Cohort (LON:CHRT) subsidiary SEA has been awarded a contract by BAE Systems (LON:BAES) for the supply of its External Communications System (ECS) for the second stage of the common External Communications System (cECS) programme. This reaffirms one of Cohort’s key core competences and further strengthens the group’s long-term outlook. The positive development of the global defence and security spending outlook provides a healthy environment for Cohort’s organic development. Recent share price performance leaves significant upside to our sum of the parts-based fair value of 445p.
The order is worth up to £17m and is for the supply of SEA’s ECS for the second stage of the cECS programme. It covers critical procurement and design into 2017. Further orders are then expected and ultimately the cECS will be provided for all Royal Navy submarines. The cECS is expected to reduce system cost and fitting time, increasing flexibility and sustainability of the fleet. SEA has been supplying its ECS to the Astute programme since 2009, with five boats covered. The initial cECS design contract was awarded to SEA in October 2014.
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