TIDMPEN
RNS Number : 5181E
Pennant International Group PLC
12 February 2018
FOR IMMEDIATE RELEASE 12 February 2018
PENNANT INTERNATIONAL GROUP PLC
Trading Update and IFRS15 Impact
Notice of Results
This announcement contains information which, prior to its
release via this announcement, was inside information for the
purposes of the Market Abuse Regulation
Pennant International Group plc ("Pennant" or the "Group"), the
AIM quoted supplier of integrated training and support solutions,
products and services, principally to the defence, rail, aerospace
and naval sectors and to Government Departments, is pleased to
announce a trading update for the 2017 financial year ("FY 2017")
ahead of the announcement of its full results for the year.
The Group also confirms that it is required to report under the
new International Financial Reporting Standard 15 ("IFRS15") with
effect from 1 January 2018 and this announcement provides further
detail about the impact of doing so.
Trading Update FY 2017
Preliminary unaudited assessment of the Group's trading for
FY2017 indicates that Pennant is 'on track' to deliver results in
line with market expectations (with revenue of over GBP18 million
and EBITA of approximately GBP2.1 million).
With a strong order book (circa GBP33 million at year end),
significant bids in progress and a healthy pipeline, the Group is
confident about its prospects for the future.
The audited results for FY2017 will be released on 12 March
2018.
IFRS15 Impact
Introduction
This section of the announcement summarises the effect on the
Group of adopting IFRS15.
Key points
1. Revenue in relation to the production of generic Commercial
Off The Shelf ("COTS") products (such as the GenFly, GenSkills and
IAMT) will only be recognised on completion of the contract,
delivery of the product, or upon a contractual acceptance
milestone, rather than throughout the duration of the contract.
2. This means that if a COTS item is produced in one year but
the acceptance or delivery of the item (as the case may be) takes
place the following year, all revenue associated with that item
would be recognised in the second year.
3. Costs incurred to date on COTS products will be shown as
work-in-progress held on the balance sheet at cost.
4. Revenue in relation to engineered-to-order solutions (such as
the Wildcat trainers for the MOD), previously recognised on a
percentage of costs completed basis, will continue to be recognised
on fundamentally the same basis.
5. Revenue on services contracts will continue to be recognised
over time as the customer receives the service.
6. Profit on contracts will continue to be recognised
progressively as risks are mitigated or retired.
7. No impact is anticipated on the way that Pennant manages its contracts.
8. No impact is anticipated on the lifetime revenue and
profitability of contracts or the timing of cash receipts, which
are determined by the terms and conditions of those contracts.
Pennant's financial reporting for FY 2017 and the 2018 financial
year ("FY 2018")
-- The Group is reporting its results for FY 2017 under IAS 11
and 18 and the results for FY 2017 will not be restated following
the adoption of IFRS15.
-- The adoption of IFRS15 with effect from 1 January 2018 will require Pennant to:
o report revenue and profit on certain contracts in FY 2018
where the relevant work was carried out, costs incurred, and
revenue and profit recognised during prior financial years but
where the completion, acceptance or delivery of the relevant goods
under those contracts will occur during FY 2018 (as explained in
key points 1 and 2 above);
o make a corresponding transitional adjustment to the Group's
opening reserves for FY 2018 to reflect the impact of adopting
IFRS15 in relation to such contracts (the "Opening
Adjustment").
-- The Opening Adjustment comprises the recognition of
approximately GBP7 million of revenue and GBP3 million of
EBITA.
-- In addition to the Opening Adjustment, the adoption of IFRS15
is also likely to result in revenue and profit on work carried out
during FY 2018 being reported across 2019 and 2020, rather than for
FY 2018 (as explained in the 'key points' section above).
-- The ultimate impact of the later recognition of revenue and
profit will depend on the mix of products worked on during FY 2018
but the present estimate is approximately GBP5 million of revenue
and GBP2 million of EBITA.
-- The anticipated net effect of Pennant adopting IFRS15 (taking
into account the Opening Adjustment and the later recognition of
revenue and profit) is a positive adjustment to revenue and EBITA
for FY 2018 of GBP2 million and GBP1 million respectively
-- Forecasts for FY 2018 and beyond will be presented on a basis
consistent with the new standard (being the basis on which the
Group must report).
-- The estimated impact on the Group's underlying earnings per
share for FY 2018 is an increase of approximately 9p.
-- The Group's results announced for the half year ending 30
June 2018 will be the first to be prepared under IFRS15 and will
not include restated comparatives for the half year ended 30 June
2017.
Enquiries:
Pennant International www.pennantplc.co.uk
Group plc
Philip Walker, CEO
David Clements, Commercial
Director +44 (0) 1452 714 914
WH Ireland Limited www.whirelandplc.com
Mike Coe / Ed Allsopp +44 (0) 117 945 3470
Walbrook PR (Financial paul.vann@walbrookpr.com
PR)
Paul Vann / Tom Cooper +44 (0)20 7933 8780
Mob: +44 (0)7768 807631
Disclaimer: By their nature forward-looking statements involve
risk and uncertainty as they relate to events and depend on
circumstances that may occur in the future. Although the Company
believes such statements are reasonable, no assurance can be given
that these expectations will prove to be correct. There are a
number of factors, many of which are beyond the control of the
Company, which could cause actual results and developments to
differ materially from those expressed or implied by
forward-looking statements. No representation or warranty express
or implied is made as to the fairness, accuracy or completeness of
the information contained in this presentation and no reliance
should be placed upon it. Save in the case of fraud, no liability
is or will be accepted for such information by the Company, its
advisers or any of their respective directors, officers, employees,
agents or advisers or any other person. In particular it should be
noted that information about past performance is not a guide as to
future performance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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