Completion of Acquisition

RNS Number : 3670H

Cohort PLC

03 December 2020

 

3 December 2020

 

COHORT PLC

("Cohort" or "the Group")

Cohort completes acquisition of Wärtsilä ELAC Nautik GmbH

Cohort plc, the independent technology group, is pleased to announce that the acquisition of Wärtsilä ELAC Nautik GmbH has now completed. German government approval for the transaction was granted in November and the other closing conditions were subsequently met. The acquisition, which has a headline price of €11.25m, is being funded from existing cash resources and the Group's banking facilities. Wärtsilä ELAC Nautik GmbH will be renamed ELAC SONAR GmbH ("ELAC SONAR").

A market leader in sonar systems technology for naval surface ships and submarines, ELAC SONAR will join the Group as Cohort's sixth standalone subsidiary. The acquisition will enhance Cohort's maritime defence system offering, with market leading technology in surface ship and submarine sonars, underwater communication systems and echo sounders. In addition:

· ELAC SONAR shares highly complementary expertise, capabilities and technologies with Cohort Subsidiary SEA, providing a significant cross-selling opportunity.

· ELAC SONAR is focused on defence export markets, with naval markets accounting for 80-90% of revenues, and strong penetration in South East Asia and Europe. The acquisition also adds Germany as a domestic market for the Group.

Background to the acquisition

Founded in 1926, ELAC SONAR is headquartered in Kiel, Germany, employing around 130 permanent staff. It has a locally based, highly experienced operational management team, who will remain in place following the acquisition.

ELAC SONAR has a global customer base, predominantly in Asia and Europe, but with a growing focus in North and South America. Its customers include navies, shipyards, integrators and resellers, with naval markets accounting for 80-90% of revenues whilst 10-20% of revenues are generated from commercial and dual use markets. ELAC SONAR has products currently in operation on various submarines and surface ships, including for the German, Indonesian, Singaporean, Taiwanese, Dutch and Portuguese navies.

ELAC SONAR's offer comprises highly customised and innovative solutions for its customers, with a business model that focuses on open architecture products that are easy to upgrade and customise.  Most supply contracts include services covering installation, consultancy, system integration, acceptance tests, updates, training and spare parts.

 

Financial information on ELAC

In its financial year ended 31 December 2019, Wärtsilä ELAC Nautik generated revenues of €21.4m and EBIT of €1.8m.  The order back log as at 31 October 2020 stood at €26.0m, of which c.€12m  was for delivery during calendar year 2021 with some long-term orders stretching out to 2025.  As at 31 December 2019, Wärtsilä ELAC Nautik had total assets of €28.6m. Wärtsilä ELAC Nautik operates a small defined benefit pension scheme, which is now closed to new members, but which may require modest funding by Cohort in coming years. As at 31 December 2019, it had a deficit as calculated under IFRS of €8.4 million.

Based on the order book, prospects and delays due to the COVID-19 pandemic, a revenue of €20.7m and an EBIT of €1.0m is expected for the year ending 31 December 2020. The acquisition is expected to be earnings enhancing for the Group's financial year commencing 1 May 2021, reinforced by ELAC SONAR's order book out to 2025 and its encouraging order pipeline.

Andrew Thomis, Chief Executive Officer of Cohort, said:

"We are delighted to welcome ELAC SONAR to the Group. This is a significant step for Cohort, adding a sixth standalone business to our portfolio. ELAC SONAR brings a leading position in the attractive and growing submarine and surface sonar markets, complementing our existing capabilities and giving the Group an exceptionally wide and capable offering in this important sector."

ENDS

For further information, please contact:

Cohort plc		0118 909 0390
Andrew Thomis, Chief Executive Simon Walther, Finance Director Raquel McGrath, Company Secretary
Investec Bank plc		020 7597 5970
Daniel Adams / Chris Baird
MHP Communications		020 3128 8100
Reg Hoare / Pete Lambie / Isabella Grace

NOTES TO EDITORS 

Cohort plc (www.cohortplc.com) is the parent company of six innovative, agile and responsive businesses based in the UK, Germany and Portugal, providing a wide range of services and products for domestic and export customers in defence and related markets.

Chess Technologies, through its operating businesses Chess Dynamics and Vision4ce, offers surveillance, tracking and fire-control systems to the defence and security markets. It was acquired by Cohort plc in December 2018. www.chess-dynamics.com & www.vision4ce.com

EID designs and manufactures advanced communications systems for naval and military customers. Cohort acquired a majority stake in June 2016. www.eid.pt

ELAC SONAR supplies advanced sonar systems and underwater communications to global customers in the naval marketplace.  Acquired by Cohort in December 2020.  www.elac-sonar.de

MASS is a specialist data technology company serving the defence and security markets, focused on electronic warfare, digital services and training support.  Acquired by Cohort in August 2006. www.mass.co.uk

MCL designs, sources and supports advanced electronic and surveillance technology for UK end users including the MOD and other government agencies. MCL has been part of the Group since July 2014. www.marlboroughcomms.com

SEA delivers and supports technology-based products for the defence and transport markets alongside specialist research and training services. Acquired by Cohort in October 2007. www.sea.co.uk

Cohort (AIM: CHRT) was admitted to London's Alternative Investment Market in March 2006. It has headquarters in Reading, Berkshire and employs in total around 1,000 core staff there and at its other operating company sites across the UK. Germany and Portugal.

 

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