A Robust Year and a Record Order Book: Cohort’s Impressive FY25 Update
Cohort PLC just dropped their full-year trading update, and defence investors should be paying attention. The headline? Strong growth, a record order book, and strategic moves that position this UK tech group for sustained momentum. Let’s dissect what this means.
The Standout Figures
Cohort delivered exactly what the market wanted:
- Revenue & profit growth comfortably met expectations, building on last year’s performance
- A record £615m closing order book – that’s nearly £100m higher than last year’s already solid £518.7m
- Positive net funds exceeding £5m – significantly better than anticipated despite their acquisition spree
- Order intake of c.£285m (excluding EM Solutions’ contribution) maintaining the crucial pattern of intake exceeding revenue
Most impressively? That bulging order book now covers around 80% of FY26 revenue expectations – providing serious visibility in an uncertain world.
Divisional Dynamics: A Tale of Two Halves
Digging deeper, the performance wasn’t uniform across Cohort’s structure:
Communications & Intelligence Division
- Star performer with excellent organic growth
- Net margins expanded to around 17% (up from 15.5% last year)
- Benefitted from the initial contribution of EM Solutions
Sensors & Effectors Division
- Broadly flat trading profit despite higher revenue
- Margins dipped to just under 9% (down from over 10%)
- Attributed to weaker margin mix at SEA and one-off project delays/costs at Chess
Strategic Chess Moves: Acquisitions & Disposals
Cohort isn’t sitting still. Two significant plays shape their future:
- The EM Solutions Acquisition (£75m): Their largest ever, funded through a £41m placing, cash, and debt. This Australian satellite communications specialist broadens Cohort’s naval systems offering and taps into the critical Indo-Pacific defence market. Integration’s on track.
- Transport Division Disposal (>£8m): The small non-core unit (within Sensors & Effectors) is being sold. Post-deal, non-defence revenue shrinks to just ~3%, sharpening Cohort’s defence/security focus.
Order Book: The Engine for Future Growth
Beyond the record £615m headline:
- Order intake remains healthy, sitting at 1.1x annual revenue (even after excluding last year’s £135m Royal Navy anomaly)
- Revenue visibility now stretches into the mid-2030s – a rarity that de-risks the investment case
Outlook: Defence Tailwinds Remain Strong
Management’s tone is confident, underpinned by:
- Robust demand drivers: Ongoing conflicts and Indo-Pacific tensions fuel global defence spending
- AUKUS alignment: EM Solutions positions Cohort perfectly within this crucial security pact
- Margin ambition: Clear aim to lift group net margins towards the “low to mid-teen %” range
CEO Andrew Thomis hit the nail on the head: “Our strong balance sheet provides a robust platform from which to continue to invest… while considering selective acquisitions.”
The Bottom Line for Investors
Cohort’s update ticks the boxes: delivery against expectations, strategic portfolio refinement, and outstanding visibility through that £615m order book. The EM Solutions integration and margin progression in Sensors & Effectors are key watchpoints. With prelims due July 16th, this trading update sets a very solid foundation. Cohort continues to demonstrate why it’s a serious player in the defence tech arena – executing its playbook with discipline. One to keep firmly on the radar.
