Cohort plc Annual Report 2021

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FY2021 Annual Report · Cohort plc

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Applying advanced
technology to protect
and secure

Annual Report and Accounts 2021

Strategic report

Governance

Financial statements

Our purpose

Supporting entrepreneurial
businesses to grow and
innovate in defence, technology
products & services

We support the businesses within our Group to grow. With a focus on
entrepreneurialism, we foster agility and promote innovation. Our strong balance
sheet provides a stable financial foundation. We create an environment of trust
where our businesses share knowledge to widen market access and through
partnership open doors globally.

cohortplc.com

Strategic report
1 Highlights

2 Who we are

3 Geographic analysis

4 Our markets

Investment case

Chairman’s statement

Business model

11 Strategy

Innovation and technology

14 Key performance indicators

16 Operating review

19 Subsidiary review

31 Financial review

37 Risk management and principal risks

43 Stakeholder engagement

50 Environmental report

Corporate governance
53 Board of Directors

54 Executive Management Team

55 Corporate governance report

60 Audit Committee report

Financial statements
Independent auditor’s report
80

85 Consolidated income statement

86 Consolidated statement of comprehensive income

87 Consolidated statement of changes in equity

62 Nomination Committee report

88 Company statement of changes in equity

63 Remuneration Committee report

89 Consolidated and Company statement of

75 Directors’ report

financial position

78 Statement of Directors’ responsibilities

90 Consolidated and Company cash flow

statements

91 Notes to the financial statements

119 Accounting policies

128 Five-year record

128 Glossary of terms

IBC Shareholder information, financial calendar

and advisers

Highlights

How we have performed

Operational highlights
X Initial contribution from ELAC driving
overall growth in Group’s performance

X Acquisition of Wärtsilä ELAC Nautik

GmbH (ELAC) completed

X Good performance from MASS,

X Adjusted operating profit of £18.6m

although slightly weaker than last year’s
record high

(2020: £18.2m) on revenue of £143.3m
(2020: £131.1m)

X Much stronger year from EID and better

performance from MCL

X Dividend increased by 10%
X Net funds better than expected at £2.5m

X Weaker performance from Chess and SEA

(2020: net debt £4.7m)

Financial highlights

ADJUSTED OPERATING PROFIT (£m)

ORDER INTAKE (£m)

NET FUNDS/(DEBT) (£m)

£18.6m

£180.3m

£2.5m

18.6

18.2

16.2

15.2

14.4

180.3

2.5

124.4

(4.7)

189.9

(6.4)

76.6

108.6

11.3

8.5

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Who we are

Innovative, agile, responsive

Cohort 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, security and related markets. Each of the
subsidiary businesses within the Group offers a specialist portfolio of technologies
and services, many unique, supplied to prime contractors and end users.

Our businesses

TOTAL REVENUE

£143.3m
(2020: £131.1m)

SEA delivers and supports
technology-based products for the
defence and transport markets
alongside performing specialist
research and training services.

REVENUE:

£28.0m
(2020: £31.7m)

MCL designs, sources and
supports advanced electronic
and surveillance technology.

REVENUE:

£18.0m
(2020: £15.1m)

FULL REVIEW ON PAGE 27

FULL REVIEW ON PAGE 29

2021: £143.3m

2020:
£131.1m

R19+
20+

Chess is a leading supplier of
electro-optical and electro-
mechanical systems to the
defence and security markets.

REVENUE:

£28.6m
(2020: £25.2m)

FULL REVIEW ON PAGE 19

EID designs and manufactures
advanced communications
systems for the defence and
security markets.

REVENUE:

£20.9m

(2020: £18.0m)

FULL REVIEW ON PAGE 21

ELAC Sonar supplies advanced sonar
systems and underwater communications
to global naval customers.

REVENUE:

£8.3m (five months)
(2020: £nil)

FULL REVIEW ON PAGE 23

MASS is a specialist data technology company
serving the defence and security markets.

REVENUE:

£39.5m
(2020: £41.1m)

FULL REVIEW ON PAGE 25

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
15
+
6
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28
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13
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18
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R
14
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31
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12
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24
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L
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Geographic analysis

Geographic breakdown of revenue

UK TOTAL

£77.1m

(2020: £78.9m)

PORTUGAL

£6.3m

(2020: £8.3m)

OTHER EUROPEAN
COUNTRIES

£23.4m

(2020: £13.2m)

NORTH AND
SOUTH AMERICA

£5.9m

(2020: £6.3m)

GERMANY

£1.0m

(2020: £0.1m)

ASIA PACIFIC

£29.6m

(2020: £24.3m)

FULL DETAIL IN THE FINANCIAL
STATEMENTS ON PAGE 93

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Our markets

Applying advanced technology to
protect and secure, we nurture agile
partnerships across our markets

Defence and security
X We supply electronics, software, electromechanical solutions and knowledge-based services
to defence customers, across all domains, with a focus on maritime and land. Also to
government and law enforcement agencies, and critical national infrastructure authorities.
X Direct customers include Ministries of Defence, platform providers, system integrators

and infrastructure operators in national and international markets.

Intelligent Transport Systems
X We provide high-integrity software and systems development for this growing and

complex application area.

Revenue by market area
Non-UK defence revenue exceeds
UK MOD revenue for the first time.

Defence and security total:

£134.0m (2020: £118.1m)

NON-UK SECURITY
REVENUE

£1.8m

UK SECURITY REVENUE

£6.1m

OTHER REVENUE

£7.8m

£2.2m

£13.0m

£59.8m

2021

£9.3m42+
R45+

2020

£48.3m

NON-UK DEFENCE REVENUE

£65.9m

Cohort plc Annual Report and Accounts 2021

UK DEFENCE REVENUE

£60.2m

Strategic reportGovernanceFinancial statements46
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1
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7
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37
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Our markets continued

Combat Systems
We provide solutions to protect valuable combat assets
against threats, and execute missions on land, above and
below water.

REVENUE:

£30.2m
(2020: £18.0m)

X Anti-submarine Warfare

X Platform and Force Protection

C4ISTAR
We provide solutions to enable secure information exchange
and situational awareness.

X Communication & Information Systems

X Intelligence, Surveillance and Reconnaissance

REVENUE:

£70.8m
(2020: £63.1m)

X Electronic Warfare

X Sonar Systems

Digital Services
We provide services to ensure critical and sensitive
information infrastructure is protected and secure and to
reduce threats to the community.

REVENUE:

£14.5m
(2020: £15.0m)

X Cyber Security

X Digital Forensics

Training & Simulation
We deliver knowledge, tools, and instruction for people to
learn new skills in real, virtual, and safe environments.

X Training and Exercise Support

X Skills Based Training

X Synthetic Environment Training

Research, Advice & Support
We help the armed forces to research, define, acquire,
and support the next generation of capability.

X Research Management

X Independent Technical Support and Advice

X Capability Development

REVENUE:

£9.5m
(2020: £9.4m)

REVENUE:

£9.0m
(2020: £12.6m)

Intelligent Transport Systems
Our systems and products support transport organisations,
operators and local authorities in the UK and North America
markets, providing enforcement systems for:

REVENUE:

£6.4m
(2020: £7.6m)

X Parking and Bus Lanes

X Complex Moving Traffic Offences

X Criminal Traffic Offences

Subsea
The Group disposed of this operation (within SEA) in August 2020. Revenue 2021: £1.0m (2020: £2.9m).

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Investment case

Why invest in Cohort

We are committed to delivering value to shareholders
and ensuring they benefit from our success.

Strong business model
X Experienced leadership teams with core
capabilities in defence and security.

X Subsidiaries operate with a significant
degree of autonomy, enabling agility.

X Group operates a light-touch but rigorous
financial and strategic control regime.

Consistent dividend
track record
X Dividend increased by 10% and 11%

respectively in each of the last two years.

X Dividend increased every year since IPO

in 2006.

X Strong balance sheet in place with

robust funding.

Continued organic and
acquisitive growth
X Multiple opportunities to accelerate
growth by making selective, targeted
acquisitions in the UK and overseas.

X Pipeline of businesses regularly

reviewed, considering both stand-alone
and bolt-in acquisitions.

X Strong record of growing
acquired businesses.

Financial strength
X Strong balance sheet gives customers

confidence to award contracts.

X Group underpinned by long term contracts

and strong pipeline.

X All acquisitions funded by cash/debt

since 2008.

Access to attractive
growth markets
X Use our agility and innovation to identify
niches with attractive prospects and
sustainable competitive advantage.

X Ensure subsidiaries have close working
relationships to benefit from each
other’s technical capabilities, customer
relationships and market knowledge.

Visibility of future
earnings provided by
substantial order pipeline
X Order book at 30 April 2021: £242.4m

(30 April 2020: £183.3m).

X 64% of 2021/22 externally forecast
revenue on contract at 30 April 2021
(62% equivalent for 2020/21).

X Order book extends out to 2031.

READ MORE ABOUT OUR INVESTMENT
CASE GO TO COHORTPLC.COM/INVESTORS

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Chairman’s statement

Good order
cover for the
coming year

Nick Prest CBE
Chairman

“ Cohort achieved record adjusted
operating profit.”

Performance
Cohort continued to make progress in 2021, achieving a record adjusted
operating profit of £18.6m (2020: £18.2m) on revenue of £143.3m
(2020: £131.1m). MCL and EID both posted an increase in profit and
we benefited from an initial five-month contribution from ELAC.

These positive movements were partly offset by weaker performances
at Chess, SEA and, to a small extent, MASS. Despite increased revenue,
Chess’s profit performance was down, in part due to an operationally
challenging project in support of a multinational military deployment.
SEA, despite a restructuring exercise that completed in quarter two, had
another disappointing year. Its revenue was down 13% and its trading
profit down just over 30%. The fall in revenue was mainly in research and
technical support areas for the UK MOD but there was also a drop in
transport activity, due to the impact of COVID-19 on local authorities’
focus and spend, with lower levels of vehicle traffic in the UK throughout
much of last year. SEA, however, completed the sale of its subsea business
to management in August 2020. MASS was slightly weaker after a record
2020 with a lull in activity on a long-term support project.

The need for the Group to manage the issues around COVID-19 and the
various restrictions on travel, work and social interaction continued
throughout the financial year. At the start we were still in the first wave
of COVID-19, with restrictions in place and uncertainty about the duration
and impact of the pandemic. Subsequently, we saw an easing of restrictions
and some resumption of travel, but this was significantly curtailed late in
2020. Lockdowns, in various guises, in the UK, Portugal and Germany, and
our wider markets, extended into 2021 and past this financial year end.
Despite this, the Group has continued to deliver to its customers and
to grow its revenue. We also secured a good level of orders, the second
highest annual total in our history, and improved our funding position
from opening net debt of £4.7m to closing net funds of £2.5m.

As a result of COVID-19 we have experienced delay to certain aspects
of our work. Some tasks requiring access to customer sites, such as the
completion of integration and test activities, have been delayed. We have
been unable to perform some training, service and support activities due
to travel restrictions affecting either us or our customers. Offsetting this,
we have made a significant saving in travel and marketing spend, the latter
due to cancellation or postponement of many exhibitions.

We estimate the overall impact on the year ended 30 April 2021 as £6m
lower revenue (2020: £3m lower) and £0.2m lower trading profit (2020:
£1m lower), with reduced margin partly offset by overhead savings.

We do not yet know the impact of the travel and marketing restrictions on
future order flow. Although 2020/21 was strong for order intake, much of
that was from opportunities that were already in the pipeline. We have
certainly seen some delays, including to expected orders from the Portuguese
Government, due to COVID-19. Looking forward, we hope to see a return
to some pre-COVID normality in the second half of this financial year.

The Group’s operating profit of £7.8m (2020: £10.7m) is stated after
recognising amortisation of intangible assets of £10.1m (2020: £7.3m),
exceptional items of £1.3m (2020: £0.8m) and research and development
expenditure credits of £1.0m (2020: £0.8m). Profit before tax was £7.1m
(2020: £10.0m) and profit after tax was £5.5m (2020: £9.7m).

The closing net funds of £2.5m (2020: net debt of £4.7m), was better than
our expectation, due to an improved operating cash flow, particularly at
EID, MCL and SEA.

Strategic initiatives
Cohort acquired Wärtsilä ELAC Nautik GmbH in early December 2020,
following approval by the German Federal Government, a process that
took longer than we had expected, in part due to COVID-19. This approval
required certain undertakings from Cohort to safeguard German technical
capability and military information. We completed the acquisition of the
business, now renamed ELAC Sonar (ELAC), on 2 December 2020. The final
price paid was €16.2m and the business included €14.4m of cash on
completion. The net cash outflow was €1.8m (£1.3m). There are no further
payments to be made.

ELAC joined the Group as Cohort’s sixth standalone business and the
transaction accorded with our strategy of acquiring businesses, primarily in
the defence and security sector, with a strong niche capability and market
position. ELAC, which is a market leader in sonar systems technology for
naval surface ships and submarines, increases the Group’s reach and
potential internationally and adds Germany as a new home market. ELAC’s
potential was demonstrated by its win of an order for €49m from the
Italian Navy in early July 2021.

When we acquired Chess in December 2018, we agreed to pay further
consideration depending on the performance of the business over the
three years ended 30 April 2021. Our current best estimate is that the
additional consideration payable, including earn-out, to take control of
the whole of Chess in 2021 will now be £2.8m (2020: £4.0m), and will be
payable on or before 31 October 2021.

Shareholder returns
Adjusted earnings per share (EPS) were 33.63 pence (2020: 37.10 pence).
The adjusted EPS figure was based upon profit after tax, excluding
amortisation of other intangible assets, net foreign exchange movements
and exceptional items. Basic EPS were 13.38 pence (2020: 23.47 pence).
The adjusted EPS were lower primarily due to the higher tax charge of
17.4% (2020: 6.6%), in part reflecting the change in mix of tax jurisdictions
from which the Group’s profits were derived.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Chairman’s statement continued

Shareholder returns continued
The Board is recommending a final dividend of 7.60 pence per ordinary
share (2020: 6.90 pence), making a total dividend of 11.10 pence per
ordinary share (2020: 10.10 pence) for the year, a 10% increase. The
dividend has been increased every year since the Group’s IPO in 2006.
It will be payable on 27 September 2021 to shareholders on the register
at 20 August 2021, subject to approval at the Annual General Meeting
on 20 September 2021.

DIVIDEND (PENCE PER ORDINARY SHARE)

11.10p

+10%

11.10

10.10

9.10

8.20

7.10

Our people
As always, my thanks go to all employees within the Cohort businesses.
Their hard work, skill and ability to satisfy our customers’ needs are what
continue to drive the performance of our Group. It is a pleasure to welcome
our new employees in Kiel, Germany to the Group.

As already highlighted, COVID-19 has continued to be a challenge
throughout the year. Our employees have shown remarkable agility and
resilience and have remained very focused on the needs of our customers
as well as the welfare of all our colleagues. Where possible, customer visits
have taken place and, in some cases, and where permitted, employees have
undertaken essential travel to support overseas customers, enduring
arduous testing and quarantine regimes in both directions. We have
continued to enforce COVID-safe practices at our places of work and
operate shift patterns to ensure safety and delivery to key customers,
including the British, Portuguese, and German armed forces as well as
export customers and partners.

We continue to see a return of colleagues to work on site and now have
around 50% of our employees back on site on a part-time or regular basis.
We currently expect 75% of our workforce to be primarily site-based by
October 2021. We do expect to see a mix of home and office-based
working to continue for some time into the future.

Andy Thomis, Simon Walther and their senior executive colleagues have
continued their dedicated and skilful work which has helped the Group to
progress in the face of continuing challenging conditions.

Governance and Board
As previously announced, Sir Robert Walmsley retired from our Board on
31 December 2020. Sir Robert has continued to provide consultancy
services to the Group, deploying his skills and experience in project
management and knowledge of the naval market.

As announced on 27 July 2021, Beatrice Nicholas will join the Board as
a Non-executive Director on 1 September 2021. Beatrice had a long and
successful career in the defence industry with GEC, BAE Systems and
Leonardo and brings a wealth of experience in engineering, project
management and general management, much of it in products and
technologies closely aligned to Cohort. We look forward to welcoming
her to the Board and to her contribution.

I also take this opportunity to welcome new Managing Directors to the
Group. Frederico Lemos joined EID in late November 2020, succeeding
António Marcos Lopes who retired after 37 years of service. At SEA, Richard
Flitton joined us in January 2021 replacing Steve Hill. I also welcome the joint
Managing Directors of ELAC, Bernd Szukay and Ole Schneider, who joined the
Group in December having both been with ELAC for over ten years.

Outlook
Prior to the COVID-19 pandemic governmental expenditure on defence and
security was growing in many parts of the world, as a response to perceived
increases in threats of various kinds. We have not so far seen any notable
examples of decreases as a result of public expenditure pressures following
fiscal expansions in response to COVID-19, but we are conscious this is a risk.

Our business from the UK into EU countries and vice versa remains small
(£4.6m in 2021; £3.0m in 2020), and consequently we do not expect any
direct effects upon Cohort from Brexit. In the longer term there could be
indirect effects, resulting from the broad economic and political
consequences, and the future defence and security relationship that
develops between the UK and the EU.

In the UK, we welcomed the recent strategic review and the four-year
spending plan for the UK MOD. Both of these improve visibility and provide
momentum, some of which we have already seen at MCL. The Cohort
businesses have strong and relevant capabilities for both the current and
evolving needs of our principal customer, established positions on some
key long-term UK MOD programmes and a good pipeline of new
opportunities. This was demonstrated by SEA’s recent contract win to
support the UK’s in-service sonar equipment. Export prospects for the
Group continue to develop, as exemplified by Chess’s successes in the year
and the recent large win at ELAC. For the first time in Cohort’s history,
revenue derived from the UK MOD is in a minority.

Our order intake for the year was £180.3m (2020: £124.4m). As we
indicated last year, a number of key export orders were secured in the year,
on most of which work has started. Renewals of important orders from the
UK MOD were secured by SEA and MASS. These are for services and
support we have successfully delivered for many years and winning these is
an endorsement of our service focus to our major customers. One of these
orders provides visibility of revenue out to 2031.

The Group has entered the new financial year with a substantial long-term
order book. The 30 April 2021 order book of £242.4m underpins nearly
£100m (2020: £84m) of current financial year revenue, representing 64%
of expected consensus revenue for the year. Following order wins since the
start of the financial year of over £50m, including recent announcements,
that cover now stands at 70%.

As we indicated in our statement of 26 May 2021, EID’s order intake in the
year just finished was poor and as a result its expected performance for
2021/22 will be much weaker than its strong 2020/21 performance, with
revenue being down by around a third. The remainder of the Group
continues to make progress and we expect revenue to grow in 2021/22 but
the change in revenue and margin mix, especially the decline at EID, will
see the Group’s trading performance grow more slowly in 2021/22.

Overall, we continue to expect that our trading performance for 2021/22
will be slightly ahead of that achieved for the year ended 30 April 2021 and
to have zero net debt at the year end.

Prospects for 2022/23 depend on order progress in the current year.
We are optimistic that the Group will return to a higher rate of growth
in 2023/24, based on current orders for long-term delivery and on our
pipeline of opportunities.

Cohort plc Annual Report and Accounts 2021

Nick Prest CBE
Chairman

Strategic reportGovernanceFinancial statements
Business model

Our business model

Significant competitive advantage
Being part of the Cohort Group brings significant advantages to
our businesses compared with operating independently

M a r ket access

gility

Autonomous agile businesses combining
niche technology with highly skilled people
and an agile approach

e a
c

uisition

o lt-in acquisition

Clear acquisition approach
There are good businesses in the UK or overseas that
would thrive under Cohort ownership

Our mission is clear:
To build and operate a group of companies applying advanced technology in defence, security and related markets
and combining the innovation and responsiveness of smaller, independent businesses with the stability, shared
knowledge, wider market access and lower funding costs of a listed group to provide enduring benefits to
customers, employees and shareholders.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Business model continued

How we create value

We create solutions to keep people safe. Acting with agility to find a better way,
make smart decisions and meet customers’ needs.

Where independent subsidiaries are free to grow and deepen relationships with the
support of a steady hand. Bringing the expertise of the Group to the ingenuity of our
businesses. To deliver purposeful innovation that protects us all.

Our shareholders
We are committed to delivering value to our
shareholders and ensuring that they benefit
from our success. We are focused on delivering
high standards of corporate governance and
providing clear, consistent communication.

Our customers
Our global customers depend on us to be their
trusted partner of choice to deliver reliably.
We use innovation to stay at the forefront of
defence and security technology solutions for
our customers. Our culture of openness and
support makes us easy to do business with.

Our suppliers and partners
Our suppliers and partners are critical to the
success of our business. We work closely with
them to build long term relationships. We ensure
that they are paid in line with our commitments
for goods and services received.

Our people
Our capabilities and customer relationships all
ultimately derive from our people. Guided by
our values, all employees across the Cohort
Group can fulfil their potential, develop their
careers, make a difference through the roles
that they undertake, and feel rewarded for
what they do.

Our communities
We recognise the importance of engaging
with our local communities. We do this through
education, work experience, fundraising and
sponsorship initiatives, and engage with many
military and veterans charities. Across the Group
we employ armed forces reservists and are
proud to be a signatory of the UK Armed
Forces Corporate Covenant.

READ MORE ABOUT OUR VALUES GO TO
COHORTPLC.COM/ABOUT-US/OUR-PEOPLE

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Strategy

A clear strategy for growth

Three key objectives form our clear strategy for growth.

Organic growth

Acquisition

Maintaining confidence

Consistently grow profits and
cash generation organically
through our subsidiaries.

Increase the profitability of
the Group and access new
markets through selective
acquisitions.

Delivered through:
X A focus on developing long-term

customer partnerships.

Delivered through:
X Proactive engagement with businesses
that can add value to the Group.

X Encouraging innovation and responsiveness.

X Maintaining a strong acquisition team.

X Identifying and pursuing growth

opportunities in new and existing markets.

X Demonstrating a structure and culture
that are attractive to potential sellers.

X Developing high-quality leadership teams

and a high-performance culture.

Ensure good corporate
governance, sound
management of subsidiaries
and effective communications
to shareholders.

Delivered through:
X A light-touch management of subsidiaries

backed by a framework of financial control,
strategy review, performance management
and leadership development.

X An effective operational strategy

providing support and guidance when
circumstances change.

X Providing clear and consistent investor
communications through all channels.

What we did in 2020/21
X Record closing order book and improved

What we did in 2020/21
X Completed acquisition of ELAC.

What we did in 2020/21
X Established a Nominations Committee.

visibility at Chess and SEA. Some orders now
have delivery dates into the early 2030s.

X Selected an appointed new leadership

at SEA and EID.

X Reviewed numerous acquisition

X Completed Chess project control process.

opportunities.

Our priorities for 2021/22
X Continue to improve long-term order book,
especially at EID and ELAC, and improve
long-term pipeline at MCL.

X Improved cash performance at Chess.

Our priorities for 2021/22
X Complete acquisition of minority of Chess.

Our priorities for 2021/22
X Appoint a new independent Non-executive

X Continue to seek value-adding

Director to the Board.

acquisitions with strong market positions
in relevant sectors.

X Implement a project advisory committee
to oversee ELAC’s Italy sonar project.

X Improve operational control at Chess.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Innovation and technology

Innovation
and technology

Our customers rely on us to deliver innovative solutions
and purposeful technology that is driven by their needs.
Innovation is at the core of our values. We dedicate the
equivalent of 50% of our profits to innovation and employ
the best technology and domain experts to stay at the
forefront of defence and security technology solutions.

We also carry out customer funded R&D activities
and participate in UK MOD and government research
frameworks, developing products in house, through
inter-company collaboration and working in partnership
with suppliers to enhance capability.

ELAC Sonar SPHERE®

SPHERE® by ELAC Sonar is the next generation in sonar technology, featuring open, modular
system architecture that delivers unrivalled application, flexibility, and detection capability for
modern submarines.

This holistic sonar solution, developed by ELAC Sonar’s hydroacoustic experts, focuses on offering
simplicity, scalability, and interoperability. It enables the integration of previously discrete
single-application sonar systems into one versatile, modular system architecture. This single
system can process data from thousands of sensors in real time, boosting overall sensing performance.

With set configurations or designed to specific requirements, SPHERE offers customers a unique,
high-quality solution, with reduced life-cycle costs and the ability for rapid technology updates.

WWW.ELAC-SONAR.DE/SPHERE-BY-ELAC

Cohort plc Annual Report and Accounts 2021

SEA ROADflow
technology recognised
for enhancing road
safety and
significantly reducing
traffic offences
Together with long-standing partner
Derby City Council, SEA was recognised
with a Parking Technology Award for a
project to improve school road safety
in Derby. The solution based on SEA’s
ROADflow Attended solution this has
helped to change driver behaviour
and realised significant operational,
environmental, and health and wellbeing
benefits, together with improvements
in road safety.

SEA’s Red Light Safety Enforcement cameras
have been credited with an 86% reduction
in driving offences, improving safety at
level crossings across Sussex. The
cameras, have been activated more than
10,000 times since they were installed in
2015. During this time British Transport
Police saw a reduction in driving offences
from 450 in 2015 to just 68 in 2020,
highlighting just how effective this highly
visible deterrent has been at preventing
level crossing Highway Code offences.

Strategic reportGovernanceFinancial statementsInnovation and technology continued

SEA using AI to map marine environments for the MOD
Working with SEA, scientists at the University of Bath’s Institute for Mathematical Innovation (IMI)
have developed an Artificial Intelligence (AI) algorithm which could improve underwater mapping by
making sense of incomplete data and working out how many measurements are needed to give an
accurate survey.

The research was part of a project contracted by the Defence and Security Accelerator (DASA), a part
of the Ministry of Defence, to improve monitoring of the UK’s vast marine territories using high-tech
sonar. SEA led the project and provided simulated sonar data to train and test the AI algorithms
developed by the IMI.

The technology could also be potentially used for ocean tomography across entire ocean basins, like
the Arctic, to study the effects of climate change on the oceans and better enable the sustainability
of human activities in fragile environments and ecosystems.

NATO Innovation
Challenge 2020
The 2020 NATO Innovation Challenge,
‘In life-or-death situations, how do you
improve human trust in autonomous
systems?’ was taken up by the MASS
Innovation Team. Its solution looked at
how it could treat the autonomous system
like any other new team member: building
trust and competency through
supervision, simulation and
(machine) teaching.

The MASS team was delighted to be
selected as one of ten finalists out of 80
proposals submitted from industry,
defence and academia across the 29 NATO
nations. MASS aims to build on this
success to work with NATO on solution
development in the future.

Chess enters the
space market
Chess Dynamics is working with QinetiQ
on the design and build of a relocatable
Optical Ground Station (OGS) supporting
Dstl’s space-based Titania Free Space
Optical Communications research project.
The OGS will be used to acquire and track
the Titania satellite and close an optical
communications link.

The OGS terminal will house an optical
exchange telescope provided by QinetiQ,
and utilising Chess’s precision tracking
equipment. The high-accuracy, zero
backlash yoke positioners and advanced
tracking algorithms will deliver precise
closed loop tracking of the satellite transit.
The positioner is a high-performance
servo-controlled platform that Chess
developed for a range of payloads and has
been proven in service under a wide range
of operating scenarios for many UK and
international customers.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Key performance indicators

Measuring our progress

Change in revenue
Indicates the change in total Group revenue
compared with prior years.

Change in adjusted
operating profit
Change in Group operating profit before
exceptional items, amortisation of other
intangible assets, research and development
expenditure credits and non-trading exchange
differences, including marking forward
exchange contracts to market.

Order book visibility
Orders for the next financial year expected to be
delivered as revenue, presented as a percentage
of consensus market revenue forecasts for
the year.

Change in adjusted

earnings per share

Annual change in earnings per share, before

exceptional items, amortisation of other

intangible assets and non-trading exchange

differences including marking forward

exchange contracts to market, all net of tax.

Operating cash conversion

International revenue

Net cash generated from operations (net of

Total sales to markets outside the UK, Germany

interest and net capital expenditure) before tax

and Portugal.

as compared to the profit before tax and interest,

excluding amortisation of other intangible assets

over a rolling four-year period.

Why is it important?
Revenue growth gives a quantified indication
of the rate at which the Group’s business
activity is expanding over time.

Why is it important?
The adjusted operating profit trend provides an
indication of whether additional revenue is being
gained without profit margins being compromised
and whether any acquisitions are value enhancing.

Why is it important?
Order book visibility, based on expected revenue
during the year to come, provides a measure of
confidence in the likelihood of achievement of
future forecasts.

Why is it important?

Change in adjusted earnings per share is an

Operating cash conversion measures the ability

International markets are important to the

absolute measure of the Board’s management

of the Group to convert profit into cash.

organic growth of the business and reduce our

dependence on domestic markets.

of the Group’s return to shareholders (net of tax

and interest).

RESULTS

64%

RESULTS

(9%)

RESULTS

81%

RESULTS

£60.9m

10%

12%

64%

62%

55%

Comment on results
Of this growth, ELAC added £8.3m; excluding this
the underlying Group revenue of £135.0m was
3% higher than in 2020, mainly due to increases
at EID and MCL offsetting falls at SEA.

Comment on results
Of this growth, the impact of ELAC added £1.2m;
excluding this the underlying Group adjusted
operating profit of £17.4m was 4% lower than
the 2020 equivalent figure with falls at Chess and
SEA the main contributors.

Comment on results
This is higher than the last three years and has
already increased to 70% in mid-July 2021.

Comment on results

The 9% decrease compares to a 2% increase in

The stronger conversion in the last year reflects

The increase in 2021 export revenue is driven by

the adjusted operating profit with the growth

good cash performance at SEA, MCL and EID.

export sales at EID, Chess, and the inclusion of

being mostly driven by earnings from our part

Our expectation is that the conversion rate

ELAC. Of particular note was an increase in sales

owned subsidiary (EID). The main reason for the

should decrease in 2021/22 due to the favourable

to the Middle East and Europe.

fall was an expected increase in the tax charge

timing in 2020/21. The conversion rate in

(rate increasing from 6.6% in 2020 to 17.4%

2020/21 alone was 112%.

in 2021). The tax rate increase was due to the

inclusion of Germany (31%) and the timing

of R&D credits in Portugal.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsKey performance indicators continued

Change in revenue

Indicates the change in total Group revenue

compared with prior years.

Change in adjusted

operating profit

Change in Group operating profit before

exceptional items, amortisation of other

intangible assets, research and development

expenditure credits and non-trading exchange

differences, including marking forward

exchange contracts to market.

Order book visibility

Orders for the next financial year expected to be

delivered as revenue, presented as a percentage

of consensus market revenue forecasts for

the year.

Change in adjusted
earnings per share
Annual change in earnings per share, before
exceptional items, amortisation of other
intangible assets and non-trading exchange
differences including marking forward
exchange contracts to market, all net of tax.

Operating cash conversion
Net cash generated from operations (net of
interest and net capital expenditure) before tax
as compared to the profit before tax and interest,
excluding amortisation of other intangible assets
over a rolling four-year period.

International revenue
Total sales to markets outside the UK, Germany
and Portugal.

Why is it important?

Revenue growth gives a quantified indication

The adjusted operating profit trend provides an

Order book visibility, based on expected revenue

of the rate at which the Group’s business

indication of whether additional revenue is being

during the year to come, provides a measure of

activity is expanding over time.

gained without profit margins being compromised

confidence in the likelihood of achievement of

and whether any acquisitions are value enhancing.

future forecasts.

Why is it important?
Change in adjusted earnings per share is an
absolute measure of the Board’s management
of the Group’s return to shareholders (net of tax
and interest).

Why is it important?
Operating cash conversion measures the ability
of the Group to convert profit into cash.

Why is it important?
International markets are important to the
organic growth of the business and reduce our
dependence on domestic markets.

RESULTS

64%

Comment on results

Of this growth, ELAC added £8.3m; excluding this

Of this growth, the impact of ELAC added £1.2m;

This is higher than the last three years and has

the underlying Group revenue of £135.0m was

excluding this the underlying Group adjusted

already increased to 70% in mid-July 2021.

3% higher than in 2020, mainly due to increases

operating profit of £17.4m was 4% lower than

at EID and MCL offsetting falls at SEA.

the 2020 equivalent figure with falls at Chess and

SEA the main contributors.

RESULTS

(9%)

10%

16%

RESULTS

81%

RESULTS

£60.9m

81%

60%

62%

60.9

43.9

32.5

Comment on results
The 9% decrease compares to a 2% increase in
the adjusted operating profit with the growth
being mostly driven by earnings from our part
owned subsidiary (EID). The main reason for the
fall was an expected increase in the tax charge
(rate increasing from 6.6% in 2020 to 17.4%
in 2021). The tax rate increase was due to the
inclusion of Germany (31%) and the timing
of R&D credits in Portugal.

Comment on results
The stronger conversion in the last year reflects
good cash performance at SEA, MCL and EID.
Our expectation is that the conversion rate
should decrease in 2021/22 due to the favourable
timing in 2020/21. The conversion rate in
2020/21 alone was 112%.

Comment on results
The increase in 2021 export revenue is driven by
export sales at EID, Chess, and the inclusion of
ELAC. Of particular note was an increase in sales
to the Middle East and Europe.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Operating review

Modest but positive progress

Operating review
2021 has been, overall, another year of progress for Cohort, with the Group
reaching a record level of revenue and adjusted operating profit but with
mixed results from the underlying businesses. Revenue grew by 9.3% and
adjusted operating profit by 2.2%. Both revenue and adjusted operating
profit benefited from a maiden contribution from ELAC, which joined the
Group in December 2020.

EID improved its performance again as a result of increased export sales,
including some deliveries that had been delayed from the previous year.
MCL returned strongly after a disappointing year in 2020 with some good
wins and successful deliveries. These improvements were offset by weaker
performances at Chess and SEA. Chess achieved good revenue growth,
but margins were affected by the need for competitive pricing and a small
number of problem projects. SEA was hit by delays to expected order
intake, resulting in lower revenue and profit despite the cost base reduction
implemented during the year.

The COVID-19 pandemic and resultant lockdowns continued to have an
impact on many of our markets, with international travel restrictions still
in place in many regions. The resulting barriers to interaction with
customers have not had a short-term impact on our ability to win new
business. The Group achieved an order intake of over £180m, resulting in a
closing order book of £242m and order cover of just under £100m for
2022. Nevertheless, we have continued to see deliveries of products and
services impacted by customer site closures and restrictions. With vehicle
traffic volumes falling drastically over the pandemic period and plenty of
competing priorities, local authority spending on SEA’s traffic enforcement
systems has reduced and is only just now showing signs of recovery. Overall,
for 2021 we estimate that the impact of COVID-19 has been a reduction in
revenue of around £6m across the Group but that savings in overheads,
especially on travel and business development, including exhibitions, has
offset most of the margin slippage with a net impact on adjusted operating
profit of £0.2m.

The Group’s adjusted operating profit grew by 2.2% to £18.6m (2020:
£18.2m) on revenue of £143.3m (2020: £131.1m), a net operating return
of 13.0% (2020: 13.9%). The Group’s statutory operating profit of £7.8m
(2020: £10.7m) reflects the significant effect of the amortisation of other
intangible assets, a £10.1m non-cash charge in 2021 (2020: £7.4m charge).
In this review, therefore, the focus is on the adjusted operating profit of
each business, which we consider to be a more appropriate measure of
performance year on year. The adjusted operating profit is reconciled to
the operating profit in the Consolidated Income Statement and by business
in note 1.

Andrew Thomis
Chief Executive

“ 2021 has been a year of modest but
positive progress for Cohort, with the
impact of COVID-19 added into the
mix of factors affecting business. It has
been a pleasing year for order intake,
and cash performance was also good.
In terms of revenue and profit, strong
performance at EID and Marlborough
Communications (MCL), together with
a maiden contribution from ELAC, have
been partly offset by reduced profits
at Chess and SEA. Overall, performance
has been in line with our expectations
for the year.”

2021 highlights
X The Group’s adjusted operating profit of £18.6m (2020: £18.2m)
on revenue of £143.3m (2020: £131.1m) represented a net return
of 13.0% (2020: 13.9%).

X MASS remained the strongest contributor to the Group’s

adjusted operating profit, despite a slightly reduced level of
revenue and profit.

X ELAC made an initial contribution to revenue and profit

following completion of the acquisition in December 2020.

X EID had a much stronger year, as did MCL.

X Chess saw a reduction on profit despite strong revenue growth.

X SEA’s performance was lower than in 2020 in terms of revenue

and profit.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsOperating review continued

Operating review continued
Adjusted operating profit by subsidiary

Adjusted operating profit

Adjusted operating margin

2020
£m

Change
%

Chess

EID

ELAC

MASS

MCL

SEA

2021
£m

3.0

4.8

1.2

8.7

2.1

2.4

3.9

3.1

—

8.9

1.7

3.5

Central costs

(3.6)

18.6

(2.9)

18.2

(0.9)

1.7

1.2

(0.2)

0.4

(1.1)

(0.7)

0.4

2021
%

10.5

23.1

14.1

22.1

11.5

8.4

—

13.0

2020
%

15.6

17.2

—

21.7

11.0

11.1

—

13.9

EID’s performance improved markedly compared to 2019/20 with a
significant increase in export revenue, partly the result of a substantial
delivery being delayed from the end of the previous year. Its operating
margin was enhanced by improved production efficiency.

ELAC made a welcome initial contribution to revenue and profit from its
five months in the Group in 2020/21. Its revenue was derived from a
combination of specialist sonar products and a surface ship sonar suite.

MCL delivered increased revenue and profit after a disappointing 2020.
Strong demand for hearing protection systems from the British Army made
a major contribution to performance.

Following a record year in 2020, as expected MASS delivered a slightly
weaker trading performance in 2021 with a reduction in revenue (mostly in
its Digital Services and Electronic Warfare Operational Support divisions)
and the corresponding gross margin. MASS’s service deliveries faced a
considerable headwind from COVID-19, and we were pleased that it
nevertheless managed to deliver a satisfactory result.

After a good result in 2020 Chess delivered increased revenue, following
strong order intake. Disappointingly, profit and consequently operating
margin were significantly reduced, a result of tighter margins on some
larger contracts and cost overruns on a small number of problem projects.

SEA’s result was disappointingly behind our expectations and last year’s
performance. Order intake during the year was very strong, but contract
awards were in many cases later than expected and it was not possible to
realise the planned revenue from them. The Transport business also suffered
as COVID-19 diverted local authority expenditure and priorities elsewhere.

Our people
All the Group’s capabilities and customer relationships ultimately derive
from our people, and the success we have enjoyed is a result of their
efforts. Their adaptability and perseverance in the face of the challenges of
the pandemic have been exemplary. I would like to take this opportunity to
express my sincere thanks to all employees of Cohort and its businesses.

Over the year we have made several changes to our subsidiary senior
management. Steve Hill stepped down as Managing Director of SEA in July
2020. Martin Kelly, SEA’s Head of Complex Systems, took over on a
temporary basis, with Richard Flitton appointed as permanent Managing
Director in January 2021. My thanks go to Steve for his contribution to SEA
and to Martin for his willingness to step up at short notice. At EID, António
Marcos Lopes retired after over 37 years of service and was replaced as
Managing Director by Frederico Lemos. I thank António for his contribution
to EID’s development, and I am delighted to welcome both Richard and
Frederico to the Cohort Group. Just after the financial year end, Graham
Beall who founded Chess and has led the business since 1993, stepped back
from the role of Managing Director to lead the business’s US market
development. His deputy, David Tuddenham has taken over as Managing
Director from 1 June 2021 following a competitive selection process.

As the COVID-19 pandemic has waxed and waned across Europe, our
infection control measures have remained effective and we have not
witnessed any confirmed transmission of COVID-19 in the workplace. That
has not prevented the disease affecting many of our colleagues, either
directly or through family connections. We experienced one tragic loss of
life of an employee at EID, and many more have lost close family members
to the disease. It has been a sad time for many of our workforce, but their
resilience and commitment has been remarkable.

Our policy towards the UK’s furlough scheme has developed as the
pandemic and the Government response has evolved. We made some use
of the scheme initially where lockdown restrictions had a direct impact on
employees’ ability to carry out their roles, as the alternative would have
been to make the individuals concerned redundant. Avoiding redundancy
and unemployment in these circumstances was exactly what the scheme
was intended to do, and the net saving to Cohort compared to the
redundancy option was small or even negative. However, we elected not to
make use of the furlough scheme simply to match resources to demand,
even when demand has been affected by COVID, an option we could have
taken advantage of. We took the view that such resource management,
and the associated costs, are for us and not the UK Government. We
subsequently ceased use of the scheme completely in October 2020.
Receipts from the scheme for the Group over 2019/20 and 2020/21 were
£0.3m in total.

As governments and health services begin to bring the pandemic under
control, we expect gradually to increase the numbers of people working
regularly on-site at our facilities in the UK, Portugal and Germany. The
experience of remote working has had some very positive aspects, and our
businesses all intend to make use of the flexibility and efficiency it can
offer in future. Nevertheless, as we have begun to resume face-to-face
meetings with colleagues, suppliers, partners and customers, the
importance and value of these interactions have become clearer than ever.
Currently our workforce is split roughly 50:50 between those who are
primarily home-based and those who are site-based. If the current
lockdown measures continue to be eased, we expect that balance to be
around 25:75 between home and site-based by October of this year.

Operating strategy
Organic growth
Despite the difficulties in customer communications thrown up by the
COVID-19 pandemic, we have had a good year for new orders, and we end
it with a significantly increased order book. That is a positive indicator for
future organic growth. However, although we did see some organic revenue
growth in 2021, the modest level of net profit growth was driven by the
acquisition of ELAC.

Cohort currently operates as a group of six small and medium-sized
businesses, operating primarily in defence and security markets, and with
a strong emphasis on technology, innovation and specialist expertise.
Within our markets we have sought to identify niches where prospects are
attractive and where we have some sustainable competitive advantage.
Growth strategies and opportunities vary around the Group:

X MASS uses its extremely high reputation, its rare or unique technical
capabilities and its experience at building long-lasting customer
relationships to win long-term service contracts, gradually adding
new building-blocks to its revenue stream.

X EID combines a low cost-base by international standards with access
to Portugal’s extremely strong technical education system to create
high-performance low-cost communications products that can win
in a highly competitive marketplace.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Operating review continued

Operating strategy continued
Organic growth continued
X Chess makes use of its innovative engineers, customer-focused culture
and ability to source sensors from the best international providers to
win against more vertically-integrated larger competitors.

X SEA has used its close long-term relationship with the Royal Navy to

build confidence with that important customer, which in turn creates a
strong platform for export orders. It is also investing in new technologies
where there is an opportunity to build a strong competitive position,
for instance in lightweight towed-array sonars.

X MCL has a unique business model, combining a small but innovative
engineering team with a wide range of international partnerships to
provide highly specialised equipment and services to the UK armed
forces and security services.

X ELAC, the newest member of the Group, has built on almost a century of
hydro-acoustic knowledge to create a new architecture for sonar systems
on a scale that only a few international providers can match. Its systems
combine world-class performance with an ability for customers to
tailor analysis techniques and data libraries to their own specific needs.

Our businesses have continued to be active in finding new customers, and
2021 has seen some notable successes for Chess, MCL and SEA in particular.
Discussions with potential customers have opened up some major
longer-term opportunities for all of our businesses.

Being part of the Cohort Group brings some material advantages to small
and medium-sized defence technology businesses. The Group’s strong
balance sheet gives customers the confidence to award large or long-term
contracts that we are well able to execute technically but which might
otherwise be perceived as risky. Recent examples include the award of the
€49m order to ELAC for sonar systems for the Italian Navy’s new class of
submarine, the £25m support contract recently awarded to SEA for the
Royal Navy and the £16m of orders awarded to Chess, announced in
October 2020.

The Group’s Directors have long experience of operating in the defence
sector and have contacts and working relationships with senior customers
in the UK and internationally that would be hard for independent smaller
businesses to establish. Our six operating businesses, while remaining
operationally independent, have formed close working relationships and
benefit from sharing technical capabilities, customer relationships and
market knowledge within the bounds imposed by our various confidentiality
obligations. We will continue to work to promote the Group’s services and
products in wider markets, including through business development visits
as and when government restrictions allow.

These strategies have generated long-term customer relationships and
good opportunities that give us confidence that we can continue to win
substantial new business in the year ahead. Overall, the organic profit
performance of the business in the year (i.e. excluding the effect of ELAC’s
initial contribution) was slightly behind that achieved in 2020 with
improved results at MCL and EID being offset by weaker performance
at Chess and SEA.

Acquisitions
Alongside our organic growth strategy, we continue to see opportunities
to accelerate our growth by making further targeted value enhancing
acquisitions. We believe that there are good businesses in the UK and
overseas that would thrive under Cohort ownership, whether as standalone
members of the Group or as “bolt-in” acquisitions to our existing subsidiaries.

of this nature fully within the relevant subsidiary. This could lead to both
cost savings and benefits from shared access to markets and technologies.

For standalone acquisitions we are looking for agile, innovative businesses
that have reached a stage of development where there will be mutual
benefit in joining Cohort. It is likely that candidates will be operating in the
defence and security markets either in the UK or internationally, as that is
where the Group can add most value. Growth prospects, sustainable
competitive advantage and the ability to operate as part of a publicly
quoted UK group will all be important.

On 3 December 2020, we announced the completion of our agreement to
acquire 100% of Wärtsilä ELAC Nautik GmbH (now renamed ELAC Sonar
GmbH) for a consideration of €16.2m on a debt free, cash free basis. ELAC,
a leader in sonar systems technology for naval surface ships and submarines,
has joined the Group as Cohort’s sixth standalone business. The agreement
was first announced in December 2019, completion taking longer than
expected as a result of COVID-19 restrictions and the need for German
Federal Government approval.

The acquisition of ELAC fits well with our acquisition strategy. Importantly,
it increases the Group’s exposure to scalable product and systems and
export customers, particularly in the naval market. ELAC shares highly
complementary expertise, capabilities, and technologies with SEA,
providing a significant cross-selling opportunity. This has already begun,
with SEA offering its towed-array sonar to customers being supplied with
ELAC’s complementary sonar products. The acquisition will increase the
Group’s reach and potential in new international markets and adds
Germany as a new home market.

We acquired 81.84% of Chess in December 2018 for an initial
consideration of just over £20.0m. The acquisition includes an earn-out
clause and an option for acquiring the minority interest (18.16%), both
based on Chess’s performance for the three years ended 30 April 2021.
The performance period for determining the value of the earn-out and
option ended on 30 April 2021, and we now expect to pay £2.8m
(2020: £4.0m) in total on or before 31 October 2021.

Maintain confidence
Cohort’s management approach is to allow its subsidiary businesses a
significant degree of operational autonomy to develop their potential fully.
At the same time we provide light-touch but rigorous financial and strategic
controls at Group level to manage and control risks and ensure legislative
and regulatory compliance. Our experience is that our customers prefer to
work with businesses where decision making is streamlined and focused on
solving their immediate problems. This model provides us with a degree of
competitive advantage over some larger rivals where the decision-making
process can be more extended. It is also cost-effective as it avoids the need
for additional layers of management involved in coordination activities and
for a large headquarters team. High-calibre employees find our business
model attractive and more rewarding as it allows them to be involved in
decisions affecting the business, even at a relatively junior level, rather
than being constrained to a narrow or purely technical role. This positions
us well with customers where such attributes are highly valued.

Although the degree of autonomy our subsidiary businesses enjoy is high,
and we believe that this is an effective operational strategy, we take a
practical view of the best way forward when circumstances change. When
the operational situation is such that a merger, restructuring or even sale is
necessitated, we will act and have acted in the best interests of the wider
Group and its shareholders.

The most likely candidates for bolt-in acquisitions are businesses with
capabilities and/or customer relationships that are closely linked to one of
our existing subsidiaries. We would expect to integrate an acquired business

Andrew Thomis
Chief Executive

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsDavid Tuddenham
Managing Director of
Chess Technologies

CHESS-DYNAMICS.COM

Subsidiary review

Overview
Chess Technologies (Chess) operates through two distinct businesses,
Chess Dynamics and Vision4ce.

Chess Dynamics is an innovative, well-respected surveillance, tracking
and gunfire control specialist for military and commercial customers.
Chess’s military customers include defence forces and prime
contractors in the UK and overseas for the naval and land sectors.

Based in Horsham and Plymouth, Chess Dynamics designs, develops
and manufactures precision stabilised and non-stabilised multi-axis
platforms, fire control directors and positioners for electro-optic,
radar, communication, security, surveillance and targeting systems,
and a wide range of high-performance cameras and special sensors.

The more complex tracking and targeting systems are integrated into
naval fire control solutions and sophisticated vehicle-based
surveillance, targeting, tracking and force protection systems.

The company is a major developer and worldwide supplier of
counter-UAV (drone) protection systems including rapid deployment
systems for military and security use. It provides a complete service
including survey, installation, training and maintenance across its
entire product range, including bespoke engineering solutions.

Vision4ce, a wholly owned subsidiary of Chess, is a leading electronics
and real-time software house based in Wokingham. It designs,
develops and supplies high-performance digital video trackers and
the associated software for Chess Dynamics and other customers.

Founded in 1993, Chess is led by Managing Director David Tuddenham.
Chess is 82% owned by Cohort, and joined the Cohort Group in 2018

REVENUE

£28.6m

2020: £25.2m

ADJUSTED OPERATING PROFIT

£3.0m

2020: £3.9m

OPERATING CASH FLOW

£(1.0)m

2020: £(2.8m)

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

Chess grew its revenue again in 2021, up by
13%. However, a combination of the need
for competitive pricing and some poorly
performing projects reduced its margin and
the result was a fall in adjusted operating
profit by 23%.
Chess’s revenue is dominated by export customers. This year they have
included an important European Army for target identification and the
Belgian and Dutch navies for an optical fire control system for their new
class of Mine Countermeasures Vessels.

Chess has continued to demonstrate what a good strategic fit it is for the
Group. It is a leading supplier within its market and has a strong ethos of
innovation and responsiveness.

Chess was only marginally impacted by the COVID-19 pandemic and
lockdown with a few in-country activities being postponed. It continued to
carry out production and support from its main site in Horsham and its
naval centre in Plymouth with little disruption, whilst observing all the
necessary safety requirements for its employees, customers and suppliers.
It currently has 70% of its people working mostly on site and expects this
number to be at 95% by October this year.

Chess’s rapid growth over the last few years has caused it some growing
pains, especially in project control and delivery. This, along with growing
working capital, is reflected again in its weak cash performance this year.
Cohort began work with Chess’s management last year to strengthen its
processes to ensure it can successfully grow whilst still maintaining its
agility and innovative approach. This work continues to focus on improving
its project delivery, its commercial approach and ultimately its cash
performance, with the aim of ensuring it will be fully able to deliver on its
order success from last year.

Some of these growing pains have resulted in the weaker than expected
performance in 2021. It has seen some project margin deterioration where
technical specification has proved a challenge for Chess resulting in cost
increases. We believe that these issues have now been bottomed out.

Chess’s order book at April 2021 of just over £42m provides cover for
nearly £20m of 2021/22 revenue and our expectation is that Chess should
return to growth in the coming year.

Cohort plc Annual Report and Accounts 2021

“ Chess had a strong year for
orders, securing nearly £58m,
which gives it a good platform
for the coming year.”

Strategic reportGovernanceFinancial statementsSubsidiary review continued

Frederico Lemos
Managing Director of EID

Overview
EID is a Portuguese high-tech company with over 35 years’ experience
and deep know-how in the increasingly critical fields of tactical and
naval C3 (command, control and communications). The company’s
focus is the design, manufacture, delivery and support of advanced
high-performance command C3 equipment for the global defence
and security markets.

EID changed its operational structure in May 2021, creating single
engineering and business development teams to enable a more
coordinated focus on product development and to addressing its
markets. Its other key units are the internal production and logistics
units. Its markets remain primarily navy and army customers, both in
Portugal and overseas.

The UK Royal Navy is amongst the customers for its naval
communications systems and its products equip over 145 vessels
worldwide including the navies of Portugal, the Netherlands, Spain
and Belgium and many non-NATO export customers. Its tactical
communications products are used extensively in a variety of
personal and vehicular applications for armies worldwide.

EID operates from an engineering and production facility near Lisbon
and is led by Managing Director, Frederico Lemos. EID is 80% owned
by Cohort, with the remaining 20% of its shares held by the
Portuguese Government though its defence investment arm, idD.
It joined the Group in 2016.

EID.PT

REVENUE

£20.9m

2020: £18.0m

ADJUSTED OPERATING PROFIT

£4.8m

2020: £3.1m

OPERATING CASH FLOW

£5.4m

2020: £3.6m

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

EID grew on a good performance last year,
with a very strong net return.
The increase in revenue of over 16% improved the gross margin, which
also benefited from some operational efficiencies, while the overhead
for the business remained flat. As a result, the net margin of EID rose from
17.2% to 23.1%. This is a very strong return and above historical levels for
the business.

This improvement derived from a near doubling of intercom system
deliveries to an overseas customer, the production of which was more
efficient than EID had achieved previously. This customer alone was nearly
50% of EID’s revenue for the year. EID’s revenue from its domestic customer,
the Portuguese Armed Forces, declined after a strong year last year. This
was partly expected but was also down due to a delayed order from the
Portuguese Army. Sales to naval customers were virtually flat and remained
relatively low (16% of total revenue) for the business. This was in part due
to a delayed naval upgrade programme from the Portuguese Navy which is
now not expected until 2022.

EID managed the COVID-19 impact well during the year, delivering most
of what was scheduled to be delivered. Minor margin loss was offset
by reduced travel.

EID had another strong cash performance for the year, collecting
receipts on deliveries at the end of the year, which was better than
our expectations.

As we stated in May, the delay to some key orders at EID, especially from
naval customers, has resulted in the coming year having a lower level of
revenue on order (44%; 2020/21: 90%) and our expectations for 2021/22
being scaled back from where we saw things this time last year. EID’s revenue
for the coming year is expected to be around two thirds of this year and the
resultant operational gearing means the adjusted operating profit is likely
to be much lower. The mix of work at EID is expected to remain dominated
by deliveries of intercom and radio products, especially to overseas
customers over the next few years, and this brings a level of unpredictability
with it. We are expecting longer-term naval orders to progress this year,
although the timing of the contract awards is also unpredictable.

Cohort plc Annual Report and Accounts 2021

“ We expect a less strong EID
performance in 2021/22 following
delays to order intake
in 2020/21.”

Strategic reportGovernanceFinancial statementsSubsidiary review continued
Subsidiary review

Overview
ELAC serves global customers in the naval marketplace. Working
with navies, system integrators and shipyards, ELAC supplies mission
critical hydro-acoustic naval sensors. These include complete
submarine and surface ship sonar suites, submarine rescue sonars
and digital underwater communications and measurement systems.
The company specialises in developing innovative hydro-acoustics,
working together with customers to meet their specific needs,
offering flexibility through open architecture.

The market-leading digital underwater communication system
UT3000 and the open-architecture based KaleidoScope system,
developed over the past 20 years, have laid the foundations for the
current second-generation open sonar processing platform and fully
digitised hydrophones.

The company was founded in 1926 and is located in Kiel, Germany,
where it benefits from being close to the German Navy and NATO
Centre of Excellence for Confined and Shallow Waters. With several
global players in naval shipbuilding and the naval systems industry
nearby, ELAC has access to excellent resources and networks. ELAC
is led by Bernd Szukay and Ole Schneider and joined the Cohort
Group in December 2020.

Bernd Szukay and Ole Schneider
Joint Managing Directors of ELAC Sonar (ELAC)

ELAC-SONAR.DE

REVENUE

£8.3m (five months)

ADJUSTED OPERATING PROFIT

£1.2m (five months)

OPERATING CASH FLOW

£0.4m (five months)

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

ELAC’s initial contribution, over five months
of Cohort ownership, was £1.2m of adjusted
operating profit on £8.3m of revenue.
ELAC joined the Group in early December 2020 after approval by the
German Federal Government, a process that took longer than expected
in part due to COVID-19. ELAC’s initial contribution was in line with our
expectations and the business saw only minor COVID-19 impacts.

In early July 2021, ELAC secured a contract for over £42m to provide sonar
systems for two new U212 Near Future Submarines being supplied by
Fincantieri for the Italian Navy. The contract also includes delivery of a
special test and crew training system and associated technical services.
This is expected to create a capability for the Italian Navy that is
unmatched on a submarine of this class.

Work has begun already, and the contract stretches out to 2030 with the
customer having the option for a further two submarines to be supplied
with the same system. This is great endorsement of ELAC’s capabilities and
provides ELAC with 90% coverage of its 2021/22 revenue expectations.
This project, which is the largest technical delivery contract the Group has
ever won, will be overseen by a Programme Advisory Committee set up by
Cohort and chaired by Sir Robert Walmsley, whose members have
extensive knowledge and experience of operating, developing, and
delivering submarine systems.

At the time of the acquisition ELAC had agreed in principle to supply
another customer with submarine sonar systems, but this has not yet
resulted in a finalised contract. A mechanism was agreed with the seller to
alleviate some of the operational costs the business would have to bear if
this opportunity was delayed or not secured. The cost recovery is payable
over two years, with a maximum value of £2.1m if the opportunity is not
secured by 1 December 2022. The current year trading performance of
ELAC includes £0.5m in respect of this.

Cohort plc Annual Report and Accounts 2021

“ ELAC has just secured an important
contract to provide sonar systems
to the Italian Navy’s next-
generation submarine.”

Strategic reportGovernanceFinancial statementsSubsidiary review continued

Chris Stanley
Managing Director of MASS

Overview
MASS is a data technology company with over 35 years’ heritage serving the
defence and security markets in the UK and around the world. It provides
electronic warfare operational support, digital services and other support to
military operations.

The company delivers tailored, integrated solutions that are increasingly critical to
customers’ operational advantage. MASS’s expertise in data management, system
engineering and project management enables delivery of through-life capability in
the form of high-technology solutions, training and trusted managed services.
These are underpinned by MASS’s strong research and development capability.

MASS’s core skill is enabling its customers to convert their own raw data into
actionable information for operational and strategic application.

MASS operates through four divisions.

The EWOS division includes the THURBON™ Electronic Warfare (EW) database,
SHEPHERD (the provision of a system embodying THURBON™ to the UK MOD)
and MASS’s EW managed service offerings in the UK and elsewhere.

The Digital Services division offers solutions and training to wider government,
including security customers. This division also delivers secure network design,
delivery and support and information assurance services to commercial, defence
and educational customers.

The Strategic Systems division provides certain managed service and niche
technical offerings to the UK MOD.

The Training Support division provides training simulation and support to the UK’s
Joint Warfare Centre as well as similar high-level command training to other UK
and overseas customers.

Established in 1983, MASS joined the Cohort Group in 2006. The company is
based in Cambridgeshire and it also operates an Electronic Warfare Training
Academy in Lincolnshire. MASS is led by Managing Director Chris Stanley.

MASS.CO.UK

REVENUE

£39.5m

2020: £41.1m

ADJUSTED OPERATING PROFIT

£8.7m

2020: £8.9m

OPERATING CASH FLOW

£4.6m

2020: £11.6m

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

MASS, as expected, after a record 2019/20,
had a slightly weaker year but remains the
Group’s strongest profit contributor. Sales
and adjusted operating profit were down
4% and 2% respectively.
Despite some impact from COVID-19, MASS had a good year and its final
result was ahead of our expectations. COVID-19 impacted its ability to
deliver EW training, especially to overseas customers, and also limited the
level of exercise work carried out by the Joint Forces Command (JFC).
MASS assisted the JFC in its support to the Government’s pandemic planning.

The EWOS business, which is mostly export, saw a slight reduction in
training and overseas support activity, much of it slipping into 2022 and
in some cases later. Digital Services activity was also down, as was secure
IT provision for schools, although this is lower margin activity. In the other
parts of the business, especially its technical support to key parts of the UK
defence domain, MASS continued to deliver a high level of service despite
considerable practical difficulties arising from lockdown restrictions at
times. MASS currently has around one third of its staff based primarily
at its own or customer sites and expects this proportion to double
by October.

MASS’s net margin increased to 22.1% (2020: 21.7%). This was due to
improved mix, especially in Digital Services, and flat overheads.

MASS’s operating cash flow this year was positive but, as expected, did not
replicate last year when it saw accelerated receipts from the UK MOD as
the COVID-19 pandemic first struck.

MASS continues to demonstrate its strength in its core markets of EWOS
and niche technical support to key government capabilities. Its order book
of £77m gives good visibility beyond 2023.

Cohort plc Annual Report and Accounts 2021

“ MASS continues to demonstrate its
strength in its core markets of
EWOS and niche technical support
to key government capabilities. Its
order book of £77m gives good
visibility beyond 2023.”

Strategic reportGovernanceFinancial statementsAll text to be supplied and images lo-res

Subsidiary review continued

Shane Knight
Managing Director of MCL

Overview
Marlborough Communications Limited (MCL) is a leading supplier of advanced
electronic communications, information systems and signals intelligence
technology to the defence and security sectors.

MCL utilises an ever-expanding international network of specialist technology
providers, combined with its own bespoke design, engineering and integration
skills, to deliver and support a diverse portfolio of C4 and ISTAR capabilities that
transform the effectiveness of its customers’ operations.

The company’s specialist C4IS portfolio includes hearing protection,
communication headsets and radios, while its ISTAR capabilities include signals
intelligence, electronic warfare and UAV and UGV technologies. The company
supplies customers including the UK MOD, other UK Government departments
and defence prime contractors. With a small, expert workforce of just 36
employees, MCL is adept at identifying the latest technologies and capabilities
to suit the unique demands of each customer it works with.

Founded in 1980 and based in Surrey, MCL is led by Managing Director Shane
Knight and has been part of the Cohort Group since 2014.

MARLBOROUGHCOMMS.COM

REVENUE

£18.0m

2020: £15.1m

ADJUSTED OPERATING PROFIT

£2.1m

2020: £1.7m

OPERATING CASH FLOW

£4.3m

2020: £(2.3)m

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

After a disappointing 2020, MCL bounced
back in 2021 with revenue and adjusted
operating profit up by 19% and 23%
respectively. It also delivered a very strong
cash performance and had a good year
for order intake.
MCL saw some impact from COVID-19 with some milestones for system
calibration slipping into 2021/22 but its overall performance was very good
and exceeded our expectations. The small team at MCL is flexible and at
present around two thirds are mostly on site with the remainder working
from home.

When we acquired MCL, back in July 2014, one of the primary objectives
was to support it in building an order book and business with greater
longevity and visibility. This year saw the order book increase from £8.6m
(April 2020) to £12.4m (April 2021), although the visibility of MCL’s revenue
still remains, on average, in the three to six-month range. As we said last
year, MCL sees some substantial opportunities in long-term UK naval
support programmes, some of which have slipped due to COVID-19 but are
now being moved forward by the UK MOD. Success in these would enable
MCL to improve its revenue visibility significantly. More immediately,
MCL starts 2021/22 with improved visibility and some good prospects
for the coming year.

MCL completed delivery of a small number of autonomous vehicles for
initial trials with the British Army and its success in this programme
enabled it to secure a follow-on order for delivery in 2022. It was also
involved in supplying new camera systems for the UK’s military dogs,
exemplifying MCL’s flexibility and importance to the UK military, especially
its Special Forces.

As already highlighted, the recent UK defence review and spending plans
have given MCL some forward momentum, especially with opportunities
to support the new Ranger regiment.

Cohort plc Annual Report and Accounts 2021

“ MCL starts 2021/22 with improved
visibility and some good prospects for
the coming year. The recent UK
defence review and spending plans
have given MCL positive momentum.”

Strategic reportGovernanceFinancial statementsSubsidiary review continued

Richard Flitton
Managing Director of SEA

Overview
SEA delivers products and services into the defence and transport
markets alongside performing specialist research and providing
services, including training and product support.

In the maritime domain, SEA’s engineering capabilities cover a wide
range of maritime mission systems requirements, including
communications, torpedo and decoy launching systems, towed-array
sonar systems, infrastructure and training. As well as providing
products and services for UK and export customers in these areas, it
carries out technology research on behalf of the UK MOD into future
maritime and soldier systems.

SEA also delivers complex data management solutions alongside
automated traffic enforcement systems to UK Government and
export customers in the transport domain, utilising its award-winning
expertise in signal processing and software engineering.

SEA manages its business through two divisions:

X Complex Systems, based at Beckington; and

X Integrated Electronic Systems, based at Barnstaple.

The technology and innovation activities of the organisation are
underpinned by strong project management and dedicated
production and support teams.

SEA was founded in 1987 and joined the Cohort Group in 2007.
SEA is located in the UK in Somerset, Bristol and Devon and is
led by Managing Director Richard Flitton.

SEA.CO.UK

REVENUE

£28.0m

2020: £31.7m

ADJUSTED OPERATING PROFIT

£2.4m

2020: £3.5m

OPERATING CASH FLOW

£9.8m

2020: £3.6m

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Subsidiary review continued

SEA had a disappointing year with revenue
falling by 12% and adjusted operating profit
by 31%. The drop was mostly driven by
delays to export orders and weaker research
and transport activity, the latter in part
due to COVID-19.
The change in SEA’s revenue over the last five years is analysed by activity
as follows:

Submarine
systems

Research

Export defence

Other defence
products and
support

Transport

Subsea

SEA total
revenue

2017
£m

16.9

2.1

6.0

11.9

5.9

1.9

2018
£m

7.3

2.3

7.1

13.2

5.3

2.1

2019
£m

4.7

4.5

8.2

9.6

9.2

2.1

2020
£m

2.7

5.2

1.6

11.7

7.6

2.9

2021
£m

4.2

3.0

2.3

11.1

6.4

1.0

44.7

37.3

38.3

31.7

28.0

Submarine systems activity at SEA grew slightly in 2021. Some of this was
related to the UK Royal Navy’s Dreadnought programme, now starting to
get underway, but most of the growth was from an export customer.

SEA’s research activity has been patchy. Its naval research activity continues
to be an important part of its overall offering but a land research programme
which has provided a substantial proportion of this revenue stream in
recent years completed in early 2020/21 and has not been extended.

Export revenue at SEA was up slightly following some significant wins in
the final quarter of the financial year. These, however, were too late to
enable SEA to achieve its expected performance for the whole year.

SEA’s transport business saw a 16% fall in revenue with lower export and
UK sales of its ROADflow product range. COVID-19 was an important
factor in this, particularly in the first half of 2020/21, with reduced vehicle
traffic and local authority attention being focused on the pandemic.
We expect this market to recover in 2022 as we see a catch-up on system
deployments in the UK and look for new applications, including the
enforcement of Clean Air Zones.

Of all of our businesses, SEA saw the greatest impact from COVID-19
with lower sales in transport and delayed export activity.

Over the past few years, the decline in submarine systems work has resulted
in a higher proportion of revenue being derived from less predictable orders.
For instance, SEA’s transport contracts are typically on short timeframes
from win to delivery, usually a few weeks to months. As we signalled last
year, SEA, especially in the final quarter of 2020/21, had a very strong
order intake, securing orders of over £63m and ending the year with an
order book of nearly £70m, underpinning over £20m of SEA’s revenue to be
delivered in 2021/22. This provides us with some confidence that SEA will
see growth in 2021/22 and return to a better level of performance over the
coming few years.

SEA’s order book has also increased in length with the in-service sonar
support order for the UK Royal Navy (£25m) stretching out to 2031.

SEA encountered some technical difficulties with its narrow-diameter
towed-array sonar (Krait) which held up some deliveries and prevented
further trials with potential customers, with the latter also impacted by
COVID-19 restrictions. These difficulties were resolved towards the end
of the financial year, and we are looking forward to getting underway
with customer trials.

A restructuring exercise was completed in July 2020 realising an annual
saving of £1.3m at a cost of £0.7m. These changes were made to shape
SEA’s cost base to its expected level of activity in 2020/21 and beyond,
while ensuring it was ready to deliver when longer-term orders were
secured. The inflow of orders in 2020/21, especially for export customers,
was later than we had anticipated and as a result the cost reduction,
although necessary, did not have the desired impact in 2020/21. Going
forward, with the order book now in place we expect an improving return
from SEA.

As we indicated last year, SEA’s Subsea activity was not core to our
business strategy and its future position in the business was under review.
In August 2020, SEA completed the sale of its Subsea business to
its management.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsFinancial review

Net funds better than expected

Simon Walther
Finance Director

“ Defence revenue from other
customers exceeded that from the
UK MOD for the first time, reflecting
both the increased sales at EID and
Chess, where a much greater
proportion of sales are to export
markets, and the initial contribution
of ELAC.”

Revenue analysis
The segmental breakdown of sales in 2020/21 continued the trend we have
seen in recent years with rising C4ISTAR revenue, driven by increased
intercom deliveries from EID and higher MCL sales. The growth in combat
systems revenue was driven by the initial contribution from ELAC and
organic growth at both SEA and Chess. Our research work, which is mostly
at SEA, after some years of growth saw a reduction this year, following
completion of a three-year project for the UK MOD, which was not
extended. Other research activity and technical support was also lower,
partly due to some inertia in the UK MOD prior to the publication of the
Defence Review. We expect our activity in research and technical support
to decline in absolute terms in the coming years as we focus on research
and development in support of our product and service offerings.

The Group saw a small increase in revenue from the UK MOD, in absolute
terms, although as a proportion of the total it continued to decline as our
export activity increased. The absolute increase was primarily a result of
higher sales of hearing protection and other equipment at MCL.

Sales to the Portuguese MOD decreased, a result of delayed orders for
both land and naval systems, which we now expect to secure in the 2022
calendar year.

Security sales were lower with less sales of counter drone systems to
commercial airports, COVID-19 a contributing factor.

Export defence sales were much higher, now representing almost as much
of the Group’s revenue as the UK MOD. This was higher due to deliveries
into Europe by Chess, the Middle East by EID, higher sales of external
communication systems at SEA, and the introduction of ELAC.

The Group’s defence and security business is, and is expected to remain,
the largest part of our business, supplying 94% of revenue this year
(2020: 90%). The Group’s non-defence revenue was down nearly 30%
compared to last year, with SEA’s transport business seeing reduced
revenue due to lower UK and export sales, mostly as a result of COVID-19.
Underlying UK ROADflow sales fell for the first time in five years. SEA’s
offshore energy business was sold in August 2020.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Financial review continued

Revenue by sector and business

Chess

EID

ELAC

MASS

MCL

SEA

Group

2021
£m

Defence and security

28.6

Transport

Offshore energy

Other commercial

—

2020
£m

25.2

—

2021
£m

20.9

2020
£m

18.0

—

2021
£m

8.3

—

28.6

25.2

20.9

18.0

8.3

2020
£m

—

2021
£m

2020
£m

37.6

38.7

—

1.9

39.5

—

2.4

41.1

2021
£m

18.0

—

2020
£m

15.1

—

2021
£m

20.6

6.4

1.0

—

2020
£m

21.1

7.6

2.9

0.1

2021
£m

134.0

6.4

1.0

1.9

2020
£m

118.1

7.6

2.9

2.5

18.0

15.1

28.0

31.7

143.3

100

131.1

100

The defence and security revenues are further broken down as follows:

Chess

EID

ELAC

MASS

MCL

SEA

Group

Direct to UK MOD

Indirect to UK MOD
where the Group acts
as a sub-contractor or
partner

Total to UK MOD

Portuguese MOD

German MOD

Security

Export defence

2021
£m

—

2020
£m

—

2021
£m

—

2020
£m

—

2021
£m

—

2020
£m

—

2021
£m

19.3

2020
£m

19.8

2021
£m

16.6

2020
£m

12.9

2021
£m

8.0

2020
£m

8.5

2021
£m

43.9

2.1

—

2.4

24.1

26.5

28.6

2.2

—

4.8

18.2

23.0

25.2

0.1

5.9

—

14.9

20.8

20.9

0.1

8.3

—

9.6

17.9

18.0

—

1.0

—

7.3

8.3

—

4.8

24.1

—

4.5

9.0

13.5

37.6

4.3

24.1

—

4.2

10.4

14.6

38.7

0.4

17.0

1.1

14.0

8.9

16.9

11.0

19.5

—

1.0

—

1.0

—

1.1

—

1.1

—

3.7

—

1.6

16.3

60.2

5.9

1.0

7.9

59.0

73.8

18.0

15.1

20.6

21.1

134.0

Note: The percentages applied to the defence and security revenue are based on the total revenue for the Group in each year.

Defence and security revenues are categorised into market segments as follows:

2020
£m

41.2

18.7

59.9

8.3

—

10.1

39.8

58.2

118.1

Year ended
30 April 2020

£m

18.0

63.1

15.0

9.4

12.0

0.6

118.1

—

Year ended
30 April 2021

£m

30.2

70.8

14.5

9.5

7.4

1.6

134.0

Year ended
30 April 2021

Year ended
30 April 2020

£m

90.7

52.6

143.3

100

£m

74.8

56.3

131.1

100

By market segment

Combat systems

C4ISTAR

Digital Services

Training and simulation

Research, advice and support

Other

Total defence and security revenue

The Group’s total revenue, broken down by type of deliverable is as follows:

Product

Services

Total revenue

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Financial review continued

Operational outlook
Order intake and order book

Chess

EID

ELAC

MASS

MCL

SEA

Order intake

Order book

2021
£m

57.7

4.3

7.2

25.6

21.8

63.7

2020
£m

17.8

29.3

—

33.5

9.1

34.7

2021
£m

42.3

20.0

21.2

77.2

12.4

69.3

2020
£m

13.4

36.5

—

91.2

8.6

33.6

180.3

124.4

242.4

183.3

The 2021 order book includes £23.2m of order book acquired with ELAC in
December 2020.

The increase in the Group’s order book reflects the strong order intake at
Chess and SEA and the acquisition of ELAC offsetting the unwind of some
our longer-term orders, especially at MASS. These are typically renewed on
a multi-year cycle, and we expect a negative effect on our order book as
deliveries take place.

The 2020/21 order intake was 126% (2020: 95%) of the Group’s revenue
for the year ended 30 April 2021. This was, as expected, higher than last
year, with substantial export orders being secured at Chess and SEA.

The revenue on order (order cover) for the coming year was 64%
(2020: 62%) as at 30 April 2021, based on external revenue forecasts.
This had risen to 70% in July.

The table below shows the expected delivery of future revenue from the
current order book. The Group’s order intake and order book are the
contracted values with customers and do not include any value attributable
to frameworks or other arrangements where no enforceable contract
exists. The order intake and order book include contractual changes to
existing orders including extensions, variations and cancellations.

Delivery of the Group’s order book into revenue

Chess’s order intake of £57.7m included significant orders for European
land and naval forces. Chess’s closing order book of £42.3m included
£19.8m for delivery in 2021/22. Chess is also well positioned for further
naval and land programmes which we hope will convert to orders in the
coming year. Chess performed less well than expected in 2020/21 due to
weaker margin on some projects where delays, customer deployment
changes and technical challenges all resulted in a weaker margin than
expected. We expect a stronger performance for the coming year as it
continues to lay down a longer-term order book.

EID’s order intake for this year was very weak at £4.3m (2020: £29.3m),
but its order book of £20.0m gives reasonable underpinning for the year
ahead. As we stated last year, the need for EID to secure orders, especially
in its naval markets, remains important for its medium to long-term order
book and growth. The poor order intake in 2020/21, mostly due to delays
to Portuguese defence programmes, has resulted in the expected EID
performance for the coming year being now much weaker than we thought
this time last year, with revenue likely to be one third down on 2020/21 in
2021/22.

At the time of its acquisition, ELAC had an order book of over £23m, with
some delivery out to 2025. In the five months since joining the Group,
ELAC’s order intake was £7.2m, of which the majority was export, including
Japan. ELAC’s closing order book of £21.2m underpins £12.3m of revenue
for delivery in 2021/22 to which the recently secured Italian sonar order
adds around £5m of revenue for the coming year, giving us confidence that
ELAC should grow on a like for like basis in 2021/22.

242.4

21.2

12.4

42.3

69.3

20.0

77.2

250

200

150

m
£

100

MASS

EID

SEA

Chess

MCL

ELAC

57.6
7.8
7.9
11.5
10.9
3.4
16.1

42.1
4.6
3.6

8.3
9.7
4.8
11.1

52.0
4.6
0.8

11.9
11.8
4.1
18.8

26.8
1.3
0.0
1.6
6.3
6.9
10.7

63.9
2.9

9.0

30.6

0.8
20.5

At 30 April 2021

H1 2021/22

H2 2021/22

2022/23

2023/24

Later years

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Financial review continued

Operational outlook continued
Delivery of the Group’s order book into revenue continued
MASS’s order intake of £25.6m included an £11m renewal of its support to
the UK’s Joint Forces Command out to March 2022, a service MASS has
been providing for over 15 years. The contract, awarded under the UK
MOD’s Single Source Regime, includes an option to extend the service to
March 2025. MASS’s closing order book of over £77m includes over £27m
of revenue to be delivered in 2021/22. We expect MASS to return to
growth in the coming year.

At MCL, order intake of £21.8m was much higher than last year and
included over £7m of hearing protection related orders and an extension to
its work on autonomous vehicles for the British Army. MCL’s closing order
book of £12.4m includes £11.5m to be delivered in 2021/22. Our long-term
aim remains to strengthen MCL’s order book and prospects to give it more
visibility of future workflows. With some key prospects in UK naval
programmes, MCL should see modest growth in the coming year.

SEA’s order intake of nearly £64m was very strong and well above last
year’s £35m. Orders secured included a ten-year support contract to the
UK Royal Navy’s minor sonars at nearly £25m, as well as export orders for
Torpedo Launcher Systems and External Communications Systems of
around £17m. SEA’s Transport division had a weaker year with order intake
of only £7m (2020: £8m), in part due to COVID-19 impacts on traffic
volumes and local authority spend and focus. In the coming year we expect
SEA to secure further export orders and, on the back of its stronger order
book, return to growth and a net margin back above 10%.

A significant proportion of Cohort’s business will continue to be derived
from the UK MOD, either directly or indirectly. The UK Government
presented its latest Strategic Defence and Security Review in early 2021.
The Review gave high priority to a number of current and future capabilities
where the Group’s offerings are strong, including submarines, special forces,
cyber and secure communications, and from which we derived revenue of
£40.8m this year (2020: £37.5m). Following the Review, the UK Government
followed this up with a unique four-year spending commitment for UK
defence which included an additional £16bn of spending up to March 2025,
an increase of over 10% over the previous defence spending plans for the
same period. We have already seen some positive momentum from this at
MCL, which tends to be the first of our businesses to see the impact of UK
MOD spend adjustments. One dependency for 2021/22 performance,
ELAC’s submarine sonar system for Italy, has now been secured. With the
exception of EID, the Group’s other businesses are not dependent upon any
significant single order, but all require a varying level of infill to achieve
their performance expectations. The level of infill required varies from 45%
at MCL (typically the lowest level of cover of our businesses) to just over
30% at MASS with an average across the Group of 36%. The order cover
has increased to 70% following order wins of over £50m from May through
to mid-July, including the Italian submarine sonar.

Funding resource and policy
At the time of approval of this statement (27 July 2021), the Group has
lived with the impact of COVID and resultant lockdown measures for well
over a year. This has given rise to additional risk and uncertainty. The
Cohort Board has considered these risks and taken appropriate steps and
actions to manage them. At 30 April 2021, the Group’s cash and readily
available credit was £42.6m. A very high proportion of our ultimate
customers are governments or government agencies, with a clear need
to invest in defence and security. The international and domestic security
environment still calls for greater resources to be devoted to defence
and counterterrorism in the UK and many other countries. As already
mentioned, over 64% of our revenue for 2021/22 was on contract at
30 April 2021 providing further assurance and this has since increased.
The Board considers the Group to be a going concern.

The Group retains a robust financial position and continues to be cash
generative enabling it to continue to invest in internal R&D and other
value-adding projects on a carefully considered basis as well as maintaining
its progressive dividend policy. The Group’s cash position and banking
facility also provide it with the resources to conduct its acquisition strategy.

NatWest is the Group’s primary bank, especially for clearing purposes and
day-to-day transactions.

The Group currently benefits from a four-year revolving credit facility
(expiring November 2022) with an option to extend for one year (to
November 2023). The facility is provided by NatWest and Lloyds. The
maximum value of the facility at 30 April 2021 was £40m.

The facility itself provides the Group with a flexible arrangement to draw
down for acquisitions and overdraft. As at 30 April 2021, £29.7m of the
facility was drawn, leaving £10.3m available to be drawn down. The Group’s
banking covenants were all passed for the year ended 30 April 2021. Looking
forward, we expect this to continue out to 31 July 2022 and beyond.

The facility is available to the UK members of the Group and is fully
secured over the Group’s assets, including those of Chess and ELAC but
excluding EID’s.

The UK Group has separate bilateral facilities with each of NatWest and
Lloyds for instruments such as forward exchange rates, bank guarantees
and letters of credit. In addition, the Group is free to arrange such facilities
with other banks where pricing and operational efficiency warrant it. MCL,
for example, has a forward exchange facility with Investec Bank.

The Group takes a prudent approach to treasury policy with its overriding
objective being protection of capital. In implementing this policy, deposits
are usually held with institutions with credit ratings of at least Baa3.
Deposits are generally held on short (less than three months) duration to
maturity on commencement. This matches the Group’s cash resources
with its internal monthly 13-week cash forecasts, retaining flexibility whilst
trying to ensure an acceptable return on its cash. Most of the Group’s UK
cash (that is not on short-term deposit) is managed through a set-off
arrangement, enabling the most efficient use of the Group’s cash from day
to day, under the supervision of the Group’s finance function.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsFinancial review continued

Funding resource and policy continued
EID’s bank facilities are managed locally in Portugal. The cash is spread
across a number of institutions to minimise capital risk.

EID provides no security over its assets and its wide range of banks enable
it to be well supported in executing export business, specifically in respect
of foreign exchange contracts, guarantees and letters of credit.

EID has a local overdraft facility of €2.5m with Santander. This was
undrawn at 30 April 2021.

ELAC manages its own banking arrangements locally in Germany. ELAC
uses Commerzbank for its day-to-day clearing and export requirements,
including foreign exchange contracts, guarantees and letters of credit.

ELAC currently has no overdraft facility with Commerzbank or any
other bank.

ELAC’s assets (including its cash and deposits) are part of the Group’s
security undertakings with Lloyds and NatWest. Future Group facility
discussions will look to include a German bank in the Group facility
enabling ELAC to have a wider local facility, including, if necessary,
an overdraft facility.

The Group regularly reviews the ratings of the institutions with which
it holds cash and always considers this when placing a new deposit.

The Group’s net funds at 30 April 2021 were £2.5m, better than expected
due to timing of receipts. Looking forward, we expect the Group’s net debt
at 30 April 2022 to be close to zero, as the timing advantage is expected to
unwind. The Group is expected to move back into net funds by 30 April
2023, if there is no further corporate activity.

In addition to its cash resources, the Group has in issue 41.0m ordinary
shares of 10 pence each. Of these shares 0.2m (2020: 0.2m) are owned by
the Cohort plc Employee Benefit Trust (EBT), which waives its rights to
dividends. In addition, the Group has issued options over ordinary shares
through Key Employee Share Option and SAYE schemes to the level of 1.7m
at 30 April 2021 (2020: 1.5m).

The Group’s exposure to foreign exchange risk arises from two sources:

the reporting of overseas subsidiaries’ earnings (currently EID and
ELAC) and net assets in sterling; and

transactions in currencies other than our Group reporting currency (£)
or subsidiary reporting currency where different (currently € at EID
and ELAC).

The first risk is a reporting rather than cash risk and we do not hedge the
reporting of earnings.

In terms of reporting asset values, we have in place a natural hedge of
borrowing in euros to acquire a euro asset (ELAC) but over time, as the
asset grows and the loan diminishes, this hedge will wane.

We take a prudent approach to transactional foreign exchange risk
requiring all significant sales and purchases to be hedged at the point in
time when we consider the transaction to be certain, usually on contract
award. We mark these forward contracts to market at each reporting date,
recognising any gain or loss in the income statement.

The Group has maintained its progressive dividend policy, increasing
its dividend this year by 10% to a total dividend paid and payable of
11.10 pence per share (2020: 10.10 pence).

The last five years’ annual dividends, growth rate, earnings and cash cover
are as follows:

Dividend
Pence

Growth over
previous year
%

Earnings cover
(based upon
adjusted
earnings
per share)

Cash cover
(based upon
net cash
inflow from
operations)

11.1

10.1

9.1

8.2

7.1

6.0

3.0

3.7

3.8

3.5

3.9

4.5

3.6

2.8

2.3

4.0

0.2

2.8

2021

2020

2019

2018

2017

2016

The growth over recent years has moved the dividend from a relatively low
base to a more normal level for an established cash-generative business.
Looking forward the Group plans to maintain a policy of growing its
dividend each year and we expect the rate of growth to align with the
earnings growth of the Group.

The Group’s cash generation in 2021 was stronger than the expected flat
performance for the year. In summary, the Group’s cash performance was
as follows:

Adjusted operating profit

Depreciation and other non-cash operating
movements

Working capital movement

Acquisition of ELAC

Costs paid in respect of acquiring ELAC

Costs paid in respect of MASS relocation

Restructuring and subsea disposal at SEA

Tax, dividends, capital expenditure, interest,
loans and other investments

Increase in funds

2021
£m

18.6

2.4

(0.1)

20.9

(1.3)

(0.6)

—

(0.7)

(11.1)

7.2

2020
£m

18.2

1.8

(7.0)

13.0

—

(0.5)

(0.3)

—

(10.5)

1.7

The slightly higher cash outflow in tax, and dividends, etc. was mostly due
to higher tax payments, partly offset by lower capital expenditure and net
investment in own shares. Looking forward, we retain the flexibility to use
newly issued shares as well as EBT shares to satisfy employee share options.

The Group’s customer base of governments, major prime contractors and
international agencies makes its debtor risk low. The year-end debtor days
in sales were 38 days (2020: 37 days). This calculation is based upon
dividing the revenue by month, working backwards from April, into the
trade debtors balance (excluding revenue recognised not invoiced) at the
year end. This is a more appropriate measure than calculating based upon
the annual revenue as it takes into account the heavy weighting of the
Group’s revenue in the last quarter of each year. The small change in
debtors days reflected the UK MOD’s accelerated payments at the end
of 2019/20 being slowed to normal practices in 2020/21, as expected.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Financial review continued

Tax
The Group’s tax charge for the year ended 30 April 2021 of £1,554,000
(2020: charge of £295,000) was at a rate of 22.0% (2020: rate of 3.0%)
of profit before tax. This includes a current year corporation tax charge
of £4,254,000 (2020: charge of £2,325,000), a prior year corporation tax
credit of £310,000 (2020: credit of £770,000) and a deferred tax credit of
£2,390,000 (2020: credit of £1,260,000).

The Group’s overall tax rate was above the standard corporation tax rate
of 19.00% (2020: 19.00%). The increase is due to the higher contribution
of taxable profits from Portugal (at 23.0%) and also an initial contribution
from Germany (at 31.0%). Additionally, R&D credits recognised last year
by EID in Portugal were, due to timing, not recognised this year. The Group
has also taken a prudent approach to the potential outcomes of a tax audit
in Portugal and a R&D credit review in the UK.

The Group has reported research and development expenditure credits
(RDEC) for the UK in accordance with IAS 20 and shown the credit of
£1,029,000 (2020: £784,000) in cost of sales and adjusted the tax charge
accordingly. The RDEC has been reversed in reporting the adjusted
operating profit for the Group to ensure comparability of operating
performance year on year.

Looking forward, the Group’s effective current tax rate (excluding the
impact of RDEC reporting) for 2021/22 is estimated at 18.0% compared
with 17.4% of the pre-RDEC adjusted operating profit less interest for
2020/21. This rate going forward reflects a combination of an expected
decrease in Portuguese derived profits and higher German profits. The
Group maintains a cautious approach to previous R&D tax credit claims
for tax periods that are still open, currently 2019/20 and 2020/21.

Exceptional items
The exceptional items this year are just over £1.3m in total. This includes a
restructuring charge at SEA of just over £0.6m completed in the summer
of 2020. The disposal of SEA’s subsea business to the management of that
division in August 2020 realised a loss of £0.5m, including a prudent stance
on a vendor loan.

Adjusted earnings per share
The adjusted earnings per share (EPS) of 33.63 pence (2020: 37.10 pence) is
reported in addition to the basic earnings per share and excludes the effect
of exceptional items, amortisation of intangible assets and exchange
movement on marking forward exchange contracts to market, all net
of tax.

The adjusted earnings per share exclude the non-controlling interest of EID
(20%) and Chess (18.16%).

The reconciliation is as follows:

Year ended 30 April 2020

Chess (81.84% owned)

100% owned businesses throughout the year
ended 30 April 2021

EID (80% owned)

ELAC (five months in 2021)

Change in tax rate 17.4% (2020: 6.6%)

Dilution from higher weighted average number
of shares (due to option exercises)

Year ended 30 April 2021

Increase/(decrease) from 2020 to 2021

Adjusted
operating
profit
£m

18.2

(0.9)

(1.6)

1.7

1.2

—

18.6

Adjusted
earnings
per share
Pence

37.10

(1.56)

(4.06)

3.38

3.00

(4.14)

(0.09)

33.63

(9%)

The adjustments to the basic EPS in respect of exceptional items, exchange
movements and other intangible asset amortisation of EID and Chess only
reflect that proportion of the adjustment that is applicable to the equity
holders of the parent.

Accounting policies
Following the adoption of IFRS 16 ‘Leases’ last year, there were no
significant accounting policy changes in 2020/21.

Simon Walther
Finance Director

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsRisk management and principal risks

Risk management

Risk management
The key risks and the management thereof are set out on pages 38 to 42.
In addition to these risks, other risks facing the Group are explained
elsewhere in the Annual Report and these should be read together to give
a complete picture of our risks and their management and control.

Specifically, the COVID-19 pandemic and resulting economic market risks
(which still include Brexit) are discussed in the Chairman’s statement and
Operational review and the cyber risk of the Group is discussed within the
Corporate governance report, alongside our ethical and behavioural risks.

Finally, our risk in respect of our key resource, our employees, is contained
within this Risk management section but also expanded upon in the
Business model and Stakeholder engagement sections of this report.

The Board’s approach to risk management is summarised by the
following framework:

Risk management framework

The Group faces a number of risks, the significant ones of which are set out
on the next pages. The Group reviews, analyses and addresses the risks it
faces through the Audit Committee, Board, Group Executive and subsidiary
management meetings, and subsidiary project and functional reviews.

Depending upon the nature of the risk, review and action may be on an
annual basis. In most cases the review is more frequent. Project risks are
generally reviewed monthly through the individual project reviews,
subsidiary management meetings and reports to the Cohort Board.

Cohort plc Board

Audit Committee

Executive Management

Top-down review

Risk review

Group-wide business risk register

Bottom-up review

Group businesses

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Risk management and principal risks continued

Nature of risk

Mitigation and progress

Change

Unchanged

Increased

Decreased

Business risk
Capacity to grow the Group

As an AIM-listed group, Cohort’s strategy is to grow, both
organically and by acquisition. This gives rise to the risk of
the Group not having the capacity to grow in line with our
strategic objectives. Specific elements of this risk include
our ability to win new business and design new and
competitive products and solutions, whilst ensuring that
we meet our obligations to our customers and identify and
execute suitable value-adding acquisitions.

Market risk
Customers

The Group’s single most important customer remains the
UK MOD. £43.9m of revenue came directly from this source
in 2021 (2020: £41.2m), 31% (2020: 32%) of Group revenue.

In addition, £16.3m (2020: £18.7m) of Group revenue, 11%
(2020: 14%), was sourced ultimately from the UK MOD but
received via other contractors.

The impact of the COVID-19 pandemic on the UK, German
and Portuguese Governments’ financial robustness is likely
to be significant.

The impact on our overseas markets of COVID-19 is also
uncertain and in the short to medium term our markets
may come under budgetary pressure.

Any event which affects the Group’s reputation with the
UK MOD could also put this revenue at risk.

The elements of this broad business risk are addressed below, especially the
risks in respect of customers, operations, acquisitions and treasury.

At a higher level, our federated model of relatively small, independent
businesses enables us to respond more quickly to changing market and
business conditions. Through this independence, each business is able to
retain a good degree of innovation and responsiveness.

This model also allows our businesses to keep close to customer requirements
and technical changes to enable them to identify the need for new products
and solutions and how best to achieve this, whether through our own
development or utilising third-party technologies.

To ensure that the business growth opportunities are value adding, whether
new business, products, services or acquisitions, appropriate controls are in
place in our subsidiaries’ businesses and at Group level to lessen the risks of
such undertakings.

The slight decrease in the proportion of the Group’s revenue to its ultimate
primary customer in 2021 compared with 2020 reflects the acquisition of
ELAC, which had no sales with the UK MOD in the current year. The slight
increase in direct sales was mostly at MCL. The indirect revenue to the UK
MOD decreased due to lower sales at SEA, mostly in research and technical
support. Looking ahead, we expect UK MOD sales as a proportion of total
revenue to continue to decline as the Group’s exports grow.

The Portuguese MOD, which is also a home market for the Group, was lower
at £5.9m (4%) in 2021 (2020: £8.3m; 6%). The fall in revenue from the
Portuguese domestic customer was a result of slippage of orders, particularly
a land programme, which we now expect to be secured in 2021/22. Germany
is a new home market for the Group following the acquisition of ELAC, but
sales are low at £1.0m (1%) in 2020/21 and expected to remain low going
forward. Non-defence sales (which include security) decreased to £17.2m
(12%) from £23.1m (18%). The decrease was due to a drop in transport
revenue where the impact of COVID-19 was more noticeable, particularly
delays to deployment of traffic camera systems as a result of a marked
drop in traffic levels. Subsea was also much lower following its disposal
in August 2020.

In our defence and security export markets, £60.7m of revenue (42%) was
delivered this year compared with £42.2m (32%) in 2020. This growth was
expected with EID delivering to a Middle East customer and an initial
contribution from ELAC. Chess export revenue was also higher with deliveries
to European customers. MASS export revenue was slightly down due to
delayed overseas EWOS activity as a result of COVID-19.

£40.8m (2020: £37.5m), 28% (2020: 29%) of Group revenue, representing
68% (2020: 63%) of revenue derived from the UK MOD, was in relation to the
Astute and other submarine programmes, nuclear deterrent programmes and
operational support to the Royal Navy, Royal Air Force and Joint Forces, all of
which have been confirmed as high priority areas following the Government’s
latest Strategic Defence and Security Review.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsRisk management and principal risks continued

Nature of risk

Mitigation and progress

Change

Unchanged

Increased

Decreased

Operational risks
Employees

The Group’s main resource is our
employees. We are not a capital
intensive business and as such
our value and our customers’
value derives from the ability of
the Group to recruit, retain and
train employees with the right
skills and flexibility. In some of
our key areas, resources are
limited, and it is a risk if we
cannot maintain sufficient
numbers and appropriate skills.

Suppliers

As is typical in the defence
sector, the Group is reliant on
certain key suppliers for specific
elements of its technical and
product offerings. This reliance is
long term, with product duration
in this sector often being tens
of years.

As highlighted in Stakeholder Engagement (pages 43 to 49), we endeavour to provide an environment in
which skilled employees are attracted to our business through the nature and variety of work and the
level of responsibility we can provide. We maintain close links with our military and security customers,
which provide a primary source of domain experts for our businesses. We, in return, are keen to support
people initiatives for and within those organisations, including the UK MOD’s Armed Forces Covenant.

We maintain close links with academic institutions in our neighbourhoods and further afield where
appropriate skills exist.

We have apprenticeship and graduate recruitment schemes which ensure the Group is able to develop its own
people to ensure skills are maintained into the future, especially in light of shrinking military establishments.

The flexibility of our workforce has continued to be demonstrated throughout the various COVID-19
lockdowns, in the UK, Germany and Portugal. Initially 70% of our employees were working from home; this
is now around 50% and, provided the current plans for coming out of COVID-19 lockdowns continue, we
expect to have 75% of our people back in their work facility or on customer establishments by October 2021.

This risk is managed through close liaison with suppliers, good project management and having
contingency plans to contract with alternative suppliers or bring the work in house.

The long-term life of many defence products requires a regular review of product life and capability, and
the Group supports the customer in this respect through funded ongoing product support and re-life tasks.

We have continued to see some suppliers struggling to meet delivery schedules as a result of COVID-19.
This has been particularly noticeable where the level of a supplier’s output to the defence sector is low,
and the supplier is more dependent upon on the commercial aerospace and automotive markets. We
have seen delivery times increase, particularly for semi-conductors and certain other components. We
have, where appropriate, ordered products and components ahead of schedule to ensure we meet
customer expectations. This will result in a higher working capital commitment.

Operations (Chess, EID, ELAC, MASS and SEA)

The subsidiary trading and
business risks are similar in the
cases of Chess, EID, ELAC, MASS
and SEA.

Bid risk – the businesses bid
on contracts where the scope
of work may not be well or
fully defined by the customer.

ii. Fixed-price contracts – these

are often of a long-term nature
(greater than 12 months) and
typically include delivery of
hardware and software, some
of which may be developed
as part of the contract.

iii. Due to the nature of their
niche technical skills
requirement, Chess, EID,
ELAC, MASS and SEA all have
a fixed level of core software
and hardware engineering
and technical expertise.

This is typical in defence and is managed through bid/no bid reviews at the appropriate level using
experienced personnel, including the Cohort Executive and Board.

These projects are managed by dedicated project management teams, monthly reviews by the
subsidiary board and regular interaction with the customer and key suppliers. Revenue and costs are
recognised taking account of risk and the estimated cost at completion (including any contingency).

This cost base is carefully monitored at budget time and by rolling quarterly forecasts to identify any
potential risk of low utilisation and thus under-recovery of cost, or over-utilisation leading to the
inability to meet customer commitments.

The risk is mitigated, in the short term, by the use of sub-contractor staff. In the long term, a programme
of skills assessment and training is in place to ensure continued flexibility of the Group’s engineering and
technical resources.

Chess was acquired in December 2018. Chess brought with it more production, including machining,
than seen elsewhere in the Group.

As highlighted last year, we noted some operational, project and commercial weakness at Chess. We
have made progress in addressing these issues having appointed an Operations, Project and Technical
Director to support the existing management team at Chess.

Further work needs to be done to improve Chess’s delivery performance and tighten its commercial
processes. The Group’s Head of Commercial, who joined in March 2021, is closely supporting Chess in
this improvement.

The acquisition of ELAC in December 2020 has added further manufacturing and testing capability to
the Group. ELAC, having been owned by various public listed companies over the last 20 years, has very
good control processes in place. However, its recent win of the large Italian submarine sonar contract is
a significant development and delivery step for the business and the Group has put in place a Project
Advisory Committee (PAC) to act as a review panel for the project and to be able to advise ELAC and the
Cohort Board. This PAC comprises individuals with extensive experience in the submarine and sonar
domains and is chaired by Sir Robert Walmsley.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Risk management and principal risks continued

Nature of risk

Mitigation and progress

Change

Unchanged

Increased

Decreased

Operational risks continued
Operations (MCL)

MCL’s revenue visibility is short at typically three to six
months. This carries risk to employee utilisation and
predictability of revenue and profit.

MCL’s employee levels are low, 2021: 36 (2020: 33), and its people are flexible
and possess multiple skills, enabling them to take on design, integration and
support tasks across the full range of MCL’s product offering. MCL has a
long-term strategy to improve its visibility by securing longer-term contracts,
utilising the Group’s size and financial stability. Its order cover for 2021/22 is
higher than last year’s at 55% (2020: 37%). MCL’s significant exposure to the
UK MOD (over 90% of its revenue) has provided some stability in the recent
COVID-19 pandemic. The recent positive news with a marked increase in the
UK MOD budget and agreed four-year spending plan have given MCL some
positive momentum especially since MCL primarily addresses special forces
and other niche users where budgetary pressure is generally lower.

Managed service contracts

The Group (through its subsidiaries, MASS, MCL and SEA)
operates a number of off-site managed service contracts.
These contracts are long term in nature (typically five years
at commencement) and have dedicated project managers.
The contracts are fixed price in terms of revenue with
opportunities for additional tasks enhancing volume
and return.

The Group carefully manages the partnership with its customer and supplier
base in all these cases to ensure the customer receives value for money, with
skilled Group staff providing a dedicated, flexible and responsive approach.
The primary risk to these managed service contracts is termination or loss
through competition. We mitigate this risk through the partnering approach
adopted by the Group and our close engagement with customers to ensure
their needs are met.

Export contracts

The Group’s subsidiaries seek to win and deliver solutions
and services outside its geographical home markets, the
UK, Germany, and Portugal.

The risks that arise for the Group relate to the need to
comply with local and domestic legislation, and to ensure
we receive payment in circumstances where political and
credit risk may be much higher than in our domestic
markets. There is also a risk that export licences may not
be granted or may be cancelled. The timing of some export
contracts can be more difficult to predict.

As expected, we renewed a key long-term support contract with the UK MOD
under the Single Source Regime after a competitive process stalled. SEA
secured a ten-year support contract (out to 2031) for minor sonars for the
UK’s Royal Navy, a support service SEA has provided for many years.

The Group’s long-term strategy is to grow its export business, both in terms of
volume and markets. This provides mitigation against reliance on any single
customer, in particular the UK MOD. Total export activity in 2021 represented
42% (2020: 33%) of the Group’s revenue. Revenue derived from the UK,
Germany and Portuguese defence ministries represent 42% (2020: 46%),
<1% (2020: nil), 4% (2020: 6%) of the Group total respectively.

Our commercial employees are highly experienced at dealing with the various
regulatory processes associated with the export of defence goods and
services, including export licence applications and information security
requirements. In particular we have a strong Group-wide Anti-Bribery Policy
to ensure compliance with the UK’s 2010 Bribery Act.

The Group has experienced a very low level of bad debts, including from
export contracts. We take a case-by-case approach to payment risk, making
use of various treasury and commercial arrangements where necessary to
ensure payment. We regularly monitor any potential political risk to any of
our export markets, and we do not commit resources to markets where
export licences might be difficult to obtain.

As in our domestic markets, COVID-19 may impact our export markets with
individual customer defence budgets coming under pressure. We may also see
more positive drivers as a result of changes in regional security stances and
disputes. The unpredictability of some export contracts, especially in terms of
timing, has been seen this year at EID with orders slipping out of year, in part
due to COVID-19. EID has also seen orders from its domestic customer slip
out of year.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsRisk management and principal risks continued

Nature of risk

Mitigation and progress

Change

Unchanged

Increased

Decreased

Operational risks continued
Partners

The Group, especially in the defence sector, often secures
business through teaming and partnering with other
suppliers and this is often a requirement of securing work
with the UK MOD in order to ensure the end customer
receives the best solution. This creates a risk that the
Group’s revenue or profit will be affected by poor
performance of a partner business.

Strategic risk
Acquisitions

The buying (and selling) of businesses is a risk in respect
of value, distraction, integration and ongoing obligations
and undertakings.

Financial risks
Treasury

Over the last 12 months, the credit ratings of most of our
banks (see note 15) have remained steady.

In November 2018, the Group completed a new bank
facility with Lloyds and NatWest. NatWest remains the
Group’s primary bank, especially for clearing purposes and
day-to-day transactions. The facility is a revolving credit
facility for four years with an option to extend for one year.
The facility was increased from £30m to £40m on 20 May
2020 by exercising an accordion. Of this facility, £29.7m
was drawn at 30 April 2021. The facility itself provides the
Group with a flexible arrangement to draw down for
acquisitions and overdrafts.

This facility is available to all of the Group’s entities
(excluding EID and ELAC) through an offset arrangement.
The current facility expires in November 2022, although
the Group has an option to extend it for one year.

The facility is secured against all of the Group’s UK and
German businesses (and assets) including the Group’s
shares in EID. EID has facilities with local banks in Portugal,
none of which have security over its assets. These facilities
are for clearing bank purposes, overdraft, foreign exchange
contracts, guarantees and letters of credit.

ELAC has facilities with its local German bank, Commerzbank,
for clearing bank purposes, foreign exchange contracts,
guarantees and letters of credit but not currently an overdraft.

A risk for the Group is that its pools of cash and facilities, in
the UK, Germany and Portugal, are insufficient for local needs.

Under the facility agreement with its banks, the Group is
required to meet certain covenants every quarter. There is a
risk that the Group does not meet some or all of the covenants
and that the facility is amended or cancelled as a consequence.

The Group takes an active part in these arrangements and, through regular
(usually monthly) project review meetings and other communication, ensures
that the team (including our partners) delivers as a whole to the customer
and to the needs of the individual team members.

The Group’s acquisition risk is mitigated as far as practicable by the acquisition
process being led at the Cohort Board level, making use of a skilled and
experienced internal team augmented by external expertise and resources as
and when required. Our approach to acquisitions is set out more fully in our
Business model on page 9. During the year ended 30 April 2021, the Group
completed the acquisition of 100% of Wärtsilä ELAC Nautik GmbH (ELAC).
The completion of this acquisition was delayed by the longer than expected
German Federal Government approval process. The final terms of the
acquisition were unchanged from that negotiated and agreed in December 2019.

The Group takes a very prudent approach to the management of its financial
instruments, which are described in note 18. The Group’s cash (see note 15)
is usually held with at least Baa3-rated institutions (including Germany and
Portugal) and on deposits usually not exceeding three months. This ensures a
very low risk to capital and a reasonable balance of liquidity against interest
earned on cash deposits.

The Group regularly reviews the ratings and other relevant factors in respect
of the banks with which it deposits its cash and on each and every occasion
that a short-term deposit is placed.

The Group prepares a monthly cash forecast to ensure that cash in the UK,
Germany and Portugal is sufficient for local needs over the following
three-month period. The shareholder agreement in respect of EID enables
dividends to be paid from EID to the UK.

The Group regularly monitors its covenant position and considers the impact
of proposed transactions upon our banking covenants to ensure that they are
not breached. It also has regular (no less than twice yearly) meetings with its
banking providers to ensure that any potential issues or risks are identified and
communicated early and that any implications for covenants can be addressed.

The Group has remained in compliance with its banking covenants in 2021
and expects to continue to do so. The impact of IFRS 16 ‘Leases’ is ignored for
the purpose of our banking covenants.

The Group expects to begin discussions with its current two UK banks regarding
renewal of its Group facility in the second half of 2021. These discussions will
probably encompass an extension of the facility in size and participating
banks with a German bank likely to be added to the facility providers.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Risk management and principal risks continued

Nature of risk

Mitigation and progress

Change

Unchanged

Increased

Decreased

Financial risks continued
Currency risk

The Group has contracts with overseas customers and
suppliers requiring payment or receipt in currencies
other than sterling (in the UK) and euros (in Germany
and Portugal).

The Group’s exposure to credit risk at 30 April 2021 in
respect of financial derivatives (forward foreign exchange
contracts) was £5.9m of payable and £17.5m of receivable
(2020: £4.6m of payable and £0.1m of receivable).

The financial derivatives at 30 April 2021 were held with
NatWest, Lloyds and Investec Bank (30 April 2020:
NatWest, Lloyds and Investec Bank). These are disclosed
in detail in note 18 to the financial statements.

Revenue

The Group has risk in respect of:

i. milestone and acceptance failure on projects; and

ii. unrecoverable trade debts.

The recognition of revenue is discussed at length in the
accounting policies (pages 124 and 125) and critical
accounting judgements (pages 126 and 127) and as such
may from time to time have a degree of risk.

The 2021 net bad debt charge was virtually £nil (2020:
£0.1m) on Group revenue of £143.3m (2020: £131.1m).

Financial assets exposed to credit risk at 30 April:

Trade receivables

Other receivables including
contract assets

Cash and bank deposits

2021
£m

30.2

36.4

32.3

2020
£m

23.3

24.1

20.6

The Group manages its exposure to currency risk by using forward foreign
currency exchange contracts. The level of forward cover is determined on an
individual contract basis, taking into account the net currency exposure to
receipts and purchases. Forward contracts are only put in place when the
award of customer contracts has taken place or is considered highly probable.
The Group does not enter into speculative forward exchange contracts. The
Group’s primary exposure is to the US dollar through MCL, which purchases a
number of products in the US. As expected, our euro exposure increased in
the year following new export contracts at Chess.

The Group does not hedge the exposure to euro/sterling fluctuations that
arise from its ownership of either EID or ELAC.

The Group takes a prudent approach to revenue and credit risk, and any work
done at risk is minimal, authorised at the appropriate level and reviewed on a
monthly basis. The Group uses project control processes and regularly reviews
project progress to ensure recognition of revenue takes account of external
milestones and customer acceptance as well as the internal costs incurred. The
calibre of the Group’s customers and the control processes in respect of revenue
capture and invoicing ensure minimal bad debts.

The Group also uses letters of credit and other methods of payment guarantee,
including customer advances, especially in respect of overseas customers, to
ensure any export debt risk is minimised. Significant debt receivable in foreign
currency is hedged using forward exchange contracts.

The credit risk of the major debtor of the Group, the UK MOD, is considered
very low.

The Group’s risk to trade receivables is higher in some of our non-defence
markets where our customers are not all government bodies.

The Group also has a risk, even for government business, where we contract via
a prime contractor. This risk has been low historically, especially in the defence
sector, but collapses such as Carillion in the past highlight that prime contractor
risk needs to be monitored.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsStakeholder engagement

Engaging with our stakeholders

We maintain strong relationships across all our stakeholder groups.

Shareholders
X Direct engagement with certain shareholders following 2020 AGM.

X Establishment of a Nomination Committee.

X Live Q&As hosted for shareholders.

Suppliers and partners
X The Board received updates on relationships with key suppliers and
strategic partners through the monthly reporting mechanism and
the year-end compliance reports.

X Our Group engagement principles show our suppliers how we will

FURTHER DETAILS ARE SET OUT ON PAGE 44 AND IN THE
CORPORATE GOVERNANCE REPORT ON PAGE 56

work with them.

People
X The Board maintained close contact with the Managing Directors
throughout lockdown to understand the impact on employees.

X The Board received monthly health and safety reports which
included updates on safety incidents involving employees and
incidents of COVID-19 throughout the Group.

X Board members attended the Cohort Business Excellence Awards

remotely to commend individuals for their achievements.

X Board members contributed to Q&A sessions held for the

Learning Development Programme Alumni event and Business
Development Conference.

FURTHER DETAILS ARE SET OUT IN THE “PEOPLE” ON PAGE 45 AND 46

Communities
X Engagement by our subsidiaries in the communities within

which they operate is reported to the Board throughout the year
where appropriate.

Customers
X The Board received regular updates on key customers through the

monthly reporting mechanism, virtual attendance at Board
meetings by the Managing Directors and input from the Managing
Directors into the strategy planning.

X Our Group engagement principles show our customers how we will

work with them.

X Board members attended the online customer webinar hosted by

Chess and SEA.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Stakeholder engagement continued

Shareholders

The Board gives the utmost importance to engaging
with shareholders.

Annual General Meeting
Our AGM is one of the key methods of communicating with the Company’s
shareholders. The AGM is an opportunity for the Chair, the Senior
Independent Director, the Committee Chairs and the rest of the Cohort plc
Board to meet with shareholders, hear their views and answer their questions
about the Group and its business. Last year, a physical AGM was not possible
due to COVID-19 and the Company held a closed meeting in accordance
with the provisions of the Corporate Insolvency and Governance Act 2020.
However, the Board was keen to maintain engagement with shareholders.
To facilitate this the Board invited shareholders to submit questions in
advance of the AGM and conducted a live Q&A session immediately after
the AGM. All voting was conducted by way of a poll and all shareholders
were encouraged to submit voting instructions by proxy in advance of
the AGM to ensure that all shareholders were able to participate in the
decision-making of the Company and have their votes recorded. Details of
proxy votes received were also made available on the Company’s website
(cohortplc.com) following the meeting.

This year the Company is expecting to be able to host a physical AGM
at 15:00 on 20 September 2021 at Phyllis Court Club, Marlow Road,
Henley-on-Thames, Oxfordshire RG9 2HT and the Notice of AGM for
Cohort plc is being sent to shareholders together with this Annual Report.

The Board also hosted live Q&A sessions for shareholders following the
year end announcement in July and after the Interim results in December.

Responding to shareholders
The Chairman takes overall responsibility for ensuring that the views of
our shareholders are communicated to the Board, and that all Directors
are made aware of issues and concerns raised by shareholders. When
appropriate, the Committee Chairs will engage with shareholders where
an issue has been raised relevant to the work of their committee.

Details of the engagement between the Chairman and the Chair of the
Remuneration Committee and some of our significant shareholders are
set out in our Corporate governance report.

Other shareholder engagement
Further engagement with our shareholders takes place through meetings
with institutional shareholders, the Annual Report and Accounts,
the Interim Report, social media, webcasts and email for RNS alerts.
The Chairman, together with the Company Secretary, responds to any
written enquiries received from investors.

The Executive Directors host presentations to market analysts on the
Group’s performance twice per year and, on occasions, along with other
members of the Board, will host capital market days where shareholders
and other interested parties, including analysts and banks, are invited
to attend.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsStakeholder engagement continued

People

Our capabilities and customer relationships all ultimately
derive from our people. Across the Cohort Group, our people
can make a difference, fulfil their potential, develop their
careers, and be rewarded for what they do.

We recognise that our success hinges on the attitudes and
behaviours of our people. We create a climate and culture
that encourages them to deliver outstanding performance
for our customers, operating with uncompromising ethics.
We encourage our people to role model our brand values
that capture and articulate the spirit of the Group.

NUMBER OF PERMANENT EMPLOYEES*:

1,005

* At 30 April 2021.

1,005

906

907

Board visits to subsidiaries
The Board places great importance on visiting subsidiary sites throughout
the year to engage directly with local management and employees. This
enables the Directors to understand the priorities for local management so
that they can have regard to their interests in decision-making. This year,
the Non-executive Directors were unable to visit the subsidiaries’ sites in
person due to the COVID-19 restrictions. As an effective alternative, the
Board engaged virtually with the Managing Directors to ensure a conduit
to employees was maintained throughout the lockdown restrictions.
The Non-executive Directors are planning an increased programme of
visits to subsidiaries’ sites in the year ahead.

Group communications
The Group organises employee communications locally through its subsidiary
undertakings. The channels used for organised communications include
the Group intranet, regular update presentations, direct all-employee
emails and distribution of news releases. The Group intranet features
regular updates from the Chief Executive and updates at key times of the
reporting calendar. This ensures that employees have a good awareness
of the financial and economic factors affecting the Group’s performance.
Where possible communications are translated into the local language.
The Chief Executive communicated regularly to employees during the
pandemic through all-employee emails.

In December 2020 ELAC Sonar joined the Cohort Group, and as a Board
visit was not possible the welcome communications were delivered by
the Chief Executive online.

Internal communications
Each subsidiary has its own internal communications programme, including
local intranets, in-house magazines or staff bulletins, and notices are
published containing information about matters of interest within the
Group. The regular town hall meetings and informal employee briefings,
where employees’ questions can be answered by local leadership, were
adapted during the pandemic and moved online. During the lockdown
restrictions where the majority of employees were working from home,
subsidiary management teams increased communications to their
employees and one-to-one communication increased in frequency. At SEA
a communications portal was made available to furloughed workers to
help them stay in touch from April to October 2020.

Employee feedback
Our larger subsidiaries conduct regular employee engagement surveys, and
the key outcomes are put into an action plan for the local management
team to implement. The results of these surveys are reported to the
Cohort plc Board.

Reward and recognition
Each year we host the Cohort Business Excellence Awards, where we
acknowledge the key achievements and dedication of those teams and
individuals who have shown true delivery of our values, made a real
difference to the success of our business, or been commended for their
excellence in service to our customers. The awards event was held as a
virtual celebration due to the pandemic and was attended by
representatives from the Board.

The recipients of this year’s top award were a team from Chess Dynamics
who put exceptional effort into the testing and verification programme for
a customer’s vehicle surveillance system. They put in a high level of
dedication, effort, and teamwork, and overcame extreme logistical issues
and succeeded in winning this major customer contract.

The larger subsidiaries also run their own recognition schemes. This year
both MASS and Chess Dynamics have introduced recognition schemes.

Recognition at MASS
At MASS, a Monthly Applause scheme was introduced in 2020.
All employees can nominate a colleague who will receive a voucher.
The MASS Achievement Awards were also introduced to provide
recognition on a broader scale. The awards link into the Group
and Company values. The awards ceremony took place in
December 2020.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Stakeholder engagement continued

People continued

Training and development
The success of our business depends on our ability to deliver innovative
solutions to our customers. This drives us to attract the best talent and
to nurture this ability within our employees, providing them with a
stimulating workplace and career development and supporting the
creation of long-term value for our business.

Many training schemes operate at subsidiary level, including the use of
online solutions such as LinkedIn Learning. At Group level, our Leadership
Development Programmes are designed to equip our current and future
leaders with the skills to effectively deliver the strategic priorities of the
business and respond to the competitive and changing environment we
operate within. In 2020/21 we ran a Leadership Development Alumni
Programme online to ensure the networks formed from the original
training are maintained and encourage collaboration across the Group.
The Board was able to engage with the individuals who are being developed
to grow the Group in the future through an online Q&A session.

The Group also provides regular training on our Group policies including on
topics such as anti-bribery and data protection.

Health and wellbeing
The subsidiaries took part in many activities during the year to promote
the health and wellbeing of their people and these are reported back to the
Board. In particular this year there was a focus on supporting Mental
Health Awareness Week and activities engaging with MIND, the mental
health charity. SEA established a Dignity at Work Policy designed to create
a work environment free from bullying and harassment, where everyone is
treated with dignity and respect. Our Employee Assistance Programmes
are available for employees to access and were regularly promoted through
our COVID-19 communications.

All-employee share schemes
An important part of employee engagement in the UK are the all-
employee share schemes. All UK permanent employees were again
encouraged to invest in the Cohort plc Save as You Earn (SAYE) scheme
and/or the Group’s Share Incentive Plan (SIP). In addition, senior
management and key employees in all subsidiaries are awarded share
options under the Cohort plc 2016 share option scheme. Further details
are set out in note 20 of the accounts.

Women in Defence Charter
On International Women’s Day 2021, Cohort made a
firm commitment to gender diversity by signing the
Women in Defence Charter – a pledge to provide
opportunities for women to succeed at all levels and
giving a public commitment to ensuring women are
given every opportunity within the Cohort Group.

Group website
The Company uses the Group website (cohortplc.com) as a key
source of information for all of our stakeholders; our website contains
information on the business of the Group, corporate governance,
all regulatory announcements, key dates in the financial calendar
and other important shareholder information.

Chess receive Olympic motivation
Chess Dynamics welcomed former Olympian Fran
Halsall to its offices to discuss motivation, techniques
to support wellbeing and how to utilise the parallels of
an elite mindset.

Fran’s successful career in elite sport has taught her
many lessons, lessons that she shared with the team at
Chess to help build resilience, wellbeing, engagement
and performance.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsStakeholder engagement continued

Customers, suppliers and partners

The Board received regular updates on key customers
through the monthly reporting mechanism; subsidiary MDs
were also asked to attend at Board meetings through video
conference. All subsidiary MDs have input into the strategy
planning process.

During 2020/21 our business development teams were not able to meet
with their customers face to face and all industry conferences and
exhibitions were cancelled or moved online. The teams worked hard to
create alternative methods of reaching their contacts, including hosting
online seminars and meetings by video conference. Customers were
supplied with video training aids and a Virtual User Group was set up
for our Transport business at SEA.

Our engagement principles show what our customers, partners
and suppliers can expect from us when they work with the Cohort Group.

We hold innovation at our core
Breaking new ground reverberates through the core of our business.
It is fundamental, constant and a critical resource for our customers.
We dedicate the equivalent of over 50% of our profits to innovation
and we employ and develop the best minds in the business to stay at
the forefront of defence and security technology solutions.

We nurture agile partnerships
Direct access to specialist expertise, underpinned by deep operational
experience. With short decision-making chains, managed risk and a
culture of openness and support, we’re easy to do business with.

We commit to mission critical effectiveness
We are committed to developing purposeful technology that is driven
by our customers and their agenda. Inspired and motivated by solving
real problems, we move quickly and act effectively.

Virtual Learning Environment
MASS launched a new online learning platform to hosts its
popular Cyber and Electronic Warfare (EW) training courses,
offering an engaging learning experience in an accessible and
COVID secure way.

The Virtual Learning Environment (VLE) offers a full mix of teaching
methods, including virtual classrooms, group work and individual
self-paced learning. Students benefit from the usual five-star
experience of a MASS training course but with the advantages an
online platform brings.

Ship Survivability webinar
To make up for the lack of face-to-face industry events, Chess and
SEA joined together in November 2020 to host a joint customer
webinar entitled “Ship Survivability’” attended by an international
online audience. Here our industry experts discussed how naval
surface ships, especially carrier strike groups, are being increasingly
targeted by hostile threats. The discussion looked at a ship’s ability
to identify and counter threats whilst still being able to project
power as intended, and fed into an active Q&A session.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Stakeholder engagement continued

Communities

We recognise the enormous contribution that
our Armed Forces make to protect our nation
and the work that we do helps them carry out
their vital tasks more effectively. Across the
Group, we employ many military veterans
and current reservists, and we are proud to
be a signatory to the Armed Forces Covenant,
holding two Silver Awards under the Defence
Employer Recognition Scheme.

CHARITY DONATIONS
IN 2021 BY THE GROUP:

£28,000
(2020: (£44,000 )

Chess Sponsors Plymouth football club
Chess has sponsored the Plymstock United Under 16s football club
since 2019. The team is local to the Naval Systems team based in
Plymouth. Under its sponsorship the team has won the Devon
County Cup for two years in a row.

Charities
Our subsidiaries are active participants in their local communities and
engage in local initiatives and provide charitable support. In a challenging
year our teams managed to provide valuable support for both local and
national charities. Initiatives included a charity bike ride for SSAFA and
raising money for Macmillan cancer charity and local hospices.

At a Group level we maintain close links with academic institutions, and we
are Enterprise Partners of the Institute of Engineering and Technology.

STEM
We actively promote STEM (Science, Technology, Engineering and Maths)
locally by supporting schools and colleges, providing opportunities for
work experience and promoting our businesses at careers fairs, in order to
motivate and inspire the next generation of young scientists and engineers.
Students are sponsored at various levels across the Group, including at
Kiel University.

Work placements at MASS
Despite the restrictions created by the COVID-19 situation, at MASS
they were still able to hold work placements for local schools. The
children were given equipment as an employee would be and were
able to remotely participate in all activities as if they were in the
office; joining team calls, stand-ups and briefings, working via
screen sharing on shadowing technology changes, and having access
to a learning platform to reinforce their school learning with
industry learning. They were also given five technology research
tasks which could be done on their own, calling the MASS team for
information when needed.

Cohort plc Annual Report and Accounts 2021

Peter Hodgkinson and Jonnie Barnes-Yallowley from SEA undertook a
cycling challenge to raise money for SSAFA

Strategic reportGovernanceFinancial statementsStakeholder engagement continued

Section 172 statement

Section 172 (1) of the Companies Act 2006 requires the Directors to act in the way that
they consider, in good faith, would be most likely to promote the success of the Company
for the benefit of its members as a whole and, in doing so to have regard (amongst other
matters) to:

Section 172 matters
X the likely consequences of any decisions in

How the Board has had regard to these matters:
X Board strategy discussions and oversight

the long term

X Effective risk management

Page reference

37-42

X Proactive acquisition programme, completing the acquisition of ELAC Sonar

in 2020

X Our business model and strategic plan

9-11

X the interests of the Company’s employees

X Protecting our employees throughout the COVID-19 pandemic, enabling home

X the need to foster the Company’s business
relationships with suppliers, customers
and others

working and providing a COVID-19 secure workplace when appropriate

X Regular health and safety reporting to the Board

X Investment in our employees through training and other initiatives

X Partnering with our customers to develop innovative solutions including

creating a virtual learning environment to deliver training during the pandemic

X High level engagement with key defence customers

X Our Group engagement principles and ethical business conduct

X Building the relationship with the UK MOD through involvement in group

activities such as the Department of Equipment and Support

X Hosting webinars for customers

X Prompt payment of suppliers

X the impact of the Company’s operations
on the community and environment

X Community initiatives were undertaken throughout the year

X SEA has ISO14001 certification and four other subsidiaries are in the process

of evaluating or working towards this

X Promoting STEM opportunities

X Supporting charities

X the desirability of the Company

X Updated ethical policies and training

maintaining a reputation for high
standards of business conduct

X the need to act fairly as between
shareholders of the Company

X New procedures for approval and onboarding of agents

X Whistleblowing hotline

X Shareholder engagement practices

45-46

103

In discharging their duties under Section 172, the Directors also take into account any other matters which they consider relevant to the decision being
made together with the Company’s purpose, values and strategic objectives. Further details on how the Board operates and reflects stakeholder views in
its decision making are set out in the Corporate governance report on pages 55 to 59.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Environmental report

The Group keeps the environmental impact of our activities under review in order to
improve resource efficiency and reduce waste. As a part of the Group’s commitment to
minimising the impact of its business operations on the environment, we work with our
suppliers, customers, and communities to improve standards of environmental protection.

The table below summarises our GHG emissions
for the reporting year 1 May 2020 to 30 April 2021.
2020/21
Tonnes CO2e
143.50

Scope 1

Site gas

Scope

Activity

Van travel and distribution

Company car travel

Site gas oil

Refrigeration & A/C

Scope 1 Subtotal

Scope 2

Scope 2 Subtotal

Scope 3

Flights

Employee-owned
car travel (grey fleet)

Electricity transmission
& distribution

Hire cars

Rail travel

Taxi travel

Bus travel

Scope 3 Subtotal

Total tonnes of CO2e
Tonnes of CO2e per employee (all scopes)
Tonnes of CO2e per £m turnover (all scopes)
Total energy consumption (kWh)2

2019/20
Tonnes CO2e
167.321
67.19

70.63

38.74

0.84

344.71

536.47

1,725.18

69.47

50.29

6.89

0.00

270.15

429.87

90.86

138.24

70.54

45.55

39.60

23.08

4.88

<0.01

1,976.52

2,857.71

4.45

23.58

36.97

14.56

1.02

0.94

0.00

214.88

914.90

1.52

6.40

3,791,999 3,467,995

1. Gas emissions have been adjusted to reflect improvement in data accuracy.

Total energy consumption includes electricity, gas and Company owned vehicles
(Scope 1 and 2).

Over the assessment period, Scope 3 emissions have reduced dramatically.
This is mainly due to a reduction in flights as COVID-19 restrictions limited
air travel. Whilst Cohort expects some international travel to resume
when restrictions are lifted, we will also continue to use virtual meetings
where appropriate.

Performance – energy and greenhouse gas
(GHG) reporting
Cohort reports our environmental performance in accordance with the UK
Government’s Streamlined Energy and Carbon Reporting Guidance (SECR)
as required under the Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations 2018.

The GHG emissions have been assessed independently by Carbon
Footprint Ltd following the ISO 14064-1:2018 standard using the 2020
emission conversion factors published by the Department for Environment,
Food and Rural Affairs and the Department for Business, Energy &
Industrial Strategy. The financial control approach has been used for the
assessment with the location-based approach used for assessing Scope 2
emissions from electricity usage. The Cohort Group has seven entities in
our financial statements, five of which have been included in the
assessment. Our European subsidiaries (EID and ELAC Sonar) have not
been included.

The 2019/20 financial year was the first year that the Group reported
under SECR on the emission sources of UK entities that fall within its
consolidated financial statements, and this forms the baseline for our
GHG emissions.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsSEA’s nature garden
A nature garden has been established at SEA’s Beckington site which
allows local schools to access a green area for nature education and
also provides a green space for staff to enjoy in their lunch breaks.
The garden was created in a field adjacent to the site and was
converted by staff and their families to include a large pond, bug
house and seating area for school groups to use.

Environmental report continued

Environmental incidents
There have been no internal or external environmental incidents
throughout this reporting period at any of our locations. Relevant staff
receive training updates to enable them to effectively manage such events
if they occur.

ISO14001
SEA already has ISO14001 accreditation and four of our remaining
five subsidiaries are in the process of evaluating or working towards
this accreditation.

Environmental initiatives
The subsidiaries of the Cohort Group have implemented a range of energy
reduction measures; for example, SEA has replaced several 20-year-old
boilers across its Bristol and Beckington sites, which will significantly improve
heating efficiency, and projects have commenced on many sites to replace
all lighting with energy efficient LED lighting.

Several of our subsidiaries have joined an electric car scheme enabling
employees to purchase or lease an electric vehicle through salary sacrifice.
Cycle to work schemes have also been instigated.

MCL is in the process of implementing a new Environmental Management
System to ensure it is regularly reviewing its carbon emissions and
continuously aiming to reduce this.

Waste and recycling
Recycling initiatives are in place at the majority of our sites including waste
stream separation at source across sites. SEA has become a “zero to
landfill” business; when equipment is at end of life it is recycled
appropriately, and any new equipment sourced is assessed to ensure
it is more energy efficient.

Looking forward
Our UK subsidiaries are in the process of preparing carbon reduction plans
to achieve net zero by 2050.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Corporate governance
53 Board of Directors

54 Executive Management Team

55 Corporate governance report

60 Audit Committee report

62 Nomination Committee report

63 Remuneration Committee report

75 Directors’ report

78 Statement of Directors’ responsibilities

Board of Directors

Nick Prest CBE
Chairman

Andrew Thomis
Chief Executive

Simon Walther
Finance Director

Nick became Chairman of Cohort on flotation
in March 2006.

Andrew took over as Chief Executive of Cohort
in May 2009.

After graduating from Oxford in 1974 Nick joined the
UK MOD. In 1982 Nick moved to Alvis, the defence
contractor, undertaking a variety of roles before
becoming Chief Executive in 1989 and Chairman and
Chief Executive in 1996. Nick left Alvis following its
acquisition by BAE Systems in 2004, by which time the
company had become a leading international business
in military land systems. Nick was also Chairman of
Aveva Group plc from 2006 until 2012 and Chairman
of Shephard Media until 2020.

Andrew graduated with an MEng degree in Electrical
and Electronic Engineering from Imperial College
London in 1987. He spent nine years in science,
technology and policy roles in the UK MOD. He left
in 1996 and, after a period working with public and
private sector clients at Capita plc’s management
consultancy arm, he joined Alvis in a role covering
strategy, M&A and business development. Following
the acquisition of Alvis by BAE Systems in 2004,
Andrew worked with Nick Prest and Stanley Carter on
the creation of Cohort plc, acting as Finance Director
during the flotation and subsequently Corporate
Development Director. From 2007 to 2009 he was
Managing Director of MASS. Andrew is a Fellow of
the Institution of Engineering and Technology.

Simon joined Cohort as Finance Director in May 2006.

After graduating with a BSc in Toxicology and
Pharmacology from University College London, Simon
went on to qualify as a Chartered Accountant with
Touche Ross in 1992. Simon moved to the Peninsular
and Oriental Steam Navigation Company (P&O) in
1993 where he was appointed as Chief Accountant for
P&O European Ferries in 1995. He has over 20 years’
industry-relevant experience, with previous senior
finance roles at Alvis and BAE Systems.

Stanley Carter
Non-executive Director

Stanley has been with Cohort since its formation,
initially as its Chief Executive before becoming
Co-Chairman in 2009. In 2015, Stanley stepped down
from Co-Chairman to become a Non-executive Director.

Stanley jointly founded Cohort with Nick Prest in 2006
with SCS as the launch vehicle on flotation. Prior to that
he was Managing Director of SCS, which he founded in
1992 on leaving the Regular Army. During his military
service as a Royal Artillery Officer he held a wide range
of posts in the UK MOD’s central staff, in procurement
and at government research establishments, and
represented the UK on NATO technical committees.
He received an award for the invention of a missile
launcher from the UK MOD. He has held a number of
directorships in technology companies and has degrees
in Technology and Behavioural Science and an MSc in
Information Systems.

Edward Lowe
Independent Non-executive Director

Edward was appointed to the Board on 1 July 2019
and became Chair of the Remuneration Committee on
23 July 2019.

Edward joined Racal Electronics in 1980 and, over a
20-year period, undertook a variety of commercial,
sales and managerial roles. In 2000, he was appointed
Vice President within Thales UK with responsibility for
the commercial, sales and strategy functions. In 2005
he was appointed Managing Director of the Thales UK
naval activities and led the international business line
for naval platforms and services. In 2010 he was
appointed Chief Operating Officer for Thales UK with
operational responsibility for all Thales UK activities.

Jeff Perrin
Independent Non-executive Director and
Senior Independent Director

Jeff joined Cohort in July 2015. He is Chair of the Audit
Committee and was appointed Senior Independent
Director on 23 July 2019.

A Chartered Certified Accountant, Jeff has held a
number of senior financial positions including roles
within Unilever, Oriflame and the defence businesses
of GEC and Radstone Technology Plc. In the latter
company, he was also Chief Executive for four years
until his departure a year after its acquisition by the
General Electric Company in 2006. He was Chairman
of the private equity-backed defence company Chess
Technologies Limited from 2008 until the acquisition
of a majority share by Cohort on 12 December 2018.

Raquel McGrath
Company Secretary and General Counsel

Raquel took over as Company Secretary and General Counsel from 1 October 2020.

Raquel graduated from the University of Bristol in 1991 with a Bachelor of Laws LLB (Hons) followed by Law
Society Finals at the College of Law, Chester, in 1993. She started her career as a Solicitor and Articled Clerk
with Slaughter and May in London before moving to Melbourne to work with Allens Arthur Robertson as a
Senior Associate. After returning to the UK, she took on the role of Head of Legal and Company Secretary
at an AIM listed logistics business. Most recently Raquel was General Counsel and Company Secretary at
Oxford Policy Management. Raquel joined Cohort plc as Interim Group Legal Counsel and Deputy Company
Secretary in November 2019 before taking over the role of Company Secretary from Simon Walther in
October 2020, in addition to being appointed General Counsel for the Cohort Group.

Member of the Board of Directors
Member of the Remuneration Committee
Member of the Audit Committee
Member of the Nomination Committee

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Executive Management Team

David Tuddenham
Managing Director of Chess Technologies

Shane Knight
Managing Director of MCL

Frederico Lemos
Managing Director of EID

David was appointed to the role of Managing Director
Chess Technologies (incorporating Chess Dynamics Ltd
and Vision4ce Ltd) in June 2021.

David studied at Loughborough University gaining a
BEng in Manufacturing Engineering and Management.
In his early career he worked for large international
companies including Honeywell, Teledyne, TRW and
IDEX, initially in site leadership roles, ultimately taking
on senior management positions. During this time,
he gained experience of delivering low volume, high
technology solutions within regulated industries
including aerospace and oil & gas.

In 2011 David left Teledyne to join Chess Dynamics
as Operations Director, helping to deliver operational
excellence in support of the rapid and sustained
growth of the business. David was promoted to
Deputy Managing Director in 2014, becoming
Managing Director of Chess Dynamics in 2016.

Shane was appointed as Managing Director of MCL
in January 2019.

Frederico was appointed as Executive President of EID
in December 2020.

Shane served in the Army until his final appointment
as a Captain in the Royal Signals. Throughout his
Army career he worked in a range of posts within the
electronic warfare arena. He joined MCL in 2003 as
Business Development Manager (Communications) and
became Sales and Marketing Director in 2011 before his
appointment to Managing Director in 2019. Shane has
over 15 years’ business experience in the international
defence sector.

Frederico has more than 20 years’ experience in defence,
both in the public and private sectors. Before joining EID,
he was based in the UAE as Embraer’s Vice President
for Defence for the Middle East and Asia regions. Prior
to that he occupied different positions in defence
business development with Embraer and OGMA
(Embraer group), as well as Project and Programme
Manager at the Portuguese Air Force HQ, where he
served as a career officer.

Frederico graduated as an Aerospace Engineer at the
Portuguese Air Force Academy and Lisbon University
IST in 2003, and holds post graduate qualifications in
Business, Innovation and Leadership from Catolica
Lisbon and ISEG business schools.

Bernd Szukay
Joint Managing Director of ELAC Sonar

Bernd was appointed as Joint Managing Director
of ELAC Sonar in 2020.

Bernd served in the German Navy leaving as a
Lieutenant Commander. During this time, he was
mainly involved in naval procurement and testing, and
graduated in communications engineering and business
administration. Bernd has since gained over 20 years’
experience in the commercial sector, both in IT/
telecommunications and defence. He has held roles
in product management, strategy and key account
management with Siemens, T-Systems, and
Raytheon Anschütz.

In 2012, Bernd joined L-3 Communications ELAC
Nautik, as Director for Sales and Marketing. In recent
years, he has been working with Ole Schneider to drive
the realignment of the product portfolio, strategy,
and go-to-market approach.

Ole Schneider
Joint Managing Director of ELAC Sonar

Ole was appointed as Joint Managing Director of ELAC
Sonar in 2020.

After graduating with a BA in business administration
from the University of Applied Sciences Kiel, Ole joined
L-3 Communications ELAC Nautik in 2007 as Project
Controller. He was appointed as Finance Director in
2013, and in 2015 he managed the transition of
ownership from L-3 to Wärtsilä. Since 2018 he
has worked alongside Bernd Szukay at a top
management level.

Richard Flitton
Managing Director of SEA

Richard was appointed as Managing Director of SEA
in January 2021.

Richard graduated from the University of Brighton
with a BEng (Hons) in Mechanical & Control Systems
Engineering. He also holds an MBA from the University
of Warwick.

Richard’s early career was as an engineer working on
high-performance visualisation and simulation products
in both commercial and defence markets at Hughes
Rediffusion. He moved on to take senior technical and
leadership roles at Evans and Sutherland (E&S) in both
the UK and US. He was ultimately appointed to a board
level position at E&S, heading a division delivering
real-time computer graphics systems for customers
in the aerospace, defence, simulation, training,
entertainment and scientific sectors.

Subsequently Richard moved to EADS Astrium where
he led a business unit delivering military satellite
ground systems. In 2008 he joined TRL, now a
subsidiary of L3 Harris, delivering high-grade cyber
security solutions, integrated C2 and sensors and
effectors in the Electronic Warfare and ISR domain.
After taking on several senior roles at TRL, his most
recent appointment there was as Managing Director.

Chris Stanley
Managing Director of MASS

Chris was appointed as Managing Director of MASS
in April 2017.

After graduating from the University of Leicester with
a BSc in Astrophysics and obtaining a master’s degree
in Microwave Solid State Physics from the University
of Portsmouth, Chris started his career designing radar
systems and antennas for Racal Defence before spending
six years developing radar and IR countermeasures for
the RAF at the Electronic Warfare Operational Support
Establishment. Chris then spent four years as the
Mathematical Modelling Group Manager at GEC Avionics,
designing and developing advanced radar systems.
During this time, he also gained an MBA from
Henley Management College.

Chris managed and directed the Technical Services
business unit within the VT Group before moving to
MASS in December 2007 as Director of the EWOS
division and most recently filling the position of
Managing Director.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsCorporate governance report

Nick Prest CBE
Chairman

Introduction
Cohort has placed a great importance on corporate governance since its
flotation in 2006 and has, as far as practicable, modelled its corporate
governance structure on a recommended corporate governance code.

Since 2018 Cohort has applied the QCA Corporate Governance Code
(the QCA Code), being appropriate for a company with the size and
structure of Cohort, and our Corporate governance report for the year
ended 30 April 2021 is based upon the QCA Code.

The QCA Code sets out ten principles in three broad categories and I have
set out below the Group’s application of each principle to the extent that
the Board considers these to be appropriate to Cohort. Where our practices
depart from the expectations of the QCA Code, I have clearly highlighted
these and given an explanation as to why, at this time, it is appropriate for
the Group to depart from the QCA Code.

As Chairman of the Board, I take primary responsibility for corporate
governance. An important part of my role is to build strong relationships
with shareholders and other stakeholders and to ensure that the views

Governance structure
Corporate governance framework

The Board of Directors1
Nick Prest CBE (Chair)

Audit
Committee

Remuneration
Committee2

Nomination
Committee3

Jeff Perrin (Chair)

Edward Lowe (Chair)

Nick Prest CBE (Chair)

Edward Lowe

Jeff Perrin

Nick Prest CBE

Jeff Perrin

Edward Lowe

1. Sir Robert Walmsley retired on 31 December 2020.

2. Stanley Carter also served on the Remuneration Committee until 31 December 2020.

3. The Nomination Committee was established on 21 April 2021.

expressed by shareholders are communicated to and considered by the
Board. At the 2020 AGM, a significant number of votes were cast against
Resolution 1 (to receive the Annual Report and Accounts). Following the
AGM, the Board engaged with the relevant shareholders to understand the
concerns that lay behind those votes. These broadly fell into two categories,
firstly the perceived lack of diversity, specifically the lack of any females on
the Cohort Board, and secondly dissatisfaction with some aspects of our
executive remuneration scheme.

On the first issue of Board composition, the Board established a Nomination
Committee with responsibility for, inter alia, reviewing the structure, size
and composition (including the skills, knowledge, experience and diversity)
of the Board. The Committee held its inaugural meeting in April 2021 and
recommended to the Board that the Board would benefit from the addition
of an additional Director to replace Sir Robert Walmsley. A recruitment
exercise was undertaken and the successful candidate was Beatrice Nicholas.
Further details are set out in the Nomination Committee report on
page 62.

On the second issue, Edward Lowe, as Chair of the Remuneration Committee,
engaged with the shareholders who had raised concerns regarding certain
aspects of the executive remuneration scheme, and took advice from an
external remuneration consultant. The advice was that the Executive
Remuneration scheme had been effective and proportionate in the round
but that some features of it were unusual and open to misunderstanding.
The Board, advised by the Remuneration Committee, accordingly decided
to make changes to the scheme. Further details are set out in the
Remuneration Committee report on pages 63 to 74. The Board will also
put the Remuneration Policy to an advisory vote at the 2021 AGM to be
held in September.

The principal means of communicating our application of the QCA Code
are this Annual Report and our website (cohortplc.com).

Board composition

(1)
Chairman
Executive
(2)
Non-executive (3)

1717+

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
33
33
+
50
50
+
M
M
Corporate governance report continued

Deliver growth
Principle 1. Establish a strategy and business model which
promote long-term value for our shareholders
The Board, led by the Chairman, sets the Group’s strategic direction and is
responsible to Cohort’s stakeholders for the leadership, oversight and
long-term success of the Group.

The Group’s Business model is set out on page 9 to 10. We believe this
promotes long-term value for our shareholders as demonstrated by our
five years’ financial performance (see page 128) and our key performance
indicators on page 14 which are shown for the last three years.

Our progressive dividend policy and share performance over the last five
years are also indicators of long-term value for our shareholders with total
shareholder return shown below.

In addition to our scheduled Board meetings, the Board meets for an
annual strategy day at which it conducts an in-depth annual review of
strategy and the business plans of Cohort and its subsidiaries. This provides
the Executive Directors and the Non-executive Directors in particular, with
an opportunity to discuss execution and delivery of strategy in-depth with
the subsidiary Managing Directors and to challenge the Group’s corporate
strategy. This year the Board was able to meet in person for the strategy
day with remote attendance by each of the Managing Directors. In
between our formal annual strategy reviews, strategic issues and emerging
risks are frequently discussed by the Board.

Remaining on AIM is of long-term value to our shareholders as it offers a
combination of access to capital markets, flexibility to make acquisitions,
incentives and rewards to management through share schemes, and a
regulatory environment appropriate to the size of the Company.

Some of the key activities which we have undertaken to promote
long-term value are set out in our Section 172 statement on page 49.

Principle 2. Seek to understand and meet our shareholders’
needs and expectations
Cohort places a great deal of importance on communication with all
shareholders and details of how we achieve this are set out in the
“Stakeholder engagement” section on page 44. The Company also meets
with its institutional shareholders and analysts and receives regular
feedback from its institutional shareholders, either directly or via its
Nomad, Investec. The Board was keen to ensure that shareholders were

Total Shareholder Return Five Year Performance

provided with the opportunity to engage with the Board throughout the
COVID-19 pandemic and we hosted three live Q&A sessions following the
2019/20 financial year announcement in July 2020, the 2020 AGM, and
the interim results announcement in December 2020. Shareholders were
also invited to submit questions in writing in advance of the AGM.

We also carefully consider any voting guidance reports received from
organisations such as the Institutional Shareholder Services.

The primary points of contact with the shareholders are me, the Chief
Executive and the Finance Director. Jeff Perrin, the Senior Independent
Director, is available to all shareholders should they have any concerns
which communication through the normal channels of Chairman, Chief
Executive and Finance Director has failed to resolve, or for which contact
through the normal channels would be inappropriate.

Principle 3. Take into account wider stakeholder and
social responsibilities and their implications for our
long-term success
Consideration of all of the Group’s stakeholders is an integral part of the
Board’s discussions and decision making. Stakeholders include, shareholders,
our employees, customers, partners, suppliers and neighbours. Details of
our stakeholder engagement activities are set out on pages 43 to 49.

In particular, we believe that our employees are the key to our success. We
are not a capital-intensive business but depend upon the skills, capabilities
and flexibility of our employees, and our business model depends upon us
being agile and responsive (see pages 45 and 46). The Board receives a
monthly report on health and safety across the Group and received regular
updates from the Chief Executive regarding staff wellbeing and morale
throughout the COVID-19 pandemic.

We facilitate named or anonymous feedback by employees through our
whistle-blowing arrangements. These are managed by an independent
third-party service provider. If any call is made to this third party, either the
Chief Executive or the Senior Independent Director is notified promptly of
the fact and the content of the call, so that appropriate action can be taken.

Our customers and suppliers are in many instances long-term partners and
an important part of our culture is to establish and maintain relationships
of trust (see page 47).

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Cohort

FTSE AIM All Share

Peer group (weighted)

0
April 2016

April 2017

April 2018

April 2019

April 2020

April 2021

Cohort plc Annual Report and Accounts 2021

The weighted peer group companies
comprises Avon, Babcock, Chemring,
QinetiQ and Ultra Electronics.

Strategic reportGovernanceFinancial statements

Corporate governance report continued

Deliver growth continued
Principle 4. Embed effective risk management, considering
both opportunities and threats, throughout the Group
The Board and Group approach to risk is set out in the Audit Committee
report on pages 60 and 61, and in the “Risk management” section on
page 37.

The Board has overall responsibility for the system of internal control and
for reviewing its effectiveness in managing the risks we face. Such systems
are designed to manage rather than eliminate risks and can provide only
reasonable and not absolute assurance against material misstatement or
loss. Each year, on behalf of the Board, the Audit Committee reviews the
effectiveness of these systems. This is achieved primarily by considering
the risks potentially affecting the Group and from discussions with the
external auditor. The key risks of the Group are presented on pages 37
to 42.

On the recommendation of the Audit Committee, the Board has
determined that an internal audit function is not required due to the
relatively small size of Cohort and the high level of Director review and
authorisation of transactions. The Board will keep this matter under
review as the Group develops.

A comprehensive budgeting process is completed once a year and is
reviewed and approved by the Board. In addition, the Group conducts
quarterly re-forecasts. The Group’s results, as compared against budget
and the latest quarterly forecast, are reported to the Board on a monthly
basis and discussed in detail at each meeting of the Board.

The subsidiary balance sheets are reviewed in detail on a quarterly basis
by the Cohort Finance Director.

Maintain a dynamic management framework
The Board of Cohort plc is highly experienced in the defence market.
Through the operation of the Board and the Group Executive, which
comprises the subsidiary Managing Directors and the Cohort plc Executive
Directors and function heads, the Board is able to monitor the business
and respond in a timely manner to issues and opportunities as and when
they arise.

Principle 5. Maintain the Board as a well-functioning,
balanced team led by the Chair
The Board
As at 30 April 2021, the Board of Directors comprised of me, two Executive
Directors, Andrew Thomis and Simon Walther, and three Non-executive
Directors, Stanley Carter, Jeff Perrin, and Edward Lowe. Sir Robert Walmsley
served on the Board as a Non-executive Director until 31 December 2020.

The Board considers that Jeff Perrin and Edward Lowe are independent
Non-executive Directors.

All Directors retire by rotation and are subject to election by shareholders
at least once every three years. Any Non-executive Directors who are
considered by the Board to be independent but who have served on the
Board for at least nine years, will be subject to annual re-election.

Board Committees
The Board has established three Committees: Audit, Nomination and
Remuneration, each having written terms of reference, which can be
viewed on the Company’s website (cohortplc.com).

The reports of the three Committees are reported separately on pages 60
and 61 for the Audit Committee, page 62 for the Nomination Committee
and pages 63 to 74 for the Remuneration Committee.

Audit Committee
The Audit Committee is comprised of two independent Non-executive
Directors in accordance with the QCA Code, being Jeff Perrin (Chair) and
Edward Lowe. The Audit Committee’s role is set out on page 62 of the
Audit Committee report.

Nomination Committee
As noted above, the Board established a Nomination Committee in April 2021.
The Nomination Committee comprises me as Chair and two independent
Non-executive Directors, Jeff Perrin and Edward Lowe. The Nomination
Committee’s role is set out on page 62 of the Nomination Committee report.

Remuneration Committee
Following the establishment of the Nomination Committee in April 2021,
what had previously been the Remuneration & Appointments Committee
became the Remuneration Committee with revised terms of reference
(available on the Company’s website (cohortplc.com)).

In 2020, the Board received feedback from investors that the composition
of the Remuneration Committee was not in line with best practice as a
non-independent Non-executive Director sat on the Committee. In response
to this feedback, Stanley Carter stepped down from the Committee and
the Committee currently comprises Edward Lowe (Chair), Jeff Perrin and
me. The Board is of the opinion that the composition of the Committee
is now compliant with the UK Corporate Governance Code (the UK Code)
as it comprises two independent Non-executive Directors (one serving
as Chair) and a Chairman who was independent on appointment. All three
members of the Committee have considerable experience of managing
remuneration schemes for senior executives in public and private
companies, both large and small.

The Remuneration Committee’s role is set out on page 70.

Company Secretary
Raquel McGrath was appointed as the Company Secretary on 1 October
2020, and acts as secretary to the Board and its Committees. This role was
previously undertaken by Simon Walther, the Finance Director of Cohort
plc. The Company Secretarial department supports the Board, ensuring
good information flows and advising on all corporate governance matters.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Corporate governance report continued

Maintain a dynamic management framework continued
Principle 5. Maintain the Board as a well-functioning, balanced team led by the Chair continued
Attendance at Board and Committee meetings
Board and Committee meetings are scheduled in advance for each calendar year. Additional meetings are arranged as necessary including meetings with
subsidiary Managing Directors to review strategic and financial plans and, as mentioned above, the Board also holds a strategy day in addition to the
scheduled meetings. The scheduled Board and Committee meetings and attendance of the members during the year ended 30 April 2021 were as follows:

Board
(9 scheduled
meetings)

Audit
Committee
(3 meetings)

Remuneration
Committee
(1 meetings2)

Nomination
Committee
(1 meeting)

N Prest CBE (Chairman)
S Carter (Non-executive Director)3
Sir R Walmsley (Non-executive Director)1
J Perrin (Independent Non-executive Director and Senior Independent Director)

E Lowe (Independent Non-executive Director)

A Thomis (Chief Executive)

S Walther (Finance Director)

1. Sir Robert Walmsley retired from the Board on 31 December 2020.

9/9

6/6

9/9

—

3/3

—

1/1

—

1/1

—

2. The timing of the Remuneration Committee meetings was changed this year resulting in the second meeting being moved into the following reporting period.

3. Stanley Carter stepped down from the Remuneration Committee on 31 December 2020.

The Executive Directors and subsidiary Managing Directors all work full time for the Group.

All the Non-executive Directors give adequate time to fulfil thoroughly their responsibilities to Cohort and, as Chairman, I monitor this.

Principle 6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board has a broad range of skills, with particularly deep experience in the defence sector. The balance of skills and experience of the Board is
summarised as follows:

N Prest

A Thomis

S Walther

E Lowe

S Carter

J Perrin

Defence
sector

Financial

General
management

Other public
company
(board level)



1/1

—

1/1

—

Public
sector



The Board biographies (page 53) give an indication of the breadth of skills and experience.

Cohort is predominantly a defence company and collectively the Board has experience of engineering, financial, commercial, sales and marketing and
general management functions in a range of defence companies, large and small, operating in and supplying to a large number of countries throughout
the world. We consider this collective experience to be an important contributor to Cohort.

Each member of the Board takes responsibility for maintaining their skill set, which includes formal training and seminars. We also commission tailored
executive coaching for our senior executives from time to time.

As noted above, some of our shareholders have in the past raised the issue of a lack of diversity, specifically a lack of any female representation, on
the Cohort Board. The policy of Cohort has been to appoint Directors who have deep management experience of the defence industry at senior level.
For a variety of reasons there are comparatively few women at senior executive level in the defence industry so finding candidates with this background
for non-executive roles is not easy. It is therefore particularly pleasing that this year we have been able to do so. Further details are set out in the
Nominations Committee report. The Company Secretary, a qualified solicitor, is responsible within the Company for advising the Board on its legal and
regulatory responsibilities and on corporate governance matters. The Company Secretary and the Cohort Group Head of Human Resources also advise
the Non-executive Directors independently of the Executive Directors on any matter in which the Executive Directors are personally interested, for
example their own remuneration.

When necessary, external advice is sought, on legal, personnel, financial and governance matters. The primary sources are the Company’s Nomad and the
Company’s lawyers.

Principle 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
Our approach to evaluation of the Board’s effectiveness is that it should be a continuous process rather than just a periodic event. It is my responsibility
as Chairman to stimulate and orchestrate this process, consulting colleagues both individually and collectively. As part of the process, I must obtain the
views of colleagues on my own performance. Evaluation should embrace at the individual level skills, personality and commitment and at the collective
level processes and teamwork.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsCorporate governance report continued

Maintain a dynamic management framework
continued
Principle 7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement continued
It is important that this largely informal process is supplemented
periodically with a formal review and our policy in Cohort is to do this
every few years. Outputs from both our informal process and the periodic
formal review include plans for skills development, alterations to our
processes and ideas for succession. Succession planning is an important
component of Board evaluation.

Further details of our Board evaluation process and details of the last
formal review can be found on our website (cohortplc.com).

Principle 8. Promote a corporate culture that is based on
ethical values and behaviours
The Group has a strong ethical culture, supported by our Ethics Policy as
published on our website (cohortplc.com). We see a company as a social
unit with an economic output and the success of our social unit depends on
the values of honesty, trust, loyalty and working together, with a healthy
balance of competition and cooperation, just as in any other unit of
society. We try to run our businesses this way.

The Board, through the Group Executive, undertakes regular reviews and
audits in certain specific areas of risk, namely:

Anti-bribery
The Group has an Anti-Bribery Policy and each of its businesses has
implemented that policy and adequate procedures described by the
Bribery Act 2010 (the Act) to prevent bribery. Each business within the
Group reports annually to the Board on its compliance with the policy and
procedures. The Cohort Chief Executive is the Board member responsible
for the Group’s compliance. As part of its procedures, the Group has
implemented training in respect of compliance with the Act for its employees.

The Group’s Anti-Bribery Policy is reviewed at least every two years or more
often if necessary. The policy was last reviewed and updated in April 2020.

Cyber risk
The Group introduced an Information Security Policy (ISP) in January 2019,
replacing its previous Security Policy Framework.

The ISP encompasses our responsibilities in respect of the General Data
Protection Regulation (GDPR) and other non-personal information we handle.

The ISP covers the physical and cyber security of our information including
that held on behalf of third parties. It also addresses business continuity
and disaster recovery procedures.

Each business within the Group reports annually to the Board on its
compliance with the ISP and this compliance is currently audited by an
internal team of information assurance and cyber experts from MASS.
MASS’s own compliance with the ISP is audited externally.

The Group’s ISP is frequently reviewed, taking account of best practice and
requirements in government and industry.

Modern slavery
The Group has an Anti-Slavery Policy to address the aspects of modern
slavery as set out in the Modern Slavery Act 2015 (MSA). In accordance
with the requirements of the MSA, the Group and each UK member of the
Group have published a statement on their respective websites setting out
the steps the Group and they have taken to ensure that slavery and human
trafficking are not taking place in their respective businesses and supply
chains. A copy of the statement can be found on the Corporate governance
page of our website (cohortplc.com). The Group’s Anti-Slavery Policy was
first adopted in April 2016 and was updated in September 2020.

We expect the same high standards from all of our suppliers, contractors
and other business partners.

Principle 9. Maintain governance structures and processes
that are fit for purpose and support good decision making
by the Board
The Board has ultimate responsibility for corporate governance, which it
discharges either directly, or through its Committees and through the
management structure outlined below.

Group management
The Cohort Board holds nine scheduled meetings per calendar year, in
addition to business and strategic reviews which are not recorded as formal
Board meetings. The Board also holds regular ad-hoc discussions as
required to consider particular issues. We aim as a Board to visit each of
the subsidiaries at least once a year. This has not been possible during the
past financial year due to COVID-19, however, the Board and individual
Non-executive Directors plan to make additional visits to subsidiaries over
the year ahead to keep up to date with their business issues. The Non-
executive Directors and I meet at least once a year without the Executive
Directors present.

The Board receives a detailed monthly Board report comprising individual
reports from each of the Executive Directors and the subsidiary Managing
Directors, together with any other material necessary for the Board to hold
fully informed discussions to discharge its duties, including the review of
Company strategy to ensure this aligns with creating shareholder value. It
is the Board’s responsibility to formulate, review and approve the Group’s
strategy, budgets, major items of expenditure and commitment, major
contract bids, acquisitions and disposals. A full schedule of the matters
reserved for the Board can be viewed on the Cohort website (cohortplc.com).
The Group Executive Committee meets at least four times per calendar year,
comprising Cohort Executive Directors, subsidiary Managing Directors,
and Group Heads of Strategy, Communications, Commercial, Legal and
Human Resources.

Subsidiary management
There are monthly Executive Management meetings involving the senior
management of each subsidiary. Cohort Executive Directors attend subsidiary
Executive Management meetings on a regular basis and sit on the Board of
each subsidiary. The Non-executive Directors and I occasionally attend
subsidiary Executive Management meetings. In addition to the matters
reserved for the Board, there is a formal Delegation of Authority Policy which
is approved by the Board and provides a framework for effective decision
making at the subsidiary level together with appropriate Board oversight.

Build trust
Principle 10. Communicate how Cohort plc is governed
and is performing by maintaining a dialogue with our
shareholders and other relevant stakeholders
The Board communicates how the Company is governed and how it is
performing by maintaining a dialogue with shareholders and other stakeholders
through the mechanisms described on pages 43 to 49 and 56.

Board Committees
The reports to shareholders of the Audit, Nomination and Remuneration
Committees are on pages 60 and 61, page 62 and 63 to 74 respectively.

The Board welcomes considered enquiries from shareholders and other
stakeholders at any time.

Nick Prest CBE
Chairman

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Audit Committee report

Jeff Perrin
Independent Non-executive
Director and Senior
Independent Director

Auditor’s remuneration

Fees payable to the Company’s auditor for the audit of
the Company and consolidated accounts

Fees payable to the Company’s auditor for the audit of
the Company’s subsidiaries

Total audit fees

Interim review fee

Total non-audit fees

Total fees paid to the auditor and its associates

Charged to profit for the year

2021
£’000

2020
£’000

264

331

365

199

254

266

Introduction
The Audit Committee comprised two independent Non-executive
Directors for the year ended 30 April 2021. The Audit Committee is
scheduled to meet at least three times a year. It is the Audit Committee’s
role to provide formal and transparent arrangements for considering how
to apply financial reporting under IFRS, the Companies Act 2006, risk and
the internal control requirements of the QCA Corporate Governance Code
and maintaining an appropriate relationship with the independent auditor
of the Group.

The Audit Committee is responsible for ensuring that the Group’s risks
are understood, managed and mitigated as far as practicable.

Jeff Perrin is Chair of the Audit Committee, being a qualified Chartered
Certified Accountant and having experience of the defence industry in
previous and current roles. The current terms of reference of the Audit
Committee were reviewed and updated in October 2019 and are next
due for review in October 2021.

Consideration of the financial statements
In making its recommendation that the financial statements be approved
by the Board, the Audit Committee has taken account of the following
significant issues and judgement areas:

Areas of judgement
Revenue and profit recognition on fixed-price contracts
The judgement applied in recognising revenue on a contract over time as
performance obligations are completed is in respect of the input costs
incurred and the attributable margin. The latter is particularly a judgement
in respect of estimating the cost to complete on a particular contract and
the remaining risk and associated contingency. This cost contingency takes
account of the stage that the contract has reached and any judgement and
uncertainty remaining to deliver the remainder of the contract. It is usual
for these cost contingencies to reduce as the contract progresses and risk
and uncertainty reduce.

Goodwill
The Group has recognised goodwill and other intangible assets in respect
of the acquisitions of Chess, MASS, SEA (including J+S), MCL, EID and
ELAC Sonar (ELAC). The other intangible assets are in respect of contracts
acquired, intellectual property rights and specific opportunities and in each
case are amortised over the expected life of the earnings associated with
the other intangible assets acquired. The goodwill, which is not subject to
amortisation but to at least annual impairment testing, arises from the
intangible elements of the acquired businesses for which either the value
or life is not readily derived. This includes, but is not limited to, reputation,
customer relations, contacts and market synergies with existing Group
members. The goodwill relating to the acquisitions of Chess, MASS, SEA
(including J+S), MCL, EID and ELAC has been tested for impairment as at
30 April 2021; this is an area of judgement. In each case there was no
impairment. The Group’s 2021 post-tax WACC of 7.6% is higher than the
2020 equivalent of 7.1%, which reflects higher interest rates partly offset
by lower volatility in respect of Cohort plc’s shares. These post-tax WACC
amounts are equivalent to a pre-tax WACC of 10.4% (2020: 9.2%).

Sensitivity was applied to the impairment tests to deliver a material
impairment of goodwill as reported in note 9.

Provisions
The Group makes estimates of provisions for existing commitments
arising from past events. In estimating these provisions, the Group makes
judgements as to the quantity and likelihood of the liability arising.
Certain provisions require more judgement than others. In particular,
warranty provisions and contract loss provisions have to take account
of future outcomes arising from past deliveries of products and services.
In estimating these provisions, the Group makes use of management
experience, precedents and specific contract and customer issues.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsAudit Committee report continued

Consideration of the financial statements continued
Areas of judgement continued
Alternative performance measures (APMs)
The Group reports a number of APMs which are not in accordance with the reporting requirements of IFRS. The Audit Committee has reviewed these
during the year ended 30 April 2021 to ensure they are appropriate and that in each case:

X the reason for their use is clearly explained;

X they are reconciled to the equivalent IFRS figure; and

X they are not given prominence over the equivalent IFRS figure.

The most important APMs reported by the Group are as follows:

Adjusted operating profit
This is used by the Group to report what the Board considers is its trading profit in a consistent manner, year on year, to provide the readers of the
accounts with a consistent comparative. This is derived from the operating profit as reported under IFRS by excluding amortisation of other intangible
assets, all of which arises on acquisition of subsidiaries; research and development expenditure credits (RDEC), which were previously shown in the
reported tax figure; exceptional items, including acquisitions costs and reorganisations; and foreign exchange movements from non-trading activities,
including marking forward exchange contracts to market value.

The reconciliation of operating profit (IFRS) to adjusted operating profit is shown in the Consolidated income statement (page 85) for the Group and in
note 1 on page 91 for the Group’s subsidiaries. The following table shows the Group’s adjusted operating profit compared with operating profit for the last
five years:

Adjusted operating profit

Operating profit

2021
£m

18.6

7.8

2020
£m

18.2

10.7

2019
£m

16.2

5.9

2018
£m

15.2

10.3

2017
£m

14.4

0.9

The main difference between the two figures is the amortisation of other intangible assets value which arises on the acquisition of businesses.

The trading performance of the Group is better reflected by the adjusted operating profit.

Adjusted earnings per share
Based upon the adjusted operating profit after taking account of tax applying to adjusted operating profit and interest, to enable the Group to report an
earnings per share figure based upon what the Board considers is a more appropriate and comparable earnings basis.

This is reconciled to the headline (IFRS) earnings per share in note 8.

Independent auditor
The independent auditor liaises with the Audit Committee regarding work to be undertaken and complies with the Ethical Standards for Auditors issued
by the Auditing Practices Board. Prior to commencing its audit work, the independent auditor confirmed in writing the nature of any non-audit work
carried out on behalf of the Group and the safeguards in place to ensure its independence and objectivity. Any in-year proposals for non-audit work are
subject to prior approval by the Audit Committee.

The independent auditor presented its audit plan to the Audit Committee prior to the Audit Committee meeting held in March 2021. The plan was
reviewed and approved at that meeting with specific areas of focus by the independent auditor discussed in detail for the ensuing audit.

The independent auditor (RSM UK AUDIT LLP) was appointed in November 2019.

The analysis of RSM UK AUDIT LLP (2020: RSM UK AUDIT LLP) remuneration is shown in the table on page 60.

Fees payable to RSM UK AUDIT LLP and its associates for non-audit services to the Company are not required to be disclosed because the consolidated
financial statements are required to disclose such fees on a consolidated basis only.

Jeff Perrin
Chair of the Audit Committee

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Nomination Committee report

Nick Prest CBE
Chairman

Activities during the year
The Committee’s main activities have been:

X reviewing the composition of the Board;

I am pleased to present the first report of the Nomination Committee
which was established by the Board in April 2021.

Committee composition
I am Chair of the Committee, and the other members are the two
independent Non-executive Directors, Jeff Perrin and Edward Lowe.

Only Committee members are entitled to attend meetings although other
attendees may be invited for specific items.

Key responsibilities
The Committee is appointed by the Board and its terms of reference are
available on the Company’s website (cohortplc.com). The Committee
meets as required; there was one meeting held in the reporting year.

The key responsibilities of the Committee are:

X to regularly review the structure, size and composition of the Board

(including the skills, knowledge, experience and diversity of the Board)
and to make recommendations to the Board with regard to any changes;

X to keep the leadership needs of the organisation under review, including
succession planning, in relation to both Executives and Non-executives,
with a view to ensuring the continued ability of the organisation to
compete effectively in the marketplace;

X to be responsible for identifying and nominating for the approval of the
Board candidates to fill Board vacancies as and when they arise; and

X to undertake any work requested by the Board or Chief Executive to

select or approve appointments below Board level.

X approving a detailed candidate specification for the appointment

of an additional Non-executive Director;

X reviewing the Board succession planning; and

X reviewing the outcome of the Board evaluation.

Board appointment process
On the recommendation of the Committee, the Board decided to recruit a
Non-executive Director to replace Sir Robert Walmsley. The Committee
drew up a detailed candidate specification for this appointment designed to
complement the skills and experience of the other Directors, in particular
focusing on technical and operational attributes in addition to general
business skills. The search was managed by an independent consultancy
and after a thorough exercise which identified a range of candidates, both
male and female, the Committee was pleased to be able to recommend
the appointment of Beatrice Nicholas with effect from 1 September 2021.
The Board approved this and the appointment was announced on 27 July 2021.

Board evaluation
The Board undertook an informal Board evaluation during the year ended
30 April 2021, including consideration of succession plans for the Board.
A principal outcome was the decision by the Board to recruit another
Independent Non-executive Director.

Re-appointment of Directors
The Company’s Articles of Association require any Director who has not
been appointed or re-appointed at either of the two previous Annual
General Meetings of the Company to retire, and for one-third of the
Directors to retire by rotation each year. Accordingly, Nick Prest and
Andrew Thomis, being eligible, will offer themselves for re-election at the
2021 AGM. The Committee, in the absence of Nick Prest, has considered
the performance and commitment to the role of each of these Directors
and has recommended their re-election to the Board on the basis that each
of these Director’s contribution is, and continues to be, important to the
Company’s long-term sustainable success.

Nick Prest CBE
Chair of the Nomination Committee

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Remuneration Committee report

Edward Lowe
Independent
Non-executive Director

I am pleased to present the Remuneration Committee (the Committee)
report for the year ended 30 April 2021.

The view of the Committee is that the levels of remuneration are in line
with industry peers and the Directors Remuneration Policy (the Policy) has,
as intended, supported delivery of the strategy and focused the management
team on delivering strong financial and operational performance. In what
has been a challenging year it is pleasing to see that this is reflected in both
the trading results for 2020/21 and the achievement of longer-term
strategic objectives.

However, shareholders have raised concerns about some aspects of our
Policy and the Committee itself has come to the view that some
simplification and adaptation is desirable. We have therefore taken expert
external advice on how to update the current Policy to improve its
effectiveness and to address shareholder concerns. This has led us to propose
a revised Policy to address these shareholder concerns whilst maintaining
those aspects of our Policy which we believe support the strategy and the
management in delivering value to shareholders. It is our intention to
implement the new Policy immediately (commencing this coming financial
year, 2021/22) and that the first year when long-term bonuses will be paid
and shares vest under the new policy will be in financial year 2023/24.
For the intervening years (financial years 2021/22 and 2022/23) the
existing Policy will continue to determine executive remuneration.

It is also to be noted that the Committee has now formalised the
requirements regarding the retention of shares by Executive Directors and
other senior managers (as detailed in the statement of the current Policy
below), and that the Board has decided that henceforth the Remuneration
report will be subject to a separate vote by shareholders at the Annual
General Meeting, commencing in September 2021.

This report is split into three sections:

X this annual letter summarising the work of the Committee in 2020/21;

X a statement of the current Directors’ Remuneration Policy (the Policy)

and a summary of the proposed revised Policy; and

X the Annual report on remuneration, which provides details of the

remuneration earned by Executive Directors and the Non-executive
Directors in the year ended 30 April 2021.

Outcomes for 2020/21
The Executive Directors and the Group Executive Management have
continued to drive the Group’s strategy and delivered a stronger
performance in 2020/21 despite the challenges presented by COVID-19.
The key highlights are discussed in the Operating review pages 16 to 36.

The Committee has given careful consideration as to how to respond to
the uncertainties surrounding the effects of the COVID pandemic, and its
decision-making regarding remuneration has been closely connected to
decisions taken by the Board to safeguard the financial health of the Group
and the payment of dividends to shareholders.

Performance related pay
Cohort’s current Executive Remuneration Policy is set out in the Policy
below. It is weighted heavily towards incentivising the long-term
performance and growth of the Group.

Maximum bonus opportunity for in-year performance is set at 15% of
salary and based on Group adjusted operating profit (up to 10% of salary)
and Group operating cash flow (up to 5% of salary) against budget. Both
measures exclude the impact of any in-year acquisitions and disposals.
Targets are set on a sliding scale with 0% payable at 95% of budget and
10% payable at 110% of budget for adjusted operating profit.

Long-term performance awards are based on the historic compound
annual growth rate per share of the Group over a four-year performance
period preceding the award. It is paid up to a maximum of 50% of salary
plus tax and employee National Insurance on Restricted Share Awards,
the taxes being paid on the Executives’ behalf by the Company.

There is also a share option award of a maximum number of options over
shares calculated as 20% of basic salary divided by the exercise price.
Long-term performance awards are accordingly delivered in a mix of cash,
shares and share options.

It is to be noted that the Committee must be satisfied with the level of
performance during the performance period taking account of a range
of factors and has the ability to adjust awards if it considers that the
calculated numbers are out of line with the underlying business performance
of the Group. For example, if the Committee is not satisfied with the level
of performance either in year or over the long-term performance period,
it may reduce the bonus payable.

The Group’s financial performance for the year resulted in in-year bonus
awards for the Executive Directors at 33% of maximum and long-term
performance awards at 85% of the maximum level. Full details can be
found on pages 70 to 74.

The Committee considers that within the broader context of the overall
performance of the Group and the individual performance of Executive
Directors, the bonuses payable under the Cohort Executive Bonus Plan
are appropriate.

The revised Policy continues to be heavily weighted towards incentivising
the long-term performance and growth of the Group. The in-year bonus
policy is unchanged from the previous Policy and will continue to be a
maximum of 15% of salary.

The long-term performance will continue to be based on compound annual
growth rate per share of the Group but is revised as follows:

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Remuneration Committee report continued

Performance related pay continued
The performance period will be the three years following award. The award
will be in two parts:

X maximum of 62.5% of salary payable for organic growth of 3% to 8%,

calculated linearly over the performance range.

X maximum of 62.5% of salary payable for total growth of 3% to 13%,

calculated linearly over the performance range.

The actual award made will be split, one third in cash and two thirds as
performance shares. The cash element will be paid three years after the
award and the performance shares will vest three years after the award
but will be subject to a further two-year holding period.

Share options will no longer be awarded.

All awards are gross of tax and Executive Directors will be responsible
for payment of income tax and employee National Insurance.

It is to be noted that the remuneration of the Group’s subsidiary
Managing Directors is structured very similarly to that of the Executive
Directors and is also weighted to the long-term performance and growth
of the Group. Accordingly, the remuneration arrangements for these
individuals will be revised in line with the revised Policy being introduced
for the Executive Directors.

Implementation of the Remuneration Policy in
2021/22
In response to the COVID-19 pandemic, the Committee considered the
salaries for the Executive Directors. No basic salary increases were
awarded in 2020 and the Committee considered it appropriate this year to
award basic salary increases of up to 3.5%, in line with average workforce
increases, to the Executive Directors with effect from 1 May 2021.

The Committee has also been keen to promote the involvement of all
Cohort employees in the long-term success of the Group and to this end
has been pleased to see the expansion of the Share Incentive Plan (SIP) and
the Save as You Earn (SAYE) schemes to a growing number of employees.

During 2021/22, the Committee will a) continue to monitor the existing
remuneration arrangements across the Group and will not hesitate to
exercise its discretionary powers if the business context changes adversely;
and b) guide the introduction of the revised Policy ensuring that
shareholders are consulted throughout this process.

Should you have any queries in relation to this report please do not
hesitate to contact me through the Company Secretary.

Edward Lowe
Chair of the Remuneration Committee

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsRemuneration Committee report continued

Cohort plc Executive Directors’ Remuneration Policy
Element of remuneration
Purpose and link to strategy
Basic salary

Operation

To provide competitive
fixed remuneration.

To attract and retain
Executive Directors of a
calibre required to deliver
growth for the business.

Intended to reflect that paid
to senior management of
comparable companies.

Reflects individual
experience and role.

Benefits

As above.

Retirement
allowance

To reward sustained
contribution by providing
retirement benefits.

Normally reviewed annually by the
Committee considering remuneration
levels for comparable companies of a
similar size and complexity, industry
sector or location.

Individual salary adjustments take into
account each Executive Director’s
performance against agreed challenging
objectives and the Group’s financial
circumstances, with significant
adjustments infrequent and normally
reserved for material changes in role, a
significant increase in the size or
complexity of the Group, or where an
individual has been appointed on a low
salary with an intention to bring them
to market levels over time and subject
to performance.

Executive Directors are entitled to
benefits such as family private health
insurance, income protection during
periods of long-term illness absence
and life assurance.

Executive Directors are eligible to
participate in any all-employee share
plan operated by the Company, on the
same terms as other eligible employees.

Executives will be eligible for any other
benefits which are introduced for the
wider workforce on broadly similar
terms and additional benefits might be
provided from time to time if the
Committee decides payment of such
benefits is appropriate and in line with
emerging market practice.

The Company pays a retirement
allowance in lieu of pension contributions.
Where this is operated via salary
sacrifice the Company passes on the
National Insurance saving of 10% of the
sacrificed salary back to the Executive
as additional retirement allowance.

Maximum potential value

Performance measure and target

Not applicable.

No prescribed maximum
salary or maximum increase
in salary. Increases are
awarded having given
consideration to those
awarded across the
wider workforce.

A maximum is not
pre-determined.

Not applicable.

The maximum level of
participation in all-employee
share plans is subject to the
limits imposed by the Inland
Revenue from time to time.

Not applicable.

For Cohort Executive
Directors the retirement
allowance is set at 4% of
basic salary in line with the
current general workforce
contribution level. National
Insurance saving on
allowance delivered via
salary sacrifice is set at 10%
of the salary sacrificed.

Cohort plc Annual Report and Accounts 2021

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Remuneration Committee report continued

Cohort plc Executive Directors’ Remuneration Policy continued
Element of remuneration

Purpose and link to strategy

Operation

Maximum potential value

Performance measure and target

In-year performance
bonus

Rewards the achievement of
annual financial business
performance targets.

Long-term
performance awards
– current scheme to
operate for 2021/22
and 2022/23 and
ceases 30 April 2023

Paid annually in cash.

15% of salary.

0% to 10% of salary payable based on
full year adjusted operating profit
performance against budget calculated
as follows:

X zero if performance below 95%

of budget.

X linear increase from 0% to 5% as
performance goes from 95% to
100% of budget.

X linear increase from 5% to 10% as
performance goes from 100% to
110% of budget.

Plus 0% or 5% of salary payable based
on full year operating cash flow
performance against budget calculated
as follows:

X zero if performance is below budget.

X 5% if performance is at or

exceeds budget.

Recovery provisions apply in cases of
restatement of financial results for the
relevant financial year.

Annual award based on the historic
annualised profit growth of the Group
over a (up to1) four-year performance
period prior to award comprised of:

1. Up to 50% of basic salary split:

X two fifths as a cash bonus;

X two fifths as Restricted Shares; and

X one fifth in either cash or Restricted
Shares at the Executive’s discretion.

The award increases from 0% to 50% of
salary on a linear basis as achievement
against the performance measure
increases from 0% to 10%.

2. An award of share options

with market value exercise price
at the discretion of the
Remuneration Committee.

Restricted Shares vest in four equal
tranches, 25% on award and 25% on
each of the following three anniversaries
of award, subject to continued
employment. No dividends are paid
on Restricted Shares before vesting.
Tax and National Insurance (employee
and employer) are borne on awards
of Restricted Shares by the Company
on behalf of the Executive.

Recovery provisions for both cash
and Restricted Shares apply in cases
of restatement of financial results
for the relevant financial year.

Cash and Restricted Shares
valued at up to 50% of basic
salary. In addition, the
income tax and National
Insurance (employee and
employer) arising from the
award of Restricted Shares is
settled by the Company on
the Executive’s behalf.

An option award over a
maximum number of shares
calculated as 20% of
basic salary divided by
exercise price.

Actual performance
compared to budget for the
financial year for adjusted
operating profit and operating
cash flow (both excluding
the impact of any in-year
acquisitions and disposals).

Both adjusted operating profit
and operating cash flow shall
be calculated after deducting
the costs of all bonus
payments, including the cost
of Restricted Shares.

Financial measures determine
100% of the bonus calculation.

The Committee has discretion
to adjust the awards if it
considers that the calculated
numbers are out of line with
the underlying performance
of the Company or the
Executive, or in other
exceptional circumstances.

Compound annualised growth
rate per share2 in adjusted
profit before interest and tax
(after excluding non-controlling
interests) between the year
ended 30 April 2017 and the
year ended 30 April 2021.

For the avoidance of doubt,
amortisation of other
intangible items, marking
forward exchange contracts to
market at the period end and
such exceptional items as the
Committee, in its absolute
discretion, decides shall be
excluded from the calculation.

The Committee has discretion
to adjust the awards if it
considers that the calculated
numbers are out of line with
the underlying performance of
the Company or the Executive,
or in other exceptional
circumstances.

The level of award of share
options is discretionary and is
based on the Remuneration
Committee’s overall
assessment of both the
individual performance of each
Executive Director and the
financial performance of
the Group.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsRemuneration Committee report continued

Cohort plc Executive Directors’ Remuneration Policy continued
Element of remuneration

Purpose and link to strategy

Operation

Long-term
performance awards
– new scheme to
operate from
2021/22 onwards
and first awards
under this scheme,
if earned, will vest
in the year ending
30 April 2024

Designed to align Executive
Directors’ interests with
both the strategic objectives
of delivering sustainable
growth and the interests of
shareholders. Encourages
long-term shareholding and
discourages excessive risk
taking. As already stated,
this new scheme will be
introduced from 1 May 2021
to replace the existing
scheme. The new scheme
will make awards for the first
time for the year ending
30 April 2024.

Share ownership
levels

To increase alignment
between Executives and
shareholders.

Annual award based on the future
annualised profit growth of the Group
over a three-year performance post the
award comprised of:

1. Up to 125% of basic salary split:

X one third as a cash bonus; and

X two thirds as performance shares.

The award has two elements:

1. The award increases from 0% to

62.5% of salary on a linear basis as
achievement against the performance
measure increases from 3% to 8%
of underlying (organic3) growth of
the Group.

2. The award increases from 0% to

62.5% of salary on a linear basis as
achievement against the performance
measure increases from 3% to 13% of
total growth of the Group.

No award of share options.

Awards will vest subject to the
performance criteria set out above and
following audit clearance of the Group
accounts in the relevant third year.
Executive Directors are required to hold
any shares arising from the vesting of
their award, net of any shares sold to
meet personal tax and social security
obligations, for a period of two years
from the vesting date. An overall reward
period of five years. Employers National
Insurance is borne by the Company.

Recovery provisions for both cash
and Restricted Shares apply in cases
of restatement of financial results
for the relevant financial year.

Executive Directors are encouraged
to build a holding of shares in the
Company during their tenure with
the Company. The Committee keeps
the level of the Executive Directors’
shareholding under review.

Sale of shares in the Company by an
Executive Director is only allowed
with the approval of the Chairman.

Maximum potential value

Performance measure and target

Cash and Restricted Shares
valued at up to 125% of basic
salary. The income tax and
employee National
Insurance on all awards are
settled by the Executive.
Employers National
insurance is settled by the
Company on all awards.

Compound annualised growth
rate per share2 in adjusted
profit before interest and tax
(after excluding non-controlling
interests) between the year
ended 30 April 2021 and the
year ending 30 April 2024.

The Committee has discretion
to adjust the awards if it
considers that the calculated
numbers are out of line with
the underlying performance of
the Company or the Executive,
or in other exceptional
circumstances.

Levels have been set
for 2021 onwards.

CEO at 200% of salary.

FD at 150% of salary.

Cohort plc Annual Report and Accounts 2021

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Remuneration Committee report continued

Cohort plc Executive Directors’ Remuneration Policy continued
Element of remuneration

Purpose and link to strategy

Operation

Chairman and
Non-executive
Directors’ fees

To provide compensation in
line with the demands of the
roles at a level that attracts
high-calibre individuals and
reflects their experience
and knowledge.

Service contracts

Base fee for Chairman and
Non-executive Directors.
Normally reviewed annually.

The Company reimburses any
reasonable expenses that a
Non-executive Director incurs in
carrying out their duties as a Director,
including travel, hospitality related and
other modest benefits, if appropriate.

If there is a temporary material
increase in the time commitments for
Non-executive Directors, the Board
may pay extra fees to recognise the
additional workload.

The Non-executive Directors are
entitled to participate in the Company
private health insurance scheme at their
own expense should they wish to do so.

The Executive Directors have service
agreements with the Company which
can be cancelled by either party giving
six months’ notice at any time or 12
months’ notice in the event of losing
office following a change of control
arising as a result of any person or
persons acquiring more than 50%
of the voting rights at a general
meeting of the Company.

Maximum potential value

Performance measure and target

Not applicable.

No maximum. Fees are set
taking into account internal
benchmarks such as the
salary increase for the
general workforce and
external benchmarks of fees
paid by companies of a
similar size and complexity.

Not applicable.

On appointment and until the participant has been in position for a period of four financial years, the long-term performance period will increase in line with increasing
tenure up to the maximum performance period of four years.

2. Being the weighted average number of Cohort plc shares in issue.

3. Organic is the growth based on the components of the Group in the year of award over the next three years.

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Illustration of the application of the Remuneration Policy
The charts below illustrate how the Policy would function for minimum, 50% of maximum performance and maximum performance for each Executive Director.
These charts address the current Policy, which ceases 30 April 2023.

Chief Executive – Andrew Thomis

Finance Director – Simon Walther

£442,176

26%

16%

49%

£328,340
6%

18%

11%

65%

£564,531

Cash bonus

Salary, benefits and retirement allowance

Restricted (including tax benefit)

Share options

600

500

400

0
0
0
£

’

300

£273,524

£419,027
6%

18%

11%

26%

16%

100%

65%

49%

100%

£214,504

200

100

0% of variable
pay vests

50% of variable
pay vests

100% of variable
pay vests

0% of variable
pay vests

50% of variable
pay vests

100% of variable
pay vests

Assumptions for charts above:

Salary levels are based on those applying from 1 May 2021. The retirement allowance is 4% of annual basic salary. Other benefits relate to private
health insurance and executive medical.

2) Amounts relating to all-employee share schemes have, for simplicity, been excluded from the charts.

The actual application of the Remuneration Policy for the Executive Directors for the year ended 30 April 2021 was as follows:

A Thomis

S Walther

Salary
£

260,750

204,000

Bonus
£

57,220

44,767

Restricted
Share awards
£

125,045

97,830

Benefits
in kind
£

1,980

Retirement
allowance
£

10,430

8,160

Emoluments
£

455,425

356,737

Pension
contributions
£

Total
£

364

455,789

357,101

Cohort plc Annual Report and Accounts 2021

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Remuneration Committee report continued

Annual Report on Remuneration
The role of the Remuneration Committee (the Committee) is to:

X establish a formal and transparent policy on Executive remuneration and to set remuneration packages for individual Executive Directors (the Group

Chief Executive and Finance Director) and the Group Executive Management (the Managing Directors of the subsidiary businesses);

X assess the performance of the individual Executive Directors and Group Executive Management against these packages and determine the related

remuneration;

X undertake the role, in conjunction with the Chief Executive, of proposing remuneration packages for individuals to the Board for new appointments; and

X undertake any other tasks appropriate to the Committee requested by the Board.

Remuneration summary
The key elements of the Executive Directors’ Remuneration Policy as it applied in 2020/21 and to apply in 2021/22 are summarised below:

Remuneration 2020/21

Fixed pay

Salary

CEO: £260,750 FD: £204,000 This will rise by 3.5% and 3.4% respectively to CEO:
£270,000 and FD: £211,000 from 1 May 2021.

Retirement allowance

4% of salary.

Benefits

Includes private health insurance, annual medicals, and life assurance.

In-year performance bonus Maximum opportunity

15% of salary.

Operation

Up to 10% based on performance against budget of adjusted operating profit.

Long-term performance
awards – current scheme,
ceases 30 April 2023

Maximum opportunity

Operation

Up to 5% based on performance against budget of operating cash flow.

50% of salary, plus tax and National Insurance paid on Executive’s behalf in respect of
Restricted Shares awarded only. In addition, an award of a maximum number of shares of up
to 20% of salary divided by exercise price in market value share options.

Up to 50% of salary based on a compound annual growth rate in performance, per share,
between the beginning and end years of a four-year performance period ending on
30 April 2021, split as follows:

X two fifths in cash;

X two fifths in Restricted Shares; and

X one fifth in either cash or Restricted Shares at the Executive’s discretion.

Restricted Shares vest in four equal tranches, 25% on award and a further 25% on each
of the three following annual anniversaries of award. Tax is paid on award by the
Company on the Executive’s behalf in respect of the Restricted Shares.

An award of up to 20% of salary divided by exercise price in share options. These are
awarded under the Cohort plc 2016 Company Share Option Plan and become exercisable
between three and ten years from date of grant. There are no future performance
conditions other than share price growth.

Malus and clawback provisions apply.

All awards can be reduced to zero at the discretion of the Committee.

A new long-term performance award scheme commences 1 May 2021 with the base year for this scheme being 2020/21.

Retirement allowance
From 1 April 2019, the Company has paid (and will continue to pay) to the Executive Directors 4% of annual salary as a retirement allowance.
This payment does not count towards the Executive Directors’ determination of bonus. This is a result of the impact of HMRC tax regulations in respect
of a cap on annual pension contributions of £10,000 (£4,000 from April 2020). This is in line with pension contribution rates to the wider workforce.

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Annual Report on Remuneration continued
Directors’ interests in the equity of Cohort plc (unaudited)

S Carter

N Prest CBE

J Perrin

A Thomis

Sir Robert Walmsley (retired 31 December 2020)

S Walther

At 30 April
2021 (or on
retirement)
Number of
10p ordinary
shares

At 30 April
2020
Number of
10p ordinary
shares

9,094,202

9,096,154

1,791,738

2,076,738

4,000

216,617

30,000

210,248

4,000

197,106

30,000

193,707

The Directors in office during the year under review and their interests in the equity of the Company are shown in the table above. The changes in the
Executive Directors’ equity interests in the Company between 30 April 2020 and 30 April 2021 are analysed as follows:

At 30 April 2020

Shares awarded under Restricted Share Scheme

Shares acquired under Cohort plc Share Incentive Plan

Cohort plc shares purchased through Cohort plc SAYE scheme

Shares acquired under Cohort plc 2016 share options scheme

Automatic dividend reinvestment in shares (within an ISA and/or a SIPP)

Shares sold on transfer to ISA

At 30 April 2021

A Thomis

S Walther

197,106

14,771

193,707

11,556

407

1,480

—

2,853

—

407

440

2,996

1,160

(18)

216,617

210,248

The Executives’ shareholdings at 30 April 2021 represent 533% of Andrew Thomis’ and 662% of Simon Walther’s annual salaries respectively (at 30 April 2020
the respective levels were 435% and 546%) and are based upon the market price of Cohort plc shares at those respective dates: £6.42 at 30 April 2021
and £5.75 at 30 April 2020. These levels exceed shareholding targets set by the Remuneration Committee.

Of the above shareholdings at 30 April 2021, 25,408 (2020: 28,406) of Andrew Thomis’ and 19,880 (2020: 22,228) of Simon Walther’s are held on trust
by the EBT as part of the Restricted Share Scheme and do not receive a dividend.

There were changes in the interests of the other Directors as follows; Stanley Carter’s interests were reduced by 1,952 shares in the year by transfer to
non-dependent family members. Nick Prest sold 285,000 shares on 12 January 2021 at a price of £6.15 per share. The sale was for personal financial
reasons and to satisfy institutional demand for Cohort plc shares. None of the Chairman’s or the Non-executive Directors’ shareholdings are held as part
of the Restricted Share Scheme (2020: £Nil).

Performance incentives (unaudited)
The Cohort Executive Directors’ bonus scheme was agreed by the Board on 19 June 2013 following a recommendation from the Committee. This scheme
has applied for the year ended 30 April 2021.

The Committee has reviewed the scheme of the Executive Directors and other members of the Group Executive Management during the financial year
and considered that it remains appropriate to incentivise and reward delivery of the business strategy and superior financial and operational performance.
Shareholders have raised concerns about some aspects of our Remuneration Policy. A new policy has been set out in this Remuneration Committee
report and we have embarked on a shareholder consultation exercise in respect of this.

At the Committee meeting held on 27 May 2021, the following awards were made to the Executive Directors:

In-year and long-term cash bonuses totalling £101,987 for the year ended 30 April 2021 (2020: £116,188).

ii. Restricted Share awards were approved as follows:

A Thomis

S Walther

In respect of the
year ended
30 April 2021

Actual
number of
shares

11,024

8,624

Estimated
value of
shares
£

66,274

51,850

19,648

118,124

In respect of the
year ended
30 April 2020

Actual
number of
shares

14,771

11,556

26,327

Actual
value of
shares
£

98,966

77,425

176,391

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Annual Report on Remuneration continued
Performance incentives (unaudited) continued
The in-year performance achieved resulted in 5% of salary being awarded as an in-year bonus for the year ended 30 April 2021 (5% for the year ended
30 April 2020). The long-term performance achieved was below the maximum over the performance period resulting in cash bonus payments of 16.94%
(2020: 20.00%) of salary and Restricted Share Awards with a value of 25.42% (2020: 30.00%) of salary, together 42.36% of salary, for the year ended
30 April 2021 (50.00% for the year ended 30 April 2020).

The total estimated value received by the Executive Directors in respect of the Restricted Share awards, including income tax and employee National
Insurance, was £222,875 in respect of the year ended 30 April 2021 (2020: £332,813). The Restricted Share awards in respect of the year ended 30 April
2020 were approved at the Committee meeting of 20 July 2020 and were awarded on 7 August 2020. The Restricted Share awards in respect of the year
ended 30 April 2021 are expected to be awarded in August 2021. The actual number of shares awarded was calculated using the average mid-market
share price for the year ended 30 April 2021 of 601.2 pence (2020: 529.6 pence). The total estimated Restricted Share award value is based on the
Executive’s marginal tax and National Insurance rates prevailing at time of award.

Ordinary shares under option granted during the year ended 30 April 2021 and outstanding at 30 April 2021 were as shown in Table 1 below.

The mid-market price of Cohort plc 10 pence ordinary shares at 30 April 2021 was 642.0 pence (2020: 575.0 pence); the lowest and highest market prices
in the year were 680.0 pence and 520.0 pence respectively.

No bonuses are payable or share options awardable to the Non-executive Directors. Cash and share bonus schemes for the Group Executive Management
have been established for the year ended 30 April 2022, with a similar framework to that of the Cohort Executive Directors, with varying levels of
percentage of salary, none exceeding those set out above for the Executive Directors, subject to the discretion of the Committee.

The Group has the right to recover from the Cohort Executive Directors and the Group Executive Management any cash bonus paid or shares awarded in
respect of a reporting period where a material adverse restatement is made.

Chairman and Non-executive Directors (unaudited)
Nick Prest CBE was appointed in February 2006. Stanley Carter was appointed Non-executive Director of Cohort plc on 22 September 2015 following his
decision to step down as Co-Chairman on the same date. Jeff Perrin was appointed Non-executive Director on 1 July 2015. Edward Lowe was appointed
Non-executive Director on 1 July 2019. These appointments can be terminated upon three months’ notice being given by either party.

Directors’ remuneration
Details of Directors’ remuneration are set out in Table 2 on pages 73 and 74.

Table 1: Directors’ share options (audited)

At 1 May 2020
Number

Granted
Number

Exercised
Number

Lapsed/
forfeited
Number

At 30 April
2021
Number

Date of
grant

Date from
which option
can be
exercised

Exercise
period
Years

A Thomis

Cohort plc 2016 share option scheme (approved)

– Option price of £3.760 per share

Cohort plc 2016 share option scheme (unapproved)

– Option price of £3.760 per share

– Option price of £3.900 per share

– Option price of £4.425 per share

– Option price of £6.200 per share

Save As You Earn (SAYE) scheme

– Option price of £4.085 per share

– Option price of £3.900 per share

– Option price of £4.475 per share

– Option price of £6.700 per share

7,978

1,809

9,846

7,569

—

8,411

—

1,480

1,993

933

—

902

(1,480)

—

31,608

9,313

(1,480)

—

7,978

25 Aug 2017

26 Aug 2020

25 Aug 2017

26 Aug 2020

10 Aug 2018

11 Aug 2021

28 Aug 2019

29 Aug 2022

28 Aug 2020

29 Aug 2023

1 Sep 2017

1 Sep 2018

6 Sep 2019

4 Sep 2020

2 Sep 2020

2 Sep 2021

7 Sep 2022

5 Sep 2023

1,809

9,846

7,569

8,411

—

1,993

933

902

39,441

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Annual Report on Remuneration continued
Directors’ remuneration continued
Table 1: Directors’ share options (audited) continued

At 1 May 2020
Number

Granted
Number

Exercised
Number

Lapsed/
forfeited
Number

At 30 April
2021
Number

Date of
grant

Date from
which option
can be
exercised

Exercise
period
Years

S Walther

Cohort plc 2016 share option scheme (approved)

– Option price of £3.760 per share

– Option price of £3.900 per share

– Option price of £6.200 per share

Cohort plc 2016 share option scheme (unapproved)

– Option price of £3.900 per share

– Option price of £4.425 per share

– Option price of £6.200 per share

Save As You Earn (SAYE) scheme

– Option price of £4.085 per share

– Option price of £4.900 per share

– Option price of £4.475 per share

– Option price of £6.700 per share

7,660

307

—

7,397

5,922

—

4,608

—

1,973

440

673

1,021

—

376

(7,660)

—

(440)

—

23,420

6,957

(8,100)

—

307

25 Aug 2017

26 Aug 2020

10 Aug 2018

11 Aug 2021

4,608

28 Aug 2020

29 Aug 2023

7,397

5,922

1,973

10 Aug 2018

11 Aug 2021

28 Aug 2019

29 Aug 2022

28 Aug 2020

29 Aug 2023

—

673

1,021

376

22,277

1 Sep 2017

1 Sep 2018

6 Sep 2019

4 Sep 2020

2 Sep 2020

7 Sep 2022

5 Sep 2023

There are no future performance conditions applying to any of the share option schemes above. The price paid for all share options in the above schemes
was Nil pence.

Both Andrew Thomis and Simon Walther have participated in the Cohort plc Share Incentive Plan (SIP) which was launched on 1 September 2018. As at
30 April 2021, contributions were made by each of £1,200. This would convert to 208 Cohort plc ordinary shares as at 30 April 2021 based on the closing
share price of 642.0 pence per share. On 1 September 2020, contributions of £1,800 each were converted to 407 ordinary shares each at 442.5 pence
per share.

The terms of the Cohort plc SIP are set out in note 20.

As announced on 1 September 2020, Simon Walther exercised 7,660 Cohort plc 2016 approved share options when the market price of Cohort plc
ordinary shares was £6.20 per share. Simon Walther disposed of sufficient shares to fund the option exercise. The balance of 2,996 shares being retained
at 30 April 2021.

Andrew Thomis exercised 1,480 share options held under the Cohort plc SAYE scheme on 5 October 2020 when the mid-market price of Cohort plc
ordinary shares was 600.0 pence per share. All shares were retained.

Simon Walther exercised 440 share options held under the Cohort plc SAYE scheme on 1 October 2020 when the mid-market price of Cohort plc ordinary
shares was 613.0 pence per share. All shares were retained.

The aggregate amount of gains made by the Directors as a result of exercising share options during the year was £22,424 (2020: £317,322).

Table 2: Directors’ remuneration (audited)

Executive Directors

A Thomis

S Walther

Non-executive Directors

N Prest

S Carter

E Lowe

J Perrin

Sir Robert Walmsley

Total

Salary
2021
£

Bonus
2021
£

Restricted
Share
awards
2021
£

Benefits
in kind
2021
£

Retirement
allowance
2021
£

Emoluments
2021
£

Pension
contributions
2021
£

Total
2021
£

260,750

204,000

57,220

44,767

125,045

97,830

1,980

10,430

455,425

8,160

356,737

364

455,789

357,101

90,000

45,000

30,000

—

90,000

45,000

30,000

—

90,000

45,000

30,000

719,750

101,987

222,875

3,960

18,590

1,067,162

728 1,067,890

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Remuneration Committee report continued

Annual Report on Remuneration continued
Directors’ remuneration continued
Table 2: Directors’ remuneration (audited) continued
Sir Robert Walmsley retired on 31 December 2020. A consultancy agreement was put in place between Cohort plc and Sir Robert from 1 January 2021
where Sir Robert will receive a retainer of £6,000 per annum to provide advice, primarily in respect of naval opportunities and requirements, and
additionally a day rate of £1,000 for supporting specific Group naval projects where appropriate. The consultancy agreement can be terminated by either
party providing at least 30 days’ notice. For the year ended 30 April 2021, Sir Robert received £6,150 under this consultancy agreement.

Executive Directors

A Thomis

S Walther

Non-executive Directors

N Prest

S Carter

E Lowe

J Perrin

Sir Robert Walmsley

Total

Salary
2020
£

Bonus
2020
£

Restricted
Share awards
2020
£

260,750

204,000

65,188

51,000

147,594

115,472

90,000

45,000

37,500

45,000

—

Benefits
in kind
2020
£

1,829

—

Retirement
allowance
2020
£

Emoluments
2020
£

Pension
contributions
2020
£

Total
2020
£

10,430

8,160

485,791

380,461

906

864

486,697

381,325

—

90,000

45,000

37,500

45,000

—

90,000

45,000

37,500

45,000

727,250

116,188

263,066

3,658

18,590

1,128,752

1,770

1,130,522

The Restricted Share awards include tax and employee National Insurance. Edward Lowe joined the Board 1 July 2019, receiving annual fees of £45,000
per annum.

CEO remuneration as a multiple of the average remuneration of all employees (unaudited)

Salary

Total remuneration

2018

5.26

9.66

2019

5.38

9.59

2020

5.76

10.27

2021

5.58

9.31

Salary includes benefits in kind and retirement allowance. Total remuneration includes all bonuses.

The decrease in the ratio from 2020 to 2021 reflects the increase in the size of the Group following the addition of ELAC, and for the CEO, no change in
salary and a lower bonus.

Relative spend on pay (unaudited)
The following table shows actual expenditure of the Group on remuneration of all employees compared with distributions to shareholders and profit retained:

2021

2020

2019

2018

Total
remuneration
expenditure
£’000

51,881

47,815

43,109

41,878

Other expenditure as a percentage of total remuneration

Dividends paid
to shareholders

Profit retained

£’000

4,247

3,853

3,464

3,035

£’000

1,652

5,074

1,781

2,622

The total shareholder return performance graph is shown on page 56 of the Corporate governance report.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Directors’ report

Introduction
The Directors present their report and the audited financial statements of Cohort plc for the year ended 30 April 2021. Cohort plc is a company
incorporated in and operating from England. Its registered address is One Waterside Drive, Arlington Business Park, Theale, Reading RG7 4SW.

Certain information required for disclosure in this report is provided in other appropriate sections of the Annual Report and Accounts, accordingly,
the following sections of the Annual Report and Accounts are incorporated into this Directors’ report by reference:

X Strategic report;

X Corporate governance report;

X Audit Committee report;

X Nomination Committee report;

X Remuneration Committee report; and

X the financial statements together with the notes to those financial statements.

Principal activities
The principal activity of the Company is that of a holding company. The principal activities of the Group are described in our Operating review on pages
16 to 36. The Company’s subsidiary undertakings, including those located outside the UK, are listed in note 11 of the financial statements.

Business review
The Strategic report provides a review of the Group’s business performance during the year, its strategy and likely future developments, its key
performance indicators, and a description of the principal risks and uncertainties facing the business. The Chairman’s statement is included in the
Strategic report section on pages 7 and 8.

There have been no significant events since the balance sheet date.

Dividends
The Directors recommend a final dividend of 7.60 pence (2020: 6.90 pence) per 10 pence ordinary share which, subject to shareholder approval, is due to
be paid on 27 September 2021 to ordinary shareholders on the register on 20 August 2021. Together with the interim dividend of 3.50 pence paid on
4 February 2021, the full dividend for the year will be 11.10 pence (2020: 10.10 pence), an increase of 10% over last year.

Directors and their interests
Brief biographies of the current Directors are set out on page 53, all of whom were in office throughout the year and up to the date of signing these
accounts. In addition, Sir Robert Walmsley served as a Non-executive Director until 31 December 2020. Details of the Directors’ interests in the equity of
the Company are disclosed in the Remuneration Committee report.

The Group maintains appropriate insurance cover in respect of legal actions against the Directors, as well as against material loss or claims against the
Group, and reviews the adequacy of the cover regularly.

The Company has made qualifying third-party indemnity provisions for the benefit of its Directors during the reporting period and these remain in force
at the date of this report.

The Company’s rules about the appointment and replacement of Directors, together with the powers of Directors, are contained in the Articles of
Association (the Articles) (available on the Company’s website cohortplc.com). Changes to the Articles must be approved by special resolution of the
shareholders. A summary of the matters reserved for the Board is included in the Corporate governance report and a copy is available on the Company’s
website (cohortplc.com).

Table 1: Information in respect of the Directors of the Company
Disclosure

Report

Directors who served throughout the year

Directors retiring by rotation

Directors’ biographies

Directors’ interests

Directors’ share options

Remuneration Committee report

Nomination Committee report

Board of Directors

Remuneration Committee report

Pages

65 to 74

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Directors’ report continued

Directors and their interests continued
Table 2: Significant shareholdings and voting rights
As at 19 July 2021, the following interests of shareholders in excess of 3% have been notified to the Company:

S Carter

Schroders Investment Management

Liontrust Asset Management

Canaccord Genuity Wealth Management

N Prest

Invesco

Herald Investment Management

Percentage of
voting rights
and issued
share capital
%

Number of
ordinary
shares

22.14

9,094,202

15.11

6,206,888

10.21

4,191,495

8.39

4.36

3.51

3.29

3,445,500

1,791,738

1,443,076

1,352,500

Nature of
holding

Direct

Research and development
During the year ended 30 April 2021 the Group expenditure on research and development, both on behalf of customers and the Group’s own private
venture expenditure, was £9.5m (2020: £9.7m).

Going concern
The Group’s financial statements have been prepared on the going concern basis.

As highlighted in note 15 to the financial statements, the Company meets its day-to-day working capital requirements through a facility which is due for
renewal in November 2022. Both the current domestic economic conditions (including the COVID-19 pandemic) and continuing UK Government budget
pressures, including defence, create uncertainty, particularly over the level of demand for the Group’s products.

The Company’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Company should be able
to operate within the level of its current facility.

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis in preparing the annual financial statements.

Capital structure
Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the year, are shown in note 19.
The Company has one class of ordinary shares, each of which carries no right to fixed income. Each share carries the right to one vote at general meetings
of the Company.

There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles
and prevailing legislation. The Directors are not aware of any agreements between holders of the Company’s shares that may result in restrictions on the
transfer of securities or on voting rights.

Subject to the provisions of the Company’s Articles and the Companies Act 2006, at a general meeting of the Company the Directors may request
authority to allot shares and the power to disapply pre-emption rights and the authority for the Company to purchase its own ordinary shares in the
market. The Board requests such authority at each Annual General Meeting. Details of the authorities to be sought at the Annual General Meeting on
20 September 2021 are set out in the Notice of Annual General Meeting.

Details of employee share schemes are set out in note 20. The Trustee of the Cohort Employee Benefit Trust (EBT) (see note 21) abstains from voting
on the Company’s shares held on trust and these shares do not receive any dividend.

At 30 April 2021, the EBT held 172,744 Cohort plc ordinary shares, 0.42% of the issued share capital (2020: 231,048; 0.56%). The maximum number
of shares held at any time in the year ended 30 April 2021 was 224,416, 0.55% of the issued share capital at that time. Shares in Cohort plc are acquired
and disposed of by the EBT for the purposes of satisfying employee share options, Share Incentive and Restricted Share Schemes, details of which are
shown in note 20.

No person has any special rights of control over the Company’s share capital and all issued shares are fully paid.

Under its Articles, the Company has authority to issue up to half of its issued shares as new ordinary shares. This approximates to 20.5m shares at
30 April 2021.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Directors’ report continued

Change of control
There are a number of agreements that take effect, alter or terminate upon a change of control of the Company, such as: commercial contracts; bank
facility agreements; property lease arrangements; and employee share plans. None of these are considered to be significant in terms of their likely impact
on the business of the Group as a whole. Furthermore, the Directors are not aware of any agreements between the Company and its Directors or
employees that provide for compensation for loss of office or employment that occurs because of a takeover bid, other than those disclosed in the
Remuneration Committee report on pages 65 to 74.

International Financial Reporting Standards (IFRS)
The Group and parent company’s reported results for the year ended 30 April 2021 are prepared in accordance with IFRS in conformity with the
requirements of the Companies Act 2006. Information about the use of financial instruments by the Company and its subsidiaries is given in note 18
to the financial statements.

Fixed assets
There is no material difference between the book value and current open market value of the Group’s interests in land and buildings.

Employee consultation
Details of our engagement with employees and how the Directors have considered their interests throughout the year are set out in our Stakeholder
Engagement summary on pages 43 to 49.

Disabled employees
The policy of the Group is to offer the same opportunities to disabled people as to all others in respect of recruitment and career advancement, provided
their disability does not prevent them from carrying out their required duties. Employees who become disabled will, wherever possible, be retained,
rehabilitated and, where necessary, retrained.

Donations
During the year ended 30 April 2021 the Group made charitable donations of £28,000 (2020: £44,000), mainly in respect of military and local charities.
The Group made no political donations during the year (2020: £nil).

Environment
The Company is required to disclose its UK energy use and associated greenhouse gas emissions (GHG) under the Streamlined Energy and Carbon
Reporting (SECR) Regulations, which came into force on 1 April 2019. Details of our report are set out on pages 50 to 51 of the Strategic report. As this is
the second year that the Company has had to undertake a GHG emissions assessment to comply with SECR, no specific measurable energy efficiency
actions have yet been undertaken.

Provision of information to the auditor
The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant
audit information of which the auditor is unaware. Each of the Directors has confirmed that they have taken all the steps they ought to have taken as
Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

RSM UK AUDIT LLP has expressed its willingness to continue in office as auditor and a resolution to re-appoint them will be proposed at the
forthcoming AGM.

Approved by the Board of Directors on 27 July 2021 and signed on its behalf by:

Raquel McGrath
Company Secretary

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Statement of Directors’ responsibilities
in respect of the Annual Report and financial statements

The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and enable them to
ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible safeguarding the assets
of the Group and the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Cohort plc website.

Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.

By order of the Board on 27 July 2021

Andrew Thomis
Chief Executive

Simon Walther
Finance Director

The Directors are responsible for preparing the Strategic report, the
Directors’ report and the financial statements in accordance with
applicable law and regulations.

Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors have elected
under company law and the AIM Rules of the London Stock Exchange to
prepare Group financial statements in accordance with International
Accounting Standards in conformity with the requirements of the Companies
Act 2006 and have elected under company law to prepare the Company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards
and applicable law), including FRS 101 ‘Reduced Disclosure Framework’.

The Group financial statements are required by law and accounting
standards in conformity with the requirements of the Companies Act 2006
to present fairly the financial position and performance of the Group. The
Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of the Act to financial statements giving a
true and fair view are references to their achieving a fair presentation.

Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the profit or loss
of the Group for that period. In preparing each of the Group and Company
financial statements, the Directors are required to:

X select suitable accounting policies and then apply them consistently;

X make judgements and estimates that are reasonable and prudent;

X for the Group financial statements, state whether they have been
prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006;

X for the Company financial statements, state whether applicable UK
accounting standards have been followed, subject to any material
departures disclosed and explained in the Company financial
statements; and

X prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and the Company will
continue in business.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsFinancial statements
Independent auditor’s report
80

85 Consolidated income statement

86 Consolidated statement of comprehensive income

87 Consolidated statement of changes in equity

88 Company statement of changes in equity

89 Consolidated and Company statement of financial position

90 Consolidated and Company cash flow statements

91 Notes to the financial statements

119 Accounting policies

128 Five-year record

128 Glossary of terms

IBC Shareholder information, financial calendar and advisers

Cohort plc Annual Report and Accounts 2021

Independent auditor’s report
to the members of Cohort plc

Opinion
We have audited the financial statements of Cohort plc (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year ended 30 April 2021 which
comprise the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, Company
statement of changes in equity, Consolidated and Company statement of financial position, Consolidated and Company cash flow statements and notes
to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in the preparation of the
Group financial statements is applicable law and International Accounting Standards in conformity with the requirements of the Companies Act 2006.
The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted
Accounting Practice).

In our opinion:

X the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 30 April 2021 and of the Group’s

profit for the year then ended;

X the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the

requirements of the Companies Act 2006;

X the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

X the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going
concern basis of accounting included:

X auditing the forecasts prepared by management covering at least 12 months from the anticipated sign-off date;

X review of post year-end trading of the Group and comparison to the forecasts supplied by management; and

X auditing the sufficiency of going concern disclosures in the financial statements, including whether commentary regarding the timing of
management’s existing bank facilities falling due is appropriate and whether management will be seeking renewals of such facilities.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group’s or the parent company’s ability to continue as a going concern for a period of at least 12 months from when the
financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Summary of our audit approach

Key audit matters

Group
X Revenue recognition

X Goodwill impairment

Parent company
X Investment in subsidiaries impairment

Materiality

X Acquisition accounting
X Overall materiality: £890,000 (2020: £874,000)

X Overall materiality: £890,000 (2020: £874,000)

X Performance materiality: £667,000 (2020: £655,000)

Scope

Our audit procedures covered 100% of revenue and 100% of profit before tax.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsIndependent auditor’s report continued
to the members of Cohort plc

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Group and parent company financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the group and parent company financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition (Group)

Key audit matter
description

The Group has set out the critical accounting judgements in relation to revenue recognition on page 126. Contract receivables and
payables arising under IFRS 15 are set out in notes 13 and 14.

The Group derives revenue from a range of contract types including those where control passes at a point in time, support contracts
and licence revenue as well as complex contracts that are operated on an input model as described below. The application of the
appropriate revenue recognition criteria is key to the recognition of revenue within the accounts and has been deemed a key audit
matter due to the judgemental nature of assigning the revenue recognition type.

The Group recognises revenue on a number of fixed-price contracts by reference to the degree of completion of each contract.
The degree of completion is measured by reference to costs incurred at the reporting date as a percentage of the total estimated
costs to complete the project. The assumptions underlying the cost to complete estimates involve judgement, and any changes in
the assumptions could have a material impact on the revenue recognised in relation to these contracts. The effect of these matters is
that, as part of our risk assessment, we determined that the cost to complete estimates have a high degree of estimation uncertainty,
with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and revenue
recognition has been deemed a key audit matter due to the estimation uncertainty and the allocation of audit resources.

How the matter
was addressed
in the audit

Audit of revenue recognition policies and discussion of the policies with management to check that they are appropriate based
on the service supplied, contractual terms and relevant accounting standards.

Review of management’s assessment of the performance obligations and transaction price in the contracts sampled to check
this is in accordance with IFRS 15.

3. Performance of tests of detail on a sample of accrued revenue and deferred revenue items to check the items are accounted for in
accordance with the revenue recognition policy as well as specific cut-off testing for revenue recorded either side of the year end.

4. Recalculation of the revenue recognised on a sample of contracts, including significant new contracts entered into during the year,
corroborating the details to the underlying contracts and anticipated margin to project managers’ assessment of costs to complete.

Challenge of project managers’ estimations to complete through assessment of historical accuracy of budgets and interviews with
project managers on the projects tested in detail.

Impairment of goodwill (for the Group) and investment in subsidiaries (Cohort plc Company only)

Key audit matter
description

The Group has a Goodwill balance of £43.7m (2020: £42.1m) relating to historic acquisitions as described in note 9 in the consolidated
financial statements. In addition, the Parent company holds significant investments in subsidiaries at cost of £91.0m (2020: £90.9m).

Management assesses goodwill and investments in subsidiaries for impairment using discounted cash flow (“DCF”) models to
estimate the value in use of the Group’s cash generating units (“CGUs”) and compare this to the carrying values of goodwill and
investments in subsidiaries.

The use of a DCF model requires management to make estimates involving judgement, including forecasts of revenue and profitability
and application of appropriate discount rates and as a result the matter was considered to be one of most significance in the Group
and Parent company audits and therefore determined to be a key audit matter.

How the matter
was addressed
in the audit

Audit of management’s sensitivity analysis and check of arithmetic accuracy.

Corroboration of inputs to the DCF models to relevant external and internal financial information and challenge of
management assumptions.

3. Comparison of forecast financial performance to post year end trading to assess reliability of forecasting.

4. Comparison of growth and discount rate assumptions to comparable companies.

Challenge of forecasts focused on CGU for which the DCF models showed lowest headroom.

6. Audit of the disclosures in the financial statements and consideration of their completeness, accuracy and appropriateness.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Independent auditor’s report continued
to the members of Cohort plc

Key audit matters continued

Acquisition accounting (Group)

Key audit matter
description

During the year, the Group acquired ELAC Sonar GmbH, as described in note 30, with the year ended 30 April 2021 being the first
accounting period of consolidating this entity.

How the matter
was addressed
in the audit

The acquisition has been accounted for under IFRS 3 whereby fair values have been attributed to the identifiable assets and liabilities
acquired and measurement of goodwill has arisen on acquisition.

The acquisition accounting has been deemed a key audit matter since careful consideration has been required in assessing the fair
value of these assets which is highly judgemental.

Auditing the disclosures made in relation to the changes to the Group and ensuring these are included appropriately in the
financial statements.

Auditing the acquisition accounting and checking that this is accurately reflected in the consolidation.

3. Reviewing the detailed purchase agreement to ensure the legal and funding arrangements have been appropriately accounted

for and disclosed in the consolidated financial statements.

4. Involving our valuation specialist to assist in assessing the valuation of intangible assets other than goodwill.

Involving our tax specialist in reviewing the tax liabilities acquired on acquisition and tax rates applied to fair value adjustments
in the recognition of deferred tax assets and liabilities.

6. Challenging management’s acquisition workings leading to adjustments being made as a result of this challenge.

Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures.
When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the
economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our professional judgement,
we determined materiality as follows:

Group

Parent company

Overall materiality

£890,000 (2020: £874,000)

Basis for determining overall materiality

5% of adjusted operating profit

4% of net assets – capped at Group materiality

Rationale for benchmark applied

Adjusted operating profit is the key benchmark
against which the business is assessed by
management and investors.

The holding company is primarily focused on the
investments that it holds.

Performance materiality

£667,000 (2020: £655,000)

Basis for determining performance materiality

75% of overall materiality

£667,000 (2020: £655,000)

75% of overall materiality

Reporting of misstatements to the
Audit Committee

Misstatements in excess of £45,000 and
misstatements below that threshold that, in our
view, warranted reporting on qualitative grounds.

An overview of the scope of our audit
The Group consists of eight components, six of which are based in the UK, one in Germany (acquired in the period) and one in Portugal.

Full scope audits were performed for six components, and analytical procedures at Group level for the remaining two components.

Full scope audit

Analytical procedures

Total

Number of components

Revenue

Profit before tax

88%

12%

100%

91%

100%

Of the above, full scope audits for two components were undertaken by component auditors.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsIndependent auditor’s report continued
to the members of Cohort plc

Other information
The other information comprises the information included in the Annual Report, other than the financial statements and our Auditor’s report thereon.
The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:

X the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is

consistent with the financial statements; and

X the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic report or the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

X adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not

visited by us; or

X the parent company financial statements are not in agreement with the accounting records and returns; or

X certain disclosures of Directors’ remuneration specified by law are not made; or

X we have not received all the information and explanations we require for our audit.

Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 78, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Independent auditor’s report continued
to the members of Cohort plc

Auditor’s responsibilities for the audit of the financial statements continued
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence
regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial
statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on
the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to
obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing
appropriate responses, and to respond appropriately to fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s operations are
conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group audit engagement team and
component auditors:

X obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the Group and Parent company

operates in and how the Group and Parent company are complying with the legal and regulatory frameworks;

X enquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including

any known actual, suspected or alleged instances of fraud; and

X discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial

statements may be susceptible to fraud.

The most significant laws and regulations were determined as follows:

Legislation / Regulation

International Accounting Standards in conformity with
the requirements of the Companies Act 2006 / Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’

Tax compliance regulations

Additional audit procedures performed by the Group audit engagement team and
component auditors included:

Review of the financial statement disclosures and testing to supporting documentation.

Completion of disclosure checklists to identify areas of non-compliance.

Consideration of whether any matter identified during the audit required reporting
to an appropriate authority outside the entity.

AIM listing rules

Review of announcements made during the year via RNS.

The areas that we identified as being susceptible to material misstatement due to fraud were:

Risk

Audit procedures performed by the audit engagement team:

Revenue recognition

Management override
of controls

Please refer to the Key audit matters section above regarding how the matter was addressed in the audit.
X Testing the appropriateness of journal entries and other adjustments.

X Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

X Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s report.

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.

Richard Bartlett-Rawlings (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
The Pinnacle
Midsummer Boulevard
Milton Keynes
MK9 1BP

27 July 2021

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsConsolidated income statement
for the year ended 30 April 2021

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit

Comprising:

Adjusted operating profit

Amortisation of other intangible assets (included in administrative expenses)

Research and development expenditure credits (RDEC) (included in cost of sales)

Charge on marking forward exchange contracts to market value at the year end (included in cost of sales)

Exceptional items (included in administrative expenses)

Cost of acquisition of ELAC

Cost of relocation of MASS’s Lincoln facility

Adjustment to earn-out on acquisition of Chess

Cost of restructuring at SEA

Loss on disposal of SEA’s subsea business

Finance income

Finance costs

Profit before tax

Income tax charge

Profit for the year

Attributable to:

Equity shareholders of the parent

Non-controlling interests

Earnings per share

Basic

Diluted

All profit for the year is derived from continuing operations.

The accompanying notes form part of the financial statements.

Notes

2021
£’000

2020
£’000

143,308

131,059

(89,951)

(80,016)

53,357

51,043

(45,549)

(40,312)

7,808

10,731

18,609

(10,103)

1,029

(410)

(106)

—

(38)

(651)

(522)

18,223

(7,354)

784

(132)

(950)

(590)

750

—

7,808

10,731

(768)

7,057

(1,554)

5,503

5,463

5,503

Pence

13.38

13.24

(779)

9,979

(295)

9,684

9,559

125

9,684

Pence

23.47

23.24

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Consolidated statement of comprehensive income
for the year ended 30 April 2021

Profit for the year

Items which may be subsequently reclassified to profit or loss:

Foreign currency translation differences on net assets of oversea subsidiaries, net of loans used to acquire oversea subsidiaries

Changes in retirement benefit obligations

Other comprehensive income for the period, net of tax

Total comprehensive income for the year

Attributable to:

Equity shareholders of the parent

Non-controlling interests

2021
£’000

5,503

355

359

2020
£’000

9,684

—

5,862

9,716

5,616

246

5,862

9,586

130

9,716

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Consolidated statement of changes in equity
for the year ended 30 April 2021

Group

At 1 May 2019

Impact of IFRS 16 ‘Leases’ as at 1 May 2019

Restated as at 1 May 2019

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

Transactions with owners of Group and non-controlling
interests, recognised directly in equity

Equity dividends

Vesting of Restricted Shares

Own shares purchased

Own shares sold

Net loss on selling own shares

Share-based payments

Deferred tax adjustment in respect
of share-based payments

Transfer of share option reserve on vesting of options

Change in fair value of Chess’s net assets acquired

Change in option for acquiring non-controlling interest
in Chess

At 30 April 2020

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

Transactions with owners of Group and non-controlling
interests, recognised directly in equity

Issue of new shares

Equity dividends

Dividend from subsidiary with non-controlling interest

Vesting of Restricted Shares

Own shares purchased

Own shares sold

Net loss on selling own shares

Share-based payments

Deferred tax adjustment in respect
of share-based payments

Transfer of share option reserve on vesting of options

Change in option for acquiring non-controlling interest
in Chess

Attributable to the equity shareholders of the parent

Share
capital
£’000

Share
premium
account
£’000

4,096

29,657

—

Own
shares
£’000

(348)

—

Share
option
reserve
£’000

Other
reserves
£’000

Retained
earnings
£’000

Non-
controlling
interests
£’000

Total
£’000

Total
equity
£’000

603

(4,350)

41,034

70,692

6,279

76,971

—

(148)

—

(148)

4,096

29,657

(348)

603

(4,350) 40,886

70,544

6,279

76,823

—

(3,677)

1,472

989

—

318

193

(268)

—

750

9,559

9,586

125

130

9,684

9,716

(3,853)

— (3,853)

210

—

(989)

—

268

—

210

(3,677)

1,472

—

318

193

—

750

—

210

(3,677)

1,472

—

318

193

—

(163)

—

750

4,096

29,657

(1,564)

846

(3,600) 46,108

75,543

6,246

81,789

—

299

—

(1,418)

821

1,093

—

406

(332)

—

5,463

153

5,616

206

246

5,503

359

5,862

—

307

—

(4,247)

754

290

—

(1,093)

—

332

754

290

(1,418)

821

—

406

—

307

(4,247)

(754)

—

290

(1,418)

821

—

406

—

1,238

—

1,238

—

1,238

At 30 April 2021

4,104 29,956

(1,068)

923

(2,362) 47,760

79,313

5,738

85,051

The accompanying notes form part of the financial statements.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements
Company statement of changes in equity
for the year ended 30 April 2021

Company

At 1 May 2019

Impact of IFRS 16 ‘Leases’ as at 1 May 2019

Restated as at 1 May 2019

Profit for the year

Transactions with owners of the Company, recognised
directly in equity

Equity dividends

Vesting of Restricted Shares

Own shares purchased

Own shares sold

Net loss on selling own shares

Share-based payments

Deferred tax adjustment in respect
of share-based payments

Transfer of share option reserve on vesting of options

Change in option for acquiring non-controlling interest
in Chess

Total contributions by and distributions to owners
of the Company

At 30 April 2020

Profit for the year

Transactions with owners of the Company, recognised
directly in equity

Issue of new shares

Equity dividends

Vesting of Restricted Shares

Own shares purchased

Own shares sold

Net loss on selling own shares

Share-based payments

Deferred tax adjustment in respect of share-based
payments

Transfer of share option reserve on vesting
of options

Change in option for acquiring non-controlling interest
in Chess

Total contributions by and distributions to owners
of the Company

Share
capital
£’000

4,096

—

Share
premium
account
£’000

29,657

—

4,096

29,657

—

4,096

29,657

—

299

—

Own
shares
£’000

(348)

—

(348)

—

(3,677)

1,472

989

—

(1,216)

(1,564)

—

(1,418)

821

1,093

—

Share
option
reserve
£’000

603

—

603

—

318

193

(268)

—

243

846

—

406

(332)

Other
reserves
£’000

(4,350)

—

(4,350)

—

750

—

Retained
earnings
£’000

18,807

Total
£’000

48,465

(29)

18,778

6,681

48,436

6,681

(3,853)

210

—

(989)

—

2,100

5,820

—

(4,247)

290

—

(1,093)

—

210

(3,677)

1,472

—

318

193

(217)

750

1,877

50,313

5,820

307

(4,247)

290

(1,418)

821

—

406

(308)

1,238

(3,600)

20,878

—

1,238

299

496

923

1,238

794

2,912

(2,362)

21,672

53,225

At 30 April 2021

4,104

29,956

(1,068)

The reserves of the Group and the Company are described in note 22.

The accompanying notes form part of the financial statements.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsConsolidated and Company statement of financial position
as at 30 April 2021

Assets
Non-current assets
Goodwill
Other intangible assets
Right of use asset
Property, plant and equipment
Investment in subsidiaries
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents

Total assets

Liabilities
Current liabilities
Trade and other payables
Derivative financial instruments
Lease liability
Bank borrowings
Provisions
Other payables

Non-current liabilities
Deferred tax liabilities
Lease liability
Bank borrowings
Provisions
Retirement benefit obligations
Other payables

Total liabilities

Net assets

Equity
Share capital
Share premium account
Own shares
Share option reserve
Other reserves
Retained earnings

Total equity attributable to the equity shareholders of the parent
Non-controlling interests

Total equity

The accompanying notes form part of the financial statements.

Group

2021
£’000

Notes

Company

2020
£’000

2021
£’000

2020
£’000

9
9
10a
10b
11
17

12
13
18
15

14
18
10a
15
16
29

17
10a
15
16
26
29

43,663
15,093
7,076
12,536
—
600

78,968

12,892
66,692
38
32,294

111,916

42,091
13,234
6,900
12,121
—
598

74,944

11,478
47,423
—
20,567

79,468

—
—
200
209
91,038
77

91,524

—
18,398
—
—

18,398

—
—
250
250
90,970
56

91,526

—
3,516
—
—

3,516

190,884

154,412

109,922

95,042

(50,326)
(679)
(1,571)
(50)
(2,786)
(2,800)

(30,985)
(231)
(1,257)
(85)
(1,546)
—

(10,487)
—
(100)
(13,447)
—
(2,800)

(3,476)
—
(80)
(11,882)
—
—

(58,212)

(34,104)

(26,834)

(15,438)

(2,735)
(5,984)
(29,780)
(1,140)
(7,982)
—

(2,820)
(6,240)
(25,189)
(270)
—
(4,000)

—
(121)
(29,742)
—
—
—

—
(196)
(25,095)
—
—
(4,000)

(47,621)

(38,519)

(29,863)

(29,291)

(105,833)

(72,623)

(56,697)

(44,729)

85,051

81,789

53,225

50,313

4,104
29,956
(1,068)
923
(2,362)
47,760

79,313
5,738

85,051

4,096
29,657
(1,564)
846
(3,600)
46,108

75,543
6,246

81,789

4,104
29,956
(1,068)
923
(2,362)
21,672

53,225
—

53,225

4,096
29,657
(1,564)
846
(3,600)
20,878

50,313
—

50,313

As permitted by Section 408 of the Companies Act 2006, the parent company’s profit and loss account has not been included in these financial
statements. The parent company’s profit after tax was £5,820,000 (2020: £6,681,000).

The financial statements on pages 85 to 128 were approved by the Board of Directors and authorised for issue on 27 July 2021 and are signed on its behalf by:

Andy Thomis
Chief Executive

Company number
05684823

Simon Walther
Finance Director

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Consolidated and Company cash flow statements
for the year ended 30 April 2021

Net cash in/(out) flow from operating activities

Cash flows from investing activities

Interest received

Purchases of property, plant and equipment

Acquisition of ELAC Sonar (net of cash acquired)

Net cash (used in)/generated from investing activities

Cash flows from financing activities

Issue of new shares

Dividends paid

Purchase of own shares

Sale of own shares

Drawdown of borrowings

Repayment of borrowings

Repayment of lease liabilities

Net cash (used in)/generated from financing activities

Net increase/(decrease) in cash and cash equivalents

Represented by:

Cash and cash equivalents and short-term borrowings brought forward

Cash flow

Exchange

Notes

10b

10a

Group

Company

2021
£’000

16,216

(1,247)

(1,311)

(2,541)

307

(4,247)

(1,418)

821

12,110

(7,180)

(1,948)

(1,555)

12,120

20,567

12,120

(393)

2020
£’000

11,597

(2,662)

—

(2,635)

—

(3,853)

(3,677)

1,472

(78)

(1,114)

(7,152)

1,810

18,763

1,810

(6)

2021
£’000

(1,984)

2020
£’000

5,265

(51)

(24)

307

(4,247)

(1,418)

821

12,110

(7,089)

(89)

395

(1,565)

(93)

—

(70)

—

(3,853)

(3,677)

1,472

—

(77)

(6,135)

(940)

(11,882)

(10,942)

(1,565)

—

(940)

—

Cash and cash equivalents and short-term borrowings carried forward

32,294

20,567

(13,447)

(11,882)

Net (debt)/funds reconciliation

Group

Cash and bank

Short-term deposits

Cash and cash equivalents

Loan

Finance lease

Debt

Net (debt)/funds

Company

Cash and bank

Short-term deposits

Cash and cash equivalents

Loan

Overdraft

Debt

Effect of
foreign
exchange rate
changes
£’000

At 1 May
2020
£’000

Cash flow
£’000

At 30 April
2021
£’000

20,567

—

20,567

(25,095)

(179)

(25,274)

(4,707)

—

(25,095)

(11,882)

(36,977)

(393)

—

(393)

374

—

374

(19)

—

374

—

374

12,120

32,294

—

12,120

32,294

(5,021)

(29,742)

(88)

(4,930)

(29,830)

7,190

2,464

—

(5,021)

(1,565)

(29,742)

(13,447)

(6,586)

(43,189)

(6,586)

(43,189)

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with a maturity at commencement of three months or less.
The carrying amounts of these assets approximate to their fair value.

The accompanying notes form part of the financial statements.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Notes to the financial statements
for the year ended 30 April 2021

1. Segmental analysis
For management and reporting purposes, the Group, during the year ended 30 April 2021, operated through its six trading subsidiaries: Chess, EID, ELAC
Sonar (ELAC), MASS, MCL and SEA. ELAC was part of the Group for the five months ended 30 April 2021. These subsidiaries are the basis on which the
Company reports its primary business segment information in accordance with IFRS 8. Whilst each subsidiary internally reports by reference to the
sectors it sells to, these are considered by the Board to have similar economic characteristics in terms of the nature of the services and their customer
base and therefore disaggregated information is not regularly reported to the Board. On this basis, the Board, which is deemed to be the chief operating
decision maker, considers each trading subsidiary a separate operating segment.

The principal activities of the trading subsidiaries are described in the Strategic report (pages 1 to 51).

Business segment information about these subsidiaries is presented below:

2021

Revenue

External revenue

Inter-segment revenue

Segment adjusted operating profit

Unallocated corporate expenses

Chess
£’000

EID
£’000

ELAC
£’000

MASS
£’000

MCL
£’000

SEA
£’000

Eliminations
£’000

Group
£’000

28,641

20,952

8,290

39,487

17,980

27,958

—

143,308

—

28,641

3,018

—

20,952

4,834

—

39,557

8,742

—

17,980

2,071

—

27,958

2,353

—

8,742

2,071

2,353

Adjusted operating profit

3,018

4,834

(Charge)/credit on marking forward exchange
contracts to market value at the year end

(679)

Costs of acquisition of ELAC

Loss on disposal of SEA’s subsea operations

Costs of restructuring at SEA

Adjustment to earn-out on acquisition of Chess

—

Amortisation of other intangible assets

(6,319)

(237)

(3,547)

Research and development expenditure
credits (RDEC)

Operating profit/(loss)

Finance cost (net of income)

Profit/(loss) before tax

Income tax charge

Profit after tax

117

—

262

(3,863)

4,597

(2,449)

9,004

(48)

(1)

(48)

(64)

2,377

(2)

(3,911)

4,596

(2,497)

8,940

2,375

—

267

—

(522)

(651)

—

611

1,793

(113)

1,680

(70)

—

143,308

—

22,191

(3,582)

18,609

(410)

(106)

(522)

(651)

(38)

(10,103)

1,029

7,808

(751)

7,057

(1,554)

5,503

—

8,290

1,173

—

1,173

—

(75)

—

All are UK operations with the exception of EID, which is based in Portugal, and ELAC, which is based in Germany. All operations are continuing. Inter-segment
sales are charged at arm’s length rates.

Unallocated corporate expenses are the costs of the Cohort plc head office including the remuneration of the Cohort plc Board.

Other information

Capital additions

Depreciation of property, plant and equipment

Depreciation of right of use assets

Balance sheet

Assets

Chess
£’000

410

243

487

Chess
£’000

EID
£’000

108

EID
£’000

ELAC
£’000

370

157

180

ELAC
£’00

MASS
£’000

111

368

206

MASS
£’000

MCL
£’000

107

MCL
£’000

SEA
£’000

153

919

346

Central
£’000

SEA
£’000

Eliminations
£’000

Group
£’000

1,247

1,957

1,510

Group
£’000

Segment tangible assets

Goodwill and other intangible assets

26,711

9,142

14,186

2,666

21,043

9,987

13,115

12,500

4,558

2,398

28,752

22,063

(9,872)

—

98,493

58,756

Current tax asset

Deferred tax asset

Cash

Consolidated total assets

35,853

16,852

31,030

25,615

6,956

50,815

741

600

32,294

190,884

(12,017)

(11,256)

(15,336)

(9,923)

(8,078)

(15,201)

(1,457)

(73,268)

Liabilities

Segment liabilities

Deferred tax liability

Bank borrowings

Consolidated total liabilities

(12,017)

(11,256)

(15,336)

(9,923)

(8,078)

(15,201)

The above figures include 100% of Chess and EID. The non-controlling interest, 18.16% for Chess and 20.00% for EID, is reported separately in the income
statement and Group reserves.

Cohort plc Annual Report and Accounts 2021

(2,735)

(29,830)

(105,833)

Strategic reportGovernanceFinancial statements

1. Segmental analysis continued

2020

Revenue

External revenue

Inter-segment revenue

Segment adjusted operating profit

Unallocated corporate expenses

Adjusted operating profit

Credit on marking forward exchange contracts to market
value at the year end

Costs of acquisition of ELAC

Costs of relocation of MASS’s Lincoln office facility

Adjustment to earn-out on acquisition of Chess

Amortisation of other intangible assets

Research and development expenditure credits (RDEC)

Operating profit/(loss)

Finance cost (net of income)

Profit/(loss) before tax

Income tax charge

Profit after tax

Chess
£’000

EID
£’000

MASS
£’000

MCL
£’000

SEA
£’000

Eliminations
£’000

Group
£’000

25,155

18,020

41,115

15,064

25,158

3,923

—

3,923

—

(6,538)

192

(2,423)

(47)

18,021

3,108

—

3,108

—

(816)

—

2,292

(2)

(2,470)

2,290

41,212

8,914

—

8,914

—

(590)

—

272

8,596

(71)

8,525

—

15,064

1,660

—

1,660

(147)

—

1,513

(8)

1,505

31,705

455

32,160

3,532

—

3,532

—

526

4,073

(106)

3,967

—

131,059

(556)

—

131,059

21,137

(2,914)

18,223

(132)

(950)

(590)

750

(7,354)

784

10,731

(752)

9,979

(295)

9,684

All are UK operations with the exception of EID, which is based in Portugal. All operations are continuing. Inter-segment sales are charged at arm’s length rates.

Unallocated corporate expenses are the costs of the Cohort plc head office including the remuneration of the Cohort plc Board.

Other information

Capital additions

Depreciation of tangible fixed assets

Depreciation of right of use assets

Balance sheet

Assets

Chess
£’000

368

146

412

Chess
£’000

EID
£’000

107

EID
£’000

MASS
£’000

439

311

217

MASS
£’000

MCL
£’000

107

MCL
£’000

SEA
£’000

1,626

727

258

Central
£’000

SEA
£’000

Eliminations
£’000

Segment tangible assets

Goodwill and other intangible assets

18,563

15,461

10,325

2,903

11,617

12,500

2,500

2,398

34,578

22,063

207

—

Current tax asset

Deferred tax asset

Cash

Consolidated total assets

34,024

13,228

24,117

4,898

56,641

Group
£’000

2,662

1,472

1,168

Group
£’000

77,790

55,325

132

598

20,567

154,412

Liabilities

Segment liabilities

Deferred tax liability

Bank borrowings

(7,446)

(6,820)

(11,670)

(3,800)

(11,483)

(3,310)

(44,529)

(2,820)

(25,274)

(72,623)

Consolidated total liabilities

(7,446)

(6,820)

(11,670)

(3,800)

(11,483)

The above figures include 100% of Chess and EID. The non-controlling interest, 18.16% for Chess and 20.00% for EID, is reported separately in the income
statement and Group reserves.

For the purposes of monitoring segment performance and allocating resource between segments, the Group’s Chief Executive monitors the tangible,
intangible and financial assets attributable to each segment.

All assets and liabilities are allocated to reportable segments with the exception of central cash and bank borrowings, current tax and deferred tax assets
and liabilities.

Goodwill and other intangible assets are allocated to reportable segments as analysed in note 9.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

1. Segmental analysis continued
Geographical segments
The Group’s subsidiaries are all located in the UK with the exception of EID, which is located in Portugal, and ELAC, which is based in Germany.
The following table provides an analysis of the Group’s revenue by geographical location of the customer:

Germany

Portugal

Other European countries

Asia Pacific

Africa

North and South America

2021
From the
UK
£’000

76,927

—

17,618

14,018

—

5,453

2021
From
Portugal
£’000

132

—

6,276

2,448

11,931

146

2021
From
Germany
£’000

960

—

3,300

3,501

447

2021
Total
£’000

77,080

1,010

6,276

23,366

29,450

207

5,919

2020
From the
UK
£’000

78,772

—

11,223

16,729

—

6,263

2020
From
Portugal
£’000

143

—

8,295

2,013

7,558

—

2020
Total
£’000

78,915

8,295

13,236

24,287

—

6,274

114,066

20,952

8,290

143,308

113,039

18,020

131,059

All Group assets, tangible and intangible, are located in the UK with the exceptions of EID, which is located in Portugal, and ELAC, which is based in
Germany. EID’s and ELAC’s net assets are shown in note 1.

Market segments
The following table provides an analysis of the Group’s revenue by market sector:

Defence (including security)

Transport

Offshore energy

Other commercial

The offshore energy business (part of SEA) was sold in August 2020.

The Group’s total revenue, broken down by type of deliverable, is as follows:

Product

Services

Total revenue

2021
£’000

2020
£’000

133,912

118,054

6,410

1,038

1,948

7,616

2,852

2,537

143,308

131,059

2021
£’000

90,743

52,565

2020
£’000

74,770

56,289

143,308

131,059

Product includes bespoke product, customised systems and sub-systems and is hardware and/or software. Services include operational support and
training.

Further information on revenue by market segment and capability can be found in the Strategic report (pages 1 to 51).

Major customers
Revenue from major customers included in the Group’s business segments for the year ended 30 April 2020 is as follows:

2021

2020

UK MOD
£’000

—

19,288

16,562

7,998

43,848

Portuguese
MOD
£’000

—

5,935

—

5,935

Customer A
£’000

Customer B
£’000

Customer C
£’000

UK MOD
£’000

1,006

—

5,611

—

4,566

—

2,111

7,683

10,206

—

10,206

5,611

—

19,751

12,938

8,494

41,183

Portuguese
MOD
£’000

—

8,289

—

8,289

Customer A
£’000

Customer B
£’000

Customer C
£’000

1,574

—

5,972

—

2,212

9,758

—

6,520

—

4,244

—

6,520

4,244

Chess

EID

ELAC

MASS

MCL

SEA

Customer C in 2021 is not the same as customer C in 2020.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

2. Employee benefit expense (including Directors)

Wages and salaries

Social security costs

Retirement benefit obligations (see note 26):

Defined contribution scheme

Defined benefit scheme

Share-based payments

Average number of employees (including Directors)

Engineering and production

Managed services

Total operational

Administration and support

2021
£’000

43,883

5,283

2,177

132

406

2020
£’000

40,380

4,908

2,209

—

318

51,881

47,815

2021
Number

2020
Number

567

121

688

252

940

537

117

654

245

899

The above disclosures include Directors. Directors’ emoluments and share option details are disclosed separately in the Remuneration Committee report
on pages 63 to 74, where the relevant disclosures have been highlighted as audited.

3. Profit for the year
The profit for the year has been arrived at after charging:

Net foreign exchange losses

Research and development costs

Depreciation of property, plant and equipment

Depreciation of right of use assets

Amortisation of other intangible assets

Cost of inventories recognised as expenses

Staff costs (excluding share-based payments)

Share-based payments

Notes

10b

10a

2021
£’000

410

9,512

1,957

1,510

10,103

53,970

51,475

406

2020
£’000

132

9,734

1,472

1,168

7,354

45,732

47,497

318

All of the above charges are in respect of continuing operations.

The fees payable to the auditor for audit and non-audit services are disclosed in the Audit Committee report on page 60, where the relevant disclosures
have been highlighted as audited.

4. Finance income

Interest on bank deposits

All finance income is in respect of continuing operations.

5. Finance costs

Loans

Finance leases

Interest paid on lease liabilities (see note 10a)

Retirement benefit obligations

All finance costs are in respect of continuing operations.

Cohort plc Annual Report and Accounts 2021

2021
£’000

492

237

768

2020
£’000

527

246

—

779

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

6. Income tax charge

Current tax charge/(credit):

UK corporation tax: in respect of this year

UK corporation tax: in respect of prior years

German corporation tax: in respect of this year

Portugal corporation tax: in respect of this year

Portugal corporation tax: in respect of prior years

Other foreign corporation tax: in respect of this year

Other foreign corporation tax: in respect of prior years

Deferred tax charge/(credit):

In respect of this year

In respect of prior years

2021
£’000

2020
£’000

2,833

(550)

304

1,117

240

—

3,944

2,227

(785)

—

130

—

(31)

1,556

(2,498)

(1,297)

108

(2,390)

(1,261)

1,554

295

The corporation tax is calculated at 19.0% (2020: 19.0%) of the estimated taxable profit for the year, as disclosed below.

The current tax in respect of the year ended 30 April 2021 includes £142,000 credit (2020: £188,000) in respect of exceptional items.

The deferred tax includes a credit of £2,374,000 in respect of amortisation of other intangible assets (2020: £1,425,000), and a credit of £78,000
(2020: credit of £25,000) in respect of marking forward exchange contracts to market value at the year end. The deferred tax is further explained in note 17.

The tax charge for the year is reconciled to profit per the Consolidated income statement for the year ended 30 April 2021 as follows:

Profit before tax on continuing operations

Tax at the UK corporation tax rate of 19.0% (2020: 19.0%)

Tax effect of expenses and reserve movements that are not deductible in determining taxable profit

Tax effect of R&D tax credits in Portugal

Tax effect of exceptional items that are not recognised in determining taxable profit

Tax effect of other timing differences not reflected in deferred tax

Tax effect of change in tax rate: 2021 no change (2020: change in tax rate from 17% to 19% for assets/liabilities falling after April 2020)

Tax effect of statutory deduction for share options exercised

Tax effect of foreign tax rates

Tax effect of deferred tax movement on share options to be exercised

Tax effect of other prior year adjustments

Tax charge for the year

2021
£’000

7,057

1,341

(99)

—

111

127

—

(22)

313

(15)

(202)

1,554

2020
£’000

9,979

1,896

(26)

(586)

(38)

(282)

(132)

192

(31)

(734)

295

The UK corporation tax for the year ended 30 April 2021 is calculated at 19.0%, based upon 12 months at 19.0%. The UK corporation tax rate for the year
ended 30 April 2020 is calculated at 19.0%, based upon 12 months at 19.0%. The Portuguese corporation tax rate calculated for the year ended 30 April 2021
is 23.0% (2020: 26.0%) and the German corporation tax rate calculated for the five months ended 30 April 2021 is 31.0% (2020: not applicable).

In addition, a deferred tax credit of £3,000 (2020: credit of £193,000) was recognised directly in equity in respect of share options.

7. Dividends

Amounts recognised as distributions to equity holders in the period:

Final dividend in respect of the year ended 30 April 2020 at 6.90 pence per ordinary share (2019: 6.25 pence)

Interim dividend in respect of the year ended 30 April 2021 at 3.50 pence per ordinary share (2020: 3.20 pence)

Proposed final dividend for the year ended 30 April 2021 at 7.60 pence per ordinary share
(2020: 6.90 pence per ordinary share)

2021
£’000

2,815

1,432

4,247

2020
£’000

2,544

1,309

3,853

3,106

2,840

The cost of the proposed final dividend, which is an estimate, is subject to approval by shareholders at the AGM to be held on 20 September 2021 and has
not been included as a liability in these financial statements. If approved, this dividend will be paid on 27 September 2021 to shareholders on the register
as at 20 August 2021.

The Cohort Employee Benefit Trust, which holds ordinary shares in Cohort plc representing 0.42% (2020: 0.56%) of the Company’s called up share
capital, has agreed to waive all dividends due to it in accordance with an arrangement dated 20 November 2009.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

8. Earnings per share
The earnings per share are calculated as follows:

Basic earnings (net profit attributable to equity holders of Cohort plc) 40,841,923

Weighted
average
number
of shares
Number

413,249

Share options

Diluted earnings

2021

2020

Earnings
£’000

5,463

Earnings
per share
pence

Weighted
average
number
of shares
Number

13.38

40,728,149

409,484

Earnings
£’000

9,559

Earnings
per share
pence

23.47

41,255,172

5,463

13.24

41,137,633

9,559

23.24

The basic earnings per share are calculated by dividing the profit attributable to equity holders of the parent company (Cohort plc) by the weighted average
number of ordinary shares in issue during the year. The diluted earnings per share are calculated by dividing the profit attributable to equity holders of the
parent company by the weighted average number of shares in issue during the year as adjusted for the effects of potentially dilutive share options.

The weighted average number of shares for the years ended 30 April 2021 and 30 April 2020 is after deducting the own shares, which are held by the
Cohort Employee Benefit Trust.

In addition, the adjusted earnings per share of the Group are calculated in a similar manner to the basic earnings per share with the adjustments to the
basic earnings as shown below:

Basic earnings

Charge on marking forward exchange contracts at the
year end (net of tax credit of £78,000 (2020: credit of
£25,000))

Acquisition cost of ELAC (net of tax credit of £6,000
(2020: tax credit of £76,000))

Costs of relocation of MASS’s Lincoln facility (net of tax
of £112,000)

Adjustment to earn-out on acquisition of Chess

Costs of restructuring at SEA (net of tax of £124,000)

Loss on disposal of SEA’s subsea business (net of tax of
£12,000)

Amortisation of other intangible assets (see below)

Adjusted earnings

Share options

Diluted adjusted earnings

2021

2020

Weighted
average
number
of shares
Number

Notes

40,841,923

—

Earnings
£’000

5,463

332

100

—

527

510

6,763

Earnings
per share
pence

Weighted
average
number
of shares
Number

13.38

40,728,149

—

40,841,923

13,733

33.63

40,728,149

413,249

—

409,484

Earnings
£’000

9,559

107

874

478

(750)

—

4,840

15,108

—

41,255,172

13,733

33.29

41,137,633

15,108

Earnings
per share
pence

23.47

—

37.10

—

36.73

The adjusted earnings are in respect of continuing operations. The research and development expenditure credit (RDEC) has no effect on adjusted
earnings per share as it is Nil after tax.

The following table shows the adjustment to earnings for calculating the adjusted earnings per share.

Amortisation
of other
intangible
assets
(note 9)
£’000

6,319

237

3,547

10,103

Deferred
tax credit
thereon
£’000

(1,201)

(53)

(1,120)

(2,374)

2021

Net
£’000

5,118

184

2,427

7,729

Attributable
to equity
shareholders
of the
Group
£’000

4,189

147

2,427

6,763

Non-
controlling
interest
£’000

(929)

(37)

—

(966)

Amortisation
of other
intangible
assets
(note 9)
£’000

6,538

816

—

Deferred
tax credit
thereon
£’000

(1,242)

(183)

—

2020

Net
£’000

5,296

633

—

Attributable
to equity
shareholders
of the
Group
£’000

4,334

506

—

Non-
controlling
interest
£’000

(962)

(127)

—

7,354

(1,425)

5,929

(1,089)

4,840

Chess

EID

ELAC

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

9. Goodwill and other intangible assets

SEA
£’000

MASS
£’000

MCL
£’000

Goodwill

EID
£’000

Chess
£’000

ELAC
£’000

Group
£’000

Cost

At 1 May 2019

24,063

12,500

2,398

Adjustment to fair value on acquisition of Chess

—

At 1 May 2020

Acquisition of ELAC Sonar

At 30 April 2021

Amortisation

At 1 May 2019

Charge for the year ended 30 April 2020

At 1 May 2020

Charge for the year ended 30 April 2021

At 30 April 2021

Net book value

At 30 April 2021

At 30 April 2020

Cost

At 1 May 2019

Adjustment to fair value on acquisition of Chess

At 1 May 2020

Acquisition of ELAC Sonar

At 30 April 2021

Amortisation

At 1 May 2019

Charge for the year ended 30 April 2020

At 1 May 2020

Charge for the year ended 30 April 2021

At 30 April 2021

Net book value

At 30 April 2021

At 30 April 2020

24,063

12,500

2,398

—

24,063

12,500

2,398

2,000

—

2,000

—

2,000

—

2,195

—

2,195

—

2,195

—

2,198

737

2,935

—

2,935

—

1,572

—

43,354

737

44,091

1,572

45,663

2,000

—

2,000

—

2,000

22,063

12,500

2,398

2,195

2,935

1,572

—

43,663

42,091

SEA
£’000

7,955

—

7,955

—

7,955

—

7,955

—

7,955

—

Other intangible assets

MASS
£’000

MCL
£’000

EID
£’000

Chess
£’000

ELAC
£’000

Group
£’000

4,340

15,678

10,247

23,934

—

4,340

15,678

10,247

23,934

—

4,340

15,678

10,247

23,934

4,340

15,678

—

4,340

15,678

—

4,340

15,678

—

8,723

816

9,539

237

9,776

471

708

4,870

6,538

11,408

6,319

17,727

6,207

12,526

—

11,962

—

3,547

8,415

—

62,154

—

62,154

11,962

74,116

41,566

7,354

48,920

10,103

59,023

15,093

13,234

Goodwill arises on the acquisition of subsidiaries. These subsidiaries are the cash-generating units to which goodwill has been allocated.

The acquisition of ELAC Sonar completed 2 December 2020 (see note 30).

The amortisation charge is disclosed as “Amortisation of other intangible assets” in the income statement.

The Group tests goodwill biannually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the subsidiaries (cash-generating units) are determined from value-in-use calculations.

The value-in-use calculations take the cash flows of each cash-generating unit and apply the Group’s weighted average cost of capital (WACC) to this to
determine if there is any impairment of the cash-generating units’ goodwill.

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

9. Goodwill and other intangible assets continued
In assessing any impairment of goodwill, each value-in-use calculation makes a number of estimates, which use the same basis as used in previous years,
as follows:

Cash flow

Growth rate

Basis of estimate

As in previous years, the cash flows for the years ending 30 April 2022, 2023 and 2024 are based upon the cash-generating units’
budgets and forecasts for those years. These cash flows are based upon the revenue, margin and overhead cost forecasts for each
business taking account of the run-off of order book, renewal of existing business and winning of new business. Historically, these cash
flow forecasts have been a reasonable forecast of actual performance over the period of measurement. Costs reflect inflation rates,
currently assumed at 2% (2020: 2%). With regard to the revenue, margin and overhead cost forecasts, the key assumptions underlying
these inputs are that current projects contracted will continue as per agreement, that government defence spending will remain largely
consistent in the future and that each cash-generating unit will continue to be as successful in competing for new contracts as it has
been historically. At 30 April 2021, nearly £100m (65% of consensus forecasts) of revenue for 2022 was already under contract and, as
such, the main assumptions related to revenue volumes are in periods for 2023 and after where there is greater uncertainty and risk.

The cash flows for each UK-based cash-generating unit from years four to twenty inclusive are based upon the forecast cash flow for
the year ending 30 April 2024 to which a growth rate of 1.5% is applied each year (2020: 1.5%). This rate reflects a prudent view of
recent UK growth rates and is below the historically higher UK growth rate of 2.25%. The growth rate is similar for all of the UK-based
cash-generating units as a significant proportion of their business is with the same customer, the UK MOD. As a significant proportion
of the business is with the UK Government, a more prudent growth rate has been used to reflect lower expected growth rates of
UK Government expenditure. In the case of EID, its main customer is the Portuguese MOD. As such, the growth rate assumed for EID’s
future cash flows is 1.0% (2020: 1.0%), reflecting the expected growth rate for Portuguese Government expenditure. In the case of
ELAC, its domestic customer, the German Bundeswehr, does not form a significant proportion of its revenue with much of its business
from export customers. A growth rate of 1.5% has been assumed for ELAC in 2021. The longevity of the cash flows used reflects the
length of our order books and the long duration of the customer platforms and applications we supply and support.

WACC comprises a number of elements as follows:

Basis of estimate

Value of equity

Calculated as the issued share capital of the Group (Cohort plc) multiplied by the closing share price at 30 April 2021 of
£6.42 (2020: £5.75).

Risk free interest rate

Based upon 30-year UK Government gilt rate of 1.34% (2020: 0.59%). The 30-year gilt rate has been used as a better
reflection of long-term rates.

Beta factor

Derived from analyst estimates provided by the Group’s Nomad (Investec) and reflects a range of outcomes from 0.15 to
0.43 (2020: 0.46 to 0.84).

Equity risk premium

The equity risk premium of the Group of 9.48% (2020: 10.46%) to which is added a further range of risk premium of 4%
to 12% to reflect customer market risk and the low liquidity and risk of AIM stocks.

Cost of debt

The Group is in a net funds position. The Group loans at 30 April 2021 have an average interest cost of 1.64% per annum
as at that date (2020: 2.09% per annum).

The Group’s pre-tax WACC applied to each cash-generating unit’s cash flows was 10.4% (2020: 9.2%). The Group WACC has been deemed appropriate
to use for each cash-generating unit as all funding is cross-guaranteed and therefore the same cost of funding is incurred by each cash-generating unit.
The increase in the Group’s pre-tax WACC is due to higher interest rates and equity risk partly offset by a lower volatility (Beta factor), both of the latter
in respect of Cohort plc shares.

On the basis of these tests, no impairment of goodwill has arisen in the year ended 30 April 2021 in respect of any of Chess, EID, ELAC, MASS, MCL or
SEA. Sensitivity was applied to the impairment tests to deliver a material impairment of goodwill. If the post-tax WACC is increased to over 10%, SEA’s
goodwill (£22.6m) is impaired by around £10m. SEA’s goodwill is the most sensitive to impairment due to its current high level of segmental current
assets. This impairment would arise if the higher equity risk was applied to the post-tax WACC calculation.

The other intangible assets arose on the acquisition of subsidiaries and is mainly in respect of contracts and prospects acquired. The EID other intangible
asset will be fully amortised by 30 April 2023. The Chess other intangible asset will be fully amortised by 30 April 2024.

The other intangible asset in respect of ELAC is in respect of contracts acquired and expected opportunities to be secured. The other intangible asset of
ELAC will be fully amortised by 30 April 2029.

The split of the net book value of other intangibles, where it comprises both contracts/opportunities to be secured and contracts acquired, is as follows:

ELAC
£’000

4,701

3,714

8,415

2021

EID
£’000

471

—

471

Chess
£’000

1,408

4,799

6,207

2020

EID
£’000

708

—

708

Chess
£’000

2,062

10,464

12,526

Contracts acquired

Customer relationships

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 202110. Fixed assets
a) Right of use assets
The Group adopted IFRS 16 ‘Leases’ as from 1 May 2019. The Group applied IFRS 16 using the modified retrospective with cumulative effect method,
i.e. by recognising the cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance of equity at 1 May 2019.

Cost of right of use assets

At 1 May 2019

Additions

Disposals

Foreign exchange movement

At 1 May 2020

Additions

Disposals

Acquired (see note 30)

Foreign exchange movements

At 30 April 2021

Accumulated depreciation of right of use assets

At 1 May 2019

Charge for the year

At 1 May 2020

Charge for the year

Disposals

Foreign exchange movement

At 30 April 2021

Net book value at 30 April 2021

Net book value at 30 April 2020

Lease liabilities

At 1 May 2019

New lease liabilities

Interest charge

Payments

At 1 May 2020

New lease liabilities

Acquired (see note 30)

Interest charge

Payments

Foreign exchange movement

At 30 April 2021

Current

Non-current

At 30 April 2021

Current

Non-current

At 30 April 2020

Group

Fixtures and
equipment
£’000

467

128

—

(1)

594

529

(61)

(5)

Property
£’000

5,450

2,475

(451)

—

7,474

—

(229)

1,430

(43)

8,632

1,067

Group

Fixtures and
equipment
£’000

—

196

336

(53)

(3)

476

591

398

Group

Other
£’000

467

128

(199)

409

341

(259)

(4)

510

251

259

510

179

230

409

Property
£’000

—

972

1,174

—

2,147

6,485

6,502

Property
£’000

5,598

2,418

233

(1,161)

7,088

—

1,465

225

(1,689)

(44)

7,045

1,320

5,725

7,045

1,078

6,010

7,088

Total
£’000

5,917

2,603

(451)

(1)

8,068

529

(290)

1,440

(48)

9,699

Total
£’000

—

1,168

1,510

(53)

(2)

2,623

7,076

6,900

Total
£’000

6,065

2,546

246

(1,360)

7,497

341

1,476

237

(1,948)

(48)

7,555

1,571

5,984

7,555

1,257

6,240

7,497

Company
£’000

325

—

325

—

351

Company
£’000

—

151

200

250

Company
£’000

354

—

(88)

276

—

(89)

—

221

101

121

221

196

276

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
10. Fixed assets continued
a) Right of use assets continued

Amounts recognised in Consolidated income statement

Interest expense on lease liabilities (note 5)

Depreciation expense

2021
£’000

237

1,510

1,747

2020
£’000

246

1,168

1,414

The Company’s right of use asset is in respect of its property lease at Theale (net book value £175,000; 2020: £250,000) and a vehicle (net book value
£25,000; 2020: £nil).

Right of use assets were measured at their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the Group’s
incremental borrowing rate at the date of initial application.

b) Property, plant and equipment

Group

Cost

At 1 May 2019

Additions

Disposals

Foreign exchange movement

At 1 May 2020

Additions

Disposals

Acquired (see note 30)

Foreign exchange movement

At 30 April 2021

Depreciation

At 1 May 2019

Charge in the year

Eliminated on disposal

Foreign exchange movement

At 1 May 2020

Charge in the year

Eliminated on disposal

Foreign exchange movement

At 30 April 2021

Net book value

At 30 April 2021

At 30 April 2020

Land and
buildings
£’000

9,994

353

—

Fixtures
and
equipment
£’000

8,738

2,309

(121)

10,347

10,932

(223)

—

1,212

(489)

1,419

(68)

Total
£’000

18,732

2,662

(121)

21,279

1,247

(712)

1,419

(68)

10,159

13,006

23,165

2,321

314

—

2,635

336

(211)

—

5,455

1,158

(92)

6,523

1,621

(271)

(4)

7,776

1,472

(92)

9,158

1,957

(482)

(4)

2,760

7,869

10,629

7,399

7,712

5,137

4,409

12,536

12,121

The net book value of the Company’s property, plant and equipment was £209,000 at 30 April 2021 (2020: £250,000). This was after additions of
£51,000, net disposals of £nil and a depreciation charge of £92,000 for the year ended 30 April 2021.

The net book value of fixed assets held under finance leases at 30 April 2021 was £178,000 (2020: £240,000).

The depreciation charge is disclosed within “Administrative expenses” in the Consolidated income statement.

The Group’s land and buildings as disclosed above are the cost of purchase plus refurbishment and the fair value on acquisition. As such the Group has no
revaluation reserve at this time.

11. Investment in subsidiaries and joint ventures

Subsidiary undertakings

Joint ventures

100 Cohort plc Annual Report and Accounts 2021

Group

2021
£’000

—

2020
£’000

—

Company

2021
£’000

2020
£’000

91,038

90,970

—

91,038

90,970

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

11. Investment in subsidiaries and joint ventures continued
A list of all the investments in joint ventures and subsidiaries is as follows:

Name of company

Registered office

Directly owned
Systems Consultants Services
Limited (SCS)

MASS Limited

SEA (Group) Ltd. (SEA)

Marlborough Communications
(Holdings) Limited
Thunderwaves, S.A.

Cohort Deutschland GmbH

Chess Technologies Limited
(Chess)

Held through a subsidiary
MASS Consultants Limited
(MASS)

Systems Engineering
& Assessment Ltd

JS Residual Ltd

Marlborough Communications
Limited (MCL)
Beckington Castle Ltd

Chess Dynamics Limited

Empresa de Investigação
e Desenvolvimento de
Electrónica, S.A. (EID)
8963665 Canada Inc.

JSK Naval Support Inc.

Vision4ce Limited

Chess Dynamics Inc

ELAC SONAR GmbH

One Waterside Drive, Arlington
Business Park, Theale, Reading
RG7 4SW
One Waterside Drive, Arlington
Business Park, Theale, Reading
RG7 4SW
Beckington Castle, 17 Castle
Corner, Beckington, Frome BA11
6TA
Dovenby Hall, Balcombe Road,
Horley, Surrey RH6 9UU
6. Ruo do Alecrim 26E
1200-018, Lisbon
Neufeldtstraße 10, 24118 Kiel,
Germany
One Waterside Drive, Arlington
Business Park, Theale, Reading
RG7 4SW

Enterprise House, Great North
Road, Little Paxton, St. Neots,
Cambridgeshire
PE19 6BN
Beckington Castle, 17 Castle Corner,
Beckington, Frome BA11 6TA

Riverside Road, Pottington
Business Park, Barnstaple, Devon
EX31 1LY

Dovenby Hall, Balcombe Road,
Horley, Surrey RH6 9UU
Beckington Castle, 17 Castle Corner,
Beckington, Frome BA11 6TA
Quadrant House,
North Heath Business Park,
North Heath Lane
Horsham, West Sussex RH12 5QE
Quinta dos
Medronheiros-Lazarim, 2820-486
Charneca da Caparica, Lisbon
1100, Boul Rene-Levesque O,
Porte 2500, Montreal (Quebec),
Canada H3B 5C9
193 Brunswick Blvd,
Quebec, Canada
H9R 5N2
Unit 4, Wokingham Commercial
Centre, Molly Millars Lane,
Wokingham RG41 2RF
7060 S Tucson Way A,
Centennial,
CO 80112 USA
Neufeldtstraße 10,
24118 Kiel, Germany

Country of
registration

Type of
shares

Proportion of
shareholding
and voting
rights held

Nature of business

England Ordinary

100% Formerly a provider of technical consultancy
Dormant

England Ordinary

100%

Holding company of
MASS Consultants Limited

England Ordinary

100%

Holding company of Systems Engineering &
Assessment Ltd and Beckington Castle Ltd

England Ordinary

100%

Portugal Ordinary

100%

Holding company of Marlborough
Communications Limited
Holding company of EID

Germany Ordinary

100%

Holding company for ELAC SONAR GmbH

England Ordinary

81.84% Holding company of Chess Dynamics Limited,
Chess Dynamics Inc and Vision4ce Limited

England Ordinary

100% Electronic warfare, managed services, secure
communications and digital services

England Ordinary

100%

100% Deliverer of systems engineering, software and
electronic engineering services and solutions to
the defence and transport markets and is also
the holding company of JS Residual Ltd
Subsidiary of Systems Engineering &
Assessment Ltd. Holds investment in SEA’s
Canadian operations
Dormant
Designs, sources and supports advanced
electronic and surveillance technology
Property company holding freehold of
Beckington Castle and SEA’s Bristol office
Design and production of detection and
tracking systems, as well as counter UAV
solutions for the defence and security markets

100%

Portugal Ordinary

80%

Canada Ordinary

100%

Designs and manufactures advanced
communications systems for the defence and
security markets
The holding company of the Group’s
investment in JSK Naval Support Inc.

Canada Ordinary

England Ordinary

50% A joint venture between SEA and a Canadian
supplier to deliver and support SEA products
and services into the Canadian Navy
100% Software solutions for detection, tracking and
C-UAV systems

USA Ordinary

100%

US representative of Chess’s UK business

Germany Ordinary

100%

Supplies advanced sonar systems and
underwater communications to global
customers in the naval market
100% Social institution of ELAC SONAR GmbH which
provides pension-related support benefits to
ELAC SONAR GmbH employees

ELAC SONAR
Unterstützungskasse GmbH

Neufeldtstraße 10,
24118 Kiel, Germany

Germany Ordinary

All shares held in subsidiaries and joint ventures are the same class and carry equal weighting to any shares held by other shareholders.

Cohort plc Annual Report and Accounts 2021

101

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
11. Investment in subsidiaries and joint ventures continued
Company
The Company’s investments in subsidiaries are as follows:

At 1 May 2019

Share-based payments

Vested in year

Deferred tax on share-based payments
charged directly to equity

At 1 May 2020

Additions

Share-based payments

Vested in year

Deferred tax on share-based payments
charged directly to equity

At 30 April 2021

12. Inventories

Finished goods and raw materials

Chess
£’000

18,702

—

18,743

—

(10)

18,797

Cohort
Deutschland
£’000

—

MASS
£’000

MCL
£’000

14,546

16,498

111

(109)

(22)

SCS
£’000

1,584

—

SEA
£’000

Thunderwaves
£’000

Total
£’000

26,511

12,884

90,725

(87)

—

286

(218)

177

14,624

16,517

1,584

26,573

12,929

90,970

—

139

(109)

(4)

—

(32)

—

(107)

—

(59)

—

358

(307)

(7)

14,650

16,521

1,584

26,560

12,902

91,038

2021
£’000

12,892

2020
£’000

11,478

The inventory at 30 April 2021 is after stock provision of £5,419,000 (2020: £575,000). The significant increase in the stock provision is due to the
acquisition of ELAC which has historically retained a high level of stock provision against older product lines. The Group also identified a number of stock
value issues on acquisition which have been specifically provided for (see note 30).

13. Trade and other receivables

Trade receivables (net of provision for doubtful debts)

Contract receivables

Prepayments and accrued income

Current tax assets

Amounts due from subsidiary undertakings

Group

Company

2021
£’000

30,245

26,112

9,594

741

—

2020
£’000

23,275

16,475

7,541

132

—

66,692

47,423

2021
£’000

—

388

—

18,010

18,398

2020
£’000

—

175

—

3,341

3,516

No trade and other receivables were due in greater than one year.

The average credit period taken on sales of goods is 38 days (2020: 37 days). Of the trade receivables balance, £9.8m was considered overdue at 30 April
2021 (30 April 2020: £6.1m). The increase in the debtor days is due to slippage of some receivables from the UK MOD into early 2021/22. Overdue is
defined as trade receivables still outstanding beyond invoice terms (typically 30 days). The allowance for doubtful debt is determined by management’s
best estimates, by reference to the particular receivables over which doubt may exist. None of the other receivables were past due.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. One of the largest trade receivables, to
which the Group is exposed at 30 April 2021, is the UK MOD (customer B below) with a balance outstanding of £5.9m (2020: £2.0m). Customers who
represent more than 5% of trade receivables include:

Customer A

Customer B

Customer C

Customer D

2021
£m

8.0

5.9

1.9

1.3

2020
£m

0.9

2.0

1.9

2.7

Customer D in 2021 is not the same as customer D in 2020.

Trade receivables include £13.9m (2020: £7.1m) denominated in foreign currency. The predominant currency of the trade receivables is pounds sterling.

The majority of the Group’s customers are UK or overseas government organisations and larger prime contractors in the defence and transport sectors.

102

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
13. Trade and other receivables continued
The Group assesses all new customers for creditworthiness before extending credit. In the case of overseas customers, the Group utilises various payment
protection mechanisms including but not limited to export credit guarantees, letters of credit and advance payments.

Trade receivables disclosed above include amounts which are past due at the reporting date but against which the Group has not recognised an allowance
for doubtful debts because the credit quality of the customer is not considered to have changed and the amount due is considered fully recoverable. The
Group recognises provisions for doubtful debts on a credit loss basis taking into account the future anticipated losses based upon the creditworthiness of
the end customer.

Ageing of past due but not impaired receivables

<30 days
30–60 days
60–90 days
>90 days

Movement in the allowance for doubtful debts (reported within trade receivables)

Balance at 1 May
Expected credit losses recognised
On acquisition of ELAC
Utilised on write off of debt
Released on recovery of debt previously provided
Foreign exchange movement

Balance at 30 April

Contract receivables

Opening balance
Acquired
Contract receivable recognised in revenue
Contract receivable invoiced

Foreign exchange movement

Closing balance

2021
£’000

6,161
961
97
2,560

9,779

2021
£’000

1,026
4
256
—
(343)
—

943

2020
£’000

38
2,890
96
3,113

6,137

2020
£’000

980
94
—
(14)
(37)
3

1,026

2021
£’000

16,475
3,441
29,580
(23,326)

(58)

2020
£’000

13,044
—
22,312
(18,890)

26,112

16,475

The Group order book at 30 April 2021 and its expected recognition as revenue in future periods is shown in the Operational review on pages 33 to 34.
The order book at 30 April 2020 is shown on page 33.

14. Trade and other payables

Advance receipts
Trade payables and accruals
Social security and other taxes
Accruals and deferred income
Amounts due to subsidiary undertakings

Group

Company

2021
£’000

14,658
12,338
5,085
18,245
—

50,326

2020
£’000

6,057
8,494
5,149
11,285
—

2021
£’000

—
211
218
1,502
8,556

30,985

10,487

2020
£’000

—
64
161
1,667
1,584

3,476

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing contract costs. Advance receipts reflect invoicing
ahead of work done in accordance with contracted terms. The average credit period taken for trade purchases is 41 days (2020: 43 days), based upon each
Group business’s standard payment terms. The Group has financial risk management policies in place to ensure that all payables are paid within the
pre-agreed credit terms (see Risk management, pages 37 to 42).

Trade payables and accruals, other payables and taxes are all due for settlement within 12 months of the year end, the majority within three months.

Social security and other taxes include employment taxes and VAT.

The Directors consider that the carrying amount of trade payables approximates to their fair values.

Cohort plc Annual Report and Accounts 2021

103

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

14. Trade and other payables continued
Total payable includes £3.4m (2020: £0.9m) denominated in foreign currency.

Contract liabilities

Opening balance

New advances

Advances consumed in delivery of contract

Foreign exchange movement

Closing balance

15. Bank borrowings

Bank overdrafts

Bank loans

Finance leases

These borrowings are repayable as follows:

On demand or within one year

In the second year

In the third to fifth years inclusive

Less: amounts due for settlement within 12 months (shown under current liabilities)

2021
£’000

6,057

20,773

(12,175)

14,658

2020
£’000

4,620

9,945

(8,520)

6,057

Group

Company

2021
£’000

—

2020
£’000

—

29,742

25,095

179

2021
£’000

13,447

29,742

—

2020
£’000

11,882

25,095

—

29,830

25,274

43,189

36,977

Group

Company

2021
£’000

29,772

29,830

(50)

2020
£’000

25,098

25,274

2021
£’000

13,447

29,742

—

43,189

2020
£’000

11,882

—

25,095

36,977

(85)

(13,447)

(11,882)

Amount due for settlement after 12 months

29,780

25,189

29,742

25,095

The weighted average interest rates paid were as follows:

Bank overdrafts (variable)

Bank loans (variable)

Finance leases (fixed)

2021
%

—

1.64

6.01

2020
%

—

2.09

5.10

The variable rates are based upon the Bank of England or European Central Bank interest rates. The interest rate applying to the bank loans drawn in
sterling was 1.71% (2020: 2.32%) and in euros was 1.50% (2020: 1.50%).

On 15 November 2018, the Group entered into its current banking facility. On 20 May 2020, the Group exercised an option to extend this facility from
£30m to £40m. The facility is provided by Lloyds and NatWest banks. The facility is provided for four years with options to extend for a further year and
is secured over all of the Group’s assets excluding EID, which is not part of the facility arrangement and maintains its own facilities locally in Portugal.
The facility is available to the Group (excluding EID and ELAC)) in respect of acquisition financing and overdraft. The Group is not obliged to make any
repayments prior to the facility’s expiration in November 2022 and the facility is disclosed as repayable in the second year.

The movement in the facility drawn in the year by currency was as follows:

At 1 May 2019

Borrowing drawn down

Borrowing repaid

Foreign exchange movement

At 1 May 2020

Borrowing drawn down

Borrowing repaid

Foreign exchange movement

At 30 April 2021

Sterling
£’000

18,000

—

18,000

—

Euro
£’000

7,028

—

7,095

12,110

(7,089)

(374)

Total
£’000

25,028

—

25,095

12,110

(7,089)

(374)

18,000

11,742

29,742

At 30 April 2021, the Group had available £10.3m of undrawn bank facility. The Directors consider the carrying amount of bank borrowings approximate
to their fair values.

104 Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

15. Bank borrowings continued
The Group has entered into separate bilateral arrangements with each of its banks, Lloyds and NatWest, for ancillary facilities including bonding, letters
of credit and foreign exchange contracts.

Similar bilateral arrangements exist for EID with its bank in Portugal. In addition, EID has an overdraft facility of €2.5m with Santander which is renewable
on a six-month rolling basis. This facility was undrawn at 30 April 2021.

Similar bilateral arrangements exist for ELAC with its bank in Germany, Commerzbank. ELAC currently has no overdraft facility and is part of the Group’s
bank security arrangements.

The Group’s cash at 30 April 2021 of £32.3m is held with the following banks:

National Westminster Bank plc

Barclays Bank PLC

Lloyds Bank plc

Novo Banco

Santander Bank

Banco Comercial Português

Caixa Geral de Depósitos Bank

Commerzbank

Other banks and cash

16. Provisions

Group

At 1 May 2019

On acquisition (see note 29)

Released to the income statement

Utilised

Foreign exchange movement

At 1 May 2020

On acquisition (see note 30)

Charged/(released) to the income statement

Utilised

Foreign exchange movement

At 30 April 2021

Provisions due in less than one year

Provisions due in greater than one year

At 30 April 2021

Provisions due in less than one year

Provisions due in greater than one year

At 30 April 2020

Moody’s
long-term
credit rating
of bank
as at
2021

2021
£’000

2020
£’000

19,160

13,493

A1*/A2

—

980

5,419

1,227

5,418

—

4,449

1,301

1,246

—

Baa3

Baa2

Baa3

32,294

20,567

Other
contract
related
provisions
£’000

Warranty
£’000

651

—

(155)

(95)

405

275

203

(128)

(8)

747

—

747

405

—

405

775

900

(257)

(7)

—

1,411

2,373

(506)

(26)

(73)

3,179

2,039

1,140

3,179

1,141

270

1,411

Total
£’000

1,426

900

(412)

(102)

1,816

2,648

(303)

(154)

(81)

3,926

2,786

1,140

3,926

1,546

270

1,816

The warranty provisions are management’s best estimates of the Group’s liability under warranties granted on software and other products supplied and
are based upon past experiences. The timing of such expenditure is uncertain, although warranties generally have a time limit of no more than 12 months,
unless a longer warranty period is purchased by the customer. Warranty provisions are reviewed at the half year and year end in respect of actual spend
and the remaining obligations to be fulfilled.

Other contract related provisions are management’s best estimate of the Group’s exposure to contract related costs and undertakings which are in addition
to contract accruals and include contract loss provisions. The timing of these is uncertain but is expected to be resolved within 12 months of the balance
sheet date apart from dilapidation provisions for Group’s leased properties. These arise where a service or product has been previously delivered to the
customer and the Group receives a claim or an adverse indication in respect of the work done. Where the amount required is uncertain or the Group
disputes the amount of the claim, provision is made for the best estimate of the amount that will be required to settle the issue.

Cohort plc Annual Report and Accounts 2021

105

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

16. Provisions continued
Other contract related provisions also include contract loss provisions in respect of contracts where the estimated cost at completion exceeds the total
expected revenue of the contract. A contract loss provision is recognised as a provision in full immediately as it arises. The contract loss provisions are
held in respect of contracts which are expected to complete in the next 12 months.

Other contract related provisions also include property dilapidation provisions and other trade related issues which may not be related to a trading contract.

17. Deferred tax

Accelerated
tax
depreciation
£’000

Other
intangible
assets
£’000

Revaluation
of building
£’000

Other
short-term
timing
differences
£’000

Share options
£’000

Derivatives
£’000

Group
£’000

(3,676)

1,330

(36)

1,261

193

(2,222)

(2,307)

2,498

(108)

2,391

—

At 1 May 2019

(143)

(3,713)

(301)

332

130

Credit/(charge) to the income statement in respect of the
current tax year

Charge to the income statement in respect of prior tax years

Effect of tax rate change from 17.0% to 19.0% for assets/
liabilities falling after April 2020

Foreign exchange movement

Recognised in the income statement

Recognised in equity

At 1 May 2020

On acquisition (see note 30)

Credit/(charge) to the income statement in respect of the
current tax year

Credit/(charge) to the income statement in respect of prior
tax years

Foreign exchange movement

Recognised in the income statement

Recognised in equity

At 30 April 2021

(102)

(33)

(14)

—

(149)

—

(292)

—

(108)

—

(84)

—

1,425

—

1,425

—

(2,288)

(3,777)

2,374

—

(1)

2,373

—

(34)

—

(27)

—

(328)

—

(56)

(3)

(48)

—

284

1,470

(1)

—

193

358

—

(4)

—

(376)

(3,692)

(320)

1,759

372

122

(2,135)

Certain deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to do so. The following is the analysis of the
total deferred tax balances (after offset) for financial reporting purposes:

Deferred tax assets

Deferred tax liabilities

2021
£’000

600

(2,735)

(2,135)

2020
£’000

598

(2,820)

(2,222)

A deferred tax liability in respect of the revaluation of a freehold building arose on the acquisition of SEA and is the potential tax liability payable on the
revaluation gain in respect of the building with reference to its historical cost.

The Company’s deferred tax balance at 30 April 2021 was an asset of £77,000 (2020: £56,000) being £21,000 (2020: £14,000) in respect of other
short-term timing differences, accelerated tax depreciation of £17,000 (2020: £12,000) and share options of £39,000 (2020: £30,000).

The corporation tax rate in the UK for the year ended 30 April 2021 was 19.0% (2020: 19.0%) which has been applied by Cohort in calculating its income
tax (see note 6). The increase in future UK corporation tax rate to 25.0% (to be effective 1 April 2023) was substantively enacted in May 2021. The effect
of this rate change if it was applied for the year ended 30 April 2021 would be an increase in the deferred tax charge and net liability of £200,000.

For deferred tax balances in respect of EID (Portugal), the rate used was 22.20% (2020: 22.20%). For ELAC (Germany) the rate used was 31.575%.

The equity movement in deferred tax on share options is to reflect the future tax associated with the total future share options exercisable and is not
capped at the share-based payment level.

106

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
18. Derivative financial instruments
The Group has derivative financial instruments as follows:

Assets

Foreign currency forward contracts

Liabilities

Foreign currency forward contracts

2021
£’000

2020
£’000

—

(679)

(231)

The changes in marking the outstanding foreign currency forward contracts to fair value (which are based upon quoted market valuations) are credited or
charged to the Consolidated income statement as “credit/(charge) on marking forward exchange contracts to market value at the year end”. They are in
respect of trading contracts undertaken by the Group and in respect of Chess, MCL and SEA and are disclosed within their respective operating profits in
the segmental analysis (see note 1; 2020: MCL and SEA). They are considered to be level 1 classification. The charge (2020: charge) to the Consolidated
income statement for the year ended 30 April 2021 was as follows:

Foreign currency forward contracts

2021
£’000

410

2020
£’000

132

Currency derivatives
The Group utilises forward currency contracts to hedge significant future transactions and cash flows. The Group is party to a number of foreign currency
forward contracts in the management of its foreign exchange rate exposure.

The changes in total outstanding committed foreign currency forward contracts of the Group were as follows:

2021

At forward exchange rates

At 1 May 2020

Contracts matured in period

New contracts in period

At 30 April 2021

Fair value adjustment

At 30 April 2021 at spot rate

Buy
£’000

Sell
€’000

110

(110)

17,480

(680)

16,800

126

(126)

19,314

—

Sell
£’000

—

(971)

(937)

Buy
€’000

Buy
£’000

Sell
US$’000

Sell
£’000

Buy
US$’000

—

(1,075)

—

(4,574)

4,574

(4,913)

(6,016)

6,016

(6,813)

(4,913)

(6,813)

(4,908)

—

The total fair value adjustment is £641,000 (2020: £231,000) and the change in the forward exchange fair values for the year ended 30 April 2021 is
£410,000 (30 April 2020: £132,000), which is included in the operating profit of the Group as a charge (2020: charge).

2020

At forward exchange rates

At 1 May 2019

Contracts matured in period

New contracts in period

At 30 April 2020

Fair value adjustment

At 30 April 2020 at spot rate

Buy
£’000

388

(388)

110

—

110

Sell
€’000

433

(433)

126

—

Sell
£’000

Buy
US$’000

(9,603)

5,546

(517)

(4,574)

(231)

(4,805)

(12,587)

7,222

(651)

(6,016)

—

Cohort plc Annual Report and Accounts 2021

107

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

18. Derivative financial instruments continued
Liquidity risk
The maturity of the outstanding contracts was as follows:

At 30 April 2021

Within one year

Within two years

Greater than two years

Buy
£’000

6,685

2,221

8,574

Sell
€’000

7,435

2,474

9,405

Sell
£’000

(942)

(29)

—

Buy
€’000

(1,044)

(31)

—

At 30 April 2021 at forward rate

17,480

19,314

(971)

(1,075)

At 30 April 2020

Within one year

Within two years

Greater than two years

At 30 April 2020 at forward rate

The following significant exchange rates applied at 30 April:

Exchange rates at 30 April

Buy
£’000

Sell
US$’000

—

Buy
£’000

110

—

110

—

Sell
€’000

126

—

126

Sell
£’000

(4,913)

—

Buy
US$’000

(6,813)

—

(4,913)

(6,813)

Sell
£’000

(4,574)

—

Buy
US$’000

(6,016)

—

(4,574)

(6,016)

2021

2020

US$

Euro

US$

Euro

0.7204

0.8698

0.7987

0.8705

Sensitivity analysis
A 10% strengthening of sterling against the above currencies at 30 April 2021 would decrease the reported operating profit by £995,000 (2020: increase
the reported operating profit by £427,000) in respect of marking these forward contracts to market value.

19. Share capital

Allotted, called up and fully paid 10 pence ordinary shares

Movement in allotted, called up and fully paid 10 pence ordinary shares:

At 1 May 2019

Share options exercised

At 1 May 2020

Share options exercised

At 30 April 2021

The Company has one class of ordinary shares, none of which carry a right to fixed income.

During the year ended 30 April 2021, 82,565 ordinary shares (2020: Nil) in Cohort plc were issued to satisfy share options.

New shares were issued as follows:

Price per share (£)

3.380

3.400

3.550

3.725

3.760

3.900

4.085

4.425

4.475

£8,256 was added to the share capital with the balance (£299,000) added to the share premium account.

108 Cohort plc Annual Report and Accounts 2021

2021
Number

2020
Number

41,041,666 40,959,101

Number

40,959,101

—

40,959,101

82,565

41,041,666

Proceeds
from new
shares issued
£’000

Number of
Shares

18,761

20,800

676

4,849

8,000

3,416

21,269

4,593

201

82,565

307

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 202120. Share options
The Group grants new share options under the Cohort plc 2016 share option scheme to senior management and key employees. Previous options have
been granted under the Cohort plc 2006 share option scheme. The Group also operates a Save As You Earn (SAYE) scheme and a Share Incentive Plan
(SIP), both of which are available to all employees.

The following options were outstanding at 30 April 2021:

Scheme and
grant date

Exercise
price
£

Cohort plc 2006 share option scheme

Vesting
date

Expiry
date

23 Jul 2010

26 Jul 2011

2 Aug 2012

9 Aug 2013

11 Aug 2014

20 Aug 2015

0.835

0.915

1.165

1.675

1.975

3.725

24 Jul 2013

27 Jul 2014

3 Aug 2015

10 Aug 2016

23 Jul 2020

26 Jul 2021

2 Aug 2022

9 Aug 2023

12 Aug 2017

11 Aug 2024

21 Aug 2018

20 Aug 2025

Cohort plc 2016 share option scheme

Vested

—

22,000

8,500

10,700

12,600

38,603

16 Aug 2019

15 Aug 2026

40,219

26 Aug 2020

25 Aug 2027

170,784

11 Aug 2021

10 Aug 2028

29 Aug 2022

28 Aug 2029

19 Sep 2022

18 Sep 2029

8 Nov 2022

7 Nov 2029

29 Aug 2023

28 Aug 2030

2 Oct 2023

1 Oct 2030

29 Apr 2024

28 Apr 2031

—

272,433

379,249

13,491

5,454

13,491

5,454

347,769

6,000

80,000

6,000

80,000

30 April 2021

Not
vested

Total

Vested

30 April 2020

Not
vested

—

22,000

8,500

10,700

12,600

38,603

40,219

170,784

Total

15,000

22,000

8,500

10,700

12,600

72,090

81,366

272,158

—

272,158

304,553

408,907

13,491

5,454

13,491

5,454

—

15,000

22,000

8,500

10,700

12,600

72,090

81,366

—

303,406

1,104,396

1,407,802

222,256

1,004,563

1,226,819

—

3,087

—

27,811

27,853

56,401

88,225

68,563

—

27,811

30,940

56,401

88,225

68,563

—

6,853

—

33,509

29,332

80,392

62,065

96,011

—

33,509

36,185

80,392

62,065

96,011

—

3,087

268,853

271,940

6,853

301,309

308,162

306,493 1,373,249

1,679,742

229,109

1,305,872

1,534,981

15 Aug 2016

25 Aug 2017

10 Aug 2018

28 Aug 2019

18 Sep 2019

7 Nov 2019

28 Aug 2020

1 Oct 2020

28 Apr 2021

3.400

3.760

3.900

4.425

4.875

5.500

6.200

6.150

6.340

Save As You Earn (SAYE) scheme

14 Aug 2015

29 Aug 2016

25 Aug 2017

1 Sep 2018

6 Sep 2019

4 Sep 2020

3.380

3.550

4.085

3.900

4.475

6.700

The SAYE options have maturity periods of three or five years from the date of grant. The Group plan provides for a grant price equal to the closing market
price of the Group shares on the trading day prior to the date of grant. In the case of the SAYE schemes, the price is determined on the date before the
invitation to participate, which was on 10 August 2020 for the 2020 scheme. The vesting period is generally three years, five years in the case of some
SAYE options.

If options under the Cohort plc 2006 or 2016 share option schemes remain unexercised after a period of ten years from the date of grant, the options
expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest.

The Group launched an all-employee Share Incentive Plan (SIP) on 1 September 2018. The scheme provides for participating employees to save up to
£150 per month throughout each annual accumulation period. At the end of each accumulation period (30 August each year), the amount saved will be
used to purchase Cohort plc ordinary shares at the lower of the mid-market share price on the first and last day of accumulation period.

The shares to be issued under the Group’s SIP scheme are provided by the Cohort Employee Benefit Trust (see note 21).

Cohort plc Annual Report and Accounts 2021

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Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

20. Share options continued
The movement in share options during the year is as follows:

Outstanding at 1 May

Granted during the year

Forfeited during the year

Exercised during the year

Expired during the year

Outstanding at 30 April

Exercisable at 30 April

2021

2020

Weighted
average
exercise
price
£

3.90

6.29

4.18

3.56

3.63

4.66

3.29

Options

1,534,981

510,590

(105,432)

(252,505)

(7,892)

1,679,742

306,493

Options

1,600,323

535,471

(81,045)

(515,662)

(4,106)

1,534,981

229,109

Weighted
average
exercise
price
£

3.32

4.45

3.84

2.70

3.40

3.90

2.86

The weighted average remaining contractual life is six years (2020: seven years).

The exercised options in the year were satisfied by transferring shares from the Cohort Employee Benefit Trust (see note 21) and the issue of new shares
(see note 19).

In the year ended 30 April 2021, options were granted as follows: 71,372 on 4 September 2020 under the SAYE scheme, and 353,218 on 28 August 2020,
6,000 on 1 October 2020 and 80,000 on 28 September 2020, the latter three under the Cohort plc 2016 share option scheme. The option price for the
SAYE scheme was £6.700 per share which was the mid-market price on the day before the scheme invitation was made on 10 August 2020. The option
price for the options issued under the Cohort plc 2016 share option scheme was £6.20, £6.15 and £6.34 respectively, the mid-market price the day before
the grant.

Share options granted during the current and previous years were valued using the Quoted Companies Alliance model. The inputs to this model for the
current and previous years were as follows:

Average share price

Weighted average exercise price

Expected volatility

Risk free rate

Leaver rate (per annum)

Dividend yield

2021

£6.01

£4.66

39.0%

2020

£5.30

£3.90

25.0%

0.32%–1.50%

0.55%–1.51%

10.0%

0.92%

10.0%

0.91%

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years. The leaver rate used in
the model is based on management’s best estimate.

The Group recognised a cost of £406,000 (2020: £318,000) relating to share-based payment transactions which are all equity settled, an equivalent
amount being transferred to the share option reserve.

The cost of share-based payments is included in “Administrative expenses” within the Consolidated income statement.

21. Own shares

Balance at 1 May 2019

Acquired in the year

Sold in the year

Loss on shares sold in the year

Balance at 30 April 2020

Acquired in the year

Sold in the year

Loss on shares sold in the year

Balance at 30 April 2021

£’000

348

3,677

(1,472)

(989)

1,564

1,418

(821)

(1,093)

1,068

The own shares reserve represents the cost of shares in Cohort plc purchased in the market and held by the Cohort Employee Benefit Trust to satisfy
options under the Group’s share options (see note 20), the Restricted Share Schemes (see the Remuneration Committee report on pages 65 to 74) and the
Group’s SIP scheme.

The number of ordinary shares in Cohort plc held by the Employee Benefit Trust at 30 April 2021 was 172,744 (2020: 231,048).

110

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 202121. Own shares continued
Tranches of Cohort plc ordinary shares were acquired by the Employee Benefit Trust as follows:

Date

4 August 2020

1 September 2020

3 September 2020

2 October 2020

15 December 2020

9 February 2021

10 February 2021

Number
acquired

13,368

30,197

32,938

53,694

500

68,500

31,500

230,697

Price
per share
£

5.956

6.200

6.018

5.916

6.258

6.280

Investment
£’000

187

198

323

429

198

1,418

Ordinary shares in Cohort plc were transferred by the Employee Benefit Trust for the purposes of satisfying the exercise of share options and SIP as follows:

Exercise price per share
Pence

83.5

338.0

340.0

355.0

372.5

376.0

390.0

408.5

442.5

Number of
shares sold

Proceeds
£’000

15,000

13,204

24,200

661

24,785

89,040

4,640

26,686

28,242

226,458

335

109

125

821

Loss
on sale
of shares
£’000

(89)

(42)

(79)

(2)

(73)

(262)

(13)

(55)

(59)

(674)

In addition, 62,543 (2020: 51,816) ordinary shares in Cohort plc were transferred at nil value realising a loss on sale of shares of £419,000 for the purpose
of satisfying shares awarded to the Executive Directors (see the Remuneration Committee report on pages 65 to 74) and senior management under the
Group’s Restricted Share Scheme. The total loss on satisfying share options and Restricted Shares by the Employee Benefit Trust was £1,093,000
(2020: £989,000). 26,321 of the shares sold at £4.425 per share were in respect of satisfying the Group’s SIP.

82,618 (2020: 102,034) of the shares held by the Employee Benefit Trust at 30 April 2021 remain to be issued under the Restricted Share Scheme, on
which an estimated loss of £511,000 (2020: £691,000) will be recognised as they are issued.

As at 30 April 2021, an estimated 18,000 shares (2020: 18,000) held by the Employee Benefit Trust expect to be issued under the SIP on which no
estimated loss or gain (2020: loss of £43,000) would be recognised as they are issued.

The market valuation of the ordinary shares in Cohort plc held by the Employee Benefit Trust at 30 April 2021 was £1,109,016 (2020: £1,328,526).

The cost of operating the Employee Benefit Trust during the year ended 30 April 2021 was £24,349 (2020: £23,825) and this cost is included within
“Administrative expenses” in the Consolidated income statement.

22. Reserves and non-controlling interests
The Group (consolidated) and Company statements of changes in equity are disclosed as primary statements on pages 87 and 88. Below is a description
of the nature and purpose of the individual reserves:

X Share capital represents the nominal value of shares issued, including those issued to the Cohort Employee Benefit Trust (see note 19).

X Share premium includes the amounts over the nominal value in respect of share issues. In addition, costs in respect of share issues are debited to

this account.

X Own shares held by the Group represent shares in Cohort plc. All the shares are held by the Cohort Employee Benefit Trust (see note 21).

X Share option reserve represents the cumulative share-based payment charged to reserves less the transfer to retained earnings on vesting of options.

X The other reserve represented the final earn-out payable on the acquisition of the non-controlling interest (18.16%) of Chess. This reserve is expected

to be fully utilised by 30 April 2022.

X Retained earnings include the realised gains and losses made by the Group and the Company.

Cohort plc Annual Report and Accounts 2021

111

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
22. Reserves and non-controlling interests continued
The non-controlling interests are analysed as follows:

Group

At 1 May 2019

Profit/(loss)

Other comprehensive income

Change in the fair value of assets acquired with Chess

At 1 May 2020

Profit/(loss)

Other comprehensive income

Dividend from subsidiary with non-controlling interest

At 30 April 2021

23. Net cash from operating activities

Profit for the year

Adjustments for:

Income tax charge/(credit)

Depreciation of property, plant and equipment

Depreciation of right of use assets

Amortisation of other intangible assets and goodwill

Net finance expense

Derivative financial instruments and other non-trading exchange movements

Share-based payment

Decrease in provisions

Operating cash flows before movements in working capital

Decrease in inventories

Increase in receivables

Increase/(decrease) in payables

Cash generated by operations

Income taxes paid

Interest paid

Net cash in/(out) flow from operating activities

EID
(20.00%)
£’000

2,517

375

—

2,897

589

206

(754)

Chess
(18.16%)
£’000

3,762

(250)

—

(163)

3,349

(549)

—

Total
£’000

6,279

125

(163)

6,246

206

(754)

2,938

2,800

5,738

Group

Company

2021
£’000

5,503

1,554

1,957

1,510

10,103

751

410

406

(1,269)

2020
£’000

9,684

295

1,472

1,168

7,354

752

132

318

(511)

20,925

20,664

576

(13,138)

12,565

1,974

(4,597)

(5,059)

(7,682)

20,928

12,982

(3,944)

(768)

16,216

(606)

(779)

2021
£’000

5,820

2020
£’000

6,681

(161)

(220)

—

382

—

6,256

—

(14,882)

7,123

(7,759)

(1,503)

—

(481)

—

522

—

7,183

—

(505)

(879)

(1,384)

5,799

—

(534)

5,265

11,597

(1,984)

Interest paid includes the interest element of lease liabilities under IFRS 16 (see note 10a) of £237,000 (2020: £246,000).

112

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021

24. Leases
Prior to 1 May 2019 the Group recognised only finance leases and operating leases. Since 1 May 2019 the Group has recognised three types of lease
arrangements for reporting purposes.

Type

How determined

Reporting

1. Finance leases

Lease agreement is a finance lease.

Operating leases as
right of use assets

Lease agreement is an operating lease but does not meet the
criteria for type 3 below.

3. Operating leases

Operating leases where:

X length of lease is less than 12 months in duration, and/or

X the value of the lease is low (below £5,000) at inception.

Asset is reported in property, plant and equipment (note 10b)
and depreciated over term of lease. Liability is shown as part
of debt (see note 15).

Asset is reported as right of use asset (see note 10a) and
depreciated over term of lease and liability is shown as lease
liability (see note 10a).

No asset or liability is recognised and cost of lease is expensed
over the lease term as part of operating profit in the
income statement. The cost of these operating leases is
recognised in the Consolidated income statement in the year
ended 30 April 2021 was £370,000 (30 April 2020: £386,000).

25. Commitments
There was £58,000 of capital commitments at 30 April 2021 (2020: £Nil).

26. Retirement benefit obligations
The Group operates a variety of retirement benefit arrangements. These are all defined contribution schemes with the exception in Germany of ELAC
Sonar (ELAC) where a defined benefit scheme operates.

i. Defined contribution schemes
The Group makes contributions to defined contribution stakeholder pension schemes. The contributions for the year of £2,177,000 (2020: £2,209,000)
were charged to the Consolidated income statement. Contributions outstanding at 30 April 2021 were £308,988 (2020: £317,907).

ii. Defined benefit schemes
The Group operates a single defined benefit scheme in Germany on behalf of employees in ELAC. The scheme has been closed to new members since
1 January 2019. The scheme provides annuities to the entitled participants and is funded by an external support fund. At each balance sheet date, the
obligations are calculated by an external actuary.

Retirement benefit risks
Defined benefit schemes expose the Group to a number of risks, the most significant of which is detailed below:

Asset risk

Longevity risk

As the scheme assets are in the form of purchased annuities held with an independent insurance provider, this risk is low.

The plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
increase in the plan’s liabilities.

Charges to the income statement in respect of the Group’s defined benefit scheme are as follows:

Service cost

Net interest expense

Amounts recognised in the statement of comprehensive income are set out below:

Net gains from changes in assumptions

Gains from plan assets

Amounts included in the Group’s Consolidated balance sheet arising from the Group’s defined benefit scheme obligations are:

Present value of defined benefit obligations

Fair value of scheme’s assets

Net liability arising from defined benefit obligations

2021
£’000

132

162

2021
£’000

330

355

2021
£’000

(14,278)

6,296

(7,982)

2020
£’000

—

2020
£’000

—

2020
£’000

—

Cohort plc Annual Report and Accounts 2021

113

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
26. Retirement benefit obligations continued
Retirement benefit risks continued
Fair value of the scheme’s assets are as follows:

At 1 May 2020

Plan assets from acquisition of ELAC

Interest income

Amounts recognised in income in respect of defined benefit scheme

Return on plan assets excluding amounts included in interest income

Amounts recognised in the statement of comprehensive income

Contributions:

Employer

Payment from plan:

Benefits paid

Effect of movements in exchange rates

At 30 April 2021

The plan asset at acquisition and at 30 April 2021 comprised insurance annuities held with a third-party insurer.

The present value of defined benefit obligations comprised:

At 1 May 2020

Scheme liabilities from acquisition of ELAC

Current service cost

Interest expense

Amounts recognised in income in respect of defined benefit scheme

Remeasurement gains/(losses) from:

Change in financial assumptions

Experience adjustments

Amounts recognised in the statement of comprehensive income

Payments from plan:

Benefits paid

Benefit payments from employer

Effects of movements in exchange rates

At 30 April 2021

£’000

—

6,351

171

(88)

(193)

6,296

£’000

—

(14,871)

(132)

(58)

(190)

345

(15)

330

360

(14,278)

The net defined retirement obligation acquired on 2 December 2020 as part of the ELAC acquisition was £7,595,000 to which a fair value adjustment was
added of £925,000 to arrive at a fair value on acquisition of £8,520,000 comprising asset of £6,351,000 and obligation of £14,871,000 (see note 30).

Actuarial assumptions
The assumptions used for the purpose of the actuarial valuations were as follows:

Discount rate

Salary increase rate

Pensions-in-payment increase rate

Mortality assumption

At year end
30 April 2021

At acquisition
2 December 2020

1.00%

2.00%

1.00%

1.10%

2.00%

1.00%

Richttafeln 2018 G

Richttafeln 2018

The assumptions regarding future mortality are based on actuarial advice in accordance with published statistics, which are country specific.

The current and future beneficiaries of the scheme are as follows:

Active

Deferred

Retired

The weighted average duration of the benefit obligation as at 30 April 2021 is 21 years.

114

Cohort plc Annual Report and Accounts 2021

Number

Average age

147

50.1

54.7

74.5

Average annual
pension
€

5,760

1,680

1,771

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 202126. Retirement benefit obligations continued
Actuarial assumptions continued
Using the mortality tables adopted, the expected lifetime of average members currently at age 65 and average members at age 65 in 20 years’ time is
as follows:

31 December 2020

31 December 2040

Male
Years

85.3

88.1

Female
Years

88.8

91.0

The expected contributions for the year ending 30 April 2022 are £350,000 for scheme assets and a further £50,000 benefit payments not from the
plan assets.

The expected total benefit payments for the next ten years are £3.7m ranging from around £280,000 per annum to £420,000 per annum.

Sensitivity analysis
Several significant actuarial assumptions are made for the determination of the defined benefit obligation. These are set out below along with the impact
on the net liability of the scheme as at 30 April 2021 by the prescribed sensitivity change:

Mortality rate – increase in life expectancy

Discount rate – increase in rate

Salary increase assumption – increase in rate

Pension payment increase assumption – increase in rate

Increase/
(decrease) in
net liability
of scheme
£m

0.8

(2.4)

0.9

2.1

Change in
assumption

+1 year

+1%

The above sensitivities are based on a change of assumption while holding all other assumptions constant. In practice this is unlikely to occur and changes
in some of the assumptions may have some correlation. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions,
the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has
been applied as when calculating the pension liability recognised within the balance sheet.

27. Contingent liabilities
At 30 April 2021 the Group had in place bank guarantees of £13,693,000 (2020: £3,600,000) in respect of trading contracts. The Group is not aware of
any conditions which would realise these contingent liabilities. The significant increase in the Group’s contingent liabilities is due to the acquisition of ELAC
and its bank guarantees in respect of its contracts. The rest of the Group’s bank guarantees in respect of contracts were also higher due to increased
export orders.

28. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. However, the key
transactions with the Company are disclosed as follows:

2021

2020

Interest paid
to subsidiaries
£’000

Interested
received from
subsidiaries
£’000

—

105

—

Management
fees received
from
subsidiaries
£’000

2,756

2,728

Dividends
received from
subsidiaries
£’000

Group relief
received from
subsidiaries
£’000

6,900

7,200

236

220

Cohort plc Annual Report and Accounts 2021

115

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
28. Related party transactions continued
During the year ended 30 April 2021, the Directors of Cohort plc received dividends from the Company as follows:

S Carter

N Prest CBE

A Thomis

Sir Robert Walmsley (retired 31 December 2020)

S Walther

J Perrin

2021
£

2020
£

946,000

215,981

859,384

196,252

19,524

3,120

19,440

416

15,417

2,835

15,887

378

1,204,481

1,090,153

Further details of the remuneration of the Directors are set out in the Remuneration Committee report (pages 63 to 74).

The aggregate remuneration (excluding share option costs) of the key management (2021: 12; 2020: 12) of the Group was as follows:

Salary (including any allowances, benefits and employer’s NIC)

Employer’s pension contribution

2021
£

2020
£

2,204,898

1,970,197

47,723

75,370

2,252,621

2,045,567

The key management of the Group is the Board of Cohort plc plus each subsidiary’s Managing Director.

29. Acquisition of Chess Technologies Limited (Chess)
As announced on 12 December 2018, Cohort plc acquired 81.84% of Chess for an initial cash consideration of just over £20.0m. The Group has recognised
100% of Chess’s results and net assets from that date as it has effective control.

The acquisition accounting for Chess was reviewed prior to the first anniversary of its acquisition (12 December 2019) and further provisions were
recognised of £900,000 in respect of contract liabilities.

Under the sale and purchase agreement, up to a further £12.7m is payable to the shareholders of Chess as an earn-out based upon its trading performance
over the three years ended 30 April 2021. Based upon the actual performance to 30 April 2021 this earn-out is estimated at £438,000 as at 30 April 2021
(2020: £400,000).

The sale and purchase agreement for the acquisition of Chess includes a put and call option for the purchase of the remaining shares (18.16%) in Chess,
the non-controlling interest.

This option is exercisable by 31 October 2021 and is capped at £9.1m. The amount payable is dependent upon the performance of the Chess business
for the three years ended 30 April 2021.

The non-controlling interest was entitled to participate in any dividends payable by Chess in the period to 30 April 2021.

In accordance with IFRS 3, the Group has ascribed a value to the option to acquire the non-controlling interest of Chess. This value is £2,362,000
(2020: £3,600,000) and the option is shown as a current liability and, as the non-controlling interest has a right to dividends, in the other reserves as
“option for acquiring non-controlling interest in Chess”.

The Group has applied the present-access method to the acquisition of Chess and thus the non-controlling interest is deemed not to be part of the
acquisition transaction and the liability arising from the option is not included in the consideration transferred but is accounted for separately.

The values assigned to both the earn-out and option are estimates based upon Chess’s actual performance for the years ended 30 April 2019, 30 April 2020
and 30 April 2021. The values remain estimates as the final agreed figures will be subject to the closing net cash/(debt) and working capital at the option
exercise date. These estimates are considered to be significant unobservable inputs in accordance with IFRS 13. In accordance with IFRS 13 ‘Fair Value
Measurement’ this is a level 3 liability but has not been discounted as the effect is immaterial.

116

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 202130. Acquisition of Wärtsilä ELAC Nautik GmbH (ELAC Sonar)
As announced on 3 December 2020, the Group completed the acquisition of 100% of ELAC Sonar (ELAC). The consideration paid on completion was
€10.5m (£9.4m) and a further €5.662m (£4.8m) was paid on 1 April 2021 following agreement of the completion accounts. No further payments are due.

The acquisition accounting is as follows:

Recognised amounts of identifiable assets and liabilities assumed:

Investments

Property, plant and equipment

Right of use assets

Other intangible assets

Inventory

Trade and other receivables

Cash

Trade and other payables

Provisions

Retirement benefit obligations

Right of use liability

Corporation tax

Deferred tax

Goodwill

Total consideration (all satisfied by cash) transferred

Net cash outflow arising on acquisition:

Cash consideration paid

Cash acquired

Book value
£’000

Provisional
fair value
£’000

1,878

1,440

—

4,695

6,006

12,927

(7,019)

(276)

(7,595)

(1,476)

—

10,603

—

1,419

1,440

11,962

2,042

5,742

12,927

(7,467)

(2,648)

(8,520)

(1,476)

(448)

(2,307)

12,666

1,572

14,238

(12,927)

1,311

The fair value adjustments reflect adjustments arising out of Cohort’s due diligence work on the acquisition. These include additional provisions against
inventory, trade and other receivables and for other contractual and historical obligations, including dilapidations and product warranty.

The retirement benefit obligation has been independently valued (see note 26) and the provisional fair value reflects this valuation.

Cohort plc Annual Report and Accounts 2021

117

Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021
30. Acquisition of Wärtsilä ELAC Nautik GmbH (ELAC Sonar) continued
The most significant fair value adjustment is in respect of the other intangible assets and is analysed, including their estimated useful lives, as follows:

Contracts

Customer relationships

Other intangible assets

Book value
£’000

—

Provisional
fair value
£’000

6,683

5,279

11,962

Estimated life
Years

A deferred tax liability of £3.8m in respect of the other intangible assets balance above was established and is disclosed as part of the fair value deferred
tax liability. Deferred tax assets in respect of some of the adjustments made as part of the fair value exercise were also recognised of £1.5m in total.
These deferred tax assets are considered recoverable.

The other intangible assets acquired are based upon the following:

Contracts

Customer relationships

The estimated profit in the acquired order book of ELAC, discounted at an appropriate WACC over the expected life of the
order book, and after recognising a discount in respect of fixed asset and technology diminution. This other intangible asset
will be amortised over the estimated order book life at a rate to reflect the expected generation of profit from the order book.

The estimated profit in identified future orders and prospects, discounted at an appropriate WACC over the expected life of the
future order or prospect, and after recognising a discount in respect of fixed asset and technology diminution. The estimated
profit was also discounted by a likely win factor, 63% in this case. This other intangible asset will be amortised over the
estimated useful life at a rate to reflect the expected generation of profit from those future orders and prospects.

The goodwill of just under £1.6m arising from the acquisition represents customer contacts, supplier relationships and know-how to which no certain
value can be ascribed. None of the goodwill is expected to be deductible for tax purposes.

On acquiring ELAC from the seller, Wärtsilä Deutschland GmbH, it was agreed that a mechanism would be put in place to pay to Cohort Deutschland GmbH
(Cohort’s holding company of ELAC) up to €2.415m if a named prospect was delayed or not secured on or before 1 December 2022. This mechanism
provides relief to ELAC for costs in place in anticipation of this prospect.

The mechanism has been accounted for as a contingent asset as it will be recognised on a cash receivable basis as and when mechanism schedule dates
are passed, and the named prospect has not been secured.

If the prospect is secured on or before any of the agreed schedule dates, any payments receivable after this date will be foregone.

This income will be recognised on a receivable basis in the Group’s adjusted operating profit and disclosed within the ELAC business for segmental
reporting purposes.

For the year ended 30 April 2021, the Group has recognised just under £0.5m of income in respect of this mechanism which will be received on or before
13 December 2021.

The acquisition costs of £1.05m in respect of ELAC were charged as an exceptional item in the Consolidated income statement. £0.95m was charged in
the year ended 30 April 2020 and a further £0.10m in the year ended 30 April 2021, the acquisition taking longer to complete due to the prolonged
German Government approval process, in part due to COVID-19.

ELAC contributed £8.3m of revenue and just under £1.2m of adjusted operating profit for the period from 2 December 2020 to 30 April 2021.

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Strategic reportGovernanceFinancial statementsNotes to the financial statements continuedfor the year ended 30 April 2021Accounting policies

Basis of accounting
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards
in conformity with the requirements of the Companies Act 2006.

The Company financial statements presented on pages 85 to 128 are prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law), including FRS 101 ‘Reduced Disclosure Framework’.

On publishing the parent company financial statements here, together with the Group financial statements, the Company is taking advantage of the
exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form part of these approved
financial statements. The Company is a public company limited by shares.

The financial statements are prepared on the historical cost basis except for derivative financial instruments that are stated at their fair value.

Going concern
As highlighted in note 15 to the financial statements, the Company meets its day-to-day working capital requirements through a facility which is due for
renewal in November 2022. Both the current domestic economic conditions (including the COVID-19 pandemic) and continuing UK Government budget
pressures create uncertainty, particularly over the level of demand for the Group’s products. Specifically in respect of UK defence spending (UK MOD
represents 42% of the Group’s 2020/21 revenue), the four-year budget settlement does give the Group some improved visibility from this key customer.

Further information regarding the Company’s business activities, together with the factors likely to affect its future development, performance and
position, is set out in the Strategic report on pages 1 to 51 and included in the Risk management section on pages 37 to 42. The financial position of the
Company, its cash flows, its liquidity position and its borrowing facilities are also described in the Strategic report on pages 1 to 51.

In addition, the Strategic report includes the Company’s objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings made up to 30 April 2021.
Subsidiaries acquired during the year are consolidated from the date of acquisition, using the purchase method (see “Business combinations” below).

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the
Group. The Group’s subsidiaries have prepared their statutory financial statements in accordance with Adopted IFRS, as from 1 May 2019.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration
potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the
non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a
deficit balance.

Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains
arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Adoption of new and revised standards
The group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 May 2020:

X Definition of Material – amendments to IAS 1 and IAS 8

X Definition of a Business – amendments to IFRS 3

X Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 7

X Revised Conceptual Framework for Financial Reporting

X COVID-19 Related Rent Concessions – amendments to IFRS 16 and Interest Rate Benchmark Reform amendments to IFRS 7, IAS 39 and IFRS 9

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current
or future periods.

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Adoption of new and revised standards continued
Standards and interpretations issued as at 27 July 2021 not applied to these financial statements
Certain new accounting standards and interpretations have been published that are not mandatory for 30 April 2021 reporting periods and have not been
early adopted by the Group. These standards, outlined below, are not expected to have a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.

X Amendments to IFRS 3 ‘Business Combinations’; IAS 16 ‘Property, Plant and Equipment’; IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’;

and Annual Improvements 2018-2020 (all issued on 14 May 2020 and effective for years commencing on or after 1 January 2022)

X Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (issued on 27 August 2020 and effective for years

commencing on or after 1 January 2021)

Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement using the effective interest rate method
and are disclosed within accruals to the extent they are not settled in the period, unless the loan terms provide for the interest to be added to the
principal, in which case the interest is added to the carrying amount of the instrument to which it pertains.

Borrowing costs
All borrowing costs are recognised in the income statement in the period in which they are incurred unless, where appropriate, interest costs are
capitalised into assets, fixed and current.

Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured as the aggregate of the fair values,
at the completion date, of assets acquired, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the
acquired subsidiary. The costs of acquisition are charged to the Consolidated income statement as an exceptional item in accordance with IFRS 3 (Revised).

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the
Group’s interest in the net fair value of the identifiable intangible assets, assets, liabilities and contingent liabilities recognised. If, after reassessment,
which is a point in time greater than 12 months after the completion date, the Group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities exceeds or is below the cost of the business combination, the excess or shortfall is recognised immediately in the
income statement as an exceptional item.

Adjustments to the provisional value of assets and liabilities acquired in a business combination when the final values have become known within
12 months are adjusted for and reported as a movement in the current period.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not
remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are
recognised in profit or loss as an exceptional item.

The Group measures the non-controlling interests, which have both present ownership interests and are entitled to a proportionate share of net assets
of the acquired business in the event of liquidation, at its proportionate interest in the recognised amount of the identifiable net assets of the acquired
business at the acquisition date.

Where less than 100% of a subsidiary is acquired but the Group has effective control, that subsidiary is accounted for as if 100% were acquired with the
non-controlling interest recognised appropriately.

Acquisitions and disposals of non-controlling interests that do not result in a change of control are accounted for as transactions with owners in their
capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a
proportionate amount of the net assets of the subsidiary. Any difference between the price paid or received and the amount by which non-controlling
interests are adjusted is recognised directly in equity and attributed to the owners of the parent.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and on-demand deposits, and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value. Deposits are included within cash and cash equivalents where the
maturity from commencement of the deposit is three months or less.

Derivative financial instruments
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rates. The Group uses foreign exchange
forward contracts and interest rate swap contracts to hedge these exposures. The Group does not use derivative financial instruments for speculative purposes.

Changes in the fair value of derivative financial instruments are recognised in the income statement as they arise and are disclosed separately in deriving
the Group’s adjusted operating profit.

Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

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Exceptional items
The separate reporting of exceptional items helps provide a better indication of the Group’s underlying business performance, reported as the adjusted
operating profit. Events which may give rise to the classification of items as exceptional, if of a significantly material value, include gains or losses on the
disposal of a business or the restructuring of a business, transaction costs, litigation and similar settlements, asset impairments and onerous contracts.

Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes party to the contractual provisions of
the instrument.

Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates
(its functional currency), which is generally sterling for the Group. Cohort’s direct subsidiaries, Thunderwaves and Cohort Deutschland, and indirect
subsidiaries, EID and ELAC, all have the euro as their functional currency. For the purpose of the consolidated financial statements, the results and
financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the presentational
currency for the consolidated financial statements, with any exchange difference included in the Consolidated comprehensive statement of income.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date.

Exchange differences arising on the settlement of monetary items, and on the re-translation of monetary items, are included in the income statement
for the year.

In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts. The Group’s accounting policies in respect of
such derivative financial instruments are described above.

These forward foreign exchange contracts are revalued to fair value at each balance sheet date with any movement included in the Consolidated income
statement as part of the cost of sales and disclosed separately in deriving the Group’s adjusted operating profit.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable intangible
assets, assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at
cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment
biannually. Any impairment is recognised immediately in the income statement as an exceptional item and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s subsidiaries as appropriate. Subsidiaries (cash-generating units) to
which goodwill has been allocated are tested for impairment biannually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the subsidiary is less than the carrying amount of the subsidiary, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the subsidiary and then to the other assets of the subsidiary pro rata on the basis of the carrying amount of each
asset in the subsidiary. An impairment loss recognised for goodwill is not reversed in a subsequent period. The impairment of goodwill is a critical
judgement and estimate and is discussed in detail below.

On disposal of a subsidiary, or part of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.

Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment (if any).

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or subsidiary) is estimated to be less than its carrying amount, the carrying amount of the asset (subsidiary) is
reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount,
in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (subsidiary) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (subsidiary) in prior years. A reversal of an impairment loss is recognised as income immediately.

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Intangible assets
Intangible assets are recognised in respect of contracts, intellectual property rights and other measurable intangibles, including customer relations,
arising on business combinations. The value of these intangible assets is determined by the estimated value to the Group going forward. The intangible
assets are written off over the estimated useful life of those particular assets. As discussed on page 60, the valuation of intangible assets is an area of
critical judgement and estimate for the Directors.

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of finished goods and work in progress includes overheads appropriate to the
stage of manufacture. Net realisable value is based upon estimated selling price less the further cost expected to be incurred to completion and disposal.
Provision is made for obsolete and slow-moving items. Stock is accounted for on a first in, first out basis.

Joint ventures
The Group accounts for joint ventures where it has a participating interest using the equity method of accounting and discloses the net investment
in non-current assets.

Where the investment in a joint venture is negative, the negative investment, to the extent it is a liability of the Group, is offset against any trade
and other receivables held by the Group in respect of that joint venture.

The Group accounts for joint ventures in which it no longer has a participating interest by recognising any investment and assets or liabilities due to
or from the Group.

Leases
The Group applied IFRS 16 using the modified retrospective approach and therefore the comparative information (prior to 1 May 2019) was not restated
and continues to be reported under IAS 17.

At the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee
At commencement or on modification of a contract that contains a lease component, along with one or more other lease or non-lease components,
the Group accounts for each lease component separately from the non-lease components. The Group allocates the consideration in the contract to each
lease component on the basis of its relative standalone price and the aggregate standalone price of the non-lease components.

The Group recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives received.

The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right of use asset reflects that the Group will
exercise a purchase option. In that case the right of use asset will be depreciated over the useful life of the underlying asset, which is determined on the
same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

X fixed payments, including in-substance fixed payments;

X variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

X amounts expected to be payable under a residual value guarantee;

X the exercise price under a purchase option that the Group is reasonably certain to exercise;

X lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and

X penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising
from a change in an index or rate, there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the
Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset, to the extent
that the right of use asset is reduced to nil, with any further adjustment required from the remeasurement being recorded in profit or loss.

The Group has elected not to recognise right of use assets and lease liabilities for leases of low-value assets and of short-term (less than 12 months)
leases. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

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Pension contributions
Payments are made to the Company’s stakeholder pension schemes, all of which are defined contribution schemes with the exception of a defined benefit
scheme in Germany. In respect of defined contribution schemes, amounts are charged to the income statement as incurred.

In respect of the defined benefit scheme, the schemes’ assets and liabilities are valued annually by an external actuary. The service cost and net interest
movements are recognised in the Consolidated income statement. Movements in valuation from changes in assumptions, including discount rate and
mortality rate, are recognised in the Consolidated statement of other comprehensive income. The gross assets and obligations of the scheme, as
independently valued, are shown net as retirement benefit obligations in the Consolidated statement of financial position at each balance sheet date.

Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their fair
value at the date of acquisition, plus any subsequent cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful
lives, using the straight-line method, on the following bases:

Buildings

2%–4%

Fixtures, fittings and equipment

20%–50%

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the
relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of
the asset and is recognised in the income statement.

Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) which arises as a result of a past event and it is probable that the
Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at
the balance sheet date and are discounted to present value where the effect is material. In respect of specific types of provisions, the policy is as follows:

Warranty
Provisions for the expected cost of warranty obligations under local sale of goods legislation and specifically contracted warranty undertakings are
recognised at the date of sale of the relevant product or service. The provision is the Directors’ best estimate of the expenditure required to settle the
Group’s obligation.

Other contract related provisions including contract loss provisions
These include the following:

The Group undertakes a number of contracts where contractual and/or third-party obligations arise as a result of delivering the contract. This provision
includes amounts for losses on contracts which are recognised in full immediately when it is probable that total contract costs will exceed total contract
revenue. In some cases, after a product has been delivered and revenue has been recognised, the Group receives claims (including warranty issues) from
customers in respect of work done. Where the amount required to settle the claim is uncertain or the Group disputes the amount of the claim, provision
is made for the best estimate of the amount that will be required to settle the claim.

Contract loss provisions are reviewed on a regular basis to determine whether the provision is still adequate or excessive. Contract loss provisions and
subsequent adjustments to them are charged as cost of sales in the income statement.

Where such an obligation relates to a discontinued operation then the charge will be disclosed as an exceptional item.

Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from the Group’s own development activity is recognised only if all of the following conditions are met:

X an asset is created that can be identified (such as software, product and new processes) and is technically and commercially feasible;

X it is probable that the asset created will generate future economic benefits and the Group has available to itself sufficient resources to complete

the development and to subsequently sell and/or use the asset created; and

X the development cost of the asset can be measured reliably.

Internally generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally generated intangible asset can
be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Revenue and profit recognition
The Group applies IFRS 15 ‘Revenue from Contracts with Customers’.

Revenue represents income derived from contracts for the provision of goods and services, over time or at a point in time, by the Group to customers
in exchange for consideration in the ordinary course of the Group’s activities.

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Performance obligations
Upon approval by the parties to a contract, the contract is assessed to identify each promise to transfer either a distinct good or service or a series of
distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. Goods and services are distinct and
accounted for as separate performance obligations in the contract if the customer can benefit from them either on their own or together with other
resources that are readily available to the customer and they are separately identifiable in the contract.

The Group provides warranties to its customers to give them assurance that its products and services will function in line with agreed-upon specifications.
Warranties are not provided separately and, therefore, do not represent separate performance obligations.

Transaction price
At the start of the contract, the total transaction price is estimated as the amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods and services to the customer, excluding sales taxes. Variable consideration, such as price escalation, is included based
on the expected value or most likely amount only to the extent that it is highly probable that there will not be a reversal in the amount of cumulative
revenue recognised. The transaction price does not include estimates of consideration resulting from contract modifications, such as change orders, until
they have been approved by the parties to the contract. The total transaction price is allocated to the performance obligations identified in the contract
in proportion to their relative standalone selling prices. Given the bespoke nature of many of the Group’s products and services, which are designed and/
or manufactured under contract to the customer’s individual specifications, there are typically no observable stand alone selling prices. Instead,
standalone selling prices are typically estimated based on expected costs plus contract margin.

Whilst payment terms vary from contract to contract, on some of the Group’s contracts, an element of the transaction price is received in advance of
delivery. The Group therefore has contract liabilities disclosed as advance receipts (note 14). The Group’s contracts are not considered to include
significant financing components on the basis that there is no difference between the consideration and the cash selling price. UK Ministry of Defence
contracting rules prohibit the inclusion of financing in the sales price.

Revenue and profit recognition
Revenue is recognised as performance obligations are satisfied as control of the goods and services is transferred to the customer. For each performance
obligation within a contract, the Group determines whether it is satisfied over time or at a point in time. Performance obligations are satisfied over time
if one of the following criteria is satisfied:

X the customer simultaneously receives and consumes the benefits provided by the Group’s performance as it performs;

X the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

X the Group’s performance does not create an asset with an alternative use to the Group and it has an enforceable right to payment for performance

completed to date.

The Group has determined that most of its contracts satisfy the over time criteria, either because the customer simultaneously receives and consumes
the benefits provided by the Group’s performance as it performs (typically services or support contracts) or the Group’s performance does not create an
asset with an alternative use to the Group and it has an enforceable right to payment for performance completed to date (typically development or
production contracts).

For each performance obligation to be recognised over time, the Group recognises revenue using an input method, based on costs incurred in the period.
Revenue and attributable margin are calculated by reference to estimates of transaction price and total expected costs to complete the contract, after
making suitable allowances for technical and other risks. Revenue and associated margin are therefore recognised progressively as costs are incurred, and
as risks have been mitigated or retired. The Group has determined that this method appropriately depicts the Group’s performance in transferring control
of the goods and services to the customer.

If the over time criteria for revenue recognition are not met, revenue is recognised at the point in time that control is transferred to the customer, which is
usually when legal title passes to the customer and the business has the right to payment, for example on delivery.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately as an expense.

Internally, the Group categorises revenue recognition according to three types. One or more of each type can apply to a single customer contract.

Type

One

Point in time

Point in time or over time

Reason for type applied

Two

Over time service

Three

Over time

Revenue is recognised when the product or service is delivered to the customer per the contract and the
customer is obliged to pay at this point. This usually applies to all the Group’s standard products, support,
spares and repairs.

Revenue is recognised for a service provision over time. Typically, these services are long term (greater than
one year) but the contract with the customer fixes the annual revenue where the costs incurred per annum
are variable. Revenue is typically recognised on a monthly basis based on either timesheets or a fixed
receivable from the customer.

Revenue is recognised over the contract based on the input costs to deliver the contract to that stage,
taking account of appropriate risk contingencies in the remaining costs to complete the contract. Revenue
is recognised (typically monthly) on input costs including internal labour (timesheets) and bought in goods
and services (invoices or delivery notes).

The Group’s businesses determine the revenue category/categories at the contract outset and apply this recognition method consistently until the
contract is completed.

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Software licences
The Group sells software licences either separately or together with other goods and services, including computer hardware and implementation, hosting
and support. Revenue recognition in respect of software licences sold as part of a bundle of goods and services is considered separately when the licence
is determined to be a separate performance obligation. Software licences either represent a right to access the Group’s intellectual property as it exists
throughout the licence period or a right to use the Group’s intellectual property as it exists at the point in time at which the licence is granted. Revenue in
respect of right to access licences is recognised over the licence term or, in relation to perpetual licences, over the related customer relationship and revenue
in respect of right to use licences is recognised upfront on delivery to the customer.

A software licence is considered to be a right to access the Group’s intellectual property as it exists throughout the licence period if all of the following
criteria are satisfied:

X the contract requires, or the customer reasonably expects, that the Group will undertake activities that significantly affect the intellectual property;

X the licence directly exposes the customer to the effects of those activities; and

X those activities do not result in the transfer of a good or service to the customer.

Contract modifications
The Group’s contracts are often amended for changes in customers’ requirements and specifications. A contract modification exists when the parties to
the contract approve a modification that either changes existing or creates new enforceable rights and obligations. The effect of a contract modification
on the transaction price and the Group’s measure of progress towards the satisfaction of the performance obligation to which it relates is recognised in
one of the following ways:

1. prospectively, as an additional, separate contract;

2. prospectively, as a termination of the existing contract and creation of a new contract; or

3. as part of the original contract using a cumulative catch-up.

The majority of the Group’s contract modifications are treated under either 1 (for example, the requirement for additional distinct goods or services) or 3
(for example, a change in the specification of the distinct goods or services for a partially completed contract), although the facts and circumstances of any
contract modification are considered individually as the types of modifications will vary contract by contract and may result in different accounting outcomes.

Costs to obtain a contract
The Group expenses pre-contract bidding costs which are incurred regardless of whether a contract is awarded. The Group does not typically incur costs
to obtain contracts that it would not have incurred had the contracts not been awarded, such as sales commission.

Costs to fulfil a contract
Contract fulfilment costs in respect of over time contracts are expensed as incurred. Contract fulfilment costs in respect of point in time contracts are
accounted for under IAS 2 ‘Inventories’.

Sales of goods are recognised when goods are delivered, and title has passed.

Share-based payments
The Group has applied the requirements of IFRS 2 ‘Share-based Payments’. In accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested as of 1 May 2006.

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding
the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of equity-settled share-based
payments is expensed on a straight-line basis over the vesting period based on the Group’s estimate of shares that will eventually vest and adjusted for
the non-market-based vesting conditions.

Fair value is measured by use of the Quoted Companies Alliance binomial model. The expected life used in the models has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The cost of share-based payments is charged to the income statement with a corresponding credit applied to the share option reserve. The appropriate
element of the reserve is transferred to the retained profit of the Group when the share options to which the reserve relates vest.

Taxation
The tax expense represents the sum of the tax currently payable and the deferred tax expense or credit.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

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Strategic reportGovernanceFinancial statements
Accounting policies continued

Taxation continued
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in joint
ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised. Deferred tax is
charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Trade and other receivables
Trade receivables are initially measured at fair value.

With the exception of derivative financial instruments (see above) all other trade and other receivables are reported at amortised cost.

The Group recognises provisions for doubtful debts on a credit loss basis taking into account the future anticipated credit losses based upon the
creditworthiness of the end customer. The allowance recognised is measured as the difference between the asset’s carrying amount and the estimated
recoverable amount.

Where revenue recognised over time on a contract exceeds the value that has been invoiced, the excess is recognised as a contract asset and is included
within trade and other receivables.

Accrued income is recognised on revenue recognised at a point in time where a delivery or service has been made and revenue can be recognised, but no
invoice has been raised.

Trade and other payables
Trade and other payables are initially measured at fair value.

With the exception of derivative financial instruments (see above) all other trade and other payables are reported at amortised cost.

Subsequent measurement is based on changes in the fair value and any changes recognised in the Consolidated income statement. To the extent that
receipts from customers exceed relevant revenue, whether invoiced or a contract asset, then this is included as an advance receipt within trade and
other payables.

Deferred income will arise on point in time contracts where customers have been invoiced, usually as a result of supplier costs incurred by the Group
but where the service/delivery has been made.

Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described above, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised.

The Directors have identified the following critical judgements and estimates in applying the Group’s accounting policies that have the most significant
impact on the amounts recognised in the financial statements.

1. Critical accounting judgements
Revenue recognition
Judgement is applied in whether to recognise revenue over time or at a point in time with respect to contracts and other sales agreements in place.
This will make reference to the contractual arrangements on each contract and which revenue recognition method is most appropriate for that contract
or sales agreement.

Recoverability of trade and other receivables
Judgement is applied in determining whether any of the Group’s trade and other receivables require a bad debt provision to be recognised. This takes
account of the nature of our customers, many of which are ultimately governments, our historical experience and the commercial terms we have in place
to protect the recoverability of our receivables. Within the receivables balance and contract assets there is a balance of £7.7m relating to a single customer
which, whilst past due, has not been provided for. Management has assessed the recoverability of this balance and concluded that, as the ultimate
customer is a sovereign government, the risk of impairment is low.

Fair values on acquisition
Judgement is applied in recognising the fair value of assets and liabilities on acquisition. This judgement will make use of the experience of the Directors,
knowledge of the business acquired and the due diligence exercise during the acquisition process. Provisional fair values are recognised on the initial
reporting of any acquisition, allowing the Directors to reassess any judgements or estimates made in the first 12 months of ownership.

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Strategic reportGovernanceFinancial statementsAccounting policies continued

1. Critical accounting judgements continued
Acquisition of other intangible assets
Intangible assets other than goodwill that are obtained through acquisition are capitalised on the balance sheet. These other intangible assets are valued
on acquisition using a discounted cash flow methodology which depends on future assumptions about the revenue from contracts, prices and costs and
on the Group’s cost of capital. At the time of an acquisition, the Directors use the business’s projected gross margin from contracts acquired or future
prospects. These gross margin figures will depend upon each contract’s cost to complete estimate at that point in time and the Directors will apply
judgement in whether those costs to complete are appropriate or not. The Directors will also take into account the expected timing of the recognition
of revenue (and gross margin) on each contract or future prospect.

Provisions
The Group makes estimates of provisions for existing commitments arising from past events. In estimating these provisions, the Group makes judgements
as to the quantity and likelihood of the liability arising. Certain provisions require more judgement than others. In particular, warranty provisions and
contract loss provisions have to take account of future outcomes arising from past deliveries of products and services. In estimating these provisions,
the Group makes use of management experience, precedents and specific contract and customer issues.

Research and development
The recognition of research and development expenditure as an internally generated intangible asset requires the Directors to make judgements,
especially with respect to whether the asset created will generate future economic benefit. This is a key judgement in this respect as the time between
development and any income can be considerable (over five years) and often the income-generating asset may have considerably evolved from the asset
originally created. As a result of this, the Group almost always expenses research and development in the period it is incurred.

Taxation
In accordance with IFRS IC 23 ‘Uncertainty over Income Tax Treatments’ the Group currently takes a cautious approach to recognition of R&D tax credits
for periods that are still open. As at 30 April 2021, a provision of £775,000 (2020: £440,000) was recognised against R&D tax credit claims made in the
final and early build computations for 2019/20 and 2020/21. The Group considers this level of provision as not material.

2. Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Revenue and profit recognition
The judgement applied in recognising revenue on a contract over time as performance obligations are completed is in respect of the input costs incurred
and the attributable margin. The latter is particularly a judgement in respect of estimating the cost to complete on a particular contract and the remaining
risk and associated contingency. The Directors make use of monthly project (contract) control processes in each business within the Group to monitor
and review cost to complete estimates and the utilisation or release of risk contingencies with each contract. This cost contingency takes account of the
stage that the contract has reached and any judgement and uncertainty remaining to deliver the remainder of the contract. It is usual for these cost
contingencies to reduce as the contract progresses and risk and uncertainty reduces.

Incremental borrowing rate
In respect of the application of IFRS 16 ‘Leases’, the incremental borrowing rate of the Group in respect of leases reported as right of use assets and lease
liabilities has been estimated at 3.0% (2020: 3.0%). This is based upon the Group’s current secured borrowing rate from its banks and peer and market
rates for such leasing arrangements.

Other
Where a reasonably possible change in a key assumption could give rise to a change in the amount reported, this is disclosed within the relevant note to
the accounts.

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Strategic reportGovernanceFinancial statements
Five-year record

Headline results (£’000)

Revenue

Adjusted operating profit

Operating profit

Adjusted earnings per share (pence)

Basic

Diluted

Statutory earnings per share (pence)

Basic

Diluted

Dividend per share (pence)

Net operating cash flow (£’000)

Net funds/(debt) (£’000)

Order intake (£m)

Order book (£m)

2021

2020

2019

2018

2017

143,308

131,059

121,182

110,547

18,609

7,808

18,223

10,731

16,164

5,944

15,225

10,262

112,994

14,399

873

33.63

33.29

13.38

13.24

11.10

16,216

2,464

180.3
242.4 1

37.10

36.73

23.47

23.24

10.10

11,597

(4,707)

124.4

183.3

33.60

33.41

13.37

13.29

9.10

8,635

(6,424)

189.9
190.9 2

29.08

28.79

18.95

18.76

8.20

13,220

11,338

76.6

103.8

27.71

27.34

8.87

8.75

7.10

659

8,472

108.6
136.2 3

1. The order book at 30 April 2021 is after including the acquired order book of ELAC Sonar (£23.2m) on 2 December 2020.

2. The order book at 30 April 2019 is after including the acquired order book of Chess (£20.1m) on 12 December 2018.

3. The order book at 30 April 2017 is after including the acquired order book of EID (£23.1m) on 28 June 2016.

Glossary of terms

Anti-Submarine Warfare

SIGINT

Signals intelligence

SIP

SSAFA

STEM

s-UAV

TLS

UAV

UGS

UGV

Share Incentive Plan

Soldiers, Sailors, Airmen and Families Association

Science, Technology, Engineering & Maths

Small Unmanned Air Vehicle

Torpedo Launcher System

Unmanned Air Vehicle

Unmanned Ground Systems

Unmanned Ground Vehicle

Please visit our subsidiary websites for more information on the products
and services mentioned in this report:

Chess – chess-dynamics.com

EID – eid.pt

ELAC – elac-sonar.de

MASS – mass.co.uk

MCL – marlboroughcomms.com

SEA – sea.co.uk

ASW

C4IS

Command, control, communications, computers and
information systems

C4ISTAR Command, control, communications, computers, intelligence,
surveillance, target acquisition and reconnaissance

C-UAS

C-UAV

DoD

DSEI

ECS

Counter-unmanned aerial systems

Counter-unmanned Air Vehicle

United States Department of Defence

Defence and Security Equipment International event

External communications system

Electronic warfare

EWOS

Electronic warfare operational support

GHG

ISO

ISTAR

MOD

NATO

RAF

SAYE

SECR

Greenhouse gas

Intermodal shipping container

Intelligence, surveillance, target acquisition and reconnaissance

UK Ministry of Defence

North Atlantic Treaty Organisation

Royal Air Force

Save as You Earn scheme

Streamlined Energy and Carbon Reporting

128

Cohort plc Annual Report and Accounts 2021

Strategic reportGovernanceFinancial statements

Shareholder information, financial calendar and advisers

Advisers
Nominated adviser and broker
Investec
30 Gresham Street
London EC2V 7QP

Auditor
RSM UK AUDIT LLP
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Buckinghamshire MK9 1BP

Tax advisers
Deloitte LLP
Abbots House
Abbey Street
Reading RG1 3BD

Legal advisers
Shoosmiths LLP
Apex Plaza
Forbury Road
Reading RG1 1SH

Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL

Public and investor relations
MHP Communications
4th Floor, 60 Great Portland Street
London W1W 7RT

Bankers
Lloyds Bank
3rd Floor
10 Gresham Street
London EC2V 7AE

NatWest Bank
Abbey Gardens
4 Abbey Street
Reading RG1 3BA

Shareholders’ enquiries
If you have an enquiry about the Company’s
business, or about something affecting you
as a shareholder (other than queries which
are dealt with by the registrars), you should
contact the Company Secretary by letter to
the Company’s registered office or by email
to info@cohortplc.com.

Share register
Link Group maintains the register of members
of the Company.

If you have any questions about your personal
holding of the Company’s shares, please contact:

Financial calendar
Annual General Meeting
20 September 2021

Final dividend payable
27 September 2021

Expected announcements
of results for the year ending
30 April 2022
Preliminary half year
announcement
December 2021

Preliminary full year
announcement
July 2022

Registered office
Cohort plc
One Waterside Drive
Arlington Business Park
Theale
Reading RG7 4SW

Registered company number
of Cohort plc
05684823

Cohort plc is a company registered
in England and Wales.

Link Group
Shareholder Solutions
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL

Telephone: 0871 664 0300 (calls are charged at
12 pence per minute plus your phone provider’s
access charge). (From outside the UK: +44 371
664 0300; calls will be charged at the applicable
international rate.) Lines are open 9.00am to
5.30pm, Monday to Friday, excluding public
holidays in England and Wales.

Email: shareholderenquiries@linkgroup.co.uk

If you change your name or address or if
details on the envelope enclosed with this
report, including your postcode, are incorrect
or incomplete, please notify the registrars
in writing.

Daily share price listings
The Financial Times – AIM, Aerospace
and Defence

The Times – Engineering

The Daily Telegraph – AIM section

London Evening Standard – AIM section

Cohort plc’s commitment to environmental issues is reflected in this
Annual Report, which has been printed on Symbol Freelife Satin and
UPM Fine Offset, an FSC® certified material. This document was printed
by Pureprint Group using its environmental print technology, with 99%
of dry waste diverted from landfill, minimising the impact of printing
on the environment. The printer is a CarbonNeutral® company.

Both the printer and the paper mill are registered to ISO 14001.

One Waterside Drive
Arlington Business Park
Theale
Reading RG7 4SW

cohortplc.com