Science Group reports 'good start' to year across business

The AIM-traded firm, which was holding its annual general meeting, said that in the services businesses, the research and development consultancy division had seen “particularly strong” momentum in the medical sector, while the regulatory and compliance division continued its progress from 2020.

It said the Frontier product division was performing “well”, with material supply constraints likely to be the biggest risk in the current year.

Given the ongoing momentum, the board said it now expected the group to report adjusted operating profit for the first half around 30% higher than in the same period a year earlier.

“This is a particularly notable performance, since the first half of 2020 reported a record adjusted operating profit for the group, and the current year includes a significant currency exchange rate headwind relative to the strong 2020 comparator,” the board said in its statement.

“While it is still early in the year and the board is closely monitoring the impact of a strengthening sterling currency, this excellent start to 2021 provides a platform for the year as a whole and empowers the group management teams to continue to invest in future growth opportunities with confidence.”

Gross cash at 30 April totalled £29.5m, with net funds of £13.3m.

The group said its strong balance sheet and free cash flow generation enabled the board to continue to evaluate corporate opportunities to increase the scale and development of the group, in parallel with the organic investment activities.

Looking at the Frontier business, Science Group said the division’s strategy review was ongoing, following the restructuring in 2019-2020 which created a “highly profitable business” making a “significant positive contribution” to the group.

“The review has not only confirmed the strategic position of Frontier but also identified a number of opportunities to further enhance and develop the business which are currently being evaluated,” the directors said.

“As a result, the board has concluded that retaining Frontier in the group is the most attractive option for Science Group shareholders and has decided to terminate potential sale discussions.”

Finally, the company said its triennial freehold property valuations were undertaken in March, reporting that despite the timing in the midst of the Covid-19 pandemic, there were only minor changes to the valuations with a range between £23m and £35m, the latter being a sale-and-leaseback model.

“This completes the work required to transfer the Harston Mill property out of Sagentia, which will now proceed as previously reported in order to address this legacy issue and provide a

more appropriate corporate structure.”

At the close, shares in Science Group were up 11.43% at 390p.