07th March 2012
Pentagon Protection Plc
("Pentagon" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2011
Pentagon Protection Plc (AIM:PPR) the AIM listed global specialist in the supply and installation of enhanced glass protection, high-risk security consulting, training and equipment today announces its final results for the year ended 30 September 2011.
HIGHLIGHTS
Financial benchmarks
· 62% increase sales
· 38% increase in Gross Profit
· Operating Loss before provisions reduced by 54%
The annual report and accounts for the year ended 30 September 2011 are being posted to shareholders tomorrow and will be available on the Company's website www.pentagonprotection.com.
Enquiries:
Pentagon Protection Plc Haytham ElZayn, Chairman
|
Tel: 01494 793 333 |
Pentagon Protection Plc Steve Chambers, Managing Director
|
Tel: 01494 793 333 |
Seymour Pierce Limited Jonathan Wright
|
Tel: 0207 107 8000 |
Rivington Street Jon Levinson |
Tel: 0207 562 3357 |
Chairmans Statement
I am pleased to present the results for Pentagon Protection Plc for the year ended 30 September 2011.
This has been a period of really positive change for the Group, marked by the acquisition of International Glass Solutions LLC (IGS) during the year and the appointment of Steve Chambers as Managing Director. Both these factors have helped the Group not only break into, but really establish itself, in the US market. A key distribution agreement for a liquid solar control product in the US has been another step forward for the Group. In November 2011, the Group also announced the opening of offices in Amman, which will present interesting opportunities in the Middle East and Gulf region where the credibility associated with being a listed, public company will give us a competitive advantage as well as allow us to bid on large government contracts.
The results for the year have shown a significant improvement from 2010 in many respects, with turnover increasing significantly in new markets. Whilst the Group is showing an overall loss for the year, the results before the exceptional items which were present in 2010 show a marked improvement over last year. A more detailed financial review is given below.
The Group has seen some significant contract gains in its subsidiary companies, SDS Group Limited and IGS, and has some exciting prospects for 2012.
Financial review
As noted above, turnover has increased dramatically from £1.8m to £2.9m, an increase of 62% and a return to 2009 levels. Each existing geographical market has seen improved turnover but the largest and most exciting increases for the group have been in the US, European and Far Eastern markets, which are a real indication of the global impact of the Group.
Gross profit margins have decreased as a higher proportion of the turnover this year has arisen from some large window film contracts which attract slightly lower margins. However the margin has only dropped to 29%, which is a reduction of 4% on the prior year, but is still a significant improvement on 2009 margins of 24%.
Distribution costs have dropped in the year, from £95k to £57k, as cost cutting measures continue to be implemented.
Administrative expenses show a drop to £1.07m from £1.18m in 2010, a decrease of 9%. This is largely due to acquisition related costs in the prior year and a smaller share option cost in the current year. (The cost of share options are a non-cash accounting adjustment only).
Although the Group has made an operating loss in the year, this loss has reduced from £681k in 2010 to £315k in 2011, a reduction of £366k or 54%.
The Group has no exceptional items in the current year and minimal finance costs.
The Group has net assets of £264k, down from £452k in 2010.
The Board does not recommend the payment of a dividend.
Operational review
The Group has continued to make progress this year across both the film and security services sectors.
We are nearing completion on the first of the two buildings on our European Commission contract and all indications are that this has been a successful project for the Group. The second building is due to start in 2012 and should provide a solid financial backdrop for the Group over the next twelve months.
During the year the UK film division secured a number of high value contracts for major shopping and retail centres and completed some large window film projects in the Middle East.
The security products division benefitted from some large equipment orders from the MOD and Police Forces around the country. We have also devoted increased resources to our sales efforts and expect to be awarded some valuable contracts in 2012.
Acquisition of International Glass Solutions LLC (IGS)
As previously reported, on 25 October 2010, the Group acquired 100% of the share capital of IGS.
IGS made a small loss before allocation of overhead expenses for the year and has also contributed to the Group's turnover. It has continued to build its project portfolio over the year with some exciting prospects for the year ahead, including securing an exclusive distribution agreement for a liquid solar control product.
Current trading and future prospects
The Group continues to expand its global coverage and is looking forward to a profitable year ahead. 2011 saw improvements in the Group's financial picture and we have very high hopes that even greater improvements will be made in 2012. The Group has a strong sales pipeline and a list of projects for which we are tendering, both for our line of specialist security products as well as for our window films. Whilst one can never be certain we will win a tender, we feel the Group is uniquely qualified and positioned to complete these projects, giving us a better than average probability of winning a significant proportion of tenders made.
We are tendering on several large projects within the UK which have arisen in preparation for the Olympic Games and which we feel we are well qualified to undertake. Several large projects which the Group had previously completed are also coming up for renovation, providing significant opportunities for additional work. In addition, the Group has tendered for several large overseas projects in Asia, the Middle East and Africa which we hope to be awarded in 2012.
I am excited by the potential we have with our new office in Amman. Aside from re-establishing our presence in the Middle East, this office opens up opportunities to pursue large projects in the region, several of which are already being tendered. Finally, we expect IGS to outperform last year as the US economy recovers and sales to both the commercial and residential markets in the United States increase.
Conclusion
This has been an exciting year for the Group and I am looking forward to the year ahead. The Group has established a strong position and has some fantastic opportunities which I am sure we will maximise.
On behalf of the Board, I would like to thank all of our employees for their continued hard work and support.
H ElZayn
Chairman
7 March 2012
AS AT 30 SEPTEMBER 2011
|
|
Group |
Company |
||
|
|
2011 |
2010 |
2011 |
2010 |
|
Notes |
£ |
£ |
£ |
£ |
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible asset |
8 |
5,366 |
- |
- |
- |
Investments |
9 |
- |
- |
641,921 |
545,921 |
Goodwill |
10 |
434,536 |
351,360 |
- |
- |
Property, plant and equipment |
12 |
13,075 |
15,917 |
5,585 |
6,946 |
|
|
452,977 |
367,277 |
647,506 |
552,867 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
252,210 |
193,151 |
2,000 |
2,000 |
Trade and other receivables |
13 |
544,775 |
360,417 |
618,877 |
383,640 |
Cash and cash equivalents |
|
79,386 |
178,056 |
17,884 |
38,382 |
|
|
876,371 |
731,624 |
638,761 |
424,022 |
|
|
|
|
|
|
TOTAL ASSETS |
|
1,329,348 |
1,098,901 |
1,286,267 |
976,889 |
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
14 |
707,726 |
568,522 |
501,989 |
343,889 |
Shareholder loan |
14 |
357,931 |
74,467 |
357,931 |
74,467 |
Borrowings |
15 |
- |
4,355 |
- |
4,355 |
Total liabilities |
|
1,065,657 |
647,344 |
859,920 |
422,711 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Issued capital |
17 |
881,918 |
801,918 |
881,918 |
801,918 |
Share premium account |
|
7,056,785 |
7,056,785 |
7,056,785 |
7,056,785 |
Share based payments |
18 |
74,230 |
51,749 |
74,230 |
51,749 |
Other reserves |
|
12,444 |
(4,541) |
11,459 |
(4,541) |
Retained earnings |
|
(7,761,686) |
(7,454,354) |
(7,598,045) |
(7,351,733) |
|
|
|
|
|
|
Total equity attributable to |
|
|
|
|
|
equity shareholders of the parent |
|
263,691 |
451,557 |
426,347 |
554,178 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
1,329,348 |
1,098,901 |
1,286,267 |
976,889 |
|
|
2011 |
2010 |
|
Notes |
£ |
£ |
|
|
|
|
Revenue |
2 |
2,851,631 |
1,763,809 |
|
|
|
|
Cost of sales |
|
(2,036,104) |
(1,173,690) |
|
|
|
|
Gross profit |
|
815,527 |
590,119 |
|
|
|
|
Distribution costs |
|
(56,694) |
(94,802) |
Administrative expenses |
|
(1,074,330) |
(1,181,394) |
Other operating income |
|
- |
4,610 |
|
|
|
|
OPERATING LOSS BEFORE PROVISIONS |
|
(315,497) |
(681,467) |
|
|
|
|
Profit on disposal of subsidiary |
9 |
- |
461,865 |
Warranty claim provision |
|
- |
225,800 |
|
|
|
|
|
|
|
|
OPERATING (LOSS)/PROFIT BEFORE FINANCING ACTIVITIES |
|
(315,497) |
6,198 |
|
|
|
|
Finance income |
3 |
29 |
41 |
Finance costs |
4 |
(2,500) |
(4,695) |
|
|
|
|
(LOSS)/PROFIT BEFORE TAX |
5 |
(317,968) |
1,544 |
|
|
|
|
Tax |
6 |
10,636 |
- |
|
|
|
|
(LOSS)/PROFIT FOR THE YEAR |
|
(307,332) |
1,544 |
|
|
|
|
Other comprehensive expense |
|
985 |
- |
|
|
|
|
TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR |
|
(306,347) |
1,544 |
(Loss)/profit attributable to: |
|
|
|
Equity holders of the parent |
|
(307,332) |
1,544 |
|
|
|
|
Total comprehensive (expense)/income for the year attributable to: |
|
|
|
Equity holders of the parent |
|
(306,347) |
1,544 |
|
|
|
|
(Loss)/earnings per share (pence per share) |
|
|
|
|
|
|
|
Basic |
7 |
(0.04)p |
0.00p |
|
|
|
|
Diluted |
7 |
(0.04)p |
0.00p |
Revenue and operating (loss)/profit for the year all derive from continuing operations.
Group |
|
|
|
|
|
|
|
Share capital |
Share premium account |
Share based payments |
Other reserves |
Retained earnings |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
At 1 October 2009 |
641,418 |
6,914,366 |
- |
(4,541) |
(7,455,898) |
95,345 |
For the year to |
|
|
|
|
|
|
30 September 2010: |
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
for the year |
- |
- |
- |
- |
1,544 |
1,544 |
Transactions with owners |
|
|
|
|
|
|
Shares issued - proceeds |
160,500 |
160,500 |
- |
- |
- |
321,000 |
Shares issued - costs |
- |
(18,081) |
- |
- |
- |
(18,081) |
Share based payments |
- |
- |
51,749 |
- |
- |
51,749 |
|
|
|
|
|
|
|
At 1 October 2010 |
801,918 |
7,056,785 |
51,749 |
(4,541) |
(7,454,354) |
451,557 |
For the year to |
|
|
|
|
|
|
30 September 2011: |
|
|
|
|
|
|
Total comprehensive expense |
- |
- |
- |
985 |
(307,332) |
(306,347) |
for the year |
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
Shares issued on acquisition of subsidiary |
80,000 |
- |
- |
16,000 |
- |
96,000 |
Share based payment |
- |
- |
22,481 |
- |
- |
22,481 |
At 30 September 2011 |
881,918 |
7,056,785 |
74,230 |
12,444 |
(7,761,686) |
263,691 |
|
|
|
|
|
Group - Other reserves |
Merger reserve |
Currency reserve |
Shares held by ESOP |
Total |
|
|
|
|
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
At 1 October 2009 |
- |
- |
(4,541) |
(4,541) |
For the year to |
|
|
|
|
30 September 2010: |
|
|
|
|
Total comprehensive income |
|
|
|
|
for the year |
- |
- |
- |
- |
Transactions with owners |
|
|
|
|
Shares issued - proceeds |
- |
- |
- |
- |
Shares issued - costs |
- |
- |
- |
- |
Share based payments |
- |
- |
- |
- |
|
|
|
|
|
At 1 October 2010 |
- |
- |
(4,541) |
(4,541) |
For the year to |
|
|
|
|
30 September 2011: |
|
|
|
|
Total comprehensive income |
|
|
|
|
for the year |
- |
985 |
- |
985 |
Transactions with owners |
|
|
|
|
Shares issued on acquisition of subsidiary |
16,000 |
- |
- |
16,000 |
At 30 September 2011 |
16,000 |
985 |
(4,541) |
12,444 |
All equity is attributable to equity shareholders of the parent.
Company |
|
|
|
|
|
|
|
Share capital |
Share premium account |
Share based payments |
Other reserves |
Retained earnings |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
At 1 October 2009 |
641,418 |
6,914,366 |
- |
(4,541) |
(4,565,748) |
2,985,495 |
For the year to |
|
|
|
|
|
|
30 September 2010: |
|
|
|
|
|
|
Total comprehensive expense |
|
|
|
|
|
|
for the year |
- |
- |
- |
- |
(2,785,985) |
(2,785,985) |
Transactions with owners |
|
|
|
|
|
|
Shares issued - proceeds |
160,500 |
160,500 |
- |
- |
- |
321,000 |
Shares issued - costs |
- |
(18,081) |
- |
- |
- |
(18,081) |
Share based payments |
- |
- |
51,749 |
- |
- |
51,749 |
|
|
|
|
|
|
|
At 1 October 2010 |
801,918 |
7,056,785 |
51,749 |
(4,541) |
(7,351,733) |
554,178 |
For the year to |
|
|
|
|
|
|
30 September 2011: |
|
|
|
|
|
|
Total comprehensive expense |
|
|
|
|
|
|
for the year |
- |
- |
- |
- |
(246,312) |
(246,312) |
Transactions with owners |
|
|
|
|
|
|
Shares issued on acquisition of subsidiary |
80,000 |
- |
- |
16,000 |
- |
96,000 |
Share based payments |
- |
- |
22,481 |
- |
- |
22,481 |
At 30 September 2011 |
881,918 |
7,056,785 |
74,230 |
11,459 |
(7,598,045) |
426,347 |
|
|
|
|
Company - Other reserves |
Merger reserve |
Shares held by ESOP |
Total |
|
|
|
|
|
£ |
£ |
£ |
|
|
|
|
At 1 October 2009 |
- |
(4,541) |
(4,541) |
For the year to |
|
|
|
30 September 2010: |
|
|
|
Total comprehensive income |
|
|
|
for the year |
- |
- |
- |
Transactions with owners |
|
|
|
Shares issued - proceeds |
- |
- |
- |
Shares issued - costs |
- |
- |
- |
Share based payments |
- |
- |
- |
|
|
|
|
At 1 October 2010 |
- |
(4,541) |
(4,541) |
For the year to |
|
|
|
30 September 2011: |
|
|
|
Total comprehensive expense |
|
|
|
for the year |
- |
- |
- |
Transactions with owners |
|
|
|
Shares issued on acquisition of subsidiary |
16,000 |
- |
16,000 |
At 30 September 2011 |
16,000 |
(4,541) |
11,459 |
Represents amounts subscribed for share capital in excess of nominal value, net of directly attributable issue costs.
Represents the reserve account which is used for the corresponding entry to the share based payment charge through the income statement.
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.
These relate to shares held by the Pentagon Employee Share Ownership Plan and are used to assist in meeting the obligations under employee remuneration schemes.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen on the retranslation of overseas operations.
|
Group |
Company |
||
|
2011 |
2010 |
2011 |
2010 |
|
£ |
£ |
£ |
£ |
Operating activities |
|
|
|
|
(Loss)/Profit before tax |
(317,968) |
1,544 |
(246,312) |
(2,785,985) |
Adjustments for: |
|
|
|
|
Depreciation of property, plant and equipment |
5,222 |
7,133 |
1,589 |
429 |
Amortisation of intangibles |
409 |
18,540 |
- |
- |
(Profit)/Loss on disposal of subsidiary |
- |
(461,865) |
- |
221,416 |
Share based payments |
22,481 |
51,749 |
22,481 |
51,749 |
Loss on disposal of property, plant and equipment |
- |
14,960 |
- |
- |
Exchange adjustment |
985 |
- |
- |
- |
Changes in working capital: |
|
|
|
|
Increase in inventories |
(59,059) |
(20,093) |
- |
(2,000) |
(Increase)/Decrease in trade and other receivables |
(169,167) |
438,127 |
(235,237) |
1,924,413 |
Increase in trade and other payables |
129,324 |
15,639 |
158,100 |
253,314 |
Decrease in provisions |
- |
(225,800) |
- |
- |
Net finance cost |
2,471 |
4,654 |
- |
3,331 |
Net cash used in operating activities |
(385,302) |
(155,412) |
(299,379) |
(333,333) |
Investing activities |
|
|
|
|
Payments to acquire property, plant and equipment |
(829) |
(8,071) |
(228) |
(3,020) |
Receipts from sales of property, plant and equipment |
- |
5,224 |
- |
- |
Disposal of a subsidiary net of cash disposed of |
- |
(29,759) |
- |
1 |
Acquisition of a subsidiary net of cash received |
187 |
- |
- |
- |
Interest received |
29 |
41 |
- |
- |
Net cash used in investing activities |
(613) |
(32,565) |
(228) |
(3,019) |
Financing activities |
|
|
|
|
Decrease in factor finance |
- |
(45,915) |
- |
- |
Capital element of finance lease contracts |
(4,355) |
(5,210) |
(4,355) |
- |
Shareholder loan |
283,464 |
74,467 |
283,464 |
74,467 |
Net proceeds from issue of shares |
- |
302,919 |
- |
302,919 |
Interest paid |
(2,500) |
(4,695) |
- |
(3,331) |
Net cash from financing activities |
276,609 |
321,566 |
279,109 |
374,055 |
Taxation |
10,636 |
- |
- |
- |
|
|
|
|
|
Net (decrease)/increase in cash and cash |
|
|
|
|
equivalents |
(98,670) |
133,589 |
(20,498) |
37,703 |
|
|
|
|
|
Cash and cash equivalents at the start of the year |
178,056 |
44,467 |
38,382 |
679 |
|
|
|
|
|
Cash and cash equivalents at the end of the year |
79,386 |
178,056 |
17,884 |
38,382 |
|
|
|
|
|
Cash and cash equivalents consists of:
|
|
|
|
|
Cash and cash equivalents |
79,386 |
178,056 |
17,884 |
38,382
|
|
79,386 |
178,056 |
17,884 |
38,382 |