Our February Company Watch pick Cohort, the defence technical services business, has climbed from 161.5p to 167.5p on news it had clinched a £9 million research programme to support the UK’s armed forces. Cohort’s SEA arm has been awarded a framework contract by the Ministry of Defence (MoD), worth £9 million over three years, involving work for an MoD programme aimed at developing new techniques, processes and technology to support UK armed forces operations in places such as Iraq and Afghanistan.

According to chairman Nick Prest, the contract award ‘demonstrates the MoD’s confidence in SEA to undertake these important research programmes’. SEA,
the second AIM acquisition by Cohort, which floated in March 2006 in order to consolidate a large and fragmented market, is a specialist developer of electronic surveillance systems for the defence, space and offshore sectors and recently cheered its new owners with the winning of more than £5.5 million worth of contracts for two transport sector clients, Network Rail and Transport for London.

Cash generative, profitable and already dividend paying, Cohort’s other businesses are Oxfordshire-based SCS, a fast-growing technical services provider whose key client is the MoD, and maiden AIM acquisition MASS, an independent systems house focused on the defence sector.

Profitable and demonstrating progressive dividend growth, we still like the look of Cohort, a well-managed concern with a solid forward order book (worth £56.1 million at the half-year). Based on 2008 forecasts before the latest contract news – turnover of £57.4 million, profits of £5.6 million and 11.9p of earnings – Cohort commands an inexpensive p/e rating of 14 times and should have further to go. Hold.

Cohort	AIM	£56.68m	140.00p	0.00p
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Cohort climbs on contract win			03/03/2008
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