Science Group Plc · LSE:SAG
Science — H1 2021 Earnings Presentation
20 slides from Science's earnings presentation, Jul 26, 2021
Slide 1: 2021 Interim Results
2021 Interim Results Martyn Ratcliffe Chairman – Dan Edwards Group Managing Director – Jon Brett Acting Group Finance Director To be read in conjunction with the Interim Results announcement released on 26 July 2021
Slide 2: Financial Summary
Financial Summary Group revenue Adjusted operating profit Earnings per share (adjusted basic) Gross cash (excluding client funds) – – – – £40.7m – £7.3m – 13.3pence – £29.0m – H1-20: £36.9m H1-20: £4.9m H1-20: 8.8 pence H1-20: £22.0m Adjusted diluted EPS 13.0 pence (H1-20 8.5 pence) – Record H1 perf
Slide 3: Group Overview
Group Overview Science Group is an international, science-led services and product development organisation with 3 operating divisions. R&D Regulatory & Frontier Smart Consultancy Compliance Technologies Property The Group owns significant Provides science & technology Provides services to clients i
Slide 4: Science Group History
Science Group History Recent history (post 2010) 1 Change of Control 2 Acquisition of OTM 450 3 Acquisition of Oakland Innovation 400 4 Name change to Science Group plc 5 Acquisition of Leatherhead Food Research 350 6 Acquisition of TSG 7 Acquisition of Frontier Smart Technologies 300 Price in pence
Slide 5: Group Revenue
Group Revenue –Record revenue of £40.7m (H1-20 £36.9m) –Organic growth of approx. 10% –Revenue growth of approx. 16% on constant currency basis –Balanced portfolio - good performance in all divisions 45 40 35 30 R&D Frontier Smart Consultancy Revenue (£m) Technologies 25 Non-recurring 33% 40% 20 Oth
Slide 6: Group Adjusted Operating Profit
Group Adjusted Operating Profit –Record half-year adjusted operating profit of £7.3m (H1-20: £4.9m) –Increase of 47% on H1-20. Increase of 120% on H1-19 (£3.3m) –AOP Margin of 17.8% (H1-20: 13.3%) –Services Divisions AOP margin: 19.3% (H1-20: 15.7%) –Product Division AOP margin: 21.8%. (H1-20: 6.6%)
Slide 7: Delivering Shareholder Value
Delivering Shareholder Value –Substantial profit growth with strong cash conversion –Nil shareholder dilution since 2010 –Converts into strong track record of EPS growth –Strong alignment of management and institutional shareholders 16 20 14 Adjusted operating profit (£m) Adjusted EPS (pence) 12 15
Slide 8: Shareholder value relative to FTSE AIM All-Share index
Shareholder value relative to FTSE AIM All-Share index 450 4500 400 Over 10 years 4000 500 Over 5 years 5000 350 3500 400 4000 300 3000 Volume imn’000s Price in pence 250 2500 300 3000 200 2000 200 2000 150 1500 100 1000 100 1000 50 500 0 0 0 0 SCIENCE GROUP SCIENCE GROUP FTSE AIM All-Share (re-base
Slide 9: Equity Share Capital
Equity Share Capital –Net nil shareholder dilution in over a decade –Acquisitions and investments funded primarily through operating cash flow –Acquisition-related share issues and share options offset by buy-backs –Institutional shareholder base expanded following 2018 strategic review –Shares in i
Slide 10: Operating Business Performance
Operating Business Performance 10 Science Group – 2021 Interim Results
Slide 11: R&D Consultancy
R&D Consultancy – Services revenue of £15.2m (H1-20 £15.2m) • Tough H1-20 comparator (UK ventilator) Revenue by sector • 4% organic growth on constant currency • 50% of revenue in US$ and 7% in Euro 12% Medical – AOP margin of Services Div of 19.3% (H1-20: 15.7%) 14% Food & Beverage Industrial – R&D
Slide 12: R&D Consultancy Division: Project Examples
R&D Consultancy Division: Project Examples Surgical Robotics Energy Efficiency – Working with several clients in – Worked with a leading beverage surgical robotics company to develop a novel, breakthrough technology – Projects ranging from concept development to full product – The technology will re
Slide 13: Regulatory & Compliance
Regulatory & Compliance Revenue by sector – Revenue of £10.5m (H1-20 £10.0m) • 36% of revenue in US$ and 8% in Euro Food & Beverage 29% • Organic growth broadly consistent North America and Europe Industrial, Consumer & Chemical 71% – AOP margin of Services Div of 19.3% (H1-20: 15.7%) – Launch of me
Slide 14: Regulatory & Compliance Division: Project Examples
Regulatory & Compliance Division: Project Examples Covid-19 Product Approval Brexit-Driven Regulation – Continued to assist companies through – Attained Authorisation for gene therapy the complex regulatory and technical client who was first applicant under UK landscape for products seeking claims R
Slide 15: Frontier Smart Technologies
Frontier Smart Technologies – Revenue of £13.6m (H1-20 £7.5m) Shipments by product line (H1-21) – Revenue in US$, partially offset by US$ materials purchases 20% – AOP margin of 21.8% (H1-20 6.6%) DAB – Ongoing materials constraint associated with the SmartRadio 80% global semiconductor supply short
Slide 16: Freehold Properties
Freehold Properties – Science Group owns two freehold properties • Harston Mill (Cambridge) and Great Burgh (Epsom) • Out-of-town, low-rise facilities with substantial car-parking • Book value: £21.1m (H1-20: £21.3m) • Triennial independent valuation (March 2021): £23m to £35m – Ownership normalisat
Slide 17: Appendix: Capital Management Sources & Allocation
Appendix Capital Management Sources & Allocation 17 Science Group – 2021 Interim Results
Slide 18: Cash & Debt 2009 to H1-2021
Cash & Debt 2009 to H1-2021 –Capital resources deployed for acquisitions (2013, 2015, 2017, 2019) –Debt refinanced in 2016 and loan increased in 2019 and 2020 –Debt term to 2026 –No operating covenants if bank debt <£10m 40 20 30 15 20 10 Debt £ million Gross Group Cash 10 5 Net funds/(debt) 0 0 200
Slide 19: Capital Sources 2010 to H1-2021
Capital Sources 2010 to H1-2021 –Strong operating cash flow continues to be primary capital source –Debt refinancing in 2016 and topped up in 2019 and 2020 –Debt secured against Harston and Epsom freehold properties, limited operating covenants –10 year term loan fixed at 3.5% using interest rate sw
Slide 20: Capital Allocation 2010 to H1-2021
Capital Allocation 2010 to H1-2021 –Major capital deployments related to acquisitions –Dividend payment outflow in H1-2021 realigned with pre-Covid level –Equity buy-backs undertaken when appropriate and shares held in Treasury 24 20 Dividend 16 Debt Repayment Acquisition £ million 12 Consideration