UHV Design 2011 GDS 2011 Quorum 2014 Scientifica 2012 Scientifica 2014
Judges Scientific plc AIM:JDG UHV Design 2011 Quorum 2014 - - PowerPoint PPT Presentation
Judges Scientific plc AIM:JDG UHV Design 2011 Quorum 2014 - - PowerPoint PPT Presentation
Judges Scientific plc AIM:JDG UHV Design 2011 Quorum 2014 Scientifica 2014 GDS 2011 Scientifica 2012 25 September 2015 Disclaimer The document attached hereto and the presentation of which it forms part (together the Materials) have
Disclaimer
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1
Presentation team
David Cicurel, Chief Executive: Founded Judges in 2002 having spent much of his career as a turnaround specialist and, subsequently, as an active private investor operating with own funds. Responsible for several corporate recovery exercises including two UK public companies: International Media Communications plc (later known as Continental Foods) and International Communication and Data plc. Brad Ormsby, Finance Director: A Chartered Accountant with significant senior management experience acquired during nine years at PwC followed by six years at Eurovestech plc and associated companies. Prior to joining Judges, Brad was CFO at Kalibrate Technologies plc, where he was actively involved in their successful IPO. 2
3
Overview
- Focus on the scientific
instrument sector
- Eleven acquisitions since
May 2005
- Continued opportunities for
consolidation
- Profitable and cash
generative
- Interim dividend of 8.1p; an
increase of 11%
500 1000 1500 2000 2500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Share performance
LSE: JDG FTSE: ASX
pence
5 Queen’s Awards for design excellence and export
Highlights – HY 2015
- Record revenues of £24.9m (H1 2014: £21.9m) but 9.6% organic contraction
- Organic order intake up 9.5% compared with H1 2014
- Adjusted pre-tax profit: £3.3m (H1 2014: £4.1m); 18.5% down
- Adjusted basic EPS: 41.1p (H1 2014: 50.3p), down 18.3%
- Interim dividend up 11% to 8.1p (H1 2014: 7.3p)
- £9.6m acquisition of Armfield Limited in January; business model intact
- Adj. net debt* £7.5m at 30 June 2015 (June 2014: £3.3m; Dec 2014: £1.3m)
- Cash generated from operations of £2.3m (H1 2014: £3.3m)
* excluding minority quasi-equity
4
Order book impact on Earnings
- 2015 H1 order book growth providing store for higher H2 performance
- H1 2014 brought forward earnings from H2 2014 by reducing the order book
H1 2015 H1 2014 weeks weeks Opening order book 9.9 10.9 Closing order book 11.7 7.8 Growth/(depletion) 1.8 (3.1) pence pence Impact on EPS @ 6.5p per week (11.7) 20.2 5
10½ Year Financial History
6
- 5.0
10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
b c d e f g h i j k l m n
- p
q r s t u v
- 1.0
2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
Revenues £m Profits £m
Revenues and Profits
Revenue £m - half year Revenue £m Adjusted operating profit Adjusted operating profit - half year
- 20.0
40.0 60.0 80.0 100.0 120.0
b c d e f g h i j k l m n
- p
q r s t u v w
- 5.0
10.0 15.0 20.0 25.0
- Adj. EPS (p)
Dividends (p)
Earnings and Dividends
- Adj. eps - half year
- Adj. eps
Dividend Dividend - half year
- 1.0
2.0 3.0 4.0 5.0 £'m
Annual debt repaid + dividends paid from cashflow
Dividends Repayment of borrowings
Return On Total Invested Capital
7
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
ROTIC (Trailing 12 months)
Armfield January 2015 GDS acquisition March 2012 Scientifica June 2013 FTT acquisition
- The UK is a global centre of excellence for precision &
scientific instrument manufacture
- Fragmented industry with 2,000 companies in the sector
(170 with turnover > £5m)
- A resilient sector through past economic downturns
- 78% of revenues exported*
* Source: UK Office of National Statistics UK Trade in Goods Analysed in Terms of Industries Report - Q2 2009: §D, pp 5-13.
8
UK Instrumentation Industry Background
- Targets must be strong in their world niche markets
- Companies must generate sustainable profits and cash
- Pay 3 to 6 times EBIT according to size
- Borrow up to 2.5 times EBITDA @ 2 to 4%
- Create environment where businesses can thrive
- Implement robust financial controls
- Repay debt and reinvest in further acquisitions
9
Our Business Model
Material Sciences
47% of Group sales 41% of EBITA contribution
- Key businesses and instruments manufactured:
– FTT: instruments to test flammability – PFO: fibreoptics testing instruments – Sircal: noble gas purification – GDS: instruments to test the mechanical properties of soil and rocks – Armfield: educational instruments and R&D instruments for food and drinks 10
FTT Sircal PFO GDS Armfield
Revenue
Revenue
Quorum Scientifica UHV
Vacuum
53 % of Group sales 59 % of EBITA contribution
- Key businesses and instruments manufactured:
– UHV Design: Ultra High Vacuum manipulation – Quorum: sample preparation for electron microscopy – Deben: accessories for electron microscopy – Scientifica: systems for neuroscience research 11
Deben
Armfield acquisition – Material Science
- Educational instruments (c.75% revenue)
- R&D instruments for food and drinks (c.25% of sales)
- £12m annual sales; £1.66m adjusted EBIT
- UK and US direct sales
- Worldwide agents network
- Quality and service key in educational
markets
- Vendors staying
12
Armfield transaction
- Consideration:
– £8.3m initial cash in January (approx 5x earnings) – £1.3m earn-out paid in May (£0.76m cash, £0.59m shares) – Potential 2017 pension recovery (max. £0.36m)
- Financed with existing cash and £4.8m from new facility
- Immediately earnings-enhancing
13
H1 2015 H1 2014 Variance Variance £m £m £m % Revenue 24.9 21.9 3.0 13.7% Operating costs (21.3) (17.5) (3.8) 21.7% Adjusted operating profit 3.6 4.4 (0.8) (18.2)% Interest (0.3) (0.3) 0.0 0.0% Adjusted PBT 3.3 4.1 (0.8) (18.5)% Adjusting items (4.8) (2.2) (2.6) 118.2% Statutory PBT (1.5) 1.9 (3.4) (178.9)%
Performance
Organic revenue down 9.6% Adjusted PBT down 18.5% Adjusting items mainly amortisation
- f acquisition intangible assets and
acquisition costs
- H1 2014 inflated after draining prior year order book
- H1 2015 organic order book growth from 9.9 weeks to 11.7 (13.7 weeks inc Armfield)
- Lower interest rates on new facility
14
Revenue summary
ACTUAL
- Record revenues of £24.9m up £3.0m
- Armfield impact on RoW revenues
ORGANIC
- 9.6% like for like sales decline
- Weak US, Germany; China strong
15
UK Europe North America Rest of the world
- 2,000
4,000 6,000 8,000 10,000 Sales 2014 Sales 2015
- 60.0%
- 40.0%
- 20.0%
0.0% 20.0% 40.0% 60.0%
Organic sales 2015
£’000
ORDER INTAKE
- H1 Organic order intake up 9.5% compared to H1 2014
- YTD intake consistent with the Group’s annual sales target
- Organic order book at 30 Jun 2015: 11.7 weeks (1 Jan 2015: 9.9
weeks; 30 Jun 2014: 7.8 weeks)
16
Armfield order intake solid post-acquisition
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 Thousands Group (17 wks * 3) Group (ttm) Group (budget)
Cashflow H1 2015 H1 2014 £m £m Adjusted EBITDA 3.8 4.6 Working capital movements (1.0) (1.2) Share based payments 0.1
- Exceptional transaction fees
(0.6)
- Cash generated from operations
2.3 3.4 Tax (0.7) (0.7) Capex (inc acquisitions) (7.7) (0.5) Interest payments (0.3) (0.3) Repayment of borrowings (1.3) (1.8) Proceeds from bank loans 4.7
- Dividends
- Issue of shares
0.1 0.1 Other
- (0.1)
Movement in cash (2.9) 0.1
Summary Balance sheet and Cashflows
Other assets larger following Armfield acquisition (goodwill & intangibles offset by pension) Net debt higher following Armfield acquisition Healthy cash generation Continued focus on repaying debt Increasing dividend returns for shareholders
17
Balance Sheet 2015 2014 £m £m Cash 8.2 10.1 Debt (15.7) (13.3) Adjusted net debt (7.5) (3.2) Minority debt (0.5) (0.5) Working capital 7.4 5.2 Other assets/liabilities 23.5 21.8 Net assets 22.9 23.3
Summary
- Challenging trading but acquisitive business model remains
intact
- Management confident in the Group’s ability to meet market
expectations following positive 2015 YTD order intake
- Focus on shareholder value - cash generation, debt
repayment, dividend growth and return on capital
- Interim dividend increased by 11% to 8.1p
- Opportunity to grow organically and through acquisitions in a
high margin sector with sustainable barriers to entry
18
Appendices
- Management team
- Capital structure
- Trading businesses
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Central Management Team
- Alex Hambro, Non-Executive Chairman: An independent consultant for a number of
private equity and venture capital fund management groups and family office investors advising his clients on the establishment of alternative investment funds and investment strategies.
- David Cicurel, Chief Executive: Founded Judges in 2002 having spent much of his
career as a turnaround specialist and, subsequently, as an active private investor
- perating with own funds. Responsible for several corporate recovery exercises
including two UK public companies: International Media Communications plc (later known as Continental Foods) and International Communication and Data plc.
- Brad Ormsby, Finance Director: A Chartered Accountant with significant senior
management experience acquired during nine years at PwC followed by six years at Eurovestech plc and associated companies. Prior to joining Judges, Brad was CFO at Kalibrate Technologies plc, where he was actively involved in their successful IPO.
- David Barnbrook, Chief Operating Officer: A Chartered Engineer with more than 20
years’ experience as a Senior Manager and Director in sectors encompassing defence, instrumentation, aerospace and customer service.
Owners of 19.2% of Total Equity
20
Capital Structure
Listing & Ticker: AIM : JDG Ordinary Shares Issued (21.9.15): 6,068,949 Last price (21.9.15): 1470.0p Market Capitalisation (21.9.15): £89.2m Major shareholders:
15.3% - David Cicurel 3.9% - Other directors 12.7% - Schroders 5.8% - Guy Naggar 5.1% - Liontrust Asset Management 5.0% - FTT Vendors 3.4% - Incagrove Ltd 3.0% - Polar Capital 2.1% - BlackRock 2.1% - NFU Mutual 1.7% - Artemis Asset Management Ltd 1.7% - Allianz Asset Management AG
21
Subsidiary companies
22
Fire Testing Technology (FTT)
- Purchased in 2005
- Instruments measure
materials’ reaction to fire
- World leader
- Driven by safety,
regulation, globalisation
23
PE.fiberoptics (PFO)
- Judges backed MBO in
2005; 51% holding
- Management remain
- Instruments measure
behaviour of light in fibre (telecom)
- PerkinElmer closed it when
the internet bubble burst
- Driven by growth of the
internet
24
Sircal
- Purchased in 2010
- Instruments to purify
noble gases
- Used in Arc-Spark
spectrometry to analyse metals
- Driven by global growth
and regulation
25
Global Digital Systems (GDS)
- Acquired March 2012
- Geotechnical instruments
- Measure mechanical properties
- f soil and rock
- Largely universities but
increasing sales to commercial sector
26
UHV Design
- Purchased in 2006
- Instruments move, heat and
cool objects under Ultra High Vacuum
- Universities, science projects,
some manufacturing
- Driven by growth in science
and education
27
Quorum
- Purchased in 2009
- Instruments used to
prepare samples for electron microscopy
- Universities, bioscience,
semiconductors
- Driven by growth in
education and life sciences
28
Deben
- 51% purchased March 2011
- KE added in 2012
- Management stayed on with
49%
- Accessories used in electron
microscopy
- Universities and electron
microscope OEMs
29
Scientifica
- Purchased in 2013
- Electrophysiology and imaging
- Systems used in neuroscience
research
- Driven by efforts to find cures for
degenerative conditions
- Universities & research centres in
US, UK and elsewhere
30
Armfield
- Acquired in Jan 2015
- Educational instruments for
undergraduate students
- R&D instruments for commercial
food and drinks industry
- Worldwide agents network
- Vendor management team remain
31