Final Results Replacement

Pentagon Protection PLC 02 February 2005 PENTAGON PROTECTION PLC REPLACEMENT ANNOUNCEMENT THIS ANNOUNCEMENT REPLACES THE ANNOUNCEMENT OF FINAL RESULTS MADE BY THE COMPANY ON 17 DECEMBER 2004 (RNS NO. 5347G). CHANGES TO THAT ANNOUNCEMENT ARE AS FOLLOWS: Changes to announcement are as follows: Consolidated Profit and Loss Account Goodwill amortisation - (Amount not changed) Disclosure changed to include the cost under Administration expenses heading. Consolidated Balance Sheet Current Year - No adjustments Prior Year - Typing error made on conversion as creditors should be Â£413,105 not Â£13,105. All other figures not adjusted. Consolidated Cash flow Statement Note 1 Reconciliation of operating profit/(Loss) to net cash outflow from operating activities Operating profit decreased from Â£278,489 to Â£195,495 Depreciation charges decreased from Â£79,651 to Â£45,350 Amortisation has been introduced at Â£117,302 Increase in stock reduced from (Â£117,002) to (Â£100,247) Increase in debtors changed from (831,231) to Â£97,428 Decrease in creditors changed from Â£400,288 to (Â£110,741) Net Cash inflow changed from (Â£189,805) to Â£244,587 Note 2 Analysis of cash flow for headings netted in cash flow statement Returns on investments and servicing of finance - no adjustments Capital expenditure and financial investments Purchase of tangible fixed assets - Reduced from Â£121,354 to Â£75,538 Purchase of intangible fixed assets - Reduced from Â£1,213,162 to Â£943,365 Financing - Share Issue decrease from Â£2,347,500 to Â£1,597,500 Note 3 Analysis of changes in net funds Debts falling due within one year - Opening balance changed from (Â£18,468) to (Â£106,224) and the movement in year from Â£5 to Â£30,005 and closing balance from (Â£18,463) to (Â£76,219). Factor finance has been introduced with an opening balance of (Â£86,621), movement Â£14,941 and closing balance of (Â£71,680). Total closing balances has adjusted with the above accordingly. Reconciliation to net debt cash flow to movement in net fund/(debt) Cash movement relating to debt and lease financing - Increased from Â£35,976 to Â£80,917 Net debt at 1st October 2003 adjusted to movements on note 3. The corrected version of the announcement follows: FINAL RESULTS YEAR ENDED 30 SEPTEMBER 2004 Turnover up 184%, Profits Turn Around; Record Order Book Pentagon Protection PLC ('Pentagon' or 'the Company'), the provider of protective glazing products to the commercial and automotive sectors, announces its final results for the year ended 30 September 2004. The Company went public on AIM in April 2003. David Thomas, Chairman, in his statement reports: 'I am delighted to report a year of reasonable progress. These results are in line with management's expectations, with the contribution from our first acquisition, Filmtek Limited, exceeding expectations. We have strengthened the foundations for the continued growth of our established business and expansion into new product sectors and geographies. Filmtek underpins our aspirations of becoming a leading global player in overall glass protection.' Financial Highlights â€¢ Turnover: Â£3.32m, up 184% - Continuing operations Â£1.46m (2003: Â£1.16m) up 25% - Acquisitions Â£1.85m (2003: nil) â€¢ Operating profit: Â£195,495 (2003: loss Â£239,231) - Continuing operations Â£17,980 (2003: nil) - Acquisitions Â£177,515 â€¢ Interest cover 12 x â€¢ Pre-tax profit: Â£178,857 (2003: loss Â£270,422) â€¢ Basic, diluted earnings per share: 0.15p (2003: loss 0.47p) â€¢ Net assets: Â£3.59m (2003: Â£375,865) - Acquisition of Filmtek - Two successful share placings â€¢ Cash Â£601,782 (2003: Â£252,109) â€¢ No dividend, in line with stated policy Corporate Highlights Pentagon Filmtek â€¢ Filmtek acquisition, first since flotation April 2003, broadens international markets for products and services â€¢ Pentagon Filmtek's contribution exceeds expectations â€¢ Major projects in UK, Middle East and Far East â€¢ Contracts completed/ongoing: HSBC, Sony, Boots, Marks & Spencer, Barclays, Credit Suisse First Boston, Asda, Dixons, the British Council, United Nations, DHL, Pepsi, Singapore Changi Airport, and Middle East based groups â€¢ Record order book of Â£1.3m Pentagon Glass-Tech â€¢ SupaGlass continues to win recognition, awards and accreditations. â€¢ Growing overseas business â€¢ VW, Audi, Mazda, Honda, the Post Office, using or approved the product â€¢ General Health and Safety policies expected to benefit the business â€¢ New product launch planned for early 2005 Pentagon Pro-Marker â€¢ Recent launch in Dusseldorf well received Outlook David Thomas says: 'The first quarter has started well and the Group has a record order book. The directors are confident of continued profits across all areas of the business.' Contact: David Thomas, Chairman Pentagon Protection PLC 020 8749 9749 Peter Binns Binns & Co PR Ltd 020 7786 9600 Charlotte Edgar Binns & Co PR Ltd 020 7153 1478 CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER 2004 Final results for the year ended 30th September 2004. Introduction and Financial Review I am delighted to report a year of considerable progress in the development of Pentagon Protection plc. These results are in line with management's expectations arising from the strategies announced in the Group's 2003 Annual Report and deployed across 2004. A significant gain has been recorded in turnover, the Group has moved into profit and we have strengthened the foundations for the continued growth of our established business and expansion into new product sectors and geographies. Importantly, we have successfully integrated a major new business - Filmtek Limited, acquired in December 2003 - to underpin the achievement of our aspirations of becoming a leading global player in overall glass protection. The Group's financial results from continuing operations for the year ending 30 September 2004 show turnover up 25 per cent. to Â£1,462,714, compared with Â£1,165,914 for the previous year. Including the effects of the Filmtek acquisition, turnover for the year increased to Â£3,316,554, up 184 per cent. compared to 2003. On operating profit, the continuing operations posted a swing of Â£288,402 from an operating loss of (Â£270,422) in 2003 to a profit of Â£17,980 in 2004. With the contribution from the Filmtek acquisition, the operating profit in 2004 was Â£195,495, an improvement of Â£465,917 over 2003 levels. The Group has benefited from a positive cash flow during the year. The net interest charge for the year reduced to Â£16,638 (2003: Â£31,191). Interest was covered 12 times by operating profit (2003: interest was not covered due to an operating loss). Net assets of the Group have increased to Â£3,596,309 (2003: Â£375,865) as a result of the acquisition of Filmtek and the two successful share placings during the year: First, in December 2003, to help finance the acquisition of Filmtek (21 million new Ordinary Shares at 4.75p, which raised Â£997,500 gross); second, in September 2004 (9.6 million new Ordinary Shares at 6.25p, which raised Â£600,000 gross) to finance the organic expansion of the Group. Overall there was an increase in net funds during the year of Â£385,649 (2003: Â£311,097). The net cash Inflow from operating activities of Â£244,587 (2003: outflow of Â£340,211) was caused by an increase in working capital of Â£547,945 (2003: increase in working capital Â£134,940). The increase in working capital reflects the expansion of the business with the acquisition of Filmtek and the broadening of the geographical spread of the Group's activities. In line with stated policy, the directors do not recommend payment of a dividend. Business Review Pentagon Filmtek Filmtek, the Group's first acquisition since flotation, is a leading specialist in the advancement and installation of safety, security and solar window film on commercial buildings, in the UK and overseas. To recap on the details of the acquisition: it was financed by a placing of 21 million new ordinary shares at 4.75p, which raised Â£997,500 gross, and by the issue of 15,789,474 new Ordinary Shares in Pentagon Protection to the vendors. In addition, deferred consideration of up to a maximum of Â£1 million could also be payable over the following three years, depending on Pentagon Filmtek's profits in the three years ended 30 April 2006, this to be satisfied by a combination of cash and new Ordinary Shares in Pentagon. The acquisition has significantly broadened the international market for Pentagon Protection's products and services under the distinctive Pentagon brand and has added substantial flat-glass expertise to the Company's automotive glass protection services. Pentagon Filmtek, which was founded as Filmtek Limited in 1996, has grown to become a leading specialist in the development and installation of protective window film on commercial buildings, leading to the development of the Filmtek 'Anchoring Solution', a unique technology for containing and anchoring glass that has particular application in overhead glazed roofing. Pentagon Filmtek's contribution to the Group's overall business has exceeded expectations. Turnover of this business for the nine months ending September 2004 was Â£1,853,840, representing 56 per cent. of Group sales. Operating profit for the same period was Â£195,495. Pentagon Filmtek has undertaken several major projects over the year, nationally and internationally, and has provided a base from which the Group has established on-the-ground representation in the Far East (Singapore) and will shortly open in the Middle East (Bahrain), two geographical areas identified as key to our international expansion. The Group has also established agency relationships in Dubai and Saudi Arabia. Over the last two years, Pentagon Filmtek has completed contracts in more than 51 countries worldwide, including Saudi Arabia, Iraq, Afghanistan, East Timor, Bahrain, China, and Singapore. Our recent client list comprises an array of blue-chip companies. Domestic and international contracts recently completed and ongoing include: HSBC, Sony, Boots, Marks & Spencer, Barclays, Credit Suisse, Asda, Dixons, the British Council, United Nations, DHL, Pepsi, Singapore Changi Airport and a number of Middle East based groups. The prospects for continued progress are also highly encouraging: Pentagon Filmtek has currently quoted for projects comprising close to Â£3,000,000 in value and has an order book of Â£1,300,000. Pentagon Glass-Tech Section 32 of the Construction and Use Regulations (part of the Road Traffic Act) was changed by Parliament in February 2004 to include reference to window tint films, the effect of which is to discourage the practice of applying tints to the driver and forward passenger windows. This had a significant effect on demand for window tinting and compelled the Group to step up its effort in promoting SupaGlass as a superior alternative to tinting and to open new markets internationally, capitalising on the strengthening overall awareness of the Pentagon brand. The revised strategy is working. Turnover on continuing operations for the year ending September 30, 2004 was Â£1,462,714, up from Â£1,165,914 for the previous year. Good progress was also made on profit, with the business posting an operating profit for the year of Â£17,980 compared to a loss for the previous year of Â£239,231. Internationally, Pentagon Glass-Tech has secured license-based representation across the year in Benelux and Brazil and received a deposit for Greece. Discussions are ongoing with a number of additional licensee prospects, particularly in the Middle East. The directors are confident that the pace of international expansion will accelerate over this next year. Pentagon Glass-Tech and Pentagon Filmtek plan to establish dedicated offices and facilities in Bahrain, which will act as the base for the Group to fulfil automotive and commercial building projects within the region. SupaGlass is continuing to attract commendations, accreditations and praise from the motor industry. After the VW initiative to promote the product throughout its dealer network, which is now beginning to be executed, sister company Audi has recently approved SupaGlass and will soon also offer SupaGlass through its motor retail network. Similar aspirations exist with respect to Mazda and Honda, both of which have approved SupaGlass during 2004. In addition, the Post Office has recently issued an approval for SupaGlass following extensive testing and this is expected to translate into orders for the application of SupaGlass to a significant number of vehicles from the start of 2005. A major focus for SupaGlass during 2005 will be Health and Safety. Government Health & Safety policies are encouraging employers to put more diligence into developing duties of care operations for their employees on the road. It is anticipated that this will lead to increased SupaGlass demand for company vehicles, capitalising on the brand's growing reputation for protection in this area. Pentagon Glass-Tech will launch, early in 2005, an upgraded version of SupaGlass that increases the thickness of the protective laminate from 300 to 450 microns. Not only will the Group secure worldwide exclusivity from the manufacturer for distribution of this superior-performing material, the initiative will strengthen Pentagon's position with the Government on the development of a new, anti-theft DIN standard for vehicle glazing. Pentagon Pro-Marker The Group has been working on the development of a product that provides a patented, technically superior glass-etched certification mark for use by glass and glazing industries in the face of impending legislation. This new legislation dictates that all safety glass produced and installed in any building within a critical location must be marked in accordance with the relevant impact accreditation. Failure to do so could deem the glass unfit for purpose and non-compliant with UK building regulations with the penalties in line with UK law. Pro-Marker has been developed in close consultation with the glass industry and with the support of the Glass & Glazing Federation. Pentagon Pro-Marker was officially launched in November at 'Glasstech 2004' in Dusseldorf, the leading international glass exhibition. The response received from representatives of many countries was extremely encouraging and the directors are now in advanced discussions with a leading distributor for the UK and Europe. In addition, the Group is in discussions with a number of companies both inside and outside of the glass industry, from whom significant orders for Pro-Marker are also expected to mature over the next year. Conclusion and Outlook It is encouragingly evident that the steps taken by the directors to strengthen both critical mass and senior management over the last year, in combination with a clear spirit of commitment and dedication at all levels from within the Group, have resulted in a significantly stronger business and platform for future growth. In our two lead companies, Pentagon Filmtek and Pentagon Glass-Tech, we have clear evidence of the internationally growing product appeal of our other protection technologies. The need for protection across glass of all types continues to grow, driven by urban criminal violence, terrorism and intensifying Health & Safety considerations. We have also seen a growth in the confidence of our clients to increase levels of business with us, resulting from continuing improvements in product and service and further accreditations of our technologies. The first quarter has started well and the Group has a record order book. With the Group pressing ahead over the coming year with its plans to expand the Pentagon Protection brand geographically into new markets, introduce better technologies and launch superior new products, the directors are confident of continued progress across all areas of the business. David Thomas Chairman PENTAGON PROTECTION PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER 2004 30.9.04 30.9.03 Notes Â£ Â£ Â£ Â£ TURNOVER 2 -------- -------- Continuing operations 1,462,714 1,165,914 Acquisitions 1,853,840 - -------- -------- 3,316,554 1,165,914 Cost of sales 1,364,463 354,100 -------- -------- GROSS PROFIT 1,952,091 811,814 -------- -------- Distribution costs 501,997 261,496 Administrative costs 1,192,343 807,303 Amortisation of goodwill 82,994 - -------- -------- 1,777,334 1,068,799 -------- -------- 174,757 (256,985) Other operating income 20,738 17,754 -------- -------- OPERATING PROFIT/(LOSS) -------- -------- Continuing operations 17,980 (239,231) Acquisitions 177,515 - -------- -------- 195,495 (239,231) Interest receivable and 3,125 988 similar income -------- -------- 198,620 (238,243) Interest payable and 19,763 32,179 similar charges -------- -------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES 178,857 (270,422) BEFORE TAXATION Tax on profit/(loss) on - 111,500 ordinary activities -------- -------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES 178,857 (381,922) AFTER -------- -------- TAXATION PROFIT/(LOSS) FOR THE 178,857 (381,922) FINANCIAL YEAR -------- -------- RETAINED PROFIT/ (DEFICIT) FOR THE YEAR 178,857 (381,922) FOR THE GROUP ======== ======== Basic and diluted 0.15p (0.47)p earnings/(loss) per share TOTAL RECOGNISED GAINS AND LOSSES The Group has no recognised gains or losses other than the profit for the current year and the loss for the previous year. CONSOLIDATED BALANCE SHEET 30TH SEPTEMBER 2004 30.9.04 30.9.03 Notes Â£ Â£ Â£ Â£ FIXED ASSETS -------- -------- Intangible assets 2,430,844 - Tangible assets 237,814 161,808 -------- -------- 2,668,658 161,808 CURRENT ASSETS --------- -------- Stocks 156,276 39,274 Debtors 1,219,965 388,734 Cash at Bank 601,782 252,109 --------- -------- 1,978,023 680,117 CREDITORS Amounts falling due within 777,972 413,105 one year --------- -------- NET CURRENT ASSETS 1,200,051 267,012 -------- -------- TOTAL ASSETS LESS CURRENT 3,868,709 428,820 LIABILITIES CREDITORS Amounts falling due after 22,400 52,955 more than one year PROVISIONS FOR LIABILITIES 250,000 - AND CHARGES -------- 3,596,309 375,865 -------- -------- CAPITAL AND RESERVES Called up share capital 135,556 89,167 Share premium 3,029,370 784,172 Merger reserve 192,150 192,150 Shares to be issued 750,000 - Profit and loss account (510,767) (689,624) -------- -------- SHAREHOLDERS' FUNDS 3,596,309 375,865 ======== ======== CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER 2004 30.9.04 30.9.03 Notes Â£ Â£ Â£ Â£ Net cash inflow / (outflow) from operating 1 244,587 (340,211) activities Returns on investments and servicing of 2 (16,638) (31,191) finance Taxation - (29,354) Capital expenditure and financial 2 (410,522) 5,977 investment Acquisitions 2 (943,365) - -------- -------- (1,125,938) (394,779) Financing 2 1,475,611 651,950 --------- -------- Increase in cash in the period 349,673 257,171 ======== ======== Reconciliation of net cash flow to movement in net funds/(debt) Notes 2004 2003 Â£ Â£ Increase/(decrease) in cash in 3 349,673 257,171 the year Cash movements relating to debt and lease 80,917 167,223 financing -------- --------- Movement in net debt resulting from cash 430,590 424,394 flows -------- --------- Inception of new finance - (25,186) leases -------- --------- Change in net debt 430,590 399,208 Net debt at 1 October 2003 (10,902) (410,110) -------- --------- Net funds/(debt) at 30 419,688 (10,902) September 2004 ======== ======== NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER 2004 1. RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 30.9.04 30.9.03 Â£ Â£ Operating profit/(loss) 195,495 (239,231) Depreciation charges 45,350 35,823 Amortisation 117,302 - Profit on disposal of fixed assets - (1,863) Increase in stocks (100,247) (13,200) Decrease in debtors 97,428 7,923 Decrease in creditors (110,741) (129,663) ________ ________ Net cash inflow/(outflow) from operating activities 244,587 (340,211) ======== ======== 2. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT 30.9.04 30.9.03 Â£ Â£ Returns on investments and servicing of finance Interest received 3,125 988 Interest paid (18,793) (30,446) Interest element of hire purchase payments (970) (1,733) ________ ________ Net cash outflow for returns on investments and servicing of finance (16,638) (31,191) ======== ======== Capital expenditure and financial investment Purchase of tangible fixed assets (75,538) (15,695) Sale of tangible fixed assets - 21,672 Development expenditure (334,984) - __________ ________ Net cash (outflow)/inflow for capital expenditure and financial investment (410,522) 5,977 ======== ======== Acquisitions Purchase of subsidiary undertaking (860,510) - Net overdrafts acquired with subsidiary (82,855) - ---------- --------- Net cash outflow for acquisitions (943,365) - ---------- --------- The subsidiary undertaking acquired during the year contributed Â£288,418 to the group's net operating cash flows, paid Â£3,059 in respect of net returns on investments and servicing of finance, and utilised Â£169,442 for capital expenditure Financing Loans repaid to financial institution (18,467) (18,462) Increase in factor finance - 42,201 Flotation and share issue costs (55,913) (290,826) Capital element of finance lease rental (17,509) (35,539) Net decrease in director's loan (30,000) (155,423) Share issue 1,597,500 1,109,900 _________ ________ Net cash inflow from financing 1,475,611 651,950 ======== ======== NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER 2004 3. ANALYSIS OF CHANGES IN NET FUNDS At 1.10.03 Cash flow Other non-cash At 30.9.04 changes Â£ Â£ Â£ Â£ Net cash: Cash at 252,109 349,673 - 601,782 bank ------------ ------------ ------------ ------------ Debts falling due within (106,224) 30,005 - (76,219) one year ------------ ------------ ------------ ------------ Debt due after (20,771) 18,462 - (2,309) one year ------------ ------------ ------------ ------------ Finance (49,395) 17,509 - (31,886) leases ------------ ------------ ------------ ------------ Factor (86,621) 14,941 - (71,680) finance ------------ ------------ ------------ ------------ Total (10,902) 430,590 - 419,688 ======== ======== ======== ======== Copies of the Company's full Report and Accounts will be sent to shareholders in due course and will be available from: Pentagon Protection Plc Pentagon House 4 Acton Park Estate The Vale London W3 7QE This information is provided by RNS The company news service from the London Stock Exchange

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