Strong H1 and forecasts upgraded

H1 results released today confirm the positive trajectory indicated in recent newsflow. Vertu had a strong H1, achieving record revenues of £2596.5m, just ahead of H1 FY26. Adjusted PBT of £23.8m was some 19% above the prior year as Gross Profit grew across the business. The new car market is demonstrating good growth, including a rebalancing towards (higher margin) private sales. Management actions in expanding into older vehicles and continuing investment in technology are showing benefits, whilst Vertu is gaining representation with the Chinese brands. The results disclose that the full results for the year ending 28 February 2027 are now expected to be ahead of current market expectations. We have adjusted our forecasts again to reflect the positive news.

Strong H1 and forecasts upgraded

Today’s trading and strategic update for the 12 months ending 30 September discloses that revenues and earnings for the 15m ending Dec 26 are expected to be below management and market expectations with a range for revenue of £47.0m to £51.0m and for adjusted EBIT loss of £-0.5m to £-3.9m. Our previous forecasts were £56.5m and profit £3.0m respectively. For FY27 the revenue is also now expected to be lower than market expectations whilst, as a result of the more assertive action on costs, adjusted EBIT is now expected to be at or above current market expectations of £3.5m. The principal reasons cited for the lower than expected revenue are changes in Vicon’s established end markets, research funding pressure, delays to major projects in IVMS and uncertainty regarding a few sizeable Vicon contracts.

Trading update – familiar challenges

tinyBuild is the strongest- performing UK video game stock of 2026, up by over 80% since the beginning of the year. We like the diversified portfolio of own-IP which offers a strong risk-reward combination. After three years of neglect, the video game sector is starting to attract investors’ interest again. We forecast solid H1 results ($18.7m revenue and $3m Adj. EBITDA) and a strong second half, based simply on titles for which the release date has already been announced (e.g. Restory, Graveyard Keeper 2, Probably Stolen). If future releases continue to track positively, there is also some potential for upside surprise over coming months.

Risks tilting to the upside

Oxford Metrics yesterday announced the acquisition of Captive Devices a specialist in markerless motion capture of facial expressions and movements. The total consideration is for up to £750,000, made up, subject to the usual adjustments, of £250k cash, £300k shares and £200k cash contingent. Founded in 2024 by experienced gaming industry professionals, Captive Devices has already achieved sales to major studios. The deal adds an exciting new set of products, solutions and knowhow to Vicon, whilst providing Captive Devices with access to Vicon’s market leading international customer base.

Acquisition highlights market evolution

The trading update released today provides encouraging news. Both new and used vehicles are performing well and ‘Value Cars by Vertu’ has been launched successfully. The portfolio exposure to leading Chinese brands is building; the focus on costs is a constant. Management welcomes the government consultation on the ZEV mandate, albeit with a note of caution. Orders for the July-September quarter ahead of the September plate change give management the confidence to anticipate FY27 results ahead of market expectations, and we raise our FY27 adjusted PBT estimate accordingly.

Strong trading drives forecast upgrade

We initiated on Science Group in June 2026. In our note we discussed how the Group brings together three divisions under the umbrella of a disciplined group structure. Our note was entitled “Control, Cashflow, Compounding”, and the interim results clearly show how the Group is steadfastly demonstrating each of these three characteristics.

Interim results to 30th June 2026

The OM investor event on 17th June brought together the PLC board management and the divisional MDs to present on the Group and its direction, including its updated strategy and capital allocation policy. The presentations gave a clear view on the path management is seeking to take to doubling revenues, ARR ~25% of revenue and adjusted EBIT margin in mid-teens %. There is considerable potential to take Vicon from a product to a platform business and IVMS from a projects to a products business, along with evolving their routes to market. Perhaps the most encouraging feature was that the narrative focused less on market growth and technology adoption, and more on what OM itself can do to drive sales and provide customers with modern, innovative solutions.

Investor day – two transformations

Vertu’s AGM trading update covering the three months to end May states that Vertu is trading ahead of market expectations and that it is seeing like for like volume growth across the Group. Aftersales continues to drive profit growth whilst group margins are stable with overall trading ahead of prior years. We have adjusted our forecasts for FY27 to reflect this encouraging news. Vertu is growing its exposure to the leading Chinese brands, with two openings, on existing Vertu sites, planned for Omoda and Jaecoo. By October, 15 of Vertu’s sales outlets will be with Chinese automotive brands.

Trading ahead of market expectations

OM’s results for the period ended 31 March 2026 provide encouraging evidence of clear strategic and operational progress. The figures are in line with the trading update given in April with revenue £20.7m, up 3% on the prior year, and Adjusted LBIT £(0.2m) an improvement upon the prior year’s £(0.4m). Motion Capture has had a good start to the 15-month period, although Vision Metrology has seen the impact of delays in some customer projects. The important event today, however, is not the interim results but the investor event this afternoon at which management will give further insight into the updated group strategy and capital allocation – with perhaps the most exciting prospect being the presentations on Vision Metrology’s evolving opportunity.

Visible progress

Science Group brings together high-return, cash-generative operating businesses, which benefit from being within a disciplined group structure. Our valuation shows the operating businesses trading on a PE of 9.4x, which appears low for such high margins, high returns and cash generation.

Control, cashflow, compounding

The results for the year to 28 February released today were slightly up on market expectations for Adjusted PBT. Revenue was lower than our estimate (£4,833.8m vs £5,133.8m), driven mainly by subdued new vehicle sales, while the key figure of adjusted profit before tax at £24.5m was ahead of our estimate of £23.4m. Net debt (pre-leases) was £61.3m, slightly better than the £63.2m we had estimated. Vertu has seen an encouraging start of trading in FY27, with management confirming expectations for the year.

Making progress against the headwinds

Vertu has today announced the settlement of its business interruption insurance claim for the impact of the JLR cyber-attack in September 2025. An interim payment of £1.0m had already been received and reflected in our forecasts and market expectations, but the full settlement adds £2.4m to our, and market, estimates for FY26.