Cosalt reveals potential £17m hit

The Grimsby-based group uncovered problems in its offshore division’s accounts in October, stemming from “a series of doubtful transactions”.

Yesterday the group said legal and exceptional charges from investigating and writing this off may reach £7m. Cosalt is also considering a non-cash impairment charge against the offshore division’s goodwill and intangible assets, worth more than £10m.

Cosalt said together with tough markets, this meant its trading for the year to the end of October was below expectations. Its shares plunged 27 per cent to 4.38p.

“The reasons for this action largely relate back to the poor trading and losses which the business operations suffered under the previous offshore management team,” said the group.

Cosalt started probing its Aberdeen-based offshore division in early September, and suspended its then head Calum Melville. Mr Melville and his brother Stuart, the division’s operations director, then resigned.

The group is currently pursuing legal action against the Melville brothers for alleged fraud.

“Having now completed the extensive investigations into the offshore division, the group’s position is that during the period to October 31, 2010, significant activities took place in this division which it is alleged were fraudulent,” it said.

Cosalt added talks about selling its marine business are “relatively well-advanced”.

The group said its debt has risen in recent months, and talks on long-term funding continue.