Trading Statement

Pennant International Group PLC
3 September 2001

Pennant International Group plc - Trading Statement



It is intended to announce the half-year results to 30 June 2001 on 28
September. In the meantime your Board considers it appropriate to issue the
following statement on trading:



Training Systems.  The delays in contract awards referred to in the Annual
Report 2000 as affecting the first half of the year have continued into the
second half. Sales enquiries are good, but the awarding of contracts remains
slow. Furthermore, a number of invitations to tender for new business, which
have been intimated by the customer, are still awaited.  The absence of these
contracts is estimated to have cost £150k contribution in the first half.



A major contract that was expected to be completed early in the second half
has been subject to delay. Delivery of the product for acceptance was late and
further difficulties have been experienced during the acceptance stage. Phases
one and two of the contract have now been delivered following factory
acceptance and a revised schedule agreed with the customer for the remaining
two phases. The delays have however led to significant additional costs,
including late delivery charges from the customer, resulting in the need for
recognition of losses of £500k to cover the period to full acceptance of all
deliverables.  These delays have held up receipt of cash of £1.1 million which
is now expected before the year end.  As a result of these issues significant
management changes have been implemented.



Software Services.  Software sales expected to contribute £325k profit in the
first half have been delayed and are now expected in the second half.



Data Services.   Continues to trade profitably.



Dividend.  Due to the above the directors consider it inappropriate for an
interim dividend to be paid.



Cash Resources.   The matters above have had an inevitable adverse effect on
the cash resources of the Group: net debt has increased by £530k in the first
half. This matter has been addressed by your Board and satisfactory revised
facilities have been agreed with the Group's bankers.



Future Trading.  Notwithstanding the above, a number of small contracts were
awarded in the first half and the delayed larger contract awards appear to be
moving closer.  If these materialise as expected the Group should return to
profitability on a monthly basis towards the end of the second half.