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)

* 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.