Half Yearly Report

 

TIDMSTEC 
 
RNS Number : 9837S 
Shieldtech PLC 
29 May 2009 
 

 
 
29 May 2009 
 
 
Shieldtech plc (the "Company" or the "Group") 
 
 
 
 
Results for the 6 months ended 31 December 2008 
 
 
Shieldtech plc, a specialist provider of products and services to the Homeland 
Security market, is pleased to announce its results for the six months ended 31 
December 2008. 
 
 
Highlights 
 
 
  *  Turnover GBP5.0m (2007: GBP2.5m) and operating profit before amortisation of 
  intangible assets and share based payments of GBP236,000 (2007: loss GBP563,000) 
 
 
 
  *  Further GBP1.1m order, under an existing contract, to supply a major overseas 
  defence client 
 
 
 
  *  Awarded contract supplying HMRC 
 
 
 
  *  Contracts with UK and New Zealand police forces renewed 
 
 
 
  *  19 product accreditations achieved to the new Home Office Scientific Development 
  Branch standard introduced in June 2007 
 
 
 
  *  Significant new product development, particularly in connection with the 
  impending tender for the contract to supply the Metropolitan Police 
 
 
 
  *  Knowledge Transfer Partnership established with a leading UK university to share 
  people, facilities, research and knowledge to accelerate the development of 
  future armour solutions 
 
 
 
  *  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 
 
 
 
Tony O'Neill, Chief Executive commented: 
 
 
"We are operating in an increasingly exciting market place. With a more secure 
financial base, Shieldtech 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: [phone] | 
| Tony O'Neill, Chief Executive Officer     |                            | 
| Robert Denton, Group Finance Director     |                            | 
|                                           |                            | 
+-------------------------------------------+----------------------------+ 
| Seymour Pierce                            |  Tel: [phone] | 
| Nicola Marrin/Mark Percy                  |                            | 
+-------------------------------------------+----------------------------+ 
| Buchanan Communications                   |  Tel: [phone] | 
| Tim Anderson / Isabel Podda / Ben Romney  |                            | 
+-------------------------------------------+----------------------------+ 
 
 
 
Chief Executive's Review 
 
 
 
 
I am pleased to report that the Shieldtech Group has traded profitably during 
the first six months of the current financial year and that the level of 
business activity is considerably higher than in the corresponding period last 
year.  This was achieved in spite of uncertainties hanging over the Group in 
connection with its future funding.  Financing proposals to be put to 
shareholders at the Annual General Meeting on 22 June 2009 would, in the view of 
Directors, provide a satisfactory resolution to the Group's working capital 
requirements. 
 
 
Financial results 
 
 
Sales in the six months ended 31 December 2008 were GBP5.0 million, double those 
of the corresponding period to 31 December 2007 and more than 40% up on the 
second half of the year ended 30 June 2008. 
 
 
The Group made an operating profit before, amortisation of intangible assets and 
share based payments, of GBP236,000 in the six months ended 31 December 
2008, compared to the operating loss in the corresponding period of GBP563,000 
and the operating loss in the second half of the year ended 30 June 2008 of 
GBP196,000.  Profit before tax for the period was GBP49,000 (2007: loss 
GBP1,035,000). 
 
 
The Group generated a net cash inflow from operations of GBP119,000 in the six 
months ended 31 December 2008, compared to the net cash outflow in the 
corresponding period of GBP1.059 million and the net cash outflow in the second 
half of the year ended 30 June 2008 of GBP75,000. 
 
 
Recent contract wins 
 
 
In October Aegis received, under an existing contract with an overseas 
defence customer, a further call-off order amounting to GBP1.1 million, for 
which most deliveries will be made in the second half of the current financial 
year. In November Aegis took over the responsibility to provide body armour 
systems to staff of Her Majesty's Revenue and Customs, having been awarded this 
contract in the autumn. Several UK police forces have extended their existing 
contracts for a further period.  The New Zealand police force has renewed its 
contract for a further 3 years. 
 
 
Operational progress 
 
 
Aegis introduced its customer service charter, committing to timelines for 
responding to customers' enquiries, orders and complaints.  This is the 
cornerstone of our philosophy for looking after our customers professionally, 
flexibly and promptly. 
 
 
We have concentrated greatly on new product developments during these six 
months.  For our customers "ballistics is a given" and we recognise and 
understand that their focus is on "wearability". Our designers have collaborated 
with experts to design a new range of products addressing issues relating to 
thermal conductivity, user perceptions of temperature and humidity, the female 
form, blunt trauma and ergonomics.  These new products have the potential to 
meet the requirements of opportunities globally, not just in the UK. Much of 
this development has been validated scientifically in conjunction with a leading 
UK university under a knowledge transfer partnership program. 
 
 
In parallel we have continued to expand our range of ballistic, knife and spike 
protection panels. I am pleased to report that Aegis now has nineteen product 
accreditations to the 2007 HOSDB standard. 
 
 
Our sales structure has been further developed, particularly in specific 
overseas markets. Aegis achieved accreditation status with the United Nations 
and is now able to participate in certain tenders conducted under UN auspices. A 
network of agents and distributors is being developed, mainly across Europe and 
the Middle East, where markets offer the potential of substantial contracts, the 
requirements of which are met by our new products. In the UK Aegis has started 
to generate business with other emergency and first responder organisations and 
with local authorities. 
 
 
Aegis suffered prime cost increases due to the significant weakening of sterling 
against the euro in November and December. The financial effects were twofold: 
firstly, gross profit margins were eroded, more than offsetting the benefits of 
improvements made in production, purchasing and stock management; secondly the 
cost of settling amounts due to suppliers increased by GBP0.2 million, 
exacerbated by the fact that we had arranged extended payment terms with key 
suppliers in the light of our bank's decision to reduce overdraft facilities 
made available to the Group due to the trading losses in the previous financial 
year. 
 
 
We made the difficult decision to increase selling prices in order to cover the 
additional cost created by these adverse movements in the euro:GBP exchange 
rate. The majority of our customers acknowledge that this incremental cost is 
outside our own control and an issue faced by our competitors as well. Price 
increases will come into effect at different times, based upon individual 
contracts, during 2009. 
 
 
I take the opportunity to record our thanks to those key customers and suppliers 
who have supported the Group during a difficult period and particularly Aegis' 
key trading partners who have demonstrated their confidence in the business by 
permitting extended credit terms, in some cases for long periods and for 
substantial amounts. 
 
 
Strategy 
 
 
The Directors continue to believe that there will be attractive opportunities to 
grow organically and by acquisition. However, the priority remains to 
re-establish profitable organic growth. The Group would benefit in many ways 
from increasing its range of products and customers and the geographical spread 
of its business and revenue streams, within which we seek to grow our euro based 
revenue stream, creating a natural hedge against Aegis' exposure to the euro on 
its prime costs. 
 
 
Funding 
 
 
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. 
Outlook 
 
 
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. 
 
 
 
 
Anthony O'Neill 
22 May 2009 
 
 
+--------------------------------+----------+------------+------------+------------+ 
|          CONSOLIDATED INCOME STATEMENT                                           | 
|          For the six months ended 31 December 2008                               | 
|                                                                                  | 
+----------------------------------------------------------------------------------+ 
| D                              |          | Unaudited  | Unaudited  |  Audited   | 
|                                |          |   6 months |   6 months |  16 months | 
|                                |          |   ended 31 |      ended |      ended | 
|                                |          |   December |         31 |    30 June | 
|                                |          |            |   December |            | 
+--------------------------------+----------+------------+------------+------------+ 
|                                |          |       2008 |       2007 |       2008 | 
+--------------------------------+----------+------------+------------+------------+ 
|                                |          |    GBP'000 |    GBP'000 |    GBP'000 | 
+--------------------------------+----------+------------+------------+------------+ 
|                                |  Note    |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| Continuing activities          |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| Revenue                        |          |      5,030 |      2,457 |      5,986 | 
+--------------------------------+----------+------------+------------+------------+ 
| Cost of sales                  |          |    (3,395) |    (1,595) |    (4,002) | 
+--------------------------------+----------+------------+------------+------------+ 
| Gross profit                   |          |      1,635 |        862 |      1,984 | 
+--------------------------------+----------+------------+------------+------------+ 
| Administrative expenses        |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| - impairment of goodwill       |          |          - |          - |    (8,808) | 
+--------------------------------+----------+------------+------------+------------+ 
| - amortisation of intangible   |          |      (132) |      (132) |      (264) | 
| assets                         |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| - share-based payments         |          |          - |      (280) |      (280) | 
+--------------------------------+----------+------------+------------+------------+ 
| - other                        |          |    (1,399) |    (1,425) |    (2,743) | 
+--------------------------------+----------+------------+------------+------------+ 
| Total administrative expenses  |          |    (1,531) |    (1,837) |   (12,095) | 
+--------------------------------+----------+------------+------------+------------+ 
|                                |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| Operating profit / (loss)      |          |        104 |      (975) |   (10,111) | 
+--------------------------------+----------+------------+------------+------------+ 
| Finance costs                  |          |       (55) |       (60) |      (111) | 
+--------------------------------+----------+------------+------------+------------+ 
| Finance income                 |          |          - |          - |          7 | 
+--------------------------------+----------+------------+------------+------------+ 
| Profit / (loss) before income  |          |         49 |    (1,035) |   (10,215) | 
| tax                            |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| Income tax                     |          |       (54) |        191 |        220 | 
+--------------------------------+----------+------------+------------+------------+ 
| Loss for the period            |          |        (5) |      (844) |    (9,995) | 
+--------------------------------+----------+------------+------------+------------+ 
| Attributable to                |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| Equity holders of the Company  |          |        (5) |      (844) |    (9,995) | 
+--------------------------------+----------+------------+------------+------------+ 
| Profit per share attributable to the      |            |            |            | 
| equity holders of the Company during the  |            |            |            | 
| period                                    |            |            |            | 
+-------------------------------------------+------------+------------+------------+ 
|                                |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
| - Basic and diluted            |    4     |    (0.01)p |    (1.60)p |   (18.94)p | 
+--------------------------------+----------+------------+------------+------------+ 
|                                |          |            |            |            | 
+--------------------------------+----------+------------+------------+------------+ 
 
 
 
 
 
 
 
 
+--------------------------------------+------------+------------+------------+----------+ 
| CONSOLIDATED BALANCE SHEET                                                             | 
| For the six months ended 31 December 2008                                              | 
|                                                                                        | 
+----------------------------------------------------------------------------------------+ 
|                                      |            | Unaudited  |  Unaudited |  Audited | 
|                                      |            |   6 months |   6 months |          | 
|                                      |            |      ended |   ended 31 |       16 | 
|                                      |            |         31 |   December |   months | 
|                                      |            |   December |            |    ended | 
|                                      |            |            |            |  30 June | 
+--------------------------------------+------------+------------+------------+----------+ 
|                                      |            |       2008 |       2007 |     2008 | 
+--------------------------------------+------------+------------+------------+----------+ 
|                                      |    Note    |    GBP'000 |    GBP'000 |  GBP'000 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Assets                               |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Non current assets                   |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Property, plant and equipment        |            |        190 |        218 |      207 | 
+--------------------------------------+            +------------+------------+----------+ 
| Goodwill                             |            |      2,000 |     10,714 |      2,000 | 
+--------------------------------------+            +------------+------------+------------+ 
| Other intangible assets              |            |        924 |      1,188 |      1,056 | 
+--------------------------------------+------------+------------+------------+------------+ 
| Total non-current assets             |            |      3,114 |     12,120 |    3,263 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Current assets                       |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Inventories                          |            |        850 |        693 |      771 | 
+--------------------------------------+            +------------+------------+----------+ 
| Trade and other receivables          |            |      1,602 |      1,113 |      1,962 | 
+--------------------------------------+------------+------------+------------+------------+ 
| Total current assets                 |            |      2,452 |      1,806 |    2,773 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Total assets                         |            |      5,566 |     13,926 |    5,996 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Liabilities                          |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Non current liabilities              |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Long term borrowings                 |            |        550 |        750 |      650 | 
+--------------------------------------+            +------------+------------+----------+ 
| Obligations under finance leases     |            |          5 |         32 |         28 | 
+--------------------------------------+            +------------+------------+------------+ 
| Deferred income tax liabilities      |            |         14 |         17 |         14 | 
+--------------------------------------+------------+------------+------------+------------+ 
| Total non-current liabilities        |            |        569 |        799 |      692 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Current liabilities                  |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Trade and other payables             |            |      2,319 |      1,280 |    2,635 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Financial liability - borrowings     |            |        818 |        407 |      813 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Obligations under finance leases     |            |         32 |         28 |       23 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Current tax liabilities              |            |          - |        221 |        - | 
+--------------------------------------+------------+------------+------------+----------+ 
| Loan notes                           |            |          - |        207 |        - | 
+--------------------------------------+------------+------------+------------+----------+ 
| Total current liabilities            |            |      3,169 |      2,143 |    3,471 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Total liabilities                    |            |      3,738 |      2,942 |    4,163 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Equity                               |            |            |            |          | 
+--------------------------------------+------------+------------+------------+----------+ 
| Capital and reserves attributable to equity       |            |            |          | 
| holders of the Company                            |            |            |          | 
+---------------------------------------------------+------------+------------+----------+ 
| Share capital                        |            |      9,009 |      9,009 |    9,009 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Share premium                        |            |     14,200 |     14,200 |   14,200 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Share based payment                  |            |        280 |        280 |      280 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Retained earnings                    |            |   (21,661) |   (12,505) | (21,656) | 
+--------------------------------------+------------+------------+------------+----------+ 
| Total shareholders' equity           |            |      1,828 |     10,984 |    1,833 | 
+--------------------------------------+------------+------------+------------+----------+ 
| Total equity and liabilities         |            |      5,566 |     13,926 |    5,996 | 
+--------------------------------------+------------+------------+------------+----------+ 
 
 
 
 
 
 
+--------------------------------+------+-------------+-------------+----------+ 
| CONSOLIDATED CASH FLOW STATEMENT                                             | 
| For the six months ended 31 December 2008                                    | 
|                                                                              | 
+------------------------------------------------------------------------------+ 
|                                |      |  Unaudited  | Unaudited 6 |  Audited | 
|                                |      |    6 months |      months |          | 
|                                |      |       ended |    ended 31 |       16 | 
|                                |      | 31 December |    December |   months | 
|                                |      |             |             | ended 30 | 
|                                |      |             |             |     June | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |      |        2008 |        2007 |     2008 | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |      |     GBP'000 |     GBP'000 |  GBP'000 | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |Note  |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Cash flows from operating      |      |             |             |          | 
| activities                     |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Cash generated / (consumed by) |  5   |          45 |       (999) |    (584) | 
| operations                     |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Income tax received / (paid)   |      |         129 |           - |    (444) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Interest paid                  |      |        (55) |        (60) |    (106) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Net cash inflow / (outflow)    |      |         119 |     (1,059) |  (1,134) | 
| from operating activities      |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Cash flows from investing      |      |             |             |          | 
| activities                     |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Interest received              |      |           - |           - |        7 | 
+--------------------------------+------+-------------+-------------+----------+ 
| Purchases of property plant    |      |        (10) |        (11) |     (33) | 
| and equipment                  |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Acquisition of subsidiaries    |  6   |           - |     (6,002) |  (6,002) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Net cash used in investing     |      |        (10) |     (6,013) |  (6,028) | 
| activities                     |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Cash flows from financing      |      |             |             |          | 
| activities                     |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Proceeds from the issue of     |      |           - |      10,075 |   10,075 | 
| ordinary shares                |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Payment for share issue costs  |      |           - |     (1,075) |  (1,075) | 
+--------------------------------+------+-------------+-------------+----------+ 
| New borrowings                 |      |           - |       1,000 |    1,000 | 
+--------------------------------+------+-------------+-------------+----------+ 
| Repayment of borrowings        |      |       (100) |     (2,850) |  (2,950) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Repayment of loan notes        |      |           - |       (260) |    (467) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Repayment of finance lease     |      |        (14) |        (14) |     (23) | 
+--------------------------------+------+-------------+-------------+----------+ 
| Net cash received from         |      |       (114) |       6,876 |    6,560 | 
| financing activities           |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
|                                |      |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
| Net decrease in cash and cash         |         (5) |       (196) |    (602) | 
| equivalents                           |             |             |          | 
+---------------------------------------+-------------+-------------+----------+ 
| Cash and cash equivalents at the      |       (613) |        (11) |     (11) | 
| beginning of the period               |             |             |          | 
+---------------------------------------+-------------+-------------+----------+ 
| Cash and cash equivalents at the end  |       (618) |       (207) |    (613) | 
| of the period                         |             |             |          | 
+--------------------------------+------+-------------+-------------+----------+ 
 
 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                                  | 
| For the six months ended 31 December 2008                                                    | 
|                                                                                              | 
+----------------------------------------------------------------------------------------------+ 
|                            | Ordinary | Deferred |    Share |    Share | Retained |    Total | 
|                            |    share |    share |    based |  premium | earnings |   equity | 
|                            |  capital |  capital |  payment |          |          |          | 
|                            |          |          |  reserve |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |  GBP'000 |  GBP'000 |  GBP'000 |  GBP'000 |  GBP'000 |  GBP'000 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 30 June 2008    |      527 |    8,482 |        - |   14,200 | (21,656) |    1,833 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Changes in equity for the  |          |          |          |          |          |          | 
| six months ended 31        |          |          |          |          |          |          | 
| December 2008              |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Total recognised           |          |          |          |          |          |          | 
| income/(loss)              |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|  - loss for the period     |        - |        - |        - |        - |      (5) |      (5) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 31 December     |      527 |    8,482 |      280 |   14,200 | (21,661) |    1,826 | 
| 2008                       |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 30 June 2007    |    8,498 |        - |        - |    3,011 | (11,661) |    (152) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Changes in equity for the  |          |          |          |          |          |          | 
| year ended 30 June 2008    |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Total recognised           |          |          |          |          |          |          | 
| income/(loss)              |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|  - loss for the period     |        - |        - |        - |        - |  (9,995) |  (9,995) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |    8,498 |        - |        - |    3,011 | (21,656) | (10,147) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share reorganisation       |  (8,482) |    8,482 |        - |        - |        - |        - | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Issues of share capital    |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| - acquisition of Aegis     |      108 |        - |        - |    2,592 |        - |    2,700 | 
| group                      |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|  - other                   |      403 |        - |        - |    9,672 |        - |   10,075 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share issue costs          |        - |        - |        - |  (1,075) |        - |  (1,075) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share based payment charge |        - |        - |      280 |        - |        - |      280 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 30 June 2008    |      527 |    8,482 |      280 |   14,200 | (21,656) |    1,833 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 30 June 2007    |    8,498 |        - |        - |    3,011 | (11,661) |    (152) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Changes in equity for the  |          |          |          |          |          |          | 
| six months ended 31        |          |          |          |          |          |          | 
| December 2007              |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Total recognised           |          |          |          |          |          |          | 
| income/(loss)              |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|  - loss for the period     |        - |        - |        - |        - |    (844) |    (844) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|                            |    8,498 |        - |        - |    3,011 | (12,505) |    (996) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share reorganisation       |  (8,482) |    8,482 |        - |        - |        - |        - | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Issues of share capital    |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| - acquisition of Aegis     |      108 |        - |        - |    2,592 |        - |    2,700 | 
| group                      |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
|  - other                   |      403 |        - |        - |    9,672 |        - |   10,075 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share issue costs          |        - |        - |        - |  (1,075) |        - |  (1,075) | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Share based payment charge |        - |        - |      280 |        - |        - |      280 | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
| Balance at 31 December     |      527 |    8,482 |      280 |   14,200 | (12,505) |   10,984 | 
| 2007                       |          |          |          |          |          |          | 
+----------------------------+----------+----------+----------+----------+----------+----------+ 
 
 
  1.  Nature of operations and general information 
 
Shieldtech plc ("the Company") and its subsidiaries (together "the Group") are 
principally involved with the supply of products and services to the Homeland 
Security market. The main activities of the Group currently are the design, 
manufacture and distribution of body armour systems. 
 
 
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 the registered office and 
principal place of business is 5 Chesford Grange, Woolston, Warrington, WA1 4RQ. 
 
 
These unaudited consolidated interim financial statements have been prepared in 
accordance with International Financial Reporting Standard ('IFRS') IAS 34 
Interim Financial Reporting. They do not include all the information required 
for full annual financial statements and should be read in conjunction with the 
consolidated financial statements of the Group for the year ended 30 June 2008 
which have been delivered to the Registrar of Companies and are also available 
on the Company's website at www.shieldtechplc.com. Those financial statements 
received an unqualified audit report which did not contain statements under 
section 237(2) and (3) of the Companies Act 1985. 
 
 
Shieldtech plc's consolidated interim financial statements are presented in 
pounds sterling (GBP), which is also the functional currency of the Company. 
 
2.  Accounting policies 
These unaudited consolidated interim financial statements have been prepared 
under the historical cost convention. The accounting policies used in these 
interim financial statements are consistent with those applied in the audited 
financial statements of the Group for the year ended 30 June 2008. 
 
 
The financial statements have been prepared on a going concern basis under the 
historical cost convention. As described in the Chairman's Statement in the 
Report and Accounts for the year ended 30 June 2008, the Group's trading loss in 
that 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. 
 
 
The principal accounting policies are set out below. 
 
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. 
 
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. 
 
2.3Business 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 buildingsterm 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. 
 
3. Segmental information 
The business of the Group comprises one segment, body armour systems. 
Accordingly no segmental information is provided. 
 
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 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 the entire share capital of Aegis Engineering Holdings 
Limited (formerly Shieldtech Limited) and its subsidiary Aegis Engineering 
Limited. 
 
 
The loss per share is calculated by reference to the loss attributable to 
ordinary shareholders divided by the weighted average number of ordinary shares 
in issue during the period. 
 
 
+----------------------------------------+--------------+-------------+--------------+ 
|                                        |   Unaudited  |  Unaudited  |     Audited  | 
|                                        |     6 months |    6 months |    16 months | 
|                                        |     ended 31 |    ended 31 |     ended 30 | 
|                                        |     December |    December |         June | 
+----------------------------------------+--------------+-------------+--------------+ 
|                                        |         2008 |        2007 |         2008 | 
+----------------------------------------+--------------+-------------+--------------+ 
|                                        |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
| Loss attributable to equity holders of |          (5) |       (844) |      (9,995) | 
| the Group (GBP'000)                    |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
| Weighted average number of ordinary    |   52,788,223 |  52,763,139 |   52,775,578 | 
| shares in issue                        |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
| Basic and diluted loss per share       |      (0.01)p |     (1.60)p |     (18.94)p | 
| (pence)                                |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
|                                        |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
| Profit / (loss) attributable to equity |          127 |       (432) |        (643) | 
| holders of the Group (GBP'000) -       |              |             |              | 
| before impairment of goodwill,         |              |             |              | 
| amortisation of intangible assets and  |              |             |              | 
| share based payment charge             |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
| Basic and diluted earnings / (loss)    |        0.24p |     (0.82)p |      (1.22)p | 
| per share (pence)                      |              |             |              | 
| -before impairment of goodwill,        |              |             |              | 
| amortisation of intangible assets and  |              |             |              | 
| share based payment charge             |              |             |              | 
+----------------------------------------+--------------+-------------+--------------+ 
 
 
Share options in issue are anti-dilutive in respect of the basic earnings / 
(loss) per share calculation and have therefore been excluded in the above 
calculations. 
             5. Cash consumed by operations 
+--------------------------------------+------------+------------+----------+ 
|                                      | Unaudited  | Unaudited  | Audited  | 
|                                      |   6 months |   6 months |       16 | 
|                                      |      ended |      ended |   months | 
|                                      |         31 |         31 |    ended | 
|                                      |   December |   December |  30 June | 
+--------------------------------------+------------+------------+----------+ 
|                                      |       2008 |       2007 |     2008 | 
+--------------------------------------+------------+------------+----------+ 
|                                      |    GBP'000 |    GBP'000 |  GBP'000 | 
+--------------------------------------+------------+------------+----------+ 
| Loss for the period                  |        (5) |      (844) |    (104) | 
+--------------------------------------+------------+------------+----------+ 
| Adjustments for:                     |            |            |          | 
+--------------------------------------+------------+------------+----------+ 
|  - Depreciation                      |         27 |         27 |        - | 
+--------------------------------------+------------+------------+----------+ 
|  - Amortisation of intangible assets |        132 |        132 |        - | 
+--------------------------------------+------------+------------+----------+ 
|  - Share based payment charge        |          - |        280 |        - | 
+--------------------------------------+------------+------------+----------+ 
|  - Finance costs                     |         55 |         60 |        - | 
+--------------------------------------+------------+------------+----------+ 
|  - Finance income                    |          - |          - |      (1) | 
+--------------------------------------+------------+------------+----------+ 
| - Taxation income recognised in      |         54 |      (191) |        - | 
| income statement                     |            |            |          | 
+--------------------------------------+------------+------------+----------+ 
|  - Trade and other receivables       |        172 |        186 |      (3) | 
+--------------------------------------+------------+------------+----------+ 
|  - Inventories                       |       (79) |        204 |        - | 
+--------------------------------------+------------+------------+----------+ 
|  - Trade and other payables          |      (311) |      (853) |       76 | 
+--------------------------------------+------------+------------+----------+ 
|                                      |            |            |          | 
+--------------------------------------+------------+------------+----------+ 
| Cash generated / (consumed) by       |         45 |      (999) |    (584) | 
| operations                           |            |            |          | 
+--------------------------------------+------------+------------+----------+ 
 
6.Acquisition of subsidiaries 
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 is the design, manufacture and 
distribution of body armour systems and other Homeland Security products and 
equipment. 
 
 
+----------------------------------------+-----------+-------------+------------+ 
|                                        |   Book    |Adjustments  |Fair value  | 
|                                        |  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 |           |             |   6,198    | 
|                      associated costs) |           |             |            | 
+----------------------------------------+-----------+-------------+------------+ 
|        Less: cash and cash equivalents |           |             |   (196)    | 
|                               acquired |           |             |            | 
|                                        |           |             |            | 
+----------------------------------------+-----------+-------------+------------+ 
|                                        |           |             |   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. 
 
 
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. 
 
 
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. 
 
7.Share capital reorganisation 
The Company's share capital was reorganised on 12 July 2007 by: 
- Consolidating every 500 ordinary shares into one consolidated share 
- Sub-dividing each consolidated share into one new ordinary share and 499 
deferred shares. 
The new ordinary shares have rights identical in all respects to the previous 
ordinary shares. The deferred shares have no voting or dividend rights and are 
effectively valueless. It is the Board's intention to cancel these deferred 
shares at the appropriate time. 
 
8.Approval of these unaudited consolidated interim financial statements 
These unaudited consolidated interim financial statements were approved and 
authorised for issue by the Board of Directors on 22 May 2009. 
 
 
+---------------------------------------+----------------------------------+ 
| Directors, Secretary and Advisers     |                                  | 
|                                       |                                  | 
+---------------------------------------+----------------------------------+ 
| Company registration number           |                                  | 
+---------------------------------------+----------------------------------+ 
| 1423125                               |                                  | 
|                                       |                                  | 
+---------------------------------------+----------------------------------+ 
| Directors                             |                                  | 
+---------------------------------------+----------------------------------+ 
| Timothy Redmayne Wightman             |                                  | 
+---------------------------------------+----------------------------------+ 
| Robert William Denton                 |                                  | 
+---------------------------------------+----------------------------------+ 
| Anthony Arthur O'Neill                |                                  | 
+---------------------------------------+----------------------------------+ 
| Sir Keith Povey                       |                                  | 
+---------------------------------------+----------------------------------+ 
| Adrian Effland Bradshaw               |                                  | 
|                                       |                                  | 
+---------------------------------------+----------------------------------+ 
| 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 
 
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