Pennant Share Discussion Threads

[chrisdgb] 21/12/2022 10:51

Agreed, one of my stocks for 2023.........

[hybrasil] 14/12/2022 17:53

I get disillusioned from time to time but if you read the miton microcap interims of today undervaluation is very prevalent in all these small caps where I reside.

This should be higher.

Happy Christmas!

[chrisdgb] 14/11/2022 10:53

Buys trickling through.........

[chrisdgb] 10/11/2022 08:05

Not much liquidity in the market..........

[40 fathoms] 09/11/2022 11:18

Agree, it looks like a broadly fair restructuring of their option stack.

[oldtimer169] 09/11/2022 09:14

Yes-a decent incentive to deliver.

[hybrasil] 09/11/2022 08:16

That option repricing is interesting. I d be happy at 56p

[ga_dti] 26/9/2022 07:43

Latest CEO interview discussing interim results -

[40 fathoms] 22/9/2022 08:59

For what it is worth, WH Ireland put out an updated note after the yesterday's interims

For this year (2022) they have EBITDA of GBP 1 million and GBP 1.8 million for 2023. So, on that basis and I think next year's revenue number is probably undercooked, we are trading at @11x this year and 5.5x next. They also have PEN at 200k net cash at end of this year and 2.1 million at the end of next year.

To put that into context if you took that 2023 net cash number and added the remaining debt free property value you get half the current market cap. To hit the WH Ireland revenue numbers for next year (16.5million) they need to convert and deliver @GBP 4 million from their GBP 50 million pipeline, as they already have GBP 12.5 million contracted for 2023, given the market outlook and commentary that does not seem like too much of a stretch over the next 15 months.

[40 fathoms] 21/9/2022 07:28

Very happy with the progress and outlook here. Cash situation is partially resolved by the post period end property sale and will be substantially net cash once General Dynamics and one or two others pay what they owe.

Outlook

We are securing new customers for our IPS software and services lines in important adjacent sectors including commercial aerospace, while at the same time gearing up for the launch of the new GenS software suite next year.

Furthermore, with the prevailing global security situation, we are seeing real signs that defence procurement programmes are unlocking in our key regions, with several new opportunities already being pursued.

As a result of management's efforts to re-orient the business, we have a leaner organisation, with increasing software and recurring services revenues; the platform is now in place to grow the business and enhance shareholder value.

With a Period-end contracted order book of £27 million with good forward visibility, a healthy sales pipeline containing opportunities worth over £50 million, and a leaner, optimised organisation, the Board is confident about the Group's future prospects.

[masurenguy] 21/9/2022 07:17

Interim Results for the six months ended 30 June 2022

Return to positive EBITA; business mix transformed; significant gross margin improvement

Pennant International Group plc (AIM: PEN) ("Pennant", the "Group" or "Company"), a leading global provider of training technology and integrated product support solutions, announces its Interim Results for the six months ended 30 June 2022 (the "First Half", the "Period", or "H1 2022").

Commenting on the results, Chairman John Ponsonby said: "I am pleased to report that the Period saw the Group return to positive earnings before interest, taxation and amortisation as gross margin significantly improved and costs remained under tight control. As a result of management's continued efforts to deliver the Group's strategy, we now have a leaner, more streamlined organisation, with an increasing proportion of recurring revenues from software and services, providing greater forward visibility and a solid platform from which to grow the business and enhance shareholder value."

Key points: Financial

-- oup revenues for the Period of GBP6.9 million (H1 2021: GBP 7.4 million) of which circa 65% were recurring (H1 2021: 53% recurring);
-- 52% of revenues generated from software licensing and associated activities (H1 2021: 35%);
-- Gross margin doubles to 41% (H1 2021: 21%);
-- EBITA profit of GBP0.1 million (H1 2021: EBITA loss of GBP1.0 million);
-- EBITDA profit of GBP0.4 million (H1 2021: EBITDA loss of GBP0.7 million);
-- Loss before tax of GBP0.8 million (H1 2021: loss before tax of GBP1.7 million);
-- Net debt at Period end of GBP4.1 million (H1 2021: net debt of GBP1.9 million);
-- Trade and other receivables due at Period end of GBP5.1 million (H1 2021: GBP3.7 million);
-- Basic loss of (2.21)p per share (H1 2021: basic loss per share of (4.64)p per share);
-- Unrelieved tax losses of GBP6.7 million carried forward (H1 2021: GBP4.5 million carried forward);
-- Three-year order book at Period end stood at GBP27 million (H1 2021: GBP26 million).

Key points: Operational

-- Secured the 'Major Programme' a contract from Boeing Defence UK Limited for the upgrade of Apache training equipment, worth GBP8.8 million over three years.

-- Following contract award, successfully passed the initial engineering milestone event on the Apache upgrade programme.

-- Factory acceptance achieved on the UK Helicopter programme (overall contract value: GBP3.5 million), with the training device delivered to the end user's site post Period end.

-- A second software and services order secured in the commercial aerospace sector (overall order value: USD$1.7 million), a key target market for the Group's IPS business line.

-- evelopment work completed on prototype simulator for rail infrastructure organisation which is intended to be rolled out to numerous sites in the future.

Post Period end highlights:

-- First 'Launch Partner' to participate in programme of testing and product promotion for new GenS product signed in Australasia.

-- Circa GBP1 million of orders for software and equipment upgrades received across July and August, taking orders received during 2022 to approximately GBP12 million.

-- GD MTE programme almost complete - all four devices have been built and achieved factory acceptance - and will be finished before year-end.

-- Surplus freehold site (Pennant Court) sold in August for GBP2.1 million with proceeds used to paydown borrowings (reduced to GBP2 million as at 20 September 2022).

[40 fathoms] 17/9/2022 04:35

The top 4 shareholders hold in excess of 50% of the shares, so at current market cap the free float is tiny and thus the liquidity.

They report next week and one would hope they will be able to demonstrate a very significant improvement in the cash position/outlook and reaffirm the house-brokers view that the company is on track for a single digit P/E in 2023.

[chrisdgb] 05/9/2022 12:42

Shocking market liquidity...........

[oldtimer169] 11/8/2022 14:10

Is that a double bottom forming on the chart...any chartists out there?

[40 fathoms] 10/8/2022 15:37

Based on that interview the maths going forward seems pretty simple. They need 13 million in annual revenue to break even and they already have an order book of 13 million for FY 2023. Given the large qualified opportunity pipeline it should be possible to pick up at least 6 million of additional revenue between now and the end of 2023. At 45% gross margins that would result in EBIT of @ 2.7 million next year that would put Pennant on a PE of 4.5x for 2023.

[masurenguy] 10/8/2022 10:07

Interview with Phil Walker.

[40 fathoms] 08/8/2022 23:10

Below is the link to the the presentation that was given at last weeks capital markets day.

[chrisdgb] 07/8/2022 16:59

Many Thanks, much to ponder….!

[40 fathoms] 06/8/2022 01:19

I think the question of too early comes down to your view on two factors. Firstly, when will General Dynamics settle their outstanding invoices. The amount outstanding is the difference between the company being in a comfortable net cash position or @ 2 million in debt. In theory these should be settled before the end of this financial year and this will close out what has been a disastrous fixed price contract that was signed in 2012/2013 (under previous management).

The second factor is can they maintain the progress towards building recurring revenue/ software sales with its much higher associated margins.

For what it is worth the house broker WH Ireland put out a 24 page report a couple of days ago highlighting the transition in the business. They have the business on 9.2x next year. I think that undercooks the number. This seems inexpensive for a business that will have 60% to 70% of its revenue from recurring sources and will be net cash to the tune of 15% of current market cap, by the end of 2023.

Probably also worth keeping in mind that they have more unencumbered real estate to a value of @ 3.5 million, that could/ might be sold. On the basis of the house brokers numbers, at the end of FY23 real estate and net cash would equal 50% of current market cap.

The one uncertainty to keep in mind is the renewal, in early 2024, of the software contract with the Canadian Department of National Defence. There is a high probability of an additional multi year contract but this is of significant value so worth watching. They have held this contract for 22 years and are likely to be the only qualified bidder but even if they are not their new GenS product is the most advanced in the market.

[chrisdgb] 05/8/2022 14:57

Not owned this before, what is the gut feeling..? Decent recovery story or too early? cheers........

[masurenguy] 03/8/2022 08:53

Sale of Pennant Court

Pennant International Group announces that it has exchanged contracts for the sale of its facility known as Pennant Court. With the Group's increasing software focus and reduced reliance on resource-intensive hardware engineering activities, earlier this year the Board commissioned a comprehensive review of the Group's UK facilities. Recognising a reduced requirement for space at its Cheltenham operating sites, the Board decided to market for sale the Group's former Cheltenham head office, Pennant Court. Completion is scheduled for 19 August 2022. Pennant has not entered into any leaseback arrangement in relation to any part of the property and will vacate the site entirely upon completion. The sale price is £2.1m (plus VAT), which will be payable in full, in cash on completion. After transaction expenses, the sale is expected to realise a profit of £0.2m. The Board considers that the sale price fairly reflects Pennant Court's market value.

The sale proceeds will be used to reduce the Group's overdraft, which currently stands at circa £4.2m overdrawn (against a temporary limit of £5m) such that immediately after the sale, the Group expects to be around £2.1m overdrawn against an updated limit of £3m (adjusted for the release of the asset from the bank's security package). The Group expects to realise savings of circa £0.2m pa in respect of running costs related to Pennant Court. The Group will also terminate its office lease in Stevenage this month and is in the early stages of negotiations to surrender another leased premises. The Group will continue to have sufficient facilities to service its order book and pipeline opportunities with 30,000 square feet of retained facilities in Cheltenham alone.

[hastings] 28/7/2022 09:13

Net cash now forecast by broker at £0.2m for full year, increasing to £2.1m in full year 2023. Personally, happy with the changing picture highlighted by software division performing very well and gaining traction.

[40 fathoms] 28/7/2022 08:56

Before the September results you have the capital markets day the week after next.

For me the key is that 65% of revenue now comes from recurring sources. This is huge change in the nature of the business and represents a base that we can build on overtime.

With the sale of Pennant Court we should be in a substantial net cash position by year end, if General Dynamics settle all of their obligations towards us. They will settle eventually, in the meantime, one would assume we continue to accrue interest on overdue amounts.

[rimau1] 28/7/2022 07:35

I hate it when i can’t decide if an update is good or not. Can we really do £17m FY revenue and £0.6m PBT still? The TU is good in terms of what we have been told but i can’t see any reference to trading in line with expectations? Anyone? I thought we might be in a net cash position by year-end but they reference net debt being materially improved which implies not and the order group is marginally higher rather than growing, Hmmm. I am less confident today than yesterday on FY22/2023. September results will be interesting.