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Judges ScientificPLC (JDG)

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Tuesday 18 September, 2018

Judges ScientificPLC

Interim Results

RNS Number : 0397B
Judges Scientific PLC
18 September 2018
 

 

Press release

18 September 2018

 

Judges Scientific plc

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

Interim results for the six months ended 30 June 2018 and Trading Update

 

 Key financials 

·        Revenues up 13% to a record £37.0 million (H1 2017: £32.7 million) including 5.7% Organic growth;

·        Adjusted* pre-tax profit up 50% to £6.6 million (H1 2017: £4.4 million);

Statutory pre-tax profit of £4.2 million (H1 2017: £2.1 million);

·        Adjusted* basic earnings per share up 52% to 83.4p (H1 2017: 54.8p);

Statutory basic earnings per share of 53.3p (H1 2017: 23.9p);

·        Interim dividend of 12.0p (H1 2017: 10.0p), an increase of 20%; covered 7 times by adjusted earnings;

·        Organic order intake up 2.3% compared with H1 2017;

·        Organic order book at 15.0 weeks (H1 2017: 15.4 weeks);

·        Cash generated from operations of £6.3 million (H1 2017: £4.4 million);

·        Adjusted* net debt of £2.2 million as at 30 June 2018 (31 December 2017: £8.0 million);

Statutory net debt of £2.4 million as at 30 June 2018 (31 December 2017: £7.6 million);

·        Cash balances of £14.4 million as at 30 June 2018 (31 December 2017: £10.7 million);

·        Bank debt refinanced with new facilities of £35 million;

·        Post period end buy-back by PFO of one half of the shares held by its minority holders for a cash consideration of £1.5 million, increasing the Group's share in PFO from 51% to 67.5%.

Trading update 

·        Adjusted profit before tax and Earnings per Share anticipated to be ahead of FY 2018 expectations.

 

* Adjusted earnings figures are stated before adjusting items relating to hedging of risks materialising after the end of the period, amortisation of acquired intangible assets, share based payments and acquisition-related costs.  Adjusted net debt notionally includes acquisition-related payments which had yet to be settled at the balance sheet date and excludes subordinated debt owed by subsidiaries to minority shareholders. 

 

Alex Hambro, Chairman of Judges Scientific, commented:  

"During the period, the Company achieved new records in terms of revenues, adjusted profit before tax, adjusted earnings per share and dividends.  This strong momentum has been maintained since the end of the period and as such, the Board anticipates that full year adjusted profit before tax and EPS will be ahead of current market expectations.

 

During the period we welcomed Charles Holroyd to the Board with Glynn Reece transitioning to become the Group's Company Secretary. The Group continues to pursue its disciplined strategy and benefits from a broad range of revenue streams, diversified by geography and market, partially insulating it against wider external volatility."

 

For further information please contact: 

 

Judges Scientific

 

 

David Cicurel, CEO

Brad Ormsby, Group FD

   Tel: +44 (0) 203 829 6970

 

 

Shore Capital (Nominated Adviser & Broker)

 

 

Stephane Auton

Edward Mansfield

Tel: +44 (0) 20 7408 4090

 

 

Alma (Financial Public Relations)

Rebecca Sanders-Hewett

Sam Modlin

 

Tel: +44 (0) 20 3865 9886

 

 

 

 

Tel: +44 (0) 203 829 6970

 

 

Tel: +44 (0) 20 7408 4090

 

Tel: +44 (0) 20 3865 9886

 

 

 

 

 

 

 

 

Chairman's Statement 

It is pleasing to report for the first half of 2018 record figures across revenues, adjusted profit before tax, adjusted earnings per share and dividends, maintaining the positive momentum experienced since the middle of 2016. 

The Group's results for the six-month period to 30 June 2018 include a full contribution from Oxford Cryosystems Limited, which was acquired in July 2017.  "Organic" in this statement excludes the performance of that business. 

Trading performance 

Group revenues for the six months ended 30 June 2018 increased 13% to a record £37.0 million (H1 2017: £32.7 million) as a result of 5.7% Organic growth and of the contribution from Oxford Cryosystems. Organic sales were particularly strong in the Rest of Europe (up 31%) and North America (up 16%); after its recent weakness, the UK showed some improvement (up 9%) but the Rest of the world receded 21%, mainly due to a pause in China/Hong Kong (down 17% after many years of strong, albeit erratic, growth).  The non-Organic business produced revenues in line with the Board's expectations. 

Profitability primarily driven by Organic revenue growth was bolstered by the underlying favourable foreign exchange environment, despite the tentative strengthening of Sterling for a period in the six months being reported; it was also reinforced by the progress made with the previously communicated localised production issues. Organic contribution to EBITA and central costs advanced by 36% which, with the contribution from Oxford Cryosystems, led to a 50% increase in adjusted pre-tax profit to £6.6 million (H1 2017: £4.4 million). Return on total invested capital ("ROTIC") recovered to 24.2% for the trailing 12 months ended 30 June 2018 (30 June 2017: 17.4%) evidencing the performance momentum we have been building.

The strong Organic EBITA performance was the main factor behind earnings growth but they were also enhanced by the Oxford Cryosystems contribution and the increased shareholding in Bordeaux.  Adjusted basic earnings per share progressed 52% to 83.4p (H1 2017: 54.8p) and adjusted diluted earnings per share grew similarly from 54.1p to 82.1p.

Your Directors continue to show adjusted figures, prepared consistently with past reports, in order to communicate to shareholders what is, in the Directors' opinion, the true operating performance of the Group.  The total adjustments of £2.4 million (H1 2017: £2.3 million) include a £2.1 million charge for amortisation of acquired intangible assets (H1 2017: £2.2 million) arising through acquisition. The adjusting items reduce profit before tax from £6.6 million to £4.2 million (H1 2017: £2.1 million) and earnings per share to 53.3p basic and 52.4p diluted (H1 2017: 23.9p basic and 23.6p diluted). 

Cashflow and net debt 

Cash flow during the first half of 2018 was in tune with the improved trading, with cash from operations of £6.3 million (H1 2017: £4.4 million) representing 92% of adjusted EBIT (H1 2017: 95%).  The interim balance sheet includes cash balances of £14.4 million and adjusted net debt of £2.2 million, down from £8.0m at the beginning of 2018. 

In April, the Company entered into an agreement with Lloyds Banking Group plc to refinance and expand the Group facilities for another five years; the new facilities consist of a £10 million term loan, a £20 million committed acquisition facility and a £5 million uncommitted acquisition facility (accordion) on similar terms to the previous agreement. Bordeaux Acquisition Limited's ("Bordeaux") facilities remain unchanged and separate from the Group's facilities. The Group owns 75.5% of the shares in, and shareholders loans to, Bordeaux.

Order intake 

As previously announced, Organic order intake in the first half was solid, showing a progression of 2.3% on the excellent performance achieved in the same period last year.  On 30 June 2018, the Organic order book stood at 15.0 weeks of sales against 15.0 weeks at the beginning of 2018 and 15.4 weeks at 30 June 2017. With satisfactory bookings at Oxford Cryosystems, the Group's overall order book, including Oxford Cryosystems, at 30 June 2018 stood at 14.6 weeks. 

Geographic Organic order intake grew strongly in the UK (by 27%) and in the Rest of Europe (by 24%), was flat in North America and down by 20% in China. This illustrates both the differential in timing between receipt of orders and their subsequent delivery, and also the variability of orders by geography over short periods. This is somewhat mitigated by the Group's diversity both by geography and by market.

Dividend 

In accordance with the Company's dividend policy and in view of the positive performance in the period, the Board is declaring an interim dividend of 12.0p (2017: 10.0p), which will be paid on Friday 2 November 2018 to shareholders on the register on Friday 5 October 2018.  The shares will go ex-dividend on Thursday 4 October 2018.  The interim dividend is covered 7 times by adjusted earnings. 

Board composition

On 1 June 2018, we were delighted to welcome Charles Holroyd to the Board as a Non-Executive Director replacing Glynn Reece who stepped down from the Board but remains as Company Secretary. Having been with the Group since its inception, Glynn has worked with the Board to grow the business and deliver significantly value for our shareholders, and we thank him for his hugely valuable contribution.

Charles most recently worked at Oxford Instruments plc, which he joined in 1999 and where he served on the board from 2005 until 2013 and was responsible for group business development.  Charles has a BSc in Electrical and Electronics Engineering from Bristol University and an MBA from INSEAD and is a Chartered Engineer and a Fellow of the Institution of Engineering and Technology. Charles is the senior independent Non-Executive Director and is a member of both the remuneration and audit committees.

Post balance sheet event 

On 8 August 2018 PE Fiberoptics Limited ("PFO"), the vehicle for a 2005 management buy-out backed by Judges, purchased half of its own shares from all shareholders other than Judges, satisfied by a portion of its surplus cash balances. As a result, PFO purchased 24.5% of its issued share capital and subsequently cancelled these shares, increasing the Group's share in PFO from 51% to 67.5%. The total value of the repurchase was £1.5m and the Board expects the transaction to be immediately earnings enhancing for the Group.

Outlook

Currency fluctuations and the ups and downs of government spending in various parts of the global market for our products continue to be the main factors influencing demand in the short term and causing it to oscillate around the long term positive trend driving the scientific sector.

In the last three years, trading has displayed a second half bias which is not expected to be replicated this year. Despite this, since the end of the period under review, order intake has continued to be positive and Organic intake for the first ten weeks of the second half is significantly ahead of the same period in 2017 giving the Board confidence that adjusted profit before tax and EPS will be ahead of current market expectations for the year as a whole.

 

The Hon. Alexander Hambro 

Chairman 

17 September 2018

 

 

 

Condensed consolidated interim statement of comprehensive income

 

 

Note

Adjusted

£000

Adjusting

 items

£000

Six months to

30 June

2018

£000

Six months to

30 June

2017

£000

Year to

 31 December

2017

£000

Revenue

3

36,962

-

36,962

32,720

71,360

Operating costs

 

(30,102)

-

(30,102)

(28,097)

(60,481)

Adjusted operating profit

3

6,860

-

6,860

4,623

10,879

Adjusting items

4

-

(2,350)

(2,350)

(2,295)

(5,217)

Operating profit/(loss)

 

6,860

(2,350)

4,510

2,328

5,662

Interest income

 

12

-

12

10

34

Interest expense

4

(263)

(27)

(290)

(268)

(575)

Profit/(loss) before tax

 

6,609

(2,377)

4,232

2,070

5,121

Taxation (charge)/credit

 

(991)

435

(556)

(224)

(382)

Profit/(loss) for the period

 

5,618

(1,942)

3,676

1,846

4,739

Attributable to:

 

 

 

 

 

 

Owners of the parent

 

5,140

(1,857)

3,283

1,460

4,013

Non-controlling interests

 

478

(85)

393

386

726

Other comprehensive income

 

 

 

 

Items that will not be reclassified subsequently to profit or loss

 

 

 

 

Retirement benefits actuarial gains/(losses)

 

128

160

(195)

Items that may be reclassified subsequently to profit or loss

 

 

 

 

Exchange differences on translation of foreign subsidiaries

 

20

(30)

(75)

Other comprehensive income/(expense) for the period, net of tax

 

148

130

(270)

Total comprehensive income for the period

 

3,824

1,976

4,469

Attributable to:

 

 

 

 

Owners of the parent

 

3,431

1,590

3,743

Non-controlling interests

 

393

386

726

 

 

 

 

 

Pence

Pence

Pence

Earnings per share - adjusted

 

 

 

 

 

 

Basic

5

 

 

83.4

54.8

131.9

Diluted

5

 

 

82.1

54.1

130.3

Earnings per share - total

 

 

 

 

 

 

Basic

5

 

 

53.3

23.9

65.6

Diluted

5

 

 

52.4

23.6

64.8

 

 

 

Condensed consolidated interim balance sheet

 

 

Note

30 June

2018

£000

30 June

2017

£000

31 December

2017

£000

ASSETS

 

 

 

 

 

 

 

 

Goodwill

 

14,650

13,335

14,650

Other intangible assets

6

6,861

7,586

9,006

Property, plant and equipment

 

5,534

5,275

5,344

Deferred tax assets

 

713

675

730

 

 

27,758

26,871

29,730

Current assets

 

 

 

 

Inventories

 

11,424

11,205

10,380

Trade and other receivables

 

13,708

10,842

11,827

Cash and cash equivalents

 

14,365

8,942

10,681

 

 

39,497

30,989

32,888

Total assets

 

67,255

57,860

62,618

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(13,961)

(11,914)

(11,972)

Trade and other payables relating to acquisitions

 

-

(97)

(599)

Borrowings

 

(3,081)

(2,692)

(3,566)

Current tax liabilities

 

(3,680)

(2,073)

(2,821)

 

 

(20,722)

(16,776)

(18,958)

Non-current liabilities

 

 

 

 

Borrowings

 

(13,642)

(12,382)

(14,696)

Deferred tax liabilities

 

(1,661)

(1,807)

(2,087)

Retirement benefit obligations

11

(2,094)

(2,036)

(2,221)

 

 

(17,397)

(16,225)

(19,004)

Total liabilities

 

(38,119)

(33,001)

(37,962)

Net assets

 

29,136

24,859

24,656

EQUITY

 

 

 

 

Share capital

7

309

306

307

Share premium

 

15,000

14,479

14,529

Other reserves

 

2,075

2,100

2,055

Retained earnings

 

10,282

6,175

6,688

Equity attributable to owners of the parent

 

27,666

23,060

23,579

Non-controlling interests

 

1,470

1,799

1,077

Total equity

 

29,136

24,859

24,656

 

 

 

Condensed consolidated interim statement of changes in equity

 

 

 

Share

capital

£000

Share

premium

£000

Other

reserves

£000

Retained

earnings

£000

Total attributable

to owners

of parent

£000

Non-

controlling

interests

£000

Total

equity

£000

 

At 1 January 2018

307

14,529

2,055

6,688

23,579

1,077

24,656

 

Share-based payments

-

-

-

183

183

-

183

 

Issue of share capital

2

471

-

-

473

-

473

 

Transactions with owners

2

471

-

183

656

-

656

 

Profit for the period

-

-

-

3,283

3,283

393

3,676

 

Retirement benefit actuarial gains

-

-

-

128

128

-

128

 

Foreign exchange differences

-

-

20

-

20

-

20

 

Total comprehensive income for the period

-

-

20

3,411

3,431

393

3,824

 

At 30 June 2018

309

15,000

2,075

10,282

27,666

1,470

29,136

                   

 

 

 

Share

capital

£000

Share

premium

£000

Other

reserves

£000

Retained

earnings

£000

Total attributable

to owners

of parent

£000

Non-

controlling

interests

£000

Total

equity

£000

 

At 1 January 2017

305

14,472

2,130

4,425

21,332

1,413

22,745

 

Share-based payments

-

-

-

130

130

-

130

 

Issue of share capital

1

7

-

-

8

-

8

 

Transactions with owners

1

7

-

130

138

-

138

 

Profit for the period

-

-

-

1,460

1,460

386

1,846

 

Retirement benefit actuarial gains

-

-

-

160

160

-

160

 

Foreign exchange differences

-

-

(30)

-

(30)

-

(30)

 

Total comprehensive (expense)/income for the period

-

-

(30)

1,620

1,590

386

1,976

 

At 30 June 2017

306

14,479

2,100

6,175

23,060

1,799

24,859

                   

 

 

 

Share

capital

£000

Share

premium

£000

Other

reserves

£000

Retained

earnings

£000

Total attributable

to owners

of parent

£000

Non-

controlling

interests

£000

Total

equity

£000

 

At 1 January 2017

305

14,472

2,130

4,425

21,332

1,413

22,745

 

Dividends

-

-

-

(1,743)

(1,743)

-

(1,743)

 

Adjustments arising from change in non-controlling interest

-

-

-

(96)

(96)

(1,062)

(1,158)

 

Issue of share capital

2

57

-

-

59

-

59

 

Share-based payments

-

-

-

284

284

-

284

 

Transactions with owners

2

57

-

(1,555)

(1,496)

(1,062)

(2,558)

 

Profit for the year

-

-

-

4,013

4,013

726

4,739

 

Retirement benefit actuarial losses

-

-

-

(195)

(195)

-

(195)

 

Foreign exchange differences

-

-

(75)

-

(75)

-

(75)

 

Total comprehensive (expense)/income for the year

-

-

(75)

3,818

3,743

726

4,469

 

At 31 December 2017

307

14,529

2,055

6,688

23,579

1,077

24,656

                   

Condensed consolidated interim cash flow statement

 

 

 

Six months to

30 June

2018

£000

Six months to

30 June

2017

£000

Year to

31 December

2017

£000

 

Cash flows from operating activities

 

 

 

 

Profit after tax

3,676

1,846

4,739

 

Adjustments for:

 

 

 

 

Financial instruments measured at fair value: Hedging contracts

22

15

22

 

Share-based payments

183

130

284

 

Depreciation

373

338

675

 

Amortisation of intangible assets

2,145

2,150

4,589

 

(Profit)/loss on disposal of property, plant and equipment

-

(1)

54

 

Foreign exchange (losses)/gains on foreign currency loans

(18)

35

48

 

Interest income

(12)

(10)

(34)

 

Interest expense

263

237

515

 

Retirement benefit obligation net interest cost

27

31

60

 

Contributions to defined benefit plans

-

-

(236)

 

Tax recognised in Income Statement

556

224

382

 

Increase in inventories

(1,044)

(1,266)

(25)

 

(Increase)/decrease in trade and other receivables

(1,881)

499

111

 

Increase/(decrease) in trade and other payables

1,989

180

(263)

 

Cash generated from operations

6,279

4,408

10,921

 

Finance costs paid

(266)

(239)

(482)

 

Tax (paid)/received

(115)

216

68

 

Net cash from operating activities

5,898

4,385

10,507

 

Cash flows from investing activities

 

 

 

 

Paid on acquisition of new subsidiaries

(599)

(1,507)

(8,769)

 

Gross cash inherited on acquisition

-

-

1,655

 

Acquisition of subsidiaries, net of cash acquired

(599)

(1,507)

(7,114)

 

Paid on the acquisition of trade and assets

-

(11)

(11)

 

Purchase of property, plant and equipment

(557)

(339)

(728)

 

Proceeds from the sale of assets

-

8

-

 

Interest received

12

10

34

 

Net cash used in investing activities

(1,144)

(1,839)

(7,819)

 

Cash flows from financing activities

 

 

 

 

Proceeds from issue of share capital

473

8

59

 

Repayments of borrowings*

(1,518)

(1,503)

(2,668)

 

Proceeds from bank loans*

-

-

4,500

 

Equity dividends paid

-

-

(1,743)

 

Net cash (used in)/from financing activities

(1,045)

(1,495)

148

 

Net change in cash and cash equivalents

3,709

1,051

2,836

 

Cash and cash equivalents at start of period

10,681

7,909

7,909

 

Exchange movements

(25)

(18)

(64)

 

Cash and cash equivalents at end of period

14,365

8,942

10,681

 

*- On 27 April 2018, £12,896,000 of outstanding loans were repaid and simultaneously reborrowed as the Group renewed its banking facilities (see note 10). 

 

 

Notes to the interim report

 

1. General information and basis of preparation

The Judges Scientific plc group's principal activities comprise the design, manufacture and sale of scientific instruments. The subsidiaries are grouped into two segments: Materials Sciences and Vacuum.

The financial information set out in this interim report for the six months ended 30 June 2018 and the comparative figures for the six months ended 30 June 2017 are unaudited. The interim report has been prepared in accordance with IAS 34 "Interim Financial Reporting". The interim report does not contain all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2017, which have been prepared in accordance with IFRS as adopted by the European Union.

The financial information for the year ended 31 December 2017 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies. The Auditor's Report in respect of those financial statements was unqualified and did not contain statements under section 498 of the Companies Act 2006.

Judges Scientific plc is the Group's ultimate parent company. The Company is a public limited company incorporated and is domiciled in the United Kingdom. Its registered office and principal place of business is 52c Borough High Street, London SE1 1XN and the Company's shares are quoted on the Alternative Investment Market. The interim report is presented in Sterling, which is the functional currency of the parent company. The interim report has been approved for issue by the Board of Directors on 17 September 2018. 

2. Significant accounting policies

The interim report has been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2017, except for the taxation policy where, for the purposes of the interim results, the tax charge on adjusted business performance is calculated by reference to the estimated effective rate for the full year. Additionally, the Group has adopted IFRS 15 'Revenues from Contracts with Customers' as of 1 January 2018. No restatement to prior period comparatives was required.

3. Segmental analysis

For the period ended 30 June 2018

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

16,295

20,667

-

36,962

Operating costs

 

(12,988)

(15,991)

(1,123)

(30,102)

Adjusted operating profit

 

3,307

4,676

(1,123)

6,860

Adjusting items

4

 

 

 

(2,350)

Operating profit

 

 

 

 

4,510

Net interest expense

 

 

 

 

(278)

Profit before tax

 

 

 

 

4,232

Income tax charge

 

 

 

 

(556)

Profit for the period

 

 

 

 

3,676

 

For the period ended 30 June 2017

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

16,274

16,446

-

32,720

Operating costs

 

(12,906)

(13,973)

(1,218)

(28,097)

Adjusted operating profit

 

3,368

2,473

(1,218)

4,623

Adjusting items

4

 

 

 

(2,295)

Operating profit

 

 

 

 

2,328

Net interest expense

 

 

 

 

(258)

Profit before tax

 

 

 

 

2,070

Income tax charge

 

 

 

 

(224)

Profit for the period

 

 

 

 

1,846

 

For the year ended 31 December 2017

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

34,088

37,272

-

71,360

Operating costs

 

(26,699)

(31,225)

(2,557)

(60,481)

Adjusted operating profit

 

7,389

6,047

(2,557)

10,879

Adjusting items

4

 

 

 

(5,217)

Operating profit

 

 

 

 

5,662

Net interest expense

 

 

 

 

(541)

Profit before tax

 

 

 

 

5,121

Income tax charge

 

 

 

 

(382)

Profit for the year

 

 

 

 

4,739

Unallocated items relate to the Group's head office costs.

 

Segment assets and liabilities

At 30 June 2018

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

19,445

24,704

23,106

67,255

Liabilities

(9,491)

(14,826)

(13,802)

(38,119)

Net assets

9,954

9,878

9,304

29,136

Capital expenditure

122

435

-

557

Depreciation

122

233

18

373

Amortisation

775

1,370

-

2,145

 

At 30 June 2017

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

16,450

21,469

19,941

57,860

Liabilities

(7,579)

(7,380)

(18,042)

(33,001)

Net assets

8,871

14,089

1,899

24,859

Capital expenditure

174

165

-

339

Depreciation

114

206

18

338

Amortisation

1,115

1,035

-

2,150

 

At 31 December 2017

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

16,741

22,774

23,103

62,618

Liabilities

(7,274)

(11,677)

(19,011)

(37,962)

Net assets

9,467

11,097

4,092

24,656

Capital expenditure

288

440

-

728

Depreciation

221

419

35

675

Amortisation

2,045

2,544

-

4,589

 

Unallocated items are borrowings, intangible assets and goodwill arising on acquisition, deferred tax, defined benefit obligations and parent company net assets.

Geographic analysis

Six months to

30 June

2018

£000

Six months to

30 June

2017

£000

Year to

31 December

2017

£000

UK (domicile)

4,541

4,003

9,005

Rest of Europe

11,499

7,825

17,784

North America

9,972

8,103

18,380

Rest of the world

10,950

12,789

26,191

Revenue

36,962

32,720

71,360

 

4. Adjusting items

 

Six months to

30 June

2018

£000

Six months to

30 June

2017

£000

Year to

31 December

2017

£000

Amortisation of intangible assets

2,145

2,150

4,589

Financial instruments measured at fair value: Hedging contracts

22

15

22

Share-based payments

183

130

284

Acquisition costs

-

-

322

Total adjusting items within operating profit

2,350

2,295

5,217

Retirement benefits obligation net interest cost

27

31

60

Total adjusting items

2,377

2,326

5,277

Taxation

(435)

(435)

(1,092)

Total adjusting items net of tax

1,942

1,891

4,185

Attributable to:

 

 

 

Owners of the parent

1,857

1,888

4,061

Non-controlling interests

85

3

124

 

1,942

1,891

4,185

 

5. Earnings per share

 

Note

Six months to

30 June

2018

£000

Six months to

30 June

2017

£000

Year to

31 December

2017

£000

Profit for the period attributable to owners of the parent

 

 

 

 

Adjusted profit

 

5,140

3,348

8,074

Adjusting items

4

(1,857)

(1,888)

(4,061)

Profit for the period

 

3,283

1,460

4,013

 

 

 

Pence

Pence

Pence

Earnings per share - adjusted

 

 

 

 

Basic

 

83.4

54.8

131.9

Diluted

 

82.1

54.1

130.3

Earnings per share - total

 

 

 

 

Basic

 

53.3

23.9

65.6

Diluted

 

52.4

23.6

64.8

 

 

 

Number

Number

Number

Issued Ordinary shares at start of the period

7

6,141,128

6,107,628

6,107,628

Movement in Ordinary shares during the period

7

43,050

8,000

33,500

Issued Ordinary shares at end of the period

7

6,184,178

6,115,628

6,141,128

Weighted average number of shares in issue

 

6,162,943

6,113,982

6,121,643

Dilutive effect of share options

 

96,928

71,371

72,786

Weighted average shares in issue on a diluted basis

 

6,259,871

6,185,353

6,194,429

 

Adjusted basic earnings per share is calculated on the adjusted profit, which is presented before any adjusting items, attributable to the Company's shareholders divided by the weighted average number of shares in issue during the period.

Adjusted diluted earnings per share is calculated on the adjusted basic earnings per share, adjusted to allow for the issue of Ordinary shares on the assumed conversion of all dilutive options and any other dilutive potential Ordinary shares. The calculation is based on the treasury method prescribed in IAS 33. This calculates the theoretical number of shares that could be purchased at the average middle market price in the period out of the proceeds of the notional exercise of outstanding options. The difference between this theoretical number and the actual number of shares under option is deemed liable to be issued at nil value and represents the dilution.

Total earnings per share is calculated as above whilst substituting total profit for adjusted profit.

6. Other intangible assets

The following tables show the significant additions to and amortisation of intangible assets:

 

Carrying

amount at

1 January

2018

£000

Acquisitions

£000

Disposal

£000

Amortisation

£000

Carrying

amount at

30 June

2018

£000

Distribution agreements

606

-

-

(158)

448

Research and development

3,712

-

-

(702)

3,010

Sales order backlog

-

-

-

-

-

Brand and domain names

3,705

-

-

(973)

2,732

Customer relationships

983

-

-

(312)

671

Total

9,006

-

-

(2,145)

6,861

 

 

Carrying

amount at

1 January

2017

£000

Acquisitions

£000

Disposal

£000

Amortisation

£000

Carrying

amount at

30 June

2017

£000

Distribution agreements

481

-

-

(190)

291

Research and development

3,547

-

-

(638)

2,909

Sales order backlog

90

-

-

(90)

-

Brand and domain names

4,093

-

-

(891)

3,202

Customer relationships

1,525

-

-

(341)

1,184

Total

9,736

-

-

(2,150)

7,586

 

 

Carrying

amount at

1 January

2017

£000

Acquisitions

£000

Disposal

£000

Amortisation

£000

Carrying

amount at

31 December

2017

£000

Distribution agreements

481

555

-

(430)

606

Research and development

3,547

1,481

-

(1,316)

3,712

Sales order backlog

90

225

-

(315)

-

Brand and domain names

4,093

1,437

-

(1,825)

3,705

Customer relationships

1,525

192

(31)

(703)

983

Total

9,736

3,890

(31)

(4,589)

9,006

 

7. Share capital

Movements in the Group's Ordinary shares in issue are summarised as follows:

Ordinary shares of 5p each

Six months to

30 June 2018

Number

Six months to

30 June 2017

Number

Year to

31 December

2017

Number

Issued and fully paid

 

 

 

Start of the period

6,141,128

6,107,628

6,107,628

Exercise of share options

43,050

8,000

33,500

End of the period

6,184,178

6,115,628

6,141,128

 

During the first six months of 2018 the following allotments took place:

- 43,050 Ordinary shares were issued to satisfy the exercise of share options as follows:

on 22 January 2018 when the mid-market share price was 2,350.0p;

on 31 January 2018 when the mid-market share price was 2,290.0p;

on 6 April 2018 when the mid-market share price was 2,350.0p;

on 9 April 2018 when the mid-market share price was 2,350.0p;

on 13 April 2018 when the mid-market share price was 2,350.0p; and

on 4 May 2018 when the mid-market share price was 2,550.0p.

8. Changes in net debt

Changes in net debt for the six months ended 30 June 2018 were as follows:

 

1 January

2018

£000

Cash flow

£000

Non-cash

items

£000

30 June

2018

£000

Cash at bank and in hand

10,681

3,709

(25)

14,365

Bank debt

(18,072)

1,518

21

(16,533)

Net senior debt

(7,391)

5,227

(4)

(2,168)

Subordinated debt to non-controlling shareholders

(190)

-

-

(190)

Effect of payments relating to the acquisition of Crystallon Limited not settled at 31 December 2017 (included within current liabilities)

(599)

599

-

-

Total net debt

(8,180)

5,826

(4)

(2,358)

Subordinated debt to non-controlling shareholders

190

-

-

190

Adjusted net debt

(7,990)

5,826

(4)

(2,168)

 

Non-cash items represent foreign exchange differences on bank loans.

9. Acquisitions

In March 2018, deferred consideration of £0.599 million was paid to the vendors of Crystallon Limited ("Crystallon") following achievement by Crystallon of EBITA in excess of £0.899 million for the financial year ended 30 November 2017.

10. Banking arrangements

On 27 April 2018, the Group entered into new banking facilities ("Facility") with Lloyds Banking Group plc (the "Bank") replacing its existing banking arrangements. The Facility was for an aggregate £35.0 million consisting of a £10.0 million term loan ("Term Loan"), a committed £20.0 million revolving credit facility ("RCF") plus a £5.0 million accordion facility, which can be drawn at the discretion of the Bank. The Facility replaced the previous facilities for which the Group had a total of £12.9 million outstanding. The Facility has a five year term ("Borrowing Term") with covenants and interest consistent with the previous bank facilities. The Term Loan shall amortise on a straight line basis over the Borrowing Term by quarterly instalments.  The RCF is repayable in a bullet at the end of the Borrowing Term.

The existing lending facilities via Bordeaux Acquisition Limited ("Bordeaux"), the Group's 75.5% owned subsidiary, remain unchanged. Bordeaux was set up as a vehicle to acquire Deben UK Limited and was used in 2017 to acquire Crystallon, the parent of Oxford Cryosystems Limited.

11. Defined Benefit Scheme

The Group's defined benefit pension scheme liability has reduced to £2.1 million compared to £2.2 million at 31 December 2017, due to a small increase in the discount rate.

12. Dividends

During the period, the Company paid no dividends (2017: £nil).

The Company paid a final dividend of 22.0p per share (£1.4 million) on 6 July 2018 relating to the financial year ended 31 December 2017.

The Company will pay an interim dividend for 2018 of 12.0p per share on 2 November 2018 to shareholders on the register on 5 October 2018. The shares will go ex-dividend on 4 October 2018.

13. Post Balance Sheet Event

On 8 August 2018 the Company's interest in its majority owned subsidiary PE Fiberoptics Limited ("PFO") increased from 51% to 67.5%. 

In 2005, Judges financed the management buy-out of a business manufacturing instruments to test fibre optics. The buy-out vehicle, PFO, was owned by Judges (51%), the seller (14%) with the management of PFO owning the balance of the equity (35%).

PFO purchased half of the shares owned by all shareholders other than Judges, totalling 24.5% of its issued share capital, satisfied by a portion of its surplus cash balances and subsequently cancelled those shares acquired. The total value of the repurchase was £1.5m, based on an enterprise value of £3.8m for 100% of PFO. In 2017, PFO generated £1.1m EBIT. 

 

 


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