RNS Number:7894M
Pentagon Protection PLC
26 June 2003
PENTAGON PROTECTION PLC
INTERIM RESULTS 2003
Pentagon Protection Plc, which develops and supplies innovative glass related
products to the automotive sector and other industries, announces its maiden
Interim Results since flotation on April 2, for the six months ended 31 March
2003.
The Group's proprietary vehicle window glazing reinforcement system. Pentagon
Supaglass, is the only vehicle security film system of its type that has a
Thatcham Q Vehicle Security listing, a prEN 12600 Class I anti-bomb blast and
impact resistance certification and a number of security and safety awards.
The Group's growth strategy encompasses three key areas: Retail, Business to
Business and Domestic and International Franchising.
For further information, please contact:
Pentagon Protection Plc
David Thomas, Chairman
Tel: (020) 8749 9749
Binns & Co PR Ltd
Peter Binns/Emma McCaffrey/Kerry Hopkins
Tel: (020) 7786 9600
PENTAGON PROTECTION PLC
CHAIRMAN'S STATEMENT
Introduction and Financial Review
The period under review has been an active six months for Pentagon Protection,
culminating in the group achieving a successful flotation on AIM by way of a
placing on 2nd April, just after the period end, raising a net #500,000 to fund
the development of the business.
The proceeds have been used to fund development of the fleet provider segment of
the Group's business and operational effectiveness of its domestic and
international franchise networks. They have also been applied to other areas,
for investment in new projects and equipment to increase capacity at our London
headquarters. The remainder has provided additional working capital.
The Group's financial results for the six months to 31 March 2003 show a loss of
#76,669 on a turnover of #531,930. This is broadly in line with management's
expectations. The results for the period under review primarily reflect
continued investment in the strategic long-term development of the business.
They also reflect a softening of the retail market and our continued investment
in high potential, large-scale business opportunities through enrolment and
marketing.
Corporate Developments
Despite the prevailing recent economic uncertainty arising over recent months,
Pentagon Protection continues to make progress in its overall objective of
establishing the Group as a domestic and international leader in the application
of its award-winning, performance enhancing safety and security film (SupaGlass)
to vehicle glass.
Considerable strides since flotation have been made across each of our three
core target markets in the retail, business-to-business and franchising sectors,
details of which are covered more fully in my business review.
Business Review
Market and Competition
The Directors are confident that the UK market for protective film, and
therefore for SupaGlass, will continue to grow. This is largely due to renewed
Government-sponsored initiatives to reduce vehicle crime and increase vehicle
safety.
Unofficial reports indicate that vehicle crime, especially 'theft from'
vehicles, is still a significant challenge. The Directors anticipate a greater
impetus by government to promote systems to help reduce the incidence of such
crime, including 'anti-smash & grab' protective film of the performance
standards created by SupaGlass.
The Group is well poised to reap the benefits of such efforts, largely due to
the growing awareness of Supaglass and the strength of the Group's association
with police and related parties. Importantly, the Directors are receiving
indications that other potentially competitive systems, such as factory-produced
laminated glass, are less preferred to the SupaGlass-type solution due to cost
and safety issues.
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In vehicle safety, the most important development has been Home Secretary David
Blunkett's recent announcement that the new legislation covering 'involuntary
manslaughter' will be brought forward, causing employers to develop Duty of Care
policies for their employees on the road, which will also be expected to cover a
vehicle's safety, an area for which SupaGlass has won both an award and a
national endorsement. It is for this reason that we have begun applying
SupaGlass onto a number of public service vehicles.
Retail
The Group continues to strengthen its leadership in the retail market behind the
Pentagon and SupaGlass brands, having established exclusive relationships with
the Mercedes Benz UK and H.R.Owen dealer groups, among others. This has helped
to partially offset the negative effects of a softening of this sector as a
result of a decline in the rate of new car sales, a core source of business for
the Group.
Business to Business
Pentagon SupaGlass is making strong inroads in awareness and interest across all
three of the Group's priority business-to-business areas;
* Public Sector: The Group has secured agreement from a number of groups
within the UK'S Fire and Police Services to have SupaGlass protective
laminates applied to their vehicles, both liveried and unmarked.
* Private Sector: The Group is in advanced discussions with a number of
private sector fleet users regarding the application of SupaGlass across
their fleets, building on the success of earlier agreements with Transco and
BT.
* Original Equipment Manufacturers: As a result of the publicity generated by
the Group's engagement by Citroen to apply dark laminates to a special
edition of its Xsara 'Enterprise' vehicle, Pentagon has been asked by three
major car manufacturers to prepare specific proposals related to the
application of SupaGlass across their range of vehicles. In addition, the
Group has prepared test glass for evaluation by other manufacturers, both in
the UK and abroad. We are extremely confident that we shall soon be able to
report significant news associated with these major business-building
efforts.
Domestic and International Franchising
The Group's expansion through licences and franchising is encouraging. In the
UK, although we have not signed any new franchisees since flotation, we are
pleased to report strong current interest in franchises for Ipswich, Kent,
Stafford and Chesterfield. Internationally, the Group has secured deposits for
representation in Nigeria, Cyprus, Kuwait and Greece and is in advanced
negotiations for the same in the UAE, Germany and Italy.
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New Initiatives
To further consolidate Pentagon's leadership in the area of enhanced glass
security and safety, the Group has secured the worldwide rights to market and
sell a patented security/safety mark etching technology. This is of particular
relevance for the UK'S Glass & Glazing Federation's FENSA (Fenestration Self-
Assessment Scheme), which dictates that all new building glass be marked with
proof of its compliance with pre-deteimined safety standards. As a result of
this initiative, Pentagon intends to diversify its business into the flat glass
sector by capitalising on the strength of its reputation and introducing
technology significantly superior to incumbent glass marking systems. In
addition, this technology has strong potential in the automotive sector for
security etching, thus complementing Pentagon's portfolio of products and
services in its core business.
Outlook
Despite a sluggish economy, partially reflected in some of Pentagon's business
indicators, the Directors are confident about the Group's outlook for the rest
of this year and beyond.
The issues of Security and Safety are growing in the consciousness of lawmakers
and OEMs alike, measured by the strength of interest evinced by both these
audiences in SupaGlass. A car's glass is its 'Achilles heel'. SupaGlass is
emerging as the preferred remedy.
The Directors look forward to announcing significant progress in the months
ahead as SupaGlass gains further awareness and acceptance, especially with new
car fleets. In addition, Pentagon's entry into the glass etching market with
significantly superior technology should yield some exciting early results for
the Group and its shareholders.
We have the lead on the competition with our products and technology and remain
confident about the Group's long-term prospects in a number of growth markets.
David Thomas
Chairman
26th June 2003
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PENTAGON PROTECTION PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2003
Notes Unaudited
# #
Turnover 3 531,930
Cost of sales (163,965)
_______
Gross profit 367,965
Selling and distribution costs 119,508
Administrative expenses 317,918
_______
(437,426)
_______
(69,461)
Other operating income 8,552
_______
Operating loss (60,909)
Interest receivable 66
Interest payable (15,826)
_______
Loss on ordinary activities before and
after taxation (76,669)
Accumulated losses brought forward (307,702)
_______
Accumulated losses carried forward (384,371)
=======
Basic loss per ordinary share 4 0.14p
Fully diluted loss per ordinary share 4 0.14p
There are no recognised gains or losses other than the loss for the financial
period.
The notes on pages 7 to 9 form part of this interim report
4
PENTAGON PROTECTION PLC
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2003
Notes Unaudited
# #
Fixed assets
Tangible assets 168,153
Current assets
Stocks 41,074
Debtors 407,017
Deferred tax asset 5 118,000
Cash at bank and in hand 6,786
_______
572,877
Creditors: Amounts falling due within one year (608,721)
_______
Net current liabilities (35,844)
_______
Total assets less current liabilities 132,309
Creditors: Amounts falling due after more than one
year (270,563)
_______
(138,254)
=======
Capital and reserves
Called up share capital 54,167
Merger reserve 6 191,950
Profit and loss account 6 (384,371)
_______
Equity shareholders' funds (138,254)
=======
The notes on pages 7 to 9 form part of this interim report
5
PENTAGON PROTECTION PLC
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2003
Unaudited
#
Net cash outflow from operating activities (39,700)
Returns on investments and servicing of finance (9,012)
Capital expenditure (721)
______
Cash outflow before financing (49,433)
Financing (10,529)
______
Decrease in cash in the period (59,962)
======
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period (59,962)
Decrease in finance lease debt 11,298
Decrease in bank loan 9,231
Increase in Director's loan (16,769)
______
Movement in net funds from cashflows in period (56,202)
Net debt at 1 October 2002 (365,692)
_______
Net debt at 31 March 2003 (421,894)
=======
The notes on pages 7 to 9 form part of this interim report
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PENTAGON PROTECTION PLC
NOTES TO THE INTERIM REPORT
For the six months ended 31 March 2003
1. BASIS OF CONSOLIDATION
The interim report has been prepared in accordance with applicable accounting
standards and under the historical cost convention. On the 25th 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 and therefore includes the results of the group since 30 September 2002
which was the most recent financial year end of the two subsidiaries.
As this interim report represents the first published results of the group since
its combination no comparative figures have been produced. 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
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PENTAGON PROTECTION PLC
NOTES TO THE INTERIM REPORT
For the six months ended 31 March 2003
2. ACCOUNTING POLICIES (continued)
Stocks
Stock 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.
3. TURNOVER
The turnover for the period is attributable to the principal activities of the
group.
4. LOSS PER SHARE
The calculation of the loss per share is based on the loss for the period
#(76,669) divided by the number of shares in issue after the combination of the
group had taken place (54,166,668 ordinary 0.lp shares).
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PENTAGON PROTECTION PLC
NOTES TO THE INTERIM REPORT
For the six months ended 31 March 2003
5. DEFERRED TAX ASSET
The group is forecast to become profitable during the next financial year ending
30 September 2004. The extent to which the deferred tax asset will be recovered
in the next financial year depends on the amount of taxable profits made. It is
forecast that any remaining deferred tax will be recovered in the following
year.
6. MOVEMENT IN RESERVES
Merger Profit & loss Total
reserve account
# # #
Balance brought forward 191,950 (307,702) (115,752)
Loss for the period - (76,669) (76,669)
_______ _______ _______
191,950 (384,371) (192,421)
======= ======= =======
7. POST BALANCE SHEET EVENTS
On 5 April 2003, Pentagon Protection Plc floated on the AIM raising #750,000
gross which after associated costs resulted in a net cash receipt of
approximately #500,000. 25,000,000 ordinary O.lp shares were issued at a price
of 3p as part of the flotation. #80,814 of the flotation costs are included as
prepayments in these results.
8. 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
The company news service from the London Stock Exchange
END
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