Pennant International Reports H1 2025 Loss Amid Strategic Software Push and Siemens Deal

Cash, debt, property and the proposed equity raise

Net debt excluding leases was £2.1 million at 30 June 2025. Cash and cash equivalents were £0.7 million, and the Group had a bank overdraft of £2.734 million at period end.

• Property disposals: the programme launched in September 2024 is complete, realising £3.1 million of gross proceeds. Of this, £2.0 million was received in H1 and £1.1 million after the period. The RNS notes a net gain versus fair value.
• Proposed equity raise: an underwritten direct subscription to raise £1.25 million (before expenses) at 21.5p by existing shareholders. Results are expected to be announced by 22 September 2025.
• Overdraft headroom: the overdraft limit reduces from £2 million to £1 million on 1 November 2025. Management expects the subscription proceeds to facilitate that reduction and fund Auxilium development.

The going concern note is frank: even after the proposed raise, the Group remains reliant on Training Systems awards. That is a key dependency and a risk investors should weigh.

Outlook: pipeline and guidance

• Contracted revenue for the full year sits at approximately £9 million.
• The Board has a “high level of confidence” in delivering full-year revenue of not less than £10 million and says trading is in line with current market expectations.
• GenFly with the UK Ministry of Defence: negotiations are progressing well with the aim to secure an award before year end.
• Additional Training Systems opportunities: advanced talks on multi-year sole-source contracts with existing customers. Including GenFly, advanced bids exceed £10 million.

In short, H2 is busy. Converting a portion of the advanced bids list is pivotal for cash, sentiment and the Group’s repositioning.

My view: the good, the bad, and what to watch

Positives

• Clear strategic shift: Software and Services now 87% of revenue, with ARR at £2.3 million and half the customer base transitioned to Auxilium.
• Siemens partnership: meaningful channel expansion and third-party validation for GenS.
• Balance sheet actions: property disposals completed for £3.1 million; proposed £1.25 million subscription to shore up working capital.

Negatives

• Top-line pressure: revenue down sharply year-on-year and gross margin back to 44%.
• Losses widened: adjusted loss before tax of £1.8 million and statutory loss before tax of £2.2 million.
• Reliance on contract awards: going concern still linked to Training Systems wins; overdraft limit reduces in November, keeping time pressure on conversions.

What to watch next

• GenFly award timing and size.
• Conversion of the >£10 million advanced bids into signed contracts, particularly sole-source deals with existing customers.
• Evidence of Siemens-led pipeline building for GenS and further Auxilium channel appointments.
• ARR progression and pace of remaining customer migrations to Auxilium.

Bottom line

This was a messy first half operationally, but strategically it nudged Pennant further toward a software-led, higher margin model. If management lands GenFly and a couple of the sole-source Training Systems contracts while Siemens begins to deliver Auxilium traction, the investment case strengthens. Until then, the shares carry execution risk alongside the promise of a more recurring, scalable business model.

Jargon buster: ARR is annual recurring revenue from subscriptions and maintenance. IPS/ILS are software and processes that support maintenance, logistics and availability of complex equipment.