Interim Results Presentation July 2017 - Martyn Ratcliffe Chairman Rebecca Hemsted Finance Director - Science Group
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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
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
Medical
• Commercial: Quieter period due to major projects
completing in second half of 2016
Oakland
• Oil & Gas: Challenging market conditions
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
4Group 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
6 revenue
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
5International 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%
GBP UK
50% 50%
EUR Europe
40% USD 40% North
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 Currency Core Business Revenue by Geography
6Adjusted 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
0.5 and margin is calculated as
operating profit excluding
impairment of goodwill and
investments, amortisation of
0.0 0.0% acquisition related intangible
H1-12 H2-12 H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H2-16 H1-17 assets, acquisition
integration costs, share
based payment charges and
other specified items.
7Currency 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
1.40 GBP/USD
GBP/EUR
1.30
1.20
1.10
30 June 31 December
1.00 2016 2016
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Dec-15
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8www.sciencegroup.com
Head office Epsom London
Harston Mill Great Burgh 48-49 St James's Street
Harston, Cambridge Yew Tree Bottom Road London
CB22 7GG Epsom SW1A 1JT
UK Surrey UK
KT18 5X
5XT
Phone: +44 1223 875200 Phone: +44 1372 376761 Phone: +44 207 014 3250
info@sciencegroup.com info@sciencegroup.com info@sciencegroup.com
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