Interim Results Presentation July 2016 Martyn Ratcliffe Chairman - - PowerPoint PPT Presentation

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Interim Results Presentation July 2016 Martyn Ratcliffe Chairman - - PowerPoint PPT Presentation

Oct 11, 2023 460 likes •565 views

Interim Results Presentation July 2016 Martyn Ratcliffe Chairman Rebecca Hemsted Finance Director To be read in conjunction with the Interim Results a nnouncement released on 12 July 2016 1 Science Group plc Science and technology services

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Interim Results Presentation July 2016

Martyn Ratcliffe Chairman Rebecca Hemsted Finance Director

To be read in conjunction with the Interim Results announcement released on 12 July 2016

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Science and technology services

  • Science-based Consultancy and Advisory Services
  • Technology & Product Development

Four subsidiary companies/brands

  • Sagentia – founded 1986, provides services to medical and commercial markets
  • OTM Consulting – acq 2013, provides services to oil and gas industry
  • Oakland Innovation – acq February 2015, provides services to consumer, healthcare and food &

beverage markets

  • Leatherhead Research – acq September 2015, provides services to food & beverage industry

Significant freehold property assets

  • North-of-London Facility – offices and laboratories based in freehold property in Harston, Cambridge
  • Sagentia and Oakland Innovation
  • South-of-London Facility – offices and laboratories based in freehold property in Epsom
  • Leatherhead Research and OTM Consulting
  • Other leasehold offices: UK – London; USA – Boston & Houston

Science Group plc

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Satisfactory operating performance Group revenue of £17.7m (H1-15: £14.1m)

  • Benefitting from 2015 acquisitions
  • Continuing challenging oil & gas market resulted in OTM revenue decline
  • Sagentia-Medical affected by end of large projects in mid-2015. Significant new projects recently won

Adjusted* operating profit of £2.5m (H1-15: £2.4m)

  • Leatherhead Research contribution exceeded integration plan

Statutory PBT of £1.1m (H1-15: £1.9m)

  • One off costs relating to Leatherhead, including restructuring/relocation of £0.3m (H1-15: £nil)
  • Approx. 60% of total Leatherhead and OTM staff have been relocated to the Epsom site
  • Increase in amortisation of acquisition related intangible assets arising from 2015 acquisitions
  • Settlement of vested unapproved share options resulting in one off cost of £0.2m (See later)
  • Loss on revaluation of interest rate swap of £0.1m (H1-15: gain of £0.1m)

Financial Summary - 1

* Throughout this presentation, adjusted operating profit and margin excludes amortisation and impairment of intangible assets, share based payment charges and other exceptional costs

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Freehold property assets : £21.3m (H1-15 : £13.6m)

  • Harston Mill : £13.5m; approx gross 100k sq ft; approx. one third of space is sublet
  • Great Burgh : £7.8m; approx gross 50k sq ft; will be fully used by Science Group

Cash balance of £17.2m (H1-15: £21.5m) and Net Funds of £9.9m (H1-15: £13.2m)

  • Acquisition of business and property in H2-15 of £13.6m
  • Cash generated from operations in H1-16: £5.3m (H1-15: £3.3m) including £1.5m VAT rebate re property
  • Bank debt at 30 Jun 2016: £7.3m (H1-15: £8.3m)

Basic EPS of 2.4 pence (H1-15: 4.0 pence) and diluted EPS of 2.3 pence (H1-15: 3.6 pence)

  • In line with reduction in PBT following non-recurring and other exceptional items

Financial Summary - 2

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At 31 December 2015, the Group had 3.0m share options outstanding

  • Of which 1.9m have vested or are anticipated to vest during 2016

Share options settlement offer to employees

  • Limited liquidity in Science Group shares and not understood by many employees
  • Difficult for share option holders to exercise and unexercised share options act as share overhang
  • Eligible employees offered a cash settlement in exchange for waiving right to unexercised,

unapproved, vested share options (and PSP) issued up to Dec 2013, totalling 1.0m options

  • Following this action, outstanding options have reduced to 1.8m, of which 0.8m have vested or will

vest in 2016 and 0.2m anticipated to lapse

Accounting impact

  • Cash outflow for settlement to employees who accepted the offer of £0.6m
  • Incremental P&L employment cost of £0.2m, recognised as an exceptional cost

Future Share Option Grants

  • Limited to Senior Grades as part of total remuneration package
  • Under normal circumstances, limitation to not more than 1% of ISC per annum
  • 2008 Unapproved Scheme will be terminated as soon as practicable

Share Options

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  • Benefitted from 2015 acquisitions
  • Offset by challenging oil & gas market
  • Phasing of projects in Medical sector continued to affect revenue. New large projects won

Group Revenue Breakdown

2 4 6 8 10 12 14 16 18 H1-11 H2-11 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16

£ million

Non Core: Incl third party property income Other core business revenue Core business: Services revenue

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  • Group comprises 5 operating businesses using 4 brands
  • 2015 acquisitions have expanded customer base and service offerings
  • Food & Beverage market synergies : Sagentia-Commercial, Oakland and Leatherhead

Services Revenue Profile – H1 2016

Sagentia-Medical Sagentia- Commercial OTM Oakland Leatherhead

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  • Science Group is an international business : approx. 70% of Services revenue outside UK
  • 35% of services revenue in US$ (H1-15: 55%) and 11% in Euro (H1-15 : 7%)
  • Over 90% of employees are based in the UK

International Services Business

Services Revenue by Currency Services Revenue by Geography

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16

Other GBP EUR USD

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16

Other UK Europe North America

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0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 H1-11 H2-11 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16

  • Leatherhead contribution ahead of integration plan level
  • Offset by OTM business in challenging Oil and Gas market
  • Sagentia aggregate contribution declined due to project phasing in Medical division
  • Oakland contribution strong

Adjusted Operating Profit

Adjusted operating profit £m

Adjusted operating profit excludes amortisation and impairment of intangible assets, share based payment charges and other exceptional items

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Head office Harston Mill Harston, Cambridge CB22 7GG UK Phone: +44 1223 875200 info@sciencegroup.com Epsom Great Burgh Yew Tree Bottom Road Epsom Surrey KT18 5XS Phone: +44 1372 376761 info@sciencegroup.com London 48-49 St James's Street London SW1A 1JT UK Phone: +44 207 014 3250 info@sciencegroup.com

www.sciencegroup.com

Head office Harston Mill Harston, Cambridge CB22 7GG UK Phone: +44 1223 875200 info@sciencegroup.com Epsom Great Burgh Yew Tree Bottom Road Epsom Surrey KT18 5XS Phone: +44 1372 376761 info@sciencegroup.com London 48-49 St James's Street London SW1A 1JT UK Phone: +44 207 014 3250 info@sciencegroup.com

www.sciencegroup.com