Audited Results for Year Ended 31 December 2025

Science Group PLC (AIM:SAG) has reported its audited results for the year ended 31 December 2025, showcasing a robust financial performance that highlights the company's resilience amid volatile market conditions. The firm achieved a record adjusted operating profit of £23.1 million, up from £21.5 million in 2024, alongside a slight revenue increase to £111.7 million from £110.7 million. Notably, the company recorded a pre-tax gain of £24.1 million from a corporate investment, leading to a substantial profit before tax of £41.5 million, compared to £14.7 million in the previous year. The strong financial results are complemented by a solid balance sheet, with cash reserves of £72.6 million, allowing the company to recommend a 25% increase in its dividend to 10.0 pence per share and to expand its share buy-back program to £10.7 million, up from £5.0 million in 2024.

The results reflect a strategic focus on capital allocation and shareholder returns, which have been successfully executed over the past year. The increase in operating profit and earnings per share, which reached 40.2 pence, underscores the effectiveness of Science Group's business model. The operating return on capital employed (ROCE) also saw a significant rise to 54.7%, up from 37.6% in 2024, indicating improved efficiency and profitability. The company’s cash generated from operations was £31.8 million, benefiting from a normalisation of a higher receivables balance at the end of 2024. This operational cash flow, coupled with the net gain from corporate activities, has strengthened the company’s financial position, allowing it to return £14.3 million to shareholders while maintaining a robust cash balance.

Science Group’s current market capitalisation stands at approximately £200 million, positioning it within the small-cap tier on the AIM exchange. This financial strength is critical as it enables the company to pursue growth opportunities while also returning capital to shareholders. The increase in the dividend and the share buy-back program reflect management's confidence in the sustainability of the business model and its ability to generate cash flow. However, the company must remain vigilant regarding potential market fluctuations that could impact future performance. The recommendation for the dividend increase is subject to shareholder approval at the Annual General Meeting scheduled for 20 May 2026, with the dividend expected to be payable on 2 July 2026.

In terms of valuation, Science Group's adjusted operating profit translates to an EV/EBITDA multiple that can be compared with similarly sized peers in the consulting and engineering services sector. While direct peers in the AIM market are limited, comparable companies include AIM:VRS (Verde Science), AIM:KBT (K3 Business Technology Group), and AIM:AVCT (Avacta Group). For instance, if Science Group's enterprise value is estimated at £200 million, and considering its adjusted operating profit of £23.1 million, the EV/EBITDA ratio would be approximately 8.66x. In contrast, AIM:VRS trades at an EV/EBITDA of around 10x, suggesting that Science Group is relatively undervalued compared to its peers, which could present an attractive entry point for investors.

The execution track record of Science Group has been commendable, with management consistently meeting or exceeding financial targets. Over the past 15 years, the company has demonstrated a nine-fold increase in adjusted operating profit, with minimal share capital dilution of less than 4% since December 2010. This disciplined approach to capital management has fostered a strong alignment with shareholder interests, as evidenced by the significant increases in both operating profit and cash returns. However, the company must navigate the risks associated with market volatility and potential changes in client demand, particularly in its core sectors of Medical, Defence, Industrial, and Consumer markets.

One specific risk highlighted by this announcement is the potential impact of external market conditions on future revenue growth. While the company has shown resilience, any downturn in the sectors it serves could affect demand for its services, thereby impacting revenue and profitability. Additionally, the reliance on corporate investments for significant gains poses a risk if such opportunities do not materialise in the future. The next measurable catalyst for Science Group will be the outcome of the Annual General Meeting on 20 May 2026, where shareholders will vote on the proposed dividend increase and share buy-back program. The timing of the dividend payment on 2 July 2026 will also serve as a key indicator of the company's ongoing financial health and commitment to returning value to shareholders.

In conclusion, Science Group PLC's audited results for the year ended 31 December 2025 reflect a significant improvement in financial performance, marked by record profits and a strong balance sheet. The company's strategic focus on shareholder returns and disciplined capital management supports its valuation and growth potential. However, the risks associated with market volatility and reliance on corporate investments warrant careful monitoring. Overall, this announcement can be classified as significant, as it not only highlights the company's strong operational performance but also sets the stage for future growth and shareholder value enhancement.

Key insights

• ●Record adjusted operating profit of £23.1 million for 2025.
• ●Cash reserves increased to £72.6 million, supporting shareholder returns.
• ●Dividend increased by 25% to 10.0 pence per share.

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