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 Scientifica 2012 GDS 2011 22 March 2016 Disclaimer The document attached hereto and the presentation of which it forms part (together the Materials) have been
Disclaimer
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Overview
- Group involved in the buy and build of scientific instrument businesses
- Twelve acquisitions since May 2005
- Continued opportunities for consolidation in fragmented market
- Long-term profitability and cash generation
- Strong growth fundamentals in resilient core markets; UK is centre of manufacturing excellence
500 1000 1500 2000 2500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Share performance
LSE: JDG FTSE: ASX
5 Queen’s Awards for design excellence and export
p
Highlights – FY 2015
Financial
- Record revenues of £56.2m (2014: £40.6m); 4.9% organic growth
- Opening order book 11.9 weeks (2014: 9.9 weeks); organic order intake up 12.7%
- Adjusted operating profit: £9.3m (2014: £7.0m); up 32.9%
- Adjusted basic EPS: 109.2p (2014: 82.7p), up 32.0%
- Total 2015 dividend of 25.0p; 14% increase on 2014
- Cash generated from operations of £8.5m (2014: £7.5m)
- Adjusted net debt of £4.0m (Dec 2014: £1.3m)
Operating
- 2 acquisitions completed since Jan 2015
- Benefits from streamlined banking arrangements
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Management team
Alex Hambro, Non-Executive Chairman Experienced adviser to private equity and VC funds and family office investors. David Cicurel, Chief Executive Founded Judges in 2002; Turnaround specialist and veteran deal-maker Brad Ormsby, Group Finance Director Previously CFO of Kalibrate Technologies plc; PwC trained Chartered Accountant David Barnbrook, Chief Operating Officer Chartered Engineer with over 20 years senior management experience in industry 4
Owners of 19% of equity
- Long term drivers of growth:
– Global higher education – Optimisation
- Acquisition attributes:
– Strong exporters in their global niche markets; solid EBIT margins – Generate sustainable profits and cashflows – Pay 3 to 6 times EBIT according to size – Borrow up to 2.5 times EBITDA @ 2 to 4%
- Post acquisition:
– Create environment for businesses to thrive; implement robust financial controls – Repay debt and reinvest in further acquisitions 5
Our Business Model
- 10.0
20.0 30.0 40.0 50.0 60.0
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 10.0
Revenues £m Profits £m
Revenues and Profits
Revenue £m Adjusted operating profit
11 Year Financial History
6 Faster debt repayment
- 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 30.0
- Adj. EPS (p)
Dividends (p)
EPS and Dividends
Adjusted EPS Dividend
- 1.0
2.0 3.0 4.0 5.0 6.0 7.0 £'m
Annual debt repaid + dividends paid from cashflow
Dividends Repayment of borrowings
CAGR 9.4% for past 8 years
Operational results drivers
- Organic revenue
– public sector funding – foreign exchange rates – macroeconomic environment
- Cost
– investment in R&D and sales – control of other overheads
- Geographic expansion
– Armfield’s US office – new Scientifica office adjacent 7
Segmental split
Material sciences 50% of Group sales 53% of EBITA contribution
- Businesses acquired:
Armfield: educational instruments and R&D instruments for food and drinks 8
FTT Sircal PFO GDS Armfield
Revenue
Vacuum 50% of Group sales 47% of EBITA contribution
- Businesses acquired:
CoolLED: LED illumination sources for fluorescence microscopy
Revenue
Quorum Scientifica UHV Deben
Armfield acquisition
- Educational (c.75% sales); R&D for food and drinks (c.25% sales)
- Reputation for high quality products and service
- £9.6m acquisition cost (approx 5 times earnings)
- Financed with £5m from new acquisition facility
- Performing in line with expectations
- Earnings enhancing and cash generative
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CoolLED acquisition
- LED illumination sources for fluorescence microscopy
- High quality products leading the replacement of mercury lamps
- £2.8m revenues and £0.75m operating profit
- Consideration consists:
– £3.5m cash paid on completion – Earn-out capped at £1.0m based upon operating profits of £1.0m
- Financed by £3.5m from revolving acquisition facility
- Immediately earnings-enhancing
- Management team remaining
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Acquisitions overview
- Fragmented market with over 2,000 privately held businesses in the UK
- Large pool of potential acquisitions; Judges is highly selective
- Judges has strong reputation for being a good acquirer:
– Trusted to honour the terms agreed – Trusted to act quickly with secured funding – Treats vendors and staff with respect – No micromanagement post-acquisition
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2015 2014 Variance Variance £m £m £m % Revenue 56.2 40.6 15.6 38.5% Operating costs (46.9) (33.6) (13.3) 39.6% Adjusted operating profit 9.3 7.0 2.3 31.9% Interest (0.5) (0.6) 0.1 (16.7)% Adjusted PBT 8.8 6.4 2.4 35.6% Taxation (1.8) (1.2) (0.6) 46.1% Adjusted PAT 7.0 5.2 1.8 33.2% Adjusting items (post tax) (5.9) (2.9) (3.0) 102.8% Statutory PAT 1.1 2.3 (1.2) (52.6)%
Performance
Organic revenue up 4.9% Adjusted PBT up 35.6% Adjusting items mainly amortisation from Armfield acquisition (inc. £2m
- f order backlog asset)
- Performance weighted to H2 for first time – Armfield and sales recovery
- Effective tax rate impacted by Armfield US; new Scientifica US office from 2016
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Revenue summary
- Record revenues of £56.2m up £15.6m
- 4.9% like for like sales growth
- Organic growth UK, US; China strong; EU slow
- 5/6ths sales exported
- Armfield’s higher RoW revenues
- Seasonality for the first time:
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UK Europe North America Rest of the world
- 4,000
8,000 12,000 16,000 20,000 24,000 Sales 2014 Sales 2015
- 30.0%
- 10.0%
10.0% 30.0% 50.0%
Organic sales 2015
£’000
H1 H2
Half year split
H1 H2
Impact on EPS
ORDER INTAKE
- FY Organic order intake ahead by 12.7% compared to 2014
- YTD intake quiet; similar to start of 2014 and 2015
- Organic order book at 31 Dec 2015: 11.4 weeks (1 Jan 2015: 9.9 weeks)
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Total order book 11.9 weeks including Armfield
10,000 20,000 30,000 40,000 50,000 60,000 70,000 Thousands Group (17 wks * 3) Group (ttm) Group (budget)
Cashflow 2015 2014 £m £m Adjusted EBITDA 9.7 7.4 Working capital movements (0.5) 0.1 Share based payments 0.1
- DB pension contributions
(0.2)
- Exceptional transaction fees
(0.6)
- Cash generated from operations
8.5 7.5 Tax (1.4) (1.2) Capex (inc acquisitions) (8.1) (0.7) Interest payments (0.5) (0.6) Repayment of borrowings (4.6) (2.7) Proceeds from bank loans 4.8
- Dividends
(1.4) (1.2) Issue of shares 0.2 0.1 Other (0.1) (0.2) Movement in cash (2.6) 1.0
Summary Balance sheet and Cashflows
Continued low working capital Inherited Armfield Defined Benefit pension scheme Healthy cash generation Focus on debt repayment Increasing dividend returns for shareholders
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Balance Sheet 2015 2014 £m £m Cash 8.5 11.1 Debt (12.5) (12.4) Adjusted net debt (4.0) (1.3) Minority debt (0.5) (0.5) Working capital 6.7 5.1 DB Pension (1.1)
- Other assets/liabilities
23.0 20.0 Net assets 24.1 23.3
Net debt higher following £9.6m Armfield acquisition
Return On Total Invested Capital
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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)
GDS acquisition March 2012 Scientifica June 2013 FTT acquisition Armfield January 2015
Investment case
- Robust business model; pursued with discipline
- Strong long-term growth drivers in higher education and optimisation
- Management focused on shareholder value - cash generation, debt
repayment, dividend growth and return on capital
- Every deal is earnings enhancing; large pool of targets
- Dividend growth of 10+% for past 11 years
- Inheritance tax free shareholding after 2 years
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Appendices
- Capital structure
- Trading businesses
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Capital Structure
Listing & Ticker: AIM : JDG Ordinary Shares Issued (18.3.15): 6,100,549 Last price (17.3.15): 1572.5p Market Capitalisation (18.3.15): £95.9m Major shareholders:
15.0% - David Cicurel 3.7% - Other directors 11.0% - Schroders 7.2% - Liontrust Asset Management 5.5% - Guy Naggar 4.9% - FTT Vendors 4.9% - Polar Capital 2.7% - Hargreaves Lansdown 2.6% - NFU Mutual 2.3% - Allianz Asset Management AG 1.7% - Artemis Asset Management Ltd 1.6% - Incagrove Ltd
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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
- PerkinElmer closed it when the
internet bubble burst
- Management remain
- Instruments measure behaviour
- f light in fibre (telecom)
- 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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Global Digital Systems (GDS)
- Acquired March 2012
- Geotechnical instruments
- Measure mechanical properties of 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
- bjects 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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CoolLED
- Purchased in February 2016
- LED illumination sources for
fluorescence microscopy
- Replacement for outdated
mercury lamps
- Universities & research
centres in US, UK and elsewhere
- Management team remaining
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