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12 Jan 17. Airbus Defence and Space has entered into an agreement to sell its 49 percent share in Atlas Elektronik Group to ThyssenKrupp AG based in Essen, Germany. With this acquisition, ThyssenKrupp, which to date has held a 51 percent share in the company, will become the sole owner of Atlas Elektronik. The sale of its shares in Atlas Elektronik, a supplier of cutting-edge maritime technology, is part of Airbus Defence and Space’s divestment program which will allow it to focus on its core business. Closing of the transaction is subject to customary regulatory approvals.
11 Jan 17. Cobham cancels dividend in yet another profit warning. FTSE 250 Aerospace and defence group Cobham has issued the latest in a string of profit warnings, and said the company would cancel its final dividend in light of “disappointing trading and higher than expected net debt”. Cobham said its draft accounts for 2016 show group trading profit of £245m, below the range of £255m to £275m predicted after its last warning in October. The company said its new management team is “commencing a thorough closing balance sheet review”, and noted that the current trading profit figure does not include any adjustments arising from the review, with “significant uncertainty” around the outcome of one major contract. Net debt at the end of the year was £1.03bn, a reduction on the same period last year but still higher than its target. After October’s warning the company said it had no intention of suspending its dividend, but today Cobham said it would not recommend a final dividend payment, and will set out its future dividend policy “following a full review of the group’s financial situation”. The news follows an already difficult year for Cobham, which hired a new chief executive and chairman and was forced to launch a £507m rescue rights issue to avoid breaching bank covenants. Two former directors of one of Cobham’s subsidiaries, meanwhile, have been accused of unlawfully transferring cash to another Cobham company. (Source: FT.com)
09 Jan 17. Cohort hits target price. Aim-traded shares in UK defence group Cohort (CHRT:410p) came within pennies of their 432p all-time high post-results last month, much as I predicted when I previewed the announcement (‘Targeting record highs’, 21 Nov 2016). It’s a company I know well, having initiated coverage at 214p (‘Blue-sky buy’, 6 Oct 2014), and subsequently advised top slicing two-thirds of your holdings 415p at the end of 2015 (‘On a roll’, 15 Dec 2015).
The only question I now have is whether there is sufficient upside to warrant maintaining an interest. Having assessed the first-half figures, and taken into consideration guidance that points towards pre-tax profits rising by a fifth to £14.3m on12 per cent higher revenues of £125m in the 12 months to end-April 2017, as analysts at Edison Investment Research predict, I feel that a chart break-out is likely in due course. That’s because almost £50m of Cohort’s £129.6m order book at the end of October is deliverable in the second half, so underpinning a large chunk of Edison’s full-year profit estimates, and the company has also won £16m-worth of additional orders since the end of the first half. Moreover, I feel that Edison’s forecast of a further double-digit increase in pre-tax profits to £16.6m on revenues of £139m in the financial year to end-April 2018 is certainly achievable, a performance that would lift EPS from 24.1p to 33.4p, and support a rise in the payout from 7p to 8p a share.
That’s because in the new financial year the company will benefit from a full 12-month contribution from EID, a Portugal-based supplier of advanced electronics, communications and control products for the global defenc