Half-yearly Report
Pentagon Protection Plc
("Pentagon" or the "Company")
Unaudited Interim Financial Statements for the period ended 31 March
2014
CHAIRMAN'S STATEMENT
Introduction
These are the results for Pentagon Protection Plc for the interim
period ended 31 March 2014.
Financial review
Turnover of £596,412 for the six months to 31 March 2014 and a loss
after tax of £380,201 represents a significantly poorer performance compared
to the same period last year. As a result, the statement of financial position
shows total equity attributable to the shareholders of the parent as negative
£108,451.
Post balance sheet events
It was announced on 14 April 2014, despite a relatively healthy
sales pipeline for each of the Company's three divisions, the lack of working
capital and the Company's cash constraints meant that management were in
discussions regarding short term financing.
On 6 May 2014, the Board requested that trading of the ordinary
shares of the Company on the AIM Market be temporarily suspended pending
clarification of the Group's financial position. It also confirmed that the
financial condition and prospects of the Group had not improved and it was
likely the Board would need to appoint administrators to the Company.
On 22 May 2014, the Company disposed of the entire issued share
capital of SDS Group Limited ("SDS"), the Group's security division for a
total consideration of £190,000 on an intercompany debt free basis, to Mr
Haytham ElZayn, former chairman and existing 29.5% shareholder of the Company.
Consideration of £110,000 for the shares in SDS was settled by way of
reduction of a loan payable by the Company to Mr ElZayn. In addition,
intercompany balances of £43,963 payable by SDS to International Glass
Solutions LLC, a wholly owned subsidiary of the Company, and £38,683 payable
by SDS to the Company have been assigned to Mr ElZayn for an aggregate
consideration of £80,000, settled similarly by way of reduction of the loan
payable by the Company to Mr ElZayn.
On 24 June 2014, the Company posted a circular to shareholders
("Circular") containing a notice convening a general meeting of the Company
("General Meeting") to be held on 11 July 2014. The Circular contained
proposals (the "Proposals") for, inter alia:
- a Company Voluntary Arrangement ("CVA"),
- the disposal of its trading subsidiaries,
- the adoption of an Investing Policy under AIM Rule 15,
- the conditional appointment of Peterhouse Corporate Finance Limited
("Peterhouse") as Sole Broker,
- placing by Peterhouse of Ordinary Shares at a price of £0.013 to raise
£611,600,
- the issue of warrants, and
- the change of name to YOLO Leisure and Technology plc.
The Circular was issued because the Board had not been able to
secure additional short-term financing for the Company and therefore the
Directors considered that, if the Proposals are not approved at the General
Meeting, it would be likely that the only alternative would be the cessation
of trading and the realisation of assets, which the Directors believed would
deliver very little or no value to its Shareholders.
The Directors therefore made a proposal to creditors under a CVA
process, which provided an opportunity for the unsecured creditors to make a
partial recovery of their debt, which was based on realising a value for the
existing AIM listing status of the business. The Directors also proposed
disposing of the Company's remaining businesses, as part of a CVA process, to
Mr Haytham ElZayn in consideration for the balance of loan amounts due to him.
In order to recapitalise the Company and to provide funding for the
CVA and working capital, Peterhouse conditionally raised £611,600 at £0.013
per Subscription Share, through the Subscription of 47,046,148 new Ordinary
Shares. The Subscription Shares will be issued subject to the passing of
certain Resolutions as set out above.
Subject to the passing of Resolutions at the General Meeting,
Peterhouse Corporate Finance Limited will be appointed as sole broker to the
Company and Simon Lee Robinson will join the Board as Chief Executive Officer
and Mohammed Sohail Bhatti as Finance Director and that Cecil O'Brien and I
will resign from office.
Steven Chambers
Chairman
10 July 2014
For further enquiries please contact:
Pentagon Protection Plc: Tel: 01494 793 333
Steven Chambers, Managing Director
Cairn Financial Advisers LLP Tel: 0207 148 7900
Sandy Jamieson
Peterhouse Corporate Finance Limited Tel: + 44 20 7469 0930
Eran Zucker
Unaudited Unaudited
six months ended six months ended
31 March 2014 31 March 2013
Notes £ £
Revenue 596,412 1,746,801
Cost of sales (443,470) (1,171,362)
GROSS PROFIT 152,942 575,439
Distribution costs - (10,944)
Administrative expenses (532,992) (553,843)
(LOSS)/PROFIT FROM OPERATIONS BEFORE
FINANCING ACTIVITIES
(380,050) 10,652
Finance income - -
Finance costs - (7,864)
(LOSS)/PROFIT BEFORE TAX (380,050) 2,788
Tax (151) (46)
(LOSS)/PROFIT FOR THE PERIOD (380,201) 2,742
Other comprehensive income/(expense) - 6,638
TOTAL COMPREHENSIVE (EXPENSE)/INCOME
FOR THE PERIOD (380,201) 9,380
(Loss)/profit before tax and total comprehensive (expense)/income for the
period are all attributable to the equity shareholders of the parent.
(Loss)/profit per share
Basic 0.00p 0.00p
Diluted 0.00p 0.00p
Revenue and operating (loss)/profit for the period all derive from continuing
operations.
Unaudited Audited
31 March 30 September
2014 2013
Notes £ £
ASSETS
Non-current assets
Intangible assets 3,838 -
Goodwill 434,536 434,536
Property, plant and equipment 29,259 30,742
467,633 465,278
Current assets
Inventories 134,799 144,023
Trade and other receivables 277,649 821,558
Cash and cash equivalents 4 10,433 9,529
422,881 975,110
TOTAL ASSETS 890,514 1,440,388
EQUITY AND LIABILITIES
Equity
Share capital 5 905,065 905,065
Share premium account 7,160,948 7,160,948
Share based payment reserve 76,874 81,415
Other reserves 25,040 11,198
Retained earnings (8,276,378) (7,896,177)
Total equity attributable to
equity holders of the
parent
(108,451) 262,449
Current liabilities
Trade and other payables 668,021 840,051
Shareholder loan 330,944 337,888
Total liabilities 999,965 1,177,939
TOTAL EQUITY AND LIABILITIES 890,514 1,440,388
Share Share
Share Premium based Other Retained
capital account payments reserves earnings Total
reserve
£ £ £ £ £ £
Audited at 1 October 2012 905,065 7,160,948 80,146 9,696 (8,285,704) (129,849)
Total comprehensive
income/(expense) for the period - - - 6,638 2,742 9,380
Unaudited at 31 March 2013 905,065 7,160,948 80,146 16,334 (8,282,962) (120,469)
Total comprehensive
expense for the period - - - (5,136) 386,785 381,649
Transactions with owners:
Shares issued - - - -
Share based payments - - 1,269 - - 1,269
Audited as at 1 October 2013 905,065 7,160,948 81,415 11,198 (7,896,177) 262,449
Total comprehensive
income for the period - - (4,541) 13,842 (386,201) (370,900)
Unaudited at 31 March 2014 905,065 7,160,948 76,874 25,040 (8,276,378) (108,451)
All equity is attributable to equity shareholders of the parent.
Share premium
Represents amounts subscribed for share capital in excess of its nominal
value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account, which is used for the corresponding entry to
the share based payment charge through the Statement of Comprehensive Income.
Group - Other reserves Merger Currency Shares held Total
reserve reserve by ESOP
£ £ £ £
Audited At 1 October 2012 16,000 (1,763) (4,541) 9,696
Transactions with owners:
Total comprehensive income - - - -
for the
period
Unaudited at 31 March 2013 16,000 (1,763) (4,541) 9,696
Total comprehensive income
for the
period - 1,502 - 1,502
Audited as at 30 September 16,000 (261) (4,541) 11,198
2013
Total comprehensive income
for the
period - 13,842 - 13,842
At 31 March 2014 16,000 13,581 (4,541) 25,040
Merger reserve
Represents the difference between the fair value and nominal value of the
equity consideration provided in exchange for 90% or more of the equity
instruments acquired in another entity.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have
arisen on the retranslation of overseas operations.
Shares held by ESOP
These relate to shares held by the Pentagon Employee Share Ownership Plan and
are used to assist in meeting the Group's obligations under employee
remuneration schemes.
Unaudited Unaudited
six months ended six months ended
31 March 2014 31 March 2013
£ £
Operating activities
(Loss)/profit before tax (380,050) 2,788
Depreciation of property, plant and equipment 38,688 1,243
Share based payments - -
Exchange adjustment (11,910) 6,638
Changes in working capital:
Decrease in inventories 9,224 540
(Increase)/decrease in trade and other receivables 543,909 (1,069,196)
Increase/(decrease) in trade and other payables (172,031) 1,038,146
Net finance cost/(income) - 7,864
Net cash used in operating activities 27,930 (11,977)
Investing activities
Payments to acquire property, plant and equipment (19,931) -
Net cash used in investing activities (19,931) -
Financing activities
Decrease in shareholder loan (6,944) (49,381)
Interest paid - (7,864)
Net cash used in financing activities (6,944) (57,245)
Taxation (151) (46)
Net increase/(decrease) in cash and cash equivalents 904 (69,268)
Cash and cash equivalents at the start of the period 9,529 114,954
Cash and cash equivalents at the end of the period 10,433 45,686
1 General information
Pentagon Protection Plc (`the Company') and its subsidiaries (together `the Group')
specialise in the supply and installation of anti-shatter/safety films, bomb blast
protection, security and solar control films as well as opaque privacy films and
manifestation graphics and the provision of bespoke security consultancy for high risk
project management. They are also involved in Assessment and Examination (A&E)
projects.
The Company is a publicly quoted company incorporated and domiciled in England. The
address of its registered office is Solar House, Amersham Road, Chesham,
Buckinghamshire HP5 1NG.
The Company is quoted on AIM.
This consolidated interim financial information was approved for issue on 10 July
2014.
2 Accounting policies
2.1 Basis of preparation
The interim consolidated financial information comprises the consolidated Statements of
Financial Position at 31 March 2014 and 30 September 2013 and the consolidated
Statements of Comprehensive Income, Changes in Equity and Cash Flows for the periods
ended 31 March 2014 and 31 March 2013 and the related notes of Pentagon Protection Plc,
(hereinafter referred to as 'the interim financial information'.)
The interim financial information has been prepared in accordance with IAS 34, 'Interim
Financial Reporting' as adopted by the European Union. In preparing this information,
management have used the accounting policies set out in the Group's annual financial
statements as at 30 September 2013.
This interim financial information does not constitute a set of statutory accounts under
the requirements of the Companies Act 2006 and is neither audited nor reviewed. The
comparative figures for the financial year ended 30 September 2013 are an extract from
the Group's 2013 financial statements, which have been reported on by the Group's
auditors and delivered to the Registrar of Companies. The report of the auditors was
unqualified.
This document (the Interim Statement 2014) will be published on the company's website
and will be publicly available from the London Stock Exchange regulatory publications.
The maintenance and integrity of the Pentagon Protection Plc website is the
responsibility of the directors. Legislation in the UK governing the preparation and
dissemination of accounts may differ from legislation in other jurisdictions.
2.2 Going concern
The Group has net liabilities of £108,451 as at 31
March 2014. The financial statements have been
prepared on the going concern basis and take in to
account the disposal of 22 May 2014 and the
assumption that the shareholder resolutions are
passed on 11 July 2014 and that the subsequent
placing of shares is successful.
3 Business and geographical segments
Based on the risks and returns the directors consider that the primary
reporting format is by business segment. Results by business segment are
as follows:
Unaudited Unaudited
six months ended six months
ended
31 March 2014 31 March 2013
£ £
Protective Film and Anchoring
Turnover 235,204 1,053,643
Cost of sales (216,999) (687,637)
Gross profit 18,205 366,006
Overheads (net) (283,156) (294,249)
Operating (loss)/profit (264,951) 71,757
Security Products and Services
Turnover 361,208 693,158
Cost of sales (226,470) (483,725)
Gross profit 134,738 209,433
Overheads (124,975) (242,596)
Operating profit/(loss) 9,763 (33,163)
Group Operating Expenses (net)
Overheads (124,860) (27,942)
Totals
Turnover 596,412 1,746,801
Cost of sales (443,470) (1,171,362)
Gross profit 152,942 575,439
Overheads (532,992) (564,787)
Operating (loss)/profit (380,050) 10,652
Assets and liabilities by business segment are as follows:
Unaudited Audited
31 March 30 September
2014 2013
£ £
Protective Film and Anchoring
Total assets 694,649 995,179
Total liabilities (855,974) (1,003,754)
Depreciation and amortisation in period 3,035 2,755
Capital expenditure - 22,289
Security Products and Services
Total assets 195,865 445,209
Total liabilities (142,991) (174,185)
Depreciation and amortisation in period 825 10,906
Capital expenditure - 200
TOTAL ASSETS 890,514 1,440,388
TOTAL LIABILITIES (998,965) (1,177,939)
All of the business assets are located in the United Kingdom. The secondary
reporting format is by geographic
segment based on location of customers. External revenue by segment is as
follows:
Unaudited Unaudited
six months six months
ended ended
31 March 2014 31 March 2013
£ £
United Kingdom 412,456 554,188
Americas 163,741 291,857
Europe 3,238 569,548
Africa and Middle East 7,937 295,288
Far East 9,040 35,920
596,412 1,746,801
4 Cash and cash equivalents
For the purpose of the consolidated interim cash flow statement, cash and cash
equivalents are comprised
of the following:
Unaudited Unaudited
31 March 31 March
2014 2013
£ £
Cash at bank and in hand 10,433 9,529
5 Share capital Unaudited Unaudited
six months six months
ended ended
31 March 2014 31 March 2013
£ £
Issued and fully paid
As at 30 September 2013 and at 31 March 2014
Ordinary shares (11,133,908 shares of 1p each)
111,339 111,339
Deferred shares (8,819,181 shares of 9p each) 793,726 793,726
905,065 905,065
6 Dividends paid and proposed
Equity dividends on ordinary shares:
No interim dividend was paid or is proposed for the half year ended 31 March
2014.
7 (Loss per share)/Profit
The calculations of (loss)/profit per share are based on the following results
and number of shares:
Unaudited Unaudited
six months six months
ended ended
31 March 2014 31 March 2013
£ £
(loss)/profit for the financial period (380,201) 9,380
Weighted average number of shares
for diluted loss per share 10,575,836 10,575,836
Weighted average number of shares
for basic loss per share
10,575,836 10,575,836
At 31 March 2014, the number of ordinary shares in issue was
11,133,908.
In accordance with the provisions of IAS 33 for the periods ended 31 March
2014, 30 September 2013 and
31 March 2013, shares under option were not regarded as dilutive in calculating
earnings per share.
8 Seasonality of interim operations
Pentagon Protection Plc does not operate in a seasonal or
cyclical business environment.
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