Science Group shares take off on back of massive profit gain
Revenue of £57.2m compared to £53.7m last time and the group has cash of £82m and net funds of £70.3m (H1 2024: £38.8m and £26.4m).
Science Group plc is an international Professional Services and Systems organisation delivering innovation through the application of science, technology and engineering.
The capital generated from the operating cash flow is invested in corporate opportunities where the resources and capabilities of the group could be deployed to produce attractive returns for shareholders.
In the first half Science Group reported another record Adjusted Operating Profit despite the volatile political/economic environment, benefitting from the resilience of the group's operating model. In parallel, consistent with the corporate strategy, the group made an investment in Ricardo plc which produced an exceptional profit and cash inflow.
Ricardo, once pursued by the group as a potential investment target, was eventually sold elsewhere but Science Group had shrewdly built up its share so benefited hugely from the acquisition elsewhere.
Excluding investment activity, a strong performance in the Systems businesses offset the weaker market conditions within Professional Services. As a result, Adjusted Operating Profit increased to £11.3m (H1 2024: £11m) on revenue of £57.2m (H1 2024: £53.7m.
As a result of the strong operating cash flow and the investment gain, group cash at 30 June 2025 was £82m (£38.8 m) with net funds of £70.3m (£26.4m), prior to the recent shareholder dividend payment (£3.6m) and the tax payable (£5.1m) on the investment. The group's recently renewed and extended revolving credit facility of £3m remains undrawn.
Group company Frontier Smart Technologies is worth a mention. It is a leading developer and supplier of radio and audio semiconductors and modules, with a significant share of its core market. The dedicated product development team is based in Cambridge with the sales, support and operations functions in UK and China. With minimal synergies to Science Group's other businesses, the long-term strategy for Frontier remains under review.
Frontier has performed ahead of expectations in the first half of 2025 with revenue increasing by 2 per cent to £7.1m for the six months ended June 30 (H1 2024: £5.9 million).
Operational simplification in 2024 has translated into an Adjusted Operating Profit of £0.9m (H1 2024: £0.1m) and, since all R & D costs are expensed with no capitalisation, there is a high correlation between Adjusted Operating Profit and cash conversion.
The outlook for the second half of 2025 is anticipated to be broadly in line with the first six months, with the new Auria product offering incremental growth in 2026 and beyond.
