Cambridge tech consultancy Science Group plc saw its share price leap 24.30p (7.71 per cent) to 339.30p after posting record revenues and adjusting operating profit – ahead of upgraded expectations – for the year to end-December.
A recommended dividend of 4p a share was a welcome bonus for stockholders. Group revenue increased 29 per cent to £73.7 million while adjusted operating profit rose by 62 per cent to £10.9m.
A great year was also marked by the successful integration and turnaround of Frontier Smart Technologies with a strong profit contribution to the group.
Chairman Martyn Ratcliffe said fresh acquisitions would be scouted but no moves would be made unless deals bolstered not only the bottom line but also the group’s long-term business expansion strategy.
He said: “Despite the challenges resulting from the Covid-19 pandemic, the performance has been very satisfactory, reflecting the portfolio nature of the group balancing exposure to sectors, service/product lines and geographies.
“The resilient performance, achieved in an unprecedented environment, is a credit to the commitment and dedication of Science Group employees. The unusual circumstances, with minimal international travel and refocused marketing activities, also enabled the board to invest in evolving the business operations to position for the inevitable longer-term change resulting from such a global event.
“As a result, the board is optimistic for the continued progress of the group in 2021 and has experienced a good start to the current year whilst remaining mindful of the ongoing economic uncertainty.
“With a strong balance sheet including significant cash resources, the board continues to cautiously explore both add-on acquisitions and larger opportunities to increase the scale of the group. However, there can be no certainty that any transactions will satisfy the Board’s evaluation criteria and diligence process.”
Science Group is an international, science-led services and product development organisation with a significant freehold property asset base. Following the Frontier acquisition in 2019 and the natural evolution of the services operations, the group now comprises three divisions: R & D Consultancy; Regulatory & Compliance; and Frontier Smart Technologies.
Science Group continues to benefit from excellent cash conversion and a very strong balance sheet. At December 31, gross cash was £27.1m (2019: £13.9m) and net funds £10.6m (2019: net debt of £2.3m).
Some 33 per cent of the group’s business is derived from clients based in North America compared to 17 per cent directly from Europe, and 57 per cent of group revenue is denominated in US dollars compared to five per cent in Euros.
“As such, business/trading relations and the corresponding currency relationships with the USA are a far greater consideration for Science Group,” said Ratcliffe.
“While monitoring the effect of Brexit is important, the new administration in the USA has potentially far greater impact on the group’s business and operations.”