Half Yearly Report

25 September 2012

Judges Scientific PLC

Half Yearly Report

Judges Scientific plc

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

Interim results for the six months ended 30 June 2012

JUDGES SCIENTIFIC REPORTS RECORD HALF-YEAR RESULTS

Highlights*:

·; Record adjusted basic earnings per share of 38.4p, an increase of 40% (H1-2011: 27.3p)

·; Interim dividend of 5p, an increase of 51% (H1-2011: 3.3p); 7.6 times covered by adjusted earnings

·; Record sales of £13.4 million, an increase of 39% (H1-2011: £9.7 million) including 8% organic growth

·; Record adjusted pre-tax profit of £2.6 million, an increase of 47% (H1-2011: £1.8 million)

·; Acquisitions of Global Digital Systems and the business of KE Developments completed in March 2012

·; £3 million placing at 600p completed in May 2012

·; Adjusted net debt of £4.3 million at 30 June 2012 (30 June 2011: £3.0 million and 31 December 2011: £0.7 million)

·; Cash balances of £3.9 million at 30 June 2012

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

Alex Hambro, Chairman of Judges Scientific, commented:

"It is gratifying to be able to announce a record set of interim results for the seventh consecutive year. During the first half of 2012, the Group generated solid organic growth and completed two acquisitions and a placing.

"Trading at the start of the second half of the year has been satisfactory and a healthy order book and a robust balance sheet should help the Group confront the global challenges and deliver results in line with expectations."

Enquiries:

Judges Scientific plc

David Cicurel, CEO

01342 323 600

Shore Capital

Pascal Keane

Edward Mansfield

020 7408 4090

Cardew Group

Melvyn Marckus

07775 896491

Chairman's Statement

It is gratifying to be able to announce a record set of interim results for the seventh consecutive year. Revenues for the six months ended 30 June 2012 rose 39% to £13.4 million compared with £9.7 million in the first half of 2011. The businesses which were owned by the Group throughout the first half periods of both 2011 and 2012 achieved organic growth of 8%. The balance of the increase was attributable to the acquisition of an indirect 51% interest in Deben UK Limited ("Deben") in March 2011 and of Global Digital Systems Limited ("GDS") and the business of KE Developments Limited ("KED") in March 2012. The £7.65 million purchase of GDS, which designs, manufactures and sells instruments used to test the mechanical properties of soil and rock, represents the Group's largest transaction to date. The acquisition by Deben of KED, which specialises in the production of accessories for electron microscopes, further reinforces our presence in microscopy; this small acquisition is not expected to contribute to profitability in the current year.

Adjusted pre-tax profit for the first half of 2012 recorded a 47% increase to £2.6 million (H1-2011: £1.8 million). Organic growth in EBITA contribution amounted to 19%, with the balance being attributable to acquisitions, all of which have performed according to the Board's expectations. KED was successfully integrated into Deben's operations during the period.

Adjusted basic earnings per share rose 40% to 38.4p (H1-2011: 27.3p). Adjusted diluted earnings per share amounted to 33.5p (H1-2011: 23.4p). The return on total invested capital ("ROTIC") softened from 42% to 39%, the unavoidable consequence of a large acquisition.

As in the past, the Group's figures have been adjusted to remove items which have to be included in the IFRS accounts but which, in the opinion of the Directors, serve to obscure rather than to clarify the Group's trading performance. These items comprise the transaction costs arising on acquisitions (£444,000) and two non-cash items, being the amortisation of intangible assets (£1.9 million) and a £1.35 million charge arising in respect of the Convertible Redeemable shares; the latter charge arose as a result of the further increase in the market value of the Company's Ordinary shares during the reporting period.

The Directors, having recognised that the Group's results are significantly distorted by these accounting quirks, proposed measures designed to accelerate the redemption and/or conversion of the Convertible Redeemable shares; these proposals were adopted by shareholders at the last Annual General Meeting. Several Directors have since used these measures with regard to their respective holdings and, as a result, the current financial year will be the last to be significantly affected by this distortion. After inclusion of these IFRS-related charges, profit before tax is turned into a £1.1 million loss (H1-2011: profit £226,000) and earnings per share into a 36.4p loss basic and diluted (H1-2011: profits of 2.7p basic and 2.6p diluted).

Order intake during the six-month period registered organic growth of 14%. The order book at 30 June 2012 represented ten weeks of sales, somewhat ahead of the level at the beginning of the year.

After having borrowed £8 million to purchase GDS, the Company raised £3 million (£2.8 million net of costs) in May through the placing of 500,000 new Ordinary shares with one existing and several new institutions as well as various private investors. It was pleasing that the discount to the then market price was less than 5% and that the placing was almost three times subscribed; applications were scaled down to strike the right balance between the desire to restore the Group's ability to pursue further acquisitions and the wish to limit earnings dilution. As a result of the placing and healthy cash flow in the first half, the balance sheet remains prudent with £3.9 million adjusted cash balances at 30 June 2012 (H1-2011: £4.1 million) and adjusted net debt of £4.3 million (H1-2011: £3.1 million).

The Group's dividend policy is to set payments at a level that leaves good visibility of future progression. The Board views the level of cover as sufficient to justify a further step increase and, accordingly, an interim dividend of 5p (2011: 3.3p) will be paid on Friday 2 November 2012 to shareholders on the register on Friday 5 October 2012. The shares will go ex-dividend on Wednesday 3 October 2012.

Trading at the start of the second half of the year has been satisfactory and order intake has been comfortably consistent with management's expectations for the year. The scientific instruments sector has continued to show resilience in the face of European public sector austerity, question marks in relation to China's growth prospects, doubts over the future of the Euro and a strong domestic currency; these threats remain but the Group is in a solid position to weather them.

The Hon. Alexander Hambro

Chairman

24 September 2012

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 BALANCE SHEET

(continued)

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.

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 2012 and the comparative figures for the six months ended 30 June 2011 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 2011, which have been prepared in accordance with IFRS as adopted by the European Union.

The financial information for the year ended 31 December 2011 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 2011 have been filed with the Registrar of Companies. The auditor's report on 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 24 September 2012.

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 2011, 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.

3.1 Derivative financial instruments

Under the terms of IAS 39 Financial Instruments - Recognition and Measurement, the Convertible Redeemable shares in the company are deemed to represent embedded derivative financial instruments. As such, it is a requirement that they be fair-valued at each accounting date, with changes in fair-value being recognised through the Statement of Comprehensive Income. The fair value is calculated by reference to the market price of the company's Ordinary shares and the exercise price. In accordance with IAS 32 Financial Instruments: Presentation, on conversion the fair value of the Convertible Redeemable shares converted is transferred direct to equity.

4. Significant events and transactions

The Group recorded a solid trading performance during the six-month period ended 30 June 2012. Organic growth in revenues of companies which were owned throughout the first half of both 2011 and 2012 amounted to some 8%. This figure rose to 39% when the results of companies acquired after 1 January 2011 are taken into account. Adjusted operating profits increased to £2.7 million, a rise of 47% compared with the first behalf of 2011.

Global Digital Systems Limited ("GDS") was acquired on 6 March 2012 for the sum of £8.1 million, including transaction costs but excluding payments in respect of surplus cash. This was financed by an increase in Bank loan and overdraft facilities and by the use of existing cash resources. Since its acquisition, GDS has traded in line with expectations.

With a view to restoring the company's ability to complete further acquisitions following the GDS deal, the company undertook a placing of 500,000 new Ordinary shares in May 2012 at a price of 600p per share, raising £2.8 million net of costs.

At the May 2012 Annual General Meeting, the company's shareholders approved a resolution to amend the conversion terms of the Convertible Redeemable shares. The revised terms were intended to encourage early conversion and/or redemption. During June, conversion and redemption notices were received by the company, for execution in the second half of the year, in a combination that will be cash-neutral for the company. These notices covered the major part of the outstanding share capital of this class; as a result, few of these shares will still be outstanding at the end of the current year and the accounting adjustments that go with them will cease to distort the figures thereafter.

5. Additions to and amortisation of intangible assets

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

Additions in the period include £7,957,000 in relation to the acquisition of Global Digital Systems Limited (see note 9) and £300,000 in relation to KE Developments Limited (see note 10).

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:

6. Earnings per share (continued)

6. Earnings per share (continued)

7. Share issue

During the first six months of 2012 the following allotments took place:

·; to satisfy the exercise of share options as follows:

§ 29,000 share options on 29 March 2012 when the mid-market share price was 655.0p

§ 12,000 share options on 16 April 2012 when the mid-market share price was 626.5p

§ 20,000 share options on 22 May 2012 when the mid-market share price was 647.5p

·; 500,000 shares were issued at 600.0p per share in a Placing on 10 May 2012 when the mid-market share price was 628.5p

Ordinary shares authorised and issued are summarised as follows:

8. Changes in net debt in the 6 months ended 30 June 2012 were as follows:

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

9. Acquisition of Global Digital Systems Limited

On 6 March 2012 the company acquired the entire issued share capital of Global Digital Systems Limited ("GDS"), a company based in the UK. The total cost of acquisition, all of which was paid in cash, includes the components stated below.

9. Acquisition of Global Digital Systems Limited (continued)

The amounts recognised for each class of the acquiree's assets, liabilities and contingent liabilities at the acquisition date are as follows:

The goodwill that arose on the combination can be attributed to the profitability of GDS.

The figures described below include interest charges that have been incurred by the company as a result of this acquisition.

The acquisition of GDS resulted in a profit after tax (before exceptional items) attributable to equity holders of the parent company of £306,000 in the 17 weeks from 6 March 2012 to the reporting date. After amortisation of intangible assets, the contribution to the equity holders of the parent company's results amounted to a loss of £712,000 after tax.

If GDS had been acquired on 1 January 2012, based on pro-forma 2011 results, revenue for the group for the period to 30 June 2012 would have increased by £873,000 and profit after tax attributable to equity holders of the parent company would have increased by £118,000 after allowing for interest costs but before charging amortisation of intangible assets (a reduction of £104,000 after charging additional amortisation of intangible assets of £222,000).

10. Acquisition of certain assets and the trade of KE Developments Limited

On 6 March 2012, the company's indirect subsidiary, Deben UK Limited ("Deben") acquired certain assets and the trade of KE Developments Limited ("KED"), a company based in the UK.

KED was based in Toft, Cambridgeshire and, like Deben, designs and manufactures accessories for electron microscopy. Management transferred KED's business operations to Deben's premises in Woolpit, Suffolk, and all of KED's employees were offered the opportunity to continue their employment at Deben.

Deben purchased KED's fixed assets for £40,000 and will make a contingent goodwill payment capped at £300,000 based on the existing customer relationships. The payment, spread over a period of five years, will be determined by the sales of the business post completion. In the year to 30 June 2011, KED's sales totalled £975,000 and normalised profit was around break-even.

Acquisition-related transaction costs charged in the Income Statement amounted to £33,000.

11. Dividends

The company paid an interim dividend of 3.3p per share (£141,470) on 3 November 2011 and a final dividend of 6.7p per share (£325,015) on 5 July 2012, both relating to the financial year ended 31 December 2011.

The company will pay an interim dividend for 2012 of 5p per share on 2 November 2012 to shareholders on the register on 5 October 2012. The shares will go ex-dividend on 3 October 2012.

12. Distribution of document

Copies of these condensed consolidated interim financial statements will be sent to shareholders and will be available on the company's website at www.judges.uk.com