CSLT.L Regulatory News (CSLT)

3 Jul 2007 07:01

Cosalt PLC03 July 2007 Cosalt plc ("Cosalt" or "the Group") Interim results for the 26 weeks ended 29 April 2007 Cosalt, which is implementing a growth strategy centred on making the Group the leading European provider of personal safety and protection services andequipment, today announces a further acquisition in Marine Safety alongside anincrease in interim turnover and profits 2007 2006Revenue £63.9m £57.1mProfit before tax £592,000 £114,000Earnings per share 6.4p 1.3pDividend 6.0p 6.0p Operational Highlights • Group making rapid progress with its strategic objectives following a second acquisition in Marine Safety. • Strong performance in Marine Safety following Bofort acquisition • Acquisition of Marine Safety Systems in Spain for €3.0m, extending the Group's footprint in another 'top-ten' European port • Share placings completed during period raised £4.2 million to fund Bofort acquisition and future growth • Further progress in managing turnaround of Holiday Homes division • Further strengthening of the board with the appointment of Rod Powell as a non-executive director John Kelly, Chairman, commented: "The last six months have endorsed the Board's confidence in its strategy offocusing on Marine and Industrial Safety services. We are actively pursuing anumber of acquisition opportunities whilst managing cash carefully and we areconfident that the current year will demonstrate a second year of recovery." 3 July 2007 ENQUIRIES: Cosalt plc Tel: 020 7457 2020 (today)Per Jonsson, Chief Executive Tel: 01472 504504 (thereafter)Neil Carrick, Finance Director College Hill Tel: 020 7457 2020Matthew Gregorowski Email: matthew.gregorowski@collegehill.comMark Garraway Email: mark.garraway@collegehill.com CHAIRMAN'S STATEMENT Overview We are making good progress in implementing our new strategy which is focused onbecoming Europe's leading supplier and service provider of critical safetyequipment to marine and industrial customers. This is being achieved through acombination of organic growth and through acquisition. On 28 December last year we announced the acquisition of the Marine SafetyDivision of Bofort, which we have successfully integrated with our existingMarine Safety business. This was the first step towards achieving our newstrategic objective, expanding our through-life management and servicecapability of critical safety equipment and giving us a launch pad into the keyEuropean market. Cosalt is now the leader in the highly fragmented market ofmarine safety servicing in the EU. We are pleased to announce today that we have made a further, second strategicacquisition in marine safety; that of Maritime Safety Systems ("SSM") in Spainfor a consideration of €3 million. This acquisition gives us a dominantpresence in the rapidly expanding cargo and cruise ship port of Barcelona and abase from which to further strengthen our network in other key ports in Spain.This adds yet another of Europe's top ten ports to our service network, whichnow spans Spain, Italy, Germany, Holland, Belgium and the UK. We are currently actively pursuing a number of other acquisition opportunities. We are also making progress in managing our Holiday Homes and Schoolwearbusinesses against a backdrop of seasonal demands impacting both activities. Results & Dividend Group turnover for the 26 weeks to 29 April 2007 increased by 12% to £63.92million, compared with £57.09 million for the 26 weeks to 30 April 2006. The Group achieved a profit before taxation of £592,000, after charging £946,000of exceptional costs and after taking credit for £1.59 million of exceptionalproperty profit and revaluation. This is compared with a profit beforetaxation of £114,000 at the interim stage last year, after taking into account£305,000 of exceptional property profits. Earnings per share on continuingoperations were 6.40p (2006: 1.30p). These results reflect the strong performance of the Bofort acquisition in MarineSafety and a return to profitability for Holiday Homes which more thancompensated for the previously forecast fall in demand for immersion suitsfollowing legislative changes in 2006. Whilst the Group's future growth is focused on safety equipment and servicing,the restructuring of the remainder of the Group continues, in particular withProtective Clothing where loss making contracts are being exited. These factors give the Board confidence in the outlook for the Group and inmaintaining the interim dividend at 6.00p. The dividend will be paid on 12September 2007 to shareholders on the register on 17 August 2007. Operational Review Safety & Protection Turnover for Marine Safety increased significantly to £22.10 million (2006:£18.97 million) resulting in an improved operating profit of £1.50 million(2006: £1.15 million). As previously forecast, demand for immersion suits during this period wassubstantially less than in 2006 which benefited from legislation introduced inthat year. However, this was comfortably offset by the strong performance of theBofort business, acquired at the end of 2006, which was well ahead of both itsprior year and budget. We actively continue to appraise several complementary acquisitions in themarine and industrial safety service markets, both at home and abroad. Theacquisition of SSM, announced today, marks a further step in this direction. SSMholds a leading position in the Spanish marine safety market as one of a smallnumber of companies worldwide authorised to service mass evacuation systems forcruise ships. The quality of their service operation is particularly wellrecognised. In Protective Clothing, turnover was marginally lower at £9.89 million (2006:£9.97 million) resulting in an operating loss of £257,000 (2006: profit of£176,000). A number of loss making contracts were terminated in the period andwill run off in the second half. As previously announced, further stockwrite-downs were made as a consequence of this positive action. Provisionstotalling £946,000 have been made in respect of these write-downs and are-structuring plan launched after the end of the period. This exceptionalprovision was more than offset by the Group's exceptional property profit andrevaluation. Schoolwear Turnover was £6.89 million (2006: £6.94 million) resulting in an operating lossof £56,000 in this highly seasonal activity (2006: profit of £57,000). Entering into the second half we have better order to sales coverage in allmajor product lines compared to last year. Cost savings from last year'smanagement initiatives are in line with plan and these two improvements shouldlead to a stronger financial result for the second half of the current year. Holiday Homes With a very strong performance from our market-leading log cabin Custom Homesbusiness, turnover increased significantly to £25.04 million (2006: £21.22million) resulting in an operating profit of £455,000 (2006: loss of £674,000). Custom Homes increased sales by 49% and operating profits by more than 200%.The order book is now full for the year and we are increasing manufacturingcapacity in a controlled way to safeguard our high quality standards. Our 2007 Caravan Holiday Home model range has gained market share. However, themarket remains weak with manufacturers clearing excessive inventory levels andthis is causing margin pressure. A number of factors could still impact theoverall result of the business for the year and we must wait until the end ofthe important summer trading period for a clearer picture. Funding The Bofort acquisition completed on 27 December 2006 increased debt levels byapproximately £8 million net of the £1.7m proceeds of a 5% placing which tookplace at the same time. A further placing of 5% of shares was made on 2 Aprilraising £2.5m. As a result of these actions and the increased turnover inHoliday Homes, borrowings increased by £12 million compared to 30 April 2006.This represented gearing of 102% (2006: 72%) (excluding IAS 19 pension schemedeficit and related deferred tax asset) which also reflects the normalseasonally high working capital profile of the Group. We confidently expectlower borrowing at the October 2007 year-end. Board I am today pleased to announce the appointment of Rod Powell to the Board as anon-executive Director. Rod brings a considerable wealth of industrialexpertise from 20 years in general management, operations and sales in seniorpositions with a range of companies including Invensys, ICL and TexasInstruments. At Invensys, Rod was chief executive of the $3 billion controlsdivision. He is currently interim chief executive of Plasmon PLC, and is anon-executive director of Hanover Investors, Plasmon PLC, Renold PLC, and DustNetworks Inc. Rod will bring valuable experience to our post merger integrationand management of acquisitions in Safety and Protection and I am delighted towelcome him to the Board. Outlook In Safety & Protection, ten months of accretive earnings from the Bofortacquisition (these interim results only include four months of Bofort as part ofCosalt) will more than compensate for the reduced level of immersion suit salesthis year. We are also pleased with the acquisition of SSM which, though small,complements our expanding European footprint and provides the opportunity forfurther growth in Spain. Protective Clothing remains affected by the run off ofloss making contracts and the continuing restructure plan In Schoolwear, we are confident that last year's management initiatives willlead to a stronger financial result in the second half of this year. In Holiday Homes, whilst the outlook for the caravan holiday homes market isweak, it is too early to forecast the full impact on the business. We continueto look to improve the efficiencies in this business, with particular attentionto the working capital employed. By contrast the Custom Homes business hasstrong momentum and a full order book. It is probable that the Group will incur further exceptional costs during thesecond half as management continue to restructure the operations where return oncapital remains inadequate. It is expected that any such charges will becompensated for by exceptional property profits. The last six months have endorsed the Board's confidence in its strategy offocusing on Marine and Industrial Safety services. We are actively pursuing anumber of acquisition opportunities whilst managing cash carefully and we areconfident that the current year will demonstrate a second year of recovery. J A B KellyChairman3 July 2007 Consolidated income statement for the twenty-six weeks to 29 April 2007 26 weeks ended 26 weeks ended 52 weeks ended 29 April 2007 30 April 2006 29 October 2006 £000 £000 £000 Revenue 63,922 57,092 123,995 Operating profit before exceptional gains and costs 936 376 3,294and gain on revaluation of investment propertiesRedundancy, reorganisation and impairment (946) - (1,209)Profit on disposal of surplus properties 525 305 284Gain on revaluation of investment properties 1,067 - 835Operating profit 1,582 681 3,204 Financial income 44 30 85Financing costs (1,034) (597) (1,375) Profit before taxation 592 114 1,914 Income tax credit/(expense) 298 58 (263) Profit for the period 890 172 1,651 Earnings per ordinary shareBasic (total) 6.40p 1.30p 12.43pDiluted (total) 6.39p 1.29p 12.40p Dividend per ordinary sharePaid in the period 12.75p 12.75p 18.75pArising in respect of the period 6.00p 6.00p 18.75p Consolidated balance sheet as at 29 April 2007 As at As at As at 29 April 2007 30 April 2006 29 October 2006 £000 £000 £000 AssetsNon-current assetsIntangible assets - goodwill 10,120 3,270 3,268Intangible assets - other 1,413 1,406 1,319Investment properties 2,592 1,226 2,062Property plant and equipment 13,841 13,437 12,906Investments 750 1,000 1,000Deferred tax assets 3,106 4,064 4,060 31,822 24,403 24,615Current assetsInventories 26,322 22,309 21,216Trade and other receivables 42,775 34,926 31,809Cash and cash equivalents 814 557 151 69,911 57,792 53,176 Total assets 101,733 82,195 77,791 LiabilitiesNon-current liabilitiesInterest bearing loans and borrowings 1,230 1,247 801Deferred tax liabilities 655 743 655Deferred Government grants 46 60 52Provisions 190 103 146Retirement benefit obligations 9,969 13,470 13,179 12,090 15,623 14,833Current liabilitiesBank overdrafts 20,574 13,861 5,473Interest bearing loans and borrowings 11,923 6,360 7,174Corporation tax payable - - 760Provisions 392 461 392Trade and other payables 31,106 26,193 28,741Other financial liabilities 272 - 297 64,267 46,875 42,837 Total liabilities 76,357 62,498 57,670 Net assets 25,376 19,697 20,121 EquityShare capital 3,698 3,319 3,322Share premium 8,444 4,547 4,573Other reserves 1,148 1,148 1,148Hedging reserve (272) (10) (292)Translation reserve 28 - -Retained earnings 12,330 10,693 11,370 Total equity 25,376 19,697 20,121 Consolidated cash flow statement for the twenty-six weeks to 29 April 2007 26 weeks ended 26 weeks ended 52 weeks ended 29 April 2007 30 April 2006 29 October 2006 £000 £000 £000 Cash generated from operationsProfit for the period 890 172 1,651Adjustments for:Income tax (credit)/expense (298) (58) 263Depreciation 1,285 1,122 2,304Amortisation of intangible assets 212 144 298Deferred government grants released (6) (8) (14)Net finance costs 990 567 1,290Share based payment charge 15 11 25Profit on disposals of property, plant and equipment (1,593) (305) (1,119)Pension contributions in excess of charge (409) (76) (412)Cash flow before changes in working capital 1,086 1,569 4,286(Increase) in inventories (3,421) (2,138) (1,035)(Increase) in trade and other receivables (5,971) (9,869) (8,421)(Decrease)/increase in trade and other payables (3,947) 5,585 9,946(Decrease)/increase in provisions (44) (1,008) (1,039)Net cash (used in)/from operations (12,297) (5,861) 3,737 Interest received 44 30 85Interest paid (937) (492) (1,327)Interest element of finance lease rentals (18) (16) (30)Dividends paid on preference shares (2) (2) (4)Income tax paid 229 - 313Net cash (used in)/from operating activities (12,981) (6,341) 2,774 Cash flows from investing activitiesAcquisitions of subsidiaries (net of cash acquired) (8,233) - -Sale of investments 250 - -Proceeds from sale of property, plant and equipment 1,364 1,405 1,444Purchase of property, plant and equipment (946) (1,254) (1,738)Purchase of intangible assets - software (169) (96) (196)Net cash (used in)/from investing activities (7,734) 55 (490) Cash flows from financing activitiesDividends paid to shareholders (1,790) (1,693) (2,490)Finance lease principal payments (39) (161) (345)Exercise of share options and share issues 4,246 - 30New Loan 546 - - Repayment of bank borrowing (924) (1,035) (1,702)Net cash (used in)/from financing activities 2,039 (2,889) (4,507) Effect of exchange rate fluctuations on cash held 2 - - Net (decrease) in cash and cash equivalents (18,674) (9,175) (2,223) Cash and cash equivalents at beginning of period (10,667) (8,444) (8,444)Cash and cash equivalents at end of period (29,341) (17,619) (10,667) Cash 814 557 151Overdrafts (20,574) (13,860) (5,473)Factoring Advances (9,581) (4,316) (5,345)Cash and cash equivalents (29,341) (17,619) (10,667) Note: The outflow of funds from operations in the first half of the year is anormal feature of the Group's business. Consolidated statement of recognised income and expensefor the twenty-six weeks to 29 April 2007 26 weeks ended 26 weeks ended 52 weeks ended 29 April 2007 30 April 2006 29 October 2006 £000 £000 £000 Effective portion of cashflow hedges taken direct to - (180) (408)equityActuarial profits/ (losses) on defined benefits scheme 2,800 - (45)Taxation on items taken directly to equity (954) 54 14Net income/(expense) recognised directly in equity 1,846 (126) (439) Profit/(loss) for the period 890 172 1,651 Effect of change in accounting policy Effect of adoption of IAS32 and IAS39, net of tax, on 31October 2005Share capital - (50) (50)Hedging reserve - 116 116Retained earnings - (13) (13) - 53 53 Total recognised income and expense for the period 2,736 99 1,265 Notes to the interim statement 1. Basis of preparation This interim financial statements are condensed financial statements and theinterim report has been approved by the Directors on 3 July 2007 and prepared inaccordance with International Financial Reporting Standards (IFRSs) as adoptedby EU ("adopted IFRSs"). The interim financial information has been prepared by applying the accountingpolicies and presentations that were applied in the preparation of the Group'spublished consolidated financial statements for the year ended 29 October 2006. The preparation of financial statements in conformity with IFRSs requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making otherjudgements about carrying values of assets and liabilities that are not readilyapparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods. Statutory accounts for the year end 29 October 2006 have been delivered to theRegistrar of Companies KPMG Audit Plc reported on those accounts under section235 of the Companies Act 1985. The report was unqualified and did not contain astatement under section 237 (2) or (3) of that Act. 2. Analysis by business segment At 29 April 2007 the Group is organised into three main business segments:Safety & Protection, incorporating Marine Safety and Protective Clothing,Schoolwear and Holiday Homes. The primary segment reporting format is determined to be the business segmentsas the Group's risks and returns are predominantly affected by differences inthe products and services provided by these different activities. The operatingbusiness segments are organised and managed separately. During the period theProtective Clothing business was merged with Marine Safety to form Safety &Protection. Safety and protection Marine Protective Schoolwear Holiday Head office/ Safety Clothing Homes Unallocated Total26 weeks ended 29 April £000 £000 £000 £000 £000 £0002007 Revenue 22,099 9,889 6,888 25,046 - 63,922Operating profit/(loss) 1,495 (257) (56) 455 (701) 936before exceptionalitemsReorganisation - (946) - - - (946)Profit on disposal of - - - - 1,592 1,592surplus properties andgain on revaluation ofinvestment propertiesOperating profit/(loss) 1,495 (1,203) (56) 455 891 1,582 Operating profits are shown before head offices charges. The comparative figureshave been adjusted to reflect this disclosure. Included within Marine Safety is turnover of £4,847,000 and operating profit of£754,000 relating to the Bofort business acquired on 27 December 2006. 2. Analysis by business segment (continued) Safety & Protection Marine Protective Schoolwear Holiday Head office/ Safety Clothing Homes Unallocated Total26 weeks ended 30 April £000 £000 £000 £000 £000 £0002006 Revenue 18,970 9,965 6,939 21,218 - 57,092Operating profit before 1,147 176 57 (674) (330) 376exceptional itemsExceptional items - 305 - - - 305Operating profit/(loss) 1,147 481 57 (674) (330) 681 Safety & Protection Marine Protective Schoolwear Holiday Head office/ Safety Clothing Homes Unallocated Total52 weeks ended 29 £000 £000 £000 £000 £000 £000October 2006 Revenue 39,407 18,840 19,112 46,636 - 123,995Operating profit/(loss) 2,733 (328) 1,216 364 (691) 3,294before exceptional itemsExceptional items - (176) (195) (82) 363 (90)Operating profit/(loss) 2,733 (504) 1,021 282 (328) 3,204 3. Summary of movements in equity Share Share Other Hedging Retained capital premium reserve reserve earnings Total52 weeks ended 29 October 2006 £000 £000 £000 £000 £000 £000 Balance brought forward at 3,369 4,547 1,148 - 12,215 21,279transitionProfit for the period - - - - 1,651 1,651Share option charge - - - - 25 25Exercise of share options 3 26 - - - 29Effect of adoption of IAS32 and (50) - - 116 - 66IAS39 net of tax on 31 October 2005Change in value of hedged items - - - (408) - (408)Dividends paid - - - - (2,490) (2,490)Movements in pension deficit and - - - - (31) (31)related taxationBalance as at 29 October 2006 3,322 4,573 1,148 (292) 11,370 20,121 Share Share Other Hedging Retained capital premium reserves reserve earnings Total26 weeks ended 30 April 2006 £000 £000 £000 £000 £000 £000 3,369 4,547 1,148 - 12,215 21,279 Balance brought forward at 31 October2005Profit for the period - - - - 172 172Share option charge - - - - 11 11 Effect of adoption of IAS32 and IAS39 (50) - - 116 (13) 53net of tax on 31 October 2005Effect of hedges paid in the period - - - (126) - (126)Dividends paid - - - - (1,692) (1,692)Balance as at 30 April 2006 3,319 4,547 1,148 (10) 10,693 19,697 Share Share Other Hedging Retained Translation capital premium reserves reserve earnings reserve Total26 weeks ended 29 April 2007 £000 £000 £000 £000 £000 £000 £000 Balance brought forward at 29 October 3,322 4,573 1,148 (292) 11,370 - 20,1212006Profit for the period - - - - 890 - 890Share option charge - - - - 15 - 15Exercise of share options and share 376 3,871 - - - - 4,247issuesForeign subsidiary translation - - - - - 28 28Effect of hedges paid in the period - - - 20 - - 20Dividends paid - - - - (1,790) - (1,790)Movement in pension deficit and - - - - 1,845 - 1,845related taxationBalance as at 29 April 2007 3,698 8,444 1,148 (272) 12,330 28 25,376 4. Business combinations On 27 December 2006, the Group acquired the Marine Safety Division of the BofortGroup for a total consideration of €12 million in cash. Effect of the acquisition The acquisition had the following effect on the Group's assets and liabilities. Acquiree's net assets at the acquisition date Book value Provisional fair value £000 £000Intangible assets 30 11Property, plant and equipment 1,549 1,501Inventories 1,779 1,662Cash 146 146Interest bearing loans and borrowings (1,286) (1,286)Other receivables and payables (144) (641)Net assets 2,074 1,393Goodwill and intangibles on acquisition - 6,986Consideration paid (including costs) - 8,379Net cash and cash equivalents acquired - 146Net cash outflow in period - 8,233 At 29 April 2007 the fair values of the assets and liabilities acquired notedabove are provisional. 5. Earnings per share The basic earnings on total operations are calculated on the basis of totalprofits of £890,000 (£172,000 for 30 April 2006 and £1,651,000 for 29 October2006) and the average number of shares in issue for the period, being 13,904,301for 29 April 2007 (13,275,169 for 30 April 2006 and 13,278,631 for 29 October2006). The basic earnings per share on continuing activities are calculated on thebasis of profits of £890,000 (£172,000 for 30 April 2006 and £1,651,000 for 29October 2006 attributable to ordinary shareholders and the average number ofshares in issue for the period, being 13,904,301 for 29 April 2007 (13,275,169for 30 April 2006 and 13,278,631 for 29 October 2006). The diluted earnings per share on total operations are calculated on the basisof the profits of £890,000 (£172,000 for 30 April 2006 and £1,651,000 for 29October 2006) and the average number of shares in issue for the period plus theaverage maximum potential number of shares which could be issued under thevarious Executive Share Option Schemes. The total number of shares used tocalculate the diluted earnings are 13,923,402 (13,313,392 for 30 April 2006 and13,311,596 for 29 October 2006). The diluted earnings per share on continuing activities of £890,000 (£172,000for 30 April 2006 and £1,651,000 for 29 October 2006) are calculated on thebasis of the continuing profits attributable to ordinary shareholders and theaverage number of shares in issue for the period plus the average maximumpotential number of shares which could be issued under the various ExecutiveShare Option Schemes. The total number of shares used to calculate the dilutedearnings are 13,923,402 (13,313,392 for 30 April 2006 and 13,311,596 for 29October 2006). 6. Interim dividend The interim dividend of 6.0p per share will be paid on 12 September 2007 toshareholders on the register on 17 August 2007. In accordance with the requirements of International Accounting Standards, theproposed interim dividend has not been accrued in the consolidated financialstatements for the twenty-six weeks to 29 April 2007. 7. Taxation The taxation charge for the interim period is based upon the estimated rate forthe full year. The property disposals and revaluation of investment propertieswere not taxed due to the availability of capital losses Independent review report by KPMG Audit Plc to Cosalt:plc Introduction We have been engaged by the company to review the financial information for thetwenty-six weeks ended 29 April 2007 which comprises a consolidated balancesheet as at 29 April 2007 and the related consolidated statements of income,cash flows and the statement of recognised income and expenses for thetwenty-six weeks ended 29 April 2007 and related notes and we have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and translations. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended29 April 2007. KPMG Audit Plc Chartered AccountantsLeeds3 July 2007 This information is provided by RNS The company news service from the London Stock Exchange