REG - Science Group PLC - Audited Results for Year Ended 31 December 2025
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RNS Number : 8520W Science Group PLC 17 March 2026
17 March 2026
SCIENCE GROUP PLC
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2025
Science Group plc, ('Company', 'Science Group' or the 'Group'), the
international services and systems company delivering innovation through the
application of science, technology and engineering, reports its audited
results for the year ended 31 December 2025.
· Strong operating performance despite volatile market conditions
o Record adjusted* operating profit of £23.1 million (2024: £21.5 million)
o Record adjusted* basic earnings per share of 40.2 pence (2024: 36.2 pence)
o Revenue of £111.7 million (2024: £110.7 million)
o Operating Return on Capital Employed of 54.7% (2024: 37.6%)
· Operating results augmented by corporate activity
o Pre-tax gain of £24.1 million from corporate investment
o Record profit before tax of £41.5 million (2024: £14.7 million)
o Record statutory basic EPS of 75.1 pence (2024: 26.5 pence)
· Robust balance sheet and cash flow
o Cash of £72.6 million (2024: £38.6 million)
o Net funds of £61.2 million (2024: £26.8 million)
o Cash generated from operations of £31.8 million (2024: £21.8 million)
· Shareholder returns
o Recommended dividend increase of 25% to 10.0 pence per share (2024: 8.0
pence)
o Share buy-back increased to £10.7 million (2024: £5.0 million)
o Buy-back anticipated to continue at a broadly similar level in 2026
Science Group plc
Tel: +44
(0)1223 875 200
Martyn Ratcliffe, Executive Chair
Jon Brett, Finance Director
Panmure Liberum Limited (Nomad & Joint Broker)
Tel: +44 (0)20 3100 2000
Nicholas How, Rupert Dearden
Peel Hunt LLP (Joint Broker)
Tel: +44 (0)20 7418 8900
Neil Patel, Benjamin Cryer, Kate Bannatyne
Alternative performance measures (*) are provided in order to reflect the
underlying financial performance of the Group. Details and definitions are
provided in the report.
An investor presentation and summary factsheet are available at
www.sciencegroup.com.
Statement of Executive Chair
Science Group is an international services and systems company delivering
innovation through the application of science, technology & engineering.
In 2025, the Group again demonstrated the resilience of its business model
reporting record operating profit and earnings per share despite volatile
market conditions.
Science Group's strong balance sheet provides a solid foundation for the
business operations and enables capital allocation options including cash
returns to shareholders and investment in corporate opportunities where the
Group's management and technical resources can be deployed to enhance
shareholder returns. In 2025, both capital allocation strategies were
successfully deployed, delivering increased capital returns and material
incremental value to Science Group shareholders.
Group Financial Summary
For the year ended 31 December 2025, Science Group reported adjusted operating
profit ('AOP') of £23.1 million (2024: £21.5 million) with adjusted
(operational) basic earnings per share of 40.2 pence (2024: 36.2 pence).
Revenue was broadly consistent at £111.7 million (2024: £110.7 million) with
an increased operating margin of 20.7% (2024: 19.5%).
The Group's statutory operating profit was £40.9 million for the year (2024:
£14.9 million) including the benefit of £24.1 million resulting from the
corporate activity. Profit before tax was £41.5 million (2024: £14.7
million) and statutory basic earnings per share was 75.1 pence (2024: 26.5
pence).
Cash generated from operations was £31.8 million in the year (2024: £21.8
million), benefitting from the normalisation of a higher receivables balance
at the end of 2024. The strong operating cash flow was further enhanced by the
net gain from the corporate investment. As a result, at 31 December 2025,
Group cash was £72.6 million (2024: £38.6 million) and net funds were £61.2
million (2024: £26.8 million), after returning £14.3 million to shareholders
in the year, more than doubling the buy-back programme to £10.7 million
(2024: £5.0 million) whilst maintaining the dividend payment. The estimated
tax liability (£5.1 million) associated with the investment was also paid
prior to the year end.
The Board's priority remains operating margin, profit and cash flow.
Shareholder alignment is evidenced by the 9-fold increase in AOP over the past
15 years delivered from share capital dilution of less than 4% since December
2010. Combining the margin and profitability focus with disciplined working
capital and balance sheet management, since 2020 Science Group has reported a
Return on Capital Employed ('ROCE', defined as AOP/Net Equity less Net Funds)
in excess of 30%, with 2025 reaching 54.7% (2024: 37.6%).
In view of the consistent operating performance, strong operating cash flow
and significant cash resources, the Board is recommending the annual dividend
be increased by 25% to 10.0 pence per share (2024: 8.0 pence). Subject to
shareholder approval at the Annual General Meeting, scheduled for 20 May 2026,
the dividend will be payable on 2 July 2026 to shareholders on the register at
the close of business on 22 May 2026.
Operating Business Review
Science Group provides services and systems, characterised by deep technical
expertise applied with detailed domain knowledge, across Medical, Defence,
Industrial and Consumer market sectors. Shared services functions provide
Finance, Legal, HR, Property Management and IT support across the Group,
improving efficiency and operational governance. The costs of these central
functions (along with allocated property costs) are charged into the operating
businesses and the segmental reporting therefore reflects the financial
performance of each business as a stand-alone entity. The only costs not
charged to the operating businesses are the Corporate costs which account for
less than 3% of Group revenue.
Sagentia Services Division
The Services Division, operating under the Sagentia brand, is an international
business providing advisory, product development and regulatory services.
The Division's high calibre science, engineering and technical resources are
deployed across Medical, Defence, Consumer (including Food & Beverage) and
Industrial/Chemical markets.
Sagentia is a trusted services partner to its clients, often providing leading
edge innovation or technical insight in support of a customer's strategy.
While the majority of the Division's projects are therefore confidential, the
Division's reputation for providing high quality services is reflected in the
levels of repeat business and long-term relationships. Recent projects have
covered a diverse range of activities:
· from market-leading medical robotics to the application of
generative AI in consumer-facing R&D;
· from developing new concepts in defence to environmentally-friendly
pest control; and
· from formulating MAHA-compliant edible dyes to incorporating
physical AI into domestic robotics.
Sagentia is positioned as a premium rate, high value-add services
organisation. A significant proportion of consultants have Masters Degrees or
PhD qualifications in science or engineering subjects and the Group benefits
from impressive freehold properties providing office and laboratory facilities
consistent with the high-end market positioning. It is the deployment of
multi-disciplinary teams, combined with the Division's commercial and
operational management, that translates into shareholder value.
The Defence practice, acquired as part of TP Group in 2023, was historically
dependent on low margin, pass-through contractor revenue, which also carried
material counterparty risk. This emphasis on revenue rather than margin was
inconsistent with the Sagentia strategy of focusing on high value-add
services. Therefore, a progressive exit of this low-end activity has been
undertaken whilst developing the higher quality practice areas, enabling the
Division's deep science and technology innovation services to access the UK
defence market.
For the year ended 31 December 2025, the Services Division generated revenue
of £71.5 million (2024: £72.2 million), the slight decline reflecting the
Defence transition referenced above, partially offset by a strong performance
in the Medical practice. The Industrial and Consumer sectors delivered a
creditable performance in challenging market conditions during 2025. By
geography, the UK accounts for 36% of the Division's revenue with North
America accounting for 41% and Continental Europe for 13%. (The business has
minimal direct exposure to the Middle East.) The execution of the Services
strategy translated into an increased adjusted operating profit of £18.8
million (2024: £17.9 million) and a margin improvement to 26.3% (2024:
24.9%). Subject to external factors (e.g. geopolitical events), the Board does
not anticipate the market to change materially in 2026 and the priorities will
continue to be margin, profitability and cash conversion.
With regard to the potential influence of AI on the business, Sagentia
continually evaluates new technologies. Accordingly AI tools are being
utilised in several areas to augment the Division's service propositions,
within a defined governance regime. Due to the strategic emphasis on higher
end scientific, technical and engineering services, AI applications to date
have been incremental although this is anticipated to progressively increase
in the years ahead, enhancing Sagentia advisory services while potentially
expanding the opportunities in Physical-AI where the Division's sensor and
robotics expertise is highly relevant.
Systems Businesses
The Group has two systems businesses, CMS2 and Frontier, both of which have
leading positions in their specialist markets. These businesses operate
independently but are supported by the Group's corporate
functions/infrastructure and, if required, can access the Sagentia Division's
science, technology and engineering capabilities on an arm's length basis. In
aggregate, for the year ended 31 December 2025, the Systems businesses
reported increased revenue of £39.6 million (2024: £37.8 million) and an
adjusted operating profit of £6.6 million (2024: £5.8 million).
CMS2 (Critical Maritime Systems & Support) designs, manufactures and
supports atmosphere management systems for submarines, providing both oxygen
generation and CO(2) extraction capabilities. The business has a market
leading position outside the USA and services an international client base,
although the UK (direct to MoD and via prime contractors) continues to account
for the majority of the revenue.
For the year ended 31 December 2025, revenue was £26.4 million (2024: £25.9
million), including £5.2 million of low-margin pass-through materials related
to support contracts (2024: £5.6 million). Adjusted operating profit was
broadly consistent at £5.5 million (2024: £5.7 million), within the
anticipated variability for the characteristics of the business.
The solid financial performance, delivering operating margin of 21.0% (2024:
22.2%) in a defence business, demonstrates the success of the financial and
operational turnaround since the acquisition in 2023. This progress continued
throughout 2025 with the ongoing roll-out of support contracts across the
majority of the installed base enabling improvements in customer service.
The volatile geopolitical environment in recent years, combined with
developments in the operational theatre, continue to reinforce the imperative
of submarines and particularly the need for extended underwater deployments.
CMS2 is well positioned as a supplier to the UK fleet and to international
allies.
Frontier is a market leading supplier of DAB/DAB+ radio and connected audio
chips and modules. Rarely visible to the end user, Frontier technology powers
the majority of the DAB products (non-automotive) sold across the European
market, with a reputation for quality and reliability. In recent years,
Frontier has developed a new connected audio product, Auria, and following
multiple design wins from a range of brands, the first products are expected
to enter the retail channel in 2026.
While the consumer electronics market is unlikely to return to the levels
experienced during the pandemic, volumes appear to have stabilised and
Frontier's customers (collectively, brands in Europe and factories in China)
have returned to more predictable ordering patterns. As a result, revenue
increased to £13.2 million (2024: £12.0 million) producing an adjusted
operating profit of £1.1 million (2024: £0.1 million). This result was
achieved after expensing all costs associated with the investment in Auria,
since Frontier does not capitalise R&D expenditure.
While the underlying outlook for the established product range is anticipated
to be relatively stable in the year ahead, there are external factors
potentially affecting the business, including industry-wide memory cost
increases, US Dollar exchange rate volatility and uncertainty related to
potential transport disruption resulting from the situation in the Middle
East. More strategically, the medium-term opportunity represented by Auria is
significantly larger than the core radio market, offering potential for
material growth.
Corporate
The Corporate function is responsible for the strategy, corporate development
and governance of the Group, ensuring alignment of business operations with
shareholder priorities. The capital generated from the high margin, high cash
flow operations is invested in corporate opportunities where the Group's
management and technical resources can be deployed to enhance shareholder
returns. The underlying costs of the corporate function were £3.1 million
(2024: £2.9 million), which are the only costs not charged to the operating
businesses.
The major activity of the Corporate function in 2025 was the successful
investment in Ricardo plc ('Ricardo'). This followed detailed analysis
undertaken in 2024 which concluded that Ricardo market forecasts appeared
challenging, analysis that was subsequently confirmed by the Ricardo profit
warning in January 2025. Science Group commenced building a stake, ultimately
becoming the second largest shareholder in Ricardo. While the potential
opportunities for collaboration were readily apparent, the Ricardo Board
elected not to engage with Science Group, resulting in a progressive
escalation. However, in June 2025, a third party made an attractive offer for
Ricardo at a significant premium to the Science Group investment cost and the
Board accepted the offer, realising a net gain of £24.1 million before tax, a
return-on-investment in excess of 70% in less than 5 months.
In parallel with the corporate activity, the Group also renewed its financing
facilities with an extended forward commitment to provide the Board with
optionality in capital allocation. In summary:
· Two new Term Loans totalling £12.0 million for a 10-year period at
the same margin as the previous (2016) Loan, with interest rate swaps to fully
hedge the loan interest. These 10-year loans are secured solely on the Group's
freehold properties and are not subject to covenants related to operating
business performance.
· A new Revolving Credit Facility ('RCF') of £30.0 million on a
5-year term (with an additional £10.0 million accordion option, subject to
approval) at 1.95% above SONIA, a significantly lower margin than the previous
RCF. The RCF was undrawn at 31 December 2025 and remains undrawn.
Share Buy-Back Programme
In view of the Group's balance sheet strength, cash resources and consistent
operational cash generation, the Board maintains an active share buy-back
programme. Since 2024 the share buy-backs undertaken by the Group have
included a delegated programme implemented via Panmure Liberum, supplemented
with ad hoc activities at the Board's discretion. In 2025, the buy-back
capital allocation was significantly increased to £10.7 million (2024: £5.0
million), as the Company repurchased 1,996,657 shares, at an average price of
538 pence per share. At 31 December 2025, shares in issue (excluding treasury
shares held of 3.0 million) were 43.1 million (2024: 44.7 million excluding
treasury shares held of 1.4 million).
Between 1 January and 13 March 2026 (being the latest practicable date prior
to the results announcement), the Company has repurchased an additional
446,830 shares through the Panmure Liberum delegated authority. Therefore,
since the last Annual General Meeting in May 2025 ('2025 AGM'), the
Company has in total repurchased 2,236,377 shares, equivalent to 5.02% of the
issued share capital at the time of the 2025 AGM. As a result, at market close
on 13 March 2026, shares in issue (excluding treasury shares held of
3,489,062) were 42,696,812.
Subject to market dynamics and corporate activity, the Board anticipates the
capital allocation to the share buy-back programme in 2026 being at a broadly
similar level to 2025. The standard shareholder authority ('Standard
Authority') to buy back up to 10% of issued share capital will be proposed to
shareholders at the Annual General Meeting in May 2026 ('2026 AGM').
The Board acknowledges the substantial cash balances held by the Company,
reinforced by the consistent operating cash flow from the business. While
dialogue with major shareholders encourages the Board to seek to deploy the
capital to accelerate the growth of the Group, the Board remains concerned
that Science Group's relative valuation may act as an inhibitor. Indeed, it is
the Board's opinion that, on a relative valuation basis, one of the most
attractive buying opportunities is the repurchase of the Company's shares.
Accordingly, if the Board considers it to be in the best interests of Science
Group shareholders, additional capital allocation to the buy-back programme
may be appropriate and this could potentially exceed the Standard Authority.
To facilitate this option in a timely and cost-effective manner, should it be
appropriate in the future, a second buy-back resolution will be put to
shareholders at the 2026 AGM, such that in the event that the Standard
Authority were to be fully utilised, the buy-back programme would be able to
continue up to an additional 10% of the issued share capital ('Additional
Buy-Back Resolution').
If fully utilised, the Standard Authority and the Additional Buy-Back
Resolution (if approved by shareholders at the 2026 AGM) could result in a
significant return of capital to shareholders and will therefore be subject to
a buy-back limit of £50.0 million. For the avoidance of doubt, the Board is
not at the present time intending to use the buy-back extension related to the
second resolution and the Board would notify shareholders of the intent to
utilise the facility as appropriate.
Summary and Outlook
Science Group has reported another robust operating performance in 2025,
maintaining strong margins and extending the Group's track record of adjusted
operating profit growth, despite economic, political and market volatility.
The Group also benefited from the corporate investment activity in the first
half of the year resulting in an exceptional profit before tax and record
earnings per share.
Over the past 15 years, the Group has delivered substantial EPS growth and
since 2020, a ROCE exceeding 30% every year. As a result, shareholder value
accretion has exceeded relevant market indices, while more recently the Board
has materially increased capital returns to shareholders through the share
buy-back programme. In 2026, the Board is also recommending a 25% increase in
the dividend and will continue to monitor the buy-back programme to reflect
the best interests of shareholders.
The outlook for the Group's services and systems is influenced by external
factors. As a result, in the current geopolitical environment, the Board
continues to adopt a pragmatic and conservative perspective that underlying
organic revenue growth may be constrained. The Board's focus on margin,
profit and correlated cash conversion will remain the operating priority in
order to continue to deliver value to shareholders whilst positioning the
business to have resilience to market instability. Accordingly the Board
retains a positive outlook for the year ahead.
Finally, the Board's consistent, disciplined approach has enabled Science
Group to build an exceptionally strong balance sheet with significant cash
resources. This financial strength not only provides a solid foundation for
the Group and the ability to sustain capital returns to shareholders, but also
enables the Board to continue to seek opportunities to accelerate the growth
of the existing operating businesses or to explore more material increases in
the scale of the Group. In an unpredictable world, Science Group continues to
provide shareholders with both resilience and opportunity.
Martyn Ratcliffe
Executive Chair
Finance Director's Report
In the year ended 31 December 2025, the Group generated revenue of £111.7
million (2024: £110.7 million). The Sagentia Services Division, generated
revenue of £71.5 million (2024: £72.2 million), including materials charged
on projects. Systems revenue totalled £39.6 million of which £26.4 million
(2024: £25.9 million) was generated by the CMS2 business and £13.2 million
(2024: £12.0 million) by the Frontier business. External revenue derived from
freehold property was £0.6 million (2024: £0.6 million).
Adjusted operating profit for the Group increased to £23.1 million (2024:
£21.5 million), reflecting another year of strong underlying performance,
despite economic and political volatility. The Group's statutory operating
profit was £40.9 million (2024: £14.9 million), a significant increase
including a £24.1 million pre-tax net gain on disposal of a corporate
investment in June 2025.
Adjusted operating profit is an alternative profit measure that is calculated
as operating profit excluding amortisation of acquisition related intangible
assets, share based payment charges, and other specified items that meet the
criteria for adjustment. Further information is provided in the notes to the
financial statements on this and other alternative performance measures. The
amortisation charge on acquisition-related intangible assets was £4.1 million
(2024: £4.4 million) and the share-based payment charge for the year was
£2.1 million (2024: £2.3 million).
Statutory profit after tax was £33.3 million (2024: £12.0 million),
including net finance income of £0.6 million (2024: net finance cost of £0.1
million) and a tax charge of £8.2 million (2024: £2.7 million). The tax
charge increase is primarily linked to an additional £5.1 million payable
following the gain on disposal of the corporate investment. Statutory basic
earnings per share was 75.1 pence (2024: 26.5 pence per share).
Corporate Investment
During the first half of 2025, the Group initiated a significant investment in
Ricardo. Between February and May 2025, Science Group acquired 13.5 million
shares in Ricardo, equivalent to approximately 21.8% of the voting rights, at
an average price of 239 pence per share (including brokerage fees), a total
investment of £32.7 million funded entirely from the Group's existing cash
resources.
On 11 June 2025, a third party made an offer for Ricardo at a price per share
of 430 pence, a substantial premium to the share price following the Ricardo
profit warning and to Science Group's average share purchase price.
Accordingly, Science Group supported the offer and agreed to sell 12.4 million
Ricardo shares, equivalent to 19.99% of the issued share capital, to the
offeror at the offer price. Science Group shortly thereafter sold the
remainder of its Ricardo shareholding on the open market and the aggregate
cash proceeds of the sales, totalling approximately £58.0 million, were
received in June 2025. In addition, during the period Science Group also
received a dividend of £0.2 million, increasing total cash received to £58.2
million.
After directly attributable costs of £32.7 million, the gain on disposal of
investment for Science Group was £25.5 million. After additional associated
costs (linked to the gain on investment) of £1.4 million, the net pre-tax
gain was £24.1 million (see Consolidated Income Statement), equivalent to a
return on investment in excess of 70.0%. There is an estimated tax liability
of £5.1 million on the gain, which was paid in 2025, bringing the estimated
post tax gain to £19.0 million.
Finance System Upgrades
The Group successfully completed two accounting system upgrades in the year.
These were the final stage in a rolling programme of migrations over recent
years and the Group ended the year with all major businesses operating on the
same Finance IT platform. The migrations were completed on time and with
minimal disruption to business activities. As a result of the system
upgrades, there is greater Finance operational efficiency and organisational
resilience.
Foreign Exchange
In 2025, £30.6 million (equivalent to 27.4%) of the Group's operating
business revenue was denominated in US Dollars (2024: £32.8 million),
including all of Frontier's revenue. In addition, £2.1 million of the Group's
operating business revenue was denominated in Euros (2024: £1.8 million). The
average exchange rates during 2025 were 1.32 for US Dollars and 1.17 for Euros
(2024: 1.28 and 1.18 respectively).
As in 2024, 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 Services Division cash flows
through to the end of 2025. The option instrument applied to $0.5 million per
month at an exchange rate of $1.25/£1 and a further $0.5 million per month at
an exchange rate of $1.30/£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 2026 for $0.5 million per month at an exchange
rate of $1.30/£1 and the Board continue to monitor FX exposure to both US
Dollar and the Euro.
Taxation
The tax charge for the year was £8.2 million (2024: £2.7 million). The
marked increase was primarily as a result of £5.1 million of tax payable in
respect of the gain on the corporate investment activity. The overall Group
tax charge has been reduced through utilising brought forward tax losses,
together with Research and Development ('R&D') tax credits.
Science Group recognises R&D tax credits as a credit against the Income
Statement tax charge, not as a reversal of operating expenses which is a
common practice. While the Science Group practice reduces reported adjusted
operating profit and profit before tax, the Board considers this approach to
be more appropriate and inherently more conservative.
At 31 December 2025, the Group had £11.6 million of tax losses (2024: £21.4
million), predominantly relating to Frontier (£11.3 million (2024: £16.8
million)). Of the Frontier losses, £3.5 million (2024: £7.0 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
£0.3 million (2024: £4.6 million) unrecognised as a deferred tax asset due
to the low probability that these losses will be utilised, although during the
year, the Group was able to utilise some of these other tax losses to offset
against the corporate investment gain.
Financing and Cash
Cash generated from operations, which for Science Group typically correlates
with profitability, was particularly strong at £31.8 million (2024: £21.8
million), benefitting from the normalisation of a high receivables balance at
the end of 2024. Group cash was also significantly boosted by the realisation
of the gain on the corporate investment (net of the associated costs and tax
outflow). With such strong cash inflows, during the year, £14.3 million was
returned to shareholders through share buybacks (£10.7 million) and dividends
paid (£3.6 million).
The Group cash balance (excluding Client Registration Funds) at 31 December
2025 was £72.6 million (2024: £38.6 million) and net funds were £61.2
million (2024: £26.8 million). Client Registration Funds of £2.4 million
(2024: £2.9 million) were held at the year end in relation to pass-through
payments for US regulatory processing.
In addition, the Board took the opportunity to renew the Group's bank
borrowing facilities which comprise a Term Loan and a Revolving Credit
Facility ('RCF'):
· The 2016 Term Loan was 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 loan interest
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 realised a one-off benefit, with
corresponding cash inflow, of approximately £0.6 million.
· The 2021 RCF was 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 set at a rate of 1.95% plus SONIA. To date, the RCF remains undrawn
but provides flexibility if required.
Working capital management continued to be a strong focus for the Group with
debtor days sales outstanding ('DSO') of 33 at 31 December 2025 (2024: 36
days) reflecting the disciplined process, from initial sale to cash
collection. Days sales in inventory ('DSI') was relatively flat at 73 days
(2024: 76 days), following the normal cycle expected for the Frontier business
to which this metric relates (there are minimal levels of inventory held in
the CMS2 business or the Services division).
Property
Science Group owns two UK freehold properties, Harston Mill, near Cambridge
(approx. 9,000 sq m on 6.5 hectares), and Great Burgh (approx. 4,000 sq m on
3.6 hectares), near Epsom. The primary function of these properties is to host
the Group's operations.
The Group charges market rents to its operating businesses and lets out part
of the Harston Mill site to third parties. For the year ended 31 December
2025, the rental and associated services income derived from this activity was
£3.9 million (2024: £3.9 million), of which £0.6 million (2024: £0.6
million) was 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 £20.6 million (2024: £20.8 million).
Share Capital
At 31 December 2025, the Company had 43,143,642 ordinary shares in issue
(2024: 44,738,465) and the Company held an additional 3,042,232 shares in
treasury (2024: 1,447,409). The voting rights in the Company at 31 December
2025 were 43,143,642 (2024: 44,738,465). 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 2025
Note 2025 2024
£000
£000
Revenue 111,663 110,669
Direct operating expenses (65,627) (65,491)
Sales and marketing expenses (7,952) (8,918)
Administrative expenses (21,203) (21,379)
Net proceeds from disposal of corporate investment 1 24,051 -
Adjusted operating profit 23,065 21,541
Amortisation of acquisition related intangible assets 7 (4,084) (4,388)
Net proceeds from disposal of corporate investment 1 24,051 -
Share-based payment charge (2,100) (2,272)
40,932 14,881
Operating profit
Finance income 2,034 828
Finance costs (1,471) (970)
Profit before tax 41,495 14,739
Tax charge (net of R&D tax credit of £731,000
(2024: £706,000))
3 (8,223) (2,719)
Profit for the year 33,272 12,020
Earnings per share
Earnings per share (basic) 5 75.1p 26.5p
Earnings per share (diluted) 5 73.6p 26.0p
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2025
Note 2025 2024
£000
£000
Profit for the year attributable to:
Equity holders of the parent 33,272 12,020
Profit for the year 33,272 12,020
Other comprehensive income/(expenses) items
that will or may be reclassified to profit or loss:
Exchange differences on translating foreign operations (606) 10
Fair value loss on hedging instruments (400) (416)
Hedging instruments reclassed to profit or loss (789) -
Deferred tax credit on hedging instruments 4 322 104
Other comprehensive expense for the year (1,473) (302)
Total comprehensive income for the year attributable to:
Equity holders of the parent 31,799 11,718
Total comprehensive income for the year 31,799 11,718
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2025
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 2025 462 26,834 (6,424) 10,343 776 553 51,461 84,005
Contributions and distributions:
Purchase of own shares - - (10,737) - - - - (10,737)
Issue of shares out of treasury - - 1,610 - - - (1,606) 4
Dividends paid (Note 6) - - - - - - (3,564) (3,564)
Share-based payment charge - - - - - - 2,100 2,100
Deferred tax credit on share-based payment transactions - - - - - - (291) (291)
Transactions with owners - - (9,127) - - - (3,361) (12,488)
Profit for the year - - - - - - 33,272 33,272
Other comprehensive income/(expenses) items
that will or maybe reclassed to profit or loss:
Exchange differences on translating foreign operations - - - - (606) - - (606)
Fair value loss on hedging instruments - - - - - (400) - (400)
Hedging instruments recycled to statement of comprehensive income - - - - - (789) - (789)
Deferred tax credit on hedging instruments - - - - - 322 - 322
Total comprehensive income/(expenses) for the year - - - - (606) (867) 33,272 31,799
Balance at 31 December 2025 462 26,834 (15,551) 10,343 170 (314) 81,372 103,316
Consolidated Balance Sheet
At 31 December 2025
Note 2025 2024
£000 £000
Assets
Non-current assets
Acquisition related intangible assets 7 17,302 21,496
Goodwill 7 18,544 18,942
Property, plant and equipment and right-of-use asset 23,600 25,002
Derivative financial instruments - 627
Deferred tax assets 4 1,870 2,051
61,316 68,118
Current assets
Inventories 8 1,039 1,167
Trade and other receivables 9 24,247 27,786
Current tax assets 1,631 2,428
Derivative financial instruments 185 144
Cash and cash equivalents - Group cash 10 72,608 38,556
Cash and cash equivalents - Client registration funds 10 2,398 2,895
102,108 72,976
Total assets 163,424 141,094
Liabilities
Current liabilities
Trade and other payables 11 38,071 35,530
Current tax liabilities 341 599
Provisions 12 3,095 1,049
Borrowings 14 600 1,200
Lease liabilities 731 809
42,838 39,187
Non-current liabilities
Provisions 12 931 1,211
Borrowings 14 10,832 10,572
Lease liabilities 2,055 2,914
Derivative financial instruments 603 -
Deferred tax liabilities 4 2,849 3,205
17,270 17,902
Total liabilities 60,108 57,089
Net assets 103,316 84,005
Shareholders' equity
Share capital 13 462 462
Share premium 26,834 26,834
Treasury shares (15,551) (6,424)
Merger reserve 10,343 10,343
Translation reserve 170 776
Cash flow hedge reserve (314) 553
Retained earnings 81,372 51,461
Total equity 103,316 84,005
Consolidated Statement of Cash Flows
For the year ended 31 December 2025
Note 2025 2024
£000
£000
Profit before income tax 41,495 14,739
Adjustments for:
Gain on corporate investment disposal 1 (25,483) -
Amortisation of acquisition related intangible assets 7 4,084 4,388
Depreciation of property, plant and equipment 542 528
Depreciation of right-of-use assets 846 865
Bank charges on derivative financial instruments 135 211
Net interest costs (563) 142
Share-based payment charge 2,100 2,272
Decrease in inventories 68 165
Decrease/(increase) in receivables 3,756 (4,552)
(Decrease)/increase in payables representing client registration funds (328) 1,014
Increase in payables excluding balances representing client registration funds 3,361 2,247
Increase/(decrease) in provisions 1,781 (183)
Cash generated from operations 31,794 21,836
Interest paid (1,296) (870)
Proceeds from interest rate swaps 612 -
UK corporation tax paid (7,458) (1,930)
Foreign corporation tax paid (488) (560)
Cash flows from operating activities 23,164 18,476
Interest received 1,422 723
Purchase of property, plant and equipment (33) -
Purchase of intangible assets (166) -
Proceeds from disposal of corporate investment 1 58,176 -
Purchase of corporate investment and associated costs 1 (32,693) -
Cash flows used in investing activities 26,706 723
Issue of shares out of treasury 4 3
Repurchase of own shares (10,737) (4,959)
Dividends paid 6 (3,564) (3,657)
Purchase of derivative financial instruments (135) (211)
Payment of bank loan arrangement fees (415) -
Repayment of term loan (250) (1,200)
Principal elements of lease payments (888) (693)
Cash flows from financing activities (15,985) (10,717)
Increase in cash and cash equivalents in the year 33,885 8,482
Cash and cash equivalents at the beginning of the year 41,451 32,830
Exchange (loss)/gain on cash (330) 139
Cash and cash equivalents at the end of the year 10 75,006 41,451
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 services and systems company
delivering innovation through the application of science, technology and
engineering.
The Consolidated and Company Financial Statements of Science Group have been
prepared under the historical cost convention, as modified by the revaluation
of certain financial instruments at fair value. The Group Financial Statements
are prepared under IFRS as adopted by the UK in conformity with the
requirements of the Companies Act 2006. The Company Financial Statements are
prepared in accordance with Financial Reporting Standard 101, Reduced
Disclosure Framework ('FRS 101'), applying the recognition and measurement
requirements of UK‑adopted international accounting standards, with
amendments where required to comply with the Companies Act 2006 and with
exemptions permitted by FRS 101 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 2025, was 547.5
pence per share (31 December 2024: 453.0 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 (i.e. those directly related to the
restructuring, relocation and integration of acquired businesses), 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 are 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.
Excluded from adjusted operating profit in 2025 is the net gain on corporate
investment disposal arising from Ricardo plc ('Ricardo'), including costs
associated with the gain on this corporate investment which are intrinsically
linked.
During the first half of 2025, following a Ricardo profits warning in January,
the Group initiated a significant investment in Ricardo. Between February and
May 2025, Science Group acquired 13.5 million shares in Ricardo, equivalent to
approximately 21.8% of the voting rights, at an average price of 239 pence per
share (including brokerage fees), a total investment of £32.7 million funded
entirely from the Group's existing cash resources.
On 11 June 2025, a third party made an offer for Ricardo at a price per share
of 430 pence, a substantial premium to the average share price paid by Science
Group. Accordingly, Science Group supported the offer and agreed to sell 12.4
million Ricardo shares, equivalent to 19.99% of the issued share capital, to
the offeror at the offer price. Science Group shortly thereafter sold the
remainder of its Ricardo shareholding on the open market and the aggregate
cash proceeds of the sales, totalling approximately £58.0 million, were
received in June 2025. In addition, during the period Science Group also
received a dividend of £0.2 million, increasing total cash received to £58.2
million.
After directly attributable costs of £32.7 million, the gain on disposal of
investment for Science Group was £25.5 million. After additional associated
costs of £1.4 million (linked to the gain on investment), the net pre-tax
gain was £24.1 million (see Consolidated Income Statement), equivalent to a
return on investment in excess of 70.0%. There is an estimated tax liability
of £5.1 million on the gain, which was paid in 2025, bringing the estimated
post tax gain to £19.0 million.
(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 24.6% (2024: 23.3%) 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 2025 2024
£000 £000
Cash and cash equivalents - Group cash 10 72,608 38,556
Borrowings 14 (11,432) (11,772)
Net Funds 61,176 26,784
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. The cash from
operations measure similarly excludes movements in Client registration funds.
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 June 2027. 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 and implausible downside forecast which envisages a 'stress' or
'downside' situation.
For the severe and implausible downside forecast the assumptions include:
· A revenue reduction of at least 25% across all businesses
· 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 2025 of £72.6 million (excluding client registration
funds) and net funds of £61.2 million, together with the undrawn Revolving
Credit Facility ('RCF') of £30.0 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,
each for 10 years expiring in March 2035 (Balances owed at 31 December 2025
were £11.4 million). 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.
2. Segment information
The Services segment comprises five consultancy Practices under the Sagentia
brand: Medical, Innovation, Regulatory, Defence and Aviation. The Systems
segments comprise two businesses: (a) Critical Maritime Systems & Support
('CMS2'), which designs, manufactures and supports submarine atmosphere
systems for the defence sector; and (b) Frontier Smart Technologies
('Frontier') which designs and supplies radio and audio
semi-conductors/modules.
The Group's segmental reporting shows the performance of the operating
businesses separately from the value generated by the Group's freehold
properties and the corporate costs. The Services Segment consists of five
Practices as set out above. Financial information is provided to the Chief
Operating Decision Makers ('CODMs') in line with this structure: the Services
segment; the two Systems businesses (CMS2 and Frontier); the Freehold
Properties and Corporate costs.
The Services Practices are aggregated into one 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 CODMs review 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.
Services revenue includes all consultancy fees plus recharged materials and
expenses relating directly to the performance of the services. CMS2 revenue
includes the design, manufacture and support of specialist systems for
submarine atmosphere management, used in the UK and international naval
defence markets. Frontier revenue includes sales of chips and modules which
are incorporated into digital radios and audio systems. 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.
Services 2025 2024
£000 £000
Services revenue 71,487 72,209
Revenue 71,487 72,209
Direct operating expenses (38,208) (38,768)
Sales and marketing expenses (6,638) (7,209)
Administrative expenses (10,557) (11,342)
Adjusted operating profit 18,769 17,947
Amortisation of acquisition related intangible assets (1,231) (1,487)
Share-based payment charge (1,454) (1,570)
Operating profit 16,084 14,890
Systems - CMS2 2025 2024
£000 £000
Systems revenue 26,396 25,857
Revenue 26,396 25,857
Direct operating expenses (17,830) (17,066)
Sales and marketing expenses (30) (338)
Administrative expenses (3,987) (3,769)
Adjusted operating profit 5,532 5,737
Amortisation of acquisition related intangible assets (819) (820)
Share-based payment charge (164) (233)
Operating profit 4,549 4,684
Systems - Frontier 2025 2024
£000 £000
Systems revenue 13,193 11,970
Revenue 13,193 11,970
Direct operating expenses (9,824) (9,558)
Sales and marketing expenses (1,139) (1,293)
Administrative expenses (3,350) (3,356)
Adjusted operating profit 1,102 85
Amortisation of acquisition related intangible assets (2,034) (2,081)
Share-based payment charge (188) (241)
Operating loss (1,120) (2,237)
Freehold Properties 2025 2024
£000 £000
Intra-Group property income 3,311 3,313
Third party property income 587 633
Revenue 3,898 3,946
Direct operating expenses (2,212) (2,330)
Administrative expenses (992) (966)
Adjusted operating profit 769 713
Share-based payment charge (75) (63)
Operating profit 694 650
Corporate 2025 2024
£000 £000
Direct operating expenses (863) (1,082)
Sales and marketing expenses (115) (78)
Administrative expenses (2,348) (1,946)
Net proceeds from disposal of corporate investment 24,051 -
Adjusted operating loss (3,107) (2,941)
Net proceeds from disposal of corporate investment 24,051 -
Share-based payment charge (219) (165)
Operating profit/(loss) 20,725 (3,106)
Group 2025 2024
£000 £000
Services revenue 71,487 72,209
Systems revenue - CMS2 26,396 25,857
Systems revenue - Frontier 13,193 11,970
Third party property income 587 633
Revenue 111,663 110,669
Direct operating expenses (65,627) (65,491)
Sales and marketing expenses (7,952) (8,918)
Administrative expenses (21,203) (21,379)
Net proceeds from disposal of corporate investment 24,051 -
Adjusted operating profit 23,065 21,541
Amortisation of acquisition related intangible assets (4,084) (4,388)
Net proceeds from disposal of corporate investment 24,051 -
Share-based payment charge (2,100) (2,272)
Operating profit 40,932 14,881
Net finance income/(costs) 563 (142)
Profit before income tax 41,495 14,739
Income tax charge (8,223) (2,719)
Profit for the period 33,272 12,020
Geographical and currency revenue analysis
Primary geographic markets 2025 2024
£000 £000
United Kingdom 47,606 51,067
Other European Countries 10,832 15,023
North America 29,305 24,368
Asia 22,638 19,489
Other 1,282 722
111,663 110,669
Currency 2025 2024
£000 £000
US Dollar 30,622 32,762
Euro 2,080 1,788
Sterling 78,961 76,119
111,663 110,669
3. Income tax
The tax charge comprises:
Year ended 31 December Note 2025 2024
£000
£000
Current taxation (9,252) (3,435)
Current taxation - adjustment in respect of prior years 76 854
Deferred taxation 4 170 (72)
Deferred taxation - adjustment in respect of prior years 4 52 (772)
R&D tax credit 731 706
(8,223) (2,719)
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 24.6% (2024: 23.3%) as follows:
2025 2024
£000
£000
Profit before tax 41,495 14,739
Tax calculated at domestic tax rates applicable to profits/(losses) in the (10,208) (3,434)
respective countries
Expenses not deductible for tax purposes (762) (280)
Adjustment in respect of prior years - current tax 76 854
Adjustment in respect of prior years - deferred tax 52 (772)
Share scheme movements 660 77
Utilisation of losses previously not recognised - 11
Utilisation of previously unrecognised tax losses 1,228 119
Research & Development ('R&D') tax credit 731 706
Tax charge (8,223) (2,719)
During the year, the Group recognised a gain of £24.1 million on the disposal
of shares in an investee company. The corporation tax on this gain was £6.0
million, which was reduced to £5.1 million after utilising available
brought-forward losses.
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 (2024: £0.7 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 2024 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)
Credited 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)
(Charged)/credited to the Income Statement (8) (772) 153 785 12 170
(Charged)/credited to the income statement (adjustment in respect of prior (42) - - - 94 52
year)
(Charged)/credited to Equity - - (291) - 322 31
Effect of movements in exchange rates (12) (104) - 49 (11) (78)
At 31 December 2025 (84) 882 1,709 (4,158) 672 (979)
2025 2024
£000 £000
Tax losses 882 1,758
Share-based payment 1,709 1,847
Other temporary differences:
Lease liabilities 141 178
Provision 629 320
Total deferred tax assets 3,361 4,103
Set-off deferred tax liabilities pursuant to set-off provisions (1,491) (2,052)
Net deferred tax assets 1,870 2,051
Deferred tax liabilities comprise temporary differences attributable to:
2025 2024
£000 £000
Acquisition related intangible assets 4,158 4,992
Accelerated capital allowances 84 22
Other temporary differences:
Right-of-use assets 98 243
Total deferred tax liabilities 4,340 5,257
Set-off deferred tax liabilities pursuant to set-off provisions (1,491) (2,052)
Net deferred tax liabilities 2,849 3,205
At 31 December 2025, Science Group had £11.6 million (2024: £21.4 million)
of tax losses, the largest component of which related to Frontier (£11.3
million (2024: £16.8 million)). Of the Frontier losses balance, £3.5 million
(2024: £7.0 million) is recognised as a deferred tax asset which is
anticipated to be used to offset future taxable profits. The balance of £7.8
million (2024: £9.8 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 £0.3 million (2024:
£4.6 million) unrecognised as a deferred tax asset due to the low probability
that these losses will be utilised, although during the year the Group was
able to utilise some of these other tax losses to offset against the corporate
investment gain.
5. Earnings per share
The calculation of earnings per share is based on the following result and
weighted average number of shares:
2025 2024
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 33,272 44,314,909 75.1 12,020 45,377,531 26.5
Effect of dilutive potential ordinary shares: share options - 919,731 (1.5) - 915,406 (0.5)
Diluted earnings per ordinary share 33,272 45,234,640 73.6 12,020 46,292,937 26.0
Only the share options granted are dilutive.
The calculation of adjusted earnings per share is as follows:
2025 2024
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 17,816 44,314,909 40.2 16,413 45,377,531 36.2
Effect of dilutive potential ordinary shares: share options - 919,731 (0.8) - 915,406 (0.7)
Adjusted diluted earnings per ordinary share 17,816 45,234,640 39.4 16,413 46,292,937 35.5
*The calculation of adjusted profit after tax is as follows:
2025 2024
£000 £000
Adjusted operating profit 23,065 21,541
Finance income 2,034 828
Finance costs (1,471) (970)
Adjusted profit before tax 23,628 21,399
Tax charge at the blended corporation tax rate across the various (5,812) (4,986)
jurisdictions 24.6% (2024: 23.3%)
Adjusted profit after tax 17,816 16,413
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 2024 of £3.6 million was paid in July 2025 (2024:
£3.7 million paid for 2023 in July 2024).
The Board has proposed a final dividend for 2025 of 10.0 pence per share
(2024: 8.0 pence per share). The dividend is subject to approval by
shareholders at the next Annual General Meeting and the expected cost of £4.3
million has not been included as a liability as at 31 December 2025.
7. Intangible assets
Technical know-how and intellectual property rights Customer relationships Goodwill Total
£000
£000
£000 £000
Cost
At 1 January 2024 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
Additions 166 - - 166
Effect of movement in exchange rates (865) (275) (398) (1,538)
At 31 December 2025 15,782 30,995 20,769 67,546
Accumulated amortisation
At 1 January 2024 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
Amortisation charged in year 2,134 1,950 - 4,084
Effect of movement in exchange rates (634) (230) - (864)
At 31 December 2025 10,827 18,641 - 29,468
Accumulated impairment
At 1 January, 31 December 2024 and - 7 2,225 2,232
31 December 2025
Carrying amount
At 31 December 2024 7,154 14,342 18,942 40,438
At 31 December 2025 4,955 12,347 18,544 35,846
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:
2025 2024
Pre-tax discount rate Pre-tax £000
£000 discount rate
R&D Consultancy 16.3% 3,383 17.2% 3,383
Leatherhead Research 16.3% 650 17.2% 650
TSG Americas 17.0% 2,587 17.5% 2,778
TSG Europe 16.3% 4,546 17.2% 4,546
Frontier Smart Technologies Group 19.8% 3,156 20.0% 3,363
CMS2 16.0% 1,576 15.9% 1,576
TPG Services 16.3% 2,646 17.2% 2,646
18,544 18,942
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 amount of the
CGUs is determined to be the higher of value in use and fair value less costs
of disposal. Historically, value in use has led to a recoverable amount higher
than the carrying amount of goodwill and is therefore the chosen method of
valuation for the goodwill impairment review (a CGU is defined by IAS 36 as a
grouping of assets at the lowest level for which there are identifiable and
largely independent cash inflows). The key assumptions for the value in use
calculations are those regarding the discount rates, profit margins, and rates
of growth or decline in 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
2025 2024
£000 £000
Raw materials 192 220
Work in progress 234 433
Finished goods 613 514
1,039 1,167
9. Trade and other receivables
2025 2024
£000 £000
Current assets:
Trade receivables 14,954 16,739
Provision for impairment (82) (97)
Trade receivables - net 14,872 16,642
Unbilled invoices on contracts 1,145 1,679
Amounts recoverable on contracts 2,269 4,283
Other receivables 76 43
Other taxation and social security 1,616 1,111
VAT 795 423
Prepayments 3,474 3,605
24,247 27,786
All amounts disclosed above, except for prepayments, are receivable within 90
days.
Other taxation and social security relates to employer's NIC liability on
share options vested. Of this balance, £452,000 (2024: £653,000) is due
after one year.
10. Cash and cash equivalents
2025 2024
£000 £000
Cash and cash equivalents - Group cash 72,608 38,556
Cash and cash equivalents - Client registration funds 2,398 2,895
75,006 41,451
The Group receives cash from clients, primarily in North America, for the
purpose of payment of registration fees to regulatory bodies. The cash is
separately identified for reporting purposes and is unrestricted.
11. Trade and other payables
2025 2024
£000 £000
Current liabilities:
Contract liabilities 21,750 17,863
Client registration funds on account 2,398 2,895
Trade payables 3,292 4,022
Other taxation and social security 1,752 1,841
VAT 1,583 2,305
Accruals 7,296 6,604
38,071 35,530
12. Provisions
Dilapidations Restructuring Legal Other Total
£000
£000 £000 £000 £000
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 1 January 2025 682 67 172 1,339 2,260
Provisions made during the year 4 72 160 2,041 2,277
Provisions used during the year - (39) (2) - (41)
Provisions reversed during the year (45) - (65) (346) (456)
Effect of movement in exchange rates (6) - (5) (3) (14)
At 31 December 2025 635 100 260 3,031 4,026
Current liabilities 156 100 260 2,579 3,095
Non-current liabilities 479 - - 452 931
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
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 2025 is 2.5 years
(2024: 3.5 years).
The restructuring provision relates to the costs associated with the closure
or re-organisation of some Group entities.
Legal provisions reflect the best estimate of the future cost of responding to
potential legal claims.
Other provisions include a settlement balance where the Group is currently
engaged in commercial discussions with a customer in relation to a contractual
matter. While the discussions remain ongoing and the matter is commercially
sensitive, the Group has assessed that it has a present obligation arising
from past events. Based on management's best estimate of the potential
outflow, a provision of £1.3 million has been recognised at the reporting
date. The timing and final amount of any settlement remain uncertain, and the
associated risks have been taken into account in determining the value of the
provision. No further information has been disclosed as it is considered that
doing so would prejudice the Group's position in the continuing discussions.
In addition, other provisions include an amount of £1.6 million (2024: £1.1
million) relating to the employer's NIC liability on share options that have
vested in full (or the proportion that has 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 Group prior to the share
options being exercised, a corresponding asset, of equal value, is recognised
in current assets.
Other provisions also include smaller value provisions made in respect of
product and service deliveries that include warranty provision.
13. Called-up share capital
2025 2024
£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 2025 was 46,185,874 shares (2024: 46,185,874) and the total number of
ordinary shares in issue (excluding treasury shares) was 43,143,642 (2024:
44,738,465). The total number of voting rights in the Company is 43,143,642
(2024: 44,738,465).
14. Borrowings
(a) Term Loan
2025 2024
£000 £000
Current bank borrowings 600 1,200
Non-current bank borrowings 10,832 10,572
Total borrowings 11,432 11,772
2025 2024
£000 £000
Opening balance 11,772 12,956
Additional loans taken out in the year 12,000 -
Repayments of the previous term loans (11,800) (1,200)
Repayments for the new term loans in the year (450) -
Additional borrowing arrangement fee (129) -
Amortisation of loan arrangement fee 39 16
Total borrowings 11,432 11,772
In March 2025 the Group agreed new bank borrowing facilities with Lloyds Bank
plc. The previous Term Loan (with a subsidiary Sagentia Limited) which was
scheduled to expire in September 2026 was repaid and two new Term Loans were
agreed with a combined value of £12.0 million. The new Term Loans are 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 owned by a subsidiary Quadro Harston Limited, and a second,
independent loan to the property in Epsom, Surrey owned by a subsidiary Quadro
Epsom Limited. As the loan repayment and new Term Loans were all within the
Group, Lloyds Bank plc remitted the net balance due of £0.2 million to the
Group on completion.
At 31 December 2025, the amount outstanding on the Term Loans was £11.4
million (2024: £11.8 million).
The carrying amount of the Term Loans is considered to be a reasonable
approximation of the fair value.
The reconciliation of bank loans interest expense is shown below.
2025 2024
£000 £000
Interest expense 903 463
Interest paid (864) (447)
Amortisation of loan arrangement fees (39) (16)
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:
2025 2024
£000
£000
Within one year 600 1,200
Between 1 and 2 years 600 1,200
Between 2 and 5 years 1,800 9,400
Over 5 years 8,550 -
11,550 11,800
The new Term Loans have financial covenants that the Group needs to comply
with namely (i) the Loan to Value ratio, as defined as the loan balance
divided by the property value should not exceed 65% and (ii) the Debt Service
Cover, defined as the Net Rental Income divided by Debt Service for the
period, shall not be less than 110%. These covenants apply to each Term Loan.
(b) Revolving Credit Facility
As part of the refinancing referred to above the Group signed a new 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 £30.0 million, with an additional £10.0 million
accordion option, subject to agreement. The new RCF agreement runs for a term
of five years and ends in March 2030. The margin on drawn sums is 1.95% over
the Sterling Overnight Index Average ('SONIA') and is 0.6% 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 new Term Loans. At 31
December 2025, the RCF was undrawn.
The RCF has two financial covenants with which the Group needs to comply with:
(i) the Group's net leverage, as defined as the net debt divided by the
rolling 12 month EBITDA, should not exceed 3.0; 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 six monthly basis unless the net leverage exceeds 2, in which case
reporting moves to quarterly until net leverage returns to below 2 again.
The reconciliation of RCF interest expense is shown below.
Group 2025 2024
£000 £000
Interest expense 342 349
Interest paid (207) (268)
Impairment of arrangement fee of terminated RCF (66) -
Amortisation of RCF arrangement fee (69) (81)
Interest accrual at the year end - -
(c) Hedge accounting
In order to address interest rate risk, the Group entered into interest rate
swaps to fully hedge the finance cost on the new Term Loans resulting in a
10-year fixed effective interest rate of 7.3%. The interest rate on the swaps
at 4.7% which, when combined with the contractual loan margin, economically
fixes the finance cost at 7.3%.
Hedge effectiveness is determined at inception of the hedge relationship and
at every reporting period end through the assessment of the hedged items and
hedging instrument to determine whether there is still an economic
relationship between the two. The critical terms of the interest rate swaps
entered into exactly match the terms of the hedged items. As such the economic
relationship and hedge effectiveness are based on the qualitative factors and
the use of a hypothetical derivative where appropriate.
15. 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 2025.
The financial information set out above, which was approved by the Board on 16
March 2026, is derived from the full Group accounts for the year ended 31
December 2025 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 2025, will be delivered to the Registrar of Companies in due
course.
The Board of Science Group approved the release of this preliminary
announcement on 16 March 2026.
The Annual Report for the year ended 31 December 2025 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 Group's website. Further copies will be available on request
and free of charge from the Company Secretary.
- Ends -
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