Cohort Plc · LSE:CHRT
Cohort — H1 2022/23 Earnings Presentation
38 slides from Cohort's earnings presentation, Dec 14, 2022
Slide 1: Results for the Six Months Ended 31 October 2022
RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2022 Andrew Thomis & Simon Walther 14 December 2022 1
Slide 2: Highlights
HIGHLIGHTS Andrew Thomis, Chief Executive Cohort plc Interim Results Presentation December 2022 2
Slide 3: Financial Highlights
Introduction FINANCIAL HIGHLIGHTS Adjusted Revenue Adjusted EPS operating profit Increased revenue & operating profit £77.5m £5.0m 10.12p 29% 194% 233% (2021: £60m) (2021: £1.7m) (2021: 3.04p) Order book Order intake FY22/23 revenue cover Record order book out to 2032 & strong £304.2m £88.6m 95% rev
Slide 4: Operational Highlights
introduction OPERATIONAL HIGHLIGHTS Strong Strong revenue domestic and & profit growth export at MCL demand Weaker Revenue & performance efficiency at EID improvements at Chess Good performance and record order intake at SEA Cohort plc Interim Results Presentation December 2022 4
Slide 5: A Much Stronger First Half with a Record Closing Order Book
A MUCH STRONGER FIRST HALF WITH A RECORD CLOSING ORDER BOOK Higher UK MOD sales Operational challenges showing signs of improvement Opportunities from complex market dynamics Cohort plc Interim Results Presentation December 2022 5
Slide 6: Financial & Divisional Review
FINANCIAL & DIVISIONAL REVIEW Simon Walther, Finance Director Cohort plc Interim Results Presentation December 2022 6
Slide 7: Divisional Highlights
DIVISIONAL HIGHLIGHTS 2022/23 2021/22 • Stronger H1 Revenue: £19.1m / £5.9m • Improved revenue & profit expected FY22/23 Adj Op profit: £0.3m / (£2.7m) Order book: £35.9m / £42.6m 2022/23 2021/22 • Weaker mix Revenue: £8.9m / £10.7m • Order book underpins £13m H2 revenue Adj Op profit: £0.9m / £1.5m
Slide 8: Divisional Highlights
DIVISIONAL HIGHLIGHTS 2022/23 2021/22 • Very strong H1 Revenue: £13.8m / £7.9m • Record order book, good opportunities pipeline Adj Op profit: £2.2m / £0.5m Order book: £24.8m / £13.0m 2022/23 2021/22 • Weak H1 but stronger H2 expected Revenue: £2.0m / £2.6m • FY22/23 expected to be weaker than FY21
Slide 9: Cash Flow
CASH FLOW £m Opening net funds 1 May 2022 11.0 Adjusted operating profit 5.0 Working capital build (9.9) Operating cash flow (4.9) Tax/capex/dividends (6.7) Closing net debt at 31 October 2022 (0.6) • £7.6m net funds at 9 December 2022. Expect net funds to be £4m-£5m at financial year end • Chess ea
Slide 10: Outlook
OUTLOOK Andrew Thomis, Chief Executive Cohort plc Interim Results Presentation December 2022 10
Slide 11: Positive Medium-Term Outlook for Growth
POSITIVE MEDIUM-TERM OUTLOOK FOR GROWTH • Continuing geopolitical situation in Europe Big Picture • International tensions in Asia-Pacific region • UK defence and security mini-spending review expected Q1 2023 Domestic • Increased opportunities in Portugal markets • Growing orders from German domest
Slide 12: Record Order Book out to 2032
RECORD ORDER BOOK OUT TO 2032 304.2 300 58.7 ELAC 250 MCL 24.8 CHESS SEA 200 35.9 EID MASS £m 150 96.3 102.1 100 82.5 79.9 23.6 50 39.6 64.8 0 At 31 October 2022 H2 2022/23 2023/24 2024/25 Later Years Cohort plc Interim Results Presentation December 2022 12
Slide 13: Good Underpinning for Coming Year
GOOD UNDERPINNING FOR COMING YEAR Order book 31 October To be delivered 31 October Last year's to be 2022 2022/23 2021 delivered £m £m £m £m Chess 35.9 12.2 42.6 15.3 EID 23.7 8.8 25.8 7.4 ELAC 58.7 13.3 55.9 10.8 MASS 64.8 14.6 81.1 15.7 MCL 24.8 18.3 13.0 11.0 SEA 96.3 15.3 67.5 14.2 304.2 82.5 28
Slide 14: Summary & Outlook
SUMMARY & OUTLOOK Significantly improved revenue, profit and EPS in H1 Interim dividend increased by 10% Strong order cover for return to growth in 2022/23 – expectations maintained Record long-term order book reflects positive market developments Pipeline of opportunities supports further growth in
Slide 15: Exciting Long-Term Future as a Major Independent Defence Technology Group
Exciting long-term future as a major independent defence technology group offering world-class systems to domestic and export customers alike Cohort plc Interim Results Presentation December 2022 15
Slide 16: Appendix
APPENDIX Cohort plc Interim Results Presentation December 2022 16
Slide 17: Cohort Business Model
COHORT BUSINESS MODEL • Subsidiaries enjoy a significant degree of operational autonomy in order to develop their potential fully: – Enables streamlined decision-making and focus on solving customer’s immediate problems – Provides competitive advantage over larger rivals where the decision-making pr
Slide 18: Applying Advanced Technology to Protect and Secure
Applying advanced technology to protect and secure We create solutions to keep people safe. Acting with agility to find a better way, make smart decisions and meet customers’ needs. Where independent subsidiaries are free to grow and deepen relationships with the support of a steadying hand. Bringin
Slide 19: Acquisition Strategy
ACQUISITION STRATEGY • Continue to see opportunities to accelerate growth by making targeted acquisitions in the UK and overseas • Stand-alone acquisitions – Likely to be operating in defence and security markets – Ready to join a larger public group – Growth potential and sustainable competitive ad
Slide 20: Acquisition Track Record
ACQUISITION TRACK RECORD • 2006: SCS acquisition helped create the Group at IPO (SCS now fully integrated within other divisions) • 2006: MASS acquired for £13m • 2007: SEA acquired for £25m • 2014: Disposal of Space Division for £6.5m • 2014: J+S acquired for £12m (now fully integrated within SEA)
Slide 21: Revenue & Profit Bridge
Financial Review REVENUE & PROFIT BRIDGE +£2.5m -£0.6m -£1.8m +£5.9m -£1.7m Revenue bridge SEA EID MASS ELAC +13.2m MCL H1 2022/23 Revenue £77.5m H1 2021/22 Chess Revenue £60.0 +£0.3m +£0.0m -£0.5m Adjusted operating profit bridge +£1.6m SEA -£0.5m MASS EID -£0.6m Head office +£3.0m MCL ELAC 2022/23
Slide 22: Net Funds Bridge
Financial Review NET FUNDS BRIDGE +£2.1m +£0.1m -£12.6m Net purchase of +£5.0m own shares Depreciation +£11.0m Adjusted operating profit -£2.6m Working capital -£3.4m Capex 2021/22 Opening Net Funds -£0.2m -£0.6m Dividends Others H1 2022/23 Closing Net Funds Cohort plc Interim Results Presentation D
Slide 23: Chess Dynamics Trading History
Chess Dynamics is an innovative, well-respected surveillance, tracking and gunfire control specialist for military and commercial customers. Incorporating Vision4ce Software for surveillance, tracking & fire control systems hardware Chess’s military customers include defence forces and prime contrac
Slide 24: Chess Highlights
CHESS HIGHLIGHTS H1 23 H1 22 Revenue (£m) 19.1 5.9 Operating profit (£m) 0.3 (2.7) Operating margin 1.6% (45.8%) • Stronger first half, but weaker mix of revenue • Improved cash performance • Management team making significant improvements • Stronger revenue and improved profit expected for full yea
Slide 25: EID Trading History
EID is a Portuguese high-tech company with over 35 years’ experience and deep know-how in the increasingly critical fields of electronic tactical and naval communications, command and control (3C) equipment. The company’s focus is the design, manufacture, delivery and support of advanced high-perfor
Slide 26: EID Highlights
EID HIGHLIGHTS H1 23 H1 22 Revenue (£m) 2.0 2.6 Operating profit (£m) (0.9) (0.5) Operating margin (45.0%) (19.2%) • Disappointing first half • Key order from Portuguese Navy further delayed - expected in 2023 • Closing order book underpins £13m of H2 2022/23 revenue • Not expected to recover until
Slide 27: ELAC Trading History
ELAC SONAR is an innovative German company supplying global navies with advanced sonar systems and underwater communications, located in Kiel Germany. It works with navies, system integrators and shipyards to supply mission critical hydro-acoustic naval sensors - from fully-fledged submarine combat
Slide 28: ELAC Highlights
ELAC HIGHLIGHTS H1 23 H1 22 Revenue (£m) 8.9 10.7 Operating profit (£m) 0.9 1.5 Operating margin 10.1% 14.0% • Weaker mix first half • Some delays in Government export approvals, expected to ease 2023 • Order coverage >90% for 2022/23 • H1 2022/23 saw conclusion of adjustment mechanism from Wartsila
Slide 29: MASS Trading History
MASS is a global technology company, trusted by the most secure organisations to provide advanced, cyber hardened digital services centred around data, information and knowledge. MASS has built its reputation through decades in defence, providing training, electronic warfare and cyber security servi
Slide 30: MASS Highlights
MASS HIGHLIGHTS H1 23 H1 22 Revenue (£m) 17.3 19.1 Operating profit (£m) 4.0 3.7 Operating margin 23.1% 19.4% • Improved operating profit from stronger mix of work, despite fall in revenue • Delivery constraints from Covid-19 and redeployment of customer budgets due to geo-political situation • Well
Slide 31: MCL Trading History
Marlborough Communications Limited (MCL is a leading supplier of advanced electronic communications, information systems and signals intelligence technology to the defence and security sectors. The company has over 40 years’ experience in supporting the UK’s ISTAR programmes including signals intell
Slide 32: MCL Highlights
MCL HIGHLIGHTS H1 23 H1 22 Revenue (£m) 13.8 7.9 Operating profit (£m) 2.2 0.5 Operating margin 15.9% 6.3% • Very strong H1 • Greater activity in supplying equipment to UK MOD • Record order book of £24.8m and good pipeline of opportunities • High tempo of activity with UK MOD continues • Working on
Slide 33: SEA Trading History
SEA delivers products and services into the defence and transport markets, alongside performing specialist research and providing services including training and product support. SEA’s engineering capabilities cover a wide range of maritime mission systems requirements including communications, ship
Slide 34: SEA Highlights
SEA HIGHLIGHTS H1 23 H1 22 Revenue (£m) 16.4 13.9 Operating profit (£m) 1.2 1.2 Operating margin 7.3% 8.6% • Very strong order intake including key five-year order from UK Royal Navy • Pipeline from domestic and export remains robust • Expect stronger second half and delivering full year performance
Slide 35: Net Cash Flow
NET CASH FLOW Half Year ended 31 October 2022 2021 £m £m Adjusted operating profit 5.0 1.7 Working capital (12.6) 4.3 Depreciation and share based payments 2.4 2.3 Net funds inflow from operations (5.2) 8.3 Acquisition of JSK - (0.4) Capital expenditure (2.6) (0.6) Net purchase of own shares 0.1 (0.
Slide 36: Earnings Per Share
EARNINGS PER SHARE • 232.9% increase in adjusted earnings per share from 194.1% increase in adjusted operating profit • Reconciled as follows: Adjusted operating Adjusted earnings profit per share £m Pence 2021 October 1.7 3.04 Chess (81.84% owned) 3.0 6.05 EID (80% owned) (0.5) (0.98) ELAC (0.6) (1
Slide 37: Quarterly Profile of Group Revenue
QUARTERLY PROFILE OF GROUP REVENUE 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 % 2022/2023 Average % 40.0 37.2 35.0 30.0 27.5 25.0 21.1 21.5 20.0 15.0 10.0 5.0 0.0 Q1 Q2 Q3 Q4 Cohort plc Interim Results Presentation December 2022 37
Slide 38: Thank You
THANK YOU Cohort plc One Waterside Drive Arlington Business Park Theale Reading RG7 4SW www.cohortplc.com Cohort plc Interim Results Presentation December 2022 38