Science Group plc (LSE:SAG) said it expects performance in 2026 to remain resilient and in line with board expectations despite geopolitical uncertainty and delays affecting UK defence contract awards.
Revenue is anticipated to be lower than the previous year as the company intentionally reduces lower-margin defence-related work, a move management said should contribute to improved overall margins. Science Group continues to maintain a strong financial position, supported by significant cash reserves, net funds and access to an undrawn revolving credit facility, with management prioritising adjusted operating profit, margin expansion and cash generation.
Defence operations and technology divisions
The company said its Sagentia Services division remains broadly well positioned, although activity tied to UK defence markets has been affected by delayed procurement decisions.
Meanwhile, CMS2’s submarine-related systems business has proven more resilient and could secure contracts capable of supporting growth visibility into the 2030s.
Frontier’s DAB+ and SmartRadio operations continued to perform steadily, with shipments now underway for its new Auria connected audio platform. However, management cautioned that consumer electronics demand could remain pressured by broader macroeconomic weakness and potential price inflation.
Share buybacks and capital allocation
Over the past year, Science Group returned more than £24 million to shareholders through dividends and share buybacks, while also reducing its voting share capital. Management said these returns have been funded organically alongside continued growth and maintenance of a strong balance sheet.
The board indicated it intends to continue — and potentially increase — the company’s buyback programme. Science Group is also evaluating broader capital allocation options, including the possibility of higher shareholder returns if suitable acquisition or investment opportunities do not emerge.
Management added that the company’s relatively modest valuation on the London market remains a limiting factor in pursuing larger corporate ambitions.
Outlook and valuation considerations
Science Group’s outlook is supported by solid profitability, conservative balance sheet management and comparatively attractive valuation metrics, including a relatively low price-to-earnings ratio.
However, these positives are partly offset by weaker technical indicators, with the share price trading below key moving averages and negative MACD signals pointing to softer market momentum. Recent share buyback activity nevertheless provides an additional supportive factor for investor sentiment.
More about Science Group
Science Group plc is an international science, engineering and technology consultancy and systems business operating across multiple sectors. Through its Sagentia Services division, the company supports clients in industries including MedTech, consumer products, food and beverage, defence and industrial markets.
Other divisions include CMS2, which specialises in defence systems, and Frontier, which focuses on connected audio and digital radio technologies.
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