Record year delivered despite pandemic

Cohort 28 July 2020 Update
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Cohort

Record year delivered despite pandemic

FY20 results

Aerospace & defence

28 July 2020

Price

600p

Market cap

£246m

Net debt (£m) at 30 April 2020

4.7

Shares in issue

41.0m

Free float

72%

Code

CHRT

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

11.1

17.7

35.6

Rel (local)

11.9

12.0

65.3

52-week high/low

729.0p

432.5p

Business description

Cohort is an AIM-listed defence and security company operating across five divisions: MASS (31% of FY20 sales), SEA (24%), MCL (11%), the 80%-owned Portuguese business EID (14%), and the 81%-owned Chess Technologies based in the UK (19%).

Next events

AGM

15 September 2020

Analyst

Andy Chambers

+44 (0)20 3681 2525

Cohort is a research client of Edison Investment Research Limited

Cohort has reported FY20 results with no major surprises following the close period trading update in May. Despite some COVID-19 impact in Q420 in terms of customer orders and delivery acceptances, sales increased 8%, generating double-digit improvements in adjusted operating profit and EPS, all of which represent record levels for the group. While the immediate outlook remains subject to pandemic effects, management expects to deliver FY21 performance in line with FY20.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

04/19

121.2

15.9

33.6

9.1

17.9

1.5

04/20

131.1

17.5

37.1

10.1

16.2

1.7

04/21e

137.1

17.6

35.4

11.1

17.0

1.9

04/22e

143.9

18.8

37.7

12.2

15.9

2.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Strategy delivers growth

Cohort delivered FY20 results in line with expectations following the recent closing trading update. Revenues grew by 8% to £131.1m with adjusted operating profit rising 12.7% to £18.2m (FY19 £16.2m). The MASS division had a record year and Chess performed better than plan, with EID recovering strongly. MCL was lower following a strong FY19 and SEA is optimising costs to reflect anticipated activity levels. Management estimates that COVID-19 deferred group sales of some £3m due to more cautious delivery acceptances and slower order processing by customers, reducing adjusted operating profit by £1m. There were some positives such as accelerated payment terms from the MOD that benefited cash flow, which was slightly better than the company expected with year-end net debt of £4.7m excluding leases. Adjusted EPS rose 10% to 37.1p. The final dividend was increased by 11%, giving a full year payment of 10.1p, in line with our expectations.

Order cover underpins visibility

Following order intake of £124.4m (FY19 £189.8m), the year-end order book stood at £183.3m, 4% lower than at the start of the year. Orders for delivery in FY21 cover 62% (FY19 55%) of market consensus sales expectations of £136m, which has increased to 75% following £50m of orders received since start of FY21. Management expects performance in FY21 to be in line with FY20, with COVID-19 restrictions still constraining some activity, especially for export markets. Nevertheless, Cohort is executing its growth strategy. The €11.25m ELAC purchase should now complete before the end of September and appears to be financially compelling, further enhancing FY21 growth prospects.

Valuation: ELAC should create further value

The average of our DCF and peer group SOP valuation generates a fair value of 606p, which is aligned with the share price. Our expectation that ELAC should immediately enhance returns is yet to be reflected in the rating. Cohort trades on an FY22e P/E of 15.9x, broadly in line with its UK defence peers.

Cohort grows to record levels in FY20

Cohort delivered another year of growth in FY20 despite some impact of COVID-19 in the final quarter, which in sales terms is normally the strongest quarter for the businesses. COVID-19-related factors including lockdowns delayed some customer acceptance and deferred new order processes. Management estimated these caused a slip of £3m of revenues and £1m of adjusted operating profit into FY21. Despite the pandemic, Cohort delivered record sales, adjusted operating profit and adjusted EPS in FY20, the key highlights of which are summarised in Exhibit 1.

Exhibit 1: Cohort

Year to April (£m)

2019

2020

% change

Revenue

MASS

38.9

41.1

5.6

SEA

38.3

31.7

(17.3)

MCL

21.7

15.1

(30.6)

EID

11.5

18.0

56.3

Chess

10.7

25.2

135.7

Total revenue

121.2

131.1

8.2

Adjusted operating profit

MASS

8.2

8.9

9.0

SEA

5.5

3.5

(35.7)

MCL

2.3

1.7

(27.3)

EID

1.4

3.1

129.0

Chess

1.7

3.9

133.2

HQ & Other

(2.8)

(2.9)

3.2

Total adjusted operating profit

16.2

18.2

12.7

Finance costs

(0.3)

(0.8)

179.6

Adjusted PBT

15.9

17.5

9.9

Tax expense

(2.6)

(2.2)

(12.6)

Minorities

0.4

(0.1)

n.m.

Adjusted net income

13.7

15.1

10.4

Adjusted EPS (p)

33.6

37.1

10.4

DPS (p)

9.1

10.1

11.0

Net cash/ (debt) (excludes lease liabilities)

(6.4)

(4.7)

(26.7)

Source: Company reports

The key features of the FY20 results are:

Reported closing order book of £183.3m reflected a continued good level of order intake with a FY20 book to bill ratio of 0.95x for the group despite some orders slipping from Q4 into FY21. The previous year (FY19) saw record levels of both order intake and backlog, which included some £70m of contract renewals. The new financial year has started strongly with over £50m of new orders booked so far.

Reported revenues were £131.1m (FY19 £121.2m), which was broadly in line with our expectations that we revised down following the period-end trading statement in May, reflecting the initial COVID-19 issues.

Reported adjusted operating profit was £18.2m (FY19 £16.2m), an increase of 13%, in line with market expectations and slightly above our own estimate.

Reported adjusted EPS was 10.4% higher at 37.1p (FY19 33.6p), both of which exclude research and development tax credits, which we treat as exceptional.

Reported DPS was 10.1p (FY18 9.1p), an 11.0% increase in line with the group’s progressive dividend policy and continuing the positive track record since flotation in 2006.

Year-end net debt (excluding lease liabilities) was slightly better than expected at £4.7m (FY19 £6.4m), partially reflecting accelerated invoice payments by the UK MOD to support suppliers during the pandemic. More normal payment terms should resume by H221.

Defence and security revenue accounted for 90% (FY19 88%) of the group total in FY20. The increase is more than accounted for by the £14.5m incremental sales from the full-year contribution of Chess, compared to just five months in FY19. Defence and security sales can be split further by customer and market segment, as shown in Exhibits 2 and 3. Overall group revenues were split 57:43 between products and provision of services.

Exhibit 2: FY20 defence and security revenue (£118.1m) by market segment, % of group sales

Exhibit 3: FY20 defence and security revenue (£118.1m) by end customer, % of group sales

Source: Cohort

Source: Cohort

Exhibit 2: FY20 defence and security revenue (£118.1m) by market segment, % of group sales

Source: Cohort

Exhibit 3: FY20 defence and security revenue (£118.1m) by end customer, % of group sales

Source: Cohort

Divisional summaries

MASS

Exhibit 4: MASS FY20 revenue split by activity, £41.1m

Exhibit 5: MASS order book run off, FY20 backlog £91.2m

Source: Cohort

Source: Cohort

Exhibit 4: MASS FY20 revenue split by activity, £41.1m

Source: Cohort

Exhibit 5: MASS order book run off, FY20 backlog £91.2m

Source: Cohort

Sales rose by 5% in FY20 to record levels of £41.1m (FY19 £39.0m) and adjusted operating profit increased 9% to £8.9m (FY19 £8.2m), a margin of 21.7% (FY19 21.0%). The export-oriented electronic warfare operational support business was broadly flat year on year, with divisional sales growth driven by two long-term support contracts for the UK MOD. One was renewed last year and the further two-year extension of the Joint Forces Command support contract (JCAST) worth £11m was announced in July 2020. MASS has provided the service for 15 years and the extension includes three further one-year extension options. The order backlog did fall from record levels as the company started to work through the record FY19 order backlog. However, order cover for the current year now stands at almost 90%. We expect MASS to make further progress in FY21.

SEA

Exhibit 6: SEA FY20 revenue split by activity, £31.7m

Exhibit 7: SEA order book run off, FY20 backlog £33.6m

Source: Cohort

Source: Cohort

Exhibit 6: SEA FY20 revenue split by activity, £31.7m

Source: Cohort

Exhibit 7: SEA order book run off, FY20 backlog £33.6m

Source: Cohort

SEA’s revenues fell by 17% to £31.7m (FY19 £38.3m) as a result of expected naval export order deferrals which slipped into FY21. There was however a disproportionate drop through to adjusted operating profit which was 36% lower at £3.3m (FY19 £5.3m). While SEA’s opening order book of £33.6m is significantly better than at the start of FY20, and provides just under 50% sales cover for FY21, the structure of the orders is shorter term than the historic norm. To optimise costs to anticipated activity levels management has implemented a further restructuring programme that should complete by the end of July 2020 at a cost of £0.7m with annual savings of £1.3m.

There are some encouraging signals for the medium to long term, with submarine systems revenues expected to start to recover in FY21 driven by the UK Dreadnought programme, as well as a growing workload on the Australian submarine programme. The drop in SEA’s revenues can almost entirely be attributed to the decline in sales for the submarine segment from a peak in 2016. In addition, the level of research activity is picking up (FY20 sales £5.2m) and this is expected to continue with a growing proportion of naval research work.

Chess

Exhibit 8: Chess FY20 revenue split by activity, £25.2m

Exhibit 9: Chess order book run off, FY20 backlog £13.4m

Source: Cohort

Source: Cohort

Exhibit 8: Chess FY20 revenue split by activity, £25.2m

Source: Cohort

Exhibit 9: Chess order book run off, FY20 backlog £13.4m

Source: Cohort

Chess was acquired in December 2018. Its first full-year contribution in FY20 was ahead of plan, with like-for-like sales growth after a strong initial five-month contribution in FY19. Revenues of £25.2m compared to £22.9m in the 12 months to April 2019. The performance was driven by higher sales of naval systems to UK and overseas export customers. Adjusted operating profit was £3.9m, a margin of 15.6%. While the order backlog of £13.4m represents a significant reduction on the FY19 level, it has been boosted since the year end by a substantial order intake of over £27m, providing over 80% cover for FY21 consensus sales expectations. Management expects the division’s performance in the current year to be similar to FY20.

EID

Exhibit 10: EID FY20 revenue split by activity, £18.0m

Exhibit 11: EID order book run off, FY20 backlog £36.5m

Source: Cohort

Source: Cohort

Exhibit 10: EID FY20 revenue split by activity, £18.0m

Source: Cohort

Exhibit 11: EID order book run off, FY20 backlog £36.5m

Source: Cohort

Following a disappointing FY19, EID saw a strong recovery, with sales improving 56% to £18.0m (FY19 £11.5m). Revenues for the Portuguese Ministry of National Defence more than doubled and accounted for over 50% of sales. The growth was achieved despite EID accounting for around 50% of the overall COVID-19 impact with some £1.5m of revenues deferred into FY21.The operational leverage led to an adjusted operating profit of £3.1m (FY19 £1.3m) a margin of 17.8% (FY19 11.8%), returning to management’s long-term expectation. The order book rose 46% to £36.5m providing over 90% order cover for FY21 sales. Management expects some key domestic Portuguese orders in the current year as well as further export orders.

MCL

Exhibit 12: MCL FY20 revenue split by activity, £15.1m

Exhibit 13: MCL order book run off, FY20 backlog £8.6m

Source: Cohort

Source: Cohort

Exhibit 12: MCL FY20 revenue split by activity, £15.1m

Source: Cohort

Exhibit 13: MCL order book run off, FY20 backlog £8.6m

Source: Cohort

Following a strong year in FY19 MCL experienced a more challenging year as deliveries of hearing protection systems and for UK submarine programmes did not repeat. There were also some delays to anticipated orders and changes to customer plans that resulted in a 31% decline in sales to £15.1m. Adjusted operating profit fell to £1.7m although the margin improved slightly to 11.0% (FY19 10.5%). Management continues to make efforts to lengthen the order book which at £8.6m provides limited visibility. It is currently pursuing larger and longer-term support opportunities for the Royal Navy. Order cover is similar to FY20 at just under 40% and management indicates a better anticipated level of near-term opportunities.

Exhibit 14: Cohort divisional analysis

Year end 30 April (£m)

2018

2019

2020

2021e

2022e

MASS

37.6

38.9

41.1

41.5

44.0

SEA

37.3

38.3

31.7

34.6

35.6

MCL

17.4

21.7

15.1

15.5

16.0

EID

18.3

11.5

18.0

18.6

19.5

Chess

0.0

10.7

25.2

26.9

28.8

Group revenues

110.5

121.2

131.1

137.1

143.9

MASS

7.1

8.2

8.9

9.0

9.5

SEA

4.4

5.5

3.5

3.8

4.0

MCL

2.1

2.3

1.7

1.7

1.8

EID

4.3

1.4

3.1

3.2

3.4

Chess

0.0

1.7

3.9

3.8

4.0

HQ Other and intersegment

-2.7

-2.8

-2.9

-3.0

-3.0

Adjusted operating profit

15.2

16.2

18.2

18.5

19.7

Adjusted operating margin (%)

MASS

18.9%

21.0%

21.7%

21.7%

21.7%

SEA

11.8%

14.3%

11.1%

11.1%

11.1%

MCL

11.9%

10.5%

11.0%

11.0%

11.0%

EID

23.6%

11.8%

17.2%

17.2%

17.2%

Chess

15.8%

15.6%

14.0%

14.0%

Group

13.8%

13.3%

13.9%

13.5%

13.7%

Source: Company reports, Edison Investment Research

Outlook for FY21

Exhibit 15: Cohort divisional order intake and backlog

Year end 30 April (£m)

FY18

FY19

FY20

FY20/FY19
% change

Order intake

MASS

29.1

97.0

33.5

-65.5%

SEA

27.0

36.7

34.7

-5.4%

MCL

12.1

26.0

9.1

-65.0%

EID

8.4

18.9

29.3

55.0%

Chess

11.3

17.8

57.5%

Total order intake

76.6

189.9

124.4

-34.5%

Order book

MASS

40.9

98.8

91.2

-7.7%

SEA

33.6

31.1

33.6

8.0%

MCL

10.3

14.6

8.6

-41.1%

EID

19.0

25.6

36.5

42.6%

Chess

-

20.8

13.4

-35.6%

Total order book

103.8

190.9

183.3

-4.0%

Source: Company reports

The year-end order book of £183.3m was 4% lower than the previous year’s record level. Order intake remained relatively robust considering the £70m of contract renewals booked in FY19. MASS notably booked a long-term £50m UK MOD support contract renewal in H219 which it is now trading, as reflected by its lower backlog. The book to bill ratio for the group was 0.95x.

Of the group backlog, £84.5m is expected to be delivered in FY21, providing 62% cover for the consensus sales expectation of c £136m, well above the prior year level of 55%.

Exhibit 16: Cohort year end order backlog run off by division

£m

MASS

EID

SEA

Chess

MCL

Group

Backlog at 30 April 2020

91.2

36.5

33.6

13.4

8.6

183.3

To be delivered in:

H121

15.1

4.6

12.2

7.2

6

45.1

H221

12.5

15.6

6.2

3.6

1.5

39.4

FY21

27.6

20.2

18.4

10.8

7.5

84.5

FY22

21.6

5.5

7.5

1.1

0.4

36.1

FY23

17.7

3.7

5.9

1.3

0.1

28.7

Later years

24.3

7.1

1.8

0.2

0.6

34.0

Source: Cohort

In addition, the order intake in Q121 has been strong, with over £50m of orders booked since the start of the financial year including:

£20m surveillance system for Northern Europe for Chess.

£7m C-UAS system for an international customer for Chess.

£11m JCAST contract extension for MASS.

£12m+ of smaller orders.

As a result, the order cover currently stands at 75% for the group. Management expects FY21 revenues to be split 40:60 between H121 and H221.

As well as the orders already booked, there is an encouraging pipeline of additional prospects that includes:

£20m+ naval systems opportunity at Chess.

€20m of domestic opportunities at EID.

Multiple major prospects for Torpedo Launcher and Krait at SEA.

In line with its agile growth strategy management continues to invest in organic growth and target value-enhancing acquisition opportunities both in the UK and overseas. In FY21 £2.9m was spent on self-funded R&D. The divisional focus on projects is

SEA – further development of Krait array and Krait Defence System.

EID – new generation vehicle intercom and high security naval comms.

MASS – new software and training capabilities including NEWTS and CounterworX products.

Chess – artificial intelligence for automated target identification.

MCL is looking at long-term business expansion by new applications of existing skills for the Royal Navy.

Proposed purchase of ELAC

One impact of the pandemic has been the delay to regulatory processes. It has resulted in the longer than anticipated approval process of the German government for the proposed €11.25m acquisition of ELAC Nautik (ELAC) from Wärtsilä, first announced on 12 December 2019. Completion is now expected to be before the end of September.

ELAC develops and supplies sonar systems technology for naval surface ships and submarines and is complementary to Cohort’s other naval capabilities, notably at SEA. It also extends the group’s customer base and global reach, as well as establishing a presence in the German defence market. The company brings with it significant cash balances that will offset a major proportion of the cash cost, so the impact on net debt will be more modest than the purchase price suggests. However, in common with other defence contractors, ELAC has contract bonds and guarantees that do impinge on the availability of cash from a liquidity perspective, reducing available headroom.

As a reminder (see our note of December 2019) the deal should be financially compelling, directly enhancing EPS and allowing for some drawdown on the credit facility creating value quickly following completion. For the year ended 31 December 2018, ELAC generated revenues of €20.7m and EBIT of €1.4m, with growth expected for both in the year to 31 December 2019. The order book at 31 October 2019 stood at €26.4m, of which €20m is due for delivery in 2020, with a tail to 2025. We expect updated numbers to be provided on completion.

Debt and liquidity

FY20 results were the first to implement IFRS 16, with £7.5m of leases and £6.0m of right of use assets added to the balance sheet. The change in accounting treatment reduced profit before tax by a mere £50k, although cash flow is unaffected.

Net debt of £4.7m was better than expected partially due to accelerated invoice settlement terms by the UK MOD aimed at supporting its suppliers’ cash performance as COVID-19 took hold. The robust balance sheet leaves some £35m of available liquidity, with £20m of gross cash and around £15m of the £40m four-year revolving credit facility (RCF) remaining undrawn. The RCF was increased by £10m in May 2020 and expires in November 2022, with an option to extend to November 2023.

Revisions to estimates

In aggregate the changes to our earnings estimates are relatively small and are shown in the table below. We also introduce our FY22 estimates.

Exhibit 17: Cohort earnings estimates revisions

Year and 30 April (£m)

2020e

2020

 

2021e

2021e

 

2022e

 

Prior

Actual

% change

Prior

New

% change

New

MASS

38.2

41.1

7.8%

39.7

41.5

4.6%

44.0

SEA

32.6

31.7

(2.7)%

33.2

34.6

4.0%

35.6

MCL

19.3

15.1

(22.1)%

19.9

15.5

(22.1)%

16.0

EID

17.9

18.0

0.8%

18.4

18.6

0.8%

19.5

Chess

25.0

25.2

0.6%

26.8

26.9

0.6%

28.8

Total group

132.9

131.1

(1.4)%

138.0

137.1

(0.7)%

143.9

 

 

 

 

 

 

 

EBITDA

20.1

20.9

3.7%

20.8

21.1

1.2%

22.2

 

 

 

 

 

 

 

MASS

7.4

8.9

19.8%

7.7

9.0

16.3%

9.5

SEA

4.5

3.5

(22.0)%

4.6

3.8

(16.6)%

4.0

MCL

1.9

1.7

(10.5)%

1.9

1.7

(10.5)%

1.8

EID

3.2

3.1

(3.4)%

3.3

3.2

(3.4)%

3.4

Chess

3.6

3.9

 

3.7

3.8

 

4.0

HQ, other and intersegment

(2.8)

(2.9)

4.1%

(2.8)

(3.0)

7.1%

(3.0)

Adjusted operating profit

17.9

18.2

2.0%

18.5

18.5

0.0%

19.7

 

 

 

 

 

 

 

Adjusted PBT

16.8

17.5

3.9%

17.6

17.6

0.0%

18.8

 

 

 

 

 

 

 

EPS - adjusted continuing (p)

34.9

37.1

6.3%

35.3

35.4

0.1%

37.7

DPS (p)

10.1

10.1

0.0%

11.1

11.1

0.0%

12.2

Net cash/(debt)

(5.3)

(4.7)

(11.7)%

(5.0)

(4.2)

(17.4)%

5.1

Source: Company reports, Edison Investment Research

Valuation: A more appropriate rating

We calculate our fair value based on a simple average of a sum-of-the-parts calculation and a capped DCF. Currently this stand at 606p, before any benefit from the proposed ELAC acquisition.

Our sum-of-the-parts valuation based on the calendar year 2021 performance produces a value of 608p per share. It uses relative valuations to UK defence peers for each division.

Exhibit 18: Sum-of-the-parts valuation- calendar year 2021 basis

 

EBITA
(£m)

Tax
(%

NOPAT
(£m)

P/E
(x)

Value (£m)

Notes

MASS

9.4

15.0%

8.0

15.3

122

Average of 15% premium to BAE Systems (11.9x), in line with Ultra (15.9x),10% discount to Cobham (17.6x) and 10% premium to QinetiQ (14.5x)

SEA

3.9

15.0%

3.3

15.7

52

Average of Ultra (15.9x) and QinetiQ (14.5x)

MCL

1.7

15.0%

1.5

15.0

22

Average of Ultra (15.9x) and 20% to BAE Systems (11.9x)

EID

3.3

15.0%

2.8

15.7

44

Average of QinetiQ (14.5x) and Ultra (15.9x)

Chess

3.9

15.0%

3.4

16.3

55

In line with Ultra

Less minority interest

-13

£4m earn out value plus 20% EID minorityRIF

Less head office costs

-30

Calendarised central costs (13.0x P/E)

EV

252

Net cash

-5

FY20 net debt

Equity value

248

Shares in issue

40.7

Implied value/share (p)

 

 

 

 

608

 

Source: Edison Investment Research

Our capped DCF valuation methodology currently returns a value of 604p. The calculated WACC is marginally above 7.5% reflecting a cost of equity of 8% and modest debt levels. We assume no growth in the terminal cashflow value and normalise capex to depreciation with no working capital movements to reflect the static growth assumed. The sensitivity to various WACC and terminal growth rates is shown in the table below.

Exhibit 19: Cohort capped DCF sensitivity to WACC and terminal growth (p/share)

WACC

6.0%

6.5%

7.0%

7.5%

7.5%

8.0%

8.5%

9.0%

Terminal growth rate

0%

779

712

656

607

604

564

526

492

1%

785

718

661

611

609

568

530

496

2%

791

723

666

616

613

572

534

499

3%

797

729

671

620

618

576

537

503

Source: Edison Investment Research


Exhibit 20: Financial summary

£m

2019

2020

2021e

2022e

Year end 30 April

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

121.2

131.1

137.1

143.9

Cost of Sales

(78.1)

(80.0)

(83.7)

(87.8)

Gross Profit

43.0

51.0

53.4

56.0

EBITDA

 

 

17.3

20.9

21.1

22.2

Operating Profit (before amort. and except.)

 

16.2

18.2

18.5

19.7

Intangible Amortisation

(9.5)

(7.4)

(6.8)

(3.5)

Exceptionals

(0.7)

(0.1)

0.0

0.0

Other

0.0

0.0

0.0

0.0

Operating Profit

5.9

10.7

11.7

16.2

Net Interest

(0.3)

(0.8)

(0.9)

(0.9)

Profit Before Tax (norm)

 

 

15.9

17.5

17.6

18.8

Profit Before Tax (FRS 3)

 

 

5.7

10.0

10.8

15.3

Tax

(0.6)

(0.3)

(1.8)

(2.0)

Profit After Tax (norm)

13.3

15.2

15.0

15.9

Profit After Tax (FRS 3)

5.1

9.7

9.0

13.2

Average Number of Shares Outstanding (m)

40.7

40.7

40.8

40.8

EPS - fully diluted (p)

 

 

33.4

36.7

35.0

37.3

EPS - normalised (p)

 

 

33.6

37.1

35.4

37.7

EPS - (IFRS) (p)

 

 

13.4

23.5

21.1

31.1

Dividend per share (p)

9.1

10.1

11.1

12.2

Gross Margin (%)

35.5

38.9

38.9

38.9

EBITDA Margin (%)

14.3

15.9

15.4

15.5

Operating Margin (before GW and except.) (%)

13.3

13.9

13.5

13.7

BALANCE SHEET

Fixed Assets

 

 

72.9

74.3

68.8

66.5

Intangible Assets

61.9

55.3

48.5

45.0

Tangible Assets

11.0

12.1

13.3

14.5

Right of Use assets

6.9

6.9

6.9

Investments

0.0

0.0

0.0

0.0

Current Assets

 

 

75.6

80.1

92.3

99.8

Stocks

13.5

11.5

16.4

16.5

Debtors

42.7

47.1

49.3

51.8

Cash

18.8

20.6

25.6

30.6

Other

0.6

0.9

0.9

0.9

Current Liabilities

 

 

(36.2)

(32.8)

(34.4)

(35.7)

Creditors

(36.1)

(32.8)

(34.4)

(35.7)

Short term borrowings

(0.1)

(0.1)

0.0

0.0

Long Term Liabilities

 

 

(35.3)

(39.8)

(40.3)

(36.1)

Long term borrowings

(25.1)

(25.2)

(29.7)

(25.5)

Lease liabilities

(7.5)

(7.5)

(7.5)

Other long term liabilities

(10.1)

(7.1)

(3.1)

(3.1)

Net Assets

 

 

77.0

81.8

86.3

94.6

CASH FLOW

Operating Cash Flow

 

 

11.6

13.0

15.1

20.5

Net Interest

(0.3)

(0.8)

(0.9)

(0.9)

Tax

(2.7)

(0.6)

(2.6)

(2.8)

Capex

(2.1)

(2.7)

(2.7)

(2.8)

Acquisitions/disposals

(21.0)

(1.2)

(4.0)

0.0

Financing

0.1

(2.2)

0.0

0.0

Dividends

(3.5)

(3.9)

(4.2)

(4.7)

Other

0.0

0.0

0.0

0.0

Net Cash Flow

(17.8)

1.7

0.5

9.2

Opening net debt/(cash)

 

 

(11.3)

6.4

4.7

4.2

HP finance leases initiated

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

Closing net debt/(cash) (excluding leases)

 

6.4

4.7

4.2

(5.1)

Total financial liabilities

 

 

 

12.2

11.7

2.4

Source: Company reports, Edison Investment Research estimates


General disclaimer and copyright

This report has been commissioned by Cohort and prepared and issued by Edison, in consideration of a fee payable by Cohort. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Cohort and prepared and issued by Edison, in consideration of a fee payable by Cohort. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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