Science Group Plc · LSE:SAG
Science — FY2019 Earnings Presentation
24 slides from Science's earnings presentation, Mar 3, 2020
Slide 1: 2019 Preliminary Results
2019 Preliminary Results Martyn Ratcliffe Chairman Rebecca Archer Finance Director Dan Edwards Group Managing Director To be read in conjunction with the audited preliminary results announcement released on 3 March 2020 In addition to IFRS measures, alternative performance measures are used in this
Slide 2: Summary
Summary Group organic operating performance in line with expectations Acquisition of Frontier Smart Technologies Group completed • Complex transaction of Cayman-domiciled, AIM-listed company • Substantial operational restructuring effectively completed • One-off charges taken in 2019 Reporting segme
Slide 3: Financial Summary
Financial Summary Group revenue of £57.2m (2018: £48.7m) • Record revenue for the Group, benefitting from Frontier acquisition Adjusted operating profit of £6.7m (2018: £7.7m) • Organic Operating Business AOP of £8.2m (2018: £7.6m) • Frontier loss of £1.3m Statutory loss before tax of £1.6m (2018: P
Slide 4: Financial Summary
Financial Summary Adjusted Adjusted Revenue Operating Profit Revenue Operating Profit 2019 2019 2018 2018 £m £m £m £m Revenue from services operating business (excluding Frontier and exited operations) 48.7 8.2 47.2 7.6 Freehold properties 3.9 1.5 3.9 1.6 Corporate costs - (1.7) - (1.6) Intra-Group
Slide 5: Group Revenue Breakdown
Group Revenue Breakdown • >200% revenue growth (annualised) without shareholder dilution • 2019 includes only 4 months for Frontier • Third-party income from property reducing as Harston Mill used by acquired companies 60 50 Exited operations 40 Revenue (£m) Frontier (4 months) Freehold properties*
Slide 6: Adjusted Operating Profit
Adjusted Operating Profit • AOP excl Frontier of £8.0m (2018: £7.7m) with stable margins • Frontier operating loss of £1.3m • Group AOP of £6.7m (2018: £7.7m) 9 27% 8 24% Adjusted operating profit margin (%) Adjusted 7 21% operating profit Adjusted operating profit (£m) excluding Frontier 6 18% Grou
Slide 7: Adjusted Earnings per Share
Adjusted Earnings per Share • Issued Share Capital (excluding treasury shares) at Dec 2019 unchanged since Dec 2010 (41.7m) • Proposed dividend maintained at 4.6p per share (2018: 4.6p) 9 18p 8 16p 7 14p Adjusted operating profit (£m) Adjusted operating profit Adjusted EPS (pence) 6 12p Adjusted EPS
Slide 8: Corporation Tax
Corporation Tax Tax charge in P&L of £0.2m (2018: £0.6m) • Underlying tax charge on profits in organic business partially offset by tax losses in Frontier • R&D tax credit of £0.4m (2018: £0.4m) • Significant proportion of one off acquisition & restructuring costs not anticipated to be tax deductibl
Slide 9: Services Operating Business Overview
Services Operating Business Overview
Slide 10: Markets & Services
Markets & Services Consumer Medical Industrial Food & Beverage Applied science & Product development Technology advisory Regulatory Preliminary Results 2019 10
Slide 11: Services Revenue Profile
Services Revenue Profile Services revenue by market sector Industrial Medical Sector Overview Consumer • Medical: Recovery in H2 after weaker H1 due (including Food & to some large projects successfully completing Beverage) in 2018. • Industrial: Satisfactory performance across the Group with notabl
Slide 12: Frontier Smart Technologies
Frontier Smart Technologies
Slide 13: Frontier Smart Technologies
Frontier Smart Technologies Frontier is a leader in technologies for digital radio and smart IoT devices Designer and manufacturer of chips and modules • Now located in Cambridge, London, Hong Kong and Shenzhen • Reputation for quality and high-end market position 80% market share of digital (DAB/DA
Slide 14: Digital Radio Market
Digital Radio Market • Retail sales boosted in run up to FM switch-off in Norway • 2018 Frontier volumes inflated by end-of-year one-off deal(s) • Production and sale of 5.1m exceeded 80% market share by approx. 700k units • Impacted 2019 demand by similar amount as customers could not sell excess v
Slide 15: Restructuring of Frontier
Restructuring of Frontier • Romanian operations closed - anticipated that the legal entity will be terminated in 2020 • Frontier London office closed and staff relocated to Science Group London office • Cambridge (Sawston) office closed and staff relocated to Science Group’s freehold facility in Har
Slide 16: Frontier Smart Technologies Acquisition Timetable
Frontier Smart Technologies Acquisition Timetable 2019 Activity Accounting Treatment January Approached Frontier Board Early May Started to acquire Frontier shares on market Investment and made formal approach to Frontier board 6 June Shareholding: 28.3% of voting share capital Investment 1 July 1 J
Slide 17: Freehold Properties
Freehold Properties Science Group owns two freehold properties (Harston Mill, near Cambridge and Great Burgh, Epsom) which are managed separately from the operating business • Total income in 2019 was £3.9m • Income from third party tenants of £1.0m (2018: £1.1m) • Income from intra-Group rental cha
Slide 18: Corporate
Corporate Corporate costs for the Group for the year increased to £1.7m (2018: £1.6m) Frontier acquisition • Largest acquisition in Group history • Complex acquisition process: • Entity was AIM listed and Cayman domiciled • Offer was contested by Frontier board • Bid was not subject to UK code on Ta
Slide 19: Annual Review of Capital Sources & Allocation
Appendix Annual Review of Capital Sources & Allocation
Slide 20: Capital Sources 2010-2019
Capital Sources 2010-2019 • Debt funding in 2010, 2013, 2016 and 2019 • Debt secured against Harston and Epsom freehold properties, limited operating covenants • Term loan increased by £4.8m in February 2019 • 10 year term loan fixed at 3.6% using interest rate swap instruments to 2026 • Strong oper
Slide 21: Capital Allocation 2010-2019
Capital Allocation 2010-2019 • Major capital deployments related to acquisitions • Proposed dividend maintained at 4.6p per share (2018: 4.6p) • Equity buy-backs undertaken when appropriate • Frontier net debt of £2.2m at point of accounting consolidation • Debt of £5m less cash of £2.8m; debt repai
Slide 22: Cash & Debt 2009-2019
Cash & Debt 2009-2019 • Capital resources deployed for acquisitions (2013, 2015, 2017, 2019) • Strong balance sheet maintained • Debt refinanced in 2016 and loan increased in February 2019 30 25 20 15 10 Gross Group Cash £ million 5 Debt Net (debt)/funds 0 2009 2010 2011 2012 2013 2014 2015 2016 201
Slide 23: Equity Share Capital
Equity Share Capital • Issued share capital (excluding treasury shares) at 31 Dec 2019 same as Dec 2010 (41.7m) • Includes 0.1m of shares held by an Employee Benefit Trust which do not have voting rights • Acquisitions and investments funded primarily through operating cash flow • Share options and
Slide 24: www.sciencegroup.com
www.sciencegroup.com Head office Harston Mill Harston, Cambridge CB22 7GG UK Phone: +44 1223 875200 info@sciencegroup.com Preliminary Results 2019 24