Interim results for the half year ended 31 December 2024

HIGHLIGHTS

• Acquisition of E3 Advisory and disposal of Ricardo Defense demonstrates clear execution against our strategy
• Continuing Group order intake of £221m on the back of multi-year wins (HY 2023/24: up 11% from £199m on a constant currency basis), with modest revenue growth of 2% in the face of a challenging macro environment
• Solid improvement in underlying operating profit to £8.3m (HY 2023/24: £1.0m at constant currency), driven by higher margins and ongoing focus on cost to underpin profitability
• Continuing underlying operating profit margin improved to 4.9% from 0.6% (constant currency)
• Net debt reduced by £41.1m since 30 June 2024, due to the proceeds on the sale of Ricardo Defense
• Lower than expected underlying cash conversion of 13% in the continuing operations as a result of delayed receipts and changes to profile of invoicing milestones; improved performance expected in the second half
• Profit on sale of Ricardo Defense of £36.8m, partly offset by £14.0m impairment of Emerging A&I due to uncertainty over timing of order intake
• Resilient solutions in Energy & Environment are key to our strategy with strong fundamentals providing confidence in mid-term growth
• Continued variability in automotive end markets drives our diversification into off-highway and industrial applications which supports expected mid-term growth
• Interim dividend of 1.7p declared

Continuing operations exclude the results of Ricardo Defense, which was sold on 31 December 2024
References are defined in the glossary of terms below.

Commenting on the results, Graham Ritchie, Chief Executive Officer, said:

“With the sale of Ricardo Defense and the acquisition of E3 Advisory, we have demonstrated clear execution against our strategy, simplifying our business and accelerating our transition to environmental and energy solutions.

Although we have experienced some market headwinds in the first half, which impacted the timing of orders, we delivered an improving operating profit performance year-on-year, owing to actions taken to improve the Group’s cost base, and we will continue to focus on operational efficiency to improve profitability.

Whilst we have seen volatility owing to elections leading to short term headwinds, our Energy and Environment business is core to our strategy, offering long-term resilient solutions that are required for energy transition and climate adaptation.

Within our Automotive and Industrial engineering business we continue to see variability in demand from the automotive sectors, but this is becoming a smaller mix of our revenue as we diversify into Industrial segments, including marine, aerospace and stationary power, which gives confidence for longer-term growth.   

We remain confident that the actions we are taking to transition our portfolio of solutions, diversify our sales activity to new markets and our continued focus on cost control and operational efficiency will deliver mid-term profitable growth.”

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