Final Results

Pennant International Group PLC
5 April 2002


                        PENNANT INTERNATIONAL GROUP PLC

                               ANNUAL REPORT 2001

                              CHAIRMAN'S STATEMENT

In March 2002, the Company successfully completed a Placing and Open Offer
raising £1,995,000, net of expenses, to provide additional working capital and
headroom following losses in 2001. Also, in March 2002, the Company's short-term
bank loan of £1,500,000 was converted to a ten-year term loan repayable by
monthly instalments. The effect of these actions has been an increase in
shareholders' funds of £1,995,000 and an improvement in net current assets/
liabilities of £3,345,000.

Throughout 2001, Group companies suffered from a reduced order intake compared
with the previous year. At the mid-year stage the impact of a major delay in the
completion and delivery of a Training Systems contract and delays to tenders and
anticipated contract awards, affecting all parts of the business, was
significant. Furthermore, the expected improvement during the second half,
including the forecast placing of anticipated contract awards for programmes
where Group companies had previously been selected as preferred vendor, did not
materialise. The terrorist attacks on 11 September in the USA and the ensuing
war against terrorism have had a major effect on businesses of all types. Whilst
there has been some easing of the situation in the past six months, there
continues to be uncertainty with the conflict in Afghanistan and tensions in the
Middle East.



RESULTS AND DIVIDENDS

The Group loss on ordinary activities after taxation was £2,416,581 (2000:
Profit of £175,255 after taxation and after exceptional items of £481,000). Your
Board is not recommending a dividend for the year (2000: 4.2p).



CURRENT TRADING AND OPERATIONS

Notwithstanding the reduced order intake during 2001, due to delays in orders
being placed rather than losing business, it has been a period of high activity
in tendering for new work, further developing relationships with corporate
partners and laying the foundations for the advancement of the business. In
particular, the continuing integration of the Pennant businesses has led to
potentially significant new business opportunities in defence and aerospace. The
Group has submitted its first tenders, to defence industry prime contractors in
Europe and Scandinavia, for potential contracts with a requirement for its full
range of integrated logistic support products and services - OmegaPS software,
technical publications and training systems.

The first quarter of 2002 has shown some encouraging signs of increased business
activity, particularly in the Group's key market areas in defence and aerospace,
and new orders are being received. In the Group's non-defence markets, there are
also promising signs of renewed activity. The most significant new order
received is for a programme where Pennant Training Systems had previously been
selected as preferred vendor and where contract award had been expected in 2001.
The contract, from Westland Helicopters Limited, is for two training devices for
the Royal Air Force of Oman; a Lynx Mechanical and Weapons Trainer and an
Avionics and Electrical Systems Emulator. The combined programmes have a
significant value with revenues extending in to the first quarter of 2004.

Across the Group's businesses, order intake in the first quarter of 2002 is on
target. New business includes a significant proportion of orders with new
clients together with those from existing clients and the renewals of support
and maintenance contracts. The broadening of the business base with new clients,
particularly where there is potential follow-on business, is a welcome
development and a positive reflection of the Group's products and services and
its standing in the industry.



PROSPECTS AND THE FUTURE

In looking ahead to 2002 and 2003, the Board has taken a conservative view of
sales prospects. The business plan, going forward, is based on firm orders and
core business activity, including medium to long term maintenance and support
contracts for Software Services and Training Systems, core business for Data
Services plus high probability new business prospects. This approach has been
adopted against a backdrop of increased prospects arising from 2001 potential
business carried forward and added to prospects for 2002. However, the Board
believes that the effects of the delays in orders during 2001 will impact on the
Group's performance in the first half of 2002 but expect the Group to be
operating profitably from the third quarter.



CONCLUSION

The markets in which the Group operates, particularly defence and aerospace,
have significant potential requirements for it's products and services. Pennant
companies have been working diligently and are well positioned to secure new
business from the sizeable pool of prospects as continuing delays come to an
end. Early signs of an increase in business activity, whilst welcome, need to be
maintained. The exceptional circumstances experienced in 2001 are considered
unlikely to repeat to the same degree and this gives your Board every confidence
in the future.

Finally, I should like to thank our new investors and shareholders for
supporting the recent Placing and Open Offer and my colleagues and all staff for
their efforts throughout the year.



CHRISTOPHER POWELL

Chairman

04 April 2002




GROUP PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2001
                                                                                          2001                      2000
                                                                                             £                         £
Turnover
Continuing operations                                                               10,836,079                14,194,221
Acquisitions                                                                            69,217                         -
                                                                                     _________                 _________
                                                                                    10,905,296                14,194,221
Cost of sales                                                                      (7,400,650)               (7,912,322)
                                                                                      ________                  ________
Gross profit                                                                         3,504,646                 6,281,899
Administration expenses                                                            (5,756,935)               (5,370,457)
                                                                                      ________                  ________

Operating (loss)/profit
Continuing operations                                                              (2,214,755)                   911,442
Acquisitions                                                                          (37,534)                         -
                                                                                      ________                  ________
                                                                                   (2,252,289)                   911,442
Cost of fundamental reorganisation                                                           -                 (481,042)
                                                                                      ________                  ________

(Loss)/profit on ordinary activities before interest                               (2,252,289)                   430,400
Interest receivable and similar income                                                     158                    28,500
Interest payable                                                                     (246,035)                 (227,120)
                                                                                      ________                  ________

(Loss)/profit on ordinary activities before taxation                               (2,498,166)                   231,780

Tax on profit on ordinary activities                                                    81,585                  (56,525)
                                                                                      ________                  ________
(Loss)/profit on ordinary activities after taxation                                (2,416,581)                   175,255
attributable to members of the
parent undertaking
Dividends                                                                                    -                 (337,512)
                                                                                   ___________                  ________
Retained (loss)/profit for the year                                                (2,416,581)                 (162,257)
                                                                                      ________                  ________
(Loss)/earnings per share
Basic                                                                                 (30.07p)                     2.25p
Diluted                                                                               (29.19p)                     2.15p



The profit and loss account has been prepared on the basis that all operations
are continuing operations.



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

FOR THE YEAR ENDED 31 DECEMBER 2001
                                                                                          2001                      2000
                                                                                             £                         £

(Loss)/profit for the financial year                                               (2,416,581)                   175,255
Currency translation differences on foreign currency net investments                  (11,177)                  (24,328)
                                                                                      ________                  ________
Total gains and losses recognised since last annual report                         (2,427,758)                   150,927
                                                                                      ________                  ________




GROUP BALANCE SHEET

AS AT 31 DECEMBER 2001
                                                                                          2001                      2000
                                                                                             £                         £
Fixed assets
Intangible assets                                                                    1,651,114                 1,676,229
Tangible assets                                                                      2,588,952                 2,891,742
Investments                                                                              6,135                     6,135
                                                                                      ________                  ________
                                                                                     4,246,201                 4,574,106

Current assets
Stocks                                                                               1,068,177                 1,016,893
Debtors                                                                              3,537,834                 5,313,588
Cash at bank and in hand                                                                96,172                 1,153,375
                                                                                      ________                  ________
                                                                                     4,702,183                 7,483,856
Creditors: amounts falling due
within one year                                                                    (5,863,105)               (6,484,752)
                                                                                      ________                  ________

Net current (liabilities)/assets                                                   (1,160,922)                   999,104
Total assets less current liabilities                                                3,085,279                 5,573,210
Creditors: amounts falling due
after more than one year                                                             (447,472)                 (507,645)
                                                                                      ________                  ________
                                                                                     2,637,807                 5,065,565
                                                                                      ________                  ________
Capital and reserves
Called up share capital                                                              1,847,200                 1,847,200
Share premium                                                                        2,766,592                 2,766,592
Profit and loss account                                                            (1,975,985)                   451,773
                                                                                      ________                  ________
Shareholders' funds                                                                  2,637,807                 5,065,565
                                                                                      ________                  ________




The financial statements were approved by the Board on 4 April 2002

J J J Thompson                    J M Waller

Director                          Director





BALANCE SHEET

AS AT 31 DECEMBER 2001
                                                                                          2001                      2000
                                                                                             £                         £
Fixed assets
Tangible assets                                                                              -                    31,415
Investments                                                                          4,921,830                 4,886,795
                                                                                      ________                  ________
                                                                                     4,921,830                 4,918,210
Current assets
Debtors                                                                              4,008,848                 2,995,028
Cash at bank                                                                               154                   973,319
                                                                                      ________                  ________
                                                                                     4,009,002                 3,968,347
Creditors: amounts falling due
within one year                                                                    (3,731,157)               (3,732,964)
                                                                                      ________                  ________
Net current assets                                                                     277,845                   235,383
                                                                                      ________                  ________
Total assets less current liabilities                                                5,199,675                 5,153,593
                                                                                      ________                  ________
Capital and reserves
Called up share capital                                                              1,847,200                 1,847,200
Share premium                                                                        2,766,592                 2,766,592
Profit and loss account                                                                585,883                   539,801
                                                                                      ________                  ________
Shareholders' funds                                                                  5,199,675                 5,153,593
                                                                                      ________                  ________



The financial statements were approved by the Board on 4 April 2002

J J J Thompson                    J M Waller

Director                          Director





GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2001


                                                                  Notes                    2001                     2000
                                                                                              £                        £
Net cash outflow from
operating activities                                                  1                (81,859)                (484,744)

Returns on investments and servicing of finance                       2               (245,877)                (198,620)

Taxation                                                                                (1,595)                (248,818)

Capital expenditure                                                   2               (152,184)                (955,747)

Acquisitions and disposals                                            2               (215,169)                        -

Equity dividends paid                                                                 (224,929)                (307,617)
                                                                                       ________                 ________
Cash outflow before financing                                                         (921,613)              (2,195,546)

Financing                                                             2               (124,684)                1,643,066
                                                                                       ________                 ________

Decrease in cash                                                      4             (1,046,297)                (552,480)
                                                                                       ________                 ________




NOTES TO THE GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2001


1. Reconciliation of group operating profit to net cash inflow
   from operating activities
                                                                                               2001                 2000
                                                                                                  £                    £

Operating (loss)/profit                                                                  (2,252,289)             911,442
Exceptional item                                                                                   -           (481,042)
Depreciation                                                                                 460,806             438,164
(Profit)/loss on sale of tangible fixed assets                                               (4,552)                 604
Amortisation of intangible fixed assets                                                      240,284              95,079
Increase in stocks                                                                          (51,284)             (1,784)
Decrease/(increase) in debtors                                                             1,780,045         (1,213,842)
Decrease in creditors                                                                      (242,412)           (206,131)
Other movements                                                                             (12,457)            (27,234)
                                                                                             _______             _______
Net cash outflow from operating activities                                                  (81,859)           (484,744)
                                                                                             _______             _______



2    Analysis of cash flows for headings netted
     in the cash flow statement
     Returns on investments and servicing of finance
                                                                                                2001                2000
                                                                                                   £                   £
Interest received                                                                                158                 440
Interest paid                                                                              (246,035)           (227,120)
Currency translation profit                                                                        -              28,060
                                                                                             _______             _______

Net cash outflow for returns on investments                                                (245,877)           (198,620)
and servicing of finance
                                                                                             _______             _______
Capital expenditure
Payments to acquire intangible fixed assets                                                        -           (740,000)
Payments to acquire tangible fixed assets                                                  (177,759)           (250,927)
Receipts from sales of tangible fixed assets                                                  25,575              35,180
                                                                                             _______             _______
Net cash outflow for capital expenditure                                                   (152,184)           (955,747)

                                                                                             _______             _______




Acquisitions and disposals


Purchase of subsidiary undertakings - goodwill                                              (215,169                   -
                                                                                             _______             _______

Financing
Issue of ordinary share capital                                                                    -           1,998,750
New loans and hire purchase contracts                                                         49,500              90,941
Repayment of hire purchase and finance leases                                               (83,577)           (199,894)
Repayment of loans                                                                          (90,607)            (93,425)
Expenses paid in connection with share issue                                                        -           
(153,306)
                                                                                           _________            ________
Net cash (outflow for)/inflow from financing                                               (124,684)           1,643,066
                                                                                           _________             _______



NOTES TO THE GROUP CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2001


3     Analysis of net debt

                                                                                               Other
                                                       1 January              Cash          non-cash         31 December
                                                            2001              flow           changes                2001
                                                               £                 £                 £                   £

Cash in hand and at bank                               1,153,375       (1,057,203)                                96,172
Bank overdraft                                       (1,785,203)            10,906                           (1,774,297)
                                                                         _________
                                                                       (1,046,297)

Hire purchase due within one year                       (73,099)            34,077             6,902            (32,120)
Hire purchase due after one year                        (26,847)                 -           (6,902)            (33,749)
Loans due within one year                            (1,583,022)            90,607          (57,013)         (1,549,428)
Loans due after one year                               (465,259)                 -            57,013           (408,246)
                                                       _________        __________         _________          __________
                                                     (2,780,055)         (921,613)                 -         (3,701,668)
                                                       _________        __________         _________          __________


4     Reconciliation of net cash flow to movement in net debt


                                                                                               2001                 2000
                                                                                                   £                   £

Decrease in cash in the year                                                             (1,046,297)           (552,480)
Cash to repurchase debt                                                                      174,184             293,319
New loans and hire purchase contracts                                                       (49,500)            (90,941)
                                                                                             _______             _______

Movement in net debt in the year                                                           (921,613)           (350,102)
Opening net debt                                                                         (2,780,055)         (2,429,953)
                                                                                            ________            ________
Closing net debt                                                                         (3,701,668)         (2,780,055)
                                                                                            ________            ________





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