Science Group posts record first-half adjusted operating profit

23rd Jul 2024 12:03

(Sharecast News) - Science Group reported a record adjusted operating profit of £11m for the six months ended 30 June on Tuesday, up from £10.4m a year earlier.

The AIM-traded firm said its adjusted basic earnings per share increased to 18.1p, compared to 16.6p last year.

Its cash position strengthened, with group cash at £38.8m and net funds at £26.4m, benefiting from strong cash conversion.

A significant contributor to the performance was the turnaround at CMS2, which now reported increased revenue and profitability.

CMS2's revenue for the period was £10.9m, a rise from £7.9m in the first five months of 2023, with adjusted operating profit surging to £3.2m from £0.8m.

That improvement was attributed to strategic management actions and increased investment in innovation, resulting in 12 new patents filed in 2024.

Science Group's consultancy division faced a challenging market, with first-half revenue at £36.5m, down from £42.3m in the first half of 2023, due to large projects concluding and a broader market slowdown.

Despite that, the division maintained strong margins, with adjusted operating profit at £8.8m, consistent with the second half of 2023.

The medical sector showed sequential growth, while the Industrial sector remained subdued, and the defence sector experienced a decline due to reduced legacy low-margin activities and a slowdown in discretionary spending.

Frontier, a subsidiary focused on radio and audio semiconductors, reported revenue of £5.9m, up from £5.4m in the first six months of 2023 and £4.5m in the second half of the same year.

The business achieved operating breakeven while continuing to invest in research and development.

Frontier launched a new connected-audio product, Auria, and maintained market leadership in the traditional radio market.

Science Group also announced an increased share buyback programme of up to £5m.

"The first half of 2024 has continued the group's consistent track record, delivering record first-half adjusted operating profit, with strong cash conversion, despite ongoing economic and political uncertainty," the Science Group board said in its statement.

"This solid performance provides a good platform for the remainder of the year.

"The operating improvements and financial performance delivered by CMS2 are particularly noteworthy."

At the same time, Science Group said its consultancy division had demonstrated resilience in a "more unpredictable" market environment, adding that the anticipated Frontier recovery was progressing.

"With a robust balance sheet, including significant cash resources and undrawn debt facilities, combined with ongoing operating cash generation, Science Group continues to explore corporate opportunities while also increasing the capital allocated to the share buy-back programme."

At 1147 BST, shares in Science Group were down 0.05% at 414.8p.

Reporting by Josh White for Sharecast.com.