Final Results

RNS Number : 2225J

Judges Scientific PLC

25 March 2010

 

26 March 2010

Judges Scientific plc

('Judges Scientific,' the 'Company' or the 'Group')

PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

JUDGES SCIENTIFIC REPORTS RECORD RESULTS FOR 2009

Highlights:

·    Record adjusted basic earnings per share of 28p (2008: 21.1p) (unadjusted 20.6p - 2008: 14.7p)

·    Proposed final dividend of 3.7p, making a total distribution for the year of 5p (2008: 3.6p)

·    30% increase in adjusted profit to record £1.57 million (2008: £1.21 million) before amortisation of intangible assets, tax and minorities (and also gains on disposals of investments and abortive acquisition costs in 2008)

·    Record revenues of £11.3 million (continuing activities £8.5 million, up 20% compared with £7.1 million for 2008)

·    Cash in hand of £2.5 million as at 31 December 2009, with adjusted net debt of £1 million (unchanged from 31 December 2008, despite the acquisition of Quorum for cash)

·    Quorum, acquired in June 2009, is trading in line with expectations;  Sircal acquired 18 March 2010

Alex Hambro, Chairman of Judges Scientific, commented:

"The Group delivered a strong trading performance in 2009, spurred in part by the exceptional level of order intake recorded at the end of 2008. Although trading for the current year started in a more customary vein, we enjoy good visibility with the additional benefit of a full year's input in 2010 from Quorum and a maiden contribution from Sircal, acquired a week ago. This, together with our moderate indebtedness, gives us the confidence to increase the total dividend distribution for the year to a well-covered 5p per share."

Chairman's Statement

I am pleased to report your Company's preliminary results for the year to 31 December 2009. Revenues advanced from £7.1 million in 2008 to £11.3 million, an increase of 59% (or 20% excluding the impact of the acquisition of Quorum). Profit before tax and minorities but adjusted to exclude amortisation of intangible assets (and also, in respect of 2008, gains on disposals of investments and abortive acquisition costs) rose by 30% from £1.21 million in 2008 to a record £1.57 million in 2009. Basic earnings per share, similarly adjusted, rose from 21.1p to 28p. Unadjusted profit before tax and minorities amounted to £1.16 million (2008: £0.87 million). This equates to unadjusted basic earnings per share of 20.6p (2008: 14.7p).

Corporate activity

We continued to pursue our stated strategy of seeking acquisition opportunities in the instrumentation sector and were pleased to announce the acquisition on 9 June 2009 of Quorum Technologies Limited. Quorum specialises in the design and manufacture of instruments that prepare samples for examination under electron microscopes. The purchase price amounted to £1.2 million before taking account of a potential £300,000 capped earn-out and a payment of £465,000 in respect of cash in the business in excess of ongoing requirements.

Between completion of the acquisition on 9 June 2009 and the end of the year, Quorum generated sales of £2.7 million and an adjusted EBIT contribution of £234,000. The unadjusted pre-tax contribution was a negative £164,000, reflecting the particularly heavy write-offs of intangible assets in the months immediately after completion, as required under IFRS accounting rules.

On 18 March 2010, the Group acquired Sircal Instruments (UK) Limited, a company which designs, manufactures and distributes rare gas purifiers for use in metals analysis.

The basic consideration for the purchase was £1 million, payable in cash and financed by an additional bank loan. Sircal's most recent annual financial statements showed sales of £785,000.  Your directors believe that, had the business been owned by Judges during that period, it would have generated a contribution in the order of £270,000 before tax and amortisation of intangible assets.

Trading

The exceptional order book at the close of 2008, together with favourable exchange rates, provided a positive backdrop to a robust trading performance which continued throughout 2009. Those subsidiaries of the Company that predominantly service the public sector enjoyed particular strength and the more difficult trading conditions experienced within our private sector activities gave way to a distinct revival towards the end of the year.

The post-acquisition contribution from Quorum has been in line with expectations and we are pleased to report a healthy order intake for this business since completion. Elsewhere, order intake was less exuberant than in 2008; we attribute the buoyancy of the last four months of that year to an acceleration of orders which would have materialised later but for the implications of the world economic downturn. In the wake of this, our order book at the end of 2009 represented 11 weeks of sales, similar to the level that prevailed in December 2007.

Although your Company has a clear acquisition strategy, we are also mindful of the need to nurture our existing businesses and it is therefore gratifying to be able to highlight the 20% increase in revenues from continuing operations. In recognition of the importance of this approach, we welcomed David Barnbrook to the Board of Judges Scientific plc at the beginning of 2009 as Chief Operating Officer. He is responsible for supporting and coordinating the operations of our existing business segments and for absorbing new acquisitions into the Group.

This focus on our growing operations has allowed us to report a highly creditable Return On Total Invested Capital in 2009 of 40% (2008: 33%).

Financial position

The solid trading performance in 2009 has enabled the Group to maintain adjusted net debt at £1 million, the same level as at 31 December 2008, despite the Quorum acquisition. Unadjusted net debt (ignoring the capped earn-out on the Quorum acquisition) stood at £0.7 million. Year-end cash balances amounted to £2.5 million (2008: £1.6 million), impacted by the refinancing of our term loan at the time of the Quorum transaction, when £1.6 million of outstanding debt was repaid and a new five-year term loan of £3 million was negotiated. As usual, a significant proportion of our debt is denominated in foreign currency to hedge against the impact of exchange rate fluctuations on our export activities.

Dividends

Your Board is pleased to recommend a final dividend of 3.7p per share (2008: 2.4p per share) which, subject to approval at the forthcoming Annual General Meeting on 25 May 2010, will make a total distribution of 5p per share for 2009 (2008: 3.6p per share). Despite the increase, this is still covered 5.6 times by adjusted earnings per share, the same factor as for 2008.

The proposed final dividend will be payable on 2 July 2010 to shareholders on the register on 4 June 2010 and the shares will go ex-dividend on 2 June 2010.

Current trading and prospects

The Group is in a healthy position with resilient businesses, modest gearing, favourable exchange rates and good visibility, courtesy of its current order book. A full year's contribution from Quorum and nine months' input from Sircal will help to underwrite the Group's ongoing development. Although the current year has started positively, the global economic environment remains uncertain and our acquisition policy will remain focused on prudent earnings-enhancing transactions and the avoidance of excessive debt.

Personnel

I would like to take this opportunity on behalf of the Board to thank all the Group's executives and employees for their exemplary and sustained achievements which have found due reflection in 2009's record results.

Alex Hambro

Chairman

For further information please contact:

David Cicurel, CEO, Judges Scientific:                             Tel: [phone]

Pascal Keane, Shore Capital:                                             Tel: [phone]

 
Melvyn Marckus, Cardew Group:                                        Tel: [phone]

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

		2009	2009	2009		2008
		Continuing activities	Acquisitions	Total		Total
	Note	£000	£000	£000		£000
Revenue		8,546	2,749	11,295		7,104
Abortive acquisition costs		-	-	-		(310)
Other operating costs, excluding amortisation of intangible assets		(7,098)	(2,515)	(9,613)		(5,753)
Operating profit before amortisation of intangible assets		1,448	234	1,682		1,041
Amortisation of intangible assets		(17)	(398)	(415)		(53)
Operating profit/(loss) after amortisation of intangible assets		1,431	(164)	1,267		988
Profit on disposal of available-for-sale investments				-		21
Interest receivable				3		48
Interest payable				(110)		(188)
Profit before tax				1,160		869
Taxation				(325)		(230)
Profit and total comprehensive income for the year				835		639
Attributable to:
Equity holders of the parent company				832		567
Minority interest				3		72
Earnings per share - total and continuing
Basic	1			20.6p		14.7p
Diluted	1			20.0p		14.7p

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2009

		2009		2008
		£000		£000
ASSETS
Non-current assets
Property, plant and equipment		921		861
Goodwill		4,497		4,383
Other intangible assets		594		23
		6,012		5,267
Current assets
Inventories		1,241		672
Trade and other receivables		1,803		1,364
Cash and cash equivalents		2,540		1,621
		5,584		3,657
Total assets		11,596		8,924
LIABILITIES
Current liabilities
Trade and other payables		(2,197)		(1,337)
Current portion of long-term borrowings		(650)		(625)
Current tax payable		(638)		(292)
		(3,485)		(2,254)
Non-current liabilities
Long-term borrowings		(2,590)		(1,992)
Deferred tax liabilities		(188)		(34)
		(2,778)		(2,026)
Total liabilities		(6,263)		(4,280)
Net assets		5,333		4,644

EQUITY
Share capital		202		202
Share premium account		2,959		2,956
Merger reserve		475		475
Retained earnings		1,532		849
Equity attributable to equity holders of the parent company		5,168		4,482
Minority interest		165		162
Total equity		5,333		4,644

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2009

		Share capital	Share premium	Merger reserve	Retained earnings	Total**	Minority interest	Total equity
		£000	£000	£000	£000	£000	£000	£000
Balance at 1 January 2009		202	2,956	475	849	4,482	162	4,644
Dividends		-	-	-	(149)	(149)	-	(149)
Issue of share capital		-	3	-	-	3	-	3
Transactions with owners		-	3	-	(149)	(146)	-	(146)
Profit for the year		-	-	-	832	832	3	835
Total comprehensive income for the year		-	-	-	832	832	3	835
Balance at 31 December 2009		202	2,959	475	1,532	5,168	165	5,333
Balance at 1 January 2008		178	2,501	475	410	3,564	121	3,685
Dividends		-	-	-	(128)	(128)	(31)	(159)
Issue of share capital		24	455	-	-	479	-	479
Transactions with owners		24	455	-	(128)	351	(31)	320
Profit for the year		-	-	-	567	567	72	639
Total comprehensive income for the year		-	-	-	567	567	72	639
Balance at 31 December 2008		202	2,956	475	849	4,482	162	4,644

** - Total represents amounts attributable to equity holders of the parent company.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

		2009		2008
		£000		£000
Cash flows from operating activities
Profit after tax		835		639
Adjustments for:
Depreciation		107		81
Amortisation of intangible assets		415		53
Loss on disposal of property, plant and equipment		3		-
Profit on disposal of available-for-sale investments		-		(21)
Foreign exchange (gains)/losses on foreign currency loans		(92)		280
Interest receivable		(4)		(48)
Interest payable		110		188
Tax expense recognised in income statement		325		230
Decrease/(increase) in inventories		144		(118)
Decrease in trade and other receivables		257		179
(Decrease)/increase in trade and other payables		(95)		460
Cash generated from operations		2,005		1,923
Interest paid		(107)		(188)
Tax paid		(401)		(238)
Net cash from operating activities		1,497		1,497
Cash flows from investing activities
Paid on acquisition of new subsidiary		(1,914)		-
Gross cash inherited on acquisition		889		-
Acquisition of subsidiaries, net of cash acquired		(1,025)		-
Purchase of property, plant and equipment		(125)		(668)
Proceeds from disposal of equipment		1		-
Proceeds from disposal of available-for-sale investments		-		40
Interest received		4		48
Net cash used in investing activities		(1,145)		(580)
Cash flows from financing activities
Proceeds from issue of share capital		3		479
Repayments of borrowings (including hire purchase contracts)		(730)		(527)
Proceeds from bank loans		1,443		-
Dividends paid to equity holders of the parent company		(149)		(127)
Dividends paid to minority shareholders of subsidiary companies		-		(31)
Net cash from/(used in) financing activities		567		(206)
Net increase in cash and cash equivalents		919		711
Cash and cash equivalents at beginning of year		1,621		910
Cash and cash equivalents at end of year		2,540		1,621

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

1.      Earnings per share

Year to 31 December 2009	Earnings attributable to equity holders of the parent company	Weighted average number of shares	Earnings per share
	£000	No.	pence
Profit after tax for calculation of basic and diluted earnings per share	832
Add-back:  amortisation of intangible assets, net of tax	299
Adjusted basic and diluted profit	1,131
Number of shares for calculation of basic earnings per share		4,038,434
Dilutive effect of potential shares		108,212
Number of shares for calculation of diluted earnings per share		4,146,646
Basic earnings per share			20.6
Diluted earnings per share			20.1
Adjusted basic earnings per share			28.0
Adjusted diluted earnings per share			27.3

Year to 31 December 2008	Earnings attributable to equity holders of the parent company	Weighted average number of shares	Earnings per share
	£000	no.	Pence
Profit after tax for calculation of basic and diluted earnings per share	567
Add-back:  amortisation of intangible assets, net of tax	38
provision for abortive acquisition costs, net of tax	263
Less:  profit on disposal of available-for-sale investments, net of tax and tax adjustment in respect of prior year	(57)
Adjusted basic and diluted profit	811
Number of shares for calculation of basic earnings per share		3,849,565
Dilutive effect of potential shares		-
Number of shares for calculation of diluted earnings per share		3,849,565
Basic earnings per share			14.7
Diluted earnings per share			14.7
Adjusted basic earnings per share			21.1
Adjusted diluted earnings per share			21.1

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

2    Maturity of borrowings and net debt

	31 December 2009	Bank loan	Subordinated	Hire	Total
			loan notes	purchase
		£000	£000	£000	£000
	Repayable in less than 6 months	120	505	-	625
	Repayable in months 7 to 12	170	-	-	170
	Current portion of long-term borrowings	290	505	-	795
	Repayable in years 1 to 5	2,927	-	-	2,927
	Total borrowings	3,217	505	-	3,722
	Less:  interest included above				482
	cash and cash equivalents				2,540
	Total net debt				700

	31 December 2008	Bank loan	Subordinated	Hire	Total
			loan notes	purchase
		£000	£000	£000	£000
	Repayable in less than 6 months	352	-	10	362
	Repayable in months 7 to 12	347	15	7	369
	Current portion of long-term borrowings	699	15	17	731
	Repayable in years 1 to 5	1,585	506	-	2,091
	Total borrowings	2,284	521	17	2,822
	Less:  interest included above				205
	cash and cash equivalents				1,621
	Total net debt				996

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

3.         Acquisition of Quorum Technologies Limited

On 9 June 2009, the Group acquired 100% of the issued share capital of Quorum Technologies Limited ("Quorum"), a company based in the UK.  The total cost of acquisition, all of which has been paid or will be payable in cash, includes the components stated below.

	Paid in 2009	Payable in less than one year	Total
	£000	£000	£000
Initial consideration	1,200	-	1,200
Deferred consideration (payable in 2010 dependent upon earnings performance)	-	300	300
	1,200	-	1,500
Gross cash inherited on acquisition	889	-	889
Cash retained in the business	(424)	-	(424)
Payment to vendors in respect of surplus working capital	465	-	465
Acquisition costs	249		249
Total cost of acquisition	1,914	300	2,214

The amounts recognised for each class of the acquired company's assets liabilities and contingent liabilities recognised at the acquisition date are as follows:

	Pre acquisition carrying amount	Adjustment to fair value	Recognised at acquisition date
	£000	£000	£000
Property, plant and equipment	77	(31)	46
Intangible assets	-	987	987
Inventories	713	-	713
Trade and other receivables	696	-	696
Cash and cash equivalents	889	-	889
Total assets	2,375	956	3,331
Deferred tax liabilities	(11)	(276)	(287)
Trade payables	(656)	-	(656)
Current tax liability	(288)	-	(288)
Total liabilities	(955)	-	(955)
Net identifiable assets and liabilities	1,420	680	2,100
Goodwill arising on acquisition			114
Total cost of acquisition			2,214

The goodwill that arose on the combination can be attributed to Quorum's profitability.

Quorum made a profit after tax of £98,000 in the 29 weeks from 9 June 2009 to the reporting date.  After amortisation of intangible assets of £287,000, Quorum's contribution to the Group results amounted to a loss of £182,000, both figures stated after tax.

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

3.         Acquisition of Quorum Technologies Limited - continued

If Quorum had been acquired on 1 January 2009, revenue for the group for the year ended 31 December 2009 would have been £13,568,000 and profit after tax, based on pro-forma 2008 EBIT of £496,000 per annum, would have increased by £111,000 after allowing for interest costs but before charging amortisation of intangible assets (a reduction of £64,000 after charging additional amortisation of intangible assets of £175,000).

4.     Post Balance Sheet Event

On 18 March 2010, the company's subsidiary, Fire Testing Technology Limited ("FTT"), acquired the entire issued share capital of Sircal Instruments (UK) Limited ("Sircal"), a company which designs, manufactures and distributes rare gas purifiers for use in metals analysis.

The consideration for the purchase was £1 million, payable in cash and financed by an additional bank loan drawn down by the parent company.  An additional payment will be made on agreement of a completion balance sheet to reflect the working capital available at completion in excess of the ongoing requirements of the business.  The directors estimate that transactions costs, which will be expensed in the 2010 interim and full year Income Statements in accordance with the requirements of IFRS 3, will amount to £80,000.  Goodwill and other intangible assets arising on the acquisition amount to £850,000.  The directors have not yet concluded their review of the fair value of the net assets acquired or of the identification and valuation of Sircal's intangible assets, and therefore the disclosure of these at this time is clearly impracticable.

Sircal's unaudited financial statements for the year ended 30 September 2009 showed net tangible assets (excluding excess working capital) of £150,000.  Sales amounted to £785,000, on which the company generated operating profits of £337,000.  The Board of Judges believes that, had the business been owned by the group during that period, it would have generated a contribution in the order of £270,000 before interest, tax and amortisation of intangible assets.

5.      Preliminary Announcement

This preliminary announcement, which has been agreed with the auditors, was approved by the board of directors on 25 March 2010.  It is not the group's statutory accounts.  Copies of the group's audited statutory accounts for the year ended 31 December 2009 will be dispatched to shareholders shortly.  Copies will also be available to the public at the company's Registered Office at Unit 19, Charlwoods Road, East Grinstead, West Sussex RH19 2HL and at the company's website, www.judges.uk.com.

The audit reports for the year ended 31 December 2009 did not contain statements under Sections 498(2) or 498(3) of the Companies Act 2006.  The audit reports for the year ended 31 December 2008 did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985   The statutory accounts for the year ended 31 December 2008 have been delivered to the Registrar of Companies, but the 31 December 2009 accounts have not yet been filed.

 

END

 

 

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