TIDMPEN
RNS Number : 3516P
Pennant International Group PLC
07 February 2019
FOR IMMEDIATE RELEASE 7 February 2019
PENNANT INTERNATIONAL GROUP PLC
Completion of Acquisition of
Aviation Skills Holdings Limited
Pennant International Group plc ("Pennant", the "Company" or the
"Group"), the AIM quoted supplier of integrated training and
support solutions, products and services which train and assist
operators and maintainers in the defence and regulated civilian
sectors, is pleased to announce that it has completed the
acquisition of the entire issued share capital of Aviation Skills
Holdings Limited (the "Target", the "Acquisition").
About the Target
The Target is the holding company for the Aviation Skills
Partnership business ("ASP"), an organisation established in 2013
to help identify, create, develop and implement the skills urgently
required by the aviation and aerospace industries in partnership
with other training organisations, educators, employers and other
potential stakeholders. The vendors are Simon Witts, founder and
CEO of ASP, and his wife, Michelle Witts.
ASP is committed to the facilitation and delivery of aviation
skills training across many disciplines including Pilots, Air
Traffic Control, Airport Operations, Crewing, Engineering and
Maintenance across the UK.
ASP executes this strategy by promoting the establishment, and
then the management, of aviation skills academies. The first such
academy, International Aviation Academy - Norwich, operates from
Norwich International Airport. Three more academies are currently
being established and are expected to be fully operational from
2020.
Summary of the Acquisition terms
The initial consideration payable for the Acquisition comprises
a cash payment of GBP250,000 on completion with a further cash
payment based on completion accounts, which together will not
exceed GBP750,000.
Additional consideration based on a multi-year earn-out may be
payable based on the Target's profits over the next five financial
years (subject to potential acceleration at Pennant's option during
the term).
The earn-out payments will be determined by reference to the
profits of the Target and, subject to a performance hurdle, will
comprise a proportion of those profits on a sliding scale.
The maximum aggregate consideration payable by Pennant in
respect of the Acquisition (including the initial payments of
consideration on completion) will not exceed GBP6.75 million and in
order to reach that cap the Target would, at minimum, need to
significantly exceed forecast adjusted profit before tax for the
2019 financial year and then achieve profits of at least GBP14
million during the earn-out period.
The acquisition agreement contains customary warranties and
indemnities in respect of title, tax and various commercial matters
as well as buyer protections and termination rights in respect of
the earn-out in the case of vendor default.
Simon Witts entered into a new service agreement with ASP upon
completion of the Acquisition.
Financial Impacts
The Target's unaudited accounts for the financial year ended 31
January 2018 showed turnover of GBP398,000, net profit of GBP27,000
and net assets of GBP151,000. For the financial year just ended (31
January 2019), it expects to report profit before tax of circa
GBP175,000.
The initial consideration payable in respect of the Acquisition
is financed by a proportion of the proceeds generated from the
Company's placing of new ordinary shares (as announced on 29
January 2019). Future earn-out payments will be funded from, and
are conditional upon, the successful trading of ASP
post-Acquisition.
Benefits of the Acquisition
The Board of Pennant believes that the ASP business is highly
complementary to the Group's existing business and that the
Acquisition will:
-- materially increase the proportion of Group revenues from commercial aviation;
-- diversify the Group's business, reducing its defence-sector concentration;
-- add long-term recurring, contracted revenue to the Group's order book;
-- accelerate the Group's strategic objective of increasing and
enhancing its services offering, reducing reliance on product
sales;
-- allow the Group to develop and deliver solutions (products,
services and courseware) better tailored to the large and growing
commercial aviation sector;
-- allow the Group to develop a replicable, exportable model of
aviation skills training, integrated with high-quality Pennant
solutions;
-- in doing so, better align the Group with the needs and
interests of its end-users, other stakeholders and applicable
regulators.
Commenting on the Acquisition, Phil Walker, CEO of Pennant
commented
"As part of Pennant, ASP will develop and deploy training
programmes necessary to address the aviation and aerospace skills
shortages across the UK through a network of academies, providing
the Group with valuable additional training capabilities which
ultimately could be rolled out internationally. The ASP business
also offers a strong recurring revenue stream to complement our
existing long-term international contracts. We look forward to
working with Simon and his team."
Enquiries:
Pennant International Group plc www.pennantplc.co.uk
Philip Walker, CEO
David Clements, Commercial &
Risk Director +44 (0) 1452 714 914
WH Ireland Limited www.whirelandcb.com
Mike Coe / Chris Savidge +44 (0) 117 945 3470
Walbrook PR (Financial PR) paul.vann@walbrookpr.com
+44 (0)20 7933 8780
Paul Vann / Tom Cooper +44 (0)7768 807631
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END
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