REG - Cohort PLC - Half Yearly Report - Part 1
Released: 09/12/2009

 
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RNS Number : 8209D
Cohort PLC
09 December 2009
 
 
9 December 2009
COHORT PLC
UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED
31 OCTOBER 2009
Cohort plc, a leading independent technology group, today announces unaudited interim results for the half year to 31
October 2009. Highlights include: 
 
                                                                                         6 months ended 31 October 2009  6 months ended31 October2008  
                                                                                                                                                       
 Revenue                                                                                 £37.3m                          £33.9m                        
                                                                                                                                                       
 Adjusted operating profit*                                                              £1.4m                           £3.2m                         
                                                                                                                                                       
 Profit before tax                                                                       £1.2m                           £2.6m                         
                                                                                                                                                       
 Order book                                                                              £60.2m                          £57.6m                        
                                                                                                                                                       
 Adjusted earnings per share*                                                            2.42p                           6.25p                         
                                                                                                                                                       
 Interim dividend per share                                                              0.65p                           0.55p                         
                                                                                                                                                       
 * Excludes exceptional items (net of tax) and amortisation of other intangible assets.  
 
 
Commenting on the result, Nick Prest CBE, Chairman of Cohort plc said:
"Two of Cohort's subsidiaries, MASS and SEA have continued to trade well. MASS is well ahead of expectations having made
good progress on both UK MOD projects and overseas deliveries in the first half. SCS has had a very poor first half and as
a result our overall Group expectations for this year have been lowered. A full review is underway to identify and correct
the causes of the problems which have arisen at SCS. Taking a longer view the Board believes that the prospects for all of
the Group's businesses are sound and that this will feed into shareholder value after the problems at SCS have been
rectified. Our decision to maintain our progressive dividend policy reflects this belief."
For further information, please contact 
 
 Cohort plc Andrew Thomis, Chief ExecutiveSimon Walther, Finance Director  01491 845 630  
                                                                                          
 Investec Keith AndersonDaniel Adams                                       020 7597 5970  
                                                                                          
 Hogarth Partnership Limited    Julian Walker, Vicky Watkins               020 7357 9477  
 
 
NOTES TO EDITORS
Cohort plc (www.cohortplc.com) is an independent technology group working primarily for defence (air, land and sea), wider
government and industry clients, through three market-facing subsidiary companies: 
 
* 
MASS (www.mass.co.uk) - a specialist defence and aerospace business focused mainly on electronic warfare, information
systems and electronic systems development. Acquired by Cohort in August 2006.  
* 
SCS (www.scs-ltd.co.uk) - an independent defence consultancy, combining technical expertise with practical experience and
domain knowledge. Owned by Cohort since flotation in March 2006.  
* 
SEA (www.sea.co.uk) - an advanced surveillance systems and software house with hardware development capability operating in
the defence, space, transport and offshore market sectors. Acquired by Cohort in October 2007. 
 
Cohort (AIM: CHRT) was admitted to London's Alternative Investment Market in March 2006. It has its headquarters in
Oxfordshire and, through its operating companies, employs in total around 500 core staff there and at bases in Bristol,
Cambridgeshire, Oxfordshire, Lincolnshire and Somerset.
CHAIRMAN'S STATEMENT
OVERVIEW
Cohort has continued to make progress during the first six months of this year in two of its three subsidiaries, MASS and
SEA, both achieving good revenue growth over the equivalent period last year.  MASS continued to show good profit growth
whilst SEA's profit was slightly lower than for the corresponding period last year, in line with expectations. This
performance reflects SEA's current position in a number of key programmes, with stronger second half delivery expected. As
announced on 3 December 2009, SCS has had a poor first half. An income overstatement for prior periods has also been
identified and the comparative figures restated accordingly. An urgent investigation to identify the causes of the
difficulties at SCS and resolve them is underway. As a consequence of the position at SCS the trading profit for the Group
was down compared with the first six months for last year and the Group now anticipates a result for the full year
significantly lower than the result for the year to 30 April 2009.
FINANCIALS
In the six months ended 31 October 2009, Cohort achieved revenue of £37.3m (2008: £33.9m), a 10% increase. The Group's
revenue for the first half included £10.9m from MASS, an increase of 14% and £13.6m from SEA, an increase of 28%. SCS
revenue was down on the first half of last year by £0.9m from £13.7m to £12.8m, a fall of 7%. 
The Group's adjusted operating profit was £1.4m (2008: £3.2m). This included contributions from MASS of £1.9m (2008: £1.3m)
and from SEA £1.1m (2008: £1.2m). The loss from SCS of £0.9m (2008: profit of £1.2m) reduced the Group's overall trading
performance.  The Group's operating profit was £1.3m (2008: £2.9m).
During the period, the business of the Group's joint venture undertaking, AGS, was sold, realising an exceptional profit to
the Group of £0.2m. The Group had previously withdrawn from this joint venture undertaking and written down its investment.
As announced on 3 December 2009, as part of the review leading up to the interim results the Group identified an
overstatement of income at SCS of £1.85m. Of this amount, £0.6m has been identified as relating to the value of work in
progress at 30 April 2009 and as the Board consider this to be a material amount the figures reported for the year ending
on this date have been correspondingly restated.
The adjusted earnings per share (before exceptional items and amortisation of other intangible assets) for the six months
ended 31 October 2009 are 2.42 pence per ordinary share (2008: 6.25 pence).
Net cash outflow from operating activities was £0.1m (2008: inflow of £1.2m).  Working capital increased in the first half
but we expect it to reduce in the second half as deliveries are made.  The net outflow in the first half compared with the
net inflow in 2008/9 was primarily due to higher tax payments on account, with elements of R&D tax credits not yet
reflected in these.  The period ended with the Group holding £3.0m of net funds (£3.7m at 30 April 2009 and £1.8m net debt
at 31 October 2008).
MASS
MASS has continued to perform very well, producing a 43% increase in operating profit from a 14% increase in revenue over
the same period last year. Good progress on the MoD secure communications project as well as increased overseas deliveries
contributed to a good performance, exceeding our expectations.  MASS secured its role as IT provider for North Lincolnshire
Building Schools for the Future programme as well as being part of one of the two teams down selected to the next stage of
the UK's Defence Electronic Warfare Improvement Programme, worth up to £50m to the winning consortium. Down selection to
one contractor is expected in the second half of next year.  The order book of MASS at 31 October 2009 was £27.9m,
underpinning £8.2m of second half revenue.
During the early part of November, MASS completed the acquisition for £2.3m of a freehold property in St Neots, close to
its current operations. This acquisition has been made to enable MASS to continue to expand its operations. Refurbishment
costing up to £1.4m will take place over the next six months with MASS due to occupy its new facility in the summer of
2010. This purchase has been funded from the Group's own cash resources.
SEA
SEA performed in line with expectations. An increase in revenue of 28% was accompanied by a slight deterioration in net
profit compared with the first half of 2008/9. The lower net profit, which was in line with expectations, reflected a
change in mix with higher volumes in the period of lower margin revenue, primarily from current stages on space programmes
and the research framework agreement for Future Soldier Systems. SEA also increased manning for delivery of some programmes
which have slipped into the second half. As is typical for SEA, the delivery of revenue will be much more weighted to the
second half.  SEA order book at 31 October 2009 was £22.8m, underpinning £10.5m of the second half revenue.  
SCS
SCS has had a very poor first half to 2009/10 producing a net loss of £0.9m (2008: £1.2m profit) on revenue of £12.8m
(2008: £13.7m). This very disappointing result has arisen from a tightening in the market leading to reduced revenue, a
poor mix of work leading to lower margins and lower utilisation of core staff.  The reported operating loss of £0.9m
includes £0.4m of costs in respect of contracts completed in the year ended 30 April 2009 which do not fall to be
classified as a prior year adjustment under accounting standards.  The balance of the announced income overstatement,
£0.8m, arose during the six months ended 31 October 2009 and is included in the reported operating loss.  
Since the announcement on 3 December 2009 the Group has been carrying out an urgent investigation, in conjunction with its
auditor, into the causes of the income overstatement, which relates mainly to work in progress on a small number of fixed
price contracts. Preliminary conclusions are that causes were: errors in migrating data from the previous management
information system to the present one; shortcomings in operation of the system; poor interaction between the finance and
project management functions; and accounting errors.  As a result of a lack of adequate balance sheet review at SCS these
errors accumulated until identified by the company in the process of preparing the Interim result.
Prior to identification of the income overstatement, an initial restructuring programme had already been implemented at SCS
which reduced annual costs by £0.7m.  Following the recently identified problems, further changes are likely to be required
to put SCS back on a satisfactory trading path.  An urgent review of the management, operations and financial control at
SCS is underway in order to identify and implement the necessary changes.
The SCS second half performance is expected to be in profit, and the Board presently anticipates that SCS will trade
approximately at break even over the whole year. The SCS order book at 31 October 2009 was £9.5m with £8.0m of this
deliverable in the second half of the year. 
SCS will relocate in early 2010 from Henley-on-Thames to a new office in Theale, near Reading. SCS, as now, will lease its
new facilities.
OUTLOOK AND DIVIDENDS
The Group's order book at 31 October 2009 stood at £60.2m. £26.7m of this order book is deliverable in the second half.    
Despite the expected good performance from MASS and SEA, the breakeven trading outlook for SCS for the year means that the
profit before tax for the current financial year will be significantly below that for the year ended 30 April 2009.
Taking a longer view, the Board believes that the prospects for all of the Group's businesses are sound and that this will
feed into shareholder value after the problems at SCS have been rectified.  Reflecting this belief, the Board is
maintaining its progressive dividend policy.  The Group plans to pay an interim dividend of 0.65 pence (2008: 0.55 pence)
per ordinary share on 6 March 2010 to shareholders on the register at 27 February 2010.
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 October 2009 
 
                                                                               Notes  Six months ended 31 October 2009 Unaudited £000  Six months ended 31 October 2008 Unaudited £000  Year ended 30 April 2009Restated Unaudited£000  
                                                                                                                                                                                                                                        
 Revenue                                                                       2      37,283                                           33,860                                           77,951                                          
                                                                                                                                                                                                                                        
 Cost of sales                                                                        (27,252)                                         (22,763)                                         (54,001)                                        
                                                                                                                                                                                                                                        
 Gross profit                                                                         10,031                                           11,097                                           23,950                                          
                                                                                                                                                                                                                                        
 Administrative expenses                                                              (8,659)                                          (7,868)                                          (16,470)                                        
                                                                                                                                                                                                                                        
 Adjusted operating profit*                                                    2      1,372                                            3,229                                            7,480                                           
                                                                                                                                                                                                                                        
 Amortisation of other intangible assets                                              (297)                                            (312)                                            (540)                                           
                                                                                                                                                                                                                                        
 Exceptional items                                                             3      200                                              -                                                (674)                                           
                                                                                                                                                                                                                                        
 Operating profit                                                              2      1,275                                            2,917                                            6,266                                           
                                                                                                                                                                                                                                        
 Share of results of joint ventures                                                   -                                                (216)                                            (224)                                           
                                                                                                                                                                                                                                        
 Finance income                                                                       16                                               90                                               95                                              
                                                                                                                                                                                                                                        
 Finance costs                                                                        (88)                                             (177)                                            (303)                                           
                                                                                                                                                                                                                                        
 Profit before tax                                                                    1,203                                            2,614                                            5,834                                           
                                                                                                                                                                                                                                        
 Income tax expense                                                            4      (316)                                            (613)                                            (1,242)                                         
                                                                                                                                                                                                                                        
 Profit for the period attributable to the equity shareholders of the parent.  887    2,001                                            4,592                                            
                                                                                                                                                                                        
 Earnings per share                                                                                                                                                                     
 Basic                                                                         2.18p  4.94p                                            11.34p                                           
 Diluted                                                                       2.17p  4.92p                                            11.26p                                           
 
 
All profit for the period is derived from continuing operations.  The business of the joint venture was sold during the
period.
*Adjusted operating profit is the operating profit before exceptional items and amortisation of other intangible assets.
The consolidated income statement for the year ended 30 April 2009 has been restated for the income overstatement described
in note 8.
STATEMENT OF OTHER COMPREHENSIVE INCOME
For the six months ended 31 October 2009 
 
                                                                                                  Six months ended 31 October 2009 Unaudited £000  Six months ended 31 October 2008 Unaudited £000  Year ended 30 April 2009RestatedUnaudited£000  
                                                                                                                                                                                                                                                   
 Profit for the period attributable to equity shareholders of the parent                          887                                              2,001                                            4,592                                          
                                                                                                                                                                                                                                                   
 Other comprehensive income:                                                                                                                                                                                                                       
 Cash flow hedges - losses taken to equity (net of tax)                                           -                                                -                                                (49)                                           
                                                                                                                                                                                                                                                   
 Total comprehensive income for the period attributable to the equity shareholders of the parent  887                                              2,001                                            4,543                                          
 
 
The statement of other comprehensive income for the year ended 30 April 2009 has been restated for the income overstatement
described in note 8.
  CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 October 2009 
 
                                                                             31 October 2009 Unaudited £000  31 October 2008 Unaudited £000  30 April 2009RestatedUnaudited £000  
 ASSETS                                                                                                                                                                           
 Non-current assets                                                                                                                                                               
                                                                                                                                                                                  
 Goodwill                                                                    31,043                          31,042                          31,043                               
 Other intangible assets                                                     930                             1,675                           1,227                                
 Property, plant and equipment                                               4,731                           4,754                           4,727                                
 Deferred tax asset                                                          266                             62                              266                                  
                                                                             36,970                          37,533                          37,263                               
 Current assets                                                                                                                                                                   
 Inventories                                                                 417                             333                             359                                  
 Trade and other receivables                                                 19,654                          20,765                          23,655                               
 Derivative financial instruments                                            210                             121                             178                                  
 Cash and cash equivalents                                                   6,749                           2,134                           7,511                                
                                                                     27,030  23,353                          31,703                          
 Total assets                                                        64,000  60,886                          68,966                          
                                                                                                                                             
 LIABILITIES                                                                                                                                                                      
 Current liabilities                                                                                                                                                              
 Trade and other payables                                                    (11,086)                        (11,047)                        (16,164)                             
 Current tax liabilities                                                     (1,068)                         (1,475)                         (1,377)                              
 Other loans                                                                 -                               (42)                            (32)                                 
 Derivative financial instruments                                            (68)                            -                               (68)                                 
 Bank borrowings                                                             (3,180)                         (3,126)                         (3,167)                              
 Provisions                                                                  (1,354)                         (1,266)                         (1,528)                              
                                                                             (16,756)                        (16,956)                        (22,336)                             
                                                                                                                                                                                  
 Non-current liabilities                                                                                                                                                          
                                                                                                                                                                                  
 Other loans                                                                 -                               (11)                            -                                    
 Bank borrowings                                                             (529)                           (728)                           (615)                                
 Deferred tax liability                                                      (920)                           (662)                           (920)                                
                                                                             (1,449)                         (1,401)                         (1,535)                              
 Total liabilities                                                           (18,205)                        (18,357)                        (23,871)                             
 Net assets                                                                  45,795                          42,529                          45,095                               
                                                                                                                                                                                  
                                                                                                                                                                                  
 Equity                                                                                                                                                                           
 Share capital                                                               4,076                           4,048                           4,059                                
 Share premium account                                                       29,491                          29,186                          29,297                               
 Hedge reserve                                                               (49)                            -                               (49)                                 
 Share option reserve                                                        356                             260                             266                                  
 Retained earnings                                                           11,921                          9,035                           11,522                               
 Total equity attributable to the equity shareholders of the parent          45,795                          42,529                          45,095                               
                                                                     
                                                                     
 
 
The consolidated statement of financial position for the year ended 30 April 2009 has been restated for the income
overstatement described in note 8.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 October 2009 
 
                                                        Note  Share capital  Share premium account  Hedge reserve  Share option reserve  Retained earnings  Total equity  
                                                              £000           £000                   £000           £000                  £000               £000          
                                                                                                                                                                          
 At 1 May 2009 as previously reported                         4,059          29,297                 (49)           266                   12,012             45,585        
 Restatement in respect of income overstatement at SCS  8     -              -                      -              -                     (490)              (490)         
 At 1 May 2009 as restated                                    4,059          29,297                 (49)           266                   11,522             45,095        
                                                                                                                                                                          
 Dividends                                                    -              -                      -              -                     (488)              (488)         
 Total comprehensive income for the period                    -              -                      -              -                     887                887           
 Share options                                                17             194                    -              -                     -                  211           
 Share based payments                                         -              -                      -              90                    -                  90            
                                                                                                                                                                          
 At 31 October 2009                                           4,076          29,491                 (49)           356                   11,921             45,795        
                                                                                                                                                                          
                                                                                                                                                                          
 At 1 May 2008                                                4,046          29,158                 -              200                   7,439              40,843        
                                                                                                                                                                          
 Dividends                                                    -              -                      -              -                     (405)              (405)         
 Total comprehensive income for the period                    -              -                      -              -                     2,001              2,001         
 Share options                                                2              28                     -              -                     -                  30            
 Share based payments                                         -              -                      -              60                    -                  60            
                                                                                                                                                                          
 At 31 October 2008                                           4,048          29,186                 -              260                   9,035              42,529        
                                                                                                                                                                          
                                                                                                                                                                          
 At 1 May 2008                                                4,046          29,158                 -              200                   7,439              40,843        
                                                                                                                                                                          
 Dividends                                                    -              -                      -              -                     (627)              (627)         
 Total comprehensive income for the year                8     -              -                      (49)           -                     4,592              4,543         
 Share options                                                13             139                    -              -                     -                  152           
 Share based payments                                         -              -                      -              66                    118                184           
                                                                                                                                                                          
 At 30 April 2009                                             4,059          29,297                 (49)           266                   11,522             45,095        
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS 
For the six months ended 31 October 2009 
 
                                                         Notes    Six months ended 31 October 2009 Unaudited  Six months Ended 31 October 2008 Unaudited  Year ended 30 April 2009RestatedUnaudited  
                                                                  £000                                        £000                                        £000                                       
 Net cash (used in)/generated from operating activities  7        (81)                                        1,233                                       7,271                                      
                                                                                                                                                                                                     
 Cash flow from investing activities                                                                                                                                                                 
 Interest received                                                16                                          90                                          95                                         
 Proceeds on disposals of property, plant and machinery           27                                          -                                           6                                          
 Proceeds on disposal of interest in joint ventures               140                                         -                                           -                                          
 Purchases of property, plant and equipment                       (296)                                       (141)                                       (432)                                      
 Acquisition of subsidiaries, net of cash acquired                (280)                                       (4,673)                                     (4,673)                                    
                                                                                                                                                                                                     
 Net cash used in investing activities                            (393)                                       (4,724)                                     (5,004)                                    
                                                                                                                                                                                                     
 Cash flow from financing activities                                                                                                                                                                 
                                                                                                                                                                                                     
 Dividends paid                                                   (488)                                       (405)                                       (627)                                      
 Repayment of borrowings                                          (105)                                       (81)                                        (174)                                      
 Proceeds on issue of shares                                      211                                         30                                          152                                        
                                                                                                                                                                                                     
 Net cash used in financing activities                            (382)                                       (456)                                       (649)                                      
                                                                                                                                                                                                     
 Net (decrease)/increase in cash and cash equivalents             (856)                                       (3,947)                                     1,618                                      
                                                                                                                                                                                                     
 Cash and bank brought forward                                    1,311                                       6,081                                       6,081                                      
 Cash flow                                                        3,344                                       (4,947)                                     (4,582)                                    
 Exchange                                                94       -                                           (188)                                       
                                                                                                                                                                                                     
 Cash and bank carried forward                                    4,749                                       1,134                                       1,311                                      
                                                                                                                                                                                                     
 Short term deposits brought forward                     6,200    -                                           -                                           
 Cash flow                                               (4,200)  1,000                                       6,200                                       
                                                                                                                                                          
 Short term deposits carried forward                     2,000    1,000                                       6,200                                       
                                                                                                                                                          
 Cash and cash equivalent brought forward                7,511    6,081                                       6,081                                       
 Cash flow                                               (856)    (3,947)                                     1,618                                       
 Exchange                                                94       -                                           (188)                                       
                                                                                                                                                          
 Cash and cash equivalents carried forward               6,749    2,134                                       7,511                                       
                                                                                                                                                          
 Total debt                                              (3,709)  (3,907)                                     (3,814)                                     
                                                                                                                                                          
 Net funds/(debt)                                        3,040    (1,773)                                     3,697                                       
                                                                                                                                                          
 
 
NOTES TO THE INTERIM REPORT
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 2010. 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 is presented in sterling and all values are rounded to the nearest thousand
pounds (£000) except where otherwise indicated.
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1
May 2009. 
IAS 1 (revised), "Presentation of financial statements". The revised standard requires "non-owner changes in equity" to be
presented separately from owner changes in equity. All "non-owner changes in equity" are required to be shown in a
performance statement. Entities can choose whether to present one performance statement (the statement of comprehensive
income) or two statements (the income statement and statement of comprehensive income). The Group has elected to present
two statements: an income statement and a statement of comprehensive income. The interim financial statements have been
prepared under the revised disclosure requirements. 
IFRS 8, "Operating segments". IFRS 8 replaces IAS 14, "Segment reporting". It requires a "management approach" under which
segment information is presented on the same basis as that used for internal reporting purposes. This will not result in a
change in the reportable segments presented. 
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker has been identified as the Board that makes strategic decisions. 
In accordance with s434 of the Companies Act 2006, the unaudited results do not constitute statutory financial statements
of the Company. The six months results for both years are unaudited.  
The comparative figures for the year ended 30 April 2009 were derived from the statutory accounts for that year which have
been delivered to the Registrar of Companies. Those accounts received an unqualified audit report which did not include
statements under section 498(2) or (3) of the Companies Act 2006.  The figures for the year ended 30 April 2009 have been
restated for the income overstatement at SCS (see note 8).
The interim report was approved by the Board and authorised for issue on 8 December 2009.  Copies of the interim report
will be sent to shareholders on 21 December 2009.
2.  SEGMENTAL ANALYSIS OF REVENUE AND ADJUSTED OPERATING PROFIT 
 
                                          Six months ended 31 October 2009 Unaudited £000  Six months ended 31 October 2008 Unaudited£000  Year ended 30 April 2009RestatedUnaudited£000  
 Revenue                                                                                                                                                                                  
 MASS                                     10,905                                           9,561                                           20,622                                         
                                                                                                                                                                                          
 SCS                                      12,821                                           13,688                                          30,425                                         
                                                                                                                                                                                          
 SEA                                      13,557                                           10,611                                          26,904                                         
                                          37,283                                           33,860                                          77,951                                         
                                                                                                                                                                                          
 Operating profit                                                                                                                                                                         
 MASS                                     1,884                                            1,322                                           2,832                                          
                                                                                                                                                                                          
 SCS                                      (902)                                            1,171                                           2,723                                          
                                                                                                                                                                                          
 SEA                                      1,074                                            1,231                                           3,124                                          
                                                                                                                                                                                          
 Central Costs                            (684)                                            (495)                                           (1,199)                                        
 Adjusted operating profit                1,372                                            3,229                                           7,480                                          
                                                                                                                                                                                          
 Amortisation of other intangible assets  (297)                                            (312)                                           (540)                                          
 Exceptional items                        200                                              -                                               (674)                                          
                                                                                                                                                                                          
 Operating profit                         1,275                                            2,917                                           6,266                                          
 
 
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 and amortisation of 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 £90,000 in respect of share-based payments (six months ended 31
October 2008: £60,000, year ended 30 April 2009: £184,000)
As announced on 3 December 2009 the Group identified an overstatement of income of £1,850,000.  Of this, £620,000 has been
accounted as prior year adjustment (see note 8). Of the remainder £434,000 relates to costs incurred on contracts completed
in the year ended 30 April 2009 which do not fall to be classified as prior year adjustments under accounting standards and
£796,000 relates to costs overruns on contracts in progress. The underlying performance of SCS in the period is therefore a
loss of £468,000 (2008: profit of £1,171,000).
REVENUE ANALYSIS BY SECTOR AND TYPE OF WORK 
 
                                                                          Six months ended 31 October 2009 Unaudited  Six monthsended31 October 2008 Unaudited  Year ended 30 April 2009RestatedUnaudited  
                                                                          £m                                          %                                         £m                                         %    £m    %    
 By sector                                                                                                                                                                                                                 
 Direct to UK MoD                                                         19.5                                                                                  18.9                                            43.7       
 Indirect to UK MoD, where the Group acts as a sub-contractor or partner  6.8                                                                                   7.4                                             16.4       
 Total to the UK MoD                                                      26.3                                        71                                        26.3                                       78   60.1  77   
                                                                                                                                                                                                                           
 Export defence customers                                                 4.1                                                                                   2.5                                             6.0        
 Defence revenue                                                          30.4                                        82                                        28.8                                       85   66.1  85   
                                                                                                                                                                                                                           
 Transport                                                                1.9                                                                                   2.2                                             4.6        
 Space                                                                    3.6                                                                                   1.6                                             4.2        
 Other commercial                                                         1.4                                                                                   1.3                                             3.1        
 Non defence revenue                                                      6.9                                         18                                        5.1                                        15   11.9  15   
                                                                                                                                                                                                                           
 Total revenue                                                            37.3                                        100                                       33.9                                       100  78.0  100  
                                                                                                                                                                                                                           
 By type of work                                                                                                                                                                                                           
 Technology solutions                                                     16.0                                        43                                        12.1                                       36   30.4  39   
 Advisory services                                                        7.6                                         20                                        11.8                                       35   23.2  30   
 Manpower provision                                                       6.5                                         17                                        3.7                                        11   10.0  13   
 Managed services                                                         4.4                                         12                                        4.3                                        13   9.0   11   
 Product                                                                  2.8                                         8                                         2.0                                        5    5.4   7    
                                                                                                                                                                                                                           
 Total revenue                                                            37.3                                        100                                       33.9                                       100  78.0  100  
 
 
3.  EXCEPTIONAL ITEMS 
 
                                                                         Six months ended 31 October 2009 Unaudited £000  Six months ended 31 October 2008 Unaudited£000  Year ended 30 April 2009RestatedUnaudited£000  
 Charge in respect of withdrawing from the Group's joint venture in AGS  -                                                -                                               (674)                               
- More to follow, for following part double click [ID:nRSI8209Db]