Pennant interims

Pennant International provides a range of services that extend across e-Learning, Computer Based Training, Emulation and Simulation, Technical Documentation, Media Services, Cartography, Supportability Engineering Software products and related services. I have a holding in my growth portfolio (epic code: PEN) 

Pennant released their interims today with revenues for the period down 2% at £9.6m.  Operating margins though were up 72bps to 12.35%, lifting operating profits for the period up 3.4% to £1.18m.

 

With a lower tax rate down from 23.3% to 22.4% in addition to the uplift in operating profits, resulted in an increased EPS of 4.3% to 3.41p.  Management increased the interim dividend by 12.5% to 0.9p.

 

Free cash flow (FCF) was strong at £1,227k compared to an outflow last year of £(677.4k); after payment of £474k in dividends the company finished the period with net cash of £1,843k up from £1,113k at the end of the year.  FCF was the one weak area in the full year results (see here), so it was good to see an improvement and that there were no issues with their business model or accounting.

 

After 29% growth in revenues last year, this interim performance is a little disappointing.  Although not too much should be read into a six month period and at least margins and cash flow were strong.  Management state they are chasing a number of significant opportunities, but the timing of landing those deals are difficult to predict.