TIDMCHRT
RNS Number : 5891W
Cohort PLC
12 December 2019
12 December 2019
COHORT PLC
HALF YEAR RESULTS
FOR THE SIX MONTHSED 31 OCTOBER 2019
Cohort plc, the independent technology group, today announces
its half year results for the six months ended 31 October 2019
Operational highlights
-- Revenue up to GBP60.2m (2018: GBP39.5m). On a like-for-like basis, revenues grew by 17%.
-- Adjusted* operating profit up significantly to GBP4.0m (2018:
GBP1.0m). On a like-for-like basis, adjusted operating profit grew
by 120%.
-- Adjusted* earnings per share up to 6.94 pence (2018: 1.99 pence).
-- Order intake up to GBP77.2m (2018: GBP45.6m).
-- Closing order book of GBP206.7m (30 April 2019: GBP190.9m).
-- Net debt of GBP6.8m (31 October 2018: net funds GBP4.7m; 30 April 2019: net debt GBP6.4m).
-- Interim dividend increased by 12% to 3.20 pence per share (2018: 2.85 pence per share).
-- Initial first half contribution from Chess and an improvement
in the remainder of the Group, particularly at MASS.
-- Agreement to acquire Wärtsilä ELAC Nautik GmbH for a headline
price of EUR11.25m announced today. Expected to complete before 30
June 2020.
Looking forward
-- Second half weighting expected again this year.
-- The half year order book of GBP206.7m underpins over GBP60m
of revenue deliverable in the second half, which, added to revenue
delivered to date, is 83% (2018: 71%) of consensus forecast revenue
for the full year.
-- Prospects for more orders in the second half to further
underpin this year and next year are good.
-- Full year performance expected to be in line with market expectations.
-- The acquisition of ELAC represents a significant strategic
step, furthering our expansion in defence products and export
markets, particularly the naval sector.
Nick Prest, Chairman, commenting on the results, said:
"Cohort delivered an improved result compared to the same period
last year, due to a combination of an initial first half
contribution from Chess and an improvement in the underlying Group,
particularly at MASS. The order book of nearly GBP207m underpins a
significant proportion of the second half revenue, and, as in
recent years, we expect a stronger second half. The Board expects
Cohort's performance in 2019/20 will be in line with market
expectations."
"The acquisition of ELAC will represent a significant expansion,
adding a profitable and growing sixth stand-alone business to
Cohort's portfolio. It furthers our strategy of expanding in
defence products and export markets."
* Adjusted figures exclude the effects of marking forward
exchange contracts to market value, other exchange gains and
losses, amortisation of other intangible assets and exceptional
items.
For further information, please contact:
Cohort plc 0118 909 0390
Andy Thomis, Chief Executive
Simon Walther, Finance Director
Investec Bank Plc 020 7597 5970
Daniel Adams / Chris Baird
MHP Communications 020 3128 8771
Reg Hoare / Ollie Hoare / Alice cohort@mhpc.com
McLaren
NOTES TO EDITORS
Cohort plc (www.cohortplc.com) is the parent company of five
innovative, agile and responsive businesses based in the UK and
Portugal, providing a wide range of services and products for
domestic and export customers in defence and related markets.
Chess Technologies, through its operating businesses Chess
Dynamics and Vision4ce, offers systems and technologies for
detecting, tracking, classifying and disrupting naval, land and air
threats. It was acquired by Cohort plc in December 2018.
www.chess-dynamics.com & www.vision4ce.com
EID designs and manufactures advanced communications systems for
the defence and security markets. Cohort acquired a majority stake
in June 2016. www.eid.pt
MASS is a specialist defence and technology business, focused on
electronic warfare, information systems and cyber security.
Acquired by Cohort in August 2006. www.mass.co.uk
MCL - an expert in sourcing, design and integration of
communications and surveillance technology, as well as support and
training for UK end users including the MOD and other government
agencies. MCL has been part of the Group since July 2014.
www.marlboroughcomms.com
SEA is an advanced electronic systems and software house
operating in the defence, transport and offshore energy markets.
Acquired by Cohort in October 2007. www.sea.co.uk
Cohort (AIM: CHRT) was admitted to London's Alternative
Investment Market in March 2006. It has its headquarters in
Reading, Berkshire and employs in total around 950 core staff there
and at its other operating company sites across the UK and in
Portugal.
Chairman's statement
Nick Prest CBE
Cohort delivered an improved result in the first half compared
to the same period last year, due to a combination of an initial
first half contribution from Chess and an improvement in the
underlying Group, particularly at MASS. The order book of nearly
GBP207m underpins a significant proportion of the second half
revenue, and, as in recent years, we expect a stronger second
half.
The Group's 2019/20 first half adjusted operating profit was
GBP4.0m (2018: GBP1.0m) on higher revenue of GBP60.2m (2018:
GBP39.5m). Order intake was over 50% up at GBP77.2m (2018:
GBP45.6m).
MASS was again the largest contributor to the Group's adjusted
operating profit, with a much stronger performance than last year.
As expected, EID's performance also improved, with higher revenue
resulting in a small trading profit. EID is expected to have a
strong second half as it delivers against contracted orders. MCL
also delivered a better first half performance on higher revenue.
SEA's revenue was slightly down and as a result of this and
investment in its anti-submarine warfare system, including a sea
trial with the Portuguese Navy, its first half result was a small
trading loss. SEA is expected to return to profit in the second
half, delivering an annual performance similar to last year. Chess
contributed a good initial performance to the Group's first half
trading performance, following its acquisition in December last
year.
As announced separately today, Cohort has signed an agreement to
acquire the entire share capital of Wärtsilä ELAC Nautik GmbH
(ELAC) from its parent, Wärtsilä Corporation. The headline price is
EUR11.25m (GBP9.5m) with no earn out, and is subject to adjustments
for working capital and a pension liability under a defined benefit
scheme. The completion of the deal is subject to conditions
including satisfaction of regulatory requirements in Germany. We
expect completion of the acquisition to be concluded on or before
30 June 2020. The purchase will be funded entirely from the Group's
own cash and debt resources.
ELAC adds a range of sophisticated active and passive sonar
systems to the Group's portfolio of naval systems and products,
complementary to the existing capabilities at SEA. ELAC also brings
a presence in the German domestic market and is active in export
markets, including some that are new to the Group.
Key financials
For the six months ended 31 October 2019 the Group's revenue was
a total of GBP60.2m (2018: GBP39.5m), including GBP19.9m from MASS,
GBP13.9m from Chess, GBP13.4m from SEA, GBP6.0m from EID and
GBP7.0m from MCL.
The Group's adjusted operating profit in the period was GBP4.0m
(2018: GBP1.0m). This included contributions from MASS of GBP3.7m
(2018: GBP2.2m), Chess of GBP1.8m, MCL of GBP0.5m (2018:
break-even), EID of GBP0.1m (2018: loss of GBP0.3m) and a loss of
GBP0.3m at SEA (2018: trading profit of GBP0.4m). Central costs
were just over GBP1.7m (2018: GBP1.3m).
Cohort's operating profit, after recognising amortisation of
intangible assets (GBP3.7m) was GBP0.4m (2018: loss of GBP1.9m
after an exceptional charge of GBP0.5m and amortisation of
intangible assets of GBP2.3m).
Adjusted earnings per share for the six months ended 31 October
2019 increased to 6.94 pence (2018: 1.99 pence). The tax rate in
respect of the adjusted operating profit was 16.0% (2018: 18.0%).
Basic earnings per share were 1.00 pence (2018: loss per share of
3.52 pence).
The net funds outflow in the first half has been lower than we
expected due to the timing of payments. Before taking into account
the acquisition of ELAC, we expect the second half operating cash
flow to be flat, in line with the expectations stated in July.
The operating cash inflow of GBP4.8m (2018: outflow of GBP3.8m)
has been used in paying dividends (GBP2.5m), capital expenditure
(GBP1.8m) and net investment in the Employee Benefit Trust
(GBP0.7m). The net tax refund in the first half (GBP0.7m) was a
result of research and development credits in Portugal.
Our order intake for the first half was GBP77.2m (2018:
GBP45.6m), excluding foreign exchange movements, resulting in a
closing order book of GBP206.7m (30 April 2019: GBP190.9m).
Chess
Chess made a strong initial contribution to the Group's first
half performance following its acquisition last December,
reflecting the Group's 81.84% ownership.
Chess delivered an adjusted operating profit of GBP1.8m on
revenue of GBP13.9m with good contributions from sales of its
counter-drone system to military customers in the United States and
Norway. Chess also completed deliveries of naval systems for both
the UK and export customers.
Chess's order book of GBP16.0m at 31 October 2019 along with
good short-term order prospects give us confidence that Chess will
have a profitable second half.
Chess's long-term prospects for naval, land and counter-drone
systems remain strong.
EID
EID's operating profit for the six months ended 31 October 2019
of under GBP0.1m (2018: loss of GBP0.3m) was due to an increase in
revenue from GBP3.7m to GBP6.0m.
EID's stronger performance was mostly in its Tactical (Land)
division, delivering the first part of a large order to a Middle
East customer.
The mix of work, with lower naval systems activity, and further
investment in its new vehicle intercom system account for its lower
net margin (1%) compared with its historical levels.
The Group owned 80% of EID throughout the first half of the year
(2018: 80% owned).
EID's order book of GBP37.1m at 31 October 2019 (2018: GBP23.5m)
underpins a high percentage of its expected second half revenue and
gives us confidence that EID will deliver a stronger performance in
the second half, ahead of last year, returning EID's net margin to
more appropriate levels.
EID has good prospects of securing further significant orders in
the second half, providing a good base for 2020/21 and beyond.
MASS
MASS's adjusted operating profit of GBP3.7m (2018: GBP2.2m) was
significantly above last year on higher revenue of GBP19.9m (2018:
GBP16.0m). Its first half net margin also improved to 19% (2018:
14%), a level we expect to be maintained in the second half.
The higher revenue was a result of work commencing on new
electronic warfare operational support projects for export
customers.
Following significant order intake in 2018/19, MASS secured
further renewals in the first half of 2019/20 and we expect it to
maintain its order book into 2020/21.
MCL
MCL's first half contribution of GBP0.5m (2018: break-even) on
higher revenue of GBP7.0m (2018: GBP5.5m) was a result of increased
activity in supplying equipment to the UK MOD, particularly the
Royal Navy.
MCL's order book of GBP13.2m (2018: GBP10.0m) and a good
pipeline of opportunities give us confidence that MCL will have a
stronger second half.
We expect MCL's overall annual performance to be in line with
last year.
SEA
SEA's adjusted operating loss of GBP0.3m (2018: profit of
GBP0.4m) was on slightly lower revenue of GBP13.4m (2018:
GBP14.3m).
SEA's revenue mix was similar to last year. However, the
combination of slightly lower revenue, investment in its products,
particularly its anti-submarine warfare Krait Defence System, and
extensive bidding activities on export opportunities for naval
systems, account for its weaker profit performance. We expect this
investment to deliver stronger order intake in the second half,
providing good underpinning for 2020/21 and beyond.
For 2019/20, SEA is reasonably well underpinned with a closing
order book of GBP34.6m (2018: GBP40.7m) including GBP13m of revenue
to be delivered in the second half. Overall, we expect SEA's
performance in 2019/20 to be profitable and similar to last
year.
Dividend
The Board is declaring an interim dividend increased by 12% to
3.20 pence per share (2018: 2.85 pence per share). This increase
reflects the Board's confidence in the outlook for Cohort and its
commitment to a progressive dividend policy. The dividend is
payable on 26 February 2020 to shareholders on the register at 31
January 2020.
Auditor
After ten years as our auditor, KPMG LLP is stepping down.
Following a competitive tender process, we are appointing RSM UK
AUDIT LLP as our new auditor and it will undertake our 30 April
2020 year end audit. We will seek approval of this appointment from
shareholders at the Annual General Meeting next September.
Outlook
After a strong year in 2018/19, especially in terms of order
intake, the first half of 2019/20 has started well with over GBP77m
of orders secured and we expect a similar second half for order
intake. We expect these orders to include important first steps
into some key markets and programmes which will provide good
revenue streams for many years to come, particularly at SEA and
Chess.
At 31 October 2019 our order book was GBP206.7m (30 April 2019:
GBP190.9m), providing good underpinning for the second half. We
therefore expect, as seen in the last few years, a stronger
performance in the second half, though we still need to win and
deliver some important orders to achieve our targets for the
year.
As previously stated, we do not expect any direct effects upon
Cohort from the Brexit process, as our UK into EU business remains
small. The result of today's UK General Election is not expected to
have a material impact on UK defence spending in the short term,
notwithstanding a range of potential long term outcomes. In all
scenarios, the responsibility of the Cohort Board is to manage our
affairs so that our businesses prosper whatever the political and
economic backdrop.
Overall, the Board expects Cohort's performance in 2019/20 will
be in line with market expectations.
The acquisition of ELAC will represent a significant expansion,
adding a profitable and growing sixth stand-alone business to
Cohort's portfolio. It furthers our strategy of expanding in
defence products and export markets, particularly in the naval
sector. The naval export markets the Group is focused on are
expected to reach US$150 billion of spend over the next decade in
the Asia Pacific region (excluding China) alone.
Nick Prest CBE
Chairman
12 December 2019
Consolidated income statement
for the six months ended 31 October 2019
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ----- ----------- ----------- ----------
Revenue 2 60,151 39,493 121,182
Cost of sales (39,161) (26,406) (78,143)
---------------------------------------- ----- ----------- ----------- ----------
Gross profit 20,990 13,087 43,039
Administrative expenses (20,626) (15,005) (37,095)
---------------------------------------- ----- ----------- ----------- ----------
Operating profit/(loss) 2 364 (1,918) 5,944
---------------------------------------- ----- ----------- ----------- ----------
Operating profit/(loss) comprises:
Adjusted operating profit 2 4,034 968 16,164
Credit/(charge) on marking forward
exchange contracts to market
value at the period end (included
in cost of sales) 7 (64) 33
Amortisation of other intangible assets
(included in administrative expenses) (3,677) (2,322) (9,514)
Exceptional items:
Research and development expenditure
credits (RDEC) (included in cost of
sales) - - 744
Cost of acquiring Chess (included in
administrative expenses) - - (1,000)
Cost of acquiring EID (included in
administrative expenses) - - 17
Reorganisation of SEA (included in
administrative expenses) 2 - (500) (500)
---------------------------------------- ----- ----------- ----------- ----------
Operating profit/(loss) 364 (1,918) 5,944
Finance income 12 12 27
Finance costs (379) (57) (296)
---------------------------------------- ----- ----------- ----------- ----------
(Loss)/profit before tax (3) (1,963) 5,675
Income tax credit/(expense) 3 125 353 (584)
---------------------------------------- ----- ----------- ----------- ----------
Profit/(loss) for the period 122 (1,610) 5,091
---------------------------------------- ----- ----------- ----------- ----------
Attributable to:
Equity shareholders of the parent 407 (1,433) 5,447
Non-controlling interests (285) (177) (356)
---------------------------------------- ----- ----------- ----------- ----------
122 (1,610) 5,091
---------------------------------------- ----- ----------- ----------- ----------
Earnings/(loss) per share Pence Pence Pence
-------------------------- ----- ------ -----
Basic 4 1.00 (3.52) 13.37
Diluted 4 1.00 (3.52) 13.29
-------------------------- ----- ------ -----
All profit for the period is derived from continuing
operations.
Consolidated statement of comprehensive income
for the six months ended 31 October 2019
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------- ----------- ----------- ----------
Profit/(loss) for the period 122 (1,610) 5,091
----------------------------------------------------- ----------- ----------- ----------
Foreign currency translation differences on net
assets of EID (19) 113 (21)
----------------------------------------------------- ----------- ----------- ----------
Other comprehensive (expense)/income for the period,
net of tax (19) 113 (21)
----------------------------------------------------- ----------- ----------- ----------
Total comprehensive income/(expense) for the period 103 (1,497) 5,070
----------------------------------------------------- ----------- ----------- ----------
Attributable to:
Equity shareholders of the parent 382 (1,321) 5,559
Non-controlling interests (279) (176) (489)
----------------------------------------------------- ----------- ----------- ----------
103 (1,497) 5,070
----------------------------------------------------- ----------- ----------- ----------
Consolidated statement of changes in equity
for the six months ended 31 October 2019
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 2018 4,096 29,657 (1,190) 626 - 39,253 72,442 2,554 74,996
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Loss for the period - - - - - (1,434) (1,434) (176) (1,610)
Other comprehensive income for
the period - - - - - 113 113 - 113
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Total comprehensive income for
the period - - - - - (1,321) (1,321) (176) (1,497)
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Transactions with owners of
the
Group and non-controlling
interests
recognised directly in equity:
Equity dividend - - - - - (2,299) (2,299) - (2,299)
Vesting of Restricted Shares - - - - - 178 178 - 178
Own shares purchased - - (631) - - - (631) - (631)
Own shares sold - - 587 - - - 587 - 587
Net loss on selling own shares - - 678 - - (678) - - -
Share-based payments - - - 150 - - 150 - 150
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
At 31 October 2018 (as
restated) 4,096 29,657 (556) 776 - 35,133 69,106 2,378 71,484
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
At 1 May 2018 4,096 29,657 (1,190) 626 - 39,253 72,442 2,554 74,996
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Profit for the year - - - - - 5,447 5,447 (356) 5,091
Other comprehensive income for
the year - - - - - 112 112 (133) (21)
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Total comprehensive income for
the year - - - - - 5,559 5,559 (489) 5,070
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Transactions with owners of
the
Group and non-controlling
interests,
recognised directly in equity
Equity dividends - - - - - (3,464) (3,464) - (3,464)
Vesting of Restricted Shares - - - - - 178 178 - 178
Own shares purchased - - (631) - - - (631) - (631)
Own shares sold - - 743 - - - 743 - 743
Net loss on selling own shares - - 730 - - (730) - - -
Share-based payments - - - 291 - - 291 - 291
Deferred tax adjustment in
respect
of share-based payments - - - (76) - - (76) - (76)
Transfer of share option
reserve
on vesting of options - - - (238) - 238 - - -
Acquisition of 81.84% of Chess - - - - (4,350) - (4,350) 4,214 (136)
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
At 30 April 2019 4,096 29,657 (348) 603 (4,350) 41,034 70,692 6,279 76,971
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
At 1 May 2019 4,096 29,657 (348) 603 (4,350) 41,034 70,692 6,279 76,971
------------------------------ ------- ------- ------- ------- --------
Profit/(loss) for the period - - - - - 407 407 (285) 122
Other comprehensive income for
the period - - - - - (25) (25) 6 (19)
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Total comprehensive expense
for
the period - - - - - 382 382 (279) 103
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Transactions with owners of
the
Group and non-controlling
interests
recognised directly in equity:
Equity dividend - - - - - (2,544) (2,544) - (2,544)
Vesting of Restricted Shares - - - - - 210 210 - 210
Own shares purchased - - (1,830) - - - (1,830) - (1,830)
Own shares sold - - 1,104 - - - 1,104 - 1,104
Net loss on selling own shares - - 577 - - (577) - - -
Share-based payments - - - 150 - - 150 - 150
Adoption of IFRS 16 - - - - - (29) (29) - (29)
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
At 31 October 2019 4,096 29,657 (497) 753 (4,350) 38,476 68,135 6,000 74,135
------------------------------ ------- ------- ------- ------- -------- -------- ------- ----------- ----------
Consolidated statement of financial position
as at 31 October 2019
31 October
31 October 2018 30 April
2019 Unaudited 2019
Unaudited (restated) Audited
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ----- ---------- ----------- --------
Assets
Non-current assets
Goodwill 42,254 39,156 41,354
Other intangible assets 16,911 3,846 20,588
Right of use asset 8 5,745 - -
Property, plant and equipment 12,111 9,490 10,956
Deferred tax asset 361 640 365
---------------------------------------- ----- ---------- ----------- --------
77,382 53,132 73,263
---------------------------------------- ----- ---------- ----------- --------
Current assets
Inventories 12,889 6,316 13,452
Trade and other receivables 41,673 30,543 42,971
Derivative financial instruments - 72 -
Cash and cash equivalents 18,371 11,935 18,763
---------------------------------------- ----- ---------- ----------- --------
72,933 48,866 75,186
---------------------------------------- ----- ---------- ----------- --------
Total assets 150,315 101,998 148,449
---------------------------------------- ----- ---------- ----------- --------
Liabilities
Current liabilities
Trade and other payables (32,909) (21,189) (35,225)
Current tax liabilities (1,234) - -
Derivative financial instruments (118) (179) (99)
Bank borrowings (51) (7,253) (61)
Lease liability in respect of right of
use asset 8 (1,060) - -
Provisions (1,730) (1,018) (818)
---------------------------------------- ----- ---------- ----------- --------
(37,102) (29,639) (36,203)
---------------------------------------- ----- ---------- ----------- --------
Non-current liabilities
Deferred tax liability (3,134) (1,170) (4,041)
Bank borrowings (25,114) (13) (25,126)
Lease liability in respect of right of
use asset 8 (4,722) - -
Provisions (608) - (608)
Other creditors (5,500) - (5,500)
---------------------------------------- ----- ---------- ----------- --------
(39,078) (1,183) (35,275)
---------------------------------------- ----- ---------- ----------- --------
Total liabilities (76,180) (30,822) (71,478)
---------------------------------------- ----- ---------- ----------- --------
Net assets 74,135 71,176 76,971
---------------------------------------- ----- ---------- ----------- --------
Equity
Share capital 4,096 4,096 4,096
Share premium account 29,657 29,657 29,657
Own shares (497) (556) (348)
Share option reserve 753 776 603
Other reserves (4,350) - (4,350)
Retained earnings 38,476 35,133 41,034
---------------------------------------- ----- ---------- ----------- --------
Total equity attributable to the equity
shareholders of the parent 68,135 69,106 70,692
Non-controlling interests 6,000 2,070 6,279
---------------------------------------- ----- ---------- ----------- --------
Total equity 74,135 71,176 76,971
---------------------------------------- ----- ---------- ----------- --------
Consolidated cash flow statement
for the six months ended 31 October 2019
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ----------- ----------- ----------
Net cash generated from/(used in) operating
activities 6 4,844 (3,830) 8,635
-------------------------------------------- ----- ----------- ----------- ----------
Cash flow from investing activities
Interest received 12 12 27
Purchases of property, plant and equipment (1,823) (445) (2,058)
Acquisition of Chess (including net
debt acquired) - - (20,885)
-------------------------------------------- ----- ----------- ----------- ----------
Net cash used in investing activities (1,811) (433) (22,916)
-------------------------------------------- ----- ----------- ----------- ----------
Cash flow from financing activities
Equity dividends paid (2,544) (2,299) (3,464)
Repayment of borrowings (23) (2,000) (2,027)
Drawdown of borrowings - 12 18,017
Purchase of own shares (1,830) (631) (631)
Sale of own shares 1,104 587 743
-------------------------------------------- ----- ----------- ----------- ----------
Net cash (used in)/generated from financing
activities (3,293) (4,331) 12,638
-------------------------------------------- ----- ----------- ----------- ----------
Net decrease in cash and cash equivalents (260) (8,594) (1,643)
-------------------------------------------- ----- ----------- ----------- ----------
Represented by:
Cash and cash equivalents brought forward 18,763 20,511 20,511
Cash flow (260) (8,594) (1,643)
Exchange (132) 18 (105)
-------------------------------------------- ----- ----------- ----------- ----------
Cash and cash equivalents carried forward 18,371 11,935 18,763
-------------------------------------------- ----- ----------- ----------- ----------
Net debt reconciliation
Effect of
foreign
exchange
At 1 May rate At 31 October
2019 changes Cash flow 2019
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- --------- --------- -------------
Cash and cash equivalents 18,763 (132) (260) 18,371
-------------------------- -------- --------- --------- -------------
Loan (25,028) (1) - (25,029)
Finance leases (159) - 23 (136)
-------------------------- -------- --------- --------- -------------
Bank borrowings (25,187) (1) 23 (25,165)
-------------------------- -------- --------- --------- -------------
Net debt (6,424) (133) (237) (6,794)
-------------------------- -------- --------- --------- -------------
Notes to the interim report
for the six months ended 31 October 2019
1. Basis of preparation
The financial information contained within this Interim Report
has been prepared applying the recognition and measurement
requirements of International Financial Reporting Standards (IFRS)
as adopted by the EU and expected to apply at 30 April 2020. 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" to maintain compliance with IFRS.
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 its five subsidiaries: Chess, EID,
MASS, MCL and SEA. These subsidiaries are the basis on which the
Company, Cohort plc, reports its primary segmental information.
Going concern
The Company has considerable financial resources together with
long-term contracts with a number of customers and suppliers across
different geographic areas and industries. As a consequence, the
Directors believe that the Company is well placed to manage its
business risks successfully.
The Directors have a reasonable expectation that the Company has
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.
The Group's UK bank facility was renewed during November 2018
for four years until November 2022. The new facility of GBP30m is
with NatWest and Lloyds.
The facility is for debt (including overdraft) and is in
addition to separate bilateral facilities with each bank for trade
finance items such as guarantees and foreign exchange
instruments.
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.
(A) Statutory accounts
The financial information set out above does not constitute the
Group's statutory accounts for the year ended 30 April 2019. KPMG
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 without qualifying its
report and (iii) did not contain a statement under Sections 498(2)
or (3) of the Companies Act 2006.
(B) Statement of compliance
The accounting policies applied by the Group in its consolidated
financial statements for the year ended 30 April 2019 are in
accordance with IFRS as adopted by the European Union. The
accounting policies have been applied consistently to all periods
presented in the consolidated financial statements.
The Interim Report was approved by the Board and authorised for
issue on 12 December 2019.
2. Segmental analysis of revenue and adjusted operating
profit/(loss)
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- ----------
Revenue
Chess 13,917 - 10,674
EID 6,050 3,671 11,530
MASS 19,856 16,055 38,951
MCL 7,024 5,485 21,715
SEA 13,775 14,303 38,731
Inter-segment revenue (471) (21) (419)
--------------------------------------------- ----------- ----------- ----------
60,151 39,493 121,182
--------------------------------------------- ----------- ----------- ----------
Operating profit comprises:
Trading profit/(loss) of:
Chess 1,787 - 1,682
EID 56 (274) 1,357
MASS 3,754 2,181 8,175
MCL 468 32 2,282
SEA (302) 381 5,492
Central costs (1,729) (1,352) (2,824)
--------------------------------------------- ----------- ----------- ----------
Adjusted operating profit 4,034 968 16,164
Charge on marking forward exchange contracts
to market value at the period end 7 (64) 33
Amortisation of intangible assets (3,677) (2,322) (9,514)
Exceptional items - (500) (1,483)
Research and development expenditure credits
(RDEC) - - 744
--------------------------------------------- ----------- ----------- ----------
Operating profit/(loss) 364 (1,918) 5,944
--------------------------------------------- ----------- ----------- ----------
All revenue and adjusted operating profit is 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, other exchange gains and losses, exceptional items 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 GBP150,000 for the six months ended 31 October 2019 (six
months ended 31 October 2018: GBP150,000; year ended 30 April 2019:
GBP291,000). This figure is reported within the central costs for
the six months ended 31 October 2019 and 31 October 2018. For the
year ended 30 April 2019 the share option cost is applied to each
reporting segment in proportion to the number of employees in the
Group's various share option schemes.
The chief operating decision maker as defined by IFRS 8 has been
identified as the Board.
The operating profit and interest charge for the six months
ended 31 October 2019 include the impact of applying IFRS 16
'Leases' from 1 May 2019. The comparatives have not been restated
(see note 8).
Revenue analysis by sector and type of deliverable
Six months ended Year ended
Six months ended 31 October 2018 30 April 2019
31 October 2019 Unaudited Audited
Unaudited
------------------- ------------------- -----------------
GBPm % GBPm % GBPm %
------------------------- ---------- ------- ---------- ------- ---------- -----
By sector
UK defence 28.1 47 22.3 56 62.3 51
Portugal defence 1.5 2 1.7 4 4.4 4
Export defence customers 21.5 36 6.8 17 30.8 26
Security 4.0 7 1.9 6 9.0 7
------------------------- ---------- ------- ---------- ------- ---------- -----
Defence and security
revenue 55.1 92 32.7 83 106.5 88
------------------------- ---------- ------- ---------- ------- ---------- -----
Transport 2.8 3.9 9.2
Offshore energy 0.9 0.9 2.1
Other commercial 1.4 2.0 3.4
------------------------- ---------- ------- ---------- ------- ---------- -----
Non-defence revenue 5.1 8 6.8 17 14.7 12
------------------------- ---------- ------- ---------- ------- ---------- -----
Total revenue 60.2 100 39.5 100 121.2 100
------------------------- ---------- ------- ---------- ------- ---------- -----
The defence and security revenue is further analysed into the
following:
Six months ended Year ended
Six months ended 31 October 2018 30 April 2019
31 October 2019 Unaudited Audited
Unaudited
------------------- ------------------ -----------------
GBPm % GBPm % GBPm %
------------------------ ------------ ----- ----------- ----- ----------- ----
By market segment
Combat systems 8.9 15 9.3 24 22.9 19
C4ISTAR 29.2 49 10.4 26 51.1 42
Cyber security and
secure networks 7.6 13 7.2 18 15.5 13
Simulation and training 4.1 7 2.3 6 6.5 5
Research, advice
and support 5.1 8 3.3 8 9.3 8
Other 0.2 - 0.2 1 1.2 1
------------------------ ------------ ----- ----------- ----- ----------- ----
Total defence and
security revenue 55.1 92 32.7 83 106.5 88
------------------------ ------------ ----- ----------- ----- ----------- ----
The Group's total revenue in terms of type of deliverable is
analysed as follows:
Six months ended Year ended
Six months ended 31 October 2018 30 April 2019
31 October 2019 Unaudited Audited
Unaudited
------------------- ------------------- -----------------
GBPm % GBPm % GBPm %
-------------- ---------- ------- ---------- ------- ---------- -----
Product 34.3 57 16.6 42 65.2 54
Services 25.9 43 22.9 58 56.0 46
-------------- ---------- ------- ---------- ------- ---------- -----
Total revenue 60.2 100 39.5 100 121.2 100
-------------- ---------- ------- ---------- ------- ---------- -----
3. Income tax (credit)/expense
The income tax (credit)/expense comprises:
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------ ----------- ----------- ----------
UK corporation tax: in respect of this period 531 195 2,729
UK corporation tax: in respect of prior periods - - (10)
Portugal corporation tax: in respect of this
period 57 (90) (410)
Portugal corporation tax: in respect of prior
periods - - 1
Other foreign corporation tax: in respect of
this period - - 31
------------------------------------------------ ----------- ----------- ----------
588 105 2,341
------------------------------------------------ ----------- ----------- ----------
Deferred taxation: in respect of this period (713) (458) (1,713)
Deferred taxation: in respect of prior periods - - (44)
------------------------------------------------ ----------- ----------- ----------
(713) (458) (1,757)
------------------------------------------------ ----------- ----------- ----------
(125) (353) 584
------------------------------------------------ ----------- ----------- ----------
The income tax credit for the six months ended 31 October 2019
is based upon the anticipated charge for the full year ending 30
April 2020. As it is an estimate, the impact of research and
development credits (RDEC) is not shown separately.
4. Earnings per share
The earnings per share are calculated as follows:
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- ----------
Earnings
Basic and diluted earnings/(loss) 407 (1,433) 5,447
(Credit)/charge on marking forward exchange
contracts to market at the period end (net
of income tax) (6) 52 (27)
Exceptional items (net of income tax):
Reorganisation of SEA - 405 405
Cost of acquisition of EID - - (17)
Cost of acquisition of Chess (net of income
tax) - - 926
Group's share of amortisation of intangible
assets (net of income tax) 2,420 1,787 6,956
-------------------------------------------- ----------- ----------- ----------
Adjusted basic and diluted earnings 2,821 811 13,690
-------------------------------------------- ----------- ----------- ----------
Number Number Number
----------------------------------------------- ---------- ---------- ----------
Weighted average number of shares
For the purposes of basic earnings per share 40,633,341 40,666,957 40,749,551
Share options 200,712 213,513 224,086
----------------------------------------------- ---------- ---------- ----------
For the purposes of diluted earnings per share 40,834,053 40,880,470 40,973,637
----------------------------------------------- ---------- ---------- ----------
The weighted average number of ordinary shares for the six
months ended 31 October 2019 excludes 109,383 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 2018: 156,411; year ended 30 April 2019:
98,053).
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
Pence Pence Pence
---------------------------- ----------- ----------- ----------
Earnings/(loss) per share
Basic 1.00 (3.52) 13.37
Diluted 1.00 (3.52) 13.29
---------------------------- ----------- ----------- ----------
Adjusted earnings per share
Basic 6.94 1.99 33.60
Diluted 6.91 1.98 33.41
---------------------------- ----------- ----------- ----------
5. Dividends
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
Pence Pence Pence
------------------------------------------- ----------- ----------- ----------
Dividends per share proposed in respect of
the period
Interim 3.20 2.85 2.85
Final - - 6.25
------------------------------------------- ----------- ----------- ----------
The interim dividend for the six months ended 31 October 2019 is
3.20 pence (six months ended 31 October 2018: 2.85 pence) per
ordinary share. This dividend will be payable on 26 February 2020
to shareholders on the register at 31 January 2020.
The final dividend charged to the income statement for the year
ended 30 April 2019 was 8.50 pence per ordinary share, comprising
2.85 pence of interim dividend for the six months ended 31 October
2018 and 5.65 pence of final dividend for the year ended 30 April
2018.
6. Net cash generated from/(used in) operating activities
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------ ----------- ----------- ----------
Profit/(loss) for the period 122 (1,610) 5,091
Adjustments for:
Tax (credit)/expense (125) (353) 584
Depreciation of property, plant and equipment 654 550 1,147
Amortisation of intangible assets 3,677 2,322 9,514
Net finance costs 367 45 269
Share-based payment 150 150 291
Derivative financial instruments and foreign
exchange movements (7) 64 (33)
Increase/(decrease) in provisions 11 (574) (1,186)
------------------------------------------------ ----------- ----------- ----------
Operating cash flow before movements in working
capital 4,849 594 15,677
------------------------------------------------ ----------- ----------- ----------
Decrease/(increase) in inventories 563 111 (2,812)
Decrease/(increase) in receivables 1,020 2,580 (794)
Decrease in payables (2,086) (6,418) (451)
------------------------------------------------ ----------- ----------- ----------
(503) (3,727) (4,057)
------------------------------------------------ ----------- ----------- ----------
Cash generated from/(used in) operations 4,346 (3,133) 11,620
Tax received/(paid) 784 (640) (2,689)
Interest paid (286) (57) (296)
------------------------------------------------ ----------- ----------- ----------
Net cash generated from/(used in) operating
activities 4,844 (3,830) 8,635
------------------------------------------------ ----------- ----------- ----------
7. IFRS 15 'Revenue from Contracts with Customers'
The impact of IFRS 15 was fully reported on by the Group in the
Annual Report and Accounts for the year ended 30 April 2019.
The reported results for the six months ended 31 October 2018
were initial estimates at the publication of the 2018 Interim
Report. These figures have now been updated and reported as final
figures for the six months ended 31 October 2018.
The impact of the changes is that the total equity of the Group
at 1 May 2018 has increased by GBP66,000 from that reported in the
2018 Interim Report of 12 December 2018. The 31 October 2018
balance sheet has been restated accordingly with an increase in the
trade and other receivables by GBP66,000. The Consolidated income
statement, Consolidated statement of comprehensive income and
Consolidated cash flow statement for the six months ended 31
October 2018 are unaffected.
8. IFRS 16 'Leases'
The Group has adopted IFRS 16 'Leases' as from 1 May 2019 using
the modified retrospective methodology. This has resulted in the
Group recognising right of use assets and liabilities as
follows:
Property Other plant
and equipment Total
Right of use asset GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------------- --------
At 1 May 2019 5,405 466 5,871
Additions 336 54 390
As at 31 October 2019 5,741 520 6,261
------------------------------------------- -------- -------------- --------
Depreciation charge (429) (87) (516)
------------------------------------------- -------- -------------- --------
Net book value at 31 October 2019 5,312 433 5,745
------------------------------------------- -------- -------------- --------
Lease liability in respect of right of use
asset:
At 1 May 2019 5,900
New loans 390
Interest 93
Payments (601)
------------------------------------------- -------- -------------- --------
At 30 April 2019 5,782
------------------------------------------- -------- -------------- --------
Due within one year 1,060
Due after one year 4,722
------------------------------------------- -------- -------------- --------
5,782
------------------------------------------- -------- -------------- --------
The impact on the operating profit and profit before tax for the
six months ended 31 October 2019 is as follows:
GBP'000
---------------------------------- --------
Depreciation charge (516)
Operating lease cost 601
------------------------------------ --------
Net increase in operating profit 85
Interest charge (93)
------------------------------------ --------
Net decrease in profit before tax (8)
------------------------------------ --------
The impact of this change in accounting policy on basic earnings
per share is 0.02 pence for the six months ended 31 October
2019.
Shareholder information, financial calendar and advisers
Advisers
Nominated adviser and broker
Investec
30 Gresham Street
London EC2V 7QP
Auditor
KPMG LLP
Chartered Accountants
Arlington Business Park
Theale
Reading RG7 4SD
Tax advisers
Deloitte LLP
Abbots House
Abbey Street
Reading RG1 3BD
Legal advisers
Shoosmiths LLP
Apex Plaza
Forbury Road
Reading RG1 1SH
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Public and investor relations
MHP Communications
6 Agar Street
London WC2N 4HN
Bankers
Lloyds Bank
The Atrium
Davidson House
Forbury Square
Reading RG1 3EU
NatWest Bank
Abbey Gardens
4 Abbey Street
Reading RG1 3BA
Shareholders' enquiries
If you have an enquiry about the Company's business, or about
something affecting you as a shareholder (other than queries which
are dealt with by the registrars), you should contact the Company
Secretary by letter to the Company's registered office or by email
to info@cohortplc.com.
Share register
Link Asset Services maintains the register of members of the
Company.
If you have any questions about your personal holding of the
Company's shares, please contact:
Link Asset Services
Shareholder Solutions
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300 (calls are charged at 12 pence per
minute plus your phone provider's access charge). (From outside the
UK: +44 371 664 0300 calls will be charged at the applicable
international rate.) Lines are open 9.00am to 5.30pm, Monday to
Friday, excluding public holidays in England and Wales.
Email: shareholderenquiries@linkgroup.co.uk
If you change your name or address or if details on the envelope
enclosed with this report, including your postcode, are incorrect
or incomplete, please notify the registrars in writing.
Daily share price listings
-- The Financial Times - AIM, Aerospace and Defence
-- The Times - Engineering
-- The Daily Telegraph - AIM section
-- London Evening Standard - AIM section
Financial calendar
Annual General Meeting
15 September 2020
Final dividend payable
16 September 2020
Expected announcements of results for the year ending 30 April
2020
Preliminary full year announcement
7 July 2020
Half year announcement
December 2020
Registered office
Cohort plc
One Waterside Drive
Arlington Business Park
Theale
Reading RG7 4SW
Registered company number of Cohort plc
05684823
Cohort plc is a company registered in England and Wales.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR MMMMZLMFGLZM
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