H1'25 results: records continue to tumble
For the six months to 31 October 2024 Cohort reported revenue (adj.) operating profit and net funds ahead of recent guidance: revenue +25%YoY at £118.2m, (adj.) EBIT +69%YoY to £10.1m and net funds at 31 October of £37.9m. Order intake of £139.2m compared to £119.1m a year earlier, with a record closing order book of £541.1m. EPS (adj., dil.) was 19.8p (H1 24: 10.3p) and the interim dividend was raised by 12%YoY to 5.25p/share.Communications & Intelligence delivered revenue of £55.2m, +26%YoY and (adj.) EBIT of £8.5m, +41%YoY, a 15.4% margin compared to 13.7% a year earlier; the order book increased from £108.8m in April to £134.4m. Sensors & Effectors posted revenue of £64.2m, +26%YoY and (adj.) EBIT of £5.3m, +1.3x, an 8.3% margin compared to 4.5% in H1 24. Its closing order book was £406.8m (April, £410.7m) with H2 order intake expected to exceed revenue.
Post period-end, Cohort announced a conditional sale and purchase agreement to acquire Australian satellite communications specialist EM Solutions (Europe) B.V., for an enterprise value of c.£75.0m. The acquisition will take the Group pro forma order book to above £650m.
Recent events in Syria, the ongoing conflicts in Israel the Ukraine, and with persisting tension in the Far East / Asia Pacific region, serve as reminders of the importance to the UK of retaining an efficient and modernised defence capability.
We retain our Fair value / share of 1090p. That price is indicative of a FY26E PE of 19.0x compared to a peer group market cap weighted average of 22.2x, and EV/EBITDA of 10.1x, compared to 12.5x.
Cohort is a holding company. Co. operates through its subsidiaries: Empresa de Investigacao e Desenvolvimento de Electronica, S.A., which is engaged in the fields of electronics, tactical and naval communications, command and control; MASS Consultants Limited, which is an electronic warfare operational support, cyber security, secure ICT networks and support to operations business serving customers primarily in defense and security markets; and Marlborough Communications Limited, which is a supplier of electronic communications, information systems and signals intelligence technology to the defense and security sectors.
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