Pennant International Regulatory News (PEN)

Pennant International Group plc

Interim Results for the six months ended 30 June 2011

5 September 2011

Pennant International Group plc ("Pennant" or "the Group"), the AIM quoted supplier of integrated logistic support solutions, products and services, principally to the defence, rail, aerospace and naval sectors and to Government Departments, announces interim results for the six months ended 30 June 2011.

Commenting on the Group's performance, Chairman Christopher Powell said:

"I am pleased to report a profitable first half in which major contract wins have substantially increased the Group's order book.. Activity in respect of these new orders will increase progressively during the second half and they are expected to contribute significantly to revenues in 2012 and beyond.

"In addition to the new orders won, tendering activity remains high particularly in the Training Systems Division providing a growing pipeline of opportunities for the medium term."

Highlights: Financial

·; Group revenues for the period of £4.96million (2010: £4.89million);

·; Gross margin of 40.5% (2010: 41.4%);

·; Operating profit of £279,000 (2010: £220,000);

·; Profit before tax of £272,000 ( 2010: £209,000);

·; Profit attributable to equity holders of £202,000 (2010: £189,000) after full tax charge of £70,000 (2010: £20,000 charge);

·; Earnings per share of 0.72pence (2010: 0.67pence);

·; Net cash at period end of £699,000 (2010: £1,026,000);

·; Interim Dividend of 0.5pence per share (2010: 0.25p per share);

Highlights: Operational

·; Substantially increased order book with tendering activities in Training Systems Division remaining particularly high;

·; Training Systems: awarded the Group's largest ever contract worth in excess of £10million for Maintenance Training Equipment for the AW 159 Lynx Wildcat helicopter; successful completion of upgrade of electronic classrooms used to train Royal Australian Air Force maintenance personnel on Hawk Lead in Fighter; ongoing support revenues;

·; Data Services: A new Professional Services Agreement with Capgemini UK PLC developing the next generation of Basic PAYE Tools to support the introduction by HMRC of Real Time Information into PAYE; ongoing work on rail sector contract with potential value in excess of US$2million to supply manuals and training on major programme for supply of rolling stock;

·; Software Services: continuing resilient revenues from five year contract with Canadian Department of National Defence for support to maximise effective use of OmegaPS; sale of new OmegaPS licences to Shenjang Aircraft Research and Design Institute of China; ongoing maintenance revenues from existing OmegaPS licences:

On current trading and prospects, Mr. Powell added:

"the Group's order book is strong and there has been a high level of in the Training Systems Division providing a growing pipeline of opportunities. This, together with the ongoing revenue streams from support and consultancy agreements, a strong balance sheet and a good cash position give your board confidence for the future."

Enquiries:

Pennant International Group plc Tel: 01452 714881

Chris Snook, Chief Executive

John Waller, Finance Director

Winningtons Financial Tel: 0117 985 8989

Paul Vann/Tom Cooper

WH Ireland Tel: 0117 945 3470

Mike Coe/Marc Davies

Pennant International Group plc

Interim Report for the six months ended 30 June 2011

Chairman's Statement

I am pleased to report a profitable first half in which major contract wins have substantially increased the Group's order book. Activity in respect of these new orders will increase progressively during the second half and they are expected to contribute significantly to revenues in 2012 and beyond. 

In addition to the new orders won, tendering activity remains high particularly in the Training Systems Division providing a growing pipeline of opportunities for the medium term.

Results

Turnover for the period was £4.96 million (Interim 2010: £4.89 million) and gross margin was 40.5% (Interim 2010: 41.4%). Administrative expenses were down by 3% at £1.73million (Interim 2010: £1.78 million). As a consequence of these factors there was a 30% increase in profit before tax to £271,789 (Interim 2010: £209,078).

The recognition, for the first time, of tax losses as a deferred tax asset in the annual accounts to 31 December 2010 has resulted in a full tax charge for the period of £70,000 (2010: £20,000). The profit after tax was £201,789 (Interim 2010: £189,078). Basic earnings per share rose to 0.72p (Interim 2010: 0.67p).

Cash generated from operations was £266,886 (Interim 2010: £489,464). Cash at the end of the period was £853,753 (Interim 2010: £1,371,938). After deducting borrowings the Group had net cash of £698,949 (Interim 2010: £1,025,510). The cash balance reflects the continuing policy of purchasing the Company's own shares when appropriate and the timing of contract stage payments.

Your Board is declaring the payment of an interim cash dividend of 0.5p per share (Interim 2010: 0.25p). The dividend will be paid on 30 September 2011 to shareholders on the register at close of business on 16 September 2011.The shares are expected to go ex-dividend on 14 September 2011.

Current trading

The principal activities and achievements in the period included:

·; A contract with AgustaWestland worth in excess of £10 million for Maintenance Training Equipment for the AW159 Lynx Wildcat helicopter. This is the largest contract ever won by the Group and will provide substantial revenues through 2012 and 2013.

·; Successful completion of the upgrade of electronic classrooms in Australia used to train RAAF 

personnel in the maintenance of the Hawk Lead in Fighter. Also extension of the contract to

support the classrooms for a further two years to 2013.

·; Ongoing work and extensions to contract with BAE Systems for computer-based training

systems and emulations supporting their sale of Hawk aircraft to India

·; A new Professional Services Agreement with Capgemini UK PLC developing the next generation of Basic PAYE Tools to support the introduction by HMRC of Real Time Information into PAYE.

·; Ongoing work on a contract in the rail sector with potential value in excess of US$ 2 million to supply manuals and training to a major programme for the supply of rolling stock.

·; Continuing resilient revenues from the consultancy agreement with the Canadian Department of National Defence for support to maximise effective use of OmegaPS.

·; The sale of new OmegaPS licences to Shenyang Aircraft Research & Design Institute.

In addition to the above ongoing revenue streams have continued under other support and consultancy agreements with:

·; UK Ministry of Defence - support of 140 training devices in use at military training establishments.

·; BAE Australia - support of classrooms and training equipment in respect of the Hawk Lead in Fighter.

·; Australian Defence Organisation - specialist consultancy in respect of the support of OmegaPS.

·; Various customers - software maintenance agreements in respect of OmegaPS installations.

·; Krauss Maffei Wegmann - support of a number of rail and police car simulators.

·; TOTAL E&P UK PLC - provision of draughting services.

Outlook

The Group's order book is strong and there has been a particularly high level of tendering in the Training Systems Division providing a growing pipeline of opportunities. This together with the ongoing revenue streams from support and consultancy agreements, a strong balance sheet and a good cash position give your Board confidence for the future.

C C Powell

Chairman

5 September 2011

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2011

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2011

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 June 2011

PENNANT INTERNATIONAL GROUP plc

STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2011

PENNANT INTERNATIONAL GROUP plc

NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2011

1. Basis of preparation

This condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied to the Group's latest annual audited financial statements. The following standards, amendments to standards and interpretations have been adopted by the EU and are mandatory for the first time for the financial year beginning 1 January 2011 but have had no effect on the information presented in this condensed set of financial statements:

While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods and include the information required to be disclosed by the AIM Rules for Companies, they do not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34, 'Interim Financial Reporting'.

The results for the year ended 31 December 2010 set out in this Interim Report are not statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or s498(3) of the Companies Act 2006.

2. Taxation

The taxation charge for the period is based on the estimated rate of tax that is likely to be effective for the full year to 31 December 2011.

3. Earnings per share

Basic earnings per share are calculated by dividing the profit for the period attributable to the shareholders by the weighted average number of shares in issue. The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options.

4. Cash generated from operations

5. Copies of this statement

Copies of this statement will be sent to shareholders and will be available on the Group's website (www.pennantplc.co.uk) and from Pennant International Group plc, Pennant Court, Staverton Technology Park, Cheltenham, GL51 6TL.