Science Group stock soars after profit and revenue boost
Shares in Cambridge based Science Group rose more than 12 per cent on early trading – up 35p to 325p – as the company revealed substantial hikes in revenue and profits for the year to December 31.
The trading update said group revenue for the year was now anticipated to be in the order of £73 million – up from £57.2m in 2019.
And although the board took the opportunity during the second half of the year to increase investment in infrastructure and personnel, early indications are that – subject to audit – adjusted operating profit for the year will exceed the previously upgraded expectations of £10m (2019: £6.7 m).
There is a far from veiled hint that future expansion through acquisition could be on the cards.
At year-end Science Group had cash (excluding client funds) of £27.1m (2019: £13.9m) and net funds of £10.6m (2019: net debt of £2.3m).
While the dividend payment was reduced in 2020, in aggregate £2.4m was returned to shareholders through a combination of share buy-backs and dividends compared to an aggregate of £2m the previous year.
The group's cash now exceeds the level prior to the Frontier acquisition, enabling the board to explore further strategic opportunities, should they arise.
Over the past decade, Science Group's self-funded model has enabled the group to grow revenue more than three-fold and adjusted operating profit four-fold, without shareholder dilution.
Since the acquisition in 2019, Science Group says the restructuring and turnaround of Frontier has been very successful, resulting in an excellent performance in 2020.
Frontier is now a strongly profitable technology business with a market leading position. Confirmed orders at the start of 2021 are very healthy and shipments in the first part of the year may be supply constrained.