Interim Results
Pentagon Protection PLC
25 June 2004
Pentagon Protection Plc
Interim Results 2004
Much Improved Results; Confident Outlook
Pentagon Protection Plc ('Pentagon' or 'The Company'), the provider of
protective glazing products to the automotive commercial and residential
sectors, announces its Interim Results for the six months ended 31 March 2004.
David Thomas, Chairman, in his statement, reports:
'The period under review has been one of notable progress for Pentagon
Protection. The integration of Filmtek Ltd., Pentagon Protection's first
acquisition made in December 2003, following the April 2003 flotation on AIM, is
progressing well. Our turnover has grown significantly and we have made a
robust recovery on profit with a stronger and fitter Company.
'These results are broadly in line with management's expectations and strategy.
As indicated in my annual report for year ended 30 September 2003, we acquired
Filmtek in order to underpin the Company's leadership in the delivery of
improved security and safety for glass of any kind, and this is being reflected
in our figures and more broadly based business mix.'
Financial Highlights
• Turnover: £1.46m (2003: £531, 930)
- Continuing operations £755, 757
- Acquisitions £709, 062
• Operating profit: £10,215 (2003: loss £60, 909)
- Continuing operations loss £68, 508 (2003: loss £60, 909)
- Acquisitions £78,723
• Pre-tax profit: £253 (2003: loss £76, 669)
• Basic, diluted earnings per share: 0.00p (2003: loss 0.14p)
• Net assets: £2.83m (2003: deficit £138, 054)
• Cash £274,696 (2003: £6,786)
• No dividend, in line with stated policy in prospectus.
Corporate Highlights
• Integration of first acquisition Filmtek Ltd progressing well.
• Strengthens protective glass products business across broader client base.
• Adds substantial flat glass expertise.
• Projects domestically and overseas, especially in the Middle East.
• Pentagon Glass Tech subsidiary actively engaged in with DfT, growing
relationships with Fire Brigade, Metropolitan Police, Ambulance Service,
MOD.
• Progress with automotive sector OEM's: business won from Honda, Citroen,
Wrightbus.
• Project due to commence with Volkswagen.
• Now recommended supplier for all London-area Mercedes dealers, first for
the Company
• New product development with Pilkington.
Outlook
Regarding the outlook David Thomas said: ' Pentagon Protection is well placed to
take advantage of market opportunities at home and overseas for both its Filmtek
and Pentagon Glass Tech subsidiaries. We look forward to continued progress
across all areas of the business'
Contact:
David Thomas, Chariman Pentagon Protection PLC 020 8749 9749
Peter Binns Binns & Co PR 020 7786 9600
PENTAGON PROTECTION PLC
CHAIRMAN'S STATEMENT
Introduction and Financial Review
I am pleased to report that the period under review has been one of notable
progress for Pentagon Protection. The integration of Filmtek Ltd., Pentagon
Protection's first acquisition made in December 2003, following the April 2003
flotation on AIM, is progressing well. Our turnover has grown significantly and
we have made a robust recovery on profit with a stronger and fitter Company.
The Group's financial results from continuing operations for the six months to
31 March 2004 show turnover of £755,757, compared with £531,930 for the same
period last year.
Including the effects of the Filmtek acquisition, half-year turnover increased
to £1,464,819 against £1,165,914 for the whole of the year ended 30 September
2003. On profit, the Group significantly improved on last year's pre-tax losses
of £270,000 by breaking even for the period.
These results are broadly in line with management's expectations and strategy.
As indicated in my annual report for the year ended 30 September 2003, we
acquired Filmtek in order to underpin the Company's leadership in the delivery
of improved security and safety for glass of any kind, and this is reflected in
our figures and more broadly based business mix.
BUSINESS REVIEW
Filmtek Ltd.
Filmtek has, as anticipated, strengthened the Group's objective of becoming a
leading supplier of protective glass products across a broader client base and
adds substantial flat glass expertise to the Company.
Filmtek is in the process of undertaking several major projects both
domestically and internationally, especially in the Middle East. The Company's
clients include a number of global banks, international business houses and
government departments.
Pentagon Glass Tech
Pentagon Glass Tech Ltd., the original core of business of the Group which went
public on AIM, has been managing the market downturn in window tinting resulting
from recent legislation adjustments which have slowed demand for normal vehicle
tints to the driver and forward passenger windows. Significantly, your Company
has taken the opportunity to promote its proprietary SupaGlass higher protection
laminate across a number of existing and newly developed client opportunities.
We are actively engaged with the Department for Transport to promote our
product's safety and security aspects and, in addition, your Directors have
been strengthening relationships and business with the Fire Brigade, the
Metropolitan Police, the Ambulance Service and the Ministry of Defence.
Pentagon's progress with Original Equipment Manufacturers in the automotive
sector is also encouraging. We have secured business from Honda, Citroen, and
Wrightbus, and are due to commence projects with Volkswagen. Pentagon has become
the recommended supplier for all London-area Mercedes dealers, a first for a
company in our sector.
Pentagon Pro-Marker
As you know, your Company has been working on the development of a product that
provides a technically improved glass-etched security mark for use by glass and
glazing industries in the face of new legislation. This new legislation (FENSA),
driven by the UK's Glass & Glazing Federation, dictates that all new building
glass must be marked or etched with the confirmation of its compliance with
building regulations.
Pentagon has commenced production of the first batch of etching units. In the
meantime, we have conducted very successful tests with these units in one of the
world's largest glazing manufacturers, Pilkington. We look forward to being
able to report progress on this exciting project in the future.
Outlook
It is evident that the steps taken by your Board to strengthen both critical
mass and senior management these last few months have resulted in a
significantly improved stronger business.
In our two lead companies, Pentagon Glass Tech and Filmtek, we have clear
demonstration of product appeal both for SupaGlass and for our other protection
technologies. The need for protection across glass of all types continues to
grow, driven by urban criminal violence and terrorism. We are investing too in
the expansion of our presence to the two potentially high growth territories of
the Middle East and Far East.
We have also seen an improvement in the confidence of our client companies to
increase levels of business with us, resulting from further improvements and
performance accreditation of our technologies and from our client service
levels.
Pentagon Protection is well placed to take advantage of market opportunities at
home and overseas for both its Filmtek and Pentagon Glass Tech subsidiaries.
We look forward to continued progress across all areas of the business.
David Thomas
Chairman
25 June 2004
PENTAGON PROTECTION PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2004
Unaudited six months Audited period ended
ended 31 March September 2003
2004 2003
Notes £ £ £
Turnover 3
Continuing operations 755,757 531,930 1,165,914
Acquisitions 709,062
1,464,819 531,930 1,165,914
Cost of sales (473,347) (163,965) (354,100)
Gross profit 991,472 367,965 811,814
Selling and distribution costs (182,459) (119,508) (251,496)
Administrative expenses (808,859) (317,918) (817,303)
Other operating income 10,061 8,552 17,754
Operating profit/(loss)
Continuing operations (68,508) (60,909) (239,231)
Acquisitions 78,723 - -
10,215 (60,909) (239,231)
Interest receivable 1,025 66 988
Interest payable (10,987) (15,826) (32,179)
Profit/(loss) on ordinary 253 (76,669) (270,422)
activities before taxation
Tax on profit/(loss) on ordinary - - (111,500)
activities
-
Profit/(loss) on ordinary 253 (76,669) (381,922)
activities after taxation
Losses brought forward (689,624) (307,702) (307,702)
Accumulated losses carried £ (689,371) £ (384,371) £ (689,624)
forward
Basic and diluted earnings/(loss) 4 0.00p (0.14p) (0.47p)
per share
There are no recognised gains or losses other than the profit for the financial
period.
PENTAGON PROTECTION PLC
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2004
Unaudited six months Audited period ended
ended 31 March September 2003
2004 2003
Notes £ £ £
Fixed assets
Intangible assets 5 2,348,873 - -
Tangible assets 203,648 168,153 161,808
2,552,521 168,153 161,808
Current assets
Stocks 62,770 41,074 39,274
Debtors 1,002,792 407,217 388,734
Deferred tax asset - 118,000 -
Cash at bank and in hand 274,696 6,786 252,109
1,340,258 573,077 680,117
Creditors: Amounts falling due within (770,380) (608,721) (413,105)
one year
Net current assets/(liabilities) 569,878 (35,644) 267,012
Total assets less current liabilities 3,122,399 132,509 428,820
Creditors:
Amounts falling due after more than (283,694) (270,563) (52,955)
one year
£ 2,838,705 £ (138,054) £ 375,865
Capital and reserves
Called up share capital 125,956 54,167 89,167
Shares to be issued 5 750,000 - -
Share premium account 2,459,970 - 784,172
Merger reserve 6 192,150 192,150 192,150
Profit and loss account 6 (689,371) (384,371) (689,624)
Equity shareholders' funds £ 2,838,705 £ (138,054) £ 375,865
The notes on pages 6 to 10 form part of this interim report
PENTAGON PROTECTION PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2004
Unaudited six months Audited period ended
ended 31 March September 2003
2004 2003
£ £ £
Net cash inflow/(outflow) from 42,196 (39,700) (340,211)
operating activities
Returns on investments and servicing of (9,961) (9,012) (31,191)
finance
Taxation - - (29,354)
Capital expenditure and financial (9,710) (721) 5,977
investment
Acquisitions and disposals (943,263) - -
Net cash outflow before management of (920,738) (49,433) (394,779)
liquid resources and financing
Financing 943,331 (10,529) 651,950
Increase/(decrease) in cash in the £ 22,593 £ (59,962) £ 257,171
period
Reconciliation of net cash flow to
movement in net funds/(debt)
Increase/(decrease) in cash in the 22,593 (59,962) 257,171
period
Cash movements relating to debt and 9,683 3,760 167,223
lease financing
Movement in net funds/(debt) resulting 32,276 (56,202) 424,394
from cash flows
Inception of new finance leases - - (25,186)
Change in net funds/(debt) 32,276 (56,202) 399,208
Net debt at 1 October 2003 (10,902) (365,692) (410,110)
Net funds/(debt) at 31 March 2004 £ 21,374 £ (421,894) £ (10,902)
PENTAGON PROTECTION PLC
NOTES TO THE INTERIM REPORT
For the six months ended 31 March 2004
1. BASIS OF CONSOLIDATION
The interim report has been prepared in accordance with applicable
accounting standards and under the historical cost convention. On the 25
March 2003 Pentagon Protection Plc, which until that date had been a
dormant company, acquired all the shares in both Pentagon Glass Tech
Limited and Pentagon Glass Tech (Franchising) Limited, by way of a share
for share transfer. The shareholders in Pentagon Protection Plc immediately
after the transaction were the same as those in the two subsidiary
companies immediately before the transaction. This combination has been
accounted for using merger accounting rules since that date.
On 11 December 2003 Pentagon Protection Plc acquired 100% of the issued
share capital of Filmtek Limited. This subsidiary has been accounted for
using acquisition accounting and consequently only the results since 11
December 2003 have been included in the consolidated profit and loss
account.
The financial information set out in this interim report does not
constitute statutory financial information within the meaning of Section
240 of the Companies Act 1985 and it has not been audited.
2. ACCOUNTING POLICIES
The following accounting policies have been used consistently in dealing
with items which are considered material in relation to the financial
statements.
Accounting convention
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards.
Turnover
Turnover represents invoiced sales less returns exclusive of value added
tax and trade discounts.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated
to write off the cost less estimated residual value of each asset over its
expected useful life, as follows:
Leasehold improvements Over period of the lease
Plant and machinery 15% to 25 % reducing balance
Fixtures and fittings 25% reducing balance
Motor vehicles 25% reducing balance
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the
difference between the fair value of the consideration paid and the fair
value of assets acquired. It is capitalised and amortised through the
profit and loss account over the Directors' estimate of its useful economic
life of 20 years. Impairment tests on the carrying value of goodwill are
undertaken:
• At the end of the first financial year following acquisition;
• In other periods if events or changes in circumstances indicate that
the carrying value may not be recoverable.
Stocks
Stocks and work in progress are valued at the lower of cost and net
realisable value after making due allowance for obsolete and slow moving
items.
Leased assets
Where assets are financed by leasing or hire purchase agreements, the
assets are treated as if they had been purchased. The present value of the
minimum lease payments payable during the lease term is capitalised as a
tangible asset and the corresponding leasing commitment is included as a
liability. Rentals payable are apportioned between interest which is
charged to the profit and loss account, and capital which reduces the
outstanding commitment.
All other leases are treated as operating leases. Their annual rentals are
charged to the profit and loss account on a straight line basis over the
term of the lease.
Pension contributions
The company operates a defined contribution scheme for its employees.
The funds of this scheme are administered by trustees and are separate from
the company. All payments are charged to the profit and loss account as and
when they arise.
Deferred tax
Provision is made in full for all taxation deferred in respect of timing
differences that have originated but not reversed by the balance sheet
date, except for timing differences arising on revaluations of fixed assets
which are not intended to be sold and gains on disposals of fixed assets
which will be rolled over into replacement assets. No provision is made for
taxation on permanent differences.
Deferred tax assets are recognised to the extent that it is more likely
than not that they will be recovered.
Foreign Currencies
Assets and liabilities denominated in foreign currencies are translated at
the rate of exchange ruling at the balance sheet date. Transactions in
foreign currencies are recorded at the rate ruling at the date of the
transaction. Gains or losses on foreign currency translations are charged
to the profit and loss account as and when they arise.
Research and development
Development expenditure is capitalised on clearly defined projects whose
outcome can be assessed with reasonable certainty. Amortisation is
commenced in the year when significant revenues from the development occur
and is charged at 33% of net book value. All other research and development
expenditure is written off in the year in which it is incurred.
Invoice discounting
The group discounts some of its trade debts. The accounting policy is to
include trade debt within trade debtors due within one year and record cash
advances within creditors due within one year. Discounting fees and
interest are charged to the profit and loss account when incurred. Bad
debts are borne by the group and are charged to the profit and loss account
when incurred.
3. TURNOVER
The turnover for the period is attributable to the principal activities of
the group.
4. EARNINGS/(LOSS) PER SHARE
The calculations of earnings/(loss) per share are based on the following
profits/(losses) and numbers of shares:
Unaudited six months Audited period
ended 31 March ended 30 September 2003
2004 2003
£ £ £
Profit/(loss) for the
financial period £ 253 £ (76,669) £ (381,922)
For basic and diluted
earnings/(loss) per share:
Weighted average number of
shares 111,567,876 54,166,668 81,495,627
5. PURCHASE OF SUBSIDIARY UNDERTAKING
On 11 December 2003 Pentagon Protection Plc acquired 100% of the issued
share capital of Filmtek Limited, a company which supplies solar control,
safety and security film.
Net assets acquired: £
Tangible fixed assets 45,818
Stocks 16,755
Debtors 677,725
Cash at bank and in hand 1,964
Bank overdrafts (84,819)
Creditors (415,476)
___________
241,967
Goodwill 2,368,543
___________
£ 2,610,510
___________
Satisfied by:
Shares allotted 750,000
Cash 860,510
Contingent consideration 1,000,000
___________
£ 2,610,510
___________
The contingent consideration is contingent on the future performance of
Filmtek Limited for the three years ending 30 September 2006 and will be
settled three quarters in shares of Pentagon Protection Plc and one quarter
in cash. The cash payable of £250,000 is included within creditors falling
due after more than one year. The shares are included as shares to be
issued in capital and reserves.
During the period an amortisation charge of £19,670 was made based on the
directors' estimate of useful economic life of twenty years, thereby
reducing the carrying value of goodwill at 31 March 2004 to £2,348,873.
PENTAGON PROTECTION PLC
NOTES TO THE INTERIM REPORT
For the six months ended 31 March 2004
6. MOVEMENT IN RESERVES
Merger reserve Share premium Profit & loss account Total
£ £ £ £
At 1 October 2003 192,150 784,172 (689,624) 286,698
Premium arising on shares issued during the - 1,710,711 - 1,710,711
period
Less costs of share issue (34,913) (34,913)
Profit for the period
253 253
At 31 March 2004 £ 192,150 £ 2,459,970 £ (689,371) £ 1,962,749
7. COPIES OF THE INTERIM REPORT
Copies of the interim report are available from the company's registered
office at Pentagon House, Unit 4 Acton Park Estate, The Vale, Acton,
London, W3 7QE.
This information is provided by RNS
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Monday, 13th May 2024
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