Record 2025 results and a 25% dividend rise
Science Group PLC has delivered another set of record numbers. Adjusted operating profit rose to £23.1 million (2024: £21.5 million) and adjusted basic earnings per share (EPS) hit 40.2 pence (2024: 36.2 pence). Revenue was broadly flat at £111.7 million (2024: £110.7 million) but margins improved, pushing Operating Return on Capital Employed to an eye-catching 54.7% (2024: 37.6%).
The Board is recommending a 25% dividend increase to 10.0 pence per share (2024: 8.0 pence), payable on 2 July 2026 subject to approval on 20 May 2026. For context, at the 31 December 2025 share price of 547.5 pence, that equates to a dividend yield of about 1.8%.
Quick jargon check:
- Adjusted operating profit (AOP) strips out certain non-cash and one-off items to show underlying trading.
- EPS is profit per share. Statutory EPS was 75.1 pence thanks to a corporate gain (see below).
- ROCE measures profit against the capital employed. Higher is better; 54.7% is excellent.
Why profit jumped: operations plus a shrewd corporate trade
Operationally, the Group did the hard yards on margin and cash conversion. But the step-change in statutory profit came from corporate activity. Science Group built a stake in Ricardo plc after its profit warning, then backed an offer for Ricardo at 430 pence per share. Total proceeds were approximately £58.2 million versus a £32.7 million outlay, delivering a pre-tax net gain of £24.1 million and an estimated post-tax gain of £19.0 million. Return on investment: in excess of 70% in under five months. That’s sharp execution.
As a result, profit before tax rocketed to £41.5 million (2024: £14.7 million) and statutory basic EPS reached 75.1 pence (2024: 26.5 pence).
Cash, balance sheet and financing firepower
Cash generated from operations was strong at £31.8 million (2024: £21.8 million), helped by tighter working capital (debtor days down to 33 from 36). With the Ricardo proceeds, year-end Group cash stood at £72.6 million and net funds were £61.2 million (both excluding client registration funds).
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.
