TIDMCHRT
RNS Number : 5510W
Cohort PLC
13 December 2023
One Waterside Drive
Arlington Business Park
Reading
Berks
RG7 4SW
13 December 2023
COHORT PLC
("Cohort" or "the Group")
HALF YEAR RESULTS
FOR THE SIX MONTHSED 31 OCTOBER 2023
Strong growth in 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 2023.
The Group achieved a strong first half, with growth in revenue,
profit, and order book compared with 2022. The increase in the
interim dividend reflects the Board's confidence in the Group's
growth prospects and continued commitment to a progressive dividend
policy.
Financial highlights
-- Revenue up 22% to GBP94.3m (2022: GBP77.5m).
-- Adjusted* operating profit up 20% to GBP6.0m (2022: GBP5.0m).
-- Adjusted* earnings per share of 10.36 pence (2022: 10.12
pence) impacted by a higher tax rate and higher net interest
charge.
-- Order intake of GBP119.1m (2022: GBP88.6m), 1.3x the period's revenue.
-- Record closing order book of GBP353.9m (30 April 2023: GBP329.1m).
-- Interim dividend increased by over 10% to 4.70 pence per
share (2022: 4.25 pence per share) continuing the Group's long
standing track record of progressive dividend growth.
-- Net funds of GBP13.3m at 31 October 2023 (31 October 2022:
GBP0.6m net debt; 30 April 2023: GBP15.6m net funds).
Operational highlights
-- Increased revenue was driven by higher UK MOD sales within both divisions.
-- The strong growth in adjusted* operating profit was driven by
the Communications and Intelligence division, with profit
performance in the Sensors and Effectors division slightly lower
than last year.
-- Order intake benefited from strong performances within the
Sensors and Effectors division, particularly at SEA which continues
to grow its naval business stream.
Looking forward
-- The record order book of GBP353.9m includes over GBP90m of
revenue deliverable in the second half:
-- Taking into account revenue recognised in the first half,
this covers over 95% of consensus forecast revenue for the full
financial year.
-- Revenue deliverable in future years from committed orders
continues to grow, and the duration of the order book now extends
to 2033.
-- The current year outlook for the Group remains unchanged:
-- In line with previous experience, we anticipate a stronger
Group performance in the second half.
-- Increased delivery in Sensors and Effectors division expected
to drive growth in Group performance.
-- We continue to see a positive outlook for organic growth in the medium term.
New non-executive director appointment
-- Peter Lynas, formerly Finance Director of BAE Systems, will
join the Board as a Non-Executive Director and Audit Chair
designate in January 2024.
* Adjusted figures exclude the effects of marking forward
exchange contracts to market value (GBP6k charge; 2022: GBP1.6m
charge), amortisation of other intangible assets (GBP1.6m; 2022:
GBP1.8m).
Commenting on the results, Nick Prest CBE, Chairman of Cohort,
said:
"Cohort delivered a stronger performance for the first half
compared to the same period last year with growth in both revenue
and adjusted operating profit. Strong order intake has driven a
record closing order book which underpins most of the second half
of this financial year. Consequently, in line with previous
experience and given the 95% visibility the current order book
gives us over current year forecast revenues, we anticipate a
stronger performance in the second half and thus 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 2033. 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 international tensions in the Asia-Pacific region and
Europe. This backdrop is driving increased spending on defence and
security in Europe, including the UK, other NATO countries and the
Asia-Pacific region. Overall, we continue to see a positive outlook
for organic growth in the years ahead."
Dividend timetable:
Interim dividend announcement date 13 December 2023
Record date 5 January 2024
Dividend payment date 13 February 2024
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 .
Analyst Presentation
A meeting is being held today, for analysts, hosted by Andy
Thomis, Chief Executive, and Simon Walther, Finance Director, at
9.15am for a 09:30am start. Please contact MHP via
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
Investor Presentation
Andy Thomis (Chief Executive) and Simon Walther (Finance
Director) will be giving an investor presentation hosted by Equity
Development at 4.15pm today. 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
Please register to attend the event via the following link:
Cohort: Investor Presentation (Interim Results) - 13th December
2023 (equitydevelopment.co.uk)
For further information please contact:
Cohort plc 0118 909 0390
Andy Thomis, Chief Executive
Simon Walther, Finance Director
Emily McBride, Group Head of Marketing
and Corporate Communications
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 ) 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 1,200 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
-- 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
-- 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
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
-- 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
-- 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
Chairman's statement
Compared to the same period last year Cohort delivered a
stronger performance for the six months ended 31 October 2023 with
growth in both revenue and adjusted operating profit.
Overall, the Group's adjusted operating profit grew by 20% to
GBP6.0m (2022: GBP5.0m) on 22% higher revenue of GBP94.3m (2022:
GBP77.5m).
The re-prioritisation of defence spending within Europe seen
last year, following events in Ukraine and persistent tensions in
the Asia-Pacific region, has driven continued impetus for defence
spending. That has resulted in an increased tempo of order intake
across the Group, at 1.3x first half revenue (2022/23: 1.1x).
Recent events in the Middle East, while also contributing to an
increased regional focus on defence spending, have led to some
delays in delivery as a result of diverted customer focus. That has
been particularly noticeable in relation to training work in the
Communications and Intelligence division.
Although there remain pockets of supply challenges, notably in
relation to our Portuguese business, these have lessened over the
period. Recruitment pressures have likewise eased considerably,
reflecting the positive impact of initiatives such as apprentice
and graduate schemes, a focus on employee engagement and the
support of STEM initiatives in local schools and communities.
Recruitment of certain specialist professionals with high-level
security clearances remains the most challenging aspect of people
resourcing, and this is particularly relevant to the Communications
and Intelligence division. Overall we have seen our employee
headcount increase from 1,075 last October to 1,243 this
October.
We continue to see some inflationary pressures, particularly
affecting specialist materials and expertise. We have been able to
mitigate some of this effect through price escalation clauses in
longer term contracts. In shorter term contracts the impact is less
serious, but our ability to mitigate inflationary pressures depends
on our ability to increase our prices, which is sometimes but not
always the case.
Geographically, the improvement in the Group's adjusted
operating profit was driven by the Group's UK operations. This was
partly offset by delays to orders and deliveries within the Group's
Portuguese business, EID. We also saw weaker revenue mix at ELAC as
the Group continued to take a cautious approach to the margin
traded on the Italian sonar project, which is still in
development.
The Group's order intake was strong at GBP119.1m (2022:
GBP88.6m), and the closing order book of GBP353.9m was a record
high for the Group. On-contract revenue now stretches out to 2033.
We saw particularly strong order intake within Sensors and
Effectors of GBP93.6m. There are further good order prospects for
the Group in the second half and beyond. These include
opportunities with the Portuguese Navy, and export customers in
Southeast Asia and Australasia, as well as communications and
surveillance systems for customers in the UK and Europe. Since the
period end the order book has grown to over GBP365m including the
third boat for the Italian sonar project announced on 5 December
2023.
At 31 October 2023, net funds were GBP13.3m, compared to net
funds of GBP15.6m at 30 April 2023. As at 10 December 2023, the
Group's net funds were GBP10.3m. We expect the Group to see a net
cash outflow in the second half the of the year, a result of
planned capital investment.
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 MCL, MASS and Chess working towards ISO 14001 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 remains committed to open communications with
investors. Shortly after the AGM the Board hosted an institutional
investor site visit at Chess giving the audience a chance to view
some of the work being undertaken within the Group and an
opportunity to talk face to face with Chess's management team.
As separately announced today, Peter Lynas will be joining the
Cohort Board as a Non-Executive Director on 2 January 2024 and will
replace Jeff Perrin as Chairman of the Audit Committee when Jeff
retires in September 2024. Peter Lynas has deep experience of the
defence industry as the former Finance Director of BAE Systems, and
we are pleased to welcome him to the Board.
Key financials
For the six months ended 31 October 2023 the Group's revenue was
GBP94.3m (2022: GBP77.5m), comprised of GBP43.9m in Communications
and Intelligence (2022: GBP33.2m) and GBP51.0m in Sensors and
Effectors (2022: GBP44.5m).
The Group's adjusted operating profit in the period was GBP6.0m
(2022: GBP5.0m). Central costs were GBP2.3m (2022: GBP2.6m). Cohort
made an operating profit after recognising amortisation of
intangible assets (GBP1.6m) of GBP4.4m (2022: operating profit of
GBP1.6m, after amortisation of intangible assets of GBP1.8m and a
charge on marking forward exchange contracts to market value of
GBP1.6m).
Adjusted earnings per share for the six months ended 31 October
2023 increased to 10.36 pence (2022: 10.12 pence). The tax rate in
respect of the adjusted operating profit was 20.0% (2022: 17.0%).
Basic earnings per share were 7.46 pence (2022: 2.73 pence). The
lower growth in adjusted earnings per share when compared with
adjusted operating profit was due to the higher tax rate and higher
net interest charge.
The cash inflow from operations of GBP10.5m (2022: outflow of
GBP4.9m) is significantly higher than last year's equivalent period
due to timing of working capital movements, with advanced payments
received, particularly within Sensors and Effectors, ahead of
project work deliverable in the rest of the year. The Group made
payments in respect of dividends (GBP3.7m) and capital expenditure
(GBP2.7m) resulting in net funds at 31 October 2023 of GBP13.3m (30
April 2022: net funds of GBP15.6m). The capital expenditure
included a further spend of GBP1.5m on ELAC's new facility. The
total spend for this project is expected to be around GBP17m over
the three years from 2022 to 2025.
Communications and Intelligence
Driven largely by increased UK MOD spend, largely at MCL, the
Communications and Intelligence division posted an improved trading
profit of GBP6.0m for the six months to 31 October 2023 (2022:
GBP5.2m) on revenue of GBP43.9m (2002: GBP33.2m), a net margin of
13.7% (2022: 15.7%). The weaker net margin has been mostly driven
by performance at MASS, where some of its higher margin EWOS work
has slipped into the second half.
The division's order book reduced to GBP108.3m (30 April 2023:
GBP126.7m) as much of MCL's outstanding UK MOD order backlog was
delivered in the first half. Long-awaited orders from the
Portuguese Navy were further delayed, but we expect that the
division will deliver a performance for the whole year in line with
2022/23.
Sensors and Effectors
Despite higher revenue of GBP51.0m (2022: GBP44.5m) within
Sensors and Effectors, the trading profit of GBP2.3m was slightly
lower than that achieved last year (GBP2.5m) with a net margin of
4.5% (2022: 5.6%). This was a result of revenue mix, with a greater
proportion of lower margin sales at SEA and continued low margin
trading of the Italian sonar project as it progresses through its
development phase. Last year also included a GBP0.5m contribution
from Wärtsilä, the final payment under the scheme agreed at the
time of the acquisition of ELAC.
The division's order book increased to GBP245.6m (30 April 2023:
GBP202.4m) with GBP93.7m of order intake in the first half of the
year. SEA in particular saw several large naval orders placed,
including an order with the Royal New Zealand Navy. The pipeline of
opportunities for this division is strong with further large orders
possible in the second half of the year.
The order book covers over GBP60m of revenue to be delivered in
the second half of the year and we expect this division to deliver
a stronger performance in the second half, driving the Group's
overall growth compared to 2022/23.
Dividend
The Board has declared an interim dividend increase of over 10%
to 4.70 pence per share (2022: 4.25 pence per share). The interim
dividend is payable on 13 February 2024 to shareholders on the
register as at 5 January 2024.
Outlook
The Group's order book at 31 October 2023 stood at GBP353.9m (30
April 2023: GBP329.1m), 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 thus
remain on track to achieve our expectations for the full year.
The continued expansion of the Group's order book is a strong
indicator that we are offering competitive products in a growing
market. On-order revenue is now deliverable out to 2033. 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 international tensions in the Asia-Pacific region and
Europe. This backdrop is driving increased spending on defence and
security in Europe, including the UK, other NATO countries and the
Asia-Pacific region. Overall, we continue to see a positive outlook
for organic growth in the years ahead.
Nick Prest CBE
Chairman
13 December 2023
Consolidated income statement
for the six months ended 31 October 2023
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- ----- ----------- ----------- --------------
Revenue 2 94,304 77,467 182,713
Cost of sales (63,154) (53,184) (117,852)
----------------------------------------- ----- ----------- ----------- --------------
Gross profit 31,150 24,283 64,861
Administrative expenses (26,721) (22,675) (49,610)
----------------------------------------- ----- ----------- ----------- --------------
Operating profit 2 4,429 1,608 15,251
----------------------------------------- ----- ----------- ----------- --------------
Operating profit comprises:
Adjusted operating profit 2 5,996 5,011 19,064
Charge on marking forward exchange
contracts to market value at the period
end (included in cost of sales) (6) (1,567) (1,082)
Amortisation of other intangible assets
(included in administrative expenses) (1,561) (1,836) (3,672)
Research and development expenditure
credits (RDEC) (included in cost of
sales) - - 941
----------------------------------------- ----- ----------- ----------- --------------
Operating profit 4,429 1,608 15,251
Finance income 227 29 134
Finance costs (988) (552) (1,458)
----------------------------------------- ----- ----------- ----------- --------------
Profit before tax 3,668 1,085 13,927
Income tax expense 3 (734) (184) (2,675)
----------------------------------------- ----- ----------- ----------- --------------
Profit for the period 2,934 901 11,252
----------------------------------------- ----- ----------- ----------- --------------
Attributable to:
Equity shareholders of the parent 3,017 1,109 11,356
Non-controlling interests (83) (208) (104)
----------------------------------------- ----- ----------- ----------- --------------
2,934 901 11,252
----------------------------------------- ----- ----------- ----------- --------------
Earnings per share Pence Pence Pence
------------------- ----- ----- -----
Basic 4 7.46 2.73 27.92
Diluted 4 7.44 2.72 27.86
------------------- ----- ----- -----
All profit for the period is derived from continuing
operations.
Consolidated statement of comprehensive income
for the six months ended 31 October 2023
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------ ----------- ----------- --------------
Profit for the period 2,934 901 11,252
------------------------------------------ ----------- ----------- --------------
Foreign currency translation differences
on net assets of overseas subsidiaries (49) 305 (1,070)
------------------------------------------ ----------- ----------- --------------
Changes in retirement benefit obligations - - 1,919
------------------------------------------ ----------- ----------- --------------
Other comprehensive (expense)/income for
the period, net of tax (49) 305 849
------------------------------------------ ----------- ----------- --------------
Total comprehensive income for the period 2,885 1,206 12,101
------------------------------------------ ----------- ----------- --------------
Attributable to:
Equity shareholders of the parent 2,957 1,414 12,205
Non-controlling interests (72) (208) (104)
------------------------------------------ ----------- ----------- --------------
2,885 1,206 12,101
------------------------------------------ ----------- ----------- --------------
Consolidated statement of changes in equity
for the six months ended 31 October 2023
Attributable to the equity shareholders of the
parent
----------------------------------------------------------------------------------------------
Share Share Non-
Share premium Own option Other Retained controlling Total
capital account shares reserve reserves earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
At 1 May 2022 4,121 30,527 (3,346) 1,000 (1,400) 53,068 83,970 5,220 89,190
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Profit/(loss) for the
period - - - - - 1,109 1,109 (208) 901
Other comprehensive
income
for the period - - - - - 305 305 - 305
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Total comprehensive
income/(expense)
for the period - - - - - 1,414 1,414 (208) 1,206
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Transactions with
owners of
the Group and
non-controlling
interests recognised
directly
in equity:
Issue of new shares 16 622 - - - - 638 - 638
Equity dividend - - - - - (3,393) (3,393) - (3,393)
Vesting of Restricted
Shares - - - - - 189 189 - 189
Own shares purchased - - - - - - - - -
Own shares sold - - 111 - - - 111 - 111
Net loss on disposal
of own
shares - - 198 - - (198) - - -
Share-based payments
(including deferred
tax and
foreign exchange) - - - 312 - - 312 - 312
Change in option for
acquiring
non-controlling
interest in
Chess - - - - 384 - 384 - 384
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
At 31 October 2022 4,137 31,149 (3,037) 1,312 (1,016) 51,080 83,625 5,012 88,637
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
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 period - - - - - 11,356 11,356 (104) 11,252
Other comprehensive
income
for the period - - - - - 849 849 - 849
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Total comprehensive
income/(expense)
for the period - - - - - 12,205 12,205 (104) 12,101
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Transactions with
owners of
the Group and
non-controlling
interests recognised
directly
in equity:
Issue of new shares 25 957 - - - - 982 - 982
Equity dividend - - - - - (5,124) (5,124) - (5,124)
Vesting of Restricted
Shares - - - - - 218 218 - 218
Own shares purchased - - (586) - - - (586) - (586)
Own shares sold - - 111 - - - 111 - 111
Net loss on disposal
of 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
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
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) - - -
Transfer of reserves - - - - - 1,556 1,556 (1,556) -
Share-based payments
(including deferred
tax and
foreign exchange) - - - 420 - - 420 - 420
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
At 31 October 2023 4,149 31,611 (5,244) 2,536 - 63,735 96,787 1,129 97,916
---------------------- -------- -------- -------- -------- --------- --------- -------- ------------ --------
Consolidated statement of financial position
as at 31 October 2023
31 October 31 October
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- -------------
Assets
Non-current assets
Goodwill 50,145 50,145 50,145
Other intangible assets 4,409 7,806 5,969
Right of use asset 8,053 8,804 8,521
Property, plant, and equipment 17,177 13,829 15,304
Deferred tax asset 1,531 1,364 1,600
---------------------------------------- ---------- ---------- -------------
81,315 81,948 81,539
---------------------------------------- ---------- ---------- -------------
Current assets
Inventories 33,831 22,755 32,041
Trade and other receivables 61,060 59,573 55,612
Current tax assets 1,793 138 -
Derivative financial instruments 78 128 42
Cash and cash equivalents 36,094 29,030 41,454
---------------------------------------- ---------- ---------- -------------
132,856 111,624 129,149
---------------------------------------- ---------- ---------- -------------
Total assets 214,171 193,572 210,688
---------------------------------------- ---------- ---------- -------------
Liabilities
Current liabilities
Trade and other payables (62,945) (44,343) (55,897)
Current tax liabilities (2,876) (659) (2,143)
Derivative financial instruments (766) (1,711) (1,041)
Lease liabilities (1,541) (1,264) (1,660)
Bank borrowings - (19) (9)
Provisions (10,378) (8,835) (8,687)
Other current liabilities - (1,016) -
---------------------------------------- ---------- ---------- -------------
(78,506) (57,847) (69,437)
---------------------------------------- ---------- ---------- -------------
Non-current liabilities
Deferred tax liability (1,100) (985) (1,467)
Lease liabilities (7,154) (8,131) (7,473)
Bank borrowings (22,779) (29,612) (25,837)
Provisions (1,449) (1,294) (1,404)
Retirement benefit obligations (5,267) (7,066) (5,292)
---------------------------------------- ---------- ---------- -------------
(37,749) (47,088) (41,473)
---------------------------------------- ---------- ---------- -------------
Total liabilities (116,255) (104,935) (110,910)
---------------------------------------- ---------- ---------- -------------
Net assets 97,916 88,637 99,778
---------------------------------------- ---------- ---------- -------------
Equity
Share capital 4,149 4,137 4,146
Share premium account 31,611 31,149 31,484
Own shares (5,244) (3,037) (3,601)
Share option reserve 2,536 1,312 2,116
Other reserves - (1,016) -
Retained earnings 63,735 51,080 62,876
---------------------------------------- ---------- ---------- -------------
Total equity attributable to the equity
shareholders of the parent 96,787 83,625 97,021
Non-controlling interests 1,129 5,012 2,757
---------------------------------------- ---------- ---------- -------------
Total equity 97,916 88,637 99,778
---------------------------------------- ---------- ---------- -------------
Consolidated cash flow statement
for the six months ended 31 October 2023
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
-------------------------------------- ----- ----------- ----------- --------------
Net cash generated from/(used
by) operating activities 6 7,598 (5,846) 16,522
-------------------------------------- ----- ----------- ----------- --------------
Cash flow from investing activities
Interest received 227 29 134
Purchases of property, plant,
and equipment (2,720) (2,612) (5,231)
Purchase of non-controlling interest
in Chess - - (1,016)
-------------------------------------- ----- ----------- ----------- --------------
Net cash used in investing activities (2,493) (2,583) (6,113)
-------------------------------------- ----- ----------- ----------- --------------
Cash flow from financing activities
Issue of new shares 130 638 982
Dividends paid (3,697) (3,393) (5,124)
Purchase of own shares (1,917) - (586)
Sale of own shares 115 111 111
Repayment of borrowings (3,000) (17) (4,000)
Repayment of lease liabilities (1,006) (941) (1,954)
-------------------------------------- ----- ----------- ----------- --------------
Net cash used in financing activities (9,375) (3,602) (10,571)
-------------------------------------- ----- ----------- ----------- --------------
Net decrease in cash and cash
equivalents (4,270) (12,031) (162)
Represented by:
Cash and cash equivalents brought
forward 41,454 40,367 40,367
Net decrease in cash and cash
equivalents (4,270) (12,031) (162)
Exchange (losses)/gains (1,090) 694 1,249
-------------------------------------- ----- ----------- ----------- --------------
Cash and cash equivalents carried
forward 36,094 29,030 41,454
-------------------------------------- ----- ----------- ----------- --------------
Net funds/(debt) reconciliation
Effect of
foreign
exchange
At 1 May rate At 31 October
2023 changes Cash flow 2023
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- --------- --------- -------------
Cash and cash equivalents 41,454 (1,090) (4,270) 36,094
-------------------------- -------- --------- --------- -------------
Loan (25,837) 58 3,000 (22,779)
Finance leases (9) - 9 -
-------------------------- -------- --------- --------- -------------
Bank borrowings (25,846) 58 3,009 (22,779)
-------------------------- -------- --------- --------- -------------
Net funds 15,608 (1,032) (1,261) 13,315
-------------------------- -------- --------- --------- -------------
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 2023
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 2024. 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 (GBP'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 and SEA
The Group's first half trading is in line with historical trends
for the Group where typically we see a first half of a third or
less of the full year in respect of earnings.
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 run until July 2026 with an option to extend by a
further year until July 2027. The new facility is for a GBP35m
revolving credit facility with an accordion (option) to draw
another GBP15m. 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 52% of the Group's 2023/24 first half revenue). 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 2023. 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 2023 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 13
December 2023.
2. Segmental analysis of revenue and adjusted operating
profit
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- --------------
Revenue
Communications and Intelligence 43,888 33,176 86,379
Sensors and Effectors 50,990 44,464 97,031
Inter-segment revenue (574) (173) (697)
--------------------------------------------- ----------- ----------- --------------
94,304 77,467 182,713
--------------------------------------------- ----------- ----------- --------------
Operating profit comprises:
Adjusted operating profit of:
Communications and Intelligence 5,998 5,189 14,911
Sensors and Effectors 2,295 2,451 9,320
Central costs (2,297) (2,629) (5,167)
--------------------------------------------- ----------- ----------- --------------
Adjusted operating profit 5,996 5,011 19,064
Charge on marking forward exchange contracts
to market value at the period end (6) (1,567) (1,082)
Amortisation of intangible assets (1,561) (1,836) (3,672)
Research and development expenditure credits
(RDEC) - - 941
--------------------------------------------- ----------- ----------- --------------
Operating profit 4,429 1,608 15,251
--------------------------------------------- ----------- ----------- --------------
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 and the amortisation of other intangible assets.
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 GBP393,000 for the six months ended 31 October 2023 (six
months ended 31 October 2022: GBP310,000; year ended 30 April 2023:
GBP1,522,000).
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 Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
------------- ------------- ----------------
GBPm % GBPm % GBPm %
---------------------------------------- ------- ---- ------- ---- --------- -----
By sector
UK Defence 49.4 52 36.8 47 98.5 54
UK Security 1.1 1 0.8 1 3.7 2
UK Other 4.2 5 5.2 7 7.4 4
---------------------------------------- ------- ---- ------- ---- --------- -----
Total UK 54.7 58 42.8 55 109.6 60
Portuguese defence and security 3.7 4 0.4 1 4.9 3
German defence and security 2.9 3 0.8 1 4.3 2
---------------------------------------- ------- ---- ------- ---- --------- -----
Home market revenue 61.3 65 44.0 57 118.8 65
Export defence and security 29.3 31 29.7 38 58.4 32
Export other (non-defence and security) 3.7 4 3.8 5 5.5 3
---------------------------------------- ------- ---- ------- ---- --------- -----
Total revenue 94.3 100 77.5 100 182.7 100
---------------------------------------- ------- ---- ------- ---- --------- -----
The Group's total revenue in terms of type of deliverable is
analysed as follows:
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
------------- ------------- ----------------
GBPm % GBPm % GBPm %
-------------- ------- ---- ------- ---- --------- -----
Product 70.2 74 57.4 74 140.8 77
Services 24.1 26 20.1 26 41.9 23
-------------- ------- ---- ------- ---- --------- -----
Total revenue 94.3 100 77.5 100 182.7 100
-------------- ------- ---- ------- ---- --------- -----
3. Income tax expense
The income tax expense comprises:
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- --------------
UK corporation tax: in respect of this
period 1,878 556 3,314
UK corporation tax: in respect of prior
periods - - (756)
German corporation tax: in respect of this
period (354) 2 -
Portugal corporation tax: in respect of
this period (488) (6) (249)
Portugal corporation tax: in respect of
prior periods - - 397
Other foreign corporation tax: in respect
of this period - - 133
--------------------------------------------- ----------- ----------- --------------
1,036 552 2,839
--------------------------------------------- ----------- ----------- --------------
Deferred taxation: in respect of this period (302) (368) (96)
Deferred taxation: in respect of prior
periods - - (68)
--------------------------------------------- ----------- ----------- --------------
(302) (368) (164)
--------------------------------------------- ----------- ----------- --------------
734 184 2,675
--------------------------------------------- ----------- ----------- --------------
The income tax charge for the six months ended 31 October 2023
is based upon the anticipated charge for the full year ending 30
April 2024.
4. Earnings per share
The earnings per share are calculated as follows:
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- --------------
Earnings
Basic and diluted earnings attributable
to owners 3,017 1,109 11,356
Charge on marking forward exchange contracts
to market at the period end (net of income
tax) 5 1,660 811
Group's share of amortisation of intangible
assets (net of income tax) 1,165 1,342 2,672
--------------------------------------------- ----------- ----------- --------------
Adjusted basic and diluted earnings 4,187 4,111 14,839
--------------------------------------------- ----------- ----------- --------------
Number Number Number
----------------------------------------- ---------- ---------- ----------
Weighted average number of shares
For the purposes of basic earnings per
share 40,419,052 40,616,350 40,673,953
Share options 113,791 130,673 88,038
----------------------------------------- ---------- ---------- ----------
For the purposes of diluted earnings per
share 40,532,843 40,747,023 40,761,991
----------------------------------------- ---------- ---------- ----------
The weighted average number of ordinary shares for the six
months ended 31 October 2023 excludes 1,048,353 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 2022: 602,590; year ended 30 April 2023:
718,157).
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
Pence Pence Pence
---------------------------- ----------- ----------- --------------
Earnings per share
Basic 7.46 2.73 27.92
Diluted 7.44 2.72 27.86
---------------------------- ----------- ----------- --------------
Adjusted earnings per share
Basic 10.36 10.12 36.48
Diluted 10.33 10.09 36.40
---------------------------- ----------- ----------- --------------
5. Dividends
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
Pence Pence Pence
---------------------------------------- ----------- ----------- --------------
Dividends per share proposed in respect
of the period
Interim 4.70 4.25 4.25
Final - - 9.15
---------------------------------------- ----------- ----------- --------------
The interim dividend for the six months ended 31 October 2023 is
4.70 pence (six months ended 31 October 2022: 4.25 pence) per
ordinary share. This dividend will be payable on 13 February 2024
to shareholders on the register at 5 January 2024.
The dividend paid during the year ended 30 April 2023 was 12.60
pence per ordinary share, comprising 4.25 pence of interim dividend
for the six months ended 31 October 2022 and 8.35 pence of final
dividend for the year ended 30 April 2022.
6. Net cash generated from/(used by) operating activities
Six months Six months
ended ended
31 October 31 October Year ended
2023 2022 30 April 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- --------------
Profit for the period 2,934 901 11,252
Adjustments for:
Tax expense 734 184 2,675
Depreciation of property, plant and equipment 1,281 1,171 2,376
Depreciation of right of use assets 901 898 1,776
Amortisation of intangible assets 1,561 1,836 3,672
Net finance expense 761 523 1,324
Derivative financial instruments and other
non-trading exchange movements 6 1,567 1,082
Share-based payment 393 310 1,522
Increase in provisions 1,740 278 720
---------------------------------------------- ----------- ----------- --------------
Operating cash flow before movements in
working capital 10,311 7,668 26,399
---------------------------------------------- ----------- ----------- --------------
(Increase)/decrease in inventories (1,567) 223 (8,565)
(Increase)/decrease in receivables (5,738) (4,090) 2,999
Increase/(decrease) in payables 7,513 (8,726) (2,976)
---------------------------------------------- ----------- ----------- --------------
208 (12,593) (8,542)
---------------------------------------------- ----------- ----------- --------------
Cash generated from/(used by) operations 10,519 (4,925) 17,857
Income taxes paid (2,068) (500) (111)
Interest paid (853) (421) (1,224)
---------------------------------------------- ----------- ----------- --------------
Net cash generated from/(used by) operating
activities 7,598 (5,846) 16,522
---------------------------------------------- ----------- ----------- --------------
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 2023 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
2023 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
13 December 2023
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IR DZMMZNZLGFZM
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