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LONDON (Alliance News) - Pennant International Group PLC saw its shares drop 10% Tuesday morning as it reported higher 2014 net earnings, buoyed mainly by tax credits, a higher dividend and confidence for further progress in 2015, but said pretax and revenue declined largely as a result of contract delays.
The logistics provider to the defence, rail, aerospace and naval sectors and to government departments reported a net profit of GBP3.0 million for 2014, up from GBP1.7 million in 2013, as it booked a GBP814,612 tax credit compared with a charge of GBP550,830 a year earlier after successfully claiming GBP1.3 million in research and development tax credits for 2012 to 2014.
Still, pretax profit declined slightly to GBP2.17 million, from GBP2.25 million, as revenue fell to GBP17.8 million, from GBP18.7 million. A 7% increase in revenue in its software services division was more than offset by a slight decline in revenue in its training systems business and a larger drop in data services. Operating margins were broadly flat at 12.2%, which it said was down to cost control.
The lower-than-expected revenue in the training systems business was down to a contract that has been expected to be awarded in 2014 being deferred into 2015, while the data services unit was also hit by a delay in the award of a "significant contract" which is now expected to contribute to current year performance.
"There are significant ongoing orders that provide work through 2015 and beyond and active involvement with existing and new customers for a number of major opportunities" it said og its training systems business.
The growth in net earnings prompted it to increase its final dividend for 2014 to 2.0 pence a share, bringing the total for the year to 2.9p, or five times earnings cover. It had paid a final dividend of 1.8p in 2013.
"The board looks forward to further progress across the group in the current year, with an anticipated weighting towards the second half. The forward visibility of the order book also provides additional confidence in group revenues for 2015 and beyond," Chairman Christopher Powell said in a statement.
"Over this period a number of major contracts have been won and completed to the satisfaction of our customers, enhancing the group's profile and reputation. As a result, the group is currently actively involved in a number of significant opportunities with existing and prospective customers," the company added.
Still, its shares were down 9.2% at 89.00 pence Tuesday morning, having risen in the run-up to the results.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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