REG - Cohort PLC - Full Year Trading Update

CohortAnnouncement

25/05/2023 07:00

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RNS Number : 5806A  Cohort PLC  25 May 2023

 One Waterside Drive

 Arlington Business Park

 Reading

 Berks

 RG7 4SW

           25 May 2023

 

COHORT PLC

("Cohort" or "the Group")

 

Full Year Trading Update

 

Cohort, the independent technology group, today announces an unaudited trading
update for its financial year ended 30 April 2023.

 

Summary

 

·      Trading performance for the year ended 30 April 2023 is slightly
ahead of expectations on higher revenue.

·      Strong net funds of c.£15m, ahead of expectations (30 April
2022: £11.0m; 31 October 2022: net debt £0.6m).

·      Strong order intake of c.£218m (2022: £186.7m).

·      Closing order book of over £325m (30 April 2022: £291.0m)

·      Order book underpins c.£145m (84%) of current market revenue
expectations for the year ended 30 April 2024 (2023: £113m, 69%).

 

The Group also announces today that it will be changing its segmental
reporting practice. Future financial reports and announcements will cover two
new segments:

 

·      Communications and Intelligence, comprising the businesses EID,
MASS and MCL, and;

 

·      Sensors and Effectors, comprising Chess Dynamics, ELAC Sonar and
SEA.

 

 

Further details, including a presentation of historic results for the new
segments, are provided below. The first application of this change will be for
results for the year ended 30 April 2023, including this Full Year Trading
Update.

 

 

FY23 year-end update

 

As we signalled last year, the Group has returned to growth, and we expect to
deliver a record trading profit performance for the year ended 30 April
2023.  The Group has seen growth in both new reporting segments.

 

In Communications and Intelligence, strong demand from the UK MOD has offset a
continuing weak performance in Portugal where we have seen further order
slippage.  Weaker performance at EID, accounted for the slight deterioration
in the net margin percentage of this segment, when compared with last year.

 

The Sensors and Effectors segment saw strong growth across all its constituent
businesses. This included increased work at ELAC Sonar on the Italian
Submarine programme, which is trading at a low margin whilst the programme
makes its way through its design phase.  As expected, Chess improved its
performance despite closing out a small number of project issues and we expect
this improvement to continue into the coming financial year.

 

The closing net funds position was much stronger than we expected and arose
from timing of working capital flows in Communications and Intelligence and
the improved cash performance of the Chess business within Sensors and
Effectors.

 

The order intake is 1.2x the annual revenue (2022: 1.3x) and the order book of
the Group continues to grow and lengthen with deliveries out to 2032.  The
order intake performance was over 15% higher than last year.

 

The year end order book underpins c.£145m (84%) of the current consensus
market revenue expectations for 2024, an improvement on the year just
finished.  Since the year end, we have secured further orders including an
order for £26m (announced 9 May 2023), further improving our visibility for
the coming financial year.

 

 

 

Outlook for FY24

 

The on-going conflict in Ukraine and the tensions in the South China Sea and
around Taiwan have provided drivers for increased investment in defence, both
in NATO and further afield.  We continue to see demand for our products and
services from our domestic customers, especially the UK, and overseas.

 

In Sensors and Effectors, we expect growth in this coming year, driven by
continued performance improvement at Chess and increased delivery of systems
for UK and export naval customers.  We expect the net margin percentage of
this segment to improve in the coming year.

 

In Communications and Intelligence, we expect certain long-delayed
communication system orders for the Portuguese Navy to be secured which should
enable EID to improve its performance materially.  Elsewhere in this segment,
we expect the high level of UK MOD sales we have seen in the current financial
year to drop back to a more normal historical level.  Overall, we expect the
Communications and Intelligence sector to trade in line with 2022/23.

 

We maintain our expectations for the coming financial year.

 

 

Notice of FY23 results

 

It is the Group's intention to issue its preliminary announcement for the year
ended 30 April 2023 in late July 2023.

 

 

Andrew Thomis, Chief Executive of Cohort, said:

 

"Cohort's performance was slightly above our expectations for the year.
Strong order intake, record closing order book and strong closing net funds
provided a good start to the new financial year, and we expect to continue our
organic growth in 2023/24 and beyond."

 

 

Segmental reporting re-presentation

 

The Board believes that the revised segmental reporting, which amalgamates the
existing six business units into two reporting segments, will provide a
clearer understanding of the underlying performance of the Group, as well as a
simplified reporting structure. These new segments will provide sufficient
scope for expansion as the Group continues to grow, both organically and
through acquisition, whilst ensuring the business units can continue to
operate as standalone entities, retaining their agility and flexibility.

 

The two new reporting segments are:

 

·      Communications and Intelligence, comprising EID, MASS and MCL,
and;

 

·      Sensors and Effectors, comprising Chess, ELAC and SEA

 

These segments represent the Group's core specialisms and the business units
have been grouped accordingly to reflect their complementary technologies and
products.

 

Below is the historical financial information for the five years ended 30
April 2022 restated on the basis of this new segmental reporting.

 

 

 

 

 

                                        2022     2021      2020     2019     2018
 Headline results (£'000)
 Revenue                                137,765  143,308   131,059  121,182  111,798
 -   Communications and Intelligence    68,369   78,419    74,199   72,181   74,018
 -       EID                            8,219    20,952    18,020   11,530   19,084
 -       MASS                           38,405   39,487    41,115   38,936   37,553
 -       MCL                            21,745   17,980    15,064   21,715   17,381

 -   Sensors and Effectors              69,396   64,889    56,860   49,001   37,780
 -       Chess                          16,905   28,641    25,155   10,674   -
 -       ELAC                           21,518   8,290     -        -        -
 -       SEA                            30,973   27,958    31,705   38,327   37,780

 Adjusted operating profit              15,525   18,609    18,223   16,164   15,602
 -   Communications and Intelligence    12,253   15,647    13,682   11,814   13,862
 -       EID                            860      4,834     3,108    1,357    4,677
 -       MASS                           9,138    8,742     8,914    8,175    7,113
 -       MCL                            2,255    2,071     1,660    2,282    2,072

 -   Sensors and Effectors              7,469    6,544     7,455    7,174    4,433
 -       Chess                          314      3,018     3,923    1,682    -
 -       ELAC                           3,770    1,173     -        -        -
 -       SEA                            3,385    2,353     3,532    5,492    4,433

 -   Corporate                          (4,197)  (3,582)   (2,914)  (2,824)  (2,693)

 Operating profit                       11,090   7,808     10,731   5,944    9,960
 -   Communications and Intelligence    12,310   15,978    12,401   8,375    9,785
 -       EID                            644      4,597     2,292    367      3,115
 -       MASS                           9,400    9,004     8,596    8,209    7,113
 -       MCL                            2,266    2,377     1,513    (201)    (443)

 -   Sensors and Effectors              2,395    (4,519)   1,650    1,302    2,918
 -       Chess                          (3,130)  (3,863)   (2,423)  (3,129)  -
 -       ELAC                           496      (2,449)   -        -        -
 -       SEA                            5,029    1,793     4,073    4,431    2,918

 -   Corporate                          (3,615)  (3,651)   (3,320)  (3,733)  (2,743)

 Amortisation of intangibles            (6,865)  (10,103)  (7,354)  (9,514)  (5,312)
 -   Communications and Intelligence    (216)    (237)     (816)    (3,420)  (3,992)
 -       EID                            (216)    (237)     (816)    (990)    (1,562)
 -       MASS                           -        -         -        -        -
 -       MCL                            -        -         -        (2,430)  (2,430)

 -   Sensors and Effectors              (6,649)  (9,866)   (6,538)  (6,094)  (1,320)
 -       Chess                          (3,288)  (6,319)   (6,538)  (4,870)  -
 -       ELAC                           (3,274)  (3,547)   -        -        -
 -       SEA                            (87)     -         -        (1,224)  (1,320)

 

 

 

 

 

 

ENDS

 

 

 

For further information please contact:

 

 Cohort plc                            0118 909 0390
 Andy Thomis, Chief Executive
 Simon Walther, Finance Director
 Raquel McGrath, Company Secretary

 Investec Bank Plc (NOMAD and Broker)  020 7597 5970
 Carlton Nelson, Christopher Baird

 MHP                                   020 3128 8276
 Reg Hoare, Ollie Hoare, Hugo Harris   cohort@mhpgroup.com

 

 

NOTES TO EDITORS

 

Cohort plc (www.cohortplc.com (http://www.cohortplc.com/) ) 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 1,000 core staff there and at its other operating company sites across
the UK, Germany, and Portugal.

 

The group is split into two segments - 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 (http://www.eid.pt/)

 

·      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
(http://www.mass.co.uk/)

 

·      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 (http://www.marlboroughcomms.com/)

 

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 (http://www.chess-dynamics.com/)

 

·      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 (http://www.elac-sonar.de/)

 

·      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. www.sea.co.uk
(http://www.sea.co.uk/)

 

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