Interim Results

Cohort PLC 13 December 2007 COHORT PLC INTERIM RESULTS FOR THE HALF YEAR ENDED 31 OCTOBER 2007 GOOD STRATEGIC AND FINANCIAL PROGRESS Cohort plc, a leading independent defence technical services business, today announces interim results for the half year to 31 October 2007. Highlights include: â€¢ Acquisition of SEA Group on 31 October 2007. â€¢ Group revenue up 54% to Â£20.9m. â€¢ Adjusted* profit before tax up 42% at Â£1.5m. â€¢ Adjusted* earnings per share up 38% at 4.12p. â€¢ Group order book at 31 October Â£56.1m. â€¢ Interim dividend up 12.5% to 0.45p per share. *Before exceptional items and goodwill amortisation. Commenting on the result, Nick Prest CBE, Chairman of Cohort plc said: 'With the recent acquisition of SEA and continued strong revenue growth from both SCS and MASS, Cohort continues to deliver the strategy set out at the time of flotation in March 2006. The Board is positive about the outlook'. For further information, please contact Cohort plc 01491 843150 Stanley Carter, Chief Executive Simon Walther, Finance Director Investec 020 7597 5970 Michael Ansell Hogarth Partnership Limited 020 7357 9477 Julian Walker, Andrew Jaques, Vicky Watkins NOTES TO EDITORS Cohort plc (www.cohortplc.com) Cohort is a defence technical services group. It operates through three wholly-owned subsidiaries, MASS Consultants ('MASS'), Systems Consultants Services ('SCS') and SEA Group ('SEA') , all of which are leading independent service providers, working for defence (air, land and sea), wider government and industry clients. â€¢ MASS (www.mass.co.uk) was acquired by Cohort in August 2006 for an initial consideration of Â£12.5m and is an independent UK Systems House focused on the defence and aerospace markets. MASS offers specialist skills in four main business areas: Managed Services, Electronic Warfare, Secure Communications and Information Systems. â€¢ SCS (www.scs-ltd.co.uk), Cohort's original operating company, provides independent consultancy support, which combines technical expertise with practical experience and domain knowledge, primarily but not exclusively to the defence sector. â€¢ SEA (www.sea.co.uk) is an independent systems engineering and software company operating primarily in the defence sector, but with three other divisions focused on the space, transport and offshore arenas. SEA was acquired by Cohort on 31 October 2007 for an initial consideration of Â£20.7m. Cohort was specifically established to capitalise on consolidation and organic growth opportunities in the defence technical services market and was admitted to trading on AIM on 8 March 2006. CHAIRMAN'S STATEMENT OVERVIEW Cohort has made very good progress in executing the strategy set out at the time of flotation in March 2006. SEA (Group) Ltd (SEA) was acquired in late October 2007 following the acquisition of MASS Consultants Limited (MASS) last year and organic revenue growth has been strong. FINANCIALS This is Cohort's first reporting period under International Financial Reporting Standards (IFRS). In the six months ended 31 October 2007, Cohort achieved revenue of Â£20.9m (2006: Â£13.6m), a 54% increase. The revenue for the first half included Â£12.7m from SCS, which represented growth of 29% on 2006, and Â£8.2m from MASS, an annualised increase of 9% on the Â£3.8m for the three months ended 31 October 2006. Adjusted operating profit before accounting for the share of joint ventures, exceptional items and amortisation of acquired intangibles was Â£1.4m (2006: Â£1.0m). The operating profit included a contribution from MASS of Â£0.9m, compared with Â£0.5m for the three months ended 31 October 2006. SCS's operating profit for the first half was Â£0.9m (2006: Â£0.9m) on turnover of Â£12.7m (2006: Â£9.8m). The Group incurred a small loss in its joint venture undertaking, reflecting the developmental nature of this business. As highlighted previously this joint venture investment is not core to the group and progress has been made in its restructuring. The adjusted earnings per share (before exceptional items and amortisation of acquired intangibles) for the six months ended 31 October 2007 are 4.12 pence per ordinary share (2006: 2.99 pence). Net cash flow from operating activities was Â£0.3m (2006: Â£1.0m). The period ended with the Group holding Â£0.3m of net funds, having paid out Â£12.1m in cash for the acquisition of SEA, Â£6.0m of which was funded from the net proceeds of an equity fundraising, Â£3.0m from debt and the balance of Â£3.1m from Cohort's own cash resources. ACQUISITION OF SEA SEA was acquired on 31 October 2007. The Group will recognise revenue and operating profit of SEA from 1 November 2007. The initial consideration of Â£20.7m included Â£8.8m of Cohort plc shares taken up by the vendors, a strong endorsement of the vendor's commitment to the Cohort concept. Up to Â£4.7m of deferred consideration is payable in cash to the vendors of SEA; this is dependent upon SEA achieving an agreed level of earnings for the thirteen months ended 30 April 2008. This deferred consideration is linearly scalable, from zero deferred consideration payable if SEA profit before interest and tax is Â£2.0m up to Â£4.7m of deferred consideration payable if SEA profit before interest and tax is at or above Â£2.5m for the thirteen months ended 30 April 2008. MASS MASS, acquired in August 2006, has continued to perform well. Good progress on the main MoD secure communications project contributed to a performance in the Systems Development division that exceeded expectations. The Managed Services division started work on contracts with several new customers. A new export contract valued at approximately Â£7m was won; together with other orders, this brought MASS's order book to over Â£34m at the end of the period. SCS Overall, revenue growth has been strong in SCS, particularly in the areas of the business which feed into and support MoD operations. Demand in areas dependent on MoD capital budgets has been weaker. New contracts won include work through the Haldane Spearman consortium, support to BAE Systems, our NATO enabling contract and elements of the Future Rapid Effects System (FRES). However, a number of programmes have slipped including the Land Equipment Air Picture Programme (LEAPP) and Joint Effects Tactical Targeting Systems (JETTS) and this has impeded revenue and utilisation. In addition, there have been some investments in management and business infrastructure, including a new business information system. The overall impact is that while revenue expanded strongly net profit was held back. We expect a stronger performance in the second half. BOARD & PERSONNEL Following the acquisition of SEA, Ian Dale-Staples, Chief Executive of SEA, joined the Cohort Board. As well as overseeing SEA, Ian will contribute to the Group acquisition effort. We welcome warmly the 200 or so SEA staff who have joined the Cohort Group, many as shareholders as well as employees. Group staff now number around 450 and it is their skills and energy that will provide the forward impulse for the business. DIVIDENDS In accordance with the Group's progressive dividend policy, it plans to pay an interim dividend of 0.45 pence (2006: 0.40 pence) per ordinary share on 7 March 2008 to shareholders on the register at 8 February 2008. OUTLOOK The Group's order book at 31 October 2007 stood at Â£56.1m including Â£13.7m acquired with SEA. Â£22.8m of this order book is deliverable in the second half. We expect the profits of MASS and SCS to be weighted towards the second half, as in previous years, and with the addition of SEA, this effect will be amplified. The Cohort business model of providing technical advice and services to defence markets, independent of major producer interests, is strong and we intend to exploit it by capitalising on the organic growth opportunities available to SCS, MASS and SEA and by continuing to make complementary acquisitions as and when opportunities arise. The Board is positive about the overall outlook. CONSOLIDATED INCOME STATEMENT For the six months ended 31 October 2007 Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October 2006 April 2007 Unaudited Unaudited Unaudited Notes Â£000 Â£000 Â£000 Revenue 2 20,902 13,596 34,419 Cost of sales (15,427) (10,151) (26,027) ----------- ----------- ----------- Gross profit 5,475 3,445 8,392 Administrative expenses (4,029) (2,396) (5,481) ----------- ----------- ----------- Adjusted operating profit* 2 1,446 1,049 2,911 Amortisation of goodwill and other intangible assets 7a (168) (84) (252) Exceptional items 3 - 3 114 Share of results of joint ventures (101) (116) (242) ----------- ----------- ----------- Operating profit 2 1,177 852 2,531 Finance revenue 143 119 214 Finance costs (14) (10) (22) ----------- ----------- ----------- Profit before tax 1,306 961 2,723 ----------- ----------- ----------- Tax Expense 4 (260) (333) (454) ----------- ----------- ----------- Profit for the period 1,046 628 2,269 ----------- ----------- ----------- All profit for the period is attributable to equity shareholders and derived from continuing operations. *Adjusted operating profit is the operating profit before exceptional items, amortisation of acquired intangibles and share of results of joint ventures. Six months Restated Restated ended six year ended 31 October 2007 months ended 30 April Unaudited 31 October 2007 Pence 2006 Unaudited Unaudited Pence Pence Earnings per share 5 Basic 3.55 2.65 8.21 Diluted 3.52 2.63 8.16 Adjusted earnings per share 5 Basic 4.12 2.99 8.71 Diluted 4.09 2.97 8.65 Dividends per share proposed in respect of the period 6 Interim 0.45 0.40 0.40 Final - - 0.90 CONSOLIDATED BALANCE SHEET As at 31 October 2007 31 October Notes 2007 Restated at Restated at Unaudited 31 October 2006 30 April 2007 Â£000 Unaudited Unaudited Â£000 Â£000 ASSETS Non-current assets Goodwill 7a 30,158 12,162 12,162 Other intangible assets 7a 2,300 1,476 1,308 Property, plant and equipment 4,904 371 282 Interest in joint ventures (334) (210) (233) Finance lease receivables - 82 - Deferred tax asset 71 43 71 ----------- ----------- ----------- 37,099 13,924 13,590 ----------- ----------- ----------- Current assets Inventories 4,629 82 409 Trade and other receivables 11,569 7,382 7,964 Finance lease receivables - 115 - Cash and cash equivalents 4,603 3,426 5,015 ----------- ----------- ----------- 20,801 11,005 13,388 ----------- ----------- ----------- Total assets 57,900 24,929 26,978 ----------- ----------- ----------- LIABILITIES Current liabilities Trade and other payables (10,162) (4,413) (5,713) Current tax liabilities (552) (743) (126) Other loans (51) - - Bank loans and overdrafts (358) - - Provisions (4,956) (280) (60) ----------- ----------- ----------- (16,079) (5,436) (5,899) ----------- ----------- ----------- Non-current liabilities Other loans (53) - - Bank loans (3,864) - - Deferred tax liability (32) - - Long term provisions (500) (500) (500) ----------- ----------- ----------- (4,449) (500) (500) ----------- ----------- ----------- Total liabilities (20,528) (5,936) (6,399) ----------- ----------- ----------- Net Assets 37,372 18,993 20,579 ----------- ----------- ----------- Equity Share capital 4,035 2,946 2,947 Share premium account 29,019 14,134 14,155 Share option reserve 131 30 71 Retained earnings 4,187 1,883 3,406 ----------- ----------- ----------- Total Equity 37,372 18,993 20,579 ----------- ----------- ----------- All equity is attributable to equity shareholders of Cohort plc CONSOLIDATED CASH FLOW STATEMENT For the six months ended 31 October 2007 Notes Six months Restated Restated ended six months year ended 31 October 2007 ended 31 30 April 2007 Unaudited October 2006 Unaudited Â£000 Unaudited Â£000 Â£000 Net Cash from operating activities 8 318 970 2,155 ---------- ---------- ---------- Investing activities Interest received 143 136 225 Proceeds on disposal of property, plant and equipment - 3 - Purchases of property, plant and equipment (161) (65) (87) Acquisition of subsidiaries, net of cash acquired 7d (10,945) (11,670) (11,935) Investment in a joint venture - - (220) ---------- ---------- ---------- Net cash used in investing activities (10,963) (11,596) (12,017) ---------- ---------- ---------- Financing activities Dividends paid (265) (118) (236) Interest paid (2) (4) (8) Repayment of borrowings - - - Proceeds from finance leases - 54 251 Proceeds on issue of shares 7d 7,500 8,529 9,279 New bank loans raised 7d 3,000 - - ---------- ---------- ---------- Net cash from financing activities 10,233 8,461 9,286 ---------- ---------- ---------- Net decrease in cash and cash equivalents (412) (2,165) (576) ---------- ---------- ---------- At 1 May Cash flow At 31 October 2007 Â£000 2007 Â£000 Â£000 Funds reconciliation Cash and bank 15 50 65 Short term deposits 5,000 (462) 4,538 ---------- ---------- ---------- Cash and cash equivalents 5,015 (412) 4,603 ---------- ---------- ---------- Overdraft - (244) (244) Other loans - (104) (104) Bank loan - (3,978) (3,978) ---------- ---------- ---------- Debt - (4,326) (4,326) ---------- ---------- ---------- ---------- ---------- ---------- Net funds 5,015 (4,738) 277 ---------- ---------- ---------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Notes Six months Restated Restated ended six year 31 months ended 31 ended October 2007 October 2006 30 April 2007 Unaudited Unaudited Unaudited Â£000 Â£000 Â£000 At 1 May as previously stated 8,924 8,924 under UK GAAP Adjustment on introduction of IFRS - - ------------ ------------ ------------ 20,579 8,924 8,924 Profit reported under IFRS 9 1,046 628 2,269 Equity dividends paid (265) (118) (236) Issue of new 10p ordinary shares 16,313 9,906 9,906 Costs of new share issue (361) (377) (377) Exercise of share options - - 22 Share-based payments 60 30 71 ------------ ------------ ------------ At end of period 37,372 18,993 20,579 ============ ============ ============ NOTES TO THE INTERIM STATEMENT 1. BASIS OF PREPARATION The financial information contained within this interim report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the EU and expected to apply at 30 April 2008. This interim report is condensed with respect to IFRS requirements. As permitted, this interim report has been prepared in accordance with AIM Rules for companies and not in accordance with IAS34 'Interim Financial Reporting' and is therefore not fully compliant with IFRS. This interim report reflects the first time adoption by the Group of IFRS and comparatives have been restated accordingly, as shown in the consolidated statement of changes in equity and notes 7a and 9. On introducing IFRS, the resulting accounting policy changes have had no impact upon the group's equity with the exception of goodwill amortisation (see note 7c). The impact of IFRS on the goodwill acquired was to require it to be split between other intangibles, to be written off over their respective lives (notes 7b in respect of MASS and 7d in respect of SEA) with the remaining balance of unallocated goodwill not being amortised but subject to annual impairment test. There have been a number of presentational changes, but these are not material, with the exception of the splitting of the goodwill arising on acquisition (note 7a). The introduction of IFRS has had no impact upon the Group cash flows. Date of transition to IFRS by the Group was 1 May 2006. In accordance with s240(3) of the Companies Act 1985, the unaudited results do not constitute statutory financial statements of the Company. The six months results for both years are unaudited. The Group's auditors, Baker Tilly, UK Audit LLP, have reviewed this statement (see page 15). The comparative figures for the year ended 30 April 2007 were derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The previous statutory accounts prepared under UK GAAP have been restated to IFRS. Those accounts received an unqualified audit report which did not include statements under section 237(2) or (3) of the Companies Act 1985. The interim report was approved by the Board and authorised for issue on 12 December 2007. 2. SEGMENTAL ANALYSIS OF REVENUE AND ADJUSTED OPERATING PROFIT Six months Restated Restated ended six year 31 months ended 31 ended 30 October 2007 October 2006 April 2007 Unaudited Unaudited Unaudited Â£000 Â£000 Â£000 Revenue SCS 12,662 9,820 22,144 MASS (acquired 1 August 2006) 8,240 3,776 12,275 ------------- ------------- ------------- 20,902 13,596 34,419 ------------- ------------- ------------- Adjusted operating profit SCS 866 886 2,208 MASS (acquired 1 August 2006) 901 464 1,308 Central Costs (321) (301) (605) ------------- ------------- ------------- 1,446 1,049 2,911 ------------- ------------- ------------- Amortisation of goodwill and other (168) (84) (252) intangible assets Exceptional items - 3 114 Share of results of joint ventures (101) (116) (242) ------------- ------------- ------------- Operating profit 1,177 852 2,531 ------------- ------------- ------------- All revenue and adjusted operating profit is in respect of continuing operations. The operating profit as reported under IFRS is reconciled to the adjusted operating profit as reported above by the exclusion of exceptional items, the Group's share of joint ventures and amortisation of goodwill and other intangible assets. The adjusted operating profit is presented in addition to the operating profit to provide the trading performance of the Group, as derived from its constituent elements on a comparable basis from period to period. The adjusted operating profit is stated after charging Â£60,000 in respect of share-based payments (six months ended 31 October 2006: Â£30,000, year ended 30 April 2007: Â£71,000) 3. EXCEPTIONAL ITEMS Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October April 2007 Unaudited 2006 Unaudited Â£000 Unaudited Â£000 Â£000 Write back of provision against - - 113 joint ventures Profit on sale of property, plant - 3 1 and equipment ------------- ------------- ------------- - 3 114 ------------- ------------- ------------- 4. TAX EXPENSE Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October April 2007 Unaudited 2006 Unaudited Â£000 Unaudited Â£000 Â£000 Corporation tax: Prior year 4 - 33 Current year 256 333 449 ------------- ------------- ------------- 260 333 482 Deferred taxation - - (28) ------------- ------------- ------------- 260 333 454 ============= ============= ============= The tax expense for the six months ended 31 October is based upon the anticipated charge for the full year. 5. EARNINGS PER SHARE The earnings per share are calculated as follows: Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October April 2007 Unaudited 2006 Unaudited Â£000 Unaudited Â£000 Â£000 Earnings Basic and diluted earnings 1,046 628 2,269 Exceptional items - (3) (114) Amortisation of goodwill and other intangible assets 168 84 252 ------------- ------------- ------------- Adjusted basic and diluted earnings 1,214 709 2,407 ------------- ------------- ------------- Number Number Number Weighted average number of shares For the purposes of basic earnings per share 29,477,161 23,650,201 27,633,096 Share options 224,308 194,539 168,184 ------------- ------------- ------------- For the purposes of diluted 29,701,469 23,844,740 27,801,280 earnings per share ============= ============= ============= Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October 2006 April 2007 Unaudited Unaudited Unaudited Pence Pence Pence Earnings per share Basic 3.55 2.65 8.21 Diluted 3.52 2.63 8.16 Adjusted earnings per share Basic 4.12 2.99 8.71 Diluted 4.09 2.97 8.65 6. DIVIDENDS The interim dividend for the six months ended 31 October 2007 is 0.45p (six months ended 31 October 2006: 0.40p) per ordinary share. This dividend will be payable 7 March 2008. The final dividend for the year ended 30 April 2007 was 1.3p per ordinary share (Â£383,000). 7. GOODWILL AND OTHER INTANGIBLE ASSETS a. BALANCE SHEET b. Net book value At 31 October At 30 April 2006 2007 Unaudited Unaudited Â£000 Â£000 At 1 May as previously stated under UK GAAP 13,562 13,207 Adjustment to acquired intangibles on introduction of 76 263 IFRS ------------ ----------- At 1 May as restated under IFRS 13,638 13,470 ------------ ----------- Net Book Value MASS SEA Total Â£000 Â£000 Â£000 At 1 May 2007 as restated under IFRS 13,470 - 13,470 Addition - 19,156 19,156 Amortisation of goodwill and other (168) - (168) intangible assets for the six months ended 31 October 2007 ------------ ------------ ----------- At 31 October 2007 13,302 19,156 32,458 ============ ============ =========== Analysed as follows: Goodwill 12,162 17,996 30,158 Other intangible assets 1,140 1,160 2,300 ------------ ------------ ----------- 13,302 19,156 32,458 ============ ============ =========== b. GOODWILL ON ACQUISITION OF MASS (ACQUIRED 1 AUGUST 2006) Â£000 Goodwill on acquisition under UK GAAP 13,722 ========= Under IFRS: Intangible asset in respect of acquired contracts 1,060 Intangible asset in respect of contracts to be secured 500 Goodwill on acquisition 12,162 --------- 13,722 ========= The intangible asset in respect of acquired contracts is to be amortised over four years, the life of the contracts' earnings. The intangible asset in respect of contracts to be secured is to be written off over seven years and is in respect of certain overseas contracts for which further consideration would be payable if secured in accordance with the terms of the acquisition of MASS. In accordance with IFRS the goodwill is not amortised but tested annually for impairment. c. AMORTISATION OF GOODWILL AND OTHER INTANGIBLE ASSETS Six months Year ended ended 31 30 April October 2006 2007 Unaudited Unaudited Â£000 Â£000 Amortisation for the period previously reported 171 515 under UK GAAP Adjustment to amortisation on introduction of IFRS (87) (263) ------------- ------------- Amortisation of goodwill and other intangible assets 84 252 ------------- ------------- d. ACQUISITION OF SEA (GROUP) LIMITED On 7 November 2007, the Group completed the acquisition of 100% of the issued share capital of SEA (Group) Limited for initial consideration of Â£20.7 million with further performance related deferred consideration of up to Â£4.7m, payable in cash. SEA (Group) Limited is the parent company of Systems Engineering and Assessment Limited, an independent systems engineering and software company. The transaction has been accounted for as at 31 October 2007 by the purchase method of accounting. Book Value Fair Value Â£000 Â£000 Net assets acquired: Intangible assets 15 - Property, plant and equipment 3,243 4,553 Inventories 1,677 1,501 Trade and other receivables 4,319 4,177 Cash and cash equivalents 1,203 1,203 Trade and other payables (1,944) (2,758) Deferred tax (32) (32) Current tax liabilities (292) (292) Bank loans (1,082) (1,082) Provisions - (160) ------------- ------------- 7,107 7,110 ============= Other intangible assets 1,160 Goodwill 17,996 ------------- Total consideration 26,266 ============= Total consideration includes estimated costs of acquisition of Â£0.9 million Satisfied by: Cash 12,148 5,875,331 ordinary shares issued to vendors at 8,813 Â£1.50 per share Trade and other payables 633 Provision for deferred consideration 4,672 ------------- 26,266 ============= Net funds outflow arising on acquisition Cash consideration (12,148) Cash and cash equivalents acquired 1,203 ------------- Net cash flow (10,945) Bank loans acquired (1,082) ------------- Net funds flow (12,027) ============= As part of the acquisition, the Group drew down Â£3.0 million from its acquisition facility with RBS and raised Â£6.0m via a vendor placing net of Â£361,000 of placing costs, which were charged to the Share Premium Account. A further Â£1.5m was raised under the Venture Capital Trust Scheme. The deferred consideration, if payable, will be settled in July 2008. The total acquired goodwill and other intangible assets is an estimate since the fair values are still subject to final review. The estimated goodwill arising on the acquisition of SEA (Group) Limited is attributable to the anticipated profitability of SEA in the future and expected market and customer facing synergies that arise from the combination with the remainder of the Cohort group. In accordance with IFRS this goodwill will not be amortised but is subject to an annual impairment test. The other intangible asset is in respect of the future profitability of the acquired order book of SEA (Group) Limited and will be amortised over the period in which the acquired contracts profitability arises, a period of four years. 8. NET CASH FROM OPERATING ACTIVITIES Six months Restated Restated ended six year 31 months ended ended 30 October 2007 31 October April 2007 Unaudited 2006 Unaudited Â£000 Unaudited Â£000 Â£000 Profit for the period 1,046 628 2,269 Adjustments for: Share of loss of joint ventures 101 116 242 Tax expense 260 333 454 Depreciation of property, plant and equipment 93 78 187 Amortisation of goodwill and other intangible assets 168 84 252 Exceptional items - (3) (114) Finance revenue (net of finance costs) (129) (109) (192) Share-based payment 60 30 71 Increase/(decrease) in provisions 64 - - ------------- ------------- ------------- Operating cash flows before movements in working capital 1,663 1,157 3,169 ------------- ------------- ------------- (Increase)/decrease in inventories (1,400) 61 (267) Decrease/(increase) in receivables 33 (329) (1,180) Increase in payables 363 81 1,220 ------------- ------------- ------------- (1,004) (187) (227) ------------- ------------- ------------- Cash generated by operations 659 970 2,942 ------------- ------------- ------------- Tax (341) - (787) ------------- ------------- ------------- Net cash flow generated from operating activities 318 970 2,155 ============= ============= ============= 9. PROFIT REPORTED UNDER IFRS Six months Year ended ended 31 30 April October 2006 2007 Unaudited Unaudited Â£000 Â£000 The profit for the period reported under IFRS is reconciled as follows: As previously stated under UK GAAP 541 2,006 Adjustment to amortisation of goodwill and other 87 263 intangible assets on introduction of IFRS (note 7c) ------------ ------------ Profit for the period as reported under IFRS 628 2,269 ============ ============ INDEPENDENT REVIEW REPORT TO COHORT PLC Introduction We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 which comprises the consolidated income statement, consolidated balance sheet, consolidated cashflow statement, consolidated statement of changes in equity and the related explanatory notes on pages 9 to 14. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report, including the conclusion, has been prepared for and only for the Company for the purpose of meeting the requirements of the AIM Rules for Companies and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' Responsibilities The half-yearly financial report, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing and presenting the half-yearly financial report in accordance with the AIM Rules for Companies. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee ('IFRIC') pronouncements as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ('IFRIC') pronouncements, as adopted by the European Union. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 is not prepared, in all material respects, in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ('IFRIC') pronouncements as adopted by the European Union, and the AIM Rules for Companies. Baker Tilly UK Audit LLP Chartered Accountants 12 Gleneagles Court Brighton Road Crawley West Sussex RH11 9BX 12 December 2007 This information is provided by RNS The company news service from the London Stock Exchange

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