Cohort plc acquires J+S Ltd

Published 1st October 2014

Cohort, the independent technology group, is pleased to announce the acquisition of J+S Limited ('J+S' or 'the Company'), an independent systems and in-service support provider for the defence and offshore energy markets, from its shareholders for a cash consideration of £12 million.


  • Total cash consideration of £12m, payable from Cohort's existing resources
  • J+S provides the Group with new capabilities in defence, offered to the UK Royal Navy and other customers globally, and offshore energy
  • J+S will be integrated into Cohort's existing subsidiary SEA
  • Potential to offer enhanced technology solutions, support J+S's growth opportunities and to extend SEA's access to export markets
  • Acquisition expected to be immediately earnings enhancing

Overview of J+S Ltd:

J+S is a leading UK supplier of systems and in-service support for the defence and offshore energy markets. Its principal operating site is in Barnstaple and it also has a facility in Aberdeen. Its defence products include sonar systems, torpedo launchers and a range of other naval equipment. J+S has made sales in Canada, Malaysia and the wider Asia Pacific region, with a total of 12 per cent of 2012/13 revenue coming from outside the UK. The Company expects this proportion to increase in 2013/14. Established in 1956, J+S currently employs 137 staff across its two sites.

In the year ended 30 September 2013, J+S booked orders of £34.9m (2012: £8.8m). This was a record for the Company with a particularly strong performance from its defence business. The year-end order book stood at £36.5m (2012: £15.0m). It reported an operating profit of £1.5m (2012: £1.4m) on revenue up 4.4% to £13.2m (2012: £12.6m) for the year.

J+S expects to deliver turnover of £14m for the year to 30 September 2014 with an operating profit of £1.5m and Cohort believes growth prospects for subsequent years are strong. The Company's order book at the end of September 2014 is expected to be in excess of £33m.

At 30 September 2013, the gross assets of J+S were £8.7m and the net assets £3.7m. J+S's executive management will remain in place following the transaction, integrated into SEA's management team under Managing Director Stephen Hill.

Background to and reasons for the acquisition:

The acquisition of J+S is in line with the Group's stated strategy to accelerate its growth by making targeted acquisitions, complementing organic growth, whether as stand-alone members of the Group or as "bolt-in" acquisitions to our existing subsidiaries. The Board believes that this strategy of investing the Group's significant cash resources (which stood at over £14m as at 31 August 2014) partly in acquisitions will provide enhanced returns to shareholders.

J+S meets our stated criteria for bolt-in acquisitions where we look for businesses with capabilities and/or customer relationships that are closely linked to one of our existing subsidiaries. J+S's defence capabilities and products, notably its sonar array products, well-established manufacturing capability and long-term customer support relationships, are highly complementary to SEA's. We would expect to integrate J+S fully within SEA, leading to both cost savings and benefits from shared access to markets and technologies.

J+S's established production capability will be able to meet SEA's growing needs for submarine communication and other system manufacture. SEA's expertise in certain technology areas offers the potential for enhanced product offerings. The acquisition of J+S will extend SEA's reach internationally, by building on the strong foothold J+S has in Canada, Malaysia and the wider Asia Pacific region. It also brings a growing capability in adjacent markets including offshore energy.

Terms of the acquisition:

J+S was acquired from its shareholders, comprising David Jeffries, Chairman, and a number of other former and current employees, on a cash free / debt free basis for a consideration of £12m. This will be paid using Cohort's existing financial resources which included over £14m of net cash as at 31 August 2014 (after payment of the £6.0m initial consideration for the MCL transaction). Cohort retains unutilised banking facilities comprising an overdraft facility of £7.5m.

Andrew Thomis, Chief Executive Officer of Cohort, said:

"The acquisition of J+S represents Cohort's second significant step forward in recent months, following the acquisition of MCL in July. By integrating J+S into SEA, we aim to accelerate the growth of the combined business by enhancing its product and service offerings and broadening its international reach. The transaction will consolidate SEA's position as a leading international provider of naval defence technology. Overall, the two acquisitions have together substantially increased the scale, breadth and reach of Cohort's portfolio and are expected to be immediately earnings enhancing. We continue to look for attractive acquisition opportunities while focusing on integrating both businesses and delivering the synergies and growth we have identified."