In a year of mixed determinants, defence company Cohort (CHRT) managed to drive the gross margin by around 480 basis points despite flatlining revenue. Excluding amortisations and one-offs, the defence group delivered record adjusted operating profit of £14.5m (£12m in FY2016), and the period under review saw the expansion of the product offering, improved geographic spread and enhanced opportunities for cross-selling.
The group's MASS business, which specialises in electronic warfare and communications, saw a slight increase in the top line, although its contribution to net earnings was constrained by increased overheads and one-off costs. However, management was pleasantly surprised by the early impact of naval and tactical communications specialist EID, in which Cohort secured a controlling interest this time last year. This maiden contribution included £4.2m in adjusted operating profit on £16m in revenue; a pointer to the higher-margin business mix of the acquired subsidiary. The MCL division's business mix also improved, aided by supply contracts for the delivery of tactical hearing protection systems for the British Army. The work is ongoing and MCL has been able to garner further domestic military orders for the technology.
Investec forecasts adjusted pre-tax profit of £15.5m for the April 2018 year-end, giving to EPS of 29.1p, against £14.5m and 27.6p in FY2017.
| COHORT (CHRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 431p | MARKET VALUE: | £177m | |
| TOUCH: | 427-435p | 12-MONTH HIGH: | 463p | LOW: 283p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 47 | |
| NET ASSET VALUE: | 170p* | NET CASH: | £8.5m | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 70.9 | 8.5 | 20.8 | 3.5 |
| 2014 | 71.6 | 6.7 | 14.8 | 4.2 |
| 2015 | 100 | 5.9 | 14.0 | 5.0 |
| 2016 | 113 | 5.3 | 19.1 | 6.0 |
| 2017 | 113 | 1.0 | 9.1 | 7.1 |
| % change | - | -82 | -53 | +18 |
Ex-div: 17 Aug Payment: 13 Sep *Includes intangible assets of £50.6m, or 124p a share | ||||
