REG - Judges ScientificPLC - Interim Results
20/09/2023 07:00
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RNS Number : 9771M Judges Scientific PLC 20 September 2023
Judges Scientific plc
("Judges Scientific", "the Company", or "the Group")
Interim results for the six months ended 30 June 2023
Solid Organic and acquisition growth
23% increase to interim dividend
Judges Scientific, the group focused on acquiring and developing companies in
the scientific instrument sector, announces its unaudited interim results for
the six months ended 30 June 2023.
Key financials
Period ended 30 June H1 2023 H1 2022 Change
Revenue £61.3m £46.4m 32%
Adjusted* pre-tax profit £12.8m £9.6m 33%
Adjusted* basic earnings per share 152.8p 124.6p 23%
Cash generated from operations £11.5m £8.2m 40%
Interim dividend per share 27.0p 22.0p 23%
Statutory pre-tax profit £0.8m £3.9m
Statutory basic (loss)/earnings per share (18.7)p 44.4p
As at: 30 Jun 2023 31 Dec 2022
Adjusted* net debt (excl. IFRS 16) £50.0m £52.0m
Cash balances £14.6m £20.8m
Statutory net debt (excl. IFRS 16) £48.4m £34.8m
Statutory net debt (incl. IFRS 16) £55.1m £39.1m
Other financial highlights
· Organic** revenue increased 16.5% against H1 2022.
· Organic** order intake up 14% compared with H1 2022.
· Organic** order book at 22.4 weeks (H1 2022: 21.3 weeks).
Strategic highlights
· Completion of two small acquisitions: Henniker and Bossa Nova for
a combined consideration of up to £3.6m plus excess cash.
· Full £35.0m earnout (50% cash, 50% new shares) settled in
respect of Geotek.
· Moderate progress with supply chain challenges.
· Strengthening of Judges Executive team following the recruitment
of Dr Tim Prestidge as Group Business Development Director.
Outlook
· Business environment still in recovery mode.
· Strong second half anticipated for the Group due to the timing of
the next Geotek coring expedition.
· Strong H1 Organic order intake and solid Organic order book (21.4
weeks at the end of August) augur positively for H2.
· The Board expects that the Group will meet market expectations
for the full 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 includes acquisition-related cash payables which
had yet to be settled at the balance sheet date and excludes IFRS 16 debt.
** Organic denotes Group performance excluding the businesses which were not
part of the Group on 1 January 2022.
Alex Hambro, Chairman of Judges Scientific, commented:
"During the period all the measures of Organic performance were again beaten,
with results bolstered by the contribution from Geotek. While we have not yet
returned to a pre-pandemic trading environment and we continue to operate in a
challenging world, we have seen improving prospects across our markets. We are
well configured moving forwards, strengthened by a reinforced executive team
and a solid order book, with a strong second half anticipated for the Group."
Investor Presentation
Judges Scientific is hosting a webinar, available to all existing and
potential shareholders, covering the interim results for the six months to 30
June 2023, on 20 September at 16:45 UK time. Investors can register for the
webinar here: https://bit.ly/JDG_H123_webinar
(https://bit.ly/JDG_H123_webinar)
For further information please contact:
Judges Scientific plc Shore Capital (Nominated Adviser & Joint Broker)
David Cicurel, CEO Stephane Auton
Brad Ormsby, CFO Iain Sexton
Tel: +44 (0) 20 3829 6970 Tel: +44 (0) 20 7408 4090
Liberum (Joint Broker) Investec Bank plc (Joint Broker)
Edward Mansfield Virginia Bull
Nikhil Varghese Carlton Nelson
Tel : +44 (0) 20 3100 2222 Tel: +44 (0) 207 597 4000
Alma PR (Financial Public Relations)
Sam Modlin
Joe Pederzolli
Rebecca Sanders-Hewett
Tel: +44 (0) 20 3405 0205
judges@almapr.co.uk (mailto:judges@almapr.co.uk)
Chairman's statement
In an improving business environment, the Group's operations continued to
progress from the difficulties caused by the pandemic and the war in Ukraine
with the first half of 2023 establishing new records in Organic order intake,
Organic revenues and Organic EBITA contribution. Adjusted pre-tax profits and
Adjusted earnings per share also reached new records, including a full
six-month contribution from Geotek together with a modest maiden contribution
from the two small acquisitions which were completed in the first half,
Henniker Scientific Limited ("Henniker") and Bossa Nova Vision LLC ("Bossa
Nova").
In February we were pleased to welcome Dr Tim Prestidge to the Board as Group
Business Development Director. With his significant experience in leadership
and innovation, Tim's appointment serves as a reinforcement of the executive
team.
Order intake
As we entered this six-month period China ended its national lockdown which
edged Organic order intake toward normality. Not all Organic businesses
reached a complete recovery but, as a whole, bookings were successful and 14%
up on H1 2022. Organic intake for the first half was 28% above H1 2019, the
last pre-pandemic comparative; this shows a compound annual growth rate of
6.3%, although still not quite the 9% pre-Covid Organic revenue trend yet.
All regions showed progress, the most successful being China/Hong Kong, which
grew 78% after two years of stagnation and produced more than half of the
total absolute increase. North America was up 6.6% including 10.3% in the US.
Rest of Europe grew 7.5% with the best country performance in Germany. The UK
progressed 4.5% and the Rest of the World advanced 3.5% including an excellent
increase in Japan (+103%).
Revenues
The revival in order intake and the large order book at the start of H1 drove
strong Organic sales revenues. Revenue growth was tempered by the ongoing
supply chain difficulties but these attenuated during the period, enabling
Organic revenues to reach £53.3m, which was a 16.5% increase over H1 2022.
Total Group revenues for the period increased to £61.3m (H1
2022: £46.4m), including a much larger six-month contribution from Geotek
(against only one month in H1 2022).
Organic revenues increased in all territories, particularly in North America
(up 43%). The Rest of the World grew 16% and the UK 12%. China/Hong Kong
increased 5% and the Rest of Europe ahead by 4%. The largest absolute changes
by country were the US (up £4m) and Taiwan (up £1.1m), followed by the UK,
Sweden and Germany (up £0.6m each). Turkey was down £0.6m.
Although the growth in Organic intake (14%) was lower than the growth in
Organic revenues (16.5%), in absolute terms Organic order intake was still
larger than Organic revenues, resulting in an increased Organic order book at
22.4 weeks (21.3 weeks at 30 June 2022). The Group total order book stood at
23.5 weeks.
Geotek's revenues significantly supplemented Organic growth, together with a
small addition from the two acquisitions completed in H1. As explained at the
time of the acquisition, Geotek would normally generate its revenues in
relatively equal measures from each of its three divisions: instruments,
services and coring. Coring expeditions would typically (but not necessarily)
occur once a year, with the timing of the Coring revenue recognition being
uncertain. As in 2022, coring activity in 2023 is taking place in H2 and Group
revenues and profits will therefore be weighted towards the second half.
Looking further forward, we are envisaging another expedition during the
course of 2024, although it is currently expected to take place towards the
end of the year causing uncertainty regarding the amount of the related
revenue to be recognised in 2024.
Profits
Adjusted operating profit improved 41% to £14.2m (H1 2022: £10.1m) and
Adjusted pre-tax profit progressed 33% to £12.8m (H1 2022: £9.6m); the
lower growth reflects the increase in Adjusted interest expense resulting from
the Geotek acquisition.
The main drivers of improved profitability were the contribution of Geotek and
the increase in Organic revenue: the EBITA contribution of the Organic
businesses progressed 12% versus H1 2022 despite the delayed effect of
measures taken to compensate for the inflationary pressures.
Return on Total Invested Capital ("ROTIC") improved from 21.3% at 31
December 2022 to 22.8% for the trailing 12 months ended 30 June 2023 (30 June
2022: ROTIC of 29.6%). The reduction in ROTIC compared with 30 June 2022
reflects the size and higher multiple paid for the large Geotek acquisition.
Adjusted basic earnings per share grew 23% to 152.8p (H1 2022: 124.6p) and
Adjusted diluted earnings per share progressed similarly to 150.3p from
123.0p. Adjusted Earnings per share grew less than pre-tax profit mostly as a
result of the increase in UK corporation tax rates to 25% during the period.
The increase in the issued share capital following settlement of the Geotek
earn-out had a minor impact but this will accentuate in H2.
The 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 pre-tax adjustments of £12.0m (H1
2022: £5.7m) consist primarily of a £6.1m charge for amortisation of
acquired intangible assets arising through acquisition and £5.5m in respect
of the premium on the shares issued to satisfy the Geotek earn-out. These
adjusting items reduce profit before tax from £12.8m to £0.8m (H1
2022: £3.9m) and result in a loss per share of 18.7p basic and 18.4p diluted
(H1 2022: earnings of 44.4p per share basic and 43.8p per share diluted).
Corporate activity
On 3 April 2023, the Group acquired 100% of the share capital of Henniker
Scientific Limited ("Henniker"), a company specialising in instruments for
plasma and surface science applications, based in Runcorn. The initial
consideration was £1.85m paid in cash on completion plus excess cash. A cash
earn-out capped at £0.46m will be paid if and to the extent that Henniker
achieves an EBIT of £0.58m in 2023 or 2024.
On 2 May 2023, the Group acquired 100% of the share capital of Bossa Nova
Vision LLC ("BNV"), a California based company specialising in imaging
technology for the hair care industry for a consideration of $1.6m in cash.
BNV produced $0.4m EBIT in 2022. BNV will, over time, be integrated into
Dia-Stron as both companies offer complementary instrumentation to the hair
industry.
Cashflow and net debt
The Group saw reasonable cash conversion: cash generated from operations grew
to £11.5m (H1 2022: £8.2m) representing 81% of Adjusted operating profit
(H1 2022: 81%). Cash generation was still affected by increased working
capital requirements from stockpiling of components to counteract supply
channel difficulties and increased work in progress (unfinished instruments)
due to component shortages.
The interim balance sheet includes cash balances of £14.6m and Adjusted net
debt of £50.0m from £52.0m at the beginning of 2023.
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 27p (2022:
22p), which will be paid on Friday 3 November 2023 to shareholders on the
register on Friday 6 October 2023. The shares will go ex-dividend on
Thursday 5 October 2023. The interim dividend is covered 5.7 times by
Adjusted earnings (2022: 5.7 times).
Outlook
Last year we said ""Business as usual" in comparison to pre-pandemic has not
returned yet". While this is still the case, improvement is continuing.
Well-documented world tensions are unresolved and breed a tendency to reshore
and buy local, a trend that is not ideal for the scientific community which
thrives on free exchange and a cosmopolitan atmosphere. Furthermore, vast
government debt worldwide is aggravated by high interest rates, and those as
well as inflation seem to always last longer than promised. Therefore, growth
in research spending may be less smooth as a result.
That said, we are well configured in the face of uncertainty: our niche
businesses are less vulnerable to inflation, Sterling is still a very
competitive currency and the debt incurred in 2022 was hedged at an
advantageous fixed rate. Higher interest rates on future deals and higher
taxation must sharpen our acquisition discipline and our focus on cash
generation.
At the end of August, Organic order intake remained 13% ahead and the total
order book was 21 weeks. This together with an anticipated strong H2
contribution from Geotek, provides the Board with confidence that Adjusted
Earnings per Share for the full year will meet current market expectations.
The Hon. Alexander Hambro
Chairman
20 September 2023
Condensed consolidated interim statement of comprehensive income
Note Adjusted Adjusting Adjusted Adjusting Year to
£m items 30 June £m items 30 June 31 December
£m 2023 £m 2022 2022
£m £m £m
Revenue 3 61.3 - 61.3 46.4 - 46.4 113.2
Operating costs 3,4 (47.1) (12.4) (59.5) (36.3) (5.2) (41.5) (95.0)
Operating profit/(loss) 14.2 (12.4) 1.8 10.1 (5.2) 4.9 18.2
Interest income 0.1 - 0.1 - - - 0.2
Interest expense 4 (1.5) 0.4 (1.1) (0.5) (0.5) (1.0) (2.4)
Profit/(loss) before tax 12.8 (12.0) 0.8 9.6 (5.7) 3.9 16.0
Taxation (charge)/credit (2.8) 1.0 (1.8) (1.5) 0.6 (0.9) (3.2)
Profit/(loss) for the period 10.0 (11.0) (1.0) 8.1 (5.1) 3.0 12.8
Attributable to:
Owners of the parent 9.8 (11.0) (1.2) 7.9 (5.1) 2.8 12.5
Non-controlling interests 0.2 - 0.2 0.2 - 0.2 0.3
Profit/(loss) for the period 10.0 (11.0) (1.0) 8.1 (5.1) 3.0 12.8
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Retirement benefits actuarial gain 0.2 1.4 2.1
Deferred tax on retirement benefits actuarial gain - (0.4) (0.5)
Items that may be reclassified subsequently to profit or loss
Exchange (loss)/gain on translation of foreign subsidiaries (0.1) 0.2 0.1
Other comprehensive income for the period, net of tax 0.1 1.2 1.7
Total comprehensive (loss)/income for the period (0.9) 4.2 14.5
Attributable to:
Owners of the parent (1.1) 4.0 14.2
Non-controlling interests 0.2 0.2 0.3
Pence Pence Pence Pence Pence
Earnings per share - adjusted
Basic 5 152.8 124.6 363.8
Diluted 5 150.3 123.0 359.0
Earnings per share - total
Basic 5 (18.7) 44.4 196.1
Diluted 5 (18.4) 43.8 193.5
Condensed consolidated interim balance sheet
Note 30 June 30 June 31 December
2023 2022 2022
£m £m £m
ASSETS
Non-current assets
Goodwill 6 52.6 50.5 51.4
Other intangible assets 7 41.0 49.7 44.4
Property, plant and equipment 16.7 15.3 15.9
Right-of-use leased assets 6.5 4.3 4.2
Retirement benefit surplus 11 1.5 - 1.2
Deferred tax assets - 4.1 -
118.3 123.9 117.1
Current assets
Inventories 28.4 21.9 22.3
Trade and other receivables 25.7 20.1 25.6
Cash and cash equivalents 14.6 36.4 20.8
68.7 78.4 68.7
Total assets 187.0 202.3 185.8
LIABILITIES
Current liabilities
Trade and other payables (26.5) (28.4) (25.9)
Payables relating to acquisitions 9 (1.6) (48.2) (34.3)
Borrowings 10 (6.2) (6.7) (6.2)
Right-of-use lease liabilities (1.2) (1.0) (1.0)
Current tax liabilities (3.3) (2.0) (2.2)
(38.8) (86.3) (69.6)
Non-current liabilities
Borrowings 10 (56.8) (52.5) (49.4)
Right-of-use lease liabilities (5.5) (3.4) (3.3)
Deferred tax liabilities (8.6) (12.5) (9.0)
(70.9) (68.4) (61.7)
Total liabilities (109.7) (154.7) (131.3)
Net assets 77.3 47.6 54.5
EQUITY
Share capital 8 0.3 0.3 0.3
Share premium 17.6 17.0 17.2
Other reserves 26.9 4.2 4.1
Retained earnings 32.1 26.0 32.7
Equity attributable to owners of the parent 76.9 47.5 54.3
Non-controlling interests 0.4 0.1 0.2
Total equity 77.3 47.6 54.5
Condensed consolidated interim statement of changes in equity
Share Share Other Retained Total Non- Total
capital premium reserves earnings attributable controlling equity
£m £m £m £m to owners interests £m
of parent £m
£m
At 1 January 2023 0.3 17.2 4.1 32.7 54.3 0.2 54.5
Issue of share capital - 0.4 22.9 - 23.3 - 23.3
Purchase of own shares for Company reward scheme - - - (0.1) (0.1) - (0.1)
Tax on Company reward scheme shares awarded - - - (0.1) (0.1) - (0.1)
Share-based payments - - - 0.6 0.6 - 0.6
Transactions with owners - 0.4 22.9 0.4 23.7 - 23.7
Loss for the period - - - (1.2) (1.2) 0.2 (1.0)
Retirement benefit actuarial gain - - - 0.2 0.2 - 0.2
Foreign exchange differences - - (0.1) - (0.1) - (0.1)
Total comprehensive income for the period - - (0.1) (1.0) (1.1) 0.2 (0.9)
At 30 June 2023 0.3 17.6 26.9 32.1 76.9 0.4 77.3
At 1 January 2022 0.3 16.7 2.0 23.8 42.8 0.6 43.4
Change in non-controlling interest - - 2.0 (1.4) 0.6 (0.7) (0.1)
Issue of share capital - 0.3 - - 0.3 - 0.3
Purchase of own shares for Company reward scheme - - - (0.1) (0.1) - (0.1)
Deferred tax on share-based payments - - - (0.4) (0.4) - (0.4)
Share-based payments - - - 0.3 0.3 - 0.3
Transactions with owners - 0.3 2.0 (1.6) 0.7 (0.7) -
Profit for the period - - - 2.8 2.8 0.2 3.0
Retirement benefit actuarial gain - - - 1.0 1.0 - 1.0
Foreign exchange differences - - 0.2 - 0.2 - 0.2
Total comprehensive income for the period - - 0.2 3.8 4.0 0.2 4.2
At 30 June 2022 0.3 17.0 4.2 26.0 47.5 0.1 47.6
At 1 January 2022 0.3 16.7 2.0 23.8 42.8 0.6 43.4
Dividends - - - (4.4) (4.4) - (4.4)
Change in non-controlling interest - - 2.0 (1.4) 0.6 (0.7) (0.1)
Issue of share capital - 0.5 - - 0.5 - 0.5
Purchase of own shares for Company reward scheme - - - (0.1) (0.1) - (0.1)
Deferred tax on share-based payments - - - - - - -
Share-based payments - - - 0.7 0.7 - 0.7
Transactions with owners - 0.5 2.0 (5.2) (2.7) (0.7) (3.4)
Profit for the period - - - 12.5 12.5 0.3 12.8
Retirement benefit actuarial gain - - - 1.6 1.6 - 1.6
Foreign exchange differences - - 0.1 - 0.1 - 0.1
Total comprehensive income for the year - - 0.1 14.1 14.2 0.3 14.5
At 31 December 2022 0.3 17.2 4.1 32.7 54.3 0.2 54.5
Condensed consolidated interim cashflow statement
Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 £m
£m £m
Cashflows from operating activities
(Loss)/profit after tax (1.0) 3.0 12.8
Adjustments for:
Financial instruments measured at fair value: hedging contracts (1.1) (0.4) (2.3)
Share-based payments 0.6 0.3 0.7
Depreciation of property, plant and equipment 0.8 0.6 1.4
Depreciation of right-of-use leased assets 0.6 0.5 1.1
Amortisation of acquired intangible assets 6.1 2.3 8.4
Amortisation of internally generated intangible assets 0.1 - 0.1
Profit on disposal of property, plant and equipment - - -
Interest income (0.1) - (0.2)
Interest expense 1.4 0.4 1.8
Interest payable on right-of-use lease liabilities 0.1 0.1 0.2
Unwinding of discount on fair value of deferred consideration 0.7 0.5 2.6
Premium on shares issued to fund acquisition 5.5 - -
Retirement benefit obligation net interest cost - - -
Contributions to defined benefit plans - - (0.4)
Tax recognised in the Consolidated Statement of Comprehensive Income 1.8 0.9 3.2
Increase in inventories (5.9) (3.7) (4.2)
Decrease/(increase) in trade and other receivables 1.4 0.2 (3.1)
Increase in trade and other payables 0.5 3.5 1.9
Cash generated from operations 11.5 8.2 24.0
Tax paid (1.7) (0.7) (2.1)
Net cash from operating activities 9.8 7.5 21.9
Cashflows from investing activities
Paid on acquisition of subsidiaries (3.2) (45.0) (45.0)
Paid in respect of surplus working capital - - (17.8)
Paid in respect of earn out (17.5) - -
Gross cash inherited on acquisition 1.5 19.6 19.6
Acquisition of subsidiaries, net of cash acquired (19.2) (25.4) (43.2)
Purchase of property, plant and equipment (1.6) (5.1) (6.4)
Capitalised development costs (0.6) (0.5) (1.5)
Proceeds on disposal of property, plant and equipment - - 0.1
Interest received 0.1 - 0.2
Net cash used in investing activities (21.3) (31.0) (50.8)
Cashflows from financing activities
Proceeds from issue of share capital 0.1 0.3 0.3
Purchase of own shares for Company reward scheme (0.1) (0.1) (0.1)
Tax on shares awarded under Company reward scheme (0.1) - -
Finance costs paid (1.4) (0.4) (1.8)
Repayments of borrowings (3.1) (2.9) (6.5)
Repayments of right-of-use lease liabilities (0.6) (0.6) (1.3)
Proceeds from bank loans* 10.5 45.1 45.1
Equity dividends paid - - (4.4)
Paid on acquisition of non-controlling interest in subsidiary - (0.1) (0.1)
Net cash from financing activities 5.3 41.3 31.2
Net change in cash and cash equivalents (6.2) 17.8 2.3
Cash and cash equivalents at the start of the period 20.8 18.4 18.4
Exchange movements - 0.2 0.1
Cash and cash equivalents at the end of the period 14.6 36.4 20.8
* On 23 May 2022, £15.2m of outstanding loans were repaid and £60.3m
was simultaneously reborrowed as the Group renewed its banking facilities.
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 2023 and the comparative figures for the six months ended 30
June 2022 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 2022, 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 2022 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 2022 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 19 September 2023.
Going concern
The consolidated financial statements have been prepared on a going concern
basis. The Group ended the first half of 2023 with adjusted net debt of
£50.0m compared to adjusted net debt of £52.0m at 31 December 2022, after
paying £3.2m in cash in respect of the Henniker and BNV acquisitions (see
note 9) and having settled the full £35m earn-out from the Geotek
acquisition. The Group uses adjusted net debt rather than statutory net debt
for this comparison, as this figure includes actual cash liabilities arising
from acquisitions which are due within one year. The reduction in net debt
arose as a result of consistent cash generation arising from strong
performance of the Group's principal operating companies, supported by Organic
order intake greater than revenue, and is after payment of our fair share of
tax (£1.7m) and ongoing investment into capital expenditure (including
property refurbishment) for the businesses (£2.2m).
The Directors have considered the ongoing impact of the war in Ukraine, the
Covid-19 pandemic, the continued inflationary challenges and subsequent
increases in interest rates. The Group is in a strong financial position with
high cash balances, low gearing and a solid future order book enabling it to
face the challenge of the continued uncertain global economic environment.
The Directors have planned for reasonably foreseeable worsening scenarios
including a repetition of the same level of reduction in orders in 2024 as
happened after the first outbreak of Covid-19 in 2020, which would not cause
any significant challenges to the Group's continued existence.
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 2022, 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 2023 Note Materials Vacuum Head office Total
Sciences £m £m £m
£m
Revenue 31.0 30.3 - 61.3
Operating costs (23.7) (21.4) (2.0) (47.1)
Adjusted operating profit 7.3 8.9 (2.0) 14.2
Adjusting items 4 (12.4)
Operating profit 1.8
Net interest expense (1.0)
Profit before tax 0.8
Income tax charge (1.8)
Loss for the period (1.0)
For the period ended 30 June 2022 Note Materials Vacuum Head office Total
Sciences £m £m £m
£m
Revenue 21.9 24.5 - 46.4
Operating costs (17.3) (17.5) (1.5) (36.3)
Adjusted operating profit 4.6 7.0 (1.5) 10.1
Adjusting items 4 (5.2)
Operating profit 4.9
Net interest expense (1.0)
Profit before tax 3.9
Income tax charge (0.9)
Profit for the period 3.0
For the year ended 31 December 2022 Note Materials Vacuum Head office Total
Sciences £m £m £m
£m
Revenue 59.9 53.3 - 113.2
Operating costs (41.6) (38.2) (3.3) (83.1)
Adjusted operating profit 18.3 15.1 (3.3) 30.1
Adjusting items 4 (11.9)
Operating profit 18.2
Net interest expense (2.2)
Profit before tax 16.0
Income tax charge (3.2)
Profit for the year 12.8
Unallocated items relate to the Group's head office costs.
Segment assets and liabilities
At 30 June 2023 Materials Vacuum Head office Total
Sciences £m £m £m
£m
Assets 50.4 40.9 95.7 187.0
Liabilities (28.3) (13.7) (67.7) (109.7)
Net assets 22.1 27.2 28.0 77.3
Capital expenditure 0.8 0.8 - 1.6
Depreciation of property, plant and equipment 0.4 0.4 - 0.8
Depreciation of right-of-use leased assets 0.4 0.2 - 0.6
Amortisation of acquired intangible assets 5.8 0.3 - 6.1
Amortisation of internally generated intangible assets - 0.1 - 0.1
At 30 June 2022 Materials Vacuum Head office Total
Sciences £m £m £m
£m
Assets 62.4 37.8 102.1 202.3
Liabilities (22.1) (13.0) (119.6) (154.7)
Net assets 40.3 24.8 (17.5) 47.6
Capital expenditure 0.1 5.0 - 5.1
Depreciation of property, plant and equipment 0.3 0.3 - 0.6
Depreciation of right-of-use leased assets 0.3 0.2 - 0.5
Amortisation of acquired intangible assets 1.6 0.7 - 2.3
Amortisation of internally generated intangible assets - - - -
At 31 December 2022 Materials Sciences Vacuum Head office Total
£m £m £m £m
Assets 54.7 38.4 92.7 185.8
Liabilities (24.4) (11.7) (95.2) (131.3)
Net assets 30.3 26.7 (2.5) 54.5
Capital expenditure 0.5 5.9 - 6.4
Depreciation of property, plant and equipment 0.6 0.7 0.1 1.4
Depreciation of right-of-use leased assets 0.6 0.4 0.1 1.1
Amortisation of acquired intangible assets 7.3 1.1 - 8.4
Amortisation of internally generated intangible assets - 0.1 - 0.1
Head office items are borrowings, intangible assets and goodwill arising on
acquisition, deferred tax, defined benefit obligations and parent company net
assets.
Geographic analysis Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 £m
£m £m
UK (domicile) 7.4 5.9 13.3
Rest of Europe 16.0 14.5 32.3
North America 16.4 10.2 31.9
China/Hong Kong 6.7 6.2 13.9
Rest of the World 14.9 9.6 21.8
Revenue 61.4 46.4 113.2
4. Adjusting items
Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 £m
£m £m
Amortisation of acquired intangible assets 6.1 2.3 8.4
Financial instruments measured at fair value: hedging contracts - (0.4) (0.1)
Share-based payments 0.6 0.3 0.7
Employment taxes arising from share-based payments - 0.1 (0.1)
Contingent consideration measured at fair value (see note 9) 5.5 - -
Acquisition costs (see note 9) 0.2 2.9 3.0
Total adjusting items within operating profit 12.4 5.2 11.9
Unwinding of discount on fair value of deferred consideration 0.7 0.5 2.6
Retirement benefits obligation net interest (credit)/cost - - -
Financial instruments measured at fair value: interest rate swaps (1.1) - (2.1)
Total adjusting items 12.0 5.7 12.4
Taxation (1.0) (0.6) (1.7)
Total adjusting items net of tax 11.0 5.1 10.7
Attributable to:
Owners of the parent 11.0 5.1 10.6
Non-controlling interests - - 0.1
11.0 5.1 10.7
5. Earnings per share
Note Six months Six months Year to
to to 31 December
30 June 30 June 2022
2023 2022 £m
£m £m
Profit for the period attributable to owners of the parent
Adjusted profit 9.8 7.9 23.1
Adjusting items 4 (11.0) (5.1) (10.6)
Profit for the period (1.2) 2.8 12.5
Pence Pence Pence
Earnings per share - adjusted
Basic 152.8 124.6 363.8
Diluted 150.3 123.0 359.0
Earnings per share - total
Basic (18.7) 44.4 196.1
Diluted (18.4) 43.8 193.5
Note Number Number Number
Issued Ordinary shares at start of the period 8 6,369,746 6,318,415 6,318,415
Movement in Ordinary shares during the period 8 237,992 36,002 51,331
Issued Ordinary shares at end of the period 8 6,607,738 6,354,417 6,369,746
Weighted average number of shares in issue 6,411,767 6,325,433 6,342,759
Dilutive effect of share options 109,140 85,251 85,077
Weighted average shares in issue on a diluted basis 6,520,907 6,410,684 6,427,836
Adjusted basic earnings per share is calculated on the adjusted profit, which
excludes 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 share 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. Goodwill
The following tables show the additions to goodwill:
Total
£m
Carrying amount at 1 January 2023 51.4
Acquisitions (see note 9) 1.2
Carrying amount at 30 June 2023 52.6
Total
£m
Carrying amount at 1 January 2022 18.7
Acquisitions 31.8
Carrying amount at 30 June 2022 50.5
Total
£m
Carrying amount at 1 January 2022 18.7
Acquisitions 32.7
Carrying amount at 31 December 2022 51.4
7. Other intangible assets
The following tables show the additions to, and amortisation of, intangible
assets:
Internally Acquired Acquired Acquired Acquired Acquired Total
generated distribution technology sales order brand customer £m
development agreements £m backlog and relationships
costs £m £m domain £m
£m names
£m
Carrying amount at 1 January 2023 2.1 - 22.1 3.2 2.1 14.9 44.4
Acquisitions (see note 9) - - 1.3 0.2 - 0.7 2.2
Additions 0.6 - - - - - 0.6
Amortisation (0.1) - (2.0) (1.8) (0.3) (2.0) (6.2)
Carrying amount at 30 June 2023 2.6 - 21.4 1.6 1.8 13.6 41.0
Internally Acquired Acquired Acquired Acquired Acquired Total
generated development costs distribution technology sales order brand customer £m
£m agreements £m backlog and relationships
£m £m domain £m
names
£m
Carrying amount at 1 January 2022 0.8 0.1 2.0 - 0.9 1.3 5.1
Acquisitions - - 22.8 5.4 1.8 16.5 46.5
Additions 0.5 - - - - - 0.5
Amortisation - (0.1) (0.8) (0.3) (0.3) (0.9) (2.4)
Carrying amount at 30 June 2022 1.3 - 24.0 5.1 2.4 16.9 49.7
Internally Acquired Acquired Acquired Acquired Acquired Total
generated distribution technology sales order brand customer £m
development agreements £m backlog and relationships
costs £m £m domain £m
£m names
£m
Carrying amount at 1 January 2022 0.8 0.1 2.0 - 0.9 1.3 5.1
Acquisitions - - 22.8 5.4 1.8 16.5 46.5
Additions 1.4 - - - - - 1.4
Amortisation (0.1) (0.1) (2.7) (2.2) (0.6) (2.9) (8.6)
Carrying amount at 31 December 2022 2.1 - 22.1 3.2 2.1 14.9 44.4
8. Share capital
Movements in the Group's Ordinary shares in issue are summarised as follows:
Ordinary shares of 5p each 2023 2022
£m £m
Allotted, called up and fully paid - Ordinary shares of 5p each
1 January: 6,369,746 shares (2022: 6,318,415 shares) 0.3 0.3
Exercise of share options: 7,851 shares (2022: 3,876 shares) - -
Issue of shares as consideration for shareholding in subsidiary company: nil - -
shares (2022: 29,197 shares)
Issue of shares as settlement of acquisition costs: 2,278 shares (2022: 2,929 - -
shares)
Issue of shares as settlement of earn-out (see note 9): 227,863 shares (2022: - -
nil)
30 June: 6,607,738 shares (2022: 6,354,417 shares) 0.3 0.3
Allotments of Ordinary shares in the first six months of 2023 were made to
satisfy the exercise of 7,851 share options in aggregate on 14 occasions
during the period when the share price was within the range of 8000p to 9910p
(2022: exercise of 3,876 share options when the share price was within the
range of 7500p to 8360p).
9. Acquisitions
Acquisition of Geotek Holding Limited and Geotek Coring Limited
The £35m earn-out on the acquisition was achieved in full, and was settled in
June 2023. 50% (£17.5m) of the earn-out was satisfied in cash, partly
financed from the Group's existing banking facilities (see note 10) and 50%
was satisfied by the issue of 227,863 new Ordinary shares, at a price of 7690p
per share, which was the prevailing share price at the time of signing heads
of terms with Geotek's vendors. To the extent that the Judges share price at
the date of issue was higher than the prevailing share price at the time of
signing heads of terms with Geotek's vendors, a charge of £5.5m has been
recognised in the Interim statement of comprehensive income, within adjusting
items (see note 4) as no changes are permitted to the acquisition
consideration or goodwill to reflect the share price movement. The issue of
shares also increased share premium by £22.9m.
No changes have been made to the provisional fair values as presented in the
2022 Annual Report and Accounts.
Acquisition of Henniker Scientific Limited
On 3 April 2023, Judges Scientific acquired 100% of the entire issued share
capital of Henniker Scientific Limited ("Henniker"), a leading supplier of
instruments, systems & technologies for plasma and surface science
applications, supplying solutions for cleaning, surface activation to improve
adhesion, and functional nano-scale coatings.
The purchase price of Henniker consists of:
• The initial consideration, paid in cash at completion, of £1.85m.
• Contingent consideration up to a maximum of £0.46m to be
satisfied in cash.
• The contingent consideration becomes payable on achievement of a
minimum adjusted EBIT of £0.46m for the year to 31 March 2024 increasing pro
rata on a 4:1 ratio until it reaches a cap when an adjusted EBIT of £0.58m is
achieved.
• An additional payment for excess cash (surplus working capital) at
completion over and above the ongoing requirements of the business and will be
covered by the cash inherited at completion.
The summary provisional fair value of the cost of this acquisition includes
the components stated below:
Consideration £m
Initial cash consideration 1.8
Contingent consideration 0.5
2.3
Gross cash inherited on acquisition 1.3
Cash retained in the business (0.1)
Payment in respect of surplus working capital 1.2
Total consideration 3.5
Acquisition-related transaction costs charged to the Consolidated Statement of 0.1
Comprehensive Income
The payment in respect of surplus working capital was settled in July 2023.
Acquisition of Bossa Nova Vision
On 2 May 2023, Judges Scientific acquired 100% of the entire issued share
capital of Bossa Nova Vision LLC ("BNV"), a company specialising in imaging
measurement technology for the cosmetics industry based in Los Angeles,
California, USA.
The consideration for BNV was £1.3m in cash, which was paid in May 2023.
Acquisition-related transaction costs charged to the Consolidated Statement of
Comprehensive Income amounted to £0.1m.
The summary provisional fair values recognised for the assets and liabilities
acquired from the two acquisitions during the period are as follows:
Book value Accounting Fair value Fair value
£m policy adjustments £m
alignments £m
£m
Intangible assets - - 2.2 2.2
Property, plant and equipment - - - -
Right-of-use leased assets - - - -
Deferred tax assets - - - -
Current tax recoverable - - - -
Inventories 0.2 - - 0.2
Trade and other receivables 0.4 - - 0.4
Cash and cash equivalents 1.5 - - 1.5
Total assets 2.1 - 2.2 4.3
Deferred tax liabilities - - (0.5) (0.5)
Trade payables (0.1) - - (0.1)
Right-of-use lease liabilities - - - -
Current tax liability (0.1) - - (0.1)
Total liabilities (0.2) - (0.5) (0.7)
Net identifiable assets and liabilities 1.9 - 1.7 3.6
Total consideration 4.8
Goodwill recognised 1.2
The intangible assets recognised reflect recognition of acquired customer
relationships, the value of the acquired future committed order book, together
with the acquired technology. A significant amount of the value of the
acquired business is attributable to its workforce and sales knowhow and
contributes to the goodwill recognised upon acquisition. £0.4m of goodwill
has been allocated to the Materials Sciences segment in relation to the
acquisition of BNV and £0.8m of goodwill has been recognised within the
Vacuum segment in relation to Henniker.
The majority of the deferred tax liabilities recognised represent the tax
effect which will result from the amortisation of the intangible assets,
estimated using the tax rate substantively enacted at the balance sheet date.
10. Changes in net debt
Changes in net debt for the six months ended 30 June 2023 were as follows:
1 January Cashflow Non-cash 30 June
2023 £m items 2023
£m £m £m
Cash at bank and in hand 20.8 (6.3) 0.1 14.6
Bank debt (55.6) (7.4) - (63.0)
IFRS 16 right-of-use lease liabilities (4.3) 0.6 (3.0) (6.7)
Statutory net debt (including IFRS 16) (39.1) (13.1) (2.9) (55.1)
Less: IFRS 16 right-of-use lease liabilities 4.3 (0.6) 3.0 6.7
Statutory net debt (excluding IFRS 16) (34.8) (13.7) 0.1 (48.4)
Accrued acquisition consideration payable in cash (note 9) (17.2) 17.5 (1.9) (1.6)
Adjusted net debt (52.0) 3.8 (1.8) (50.0)
Non-cash items primarily represent foreign exchange differences on foreign
currency bank balances.
The movement in borrowings over the period was as follows:
2023 2022
£m £m
At 1 January 55.6 17.0
Net proceeds from drawdown of loans* 10.5 45.1
Repayment of loans (3.1) (2.9)
Interest payable 1.4 0.4
Interest paid (1.4) (0.4)
At 30 June 63.0 59.2
* On 23 May 2022, £15.2m of outstanding loans were repaid and £60.3m
was simultaneously reborrowed as the Group renewed its banking facilities.
2023 2022
£m £m
Current 6.2 6.7
Non-current 56.8 52.5
Total borrowings at 30 June 63.0 59.2
11. Defined benefit scheme
The Group's defined benefit pension scheme is a net asset of £1.5m, compared
to a net asset of £1.2m at 31 December 2022, and £0.0m at 30 June 2022. The
increase in the asset is primarily due to an increase of 0.4% in the discount
rate to 5.2% from 4.8% at 31 December 2022.
12. Dividends
During the period, the Company paid no dividends (period to 30 June 2022:
£nil).
The Company paid a final dividend of 59.0p per share totalling £3.9mi to
shareholders on 7 July 2023 relating to the financial year ended 31 December
2022.
The Company will pay an interim dividend for 2023 of 27p per share (2022:
interim dividend of 22.0p per share) on 3 November 2023 to shareholders on the
register on 6 October 2023. The shares will go ex-dividend on 5 October 2023.
13. Related party transaction
The acquisition of Geotek was originated by Charles Holroyd, a Non-Executive
Director of Judges. As with all Judges Scientific Non-Executive Directors, and
as disclosed in the Group's Annual Report and Accounts, he is incentivised to
originate acquisitions on behalf of the Group. Accordingly, at the time of his
appointment to the Board of Judges Scientific in 2018, he entered into an
introduction agreement entitling him to the payment of a fee amounting to 1%
of the enterprise value of any business that he introduced to the Group and
was subsequently acquired by the Group ("Introduction Fee"). Based on the
experience of the Group, the level of the Introduction Fee is materially lower
than the fees charged by independent brokers.
Mr Holroyd was not involved in any part of the decision-making process in
relation to the acquisition. The Introduction Fee in relation to Geotek was
payable at the same time and in the same proportion as the payments of the
initial consideration and the Earn-out to the sellers. Following settlement of
the Earn-out in June 2023, Mr Holroyd elected to receive one half of his fee
of £350,000 in new Ordinary shares, valued at £76.80 per Ordinary share, and
the other half in cash to enable him to pay the related taxation.
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