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Judges ScientificPLC (JDG)

  Print          Annual reports

Friday 24 September, 2021

Judges ScientificPLC

Interim Results

RNS Number : 8214M
Judges Scientific PLC
24 September 2021
 

Judges Scientific plc

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

Interim results for the six months ended 30 June 2021

 

Performance recovering, order book restored to pre-pandemic levels, and strong cash generation.

15% increase to interim dividend.

 

 

Judges Scientific, the group focused on acquiring and developing companies in the scientific instrument sector, announces its Interim Results for the six months ended 30 June 2021. 

Key financials

Period ended 30 June

H1 2021

H1 2020

Change

Revenue

£43.0m

£37.4m

14.7%

Adjusted* pre-tax profit

£8.5m

£6.4m

31.5%

Adjusted* basic earnings per share

111.0p

84.2p

31.8%

Cash generated from operations

£8.0m

£5.1m

56.5%

Interim dividend per share

19.0p

16.5p

15.2%

Statutory pre-tax profit

£6.7m

£4.3m

55.4%

Statutory basic earnings per share

88.4p

57.8p

52.9%

 

 

 

 

As at:

30 Jun 2021

31 Dec 2020

 

Adjusted* net debt (excl. IFRS 16)

£1.7m

£5.7m

 

Cash balances

£17.6m

£15.5m

 

Statutory net debt (excl. IFRS 16)

£1.7m

£5.7m

 

Other financials

·Organic** revenue increased 5% against H1 2020.

·Organic** order intake up 25% compared with H1 2020; and 3% up compared with record H1 2019.

·Organic** order book at 16.1 weeks (H1 2020: 10.8 weeks); total order book at 17.6 weeks.

·New £60m five-year bank facility to provide greater acquisition financing capability.

Outlook

·Business recovering from the initial impact of Covid-19.

·Environment still challenging, with marked differences between local markets and between the various scientific disciplines we serve.

·Organic orders remain positive and to the end of August are 23% up compared to the same period in 2020.

·Organic order book at the end of August was 18.8 weeks and total order book 20.1 weeks.

·The Board is confident that the Group will exceed existing market expectations for the current year.

* 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 IFRS 16 debt. 

** Organic designates group performance excluding the businesses which were not part of the group on 1 January 2020.

 

Alex Hambro, Chairman of Judges Scientific, commented:  

"Pleasingly, the Group's performance has started to recover from the initial impact of the pandemic. Whilst there are further obstacles to overcome,  the Group's resilience and adaptability and the contribution of the recent acquisitions have enabled the first half performance to reach the record established in 2019."

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

 

For further information please contact: 

Judges Scientific plc

 Tel: +44 (0) 20 3829 6970

 

David Cicurel, CEO

Brad Ormsby, Group FD

 

 

 

Shore Capital (Nominated Adviser & Joint Broker)

 

 

Stephane Auton

Edward Mansfield

Iain Sexton

 

Tel: +44 (0) 20 7408 4090

 

 

Liberum (Joint Broker)

Bidhi Bhoma

Euan Brown

W illiam Hall

 

Alma PR (Financial Public Relations)

Sam Modlin 

Justine James

Joe Pederzolli 

 

Tel: +44 (0) 20 3100 2222 

 

 

 

 

Tel: +44 (0) 20 3405 0205

 

 

 

 

 

Chairman's statement 

The first half of 2021 marked a significant improvement in the Group's performance after the global difficulties caused by Covid-19 in 2020. Although daily life has returned to some normality in those countries with the benefit of a full vaccination programme, the pandemic is still ongoing across the world; our markets are, of course, global and are still affected by the ups-and-downs of the pandemic in various regions. Our markets and customers have managed to adapt to this new environment to a degree, but it is not "business as usual" yet. Our performance should be evaluated in this new context: reaching the adjusted EPS of H1 2019 (108.7p) demonstrates a significant recovery but we would have preferred to have already been able to add the two missing years of organic growth and the full contribution from our recent acquisitions to that result.

 

Order intake 

Travel restrictions, university closures and the cancellation of scientific conferences have continued to thwart our commercial activities but order intake has strongly rebounded and Organic** order intake for the 6 months to 30 June was up 25% compared to the same period last year which was itself down 17% on H1 2019; this leaves us 3% ahead of our record H1 2019 intake but well below pre-Covid growth levels.

Progress was strongest in geographies which were affected most in 2020 with North America up 41%, the Rest of Europe up 34%, the UK up 26%, China/Hong Kong up 2% and the Rest of the World up 8%. The most notable absolute increases were the US (up £2.5 million), the UK (up £1.4 million), France (up £1.2m), Germany (up £1.1 million), the Czech Republic (up £0.7 million) and Japan (up £0.6 million); the worst absolute decline was Brazil (down £0.3 million).

Order intake still varied considerably from business to business, between various scientific disciplines, and with bookings from large corporate customers being the slowest to revive.

Revenues 

Group revenues for the period increased to 43.0 million (H1 2020: 37.4 million). This included a 5% increase in Organic revenues plus the contribution of the businesses acquired in 2020. Organic revenue expanded less than Organic order intake as the Organic order book was refilled to a robust level. Whilst there is a gap before a recovery in orders translates into sales growth, another factor has been the divergence between the Group's businesses slowest to rebound and those working hard to satisfy a large order book; a further feature has been a change in the way China produces tax exemption certificates on academic imports, deferring sales, profits and cash-flow throughout the period.

Organic sales were strong in the UK (up 39%) and the rest of Europe (up 27%) but were weak in China/Hong Kong (down 33%) and North America (down 16%).

Profits 

Adjusted operating profit improved 31% to 8.8 million (H1 2020: 6.7 million) and adjusted pre-tax profit progressed 32% to 8.5 million (H1 2020: 6.4 million).

The main driver of improved profitability has been the increase in Organic revenue reflecting the operational gearing within the Group: the EBITA contribution of the Organic businesses progressed 14% versus H1 2020. In addition, the non-Organic businesses added a £0.7m EBITA contribution. Natural savings related to Covid-19 (travel and scientific conferences) continued to benefit our costs but our use of the UK Government's Coronavirus Job Retention Scheme was reduced by 75% versus H1 2020. It should be noted that order book fluctuations have a significant impact on profitability; H1 profits were flattered in 2020 by the compression of the order book and were dampened in 2021 by its rebuilding.

A further impact on our results for the six-month period to 30 June 2021 is that, in accordance with IAS 38, we were required to capitalise £0.4 million of our total R&D expense relating to development of new or significantly improved products. This has had the effect of artificially improving our result for this half year by 5 pence of EPS. Once these products are completed, their development costs will be amortised through the income statement over the next three years. We are likely to have a materially similar run rate of capitalisation over the second half of this year and also in the coming years, so whilst there will be a performance-enhancing effect on the results this year, the effect on the bottom line will diminish over the next two to three years.

Return on Total Invested Capital ("ROTIC") recovered to 25.0% for the trailing 12 months ended 30 June 2021 (31 December 2020: 23.5%; 30 June 2020: 26.6%). The ROTIC calculation excludes any effect of the aforementioned capitalisation of development costs.

Adjusted basic earnings per share grew 32% to 111.0p (H1 2020: 84.2p) and adjusted diluted earnings per share progressed similarly to 109.5p from 82.5p.

Your Directors continue to publish adjusted figures alongside the statutory results, 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 1.7 million (H1 2020: 2.1 million) consist primarily of a 1.4 million charge for amortisation of acquired intangible assets arising through acquisition. The adjusting items reduce profit before tax from 8.5 million to 6.7 million (H1 2020: 4.3 million) and earnings per share to 88.4p basic and 87.1p diluted (H1 2020: 57.8p basic and 56.6p diluted). 

Cashflow and net debt 

The Group once again saw strong cash conversion: cash generated from operations grew to £8.0 million (H1 2020: 5.1 million) representing 91% of adjusted operating profit (H1 2020: 76%). Cash generation was still affected by increased working capital requirements from stockpiling of components to counteract potential supply channel difficulties and by payment delays due to our inability to travel and perform installations; the aforementioned issue of Chinese tax certificates has also impacted H1 cash-flow.

The interim balance sheet includes cash balances of 17.6 million and adjusted net debt of 1.7 million, from 5.7 million at the beginning of 2021.

On 26 May 2021 the Group entered into new banking facilities ("Facility") with Lloyds Banking Group plc (the "Bank") for an aggregate £60.0 million, which replaced its previous £35.0 million banking arrangements. The new Facility will provide the Group, in support of its buy and build strategy, with greater acquisition financing capacity, both in terms of higher frequency and/or larger deals.

The Facility consists of a 19.0 million term loan ("Term Loan"), a committed 35.0 million revolving credit facility plus a 6.0 million accordion facility, which can be drawn at the discretion of the Bank. The Facility has a five year term with covenants and interest consistent with the previous bank facilities.The accordion facility increases by the amount paid off the Term Loan, keeping the overall Facility at 60.0 million throughout the five year period (see note 10 for further details).

The existing lending facilities via Bordeaux Acquisition Limited remain unchanged.

Corporate activity

On 16 February 2021, the Group purchased 12.5% of the outstanding shares in Bordeaux Acquisition Limited for a cash consideration of 1.8 million, bringing its shareholding to 88%. Bordeaux owns 100% of Deben UK Limited and Oxford Cryosystems Limited and holds significant net cash.

Dividend 

In accordance with the Company's policy of increasing dividends by no less than 10% per annum, the Board is declaring an interim dividend of 19p (2020: 16.5p), which will be paid on Friday 5 November 2021 to shareholders on the register on Friday 8 October 2021.  The shares will go ex-dividend on Thursday 7 October 2021.  The interim dividend is covered 5.5 times by adjusted earnings (2020: 5 times). 

Outlook

As the Group emerges from the worst of the pandemic, it is still faced by many challenges; whilst traveling restrictions and university closures are progressively alleviated, capital expenditure freezes are still affecting some of our operations and supply chain issues, which were benign in 2020, are now generating much unproductive management effort. Nevertheless, the Company is consolidating its recovery: Organic order intake remains positive and for the eight months to the end of August was 23% up on 2020, when the total order book stood at 20.1 weeks. Our financial position is robust and the Board has confidence that the performance for the year as a whole will be ahead of consensus expectations.

 

Chairman

23 September 2021

 

 

Condensed consolidated interim statement of comprehensive income

 

 

Note

Adjusted

£000

Adjusting

 items

£000

 

30 June

2021

£000

Adjusted

£000

Adjusting

 items

£000

 

30 June

2020

£000

Year to

 31 Dec

2020

£000

Revenue

3

42,955

-

42,955

37,449

-

37,449

79,865

Operating costs

3,4

(34,147)

(1,698)

(35,845)

(30,746)

(2,080)

(32,826)

(69,699)

Operating profit/(loss)

 

8,808

(1,698)

7,110

6,703

(2,080)

4,623

10,166

Interest income

 

1

-

1

13

-

13

14

Interest expense

4

(350)

(27)

(377)

(281)

(22)

(303)

(707)

Profit/(loss) before tax

 

8,459

(1,725)

6,734

6,435

(2,102)

4,333

9,473

Taxation (charge)/credit

 

(1,318)

258

(1,060)

(940)

363

(577)

(825)

Profit/(loss) for the period

 

7,141

(1,467)

5,674

5,495

(1,739)

3,756

8,648

Attributable to:

 

 

 

 

 

 

 

 

Owners of the parent

 

7,001

(1,431)

5,570

5,268

(1,654)

3,614

8,220

Non-controlling interests

 

140

(36)

104

227

(85)

142

428

Profit/(loss) for the period

 

7,141

(1,467)

5,674

5,495

(1,739)

3,756

8,648

Other comprehensive income

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Retirement benefits actuarial gain/(loss)

 

 

938

 

 

(740)

(1,092)

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

 

 

Exchange (loss)/gain on translation of foreign subsidiaries

 

 

(21)

 

 

 

 

144

(82)

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

 

 

917

 

 

 

 

(596)

(1,174)

Total comprehensive income for the period

 

 

 

6,591

 

 

3,160

7,474

Attributable to:

 

 

 

 

 

 

 

 

Owners of the parent

 

 

 

6,487

 

 

3,018

7,046

Non-controlling interests

 

 

 

104

 

 

142

428

 

 

 

 

 

Pence

Pence

Pence

Earnings per share - adjusted

 

 

 

 

 

 

Basic

5

 

 

111.0

84.2

177.2

Diluted

5

 

 

109.5

82.5

173.9

Earnings per share - total

 

 

 

 

 

 

Basic

5

 

 

88.4

57.8

131.1

Diluted

5

 

 

87.1

56.6

128.7

 

 

 

 

Condensed consolidated interim balance sheet

 



 

 

 

Note

30 June

2021

£000

30 June

2020

£000

31 December

2020

£000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

 

 18,713

18,196

18,713

Other intangible assets

6

 5,963

7,098

6,909

Property, plant and equipment

 

 6,702

6,583

6,678

Right-of-use leased assets

 

 4,646

4,295

5,125

Deferred tax assets

 

 1,899

2,131

2,153

 

 

37,923

38,303

39,578

Current assets

 

 

 

 

Inventories

 

 13,175

14,040

12,585

Trade and other receivables

 

 16,312

12,666

14,340

Cash and cash equivalents

 

 17,612

19,422

15,523

 

 

47,099

46,128

42,448

Total assets

 

85,022

84,431

82,026

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

(16,774)

(15,069)

(15,828)

Trade and other payables relating to acquisitions

 

-

(2,769)

-

Borrowings

 

(4,657)

(3,047)

(3,857)

Right-of-use lease liabilities

 

(938)

(854)

(947)

Current tax liabilities

 

(2,216)

(2,512)

(1,539)

 

 

(24,585)

(24,251)

(22,171)

Non-current liabilities

 

 

 

 

Borrowings

 

(14,679)

(20,244)

(17,358)

Right-of-use lease liabilities

 

(3,836)

(3,468)

(4,209)

Deferred tax liabilities

 

(1,767)

(1,819)

(1,945)

Retirement benefit obligations

11

(1,962)

(3,088)

(3,295)

 

 

(22,244)

(28,619)

(26,807)

Total liabilities

 

(46,829)

(52,870)

(48,978)

Net assets

 

38,193

31,561

33,048

EQUITY

 

 

 

 

Share capital

7

316

314

315

Share premium

 

16,562

16,068

16,429

Other reserves

 

1,903 

2,203

1,977

Retained earnings

 

18,912

12,404

13,469

Equity attributable to owners of the parent

 

37,693

30,989

32,190

Non-controlling interests

 

500

572

858

Total equity

 

38,193

31,561

33,048

 

 

 

 

 

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 2021

315

16,429

1,977

13,469

32,190

858

33,048

 

Adjustment arising from change in non-controlling interest

-

-

-

(1,371)

(1,371)

(462)

(1,833)

 

Issue of share capital

1

133

-

-

134

-

134

 

Purchase of own shares for Company reward scheme

-

-

(53)

-

(53)

 -

(53)

 

Share-based payments

-

-

-

306

306

 -

306

 

Transactions with owners

1

133

(53)

(1,065)

(984)

(462)

(1,446)

 

Profit for the period

-

-

-

 5,570

 5,570

 104

 5,674

 

Retirement benefit actuarial gain

-

-

-

938

938

-

938

 

Foreign exchange differences

-

-

(21)

-

(21)

-

(21)

 

Total comprehensive income for the period

-

-

(21)

6,508 

 6,487

 104

 6,591

 

At 30 June 2021

316

16,562

1,903

 18,912

 37,693

 500

 38,193

 

 

 

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 2020

311

15,453

2,059

10,048

27,871

821

28,692

 

Adjustment arising from change in non-controlling interest

-

-

-

(680)

(680)

(391)

(1,071)

 

Issue of share capital

3

615

-

-

618

-

618

 

Share-based payments

-

-

-

162

162

-

162

 

Transactions with owners

3

615

-

(518)

100

(391)

(291)

 

Profit for the period

-

-

-

3,614

3,614

142

3,756

 

Retirement benefit actuarial loss

-

-

-

(740)

(740)

-

(740)

 

Foreign exchange differences

-

-

144

-

144

-

144

 

Total comprehensive income for the period

-

-

144

2,874

3,018

142

3,160

 

At 30 June 2020

314

16,068

2,203

12,404

30,989

572

31,561

 

 

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 2020

311

15,453

2,059

10,048

27,871

821

28,692

Dividends

-

-

-

(3,231)

(3,231)

-

(3,231)

Adjustment arising from change in non-controlling interest

-

-

-

(680)

(680)

(391)

(1,071)

Issue of share capital

4

976

-

-

980

-

980

Deferred tax on share based payments

-

-

-

(113)

(113)

-

(113)

Share-based payments

-

-

-

317

317

-

317

Transactions with owners

4

976

-

(3,707)

(2,727)

(391)

(3,118)

Profit for the period

-

-

-

8,220

8,220

428

8,648

Retirement benefit actuarial loss

-

-

-

(1,092)

(1,092)

-

(1,092)

Foreign exchange differences

-

-

(82)

-

(82)

-

(82)

Total comprehensive income for the period

-

-

(82)

7,128

7,046

428

7,474

At 31 December 2020

315

16,429

1,977

13,469

32,190

858

33,048

 

Condensed consolidated interim cashflow statement

 

 

 

Six months to

30 June

2021

£000

Six months to

30 June

2020

£000

Year to

31 December

2020

£000

 

Cashflows from operating activities

 

 

 

 

Profit after tax

5,674

3,756

8,648

 

Adjustments for:

 

 

 

 

Financial instruments measured at fair value: hedging contracts

(34)

146

72

 

Share-based payments

306

162

317

 

Depreciation of property, plant and equipment

512

431

926

 

Depreciation of right-of-use leased assets

510

436

935

 

Amortisation of intangible assets

1,355

1,360

3,179

 

Profit on disposal of property, plant and equipment

(29)

(3)

(4)

 

Interest income

(1)

(13)

(14)

 

Interest expense

245

196

464

 

Interest payable on right-of-use lease liabilities

105

85

190

 

Retirement benefit obligation net interest cost

27

22

53

 

Contributions to defined benefit plans

(164)

-

(236)

 

Tax recognised in the Consolidated Statement of Comprehensive Income

1,060 

577

825

 

(Increase)/decrease in inventories

(590)

(716)

1,099

 

Increase in trade and other receivables

(1,972)

(39)

(1,232)

 

Increase/(decrease) in trade and other payables

983

(1,296)

(598)

 

Cash generated from operations

7,987

5,104

14,624

 

Tax paid

(565)

(749)

(2,377)

 

Net cash from operating activities

7,422

4,355

12,247

 

Cashflows from investing activities

 

 

 

 

Paid on acquisition of subsidiaries

-

(5,274)

(8,857)

 

Payment of deferred consideration

-

(1,896)

(3,922)

 

Gross cash inherited on acquisition

-

969

1,363

 

Acquisition of subsidiaries, net of cash acquired

-

(6,201)

(11,416)

 

Purchase of property, plant and equipment

(544)

(675)

(1,268)

 

Capitalised development costs

(409)

-

-

 

Proceeds from the sale of property, plant and equipment

36

3

14

 

Interest received

1

13

14

 

Net cash used in investing activities

(916)

(6,860)

(12,656)

 

Cashflows from financing activities

 

 

 

 

Proceeds from issue of share capital

134

618

980

 

Purchase of own shares for Company reward scheme

(53)

-

-

 

Finance costs paid

(245)

(200)

(468)

 

Repayments of borrowings*

(1,879)

(1,429)

(7,857)

 

Repayment of subordinated loan notes

-

-

(190)

 

Repayments of right-of-use lease liabilities

(520)

(527)

(1,108)

 

Proceeds from bank loans*

-

10,274

14,816

 

Equity dividends paid

-

-

(3,231)

 

Paid on acquisition of non-controlling interest in subsidiary

(1,833)

(1,071)

(1,071)

 

Net cash (used in)/from financing activities

(4,396)

7,665

1,871

 

Net change in cash and cash equivalents

2,110

5,160

1,462

 

Cash and cash equivalents at the start of the period

15,523

14,123

14,123

 

Exchange movements

(21)

139

(62)

 

Cash and cash equivalents at the end of the period

17,612

19,422

15,523

 

* On 25 May 2021, £19.0 million of outstanding loans were repaid and simultaneously reborrowed as the Group renewed its banking facilities (see note 10).  On 29 June 2020, £5.0 million was borrowed as a working capital buffer, and was subsequently repaid in December 2020.

 

 

 

 

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 2021 and the comparative figures for the six months ended 30 June 2020 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 2020, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 (IFRS).

The financial information for the year ended 31 December 2020 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 2020 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 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 23 September 2021.

Going concern

The consolidated financial statements have been prepared on a going concern basis. The Group ended the first half of 2021 with total net debt of £1.8 million (equal to 5% of equity) compared to adjusted net debt of £5.7 million at 31 December 2020. This reduction in net debt arose through profitable and cash generative trading of the Group's principal operating companies throughout the first half of 2021, driven by the 25% growth in Organic order intake, partially offset by £1.9 million allocated to increase the Group's shareholding in one of its majority-owned businesses (see Note 9). Further outlays were also made, paying instalments towards our fair share of tax (£0.6 million) and ongoing investment into capital expenditure (£0.5 million).

The Directors have considered the ongoing impact of the COVID-19 pandemic, and a summary of the implications is included in the Chairman's Statement. The Group is in a robust financial position, with high cash balances, low gearing and a strong future order book enabling it to face the challenge of the continued uncertain global economic environment due to COVID-19. The Directors have also performed reasonably possible stress testing on forecast cashflows, considering potential scenarios from the pandemic and, as a result, consider that the Group is appropriately placed to manage its business risks.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. They therefore continue to adopt the going concern basis in preparing the Interim Report.

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 2020, 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.

3. Segmental analysis

For the period ended 30 June 2021

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

19,019

23,936

-

42,955

Operating costs

 

(15,926)

(16,908)

(1,313)

(34,147)

Adjusted operating profit

 

3,093

7,028

(1,313)

8,808

Adjusting items

4

 

 

 

(1,698)

Operating profit

 

 

 

 

7,110

Net interest expense

 

 

 

 

(376)

Profit before tax

 

 

 

 

6,734

Income tax charge

 

 

 

 

(1,060)

Profit for the period

 

 

 

 

5,674

 

 

 

3. Segmental analysis (continued)

For the period ended 30 June 2020

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

14,675

22,774

-

37,449

Operating costs

 

(12,274)

(17,110)

(1,362)

(30,746)

Adjusted operating profit

 

2,401

5,664

(1,362)

6,703

Adjusting items

4

 

 

 

(2,080)

Operating profit

 

 

 

 

4,623

Net interest expense

 

 

 

 

(290)

Profit before tax

 

 

 

 

4,333

Income tax charge

 

 

 

 

(577)

Profit for the period

 

 

 

 

3,756

 

 

For the year ended 31 December 2020

Note

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Revenue

 

33,210

46,655

-

79,865

Operating costs

 

(28,341)

(34,564)

(2,603)

(65,508)

Adjusted operating profit

 

4,869

12,091

(2,603)

14,357

Adjusting items

4

 

 

 

(4,191)

Operating profit

 

 

 

 

10,166

Net interest expense

 

 

 

 

(693)

Profit before tax

 

 

 

 

9,473

Income tax charge

 

 

 

 

(825)

Profit for the year

 

 

 

 

8,648

 

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

Segment assets and liabilities

At 30 June 2021

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

25,374

34,492

25,156

85,022

Liabilities

(12,390)

(11,724)

(22,715)

(46,829)

Net assets

12,984

22,768

2,441

38,193

Purchase of property, plant and equipment

198

343

3

544

Capitalised development costs

77

332

-

409

Depreciation of property, plant and equipment

177

309

26

512

Depreciation of right-of-use leased assets

261

219

30

510

Amortisation

530

825

-

1,355

 

At 30 June 2020

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

24,155

30,222

30,054

84,431

Liabilities

(10,970)

(11,216)

(30,684)

(52,870)

Net assets

13,185

19,006

(630)

31,561

Purchase of property, plant and equipment

121

544

10

675

Depreciation of property, plant and equipment

113

295

23

431

Depreciation of right-of-use leased assets

203

205

28

436

Amortisation

392

968

-

1,360

 

 

 

3. Segmental analysis (continued)

 

At 31 December 2020

Materials

Sciences

£000

Vacuum

£000

Unallocated

items

£000

Total

£000

Assets

23,566

31,713

26,747

82,026

Liabilities

(11,468)

(11,702)

(25,808)

(48,978)

Net assets

12,098

20,011

939

33,048

Purchase of property, plant and equipment

355

902

11

1,268

Depreciation of property, plant and equipment

285

591

50

926

Depreciation of right-of-use leased assets

465

413

57

935

Amortisation

1,345

1,834

-

3,179

 

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

2021

£000

Six months to

30 June

2020

£000

Year to

31 December

2020

£000

UK (domicile)

 7,743

5,153

10,167

Rest of Europe

 14,354

10,847

24,784

North America

 8,382

9,241

17,289

China/Hong Kong

 4,720

5,286

13,721

Rest of the World

 7,756

6,922

13,904

Revenue

 42,955

37,449

79,865

 

4. Adjusting items

 

Six months to

30 June

2021

£000

Six months to

30 June

2020

£000

Year to

31 December

2020

£000

Amortisation of intangible assets

1,355

1,360

3,179

Financial instruments measured at fair value: hedging contracts

(34)

146

72

Share-based payments

306

162

317

Employment taxes arising from share-based payments

39

28

64

Acquisition costs

32

384

559

Total adjusting items within operating profit

1,698

2,080

4,191

Retirement benefits obligation net interest cost

27

22

53

Total adjusting items

1,725

2,102

4,244

Taxation

(258)

(363)

(1,204)

Total adjusting items net of tax

1,467

1,739

3,040

Attributable to:

 

 

 

Owners of the parent

1,431

1,654

2,888

Non-controlling interests

36

85

152

 

1,467

1,739

3,040

 

 

 

5. Earnings per share

 

Note

Six months to

30 June

2021

£000

Six months to

30 June

2020

£000

Year to

31 December

2020

£000

Profit for the period attributable to owners of the parent

 

 

 

 

Adjusted profit

 

7,001

5,268

11,108

Adjusting items

4

(1,431)

(1,654)

(2,888)

Profit for the period

 

5,570

3,614

8,220

 

 

 

Pence

Pence

Pence

Earnings per share - adjusted

 

 

 

 

Basic

 

111.0

84.2

177.2

Diluted

 

109.5

82.5

173.9

Earnings per share - total

 

 

 

 

Basic

 

88.4

57.8

131.1

Diluted

 

87.1

56.6

128.7

 

 

 

Number

Number

Number

Issued Ordinary shares at start of the period

7

6,299,163

6,226,291

6,226,291

Movement in Ordinary shares during the period

7

12,676

48,650

72,872

Issued Ordinary shares at end of the period

7

6,311,839

6,274,941

6,299,163

Weighted average number of shares in issue

 

6,306,177

6,254,512

6,269,437

Dilutive effect of share options

 

90,467

128,861

117,551

Weighted average shares in issue on a diluted basis

 

6,396,644

6,383,373

6,386,988

 

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:

 

Development costs

£000

Acquired

distribution

agreements

£000

Acquired

technology

£000

Acquired

sales order

backlog

£000

Acquired

 brand

and

domain names

£000

Acquired

customer

relationships

£000

Total

£000

Carrying amount at 1 January 2021

-

192

2,970

33

1,566

2,148

6,909

Additions

409

-

-

-

-

-

409

Amortisation

-

(50)

(519)

(33)

(348)

(405)

(1,355)

Carrying amount at 30 June 2021

409

142

2,451

-

1,218

1,743

5,963

 

 

Development costs

£000

Acquired

distribution

agreements

£000

Acquired

technology

£000

Acquired

sales order

backlog

£000

Acquired

 brand

and

domain names

£000

Acquired

customer

relationships

£000

Total

£000

Carrying amount at 1 January 2020

-

400

1,927

119

1,508

504

4,458

Acquisitions

-

 -

1,400

400

750

1,450

4,000

Amortisation

-

(143)

(474)

(219)

(372)

(152)

(1,360)

Carrying amount at 30 June 2020

-

257

2,853

300

1,886

1,802

7,098

 

 

Development costs

£000

Acquired

distribution

agreements

£000

Acquired

technology

£000

Acquired

sales order

backlog

£000

Acquired

 brand

and

domain names

£000

Acquired

customer

relationships

£000

Total

£000

Carrying amount at 1 January 2020

-

400

1,927

119

1,508

504

4,458

Acquisitions

-

-

2,100

500

830

2,200

5,630

Amortisation

-

(208)

(1,057)

(586)

(772)

(556)

(3,179)

Carrying amount at 31 December 2020

-

192

2,970

33

1,566

2,148

6,909

 

7. Share capital

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

Ordinary shares of 5p each

30 June 2021

£000

30 June 2020

£000

Allotted, called up and fully paid - Ordinary shares of 5p each

 

 

1 January: 6,299,163 shares (2020: 6,226,291 shares)

315

311

Exercise of share options: 12,676 shares (2020: 48,650 shares)

1

3

30 June: 6,311,839 shares (2020:  6,274,941 shares)

316

314

 

Allotments of Ordinary shares in the first six months of 2021 were made to satisfy the exercise of 12,676 share options in aggregate on 16 occasions during the period when the share price was within the range of 5800p to 6408p (2020: exercise of 48,650 share options when the share price was within the range of 4300p to 5680p).

 

 

8. Changes in net debt

Changes in net debt for the six months ended 30 June 2021 were as follows:

 

1 January

2021

£000

Cashflow

£000

Non-cash

items

£000

30 June

2021

£000

Cash at bank and in hand

15,523

2,110

(21)

17,612

Bank debt

(21,215)

1,879

-

(19,336)

Total net debt

(5,692)

3,989

(21)

(1,724)

Non-cash items primarily represent foreign exchange differences on foreign currency bank balances.

The movement in borrowings over the period was as follows:

 

2021

£000

2020

£000

At 1 January

21,215

14,260

Proceeds from drawdown of loans

-

10,274

Repayment of loans

(1,879)

(1,429)

Interest payable

245

196

Interest paid

(245)

(200)

At 30 June

19,336

23,101

Subordinated debt to non-controlling shareholders

-

190

Total borrowings at 30 June

19,336

23,291

 

On 25 May 2021, £19.0 million of outstanding loans were repaid and simultaneously reborrowed as the Group renewed its banking facilities (see note 10).

 

2021

£000

2020

 000

Current

4,657

3,047

Non-current

14,679

20,244

Total borrowings at 30 June

19,336

23,291

 

9. Acquisitions

Increased shareholding in Bordeaux Acquisition Limited

On 16 February 2021, Judges acquired 12.5% of the shares in Bordeaux Acquisition Limited for a cash consideration of £1.8 million, increasing its shareholding from 75.5% to 88%. The transaction was financed from Judges' existing cash resources.

10. Banking arrangements

On 25 May 2021, 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 £60.0 million consisting of a £19.0 million term loan ("Term Loan"), a committed £35.0 million revolving credit facility ("RCF") plus a £6.0 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 £19.0 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 accordion facility increases by the amount paid off the Term Loan, keeping the overall Facility at £60.0 million throughout the Borrowing Term.

The existing lending facilities via Bordeaux Acquisition Limited ("Bordeaux"), the Group's 88% 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 net liability has decreased to £2.0 million, compared to £3.3 million at 31 December 2020, primarily due to an increase of 0.5% in the discount rate to 1.85% from 1.35% at 31 December 2020.

12. Dividends

During the period, the Company paid no dividends (period to 30 June 2020: £nil).

The Company paid a final dividend of 38.5p per share totalling £2.4 million to shareholders on 9 July 2021 relating to the financial year ended 31 December 2020 (35.0p per share totalling £2.2 million relating to the financial year ended 31 December 2019).

The Company will pay an interim dividend for 2021 of 19.0p per share (2020: interim dividend of 16.5p per share) on 5 November 2021 to shareholders on the register on 8 October 2021. The shares will go ex-dividend on 7 October 2021.

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