Annual Report and Accounts 2005
Judges Capital plc
Company Information
Directors
The Hon. Alexander Robert Hambro (Non-Executive Chairman)
David Elie Cicurel (Chief Executive)
Ralph Leslie Cohen (Finance Director)
Ralph Julian Elman (Non-Executive Director)
Glynn Carl Reece (Non-Executive Director)
Company Secretary
Ralph Leslie Cohen
Registered Office
Unit 19, Charlwoods Road
East Grinstead
West Sussex RH19 2HL
Registrar
Capita IRG plc
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Nominated Adviser
Shore Capital and Corporate Ltd
Bond Street House
14 Clifford Street
London W1S 4JU
Stockbroker
Shore Capital Stockbrokers Ltd
Bond Street House
14 Clifford Street
London W1S 4JU
Auditors
Grant Thornton UK LLP
Chartered Accountants
Registered Auditors
8 West Walk
Leicester LE1 7NH
Principal Bankers
Bank of Scotland
55 Temple Row
Birmingham B2 5LS
Solicitors
Faegre & Benson LLP
7 Pilgrim Street
London EC4V 6LB
Registered in England and Wales, Company No. 4597315
1
Contents
Trading Activities
Chairman’s Statement
Directors’ Report
Report of the Independent Auditor
to the Members of Judges Capital plc
Consolidated Profit and Loss Account
Balance Sheets
Consolidated Cash Flow Statement
Notes to the Consolidated Cash Flow Statement
Page
3
4 - 5
6 - 7
8
9
10
11
12
Other Notes to the Financial Statements
13 - 21
Notice of Annual General Meeting
Form of Proxy
22 - 23
23
2
Trading Activities
Fire Testing Technology
Established in 1989 and strongly focused on the global export market,
FTT has become the world’s leading producer of fire testing
instrumentation. With a portfolio of more than 35 instruments, FTT
possesses an unrivalled product range and has supplied numerous fire
research institutions and testing laboratories. The company’s scientists
are recognised authorities on fire testing issues and, as such, are
members of national and international Fire and Safety Standards
Committees.
FTT designs and assembles its product range at its base in East
Grinstead, Sussex. Instruments include the Cone Calorimeter, which
measures specific fire properties of materials such as rate of heat
release and time to ignition, and the NBS Smoke Density Chamber,
which measures the density of smoke emission from heated materials.
A recent innovation is the Micro Calorimeter, developed in co-operation
with the Federal Aviation Administration, which measures fire properties
pertaining to specimens that weigh no more than a few milligrams.
The principal industries served by FTT are manufacturers of
construction, electro-technical and furnishing products together with
manufacturers of transport systems. With almost all of its output
exported, the company’s products are in everyday use in every
continent, supported by a worldwide network of agents and a team of
service engineers based at the Sussex HQ.
Website: www.fire-testing.com
PE.fiberoptics
PE.fiberoptics is a leading provider to the telecommunications industry
of a wide range of specialised equipment designed to test the properties
of fibre optic and fibre optic networks. Superior technology, design and
manufacture serve to ensure that its innovative products play a vital role
in resolving fibre characterisation and network problems quickly and
efficiently.
Recognised for its award winning products, PFO provides customers
with equipment that will respond to and resolve the day-to-day
challenges experienced in both optical network applications and quality
assurance laboratories. Such products include the CHROMOS11-CL-
PMD, a unique portable optical analyser which has performed over a
world record distance of 15,500 km on a US-Europe-US submarine link
involving hundreds of optical amplifiers.
UHV Design
UHV Design specialises in the development and manufacture of
instruments used to create motion, heating and cooling within ultra
high vacuum chambers where pressure is several trillion times less
than the atmosphere. Designs include the patented MagiGear rotary
feedthrough, which enables rotary motion to be transferred into a
vacuum system utilising magnetic technology. Complex customised
assemblies are also designed and manufactured, tailored to meet
customers’ specific requirements.
The company’s dedication to innovation and quality has established
UHV Design as a major force in its field on a worldwide basis, with
overseas markets currently accounting for more than 70% of sales.
End-users include academic and research establishments (both public
and private sector) and industrial enterprises in sectors such as
semiconductors, aerospace, defence and nanotechnology.
PFO’s customers include manufacturers of fibre, cable and
telecommunications equipment together with network operators. Exports
currently account for more than 90% of sales.
Website: www.uhvdesign.com
Website: www.pefiberoptics.com
3
Chairman’s Statement
I am pleased to report that in 2005 your company achieved its maiden
pre-tax profit for a full year amounting to £163,000 (2004: loss
£153,000) on turnover of £2.2 million (2004: nil).
(“FTT”) and supported a management buy-out of PE.fiberoptics
(“PFO”). Subsequent to the year-end, Judges has completed the
acquisition of UHV Design (“UHV”).
A New Direction
In 2005 your company adopted a new strategy focused on the
development of a scientific instrumentation group. Our previous activity,
effectively operating as a catalyst in relation to public to private
transactions, proved incompatible with the revival of interest in quoted
‘small cap’ shares.
During the year, your company purchased Fire Testing Technology
FTT
FTT, acquired on 24 May 2005, is a world leader in the manufacture of
instruments designed to measure the reaction of a variety of materials
to fire. FTT’s business is largely driven by the need to comply with
regulation and more than 95% of its sales are overseas. The purchase
price amounted to £3.7 million, including 400,000 Ordinary shares and
£500,000 in vendor subordinated loan notes, plus an £803,000
adjustment for excess working capital on completion. The cash
consideration was financed by a £2.4 million senior term loan from
HBoS and a £956,000 placing of Ordinary shares at 100p per share. In
the year ended 31 May 2005, FTT generated sales of £3.3 million and
an operating profit of £700,000.
PFO
On 2 September 2005 your company supported the management buy-
out by PFO of the fibre optic testing instruments division of
PerkinElmer. The subscription price for our 51% shareholding was a
nominal £51 plus a £40,800 subordinated loan and a £250,000 senior
working capital facility, of which £75,000 was drawn down on
completion. PFO makes instruments designed to check the performance
4
I would like to take this opportunity to thank both our longer standing
and new shareholders for their continued support and also our group
employees for their dedication and valued efforts throughout a year of
organisational change.
Alex Hambro
Chairman
Date: 21 March 2006
of fibre optic used in telecommunications. The acquired business
suffered in the aftermath of the telecom boom and its future success will
be influenced by a resumption of normal spending within the sector.
PFO has made an encouraging start and proved profitable and cash
generative during its first four months’ trading. The majority of the
senior facility was repaid at the year-end with the remainder repaid
shortly thereafter.
UHV
The acquisition of UHV was completed on 21 February 2006. UHV
designs and manufactures instruments capable of manipulating objects
in ultra high vacuum chambers. The £836,000 purchase price
comprised £650,000 in cash, 98,522 Ordinary shares and an earn-out
up to a maximum of £86,000; a further cash payment will become due,
reflecting excess working capital at completion. The cash element was
financed by an extension of our senior term loan. In the year ended 31
March 2005, UHV generated an unaudited operating profit of £295,000
from a £954,000 turnover.
Investment Portfolio
Our investment portfolio was drastically reduced during the year from a
book value of £1.7 million to £428,000. The net contribution from
disposals amounted to £90,000. At the year-end the book value of our
portfolio included £228,000 of shares in companies that are either in the
process of being liquidated or, in the case of Dickinson Legg, received a
takeover offer post our balance sheet date (in March 2006). The only on-
going investment is Poole Investments (book value: £200,000).
Financial Performance
The Profit & Loss account therefore reflects seven months’ trading at
FTT, four months’ trading at PFO and our residual investment activity.
Basic earnings per share were 1.6p and 1.7p on a fully diluted basis
(2004: loss per share of 7.3p). This encompasses the profits from our
reducing investment activity and a full year of overheads, while our new
trading activity only contributed for part of the year. Earnings per share,
excluding goodwill amortisation, amounted to 5.3p and 4.8p on a fully
diluted basis.
Our year-end financial position was strong with £1.15 million of cash in
hand (excluding the investment portfolio).
Board
Your Board was strengthened towards the end of the year by the
recruitment of Ralph Cohen as a full-time Finance Director. Ralph
Elman remains on the Board as a non-executive director and the Board
would like to take this opportunity to thank him for his contribution as a
part-time Finance Director.
Prospects
Your Board is confident that the company’s new strategy will result in
increased shareholder value over time. We are delighted with the
acquisitions completed during the past nine months and we are actively
looking for new opportunities to achieve further consolidation within the
instrumentation sector.
5
Directors’ Report
The directors present their report and financial statements for the year
ended 31 December 2005.
Directors’ interests
The directors’ interests in the Ordinary shares of the company were as
stated below:
Principal activities and review of the business
The principal activity of the company changed during the year. Judges
Capital plc has become the parent company of a trading group involved
in the design and manufacture of scientific instruments. Prior to this
change of direction, the principal activity was that of undertaking
investments.
A review of the group’s activities during the year and its prospects is
contained within the Chairman’s statement.
Results and dividends
The results for the year are set out on page 9. The directors do not
recommend payment of a dividend for the year.
Directors
The following directors have held office at any time during the year:
Hon AR Hambro1 – non-executive
Mr DE Cicurel
Mr RL Cohen – appointed 20 October 2005
Mr RJ Elman2 – non-executive (executive until 20 October 2005)
Mr GC Reece1 – non-executive
1 Member of the audit and remuneration committees
2 Member of the audit and remuneration committees since 20 October 2005
6
Ordinary of 5p each
31 December 2005
1 January 2005
(or date of appointment if later)
Shares
25,000
526,356
-
-
-
Options
-
-
37,000
-
-
Hon AR Hambro
Mr DE Cicurel*
Mr RL Cohen
Mr RJ Elman
Mr GC Reece
* Held through David Cicurel (Investments) Limited (‘DCIL’), except for 40 shares held
directly. It is intended that the Ordinary shares held by DCIL will be distributed in
specie to David Cicurel Securities Limited (‘DCSL’) once the close period has ended.
DCSL owns 100% of the ordinary shares of DCIL.
Shares
-
526,356
-
-
-
Options
-
-
-
-
-
Details of share options are set out in note 18 to the financial statements.
In addition to the above holdings of Ordinary shares, the directors had
the following interests in the Convertible Redeemable share capital of
the company:
Convertible Redeemable of 1p each (quarter-paid)
31 December 2005
1 January 2005
(or date of appointment if later)
Shares
416,667
Hon AR Hambro
4,166,667
Mr DE Cicurel*
-
Mr RL Cohen
208,333
Mr RJ Elman
Mr GC Reece
208,333
* Held through DCIL at 31 December 2005. On 23 February 2006 DCIL distributed in
specie the 4,166,667 convertible redeemable shares in the company to DCSL.
Shares
416,667
4,166,667
-
208,333
208,333
The conversion terms of the Convertible Redeemable shares are
detailed in note 19 to the financial statements. Following a full
conversion of the Convertible Redeemable shares to Ordinary shares,
the directors’ interests in the enlarged share capital of the company as
at 31 December 2005 would have been as follows:
Hon AR Hambro
Mr DE Cicurel
Mr RL Cohen
Mr RJ Elman
Mr GC Reece
Ordinary Shares
39,345
919,805
-
19,672
19,672
Payment policy
The group’s policy is to agree terms and conditions with suppliers
before business takes place and to pay agreed invoices in accordance
with the terms of payment. Trade creditor days of the company at the
end of the year represented 6 days (2004: 4 days).
Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and United
Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
Company law requires the directors to prepare financial statements for
each financial year which give a true and fair view of the state of affairs of
the group and company and of the profit or loss of the group for that year.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the group and company will continue
in business.
The directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the financial position
of the group and company and enable them to ensure that the financial
statements comply with the Companies Act 1985. They are also
responsible for safeguarding the assets of both the group and company
and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The maintenance and integrity of the Judges Capital website is the
responsibility of the directors: the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website. Legislation in
the United Kingdom governing the preparation and dissemination of the
financial statements may differ from legislation in other jurisdictions.
International Financial Reporting Standards
Judges Capital plc intends to adopt IFRS in line with the AIM mandatory
adoption timetable (ie for the year ending 31 December 2007).
Corporate Governance
The directors have established an audit committee and a remuneration
committee with formally delegated duties and responsibilities. The
members of both committees are the non-executive directors.
The audit committee determines the terms of engagement of the
company’s auditors and, in consultation with the company’s auditors,
the scope of the audit. The audit committee has unrestricted access to
the company’s auditors. The remuneration committee reviews the scale
and structure of the executive directors’ remuneration and the terms of
their service contracts. The remuneration of the non-executive directors
is determined by the Board as a whole. No directors participate in
setting their own pay.
Post balance sheet events
On 21 February 2006, the company announced the acquisition of the
entire issued share capital of UHV Design Limited for a maximum
consideration of £836,000 (plus a working capital adjustment). This
company designs and manufactures instruments used to manipulate
objects in ultra high vacuum chambers. On 6 March 2006 the company
issued 98,522 Ordinary shares of 5p at a fair value of £1.015 in respect
of the acquisition of UHV Design Limited.
In addition, a formal takeover offer was received on 3 March 2006 by
Dickinson Legg Group plc, a quoted company in which Judges Capital
plc holds 3.01%, valuing the shares at 17.75p.
Financial risk management objectives and policies
The group uses financial instruments, other than derivatives,
comprising borrowings, cash and other liquid resources and various
other items such as trade debtors and creditors that arise directly from
its operations. The main purpose of these financial instruments is to
raise finance for the group’s operations. The main risks arising from the
group financial instruments are interest rate risk, liquidity risk, credit
risk and foreign currency risk. The directors review and agree policies
for managing each of these risks and they are summarised below.
Interest rate risk
The group finances its operations through a mixture of bank
borrowings, equity and retained profits. The group’s exposure to interest
rate fluctuations on its borrowings is managed on a group basis by the
use of both fixed and floating facilities.
Liquidity risk
The group seeks to manage financial risk by ensuring sufficient liquidity
is available to meet foreseeable needs and to invest cash assets safely
and profitably. Primarily this is achieved through loans arranged at
group level. Short term flexibility is achieved by overdraft facilities.
Credit risk
The group reviews the credit risk relating to its customers by ensuring
wherever possible it deals with long established trading partners and
agents and government / university backed bodies, where the risk of
default is considered low. Where considered appropriate, the group insists
on up-front payment and requires letters of credit facilities to be provided.
Currency risk
With a significant proportion of the group’s sales being exported, the
main risk area to which the group is exposed is that of foreign
currencies (mainly US$ and Euros). It is not the group’s practice for this
risk to be hedged but the directors review this on a regular basis.
Auditors
Grant Thornton UK LLP offer themselves for reappointment as auditors
in accordance with section 385 of the Companies Act 1985.
On behalf of the board
RL Cohen
Director and Company Secretary
21 March 2006
7
Report of the Independent Auditor
to the Members of Judges Capital plc
Opinion
In our opinion the financial statements:
• give a true and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the state of the group’s
and the parent company’s affairs as at 31 December 2005 and of the
group’s profit for the year then ended; and
• have been properly prepared in accordance with the Companies Act
1985.
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
Leicester
21 March 2006
We have audited the group and parent company financial statements
(the ‘financial statements’) of Judges Capital plc for the year ended 31
December 2005 which comprise the consolidated profit and loss
account, the group and company balance sheets, the consolidated
cashflow statement and associated notes a to c and notes 1 to 29 to the
financial statements. These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the company’s members, as a body, in
accordance with Section 235 of the Companies Act 1985. Our audit
work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law
we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for
this report or for the opinions we have formed.
Respective responsibilities of the directors and auditors
The directors’ responsibilities for preparing the annual report and the
financial statements in accordance with United Kingdom law and
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice) are set out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards
on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give
a true and fair view and are properly prepared in accordance with the
Companies Act 1985. We also report to you if, in our opinion, the
directors’ report is not consistent with the financial statements, if the
group and company has not kept proper accounting records, if we have
not received all the information and explanations we require for our
audit, or if information specified by law regarding directors’
remuneration and transactions with the company is not disclosed.
We read the other information contained in the annual report and
consider whether it is consistent with the audited financial statements.
This other information comprises only the Chairman’s Statement and
the Directors’ Report. We consider the implications for our report if we
become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do
not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on
Auditing (UK and Ireland) issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements made by the
directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the group and company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of information in the
financial statements.
8
Consolidated Profit and Loss Account
Notes
Continuing activities
£
-
(244,426)
-
(244,426)
(244,426)
Turnover
Operating costs
Goodwill amortisation
Total operating costs
Operating (loss) / profit
Profit on disposal of investments
Provision against investments
Investment income
Net interest (payable) / receivable
Profit / (loss) on ordinary activities before taxation
Tax on profit / (loss) on ordinary activities
Profit / (loss) on ordinary activities after taxation
Minority interests
Profit / (loss) for the financial year retained
Earnings / (loss) per share
Basic
Diluted
2
3
5
6
4
7
20
8
There are no recognised gains and losses other than the results for the year set out above.
The accompanying notes form an integral part of these financial statements.
2005
Acquisitions
£
2,211,521
(1,737,350)
(103,750)
(1,841,100)
370,421
Total
£
2,211,521
(1,981,776)
(103,750)
(2,085,526)
125,995
89,842
-
-
(52,632)
163,205
(100,777)
62,428
(15,499)
46,929
1.6p
1.7p
2004
£
-
(175,535)
-
(175,535)
(175,535)
57,654
(100,000)
61,912
2,441
(153,528)
-
(153,528)
-
(153,528)
(7.3)p
-
9
Balance Sheets
Fixed assets
Intangible assets
Tangible assets
Investments
Current assets
Stocks
Debtors
Investments
Cash in hand and at bank
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities
Minority interests
Total net assets
Capital and reserves
Called up share capital
Share premium
Merger reserve
Profit and loss account
Shareholders' funds
Notes
9
10
11
12
13
14
15
16
17
18
20
20
20
21
Group
£
3,638,059
114,336
-
3,752,395
413,130
692,350
427,911
1,148,619
2,682,010
(1,044,264)
1,637,746
5,390,141
2005
Company
£
-
-
4,579,564
4,579,564
-
145,242
427,911
742,337
1,315,490
(305,776)
1,009,714
5,589,278
(2,528,959)
(2,528,959)
-
-
(23,557)
(15,548)
2,822,077
173,118
2,501,430
380,000
(232,471)
2,822,077
Group
(restated)
£
2004
Company
(restated)
£
-
-
-
-
-
8,230
1,702,075
296,073
2,006,378
(484,966)
1,521,412
1,521,412
-
-
-
-
-
-
-
-
8,230
1,702,075
296,073
2,006,378
(484,966)
1,521,412
1,521,412
-
-
-
3,060,319
1,521,412
1,521,412
173,118
2,501,430
-
385,771
3,060,319
105,318
1,695,494
-
(279,400)
1,521,412
105,318
1,695,494
-
(279,400)
1,521,412
The accompanying notes form an integral part of these financial statements. The financial statements were approved by the Board on 21 March 2006
D.E. Cicurel
Director
10
R.L. Cohen
Director
Consolidated Cash Flow Statement
Notes
a
2005
£
£
345,217
Net cash inflow / (outflow) from operating activities
Returns on investments and servicing of finance
Interest received
Interest paid
Dividends received
Capital expenditure
Purchases of fixed assets
Acquisitions and disposals
Investments in subsidiaries
Net cash from purchase of subsidiary undertaking
Net cash outflow before management of liquid resources and financing
Management of liquid resources
Purchases of investments
Sales of investments
Net cash outflow before financing
Financing
Issue of Ordinary shares
Expenses paid in connection with share issues
Loans drawn down
Loan repayments
Payments for CFDs
Repayments of CFDs
Net cash inflow / (outflow) from financing
Increase / (decrease) in cash in the year
c
The accompanying notes form an integral part of these financial statements.
54,462
(107,094)
-
(4,059,564)
579,949
956,000
(102,264)
2,448,959
(164,000)
-
(451,421)
(52,632)
(11,704)
(3,479,615)
(3,198,734)
-
1,364,006
(1,834,728)
2,687,274
852,546
£
25,279
(360)
58,462
-
-
-
-
-
-
(57,300)
-
2004
£
(195,365)
83,381
-
-
(111,984)
(650,790)
412,500
(350,274)
(57,300)
(407,574)
11
Notes to the Consolidated Cash Flow Statement
a Reconciliation of operating profit / (loss) to net cash inflow / (outflow) from operating activities
Operating profit / (loss)
Depreciation of fixed assets
Amortisation of goodwill
Increase in stocks
Increase in debtors
Increase / (decrease) in creditors due within one year
Net cash inflow / (outflow) from operating activities
b Analysis of net funds / (debt)
1 January 2005
Acquisitions
£
296,073
1,702,075
(451,421)
1,250,654
-
-
1,546,727
Net cash:
Cash at bank and in hand
Liquid resources:
Current asset investments
Amount outstanding under CFDs
Debt due < one year
Debt due > one year
Net funds / (debt)
c Reconciliation of net cash flow to movement in net funds
Increase / (decrease) in cash in the year
Cash flow from increase / (decrease) in liquid resources
Profit on disposal of investments
Transactions in investments under CFDs
Amount repaid / (outstanding) under CFDs
Provision against investments
New loans entered into (net of repayments)
Non cash movement - issue of loan notes
Movement in net funds / (debt) in the year
Opening net funds
Closing net (debt) / funds
12
£
-
-
-
-
-
-
-
-
(500,000)
(500,000)
(256,000)
(2,028,959)
(1,432,413)
2005
£
125,995
10,767
103,750
(60,880)
(43,247)
208,832
345,217
2004
£
(175,535)
-
-
-
(4,068)
(15,762)
(195,365)
Cash flow Investment realisations
(net)
£
£
31 December 2005
£
852,546
-
1,148,619
(1,274,164)
451,421
(822,743)
-
-
(822,743)
2005
£
852,546
(1,364,006)
89,842
-
451,421
-
(2,284,959)
(500,000)
(2,755,156)
1,546,727
(1,208,429)
427,911
-
427,911
(256,000)
(2,528,959)
(1,208,429)
2004
£
(407,574)
238,290
57,654
498,795
(451,421)
(100,000)
-
-
(164,256)
1,710,983
1,546,727
Notes to the Financial Statements
1 Accounting policies
1.1 Accounting convention
The financial statements have been prepared in accordance with
applicable United Kingdom Accounting Standards and under the
historical cost convention. The format used for the profit and loss
account has been changed from Format 1 to Format 2 of Schedule
4 of the Companies Act 1985. This has been done by the directors
to reflect more accurately the operations of the group.
The principal accounting policies of the group are set out below.
The policies have remained unchanged from the previous year,
apart from the adoption of FRS 21 – Events After the Balance
Sheet Date, and FRS 25 – Financial Instruments: Disclosure and
Presentation. These changes are described in more detail below.
Changes in Accounting Policy
In preparing the financial statements for the current year, the
group has adopted the following Financial Reporting Standards:
FRS 21 - Events After the Balance Sheet Date
The adoption of FRS 21 has resulted in a change in accounting
policy in respect of proposed equity dividends. If the company
declares dividends to the holders of equity instruments after
the balance sheet date, the company does not recognise those
dividends as a liability at the balance sheet date. Previously
had equity dividends been proposed after the balance sheet
date but before authorisation of the financial statements they
would have been recorded as liabilities at the balance sheet
date. Any aggregate amount of equity dividends proposed
before approval of the financial statements, which would not be
shown as liabilities at the balance sheet date, would be
disclosed in the notes to the financial statements. This change
in accounting policy had no effect on figures previously
reported or on the results for the period, as set out in note 20.
FRS 25 - Financial Instruments: Disclosure
and Presentation
The adoption of FRS 25 has resulted in a change in the
presentation of non-equity shares, which are now disclosed as
financial liabilities, and as a result the 2004 balance sheets have
been restated accordingly. The financial effect of this change in
classification is set out in notes 15 and 19.
maximum of 20 years for acquisitions of subsidiary companies.
Negative goodwill is written back to the profit and loss account to
match the consumption of the non-monetary assets acquired.
1.4 Cashflow statement
Movement of liquid resources relates to net cash cost of current
investments acquired and sold in the year. All current asset
investments are held as liquid resources.
1.2 Basis of consolidation
The group financial statements consolidate those of the company
and of its subsidiaries, drawn up to a coterminous accounting date.
The results of companies acquired during the year are consolidated
from the date of acquisition. Acquisitions of subsidiaries are dealt
with by the acquisition method of accounting.
• Revenue recognition policies in respect of the group’s principal
revenue streams are as follows:
• Sales of instruments and spares are recognised at the point of
despatch.
• Installation revenues are deferred and recognised on
completion of installation.
1.5 Turnover
The company is entitled to the merger relief offered by section 131
of the Companies Act 1985 in respect of the fair value of the
consideration received in excess of the nominal value of the
equity shares issued in connection with the acquisition of Fire
Testing Technology Limited.
All revenues are stated exclusive of value added tax.
1.6 Investment income
Investment income comprises dividends declared during the
accounting period and interest receivable on quoted and unquoted
investments.
The share of net assets of subsidiaries which are not wholly
owned are disclosed as minority interests.
1.7 Tangible fixed assets
1.3 Goodwill
Goodwill arising on the acquisition of subsidiary companies or
of business undertakings is the difference between the fair value
of the purchase consideration and the fair value of the net assets
acquired. Goodwill is capitalised and amortised on a straight
line basis over its estimated useful economic life up to a
Fixed assets are stated at cost or at fair value if part of an
acquisition, net of any depreciation and any provision for
impairment. Depreciation is provided at annual rates calculated to
write off the cost or fair value less residual value of each asset
over its expected useful life, as follows:
Plant and machinery
: 15% on written down value or
20% on cost
13
Fixtures, fittings and equipment: 15% on written down value
: 25% on written down value
Motor vehicles
: 20% on cost
Building improvements
1.8 Stocks
Stocks are stated at the lower of cost and net realisable value or at
fair value if part of an acquisition. Cost includes materials, direct
labour and an attributable proportion of manufacturing overheads
based on normal levels of activity.
1.9 Investments
Fixed asset investments in subsidiaries are stated at cost less
provision for permanent diminution in value. Other investments
are treated as current assets, reflecting the group’s strategic
investment policy actively to pursue appropriate exit routes on all
such investments. Current asset investments are stated at the
lower of cost and the directors’ estimate of near-term net
realisable value.
1.11 Pensions
Companies in the group operate defined contribution pension
schemes for employees and directors. The assets of the schemes
are held by investment managers separately from those of the
company and group. The annual contributions payable are
charged to the profit and loss account.
1.12 Foreign currencies
Monetary assets and liabilities denominated in foreign currencies
are translated into sterling at the rates of exchange prevailing at
the balance sheet date. Transactions in foreign currencies are
recorded at the rate of exchange prevailing at the date of
transaction. All differences are taken to the profit and loss
account.
1.13 Leasing
Rentals payable under operating leases are charged against
income on a straight line basis over the lease term.
1.10 Deferred taxation
1.14 Contracts for Differences
Deferred tax is recognised on all timing differences where the
transactions or events that give the group and the company an
obligation to pay more tax in the future, or a right to pay less tax
in the future, have occurred by the balance sheet date. Deferred
tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is not discounted and is measured
using rates of tax that have been enacted or substantively enacted
by the balance sheet date.
To facilitate its former investment purchases, the group
periodically funded the acquisition of rights over shares by the
use of Contracts for Differences (CFDs). CFDs are a financing
tool, in that they provide access to economic benefits (the
underlying investments) in return for an ongoing financing cost.
Investments purchased using CFDs are therefore treated as owned
investments, with the gross CFD liability treated as debt. The
carrying costs of CFDs are treated as finance costs and charged to
the profit and loss account as incurred.
2 Turnover and profit / (loss) on ordinary activities
before taxation
Turnover and profit / (loss) on ordinary activities before taxation are
attributable to the Group’s continuing activities of the design and
manufacture of scientific instruments and undertaking of
investments, as set out on the face of the profit and loss account. An
analysis of turnover by destination for the group is set out below:
United Kingdom
Europe
United States / Canada
Australasia
Rest of the World
3 Operating costs
2005
£
103,416
891,050
475,886
490,711
250,458
2,211,521
2004
£
-
-
-
-
-
-
2005
2005
Continuing Acquisitions
activities
£
Raw materials and consumables
Other external charges
Staff costs
Depreciation
Other operating charges
-
145,613
98,813
-
-
£
761,433
427,578
532,558
10,767
5,014
2005
Total
£
761,433
573,191
631,371
10,767
5,014
2004
£
-
109,468
66,067
-
-
244,426
1,737,350
1,981,776
175,535
14
4
Profit / (loss) on ordinary activities before taxation
6 Net interest (payable) / receivable
8
2005
£
2004
£
Profit / (loss) on ordinary activities before taxation is
stated after charging / (crediting):
Profit on disposal of investments
(89,842)
(57,654)
Provision against investments
-
100,000
Interest receivable
CFD finance charges
Interest payable - bank loans and overdrafts
Interest payable - loan notes
Auditors’ remuneration - audit services
(Company - £10,500; 2004 - £7,000)
Remuneration of auditors for non-audit work
(tax compliance)
Depreciation
Goodwill amortisation
Release of negative goodwill
Operating lease rentals - land and buildings
35,800
7,000
7 Taxation
5,650
1,500
10,767
113,050
(9,300)
62,026
-
-
-
-
Current tax
Deferred tax
Tax on profit / (loss) on ordinary activities
Factors affecting the tax charge for the year:
2005
£
54,462
-
(87,077)
(20,017)
2004
£
27,465
(24,664)
(360)
-
Earnings / (loss) per share
Options and warrants over Ordinary shares and rights of
conversion of the Convertible Redeemable shares are described in
notes 18 and 19 but had no dilutive effect on earnings per share
in 2004.
2005
Basic
Diluted
2004
Basic
(52,632)
2,441
Earnings
Basic: Profit / (loss) for the financial year
46,929
46,929
(153,528)
2005
£
100,559
218
100,777
2004
£
-
-
-
Adjusted:
Add back goodwill charge, net of £4,557
minority interest in negative goodwill
write back
Notional taxed interest income accruing
on dilution
108,307
108,307
-
11,744
Adjusted profit / (loss)
155,236
166,980
In addition fees were paid to the auditors in 2005 in respect of work undertaken
in connection with the acquisition of Fire Testing Technology Limited. The costs
of £48,000 plus VAT were charged to investments in subsidiaries.
5
Investment income
2005
£
2004
£
Profit / (loss) on ordinary activities before taxation
163,205
(153,528)
Profit / (loss) on ordinary activities before taxation
multiplied by standard rate of UK corporation tax of 30%.
48,961
(46,058)
Goodwill charges not deductible for tax purposes
33,915
-
Losses carried forward
19,238
16,058
Provisions and expenditure not deductible for tax purposes
(813)
30,000
Income from current asset investments
-
61,912
Marginal relief
Capital allowances in excess of depreciation
(524)
(218)
100,559
-
-
-
The group and company have unrelieved tax losses at 31 December 2005 of
£311,000 (2004: £247,000). The group and company have not recognised a
deferred tax asset in respect of these losses as the timing and extent of recovery
is insufficiently certain. These losses are available to be offset against future
profits of the parent company.
Number of shares
Basic: weighted average in year
Adjusted: weighted average increase
on dilution
2,931,101
2,931,101
2,106,356
-
513,593
2,931,101
3,444,694
Earnings / (loss) per share
Basic (no dilution effect in 2004)
Adjusted (no dilution effect in 2004)
1.6
5.3
1.7
4.8
(7.3)
15
9
Intangible assets
11 Investments in subsidiaries
13 Debtors
Group
Cost
1 January 2005
Arising during the year
31 December 2005
Amortisation
1 January 2005
Charge / (credit) for the year
Goodwill
£
Negative
goodwill
£
Total
£
-
3,875,374
-
(133,565)
-
3,741,809
3,875,374
(133,565)
3,741,809
-
113,050
-
(9,300)
-
103,750
31 December 2005
113,050
(9,300)
103,750
Net book value – 31 December 2005
3,762,324
(124,265)
3,638,059
Goodwill arose in connection with the acquisition of Fire Testing Technology
Limited, and negative goodwill arose in connection with the purchase of the trade
and assets of PE.fiberoptics Limited, as set out in notes 27 and 28 respectively.
10 Tangible assets
Plant &
machinery
Group
£
Fixtures,
fittings &
equipment
£
Motor
vehicles
£
Building
improve-
ments
£
Cost / deemed cost
1 January 2005
Acquisitions
Additions in year
-
69,326
2,410
-
118,634
9,294
31 December 2005
71,736
127,928
Depreciation
1 January 2005
Acquisitions
Charge for year
-
48,699
1,340
31 December 2005
50,039
-
30,227
8,790
39,017
-
31,739
-
31,739
-
27,374
637
28,011
-
29,367
-
29,367
-
29,367
-
29,367
Total
£
-
249,066
11,704
260,770
-
135,667
10,767
146,434
Net book value -
31 December 2005
16
21,697
88,911
3,728
-
114,336
Company:
Cost
1 January 2005
Acquisitions in year (see notes 27 and 28)
31 December 2005
£
-
4,579,564
4,579,564
The company’s trading subsidiaries at 31 December 2005, both of which were
incorporated and operate in the United Kingdom, were as follows:
Company
Principal activity
Class of shares
% held
Fire Testing
Technology Limited of fire testing equipment
Design and assembly
Ordinary £1
100%
PE.fiberoptics
Limited
Design and assembly
of fibre-optic testing
equipment
“A” Ordinary £1
100% of “A”
class; being
51% of total
equity
12 Stock
Raw materials
Work in progress
2005
£
253,462
159,668
413,130
Group Company
2004
£
2005
£
2004
£
-
-
-
-
-
-
-
-
-
Group Company
2005
£
559,436
Trade debtors
-
Amounts owed by Group companies
-
Corporation tax - group relief
Other debtors
44,942
Prepayments and accrued income 87,972
2004
£
-
-
-
3,875
4,355
2005
£
-
111,978
28,853
-
4,411
692,350
8,230
145,242
2004
£
-
-
-
3,875
4,355
8,230
14 Current asset investments
Group and Company
Unquoted investments
Quoted investments
Less: provision against
investments
Historical
cost
£
Period end value
Directors’
valuation
£
Market
valuation
£
Total
Valuation
£
19,373
508,538
-
318,825
45,500
-
45,500
318,825
(100,000)
-
-
-
At 31 December 2005
427,911
318,825
45,500
364,325
Net unrealised (loss) /
gain at 31 December 2005
-
(89,713)
26,127
(63,586)
A formal takeover offer was received by Dickinson Legg Group plc, a quoted
company in which Judges Capital plc holds 3.01%, on 3 March 2006, valuing
the shares at 17.75p. This has the effect of reducing the unrealised loss shown
above on quoted investments by £46,537 to £43,176.
Details of the investments held at 31 December 2005 are as follows: quoted
investments - Dickinson Legg Group plc - 1,095,000 shares (representing
3.01%), Poole Investments plc - 5,700,000 shares (representing 3.08%, part of a
13% concert party). Unquoted investments - Fortress Holdings plc (in members'
voluntary liquidation) - 800,100 shares (representing 1.68%), Lionheart plc (in
members' voluntary liquidation) - 275,000 shares (representing 3.81%), SP
Holdings plc (in administration) - 1,250,000 shares (representing 2.43%).
16 Creditors: amounts falling due after more than
18 Equity share capital
Historical
cost
£
Period end value
Directors’
valuation
£
Market
valuation
£
Total
Valuation
£
227,399
1,574,676
-
1,693,601
260,000
-
260,000
1,693,601
(100,000)
-
-
-
Unquoted investments
Quoted investments
Less: provision against
investments
At 31 December 2004
1,702,075
1,693,601
260,000
1,953,601
Net unrealised gain at
31 December 2004
-
218,925
32,601
251,526
15 Creditors: amounts falling due within one year
Group Company
2005
£
2004
(restated)
£
2005
£
2004
(restated)
£
one year
Bank loan
Subordinated loan notes
Group Company
2005
£
2004
£
2005
£
2004
£
2,028,959
500,000
2,528,959
-
-
-
2,028,959
500,000
2,528,959
-
-
-
The bank loan is secured on assets of the group, is repayable in quarterly
instalments over a 6 year period ending 31 March 2011 and bears interest at
2 1⁄4% above LIBOR-related rates. The subordinated loan notes are unsecured,
repayable on 23 May 2010 and bear interest at 7% per annum. The repayment
profile of these borrowings is as follows:
Trade creditors
Accruals and deferred income
Social security and other taxes
Corporation tax
Bank loan
Other creditors
224,203
111,096
47,073
315,798
256,000
90,094
453,517
16,174
2,775
-
-
12,500
-
33,284
3,992
-
256,000
12,500
453,517
16,174
2,775
-
-
12,500
Repayable in less than 1 year
Repayable in years 1 to 2
Repayable in years 2 to 5
Repayable after year 5
1,044,264
484,966
305,776
484,966
17 Provisions for liabilities
Included within trade creditors in 2004 is £451,421 representing the gross
amount outstanding in respect of Contracts for Differences.
Other creditors include £12,500 of non equity shares classed as financial
liabilities (see note 19).
Deferred tax - Group
1 January 2005
Arising on acquisitions in the year
Charge for the year
31 December 2005
Bank loan Subordinated
loan notes
£
£
Total
£
256,000
304,000
1,548,000
176,959
-
-
500,000
-
256,000
304,000
2,048,000
176,959
2,284,959
500,000
2,784,959
£
-
23,339
218
23,557
Amounts provided in respect of deferred tax are computed at 30% and relate to
accelerated capital allowances.
(Group and Company)
Authorised
10,000,000 Ordinary shares of 5p each
2005
£
2004
(restated)
£
500,000
500,000
Allotted, called up and fully paid
3,462,356 (2004: 2,106,356) Ordinary shares of 5p each 173,118
105,318
The increase in 2005 in the number of shares issued amounted to 1,356,000. Of
these, 400,000 were allotted to the vendors of Fire Testing Technology Limited
on 24 May 2005 as part consideration. The company has taken advantage of the
merger relief available under section 131 of the Companies Act 1985 and
recorded the issue of these shares at nominal value. The remaining 956,000
shares were issued by way of a placement on 24 May 2005, to raise finance for
the acquisition at a price of £1 per 5p share.
On 6 March 2006 the company issued 98,522 Ordinary shares of 5p at a fair
value of £1.015 in respect of the acquisition of UHV Design Limited.
Equity share options and warrants
Options issued under Employee Unapproved
Share Option Plan
Options were issued on 20 October 2005 at £1.015 per share,
exercisable between the third and tenth anniversaries of grant and
conditional on achievement of group earnings targets, as follows:
• to a director of the company (Mr R.L. Cohen) 37,000 shares
• other 5,000 shares
The market price of the Company’s ordinary shares on 31
December 2005 was £1.04 and the high and low prices during the
year were £1.065 and £0.99 on 6 May 2005 and 11 July 2005
respectively. The share price on 14 March 2006 was £1.025.
17
Warrants to subscribe
Under an agreement dated 22 October 2004, Invex Capital LLP
was granted unquoted warrants to subscribe for Ordinary shares
in the company in connection with the acquisition of Fire Testing
Technology Limited. This warrant has an exercise price of £1 per
share, expires on 23 May 2010 and relates to 133,564 shares.
Convertible Redeemable shares
The conversion rights set out in note 19 would have resulted in the
issue of 472,139 Ordinary shares if conversion of all the Convertible
Redeemable shares had taken place on 31 December 2005.
19 Shares classed as financial liabilities
(Group and Company)
2005
£
2004
(restated)
£
Authorised
5,000,000 Convertible Redeemable shares of 1p each
50,000
50,000
Allotted, called up and fully paid
5,000,000 Convertible Redeemable shares of
1p each – quarter paid
12,500
12,500
In accordance with FRS 25 - Financial Instruments: Disclosure
and Presentation, the preference shares have been reclassified as
financial liabilities and included in other creditors (see note 15).
The principal terms of the Convertible Redeemable Shares are as
follows:
• There is no right to participate in the profits of the company.
• On a winding up or other return of capital the surplus assets
remaining after payment of liabilities shall be applied:
i) First in repaying the capital paid up on the Ordinary shares;
ii) Secondly in repaying the capital paid up on the Convertible
18
Redeemable Shares; and
20 Statement of movements on reserves
iii)Thirdly distributed amongst the holders of the Ordinary Shares
according to the amounts paid up.
• The holders of the Convertible Redeemable Shares are not
entitled to attend or vote at General Meetings of the company
unless the meeting considers a resolution for winding up the
company.
• On payment to the company of the aggregate of (i) a sum equal
to any amount which has not been called or which is otherwise
unpaid in respect of all of the Convertible Redeemable Shares
to be converted and (ii) a further sum equal to 95 pence
multiplied by the number of Ordinary Shares to be issued as a
result of the conversion less the amount paid up or deemed
paid up (including the amount referred to in (i) above) in
respect of the Convertible Redeemable Shares to be converted
(“Conversion Price”), each holder of Convertible Redeemable
Shares shall be entitled to convert all or any of his Convertible
Redeemable Shares into such number of fully paid Ordinary
Shares which represents 0.24 per cent of the number of
Ordinary Shares in issue, assuming that all the Convertible
Redeemable Shares remaining capable of being convertible into
Ordinary Shares at the date of which the conversion takes place
had been converted at the time, for every 100,000 Convertible
Redeemable Shares so converted and in proportion for any
greater or lesser number of Convertible Redeemable Shares
(“Conversion Rate”).
• The holders of Convertible Redeemable Shares shall (subject to
the provisions of the Companies Act) be entitled at any time to
redeem all or any of the Convertible Redeemable Shares
outstanding out of any profits or monies of the company which
may lawfully be applied for that purpose.
Group
1 January 2005
Merger
reserve
£
-
Share
premium
account
£
Profit and
loss
account
£
1,695,494
(279,400)
Retained profit for the year
Premium on shares issued in the year
Merger reserve arising on shares issued
-
-
380,000
-
805,936
-
46,929
-
-
Balance at 31 December 2005
380,000
2,501,430
(232,471)
In the current year, no dividends have been proposed after the balance sheet date.
Under the previous accounting policy any such dividends would have been shown
as a liability and deducted from the profit for the year. Under the new accounting
policy these are not accrued. No dividends had been declared by the company in
respect of the year ended 31 December 2004, and thus the implementation of FRS
21 has had no impact on previously reported results and balance sheets.
The premium on shares issued is stated after charging costs of £102,264
relating to the share placing in the year.
The company has taken advantage of the relief available under section 131 of the
Companies Act 1985 and recorded the shares issued in connection with the
acquisition of Fire Testing Technology Limited (400,000 shares at a fair value of
£1 per 5p share) at nominal value.
Company
1 January 2005
Retained profit for the year
Premium on shares issued in the year
Balance at 31 December 2005
Share Profit and
loss
account
premium
account
£
£
1,695,494
(279,400)
-
805,936
665,171
-
2,501,430
385,771
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial statements.
The parent company’s profit for the year was £665,171 (2004: loss of £153,528).
21 Reconciliation of movements in shareholders’ funds
24 Related Party Transactions
Profit / (loss) for the year
Proceeds from issue of shares (net)
2005
£
2004
£
46,929
1,253,736
(153,528)
-
Net addition to / (decrease from) shareholders’ funds
Opening shareholders’ funds
1,300,665
1,521,412
(153,528)
1,674,940
Closing shareholders’ funds
2,822,077
1,521,412
22 Directors’ emoluments
Emoluments
2005
£
2004
£
89,110
62,000
During the year no directors participated in defined contribution pension
schemes (2004: nil).
23 Employees
Group
Number of employees - manufacturing
- sales and administration
Employment costs
Wages and salaries
Social security costs
Pension costs
2005
no.
11
11
22
2005
£
560,781
57,284
13,306
2004
no.
-
4
4
2004
£
60,825
5,242
-
631,371
66,067
In addition to the amounts paid to the directors the following
transactions took place:
Mr D.E. Cicurel
The sum of £12,500 (2004: £25,000) was paid to David
Cicurel (Investments) Limited, a company indirectly controlled
by The David Cicurel Settlement, of which Mr D.E. Cicurel is a
potential beneficiary. This represented a contribution towards
the costs of using the offices and administrative services of
that company. This arrangement terminated on 30 June 2005
but prior to that date was monitored by the non-executive
Directors.
Mr R.J. Elman
Mr R.J. Elman is a partner of Elman Wall, a firm of Chartered
Accountants who provided bookkeeping and accounting services
to the company at a cost of £21,000 (2004: £12,000). This
arrangement terminated on 31 December 2005.
25 Financial Instruments
Financial instruments relating to investment
activities
To facilitate its former investment purchases, the group has used
financial instruments, other than derivatives, comprising borrowings
(including Contracts for Differences), cash and various items such
as short term debtors and creditors that arose directly from its
operations. The main purpose of these financial instruments was to
raise finance for the group’s investment operations.
Interest was received during 2005 and earlier periods on bank
balances based on a floating rate which represented base less
0.25 per cent. Interest was paid on the gross amount outstanding
in respect of Contracts for Differences based on a floating rate
which represented approximately 7 per cent.
The main risk arising from the group’s investment related financial
instruments was liquidity risk. The board reviewed and agreed
policies for managing each of these risks and they are
summarised below.
Management of liquid resources
Judges Capital plc endeavoured to balance its investment
portfolio with approximately five positions at any one time. These
special situations would, ideally, be at different stages of maturity,
in different sectors and would involve different levels of
management co-operation.
The group had used CFDs (i) to increase its investment in equities
up to the level of its own shareholders’ funds and still keep
prudent cash balances and (ii) to enhance returns on one
particular holding where the risk was low but the potential uplift
was less than the company’s target.
Judges Capital plc have in the past invited co-investors to
participate in an individual transaction for which they would pay
Judges Capital plc a share of their profits. This served to boost
the return on the funds invested in a target and enabled Judges
Capital plc to pursue a strategy, such as an outright bid for a
target, that would otherwise have lead to an imbalance in the
investment portfolio.
Financial instruments relating to scientific
instrumentation activities
The group’s policies on treasury management and financial
19
instruments are given in the Report of the Directors. As permitted
by FRS 13, short-term debtors and creditors have been excluded
from the disclosures below.
Financial assets
The group’s financial assets comprise cash at bank, which is
principally denominated in sterling and earns interest at floating
rates. There is no difference between the book and fair values of
the financial assets. At 31 December 2005 the group had debtors
denominated in foreign currency as follows: Euros – £155,492
and US Dollars – £91,743 (2004: Nil).
Financial liabilities
The group’s principal financial liabilities are the bank debt and
unsecured loan notes assumed in connection with the acquisition
of Fire Testing Technology Limited, further details of which are
given in Note 16.
Fair value of financial instruments
Financial instruments include the borrowings above. The directors
believe that there is no material difference between the book value
and fair value of such financial instruments. All financial
instruments are sterling denominated.
Borrowing facilities
The Group had an undrawn committed overdraft facility of
£500,000 at 31 December 2005 (2004: nil).
26 Post balance sheet events
On 21 February 2006, the company announced the acquisition of the
entire issued share capital of UHV Design Limited for a maximum
consideration of £836,000 (plus a working capital adjustment). This
company designs and manufactures instruments used to manipulate
objects in ultra high vacuum chambers. On 6 March 2006 the
company issued 98,522 Ordinary shares of 5p at a fair value of
£1.015 in respect of the acquisition of UHV Design Limited.
In addition, a formal takeover offer was received on 3 March 2006
by Dickinson Legg Group plc, a quoted company in which Judges
Capital plc holds 3.01%, valuing the shares at 17.75p.
27 Acquisition of Fire Testing Technology Limited
(“FTT”)
On 24 May 2005 the company acquired 3,000 ordinary shares of
£1 each in Fire Testing Technology Limited (“FTT”), being 100%
of its issued share capital. Goodwill arising on the acquisition of
FTT has been capitalised. The purchase of FTT has been
accounted for by the acquisition method of accounting. Advantage
has been taken of Section 131 of the Companies Act 1985 to take
merger relief in respect of the premium on the issue of shares to
the vendors of FTT.
FTT’s results for the period from 1 June 2004, the beginning of its
financial year, to the date of acquisition were as follows: turnover
of £3,261,286, operating profit of £685,435, profit before tax of
£698,820, tax of £215,737 and profit after tax of £483,083. The
profit after tax for the year ended 31 May 2004 was £461,486.
The assets and liabilities of FTT at the date of acquisition were as
follows:
Fixed assets
Current assets
Current liabilities
Long term liabilities
Book
Fair value
value adjustment
£
£
Fair
value
£
335,083
1,489,509
(445,430)
(23,339)
(271,684)
-
-
-
63,399
1,489,509
(445,430)
(23,339)
Total net assets at date of acquisition
1,355,823
(271,684)
1,084,139
Consideration paid, including transaction costs
Goodwill
Consideration satisfied by:
Cash falling due on completion, including transaction costs
Cash paid subsequently - earn-out
- working capital adjustment
Cash consideration paid
Issue of shares - 400,000 ordinary 5p shares at fair value of £1
Issue of subordinated loan notes
Total fair value of consideration
Less: merger relief
Company - cost of investment recorded
4,959,513
3,875,374
2,756,850
500,000
802,663
4,059,513
400,000
500,000
4,959,513
(380,000)
4,579,513
The fair value adjustment related to leasehold improvements on premises rented
by FTT. The directors assessed that these improvements did not have a fair value
since the company was paying an open market rental for the premises.
20
FTT made the following contributions to, and utilisations of, group
cash flow:
Net cash inflow from operating activities
Returns on investment and servicing of finance
Capital expenditure and financial investment
Increase in cash
Analysis of net outflow of cash in respect of the purchase of FTT:
Cash at bank and in hand at the date of acquisition
Cash consideration
Net cash outflow
2005
post
acquisition
£
507,155
16,363
(4,182)
519,336
£
579,949
(4,059,513)
(3,479,564)
28 Acquisition of interest in PE.fiberoptics Limited
(“PFO”)
On 2 September 2005 the company subscribed in cash and at par
for 51 “A” ordinary shares of £1 each in PE.fiberoptics Limited
(“PFO”), being 51% of its issued share capital, prior to its
commencement of trade. PFO acquired the goodwill and certain
assets of a business previously carried on by PerkinElmer (UK)
Limited in the field of scientific instruments for use in the fibre-
optic industry. Negative goodwill arising on the acquisition of
these assets has been capitalised within the accounts of PFO. The
purchase of PFO has been accounted for by the acquisition
method of accounting.
Apart from cash raised on subscription for its shares, PFO had
no assets or liabilities at the date of acquisition of its shares by
Judges Capital plc, nor any accumulated profits or losses. The
fair values attributed by the directors of PFO to the assets
acquired from PerkinElmer were as follows:
Purchase
Fair value
value adjustment
(negative
goodwill)
£
£
Fixed assets
Stocks
1
8,429
49,999
83,566
Fair
value
£
50,000
91,995
Total net assets purchased by PFO
following acquisition
8,430
133,565
141,995
The fair value adjustment reflects the directors assessment of the value of the
assets acquired to the business.
PFO made the following contributions to, and utilisations of, group cash flow,
before accounting for minority interests:
Net cash inflow from operating activities
Returns on investment and servicing of finance
Capital expenditure and financial investment
Increase in cash
Analysis of net outflow of cash in respect of the purchase of PFO:
Cash consideration for shares
Net cash outflow
2005
post
acquisition
£
115,984
(1,566)
(7,522)
106,896
£
51
51
29 Operating lease commitments
At 31 December 2005 the group had annual commitments under
non-cancellable operating leases as follows:
Expiry date:
land and buildings - between one and five years
- after five years
2005
£
2004
£
93,000
-
-
-
21
Notice of Annual General Meeting
Notice is hereby given that the third Annual General Meeting of Judges
Capital plc ("the Company") will be held at 17 Grosvenor Gardens, London
SW1W 0BD on 18 May 2006 at 12.00 noon for the purpose of dealing with
the following business of which items 5 and 6 are special business.
Ordinary Business
1 To receive the reports of the directors and the auditors and the
audited financial statements of the Company for the year ended 31
December 2005.
2 To re-appoint David Cicurel, who retires by rotation, as a director.
section 80 of the Companies Act 1985 ("the Act")) up to an
aggregate nominal amount of £89,022 provided that this authority
unless renewed shall expire at the close of the next Annual General
Meeting of the Company, save that the Company may before such
expiry make any offer, agreement or other arrangement which would
or might require relevant securities to be allotted after such expiry
and the directors of the Company may allot the relevant securities in
pursuance of such offer, agreement or other arrangements as if the
authority conferred hereby had not expired, this authority to replace
any previous authority under section 80 of the Act which is hereby
revoked with immediate effect.
(ii) the allotment (otherwise than pursuant to sub-paragraph (i)
above) of equity securities for cash up to an aggregate nominal
amount of £44,511.
and, unless previously renewed, revoked or varied, such power
shall expire at the close of the next Annual General Meeting of
the Company, save that the Company may before such expiry
make an offer, agreement or other arrangement which would or
might require equity securities to be allotted after such expiry and
the directors of the Company may allot equity securities in
pursuance of such offer, agreement or other arrangement as if the
power conferred hereby had not expired;
3 To re-appoint Ralph Cohen, who was appointed since the last
Annual General Meeting, as a director.
Special Resolution
6 THAT:
4 To re-appoint Grant Thornton UK LLP as auditors to hold office from
the conclusion of this meeting until the conclusion of the next
general meeting at which financial statements are laid before the
Company and to authorise the directors to fix the remuneration of
the auditors.
Special Business
To consider and, if thought fit, to pass the following resolutions as to
the resolution numbered 5 as an Ordinary Resolution and as to the
resolution numbered 6 as a Special Resolution:
Ordinary Resolution
5 THAT the directors of the Company be and are hereby generally and
unconditionally authorised to exercise all the powers of the
Company to allot relevant securities (as defined for the purposes of
(a) subject to and conditional upon the passing of resolution 5
above, the directors of the Company be and they are hereby
empowered pursuant to section 95(1) of the Act to allot equity
securities (as defined for the purposes of section 95 of the Act)
for cash, pursuant to the authority granted by resolution 5 above,
as if section 89(1) of the Act did not apply to any such allotment,
provided that such power shall be limited to:
(i) the allotment of equity securities in connection with a relevant
rights issue or open offer in favour of ordinary shareholders
where the equity securities attributable to the respective interests
of all ordinary shareholders are proportionate to the respective
numbers of Ordinary Shares held by them on the record date for
such allotment, but subject to such exclusions as the directors
may deem fit to deal with fractional entitlements or problems
arising under the laws of any overseas territory or the
requirements of any regulatory body or stock exchange; and
(b) For the purposes of this resolution:
(i) "relevant rights issue" means an offer of equity securities open
for acceptance for a period fixed by the directors of the Company
to holders on the register on a fixed record date of Ordinary
shares in the Company in proportion (or as nearly as may be
practicable) to their respective holdings but subject in any case
to such exclusions or other arrangements as the directors of the
Company may deem necessary or desirable to deal with
fractional entitlements or legal or practical problems under the
laws of, or the requirements of, any recognised regulatory body
or any stock exchange in any territory; and
(ii) the nominal amount of any securities shall be taken to be, in the
case of rights to subscribe for or convert any securities into
shares of the Company, the nominal amount of such shares,
which may be allotted pursuant to such rights.
22
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Form of Proxy
for the Annual General Meeting of Judges Capital plc on 18 May 2006 at 12.00 noon at 17 Grosvenor Gardens, London SW1W 0BD
If you are unable to attend the Annual General Meeting, you may appoint a proxy to attend and vote in your place. A proxy need not be a
member of Judges Capital plc. A proxy must vote as you have instructed and cannot vote on a show of hands. If you wish to appoint a proxy other than
the Chairman of the meeting you may do so by crossing out the words ‘Chairman of the meeting’ and writing another proxy’s name and address in the
space provided. You may appoint more than one proxy. Please indicate for each Resolution how you wish your proxy to vote by placing a tick in the
relevant box. If you do not tell your proxy how to vote, your proxy may vote or withhold his/her vote as he/she thinks fit on the Resolutions or any other
business at the meeting (including amendments to Resolutions).
I/We
of
(Block Letters)
appoint the
Chairman of the meeting or
proxy to attend and, on a poll, to vote on my/our behalf at the Annual General Meeting of Judges Capital plc to be held at 12.00 noon on 18 May 2006,
and at any adjournment(s) of that meeting.
as my/our
For
Against
Vote
Withheld
1
2
3
4
5
6
Approval of Annual Report and Accounts
Re-appointment of David Cicurel
Re-appointment of Ralph Cohen
Re-appointment of auditors
Authority to allot relevant securities
Authority to disapply pre-emption rights *
*Special resolution
If this proxy is signed by someone else on your behalf, their authority must also be returned with this form. In the case of joint holdings, any one holder
may sign this form. In the case of a corporation, the proxy must be executed under its common seal or under the hand of a duly authorised officer or
attorney. Even if you complete and return this proxy form, you may still attend the meeting and vote in person should you later decide to do so.
Please sign here:
Date:
Please post this form in an envelope once you have completed it to the address below. To be valid, this form must be received no later than 48 hours
before the time fixed for holding the meeting or any adjournment thereof.
Mailing address for Form of Proxy: Capita Registrars, Proxy Department, The Registry, 34, Beckenham Road, Beckenham, Kent BR3 4TU
Mailing address for Form of Proxy
Capita Registrars, Proxy Department, The Registry, 34, Beckenham Road, Beckenham, Kent BR3 4TU
Fold here
25
Judges Capital plc
Judges Capital plc, Unit 19, Charlwoods Road, East Grinstead, West Sussex RH19 2HL
Tel: 01342 323600 Fax: 01342 323608 E-mail: enquiries@judges.uk.com