Pennant International Group plc (LON:PEN) Chief Executive Officer Phil Walker caught up with DirectorsTalk for an exclusive interview to discuss key highlights from H1 trading update, order intake, and what we can expect from their Auxilium software suite.
Q1: Phil, you released a trading update on the 25th of July. Could you just talk us through the key highlights of your first half numbers?
A1: So, we released our trading update, as you said, on 25th of July, ad in summary, I would say it’s been a solid start to the year for Pennant International and we’ve had good progress on a number of fronts.
From a financial perspective, the trading update for H1 shows year-on-year improvements across all of our key metrics. For example, revenues increased slightly to £7.4 million, prior year for the same period with £7.1 million and alongside that, our gross margins ticked up to 48%, and the same period last year was 47%. So continuing the solid performance we posted at the end of the year.
Similarly, on the adjusted EBITDA, we saw growth to £0.9 million, same period last year was £0.8 so it’s about 60% of our FY estimate achieved in the first half, so on track for the year as a whole.
The final point I’d make is net debt, so those who follow the company will be aware that we raised around £1.4 million equity in the year. Our net debt was down to £1.6 at the period end, and that’s after investing about £700,000 in our new Auxilium software suite.
So all in all, a solid start for the year.
Q2: Now, in your trading update, you mentioned order intake. What can you tell us about the current activity levels and progress there?
A2: As outlined in the May update, and we’ve repeated again this announcement, the group is in the process of moving forward on a number of material sales prospects, with a view that we should convert a number of these in the second half of the year. This year, year-to-date, and the back end of 2023, we had a significant rise in bid activity. The key challenge now is for us to convert these opportunities into contracts.
As we all know, with defence contracting, sometimes the timing and the quantum of these awards can be prolonged and complicated but I’m feeling quite confident that we’re making meaningful progress.
We’re looking forward to sharing developments with our followers over the coming period and feeling cautiously optimistic.
Q3: You mentioned Auxilium earlier, significant investment has gone into the suite but could you just explain for us the strategic plan and provide us with an update on what we can expect from the suite?
A3: So, as part of our strategic plan, the group has been investing in our system support software capability, now known as Auxilium, with a view of being the first to market with an end-to-end capability.
As you will recall, in April this year, the group launched our new configuration software, known as GenS and we’re looking to progress the launch of this fully integrated software suite, known as Auxilium. For those who don’t know, that’s the Latin for support and assistance, and Pennant International provides support and assistance, and it’s due to be launched in the final quarter of this year.
The launch of Auxilium itself represents a key point in our strategy, because it brings together the three core software applications in the group; our configuration software, our documentation software, and our analysis software into one integrated tool set.
What that does for the business, and does for our customers, is it enhances our capability, and it gives us the scope to target larger opportunities, enterprise selling, if you like, and to cross-sell into our customer base. The key thing for us is, from a customer’s point of view, it will drive the efficiency of their data, reduce their costs, and the products themselves are aligned to the global standards specifications.
The new software should bring in higher margins, increase revenue, and continue our journey to build these long-term profitable recurring revenues, which has been part of the overall objective and the plan for this business. So very excited about the Auxilium launch in Q4.
