Final Results and Acquisition

Judges Capital PLC 29 April 2005 JUDGES CAPITAL ANNOUNCES ACQUISITION OF FIRE TESTING TECHNOLOGY AND PRELIMINARY RESULTS TO 31 DECEMBER 2004 The Directors of Judges Capital plc, ('Judges Capital') today reported the Company's preliminary results for the financial year to 31 December 2004 and, in a separate statement, also announced: • The proposed £3.7 million acquisition of Fire Testing Technology ('FTT'), a private company which specialises in the design, manufacture, installation and maintenance of fire testing equipment • A Placing of 956,000 New Ordinary Shares to raise £956,000, the net proceeds of which will be used to fund, in part, the acquisition of FTT in conjunction with agreed bank facilities As disclosed in the Admission Document: • The Board of Judges Capital has identified 'instrumentation and testing' as an area that offers 'significant potential for growth and enhanced shareholder returns.' • The UK based instrumentation sector is estimated to be worth approximately £5 billion per annum. This encompasses almost 2,000 active companies, some 185 of which have an annual turnover in excess of £5 million. • FTT's turnover for the financial year to 31 May 2004 amounted to £2.84 million, up from £2.28 million, while pre-tax profits advanced from £289,000 to £635,000. Turnover for the seven months to 31 December 2004 amounted to £1.58 million, while pre-tax profits totalled £227,000 • FTT's current trading is strong and orders in hand or under negotiation augur well for the onset of the financial year commencing 1 June 2005 • Exports account for more than 90% of FTT's sales. Principal customers operate in the construction/building, transport, textile, plastics and electrical industries • FTT's net assets/shareholders' funds totalled £1.02 million as at 31 December 2004 • Judges Capital's proposed acquisition of FTT is subject to shareholder approval, completion of the Placing and Admission to AIM. Fire Testing Technology, founded in 1989, designs, manufactures, installs and maintains fire testing equipment. This equipment is used to test the effects of fire on a wide variety of materials thus enabling users to monitor compliance with legislation, industry standards and customer requirements. The £3.7 million consideration will be satisfied by a cash payment of £2.3 million at completion, £0.4 million in consideration shares in Judges Capital at the placing price, £0.5 million in subordinated interest bearing loan notes and a deferred contingent consideration of up to £0.5 million payable in cash if FTT generates £773,000 of adjusted operating profit in the year to 31 May 2005. A notice convening an EGM to be held at 11.00 a.m. on 23 May 2005 will be sent to shareholders today. Subject to the necessary approvals it is expected that dealings in the enlarged issued share capital of Judges Capital will commence on AIM at 8 a.m. on 24 May 2005. Judges Capital's preliminary results for 2004 show net losses for the year, before a provision against investments, of £54,000 (2003: £126,000) which, after provision, amounted to £154,000 (2003: £126,000). Net assets amounted to £1.53 million which, taking into account unrealised profit of £252,000, totalled £1.79 million (2003: £1.78 million) or 84.8p per ordinary share (2003: 84.5p). Administrative expenses totalled £176,000 (2003: £205,000 including £17,000 relating to an abortive transaction). Judge Capital's portfolio of active investments at the year-end was as follows: • a 2.2% shareholding in Interior Services Group ('ISG'), half of which was held through CFDs (Contracts for Difference). Together with co-investors Judges Capital controlled 3.1% of ISG at the year end; • together with David Cicurel (Investments) and Starlight Investments, an 11.7% shareholding in Poole Investments plc (formerly Pilkington's Tiles), which owns an attractive real estate site in Poole, Dorset; • a 3% shareholding in Dickinson Legg, a small engineering company; • a 1.7% shareholding in Fortress Holdings, a cash shell which has now entered members' voluntary liquidation. This is the outcome sought and the Board is confident that this investment will yield a significant profit; • a 2.4% shareholding in a small marketing company; and • a residual investment in Lionheart, a cash shell in voluntary liquidation. During the year Judges Capital received back its original investment and a significant profit. One more distribution is expected. In January 2005, Judges Capital disposed of its shareholding in ISG plc, a transaction that generated total proceeds of £1,156,000 and a profit on sale of £226,000. Of the proceeds, the sum of £512,000 was used to settle related liabilities under contracts for difference. In addition, Judges Capital received £208,000 post the year-end from the liquidators of Fortress Holdings, an amount that approximates to the original investment. Commenting on Judges Capital's preliminary results for the financial year to 31 December 2004 and the proposed acquisition of FTT Alex Hambro, Chairman, said: 'The historic focus of our approach has been to acquire strategic stakes in undervalued quoted companies and propose changes likely to result in enhanced shareholder value, the principal mechanism being the encouragement of public to private transactions in order to take advantage of different perceptions of value between stock market investors and private equity funds. 'Despite our successes, the environment in respect of our business model has remained hostile. The enthusiasm for small companies has continued with the FTSE Small Cap index rising approximately 80% in the space of two years from its low point in March 2003. The continued strength in the share prices of 'Small Cap' companies has resulted in a serious deterioration of the arbitrage opportunity between public and private valuations, a factor that is integral to our strategy. In view of the fact that this public to private arbitrage has reversed, we need to deploy our skills in order to take advantage of the opportunities this change is creating. 'Your Board has decided to pursue a new strategy that it believes is more likely to produce satisfactory shareholder returns in this changed environment. We announced today the acquisition of Fire Testing Technology, a trading company involved in the manufacture of fire testing instruments. Fire Testing Technology is a solid, cash generative, growing, niche business. The instrument sector consists of a large number of suppliers and we will seek further acquisition opportunities.' JUDGES CAPITAL PLC CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 During its second year in operation, your Company continued its strategy as an activist investor in small public companies. The historic focus of our approach has been to acquire strategic stakes in undervalued quoted companies and propose changes likely to result in enhanced shareholder value, the principal mechanism being the encouragement of public to private transactions in order to take advantage of different perceptions of value between stock market investors and private equity funds. During the year under review we continued to build our portfolio and, by the middle of the year, the Company was close to being fully invested. This remained the case until the year-end. The net losses for the year, before a provision against investments, amounted to £54K (2003: £126K) and, after provision, totalled £154k (2003: £126K). Net assets amounted to £1.53 million which, together with unrealised profit of £252K, amounted to £1.79 million (2003: £1.78 million) or 84.8p per ordinary share (2003: 84.5p). We continued to maintain strict control of our administrative expenses which amounted to £176K for the period (2003: £205K including £17K relating to an abortive transaction). During the year we entered into a number of Contract for Difference (CFDs) in respect of certain investment holdings. CFDs effectively represent a financing tool, enabling us to control larger stakes in target companies without having to purchase shares outright, thus providing greater leverage. The use of CFD investment enabled us to retain a significant bank balance (£296K) at the year-end, while still investing an amount equivalent to the funds initially raised. Our portfolio of active investments at the year-end was as follows: • a 2.2% shareholding in Interior Services Group ('ISG'), half of which was held through CFDs. Together with co-investors we controlled 3.1% of ISG at the year end; • together with David Cicurel (Investments) and Starlight Investments, an 11.7% shareholding in Poole Investments plc (formerly Pilkington's Tiles), which owns an attractive real estate site in Poole, Dorset; • a 3% shareholding in Dickinson Legg, a small engineering company; • a 1.7% shareholding in Fortress Holdings, a cash shell which has now entered members' voluntary liquidation. This is the outcome we sought and we are confident that this investment will yield a significant profit; • a 2.4% shareholding in a small marketing company; and • a residual investment in Lionheart, a cash shell in voluntary liquidation; during the year we received back our original investment and a significant profit. One more distribution is expected. Despite our successes, the environment in respect of our business model has remained hostile. The enthusiasm for small companies has continued with the FTSE Small Cap index rising approximately 80% in the space of two years from its low point in March 2003. The continued strength in the share prices of 'Small Cap' companies has resulted in a serious deterioration of the arbitrage opportunity between public and private valuations, a factor that is integral to our strategy. In view of the fact that this public to private arbitrage has reversed, we need to deploy our skills in order to take advantage of the opportunities this change is creating. As this buoyancy is proving persistent your Board has decided to pursue a new strategy that it believes is more likely to produce satisfactory shareholder returns in this changed environment. We announced today the acquisition of Fire Testing Technology Limited, a trading company involved in the manufacture of fire testing instruments. The acquisition amounts to a maximum of £3.7 million plus a working capital adjustment and will be financed by a £956,000 placing and by debt. Fire Testing Technology Limited is a solid, cash generative, growing, niche business. The instrument sector consists of a large number of suppliers and we will seek further acquisition opportunities. Full details are provided in the admission document. With a view to actively pursuing this new strategy we will seek to accelerate the disposal of our share portfolio. After the year-end we disposed of our principal holding, ISG, and realised a net profit of £226K and an annual investment return of 30.5% on our shares (the leverage enabled us to produce a higher return on the CFDs). We have also made a provision of £100k against the carrying value of our other investments which reflects our current view of the net realisable value of the remaining portfolio (excluding ISG). The aforementioned change in strategy means that we may choose to exit from these investments more rapidly than would otherwise have been the case. As a result of this provision, which is calculated on the approximate current market value, the net loss for the year amounts to £154K. Your Board recognises that our original business model was thwarted by the sudden revival in small public company equity valuations and that, due to our small size, some excellent performances on individual investments have not translated into overall profitability. We are confident that our new direction will produce attractive shareholder returns in this new environment and we thank our shareholders for their continued support. Current Trading and Future Prospects In January 2005, Judges Capital disposed of its shareholding in ISG plc, a transaction that generated total proceeds of £1,156,000 and a profit on sale of £226,000. Of the proceeds, the sum of £512,000 was used to settle related liabilities under contracts for difference. In addition, Judges received £208,000 post the year-end from the liquidators of Fortress Holdings, an amount that approximates to Judges' original investment. Alex Hambro Chairman Date: 29 April 2005 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2004 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2004 Year ended Period ended 31 December 31 December 2004 2003 £ £ Administrative expenses (175,535) (204,859) ------------ ------------- Operating loss (175,535) (204,859) Profit on disposal of investments 57,654 30,049 Provision against investments (100,000) - Investment income 61,912 14,750 Net interest receivable and similar income 2,441 34,188 ------------ ------------ Loss on ordinary activities before taxation (153,528) (125,872) Tax on loss on ordinary activities - - ----------- ------------ Loss on ordinary activities after taxation (153,528) (125,872) =========== ============ Loss per ordinary share (7.3p) (6.7p) =========== ============ All operations are continuing operations. There are no recognised gains and losses other than those passing through the profit and loss account. BALANCE SHEET AS AT 31 DECEMBER 2004 2004 2003 £ £ Current assets Debtors 8,230 18,912 Investments 1,702,075 1,007,336 Cash at bank and in hand 296,073 703,647 ----------- ----------- 2,006,378 1,729,895 Creditors: amounts falling due within (472,466) (42,455) one year ----------- ----------- Total assets less current 1,533,912 1,687,440 liabilities =========== =========== Capital and reserves Called up share capital 117,818 117,818 Share premium account 1,695,494 1,695,494 Profit and loss account (279,400) (125,872) ----------- ----------- Shareholders' funds 1,533,912 1,687,440 =========== =========== Equity interests 1,521,412 1,674,940 Non-equity 12,500 12,500 interests ----------- ----------- 1,533,912 1,687,440 =========== =========== CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Year ended Period ended 31 December 2004 31 December 2003 £ £ £ £ Net cash outflow from operating activities (195,365) (166,566) Returns on investments and servicing of finance Interest received 25,279 34,188 Interest paid (360) - Dividends received 58,462 - --------- --------- 83,381 34,188 --------- --------- Net cash outflow before management of (111,984) (132,378) liquid resources and financing Management of liquid resources Purchase of investments (650,790) (1,039,372) Sale of investments 412,500 62,085 --------- --------- Net cash outflow from management of liquid resources (238,290) (977,287) --------- --------- Net cash outflow before financing (350,274) (1,109,665) --------- --------- Financing Issue of Ordinary shares - 2,001,002 Issue of convertible Redeemable - 12,500 shares Expenses paid in connection with share - (200,190) issue Payments for CFDs (57,300) - --------- --------- Net cash (outflow)/inflow from (57,300) 1,813,312 financing --------- --------- (Decrease)/increase in cash in the (407,574) 703,647 period ========= ========= 1 Loss per ordinary share Loss per share is calculated by dividing the loss for the period of £153,528 (2003:£125,872) by the weighted average number of shares in issue during the period of 2,106,356 (2003: 1,888,649). As there is a loss for the period there is no dilutive effect arising from the convertible redeemable shares. 2 Current asset investments Historical Period end value Cost Market Directors' Total valuation valuation Valuation £ £ £ £ Unquoted investments 227,399 - 260,000 260,000 Quoted investments 1,574,676 1,693,601 - 1,693,601 Less: provision against investments (100,000) - - - --------- --------- --------- -------- At 31 December 2004 1,702,075 1,693,601 260,000 1,953,601 ========= ========= ========= ======== Net unrealised gain at 31 December 2004 - 218,925 32,601 251,526 ========= ========= ========= ======== Historical Period end value Cost Market Directors' Total valuation valuation Valuation £ £ £ £ Unquoted investments 368,467 - 420,750 420,750 Quoted investments 638,869 679,756 - 679,756 --------- --------- --------- -------- At 31 December 2003 1,007,336 679,756 420,750 1,100,506 ========= ========= ========= ======== Net unrealised gain at 31 December 2003 - 40,887 52,283 93,170 ========= ========= ========= ======== 3 Statement of movements on reserves Share premium Profit and account loss account £ £ Balance at 31 December 2003 1,695,494 (125,872) Retained loss for the year - (153,528) ---------- ---------- Balance at 31 December 2004 1,695,494 (279,400) ========== ========== 4 Reconciliation of movements in 2004 2003 shareholders' funds £ £ Loss for the financial period (153,528) (125,872) Proceeds from issue of shares - 1,813,312 ---------- ---------- Net addition to shareholders' funds (153,528) 1,687,440 Opening shareholders' funds 1,687,440 - ---------- ---------- Closing shareholders' funds 1,533,912 1,687,440 ========== ========== The results for the period ended 31 December 2004 will be posted to shareholders and the AIM team today. Further copies are available at the Company's registered office, 1 Bickenhall Mansions, Bickenhall Street, London W1U 6BP. Ends For further information please contact: David Cicurel, Chief Executive, Judges Capital PLC : Tel: 0207 437 4037 Mike Sawbridge, Shore Capital & Corporate Limited: Tel: 0151 600 3722 Melvyn Marckus, Cardew Group: Tel: 0207 930 0777 END This information is provided by RNS The company news service from the London Stock Exchange

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