new contractshave recently been won which will impact favourably on the 2005/06 year. Goingforward, we believe that this business will make an increasingly importantcontribution to the Group. Schoolwear/Childrenswear This activity, trading as Banner, Beau Brummel and Distinctive, is involvedprincipally in the manufacture, procurement and distribution of Schoolwear andChildrenswear, together with the supporting Menswear and Ladieswear businesses. Turnover of continuing activities in the 53 weeks to 31 October 2004 was £20.70million (52 weeks to 26 October 2003 - £20.63 million). Operating profits ofcontinuing businesses were £1.36 million (2003 - £1.68 million). The 2004 year has been challenging for the management teams of both Schoolwearand Childrenswear in a deflationary price environment. However, market sharehas been maintained, the supporting businesses of Menswear and Ladieswear aredoing better and the closure of the retail concessions and the loss makingDistinctive Childrenswear fashion business at North Shields, will result in alower risk operation going forward. The Distinctive Schoolwear brand is now being developed from within our Banner/Beau Brummel Schoolwear business. Schoolwear continues to be the principal business, with a market leadingposition supplying independent schools through specialist retailers. The outlookis promising, albeit in a highly seasonal activity. Fibres and Netting It was a difficult trading year for the Knox Group, resulting in an operatingprofit for the 53 weeks to 31 October 2004 of £60,000 (52 weeks to 26 October2003 - £526,000). As Shareholders will have read in the Chairman's Statement, we sold the non-coreKnox businesses to the Knox management team shortly after the end of thefinancial year on 22 November 2004. The catalyst for this disposal was thesale of part of the Kilbirnie freehold site to Tesco Stores Limited in May 2004. I enjoyed working with Jim Traynor, the Knox Group Managing Director, and hisable team but believe that their cyclical businesses, which have recently beenvery much on the periphery of Cosalt Group activities, are better suited toprivate ownership. I thank the team for their efforts and contribution over theyears and wish them well for the future. LEISURE PRODUCTS DIVISION Cosalt Holiday Homes This business designs and manufactures caravan holiday homes, leisure customhomes and residential park homes. Kingsform is a small business which makesbedroom and kitchen furniture, doors and panels for Cosalt Holiday Homes andother customers. Turnover for the 53 weeks to 31 October 2004 was £61.84 million, compared with£58.59 million in the 52 weeks to 26 October 2003. With a much improvedcontribution from the leisure custom homes activity in the 53 weeks to 31October 2004, operating profits increased to £4.43 million (2003 - £4.30million). As the Chairman outlined in the interim statement, and we reinforced in thetrading update of 22 November 2004, the holiday home market has been buoyant forseveral years but, as predicted, the retail market is showing signs of atemporary slowdown. As a result, Cosalt Holiday Homes, following another goodyear, is currently experiencing a more difficult trading environment. Whilst wehave concluded the 2004 season with stocks under control, the market has beenover-supplied resulting in higher levels of stock this winter in the hands ofdealers and park operators. This is a natural cyclical fluctuation and islikely to result in a temporary drop off in demand. We have, therefore, planned winter production of caravan holiday homes atreduced levels but anticipate that following a difficult first half, industrystocks will reduce in the spring and early summer months and production willreturn to previous levels. Looking forward, the market for our product remains buoyant and we expect areturn to normal levels of demand in the second half of this year. Forwardorders for leisure custom homes, where new parks continue to be developed, aregood. OUTLOOK The key strength of the Group is the way in which it is structured with a smallcentral team encouraging the very best of effort from loyal, motivated andcommitted teams of people across our activities. Prudent cash control andjudicious financial planning continue to be vital. Over the past few years the Group has seen some significant change which hasresulted in a more focused business with a much improved earnings profile. The2003-04 year has been challenging but the sale of the Knox Group,re-organisation of Cosalt:Ballyclare, the closure of our loss making retailconcessions and of the Distinctive Childrenswear fashion business has furtherenhanced the focus and balance of the Group. We continue to review the qualityof all the Group's businesses and, where appropriate, will take managementaction to ensure that the quality of earnings is strengthened still further. We have important and market leading brands in holiday homes, marine safety,fire protection, workwear and schoolwear. Whilst the coming year is going to bemore difficult in the caravan holiday home market, resulting in a higherconcentration of the Group's profits in the second half, with a combination ofthe drive and ambition of the Divisional teams and the disciplines imposed fromthe centre, I believe the Group will continue to make progress. Bill WoodGroup Managing Director 31 January 2005 FINANCE DIRECTOR'S REPORT PROFIT & LOSS ACCOUNT Turnover increased by 2% to £154.68 million in the year ended 31 October 2004,and by 2.6% excluding the turnover of discontinued operations. The operating profit, before charging goodwill and exceptional items, was down2.1% overall but excluding the operating losses of £307,000 on discontinuedoperations there was a 5.2% increase in the year to £8.68 million (2003 - £8.25million). Earnings per share, before charging goodwill and exceptional itemsand discontinued activities increased by 2.6% to 38.14p (2003: 37.18p). The profit and loss account has been presented in a columnar form over two pagesto show the impact of exceptional items and discontinued activities, and theunderlying performance of the Group separately. EXCEPTIONAL ITEMS The Cosalt:Ballyclare business incurred £600,000 of re-organisation andredundancy costs in the second half of the year, which was outlined by theChairman at the interim stage in 2004. These costs related to the exit from lowmargin business and as a large proportion of this related to stock write downsthere was little effect upon cash. There was a cost of £211,000 incurred on exiting an investment in Spain, whereprevious management had unsuccessfully attempted to expand the fire activity ofCosalt:Ballyclare in to Continental Europe. The sale of part of the Knox site to Tesco in September 2004 generated a profitof £1.08 million and £1.2 million of cash proceeds. DISCONTINUED ACTIVITIES As noted in the Group's pre-close period statement on 22 November 2004, the Knoxbusinesses were sold in November and the discontinuance of two segments ofbusiness was announced, being the Michael De Leon retail concessions and theDistinctive Childrenswear fashion business. £1 million of costs were incurredin preparing the Knox businesses for sale but a large proportion of thisinvolved the impairment in value of assets, which did not have cash implicationsin the second half of the year. The costs of discontinuing the other twobusinesses were £786,000 and in total discontinued activities produced anoperating loss of £307,000 in the year to October 2004, compared with anoperating profit in the 2003 year of £296,000. INTEREST The charge to the accounts for interest payable was £1.60 million (2003 - £1.71million). The interest charge has fallen as a result of the improved level of Groupborrowings during the year. Interest was covered six times by the profit on continuing activities beforecharging exceptional items. TAXATION The effective rate of taxation on continuing activities was 30.4% pre-goodwilland exceptional earnings. Taxation has been allowed for on the exceptionalcosts, where applicable, but the capital gains on the property profit should becovered by capital losses generated in earlier years. SHAREHOLDERS' RETURNS The earnings per share for the year on continuing activities, before chargingexceptional items and goodwill, were 38.14p, compared to 37.18p in the previousyear, with the FRS3 earnings per share 27.74p, compared to 33.74p last year. As a result of the performance from continuing activities and the strongcash-flow performance, the Directors have proposed a final dividend of 12.75p,resulting in a total dividend for the year of 18.75p, compared with 18.25p lastyear - a 2.7% increase. If the final dividend is approved at the AnnualGeneral Meeting, the total cost of this year's ordinary dividend will amount to£2.49 million. The dividend is twice covered by profits on continuingactivities before charging exceptional items. CASH FLOW AND BORROWINGS Cash generation from operating activities was £13.3 million for the year (2003 -£3.8 million). A very strong working capital reduction in Cosalt:Ballyclare, where over £5million was generated from the reduction in stock and debtors, has contributedto a significant improvement in the Group's borrowings. This, coupled with thenormal level of cash generated from the Group's activities, has resulted inGroup gearing falling to 37% at 31 October 2004, compared to 58% at 26 October2003. PENSIONS The FRS17 deficit has increased slightly this year to £8.09 million (2003 -£7.58 million) after deferred tax credit. This increase is due largely to thereduction in gilt yields, which has increased liabilities, and is despite animprovement in the valuation of the Scheme's assets. The FRS17 figures are shown in the Notes to the Accounts this year, and theGroup has used SSAP24 for the accounting figure. Profit and loss account charges on both bases have been similar in each of thelast two years. The Board has decided to fully adopt FRS17 a year early from the start of theOctober 2005 financial year in order to provide some stability in the profit andloss account charge for the future. This will, however, result in the deficitin the Scheme being included in the Group's balance sheet which will thereforebe subject to valuation fluctuations and potential volatility in the future. A new actuarial valuation is being prepared as at 31 December 2004. The DefinedBenefits Plan was closed to new members in 2000. Pensionable salaries have beenfrozen for three years from April 2002, and a further reduction in future earlyretirement benefits was implemented in April 2003, at which date employedmembers' contributions were increased significantly. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) The Group will adopt IFRS for the year to October 2006. Analysis of thedifferences between these Reporting Standards and the current UK GAAP indicatesthat the areas of pensions, intangible fixed assets, share based payments andforeign exchange hedging activities are likely to have the greatest impact onthe Group accounts. TREASURY MANAGEMENT The Group's operations are primarily financed from retained earnings, bankoverdrafts, leasing and longer term loans. It is the Group's policy not to tradein or enter into speculative transactions. Debt is principally raised centrally and the Group aims to maintain a balancebetween flexibility and continuity of funding by having a range of maturities onits borrowings. Flexibility is provided by overdrafts and debtor financingwhich, due to the seasonal nature of many of its businesses, fulfils arequirement for significant short-term funding for these seasonal peaks. TheGroup's policy is to maintain a mixture of floating and fixed rate borrowings.Although the Group does not have significant sales in foreign currency, there isan increasing amount of purchases made in foreign currency. The Group's policyis to eliminate currency exposure by the use of forward currency contracts. The acquisition of SEET plc in April 2001 substantially increased the Group'sborrowings and in order to provide protection against significant interest raterises in the future, the Board decided at that time to purchase a cap to coverthe consideration money on the SEET purchase of £6.3 million, plus an element ofcore borrowings of £4 million. The amount covered by the cap reduces in line with the repayments on themedium-term loan. A floor transaction was taken out at the same time and on thesame basis in order to minimise the up-front premium for this cover. The weighted average interest rate on the fixed rate borrowings during the yearwas 5.62%, with an average maturity period of 2 years 2 months. Interest onfloating rate liabilities is based on bank base rate or LIBOR. The interestrate cap is at 6.75% and the floor at 4.98% - both mature in May 2008. At the end of the year, the Company had £17.5 million of undrawn facilitiesrelating to bank overdrafts and £3.5 million relating to an amortising revolvingcredit. BALANCE SHEET The Group balance sheet has been strengthened in the year with the addition of£1.2 million of retained profits. The net asset value per share at October 2004 was 249p. Neil CarrickGroup Finance Director 31 January 2005 Consolidated Profit and Loss Account 53 weeks ended 31 October 2004 Continuing activities Before Goodwill Total Discontinued Group Total goodwill amortisation activities amortisation and and exceptional exceptional items items £000s £000s £000s £000s £000s Turnover 145,371 - 145,371 9,314 154,685Operating Profit/(loss)Operating profit before /(loss)before goodwill amortisation andexceptional items 8,676 - 8,676 (307) 8,369Goodwill amortisation - (163) (163) - (163)Reorganisation, Redundancy andimpairment costs - (600) (600) (1,797) (2,397) Total operating profit/(loss) 8,676 (763) 7,913 (2,104) 5,809Loss on disposal of business - (228) (228) - (228)Profit on disposal of fixed assets - 1,075 1,075 - 1,075Profit on ordinary activitiesbefore interest 8,676 84 8,760 (2,104) 6,656Interest payable and similar - (1,396) (208) (1,604)charges (net) (1,396)Profit/(loss) on ordinaryactivities before taxation 7,280 84 7,364 (2,312) 5,052Taxation on ordinary activities (2,213) 185 (2,028) 663 (1,365)Profit/(loss) after taxation 5,067 269 5,336 (1,649) 3,687Preference dividends (4) - (4) - (4)Profit/(loss) attributable toordinary shareholders 5,063 269 5,332 (1,649) 3,683Ordinary dividends paid andproposed (Equity shares) (2,491) - (2,491) - (2,491)Retained profit/(loss) 2,572 269 2,841 (1,649) 1,192 Basic earnings per ordinary share 38.14p 27.74pDiluted earnings per ordinary share 37.97p 27.62pDividend per share 18.75p 18.75p There are no recognised gains and losses other than the profit for the period. There is no material difference between the profit on ordinary activities beforetaxation and the retained profit for the year stated above and the historicalcosts equivalents. Consolidated Profit and Loss Account 52 weeks ended 26 October 2003 Continuing activities Before Goodwill Total Discontinued Group Total goodwill amortisation activities amortisation and and exceptional exceptional items items £000s £000s £000s £000s £000s Turnover 141,698 - 141,698 9,905 151,603Operating Profit/(loss)Operating profit before /(loss)before goodwill amortisation andexceptional items 8,250 - 8,250 296 8,546Goodwill amortisation - (152) (152) - (152)Reorganisation, Redundancy andimpairment costs - (930) (930) - (930) Total operating profit/(loss) 8,250 (1,082) 7,168 296 7,464Loss on disposal of business - (215) (215) - (215)Profit on disposal of fixed - 468 468 - 468assets Profit on ordinary activitiesbefore interest 8,250 (829) 7,421 296 7,717 Interest payable and similar (1,492) - (1,492) (223) (1,715)charges (net) Profit/(loss) on ordinary activities before taxation 6,758 (829) 5,929 73 6,002 Taxation on ordinary activities (2,047) 343 (1,704) (22) (1,726) Profit/(loss) after taxation 4,711 (486) 4,225 51 4,276Preference dividends (4) - (4) - (4) Profit/(loss) attributable to 4,707 (486) 4,221 51 4,272ordinary shareholdersOrdinary dividends paid and Proposed (Equity shares) (2,383) - (2,383) - (2,383)Retained profit/(loss) 2,324 (486) 1,838 51 1,889 Basic earnings per ordinary share 37.18p 33.74pDiluted earnings per ordinary 37.00p 33.58pshareDividend per share 18.25p 18.25p There are no recognised gains and losses other than the profit for the period. There is no material difference between the profit on ordinary activities beforetaxation and the retained profit for the year stated above and the historicalcosts equivalents. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 Consolidated Balance Sheet 31 October 2004 26 October 2003 £000s £000s £000s £000sFixed assets Intangible assets - goodwill 2,740 2,974Tangible fixed assets 18,201 18,408 20,941 21,382Current assets Stocks 25,673 25,325Debtors 32,144 35,165Bank and cash balances 1,743 467 59,560 60,957 CreditorsAmounts falling due within one year 40,832 41,269 Net current assets 18,728 19,688Total assets less current liabilities 39,669 41,070 CreditorsAmounts falling due after more than one year 4,413 7,413 35,256 33,657 Provisions for liabilities and charges 2,027 1,644 Deferred income: Grants not yet credited to profit 150 2,177 173 1,817Net assets 33,079 31,840 Capital and reservesCalled up share capital 3,369 3,363Share premium account 4,547 4,506Revaluation reserve 443 443Investment property revaluation reserve 67 67Other reserves 1,148 1,148Profit and loss account 23,505 22,313Shareholders' funds 33,079 31,840(including non-equity interests) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 Consolidated Cash Flow Statement 53 weeks ended 52 weeks ended 31 October 2004 26 October 2003 £000s £000s £000s £000s Net cash inflow from operating activities 13,291 3,843 Returns on investments and servicing of financeInterest paid (1,604) (1,576)Interest received 27 21Interest element of finance lease payments (70) (95)Non-equity dividends paid (4) (4) (1,651) (1,654)TaxationCorporation tax paid (1,610) (1,539) Capital expenditure and financial investmentGovernment grants - 67Purchase of tangible fixed assets (3,667) (2,239)Sale of tangible fixed assets 2,586 436 (1,081) (1,736) Acquisitions and disposals (15) (1,692) Equity dividends paid (2,456) (2,223) Net cash inflow/(outflow) before use of financing 6,478 (5,001)Financing:New loan 41 --Issue of share capital 47 2,370Issue of loan notes - 338New bank borrowings - 3,200Repayment of bank and other borrowings (2,383) (1,626)Capital element of finance lease rental payments (647) (716) (2,942) 3,566Increase/(decrease) in cash 3,536 (1,435) Reconciliation of net cash flow tomovement in net debt Increase/(decrease) in cash 3,536 (1,435)Cash outflow/(inflow) from decrease/(increase)in debt and lease financing 2,989 (1,196) Change in net debt from cash flows 6,525 (2,631)Finance leases on acquisition ofsubsidiary undertakings - (21)Arrangement fees amortised (19) (19)Inception of new finance leases (320) (418) Movement in net debt in year 6,186 (3,089)Net debt as at 26 October 2003 (18,468) (15,379)Net debt as at 31 October 2004 (12,282) (18,468) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 The turnover and results of the main activities were as follows: 2004 2003Turnover £000s £000s Industrial Services 92,845 91,667Leisure Products 61,840 59,936 154,685 151,603Profit on ordinary activities before interest Industrial Services Operating profit before exceptional items 3,936 4,302Exceptional items (2,397) (930)Goodwill amortisation (163) (152)Operating Profit 1,376 3,220Loss on disposal of business (211) -Profit on disposal of fixed asset 1,075 74Total Industrial Services 2,240 3,294 Leisure Products Operating profit before exceptional items 4,433 4,244Loss on disposal of business (17) (215)Profit on disposal of fixed asset - 394Total Leisure Products 4,416 4,423 Profit on ordinary activities before interest 6,656 7,717 Operating assets The operating assets of the main activities at 31 October 2004 were as follows: Operating capital employed 2004 2003 £000s £000s Industrial Services 30,645 36,032Leisure Products 16,138 13,091 46,783 49,123Non-operating assets and liabilities* (2,467) (187)Net borrowings (11,237) (17,906)Total net assets 33,079 31,840 * Non-operating assets and liabilities principally represents investmentproperties, taxation, dividends and finance leases. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 Reconciliation of operating profit to cash flow from operating activities 2004 2003 £000s £000s Operating profit 5,809 7,464Depreciation 2,564 2,628Impairment 816 -Amortisation of goodwill 163 152Capital grants income release (23) (33)Increase in stocks (397) (3,309)Decrease/(increase) in debtors 3,302 (1,629)Increase / (decrease) in creditors 917 (1,063)Increase / (decrease) in provisions 140 (367)Net cash inflow from operating activities 13,291 3,843 Analysis of changes in net debt At 26 October 2003 Cash Flows Other At 31 October 2004 Non Cash Changes £000s £000s £000s £000s Cash in hand and at bank 467 1,276 - 1,743Overdrafts (4,207) 2,031 - (2,176)Advances due within one year (5,134) 229 - (4,905) (8,874) 3,536 - (5,338) Debt due within one year (1,596) 2,375 (2,946) (2,167)Debt due after one year (6,626) (33) 2,927 (3,732)Finance leases (1,372) 647 (320) (1,045)Total (18,468) 6,525 (339) (12,282) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-THREE WEEKS ENDED 31 OCTOBER 2004 Notes to the Accounts 1. The financial information set out above does not constitute the Company's statutory accounts for the 53 weeks ended 31 October 2004 or 52 weeks ended 26 October 2003 but is derived from those accounts. Statutory Accounts for 2003 have been delivered to the Registrar of Companies, and those for 2004 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. Full accounts for Cosalt plc for the period ended 31 October 2004 will be sent to shareholders during March 2005 and will be available after that time from the Company Secretary, Cosalt plc, Fish Dock Road, Grimsby, North East Lincolnshire DN31 3NW. Copies of this announcement are available from the same address and both the accounts and this announcement will be available on the Company's website www.cosalt.plc.uk. 2. The figures of basic earnings per share are calculated on the profit attributable to ordinary shares of £3,683,000 (2003: £4,272,000), divided by the average number of shares in issue during the period, being 13,274,989 (2003: 12,660,543). For diluted earnings per share, the weighted average number of ordinary shares is adjusted for the dilutive effect of potential ordinary shares. The Group has only one category of dilutive potential ordinary shares which is that of share options granted to employees. Those options which have an exercise price which is less than the daily average mid-market price of the Company's ordinary shares during the period are considered dilutive. 31 October 2004 26 October 2003 Weighted average number of shares in issue 13,274,989 12,660,543Weighted average number of dilutive share options 59,032 61,656Total number of shares for calculating diluted earnings pershare 13,334,021 12,722,199 3. A final dividend of 12.75p per share is proposed and if approved will be payable on 6 April 2005 to shareholders on the register on 18 March 2005, absorbing £2,491,000. 4. This preliminary announcement was approved by the Board on 31 January 2005. This information is provided by RNS The company news service from the London Stock Exchange