Cohort Plc · LSE:CHRT
Cohort — H1 2020/21 Earnings Presentation
40 slides from Cohort's earnings presentation, Dec 10, 2020
Slide 1: Results for the Six Months Ended 31 October 2020
RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2020 10 December 2020 Cohort plc Interim Results Presentation 10 December 2020
Slide 2: Highlights
HIGHLIGHTS Andy Thomis, Chief Executive Cohort plc Interim Results Presentation 10 December 2020
Slide 3: Impact & Mitigation of COVID-19
Introduction IMPACT & MITIGATION OF COVID-19 • Employee safety and wellbeing remains paramount Employees • We have adopted new ways of working to enable continued customer support • Limited impact to date Operations • Challenges in service delivery, customer acceptance and business development • Wel
Slide 4: Financial Highlights
Introduction FINANCIAL HIGHLIGHTS Adjusted Revenue Adjusted EPS Operating Profit Improved operating profit despite lower revenue £54.4m £4.3m 7.74p -10% +8% +12% (H1 19: £60.2m) (H1 19: £4.0m) (H1 19: 6.94p) Order intake Order book Revenue cover Strong order intake and improved revenue cover £89.2m
Slide 5: Operational Highlights
Introduction OPERATIONAL HIGHLIGHTS ELAC SONAR GmbH Limited impact from joined Group in COVID-19 on Group December 2020 business SEA returned Improved to profit after performance restructuring at MASS and EID Robust order intake including record orders for Chess Cohort plc Interim Results Presentati
Slide 6: Acquisition of Wärtsilä ELAC Nautik GmbH
ACQUISITION OF WÄRTSILÄ ELAC NAUTIK GmbH Cohort plc Interim Results Presentation 10 December 2020
Slide 7: Acquisition of Wärtsilä ELAC Nautik GmbH
Acquisition update ACQUISITION OF WÄRTSILÄ ELAC NAUTIK GmbH • Cohort’s sixth standalone subsidiary, completed 2 December 2020 • Renamed ELAC SONAR GmbH on acquisition • A leader in sonar systems for naval surface ships and submarines • Headquartered in Kiel, Germany, employing 130 people – managemen
Slide 8: Reasons for and Benefits of the Acquisition
Acquisition update REASONS FOR AND BENEFITS OF THE ACQUISITION • Enhances Cohort’s maritime defence system offering with market leading technology in high-growth sector • Opportunity to take advantage of strong submarine new build market, with growth in Asia and Europe • Naval export market in APAC
Slide 9: Financial Terms and Highlights of Acquisition
Acquisition update FINANCIAL TERMS AND HIGHLIGHTS OF ACQUISITION • Headline price is €11.25m for 100% shares, no earnout • Initial cash payment of €10.5m (£9.5m) • Funded from existing cash resources and £40m credit facility agreed in 2019 • Order book as at 31 October 2020 €26.0m, of which c.€12m f
Slide 10: Financial and Divisional Review
FINANCIAL AND DIVISIONAL REVIEW Simon Walther, Finance Director Cohort plc Interim Results Presentation 10 December 2020
Slide 11: Revenue & Adjusted Operating Profit Bridge
Financial Review REVENUE & ADJUSTED OPERATING PROFIT BRIDGE Revenue bridge £60.2m £0.4m - £54.4m -£2.4m -£1.4m -£2.4m Adjusted operating profit bridge £1.1m £4.3m £4.0m £0.8m £0.3m -£0.5m -£1.4m Cohort plc Interim Results Presentation 10 December 2020 11
Slide 12: Cash Bridge
Financial Review CASH BRIDGE £4.3m -£0.2m -£0.5m -£2.8m -£4.7m -£2.2m -£6.1m Opening net Adjusted Working capital Capex Dividend Other, including Closing net debt debt operating profit movement tax Cohort plc Interim Results Presentation 10 December 2020 12
Slide 13: Chess Highlights
Divisional Highlights CHESS HIGHLIGHTS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 13.9 1.8 11.5 MCL SEA CHESS 10.9 29.8 52.8 0.3 EID MASS 36.1 88.9 18 19 20 18 19 20 • Reduced revenue due to higher export counter-drone systems last year Financial • Lower profit due to higher bought
Slide 14: EID Highlights
Divisional Highlights EID HIGHLIGHTS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 6.0 0.3 4.7 MCL SEA CHESS 3.6 10.9 29.8 52.8 0.1 -0.2 EID MASS 36.1 18 19 20 88.9 18 19 20 • Operating profit improved due to mix of work Financial • Improved performance including higher naval systems a
Slide 15: MASS Highlights
Divisional Highlights MASS HIGHLIGHTS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 4.6 19.9 20.2 MCL SEA CHESS 16.0 3.7 10.9 29.8 52.8 2.2 EID MASS 36.1 88.9 18 19 20 18 19 20 • Operating profit better than 2019, with 22% net margin Financial • Benefitted from product mix • Improved m
Slide 16: MCL Highlights
Divisional Highlights MCL HIGHLIGHTS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 7.0 0.5 5.5 MCL SEA 4.7 CHESS 10.9 29.8 52.8 <0.1 <0.1 EID MASS 36.1 18 19 20 88.9 18 19 20 • Breakeven performance on slightly lower revenue Financial • Lower activity in supplying to UK MOD, particular
Slide 17: SEA Highlights
Divisional Highlights SEA HIGHLIGHTS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 14.3 0.8 MCL SEA CHESS 0.4 10.9 29.8 52.8 13.4 13.3 -0.3 EID MASS 36.1 88.9 18 19 20 17 18 19 • Adjusted operating profit of £0.8m on slightly lower revenue of £13.3m Financial • Return to profitability
Slide 18: Other Financial Items
Financial Review OTHER FINANCIAL ITEMS Income • Headline tax credit of £0.1m (2018: credit of £0.4m) Statement Balance • No goodwill impairment Sheet • €11.25m (£10.0m) paid for Wärtsilä ELAC Nautik GmbH out of cash & debt resources Payables • Estimated £4.0m payable on or before 31 October 2021 to
Slide 19: 2020/21 Modelling Guidance
Financial Review 2020/21 MODELLING GUIDANCE • Anticipate amortisation of £6.5m in 2020/21, £3.5m in 2021/22 Income and around £1.5m in each of the two years thereafter (stated pre-ELAC) Statement • Underlying tax rate of 16% (excluding RDEC) but still hold tax provisions • Operating cash inflow of <
Slide 20: Outlook & Prospects
OUTLOOK & PROSPECTS Andy Thomis, Chief Executive Cohort plc Interim Results Presentation 10 December 2020
Slide 21: Outlook for Growth
Outlook OUTLOOK FOR GROWTH Home markets • Low impact of COVID-19 on home market • UK defence spending boost expected in relevant areas for Group, including naval programmes, cyber, AI and directed energy • Cohort’s major programmes are stable, long term and operationally important Export markets • E
Slide 22: Investing for Organic Growth
Outlook INVESTING FOR ORGANIC GROWTH • Well-established private venture and customer-funded R&D activities • Group priorities include: – Anti-Submarine Warfare (ASW) – Next generation vehicle intercom system – Upgrades to naval communications system – High-definition surveillance – Machine learning
Slide 23: Order Book – Underpinning 2020/21 and Beyond
Outlook ORDER BOOK – UNDERPINNING 2020/21 AND BEYOND 250 218.5 10.9 200 52.8 150 29.9 £m 36 100 70.8 9.7 34.1 31.8 50.5 0.2 31.3 88.9 14.3 0.2 11.8 10.5 50 0.3 0.5 11.5 9.6 6.6 3.3 3.6 6.4 17.9 5.1 7.4 3.1 3.5 15.4 12 4.1 29.1 0 17.4 15 At 31 Oct 2020 H2 2020/21 H1 2021/22 H2 2021/22 2022/23 Later Y
Slide 24: 2020/21 Outlook & Summary
Outlook 2020/21 OUTLOOK & SUMMARY • Continuing COVID-19 restrictions having limited impact on Group • Order book stands at £218.5m, underpinning over £70m revenue in H2 • Cover of 92% (2019: 83%) of consensus forecast revenue for the full year • Second half weighting expected again this year • Good
Slide 25: Appendix
APPENDIX Cohort plc Interim Results Presentation 10 December 2020
Slide 26: Cohort Business Model
Financial Review 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 d
Slide 27: Quarterly Profile of Group Revenue
Financial Review QUARTERLY PROFILE OF GROUP REVENUE 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 % 2020/2021 50 Average % 45 40 35 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Cohort plc Interim Results Presentation 10 December 2020 27
Slide 28: Income Statement
Financial Review INCOME STATEMENT Half year ended 31 October 2020 2020 2019 to 31 to 31 October October £m £m Revenue 54.4 60.2 Gross profit 19.6 36.0% 21.0 34.9% Overhead (15.3) (17.0) 1 Adjusted operating profit 4.3 4.0 Exceptional items (1.1) - 1 Adjusted profit before interest and tax 3.2 4.0 Ne
Slide 29: Earnings per Share
Financial Review EARNINGS PER SHARE • 12% increase in adjusted earnings per share from 8% growth in adjusted operating profit • Reconciled as follows: Adjusted Adjusted operating earnings per profit share £m pence 2020 4.0 6.94 Weighted share capital movement - (0.03) Tax - (0.19) Chess (81.84% owne
Slide 30: Funds Flow
Financial Review FUNDS FLOW Six months ended 31 October 2020 2020 2019 £m £m Adjusted operating profit 4.3 4.0 Working capital (1.1) (0.3) Depreciation and share based payments 0.9 0.7 Net funds inflow from operations 4.1 4.4 Capital expenditure (0.5) (1.8) Net purchase of own shares - (0.7) Dividen
Slide 31: 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 32: Acquisition Strategy
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 susta
Slide 33: Acquisition Track Record
Financial Review 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 integr
Slide 34: Chess Dynamics
Chess Dynamics is an innovative, well-respected surveillance, tracking and gunfire control specialist for military and commercial customers. Chess’s military customers include defence forces and prime contractors in the UK and overseas for the naval and land sectors. Platforms: 39% Fire control, sur
Slide 35: EID
EID is a Portuguese high-tech company with 35 years’ experience and 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-performance 3C e
Slide 36: ELAC SONAR
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 s
Slide 37: MASS
MASS is a data technology company with over 35 years’ heritage serving the defence and security markets. Providing electronic warfare operational support, digital services and training support to military operations in the UK and to international customers. MASS’s core skill is enabling its customer
Slide 38: Marlborough Communications Limited
Marlborough Communications Limited 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 intelligenc
Slide 39: SEA
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, torp
Slide 40: Cohort plc contact details
Cohort plc One Waterside Drive Arlington Business Park Theale Reading RG7 4SW www.cohortplc.com Cohort plc Interim Results Presentation 10 December 2020 40