Judges Scientific Regulatory News (JDG)

Judges Scientific plc

("Judges Scientific", the "Company", or the "Group")

Interim results for the six months ended 30 June 2014

JUDGES SCIENTIFIC REPORTS RECORD HALF-YEAR RESULTS

Highlights:

· Revenues up 43% to a record £21.9 million (H1-2013: £15.4 million) including 3.2% organic growth

· Adjusted* pre-tax profit up 30% to a record £4.1 million (H1-2013: £3.1 million)

· Adjusted* basic earnings per share up 22% to a record 50.3p (H1-2013: 41.1p)

· Interim dividend of 7.3p, an increase of 10.6% (H1-2013: 6.6p); covered seven times by adjusted earnings

· Adjusted* net debt of £3.3 million at 30 June 2014 (30 June 2013: £15 million and 31 December 2013: £5.7 million)

· Cash balances of £10.1 million at 30 June 2014

. Organic order intake down 4.8% compared with H1-2013

* Adjusted earnings figures are stated after adding back exceptional items relating to derivative financial instruments, hedging of risks materialising after the end of the period, amortisation of intangible assets and acquisition-related costs. Adjusted net debt notionally includes acquisition-related payments which had yet to be settled at the balance sheet date and excludes subordinated debt owed by subsidiaries to minority shareholders.

Alex Hambro, Chairman of Judges Scientific, commented:

"I am able to announce a record set of interim results for the ninth consecutive year. As indicated in our trading statement in July, progress at the mid-year has been driven by Scientifica's contribution, with only modest organic growth. The business climate within the instrumentation sector remains challenging but your Group's ability to pursue its strategic objectives is undiminished."

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Chairman's Statement

For the ninth consecutive year, I am able to announce progress at the interim stage with revenues, adjusted operating profits, earnings per share and dividends all at record levels.

Revenues for the six months ended 30 June 2014 rose 43% to £21.9 million (H1-2013: £15.4 million); the businesses which were owned by the Group on 1 January 2013 achieved organic growth of 3.2%, with weak performances in China and the US (each down 15%) counterbalanced by 10% growth in all other territories. The remainder of the increase reflected the first-time inclusion of a full six months of revenues from Scientifica, the specialist manufacturer of electrophysiology equipment acquired by the Group in June 2013.

Adjusted pre-tax profit for the first half of 2014 rose 30% to £4.1 million (H1-2013: £3.1 million). The increase was attributable to the inclusion of the Scientifica figures, with organic EBITA contribution from businesses which were owned by the Group on 1 January 2013 remaining static compared with the first half of 2013.

Earnings per share progressed despite the 11% increase in our issued share capital, 9.4% of which resulted from the £8.1 million equity placing in October 2013. Adjusted basic earnings per share rose 22% to 50.3p (H1-2013: 41.1p). Adjusted diluted earnings per share increased 24% to 48.7p (H1-2013: 39.4p). The return on total invested capital ("ROTIC") decreased from 41% to 30%, as was anticipated at the time of the Scientifica acquisition.

As in the past, the Group's figures have been adjusted to eliminate items which have to be included in the accounts under IFRS but which, in the opinion of the Directors, serve to obscure rather than clarify the Group's trading performance. The most significant item during this half-year was the amortisation of intangible assets (£2.2 million). After the period end, the remaining Convertible Redeemable shares were converted and as a result the 2015 IFRS results will be free from this distortion. The IFRS-related charges reduced profit before tax from £4.1 million to £1.9 million (H1-2013: £777,000) and earnings per share to 22.2p basic and 21.6 diluted (H1-2013: 7p basic and 6.7p diluted).

Organic order intake during the six-month period decreased 4.8% compared to the first half of 2013; total order intake (including Scientifica) was 11% below the level required to meet the Group's sales budget without consuming its order book. The second quarter showed a moderate but insufficient improvement compared to the first. The order book at 30 June 2014 represented 7.8 weeks of sales, compared to 10.6 weeks at 30 June 2013.

Cash flow during the first half was strong, with cash from operations representing 76% of adjusted EBIT; this resulted in a 42% reduction in adjusted net debt to £3.3 million (2013: £15 million on 30 June and £5.7 million at the year-end). Cash balances at the end of the period exceeded £10.1 million.

The Company's dividend policy is to achieve steady increases in payments, with a step change provided this does not impair the visibility of future progression. Consistent with this policy and taking into account the challenging business environment, the Board has concluded that it can prudently declare an interim dividend of 7.3p (2013: 6.6p), which will be paid on Friday 7 November 2014 to shareholders on the register on Friday 10 October 2014. The shares will go ex-dividend on Thursday 9 October 2014.

Trading at the start of the second half has continued to be difficult. Weekly order intake in the third quarter has broadly mirrored the activity seen in the first half.

The principal drivers of shareholder value creation have been our ability to deliver net debt reduction, a progressive dividend policy and the completion of earnings-enhancing acquisitions. In spite of the frustrations encountered during the first half of 2014, your Group's ability to deliver these objectives remains undiminished.

The Hon. Alexander Hambro

Chairman

24 September 2014

JUDGES SCIENTIFIC plc

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

There are no items of other comprehensive income for the three periods in question.

The accompanying notes form an integral part of these consolidated financial statements.

JUDGES SCIENTIFIC plc

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

JUDGES SCIENTIFIC plc

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

* - Total represents amounts attributable to equity holders of the parent company

JUDGES SCIENTIFIC plc

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

JUDGES SCIENTIFIC plc

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Nature of operations

Judges Scientific plc is the ultimate parent company of the Group, whose principal activities comprise the design, manufacture and sale of scientific instruments. The subsidiaries are grouped into two segments.

· Material Sciences Group

· Fire Testing Technology Limited is the world's major producer of instruments designed to measure the reaction of materials to fire; the activity is supported through the in-house production of engineering parts by its subsidiary company, Aitchee Engineering Limited. Its other trading subsidiary, Sircal Instruments (UK) Limited, designs, manufactures and sells rare gas purifiers for use in metals analysis.

· PE.fiberoptics Limited is a significant provider to the telecoms industry of equipment to test the properties of fibre optic and fibre optic networks.

· Global Digital Systems Limited designs, develops and manufactures equipment and software used for the computer-controlled testing of soils and rocks.

· Vacuum Group

· Quorum Technologies Limited designs, manufactures and sells instruments that prepare samples for examination in electron microscopes.

· UHV Design Limited designs, manufactures and sells instruments to create motion, heating and cooling within ultra high vacuum chambers.

· Deben UK Limited designs, manufactures and sells devices used to enable or to improve the observation of objects under microscopes.

· Scientifica Limited designs, manufactures and sells complete instrument rigs used in electrophysiology, comprised of micromanipulators, optical microscopes and associated mounting solutions.

2. General information and basis of preparation

The financial information set out in these condensed consolidated interim financial statements for the six months ended 30 June 2014 and the comparative figures for the six months ended 30 June 2013 are unaudited. They have been prepared taking into account the requirements of IAS 34 Interim Financial Reporting and the AIM Rules. They do not contain all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013, which have been prepared in accordance with IFRS as adopted by the European Union.

The financial information for the year ended 31 December 2013 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2013 have been filed with the Registrar of Companies. The Auditor's Report in respect of those financial statements was unqualified and did not contain statements under section 498 of the Companies Act 2006.

The condensed consolidated interim financial statements are presented in Sterling, which is also the functional currency of the parent company.

Judges Scientific plc is the Group's ultimate parent company. The Company is a Public Limited Company incorporated and domiciled in the United Kingdom. Its registered office and principal place of business is Unit 19, Charlwoods Road, East Grinstead, West Sussex RH19 2HL. Its shares are listed on the Alternative Investment Market.

The condensed consolidated interim financial statements have been approved for issue by the Board of Directors on 23 September 2014.

3. Significant accounting policies

The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2013, except for the taxation policy where, for the purposes of the interims, the tax charge on underlying business performance is calculated by reference to the estimated effective rate for the full year.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

4. Significant events and transactions

Revenues for the six months ended 30 June 2014 rose strongly to £21.9m, up 43% on the equivalent period in the previous year. This increase was largely attributable to the inclusion of Scientifica Limited (acquired on 26 June 2013), with organic revenue growth achieved by the other operating companies in the Group amounting to 3.2%. Similarly the 30% increase in adjusted pre-tax profits was attributable to the inclusion of Scientifica, with static results overall from the other operating companies.

Order intake during the first half of the financial year for the businesses which were owned by the Group on 1 January 2013 was disappointing, with a shortfall of 4.8% compared with the equivalent figures for the previous period. Order intake in the third quarter has broadly mirrored the activity seen in the first half.

5. Intangible assets

The following tables show the significant additions to and amortisation of intangible assets:

6. Earnings per share

Basic earnings per share is calculated on the earnings attributable to Ordinary shareholders divided by the weighted average number of shares in issue during the period.

Diluted earnings per share is calculated on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options and other dilutive potential Ordinary shares. The calculation is based on the treasury method prescribed in IAS 33. This calculates the theoretical number of shares that could be purchased at the average middle market price in the period out of the proceeds of the notional exercise of outstanding options. The difference between this theoretical number and the actual number of shares under option is deemed liable to be issued at nil value and represents the dilution.

Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below:

7. Share issue

During the first six months of 2014 the following allotments took place:

· to satisfy the exercise of share options as follows:

§ share options on 27 January 2014 when the mid-market share price was 2,060.0p

§ share options on 10 February 2014 when the mid-market share price was 2,282.5p

§ share options on 29 May 2014 when the mid-market share price was 2,075.0p

§ share options on 5 June 2014 when the mid-market share price was 2,065.0p

· to satisfy the requirements of the earn-out on the acquisition of Scientifica when the mid-market share price was 2,080.0p

Ordinary shares in issue are summarised as follows:

8. Changes in net debt in the 6 months ended 30 June 2014 were as follows:

Non-cash items represent foreign exchange differences on bank loans.

9. Dividends

The Company paid an interim dividend of 6.6p per share (£353,625) on 8 November 2013 and a final dividend of 13.4p per share (£799,141) on 3 July 2014, both relating to the financial year ended 31 December 2013.

The Company will pay an interim dividend for 2014 of 7.3p per share on 7 November 2014 to shareholders on the register on 10 October 2014. The shares will go ex-dividend on 9 October 2014.