Science Group PLC Trading Update (7080B)
October 12 2020 - 2:00AM
UK Regulatory
TIDMSAG
RNS Number : 7080B
Science Group PLC
12 October 2020
12 October 2020
Science Group plc
(the "Group" or "Science Group")
Trading Update
Science Group announces that, following its trading update on 10
September 2020, revenue across the Group has continued to be at the
higher end of the Board's expectations. In particular, the
performance of Frontier is noteworthy in terms of both revenue and,
due to an enhanced product mix, an improved operating margin. While
the Board is using the opportunity to increase investments in the
operating businesses, it is now apparent that the Group's adjusted
operating profit for the year ended 31 December 2020 will exceed
the Group's expectations as set out at the start of the year.
Frontier Smart Technologies
The acquisition of Frontier was completed one year ago this
week. The restructuring and integration programme was executed
rapidly and, in hindsight, would have been very challenging if it
had not been completed before the outbreak of the pandemic. While
the business was disrupted by Covid-19 in the first half of the
year, demand for Frontier products has continued the recovery seen
in the early summer, with shipments in 2020 now constrained by
materials supply and orders booked for shipments in early 2021 now
approaching 50% of the first quarter forecast.
The benefit of this uptick in demand is enhanced by an
increasing proportion of SmartRadio modules (combined DAB, Internet
Radio and music/podcast streaming services) in the product mix
which have a higher average selling price than DAB-only modules. It
is unclear whether this is a longer term trend at this stage,
although Smart Radio sell through can be validated by tracking the
quantity of first-time connections to the Nuvola IoT infrastructure
and the data obtained supports the view of market growth in this
sub-sector since mid-April.
As a result, after many years of losses, for the year to 31
December 2020 it is now anticipated that Frontier will slightly
exceed the revenue plan set out at the start of the year and
operating margins for the year are now anticipated to be broadly in
line with the rest of the Group. In summary, Frontier has exceeded
the Board's expectations in its first year post-acquisition.
Employee Appreciation and Charitable Donations
In achieving such a strong performance in this challenging year,
the employees of Science Group have demonstrated their resilience,
commitment and determination. The Board expresses its gratitude for
this dedication and has awarded a one-off bonus of GBP500 to all
eligible, permanent employees (pro-rated for part-time staff and
localised for employees outside the UK).
In addition, early in the pandemic, the Board recognised the
potential impact on some sectors of society and provided support to
local food banks. Unfortunately, as we enter winter, Covid-19
remains firmly established and charitable sector fund raising
continues to be very severely constrained. In light of the Group's
successful financial performance, the Board has decided to increase
the Group's charitable donations in 2020 to further support local
communities in these difficult times.
2021 Outlook
The global economic environment remains unpredictable and the
future will be subject to the effects of Covid-19, Brexit and the
US Presidential election. Realistically it is impossible to
incorporate such a combination of factors into a business plan. The
Board will therefore continue its prudent operating model, making
investments when financial results permit, and maintaining its
primary focus on cash flow. This model, which is consistently
implemented in every acquisition, has delivered resilient
performance over the past decade, even during the pandemic .
Science Group also benefits from its strong balance sheet
including gross cash (excluding client held funds) at 30 September
2020 of GBP25.0 million and net funds of GBP8.2 million, with the
debt secured on the Group's substantial freehold property (office
and laboratory) assets. This capital base enables the Board to
continue to explore acquisition opportunities although, as always,
there can be no certainty that any acquisitions will be
completed.
End
Science Group plc
Tel: +44 (0) 1223 875
Martyn Ratcliffe, Chairman 200
Rebecca Archer, Finance Director www.sciencegroup.com
Stifel Nicolaus Europe Limited (Nominated
Adviser and Joint Broker)
Tel: +44 (0) 20 7710
Nick Adams, Alex Price 7600
Liberum Capital Limited (Joint Broker)
Tel: +44 (0) 20 3100
Neil Patel, Cameron Duncan 2000
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation (No
596/2014). The person responsible for this announcement is Rebecca
Archer, Finance Director .
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END
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