Headline figures showing a 40% rise in full year revenue at high-tech defence specialist Cohort (CHRT:AIM) are good news but given the forward looking nature of the market it is a build in the order book which is likely driving the counter almost 5% higher to 277.5p.


Cohort was able to report a financial and operational performance ahead of expectations across its four divisions and this was driven by strong organic growth as well as first time contributions from 2014 acquisitions MCL (now a standalone fourth business in the group) and J+S, which is now part of the group's SEA systems engineering business. Strip out these two deals and Cohort would still be showing revenue growth of 22% and adjusted operating profit up 17%.

Looking forward, Cohort can also point to strong visibility with around two thirds of the current year's revenue already pencilled in. A strong end of year cash position is another compelling attraction. Despite spending £17 million on the MCL and J+S deals, Cohort still finished the year with £18.8 million in cash; a situation which chief executive Andrew Thomis puts down to efficient working capital management and good cashflow. This kind of war-chest provides what Investec analyst Chris Dyett characterised as 'significant firepower for future acquisitions'.

Maintaining its 'Buy' recommendation, the broker raises its price target from 325p to 360p.

'While there are ongoing pressures within the UK defence market, the outlook remains positive with a number of major contract opportunities,' says Dyett.

Issue Date: 25 Jun 2015