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Governance
Going concern
The Group refinanced in August 2008 with its bankers and
obtained unsecured total facilities of £34 million for a three
year period. The additional facilities secured were used to
finance the acquisition in August 2008 of Myhre-Maritime A/S,
a company based in Norway (see note 28 on page 70). This
acquisition, which resulted in a £10.6 million cash outflow, was
an integral part of the Group’s strategy of building a leading
global business in the Safety and Protection markets serving
the Marine Oil and Gas sectors.
At the same time, following the disposal of Banner in March
2008, the Group continued its strategy of disposing of non-core
businesses with the progression of the sale of the remaining
discontinued non-core Holiday Homes business.
During the late summer, as the global credit crisis intensified,
these adverse market conditions resulted in adverse cash
outflows from trading within the Holiday Homes business and
a material reduction in the expected sale proceeds. The sale
was finally completed on 25 October 2008. These negative
cash flows were significantly in excess of those planned when
the forecasts were put together in August 2008 to support the
refinancing and the acquisition of Myhre-Maritime A/S.
The performance of the underlying business remained good,
however the above factors led to a significant reduction in
headroom on the facilities available to the Group and the
need for additional funding. Consequently, the Directors
sought additional facilities of £5 million from their bankers which
were approved by their Credit Committees in the week ended
21 February 2009. The total bank facilities of £39 million will
now be fully secured over the assets of the Group.
As part of their negotiations a share in the security over the
assets will be given to the Trustees of the Cosalt plc Retirement
Benefit Plan.
The bank facilities include the following:
• a £19,900,000 Revolving Credit facility with a maturity
date of February 2012;
• a £13,100,000 Term Loan facility with the first repayment
of £3 million in October 2009 and the final repayment in
February 2012; and
• a 364 Day Credit facility of £6 million.
The Directors anticipate that on expiry of the 364 Day Credit
facility in the next 12 months, these facilities will be extended
or renegotiated, or that alternative or additional funding will
be secured.
Having considered these facilities, and reviewed the profit
and cash forecasts of the Group with appropriate sensitivities
around operational performance the Directors are satisfied that
the Group has sufficient funds for the foreseeable future and
therefore the going concern basis of preparation of the financial
statements remains appropriate.
Corporate governance report
Relations with Shareholders
The Company, principally through the Chief Executive Officer
and Finance Director, maintains a regular dialogue with
institutional Shareholders and financial analysts, particularly
following the interim and preliminary results announcements.
The Chairman makes himself available for these regular investor
meetings if requested to do so. The Non executive Directors
and the remainder of the Board are kept informed of the view
of Shareholders by regular reports from the Chief Executive
Officer and Finance Director and independent feedback reports
from brokers and the Group’s financial PR Company. They
also receive copies of independent research and brokers notes
when published. The Company’s Annual General Meeting is
used as the main opportunity for the Directors to communicate
with private investors. The Group maintains a website which
gives additional information for Shareholders. At the Annual
General Meeting in March 2008 the Chairman indicated the
level of proxies received on all the resolutions following the
vote by the meeting.
Statement of Compliance with the Combined Code
The Directors believe the Company has complied with the
provisions set out in Section 1 of the Combined Code.
Statement of Directors’ responsibilities in respect of the
Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year.
Under that law they are required to prepare the Group financial
statements in accordance with IFRSs as adopted by the
EU and applicable law and have elected to prepare the
Parent Company financial statements in accordance with
UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice).
The Group financial statements are required by law and
IFRSs as adopted by the EU to present fairly the financial
position and the performance of the Group; the Companies
Act 1985 provides in relation to such financial statements that
references in the relevant part of the Act to financial statements
giving a true and fair view are references to their achieving a
fair presentation.
Cosalt plc Annual report & financial statements 2008
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