15th Sep 2005 07:01
Judges Capital PLC15 September 2005 Judges Capital plc("Judges Capital" or the "Company") Interim results for the six months ended 30 June 2005 Highlights: • Judges Capital announces first results as a trading company • Encouraging order book at Fire Testing Technology (FTT) acquired in May 2005 • Balance sheet includes cash and short-term debtors of £1.85 million; and in excess of £1.5 million in cash and securities available to finance equity element of future acquisitions • Acquisition of 51% interest in PE fiberoptics in September 2005, specialists in design and manufacture of instruments to test fibre optic cables • Interim pre-tax profits £12,000 (£28,000 before goodwill amortisation) (2004: loss of £2,000) • Earnings per Ordinary share: 0.08p (2004: loss 0.1p) • Directors view the outlook with confidence Alexander Hambro, Chairman of Judges Capital, commented: "The order book at FTTis encouraging and your Board is delighted that the Company's new direction as atrading group has been founded on a company of the calibre of FTT. YourDirectors therefore view the outlook with confidence. "As stated at the time of our purchase of FTT your Board has identified the UKbased instrumentation sector, which encompasses almost 2,000 active companies,as an area that offers significant potential for growth. Against thisbackground, your Board is continuing to explore further acquisitionopportunities in this field." For further information please contact: David Cicurel, Chief Executive, Judges Capital: Tel: 07771 893 080Alex Borrelli, Shore Capital & Corporate: Tel: 020 7408 4090Melvyn Marckus, Cardew Group: Tel: 0207 930 0777 Chairman's Statement This is the first set of accounts since your Company's change of direction froman investment company to a trading group involved in the manufacture of test andmeasurement instruments. This is also our first six-month period showingconsolidated profits. On 24 May 2005 your Company completed the purchase of Fire Testing TechnologyLimited ("FTT"). As the world leader in its market, FTT is an attractivebusiness which has doubled its turnover in the space of five years and currentlygenerates an operating margin in excess of 25%. The purchase consideration was£3.7 million comprised of cash (£2.3 million), shares (£0.4 million),subordinated notes (£0.5 million) and earn-out (£0.5 million). This equates toapproximately 4.5 times FTT's operating profits for the year ended 31 May 2005.In addition we will be paying an excess working capital adjustment ofapproximately £0.8 million, which is more than covered by the cash accumulatedin FTT. The cash element and the earn-out have been financed through a £956,000share placing and a £2.43 million bank loan facility. Pre-tax profit for the six months to 30 June 2005 amounted to £12,000 (£28,000before goodwill amortisation). The results benefited from a £45,000 five-weekoperating contribution from FTT before goodwill amortisation, while investmentactivity largely covered corporate overheads during the period. The Company,which has been winding down its share portfolio, realised a £226,000 gain on itsinvestment in Interior Services Group and has made a provision of £150,000against its interest in SP Holdings. The only significant holdings that remainare in Poole Investments and Dickinson Legg. The balance sheet includes cash and short-term debtors of £1.85 million. Afterallowing for the aforementioned excess working capital payment, this leaves inexcess of £1 million in cash and £1.5 million in cash and securities availableto finance the equity element of future acquisitions. As stated at the time ofour purchase of FTT your Board has identified the UK based instrumentationsector, which encompasses almost 2,000 active companies, as an area that offerssignificant potential for growth. Against this background, your Board iscontinuing to explore further acquisition opportunities in this field. Since the end of the period we have acquired a 51% equity interest in PEfiberoptics Limited ("PEF"), a newly formed company that will specialise in thedesign and manufacture of instruments to test fibre optic cables; the balance ofthe equity being held by senior managers and a US multinational corporation. Thebusiness was purchased from a subsidiary of that corporation which had beenclosed down following a sharp contraction in revenues post the exuberance of theinternet bubble. Our maximum investment is £300,000, including a £250,000secured working capital facility. The order book at FTT is encouraging and your Board is delighted that theCompany's new direction as a trading group has been founded on a company of thecalibre of FTT. Your Directors therefore view the outlook with confidence. I would like to take this opportunity to express, on behalf of the Board, ourthanks to shareholders and employees for their continued support and to extend awarm welcome to all our new colleagues at FTT and PEF. The Hon. Alexander Robert HambroChairman 14 September 2005 Judges Capital plcInterim report and accountsConsolidated profit and loss account for the six months ended 30 June 2005 Six months ended Six months ended Year ended 30 June 2005 30 June 2004 31 December 2004 (unaudited) (unaudited) (audited) £000 £000 £000 £000 £000 Continuing Acqui-sitions Total operations Turnover - 265 265 - -Direct costs - (175) (175) - -Gross profit - 90 90 - - Administrative expenses (102) (61) (163) (84) (176)Operating (loss)/profit (102) 29 (73) (84) (176) Profit on disposal of 226 44 58investmentsProvision against (150) - (100)investmentsInvestment income - 24 62 Profit/(loss) on ordinary 3 (16) (156)activities before interestand taxation Net interest receivable 9 14 2 Profit/(loss) on ordinary 12 (2) (154)activities before taxation Tax on profit/(loss) on (10) - -ordinary activitiesProfit/(loss) on ordinary 2 (2) (154)activities after taxation Earnings/(loss) per 0.08p (0.1p) (7.3p)ordinary share Judges Capital plcInterim report and accountsConsolidated balance sheet at 30 June 2005 30 June 2005 30 June 2004 31 December 2004 Notes (unaudited) (unaudited) (audited) £000 £000 £000Fixed assetsTangible assets 60 - -Goodwill 8 3,946 - - 4,006 - -Current assetsStock and work in progress 210 - -Investments 1 428 1,584 1,702Debtors 922 27 8Cash at bank and in hand 1,702 616 296 3,262 2,227 2,006Creditors: amounts falling duewithin one year (2,062) (541) (472) Net current assets 1,200 1,686 1,534 Total assets less current 5,206 1,686 1,534liabilities Long term liabilitiesSubordinated loan note (500) - -Bank loan (1,893) - - (2,393) - - Provision for deferred tax (23) - - Total net assets 2,790 1,686 1,534 Capital and reservesCalled up share capital 2 186 118 118Share premium account 3 2,881 1,695 1,695Retained loss (277) (127) (279)Shareholders' funds 2,790 1,686 1,534Equity shareholders' funds 2,777 1,673 1,674Non-equity shareholders' funds 13 13 13 2,790 1,686 1,534 Judges Capital plcInterim report and accountsConsolidated cashflow statement for the six months ended 30 June 2005 Note Six months ended Six months ended Year ended 30 June 2005 30 June 2004 31 December 2004 (unaudited) (unaudited) (audited) £000 £000 £000Net cash outflow from operating activities 4 (114) (119) (195) Return on investments and servicing offinanceInterest paid (1) - -Interest received 23 14 25Dividends received - 24 58Net cash inflow from returns on 22 38 83investment and servicing of financeAcquisitionsPurchase of subsidiary undertaking (2,715) - -Net cash from purchase of subsidiary 580 - -undertakingNet cash outflow from acquisitions (2,135) - - Management of liquid resourcesPurchase of investments - (945) (651)Sale of investments 780 412 413Net cash inflow/(outflow) from 780 (533) (238)management of liquid resources Net cash outflow before financing (1,447) (614) (350) FinancingIssue of ordinary share capital 956 - -Expenses paid in connection with share (102) - -issuesReceipts/(payments) for CFD's 119 526 (57)Receipts from borrowing 1,880 - -Net cash inflow/(outflow) from 2,853 526 (57)financing Increase/(decrease) in cash in the 5/6 1,406 (88) (408)period Judges Capital plcInterim report and accountsNotes to the interim accounts 1. Investments Historical Period end value cost Stock market Directors' Total valuation valuation £000 £000 £000 £000Unquoted investments 169 - 66 66Quoted investments 509 369 - 369Less: provision against investments (250) - - - 428 369 66 435 2. Share capital At 30 June 2005 At 30 June 2004 At 31 December 2004 (unaudited) (unaudited) (audited) £000 £000 £000Authorised:10,000,000 ordinary shares of 5p 500 500 500each5,000,000 convertible redeemable 50 50 50shares of 1p each 550 550 550 Allotted and called up:3,462,356 (2004: 2,106,356) 173 105 105ordinary shares of 5p each,fully paid5,000,000 convertible redeemable 13 13 13shares of 1p quarter paid 186 118 118 On 24 May 2005, 956,000 ordinary 5p shares were issued by way of a placing forconsideration of £956,000, and on the same date, 400,000 ordinary 5p shares wereissued as part of the consideration in respect of the acquisition of shares inFTT. 3. Share premium account At 30 June 2005 At 30 June 2004 At 31 December 2004 (unaudited) (unaudited) (audited) £000 £000 £000 Balance 2,881 1,695 1,695 On 24 May 2005 1,356,000 ordinary shares were issued at a premium of 95presulting in an increase in share premium of £1,185,935, after £102,265 ofplacing costs. 4. Reconciliation of operating loss to net cash outflow from operatingactivities At 30 June 2005 At 30 June 2004 At 31 December 2004 (unaudited) (unaudited) (audited) £000 £000 £000Operating loss (73) (84) (176)Increase in debtors (225) (8) (4)Increase/(decrease) in (27) (15)creditors within one year 132Decrease in stock 33 - -Amortisation of goodwill 16 - -Depreciation 3 - - Net cash outflow from (114) (119) (195)operating activities 5. Analysis of net funds 31 December 2004 Cashflow Debt 30 June 2005 £000 £000 £000 £000Net cash:Cash at bank 296 1,406 - 1,702Bank loan - - (1,893) (1,893) Net funds/(debt) 296 1,406 (1,893) (191) 6. Reconciliation of net cashflow to movement in net funds £000 Increase in cash in the period 1,406Change in debt in the period (1,893)Movement in net funds in the period (487) Opening net funds 296 Closing net debt (191) 7. Basis of accounts The financial information for the six months to 30 June 2005 is unaudited andhas been prepared on the basis of the Company's adopted accounting policies.This financial information, together with the comparative information, does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The financial information for the year ended 31 December 2004 has been extractedfrom the statutory accounts to that date which have been reported on by thecompany's auditors and delivered to the Registrar of Companies. The auditors'report was unqualified and did not contain a statement under section 237(2) or(3) of the Companies Act 1985. 8. Acquisition of Fire Testing Technology Limited Book value of assets & Fair value Total liabilities at the date of adjustments acquisition £000 £000 £000Fixed assets 335 (272) 63 Current Assets 1,512 - 1,512 Current Liabilities (453) - (453) Long Term Liabilities (23) - (23)Total net assets at date of 1,371 (272) 1,099acquisition Consideration paid 5,061 - 5,061including acquisition costs Goodwill arising on 3,690 272 3,962acquisition Less: Amortisation in period (16) Net book value at 30 June 2005 3,946 The balance sheet of FTT included £271,684 within leasehold improvements onpremises rented by that Company. The Directors assessed the fair value of theseimprovements as having no value in view of the fair market rental being paid bythe Company. The calculation of the goodwill arising on acquisition of FTT is subject to thefinal agreement of certain variable elements of the consideration. The goodwill is being amortised over a period of 20 years, on a straight linebasis. 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Judges Scientific