Pennant International

Training technology specialist Pennant International slipped into losses on lower sales in a very tough year to December.

Relatively resilient, this small company provides everything from e-learning and instructor-led training, to state-of-the-art simulator systems for a diverse batch of clients ranging from BAE Systems, the MoD and Network Rail to Anglo-Italian helicopter company AgustaWestland.

Nevertheless, as the downturn worsened in the second half of 2008, Pennant’s data services operations were badly affected, while new licence sales in its software business came under pressure. As a result, prior year pre-tax profits of £1.1m reversed to losses of £500,383, on a 20% turnover decline to £9.8m. After experiencing a near £1m net cash outflow, the board prudently decided to skip the final dividend.

In response to present challenging markets, chairman Christopher Powell says Pennant has reduced its cost base, whilst continuing to diversify into markets other than defence, such as rail and power. The building up of recurring revenue – Pennant has a number of long-term maintenance, support and consultancy deals in place – also remains a strategic priority. Encouragingly, Powell says the first quarter of 2009 was encouraging, with new relationships established and new orders won, ‘substantially increasing the value of the order book’.

Given the diversity of its products and services and its solid repeat revenue base with high quality clients, Pennant’s depressed shares, as high and low as 11.5p and 4.75p over the past 52 weeks, have decent recovery potential in more benign economic conditions.