REG - Cohort PLC - Final Results
17/07/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240717:nRSQ6649Wa&default-theme=true
RNS Number : 6649W Cohort PLC 17 July 2024
One Waterside Drive
Arlington Business Park
Reading
Berks
RG7 4SW
17 July 2024
COHORT PLC
UNAUDITED PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 APRIL 2024
Record revenue, adjusted operating profit and order book of over half a
billion pounds. Further progress expected.
Cohort plc today announces its unaudited results for the financial year ended
30 April 2024.
2024 2023 %
Revenue £202.5m £182.7m 11
Adjusted operating profit(1) £21.1m £19.1m 11
Adjusted earnings per share(2) 42.89p 36.48p 18
Net funds(3) £23.1m £15.6m 48
Order intake £392.1m £220.9m 78
Order book (closing) £518.7m £329.1m 58
Proposed final dividend per share 10.10p 9.15p 10
Total dividend per share 14.80p 13.40p 10
Statutory 2024 2023 %
Statutory profit before tax £19.8m £13.9m 42
Basic earnings per share 37.87p 27.92p 36
Highlights include:
• Record revenue, adjusted operating profit, order intake, closing
order book and net funds, exceeding market expectations.
• Adjusted operating profit up 11% on revenue up 11%.
o Sensors and Effectors saw robust growth, with Chess and SEA delivering
improved performances on the back of strong product offerings.
o Communications and Intelligence reported a weaker year overall.
• Order book exceeded half a billion pounds for the first time, with
deliveries now extending out to 2037.
• Order intake of £392.1m (2023: £220.9m), including the £135m
Royal Navy contract awarded to SEA in March 2024.
• Dividend increased by 10%; the dividend has been increased every
year since the Group's IPO in 2006.
• Net funds above market expectations at £23.1m (2023: £15.6m).
Looking forward - Strong order book underpinning growth expectations:
• Record closing order book underpins over 90% of current market
revenue expectations for 2024/25.
• Acquired 100% of Interactive Technical Solutions Ltd ("ITS") for a
cash consideration of £3.0m, which is expected to be immediately earnings
enhancing, within the Communications and Intelligence division
• Encouraging start to the 2024/25 financial year with expectations
for the full year, excluding acquisition of ITS, unchanged.
• Significant further progress targeted for 2025/26 and beyond
(1) Excludes amortisation of other intangible assets, research and development
expenditure credits and non-trading exchange differences, including marking
forward exchange contracts to market.
(2) Excludes amortisation of other intangible assets and non-trading exchange
differences, including marking forward exchange contracts to market.
(3)Cash and cash equivalents less bank borrowings excluding IFRS 16 lease
liabilities.
Commenting on the results, Nick Prest CBE, Chairman of Cohort plc, said:
"We are reporting another strong performance for Cohort with improved revenue,
profit and net funds, and one that has exceeded expectations. Our order book
surpassed £500m for the first time and provides a solid foundation for the
future.
Our order book not only grew in value, but its longevity further increased,
providing visibility out to 2037. We have good prospects to secure further
long-term orders for our naval systems and support work.
The order book underpins more than £184m (2023: £140m), representing over
90% of 2024/25 revenue expectations. Following order wins since the start of
the financial year of over £70m, that cover now stands at over 95%. These
order wins include over £35m from Portugal.
We continue to expect another year of good growth in trading performance in
2024/25, enhanced by the addition of ITS. Given planned capital expenditure
and expansion in working capital to support our record order book, net funds
are likely to decrease.
We are optimistic that the Group will make significant further progress in
2025/26 and beyond, based on current orders for long-term delivery, our
continued investment in the businesses and our pipeline of opportunities."
A meeting is being held today for institutional analysts, hosted by Andy
Thomis, Chief Executive, and Simon Walther, Finance Director, from 09.00 for a
09:30 start (UK times). Please contact MHP via cohort@mhpgroup.com
(mailto:cohort@mhpgroup.com) if you wish to attend.
For those unable to attend in person, there will be a recording of the
presentation available on Cohort's website after the meeting:
https://www.cohortplc.com/investors/results-reports-presentations
(https://protect.checkpoint.com/v2/___https:/www.cohortplc.com/investors/results-reports-presentations___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OjEyYjk6N2M4ODg5NzJjYmI1YmU1MjZkMDE4ZGRlNDZjZGFjZDdlOGQ5MjRlZmQzZjY0MDRlODQyMDhlZmFhOGQzZjIzNjpwOkY6Tg)
Investor Presentations
Chief Executive, Andy Thomis, and Finance Director, Simon Walther will be
presenting at the LIVE Shares and AJ Bell investor evening on 17 July at 18.00
at the Novotel, Tower Bridge, London, EC3N 2NR.
Chief Executive, Andy Thomis, and Finance Director, Simon Walther, will be
presenting an investor webinar hosted by Equity Development on Friday, 19th
July at 10:00. Registration is free and questions can be submitted during the
presentation which will, if possible, be addressed at the end of it. A
recording will also be made available afterwards.
To attend the event, please register at
https://us06web.zoom.us/webinar/register/WN_v_2o2Xo8R0eD6XlgtsM8Ew#/registration
(https://protect.checkpoint.com/v2/___https:/us06web.zoom.us/webinar/register/WN_v_2o2Xo8R0eD6XlgtsM8Ew___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OjcyMGU6ZDRlM2I3NWQ1OWYxYmQyMjRjNWVlNjM2YmE0NDgzMmM3NmM2YjM5MWViYzkxNTg0ZjExOGFlOTIyYmI3YjU5ZTpwOkY6Tg#/registration)
For further information please contact:
Cohort plc 0118 909 0390
Andy Thomis, Chief Executive
Simon Walther, Finance Director
Emily McBride, Head of Corporate Communications
Investec Bank Plc (NOMAD and Broker) 020 7597 5970
Carlton Nelson, Christopher Baird
MHP 07817 458804
Reg Hoare, Ollie Hoare, Hugo Harris cohort@mhpgroup.com
NOTES TO EDITORS
Cohort plc (www.cohortplc.com
(https://protect.checkpoint.com/v2/___http:/www.cohortplc.com/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OmY2M2Y6MjM2NTBhZTZjOTBlZjQ2OTQ5ZTRmNDI2OTU4ZjZjYjcyNTM5NWVhMzg5YmUxNWEzNTBiOTc3YzMxYTgwODU3MDpwOkY6Tg)
) is the parent company of six innovative, agile and responsive businesses
based in the UK, Germany and Portugal, providing a wide range of services and
products for domestic and export customers in defence and related markets.
Cohort (AIM: CHRT) was admitted to London's Alternative Investment Market in
March 2006. It has headquarters in Reading, Berkshire and employs in total
over 1,300 core staff there and at its other operating company sites across
the UK, Germany, and Portugal.
The Group is split into two divisions - Communications and Intelligence, and
Sensors and Effectors:
Communications and Intelligence
· EID designs and manufactures advanced communications systems for
naval and military customers. Cohort acquired a majority stake in June
2016. www.eid.pt
(https://protect.checkpoint.com/v2/___http:/www.eid.pt/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OjY3ZTY6MmY3NjZhZjk2YjYzY2I0NzNiMGQ1MzcxY2Y0OTE3NDc2NGM4YjJkNDJkZDIyNDkwZDY3N2Q3YmU2NDgyZWVkOTpwOkY6Tg)
· MASS is a specialist data technology company serving the defence
and security markets, focused on electronic warfare, digital services, and
training support. Acquired by Cohort in August 2006. www.mass.co.uk
(https://protect.checkpoint.com/v2/___http:/www.mass.co.uk/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OmQ2MTk6ZDU4MTQ1NTBiYWYzNzBkNmZiYjk1MDAzY2FlMjVlYzhjNjBhNTk1NzA0MWE5OTQyYTM1ODI5NjgwOTg4NjFiYzpwOkY6Tg)
· MCL designs, sources, and supports advanced electronic and
surveillance technology for UK end users including the MOD and other
government agencies. MCL has been part of the Group since July
2014. www.marlboroughcomms.com
(https://protect.checkpoint.com/v2/___http:/www.marlboroughcomms.com/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OmE1YmU6ZWYyNTgxOWVjZTY1ZGYzZjcyNmQ4NjVjZGVjNzRhMWM3NmI5ZGQ0NTVlYmNjMTJmN2EyY2QwNTIyMDJiYWVmZjpwOkY6Tg)
Sensors and Effectors
· Chess Dynamics offers surveillance, tracking and fire-control
systems to the defence and security markets. Chess has been part of the Group
since December 2018. www.chess-dynamics.com
(https://protect.checkpoint.com/v2/___http:/www.chess-dynamics.com/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OjA3NGM6YmFhMWU4N2I4Mzg5ODllNDdiZGJjMjBmYmIzMjc3NTMwZWU0Njk1YTc1OTJjMTFhYmExNWRkYzQ0OTNjYmY1YjpwOkY6Tg)
· ELAC SONAR supplies advanced sonar systems and underwater
communications to global customers in the naval marketplace. Acquired by
Cohort in December 2020. www.elac-sonar.de
(https://protect.checkpoint.com/v2/___http:/www.elac-sonar.de/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OmQyNmY6ZjVlNDg2ZDkzMzg2YzZkNzEwYTZjOWFiZGRlNzEzN2FmNmI3ZDgwNWFkYzRmNDJhM2I5MTY5MGVjZjk0ZTU0MzpwOkY6Tg)
· SEA delivers and supports technology-based products for the
defence and transport markets alongside specialist research and training
services. Acquired by Cohort in October 2007. https://www.sea.co.uk/
(https://protect.checkpoint.com/v2/___https:/www.sea.co.uk/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2OjdkNjA6NzQyOTE4MmI5NGIzNDBkYzAzNDllYmE1Y2FkZjIwZDYzNzc3ZjQ4Y2UyYjBmMjdhMzc5OGZkYWQ5YTQ2OTZlMzpwOkY6Tg)
Chairman's statement
"Another record revenue and profit performance, with robust cash and a record
closing order book."
Performance
The Group achieved a record adjusted operating profit of £21.1m (2023:
£19.1m) on record revenue of £202.5m (2023: £182.7m), exceeding market
expectations, and representing an increase of 11% on the prior year in both
cases.
As I said last December, the invasion of Ukraine in 2022 and persistent
tensions in the Asia-Pacific region, have driven continuing impetus for
defence spending across the globe. This is reflected in the Group delivering
a record year of order intake, winning £392.1m of orders (2023: £220.9m)
representing 1.9x full year revenue (2023: 1.2x), and has resulted in a record
closing order book of £518.7m (2023: £329.1m).
As well as growing in size, our order book has extended in duration, now
stretching out to 2037. This reflects the significant naval orders the Group
has secured over the last few years, which are typically long-term in nature.
A notable example of a naval order won in the period is the £135m order for
SEA's Ancilia product secured in March 2024. As we said at the time, we
expect this order with the Royal Navy to grow and we see a good pipeline of
export opportunities for this and other product offerings for naval vessels,
both surface ships and submarines.
In the Land domain, we are seeing increased demand for drone and counter drone
systems, driven by the Ukraine conflict. The attacks on shipping in the Red
Sea show that drone defence is not only needed in the land environment. Other
areas of increased demand include secure communications and electronic
warfare.
The Group's net funds also finished at a much higher level than we expected at
the start of the year: £23.1m compared with £15.6m in 2023. As well as
reflecting the Group's profit performance, this resulted from favourable
timing of working capital flows and delayed expenditure on our new facility in
Germany due to adverse winter weather.
The Sensors and Effectors division saw a marked performance improvement. SEA
made the largest contribution to revenue growth and also significantly grew
profit on the back of its strong order book. Another major factor was a
turnaround at Chess, which saw growth in revenue as well as a sharply improved
margin performance. Both are set to grow further following the Ancilia win.
ELAC SONAR's revenue grew, and it achieved an important milestone with the
order for the third Italian submarine sonar system, though margin was affected
by the cautious trading policy adopted on that large project, which is now
beginning its production phase.
The Communications and Intelligence division reported a weaker year overall;
we had previously indicated that we expected it to achieve a broadly level
performance against last year as the record activity at MCL fell back to lower
historical levels. Compared to the Sensors and Effectors division,
Communications and Intelligence has so far seen less direct impact from global
demand patterns. MASS's revenue is dominated by stable multi-year contracts
from the UK, and EID's presently by its domestic customer which, although a
NATO member, is not a large spender on defence. MCL did benefit from domestic
and international demand for drones and counter-drone systems. The result was
the second-best annual performance in its history, but still some way behind
the exceptional result of 2022/23. MASS's revenue and profit grew to a record
level, and EID showed a modest performance improvement, although still posting
a small loss in the year. These did not offset the reduction in MCL's
contribution resulting in the weaker year overall.
Strategic initiatives
On 31 May 2024, our business MCL (within our Communications and Intelligence
division) acquired 100% of Interactive Technical Solutions Ltd ("ITS") for a
cash consideration of £3.0m paid from the Group's existing financial
resources. ITS specialises in providing technical support, publications and
services to the UK MOD and prime contractors, particularly in the area of
military vehicles. This acquisition is expected to be immediately earnings
enhancing.
The Group continues to review acquisition opportunities as they arise, in line
with our investment criteria.
Shareholder returns
Adjusted earnings per share (EPS) were 42.89 pence (2023: 36.48 pence). The
adjusted EPS figure was based on profit after tax, excluding amortisation of
other intangible assets and net foreign exchange movements. Basic EPS were
37.87 pence (2023: 27.92 pence). The adjusted EPS were 18% higher primarily
due to the stronger adjusted operating profit (up 11%) and a lower tax rate on
adjusted earnings of 12.7% (2023: 14.8%).
The Board is recommending a final dividend of 10.10 pence per ordinary share
(2023: 9.15 pence), making a total dividend of 14.80 pence per ordinary share
(2023: 13.40 pence) for the year, a 10% increase. The dividend has been
increased every year since the Group's IPO in 2006. The final dividend will be
payable on 2 October 2024 to shareholders on the register at 23 August 2024,
subject to approval at the Annual General Meeting on 24 September 2024.
Over the medium term, the Group plans to maintain a policy of growing its
dividend each year at a rate reflecting growth in earnings per share and
capital requirements.
Our people
As always, my thanks go to all employees within the Cohort businesses. Their
hard work, skill and ability to satisfy our customers' needs are what continue
to drive the performance of our Group.
The increasing order book and demand is driving a need for us to add to our
work force, particularly for engineers and related technical skills. We have
continued to invest in our graduate schemes and in work with local schools to
support STEM activities. Recruitment challenges remain in some areas,
especially high-level security cleared individuals, but overall we have
increased our head count from 1,132 last April to 1,309 this April.
Andrew Thomis, Simon Walther and their senior executive colleagues have
continued their dedicated and skilful work which has helped the Group to
continue its progress. I would like to thank Shane Knight, who retired as
Managing Director of MCL at the end of the financial year, for his dedication
to MCL over 21 years and welcome Claire King as the new Managing Director.
Governance
Having served on the Board for nine years, Jeff Perrin has decided not to
stand for re-election as a non-executive director at Cohort's forthcoming
Annual General Meeting to be held in September 2024. Jeff has made an immense
contribution to Cohort both as Chair of the Audit Committee and as the Senior
Independent Director. The Board and all Cohort staff are grateful to him for
his sage advice and guidance. We formally welcomed Peter Lynas onto the
Board as a non-executive director on 2 January 2024. Peter has had a long
and successful career in the defence industry and brings a wealth of
experience in finance and general management to Cohort. Peter will take over
from Jeff as Chair of the Audit Committee and Senior Independent Director.
Throughout the last financial year, we have continued to be guided by the 2018
edition of the QCA Corporate Governance Code (the QCA Code) and we have been
applying the new 2023 edition from 1 May 2024.
The Board regularly evaluates and reviews the Group's environmental, social
and governance (ESG) activity and is committed to maintaining appropriate
standards. The Group has disclosed climate-related financial information for
the second year and has established governance mechanisms to oversee
climate-related risks and opportunities. This year we have undertaken a
qualitative scenario analysis which has deepened our understanding of the
potential risks and opportunities under the three scenarios reviewed. The
Board agreed that a disclosure in line with the mandatory climate-related
financial disclosures under the Companies Act 2006 (CFD) is appropriate for
the Group given its size, industry sector and legal and regulatory
requirements rather than a disclosure in line with TCFD.
The Group's values, stakeholder engagement principles and governance policies
are all outlined on our website and in our Annual Report and Accounts.
Capital allocation
We have a proven strategy supported by an appropriate capital allocation
policy. As a Board we use this to inform our decision making and it has been
key to our progress. Our approach to capital allocation has three priorities:
to deliver sustainable organic growth, through investment in our people,
research and development and the capital requirements of the business; to find
value generating complementary acquisitions; and to pay a progressive
dividend. If all of the prior priorities are satisfied, then we will return
excess capital to shareholders. At the current time we have a strong balance
sheet with significant net cash which provides us with a range of options.
Outlook
Cohort continues to see good demand for our products and services from both
our domestic customers, especially the UK, and from export customers. The
geopolitical tensions driving increased investment in defence have remained
unrelenting during the year, with conflicts in the Ukraine coupled with
tensions in the Asia-Pacific region leading to increased spending
internationally.
Our order book underpins over £180m of current financial year revenue (2023:
£140m), representing over 90% of current market expectations of revenue for
the year. Following order wins since the start of the financial year of over
£70m, that cover now stands at just over 95%.
Overall we continue to expect another year of good growth in trading
performance in 2024/25, enhanced by the addition of ITS. Given planned capital
expenditure and expansion in working capital to support our record order book,
net funds are likely to decrease.
We are optimistic that the Group will make further progress in 2025/26 and
beyond, based on current orders for long-term delivery and on our pipeline of
opportunities.
Nick Prest CBE
Chairman
Chief Executive Officer's report
Overview
Following an encouraging performance in 2022/23 the Group's performance for
this year improved again with strong growth in revenue, profit, order intake
and cash. Overall, the results were ahead of market expectations. Sensors and
Effectors performed strongly, offsetting the slightly weaker Communications
and Intelligence division. In Sensors and Effectors, Chess continued its
improvement whilst SEA also delivered a better result on higher volume. In
Communications and Intelligence, the expected fall-back at MCL was not fully
compensated by EID, which made a smaller loss than last year. Cash
performance was also better than expected, resulting in another strong
positive net funds position at the year end. Order intake was a record high,
and the resulting record order book of over half a billion pounds gives us a
solid base for 2024/25 and beyond. We see good prospects for further
significant new orders in the year ahead.
Financial performance
The Group's revenue of £202.5m (2023: £182.7m) was 11% higher than last year
and delivered an adjusted operating profit of £21.1m (2023: £19.1m), 11%
higher than last year. Work on naval systems has made a major contribution to
performance, particularly within the Sensors and Effectors division.
The Group's statutory operating profit of £21.2m (2023: £15.3m) reflects the
amortisation of other intangible assets, a £3.1m non-cash charge in 2024
(2023: £3.7m charge) and the Research and Development credit (RDEC) of
£2.9m.(2023: £0.9m), which in turn is offset by a higher tax charge.
Adjusted earnings per share increased by 18% to 42.89p per share reflecting
the improved performance as well as tax credits received in overseas
territories.
Group net funds grew by 48% to £23.1m. As well as the improved adjusted
operating performance, this benefited from delays to the planned capital
expenditure on the new site in Germany, a result of bad winter weather. This
delay in expenditure is expected to be caught up in 2024/25, and the Group net
funds are expected to partially decline as a result.
Strategic progress
The Group has continued to make progress this year, achieving 11% organic
growth in revenue and adjusted operating profit, in line with our target for
double digit growth. The record order intake, particularly in key areas of
naval systems has, as we have seen in recent years, increased and lengthened
our order book. We continue to see a good pipeline of prospects, both in our
domestic and export markets. Key developments have included:
· The selection of Ancilia, the new decoy launcher system, to
protect the Royal Navy's surface fleet against modern missile threats. As well
as being a major revenue and profit opportunity in its own right (it is the
Group's largest ever single contract win), it represents a strong endorsement
of Ancilia from an internationally respected customer. That is a boost to the
system's wider export opportunities.
· Chess's various offerings into ground-based air defence systems,
especially against drones have seen a strong demand in 2024 and this
continues.
· SEA secured its first customer for its complete Anti-submarine
Warfare systems based upon its thin-line towed sonar array, Krait. As with
Ancilia, this opens up wider export markets, especially in the Asia Pacific
region.
· ELAC SONAR secured the order to provide its Sphere sonar
technology for the third Italian Navy submarine, confirming the customer
endorsement of this ground-breaking technology.
The closing order book and pipeline provide a firm base for us to continue to
deliver on our strategy and to also push our overall net margin for the Group
from its current 10-11% towards our target % of low to mid-teens within the
next three to five years.
In addition, the Group's strong net funds and available banking facilities
provide sufficient capital for us to continue to look for suitable businesses
to add to the Group, either as part of an existing Group business or as new
standalone business, further accelerating the growth in revenue and adjusted
operating profit.
Our people
All the Group's capabilities and customer relationships ultimately derive from
our people, and the success we have enjoyed is a result of their efforts. They
have risen to the challenge of the stronger demand we have seen this year, and
in doing so have made a material contribution to the national security and
defence of our nations and allies as well to the performance of the Group. I
would like to take this opportunity to express my sincere thanks to all
employees of Cohort and its businesses.
At the year end, Shane Knight retired as Managing Director of MCL. His
successor is Claire King, who has been with MCL for 12 years and formerly held
the role of Business Development Director.
Like many high-skill businesses, we are facing challenges in recruiting
qualified and experienced people to meet our customer demands and our own
investment strategies. As our order book has grown, so have our employee
numbers and the Group now has just over 1,300 employees compared with nearly
1,130 this time last year, a 15% increase. We will continue to add more
resources in the coming year, especially at Sensors and Effectors, although we
expect at a slower rate.
Acquisitions
On 31 May 2024, our subsidiary MCL (part of the Communications and
Intelligence division) completed the acquisition of ITS for an enterprise
value of £3.0m. This business will be integrated within MCL where it will
continue to provide technical support and services to both MCL and external
customers, including other members of the Group. This business typically
works in the Land domain, primarily on the UK military vehicle fleet either
directly for the British Army or via prime contractors.
Capital allocation
Our capital allocation policy is set out in the Chairman's statement. This is
exemplified as follows:
1. Continuous investment in Research and Development, maintaining
product offerings at the forefront of demanding environments and developing
new technologies within the Group's core competencies. Increasing by 26% to
£14.8m in year.
2. Complementary acquisitions driving growth in core areas where the
Group can leverage industry knowledge. ITS was acquired in May 2024.
3. A progressive dividend policy. An increase of at least 10% for
the sixth year running.
Andrew Thomis
Group Chief Executive
Operating Review
In this review the focus is on the adjusted operating profit of each division,
which we consider to be a more appropriate measure of performance year on
year. The adjusted operating profit is reconciled to the operating profit in
the Consolidated income statement, and this is broken down by reporting
segment in note 2.
The adjusted operating profit margin (net margin) of the Group was 10.4%, in
line with that achieved in 2022/23. The net margin was slightly lower in
Communications and Intelligence with lower UK MOD sales at MCL partly offset
by the slightly better performance at EID, which made a smaller loss than last
year. In Sensors and Effectors, the net margin was higher. This was mostly
driven by the significantly improved performance at Chess, partly offset by a
weaker mix at SEA.
As we have indicated previously, we are expecting these net margins to
increase over the medium-term. We expect Sensors and Effectors to be able to
yield net margin percentages in the mid-teens. This should be achieved from
the delivery of the strong order book, especially at SEA, with the overhead
footprint of the SEA and Chess businesses now established at a suitable level
to deliver their current order books for the next few years. At ELAC, the
last few years have seen cautious trading on the Italian sonar project as it
progresses through its development phases, holding ELAC's net margins down.
Early production work has now commenced, and this will begin in earnest in
2024/25. We will review the approach to project margin as major milestones are
achieved.
In the Communications and Intelligence division, MASS continues to deliver net
margins in excess of 20% and we expect that to continue. As expected, MCL's
net margin fell back from its high of last year as its volume reverted to a
lower level. MCL's net margin is typically low double digit with the
occasional uplift. EID has traded poorly for the last few years and posted
another loss albeit smaller than last year. The net margin for EID remains
unacceptably low. With the first of the expected new orders now received this
should begin to recover in the current year. Overall, we expect the
Communications and Intelligence division to deliver a net margin percentage in
the high teens.
When the above are combined with the central costs, we are targeting an
overall net margin for the Group of low to mid-teens percent in the next three
to five years.
Adjusted operating profit by reporting segments:
Adjusted operating profit Adjusted operating margin
2024 2023 2024 2023
£m £m % %
Communications and Intelligence 12.8 14.9 15.5 17.3
Sensors and Effectors 12.8 9.4 10.7 9.7
Central costs (4.5) (5.2) - -
21.1 19.1 10.4 10.4
Communications and Intelligence
· Revenue - £82.9m (2023: £86.2m)
· Adjusted operating profit - £12.8m (2023: £14.9m)
· Net cash flow generated from operating activities - £3.2m (2023:
£8.3m)
· Headcount - 484 (2023: 432)
Communications and Intelligence delivered a weaker performance on slightly
lower revenue. This was due to lower activity with the UK MOD, primarily
through MCL where last year we saw a record performance. Elsewhere in this
division, MASS continued to be the largest contributor to Group profit
delivering a net margin of 22.5% (2023: 23.2%) on higher revenue.
The Communications and Intelligence division enters 2024/25 with £63.2m
(2023: £59.1m) of its revenue on order. This is slightly higher than last
year and we expect to see improvements in Portugal, in terms of both
deliveries and orders as well as some good prospects at MCL. We expect this
division to deliver a better performance in 2024/25, in part a recovery at EID
as expected orders from the Portuguese Army and Navy arrive.
MASS enters 2024/25 with a record high of contractual revenue cover at 90%.
MCL, although at a much lower cover, more in line with its historical norm, is
already seeing a rise in customer activity. As demonstrated in 2022/23, it can
respond rapidly to this.
Sensors and Effectors
· Revenue - £119.6m (2023: £96.5m)
· Adjusted operating profit - £12.8m (2023: £9.4m)
· Net cash flow generated from operating activities - £21.5m
(2023: £5.9m)
· Headcount - 805 (2023: 682)
The Sensors and Effectors division delivered a much improved operating
performance on significantly higher revenue. Revenue grew at all three
businesses in the division, with SEA and Chess also showing strong profit
growth.
The division saw growth in revenue to export customers, including in Europe,
South America, Canada and the Asia Pacific region. Following significant
order wins last year from customers in Germany and the UK, revenue increased
to these two countries and going forward, as a result of the Ancilia contract,
the UK MOD revenue will continue to rise. Other significant orders included
follow on orders for Italy and New Zealand and new orders for Canada and
Australia as well as a range of other European and Asia Pacific customers.
Looking forward, this division is well underpinned for 2024/25 with over
£120.9m (2023: £83.6m) of revenue on order at 30 April 2024. The significant
order book and good prospects, some of which have already been secured, gives
us confidence that this division will grow in the coming few years. Over that
period we expect that its net margin, as a percentage should rise into the
early teens.
The amount of activity undertaken between our businesses has grown in the
year, as typified by SEA and Chess collaboration on the Ancilia product and
subsequent winning of the MEWP project for the Royal Navy, and we expect that
to continue. We will ensure that the necessary coordination and oversight to
manage this is provided both within the respective businesses and from our
head office to ensure that we are able to deliver these more complex
programmes while maintaining the autonomy and agility that are so important
for our operating businesses.
Andrew Thomis
Group Chief Executive
FINANCIAL REVIEW
Revenue analysis
The Group reports its segmental revenue through its two divisions,
Communications and Intelligence and Sensors and Effectors.
The revenue for the Group is also analysed into two separate breakdowns:
1. market (and geography) (see table below); and
2. product or service (see table below).
The Group's revenue continues to be dominated by defence and security
customers with £191.6m (2023: £169.8m) delivered to these markets, 95% of
Group revenue (2023: 93%).
Overall, the Group's increase in revenue has been driven by an increase in
export and activity with our domestic customers in Germany and Portugal. UK
MOD revenue decreased slightly to £96.8m (2023: £98.5m), and as a proportion
of Group revenue was lower at 48% (2023: 54%) due to the increase in exports.
Export defence markets grew by 23% (2023: 20%), and as a proportion of the
overall revenue increased from 32% last year to 36% this year. The increase
was in deliveries to European customers, mostly land domains and, as expected
into Asia Pacific for naval customers.
In our other domestic markets, as expected we again saw growth in both
Portugal and Germany. In Portugal, EID's revenue reflects the current
importance of its domestic customer. Depending upon the timing of orders we
expect this revenue to grow and remain an important element of EID's revenue
stream over the next few years.
Non-defence revenue, which includes transport and legacy hydroacoustic
products, was slightly lower. Both are reported within Sensors and Effectors.
The Group continues to see the larger proportion of its revenue from product
(hardware and/or software). The increase in the absolute revenue this year was
driven by export orders, especially naval systems to Asia Pacific and Europe
partly offset by the expected decline at MCL. The service element of the
Group's revenue increased from last year, driven by higher revenue at MASS and
a marked increase in support work to the Royal Navy at SEA. In the past, the
service revenue has typically been around 40%, this has fallen in recent years
as the product and systems activity, especially at Chess, ELAC and SEA has
increased. Going forward, we continue to work on increasing the support and
services work at Chess and EID.
The Group's revenue this year has driven an increase in statutory gross margin
percentage from 36% to 38%. The main cause of the increase in statutory
reported gross margin was an improvement in margins in Sensors and Effectors,
particularly at Chess where the changes we made have seen it close out most of
its legacy low margin projects and improve its margins on new work. ELAC's
gross margin was consistent with last year. SEA's gross margin was also
slightly weaker due to the mix of work, especially an export contract
containing a large element of sub-contractor effort which we expect to
completely close out in 2025/26.
In Communications and Intelligence, the gross margin saw improvement at MCL
due to mix and weaker margin at EID due to more deliveries to its domestic
customer. MASS was unchanged.
In terms of domain, the Group's revenue is dominated by Maritime and Land, a
combined 78% of Group revenue (2023: 78%). The next significant area is Joint
and Strategic at 10% (2023: 8%) which is mostly Communications and
Intelligence support to the UK's Joint Warfare capability. The growth in
Maritime is due to an increase in exports in Sensors and Effectors, mainly at
SEA. Land domain has fallen back from its peak last year due to the expected
fall back to more historically normal levels at MCL in Communications and
Intelligence. Going forward, we expect the Maritime domain to remain
dominant although we should see growth in other security work, albeit a small
element of the overall Group revenue.
Revenue by market and geography
Communications and Intelligence Sensors and Effectors Group
2024 2023 2024 20243 2024 % 2023 %
£m £m £m £m £m £m
Direct to UK MOD 58.0 62.1 10.7 0.2 68.7 34 62.3 34
Indirect to UK MOD where the Group acts as a sub-contractor or partner 5.0 7.3 23.1 28.9 28.1 14 36.2 20
Total UK defence 63.0 69.4 33.8 29.1 96.8 48 98.5 54
UK security 3.6 3.7 - - 3.6 2 3.7 2
UK other (non-defence and security) 0.1 - 8.2 7.4 8.3 7.4
Total UK 66.7 73.1 42.0 36.5 108.7 109.6
Portuguese defence and security 10.3 4.9 - - 10.3 5 4.9 3
German defence and security 0.3 - 8.7 4.3 9.0 4 4.3 2
Total non-UK domestic defence and security 10.6 4.9 8.7 4.3 19.3 9 9.2 5
Export defence and security
- Other European countries 1.1 2.1 36.4 33.7 37.5 35.8
- Asia Pacific and Africa 4.4 5.7 24.4 12.3 28.8 18.0
- North and South America 0.1 0.4 5.5 4.2 5.6 4.6
Total export defence and security 5.6 8.2 66.3 50.2 71.9 36 58.4 32
Export other (non-defence and security) - - 2.6 5.5 2.6 5.5
82.9 86.2 119.6 96.5 202.5 100 182.7 100
Revenue by type of deliverable
Year ended Year ended
30 April 2024 30 April 2023
£m % £m %
Product 148.4 73 140.8 77
Communications and Intelligence 45.1 22 53.8 29
Sensors and Effectors 103.3 51 87.0 48
Services 54.1 27 41.9 23
Communications and Intelligence 37.8 19 32.4 18
Sensors and Effectors 16.3 8 9.5 5
Total revenue 202.5 100 182.7 100
Operational outlook
Order intake and order book
Order intake Order book
2024 2023 2024 2023
£m £m £m £m
Communications and Intelligence 64.3 94.5 108.0 126.7
Sensors and Effectors 327.8 126.4 410.7 202.4
392.1 220.9 518.7 329.1
The increase in the Group's order book reflects the very strong order intake
in Sensors and Effectors. As expected, the Communications and Intelligence
order intake was lower than last year, which had benefited from very high
activity at MCL.
The 2023/24 order intake was 194% (2023: 121%) of the Group's revenue for the
year.
The revenue on order (order cover) for the coming year was over 90% (2023:
80%) as at 30 April 2024, based on the latest external revenue forecasts. This
had risen to over 95% in July.
The Group's order intake and order book are the contracted values with
customers and do not include any value attributable to frameworks or other
arrangements where no enforceable contract exists. The order intake and order
book take account of contractual changes to existing orders including
extensions, variations and cancellations.
Communications and Intelligence
Order intake at Communications and Intelligence was 32% lower than last year
and represented 78% of its annual revenue for 2023/24 (2023: 110%). The lower
order intake was a result of MCL coming off of its record performance of last
year. Elsewhere in this division, MASS has continued to deliver on its
long-term contracts which are not due for renewal until 2026 at the
earliest. This results in an expected step down in the order book from year
to year and the order cover against revenue being lower between renewal
years. EID had another weak year of order intake, but we expect a stronger
order inflow in 2024/25 as orders are received from its domestic customer.
This division is dominated by activity with the UK MOD where £41.1m of its
order intake (2023: £70.4m) was ultimately intended for that customer. The
decrease was at MCL following high demand last year for communication
equipment including hearing protection and intercoms. Important orders
secured in the year included renewals and extensions of long-term contracts
for our support to the UK's Joint Forces Command (£8.5m), electronic warfare
capability and the UK's strategic deterrent. The Group has been providing
services in all these areas for several decades.
Orders from other UK Government security departments totalled £13.5m (2023:
£3.4m), primarily in cyber services that MASS provides.
Sensors and Effectors
Order intake at Sensors and Effectors was very strong, 159% higher than last
year at £327.8m, representing 272% of its 2023/24 annual revenue (2023:
131%). The much higher order intake reflects the large long-term contracts
secured by SEA and continuing good momentum at Chess.
This year was dominated by the large order (over £135m) for our Ancilia
system from the Royal Navy. This order will supply and support systems for
seventeen surface ships and runs until 2037. Other important Royal Navy work
included orders for the next batch of Type 26 frigates and the Dreadnought
submarines. In export markets, the division secured various product orders
for Australia and Canada (Type 26) and New Zealand (ANZAC frigates). SEA
also secured an important export customer for its Anti-submarine Warfare
system based on its thin-line towed sonar array, Krait.
In Europe we continue to win work, including orders of nearly £7m for the
German Navy. A follow-on order for Italy sonar (Boat 3) was received by ELAC,
endorsing its solution for the new class of Italian submarines.
We continue to see good prospects in the Maritime domain for our products,
both in export markets as well as our domestic markets and the success of
Ancilia adds to this pipeline.
In the Land domain, Chess has seen a marked increase in demand for its
stabilised fire-control and tracking systems, particularly in countering
drones as part of ground-based air defence solutions. This demand is mostly
focussed in Europe and Chess secured around £17m of orders with some good
prospects for the coming year and beyond.
Delivery of the Group's order book into revenue
"The Group order book underpins over 90% of the 2024/25 latest analyst
forecasts for revenue. This has increased to 95% in July."
Cohort's order book has again increased in size and lengthened in duration. We
already have on order for delivery in 2024/25 over 90% of the external
expectations for the year. The order book for Sensors and Effectors is both
larger and longer than for Communications and Intelligence, which is what we
expect with the greater proportion of long-term delivery projects for naval
customers. In Communications and Intelligence, the longevity of the order book
is dominated by the multi-year support contracts for the UK MOD through MASS,
the first of which is due for renewal in 2026.
The short-term nature of some of the business in Communications and
Intelligence, especially the product delivery of MCL and the shorter delivery
contracts in training and cyber by MASS, mean that this division will
typically enter a financial year with less revenue on order. We do expect to
see some increase in the longevity of this division's order book in the coming
year when anticipated orders for the Portuguese Navy arrive.
Sensors and Effectors has a number of large multi-year programmes, both for
delivery and support, with work now stretching out to 2037. The prospects for
this division in the coming year to further increase the size of the order
book are good, both in the UK and export markets.
The Group's businesses are not dependent upon a single critical order to
achieve their respective revenue targets for 2024/25. The Group order infill
still required for the coming year of under 10% is an historically low level
and this had further reduced to under 5% in July 2024.
We introduced last year an analysis of the number of orders secured by a range
of order size. This is shown in the "Order intake analysis" chart above. This
shows that 95% (2023: 95%) of the Group's orders (by number) secured are of
less than £0.5m in value, accounting for 11% (2023: 23%) of the Group's total
order intake value. The remaining 5% of orders account for nearly 90% (2023:
77%) of the Group's total order value. The Ancilia order secured by SEA in
March 2024 (announced at £135m) has distorted some of the value comparatives
but as we have seen over the last few years, the Group is winning more large
individual orders. This year it has won ten (2023: nine) orders larger than
£5m with a total order value of £257.1m (2023: £69.2m). As a policy, we
usually only announce individual orders with a value of over £10m.
Funding resource and policy
At 30 April 2024, the Group's cash and readily available credit was £58.1m
(2023: £50.6m). A very high proportion of our ultimate customers are
governments or government agencies, with a clear need to invest in defence and
security. The international and domestic security environment still calls for
greater resources to be devoted to defence and counterterrorism in the UK and
many other countries, especially in the light of continuing events in Ukraine
and rising tensions in the South China Sea. As already mentioned, over 90% of
our revenue (based on latest analyst forecasts) for 2024/25 was on contract at
30 April 2024, providing further assurance, and this has since increased to
over 95%. The Board therefore considers the Group to be a going concern.
As set out in our capital allocation policy, the Group retains a robust
financial position and continues to be cash generative, enabling it to
continue to invest in internal R&D and other value-adding projects on a
carefully considered basis as well as maintaining its progressive dividend
policy. The Group's cash position and banking facility also provide it with
the resources to conduct its acquisition strategy.
The Group completed a renewal of its banking facility on 18 July 2022. The
facility was initially for three years to July 2025, and this has been
extended, again, following exercise of an option, in May 2024, to July 2027.
The revolving credit facility (RCF) is for an initial £35m with an option
(accordion) to draw a further £15m. The facility is provided by three banks:
NatWest, Lloyds and Commerzbank. There are no further options to extend this
current facility and we will enter discussions with our banks in 2025/26 to
renew the facility which is due to expire July 2027.
The Group's bank borrowings have been reported as due after one year as the
facility in place as at 30 April 2024 was due to expire in July 2026.
NatWest is the Group's primary bank in the UK, especially for clearing
purposes and day-to-day transactions. Commerzbank undertakes a similar role in
Germany for ELAC.
The Group's facility in place as at 30 April 2024 was for £35m, of which
£16.5m was drawn, leaving £18.5m available to be drawn down. The facility
itself provides the Group with a flexible arrangement to draw down for
acquisitions and overdraft. The Group's banking covenants were all passed for
the year ended 30 April 2024. Looking forward, we expect this to continue out
to 31 July 2025 and beyond.
The Group's net funds at 30 April 2024 were £23.1m (30 April 2023: £15.6m),
better than expected due to a marked improvement in working capital management
at MCL and SEA and lower capital expenditure spend on its new facility by ELAC
due to adverse winter weather. The increase in activity and order book has
resulted in a marked increase in both the Group's trade and other receivables
and trade and other payables. The net impact is minimal with an increase of
only £1.3m in net trade related liabilities since last year.
Looking forward, we expect the Group's net funds at 30 April 2025 to be lower,
as the timing advantage is expected, in part, to unwind. We expect to see the
impact of greater expenditure on the facility work in Germany and also the
recently completed purchase of Interactive Technical Solutions for £3.0m in
cash. As at 30 April 2024 the Group had invested £4.1m in the new German
facility with a further £10m due to be spent in the current year.
The Group expects to see an increase in net funds by 30 April 2026 from 2025,
if there is no further corporate activity.
The Group has maintained its progressive dividend policy, increasing its
dividend this year by 10% to a total dividend paid and payable of 14.80 pence
per share (2023: 13.40 pence).
The last five years' annual dividends, growth rate, earnings cover and cash
cover are as follows:
Dividend Growth over Earnings cover Cash cover
Pence previous year (based upon (based upon
% adjusted net cash
earnings inflow from
per share) operations)
2024 14.8 10 2.9 3.7
2023 13.4 10 2.7 3.0
2022 12.2 10 2.6 3.9
2021 11.1 10 3.0 3.6
2020 10.1 11 3.7 2.8
2019 9.1 11 3.8 2.3
Looking forward the Group plans to maintain a policy of growing its dividend
each year at a rate reflecting growth in earnings per share and capital
requirements.
In summary, the Group's cash performance in 2023/24 was as follows:
2024 2023
£m £m
Adjusted operating profit 21.1 19.1
Depreciation and other non-cash operating movements 3.4 3.0
Working capital movement 1.8 (5.5)
26.3 16.6
Acquisition of the non-controlling interest of Chess - (1.0)
Tax, dividends, capital expenditure, interest and other investments (18.8) (11.0)
Increase in funds 7.5 4.6
The higher cash outflow in tax and dividends, etc. was mostly due to tax paid
(£4.6m higher), net investment in own shares of £1.1m, £0.6m higher than
last year and higher capital expenditure by £1.5m. The balance was higher
dividends and lower level of new shares issued. The higher tax payment
included a payment in Germany of £2.7m (2023: nil) which was an alignment of
the local tax base with IFRS. The higher capex was mostly a result of initial
investment in our new German facility and certain key items of capital
equipment for the Italian sonar programme. We expect the capital expenditure
in the coming year on this facility to build to a peak as we approach
completion in the Summer of 2025.
Tax
The Group's tax charge for the year ended 30 April 2024 of £4.5m (2023:
charge of £2.7m) was at a rate of 22.9% (2023: 19.2%) of profit before tax.
This includes a current year corporation tax charge of £7.4m (2023: £3.2m),
a prior year corporation tax credit of £0.6m (2023: £0.4m) and a deferred
tax credit of £2.3m (2023: £0.1m), mostly in respect of the current year.
The Group's overall tax rate of 22.9% was below the standard UK corporation
tax rate of 25.0% (2023: 19.5%). The decrease is due to an R&D credit
recognised in Portugal, as there was in 2023, partly offset by a higher rate
in Germany (at 31.6%).
The Group has reported research and development expenditure credits (RDEC) for
the UK in accordance with IAS 20 and shown the credit of £2.9m (2023: £0.9m)
in cost of sales and adjusted the tax charge accordingly. The RDEC has been
reversed in reporting the adjusted operating profit for the Group to ensure
comparability of operating performance year on year.
Looking forward, the Group's effective current tax rate (excluding the impact
of RDEC reporting) for 2024/25 is estimated at less than 20% compared with 13%
of the pre-RDEC adjusted operating profit less interest for 2023/24. The Group
maintains a cautious approach to previous R&D tax credit claims for tax
periods that are still open, currently 2022/23 and 2023/24 as well as the
potential outcome of a tax audit in Portugal.
Adjusted earnings per share
The adjusted earnings per share (EPS) of 42.89 pence (2023: 36.48 pence) are
reported in addition to the basic earnings per share and exclude the effect of
amortisation of intangible assets and exchange movement on marking forward
exchange contracts to market, all net of tax.
The adjusted earnings per share exclude non-controlling interest of EID (20%).
The reconciliation from last year to this year is as follows:
Adjusted Adjusted
operating earnings
profit per share
£m Pence
Year ended 30 April 2023 19.1 36.48
100% owned businesses throughout the year ended 30 April 2024 1.4 3.02
Impact of businesses with minority holding 0.6 1.04
Change in tax rate (excluding RDEC): 12.7% (2023: 14.8%) - 0.93
Other movements including interest and lower weighted average share capital - 1.42
Year ended 30 April 2024 21.1 42.89
Increase from 2023 to 2024 11% 18%
The adjustments to the basic EPS in respect of exchange movements and other
intangible asset amortisation of EID only reflect that proportion of the
adjustment that is applicable to the equity holders of the parent.
Accounting policies
There were no significant accounting policy changes in 2023/24.
Simon Walther
Finance Director
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the year ended 30 April 2024
Notes 2024 2023
£'000 £'000
Revenue 2 202,533 182,713
Cost of sales (126,260) (117,852)
Gross profit 76,273 64,861
Administrative expenses (55,086) (49,610)
Operating profit 21,187 15,251
Comprising:
Adjusted operating profit 2 21,141 19,064
Amortisation of other intangible assets (included in administrative expenses) (3,121) (3,672)
Research and development expenditure credits (RDEC) (included in cost of 2,870 941
sales)
Credit/(charge) on marking forward exchange contracts to market value at the 297 (1,082)
yearend (included in cost of sales)
2 21,187 15,251
Finance income 500 134
Finance costs (1,863) (1,458)
Profit before tax 19,824 13,927
Income tax charge 3 (4,532) (2,675)
Profit for the year 15,292 11,252
Attributable to:
Equity shareholders of the parent 15,316 11,356
Non-controlling interests (24) (104)
15,292 11,252
All profit for the year is derived from continuing operations.
Notes Pence
Pence
Earnings per share
Basic 4 37.87 27.92
Diluted 4 37.72 27.86
Adjusted earnings per share
Basic 4 42.89 36.48
Diluted 4 42.72 36.40
Dividends per share paid and proposed in respect of the year
Interim 4.70 4.25
Final 10.10 9.15
14.80 13.40
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 April 2024
2024 2023
£'000 £'000
Assets
Non-current assets
Goodwill 50,145 50,145
Other intangible assets 2,848 5,969
Right of use asset 7,818 8,521
Property, plant and equipment 19,370 15,304
Deferred tax asset 2,543 1,600
82,724 81,539
Current assets
Inventories 33,310 32,041
Trade and other receivables 79,377 55,612
Current tax assets 1,823 2,126
Derivative financial instruments 105 42
Cash and cash equivalents 55,157 50,956
169,772 140,777
Total assets 252,496 222,316
Liabilities
Current liabilities
Trade and other payables (80,967) (55,897)
Current tax liabilities (2,150) (4,269)
Derivative financial instruments (399) (1,041)
Lease liability (1,781) (1,660)
Bank borrowings (15,490) (9,511)
Provisions (8,914) (8,687)
(109,701) (81,065)
Non-current liabilities
Deferred tax liability (887) (1,467)
Lease liability (6,708) (7,473)
Bank borrowings (16,530) (25,837)
Provisions (3,204) (1,404)
Retirement benefit obligations (5,626) (5,292)
(32,955) (41,473)
Total liabilities (142,656) (122,538)
Net assets 109,840 99,778
Equity
Share capital 4,161 4,146
Share premium account 32,157 31,484
Own shares (4,569) (3,601)
Share option reserve 2,859 2,116
Retained earnings 74,066 62,876
Total equity attributable to the equity shareholders of the parent 108,674 97,021
Non-controlling interests 1,166 2,757
Total equity 109,840 99,778
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 April 2024
Attributable to the equity shareholders of the parent
Share Share Own Share Other Retained Total Non- Total
capital premium shares option reserves earnings £'000 controlling equity
£'000 account £'000 reserve £'000 £'000 interests £'000
£'000 £'000 £'000
At 1 May 2022 4,121 30,527 (3,346) 1,000 (1,400) 53,068 83,970 5,220 89,190
Profit for the year - - - - - 11,356 11,356 (104) 11,252
Other comprehensive income for the year - - - - - 849 849 - 849
Total comprehensive income/(expense) for the year - - - - - 12,205 12,205 (104) 12,101
Transactions with owners of Group and non-controlling interests, recognised
directly in equity
Issue of new shares 25 957 - - - - 982 - 982
Equity dividends - - - - - (5,124) (5,124) - (5,124)
Vesting of Restricted Shares - - - - - 218 218 218
Own shares purchased - - (586) - - - (586) - (586)
Own shares settled - - 111 - - - 111 - 111
Net loss on settling own shares - - 220 - - (220) - - -
Purchase of non-controlling interest - - - - - 2,359 2,359 (2,359) -
Share-based payments - - - 1,522 - - 1,522 - 1,522
Deferred tax adjustment in respect of share-based payments - - - (36) - - (36) - (36)
Transfer of share option reserve on vesting of options - - - (370) - 370 - - -
Change in option for acquiring non-controlling interest in Chess - - - 1,400 - 1,400 - 1,400
At 30 April 2023 4,146 31,484 (3,601) 2,116 - 62,876 97,021 2,757 99,778
Profit for the year - - - - - 15,316 15,316 (24) 15,292
Other comprehensive expense for the year - - - - - (853) (853) (23) (876)
Total comprehensive income/(expense) for the year - - - - - 14,463 14,463 (47) 14,416
Transactions with owners of Group and non-controlling interests, recognised
directly in equity
Issue of new shares 15 673 - - - - 688 - 688
Equity dividends - - - - - (5,598) (5,598) - (5,598)
Vesting of Restricted Shares - - - - - 209 209 - 209
Own shares purchased - - (1,917) - - - (1,917) - (1,917)
Own shares settled - - 802 - - - 802 - 802
Net loss on settling own shares - - 147 - - (147) - - -
Adjustment to non-controlling interest - - - - - 1,544 1,544 (1,544) -
Share-based payments - - - 1,278 - - 1,278 - 1,278
Deferred tax adjustment in respect of share-based payments - - - 184 - - 184 - 184
Transfer of share option reserve on vesting of options - - - (719) - 719 - - -
At 30 April 2024 4,161 32,157 (4,569) 2,859 - 74,066 108,674 1,166 109,840
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 April 2024
Group
Notes 2024 2023
£'000 £'000
Net cash from operating activities 5 23,017 16,288
Cash flow from investing activities
Interest received 500 134
Purchases of property, plant and equipment (6,659) (5,231)
Net cash used in investing activities (6,159) (5,097)
Cash flow from financing activities
Issue of new shares 688 982
Dividends paid (5,598) (5,124)
Purchase of own shares (1,917) (586)
Settlement of own shares 802 111
Purchase of non-controlling interest in Chess - (1,016)
Repayment of borrowings (9,000) (4,000)
Repayment of lease liabilities (1,892) (1,720)
Net cash used in financing activities (16,917) (11,353)
Net decrease in cash and cash equivalents (59) (162)
Represented by:
Cash and cash equivalents brought forward 41,454 40,367
Net decrease in cash and cash equivalents (59) (162)
Foreign exchange (loss)/gain (1,728) 1,249
Cash and cash equivalents carried forward 39,667 41,454
At Effect of Cash flow At
30 April 2023 foreign £'000 30 April 2024
£'000 exchange rate £'000
changes
£'000
Net funds reconciliation
Cash and bank 50,956 (1,728) (5,299) 43,999
Short-term deposits - - 11,158 11,158
Bank overdrafts (9,502) - (5,988) (15,490)
Cash and cash equivalents 41,454 (1,728) (6,047) 39,667
Loan (25,837) 307 9,000 (16,530)
Finance lease (9) - 9 -
Debt (25,846) 307 9,009 (16,530)
Net funds 15,608 (1,421) 8,950 23,137
NOTES TO THE PRELIMINARY RESULTS ANNOUNCEMENT
1. BASIS OF PREPARATION
The unaudited summary financial information contained within this preliminary
report has been prepared using accounting policies consistent with UK Adopted
International Accounting Standards. The financial information contained in
this announcement does not constitute statutory accounts as defined in Section
434 of the Companies Act 2006. The results for the year ended 30 April 2024
are unaudited. The financial statements for the year ended 30 April 2024 will
be finalised on the basis of the financial information presented by the Board
of Directors in this preliminary announcement and will be delivered to the
Registrar of Companies after the Annual General Meeting. The financial
statements are subject to completion of the audit and may also change should a
significant adjusting event occur before the approval of the statutory
accounts.
The Group owned 80% of EID throughout the period and 81.84% of Chess to 30
November 2022 before purchasing the remainder of the non-controlling interest
and in both cases had effective control throughout. Therefore, 100% of EID's
and Chess's results and balances have been consolidated with the
non-controlling interest identified.
The comparative figures for the financial year ended 30 April 2023 are not the
Company's statutory accounts for that financial year. Those accounts have been
reported on by the Company's auditor and delivered to the Registrar of
Companies. The report of the auditor was:
i. unqualified,
ii. did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying
their report, and
iii. did not contain a statement under section 498(2) or (3)
of the Companies Act 2006.
At 30 April 2024, the Group's cash and readily available credit was £58.1m
(2023: £50.6m). A very high proportion of our ultimate customers are
governments or government agencies, with a clear need to invest in defence and
security. The international and domestic security environment still calls for
greater resources to be devoted to defence and counterterrorism in the UK and
many other countries, especially in the light of recent events in Ukraine. As
already mentioned, over 90% of our revenue (based on consensus analyst
forecasts) for 2024/25 was on contract at 30 April 2024 providing further
assurance, and this has since increased to over 95%.
As announced on 19 July 2022, the Group has renewed its bank facility,
increasing it from £40m to £50m and extending it to July 2025 from November
2022. The Group extended this facility to July 2027 on 20 May 2024.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis in preparing the annual
financial statements.
The preliminary announcement was approved by the Board and authorised for
issue on 17 July 2024.
Copies of the Annual Report and accounts for the year ended 30 April 2024 will
be posted to shareholders on 21 August 2024 and will be available on the
Company's website (www.cohortplc.com
(https://protect.checkpoint.com/v2/___http:/www.cohortplc.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplMWNjOWY5Y2RiMDI0ZGRlZmMzNWM4NGIwYWY2NDM5Yzo2Ojg1NDc6M2M2OTlkZTdhZWMxODM0ZGVmMjlkOGIwN2ZiNzA3NTBmNWE1YmVjMmI1N2ViZTQ3NjU1YWYxZGUxYjkzYmY3YzpwOkY6Tg)
) from that date.
2. SEGMENTAL ANALYSIS OF REVENUE AND OPERATING PROFIT
Year ended Year ended
30 April 2024 30 April 2023
£000 £000
Revenue
Communications and Intelligence 82,929 86,195
Sensors and Effectors 119,604 96,518
202,533 182,713
Adjusted Operating Profit
Communications and Intelligence 12,842 14,911
Sensors and Effectors 12,787 9,320
Central costs (4,488) (5,167)
21,141 19,064
Amortisation of other intangible assets (3,121) (3,672)
Research and development expenditure credit (RDEC) 2,870 941
Credit/charge on marking forward exchange contracts to market value at the 297 (1,082)
year end
Operating Profit 21,187 15,251
The above segmental analysis is the primary segmental analysis of the Group.
All revenue and adjusted operating profit are in respect of continuing
operations.
The operating profit as reported under IFRS is reconciled to the adjusted
operating profit as reported above by the exclusion of amortisation of other
intangible assets, RDEC and change on marking forward exchange contracts to
market value at the year end.
The adjusted operating profit is presented in addition to the operating profit
to provide the trading performance of the Group, as derived from its
constituent elements on a consistent basis from year to year.
3. TAX CHARGE
Year ended Year ended
30 April 2024 30 April 2023
£000
£000
UK corporation tax: in respect of this year 6,388 3,314
UK corporation tax: in respect of prior years (252) (756)
German corporation tax: in respect of this year 528 -
German corporation tax: in respect of prior years (354) -
Portugal corporation tax: in respect of this year (442) (249)
Portugal corporation tax: in respect of prior years - 397
Other foreign corporation tax: in respect of this year - 133
5,868 2,839
Deferred tax: in respect of this year (1,292) (96)
Deferred tax: in respect of prior years (44) (68)
(1,336) (164)
4,532 2,675
The current year deferred tax credit includes a credit of £852,000 (2023:
credit of £987,000) in respect of the amortisation of other intangible assets
and a current year charge of £74,000 (2023: £271,000 credit) in respect of
marking forward exchange contracts to market value at the year end.
4. EARNINGS PER SHARE
The earnings per share are calculated by dividing the earnings for the year by
the weighted average number of ordinary shares in issue as follows:
Year ended Year ended
30 April 2024 30 April 2023
£000 £000
Earnings
Basic and diluted earnings 15,316 11,356
Amortisation of other intangible assets (net of tax of £852,000; 2023: 2,254 2,672
£987,000)
(Credit)/charge on non-trading foreign exchange movements (net of tax charge (223) 811
of £74,000 (2023: credit of £270,000)
Adjusted basic and diluted earnings 17,347 14,839
The adjustment for the amortisation of intangible assets in respect of EID and
Chess to November 2022 reflects the interests of the equity holders of the
parent only and excludes the proportion allocated to the non-controlling
interest in each year. The Chess non-controlling interest was acquired in
November 2022.
Year ended Year ended
30 April 2024 30 April 2023
Number Number
Weighted average number of shares
For the purposes of basic earnings per share 40,445,297 40,673,953
Share options 156,639 88,038
For the purposes of diluted earnings per share 40,601,936 40,761,991
Year ended Year ended
30 April 2024 30 April 2023
Pence Pence
Earnings per share
Basic 37.87 27.92
Diluted 37.72 27.86
Adjusted earnings per share
Basic 42.89 36.48
Diluted 42.72 36.40
5. NET CASH GENERATED FROM OPERATING ACTIVITIES
Year ended Year ended
30 April 2024 30 April 2023
£000 £000
Profit for the year 15,292 11,252
Adjustments for:
Tax charge 4,532 2,675
Depreciation of property, plant and equipment 2,648 2,376
Depreciation of right of use assets 1,952 1,776
Amortisation of goodwill and other intangible assets 3,121 3,672
Net finance expense 1,363 1,324
Derivative financial instruments and other non-trading exchange movements (297) 1,082
Share-based payment 1,106 1,522
Movement in provisions 2,213 720
Operating cash inflows before movements in working capital 31,930 26,399
Increase in inventories (1,371) (8,565)
(Increase)/decrease in receivables (24,726) 2,999
Increase/(decrease) in payables 23,769 (2,976)
(2,328) (8,542)
Cash generated by operations 29,602 17,857
Tax paid (4,722) (111)
Interest paid (1,863) (1,458)
Net cash generated from operating activities 23,017 16,288
Interest paid includes the interest element of lease liabilities under IFRS 16
of £284,000 (2023: £234,000).
6. POST BALANCE SHEET EVENTS
On 31st May 2024 Cohort plc acquired 100% of Interactive Technical Solutions
Limited ("ITS") through its wholly owned subsidiary Marlborough Communications
Limited ("MCL"). This business will be integrated within MCL where it will
continue to provide technical support and services to both MCL and external
customers, including other members of the Group. A cash consideration of £3m,
was paid for the acquisition which will be fully disclosed in the accounts for
the year ending 30 April 2025. There are no contingent considerations within
the purchase agreement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SFAFUMELSESWRecent news on Cohort
See all newsRCS - Cohort PLC - Contract win
AnnouncementREG - Cohort PLC - Total Voting Rights
AnnouncementREG - Cohort PLC - Director/PDMR Shareholding
AnnouncementREG - Cohort PLC - Director/PDMR Shareholding
AnnouncementREG - Cohort PLC - Block Listing Six Monthly Return
Announcement