TIDMCHRT
RNS Number : 5340N
Cohort PLC
21 May 2020
21 May 2020
COHORT PLC
("Cohort" or "the Group")
Year end and COVID-19 Update
Cohort, the independent technology group, today issues a trading
update for its financial year ended 30 April 2020, and an update on
its response to COVID-19.
Summary:
-- With the benefit of a lower tax charge we anticipate FY20
earnings per share to be in line with market expectations
-- FY20 Revenue expected to be c.GBP133m (2019: GBP121.2m)
-- FY20 Adjusted* operating profit expected to be c.GBP18m (2019: GBP16.2m)
-- FY20 Adjusted earnings per share expected to be c.35.0p (2019: 33.6p)
-- Net debt at 30 April 2020 of c.GBP5m (30 April 2019: net debt GBP6.4m)
-- A closing order book of c.GBP186m (30 April 2019: GBP190.9m)
-- FY21's trading performance difficult to predict given
COVID-19 impact but currently expected to be in line with FY20
*subject to audit; 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.
COVID-19 response
In responding to the disruption caused by COVID-19, the
wellbeing of all our employees remains paramount. The transition to
having most employees work from home, and the adoption of social
distancing measures for those unable to do so, was achieved quickly
and efficiently. Fewer than 30% of the Group's employees are now
working on site and many of these are working from home for part or
most of the time. Nevertheless, our manufacturing sites have
remained operational with enhanced health and safety measures in
place.
A small minority of Group employees are on furlough leave, most
of whom either are vulnerable individuals or have vulnerable
dependents. Cost containment and cash preservation measures have
been implemented across the Group including Board and senior
management pay freezes for the coming financial year.
FY20 year end update
Cohort's performance was tracking broadly in line with
expectations prior to the imposition of COVID-19 restrictions in
the last two months of our financial year, typically our busiest
period. We were assisted by the UK MOD's quick action to support
its suppliers, including faster payments and simplification of some
procedures.
Nevertheless, the restrictions have affected our ability to
carry out work on customer premises and customers' ability to
witness acceptance tests and to place new orders. This had some
impact on our FY20 revenue and trading profit, although these still
showed positive growth compared to FY19. With the benefit of a
lower tax charge we anticipate FY20 earnings per share to be in
line with market expectations.
Despite delays to orders caused by COVID-19 restrictions in the
final quarter, order intake for the year was c.GBP125m, a
satisfactory outcome compared to the record order intake of
GBP189.9m in FY19 which included a number of large, long term
awards. The expected year end order book of c.GBP186m is similar to
the prior year (2019: GBP190.9m).
As at 30 April 2020, net debt stood at c.GBP5m (31 October 2019:
net debt GBP6.8m; 30 April 2019: net debt GBP6.4m); this was better
than both our forecast and the position at the last year-end and
represents a net debt / EBITDA ratio of less than 0.3 (2019:
0.4).
The net debt comprised of gross cash of GBP20m and gross debt of
GBP25m, together with a GBP5m undrawn facility, gives the Group
access to GBP25m of available facilities. In addition, the Group
has agreed with its banks to convert an existing GBP10m accordion
into a committed facility. This will be used for the proposed
acquisition of ELAC, the Germany-based market leader in naval
surface ship and submarine sonar systems, that was announced in
December 2019.
We remain in positive discussions with the German Federal
Authorities about approval of the transaction. Both Cohort and
Wärtsilä are working hard to complete the transaction in June 2020
as originally planned, but COVID-19 restrictions are likely to
result in some delay. We will provide a further update when the
conditions for completion have been met.
Given the Group's satisfactory performance last year and strong
balance sheet, the Board expects to recommend the payment of a
final dividend for the year ended 30 April 2020 in line with our
progressive policy of recent years. The decision will be announced
as usual at the time of the Group's final results and will be
subject to shareholder approval at the AGM.
FY21 Outlook
Cohort remains well placed, having entered the new financial
year with a substantial long-term order book. The 30 April 2020
order book of c.GBP186m underpins nearly GBP83m (2019: GBP80m) of
current financial year revenue, representing c.60% of expected
revenue for the year. The Group has a number of significant new
domestic and export opportunities, and extensions to existing
contracts, being addressed at Chess, EID and MASS and with good
prospects at MCL and SEA.
The potential impact of COVID-19 makes it more difficult than
usual to provide guidance. At this early stage the Board expects
that restrictions on international travel due to COVID-19 may
result in short term constraints on export activity (which
represented over 30% of Cohort's revenues in the year just ended).
As a result, FY21 trading performance is currently expected to be
in line with that achieved in FY20. If appropriate the Board will
provide further updates during the current financial year.
In the longer term, the Group expects to return to growth, as it
recovers the orders and revenue delayed due to COVID-19.
Notice of FY20 results
It is the Group's current intention to issue its final results
for the year ended 30 April 2020 in July 2020. Given the recent
guidance from the FRC around the potential complexity of the audit
process under COVID-19 restrictions, the Group will confirm the
proposed date in a later announcement.
Andrew Thomis, Chief Executive of Cohort, said:
"Cohort had a satisfactory year despite the impact of COVID-19
on the business in the last two months of our financial year. We
successfully transitioned to most employees working from home, with
the adoption of social distancing measures for those unable to do
so. We have a robust financial position, a strong order book
underpinning 60% of expected current year revenues, and an
encouraging pipeline of order opportunities across the
business.
"Overall, as a result of the impact of COVID-19 we expect
trading performance in the coming financial year to be in line with
that achieved in 2019/20."
Ends
For further information, please contact:
Cohort plc 0118 909 0390
Andrew Thomis, Chief Executive
Simon Walther, Finance Director
Investec Bank plc 020 7597 5970
Daniel Adams / Chris Baird
MHP Communications 020 3128 8100
Reg Hoare / Pete Lambie / cohort@mhpc.com
Alice 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.
All financial information included in this announcement is
sourced from unaudited management accounts and excludes any
specific items. This announcement contains certain forward-looking
statements that are based on management's current expectations or
beliefs as well as assumptions about future events. These are
subject to risk factors associated with, amongst other things, the
economic and business circumstances occurring from time to time in
the countries and sectors in which Cohort operates. It is believed
that the expectations reflected in these statements are reasonable
but they may be affected by a wide range of variables which could
cause actual results, and Cohort's plans and objectives, to differ
materially from those currently anticipated or implied in the
forward-looking statements. Investors should not place undue
reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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