•
ANNUAL REPORT & ACCOUNTS 2018PENNANT INTERNATIONAL GROUP PLC
REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
01
02
STRATEGIC REPORT
Financial highlights
Chairman’s statement
Chief Executive’s review
Group strategic framework
About Pennant
Reorganisation
Group structure & capabilities
GOVERNANCE & RISKS
Board of Directors
Audit committee
Remuneration committee
Strategy committee
Attendance
Operational governance
Financial control
Risk management & principal risks
Remuneration report
Audit committee report
Directors’ report
Directors’ responsibility statement
03
FINANCIAL STATEMENTS
Independent Auditor’s report
The Group
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
The Company
Company statement of comprehensive income
Company statement of changes in equity
Company statement of financial position
Company statement of cash flows
4
5
6-7
8-12
13
14-17
14
16
18
19
21
21
21
21
22
22
23-27
28-30
31
32-35
36
37
38-41
42
43
44
45-46
47
48-71
72
73
74
75
Notes to the company financial statements
76-79
Shareholder information & financial calendar
Officers and professional advisers
81
82
1
STRATEGIC REPORT
Our vision is to be the provider
of choice for world-class products
and services which train and assist
operators and maintainers in both the
defence and regulated civilian sectors.
YEAR: 2018
FINANCIAL HIGHLIGHTS
2018
3,169,480
OPERATING PROFIT
37 million
ORDER BOOK
1,848,954
YEAR END CASH
9.49p
BASIC EPS
21,069,223
GROUP REVENUE
2017
OPERATING PROFIT
1,808,751
ORDER BOOK
34 Million
BASIC EPS
4.65p
YEAR END CASH
1,502,655
GROUP REVENUE
18,069,960
REVENUE
YEAR: 2018
YEAR: 2017
YEAR: 2016
YEAR: 2015
£21,069,223
£18,069,960
£17,211,455
£9,892,685
KEY FIGURES
•
GROSS MARGIN 39.2% (2017: 40%)
•
•
•
•
•
OPERATING MARGIN 15.0% (2017: 10.0%)
EBITA £3.32M (2017: £2.10)
ORDER BOOK £37 MILLION (2017: £34 MILLION)
NET ASSETS £14 MILLION (2017: £13.3 MILLION)
CASH GENERATED / (USED) IN OPERATIONS £5.0 MILLION (2017: (£1.0M))
5
Pennant International Group PLC Annual Report 2018 CHAIRMAN’S STATEMENT
YEAR OF DELIVERY
In my statement for 2017, I advised that Pennant had undergone
a period of dynamic and transformational change, led by the new
management team and we provided guidance that the Group’s
trading prospects for 2018 were positive.
In these accounts, the Group is reporting a record performance
for 2018, with full-year revenues and operating profits ahead of
historic levels and in-line with market expectations.
During the period under review, a number of key operational
and strategic objectives have been achieved, most notably the
successful completion of two major Middle East contracts, the
securing of other major contract awards across the business,
several of which are with new customers, and the launch and
subsequent sales of our innovative new training solutions.
Post period-end, this positive trading momentum has been
maintained, complemented by the raising of over £2.1 million
of new share capital by way of an over-subscribed institutional
placing and the exercise of share options, and the purchase of
the Aviation Skills Partnership, the Group’s first acquisition since
1999.
KEY FINANCIALS
For the year ended 31 December 2018, the Group delivered
consolidated revenues of £21.07 million (2017: £18.07 million),
driven by the continued production and successful completion of
products on its major contracts for training colleges in the Middle
East.
The Group posted consolidated profit before tax of £3.18 million
(2017: £1.81 million) which represents a significant increase
in performance and a record reported profit for the Group.
Consolidated net assets increased to £14.04 million (2017: £13.33
million) reflecting the profitable trading.
Basic earnings per share more than doubled to 9.49p compared
to the reported earnings per share of 4.65p for the same period
last year.
DIVIDENDS
The Board fully appreciates the importance of dividend payments.
However, notwithstanding the Group’s strong trading performance,
positive outlook and nil borrowings, the Directors have concluded
that it is in the Company’s and shareholders’ current best
interests to retain cash for working capital and investment in
accordance with plans for future growth (including securing key
new contracts and the development of the ASP business).
The Board will therefore not be recommending the payment of a
final dividend for the year ended 31 December 2018. However, it
will continue to review dividend policy throughout 2019 based on
trading performance and working capital requirements.
GOVERNANCE
The Board believes in robust corporate governance. We have
worked closely with our advisors and in 2018 continued to
strengthen our governance frameworks to ensure strong,
proportionate governance throughout the Group. We have
established appropriate risk management procedures and keep
key risks to the Group under regular review. Further details of our
principal risks and uncertainties are provided in the Governance
& Risks section of this document.
6
“The Board is reporting healthy organic growth achieved across the Group in 2018”Pennant International Group PLC Annual Report 2018 CHAIRMAN’S STATEMENT
BOARD CHANGES
BREXIT
During the period under review there have been a number of
Board changes. With effect from 1 April 2018 Gary Barnes was
appointed as Finance Director and John Ponsonby was appointed
Non-Executive Director and Chair of the Strategy Committee.
Further details on both new Board members can be found in the
Governance & Risks section of this document.
Christopher Powell, Non-Executive Director and Chair of the
Audit Committee is due to retire by rotation at the next Annual
General Meeting (“AGM”). After more than 25 years of service to
the Group, Mr Powell has confirmed that he will not be standing
for re-election.
The Board has carried out a review of its customer and supplier
base and continues to monitor developments in relation to Brexit
and its potential impact on the Group.
Pennant has no significant contracts with customers in EU
member states (other than the UK itself), and no material direct
suppliers within the EU. While the ultimate form Brexit will take
remains unclear, the Group presently expects that Brexit will have
minimal effect on its trading but is keeping this under review as
the political and economic situation develops and the potential
impact of Brexit on the wider supply chain and the business
environment generally becomes clearer.
On behalf of the Board, I would like to take this opportunity
to recognise Christopher for his long service and significant
contribution to the Company. Christopher has been integral to
the Group’s success over the years, being key to the Company’s
admission to AIM over 20 years ago, overseeing the award of the
Group’s ‘game-changing’ contract for training devices at RAF
Cosford, leading the acquisition of the OmegaPS business, and
many other critical contributions. Following his retirement as a
Director at the AGM, we anticipate that we will engage Christopher
from time to time on strategic matters, drawing on his extensive
knowledge and experience.
On 24 September 2018, Timothy Rice, who was due to retire by
rotation at the next AGM confirmed that he would not be standing
for re-election and it was agreed that Mr Rice would leave the
Company with immediate effect. On behalf of the Board, I would
like to thank Tim for his contribution to the Company.
OUTLOOK AND FUTURE DEVELOPMENTS
Though the Board is pleased with the healthy organic growth
achieved across the Group in 2018, and is looking to build on
this positive momentum by continuing to implement the Group’s
strategy, we recognise that prospects for both the UK and the
broader global economy remain uncertain; there are political and
financial pressures in defence markets and beyond.
The key risks faced by Pennant have been carefully considered by
the Board and our assessment of these risks and the mitigations
and controls we are deploying in response are set out at pages
23-27. Pennant is nimble, agile and responsive, so is well placed
to address these challenges as they arise.
The Group is experiencing an encouraging start to the current
financial year and anticipates that the full year results for 2019
will be significantly second-half weighted due to the mix of
products and the application of IFRS 15.
Our contracted order book, valued at more than £37 million,
underpins good forward visibility of revenues well into 2021,
and, when combined with the pipeline of active bids and the
acquisition of ASP, together provide an excellent basis for further
achievement in 2019 and beyond.
Approved by the Board on 11 March 2019
And signed on its behalf
OUR PEOPLE
As always, I would also like to take this opportunity to thank Philip
Walker, his executive team and all Pennant staff across the Group
for their hard work and dedication throughout the year. Their
continued commitment and drive to ensure that the business
delivers the high-quality solutions that our customers require
and expect, operating under tight timescales, are key factors
in maintaining and enhancing the ongoing and longstanding
relationships we have with our customers.
S A Moore
Chairman
7
“Positive momentum & good forward visibility”Pennant International Group PLC Annual Report 2018 CHIEF EXECUTIVE’S REVIEW
Cash generated in operations amounted to £5.0 million (2017:
cash used in operations £1.0 million), reflecting achievement of
contractual delivery on major programmes. The Group has nil
borrowings and at year-end had cash balances of £1.8 million
(2017: £1.5 million).
The Group’s tax position shows a tax charge of £32,712 (2017:
£275,409), representing an effective tax rate of 1% (2017: 15%).
The Group has unrelieved tax losses carried forward of £5.3
million (2017: £0.3 million).
Research and Development tax credits claimed in the UK during
the year amounted to £1.9 million (2017: £0.3 million) with further
claims on current projects expected to be made during 2019.
The year-end order book stood at £37 million (2017: £34 million),
of which £19 million of revenue (2017: £13 million) is scheduled
for recognition within one year. Of the total order book, 51%
(2017: 65%) is denominated in sterling and 36% (2017: 30%) is
denominated in Canadian dollars. Any movement of sterling to the
Canadian dollar would potentially impact the OmegaPS business.
The Company’s balance sheet remains strong, and post year end
the Company raised £2.1 million from an issue of new shares
and will use these funds to support the acquisition of ASP, to
continue investing in product development and for working capital
requirements.
DIVISIONAL PERFORMANCE
All business units have contributed to the Group’s profitable
performance and new orders have been secured in each division.
Divisional financial performance is set out below and further
information about the business of each division is provided in the
‘About Pennant’ section of this document.
TECHNICAL TRAINING
The Group’s Technical Training division (formerly known as
Training Systems) is focused on the design and build of generic
and platform-specific training solutions and the provision of
related technical and support services.
The Technical Training division continues to be the main driver
of revenues within the Group and has delivered an excellent
performance. Revenues for the year were strong at £16.8 million
(2017: £13.6 million) as a direct result of the successful delivery of
major Middle East contracts.
Revenue
Divisional Contribution
2018
£m
16.8
2.9
2017
£m
13.6
1.4
8
SIGNIFICANT PROGRESS BY PENNANT
In last year’s report,
I outlined my confidence that the
implementation of operational improvements coupled with the
continued investment in infrastructure, people and products had
provided a firm platform to drive future growth.
I am delighted to report that this confidence was well-founded
as 2018 saw the Group make significant progress - delivering
impressive results for the year and continuing to implement its
strategy. The Group overcame all the key challenges faced and
was able to focus on contract delivery which generated revenues
for the year of £21.1 million (up 17%), an operating profit of £3.2
million (up 75%) and an operating margin of 15% (2017: 10%).
Across all units we have seen major new orders secured, with
every division and every territory in which we operate making a
positive contribution to overall performance.
FINANCIAL REVIEW
The results for the year are set out on page 42. The key financial
performance indicators are noted below.
The gross profit margin for the period was 39% (2017: 40%)
reflecting the consistent mix of products and services delivered
across the two years.
The operating margin has significantly increased to 15% (2017:
10%) due to effective management of central costs and the
benefits of an improved operational model following the re-
organisation of UK operations at the start of 2018.
“Enhanced ability to deliver future growth”Pennant International Group PLC Annual Report 2018 CHIEF EXECUTIVE’S REVIEW
AVIATION SKILLS PARTNERSHIP
Post year-end, the Group made its first acquisition since 1999
with the purchase of Aviation Skills Partnership (ASP). ASP is
focused on the promotion, facilitation and delivery of aviation
skills training. Further details are provided on page 15 of this
document.
OPERATIONAL REVIEW
Our mission is to generate sustainable long-term growth for the
business. In order to deliver this objective, we continue to invest in
areas that we consider are the main drivers for business success
and to ensure the business has the tools and flexible skilled
workforce required to deliver new, major and complex contracts.
INFRASTRUCTURE
The Group has continued to modernise and improve both
production and administrative facilities with investment in a
planned programme to upgrade our operations. During 2018 the
Group invested over £2 million in new facilities, acquiring two new
freehold properties and increasing overall floor space to circa
60,000 square feet.
This increased footprint provides the foundation to bid and deliver
additional and larger scale programmes in the future.
Revenues from the Technical Training division were predominantly
generated from product sales, which accounted for 80% of the
divisional revenue, with the balance generated from technical and
support services.
The contribution from Technical Training accounted for 90% of the
Group’s operating profit for the period (2017: 78%).
During the period, the Group made significant investment in
preparation for further growth expected to be driven by future
contract awards. To complement this, the division has been
reorganised internally to maximise its potential to secure and
deliver new orders. See the ‘About Pennant’ section for further
details pages 14 to 17.
INTEGRATED LOGISTICS SUPPORT (ILS)
The Group’s ILS division (formerly known as Software Services)
focuses on the development of the OmegaPS LSAR software
product and the provision of consultancy, training and support
services in relation there to.
The division had a solid year with revenues and contribution being
maintained at similar levels to the prior year:
Revenue
Divisional Contribution
2018
£m
4.3
0.3
2017
£m
4.4
0.4
Revenues from the ILS division in both 2017 and 2018 were
primarily generated from consultancy services 60% and long-
term software maintenance agreements 15%. This contracted,
recurring revenue is integral to the Group’s forward visibility and
quality of earnings.
The ILS division accounted for 10% of the Group’s net profit for
the period.
During the period, the Group secured a new consulting services
contract with the Canadian government, worth up to C$30m,
for the use and optimisation of Pennant’s OmegaPS suite of
supportability software.
9
Pennant International Group PLC Annual Report 2018 CHIEF EXECUTIVE’S REVIEW
PEOPLE
Our employees remain core to our future business success.
Without talented people, there are no product innovations or
technical solutions.
During 2018, we strengthened and grew the teams across our UK,
Canadian and Australian operations with significant investment
made in senior skills and we made a number of strategic
appointments designed to improve operational delivery and
manage risk including:
•
•
•
a new Chief Operating Officer to manage the Technical
Training business (an experienced operations director with
a prime contractor and military background), commencing
in role post period-end;
a new Chief Operating Officer for the ILS business (an
internal candidate with excellent product knowledge and
creditable service with the Canadian Navy, a key user of
OmegaPS), to succeed Brian MacDonald from the second
half of 2019;
a new Head of Programmes for Technical Training (an
experienced manager of training-related programmes
at several prime contractors) to focus on effective
programme delivery.
On behalf of the Board, I would like to thank Mr MacDonald for his
exemplary service to the Group as the present Canadian COO over
the last 15 years and to recognise his huge contribution in building
the OmegaPS business (particularly its consultancy services) into
the key division of the Group that it is today. Brian will continue to
work with the Group in a strategic advisory role.
INNOVATION
In line with the Group’s core strategic objective, investment in
innovation has been targeted to expand the Group’s market
coverage, addressing gaps in the product range and improving
the overall customer proposition. During the period, the Group
invested over £1m in the development of new and enhanced
solutions.
To date six new products have been successfully launched and
orders have been secured for five of these solutions within the
first year, including the Basic Helicopter Maintenance Trainer,
Generic Stores Loading Trainer, Genskills Mk 2, Virtual Aircraft
Training System and Virtual Loadmaster Training System.
The Company anticipates that it will continue to invest in new
solutions during 2019 and beyond. The Group has an active
pipeline of potential product innovations and improvements that
are going through an assessment process with a view to obtaining
funding approval if a business case is proven. Together, these new
products offer the potential for further significant growth.
10
Pennant International Group PLC Annual Report 2018 CHIEF EXECUTIVE’S REVIEW
CONTRACTS
New contract awards, amendments and achievements during the year are set
out below:
• Award of a new contract in October 2018 to supply training aids for Qatar
worth in the region of £10 million, deliverable over 2018, 2019 and 2020.
• The successful completion and customer acceptance of the first tranche
of devices on the Qatari contract prior to year-end.
• Successful rescoping of the Group’s key contract with a major UK prime
contractor for electromechanical trainers and computer-based training
for the Ajax vehicle, with contract value increased by £3.5 million to just
under £12 million.
• Delivery of all remaining training aids on both Middle East contracts
signed in 2016, with final payments received in July 2018.
• Successful renewal of the key contract with the Canadian government,
worth circa C$30 million over five years.
• An extension to 31 March 2019 on the existing Omega PS contract with
the Australian Defence Organisation.
• An order from the UK MOD for an upgrade to its virtual parachute
training systems (worth circa £370,000).
• A new contract in the Middle East for technical and support services to
be provided in region.
• An order from a new customer in the rail industry for the re-configuration
and re-deployment of a rail cab simulator (worth circa £125,000).
• Additional orders from Network Rail for control room simulators worth
circa £50,000.
• A new contract from a rail car builder for technical documentation
services (initial value: £150,000 per annum).
• New order secured worth in the region of C$750,000 over three years
(to June 2021) for OmegaPS consultancy services to a North American
prime contractor.
11
Pennant International Group PLC Annual Report 2018 CHIEF EXECUTIVE’S REVIEW
IMPLEMENTING THE STRATEGY
The underlying strengths of Pennant – our long-term customer relationships, our specialist services and our quality-assured reputation
– remain the solid foundations of our proposition.
Through its continued investment in infrastructure, people and products, the Company has enhanced its ability to deliver future growth.
The Board is confident that Pennant can continue to increase revenues through organic growth and will continue to explore ways to
complement this with acquisitions.
The achievements of the year, together with operational improvements implemented across the Group and our healthy pipeline, provide
a firm platform for future success.
Approved by the Board on 11 March 2019
and signed on its behalf
P H Walker
Director
12
Pennant International Group PLC Annual Report 2018 GROUP STRATEGIC FRAMEWORK
OUR VISION
To be the provider of choice for world-class products and services which train and
assist operators and maintainers in both the defence and regulated civilian sectors.
To realise the Vision while delivering sustainable growth in shareholder value.
OUR MISSION
OUR STRATEGY
Innovation – Make World Class Products
Customer Focus – Provide Excellent Services
Diversification – Grow Civil
Corporate Development – New Markets, New Ventures
STRATEGIC OBJECTIVES
Continuously
review and
enhance the Group’s
product range
To grow and
improve our
service offering
Accelerate the
Group’s presence
in civilian training
and regulated
engineering markets
Expand the
Group’s business
in innovative ways
OUR STRATEGY IN ACTION
Acquisition of
Aviation Skills Partnership
New Virtual Loadmaster
Training System launched
and sold to US customer
GenSkills Mk 2 -
enhanced capability
Continued investment in
additional production capacity
New Basic Helicopter
Maintenance Trainer launched
New OmegaPS Rail
product developed
New Generic Stores Load
Trainer launched
BAE systems - Middle East
strategic partnership
13
2143Pennant International Group PLC Annual Report 2018 ABOUT PENNANT
ABOUT PENNANT
Founded in 1958, Pennant has evolved over the past six decades,
from modest beginnings, into a market-leading technology-led
business with a truly global customer base.
The Group operates principally in the areas of civil and military
aviation, defence and rail with customers including global defence
primes, government departments, overseas aviation colleges and
rail operators.
We are confident that the following factors point towards
significant potential for growth:
Pennant has a diverse portfolio of capabilities enabling it to offer
a wide range of products and services which train and assist
operators and maintainers in both the defence and regulated
civilian sectors and so it is ideally placed to take advantage of the
trends outlined above.
The Group has offices worldwide: in the UK (with its head office
sites in Cheltenham and offices in Manchester, Fareham and
Greater London), Australia (in Melbourne and on the Wagga
Wagga RAAF base) and in Ottawa in Canada.
•
•
•
•
new capital equipment platforms (for land, naval, air, rail)
are becoming more sophisticated and complex, thereby
increasing the requirement for training;
the use of ‘real’ equipment for training has safety implications,
is expensive and often impractical;
there is a continuing trend for defence forces and other
organisations to outsource training services,
including
updating their training devices;
global training regulations are harmonising and the ability to
utilise synthetic training is increasing; and
•
global expenditure on defence and rail is on the rise.
The Company was admitted to trading on the AIM market in 1998
and has successfully traded as a public company for over 20
years, last issuing shares in January 2019, principally to fund the
acquisition of the Aviation Skills Partnership.
FAREHAM, UK
MANCHESTER, UK
NORWICH IAA, UK
HEAD OFFICE, CHELTENHAM UK
OTTAWA, CANADA
PENNANT AUSTRALIA - WAGGA
PENNANT AUSTRALIA - MELBOURNE
14
Pennant International Group PLC Annual Report 2018 ABOUT PENNANT
ACQUISITION OF AVIATION SKILLS PARTNERSHIP
Post period-end, on 6 February 2019, the Company acquired the
entire issued share capital of Aviation Skills Holdings Limited,
the parent company of The Aviation Skills Partnership Limited
(“ASP”). The vendors were Simon Witts, founder and CEO of ASP,
and his wife, Michelle Witts.
The initial consideration payable for the acquisition comprised a
cash payment of £250,000 on completion with a potential further
cash payment due based on completion accounts. The initial
consideration will not exceed £750,000.
Additional consideration based on a multi-year earn-out may be
payable based on the ASP’s profits over the next five financial
years (subject to potential acceleration at the Company’s option
during the term). The earn-out payments will be determined by
reference to the profits of ASP and, subject to a performance
hurdle, will comprise a proportion of those profits on a sliding
scale. The maximum aggregate consideration payable by the
Company in respect of the acquisition (including the initial
payments of consideration on completion) will not exceed £6.75
million. In order to reach that cap, ASP would, at minimum, need
to significantly exceed forecast adjusted profit before tax for the
2019 financial year and then achieve profits of at least £14 million
during the earn-out period. The Board’s best estimate as to the
likely amount of total consideration actually payable, based on
ASP budgets, is circa £2 million.
The acquisition agreement contained customary warranties
and indemnities in respect of title, tax and various commercial
matters as well as buyer protections and termination rights in
respect of the earn-out in the case of vendor default.
Simon Witts entered into a new service agreement with ASP upon
completion of the acquisition.
ASP’s unaudited accounts for the financial year ended 31 January
2018 showed turnover of £398,000, net profit of £27,000 and net
assets of £151,000.
For the financial year ended 31 January 2019, ASP expects to
report profit before tax in excess of £150,000.
The accounting treatment for the business combination has not
been finalised (i.e. fair value of assets and liabilities at date of
acquisition and any intangible assets or goodwill) due to the short
period of time between the completion of the acquisition and the
authorisation of these financial statements.
The initial consideration payable in respect of the acquisition
was financed by a proportion of the proceeds generated from
the Company’s allotment and issue of 2,337,160 new ordinary
shares on 1 February 2019 which raised circa £2.1 million before
expenses.
Future earn-out payments will be funded from, and are conditional
upon, the successful trading of ASP.
The Board believes that the ASP business is highly complementary
to the Group’s existing business and that the acquisition will:
• materially increase the proportion of Group revenues
from commercial aviation;
• diversify the Group’s business, reducing its defence-
sector concentration;
• add long-term recurring, contracted revenue to the
Group’s order book;
• accelerate the Group’s strategic objective of increasing
and enhancing its services offering, reducing reliance on
product sales;
• allow the Group to develop and deliver solutions
(products, services and courseware) better tailored to
the large and growing commercial aviation sector;
• allow the Group to develop a replicable, exportable
model of aviation skills training, integrated with high-
quality Pennant solutions; and
•
in doing so, better align the Group with the needs and
interests of its end-users, other stakeholders and
applicable regulators.
15
Pennant International Group PLC Annual Report 2018 ABOUT PENNANT
The Group operates through three divisions:
TECHNICAL SERVICES & SUPPORT
Pennant offers a range of technical services including: training
needs analysis
technical
publications and in-service support.
(TNA), courseware development,
Pennant has been at the forefront of distributed learning in the
form of web and server-based e-learning, with Computer Based
Training (CBT) and Computer Aided Instruction (CAI) applications
providing consultancy and developing new strategies, practices
and technology in collaboration with government departments
and industry across the world.
Pennant has significant expertise and long-standing pedigree in
technical publications and is able to provide S1000D-compliant
Integrated Electronic Technical Manuals, either as a standalone
service or to complement Pennant training solutions.
TECHNICAL TRAINING
The division provides technical training solutions, services and
support.
SOLUTIONS
Pennant specialises in both generic and platform specific
products (engineered solutions) based on real or simulated
equipment interfaced with software emulations and instructor
control facilities. These solutions can be deployed as physical,
hardware training devices or through immersive, virtual or
augmented reality environments.
Pennant’s range of generic training equipment offers a blended
solution enabling ab-initio students to benefit from a suite of
modern, generic training aids which provide operation and
maintenance savings and improved safety outcomes.
These training aids include: basic hand skills devices, virtual
reality solutions, desktop emulators and mechanical systems for
practicing maintenance and fault finding activities.
In addition to the suite of generic training products, Pennant has
an experienced team of systems engineers that analyse, design
and manufacture bespoke engineering solutions to satisfy training
needs. This equipment can be platform specific or custom-built,
and can include simulators, part-task trainers and procedural
trainers for both defence and civilian customers.
16
Pennant International Group PLC Annual Report 2018 ABOUT PENNANT
ILS GROUP (OMEGAPS)
AVIATION SKILLS PARTNERSHIP
Pennant owns the market-leading OmegaPS suite of Logistics
Support Analysis software which is used worldwide by major
defence contractors and by the defence authorities in Canada and
Australia to maximise efficient logistical support on complex long-
life assets. The Group’s ILS division focuses on the development
of the OmegaPS LSAR software suite and the provision of
consultancy, training and support services in relation thereto.
Revenues are generated from the sale of licences, associated
maintenance agreements, software
training courses and
consultancy services in support of the product implementation.
The product is regularly updated to enhance functionality, and
to keep in line with emerging industry standards and changing
technology.
The OmegaPS business has offices in Canada, Australia and the
UK. Current OmegaPS customers include:
ASP was established in 2013 to help identify, create, develop
and implement the skills urgently required by the aviation
and aerospace industries in partnership with other training
organisations, educators, employers and other potential
stakeholders.
ASP promotes the establishment, and then the management, of
aviation skills academies. The first such academy, International
Aviation Academy – Norwich, operates from Norwich International
Airport. Three more academies are currently being established
and are expected to be fully operational from 2020.
ASP is committed to the facilitation and delivery of aviation
skills training across many disciplines including Pilots, Air
Traffic Control, Airport Operations, Crewing, Engineering and
Maintenance across the UK and, following its acquisition, the
Group will work to integrate Pennant’s Technical Training
capabilities with ASP’s offering.
17
Pennant International Group PLC Annual Report 2018 2
GOVERNANCE & RISKS
The Group is committed to good
corporate governance and this
section of the annual report details
the Group’s current governance
arrangements, including those in
relation to risk management.
CORPORATE GOVERNANCE REVIEW
THE BOARD
The business of the Group is ultimately managed by the Directors
of Pennant International Group plc, who are responsible for
running the Company for the benefit of its shareholders in
accordance with their fiduciary and statutory duties.
The Board is led by the Chairman, Simon Moore, who is
responsible for the Group’s corporate governance arrangements
and who ensures that all members of the Board are able to
contribute to Board discussions and decision-making. All
Directors acknowledge their collective responsibility and legal
obligation to promote the best interests of the Company.
The effectiveness of the Board is kept under review by the
Chairman and the Company’s nominated adviser is regularly
invited to Board meetings to review the Board in action and the
contributions of its members (with any feedback being shared
with the Chairman). The Chairman also regularly solicits feedback
on Board effectiveness from institutional and other shareholders.
Feedback from such meetings is that investors remain generally
supportive of the Company’s strategy and approach.
Succession planning for the Board is kept under review by the
Chairman having regard to the current composition of the Board
and taking into account corporate governance guidelines and
business requirements. Gender balance will be a consideration in
any future appointments.
In discharging its duties, the Board is supported by three
standing committees (the “Committees”): the Audit Committee,
the Remuneration Committee and the Strategy Committee. The
Terms of Reference for each of the Committees are available on
the Group’s website (www.pennantplc.co.uk/investors/corporate-
governance) and a summary of their respective functions
is provided below. The Terms of Reference for each of the
Committees were last substantively updated and reviewed and
approved by the Board on 14 September 2018.
The Board does not have a nominations committee and any
nominations for appointment to the Board are considered by the
full Board (with any appointment subject to a shareholder vote at
the next Annual General Meeting).
The Board has three Non-Executive Directors and three Executive
Directors. Of the Non-Executive Directors, two are considered
by the Company to be independent: Simon Moore and John
Ponsonby.
The Company has a written strategic plan to expand the business
with a view to growth in shareholder value; in essence, the
strategy focuses on four core themes: making innovative, world-
class products; providing excellent customer service (before
and after sale); diversifying into regulated civilian markets; and
corporate development (exploring partnerships, acquisitions and
other ways to grow the business). See page 13 for a summary of
the strategy.
This strategy is kept under review by, and evolves under the
guidance of, the Strategy Committee. The key challenges in
implementing the Company’s business model and strategy are
documented on pages 23 to 27.
THE DIRECTORS
SIMON MOORE
Mr Moore (53) is an independent Non-Executive Director and the
Company’s Chairman.
In addition to chairing the Board, he is Chair of the Remuneration
Committee and a member of the Audit Committee and the
Strategy Committee.
Mr Moore has over 25 years’ experience within a variety of
strategic, advisory, executive and non-executive roles in a number
of sectors. He is particularly experienced in finance matters,
having worked in the banking industry for a number of years
(following a commission in the British Army).
Mr Moore’s work in strengthening the Group’s governance was
recognised at the 2018 QCA Awards by the award of Non-Executive
Director of the Year.
Mr Moore is also chairman of Cambridge & Counties Bank and
chairman of Al Rayan Bank PLC.
CHRISTOPHER POWELL
Mr Powell (72) is a Non-Executive Director and the Chair of the
Audit Committee. He is also a member of the Remuneration
Committee and the Strategy Committee.
A chartered accountant, Mr Powell has significant experience
in the business of the Group and the sectors within which it
operates, having served the Company since admission. He also
has substantial expertise in real estate and corporate finance
transactions, which aided the Group’s acquisitions during the
period of additional land and buildings and of the Aviation Skills
Partnership.
Mr Powell is also a director of Severn Glocon Group Plc and the
Great British Card Company Plc.
JOHN PONSONBY
Mr Ponsonby (63) is an independent Non-Executive Director and
the Chair of the Strategy Committee. He is also a member of the
Audit Committee and the Remuneration Committee.
He is an experienced senior executive within the aerospace
industry having been the managing director of Leonardo
Helicopters UK (the AgustaWestland business).
Mr Ponsonby has an extensive background in the organisation,
delivery and commercialisation of technical training: prior
to his appointment as managing director, he was the senior
vice-president for global customer support and training for
AgustaWestland and, before moving into industry, was the Air
Vice-Marshal commanding the RAF’s training group.
19
Pennant International Group PLC Annual Report 2018 CORPORATE GOVERNANCE REVIEW
On account of this significant expertise in training delivery, Mr
Ponsonby has been appointed (on a short-term basis) to Chair
the Aviation Skills Partnership, guiding its ongoing expansion and
the operationalisation of its model. This entails an additional time
commitment of two days per week.
Directors. Mr Clements works closely with the Company’s
nominated adviser to ensure proper management of investor
relations, company law and AIM compliance. He is experienced
on public company regulatory compliance and Takeover Code
matters.
Mr Ponsonby was appointed to the Board on 1 April 2018.
Mr Clements is a member of the Strategy Committee.
PHILIP WALKER
GARY BARNES
Mr Walker (38) is the Group’s Chief Executive Officer. He joined
Pennant in 2014 as Chief Financial Officer, being promoted to CEO
in February 2017.
Mr Walker is a chartered accountant and qualified corporate
finance professional.
Prior to joining the Company, Mr Walker worked for Grant
Thornton UK LLP and Barclays Bank Plc. At Grant Thornton, he
led numerous corporate finance transactions (both buy side and
sell side) and developed and implemented strategic plans for a
number of businesses.
While at Barclays, Mr Walker worked with businesses with a
turnover of between £5 million and £50 million, focusing on debt
structuring, including working capital, investment, trade finance
and the restructuring of facilities. He provided structuring advice
on various types of corporate transactions.
Mr Barnes (52) is the Group’s Finance Director.
Mr Barnes joined Pennant in 1997, initially as Financial Controller,
later being promoted to Head of Finance following his long-time
effective co-ordination of financial reporting, budgets, forecasting
and audit liaison throughout the Group.
Mr Barnes was appointed to the Board as Finance Director on 1
April 2018 and has operational oversight of all financial matters
across the Group. He leads the Company’s relationships with its
auditors, bankers, pension scheme administrators and insurers.
Mr Barnes is a member of the Strategy Committee and routinely
attends the Audit Committee.
TIM RICE
Since joining Pennant, Mr Walker has brought this experience to
bear in driving the review, renewal and implementation of Group
strategy while successfully leading two equity fund-raisings and
the acquisition of ASP.
Mr Rice is an experienced aerospace executive and a chartered
engineer. He served as a Director until 24 September 2018 and
was a member of the Audit Committee and the Remuneration
Committee.
Mr Walker is responsible for the day-to-day running of all Group
businesses and the execution of Group strategy. He is a member
of the Strategy Committee.
MAINTAINING THE BOARD’S SKILLS
The Directors acknowledge their responsibility to maintain their
skills, knowledge and competences. For example, Directors
complete appropriate ‘continuing professional development’ in
support of their respective professional qualifications and attend
forums and briefings organised by trade bodies on industry
developments and wider changes. The Board seeks guidance from
external advisors when appropriate such as financial and legal
due diligence on potential acquisitions. Based on the skills and
expertise highlighted in the profiles of each Director above, the
Board feels confident that it has the necessary mix of capabilities,
experience and personal qualities to deliver the Group’s strategic
objectives.
DAVID CLEMENTS
Mr Clements (39) is the Commercial & Risk Director. He joined
the Group in June 2017 and was appointed to the Board in October
2017.
He is a practising solicitor with extensive experience in corporate
and commercial law and practice, gained advising AIM-quoted and
private companies particularly in the engineering, manufacturing
and software sectors. Prior to joining Pennant, he was with the
law firm Charles Russell Speechlys.
As Commercial & Risk Director, Mr Clements is responsible for
commercial, risk management, administrative and infrastructure
functions across the Group, seeking to ensure the Group’s legal
and commercial position is appropriately protected.
Mr Clements also acts as Company Secretary to all Group
companies, advising the Chairman on corporate governance
matters and being available as a ‘sounding board’ for other
20
Pennant International Group PLC Annual Report 2018 CORPORATE GOVERNANCE REVIEW
THE COMMITTEES
AUDIT COMMITTEE
The Audit Committee’s role is to determine and apply policy on
behalf of the Board to the financial reporting and internal controls
of the Company and to maintain an appropriate relationship with
the Company’s auditors.
The Committee comprises all Non-Executive Directors and
during the reported period was chaired by Christopher Powell.
It typically meets at least twice a year at appropriate times in the
reporting and audit cycle and otherwise as required.
Given the nature of the Group’s business, the Committee pays
particularly close attention to reviewing and discussing with the
external auditors the management’s judgments on the application
of revenue recognition policies in relation to material projects.
REMUNERATION COMMITTEE
The Remuneration Committee’s role is to determine and apply
policy on behalf of the Board to the remuneration and benefits of
Executive Directors and to ensure compliance with best practice
(including reporting to shareholders).
The Committee comprises all Non-Executive Directors and during
the reported period was chaired by Simon Moore.
During the year, the Committee, operating under its Terms
of Reference dated 24 September 2018, discharged
its
responsibilities, including determining and agreeing with the
Board the framework or broad policy for the remuneration of
the Company’s Chief Executive Officer, Chairman, the Executive
Directors, the Company Secretary and such other members of
the Group’s executive management as it is designated to consider.
The Committee also reviews and approves the Executive Directors’
proposals (if any) following annual review of employee pay and
benefits.
STRATEGY COMMITTEE
The Strategy Committee was established in April 2018 to consider,
review and approve the strategic objectives and plans of the Group
as may be proposed by the Executive Directors and to provide
guidance and make recommendations as appropriate to the
Board and senior management of the Group as to the formulation
and implementation of strategy.
The Committee currently comprises all Directors and during the
reported period was chaired by John Ponsonby.
During the year, the Committee, operating under its Terms of
Reference dated 25 April 2018, discharged its responsibilities by
holding its inaugural meeting in October 2018 at which various
business plans and investment cases were presented and certain
strategic programmes were approved.
ATTENDANCE
Directors are required to devote such time and effort to their
duties as is required to secure their proper discharge and, for
Non-Executive Directors, this typically entails one or two days
of meetings per month as well as reading and preparation time.
A full pack of management information (in consistent, agreed
form) is provided to the Board in advance of every meeting. Each
Executive Director has a full-time service agreement.
Directors’ attendances at meetings of the Board and
Committees during 2018 were as follows:
its
Board
Audit Committee
Remuneration
Committee
Strategy
Committee
Simon Moore
Christopher Powell
Timothy Rice (resigned 24/09/18)
John Ponsonby
Philip Walker
David Clements
Gary Barnes
10/10
10/10
5/6
8/8
10/10
10/10
8/8
1/1
1/1
1/1
-
-
-
-
2/2
2/2
1/1
2/2
-
-
-
1/1
1/1
-
1/1
1/1
1/1
1/1
21
Pennant International Group PLC Annual Report 2018 CORPORATE GOVERNANCE REVIEW
COMPLIANCE WITH CORPORATE GOVERNANCE CODES
FINANCIAL CONTROL
The Board has overall responsibility for the Group’s system of
internal financial control and for reviewing its effectiveness.
The purpose of the system of control is to manage rather than
eliminate the risk of failure to achieve business objectives and
can only provide reasonable, but not absolute, assurance against
misstatement or loss.
During the year (operating under its Terms of Reference) the
Audit Committee kept the effectiveness of the Company’s internal
controls and risk management systems under review by regular
sampling and other checks.
The Finance Director is the executive within the Group responsible
for day-to-day financial management of the Group’s affairs and its
internal accounting.
The Finance Director participates in and provides information and
support to the Audit Committee as and when the Audit Committee
so requests.
The Company has adopted the QCA Corporate Governance Code
and a detailed statement of the Company’s compliance against
the code (together with references to supporting material) is
provided on the Group’s website: http://www.pennantplc.co.uk/
investors/corporate-governance/
OPERATIONAL GOVERNANCE
Day-to-day running of the Group’s business is delegated by the
Board to the Executive Directors led by the Chief Executive Officer.
The Executive Directors have established a management and
reporting framework across the Group, supported by a Group
Management Board comprising the Executive Directors together
with the Chief Operating Officers for the Technical Training and
ILS Group business units and the CEO of the Aviation Skills
Partnership.
Clear channels are in place for information and proposals to
flow up from the Group’s various operating units to the Executive
Directors and the Board, and for information and decisions to flow
back down.
Key performance indicators (at both a contract and functional
level) are reported monthly, providing visibility and accountability
across the business leading to better products and services for
customers, allowing effective risk management, and ensuring the
Group retains its quality accreditations.
22
Pennant International Group PLC Annual Report 2018
RISK MANAGEMENT REVIEW
RISK MANAGEMENT REVIEW
KEY RISKS
Key risks to the Group (and the relevant mitigants and controls
employed by the Group) are explained below.
These are the risks which the Board considers, as at the date of
this report, are the most critical to the continued operation of the
Group. The risks described do not represent the totality of the
risks facing the Group and should not be relied on as such by
any person considering any investment decision in relation to the
Company’s ordinary shares.
Group-wide risk management is ultimately the responsibility of
the Board (supported by the Audit Committee) and is overseen
operationally by the Commercial & Risk Director.
Operational risk management is embedded in the Group’s
business processes, which are set down in writing and compliance
with which is monitored and audited by the Group’s internal
Quality function (and periodically reviewed by external quality
compliance auditors).
Each live programme has a risk and opportunities register
which is maintained by the relevant Programme Manager and
reviewed regularly, in particular at standing monthly and quarterly
programme review meetings.
The Group’s key risks (operational and otherwise) are recorded
in a Group Risk Register and those risks together with their
respective mitigants, controls and corrective actions are reviewed
regularly by the Board. Risk is a standing agenda item for the
Board and senior managers are required to review, identify and
report risks on an ongoing basis and to formally review all key
risks monthly.
Description of risk
Potential impact
Mitigation and control
Defence focus
The Group has historically been heavily
reliant on government defence spending by
the UK and other states (particularly aviation
related), with over 80% of its revenues for
2018 deriving from defence contracts.
A reduction in defence spending leads to
reduced orders, adversely affecting the
Group’s revenue and profit.
Exposure to reputational risks arising
from sub-contracting to defence primes
supplying
into geo-politically sensitive
regions.
The Group’s largest contract (by value)
is currently a military land vehicle
programme, diversifying from aviation-
related defence projects.
Furthermore, it is a key strategic focus
of the Group to expand into civilian
sectors in order to reduce reliance on
defence spending generally.
The rail sector is historically the Group’s
most active area of civil diversification
(and remains a key focus) and a primary
reason for the acquisition of Aviation
Skills Partnership is to increase the
Group’s access
the commercial
to
aviation training market.
Any new opportunities are assessed
for potential
to
Pennant and due regard is given to UK
government policy and guidance.
reputational
risk
23
Pennant International Group PLC Annual Report 2018
KEY RISKS
Description of risk
Potential impact
Mitigation and control
Prime dependence
The Group currently depends to a large
extent on prime contractors awarding it sub-
contracts to deliver the training solution on
larger programmes.
Loss or deterioration of relationships with
prime contractors leads to reduced orders,
adversely affecting the Group’s revenue and
profit.
Work for prime contractors is carried
out under written contracts spanning a
number of years, mitigating the risk of
immediate loss of business.
The Group contracts with and maintains
(and continues to cultivate) long-term
good relationships with several primes
(BAE, General Dynamics, Lockheed
Martin), meaning that it is not overly-
reliant on any one of them. Furthermore,
the Group is always seeking to add to
its customer roster, and during the
reported period, the Group was down-
selected by a key new customer on a
major contract (final award pending).
are
developed
at
and
Relationships
all
maintained with
organisational levels, from technical
leads
to
executives.
to programme managers
primes
(and
Direct sales, particularly of software
products
related consultancy
services), are an increasingly important
part of the Group’s business. For
example, during the reported period,
the Group secured a direct sale to the
New Zealand Defence Force.
Description of risk
Potential impact
Mitigation and control
Legal and compliance burden
In the sectors in which it operates, the
Group is subject to considerable legislation
and regulation.
Failure to comply with relevant legislation
and regulation results in the Group being
unable to sell its products.
For example: in selling its training equipment
overseas, the Group must comply with UK
export control laws; in receiving and using
certain data, it must comply with the US
ITAR regulations; in designing its hardware
trainers, it must comply with various EU and
UK safety laws.
its officers are found
The Group and
criminally liable for breaches of foreign
legislation and/or face civil penalties.
Serious breaches of health and safety law
result in the Group’s operations being
suspended.
The Group has an experienced
Commercial team with considerable
export expertise. The Commercial &
Risk Director is a qualified lawyer and
provides legal advice to the Group as
appropriate
External legal counsel (both UK and
overseas) and safety and compliance
advisors are retained and consulted as
necessary.
Of course, the Group in operating overseas
is subject to the laws of relevant foreign
jurisdictions, whether it is aware of them or
not.
The Group has a dedicated Health &
Safety officer and several employees
with
and
experience.
qualifications
relevant
24
Pennant International Group PLC Annual Report 2018
KEY RISKS
Description of risk
Potential impact
Mitigation and control
Contract pricing and delivery
The Group’s key contracts are often on a
fixed price with a fixed delivery timeline
and performance of those contracts may be
reliant on external dependencies.
The Group will contract on fixed prices on
‘engineered-to-order’ projects (e.g. for a
platform-specific training aid), where it has
never designed and delivered the required
product before. In such cases, the fixed
price must be calculated without reference
to the previous costs of producing such a
product. This creates a risk of mis-pricing
a contract.
Where a project has been keenly priced, any
delays may cause budgets to become very
strained.
External factors (e.g. a supplier delay on
delivering a part) cause the delay or failure
to deliver a contract resulting in reputational
damage to the Group and entitling the
customer to claim compensation (including,
on some contracts, liquidated damages).
A mis-priced contract, although delivered
in compliance with its terms and timeline,
results in the Group failing to realise the
desired profit on carrying out such work,
with an associated negative impact on the
Group’s overall financial performance.
The Group
is careful to deal with
trusted suppliers with a track record of
performance, wherever possible.
Considerable analysis and effort
is
applied in pricing each ‘engineered-to-
order’ contract to ensure that all likely
work and costs required to deliver that
contract are reflected in the price.
The Group employs qualified and
experienced programme managers to
manage delivery (including cost and
risk) on all projects. The programme
managers, in turn, regularly report to
the Group’s senior management.
in
conjunction with
The Group’s experienced Commercial
team,
the
for
programme managers, monitor
contractual ‘scope creep’ and manage
change control requests accordingly.
Description of risk
Potential impact
Mitigation and control
The Group’s dedicated Purchasing team
controls the ordering of items in time
for production and manages the Group’s
supply chain with support from the
Commercial team.
Customer dependencies
its
In delivering
‘engineered-to-order’
programmes, the Group is often dependent
on the provision of data from its customers
and, in some cases, third parties.
The required data may not be available
(because it has not yet been created or
distilled into writing) or a third-party data
owner may be unwilling to release the data.
Material amounts of data are not received
when required, and a programme
is
delayed,
the Group’s ability
to pass progress milestones and render
invoices. In very serious cases, the delivery
of the programme itself is jeopardised.
impacting
This is a difficult risk to manage. The
Group monitors the provision of data
and is always alive to the risk of data
flows drying up. Concerns are raised
at an early stage with customers to
ensure that the customer understands
the importance of timely data flow to the
Group. The risk is always flagged to the
customer in pre-contract negotiations
so that the contracting assumption
is clear to the customer at outset. If a
programme ultimately terminates due
to this risk eventuating, the Group will
have a right to payment for work done
until termination.
25
Pennant International Group PLC Annual Report 2018
KEY RISKS
Description of risk
Contract profiles
Potential impact
Mitigation and control
The Group’s turnover, profits and cashflows
are, particularly in the Technical Training
division, reliant on the award and timely
delivery of a small number of high-value
contracts.
Award or delivery of such contracts is
delayed, causing significant financial effects
on the Group (particularly when judged by
annual reporting).
Delays on award or delivery lead to a
negative perception amongst stakeholders
that the Group’s business is inconsistent
and prone to ‘lumpy’ revenues.
generate
contracts
significant
Large
working capital demands which cannot
be met, delivery of the contract (and
continuance of the business generally) is
jeopardised.
The Group always seeks to negotiate
cash-neutral or cash-positive payment
milestones such
that contractual
programmes of work are largely self-
funding.
Where this is not possible, the Group
has access to overdraft facilities with
its bankers (currently undrawn) to fund
working capital requirements and can
(and has evidenced an ability to) utilise
its status as a public company to raise
funding on the equity capital markets.
The Group is constantly seeking ways
to enhance its recurring revenues (to
increase profitable turnover generally
and to mitigate the effects of ‘lumpy’
contracts) and actively targets sales of
ongoing services as a means of doing
so.
Description of risk
Potential impact
Mitigation and control
Information systems and security
The Group’s operations are heavily
dependent on the availability and security of
its IT systems. A diverse range of software
platforms and packages are needed to
deliver the Group’s contracts.
Key systems are unavailable
for a
meaningful length of time and the Group’s
delivery of customer contracts is delayed
or prevented, with consequent potential
adverse effects on revenue.
The ‘hacking’ of, or a successful cyber-
attack against, the Company’s systems
leads
to serious negative reputational
and contractual consequences, as well as
regulatory breaches.
The Group has dedicated IT personnel
tasked with ensuring the security and
availability of the systems.
The Group follows best practice as
regards IT security and has the Cyber
Essentials accreditation.
All data is backed up regularly to
secure servers. The Group’s multi-
site operations allow the recovery and
restoration of systems from one site if
another is affected.
26
Pennant International Group PLC Annual Report 2018 KEY RISKS
Description of risk
Managing growth
As the Group looks forward to a period of
growth, it will face challenges in ‘ramping
up’ to meet demand.
Given its volume of ‘engineered-to-order’
programmes and pipeline, the Group is not
able to run a standard assembly line and has
to custom-configure its production facilities
for each order.
The Group needs staff with a wide range of
technical skills, including engineering and
software design and programming. Subject
matter expertise is required in various areas
including fixed wing and rotary aviation and
parachuting. The pool of people with the
appropriate skills is inherently limited.
Potential impact
Mitigation and control
The Group does not have the appropriate
facilities in which to build its goods and
delivery of contracts is delayed or prevented,
leading to negative impacts on revenue and
reputation.
The Group is unable to secure the necessary
human resources and the timely delivery of
its contracts is jeopardised, with potentially
negative effects to revenue and profit.
Group
has
a
developed
The
facilities plan and
comprehensive
carefully monitors its needs for future
space, both for secured and potential
orders and has already acquired
additional space for expansion. In the
reported period, a significant new
production facility was acquired (over
6,000 sq. ft) and planning consent was
obtained on another Group site for a
further production facility (if required).
The Group maintains a panel of
recruitment consultants with track-
records of finding suitable people,
enabling the Group to ‘flex’ resource to
meet demands of programmes.
Employee training and development is
prioritised in technical areas so that
skills gaps can be filled internally.
Good links to former employers are
maintained by those staff with military
backgrounds, enabling the recruitment
of additional subject matter experts.
Description of risk
Potential impact
Mitigation and control
Changes in training standards and
technology
Much of the Group’s business is driven by
the training requirements of its customers
which are
in turn driven by training
standards set down by various authorities
(such as the European Aviation Safety
Agency).
in virtual and
The rapid development
augmented reality technology and other
innovative solutions present challenges
(and opportunities) to the Group’s traditional
hardware focused approach to training aids.
Failure to ensure its products comply with
changing standards means decreased
saleability
end-user
a
experience), adversely affecting the Group’s
revenue and profit.
lesser
(and
Similarly, being left behind as technology
progresses reduces the attractiveness of
the Group’s products, ultimately resulting
in fewer sales and lower revenue and profit.
The Group has formed a discrete
business unit (comprised of specialists
in relevant training regulation and
its
delivery)
product range keeps pace with, and
anticipates changes
to, regulation
(including in relation to the impending
exit from the European Union).
tasked with ensuring
This unit also proactively considers and
implements product
improvements
(to enhance training value) and works
in conjunction with the Group’s virtual
technology specialists on
innovative
ways to deliver training.
27
Pennant International Group PLC Annual Report 2018
REMUNERATION REPORT
The Remuneration Committee plays an important role in the good governance of the Group. As set out in its Terms of Reference, the
Committee determines the remuneration packages for Executive Directors and other senior employees and keeps the Group’s policy
on pay and benefits under review generally.
Based on the performance criteria, neither the Executive Directors’ bonus scheme nor the bonus scheme for employees will pay out
(each scheme is a cash bonus scheme which pays out upon the Group meeting or exceeding its market forecast for the year). A pay
increase of 2% was approved for employees generally, effective 1 January 2019. Directors’ emoluments in respect of 2018 are shown
in the table below.
For the current year, the Committee will keep under review the long-term incentivisation of Executive Directors and senior employees,
having regard to the need to control costs while ensuring that pay and benefits offered by the Group are appropriate for attracting and
retaining the right people.
The Committee will continue to have due regard to remuneration reports from independent sources, to the guidance of its professional
advisers and to good practice generally.
Simon Moore
Chair
Remuneration Committee
11 March 2019
28
Pennant International Group PLC Annual Report 2018 REMUNERATION REPORT
DIRECTORS’ REMUNERATION
Salary
Bonus
Benefits and
car allowance
Pension
Total 2018
2017
C C Powell
C Snook
P H Walker
S A Moore
T J Rice *
D Clements
G Barnes
J Ponsonby
£
45,000
-
175,000
65,000
52,466
116,666
75,000
33,750
562,882
-
-
-
-
-
-
-
-
-
£
-
-
£
-
-
16,359
17,500
397
-
3,605
5,021
714
-
-
11,000
7,500
£
45,000
-
208,859
65,397
52,466
131,271
87,521
£
45,000
410,412
189,586
60,000
40,000
24,680
-
-
-
34,464
26,096
36,000
624,978
769,678
* The salary reported for Mr Rice comprises payment for services rendered during the period together with a lump-sum payment in
respect of Mr Rice’s notice period.
Pension contributions shown above are pension payments into the Pennant International Group Plc Pension Scheme, a defined
contribution scheme.
There were 1,799,043 share options held by the Directors at the end of 2018 (2017: 1,223,588) as further particularised on the following
tables.
SERVICE CONTRACTS
There are no Directors’ service contracts (or contracts for services) with notice periods in excess of one year.
DIRECTORS AND THEIR INTERESTS
The following Directors have held office since 1 January 2018 except where indicated otherwise and their beneficial interests in the
ordinary shares of the Company were as stated below:
31 December 2018
5p ordinary shares
31 December 2017
5p ordinary shares
C C Powell
P H Walker
S A Moore
T Rice
D Clements
G Barnes (appointed 1 April 2018)
J Ponsonby (appointed 1 April 2018)
Number
6,278,253
6,349
23,264
6,349
5,291
150,934
-
Number
6,301,533
-
18,183
-
-
150,934
-
29
Pennant International Group PLC Annual Report 2018 REMUNERATION REPORT
The following Directors have interests in share options of the Company as stated below:
C C Powell
P H Walker
S A Moore
T Rice
D Clements
G Barnes
J Ponsonby
Total
EMI options
Unapproved
options
Total
2018
Number
Number
Number
-
297,619
-
-
305,455
370,000
-
-
525,969
300,000
-
-
-
-
-
823,588
300,000
-
305,455
370,000
-
973,074
825,969
1,799,043
EMI OPTIONS
UNAPPROVED OPTIONS
Philip Walker holds 297,619 EMI options exercisable at 84.0p
(granted on 18 March 2015) which have vested and are exercisable
in accordance with the terms of the option agreement.
David Clements holds 100,000 EMI options at 80.5p (granted on
12 September 2017) exercisable upon expiry of three years from
the date of grant.
During the period, on 26 March 2018, David Clements was granted
205,455 EMI options at 82.5p per share. These options are subject
to a time-based vesting condition, becoming exercisable as to one
third three years after grant, another third after four years and the
final third after five years. The options lapse upon the occurrence
of certain events, including the termination of Mr Clements’
employment.
Gary Barnes holds 370,000 EMI options. 270,000 of these options
are vested and exercisable at prices from 26.75p to 86p per
share. 100,000 of Mr Barnes’ EMI options at 80.5p (granted on
12 September 2017) are not yet exercisable, becoming so upon
expiry of three years from the date of grant.
During the period, Simon Moore held 300,000 unapproved share
options at 55.5p (granted on 20 June 2016), exercisable once the
ordinary shares of the Company traded on AIM at a price of 100p
or more for more than 10 business days within a 20 business day
period.
Post period-end, the exercise condition described above having
been met, Mr Moore exercised all his unapproved options, selling
such number of resulting shares as was necessary to fund the
exercise price and his expenses, and retained the balance. Mr
Moore’s aggregate holding at the date of approval of this report is
79,524 ordinary shares and he holds no share options.
Philip Walker holds 525,969 unapproved share options at 55.0p
(granted on 19 April 2017), exercisable upon expiry of three years
from the date of grant.
30
Pennant International Group PLC Annual Report 2018 AUDIT COMMITTEE REPORT
During the year, the Committee operating under its Terms of Reference dated 8 February 2018 discharged its responsibilities by
(amongst other things) reviewing and monitoring:
•
•
the consistency of, and any changes to, accounting policies both on a year-on-year basis and across the Group;
the methods used to account for significant or unusual transactions;
• whether the Company has followed appropriate accounting standards and made appropriate estimates and judgments, taking
into account the views of the external auditors;
•
•
the clarity of disclosure in the Company’s financial reports and the context in which statements are made; and
all material information presented with the financial statements, such as the operating and financial review and this corporate
governance section (insofar as it relates to audit and risk management).
For 2018, a particular focus for the Committee was the Company’s approach to IFRS 15 and related briefings on the impact on the
financial statements. Further information on IFRS 15 is provided in note 2 to the accounts.
The Committee has continued its monitoring of the financial reporting process and its integrity, risk management systems
and assurance. The Committee has also overseen the transition of lead partners at the Company’s auditors.
The Committee has reviewed all significant issues concerning the financial statements. The principal matters we considered concerning
the 2018 financial statements were recognition of revenue, profit and provisioning. We have reviewed key estimates and management
judgements prior to publication of the 2018 financial statements, including on the Middle East contracts, the new Qatar contract and
the Ajax programme.
Christopher Powell
Chair
Audit Committee
11 March 2019
31
Pennant International Group PLC Annual Report 2018 DIRECTOR’S REPORT
DIRECTORS’ REPORT
The Directors present their report and the audited financial
statements for the year ended 31 December 2018.
PRINCIPAL ACTIVITIES
The principal activity of the Company is the provision of
management services to the Group.
The principal activities of Group companies during the year were
the supply of integrated training and support solutions, products
and services, principally to the defence, rail, aerospace and naval
sectors and to Government Departments.
DIVIDENDS
No dividends were paid during the year (2017: £NIL). As highlighted
in the Chairman’s Statement, the Board is not recommending
the payment of a final dividend in respect of the year ended 31
December 2018.
GOING CONCERN
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. In reaching this conclusion
the Directors have considered the financial position of the Group,
its cash, liquidity position and borrowing facilities together with its
forecasts and projections for 18 months from the reporting date
that take into account reasonably possible changes in trading
performance and post year end events such as acquisition and
share issue. The going concern basis of accounting has therefore
continued to be adopted in preparing the financial statements.
RESEARCH & DEVELOPMENT
Research and development within the Group (involving the
development of new hardware and software products which have
been capitalised) amounted to £1,480,180 (2017: £311,636)
POST BALANCE SHEET EVENTS
Aside from the acquisition of Aviation Skills Partnership and the
associated equity fundraising already described in the ‘About
Pennant’ section, there are no post balance sheet events to report.
TREASURY OPERATIONS AND FINANCIAL INSTRUMENTS
The Group operates a centralised treasury function which is
responsible for managing liquidity, interest and foreign currency
risks associated with the Group’s activities.
The Group’s principal financial instrument is cash, the main
purpose of which is to provide finance for the Group’s operations.
In addition, the Group has various other financial assets and
liabilities such as trade receivables and trade payables arising
directly from its operations.
In accordance with the Group’s treasury policy, derivative
instruments are not entered into for speculative purposes.
The Group’s exposure and approach to capital and financial risk,
and approach to managing these is set out in note 33 to the
Consolidated Financial Statements.
EMPLOYEE ENGAGEMENT
The Group engages with its employees regularly through various
media including intranet, newsletters, employee opinion surveys,
team briefings and twice-yearly financial results presentations to
all staff. Details of the Group’s performance are shared with all
employees at appropriate times using these methods.
The Group’s culture and related behaviours are driven (and
closely monitored) by the Board, with employee feedback (via
opinion surveys and other channels) being delivered to the
Board periodically. A formal set of Core Values was established
post period-end focusing on Performance, Innovation, Quality,
Respect and Teamwork. These Core Values support the Group’s
strategic objectives, particularly linking into the Innovation and
the Customer Focus themes.
John Ponsonby is designated as the Non-Executive Director to
whom employees can raise any concerns regarding wrong-doing.
32
Pennant International Group PLC Annual Report 2018 DIRECTOR’S REPORT
EMPLOYEE POLICIES
The Group has established employment policies to ensure
compliance with current legislation and codes of practice,
including equal opportunities.
The Group is an equal opportunities employer and applications
from disabled persons are fully and fairly considered. In the event
of disability, every effort is made to ensure that employment
continues and appropriate training is provided with the intention
that career development and promotion of disabled people should
not be affected.
The Board typically meets ten times per year and a full pack
of Board papers (containing various reports and management
information) is distributed to Directors in advance of the meetings.
The Directors have access to external advice at the expense of the
Company and access to the Company Secretary (who is a qualified
solicitor).
One third of the Directors are subject to retirement by rotation
every year. Accordingly, Philip Walker and Christopher Powell
retire by rotation at the AGM. Philip Walker, being eligible, offers
himself for re-election.
The Company is a signatory to the UK’s Armed Forces Covenant
and welcomes applications from ex-service personnel.
DIRECTORS’ INDEMNITY
POLICY ON PAYMENT OF SUPPLIERS
The Group’s policy during the year and for 2019 is to pay suppliers
in accordance with the relevant contractual terms agreed between
the Group and the supplier.
AUTHORITY FOR COMPANY TO PURCHASE ITS OWN
SHARES
Under a shareholders’ resolution of 25 April 2018, the Company
(acting by its Directors) was granted authority to purchase
through the market up to 4,941,530 of the Company’s ordinary
shares, at a maximum price equal to 105% of the average of the
middle market quotations for an ordinary share taken from the
Company’s quotation on the London Stock Exchange for the five
business days immediately preceding the purchase. Since 25 April
2018, the Company has not purchased any of its own shares and
the authority referred to above remains unutilised. A proposal to
renew the authority will be made at the Company’s AGM in 2019.
THE BOARD
The Board comprises the Chairman, the Chief Executive Officer,
the Finance Director, the Commercial & Risk Director and the
Non-Executive Directors.
The Directors in office as at the date of this report, all of whom
served within the year, are named on pages 19 to 21.
Gary Barnes and John Ponsonby were appointed to the Board
with effect from 1 April 2018.
The Company’s Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors and
officers of the Company in respect of liabilities they may incur in
the discharge of their duties or in the exercise of their powers,
including any liabilities relating to the defence of any proceedings
brought against them which relate to anything done or omitted,
or alleged to have been done or omitted, by them as officers or
employees of the Company. Appropriate directors’ and officers’
liability insurance cover is in place in respect of all the Directors.
DIRECTORS’ CONFLICTS OF INTEREST
The Company has procedures in place for managing conflicts
of interest. Should a Director become aware that they, or their
connected parties, have an interest in an existing or proposed
transaction involving Pennant, they will notify the Board in writing
or at the next Board meeting. Directors have an ongoing duty to
update the Board in relation to any changes to these conflicts.
33
“Our core values link into the innovation and customer focus at Pennant”Pennant International Group PLC Annual Report 2018 DIRECTOR’S REPORT
34
Pennant International Group PLC Annual Report 2018 DIRECTOR’S REPORT
SIGNIFICANT SHAREHOLDINGS
As at 31 December 2018 the Group has been notified, in accordance with Chapter 5 of the Disclosure and Transparency Rules, of the
voting rights held as a shareholder of the Company as shown in the table below.
Investor
Powell C C Esq
Canaccord Genuity Group
Business Growth Fund
Liontrust Asset Management
Killik & Co
Downing LLP
POLITICAL DONATIONS
The Group did not make any political donations during 2018 (2017:
£NIL).
MATTERS COVERED IN THE STRATEGIC REPORT
As permitted by paragraph 1A of schedule 7 to the Large and
Medium Sized Companies and Groups (Accounts and Reports)
Regulations 2008 certain matters which are required to be
disclosed in the Directors Report (such as review of the business
and future developments) have been omitted as they are included
within the Strategic Report section (in the Chairman’s Statement
on pages 6 to 7 and the CEO Review on pages 8 to 12.
ANNUAL GENERAL MEETING
The Company’s Annual General Meeting will be held at its
offices located at Pennant Court, Staverton Technology Park,
Cheltenham, GL51 6TL on Wednesday 1 May 2019. The Notice
convening the Annual General Meeting and an explanation of the
business to be put to the meeting will be contained in a separate
circular sent to shareholders and will also be available on the
website at www.pennantplc.co.uk under the ‘Circulars’ section.
Number of
shares held
% interest in
the total voting
rights of Pennant
6,278,253
4,959,600
3,636,364
3,633,077
1,788,143
1,311,032
18.63
14.72
10.79
10.78
5.31
3.89
STATEMENT AS TO DISCLOSURE OF INFORMATION TO
AUDITOR
As far as the Directors are aware, they have each taken all
necessary steps to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
As far as the Directors are aware, there is no relevant audit
information of which the Company’s auditor is unaware.
This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.
AUDITOR
Mazars LLP have signified their willingness to continue in office and
a resolution to reappoint Mazars LLP as auditor to the Company
will be proposed at the AGM.
Approved by the Board on 11 March 2019
and signed on its behalf
D J Clements
Director
35
Pennant International Group PLC Annual Report 2018
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to
prepare the financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European
Union and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Company and the Group
for that period.
In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
state whether IFRS as adopted by the European Union have been followed subject to any material departures disclosed and
explained in the financial statements;
• provide additional disclosures when compliance with specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial
performance; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s and
the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Approved by the Board on 11 March 2019
and signed on its behalf
D J Clements
Director
36
Pennant International Group PLC Annual Report 2018 3
FINANCIAL STATEMENTS
The following section outlines the
results for the period ended 31
December 2018.
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF PENNANT INTERNATIONAL GROUP PLC
OPINION
We have audited the financial statements of Pennant International
Group PLC (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2018 which comprise
the Consolidated Income Statements, Consolidated and Parent
Company Statement of Comprehensive Income, the Consolidated
and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statements of Cash Flows,
the Consolidated and Parent Company Statements of Changes in
Equity and notes to the Consolidated and Parent Company financial
statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s and
of the parent company’s affairs as at 31 December 2018
and of the group’s and the parent company’s profit for
the year then ended;
The impact of uncertainties due to Britain exiting the European
Union on our audit
The Directors’ view on the impact of Brexit is disclosed on page 7.
The terms on which the United Kingdom may withdraw from the
European Union, currently due to occur on 29 March 2019, are
not clear, and it is therefore not currently possible to evaluate all
the potential implications to the Group’s and Company’s trade,
customers, suppliers and the wider economy.
We considered the impact of Brexit on the group and parent
company as part of our audit procedures, applying a standard firm
wide approach in response to the uncertainty associated with the
group’s and parent company’s future prospects and performance.
However, no audit should be expected to predict the unknowable
factors or all possible implications for the group and parent
company and this is particularly the case in relation to Brexit.
CONCLUSIONS RELATING TO GOING CONCERN
• have been properly prepared in accordance with IFRSs
as adopted by the European Union; and
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you where:
• have been prepared in accordance with the requirements
of the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS regulation.
•
the financial statements have been prepared
in
accordance with the requirements of the Companies Act
2006 and, as regards the group financial statements,
Article 4 of the IAS regulation.
•
•
BASIS FOR OPINION
We conducted our audit
in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard, as applied to SME listed
entities and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed
in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
38
Pennant International Group PLC Annual Report 2018 INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF PENNANT INTERNATIONAL GROUP PLC
The risk
Revenue/Profit Recognition
Our response
A significant proportion of the group’s activities are accounted
for as long term contracts. Accounting for these contracts can be
complex and requires management to exercise their judgement
when considering the likely costs to complete on a contract.
The group’s accounting policy for revenue recognition is set out in
the accounting policy notes on “Revenue recognition” on page 62.
Judgements around management’s assessment of the costs to
complete will impact on the expected overall profitability of the
contract and therefore the revenue recognised in the period.
This also raises the risk that revenue and therefore profit could
be materially misstated, either in error or fraudulently, as they
are based on the estimated stage of completion with reference to
costs. As a result we have identified revenue recognition as a key
audit matter to reflect the significance of these judgements to the
users of the financial statements.
Our procedures over revenue and profit recognition included, but
were not limited to:
- An assessment that revenue is recorded in accordance
with the accounting policies and that these policies are
consistent with the requirements of IFRS15 – “Revenue
from Contracts with Customers”
- A detailed review, based upon a sample of material and
residual contracts, of the recording of contract costs
and the recognition of revenue and profit. This included
confirming that sales invoices are raised in relation to the
achievement of agreed milestones and that revenue is
based upon the cost progression including the accuracy
and robustness of management’s estimates of costs to
complete.
- Discussion with management and considering the
impact of commercial and operational risks and how
the associated financial exposures are recorded in each
contract in our sample.
-
Testing on a sample basis that actual costs were
accurately recorded in the appropriate contract on a
timely basis and that contract cost accruals at the year
end were complete.
- Review and consideration of the impact of any material
exposures to customer delays, re-scoping of contracts
and warranty clauses
-
Validating
disclosures required by IFRS 15.
the accuracy and appropriateness of
Based on the work performed, revenue from long term
contracts are fairly stated.
OUR APPLICATION OF MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and on the financial statements as a whole. Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows.
Overall materiality
£312,170
How we determined it
Materiality has been determined with reference to a benchmark of Profit before tax, of
which it represents 9.5%.
Rationale for benchmark applied
We used profit before tax to calculate our materiality as, in our view, this is the most
relevant measure of the underlying financial performance of the company.
Performance materiality
Reporting threshold
£226k
£9k
39
Pennant International Group PLC Annual Report 2018 INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF PENNANT INTERNATIONAL GROUP PLC
The overall materiality of the parent company was £185k, which
was determined with reference to a benchmark of net assets, of
which it represents 2%. Performance materiality was £148k and
reporting threshold was £6k.
The group’s components were allocated a component materiality
in the range of £20k to £273k
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and
assessed the risk of material misstatement in the financial
statements. In particular, we looked at where the directors
made subjective judgements such as making assumptions on
significant accounting estimates.
We gained an understanding of the legal and regulatory framework
applicable to the group and company, the structure of the group
and the parent company and the industry in which it operates. We
considered the risk of acts by the company which were contrary to
the applicable laws and regulations including fraud. We designed
our audit procedures to respond to those identified risks, including
non-compliance with laws and regulations (irregularities) that are
material to the financial statements.
We focused on laws and regulations that could give rise to a
material misstatement in the financial statements, including, but
not limited to, the Companies Act 2006.
Our tests included, but were not limited to, obtaining evidence
about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused
by irregularities including fraud, review of minutes of directors’
meetings in the year and enquiries of management. As a result of
our procedures, we did not identify any Key Audit Matters relating
to irregularities, including fraud.
The risks of material misstatement that had the greatest effect on
our audit, including the allocation of our resources and effort, are
discussed under “Key audit matters” within this report.
We tailored the scope of our group audit to ensure that we
performed sufficient work to be able to give an opinion on the
financial statements as a whole. We used the outputs of a risk
assessment, our understanding of the parent company and
group’s accounting processes and controls and its environment
and considered qualitative factors in order to ensure that we
obtained sufficient coverage across all financial statement line
items.
Our group audit was scoped by obtaining an understanding of
the group and its environment, including group-wide controls,
and assessing the risks of material misstatement at the group
level. Based on that assessment, all entities within the group
were subject to full scope audit and was performed by the group
audit team. At the parent company level we also tested the
consolidation process and carried out analytical procedures to
confirm our conclusion that there were no significant risks of
material misstatement of the aggregated financial information
OTHER INFORMATION
The directors are responsible for the other information. The other
information comprises the information included in the annual
report and Accounts, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the
audit:
•
•
the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY
EXCEPTION
In light of the knowledge and understanding of the group and the
parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
40
Pennant International Group PLC Annual Report 2018 INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF PENNANT INTERNATIONAL GROUP PLC
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
USE OF THE AUDIT REPORT
This report is made solely to the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume re-
sponsibility to anyone other than the company and the company’s
members as a body for our audit work, for this report, or for the
opinions we have formed.
Tim Hudson (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
45 Church Street
Birmingham
B3 2RT
11 March 2019
RESPONSIBILITIES OF DIRECTORS
As explained more fully
in the directors’ responsibilities
statement set out on page 20 the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
41
Pennant International Group PLC Annual Report 2018 CONSOLIDATED INCOME STATEMENT FOR THE YEAR
ENDED 31 DECEMBER 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Finance income
Profit before taxation
Taxation
Profit for the year attributable to the equity
holders of the parent
Earnings per share
Basic
Diluted
Notes
2018
£
2017
£
5
21,069,223
18,069,960
(12,806,223)
(10,906,992)
8,263,000
7,162,968
(5,093,520)
(5,356,895)
3,169,480
1,806,073
(1,700)
10,857
(2,693)
5,371
3,178,637
1,808,751
(32,712)
(275,409)
3,145,925
1,533,342
9.49p
8.67p
4.65p
4.30p
8
10
11
12
14
The accompanying notes on pages 48 to 71 are an integral part of these financial statements.
42
Pennant International Group PLC Annual Report 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE YEAR ENDED 31 DECEMBER 2018
Profit for the year attributable to the equity
holders of the parent
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive income for the period
attributable tothe equity holders of the parent
2018
£
2017
£
3,145,925
1,533,342
(34,086)
(85,055)
3,111,839
1,448,287
43
Pennant International Group PLC Annual Report 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Obligations under finance leases
Total current liabilities
Net current assets
Non-current liabilities
Obligations under finance leases
Trade and other payables
Deferred tax liabilities
Warranty provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Translation reserve
Revaluation reserve
Total equity
Notes
15
16
17
26
18
20
21
22
23
23
22
26
27
2018
£
951,939
1,660,292
6,889,346
198,432
9,700,009
1,923,639
5,184,533
1,848,954
8,957,126
18,657,135
4,478,039
42,247
5,350
4,525,636
4,431,490
2017
£
962,133
231,048
3,702,851
310,699
5,206,731
74,629
10,153,650
1,502,655
11,730,934
16,937,665
2,932,857
80,600
4,945
3,018,402
8,712,532
20,383
26,895
23,105
-
50,000
93,488
4,619,124
14,038,011
6,325
307,916
250,000
591,136
3,609,538
13,328,127
28
1,685,177
1,647,177
3,168,870
200,000
8,225,321
297,926
460,717
2,677,571
200,000
7,982,360
332,012
489,007
14,038,011
13,328,127
Approved by the Board and authorised for issue on 11 March 2019
G R Barnes
Director
The accompanying notes on pages 48 to 71 are an integral part of these financial statements.
44
Pennant International Group PLC Annual Report 2018 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Share
capital
Share
Premium
(see
below)
Capital
redemption
reserve
(see below)
Retained
earnings
Translation
reserve
(see below)
Revaluation
reserve
(see below)
Total equity
£
£
£
£
£
£
£
At 1 January 2017
1,649,277
2,685,971
200,000
6,347,343
417,067
517,297
11,816,955
Profit for the year
Other comprehensive income
-
-
-
-
-
-
1,533,342
-
-
(85,055)
-
-
1,533,342
(85,055)
Total comprehensive income
1,649,277
2,685,971
200,000
7,880,685
332,012
517,297
13,265,242
Cancellation of B and C shares
(2,100)
(8,400)
Recognition of share based
payment
Transfer from revaluation
reserve
-
-
-
-
-
-
-
-
73,385
28,290
-
-
-
-
-
(10,500)
73,385
(28,290)
-
At 1 January 2018
1,647,177
2,677,571
200,000
7,982,360
332,012
489,007
13,328,127
Total Comprehensive Income
for the year
Adjustment on initial
application of IFRS 15
Other comprehensive income
-
-
-
-
-
-
-
-
-
3,145,925
(3,151,644)
-
-
-
-
3,145,925
(3,151,644)
-
(34,086)
-
(34,086)
Total comprehensive income
1,647,177
2,677,571
200,000
976,641
297,926
489,007
13,288,322
Issue of New Ordinary Shares
38,000
491,299
Recognition of share based
payment
Deferred tax on share options
Transfer from revaluation
reserve
-
-
-
-
-
-
-
-
-
-
-
103,983
116,407
28,290
-
-
-
-
-
-
-
529,299
103,983
116,407
(28,290)
-
At 31 December 2018
1,685,177
3,168,870
200,000
8,225,321
297,926
460,717
14,038,011
45
Pennant International Group PLC Annual Report 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
SHARE PREMIUM ACCOUNT
Represents the amount by which shares have been issued at a price greater than nominal value less issue costs.
CAPITAL REDEMPTION RESERVE
This represents the amount by which the Company’s share capital has been diminished by the cancellation of shares held in treasury.
RETAINED EARNINGS
This represents the accumulated realised earnings from the prior and current periods as reduced by losses and dividends from time
to time.
TRANSLATION RESERVE
Exchange differences relating to the translation of the net assets of the Group’s foreign subsidiaries from their functional currency to
the presentational currency of the Group, being sterling, are recognised directly in the translation reserve.
REVALUATION RESERVE
This represents the extent to which the revaluation of such land and buildings at fair value exceed the carrying amount.
46
Pennant International Group PLC Annual Report 2018 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Net cash from operations
Investing activities
Interest received
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from sale of assets held for sale
Proceeds on disposal of property, plant & equipment
Net cash used in investing activities
Financing activities
Proceeds from sale of ordinary shares
Cancellation of B & C Shares
Net funds from obligations under finance leases
Net cash from/(used in) financing activities
Notes
2018
£
2017
£
29
11
16
17
17
28
28
23
5,012,123
(988,536)
10,857
(1,583,760)
(3,561,439)
-
1,600
5,371
(227,108)
(1,282,088)
575,000
-
(5,132,742)
(928,825)
529,299
-
(4,647)
-
(10,500)
(4,187)
524,652
(14,687)
Net increase/(decrease) in cash and cash equivalents
404,033
(1,932,048)
Cash and cash equivalents at beginning of year
1,502,655
3,517,541
Effect of foreign exchange rates
(57,734)
(82,838)
Cash and cash equivalents at end of year
21
1,848,954
1,502,655
The accompanying notes on pages 48 to 71 are an integral part of these financial statements.
47
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1 GENERAL INFORMATION
Pennant International Group plc is a public company incorporated in England and Wales under the Companies Act 2006.
The address of the registered office is Pennant Court, Staverton Technology Park, Cheltenham, GL51 6TL.
The principal activity of the Group during the year was the delivery of integrated training and support solutions, products and
services, principally to the defence, rail, aerospace and naval sectors and to Government Departments.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment
in which the Group operates. All values are rounded to the nearest pound except where otherwise stated. Foreign operations are
included in accordance with the policies set out in note 3.
2 STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED IN THE CURRENT FINANCIAL YEAR ENDED 31
DECEMBER 2018
The adoption of the following mentioned standards, amendments and interpretations in the current year have not had a material
impact on the Group’s financial statements for the year ended 31 December 2018 with the exception of IFRS 15 ‘Revenue from
Contracts with Customers’ whose impact is disclosed below:
•
•
•
•
•
IFRS 9 ‘Financial Instruments’
IFRS 15 ‘Revenue from Contracts with Customers’’
IFRS 2 ‘Share-based Payment’ that clarify the classification and measurement of share-based payment transactions.
‘Transfers of Investment Property (Amendments to IAS 40)’
IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’
• Annual Improvements to IFRSs (2014 - 2016): Clarification of the scope of IFRS 12
Disclosure of Interests in Other Entities and amendments to IFRS 1 and IAS 28
IFRS 9– FINANCIAL INSTRUMENTS
The Group adopted IFRS 9 on 1 January 2018. The Group has no past record of recognising impairment losses on trade receivables.
Based on all information available (including current and forward-looking information), there the Group envisages a nil probability
of any default occurring during the next 12 months. Therefore, there is no material impact from IFRS 9.
IFRS 15 - REVENUE FROM CONTRACTS WITH CUSTOMERS
This section details the impact on the Group of adopting IFRS 15 on 1 January 2018.
• The simplified transition method has been adopted by the company / group, no restatement of comparatives and third bal-
ance sheet has been prepared. The company has recognised the cumulative effect of initially applying the date at the date
of initial application in retained earnings.
• Revenue in relation to the production of generic Commercial Off The Shelf (“COTS”) products (such as the GenFly, GenSkills
and IAMT) is now recognised on completion of the contract, delivery of the product, or upon a contractual acceptance mile-
stone, rather than throughout the duration of the contract.
• Costs incurred to date on COTS products are shown as work-in-progress held on the Consolidated Statement of Financial
Position at cost. Costs comprise of directly attributable costs such as labour, subcontractor and materials.
48
Pennant International Group PLC Annual Report 2018
STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED
IN THE FINANCIAL YEAR ENDED 31 DECEMBER 2018
• Revenue in relation to engineered-to-order solutions (such as the Wildcat trainers for the MOD) continued to be recognised
on a percentage of costs completed basis.
• Revenue on services contracts is recognised over time as the customer receives the service.
• The conversion to IFRS 15 has no impact or is anticipated, on the lifetime revenue and profitability of contracts or the timing
of cash receipts, which are determined by the terms and conditions of the contracts.
•
In compliance with the standard, Pennant has reported revenue and profit for 2018 on certain off the shelf Technical Training
Solutions contracts where the relevant work was carried out, costs incurred, and revenue and profit recognised during prior
financial years but where the completion, acceptance or delivery of the relevant goods under those contracts occurred
during 2018. A corresponding adjustment amounting to £3,151,644 has been made through the Company’s reserves as
shown in the Consolidated Statement of Changes in Equity.
• Had the full retrospective method been applied, the impact of the adoption would have been a reduction in 2017 reported
revenue and cost of sales of £7,023,595 and £3,871,951. The impact on the balance sheet would have been an increase in
inventory of £3,871,951 and a credit to contract asset and liability of £4,250,477 and £2,773,118 respectively.
The adoption of the following mentioned standards, amendments and interpretations in future years are not expected to have a
material impact on the Group’s financial statements with the exception of IFRS16 ‘Leases’ whose impact is disclosed below:
•
•
•
•
•
•
•
•
•
‘Annual Improvements to IFRS Standards 2015–2017 Cycle,’
1 January 2019
‘Prepayment Features with Negative Compensation (Amendments to IFRS 9)’ 1 January 2019
‘Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)’ 1 January 2019
‘Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)’
1 January 2019
IFRIC 23 ‘Uncertainty over Income Tax Treatments’
IFRS 16 ‘Leases’
‘Definition of a Business (Amendments to IFRS 3)’
1 January 2019
1 January 2019
1 January 2020
‘Definition of Material (Amendments to IAS 1 and IAS 8)’
1 January 2020
IFRS 17 ‘Insurance Contracts’
1 January 2021
IFRS 16 – LEASES
We anticipate that the standard will impact almost all commonly used financial metrics including gearing ratio, current ratio,
asset turnover, EBITA, operating profit, EPS and operating cash flows.
The Group anticipates that the adoption of the above standard will create an asset of circa £800,000 and an equal liability on the
balance sheet, thereafter the amortisation profile of the asset and liability will be different but not materially so.
49
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
3 ACCOUNTING POLICIES
REVENUE RECOGNITION
The financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
The financial statements have been prepared on the
historical cost basis or a revaluation basis where indicated.
The principal accounting policies set out below have been
consistently applied to all periods presented.
GOING CONCERN
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company
and the Group have adequate resources to continue
in operational existence for the foreseeable future. In
reaching this conclusion the Directors have considered the
financial position of the Group, its cash, liquidity position
and borrowing facilities together with its forecasts and
projections for 18 months from the reporting date that
take into account reasonably possible changes in trading
performance and post year end events such as acquisition
and share issue. The going concern basis of accounting has
therefore continued to be adopted in preparing the financial
statements.
BASIS OF CONSOLIDATION
The financial statements incorporate the results of the
Company and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company has
power to govern the financial and operating policies of the
investee entity so as to obtain benefits from its activities.
Where necessary, adjustments are made to the results of
subsidiaries to bring accounting policies used into line with
those used by the Group.
Technical training solutions – engineered solutions
Where the outcome of an engineered solution can be
estimated reliably, revenue and costs are recognised by
reference to the stage of completion of the construction
activity at the reporting date. This is normally measured
by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs,
except where this would not be representative of the stage of
completion. Variations in contract work, claims and incentive
payments are included to the extent that they have been
agreed with the customer.
Where the outcome of an engineered solution cannot be
estimated reliably, contract revenue is recognised to the
extent of contract costs incurred where it is probable they
will be recoverable. Contract costs are recognised as
expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an
expense immediately.
Technical training solutions – commercial off the shelf
Revenue is recognised upon customer acceptance of the
product in accordance with the relevant contract.
Technical support services
Revenues arising from the support contracts provided to
customers are invoiced in advance but recognised as revenue
across the period to which the support agreements relate.
Amounts not taken to revenue at a period end are shown in
the statement of financial position as a contract liability.
All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Omega PS – licences and support contract
BUSINESS COMBINATIONS AND GOODWILL
Acquisitions of subsidiaries and businesses are accounted
for using the acquisition method. The assets and liabilities
and contingent liabilities of the subsidiaries are measured
at their fair value at the date of acquisition. Any excess of
cost of acquisition over fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of
cost of acquisition below the fair value of the identified net
assets acquired (i.e. discount on acquisition) is credited in
profit or loss in the period of acquisition. Goodwill arising
on consolidation is recognised as an asset and reviewed for
impairment at least annually. Any impairment is recognised
immediately in profit or loss account and is not subsequently
reversed. Acquisition related costs are recognised in the
income statement as incurred.
Revenues arising from the Omega PS licences are recognised
at the point of acceptance with the associated maintenance
contract being invoiced in advance but recognised as
revenue across the period to which the maintenance support
agreements relate. Amounts not taken to revenue at a
period end are shown in the statement of financial position
as contract liability.
Omega PS – consultancy
Revenue is recognised on a time and materials basis on the
basis of the amount which the group has the right to invoice.
50
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
LEASES
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognised as assets
of the Group at their fair value or, if lower at the present
value of the minimum lease payments, each determined at
the inception of the lease. The corresponding liability to the
lessor is included in the balance sheet as a finance lease
obligation.
Lease payments are apportioned between finance expenses
and a reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance expenses are recognised immediately in
profit or loss.
Rentals payable under operating leases are charged to
income on a straight-line basis over the term of the relevant
lease.
FOREIGN CURRENCY
The individual financial statements of each group company
are presented in the currency of the primary economic
environment in which it operates (its functional currency).
For the purpose of the consolidated financial statements,
the results and financial position of each group company
are expressed in pound sterling, which is the functional
currency of the Company, and the presentation currency for
the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the Group
Company’s functional currency (foreign currencies) are
recorded at rates of exchange prevailing on the dates of the
transactions. At the reporting date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Non-
monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at
the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in foreign
currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are
included in profit or loss for the period. Exchange differences
arising on the retranslation of non-monetary items carried
at fair value are included in profit or loss for the period
except for differences arising on the retranslation of non-
monetary items in respect of which gains and losses are
in equity. For such non-monetary
recognised directly
items, any exchange component of the gain or loss is also
recognised directly in equity.
For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on
the reporting date. Income and expense items are translated
at the average exchange rates for the period, unless
exchange rates fluctuate significantly during the period, in
which case the exchange rates at the date of transactions
are used. Exchange differences arising, if any, are classified
as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised as income and
expense in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rates.
TAXATION
The tax expense represents the sum of the tax currently
payable and deferred tax. The tax currently payable is based
on taxable profit for the year. Taxable profit differs from the
net profits as reported on the income statement because
it excludes items of income and expense that are taxable
or deductible in other years and it further excludes items
that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
tax
liabilities are generally recognised
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method.
for
Deferred
all temporary differences and deferred tax assets are
recognised to the extent that it is probable that the taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax
liabilities are recognised for temporary
differences arising on investments in subsidiaries and
interest in joint ventures, except where the Group is able to
control the reversal of the temporary differences and it is
probable that the temporary differences will not reverse in
the foreseeable future.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or at least
realised based on the tax rates that have been enacted or
51
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
substantively enacted at the reporting date. Deferred tax is
charged or credited in the income statement, except when
it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt within equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
WARRANTY PROVISIONS
Warranty Provisions are made in respect of contractual
obligations and warranties based on the judgement of
management taking into account the nature of the claim or
contractual obligation, the range of possible outcomes, past
experience and any mitigation.
SHARE-BASED PAYMENT
The Group issues equity-settled share-based payments to
certain employees. Equity-settled share-based payments are
measured at fair value (excluding the effect of non-market-
based vesting conditions) at the date of grant. The fair value
determined at the date of grant is expensed on a straight-
line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest and adjusted for
the effect of non-market based vesting conditions.
Fair value is measured by use of an option pricing model.
The model has been adjusted, based on management’s
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural conditions.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (except for land and buildings)
are stated at cost less accumulated depreciation and any
recognised impairment loss. Depreciation is charged to
write off the cost of assets over their estimated useful lives
on the following bases:
Freehold land
Freehold buildings
Nil
}
Net book value at 1 January 2007
being written off over 35 years on
a straight-line basis
Plant and equipment
10% to 25% of cost per annum
Computers
Motor Vehicle
33.33% of cost per annum
25% of cost per annum
Land and buildings held for use in the production or supply
of goods or services, or for administrative purposes, are
stated in the balance sheet at their revalued amounts, being
the fair value at the date of revaluation, less any subsequent
accumulated depreciation and subsequent accumulated
impairment
losses. Revaluations are performed with
sufficient regularity such that the carrying amount does not
differ materially from that which would be determined using
fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such
land and buildings is credited to the properties revaluation
reserve, except to the extent that it reverses a revaluation
decrease for the same asset previously recognised as
an expense, in which case the increase is credited to the
income statement to the extent of the decrease previously
expensed. A decrease in carrying value amount arising on
the revaluation of such land and buildings is charged as an
expense to the extent that it exceeds the balance, if any, held
in the properties revaluation reserve relating to a previous
revaluation of that asset.
An annual transfer from the asset revaluation reserve
to retained earnings is made for the difference between
depreciation based on the revalued carrying amount of the
asset and depreciation based on the asset’s original cost.
Additionally, accumulated depreciation as at the revaluation
date is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued amount
of the asset. Upon disposal, any revaluation reserve relating
to the particular asset being sold is transferred to retained
earnings.
INTERNALLY-GENERATED INTANGIBLE ASSETS
An internally-generated intangible asset arising from the
Group’s development activities is capitalised and held as an
intangible asset in the statement of financial position when
the costs relate to a clearly defined project; the costs are
separately identifiable; the outcome of such a project has
been assessed with reasonable certainty as to its technical
feasibility and its ultimate commercial viability; the aggregate
of the defined costs plus all future expected costs in bringing
the product to market is exceeded by the future expected
sales revenue; and adequate resources are expected to exist
to enable the project to be completed. Internally-generated
intangible assets are amortised over their useful lives,
normally three years, from completion of development.
Where no internally-generated intangible asset can be
recognised, development expenditure is recognised as an
expense in the income statement in the period in which it
is incurred.
INTANGIBLE ASSETS
Intangible assets are stated at cost less accumulated
amortisation and any
loss.
Amortisation is charged to write off intangible assets on a
straight-line basis over their estimated useful lives on the
following basis:
impairment
recognised
Software development costs 33.33% of cost per annum
The amortisation of
administration expenses
Statement.
intangible assets
is
included
in
the Consolidated
in
Income
52
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
INVENTORIES
Inventories are stated at the lower of cost and net realisable
value. Costs comprise direct materials and, where
applicable, direct labour costs and overheads that have been
incurred in bringing the inventories to their present location
and condition. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs
to be incurred in marketing, selling and distribution.
FINANCIAL INSTRUMENTS
The Group classifies financial
their
component parts, on initial recognition as a financial asset
or a financial liability.
instruments, or
Trade and other receivables
Trade and other receivables are measured at
initial
recognition at fair value, and subsequently measured
at amortised cost using the effective interest method.
The Group assesses possible increase in credit risk for
financial assets measured at amortised cost at the end of
each reporting period. For trade receivables the simplified
approach is used, and the loss allowance is measured at the
estimate of the lifetime expected credit losses. The amount
of any loss allowance is recognised in profit or loss.
Cash and cash equivalents
Cash and cash equivalents are recognised as financial
assets. They comprise cash held by the Group and short
term bank deposits with an original maturity date of three
months or less.
Trade payables
Trade payables are initially recognised as financial liabilities
measured at fair value, and subsequent to initial recognition
measured at amortised cost.
Bank borrowings
Interest bearing bank loans, overdrafts and other loans are
recognised as financial liabilities and recorded at fair value,
net of direct issue costs. Finance costs are accounted for on
an amortised cost basis in the income statement using the
effective interest rate.
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY
SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies,
which are described in note 3, the Directors are required to
make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other
factors considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both
current and future periods.
The following are the critical judgements and estimations
that the Directors have made in the process of applying
the Company’s accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements.
CRITICAL ACCOUNTING JUDGEMENTS
Revenue recognition
A significant proportion of the Group’s revenue derives
from construction contracts. The Directors are satisfied
that revenue is recognised when, and to the extent that, the
group obtains the right to consideration which is derived on
a contract-by-contract basis from the stage of completion of
the contract activity at the reporting date. This is measured
by the proportion that contract costs incurred for work
performed to date bear to the estimated total contract cost.
Judgement has been required in the estimation of the total
costs of each contract. The Directors estimate the standalone
selling at price at contract conception based on products
supplied in similar circumstances to similar customers.
Capitalisation of development costs
The capitalisation of development costs includes judgements
over when the requirements of IAS38 intangible assets is
met. This includes confirmation that the asset is technically
and commercially feasible and the Group can demonstrate a
market for the product, which supports its future economic
benefits. This is confirmed by information received through
the sales team from existing and potentially new customers.
53
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Deferred tax asset recognition
The recognition of deferred tax assets (see note 26) is based upon whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine
the future taxable profits, reference is made to the latest available profit forecasts.
Significant items on which the Group has exercised accounting judgement include recognition of deferred tax assets in respect of
tax losses in Pennant International Limited both at the current year end and on the impact of the adoption of IFRS15. Deferred tax
has therefore been recognised at both dates based on the amount of taxable profits in the profit forecasts.
KEY SOURCE OF ESTIMATION UNCERTAINTY
Recoverability of internally-generated intangible asset
During the year, management reconsidered the recoverability of its internally-generated intangible asset which is included in
its balance sheet at £1,462,405 (2017: £174,520). The products continue to progress in a very satisfactory manner, and customer
reaction has reconfirmed management’s previous estimates of anticipated revenues from the project. Key judgements made in
estimating the recoverability of intangible assets are revenue growth and useful life of individual asset.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which
goodwill has been allocated. The value in use calculation, as described in note 15, requires estimates of the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. The carrying
amount of goodwill at the balance sheet date was £951,939 (2017: £962,133) and the review has been carried out by the directors,
the review including sensitivity analysis has shown no impairment.
54
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
5 REVENUE
An analysis of the Group’s revenue is as follows:
Technical Training Solutions
Technical Support Services
Omega PS
Investment income (note 11)
2018
£
13,744,718
3,074,490
4,250,015
2017
£
9.660,779
4,018,011
4,391,170
21,069,223
18,069,960
10,857
5,371
21,080,080
18,075,331
In the case of Technical Training Solutions, the customer pays a fixed amount based on a payment schedule. The performance
obligation in relation to off the shelf training products is satisfied upon customer acceptance and in relation to engineered to
order solutions upon percentage of completion based on cost. Technical support services and Omega PS licences and supports
are invoiced in advance of the contract period with the performance obligation being satisfied over the contract period. Omega PS
consultancy services are invoiced on a monthly basis in arrears based on time and material. If the services rendered by the Group
exceed the payment, a contract asset is recognised, if the payments exceed the services rendered a contract liability is recognised.
6 SEGMENT INFORMATION
The operating segments that are regularly reviewed by executive management in order to allocate resources to segments and to
assess performance are UK, North America and Australasia as these represent the way the Group reports financial performance
and position internally. The accounting policies of the reporting segments are the same as those adopted by the Group and set
out in note 3.
6.1 Segment revenues and results
UK
North America
Australasia
Inter-segment sales
UK
North America
Australasia
External sales
Net unallocated corporate receipts
Net finance income / (costs)
Profit before tax
Segment revenue
Segment profit
2018
£
2017
£
2018
£
17,538,114
14,939,222
2,874,029
3,712,642
1,581,123
3,742,265
1,284,662
165,983
102,743
22,831,879
19,966,149
3,142,755
2017
£
1,583,444
125,219
5,344
1,714,007
(463,932)
(952,818)
(36,844)
-
(1,261,880)
(943,371)
21,069,223
18,069,960
26,725
9,157
92,066
2,678
3,178,637
1,808,751
Inter-segment sales are made on an arm’s length basis.
Technical Training Solutions and Technical Support Services are only performed by the UK Segment, with Omega PS being
performed by all three segments.
55
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
6.2 Segment assets and liabilities
Segment assets
UK
North America
Australasia
Eliminations on consolidation
Unallocated
Consolidated assets
Segment liabilities
UK
North America
Australasia
Eliminations on consolidation
Unallocated
Consolidated liabilities
6.3 Other segment information
United Kingdom
North America
Australasia
6.4 Geographical information
2018
£
16,625,498
2,291,457
1,103,405
20,020,360
(1,469,702)
106,477
18,657,135
6,183,905
297,721
299,828
6,781,454
(2,287,784)
125,454
4,619,124
2017
£
13,532,447
2,182,825
994,420
16,709,692
(587,140)
815,113
16,937,665
2,991,626
272,747
256,291
3,520,664
-
88,874
3,609,538
Depreciation and amortisation
Additions to non-current assets
2018
£
508,869
6,253
9,179
524,301
2017
£
495,834
4,841
12,681
513,356
2018
£
2017
£
5,125,878
1,492,928
-
19,321
8,165
8,103
5,145,199
1,509,196
The Group operates in three geographical areas – United Kingdom, North America and Australasia.
The Group’s revenue from external customers and information about its non-current assets by geographical location are detailed
below.
United Kingdom
North America
Australasia
Revenue from external customers
Non-current assets*
2018
£
17,074,182
3,675,798
319,243
21,069,223
2017
£
13,986,414
3,742,262
341,284
18,069,960
2018
£
9,231,096
15,955
254,526
9,501,577
2017
£
4,614,799
10,695
270,538
4,896,032
* Non-current assets excluding financial instruments and deferred tax assets.
56
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
6.5 Information about major customers
Included in the revenues of each segment are the following sales to individual external customers amounting to 10% or more of
the Group’s revenues.
United Kingdom
Customer 1
Customer 2
North America
Customer 3
7 STAFF COSTS
The aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs (note 32)
2018
£
2017
£
7,747,603
3,472,963
3,446,250
4,128,510
3,362,350
3,273,152
2018
£
2017
£
6,568,032
6,084,710
585,399
380,127
591,793
304,326
7,533,558
6,980,829
The average number of persons, including Executive Directors employed by the Group during the year was:
Number
Number
Office and management
Production
Selling
8 OPERATING PROFIT FOR THE YEAR
Operating profit for the year has been arrived at after charging:
Net foreign exchange loss/ (gain)
Research and development costs*
Amortisation of intangible assets
Depreciation of property, plant and equipment
Share-based payment (note 31)
* Of these research and development costs, £1,024,984 were capitalised (2017: £174,520)
22
103
10
135
2018
£
5,416
1,480,180
154,489
369,812
103,983
16
90
9
115
2017
£
(45,683)
311,636
291,816
221,540
73,385
57
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
9 AUDITOR REMUNERATION
Fees payable to the company’s auditor for:
The audit of the annual financial statements
-
-
- Non Audit fees -other services
The audit of the company’s group undertakings
Total audit fees
10 FINANCE COSTS
Interest expense for bank overdraft
Other interest expense
11 FINANCE INCOME
Income from bank deposits
Other interest receivable
2018
£
30,000
25,000
2,200
57,200
2018
£
166
1,534
1,700
2018
£
10,857
-
10,857
2017
£
27,000
28,000
2,200
57,200
2017
£
2,693
-
2,693
2017
£
4,285
1,086
5,371
58
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
12 TAXATION
Recognised in the income statement
Current UK tax expense
Foreign tax
Adjustment in respect of prior tax years foreign
In respect of prior years
Deferred tax expense relating to origination and reversal of
temporary differences
Deferred tax prior year adjustment
Exchange rate difference
Total tax expense
2018
£
-
103,819
9,770
5
113,594
(84,463)
3,581
-
32,712
2017
£
52,218
34,385
-
(3,511)
83,092
189,398
-
2,919
275,409
Reconciliation of effective tax rate
Profit before tax
3,178,641
1,809,751
Tax at the applicable rate of 19.00% (2017: 19.25%)
604,199
348,378
Income not taxable for tax purposes
Tax effect of expenses not deductible in determining taxable profit
Additional deduction for R&D expenditure
Foreign tax credits
Share Option deduction
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Effect of lower rate of deferred tax
Losses arising not recognised in deferred tax
Deferred tax not recognised
Effect of adjustments for prior years
Other differences
Total tax expense
(598,812)
88,885
(365,604)
30,125
(79,933)
21,329
(9,852)
-
340,001
13,351
(10,977)
32,712
-
19,788
(77,974)
2,250
-
-
8,853
(40,612)
(2,169)
-
16,895
275,409
13 DIVIDENDS
No dividends were paid during the year (2017: £NIL). No final dividend will be proposed at the Annual General Meeting (2017:
£NIL).
59
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
14 EARNINGS PER SHARE
Earnings per share has been calculated by dividing the net profit attributable to equity holders by the weighted average number
of ordinary shares in issue during the year as follows:
Profit after tax attributable to equity holders
Weighted average number of ordinary shares in issue during the year
Diluting effect of share options
Diluted average number of ordinary shares
2018
£
2017
£
3,145,925
1,533,342
Number
Number
33,133,533
32,943,533
3,168,134
2,752,096
36,301,667
35,695,629
On 1 February 2019, the Company allotted and issued 2,337,160 new ordinary shares of 5p each. Had these shares been issued
prior to 31 December 2018, the basic earnings per share would have been 8.87p and the diluted earnings per share would have
been 8.29p.
15 GOODWILL
At 1 January 2017
Currency translation
At 1 January 2018
Currency translation
At 31 December 2018
£
964,159
(2,026)
962,133
(10,194)
951,939
Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units (“CGUs”) that are expected to
benefit from that business combination. The carrying amount of goodwill has been allocated as follows:
Cash generating unit:
Pennant International Ltd
Software – North America & Australasia
2018
£
583,900
368,039
951,939
2017
£
583,900
378,233
962,133
The Group tests goodwill annually for impairment. The recoverable amounts of the CGU’s are determined from value in use
calculations. The Group prepares cash flow forecasts for the following 12 months derived from the most recent annual financial
budgets approved by the management and extrapolates cash flows for a further 3 years based on a growth rate of 10.0% (2017:
3.0%). These forecast cash flows are discounted at 12% per annum (2017: 10% per annum) to provide the value in use for each
CGU.
Key assumptions are based on past experience and external sources. No impairment of goodwill has been recorded in previous
years and the most recent tests confirm no impairment. The Directors have assessed the sensitivity of the assumptions detailed
above and consider that it would require significant adverse variance in any of the assumptions to reduce fair value to a level
where it matched the carrying value.
60
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
16 OTHER INTANGIBLE ASSETS
Cost
At 1 January 2017
Currency translation
Additions
At 1 January 2018
Currency translation
Additions
At 31 December 2018
Amortisation
At 1 January 2017
Currency translation
Charge for the year
At 1 January 2018
Currency translation
Charge for the year
At 31 December 2018
Carrying amount
At 31 December 2018
At 31 December 2017
Software
£
62,357
(261)
52,588
114,684
(1,055)
191,791
305,420
18,577
(237)
39,816
58,156
(1,028)
50,505
Development
costs
£
907,753
-
174,520
Total
£
970,110
(261)
227,108
1,082,273
1,196,957
-
1,391,969
2,474,242
(1,055)
1,583,760
2,779,662
655,753
674,330
-
252,000
907,753
-
103,984
(237)
291,816
965,909
(1,028)
154,489
107,633
1,011,737
1,119,370
197,787
56,528
1,462,505
1,660,292
174,520
231,048
During 2018 the Group capitalised £1,391,969 of development costs in relation to the development of nine new products, these
costs will be amortised over a three-year period.
61
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
17 PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
£
Fixtures and
equipment
Motor vehicles
£
£
Total
£
Cost / Valuation
At 1 January 2017
Currency translation
Additions
At 1 January 2018
Currency translation
Additions
Disposals
2,227,398
-
878,079
3,105,477
-
2,693,613
-
1,940,689
(1,053)
404,009
2,343,645
(3,471)
867,826
(11,517)
At 31 December 2018
5,799,090
3,196,483
39,586
42,657
4,210,744
694
-
43,351
(3,765)
-
-
10,253
(1,108)
4,139
13,284
(407)
3,425
-
(359)
1,282,088
5,492,473
(7,236)
3,561,439
(11,517)
9,035,159
1,568,296
(214)
221,540
1,789,622
(4,821)
369,812
(8,800)
120,198
1,437,845
-
79,606
199,804
-
107,743
-
307,547
894
137,795
1,576,534
(4,414)
258,644
(8,800)
1,821,964
16,302
2,145,813
5,491,543
2,905,673
1,374,519
767,111
23,284
30,067
6,889,346
3,702,851
Depreciation
At 1 January 2017
Currency translation
Charge for year
At 1 January 2018
Currency translation
Charge for year
Disposals
At 31 December 2018
Carrying amount
At 31 December 2018
At 31 December 2017
Land and buildings were revalued at 20 October 2017 to £2,800,000 by Hutchings & Thomas, independent valuers not connected
with the Group, on the basis of market value. The valuation conforms to International Valuation Standards and was based on
recent market transactions on arm’s lengths terms and rental yields for similar properties. This valuation equated to the carrying
value at the time, so no gain or loss was realised on revaluation. The directors have concluded that there is no material difference
between the fair value of land and buildings and the carrying value at 31 December 2018.
Within the value stated for land and buildings are assets under construction totalling £402,683 (2017: £620,000).
At 31 December 2018, had the land and buildings of the Group been carried at historical cost less accumulated depreciation and
accumulated impairment losses, their carrying amount would have been approximately £5.03 million (2017: £2.42 million).
The revaluation surplus is disclosed in the Statement of Changes in Equity. The revaluation surplus arises in a subsidiary and
cannot be distributed to the parent due to legal restrictions in the country of incorporation.
All of the Group’s properties are categorised as Level 2 in the fair value hierarchy as defined by IFRS 13 Fair Value Management.
There are no transfers of properties between Levels 1, 2 and 3 during the year ended 31 December 2018.
62
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
18 INVENTORIES
Raw materials and consumables
Work in Progress
19 CONTRACT ASSETS
Contracts in progress:
Contract Assets (note 20)
Contract Liabilities (note 22 & 25)
2018
£
160,212
1,763,427
1,923,639
2017
£
74,629
-
74,629
2018
£
2017
£
1,891,527
4,901,013
(1,949,836)
(1,279,182)
( 58,309)
3,621,831
The amount of revenue recognised in 2018 that was included in the 2017 contract liability balance was £1,272,857. The contract
asset has decreased due to Generic Off the Shelf products being recognised in Inventories upon adoption of IFRS 15.
20 TRADE AND OTHER RECEIVABLES
Trade receivables
Contract Assets (note 19)
Other receivables
VAT receivable
Prepayments and accrued income
2018
£
2,503,726
1,891,527
2,579
277,755
508,946
2017
£
4,844,785
4,901,013
2,561
-
405,291
5,184,533
10,153,650
There are no unimpaired trade receivables that are past due as at the reporting date.
No receivables have been written off as uncollectible during the year (2017: £NIL) and it has not been necessary to recognise any
impairment loss under the expected lifetime loss model.
63
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
21 CASH AND CASH EQUIVALENTS
Bank
Petty cash
2018
£
2017
£
1,845,644
1,498,936
3,310
3,719
1,848,954
1,502,655
Cash and cash equivalents comprise cash held by the Group and short-term deposits with an original maturity date of three
months or less. The carrying amount approximates their fair value.
22 TRADE AND OTHER PAYABLES
Contract Liabilities (note 19)
Trade payables
Taxes and social security costs
Accruals
2018
£
1,926,731
1,859,029
527,279
165,000
2017
£
1,272,857
931,498
464,351
264,151
4,478,039
2,932,857
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
23 OBLIGATIONS UNDER FINANCE LEASES
Amounts payable
Within 1 year
Within 2 to 5 years inclusive
Less future finance charges
Minimum payments
Present value of minimum
payments
2018
£
7,738
21,525
(3,530)
25,733
2017
£
8,109
30,055
(6,324)
31,840
2018
£
5,350
20,383
-
25,733
2017
£
4,945
26,895
-
31,840
Carrying amount of assets subject to finance lease:
Property, plant and equipment
19,996
23,950
The Group’s obligations under finance leases are secured by the lessor’s rights to the leased assets.
24 BORROWINGS
The Group has available unused bank overdraft facilities of £3,000,000 (2017: £1,500,000). Any overdraft arising from the facility
is repayable on demand and carries interest at 2.00% (2017: 2.00%) plus the bank’s base rate. Any facilities used are secured by
fixed and floating charges over the assets of Pennant International Group plc, Pennant International Limited, Pennant Software
Services Limited and Pennant Support & Development Services Limited (formerly known as Pennant Information Services
Limited) and by cross-guarantees between those companies.
64
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
25 TRADE AND OTHER PAYABLES NON CURRENT
2018
£
23,105
23,105
2017
£
6,325
6,325
Total
£
195,364
(189,397)
(3,184)
2,783
80,882
116,407
(1,640)
198,432
2016
£
482,989
(287,625)
195,364
Contract Liabilities
26 DEFERRED TAX
At 1 January 2017
Credit/(charge) to income
Exchange differences
At 1 January 2018
Credit/(charge) to income
Credit/(charge) to equity
Exchange differences
At 31 December 2018
Accelerated tax
depreciation
Other temporary
differences
£
(283,267)
(17,063)
-
(300,330)
(259,796)
-
-
(560,126)
£
31,022
13,805
(4,087)
40,740
12,803
116,407
(1,640)
168,310
Tax losses
£
447,609
(186,139)
903
262,373
327,875
-
-
590,248
In the statement of financial position deferred assets and liabilities are shown without any set off as follows:
Deferred tax assets
Deferred tax liabilities
2018
£
198,432
-
198,432
2017
£
310,699
(307,916)
2,783
Deferred tax has been provided at 17% (2017: 17%), the corporation tax rate that will be effective from 1 April 2020.
At the reporting date the Group had unused tax losses of approximately £5.3 million (2017: £0.3 million) available for set-off
against future profits. No deferred tax asset has been recognised in respect of some of these available losses due to the un-
predictability of future profit streams in some of the subsidiaries in which they arise. The tax losses are available indefinitely for
offsetting against future taxable profits.
27 WARRANTY PROVISIONS
Warranty provisions
2018
£
2017
£
50,000
250,000
The Group has recognised a warranty provision in respect of contractual obligations on one major programme. During the period,
the Group incurred costs of £30,000 in relation to warranty claims and released £170,000 of the provision brought forward from
2017. The Group expects the remaining provision to be utilised or released within the next two years.
65
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
28 SHARE CAPITAL
Authorised, issued and fully paid
33,703,540 ordinary shares of 5p each (2017: 32,943,540)
2018
£
2017
£
1,685,177
1,685,177
1,647,177
1,647,177
The B and C shares were repurchased by the Company in 2017 and cancelled and there are no shares of such classes now in issue
(the Company’s entire issued share capital now comprises ordinary shares of 5p each only). The Company’s ordinary shares carry
one vote per share, have equal rights to participate in dividends, are freely transferable and are not redeemable.
During October 2018 760,000 5p ordinary shares were issued for cash consideration of £529,299.
29 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS
Cash generated from operations
Profit for the year
Finance income
Finance costs
Income tax charge
Depreciation of property, plant and equipment
Amortisation of other intangible assets
Profit on disposal of property, plant and equipment
Share-based payment
Operating cash flows before movement in working capital
Decrease/(increase) in receivables
Decrease/(increase) in inventories
(Decrease) in payables and provisions (notes 22,25 and 27)
Cash generated from operations
Tax paid
Interest paid
2018
£
2017
£
3,145,925
1,533,342
(10,857)
1,700
32,712
154,489
369,812
1,117
(5,371)
2,693
275,409
221,540
291,816
-
103,983
73,385
3,798,881
2,392,814
718,640
(2,333,522)
2,022,941
(1,411,156)
5,129,306
(115,483)
(1,700)
(74,629)
(966,646)
(981,983)
(3,860)
(2,693)
Net cash generated/(used) in operations
5,012,123
(988,536)
66
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
30 OPERATING LEASE ARRANGEMENTS
Lease payments under operating leases recognised
as an expense in the year
2018
£
2017
£
294,596
273,911
The Group had commitments under non-cancellable operating leases as follows:
Land and buildings
2018
£
149,687
288,824
77,500
-
516,011
2017
£
154,038
352,595
-
-
Other
2018
£
102,503
132,302
-
-
2017
£
61,915
74,162
-
-
506,633
234,805
136,077
Within one year
In the second to fifth years
In the sixth to tenth years
After ten years
The Group has no operating leases longer than 10 years.
31 SHARE-BASED PAYMENT
The Company operates an EMI share option scheme for certain employees of the Group (the “Scheme”) and has also granted
unapproved options to certain Directors. Options granted under the Scheme are exercisable at the price equal to the quoted mid-
market price at the close of business on the date of grant while unapproved options are exercisable in accordance with the terms
of the relevant agreement (further details of which are contained in the Remuneration Report). Exercise in all cases is subject
to non-market conditions as options are forfeited if the employee leaves the Group before the options vest. Details of the share
options outstanding during the year are as follows:
Options granted under the Scheme
2018
Number of
share options
Weighted
average
exercise price
2017
Number of share
options
Weighted average
exercise price
Outstanding at 1 January 2018
Granted during the year
Exercised during the year
Outstanding at 31 December 2018
Exercisable at 31 December 2018
2,207,619
655,455
(760,000)
2,103,074
1,247,619
65.58p
112.36p
69.64p
80.42p
63.63p
2,007,619
200,000
-
2,207,619
1,010,000
65.58p
80.50p
-
66.93p
59.79p
The option prices for the outstanding share options are:
20 – 50p
51 – 80p
81 – 100p
101 – 135p
390,000
150,000
1,183,074
380,000
The fair value of the options granted during the year under the Scheme is £104,873. The weighted average fair value is 16p.
67
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Unapproved Options
Outstanding at 1 January 2018
Granted during the year
Outstanding at 31 December 2018
Exercisable at 31 December 2018
2018
2017
Number of share
options
Weighted
average
exercise price
Number of
share options
Weighted
average
exercise price
825,969
-
825,969
300,000
55.18p
-
55.18p
55.50p
300,000
525,969
825,969
-
55.50p
55.00p
55.18p
-
The options outstanding at 31 December 2018 (unapproved and those under the Scheme) had a weighted average remaining
contractual life of 7.12 years (2017: 7.32 years).
The Group recognised total expenses related to equity-settled share-based payment transactions of £103,983 (2017: £73,385).
The inputs to the Black-Scholes model for all options granted in 2018 were as follows:
• Share price at date of grant 112.36p
• Exercise price 112.36p
• Expected volatility (based on historic volatility) 20%
• Risk free rate 1.27%
• Expected dividend yield 2.9%
• Option life 10 years
• Vesting period 3 years
32 EMPLOYEE BENEFITS
Defined contribution
The Group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the
Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds.
Contributions payable by the Group for the year
2018
£
2017
£
380,127
304,326
68
Pennant International Group PLC Annual Report 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
33 FINANCIAL INSTRUMENTS
33.1 Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
shareholders. The capital structure of the Group consists of cash and cash equivalents and equity comprising issued share
capital, reserves and retained earnings. The Group is not subject to any externally imposed capital requirements.
33.2 Categories of financial instruments
Financial assets
Measured at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Measured at amortised cost
Trade and other payables
33.3 Financial risk management
2018
£
2017
£
3,293,006
1,848,954
5,141,960
5,252,637
1,502,655
6,755,292
2,551,308
1,660,000
Financial risks include market risk (principally foreign currency risk), credit risk, liquidity risk and interest risk. The Group
seeks to minimise the effect of these risks by developing and applying policies and procedures which are regularly reviewed for
appropriateness and effectiveness. The Group’s principal financial instruments comprise cash held in current accounts, trade
receivables, trade payables, other payables and borrowings that arise directly from its operations.
33.4 Foreign currency risk
The Group operates internationally giving rise to exposure from changes in foreign exchange rates. The Group’s policy permits
but does not demand that these exposures are hedged in order to fix their cost in sterling. Forward foreign exchange contracts
are entered into in respect of forecast foreign exchange transactions when the amount and timing of such transactions becomes
reasonably certain. At 31 December 2018 and 31 December 2017 the Group had no commitments under forward exchange
contracts.
The Canadian dollar, the Australian dollar and the American dollar are the main foreign currencies in which the Group operates.
The carrying amounts of the Group’s monetary assets and liabilities denominated in these currencies expressed in sterling at the
reporting date are as follows:
Canadian $
American $
Australian $
Total
Liabilities
2018
£
161,832
-
115,868
277,700
2017
£
187,015
1,202
156,295
344,512
Assets
2018
£
1,148,912
339,515
167,460
1,655,887
2017
£
1,465,791
205,014
225,653
1,896,458
69
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
The following table details the Group’s sensitivity to a 5% increase in Sterling against the relevant foreign currencies. The analysis
includes outstanding foreign currency denominated monetary items where denominated in a currency other than the functional
currency of the debtor or creditor. A positive number indicates an increase in profits and a negative number a decrease in profit.
A 5% weakening of Sterling against the relevant currencies would have an equal and opposite effect on profit.
Canadian $
American $
Australian $
33.5 Credit risk
Impact on profit
2018
£
49,354
16,976
2,580
2017
£
63,939
10,191
3,468
Credit risk refers to the risk that a customer or counterparty to a financial instrument fails to meet its contractual obligations,
resulting in financial loss to the Group, and arises principally from the Group’s receivables from customers and bank current
accounts. Major customers that wish to trade on credit terms are subject to credit verification procedures and receivable balances
are monitored on an on-going basis. The credit risk on bank current account balances is limited because the counterparties are
banks with high credit ratings assigned by international credit-rating agencies. No impairments for bad or doubtful debts have
been made. At the end of the financial year there are no material debts that are deemed to be past due.
At 31 December 2018 and 31 December 2017 there were no significant concentrations of credit risk outside of the three customers
disclosed in note 6.5. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the
statement of financial position.
33.6 Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient cash to meet its financial obligations as they fall due. The Group
ensures that sufficient cash and undrawn facilities are available to fund ongoing operations and to meet its medium-term capital
and funding obligations.
At the year end the Group had net cash funds of £1,848,954 (2017: £1,502,655) and undrawn facilities of £1,500,000 (2017:
£1,500,000). The level of the Group’s overdraft facility is reviewed annually.
The Groups financial obligations consist of trade and other payables and obligations under finance leases which are all payable
within 12 months with the exception of the non-current obligations under finance leases set out in note 23.
Trade and other payables are all payable within three months.
33.7 Interest risk
The Group has no liabilities subject to interest rate risk at the balance sheet date. However, the Group is from time to time exposed
to interest rate risk on bank overdraft. Interest is paid on bank overdraft at 2.00% (2017: 2.00%) over base rate. 1% rise/fall in
interest rates would have decreased / increased profit for the year by an immaterial amount (2017: immaterial).
70
Pennant International Group PLC Annual Report 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
34 CAPITAL COMMITMENTS
At 31 December 2018 the Group had capital commitments of £71,073 in respect of assets under construction (2017: £115,501).
35 RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
are not disclosed in this note.
Barclays Bank Plc have given performance guarantees of £738,438 (2017: £773,326), in the normal course of business, to a
customer of Pennant International Limited. These are secured by fixed and floating charges over the assets of the Company.
Remuneration of key management personnel
Amounts paid to Group directors who are the only key management personnel of the Group are set out in the Corporate Govern-
ance Report.
Dividends paid to Directors
Dividends totalling £NIL (2017: £NIL) were paid in the year in respect of ordinary shares in which the Company’s Directors had a
beneficial interest.
36 POST BALANCE SHEET EVENTS
Post year end on 6 February 2019 the Company acquired the entire issued share capital of Aviation Skills Holdings Limited, further
details regarding the acquisition are disclosed in the Strategic Report on page 15.
71
Pennant International Group PLC Annual Report 2018 COMPANY STATEMENT OF COMPREHENSIVE INCOME FOR
THE YEAR ENDED 31 DECEMBER 2018
Continuing operations
Management charges receivable
Administrative expenses
Operating profit
Finance costs
Finance income
Profit before tax
Tax charge
Profit after tax
Other comprehensive income
Notes
2018
£
2017
£
1,301,938
1,900,021
(1,275,212)
(1,807,954)
26,726
92,067
(1)
-
26,725
-
1040
93,107
(1)
(32,124)
26,724
60,983
-
-
3
4
5
Total comprehensive income attributable to equity holders
26,724
60,983
72
Pennant International Group PLC Annual Report 2018 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 31 DECEMBER 2018
Share
capital
Share
premium
Capital
redemption
reserve
Treasury
shares
Retained
earnings
Total equity
£
£
£
£
£
£
At 1 January 2017
1,649,277
2,685,971
200,000
-
3,389,020
7,924,268
Total comprehensive income for the
year
-
-
Cancellation of B and C shares
(2,100)
(8,400)
Recognition of share-based
payment
-
-
-
-
-
At 1 January 2018
1,647,177
2,677,571
200,000
Total comprehensive income for
the year
-
-
Issue of new ordinary shares
38,000
491,299
Recognition of share-based
payment
-
-
-
-
-
At 31 December 2018
1,685,177
3,168,870
200,000
-
-
-
-
-
-
-
-
60,983
60,983
-
73,385
(10,500)
73,385
3,523,388
8,048,136
26,724
26,724
-
103,982
529,299
103,982
3,654,094
8,708,141
Note: see page 46 for a description of the reserves appearing in the column headings of the table above.
73
Pennant International Group PLC Annual Report 2018 COMPANY NUMBER: 3187528
COMPANY STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2018
Non-current assets
Investment in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Amounts due from subsidiaries
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Amounts due to subsidiaries
Current tax liabilities
Total current liabilities
Net current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Total equity
Approved by the Board and authorised for issue on 11 March 2019
G R Barnes
Director
Notes
2018
£
2017
£
6
7
8
7,909,037
7,909,037
7,909,037
7,909,037
56,771
2,287,784
49,706
2,394,261
18,861
3,455,544
796,252
4,270,657
10,303,298
12,179,694
120,394
1,469,702
5,061
1,595,157
56,750
4,042,684
32,124
4,131,558
799,104
139,099
1,595,157
4,131,558
8,708,141
8,048,136
10
1,685,177
3,168,870
200,000
3,654,094
1,647,177
2,677,571
200,000
3,523,388
8,708,141
8,048,136
74
Pennant International Group PLC Annual Report 2018
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Net cash from operations
11
(1,275,845)
(1,955,177)
Notes
2018
£
2017
£
Investing activities
Dividend/interest received
Net cash from investing activities
Financing activities
Proceeds from sale of ordinary shares
Cancellation of B & C Shares
Net cash used in financing activities
4
28
28
-
-
529,299
-
529,299
1,040
1,040
-
(10,500)
(10,500)
Net cash (decrease) in cash and cash equivalents
(746,546)
(1,964,637)
Cash and cash equivalents at beginning of year
796,252
2,760,889
Cash and cash equivalents at end of year
7
49,706
796,252
75
Pennant International Group PLC Annual Report 2018 NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2018
1 ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by the Act
the separate financial statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union. The principal accounting policies adopted are the same as those set out in note 3 to the consolidated
financial statements except as noted below:
• Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
2 OPERATING PROFIT
The auditor remuneration for audit and other services is disclosed in note 9 to the consolidated financial statements.
3 FINANCE COSTS
Interest expense for bank overdraft
4 FINANCE INCOME
Bank Interest Received
5 TAX
Current tax expense
Tax charge for the year
Reconciliation of effective tax rate
Profit before tax
Tax at applicable rate 19.00% (2017: 19.25%)
Tax effect of:
Expenses that are not deductible for tax
Changes in rate on deferred tax
Group relief
Total tax charge
2018
£
1
2018
£
-
2018
£
1
1
2017
£
-
2017
£
1,040
2017
£
32,124
32,124
26,725
93,106
5,078
17,920
25,437
1
(30,515)
1
14,674
(470)
-
32,124
76
Pennant International Group PLC Annual Report 2018
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2018
6 SUBSIDIARIES
Details of the Company’s subsidiaries at 31 December 2018 are as follows:
Pennant International Limited
Registered office
Pennant Court, Staverton
Technology Park, Cheltenham
GL51 6TL
Proportion of
ownership
100%
Pennant Support & Development Services Limited
Pennant Court, as above
Pennant Software Services Limited
Pennant Court, as above
Pennant Canada Limited
Pennant Australasia Pty Limited
1400 Blair Place, Suite 100,
Ottawa, Ontario K1J 9B8, Canada
Suite 6, 334 Highbury Road,
Mt. Waverley
Victoria, 3149, Australia
100%
100%
100%
100%
Pennant Information Services Inc.
1400 Blair Place, as above
100%
The investments in subsidiaries are all stated at cost.
7 CASH AND CASH EQUIVALENTS
These comprise cash held by the company and short-term bank deposits with an original maturity of three months or less.
8 TRADE AND OTHER PAYABLES
Trade payables principally comprise amounts outstanding for services and ongoing costs. The carrying amount approximates
their fair value.
9 BORROWINGS
Details of the Group overdraft arrangements are set out in note 24 to the consolidated financial statements.
10 SHARE CAPITAL
Details are set out in note 28 to the consolidated financial statements.
77
Pennant International Group PLC Annual Report 2018
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2018
11 NOTE TO STATEMENT OF CASH FLOWS
Cash generated from operations
Profit for the year
Tax charge
Finance costs
Finance income
Share-based payment
Operating cash flows before movement in working capital
Decrease/(Increase) in receivables
(Decrease)/Increase in payables
Cash generated from operations
Tax Paid
Interest paid
Net cash generated from operations
12 FINANCIAL INSTRUMENTS
2018
£
26,724
1
1
-
103,982
130,708
2017
£
60,983
32,124
-
(1,040)
73,385
165,452
1,129,850
(2,726,097)
(2,509,338)
605,468
(1,248,780)
(1,955,177)
(27,064)
(1)
-
-
(1,275,845)
(1,955,177)
The Company’s approach to the management of capital and market risks is set out in note 33 to the consolidated financial
statements. To address its liquidity risk the Company ensures that sufficient cash and undrawn facilities are available to fund
ongoing operations and to meet its medium term capital and funding obligations. The Company is from time to time exposed to
interest rate risk on a bank overdraft. Interest is paid on its bank overdraft at 2.00% (2017: 2.00%) over base rate. 1% rise/fall in
interest rates would have decreased/ increased profit for the year by an immaterial amount (2017: immaterial). The Company is
not exposed to foreign currency risks.
CATEGORIES OF FINANCIAL INSTRUMENTS
Financial assets
Measured at amortised cost
Trade and other receivables
Amounts due from subsidiaries
Cash and cash equivalents
Financial liabilities
Measured at amortised cost
Trade and other payables
Amounts due to subsidiaries
2018
£
2017
£
56,771
2,287,784
49,706
2,394,261
120,394
1,469,702
1,590,096
18,861
3,455,544
796,252
4,270,657
56,750
4,042,684
4,099,434
78
Pennant International Group PLC Annual Report 2018
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2018
13 CONTINGENT LIABILITIES
The Company is party to a group registration for the purposes of Value Added Tax (VAT). Members of the group are jointly and
severally liable for the total tax due. The total amount of VAT payable by the group registration and not accrued in the statement
of financial position was £NIL (2017: £80,484).
14 RELATED PARTY TRANSACTIONS
The Company has provided guarantees to the bank in respect of its bank borrowings and any bank borrowings of its subsidiaries
as set out in note 24 to the consolidated financial statements.
The Company has guaranteed the payment of rent under a lease agreement for office premises occupied by a subsidiary company.
The lease runs for five years from 1 February 2015 at an annual rental of £51,135.
Other transactions with related parties consist of management charges for services provided to and by subsidiary companies as
disclosed on the face of the statement of comprehensive income.
79
Pennant International Group PLC Annual Report 2018
SHAREHOLDER INFORMATION AND FINANCIAL CALENDAR
SHAREHOLDER ENQUIRIES
If you have an enquiry about the Company’s business, or about something affecting you as a shareholder (other than queries that are
dealt with by the Neville Registrars as registrar), you should contact the Company Secretary by letter to the Company’s registered office
or by email to cosec@pennantplc.co.uk
SHARE REGISTER
Neville Registrars maintain the register of members of the Company.
If you have any questions about your personal holding of the Company’s shares, please contact Neville Registrars using the following
details:
Neville House
18 Laurel Lane
Halesowen
B63 3DA
Telephone: 0121 585 1131
If you change your name or address (or we write to you and have mis-addressed the correspondence), please notify the registrars in
writing or contact them using the details above.
FINANCIAL CALENDAR
Annual General Meeting – 1 May 2019
Expected announcement of results for the year ending 31 December 2019:
Half-year announcement - September 2019
Full-year preliminary announcement - March 2020
DAILY SHARE PRICE LISTINGS
The Financial Times - AIM
81
Pennant International Group PLC Annual Report 2018 OFFICERS AND PROFESSIONAL ADVISERS
Directors
S Moore (Chairman)
P Walker FCA (Chief Executive Officer)
D Clements
C Powell FCA
T Rice (resigned 24 September 2018)
G Barnes (appointed 1 April 2018)
J Ponsonby (appointed 1 April 2018)
Secretary
D Clements
Registered office
Pennant Court
Staverton Technology Park
Cheltenham
Gloucestershire
GL51 6TL
Company number
3187528
Auditor
Bankers
Nominated Adviser and Broker
Mazars LLP
45 Church Street
Birmingham
B3 2RT
Barclays Bank Plc
Bridgewater House
Finzels Reach
Counterslip
Bristol
BS1 6BX
W H Ireland Ltd
4 Colston Avenue
Bristol
BS1 4ST
PENNANT INTERNATIONAL GROUP PLC
COMPANY NUMBER: 3187528
WWW.PENNANTPLC.CO.UK