Final Results

RNS Number : 8611Y

Pentagon Protection PLC

07 March 2012

 



07^th 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: [phone]
Pentagon Protection Plc Steve Chambers, Managing Director	Tel: [phone]
Seymour Pierce Limited Jonathan Wright	Tel: [phone]
Rivington Street Jon Levinson	Tel: [phone]

Chairmans Statement

Introduction

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

 

STATEMENT OF FINANCIAL POSITION

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

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2011

		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.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2011

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

 

Share capital

Represents the par value of shares in issue.

Share premium

Represents amounts subscribed for share capital in excess of nominal value, net of directly attributable issue costs.

Share based payments

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.

Shares held by ESOP

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.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

	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

 

END

 

 

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