£220.8m market cap

550p last close

Cohort is an AIM-listed defence and security company operating across five divisions: MASS (32% of FY19 sales), SEA (32%), MCL (18%), the 80%-owned Portuguese business EID (9%) and the recently acquired 81%-owned Chess Technologies based in the UK (c five months 9%).

Investment summary

Cohort again delivered growth in FY19 alongside a record order intake of £190m, better then expected cash performance and an 11% dividend increase. MCL, MASS and SEA all delivered strong profit growth and Chess made a better than expected initial contribution. The order backlog increased to £210m at the end of August and with subsequent intake now covers 76% of FY20 sales. EID should improve and Chess adds a full year contribution. We expect a relatively neutral cash flow this year and strengthening in FY21. The discount to UK defence peers looks unwarranted.

Y/E Apr
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 110.5 16.3 15.1 29.1 18.5 13.5
2019A 121.2 17.3 15.9 33.6 16.0 19.1
2020E 145.7 21.0 18.6 35.7 15.1 24.2
2021E 153.9 22.3 19.9 39.2 13.8 8.1
Industry outlook

Cohort is heavily influenced by activities in defence and security (89% of FY18 sales). These markets require highly differentiated technologies and services with high barriers to entry based on customer relationships, regulation and high-level security clearances. The UK government’s commitment to spend at least 2% of GDP on defence provides greater confidence, as does the parliamentary approval for the replacement of Trident.

Last updated on 05/11/2019
Share price graph
Balance sheet
Forecast net debt (£m) 6.8
Forecast gearing ratio (%) 8
Price performance
Actual 1.1 21.1 35.6
Relative* 2.9 25.4 32.6
52-week high/low 539.0p/354.0p
*% relative to local index
Key management
Nick Prest Chairman
Andrew Thomis CEO
Simon Walther FD

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