Science Group (LSE:SAG) reported a resilient performance for the first half of 2026, delivering higher profitability despite a modest decline in revenue amid geopolitical uncertainty and slower activity in the UK defence market. Adjusted operating profit increased to £11.5 million, while operating margins strengthened as the company continued to focus on higher-quality revenue streams. Adjusted earnings per share also improved, supported by stronger profitability and the ongoing execution of an active share buy-back programme.
The group’s Services division maintained healthy margins despite delays to UK defence spending and reduced client investment linked to instability in the Middle East. Management noted that trading conditions are beginning to improve following the publication of the UK Defence Investment Plan. Within the Systems businesses, CMS2 performed ahead of expectations, benefiting from the timing of contract deliveries that produced exceptionally strong margins, while Frontier delivered stable revenue despite higher electronic component costs. Backed by a robust balance sheet and a portfolio of freehold property assets, Science Group said it remains well positioned to continue returning capital to shareholders while exploring strategic acquisitions and opportunities to unlock additional value from its real estate holdings.
The company’s investment outlook continues to be supported by strong profitability, a conservative financial position and an attractive valuation based on a relatively low price-to-earnings multiple. These strengths are partly offset by weaker technical indicators, with the shares trading below key moving averages and the MACD remaining negative. Continued share buy-backs and other capital allocation initiatives provide an additional positive factor for investors.
More about Science Group plc
Science Group plc is an international science, technology and engineering business that provides consultancy, systems and product development services across a range of specialist industries. Through its Sagentia division, the company delivers innovation, regulatory and advisory services, while CMS2 supplies submarine atmosphere management systems for the defence sector and Frontier develops radio frequency and audio semiconductor technologies.
The group’s strategy focuses on generating sustainable operating profit, expanding margins and producing strong cash flow, enabling it to invest in growth opportunities while returning excess capital to shareholders. Alongside its operating businesses, Science Group also owns significant freehold property assets near Cambridge and Epsom, which provide additional opportunities to enhance long-term shareholder value.
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