Cohort (CHRT) reported a 12 per cent increase in gross profit on revenue that was essentially flat on the 2015 half year. But a 54 per cent hike in amortisation charges, and £2.2m in exceptional costs relating to the reorganisation of the Systems Consultants Services (SCS) subsidiary, sent the defence contractor into negative earnings territory. Even on an adjusted basis, earnings came in 16 per cent lower at 5.99p, reflecting the increased proportion of earnings derived from the partially owned communications manufacturers EID and MCL, the former of which represented a four-month maiden contribution.
The group's Systems Engineering & Assessment (SEA) subsidiary endured a torrid first half with revenue, profit and margins under pressure, but we can expect a reversal of fortune, as its closing order book of £45.8m included £19.5m of revenue to be delivered in the second half, much of which is higher-margin maritime work for export customers. Despite slightly lower revenue, Cohort's MASS subsidiary, a specialist in electronic warfare and cyber security systems, recorded operating profit in line with the prior period due to a higher-margin business mix.
Investec analysts predict adjusted profit of £14.3m for the April 2017 year-end, leading to EPS of 24.5p (from £12m and 20.8p in FY2016).
| COHORT (CHRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 405p | MARKET VALUE: | £166m | |
| TOUCH: | 400-410p | 12-MONTH HIGH: | 420p | LOW: 283p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 34 | |
| NET ASSET VALUE: | 151p* | NET CASH: | £9.9m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 49.7 | 0.1 | 2.8 | 1.9 |
| 2016 | 50.0 | -3.2 | -4.5 | 2.2 |
| % change | +1 | - | - | +16 |
Ex-div: 2 Feb Payment: 1 Mar *Includes intangible assets of £56.8m, or 139p a share | ||||
