REG - Cohort PLC - Half Year Results
11/12/2024 07:00
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RNS Number : 5894P Cohort PLC 11 December 2024
One Waterside Drive
Arlington Business Park
Reading
Berks
RG7 4SW
11 December 2024
COHORT PLC
("Cohort" or "the Group")
HALF YEAR RESULTS
FOR THE SIX MONTHS ENDED 31 OCTOBER 2024
Record first half performance; strong growth in adjusted* operating profit,
revenue and order book; further progress expected
Cohort plc, the independent technology group, today announces its half year
results for the six months ended 31 October 2024.
Financial highlights
· Revenue, adjusted* operating profit and net funds all ahead of
recent guidance.
· Revenue up 25% to £118.2m (2023: £94.3m).
· Adjusted* operating profit up 69% to £10.1m (2023: £6.0m). A
net margin of 8.5% (2023: 6.4%).
· Adjusted* earnings per share of 20.00 pence (2023: 10.36 pence)
reflecting the marked improvement in performance.
· Order intake of £139.2m (2023: £119.1m), 1.2x the period's
revenue (2023: 1.3x).
· Record closing order book of £541.1m (30 April 2024: £518.7m).
· Interim dividend increased by over 10% to 5.25 pence per share
(2023: 4.70 pence per share) continuing the Group's long standing track record
of progressive dividend growth.
· Net funds of £37.9m at 31 October 2024 (31 October 2023: £13.3m
net funds; 30 April 2024: £23.1m net funds), well ahead of expectations due
to working capital flows that included strong customer advances.
Operational highlights
· Increased revenue was driven by higher UK MOD sales within both
divisions but particularly from within the Communications and Intelligence
division.
· Both divisions achieved strong growth in adjusted* operating
profit with the Sensors and Effectors division more than doubling last year's
reported result.
· Order intake benefited from a strong performance within the
Communications and Intelligence division, with significant orders being
received at EID.
Looking forward
· The order book of £541.1m includes over £120m of revenue
deliverable in the second half:
o Taking into account revenue recognised in the first half, this covers
over 99% of consensus forecast revenue for the full financial year.
o Revenue deliverable in future years from committed orders continues to
grow, with the duration of the order book extending to the mid-2030's.
· The current year outlook for the Group remains unchanged:
o In line with previous experience, we anticipate a stronger Group
performance in the second half.
o Increased delivery in the Sensors and Effectors division is expected to
drive the expected full-year growth in Group profit performance.
· We continue to see a positive outlook for organic growth in the
medium term.
* Adjusted figures exclude the effects of marking forward exchange
contracts to market value (£100k charge; 2023: £6k charge), amortisation of
other intangible assets (£1.0m; 2023: £1.6m) and acquisition costs (£199k;
2023: £nil).
Acquisitions
· The Group announced the conditional agreement to acquire the
entire issued share capital of EM Solutions Pty Ltd on 21 November 2024, post
reporting date. This acquisition is expected to complete shortly and be
materially accretive to adjusted EPS in the first full financial year of
ownership (2025/26) and thereafter.
· The Group also completed the acquisition of Interactive Technical
Solutions Limited which has been integrated within the C&I division where
it will continue to provide technical support and services both externally and
to other members of the Group.
Commenting on the results, Nick Prest CBE, Chairman of Cohort, said:
"Cohort delivered a much stronger performance in the first half compared to
the same period last year, with growth in both revenue and adjusted operating
profit. Continued strong order intake has driven a record closing order book
which underpins most of the second half of this financial year. In line with
previous experience we anticipate a stronger performance in the second half
and we remain on track to achieve our expectations for the full year."
"The continued expansion of the order book is a strong indicator that we are
offering competitive products in a growing market. On-order revenue is now
deliverable out to the mid-2030's. The pipeline of order opportunities for the
remainder of the year also looks strong. Demand for our solutions and services
continues to be driven by heightened international tensions in the
Asia-Pacific region as well as conflict in Europe and the Middle East. This
backdrop is driving increased spending on defence and security. Overall, we
continue to see a positive outlook for organic growth in the years ahead."
Dividend timetable:
Interim dividend announcement date
11 December 2024
Record date
10 January 2025
Dividend payment date
18 February 2025
A Dividend Reinvestment Plan ('DRIP') is provided by Equiniti Financial
Services Limited. The DRIP enables the Company's shareholders to elect to have
their cash dividend payments used to purchase the Company's shares. The latest
election date is 23 January 2024. More information can be found at
www.shareview.co.uk/info/drip
(https://protect.checkpoint.com/v2/___http:/www.shareview.co.uk/info/drip___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OmY4Y2E6MGEyZGY5ZGQzNjc5YjE1YjVhMzcxMTM2Nzc1NGM5NTc3MDZkYThiMWUxMDIwOTJlZGY1NzBmYzEzOGI3Y2UyZTpwOkY6Tg)
.
Analyst Presentation
A meeting is being held today, for analysts, hosted by Andy Thomis, Chief
Executive, and Simon Walther, Finance Director, at 09:15 for a 09:30 start.
Please contact MHP via cohort@mhpgroup.com (mailto:cohort@mhpgroup.com) if you
wish to attend.
For those unable to attend in person, a recording of the presentation will be
made available on Cohort's website:
https://www.cohortplc.com/investors/results-reports-presentations
(https://protect.checkpoint.com/v2/___https:/www.cohortplc.com/investors/results-reports-presentations___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjQ1ODA6OTE1ZWY1ZjVkZmJjYzMxZjEzMmU1MzBkMjkzMDliNWZiMTA0MzZjMWZhMDY2OGY2NDg5YjdkOWJhMjAxM2E5MDpwOkY6Tg)
Investor Presentation
Andy Thomis (Chief Executive) and Simon Walther (Finance Director) will be
giving an investor presentation hosted by Equity Development at 2.30pm on
Friday 13(th) December. The webinar is open to all existing and potential
shareholders. Questions can be submitted during the presentation, or sent
beforehand by email to info@equitydevelopment.co.uk
(mailto:info@equitydevelopment.co.uk)
Please register to attend the event via the following link: Cohort: Investor
Presentation (Interim Results) - 13th December 2024 (equitydevelopment.co.uk)
(https://protect.checkpoint.com/v2/___https:/www.equitydevelopment.co.uk/news-and-events/cohort-investor-presentation-13december2024___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzphNjAwNWRiYzA0MzQxMjI1N2VhZjk3NDgyMjY2MDQxNTo2OmQyMDc6MGY0MTc3YWMzMmYyOTViNWQ2NDczYjllYTVkNzQ1OGNmNzUwMDE4YmZkOWZiYTlhNmQ3NDg5YTE2MWUwYWEzYzpwOkY6Tg)
For further information please contact:
Cohort plc 0118 909 0390
Andy Thomis, Chief Executive
Simon Walther, Finance Director
Kellie Young, Marketing and Corporate Communications
Raquel McGrath, Company Secretary
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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjNhYmU6MjFmYzdiYTRmYzM4YzMzZjFmZTJlY2JiM2FkMTNiYmJlNGZiZWM5MTZjM2E0NzUwOTAwMmVkYjk4OWNlYTcxYTpwOkY6Tg)
) 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 1,400 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 ("C&I")
· 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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjBhMjk6ODU4MjhmM2FhZDExOGJlY2Q1MjA1ODYxZTZmZmU3YWNkZmIyZjY5M2JmNzBiNDZiNWY4OWIzNDU1OWZmOGMxZTpwOkY6Tg)
· 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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjMwNWQ6YzVlNWM3MTk1NTc1ZDA0ZGFhY2FjYmMwYzJhMTdkMWEwYmZkN2YyYmNlN2FkOTVkYTBlMWIyZDNkMTBjYTE4ODpwOkY6Tg)
· 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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjViY2U6MTk1YzgxNzBhYjczOGMzZDU4ZWRlMTU1ZjYzOWY5OWEwYWEwMTNjYzhjMjViOTFhNzQ3MGI5ZTM1NGZkZWJhYzpwOkY6Tg)
Sensors and Effectors ("S&E")
· 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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OmU2OWI6Mzg5MTZmMmFlNDUxMGIzZGE0ZTVmOWZiNDNkYmI5YzU5MTgyMWU2NjlhMGFhODBiYzYxOGI5OWRkNDM0OTlmZjpwOkY6Tg)
· 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/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OmI0ODc6NTJkNGE2ZjUxZjZjOGJkN2MwNzYzODBjNzE5NjQ3MDgyMjU3OTZhODFiZDRmMWVmNTQ3MjZiZTMxNTA0M2IzODpwOkY6Tg)
· 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
(https://protect.checkpoint.com/v2/___http:/www.sea.co.uk/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzplZDNkMjIwZjIyOWNkNDI0ZTY1MjNlZjYxNzE5YWZlZDo2OjgyM2U6NmEwNzJiMmI4OTc2MDNhZWI1OGJkYzg5OTY1OGMzZjk0MmIzNWRkNGQwZWQ2MjQzMzczODRhYWE2ZTViNDhmNzpwOkY6Tg)
Chairman's statement
I am pleased to announce that Cohort delivered a much stronger performance for
the six months ended 31 October 2024 compared to the same period last year.
Overall, the Group's adjusted operating profit grew by 69% to £10.1m (2023:
£6.0m) on 25% higher revenue of £118.2m (2023: £94.3m). The net margin of
8.5% (2023: 6.4%) is a material improvement and we expect the second half net
margin to be stronger again, moving the Group towards the mid-teen target we
have set ourselves in the medium term.
The Group has maintained the increased order intake tempo that began last
year, once again securing orders in the period that significantly exceeded
revenue. The international focus on defence spending continues, driven by
events in Ukraine and the Middle East, together with persistent tensions in
the Asia Pacific region. We believe that these increasingly entrenched
geopolitical forces are likely to have an impact on defence spending for the
foreseeable future.
We again increased our employee headcount, this time from 1,243 last October
to 1,418 this October. This increase is a result of the higher order book and
our confidence in the pipeline of opportunities we see across all our
businesses. It also reflects the success of the Group's apprentice and
graduate schemes, our focus on employee engagement and the support of STEM
initiatives.
The improvement in the Group's adjusted operating profit was driven by the
Group's UK and German operations as UK MOD work increased, work on the Italian
sonar project continued and German government R&D incentive payments were
received for sonar technology development work. This was partly offset by
delays to orders and deliveries within the Group's Portuguese business, EID.
Some of these orders have now been secured but too late in the reporting
period to impact EID's performance. This will improve in the second half of
the year, and we expect EID to deliver a profit for the whole year, albeit
below target net margins.
The Group's order intake was strong at £139.2m (2023: £119.1m), and the
closing order book of £541.1m was a record high for the Group. On-contract
revenue stretches out to the mid-2030s. We saw particularly strong order
intake within Communications and Intelligence of around £80m as long-awaited
orders with the Portuguese Navy were secured.
At 31 October 2024, net funds were £37.9m, compared to net funds of £23.1m
at 30 April 2024. We expect a net cash outflow in the second half the of the
year, a result of planned capital investment, working capital build and the
acquisition of EM Solutions.
Governance
The Board regularly evaluates and reviews the Group's environmental, social
and governance (ESG) activity and is committed to maintaining appropriate
standards. We continue to make good progress with a wide range of initiatives
at subsidiary level with Chess, EID and SEA being ISO 14001 accredited and MCL
working towards accreditation. Each UK subsidiary has published its net zero
carbon plans. The Group's values, customer engagement principles and
governance policies are all outlined on Cohort's website and in the Annual
Report and Accounts. The Board's commitment to open communications with
investors was recognised this year by a shortlisting at the AIM awards and
winning the Small Cap Network's award for Investor Relations Success.
Key financials
For the six months ended 31 October 2024 the Group's revenue was £118.2m
(2023: £94.3m), comprised of £55.2m in Communications and Intelligence
(2023: £43.9m) and £64.2m in Sensors and Effectors (2023: £51.0m).
The Group's adjusted operating profit in the period was £10.1m (2023:
£6.0m). Central costs were £3.7m (2023: £2.3m). Cohort made an operating
profit after recognising amortisation of intangible assets (£1.0m),
acquisition costs (£0.2m) and a charge on marking forward exchange contracts
to market value (£0.1m) of £8.8m (2023: operating profit of £4.4m, after
amortisation of intangible assets of £1.6m).
Adjusted earnings per share for the six months ended 31 October 2024 increased
to 20.00 pence (2023: 10.36 pence). The tax rate in respect of the adjusted
operating profit was 20.0% (2023: 20.0%). Basic earnings per share were 17.55
pence (2023: 7.46 pence). The higher growth in adjusted earnings per share
when compared with adjusted operating profit was due to losses attributed to
minority shareholders.
The cash inflow from operations of £34.7m (2023: inflow of £10.5m) is
significantly higher than last year's equivalent period due to timing of
working capital movements. Advanced payments were received, notably within
Sensors and Effectors, ahead of project work deliverable in the remainder of
this financial year. The Group made payments in respect of dividends (£4.1m)
and capital expenditure (£6.7m) resulting in net funds at 31 October 2024 of
£37.9m (30 April 2024: net funds of £23.1m). The capital expenditure
included a further spend of £3.6m on ELAC SONAR's new facility. The total
spend for this project is expected to be around £20m over the three years
from 2022 to 2025.
Communications and Intelligence
Driven largely by increased UK MOD spend, particularly at MCL, the
Communications and Intelligence division posted an improved trading profit of
£8.5m for the six months to 31 October 2024 (2023: £6.0m) on revenue of
£55.2m (2023: £43.9m), a net margin of 15.5% (2023: 13.7%). A major factor
in the improved net margin was the stronger performance at MCL. The division's
order book increased to £134.3m (30 April 2024: £108.0m), a result of
long-awaited orders from the Portuguese Navy. These should enable EID to
deliver an overall profit for the year, following a loss in the first half.
Sensors and Effectors
Revenue of £64.2m (2023: £51.0m) within Sensors and Effectors, drove a
trading profit of £5.3m more than doubling that achieved last year (£2.3m)
with a net margin of 8.4% (2023: 4.5%). This was a result of strong trading at
both ELAC SONAR and SEA, both delivering trading profit double that for last
year on c50% revenue growth. This was partially offset by a weaker performance
at Chess due to mix and delays of key deliverables.
The division's closing order book was £406.8m (30 April 2024: £410.7m) with
£59.4m of order intake in the first half of the year, slightly behind
revenue. The pipeline of opportunities for this division remains strong with
order intake in the second half of the year currently expected to exceed
revenue.
Dividend
The Board has declared an interim dividend of 5.25 pence per share (2023: 4.70
pence per share), an increase of more than 10%. The interim dividend is
payable on 18 February 2025 to shareholders on the register at 10 January
2025.
Outlook
The Group's order book at 31 October 2024 stood at £541.1m (30 April 2024:
£518.7m), underpinning most of the second half of this financial year. In
line with previous experience, we anticipate a stronger Group performance in
the second half and remain on track to achieve our profit expectations for the
full year, albeit on weaker revenue mix.
The continued expansion of the Group's order book is a strong indicator that
we are offering competitive products in a growing market. Demand for our
solutions and services continues to be driven by international tensions in the
Asia-Pacific region and Europe, resulting in a robust pipeline of order
opportunities. We remain confident in our forecast for continued organic
business growth both now and in medium term.
Post balance sheet event
On 21 November 2024 the Group announced the proposed acquisition of EM
Solutions in Australia, in line with our strategy to accelerate growth by
making targeted acquisitions in the UK and overseas. Australia is an
increasingly important strategic market, reflecting the increased security
challenges in the Indo Pacific, highlighted by the creation of the AUKUS
alliance.
This would be our largest acquisition to date, which, when completed will add
Cohort's seventh standalone business, thereby creating a materially larger
Group. With the strong momentum being reported by Cohort and EM Solutions,
together with the substantial combined order book, the acquisition is expected
to be materially enhancing to adjusted EPS in the first full financial year
(2025/26) and onwards.
We expect to complete this acquisition shortly.
Nick Prest CBE
Chairman
11 December 2024
Consolidated income statement
for the six months ended 31 October 2024
Notes Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 2 118,238 94,304 202,533
Cost of sales (79,986) (63,154) (126,260)
Gross profit 38,252 31,150 76,273
Administrative expenses (29,436) (26,721) (55,086)
Operating profit 2 8,816 4,429 21,187
Operating profit comprises:
Adjusted operating profit 2 10,111 5,996 21,141
Amortisation of other intangible assets (included in administrative expenses) (996) (1,561) (3,121)
(Charge)/credit on marking forward exchange contracts to market value at the (100) (6) 297
period end (included in cost of sales)
Acquisition related costs (199) - -
Research and development expenditure credits (RDEC) (included in cost of - - 2,870
sales)
Operating profit 8,816 4,429 21,187
Finance income 318 227 500
Finance costs (628) (988) (1,863)
Profit before tax 8,506 3,668 19,824
Income tax expense 3 (1,701) (734) (4,532)
Profit for the period 6,805 2,934 15,292
Attributable to:
Equity shareholders of the parent 7,102 3,017 15,316
Non-controlling interests (297) (83) (24)
6,805 2,934 15,292
Earnings per share Pence Pence Pence
Basic 4 17.55 7.46 37.87
Diluted 4 17.34 7.44 37.72
All profit for the period is derived from continuing operations.
Consolidated statement of comprehensive income
for the six months ended 31 October 2024
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 6,805 2,934 15,292
Foreign currency translation differences on net assets of overseas (193) (49) (450)
subsidiaries
Changes in retirement benefit obligations - - (426)
Other comprehensive expense for the period, net of tax (193) (49) (876)
Total comprehensive income for the period 6,612 2,885 14,416
Attributable to:
Equity shareholders of the parent 6,973 2,957 14,463
Non-controlling interests (361) (72) (47)
6,612 2,885 14,416
Consolidated statement of changes in equity
for the six months ended 31 October 2024
Attributable to the equity shareholders of the parent
Share Share Own Share Retained Total Non- Total
capital premium shares option earnings £'000 controlling equity
£'000 account £'000 reserve £'000 interests £'000
£'000 £'000 £'000
At 1 May 2023 4,146 31,484 (3,601) 2,116 62,876 97,021 2,757 99,778
Profit/(loss) for the period - - - - 3,017 3,017 (83) 2,934
Other comprehensive (expense)/income for the period - - - - (60) (60) 11 (49)
Total comprehensive income/(expense) for the period - - - - 2,957 2,957 (72) 2,885
Transactions with owners of the Group and non-controlling interests recognised
directly in equity:
Issue of new shares 3 127 - - - 130 - 130
Equity dividend - - - - (3,697) (3,697) - (3,697)
Vesting of Restricted Shares - - - - 202 202 - 202
Own shares purchased - - (1,917) - - (1,917) - (1,917)
Own shares sold - - 115 - - 115 - 115
Net loss on disposal of own shares - - 159 - (159) - - -
Adjustment to non-controlling interest - - - - 1,556 1,556 (1,556) -
Share-based payments (including deferred tax) - - - 420 - 420 - 420
At 31 October 2023 - unaudited 4,149 31,611 (5,244) 2,536 63,735 96,787 1,129 97,916
At 1 May 2023 4,146 31,484 (3,601) 2,116 62,876 97,021 2,757 99,778
Profit/(loss) 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 - audited 4,161 32,157 (4,569) 2,859 74,066 108,674 1,166 109,840
At 1 May 2024 4,161 32,157 (4,569) 2,859 74,066 108,674 1,166 109,840
Profit/(loss) for the period - - - - 7,102 7,102 (297) 6,805
Other comprehensive expense for the period - - - - (129) (129) (64) (193)
Total comprehensive income/(expense) for the period - - - - 6,973 6,973 (361) 6,612
Transactions with owners of the Group and non-controlling interests recognised
directly in equity:
Issue of new shares 26 1,356 - - - 1,382 - 1,382
Equity dividend - - - - (4,095) (4,095) - (4,095)
Vesting of Restricted Shares - - - - 133 133 - 133
Own shares purchased - - (3,998) - - (3,998) - (3,998)
Own shares sold - - 889 - - 889 - 889
Net loss on disposal of own shares - - 267 - (267) - - -
Share-based payments (including deferred tax) - - - 440 - 440 - 440
At 31 October 2024 - unaudited 4,187 33,513 (7,411) 3,299 76,810 110,398 805 111,203
Consolidated statement of financial position
as at 31 October 2024
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 51,513 50,145 50,145
Other intangible assets 3,725 4,409 2,848
Right of use asset 7,487 8,053 7,818
Property, plant, and equipment 24,285 17,177 19,370
Deferred tax asset 2,572 1,531 2,543
89,582 81,315 82,724
Current assets
Inventories 39,271 33,831 33,310
Trade and other receivables 70,451 61,060 79,377
Current tax assets 3,263 1,793 1,823
Derivative financial instruments 103 78 105
Cash and cash equivalents 75,368 54,608 55,157
188,456 151,370 169,772
Total assets 278,038 232,685 252,496
Liabilities
Current liabilities
Trade and other payables (98,977) (62,945) (80,967)
Current tax liabilities (2,789) (2,876) (2,150)
Derivative financial instruments (431) (766) (399)
Lease liabilities (1,794) (1,541) (1,781)
Bank borrowings (26,127) (18,514) (15,490)
Provisions (10,953) (10,378) (8,914)
(141,071) (97,020) (109,701)
Non-current liabilities
Deferred tax liability (1,115) (1,100) (887)
Lease liabilities (6,322) (7,154) (6,708)
Bank borrowings (11,341) (22,779) (16,530)
Provisions (2,356) (1,449) (3,204)
Retirement benefit obligations (4,630) (5,267) (5,626)
(25,764) (37,749) (32,955)
Total liabilities (166,835) (134,769) (142,656)
Net assets 111,203 97,916 109,840
Equity
Share capital 4,187 4,149 4,161
Share premium account 33,513 31,611 32,157
Own shares (7,411) (5,244) (4,569)
Share option reserve 3,299 2,536 2,859
Retained earnings 76,810 63,735 74,066
Total equity attributable to the equity shareholders of the parent 110,398 96,787 108,674
Non-controlling interests 805 1,129 1,166
Total equity 111,203 97,916 109,840
Bank borrowings and cash and cash equivalents have been restated (note 9).
Consolidated cash flow statement
for the six months ended 31 October 2024
Notes Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Net cash generated from operating activities 6 31,407 7,598 23,017
Cash flow from investing activities
Interest received 318 227 500
Purchases of property, plant and equipment (6,655) (2,720) (6,659)
Acquisition of subsidiary (net of cash acquired) 7 (2,989) - -
Net cash used in investing activities (9,326) (2,493) (6,159)
Cash flow from financing activities
Issue of new shares 1,382 130 688
Dividends paid (4,095) (3,697) (5,598)
Purchase of own shares (3,998) (1,917) (1,917)
Sale of own shares 889 115 802
Repayment of borrowings (5,000) (3,000) (9,000)
Repayment of lease liabilities (1,114) (1,006) (1,892)
Net cash used in financing activities (11,936) (9,375) (16,917)
Net increase/(decrease) in cash and cash equivalents (4,270) (59)
10,145
Represented by:
Cash and cash equivalents brought forward 39,667 41,454 41,454
Net increase/(decrease) in cash and cash equivalents 10,145 (4,270) (59)
Exchange losses (571) (1,090) (1,728)
Cash and cash equivalents carried forward 49,241 36,094 39,667
Net funds/(debt) reconciliation
At 1 May Effect of foreign Cash flow At 31 October
2024 exchange rate £'000 2024
£'000 changes £'000
£'000
Cash and bank 43,999 (673) 20,061 63,387
Short-term deposits 11,158 103 720 11,981
Bank borrowings (15,490) - (10,637) (26,127)
Cash and cash equivalents 39,667 (570) 10,144 49,241
Bank borrowings (16,530) 189 5,000 (11,341)
Net funds 23,137 (381) 15,144 37,900
The above analysis excludes IFRS 16 leases which are disclosed on the face of
the statement of financial position.
Notes to the interim report
for the six months ended 31 October 2024
1. Basis of preparation
The financial information contained within this Interim Report has been
prepared applying the recognition and measurement requirements of UK-adopted
International Accounting Standards expected to apply at 30 April 2025. As
permitted, this Interim Report has been prepared in accordance with the AIM
Rules for Companies and is not required to comply with IAS 34 'Interim
Financial Reporting'. This Interim Report is presented in Sterling and all
values are rounded to the nearest thousand pounds (£'000) except where
otherwise indicated.
For management and reporting purposes, the Group, for the period just ended,
operated through two divisions, each containing three of our six small and
medium-sized businesses, operating primarily in defence and security markets,
and with a strong emphasis on technology, innovation and specialist expertise.
These divisions are the basis on which the Company, Cohort plc, currently
reports its primary segmental information and are as follows:
· Communications and Intelligence, comprising EID, MASS and MCL,
and;
· Sensors and Effectors, comprising Chess, ELAC SONAR and SEA.
Going concern
The Group meets its day-to-day working capital requirements through a facility
which was renewed in July 2022 and recently extended to July 2027. The
facility is for a £35m revolving credit facility with an accordion (option)
to draw another £15m. The accordion was converted into the revolving credit
facility on 6 December 2024 and the revolving credit facility now stands at
£50m. Both the current domestic economic conditions and continuing UK
Government budget pressures create uncertainty, particularly over the level of
demand for the Group's products and services, specifically in respect of UK
defence spending (UK MOD represents 56% of the Group's 2024/25 first half
revenue - 2023: 52%). The current heightened international security situation,
especially the ongoing conflict in Ukraine, has increased the focus of
governments, particularly in NATO, on defence capability and how this should
be enhanced, including increased investment. The Group's forecasts and
projections, taking account of reasonably possible changes in trading
performance for a period of at least 12 months from the date of signing this
Interim Report, show that the Group should be able to operate within the level
of its current facility.
The Directors have a reasonable expectation that the Company and Group have
adequate resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of accounting in
preparing this Interim Report.
(A) Statutory accounts
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 30 April 2024. RSM UK Audit LLP has
reported on these accounts; its report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way
of emphasis, or material uncertainty, without qualifying its report and (iii)
did not contain a statement under Sections 498(2) or (3) of the Companies Act
2006. In accordance with Section 434 of the Companies Act 2006, the unaudited
results do not constitute statutory financial statements of the Company. The
six months results for both years are unaudited.
(B) Statement of compliance
The accounting policies applied by the Group in this Interim Report are
consistent with its Consolidated financial statements for the year ended 30
April 2024 and are in accordance with UK-adopted International Accounting
Standards. The accounting policies have been applied consistently to all
periods presented in the Consolidated financial statements of this Interim
Report.
Critical accounting estimates and judgements
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of certain assets and liabilities.
Estimates and judgements as applied to items, including goodwill, revenue
recognition, recoverability of trade and other receivables, provisions and
taxation have not materially changed since the year end.
The Interim Report was approved by the Board for issue on 11 December 2024.
2. Segmental analysis of revenue and adjusted operating profit
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue
Communications and Intelligence 55,206 43,888 83,382
Sensors and Effectors 64,184 50,990 120,489
Inter-segment revenue (1,152) (574) (1,338)
118,238 94,304 202,533
Operating profit comprises:
Adjusted operating profit of:
Communications and Intelligence 8,484 5,998 12,842
Sensors and Effectors 5,324 2,295 12,787
Central costs (3,697) (2,297) (4,488)
Adjusted operating profit 10,111 5,996 21,141
(Charge)/credit on marking forward exchange contracts to market value at the (100) (6) 297
period end
Costs of acquisitions (199) - -
Amortisation of intangible assets (996) (1,561) (3,121)
Research and development expenditure credits (RDEC) - - 2,870
Operating profit 8,816 4,429 21,187
All revenue and adjusted operating profits 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 marking forward
exchange contracts to market value at the period end, the amortisation of
other intangible assets, RDEC and costs of acquisitions.
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 comparable basis from period to period.
The Group's adjusted operating profit includes the cost of share options of
£945,000 for the six months ended 31 October 2024 (six months ended 31
October 2023: £393,000; year ended 30 April 2024: £1,278,000).
The chief operating decision maker as defined by IFRS 8 has been identified as
the Board.
Revenue analysis by sector and type of deliverable
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£m % £m % £m %
By sector
UK defence 66.2 56 49.4 52 96.8 48
UK security 2.4 2 1.1 1 3.6 2
UK other 4.0 3 4.2 5 8.3 4
Total UK 72.6 61 54.7 58 108.7 54
Portuguese defence and security 3.5 3 3.7 4 10.3 5
German defence and security 1.6 1 2.9 3 9.0 4
Home market revenue 77.7 65 61.3 65 128.0 63
Export defence and security 38.0 32 29.3 31 71.9 36
Export other (non-defence and security) 2.5 3 3.7 4 2.6 1
Total revenue 118.2 100 94.3 100 202.5 100
The Group's total revenue in terms of type of deliverable is analysed as
follows:
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£m % £m % £m %
Product 88.2 75 70.2 74 148.4 73
Services 30.0 25 24.1 26 54.1 27
Total revenue 118.2 100 94.3 100 202.5 100
3. Income tax expense
The income tax expense comprises:
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
UK corporation tax: in respect of this period 967 1,878 6,388
UK corporation tax: in respect of prior periods - - (252)
German corporation tax: in respect of this period 509 (354) 528
German corporation tax: in respect of prior periods - - (354)
Portugal corporation tax: in respect of this period 26 (488) (442)
1,502 1,036 5,868
Deferred taxation: in respect of this period 199 (302) (1,292)
Deferred taxation: in respect of prior periods - - (44)
199 (302) (1,336)
1,701 734 4,532
The income tax charge for the six months ended 31 October 2024 is based upon
the anticipated charge for the full year ending 30 April 2025.
4. Earnings per share
The earnings per share are calculated as follows:
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Earnings
Basic and diluted earnings attributable to owners 7,102 3,017 15,316
Charge/(credit) on marking forward exchange contracts to market at the period 75 5 (223)
end (net of income tax)
Cost of acquisitions 199 - -
Group's share of amortisation of intangible assets (net of income tax) 716 1,165 2,254
Adjusted basic and diluted earnings 8,092 4,187 17,347
Number Number Number
Weighted average number of shares
For the purposes of basic earnings per share 40,467,776 40,419,052 40,445,297
Share options 478,853 113,791 156,639
For the purposes of diluted earnings per share 40,946,629 40,532,843 40,601,936
The weighted average number of ordinary shares for the six months ended 31
October 2024 excludes 1,215,927 ordinary shares held by the Cohort plc
Employee Benefit Trust (which do not receive a dividend) for the purposes of
calculating earnings per share (six months ended 31 October 2023: 1,048,353;
year ended 30 April 2024: 913,308).
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
Pence Pence Pence
Earnings per share
Basic 17.55 7.46 37.87
Diluted 17.34 7.44 37.72
Adjusted earnings per share
Basic 20.00 10.36 42.89
Diluted 19.76 10.33 42.72
5. Dividends
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
Pence Pence Pence
Dividends per share proposed in respect of the period
Interim 5.25 4.70 4.70
Final - - 10.10
The interim dividend for the six months ended 31 October 2024 is 5.25 pence
(six months ended 31 October 2023: 4.70 pence) per ordinary share. This
dividend will be payable on 18 February 2025 to shareholders on the register
at 10 January 2025.
The dividend paid during the year ended 30 April 2024 was 13.85 pence per
ordinary share, comprising 4.70 pence of interim dividend for the six months
ended 31 October 2023 and 9.15 pence of final dividend for the year ended 30
April 2023.
6. Net cash generated from operating activities
Six months ended Six months ended Year ended
31 October 2024 31 October 2023 30 April 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 6,805 2,934 15,292
Adjustments for:
Tax expense 1,701 734 4,532
Depreciation of property, plant and equipment 1,603 1,281 2,648
Depreciation of right of use assets 1,075 901 1,952
Amortisation of intangible assets 996 1,561 3,121
Net finance expense 310 761 1,363
Derivative financial instruments and other non-trading exchange movements 100 6 (297)
Share-based payment 235 393 1,106
Increase in provisions 180 1,740 2,213
Operating cash flow before movements in working capital 13,005 10,311 31,930
Increase in inventories (5,952) (1,567) (1,371)
Decrease/(increase) in receivables 5,603 (5,738) (24,726)
Increase in payables 22,072 7,513 23,769
21,723 208 (2,328)
Cash generated from operations 34,728 10,519 29,602
Income taxes paid (2,693) (2,068) (4,722)
Interest paid (628) (853) (1,863)
Net cash generated from operating activities 31,407 7,598 23,017
7. Acquisition of Interactive Technical Solutions Limited ("ITS")
On 31 May 2024, the Group's wholly owned subsidiary Marlborough Communications
Limited ("MCL"), acquired 100% of the share capital of ITS. ITS is based in
Knaresborough, United Kingdom. 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.
The provisional acquisition accounting is as follows:
Book value Provisional fair value
Unaudited Unaudited
£'000 £'000
Recognised amounts of identifiable assets and liabilities: 31 31
Property plant and equipment
Other intangible assets - 1,872
Trade and other receivables 308 308
Cash 777 777
Trade and other payables (114) (114)
Deferred tax (8) (476)
994 2,398
Goodwill 1,368
Total consideration (all satisfied by cash) transferred 3,766
Net cash outflow arising on acquisition:
Cash consideration paid 3,766
Cash acquired (777)
2,989
The fair value adjustment comprises intangible assets consisting of:
Book value Provisional fair value Estimated life
Unaudited Unaudited Years
£'000 £'000
Contracts - 710 2
Customer relationships - 1,162 6
Other intangible assets - 1,872
A deferred tax liability of £468,000 has been recognised on the other
intangible asset balance and is recognised as part of the deferred tax
liability.
The consideration of £3,766,000 represents purchase of 100% of the shares of
ITS and there are no contingent considerations within the purchase agreement.
The goodwill of just below £1.4m arising from the acquisition represents
customer contacts, supplier relationships and know-how to which no certain
value can be ascribed. None of the goodwill is expected to be deductible for
tax purposes.
Acquisition costs of £99,000 were incurred and have been disclosed as an
exceptional item in the income statement.
ITS's contribution from acquisition was £627,000 of revenue and £112,000 of
trading profit for the period from 31 May 2024 to 31 October 2024.
8. Post balance sheet events
On 21 November 2024 Cohort plc announced that it had entered into a
conditional sale and purchase agreement to acquire the entire issued share
capital of EM Solutions Pty Ltd which holds all of the issued share capital in
EM Solutions (Europe) B.V. (together "EM Solutions") for an enterprise value
of AUD$144.0 million (c.£74.2 million), subject to customary post-completion
adjustments.
The completion of the acquisition is expected shortly following satisfaction
of certain conditions. The Australian Government's approval, the most
significant condition, has already been received.
Acquisition costs of £100,000 were incurred to 31 October 2024 and have been
disclosed as an exceptional item in the income statement. We expect the
overall acquisition costs for EM Solutions to be just over £3 million.
The acquisition was part funded through a placing and retail offer by issuing
4,685,713 New Ordinary Shares at £8.75 per ordinary share and raising gross
proceeds of £41m.
9. Restatement
A disclosure restatement has been made for the comparative period ended
October 2023 as explained below. This restatement has had no impact on the way
the Group is operated, the profit reported, the retained earnings held,
earnings per share reported, net funds held, or any other key metric reported
and/or used by management in assessing the performance of the business.
Restatement of Statement of financial position: Bank overdrafts managed on a
net basis in combination with cash held at bank and reported and managed on a
net basis as part of quarterly bank covenant arrangements with the banking
syndicate have, in accordance with IAS 32, been disclosed as bank borrowings
separately from cash held with banks where it was previously reported net
(October 2023: £18,514,000 borrowings). This is due to the Group not having a
legal right of offset in the bank facility contract irrespective of the Group
holding a practical ability to offset within its single Group-wide facility.
Independent review report to Cohort plc
Conclusion
We have been engaged by Cohort PLC ('the Company') to review the condensed set
of financial statements of the Company and its subsidiaries (the 'Group') in
the interim financial report for the six months ended 31 October 2024 which
comprises the Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Statement of Changes in Equity,
Consolidated Statement of Financial Position, Consolidated Cash Flow Statement
and accompanying notes. We have read the other information contained in the
interim financial report and considered whether it contains any apparent
material misstatements of fact or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim
financial report for the six months ended 31 October 2024 is not prepared, in
all material respects, in accordance with the presentation, recognition and
measurement criteria of UK-adopted International Accounting Standards and the
AIM Rules for Companies.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ('ISRE (UK) 2410') issued for use in
the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted International Accounting Standards. The
condensed set of financial statements included in this interim financial
report has been prepared in accordance with the presentation, recognition and
measurement criteria of UK-adopted International Accounting Standards.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group and
the Company to cease to continue as a going concern.
Responsibilities of Directors
The interim financial report is the responsibility of and has been approved by
the directors. The directors are responsible for preparing the interim
financial report in accordance with the presentation, recognition and
measurement criteria of UK-adopted International Accounting Standards and the
AIM Rules for Companies.
In preparing the interim financial report, the directors are responsible for
assessing the Group's and the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the interim financial report, we are responsible for expressing
to the Company a conclusion on the condensed set of financial statements in
the interim financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 "'Review of Interim Financial
Information performed by the Independent Auditor of the Entity". Our review
work has been undertaken so that we might state to the Company those matters
we are required to state to them in an independent review report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our review work,
for this report, or for the conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
11 December 2024
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