TIDMSTEC
RNS Number : 9817S
Shieldtech PLC
29 May 2009
29 May 2009
Shieldtech plc (the "Company" or the "Group")
Results for the year ended 30 June 2008
Shieldtech plc, a specialist provider of products and services to the Homeland
Security market, announces its results for the year ended 30 June 2008, the
first financial year since it was admitted to AIM in July 2007.
Highlights
* Turnover of GBP6.0m
* Operating loss of GBP0.8m before amortisation of intangible fixed assets, share
based payments and the charge for impairment of goodwill
* Anticipated disruption in UK market caused by the introduction of new standards
for ballistic protection garments
* GBP1.8m order to supply a major overseas defence client
* Trading in the third quarter began to improve and the Group ended the year with
the order book at a 2 year high
* Proposals for investment of new monies into the Group and refinancing of bank
facilities also to be announced today and to be presented to Shareholders at the
AGM
Tim Wightman, Chairman, commented:
"We are operating in an increasingly exciting market place. With a more secure
financial base, the Board is confident that the Group will be able to capitalise
on some exciting opportunities through innovation in our product range and our
strengthened international sales network. We have laid the groundwork,
internally and with key suppliers, to be ready to present new, innovative, cost
effective solutions, to existing customers and to new prospects in the UK and
overseas."
For more information please contact:
+-------------------------------------------+----------------------------+
| Shieldtech plc | Tel: +44 (0) 1925 840048 |
| Tony O'Neill, Chief Executive Officer | |
| Robert Denton, Group Finance Director | |
+-------------------------------------------+----------------------------+
| Seymour Pierce | Tel: +44 (0) 20 7107 8000 |
| Nicola Marrin/Mark Percy | |
+-------------------------------------------+----------------------------+
| Buchanan Communications | Tel: +44 (0) 20 7466 5000 |
| Tim Anderson / Isabel Podda / Ben Romney | |
+-------------------------------------------+----------------------------+
Chairman's Statement
The Group's first financial year since it was admitted to AIM in July 2007 has
been a disappointment. Aegis Engineering Limited, the business we acquired at
admission, suffered in the first half of the year from a weak demand in the UK.
Activity levels generally across our market sector were slow owing to the
introduction of new ballistic protection standards by the Home Office Scientific
Development Branch ("HOSDB"). While we had anticipated some disruption in demand
in the Admission Document, the publication of the new standards was delayed and
subsequent testing by police forces of garments made to the new standards was
more prolonged than we had expected. Consequentially police forces deferred
placing orders. During this period we concentrated on achieving manufacturing
and administrative efficiencies which led to improvements in gross margin.
In compensation for the weak demand in the UK, we were pleased to announce in
February 2008 that Aegis had been awarded a major contract to supply a modular
body armour system for a major overseas defence force. The contract had an
initial value of GBP1.8m and further potential revenue of more than GBP3.0m.
Trading in the third quarter began to improve and the momentum built up through
the last quarter of the year. At the year end the order book was at a two year
high.
Financial results
Revenue in the 12 months ended 30 June 2008 was GBP6.0m which compared to
GBP11.5m reported by Aegis in the year before its acquisition. The Gross Profit
was GBP2.0m, a gross margin of 33.1%. The Operating Loss before amortisation of
intangible fixed assets, share based payments and the charge for impairment of
goodwill was GBP0.8m. The acquisition of Aegis created substantial goodwill and,
in the light of its trading performance in 2008 and its revised prospects for
the current financial year, the Board determined it was appropriate to take an
impairment charge of GBP8.8m.Including this figure, the Operating Loss for the
year was GBP10.1m (2007: GBP0.1m). The Loss after tax was GBP10.0m (2007:
GBP0.1m). The loss per share was 18.9 pence (2007: 0.2 pence).
The cash outflow from operations was GBP0.6m. In the last quarter of the
financial year, our bank HSBC reduced the Group's overdraft facility without
prior notice in response to the losses made in the year and the "credit crisis".
We have since managed the Group's financial affairs robustly, particularly as
regards working capital, and operated within the reduced facility. We are
particularly grateful to our key suppliers who have assisted by permitting
extensions to normal payment terms. At 30 June 2008 the Group had arranged
extended payment terms with key suppliers, amounting to approximately GBP0.85m.
At the end of the year Total Shareholders' Equity was GBP1.8m (2007: deficiency
GBP0.2m) and borrowings were GBP1.5m (2007: GBPnil). The Group did not exist in
its current form or trade in the period to 30 June 2007.
Strategy
The Group's objective still remains as set out in 2007, to become a leading
supplier of products and services for customers in the Homeland Security market.
In particular, we believe that there are strong opportunities globally to
provide high quality products to protect police and military personnel from the
threats associated with gun and knife crime and armed conflicts. Aegis remains
our core business. It has a strong share of the UK police market and has a
developing track record of winning major tenders from the MOD and in export
markets. The directors continue to believe that there will be attractive
opportunities to grow organically and by acquisition. However, the Group's
performance during the year has inevitably curtailed these plans for the time
being and the priority now is to re-establish profitable organic growth.
Although the global economic climate will make financing more difficult, we do
not expect it to have a detrimental effect on the overall demand for our
products.
Business development
We have made a number of significant improvements to our products during the
year. In February 2008 we announced that Aegis had launched a new range of
"chain-mail" composite body armour systems to add to its range of soft (aramid
based) and hard shell systems. We continue to develop new body armour
constructions which will address the issues of heat, flexibility and physical
stress and so improve the comfort for wearers of body armour systems.
Following the introduction of the revised ballistic measurement standards by
HOSDB, Aegis has developed and received accreditations for protection systems
meeting 19 new or revised standards. These high standards are regarded as a
bench-mark in many overseas markets. We have been experiencing an increasing
overseas interest in our products and we will be putting more resources into
developing overseas markets during 2009.
Funding
Since the year end, the Group has carried out a review of its structure and
future capital needs and it has been in discussions with its bankers to secure
appropriate facilities for its future working capital requirements which I am
pleased to say have been satisfactorily resolved.
The Company proposes to raise GBP1.1 million, before expenses, by the issue of
loan notes. It also proposes to issue warrants to subscribe for 20,625,000
ordinary shares at an exercise price of 6 pence per ordinary share. The issue of
the loan notes and warrants is conditional on, inter alia, Shareholders'
approval at the Annual General Meeting to be held on 22 June 2009.
It is proposed that the Company enter into a Loan Note Instrument to create
GBP1,100,000 8% fixed rate secured loan notes 2011 and that these be issued to
three individuals who have indicated their intention to make such investment.
The loan notes will be secured by debentures granted by each company in the
Group and by guarantees and indemnities granted by the subsidiary companies. The
loan notes and the loan note securities will be subject to the terms of an
intercreditor agreement and the loan notes will be subordinated to the Bank.
The warrants will be exercisable, in whole or in part, at any time following the
date falling 6 months from the date of issue of the warrants. The warrants will
lapse to the extent not exercised by the fifth anniversary of the date of issue.
In the event of the full exercise of the warrants the new ordinary shares
thereby created would represent 28.1% of the Company's enlarged share capital.
Conditional upon, among other things, completion of the loan note investment,
the Bank has offered to provide bank facilities comprising a GBP250,000 sterling
net overdraft facility and a GBP900,000 LIBOR term loan facility. The bank
facilities will be secured by debentures granted by each company in the Group
and by a composite guarantee to be entered into by each company in the Group.
The bank facilities and the bank securities will be subject to the terms of an
intercreditor agreement and will rank ahead of the loan notes and the loan note
securities.
The Board
Glenn Hopkinson retired as a director of the company on 10 December 2008. Glenn
joined Aegis in 2002 as Operations Director and led a management buy-out in 2004
with the incumbent management team, creating a partial exit for Aegis' founders.
Shieldtech acquired Aegis in July 2007 at which time most of Aegis' directors
left the business. Glenn agreed to remain for a transitional period and is now
moving on to new and different challenges. The Board is grateful for Glenn's
support and assistance since the acquisition and wishes him well for the future.
Progressively since June Tony O'Neill, CEO, and Robert Denton, Group Finance
Director, have assumed all operational and financial responsibilities.
Staff
The board is grateful for the efforts and contribution made by the entire
Group's staff in what has been a difficult year.
Prospects
The Board expects an improved trading performance in the year to June 2009. The
euro:GBP exchange rate has a major impact on our material costs, however, as we
believe it does for our competitors in the UK market and this has affected gross
margins adversely. In response we have increased our selling prices as well as
maintaining a tight control on overhead costs and expect to
assist profitability.
It is expected that the contract for the supply of certain body armour systems
for the Metropolitan Police will be put out to tender this autumn. Aegis is one
of four companies qualified to participate in pre-tender discussions during
which new products have been developed for review. The results of this tender
may have an influence on the procurement strategies of other UK police forces,
which will have the option of purchasing under the Metropolitan Police framework
agreement or may choose to continue with their own framework agreements and
contracts. Aegis is monitoring the situation carefully and expects to have
products available to meet both eventualities.
With a more secure financial base, the Board is confident that the Group will be
able to capitalise on some exciting opportunities. We have laid the groundwork,
internally and with key suppliers, to be ready to present new, innovative, cost
effective solutions, to existing customers and to new prospects in the UK and
overseas.
T R Wightman
22 May 2009
SHIELDTECH PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2008
+------------------------------------------+----------+----------------+-------------------------+
| | | year | 16 months |
+------------------------------------------+----------+----------------+-------------------------+
| | | ended | ended |
+------------------------------------------+----------+----------------+-------------------------+
| | | 30 June | 30 June |
+------------------------------------------+----------+----------------+-------------------------+
| | | 2008 | 2007 |
+------------------------------------------+----------+----------------+-------------------------+
| | Notes | GBP'000 | GBP'000 |
+------------------------------------------+----------+----------------+-------------------------+
| | | | |
+------------------------------------------+----------+----------------+-------------------------+
| Revenue | | 5,986 | - |
+------------------------------------------+----------+----------------+-------------------------+
| Cost of sales | | (4,002) | - |
+------------------------------------------+----------+----------------+-------------------------+
| | | _______ | ________ |
+------------------------------------------+----------+----------------+-------------------------+
| GROSS profit | | 1,984 | - |
+------------------------------------------+----------+----------------+-------------------------+
| Administrative expenses | | | |
+------------------------------------------+----------+----------------+-------------------------+
| amortisation of intangible fixed assets | | (264) | - |
+------------------------------------------+----------+----------------+-------------------------+
| share based payments | | (280) | - |
+------------------------------------------+----------+----------------+-------------------------+
| impairment of goodwill | | (8,808) | - |
+------------------------------------------+----------+----------------+-------------------------+
| other | | (2,743) | (105) |
+------------------------------------------+----------+----------------+-------------------------+
| | | ------- | ------- |
+------------------------------------------+----------+----------------+-------------------------+
| Total administrative expenses | | (12,095) | (105) |
+------------------------------------------+----------+----------------+-------------------------+
| | | ------- | ------- |
+------------------------------------------+----------+----------------+-------------------------+
| operating loss | | (10,111) | (105) |
+------------------------------------------+----------+----------------+-------------------------+
| Finance costs | | (111) | - |
+------------------------------------------+----------+----------------+-------------------------+
| Finance income | | 7 | 1 |
+------------------------------------------+----------+----------------+-------------------------+
| | | ------- | ------- |
+------------------------------------------+----------+----------------+-------------------------+
| LOSS BEFORE INCOME TAX | | (10,215) | (104) |
+------------------------------------------+----------+----------------+-------------------------+
| Income tax | | 220 | - |
+------------------------------------------+----------+----------------+-------------------------+
| | | ------- | ------- |
+------------------------------------------+----------+----------------+-------------------------+
| LOSS FOR THE PERIOD | | (9,995) | (104) |
+------------------------------------------+----------+----------------+-------------------------+
| | | ------- | ------- |
+------------------------------------------+----------+----------------+-------------------------+
| | | | |
+------------------------------------------+----------+----------------+-------------------------+
| Loss per share attributable to the | | | |
| equity holders of the Company during the | | | |
| period | | | |
+------------------------------------------+----------+----------------+-------------------------+
| | | | |
+------------------------------------------+----------+----------------+-------------------------+
| Basic and diluted earnings per share | 4 | (18.94)p | (0.20)p |
+------------------------------------------+----------+----------------+-------------------------+
| | | | |
+------------------------------------------+----------+----------------+-------------------------+
| | | | |
+------------------------------------------+----------+----------------+-------------------------+
Shieldtech plc
BALANCE SHEETS
At 30 June 2008
+----------------------+----------+----------+---------+---------+----------+---------+
| Group | Ordinary | Deferred | Share | Share | | |
| | | | | Based | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | Share | Share | Premium | Payment | Retained | Total |
+----------------------+----------+----------+---------+---------+----------+---------+
| | Capital | Capital | Account | Reserve | Earnings | Equity |
+----------------------+----------+----------+---------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 28 | 8,498 | - | 3,011 | - | (11,557) | (48) |
| February 2006 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Loss for the period | - | - | - | - | (104) | (104) |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Total recognised | - | - | - | - | (104) | (104) |
| income and expense | | | | | | |
| for the period | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 8,498 | - | 3,011 | - | (11,661) | (152) |
| 2007 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 8,498 | - | 3,011 | - | (11,661) | (152) |
| 2007 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Loss for the period | - | - | - | - | (9,995) | (9,995) |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Total recognised | - | - | - | - | (9,995) | (9,995) |
| income and expense | | | | | | |
| for the period | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share reorganisation | (8,482) | 8,482 | - | - | - | - |
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Issue of share | | | | | | |
| capital | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| - acquisition of | 108 | - | 2,592 | - | - | 2,700 |
| Aegis group | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| - other | 403 | - | 9,672 | - | - | 10,075 |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share issue costs | - | - | (1,075) | - | - | (1,075) |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share based payment | - | - | - | 280 | - | 280 |
| charge | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 527 | 8,482 | 14,200 | 280 | (21,656) | 1,833 |
| 2008 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | Share | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Company | Ordinary | Deferred | Share | Based | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | Share | Share | Premium | Payment | Retained | Total |
+----------------------+----------+----------+---------+---------+----------+---------+
| | Capital | Capital | Account | reserve | Earnings | Equity |
+----------------------+----------+----------+---------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 28 | 8,498 | - | 3,011 | - | (11,659) | (150) |
| February 2006 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Loss for the period | - | - | - | - | (104) | (104) |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Total recognised | - | - | - | - | (104) | (104) |
| income and expense | | | | | | |
| for the period | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 8,498 | - | 3,011 | - | (11,763) | (254) |
| 2007 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 8,498 | - | 3,011 | - | (11,763) | (254) |
| 2007 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Loss for the period | - | - | - | - | (9,893) | (9,893) |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Total recognised | - | - | - | - | (9,893) | (9,893) |
| income and expense | | | | | | |
| for the period | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share reorganisation | (8,482) | 8,482 | - | - | - | - |
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Issue of share | | | | | | |
| capital | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| -acquisition of | 108 | - | 2,592 | - | - | 2,700 |
| Aegis group | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| - other | 403 | - | 9,672 | - | - | 10,075 |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share issue costs | - | - | (1,075) | - | - | (1,075) |
+----------------------+----------+----------+---------+---------+----------+---------+
| Share based payment | - | - | - | 280 | - | 280 |
| charge | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| Balance at 30 June | 527 | 8,482 | 14,200 | 280 | (21,656) | 1,833 |
| 2008 | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
| | | | | | | |
+----------------------+----------+----------+---------+---------+----------+---------+
BALANCE SHEETS
At 30 June 2008
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | Group | | | Company | |
+--------------------------------+-------+------------+---------+--+------------+---------+
| | | 30 | | 30 | | 30 | | 30June |
| | | June | | June | | June | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | 2008 | | 2007 | | 2008 | | 2007 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| |Notes | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| ASSETS | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| NON-CURRENT ASSETS | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Property, plant & equipment | | 207 | | - | | - | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Goodwill | 5 | 2,000 | | - | | - | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Other intangible assets | | 1,056 | | - | | - | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Investment in subsidiaries | | - | | - | | 3,056 | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | 3,263 | | - | | 3,056 | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| CURRENT ASSETS | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Inventories | | 771 | | - | | - | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Trade and other receivables | | 1,715 | | 6 | | 7 | | 6 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Current tax assets | | 247 | | - | | - | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Amounts owed by subsidiaries | | - | | - | | 178 | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | 2,733 | | 6 | | 185 | | 6 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Total assets | | 5,996 | | 6 | | 3,241 | | 6 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| LIABILITIES | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Non current liabilities | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Financial liabilities - | | 678 | | - | | 650 | | - |
| borrowings | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Deferred income tax | | 14 | | - | | - | | - |
| liabilities | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | 692 | | - | | 650 | | - |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Current liabilities | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Trade and other payables | | 2,635 | | 147 | | 375 | | 147 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Financial liabilities - | | 836 | | 11 | | 383 | | 11 |
| borrowings | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Amounts due to subsidiaries | | - | | - | | - | | 102 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | 3,471 | | 158 | | 758 | | 260 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| Total liabilities | | 4,163 | | 158 | | 1,408 | | 260 |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
| | | | | | | | | |
+--------------------------------+-------+---------+--+---------+--+---------+--+---------+
+-------------------------------+-----+--------+--+--------+--+--------+--+--------+
| EQUITY | | | | | | | | |
+-------------------------------+-----+--------+--+--------+--+--------+--+--------+
Capital and reserves attributable to equity holders of the Company
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | | | | | | | |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | Group | | | Company | |
+-------------------------------+-------+-------------+----------+--+-------------+----------+
| | | 30 | | 30 | | 30 | | 30 |
| | | June | | June | | June | | June |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | 2008 | | 2007 | | 2008 | | 2007 |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| |Notes | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Share capital | | 9,009 | | 8,498 | | 9,009 | | 8,498 |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Share premium account | | 14,200 | | 3,011 | | 14,200 | | 3,011 |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Share-based payment reserve | | 280 | | - | | 280 | | - |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Retained earnings | | (21,656) | | (11,661) | | (21,656) | | (11,763) |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | | | | | | | |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Total shareholders' equity | | 1,833 | | (152) | | 1,833 | | (254) |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | | | | | | | |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| Total equity and liabilities | | 5,996 | | 6 | | 3,241 | | 6 |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | | | | | | | |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
| | | | | | | | | |
+-------------------------------+-------+----------+--+----------+--+----------+--+----------+
The Financial Statements were approved by the Board of Directors on 22 May 2009
and were signed on its behalf by:
Robert William Denton
Director
Shieldtech plc
CASH FLOW STATEMENTS
For the year ended 30 June 2008
+----------------------------------------+---------+----------+---------+---------+
| | Group | Company |
+----------------------------------------+--------------------+-------------------+
| | year | 16 | year | 16 |
| | | months | | months |
+----------------------------------------+---------+----------+---------+---------+
| | ended | ended | ended | ended |
+----------------------------------------+---------+----------+---------+---------+
| | 30 | 30 June | 30 June | 30 June |
| | June | | | |
+----------------------------------------+---------+----------+---------+---------+
| | 2008 | 2007 | 2008 | 2007 |
+----------------------------------------+---------+----------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash flows from operating activities | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Loss after taxation | (9,995) | (104) | (9,893) | (104) |
+----------------------------------------+---------+----------+---------+---------+
| Adjustments for | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Depreciation | 60 | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| Impairment of goodwill / investment in | 8,808 | - | 5,842 | - |
| subsidiary | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Provisions against intra group | - | - | 3,566 | - |
| balances | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Amortisation of intangible assets | 264 | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| Share-based payment charge | 280 | - | 280 | - |
+----------------------------------------+---------+----------+---------+---------+
| Finance costs | 111 | - | 70 | - |
+----------------------------------------+---------+----------+---------+---------+
| Finance income | (7) | (1) | (283) | (1) |
+----------------------------------------+---------+----------+---------+---------+
| Taxation credit recognised in income | (220) | - | - | - |
| statement | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Increase in trade and other | (444) | (3) | (1) | (3) |
| receivables | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Decrease in inventories | 126 | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| Increase in trade and other payables | 433 | 76 | 225 | 76 |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash flows from operations | (584) | (32) | (194) | (32) |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Income tax paid | (444) | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| Interest paid | (106) | - | (67) | - |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Net cash outflow from operating | (1,134) | (32) | (261) | (32) |
| activities | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash flows from investing activities | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Interest received | 7 | 1 | 283 | 1 |
+----------------------------------------+---------+----------+---------+---------+
| Purchase of property, plant and | (33) | - | - | - |
| equipment | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Acquisition of subsidiaries | (6,002) | - | (6,198) | - |
+----------------------------------------+---------+----------+---------+---------+
| Amounts transferred to subsidiaries | - | - | (3,846) | - |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Net cash used in investing activities | (6,028) | 1 | (9,761) | 1 |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash flows from financing activities | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Proceeds from issue of share capital | 10,075 | - | 10,075 | - |
+----------------------------------------+---------+----------+---------+---------+
| Payment for share issue costs | (1,075) | - | (1,075) | - |
+----------------------------------------+---------+----------+---------+---------+
| New borrowings | 1,000 | - | 1,000 | - |
+----------------------------------------+---------+----------+---------+---------+
| Repayment of borrowings | (2,950) | - | (150) | - |
+----------------------------------------+---------+----------+---------+---------+
| Repayment of loan notes | (467) | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| Repayment of finance leases | (23) | - | - | - |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Net cash received from financing | 6,560 | - | 9,850 | - |
| activities | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Net decrease in cash and cash | (602) | (31) | (172) | (31) |
| equivalents | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash and cash equivalents at beginning | (11) | 20 | (11) | 20 |
| of period | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| Cash and cash equivalents at end of | (613) | (11) | (183) | (11) |
| period | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
| | | | | |
+----------------------------------------+---------+----------+---------+---------+
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
Shieldtech plc is the Group's ultimate parent company. It is incorporated and
domiciled in England and Wales. Shieldtech plc's shares are listed on the AIM
market of the London Stock Exchange.
The address of its registered office and principal place of business is 5
Chesford Grange, Woolston, Warrington WA1 4RQ.
The consolidated financial statements of Shieldtech plc are presented in Pounds
Sterling (GBP), which is also the functional currency of the parent. The
principal activity of the Company is a holding company. The principal activities
of its subsidiaries are described in Note 16.
2. PRINCIPAL ACCOUNTING POLICIES
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU), including International Accounting Standards (IAS) and
interpretations issued by the International Financial Reporting Interpretations
Committee (IFRIC). Practice is continuing to evolve on the application and
interpretations of IFRS. Further standards may be issued by the International
Accounting Standards Board (IASB) and standards currently in issue and endorsed
by the EU may be subject to interpretations issued by IFRIC.
IFRS, as adopted by the EU, differs in certain respects from IFRS as issued by
the IASB. However, the consolidated financial statements for the period
presented would be no different had the Group applied IFRS as issued by the
IASB. References to IFRS hereafter should be construed as references to IFRS as
adopted by the EU.
The preparation of financial statements, in conformity with generally accepted
accounting principles under IFRS, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual results may
ultimately differ from those estimates.
The financial statements have been prepared using the measurement basis
specified by IFRS for each type of asset, liability, income and expense. The
measurement bases are more fully described in the detailed accounting policies
below.
The financial statements have been prepared on a going concern basis under the
historical cost convention. As described in the Chairman's Statement, the
Group's trading loss in the period reflected weak demand in the UK following the
introduction of new ballistic protection standards. Trading improved towards the
end of the period and this improvement has been maintained since 30 June 2008.
The Bank reduced the Group's overdraft facility in response to the trading loss
and indicated its requirement for additional finance to be injected into the
business in order to ensure the Bank's continued support. The Company has been
engaged for some months in discussions with the Bank and other parties
concerning an injection of additional finance into the business. Throughout this
period the Bank has continued to provide working capital support to enable the
discussions to be completed. It is proposed that the Company enter into a Loan
Note Instrument to create GBP1,100,000 8% fixed rate secured loan notes 2011 and
that these be issued to three individuals who have indicated their intention to
make such investment. The issue of loan notes will further improve the Group's
financial position and provide, with the Bank's ongoing support, the working
capital required by the Group. The Bank has offered, conditional upon, among
other things, completion of this investment, to provide new banking facilities
to the Group. The investment is conditional upon the approval of the
Shareholders at the forthcoming Annual General Meeting. At the date of this
report these conditions have not yet been satisfied.
Subject to the satisfaction of these conditions, the Directors believe the Group
will have sufficient funding to meet its debts as they fall due for a period of
at least twelve months from the expected date of completion of the investment.
If the conditions were not to be satisfied then the funding from the investors
might not be forthcoming. For the reasons set out above this creates a material
uncertainty over the ability of the Group to pay its debts as they fall due
which casts significant doubt over the Group's ability to continue as a going
concern. These financial statements do not include any adjustments that would
result if the going concern basis of preparation was inappropriate.
2.2 Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are
entities over which the Group has the power to control the financial and
operating policies so as to obtain benefits from its activities. The Group
obtains and exercises control through voting rights. Subsidiaries are
consolidated from the date on which control is transferred to the Group.
Unrealised gains on transactions within the Group are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
2.3 Business combinations
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase
method involves the recognition at fair value of all identifiable assets and
liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with Group accounting policies.
Goodwill is stated after separating out identifiable intangible assets.
2.4 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the net identifiable assets including separately
identifiable intangible assets and contingent liabilities of the acquired
subsidiary at the date of acquisition, regardless of whether or not they were
recorded in the financial statements of the subsidiary prior to acquisition.
Goodwill is tested annually for impairment.
Other intangible assets
Separately identifiable intangible assets are included at their fair value at
the date of acquisition and amortised over their estimated useful lives,
generally up to five years.
2.5 Property, plant and equipment
Property, plant and equipment are included at cost less accumulated depreciation
and provision for impairment. No depreciation is charged during the period of
construction or commissioning.
2.6 Depreciation
Depreciation is calculated to write down the cost, less any estimated residual
value, of all property, plant and equipment on a straightline basis over their
estimated useful economic lives as follows:
Long leasehold land and buildings term of lease
Plant and machinery up to 10 years
Other up to 5 years
Material residual value estimates are updated as required, but at least
annually, whether or not the asset is revalued.
2.7 Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the
difference between the disposal proceeds and the carrying amount of the asset
and is recognised in the income statement.
2.8 Impairment testing of assets
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level.
Individual assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised where the asset's or cash-generating unit's
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation. Impairment losses
recognised for cash-generating units, to which goodwill has been allocated, are
credited initially to the carrying amount of goodwill. Any remaining impairment
loss is charged pro rata to the other assets in the cash-generating unit. With
the exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist.
2.9 Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease payment plus
incidental payments, if any, to be borne by the lessee. A corresponding amount
is recognised as a finance leasing liability.
The interest element of leasing payments is charged to the income statement in
constant proportion to the capital balance outstanding over the period of the
lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the income statement on a straight-line basis over the lease
term. Lease incentives are spread over the term of the lease.
2.10 Investments
Investments in subsidiary companies are included at cost less provision for
impairment.
2.11 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
calculated on a FIFO basis and includes materials, direct labour and an
attributable proportion of manufacturing overheads based on normal levels of
activity. Net realisable value is based on estimated selling price less further
costs to be incurred to completion and disposal.
2.12 Cash and cash equivalents
For the purposes of the cash flow statement cash and cash equivalents comprise
cash in hand and demand deposits together with other short-term highly liquid
investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value. Bank overdrafts that
are repayable on demand form an integral part of the Group's cash management and
are also included as a component of cash and cash equivalents. For the purposes
of the balance sheet cash and cash equivalents are cash on hand and deposits
with banks and other financial institutions which are not restricted in its use.
Bank overdrafts are included in borrowings in current liabilities.
2.13 Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable. Revenue is reduced for any rebates and other similar allowances.
Revenue on the outright sale of goods, where no supplier obligations remain, is
recognised on despatch to the customer. Revenue from a contract to provide goods
is recognised by reference to the stage of completion of the contract.
Interest income is accrued on a time basis by reference to the principal
outstanding and at the effective interest rates applicable.
2.14 Foreign currency
Transactions in foreign currency are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses arising from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are recognised in the income statement.
2.15 Employee benefits
Pension contributions - defined contribution scheme
The Group makes pension contributions only to defined contribution schemes.
These contributions are recognised in the income statement during the period in
which they become payable. The group has no further payment obligations once the
contributions have been paid.
Share-based payments
The Group operates a number of equity-settled, share-based compensation plans.
The fair value of the services received in exchange for the grant of the options
and warrants is recognised as an expense in the income statement with a
corresponding adjustment to equity. The total amount to be expensed over the
vesting period, or on grant if there is no vesting period, is determined by
reference to the fair value of the options and warrants granted using an
appropriate pricing model.
2.16 Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax is the tax currently payable or receivable based on the taxable
profit or loss for the period. The Group's liability for current tax is
calculated using tax laws and rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. In addition, tax
losses available to be carried forward as well as other income tax credits to
the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax
assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity (such as the revaluation of land) in
which case the related deferred tax is also charged or credited directly to
equity.
2.17 Segment reporting
A segment is a distinguishable component of the Group that is engaged in
providing goods or services (business segment), or in providing goods or
services within a particular economic environment (geographical segment), which
is subject to risks and returns that are different from those of other segments.
2.18Financial assets
All financial assets are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets are recognised at
fair value plus transaction costs.
Financial assets at fair value through profit or loss include financial assets
that are either classified as held for trading or are designated by the entity
as at fair value through profit or loss upon initial recognition. Subsequent to
initial recognition, the financial assets included in this category are measured
at fair value with changes in fair value recognised in the income statement.
Financial assets originally designated as financial assets at fair value through
profit or loss may not be reclassified subsequently.
Financial assets are designated as at fair value through profit or loss where
they eliminate or significantly reduce a measurement (or recognition) mismatch.
Loans receivable are measured subsequent to initial recognition at amortised
cost using the effective interest method, less provision for impairment. Any
change in their value through impairment or reversal of impairment is recognised
in the income statement.
Provision against trade receivables is made when there is objective evidence
that the Group will not be able to collect all amounts due to it in accordance
with the original terms of those receivables. The amount of the write-down is
determined as the difference between the asset's carrying amount and the present
value of estimated future cash flows.
An assessment for impairment is undertaken on each financial asset at least at
each balance sheet date.
2.19 Financial liabilities
Financial liabilities are recorded at amortised cost using the effective
interest method, with interest-related charges recognised as an expense in
finance cost in the income statement. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are charged to the
income statement on an accruals basis using the effective interest method and
are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
Financial liabilities are categorised as at fair value through profit or loss
where they are classified as held-for-trading or designated as at fair value
through profit or loss on initial recognition.
A financial liability is derecognised only when the obligation is extinguished,
that is, when the obligation is discharged or cancelled or expires.
2.20 Equity
Equity comprises:
Share capital - the nominal value of equity shares issued.
Share premium account - the excess over nominal value of the fair value of
consideration received for equity shares net of expenses of the share issue.
Share-based payment reserve - the fair value of share-based payments that has
been expensed in the income statement, until such share-based payments are
exercised.
Retained earnings - the retained profits and losses.
2.21 Critical accounting estimates and judgements
The preparation of the financial statements requires the use of estimates and
assumptions. These affect the classification and valuation of assets,
liabilities, income, expenses and contingent liabilities. Estimates and
assumptions mainly relate to the useful life of noncurrent assets, the
discounted cash flows used in impairment testing, the valuation of share based
payments and provision for taxes. Estimates are based on historical experience
and other assumptions that are considered accurate in the circumstances. The
actual values may vary from the estimates. The estimates and the assumptions are
continually reviewed.
Critical accounting and valuation policies and methods are those that are most
important to the portrayal of the Group's financial position, results of
operations and cash flows, and that require the application of difficult,
subjective and complex judgments, often as a result of the need to make
estimates about the effects of matters that are inherently uncertain and may
change in subsequent periods. While not all of the significant accounting
policies require difficult, subjective or complex judgments, the Company
considers the following accounting policies to be significant.
Intangible assets
At 30 June 2008 the Group had intangible assets with a net carrying amount of
GBP3.056 million, comprising goodwill of GBP2 million and customer relationships
of GBP1.056 million.
Intangible assets other than goodwill are amortised over their estimated useful
lives. The estimated useful lives are based on estimates of the period during
which the assets will generate revenue. Intangible assets other than goodwill
are tested for impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets may no longer be recoverable. Further
information is given in Note 13.
Goodwill is tested annually for impairment. Impairment losses are measured by
comparing the carrying amount to the discounted cash flows expected to be
generated by the relevant cash-generating unit to which the goodwill belongs.
The impairment loss is first allocated to goodwill and then to the other assets
of a cash-generating unit. Estimating the discounted future cash flows involves
significant assumptions regarding future sales prices, sales volumes and costs.
The discounting process is also based on assumptions and estimations relating to
business-specific costs of capital, which in turn are based on country risks,
credit risks and additional risks resulting from the volatility of the
respective line of business. Further information is given in Note 12.
Estimates are also used in the course of acquisitions to determine the fair
value of the assets and liabilities acquired. If any intangible assets are
identified, depending on the type of asset and the complexity of determining its
fair value, the Company either consults with an independent external valuation
expert or develops the fair value internally, using an appropriate valuation
technique which is generally derived from a forecast of the total expected
future net cash flows. Further information is given in Note 14.
Although the Company believes that its estimates of the relevant expected useful
lives, its assumptions concerning the macroeconomic environment and developments
in the industries in which the Group operates and its estimations of the
discounted future cash flows are appropriate, changes in assumptions or
circumstances could require changes in the analysis. This could lead to
additional impairment charges in the future or to valuation write-backs should
the trends expected by the Company reverse.
Share based payments
The fair value of share-based payments is determined under the Black-Scholes
model and is dependant on estimates for the expected life of share options and
warrants, volatility of shares, risk free yield rate to maturity and expected
dividend yield. Further information is given in Note 23.
Income taxes
Estimates are made to compute provisions for taxes. Judgements are necessary to
determine whether deferred tax assets are recognised. These involve assessing
the probabilities that deferred tax assets resulting from deductible temporary
differences and tax losses can be utilised to offset future taxable income.
Uncertainties exist with respect to the interpretation of complex tax
regulations and the amount and timing of future taxable income. Differences
arising between the actual results and the assumptions made, or future changes
to such assumptions, could necessitate adjustments to tax income and expense in
future periods. Further information is given in Notes 9 and 10.
2.22 Adoption of new and revised standards
Standards and interpretations in issue not yet adopted.
At the date of the authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective. The Directors anticipate the
adoption of these standards and interpretations will have no material impact on
the Group's financial statements, with the exception of IAS 1 which will affect
the presentation of changes in equity and introduces a statement of
comprehensive income. This amendment will not affect the financial position or
results of the Group but will give rise to additional or changed disclosure. The
Directors anticipate that the Group will adopt these standards and
interpretations on their effective dates.
* IAS 1 Presentation of financial statements (revised 2007) (effective 1 January
2009);
* IAS 23 Borrowing costs (revised 2007) (effective 1 January 2009);
* IAS 27 Consolidation and separate Financial Statements (revised 2008) (effective
1 July 2009);
* Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation
of Financial Statements - Puttable Financial Instruments and Obligations Arising
on Liquidation (effective 1 January 2009);
* Amendment to IAS 39 Financial Instruments: Recognition and Measurement -
Eligible Hedged Items (effective 1 July 2009);
* Improvements to IFRSs (effective 1 January 2009 other than certain amendments
effective 1 July 2009);
* Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards and IAS 27 Consolidated and Separate Financial Statements - Costs of
Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective 1
January 2009);
* Amendment to IFRS 2 Share-based payment. Vesting Conditions and Cancellations
(effective 1 January 2009);
* IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009);
* IFRS 8 Operating segments (effective 1 January 2009);
* IFRIC 12 Service concession arrangements (effective 1 July 2008);
* IFRIC 13 Customer loyalty programmes (effective 1 July 2008); and
* IFRIC 14 and IAS 19 The limit on defined benefit asset, minimum funding
requirements and their interaction (effective 1 January 2008);
* IFRIC 15 Agreements for the Construction of Real Estate (effective 1 January
2009)
* IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October
2008)
* IFRIC 17 Distributions of Non Cash assets to Owners (effective 1 July 2009)
3. SEGMENTAL ANALYSIS
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, business segments, is based on the
Group's management and internal reporting structure.
The Group operates in one business segment, that of the supply of goods and
services to the Homeland Security Market.The Group's results, assets and
liabilities are derived from the Group's single business segment.
All of the Group's production facilities are located in the United Kingdom. The
Group's results, assets and liabilities are derived from the Group's assets in
the UK.
4. LOSS PER SHARE
The Company's share capital was reorganised on 12 July 2007 by consolidating
every 500 ordinary shares into 1 consolidated share and then subdividing each
consolidated share into 1 new ordinary share and 499 deferred shares. The effect
of the reorganisation was to reduce the number of ordinary shares by a factor of
500. On 13 July 2007 40,000,000 new ordinary shares were placed to raise GBP10
million and 10,800,000 new ordinary shares were issued as part of the
consideration to purchase a new subsidiary company as described in note 14. The
loss per share is based on the loss of GBP9,995,000 (16 months ended 30 June
2007: GBP104,000) and the weighted average of 52,775,578 (16 months ended 30
June 2007:52,499,762) new ordinary shares of 1 pence each in issue after these
events.
+------------------------------------------------------------+----------------+---------------+
| | 2008 | 2007 |
+------------------------------------------------------------+----------------+---------------+
| | | |
+------------------------------------------------------------+----------------+---------------+
| Loss attributable to equity holders of the Group (GBP'000) | (9,995) | (104) |
+------------------------------------------------------------+----------------+---------------+
| Weighted average number of ordinary shares in issue | 52,775,578 | 52,499,762 |
+------------------------------------------------------------+----------------+---------------+
| Basic and diluted loss per share | (18.94)p | (0.20)p |
+------------------------------------------------------------+----------------+---------------+
| | ------- | ------- |
+------------------------------------------------------------+----------------+---------------+
The loss for the period and the weighted average number of ordinary shares for
the purpose of calculating the diluted earnings per share are the same as for
the basic earnings per share calculation. This is because the outstanding share
options would have the effect of reducing the loss per ordinary share and would
therefore not be diluted.
5 GOODWILL
+---------------------------------------------------------------------+----------------+
| | GBP'000 |
+---------------------------------------------------------------------+----------------+
| Cost | |
+---------------------------------------------------------------------+----------------+
| At 1 July 2007 | - |
+---------------------------------------------------------------------+----------------+
| Addition on acquisition of Aegis group | 10,808 |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| At 30 June 2008 | 10,808 |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| Impairment | |
+---------------------------------------------------------------------+----------------+
| At 1 July 2007 | - |
+---------------------------------------------------------------------+----------------+
| Charge for the year relating to the Aegis group | 8,808 |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| At 30 June 2008 | 8,808 |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| Net book value | |
+---------------------------------------------------------------------+----------------+
| At 1 July 2007 | - |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| At 30 June 2008 | 2,000 |
+---------------------------------------------------------------------+----------------+
| | ------- |
+---------------------------------------------------------------------+----------------+
| | |
+---------------------------------------------------------------------+----------------+
As at 30 June 2008 the Group assessed the value of goodwill relating to the
Aegis group, on a value in use basis, and determined that it was appropriate to
reduce it by an impairment charge. The net book value of goodwill was
determined from a value in use calculation using a discounted cash flow model.
The discount rate was 13%. Cash flow forecasts of the Aegis group were prepared
for the two years ending 30 June 2010 based on past performance and expectations
and extrapolated for a further three years on a constant 10% basis to give five
year projections.
The impairment charge amounted to GBP8.808 million, due to the combination of
factors described below.
Goodwill arose on the acquisition by the Company of the Aegis group in July
2007, adding to the goodwill already recognised in the accounts of the Aegis
group. Total goodwill amounted to GBP10.808 million. Goodwill represents the
value ascribed by the Company, at the time of the acquisition, incremental to
the separately identified tangible and intangible assets, including customer
relationships (see Note 13). In accordance with accounting standards the value
of goodwill and other intangible assets has been reviewed in the light of events
since the acquisition.
At the time of the acquisition it was known that revised regulatory standards
would be published in the principal markets in which the Aegis group operates.
It was expected that these markets would take a few months to adjust to
the revised standards. In the event the period of adjustment has taken much
longer than expected and the level of activity in the market reduced
significantly for about a year. During this period the Aegis group suffered a
substantial reduction in sales and operated at a loss.
Trading improved from the fourth quarter of the financial year. Sales are
forecast to return to the level achieved before the regulatory change in the
medium term.
In parallel, business valuations generally have fallen greatly, reflecting the
global economic challenges that developed in both equity and debt markets during
2008 and particularly the near complete retrenchment of commercial banks from
corporate lending.
6 ACQUISITION
+-----------------------------------------------------+--------------+----------------+----------------+
| On 13 July 2007, the Company acquired the entire share capital of Aegis Engineering Holdings Limited |
| (previously named Shieldtech Limited) and its wholly owned subsidiary Aegis Engineering Limited |
| (together 'the Aegis group') whose principal activity is the design, manufacture and distribution of |
| body armour systems and other Homeland Security products and equipment. |
| |
+------------------------------------------------------------------------------------------------------+
| | Book value | Adjustments | Fair value |
+-----------------------------------------------------+--------------+----------------+----------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------------------+--------------+----------------+----------------+
| Non current assets | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Property, plant and equipment | 234 | - | 234 |
+-----------------------------------------------------+--------------+----------------+----------------+
| Other intangible assets | - | 1,320 | 1,320 |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Current assets | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Inventories | 897 | - | 897 |
+-----------------------------------------------------+--------------+----------------+----------------+
| Trade and other receivables | 1,293 | (28) | 1,265 |
+-----------------------------------------------------+--------------+----------------+----------------+
| Cash and cash equivalents | 196 | - | 196 |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Non current liabilities | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Financial liabilities - bank loan | (2,800) | - | (2,800) |
+-----------------------------------------------------+--------------+----------------+----------------+
| Finance leases | (48) | - | (48) |
+-----------------------------------------------------+--------------+----------------+----------------+
| Deferred income tax liabilities | (14) | - | (14) |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Current liabilities | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Trade and other payables | (1,984) | (66) | (2,050) |
+-----------------------------------------------------+--------------+----------------+----------------+
| Finance leases | (26) | - | (26) |
+-----------------------------------------------------+--------------+----------------+----------------+
| Current tax liabilities | (417) | - | (417) |
+-----------------------------------------------------+--------------+----------------+----------------+
| Loan notes | (467) | - | (467) |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| | (3,136) | 1,226 | (1,910) |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Goodwill on acquisition | | | 10,808 |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Initial purchase consideration | | | 8,898 |
+-----------------------------------------------------+--------------+----------------+----------------+
| |
| The acquisition of the Aegis group has been recognised in these financial statements on the basis of |
| estimates of the fair values of the net assets acquired and the goodwill arising. |
| |
| The initial purchase consideration was GBP8.5 million, satisfied by GBP5.8 million in cash and by |
| GBP2.7 million from the issue of 10.8 million new ordinary shares at a market price of 25 pence |
| each, and associated costs of GBP0.4 million. The initial purchase consideration is subject to |
| adjustments dependent on the performance of the Aegis group in the two years ended 30 June 2008. The |
| adjustments arising in respect of the year ended 30 June 2007 were GBPnil. The adjustment in respect |
| of the year ending 30 June 2008 is based on an earn-out to be determined by the adjusted profit of |
| the Aegis group (between GBP2.8 million and GBP4.2 million), subject to a maximum amount of GBP5.3 |
| million and is estimated to be GBPnil. |
+------------------------------------------------------------------------------------------------------+
| | | | |
| Net cash flow on acquisition | | | GBP'000 |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Initial purchase consideration | | | 8,898 |
+-----------------------------------------------------+--------------+----------------+----------------+
| Less: non-cash consideration | | | (2,700) |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| Consideration paid in cash (including associated | | | 6,198 |
| costs) | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | |
| Less: cash and cash equivalents acquired | | | (196) |
| | | | |
+-----------------------------------------------------+--------------+----------------+----------------+
| | | | 6,002 |
+-----------------------------------------------------+--------------+----------------+----------------+
Goodwill arose in the business combination because the consideration included a
control premium and amounts in relation to revenue growth, future market
development and the assembled workforce of the Aegis group. These benefits are
not recognised separately from goodwill as the future economic benefits arising
from them cannot be reliably measured.
The Company also acquired the customer lists and customer relationships of the
Aegis group. The fair value of these intangible assets has been assessed and
separately recognised from goodwill because they are capable of being separated
from the Group and sold, transferred, licensed, rented or exchanged, either
individually or together with any related contracts.
The results of the Aegis group for the year comprise:
+------------------------------------+-----------------+------------------+------------+
| |Pre-acquisition |Post-acquisition | Total |
+------------------------------------+-----------------+------------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------+-----------------+------------------+------------+
| | | | |
+------------------------------------+-----------------+------------------+------------+
| Revenue | 18 | 5,986 | 6,004 |
+------------------------------------+-----------------+------------------+------------+
| | | | |
+------------------------------------+-----------------+------------------+------------+
| Operating profit | (171) | (366) | (537) |
| | | | |
+------------------------------------+-----------------+------------------+------------+
+---------------------------------------+----------------------------------+
| Company registration number | |
+---------------------------------------+----------------------------------+
| 1423125 | |
+---------------------------------------+----------------------------------+
| Directors | |
+---------------------------------------+----------------------------------+
| Timothy Redmayne Wightman | |
+---------------------------------------+----------------------------------+
| Robert William Denton | |
+---------------------------------------+----------------------------------+
| Anthony Arthur O'Neill | |
+---------------------------------------+----------------------------------+
| Sir Keith Povey | |
+---------------------------------------+----------------------------------+
| Adrian Effland Bradsha | |
+---------------------------------------+----------------------------------+
| Company secretary | |
+---------------------------------------+----------------------------------+
| Robert William Denton | |
+---------------------------------------+----------------------------------+
| Registered office | |
+---------------------------------------+----------------------------------+
| 5 Chesford Grange | |
| Woolston | |
| Warrington | |
| WA1 4RQ | |
| | |
+---------------------------------------+----------------------------------+
| Independent auditors | |
+---------------------------------------+----------------------------------+
| Grant Thornton UK LLP | |
| Chartered Accountants and Registered | |
| Auditors | |
| 4 Hardman Square | |
| Spinningfields | |
| Manchester | |
| M3 3EB | |
| | |
+---------------------------------------+----------------------------------+
| Registrars | |
+---------------------------------------+----------------------------------+
| Capita Registrars | |
| The Registry | |
| 34 Beckenham Road | |
| Beckenham | |
| Kent | |
| BR3 4TU | |
| | |
+---------------------------------------+----------------------------------+
| Solicitors | |
+---------------------------------------+----------------------------------+
| Shoosmiths | |
| Apex Plaza | |
| Forbury Road | |
| Reading | |
| RG1 1SH | |
| | |
+---------------------------------------+----------------------------------+
| Nominated adviser and Broker | |
+---------------------------------------+----------------------------------+
| Seymour Pierce Limited | |
| 20 Old Bailey | |
| London | |
| EC4M 7EN | |
| | |
+---------------------------------------+----------------------------------+
| Website | |
| | |
+---------------------------------------+----------------------------------+
| www.shieldtechplc.com | |
+---------------------------------------+----------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DGGZKKRDGLZM
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