Cohort Plc LON:CHRT, the AIM-listed defence company, has seen its shares rise nearly 40% since The Armchair Trader last reported on the ‘One To Watch’, Reading-based firm in May 2024.
The company’s shares have increased 125% since this publication started coverage in July, and 2025 is looking like it will be another good year for the company.
Cohort last week announced that it had acquired Australian defence manufacturer, EM Solutions. The Australian firm, based in Queensland, designs, assembles, tests and supports satellite-on-the-move terminals for defence and government clients.
EM Solutions was founded in 1987 as MITEC, a spin-out from the University of Queensland, and focussed on long-range microwave communications and building on MITEC’s work, its founders set-up EM Solutions in 1998.
The company applied its technology to the defence sector, winning contracts with the Australian Navy, the Australian Army and Australian Border Force, and was acquired by Australian space and defence company, Electro Optic Systems in 2019.
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EM Solutions to operate as standalone subsidiary
EM Solutions will operate as a stand-alone subsidiary of Cohort. The UK-company has six other operating subsidiaries and the acquisition will further strengthen Cohort’s capabilities in the naval communications sub-sector.
Andy Thomis, Cohort’s CEO said: “We are delighted to welcome EM Solutions to the Cohort group. This is a significant step for Cohort, broadening the group’s strong naval systems service offering, bringing new customers and enhancing the global footprint of the combined business. Together, we look forward to serving EM Solutions’ customers, current and future, in the years to come.”
In its interim report, published in January, Cohort said that its had delivered record first-half performance, with higher revenue and adjusted profit than 2023 with a closing order book at a record level of GBP541.1m.
Cohort revenue up 25%
Revenue was up 25% year-on-year to GBP118.2m with adjusted operating profit of GBP10.1m up 69% y-o-y. The company improved its margin from 6.4% to 8.5% and Cohort’s earnings per share nearly doubled from 10.6p to 20p, driven by an increase of GBP20m y-o-y in orders.
Management declared a dividend of 5.25p/share, up from 4.7p/share in 2023. The company at the end of the period had net funds of GBP37.9m, an increase of GBP24.6m from the year before, which was well-ahead of expectations.
As previously reported, a more unstable world benefits Cohort, as does the announcement of the newly inaugurated American president, Donald Trump, who is pushing the US’ allies in NATO to increase defence spending to 5%. The NATO average is currently around 2%, often less, of national budgets, and with the US President’s aggressive policy of tariffs, the US’ allies might use an agreement to up defence spending as leverage to reduce the impact of US tariffs. Notably even the US doesn’t spend 5% on defence itself.
This augurs well for Cohort, and the company started the year with a EUR16.4m (GBP13.6m) contract to supply a new sonar system for the Italian Navy’s submarines through German subsidiary, ELAC. The amendment brings the total value of the contract, which was awarded in 2021, to over EUR100m and covers the supply of sonar systems for a total of four submarines. The contract further demonstrates Cohort’s visibility of future revenues.
2024’s performance was helped by higher UK Ministry of Defence sales, especially in Communications and Intelligence, specifically in Sensors and Effectors, with notable performance from subsidiary, EID.
Successful £40m placement
The company is well-equipped for the coming year, having successfully raised GBP40m through a placement in November, placing 4.6 million shares, or 9.8% of its existing capital, at 10p through Investec Bank. The funds were used to buy EM Solutions.
Cohort continues to solidify its position as a key player in the defence sector, with strong financial performance, strategic acquisitions, and a growing global footprint that adds Australia to operations in the UK, Portugal and Germany. The purchase of EM Solutions enhances its capabilities in naval communications, while rising defence budgets among NATO allies present further growth opportunities. With a record order book, increasing profitability, and a positive market outlook, Cohort appears well-positioned for sustained success in 2025 and beyond.
