1

2017 Preliminary Results

Martyn RatcliffeChairman

Rebecca ArcherFinance Director

To be read in conjunction with the audited preliminary results announcement released on 28 February 2018

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.

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Group revenue of £40.8m (2016: £36.9m)

Adjusted operating profit of £6.9m (2016: £6.2m)• Adjusted EBITDA of £7.6m (2016: £7.0m)

Statutory PBT of £3.9m (2016: £3.0m)

Adjusted basic EPS increased to 12.8 pence (2016: 11.4 pence)• Basic EPS of 7.7 pence (2016: 6.8 pence)

Cash balance of £19.9m (2016: £26.0m) and Net Funds of £6.0m (2016: £11.3m)• After capital of £13.2m deployed via acquisition of TSG (net capital outflow of £10.4m)• Excludes cash held on behalf of clients for regulatory registration of £0.9m• Cash generated from operations (excluding client registration funds) of £7.8m (2016: £11.6m)

Proposed dividend increase to 4.4 pence per share (2016: 4.2 pence per share)

Financial Summary

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Group Revenue Breakdown

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014 2015 2016 2017

Rev

enue

(£m

)

Non Core: PropertyincomeCore Business:Other revenueCore Business:Services revenue

• Largest customer accounted for approx 10%• 2017 includes only 4 months of TSG revenue (post-acquisition period: £4.9m)• Group revenue benefitted by £0.7m from favourable forex rates compared to 2016

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Strategic Axes

Market Sector

GeographyServiceService

5

Markets & Services

Med

ical

Com

mer

cial

Food

& B

ever

age

Applied Science

Technology Advisory

Product Development

Regulatory

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• Business model structured around vertical markets• Five distinct brands under Science Group umbrella brand

Market Sector Revenue Profile

Medical

Commercial

Food & Beverage

Market Sector Overview

• Medical: Very strong performance in PD in 2017 and excellent momentum entering 2018.

• Commercial: Satisfactory performance in Advisory but disappointing in PD due to combination of market and internal execution. PD management change undertaken.

• Food & Beverage: Good performance in Regulatory services. Increasingly integrated sector offering with Science and Advisory services under Leatherhead brand.

Q4 2017 Data

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Services Revenue Profile

Applied Science & Product

Development

Advisory

Regulatory

OtherServices Developments

• Applied Science : Consolidated Sagentia and Leatherhead science teams into single function.

• Advisory : Consolidated all advisory activities into single organisation with 4 vertical markets: Food & Beverage; Medical; Commercial and Chemicals & Energy

• Regulatory : Significantly expanded service offering and geographical footprint through TSG acquisition. Strong performance in Food & Beverage sector. Increasing coordination of all Regulatory services across Europe

Q4 2017 Data

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• 83% (2016: 74%) of Core Business revenue is derived from outside UK• 35% of Core Business revenue invoiced in USD (2016: 35%) and 10% in EUR (2016: 11%)• TSG acquisition did not materially change the currency/geographic revenue profile• Increase in revenue from Europe due to large Sagentia contracts

Revenue by Currency/Geography

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016 2017

OtherGBPEURUSD

Core Business Revenue by Currency Core Business Revenue by Geography

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016 2017

Rest of WorldUKEuropeNorth America

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Geographical Presence

TSG acquisition significantly expanded Group international footprint

President of Science Group North America appointed to lead integrated service offeringin strategic market

New European MD and European Operations Director appointed to integrate Regulatoryservices across countries and maximisescale synergies

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• Adjusted operating profit increased to £6.9m (2016: £6.2m)• Adjusted EBITDA of £7.6m (2016: £7.0m)• Strong operating margin performance maintained despite acquisition integration disruption• FX benefit (£0.6m) partially allocated to organic investment

Adjusted Operating Profit

0%

4%

8%

12%

16%

20%

24%

28%

0

1

2

3

4

5

6

7

8

2010 2011 2012 2013 2014 2015 2016 2017

Adjustedoperating profit

Adjustedoperating profitmargin

Adj

uste

d op

erat

ing

prof

it (£

m)

Adj

uste

d op

erat

ing

prof

it m

argi

n (%

)

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• Adjusted basic EPS increased to 12.8 pence (2016: 11.4 pence)• Weighted average number of shares decreased by 3% due to 2016 share buy backs• At 31 December 2017, ISC was approx 5% less than at end 2010

Adjusted Earnings per Share

-

2p

4p

6p

8p

10p

12p

14p

0

1

2

3

4

5

6

7

8

2010 2011 2012 2013 2014 2015 2016 2017

Adjustedoperating profit

Adjusted EPS(basic)

Adjusted EPS(diluted)A

djus

ted

EPS

(pen

ce)

Adj

uste

d op

erat

ing

prof

it (£

m)

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TSG Integration• TSG acquired in September 2017 for $17.0m (£13.2m) with additional contingent deferred

payment of $0.75m in December 2019• Funded from existing cash resources• Acquisition integration costs of £0.8m incurred to date• Contributed £4.9m revenue in 2017 (September to December)

• USA and UK account for 78% of revenue• Additional presence in Canada, Germany, France, Spain, Slovenia, Slovakia, Poland and Ireland. • Branch office in Romania has been closed post-acquisition

• USA Integration Programme• Separation of systems (incl payroll, benefits, IT) from vendor• Improving poor financial/operational controls and processes

• Europe Integration Programme• Creating integrated European strategy rather than historic autonomous units• Improving operational processes• Strengthening management team

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1.00

1.10

1.20

1.30

1.40

1.50

1.60

Dec

-15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

Mar

-17

Apr

-17

May

-17

Jun-

17

Jul-1

7

Aug

-17

Sep-

17

Oct

-17

Nov

-17

Dec

-17

Jan-

18

30 June2017

30 December2017

• Foreign exchange benefit on Group revenue in 2017 compared to 2016 of £0.7 million• Average USD rate of 1.26 in H1-17 and 1.32 in H2-17 (H1-16: 1.44 and H2-16: 1.29)• Average Euro rate of 1.17 in H1-17 and 1.12 in H2-17 (H1-16: 1.30 and H2-16: 1.17)• While FX always uncertain, Board not anticipating benefit in 2018 and potentially negative

Currency Exchange RatesEx

chan

ge ra

te

30 June2016

31 December2016

GBP/USD

GBP/EUR

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Net Funds + Freehold Property per Share• Strong asset base, comprising significant cash resources and freehold property assets• Decrease due to capital allocated to TSG acquisition• Property valuations to be undertaken in 2018

0

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014 2015 2016 2017

Net funds + freehold propertyper share (basic)

Net funds per share (basic)

Net

fund

s +

free

hold

pro

pert

y pe

r sha

re (p

ence

)

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Corporation TaxEffective tax rate in 2017 is a tax charge of 22.2% (2016: 7.4%)

Tax charge in P&L of £0.9m in 2017 (2016: £0.2m)• R&D tax credit of £0.3m relating to 2017 (2016: R&D tax credit of £0.7m relating to 2015 & 2016) • One off tax cost in US of £120,000, Tax Cuts and Jobs Act (2016: £nil)• Significant adjustments largely ceased with R&D tax credit recognised in the year to which it relates.

Overall tax charge in line with substantively enacted corporation tax rates

Carried forward tax losses at 31 December 2017 of £11.4m (2016: £11.8m)• Includes £0.6m of trading tax losses (2016: £1.4m) which should partially reduce tax cash payments

• In 2017, cash inflow from R&D tax credits offset payments on account to give net cash outflow of £0.1m (2016: cash inflow of £0.6m)

• Other unrecognised tax losses of £10.8m (2016: £10.4m)• Will only be recognised if probable that losses can be utilised

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Proposed PSP AmendmentsEquity based component of remuneration important to attract and retain key staff, particularly senior managers

PSP Option plan has been reviewed and amendments to be proposed at AGM:

• Exclude option grants related to TSG acquisition (400,000) from Plan limit• Increase annual limit to 1.5% of ISC (but not to exceed 600,000)• Remove “grace period” post-termination under normal circumstances• USA Addendum: Address anomaly to avoid negative tax consequence for USA

employee recipients• EEI Addendum

• Longer-term incentive with irregular larger awards (50,000 to 250,000). • All awards under EEI Addendum to be approved by shareholders (3 years)• Max aggregate award at any grant 1.2 million • Excludes any holder of 1.5% of ISC in shares or options• Vesting period: 5 years • Performance conditions based on share price appreciation in range 50% to 100%

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Appendix

Annual Review of Capital Sources & Allocation

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Capital Sources 2010-2017• 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 instrument to 2026

• 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

£ m

illio

n

DebtEquity - Shares IssuedEquity - AcquisitionDisposal of investmentsOperating 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

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• Major capital deployment related to TSG acquisition in 2017• Proposed dividend increase by 5%• Equity buy-backs undertaken when appropriate. None in 2017

Capital Allocation 2010-2017

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015 2016 2017

£ m

illio

n

Dividend

Debt Repayment

Acquisition Consideration

Property, Plant & Equipment

Equity Buy-Back

Dividend is cash outflow timing, not period for which declared

20

• Capital resources deployed for acquisitions (2013, 2015, 2017)• Strong balance sheet maintained with cash resources for further investment/acquisition• Debt refinanced in 2016

Cash & Debt 2009-2017

-15

-10

-5

0

5

10

15

20

25

30

2009 2010 2011 2012 2013 2014 2015 2016 2017

£ m

illio

n

Gross Group Cash

Debt

Net Funds

Group Cash and Net Funds exclude cash held by TSG in respect of Client Registration Funds.

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• Issued share capital has decreased by approx 5% 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

mill

ion

shar

es

Outstanding ShareOptions

Issued Shares (ExclTreasury Shares) atyear end

34%

17%13%

5%

4%

26%

Chairman

Other Directors

Canaccord Genuity

Ruffer LLP

Miton

Charles Stanley

OtherShareholdings >3% as reported to Company as at 26 February 2018

Shares in issue (excluding treasury shares): 39.4m (2016: 39.3m)

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Head officeHarston MillHarston, CambridgeCB22 7GGUK

Phone: +44 1223 875200info@sciencegroup.com

www.sciencegroup.com

Head officeHarston MillHarston, CambridgeCB22 7GGUK

Phone: +44 1223 875200info@sciencegroup.com

www.sciencegroup.com