Judges Scientific plc · LSE:JDG
Judges Scientific — Investor Presentation (September 2015)
32 slides from Judges Scientific's investor presentation, Sep 25, 2015
Slide 1: Judges Scientific plc
Judges Scientific plc AIM:JDG UHV Design 2011 GDS 2011 Quorum 2014 Scientifica 2012 Scientifica 2014 25 September 2015
Slide 2: Disclaimer
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
Slide 3: Presentation team
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: Inter
Slide 4: Overview
Overview • Focus on the scientific Share performance LSE: JDG FTSE: ASX instrument sector 2500 2000 • Eleven acquisitions since 1500 May 2005 pence 1000 • Continued opportunities for 500 consolidation 0 • Profitable and cash 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 generative • Interim
Slide 5: Highlights – HY 2015
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 8.1
Slide 6: Order book impact on Earnings
Order book impact on Earnings 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 • 2015 H1 order book growth providing store for higher H2 performance • H1 2014 brought forward earning
Slide 7: 10½ Year Financial History
10½ Year Financial History b c d e f g h i j k l m n o p q r s t u v b c d e f g h i j k l m n o p q r s t u v w 45.0 Revenues and Profits 9.0 120.0 Earnings and Dividends 25.0 40.0 8.0 100.0 20.0 35.0 7.0 30.0 6.0 80.0 15.0 Dividends (p) 25.0 5.0 Adj. EPS (p) 60.0 Revenues £m Profits £m 20.0 4.0 10
Slide 8: Return On Total Invested Capital
Return On Total Invested Capital Scientifica ROTIC (Trailing 12 months) June 2013 GDS acquisition FTT acquisition March 2012 50.0% 45.0% Armfield 40.0% January 2015 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 7
Slide 9: UK Instrumentation Industry Background
UK Instrumentation Industry Background • 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* * Sou
Slide 10: Our Business Model
Our Business Model • 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 •
Slide 11: Material Sciences
Material Sciences 47% of Group sales FTT 41% of EBITA contribution Revenue Sircal Armfield PFO • Key businesses and instruments manufactured: GDS – FTT: instruments to test flammability – PFO: fibreoptics testing instruments – Sircal: noble gas purification – GDS: instruments to test the mechanical
Slide 12: Vacuum
Vacuum 53 % of Group sales Quorum Scientifica 59 % of EBITA contribution Revenue • Key businesses and instruments manufactured: UHV Deben – UHV Design: Ultra High Vacuum manipulation – Quorum: sample preparation for electron microscopy – Deben: accessories for electron microscopy – Scientifica: syst
Slide 13: Armfield acquisition – Material Science
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
Slide 14: Armfield transaction
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
Slide 15: Performance
Performance H1 2015 H1 2014 Variance Variance £m £m £m % Organic revenue down 9.6% 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 down 18.5% Adjusted PBT 3.3 4.1 (0.8) (18.5)% Adjusting
Slide 16: Revenue summary
Revenue summary £’000 10,000 ACTUAL 8,000 6,000 4,000 • Record revenues of £24.9m up £3.0m 2,000 - UK Europe North Rest of America the world • Armfield impact on RoW revenues Sales 2014 Sales 2015 ORGANIC Organic sales 2015 60.0% 40.0% • 9.6% like for like sales decline 20.0% 0.0% -20.0% • Weak US,
Slide 17: Order intake
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) 65,000 Thousands 60,000 55,000 50,000 45,000 Armfield order intake solid 40,
Slide 18: Summary Balance sheet and Cashflows
Summary Balance sheet and Cashflows Balance Sheet 2015 2014 Cashflow H1 2015 H1 2014 £m £m £m £m Cash 8.2 10.1 Adjusted EBITDA 3.8 4.6 Debt (15.7) (13.3) Working capital movements (1.0) (1.2) Adjusted net debt (7.5) (3.2) Share based payments 0.1 - Minority debt (0.5) (0.5) Exceptional transaction f
Slide 19: Summary
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 • Inter
Slide 20: Appendices
Appendices • Management team • Capital structure • Trading businesses 19
Slide 21: Central Management Team
Central Management Team Owners of 19.2% of Total Equity • 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
Slide 22: Capital Structure
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%
Slide 23: Subsidiary companies
Subsidiary companies 22 @28 Judges Scientific ple
Slide 24: Fire Testing Technology (FTT)
Fire Testing Technology (FTT) • Purchased in 2005 • Instruments measure materials’ reaction to fire • World leader • Driven by safety, regulation, globalisation 23
Slide 25: PE.fiberoptics (PFO)
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
Slide 26: Sircal
Sircal • Purchased in 2010 • Instruments to purify noble gases • Used in Arc-Spark spectrometry to analyse metals • Driven by global growth and regulation 25
Slide 27: Global Digital Systems (GDS)
Global Digital Systems (GDS) • Acquired March 2012 • Geotechnical instruments • Measure mechanical properties of soil and rock • Largely universities but increasing sales to commercial sector 26
Slide 28: UHV Design
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
Slide 29: Quorum
Quorum • Purchased in 2009 • Instruments used to prepare samples for electron microscopy • Universities, bioscience, semiconductors • Driven by growth in education and life sciences 28
Slide 30: Deben
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
Slide 31: Scientifica
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
Slide 32: Armfield
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
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