REG - Science Group PLC - Audited Results for Year Ended 31 December 2024
24/03/2025 07:00
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RNS Number : 7658B Science Group PLC 24 March 2025
24 March 2025
SCIENCE GROUP PLC
AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Science Group plc (the 'Company') together with its subsidiaries ('Science
Group' or the 'Group') reports its audited results for the year ended 31
December 2024.
· Solid financial performance:
o Record adjusted* operating profit of £21.5 million (2023: £20.5 million)
o Record adjusted* basic earnings per share of 36.2 pence (2023: 33.3 pence)
o Revenue marginally lower at £110.7 million (2023: £113.3 million)
o Record profit before tax of £14.7 million (2023: £7.6 million)
o £21.8 million cash generated from operations
o Year-end cash of £38.6 million with net funds of £26.8 million (2023:
£30.9 million and £18.0 million, respectively) after £5.0 million (2023:
£3.9 million) share buy-back
· Significant corporate activity post year-end:
o Investment in Ricardo plc in February/March 2025
o Banking facilities (term loan and revolving credit facility) renewed in
March 2025
o 2025 share buy-back programme being increased to over £6.0 million (2024:
£5.0 million) and dividend maintained at 8.0 pence per share reflecting
capital allocation prioritisation
Science Group plc
Martyn Ratcliffe, Executive Chair Tel: +44 (0) 1223 875 200
Jon Brett, Finance Director www.sciencegroup.com
(https://protect.checkpoint.com/v2/r06/___http:/www.sciencegroup.com___.ZXV3MjpuZXh0MTU6YzpvOjU0ZGI5YzMxZTIyYWRjYjNiNDllZDg0YzAwYjdlYTg0Ojc6ODkyNTpiMmM0ZGYxMGZmNjg5OGUzNTZjZDliYzcxZTZjOWMxY2YxNDJiNjliNzg1Y2E2ZjdiNWUyNWIxMTE3NTdkMjgzOnA6VDpU)
Canaccord Genuity Limited (Nominated Adviser and Joint Broker)
Simon Bridges, Andrew Potts Tel: +44 (0) 20 7523 8000
Panmure Liberum Limited (Joint Broker) Tel: +44 (0) 20 3100 2000
Max Jones, John More
*Alternative performance measures are provided in order to reflect the
underlying financial performance of the Group. Refer to Note 1 for detail and
explanation of the measures used.
Statement of Executive Chair
Science Group plc is an international science & technology consultancy and
systems organisation. In 2024, Science Group again demonstrated the resilience
of its operating model and, in an unpredictable economic and political
environment, the Group has delivered another year of record profitability.
In early 2025, the Group's robust balance sheet, accumulated cash resources
and strong operating cash flow enabled Science Group to make an investment in
Ricardo plc ("Ricardo"), a UK-based, science and technology consultancy and
engineering business. Science Group is now the second largest shareholder in
Ricardo.
Financial Summary
For the year ended 31 December 2024, Science Group reported adjusted operating
profit of £21.5 million (2023: £20.5 million) and an adjusted basic earnings
per share increase of 9% to 36.2 pence (2023: 33.3 pence). Revenue was
marginally down at £110.7 million (2023: £113.3 million) reflecting (i)
market conditions; (ii) a strong comparator in some consultancy areas; and
(iii) the managed transition away from some legacy, low margin activities in
the defence sector. The Group's reported statutory operating profit was £14.9
million for the year (2023: £8.1 million) and profit before tax was £14.7
million (2023: £7.6 million, which was impacted by one-off, non-cash
adjustments associated with the TP Group acquisition). Cash generated from
operations was £21.8 million in the year, reflecting the Group's consistent
focus on cash conversion.
Science Group retains a strong balance sheet. Despite returning £8.6 million
to shareholders through share buy-backs (£5.0 million, 2023: £3.9 million)
and an increased dividend payment outflow of £3.7 million (2023: £2.3
million), at 31 December 2024 Group cash was £38.6 million (2023: £30.9
million) and net funds were £26.8 million (2023: £18.0 million).
At 19 March 2025, adjusting for the cost of the Ricardo share purchases
(including brokerage fees), Science Group retained gross cash of approximately
£25.7 million and net funds of approximately £13.8 million. At the same
date, the market value of the Ricardo investment was £25.6 million.
Therefore, not only has the Ricardo shareholding produced a paper profit (in
March 2025) since investment, but Science Group retains significant cash
resources, enhanced by a new unused debt facility.
Consultancy Services
The Consultancy Division is an international services business providing
advisory, product development, regulatory and project management services.
The Division is characterised by deep technical and scientific expertise
combined with specialist industry-sector knowledge.
The collaboration between the different practices that make up the Division
has progressively developed such that the Board is now unifying the operations
under the Sagentia brand. The finance function across the Division has been
fully integrated and is migrating to a consistent Finance IT platform,
anticipated to be completed in summer 2025, enabling the business to maintain
its high productivity and efficiency of operations.
Reflecting the more challenging consultancy market in 2024, a strong prior
year comparator in the Medical sector and management action to reduce some
legacy, low margin activities in the TP Group Defence services business, for
the year ended 31 December 2024, the Consultancy Division generated revenue of
£72.2 million (2023: £81.3 million), producing an adjusted operating profit
of £17.9 million (2023: £20.4 million). The Division margin has been
maintained at 24.9%, broadly the same as in 2023. The outlook for the year
ahead reflects the ongoing refocusing to higher value-add activities in the
Defence sector being broadly offset by growth in other sectors.
Systems Businesses
The Group has two systems businesses, both of which have leading positions in
their specialist markets. These businesses operate independently but are
supported by the Group's corporate and shared services infrastructure and
leverage the Consultancy Division's science, technology and engineering
capabilities. In aggregate, for the year ended 31 December 2024, the Systems
businesses reported significantly increased revenue of £37.8 million (2023:
£31.2 million) and an adjusted operating profit of £5.8 million (2023: £2.2
million).
CMS2 (Critical Maritime Systems & Support) designs, develops, manufactures
and supports atmosphere management systems for submarines. The business
services an international client base, but the UK Defence market accounts for
around 70% of the revenue.
Management action in the last two years has transformed the business, with
revenue growing to £25.9 million, including around £5.6 million of
low-margin pass-through materials, (2023: £21.3 million, 11 months, including
£3.4 million of low margin revenue). Adjusted operating profit increased to
£5.7 million (2023: £3.6 million, 11 months). Revenue and profit in 2024
benefitted from prior years chargeable rate reconciliation, a standard
retrospective process in the UK Defence sector. The Board anticipates that the
business will continue to progress in 2025 and continues to invest in next
generation systems and technologies.
Frontier is a market leading supplier of DAB/DAB+/Smart Radio chips and
modules. Whilst the consumer electronics market has started to recover from
the post-pandemic trough, it remains subdued in the weak UK and European
economic environment. Revenue increased to £12.0 million (2023: £10.0
million) and the business returned to break-even, despite significant
investment in new product development activities, all of which was expensed in
the year with no capitalisation of R&D. Further business simplification
and cost reduction was undertaken with the transitioning of the internet radio
service infrastructure to a third party partner. The Board anticipates the
Frontier recovery to continue in 2025.
Corporate
The corporate function is responsible for the strategic development and
governance of the Group, ensuring alignment of business operations with
Science Group shareholders. The underlying costs of the corporate function
were £2.9 million (2023: £2.6 million) due to increased corporate activity
in the year.
During 2024, the Company repurchased 1,080,507 shares at a total cost of £5.0
million (2023: £3.9 million), equivalent to an average price of 459 pence per
share. At 31 December 2024, shares in issue (excluding treasury shares held of
1.4 million) were 44.7 million (2023: 45.5 million excluding treasury shares
held of 0.7 million). The Board anticipates continuing the buy-back programme
in 2025, with an increased capital allocation of over £6.0 million and is
recommending maintaining the dividend at 8.0 pence per share (2023: 8.0 pence
per share), reflecting capital allocation preference in shareholder feedback.
Subject to shareholder approval at the Annual General Meeting ('AGM'), the
dividend will be payable on 4 July 2025 to shareholders on the register at the
close of business on 23 May 2025.
Science Group owns two UK freehold properties, Harston Mill, near Cambridge,
and Great Burgh, near Epsom, the primary function of which is to host the
Group's operating businesses. The Group charges market rents to the operating
businesses and lets out part of the Harston Mill site to third parties. For
the year ended 31 December 2024, the rental and associated services income
derived from this activity was £3.9 million (2023: £4.2 million), with £0.6
million (2023: £0.8m) generated from third party tenants. Intra-group rental
charges are eliminated on Group consolidation. The last independent valuation
of the freehold properties (December 2023) indicated an aggregate value in the
range of £16.9 million to £31.6 million, although for consistency the
properties are held on the balance sheet on a cost basis of £20.8 million
(2023: £21.0 million).
The Group's Term Loan and Revolving Credit Facility ("RCF") were scheduled to
expire in 2026. In order to support the Group's corporate strategy, the Board
undertook an early process to refinance these facilities and in March 2025
confirmed:
· Two new Term Loans with a combined value of £12.0 million for a 10
year period, secured solely on the Group's freehold properties at the same
margin as the previous (2016) Loan, and
· A new RCF on a 5 year term of £30.0 million (with an additional
£10.0 million accordion option, subject to approval) at a significantly lower
margin of 1.95% above SONIA.
Interest rate swaps will fully hedge the two Term Loans. In connection with
repaying the 2016 Loan early, the Group will realise a one-off benefit, with
corresponding cash inflow, associated with the interest rate hedging on that
loan of approximately £0.6 million.
Investment in Ricardo plc
Ricardo is a UK-based science and technology consultancy and engineering
business with similar skills to Science Group, operating in complementary
markets. Science Group has been monitoring Ricardo for some time with more
intensive analysis undertaken in the second half of 2024 and early 2025.
The Ricardo profit warning at the end of January 2025 was anticipated and in
mid-February Science Group commenced acquiring shares in Ricardo. At 19 March
2025, Science Group is the second largest shareholder in Ricardo with a
holding of 10.1 million shares, equivalent to a 16.2% stake. This investment
has been acquired at an average cost (including brokerage fees) of 231 pence
per share, around 15 year low share price levels. On 19 March 2025, the
Ricardo share price closed at 254 pence per share.
Science Group has had dialogue with the Ricardo Board in relation to managing
the investment. The Ricardo poor financial performance, with weak cash
conversion and a stretched balance sheet, has led to a significant degradation
of shareholder value in this once great British company. The contrast to
Science Group and its record earnings per share, for similar consultancy and
systems businesses, is stark. A catalyst for change is required to restore
shareholder value in Ricardo and to address the ineffective governance.
Science Group acquired its material stake in Ricardo in a timely and effective
manner. As a result, from a purely financial perspective, down-side risk has
been mitigated and a paper profit (approximately £2.3 million) achieved at 19
March 2025. However, as the second largest shareholder in Ricardo, a variety
of options to enhance and/or realise value from the investment, over a short,
medium or long time horizon, are open to Science Group and all options will be
evaluated.
Summary and Outlook
In summary, Science Group reports another solid performance in 2024, despite
economic and political volatility, maintaining strong margins with record
adjusted earnings per share, the primary metric for shareholder value. The
Consultancy Services Division was somewhat affected by the market instability,
but this was offset by the performance of CMS2 resulting from the successful
turnaround of that business. Accordingly, the Group's strategy again
demonstrates resilience and translates into tangible results. Most
importantly, adjusted operating profit translates into cash.
Science Group's strong balance sheet provides a robust foundation for the
Group while also enabling the Board to pursue corporate opportunities in a
timely manner, as evidenced by the recent investment in Ricardo. Even after
the Ricardo investment, Science Group retains significant cash resources,
enhanced by the recent renewal and increase of finance facilities.
Similarly, while the Science Group share price has consistently outperformed
the relevant market indices, the Board remains focused on translating
operating performance into shareholder value. Accordingly, the Board,
anticipates allocating capital to continuing and increasing the share buyback
programme in the year ahead.
Martyn Ratcliffe
Executive Chair
Finance Director's Report
Overview of Results
In the year ended 31 December 2024, the Group generated revenue of £110.7
million (2023: £113.3 million). Revenue from the Consultancy Services
Division, that is revenue derived from consultancy services and materials
recharged on projects, was £72.2 million (2023: £81.3 million) while Systems
revenue generated by the CMS2 Business was £25.9 million (2023: £21.3
million) and Systems revenue generated by the Frontier Business was £12.0
million (2023: £10.0 million). External revenue generated by freehold
properties, comprising property and associated services income derived from
space let to third parties in the Harston Mill facility, was £0.6 million
(2023: £0.8 million).
Adjusted operating profit for the Group increased to £21.5 million (2023:
£20.5 million). The Group's statutory operating profit of £14.9 million
(2023: £8.1 million) reflects the amortisation of acquisition-related
intangible assets of £4.4 million (2023: £4.9 million) and share-based
payment charges of £2.3 million (2023: £2.0 million). Statutory operating
profit increased relative to 2023 because of the increase in the underlying
profitability of the Group, but additionally 2023 was impacted by one-off
acquisition related adjustments relating to TP Group totalling £5.5 million.
After net finance costs of £0.1 million (2023: £0.5 million) and a tax
charge of £2.7 million (2023: £2.1 million), statutory profit after tax was
£12.0 million (2023: £5.5 million). Statutory basic earnings per share was
26.5 pence (2023: 12.1 pence per share).
Adjusted operating profit is an alternative profit measure that is calculated
as operating profit excluding acquisition integration costs, amortisation of
acquisition related intangible assets, share based payment charges, and other
specified items that meet the criteria to be adjusted. Refer to the notes to
the financial statements for further information on this and other alternative
performance measures.
Foreign Exchange
The acquisition of TP Group, where revenue is denominated in Sterling, has
reduced the percentage of the Group's overall exposure to foreign exchange,
however there remains a reasonable proportion of the Group's revenue
denominated in currencies other than Sterling. In 2024, £32.8 million
(equivalent to 30%) of the Group's operating business revenue was denominated
in US Dollars (2023: £34.6 million), including all of Frontier's revenue. In
addition, £1.8 million of the Group operating business revenue was
denominated in Euros (2023: £3.9 million). The average exchange rates during
2024 were 1.28 for US Dollars and 1.18 for Euros (2023: 1.24 and 1.15
respectively).
As in 2023, to provide greater forward visibility of foreign exchange
movements, the Group acquired a currency exchange instrument to cap the
Sterling:US Dollar rate in relation to certain Consultancy Division cash flows
through to the end of 2024. The instrument applied to $1.0 million per month
at an exchange rate of $1.25/£1, whilst still allowing the business to
benefit from lower spot exchange rates when appropriate. A similar instrument
has been put in place until the end of 2025 for $1.0 million per month at an
exchange rate of $1.275/£1.
Taxation
The tax charge for the year was £2.7 million (2023: £2.1 million). The
increase is reflective of the higher profitability, offset by the utilisation
of tax losses and Research and Development ("R&D") tax credits.
At 31 December 2024, the Group had £21.4 million (2023: £29.3 million) of
tax losses, the largest component of which (£16.8 million) related to
Frontier (2023: £19.2 million). Of the Frontier losses, £7.0 million (2023:
£9.1 million) have been recognised as a deferred tax asset which is
anticipated to be used to offset future taxable profits. The balance has not
been recognised as a deferred tax asset due to the uncertainty in the timing
of utilisation of these losses. Aside from these amounts, the Group has other
tax losses of £4.6 million (2023: £4.2 million) unrecognised as a deferred
tax asset due to the low probability that these losses will be utilised.
Financing and Cash
Cash from operations was strong at £21.8 million (2023: £10.3 million). Cash
flow from operating activities (excluding Client Registration Funds) which
takes interest payments and taxation into account, was £17.5 million (2023:
£8.9 million). Reported cash from operating activities in accordance with
IFRS was £18.5 million (2023: £7.9 million). The difference in these two
metrics relates to the fact that one of the Group's businesses, TSG, processes
regulatory registration payments on behalf of clients. The alternative
performance measure, by excluding Client Registration Funds, reflects the
Group's available cash position and cash flow.
The Group cash balance (excluding Client Registration Funds) at 31 December
2024 was £38.6 million (2023: £30.9 million) and net funds were £26.8
million (2023: £18.0 million). Client Registration Funds of £2.9 million
(2023: £1.9 million) were held at the year end.
Subsequent to the year end (in March 2025), the Group renewed its bank
borrowing facilities:
· The 2016 Term Loan has been replaced with two new Term Loans with a
combined value of £12.0 million for a 10 year period, secured solely on each
of the Group's freehold properties. The interest margin of 2.6% is the same as
the 2016 Loan. Interest rate swaps will fully hedge the two new Loans
resulting in a 10-year fixed effective interest rate of approximately 7.3%,
comprising the SONIA lending margin plus the swap rate. In connection with
repaying the 2016 Loan early, and settling the interest rate hedging
associated with that Loan, the Group will realise a one-off benefit, with
corresponding cash inflow, of approximately £0.6 million.
· The 2021 Revolving Credit Facility ("RCF") has been replaced with a
new 5 year RCF of £30.0 million (with an additional £10.0 million accordion
option, subject to approval). The new RCF is at a rate of 1.95% plus SONIA.
Working capital management continued to be a strong focus for the Group with
debtor days of 36 at 31 December 2024 (2023: 40 days) and inventory days of 76
(2023: 121 days).
Ricardo plc
In February and March 2025, the Group commenced purchasing shares in Ricardo,
incrementally increasing its holding to 16.2% (as at 19 March 2025). These
purchases were funded from the Group's existing cash resources.
Share Capital
At 31 December 2024, the Company had 44,738,465 ordinary shares in issue
(2023: 45,458,972) and the Company held an additional 1,447,409 shares in
treasury (2023: 726,902). The voting rights in the Company at 31 December 2024
were 44,738,465 (2023: 45,458,972). In this report, all references to measures
relative to the number of shares in issue exclude shares held in treasury
unless explicitly stated to the contrary.
Jon Brett
Finance Director
Consolidated Income Statement
For the year ended 31 December 2024
Note 2024 2023
£000
£000
Revenue 110,669 113,341
Direct operating expenses (65,491) (67,090)
Sales and marketing expenses (8,918) (9,206)
Administrative expenses (21,379) (28,731)
Share of loss of equity-accounted investment - (169)
Adjusted operating profit 2 21,541 20,535
Acquisition integration costs - (518)
Amortisation of acquisition related intangible assets 7 (4,388) (4,944)
Loss on remeasurement of equity-accounted investment - (4,762)
Share-based payment charge (2,272) (1,997)
Share of loss of equity-accounted investment - (169)
14,881 8,145
Operating profit
Finance income 828 679
Finance costs (970) (1,205)
Profit before tax 14,739 7,619
Tax charge (net of R&D tax credit of £706,000
(2023: £517,000)) 3 (2,719) (2,095)
Profit for the year 12,020 5,524
Earnings per share
Earnings per share (basic) 5 26.5p 12.1p
Earnings per share (diluted) 5 26.0p 12.0p
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Note 2024 2023
£000
£000
Profit for the year attributable to:
Equity holders of the parent 12,020 5,524
Profit for the year 12,020 5,524
Other comprehensive income items
that will or may be reclassified to profit or loss:
Exchange differences on translating foreign operations 10 (848)
Fair value loss on financial instruments (416) (441)
Deferred tax credit on financial instruments 4 104 147
Other comprehensive expense for the year (302) (1,142)
Total comprehensive income for the year attributable to:
Equity holders of the parent 11,718 4,382
Total comprehensive income for the year 11,718 4,382
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2024
Share capital Share premium Treasury shares Merger reserve Translation reserve Cashflow hedge reserve Retained earnings Total equity
£000 £000 £000 £000 £000
£000 £000 £000
Balance at 1 January 2024 462 26,834 (2,930) 10,343 766 865 42,026 78,366
Contributions and distributions:
Purchase of own shares - - (4,959) - - - - (4,959)
Issue of shares out of treasury - - 1,465 - - - (1,462) 3
Dividends paid (Note 6) - - - - - - (3,657) (3,657)
Share-based payment charge - - - - - - 2,272 2,272
Deferred tax charge on share-based payment transactions - - - - - - 262 262
Transactions with owners - - (3,494) - - - (2,585) (6,079)
Profit for the year - - - - - - 12,020 12,020
Other comprehensive income items
that will or maybe reclassed to profit or loss:
Fair value loss on financial instruments - - - - - (416) - (416)
Exchange differences on translating foreign operations - - - - 10 - - 10
Deferred tax charge on financial instruments - - - - - 104 - 104
Total comprehensive income for the year - - - - 10 (312) 12,020 11,718
Balance at 31 December 2024 462 26,834 (6,424) 10,343 776 553 51,461 84,005
Consolidated Balance Sheet
At 31 December 2024
Note 2024 2023
£000 £000
Assets
Non-current assets
Acquisition related intangible assets 7 21,496 25,845
Goodwill 7 18,942 18,878
Property, plant and equipment and right-of-use asset 25,002 25,856
Derivative financial instruments 627 886
Deferred tax assets 4 2,051 2,071
68,118 73,536
Current assets
Inventories 8 1,167 1,332
Trade and other receivables 9 27,786 23,315
Current tax assets 2,428 1,516
Derivative financial instruments 144 301
Cash and cash equivalents - Group cash 10 38,556 30,949
Cash and cash equivalents - Client registration funds 10 2,895 1,881
72,976 59,294
Total assets 141,094 132,830
Liabilities
Current liabilities
Trade and other payables 11 35,530 32,041
Current tax liabilities 599 379
Provisions 12 1,049 1,481
Borrowings 14 1,200 1,200
Lease liabilities 809 626
39,187 35,727
Non-current liabilities
Provisions 12 1,211 889
Borrowings 14 10,572 11,756
Lease liabilities 2,914 3,319
Deferred tax liabilities 4 3,205 2,773
17,902 18,737
Total liabilities 57,089 54,464
Net assets 84,005 78,366
Shareholders' equity
Share capital 13 462 462
Share premium 26,834 26,834
Treasury shares (6,424) (2,930)
Merger reserve 10,343 10,343
Translation reserve 776 766
Cash flow hedge reserve 553 865
Retained earnings 51,461 42,026
Total equity 84,005 78,366
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
Note 2024 2023
£000
£000
Profit before income tax 14,739 7,619
Adjustments for:
Share of loss of equity-accounted investment - 169
Loss on remeasurement of equity-accounted investee - 4,762
Amortisation of acquisition related intangible assets 7 4,388 4,944
Depreciation of property, plant and equipment 528 694
Depreciation of right-of-use assets 865 1,053
Bank charges on derivative financial instruments 211 422
Net interest costs 142 526
Share-based payment charge 2,272 1,997
Decrease in inventories 165 1,222
Increase in receivables (4,552) (2,019)
Increase/(decrease) in payables representing client registration funds 1,014 (986)
Increase/(decrease) in payables excluding balances representing client 2,247 (10,760)
registration funds*
(Decrease)/increase in provisions (183) 662
Cash generated from operations 21,836 10,305
Interest paid (870) (1,106)
UK corporation tax paid (1,930) (962)
Foreign corporation tax paid (560) (325)
Cash flows from operating activities 18,476 7,912
Interest received 723 583
Purchase of property, plant and equipment - (80)
Purchase of subsidiary undertakings, net of cash and borrowing acquired - (13,923)
Sale of subsidiary, net of cash sold - 638
Cash flows used in investing activities 723 (12,782)
Issue of shares out of treasury 3 10
Repurchase of own shares (4,959) (3,875)
Dividends paid 6 (3,657) (2,259)
Purchase of derivative financial instruments (211) (250)
Repayment of term loan 14 (1,200) (1,200)
Principal elements of lease payments (693) (912)
Cash flows from financing activities (10,717) (8,486)
Increase/(decrease) in cash and cash equivalents in the year 8,482 (13,356)
Cash and cash equivalents at the beginning of the year 32,830 46,512
Exchange gain/(loss) on cash 139 (326)
Cash and cash equivalents at the end of the year 10 41,451 32,830
Extracts from Notes to the financial statements
1. General Information
Science Group plc (the 'Company') together with its subsidiaries ('Science
Group' or the 'Group') is an international science & technology
consultancy and systems organisation. The Group and Company Financial
Statements of Science Group plc were prepared under the International
Financial Reporting Standards ('IFRS') as adopted by the UK in conformity with
the requirements of the Companies Act 2006 and have been audited by Grant
Thornton UK LLP. Accounts are available from the Company's registered
office; Harston Mill, Harston, Cambridge, CB22 7GG.
The Company is incorporated and domiciled in England and Wales under the
Companies Act 2006 and has its primary listing on the Alternative Investment
Market of the London Stock Exchange (SAG.L). The value of Science Group plc
shares, as quoted on the London Stock Exchange on 31 December 2024, was 453.0
pence per share (31 December 2023: 392.0 pence per share).
Alternative performance measures
The Group uses alternative non-Generally Accepted Accounting Principles
performance measures of 'adjusted operating profit', 'adjusted earnings per
share' and 'net funds' which are not defined within IFRS. These are explained
as follows:
(a) Adjusted Operating Profit
The Group calculates this measure by adjusting to exclude certain items from
operating profit namely: amortisation of acquisition related intangible
assets, acquisition integration costs, share-based payment charges and other
specified items that meet the criteria to be adjusted.
The criteria for the adjusted items in the calculation of adjusted operating
profit is operating income or expenses that are material and either arise from
an irregular and significant event or the income/cost is recognised in a
pattern that is unrelated to the resulting operational performance.
Materiality is defined as an amount which would reasonably be expected to
influence the economic decisions of the users of these financial statements.
Acquisition integration costs include all costs incurred directly related to
the restructuring, relocation and integration of acquired businesses.
Adjustments for Share-based payment charges occur because: once the cost has
been calculated, the Directors cannot influence the Share-based payment charge
incurred in subsequent years; it is understood that many investors/analysts
exclude the cost from their valuation analysis of the business; and the value
of the share option to the employee differs considerably in value and timing
from the actual cash cost to the Group.
The calculation of this measure is shown on the Consolidated Income Statement.
(b) Adjusted Earnings Per Share
The Group calculates this measure by dividing adjusted profit after tax by the
weighted average number of shares in issue and the calculation of this measure
is disclosed in Note 5. The tax rate applied to calculate the tax charge in
this measure is the tax at the blended corporation tax rate across the various
jurisdictions for the year which is 23.3% (2023: 24.1%) which results in a
comparable tax charge year on year.
(c) Net Funds
The Group calculates this measure as the net of cash and cash equivalents -
Group cash and Borrowings. Client registration funds are excluded from this
calculation because these monies are for the purpose of payment of
registration fees to regulatory bodies. This cash is separately identified
for reporting purposes and is unrestricted. This measure is calculated as
follows:
Note 2024 2023
£000 £000
Cash and cash equivalents - Group cash 10 38,556 30,949
Borrowings 14 (11,772) (12,956)
Net funds 26,784 17,993
Alternative performance measures
The Directors believe that disclosing these alternative performance measures
enhances shareholders' ability to evaluate and analyse the underlying
financial performance of the Group. Specifically, the adjusted operating
profit measure is used internally in order to assess the underlying
operational performance of the Group, aid financial, operational and
commercial decisions and in determining employee compensation. The adjusted
EPS measure allows the shareholder to understand the underlying value
generated by the Group on a per share basis. Net funds represent the Group's
cash available for day-to-day operations and investments. As such, the Board
considers these measures to enhance shareholders' understanding of the Group
results and should be considered alongside the IFRS measures.
Going concern
The Directors have undertaken a comprehensive going concern review. In
adopting the going concern basis for preparing these Consolidated Financial
Statements, the Directors have undertaken a review of the Group's cash flows
forecasts and available liquidity, along with consideration of the principal
risks and uncertainties over an 18-month period to September 2026. Recognising
the challenges of reliably estimating and forecasting the impact of external
factors on the Group, the Directors have considered two forecasts in the
assessment of going concern, along with a likelihood assessment of these
forecasts being:
· Base case, which reflects the Directors' current expectations of future
trading; and
· Severe but plausible downside forecast which envisages a 'stress' or
'downside' situation.
For the severe but plausible downside forecast the assumptions include:
· A revenue reduction of 20% across all businesses (although due to
diversification this is highly unlikely)
· A more limited reduction in the costs
· A reduction of discretionary bonuses across the Group
After reviewing the current liquidity position and the cash flow forecasts
modelled under both the base case and stressed downside, the Directors
consider that the Group has sufficient liquidity to continue in operational
existence for a period of at least 18 months from the date of this report and
are satisfied that it is appropriate to adopt the going concern basis of
accounting in preparing the Consolidated Financial Statements.
In reaching these conclusions the Directors noted that the Group had a cash
balance at 31 December 2024 of £38.6 million (excluding client registration
funds) and net funds of £26.8 million, together with the undrawn Revolving
Credit Facility ('RCF') of £25.0 million.
On 19 March 2025 the Group announced it had agreed new banking facilities with
Lloyds Bank plc. The existing Term Loan and RCF were scheduled to expire in
September 2026 and December 2026 respectively. There are two new Term Loans
for a combined value of £12.0 million, each for 10 years expiring in March
2035. Each loan is secured solely and individually against the Group's
freehold properties: one loan to the property in Harston, near Cambridge, and,
a second, independent loan to the property in Epsom, Surrey. The new,
increased RCF is for £30.0 million, for a period of 5 years expiring in March
2030, an increase of £5.0 million over the 2021 RCF. The RCF also has a
£10.0 million accordion, a further increase of £5.0 million over the 2021
RCF. The RCF is currently undrawn and therefore no covenants apply.
2. Segment Information
The Consultancy Services Segment comprises the Research & Development,
Regulatory & Compliance, and Defence & Aerospace Practices. The
Systems - Submarine Atmosphere Management Segment comprises the Critical
Maritime Systems & Support ('CMS2') Business, which designs, develops and
manufactures submarine atmosphere systems for the defence sector. The Systems
- Audio Chips and Modules Segment comprises the Frontier Business, which is a
provider of DAB/DAB+ radio semi-conductors/modules.
The Group's segmental reporting shows the performance of the operating
businesses separately from the value generated by the Group's significant
freehold property assets and the corporate costs. The Consultancy Services
Segment consists of three Practices: (i) Research & Development, (ii)
Regulatory & Compliance and (iii) Defence & Aerospace. Financial
information is provided to the Chief Operating Decision Makers ('CODMs') in
line with this structure: the Consultancy Services Segment; the two Systems
Businesses (Submarine Atmosphere Management and Audio Chips and Modules); the
Freehold Properties and Corporate costs.
The Consultancy Services Practices are aggregated into one Consultancy Services Segment because the Practices provide similar consultancy services and share economic characteristics, including the timing of revenue recognition, the nature of performance obligations, and the nature of costs incurred in the provision of said performance obligations. The CODM reviews this Segment as a whole. This aggregation does not impact the user's ability to understand the entity's performance, its prospects for future cash flows or the user's decisions about the entity as a whole as it is a fair representation of the performance of each service line.
Consultancy Services revenue includes all consultancy fees and other revenue
includes recharged materials and expenses relating directly to Consultancy
Services activities. Systems - Submarine Atmosphere Management revenue
includes the development, manufacture and support of specialist systems for
submarine atmosphere management, used in the UK and international naval
defence markets. Systems - Audio Chips and Modules revenue includes sales of
chips and modules which are incorporated into digital radios. The Freehold
Properties Segment includes the results for the two freehold properties owned
by the Group. Income is derived from third party tenants from the Harston Mill
site and from internal businesses which have been charged fees at an arm's
length market rental rate for their utilised property space and associated
costs. Corporate costs include PLC/Group costs.
The segmental analysis is reviewed to operating profit. Other resources are
shared across the Group.
Consultancy Services 2024 2023
£000 £000
Services revenue 70,978 79,729
Other 1,231 1,553
Revenue 72,209 81,282
Direct operating expenses (38,768) (43,142)
Sales and marketing expenses (7,209) (7,322)
Administrative expenses (11,342) (13,938)
Adjusted operating profit 17,947 20,355
Amortisation of acquisition related intangible assets (1,487) (1,918)
Share-based payment charge (1,570) (1,557)
Operating profit 14,890 16,880
Systems - Submarine Atmosphere Management 2024 2023
£000 £000
Systems revenue - Submarine Atmosphere Management 25,857 21,265
Revenue 25,857 21,265
Direct operating expenses (17,066) (14,686)
Sales and marketing expenses (338) (327)
Administrative expenses (3,769) (3,462)
Adjusted operating profit 5,737 3,619
Amortisation of acquisition related intangible assets (820) (752)
Share-based payment charge (233) (77)
Operating profit 4,684 2,790
Systems - Audio Chips and Modules 2024 2023
£000 £000
Systems revenue - Audio Chips and Modules 11,970 9,975
Revenue 11,970 9,975
Direct operating expenses (9,558) (8,496)
Sales and marketing expenses (1,293) (1,463)
Administrative expenses (3,356) (3,946)
Adjusted operating profit/(loss) 85 (1,427)
Amortisation of acquisition related intangible assets (2,081) (2,274)
Share-based payment charge (241) (229)
Operating loss (2,237) (3,930)
Freehold Properties 2024 2023
£000 £000
Inter-company property income 3,313 3,398
Third party property income 633 819
Revenue 3,946 4,217
Direct operating expenses (2,330) (2,810)
Administrative expenses (966) (854)
Adjusted operating profit 713 597
Share-based payment charge (63) (44)
Operating profit 650 553
Corporate 2024 2023
£000 £000
Direct operating expenses (1,082) (1,354)
Sales and marketing expenses (78) (94)
Administrative expenses (1,946) (6,531)
Share of loss of equity-accounted investment - (169)
Adjusted operating loss (2,941) (2,609)
Acquisition integration costs - (518)
Loss on remeasurement of equity-accounted investment - (4,762)
Share-based payment charge (165) (90)
Share of loss of equity-accounted investment - (169)
Operating loss (3,106) (8,148)
Group 2024 2023
£000 £000
Consultancy Services revenue 70,978 79,729
Systems revenue - Submarine Atmosphere Management 25,857 21,265
Systems revenue - Audio Chips and Modules 11,970 9,975
Third party property income 633 819
Other 1,231 1,553
Revenue 110,669 113,341
Direct operating expenses (65,491) (67,090)
Sales and marketing expenses (8,918) (9,206)
Administrative expenses (21,379) (28,731)
Share of loss of equity-accounted investment - (169)
Adjusted operating profit 21,541 20,535
Acquisition integration costs - (518)
Amortisation of acquisition related intangible assets (4,388) (4,944)
Loss on remeasurement of equity-accounted investment - (4,762)
Share-based payment charge (2,272) (1,997)
Share of loss of equity-accounted investment - (169)
Operating profit 14,881 8,145
Net finance costs (142) (526)
Profit before income tax 14,739 7,619
Income tax charge (2,719) (2,095)
Profit for the period 12,020 5,524
Geographical and currency revenue analysis
Primary geographic markets 2024 2023
£000 £000
United Kingdom 51,067 52,522
Other European Countries 15,023 14,202
North America 24,368 29,056
Asia 19,489 16,641
Other 722 920
110,669 113,341
Currency 2024 2023
£000 £000
US Dollar 32,762 34,642
Euro 1,788 3,876
Sterling 76,119 74,823
110,669 113,341
3. Income Tax
The tax charge comprises:
Year ended 31 December Note 2024 2023
£000
£000
Current taxation (3,435) (3,056)
Current taxation - adjustment in respect of prior years 854 84
Deferred taxation 4 (72) 317
Deferred taxation - adjustment in respect of prior years (772) 43
R&D tax credit 706 517
(2,719) (2,095)
The adjustments in prior years are due to estimation differences related to
the tax charge. In 2024, the Group opted to use tax losses sooner than
anticipated, resulting in a higher-than-normal current tax adjustment offset
by a matching deferred tax adjustment.
The corporation tax on Science Group's profit before tax differs from the
theoretical amount that would arise using the blended corporation tax rate
across the various jurisdictions applicable to profits/(losses) of the
consolidated companies of 23.3% (2023: 24.1%) as follows:
2024 2023
£000
£000
Profit before tax 14,739 7,619
Tax calculated at domestic tax rates applicable to profits/(losses) in the (3,434) (1,836)
respective countries
Expenses not deductible for tax purposes (280) (1,589)
Adjustment in respect of prior years - current tax 854 84
Adjustment in respect of prior years - deferred tax (772) 43
Share scheme movements 77 554
Utilisation of losses previously not recognised 11 241
Utilisation of previously unrecognised tax losses 119 (71)
Share of loss of equity-accounted investment - (38)
Research & Development ('R&D') tax credit 706 517
Tax charge (2,719) (2,095)
The Group claims R&D tax credits under the R&D expenditure credit
scheme. In the current year, the Group recognised a tax credit of £0.7
million (2023: £0.5 million). The Group performed a reasonable estimate of
all amounts involved to determine the R&D tax credits to be recognised in
the period to which it relates.
4. Deferred Tax
The movement in deferred tax assets and liabilities during the year by each
type of temporary difference is as follows:
Accelerated capital allowances Tax losses Share-based payment Acquisition related intangible assets Other temporary differences Total
£000 £000 £000 £000 £000 £000
At 1 January 2023 28 2,176 1,768 (1,811) (67) 2,094
Credited/(charged) to the Income Statement 47 (678) 66 985 (103) 317
Deferred taxation relating to acquisitions 4 2,259 - (5,108) 63 (2,782)
(Charged)/credited to the income statement (adjustment in respect of prior (8) - (51) - 102 43
year)
(Charged)/credited to Equity - - (486) - 147 (339)
Effect of movements in exchange rates (5) (115) - 85 - (35)
At 31 December 2023 66 3,642 1,297 (5,849) 142 (702)
(Charged)/credited to the Income Statement (18) (1,114) 288 864 (92) (72)
(Charged)/credited to the income statement (adjustment in respect of prior (74) (798) - - 100 (772)
year)
Charged to Equity - - 262 - 104 366
Effect of movements in exchange rates 4 28 - (7) 1 26
At 31 December 2024 (22) 1,758 1,847 (4,992) 255 (1,154)
2024 2023
£000 £000
Tax losses 1,758 3,642
Share-based payment 1,847 1,297
Accelerated capital allowances - 66
Other temporary differences:
Lease liabilities 178 293
Provision 320 142
Total deferred tax assets 4,103 5,440
Set-off deferred tax liabilities pursuant to set-off provisions (2,052) (3,369)
Net deferred tax assets 2,051 2,071
Deferred tax liabilities comprise temporary differences attributable to:
2024 2023
£000 £000
Acquisition related intangible assets 4,992 5,849
Other temporary differences:
Right-of-use assets 243 293
Provision 22 -
Total deferred tax liabilities 5,257 6,142
Set-off deferred tax liabilities pursuant to set-off provisions (2,052) (3,369)
Net deferred tax liabilities 3,205 2,773
At 31 December 2024, Science Group had £21.4 million (2023: £29.3 million)
of tax losses, the largest component of which related to Frontier (£16.8
million (2023: £19.2 million)). Of the Frontier losses balance, £7.0 million
(2023: £9.1 million) is recognised as a deferred tax asset which is
anticipated to be used to offset future taxable profits. The balance of £9.8
million (2023: £10.1 million) has not been recognised as a deferred tax asset
due to the uncertainty in the timing of utilisation of these losses. Aside
from these amounts, the Group has other tax losses of £4.6 million (2023:
£4.2 million) unrecognised as a deferred tax asset due to the low probability
that these losses will be utilised.
5. Earnings Per Share
The calculation of earnings per share is based on the following result and
weighted average number of shares:
2024 2023
Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share
£000 £000
Basic earnings per ordinary share 12,020 45,377,531 26.5 5,524 45,553,584 12.1
Effect of dilutive potential ordinary shares: share options - 915,406 (0.5) - 638,394 (0.1)
Diluted earnings per ordinary share 12,020 46,292,937 26.0 5,524 46,191,978 12.0
Only the share options granted are dilutive.
The calculation of adjusted earnings per share is as follows:
2024 2023
Adjusted* profit after tax Weighted average number of shares Pence per share Adjusted* profit after tax Weighted average number of shares Pence per share
£000 £000
Adjusted basic earnings per ordinary share 16,413 45,377,531 36.2 15,187 45,553,584 33.3
Effect of dilutive potential ordinary shares: share options - 915,406 (0.7) - 638,394 (0.4)
Adjusted diluted earnings per ordinary share 16,413 46,292,937 35.5 15,187 46,191,978 32.9
*Calculation of adjusted profit after tax:
2024 2023
£000 £000
Adjusted operating profit 21,541 20,535
Finance income 828 679
Finance costs (970) (1,205)
Adjusted profit before tax 21,399 20,009
Tax charge at the blended corporation tax rate across the various (4,986) (4,822)
jurisdictions 23.3% (2023: 24.1%)
Adjusted profit after tax 16,413 15,187
The tax charge is calculated using the blended corporation tax rate across the
various jurisdictions in which the Group companies are incorporated.
6. Dividends
The final dividend for 2023 of £3.7 million was paid in July 2024 (2023:
£2.3 million paid for 2022 in June 2023).
The Board has proposed a final dividend for 2024 of 8.0 pence per share (2023:
8.0 pence per share). The dividend is subject to approval by shareholders at
the next Annual General Meeting and the expected cost of £3.6 million has not
been included as a liability as at 31 December 2024.
7. Intangible Assets
Technical Customer relationships Goodwill Total
know-how and intellectual property rights
£000
£000 £000
£000
Cost
At 1 January 2023 13,656 14,343 17,200 45,199
Acquisitions through business combination 3,346 17,084 4,222 24,652
Effect of movement in exchange rates (679) (211) (319) (1,209)
At 31 December 2023 16,323 31,216 21,103 68,642
Effect of movement in exchange rates 158 54 64 276
At 31 December 2024 16,481 31,270 21,167 68,918
Accumulated amortisation
At 1 January 2023 4,971 12,206 - 17,177
Amortisation charged in year 2,349 2,595 - 4,944
Effect of movement in exchange rates (296) (138) - (434)
At 31 December 2023 7,024 14,663 - 21,687
Amortisation charged in year 2,180 2,208 - 4,388
Effect of movement in exchange rates 123 50 - 173
At 31 December 2024 9,327 16,921 - 26,248
Accumulated impairment
At 1 January, 31 December 2023 and - 7 2,225 2,232
31 December 2024
Carrying amount
At 31 December 2023 9,299 16,546 18,878 44,723
At 31 December 2024 7,154 14,342 18,942 40,438
Goodwill and acquisition related intangible assets recognised arose from
acquisitions during 2013, 2015, 2017, 2019, 2021 and 2023. The discount rates
used for goodwill impairment reviews and the carrying amount of goodwill is
allocated as follows:
2024 2023
Pre-tax discount rate Pre-tax £000
£000 discount rate
R&D Consultancy 17.2% 3,383 17.8% 3,383
Leatherhead Research 17.2% 650 18.1% 650
TSG Americas 17.5% 2,778 17.5% 2,732
TSG Europe 17.2% 4,546 17.9% 4,546
Frontier Smart Technologies Group 20.0% 3,363 20.2% 3,345
CMS2 15.9% 1,576 16.1% 1,576
TPG Services 17.2% 2,646 17.8% 2,646
18,942 18,878
Impairment review of goodwill
The Group tests goodwill annually for impairment or more frequently if there
are indications that goodwill might be impaired. The recoverable amounts of
the Cash Generating Units ('CGUs') are determined from value in use. (CGUs are
a description of a cash-generating unit (such as a whether it is a product
line, a business operation or a reportable segment as defined in IFRS8)). The
key assumptions for the value in use calculations are those regarding the
discount rates and growth or decline rates of revenue.
The Group prepares the cash flow forecasts derived from the most recent annual
financial plan approved by the Board and extrapolates cash flows for the
following four years based on forecast rates of growth or decline in revenue
by the CGU. Beyond 5 years, cash flows were extrapolated using a terminal
growth rate of 2.5% based on historic average inflation rates.
The Group monitors its post-tax weighted average cost of capital and those of
its competitors using market data. In considering the discount rates applying
to CGUs, the Directors have considered the relative sizes, risks and the
inter-dependencies of its CGUs. The impairment reviews use a discount rate
adjusted for pre-tax cash flows and are included in the table above.
8. Inventories
2024 2023
£000 £000
Raw materials 220 174
Work in progress 433 743
Finished goods 514 415
1,167 1,332
9. Trade and Other Receivables
2024 2023*
£000 £000
Restated
Current assets:
Trade receivables 16,739 13,899
Provision for impairment (97) (100)
Trade receivables - net 16,642 13,799
Amounts recoverable on contracts 4,283 4,300
Unbilled invoices on contracts 1,679 2,408
Other receivables 43 161
Other taxation and social security 1,111 768
VAT 423 222
Prepayments 3,605 1,657
27,786 23,315
All amounts disclosed above, except for prepayments, are receivable within 90
days.
The Other taxation and social security asset relates to employer's NIC
liability on share options vested. Of this balance, £653,000 is due after one
year. See Note 12 for further information.
*An amount of £2,408,000, previously disclosed under 'Amount recoverable on
contracts' is now presented under 'Unbilled invoices on contracts, reflecting
a correction in the presentation to align with the nature of the balances,
which are uninvoiced but where an unconditional right to receive consideration
exists. The 2023 'Amount recoverable on contracts' has been restated from
£6,708,000 to £4,300,000.
10. Cash and Cash Equivalents
2024 2023
£000 £000
Cash and cash equivalents - Group cash 38,556 30,949
Cash and cash equivalents - Client registration funds 2,895 1,881
41,451 32,830
The Group receives cash from clients, primarily in North America, for the
purpose of payment of registration fees to regulatory bodies. This cash is
separately identified for reporting purposes and is unrestricted.
11. Trade and Other Payables
2024 2023*
£000 £000
Restated
Current liabilities:
Contract liabilities 17,863 15,669
Client registration funds on account 2,895 1,881
Trade payables 4,022 4,106
Other taxation and social security 1,841 1,730
VAT 2,305 998
Accruals 6,604 7,657
35,530 32,041
*An amount of £1,881,000, previously disclosed under 'Contract liabilities' is now presented under 'Client registration funds on account, reflecting a correction in the presentation to align with the nature of the balances, which are amounts collected from clients for onward payment of registration fees, and which are payable to the client until such time as they are utilised. The 2023 'Contract liabilities' has been restated from £17,550,000 to £15,669,000.
12. Provisions
Dilapidations Restructuring Legal Other Total
£000
£000 £000 £000 £000
At 1 January 2023 706 40 351 - 1,097
Assumed in business combination 271 - 135 393 799
Disposed - - - (138) (138)
Provisions made during the year 84 - 454 768 1,306
Provisions used during the year (129) (8) (71) - (208)
Provisions reversed during the year (83) - (289) (34) (406)
Effect of movement in exchange rates (70) - (10) - (80)
At 1 January 2024 779 32 570 989 2,370
Provisions made during the year 64 35 24 420 543
Provisions used during the year (55) - (71) - (126)
Provisions reversed during the year (107) - (352) (70) (529)
Effect of movement in exchange rates 1 - 1 - 2
At 31 December 2024 682 67 172 1,339 2,260
Current liabilities 124 67 172 686 1,049
Non-current liabilities 558 - - 653 1,211
At 31 December 2023 779 32 570 989 2,370
Current liabilities 387 32 570 492 1,481
Non-current liabilities 392 - - 497 889
Dilapidation provisions have been recognised at the present value of the
expected obligation. These discounts will unwind to their undiscounted value
over the remaining lives of the leases via a finance charge within the income
statement.
The average remaining life of the leases as at 31 December 2024 is 3.5 years
(2023: 2.7 years).
The restructuring provision relates to the costs associated with the closure
of some non-trading Group entities.
Legal provisions reflect the best estimate of the future cost of responding to
potential legal claims.
The other provision relates to a provision for the employer's NIC liability on
share options that have vested (or the proportion that have vested). As the
employee is contractually responsible for the employer's NIC on any share
options exercised and is required to remit this sum to the Company prior to
the share options being exercised, a corresponding asset is recognised in
current assets. It also includes provisions made in respect of product and
services deliveries that include warranty provisions.
13. Called-up Share Capital
2024 2023
£000 £000
Allotted, called-up and fully paid
Ordinary shares of £0.01 each 462 462
Number Number
Allotted, called-up and fully paid
Ordinary shares of £0.01 each 46,185,874 46,185,874
The allotted, called-up and fully paid share capital of the Company as at 31
December 2024 was 46,185,874 shares (2023: 46,185,874) and the total number of
ordinary shares in issue (excluding treasury shares) was 44,738,465 (2023:
45,458,972). The total number of voting rights in the Company is 44,738,465
(2023: 45,458,972).
14. Borrowings
(a) Term loan
2024 2023
£000 £000
Current bank borrowings 1,200 1,200
Non-current bank borrowings 10,572 11,756
Total borrowings 11,772 12,956
2024 2023
£000 £000
Opening balance 12,956 14,139
Repayments in the year (1,200) (1,200)
Amortisation of loan arrangement fee 16 17
Total borrowings 11,772 12,956
During the year ended 31 December 2016, the Group entered into a 10-year fixed
term loan of £15.0 million which is secured on the freehold properties of the
Group and on which interest is payable based on SONIA plus 2.6% margin. During
the year ended 31 December 2019, the Group increased this existing loan by
£4.8 million to £17.5 million on similar terms. The repayment profile of
the loan is £1.2 million per annum over the term with the remaining balance
repaid on expiry of the loan in 2026. Costs directly associated with entering
into the loan (including the loan increase), have been offset against the
balance outstanding and are being amortised over the period of the loan.
During the year ended 31 December 2020, the Group drew a further £1.5 million
of loan funds from the £17.5 million existing loan agreement. This was on
similar terms and with no change to the loan repayment profile (i.e. the
quarterly repayments remained the same and the loan balance remains payable on
30 September 2026). Costs directly associated with entering into the
additional loan have been offset against the balance outstanding and are being
amortised over the period of the loan.
At 31 December 2024, the amount outstanding on the term loan was £11.8
million (2023: £13.0 million).
The carrying amount of the term loan is considered to be a reasonable
approximation of the fair value.
The reconciliation of bank loans interest expense is shown below.
2024 2023
£000 £000
Interest expense 463 499
Interest paid (447) (482)
Amortisation of loan arrangement fee (16) (17)
Interest accrual at the year end - -
In accordance with an agreed repayment schedule with the bank, bank borrowings
are repayable to Lloyds Bank plc as follows:
2024 2023
£000
£000
Within one year 1,200 1,200
Between 1 and 2 years 1,200 1,200
Between 2 and 5 years 9,400 10,600
11,800 13,000
On 19 March 2025 a refinancing of the existing term loan was announced.
Further details can be found at Note 15.
(b) Revolving credit facility
In December 2021 Science Group plc signed a Revolving Credit Facility ('RCF')
with Lloyds Bank plc in order to provide additional capital resources to
enable the execution of the Group's acquisition strategy. The RCF is for up to
£25.0 million, with an additional £5.0 million accordion option. The
original agreement was for a term of four years, however an option to extend
the term by an additional year was taken by the Group in December 2023
(meaning the term end date is now December 2026). The margin on drawn sums is
3.3% over the Sterling Overnight Index Average ('SONIA') and is 1.1% per annum
on undrawn amounts. Drawn amounts are secured on the Group's assets by
debentures. The RCF is in addition to the Group's existing term loan.
The RCF has two financial covenants with which the Group needs to comply if
the facility is drawn: (i) the Group's net leverage, as defined as the net
debt divided by the rolling 12 month EBITDA, should not exceed 2.5; and (ii)
the Group's interest cover, as defined as the rolling 12 month EBITDA divided
by the rolling interest payments on all borrowings, should not be less than
4.0. Reporting is on a 6 monthly basis unless the net leverage exceeds 2, in
which case reporting moves to quarterly until net leverage returns to below 2
again. For the term of the RCF, the previous covenants for the term loan are
superseded by the covenants of the RCF and will not apply.
The reconciliation of RCF interest expense is shown below.
2024 2023
£000 £000
Interest expense 349 349
Interest paid (268) (268)
Amortisation of RCF arrangement fee (81) (81)
Interest accrual at the year end - -
On 19 March 2025 a refinancing of the existing term loan was announced.
Further details can be found at Note 15.
(c) Hedge accounting
In order to address interest rate risk, the Group entered into phased interest
rate swaps in order to fully hedge the loan resulting in a 10-year fixed
effective interest rate of 3.5%. The interest rates on the swaps range from
0.4% to 1.3% which when combined with the margin on the loan economically fix
the finance cost at 3.5%. The notional amount on the interest rate swaps
reduces in line with the repayment of the term loan, so an effective hedge
remains throughout the term of the loan. There are 4 active swaps in place at
31 December 2024, totalling £11.8 million. Of this total, £0.8 million will
mature in September 2025 and the remaining balance of £11.0 million will
mature in September 2026.
15. Post Balance Sheet Events
Investment in Ricardo plc
On 28 February 2025 the Group announced an investment in Ricardo plc. Over the
period 16 February 2025 to 27 February 2025, the Group acquired 5.3 million
shares in Ricardo plc equivalent to 8.5% of the voting rights. These shares
were acquired at a total cost of £12.2 million (including brokerage fees) at
an average cost of 231 pence per share.
Share purchases continued and by 19 March 2025 the Group had increased its
shareholding to 10.1 million shares, equivalent to 16.2% of the voting rights.
The total cost of shares acquired to date was £23.3 million (including
brokerage fees). This investment was funded from the Group's existing cash
resources.
The Group will engage with the Ricado plc board and its major shareholders in
relation to managing this investment.
Refinancing of existing bank facilities
On 19 March 2025 the Group announced it had agreed new bank borrowing
facilities with Lloyds Bank plc. The existing Term Loan and RCF were scheduled
to expire in September 2026 and December 2026 respectively.
There are now two new Term Loans for a combined value of £12.0 million, each
for 10 years expiring in March 2035. Each loan is secured solely and
individually against the Group's freehold properties: one loan to the property
in Harston, near Cambridge, and, a second, independent loan to the property in
Epsom, Surrey.
The new, increased RCF is for £30.0 million, for a period of 5 years expiring
in March 2030, an increase of £5.0 million over the 2021 RCF. The RCF also
has a £10.0 million accordion, a further increase of £5.0 million over the
2021 RCF. The RCF is currently undrawn and therefore no covenants apply.
16. Statement by the Directors
Whilst the information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ('IFRSs') as adopted by the UK in
conformity with the requirements of the Companies Act 2006, this announcement
does not itself contain sufficient information to comply with IFRSs. The
accounting policies adopted in this preliminary announcement are consistent
with the Annual Report for the year ended 31 December 2024.
The financial information set out above, which was approved by the Board on 21
March 2025, is derived from the full Group accounts for the year ended 31
December 2024 and does not constitute the statutory accounts within the
meaning of section 434 of the Companies Act 2006. The Group accounts on
which the auditors have given an unqualified report, which does not contain a
statement under section 498(2) or (3) of the Companies Act 2006 in respect of
the accounts for 2024, will be delivered to the Registrar of Companies in due
course.
The Board of Science Group approved the release of this preliminary
announcement on 21 March 2025.
The Annual Report for the year ended 31 December 2024 will be posted to
shareholders in due course and will be delivered to the Registrar of Companies
following the Annual General Meeting of the Company. The report will also be
available on the investor relations page of the Group's website. Further
copies will be available on request and free of charge from the Company
Secretary.
- Ends -
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