£25million contract delay forces share slump and cost-cutting at Staverton-based firm
By James Young | 3rd May 2019
Shares in a Staverton-based training experts Pennant International took a plunge yesterday after it was revealed a £25million plus contract had been delayed.
In a statement to the London Stock Exchange, Pennant said that they had been "down-selected on a major programme as announced on 9 August 2018."
The estimated worth of that contract was stated as between £25 and £30 million, but the group have been informed that it has received notification of a delay.
The statement said: "The placing of the Pennant contract is now contingent on the prospective customer's single-source 'upstream' contract becoming effective, which may not happen until the second half of 2020."
The contract was initially expected to be awarded during the latter part of 2018 with "an aggressive timeline for delivery" and Pennant invested in expanding operation capacity to deliver it.
That has left the group with extra costs, which they state are around £90,000 per month and they will now "commence a cost-reduction exercise in response to this new timeframe for contract award."
The statement added: The board does not expect the potential delay in the contract award to have a material impact on market expectations for the current year and, having regard to the group's pipeline of active opportunities, remains confident about the company's prospects for the future."
On the news shares fell from 116.5p at the close of business on Wednesday to 98p at the close yesterday, a fall of 15 per cent. They have risen by nearly two pence in the first hour of trading on Friday.
Pennant provide training simulators and technical training to the defence, aerospace and safety critical industries across the UK, north America and Australia.
The recorded revenues of £21.06 million in 2018 and posted an operating profit of £3.169 million.
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