Interim Results Presentation July 2017 Martyn Ratcliffe Chairman Rebecca Hemsted Finance Director To be read in conjunction with the Interim Results announcement released on 25 July 2017 1
Science Group plc - Overview Science and technology services • Science-based Consultancy and Advisory Services • Technology & Product Development Four subsidiary companies/brands • Sagentia – founded 1986, servicing medical and commercial markets • OTM Consulting – acq July 2013, servicing the oil and gas industry • Oakland Innovation – acq February 2015, servicing consumer, healthcare and food & beverage markets • Leatherhead Research – acq September 2015, servicing the food & beverage industry Significant freehold property assets • Cambridge – offices and laboratories based in c.100,000 sq ft freehold property • Sagentia and Oakland Innovation • Approx one third sub-let to third party tenants • Epsom – offices and laboratories based in c.50,000 sq ft freehold property • Leatherhead Research and OTM Consulting • Other offices (leased) : UK – London; USA – Boston, Houston, San Francisco Corporate Strategy • Board continues to explore acquisition opportunities to accelerate development of the Group • No certainty that any transaction(s) will be completed 2
Financial Summary • Group revenue of £18.0m (H1-16: £17.7m) • 80% of Core Business revenue from international markets • 32% of Core Business revenue invoiced in US Dollars and 9% in Euros • Adjusted* operating profit of £3.2m (H1-16: £2.5m) • Beneficial foreign exchange rates compared to H1-16 • Currency rates now comparable to H2-16 rates • Statutory PBT of £2.3m (H1-16: £1.1m) • 2016 PBT included £0.5m of one-off charges (Leatherhead integration and share option restructuring) • Adjusted* basic EPS increased to 6.1 pence (H1-16: 4.4 pence) • Basic EPS of 5.1 pence (H1-16: 2.4 pence) and diluted EPS of 5.0 pence (H1-16: 2.3 pence) • Cash balance of £26.3m (H1-16: £17.2m) and Net Funds of £12.1m (H1-16: £9.9m) • Net funds + freehold property per share increased to 86.2 pence (H1-16: 76.0 pence) • Refinancing in H2-16 with new £15m loan (10 year debt secured on freehold property) • Returns to shareholders since June 2016 of £4.4m – dividend and H2-2016 buy-backs *Throughout this presentation, adjusted operating profit and margin is calculated as operating profit excluding impairment of goodwill and investments, amortisation of acquisition related intangible assets, acquisition integration costs, share based payment charges and other specified items. Adjusted EPS is calculated as adjusted profit after tax divided by the weighted average number of shares in issue. This includes a tax charge at the substantively enacted UK Corporation Tax Rate for the year. 3
Services Revenue Profile – H1 2017 • Science Group comprises five operating businesses • Four distinct brands under Science Group umbrella brand Market Overview • Medical: Strong recovery performance in the period Leatherhead Sagentia • Commercial: Quieter period due to major projects Medical completing in second half of 2016 • Oil & Gas: Challenging market conditions Oakland continuing • Food & Beverage: Revenue declined relative to OTM prior year due to rationalisation during Sagentia restructuring phase of integration Commercial • Other Market Sectors: Satisfactory performance 4
Group Revenue (5 Year) • Good organic growth in Outsourced Product Development (Sagentia) business on actual and/or constant currency measure. Driven by recovery in Medical sector • Non-core property rental income from Harston site stable 20 18 16 Non Core: Property income 14 Revenue (£m) 12 Other core business revenue 10 8 Core business: Services revenue 6 4 2 0 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 5
International Services Business • 80% of Core Business revenue derived from international markets • 32% of Core Business revenue invoiced in US$ (H1-16: 35%) and 9% in Euro (H1-16: 11%) • Remaining international clients, primarily in Europe, are invoiced in GBP • Over 90% of employees are based in the UK 100% 100% 90% 90% 80% 80% 70% 70% Other Other 60% 60% UK GBP 50% 50% Europe EUR 40% 40% North USD America 30% 30% 20% 20% 10% 10% 0% 0% H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 Core Business Revenue by Geography Core Business Revenue by Currency 6
Adjusted Operating Profit • Sagentia aggregate contribution increased due to strong Medical sector performance • Foreign exchange benefit in H1-17 compared to H1-16 • Continuing to use part of FX benefit to increase investment 4.0 24.0% 3.5 Adjusted operating profit margin (%) 3.0 18.0% Adjusted operating profit (£m) 2.5 2.0 12.0% 1.5 1.0 6.0% Adjusted operating profit and margin is calculated as 0.5 operating profit excluding impairment of goodwill and investments, amortisation of 0.0 0.0% acquisition related intangible assets, acquisition H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 integration costs, share based payment charges and other specified items. 7
Currency Exchange Rates • Foreign exchange benefit in H1-17 compared to H1-16 • Average USD rate of 1.26 in H1-17 (H1-16: 1.44 and H2-16: 1.29) • Average Euro rate of 1.17 in H1-17 (H1-16: 1.30 and H2-16: 1.17) • Exchange rates for H1-17 broadly equivalent to H2-16 levels 1.60 1.50 Exchange rate GBP/USD 1.40 GBP/EUR 1.30 1.20 1.10 30 June 31 December 2016 2016 1.00 Dec-15 Jan-16 Feb-16 Mar-16 Mar-16 Apr-16 May-16 May-16 Jun-16 Jul-16 Jul-16 Aug-16 Sep-16 Sep-16 Oct-16 Nov-16 Dec-16 Dec-16 Jan-17 Feb-17 Feb-17 Mar-17 Apr-17 Apr-17 May-17 Jun-17 8
www.sciencegroup.com www.sciencegroup.com Head office Head office Epsom Epsom London London Harston Mill Harston Mill Great Burgh Great Burgh 48-49 St James's Street 48-49 St James's Street Harston, Cambridge Harston, Cambridge Yew Tree Bottom Road Yew Tree Bottom Road London London CB22 7GG CB22 7GG Epsom Epsom SW1A 1JT SW1A 1JT UK UK Surrey Surrey UK UK KT18 5XT KT18 5X Phone: +44 1223 875200 Phone: +44 1223 875200 Phone: +44 1372 376761 Phone: +44 1372 376761 Phone: +44 207 014 3250 Phone: +44 207 014 3250 info@sciencegroup.com info@sciencegroup.com info@sciencegroup.com info@sciencegroup.com info@sciencegroup.com info@sciencegroup.com 9
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