Cohort

Oxfordshire-based defence technology firm Cohort has cheered with news of sizeable Ministry of Defence (MoD) contract wins for all three of its subsidiaries.

Cohort, which works for defence, government and industry clients, has announced more than £60m of new wins. MASS, the systems house acquired in 2006, has won a nine-year deal worth more than £50m with the MoD entailing technical tasks ranging from operational analysis to IT infrastructure management to software engineering.

SCS, its recently troubled defence consultancy arm, has secured a £2.2m tie-up to provide training support to the armed forces Permanent Joint Headquarters. Last, but by no means least, SEA, the surveillance systems and software business bought in late 2007, has bagged a £10m plus deal against ‘strong domestic and international competition’ to supply communications systems for nuclear submarines.

Andy Thomis, CEO, says the contracts have enhanced Cohort's credentials in its markets and provide ‘a base of long-term stable income to further underpin future group performance’. Indeed, Cohort confidently expects to close the year to April 2010 with an order book of more than £100m, compared with a total of £47.2m a year ago.

Originally backed by Growth Company Investor at 161.5p in 2008, Cohort shares came under pressure last year on news of alarming accounting errors at SCS, while more recently, the company conceded results from SEA would disappoint. Nevertheless, these latest contracts and Cohort’s burgeoning order book should restore some confidence.

Though April 2010 profits and earnings are forecast to have reduced to £4m pre-tax and 7.7p respectively, analysts see £6.1m pre-tax and EPS of 11.6p as possible for 2011, based upon which, the income-yielding shares sell for an undemanding 9.4 times earnings. Readers prepared to sit tight should be rewarded by long-term price recovery.