REG - Judges ScientificPLC - Unaudited Preliminary Results
19/03/2025 07:00
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RNS Number : 1932B Judges Scientific PLC 19 March 2025
19 March 2025
Judges Scientific plc
("Judges Scientific", "Judges", the "Company" or the "Group")
UNAUDITED* PRELIMINARY RESULTS
Difficult trading conditions, three acquisitions and 104.5p full year dividend
Judges Scientific plc (AIM:JDG), a group focused on acquiring and developing
companies in the scientific instrument sector, announces its final results
for the year ended 31 December 2024.
Key financials
Year ended 31 December 2024 2023 Change
Revenue £133.6m £136.1m (2)%
Adjusted** operating profit £27.9m £34.8m (20)%
Adjusted** basic earnings per share 283.4p 374.6p (24)%
Cash generated from operations £34.0m £31.3m 9%
Final dividend per share 74.8p 68.0p 10%
Statutory operating profit £16.9m £21.6m
Statutory basic earnings per share 156.7p 145.8p
As at: 31 Dec 2024 31 Dec 2023
Adjusted** net debt (excl. IFRS 16) £(51.7)m £(45.1)m
Cash balances £17.9m £13.7m
Statutory net debt £(55.7)m £(51.6)m
Other financial highlights
· Organic*** revenue decreased 8% compared with 2023.
· Organic*** order intake up 7% compared with 2023.
· Organic*** order book of 19.2 weeks (2023: 16.7 weeks); total
order book of 18.7 weeks.
· Cash conversion of 122% (2023: 90%).
· Proposed final dividend of 74.8p, totalling 104.5p for the year,
an increase of 10%; covered 2.7 times by Adjusted earnings.
Strategic Highlights
· Three acquisitions completed, Luciol, Rockwash and Magsputter
(Teer Coatings) for a consideration of £20.6m (including maximum earn-outs
and property) excluding excess cash.
· Extension and increase of our banking facility to £140m
including £50m accordion.
· Strengthened Executive team following the appointment of Dr Ian
Wilcock as Group Commercial Director in September 2024.
Outlook
· Commenced 2025 with a coring expedition and healthy opening order
book.
· YTD Organic order intake slightly ahead of 2024.
· Performance for 2025 currently expected to be in line with market
expectations.
Alex Hambro, retiring Chairman of Judges Scientific, commented:
"As previously announced, the Group had a difficult trading year in 2024,
driven by the delay of a Geotek coring expedition and general weakness in
order intake, particularly in China. M&A activity however was buoyant,
with three acquisitions completed, and it was pleasing to see our cash
conversion restored to normal levels.
2025 starts under better auspices with Geotek's coring expedition having
commenced.
Following 22 years with the Group, I have taken the decision to retire as
chair and will leave the board at the forthcoming AGM. It has been a privilege
to have supported the Company since its creation, championing both its
business model and unique culture. I am incredibly proud of what has been
achieved and I would like to take this opportunity to thank my fellow board
members, the management team, and of course our shareholders for their trust
and support over the years."
* The financial information for 2024 is presented unaudited. The 2024 annual
report and accounts are expected to be finalised no later than 2 April 2025
and no changes are expected to these results as part of the audit
finalisation. The delay is due to the greatly increased audit work now
required of the auditors. Future final results announcements are now expected
to be in early April to accommodate the additional work required.
** Adjusted earnings figures exclude adjusting items relating to amortisation
of acquired intangible assets, acquisition-related costs, share based payments
and hedging of risks materialising after the end of the year. Adjusted net
debt includes acquisition-related liabilities and excludes IFRS 16
liabilities.
*** Organic describes the performance of the Group including businesses
acquired prior to 1 January 2023.
Investor Presentation
As previously announced, Judges Scientific is hosting a webinar, available to
all existing and potential shareholders, covering the results for the year
ended 31 December 2024, on 19 March 2025 at 5.15pm UK time. Investors can
register for the webinar here:
https://www.engageinvestor.com/event/d02b08386248
(https://www.engageinvestor.com/event/d02b08386248)
For further information please contact:
Judges Scientific plc Shore Capital (Nominated Adviser & Joint Broker)
David Cicurel, CEO Stephane Auton
Brad Ormsby, CFO Harry Davies-Ball
Tel: +44 (0) 20 3829 6970 Tel: +44 (0) 20 7408 4090
Panmure Liberum (Joint Broker) Investec Bank plc (Joint Broker)
Edward Mansfield Virginia Bull
Nikhil Varghese Carlton Nelson
Joshua Borlant Tel: +44 (0) 20 7597 4000
Tel : +44 (0) 20 3100 2222
Alma Strategic (Financial Public Relations)
Sam Modlin
Rebecca Sanders-Hewett
Joe Pederzolli
Sarah Peters
Tel: +44 (0) 20 3405 0205
judges@almastrategic.com (mailto:judges@almastrategic.com)
Notes to editors:
Judges Scientific plc (AIM: JDG), is a group focused on acquiring and
developing companies in the scientific instrument sector. The Group consists
of 25 businesses acquired since 2005.
The acquired companies are primarily UK-based with products sold worldwide to
a diverse range of markets including: higher education institutions,
scientific research facilities, manufacturers and regulatory authorities.
The UK is a recognised centre of excellence for scientific instruments.
The Group has received five Queen's Awards for innovation and export.
The Group's companies predominantly operate in global niche markets, with long
term growth fundamentals and resilient margins.
Judges Scientific maintains a policy of selectively acquiring businesses that
generate sustainable profits and cash. Shareholder returns are created through
the reduction of debt, organic growth and dividends.
For further information, please visit www.judges.uk.com
(https://url.avanan.click/v2/___http:/www.judges.uk.com/___.YXAxZTpzaG9yZWNhcDphOm86NTVhZmY5MzJiMjQzNGE5MTEyODg4MDk0ZGRiZTFmYjM6NjowYzQ0OjMzOGQ2ZDY5ODBjNDBiY2RmOTE2NzIzY2M5MGE4ZTMzYWYyYzY3NzRhNDE3MmM1OWM4ZGVmYjNhNGJiOTVkZDI6cDpU)
Chair's statement
The year under review was a disappointing one as, for only the fourth time in
our nineteen-year history as a group of scientific instruments manufacturers,
we were unable to beat the records achieved the previous year. As previously
announced, the decline in financial performance was mainly caused by the
timing of our Geotek coring business's latest expedition but this was
accentuated by wider market headwinds affecting businesses across the Group to
varying degrees, including weaker order intake. While our trading performance
was disappointing, M&A activity was buoyant, with three acquisitions
completed, and cash conversion was restored to normal levels.
Generating attractive returns for our shareholders remains the core purpose of
the Group. As such, the Board is pleased to be recommending a final dividend
of 74.8p, resulting in a total dividend of 104.5p in respect of 2024, which is
a 10% increase on the prior year (2023: 95p), whilst retaining a healthy cover
of 2.7 times adjusted earnings per share to enable sustained progression in
line with the Group's dividend policy. Since the payment of the first dividend
in respect of 2006, regular dividends have grown at a compound annual rate of
22% and total dividend distributions have aggregated to 8.6 times the 2005
re-admission price of 100p.
Strategy
The Group's strategy remains unchanged and is based on creating attractive
returns through highly selective and carefully structured acquisitions,
underpinned by diversified, solid and growing earnings and cashflows arising
from existing businesses.
The Group's acquisition model is to acquire small/medium-sized niche
scientific instrument manufacturers, paying a disciplined multiple of earnings
and to finance any acquisition, ideally, through existing cash resources
and/or bank borrowings. We remain highly selective in seeking to acquire
businesses with a history of sustainable profits and cashflows, to obtain
immediate and enduring earnings enhancement for our shareholders. It is
paramount that acquisitions are completed only when the Directors are
satisfied that the target business has sound underlying strength with robust
and defensible margins and is acquired at a sensible multiple.
Post-acquisition, the Group provides a favourable environment for these
businesses to continue to prosper. Much effort is invested by the executive
team into helping their autonomous management teams to improve their quality
in terms of talent, leadership, innovation, geographic reach, the
speed/quality of production and financial control. Organic revenue growth
and operational improvements are an ever-growing component of long-term
shareholder returns.
As a result of the historic performance of the Group, it has been possible to
reduce debt promptly, thereby generating the financial resources necessary to
reinvest in further acquisitions and reward shareholders with a progressively
increasing dividend, subject always to our prudent approach to gearing and
earnings cover.
The underlying global market for scientific instrumentation has remained
robust in the long-term and the sector's secular growth drivers provide
comfort that the Group will continue to deliver durable returns for our
shareholders despite the potential for some short-term variability in
performance. These long-term market drivers are rooted in the global expansion
of higher education; the need for measurement tools to support the relentless
worldwide search for optimisation and the desire for discovery across industry
and science.
The nature of Judges' business model, combined with management's consistent
execution of its strategy, has generated excellent returns for investors.
Sustained growth has been delivered through our business model clearly seen
through the long-term compound annual growth rate ("CAGR") for revenue and
profit, both for the Group as whole and also on an Organic basis. Over the
past 18 years, the Group has produced a total revenue CAGR of 20% and related
EBIT growth of 26% and the Organic measure is 7% and 9% respectively. Our
disciplined approach to acquisitions allied with the aforementioned
performance, has resulted in maintaining Return on Total Invested Capital of
comfortably over 15%. In addition, the Group's strong ability to convert
profit into cash, has enabled us to finance acquisitions without significant
dilution and to maintain our policy of increasing the dividend by a minimum of
10% per year which has yielded a compound annual growth of the dividend of 22%
over the past 18 years.
Our team
In this difficult year, the hard work and competence of all our colleagues at
every level was critical to our resilience. I trust our shareholders will join
the Board in thanking them for their diligent efforts.
In September, our Board was delighted to strengthen the Executive team with
the appointment of Dr Ian Wilcock as Group Commercial Director. Ian has joined
the team in charge of supporting the growth and development of our businesses.
His experience acquired in a career including senior roles at Renishaw,
Danaher and Oxford Instruments will be invaluable to Judges and he is already
contributing energetically to the growth of our Group.
After 22 years with the Group, I will be leaving the Board at the forthcoming
AGM. It has been a privilege to support the Company since its creation,
championing both its business model and unique culture. I am incredibly proud
of what we have achieved together, growing from £2m on admission to a
business with the stature and reputation that Judges holds today. I would like
to take this opportunity to thank my fellow board members, the management
team, and of course our shareholders for their trust and support over the
years. I also wish Ralph Elman an enjoyable and successful tenure as he takes
on the role of Non-Executive Chair and have no doubt that he will continue to
provide the Group with great wisdom and guidance.
Alex Hambro
Retiring Chair
18 March 2025
Chief Executive's report
2024 Overview
2024 was a difficult year for trading. The year started with no clear
visibility on the timing of Geotek's next coring expedition and as the year
progressed, the absence of coring revenue in the year was confirmed. Coring is
an important component of the Geotek business, acquired in 2022, and
expeditions occur typically, but not necessarily, once a year. Eventually, a
contract for a coring expedition in Japan was signed in August 2024 and has
subsequently commenced in January 2025, too late to impact the 2024 results.
To accurately interpret our performance, it is important to recognise that
2023 included coring income but no coring order and 2024 included a coring
order but no income. We aim to provide guidance within this report on how this
impacts the figures and keeps comparisons meaningful.
Demand for the Group's products was generally subdued, particularly in China,
with orders being slow to materialise and, in some cases, the delivery of
existing orders being postponed. This led to reduced profitability although
our Group remains resilient in adverse periods. In addition, at the earnings
per share level, the Company suffered the full impact of the UK Corporation
Tax increase initiated in 2023.
Despite a disappointing trading performance, the Group has continued to
execute its longstanding strategy. 2024 was a good year for M&A and three
acquisitions were completed for a total of £20.6m (including potential
earn-outs). Moderate short-term fluctuations of trading performance do not
affect the conduct of our growth strategy but regular progress in our
performance is a strategic goal that we regretfully missed in 2024.
Whilst there were significant variances in performance across the businesses,
the overall performance of the Group showed the resilience of our portfolio
model. In addition to the aforementioned lack of a coring expedition, weak
order intake, particularly from China, resulted in more than half of our
businesses' profits reducing compared to 2023, however several of these were
nonetheless able to mitigate the full impact through the timely execution of
new business opportunities. Furthermore, more than a third of our organic
businesses grew to deliver record profits, benefitting from exposure to
positive long-term trends in environmental and industrial research, the
realisation of strategic initiatives to gain new accounts and win major
projects, and solid execution of their established growth plans. Our
commitment to invest across the Group for sustained long-term success
therefore remains undented, as we continue to focus on the four pillars of our
decentralised organic growth model: hiring and developing strong talent,
inspiring and supporting ambitious strategies, driving operational excellence,
and ensuring robust governance and financial control. 2024 also saw particular
emphasis around further embedding a culture of innovation, which we are
confident will enable us to sustain our operating margin and, in the long
term, result in a higher proportion of revenues being derived from patented
products and processes.
Change of Chair
As previously announced, Alex Hambro has retired from his role as Chair in
which he has excelled for 22 years, and he will leave the Board at the
forthcoming AGM. His contribution since the Company's creation has been
invaluable; he has been a great advocate of our business model and culture,
and his wisdom and enthusiasm will be missed. On behalf of the shareholders,
we thank him for his service to the Group.
We are also looking forward to Ralph Elman's contribution as our new Chair,
having assumed the role on 1 January 2025.
Order intake
Order intake is the main driver of our business. Organic intake was up 7%
year-on-year. Excluding the coring order (of which there wasn't one in 2023)
Organic intake was up 2%.
The strongest region was the Rest of the World (up 54% including the coring
order); Rest of Europe and USA/Canada were up 2% and the UK down 13% (after a
strong 2023). China/Hong Kong was down 34%. The best absolute performances by
country were achieved in Japan, Germany, Israel and Brazil, with nine
countries progressing more than £1m each. The weakest came from China /Hong
Kong (£6m down), the UK and Poland.
The most significant variance is China/Hong Kong. This region was two-thirds
down in H1, so H2 showed a return to stability. However due to the current
geopolitical market environment in this region, which is now only a tenth of
the Group's revenue, the medium-term outlook for industries like ours is
likely to converge with other developed markets rather than producing the
exceptional growth of the past years.
Revenues
Group revenues declined by 1.8% to £133.6m. Organic revenue decreased 7.6%
compared to 2023. Excluding coring, the Organic decline was 2.1%.
In Organic terms, the best performing region was the UK (+8%) followed by the
Rest of Europe (+5%) and the Rest of the World (+2%). USA/Canada was down 17%
(reflecting the fact that USA had a coring expedition in 2023 and some
residual revenue from 2022's expedition). The largest decline was China/ Hong
Kong down 33%. The best absolute performances by country were achieved in
Germany, Singapore, the Czech Republic and the UK, with six countries growing
by more than £1m each. The weakest came from the USA (due to coring and
general stagnation), from China/ Hong Kong (£5.9m down) and from Taiwan,
Sweden and Japan.
The Group continues to be a strong exporter and is well diversified, both via
its end markets and across the globe, with 25% of the Group's revenues earned
in North America, 27% in the Rest of Europe and 10% in China/Hong Kong
(which was 14% of the Group's revenues in 2023).
Revenues were mostly affected by the absence of coring and by weak order
intake from China/Hong Kong; those of our businesses with significant trading
with that zone generally suffered most unless they had a large order book at
the start of 2024.
The Organic order book at the year-end was inflated by the coring contract and
a few large orders that were deferred by our customers; it represented 19
weeks of future sales (17 weeks excluding coring) against 17 weeks in 2023.
Profits
Given the operational leverage in the Group, the most important driver of
Judges' operating margins is volume. The decrease in Organic revenue, as well
as the absence of a coring contract, reduced our Adjusted Organic EBIT margin
before central costs to 24% (2023: 29%). For the first time, Geotek was
included in the Organic perimeter.
Adjusted profit before tax, including the contribution of the two businesses
acquired in 2023 and the three purchased in 2024, amounted to £24.3m (2023:
£31.7m). Return on Total Invested Capital ("ROTIC") regressed to 16.5%
(2023: 22.7%). Statutory profit before tax was £13.0m (2023: £13.4m),
reflecting lower adjusting items.
The Group continued to invest in the improvement of its existing products and
the development of new products. Investment in research and development
amounted to £8.4m in 2024 (2023: £6.8m), equivalent to 6.3% of Group
revenue (2023: 5.0%).
2024 suffered the full-year increase in UK corporation tax rate from 19% to
25% (9 months in 2023). Adjusted earnings per share declined by 24% to 283.4p
from 374.6p, with adjusted fully diluted earnings per share similarly reducing
to 278.7p (2023: 368.5p). Statutory basic earnings per share were 156.7p
(2023: 145.8p) and statutory diluted earnings per share was 154.2p (2023:
143.5p).
Cashflow
Cash conversion was impacted in the recent past by caution and efforts to
avoid the lengthy delays to customers that the long-persisting supply chain
difficulties had caused. It was a management focus this year and improved to
122% (2023: 90%), with cash generated from operations
of £34.0m (2023: £31.3m). The second-half progress and the timing of the
Japanese coring payments contributed to the full-year improvement. Although
cash conversion was restored to pre Covid/Ukraine levels, the Group will
continue its focus on reverting to the low working capital utilisation
prevalent then.
Year-end cash balances increased to £17.9m from £13.7m at 31 December
2023. Adjusted net debt (excluding IFRS 16 lease liabilities but including
sums still due in respect of acquisitions) at the year-end amounted
to £51.7m (2023: £45.1m).
On 1 July 2024, the Group amended and extended its multi-bank facility, which
now amounts to £140m (including a £50m accordion), compared with £100m
(including a £20m accordion) previously. The facility was extended by two
years and now expires on 1 July 2028, adding increased capability to the
Group's deal-making capacity.
Corporate activity
On 1 February 2024, our subsidiary PE.fiberoptics acquired 100% of the shares
of Luciol Instruments SA ("Luciol") for CHF 2m, equal to four times
adjusted historic EBIT, plus a potential earn-out capped at CHF 0.5m plus
excess cash, of which CHF 0.3m was achieved. The Board believes that the
Luciol transaction will attenuate the vulnerability of PE.Fiberoptics to the
telecom industry's cyclicality.
On 28 June 2024, Geotek acquired 100% of the shares of Rockwash Geodata Ltd
("Rockwash") for an initial cash payment of £2.25m plus an earn-out capped at
£3.75m based on six times the higher of 2024 and 2025 adjusted EBIT, plus
excess cash. Rockwash is engaged in digitalisation of cuttings and chippings
and the Board believes that the acquisition will produce synergies with
Geotek's core digitalisation business.
Given the widening number of niche sectors we operate in, it naturally becomes
more likely that we will acquire businesses synergistic with existing Group
activities.
On 15 August 2024, the Group acquired 100% of the shares of Magsputter
Limited, the holding company of Teer Coatings Limited, a company specialising
in manufacturing coating instruments and providing coating services, for
£12.3m, equal to six times adjusted historic EBIT plus the valuation of their
property, excluding excess cash.
As a buy and build focused group, the acquisition of new businesses is a
fundamental feature of the Group's strategy. Executing this effectively
ensures that long-term value is generated for shareholders. Judges retains a
strict acquisition discipline and is highly selective in relation to both the
acquisition multiple and long-term quality of any potential addition to the
Group.
The industry in which we operate contains a multitude of small global niches,
as illustrated by the diverse nature of the new entrants to our Group.
The UK is recognised in this arena as a centre of excellence for product
innovation and manufacturing with world-leading businesses. Judges has built a
strong reputation over the past decade as an ethical, experienced and
well-financed buyer and a supportive and respectful home for businesses in our
sector whose owners wish to sell. We are trusted to act decisively and to
complete deals under the initial terms agreed. For the businesses we acquire,
the Group offers advice and support wherever necessary, stimulates intra-group
cooperation, participates in succession planning and implements robust
financial controls. We trust subsidiary management teams with the day-to-day
running of their businesses. This has been a successful operating model for
the Group, as management teams are given responsibility for their own
destinies, as well as an environment in which they can thrive.
Dividends
The Board is recommending a final dividend of 74.8p per share subject to
approval at the forthcoming Annual General Meeting on 22 May 2025, which will
make a total distribution of 104.5p per share in respect of 2024 (2023: 95p
per share). The total dividend per share is 2.7 times covered by adjusted
earnings per share (2023: 3.9 times). Our policy of increasing the dividend
by a minimum of 10% per year remains sustainable as long as there is ample
cover.
The proposed final dividend, if approved by shareholders, will be payable
on Friday 11 July 2025 to shareholders on the register on Friday 13 June
2025. The shares will go ex-dividend on Thursday 12 June 2025.
The Company's shareholders are reminded that a Dividend Reinvestment Plan
(DRIP) is in place to enable shareholders to automatically reinvest their
dividends into additional Judges shares should they so wish.
Trading environment
The long-term fundamentals supporting demand for scientific instruments and
related techniques and services remain positive. In addition to the global
expansion of higher education, market demand is driven by continuing strong
worldwide growth of scientific research across academic, corporate, and
industrial sectors, and the increasing number of industrial applications for
scientific techniques and technologies driven by the enduring pursuit for
process control and optimisation. Of course, control and optimisation require
measurement.
In parallel to these positive long-term trends, the markets across which
Judges and its peers operate are also characterised by a degree of
shorter-term variability, influenced mostly by government spending, research
funding, currency fluctuations and the business climate in major trading
blocs, particularly the USA and China.
In the medium-term, the competing goals in the various jurisdictions where the
Group operates, of stimulating recovery and of reducing ballooning government
deficits will likely increase uncertainty in worldwide research funding.
Whilst it now appears that inflation may finally be under control and interest
rates may gradually be reduced, government debt worldwide is an issue and may
cause the return of austerity.
As a large percentage of the Group's revenue is overseas, exchange rates have
a significant influence on the Group's business. Judges' manufacturing costs
are largely denominated in Sterling and most of the Group's revenue originates
from countries where the standard of value is the US Dollar (approximately one
half of total revenue) or the Euro (around one third of total revenue). The
currency movements since the Brexit referendum vote in 2016 have had a
positive influence on our margins and our competitiveness; exchange rates have
continued to remain favourable to our Group.
Outlook
Judges' business is very international and thrives on peace and free trade.
The macro environment remains uncertain, a trend that is not ideal for the
scientific community. The after-effect of budget deficits may still make
itself felt on research budgets in the coming years, while the elevated
tensions in the world may cause increased volatility. Additionally the threat
of trade wars and, in particular, recent disruptions to US research funding
make the near future for order intake less certain.
Exchange rates remain favourable to the Group's competitive position but from
April the Group will be impacted by the increase in National Insurance. This,
together with the 2023 corporation tax increase, means that the UK Government
will have increased its annual takings from the Group by approximately £3m.
Performance for 2025 is currently expected to be in line with market
expectations. However, the Group remains mindful of the potential impact of
the aforementioned macroeconomic uncertainty. 2025 has started with a coring
expedition and a healthy order book; whilst Organic order intake for the first
11 weeks of the year is slightly ahead of the 2024 comparative, the trailing
12 months Organic order intake (excluding coring) has grown by 8% since June
2024.
Notwithstanding the challenging environment, the resilience and adaptability
of the Group, combined with supportive secular drivers and a strengthened
executive team, provide confidence in the long-term delivery of durable
returns for shareholders.
David Cicurel
Chief Executive
18 March 2025
Chief Financial Officer's report
The Group's strategy is based on acquiring companies within the scientific
instruments sector and ensuring continued profitable performance and growth at
its existing subsidiary businesses.
Key Performance Indicators
The Group's financial Key Performance Indicators ("KPIs"), which are aligned
with the ability to deliver Organic growth, reduce acquisition debt and fund
dividend payments to shareholders, are Adjusted basic earnings per share,
Adjusted operating margins, return on total invested capital and cash
conversion. We have a further non-financial KPI of Organic order intake which
is the bellwether of future short-term financial performance. All five KPIs
are commented on during this report.
2024 2023
Adjusted basic earnings per share 283.4p 374.6p
Adjusted operating profit margin 20.9% 25.6%
Return on total invested capital 16.5% 22.7%
Cash conversion 122% 90%
Organic order intake +7% +7%
Alternative performance measures
The Group uses alternative performance measures ("APMs") in order to provide
readers of the accounts with a clearer picture of the Group's actual trading
performance and future prospects. Amongst these measures are: (1) Organic,
which describes the performance of the Group only including those businesses
acquired prior to the start of the comparative period, and for these accounts
the reference date is 1 January 2023; (2) Adjusted earnings figures, which
exclude adjusting items (as disclosed in note 3); (3) Adjusted net debt, which
(a) includes acquisition payables not yet settled at the Balance sheet date
and (b) excludes IFRS 16 lease liabilities; and (4) Return on total invested
capital and cash conversion which are defined within the relevant sections of
this report.
Reconciliation of Organic to Total
2024 2023 2024 2023
Revenue Revenue Op. Profit Op. Profit
£m £m £m £m
Organic 123.6 133.8 25.3 34.0
Acquisitions 10.0 2.3 2.6 0.8
Total 133.6 136.1 27.9 34.8
Revenue
Group revenues were £133.6m compared with £136.1m in 2023, a drop of 2%.
Organic revenues overall declined by 8% (2023: Organic growth of 15%) and by
2% if excluding the Geotek coring contract. The Organic revenue decline was
partially offset by the current year acquisitions of Teer Coatings, Luciol,
and Rockwash, together with full year contribution from the 2023 acquisitions
of Henniker and Bossa Nova Vision.
Across our two segments, Materials Sciences total revenues declined by £7.9m
to £64.6m (2023: £72.5m) and Vacuum revenues increased by £5.4m to £69.0m
(2023: £63.6m).
Profits
Adjusted operating profit was £27.9m compared with £34.8m in 2023, a
decrease of 20%. Performance was affected (1) by having no income from a
Geotek coring contract; (2) by weaker order intake throughout most of the year
which meant that the Group was more impacted by the negative effect of higher
operating leverage; and (3) by the Group having geared up for expected growth
rather than decline, so overheads had increased. Unsurprisingly these three
items negatively impacted Adjusted operating margins which reduced from 25.6%
to 20.9%.
Sterling, on average, slightly strengthened against both the Euro and US
Dollar in 2024, but overall exchange rates continue to be usefully positioned
for the Group, helping maintain our competitiveness as a high exporter.
Statutory operating profit reduced to £16.9m (2023: £21.6m), and statutory
profit before tax was £13.0m compared to £13.4m in 2023. This primarily
reflects the weaker trading performance but with lower adjusting items
(detailed further below).
Capitalisation of development costs
£1.4m (2023: £1.2m) of our total R&D expense was capitalised in relation
to development of new or significantly improved products. Amortisation on the
total amounts capitalised (inclusive of prior years) is £0.9m (2023: £0.4m)
reflecting an increase in the number of completed projects this year and
moving us closer to a situation where annual capitalised investment is aligned
with ongoing amortisation.
Adjusting items
£11.3m of pre-tax adjusting items were recorded in 2024 (2023: £18.3m). The
main constituent was £9.2m of amortisation of intangible assets recognised
upon acquisition (2023: £11.8m), primarily arising as a result of
acquisitions over the past 3 years.
The overall reduction of £7.0m was due to the aforementioned lower
amortisation together with a prior year £4.0m charge which related to the
difference between the market value of the new Judges shares issued for the
equity component of the Geotek earn-out compared with the market value as at
31 December 2022.
Finance costs
Net finance costs (excluding adjusting items) totalled £3.6m (2023: £3.1m).
The higher interest charge in 2024 is attributable to the higher level of
unhedged debt due to the current year's acquisitions.
Statutory net finance costs were £3.9m (2023: £8.2m). The reduction in
statutory net finance costs is primarily attributable to the aforementioned
£4.0m charge.
Taxation
The Group's tax charge arising from Adjusted profit before tax was £5.1m
(2023: £6.9m). The effective tax rate on Adjusted profits of 21.0% compares
with 21.8% in 2023. The reduction is attributable to a 1.5% increase
equivalent to the final quarter of the April 2023 increase in UK corporation
tax rates from 19% to 25% offset by a 1% benefit from the one-off recognition
of some previously unrecognised tax losses and a similar benefit from a first
time use of HMRC's Patent Box scheme ("Patent Box"). Patent Box offers a
significantly reduced rate compared with the existing UK headline rate and was
utilised by two of our companies who have existing patents.
Over the coming years, the Group's increasing focus on innovation is likely to
result in more of our businesses applying for, and being granted, patents.
This aligns with the Group's ESG commitments and the UN's SDG8.2 to achieve
higher levels of economic productivity through technological upgrading and
innovation. A higher proportion of the Group's revenues may therefore fall
within Patent Box, although it should be noted that patent applications take
time and may not be successful.
Earnings per share
Adjusted basic earnings per share declined by 24% to 283.4p from 374.6p and
Adjusted diluted earnings per share was a similar percentage lower at 278.7p
(2023: 368.5p), reflecting the weaker performance of the Group.
Statutory basic earnings per share was 156.7p (2023: 145.8p) and statutory
diluted earnings per share totalled 154.2p (2023: 143.5p). Statutory basic and
diluted earnings per share have increased as a result of the weaker trading
performance being more than offset by a reduction in the level of adjusting
items, as explained in the Adjusting items section of this report.
Order intake
Organic order intake for 2024 was 7% above the prior year figure, although
only 2% above 2023 if the Geotek coring contract order is excluded. Your Board
considers order intake and the resultant year-end order book as an important
bellwether to the Group's ability to achieve its expected results, and so the
underlying performance was disappointing in the context of the Group's
long-term compound organic revenue growth. The closing Organic order book at
31 December 2024 was 19.2 weeks of budgeted sales (31 December 2023: 16.7
weeks). Excluding Geotek's coring contract this would be 17.1 weeks. Total
order book was 18.7 weeks inclusive of the 2023 and 2024 acquisitions.
Return on Total Invested Capital
The Group closely monitors the return it derives on the capital invested in
its subsidiaries. The annual rate of Return on Total Invested Capital
("ROTIC") at 31 December 2024 was 16.5% (2023: 22.7%). The decline in ROTIC is
as a result of the overall disappointing business performance throughout 2024
and we have much work to do to restore this towards our medium-term target of
30%.
The annual rate of ROTIC is calculated by comparing attributable earnings
excluding central costs, adjusting items and before interest, tax, and
amortisation ("EBITA"), with the amounts invested in plant and equipment, net
current assets (excluding cash) and unamortised intangible assets and goodwill
(as recognised at the initial acquisition date) together with any acquisition
costs and any increases to acquisition consideration post-acquisition date.
Goodwill and parent company investment carrying values
Given 2024's subdued performance, the Group has rigorously assessed the levels
of headroom between the value in use calculations for each of the Group's cash
generating units (CGUs) and the related carrying value of goodwill and
acquired intangible assets at 31 December 2024. A standard value in use
calculation was performed for each CGU together with additional stress-testing
calculations which used reasonably possible but more conservative assumptions
for the key inputs. These assumptions included a combination of (1) reduced
2025 profitability, (2) reduced medium term growth, and (3) higher weighted
average cost of capital.
No scenario was identified which would have required any impairment to
goodwill and/or acquired intangible assets.
The carrying value of the parent company's investment in a subsidiary is
recorded on a different accounting basis to goodwill and acquired intangible
assets and is therefore a substantially higher asset value. In applying the
same process to the carrying value of the parent company investments, headroom
existed in all cases using the standard value in use calculation, however upon
applying the same more conservative stress-test scenarios, it identified
indicators of impairment in one investment, Geotek, due to its subdued
performance in 2024. A £8.3m impairment has therefore been recorded to reduce
the investment carrying value from £99m to £91m which remains higher than
the enterprise value for which the business was acquired. This has been
recorded in the parent company income statement and has no effect on the
results of the Group or its covenants.
Dividends
For the financial year ended 31 December 2024 the Company paid an interim
dividend of 29.7p per share in November 2024 (2023: 27.0p per share). Given
the weaker 2024 performance, the Board is recommending a 10% increase to the
dividend, such that the final dividend proposed is 74.8p per share and a total
dividend for the year of 104.5p per share (2023: 95.0p per share). Dividend
cover is approximately 2.7 times Adjusted basic earnings per share (2023: 3.9
times).
The Group's policy is to pay a progressively increasing dividend, with an
annual minimum increase of at least 10% (dependent on the Group's
performance), covered by earnings provided the Group retains sufficient cash
and borrowing resources with which to pursue its longstanding acquisition
strategy.
Headcount
The Group's full time equivalent ("FTE") employees for 2024 stood at 767
(2023: 682). This growth reflects recruitment in support of the Group's
long-term growth strategy, together with the acquisitions of Teer Coatings,
Luciol, and Rockwash.
Share capital and share options
The Group's issued share capital at 31 December 2024 totalled 6,642,484
Ordinary shares (2023: 6,615,717). Shares issued during 2024 were to satisfy
the exercise of share options by various members of staff during the year.
Share options issued during the year under the 2015 scheme totalled 47,131
(2023: 85,759), most of which were issued to the Executive Directors inclusive
of the appointment of Ian Wilcock. The total share options in issue at the
year-end under both the 2005 and 2015 schemes amounted to 271,587 (2023:
254,169).
Defined benefit pension scheme
The Group has one very small defined benefit pension scheme which was acquired
with Armfield in 2015. This scheme has been closed to new members from 2001
and was closed to new accrual in 2006. The latest triennial full actuarial
valuation was performed in March 2023 which resulted in a surplus for the
scheme with no further deficit reduction contributions being required.
Previous annual contributions were £0.4m.
The Group accounts for post-retirement benefits in accordance with IAS 19
Employment Benefits. The Consolidated balance sheet reflects the net surplus
or deficit on the pension scheme, based on the market value of the assets of
the scheme and the valuation of liabilities using year end AA corporate bond
yields.
Following the outcome of the triennial valuation, the Trustees of the scheme
took steps to secure the pension surplus by aligning the asset management
strategy with the expected future pension outflows to the members of the
scheme, and in March 2024 the Trustees entered into a buy-in policy with an
insurance company. This policy secured payment of all future pensions due to
the scheme's members. This action also formally commenced a process of
transferring the future responsibility of the Armfield defined benefit pension
scheme to the insurance company. Post-year end, in January 2025, the Trustees
of the Armfield pension scheme approved commencement of the winding up of the
scheme, a process that is expected to take 12-18 months before the defined
benefit pension scheme is officially no longer the responsibility of Armfield.
At 31 December 2024, the pension scheme was in a position of minimal surplus
(net of deferred tax) (31 December 2023: £1.1m net surplus). At the point of
entering into this process, the insurance company's own valuation of the
Armfield scheme showed a minimal surplus with assets and liabilities of £7m,
and therefore the surplus has in effect transferred to the insurance company
as their risk premium for accepting future responsibility for the scheme.
Cashflow and net debt
The Group has an enduring track record of converting profits into cash and
this year's trading delivered a strong cash performance with cash generated
from operations of £34.0m (2023: £31.3m). Our cash conversion rate, which
compares cash generated from operations with Adjusted operating profit, was
122% (2023: 90%), a significant improvement on the recent past and a return to
the historical 90%+ levels. It is to be noted that we received significant
advance payment for the Geotek coring contract taking place in early 2025,
however even excluding this cash conversion exceeded 100%.
This is a pleasing return to historic norms, but we haven't yet made
significant inroads into our total working capital levels which remain higher
than before COVID. Reducing overall working capital must therefore remain a
key area of focus over the short to medium term.
Total capital expenditure on property, plant, and equipment, amounted to
£5.0m (2023: £4.7m) reflecting continued investment in new property and / or
refurbishments for our trading businesses, although we expect property capex
to greatly diminish post 2025 when all major projects for the Group's existing
businesses should have completed.
The Group commenced 2024 with £45.1m of Adjusted net debt and finished the
year with £51.7m. Adjusted net debt includes acquisition-related cash
payables that had yet to be settled at the balance sheet date and excludes
IFRS 16 liabilities. The Group uses Adjusted net debt rather than statutory
net debt, as this figure includes cash liabilities arising from acquisitions.
The Group acquired Teer Coatings, Luciol, and Rockwash in 2024 for a combined
maximum consideration of £20.6m (including contingent consideration) together
with distributing £6.5m of dividends to shareholders, £5.5m towards tax
liabilities, and invested £5.0m in capital expenditure; an overall £37.6m
outflow with net debt only increasing by £6.6m.
This continues to evidence to shareholders the enduring capability of the
Group to generate cash and de-leverage despite the weaker financial
performance in 2024. Gearing, or leverage, the measure used in reporting for
our covenants, is calculated as the proportion of Adjusted net cash / debt
compared to Adjusted earnings before interest, tax, depreciation, and
amortisation ("EBITDA"). At 31 December 2024, it was 1.7 times (2023: 1.4
times). We remain committed to maintaining a prudent gearing position whilst
at the same time taking the opportunities of acquiring strong, sound
businesses at disciplined multiples.
During the first half of 2024 the Group's banking facilities were approaching
two years until maturity and the Group was given the opportunity to amend and
extend its existing multi-bank facilities ("Facility") with Lloyds Banking
Group plc, Santander, and Bank of Ireland (the "Banks"). On 2 July 2024,
this was executed, with changes to the Facility providing further acquisition
financing capacity, over an extended period, in support of the Group's buy and
build strategy. The amendments to the Facility are as follows:
· £40m extension of the aggregate to £140m consisting of
a £90m revolving credit facility ("RCF") alongside a £50m uncommitted
accordion facility, which can be drawn with the agreement of the Banks. This
replaces the previous £100m facility which consisted of a £25m term loan
("Term Loan"), a committed £55m RCF and a £20m uncommitted accordion.
· The Facility has been extended by two years giving a four-year
term running to 1 July 2028 ("Borrowing Term").
The banking covenants remain as:
· Gearing no greater than 3.0 times Adjusted EBITDA; and
· Interest Cover no less than 3.0 times.
Interest is charged at SONIA plus a margin (between 1.85% and 3.5% depending
on leverage). Subsequent to the amendment and extension of the Facility, and
completion of the acquisition of Teer Coatings, the Group entered into
additional interest rate swaps for the SONIA portion of the interest payable
for the duration of the Facility with swapped rates ranging between 3.2% in
2025 to 3.7% in 2027/2028.
This additional hedging has ensured that a large majority of the Group's
borrowings remain hedged, whilst still allowing the Group to repay a further
£10m of unhedged borrowings during 2025 via the Group's cash generation,
subject to any further acquisitions.
At the year end the RCF was £67.6m drawn (2023: £44.3m drawn), with £22.4m
available to drawdown for future acquisitions alongside the £50m accordion
should it be required to be converted from uncommitted to committed
borrowings. The Term Loan was settled as part of the amendment and extension
of the Facility (2023: £14.1m).
We continue to greatly appreciate the support of our three long-term
relationship lenders, Lloyds Banking Group plc, Santander UK plc, and Bank of
Ireland, who all understand and champion the execution of the Group's buy and
build strategy. However, during 2024 Bank of Ireland elected to commence a
withdrawal from the UK corporate lending market such that they will be
replaced as a member of the Banks in the short to medium term.
Year-end cash balances totalled £17.9m (2023: £13.7m). In previous years
when the Group had low leverage and interest rates were lower, there was
little effect on the Group's performance in maintaining optimised levels of
cash compared with paying down debt. However, with higher net debt, and in a
higher interest rate environment, there is a greater benefit for shareholders
in carrying a lower level of cash to allow unhedged debt to be repaid as and
when cashflows allow. Whilst rates remain higher, we continue to encourage our
businesses to optimise their working capital in order to generate higher cash
conversion, such that we can repay unhedged debt promptly, subject to our
usual caveat of funding future acquisitions.
Overall, whilst the trading performance of the Group was disappointing, cash
conversion has returned to historic levels, such that we have been able to
welcome three further acquisitions into the Group whilst maintaining
conservative leverage. We enter 2025 with reasonable expectations of much
improved financial performance and, despite the wider economic and
geopolitical uncertainties, we remain well positioned to continue the Group's
strategy of delivering growth in earnings via selective, reasonably priced
acquisitions of strong niche businesses in the scientific instruments sector,
coupled with the long-term organic growth of its existing group of businesses.
Brad Ormsby
Chief Financial Officer
18 March 2025
Consolidated statement of comprehensive income
For the year ended 31 December 2024
Note Adjusted Adjusting 2024 Adjusted Adjusting 2023
£m items Total £m items Total
£m £m £m £m
Revenue 2 133.6 - 133.6 136.1 - 136.1
Operating costs 2,3 (105.7) (11.2) (116.9) (101.3) (13.2) (114.5)
Operating profit/(loss) 27.9 (11.2) 16.7 34.8 (13.2) 21.6
Interest income 0.3 0.1 0.4 0.3 0.1 0.4
Interest expense (3.9) (0.2) (4.1) (3.4) (5.2) (8.6)
Profit/(loss) before tax 24.3 (11.3) 13.0 31.7 (18.3) 13.4
Taxation (charge)/credit (5.1) 2.9 (2.2) (6.9) 3.4 (3.5)
Profit/(loss) for the year 19.2 (8.4) 10.8 24.8 (14.9) 9.9
Attributable to:
Owners of the parent 18.8 (8.4) 10.4 24.4 (14.9) 9.5
Non-controlling interests 0.4 - 0.4 0.4 - 0.4
Profit/(loss) for the year 19.2 (8.4) 10.8 24.8 (14.9) 9.9
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Retirement benefits actuarial (loss)/gain (1.4) 0.1
Deferred tax on retirement benefits actuarial (loss)/gain 0.4 -
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign subsidiaries (0.5) (0.1)
Other comprehensive income for the year, net of tax (1.5) -
Total comprehensive income for the year 9.3 9.9
Attributable to:
Owners of the parent 9.0 9.5
Non-controlling interests 0.3 0.4
2024 2024 2023 2023
Pence Pence Pence Pence
Earnings per share - adjusted
Basic 1 283.4 374.6
Diluted 1 278.7 368.5
Earnings per share - total
Basic 1 156.7 145.8
Diluted 1 154.2 143.5
Consolidated balance sheet
As at 31 December 2024
Note 2024 2023
£m £m
ASSETS
Non-current assets
Goodwill 4 60.4 54.8
Other intangible assets 5 36.7 35.6
Property, plant and equipment 26.2 19.8
Right-of-use leased assets 5.6 6.6
Retirement benefit surplus - 1.4
128.9 118.2
Current assets
Inventories 28.1 26.5
Trade and other receivables 30.2 25.1
Cash and cash equivalents 17.9 13.7
76.2 65.3
Total assets 205.1 183.5
LIABILITIES
Current liabilities
Trade and other payables (29.9) (24.6)
Provisions (1.5) -
Payables relating to acquisitions - (0.5)
Borrowings 6 - (6.2)
Right-of-use lease liabilities (1.2) (1.2)
Current tax liabilities (0.9) (2.5)
(33.5) (35.0)
Non-current liabilities
Borrowings 6 (67.6) (52.2)
Payables relating to acquisitions (2.0) -
Right-of-use lease liabilities (4.8) (5.7)
Deferred tax liabilities (10.0) (8.0)
(84.4) (65.9)
Total liabilities (117.9) (100.9)
Net assets 87.2 82.6
EQUITY
Share capital 0.3 0.3
Share premium account 19.2 17.7
Other reserves 26.5 26.9
Retained earnings 40.9 37.5
Equity attributable to owners of the parent company 86.9 82.4
Non-controlling interests 0.3 0.2
Total equity 87.2 82.6
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share Share Other Retained Total Non-controlling Total equity
capital premium reserves earnings attributable interests £m
£m £m £m £m to owners of £m
the parent
£m
At 1 January 2024 0.3 17.7 26.9 37.5 82.4 0.2 82.6
Dividends - - - (6.5) (6.5) (0.2) (6.7)
Issue of share capital - 1.5 - - 1.5 - 1.5
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)
Deferred tax on share-based payments - - - (0.6) (0.6) - (0.6)
Share-based payments - - - 1.3 1.3 - 1.3
Transactions with owners - 1.5 - (6.0) (4.5) (0.2) (4.7)
Profit for the year - - - 10.4 10.4 0.4 10.8
Net retirement benefit actuarial loss - - - (1.0) (1.0) - (1.0)
Foreign exchange differences - - (0.4) - (0.4) (0.1) (0.5)
Total comprehensive income for the year - - (0.4) 9.4 9.0 0.3 9.3
At 31 December 2024 0.3 19.2 26.5 40.9 86.9 0.3 87.2
At 1 January 2023 0.3 17.2 4.1 32.7 54.3 0.2 54.5
Dividends - - - (5.7) (5.7) (0.4) (6.1)
Issue of share capital - 0.5 22.9 - 23.4 - 23.4
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)
Deferred tax on share-based payments - - - (0.1) (0.1) - (0.1)
Share-based payments - - - 1.2 1.2 - 1.2
Transactions with owners - 0.5 22.9 (4.8) 18.6 (0.4) 18.2
Profit for the year - - - 9.5 9.5 0.4 9.9
Net retirement benefit actuarial gain - - - 0.1 0.1 - 0.1
Foreign exchange differences - - (0.1) - (0.1) - (0.1)
Total comprehensive income for the year - - (0.1) 9.6 9.5 0.4 9.9
At 31 December 2023 0.3 17.7 26.9 37.5 82.4 0.2 82.6
Consolidated cashflow statement
For the year ended 31 December 2024
2024 2023
£m £m
Cashflows from operating activities
Profit after tax 10.8 9.9
Adjustments for:
Financial instruments measured at fair value 0.2 1.2
Share-based payments 1.3 1.2
Depreciation of property, plant and equipment 2.4 1.9
Depreciation of right-of-use leased assets 1.3 1.3
Amortisation of acquired intangible assets 9.2 11.8
Amortisation of internally generated intangible assets 0.9 0.4
Interest income (0.3) (0.3)
Interest expense 3.5 3.0
Interest payable on right-of-use lease liabilities 0.4 0.4
Fair value movement on contingent consideration 0.1 4.0
Retirement benefit obligation net finance income (0.1) (0.1)
Contributions to defined benefit plans - -
Tax expense recognised in the Consolidated Statement of Comprehensive Income 2.2 3.5
Decrease/(increase) in inventories 1.8 (5.1)
Increase in trade and other receivables (2.8) (0.3)
Increase/(decrease) in trade and other payables and provisions 3.1 (1.5)
Cash generated from operations 34.0 31.3
Tax paid (5.5) (4.8)
Net cash from operating activities 28.5 26.5
Cashflows from investing activities
Paid on acquisition of subsidiaries (16.4) (3.1)
Payment in respect of surplus working capital (3.9) (1.2)
Paid in respect of earn out (0.7) (17.5)
Gross cash inherited on acquisition 4.5 1.5
Acquisition of subsidiaries, net of cash acquired (16.5) (20.3)
Purchase of property, plant and equipment (5.0) (4.7)
Capitalised development costs (1.4) (1.2)
Proceeds on disposal of property, plant and equipment - -
Interest received 0.3 0.3
Net cash used in investing activities (22.6) (25.9)
Cashflows from financing activities
Proceeds from issue of share capital 1.5 0.5
Purchase of own shares for Company reward scheme (0.1) (0.1)
Tax on shares awarded under Company scheme (0.1) (0.1)
Finance costs paid (3.5) (3.0)
Proceeds from bank loans* 17.3 12.0
Repayments of borrowings* (8.1) (9.2)
Repayments of right-of-use lease liabilities (1.7) (1.6)
Equity dividends paid (6.5) (5.7)
Dividends paid to non-controlling interest (0.2) (0.4)
Net cash used in financing activities (1.4) (7.6)
Net change in cash and cash equivalents 4.5 (7.0)
Cash and cash equivalents at the start of the year 13.7 20.8
Exchange movements (0.3) (0.1)
Cash and cash equivalents at the end of the year 17.9 13.7
* On 1 July 2024, £10.9m of outstanding loans were repaid and £10.9m was
simultaneously reborrowed as the Group amended and extended its banking
facilities (see note 6).
Notes to the Final Results
For the year ended 31 December 2024
1. Earnings per share
Note 2024 2023
£m £m
Profit attributable to owners of the parent
Adjusted profit 18.8 24.4
Adjusting items 3 (8.4) (14.9)
Profit for the year 10.4 9.5
Pence Pence
Earnings per share - adjusted
Basic 283.4 374.6
Diluted 278.7 368.5
Earnings per share - total
Basic 156.7 145.8
Diluted 154.2 143.5
Number Number
Issued Ordinary shares at the start of the year 6,615,717 6,369,746
Movement in Ordinary shares during the year 26,767 245,971
Issued Ordinary shares at the end of the year 6,642,484 6,615,717
Weighted average number of shares in issue 6,634,863 6,514,028
Dilutive effect of share options 111,655 106,816
Weighted average Ordinary shares in issue on a diluted basis 6,746,518 6,620,844
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 year.
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.
2. Segmental analysis
For the year ended 31 December 2024 Note Materials Vacuum Head office Total
Sciences £m £m £m
£m
Revenue 64.6 69.0 - 133.6
Adjusted operating costs (51.6) (50.5) (3.6) (105.7)
Adjusted operating profit 13.0 18.5 (3.6) 27.9
Adjusting items 3 (11.2)
Operating profit 16.7
Net interest expense (3.7)
Profit before tax 13.0
Income tax charge (2.2)
Profit for the year 10.8
For the year ended 31 December 2023 Note Materials Vacuum Head office Total
Sciences £m £m £m
£m
Revenue 72.5 63.6 - 136.1
Operating costs (51.9) (45.0) (4.4) (101.3)
Adjusted operating profit 20.6 18.6 (4.4) 34.8
Adjusting items 3 (13.2)
Operating profit 21.6
Net interest expense (8.2)
Profit before tax 13.4
Income tax charge (3.5)
Profit for the year 9.9
Head office items relate to the Group's head office costs.
Segment assets and liabilities
At 31 December 2024 Materials Vacuum Head office Total
Sciences £m £m £m
£m
Assets 61.0 49.9 94.2 205.1
Liabilities (32.1) (15.5) (70.3) (117.9)
Net assets 28.9 34.4 23.9 87.2
Capital expenditure 1.9 3.1 - 5.0
Depreciation of property, plant and equipment 1.3 1.1 - 2.4
Depreciation of right-of-use leased assets 0.9 0.3 0.1 1.3
Amortisation of acquired intangible assets 8.0 1.2 - 9.2
Amortisation of internally generated intangible assets 0.3 0.6 - 0.9
At 31 December 2023 Materials Vacuum Head office Total
Sciences £m £m £m
£m
Assets 52.8 41.6 89.1 183.5
Liabilities (24.1) (13.1) (63.7) (100.9)
Net assets 28.7 28.5 25.4 82.6
Capital expenditure 2.2 2.5 - 4.7
Depreciation of property, plant and equipment 1.1 0.7 0.1 1.9
Depreciation of right-of-use leased assets 0.9 0.4 - 1.3
Amortisation of acquired intangible assets 11.1 0.7 - 11.8
Amortisation of internally generated intangible assets 0.1 0.3 - 0.4
Head office items include borrowings, intangible assets and goodwill arising
on acquisition, deferred tax, defined benefit obligations and parent company
net assets.
2. Segmental analysis (continued)
Analysis of revenue and non-current assets by geographical areas
Revenue Non-current assets
Geographic analysis Year to Year to Year to Year to
31 December 31 December 31 December 31 December
2024 2023 2024 2023
£m £m £m £m
UK (domicile) 17.8 14.7 128.2 117.3
Rest of Europe 36.5 33.7 - -
North America 32.9 37.9 0.6 0.8
China/Hong Kong 13.6 18.4 - -
Rest of the World 32.8 31.4 0.1 0.1
133.6 136.1 128.9 118.2
Segmental revenue is presented on the basis of the destination of the goods
where known, otherwise the geographical location of customers is utilised.
Analysis of revenue by performance obligation
2024 2023
£m £m
Sale of goods, recognised at a point in time 117.2 117.0
Sale of services, recognised at a point in time 4.8 4.3
Sale of services, recognised over time 11.6 14.8
133.6 136.1
No customer makes up more than 10% of the Group's revenues.
3. Adjusting items
2024 2023
£m £m
Amortisation of acquired intangible assets 9.2 11.8
Financial instruments measured at fair value: hedging contracts 0.1 -
Share-based payments 1.3 1.2
Retirement benefits obligation costs 0.3 -
Employment taxes arising from share-based payments - -
Acquisition costs 0.3 0.2
Total adjusting items in operating profit 11.2 13.2
Fair value movement on contingent consideration 0.1 4.0
Retirement benefits obligation net interest income (0.1) (0.1)
Financial instruments measured at fair value: interest rate swaps 0.1 1.2
Total adjusting items 11.3 18.3
Taxation (2.9) (3.4)
Total adjusting items net of tax 8.4 14.9
Attributable to:
Owners of the parent 8.4 14.9
Non-controlling interest - -
8.4 14.9
4. Goodwill
2024 2023
£m £m
Cost
1 January 54.8 53.6
Acquisitions (note 7) 5.6 1.2
31 December 60.4 54.8
£47.5m of goodwill resides in the Materials Sciences segment (including
£34.9m relating to Geotek) (2023: £45.7m) and £12.9m resides in the Vacuum
segment (2023: £9.1m). There are 9 CGUs within the Materials Sciences segment
and 11 within the Vacuum segment. Goodwill is tested annually for impairment
by reference to the value in use of each of the relevant cash-generating units
it is allocated to and aggregated for disclosure purposes into the respective
operating segments. The value in use is calculated on the basis of projected
cashflows for five years together with the terminal value at the end of the
five years, which is computed by reference to projected year six cashflows and
discounted. There was no requirement for any impairment provision at 31
December 2024 (2023: £nil).
The key assumptions in determining the value in use are:
Revenue and margins: These are derived from the detailed 2025 budgets which
are built up with reference to markets and product categories with projected
6% medium-term growth factors (2023: 6%). Projected margins reflect historical
performance and the expected impact of efforts to improve operational
efficiency.
Discount rate: Cashflows are discounted using a pre-tax discount rate of
15.5%-16.3% (2023: 16.5%-17.0%) per annum, calculated by reference to year-end
data on equity values and interest, dividend and tax rates.
Long-term growth rates: 2.5% long-term growth rate takes into account both UK
and overseas industry growth expectations (2023: 2.1%).
The long-term growth rate and discount rate are consistent for all
cash-generating units on the basis that the businesses operate in similar
markets and are exposed to similar risks.
The Directors have considered the sensitivity of the key assumptions,
including the discount rate and long-term growth rates, and have concluded
that any possible changes that may be reasonably contemplated in these key
assumptions would not result in the value in use falling below the carrying
value of goodwill, given the amount of headroom available, and the
conservative nature of the assumptions.
5. Other intangible assets
Internally Acquired Acquired Acquired Acquired Acquired Total
generated distribution technology sales order brand and customer £m
development agreements £m backlog domain relationships
costs £m £m names £m
£m £m
Cost
1 January 2023 2.2 3.8 35.4 10.8 15.4 27.8 95.4
Acquisitions (note 7) - - 1.3 0.2 - 0.7 2.2
Additions 1.2 - - - - - 1.2
31 December 2023 3.4 3.8 36.7 11.0 15.4 28.5 98.8
Acquisitions (note 7) - - 6.8 0.3 1.1 1.6 9.8
Additions 1.4 - - - - - 1.4
31 December 2024 4.8 3.8 43.5 11.3 16.5 30.1 110.0
Amortisation
1 January 2023 0.1 3.8 13.3 7.6 13.3 12.9 51.0
Charge for the year 0.4 - 4.0 3.4 0.6 3.8 12.2
31 December 2023 0.5 3.8 17.3 11.0 13.9 16.7 63.2
Charge for the year 0.9 - 4.5 0.2 0.7 3.8 10.1
31 December 2024 1.4 3.8 21.8 11.2 14.6 20.5 73.3
Net book value 31 December 2024 3.4 - 21.7 0.1 1.9 9.6 36.7
Net book value 31 December 2023 2.9 - 19.4 - 1.5 11.8 35.6
Net book value 31 December 2022 2.1 - 22.1 3.2 2.1 14.9 44.4
The key assumptions in valuing the acquired intangible assets of technology
and customer relationships at the date of acquisition are:
Discount rate: Cashflows are discounted using a pre-tax discount rate ranging
between 16% to 20% per annum (2023: 16% to 17%).
Long-term growth rates: 2-2.9% long-term revenue growth rate takes into
account both UK and overseas markets and 3% cost growth to maintain margin
which broadly aligns with long-term inflation.
Included in the above is Geotek customer relationships and acquired technology
with net book value of £7.9m and £14.3m respectively (2023: £11.2m and
£17.5m) and £4.3m for acquired technology in Teer Coatings.
6. Borrowings
2024 2023
£m £m
Current
Bank loans - 6.2
- 6.2
Non-current
Bank loans 67.6 52.2
67.6 52.2
The movement in borrowings over the year was as follows:
2024 2023
£m £m
At 1 January 58.4 55.6
Proceeds from drawdown of loans 17.3 12.0
Repayment of loans (8.1) (9.2)
Interest payable - non-cash 3.5 3.0
Interest paid - cash (3.5) (3.0)
At 31 December 67.6 58.4
6. Borrowings (continued)
Amendment and Extension to Facilities
On 1 July 2024, the Group entered into an amendment and extension of the
Group's existing multi-bank facility ("Facility") with Lloyds Banking Group
plc, Santander and Bank of Ireland (the "Banks"). The changes to the Group's
Facility are as follows:
• £40m extension of the aggregate to £140m consisting of a £90m
revolving credit facility ("RCF") alongside a £50m uncommitted accordion
facility, which can be drawn with the agreement of the Banks. This replaces
the previous £100m facility which consisted of a £25m term loan ("Term
Loan"), a committed £55m RCF and a £20m uncommitted accordion.
• The Facility has been extended by two years giving a four year
term running to 1 July 2028 ("Borrowing Term").
The RCF is repayable in a bullet at the end of the Borrowing Term, with an
option to prepay at any point during the term. Interest rates remain as Sonia
plus a margin dependent on the Group's leverage.
The banking covenants remain as:
• Gearing no greater than 3 times Adjusted EBITDA*; and
• Interest Cover no less than 3 times.
*Adjusted EBITDA (earnings before interest, tax, depreciation and
amortisation) excludes adjusting items relating to amortisation of acquired
intangible assets, acquisition-related costs, share based payments and hedging
of risks materialising after the end of the year.
The Banks have a fixed and floating charge over the Group's UK assets and the
Group was in compliance with the above covenants throughout the year.
During 2024, loans were drawn down in order to finance the 2024 acquisitions
(2023: £12.0m drawn down). As at 31 December 2024, the Group's outstanding
loans were as follows:
• the term loan was £nil (2023: £14.1m);
• the committed RCF was £67.6m drawn (2023: £44.3m); and
• the accordion remained uncommitted and undrawn.
Borrowings mature as follows:
31 December 2024 £m
Repayable in less than six months -
Repayable in months seven to twelve -
Current portion of long-term borrowings -
Repayable in years one to five 81.0
Total borrowings 81.0
Less: interest included above (13.4)
Less: cash and cash equivalents (17.9)
Add: right-of-use lease liabilities 6.0
Statutory net debt 55.7
Less: right-of-use lease liabilities (6.0)
Add: accrued acquisition consideration payable 2.0
Adjusted net debt 51.7
6. Borrowings (continued)
31 December 2023 Bank loans
£m
Repayable in less than six months 4.6
Repayable in months seven to twelve 4.6
Current portion of long-term borrowings 9.2
Repayable in years one to five 55.9
Total borrowings 65.1
Less: interest included above (6.7)
Less: cash and cash equivalents (13.7)
Add: right-of-use lease liabilities 6.9
Statutory net debt 51.6
Less: right-of-use lease liabilities (6.9)
Add: accrued acquisition consideration payable 0.4
Adjusted net debt 45.1
7. Acquisitions
Acquisition of Henniker Scientific Limited
The maximum earn-out of £0.5m on this acquisition was achieved and was
settled in July 2024.
Acquisition of Luciol Instruments SA
On 1 February 2024, Judges Scientific via PE.fiberoptics Limited acquired 100%
of the entire issued capital of Luciol Instruments SA ("Luciol") a company
manufacturing and selling instruments to measure optic fibre properties based
in Mies, Vd, Switzerland.
The purchase price of Luciol consisted of:
• The initial consideration, paid in cash at completion, of CHF
2.0m;
• Contingent consideration up to a maximum of CHF 0.5m to be
satisfied in cash;
• The contingent consideration becomes payable on achievement of
an average minimum adjusted EBIT of CHF 0.5m for the four years to 31 December
2023 (or 2024 if higher) increasing pro rata on a 4:1 ratio until it reaches a
cap when an adjusted EBIT of CHF 0.625m is achieved; and
• 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 (in
Sterling) includes the components stated below:
Consideration £m
Initial cash consideration 1.8
Contingent consideration 0.5
2.3
Gross cash inherited on acquisition 0.8
Cash retained in the business (0.1)
Payment in respect of surplus working capital 0.7
Total consideration 3.0
Acquisition-related transaction costs charged to operating costs 0.1
On 27 March 2024 Judges paid CHF 0.2m in relation to the Luciol earn out, and
in March 2025 a final nominal amount was settled.
7. Acquisitions (continued)
The summary provisional fair values recognised for the assets and liabilities
acquired with Luciol are as follows:
Book value Accounting Fair value Fair value
£m policy adjustments £m
alignments £m
£m
Intangible assets - - 1.1 1.1
Inventories 0.4 0.1 (0.1) 0.4
Trade and other receivables 0.3 - - 0.3
Cash and cash equivalents 0.8 - - 0.8
Total assets 1.5 0.1 1.0 2.6
Trade and other payables (0.3) - - (0.3)
Deferred tax liabilities - - (0.2) (0.2)
Total liabilities (0.3) - (0.2) (0.5)
Net identifiable assets and liabilities 1.2 0.1 0.8 2.1
Total consideration 3.0
Goodwill recognised 0.9
The intangible assets recognised reflect recognition of acquired customer
relationships, the value of the brand and 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. £0.9m of goodwill has been allocated to the Materials
Sciences segment.
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.
Acquisition of Rockwash Geodata Limited
On 27 June 2024, Judges Scientific via Geotek Limited acquired 100% of the
entire issued capital of Rockwash Geodata Ltd ("Rockwash") a company
specialising in rock cuttings and chippings digitalisation.
The purchase price of Rockwash consisted of:
• The initial consideration, paid in cash at completion, of £2.3m;
• Contingent consideration up to a maximum of £3.7m to be satisfied
in cash;
• The contingent consideration becomes payable on achievement of an
average minimum adjusted EBIT of £0.4m for the year ended 31 December 2024
(or 2025 if higher) increasing pro rata on a 6:1 ratio until it reaches a cap
when an adjusted EBIT of £1.0m is achieved; and
• 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 2.3
Contingent consideration 1.8
4.1
Gross cash inherited on acquisition 0.7
Cash retained in the business (0.3)
Payment in respect of surplus working capital 0.4
Total consideration 4.5
Acquisition-related transaction costs charged to operating costs 0.1
7. Acquisitions (continued)
The Group expects the majority of the earnout to be paid in relation to
Rockwash's 2025 results. The contingent consideration has been discounted in
arriving at the amount in the table above as the earnout is expected to be
settled in 2026. The contingent consideration at 31 December 2024 has
increased by £0.2m to £2.0m as a result of the unwinding of the discount. A
£0.1m difference to Rockwash's 2025 EBIT performance would change the earnout
payable by £0.6m, of which after discounting, would have a £0.4m impact on
the earnout payable at the acquisition date and £0.5m at 31 December 2024.
The summary provisional fair values recognised for the assets and liabilities
acquired with Rockwash are as follows:
Book value Accounting Fair value Fair value
£m policy adjustments £m
alignments £m
£m
Intangible assets - - 2.6 2.6
Property, plant and equipment 0.5 - - 0.5
Right-of-use leased assets - 0.1 - 0.1
Inventories - - - -
Trade and other receivables 0.9 - - 0.9
Cash and cash equivalents 0.7 - - 0.7
Total assets 2.1 0.1 2.6 4.8
Trade and other payables (0.3) - - (0.3)
Deferred tax liabilities (0.1) - (0.6) (0.7)
Right-of-use lease liabilities - (0.1) - (0.1)
Current tax liability (0.1) - - (0.1)
Total liabilities (0.5) (0.1) (0.6) (1.2)
Net identifiable assets and liabilities 1.6 - 2.0 3.6
Total consideration 4.5
Goodwill recognised 0.9
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. £0.9m of goodwill
has been allocated to the Materials Sciences segment.
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.
Acquisition of Magsputter Limited
On 15 August 2024, Judges Scientific acquired 100% of the entire issued share
capital of Magsputter Limited, the holding company of Teer Coatings Limited
("Teer Coatings"), a company specialising in manufacturing coating instruments
and providing coatings services.
The purchase price of Teer Coatings consisted of:
• The initial consideration, paid in cash at completion, of £12.3m
(including £1.9m for the purchase of premises);
• 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.
7. Acquisitions (continued)
The summary of the cost of this acquisition includes the components stated
below:
Consideration £m
Initial cash consideration 12.3
Gross cash inherited on acquisition 3.0
Cash retained in the business (0.2)
Payment in respect of surplus working capital 2.8
Total consideration 15.1
Acquisition-related transaction costs charged to operating costs 0.2
The summary provisional fair values recognised for the assets and liabilities
acquired with Teer Coatings are as follows:
Book value Accounting Fair value Fair value
£m policy adjustments £m
alignments £m
£m
Intangible assets - - 6.1 6.1
Property, plant and equipment 2.5 (0.4) 1.2 3.3
Inventories 1.2 1.9 (0.1) 3.0
Trade and other receivables 2.7 (1.3) - 1.4
Cash and cash equivalents 3.0 - - 3.0
Total assets 9.4 0.2 7.2 16.8
Trade and other payables (1.4) (2.0) - (3.4)
Deferred tax liabilities (0.3) 0.5 (1.8) (1.6)
Current tax liability (0.5) - - (0.5)
Total liabilities (2.2) (1.5) (1.8) (5.5)
Net identifiable assets and liabilities 7.2 (1.3) 5.4 11.3
Total consideration 15.1
Goodwill recognised 3.8
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. £3.8m of goodwill
has been allocated to the Materials Sciences segment.
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.
These acquisitions resulted in revenue of £6.8m and a profit after tax
(before adjusting items) attributable to owners of the parent company of
£1.6m in the period post-acquisition. After amortisation of intangible
assets, the contribution to owners of the parent company's results amounted to
a profit of £0.8m after tax.
If these acquisitions had completed on 1 January 2024, revenue attributable to
these acquisitions for the year ended 31 December 2024 would have been £11.0m
and profit after tax (before adjusting items) attributable to the owners of
the parent company would have been £2.7m. After amortisation of intangible
assets, the contribution to owners of the parent company's results would have
amounted to a profit of £1.1m after tax.
All acquisitions were made in line with Group strategy, which includes
acquiring independent trading companies, such as Teer Coatings, or
complementary companies for existing subsidiaries, such as Luciol or Rockwash.
8. Dividends
2024 2023
Pence per share £m Pence per share £m
Final dividend for the previous year 68.0 4.5 59.0 3.9
Interim dividend for the current year 29.7 2.0 27.0 1.8
Total final and interim dividend 97.7 6.5 86.0 5.7
The Directors will propose a final dividend of 74.8p per share, amounting to
£5.0m, for payment on 11 July 2025. As the final dividend remains conditional
on shareholders' approval at the Annual General Meeting, provision has not
been made for this dividend in these consolidated financial statements.
9. Final Results Announcement
The financial information for the year ended 31 December 2024 as set out in
this preliminary announcement does not constitute the statutory accounts of
the Group for the relevant year within the meaning of section 435 of the
Companies Act 2006. The financial statements for the year ended 31 December
2024 are unaudited. These accounts will be finalised on the basis of the
financial information presented by the Directors in the preliminary
announcement and will be delivered to the Registrar of Companies following the
Company's annual general meeting. The Consolidated Income Statement,
Consolidated Statement of Comprehensive Income, Consolidated Statement of
Changes in Equity and Consolidated Statement of Cash Flows for the year ended
31 December 2023 and the Consolidated Balance Sheet as at 31 December 2023
have been derived from the full Group accounts published in the 2023 Annual
Report and Accounts. These have been delivered to the Registrar of Companies
and on which the report of the independent auditors was unqualified and did
not contain a statement under section 498(2) or section 498(3) of the
Companies Act 2006.
The financial information in this preliminary announcement have been prepared
in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006. The Group has applied all
accounting standards and interpretations issued relevant to its operations and
effective for accounting periods beginning on 1 January 2024. The IFRS
accounting policies have been applied consistently to all periods.
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