Pennant International Group (AIM:PEN) reported first-half revenue of £5.8 million, up from £4.5 million a year earlier, as the AIM-listed systems support software and training solutions company swung to an adjusted EBITDA profit of £0.5 million from a £1.1 million loss in H1 2025.
The Cheltenham-based group, which serves defence, aerospace and rail markets through its Auxilium software and training systems divisions, narrowed its adjusted loss before tax to £0.3 million from £2.0 million.
Gross margin improved to 54% from 44%, while annual recurring revenue from the Auxilium software suite rose to £2.6 million at period end from £2.1 million a year earlier, growing further to £2.9 million as of the announcement date.
Net debt stood at £1.0 million at 30 June, down from £2.1 million a year earlier, though up from £0.5 million at the end of December, after one-off payments including a shareholder loan repayment and redundancy costs.
Training Systems revenue more than tripled to £1.9 million on delivery of programmes including the GenFly refresh for the UK Ministry of Defence and the ARIT programme for BAE Australia, while the segment's deliverable order book stood at £9.6 million.
Technical Services revenue was held back by a delayed multi-year contract award from Canada's Department of National Defence, confirmed on 12 June, worth potentially around C$35 million across an 11-year extended term.
"Revenue, margin and profitability have all improved significantly, while the successful launch of Auxilium Phase 3 and a number of strategic contract wins have strengthened our position in key markets", said chief executive Phil Walker.
The company said its order book already covers approximately 80% of analyst revenue forecasts for 2027, and it remains on track to meet full-year market expectations, with the second half expected to be stronger than the first.
News Intelligence what this means for the company
Pennant swung to £0.5m adjusted EBITDA profit in H1 2026 from a £1.1m loss a year earlier, driven by 29% revenue growth to £5.8m and a 10-percentage-point gross margin expansion to 54%. The turnaround reflects traction in recurring software revenue—Auxilium ARR reached £2.9m as of announcement—and a tripling of Training Systems revenue on major defence contracts, though a delayed Canadian multi-year award (worth up to C$35m over 11 years) held back Technical Services in the period.
- The company's order book now covers ~80% of analyst 2027 revenue forecasts, suggesting visibility into near-term growth and reducing execution risk on the software and training pipeline.
- Net debt rose to £1.0m from £0.5m at year-end 2025 due to one-off costs (shareholder loan repayment, redundancies), but remains below the £2.1m level a year earlier, indicating improving underlying cash generation despite the interim increase.
The shift to EBITDA profitability on margin expansion and recurring revenue growth strengthens the case for sustainable earnings, though the company remains pre-scale (H1 revenue £5.8m) and dependent on large contract wins. The Canadian defence framework award, a C$15m five-year framework with no contractual minimum, carries execution risk and does not guarantee revenue flow.
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