REG - Judges ScientificPLC - Interim Results

Judges ScientificAnnouncement

18/09/2018 07:05

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);
o  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);
o  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);
o  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


 


 


 


 




Non-current 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:
o  on 22 January 2018 when the mid-market share price was 2,350.0p;
o  on 31 January 2018 when the mid-market share price was 2,290.0p;
o  on 6 April 2018 when the mid-market share price was 2,350.0p;
o  on 9 April 2018 when the mid-market share price was 2,350.0p;
o  on 13 April 2018 when the mid-market share price was 2,350.0p; and
o  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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END
 
 
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