Cohort final results: record profit and a £618.8 million order book

Cohort beats expectations with another record year

Cohort's final results contain plenty for investors to digest, but the central message is straightforward. The defence technology group delivered record revenue, record adjusted operating profit and a record closing order book in the year ended 30 April 2026. Revenue increased by 13% to £306.4 million, while adjusted operating profit rose by a much stronger 32% to £36.3 million. Adjusted operating profit excludes items such as acquired intangible asset amortisation and exceptional costs, giving investors a view of underlying trading performance.

Importantly, this was not just an adjusted profit story. Statutory profit before tax increased by 27% to £32.6 million and basic earnings per share rose by 16% to 52.2p. Management said trading and earnings were ahead of consensus market expectations, driven by a particularly strong performance from the Communications and Intelligence division.

Cohort's key financial figures

Metric 2026 2025 Change Revenue £306.4 million £270.0 million 13% Adjusted operating profit £36.3 million £27.5 million 32% Adjusted operating margin 11.8% 10.2% Improved Adjusted earnings per share 61.9p 54.4p 14% Statutory profit before tax £32.6 million £25.6 million 27% Basic earnings per share 52.2p 45.1p 16% Order intake £314.2 million £284.7 million 10% Closing order book £618.8 million £616.4 million Record Net funds £2.2 million £5.3 million Lower Total dividend per share 17.90p 16.30p 10% The improvement in adjusted operating margin from 10.2% to 11.8% is one of the more encouraging features. Profit grew considerably faster than revenue, suggesting that additional sales translated into better operating profitability.

Cohort expects the margin to move into the low-teens percentage range in 2026/27, before progressing towards its mid-teens target by the end of the decade.

The order book provides strong visibility

Order intake increased by 10% to £314.2 million and exceeded annual revenue. This matters because it means Cohort replaced the revenue delivered during the year with slightly more contracted work.

The closing order book reached a record £618.8 million, with deliveries extending as far as 2037. Cohort stresses that this figure only includes contracted customer orders, rather than potential revenue from frameworks without enforceable commitments. At the end of April, the order book covered 83% of consensus revenue expectations for 2026/27. Contract wins since the year-end have increased that coverage to 88%.

That level of cover gives the business a useful degree of visibility, although it does not remove execution risk. Large, long-term defence programmes can involve changing delivery schedules, working capital demands and project-specific margin assumptions.

Communications and Intelligence leads the growth

The standout performer was Communications and Intelligence.

Revenue increased to £158.9 million from £124.9 million, while adjusted operating profit climbed to £32.4 million from £21.1 million. The division also generated £36.1 million of net operating cash flow and secured £186.0 million of new orders. EM Solutions, acquired in January 2025, made a strong first full-year contribution and achieved a net margin of more than 25%. MASS also grew by nearly 20%, passing £50 million of annual revenue for the first time and delivering a 20% net margin.

EID secured strong orders, although its operating performance was slightly behind the previous year because of delays completing a Portuguese Army project. Cohort expects this issue to be resolved in the current financial year. The division enters 2026/27 with £127.8 million of revenue already on order. Management expects further growth and a net margin close to 20%.

Sensors and Effectors remains the weaker area

The picture was less impressive in Sensors and Effectors. Revenue was broadly flat at £147.5 million, compared with £145.1 million, while adjusted operating profit fell to £10.5 million from £12.7 million. Several factors held back profitability. SEA faced a weaker business mix following the disposal of its Transport operation, alongside low-margin legacy projects. The Italian submarine sonar programme also remains in its development phase, meaning Cohort is recognising a margin appropriate to the remaining project risk. Chess delivered a small profit but remained below management's expectations. Cohort has changed its senior management team and expects performance to improve, mostly during the second half of 2026/27.

The group plans to invest around £15 million in a new Chess facility near Horsham. This should increase capacity and improve operational efficiency, particularly as Cohort expects demand for counter-drone systems to expand. Completion is expected in the second half of 2027/28. Sensors and Effectors has £135.9 million of 2026/27 revenue on order. Management expects revenue growth and a net margin above 10%, making delivery against that target an important measure of progress.

Cash conversion is the main caution

Cohort finished the year with net funds of £2.2 million, down from £5.3 million. That followed a significant recovery from net debt of £32.5 million at the half-year stage.

However, net cash inflow from operating activities fell sharply to £11.3 million from £51.2 million. Working capital increased as Cohort progressed larger naval contracts, including the Italian sonar project and a satellite communications programme for the Royal Australian Navy. This does not necessarily signal weaker underlying demand, but it does show that reported profit and cash generation may diverge significantly between reporting periods. Receivables increased substantially and management expects working capital movements to remain variable as contracts become larger. Cohort renewed its banking arrangements shortly before year-end. The new £175 million facility, alongside an additional £50 million accordion option, provides greater flexibility for working capital, investment and potential acquisitions. An accordion allows the borrowing facility to be increased subject to agreed conditions.

For the three years beginning with 2026/27, management expects cash flow before capital expenditure and dividends of around £120 million.

Dividend growth continues

The proposed final dividend is 12.10p per share, taking the full-year payment to 17.90p. That represents growth of 10% and marks another annual increase since Cohort joined AIM in 2006.

Adjusted earnings covered the dividend 3.5 times, although cash cover fell to 1.4 times because of the year's working capital outflow. Investors will therefore want earnings growth to convert into stronger cash generation over the medium term.

What matters next for Cohort investors

Cohort is targeting double-digit earnings growth in 2026/27 and each of the following two years. The record order book, 88% revenue coverage and strong demand across NATO Europe and export markets provide support for that ambition. The positives are clear: record trading, improving margins, strong contracted revenue visibility, broader international exposure and continued dividend growth. Revenue derived from the UK Ministry of Defence declined to 40% of group revenue from 50%, reflecting expansion in overseas markets rather than a fall in total group sales. The main concerns are operational execution in Sensors and Effectors, the uneven performance at Chess and increasingly volatile working capital. The order book is valuable, but investors still need to see those contracts delivered profitably and converted into cash.

Overall, these are strong results, led by Communications and Intelligence. The next test is whether Cohort can lift its weaker division, continue expanding margins and deliver the cash generation promised over the next three years.