Science Group eyes acquisitions after posting record interims
UK shares in Cambridge-based Science Group plc soared 44p – 10.5 per cent – to 464p at the start of the week after it delivered a record set of interim results to June 30.
The company posted unprecedented revenue growth of 10 per cent to £40.7 million while adjusted operating profit increased 47 per cent to £7.25m.
The balance sheet remains strong with gross cash of £29m and net funds of £13m (2020: £22m and £4.9m) providing the opportunity for further corporate activity.
Astute future acquisitions cannot be ruled out, based on the strength of the war chest and management’s shrewd judgement regarding long-term scale-up.
Science Group is an international, science-led services and product development organisation comprising three operating divisions: R & D Consultancy; Regulatory & Compliance; and Frontier Smart Technologies. It returned the record results despite significant currency exchange headwinds.
Due to the group’s strong cash generation, self-funding of acquisitions and share buy-back programme, this strong performance has been achieved without shareholder dilution.
The R&D Consultancy Division has become a notable asset: It was established through the integration of the group’s Advisory, Applied Science and Product Development business activities.
The division combines leading science and engineering capabilities with expertise in key vertical sectors, namely: Medical; Consumer; Food & Beverage; and Industrial, Chemical & Energy.
In the first half of 2021, the Medical Sector continued to be particularly strong, with the other sectors more affected by the pandemic, reflecting their respective market sector environments. Most sectors are now seeing the initial signs of global economic recovery, the company reports.
For the six months ended 30 June 2021, the R & D Consultancy Division generated services revenue of £15.2m – a good performance against a challenging comparator since the first half of 2020 included the one-off UK ventilator initiative.
The board says it continues to explore opportunities to increase the scale of the group. In recent months, such opportunities have included add-on acquisitions into each of the operating divisions and larger acquisitions which would extend the group’s capabilities.
The effectiveness of the group’s acquisition strategy and its disciplined operating model, funded by strong cash generation, is clearly demonstrated by the substantial increase in adjusted operating profit and earnings per share over the past decade – and particularly apparent in the past two years.
The results, which had already excited shareholders, added the supercharged hint: “With a strong balance sheet including significant cash resources, the board continues to explore both add-on acquisitions and larger opportunities to increase the scale of the group.”