Interim Results Presentation July 2017 Martyn Ratcliffe Chairman - - PowerPoint PPT Presentation

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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

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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

Science Group plc - Overview

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• 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

Financial Summary

*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.

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• Science Group comprises five operating businesses
• Four distinct brands under Science Group umbrella brand

Services Revenue Profile – H1 2017

Sagentia Medical Sagentia Commercial OTM Oakland Leatherhead

Market Overview

• Medical: Strong recovery performance in the

period

• Commercial: Quieter period due to major projects

completing in second half of 2016

• Oil & Gas: Challenging market conditions

continuing

• Food & Beverage: Revenue declined relative to

prior year due to rationalisation during restructuring phase of integration

• Other Market Sectors: Satisfactory performance

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• 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

Group Revenue (5 Year)

2 4 6 8 10 12 14 16 18 20 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17

Revenue (£m)

Non Core: Property income Other core business revenue Core business: Services revenue

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• 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

International Services Business

Core Business Revenue by Currency Core Business Revenue by Geography

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 Other GBP EUR USD 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 Other UK Europe North America

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0.0% 6.0% 12.0% 18.0% 24.0% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17

• 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

Adjusted Operating Profit

Adjusted operating profit (£m)

Adjusted

• perating

profit and margin is calculated as

• perating

profit excluding impairment of goodwill and investments, amortisation of acquisition related intangible assets, acquisition integration costs, share based payment charges and

• ther specified items.

Adjusted operating profit margin (%)

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• 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

Currency Exchange Rates

Exchange rate

1.00 1.10 1.20 1.30 1.40 1.50 1.60 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 30 June 2016 31 December 2016 GBP/USD GBP/EUR

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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 5XT 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 5X 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