Judges Scientific (LSE:JDG) Q2 2026 Earnings Call

0:00 Good afternoon and welcome to the judges scientific investor presentation. Today we are joined by CEO Tim Christage, CFO Brad Ormsby and Group Commercial Director Ian Wilcock. Questions are encouraged throughout this webinar and can be submitted via the Q&A box which is on the panel on the right hand side of your screen. I will now hand over to Tim to begin the presentation.

0:24 Thank you very much Lillian, thank you everyone for joining us. So today we're going to take you through our interim results for the six month period ended 30th June 2026. Actually this is one of two announcements that's come out today and so before I start on the interim results the first thing I'm going to do is just mention the other announcement which is regarding our CFO Brad Ormsby. Brad's been with the group for just over 11 years now and he's made a decision to retire from the group and I just wanted to mention a bit about his contribution to the group and the experience that he's brought. So Brad has made a huge impact on the group since joining.

1:14 He really lives and breathes the judges culture and is amongst his greatest ambassadors. Really grateful for the impact that he's had and how he's developed our financial acumen within the group. and particularly as well for how he's worked so hard to develop such strong relationships both with our colleagues within the group but also with the investment community outside the group He's given us 12 months notice and so he's going to absolutely be around to help in identifying his successor and in the transition process. So I'd like to thank Brad very warmly on behalf of the group for the work that he's done for us and for staying around.

1:59 I look forward to continuing to work with him over the next 12 months. Brad will say a little bit more during his presentation. Okay, and let's start talking about our entry results. So we can move to the next slide. And the first thing I'll do is say a little bit about what Judges Scientific is, who we are, and our strategy. So Judges Scientific, we are a buy and build group in scientific insurance markets. If I start in the top left hand corner, there's three pillars of our shareholder value, three pillars on which our model is based. Long term drivers. What are the long term drivers? We talk here about long term secular trends in research and scientific techniques. So the ongoing need for measurement and assessment of variables associated with scientific techniques.

2:58 and scientific processes and that those things in turn find increasing application in commercial and industrial opportunities okay and we see those as very long-term secular drivers the other aspect is a large deal pool so there are many businesses in the world if we think about a typical opportunity for us maybe it's a company which is Founded by someone that used to be in a research lab or used to be in a university. They've identified an opportunity. They've built a successful business. It's key for us obviously that it's a successful business. Maybe they've come to a conclusion over 15 or 20 years or so that it's time for them to move on and find a different home for that business.

3:46 We think there are many many thousands of opportunities, many thousands of deals like that that are available in the UK and elsewhere in the world. also fundamental to us that the businesses that we acquire have low capital use so we're not looking for businesses that require a huge amount of investment and ongoing investment in capital equipment in manufacturing equipment we're talking about businesses and the key benefit of that is high cash conversion in other words they convert the majority of their profit into cash we need that because we recycle that cash both to pay off debt and to invest in more businesses it's that compounding that generates shareholder value so moving down to the bottom left So the sort of businesses that we acquire, if they are successful, they've got successful by becoming diversified in their customer base.

4:56 If they're UK based, for example, the UK doesn't own enough of a global market in scientific instruments. to in and of itself make a successful company or a successful customer base. So companies that are successful have clearly developed an ability to export and serve customers around the world and that's a fundamental aspect of what we have to acquire. We don't buy turnarounds, we don't buy startups, we buy successful businesses and the inbuilt of that is that they're already diversified. and the sorts of customer base will include universities industrial customers and other types of research compliance and we did that some examples some typical examples across the group of the types of companies that the types of customers that our businesses have If I move to the top right, what is our growth strategy?

5:55 Well, I mentioned earlier, the companies that we acquire generate cash. Low capital use, high cash conversion. They generate cash. We then recycle that cash. We turn that cash into investments in new acquisitions, which includes paying down the debt for those acquisitions. We turn that cash into investments in organic growth, so investments into the existing portfolio. And we turn that cash into a progressive dividend policy to benefit our shareholders. Again those are the mechanisms through which we generate shareholder value. and the execution of our strategy over the last three years has been up to the end of the last financial year 25 acquisitions total dividend distributions of nearly 10 times the admission price back into 2005.

6:47 19% CAGR of total revenue 7% CAGR organic revenue 23% CAGR of total EBIT 8% CAGR organic EBIT Next slide please We're an experienced management team who together bring a broad set of skills from the different experiences that they've had so on the call today myself Brad Olesby who I mentioned earlier also Ian Wilcock our group commercial director over the last couple of years we've added into the team Rick Armitage is a group acquisitions executive and John Dunn as portfolio chief executive.

7:35 Together we bring various experiences on companies like Halma, Oxford Instruments, Danaher and Renishaw. Our next slide please So I'm going to start this next section by giving an overview of our performance in H1 and the key messages and key takeaways after which I'll hand over to Brad to take us through some of the more detailed financials. So the headline here challenging market conditions that weighed on our H1 performance but our fundamentals remain intact. So we certainly don't hide behind the fact that we have an exceptionally weak baseline performance. Our revenue was down 21% compared to prior year.

8:26 That would be 13% on a night-for-night basis if we exclude the geotech coring expedition that happened in the first half last year, which was something that we knew wouldn't reoccur this year, and Brad will talk in more detail about that. but adjusted earnings per share down 72% and we need to be clear here we are a portfolio of high margin businesses so as we'll talk about for sure we took some action on costs but we've never intended to be able to offset the entire declining margin through costs as high margin businesses when there is a declining revenue there is a high flow through and that's why the adjusted earnings per share is down so much we highlight the external headwinds that affected us during the half so coming into the half we mentioned already that there was no coring expedition for geotech which we knew about Also orders and revenue were materially affected by continued uncertainties in US research funding. So we knew this was an aspect which was going to affect us.

9:34 It started around about the beginning of the second quarter in 2025. It continued through the balance of last year and it's still affecting us now. So in the first half of this year we had two full quarters of having back versus only one quarter of the first half last year. We also continue to see postponement of offshore wind investments. Those started to impact us in the second half of 2025 and continued through the first half of this year. We had initially expected that those might improve a little. Some of the major suppliers, some of the major businesses in that industry, for example, Fubro, have been highlighting in some of their announcements They had expected to see a little bit of improvement from q2 onwards, but in fact that that didn't occur that didn't happen So we didn't see that improvement As well something that we hadn't really foreseen coming in to the half were delays resulting from china's tax exemption processes Now we should be clear this isn't something which is specific to judges this relates to any business including domestic Chinese businesses supplying research or scientific instrumentation into customers in China or to customers in China where those customers might benefit from government funding as part of the purchase they would be normally there will be processes in place where those customers can be exempt from what is essentially a VAT, about 13% or so.

11:01 And because of the new five year plan in China, several of those processes have been postponed. And the way that we saw that was, orders that were placed with customers then asking for those shipments to be postponed until the tax issues were sorted out and then lastly orders not being placed for future business until those until those issues were resolved against the backdrop of these challenges we highlight ongoing focus on controlling the controls so we continue to take action to reduce costs of underperforming businesses we took almost two million pounds of costs out of underperforming businesses principally related to people costs at the same time we also invested in talent and innovation in other businesses to support recovery and growth in It's an important point that we want to make about us.

12:06 We're not the type of group that would indiscriminately cut costs purely on the basis of attempting to achieve a short-term outcome, a short-term even number of earnings per share. Both things can be true of us. We took action to control costs that underperformed businesses while simultaneously investing elsewhere to support recovery growth. Related to that was addressing performance. We highlighted in previous presentations that there were some businesses where there were product specific issues or challenges and we're pleased to report that there's been solid progress for those businesses. Software that needed to be developed has been launched, there's been operational improvements, there's been product rationalization, there's been cost reductions, So while we're a little behind the plan that we expected to be at the age of a half, we're confident that by the end of the year there will be demonstrable progress for those businesses.

13:14 Concentrating growth. So, despite revenue down 21%, 8 of our businesses grew. As Brad will later show you a bridge, that growth was nowhere near enough to offset the decline that we saw elsewhere. But nonetheless, 8 businesses grew in the half, supported by internal growth initiatives, New product development Market development Investments in talent As well as positive market dynamics in industries like semiconductor, vacuum development and some other industrial research markets So note all three of those examples I gave were industrial markets With all that our strategy remains unchanged Disciplined acquisition process Our structured and decentralized organic growth drivers that Ian will talk about later The importance of local definition and execution of market-led growth strategies Each of our businesses responsible for defining their own strategy And continued investment for long-term returns We ended the half with a solid morning look and as we will talk about increasing momentum on order intake 90% cash inversion despite significantly lower profitability and we're recommending a 10% increase in the interim dividend and that's I'm now going to hand over to Brad for the detailed performance review thanks

14:49 Tim and I think firstly thank you very much for your kind comments

14:54 I'm probably going to address this first. You'll be aware that I've made the decision to step down from serving as judges CFO. I just want to say a couple of quick things on that. It's absolutely a very personal decision for me and no reflection whatsoever on the great management team that's at Judges and one who I firmly believe are the right people in place in order to deliver an excellent long-term future for Judges. I've been truly honoured to be able to serve my colleagues and our shareholders over the past more than a decade and I know when I leave I'm going to misjudge it terribly because it is truly a wonderful company.

15:42 Once my success has been found I will do my very best to ensure they have a really good and proper handover and then I'll take a break and see what comes next. so moving on to results in the next few nights and total revenues down 21% and as Tim touched on before like for like revenues down 13% when you exclude the 2025 geotech quarrying expedition that we knew wasn't going to repeat in the first half this year now 21% revenue drop for a business like ours with high operational leverage results in a two-thirds drop in adjusted operating profits and put simply marginal gains in revenue positively add to profitability and unfortunately in this case a significant decline in revenue really really has profits earnings per share was also significantly affected with adjusted basic earnings per share of only 39 pence.

17:00 Moving on to order intake, an order intake declined by similar amounts to the like-for-like drop in revenue with order intake 12% down in H1. However Since the end of H1, and I'll talk about this in somewhat more detail in the order intake slide, we're now in a position where life-like order intake, year-to-date, is now almost a parity. The effect or the reason for the 12% proper order intake as Tim touched on earlier was a firstly a full six months of the continuing uncertainties in the US we only had one quarter in the first half last year and it adds to that the delays in the implementation of the China tax exemptions and good reason for why we were down And as Tim touched on, and I think it's an important point to make, the environment is difficult but at the same time we've managed to, in the last few months, really see some improvement. So if you go back to the beginning of the year, and I'll talk about this later, you'll see how things have changed.

18:19 I think it's a very very important one because it's now a better place where we have good momentum in our order intake for a number of months now. Moving from P&L on to cash generation and the group has a strong track record of turning our profit into cash. We've touched on this before about high cash conversion and whilst we only generated 4.3 million cash from operations it was a cash conversion of 90% in line with historic expectations. we continue to focus on working capital and whilst it did increase in the period and impacting on our adjusted net debt which increased by 3 million and i'll come and talk about this later we remain the strong balance sheet and plenty of heading on our customers and consequently we've also provided for a 10% increase in the interim dividend to 36 pence per share and that's in line with our policy of providing shareholders with progressively increasing dividend returns lastly before I move on a quick comment about the outlook for the rest of the year now He said in July when we gave our trading updates that there were two key things we needed to deliver in order to be able to achieve the numbers in the market.

19:46 The first one is that we needed to achieve a good level of order intake in line with our expectations for Q3. And as you'll see, and I'll talk through on the order intake slide, that we have done almost all the way through Q3, quite happy with the order intake. Which then leaves us with an improved order book, an improved order outlook, and pretty much the orders we need in order to be able to deliver the full year result. So quite simply, it's a case of execution now. And that will mean to say it's absolutely straightforward and it's certainly not without risk, but it is within our gift. So moving on to the next slide. I've just touched on a couple of things in the performance slide. I did mention beforehand in the summary slide that the group has high operational leverage and the unfortunate consequence in this first half is that we suffer greatly from declining revenue on our profits.

20:48 And as Tim touched on, we're not a business, and I think he used these words so I'll repeat them, not a business but with indiscriminately cut costs in order to achieve a short-term profit target however importantly um that doesn't mean to say we do not take action where action is appropriate and we've reduced the cost base of those businesses that are underperforming um by 2 million in this first half but at the same time we've continued to invest for future growth and innovation and it's a really really important point because it takes us on to comments on tax for our effective rate of tax we expect for this year to be 18 and that is a consequence of the continued innovation and continued investment in innovation and the side product from wanting to be able to continue to improve our products for our customers in such a lot of our customers is that we're also able to tap into the uk's patent box scheme which is enabling us to reduce our tax rate so a nice side benefit which we expect to continue to benefit as the years pass from our intention to continue to invest in the budget and then lastly for those that are not as familiar with our P&L we do have adjusting items that takes the statutory results the largest of these is the four million non-cash amortization of these tangible assets which we're required to recognize when we acquire businesses so moving to the next slide on order intake which really is our bellwether so first

22:19 thing most important for me talking through the graph that's on the right hand side of the slide there are three key lines on here red line a black line and green line the red line is our internal sales budget which we set once a year and do not change it's part of our budgeting process don't change unless we have a major acquisition it's our target the black lines are trading 12 months of orders and really what we're looking for from the black line because that's the history historic last year is for the black line to ideally be touching the red line come the end of the year such that we've had sufficient orders which satisfy our internal sales budget and then the green line which is the last four months of orders annualized it's a shorter term measure unsurprisingly a much more jagged line but an important line nonetheless because if that line is tracking the red line then we know that we'll also have good operational capacity so what's happened in the period by the way before we go on to that the end of the graph is pretty much up to date So we're going to start from the beginning of the year and just remind everyone at the year end announcement in early April that we noted that Q1 order intake was down 18% in the first quarter. Not a great start to the year we have to be honest about that.

23:40 You can see that from the declining black line throughout the first quarter. But as we went into the start of the second quarter order index started to improve and you can see the black line beginning to improve as with the green line as well and so by the time we got to the end of june some improvement but still 12 percent down however that improvement continued as we went into the second half and for the last two and a half months has again continued to improve you can see that through both black and green lines and actually the green line which if you follow to the end of the graph has been at around or a bit above the budget level for at least a month and because this measure is the last four months annualized what that really means is we've had five months of order intake at and around our budgets which means that we've got momentum coming back and you can then see that in the black line as it's working its way up on hopes inextricably towards the red line for our budget So overall this is momentum returning for us.

24:47 We wouldn't have said anything for two months worth of decent order intake and hence we didn't say anything in July. But after five months I think that's a reasonable period to feel like we've made some improvements and we can see it and consequently how that's giving us greater comfort ease. Now clearly we've been effective as you can see from the geography, effects of China, effects of the continuing uncertainty in the US academic research funding arena and it's knock on effects around the world but we've managed to do this despite no real improvement in those environments. So I'm pleased with our team's doggy determination to be able to bring in extra orders and help improve things.

25:36 and that gives us a good degree of confidence looking forwards it means that we can have enough orders we wish to satisfy this year's consensus performance but as i said before still have to execute and there is definitely still risk because we have a lot of high value orders and things can go wrong however we're in a good position this year because we've got the orders to be able to deliver but moving on to the next slide and this slide is a profit bridge which reconciles between the 2025 first half and 26th first half profit contributions to the businesses before central costs. Here are the two green blocks at either end of the graph.

26:22 Reconciling between these you can see the green block of organic growth where eight of our businesses grew during the period. Good performance from them. Ian will add a bit of colour to things that we did in order to be able to achieve this over that period but as Tim touched on before I can say the red line greatly overshadows the green line. A large chunk of that is the consequence of no coring expedition at geotech during the period. but also decline of 13 of our companies and some of which I have to say is the consequence of delayed order intake and it's then subsequent and delivery for customers and I just want to say I've also left very deliberately the acquisitions column in to enable us to remind shareholders that this important part of our strategy is absolutely not on pause moving on to the next slide please I think the year end will give us a clearer picture of progress here.

27:49 gearing has negatively increased as a consequence of the weaker performance and that really is a mechanical effect on this measurement but you will also see this morning that we have announced a two-year extension to our banking facilities such that they now mature on the 1st of july 2030 instead of 2028 and i want to formally thank our banks and the three banks that we have Lloyds and Santander and HSBC for their continued support which is not unappreciated by anything and then lastly for anyone that's followed the fact that we do have a small defined benefit pension scheme that we've had on our balance sheet for the best part of 11 years August this year saw the group's no longer having responsibility for this defined benefit pension scheme as it was fully bought out such that now all members future pension payments have all been secured and the group no longer has responsibility so moving on to the next slide we turn on total investment capital erotic as quick as a quick reminder for everyone you know in its purest form it's a function of the multiples we pay for the businesses we acquire you can see on the far left hand side of the graph when we acquired FTT our first acquisition we paid close to five times start around 20% and growing erotic

29:20 thereafter requires improved financial performance and or buying businesses at lower multiples and when you pay higher multiples you can see the cliff edge effect when we acquired GPS and Scientifica which was then very large acquisitions for the group in 2012 and 2013 the cliff edge effect of doing that and likewise when we paid seven times acquire in geotech in 2022 and small acquisitions in fact minimally on Rotic now what happened in a year well the declining performance unfortunately means that Rotic has declined to around 13% and it's clear we have much work to do to return this figure to historic levels and work we will do. So moving on to the next slide.

30:07 Our Promotion 1, Diversification. Simply put, diversification works for us. Just a couple of things at the moment. One, our focus added to life science semi-con areas and also into industries particularly as a consequence of the continued uncertainty around the academic funding not only in the US but across the world and so good that we're working on that here again we'll touch on a little bit of this in a short while then onto my last slide which hopefully won't be my last slide I'm on financial history and some key statistics about the long-term success of our group Whilst we're going through a prolonged, continuing challenging period for performance, the group has provided shareholders with a long track record of growth and we will return to growth and those key measures Tim touched on at the beginning of Kager's, a revenue growth and a private growth will return to their rightful levels.

31:15 has grown by at least 10% per annum over the history of the group and we've increased this interim dividend by 10% to 36 pence per share and lastly the group's continued focus on cash generation serves to enable the group to weather challenging market conditions like we've been going through enable us to make the acquisitions we want to be able to make when we want to make them when we're able to make them quickly reduce acquisition debt and continue to farm those progressively increasing dividend returns for shareholders and I'll pass back to Tim now.

31:53 Thank you Brad. I'm going to talk through the growth strategy and also hand over to Rian to talk about the organic growth aspect of that.

32:05 So if we can move to the next slide.

32:09 We use this slide to position or describe our growth strategy around buy and build capital allocation and the priorities that we have for that capital allocation. So just going back to what I mentioned in the very first slide, the businesses that we acquire are asset light. They generate cash. Our businesses generate cash, we collect that cash, and we recycle that cash in this priority. So first priority for us is to recycle that cash as investments in further acquisitions. including reducing the debt or paying down the debt resulting from those acquisitions. The second priority for us is investments inorganically, investments in the portfolio of businesses that we have already to allow them to take some advantage of the growth and market opportunity they have.

33:05 The third priority is then a progressive dividend policy and I'll talk more about that on a later slide. So if we move to the next slide I'll talk a little bit more about our acquisition strategy and I think the key point in the heading there is around the strict discipline. The strict discipline that we have is fundamental to our acquisition strategy. If we think about the attributes of the target businesses described earlier how the deal pool we still see of the opportunity pool is large. Strong exporters in global niche markets for scientific instruments and techniques related to the use of scientific instruments.

33:52 a strong indicator for us what what indicates success strong cultural alignment as businesses have developed innovation entrepreneurialism openness within their culture and also frugality okay they're run with a real frugal mindset that helps obviously uh with the asset light or cash conversion aspect We absolutely look for businesses with robust margins. That demonstrates to us differentiation in the niche that they serve and pricing power, both of which are fundamental to our model. And we look for businesses that generate sustainable EBIT and cash flows at a high return on sales. Again, all of which reinforces the strength that they have in their marketplace.

34:40 all of these aspects taken together really form what we would think of as the hurdle okay the high barrier or high hurdle that we have that the potential acquisitions have to be able to cross in order for us to be able to think about acquiring them I think a key way of thinking about this is we always acquire a business in the context of keeping it forever we don't acquire a business in the context of selling it after three years time so if we should acquire a business absolutely it has to pass the test for us do we want to keep this business forever The deal parameters, we typically pay four to six times for a business. We have paid three times. We have paid seven times for our largest acquisitions you're taking. And that's generally around the size.

35:32 We pay a multiple of EBIT. We don't pay a multiple of EBITDA. We see depreciation and amortization as a cost of running the business. We've demonstrated flexibility in the deal structures that we've used over the years, and our deals are funded with cash in debt. We buy high-quality businesses. Importantly, we buy businesses that sell. That might sound like a tongue-in-cheek, but we are talking about businesses that the owners have decided that they want to sell the business for whatever reason. It's not that we are attempting to persuade owners who don't want to sell the business to sell to us. Deals typically have long intubation periods and we acknowledge crystallisation is erratic.

36:20 There have been periods where we've gone two years without securing a deal, in fact we're in one of those periods now. That happened again a few years ago. Equally well there's been years where we've had three deals that were completed. Perhaps the most important statement here is we aim to do deals. Absolutely, it's fundamental to who we are and what we do, but not any specific deal. So that high barrier, that high hurdle means that we mustn't feel compelled to do a deal. We have a reputation as a vulnerable acquirer. We are mindful that for most of the people that we buy from, they will go through this process just once in their life. Whereas some of them will be doing much more regularly.

37:10 So the importance of having built a reputation, maintaining our reputation, being open in the process that we follow, is absolutely key and critical to who we are in our culture. Generate cash, reduce debt. Repeat. That's the fundamentals of this model. we make no acquisitions in half on of this year but we want to emphasize the group sees a healthy pipeline of opportunities and we absolutely remain confident both in the depth and vitality of the potential dealer pool and in our continued ability to attract and acquire businesses of the disciplined elite multiples that we recently appeared So we do not interpret the lack of an acquisition in the first half as either a lull in activity or that our acquisition strategy is ceasing to work in some way. We have absolute faith in the strategy that we follow.

38:17 I'd highlight as well that compared to maybe 9-12 months ago, we do feel that there are some stronger opportunities out there. We certainly see examples of businesses that might have started a sale process and then exited that process. In other words, they stopped it themselves. uh having restarted that process and seeing some examples like that and and absolutely we are seeing good positive flow opportunities okay we're going to move on and talk about investments in organic growth on the next slide and at this point i'm going to hand over to ian thank you

39:02 Thanks, Sam. And hello, everyone. Yes, I've been well trained by my colleagues. We're going to look at organic growth for a few slides. So next slide, please. So many of you will be familiar with the fundamentals of our model, but it is worth repeating, and particularly for those who are not familiar, some fundamental points on this slide as to how we work. The key word in the title is decentralized. So we are deliberately an asset-like group. We have a small head office that is reasonable so that as much as possible in terms of resources are in the businesses, close to customers, driving innovation. Now that model only works, I think 19 separate individual P&Ls, that model only works if the left-hand side points, those fundamental points are working properly.

39:57 So the first one I'll focus on for a second is the strong leadership teams. Obviously, we can't be in the businesses, we're not in the businesses all the time. So we rely on having exceptionally good leadership teams in our businesses, and particularly focusing on the MDs having the right entrepreneurial growth minded MDs. We've got a lot of time in in talent development and making sure we've got strong leadership teams. I'm pleased to report that we've had a very stable period with only one change in MD in the period which is a retirement and I think we reported last time we had up to seven so we've reached a really good period of stability there were some other changes in the leadership teams locally but at MD level there was only one change so strong leadership teams and it's like if we get one thing right it is having those that The second point is again this model only works if it is within a framework of robust governance and financial controls Now I don't want to give the impression we over encumbered incumbent businesses with processes and structures quite the opposite We want to minimize that we want to use the agility the small nimbleness of our businesses to our advantage But of course we do need to have We do need to have processes in place, obviously financial ones, but we focus a lot on things like export controls, cybersecurity, and increasingly things like AI, responsible use of AI, to provide that framework for them to work

41:31 in. And the third point is we also recognize that we have where we have capability gaps, we can bring in additional help, we can bring in external resources, for example, we've done some software outsourcing, I'll talk about in a second. or where we think we need to invest in a capability. So for example, AI is a growing area, which we all know. And we're putting I think 23 people through an AI apprenticeships as a new initiative specifically focused on the adoption of AI for SME manufacturing businesses. It's really exciting initiative. So we get all that right on the left, which then talks to having the autonomy and accountability. But they don't work in isolation. So we move to the right hand side. We have an incredible amount of talent and experience across the group.

42:18 So we aim to leverage that as much as we can by creating communities of like-minded roles. So, for example, we have a very strong sales community, operations community, finance community, and so on. And these communities share best practices as much as they can. And whilst one of us in the exec may well sponsor them, they're generally run by one of the MDs. So these are ground up. grassroots communities um rather than the top down imposed sort of thing and they're really really successful using many examples of sharing a best practice um we promote excellence i mean partly through these communities but also through uh sharing case studies we have a learning management system which we're increasingly using we do also use it actually for some of the compliance training on the left but we're using it increasingly to improve our capabilities and promote excellence.

43:14 And then finally, on the bottom right is we encourage ambition, really, really strong growth ambitions. I'll talk a little bit about that, particularly as regards to our strategy development process in a couple of slides. We get all that right on that slide, then that gives us that long term focus that long term growth, which is what judges name for. Next slide, please. So we alluded last time, and we lifted the lid last time on some detail around some of the challenges. Sorry, some details around some of the opportunities we're seeing. And one of the very exciting things in what has obviously been a relatively difficult period in academic markets, particularly in the US, is the application of some of the scientific techniques and equipment that we make into industrial areas.

44:09 Now we picked up two here. THT is our calorimetry business focusing on understanding heat flows, and particularly is applied to a number of industrial processes and particularly in batteries. And we're seeing that we've seen a really good recovery in that battery market. And that's both in EVs, but also in, in energy storage. In general, we have new leadership there. and interesting applications of AI in that business as well. So there's some really good growth prospects there. And the second one I would draw attention to is our is UHV, which is one of our longest standing businesses in the group actually experts in moving things in ultra high vacuum. Now that's historically been a typically a big science thing often synchrotrons, international facilities and very, very academic, but increasingly finding opportunities in industrial application, particularly Semicon, where the move to more ultra clean environments is becoming more and more important.

45:09 So really two interesting examples of a growing sense of application of our scientific techniques into industry. Next slide, please. So we alluded last time to some of our businesses, we've had some product related issues, Tim touched on this at the beginning. Pleased to report some very good progress on these so firstly in fine testing technology It's our longest-standing business in the group for over 20 years run into some particular competitive issues particularly around software required additional investments particular focus on cost base and capabilities we brought in quite a lot of external expertise there and that's resulted in some Really exciting new product launches very pleased to report some significant order growth Well on the way to recovery.

46:05 These are multi-year projects Which you know big big purchase to our report on so really pleased to report some good progress there and the second we second one we Draw attention to last time was on field the business which focuses on educational equipment and food technology area again Product related issues slightly different more to do with expense the extent of the product range So we did a lot around product and rationalization folks on margin improvements cost reductions and operations improvements and multi-strand set of activities that Good progress to report as well Order intake is up and new products being launched as well. So great great great great progress on those two and a final slide for me So we've got a very robust strategy process, which we've just come to the end of. We tend to do it in the summer.

47:09 We want it to be a budgeting process in the autumn, but we deliberately separate budgeting from strategy because they are fundamentally different disciplines. Now, when we're developing strategies, we ask the businesses to really think big. What do they need to do to double the EBIT? In a three to five year period What are those big rocks, what are those big Pieces of initiatives they need to do They need to be investing in now Where do they see the market opportunities to do that Honestly it's my favourite time of the year Because I really think it brings out The creativity and entrepreneurial nature of some of our Businesses And they put that together into a Strategy, into a Three year plan which is then presented And we're just at the end of that process That then flows into the budget Which is more of a short term commitment And I think, you know, I can't over-emphasize how important that strategy process is.

48:01 It helps us identify the investments we need to be doing now to deliver the growth in the longer term. Okay, I think that's all from me. I'll hand back to Tim.

48:14 Great, thank you Stephen, thanks. So the last point I wanted to touch on in our growth strategy, a progressive dividend policy. Just a reminder, businesses generate cash, we recycle that cash. Investments in acquisitions, including end-end debt, investments in organic growth, and then a progressive dividend policy. That policy is to increase our total dividend, the total annual dividend, by a minimum 10% annually. subject always to appropriate cover and subject to no constraint on a group's capacity to continue to invest in its priorities 1 and 2 so investments in acquisitions and investments in organic growth so the board has increased the interim dividend by 10% and the cover for that dividend cover is 1.1 and we recognise completely that viewed in isolation that level of cover is not sustained it's important to understand that that's driven by the particular low result in the first half of the year okay we do expect as the result comes through for the second half that mechanistically that number will improve so the increase in the interim dividend is a statement of confidence in the group that the group will weather the current headwinds the current macro headwinds and the confidence in the future potential okay and importantly The group is not constrained in its capacity for investments in acquisitions and investments

49:47 in organic growth. Okay, I'll move on to the final couple of slides, the outlook and investment case. So next slide please. So I just want to summarize what my colleagues have said in terms of the outlook for the balance in 2026. So, positively, we are seeing real momentum in order intake. So, as Brad mentioned, 18% down at the end of the first quarter, largely because of that impact of the comparative course of previous year was not impacted by US federal funding science challenges, whereas this year it was.

50:38 So 18% down at the end of the first quarter. 12% down by the end of the half, at the end of last week, just 1% down. It didn't re-iterate. So it feels like momentum building there. also positively early signs that the china's tax exemption processes are being resolved so we're having customers who have ordered equipment but asked us to delay sending them until these things resolve they're now starting to ask for those things to be to be supplied The timing of these things, the improvements in order intake and the tax exemption process being resolved, inevitably leads to a significant H2 weighting, indeed Q4 weighting in terms of revenue. And that has some execution risks, execution challenges for us. We are a collection of businesses that produce high value capital equipment.

51:40 So a single instrument or two instruments missing or shifting a month could have an impact there so for example if there's an instrument that's being shipped and the specific terms or maybe it's delayed during shipment we are mindful those are risks that exist The risks that we have are predominantly within our control. So we now have good visibility with the improved order intake on the revenue that we used to deliver through the balance of the year. So the risks are predominantly within our control, but there are still risks in terms of execution through that final period of the year. We are confident about delivering demonstrable progress at those businesses that have underperformed. The particular examples that I gave at the end earlier.

52:30 so we're guiding trading in line with fi26 market expectations we highlight some resilient markets in particular those related to industrial so we're talking about the exposure that we have to semiconductor improvements in battery battery development and battery technologies so some other industrial research markets but absolutely highlighting continued heroines in scientific research so we see challenges remaining through the balance of this year with uncertainties from the us of course we have the midterm elections coming up soon the us budget for scientific research where there were proposed cuts that were rejected by congress but those funding flow those funding never really flowed properly through the balance of 2026 and we don't expect to see a recovery there and we're also now very mindful that the US administration is talking about similar cuts to the 2027 budget so we do expect continued headwinds in the scientific research market generally we understand the next year tech quarry expedition is not now expected earlier than 2028 so previously we anticipated that there might be a contract signed later this year for delivery

54:00 at some point next year the good news is that particular customer has had their funding approved but we now understand projects and so the quarry expedition is unlikely to happen before 2028. We have confidence in the long-term drives and my business model for the group remains intact. That brings us on to the investment case for the group so next slide please. So i reiterate long-term drivers the large deal pool and that low capital use businesses that generate cash that we recycle in the buy and build capital allocation strategy that we discussed all together continues to generate shareholder value we have a robust business model that we pursue with discipline Earnings enhancing acquisitions were diversified by geography and by application and we note increasing diversification particularly in industrial and commercial opportunities and dividend growth greater than 10% for the last 19 years actually at a CAGR of 21% Okay, thank you. That's the last slide. We're going to now move to Q&A.

55:33 Thank you. We have had a number of questions pre-submitted and submitted live. Just as a reminder, if you would like to ask a question, please type them into the Q&A box situated on the right hand side of your screen. So our first question is on long term capital allocation. Once the balance sheet has deleveraged further, has the board considered adding opportunistic share buybacks alongside the 10% dividend progression, particularly during the quieter M&A periods? This significantly enhances dividend sustainability and avoids the structural risk of getting boxed into an unsustainably high absolute payout base from one-off larger dividend hikes, while allowing judges scientific to elegantly circumvent cash drag and remain in line with historical dividend policy dividend policy sorry

56:26 I'm very happy to take that one. I think there's two points to the question here. One is your point in some respects suggests that we shouldn't do more than 10% increases to our dividend over the longer term and perhaps apply that to share buybacks and yes To answer the first part of the question, absolutely. We've looked at and thought about share buybacks and see them as a viable use of cash allocation but not necessarily at the moment. I follow the logic of a sustained and consistent dividend increase rather than a variable dividend increase which is something which we continue to talk about and given the last couple of years performance where we haven't been at historic highs we've retained the 10% increase and haven't sought for the last few years to increase anything higher than 10% and as regards The current situation, the groups in relation to share buybacks, I'll probably add this in now, that I don't feel personally, and I think the board's in agreement with this, that the use of increasing debt in order to achieve share buybacks outside of everything else we're doing is necessarily an excellent use of our capital allocation at the moment.

57:59 I certainly would feel that i've always said when we do our acquisitions you never want your latest acquisition to be your last one but you accidentally over leveraged the group and can't recover from that the same thing i would argue would be the same it would be said for share buybacks would increase our leverage and we do need to deleverage with improved performance first and foremost

58:27 we acknowledge that since the share price has come off the highs of a couple of years ago in conversations that we've had with investors share buybacks has been an increasingly common point that's been raised but as we mentioned in the interim statement it's not what we felt to be the most effective way of adding value or returning cash to investors so we wanted to take the opportunity in this announcement in the presentation we've given to really sort of that you know first and foremost in our capital allocation priority we're a dividend stock and that that doesn't mean that at some point in the future we might also consider other ways of returning cash to investors and there's been examples in the past with special dividends as well so yeah it's something that we may again come to look at but we the conclusion came to was that we see in recent history it was not the most effective way of us returning cash to investors Thank you. Our next question is on margin resilience.

59:30 You noticed a £2 million reduction in the cost base of underperforming businesses during H1. How much of this represents permanent structural overhead reduction versus temporary variable cost containment? And did any of these measures require cutting back on active R&D or engineering capacity?

59:53 So I think if I give a general overview there and Ian perhaps you want to comment on some of that as well that the majority of that cost is absolutely in targeting underperforming businesses the majority of that cost related to headcount costs okay and absolutely there was some difficult decisions to make and that is Part of I think what was Necessarily had to be made when we had examples of businesses in the group where Investments have been made previously that haven't resulted in growth, haven't delivered the growth that would be expected Then we had to make some tough decisions with those businesses to reverse some of those investments So indeed yeah there were some structural reductions in headcount across some of those businesses.

1:00:50 Ian do you want to lay a little bit more on that?

1:00:52 Yeah I was just going to add Tim that in fact the two examples that we gave FTT and Armfield both launched new products and or outdated products as well as did the cost reduction so it was done in a way which protected the innovation Because the innovation particular on the products which were that the two issues the main issues in those businesses I've been maybe lacking and we need to address that so it was done in a way which protects that core innovation and Developments allowed us to launch new products while still over overall reducing the envelope of cost Thank you and next we have You reaffirmed the current four year market expectations. Could you please explain the key assumptions behind this guidance, particularly regarding second half revenue, operating margins and Q3 order intakes?

1:01:47 Yeah, I guess that's the key thing. We said that we needed to get the appropriate level of Q3 order intake. I think we've been quite clear in showing shareholders in the order intake slide that that certainly happened for us throughout the period, very much another week or so left in Q3. But we're not up to date, more than happy with that. So it's in line with our expectations. it gives us together with the heart here order book and what we've delivered so far in the in q3 yes a higher volume to deliver in q4 but not something that we haven't delivered before as a group and if you look from an earnings perspective what we've got to do in to meet market expectations is basically deliver at 160 pence in the second half now we've done that before we certainly last year in not so brilliant year did 140 or so pence What is slightly different this year versus last year is the effect of some of the adjustments to our cost base means that we will have a lower cost base in H2 this year compared to last year. Plus, as I mentioned earlier, the benefits that we had, the side benefits from our innovation the effect on our effective tax rate on adjusted earnings which will be a lower tax rate than last year and that will add

1:03:19 some additional benefit also to our earnings such that it is not a giant leap that we've never done before but as we said beforehand it will be very much Q4 weighted just as a consequence of the fact that orders needed needed to come in in key three we're building continuing to build but clearly it's not a balanced year h1 versus h2 so there's more to deliver in h2 than h1 overall it's not like we're asking our businesses to do something they've never done before i think that's the important point and with a pretty reasonable order book And they can see that even at this stage, and we are not yet at the end of Q3. So I said it before, it's not without risk.

1:04:05 Tim's mentioned it, I mentioned it, things can go wrong. This is not a bulletproof guarantee from us that things can't go wrong. But as I said, it's within our gift. And our businesses all have the opportunity and responsibility to make sure that they plan properly, they've done everything they can to reduce the risk of it going wrong. and we're not in a position thankfully that we're desperately waiting for a load of orders to come in in November that we hopefully can get out in December.

1:04:36 but just to reiterate the bridge that we see is you know a lower cost base compared to the second half last year some impact from custom box and then the impact of operating leverage on higher volumes where we have good visibility now as a result of those positive order intake trends over the last few months it'll be nice if it works in our in our favor in h2 Thank you. Our next question is aside from recent disruption, what impact, if any, will the new Chinese procurement processes have on the group in the medium term?

1:05:27 I don't, I mean those processes are replacing previous ones that really were, I mean we don't expect them to have a long-term impact on the group and we highlight that this is not something that was specific to judges it was you know any company either you know outside China or domestic that's supplying equipment, scientific equipment funded by government money. The impact that we've seen is delays. We don't think we've seen orders being lost, orders having been received, delays in shipping those orders, and then beyond that, delays in orders being placed until these processes have resolved.

1:06:13 But I don't think we anticipate any fundamental changes in the future as a result of those newly defined processes. Ian, do you have any

1:06:22 No, I would agree. We would largely see its orders, the bidding processes have been frozen by a lot of customers until it's resolved. So, you know, quite a lot of orders have moved to the right in China, but there's no indication that they'll drop off and we would anticipate some decent recovery next year, I think, in the Chinese market. Thank you. Next, we have the delay in... The delay in a new coring expedition seems longer than usual. If that is correct, what is the reason for this?

1:07:02 The reason in this particular case is related to that customer has their funding approved but they've been elected to go to reverse the order of a couple of different things that they wanted to do and so as we currently understand it the Corning expedition that we were to be involved in will follow another expedition that they're doing about something slightly different Geotech continues to follow up some other opportunities. There are other opportunities out there. The field is very vibrant. There was a a show or an event a few months ago in France it was all about gas hydrate exploration and science and the outcome of that is that we understand there are still plenty of opportunities out there it's just we don't currently see any of those being viable to say yes there will definitely be an occurring expedition in 2027

1:08:19 but we're not highlighting at this stage any fundamental change in the market i think important to remind shareholders that these projects are incredibly expensive um you know they're usually multiple tens of millions um to actually put one of these projects on so you've got to get significant amount of funding to be able to do this and it is research so um a lot of this is completely out of our control unfortunately once a project is funded and we know it's going to happen doing the pressure coring that we do for gas hydrate we are the only company that can do it and so that's very reassuring to us but the timing unfortunately remains one which we don't have the control over thank you and this next one's for you tim how did your experience as a ceo at renishaw and halmer prepare you for your current role as executive officer at judges

1:09:20 Great question, thank you. I guess however we look at it, in several different ways, I think we're all, aren't we, the sum somewhat of our prior experiences and I think if it's been good to be able to learn from some of those past experiences and think about how to import them and how to bring them and deploy them in this situation. So I think recognising some of the real strengths in those in the previous companies i've worked for um around innovation uh and and patenting in particular uh and and bringing bringing that before here as a means of you know how to use how to use patents and patentability uh as a driver of innovation that's absolutely something that has yeah has has um i've been saying that uh i i learned in the past and look to deploy here And I think that people will know already that the model that Halma has is really rather similar to what I do here in terms of decentralized and autonomous structure.

1:10:29 But many of the things that I learned in terms of thinking about operational metrics and about expectations of what it means to operate really within the decentralized structure are things that I've been able to introduce, develop and deploy here. Thank you Tim. Our next question is, are current markets and uncertainties leading to lower valuation multiples for potential acquisition targets in the scientific instruments niche?

1:11:10 I think the simple answer to that is no, that's not our experience. If I think about the experience that we're having nine to twelve months ago, there's We have to always put this into the context of the bar that we have here. We look to acquire successful businesses and we look to acquire them in the context of keeping them forever. Okay that's a really high bar when you're looking at successful businesses. If you're having a conversation with a business and they're coming in off the back of but the owner of that successful business probably has a number in mind relative to where they used to be so if anything the inferred multiple might be higher rather than lower that can lead to some challenges in terms of how the deal might be structured that still benefits both sides and what we're seeing now is a greater level of quality businesses deal opportunities that we're looking at but I don't think we're seeing that these are high quality successful businesses so we're not we're not seeing any sort of reduction or deterioration in that sense of the multiple expectations on the other hand we've absolutely still seen that our the Thank you Tim.

1:12:43 Our next question is does the improved order intake from minus 12% in H1 to minus 1% year to date imply Q3 orders are roughly plus 20%?

1:13:10 it you know that that may be one um implication of your calculation i mean what i can say is i think it's quite helpful and slightly different but very very close is the last four months of orders certainly have been at that level as well so it's a you know it's a pleasing improvement for us and don't get me wrong i'd much prefer to be talking about growth rather than the lack of negative sign but all the same going from 18 minus 18 to minus one now is a much more positive scenario for us and more importantly as you'd have seen earlier you can do intake slides showing the trailing 12 months ticking upwards that really is the sign of progress and that's the important thing for us which we're very very pleased about but much work still to go and we want that to keep ticking up thank you brad The next question is what equipment do you supply to the offshore wind sector?

1:14:12 So in particular that relates to our company GDS instruments and so actually the story I tell upon first being introduced to that business the MD at the time told me that the best way to understand the type of equipment that they produce is to say if they had existed several hundred years ago we probably would not not be visiting the Tower of Pisa rather than visiting the Leaning Tower of Pisa if that makes sense in other words it's the type of equipment for looking at static and dynamic loading of soils in foundations or unusual building environments and so particularly those that are tethered to the sea to the base of the sea that the material and the soil I think that it's been described to me as more like yogurt than rock or hard surface so there needs to be a really excellent understanding of its performance under dynamic and static mode because the types of loads that wind turbines are experiencing are very variable and very dynamic depending on tides wind waves and so on so forth so the instruments are all about laboratory testing of

1:15:44 subsea soil samples as a precursor to determining which sites are going to be used which exact locations are going to be used for offshore wind turbines Thank you. Next we have, what share of your North American revenue is directly tied to federally funded labs versus commercial customers? Are those labs telling you 2027 budgets are recovering? Or should we model North America at the current lower base?

1:16:16 to be clear i can't give you a direct answer to that because we can't just can't measure that actually what we've always historically tried to explain to our shareholders is that and we believe that certainly as of last year around half of our revenue comes from the academic world around a sixth of it from some of the the world that is sort of indirectly financed as an example through entities like the NIH or other research institutes etc so if you then apply that into the US somewhere between half and two-thirds of the revenue that we're able to deliver for the group in the US will be affected by Federal funding but how much of that can't absolutely be so simply because Either a piece of the funding that they will get because universities will have direct funding or have funding that comes from other and other sources but an institute like the NIH will also have that situation where a large piece of funding comes from government but they'll also have other other funding arrangements as well so trying to work out a number is not even possible but we look at we looked at last year in the region of 25 percent of our total revenue was generated in the US and that the revenue that we've normally generated

1:17:49 around two-thirds of that is exposed to the effects of um reductions or uncertainties in federal funding but you certainly can't put an absolute number on our fortunately i hope that's helpful but i appreciate that there's a degree of fakeness in that answer because we just can't give anything clearer thank you and of the revenue lost in china this half how much do you think comes back versus is gone for good I would say that the vast majority of that is about delay. And one example I can speak of was we had a significant OEM order in the first quarter of last year that we were expecting to have at least in the first half this year and I say at least in the first half which is we're expecting it towards the end of the first quarter then pushed out into the second quarter and the consequence of this is now it is expected at some point in H2 it's not yet come in so we're you know expecting Q4 what it hasn't done and has gone away but until there is the resolution of the 13 tax which is purely a once this has been processed and they're in a position to be able to claim the exemption they will place an order with us so i don't know if we've really lost much at all but we're certainly very clear that existing orders their delivery have been pushed to the right and expected

1:19:22 routine and other orders have also been pushed to the right so whether they come in this year or whether they come in start next year in 27 at the moment is still slightly a question but we're feeling a lot better that the process there is improving because we've had examples of existing orders now being asked to be delivered so progress is definitely happening And what we can't do is put an absolute on when everything's back to complete normality. Thank you, Brad. Next we have, where is the order intake inflection coming from? Is it universities or industrial activity?

1:20:05 I'm happy to take that one. It's a real mix actually and I think it is worth highlighting that what we are seeing is this improvement but we're also flagging that we expect we are still seeing and expect to continue to see into 2027 continue challenges around the US federal funding research so what this the improved order momentum we are not characterizing it as a general sort of rising tide if you like or a general economy in the scientific instrumentation market rather what we're seeing is pretty broadly across our businesses we are seeing Big-ticket items, instruments, opportunities, contracts coming through that are across, certainly there's some in scientific instrumentation, but also in industrial fields including batteries and battery technology including semiconductor so pretty broad across across across the group across multiple businesses and across those sectors We're highlighting them, but we are seeing that high value scientific instrumentation is still being ordered from time to time from the

1:21:38 US. That is examples where there are research groups in the US who are finding a way through the processes justifying getting the funding that they need and those things are coming through they're being ordered so what we're seeing across the group is that these opportunities that have been typically in the opportunity pipeline for quite some time the businesses have been saying we expect these things to come through and they're diligently working on that and those things have been coming through over the last few months Thank you Tim We are now moving on to our final question. If you have any further questions, please email the team who respond to any questions that weren't covered today.

1:22:25 The question is, you've explained why North America is down, but Europe is down even more. So why is that and when do you expect Europe to recover?

1:22:36 I think the data that we showed Europe was down 20% during the first half North America was down 7% What we did highlight was that North America was down there was a bigger impact than 7% related to the challenges with continued uncertainty in federal funding of science But we did benefit from some of our businesses seeing quite region specific recovery and order intake And that was non-academic recovery and order intake in the States So that offset that, the 7% decline was perhaps less than we might normally have expected if that makes sense relative to some of that recovery in some of the businesses. The decline in Europe was relatively broad. We certainly saw decline in some OEMs where those OEMs might be scientific instrument OEMs that we sell to and they supply into the US and there was also a reasonably significant impact from a one-off non-recurring order that we saw industrial order Thank you Tim. That's all the questions we have time for today so I'll hand back over to you guys for any closing remarks.

1:23:58 I think thank you very much thanks everyone for attending I think the main closing remarks are just to reiterate you know we acknowledge a very challenging set of results in the first half but some positives in there in terms of continuing to control the controllables and progress solid progress of businesses that have been underperforming we also highlight the momentum that's been building through the second half around order intake as a result of which we maintain guidance for the end of the year and acknowledge that there remains considerable risk to the execution challenges to the execution but those things are predominantly within our control but fundamentally a high degree of confidence in Thank you to the management team for joining us today.

1:24:51 That concludes the judges scientific investor presentation. Please take a moment to complete a short survey following this event. The recording of this presentation will be made available on engage investor. I hope you enjoyed today's webinar.