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Highlights

  • Science Group Increases Stake: Science Group plc has acquired a 16.2% stake in Ricardo and is pushing for boardroom changes, including the removal of Chairman Mark Clare.

  • Board’s Firm Stance: Ricardo’s Board unanimously rejected Science Group’s demands, citing concerns over undue influence without premium payment.

  • Strategic Growth & Financial Recovery: Despite market challenges, Ricardo continues to execute its transformation strategy, delivering significant order intake and operational improvements.

Ricardo plc’s (LSE:RCDO) Board has strongly rejected demands from Science Group plc to remove Chairman Mark Clare, amid an ongoing power struggle as Science Group continues to increase its stake in the company. Currently holding 16.2% of Ricardo’s issued share capital, Science Group has been vocal in its criticism of the company’s leadership and has threatened to call a general meeting to push for board changes.

The Board of Ricardo believes Science Group’s demands serve its own interests rather than those of Ricardo’s broader shareholder base. In a firm response, the company stated that its independent Non-Executive Directors had unanimously resolved to stand by Clare, affirming their full confidence in his leadership.

Science Group’s Influence and Ricardo’s Concerns

Science Group has proposed replacing Clare with its own Executive Chairman, a move that Ricardo views as an attempt to take control without offering a premium to existing shareholders. The Board sees this as a threat to Ricardo’s strategic autonomy, especially at a time when the company is executing a major transformation plan.

This push for control comes as Ricardo navigates a challenging market environment. Factors such as global geopolitical uncertainty and delays in government budget allocations have impacted the company’s short-term financial performance. Ironically, Science Group itself reported an 11% drop in consulting revenue in 2024, reflecting similar market pressures.

Ricardo’s Transformation Strategy on Track

Despite these challenges, Ricardo remains confident in its long-term strategy. The company has been shifting focus from mobility services to environmental and energy transition solutions. This transformation has been marked by key strategic moves, including:

  • Divestment of Defense Segment: The sale of its defense operations in 2024, following a major $385 million U.S. Army contract renewal in 2023, secured significant value for shareholders.

  • Acquisition of E3 Advisory: Ricardo reinvested proceeds from the defense sale into acquiring E3 Advisory Pty Ltd, expanding its expertise in energy and infrastructure consulting.

  • Strengthening Energy & Environment Segment: With a robust order book and high-margin operations, Ricardo is well-positioned for long-term growth in energy decarbonization and climate change consulting.

  • Expanding Rail Business: The company has successfully expanded into key growth markets in the U.S. and Asia, achieving record order intake in early 2024/25.

As a result of these initiatives, Ricardo’s Environmental and Energy Transition businesses now account for approximately 85% of its operating profits.

Financial Performance and Future Outlook

Ricardo has made significant strides in improving its financial performance, despite broader economic headwinds. Recent achievements include:

  • Order Intake: £221 million in new orders in H1 2024/25, an 11% increase compared to the previous year.

  • Profitability Growth: Underlying operating profit rose to £8.3 million in H1 2024/25, a sharp improvement from £1 million in H1 2023/24.

  • Cost Efficiency Measures: The centralization of enabling functions is delivering substantial savings in indirect costs.

Upcoming Business and Strategy Update

To provide investors with a clearer view of its strategic direction, Ricardo plans to release a Business and Strategy Update in mid-April 2025. This update will highlight trading performance, cost reduction initiatives, and a deeper focus on environmental and energy transition solutions.