Science : Preliminary results presentation 2023

2023

Preliminary Results

Martyn Ratcliffe	Dan Edwards	Jon Brett
Executive Chair	Group Managing Director	Group Finance Director

To be read in conjunction with the audited preliminary results announcement released on 21 March 2024.

In addition to IFRS measures, alternative performance measures are used in this presentation. Refer to Note 1 to the Financial Statements within the preliminary results announcement for detail and explanation.

Summary

Record underlying results against a challenging macro-environment

• Group Revenue of £113.3m (2022: £86.3m)
• • Increase of 31% including TP Group plc acquisition
  • Consultancy Services revenue of £81.3m (2022: £60.7m)
  • Systems businesses revenue of £31.2 million (2022: £25.0 million)
• Group Adjusted Operating Profit (AOP) of £20.5m (2022: £17.6m)
• • Adjusted EPS increased to 33.3 pence (2022: 29.4 pence)
• Proposed dividend increase of 60% to 8.0p (2022: 5.0p)
• • Returns to shareholders (dividend and buy-back) in 2023 of £6.2m (2022: £3.6m)
• Group cash of £30.9m and net funds of £18.0m at 31 December 2023
• • (2022: £43.6m and £29.5m respectively, prior to TPG acquisition and buy-back programme)
  • Unused £25m bank facility, in addition to existing term loan (£13.0m) to 2026
  • Two substantial freehold property assets

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Science Group - 2023 Preliminary Results

Group Revenue

-Record revenue of £113.3m including contribution from TPG acquisition -Consultancy Services revenue of £81.3m (2022: £60.7m)

-Systems businesses revenue of £31.2 million (2022: £25.0 million) -Market sector diversity provides resilience

	120
	100
	80
(£m)	60
Revenue
40
	20
	0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Consultancy Services		Systems		Other

Medical

17%

Defence &

Aerospace

Industrial41%

21%

Consumer

(incl. F&B)

21%

Sector split by Revenue

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Science Group - 2023 Preliminary Results

Significant Growth with Minimal Shareholder Dilution

	125	-Five-fold increase in Revenue								25
		-Eight-fold increase in AOP
	100	-ISC increase of c.9% between 2010 and 2023					20
Sharesin issue in million	75													15	AOP in £million
50													10
Revenue£millionin
	25													5
	0													0
	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023

Group Revenue

Shares in issue

Group AOP

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Science Group - 2023 Preliminary Results

Track Record of Delivering Shareholder Value

Investment in TPG in 2021 and acquisition completed January 2023

	25														35
															30
	20									Acquisition of
								Acquisition of	Frontier				25
									TSG
AOP in £m	15														20
					Acquisition of							EPS in pence
					Oakland and
		Acquisition of	Leatherhead
10			OTM											15
															10
	5
															5
	0														0
	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023

Adjusted Operating Profit

Adjusted EPS (basic)

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Science Group - 2023 Preliminary Results

2023 Profit Reconciliation

£m	2023	2022	Notes:
Consultancy Services AOP	20.4	16.2
Systems AOP	2.2	3.9
Property AOP	0.6	0.1	Property AOP increased due to
			normalisation of energy costs
Corporate costs	(2.6)	(2.6)
Group Adjusted Operating Profit	20.5	17.6
Adjusting items (primarily non-cash)
TPG acquisition:			Investment cost mark to market
-revaluation of TPG equity investment - non-cash	(4.8)	-	at completion of acquisition
-acquisition integration costs	(0.5)	(1.1)
-share of (loss)/profit when TPG held as associate - non-cash	(0.2)	0.6
Amortisation on acquisition related intangible assets - non-cash	(4.9)	(3.8)
Share-based payment charge - non-cash	(2.0)	(1.6)
Statutory Operating profit	8.1	11.7
Net finance costs	(0.5)	(0.6)
Statutory Profit before tax	7.6	11.1
			Increased 2023 tax charge
Tax charge	(2.1)	(0.5)
Statutory Profit After tax	5.5	10.6

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Science Group - 2023 Preliminary Results

Corporation Tax

• Tax charge of £2.1m (2022: £0.5m)
• • Prior year tax charge unusually low due to deferred tax adjustments and some over accrual in 2021
  • Charge in 2023 subject to increase in UK tax rate (19% to 25%)
  • R&D tax credit of £0.5m (2022: £0.5m)
  • R&D tax credits - taken at tax line not reduction in operating costs
• Tax cash outflow of £1.3m (2022: £2.3m)
• • Lower cash outflow due to use of loss relief and some overpayment in 2022
• Carried forward tax losses at 31 December 2023 of £29.3m (2022: £26.7m)
• • Tax losses in Frontier of £19.2m (2022: £17.1m)
  • • Additional losses in year, offset by exchange revaluation
    • £9.1m recognised as a deferred tax asset to be utilised against future Frontier profits (2022: £8.7m)
    • £10.1m not recognised as an asset due to uncertainty in timing or feasibility of utilisation (2022: £8.4m)
  • Tax losses in TPG of £5.9m (2022: n/a)
  • • Utilised some tax losses in 2023
    • £5.4m recognised as a deferred tax asset to be utilised against future TPG profits (2022: n/a)
    • £0.5m not recognised as an asset due to uncertainty in timing or feasibility of utilisation (2022: n/a)
  • Other Group tax losses of £4.2m (2022: £9.6m) not recognised due to a low probability of utilisation

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Science Group - 2023 Preliminary Results

Cash Bridge

-Continued strong underlying cash generation from operations

-Group cash of £30.9m and net funds of £18.0m at 31 December 2023 (2022: £43.6m and £29.5m) -After completion of TPG acquisition and share buy-back programme

Cash in £m

70

60

50

40

30

20

10

-

Opening Cash	Cash generated	TP Group	Exceptional	Share Buyback	Dividend	Interest & loan	Tax outflow	Other	Closing
1/1/23	from underlying	acquisition	project			repayment			Cash 31/12/23
	operations	(including fees	prepayments at
		and w/cap	end of 2022
		movement)

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Science Group - 2023 Preliminary Results

Science Group Operations

Science Group Structure

Corporate Infrastructure & Governance

Consultancy Services

• Deep scientific, engineering and technical capabilities
• Specialist sector expertise
• Industrial; Defence; Medical; Consumer (incl. food & beverage);
• 380+ employees with main sites in Cambridge, Epsom, Bristol, Knaresborough and Washington DC

Systems

Businesses

Submarine atmosphere management systems

Audio chips and modules

Shared

Services

• Finance
• Legal
• HR
• IT

Revenue: £81.3m		Revenue: £31.2m
AOP: £20.4m		AOP: £2.2m

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Science Group - 2023 Preliminary Results