CSLT.L Regulatory News (CSLT)

31 Jan 2006 07:00

Cosalt PLC31 January 2006 Cosalt plc("Cosalt" or "the Group") Preliminary Results for the fifty-two weeks ended 30 October 2005 Cosalt, a market leading manufacturer and supplier of Industrial Services,Safety and Leisure Products, announces preliminary results and a maintaineddividend reflecting confidence of a substantial recovery in 2006. Financial Highlights • Turnover from continuing activities of £117.64m (2004: £145.37m)* • Profit before tax from continuing activities of £1.03m (2004: £7.20m)* • Earnings per share from continuing activities of 4.35p (2004: 37.40p)* • Full year dividend maintained at 18.75p *excluding exceptional items and goodwill Operational Highlights • Decisive management actions already delivering results: o New production systems at Holiday Homes to significantly improve flexibility and reduce cost o Integration of Cosalt:Ballyclare and Banner businesses completed on schedule o Sales approach across UK marine and industrial safety markets more focused and team strengthened • New exclusive three year contract with Network Rail • Internal strategic review underway to improve focus and scale John Kelly, Chairman, commented: "The excellent response of the management team has mitigated the impact of moredifficult trading circumstances and provided a platform for recovery. Inaddition, the Board has decided to undertake a strategic review to improve thefocus and scale of the Group. We anticipate a substantial improvement overallin 2006, particularly in the traditionally stronger second half of our financialyear." 31 January 2006 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-TWO WEEKS ENDED 30 OCTOBER 2005 CHAIRMAN'S STATEMENT INTRODUCTION Total turnover for the 52 weeks ended 30 October 2005 was £119.01 million,compared with £154.68 million for the 53 weeks to 31 October 2004. Turnoverfrom continuing businesses reduced to £117.64 million (2004 - £145.37 million).Profit before tax, excluding the amortisation of goodwill, exceptional items andlosses on discontinued activities, was £1.03 million (2004 - £7.20 million).This resulted in earnings per share of 4.35p (2004 - 37.40p). The pre-tax lossof the Group, after charging the amortisation of goodwill, exceptional items andlosses on discontinued activities, was £1.15 million (2004 - profit £4.97million). Earnings per share after goodwill, exceptional items and losses ondiscontinued activities were negative at 7.72p (2004 - 27.01p). These results largely reflect the difficulties experienced in the caravanholiday homes market and reduced and delayed orders at Cosalt:Ballyclare; bothof which we outlined to Shareholders in our trading update on 27 September 2005. DIVIDENDS Whilst 2005 has been a difficult year, the Group's prospects are improvingfollowing decisive management action taken during the year. The Board istherefore pleased to recommend an unchanged final dividend of 12.75p perordinary share resulting in the total dividend for the year being maintained at18.75p. FINANCE We have continued to manage our cash well and notwithstanding a much reducedlevel of profitability, gearing at 30 October 2005 was in line with managementexpectation at 44% (2004 - 37%). We have adequate facilities and themanagement of cash and working capital continues to be well disciplined.Further information on the key financial aspects of the Group is given in thereport of the Group Finance Director. RE-ORGANISATION AND EXCEPTIONAL COSTS Total exceptional costs on continuing activities incurred during the year to 30October 2005 were broadly in line with previous estimates at £1.95m. Holiday Homes Trading in our holiday homes business was adversely affected by the industry'sover-production in 2004, linked to declining consumer confidence and a markedshift in demand to the lower priced economy sector of the market. Management has carried out an in-depth review of our manufacturing operation,with the assistance of a leading global management consultancy firm. A numberof major changes have been implemented including the replacement of the previouspiecework payment system with team working, the introduction of multi-skillingand the creation of a more flexible small batch production unit. Unit costshave been reduced and we expect that the seasonal requirement for additionalworking capital will be less pronounced in the future. The cost of thisre-organisation was £825,000 but we are already benefiting from efficiencyimprovements. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 CHAIRMAN'S STATEMENT (CONT'D) Cosalt:Ballyclare/Banner I am pleased to report that the carefully planned integration of these twobusinesses has been completed recently on time. The buildings in Athertonhousing Cosalt:Ballyclare's administration, design and warehouse functions havebeen sold and staff relocated to the Banner premises in Stockport. Schoolwearproduction in the north-east of England has been scaled back to facilitatefurther overseas procurement, the warehousing function has been rationalised andmechanised and administration and I.T. functions are being co-ordinated. Whilstthis has resulted in exceptional costs of £628,000, these measures will reducethe cost base by more than £500,000 per annum. The sale of the Athertonfreehold was completed on 27 January 2006, resulting in a cash inflow of £1.20million and an exceptional profit of £270,000 which will be included in the 2006interim accounts. Other Exceptionals The balance of £497,000 charged as an exceptional item relates to theself-insurance excess resulting from two separate fires caused by arson, therationalisation of the branch structure in the Safety & Protection business andthe write-off of assets in a Spanish venture. ACQUISITION The marine safety business, Aberdeen Inflatables, acquired on 1 November 2004,with bases in both Aberdeen and Grimsby, contributed a pre-tax profit of£379,000 to the Safety & Protection activity. Initial consideration of £807,000 was paid on completion, with an additionalfinal consideration of £258,000, to be paid shortly, based on the operatingperformance in the year to 30 October 2005. REVIEW OF ACTIVITIES Over the past few years the Board has sought to rationalise the Group'sactivities, both through the disposal of non-core activities and the acquisitionof complementary businesses, to gain scale and improve Shareholder value. TheBoard has decided to conduct an internal strategic review to examine how best tocontinue this process and we expect further progress to be made in this regardduring the coming year. OUTLOOK The excellent response of the management team has mitigated the impact of moredifficult trading circumstances and provided a platform for recovery. Weanticipate a substantial improvement overall in 2006, particularly in thetraditionally stronger second half of our financial year. John KellyChairman 30 January 2006 COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 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. 52 weeks ended 53 weeks ended 30 October 2005 31 October 2004 £m £m £m £mTurnoverIndustrial Services - continuing 71.98 cont. 83.53 - discontinued 1.36 73.34 discont. 9.31 92.84Leisure Products 45.67 61.84 119.01 154.68Operating profit/(loss)Industrial Services - continuing 3.93 cont. 4.47 - discontinued 0.06 3.99 discont. (0.31) 4.16Leisure Products (1.06) 4.55 2.93 8.71 Goodwill and exceptionalitemsIndustrial - continuing (2.04) cont. (0.76) - discontinued - (2.04) discont. (1.80) (2.56) Total operating profit 0.89 6.15Loss on disposal of business (0.17) (0.23)(Loss)/profit on disposal offixed assets (0.01) 1.08 Profit before interest andtax 0.71 7.00 INDUSTRIAL SERVICES DIVISION Safety and Protection This business is involved in the manufacture, supply and servicing of marine andindustrial safety products and apparel - the principal brands being Cosalt,Crewsaver, Yak and Perry. Whilst turnover was lower in the 52 weeks to 30 October 2005 at £33.94 million(53 weeks to 31 October 2004: £35.36 million) operating profits increased to£2.20 million (2004: £1.88 million). The 2005 figures included a full year of trading from Aberdeen Inflatables,acquired on 1 November 2004. This business has been successfully incorporatedinto Group activities with pleasing results in the first year - turnover of£1.35 million generating an operating profit of £374,000. The year was particularly difficult with a lower level of activity generally inthe areas of the provision of lifejackets for cruise ship new-builds, offshoreprojects and defence, although we remain confident that we have maintained ourstrong market share. We have first-rate IT systems in place enabling the business to driveimprovement with the adoption of key performance indicators. The branch networkis being further rationalised and with a recently strengthened sales team thesales approach across the UK marine and industrial safety markets is becomingmore focused. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 GROUP MANAGING DIRECTOR'S REVIEW OF OPERATIONS (CONT'D) Looking forward, we expect to benefit from legislation which comes into effectin July 2006 requiring commercial cargo vessels to be equipped with immersionsuits, of which Cosalt is one of the leading producers. We are appraising a number of complementary acquisitions in the marine safetymarket, both at home and abroad. Safetywear and Protective Clothing 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 the rail maintenanceindustry, the defence industry, regional fire brigades, police forces, utilitycompanies and motor dealerships. Turnover for the 52 weeks to 30 October 2005 was reduced at £18.39 millioncompared with £27.48 million for the 53 weeks to 31 October 2004. Operatingprofits reduced to £633,000 (2004: £1.26 million). Over £2 million of the reduction in turnover arises from management action towithdraw from unprofitable contracts and over £3 million was as a result of theprevious year being boosted by the roll out of new garments to over 14,000Network Rail staff. Turnover was also impacted by delays to and reductions in anumber of orders expected during the year. As the year progressed management renewed 32 major contracts, secured businesswith eight new customers and lost only three. I am also pleased to announce that we have recently been awarded a new threeyear contract by Network Rail to supply high visibility protective garments onan exclusive basis. Volumes with Tarmac and the Environment Agency are gainingcritical mass and new business is being developed with De Walt and the MOD inboth the UK and mainland Europe. The two long-term management contracts in the fire market continue to operatewell. Prospects for recovery, building on a sounder base, are encouraging. Schoolwear and Childrenswear This activity, trading as Banner, Beau Brummel and Distinctive, is involvedprincipally in the manufacture, procurement and distribution of Schoolwear andChildrenswear, together with supporting Menswear and Ladieswear businesses. Turnover was slightly lower in the 52 weeks to 30 October 2005 at £19.64million, compared with £20.70 million in the 53 weeks to 31 October 2004.Operating profits reduced to £1.10 million from £1.36 million in 2004. As outlined in the trading update on 27 September 2005, sales in the important 'back to school' period for schoolwear were similar to the previous year and webelieve that we have maintained our significant market share with our leadingbrands. Looking forward, early 2006 season orders for schoolwear are ahead of last yearand the spring/summer order book for the supporting businesses is satisfactory. Following the recent downsizing of the UK manufacturing base in the north eastof England, facilitating additional overseas procurement, the prospects for animproved performance from these businesses are good. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 GROUP MANAGING DIRECTOR'S REVIEW OF OPERATIONS (CONT'D) LEISURE PRODUCTS DIVISION Cosalt Holiday Homes This business designs and manufactures caravan holiday homes, leisure customhomes and residential park homes. It also operates Kingsform, a small businessmaking bedroom and kitchen furniture, doors and panels for Cosalt Holiday Homesand other customers. Turnover for the 52 weeks to 30 October 2005 was £45.67 million, compared with£61.84 million for the 53 weeks to 31 October 2004. The business has incurredan operating loss of £1.06 million in 2005, compared with an operating profit of£4.55 million in the year to October 2004. The result at the operating level deteriorated in spite of Cosalt Custom Homesachieving an improved operating profit - up from £1.02 million last year to £1.26 million in 2005. As previously reported, our caravan holiday homes business has been impacted byindustry- wide issues. The four years leading up to 2004 were buoyant, but ageneral over-capacity in manufacturing led to a large carry-over of stock intothe 2005 season and trading has been affected by declining consumer confidenceand a shift in demand towards the lower priced economy ranges. During the 2005 season Cosalt Holiday Homes has focused on its levels of workingcapital and has achieved a significant reduction in stock. At the same time, asthe Chairman outlines in his report, with the help of a leading globalmanagement consultancy firm, we have achieved cost savings and developed a moreflexible production system in the caravan holiday homes factory. Additionally,the product range has been revitalised and better aligned with current markettrends. We enter the 2006 season with a strong order book for the traditional winterhire fleet business and are in a much fitter position overall. Whilst it maybe another year before we begin to see a recovery in the overall market weexpect a much better result in the full 2006 year. Whilst the Custom Homes business has made a vital contribution to Group profitsin 2005, this sector is also being affected by declining consumer confidence anddelays in new park developments. Consequently, the volume of production islikely to be down on that achieved in 2005. OUTLOOK 2005 has been a difficult and testing year for the Cosalt management team.Looking ahead however and despite difficulties in the caravan holiday homesmarket, we face 2006 in better shape overall. We have managed the Group's cash resources well; we have reduced costs atHoliday Homes and developed a more flexible leading edge production unit and wehave planned and executed the integration of Cosalt:Ballyclare and Banner withreduced UK production capacity, better overseas procurement, more effectivewarehousing and logistics and lower cost administration. Notwithstanding that the trading environment continues to be challenging, wehave continued to develop market leading brands in marine safety, safetywear,holiday and custom homes and schoolwear and I am confident of a substantialrecovery in the Group's performance in 2006. Bill WoodGroup Managing Director 30 January 2006 COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 FINANCE DIRECTOR'S REPORT PROFIT & LOSS ACCOUNT Turnover fell in the year ended 30 October 2005 to £119.01 million, comparedwith £154.68 million for the year ended 31 October 2004. This turnover includes£1.35 million from Aberdeen Inflatables acquired on 1 November 2004 and £1.36million (2004: £9.31 million) from discontinued activities, being the Knoxbusinesses, sold on 22 November 2004, the Michael De Leon retail concessions andthe Distinctive Childrenswear fashion business, which ceased trading early inthe financial year. The operating profit, before charging goodwill and exceptional items andincluding £374,000 from acquisitions, was £2.87 million, compared with £9.02million for the year ended 31 October 2004. A small operating profit wasachieved on discontinued activities of £62,000, compared with a loss of £307,000for the year ended 31 October 2004. The profit and loss account has been presented in a columnar form over two pagesto show the impact of exceptional items, acquisitions, discontinued activitiesand the underlying performance of the Group separately. EXCEPTIONAL ITEMS The significant downturn in the Holiday Homes business led to substantialredundancy and reorganisation costs of £825,000. Further redundancies andre-organisation costs of £628,000 were also incurred on the integration of theBanner and Cosalt:Ballyclare businesses and the reduction in its UKmanufacturing capacity. The Group incurred £200,000 of insurance excess on two separate fires caused byarson during the year. A further £200,000 was incurred on the restructuring of the Safety andProtection branch network. In total, exceptional items charged to operating profit were £1,853,000. A loss of £97,000 on continuing activities was also incurred on the write-off ofassets unrecoverable following the exit from an investment in Spain where we hadattempted to expand the fire activity of Cosalt:Ballyclare into mainland Europe. Losses of £72,000 and £11,000 were incurred on the sale of the discontinued Knoxbusiness and its associated land and buildings respectively. INTEREST The charge to the accounts for interest payable was £1.50 million (2004 - £1.60million). As a result of the significant reduction in operating profits the Group'sinterest was covered slightly less than twice by profits on continuingactivities before exceptional items compared to a figure of six times for theyear to 31 October 2004. TAXATION The effective rate of taxation on continuing activities was 43.6% pre-goodwilland exceptional items. This is higher than normal as much of the expendituredisallowable for taxation is unaffected by the Group's reduced level ofprofitability. Taxation relief has been allowed for on the exceptional costs,where applicable, and consequently the Group should be able to recover some ofthe taxation paid in the previous year. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 FINANCE DIRECTOR'S REPORT (CONT'D) SHAREHOLDERS' RETURNS The earnings per share for the year on continuing activities, includingacquisitions but before charging exceptional items and goodwill, were 4.35p,compared to 37.40p in the previous year, with the FRS3 figures showing a loss of7.72p per share, compared to earnings of 27.01p last year. As reported in the Chairman's Statement, the Board is recommending a finaldividend of 12.75p, resulting in the total dividend for the year being held atlast year's level of 18.75p. 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. Due to the loss incurred after charging exceptional items, thedividend will be paid out of accumulated reserves. CASH FLOW AND BORROWINGS Cash generation from operating activities was £4.6 million for the year (2004:£13.3 million). Notwithstanding the significant shortfall in profitability in the year and theacquisition of Aberdeen Inflatables, working capital has been reduced,particularly in Holiday Homes as a result of stock realisation. In addition,the sale of the Knox businesses and assets realised £2.3 million in November2004. Consequently Group borrowings were maintained at a similar level, being£12.8m, (44% gearing), compared to £12.3m (37% gearing) at 31 October 2004. PENSIONS During the year the Group has adopted Financial Reporting Standard 17(Retirement Benefits) (FRS17). As this is a change in accounting policy it hasnecessitated the restatement of comparative figures and a prior year adjustmentbeing a reduction of £8.431m in accumulated profits at 31 October 2004. The cost of the Group Defined Benefit Plan in the profit and loss account underthe new Accounting Standard is charged partly against operating profit andpartly as other finance charges. The most significant effect on the Groupaccounts is that the pension scheme deficit, as measured by FRS17, less theassociated deferred taxation, is shown as a deduction from net assets on theGroup balance sheet. FRS17 and IAS19 (the International Accounting Standard onretirement benefits which the Group will be required to adopt for the year toOctober 2006) both adopt a market value driven approach to asset valuations andliability measurement and consequently there is likely to be significantvolatility in the balance sheet figure for pensions in the future. The FRS17 deficit has increased during the year by almost £1.4m to £9.4m afterallowing for related deferred taxation. Scheme liabilities have increased bothas a result of a fall in long-term interest rates and increased longevity ofscheme members. These have been partly offset by improved asset valuationsduring the year. The Group closed the Defined Benefits Plan to new entrants in 2000 andpensionable salaries were frozen for three years from April 2002. In addition,a reduction in early retirement benefits was implemented in April 2003, at whichdate employed members' contributions were increased significantly. The latest actuarial valuation, as at 31 December 2004, showed a funding deficitof £12.4m, and the Company and Trustees have provisionally agreed a new scheduleof contributions commencing in January 2006, which will result in the Companycontributing 12.4% of pensionable salaries, plus £1.12m per annum increasingeach year in line with inflation, compared to the previous 10%, plus £818,000per annum. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) The Group will adopt IFRS for the year to October 2006. All IFRS requirementshave been reviewed in detail to assess their likely impact on the Group'sreported results, and processes put in place to collect the necessary data andprepare the transitional balance sheet as at 1 November 2004. The results forthe year ended 30 October 2005 are also being compiled in the IFRS format. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 FINANCE DIRECTOR'S REPORT (CONT'D) It is not possible to assess with certainty all of the effects on the Groupresults for the future, as a number of standards require market-based valuationat the corresponding balance sheet date. This is likely to lead to greatervolatility in the reported figures. We believe the major areas of impact on the Group are: • Retirement Benefit Accounting (IAS19) Although the calculations are slightly different from FRS17, the market value approach to valuation and the inclusion of the deficit on the balance sheet is the same under IFRS and consequently, the effects will be similar to those adopted this year, although the potential for significant volatility remains. • Share Based Payments (IFRS2) The income statement will include a notional annual charge based on the fair value of awards made to employees. This charge is not expected to be material. • Goodwill The carrying value of capitalised goodwill will be subject to an annual impairment review but there will be no periodic amortisation. The charge for goodwill amortisation in the year to October 2005 was £188,000. • Intangible Assets IAS38 requires that I.T. software that is distinct from any associated hardware be re- classified from tangible assets to intangible assets on transition. • Proposed Dividend Under IAS10 dividends will now only be accounted for when declared and consequently the proposed final dividend accrual for the year to October 2005 will be reversed and recorded in the consolidated IFRS accounts in 2006, after it has been approved by the shareholders at the Annual General Meeting. • Financial Instruments - (IAS39) Forward foreign exchange contracts and interest rate products will be measuredat fair value at the balance sheet date and any adjustments which are notcovered by hedge accounting will be taken to the income statement. These itemstherefore have the potential to create a certain amount of volatility in thefuture. 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 totrade in 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. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 FINANCE DIRECTOR'S REPORT (CONT'D) 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 5.55%, with an average maturity period of 2 years. Interest on floatingrate liabilities is based on bank base rate or LIBOR. The interest rate cap isat 6.75% and the floor at 4.98% - both mature in May 2008. At 30 October 2005, the Company had £15.5 million of undrawn facilities relatingto bank overdrafts and short term facilities. BALANCE SHEET As a result of the losses incurred during the year and the dividend to be paidout of reserves, the Group's balance sheet value has reduced by £3.5 millionduring the year. In addition, adoption of FRS17 has resulted in the Grouppension deficit, less associated deferred taxation of £9.4 million, beingdeducted from net assets. The net asset value per share before the pensionsdeficit at 30 October 2005 was 218p (2004 - 247p) and including the deficit 147pper share (2004: 186p). Post Balance Sheet Events The Atherton premises of Cosalt:Ballyclare were sold on 1st November 2005.Proceeds of £1,200,000 were received on 27 January 2006 and this generated anexceptional profit of £270,000, which will be disclosed in the Group's resultsfor the six months to April 2006. Neil CarrickGroup Finance Director 30 January 2006 COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 Consolidated Profit and Loss Account 52 weeks ended 30 October 2005 Continuing activities Before goodwill Goodwill amortisation and amortisation and Discontinued exceptional items exceptional items activities Group total Total £000s £000s £000s £000 £000s TurnoverContinuing activities 116,292 - 116,292 - 116,292Acquisitions 1,353 - 1,353 - 1,353Discontinued activities - - - 1,364 1,364 117,645 - 117,645 1,364 119,009 Operating profit/(loss) Operating profit/(loss) beforegoodwill amortisation andexceptional itemsContinuing activities 2,494 - 2,494 - 2,494Acquisitions 374 - 374 - 374Discontinued activities - - - 62 62 2,868 - 2,868 62 2,930Goodwill amortisation - (188) (188) - (188)Reorganisation, redundancy andimpairment costs - (1,853) (1,853) - (1,853) Group operating profit/(loss) 2,868 (2,041) 827 62 889Loss on disposal of businesses - (97) (97) (72) (169)Profit on disposal of fixed assets - - - (11) (11) Profit/(loss) on ordinaryactivities before interest 2,868 (2,138) 730 (21) 709 Interest payable and similarcharges (net) (1,479) - (1,479) (22) (1,501) Other finance charges - FRS17 (357) - (357) - (357) Profit/(loss) on ordinary 1,032 (2,138) (1,106) (43) (1,149)activities before taxationTaxation on ordinary activities (450) 555 105 23 128 Profit/(loss) after taxation 582 (1,583) (1,001) (20) (1,021)Preference dividends (4) - (4) - (4) Profit/(loss) attributable toordinary shareholders 578 (1,583) (1,005) (20) (1,025) Ordinary dividends paid andproposed (equity shares) (2,489) - (2,489) - (2,489) Retained loss (1,911) (1,583) (3,494) (20) (3,514) Basic earnings per ordinaryshare 4.35p (7.72p) Diluted earnings per ordinaryshare 4.34p (7.69p) Dividend per share 18.75p 18.75p 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-TWO WEEKS ENDED 30 OCTOBER 2005 Consolidated Profit and Loss Account 53 weeks ended 31 October 2004* Continuing activities Before goodwill Goodwill amortisation and amortisation and exceptional items exceptional items Discontinued Group Total activities total £000s £000s £000s £000s £000s TurnoverContinuing activities 145,371 - 145,371 - 145,371Acquisitions - - - - -Discontinued activities - - - 9,314 9,314 145,371 - 145,371 9,314 154,685 Operating profit/(loss)Operating profit/(loss) before goodwillamortisation and exceptional itemsContinuing activities 9,016 - 9,016 - 9,016Acquisitions - - - - -Discontinued activities - - - (307) (307) 9,016 - 9,016 (307) 8,709Goodwill amortisation - (163) (163) - (163)Reorganisation, redundancy and impairment costs - (600) (600) (1,797) (2,397) Group operating profit/(loss) 9,016 (763) 8,253 (2,104) 6,149Loss on disposal of businesses - (228) (228) - (228)Profit on disposal of fixed assets - 1,075 1,075 - 1,075 Profit/(loss) on ordinary activitiesbefore interest 9,016 84 9,100 (2,104) 6,996Interest payable and similar charges (1,396) - (1,396) (208) (1,604)(net) Other finance charges - FRS17 (419) - (419) - (419) Profit/(loss) on ordinary activitiesbefore taxation 7,201 84 7,285 (2,312) 4,973Taxation on ordinary activities (2,232) 185 (2,047) 663 (1,384) Profit/(loss) after taxation 4,969 269 5,238 (1,649) 3,589Preference dividends (4) - (4) - (4) Profit/(loss) attributable to ordinaryshareholders 4,965 269 5,234 (1,649) 3,585Ordinary dividends paid and proposed(equity shares) (2,491) - (2,491) - (2,491) Retained profit/(loss) 2,474 269 2,743 (1,649) 1,094 Basic earnings per ordinary share 37.40p 27.01p Diluted earnings per ordinary share 37.23p 26.89p Dividend per share 18.75p 18.75p *Restated for change in accounting policy 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-TWO WEEKS ENDED 30 OCTOBER 2005 Consolidated Balance Sheet 30 October 2005 31 October 2004* Fixed assets £000s £000s £000s £000sIntangible assets - goodwill 3,079 2,740Tangible fixed assets 17,040 18,201Investments 750 - 20,869 20,941 Current assetsStocks 20,181 25,673Debtors 25,262 31,656Bank and cash balances 232 1,743 45,675 59,072 CreditorsAmounts falling due within one year 33,127 40,832Net current assets 12,548 18,240Total assets less current liabilities 33,417 39,181 CreditorsAmounts falling due after more than one year 2,155 4,413 31,262 34,768 Provisions for liabilities and charges 2,259 1,881Deferred incomeGrants not yet credited to profit 66 2,325 150 2,031Net assets excluding pension liability 28,937 32,737 Net pension liability 9,449 8,089Net assets including pension liability 19,488 24,648 Capital and reservesCalled up share capital 3,369 3,369Share premium account 4,547 4,547Revaluation reserve 443 443Investment property revaluation reserve 67 67Other reserves 1,148 1,148Profit and loss account 9,914 15,074Shareholders' funds(including non-equity interests) 19,488 24,648 *Restated for change in accounting policy COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 Consolidated Cash Flow Statement 52 weeks ended 53 weeks ended 30 October 2005 31 October 2004 £000s £000s £000s £000s Net cash inflow from operating activities 4,640 13,291 Returns on investments and servicing of finance Interest paid (1,551) (1,604)Interest received 40 27Interest element of finance lease payments (52) (70)Non-equity dividends paid (4) (4) (1,567) (1,651) Taxation:Corporation tax paid (140) (1,610) Capital expenditure and financial investmentPurchase of tangible fixed assets (2,648) (3,667)Sale of tangible fixed assets 84 2,586 (2,564) (1,081) Acquisitions and disposals 1,572 (15) Equity dividends paid (2,489) (2,456) Net cash (outflow)/inflow before use of financing (548) 6,478 Financing:New loan - 41Issue of share capital - 47Repayment of bank and other borrowings (2,221) (2,383)Capital element of finance lease rental payments (337) (647) (2,558) (2,942) (Decrease)/increase in cash (3,106) 3,536 Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash (3,106) 3,536Cash outflow from decreasein debt and lease financing 2,558 2,989 Change in net debt from cash flows (548) 6,525 Arrangement fees amortised (20) (19)Finance leases 16 (320) Movement in net debt in year (552) 6,186Net debt as at 31 October 2004 (12,282) (18,468) Net debt as at 30 October 2005 (12,834) (12,282) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 Consolidated statement of total recognised gains and losses 52 weeks ended 53 weeks ended 30 October 2005 31 October 2004 £000s £000s(Loss)/profit for financial year (1,021) 3,589Prior year adjustments (8,431) - Actuarial loss recognised on pension schemes (2,352) (1,237) Deferred tax associated with pension schemes 706 371Total gains and losses recognised since last annual report (11,098) 2,723 The turnover and results of the main activities were as follows: 2005 2004 £000s £000sTurnoverIndustrial Services 73,340 92,845Leisure Products 45,669 61,840 119,009 154,685 Profit on ordinary activities before interest Industrial ServicesOperating profit before exceptional items 3,987 4,159 Exceptional items (929) (2,397)Goodwill amortisation (188) (163)Operating profit 2,870 1,599Loss on disposal of business (169) (211)(Loss)/profit on disposal of fixed asset (11) 1,075Total Industrial Services 2,690 2,463 Leisure ProductsOperating (loss)/profit before exceptional items (1,057) 4,550 Loss on disposal of business - (17)Exceptional items (924) -Total Leisure Products (1,981) 4,533Profit on ordinary activities before interest 709 6,996 Operating assets The operating assets of the main activities at 30 October 2005 were as follows: 2005 2004Operating capital employed £000s £000sIndustrial Services 26,066 30,645Leisure Products 14,052 16,138 40,118 46,783Non-operating assets and liabilities * (8,487) (10,898)Net borrowings (12,143) 11,237Total net assets 19,488 24,648 *Non-operating assets and liabilities principally represent investmentproperties, taxation, dividends, finance leases and pension scheme liability. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 Reconciliation of operating profit to cash flow from operating activities 2005 2004* £000s £000sOperating profit 889 6,149Depreciation 2,155 2,564Impairment - 816Amortisation of goodwill 188 163Capital grants income release (84) (23)Decrease/(increase) in stocks 4,923 (397)Decrease in debtors 6,176 3,302(Decrease)/increase in creditors (9,356) 1,506Increase in provisions 515 140Difference between pensions charge andcash contributions (766) (929) 4,640 13,291 *restated for change in accounting policy Analysis of changes in net debt At 31 Other At 30 October Cash Non Cash October 2004 Flows Changes 2005 £000s £000s £000s £000sCash in hand and at bank 1,743 (1,511) - 232Overdrafts (2,176) (4,058) - (6,234)Advances due within one year (4,905) 2,463 - (2,442) (5,338) (3,106) - (8,444) Debt due within one year (2,167) 2,220 (1,978) (1,925)Debt due after one year (3,732) - 1,958 (1,774)Finance leases (1,045) 338 16 (691)Total (12,282) (548) (4) (12,834) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 30 OCTOBER 2005 Notes to the Accounts 1. The financial information set out above does not constitute the Company's statutory accounts for the 52 weeks ended 30 October 2005 or 53 weeks ended 31 October 2004 but is derived from those accounts. Statutory Accounts for 2004 have been delivered to the Registrar of Companies, and those for 2005 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 30 October 2005 will be sent to shareholders during February 2006 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. During the period the Group has adopted Financial Reporting Standard 17 (Retirement Benefits) (FRS17). The impact of this change is to fully recognise the financial position of its defined benefit pensions scheme. The scheme is subject to triennial actuarial valuations, with the last formal valuation taking place as at 31 December 2004. As at 30 April and 31 October each year the financial position of the pension scheme is updated to reflect the anticipated FRS17 cost of current and past service, the expected return on post employment scheme assets, the interest on post employment plan liabilities and cash contributions made to the scheme. The result of adopting FRS17 has been to reduce accumulated profits by£8,431,000 at 31 October 2004. 3. The figures of basic earnings per share are calculated on the loss attributable to ordinary shares of £1,021,000 (2004: profit, £3,589,000), divided by the average number of shares in issue during the period, being 13,275,169 (2004: 13,274,989). For diluted earnings per share, the weighted average number of ordinary sharesis adjusted for the dilutive effect of potential ordinary shares. The Group hasonly one category of dilutive potential ordinary shares which is that of shareoptions granted to employees. Those options which have an exercise price whichis less than the daily average mid-market price of the Company's ordinary sharesduring the period are considered dilutive. 30 October 2005 31 October 2004 Weighted average number of shares in issue 13,275,169 13,274,989 Weighted average number of dilutive share options 54,806 59,032 Total number of shares for calculating diluted earnings pershare 13,329,975 13,334,021 4. A final dividend of 12.75p per share is proposed and if approved will be payable on 30 March 2006 to shareholders on the register on 10 March 2006, absorbing £1,692,000. 5. This preliminary announcement was approved by the Board on 30 January 2006. 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