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The defence technology group Cohort (LON:CHRT) said strong organic growth was boosted by first time contributions from two acquisitions.
The firm, which bought the MCL and J+S businesses, posted a 40% rise in revenues to just shy of £100mln, while adjusted pre-tax profit grew 23% to £10.2mln. The figures were up by 22% and 17% respectively on a like-for-like basis.
The order book, a key indicator of prospects, grew 63% year on year to £134mln.
Investors are to be rewarded with a 21% boost to the final pay-out, which takes the total dividend to 5p. It is sitting on net funds of almost £20mln
Cohort is actually three businesses in one - the largest in terms of profitability is MASS, the high-technology business whose specialities include electronic warfare and electronic security.
SCS is the consultancy business, whose clients include the MoD and NATO and the European Defence Agency and which has been given the role of assessing the airworthiness of Britain’s fleet of joint strike fighters.
Then there is SEA, which specialises in high-end communications, and is responsible for equipment used on board Britain’s fleet of Astute nuclear submarines.
“The underlying businesses of MASS, SCS and SEA all recorded growth in revenue and adjusted operating profit, and the result also benefited from the two acquisitions made in the year,” said chairman Nick Prest.
"The management emphasis is now on driving further growth both organically and by acquisition, supported by a continuing strong funding position.
“The board considers that Cohort's order book and near-term prospects provide a good base for future progress."
In a separate announcement it was revealed that co-chairman Stanley Carter is standing down in September to be replaced by Jeffrey Perrin, former chief executive of Radstone Technology.
Broker Investec said the results were ahead of expectations, driven by a strong performance from MASS and an improved outturn from SEA.
At £19.7mln, the net cash position was more than twice as high as Investec had been expecting, though Cohort expects this discrepancy to partially unwind in the current financial year, as working capital balances normalise.
“While there are ongoing pressures within the UK defence market, the outlook remains positive with a number of major contract opportunities and a strong balance sheet that provides firepower for potential acquisitions,” the broker said, as it raised its target price to 360p.
Its target price is based on a sum of the parts valuation, benchmarked against Cohort’s UK defence peers.
Investec has upgraded its earnings per share forecasts by 4.8% and 3.8% for the current fiscal year and next, respectively, while the balance sheet strength has encouraged the broker to up its dividend forecast for the current year to 6.0p; it has pencilled in rises of a penny a year in the total dividend for the next three years.
Cohort shares currently trade at just under 280p, up 5.8% on the day.