Cohort's new emphasis on offering IT systems and processes to defence customers is paying off with the technology group reporting underlying operating profits up by over two-thirds to £3m in the six months to October. However, the cloudy outlook for defence spending was reflected in radically different results for the three operating divisions.
Take the MASS division, as an example. MASS supplies IT systems, including a new electronic warfare database for the ministry of defence, and the business recorded a 20 per cent increase in sales to £13.9m, which drove operating profit up from £1.9m to £2.7m. This outperformance reflected the successful completion of several projects during the half, but management expects profit margins to even out over the course of the year to more usual levels. Still, that contrasts favourably with the troubled SCS defence consultancy business where spending cuts at the MOD led to a 16 per cent fall in revenues to £8m and a 40 per cent slump in underlying profits to £317,000.
And a re-organisation at the SEA division, which supplies surveillance systems, delivered improved profits of £0.8m (£0.1m in 2010) on sales up a third to £15.4m, despite being held back by poorly performing projects that are being wound down.
Investec Securities forecasts full-year adjusted EPS of 11.7p (10p in 2010).
COHORT (CHRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103p | MARKET VALUE: | £41.8m | |
| TOUCH: | 100-105p | 12-MONTH HIGH: | 103p | LOW: 61p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 120p* | NET CASH: | £9.6m | |
| Half-yearto 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 32.7 | 0.72 | 1.04 | 0.8 |
| 2011 | 37.3 | 1.80 | 3.46 | 1.0 |
| % change | +14 | +150 | +233 | +25 |
Ex-div: 8 Feb Payment: 7 Mar *Includes intangible assets of £32.8m, or 80p a share | ||||
