The wrenching upheaval in the UK defence market, prompted by government efforts to bring the ministry of defence's (MoD) equipment budget under control, seems to be reaching a successful conclusion as results for defence equipment and software specialist Cohort indirectly demonstrated. For example, better order intake of £79.3m, up from £55.6m in 2011, meant that revenue forecasts for this year are already 67 per cent covered. This fully justifies a positive investment outlook for the company.
Even while defence spending has been undergoing fundamental changes, Cohort benefited from working on projects where funding was ring-fenced, such as the Astute class submarine and a new electronic warfare database to the MoD. That helped the MASS division increase sales by 11 per cent to £26.1m, and underpinned a 12 per cent underlying increase in the total order book to £107m.
Chief executive Andy Thomis said that Cohort had been restructured as a series of small businesses, which had allowed much faster decision-making. He added that the defence market had stabilised as restructuring of the armed forces came to an end, but that there was still specific weakness in areas such as consulting.
Broker Investec forecasts adjusted pre-tax profits of £6.9m and EPS of 14.2p in the year to April 2013 (from £6.5m and 15.5p last year).
COHORT (CHRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 101p | MARKET VALUE: | £41.2m | |
| TOUCH: | 99-103p | 12-MONTH HIGH: | 125p | LOW: 67p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 128p* | NET CASH: | £14.1m | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 57.1 | 5.60 | 12.8 | 1.45 |
| 2009 | 78.6 | 6.50 | 12.6 | 1.75 |
| 2010 | 78.1 | 2.75 | 5.63 | 2.05 |
| 2011 | 65.1 | 2.70 | 6.79 | 2.40 |
| 2012 | 75.4 | 4.16 | 11.3 | 2.90 |
| % change | +16 | +54 | +66 | +21 |
Ex-div: 22 Aug Payment: 19 Sep *Includes intangible assets of £31.2m, or 79p a share | ||||
