Science Group Plc · LSE:SAG
Science — FY2018 Earnings Presentation
24 slides from Science's earnings presentation, Mar 5, 2019
Slide 1: 2018 Preliminary Results
2018 Preliminary Results Martyn Ratcliffe Chairman Dan Edwards Group Managing Director To be read in conjunction with the audited preliminary results announcement released on 5th March 2019 In addition to IFRS measures, alternative performance measures are used in this presentation. Refer to the Not
Slide 2: Financial Summary
Financial Summary Group revenue of £48.7m (2017: £40.8m) • Record revenue for the Group, benefitting from TSG acquisition • 83% of Core Business revenue from international markets (2017: 83%) • 35% of Core Business revenue invoiced in US Dollars (2017: 35%) and 12% in Euros (2017: 10%) Adjusted oper
Slide 3: Group Revenue Breakdown
Group Revenue Breakdown • 2018 includes full year for TSG (2017 includes only 4 months) • Group revenue headwind of £0.2m from adverse forex rates compared to 2017 50 45 40 35 Revenue (£m) 30 Non Core: Property income 25 Other core business revenue 20 Core Business: Services revenue 15 10 5 0 2010 2
Slide 4: Revenue by Currency/Geography
Revenue by Currency/Geography • 83% (2017: 83%) of Core Business revenue is derived from outside UK • 35% of Core Business revenue invoiced in USD (2017: 35%) and 12% in EUR (2017: 10%) • Employee Distribution - UK: 83%; America: 12% and Continental Europe: 5% 100% 100% 90% 90% 80% 80% 70% 70% 60% O
Slide 5: Currency Exchange Rates
Currency Exchange Rates • Foreign exchange headwind on Group revenue in 2018 compared to 2017 of £0.2 million • Average USD rate of 1.38 in H1-18 and 1.30 in H2-18 (H1-17: 1.26 and H2-17: 1.32) • Average Euro rate of 1.14 in H1-18 and 1.13 in H2-18 (H1-17: 1.17 and H2-17: 1.12) 1.60 1.50 Exchange ra
Slide 6: Adjusted Operating Profit
Adjusted Operating Profit • Adjusted operating profit increased to £7.7m (2017: £6.9m) • FX negative impact relative to 2017 of £0.1m • Margin for Group excluding TSG increased from 2017 • Margin of TSG increased but lower than other businesses resulting in aggregate decline 9 27% Adjusted operating
Slide 7: Adjusted Earnings per Share
Adjusted Earnings per Share • Adjusted EPS increased by 15% to 14.7p (2017 : 12.8p) • Issued Share Capital at 31/12/2018 was 4% less than 31/12/2010 • Proposed dividend increase to 4.6p per share (2017 : 4.4p) 9 18p 8 16p 7 14p Adjusted operating profit (£m) Adjusted EPS (pence) 6 12p 5 10p Adjusted
Slide 8: Corporation Tax
Corporation Tax Effective corporation tax rate in 2018 is a tax charge of 11.9% (2017: 22.2%) Tax charge in P&L of £0.6m in 2018 (2017: £0.9m) • R&D tax credit of £0.4m relating to 2018 • 2018 tax charge reduced by a tax adjustment of £0.2m relating to 2017, of which R&D adjustments are £0.1m • One-
Slide 9: Business Overview
science group plc Business Overview science group pic
Slide 10: Markets & Services
Markets & Services Medical Food & Beverage Commercial Applied science Product development Technology advisory Regulatory 10
Slide 11: Market Sector Revenue Profile
Market Sector Revenue Profile Market Sector Overview Food & • Medical: Flat revenue as some large projects Beverage successfully completed in H1. Medical • Commercial: Satisfactory performance across the Group with recovery in Product Development during the year. • Food & Beverage: Strong performanc
Slide 12: Services Revenue Profile
Services Revenue Profile Services Developments • Applied Science • Consolidated Sagentia and Leatherhead Other science teams into single function • Repositioned Food & Beverage science offerings • Product Development • Medical performance impacted by completion Regulatory Applied Science & of large
Slide 13: 2018 Case Studies (1)
2018 Case Studies (1) Beverage manufacturer Medical diagnostics company • Mapping regulatory • Helping develop innovative requirements in major markets diagnostics platform • Supporting their globalisation • Driving higher-volume, lower- strategy cost diagnostics 13
Slide 14: 2018 Case Studies (2)
2018 Case Studies (2) Beauty and personal care client Agri-tech leader • Helped develop spa-like, • Helped develop intelligent home-use, hand-held skincare precision-dispensing device • Reducing environment impact • Part of personalisation of chemical use in farming strategy 14
Slide 15: Strategic Review
science group plc Strategic Review science group pic
Slide 16: Strategic Review
Strategic Review Harston Mill recommended to be extracted from operating company • Tax charge and cash outflow of approximately £2m • Some recovery over 3-4 years by utilising historic investment company tax losses carried forward Increase bank debt secured on freehold properties • Low cost capital
Slide 17: Strategic Review - Organisation
Strategic Review - Organisation • Arms-length leases at market rates between Operating Businesses and Property companies. Estimated charge is £1.3m to £1.6m • This charge is broadly offset by the removal of the Corporate costs from the Operating Businesses Science Group plc Operating Property Busine
Slide 18: Appendix: Annual Review of Capital Sources & Allocation
Appendix Annual Review of Capital Sources & Allocation 18
Slide 19: Capital Sources 2010-2018
Capital Sources 2010-2018 • Debt funding in 2010, 2013 and 2016 • Debt secured against Harston and Epsom freehold properties • Limited operating covenants due to asset security • 10 year term loan fixed at 3.5% using interest rate swap instruments to 2026 • Term loan increased by £4.75m in February
Slide 20: Capital Allocation 2010-2018
Capital Allocation 2010-2018 • Major capital deployments related to acquisitions • Proposed dividend increase by 5% • Equity buy-backs undertaken when appropriate. None in 2017 18 16 14 12 Dividend £ million 10 Debt Repayment Acquisition Consideration 8 Property, Plant & Equipment 6 Equity Buy-Back
Slide 21: Cash & Debt 2009-2018
Cash & Debt 2009-2018 • Capital resources deployed for acquisitions (2013, 2015, 2017) • Strong balance sheet maintained with cash resources for further investment/acquisition • Debt refinanced in 2016. (Extended in February 2019) 30 25 20 15 Gross Group Cash 10 £ million Debt 5 Net Funds 0 2009 201
Slide 22: Net Funds + Freehold Property per Share
Net Funds + Freehold Property per Share • Very strong asset base • Significant cash resources and freehold property assets • Property valuations undertaken in 2018 90 80 70 Pence per Share 60 Net funds + freehold property per share (basic) 50 40 Net funds per share (basic) 30 20 10 0 2010 2011 2012
Slide 23: Equity Share Capital
Equity Share Capital • Issued share capital has decreased by approximately 4% since 2010 • Acquisitions and investments funded primarily through operating cash flow • Share options and acquisition-related equity have been offset by share buy-backs 60 50 23% 40 33% Chairman Outstanding Share Other Di
Slide 24: www.sciencegroup.com
www.sciencegroup.com Head office Harston Mill Harston, Cambridge CB22 7GG UK Phone: +44 1223 875200 info@sciencegroup.com 24