1

2018 Preliminary Results

Martyn RatcliffeChairman

Dan EdwardsGroup 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 Notes to the financial statements within

the preliminary results announcement for detail and explanation.

2

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 operating profit of £7.7m (2017: £6.9m)

• Adjusted EBITDA of £8.5m (2017: £7.6m)

• FX negative impact of £0.1m

Statutory PBT of £4.9m (2017: £3.9m)

• Release of TSG deferred consideration of £0.5m

• Offset by increase in amortisation on acquisition intangible assets of £0.6m

• Acquisition integration costs of £0.1m (2017: £0.8m)

Adjusted basic EPS increased by 15% to 14.7 pence (2017: 12.8 pence)

• Basic EPS of 10.7 pence (2017: 7.7 pence)

Cash balance of £21.5m (2017: £19.9m) and Net Funds of £8.8m (2017: £6.0m)

• Excludes cash held on behalf of clients for regulatory registration of £1.5m (and Feb loan extension)

Proposed dividend increase to 4.6 pence per share (2017: 4.4 pence per share)

Financial Summary

3

Group Revenue Breakdown

0

5

10

15

20

25

30

35

40

45

50

2010 2011 2012 2013 2014 2015 2016 2017 2018

Reve

nu

e (

£m

)

Non Core: Property income

Other core business revenue

Core Business: Services revenue

• 2018 includes full year for TSG (2017 includes only 4 months)

• Group revenue headwind of £0.2m from adverse forex rates compared to 2017

4

• 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%

Revenue by Currency/Geography

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

Other

GBP

EUR

USD

Core Business Revenue by Currency Core Business Revenue by Geography

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

Rest of World

UK

Europe

North America

5

1.00

1.10

1.20

1.30

1.40

1.50

1.60

Dec

-16

Jan

-17

Fe

b-1

7

Ma

r-17

Ap

r-17

Ma

y-1

7

Ju

n-1

7

Ju

l-1

7

Au

g-1

7

Se

p-1

7

Oc

t-1

7

No

v-1

7

Dec

-17

Jan

-18

Fe

b-1

8

Ma

r-18

Ap

r-18

Ma

y-1

8

Ju

n-1

8

Ju

l-1

8

Au

g-1

8

Se

p-1

8

Oc

t-1

8

No

v-1

8

Dec

-18

Jan

-19

Fe

b-1

9

30 June

2018

• 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)

Currency Exchange RatesE

xc

ha

ng

e r

ate

GBP/USD

GBP/EUR

30 June

2017

31 December

201731 December

2018

6

• 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

Adjusted Operating Profit

0%

3%

6%

9%

12%

15%

18%

21%

24%

27%

0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016 2017 2018

Adjustedoperating profit

Adjustedoperating profitmargin

Ad

jus

ted

op

era

tin

g p

rofi

t (£

m)

Ad

jus

ted

op

era

tin

g p

rofi

t m

arg

in (

%)

7

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)

-

2p

4p

6p

8p

10p

12p

14p

16p

18p

0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016 2017 2018

Adjustedoperating profit

Adjusted EPS(basic)

Adjusted EPS(diluted)

Ad

jus

ted

EP

S (

pe

nc

e)

Ad

jus

ted

op

era

tin

g p

rofi

t (£

m)

8

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-off tax cost in US of £78,000 due to Tax Cuts and Jobs Act (2017: £120,000)

Tax cash flow

• Payments on account started as historic Sagentia losses fully utilised; £1.0m tax paid on UK profits

Carried forward tax losses at 31 December 2018 of £10.8m (2017: £11.4m)

• Includes £0.4m of trading tax losses (2017: £0.6m) which should partially reduce tax cash

payments

• Other unrecognised tax losses of £10.4 m (2017: £10.8m). Will only be recognised if probable that

losses can be utilised

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Business Overview

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Commercial

Markets & Services

Medical Food & Beverage

Applied science

Regulatory

Technology advisory

Product development

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Market Sector Revenue Profile

Medical

Commercial

Food &

Beverage

Market Sector Overview

• Medical: Flat revenue as some large projects

successfully completed in H1.

• Commercial: Satisfactory performance across

the Group with recovery in Product

Development during the year.

• Food & Beverage: Strong performance in

Advisory and Regulatory services. Breadth of

services providing differentiator.

Full year 2018

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Services Revenue Profile

Applied Science & Product

Development

Advisory

Regulatory

Other

Services Developments

• Applied Science

• Consolidated Sagentia and Leatherhead

science teams into single function

• Repositioned Food & Beverage science

offerings

• Product Development

• Medical performance impacted by completion

of large projects

• Recovery in Commercial sector

• Advisory

• Consolidated all advisory activities into single

organization

• Strong revenue growth in 2018

• Regulatory

• Integration and restructuring of TSG complete

• Increasing integration of Regulatory services

across Europe

• Food & Beverage regulatory organisation

integrated with TSG Full year 2018

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2018 Case Studies (1)

• Helping develop innovative

diagnostics platform

• Driving higher-volume, lower-

cost diagnostics

• Mapping regulatory

requirements in major markets

• Supporting their globalisation

strategy

Beverage manufacturer Medical diagnostics company

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2018 Case Studies (2)

• Helped develop intelligent

precision-dispensing

• Reducing environment impact

of chemical use in farming

• Helped develop spa-like,

home-use, hand-held skincare

device

• Part of personalisation

strategy

Beauty and personal care client Agri-tech leader

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Strategic Review

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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 at relatively low risk due to minimal covenants

• Action completed in February : £4.75m increase

Separate operating business performance from property & corporate

• Increased transparency to assist valuation analysis

Broader range of acquisition/Investment opportunities to be considered

• May or may not have synergies with current business operations

Organisation now evolving to support the strategy

• Appointment of Dan Edwards to PLC Board as Group Managing Director

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Science Group plc

Operating Businesses

Property Companies

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

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Appendix

Annual Review of Capital Sources & Allocation

19

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 2019, fixed at 4.0% using interest rate swap

• Strong operating cash flow has been primary capital source

• Extraordinary operating cash flow in 2016 included one-off items

0

3

6

9

12

15

18

21

2010 2011 2012 2013 2014 2015 2016 2017 2018

£ m

illi

on

Debt

Equity - Shares Issued

Equity - Acquisition

Disposal of investments

Operating Cash Flow

“Equity – Shares Issued”

comprises equity fund raising

in 2010 and cash inflows from

share option exercises

thereafter

All balances exclude Client

Registration Funds

20

• Major capital deployments related to acquisitions

• Proposed dividend increase by 5%

• Equity buy-backs undertaken when appropriate. None in 2017

Capital Allocation 2010-2018

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015 2016 2017 2018

£ m

illi

on

Dividend

Debt Repayment

Acquisition Consideration

Property, Plant & Equipment

Equity Buy-Back

Dividend is cash outflow timing,

not period for which declared

21

• 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)

Cash & Debt 2009-2018

-15

-10

-5

0

5

10

15

20

25

30

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

£ m

illi

on

Gross Group Cash

Debt

Net Funds

Group Cash and Net Funds

exclude cash held by TSG in

respect of Client Registration

Funds.

22

Net Funds + Freehold Property per Share

• Very strong asset base

• Significant cash resources and freehold property assets

• Property valuations undertaken in 2018

0

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014 2015 2016 2017 2018

Net funds + freehold propertyper share (basic)

Net funds per share (basic)Pe

nc

e p

er

Sh

are

23

• 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

Equity Share Capital

0

10

20

30

40

50

60

mil

lio

n s

ha

res Outstanding Share

Options

Issued Shares (ExclTreasury Shares) atyear end

Shareholdings >3% as reported to

Company as at 1 March 2019

Shares in issue (excluding treasury

shares): 40.0m (2017: 39.4m)

33%

1%

17%11%

5%

3%

6%

23%

Chairman

Other Directors

Canaccord Genuity

Ruffer LLP

Miton

Charles Stanley

Otus

Other

24

Head office

Harston Mill

Harston, Cambridge

CB22 7GG

UK

Phone: +44 1223 875200

info@sciencegroup.com

www.sciencegroup.com

Head office

Harston Mill

Harston, Cambridge

CB22 7GG

UK

Phone: +44 1223 875200

info@sciencegroup.com

www.sciencegroup.com