30 Jun 2011 09:01
Pentagon Protection plc
Interim results for the six months ended 31 March 2011
Chairman's Statement
Introduction
The six months to 31 March 2011 has reflected a period of significant change for the Pentagon Group. As previously announced, this period started with an acquisition when in November 2010, the Group acquired International Glass Solutions LLC (IGS), creating for the first time a local outlet in the US market. At the same time, Steve Chambers was appointed to the Board as Managing Director, and I am delighted to be able to report that his strong management has already had a positive impact on the results for the period.
The results for the first six months show significant improvement versus the same period in 2010 with turnover increasing 32% to £1,238,595 (2010: £ £937,414) and losses from operations before exceptional items reducing by 44% to £174,078 (2010: £309,929). These figures are explained in more detail below.
SDS Group Ltd, our security products subsidiary, continues to perform well and has had some significant contract gains during the period. While John Wyatt has retired as the executive director of SDS and from the board of Pentagon, he remains involved with SDS as a consultant.
Financial Review
As I mentioned above, turnover has increased by 32% to £1,238,595. Over three quarters of this improvement has come from the SDS group, which has returned to historic levels of turnover, winning some large contracts from its traditional client base.
Cost of sales increased in line with this trend, which meant that gross profit has remained consistent with the first six months of last year at 30%. However, this is slightly down on the full year gross profit of 33%.
Total distribution and administration expenses have fallen by £40,292 from the same period in 2010, in part reflecting Steve Chamber's continual focus on operational efficiency.
The six months to 31 March 2010 included the reversal of a warranty claim provision of £225,800. There was no such write back in the period under review, therefore the loss before tax for the two periods is not directly comparable. However, the loss from operations before exceptional items has reduced from £309,929 to £174,078, a reduction of 44%.
The Interim Statement of Financial Position includes increased Goodwill of £725,158 (£351,360 at 30 September 2010) as a result of the acquisition of IGS LLC. The acquisition was paid for by an initial consideration of shares, as set out in Note 4 to the Consolidated Interim Financial Information. There is also potentially going to be contingent consideration based on profit multiples of IGS for a certain period, and our best estimate of this additional consideration has been included in this Interim Report. We will review this position for inclusion in the full year accounts to 30 September 2011.
Overall there has been an increase in total assets from £1,098,901 at 30 September 2010 to £1,597,126 at 31 March 2011.
Operational review
There has been significant progress made this year across both trading sectors; that is film and security products and services.
The film division has successfully negotiated a further one year extension to its contract with an overseas government for the upgrade of window security to its embassies and chanceries throughout the world and is generating additional revenue both in the UK and overseas. The European Commission contract also commenced during the second half of the year, and it is now proceeding well, according to our expectations.
The security products division built on its relationships with both police services and the armed forces, securing contracts with the Metropolitan Police and the British Transport Police for the supply of x-ray equipment, whilst continuing to support the Armed forces with supply and maintenance of portable x-ray equipment. In addition the Group's training and consultancy team have completed more than twenty projects in the past six months, and the 2012 Olympic Games continue to be a potential source of significant additional business over the next fifteen months.
Acquisition of International Glass Solutions LLC (IGS)
On 25 October 2010, the Group acquired from me 100% of the share capital of IGS, a company incorporated in the USA. The acquisition was part of a series of measures to strengthen the position of the Group by diversifying its project portfolio and allowing it to develop its presence in the US market.
IGS provides project management and installation services for film-based glazing solutions covering a wide range of applications, including blast mitigation and energy efficiency improvements. IGS primarily serves the commercial market and has a number of strategic partnerships already in place. In addition, IGS has access to the US residential film market, which makes up the largest portion of the window film industry in the United States and will contribute significantly to the Group's financial stability. I am confident this acquisition will give the Group a strong foothold in the USA.
While IGS has made a small loss in the period to 31 March 2011, (which is part of the Film division result in the divisional analysis), it has a strong project portfolio and is projected to grow significantly in terms of revenue and profitability over the next few years.
Conclusion
As stated in my introduction, this first six months has been a period of significant change and I am confident that with continued investment in both our management team and product development programme, we can and will continue to improve the company over the next twenty four months.
I look forward to reporting further on our progress when we publish our full year results.
Haytham ElZayn
Chairman
30 June 2011
Consolidated Interim Statement of Comprehensive Income
For the Six Months ended 31 March 2011
Unaudited | Unaudited | Audited | ||||
six months | six months | year | ||||
ended | ended | ended | ||||
31 March | 31 March | 30 September | ||||
2011 | 2010 | 2010
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£ | £ | £ | ||||
Revenue | 1,238,595 | 937,414 | 1,763,809 | |||
Cost of sales | (865,362) | (659,740) | (1,173,690) | |||
Gross profit | 373,233 | 277,674 | 590,119 | |||
Distribution costs | (19,308) | (61,633) | (94,802) | |||
Administrative expenses | (528,003) | (525,970) | (1,181,394) | |||
Other operating income | - | - | 4,610 | |||
LOSS FROM OPERATIONS BEFORE EXCEPTIONAL ITEM |
(174,078) |
(309,929) |
(681,467) | |||
Profit on disposal of subsidiary | - | - | 461,865 | |||
Exceptional item - provision | - | 225,800 | 225,800 | |||
LOSS FROM OPERATIONS BEFORE FINANCING ACTIVITIES |
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(174,078) |
(84,129) |
6,198 | ||
Finance income | 11 | 31 | 41 | |||
Finance costs | (2,741) | (1,100) | (4,695) | |||
LOSS BEFORE TAX | (176,808) | (85,198) | 1,544 | |||
Tax | - | - | - | |||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
(176,808) |
(85,198) |
1,544 | |||
Loss before tax and total comprehensive income for the period are all attributable to the equity shareholders of the parent. | ||||||
(Loss)/earnings per share | ||||||
Basic | (0.020)p | (0.013)p | 0.000p | |||
Diluted | (0.020)p | (0.013)p | 0.000p | |||
Revenue and operating loss for the period all derive from continuing operations.
Consolidated Interim Statement of Financial Position
As at 31 March 2011 | Unaudited | Unaudited | Audited | |||
31 March | 31 March | 30 September | ||||
2011 | 2010 | 2010 | ||||
| Notes | £ | £ | £ |
ASSETS |
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Non-current assets |
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Intangible assets | 5,614 | 13,902 | - | |||
Goodwill | 725,158 | 351,360 | 351,360 | |||
Property, plant and equipment | 16,103 | 31,077 | 15,917 | |||
746,875 | 396,339 | 367,277 | ||||
Current assets | ||||||
Inventories | 192,178 | 230,756 | 193,151 | |||
Trade and other receivables | 581,948 | 899,822 | 360,417 | |||
Cash and cash equivalents | 5 | 76,125 | 57,541 | 178,056 | ||
850,251 | 1,188,119 | 731,624 | ||||
TOTAL ASSETS | 1,597,126 | 1,584,458 | 1,098,901 | |||
EQUITY AND LIABILITIES | ||||||
Equity | ||||||
Share capital | 6 | 881,918 | 801,918 | 801,918 | ||
Share premium account | 6 | 7,176,785 | 7,056,785 | 7,056,785 | ||
Share based payment reserve | 51,749 | - | 51,749 | |||
Shares held by ESOP | (4,541) | (4,541) | (4,541) | |||
Retained earnings | (7,631,162) | (7,541,096) | (7,454,354) | |||
Total equity attributable to equity holders of the parent | ||||||
474,749 | 313,066 | 451,557 | ||||
Non-current liabilities | ||||||
Borrowings | - | 1,747 | - | |||
Provisions | - | 700,000 | - | |||
Deferred tax liability | - | - | - | |||
- | 701,747 | - | ||||
Current liabilities | ||||||
Trade and other payables | 820,318 | 505,364 | 642,989 | |||
Shareholder loan | 302,059 | - | - | |||
Borrowings | - | 64,281 | 4,355 | |||
1,122,377 | 569,645 | 647,344 | ||||
Total liabilities | 1,122,377 | 1,271,392 | 647,344 | |||
TOTAL EQUITY AND LIABILITIES | 1,597,126 | 1,584,458 | 1,098,901 | |||
Consolidated Interim Statement of Changes in Equity
Share | premium | based | held by | Retained | ||
capital | account | payments | ESOP | earnings | Total | |
reserve | ||||||
£ | £ | £ | £ | £ | £ | |
Audited at 1 October 2009 | 641,418 | 6,914,366 | - | (4,541) | (7,455,898) | 95,345 |
Total comprehensive income for the period | - | - |
- | - | (85,198) | (85,198) |
Transactions with owners: | ||||||
Shares issued during the period | 160,500 | 160,500 | - | - | - | 321,000 |
Share issue costs | - | (18,081) | - | - | - | (18,081) |
Unaudited at 31 March 2010 | 801,918 | 7,056,785 | - | (4,541) | (7,541,096) | 313,066 |
Transactions with owners: | ||||||
Share based payments | - | - | 51,749 | - | - | 51,749 |
Total comprehensive income for the period | - | - |
- | - | 86,742 | 86,742 |
Audited as at 30 September 2010 | 801,918 | 7,056,785 |
51,749 | (4,541) | (7,454,354) | 451,557 |
Total comprehensive income for the period | - | - |
- | - | (176,808) | (176,808) |
Transactions with owners: | ||||||
Shares issued during the period | 80,000 | 120,000 | - | - | - | 200,000 |
Unaudited at 31 March 2011 | 881,918 | 7,176,785 | 51,749 | (4,541) | (7,631,162) | 474,749 |
All equity is attributable to equity shareholders of the parent.
Share premium
Represents amounts subscribed for share capital in excess of its nominal value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account which is used for the corresponding entry to the share based payment charge through the Statement of Comprehensive Income.
Shares held by ESOP
These relate to shares held by Pentagon Employee Share Ownership Plan and are used to assist in meeting the obligations under employee remuneration schemes.
Consolidated Interim Statement of Cash Flows
For the Six Months ended 31 March 2011
Unaudited | Unaudited | Audited | ||||||
six months | six months | year | ||||||
ended | ended | ended | ||||||
31 March | 31 March | 30 September | ||||||
2011 | 2010 | 2010 | ||||||
| £ | £ | £ | |||||
Operating activities | ||||||||
(Loss)/profit before tax | (176,808) | (85,198) | 1,544 |
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Depreciation of property, plant and equipment | 4,086 | 4,086 | 7,133 |
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Amortisation of intangibles | 161 | 4,638 | 18,540 |
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Profit on disposal of subsidiary | - | - | (461,865) |
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Share based payments | - | - | 51,749 |
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Loss on disposal of property, plant and equipment | - | - | 14,960 |
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Changes in working capital: |
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(Increase)/decrease in inventories | 973 | (57,698) | (20,093) |
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Decrease/(increase) in trade and other receivables | (206,340) | 545,291 | 438,127 |
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(Increase)/decrease in trade and other payables | (19,173) | (156,734) | 90,106 |
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Decrease in provisions | - | (225,800) | (225,800) |
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Net finance cost/(income) | 2,730 | 1,069 | 4,654 |
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Net cash from/(used in) operating activities | (394,371) | 29,654 | ( 80,945) |
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Investing activities |
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Payments to acquire property, plant and equipment | (2,721) | - | (8,071) |
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Receipts from sales of property, plant and equipment | - | - | 5,224 |
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Acquisition of a subsidiary net of cash acquired | (199,813) | - | - |
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Disposal of a subsidiary net of cash disposed of | - | - | (29,759) |
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Interest received | 11 | - | 41 |
| ||||
Net cash used in investing activities | (202,523) | - | (32,565) |
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Financing activities |
| |||||||
Increase in shareholder loan | 302,059 | - | - |
| ||||
(Decrease)/increase in factor finance | (4,355) | (26,346) | (45,915) |
| ||||
Capital element of finance lease rental | - | (2,601) | (5,210) |
| ||||
Net proceeds from issue of shares | 200,000 | - | 302,919 |
| ||||
Interest paid | (2,741) | (1,069) | (4,695) |
| ||||
Net cash (used in)/from financing activities | 494,963 | (30,016) | 247,099 |
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Net decrease in cash and cash equivalents |
(101,931) |
(362) |
133,589 |
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Cash and cash equivalents at the start of the period | 178,056 | 44,467 | 44,467 |
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Cash and cash equivalents at the end of the period | 76,125 | 44,105 | 178,056 |
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Notes to the Consolidated Interim Financial Information
For the Six Months ended 31 March 2011
1 | General information |
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Pentagon Protection Plc ('the Company') and its subsidiaries (together, 'the Group') specialise in the supply and installation of anti-shatter/safety films, bomb blast protection, security and solar control films as well as opaque privacy films and manifestation graphics and the provision of bespoke security consultancy for high risk project management. They are also involved in Assessment and Examination (A&E) projects. |
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The Company is a publicly listed company incorporated and domiciled in England. The address of its registered office is Solar House, Amersham Road, Chesham, Buckinghamshire HP5 1NG. |
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The Company is listed on AIM. |
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This consolidated interim financial information was approved for issue on 30 June 2011.
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2 | Accounting policies |
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2.1 | Basis of preparation |
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The interim consolidated financial information comprises the consolidated Statements of Financial Position at 31 March 2011, 31 March 2010 and 30 September 2010 and the consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for the periods then ended and the related notes of Pentagon Protection Plc, (hereinafter referred to as 'the interim financial information'.) |
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The interim financial information has been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. In preparing this information, management have used the accounting policies set out in the Group's annual financial statements as at 30 September 2010. |
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This interim financial information does not constitute a set of statutory accounts under the requirements of the Companies Act 2006 and is neither audited nor reviewed. The comparative figures for the financial year ended 30 September 2010 are an extract from the Group's 2010 financial statements, which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified. |
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This document (the Interim Statement 2011) will be published on the company's website and will be publicly available from the London Stock Exchange regulatory publications. The maintenance and integrity of the Pentagon Protection Plc website is the responsibility of the directors. Legislation in the UK governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.
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3 | Business and geographical segments |
Based on the risks and returns the directors consider that the primary reporting format is by business segment. Results by business segment are as follows: | |
Unaudited | Unaudited | Audited | |||||||||||||||||||||
six months | six months | year | |||||||||||||||||||||
ended | ended | ended | |||||||||||||||||||||
31 March | 31 March | 30 September | |||||||||||||||||||||
2011 | 2010 | 2010 | |||||||||||||||||||||
£ | £ | £ | |||||||||||||||||||||
As restated | |||||||||||||||||||||||
Protective Film and Anchoring | |||||||||||||||||||||||
Turnover | 575,163 | 509,959 | 834,106 | ||||||||||||||||||||
Cost of sales | (397,998) | (376,164) | (564,889) | ||||||||||||||||||||
Gross profit | 177,165 | 133,795 | 269,217 | ||||||||||||||||||||
Overheads (net) | (219,126) | (283,559) | (702,734) | ||||||||||||||||||||
Operating profit/(loss) before exceptional item | (41,961) | (149,764) | (433,517) | ||||||||||||||||||||
Exceptional item | - | 225,800 | 687,665 | ||||||||||||||||||||
Operating(loss)/profit | (41,961) | 76,036 | 254,148 | ||||||||||||||||||||
Security Products and Services | |||||||||||||||||||||||
Turnover | 663,432 | 427,455 | 929,703 | ||||||||||||||||||||
Cost of sales | (467,364) | (283,576) | (608,801) | ||||||||||||||||||||
Gross profit | 196,068 | 143,879 | 320,902 | ||||||||||||||||||||
Overheads | (154,963) | (185,002) | (306,352) | ||||||||||||||||||||
Operating loss | 41,105 | (41,123) | 14,550 | ||||||||||||||||||||
Group Operating Expenses (net) | |||||||||||||||||||||||
Overheads | (173,222) | (119,042) | (262,500) | ||||||||||||||||||||
Totals | |||||||||||||||||||||||
Turnover | 1,238,595 | 937,414 | 1,763,809 | ||||||||||||||||||||
Cost of sales | (865,362) | (659,740) | (1,173,690) | ||||||||||||||||||||
Gross profit | 373,233 | 277,674 | 590,119 | ||||||||||||||||||||
Overheads | (547,311) | (587,603) | (1,271,586) | ||||||||||||||||||||
Operating loss before exceptional item | (174,078) | (309,929) | (681,467) | ||||||||||||||||||||
Exceptional item | - | 225,800 | 687,665 | ||||||||||||||||||||
Operating (loss)/profit | (174,078) | (84,129) | 6,198 | ||||||||||||||||||||
Assets and liabilities by business segment are as follows: |
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Unaudited | Unaudited | Audited |
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31 March | 31 March | 30 September |
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2011 | 2010 | 2010 |
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£ | £ | £ |
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Protective Film and Anchoring |
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Total assets | 1,229,793 | 1,259,612 | 594,136 |
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Total liabilities | (800,114) | (1,125,503) | (234,519) |
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Depreciation and amortisation in period | 2,480 | 7,463 | 429 |
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Capital expenditure | - | - | 7,375 |
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Security Products and Services |
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Total assets | 367,333 | 324,846 | 504,765 |
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Total liabilities | (322,263) | (145,889) | (412,825) |
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Depreciation and amortisation in period | 1,761 | - | 6,704 |
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Capital expenditure | - | - | 696 |
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TOTAL ASSETS | 1,597,126 | 1,584,458 | 1,098,901 |
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TOTAL LIABILITIES | (1,122,377) | (1,271,392) | (647,344) |
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The secondary reporting format is by geographic segment based on location of customers. All of the business assets are located in the United Kingdom. External revenue by segment is as follows:
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Unaudited | Unaudited | Audited | ||||||||||||||||||||||
six months | six months | year | ||||||||||||||||||||||
ended | ended | ended | ||||||||||||||||||||||
31 March | 31 March | 30 September | ||||||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||||||
£ | £ | £ | ||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||
United Kingdom | 883,990 | 820,285 | 1,540,633 | |||||||||||||||||||||
Americas | 63,022 | 2,185 | 6,319 | |||||||||||||||||||||
Europe | 168,941 | 43,521 | 59,429 | |||||||||||||||||||||
Africa and Middle East | 1,575 | 51,092 | 121,357 | |||||||||||||||||||||
Far East | 121,067 | 19,281 | 36,071 | |||||||||||||||||||||
Australasia | - | 1,050 | - | |||||||||||||||||||||
1,238,595 | 937,414 | 1,763,809 | ||||||||||||||||||||||
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4 | Acquisition of a subsidiary |
On 25 October 2010, the Company acquired 100% of the share capital of International Glass Solutions LLC ("IGS"), a company incorporated in the USA.
IGS was sold to the Company by Haytham ElZayn, the company chairman, for an initial consideration of £200,000 in shares and contingent consideration to be paid in shares or cash (see below).
The Company acquired IGS to further develop its market penetration, giving it a strong foothold in the USA.
The transaction has been accounted for using the acquisition method of accounting. |
Fair value | Total | ||||
£ | £ | ||||
Property, plant and equipment | 1,551 | ||||
Intangible assets | 5,775 | ||||
Trade receivables | 15,191 | ||||
Cash and cash equivalents | 187 | ||||
Total assets | 22,704 | ||||
Trade payables | (9,880) | ||||
(9,880) | |||||
Total liabilities |
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Total identifiable net assets | 12,824 | ||||
Provisional fair value of goodwill including contingent consideration | 373,798 | ||||
Total consideration (including direct costs and contingent consideration) | 386,622 | ||||
Satisfied by: | |||||
Initial consideration of ordinary 0.1p shares | 200,000 | ||||
Fair value of contingent consideration | 186,622 | ||||
386,622 |
On completion, the Company issued 80 million shares at an issue price of 0.25 pence, a sum of £200,000.
The fair value of shares issued was based on published prices at the date of acquisition.
The remainder of the consideration payable for the acquisition has been determined based on annualised projected profit multiples of IGS during the period ended twenty four months after completion of the acquisition, and will be satisfied by the issue of shares to the seller. If the issue of shares to the seller in satisfaction of the deferred consideration would cause the seller to hold more than 29.9% of the entire issued share capital of the Group, the balance of the outstanding consideration will be paid in cash. |
Contingent consideration cannot exceed £800,000 and cannot be less than £Nil. The fair value of the contingent consideration is measured at the present value of the potential outcomes, which has been estimated taking into account historical patterns of trade and forecasted results. The contingent consideration has been classified as a liability. There is no right to return of previously transferred consideration.
Directly attributable acquisition costs have been expensed through profit and loss as incurred within administrative expenses. Costs directly incurred in relation to the issue of ordinary shares by the Company as consideration for the acquisition, have been deducted from the share premium account directly in equity.
IGS contributed £25,682 of revenue and £2,657 of net loss for the period between the date of acquisition and the reporting date.
The fair and gross value of trade receivables amounts to £15,191. Since it is expected that the full contractual amount will be collected, none of them have been impaired.
The goodwill is not deductible for tax purposes and is attributable to the operational and strategic synergies that are expected to arise in the post acquisition period. These have not been recognised as a separate intangible asset on the basis they could not be separated from the value generated from the business as a whole. |
5 | Cash and cash equivalents |
For the purpose of the consolidated interim cash flow statement, cash and cash equivalents are comprised of the following: | ||||||||||
Unaudited | Unaudited | Audited | ||||||||
31 March | 31 March | 30 September | ||||||||
2011 | 2010 | 2010 | ||||||||
£ | £ | £ | ||||||||
Cash at bank and in hand | 76,125 | 57,541 | 178,056 | |||||||
Bank overdraft | - | (13,436) | - | |||||||
76,125 | 44,105 | 178,056 | ||||||||
6 | Share capital | Unaudited | Unaudited | Audited | |||||
six months | six months | year | |||||||
ended | ended | ended | |||||||
31 March | 31 March | 30 September | |||||||
2011 | 2010 | 2010 | |||||||
£ | £ | £ | |||||||
Authorised | |||||||||
1,000,000,000 Ordinary shares of 0.1p each | 1,000,000 | 1,000,000 | 1,000,000 | ||||||
Issued and fully paid | |||||||||
As at 1 October 2010 (801,915,156 ordinary shares of 0.1p each) |
801,918 | 641,418 | 641,418 | ||||||
Issue of Ordinary shares of 0.1p each | 80,000 | 160,500 | 160,500 | ||||||
At 31 March 2011 (881,918,156 ordinary shares of 0.1p each) |
881,918 | 801,918 | 801,918 | ||||||
Share transaction history | ||||||||
Quantity of 0.1p shares | Value | |||||||
Shares issued in the period were as follows: | ||||||||
25 October 2010 (see note 4) | 80,000,000 | 0.25p | ||||||
7 | Dividends paid and proposed | |||||
Equity dividends on ordinary shares: | ||||||
No interim dividend was paid or is proposed for the half year ended 31 March 2011. | ||||||
8 | Loss per share |
The calculations of loss per share are based on the following losses and number of shares:
Unaudited | Unaudited | Audited |
| |||||||||||
six months | six months | year |
| |||||||||||
ended | ended | ended |
| |||||||||||
31 March | 31 March | 30 September |
| |||||||||||
2011 | 2010 | 2010 |
| |||||||||||
£ | £ | £ |
| |||||||||||
| ||||||||||||||
(Loss)/profit for the financial period | (176,808) | (85,198) | 1,544 |
| ||||||||||
| ||||||||||||||
Weighted average number of shares for diluted (loss)/profit per share | 870,551,880 | 641,857,882 | 755,499,384 |
| ||||||||||
Weighted average number of shares for basic (loss)/profit per share | ||||||||||||||
870,551,880 | 641,857,882 | 722,327,745 | ||||||||||||
At 31 March 2011, the number of ordinary shares in issue was 881,918,156.
In accordance with the provisions of IAS 33 for the periods ended 31 March 2011 and 31 March 2010, shares under option were not regarded as dilutive in calculating earnings per share. In the year to 30 September 2010, there were 33,171,639 outstanding options which were considered dilutive. |
9 | Seasonality of interim operations |
Pentagon Protection Plc does not operate in a seasonal or cyclical business environment.
10 | Provisions | Unaudited | Unaudited | Audited |
| |||||||
six months | six months | year |
| |||||||||
ended | ended | ended |
| |||||||||
31 March | 31 March | 30 September |
| |||||||||
2011 | 2010 | 2010 |
| |||||||||
£ | £ | £ |
| |||||||||
| ||||||||||||
Other provision | - | 700,000 | - |
| ||||||||
The other provision related to a warranty claim in respect of some work performed in March 2005. As at 30 September 2009, the directors were confident that the cost of the remedial works would be covered by the Group's insurance policy. Nonetheless, in accordance with IAS 37, the anticipated insurance income could not be recognised in the prior reporting period so a provision was made for the cost of remedial works. However, the claim and related provision were disposed of as part of the sale of Pentagon Protection (UK) Limited in the year to 30 September 2010; therefore the provision was released in full. | ||||||||||||