£25 million contract delay gives training company cause for concern

Pennant

Pennant International Group plc, the Cheltenham-headquartered listed training provider for the defence and regulated civilian sectors has warned that a £25 million training contract due to begin roll out this year could be delayed until the second half of 2020.

The Group has revealed that the placing of the contract is now contingent on the prospective customer’s single-source ‘upstream’ contract becoming effective, which may not occur until the second half of 2020.

Pennant says it is engaging with the prospective customer with a view to accelerating the award and, as a result of the relationship established with the prospective customer, is also in discussion on a number of other opportunities.

The potential value of the contract to Pennant (£25 to £30 million) remains unchanged.

To meet the contract requirements, Pennant began expanding its operational capacity but says it is now incurring costs of around £90,000 a month and these costs are affecting operating margin.

The company says it will start a cost-reduction exercise in response to this new timeframe for contract award.

Pennant says that despite this setback, it is anticipating record revenues for 2019 (in the region of £22 million) and does not expect the potential delay in the contract award to have a material impact on market expectations for the current year. Having regard to the Group’s pipeline of active opportunities, it remains confident about its future prospects.

Pennant International Limited was established 60 years ago. It has offices in Europe, North America and Australasia and has grown through a combination of product expansion, customer development and acquisition.

The Group exports its technical training around the world to train the next generation of engineers in defence and regulated civilian sectors. Products and services include electrical and mechanical trainers, E-learning, Virtual Reality, Emulation, interactive Technical Documentation and Media Services and many more related skills and products.