REG - Judges ScientificPLC - Interim Results

Judges ScientificAnnouncement

18/09/2019 07:05

RNS Number : 6838M
Judges Scientific PLC
18 September 2019
 


 




 
 


 
18  September 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 ("MAR"). Upon publication of this announcement via a regulatory information service ("RIS"), the inside information contained in this document is now considered to be in the public domain.
 
Judges Scientific plc
("Judges Scientific", "the Company", or "the Group")
Interim results for the six months ended 30 June 2019
  Key financials ** 
§ Revenues increased 9% to a record £40.2 million (H1 2018: £37.0 million);
§ Adjusted*pre-tax profit increased 27% to £8.4 million (H1 2018: £6.6 million);
-      Statutory pre-tax profit increased to £6.9 million (H1 2018: £4.2 million);
§ Adjusted* basic earnings per share increased 30% to 108.7p (H1 2018: 83.4p);
-      Statutory basic earnings per share increased to 90.1p (H1 2018: 53.3p);
§ Interim dividend of 15.0p (H1 2018: 12.0p), an increase of 25%; covered 7 times by adjusted earnings;
§ Order intake increased 4% compared with H1 2018;
§ Order book at 13.2 weeks (H1 2018: 15.0 weeks);
§ Cash generated from operations increased to £8.5 million (H1 2018: £6.3 million);
§ Adjusted* net cash increased to £7.4 million as at 30 June 2019 (31 December 2018: £0.9 million);
-      Statutory net cash increased to £7.2 million as at 30 June 2019 (31 December 2018: £0.7 million);
§ Cash balances increased to £20.8 million as at 30 June 2019 (31 December 2018: £15.7 million).
Outlook 
§ Adjusted profit before tax and earnings per share anticipated to be ahead of FY 2019 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 cash notionally includes acquisition-related payments which had yet to be settled at the balance sheet date and excludes subordinated debt owed by subsidiaries to non-controlling shareholders. 
** In the absence of any material acquisition since 1 January 2018, this statement shows no distinction between total and organic performance.
*** Judges Scientific's compiled analyst forecast range for adjusted profit before tax (year to 31 December 2019): £14.8m to £15.1m, with an average consensus of £15.0m. The forecast range for Adjusted earnings per share:  184.7p to 190.5p, with an average consensus of 188.4p.
 
Alex Hambro, Chairman of Judges Scientific, commented:  
"The delivery of record revenue, adjusted profit before tax, earnings per share, cash generation and dividends for the first half is testament to the Group's pursuit of operational excellence. Orders to date are in line with our expectations, despite a subdued second quarter. The strong first half financial performance and healthy order book give the Board confidence that full year adjusted profit before tax and EPS will exceed current consensus market expectations."
 
For further information please contact: 
 








Judges Scientific


 


 




David Cicurel, CEO
Brad Ormsby, Group FD


   Tel: +44 (0) 203 829 6970


 




 
Shore Capital (Nominated Adviser & Joint Broker)


 


 




Stephane Auton
Edward Mansfield
Sarah Mather


Tel: +44 (0) 20 7408 4090


 




 
Liberum (Joint Broker)
Bidhi Bhoma
Euan Brown
 
Alma (Financial Public Relations)
Rebecca Sanders-Hewett
Sam Modlin
 


 
Tel: +44 (0) 20 3100 2222 
 
 
 
 
Tel: +44 (0) 20 3405 0205


 




 


 




 


 




 


 




 
 
 


 




 
Chairman's Statement 
It is gratifying to be able to report record figures across revenues, adjusted profit before tax, adjusted earnings per share and dividends for the first half of 2019, maintaining the positive financial performance experienced since the second half of 2016.
The Group's results for the six-month period to 30 June 2019 omits any distinction between "total" and "organic" as no material acquisitions were completed in the period. 
Revenues 
Group revenues for the period increased 9% to a record £40.2 million (H1 2018: £37.0 million). Sales were particularly strong in North America (up 33%). After the pause observed in FY18, China/Hong Kong showed some improvement (up 5%) but the Rest of the World receded 8%. The UK was stable and the Rest of Europe up 2%. For followers of the status of Brexit and of the US/China trade tensions, the Rest of Europe (largely the EU27) represented 29% of the Group's revenue and North America plus China/HK represented 42%.
Sales were boosted by efforts throughout the Group to further pursue operational excellence; in particular, management strived to reduce customer delivery lead times. As a consequence, sales in the first half accelerated ahead of order intake, resulting in a small reduction of the order book.
Order intake 
As previously announced, order intake in the first half was consistent with the Group's expectations for the year, showing a progression of 4.2% on the same period last year.  Due to the aforementioned acceleration of sales, the order book stood at a healthy 13.2 weeks of sales at 30 June 2019 against 14.4 weeks at the beginning of 2019 and 15.0 weeks at 30 June 2018.
Order intake was weak in the UK (22% below H1 2018) and solid in the Rest of Europe (5% above H1 2018), with double digit increases in the other major trading zones. North America was up 10%, China/HK up 13% and the Rest of the World up 13% versus H1 2018. This illustrates both the time gap between receipt of orders and their subsequent delivery, and the volatility of orders by geography over short periods.
Profits
The increased profitability was driven by revenue growth, the continuing favourable foreign exchange environment and the aforementioned efforts to optimise all aspects of our businesses. Contribution to EBITA and central costs advanced by 22% which led to a 27% increase in adjusted pre-tax profit to £8.4 million (H1 2018: £6.6 million). Return on Total Invested Capital ("ROTIC") advanced to 31.0% for the trailing 12 months ended 30 June 2019 (30 June 2018: 24.2%).
The 1.2 week order book compression contributed around half of the increased performance, which is not of a recurring nature.
Adjusted basic earnings per share progressed 30% to 108.7p (H1 2018: 83.4p) and adjusted diluted earnings per share grew similarly from 82.1p to 107.0p.
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 £1.5 million (H1 2018: £2.4 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 £8.4 million to £6.9 million (H1 2018: £4.2 million) and earnings per share to 90.1p basic and 88.6p diluted (H1 2018: 53.3p basic and 52.4p diluted). 
Cashflow and net debt 
Cash flow during the first half of 2019 mirrored the trading accomplishment, with cash from operations of £8.5 million (H1 2018: £6.3 million) representing 98% of adjusted operating profit (H1 2018: 92%).  The interim balance sheet includes cash balances of £20.8 million and adjusted net cash of £7.4 million, from £0.9 million at the beginning of 2019. 
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 15.0p (2018: 12.0p), which will be paid on Friday 1 November 2019 to shareholders on the register on Friday 4 October 2019.  The shares will go ex-dividend on Thursday 3 October 2019.  The interim dividend is covered 7 times by adjusted earnings (2018: 7 times). 
Outlook
As noted in our trading update, the Group's order intake, whilst in line with expectations overall, experienced a small contraction in the second quarter. Since the period end order intake has recovered to a satisfactory level, maintaining a healthy order book. We continue to remain cautious about the ongoing macro-economic and political uncertainty and its potential impact on the future performance of the Group.
 
We do not expect a second half weighting similar to recent years, mostly in view of the aforementioned compression of the order book in the first half. Notwithstanding this - and concerns relating to the economic outlook - the strong financial performance in the first half and the healthy order book give the Board confidence that adjusted profit before tax and EPS will exceed current consensus market expectations for the year as a whole. 
 
 
The Hon. Alexander Hambro 
Chairman 
17 September 2019
 
 
 
Condensed consolidated interim statement of comprehensive income
 




 


Note


Adjusted
£000


Adjusting
 items
£000


Six months to
30 June
2019
£000


Six months to
30 June
2018
£000


Year to
 31 December
2018
£000




Revenue


3


40,169


-


40,169


36,962


77,868




Operating costs


 


(31,539)


-


(31,539)


(30,102)


(63,137)




Adjusted operating profit


3


8,630


-


8,630


6,860


14,731




Adjusting items


4


-


(1,480)


(1,480)


(2,350)


(4,045)




Operating profit/(loss)


 


8,630


(1,480)


7,150


4,510


10,686




Interest income


 


49


-


49


12


41




Interest expense


4


(257)


(25)


(282)


(290)


(539)




Profit/(loss) before tax


 


8,422


(1,505)


6,917


4,232


10,188




Taxation (charge)/credit


 


(1,316)


265


(1,051)


(556)


(1,053)




Profit/(loss) for the period


 


7,106


(1,240)


5,866


3,676


9,135




Attributable to:


 


 


 


 


 


 




Owners of the parent


 


6,750


(1,158)


5,592


3,283


8,495




Non-controlling interests


 


356


(82)


274


393


640




Profit/(loss) for the period


 


7,106


(1,240)


5,866


3,676


9,135




Other comprehensive income


 


 


 


 


 


 




Items that will not be reclassified subsequently to profit or loss


 


 


 


 




Retirement benefits actuarial (loss)/gain


 


 


 


(250)


128


168




Items that may be reclassified subsequently to profit or loss 


 


 


 


 




Exchange differences on translation of foreign subsidiaries  


 


16


20


66




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


 


(234)


148


234




Total comprehensive income for the period  


 


5,632


3,824


9,369




Attributable to:


 


 


 


 


 


 




Owners of the parent


 


 


 


5,358


3,431


8,729




Non-controlling interests


 


 


 


274


393


640




 




 


 


 


 


Pence


Pence


Pence




Earnings per share - adjusted


 


 


 


 


 


 




Basic


5


 


 


108.7


83.4


183.4




Diluted


5


 


 


107.0


82.1


180.6




Earnings per share - total


 


 


 


 


 


 




Basic


5


 


 


90.1


53.3


137.5




Diluted


5


 


 


88.6


52.4


135.4




 
 
Condensed consolidated interim balance sheet
 




 


Note


30 June
2019
£000


30 June
2018
£000


31 December
2018
£000




ASSETS


 


 


 


 




Non-current assets


 


 


 


 




Goodwill


 


14,650


14,650


14,650




Other intangible assets


6


3,989


6,861


5,373




Property, plant and equipment


 


5,460


5,534


5,524




Right-of-use leased assets


2


2,610


-


-




Deferred tax assets


 


775


713


719




 


 


27,484


27,758


26,266




Current assets


 


 


 


 




Inventories


 


11,926


11,424


10,502




Trade and other receivables


 


11,610


13,708


13,231




Cash and cash equivalents


 


20,780


14,365


15,727




 


 


44,316


39,497


39,460




Total assets


 


71,800


67,255


65,726




LIABILITIES


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


(12,988)


(13,961)


(13,977)




Borrowings


 


(3,047)


(3,081)


(3,058)




Right-of-use lease liabilities


2


(650)


-


-




Current tax liabilities


 


(2,572)


(3,680)


(2,204)




 


 


(19,257)


(20,722)


(19,239)




Non-current liabilities


 


 


 


 




Borrowings


 


(10,541)


(13,642)


(11,968)




Right-of-use lease liabilities


2


(1,900)


-


-




Deferred tax liabilities


 


(1,215)


(1,661)


(1,477)




Retirement benefit obligations


10


(2,162)


(2,094)


(1,836)




 


 


(15,818)


(17,397)


(15,281)




Total liabilities


 


(35,075)


(38,119)


(34,520)




Net assets


 


36,725


29,136


31,206




EQUITY


 


 


 


 




Share capital


7


311


309


310




Share premium


 


15,359


15,000


15,164




Other reserves


 


2,137


2,075


2,121




Retained earnings


 


18,295


10,282


13,049




Equity attributable to owners of the parent


 


36,102


27,666


30,644




Non-controlling interests


 


623


1,470


562




Total equity


 


36,725


29,136


31,206




 
 
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 2019


310


15,164


2,121


13,049


30,644


562


31,206




 


Adjustment arising from change in non-controlling interest


-


-


-


(204)


(204)


(213)


(417)




 


Issue of share capital


1


195


-


-


196


-


196




 


Share-based payments


-


-


-


108


108


-


108




 


Transactions with owners


1


195


-


(96)


100


(213)


(113)




 


Profit for the period


-


-


-


5,592


5,592


274


5,866




 


Retirement benefit actuarial loss


-


-


-


(250)


(250)


-


(250)




 


Foreign exchange differences


-


-


16


-


16


-


16




 


Total comprehensive income for the period


-


-


16


5,342


5,358


274


5,632




 


At 30 June 2019


311


15,359


2,137


18,295


36,102


623


36,725




 




 


 


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




 


Issue of share capital


2


471


-


-


473


-


473




 


Share-based payments


-


-


-


183


183


-


183




 


Transactions with owners


2


471


-


183


656


-


656




 


Profit for the period


-


-


-


3,283


3,283


393


3,676




 


Retirement benefit actuarial gain


-


-


-


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 2018


307


14,529


2,055


6,688


23,579


1,077


24,656




 


Dividends


-


-


-


(2,103)


(2,103)


(162)


(2,265)




 


Adjustment arising from change in non-controlling interest


-


-


-


(518)


(518)


(993)


(1,511)




 


Issue of share capital


3


635


-


-


638


-


638




 


Share-based payments


-


-


-


319


319


-


319




 


Transactions with owners


3


635


-


(2,302)


(1,664)


(1,155)


(2,819)




 


Profit for the year


-


-


-


8,495


8,495


640


9,135




 


Retirement benefit actuarial gain


-


-


-


168


168


-


168




 


Foreign exchange differences


-


-


66


-


66


-


66




 


Total comprehensive income for the year


-


-


66


8,663


8,729


640


9,369




 


At 31 December 2018


310


15,164


2,121


13,049


30,644


562


31,206




 
 
Condensed consolidated interim cashflow statement
 




 


 


Six months to
30 June
2019
£000


Six months to
30 June
2018
£000


Year to
31 December
2018
£000




 


Cashflows from operating activities


 


 


 




 


Profit after tax


5,866


3,676


9,135




 


Adjustments for:


 


 


 




 


Financial instruments measured at fair value: Hedging contracts


(12)


22


56




 


Share-based payments


108


183


319




 


Depreciation of property, plant and equipment


367


373


746




 


Depreciation of right-of-use leased assets


395


-


-




 


Amortisation of intangible assets


1,384


2,145


3,633




 


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


(28)


-


18




 


Foreign exchange gains on foreign currency loans


-


(18)


(18)




 


Interest income


(49)


(12)


(41)




 


Interest expense


257


263


485




 


Retirement benefit obligation net interest cost


25


27


54




 


Contributions to defined benefit plans


-


-


(236)




 


Tax recognised in income statement


1,051


556


1,053




 


Increase in inventories


(1,424)


(1,044)


(122)




 


Decrease/(increase) in trade and other receivables


1,486


(1,881)


(1,404)




 


(Decrease)/increase in trade and other payables


(937)


1,989


2,000




 


Cash generated from operations


8,489


6,279


15,678




 


Finance costs paid


(256)


(266)


(525)




 


Tax paid


(947)


(115)


(2,351)




 


Net cash from operating activities


7,286


5,898


12,802




 


Cashflows from investing activities


 


 


 




 


Paid on acquisition of new subsidiaries


-


(599)


(599)




 


Gross cash inherited on acquisition


-


-


-




 


Acquisition of subsidiaries, net of cash acquired


-


(599)


(599)




 


Purchase of property, plant and equipment


(314)


(557)


(955)




 


Proceeds from the sale of property, plant and equipment


28


-


18




 


Interest received


49


12


41




 


Net cash used in investing activities


(237)


(1,144)


(1,495)




 


Cashflows from financing activities


 


 


 




 


Proceeds from issue of share capital


196


473


638




 


Repayments of borrowings


(1,440)


(1,518)


(3,183)




 


Repayments of right-of-use lease liabilities


(362)


-


-




 


Equity dividends paid


-


-


(2,103)




 


Share repurchase - non-controlling interest in subsidiary


(417)


-


(1,511)




 


Dividends paid - non-controlling interest in subsidiary


-


-


(162)




 


Net cash used in financing activities


(2,023)


(1,045)


(6,321)




 


Net change in cash and cash equivalents


5,026


3,709


4,986




 


Cash and cash equivalents at start of period


15,727


10,681


10,681




 


Exchange movements


27


(25)


60




 


Cash and cash equivalents at end of period


20,780


14,365


15,727




 
 
 
 
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 2019 and the comparative figures for the six months ended 30 June 2018 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 2018, which have been prepared in accordance with IFRS as adopted by the European Union.
The financial information for the year ended 31 December 2018 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 2018 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 17 September 2019.
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 2018, 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.
IFRS 16 'Leases' (effective date 1 January 2019)
The Group has adopted IFRS 16 'Leases' as of 1 January 2019. The modified retrospective approach was applied on transition. Prior period comparatives have not been restated, and there was no adjustment to equity on transition.
IFRS 16 requires the capitalisation of operating leases, such as the Group's building and vehicle leases, as right-of-use leased assets with an offsetting financial liability. The Group has elected to measure the right-of-use leased assets at an amount equal to the lease liabilities adjusted for any prepaid or accrued lease payments that existed at the date of transition. Right-of-use assets and liabilities are presented separately in the Consolidated Balance Sheet.
The weighted average incremental borrowing rate used to measure lease liabilities is 4.25%
In the Consolidated Statement of Comprehensive Income the previous rental charge has been replaced with a combination of depreciation from the right-of-use leased assets and an interest charge from the lease liabilities. The effect for the period ended 30 June 2019 is as follows:




 


Six months to
30 June
2019
£000




Rental lease charges under previous accounting standard


408




Depreciation of right-of-use leased assets


(395)




Increase in operating profit due to IFRS 16


13




Interest charge from right-of-use liabilities


(45)




Decrease in profit before tax due to IFRS 16


(32)




Decrease in earnings per share due to IFRS 16


(0.42p)




 
In the year of adoption operating profit increases, but profit before tax decreases, and earnings per share is reduced. Assuming no further changes to the Group's leases, the increase in operating profit will endure, however in future years the interest charge will reduce as the discount unwinds.
The following is a reconciliation of total operating lease commitments at 31 December 2018 to the right-of-use lease liabilities and assets recognised at 1 January 2019:




 


1 January 2019
£000




Total operating lease commitments disclosed at 31 December 2018


3,363




Adjustments to commitments disclosures


(155)




Right-of-use lease liabilities before discounting


3,208




Discounted using incremental borrowing rate


(296)




Right-of-use lease liabilities recognised at 1 January 2019


2,912




Adjustments for prepaid rent at 31 December 2018


                   135




Adjustments for accrued rent at 31 December 2018


(42)




Right-of-use leased assets recognised at 1 January 2019


3,005




 
Changes in the right-of-use leased assets for the six months ended 30 June 2019 were as follows:




 


Six months to
30 June
2019
£000




Right-of-use leased assets recognised at 1 January 2019


3,005




Depreciation


(395)




Right-of-use leased assets as at 30 June 2019


2,610




 
Changes in the right-of-use lease liabilities for the six months ended 30 June 2019 were as follows:




 


Six months to
30 June
2019
£000




Right-of-use lease liabilities recognised at 1 January 2019


2,912




Interest accrued


45




Interest paid


(45)




Repayments of right-of-use lease liabilities


(362)




Right-of-use lease liabilities as at 30 June 2019


2,550




 


 




Split between:


 




Current


650




Non-current


1,900




 
 
3. Segmental analysis




For the period ended 30 June 2019


Note


Materials
Sciences
£000


Vacuum
£000


Unallocated
items
£000


Total
£000




Revenue


 


15,929


24,240


-


40,169




Operating costs


 


(12,702)


(17,566)


(1,271)


(31,539)




Adjusted operating profit


 


3,227


6,674


(1,271)


8,630




Adjusting items


4


 


 


 


(1,480)




Operating profit


 


 


 


 


7,150




Net interest expense


 


 


 


 


(233)




Profit before tax


 


 


 


 


6,917




Income tax charge


 


 


 


 


(1,051)




Profit for the period


 


 


 


 


5,866




 




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 year ended 31 December 2018


Note


Materials
Sciences
£000


Vacuum
£000


Unallocated
items
£000


Total
£000




Revenue


 


35,058


42,810


-


77,868




Operating costs


 


(27,018)


(33,445)


(2,674)


(63,137)




Adjusted operating profit


 


8,040


9,365


(2,674)


14,731




Adjusting items


4


 


 


 


(4,045)




Operating profit


 


 


 


 


10,686




Net interest expense


 


 


 


 


(498)




Profit before tax


 


 


 


 


10,188




Income tax charge


 


 


 


 


(1,053)




Profit for the year


 


 


 


 


9,135




 
Unallocated items relate to the Group's head office costs.
  
Segment assets and liabilities




At 30 June 2019


Materials
Sciences
£000


Vacuum
£000


Unallocated
items
£000


Total
£000




Assets


16,694


26,790


28,316


71,800




Liabilities


(8,077)


(13,366)


(13,632)


(35,075)




Net assets


8,617


13,424


14,684


36,725




Capital expenditure


78


224


12


314




Depreciation of property, plant and equipment


90


262


15


367




Depreciation of right-of-use leased assets


186


182


27


395




Amortisation


651


733


-


1,384




 




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 of property, plant and equipment


122


233


18


373




Amortisation


775


1,370


-


2,145




 




At 31 December 2018


Materials
Sciences
£000


Vacuum
£000


Unallocated
items
£000


Total
£000




Assets


17,275


24,410


24,041


65,726




Liabilities


(7,888)


(11,838)


(14,794)


(34,520)




Net assets


9,387


12,572


9,247


31,206




Capital expenditure


185


770


-


955




Depreciation of property, plant and equipment


231


481


34


746




Amortisation


1,519


2,114


-


3,633




 
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
2019
£000


Six months to
30 June
2018
£000


Year to
31 December
2018
£000




UK (domicile)


4,539


4,541


10,729




Rest of Europe


11,780


11,499


23,156




North America


13,294


9,972


20,884




China/Hong Kong


3,648


3,467


7,716




Rest of the world


6,908


7,483


15,383




Revenue


40,169


36,962


77,868




 
 
4. Adjusting items




 


Six months to
30 June
2019
£000


Six months to
30 June
2018
£000


Year to
31 December
2018
£000




Amortisation of intangible assets


1,384


2,145


3,633




Financial instruments measured at fair value: Hedging contracts


(12)


22


56




Share-based payments


108


183


319




Acquisition costs


-


-


37




Total adjusting items within operating profit


1,480


2,350


4,045




Retirement benefits obligation net interest cost


25


27


54




Total adjusting items


1,505


2,377


4,099




Taxation


(265)


(435)


(1,085)




Total adjusting items net of tax


1,240


1,942


3,014




Attributable to:


 


 


 




Owners of the parent


1,158


1,857


2,834




Non-controlling interests


82


85


180




 


1,240


1,942


3,014




 
5. Earnings per share




 


Note


Six months to
30 June
2019
£000


Six months to
30 June
2018
£000


Year to
31 December
2018
£000




Profit for the period attributable to owners of the parent


 


 


 


 




Adjusted profit


 


6,750


5,140


11,329




Adjusting items


4


(1,158)


(1,857)


(2,834)




Profit for the period


 


5,592


3,283


8,495




 




 


 


Pence


Pence


Pence




Earnings per share - adjusted


 


 


 


 




Basic


 


108.7


83.4


183.4




Diluted


 


107.0


82.1


180.6




Earnings per share - total


 


 


 


 




Basic


 


90.1


53.3


137.5




Diluted


 


88.6


52.4


135.4




 




 


 


Number


Number


Number




Issued Ordinary shares at start of the period


7


6,196,678


6,141,128


6,141,128




Movement in Ordinary shares during the period


7


24,163


43,050


55,550




Issued Ordinary shares at end of the period


7


6,220,841


6,184,178


6,196,678




Weighted average number of shares in issue


 


6,207,925


6,162,943


6,176,315




Dilutive effect of share options


 


101,158


96,928


96,800




Weighted average shares in issue on a diluted basis


 


6,309,083


6,259,871


6,273,115




 
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
2019
£000


Amortisation
£000


Carrying
amount at
30 June
2019
£000




Distribution agreements


310


(110)


200




Research and development


2,458


(552)


1,906




Brand and domain names


2,235


(512)


1,723




Customer relationships


370


(210)


160




Total


5,373


(1,384)


3,989




 




 


Carrying
amount at
1 January
2018
£000


Amortisation
£000


Carrying
amount at
30 June
2018
£000




Distribution agreements


606


(158)


448




Research and development


3,712


(702)


3,010




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
2018
£000


Amortisation
£000


Carrying
amount at
31 December
2018
£000




Distribution agreements


606


(296)


310




Research and development


3,712


(1,254)


2,458




Brand and domain names


3,705


(1,470)


2,235




Customer relationships


983


(613)


370




Total


9,006


(3,633)


5,373




  
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 2019
Number


Six months to
30 June 2018
Number


Year to
31 December
2018
Number




Issued and fully paid


 


 


 




Start of the period


6,196,678


6,141,128


6,141,128




Exercise of share options


24,163


43,050


55,550




End of the period


6,220,841


6,184,178


6,196,678




 
During the first six months of 2019 the following allotments took place:
•    24,163 Ordinary shares were issued to satisfy the exercise of share options as follows:
•                      on 5 February 2019 when the mid-market share price was 2,660.0p;
•                      on 22 February 2019 when the mid-market share price was 2,700.0p;
•                      on 29 March 2019 when the mid-market share price was 2,690.0p;
•                      on 3 April 2019 when the mid-market share price was 2,720.0p;
•                      on 12 April 2019 when the mid-market share price was 3,070.0p;
•                      on 26 April 2019 when the mid-market share price was 3,175.0p;
•                      on 3 May 2019 when the mid-market share price was 3,115.0p;
•                      on 8 May 2019 when the mid-market share price was 3,105.0p; and
•                      on 3 June 2019 when the mid-market share price was 3,090.0p.
 
8. Changes in net cash
Changes in net cash for the six months ended 30 June 2019 were as follows:




 


1 January
2019
£000


Cashflow
£000


Non-cash
items
£000


30 June
2019
£000




Cash at bank and in hand


15,727


5,026


27


20,780




Bank debt


(14,836)


1,440


(2)


(13,398)




Net cash including senior debt


891


6,466


25


7,382




Subordinated debt to non-controlling shareholders


(190)


-


-


(190)




Total net cash


701


6,466


25


7,192




Subordinated debt to non-controlling shareholders


190


-


-


190




Adjusted net cash


891


6,466


25


7,382




 
Non-cash items primarily represent foreign exchange differences on foreign currency bank balances.
 
9. Acquisitions
On 29 March 2019 PE.fiberoptics Limited ("PFO"), one of the Company's subsidiaries, acquired the remaining shares of a third party shareholder for a consideration of £0.4 million. As a result, the Group's interest in PFO increased from 67.5% to 74.5%.
 
 
10. Defined benefit scheme
The Group's defined benefit pension scheme liability has increased to £2.2 million compared to £1.8 million at 31 December 2018, due to a decrease of 0.5% in the discount rate to 2.3% from 2.8% at 31 December 2018.
 
11. Dividends
During the period, the Company paid no dividends (Period to 30 June 2018: £nil).
The Company paid a final dividend of 28.0p per share totalling £1.7 million to shareholders on 5 July 2019 relating to the financial year ended 31 December 2018 (22.0 p per share totalling £1.4 million relating to the financial year ended 31 December 2017).
The Company will pay an interim dividend for 2019 of 15.0p per share (2018: interim dividend of 12.0p per share) on 1 November 2019 to shareholders on the register on 4 October 2019. The shares will go ex-dividend on 3 October 2019.
 
 
 




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END
 
 
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