Interim results six months ended 30 June David Cicurel, CEO Brad Ormsby, CFO

Transcription

1 Interim results six months ended 30 June 2018 David Cicurel, CEO Brad Ormsby, CFO 18 th September 2018

2 About Judges Scientific Buy and build model within the scientific instrument market Favourable market Long term growth drivers Large pool of potential acquisitions in global niches Low working capital requirements Track record of acquisitions and reputation as a good acquirer Sixteen acquisitions since May 2005 Strict acquisition discipline Buying sustainable businesses at sensible prices Long term drivers Low capital use Shareholder value 2 Large deal pool

3 The Judges Group Fire Testing Technology PE.fiberoptics Quorum Technologies Deben Scientifica CoolLED FIRE Dia-Stron EWB Solutions Aitchee Engineering UHV Design Sircal Instruments GDS Instruments KE Developments Armfield Oxford Cryosystems 3

4 Key Messages Strong financial performance Strong organic performance Progress with production issues Favourable FX Continued positive momentum Solid order intake underpinned by continued R&D investment Benefiting from diversification by geography and markets Positive outlook Robust order intake post H1 Expecting to exceed FY consensus* *as at 17 th September

5 Performance in the period

6 Highlights Record revenues +13% 37 million Organic growth 5.7% Organic order intake +2.3% Total order book 14.6 weeks (2016: 0.7 billion) Adjusted operating profit +52% 6.9 million (2016: 11.6 million) Adjusted EPS +52% p (2016: 61%) Cash from operations 6.3m (2017: 4.4m) (2016: 2.7 million) Interim dividend +20% 12p (2016: 24 million) Adjusted net debt 2.2m (Dec 2017: 8.0m) (2016: 10.5illion) Cash balance 14.4m (Dec 2017: 10.7m)

7 Performance H ( m) H ( m) Variance ( m) Variance (%) Revenue % Organic revenue up 5.7% Operating costs (30.1) (28.1) (2.0) 7% Adjusted operating profit Interest (0.3) (0.2) % Adjusted PBT % Taxation (1.0) (0.7) Adjusted PAT % Organic EBITA contribution up 36% Half year effective tax rate estimated at 15% Adjusting items (post tax) (1.9) (1.9) Adjusting items mainly amortisation Statutory PAT

8 Order intake H organic order intake 2.3% up on H1 2017; consistent positive order intake since June 2016 Organic order book at 30 June 2018: 15.0 weeks (30 June 2017: 15.4 weeks) Oxford Cryo trading as expected Total order book 14.6 weeks at 30 June ,000 80,000 70,000 60,000 50,000 40,000 Post H1 order intake positive 30,000 20,000 10,000 8 Group (17 wks * 3) Group (ttm) Group (budget)

9 Revenue summary Revenue growth of 13% to a record 37.0m Like for like sales growth of 5.7% Organic growth across UK, EU, and North America Orders Pause in China/HK, after years of strong but erratic growth 85+% of revenues exported Recent H1/H2 bias unlikely to repeat in 2018 Revenue 9

10 Profit bridge 000s 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 H contribution Production recovery Organic growth Organic decline Acquisition H contribution* *Contribution is EBIT from trading subsidiaries before central costs 10

11 Balance sheet and cash flow 11 Balance Sheet June 18 ( m) Working capital 10% of annual revenues Armfield DB pension triennial valuation in 2017 Dec 17 ( m) Cash Debt (16.6) (18.9) Adjusted net debt (2.2) (8.0) Subordinated debt (0.2) (0.2) Working Capital DB Pension (1.7) (1.8) Other assets / liabilities Net assets Reduced net debt from strong cash generation Cashflow 92% cash conversion of operating profit Focus on reducing debt H ( m) Increasing dividend returns H ( m) Adjusted EBITDA Working capital movements (0.7) (0.6) Share based payments Cash generated from ops Tax (0.1) 0.2 Capex (inc acquisitions) (1.2) (1.9) Interest payments (0.3) (0.2) Repayment of borrowings (1.5) (1.5) Issue of shares Movement in cash

12 Return On Total Invested Capital Return on Total Invested Capital FTT acquisition ROTIC (Trailing 12 months)* GDS March % 45.0% 40.0% Scientifica June 2013 Armfield January % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 12 *excludes central costs and properties

13 Diversification Group revenue Group revenue by geography 13

14 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Revenue - H1 12½ Year Financial History Financial history Revenue and profit Adjusted operating profit - H Revenue - H2 Adjusted operating profit - total 2,000 1,800 12,000 1,600 10,000 1,400 1,200 8,000 1,000 6, , , EPS and Dividends Adjusted basic Earnings per share - H2 Adjusted basic Earnings per share - H1 Dividends Cash generation COAGR 9.5% for past 10 years Focus on debt repayment Cash generated - HY Cash generated - FY Dividends

15 Strategy for growth

16 Growth drivers M&A Many global niches Over 2,000 privately held businesses in the UK Organic growth through Long term secular organic growth trends in science Global higher education Process optimisation Research and Development 16

17 Acquisitions

18 Acquisition criteria and delivery 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 2 to 4% Post acquisition: Create environment for businesses to thrive with support and advice for entity management teams Implement robust financial controls Repay debt and reinvest in further acquisitions Succession planning 18

19 Outlook

20 Outlook Currency fluctuations/government spending influencing demand in the short term Second half bias not replicated in current year Order intake post period end significantly ahead of the same period in 2017 Expecting to exceed FY consensus 20

21 Investment Case Strong long-term growth drivers in higher education and process optimisation Robust business model; pursued with discipline Large pool of targets, every acquisition is earnings enhancing Management focused on shareholder value profitability, cash generation, debt repayment, dividend growth and return on capital Inheritance tax free shareholding after two years Well diversified by geography and by scientific application Dividend growth of 10+% for past 12 years, CAGR 24% 21

22 Appendices Management team Major shareholders Trading businesses

23 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 Mark Lavelle, Chief Operating Officer 15 years leadership experience at Halma plc including 5 years as Divisional CEO 23 Owners of 16% of equity

24 24 Major shareholders

25 25 Our businesses

26 26 Our businesses

27 27 Our businesses

28 28 Our businesses

29 29 Our businesses

30 Our businesses 14 30