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Research: Industrials
Cohort’s largest division, MASS, has been selected as the preferred bidder for a £50m, eight-year contract for the UK Ministry of Defence (MOD). Success would represent an extension of a core activity that has been undertaken by MASS since 2000. As it was competitively tendered, the down-select also verifies Cohort’s credentials in the provision of in-service support for the MOD. The announcement represents another encouraging sign that Cohort is successfully underpinning its medium- to long-term workloads in its service contracting activities.
Written by
Cohort |
MASS success verifies core capabilities |
MASS contract update |
Aerospace and defence |
26 October 2018 |
Share price performance
Business description
Analysts
Cohort is a research client of Edison Investment Research Limited |
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Cohort’s largest division, MASS, has been selected as the preferred bidder for a £50m, eight-year contract for the UK Ministry of Defence (MOD). Success would represent an extension of a core activity that has been undertaken by MASS since 2000. As it was competitively tendered, the down-select also verifies Cohort’s credentials in the provision of in-service support for the MOD. The announcement represents another encouraging sign that Cohort is successfully underpinning its medium- to long-term workloads in its service contracting activities.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/17 |
112.7 |
14.5 |
26.6 |
7.1 |
15.0 |
1.8 |
04/18 |
111.8 |
15.5 |
29.4 |
8.2 |
13.5 |
2.1 |
04/19e |
118.4 |
16.0 |
31.2 |
9.2 |
12.8 |
2.3 |
04/20e |
124.8 |
17.0 |
33.2 |
10.1 |
12.0 |
2.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items, share-based payments and one-off tax credits
The contract award remains subject to final negotiation and approval by the MOD but would run from March 2019 until March 2027. Under the contract MASS would provide support service to the MOD including operational analysis studies, IT infrastructure management, modelling and simulation, and software engineering. All of these remain core competences of MASS. In addition to this MOD renewal, MASS is progressing other potential export opportunities including renewal and extension of existing contracts.
Taken together with other recent contract awards for EID and SEA for Network Rail, as well as other group opportunities highlighted in the Q3 trading statement in September, the news flow and order development looks encouraging across Cohort. Overall, the group seems likely to end the current financial year with significantly enhanced medium-term visibility.
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Disclaimer
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Disclaimer
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In an in-line Q3 trading update, StatPro says that its annualised recurring revenue (ARR) rose by 3% at constant currencies over the past 12 months to £54.8m. Additionally, earlier this week StatPro announced a c £1.0m five-year Infovest contract, which highlights the quality of the group’s Infovest data management solution. The main focus for growth remains the fund administrator channel and, in January, the group will operate a new structure with three divisions (Revolution for analytics, StatPro: Source for data, and Infovest for integration and data management) to drive the business. Following the recent de-rating, we believe the shares look increasing attractive on 15x our maintained FY19 earnings, especially in light of the active M&A backdrop in financial software and the scope for revenue acceleration and margin expansion.