Science Group plc Interim Results Presentation July 2015 Martyn Ratcliffe Chairman Rebecca Hemsted Finance Director To be read in conjunction with the Interim Results announcement released on 23 July 2015 1 Science Group plc
Science Group plc Science and technology services • Science, Technology & Product Development • Technology Advisory International presence • Headquarters and laboratories based in Harston, near Cambridge, UK o Substantial freehold property • Other offices: UK – London & Guildford; USA – Boston & Houston; and Dubai Key corporate metrics • Market capitalisation (30 June 2015): £56.5m • Cash less debt plus freehold property (30 June 2015): £26.7m • H1 Revenue: £14.1m (H1-14: £13.3m) • H1 Adjusted operating profit: £2.4m (H1-14: £2.4m) Adjusted operating profit excludes amortisation of acquisition related intangible assets and share-based payment charges 2 Science Group plc
Summary Operating results • Revenue of £14.1m (H1-14: £13.3m) • Adjusted operating profit of £2.4m (H1-14: £2.4m) o FX benefit to adjusted operating profit in H1-15 of £0.4m relative to H1-14 o Increased investment in the business and increased employee profit share accrual • PBT of £1.9m (H1-14: £1.8m) o Cash outflow related to tax materially lower than reported tax charge due to tax losses carried forward • Basic EPS of 4.0 pence (H1-14: 3.7 pence) and diluted EPS of 3.6 pence (H1-14: 3.4 pence) • Cash balance of £21.5m (H1-14: £22.8m) and Net Funds of £13.2m (H1-14: £13.5m) o After acquisition payment, share buy-back and payment of dividend, totalling £5.1m Corporate actions • Acquisition of Oakland Innovation Limited • Change of Group name to Science Group plc o Sagentia brand used for Technology & Product Development business Adjusted operating profit excludes amortisation of acquisition related intangible assets and share-based payment charges 3 Science Group plc
Consultancy Fees • Satisfactory in-line performance • Oakland acquisition in February 2015 added £1.0m of consultancy revenue • Net positive impact of FX in H1-15 compared to 2014 (US$ positive; € negative) 16 14 12 10 Revenue £m 8 6 4 2 0 H1-10 H2-10 H1-11 H2-11 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 4 Science Group plc
Consultancy Fees by Currency & Geography • Science Group is an international business : c.80% of consultancy fees from outside UK • 55% of consultancy fees denominated in US$ (H1-14: 55%) • When feasible, contracts are denominated in GBP • H1-15 benefited from US$ strength but impacted by € weakness Fees by Currency Fees by Geography 100% 100% 80% 80% 60% 60% Other Other GBP UK EUR Europe 40% 40% USD North America 20% 20% 0% 0% H1-13 H2-13 H1-14 H2-14 H1-15 H1-13 H2-13 H1-14 H2-14 H1-15 5 Science Group plc
Group Revenue Breakdown • IT services business has been closed, low level residual income • Property income consistent with prior year • Oakland relocated to Cambridge head office, all available space now occupied 16 14 12 IT Services (M5N) Revenue £m 10 Property Income 8 Product and licence income 6 Recharged Project Materials 4 Consultancy Fees 2 0 H1-10 H2-10 H1-11 H2-11 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 6 Science Group plc
Adjusted Operating Profit and Margin – Half Year • Operating margins remain strong • Oakland revenue of £1.0m with £nil contribution in H1-15 due to integration and relocation • Foreign exchange benefit offset by increased investment & accrued employee profit share 3.5 28% Adjusted operating profit margin % Adjusted operating profit £m 3 24% 2.5 20% 2 16% 1.5 12% Adjusted operating 1 8% profit and margin excludes amortisation of acquisition related 0.5 4% intangible assets, share-based payment charges and other 0 0% exceptional items H1-10 H1-11 H1-12 H1-13 H1-14 H1-15 Adj operating profit Adj operating profit margin Adj operating profit margin excluding Oakland 7 Science Group plc
Balance Sheet Summary Strong cash position • Cash of £21.5m (H1-14: £22.8m). Net funds of £13.2m (H1-14: £13.5m) o £3.0m net cash outflow for acquisition of Oakland o £2.1m cash outflow related to share buy-back and dividend o Strong cash conversion of trading business Working capital • Debtor Days at Jun 2015: 38 (Jun 14: 44; Dec 14: 50) • Debtor and WIP days at Jun 2015: negative 1 day (Jun 14: 6; Dec 14: 12) Freehold property • Approx. 80,000 sq ft on 16 acre site • Valued by Savills in 2013 for bank loan at £12.9m-£18.0m • Carrying value on balance sheet has not been adjusted at £13.6m 8 Science Group plc
Appendix: Acquisition of Oakland Innovation Limited Acquisition of 100% of share capital completed in February 2015 • Net assets on acquisition of £0.5m, including £0.7m cash • Consideration of £5.0m is satisfied by: • £3.6m cash on completion • £1.4m satisfied through sale of treasury shares - subject to lock-in period up to 3 years R&D consultancy founded in 1989 by Managing Director, Michael Zeitlyn • Providing services to Consumer and Healthcare markets • 47 staff based in Cambridge UK – two-thirds are PhD qualified Consultancy revenue in 2014: £3.8m with operating margin approx. 18% • Revenue post acquisition included in H1-15 of £1.0m • £Nil contribution to profit in H1-15 due to integration and relocation costs – all expensed Integrated into Technology Advisory division • Management remaining with business • Initial relocation to Harston facility successfully completed 9 Science Group plc
Head Office London Office 48- 49 St. James’s St. Harston Mill Harston, Cambridge London CB22 7GG SW1A 1JT UK UK Phone: +44 (0)1223 875200 Phone: +44 (0)20 7014 3250 info@sciencegroup.com info@sciencegroup.com Defined by science. Inspired by technology. Delivering innovation . www.sciencegroup.com 10 Science Group plc
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