1
Pennant Annual Report & Accounts 2024
Annual Report
& Accounts
2024
Company Number: 03187528
sales@pennantplc.com
pennantplc.com
2
Pennant Annual Report & Accounts 2024
Contents
Financial Statements
48
Independent Auditor's report
49-55
The Group
Consolidated income statement
56
Consolidated statement of other comprehensive income
57
Consolidated statement of financial position
58
Consolidated statement of changes in equity
59-60
Consolidated statement of cash flows
61
Notes to the consolidated financial statements
62-91
The Company
Company statement of comprehensive income
92
Company statement of financial position
93
Company statement of changes in equity
94
Company statement of cash flows
95
Notes to the company financial statements
96-104
Shareholder information & financial calendar
105
Officers & professional advisers
106
Glossary
3
Pennant Overview
4-6
Group key financials
7
Chair’s statement
8-9
Chief Executive’s review
10-11
Chief Financial Officer’s review
12-15
Integrated Business Plan
16-17
Principal risks and uncertainties
18-22
About Pennant
23-31
Governance
32
Board of Directors
33-37
Audit & Risk committee
35
Remuneration committee
35
Attendance
36
Operational governance
36
Financial control
37
Remuneration report
37-41
Audit & Risk committee report
41
Directors’ report
42-45
Directors’ responsibility statement
46
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Pennant Annual Report & Accounts 2024
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Pennant Annual Report & Accounts 2024
Glossary
3
Pennant Annual Report & Accounts 2024
AGM
EASA
EBITA
EBITDA
EMAR
H1
H2
IBP
IPS
ILS
ITAR
Net Debt
OEM
Q1
Q2
Q3
Q4
Annual General Meeting
European Union Aviation Safety Agency
Earnings before interest, taxation and amortisation
Earnings before interest, taxation, depreciation & amortisation
European Military Aviation Requirements
The six months ended 30 June 2024
The six months ended 31 December 2024
Integrated Business Plan
Integrated Product Support
Integrated Logistics Support
International Traffic in Arms Regulations (US government regulation)
The result of deducting the company’s interest bearing debt from its cash position
Original Equipment Manufacturer
The three months ended 31 March 2024
The three months ended 30 June 2024
The three months ended 30 September 2024
The three months ended 31 December 2024
Maximizing operational efficiency
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Pennant Annual Report & Accounts 2024
Our Vision
To be the leading systems support and training solutions company.
Our Mission
To ensure our customers’ assets are available where they are needed,
when they are needed and that they work.
Our Strategy
• Expand, and be first to market, with our end-to-end IPS software
suite
• Grow our technical services offering, through organic growth and
acquisition
• Optimise the Training Systems business
• Deliver excellence in our customer experience
Details of the Group’s Integrated Business Plan can be found on page 16.
Strategic Report
Pennant Overview
Maximizing operational efficiency
5
Pennant Annual Report & Accounts 2024
About Pennant
Pennant International Group plc (AIM: PEN) is a technology driven, leading global
provider of system support software and services, technical services, and training
solutions. It supports its global customer base in the design, development,
operation, maintenance, and training of complex assets, to maximize operational and
maintenance efficiency.
Its key markets include Aerospace, Defence and Rail, and adjacent safety-critical
markets such as Shipping, Nuclear and Space.
Pennant Overview
Group aspirations:
•
Auxilium software to be the systems support enterprise solution of choice
•
Increase market share at an improved rate of return with a high operating cash
conversion in chosen markets
Pennant Overview
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Pennant Annual Report & Accounts 2024
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Pennant Annual Report & Accounts 2024
How We Operate
We address the market through three key segments:
“We ensure mission critical systems are where they are needed,
when they are needed and that they work.”
Systems Support Software: a key generator of recurring revenues through the provision of a suite of software
tools designed to help clients: manage and use complex data; ensure equipment availability at optimal cost; and comply
with industry standards. Our Integrated Product Support (IPS) and Integrated Logistics Support (ILS) software and
services equips customers with powerful market-leading toolsets to manage, model and utilise complex equipment
data.
Technical Services: drives repeatable revenues through expert support for users of Pennant and third-party
solutions including consultancy, support and maintenance, training and bespoke development.
Training Systems: project-based revenues relating to the design and build of hardware, software and virtual
training solutions for maintainers and operators of aircraft, ships and land systems.
Pennant is strategically focused on sustainable recurring and repeatable revenues and profitability growth, shifting
its model towards high margin software and services. Against a climate of rising defence budgets and the burgeoning
technological complexity of military, aviation and rail platforms, the demand for these solutions is expected to grow
substantially.
Pennant Overview
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Pennant Annual Report & Accounts 2024
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Pennant Annual Report & Accounts 2024
Group Key Financials
During the year we successfully completed the delivery to program milestones under
a 3-year contract with Boeing Defence UK for updates to AH Mk1 Apache training
equipment (“Apache”). Revenue recognised, in the Training Systems segment. Software
& Services (recurring and repeatable revenue) is stable at £9.6 million (2023: £9.6
million) and 69% of Group total.
Training Systems revenue of £4.2 million (2023: £6.0 million) chiefly comprises the
Apache program.
The gross profit margin for the Period of 50% (2023: 50%), represents another record
margin year for the Group and benefits from the profitable completion of the Apache
program as well as the continued strategic shift of the Group towards software-related
products and higher value services.
The reduction in adjusted(1) EBITA resulting from the lower sales year over year has been
has been partially offset by a controlled cost base, resulting in an adjusted EBITA of £1.2
million (2023: £1.8 million) and an adjusted loss before tax of £0.3 million (2023: profit
£0.6 million).
(1) Various adjusted measures of performance are used throughout the annual report and are reconciled to
statutory figures within the CFO Review on page 12.
Adjusted(1) Profit before Tax, a key measure of performance, will be our profitability
measure going forwards as this factors in the amortised cost of our investments into
R&D and specifically our core software platform - Auxilium.
The Group had net borrowings at the year-end of £2.3 million (2023: net borrowings of
£1.9 million) excluding lease liabilities.
Post year-end, the Group has taken actions to strengthen the balance sheet and ensure
that ongoing operations are appropriately funded.
The Training Systems division restructuring exercise led to the reduction in global
workforce from 140 at the end of 2023 to 121 at the end of 2024. Cash costs of the staff
reduction exercise were £0.4 million, annual cost savings are expected to be c£2.0 million
comprising staff costs, facility costs, depreciation and amortisation.
(1) Various adjusted measures of performance are used throughout the annual report and are reconciled to statutory figures within the CFO Review on page 12.
Group Key Financials
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Pennant Annual Report & Accounts 2024
Ian Dighé - Chair
Chair's
Statement
Ready to seize the Global opportunity
I’m pleased to present my first full year annual report and
accounts since being appointed Chair of Pennant International
Group plc. During the Period, Pennant has continued its
transformation into an increasingly software driven, scalable
business with an improved financial and operating structure.
This successful change positions Pennant with market leading
products in a global market, a streamlined structure, and a
focused go-to-market strategy.
Strategy
Pennant is focused on generating sustainable recurring revenues
and profitability growth, shifting its model towards high-margin
software and services with greater visibility. First and foremost,
it is expanding its market coverage through the development
of the Group’s market-leading proprietary software suite -
Auxilium - and higher value technical services.
The Group continues to seek other strategic opportunities to
partner with or acquire complementary businesses which could
accelerate the growth strategy.
Key Financials
For the year ended 31 December 2024, the Group recorded
consolidated revenues of £13.8 million (2023: £15.5 million),
again underpinned by the Group’s contracted revenue base.
For a comprehensive breakdown of the Group’s programme of
deliveries please refer to the operational review on pages 10
and 11.
The Group has maintained its gross margin for 2024 at 50%
(2023: 50%) supporting the continuing strategic shift towards
software and higher value services. As a result, the Group
posted a consolidated adjusted EBITA profit of £1.2 million
(2023: £1.8 million), which is in line with market expectations.
The Group’s net debt at the year-end was £2.3 million (2023:
net debt of £1.9 million) which reflects, amongst other things,
the continued investment in the integrated software suite,
acquisition related expenses, and expenses related to aborted
corporate activity. Post Period end, the Company realized,
subject to contract, a total of £2.0 million in cash proceeds, net of
fees, through property disposals pursuant to the restructuring,
strengthening the balance sheet.
These results reflect the costs and operational challenges of
restructuring. The restructuring is expected to enable greater
returns going forward through improved working capital cycles
and the inherent operational gearing within the business.
With structural foundations successfully laid by the new Board,
we expect to fundamentally strengthen the Group’s balance
sheet in the coming Periods.
Dividend
The Directors believe that it continues to be both prudent, and
in the Company’s and shareholders’ best interests, to retain cash
for working capital and concentrate resources on execution of
the current growth opportunities.
The Board will therefore not be recommending the payment of
a final dividend for the year ended 31 December 2024.
Our People
It has been a year of progress and change for the Company, and I
would like to thank all employees for their efforts in engineering
that success. The resilience, flexibility and ability they have
shown has underpinned the transformation I’ve detailed, and
leaves Pennant in a strong position, ready to meet the needs of
its markets. Supporting and motivating our workforce through
appropriate incentives to ensure they continue to deliver for
Pennant’s customers, remains a priority for the Board.
Chair’s Statement
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Pennant Annual Report & Accounts 2024
Our Culture
The Board is dedicated to making sure that every employee
across the Group understands and lives by Pennant’s ‘Core
Values’ (outlined in detail on page 43). These values are at the
heart of everything the Group does. They are also essential
in shaping how we approach our policies, whether driven by
legal requirements (such as anti-bribery or anti-counterfeiting
laws) or by our ethical principles (fair treatment and equality
of opportunity), treating all individuals with the respect they
deserve regardless of their position. This requires strong
leadership at all levels.
Governance
The Board is also committed to upholding its track record
of robust corporate governance. Working closely with its
advisors, it monitors governance frameworks to ensure
strong, proportionate governance throughout the Group;
this is important given the number of geographies in which
we are present. The Board has established appropriate risk
management procedures and keeps key risks to the Group
under regular, rigorous review. Further details of the Group’s
principal risks and uncertainties are provided in the Principal
Risks and Uncertainties section of the Annual Report.
Board Changes
During the Period there were a number of Board changes.
I joined the Group as a Non-Executive Director and Chair
designate with effect from 7 February 2024.
I assumed the role of Chair on 14 May 2024 on Phil Cotton
announcing his intention to relinquish the Chair and to retire
as Non-Executive Director following the Company’s Annual
General Meeting on July 17th 2024.
In July 2024, the Group announced the appointment of Jon
Kempster as Non-Executive Director and Chair of the Audit &
Risk Committee with effect from 18 July 2024.
Also, in September 2024, the Group announced the appointment
of Klaas Van Der Leest as Non-Executive Director with effect
from 3 September 2024.
On 13 August 2024, Michael Brinson, Chief Financial Officer,
resigned to pursue other opportunities and stepped down as
Director with immediate effect.
We were delighted to appoint Darren Wiggins to the Board as
Group Chief Financial Officer with effect from 9 November 2024
following a period as Interim from September 2024.
Finally, Deborah Wilkinson has confirmed that she does not
intend to stand for re-election at the 2025 AGM and will retire as
a director on that date. I am particularly grateful for her support
when, on joining the board in February 2024, I was asked to take
the Chair at short notice. Deborah’s support and contribution in
the transition phase of Pennant has been appreciated by both
the board and executive and we all wish her well in her future
endeavours.
Following this period of changes, I am highly confident that
both the Board structure and wider staff resourcing are ideally
positioned for the next stage of Pennant’s growth.
Further details on the Board members can be found in the
Governance & Risks section of this document.
Current Trading and Outlook
The strategic investment into the Auxilium software suite brings
to market a leading software solution aligned to addressing
the challenges that operators face in managing, modelling and
utilising vast amounts of complex systems data, whilst ensuring
alignment to international standards and specifications, and
enabling intelligent data-driven decisions.
Against a climate of rising defence budgets, evolving governance
requirements and the burgeoning technological complexity of
military, aviation and rail platforms, Pennant’s unique integrated
software capability offers defence forces, organisations and
OEMs the solutions needed to address these challenges; and
demand for these solutions is expected to grow substantially.
The Board believes that the launch of the Auxilium product
suite, coupled with the Group’s underlying strengths - our
long-term customer relationships with governments and major
OEMs, our specialist services, together with our quality-assured
reputation - will provide significant opportunities that we are
well positioned to pursue.
We have made a solid start to 2025 and the Board is pleased
with the buoyant bid activity to date which should set us up for
success in the current year and beyond. The board is confident
that the trading remains on track with market expectations.
Approved by the Board on 23rd April 2025
and signed on its behalf
Ian Dighé
Chair
"the Auxilium software suite brings to
market a leading software solution
aligned to addressing the challenges
that operators face."
Chair’s Statement
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Pennant Annual Report & Accounts 2024
Pennant has repositioned
In 2024 we have successfully implemented the first stages of
the Group’s strategic plan to shift towards a highly scalable
software and technical services model.
Pennant has continued to invest in its integrated software
suite and has taken decisive action to reposition the Group
and accelerate the implementation of our growth strategy.
The impact of these changes is already visible in our financial
performance, with the Group meeting the market’s expectations
for the full year.
Restructuring of Training Systems
Significant steps have been taken to streamline Pennant’s legacy
Training Systems business segment and focus investment and
resources on the growth of its Software and Technical Services
segments which provide more predictable revenue streams,
higher margins, greater scalability, and have a shorter working
capital cycle.
The workforce restructuring programme, as announced on
23 September 2024, has been completed, with a headcount
reduction of 29 roles achieved. Four commercial units at the
Staverton site have also been sold subject to contract for
consideration totaling £2.0 million net of disposal fees, with
marketing of the remainder of the site ongoing.
The Training Systems business is now focused on delivering
modifications, retrofits and overhauls to its installed base, and
has an active pipeline of such opportunities.
The Group, from 2025, has three business segments – Systems
Support Software; Technical Services; and, Training Systems –
delivered through its three core regions – EMEA, Americas and
Asia Pacific and for financial reporting purposes presented as
two cash generating units (“CGUs”) - Software & Services and
Training Systems.
Auxilium Software
In line with the Group’s strategic objectives, Pennant has sought
to grow its software capability, and has invested c. £1.4m
during the Period to significantly improve the overall customer
proposition and expand its offering.
The programme has now moved to its next phase which will see
all three of the Group’s software applications – GenS, Analyzer
and R4i – integrated into one, holistic solution - Auxilium.
Auxilium is designed to provide customers with a powerful
market-leading toolset that allows users to manage, model and
utilise vast amounts of complex systems data.
The investment into the Auxilium suite underpins Pennant’s
efforts to increase revenue from software, higher value technical
services and secure recurring contracts.
We believe Auxilium is the only fully integrated product support
tool available that combines the breadth of capability on offer
with the level of security that is expected and required in the
Group’s end markets.
Moreover, Pennant has a 25-year track record of developing and
supporting trusted software products for blue chip customers
in the defence sector. With high barriers to entry in these
markets, Pennant can cite an exemplary record of delivering
and updating, applications for existing and new customers on a
flexible, subscription basis.
Having reached version 3.0 of Auxilium in April 2024, a further
integrated release went live on 31 March 2025 ahead of a fully
integrated release scheduled for later in 2025.
Philip Walker - CEO
Chief
Executive's
Review
"Pennant already has a track record of
delivering to a global list of household
names in the Aerospace and Defence
markets which provides a strong base."
Chief Executive’s Review
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Pennant Annual Report & Accounts 2024
Regional Operational Model
During the period, the Group implemented a new regional
operational structure with roles redesigned to better align with
its strategy and ensuring that a single person has responsibility,
authority and accountability for key business functions.
The three segments provide a number of strategic benefits,
including the ability to provide enhanced customer experience
with operational support teams deployed in each region.
The table below highlights Pennant’s regional revenue for 2023
and 2024.
Regional revenue
2024
2023
£000s
£000s
EMEA
7,351
8,821
Americas
2,743
4,051
Asia Pacific
3,681
2,663
Total
13,775
15,535
Europe, Middle East & Africa (EMEA)
Revenue generated in the EMEA region declined to £7.4 million
(2023: £8.8 million). The revenue was underpinned by existing
UK training systems contracts with Boeing Defence, and UK
technical services contracts with HMRC and rail operators.
As detailed in the Interim results on 23 September 2024, the
Group had been engaged in significant bid activity during
H1 2024, although increasingly protracted procurement
timeframes were identified as a risk.
This challenge and the announcement of the Strategic Defence
Review in the UK resulted in contract awards being deferred
pending the outcome of the review (expected mid-2025), and
this includes prospective programmes for which Pennant is a
potential supplier.
In light of this situation, management undertook a
comprehensive review of the UK training systems business (as
outlined above) and determined a decisive plan to reshape it
to reflect the much-reduced workflow while retaining the skills,
intellectual property and know-how to enable the delivery of
future programmes, training software and associated services
contracts in the UK and overseas.
Americas
The North America business saw revenues decline to
£2.7 million from £4.1 million in 2023. This was driven by
Government mandated procurement changes in respect of
Pennant’s long-term contract with the Canadian Department of
National Defence. After 23 years of single-source procurement,
the contracting mechanism for the various tasks under the
framework contract was changed to a competitive tender
process per each individual task.
During 2024, Pennant has successfully tendered and secured
all tasks for which we have recompeted which account for
approximately 60% of historic annual recurring revenues.
Pennant will continue to tender for further opportunities
as they are released to market as the region looks to restore
the level and long-term visibility of revenues that the legacy
contract provided.
Asia Pacific
The Asia-Pacific business enjoyed a good year with resultant
revenues increasing from £2.7 million to £3.7 million having
secured Technical Services contracts to support the utilisation
of Pennants technical publication and authoring software which
continued to perform well and were extended for a further year.
Operationally, Pennant’s existing long term technical services
contract in Wagga Wagga continued to perform well and was
extended into 2027 (year 14 of a 20 year framework).
Strategic Priorities
With the launch of Auxilium on 31 March 2025, the focus of our
investment programme will move to development and delivery
of the go to market strategy by expanding reseller, agent and
partnership relationships globally to extend market channels
into new territories.
This also includes enhancing support software functionality
through partners, including upgrades to the support portal and
customer tools to ensure an excellent customer experience.
This investment continues the strategy to drive higher margin,
recurring software revenues and higher value technical services,
which when aligned with a favourable market backdrop provide
a firm platform for continued progress in the current year.
Approved by the Board on 23rd April 2025
and signed on its behalf
P H Walker
Director
Chief Executive’s Review
12
Pennant Annual Report & Accounts 2024
The Pennant Group consists of two CGUs:
- Software & Services which comprises of our Systems
Support Software and Technical Services operations and,
- Training Systems comprising of our highly engineered
Training hardware operations.
During 2024 a restructuring exercise was undertaken to better
align the Training Systems segment with current market
conditions as a response to a hiatus in demand from the UK
MoD and to focus on winning and delivering aftermarket
service contracts – i.e. modifying, retrofitting and upgrading
existing Pennant original equipment. The statutory financial
performance of the Group has been materially impacted by
the restructuring including the classification of certain UK
properties as ‘held for sale’ current assets in accordance with
IFRS 5. Where appropriate, reconciliations of statutory to
‘adjusted’ income statement performance have been provided
to aid understanding of our recurring trade and operations.
The Training Systems restructuring exercise led to the reduction
in global workforce from 140 at the end of 2023 to 121 at the
end of 2024, with a cash cost of the reduction exercise of £0.4
million. The total restructuring expense recognised in the Group
income statement of £2.1 million includes £1.6 million of non-
cash costs which are outlined later in my review. The estimated
annualised cost savings resulting from the restructuring
exercise are £2.0 million, comprising staff costs, facility costs,
and depreciation and amortisation.
As part of the restructuring exercise, certain UK based facilities
within the Training System were marketed for sale in the second
half of 2024 at a total fair value of £2.9m after estimated selling
costs. At the time of releasing these financial statements, £2
million of net sales proceeds had been contracted the details of
which are recorded as a post balance sheet event in the notes
to the Group accounts. This will be used to reduce the Group’s
borrowings.
The difficult decisions taken by the Board of Directors have
strengthened the balance sheet and improved cost efficiencies
thus setting the Group up for success in the future.
Financial review
The results and a review of the key financial performance
indicators of revenue and profitability are set out below.
Performance
Group revenue of £13.8m represents an 11% year over year
reduction (2023: £15.5m).
During the year we successfully completed the delivery to
program milestones under a 3-year contract with Boeing
Defence UK for updates to AH Mk1 Apache training equipment
(“Apache”). Revenue recognised, in the Training Systems
segment, from the Apache contract in the year was £3.5m
(2023: £5.2m).
The gross profit margin for the year was 50% (2023: 50%),
representing another record margin year for the Group which
benefitted from the profitable completion of the Apache
program as well as the continued strategic shift of the Group
towards software-related products and higher value services.
Administrative costs were held flat at £7.0 million (2023:
£6.9 million) after adjusting items of £2.2 million comprising
exceptional costs (£2.3 million), share based payment expense
(£0.1 million) and gains on disposal of assets (£0.2 million) – see
the reconciliation of statutory results to adjusted results below.
The improved margins coupled with the controlled cost base,
resulted in an adjusted EBITA of £1.2 million (2023: £1.8 million)
and an adjusted loss before tax of £0.3 million (2023: profit £0.6
million).
The statutory loss before tax for the year of £3.0 million (2023:
loss £0.4 million) includes £2.3 million of exceptional costs (2023:
£0.3 million) and £1.6 million of intangible asset amortisation
(£1.3 million). The ‘adjusted’ income statement performance
excludes exceptional items (including share based payment
charges and gains on disposal of land & buildings), as well as
acquired intangible amortisation, and has been presented to
aid understanding of our recurring trade and operations.
Darren Wiggins - CFO
Chief Financial
Officer's
Review
Chief Financial Officer’s Review
13
Pennant Annual Report & Accounts 2024
Adjusted numbers
£m
2024
Statutory
Acquired
Intangible
Amortisation
Adjusted
Items (1)
2024
Adjusted
2023
Revenue
13.8
-
13.8
15.5
Gross profit
Gross profit %
6.9
50%
-
6.9
50%
7.7
50%
Other income
0.2
-
0.2
0.2
Admin costs
(9.7)
0.5
2.2
(7.0)
(6.9)
Operating profit / (loss)
(2.6)
0.5
2.2
0.1
1.0
Amortisation
1.6
(0.5)
-
1.1
0.8
EBITA
(1.0)
-
2.2
1.2
1.8
Depreciation
0.5
-
0.5
0.5
EBITDA
(0.5)
-
2.2
1.7
2.3
(1) Adjusted Items comprise exceptional costs £2.3 million, £0.1 million of shared based payment expense, and a £0.2 million gain on disposal of land & buildings
(all recognised within administrative expenses).
Reconciliation of statutory results to adjusted results
A reconciliation of statutory EBITA to adjusted EBITA is as follows:
£000s
EBITA (reported loss)
(958)
Restructuring expense
2,105
Aborted transaction costs
218
Share based payments
70
Profit on sale of land & buildings
(231)
Adjusted EBITA (at 31 December 2024)
1,204
Adjusting items to statutory operating loss in the year are consistent with prior years and include:
•
Costs associated with the restructuring of the Training Systems division in the year totaling £2.1 million (2023: £nil).
These are shown as adjusting items due to their size and non-trading nature and included:
o
The impairment of capitalised development costs (classified as intangible fixed assets) totaling £0.8 million
relating to legacy Training Systems programs
o
Cash costs of staff redundancies totaling £0.4 million due to the downsizing of the Training Systems workforce
o
Impairment of fixtures, fittings and equipment totaling £0.3 million related to the downsizing and disposal of the
Training Systems operating facilities in Cheltenham, UK
o
Write down of inventory to the lower of cost and NRV totaling £0.4m relating to assets specific to legacy Training
Systems programs
o
Professional fees relating to the restructuring exercise totaling £0.1 million
•
Gains on sale of land & buildings (unrelated to the restructuring exercise) totaling £0.2 million
•
Transaction costs from an aborted corporate acquisition exercise undertaken in H1 totaling £0.2 million
•
An expense of £0.1 million in accordance with IFRS 2 and associated with outstanding employee share option awards
Chief Financial Officer’s Review
14
Pennant Annual Report & Accounts 2024
Revenue analysis
An analysis of the Group’s revenue by operating segment and
CGU is as follows:
2024
£000s
2023
£000s
Software licences and products
397
1,111
Software maintenance
1,893
1,589
Technical services
7,276
6,873
Sub-total Software and Services
9,566
9,573
Engineered solutions
3,554
5,229
Generic products
655
733
Sub-total Training Solutions
4,209
5,962
Total Group Revenue
13,775
15,535
Revenues contributed by the Software and Services CGU
remained flat at £9.6 million year over year and represented
69% of the total revenue for the period (2023: 62%). The stability
from repeatable contract work within the Technical Services
segment drives the opportunity to benefit from inflationary
increases while in the Software segment the pleasing increase
in recurring maintenance revenues is tempered by the lower
sales of software product licenses which we attribute to a delay
in the purchasing decisions of our customers until the launch of
the integrated Auxilium suite in 2025.
The reduction in Training Solutions revenue is explained by the
successful completion of the Apache program discussed above.
Software and Services
Software licences & products
The software product sales in 2024 continued to be
predominantly driven by R4i software sales, with the associated
recurring maintenance revenues to follow on a recurring basis.
Revenues, where perpetual licenses are sold, are recognised
upon installation of the software and tend to be non-recurring
in nature. Where products are sold on a subscription basis
revenues are recognised over the duration of the subscription
period for each customer.
Software maintenance
Software maintenance revenues are recurring by nature and
are growing year on year, driven by the growth in the global
customer base for the Group’s software solutions. The revenue
is recognised over the duration of the maintenance period for
each customer which can range from annual renewals to multi-
year agreements. The software is used to support the lifecycle
of complex assets which can span decades.
Technical services
The largely repeatable technical services revenue stream has
increased from 44% of the Group’s revenues in 2023 to 53%
in 2024 as contracts and relationships mature. The revenues
are typically recognised on a consumption of benefit basis over
time.
Training Solutions
Engineered solutions
In line with management expectations, revenues associated
with engineered solutions have decreased from £5.2 million in
2023 to £3.6 million in 2024. This is reflective of the operational
stage of completion on the programmes which form the basis
of this revenue stream which is recognised over time under
IFRS 15. During the year, there was less work performed under
contractual milestones within the Apache contract, for which
the delivery across a 3 year period was largely completed.
Generic products
The revenue recognition for generic products is at a point in
time (typically on delivery) under IFRS 15. Revenues for these
products in 2024 was £0.7 million (2023: £0.7 million).
Cashflow / Net debt
The movement in net debt (as defined in the glossary to the
annual report) is summarised as follows:
£000s
Net Debt at 31 December 2023
(1,879)
Net cash generated from operations
176
Net cash used in investing activities
(1,616)
Net cash generated from financing activities
1,141
Effect of foreign exchange rates
(107)
Net Debt at 31 December 2024
(2,285)
During the first half of the year and to support the
required strategic investment in our integrated software
suite the Group utilised its 15% placing authority to raise
circa £1.2 million after fees. The Board also confirmed an
intention to subscribe for a further £0.2 million of shares in
aggregate, subject to a further placing authority being approved
at the 2024 AGM. The total proceeds after fees were £1.4
million. These funds were deployed to support the continued
capital investment in the integrated software suite.
Chief Financial Officer’s Review
15
Pennant Annual Report & Accounts 2024
Also included within investing activities was the penultimate
payment (£0.3 million) relating to the 2020 acquisition of
ADG, a critical component of our integrated software offering.
Consideration was structured to include five ‘earn out’ payments
attached to qualifying trading performance.
The Group had net borrowings at the year-end of £2.3 million
(2023: net borrowings of £1.9 million) excluding lease liabilities.
Post Period-end, the Group has taken actions to strengthen
the balance sheet and ensure that ongoing operations are
appropriately funded via:
-
Exchange of contracts for the sale of certain properties
at Staverton, Cheltenham, UK for a total of £2.0 million
in cash proceeds net of selling costs and realising a
profit on disposal of £0.1 million
-
Renewal of the existing HSBC overdraft facility up to an
available limit of £2.0 million of which £1.0 million is
secured by a charge on the Group’s remaining owned
properties at Staverton
Furthermore, the Group has an active pipeline of opportunities
spanning the entire spectrum of products and services. Securing
these pipeline orders will underpin the cashflows of the Group
in 2025 and beyond.
Research & development
Research and development repayable tax credits expected to be
claimed (for cash) in the UK for the Period amount to £0.2 million
(2023: £0.3 million) on qualifying expenditure of £1.4 million
(2023: £1.7 million). The claims relate to the development of
innovative new hardware products within the Training Systems
segment as well as software products for which IP is held in the
UK within the Software & Services segment.
Assets and liabilities and impairment
review
The Group’s goodwill has been tested for impairment, and in
accordance with IAS 36 “Impairment of assets” the recoverable
amount has been assessed as being the higher of the fair value
less costs to sell and the value in use.
Taxation
The Group’s tax position shows a tax credit of £0.5 million
(2023: charge of £0.6 million) consisting of a current tax credit
of £0.3 million (2023: £0.4 million) and a deferred tax credit
of £0.2 million (2023: charge of £1.0 million). The current tax
credit arises from R&D claims submitted with HMRC under
UK government incentive plans and an in-year tax credit from
losses in Canada. The deferred tax credit is due to a) the release
of deferred tax liabilities relating to the change in use of land &
buildings disposed post year end and classified as held for sale
at year end, and b) a deferred tax credit in Pennant America Inc.
due to temporary timing differences net of partial derecognition
of a deferred tax asset relating to unused UK losses carried
forward. More detail can be found in notes 4 and 27 to the
financial statements.
The Group has total unrelieved UK tax losses carried forward of
£7.0 million (2023: £6.8 million).
Going concern
As part of their consideration of going concern, the Directors
have reviewed the Group’s future cash forecasts and projections,
which are based on both market and internal data and recent
experience.
The Directors have concluded that there are scenarios whereby
the levels of forecast new business converted, or the timings of
conversion are delayed which represents a material uncertainty
that may cast significant doubt upon the company’s ability to
continue as a going concern.
Considering the Group’s current committed bank facility
headroom, its access to liquidity from the post year end sale
of surplus land & buildings, and the strength of its pipeline, the
Directors consider it appropriate that the Group can manage its
business risks successfully and adopt a going concern basis in
preparing these Consolidated Financial Statements.
Darren Wiggins, Director
"The Group has an active pipeline
of opportunities spanning the entire
spectrum of product and services."
Chief Financial Officer’s Review
16
Pennant Annual Report & Accounts 2024
Operating KPIs
• People
• Customers
• Growth
• Financials
Strategic
Improvement
Priorities into
Annual Targets
to Improve (TTIs)
Customer
Experience
Strategic
Deployment
Plan
Risk Management
(quarterly review
and action plans)
Run The
Business
(operational
KPIs/QMS)
Integrated
Business Plan
Integrated Business Planning (IBP) is a holistic approach that integrates strategic planning, operational planning, and
financial planning within an organisation. IBP brings together various functions, including sales, marketing, finance,
supply chain, human resources, IT and beyond to collaborate across business units and make informed decisions that
drive overall business success.
At Pennant we use IBP to ensure that the customer experience is at the heart of everything we do. Our annual strategic
planning process ensures that our long-term objectives are understood, aligned to our day-to-day operating activities
and drive team members’ annual goals. We run the business on the philosophy that motivated people drive an excellent
customer experience which in turn leads to growth opportunities and strong financial performance.
Integrated Business Plan
17
Pennant Annual Report & Accounts 2024
Our Strategic Framework
Our strategy is comprised of four key areas of focus that will help us achieve our
long-term objectives and generate meaningful shareholder value. It is centred on
maintaining and growing our core capabilities and securing growth opportunities
through advancing our strategic directives.
Strategic directives
•
Expand, and be first to market, with our end-to-end IPS software suite
•
Grow our technical services offering, through organic growth and acquisition
•
Optimise the Training Systems business
•
Deliver excellence in our customer experience
Our strategy in action:
•
Auxilium = Integration and acceleration of Pennant core software applications
into one, holistic software suite to create the next generation of IPS software
solutions
•
Restructured the Training Systems business to reduce cost base and operating
footprint – core focus on modifications, retrofits and upgrades to our installed
base
•
Investing in customer support digital tools that will make Pennant easier to
do business with
Integrated Business Plan
18
Pennant Annual Report & Accounts 2024
Principal Risks And Uncertainties
Risk Management Review
Group-wide risk management is ultimately the responsibility of the Board (supported by the Audit & Risk Committee) with an
operational framework overseen 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 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 regularly monitored by executive management and reviewed by the Audit
& Risk Committee (and the Board as appropriate).
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, to be the most critical to the continued operation of
the Group and the achievement of its strategic objectives. 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.
Risk Management Review
19
Pennant Annual Report & Accounts 2024
Description of risk
Potential impact
Mitigation and control
Realising the investment in Auxilium
With the significant investment made by
the Group in the Auxilium software suite,
it is critical to ensure that, over time,
this investment is realised through the
successful commercialisation of the suite.
This commercialisation could be sub-
optimally executed due to one or more of
the following (or other) factors: inadequate
product functionality; misjudging the
market need; ineffective sales and
marketing; under or over pricing.
Disappointing sales revenues
lead to an impairment of
the related intangible asset,
causing financial losses to the
Group.
The Group’s credibility in the
integrated product support
field is damaged as a result,
leading to the loss of ancillary
professional services work.
Auxilium conforms to various industry
standards and comprises products with a
long history in their respective niches, so it is
unlikely that the underlying customer need
has been seriously misjudged.
Early customer engagement has been
ongoing since 2022 regarding GenS and, since
2023, regarding the whole Auxilium suite.
Feedback from customers has been positive
and indicates that the market for a holistic,
end-to-end solution is real.
The development of the Auxilium suite has
been performed by skilled software architects
and engineers in accordance with industry-
recognised development processes, including
in relation to progressive testing.
New resource is being hired to support the
existing Sales and Marketing personnel to
ensure that sales and marketing activities are
optimised, building on the early customer
engagement.
A dedicated team has been created to
establish effective distribution channels
through selected agents and re-sellers to
maximize indirect sales.
Detailed financial and pricing models have
been prepared, substantiating the proposed
pricing structure (and forecast revenues
relative to the quantum of the intangible
asset) which has also been carefully sense-
checked against detailed multi-year records
and knowledge of legacy pricing.
Liquidity risk
Liquidity risk is the risk that the Group does
not have sufficient cash to meet its financial
obligations as they fall due, particularly due
to timing challenges described in the ‘Order
Intake Cycle’ risk and the ‘Cashflow Profiles’
risk below.
The Group may not be able
to meet its contractual
obligations to customers or
make payments when due
to suppliers, employees,
tax authorities and other
stakeholders.
The Directors regularly review the Group’s
forecast working capital requirements, cash
flow, current borrowing facilities and other
funding options available to the Group.
This analysis includes scenario testing of
adverse factors and ‘reverse stress testing’
of the Group’s cash flows. The Directors
assess the sensitivities of the cashflow
forecasts and consider whether there are any
uncertainties that could lead to the cashflow
forecasts becoming more adverse than
in each modelled scenario. The Directors
also consider the availability and likelihood
of potential mitigants (overdraft facility
extensions and equity placings) should the
need arise.
Risk Management Review
20
Pennant Annual Report & Accounts 2024
Order Intake cycle
With a customer base of major defence
contractors and government departments,
the acquisition of Pennant’s products and
services can be a lengthy process.
On larger ‘engineered-to-order’
programmes, it can take years from the
initial customer request for a proposal to
the award of a contract to Pennant. Such
lengthy timelines can be a product of the
prescribed procurement process itself and/
or delays ‘up stream’ on a prime contract.
Furthermore, the Strategic Defence Review
in the UK has seemingly delayed several
potential programmes pending its findings
and recommendations.
With such long timelines to
win major contracts (and
related risks of delays within
that timeline), it can be
difficult to win sufficient work
within a particular period,
meaning challenges on
revenue expectations and the
management of resources.
The Group follows diligently the prescribed
processes in order to win contracts, and
engages at all relevant levels to understand,
shape and secure the work. However, there
is a limit to Pennant’s ability to accelerate
awards, given the OEM and defence
department constraints which inevitably
apply to such processes.
The restructuring of the Training Systems
segment referred to in the CEO Report was
implemented in order to reduce fixed costs
in that unit, thereby reducing the impact of
delays in order intake, while retaining core
skills and the ability to scale up as and when
orders are received.
The most important mitigant is the Group’s
efforts (over a number of years, and
which continue) to build up a solid base
of recurring and repeatable software and
services revenues with a view to these
revenues forming an increasing proportion
of the Group’s overall turnover and thereby
mitigating reliance on, and exposure to, the
timelines of the procurement process on
larger defence projects. The launch of the
Auxilium suite is a key pillar of this strategy.
Contract risk: cashflow profiles
The Group’s turnover, profits and
cashflows, particularly in the Training
Systems segment, can become significantly
dependent on the timely delivery of a small
number of high-value contracts.
If delivery of such contracts
is delayed, it can cause
significant financial effects on
the Group (particularly when
judged by annual reporting).
Delays on delivery lead to a
negative perception amongst
stakeholders that the Group’s
business is inconsistent and
prone to ‘lumpy’ revenues.
Large contracts generate
significant working capital
demands which, if they
cannot be met, can jeopardise
delivery of the contract (and
continuance of the business
generally).
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
to fund working capital requirements. The
Company 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).The targeted
expansion of the Group’s software and
services offerings is a natural mitigant to
the reliance on, and risks of, high-value
engineering programmes.
The Group employs qualified and
experienced programme managers to
manage delivery (including cost and risk)
on all projects supported by a dedicated
Commercial function. The programme
managers, in turn, regularly report to the
Group’s senior management.
Risk Management Review
21
Pennant Annual Report & Accounts 2024
Contract risk: pricing and delivery
The Group’s key contracts are often on a
fixed price with a fixed delivery timeline.
The Group will contract on fixed prices on
‘engineered-to-order’ projects (e.g. for a
platform-specific training aid or bespoke
software development), where it has not
previously designed and delivered the
required product before. This creates a risk
of mispricing a contract.
Where a project has been keenly priced,
any delays may cause budgets to become
very strained.
A mispriced contract, even if
delivered in compliance with
its terms and timeline, can
result 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.
A delay or failure to deliver
a contract may result in
reputational damage to
the Group and entitle
the customer to claim
compensation (including, on
some contracts, liquidated
damages).
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. High-value contract bids are only
released once approved through a ‘gated’
bid management process in accordance with
written delegated authority framework.
The Group employs qualified and
experienced programme managers to
manage delivery (including cost and risk)
on all projects supported by a dedicated
Commercial function. The programme
managers, in turn, regularly report to the
Group’s senior management.
Where elements of a programme are to
be outsourced, the Group is careful to deal
with trusted suppliers with a track record of
performance, wherever possible.
Customer dependencies
In delivering its ‘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.
If data is not received when
required, and a programme
is delayed, it may impact the
Group’s ability to progress the
programme, render invoices
and recognise revenue. Data
delays may lead to inefficient
working and unbudgeted
costs. In very serious cases,
the delivery of the programme
itself may be jeopardised.
This can be a difficult risk to manage.
The importance of timely data flow to the
Group is advised to customers at an early
stage. The risk is always flagged to the
customer in pre-contract negotiations, with
a contractual dependency then placed on
the customer to ensure the provision of the
necessary data.
The Group monitors the provision of data
during the programme and is always alive to
the risk of data flows drying up. The Group
will negotiate the right to extensions of time
and/or compensation where its contract
delivery is impacted by data delays.
If a programme ultimately terminates due
to this risk eventuating, the Group will
have a right to payment for work done until
termination.
Risk Management Review
22
Pennant Annual Report & Accounts 2024
Legal and compliance risk
Due to the sectors in which it operates, the
Group is subject to considerable legislation
and regulation. In operating globally, the
Group is subject to the laws of relevant
foreign jurisdictions.
For example: in selling its training systems
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.
Failure to comply with relevant
legislation and regulation
may result in the Group being
unable to sell its products.
The Group and its officers may
be found criminally liable for
breaches of foreign legislation
and/or face civil penalties.
Serious breaches of health
and safety law may 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)
are retained, together with safety and
compliance advisers to augment its internal
quality and health & safety team.
Internal programmes for training and
awareness of key risks areas are in place (e.g.
health & safety legislation; cyber security and
data protection).
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 applications are needed to
deliver the Group’s contracts.
If key systems are unavailable,
the Group’s delivery of
customer contracts may be
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 in all
regions tasked with ensuring the security and
availability of the systems.
The Group follows best practice as regards
IT security and has industry standard
accreditations. The Group assigns
considerable budgets and internal effort to
solutions for protecting its IT environments,
and protecting its (and its customers’) data.
Managing resources
Given the ‘Order Intake’ risk described
above, planning for and securing the right
resources at the right time is a challenge.
The Group needs staff with a wide range
of specialist technical skills, including
engineering and software design and
programming. Subject matter expertise
is required in various areas and the pool
of people with the appropriate skills is
inherently limited. Specialist skills and a
relatively small workforce can give rise to
‘single points of failure’.
If the Group is unable to
secure the necessary human
resources, the timely delivery
of its contracts may be
jeopardised, with potentially
negative effects to revenue
and profit.
Conversely, resources may be
over-provisioned or secured
at the wrong time, incurring
unnecessary costs/allocating
capital which might be used
elsewhere.
The Group carefully monitors resourcing
plans and utilisation levels. Employee
training and development is prioritised in
technical areas so that skills gaps can be
filled internally. Cross-skilling and sharing of
internal resources is encouraged and actively
managed (e.g. with software engineers from
the Training Systems teams being deployed
on Auxilium). This is intended to reduce and
if possible eliminate the risk of single points
of failure.
Specialist search and recruitment firms
are used when needed (together with
professional networks) to source niche skill
sets.
The Group has actively managed its real
estate, disposing of surplus freehold
properties as described in the CEO Report.
Risk Management Review
23
Pennant Annual Report & Accounts 2024
About Pennant
Founded in 1958, Pennant has evolved over the past eight decades, from modest beginnings, into a market-leading technology-led
software and services business with a truly global customer base.
The Group operates principally in the areas of civil and military aviation, defence, space and rail with customers including global
defence primes, government departments, overseas aviation colleges, and rail operators.
We are confident that the supportive strategic backdrop for our products and services point towards significant potential for
growth:
•
we have few competitors that can provide our end-to-end solutions and services, and there is more we can do for
existing customers and for many customers in existing areas who need our services;
•
increasing global investment (land, naval, air, rail) means platforms are becoming more sophisticated and complex,
thereby increasing the requirement for specialist technical training and integrated product support;
•
the use of ‘real’ equipment for training has safety implications, is expensive and often impractical, which is driving the
use of technology whilst supporting the environmental agenda;
•
there is a continuing trend for defence forces and other organisations to outsource training and integrated product
support services, including updating their training devices and managing their data;
•
the movement to performance based contracts has pushed the responsibility of operational availability modelling and
costing onto the OEM’s;
•
the integrated product support process and the management of data is becoming ever more critical and the cost and
complexity of programs is increasing; and
•
from a global perspective the uncertain global outlook is driving commitments to increase expenditure in defence, the
aviation sector is starting to return to pre-pandemic levels and delayed investments in sectors such as rail are returning.
Pennant has a diverse portfolio of technology-based training solutions and integrated product support capabilities that enables it
to offer a wide range of solutions to both the defence and regulated civilian sectors and 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 and Fareham),
Australia (in Melbourne and Wagga Wagga), Ottawa in Canada and an office in the US (Boston).
The Company was admitted to trading on the AIM market in 1998 and has traded as a public company ever since.
Products and Services
Pennant is a market leading provider of systems support and training solutions to defence departments and major OEMs world-
wide to maximize operational and maintenance efficiency.
About Pennant
24
Pennant Annual Report & Accounts 2024
Integration
Common data repository - Single source of truth that ensures traceability and
integrity, that support a range of global standards & specifications
Configuration
Logistic Support Analysis (LSA) improves the availability and reliability of
systems, by ensuring that maintenance and support are well-planned to optimize
cost
Analysis
Model-based supportability and analysis tool to make informed decisions for an
asset’s life cycle support solution
Authoring & Publishing
For rapid creation of S1000D and ATA Technical manuals, published in PDF or
IETP
Auxilium - Systems Support Software
Pennant owns a market leading suite of software products that integrate together to create an end-to-end solution – Auxilium.
What is Auxilium?
The core software products within the Pennant toolbox are as follows:
•
GenS Product Suite which is a logistics support analysis software 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.
•
Analyzer toolkit which is a fast, accurate and user-friendly optimisation tool. It identifies preferred product
sustainment strategies through options analysis and supports operational readiness at an affordable life cycle
cost.
•
R4i product suite provides its users with a dynamic, S1000D-compliant publication solution. The R4i solution is
licenced software and provides related support, maintenance and consultancy services.
The Group’s software development and investment continues to be focused on the integration of Pennant’s three core
applications - GenS, Analyzer and R4i – being integrated, into one holistic solution – Auxilium, which will provide users
with a powerful market-leading toolset to manage, model and utilise vast amounts of systems data in an end-to-end
solution.
About Pennant
25
Pennant Annual Report & Accounts 2024
Why Auxilium?
25
About Pennant
Pennant Annual Report & Accounts 2024
26
Pennant Annual Report & Accounts 2024
Technical Services
Pennant provides expert services to support users of Pennant or third party solutions in regulated sectors.
From Training Needs Analysis Development to final disposal, Pennant can plan, implement and manage every stage of a support
life cycle.
Pennant’s dedicated technical teams have a core level of qualified and experienced subject matter experts, providing us with
the skills and knowledge to establish Pennant’s reputation for delivering highly professional, reliable and cost-effective technical
services.
Pennant has a proven track record in providing technical services across a wide range of sectors and around the globe.
Technical services capabilities include:
1.
Training needs analysis (TNA)
2.
Courseware development
3.
Software development
4.
Technical publications, IETMS, S1000D etc.
5.
Studio services - 2D & 3D design / models, VR media
development, film and media production, laser and video
scanning, E-learning and CBT, illustration, authoring,
copywriting and translation
6.
Competency mapping to EASA, EMAR, City of Guilds etc.
Training Solutions
Engineered Solutions & Generic Products
An established supplier to the UK Ministry of Defence (MoD) and other major defence contractors, Pennant has a proven capability
in the design, development, manufacture and delivery of training solutions including:
•
Translating and developing a training requirement into a deliverable product
•
Providing Subject Matter Expertise in specialist and technical areas, Virtual Reality (VR), Augmented Reality (AR) & 3D
walk-through applications
•
Hardware & software based Part Task Trainers (PTT)
•
Hardware & software based simulators for Operators and Maintainers
Pennant equipment offers a modern, blended training solution enabling ab-initio students to benefit from a suite of modern,
generic, and bespoke training aids offering operation and maintenance savings and improved safety outcomes. These training aids
complement training on real equipment and include basic hand skills devices, virtual reality trainers and maintenance emulators
for regulated sectors.
Pennant has a wide range of generic products based on real or simulated equipment interfaced with software emulations and
instructor control facilities. Ranging from basic hand-skills training aids to complex multi-function simulators, these devices provide
an end-to-end training solution for non-type specific training requirements.
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 specific 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.
7.
In service support
8.
Preventative and corrective maintenance
9.
Instruction and training delivery
10. Rail survey services
11. Consultancy, spares and obsolescence management
12. Dismantling and disposal
13. Integrated logistic support (ILS) services and planning
About Pennant
27
Pennant Annual Report & Accounts 2024
Client Need:
Defence Australia (‘DA’) needed to improve efficiencies
and reduce costs through the better management of
equipment relating to the operation of their air platforms.
Pennant's Solution:
Pennant provided its configuration management software
to manage the platform data.
Result:
Pennant software is now embedded with the client - We
have subsequently installed a suite of training systems
(circa £10.0m) and supplied our technical documentation
software alongside professional authoring services.
Opportunity:
We are in negotiations to enhance the training system
capability, upgrade the DA database and documentation
software to a subscription basis model.
Longevity of Client:
DA has been a client since 2003 and services are contracted
until at least 2027, with the aim of extending this until
2033. Annual recurring software and services revenues
from Australian Defence currently total £1.75m.
Case study - Australian Defence
"Pennant's ongoing support in
the design, development and
maintenance of innovative training
assets continues to be a major factor
behind our continued success."
- BAE Systems Australia
About Pennant
28
Pennant Annual Report & Accounts 2024
Environmental, Social & Governance
At Pennant we believe that a commitment to the principles of Environmental, Social and
Governance (ESG) not only makes good business sense for us and our key stakeholders, but
also complements our business strategy.
Environmental
We recognise the need to minimise our environmental impacts and
take great pride in the measures and solutions we take to support our
environment and tackle climate change. Pennant remains committed to our
sustainability work and understands it is essential to protect the planet. In
our framework on our Company website (www.pennantplc.com) you can
read about how we are doing this through our product, suppliers, electric
vehicles, light and water.
Social
We aim to deepen relationships with our key stakeholders by investing in
our employees and partnering with our customers, communities, investors
and suppliers. We focus on creating the right workplace culture in which
employees feel valued, respected, empowered, and inspired. The Group
is committed to creating a positive impact in the global communities and
the regions we operate. We recognise the significance of enhancing these
communities, fostering local connections, and striving to make them better
places for all. In our framework you can read about talent development,
benefit and wellness, community involvement and more.
Governance
Not only is it legislation but we have a high set of standards we expect all
our colleagues to work to when trading responsibly and enforcing good
practice. Through a number of Group policies we are addressing: Economic
Inequality, Cyber Security, Human Rights & Modern Slavery Acts, as well as
Suppliers and Responsible Trading. In our framework read about Section
172, our commitment and the Board.
Volunteering
Pennant employees are entitled to two paid days of volunteering leave
each year. Volunteering is a powerful force for positive change, and
the scheme supports charities, local communities, and individuals in
need. It not only benefits others but also enriches our staff by fostering
connections, enhancing skills, and promoting well-being.
Pennant’s ESG Framework is available on our website here:
https://www.pennantplc.com/esg/
hours of H&S training
completed across the
Group in 2024.
356
hours volunteered by
the Pennant group in
2024, through our
volunteering scheme.
67
About Pennant
Volunteering Story:
Making a Difference, One Meal at a Time
FORaMEAL, a project by the Rotary Club of Canterbury, provides emergency
meals to those affected by natural and other disasters. Each year, they distribute
meals free of charge to vulnerable individuals and families worldwide.
During the Stage 4 COVID-19 restrictions in Melbourne, they redirected part of
their FORaMEAL efforts to support the most vulnerable locals, providing over
200,000 meals. In June 2024, an additional 110,000 meals were provided to
Food Bank Victoria for distribution by their front-line charity partners to help
feed and meet the nutritional needs of many facing financial difficulties due to
the current cost of living increases.
On August 22, 2024, a Pennant Melbourne team of four decided to lend
a helping hand, and use of their two days volunteering leave to support
FORaMEal. Colleagues arrived at Camberwell Grammar School at 2:00 PM to set
up production lines. Each line included lentils, oats, rice, and sachets of essential
vitamins and minerals. Their task was to fill the packs, weigh and heat seal them,
and then box them up. Each pack provides a balanced and nutritious meal for
5-6 people! By 3:00 PM, several production lines were in full swing, and by 6:00
PM, the truck was loaded with over 20,000 meals.
One of our Pennant colleagues, Pamela Knyvett shared, “This was an amazing
opportunity to help those in need, and I am looking forward to being involved
again. I really enjoyed being part of this activity and appreciated how much
could be achieved when everybody works together. Sharing this experience with
my Melbourne colleagues was also very special.”
Together, we can make a difference!
29
Pennant Annual Report & Accounts 2024
About Pennant
30
Pennant Annual Report & Accounts 2024
Section 172 Statement
•
This section serves as our section 172 statement and should be read in conjunction with the rest of the Strategic Report
set out on pages 4 to 28 (inclusive).
•
The Directors are fully aware of their duty to promote the success of the Company in accordance with section 172 of the
Companies Act 2006.
•
Section 172 of the Companies Act 2006 requires Directors to take into consideration various matters including the interests
of certain stakeholders in their decision making.
•
Board decision-making primarily takes place at Board meetings via full and open discussions facilitated by the Chair and
with reference to Board papers prepared and circulated in advance of the meeting. Where possible, decisions are reached
through consensus or, where this is not possible, a vote. The key points of any decision are captured in Board minutes and,
where applicable, incorporated into the Group’s Integrated Business Plan (IBP).
•
With a view to supporting such decision-making, the Company maintains a written policy statement (with a periodic
review cycle) which sets out its key business relationships including customers and suppliers, as well as insurance and
advisory engagements, and how the Company approaches its relationships with these parties.
•
The Company’s strategy is focused on realising long-term profitable growth for the benefit of all stakeholders. To ensure
that this overriding objective is kept in mind, the strategy exists as a written, Board-approved document (containing multi-
year targets) and the specific actions which underpin its implementation are recorded within the IBP. Decisions can then
be taken with this long-term view in mind and with reference to the effects or relationship with existing actions in the IBP.
The CEO Review on pages 10 to 11 contains further details on the strategy and its implementation.
•
The following bullet points provide some detail as to the approach taken in relation to key matters and stakeholders.
o
Shareholders: Investors are at the centre of all financial discussions including equity, distributions and corporate
finance, with the Board taking advice from the Company’s nominated adviser and its corporate lawyers as
appropriate. As examples during the period: the decisions as to non-payment of a dividend, and the continued
internal investment in the Auxilium software suite.
Led by the Chair and CEO, the Company is active in engaging with its investors, holding periodic meetings, calls and
an open Q&A at the AGM. Fairness between investors is prioritised during such engagements, and presentations
are made available on the Company’s website so that all investors can view them.
o
Customers: customers are integral to the Company’s business with the customer experience sitting at the centre
of our Integrated Business Plan outlined on page 16. Often working together on long-term multi-year programmes,
the Company endeavours to build strong relationships with its customers at every level and is undertaking several
strategic initiatives aimed at improving our customers’ experience.
The Board places a significant premium on the Group’s reputation for quality and gives its full support to the
maintenance of the Group’s ISO9001 status.
About Pennant
31
Pennant Annual Report & Accounts 2024
o
Employees: without employees, there is no business. The Company’s approach to the interests of its employees
is detailed on page 43 of this report, explaining how the Company has sought to engage with, and properly take
account of, its valued employees. The Group’s culture and related behaviours are driven (and closely monitored)
by the Board, with employee feedback (via staff suggestion schemes, employee surveys and other channels) being
delivered to the Board periodically.
o
Suppliers: the Group works closely with its suppliers, and has a core cohort of trusted partners. The Group is
committed to fair dealing with its suppliers, including meeting agreed payment terms, and favours building lasting
relationships.
o
Community and environment: the Board is mindful of the Group’s impact on the environment and the communities
within which it operates. The Group has implemented various recycling, energy usage monitoring and waste
reduction programmes, incentivises electrical vehicle use and tracks products which may need safe disposal in
the future. Community engagement is highly regarded at Board level, with apprenticeships, work experience and
science fairs all supported.
In addition, the Commercial & Risk Director (as a practising solicitor, with substantial company law experience) is available to
provide guidance to his fellow Board members as to the substance of the duties in question.
Approved by the Board on 23 April 2025
and signed on its behalf
P H Walker
Director
About Pennant
32
Pennant Annual Report & Accounts 2024
Governance
The Group is committed to good corporate governance and
this section of the annual report details the Group's current
governance arrangements.
33
Pennant Annual Report & Accounts 2024
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 Group for the benefit of its shareholders in
accordance with their fiduciary and statutory duties.
The Board is led by the Chair, 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 Group.
The effectiveness of the Board is kept under review by the Chair,
and the Group’s nominated adviser is able to attend Board
meetings to review the Board in action and the contributions
of its members (with any feedback being shared with the
Chair). The Chair also regularly solicits feedback on Board
effectiveness from the nominated adviser, institutions and
other shareholders. Feedback indicates that investors remain
supportive of the Company’s strategy and approach, with no
proposals received that efforts ought to be targeted elsewhere.
Succession planning for the Board is kept under review by the
Chair having regard to the current composition of the Board
and taking into account corporate governance guidelines
and business requirements. In matters relating to the Chair’s
succession, the lead is taken by the other independent Non-
Executive Directors, consulting with stakeholders as appropriate.
In discharging its duties, the Board is supported by three
standing committees (the “Committees”): the Audit &
Risk Committee; the Remuneration Committee; and the
Nominations Committee. The Terms of Reference for each of
the Committees are available on the Group’s website (www.
pennantplc.com/investors) and a summary of their respective
functions is provided below. The Terms of Reference for each
of the Committees are approved by the Board, with the last
update being in September 2024.
The Board has four Non-Executive Directors and three Executive
Directors. The Board considers that all of its Non-Executive
Directors are independent.
The Group has a written strategic plan to expand the business
with a view to growth in shareholder value. This strategy is kept
under review by, and evolves under the guidance of, the Board.
The key challenges in implementing the Group’s business model
and strategy are documented on pages 18 to 22.
The Board typically holds six or seven scheduled meetings
per year plus Committee meetings. The Group’s corporate
governance arrangements are explained in more detail on the
governance pages of the Group’s website:
https://www.pennantplc.com/investors/
The Directors
Ian Dighé
Mr Dighé is an independent Non-Executive Director and is the
Company’s Chairman. He was appointed to the Board on 7th
February 2024. Ian chairs the Nominations Committee.
Ian has significant listed company and City experience, gained
throughout his executive career with a particular focus on the
investment banking, corporate broking, asset management
and closed-end funds sectors. In addition, he is experienced in
developing boards and senior management teams.
Ian was a co-founder of Bridgewell Group plc and Chairman of
Miton Group plc from February 2011, overseeing the successful
refinancing and subsequent growth of the group, before he
retired from the Miton board in December 2017.
He is currently Chairman of The Investment Company plc and
an independent director of Seneca Growth Capital VCT plc.
Jon Kempster
Mr Kempster is an independent Non-Executive Director who
was appointed to the Board on 18th July 2024. He is a chartered
accountant (ACA) who trained with Price Waterhouse and
holds a BA (Hons) in Business Studies. He has over 25 years in
the Boardroom of industry-leading FTSE-listed plcs, including
Linden Homes, Low & Bonar, Wincanton, and Frasers Group.
Jon is currently a Non-Executive Director of AIM quoted Norman
Broadbent plc, Cambridge Cognition plc and Synetics Plc. He is
also a Director of Delta Pension Nominees Limited.
Jon chairs the Audit & Risk Committee and is a member of the
Nominations Committee and the Remuneration Committee.
Corporate Governance Review
34
Pennant Annual Report & Accounts 2024
Klaas van der Leest
Klaas van der Leest is an independent Non-Executive Director
who was appointed on 3rd September 2024.
Mr van der Leest is currently Chief Executive Officer of Intercede
Group PLC, an AIM-quoted cybersecurity business which has
seen revenue growth of 100% since his appointment in 2018.
Prior to Intercede, he was Managing Director at Intelecom UK
Ltd, an independent private equity-backed communications
SaaS business, leading the organisation’s transformation, and
trebling subscription licence sales over a three-year period.
Mr Van der Leest has held various other senior executive
positions for UK technology businesses with a focus on product
development and sales strategies.
Klaas is a member of the Audit & Risk Committee, the
Nominations Committee and the Remuneration Committee.
Deborah Wilkinson
Ms Wilkinson is an independent Non-Executive Director who
was appointed to the Board on 1st February 2023. She is a
chartered accountant (FCA) who trained with Deloitte and holds
a BEng (Hons) in Mechanical Engineering.
Ms Wilkinson has held various financial and commercial
leadership roles with a range of businesses and has extensive
experience in the defence aviation sector with Airborne Systems
Group and IrvinGQ Limited.
Deborah is currently a non-executive director of Compound
Semiconductor Applications Catapult Limited
Deborah is chair of the Remuneration Committee and a member
of the Audit & Risk Committee and the Nominations Committee.
Deborah will retire as a director at the 2025 AGM.
Philip Walker
Mr Walker is the Group’s Chief Executive Officer. He was
appointed to the Board on 3rd November 2014 as Chief
Financial Officer, being promoted to CEO in February 2017.
Mr Walker is a chartered accountant and qualified Corporate
Finance professional.
Since joining Pennant, Mr Walker has brought his experience
to bear in driving the review, renewal and implementation of
Group Strategy. He originated and implemented the strategy
to transition the company from a primarily project-based and
capital-intensive operation to a high margin software and
technical services business.
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.
Since joining Pennant, Mr Walker has brought this experience
to bear in driving the review, renewal and implementation of
Group strategy.
Mr Walker is responsible for the day-to-day running of all Group
businesses and the execution of Group strategy.
Darren Wiggins
Mr Wiggins is the Group’s Chief Financial Officer. He was
appointed to the Board on the 20th November 2024.
Mr Wiggins is a chartered accountant with over 20 years’
experience, having previously held senior executive positions
in finance and operational roles. Prior to Pennant, Mr Wiggins
worked for Meggitt Aerospace and Melrose plc.
As CFO, Mr Wiggins is responsible for the day-to-day financial
management of the Group and leads the relationships with its
auditors, bankers and tax advisors.
Corporate Governance Review
35
Pennant Annual Report & Accounts 2024
David Clements
Mr Clements 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.
Mr Clements also acts as Company Secretary to all Group
companies, advising the Chair on corporate governance matters
and being available as a ‘sounding board’ for other 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.
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 and
others on industry developments and wider changes.
Prior to any appointment being made to the Board, any
prospective Director is subject to a full due diligence exercise
conducted by the Company’s nominated adviser which addresses
such issues as experience, skills and competences (as well as
vetting for adverse court judgements and disqualifications).
The Board will seek guidance from external advisers when
appropriate and regularly obtains independent legal, tax and
financial advice. For example, during the period, the Directors
obtained extensive professional advice in respect of a potential
acquisition and fundraising via a placing.
Based on the skills and expertise highlighted in the profiles
of each Director above, the Board is confident that it has the
necessary mix of capabilities, experience and personal qualities
to deliver the Group’s strategic objectives.
The Committees
Audit & Risk Committee
The Audit & Risk Committee’s role is to determine and apply
policy on behalf of the Board to the financial reporting, internal
controls and risk management framework of the Group and to
maintain an appropriate relationship with the Group’s auditors.
The Committee comprises Jon Kempster (as chair), Debbie
Wilkinson and Klaas van der Leest. It typically meets at least
three times 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 judgements on
the application of revenue recognition policies in relation to
material projects as well as carefully reviewing matters relating
to the valuation of the Group’s assets and its status as a going
concern.
The Group does not engage its auditors for non-audit services.
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 Debbie Wilkinson (as chair), Klaas van der Leest and
Jon Kempster.
During the year, the Committee, operating under its Terms of
Reference, discharged its responsibilities, including determining
and agreeing with the Board the framework or broad policy
for the remuneration of the Group’s Chief Executive Officer,
Chair, 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.
Nominations Committee
The Nominations Committee’s role is regularly review
the structure, size and composition (including the skills,
knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to any changes.
The committee was formally constituted on 19 September
2024, prior to which the consideration of any prospective
nominations was a matter for the full Board.
Corporate Governance Review
36
Pennant Annual Report & Accounts 2024
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 up to 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 its Committees during 2024 were as follows:
Board
Audit & Risk
Committee
Remuneration
Committee
Nominations
Committee
P Walker
10/10
-
-
-
D Clements
10/10
-
-
-
P Cotton (resigned 17 July)
6/6
1/1
-
-
M Brinson (resigned 13 August)
7/7
-
-
-
D Wilkinson
10/10
3/3
2/2
-
I Dighé (appointed 7 February)
10/10
3/3
2/2
-
J Kempster (appointed 18 July)
4/4
2/2
2/2
-
K van der Leest (appointed 3 September)
3/3
1/1
2/2
-
D Wiggins (appointed 20 November)
1/1
-
2/2
-
Compliance with Corporate Governance Codes
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: www.pennantplc.com/investors.
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, overseen by an Executive
Committee comprising the Executive Directors together with the regional managing directors, the Business Development Director
and the Chief Product Officer.
Following its approval by the Board during the period, the Group’s three-year plan is being implemented by the Executive Committee
through the various operating units of the Group. Clear channels are in place, with a structured meeting cycle, for the exchange of
information from the Group’s operating units to the Executive Directors and the Board and for the reciprocal provision of direction.
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. The KPIs focus on four key themes: people; customer delivery & experience; growth &
order intake; financial performance.
Corporate Governance Review
37
Pennant Annual Report & Accounts 2024
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 it can only
provide reasonable, but not absolute, assurance against misstatement or loss.
The Executive Director within the Group responsible for day-to-day financial management of the Group’s affairs is the Group’s CFO,
Darren Wiggins, under the supervision of the Audit & Risk Committee.
The Executive Directors participate in and provide information and support to the Audit & Risk Committee as and when the
Committee so requests.
Remuneration Committee Report
On behalf of the Board, I am pleased to present the Remuneration Committee Report. This sets out our Directors’ Remuneration
policy and its implementation including amounts earned by Directors in respect of the year ended 31 December 2024. In framing
the remuneration policy, the Remuneration Committee is aligned with principle 9 of the Quoted Companies Alliance (“QCA”) Code
to ensure that our remuneration policy both reflects our strategy and is aligned with shareholders’ interests.
As the Company is quoted on the AIM segment of the London Stock Exchange, the Directors are not required to prepare a
Remuneration Committee Report for each financial year and so Pennant makes the following disclosures voluntarily which are not
subject to audit.
The Remuneration Committee has formal terms of reference which can be found in the ‘Investors’ section of the Group’s website,
which are reviewed and approved annually by the Board. The Committee makes recommendations to the Board, within its terms
of reference, on the remuneration and other benefits including bonuses and share options, of the Executive Directors.
The Remuneration Committee is composed entirely of Non-Executive Directors. The CEO may be invited to attend as and when
appropriate and necessary but is not present during discussions relating to his own remuneration.
Remuneration Policy
The total remuneration package for executive directors is intended to incentivise and reward fairly to meet the growth and strategic
goals of the Group whilst recognising the Group’s current position.
Basic Salary and benefits
Basic salaries for Executive Directors are reviewed annually and the policy is to pay salary at market levels for comparable jobs with
due consideration of the size of the Group and the sector in which it operates. Benefits may include provision of a company car,
medical insurance and life assurance and contributions to a Group Personal Pension Scheme.
Annual Bonus
A contractual bonus is awardable in respect of each financial year, the quantum of which is at the discretion of the Board, having
considered the recommendations of the Remuneration Committee. The maximum bonus awardable is currently capped at 50% of
basic salary to reward executives’ contribution to the growth in profit and achievement of objectives. No bonus was awarded in
respect of the year ended 31 December 2024.
Remuneration Committee Report
38
Pennant Annual Report & Accounts 2024
Share Options
The Group believes that share ownership by Executive Directors and employees strengthens the link between their personal
interests and those of the Group and the shareholders.
The Group currently has in place an Enterprise Management Incentive (“EMI”) scheme and the Remuneration Committee has
discretion to make option grants to Executive Directors and selected employees subject to the applicable scheme rules and to
determine appropriate performance conditions.
Service Contracts
Philip Walker and David Clements have service contracts that are terminable by either party on 12 months’ notice. Darren Wiggins
was appointed during the year on a service contract with a 6 month notice period.
Non-Executive Directors
The fees of the Non-Executive Directors are determined by the full Board. The Non-Executive Directors are not eligible for bonuses
or share options.
Consultation with shareholders
The Remuneration Committee is committed to a continuing dialogue with shareholders, and seeks the views of significant share-
holders when any major changes are being made to remuneration arrangements.
Deborah Wilkinson
Chair
Remuneration Committee
23 April 2025
Remuneration Committee Report
39
Pennant Annual Report & Accounts 2024
Directors' remuneration (audited)
Salary
Bonus
Benefits
and car
allowance
Pension
Total
2024
2023
£000s
£000s
£000s
£000s
£000s
£000s
P Walker
233
-
18
23
274
308
D Clements
165
-
12
17
194
221
P Cotton (resigned 17 July)
24
-
-
-
24
54
M Brinson (resigned 13 August)
244(1)
-
9
14
267
190
D Wilkinson
45
-
-
-
45
40
I Dighé (appointed 7 February)
42
-
-
-
42
-
J Kempster (appointed 18 July)
20
-
-
20
-
K van der Leest (appointed 3 September)
15
-
-
15
-
D Wiggins (appointed 20 November)
22
-
1
1
24
-
810
-
40
55
905
813
(1) Includes £85k of compensation for loss of office
Pension contributions shown above are pension payments into the Pennant International Group Plc Pension Scheme, a defined
contribution scheme.
There were 1,589,473 share options held by the Directors in office at the end of 2024 (2023: 850,000) as further particularised on
the following tables. Options were granted to Directors in the period as explained in the ‘EMI Options’ section below.
Service contracts
There are no Directors’ service contracts (or contracts for services) with notice periods in excess of one year.
Directors and their interests (audited)
The following Directors have held office since 1 January 2024 except where indicated otherwise and their beneficial interests in the
ordinary shares of the Company were as stated below:
31 December 2024
5p ordinary shares
31 December 2023
5p ordinary shares
Number
Number
P Walker
140,145
73,145
D Clements
139,508
84,508
D Wilkinson
200,000
-
I Dighé (appointed 7 February)
360,000
-
J Kempster (appointed 18 July)
-
-
K van der Leest (appointed 3 September)
42,500
-
D Wiggins (appointed 20 November)
-
-
P Cotton ceased to be a Director on 17 July 2024. His shareholding at that date was 18,633 (31 December 2023: 18,633).
M Brinson ceased to be a Director on 13 August 2024. His shareholding at that date was 44,624 (31 December 2023: 44,624).
Remuneration Report
40
Pennant Annual Report & Accounts 2024
The following Directors have interests in share options of the Company as stated below:
EMI options
2024
2023
Number
Number
P Walker
789,473
500,000
D Clements
400,000
300,000
P Cotton (resigned 17 July)
-
-
M Brinson (resigned 13 August)
-
50,000
D Wilkinson
-
-
I Dighé (appointed 7 February)
-
-
J Kempster (appointed 18 July)
-
-
K van der Leest (appointed 3 September)
-
-
D Wiggins (appointed 20 November)
400,000
-
Total
1,589,473
850,000
EMI Options
Philip Walker holds an EMI option over 500,000 ordinary shares exercisable at 33.5p (granted on 8 November 2022) which vests in
20% tranches linked to growth in the Company’s share price. The first 20% tranche will vest upon the Company’s share price trading
at 57.0p for a period of at least 30 days. The vesting conditions for the subsequent tranches are also tied to achieving growth in the
Company’s share price with 20% vesting for every additional 5.0p achieved in the share price above 57.0p for a period of at least
30 days (20% at 62.0p; 20% at 67.0p; 20% at 72.0p and 20% at 77.0p). The performance conditions must be met within three years
from the date of grant in order for each tranche of the options to vest.
During the year (on 11 December 2024), Mr Walker was granted an additional EMI option over a further 289,473 ordinary shares,
which is subject to vesting conditions tied to achieving growth in the Company’s share price, vesting in tranches as and when
certain milestones are achieved and the share price sustained at that level for at least 30 days, as follows:
Target share price
% vesting
50p
50%
75p
25%
100p
25%
In order for the option to vest, the target share price(s) must be achieved during the three years following the date of grant (the
“Performance Period”) and to the extent that the option has not vested during the Performance Period, the rights over the
unissued shares will lapse. The exercise price under the option is 28.5 per share.
David Clements holds an EMI option over 300,000 ordinary shares exercisable at 33.5p (granted on 8 November 2022) which vests
in 20% tranches linked to growth in the Company’s share price. The first 20% tranche will vest upon the Company’s share price
trading at 57.0p for a period of at least 30 days. The vesting conditions for the subsequent tranches is also tied to achieving growth
in the Company’s share price with 20% vesting for every additional 5.0p achieved in the share price above 57.0p for a period of at
least 30 days (20% at 62.0p; 20% at 67.0p; 20% at 72.0p and 20% at 77.0p). The performance conditions must be met within three
years from the date of grant in order for each tranche of the options to vest. The options lapse upon the occurrence of certain
events, including the termination of Mr Clements’ employment.
Remuneration Report
41
Pennant Annual Report & Accounts 2024
During the year (on 11 December 2024), Mr Clements was granted an additional EMI option over a further 100,000 ordinary shares,
which is subject to the same vesting conditions and exercise price as described above for Mr Walker’s option of the same date.
Darren Wiggins holds an EMI option over 400,000 ordinary shares, granted on 11 December 2024, which is subject to the same
vesting conditions and exercise price as the options of the same date granted to Mr Walker and Mr Clements.
No EMI options were exercised by the Directors during the year.
Unapproved Options
No unapproved options were held by Directors during the year.
Audit & Risk Committee Report
During the year, the Committee operating under its Terms of Reference discharged its responsibilities by (amongst other things)
reviewing and monitoring:
•
the Group’s risk registers, including the effectiveness of controls and mitigations;
•
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 Group 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).
The Committee has continued its monitoring of the financial reporting process and its integrity, risk management systems and
assurance.
The Committee has reviewed all significant issues concerning the financial statements. The principal matters we considered
concerning the 2024 financial statements were: the appropriateness of the Going Concern assessment; recognition of revenue
and profit; and adequacy of working capital. We have reviewed key estimates and management judgements prior to publication
of the 2024 financial statements.
Following a competitive tender process and led by the Committee, S&W Partners Audit Limited (formerly CLA Evelyn Partners
Limited) were selected as the Group’s new auditor and a resolution to appoint them as auditor to the Group was passed at the
AGM in July 2024.
Jon Kempster
Chair
Audit & Risk Committee
23 April 2025
Audit & Risk Committee Report
42
Pennant Annual Report & Accounts 2024
The Directors present their report and the
audited financial statements for the year
ended 31 December 2024.
General information
The parent and ultimate parent company of the Group is
Pennant International Group plc (the “Company”) which is
a public company limited by shares, domiciled in the United
Kingdom and incorporated under the law of England and Wales.
The Company’s registered office address is Unit D1, Staverton
Connection, Staverton, Cheltenham, Gloucestershire GL51 0TF.
Directors
The following Directors held office during the Period:
Philip Cotton (Chair & Non-Executive Director)
- resigned 17 July 2024
Ian Dighe (Chair & Non-Executive Director)
- appointed 7 February 2024
Philip Walker (CEO)
David Clements (Commercial and Risk Director)
Michael Brinson (CFO) – resigned 13 August 2024
Darren Wiggins (CFO) – appointed 20 November
2024
Deborah Wilkinson (Non-Executive Director)
Jonathan Kempster (Non-Executive Director)
– appointed 18 July 2024
Klaas Van Der Leest (Non-Executive Director)
– appointed 3 September 2024
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 software and
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 (2023: £NIL). As
highlighted in the Chair’s Statement, the Board is not
recommending the payment of a final dividend in respect of the
year ended 31 December 2024.
Going Concern
The Directors have undertaken an assessment of the future
prospects of the Company and its subsidiary undertakings
(the ‘Group’), taking into account the Group’s current position
and principal risks. This review considered both the Group’s
prospects and also its ability to continue in operation and to
meet its liabilities as they fall due over the eighteen-month
period (review period’) following approval of these financial
statements.
The Directors have prepared cash flow projections to 31
December 2026 to support their decision to use the going
concern basis and these projections rely on future cash flows
from new business which is not yet secured and for which
timings are uncertain. The Directors have concluded that there
are scenarios whereby the levels of forecast new business
converted, or the timings of conversion are delayed which
represents a material uncertainty that may cast significant
doubt upon the company’s ability to continue as a going
concern – scenarios under which the Company may be unable
to realise its assets and discharge its liabilities in the normal
course of business.
David Clements - Director
Directors'
Report
Director’s Report
43
Pennant Annual Report & Accounts 2024
Nevertheless, after making enquiries and considering the
uncertainties described above, the Directors have a reasonable
expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Consideration was also given to the decisive actions undertaken
during 2024 to restructure the cost base of the Training Systems
segment, removing circa £2 million of annualized cost from the
business, post balance sheet events have served to strengthen
the future cash flow – namely the sale of surplus UK land &
buildings for gross proceeds in excess of £2 million as well as the
renewal, in April, of its overdraft facility for a further 12 months.
Furthermore, should the Group not achieve budgeted revenue
projections, management would look to address its cash costs
and/or raise capital from a number of different funding options.
For these reasons, we continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
Research & Development
Research and development expenditure within the Group
(involving the continued development of hardware and
software products of which a proportion has been capitalised)
amounted to £1.3 million (2023: £1.4 million).
Post Balance sheet events
On 24th February 2025 the company announced the disposal of
unit D at the Group’s Staverton site for a cash consideration of
£0.83 million as part of the previously announced streamlining
of the Group’s Training Division.
On 7th April 2025 the company announced the exchange of
contracts on three more commercial properties at the Group’s
Staverton site (units D3, D4 and car park). The aggregate
consideration is £1.2 million and completion on each of the
transactions is set for 25 April 2025.
During April 2025 the Group renewed its overdraft facility with
its bankers, HSBC, at a limit of £2 million, for 12 months, secured
by charges on the remaining owned land & buildings.
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 instruments are cash, contract
assets, trade receivables and payables, the main purpose of
which is to provide finance for the Group’s operations.
The Group does not typically enter into derivative contracts,
such as agreements to buy or sell foreign currency at a future
date. Any such contract requires the approval of the Executive
Directors.
Given the Group’s customer base (government bodies and
major OEMs), credit risk is not considered a significant factor in
the Group’s financial risk profile (although is monitored). Pricing
and cash profiling are the key financial risks arising from the
Group’s trading and these are discussed in detail on pages 18
to 22.
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, bi-monthly executive
briefings, 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
staff suggestion schemes and other channels) being delivered
to the Board periodically.
Our Core Values focus 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 and relevant aspects form part of
employees’ periodic appraisals.
Employees are key to the Group’s success and the Company
gives significant consideration to ensuring that it offers a
working environment, culture and benefits package which can
attract and retain the talented people it needs.
Deborah Wilkinson is designated as the Non-Executive Director
to whom employees can raise any concerns regarding wrong-
doing.
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 is committed
to treating all employees and applicants fairly.
Director’s Report
44
Pennant Annual Report & Accounts 2024
The Group is a signatory to the UK’s Armed Forces Covenant and welcomes applications from ex-service personnel.
Policy on payment of suppliers
The Group’s policy during the year (and continuing into 2025) was 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 17 July 2024, the Company (acting by its Directors) was granted authority to purchase through
the market up to 6,347,130 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 17 July 2024, 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 2025.
The Board
The Board comprises the Chair, the Chief Executive Officer, the Commercial & Risk Director, the Chief Financial Officer and three
additional Non-Executive Directors.
The Directors in office as at the date of this report are named on pages 33 to 35.
A full pack of Board papers (containing various reports and management information) is distributed to Directors in advance of each
Board and Committee meeting. 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 (rounded to the nearest whole number). In addition, any
Directors who will (at the date of the AGM) have been in office for more than three years since their last election are also required
to retire. At the AGM in 2025, Directors wishing to continue in office will be required to stand for re-election in accordance with
corporate governance best practice.
Directors' Indemnity
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 Group 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.
Director’s Report
45
Pennant Annual Report & Accounts 2024
Significant shareholdings
As at 31 December 2024 the Group had 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
Number of shares held
% interest in the total voting
rights of Pennant
CC Powell Concert Party
6,278,253
14.52%
Rockwood Strategic plc
5,860,994
13.56%
Premier Miton Group
5,524,151
12.78%
Brett Gordon
5,240,000
12.12%
Killik & Co LLP
1,797,555
4.16%
Canaccord Genuity Group
1,681,281
3.89%
Political donations
The Group did not make any political donations during 2024 (2023: £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 Chair’s Statement on
pages 8 to 9 and the Chief Executive’s review on pages 10 to 11).
Annual General Meeting
The Company’s Annual General Meeting will be held on June 6th, 2025. 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 in accordance
with communications preferences and will also be available on the website at www.pennantplc.com under the ‘AGM Documents’
section.
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 Group’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
A resolution to reappoint S&W Partners Audit Limited (formerly CLA Evelyn Partners Limited) as auditors in 2025 will be proposed
in the AGM.
Approved by the Board on 23 April 2025
and signed on its behalf
D J Clements
Director
Director’s Report
46
Pennant Annual Report & Accounts 2024
Directors' Responsibility Statement
The Directors are responsible for preparing the Group Strategic Report, Directors’ Report and the financial statements in accordance
with applicable law and regulations.
The directors are also responsible for ensuring that they meet their responsibilities under the AIM Rules.
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 UK-adopted International Accounting Standards (“IFRS”). 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 applicable UK-adopted international accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
•
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 of the ultimate parent company are responsible for the maintenance and integrity of the ultimate parent company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Approved by the Board on 23 April 2025
and signed on its behalf
D J Clements
Director
Directors’ Responsibility Statement
47
Pennant Annual Report & Accounts 2024
48
Pennant Annual Report & Accounts 2024
Financial
Statements
The following section outlines the results for the period
ended 31 December 2024.
49
Pennant Annual Report & Accounts 2024
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 2024 which comprise the Consolidated Income Statement, the Consolidated Statement
of Other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows, the Company Statement of Comprehensive Income, the Company Statement
of Financial Position, the Company Statement of Changes in Equity, the Company Statement of Cash Flows and the notes to the
financial statements, including significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
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 2024 and of the group’s and the parent company’s loss for the year then ended;
•
the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards.
•
the parent company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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 group and parent 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 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.
Our approach to the audit
Of the group’s 6 trading components including the parent company, we subjected 5 to specific audit procedures where the extent
of our audit work was based on our assessment of the risk of material misstatement and of the materiality of that component.
The components within the scope of our work covered 97% of group revenue, 100% of group profit before tax, and 100% of group
net assets.
For the remaining 1 component, we performed analysis at a group level to re-examine our assessment that there were no significant
risks of material misstatement within these.
Independent Auditor’s Report To The Members Of Pennant International Group Plc
50
Pennant Annual Report & Accounts 2024
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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.
Key audit matter
Description of risk
How the matter was addressed in the audit
Revenue recognition
(including contract assets
and contract liabilities)
The group’s revenues are a
principal consideration of its
financial performance and are
a key focus of Management
to meet market expectations.
The group has different income
streams with differing revenue
recognition principles and as a
result there is a risk that revenue
is incorrectly recognised.
We challenged management’s revenue recognition
accounting policies and related disclosures as described in
Note 3 and 5 respectively.
As part of our procedures we:
•
Confirmed the appropriateness of the Group’s
revenue recognition policy with respect to
the requirement of IFRS 15 “Revenue from
Contracts with Customers” and checking that it
has been consistently applied.
•
Performed tests of detail over a sample of
revenue transactions to determine whether the
revenue recognised was complete, occurred and
recognised in line with the Group’s accounting
policies.
•
Tested a sample of deferred and accrued
income to ensure that the related revenue was
recognised correctly in line with the Group’s
accounting policies.
Independent Auditor’s Report To The Members Of Pennant International Group Plc
51
Pennant Annual Report & Accounts 2024
Independent Auditor’s Report To The Members Of Pennant International Group Plc
The cashflow projections
which supports the going
concern status of the Group
(note 3), the recoverability
of intangible assets (notes 4,
16 and 17) and deferred tax
assets (note 27) at a group
level and the recoverability
of investments (parent
company note 6) and inter-
company receivables (parent
company balance sheet) for
the parent company.
The group is loss making and
has undertaken significant
restructuring in the year and
changed strategic focus.
Management have prepared a
budget and cashflow forecasts
indicating that in their view
the Group and the parent
company can continue to
operate as a going concern for
at least 12 months from the
date of approval of the financial
statements.
Cashflow forecasts are inherently
judgemental, particularly around
revenue forecasting, and subject
to fluctuation. As a result, these
projections were a key area of
audit focus.
Furthermore, the group has
significant intangible assets
including goodwill and also a
deferred tax asset. The parent
company also has investments
and intercompany receivables.
These matters present an area of
audit risk as the carrying values
of these is linked to the same
forecasts and the balances could
be impaired if forecasts are not
achieved.
We challenged the assumptions used in the cashflow
forecasts for going concern and in respect of the
impairment reviews for intangible assets to the group
financial statements.
The main procedures performed on the forecasts were:
•
Challenging the assumptions used in the detailed
budgets and forecasts prepared by management.
•
Using our internal valuation specialists to assess
the appropriateness of the model, discount rate
and other variables applied in the impairment
assessment.
•
Verifying the consistency of the forecasts and
assumptions used in the impairment calculations
with those used for going concern assessment,
where relevant.
•
Reviewing bank statements to monitor the cash
position of the group post year end and obtained
an understanding of significant cash inflows and
outflows expected.
•
Considering post year end trading performance
compared to forecasts and anticipated out- turn for
the rest of the financial year
•
Comparing FY2024 forecasts to actual results
achieved to assess past forecasting accuracy.
•
Assessing the appropriateness of disclosures
around going concern, deferred tax assets,
intangible assets and the parent company’s
inter-company receivables and investments.
Capitalisation of intangible
assets/development costs
The group and parent
company capitalises qualifying
development costs as intangible
assets, which are material to the
company and Group’s financial
statements. The capitalisation of
development costs is inherently
judgemental and stringent
requirements must be met
to capitalise these costs in
accordance with the applicable
accounting standard (IAS 38).
This presents an area of audit
risk that costs are incorrectly
capitalised as intangible assets.
We challenged the assumptions for capitalisation of
development costs as described in Note 4 to the group
financial statements.
As part of our procedures we:
•
Traced a sample of development costs capitalised
in the year to supporting documentation.
•
Assessed the costs capitalised in the year against
the recognition criteria of IAS 38.
•
Considered the accuracy and appropriateness of
capitalisation rates used by management
•
Considered the adequacy of impairment in
relation to specific intangible assets.
•
Considered the appropriateness of the disclosures
made in note 4 of the financial statements in
respect of the intangible assets.
52
Pennant Annual Report & Accounts 2024
Independent Auditor’s Report To The Members Of Pennant International Group Plc
Our application of materiality
The materiality for the group financial statements as a whole (“group FS materiality”) was set at £207,000. This has been determined
with reference to the benchmark of the group’s revenue, which we consider to be one of the principal considerations for members
of the company in assessing the group’s performance. Group FS materiality represents 1.5% of the group’s revenue as presented
on the face of the Consolidated Income Statement.
The materiality for the parent company financial statements as a whole (“parent FS materiality”) was set at £93,675. This has been
determined with reference to the benchmark of the parent company’s total assets as it exists only as a holding company for the
group and carries on no external trade in its own right. Parent FS materiality represents 0.6% of the parent company’s total assets
as presented on the face of the parent company statement of financial position.
Performance materiality for the group financial statements was set at £134,000, being 65% of group FS materiality, for purposes
of assessing the risks of material misstatement and determining the nature, timing and extent of further audit procedures. We
have set it at this amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds group FS materiality. We judged this level to be appropriate based on our understanding of the group and its
financial statements, as updated by our risk assessment procedures and our expectation regarding current period misstatements.
Performance materiality for the parent company financial statements was set at £60,900, being 65% of parent FS materiality
based on our overall expectation of the level of audit differences, and the number of and significance of areas of judgement in the
financial statements and considering the extent of work required to give comfort on the group.
Material Uncertainty related to going concern
We draw attention to note 3 in the financial statements concerning the group and the parent company’s ability to continue as a
going concern.
In the reporting period, the group has recorded a loss after tax of £2.6m. The directors have prepared cash flow projections to
December 2026 to support their decision to use the going concern basis and these projections rely on future cash flows from new
business which are not yet secured, and the timing also remains uncertain.
As stated in note 3, these events or conditions indicate a material uncertainty exists that may cast significant doubt on the group and
the parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Notwithstanding
the above, in auditing the financial statements we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and parent company’s ability to adopt the going concern basis of
accounting included the following procedures in conjunction with the matters described in the Key Audit Matters above:
•
Challenging the assumptions used in the detailed budgets and forecasts prepared by management for the going concern
period.
•
Considering post year end trading performance compared to forecasts and anticipated out- turn for the rest of the financial
year.
•
Reviewing bank statements to monitor the cash position of the group post year end and obtaining an understanding of
significant expected cash outflows and inflows in the forthcoming 12-month period.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
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. The directors are responsible for the other information contained within the Annual Report
and Accounts. 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.
53
Pennant Annual Report & Accounts 2024
Independent Auditor’s Report To The Members Of Pennant International Group Plc
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 course of 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
this gives rise to a material misstatement in the financial statements themselves. 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 the light of the knowledge and understanding of the group and the parent company and their 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:
•
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 46, 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Irregularities,
including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud.
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Pennant Annual Report & Accounts 2024
We obtained a general understanding of the Group’s legal and regulatory framework through enquiry of management concerning
their understanding of relevant laws and regulations, the entity’s policies and procedures regarding compliance, and how they
identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Group’s and Parent Company’s
industry and regulation.
We understand that the Group complies with the framework through:
•
Subscribing to relevant updates from external advisors and making changes to internal procedures and controls as
necessary.
•
The Executive Directors’ close involvement in the day-to-day running of the business, meaning that any litigation or claims
would come to their attention directly.
•
The Group has a dedicated Commercial & Risk Director who has oversight of all the relevant policies and procedures.
•
Outsourcing tax compliance services to external experts.
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial
statements, which are central to the Group’s ability to conduct its business, and/or where there is a risk that failure to comply could
result in material penalties. We identified the following laws and regulations as being of significance in the context of the group:
•
The Companies Act 2006 and IFRS in respect of the preparation and presentation of the financial statements.
•
International Traffic in Arms Regulations (ITAR)
•
AIM rules for companies
We performed the following specific procedures to gain evidence about compliance with the significant laws and regulations
identified above:
•
Inquiring of management and, where appropriate, those charged with governance, so to whether the group and the parent
company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance
with laws and regulations and
•
Inspecting correspondence, if any, with relevant licensing or regulatory authorities.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the
entity’s financial statements to material misstatement, including how fraud might occur.
The areas identified in this discussion were:
•
Estimates made by management regarding the appropriateness of capitalised development costs
•
Manipulation of the financial statements, especially revenue, via fraudulent journal entries or error affecting cut-off
around the year end.
•
The incentive to present a misleading view of the business’ financial performance and position given the Group’s listed
status, which might lead to misrepresentations through actions such as mis-stating revenues, presenting overly optimistic
forecasts to support the carrying value of intangible assets, deferred tax assets at a group level and investments and inter-
company receivable balances at a parent company level, as well as to support the going concern presumption.
These areas were communicated to the members of the engagement team not present at the discussion.
The procedures we carried out to gain evidence in the above areas included:
•
Challenging management regarding the assumptions used in the estimates and inherently judgemental areas (see Key
Audit Matters above).
•
Substantive testing on revenue recognition and deferred income ensuring that revenue was recognised appropriately (see
Key Audit Matters above)
•
Substantive work on other material areas affecting profits.
•
Testing journal entries, focusing particularly on postings to unexpected or unusual accounts.
•
Enquiring as to whether there is any correspondence with the above regulators to be reviewed as part of our audit work.
A further description of our responsibilities is available on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Independent Auditor’s Report To The Members Of Pennant International Group Plc
55
Pennant Annual Report & Accounts 2024
Use of the audit report
This report is made solely to the parent 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 parent 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 responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Andrew Edmonds
Senior Statutory Auditor, for and on behalf of
S&W Partners Audit Limited
Statutory Auditor
Chartered Accountants
4th Floor
Cumberland House
15-17 Cumberland House
Southampton
SO15 2BG
23rd April 2025
Independent Auditor’s Report To The Members Of Pennant International Group Plc
56
Pennant Annual Report & Accounts 2024
Consolidated Income Statement for the year ended
31 December 2024
Notes
2024
2023
Continuing operations
£000s
£000s
Revenue
5
13,775
15,535
Cost of sales
(6,875)
(7,808)
Gross profit
6,900
7,727
Land and buildings revaluation on previously impaired asset
Exceptional Costs
8
-
(2,322)
39
(325)
Profit on sale of land and buildings
18
231
-
Other administration expenses
(7,596)
(7,555)
Administrative expenses
(9,687)
(7,841)
Other income
9
185
209
Operating (loss) / profit
9
(2,602)
95
Finance costs
11
(444)
(463)
Finance income
12
5
1
Loss before taxation
(3,041)
(367)
Taxation
13
(466)
(566)
Loss for the year attributable to the equity holders of the parent
(2,575)
(933)
Loss per share
Basic
15
(6.37p)
(2.53p)
Diluted
15
(6.37p)
(2.53p)
The accompanying notes on pages 62 to 91 are an integral part of these financial statements.
Consolidated Income Statement For The Year Ended 31 December 2024
57
Pennant Annual Report & Accounts 2024
Consolidated Statement of other Comprehensive
Income for the year ended 31 December 2024
Notes
2024
2023
£000s
£000s
Loss for the year attributable to the equity holders of the parent
(2,575)
(933)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
(300)
(120)
Items that will not be reclassified to profit or loss:
Net revaluation gain
Impairment on property, plant and equipment
18
-
(80)
113
-
Deferred tax credit / (charge) – property, plant and equipment
27
20
(28)
Total comprehensive loss for the period attributable to the
equity holders of the parent
(2,935)
(968)
Consolidated Statement Of Other Comprehensive Income For The Year Ended 31 December 2024
58
Pennant Annual Report & Accounts 2024
Consolidated Statement of Financial Position as at
31 December 2024
Notes
2024
2024
£000s
£000s
Non-current assets
Goodwill
16
2,530
2,595
Other intangible assets
17
4,218
5,335
Property, plant and equipment
18
470
4,155
Right-of-use assets
19
543
860
Deferred tax assets
27
591
399
Total non-current assets
8,352
13,344
Current assets
Inventories
20
617
980
Trade and other receivables
21
2,355
2,647
Corporation tax recoverable
593
641
Assets held for sale
2,974
-
Cash and cash equivalents
23
1,045
1,099
Total current assets
7,584
5,367
Total assets
15,936
18,711
Current liabilities
Trade and other payables
22
3,251
4,099
Bank overdraft
23
3,330
2,978
Current tax liabilities
3
1
Lease liabilities
24
137
420
Deferred consideration on acquisition
25
311
468
Total current liabilities
7,032
7,966
Net current assets/(liabilities)
552
(2,599)
Non-current liabilities
Lease liabilities
24
468
501
Warranty provisions
28
92
144
Contingent consideration on acquisition
-
283
Total non-current liabilities
560
928
Total liabilities
7,592
8,894
Net assets
8,344
9,817
Equity
Share capital
29
2,162
1,844
Share premium account
6,457
5,383
Capital redemption reserve
200
200
Retained earnings
(495)
1,990
Translation reserve
(85)
215
Revaluation reserve
105
185
Total equity
8,344
9,817
Approved by the Board and authorised for issue on 23 April 2025.
D Wiggins - Director
The accompanying notes on pages 62 to 91 are an integral part of these financial statements.
Consolidated Statement Of Financial Position As At 31 December 2024
59
Pennant Annual Report & Accounts 2024
Consolidated Statement of Changes In Equity for the year
ended 31 December 2024
Share
capital
Share
premium
Capital
redemption
reserve
Retained
earnings
Translation
reserve
Revaluation
reserve
Total
equity
£000s
£000s
£000s
£000s
£000s
£000s
£000s
At 1 January 2023
1,840
5,366
200
2,844
335
110
10,695
(Loss) for the year
-
-
-
(933)
-
-
(933)
Other comprehensive
income / (loss)
-
-
-
-
(120)
85
(35)
1,840
5,366
200
1,911
215
195
9,727
Issue of new ordinary
shares
4
17
-
-
-
-
21
Recognition of share
based payment
-
-
-
69
-
-
69
Transfer from
revaluation reserve
-
-
-
10
-
(10)
-
At 31 December 2023
1,844
5,383
200
1,990
215
185
9,817
(Loss) for the year
-
-
-
(2,575)
-
-
(2,575)
Other comprehensive
income / (loss)
-
-
-
-
(300)
(60)
(360)
1,844
5,383
200
(525)
(85)
125
6,882
Issue of new ordinary
shares
318
1,252
-
-
-
-
1,570
Issue Costs
-
(178)
-
-
-
-
(178)
Recognition of share
based payment
-
-
-
70
-
-
70
Transfer from
revaluation reserve
-
-
-
20
-
(20)
-
At 31 December 2024
2,162
6,457
200
(495)
(85)
105
8,344
Consolidated Statement Of Changes In Equity For The Year Ended 31 December 2024
60
Pennant Annual Report & Accounts 2024
Share capital
This represents the issued share capital of the Company.
Share premium account
This represents the amount by which shares have been issued at a price greater than nominal value less issue costs.
Capital redemption reserve
The capital redemption reserve is a non-distributable reserve into which amounts are transferred following the redemption or
purchase of the Group’s own shares.
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 increments and decrements on the revaluation of non-current assets net of deferred tax.
Consolidated Statement Of Changes In Equity For The Year Ended 31 December 2024
61
Pennant Annual Report & Accounts 2024
Consolidated Statement of Cash Flows for the year ended
31 December 2024
Notes
2024
2023
£000s
£000s
Net cash from operations
30
176
1,294
Investing activities
Interest received
12
5
1
Payment for acquisition of subsidiaries, net of cash acquired
-
(214)
Deferred consideration paid in respect of prior year acquisition
25
(511)
(352)
Investment in intangible assets
17
(1,371)
(1,453)
Purchase of property, plant and equipment
18
(223)
(305)
Proceeds from disposal of property, plant and equipment
484
-
Net cash used in investing activities
(1,616)
(2,323)
Financing activities
Proceeds from issue of ordinary shares
1,392
21
Repayment of lease liabilities
24
(251)
(195)
Net cash from/(used in) financing activities
1,141
(174)
Net decrease in cash and cash equivalents
(299)
(1,203)
Cash and cash equivalents at beginning of year
23
(1,879)
(426)
Effect of foreign exchange rates
(107)
(250)
Cash and cash equivalents at end of year
23
(2,285)
(1,879)
Consolidated Statement Of Cash Flows For The Year Ended 31 December 2024
62
Pennant Annual Report & Accounts 2024
1. General information
Pennant International Group plc is a public company
incorporated in England and Wales under the Companies Act
2006. The company is listed on the alternative investment
market (“AIM”). The address of the registered office is Unit D1,
Staverton Connection, Staverton, Cheltenham, GL51 0TF.
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 thousand pounds 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 2024
The Group has applied the following new accounting standards
and amendments for the first time in the annual reporting period
commencing 1 January 2024. The amendments listed did not
have a material impact on the Group’s financial statements for
the current or prior Period and are not expected to significantly
impact future periods.
•
IAS 1 Presentation of Financial Statements
(Amendment): Classification of Liabilities as Current
or Non-current and Classification of Non-current
Liabilities with Covenants
•
IFRS 16 Leases (Amendment): Lease Liability in a Sale
and Leaseback;
•
IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments Disclosures (Amendment): Supplier
Finance Arrangements;
The following amendments to accounting standards have
been published but are not mandatory for 31 December
2024 reporting periods and have not been adopted early by
the Group. These amendments are not expected to have a
material impact on the entity in future reporting periods or on
foreseeable future transactions.
•
IAS 21 The Effects of Changes in Foreign Exchange
Rates (Amendment): Lack of exchangeability.
3. Accounting policies
The financial statements have been prepared in accordance
with UK-adopted International Accounting Standards (“IFRS”) in
conformity with the requirements of the Companies Act 2006.
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 statement
Accounting standards require that the Directors satisfy
themselves that it is reasonable for them to conclude whether
it is appropriate to prepare the financial statements on a going
concern basis.
The Directors have prepared cash flow projections to 31
December 2026 to support their decision to use the going
concern basis and these projections rely on future cash flows
from new business which is not yet secured and for which
timings are uncertain. The Directors have concluded that there
are scenarios whereby the levels of forecast new business
converted, or the timings of conversion are delayed which
represents a material uncertainty that may cast significant
doubt upon the company’s ability to continue as a going
concern – scenarios under which the Company may be unable
to realise its assets and discharge its liabilities in the normal
course of business.
The Directors have prepared cash flow projections to 31
December 2026 to support their decision to use the going
concern basis and these projections rely on future cash flows
from new business which is not yet secured and for which
timings are uncertain. The Directors have concluded that there
are scenarios whereby the conversion of opportunities into
new business represent a material uncertainty that may cast
significant doubt upon the company’s ability to continue as a
going concern – scenarios under which the Company may be
unable to realise its assets and discharge its liabilities in the
normal course of business.
Nevertheless, after making enquiries and considering the
uncertainties described above, the Directors have a reasonable
expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Consideration was also given to the decisive actions undertaken
during 2024 to restructure the cost base of the Training Systems
segment, removing circa £2 million of annualized cost from the
business, post balance sheet events have served to strengthen
the future cash flow – namely the sale of surplus UK land &
Notes to the Consolidated Financial Statements for the
year ended 31 December 2024
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
63
Pennant Annual Report & Accounts 2024
buildings for gross proceeds in excess of £2 million as well as the
renewal, in April, of its overdraft facility for a further 12 months.
Furthermore, should the Group not achieve budgeted revenue
projections, management would look to address its cash costs
and/or raise capital from a number of different funding options.
For these reasons, we continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
Were the company no longer a going concern, adjustments may
be required to the carrying value of assets, provisions would be
required for the future liabilities arising as a consequence of the
company ceasing business and assets and liabilities currently
classified as non-current would be reclassified as current.
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 direct the
activities of the investee, the right to the variable returns of the
investee, and the ability to use power to affect the returns of
the investee.
Where necessary, adjustments are made to the results of
subsidiaries to bring accounting policies used into line with
those used by the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The assets and liabilities (including
any contingent liabilities) of the subsidiaries are measured at
their fair value at the date of acquisition. Any excess of the
cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency in the
cost of acquisition below the fair value of the identified net
assets acquired (i.e. a discount on acquisition) is credited to the
income statement 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 the profit or loss account and is not
subsequently reversed. Acquisition-related costs are recognised
in the income statement as incurred.
Temporary differences (differences between the carrying
amount of an asset or liability in the statement of financial
position and its tax base) that arise due to the measurement of
identifiable assets and liabilities at their fair values at acquisition
are treated as deferred tax assets or liabilities, as the case may
be.
Revenue recognition
Engineered Solutions
Revenue on engineered solutions contracts is recognised
over time, based on the stage of completion for the identified
performance obligation(s) at the reporting date. Revenue is
recognised over time due to the goods having no alternative
use and the Group being entitled to compensation from the
customer for work completed to date. The stage of completion
for each performance obligation is measured using costs
incurred to date as a proportion of total expected costs to
complete the identified performance obligation.
Generic Products
Revenue is recognised on a point in time basis upon contractual
acceptance of the manufactured product by the customer.
Revenue is recognised at a point in time due to the products
having alternative uses to the Group in that they could be
sold to other prospective customers. Additionally there is not
normally any entitlement to payment for work completed to
date. Until the contractual acceptance of the product, costs are
recognised as work in progress in inventories.
Software Products & Licences
Software licence sales (goods) – revenue is recognised at a
point in time once the customer has access to the licence. This
is on the basis that the customer cannot return the licence or
ask for it to be transferred to another party and the Group is
under no obligation to provide a refund.
Software as a service (SAAS) subscriptions – revenue for the
provision of authentication and data protection services to
customers, is recognised evenly over the time during which the
subscription is provided.
Software Maintenance
Software maintenance revenue is recognised over the period
to which the maintenance support agreement relates. Amounts
invoiced but not taken to revenue at a period end are shown in
the statement of financial position as contract liabilities.
Software and Technical Services
Revenue from software and technical services is recognised
over time or on a point in time basis as determined by the terms
of the customer contract. Amounts not taken to revenue at a
period end are shown in the statement of financial position as
a contract liability.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
64
Pennant Annual Report & Accounts 2024
Leases and Right-of-use assets
Right of use assets and lease liabilities are recognised and
measured in accordance with IFRS 16. A right of use asset and
a lease liability has been recognized for all leases except leases
of low value assets and those with a duration of 12 months
or less. The lease liabilities are measured at the present value
of the lease payments due to the lessor over the lease term,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group’s incremental borrowing
rate. Right of use assets are measured at cost less depreciation
and impairment.
Foreign currency
Transactions in currencies other than each Group entity’s
functional currency 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 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.
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 into sterling 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 recorded in the Group’s transaction
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 current tax charge
and deferred tax charge. Current tax payable, where applicable,
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.
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. Deferred tax
liabilities are generally recognised for all temporary differences
and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available in future periods
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.
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 the asset
is realised, based on the tax rates that have been enacted or
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 charged or credited to 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. Warranty provisions are
recognised over time from the point of contract award. All
warranty provisions currently provided for by the Group are
considered to be assurance-based only.
Share-based payments
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.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
65
Pennant Annual Report & Accounts 2024
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:
*The net book value subsequent to the revaluation as at 31st December
2023.
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 each asset’s 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 arising on the revaluation of such land and
buildings is charged as an expense to the extent that it exceeds
any balance held in the 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 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 recognised impairment loss. Amortisation
is charged to write off intangible assets on a straight-line basis
over their estimated useful lives on the following basis:
The amortisation of intangible assets is included in ‘Other
administration expenses’ in the Consolidated Income Statement
as disclosed in note 9.
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. Inventory cost is calculated using the first in, first out
methodology. 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 instruments, or their component
parts, on initial recognition as a financial asset or a financial
liability.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
Development Costs:
Hardware development costs
10% of cost per annum
Courseware development costs
20% of cost per annum
Software development costs
20% of cost per annum
Virtual Reality development costs
50% of cost per annum
Software
33% of cost per annum
Freehold land:
Nil
Freehold buildings:
Net book value subsequent to
revaluation at 1 January 2024*
being written off over 35 years
on a straight-line basis
Fixtures and
Equipment:
10% to 33.33% of cost per
annum
Motor vehicles:
20% of cost per annum
66
Pennant Annual Report & Accounts 2024
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and subsequently measured at amortised cost.
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.
Research and Development Tax
Incentives
The Group recognises expected tax credits for conducting
qualifying research and development activities in the Income
Statement when it is probable that the credit will be received
and the amount can be measured reliably. Where the expected
credit is taxable (such as credits arising from claims under the
UK Research and Development Expenditure Credits (RDEC)
scheme) the credit is shown in the Income Statement above
the tax line. This has the effect of increasing the profit before
tax but also increasing the total tax expense. Where the credit
is not taxable it is included directly in the Taxation line of the
Income Statement. In either case the tax credit is calculated at
the current legislated rate on qualifying R&D expenditure for
the jurisdiction concerned.
Assets Held for Sale
Assets held for sale are measured at the lower of carrying
amount and fair value less costs to sell and classified separately
on the face of the Group Statement of Position as current or
non-current according to the expected date of sale. Assets held
for sale are not depreciated.
Exceptional Items
Certain incomes and expenditures are presented as an
‘exceptional item’ on the face of the consolidated income
statement as a result of being seen by the Board as non-recurring
transactions or one-off in nature. Excluding exceptional items
from can assist in measuring performance year over year and
against comparative companies.
Management have reviewed the comparative financial
statements for 2023 and represented £325k as exceptional items
on the face of the income statement, which were previously
disclosed in other administrative expenses, with no impact on
overall profitability in accordance with this accounting policy.
4. Critical accounting judgements and
key sources of estimation uncertainty
In the application of the Group’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 Group’s
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
67
Pennant Annual Report & Accounts 2024
Key source of judgement
Revenue recognition - IFRS 15
considerations
A proportion of the Group’s revenue derives from long-term
engineered solutions contracts. Judgement is used to identify
the individual performance obligations within each contract
and allocate costs and revenue across them. Each identified
performance obligation is then assessed as to whether the IFRS
15 criteria for revenue recognition over time is met.
Capitalisation of development costs
The capitalisation of development costs includes judgements
over whether the requirements of IAS 38 intangible assets are
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.
Technical feasibility is confirmed through the Technology and
Innovation teams whilst commercial viability is confirmed by
information received through the Sales team from existing and
potentially new customers.
Deferred tax asset recognition
The recognition of deferred tax assets (see note 27) 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 has been
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 brought forward unused tax losses in its UK subsidiaries.
In determining the recoverability of the deferred tax assets
management has followed a consistent approach as that
adopted for goodwill impairment testing described below.
IAS 12 emphasises the point that the very existence of unrelieved
tax losses is to be taken as strong evidence that there may not
be other future taxable profits against which the losses will be
relieved.
The tax effect of UK trading tax losses with a gross value of
£7.0 million has been offset against deferred tax liabilities
arising from temporary timing differences in equal measure,
and although the Board has full confidence in the strategic and
financial forecasts, any surplus deferred tax asset arising from
brought forward tax losses has not been recognised.
Key source of estimation uncertainty
Impairment of goodwill and other
intangible assets
The Group determines whether goodwill and other intangible
assets are impaired on an annual basis. This requires an
estimation of the value in use of the cash generating units to
which the goodwill is allocated. Estimating the value in use
requires the Group to make an estimate of the expected future
cash flows from the cash generating units and also to choose a
suitable discount rate in order to calculate the present value of
those cash flows. Further details are given in notes 16 and 17.
Revenue recognition - estimation of
cost to complete
For long-term engineered solutions contracts (see note 5), 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. This requires the estimation of the total
costs of each contract based on the contractual requirements
and the estimate cost to complete. This estimate of costs to
complete typically comprises both labour hours and bought out
materials. The estimate is informed through regular contract
reviews and amended for any applicable variations. As at 31
December 2024, the contract with the largest estimated cost to
complete is the Boeing Defence UK contract. The sensitivity of
the estimate is mitigated by the relatively short forecast period
with the contract scheduled to complete in Q1 2025.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
68
Pennant Annual Report & Accounts 2024
5. Revenue
An analysis of the Group’s revenue by product group is as follows:
2024
2023
£000s
£000s
Software licences & products
397
1,111
Software maintenance
1,893
1,589
Technical services
7,276
6,873
Engineered solutions
3,554
5,229
Generic products
655
733
Total Group Revenue
13,775
15,535
The payment terms associated with the revenue groups are typically as follows:
•
Software licences & products: payment at or before installation of software
•
Software maintenance: payment in advance of the maintenance period
•
Software and technical services: time-based or milestone-based payments
•
Engineered solutions & Generic products: milestone-based payments
Revenue which was deferred as at 31 December 2024 now recognised in this year amounts to £1,332k (2023: £2,552k).
As at 31 December 2024 the transaction price of performance obligations unsatisfied at the period end was as follows:
2024
2023
£000s
£000s
Within 1 year
3,234
7,835
In 2-5 years
1,644
2,587
After 5 years
-
770
4,878
11,192
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
69
Pennant Annual Report & Accounts 2024
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 aligned to the Training and Software & Services CGUs and the three regions, UK & Europe, North America
and Asia-Pacific (as detailed on page 11 in the ‘Chief Executive’s Review’ section) 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
Segment revenue
Segment profit/(loss)
2024
2023(1)
2024
2023(1)
£000s
£000s
£000s
£000s
Training
UK & Europe
4,209
5,962
(879)
2,299
North America
-
-
-
-
Asia-Pacific
-
-
-
-
Sub-total Training
4,209
5,962
(879)
2,299
Software & Services
UK & Europe
3,142
2,859
1,042
746
North America
2,743
4,051
(483)
(263)
Asia-Pacific
3,681
2,663
727
472
Sub-total Software & Services
9,566
9,573
1,286
955
Total
13,775
15,535
407
3,254
Management charges and licence fees
(3,009)
(3,159)
Net finance costs
(439)
(462)
Loss before tax
(3,041)
(367)
(1) Restated to show only Generic products and Engineered product solutions within Training CGU, all other trading activity presented within Software & Services
CGU (training services were previously included within the Training CGU) in line with the presentation of results to the executive management team.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
70
Pennant Annual Report & Accounts 2024
6.2 Segment assets and liabilities
Training
Segment assets:
2024
2023(1)
£000s
£000s
UK & Europe
7,036
9,876
North America
-
-
Asia-Pacific
-
-
Consolidated assets
7,036
9,876
Segment liabilities:
UK & Europe
4,143
5,540
North America
-
-
Asia-Pacific
-
-
Consolidated liabilities
4,143
5,540
Software & Services
Segment assets:
£000s
£000s
UK & Europe
4,635
4,113
North America
3,021
3,041
Asia-Pacific
1,244
1,679
Consolidated assets
8,900
8,833
Segment liabilities:
UK & Europe
1,099
501
North America
933
702
Asia-Pacific
1,417
2,242
Consolidated liabilities
3,449
3,445
(1) Restated to show only Generic products and Engineered product solutions within Training CGU, all other trading activity presented within Software & Services
CGU (training services were previously included within the Training CGU) in line with the presentation of results to the executive management team.
6.3 Other segment information
Training
Depreciation and amortisation (2)
Additions to non-current assets (2)
2024
2023(1)
2024
2023(1)
£000s
£000s
£000s
£000s
UK & Europe
743
765
401
393
North America
-
-
-
-
Asia-Pacific
-
-
-
-
743
765
401
393
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
71
Pennant Annual Report & Accounts 2024
Software & Services
Depreciation and amortisation (2)
Additions to non-current assets (2)
2024
2023(1)
2024
2023(1)
£000s
£000s
£000s
£000s
UK & Europe
1,200
913
1,328
1,797
North America
23
23
3
83
Asia-Pacific
175
135
16
578
1,398
1,071
1,347
2,458
(1) Restated to show only Generic products and Engineered product solutions within Training CGU, all other trading activity presented within Software & Services
CGU (training services were previously included within the Training CGU) in line with the presentation of results to the executive management team.
(2) Other intangible assets, property, plant and equipment and right-of-use assets.
6.4 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.
2024
2023
£000s
£000s
UK
Customer 1
3,513
5,220
Canada
Customer 2
265
2,370
7. Staff costs
The aggregate remuneration comprised:
The aggregate remuneration comprised:
2024
2023
£000s
£000s
Wages and salaries
8,327(1)
8,020
Social security costs
983
890
Other pension costs (note 32)
348
341
9,658
9,251
(1) includes termination costs of £447k resulting from the restructuring exercise.
The highest paid Director remuneration is detailed in the ‘Remuneration Report’ on pages 37 to 41.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
72
Pennant Annual Report & Accounts 2024
The average number of persons, including Executive Directors employed by the Group during the year was:
2024
2023
Number
Number
Office and management
32
32
Production
99
103
Selling
8
5
139
140
8. Exceptional Items
The following expenses have been recognised as exceptional items on the face of the Group income statement due to them being
considered non-recurring transactions or one-off in nature:
2024
2023
Restated
£000s
£000s
Included in Administrative Expenses
Inventory Impairment
407
-
Restructuring costs
1,697
-
Aborted acquisition costs
218
190
M&A integration costs
-
135
2,322
325
See note 3 for details behind the restatement.
9. Operating loss for the year
2024
2023
£000s
£000s
The operating loss for the year is stated after charging /(crediting):
Net foreign exchange profit
(232)
(73)
Research and development costs*
585
1,033
Other income arising from RDEC claim (R&D)
(117)
(205)
Property rental and sundry other income
(68)
(4)
Amortisation of developed intangible assets
1,092
778
Amortisation of acquired intangible assets
552
552
Reversal of previously recognised impairment loss as a result of land and buildings revaluation (note 18)
-
(39)
Impairment of intangible assets
831
-
Impairment of inventory
407
-
Impairment of tangible assets
302
-
Depreciation of property, plant and equipment
306
305
Depreciation of right-of-use assets
194
200
Share-based payment (note 31)
70
69
Profit on disposal of land and buildings (note 18)
(231)
-
Loss on disposal of other property, plant and equipment (note 18)
14
-
Profit on disposal of right of use assets
(18)
-
*in addition, in 2024 research & development costs of £1,349k were capitalised (2023: £1,425)
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
73
Pennant Annual Report & Accounts 2024
During 2024 research and development costs of £1,349k were capitalised (2023: £1,425k). Details of our capitalisation and
amortisation policy can be found in note 3.
10. Auditor remuneration
2024
2023
£000s
£000s
Fees payable to the Company’s auditor for:
The audit of the annual financial statements
91
76
The audit of the Company’s subsidiary undertaking
41
40
132
116
11. Finance costs
2024
2023
£000s
£000s
Interest expense for bank overdraft
195
180
Lease interest
77
79
Interest payable on deferred consideration on acquisition
36
49
Movement in discounting applied to deferred consideration
105
109
Other interest expense
31
46
444
463
12. Finance income
2024
2023
£000s
£000s
Other interest receivable
5
1
5
1
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
74
Pennant Annual Report & Accounts 2024
13. Taxation
2024
2023
£000s
£000s
Recognised in the income statement
Current UK tax credit
106
137
Foreign tax credit
143
110
In respect of prior years
44
150
Sub-total current tax
293
397
Deferred tax (charge) / credit relating to origination and reversal of temporary differences
182
(990)
In relation to prior years
(13)
44
Exchange rate difference
4
(17)
Subtotal deferred tax
173
(963)
Total income statement tax charge credit / (charge)
466
(566)
Other Comprehensive Income credit / (charge) for the period
Deferred tax
20
(28)
Reconciliation of effective tax rate
Loss before tax
(3,041)
(367)
Tax at the rate applicable in the United Kingdom of 25% (2023: 19.00%)
760
86
Tax effect of expenses not deductible in determining taxable profit
(31)
(198)
Tax effect of income excluded from taxable profits
(2)
9
Fixed asset differences
122
-
Impact of R&D tax credits
(50)
57
Foreign tax expensed
-
(8)
Chargeable losses
153
-
Effect of different tax rates of subsidiaries operating in other
23
45
Jurisdictions
Effect of higher rate of deferred tax
-
(28)
Effect of change in recognition of deferred tax asset
(1,457)
(601)
Effect of adjustments for prior years (current tax)
44
150
Effect of adjustments for prior years (deferred tax)
6
44
Other differences
2
(122)
Total tax credit / (charge)
466
(566)
14. Dividends
No dividends were paid during the year (2023: £NIL). No final dividend will be proposed at the Annual General Meeting (2023:
£NIL).
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
75
Pennant Annual Report & Accounts 2024
15. 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:
2024
2023
£000s
£000s
Loss after tax attributable to equity holders
(2,575)
(933)
Number
Number
Weighted average number of ordinary shares in issue during the year
40,421,945
36,836,443
Diluting effect of weighted average share options in issue during the year*
1,683,762
1,610,000
Diluted average number of ordinary shares
42,105,707
38,446,443
Loss per share (basic)
(6.37p)
(2.53p)
Loss per share (diluted)*
(6.37p)
(2.53p)
* Share options are excluded from the earnings per share calculation in the consolidated income statement due to their antidilutive effect on the
loss after tax attributable to equity holders.
The Company issued 6,203,767 ordinary shares at 25p each through a placing and subscription for shares.
16. Goodwill
Carrying amount:
£000s
At 1 January 2023
2,507
Currency translation
(62)
Acquisition of Track Access Productions Ltd
150
At 1 January 2024
2,595
Currency translation
(65)
At 31 December 2024
2,530
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 goodwill will not be deductible for tax purposes. The Group sells or offers for sale
the same range of all of its products in each of three distinct geographical regions, as shown in the segmental analysis at note 6.
However, the Group’s intellectual property is owned by the Company and is licenced to its subsidiaries. As the regional entities do
not have significant revenue-generating assets, the geographic regions are not considered to be CGUs.
The Group has instead chosen its CGUs to reflect its two different product streams, which are Training (sale of Engineered and
Generic products) and Software & Services (sale of Software Product Licences, Software Product Maintenance and Technical
Services). This choice is justified because the intellectual property, know-how and mode of operation is different for each CGU.
The carrying amount of goodwill has been allocated as follows:
Cash generating unit:
2024
2023
£000s
£000s
Training
734
734
Software
1,796
1,861
2,530
2,595
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
76
Pennant Annual Report & Accounts 2024
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 twelve months derived from the most recent annual financial
budgets approved by the Board of Directors and extrapolates cash flows as follows:
Software CGU:
Cashflows derive from the board approved 3 year financial plan (inclusive of 12 month annual budget) and are extrapolated for a
further two years at a growth rate of 3% (2023: 5%). The forecast includes a terminal value at a terminal growth rate of 3%.
Training CGU:
Cashflows derive from the board approved 3 year financial plan (inclusive of 12 month annual budget) and are extrapolated for
an additional two years at a growth rate of 3% per annum (2023: 3%). The forecast includes a terminal value based off an average
income from the 5 year period forecast – this is done to factor in the cyclicality experienced in the Training CGU due to long order
to delivery gestation periods.
The forecast cash flows of each CGU are discounted at the following pre-tax rates to provide the value in use for each CGU:
Training CGU: 13.47% (2023: 11.74%)
Software CGU: 13.12% (2023: 12.87%)
The rates have been calculated to reflect the working capital structure of the Group as each CGU utilises the optimal capital
structure, being both debt and equity.
The discounted cash flows provide headroom for the goodwill carrying values in excess of their respective assets in the case of each
CGU with the Training headroom being £2 million and Software headroom of £12 million both after considering terminal values.
Key assumptions are based on past experience and external sources. No impairment of goodwill has been recorded in either the
year ending 31 December 2024 or 31 December 2023. 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. For example, in the Training CGU, new business revenues would need to decrease by 15% over the
forecast period before an impairment charge is required for the carrying value of the intangibles asset (in the absence of any cost
cutting measures).
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
77
Pennant Annual Report & Accounts 2024
17. Other intangible assets
Software
Development
costs
Customer
lists and
contracts
Total
£000s
£000s
£000s
£000s
Cost
At 1 January 2023
549
9,911
-
10,460
Currency translation
-
(21)
-
(21)
Acquisition of TAP (Note 34)
-
-
536
536
Additions
28
1,425
-
1,453
Disposals
(40)
-
-
(40)
At 1 January 2024
537
11,315
536
12,388
Currency translation
-
(29)
-
(29)
Additions
22
1,349
-
1,371
At 31 December 2024
559
12,635
536
13,730
Amortisation
At 1 January 2023
531
5,239
-
5,770
Currency translation
-
(7)
-
(7)
Charge for the year
10
1,240
80
1,330
Disposals
(40)
-
-
(40)
At 1 January 2024
501
6,472
80
7,053
Currency translation
-
(16)
-
(16)
Charge for the year
19
1,517
108
1,644
Impairment
-
831
-
831
At 31 December 2024
520
8,804
188
9,512
Carrying amount
At 31 December 2024
39
3,831
348
4,218
At 31 December 2023
36
4,843
456
5,335
During 2024 the Group capitalised £1,349k (2023: £1,425k) of costs in relation to the ongoing development of the Auxilium software
suite of solutions including enhancements to existing software related assets. More information can be found in the CEO’s report.
£831k of impairment was identified (2023: £NIL) in relation to Training Systems hardware development costs relating to specific
projects no longer viable as a result of the training division restructure. An impairment review was performed as at 31 December
2024 and following sensitivity analysis performed on the key assumptions, as disclosed in note 16, no further impairment to other
intangible assets was deemed necessary.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
78
Pennant Annual Report & Accounts 2024
18. Property, plant and equipment
Land and
buildings
Fixtures and
equipment
Motor vehicles
Total
£000s
£000s
£000s
£000s
Cost / Valuation
At 1 January 2023
3,095
3,508
14
6,617
Currency translation
-
(11)
-
(11)
Additions
-
276
29
305
Acquisition of TAP (note 34)
-
2
-
2
Revaluation
5
-
-
5
Disposals
-
(105)
(7)
(112)
At 1 January 2024
3,100
3,670
36
6,806
Currency translation
-
(35)
(3)
(38)
Additions
194
29
-
223
Reclassified as held for sale
(3,100)
-
-
(3,100)
Disposals
(194)
(75)
-
(269)
At 31 December 2024
-
3,589
33
3,622
Depreciation
At 1 January 2023
73
2,528
14
2,615
Currency translation
-
(11)
-
(11)
Revaluation
(146)
-
-
(146)
Disposals
-
(105)
(7)
(112)
Charge for year
73
228
4
305
At 1 January 2024
-
2,640
11
2,651
Currency translation
-
(18)
-
(18)
On assets held for sale
(47)
-
-
(47)
Impairment
-
302
-
302
Disposals
-
(42)
-
(42)
Charge for the year
47
253
6
306
At 31 December 2024
-
3,135
17
3,152
Carrying amount
At 31 December 2024
-
454
16
470
At 31 December 2023
3,100
1,030
25
4,155
On 27 March 2024, the Parent Company exercised its option to purchase an industrial / office unit which it had leased and occupied
since January 2019 (Unit C1, Herrick Way, Staverton Technology Park, Staverton, Cheltenham, GL51 6TQ). The purchase price was
£204k inclusive of certain fixtures and fittings, and the property (including fixtures and fittings) was immediately sold on the same
date for proceeds of £484k. After agent and legal fees, the group realised a profit on disposal of £231k.
On 1st October 2024, the remainder of the owned Land & Buildings in Cheltenham, UK, were advertised for sale and subsequently
reclassified as current assets held for sale in accordance with IFRS 5.
The carrying amount of assets classified as held for sale on 31 December 2024 is £3.1 million.
The progress of this sale process is discussed in note 37 Post Balance Sheet Events.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
79
Pennant Annual Report & Accounts 2024
19. Right-of-use assets
Property
Motor vehicles
Total
£000s
£000s
£000s
Valuation
At 1 January 2023
410
93
503
Currency translation
(1)
-
(1)
Additions
410
148
558
Depreciation
(149)
(51)
(200)
At 1 January 2024
670
190
860
Currency translation
(28)
-
(28)
Additions
103
51
154
Termination of lease
(193)
(56)
(249)
Depreciation
(128)
(66)
(194)
At 31 December 2024
424
119
543
20. Inventories
2024
2023
£000s
£000s
Raw materials and consumables
589
936
Work in Progress
28
44
617
980
£695k (2023: £1,085k) of inventories have been recognised as an expense in the consolidated income statement.
During the year, as a result of the restructuring of the Training side of the business, an impairment charge of £407k (2023: £nil) has
been recognised against the inventory balance.
21. Trade and other receivables
2024
2023
£000s
£000s
Trade receivables
1,064
1,476
Contract assets
908
714
Other receivables
11
17
Prepayments
372
440
2,355
2,647
No receivables have been written off as uncollectible during the year (2023: £Nil) and it has not been necessary to recognise any
impairment loss under the expected lifetime loss model as there is no history of trade receivables being uncollected and therefore
it is believed any credit risk is minimal and any expected credit losses (ECL) charge would be immaterial.
The contract assets have increased as a result of timing differences between work performed and billing on Technical Services
contracts.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
80
Pennant Annual Report & Accounts 2024
22. Trade and other payables
2024
2023
£000s
£000s
Contract liabilities
1,502
1,687
Trade payables
672
621
Taxes and social security costs
397
611
Other creditors and Accruals
680
1,180
3,251
4,099
Contract liabilities have decreased as a result of timing differences between work performed and billing on Technical Services
contracts.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
23. Cash and cash equivalents
2024
2023
£000s
£000s
Cash at bank
1,031
1,086
Petty cash
14
13
1,045
1,099
Bank overdraft
(3,330)
(2,978)
Balance as per statement of cash flows
(2,285)
(1,879)
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.
The bank overdraft is secured by fixed and floating charges over the assets of Pennant International Group plc, Pennant International
Limited and by cross-guarantees between those companies.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
81
Pennant Annual Report & Accounts 2024
24. Lease liabilities
Property
Motor vehicles
Total
£000s
£000s
£000s
Valuation
At 1 January 2023
467
92
559
Currency translation
(1)
-
(1)
Additions
410
148
558
Termination of lease
-
-
-
Interest expense (presented as operating cash flow)
68
11
79
Repayments (principal and interest)
(205)
(69)
(274)
At 1 January 2024
739
182
921
Currency translation
(31)
-
(31)
Additions
103
51
154
Termination of lease
(208)
(55)
(263)
Interest expense (presented as operating cash flow)
57
18
75
Repayments (principal and interest)
(171)
(80)
(251)
At 31 December 2024
489
116
605
Current
93
44
137
Non-current
396
72
468
Included in the movement in lease liabilities are repayments of lease liabilities totalling £251k (2023: £274k). The principal element
of the repayments has been classified as financing activities in the Statement of Cash Flows whereas the interest payment is
included in operating cash flows at note 30. All other movements are considered to be non-cash changes.
In 2024 short-term lease rentals expensed amounted to £23k (2023: £16k). The total cash outflow in respect of leases (right-of-use
and short-term expensed rentals) was £274k (2023: £290k).
There were no low value leases or variable lease payments in the year. This is not likely to significantly change in the year ahead.
Lease payments due:
Lease payments due:
2024
2024
2023
2023
£000s
£000s
£000s
£000s
Within 1 year
197
448
In 2-5 years
529
555
After 5 years
53
159
779
1,162
Finance charges
(174)
(241)
Net Present Value
605
921
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
82
Pennant Annual Report & Accounts 2024
25. Deferred and contingent consideration
Carrying amount:
£000s
At 1 January 2023
879
Currency translation
(40)
Acquisition of Track Access Productions Ltd
155
Repayment
(352)
Movement in discount applied to future repayments
109
At 1 January 2024
751
Currency translation
(31)
Repayment (TAP)
(175)
Repayment (ADG)
(336)
Movement in discount applied to future repayments (TAP)
21
Movement in discount applied to future repayments (ADG)
81
At 31 December 2024
311
Deferred consideration (Current)
311
Contingent consideration (Non-current)
-
311
The deferred consideration comprises the remaining amounts expected to be paid in the financial year 2025 following the
acquisition of Halter Holdings Pty Ltd (the parent Company of Absolute Data Group Pty Ltd and Onestrand Inc) in March 2020.
Further details of the acquisition can be found in the annual report and accounts for the financial years 31 December 2020 and 31
December 2021.
26. Borrowings
On 31 December 2024 the Group had available bank overdraft facilities, for use by its UK trading entities and provided by HSBC UK,
of £3.5 million (2023: £4 million). During April 2025 the facility was extended for a further 12 months at a lower facility limit of £2
million which reflects the reduction in secured assets (sale of Land & Buildings).
Any overdraft arising from the facility is repayable on demand and carries interest at 2.50% (2023: 2.50%) 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 and by cross-guarantees between those companies.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
83
Pennant Annual Report & Accounts 2024
27. Deferred tax
Accelerated
tax
depreciation
Other
temporary
differences
Intangible
Assets
Tax losses
Total
£000s
£000s
£000s
£000s
£000s
At 1 January 2023
(1,312)
720
-
2,089
1,497
Charge to income
(49)
(155)
-
(715)
(919)
Credit to OCI
(28)
-
-
-
(28)
Exchange differences
-
(17)
-
-
(17)
Acquisition entry
(134)
(134)
At 1 January 2024
(1,389)
548
(134)
1,374
399
Credit / (charge) to income
475
101
69
(472)
173
Credit to OCI
20
-
-
-
20
Exchange differences
-
-
(1)
-
(1)
At 31 December 2024
(894)
649
(66)
902
591
The main rate of United Kingdom (UK) corporation tax increased from 19% to 25% with effect from 1 April 2024. The 25% rate has
been applied in the calculation of deferred taxation balances for the UK-based entities. In each foreign subsidiary, deferred tax has
been recognised at the prevailing income tax rate in the respective country.
At the reporting date the Group had unused tax losses of approximately £7.0 million (2023: £6.8 million) which are expected to
be available for set-off against future profits arising in the UK. The tax effect of the deferred tax asset recognised in the Group
statement of financial position is nil by virtue of it being offset in equal measure by the tax effect of the deferred tax liability arising
from accelerated tax depreciation in the same UK subsidiary group.
28. Warranty provisions
2024
2023
£000s
£000s
Warranty provisions as at 1 January
144
107
Additional warranties accrued
33
42
Warranty provisions released
(85)
(5)
Warranty provisions as at 31 December
92
144
During 2024, the warranty provisions balance has decreased due to the fulfilment of a warranty obligation on a programme
delivered in 2024.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
84
Pennant Annual Report & Accounts 2024
29. Share capital
2024
2023
£000s
£000s
Authorised, issued and fully paid
43,234,133 ordinary shares of 5p each (2023: 36,882,438)
2,162
1,844
2,162
1,844
The Company’s ordinary shares carry one vote per share, have equal rights to participate in dividends, are freely transferable and
are not redeemable.
On 23 May 2024 3,831,767 ordinary shares and 1,600,000 subscription shares were issued at an average value of 25p per share for
total consideration of £1.36 million.
On 2 August 2024 772,000 subscription shares were issued at an average price of 25p per share for total consideration of £0.2
million.
On 6 September 2024 147,928 ordinary shares were issued at an average price of 24p per share for a total consideration of £7k in
order to satisfy subscriptions under the employee Share Incentive Plan.
30. Notes to the consolidated statement of cash flows
Cash generated from operations:
2024
2023
Notes
£000s
£000s
Loss for the year
(2,575)
(933)
Finance costs
11
444
463
Finance income
12
(5)
(1)
Income tax (credit) / charge
13
(466)
566
Withholding tax
-
-
Depreciation of property, plant & equipment
18
306
305
Depreciation of right-of-use assets
19
194
200
Profit on disposal of property, plant and equipment
(217)
-
Amortisation of other intangible assets
17
1,644
1,330
Impairment of intangibles
17
831
-
Impairment of property, plant and equipment
18
302
-
Reversal of impairment on land and buildings valuation
18
-
(39)
Other income – RDEC (R&D)
(119)
(205)
Share-based payment
70
69
Operating cash flows before movement in working capital
409
1,755
Decrease in receivables
21
292
1,482
Decrease in inventories
20
363
21
Decrease in payables and provisions
22 / 28
(901)
(1,726)
Cash generated from operations
163
1,532
Tax received
445
117
Interest paid
(432)
(355)
Net cash generated from operations
176
1,294
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
85
Pennant Annual Report & Accounts 2024
Changes in financing liabilities:
Bank
overdraft
Lease
liabilities
(note 24)
Total
financing
liabilities
£000s
£000s
£000s
At 1 January 2023
(426)
(559)
(985)
Cash movements:
Change in cash and cash equivalents per cash flow statement
(1,203)
-
(1,203)
Lease repayments (principal and interest)
-
274
274
Non-cash movements:
Effect of foreign exchange rates
(250)
1
(249)
Lease additions
-
(558)
(558)
Interest added to liability
-
(79)
(79)
At 1 January 2024
(1,879)
(921)
(2,800)
Cash movements:
Change in cash and cash equivalents per cash flow statement
(300)
-
(300)
Lease repayments (principal and interest)
-
251
251
Non-cash movements:
Effect of foreign exchange rates
(106)
31
(75)
Lease additions
-
(154)
(154)
Lease terminations
-
263
263
Interest added to liability
-
(75)
(75)
At 31 December 2024
(2,285)
(605)
(2,890)
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
86
Pennant Annual Report & Accounts 2024
31. Share-based payments
The Company operates an EMI share option scheme for certain employees of the Group (the “Scheme”). 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. Exercise
in all cases is subject to non-market conditions as options are forfeited if the employee leaves the Group before the options vest.
The options granted to the Executive Directors in 2023 and 2024 are subject to market conditions as outlined in the remuneration
report on pages 37 to 41. Details of the share options outstanding during the year are as follows:
Options granted under the Scheme
2024
2023
Number of
share
options
Weighted
average
exercise price
Number of
share
options
Weighted
average
exercise price
Outstanding at 1 January
1,580,000
47.42p
1,530,000
48.16p
Granted during the year
919,473
28.85p
130,000
31.50p
Lapsed during the year
(210,000)
51.43p
(80,000)
35.30p
Outstanding at 31 December
2,289,473
38.39p
1,580,000
47.42p
Exercisable at 31 December
360,000
85.12p
420,000
87.53p
Of the 919,473 share options granted in 2024, 130,000 were granted to employees of the Group and 789,473 were granted to
Executive Directors. The options held by Executive Directors are detailed in the remuneration report on pages 37 to 41. The
130,000 share options granted in 2023 were all granted to employees of the Group.
The option prices for the outstanding share options are:
2024
2023
30 – 50p
2,009,473
1,240,000
51 – 80p
70,000
70,000
81 – 100p
100,000
140,000
101 – 135p
110,000
130,000
The fair value of the options granted during the year under the Scheme is £104k. The weighted average fair value is 11.3p.
The options outstanding at 31 December 2024 had a weighted average remaining contractual life of 3.03 years (2023: 3.89 years).
The Group recognised total expenses related to equity-settled share-based payment transactions of £70k (2023: £69k). This is for
the options granted to the staff and Executive Directors.
The Black-Scholes model was used to calculate the fair value of options granted in 2024 with the following inputs:
• Expected volatility (based on historic volatility): 34.39% (2023: 39.40%)
• Risk free rate: 4.62% (2023: 3.420%)
• Expected dividend yield: 0.0% (2023: 0.0%)
• Option life: 10 years staff / 3 years executive (2023: 10 years)
• Vesting period: 3 years (2023: 3 years)
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
87
Pennant Annual Report & Accounts 2024
The options granted to the Executive Directors in December 2024 are subject to market based vesting conditions. The options,
granted on 11th December 2024, are exercisable at 28.5p and vest in tranches linked to growth in the Company’s share price.
The first 50% tranche will vest upon the Company’s share price trading at 50p for a period of at least 30 consecutive days. The
second 25% tranche will vest upon the share price trading at 75p and the third 25% tranche at 100p. The performance conditions
must be met within three years from the date of grant in order for each tranche of the options to vest. The options lapse upon
the occurrence of certain events, including the termination of employment. These options are incremental to the award made
to Executive Directors in 2022 under similar conditions. Details of Directors share holding interests can be found in the Directors
Remuneration report on pages 37 to 41.
SIP Scheme
The SIP scheme is open to UK employees and is governed by UK legislation. It is designed to promote employee share ownership
and provides tax advantages to participants. The participating employees have monthly deductions taken from their salaries each
year under a salary sacrifice arrangement which are then held by the trustees of the SIP and used to purchase shares at the end
of the period.
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.
2024
2023
£000s
£000s
Contributions payable by the Group for the year
348
341
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 (including the bank overdraft facility) and
equity comprising issued share capital, reserves and retained earnings. The Group is not subject to any externally imposed capital
requirements.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
88
Pennant Annual Report & Accounts 2024
33.2 Categories of financial instruments
2024
2023
£000s
£000s
Financial assets
Measured at amortised cost
Trade receivables
1,064
1,476
Contract assets
908
714
Other receivables
11
17
Cash and cash equivalents
1,045
1,099
3,028
3,306
Financial liabilities
Measured at amortised cost
Contract liabilities
1,502
1,687
Trade payables
672
621
Other creditors
366
146
Bank overdraft
3,330
2,978
Lease liabilities
779
1,162
Deferred consideration on acquisition
311
468
6,960
7,062
33.3 Contractual maturities of financial liabilities
All of the financial liabilities in the table above are non-derivative financial liabilities and have contractual maturities as follows:
Within 1 year
Within 2 – 5
years
After 5 years
Total
£000
£000
£000
£000
Contract liabilities
1,502
-
-
1,502
Trade payables
672
-
-
672
Other creditors
366
-
-
366
Bank overdraft*
3,330
-
-
3,330
Lease liabilities
197
529
53
779
Deferred consideration on acquisition
311
311
6,378
529
53
6,960
* The bank overdraft is ordinarily renewed in April of each financial year and therefore deemed to have a contract maturity of less than one year.
33.4
Financial risk management
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.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
89
Pennant Annual Report & Accounts 2024
33.5
Foreign currency risk
The Group operates internationally, which gives rise to financial exposure from changes in foreign exchange rates. At 31 December
2024 and 31 December 2023, 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:
Liabilities
Assets
2024
2023
2024
2023
£000s
£000s
£000s
£000s
Canadian $
183
189
657
886
American $
38
35
160
154
Australian $
748
1,122
363
628
Total
969
1,346
1,180
1,668
The following table details the Group’s sensitivity to a 5% strengthening 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.
Impact on profit
2024
2023
£000s
£000s
Canadian $
(23)
(33)
American $
(6)
(6)
Australian $
18
24
33.6
Credit risk
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 2024 and 31 December 2023 there were no
significant concentrations of credit risk outside of the two customers disclosed in note 6.4. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the statement of financial position.
33.7 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
manages its liquidity needs primarily through its cash flow forecasting process whereby an updated consolidated and entity-level
forecast is produced for review by the Chief Financial Officer on a fortnightly basis. The forecast typically forecasts eighteen months
ahead using weekly timebands for the current financial year and monthly timebands for the following financial year.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
90
Pennant Annual Report & Accounts 2024
Cash forecasts are compiled on a prudent basis using accurate financial accounting system and bank data and are periodically stress-
tested to check that the Group has adequate headroom in the event of delayed customer receipts or orders. The regularity of cash
forecasting ensures that proposed payments can easily be checked against the forecast and that sufficient cash is maintained in the
Group’s overseas subsidiaries. Longer-term cash forecasts are developed as required by particular business scenarios determined
by the Board of Directors, such as planning for an acquisition.
The forecasting process as outlined above ensures that the Group can plan ahead to ensure that sufficient cash and undrawn
facilities are available for the Group to fund its ongoing operations and to meet its medium-term capital and funding obligations.
At the year end the Group had a net overdraft of £2,285k (2023: £1,879k) and net undrawn facilities of £1,215k (2023: £2,121k)
against the temporarily increased overdraft facility of £3.5 million (2023: £4.0 million). The level of the Group’s overdraft facility is
reviewed annually.
The Group’s financial obligations consist of trade and other payables and obligations under leases which are set out in notes 22
and 24 respectively.
Trade and other payables are all payable within three months.
33.8 Interest risk
The Group is from time to time exposed to interest rate risk on the bank overdraft when the Group is overdrawn. This is the only
liability subject to interest rate risk at the balance sheet date. Interest is paid on bank overdraft at 2.50% (2023: 2.50%) over
base rate. A 1% rise/fall in interest rates would have decreased/increased profit for the year by an immaterial amount (2023:
immaterial).
34. Related party transactions
Transactions with related parties
For the Group there were no sales to, purchases from or, at the year end, balances with any related party.
Intra-group transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
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 Remuneration
Report.
Dividends paid to Directors
Dividends totalling £Nil (2023: £Nil) were paid in the year in respect of ordinary shares in which the Company’s Directors had a
beneficial interest.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
91
Pennant Annual Report & Accounts 2024
35. Business combinations
The Group did not enter into any business combinations in 2024.
On 12 April 2023, Pennant acquired the entire issued share capital of Track Access Productions Limited (“TAP”). The consideration
payable for the acquisition comprised an enterprise value of £585k, plus an amount of circa £385k in respect of TAP’s ‘free cash’
after allowing for normalised working capital and repayment of debt. The acquisition was funded from the Group’s existing cash
resources.
36. Audit exemptions for group companies
The following companies have exercised exemption from audit under s479A, S480A of the Companies Act 2006 and s394A of the
Companies Act 2006:
o Aviation Skills Foundation Limited (s480)
o Pennant SIP Trustee Limited (s479A)
o Pennant Rail Holdings Limited (previously Pennant Support and Development Services Limited) (s479A)
o Track Access Productions Limited (S479A)
37. Post balance sheet events
On 24th February 2025 the company announced the disposal of unit D at the Group’s Staverton site for a cash consideration of
£0.83 million as part of the previously announced streamlining of the Group’s Training Division.
On 7th April 2025 the company announced the exchange of contracts on three more commercial properties at the Group’s Staverton
site (units D3, D4 and car park). The aggregate consideration is £1.2 million and completion on each of the transactions is set for
25 April 2025.
During April 2025 the Group renewed its overdraft facility with its bankers, HSBC, at a limit of £2 million, for 12 months, secured
by charges on the remaining owned land & buildings at Cheltenham, UK.
Notes To The Consolidated Financial Statements For The Year Ended 31 December 2024
92
Pennant Annual Report & Accounts 2024
Company Number: 03187528
Company Statement of Comprehensive Income for the year
ended 31 December 2024
Notes
2024
2023
£000s
£000s
Continuing operations
Management charges and licence fees receivable
3,007
3,171
Profit on sale of land
231
-
Exceptional costs
(1,062)
-
Administrative expenses
(3,996)
(3,967)
Operating loss
(1,820)
(796)
Finance costs
4
(48)
(63)
Loss before tax
(1,868)
(859)
Taxation
5
381
242
Loss after tax
(1,487)
(617)
Other comprehensive income
-
-
Total comprehensive loss attributable to equity holders
(1,487)
(617)
Company Statement Of Comprehensive Income For The Year Ended 31 December 2024
93
Pennant Annual Report & Accounts 2024
Company Statement of Financial Position at 31 December 2024
Notes
2024
2023
£000s
£000s
Non-current assets
Investment in subsidiaries
6
6,763
6,763
Other intangible assets
8
4,901
5,608
Right of Use assets
9
63
47
Total non-current assets
11,727
12,418
Current assets
Trade and other receivables
10
55
43
Amounts due from subsidiaries
3,848
3,365
Corporation tax recoverable
145
137
Total current assets
4,048
3,545
Total assets
15,775
15,963
Current liabilities
Trade and other payables
11
219
369
Bank overdraft
12
167
562
Amounts due to subsidiaries
7,345
6,729
Lease liabilities
13
20
17
Total current liabilities
7,751
7,677
Net current liabilities
(3,703)
(4,132)
Non-current liabilities
Lease liabilities
13
40
28
Deferred tax liability
14
367
616
Total liabilities
8,158
8,321
Net assets
7,617
7,642
Equity
Share capital
15
2,162
1,844
Share premium account
6,457
5,383
Capital redemption reserve
200
200
Retained earnings
(1,202)
215
Total equity
7,617
7,642
Approved by the Board and authorised for issue on 23 April 2025.
D Wiggins, Director
The accompanying notes on pages 96 to 104 are an integral part of these financial statements.
Company Statement Of Financial Position At 31 December 2024
94
Pennant Annual Report & Accounts 2024
Company Statement of Changes In Equity for the year
ended 31 December 2024
Share capital
Share
Premium
Capital
redemption
reserve
Retained
earnings
Total equity
£000s
£000s
£000s
£000s
£000s
At 1 January 2023
1,840
5,366
200
763
8,169
Total comprehensive loss for the
year
-
-
-
(617)
(617)
Issue of new ordinary shares
4
17
-
-
21
Recognition of share-based
payment
-
-
-
69
69
At 1 January 2024
1,844
5,383
200
215
7,642
Total comprehensive loss for the
year
-
-
-
(1,487)
(1,487)
Issue of new ordinary shares
318
1,252
-
-
1,570
Issue costs
-
(178)
-
-
(178)
Recognition of share-based
payment
-
-
-
70
70
At 31 December 2024
2,162
6,457
200
(1,202)
7,617
Note: see page 60 for a description of the reserves appearing in the column headings of the table above.
Company Statement Of Changes In Equity For The Year Ended 31 December 2024
95
Pennant Annual Report & Accounts 2024
Company Statement of Cash Flows for the year ended 31 December 2024
Notes
2024
2023
£
£
Net cash from operations
16
(1,200)
679
Investing activities
Purchase of property, plant & equipment
7
(223)
-
Proceeds from disposal of property, plant & equipment
7
454
-
231
-
Financing activities
Proceeds from issue of ordinary shares
15
1,392
21
Repayment of lease liabilities
13
(28)
(25)
Net cash generated from financing activities
1,364
(4)
Net increase in cash and cash equivalents
395
675
Cash and cash equivalents at beginning of year
(562)
(1,237)
Cash and cash equivalents at end of year
(167)
(562)
Company Statement Of Cash Flows For The Year Ended 31 December 2024
96
Pennant Annual Report & Accounts 2024
Notes to the Company Financial Statements for the year ended
31 December 2024
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 UK-adopted International Accounting Standards (“IFRS”).
The principal accounting policies adopted are the same as those set out in note 3 to the consolidated financial statements with the
following exceptions;
Investments in subsidiaries which are stated at cost less, where appropriate, provisions for impairment.
Inter group amounts receivable/payable - amounts owed to/from group undertakings are measured at amortised cost and are
repayable on demand.
Key sources of estimation uncertainty
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.
Investment in subsidiaries
The Company determines whether investments are impaired on an annual basis. This requires an estimation of the value in use
of the subsidiary investment. Estimating the value in use requires the Company to make an estimate of the expected future cash
flows from the cash generating units and also to choose a suitable discount rate in order to calculate the present value of those
cash flows. Key assumptions used in these estimations relate to revenue growth; should revenue growth not be achieved in line
with forecasts there may be potential impairment in the future.
Impairment of other intangible assets
The Company determines whether other intangible assets are impaired on an annual basis. This requires an estimation of the
value in use of the cash generating units to which the other intangible assets are allocated. Estimating the value in use requires
the Company to make an estimate of the expected future cash flows from the cash generating units and also to choose a suitable
discount rate in order to calculate the present value of those cash flows. See note 8 for further disclosure.
2. Operating loss
The operating loss is stated after amortisation of other intangible assets of £1,537k (2023: £1,362k) which is included in
Administrative expenses in the Statement of Comprehensive Income. The auditor’s remuneration for audit and other services is
disclosed in note 10 to the consolidated financial statements.
Exceptional costs, as defined in the notes to the Group financial statements, comprise the costs of an aborted acquisition (£217k),
restructuring costs (£194k) and a charge for the impairment of intangibles resulting from the restructuring program (£651k).
Notes To The Company Financial Statements For The Year Ended 31 December 2024
97
Pennant Annual Report & Accounts 2024
3. Staff costs
The aggregate remuneration comprised:
2024
2023
£000s
£000s
Wages and salaries (1)
1,542
1,416
Social security costs
185
164
Other pension costs
94
92
1,821
1,672
(1) includes termination costs of £185k resulting from the restructuring exercise.
The average number of persons, including Executive Directors employed by the Company during the year was 7 (2023: 5).
4. Finance costs
2024
2023
£000s
£000s
Interest expense
48
63
5. Taxation
2024
2023
£000s
£000s
Current tax credit
132
268
Deferred tax (charge) / credit
249
(26)
Tax credit for the year
381
242
Reconciliation of effective tax rate
Loss before tax
(1,868)
(859)
Tax at applicable rate of 25.0% (2023: 19.0%)
467
202
Effect of expenses that are not deductible for tax
(36)
(61)
Effect of other transfers and adjustments
(38)
(30)
Effect of adjustments for prior years
(12)
131
Total tax credit
381
242
Notes To The Company Financial Statements For The Year Ended 31 December 2024
98
Pennant Annual Report & Accounts 2024
6. Subsidiaries
Details of the Company’s subsidiaries at 31 December 2024 are as follows:
Subsidiary name
Registered office
Proportion of
ownership
Pennant International Limited
Unit D1 Staverton Connection, Staverton, Cheltenham, GL51 0TF
100%
Pennant Rail Holdings Limited*
Unit D1, as above
100%
Track Access Productions Limited**
Unit D1, as above
100%
Aviation Skills Foundation Limited***
Unit D1, as above
100%
Pennant SIP Trustee Limited
Unit D1, as above
100%
Pennant Canada Limited
1400 Blair Place, Suite 100, Ottawa, Ontario K1J 9B8, Canada
100%
Pennant Australasia Pty Limited
Suite 2, Building 25, 270 Ferntree Gully Road, Notting Hill,
Victoria 3168, Australia
100%
Pennant Information Services Inc.
1400 Blair Place, as above
100%
Halter Holdings Pty Ltd****
GPO Box 2890, Brisbane, Queensland 4001, Australia
100%
Absolute Data Group Pty Ltd****
GPO Box 2890, as above
100%
Pennant America Inc.
399 Boylston St. 6th Floor, Boston
MA 02116, USA
100%
* Previously Pennant Support & Development Services Limited
** Subsidiary of Pennant Rail Holdings Limited
*** Struck off 21 May 2024
**** Subsidiary of Pennant Australasia Pty Limited
The investments in subsidiaries are all stated at cost as follows in the table below:
Cost of investment
£000s
Cost of investment – beginning of year
6,763
Cost of investment – end of year
6,763
Impairment – beginning of the year
-
Impairment – end of year
-
Net cost of investment – end of year
6,763
Net cost of investment – beginning of year
6,763
Notes To The Company Financial Statements For The Year Ended 31 December 2024
99
Pennant Annual Report & Accounts 2024
7. Property, Plant & Equipment
Development costs
Total
£000s
£000s
Cost / Valuation
At 1 January 2024
-
-
Additions
223
-
Disposals
(223)
-
At 31 December 2024
-
-
On 27 March 2024 the Parent Company exercised its option to purchase an industrial / office unit which the Group had leased and
occupied since January 2019 (Unit C1, Herrick Way, Staverton Technology Park, Staverton, Cheltenham GL51 6TQ).
8. Other intangible assets
Development costs
£000s
Cost
At 1 January 2023
7,595
Additions
1,550
At 31 December 2023
9,145
Additions
1,481
At 31 December 2024
10,626
Amortisation
At 1 January 2023
2,175
Charge for the year
1,362
At 31 December 2023
3,537
Charge for the year
1,537
Impairment
651
At 31 December 2024
5,725
Carrying amount
At 31 December 2024
4,901
At 31 December 2023
5,608
Additions in the year relate to product development services carried out on behalf of the company by its operating subsidiaries,
payments are settled through inter company transactions.
£651k of impairment was identified (2023: £NIL) in relation to Training Systems hardware development costs relating to specific
projects no longer viable as a result of the training division restructure.
An impairment review was performed as at 31 December 2024 and following sensitivity analysis performed on the key assumptions,
as disclosed in note 16 to the group accounts, no further impairment to other intangible assets was deemed necessary.
Notes To The Company Financial Statements For The Year Ended 31 December 2024
100
Pennant Annual Report & Accounts 2024
9. Right-of-use assets
Motor vehicles
£000s
Valuation
At 1 January 2023
25
Additions
41
Depreciation
(19)
At 1 January 2024
47
Additions
37
Depreciation
(21)
At 31 December 2024
63
10. Trade and other receivables
Trade and other receivables principally comprise prepaid overhead costs and recoverable VAT. The carrying amount approximates
to their fair value.
11. Trade and other payables
Trade and other payables principally comprise amounts outstanding or accrued for services and ongoing costs. The carrying
amount approximates to their fair value.
12. Borrowings
Details of the Group overdraft arrangements are set out in note 26 to the consolidated financial statements.
13. Lease liabilities
Motor vehicles
£000s
Valuation
At 1 January 2023
27
Additions
41
Interest expense (presented as operating cash flow)
2
Repayments (principal and interest)
(25)
At 1 January 2024
45
Additions
37
Interest expense (presented as operating cash flow)
5
Repayments (principal and interest)
(27)
At 31 December 2024
60
Current
20
Non-current
40
Notes To The Company Financial Statements For The Year Ended 31 December 2024
101
Pennant Annual Report & Accounts 2024
In 2024 short-term lease rentals expensed amounted to £Nil (2021: £Nil). The total cash outflow in respect of leases (right-of-use
and short-term expensed rentals) was £25k.
There were no low value leases or variable lease payments excluded from lease liabilities. This is not likely to significantly change
in the year ahead.
Lease payments due
2024
2023
£000s
£000s
Within 1 year
25
21
In 1-5 years
44
33
69
54
Finance charges
(9)
(9)
Net present value
60
45
14. Deferred tax
Accelerated tax depreciation
Tax losses
Total
£000s
£000s
£000s
At 1 January 2023
(719)
129
(590)
(Charge) / credit to income
(50)
24
(26)
At 1 January 2024
(769)
153
(616)
Credit to income
152
97
249
At 31 December 2024
(617)
250
(367)
15. Share capital
Details are set out in note 29 to the consolidated financial statements.
Notes To The Company Financial Statements For The Year Ended 31 December 2024
102
Pennant Annual Report & Accounts 2024
16. Notes to the cash flow statement
Cash generated from operations:
2024
2023
£000s
£000s
Loss for the year
(1,487)
(617)
Net finance costs / (income)
48
63
Amortisation
1,537
1,362
Impairment of intangible assets
651
-
Depreciation charge – right-of-use asset
21
19
Profit on disposal of property, plant & equipment
(231)
-
Income tax credit
(381)
(242)
Share-based payment
70
69
Operating cash flows before movement in working capital
228
654
Increase in receivables
(1,211)
(1,725)
(Decrease) / Increase in payables
(293)
1,633
Cash (used in) / generated from operations
(1,276)
562
Tax received
124
180
Interest paid
(48)
(63)
Net cash generated from operations
(1,200)
679
Changes in financing liabilities:
Bank overdraft
Lease liabilities
(note 13)
Total
financing
liabilities
£000s
£000s
£000s
At 1 January 2023
(1,237)
(27)
(1,264)
Cash movements:
Change in cash and cash equivalents per cash flow statement
675
-
675
Lease repayments (principal and interest)
-
25
25
Non-cash movements:
Lease terminations
-
(41)
(41)
Interest added to liability
-
(2)
(2)
At 1 January 2024
(562)
(45)
(607)
Cash movements:
Change in cash and cash equivalents per cash flow statement
395
-
395
Lease repayments (principal and interest)
-
27
27
Non-cash movements:
Lease additions
-
(37)
(37)
Interest added to liability
-
(5)
(5)
At 31 December 2024
(167)
(60)
(227)
Notes To The Company Financial Statements For The Year Ended 31 December 2024
103
Pennant Annual Report & Accounts 2024
17. Financial instruments
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 its bank overdraft facility. Interest is paid on its bank overdraft at 2.50% (2023: 2.50%) over base rate. A 1%
rise/fall in interest rates would have decreased/ increased profit for the year by an immaterial amount (2023: immaterial). The
Company is not exposed to foreign currency risks.
Categories of financial instruments
2024
2023
£000s
£000s
Financial assets
Measured at amortised cost
Trade and other receivables
55
14
Amounts due from subsidiaries
3,848
3,365
3,903
3,379
Financial liabilities
Measured at amortised cost
Bank overdraft
167
562
Trade and other payables
70
113
Amounts due to subsidiaries
7,345
6,729
7,582
7,404
18. 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 (2023: £Nil).
19. Related party transactions
Transactions with related parties consist of:
Sales to subsidiary companies
Management and licence charges
2024
2023
£000s
£000s
Pennant International Limited
1,527
1,612
Track Access Productions Limited
119
68
Pennant Canada Limited
555
739
Pennant Australasia Pty Limited
699
658
Pennant America Inc.
108
97
3,008
3,174
Management fees, accounted for on an accruals basis, represent the charges for central services provided by the parent company
to its subsidiary entities.
Notes To The Company Financial Statements For The Year Ended 31 December 2024
104
Pennant Annual Report & Accounts 2024
License fees, accounted for on an accruals basis, are charged by the parent company to its subsidiaries as compensation for the
right of use of the intellectual property that is owned by the parent company.
Purchases from subsidiary companies
Product development services*
2024
2023
£000s
£000s
Pennant International Limited
759
662
Pennant Canada Limited
292
272
Pennant Australasia Pty Limited
376
515
Pennant America Inc.
54
99
1,481
1,548
*capitalised as other intangible assets
Salaries and other expenses settled on behalf of the Company
Pennant International Limited
1,577
1,580
Intercompany balances between the Company and its subsidiaries at the year end were as follows:
Amounts due from subsidiaries
2024
2023
£000s
£000s
Pennant Rail Holdings Limited
1,964
1,789
Pennant Canada Limited
238
390
Pennant Australasia Pty Limited
1,410
1,011
Pennant SIP Trustee Limited
19
-
Pennant America Inc.
217
175
3,848
3,365
Amounts due to subsidiaries
Pennant International Limited
4,284
3,725
Track Access Productions Limited
139
74
Pennant Information Services Inc.
560
551
Absolute Data Group Pty Limited
2,362
2,379
7,345
6,729
20. Going Concern
Please refer to note 3 of the Group consolidated financial statements for an overview of the going concern assessment for the
Group including its parent company.
21. Post Balance Sheet Events
Please refer to note 37 of the Group consolidated financial statements for details of all and any post balance sheet events related
to the Group and its parent company.
Notes To The Company Financial Statements For The Year Ended 31 December 2024
105
Pennant Annual Report & Accounts 2024
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
Steelpark Road
Halesowen
B62 8HD
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 – 6 June 2025
Expected announcement of results for the year ending 31 December 2025:
Half-year announcement - September 2025
Full-year preliminary announcement - April 2026
Daily share price listings
The Financial Times - AIM
Shareholder Information and Financial Calendar
106
Pennant Annual Report & Accounts 2024
Officers and Professional Advisers
Directors
I Dighé (Chair) (appointed 7 February 2024)
P H Walker FCA (Chief Executive Officer)
D J Clements
D J Wiggins (appointed 20 November 2024)
D Wilkinson
K P van Der Leest (appointed 3 September 2024)
J Kempster (appointed 18 July 2024)
Secretary
D J Clements
Registered office
Unit D1
Staverton Connection
Staverton
Cheltenham
Gloucestershire
GL51 0TF
Company number
03187528
Auditor
S&W Partners Audit Limited (formerly CLA Evelyn Partners Limited)
Cumberland House
15-17 Cumberland Place
Southampton
SO15 2BG
Bankers
HSBC UK Bank Plc
2 The Promenade
Cheltenham
GL50 1LR
Nominated Adviser
Zeus Capital
125 Old Broad Street
London
EC2N 1AR
Broker
Cavendish Capital Markets Limited
One Bartholomew Close
London
EC1A 7BL
Officers And Professional Advisers
107
Pennant Annual Report & Accounts 2024
108
Pennant Annual Report & Accounts 2024
Company Number: 03187528
sales@pennantplc.com
pennantplc.com