REG - Science Group PLC - Interim results for 6 months ended 30 June 2025
Mon 07:05
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RNS Number : 6991S Science Group PLC 28 July 2025
28 July 2025
SCIENCE GROUP PLC
('Science Group', the 'Group' or the 'Company')
INTERIM RESULTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2025
Summary
· Profit before Tax of £32.2m (H1 2024: £7.6m)
· Pre-tax gain of £24.0m on investment in Ricardo plc with RoI of
74%
· Statutory basic EPS of 55.3 pence (H1 2024: 12.9 pence)
· Revenue of £57.2m (H1 2024: £53.7m)
· Adjusted* Operating Profit of £11.3m (H1 2024: £11.0m)
· Adjusted* basic EPS of 19.3 pence (H1 2024: 18.1 pence)
· Group cash of £82.0m and net funds of £70.3m (H1 2024: £38.8m
and £26.4m)
Science Group plc
Martyn Ratcliffe, Chairman Tel: +44 (0) 1223 875 200
Jon Brett, Group Finance Director www.sciencegroup.com (http://www.sciencegroup.com)
Panmure Liberum (Nominated Adviser and Broker)
Nicholas How, Max Jones, John More Tel: +44 (0) 20 3100 2000
* Alternative performance measures are provided in order to enhance the
shareholders' ability to evaluate and analyse the underlying financial
performance of the Group. Refer to Note 1 for detail and explanation of the
measures used.
Interim Results 2025
Science Group plc is an international Professional Services and Systems
organisation delivering innovation through the application of science,
technology and engineering. The capital generated from the operating cash
flow is invested in corporate opportunities where the resources and
capabilities of the Group could be deployed to produce attractive returns for
shareholders.
In the first half of the year, Science Group reported another record Adjusted
Operating Profit despite the volatile political/economic environment,
benefitting from the resilience of the Group's operating model. In parallel,
consistent with the corporate strategy, the Group made an investment in
Ricardo plc ("Ricardo") which produced an exceptional profit and cash inflow.
For the six months ended 30 June 2025, Profit before Tax was £32.2 million
(H1 2024: £7.6 million) including the Ricardo investment gain of £24.0
million. Statutory basic earnings per share was 55.3 pence (H1 2024: 12.9
pence).
Excluding the investment activity, a strong performance in the Systems
businesses offset the weaker market conditions within Professional Services.
As a result, Group Adjusted Operating Profit increased to £11.3 million (H1
2024: £11.0 million) on revenue of £57.2 million (H1 2024: £53.7 million).
Adjusted basic earnings per share increased to 19.3 pence (H1 2024: 18.1
pence). Cash generated from operations in the period was very strong at £22.7
million (H1 2024: £10.7 million), benefitting from the normalisation of a
high receivables balance at the end of 2024.
As a result of the strong operating cash flow and the investment gain, Group
cash at 30 June 2025 was £82.0 million (30 June 2024: £38.8 million) with
net funds of £70.3 million (30 June 2024: £26.4 million), prior to the
recent shareholder dividend payment (£3.6 million) and the tax payable (£5.1
million) on the investment. The Group's recently renewed and extended
revolving credit facility of £30.0 million remains undrawn.
(Alternative performance measures provide clarity on the Group's underlying
trading performance. Refer to Note 1 for detail and explanation of the
measures used.)
Professional Services Division
The Group's Professional Services Division provides product development,
regulatory and advisory services to an international client base across
Consumer, Defence & Aerospace, Industrial and Medical sectors. The
Division is differentiated through technical, scientific and engineering
expertise combined with specialist industry knowledge. The unification of the
Professional Services businesses under the Sagentia brand is now operationally
complete, with active collaboration across practices/sectors and increased
efficiency in support functions.
Market conditions in the first half of 2025 were impacted by the international
political/economic volatility causing customers to defer, descope or cancel
projects. While the Consumer and Industrial sectors were more affected by the
uncertainty, some Medical product development contracts were also delayed. In
parallel, the services sector of the UK Defence & Aerospace market
experienced a hiatus as the political agenda evolved, affirming Science
Group's repositioning to focus on higher value-add services and to reduce
exposure to low margin activities.
In aggregate, while the Divisional multi-sector strategy mitigated the
external factors, revenue was constrained at £33.2 million (H1 2024: £36.5
million). Nevertheless, through disciplined cost management and the actions
taken to improve profitability in Defence & Aerospace, the Division
maintained strong margins of 23.9% (H1 24: 24.4%) and reported an Adjusted
Operating Profit of £7.9 million (H1 2024: £8.8 million), a respectable
performance in a period of exceptional volatility. More recently customers
appear to be adapting to the political/economic environment and the
Professional Services Division is anticipating a stronger performance in the
second half of the year.
Systems Businesses
The Group has two Systems businesses, both of which have leading positions in
their specialist markets. In the first half of 2025, both businesses performed
well, reporting growth in revenue and profitability.
Critical Maritime Systems & Support ("CMS2") is based in Portsmouth,
Hampshire, and designs, manufactures and supports submarine atmosphere
management systems for the Defence sector, where the business has a leading
position outside the USA. The geopolitical events in recent years have
reinforced the strategic imperative of submarines, as noted in the recent UK
Strategic Defence Review.
CMS2 revenue increased to £16.6 million for the six months ended 30 June 2025
(H1 2024: £10.9 million), enhanced by a significant amount of low-margin
consumables in the period. As a result, the business reported Adjusted
Operating Profit of £3.6 million (H1 2024: £3.2 million), continuing the
successful turnaround since the TP Group acquisition in January 2023.
CMS2 has good forward visibility for the remainder of the year. In addition,
the majority of customers have now signed support contracts which CMS2
introduced last year, delivering operational and financial benefits alongside
improved in-service support for these critical systems.
Frontier is a leading developer and supplier of radio and audio semiconductors
and modules, with a significant share of its core market. The dedicated
product development team is based in Cambridge with the sales, support and
operations functions in UK and China. With minimal synergies to Science
Group's other businesses, the long-term strategy for Frontier remains under
review.
Frontier has performed ahead of expectations in the first half of 2025 with
revenue increasing by 20% to £7.1 million for the six months ended 30 June
2025 (H1 2024: £5.9 million). The operational simplification in 2024 has
translated into an Adjusted Operating Profit of £0.9 million (H1 2024: £0.1
million) and, since all R&D costs are expensed with no capitalisation,
there is a high correlation between Adjusted Operating Profit and cash
conversion. The outlook for the second half of 2025 is anticipated to be
broadly in line with the first 6 months, with the new Auria product offering
incremental growth in 2026 and beyond.
Corporate
The first half of 2025 was a period of significant corporate activity for
Science Group with the completion of new long-term financing arrangements
being an enabling factor in the Board's decision to deploy capital in the
investment in Ricardo.
Ricardo Investment
Ricardo plc is a science and engineering company with a brand heritage
extending over 100 years. Science Group had tracked Ricardo for several years
but commenced an intensive analysis following the Ricardo results released in
September 2024. This analysis concluded that the market consensus forecasts
for Ricardo were optimistic and therefore Science Group anticipated the profit
warning issued by Ricardo in late January 2025. With a strong balance sheet
and significant cash resources, reinforced by the bank refinancing which was
being undertaken in parallel, the Science Group Board determined that the
Ricardo opportunity satisfied the Group's investment criteria.
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
£32.4 million funded entirely from the Group's existing cash resources. As
Science Group's shareholding increased, active engagement with the Ricardo
Board was initiated.
On 11 June 2025, a third party made an offer for Ricardo at a price per share
of 430 pence, a premium in excess of 100% to the share price in early February
prior to Science Group's share purchases. Accordingly, Science Group supported
the offer and agreed to sell 12.4 million Ricardo shares, equivalent to 19.99%
of the issued share capital, at the offer price. Science Group subsequently
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.
The Science Group pre-tax return (after fees and costs) on the investment was
£24.0 million, equivalent to an RoI of 74.2%. The tax liability is
anticipated to be around £5.1 million, a reduction on the standard UK
corporation tax rate due to the availability of legacy tax losses in the
Group.
Bank Finance Facilities
The Science Group Term Loan ("2016-Loan") and Revolving Credit Facility
("2021-RCF") were scheduled to expire in September 2026 and December 2026
respectively. In order to support the Group's strategy, the Board initiated an
early renewal of these facilities in 2024, a process which completed in March
2025.
Science Group now has two Term Loans, each for 10 years expiring in March
2035, with an aggregate value of £12.0 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. No other security is provided by the Group
operating businesses and there are no operating covenants on these loans. The
interest margin of 2.6% is the same as the 2016-Loan. Interest rate swaps will
fully hedge the two 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, the Group realised a one-off
benefit associated with the interest rate hedging on that loan.
In addition, the Group negotiated an increased Revolving Credit Facility
("RCF") of £30.0 million with a £10.0 million accordion, for a period of 5
years expiring in March 2030. If drawn, the RCF has two operating covenants:
(1) Net Leverage which should not exceed 3.0x EBITDA; and (2) Interest Cover
which should not be less than 4.0x EBITDA, with certain adjustments permitted
to both covenants. The margin on the RCF has been significantly reduced to
1.95%, compared with 3.3% on the
2021-RCF. The RCF is currently undrawn.
Share Buy-Back
The Group has continued with its share buy-back programme through the broker
delegated authority. During the period 310,110 shares were purchased for
treasury at an average price of 460 pence per share, a run-rate below the
Board's objective. Excluding treasury shares, at 30 June 2025 the Company had
44.4 million shares in issue (30 June 2024: 45.7 million) and held 1.7 million
shares in treasury (30 June 2024: 0.5 million). Total voting rights at 30 June
2025 were 44.4 million. Following the realisation of the Ricardo investment,
the Board has further increased the capital allocation to the buy-back
programme.
The Board recognises that the Group's cash resources exceed the Group's
operating requirements, particularly for a business that is highly cash
generative. Furthermore, with a limited UK-centred population of potential
acquisitions and/or investments, there may or may not be suitable
opportunities to deploy the capital in accordance with the Board's investment
criteria. Accordingly, and taking into account the buy-back programme
constraints, the Board shall keep under review the possibility of a return of
capital to shareholders via a tender offer.
Summary and Outlook
The first half of 2025 continued the Group's operating track record,
delivering another robust performance with strong cash conversion. The Science
Group model, combining Professional Services and Systems businesses, once
again demonstrated its resilience in a period of volatility. As a result,
Science Group is well positioned for the full year.
The Profit before Tax and cash inflow were significantly enhanced by the
Ricardo investment gain, an initiative taken after an intensive period of
analysis which delivered a substantial return for shareholders. As a result,
the Group's already strong balance sheet was materially augmented. With the
exceptionally strong financial position of Science Group, the Board will
continue to evaluate corporate opportunities should the potential
risk-adjusted returns justify the capital deployment.
Consolidated Income Statement
For the period ended 30 June 2025
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
Note £000 £000 £000
Revenue 5 57,165 53,686 110,669
Direct operating expenses (34,642) (31,254) (65,491)
Sales and marketing expenses (3,813) (4,514) (8,918)
Administrative expenses (10,680) (10,264) (21,379)
Gain on financial investment disposal 24,038 - -
Adjusted operating profit 11,286 10,989 21,541
Acquisition integration costs - (22) -
Amortisation of acquisition related intangible assets (2,059) (2,270) (4,388)
Gain on financial investment disposal 24,038 - -
Share-based payment charge (1,197) (1,043) (2,272)
Operating profit 32,068 7,654 14,881
Finance income 926 339 828
Finance costs (793) (435) (970)
Profit before income tax 32,201 7,558 14,739
Income tax charge (including R&D tax credit of £299,000
(H1 2024: £335,000)) 6 (7,535) (1,660) (2,719)
Profit for the period 24,666 5,898 12,020
Earnings per share
Earnings per share (basic) 7 55.3p 12.9p 26.5p
Earnings per share (diluted) 7 54.1p 12.8p 26.0p
Consolidated Statement of Comprehensive Income
For the period ended 30 June 2025
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit for the period attributable to:
Equity holders of the parent 24,666 5,898 12,020
Profit for the period 24,666 5,898 12,020
Other comprehensive income/(expense) items
that may be reclassified to profit or loss:
Exchange differences on translating foreign operations (798) 1 10
Fair value loss on derivative financial instruments (400) (232) (416)
Deferred tax credit on derivative financial instruments 106 58 104
Other comprehensive expense for the period (1,092) (173) (302)
Total comprehensive income for the period attributable to:
Equity holders of the parent 23,574 5,725 11,718
Total comprehensive income for the period 23,574 5,725 11,718
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
Group Share Share Treasury Merger Translation Cash flow hedge Retained Total
capital premium shares reserve reserve reserve earnings 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
Purchase of own shares - - (310) - - - - (310)
Issue of shares out of treasury stock - - 1,354 - - - (1,351) 3
Dividends paid - - - - - - - -
Share-based payment charge - - - - - - 1,043 1,043
Deferred tax credit on share-based payment transactions
- - - - - - 71 71
Transactions with owners - - 1,044 - - - (237) 807
Profit for the period - - - - - - 5,898 5,898
Other comprehensive income/(expense) items that may be reclassed to profit or
loss:
Exchange differences on translating foreign operations
- - - - 1 - - 1
Fair value loss on derivative financial instruments
- - - - - (232) - (232)
Deferred tax credit on derivative financial instruments
- - - - - 58 - 58
Total comprehensive income/(expense) for the period - - - - 1 (174) 5,898 5,725
Balance at 30 June 2024 462 26,834 (1,886) 10,343 767 691 47,687 84,898
Group Share Share Treasury Merger Translation Cash flow hedge reserve Retained Total
capital premium shares reserve reserve £000 earnings equity
£000 £000 £000 £000 £000 £000 £000
Balance at 1 July 2024 462 26,834 (1,886) 10,343 767 691 47,687 84,898
Purchase of own shares - - (4,649) - - - - (4,649)
Issue of shares out of treasury stock - - 111 - - - (111) -
Dividends paid - - - - - - (3,657) (3,657)
Share-based payment charge - - - - - - 1,229 1,229
Deferred tax credit on share-based payment transactions
- - - - - - 191 191
Transactions with owners - - (4,538) - - - (2,348) (6,886)
- - - - - - 6,122 6,122
Profit for the period
Other comprehensive income/(expense) items that may be reclassed to profit or
loss:
Exchange differences on translating foreign operations
- - - - 9 - - 9
Fair value loss on derivative financial instruments
- - - - - (184) - (184)
Deferred tax credit on derivative financial instruments
- - - - - 46 - 46
Total comprehensive income/(expense) for the period - - - - 9 (138) 6,122 5,993
Balance at 31 December 2024 462 26,834 (6,424) 10,343 776 553 51,461 84,005
Group Share Share Treasury Merger Translation Cash flow hedge Retained Total
capital premium shares reserve reserve reserve earnings 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
Purchase of own shares - - (1,437) - - - - (1,437)
Issue of shares out of treasury stock - - 81 - - - (80) 1
Share-based payment charge - - - - - - 1,197 1,197
Deferred tax credit on share-based payment transactions
- - - - - - 495 495
Transactions with owners - - (1,356) - - - 1,612 256
Profit for the period - - - - - - 24,666 24,666
Other comprehensive income/(expense) items that may be reclassed to profit or
loss:
Exchange differences on translating foreign operations
- - - - (798) - - (798)
Fair value loss on derivative financial instruments
- - - - - (400) - (400)
Deferred tax credit on derivative financial instruments
- - - - - 106 - 106
Total comprehensive (expense)/income for the period - - - - (798) (294) 24,666 23,574
Cash flow hedge reserve balance recycled to profit or loss in respect of - - - - - (470) - (470)
discontinued derivative financial instruments
Balance at 30 June 2025 462 26,834 (7,780) 10,343 (22) (211) 77,739 107,365
Consolidated Balance Sheet
At 30 June 2025
At 30 June At 30 June At 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
Note £000 £000 £000
Assets
Non-current assets
Acquisition related intangible assets 19,106 23,590 21,496
Goodwill 18,471 18,884 18,942
Property, plant and equipment 24,273 25,625 25,002
Derivative financial instruments - 861 627
Deferred tax assets 1,897 2,430 2,051
63,747 71,390 68,118
Current assets
Inventories 863 1,247 1,167
Trade and other receivables 19,471 21,134 27,786
Current tax assets 1,495 1,605 2,428
Derivative financial instruments 337 94 144
Cash and cash equivalents - Group cash 8 82,041 38,751 38,556
Cash and cash equivalents - Client funds 8 2,382 2,213 2,895
106,589 65,044 72,976
Total assets 170,336 136,434 141,094
Liabilities
Current liabilities
Trade and other payables 35,189 29,420 35,530
Current tax liabilities 5,333 340 599
Provisions 9 2,581 742 1,049
Borrowings 10 600 1,200 1,200
Lease liabilities 11 689 678 809
44,392 32,380 39,187
Non-current liabilities
Provisions 9 1,344 1,166 1,211
Borrowings 10 11,124 11,164 10,572
Lease liabilities 11 2,484 3,320 2,914
Non-current derivative financial instruments 616 - -
Deferred tax liabilities 3,011 3,506 3,205
18,579 19,156 17,902
Total liabilities 62,971 51,536 57,089
Net assets 107,365 84,898 84,005
Shareholders' equity
Share capital 462 462 462
Share premium 26,834 26,834 26,834
Treasury shares (7,780) (1,886) (6,424)
Merger reserve 10,343 10,343 10,343
Translation reserve (22) 767 776
Cash flow hedge reserve (211) 691 553
Retained earnings 77,739 47,687 51,461
Total equity 107,365 84,898 84,005
Consolidated Statement of Cash Flows
For the period ended 30 June 2025
Six months ended Six months Year
30 June ended ended
2025 30 June 31 December
(Unaudited) £000 2024 2024
(Unaudited) (Audited)
£000 £000
Profit before income tax 32,201 7,558 14,739
Adjustments for:
Gain on financial investment disposal (24,038) - -
Amortisation of acquisition related intangible assets 2,059 2,270 4,388
Depreciation of property, plant and equipment 276 275 528
Depreciation of right-of-use assets 426 421 865
Bank charges on derivative financial instruments - - 211
Net interest (income)/charge (133) 96 142
Share-based payment charge 1,197 1,043 2,272
Decrease in inventories 225 94 165
Decrease/(increase) in receivables 8,443 2,140 (4,552)
(Decrease)/increase in payables representing client funds (268) 332 1,014
Increase/(decrease) in payables excluding balances representing client funds 589 (3,041) 2,247
Change in provisions 1,684 (462) (183)
Cash generated from operations 22,661 10,726 21,836
Interest paid (660) (387) (870)
UK corporation tax paid (896) (1,039) (1,930)
Foreign corporation tax paid (327) (230) (560)
Cash flows from operating activities 20,778 9,070 18,476
Interest received 314 341 723
Purchase of property, plant and equipment (33) - -
Gain on financial investment disposal 24,038 - -
Cash flow used in investing activities 24,319 341 723
Issue of shares out of treasury - 3 3
Purchase of own shares (1,437) (310) (4,959)
Dividends paid - - (3,657)
Purchase of derivative financial instruments - - (211)
Payment of bank loan arrangement fees (415) - -
Net proceeds from/(repayment of) bank loans 50 (600) (1,200)
Proceeds from Interest rate swaps 612 - -
Payment of lease liabilities (487) (399) (693)
Cash flows used in financing activities (1,677) (1,306) (10,717)
Increase in cash and cash equivalents in the period 43,420 8,105 8,482
Cash and cash equivalents at the beginning of the period 41,451 32,830 32,830
Exchange (loss)/gain on cash (448) 29 139
Cash and cash equivalents at the end of the period 84,423 40,964 41,451
Cash and cash equivalents is analysed as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Cash and cash equivalents - Group cash 82,041 38,751 38,556
Cash and cash equivalents - Client funds 2,382 2,213 2,895
84,423 40,964 41,451
Extracts from notes to the financial statements
1. General information
The financial information for the six months ended 30 June 2025 set out in
this interim report is unaudited and does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006. The financial information
included for the year ended 31 December 2024 has been extracted from the 2024
Financial Statements of Science Group plc. The Group's statutory financial
statements for the year ended 31 December 2024 have been filed with the
Registrar of Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under Section 498(2) or Section
498(3) of the Companies Act 2006.
These unaudited interim results have been approved for issue by the Board of
Directors on 25 July 2025.
The Group and Company financial statements of Science Group plc for the year
ended 31 December 2024 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. Copies of the Financial Statements are available from the Company's
registered office: Harston Mill, Royston Road, Harston, Cambridge, CB22 7GG
and can be found on the Company's website at www.sciencegroup.com
(http://www.sciencegroup.com) .
Science Group plc (the 'Company') and its subsidiaries (together 'Science
Group' or 'Group') is an international professional services and systems
organisation delivering innovation through the application of science,
technology and engineering.
The Company is the ultimate parent company in which results of all the Science
Group companies are consolidated.
The Company is incorporated in England and Wales under the Companies Act 2006
and is listed on the Alternative Investment Market of the London Stock
Exchange (SAG).
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
in the 2024 Financial Statements and the calculations are as follows:
(a) Adjusted operating profit
The calculation of this measure is shown on the Consolidated Income Statement.
(b) Adjusted earnings per share
The calculation of this measure is disclosed in Note 7.
(c) Net funds
This measure is calculated as follows:
At 30 June At 30 June At 31 December 2024
2025 2024 £000
£000 £000
Cash and cash equivalents - Group cash 82,041 38,751 38,556
Borrowings (11,724) (12,364) (11,772)
Net funds 70,317 26,387 26,784
2. Accounting policies
The principal accounting policies applied in the preparation of these interim
financial statements are unchanged from those set out in the financial
statements for the year ended 31 December 2024. These policies have been
consistently applied to all the periods presented.
2.1 Basis of preparation
These interim consolidated financial statements are for the six months ended
30 June 2025. They have been prepared based on the measurement and recognition
principles of IFRS as adopted by the UK in conformity with the requirements of
the Companies Act 2006 and effective at the time of preparing these
statements. The financial statements have been prepared on the historical cost
basis except for certain financial instruments and share-based payments which
are measured at fair value.
Going concern
The Directors have considered the current cash balance of £82.0 million
(excluding client registration funds) and assessed forecast future cash flows
for the next 12 months. There are no events or conditions which cast
significant doubt on the ability of the Group to continue as a going concern.
On 19 March 2025, the Group agreed new banking facilities with Lloyds Bank
plc. This included two new Term Loans for a combined value of £12.0
million, each for 10 years expiring in March 2035. A new increased Revolving
Credit Facility ('RCF') was also agreed for £30.0 million until March 2030
(which remains undrawn to date). The Directors are satisfied that the Group
has adequate cash and financial resources to continue in operational existence
for the foreseeable future, being a period of at least a year following the
release of these unaudited interim results and therefore continue to adopt the
going concern basis of accounting in preparing the interim financial
statements.
3. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and fair value interest risk), credit risk, liquidity
risk and cash flow interest rate risk. The Group's overall financial risk
management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group's financial
performance. Science Group uses derivative financial instruments to hedge
certain risk exposures.
4. Segmental information
The Professional Services Segment (formerly named Consultancy Services)
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 Professional 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 Professional Services Segment; the two Systems
Businesses (Submarine Atmosphere Management and Audio Chips and Modules); the
Freehold Properties and Corporate costs.
The Professional Services Practices are aggregated into one Professional
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.
Professional Services revenue includes all fees and other revenue includes
recharged materials and expenses relating directly to Professional 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.
Professional Services Six months ended Six months Year
30 June 2025 ended ended
(Unaudited) 30 June 2024 31 December 2024
£000 (Unaudited) (Audited)
£000 £000
Professional Services revenue 32,710 36,041 70,978
Other 487 494 1,231
Revenue 33,197 36,535 72,209
Adjusted operating profit 7,926 8,840 17,947
Amortisation of acquisition related intangible assets (615) (808) (1,487)
Share-based payment charge (804) (751) (1,570)
Operating profit 6,507 7,281 14,890
Systems - Submarine Atmosphere Management Six months ended Six months Year
30 June 2025 ended ended
(Unaudited) 30 June 2024 31 December 2024
£000 (Unaudited) (Audited)
£000 £000
Systems revenue - Submarine Atmosphere Management
16,590 10,922 25,857
Revenue 16,590 10,922 25,857
Adjusted operating profit 3,636 3,170 5,737
Amortisation of acquisition related intangible assets (410) (410) (820)
Share-based payment charge (145) (63) (233)
Operating profit 3,081 2,697 4,684
Systems - Audio chips and Modules Six months ended Six months Year
30 June 2025 ended ended
(Unaudited) 30 June 2024 31 December 2024
£000 (Unaudited) (Audited)
£000 £000
Systems revenue - Audio Chips and Modules
7,088 5,889 11,970
Revenue 7,088 5,889 11,970
Adjusted operating profit 892 60 85
Amortisation of acquisition related intangible assets
(1,034) (1,052) (2,081)
Share-based payment charge (100) (145) (241)
Operating loss (242) (1,137) (2,237)
Freehold Properties Six months ended Six months Year
30 June 2025 ended ended
(Unaudited) 30 June 2024 31 December 2024
£000 (Unaudited) (Audited)
£000 £000
Intercompany property income 1,655 1,659 3,313
Third party property income 290 340 633
Revenue 1,945 1,999 3,946
Adjusted operating profit 458 392 713
Share-based payment charge (38) (18) (63)
Operating profit 420 374 650
Corporate Six months ended Six months Year
30 June 2025 ended ended
(Unaudited) 30 June 2024 31 December 2024
£000 (Unaudited) (Audited)
£000 £000
Adjusted operating loss (1,626) (1,473) (2,941)
Acquisition integration costs - (22) -
Gain on financial investment disposal 24,038 - -
Share-based payment charge (110) (66) (165)
Operating profit/(loss) 22,302 (1,561) (3,106)
Group Six months Six months Year
ended ended ended
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Professional Services revenue 32,710 36,041 70,978
Systems revenue - Submarine Atmosphere Management 16,590 10,922 25,857
Systems revenue - Audio Chips and Modules 7,088 5,889 11,970
Third party property income 290 340 633
Other 487 494 1,231
Revenue 57,165 53,686 110,669
Adjusted operating profit 11,286 10,989 21,541
Acquisition integration costs - (22) -
Amortisation of acquisition related intangible assets (2,059) (2,270) (4,388)
Gain on financial investment disposal 24,038 - -
Share-based payment charge (1,197) (1,043) (2,272)
Operating profit 32,068 7,654 14,881
Net finance income/(charges) 133 (96) (142)
Profit before income tax 32,201 7,558 14,739
Income tax charge (7,535) (1,660) (2,719)
Profit for the period 24,666 5,898 12,020
In the Freehold Properties Segment, income includes £1.7 million (H1 2024:
£1.7 million) generated from inter-segment recharges. The corresponding costs
are included within the operating Segments and are eliminated on
consolidation.
5. Revenue
In the following tables, revenue is disaggregated by geographical market and
by the currency in which the contract is denominated.
For the period ended 30 June (Unaudited)
Geographical market North America Europe (excl. UK) UK Asia Other Total
£000 £000
£000 £000 £000 £000
2025 9,053 5,091 29,484 12,791 746 57,165
2024 13,120 8,190 22,774 9,200 402 53,686
Currency USD EUR GBP Total
£000 £000 £000 £000
2025 14,526 1,079 41,560 57,165
2024 16,619 866 36,201 53,686
6. Income tax
The income tax charge for the period ended 30 June 2025 is charged at the
effective tax rate calculated for the period using reasonable estimates and
incorporating both current and deferred taxation:
Six months Six months Year
ended ended ended
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit before tax 32,201 7,558 14,739
Current taxation (7,068) (1,396) (3,435)
Current taxation - adjustment in respect of prior years
(61) (63) 854
Deferred taxation (705) (536) (72)
Deferred taxation - adjustment in respect of prior years
- - (772)
R&D tax credit 299 335 706
Tax charge (7,535) (1,660) (2,719)
Effective tax rate 23.4% 22.0% 18.4%
The Group claims Research and Development tax credits under the Research and
Development ('R&D') Expenditure Credit scheme.
7. Earnings per share
The calculation of earnings per share is based on the following results and
number of shares:
Six months Six months Year
ended ended ended
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit for the financial period 24,666 5,898 12,020
Weighted average number of shares:
For basic earnings per share 44,625,973 45,569,518 45,377,531
For diluted earnings per share 45,633,222 46,104,474 46,292,937
Earnings per share: Pence Pence Pence
Basic earnings per share 55.3 12.9 26.5
Diluted earnings per share 54.1 12.8 26.0
The calculation of adjusted earnings per share is as follows:
Six months Six months Year
ended ended ended
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Adjusted* profit after tax for the period 8,593 8,260 16,413
Weighted average number of shares:
For basic earnings per share 44,625,973 45,569,518 45,377,531
For diluted earnings per share 45,633,222 46,104,474 46,292,937
Adjusted earnings per share: Pence Pence Pence
Basic earnings per share 19.3 18.1 36.2
Diluted earnings per share 18.8 17.9 35.5
*Calculation of adjusted profit after tax:
Six months Six months Year
ended ended ended
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Adjusted operating profit 11,286 10,989 21,541
Finance income 926 339 828
Finance costs (793) (435) (970)
Adjusted profit before tax 11,419 10,893 21,399
Tax charge at the blended corporation tax rate of 24.7% (H1 2024: 24.2%)
(2,826) (2,633) (4,986)
Adjusted profit after tax 8,593 8,260 16,413
8. Cash and cash equivalents
Six months Six months Year ended
ended ended 31
30 June 30 June December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Cash and cash equivalents - Group cash 82,041 38,751 38,556
Cash and cash equivalents - Client funds 2,382 2,213 2,895
84,423 40,964 41,451
The Group receives cash from clients, primarily in North America, which are
pass-through funds solely for the purpose of payment of registration fees to
regulatory bodies. This cash is separately identified for reporting purposes
and is unrestricted.
9. Provisions
(Unaudited) Dilapid Legal NIC on share options Other Total
-ations £000
£000 £000 £000 £000
At 1 January 2024 779 570 768 253 2,370
(Decrease)/increase in provision (17) - 87 - 70
Utilisation of provision (55) (57) - - (112)
Provision reversed during the period (106) (314) - - (420)
Movement due to foreign exchange (1) 1 - - -
At 30 June 2024 600 200 855 253 1,908
Increase in provision 81 24 333 35 473
Utilisation of provision - (14) - - (14)
Provision reversed during the period (1) (38) (70) - (109)
Movement due to foreign exchange 2 - - - 2
At 31 December 2024 682 172 1,118 288 2,260
Increase in provision - - 457 1,278 1,735
Utilisation of provision - (2) - - (2)
Provision reversed during the period - (50) - - (50)
Movement due to foreign exchange (8) (6) (4) - (18)
At 30 June 2025 674 114 1,571 1,566 3,925
At 30 June At 30 June At 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Current liabilities 2,581 742 1,049
Non-current liabilities 1,344 1,166 1,211
3,925 1,908 2,260
Legal provisions represent the best estimate of the future cost of responding
to US subpoenas relating to litigation and investigations directed at third
parties.
The NIC on share options provision is for the employer's NIC liability on
share options (or proportion of options) that have vested. As employees are
contractually responsible for the employer's NIC on any share options
exercised and are required to remit this sum to the Company prior to the share
options being exercised, a corresponding asset is recognised in current
assets.
Other provision includes an amount held for settlement of a legacy contractual
agreement (in the Systems - Submarine Atmosphere Management Business), as well
as amounts for such items as restructuring and warranty provision.
10. Borrowings
At 30 June At 30 June At 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Current bank borrowings 600 1,200 1,200
Non-current bank borrowings 11,124 11,164 10,572
11,724 12,364 11,772
On 19 March 2025 the Group announced it had agreed new bank borrowing
facilities with Lloyds Bank plc. The existing 2016-Loan and 2021-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 remains undrawn to date.
11. Lease liabilities
At 30 June At 30 June At 31 December
2025 2024 2024
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Current lease liabilities 689 678 809
Non-current lease liabilities 2,484 3,320 2,914
3,173 3,998 3,723
Lease liabilities arise on properties leased by the Group. The leases have
remaining periods of between 1 and 8 years from the balance sheet date.
12. Related party transactions
The Group provides support and services to its subsidiaries. Any intra Group
lending, via loan or trading balance, is eliminated on consolidation, and
therefore not disclosed.
13. Critical accounting estimates and judgements
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expense. Actual
results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual financial statements.
14. Subsequent events
There are no post balance sheet events to disclose.
Disclaimer Statement
This announcement contains forward-looking statements. These have been made by
the Board in good faith based on the information available to them and it is
believed that the expectations reflected in these statements are reasonable.
However, due to the inherent uncertainties, including both economic and other
risk factors underlying such forward-looking information, the Directors can
give no assurance that these expectations will prove to be correct. Actual
results may differ materially from those expressed or implied, and investors
should not place undue reliance on any such forward-looking statements.
Nothing in this announcement should be construed as a profit forecast, or a
guide as to the performance, financial or otherwise of the Company whether in
the current or any future financial year.
No representation or warranty is made as to the achievement or reasonableness
of, and no reliance should be placed on such forward-looking statements. The
forward-looking statements contained in this announcement speak only as of the
date of this announcement. The Company undertakes no obligation to update or
revise any information contained in this announcement, except as may be
required by applicable law or regulation.
The Board, officers, members, employees, agents or advisers of the Company
expressly disclaim any liability for any direct, indirect or consequential
loss or damage (including, without limitation, loss of profit) suffered by any
person as a result of any obligation or undertaking to disseminate any
updates, revisions or corrections to any forward looking statements or other
information contained in the announcement, including to reflect any change in
the Company's expectations with regard thereto, any new information or any
change in events, conditions or circumstances on which any such statements are
based, unless required to do so by law or any appropriate regulatory
authority.
- Ends -
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