Science Group PLC Reports Record Profits, 25% Dividend Hike, and Major Corporate Gain in 2025

Financing has been refreshed and de-risked:

• Two 10-year term loans totalling £12.0 million, each secured on a freehold property, fully hedged at a fixed effective interest rate of roughly 7.3%.
• An undrawn £30.0 million revolving credit facility (RCF) at 1.95% over SONIA, plus a £10.0 million accordion option (subject to approval).

Net, Science Group has the rare combo of surplus cash, long-dated fixed-rate debt and an undrawn RCF. That gives plenty of optionality for buy-backs and future corporate opportunities.

Divisional performance: premium services steady, defence systems solid, consumer chips improving

Sagentia Services (Medical, Defence, Consumer, Industrial/Chemical)

• Revenue £71.5 million (2024: £72.2 million).
• Adjusted operating profit £18.8 million (2024: £17.9 million); margin up to 26.3% (2024: 24.9%).

The slight top-line dip reflects a deliberate exit from low-margin pass-through activity in Defence. Medical was strong; Consumer and Industrial held up despite tough markets. Geography remains well balanced: UK 36%, North America 41%, Continental Europe 13% with minimal direct Middle East exposure. On AI, the team is using tools within a governance framework; impact to date is incremental, but the Physical-AI opportunity could build over time given Sagentia’s robotics and sensor know-how.

CMS2 (submarine atmosphere management)

• Revenue £26.4 million (2024: £25.9 million), including £5.2 million of low-margin pass-through materials.
• Adjusted operating profit £5.5 million (2024: £5.7 million); margin 21.0% (2024: 22.2%).

A steady year that underlines the turnaround since the 2023 acquisition. With geopolitical tensions elevating the role of submarines, CMS2 looks well positioned in the UK and allied markets.

Frontier (DAB/DAB+ and connected audio)

• Revenue £13.2 million (2024: £12.0 million).
• Adjusted operating profit £1.1 million (2024: £0.1 million); note Frontier expenses all R&D, so reported operating result is a £1.1 million loss after amortisation.

The legacy radio market has stabilised. The strategic swing is toward Auria, a connected audio platform with multiple design wins and first retail products expected in 2026. Medium-term, Auria’s addressable market is “significantly larger” than core radio. Near-term watch-outs: higher industry memory costs, US Dollar volatility and potential Middle East transport disruption.

Share buy-back: bigger in 2025, could step up again

Science Group bought back £10.7 million of shares in 2025 (1,996,657 shares at an average 538 pence), more than double 2024. A further 446,830 shares were repurchased up to 13 March 2026. Since the May 2025 AGM, total buy-backs equal 5.02% of issued share capital at that time.

For 2026, the Board expects buy-backs at a broadly similar level. Notably, alongside the standard 10% authority, a second resolution is proposed to allow up to an additional 10% if warranted, capped in aggregate at £50.0 million. The Board makes no current commitment to use the extension, but clearly views the Company’s valuation as attractive for repurchases.

Outlook: margins over growth, with resilience and dry powder

Management stays pragmatic on revenue given geopolitics and mixed end-markets. The operating playbook remains margin, profit and cash conversion. With a 15-year record of EPS growth and ROCE above 30% since 2020, the Group intends to keep returning cash while remaining opportunistic on deals that fit its technical and managerial edge.

Foreign exchange is sensibly managed: 27.4% of revenue was in US Dollars, and an options structure caps part of 2026 USD exposure at $1.30/£1 while allowing upside participation.

What stands out to me

• Positive: Record AOP and EPS without chasing low-quality revenue. A 54.7% ROCE is elite for a services-and-systems mix.
• Positive: Balance sheet strength and refreshed facilities give genuine optionality. The RCF remains undrawn.
• Positive: The Ricardo move shows disciplined, thesis-driven capital allocation with rapid execution.
• Watch: Frontier remains a transition story. Auria carries execution risk and external cost/FX pressures, but the potential market is larger.
• Watch: A provision of £1.3 million is booked for a contractual matter under discussion. Details are commercially sensitive and not disclosed.
• Neutral: Management is not guiding to major revenue growth in 2026; the emphasis is on margin and cash. For investors, that likely means continued buy-backs and a higher dividend while the Group waits for better conditions or the right acquisition.

Key numbers at a glance

Metric	2025	2024
Revenue	£111.7 million	£110.7 million
Adjusted operating profit	£23.1 million	£21.5 million
Profit before tax	£41.5 million	£14.7 million
Statutory basic EPS	75.1 pence	26.5 pence
Adjusted basic EPS	40.2 pence	36.2 pence
Operating ROCE	54.7%	37.6%
Cash (Group)	£72.6 million	£38.6 million
Net funds	£61.2 million	£26.8 million
Cash generated from operations	£31.8 million	£21.8 million
Dividend (proposed)	10.0 pence per share	8.0 pence per share
Share buy-backs	£10.7 million	£5.0 million

Bottom line

Science Group’s 2025 shows a high-quality operating engine paired with opportunistic corporate savvy. The dividend step-up and active buy-back underline confidence, while the balance sheet gives room to move. If management keeps compounding margins and cash – and picks its spots as it did with Ricardo – shareholders should continue to see value accretion, even if near-term revenue growth is modest. My view: a disciplined compounder with optionality, not a fair-weather cyclical.