Cohort (CHRT) Investor Update summary

Financial performance and outlook

• Revenue reached a record £128.8 million for the first half, with profit in line with expectations despite a small decline in adjusted operating profit to £9.7 million.

• Order intake was £122.3 million, maintaining a strong order book at £604.5 million, covering 96% of external revenue forecasts for the year.

• Net debt stood at £32.5 million due to working capital build and capital expenditure, but year-end net funds are expected to be in line with previous guidance.

• Interim dividend increased by 10% to £0.058 per share, reflecting board confidence in future prospects.

• Full-year expectations for revenue, profit, and order intake remain unchanged, with a stronger second half anticipated.

Divisional performance and margin outlook

• Communications and intelligence division saw revenue rise 13% to £62.5 million, with EM Solutions making the largest profit contribution.

• Sensors and effectors division experienced lower margins due to mix and project timing, but improvements at Chess and ELAC are expected to drive future growth.

• SEA's margin was reduced by lower-margin projects, but a stronger second half is expected, targeting a 10% net margin for the year.

• Net margin for communications and intelligence is expected to exceed 17% for the full year, with further improvement targeted.

• Margin improvements are anticipated as high-margin businesses grow and low-margin projects conclude.

Market drivers and growth opportunities

• Heightened global security concerns and increased defence spending, especially in Europe and Asia-Pacific, are driving demand.

• Key growth areas include underwater infrastructure protection, secure communications, electronic warfare, and counter-drone systems.

• Significant opportunities identified in NATO, Asia-Pacific, and South America, with a focus on naval and communications technology.

• Strategic investments in new facilities in Germany, Italy, and Canada support international expansion and long-term growth.

• Acquisition of EM Solutions has strengthened the group's presence in Australasia and contributed significantly to profit.