Cohort Plc · LSE:CHRT
Cohort — H1 2021/22 Earnings Presentation
38 slides from Cohort's earnings presentation, December 2021
Slide 1: Results for the Six Months Ended 31 October 2021
RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2021 Andrew Thomis & Simon Walther December 2021
Slide 2: Highlights
HIGHLIGHTS Andy Thomis, Chief Executive Cohort plc Interim Results Presentation December 2021
Slide 3: Financial Highlights
Introduction FINANCIAL HIGHLIGHTS Order intake Order book Revenue cover Strong order intake giving a record closing order book £105.3m £285.8m 89% +18% +31% (H1 21: £89.2m) (H1 21: £218.5m) (2020/21: 92%) Interim Operating cash flow Net funds dividend Better than expected net funds; dividend increas
Slide 4: Operational Overview
Introduction OPERATIONAL OVERVIEW Chess performance EID was also weaker than weaker as expected expected ELAC positive H1, Stronger work underway performances on large from Italian Navy MCL and SEA contract win MASS largest contributor, albeit behind last year Cohort plc Interim Results Presentation
Slide 5: Disappointing H1 – But Positive Medium Term Outlook
Introduction DISAPPOINTING H1 – BUT POSITIVE MEDIUM TERM OUTLOOK Chess weaker • Considerably weaker performance due to misses against our expectations than expected • Chess most impacted by COVID-19 restrictions causing delays Reduction in • The issues at Chess have reduced our full year expectation
Slide 6: Financial and Divisional Review
FINANCIAL AND DIVISIONAL REVIEW Simon Walther, Finance Director Cohort plc Interim Results Presentation December 2021
Slide 7: Revenue & Adjusted Operating Profit Bridge
Financial Review REVENUE & ADJUSTED OPERATING PROFIT BRIDGE Revenue bridge £m Adjusted operating profit bridge £m Cohort plc Interim Results Presentation December 2021 7
Slide 8: Cash Bridge
Financial Review CASH BRIDGE Opening net Adjusted Working capital Capex Dividend Other, including Closing net funds funds operating profit movement tax Cohort plc Interim Results Presentation December 2021 8
Slide 9: Chess
Divisional Overview CHESS Revenue (£m) Adjusted Operating Profit/(Loss) Order Book (£m) 13.9 (£m) 11.5 CHESS SEA 42.6 67.5 EID 5.9 1.8 0.3 MCL 25.8 (2.7) 13.0 ELAC MASS 55.9 19 20 21 81.1 19 20 21 • Considerably weaker first half performance • Against our expectations (revenue impact): • Delays to o
Slide 10: Chess – Actions Taken
Divisional Overview CHESS – ACTIONS TAKEN Revenue (£m) Adjusted Operating Profit/(Loss) Order Book (£m) 13.9 (£m) 11.5 CHESS SEA 42.6 67.5 EID 5.9 1.8 0.3 MCL 25.8 (2.7) 13.0 ELAC MASS 55.9 19 20 21 81.1 19 20 21 • Organisation and people changes in place • Strengthened top leadership team • Full in
Slide 11: EID
Divisional Overview EID Revenue (£m) Adjusted Operating Profit / Order Book (£m) Loss (£m) 6.0 4.7 CHESS SEA 42.6 67.5 EID 2.6 0.3 25.8 MCL 0.1 (0.5) 13.0 ELAC MASS 55.9 19 20 21 19 20 21 81.1 • Weaker performance albeit better than expected • Important domestic and export orders further delayed – n
Slide 12: ELAC Sonar
Divisional Overview ELAC SONAR Revenue (£m)* Adjusted Operating Profit (£m)* Order Book (£m) 10.7 CHESS SEA 42.6 67.5 EID 25.8 1.5 MCL 13.0 ELAC MASS 55.9 19 20 21 19 20 21 81.1 *ELAC Sonar has been part of Cohort since December 2020 • Good first H1 contribution • Order intake includes €49m order fr
Slide 13: MASS
Divisional Overview MASS Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 19.9 20.2 19.1 CHESS SEA 42.6 4.6 67.5 EID 3.7 3.7 25.8 MCL 13.0 ELAC MASS 55.9 19 20 21 19 20 21 81.1 • Remains strongest contributor to Group profit • Operating profit below 2020 with lower net margin due to COVID
Slide 14: MCL
Divisional Overview MCL Revenue (£m) Adjusted Operating Profit (£m) Order Book (£m) 7.9 7.0 0.5 CHESS 0.4 SEA 4.7 42.6 67.5 EID 25.8 MCL < 0.1 13.0 ELAC MASS 55.9 19 20 21 19 20 21 81.1 • Stronger performance reflecting improved UK market • Specifically in autonomous vehicles • High level of bidding
Slide 15: SEA
Divisional Overview SEA Revenue (£m) Adjusted Operating Profit/(Loss) Order Book (£m) 13.4 13.3 13.8 (£m) CHESS SEA 42.6 1.2 67.5 EID 0.8 - 0.3 25.8 MCL 19 20 21 13.0 ELAC MASS 55.9 19 20 21 81.1 • Stronger performance following good order intake last year • Margin mix improved on 2020 with Torpedo
Slide 16: Other Financial Items
Financial Review OTHER FINANCIAL ITEMS Income • ELAC profit includes £0.6m income from Wärtsilä as relief for costs carried by the Statement business in anticipation of an order that has been delayed Balance • No goodwill impairment Sheet Payables • Expect to acquire remaining shares in Chess during
Slide 17: 2021/22 Modelling Guidance
Financial Review 2021/22 MODELLING GUIDANCE • Anticipate full year amortisation of £6.9m in 2021/22, £3.6m in 2022/23, £3.1m in Income 2023/24 and around £1.0m in each of the two years thereafter Statement • Underlying tax rate of 14% (excluding RDEC) but still hold tax provisions • Operating cash i
Slide 18: Outlook & Prospects
OUTLOOK & PROSPECTS Andy Thomis, Chief Executive Cohort plc Interim Results Presentation December 2021
Slide 19: Outlook for Growth
Outlook OUTLOOK FOR GROWTH Domestic markets • UK defence spending boost has already benefitted Group, with delayed programmes now showing momentum • Portuguese General Election in January 2022 • Cohort businesses major programmes are stable, long term and operationally important Export markets • Exp
Slide 20: Order Book – Underpinning 2021/22 and Beyond
Outlook ORDER BOOK – UNDERPINNING 2021/22 AND BEYOND 350 300 285.8 13 250 42.6 200 67.4 £m 150 25.8 0.1 70.4 98.5 55.9 11 100 74.4 1.5 11 11.2 42.5 25.1 15.3 20.5 0.4 5.1 50 81.1 6.6 14.2 7.1 7.6 7.4 10.6 4.7 28.4 10.8 6.1 19.5 18.6 27.3 0 15.7 At 31 Oct 2021 H2 2021/22 2022/23 2023/24 Later Years M
Slide 21: Order Book Evolution at Half Year
Outlook ORDER BOOK EVOLUTION AT HALF YEAR 350 300 285.8 250 218.5 206.7 200 £m 150 132.1 108.7 100 50 0 2017 2018 2019 2020 2021 Year 1 H2 Year 2 Year 3 Year 4+ Cohort plc Interim Results Presentation December 2021 21
Slide 22: 2021/22 Outlook & Summary
Outlook 2021/22 OUTLOOK & SUMMARY • Weaker first half performance and order intake for Chess • Continuing impact from COVID-19 restrictions • Record order book of £285.8m, underpinning £74m of revenue in H2 • Increased order book longevity and good pipeline of order opportunities • 10% dividend incr
Slide 23: Appendix
APPENDIX Cohort plc Interim Results Presentation December 2021
Slide 24: 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 25: Quarterly Profile of Group Revenue
Financial Review QUARTERLY PROFILE OF GROUP REVENUE 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 50 Average % 45 40 35 % 30 25 20 15 10 5 0 Q1 Q2 Q3 Q4 Cohort plc Interim Results Presentation December 2021 25
Slide 26: Income Statement
Financial Review INCOME STATEMENT Half year ended 31 October 2021 2021 2020 to 31 to 31 October October £m £m Revenue 60.1 54.4 Gross profit 21.1 35.1% 19.6 36.0% Overhead (19.4) (15.3) 1 Adjusted operating profit 1.7 4.3 Exceptional items 0.3 1.1 1 Adjusted profit before interest and tax 2.0 3.2 Ne
Slide 27: Earnings Per Share
Financial Review EARNINGS PER SHARE Adjusted Adjusted operating earnings per profit share £m pence 2021 4.0 6.94 Weighted share capital movement - (0.02) Tax - (0.20) Chess (81.84% owned) (1.5) (3.38) EID (80% owned) 0.3 (0.98) ELAC - 1.5 100% owned businesses (includes interest) 1.5 (2.19) 4.3 3.04
Slide 28: Funds Flow
Financial Review FUNDS FLOW Six months ended 31 October 2021 2021 2020 £m £m Adjusted operating profit 1.7 4.3 Working capital 6.3 (1.1) Depreciation and share based payments 1.1 0.9 Net funds inflow from operations 9.1 4.1 Capital expenditure (0.6) (0.5) Net purchase of own shares (0.1) - Dividends
Slide 29: 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 30: 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 31: 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 32: 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: 68% Fire control, sur
Slide 33: 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 34: 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 35: 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 36: Marlborough Communications
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 37: 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 38: Cohort plc contact details
Cohort plc One Waterside Drive Arlington Business Park Theale Reading RG7 4SW www.cohortplc.com Cohort plc Interim Results Presentation December 2021