30th Jan 2008 07:01
Cosalt PLC30 January 2008 Cosalt plc ("Cosalt" or "the Group") Preliminary results for the 52 weeks to 28 October 2007 Cosalt announces a strong improvement in its performance and major progresstowards achieving its objective of becoming a focussed provider of personalsafety and protection services and equipment. Financial Highlights 2007 2006 % increaseRevenue £135.13m £124.00m 9Operating profit £4.95m* £3.29m 50Profit before tax £2.70m* £2.00m 35Earnings per share 11.59p* 10.41p 11 * Before exceptional gains and costs, revaluation of investment properties andamortisation of acquisition intangibles Strategic Highlights • Market share in core Marine Safety division significantly boosted by three key acquisitions: - Bofort: access to three largest cargo ports in Europe and key cruise ports in Italy - SSM: entry into Spain and access to rapidly expanding cargo and cruise ship markets - GTC: provides major foothold in the North Sea Offshore Oil & Gas market • In 2008 Cosalt will predominantly be a Safety & Protection business • Strengthened balance sheet - Three successful share placings to help finance acquisitions - Gearing significantly reduced to 24% and with further cash management improvements in process - Flexibility to carry out further acquisitions in line with strategy • Strengthened Board and management teams John Kelly, Chairman of Cosalt, commented: "Our growth strategy is clear and focussed, delivering both financial results inthe short-term and building a platform for long-term profitable growth. Ourmarkets are robust with good defensive qualities and in the case of the NorthSea, growing quickly. They offer attractive roll-up acquisitions as well asorganic expansion opportunities. We are confident that the 2007/08 financialyear will demonstrate a third year of marked improvement in the Group'sperformance". 30 January 2008 ENQUIRIES:Cosalt plc Tel: 020 7457 2020 (today)Per Jonsson, Chief Executive Tel: 01472 504504 (thereafter)Neil Carrick, Finance DirectorCollege Hill Tel: 020 7457 2020Matthew Gregorowski Email: [email protected] Garraway Email: [email protected] For further information, visit the Company website www.cosalt.com CHAIRMAN'S STATEMENT Introduction I am pleased to present our shareholders with a year of progress against ourstrategic objectives and the prospect of further progress in the coming years.We completed three acquisitions over the course of the year, all strengtheningour core Safety business. This resulted in 50% of Group sales in 2007 comingfrom our Safety & Protection division, which will be the predominant source ofrevenue in 2008. Group turnover for the 52 weeks to 28 October 2007 was £135 million (2006: £124million). Headline operating profit before tax was up 50% to £5.0 million (2006: £3.3million) with the corresponding earnings per share up 11% to 11.59p (2006:10.41p). The Statutory profit before tax was £1.8 million (2006: £1.9 million)after exceptional gains and costs, revaluation of investment properties andamortisation of acquisition intangibles with corresponding earnings per share of10.59p (2006: 12.43p). These results reflect the strong performance from our acquisitions in MarineSafety and continued recovery in the trading of Holiday Homes, while performanceof Safety Workwear (Cosalt: Ballyclare) and Schoolwear (Banner) was relativelydisappointing. Group Strategy Our vision is to become a leading global supplier and through life manager ofcritical safety equipment for people exposed to hostile environments. This isexpected to be achieved through a combination of organic growth and acquisition.This strategy began to be implemented in 2007 with the Company successfullycompleting and integrating three acquisitions in this area over the course ofthe year. Consequently, we have now significantly strengthened our position inour three key market sectors of offshore oil and gas, cargo shipping and thecruise and ferry market. We took an important first step towards delivering on our vision by acquiringthe Marine Safety Division of the Bofort Group on 27 December 2006. Thisacquisition complemented our market leading UK Marine Safety business and gaveus an important presence in Rotterdam, Antwerp and Hamburg, the top three cargoports in Europe, as well as in Italy's two leading cruise ship ports. On 3 Julywe acquired Safety Systems Maritime (SSM) in Spain, adding the rapidly expandingcargo and cruise ship port of Barcelona to our foot print. As a consequence, wenow operate in five of Europe's top ten container ports and in the three leadingcruise ship ports in the Mediterranean. Our next strategic step was to increase our UK lifting and inspection businessby acquiring the Aberdeen-based GTC Group on 12 October. GTC is the marketleader in the North Sea for the supply, repair and management of liftingequipment, serving many of the large offshore oil and gas operators. Thesignificant scale of the acquisition of GTC represented a step-change in theGroup's development and significantly enhances our core Safety business. Dividends As announced in the prospectus relating to the GTC acquisition and associatedfundraising the Board is recommending a final dividend of 6 pence per ordinaryshare in issue prior to the 12 October placing of new shares, resulting in thetotal dividend for the year being 12 pence. That dividend will be paid on 4April 2008 to holders of those shares on 7 March 2008. Placings During the year we made three successful placings. The first on 21 December 2006was for 663,758 new ordinary shares of 25p each at a price of 256 pence pershare, raising approximately £1.7 million, which helped finance the acquisitionof Bofort. A further 5% placing was made on 2 April for 697,646 new ordinaryshares at a price of 354 pence per share, raising approximately £2.5 million,which was used to strengthen the Group's balance sheet in anticipation of theSSM acquisition. The GTC acquisition was funded by a placing and open offer for7,717,060 new ordinary shares at 330 pence per share raising approximately £25million net of expenses and the issue of 2,121,212 new Cosalt shares to the GTCvendors. The excess proceeds of the Placing and Open Offer were used tostrengthen the Company's balance sheet and provide the Group with greaterflexibility in pursuing further acquisition opportunities. Financing and Pensions Despite making three acquisitions, we have structured the funding of theacquisitions such that gearing reduced significantly to 24% compared to 66% atthe previous year end with further cash management improvements in process. The Group's defined benefits pension scheme was closed to future accrual on 31December 2006 and active members were transferred into a stakeholder definedcontribution plan. The gross deficit in the pension scheme came down to £8.8million (2006: £13.2 million). Board Changes We strengthened the Board during the year with the addition of Matthew Peacockand Rod Powell as Non-Executive Directors in March and July 2007 respectively.Mr Peacock, the founding partner of Hanover Investors, brings extensiveexperience of both the public markets and businesses going through periods ofrapid growth or change. Mr Powell brings a considerable wealth of industrialexpertise from 20 years in operational general management. Outlook Overall, we believe the market for our Safety services and products looks set toremain good with demand driven by increasing safety regulations and withexposure to the buoyant oil and gas market. We should also benefit from a fullyear's contribution of accretive earnings from the Bofort, SSM and GTCacquisitions. Holiday Homes is gaining momentum under new leadership and weexpect improved results in Safety Workwear. Our growth strategy is clear and focussed, delivering both financial results inthe short-term and building a platform for long-term profitable growth. Ourmarkets are robust with good defensive qualities and in the case of the NorthSea, growing quickly. They offer attractive roll-up acquisitions as well asorganic expansion opportunities. We are confident that the 2007/08 financialyear will demonstrate a third year of marked improvement in the Group'sperformance. CHIEF EXECUTIVE'S REVIEW OF OPERATIONS Introduction The Group has three divisions: Safety & Protection (incorporating Marine Safetyand Safety Workwear), Schoolwear and Holiday Homes. A summary of theirperformance is set out below. Safety & Protection Turnover for Marine Safety increased significantly to £50.14 million (2006:£39.41 million) resulting in an improved operating profit of £4.4 million (2006:£2.7 million) before exceptionals and reflecting our strategy of increased focuson this area. We service and provide critical marine safety equipment in the life raft, lifeboat, lift jacket, fire safety and lifting and inspection sectors. The strong performance of the Bofort business, which was well ahead of both theprior year and budget, plus an additional four months of positive earnings fromthe SSM acquisition, more than offset the anticipated reduction in UK revenuefrom lower demand for immersion suits which benefited from a legislation drivenboost in 2006. With the acquisition of Bofort and SSM we now control a combined network ofmarine safety businesses based in the key ports of Europe. In Bofort we alsohave an expanding lifeboat service capability in the port of Antwerp and a wellestablished fire safety servicing business. Bofort's business expertise andexperience in these two activities will be used to develop opportunities in theother countries where we operate as well as supporting Cosalt's UK activities. Additional regulations came into force on 1 July 2006 requiring that the annualinspection and service of lifeboats be performed by a certified third party andno longer the ship's own crew. This requirement is now the same as that forlife rafts and we intend to expand our service capability to life boats where weexpect strong demand in the next few years. There is also a significantlife-boat inspection opportunity offshore as oil and gas platforms rely on lifeboats to evacuate personnel in case of an emergency. GTC is the North Sea market leader in the supply, repair and management oflifting equipment serving many of the significant off shore oil and gasoperators and the acquisition dramatically increases our lifting and inspectionbusiness service capacity and technical competency. It will not only strengthenour capability and profile in the important UK northern North Sea offshore oiland gas market but will also give us the opportunity to extend our reach to theUK southern North Sea and Norwegian sectors, enabling us to become a uniquepan-North Sea provider of integrated safety services. Another important area of opportunity arising from the acquisitions is theexpansion of leasing contracts for marine safety products, where service supportcan now be offered to existing and new customers across the whole network in theexpanding shipping, ferry and cruise markets where faster turn around times inport make leasing and replacing safety products more attractive than owningthem. Whilst taking advantage of the many opportunities to increase revenueorganically we continue to appraise several complementary acquisitions in themarine safety service markets. Marine leisure sales had another record year with sales of the award winningCrewsaver brand of lifejackets and buoyancy aids, increasing market share inboth the UK and Europe. This was despite a difficult trading environment due topoor summer weather. SSM also has a strong position in the Spanish marineleisure market in addition to its main commercial marine safety business. In Safety Workwear, we exited a number of loss making contracts and delivered onthe restructuring plan. The Cosalt: Ballyclare legal entity was merged with ourMarine Safety business on 31 December 2006. Exceptional charges totalling £1.3million have been incurred on stock write downs on the exit from onerouscontracts and paying for necessary redundancies. Restructuring of the businesscontinues and we expect the benefits to be felt in the 2007/2008 financial year. Schoolwear Turnover was £18.48 million (2006: £19.11 million) with operating profit of£1.25 million (2006: £1.22 million) pre exceptional items. The actions taken in 2006 by the new management team have been effective and weregained our customers' confidence in our ability to deliver on time and meetquality specifications from new sourcing in the Far East. We have decided toexit womenswear in the coming financial year, and expect continued financialbenefits from these initiatives in the coming year. Holiday Homes Turnover increased to £49.75 million (2006: £46.64 million) resulting in anoperating profit of £1.00 million (2006: £364,000) pre exceptional items. In market conditions that remained difficult we continued to improve ourresults. Our market leading Custom Homes lodge business entered the 2007 seasonwith a full order book and performed ahead of expectations for the year. TheHoliday Homes caravan business benefited from some temporary housingopportunities following the floods in the summer but this could not make up forthe continued softness of the market. We strengthened the management team withthe appointment of a new Chief Executive highly experienced in manufacturing tocomplete our move to more efficient lean manufacturing. He is overseeing themove to a build-to-order production system and the multi-skilled work force cannow provide batches of one to suit the current order profile. Prospects We have made solid progress during the year, having significantly developed ourplatform from which to continue growing the business within our core markets.The Group is much more focused and our predominantly regulatory driven Safety &Protection business will contribute a vast majority of the Group's revenues andearnings going forward. We continue to appraise further opportunities toincrease our product and service offering while expanding our geographicfootprint, and have every confidence in the Group's future prospects. COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 28 OCTOBER 2007 Consolidated income statementfor the 52 weeks ended 28 October 2007 Before After exceptional Exceptional exceptional gains and gains and gains and costs, costs, costs, Before revaluation of revaluation of revaluation of exceptional Exceptional After investment investment investment gains and gains and Exceptional properties and properties and properties and costs and costs and gains and costs amortisation of amortisation of amortisation of revaluation of revaluation of and revaluation acquisition acquisition acquisition investment investment of investment intangibles intangibles intangibles properties properties properties 52 weeks to 52 weeks to 52 weeks to 52 weeks to 52 weeks to 52 weeks to 28 Oct 2007 28 Oct 2007 28 Oct 2007 29 Oct 2006 29 Oct 2006 29 Oct 2006 £000 £000 £000 £000 £000 £000Revenue 135,130 - 135,130 123,995 - 123,995Operating profit 4,952 (867) 4,085 3,294 (90) 3,204Financial income 101 - 101 85 - 85Financing costs (2,356) - (2,356) (1,375) - (1,375)Profit before taxation 2,697 (867) 1,830 2,004 (90) 1,914Income tax expenses (981) 719 (262) (621) 358 (263)Profit for the financial period 1,716 (148) 1,568 1,383 268 1,651 Basic earnings per share 11.59p 10.59p 10.41p 12.43pDiluted earnings per share 11.53p 10.53p 10.39p 12.40p Consolidated balance sheetas at 28 October 2007 As at As at 28 Oct 07 29 Oct 06 £000 £000ASSETSNon-current assetsIntangible assets - goodwill 24,273 3,268Intangible assets - customer contacts and relationships 14,819 -Intangible assets - computer software 1,241 1,319Investment properties 3,900 2,062Property plant and equipment 13,754 12,906Investments 750 1,000Deferred tax assets 2,525 4,060 61,262 24,615Current assetsInventories 25,526 21,216Trade and other receivables 41,324 31,809Cash and cash equivalents 2,476 151 69,326 53,176 Total assets 130,588 77,791 LiabilitiesNon-current liabilitiesInterest bearing loans and borrowings 1,205 801Deferred tax liabilities 4,722 655Deferred Government grants 41 52Provisions - 146Retirement benefit obligations 8,796 13,179 14,764 14,833Current liabilitiesBank overdrafts 7,709 5,473Interest bearing loans and borrowings 7,916 7,174Corporation tax payable 3,501 760Provisions 617 392Trade and other payables 37,175 28,741Other financial liabilities 96 297 57,014 42,837 Total liabilities 71,778 57,670 Net assets 58,810 20,121 EQUITYShare capital 6,157 3,322Share premium account 38,688 4,573Other reserves 1,148 1,148Exchange reserve 256 -Hedging reserve (96) (292)Retained earnings 12,657 11,370 Total equity attributable to equity holders of the parent 58,810 20,121 Consolidated statement of recognised income and expensefor the 52 weeks ended 28 October 2007 52 weeks 52 weeks ended ended 28 Oct 07 29 Oct 06 £000 £000Effective portion of changes in fair value of cash flow 196 (408)hedges net of recyclingCurrency translation differences 256 -Actuarial gains/(losses) on defined benefit scheme 3,602 (45)Taxation on items taken directly to equity (1,264) 14Net expense recognised directly in equity 2,790 (439) Profit for the financial period attributable to the 1,568 1,651equity Shareholders of the parent Total recognised income and expense 4,358 1,212 Consolidated cash flow statementfor the 52 weeks ended 28 October 2007 52 weeks 52 weeks ended ended 28 Oct 07 29 Oct 06 £000 £000Cash flows from operationsProfit for the period 1,568 1,651Adjustments for:Income tax expense 262 263Depreciation 2,633 2,304Amortisation of intangible assets 1,027 298Deferred government grants released (11) (14)Net finance costs 2,255 1,290Share based payment charge 55 25Investment property gains (1,063) (1,119)Pension contributions in excess of charge (810) (412)Profit on disposal of property, plant and equipment (513) -Cash flow before changes in working capital and 5,403 4,286provisions(Increase)/decrease in inventories 684 (1,035)(Increase)/decrease in trade and other receivables 3,778 (8,421)Increase/(decrease) in trade and other payables (6,003) 9,946(Decrease)/increase in provisions 79 (1,039)Net cash from operations 3,941 3,737Interest received 112 85Interest paid (2,169) (1,327)Interest element of finance lease rentals (54) (30)Dividends paid on preference shares (4) (4)Income tax received/(paid) (119) 313Net cash from operating activities 1,707 2,774 Cash flows from investing activitiesAcquisitions of subsidiaries (net of cash acquired) (28,384) -Sale of investments 250 -Proceeds from sale of property, plant and equipment 2,049 1,444Purchase of property, plant and equipment (1,406) (1,738)Purchase of intangible assets - software (260) (196)Net cash used in investing activities (27,751) (490) Cash flows from financing activitiesDividends paid to Shareholders (2,674) (2,490)Finance lease principal payments (433) (345)Exercise of share options and share placings 29,706 30New loan 561 -Repayment of bank borrowings (1,638) (1,702)Net cash used in financing activities 25,522 (4,507)Net decrease in cash and cash equivalents (512) (2,223) Cash and cash equivalents at beginning of period (10,667) (8,444)Effect of exchange rate fluctuations on cash held 10 -Cash and cash equivalents at end of period (11,179) (10,667) Cash 2,476 151Overdrafts (7,709) (5,473)Factoring advances (5,946) (5,345)Cash and cash equivalents (11,179) (10,667) COSALT PLC PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 28 OCTOBER 2007 Notes to the accounts 1. The financial information set out above does not constitute the Company'sstatutory accounts for the 52 weeks ended 28 October 2007 or 52 weeks ended 29October 2006 but is derived from those accounts. Statutory Accounts for 2006have been delivered to the Registrar of Companies, and those for 2007 will bedelivered following the Company's Annual General Meeting. The Auditors havereported on those accounts; their reports were unqualified and did not containstatements under Section 237(2) or (3) of the Companies Act 1985. Full accountsfor Cosalt plc for the period ended 28 October 2007 will be sent to shareholdersduring February 2008 and will be available after that time from the CompanySecretary, Cosalt plc, Fish Dock Road, Grimsby, North East Lincolnshire DN313NW. Copies of this announcement are available from the same address and boththe accounts and this announcement will be available on the Company's websitewww.cosalt.com 2. Segment reporting (a) PrimaryThe Group is organised into three main business segments: Safety & Protectionincorporating Marine Safety and Safety Workwear, 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. The operating business segments are organised andmanaged separately. During the year the Safety Workwear business was merged withMarine Safety to form Safety & Protection. 52 weeks ended 28 Oct 07 Safety & Schoolwear Holiday Head office* / Total Protection Homes unallocated £000 £000 £000 £000 £000Revenue 66,906 18,475 49,749 - 135,130Operating profit/ (loss) beforeexceptional items andgain on revaluations 4,119 1,248 1,004 (1,419) 4,952Reorganisation, redundancy andimpairment (1,277) (110) (367) - (1,754)Deficit/surplus on property disposals 525 - (12) 513Gain on revaluations - - - 1,063 1,063Amortisation of acquired intangibles (689) - - - (689)Operating profit/ (loss) 2,153 1,663 637 (768) 4,085Total assets 52,164 11,277 23,597 43,550 130,588Total liabilities (27,604) (5,587) (15,172) (23,415) (71,778)Total net assets 24,560 5,690 8,425 20,235 58,810Capital expenditure 1,400 40 391 64 1,895Depreciation 1,929 207 368 129 2,633Amortisation of intangible assets 909 59 52 7 1,027 52 weeks ended 29 Oct 06 Safety & Schoolwear Holiday Head office* Total Protection Homes /unallocated £000 £000 £000 £000 £000Revenue 58,247 19,112 46,636 - 123,995Operating profit/(loss) before exceptional itemsand gain on revaluations 2,405 1,216 364 (691) 3,294Reorganisation, redundancy and impairment (460) (195) (82) (472) (1,209)Surplus on property disposals 284 - - - 284Gain on revaluations - - - 835 835Operating profit/(loss) 2,229 1,021 282 (328) 3,204Total assets 35,854 11,149 26,834 9,445 83,282Total liabilities (17,918) (3,660) (15,730) (25,853) (63,161)Total net assets 17,936 7,489 11,104 (16,408) 20,121Capital expenditure 999 533 300 99 1,931Depreciation 1,592 201 377 134 2,304 Amortisation of intangible assets 190 39 62 7 298 Operating profits are shown before head office charges.The comparative figures have been adjusted to reflect this disclosure *Unallocated assets and liabilities principally represent investment properties,taxation, dividends, and pension scheme liability. (b) SecondaryGeographical segments: External Revenue Total Assets Capital Expenditure 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000United Kingdom 110,264 109,913 122,234 77,791 1,286 1,931Rest of Europe 24,866 14,082 8,354 - 609 - 135,130 123,995 130,588 77,791 1,895 1,931 Revenue is based on the region in which the customer is located. Total assetsand capital expenditure are based on the region in which the assets are located. 3. Earnings per share Basic earnings per share amounts are calculated by dividing the profitattributable to equity holders of the parent by the weighted average number ofordinary shares in issue during the year. Diluted earnings per share amounts are calculated by dividing the profitattributable to equity holders of the parent by the weighted average number ofordinary shares in issue during the year (adjusted for the effects ofpotentially dilutive options). The Group has only one category of dilutive potential ordinary shares which isthat of share options granted to Employees. Those options which have an exerciseprice which is less than the daily average mid-market price of the Company's ordinary shares during the year are considered dilutive. 2007 2006 Potentially Potentially dilutive dilutive share share Basic options Diluted Basic options DilutedProfit (£000) 1,568 - 1,568 1,651 - 1,651Weighted average number of shares (thousands) 14,807 77 14,884 13,279 33 13,312 Earnings per share (pence) 10.59 (0.06) 10.53 12.43 (0.03) 12.40 Apart from the share award under the Cosalt Share Plan on 30 November 2007 of49,815 shares there have been no other transactions involving ordinary shares orpotential ordinary shares between the reporting date and the date of approval ofthese financial statements which would significantly change the earnings pershare calculations shown above. 4. A final dividend of 6.00 pence per share in issue prior to the 12 October2007 placing of new shares is proposed and if approved will be payable on 4April 2008 to holders of those shares on the register as at 7 March 2008,absorbing £886,000. 5. This preliminary announcement was approved by the Board on 29 January 2008. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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