Pennant International Group plc (LON:PEN) Chief Executive Officer Phil Walker caught up with DirectorsTalk for an exclusive interview to discuss key highlights from their trading update, the appointment of a new non-executive director, and what investors can expect in 2024.
Q1: Pennant International released a trading update on 6th February 2024, can you just talk us through the key highlights?
A1: In summary, I’d like to say I’m very pleased with the group’s positive and improving trade performance.
The results, most importantly from my perspective, are in line with market expectations which is obviously a big plus but if you break down the results into various parts, it’s a really pleasing set of results.
From a revenue perspective, revenue is up 14% year on year to £15.5 million, we’ve returned to an operating profit which is fantastic news for the group and demonstrates the direction of travel.
Probably, most pleasing for me is that we’ve recorded a record gross margin. We’ve had a gross margin of 50% for the year, which is significantly up, and if you look at the trend over the last three years, we’re making huge progress towards transforming this business model.
One element just to focus on a little bit more is cash so cash at the period end was £1.9 million net debt, I think the analysts forecasts had us at about £0.1 cash. I’d just like to flag for those who are following Pennant, that in the period after the year-end, we received a significant payment of c. £2 million from one of our prime customers. Had that payment arrived in the period, we’d have been £0.3 million and beaten the cash position. So, the cash position was more a timing point than a net debt position.
In summary, from my perspective, the results are strong and they’re really positive indicators that our strategy is delivering the results we expected, and momentum is with us.
Q2: Now, you also released an RNS in relation to the appointment of the new non-executive director, can you tell us more about that change?
A2: Firstly, I’d like to take the opportunity to thank Phil Cotton, our existing Chair, on behalf of myself and the Board for his contribution and, as per the announcement, I look forward to continuing to work with Phil as a non-exec director in the business.
The news we announced really, and I’m delighted to say, we want to welcome Ian to the Board as our new NED and Chair Designate. I think it’s clear to see from Ian’s background skills, that his appointment will strengthen this Board as we move forward.
For those that don’t know Ian, he has significant listed company and city experience, particularly investment banking, corporate broking, closed end fund sector. He’s also, from my perspective, very experienced at developing Boards and the senior management teams.
As we look to implement our strategy and grow this business, I’m looking forward to working with Ian in leading the Board as it continues to try and grow and transform this business.
Q3: You mentioned there about implementing strategy, just looking forward, what should investors expect from FY24?
A3: I think 2024 should be a very exciting year for Pennant International.
Based on the strategic backdrop and global uncertainty, I watch the news, I don’t find it enjoyable, but you don’t have to look very far to see what’s going on in the world, whether it’s Eastern Europe, Middle East or in the Pacific region, there’s a lot of uncertainty. That’s driving patterns and behaviours we haven’t seen for a long time.
From our business perspective, we’ve seen an unprecedented level of activity during the last quarter of the year. At the end of 2023, as a business, we bod over £30 million of new business in that quarter of opportunities that are funded and viable opportunities for us. That level of activity is not something I’ve seen in my tenure at the group.
As countries continue to invest in these new platforms and these new assets, the support systems and the training environment needs to be updated to need the needs of those modern assets, and we are well placed to support these requirements. I would say that the pipeline remains buoyant so as a business, we’re hopeful for some really positive news during the first half of 2024.
From a performance point of view, cautiously optimistic and we’re expecting the momentum to continue to be built upon through this year. We’ve also got the release of our new software products GenS which is being released on 30th April, those that follow the group will know we’ve invested over £2 million in this software suite. This marks the start of our introduction of its fully integrated product suite with the full suite being the target towards the end of the year.
This really is the opportunity to shift the business further along the software and service strategy, and we’re all very excited to see this finally come to market.
