Pennant International : Annual Results Presentation 2024

About this update from Pennant International Group Plc

APRIL 2025 INVESTOR BRIEFING FULL YEAR RESULTS TO 31 DECEMBER 2024 Copyright 202 4 5 © Pennant International Group Plc. All other trademarks are the property of their respective owners. PRESENTATION TEAM Philip Walker - Chief Executive Officer Originated and implemented strategy to transition Pennant from a project based, capital intensive operation to a high margin software and technical services business Darren Wiggins - Chief Financial Officer Chartered accountant with significant financial and operational management experience Previously worked for Melrose plc and latterly Meggit Aerospace in the UK and Singapore Joined the company in November 2024 - CONFIDENTIAL 3 Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. FY24 OVERVIEW 2024 results in line with market expectations Launched Auxilium software Repositioned for growth - decisive action taken, pivot towards highly scalable Software and Technical Services model Training Systems business streamlined Introduced regional operating model Developing 'go to market' channels Significantly strengthened the Board - CONFIDENTIAL 4 Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. PENNANT Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. 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 GLOBAL BUSINESS UK (HQ), Canada, USA, Australia 100+ Employees REVENUE 80% Defence, 10% Rail, 10% Aerospace GEOGRAPHIES (% REV) 53% EMEA, 27% APAC, 20% NA PENNANT OVERVIEW To maximize operational efficiency at optimal cost Ensuring data integrity and compliance with global standards Enabling our customers to make data driven decisions for mission critical assets To defence agencies and major OEMS worldwide Provides systems support software, technical services & training solutions HOW WE OPERATE SYSTEMS SUPPORT SOFTWARE Our software tools are designed to help clients: Comply with industry standards. Manage and use complex data. Ensure equipment availability at optimal cost. Recurring, Repeatable & Predictable Revenue We address the market through three key segments: TRAINING SYSTEMS Our training solutions provide: Hardware, software and virtual solutions. Critical skills training for maintainers and operators of aircraft, ships and land systems. Project Based Revenues TECHNICAL SERVICES Provision of expert services to support users of Pennant or third party solutions, including: Consultancy Support & maintenance Training Bespoke development SYSTEMS SUPPORT SOFTWARE 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 optimise 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 - CONFIDENTIAL Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. OUR SOLUTIONS IN ACTION "We ensure mission critical systems are where they are needed, when they are needed and that they work." Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. FINANCIALS Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. HIGHLIGHTS Adjusted (1) results Statutory results 2024 2023 2024 2023 £m £m £m £m Revenue 13.8 15.5 13.8 15.5 EBITA 1.2 1.8 (1.0) 1.4 (Loss)/profit before tax (0.3) 0.6 (3.0) (0.4) Net Assets 8.3 9.8 Net Debt (2.3) (1.9) Trading results in line with market expectations Adjusted EBITA of £1.2m, down 34% on prior year Successfully completed the delivery under a 3-year contract with Boeing Defence UK for updates to AH Mk1 Apache training equipment -revenue recognised, in the Training Systems segment, in year £3.5m (2023: £5.2m) Software & Services (recurring and repeatable revenue) stable at £9.6m (2023: £9.6m) and 69% of Group total Gross profit margin for the Period of 50% (2023: 50%) Capitalised investment into Auxilium software of £1.4m funded by H1 equity raise Post Period-end, the Group has taken actions to strengthen the balance sheet and ensure that ongoing operations are appropriately funded (1) Adjusted to exclude one off or non-recurring items - see next slide for reconciliation STATUTORY INCOME STATEMENT Income Statement £m 2024 2023 Revenue 13.8 15.5 Cost of sales (6.9) (7.8) Gross Profit 6.9 7.7 Exceptional costs (2.3) (0.3) Profit on sale of Land & Buildings 0.2 - Other administrative expenses (7.6) (7.5) Administrative expenses (9.7) (7.8) Other income 0.2 0.2 Operating Loss (2.6) 0.1 Net Finance costs (0.4) (0.5) Loss before taxation (3.0) (0.4) Tax credit / (charge) 0.5 (0.6) Loss for the year (2.5) (1.0) RECONCILIATION BETWEEN STATUTORY & ADJUSTED RESULTS Reconciliation statutory to adjusted EBITA £m 2024 Statutory EBITA (operating loss less amortisation charges) (1.0) Restructuring expense 2.1 Aborted transaction costs 0.2 Share based payments 0.1 Profit on sale of land & buildings (0.2) Adjusted EBITA 1.2 Restructuring expenses £m P&L charge Cash Impairment of capitalized development costs 0.8 - Impairment of fixed assets 0.3 - Write down of inventory 0.4 - Termination costs 0.4 0.4 Professional fees 0.1 0.1 Total restructuring expense 2.1 0.5 Adjusted results The Pennant Board considers the adjusted results to be an important measure to exclude non-trading or non-recurring items and therefore better monitor and compare performance between reporting periods TRAINING SYSTEMS - RESTRUCTURING RATIONALE In house (UK) production Service installed units Outsource globally Site rationalization Headcount reduction Selective bidding Working capital reduction Improved cost efficiency Increased segment profit margins Shorter working capital cycle Lower business risk Previously Future Impacts Bespoke OEM Projects All skills on payroll Wide product portfolio Core skills retained Focused product portfolio Cash cost of restructuring exercise £0.5m Headcount reduced from 140 to circa 110 going into Q1 2025 Estimated annual cost savings £2.0m (£1.8m from staff costs) Property sales will serve to improve our current ratio from c.50% to c.90% by H1 2025 ADJUSTED EBITA MARGIN BRIDGE Downturn in Training Systems demand leading to unrecovered overheads Restructuring exercise undertaken in Q4 has removed £2m of costs from the business which will protect profit margins in 2025 Boeing Apache contract was high gross margin Bullish on future margins due to Cost reduction exercise completed Bids on Training System contracts are aftermarket and therefore lower material content Continued growth of high margin Software and Services segment STATEMENT OF FINANCIAL POSITION £m 2024 2023 Current assets 7.6 5.4 Non-current assets 8.3 13.3 Total assets 15.9 18.7 Current liabilities 7.0 8.0 Non-current liabilities 0.6 0.9 Total liabilities 7.6 8.9 Net Assets 8.3 9.8 UK freehold land & buildings (£3.0m) reclassified to current assets in accordance with IFRS 5 Training assets impaired following restructuring exercise undertaken in H2 Net working capital -£0.3m (2023: -£0.5m) Operating Cash Flow £m 2024 Operating cash before changes in working capital 0.4 Changes in working capital (0.2) Tax received 0.4 Interest paid (0.4) Net cash from operations 0.2 CASH GENERATION IN THE YEAR Positive cash generation from operations highlights management's focus on working capital discipline Cash cost of restructuring exercise £0.5m Further investment in the development of our integrated Auxilium software £1.4m (2023: £1.5m) Reconciliation of net debt £m 2024 Opening net debt (1.9) Net cash from operations 0.2 Net cash used in investing activities (1.6) Net cash from financing activities 1.1 FX 0.1 Closing net debt (2.3) Equity raise £1.35m (existing shareholders) net of fees to fund the continued product development program Operating within the HSBC overdraft facility limit of £3.5m (2023: £4m) Post balance sheet events have strengthened the balance sheet Completion of the sale of UK properties, £2m cash proceeds net of costs (profit on disposal of £0.1m) Renewal of the existing HSBC overdraft facility on an unsecured basis (following the bank's release of charges on the UK property assets) up to an available limit of £2m SEGMENTAL REVENUE PERFORMANCE Revenue £m 2024 2023 Movement Software licenses & products 0.4 1.1 (0.7) Software maintenance 1.9 1.6 0.3 Technical services 7.3 6.9 0.4 Software & Services 9.6 9.6 - Engineered solutions 3.6 5.2 (1.6) Generic products 0.6 0.7 (0.1) Training Systems 4.2 5.9 (1.7) Total Revenue 13.8 15.5 (1.7) 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 reduction in Training Systems revenue is explained by the successful completion of the Apache program FINANCE COSTS AND TAX Finance costs £'000 Interest expense for bank overdraft (195) Lease interest (77) Interest payable on deferred consideration (36) Movement in discounting (105) Other interest expense (31) Total finance cost (444) HSBC overdraft facility carries interest at 2.50% (2023: 2.50%) plus the bank's base rate Cash costs of finance are consistent with prior year The tax credit in 2024 includes: Tax credit £'000 Current tax credit 249 Current tax prior year adjustment 44 Deferred tax credit current year 182 Deferred tax charge prior year adjustment (13) Exchange difference 4 Total tax credit 466 R&D claims under UK incentive plans Release of deferred tax liabilities relating to change in use of UK land & buildings Deferred tax credit in Pennant America Inc. due to temporary timing differences The Group has total unrelieved UK tax losses carried forward of £7.0 million (2023: £6.8 million) HUMAN RESOURCES 2023 Actual 2025 Estimate Average 140 Headcount Aggregate Cost £9.3 million p.a. Unit Cost p.a. £66k per head 110 £7.5 million £68k per head 21% reduction £1.8m p.a. saving Retention of highly skilled team members LOOKING FORWARD Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. STRATEGIC PRIORITIES Winning higher margin after market contracts Servicing installed base Training Systems Project Based Revenue Recurring, Repeatable & Predictable Revenue Systems Support Software Technical Services Organic Expanding reseller, agent and partnership relationships to globally expand market channel beyond UK, North America and Australia Enhancing support software functionality, including upgrades to support portal and customer tools Opportunities Adding coverage of the global standards Up and downstream software products capable of integration Accessing opportunities in adjacent territories and / or markets with embedded customers SOFTWARE GROWTH TARGETS 23% CAGR 2024-2027 Cumulative Net New Users Auxilium software - Q1 licence sales on track New pricing model Continued investment in Auxilium, customer experience and business winning Go to market - developing indirect channel model in new markets and new territories Cross selling opportunities with applications integrated into holistic solution 2025 2026 2027 Direct Indirect Relies on Partnerships OUTLOOK FY25 As per market expectations, expecting a return to a positive (modest) PBT following completion of restructuring exercise Strong conversion of operating profit to operating cash Implementing go to market strategies to service new territories and markets Auxilium Q1 license sales on track Revenue in the training segment will reduce due to the successful completion of the Apache program. Training segment rationalisation completed. - CONFIDENTIAL 25 Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. P enn nt Maximizing operational efficiency Copyright 2025 © Pennant International Group Plc. All other trademarks are the property of their respective owners. Attention : This is an excerpt of the original content. To continue reading it, access the original document here .

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