TIDMCHRT
RNS Number : 5806A
Cohort PLC
25 May 2023
One Waterside Drive
Arlington Business Park
Reading
Berks
RG7 4SW
25 May 2023
COHORT PLC
("Cohort" or "the Group")
Full Year Trading Update
Cohort, the independent technology group, today announces an
unaudited trading update for its financial year ended 30 April
2023.
Summary
-- Trading performance for the year ended 30 April 2023 is
slightly ahead of expectations on higher revenue.
-- Strong net funds of c.GBP15m, ahead of expectations (30 April
2022: GBP11.0m; 31 October 2022: net debt GBP0.6m).
-- Strong order intake of c.GBP218m (2022: GBP186.7m).
-- Closing order book of over GBP325m (30 April 2022: GBP291.0m)
-- Order book underpins c.GBP145m (84%) of current market
revenue expectations for the year ended 30 April 2024 (2023:
GBP113m, 69%).
The Group also announces today that it will be changing its
segmental reporting practice. Future financial reports and
announcements will cover two new segments:
-- Communications and Intelligence , comprising the businesses EID, MASS and MCL, and;
-- Sensors and Effectors , comprising Chess Dynamics, ELAC Sonar and SEA.
Further details, including a presentation of historic results
for the new segments, are provided below. The first application of
this change will be for results for the year ended 30 April 2023,
including this Full Year Trading Update.
FY23 year-end update
As we signalled last year, the Group has returned to growth, and
we expect to deliver a record trading profit performance for the
year ended 30 April 2023. The Group has seen growth in both new
reporting segments.
In Communications and Intelligence, strong demand from the UK
MOD has offset a continuing weak performance in Portugal where we
have seen further order slippage. Weaker performance at EID,
accounted for the slight deterioration in the net margin percentage
of this segment, when compared with last year.
The Sensors and Effectors segment saw strong growth across all
its constituent businesses. This included increased work at ELAC
Sonar on the Italian Submarine programme, which is trading at a low
margin whilst the programme makes its way through its design phase.
As expected, Chess improved its performance despite closing out a
small number of project issues and we expect this improvement to
continue into the coming financial year.
The closing net funds position was much stronger than we
expected and arose from timing of working capital flows in
Communications and Intelligence and the improved cash performance
of the Chess business within Sensors and Effectors.
The order intake is 1.2x the annual revenue (2022: 1.3x) and the
order book of the Group continues to grow and lengthen with
deliveries out to 2032. The order intake performance was over 15%
higher than last year.
The year end order book underpins c.GBP145m (84%) of the current
consensus market revenue expectations for 2024, an improvement on
the year just finished. Since the year end, we have secured further
orders including an order for GBP26m (announced 9 May 2023),
further improving our visibility for the coming financial year.
Outlook for FY24
The on-going conflict in Ukraine and the tensions in the South
China Sea and around Taiwan have provided drivers for increased
investment in defence, both in NATO and further afield. We continue
to see demand for our products and services from our domestic
customers, especially the UK, and overseas.
In Sensors and Effectors, we expect growth in this coming year,
driven by continued performance improvement at Chess and increased
delivery of systems for UK and export naval customers. We expect
the net margin percentage of this segment to improve in the coming
year.
In Communications and Intelligence, we expect certain
long-delayed communication system orders for the Portuguese Navy to
be secured which should enable EID to improve its performance
materially. Elsewhere in this segment, we expect the high level of
UK MOD sales we have seen in the current financial year to drop
back to a more normal historical level. Overall, we expect the
Communications and Intelligence sector to trade in line with
2022/23.
We maintain our expectations for the coming financial year.
Notice of FY23 results
It is the Group's intention to issue its preliminary
announcement for the year ended 30 April 2023 in late July
2023.
Andrew Thomis, Chief Executive of Cohort, said:
"Cohort's performance was slightly above our expectations for
the year. Strong order intake, record closing order book and strong
closing net funds provided a good start to the new financial year,
and we expect to continue our organic growth in 2023/24 and
beyond."
Segmental reporting re-presentation
The Board believes that the revised segmental reporting, which
amalgamates the existing six business units into two reporting
segments, will provide a clearer understanding of the underlying
performance of the Group, as well as a simplified reporting
structure. These new segments will provide sufficient scope for
expansion as the Group continues to grow, both organically and
through acquisition, whilst ensuring the business units can
continue to operate as standalone entities, retaining their agility
and flexibility.
The two new reporting segments are:
-- Communications and Intelligence , comprising EID, MASS and MCL, and;
-- Sensors and Effectors , comprising Chess, ELAC and SEA
These segments represent the Group's core specialisms and the
business units have been grouped accordingly to reflect their
complementary technologies and products.
Below is the historical financial information for the five years
ended 30 April 2022 restated on the basis of this new segmental
reporting.
2022 2021 2020 2019 2018
--------------------------------------- ------- -------- ------- ------- -------
Headline results (GBP'000)
Revenue 137,765 143,308 131,059 121,182 111,798
------- -------- ------- ------- -------
* Communications and Intelligence 68,369 78,419 74,199 72,181 74,018
* EID 8,219 20,952 18,020 11,530 19,084
* MASS 38,405 39,487 41,115 38,936 37,553
* MCL 21,745 17,980 15,064 21,715 17,381
* Sensors and Effectors 69,396 64,889 56,860 49,001 37,780
* Chess 16,905 28,641 25,155 10,674 -
* ELAC 21,518 8,290 - - -
* SEA 30,973 27,958 31,705 38,327 37,780
------- -------- ------- ------- -------
Adjusted operating profit 15,525 18,609 18,223 16,164 15,602
------- -------- ------- ------- -------
* Communications and Intelligence 12,253 15,647 13,682 11,814 13,862
* EID 860 4,834 3,108 1,357 4,677
* MASS 9,138 8,742 8,914 8,175 7,113
* MCL 2,255 2,071 1,660 2,282 2,072
* Sensors and Effectors 7,469 6,544 7,455 7,174 4,433
* Chess 314 3,018 3,923 1,682 -
* ELAC 3,770 1,173 - - -
* SEA 3,385 2,353 3,532 5,492 4,433
* Corporate (4,197) (3,582) (2,914) (2,824) (2,693)
------- -------- ------- ------- -------
Operating profit 11,090 7,808 10,731 5,944 9,960
------- -------- ------- ------- -------
* Communications and Intelligence 12,310 15,978 12,401 8,375 9,785
* EID 644 4,597 2,292 367 3,115
* MASS 9,400 9,004 8,596 8,209 7,113
* MCL 2,266 2,377 1,513 (201) (443)
* Sensors and Effectors 2,395 (4,519) 1,650 1,302 2,918
* Chess (3,130) (3,863) (2,423) (3,129) -
* ELAC 496 (2,449) - - -
* SEA 5,029 1,793 4,073 4,431 2,918
* Corporate (3,615) (3,651) (3,320) (3,733) (2,743)
------- -------- ------- ------- -------
Amortisation of intangibles (6,865) (10,103) (7,354) (9,514) (5,312)
------- -------- ------- ------- -------
* Communications and Intelligence (216) (237) (816) (3,420) (3,992)
* EID (216) (237) (816) (990) (1,562)
- - - - -
* MASS
* MCL - - - (2,430) (2,430)
* Sensors and Effectors (6,649) (9,866) (6,538) (6,094) (1,320)
* Chess (3,288) (6,319) (6,538) (4,870) -
* ELAC (3,274) (3,547) - - -
* SEA (87) - - (1,224) (1,320)
------- -------- ------- ------- -------
ENDS
For further information please contact:
Cohort plc 0118 909 0390
Andy Thomis, Chief Executive
Simon Walther, Finance Director
Raquel McGrath, Company Secretary
Investec Bank Plc (NOMAD and Broker) 020 7597 5970
Carlton Nelson, Christopher Baird
MHP 020 3128 8276
Reg Hoare, Ollie Hoare, Hugo Harris cohort@mhpgroup.com
NOTES TO EDITORS
Cohort plc ( www.cohortplc.com ) is the parent company of six
innovative, agile and responsive businesses based in the UK,
Germany and Portugal, providing a wide range of services and
products for domestic and export customers in defence and related
markets.
Cohort (AIM: CHRT) was admitted to London's Alternative
Investment Market in March 2006. It has headquarters in Reading,
Berkshire and employs in total over 1,000 core staff there and at
its other operating company sites across the UK, Germany, and
Portugal.
The group is split into two segments - Communications and
Intelligence, and Sensors and Effectors:
Communications and Intelligence
-- EID designs and manufactures advanced communications systems
for naval and military customers. Cohort
acquired a majority stake in June 2016. www.eid.pt
-- 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
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END
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