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Research: Industrials
Cohort has announced that it has increased its holding in EID to 80% from 57% for the additional consideration of €3.97m from existing cash resources and debt facilities. The Portuguese government retains the remaining 20% and this is all in line with its previously announced strategy. EID brings new geographies, a good order pipeline and further growth opportunities. In addition, the company has indicated that it remains on course to meet FY18 expectations. HY18 results will be published on 13 December when we will adjust our forecasts for the increased holding.
Written by
Cohort |
Going to plan |
Increased share in EID |
Aerospace & defence |
28 November 2017 |
Share price performance
Business description
Analysts
Cohort is a research client of Edison Investment Research Limited |
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Cohort has announced that it has increased its holding in EID to 80% from 57% for the additional consideration of €3.97m from existing cash resources and debt facilities. The Portuguese government retains the remaining 20% and this is all in line with its previously announced strategy. EID brings new geographies, a good order pipeline and further growth opportunities. In addition, the company has indicated that it remains on course to meet FY18 expectations. HY18 results will be published on 13 December when we will adjust our forecasts for the increased holding.
Year |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/16 |
112.6 |
12.0 |
25.0 |
6.0 |
12.6 |
1.9 |
04/17 |
112.7 |
14.5 |
26.6 |
7.1 |
11.8 |
2.3 |
04/18e |
123.8 |
15.4 |
29.1 |
8.2 |
10.8 |
2.6 |
04/19e |
128.2 |
16.1 |
31.3 |
9.0 |
10.0 |
2.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and one-off tax credit of 2.20p in FY16.
Cohort acquired the initial 57% stake in Empresa de Investigação e Desenvolvimento de Electrónica, S.A. (EID) in June 2016, the group’s first overseas acquisition. The deal brought a new home market in Portugal plus new clients within NATO Europe and export territories such as Indonesia and Egypt. Based near Lisbon with a regional office in Indonesia, EID employs c 140 people.
EID focuses on advanced electronics, communications and command and control products and systems for the global defence market. With a proactive approach to R&D, EID’s offerings have proved to be highly attractive in export markets combining a high level of functionality and technical sophistication with a low cost base and competitive pricing. For example, over 120 warships now utilise EID’s communications equipment, which can be provided for both new build and upgrade projects. This global presence is expected to stimulate new export opportunities for Cohort’s existing businesses. Further acquisitions within the defence and security sectors will be considered with a focus on agility, innovation and growth potential.
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Disclaimer
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Disclaimer
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As a result of its work with leading retailers in the Payback loyalty scheme, UMT is Germany’s largest provider of white-label mPay services. Earlier this year the group took a decisive step into the B2C arena with the acquisition of prelado, an online German mobile phone top-up retailer. UMT plans to leverage its mPay know-how and retail contacts to drive an expansion of prelado’s product range as well as to extend prelado’s reach into other major EU countries. The group has also recently reached an agreement with solarisBank of Berlin to allow it to provide customers with full banking services as well as signing an MoU with blockchain specialist Coinsilium, to explore the use of blockchain technology in its service areas. UMT shares currently trade in line with the mPay small-cap sector on current year estimates. EV/revenues, and the current price implies free cash flow growth of 13.6% from 2021 in our reverse DCF analysis.