TIDMPEN
RNS Number : 0428W
Pennant International Group PLC
13 April 2023
FOR IMMEDIATE RELEASE 13 April 2023
PENNANT INTERNATIONAL GROUP PLC
Acquisition of UK Rail Services Business
Significantly enhances existing Rail offering, adds recurring
revenues and further diversifies Group business lines
Pennant International Group plc (AIM: PEN) (the "Company", the
"Group"), a leading global provider of training technology and
integrated product support solutions, is pleased to announce that
it has acquired the entire issued share capital of Track Access
Productions Limited ("TAP", the "Acquisition").
About TAP
-- Based in Bedfordshire, TAP was established in 2001 and
provides driver training, route mapping and route familiarisation
services to the UK rail industry. Clients comprise train operating
companies, freight operating companies, engineering prime
contractors and infrastructure providers.
-- Revenues are generated through a subscription-based web
portal and through project-specific route mapping services.
-- For the financial year ended 31 March 2023 ("FY23"), TAP's management accounts indicate:
o revenues of circa GBP600,000 (FY22: GBP481,000) of which 50%
is recurring, relating to portal subscriptions; and
o profit before tax ("PBT") of circa GBP200,000 (FY22: PBT of
GBP180,821).
-- The vendors, Ian and Jill Heys, the founders and
owner/managers of TAP, will work a short transitional period to
ensure a smooth handover. The rest of TAP's employees and
consultants are expected to remain with the business.
Summary of the key terms of the Acquisition
-- The consideration payable in respect of the Acquisition
comprises an enterprise value of GBP585,000, plus an amount of
circa GBP389,000 in respect of TAP's 'free cash' after allowing for
normalised working capital and repayment of debt ("Cash Free, Debt
Free Adjustment").
-- The initial consideration payable is circa GBP798,500 (being
70% of the enterprise value, i.e. GBP409,500, plus the Cash Free,
Debt Free Adjustment).
-- A completion payment of GBP638,610 has been settled, based on
verified estimates of the Cash Free, Debt Free Adjustment, with a
balancing payment of circa GBP160,000 within the next two months
following the production of completion accounts (to allow for any
correction of estimates).
-- The balance of the overall consideration, comprising a
deferred payment of GBP175,500 (being the remaining 30% of the
enterprise value) is due 12 months after completion.
-- The acquisition agreement contains customary warranties and
indemnities in respect of title, tax and various commercial matters
as well as buyer protections in the form of restrictions on the
future activities of the vendors and rights of setoff.
-- The Acquisition is being funded entirely from the Group's existing cash resources.
Benefits of the Acquisition
-- TAP's business aligns closely with Pennant's existing Track
Access business unit and the Acquisition will consolidate the
Group's presence in this market. The combined unit is expected to
generate revenues for 2023 in the region of GBP850,000 and will be
able to provide an enhanced offering to a broader customer
base.
-- The Acquisition also aligns with the Company's strategy, in
particular it enhances the Group's recurring revenues, further
diversifying into civilian markets, whilst bolstering the Group's
'third pillar' of rail products and services, complementing the
Group's traditional core of IPS software and training
technology.
Phil Walker, Group CEO , commented: "I am delighted to confirm
the acquisition and to welcome the TAP team into the Pennant Group.
TAP is an excellent business with a long-standing, trusted
reputation in the UK rail market and we look forward to working
together to integrate TAP into Pennant's growing rail
offering."
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
Enquiries:
Pennant International Group www.pennantplc.co.uk
plc
Philip Walker, CEO
David Clements, Commercial &
Risk Director +44 (0) 1452 714 914
WH Ireland Limited (Nomad and https://www.whirelandplc.com/capital-markets
Broker)
Mike Coe
Sarah Mather +44 (0) 20 7220 1666
Walbrook PR (Financial PR) paul.vann@walbrookpr.com
Paul Vann +44 (0)20 7933 8780
Joe Walker Mob: +44 (0)7768 807631
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END
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