Unaudited Interim Financial Statements for the period ended 31 March 2014

11 July 2014

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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 information, please contact:

Pentagon Protection Plc
Steve Chambers, Managing Director
Tel: 01923 221 91
   
Nominated Adviser, Cairn Financial Advisers
Sandy Jamieson
 Tel: 0207 148 7900
   
Sole Broker, Peterhouse Corporate Finance Limited
Eran Zucker
Tel: 0207 469 0932

 

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