Cohort ends year slightly ahead of expectations

23rd May 2024 16:21

(Sharecast News) - Technology company Cohort said in a trading update on Thursday that its full-year performance was slightly ahead of expectations, with growth in both revenue and profits year-on-year.

The AIM-traded firm said its net funds stood at £23m, surpassing the prior year's £15.6m and the £13.3m reported at the end of October.

It achieved a strong order intake of around £387m, significantly higher than the £218m recorded a year earlier.

Cohort said that robust order intake resulted in a record closing order book of £518m, up from £329.1m as of 30 April.

A notable contribution to the record was the £135m Royal Navy countermeasures contract awarded to SEA in March this year.

The board said the substantial order book supported about £180m, or 90%, of current market revenue expectations for the year ending 30 April 2025, compared to £145m, or 84%, for the year just ended.

Cohort said the strong second-half performance, particularly in the sensors and effectors division, drove the group's results.

Within the division, both Chess and SEA showed significant growth, with Chess continuing its positive trajectory from the previous year and SEA securing and delivering large naval orders.

Conversely, the communications and intelligence division experienced weaker performance due to a reduction in UK Ministry of Defence product orders from the high levels seen in the 2023 financial year, and contract delays in Portugal.

Cohort said its net funds position benefited from favourable timing of working capital flows and delayed capital expenditure on a new facility in Germany, which would now take place in the 2025 financial year.

The order intake for the year was about 1.9x annual revenue - a significant increase from 1.2x in 2023.

It said the order book now included revenue extending to 2037, reflecting the group's strong market position.

Looking ahead to the 2025 financial year, Cohort anticipated continued strong demand for its products and services from both domestic and international customers.

Global defence spending had increased due to ongoing conflicts in Ukraine and the Middle East and rising tensions in the Indo-Pacific region.

A significant milestone for the group was the Royal Navy's order for the Ancilia Trainable Decoy Launcher System, a UK-designed and built solution with promising export prospects.

That, and other recent order wins, were expected to significantly enhance the group's earnings.

"Cohort's performance was slightly ahead of our previous expectations for the year with growth in revenue and profits," said chief executive officer Andrew Thomis.

"Following strong order intake, we have a record closing order book with encouraging prospects for further orders."

Thomis said the company's strong closing net funds position provided a robust platform from which to invest in the business and, potentially, acquisitions.

"We expect to continue our organic growth in 2025 and beyond."

Cohort said it intended to issue its preliminary announcement for the year ended 30 April in late July.

At 1557 BST, shares in Cohort were up 3.09% at 832.96p.

Reporting by Josh White for Sharecast.com.