Judges Scientific Regulatory News (JDG)

29 Apr 2005 07:02

Judges Capital PLC29 April 2005 JUDGES CAPITAL PLC ACQUISITION AND PLACING Introduction The board of Judges Capital PLC is pleased to announce the proposed acquisitionof Fire Testing Technology Limited, subject to shareholder approval, completionof the placing and admission to AIM. Fire Testing Technology Limited designs,manufactures, installs and maintains fire testing equipment which is used totest the effects of fire on a wide variety of materials. The board believesthat the 'instrumentation and testing' market offers significant potential forgrowth and enhanced shareholder returns. The acquisition of Fire TestingTechnology Limited will be financed by a placing of new ordinary shares toraise £956,000 before expenses, bank facilities provided by the Bank ofScotland, £400,000 in consideration shares and the issue of a loan note to thevendors of Fire Testing Technology Limited. The board has also, today, announcedits preliminary results for the year ended 31 December 2004. A copy of theAnnual Report and Accounts will be forwarded to shareholders shortly. By reason of the size and relative value of Fire Testing Technology Limited, theacquisition will amount to a reverse takeover under the AIM Rules and thereforerequires the approval of shareholders pursuant to Rule 14 of the AIM Rules. Area of Proposed Activity The board has identified 'instrumentation and testing' as an area which itbelieves offer significant potential for growth, acquisition opportunities andenhanced shareholder returns. The UK based instrumentation sector is estimatedto be worth approximately £5bn per annum encompassing almost 2,000 activecompanies of which some 185 companies have an annual turnover in excess of £5m.The directors believe that increasing environmental awareness, constantlyevolving regulatory regimes and the need to manage risk, particularly in respectof potential litigation are all factors which augur well for a business whichwill concentrate on testing, measuring and checking and the instruments requiredto perform these functions. Fire Testing Technology Introduction Founded in 1989, Fire Testing Technology Limited designs, manufactures, installsand maintains fire testing equipment. This equipment is used to test the effectsof fire on a wide variety of materials and thereby enables users of theequipment to monitor compliance with legislation, industry standards andcustomer requirements. The Directors believe that the underlying business modelof Fire Testing Technology Limited focuses upon the exploitation of legislationthat requires various industries to test materials to establish their propertiesin relation to fire and heat. This testing requires the use of particularinstruments. Fire Testing Technology Limited has developed a portfolio ofinstruments designed to test materials produced by a wide spectrum ofcustomers. Market Fire Testing Technology Limited has always been a export led company and over90% of its sales are to customers outside the UK. These customers are based inUSA, Europe and other countries around the world (over 50 in total). The mainindustries to which Fire Testing Technology Limited sells its products are theconstruction and building, transport, textile, plastics together and electricalindustries together with educational institutions. Financial Information on Fire Testing Technology Limited The following table sets out key financial information relating to Fire TestingTechnology Limited, for the 3 year 7 month period to 31 December 2004. TheAdjusted Operating Profit (which for the final period relates to the 6 monthsended 30 November 2004) has been adjusted for non-recurring costs principallyassociated with the previous owners of Fire Testing Technology Limited, but alsoto take into account the costs of the new General Manager and the lease beingentered into on the manufacturing unit at East Grinstead. In addition theadjusted operating profit for the six months to 30 November 2004 excludes the£96,000 costs of a forgery involving Fire Testing Technology Limited's agent inChina. . y/e May y/e May y/e May 7 mths to 31 Dec 2002 2003 2004 2004 £'000 £'000 £'000 £'000Turnover 2,158 2,284 2,844 1,584Operating Profit 253 272 622 219Profit Before Tax 265 289 635 227Adjusted Operating Profit 441 516 603 284* * relates to the 6 months period ended 30 November 2004 As at 31 December 2004 the net assets/shareholders' funds of Fire TestingTechnology Limited amounted to £1.02m. Current Trading and Future Prospects In January 2005, Judges Capital PLC sold its holding of shares in ISG plc, adisposal that generated total proceeds of £1,156,000 and a profit on sale of£226,000. Of the proceeds, the sum of £512,000 was used to settle relatedliabilities under Contracts for Difference. In addition Judges Capital PLC hasreceived £208,000 since the year end, from the liquidation of Fortress HoldingsPLC, which is approximately the amount of Judges Capital PLC's investment. Fire Testing Technology Limited's trading continues to be strong. Orders on handor in the course of negotiation augur well for the onset of the forthcomingfinancial year commencing on 1 June 2005. Fire Testing Technology Limited Acquisition Terms Judges Capital PLC is proposing to acquire, subject to shareholder approval,completion of the bank facilities, the placing and admission to AIM of theenlarged share capital, 100 per cent. of the issued share capital of FireTesting Technology Limited for approximately £3.7m (plus an excess workingcapital adjustment which, as at 31 March 2005, would have been £697,000). The£3.7m consideration will be satisfied by a cash payment of £2.3m at completion,£0.4m in consideration shares in Judges Capital PLC at the placing price, £0.5min subordinated interest bearing loan notes and a deferred contingentconsideration of up to £0.5m payable in cash if Fire Testing Technology Limitedgenerates £773,000 of adjusted operating profit in the year to 31 May 2005. Theadditional working capital payment will be payable in cash at completion. Details of Placing In total 956,000 New Ordinary Shares are being placed on behalf of JudgesCapital PLC to raise £956,000 gross (£716,000 net of expenses of the placing andadmission). In total the shares being placed represent 27.6 per cent. of theenlarged issued share capital. The placing is conditional, amongst other things,on admission. The net proceeds of the placing will be used to fund the acquisition of FireTesting Technology Limited. Extraordinary General Meeting A notice convening an EGM to be held at Faegre & Benson LLP, 7 Pilgrim Street,London EC4V 6LB at 11.00 a.m. on 23 May 2005 will be sent to shareholders today. At the EGM resolutions will be proposed to approve the acquisition and toauthorise the directors to allot shares inter alia in connection with theplacing. It is expected that dealing in the enlarged issued share capital ofJudges Capital PLC will commence on AIM at 8.00 a.m. on 24 May 2005. For further information: David Cicurel - Judges Capital - 0207 437 4037Mike Sawbridge - Shore Capital & Corporate - 0151 600 3722Melvyn Marckus - Cardew & Co - 0207 930 0777 This information is provided by RNS The company news service from the London Stock Exchange