Judges Scientific plc AIM:JDG UHV Design 2011 Quorum 2014 - - PowerPoint PPT Presentation

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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


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UHV Design 2011 GDS 2011 Quorum 2014 Scientifica 2012 Scientifica 2014

Judges Scientific plc

AIM:JDG

25 September 2015

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Disclaimer

The document attached hereto and the presentation of which it forms part (together the “Materials”) have been prepared by Judges Scientific plc (“Judges” or the “Company”) and are confidential and personal to you and the Materials are furnished to you as background information to provide a basis for potential investors to consider whether to pursue an acquisition of shares in the Company and do not constitute an offer or invitation for the sale or purchase of any securities, nor do they, nor do they purport to, set out or refer to all or any of the information an investor might require or expect in making a decision as to whether or not to deal in shares in the Company. The Materials do not constitute and are not a prospectus or listing particulars (under the Financial Services and Markets Act 2000 (“FSMA”) or the Prospectus Rules of the Financial Services Authority) nor do they comprise an AIM admission document for the Rules of AIM operated by the London Stock Exchange plc and should not be construed as such. No representation or warranty or other assurance, express or implied, is made by or on behalf of or the Company or any of their respective directors, officers, employees, advisers or any

  • ther persons as to the fairness, accuracy or completeness of the information or estimates or opinions or other statements about the future prospects of the Company or any of its

respective businesses contained in the Materials or referred to in the presentation given in connection therewith and no responsibility, liability or duty of care whatsoever is accepted by any such person in relation to any such information, projection, forecast, opinion, estimate or statement. Members of the public are not eligible to take part in the presentation or be provided with the Materials. In the United Kingdom, the Materials are only being directed at persons (i) reasonably believed by the Company to be investment professionals within the meaning of paragraph (5) of Article 19 or to high net worth companies or unincorporated associations within the meaning of paragraph (2) of Article 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529), as amended and (ii) who are “qualified investors” within the meaning of section 86(7) of FSMA or otherwise in circumstances that will not have resulted and will not result in an offer of transferable securities to the public in the United Kingdom within the meaning of section 102B of FSMA. The investment or investment activity to which the Materials relate are available only to such persons and will be engaged with only with such persons. If you are not such a person (i) you should not take part in the presentation and nor should you have received the Materials, (ii) please return this document to the Company’s registered office or representative at the presentation as soon as possible and take no other action, (iii) please leave the presentation immediately after returning the Materials and (iv) you may not rely on or act upon the matters communicated by the Materials. This presentation and the information contained herein are not for publication or distribution in the United States (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")). The securities offered by the Company have not been and will not be registered under the Securities Act or any state securities laws in the United States. The securities may not be offered or sold in the United States or to or for the account or benefit of U.S. Persons (as defined in regulation S) except that the securities may be offered or sold to persons who are "qualified institutional buyers" (as defined under Rule 144A under the Securities Act) in reliance on exemption from the Securities Act provided by Rule 144A and otherwise in accordance with the applicable laws of any US State. Offers and sales to non-US Persons will be made only in "offshore transactions" in reliance on Regulation S. Neither this presentation nor any copy of it or any of the Materials may be taken or transmitted into or distributed in Canada, Australia, or the Republic of South Africa or to any resident thereof, or (iv) taken or transmitted into or distributed in Japan or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this document in other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. The Materials are being made available on the basis that the recipients keep confidential any information contained therein, whether orally or in writing, in connection with the

  • Company. The Materials are confidential and must not be copied, reproduced, published, distributed, disclosed or passed to any other person at any time without the prior written

consent of the Company. This presentation contains forward looking statements. These forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. This presentation is intended for informational purposes and does not constitute an offer to sell securities in any jurisdiction.

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SLIDE 3

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

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SLIDE 4

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

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SLIDE 5

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

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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

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10½ Year Financial History

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  • 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

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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

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  • 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.

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UK Instrumentation Industry Background

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SLIDE 10
  • 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

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Our Business Model

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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

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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

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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

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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

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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

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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

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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

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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)

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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)

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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

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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

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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

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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

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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

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Subsidiary companies

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Fire Testing Technology (FTT)

  • Purchased in 2005
  • Instruments measure

materials’ reaction to fire

  • World leader
  • Driven by safety,

regulation, globalisation

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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

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Sircal

  • Purchased in 2010
  • Instruments to purify

noble gases

  • Used in Arc-Spark

spectrometry to analyse metals

  • Driven by global growth

and regulation

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SLIDE 27

Global Digital Systems (GDS)

  • Acquired March 2012
  • Geotechnical instruments
  • Measure mechanical properties
  • f soil and rock
  • Largely universities but

increasing sales to commercial sector

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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

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Quorum

  • Purchased in 2009
  • Instruments used to

prepare samples for electron microscopy

  • Universities, bioscience,

semiconductors

  • Driven by growth in

education and life sciences

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Deben

  • 51% purchased March 2011
  • KE added in 2012
  • Management stayed on with

49%

  • Accessories used in electron

microscopy

  • Universities and electron

microscope OEMs

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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

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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

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