Final Results - Year Ended 31 December 1999

Pennant International Group PLC 29 February 2000 PENNANT FLIES HIGH Pennant International Group, announces record results. Turnover up 43% to £7.1 million Operating profit up 69 % to £1.1 million Earnings per share up 50% to 11.07p Annual dividend up 17% to 4.2p Successful acquisition of Solvera Information Services companies 'A year of growth and sound performance which ended with the acquisition of new businesses that complement existing activities and offer significant potential for future development.' CC Powell, chairman. A SUMMARY OF THE CHAIRMAN'S STATEMENT Turnover of £7,118,732 (1998 £4,972,756) was in line with market expectations which is an increase over 1998 of 43%. Operating profit for the year was £1,107,528 (1998 £712,377 including exceptional credit of £55,393) and profit before taxation amounted to £1,004,654 (1998 £641,257). Earnings per share were 11.07p (1998 7.41p), an increase of approximately 50%. Your board is recommending a final cash dividend of 2.8p, which, with the interim dividend of 1.4p, brings the total to 4.2p per share (1998 3.6p), an increase of 17%. The final dividend will be paid on 6th April 2000 to shareholders on the register at close of business on 10th March 2000. Current Trading and Operations A strong order book has been maintained, supported by the Ministry of Defence post design services, spares and repairs contracts, which were renewed in the first half of 1999 for a further three years. Work on BAE Systems Hawk training systems continued at a high rate. The second of two installations in South East Asia was completed successfully as was the delivery of two cockpit simulator structures to Canada. Work on the second programme for the Hawk Mk127, continued. Phase one installation at RAAF Williamtown, Australia, was completed to schedule in January 2000. The enhanced second phase product is scheduled to enter service in 2001. The Generic Flying Trainers, GenFly, contract, increased to four devices earlier this year is progressing well. Delivery of the first unit is scheduled for mid-2000. Deliveries of the Aerial Delivered Mine Disposal Training System, also reported last year, are due to be completed during 2000. During the second half of 1999 a number of new programmes were contracted with completion in the latter part of 1999 and in early 2000. The programmes included: A contract awarded by the Ministry of Defence to design and develop an interesting new product to train personnel in aircraft marshalling and ground handling methods, techniques and procedures to NATO approved standards. A Ministry of Defence contract for a second Hydraulics Systems Principles Trainer and a contract to upgrade the original HSPT, delivered in 1996. A new contract for CASTS, the maritime version of our scheduling, resource utilisation and management software was awarded by the Royal Navy's Maritime Warfare Centre based in Portsmouth. Three new contracts for computer based training awarded following competitive tenders, two for the Royal Air Force and one for BAE Systems. The high level of production activity during 1999 was in line with expectations and ensured that all departments were fully loaded. The enlarged workforce, resulting from our planned recruitment programme, and the use of sub-contractors, satisfied the demands of this increased workload. Acquisition The year ended with the acquisition of the Solvera Information Services companies. The three UK companies have been combined and are trading as Pennant Information Services Limited, with three operational divisions - Software Services, Data Services and E-Services - whilst the US company, Omega Logistics International Inc. is now trading as Pennant Information Services Inc. The customer base in the acquired companies includes a significant overlap in the defence and aerospace markets with that of Pennant Training Systems Limited (formerly Pennant International Ltd) but it also includes customers in the petro-chemical, transportation, information technology and telecommunications industries. In the future, group companies will be able to offer an extensive range of products and services that are fully integrated technically and operationally, including integrated logistic support software products, integrated electronic technical publications and simulation and training system products. This acquisition is a major step change in the group's development to complement the simulation and training systems business. It presents synergies in technology, products and services, and markets that create exciting new business opportunities. Conclusion The defence and aerospace markets continue to be very active and promise to remain so for the foreseeable future. This benefits all parts of the enlarged group. The non-defence markets in which we now operate also offer potential for further development and will feature strongly in the way ahead. Business activity, the high level of enquiries and expected tender activity, combined with the potential offered by our recent acquisition, gives your board every confidence in the future. Pennant website: www.pennantplc.co.uk For further information, contact: Joe Thompson, Pennant International Group plc: Tel: 01452 714881 Barrie Newton, Rowan Dartington & Co Ltd: Tel: 0117 9330020 Ken Rees, Winningtons: Tel: 0117 9308839 Mobile: 0802 466567 PENNANT INTERNATIONAL GROUP plc GROUP PROFIT AND LOSS ACCOUNT YEAR ENDED 31st DECEMBER 1999 ------------------------------------------------------------------------------ 1999 1998 __________________________ Turnover 7,118,732 4,972,756 Cost of sales 3,100,487 2,087,969 Gross profit 4,018,245 2,884,787 Administration expenses 2,910,717 2,172,410 ---------- ---------- Operating profit 1,107,528 712,377 Interest receivable 3,689 14,061 Interest payable 106,563 85,181 ---------- ---------- Profit on ordinary activities 1,004,654 641,257 before taxation Taxation 262,106 163,889 Profit on ordinary activities 742,548 477,368 after taxation attributable to members of the parent undertaking Dividends 292,740 494,679 Retained profit (1998 deficit) for the year £ 449,808 £( 17,311) ======= ======= Earnings per share 11.07p 7.41p Earnings per share (excluding exceptional income) 11.07p 6.55p There are no recognised gains or losses other than as disclosed above and there have been no discontinued activities in the current or preceding year. PENNANT INTERNATIONAL GROUP plc GROUP BALANCE SHEET AT 31st DECEMBER 1999 ------------------------------------------------------------------------------ 1999 1998 --------------------- Fixed assets Intangible assets 1,031,152 206,554 Tangible assets 3,111,857 2,342,018 Investments 6,135 6,135 ----------- ---------- 4,149,144 2,554,707 Current assets Stocks 1,015,109 382,819 Debtors 4,099,746 1,579,099 Cash at bank and in hand 767,422 73,557 ------------ ---------- 5,882,277 2,035,475 Creditors: amounts falling due within one year 6,008,099 1,626,402 ------------ ---------- Net current liabilities (1998 assets) (125,822) 409,073 ------------ ---------- Total assets less current liabilities 4,023,322 2,963,780 Creditors: amounts falling due after more than one year 616,616 546,439 ------------ ---------- £ 3,406,706 £2,417,341 ============ ========== Capital and reserves Called up share capital 1,634,000 1,560,000 Share premium 1,134,348 599,557 Capital reserve on consolidation - 69,234 Profit and loss account 638,358 188,550 ------------ ---------- £3,406,706 £2,417,341 ============ ========== C.C. POWELL ) ) DIRECTORS J.M. WALLER ) These financial statements were approved by the Board on 29th February 2000. PENNANT INTERNATIONAL GROUP plc GROUP CASH FLOW STATEMENT YEAR ENDED 31st DECEMBER 1999 ------------------------------------------------------------------------------ 1999 1998 ------------------------ Net cash inflow (1998 outflow) from operating activities 680,242 (79,979) Returns on investments and servicing of finance Interest received 3,689 14,061 Interest paid (106,563) (85,181) Preference dividends paid - (7,080) ---------- --------- Net cash outflow for returns on investments and servicing of finance (102,874) (78,200) Taxation Corporation tax paid (60,442) (253,101) Capital expenditure Payments to acquire intangible fixed assets (19,875) (162,170) Payments to acquire tangible fixed assets (762,769) (282,267) Receipts from sales of tangible fixed assets 18,706 9,450 ---------- ---------- Net cash outflow for capital expenditure (763,938) (434,987) Acquisitions and disposals Purchase of subsidiary undertakings (1,096,895) - Net overdrafts acquired with subsidiary undertakings (350,339) - ------------ ---------- Net cash outflow for acquisitions and disposals (1,447,234) - Equity dividends paid Ordinary (256,029) (102,411) Special - (250,000) ---------- ---------- (256,029) (352,411) ------------ ----------- Cash outflow before financing (1,950,275) (1,198,678) Financing Issue of ordinary share capital 615,950 1,000,000 New loans and hire purchase contracts 1,866,017 - Repayment of hire purchase and finance leases (131,319) (113,108) Repayment of loans (241,995) (110,750) Expenses paid in connection with flotation - (240,443) Expenses paid in connection with share issue (7,159) - ------------ ---------- Net cash inflow from financing 2,101,494 535,699 ------------ ---------- Increase (1998 decrease)in cash £ 151,219 £ (662,979) ============ ==========

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