A Storm in a Boardroom: Science Group Flexes Muscles While Taking Swipe at Ricardo
Let’s not mince words: when a company holding a 20.1% stake in another firm starts publicly dissecting its strategy like a frog in a GCSE biology class, things get interesting. Science Group’s latest RNS isn’t just a trading update—it’s a masterclass in shareholder activism with a side of corporate shade. Here’s what you need to know.
Science Group’s Q1: Steady as She Goes
First, the good news. Science Group kicked off 2025 with:
- Revenue and profitability slightly ahead of board expectations
- Robust operating cash flow
- A balance sheet flaunting significant cash reserves
- An entirely undrawn £30m credit facility (with £10m accordion)
In classic British understatement, they call this a “resilient performance”. Given current market volatility, I’d call it a minor triumph of financial discipline.
The Ricardo Roast: A Shareholder’s Frustration Laid Bare
Now, the main event. Science Group’s critique of Ricardo reads like a corporate thriller—complete with missed targets, questionable accounting, and a boardroom seemingly allergic to accountability. Let’s break it down:
1. Profitability? What Profitability?
Ricardo’s 2022 strategic plan promised margin improvements. The reality? Targets “materially missed” and subsequently scrapped. Science Group highlights:
- Underlying Operating Profit (UOP) inflated by excluding shared service costs
- £23.4m in “exceptional” restructuring costs forecast for 2025
- Actual EBIT expected to hit £5.1m loss this year
2. Cash Conversion Charades
Cash is king, but Ricardo’s crown looks decidedly tarnished:
- H1 cash conversion from continuing operations: 13%
- House broker’s FY24/25 cash flow forecast slashed from £7.8m to £1.0m
- Science Group dryly notes this is “the most tangible metric of any business”
3. Governance Grenades
The real fireworks come in the governance critique:
- Board failed to flag performance issues before £46m E3A acquisition
- Executive pay deemed “excessive” for a £150m market cap firm
- Restructuring costs treated as exceptional every year for five years
Science Group’s zinger: “The Ricardo Chairman is accountable for destruction of shareholder value… now is the appropriate time to align the Board.” Translation: Clean house, or we might help you do it.
The Peer Comparison That Stings
An independent analyst report (12 March 2025) comparing 13 consultancies reveals:
- Science Group: #1 in adjusted EBIT margin and ROIC
- Ricardo: Dead last in EBIT margin, second-worst in ROIC
As Science Group notes: “The Ricardo performance is derisory.” When you’re being outclassed by everyone in your peer group during the same market conditions, the problem isn’t the weather—it’s the umbrella.
What’s Next? Boardroom Battles Ahead
Science Group’s endgame is clear: boardroom changes. With Ricardo’s share price at 15-year lows (down ~50% since current chairman’s 2022 appointment), the pressure cooker’s whistling. Key questions for investors:
- Will Ricardo’s Easter epiphany on cost control translate to action?
- Can they break the cycle of “exceptional” restructuring costs?
- Will major shareholders back Science Group’s push for governance changes?
One thing’s certain: in the battle of consultancy heavyweights, Science Group just landed a haymaker. Whether it leads to real change at Ricardo—or simply more boardroom drama—remains to be seen. But for investors? Grab the popcorn. This could get educational.
