Judges Scientific plc
ANNUAL REPORT & ACCOUNTS 2011
CONTENTS
Consolidated financial statements
Chairman’s statement
Activities of the Group
The Board
Directors’ report
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
2 - 3
4
5
6 - 10
11
12
13
14
15
Notes to the consolidated financial statements
16 - 34
Parent company financial statements
Independent auditor’s report
Parent company balance sheet
36
37
Notes to the parent company financial statements
38 - 41
Company meetings
Notice of class meeting of Ordinary shareholders
42
Form of Proxy for the class meeting
Notice of Annual General Meeting
Form of Proxy for the Annual General Meeting
43 - 44
45 - 46
47 - 48
Front Page Image
A GDS Instruments triaxial cell allows
pressure and load to be applied to soil
and rock samples for the assessment of
strength properties for the civil
engineering industry.
Revenue and adjusted operating profit
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Dec 2005
Dec 2006
Dec 2007
Dec 2008
Dec 2009
Dec 2010
Dec 2011
Revenue Adjusted operating profit
Adjusted operating profit as a percentage of revenue
The decline in 2009 in the operating profit percentage resulted in
part from the acquisition of Quorum Technologies Limited
Earnings, dividends and share price
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Dec 2005
Dec 2006
Dec 2007
Dec 2008
Dec 2009
Dec 2010
Dec 2011
Dividend per share Adjusted basic earnings per share Share price in pence at the end of the week
Adjusted net debt
Dec 2005
Dec 2006
Dec 2007
Dec 2008
Dec 2009
Dec 2010
Dec 2011
Balance of net debt existing at previous year-end
Net debt arising in year from new acquisitions
Net debt as a percentage of Net Assets adjusted for derivatives
(shown under IFRS since transition on 1 Jan 2006)
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360.00
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CHAIRMAN’S STATEMENT
It is a privilege to be able to report record results for the sixth
consecutive year.
The year ended 31 December 2011 saw Group revenues advance 30% from
£16 million to £20.8 million.This reflects organic growth of 15% and includes a
full year’s contribution from Sircal and a maiden contribution from Deben.
Profit before tax, exceptional items and minorities, rose by 44% from £2.75
million in 2010 to a record £3.95 million, with the operating contribution of
the businesses owned on 1 January 2010 growing by 10%. Basic earnings per
share, before exceptional items, rose from 45p to 61p.
Exceptional items include the amortisation of
intangible assets, acquisition expenses and a
net accounting gain following a recovery under
an insurance claim.They also reflect the
difference in valuation, from one year-end to
the next, of the Convertible Redeemable
shares; after recording significant increases in
2010 and during the first half of 2011, the
Company’s share price declined in the
summer, in line with the market, and finished
the year with little progress, producing an
accounting “loss” of £304,000.Your Board
regards this as unrelated to the Group's
operating performance and it is therefore
treated as an exceptional item. Profit, including
exceptional items but before tax and
minorities, amounted to £2.89 million (2010:
£0.67 million).This equates to basic earnings
per share, including exceptional items, of 45.2p
(2010: 8.1p). Fully diluted earnings per share,
after exceptional items, amounted to 42.9p
(2010: 7.8p).
Corporate activity
On 18 March 2011, the Group acquired a 51%
interest in Deben UK Limited, a company
which makes instruments used in electron
microscopy.The vendors retained a 49%
non-controlling interest in the acquisition
vehicle.The purchase price in respect of 100%
of Deben was £3.26 million.To finance the
purchase, Lloyds Bank provided Bordeaux,
the acquisition vehicle, with a £2.42 million
loan, which is guaranteed by Judges.The
Company did not issue any shares to finance
the transaction.
Post balance sheet, on 6 March 2012, Deben
completed the purchase of the business of KE
Developments Limited (“KED”). KED makes
and sells accessories for electron microscopes
to the same client base as Deben.The business
was broadly breaking even and is not expected
to contribute to Group profits until it is
integrated into Deben during the course of
2012. Deben purchased KED’s fixed assets for
£40,000 and will pay deferred goodwill up to a
maximum of £300,000 over five years,
dependent upon the sales of KED products.
On 6 March 2012, Judges acquired the entire
share capital of Global Digital Systems Limited
(“GDS”). GDS designs, manufactures and sells
instruments used to test the physical
properties of soil and rocks; the client base is
worldwide and consists of universities and
commercial users servicing the civil
engineering sector.The company achieved a
23% compound annual growth rate over the
last five years and exports 83% of its
production; it won a Queen’s Award for
Enterprise – International Trade in 2011. GDS
generated adjusted EBIT of £1.27 million in
2011 and the £7.65 million purchase price was
financed by an extension of the facilities
provided by Lloyds Bank.
Trading
2011 represented another year of satisfactory
trading for the Group. Order intake, sales
and margins were healthy and cash generation
was strong.The turbulence experienced
within the global economy had no material
impact on Judges’ niche markets and sales held
up well, even in continental Europe which
accounts for a third of Group turnover.The
more dynamic economies of the US and Asia
yielded more progress.The task of updating a
significant proportion of the Group’s product
offering continued.
The results of our operations during 2011
have enabled the Group modestly to increase
its key Return On Total Invested Capital
performance indicator from 44.8% to 46.2%.
Inevitably, the acquisition of GDS will bring
about a short-term reduction in this measure.
Judges’ Chairman, Alex Hambro, with
Her Majesty’s Lord Lieutenant for
East Sussex, Mr Peter Field on the
occasion of UHV Design receiving
the Queen’s Award for Enterprise:
International Trade
2
Financial position
Net debt as at 31 December 2011 stood at
£1,227,000, or £730,000 excluding
subordinated amounts owed to the minority
shareholders of Bordeaux, compared with
£788,000 as at the previous year-end.The
Group’s cash-flow proved sufficient to finance
the purchase of Deben and the land in
Laughton, East Sussex, upon which we are
planning to build a new factory.As is
customary, a significant proportion of our debt
is denominated in foreign currency in order to
hedge against the impact of exchange rate
fluctuations on our export activities.Year-end
cash balances progressed from £2.5 million to
£4 million.
It gives the Board considerable pleasure to
disclose that on 29 February 2012, the Group
was in a net cash position (excluding
subordinated debt to minority shareholders);
this indicates that all the sums borrowed to
purchase our operations since the Company’s
readmission in May 2005 had been repaid or
were capable of being repaid out of positive
cash balances.As a result of the acquisition of
GDS the Group is again in a net debt position;
to fund the acquisition, the Company’s
indebtedness was replaced by a £5 million
term loan and a £4 million overdraft facility.
The Bordeaux financing remained unchanged.
The Group has obtained planning permission
for the factory development in Laughton and
construction is expected to commence in the
near future. Lloyds Bank has agreed in
principle to lend up to £2 million secured on
the Group’s wholly-owned properties.
Dividends
Your Board is pleased to recommend a final
dividend of 6.7p per share (2010: 5p per
share) which, subject to approval at the
forthcoming Annual General Meeting on
30 May 2012, will make a total distribution of
10p per share for 2011 (2010: 7.5p per share).
Despite the proposed increase, the dividend
total is still covered six times by adjusted
earnings per share, unchanged
from 2010.
The proposed final dividend will be payable on
6 July 2012 to shareholders on the register on
8 June 2012 and the shares will go ex-dividend
on 6 June 2012.
Convertible Redeemable shares
The accounting treatment of the Convertible
Redeemable shares has resulted in significant
non-cash fluctuations in the Company’s
reported profits, to the discomfort of the
investment community.The Board has
attempted to minimise the impact by treating
the resulting losses as exceptional items but
the situation remains unsatisfactory.The Board
therefore proposes to open a window of
opportunity until December 2012 during
which the holders could redeem for cash part
or all of their Convertible Redeemable shares
at a 15% discount to their theoretical
conversion value.This would encourage
holders to deal with these shares in advance
of their final maturity in December 2014.
Furthermore, the proposed mechanism would
lessen the likelihood of market disturbance as,
without this redemption option, holders might
need to finance the conversion price through
share sales.A resolution designed to amend
the Company’s Articles in order to give effect
to this scheme will be proposed at the
forthcoming AGM.
Share Incentive Plan
The Company is launching a Share Incentive
Plan (“SIP”) to enable all employees with a
minimum 12 months’ service to purchase
shares in a tax efficient manner up to a value
of £1,500 per annum, starting in April 2012. In
the first tax year, the Company will match
pound-for-pound individual employees’
investments of up to £600.This will enable all
those who work hard to support the Group’s
progress to have a share in the value they help
to create.The Board hopes that many of the
Group’s employees will choose to participate
in the scheme.
Current trading and prospects
The economic environment has shown
little change during the past year and
uncertainties persist, both in relation to efforts
to reduce government spending in
the developed world and with regard to the
relative strength of Sterling.The Group has
started 2012 with good order book visibility
and a low level of debt; the acquisitions
completed in March give your Directors
confidence that 2012 will herald further
progress in its trading position.
Alex Hambro
Chairman
Date: 28 March 2012
3
ACTIVITIES OF THE GROUP
Activities of the Group
The group specialises in the design and production of scientific instruments. Rapid expansion is being pursued, both
through organic growth within its subsidiary companies and through the acquisition of top-quality businesses with
established reputations in world-wide markets.
Fire Testing Technology Limited
is the world leader in the design, manufacture and service of
instruments that measure the reaction of a variety of materials to fire.
The key products include Cone Calorimeters, NBS Smoke Chambers,
the Oxygen Index apparatus and approximately 30 other reaction to
fire instruments. Over the last 20 years FTT has developed its
technology and expertise to become the benchmark in fire testing
instrumentation.The company has helped develop many of the major
fire test instruments used in international fire test standards during the
last 10 years participating in British, International, CEN and ASTM
standardisation committees.The products are sold worldwide to
universities, fire research institutes, test houses and product
manufacturers.
Global Digital Systems Limited
designs, develops and manufactures equipment and software used for
the computer-controlled testing of soils and rocks.This technology is
used to evaluate the mechanical properties that are key in geotechnical
and earthquake engineering design. GDS’s products have been used in
many world-renowned developments including the Three Gorges Dam
in China, the Millau Viaduct in France, the Vasco da Gama Bridge in
Portugal and, closer to home,Terminal Five at Heathrow and the new
Crossrail links. GDS’s products are used by top research institutes
throughout the world, including the Indian Institute of Technology,
Colorado School of Mines in the USA and the Hamburg University of
Technology in Germany.
Sircal Instruments (UK) Limited
designs, manufactures and distributes rare gas purifiers typically for use
in metal analysis utilising the spectrometry technique.This technique
provides qualitative and quantitative analysis of a metallic sample for
determination of its purity.The products are sold world-wide to OEM
customers (spectrometer manufacturers that use such purifiers in
conjunction with their own instruments) or directly to end users such
as metal manufacturers and distributors and test houses.
PE.fiberoptics Limited
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.
Quorum Technologies Limited
designs, manufactures and distributes instruments that prepare a wide
range of specimens for examination in electron microscopes. The
microscopes themselves typically sell for between $50,000 and $5
million. For this reason high quality preparation or preservation of
specimens is crucial to the quality of the images and data obtained
from these state-of-the-art instruments. Applications for the
technology are to be found in virtually every scientific discipline,
including all areas of life and materials sciences research, foods,
polymers, oil exploration, pharmaceutical sciences and cutting-edge
industrial technologies such as semiconductor production. Quorum’s
product range includes the market leading "Q" series of thin film
coaters and the PP3000T cryogenic preparation system for scanning
electron microscopy (SEM). Other products include an compact RF
plasma asher/etcher and also critical point dryers and freeze dryers
used for the controlled removal or stabilisation of water from
specimens prior to examination in an SEM. The products are sold
worldwide through specialist distributors or via electron microscope
manufacturers.
4
UHV Design Limited
specialises in the development and manufacture of precision
instruments used in the high and ultra-high vacuum markets for
materials research. The company’s product portfolio includes high-
performance motion devices such as magnetically-coupled rotary
drives, linear and XYZ translators, sample transfer solutions, multi-axis
cryogenic manipulators and high performance wafer heating stages.
Products are built to the highest standards in clean room conditions
to ensure quality and reliability. Customers are supported by a global
distribution network and comprise universities, government
laboratories (including the "big physics" experiments), OEMs and the
semiconductor and industrial markets. Applications for the company’s
technologies include the growth / deposition of exotic high-tech
materials, and state-of-the-art materials analysis techniques.
Deben UK Limited
designs, manufactures and sells scientific instrumentation, primarily for
use in the Electron Microscopy sector. Some 50% of sales are to OEMs
with the remainder being direct to universities, research laboratories,
hospitals and industrial companies. Primary markets are UK, Europe,
USA and Japan.With a wide distribution network, equipment is sold to
all corners of the globe. OEM products include mechanical and
electronic assemblies for stage control, specimen cooling and imaging
on electron microscopes.Tensile testing stages allow in-situ
observation of specimens under test and there is growing interest in
using these stages with X-Ray, synchrotron and optical microscopy.
The Deben acquisition of the business of KE Developments in March
2012 provides an extended product range in specimen imaging and
access to further OEM customers with good potential for sales
growth. Operating from a modern 10,0002ft factory near Bury St.
Edmunds in Suffolk, Deben is ideally placed for further growth and
expansion in coming years.
THE BOARD
The board of Judges Scientific plc
(From left to right)
Glynn Reece,
Non-Executive Director:
A qualified solicitor, he has specialised in
providing Corporate Finance deal origination
and advisory services, working for (inter alia)
Coopers & Lybrand,Arthur Andersen and
CLB, a specialist AIM firm. Currently a director
and co-owner of Nathan Alexander Limited, a
company that acts as a corporate stockbroker
and an arranger of pre-flotation finance for
small fast-growing companies.Aged: 53.
David Barnbrook,
Chief Operating Officer:
A Chartered Engineer with more than 20
years’ experience as a Senior Manager and
Director in sectors encompassing defence,
instrumentation, aerospace and customer
service.Aged: 59.
Ralph Cohen,
Finance Director:
Held various senior executive positions within
the Vivendi Universal group between 1981 and
2001, having previously spent nine years at
Ernst & Young. Subsequently founding partner
of MC Consultancy Services.Aged: 64.
Alex Hambro,
Non-Executive Chairman:
An independent consultant for a number of
private equity and venture capital fund
management groups and family office investors
advising his clients on the establishment of
alternative investment funds and investment
strategies.Aged: 51.
David Cicurel,
Chief Executive:
Founded Judges in 2002 having spent much of
his career as a turnaround specialist and,
subsequently, as an active private investor
operating with own funds. Responsible for
several corporate recovery exercises including
two UK public companies: International Media
Communications plc (later known as
Continental Foods) and International
Communication and Data plc.Aged: 62.
Ralph Elman,
Non-Executive Director:
A former finance director of quoted
companies Paramount plc, Delyn plc and
International Communication & Data plc and
Finance Director of businesses within GUS plc
and RR Donnelley. He was Senior Partner of
accountancy firm Elman Wall and is non-
executive Director of a number of private
companies. He is Chairman of the Judges audit
committee.Aged: 59.
5
DIRECTORS’ REPORT
The directors present their report and financial statements for the
year ended 31 December 2011.
completed only when the directors are satisfied that the target
business has sound long-term strength.
Principal activities
The company is the parent of a trading group involved in the design
and manufacture of scientific instruments.
Business review
The group’s activities continued to show resilience in 2011 in the face
of a downturn in world trade, focused particularly on deteriorating
confidence in the overall economic condition of the Eurozone area.
On a like-for-like basis, increases were seen in 2011 in both revenues
and profits. In addition to this organic growth, both Sircal Instruments
(UK) Limited (“Sircal”, acquired in March 2010) and Deben UK Limited
(“Deben”, in which a 51% interest was acquired in March 2011)
performed fully in line with expectations. This combination of organic
growth and earnings enhancement through acquisitions fuelled a 35%
increase in earnings per share (undiluted, excluding exceptional items),
following a 61% increase the year before.
A significant proportion of group output is sold to customers
financed directly or indirectly by the public sector, albeit in a
diversified portfolio of regions and countries. The immediate future
holds challenges for the group’s businesses as governments in many
parts of the developed world struggle to bring public sector debt and
spending under control. Movements in exchange rates also influence
international competitiveness and trading margins.
the modest strengthening of Sterling recently may have a dampening
effect on profitability.
In this context,
In addition to the dilution
The company’s business model calls for a steady increase in the scope
of its operations, achieved both through acquisitions of companies
operating in its chosen field of activity and through the ongoing
performance of its established subsidiaries.
of head office costs that results from acquisitions, the company
closely monitors the return it derives on the capital invested in its
subsidiaries. The annual rate of return on total invested capital
(“ROTIC”) is computed monthly, both overall and in respect of each
subsidiary, by comparing attributable earnings excluding exceptional
items and before interest, tax and amortisation (“EBITA”) with the
investment in property, plant and equipment, goodwill and other
intangibles and net current assets (excluding surplus cash).
the overall return computed in this manner amounted to 46.2%,
before taking account of parent company costs (other than foreign
exchange losses resulting from the hedging of subsidiary companies’
equivalent exposure) – (2010: 44.8%). New acquisitions are
inevitably priced at multiples that dampen the ROTIC measure, at
least in their early years; with this in mind, the directors view the
2011 ROTIC result with satisfaction.
In 2011,
• Acquisitions: the directors reported the acquisition on
18 March 2011 of a 51% interest in Deben, a company which
designs, manufactures and sells devices used to enable or to
improve the observation of objects under microscopes.
Its
trading performance since the acquisition has been entirely
satisfactory.
It is regarded as paramount that acquisitions are
6
• Post Balance Sheet Events – Acquisitions: on 6 March
2012, the company acquired the entire issued share capital of
Global Digital Systems Limited (“GDS”). GDS designs,
manufactures and sells instruments used to test the physical
properties of soil and rocks. Also on 6 March 2012 Deben
completed the acquisition of the trade and certain assets of KE
Developments Limited. Further details of these transactions are
set out in note 32 to the consolidated financial statements.
• Ongoing performance: the directors regard the trend of
earnings per share (excluding exceptional items), reduction in net
debt and the company’s ability to pay dividends to its
shareholders as key indicators of overall group performance.
Undiluted earnings per share (excluding exceptional items) rose
from 45.0p in 2010 to 61.0p in 2011; the directors consider
undiluted earnings to be a better measure than diluted because,
under current accounting standards, volatility in the share price
affects the latter in a way that is not necessarily correlated with
the company’s performance. Net debt increased from £788,000
at 31 December 2010 to £1,227,000 at 31 December 2011,
although if subordinated loans from non-controlling shareholders
are excluded, net debt fell slightly to £730,000 despite the
acquisition of Deben. Dividends totalling 10.0p per share
(2010: 7.5p) will be recommended in respect of 2011 (including
those that have already been paid at the interim stage); these are
covered 5.4 times by earnings excluding the derivative charge
(2010: 5.2 times) and 6.1 times (2010: 6.0 times) by earnings
adjusted as set out in note 13 to the financial statements, despite
the proposed 33% increase in the dividend.
In addition to these trends and the above "ROTIC" measure for
the rate of return on investments, the company measures the
performance of its individual subsidiaries in a number of ways:
• Revenue trends
• The Materials Sciences group: revenue rose by 8.5%,
helped by the inclusion of a full year’s trading at Sircal,
which was acquired in March 2010 and which has traded
strongly since.
• The Vacuum group: revenues rose by 49.2%, driven by
strong growth at Quorum Technologies Limited (“Quorum”)
and the acquisition in March 2011 of a 51% interest in Deben.
The growth at Quorum followed the launch of an upgraded
product range on the coaters side of the business. The
Deben acquisition produced sales fully in line with
expectations at the time of the acquisition.
Profitability
The group’s adjusted EBITA margin progressed from 18.0% in 2010 to
19.9% in 2011, driven particularly by strong performance in the
Materials Sciences group.
Cash generation and management
Cash generated from operations amounted to £4,750,000
(2010: £2,508,000). This benefited from a material increase in profits
before exceptional items and in particular before the charge relating
to the amortisation of intangible assets (largely arising from the
Deben acquisition) which did not represent a cash flow item in the
year. The investment in the Deben acquisition also resulted in
outflows (net of inherited cash) of £2,967,000, largely financed by
bank loans and the injection of subordinated loans by Judges and the
non-controlling shareholders. Consolidated net debt at 31 December
2011, excluding the subordinated loan, amounted to £730,000
(2010: £788,000), a level considered by the directors to reflect
encouraging financial strength.
Commercial risks and uncertainties
The group’s customers are located in all parts of the globe and a
major part of sales is to enterprises that are state-owned or closely
tied to state spending. Accordingly, the prevailing uncertainties in the
world economy, and particularly the borrowing constraints currently
affecting many western nations, represent a risk to the group’s
prospects.
to possible adverse impacts on the international competitiveness of
their activities caused by fluctuations in exchange rates.
In addition, the group’s exporting subsidiaries are exposed
An important element of the group’s business model is development
through acquisition; the group is exposed to the risk of an
insufficient availability of target companies of requisite quality and to
the risk that an acquired company does not meet its expected
profitability. The group manages this risk by maintaining relationships
with organisations that market appropriate targets and by performing
research into potential acquisitions.
Across all the group’s activities lies the exposure to human resource
shortages. This reflects the small niche-serving nature of the group’s
businesses and the impracticality at this stage of the group’s
development of providing significant back-up support in respect of
key roles.
The principal drivers of the individual segments within the group,
together with their individual commercial risks and uncertainties, are
as follows:
• The Materials Sciences group supplies measurement equipment
across both public and private sectors. The principal risks relate to
the degree of funding available to public-sector customers. Sales
to the private sector into industries with a history of cyclicality are
at risk of periodic downturns in activity. Overall, the long-term
growth of the business is supported by the development of related
safety regulations internationally and by the globalisation of trade,
as well as by maintaining a strong global presence;
•
The Vacuum group designs and manufactures instruments to
prepare samples for examination in electron microscopes and to
create motion, heating and cooling within ultra high vacuum
chambers.
high-tech markets which it serves, though the directors consider
It is continuing to benefit from the buoyancy of the
that there is scope to improve the division’s output and market
share through technical innovation and increased production
capability. The division is engaged in a high level of development
work, with the attendant risk of technical failure or delays. The
directors seek to mitigate this risk through the quality of the
division’s technical skills base and through its contractual
arrangements with its customers. The degree of funding available
to its public-sector customer base also represents a risk.
Financial risk management objectives and policies
The group utilises financial instruments, other than derivatives (see
note 28), comprising borrowings, cash and cash equivalents and
various other items such as trade receivables and payables 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’s financial instruments relate to interest
rates, liquidity, credit and foreign currency exposure. The directors
review and agree policies for managing each of these risks, which are
described and evaluated in more detail in note 29 to the consolidated
financial statements and which are summarised below. The policies
have remained unchanged from previous years.
•
Interest rate risk
The group finances its operations through a mixture of bank
borrowings (at floating rates), equity and retained profits. With
net debt of just £730,000 at 31 December 2011 (excluding
£497,000 of subordinated loans which do not bear interest),
exposure to interest rate fluctuations is not considered to be a
major threat to the group.
• Liquidity risk
The group seeks to manage liquidity risk by ensuring that
sufficient funds are 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 through the availability of overdraft facilities and through
the significant cash balances that the group currently holds.
• Credit risk
The group reviews the credit risk relating to its customers by
ensuring, wherever possible, that it deals with long established
trading partners, 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 to be provided.
• Currency risk
With exports representing a significant proportion of its sales, the
main risk area to which the group is exposed is that of foreign
currencies (principally US$ and Euros). The group adopts a
strategy to hedge against this risk in whole or in part by
maintaining a proportion of its bank loans in these currencies,
although this does not represent a hedge under IAS 39. The
directors review the value of this economic hedge on a regular
basis. There remains, nevertheless, an ongoing threat to the
group’s competitive position in international markets from any
sustained period of Sterling strength.
7
• Price risk
The conversion terms of the Convertible Redeemable shares give
rise to a derivative financial instrument, which is affected by
fluctuations in the company’s share price.
• Cash flow risk
The group manages its cash flow through a mixture of working
capital, bank borrowings (at floating rates), equity and retained
profits. With net debt of just £730,000 (£1,227,000 including
subordinated loans) and cash and cash equivalents at
31 December 2011 of £3,954,000 (2010: £2,542,000) cash flow is
not considered to be a major threat to the group.
Capital management objectives
The group monitors capital on the basis of carrying amount of equity,
less cash and cash equivalents as presented on the face of the balance
sheet.The directors manage the capital structure and make
adjustments to it in the light of changes in economic conditions and
the risk characteristics of the underlying assets. In order to maintain
its capital structure the group may adjust the amount of dividends
paid to shareholders, issue new shares or sell assets to reduce debt.
The directors seek to maintain a conservative gearing position (17%
at 31 December 2011, 2010: 15%) as they utilise bank funding to
support their acquisition strategy.
The directors’ capital management objectives are to ensure the
group’s ability to continue as a going concern and to provide an
adequate return to shareholders. The parent and subsidiary
companies’ boards meet regularly to review performance and discuss
future opportunities and threats with the aim of optimising
sustainable returns and minimising risk.
Going concern
The consolidated financial statements have been prepared on a going
concern basis. The directors have taken note of guidance issued by
the Financial Reporting Council on Going Concern Assessments in
determining that this is the appropriate basis of preparation of the
financial statements. The group’s principal operating companies
experienced a strong trading environment in 2011 and overall the
group enjoys good visibility for 2012, albeit that the global economic
environment remains uncertain. The directors consider the financial
position of the group to be healthy, with cash balances at
31 December 2011 in excess of £3.95 million and net debt of just
£1,227,000 (including subordinated loans). As a consequence, the
directors believe that the parent company and the group are well
placed to manage their business risks successfully despite the
uncertainties surrounding the current economic outlook.
The directors have a reasonable expectation that the parent
company and the group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the annual
report and accounts.
Results and dividends
The results for the financial year to 31 December 2011 are set out in
the Consolidated Statement of Comprehensive Income. The
company paid an interim dividend of 3.3p per Ordinary share on
4 November 2011. At the forthcoming Annual General Meeting, the
directors will recommend payment of a final dividend for the year of
6.7p per Ordinary share to be paid on Friday 6 July 2012 to
shareholders on the register on Friday 8 June 2012.The shares will go
ex-dividend on Wednesday 6 June 2012.
Directors
The following directors have held office during the year:
Hon AR Hambro 1 - non-executive
Mr DE Cicurel
Mr D Barnbrook
Mr RL Cohen
Mr RJ Elman 1 - non-executive
Mr GC Reece 1 - non-executive
1 Member of the audit and remuneration committees
Directors’ interests
The directors’ interests in the Ordinary shares of the company were
as stated below :
Ordinary of 5p each
31 December 2011
Options
Shares
-
100,000
-
538,841
55,000
15,000
72,000
15,000
-
75,791
-
3,000
1 January 2011
Shares
100,000
526,356
15,000
10,000
75,791
3,000
Options
-
-
50,000
67,000
-
-
Hon AR Hambro
Mr DE Cicurel
Mr D Barnbrook
Mr RL Cohen
Mr RJ Elman
Mr GC Reece
Dividends paid in the year to directors who hold shares
amounted to £57,000 in aggregate (2010: £45,000).
Details of share options are set out in note 24 to the financial
statements.
8
In addition to the above holdings of Ordinary shares, the following
directors had interests in the Convertible Redeemable share capital
of the company:
Convertible Redeemable of 1p each (quarter-paid)
1 January 2011
Shares
468,751
4,166,667
52,083
52,083
260,416
31 December 2011
Shares
468,751
3,439,641
52,083
52,083
260,416
Hon AR Hambro
Mr DE Cicurel
Mr D Barnbrook
Mr RL Cohen
Mr RJ Elman
The conversion terms of the Convertible Redeemable shares and
movements in the year are detailed in note 25 to the financial
statements. Following a full conversion of the outstanding Convertible
Redeemable shares to Ordinary shares, the directors’ interests in the
enlarged share capital of the company as at 31 December 2011
would have been as follows:
The directors have concluded that, on balance, the Convertible
Redeemable shares and the accounting arrangements that now
surround them have become a hindrance to a proper understanding
of the group’s affairs by investors and potential investors.
In order to
encourage holders to convert these shares before their final maturity
date on 31 December 2014, a resolution will be proposed at the
forthcoming Annual General Meeting to open a window of
opportunity until 31 December 2012 during which holders will be
able to redeem part or all of their shares at a discount of 15% to
their theoretical conversion value.
There is a deemed Concert Party including David Cicurel and others
which holds 28.1% of the Ordinary share capital. Certain authorities
were granted in previous years through a Takeover Panel 'whitewash'
in relation to any requirement on the Concert Party to make an offer
pursuant to Rule 9 of the City Code on Takeovers and Mergers; these
authorities remain in place to cover any conversion by members of
the Concert Party of their Convertible Redeemable shares.
Hon AR Hambro
Mr DE Cicurel
Mr D Barnbrook
Mr RL Cohen
Mr RJ Elman
Mr GC Reece
Ordinary Shares
153,784
933,500
20,976
20,976
105,671
3,000
Directors’ remuneration
The remuneration paid to or receivable by each person who served as a director during the year was as follows:
Base
salary/fees
Performance
related bonus
Contribution
to pension
schemes
Benefits
2011
Total
2010
Total
£000
£000
£000
£000
£000
£000
Executive Directors
Mr DE Cicurel
Mr D Barnbrook
Mr RL Cohen
Non-Executive Directors
Hon AR Hambro
Mr RJ Elman
Mr GC Reece
Total
125
110
110
25
15
20
405
25
22
22
-
-
-
69
-
6
6
-
-
-
12
3
10
3
-
-
-
16
153
148
141
25
15
20
502
126
132
125
14
12
6
415
9
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 auditor and, in consultation with the company’s auditor, the
scope of the audit. The audit committee has unrestricted access to
the company’s auditor. The remuneration committee has delegated
authority to determine 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.
Auditor
Grant Thornton UK LLP have expressed willingness to continue in
office.
In accordance with section 489(4) of the Companies Act 2006,
a resolution to reappoint Grant Thornton UK LLP will be proposed at
the Annual General Meeting.
On behalf of the board
RL Cohen
Director and Company Secretary
Judges Scientific plc
Company registration number: 4597315
28 March 2012
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 18 days (2010: 24 days).
Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected to
prepare the parent company financial statements in accordance with
United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) and the consolidated financial
statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs). Under company
law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of
affairs and of the profit or loss of the company and the group for that
period.
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 UK Accounting Standards or IFRSs 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 company will continue in
business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the company and the group and enable them to ensure that the
financial statements comply with the Companies Act 2006.They are
also responsible for safeguarding the assets of the company and group
and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
In so far as each of the directors is aware:
•
•
there is no relevant audit information of which the company's
auditor is unaware; and
the directors have taken all steps that they ought to have taken to
make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's
website.
countries and legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Information published on the website is accessible in many
10
INDEPENDENT AUDITOR’S
REPORT
We have audited the consolidated financial statements of Judges
Scientific plc for the year ended 31 December 2011 which comprise
the consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated statement of changes in
equity, the consolidated cash flow statement and notes 1 to 32. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where
the Companies Act 2006 requires us to report to you if, in our
opinion:
•
certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Other matter
We have reported separately on the parent company
financial statements of Judges Scientific plc for the year ended
31 December 2011.
Paul Houghton
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
East Midlands
28 March 2012
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 directors and auditor
As explained more fully in the statement of directors’ responsibilities,
the directors are responsible for the preparation of the consolidated
financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the
consolidated financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland).Those standards
require us to comply with the Auditing Practices Board’s (APB’s)
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm
Opinion on financial statements
In our opinion the consolidated financial statements:
•
give a true and fair view of the state of the group's affairs as at
31 December 2011 and of its profit for the year then ended;
have been properly prepared in accordance with IFRS as adopted
by the European Union; and
have been prepared in accordance with the requirements of the
Companies Act 2006
•
•
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Directors' Report for the
financial year for which the consolidated financial statements are
prepared is consistent with the consolidated financial statements.
11
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Note
Before)
exceptional)
items)
£000
2011)
Exceptional)
items)
Total)
£000)
£000)
Before)
exceptional)
items)
£000)
2010)
Exceptional)
items)
Total)
£000)
£000)
16,005)
(13,123)
2,882)
(254)
-)
(1,752)
(77)
799)
7)
(137)
669)
(169)
500)
333)
167)
8.1p
7.8p
Revenue
Operating costs excluding exceptional items
Operating profit excluding exceptional items
Exceptional items
Amortisation of intangible assets
Net insurance recovery
Charge relating to derivative financial instruments
Acquisition costs
Operating profit/(loss)
Interest receivable
Interest payable
Profit/(loss) before tax
Taxation
7
8
16
25
31
10
10
20,810)
(16,677)
4,133)
-)
-)
-)
20,810)
16,005)
(16,677)
(13,123)
4,133)
2,882)
-)
-)
-)
-)
-)
-)
-)
(1,155)
596)
(304)
(196)
(1,155)
596)
(304)
(196)
-)
-)
-)
-)
(254)
-)
(1,752)
(77)
4,133)
(1,059)
3,074)
2,882)
(2,083)
7)
(195)
-)
-)
7)
(195)
7)
(137)
-)
-)
3,945)
(1,059)
2,886)
2,752)
(2,083)
11
(1,017)
210)
(849)
(668)
(181)
-)
-)
(807)
(725)
556)
2,079)
2,027)
(1,527)
1,920)
159)
45.2p
42.9p
1,860)
167)
45.0p
41.0p
(1,527)
-)
-)
-)
Profit/(loss) and total comprehensive income for the year
2,928)
Attributable to:
Equity holders of the parent company
Non-controlling interest
Earnings per share – total and continuing
Basic
Diluted
2,588)
340)
61.0p
52.7p
13
13
There are no items of other comprehensive income for the two years in question.
The accompanying notes form an integral part of these consolidated financial statements.
12
CONSOLIDATED
BALANCE SHEET
ASSETS
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Current portion of long-term borrowings
Current tax payable
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Total liabilities
Net assets
EQUITY
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Retained earnings
Equity attributable to equity holders of the parent company
Non-controlling interest
Total equity
Note
14
15
16
23
17
18
19
25
20
21
23
24
The accompanying notes form an integral part of these consolidated financial statements.
The financial statements were approved by the board on 28 March 2012
D.E. Cicurel
Director
R.L. Cohen
Director
2011)
£000)
1,940)
5,316)
2,133)
-)
9,389)
2,052)
3,674)
3,954)
9,680)
2010)
£000)
956)
5,290)
419)
348)
7,013)
1,923)
2,515)
2,542)
6,980)
19,069)
13,993)
(3,465)
(1,739)
(1,762)
(851)
(7,817)
(3,419)
(122)
(3,541)
(11,358)
7,711)
214)
3,195)
3)
475)
3,489)
7,376)
335)
7,711)
(2,730)
(1,752)
(800)
(550)
(5,832)
(2,530)
-)
(2,530)
(8,362)
5,631)
209)
3,092)
-)
475)
1,606)
5,382)
249)
5,631)
13
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Merger Retained
earnings
reserve
Total*
£000
£000)
£000)
Non-
controlling
interest
£000)
Total)
equity)
£000)
475
1,606)
5,382)
249)
5,631)
-
-
-
-
-
-
(351)
(351)
(73)
(424)
-
314)
(37)
108)
317)
-
-
74)
(73)
108)
317)
1)
1,920)
1,920)
159)
2,079)
1,920)
1,920)
159)
2,079)
475
3,489)
7,376)
)335)
7,711)
475
1,532)
5,168)
165)
5,333)
-
-
-
-
-
(259)
(259)
(83)
(342)
-
140)
-)
140)
(259)
(119)
(83)
(202)
333)
333)
333)
333)
167)
167)
500)
500)
475
1,606)
5,382)
249)
5,631)
Capital
Share
Share
capital premium redemption
reserve
£000
£000
£000
Note
Balance at 1 January 2011
209
3,092
Dividends
Issue of share capital
Arising on conversion of Convertible Redeemable shares
Transactions with owners
Profit for the year
Total comprehensive income for the year
Balance at 31 December 2011
Balance at 1 January 2010
Dividends
Issue of share capital
Transactions with owners
Profit for the year
Total comprehensive income for the year
12
24
25
12
24
-
5
-
5
-
-
-
103
-
103
-
-
214
3,195
202
2,959
-
7
7
-
-
-
133
133
-
-
Balance at 31 December 2010
209
3,092
* - Total represents amounts attributable to equity holders of the parent company.
The accompanying notes form an integral part of these consolidated financial statements.
-
-
-
3
3
-
-
3
-
-
-
-
-
-
-
14
CONSOLIDATED CASH FLOW
STATEMENT
Cash flows from operating activities
Profit after tax
Adjustments for:
Charge relating to derivative financial instruments
Depreciation
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Foreign exchange losses on foreign currency loans
Interest receivable
Interest payable
Tax expense recognised in income statement
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Paid on acquisition of new subsidiary
Gross cash inherited on acquisition
Acquisition of subsidiaries, net of cash acquired
Payment of deferred consideration
Purchase of property, plant and equipment
Proceeds from disposal of equipment
Interest received
)
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Repaid on conversion of Convertible Redeemable shares
Repayments of borrowings
Proceeds from bank loans
Issue/(repayment) of loan notes
Dividends paid – equity share holders
Dividends paid – non-controlling interest in subsidiary
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes form an integral part of these consolidated financial statements.
2011)
£000)
2,079)
304)
170)
1,155)
-)
3)
(7)
195)
807)
220)
(577)
401)
4,750)
(190)
(1,136)
3,424)
(4,622)
1,655)
(2,967)
-)
(579)
-)
7)
(3,539)
108)
(1)
(1,075)
2,422)
497)
(351)
(73)
1,527)
1,412)
2,542)
3,954)
2010)
£000)
500)
1,752)
151)
254)
11)
4)
(7)
137)
169)
(638)
(651)
826)
2,508)
(136)
(930)
1,442)
(1,316)
481)
(835)
(300)
(207)
12)
7)
(1,323)
140)
-)
(415)
1,000)
(500)
(259)
(83)
(117))
2)
2,540)
2,542)
15
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. General information
5. Changes in accounting policies
Judges Scientific plc is the ultimate parent company of the
group, whose principal activities comprise the design,
manufacture and sale of scientific instruments.
2.
Registered office
The address of the registered office and principal place of
business of Judges Scientific plc is Unit 19, Charlwoods Road,
East Grinstead,West Sussex RH19 2HL.
3. Basis of accounting
The consolidated financial statements have been prepared under
the historical cost convention except for certain financial
instruments which are carried at fair value.
Being listed on the Alternative Investment Market of the London
Stock Exchange, the company is required to present its
consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Accordingly, these financial statements have
been prepared in accordance with the accounting policies set
out below which are based on the IFRS in issue as adopted by
the European Union (EU) and in effect at 31 December 2011.
4. Use of accounting estimates and judgements
Many of the amounts included in the consolidated financial
statements involve the use of judgement and/or estimation.
These judgements and estimates are based on management’s
best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from
the amounts included in the consolidated financial statements.
Information about such judgements and estimation is contained
in the accounting policies and/or the notes to the consolidated
financial statements and the key areas are summarised below:
Judgements in applying accounting policies:
•
the directors must judge whether all of the conditions
required for revenues to be recognised in the income
statement of the financial year, as set out in note 6.4
below, have been met;
Sources of estimation uncertainty:
•
depreciation rates are based on estimates of the useful
lives and residual values of the assets involved (see note
6.6);
estimates of future profitability are required for the
decision whether or not to create a deferred tax asset
(see note 23);
estimates are required as to intangible asset carrying
values and goodwill impairment charges.These are
assessed by reference to budgeted profits and cash flows
for future periods for the relevant income generating
units and an estimate of their values in use (see notes 15
and 16)
warranty provisions are based on estimates of the likely
cost of repairing or replacing faulty units
•
•
•
16
5.1 Standards adopted for the first time
The group has adopted IAS 24 Related Party Disclosures
(Revised 2009) in its consolidated financial statements, and it has
been applied prospectively.The revised standard introduces
changes to the definition of related parties.There is no
immediate effect on the group’s financial statements.
5.2 Standards, amendments and Interpretations to existing
Standards that are not yet effective
At the date of authorisation of these consolidated financial
statements, certain new standards, amendments and
interpretations to existing standards have been published but
are not yet effective, and have not been adopted early by the
group.
Management anticipates that all of the pronouncements will be
adopted in the group’s accounting policies for the first period
beginning after the effective date of the pronouncement. None
of these new standards, amendments and interpretations are
expected to have a significant impact on the group’s financial
statements.
IFRS 9 Financial Instruments (effective 1 January 2015)
IFRS 10 Consolidated Financial Statements
(effective 1 January 2013)
IFRS 12 Disclosure of Interests in Other Entities
(effective 1 January 2013)
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IAS 27 (Revised), Separate Financial Statements
(effective 1 January 2013)
Disclosures - Transfers of Financial Assets - Amendments to
IFRS 7 (effective 1 July 2011)
Deferred Tax: Recovery of Underlying Assets - Amendments to
IAS 12 Income Taxes (effective 1 January 2012)
Presentation of Items of Other Comprehensive Income -
Amendments to IAS 1 (effective 1 July 2012)
Disclosures - Offsetting Financial Assets and Financial Liabilities -
Amendments to IFRS 7 (effective 1 January 2013)
Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32 (effective 1 January 2014)
Mandatory Effective Date and Transition Disclosures -
Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)
6. Accounting policies
6.1 Basis of consolidation
The consolidated financial statements include those of the
parent company and its subsidiaries, all drawn up to
31 December 2011. Subsidiaries are entities over which the
group has the power to control the financial and operating
policies so as to obtain benefits from their activities.The group
obtains and exercises control through voting rights. Income,
expenditure, unrealised gains and intra-group balances arising
from transactions within the group are eliminated. Unrealised
losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Amounts
reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the
accounting policies adopted by the group.
Acquisitions of subsidiaries are dealt with by the purchase
method.The purchase method involves the recognition at fair
value of all identifiable assets and liabilities, including contingent
liabilities of the subsidiary, at the acquisition date, regardless of
whether or not they were recorded in the financial statements
of the subsidiary prior to acquisition. In the case of acquisitions
after 31 December 2005, goodwill is stated after separating out
identifiable intangible assets. Goodwill represents the excess of
acquisition cost over the fair value of the group’s share of the
identifiable net assets of the acquired subsidiary at the date of
acquisition. Acquisition-related transaction costs are recorded as
an expense in the income statement.
The parent company is entitled to the merger relief that was
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 and UHV Design
Limited.
6.2 Business combinations completed prior to the date of
transition to IFRS
The group has elected not to apply IFRS 3 Business
Combinations retrospectively to business combinations prior to
the date of transition to IFRS on 1 January 2006. Accordingly
the classification of the combination (acquisition, reverse
acquisition or merger) remains unchanged from that used under
UK GAAP. Assets and liabilities are recognised at the date of
transition if they would be recognised under IFRS, and are
measured using their UK GAAP carrying amounts immediately
post-acquisition as deemed cost under IFRS, unless IFRS
requires fair value measurement. Amounts recorded as goodwill
under UK GAAP have not been re-assessed to identify
intangible assets. Deferred tax and minority interest are
adjusted for the impact of any consequential adjustments after
taking advantage of the transitional provisions.
6.3 Goodwill
Goodwill, representing the excess of the cost of acquisition
over the fair value of the group’s share of the identifiable net
assets acquired, is capitalised and reviewed annually for
impairment. Goodwill is carried at cost less accumulated
impairment losses. Negative goodwill (where the fair value of
net assets acquired exceeds the purchase price) is recognised
immediately after acquisition in the income statement.
The carrying value of negative goodwill at the date of transition
has been credited to reserves.There is no re-instatement of
goodwill or negative goodwill that was amortised prior to
transition to IFRS.
6.4 Revenue
Revenue is measured by reference to the fair value of
consideration received or receivable by the group, excluding
Value Added Tax, and is recognised when all the following
conditions have been satisfied:
•
Sale of instruments and spares are recognised on point of
despatch to the customer;
Income from services such as installation, support, training
or consultancy is recognised when the service is performed;
the amount of revenue and the costs incurred or to be
incurred in respect of the transaction can be measured
reliably; and
it is probable that the economic benefits associated with
the transaction will flow to the group.
•
•
•
Interest income is recognised using the effective interest
method which calculates the amortised cost of a financial asset
and allocates the interest income over the relevant period.
Dividend income is recognised when the shareholder’s right to
receive payment is established.
6.5 Intangible assets acquired as part of a business
combination
In accordance with IFRS 3 Business Combinations, an intangible
asset acquired in a business combination is deemed to have a
cost to the group of its fair value at the acquisition date.The fair
value of the intangible asset reflects market expectations about
the probability that the future economic benefits embodied in
the asset will flow to the group.
Amortisation charges are included as adjusting items in
operating costs in the income statement. Amortisation begins
when the intangible asset is first available for use and is
provided at rates calculated to write off the cost of each
intangible asset over its expected useful life, as follows:
Customer relationships
Non-competition agreements
Distribution agreements
Research and development
Sales order backlog
Advertising
Domain names
Between 2 and 3 years
5 years
3 years
5 years
On shipment
Between 1 and 3 years
5 years
Subsequent to initial recognition, intangible assets are stated at
deemed cost less accumulated amortisation and impairment
charges.
6.6 Property, plant and equipment
Property, plant and equipment is stated at cost, net of
depreciation and any provision for impairment.
Disposal of assets: the gain or loss arising on the disposal of an
asset is determined as the difference between the disposal
proceeds and the carrying amount of the asset and is
recognised in the income statement.
17
Depreciation: Depreciation is provided at annual rates calculated
to write off the cost less residual value of each asset over its
expected useful life, within the following ranges:
•
2% straight-line on cost of buildings
(excluding the estimated cost of land)
Plant and machinery: 15% on written down value to 25%
Property:
straight-line on cost
Fixtures, fittings and 15% on written down value to 33%
equipment:
Motor vehicles:
straight-line on cost
25% on written down value to
25% straight-line on cost
over the minimum life of the lease
Building
improvements:
•
•
•
•
Material residual value estimates and expected useful lives are
updated as required but at least annually.
6.7 Impairment testing of goodwill, other intangible assets
and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are
tested individually for impairment and some are tested at cash-
generating unit level. Goodwill is allocated to those cash-
generating units that are expected to benefit from synergies of
the related business combination and represent the lowest level
within the group at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are
tested for impairment at least annually. All other individual assets
or cash-generating units are tested whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the
asset’s or cash-generating unit’s carrying amount exceeds its
recoverable amount.The recoverable amount is the higher of
fair value, reflecting market conditions less costs to sell, and
value in use based on estimated future cash flows from each
cash-generating unit, discounted at a suitable rate in order to
calculate the present value of those cash flows.The data used
for impairment testing procedures is directly linked to the
group’s latest approved budgets, adjusted as necessary to
exclude any future restructuring to which the group is not yet
committed. Discount rates are determined individually for each
cash-generating unit and reflect their respective risk profiles as
assessed by the directors.
Impairment losses for cash-generating units reduce first the
carrying amount of any goodwill allocated to that cash-
generating unit. Any remaining impairment loss is charged pro
rata to the other assets in the cash-generating unit.With the
exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may
no longer exist. Impairment charges are included in operating
costs in the income statement. An impairment charge that has
18
been recognised is reversed if the cash-generating unit’s
recoverable amount exceeds its carrying amount.
6.8 Leases
For finance leases, in accordance with IAS 17, the economic
ownership of a leased asset is transferred to the lessee if the
lessee bears substantially all the risks and rewards related to the
ownership of the leased asset.The related asset is recognised as
an asset in the balance sheet at the time of inception of the
lease at the fair value of the leased asset or, if lower, the present
value of the minimum lease payments plus incidental payments, if
any, to be borne by the lessee. A corresponding amount is
recognised as a finance leasing liability.The interest element of
leasing payments represents a constant proportion of the capital
balance outstanding and is charged to the income statement
over the period of the lease.
All other leases are regarded as operating leases and the
payments made under them are charged to the income
statement on a straight line basis over the period of the lease
term. Lease incentives are spread over the term of the lease.
6.9 Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs of ordinarily interchangeable items are assigned
using the first-in, first-out cost formula. Cost includes materials,
direct labour and an attributable proportion of manufacturing
overheads based on normal levels of activity.
6.10 Taxation
Current tax is the tax currently payable based on taxable profit
for the year.
Deferred taxes are calculated using the liability method on
temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of an
asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries is
not provided if reversal of those temporary differences can be
controlled by the group and it is probable that reversal will not
occur in the foreseeable future. In addition, tax losses available to
be carried forward as well as other income tax credits to the
group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting.
Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted
at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement, except
where they relate to items that are charged or credited
•
directly to equity in which case the related deferred tax is
also charged or credited directly to equity, or
where items are recognised in other comprehensive
income, in which case the related deferred tax is
recognised in other comprehensive income.
•
6.11 Share-based payments
IFRS 2 has been applied, in accordance with IFRS 1 and where the
effect is material, to equity-settled share options granted on or
after 7 November 2002 and not vested prior to 1 January 2006.
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values.Where
employees are rewarded using share-based payments, the fair
values of employees’ services are determined indirectly by
reference to the fair value of the instrument granted to the
employee.This fair value is appraised at the grant date and
excludes the impact of non-market vesting conditions.
All equity-settled share-based payments are ultimately
recognised as an expense in the income statement, with a
corresponding credit to “other reserve”.
If vesting periods or other non-market vesting conditions apply,
the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected
to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior
to vesting is recognised in the current period.The impact of the
revision of the original estimates, if any, is recognised in the
income statement over the remaining vesting period, with a
corresponding adjustment to the appropriate reserve. No
adjustment is made to any expense recognised in prior periods
if share options ultimately exercised are different to that
estimated on vesting.
Upon exercise of share options, the proceeds received net of
attributable transaction costs are credited to share capital and,
where appropriate, share premium.
6.12 Financial assets
Financial assets (other than cash) are assigned to relevant
categories by management on initial recognition, depending on
the purpose for which they were acquired. At the balance sheet
date, the group held only loans and receivables.
All financial assets are recognised when the group becomes a
party to the contractual provisions of the instrument. Loans and
receivables are recognised initially at fair value plus transaction
costs.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market.Trade receivables are classified as loans and receivables.
Loans and receivables are measured subsequent to initial
recognition at amortised cost using the effective interest
method, less provision for impairment. Any change in their value
through impairment or reversal of impairment is recognised in
operating costs in the income statement.
Provision against trade and other receivables is made when
there is objective evidence that the group will not be able to
collect all amounts due to it in accordance with the original
terms of those receivables.The amount of the write-down is
determined as the difference between the asset’s carrying
amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
A financial asset is derecognised only where the contractual
rights to the cash flows from the asset expire or the financial
asset is transferred and that transfer qualifies for derecognition.
A financial asset is transferred if the contractual rights to
receive the cash flows of the asset have been transferred or the
group retains the contractual rights to receive the cash flows of
the asset but assumes a contractual obligation to pay the cash
flows to one or more recipients. A financial asset that is
transferred qualifies for derecognition if the group transfers
substantially all the risks and rewards of ownership of the asset,
or if the group neither retains nor transfers substantially all the
risks and rewards of ownership but does transfer control of
that asset.
6.13 Financial liabilities
Financial liabilities are obligations to pay cash or other financial
assets and are recognised when the group becomes a party to
the contractual provisions of the instrument. Financial liabilities
are recorded initially at fair value net of direct issue costs if they
are not held at fair value through profit and loss. Derivatives are
recorded at fair value through profit or loss.The fair value of
derivative financial instruments are determined by reference to
active market transactions or using a valuation technique where
no active market exists.
All financial liabilities with the exception of Convertible
Redeemable shares (see paragraph 6.19) are recorded at
amortised cost using the effective interest method, with
interest-related charges recognised as an expense in finance
cost in the income statement.These financial liabilities include
trade and other payables and borrowings, including bank loans,
subordinated loans and hire purchase commitments. Finance
charges, including premiums payable on settlement or
redemption and direct issue costs, are charged to the income
statement on an accruals basis using the effective interest
method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period
in which they arise.
A financial liability is derecognised only when the obligation is
extinguished, that is, when the obligation is discharged or
cancelled or expires.
19
6.14 Cash and cash equivalents
6.19 Convertible Redeemable shares
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid
investments that are readily convertible into known amounts of
cash and which are subject to an insignificant risk of changes in
value.
6.15 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
group.The pension costs charged against profits are the
contributions payable to the schemes in respect of the
accounting period.
6.16 Foreign currencies
Transactions in foreign currencies are translated at the exchange
rate ruling at the date of the transaction. Monetary assets and
liabilities in foreign currencies are translated at the rates of
exchange ruling at the balance sheet date. Exchange differences
arising on the settlement of monetary items or on translating
monetary items at rates different from those at which they
were initially recorded are recognised in the income statement
in the period in which they arise.
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 Income Statement.The fair value
is calculated with 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 directly to equity.
6.20 Exceptional items
The fair value charge for the Convertible Redeemable shares
(see note 25) and the related deferred tax asset represent
accounting adjustments reflecting fluctuations in the company’s
share price rather than the underlying trading performance of
the group. As such the directors have concluded that they
should be treated as exceptional items for the purposes of
presenting results and earnings per share figures. Exceptional
items are those which by their size or nature are considered by
the directors to be necessary to be disclosed separately so as
to inform users of the financial statements.
6.17 Dividends
7.
Segment reporting
7.1 Identification of reportable segments
The group’s activities are predominantly in or in support of the
design and manufacture of scientific instruments.The group
operates two main business segments: the Materials Sciences
group and the Vacuum group.The group has changed its
reportable segments from the prior year and the comparative
segment disclosure has therefore been restated.
7.2 Management of operating segments
Each of the operating segments is managed independently, each
range of instruments having its individual requirements in terms
of design, manufacture and marketing.
7.3 Measurement policies
The results of operating segments are prepared by reference to
their contributions to group earnings before interest, tax and
exceptional items (“group EBITA”).This is stated before the
allocation of head office costs and after elimination of non-
controlling interest. Assets and liabilities directly attributable to
the activities of the operating segments are included in their
respective balance sheets; corporate assets and liabilities held by
the parent company are not allocated to subsidiaries.
Dividend distributions payable to equity shareholders are
included in trade and other payables when the dividends are
approved in general meeting but not paid prior to the balance
sheet date.
6.18 Equity
Equity comprises the following:
•
“Share capital” represents the nominal value of equity
shares.
“Share premium” represents the excess over nominal
value of the fair value of consideration received for equity
shares, net of expenses of the share issue.
“Capital redemption reserve” represents amounts set
aside from retained earnings on conversion of Convertible
Redeemable shares equal to the reduction then arising in
the overall nominal value of share capital of all classes.
“Merger reserve” represents the fair value of the
consideration received in excess of the nominal value of
equity shares issued in connection with acquisitions where
the company has exercised entitlement to the merger
relief that was offered by section 131 of the Companies
Act 1985.
“Retained earnings” represents retained profits and losses.
“Revaluation reserve” represents gains and losses due to
the revaluation of certain financial assets.
“Non-controlling interest” represents retained profits and
losses attributable to minority shareholders in subsidiary
companies.
•
•
•
•
•
•
20
7.4 Segment analysis
Segment analysis is as follows:
2011
Consolidated group revenues from external customers
Contributions to group EBITA
Depreciation
Amortisation of intangible assets
Segment assets
Segment liabilities
Intangible assets – goodwill
Other intangible assets
Additions to non-current assets
Materials Sciences
£000
8,177
2,298
37
24
3,211
1,564
4,664
29
30
2010
Materials Sciences
Consolidated group revenues from external customers
Contributions to group EBITA
Depreciation
Amortisation of intangible assets
Segment assets
Segment liabilities
Intangible assets – goodwill
Other intangible assets
Additions to non-current assets
£000
7,538
1,838
44
26
2,933
1,711
4,664
53
926
Vacuum
£000
Total
£000
12,633
20,810
2,083
126
1,131
6,150
5,212
652
2,104
3,568
Vacuum
£000
8,467
1,561
99
228
4,005
1,986
626
366
154
4,381
163
1,155
9,361
6,776
5,316
2,133
3,598
Total
£000
16,005
3,399
143
254
6,938
3,697
5,290
419
1,080
Segmental revenue is presented on the basis of the destination of the goods where known, failing which on the geographical location of customers.
Segment assets are based on the geographical location of assets.
United Kingdom (domicile)
Rest of Europe
United States/Canada
Rest of the world
Total
2011 2010
Revenue
£000
2,660
7,164
3,635
7,351
20,810
Non-current
assets
£000
9,389
-
-
-
9,389
Revenue
£000
1,899
5,916
2,514
5,676
16,005
Non-current
assets
£000
6,665
-
-
-
6,665
21
7.4 Segment analysis - continued
Reconciliations between totals presented by operating segment and the group’s consolidated figures are as follows:
Contribution to group EBITA
Total contribution to group EBITA
Expenses not allocated
Exceptional items
Net insurance recovery
Charge relating to derivative financial instruments
Amortisation of intangible assets
Acquisition costs attributable to group
Acquisition costs attributable to non-controlling interest
Acquisition costs expensed
Elimination of non-controlling interest adjustment in contribution to group EBITA
Operating profit after exceptional items
Interest receivable
Interest payable
Profit before tax
Depreciation
Total segment depreciation charge
Head office depreciation not allocated
Consolidated depreciation charge
Segment assets and liabilities
Total segment assets
Parent company assets
Assets eliminated on consolidation
Other assets - goodwill
Other assets - intangible assets
Net insurance recovery
Deferred tax
Consolidated total assets
Total segment liabilities
Parent company liabilities
Derivative financial instruments
Liabilities eliminated on consolidation
Acquisition related loans
Other liabilities
Convertible Redeemable shares
Deferred tax
Consolidated total liabilities
2011)
£000)
4,381)
(731)
596)
(304)
(1,155)
(110)
(86)
(196)
483)
3,074)
7)
(195)
2,886)
163)
7)
170)
9,361)
3,396)
(1,733)
5,316)
2,133)
596)
-)
19,069)
6,776)
2,829)
1,739)
(1,722)
1,316)
320)
11)
89)
11,358)
2010)
£000)
3,399)
(737)
-)
(1,752)
(254)
(77)
-)
(77)
220)
799)
7)
(137)
669)
143)
8)
151)
6,938)
3,062)
(2,064)
5,290)
419)
-)
348)
13,993)
3,697)
3,536)
1,752)
(2,042)
1,316)
119)
12)
(28)
8,362)
Revenues are derived from the sales of manufactured products; revenues from installation and support services are not material. There are no major
customers which make up 10% or more of the group’s revenues.
Expenses not allocated comprise head office costs. Parent company assets include £562,000 (2010: £569,000) in respect of a freehold property partly let at
open market value to a member of the Materials Sciences segment.
22
8. Operating costs
11. Taxation
2011)
£000)
2010)
£000)
8,529)
Raw materials and consumables
2,433)
Other external charges
5,545)
Staff costs (note 27)
Depreciation
170)
Other operating costs, excluding exceptional items 16,677)
304)
Charge relating to derivative financial instruments
(596)
Net insurance recovery
1,155)
Amortisation of intangible assets
196)
Acquisition costs
17,736)
Total operating costs, including exceptional items
6,316)
1,959)
4,697)
151)
13,123)
1,752)
-)
254)
77)
15,206)
9. Operating profit
UK corporation tax at 26.5% (2010: 28%) - current year
Current year
Prior years
Deferred tax - origination and reversal of
temporary differences:
Current year
- excluding derivative
financial instruments
- derivative financial instruments
Prior years
2011)
£000)
2010)
£000)
Tax on profit for the year - current year
- prior years
2011)
£000)
2010)
£000)
1,168)
(44)
1,124)
775)
(48)
727)
(363)
47)
(316)
(1)
(317)
852)
(45)
807)
(74)
(473)
(547)
(11)
(558)
228)
(59)
169)
Operating profit is stated after charging:
Loss on disposal of property, plant and equipment
Fees payable to the company's auditor
-)
for the audit of the company's annual accounts
20)
Fees payable to the company's auditor for other services:
for the audit of the company's subsidiaries,
pursuant to legislation
for tax services
for corporate finance transactions
for all other services
Depreciation
Loss on foreign exchange
Amortisation of intangible assets
Operating lease rentals - land and property
Operating lease rentals - vehicles
51)
11)
28)
15)
170)
115)
1,155)
249)
24)
11)
21)
43)
10)
14)
21)
151)
85)
)254)
224)
23)
Factors affecting the tax charge for the year:
Profit before tax
2,886)
669)
Profit before tax multiplied by standard rate of
UK corporation tax of 26.5% (2010 - 28%):
Carry back of losses
Provisions and expenditure not deductible
for tax purposes
Derivative charge
Change in the rate of corporation tax
Tax on profit for the year - current year
- prior years
Total net taxation charge
765)
(35)
46)
88)
(12)
852)
(45)
807)
187)
-)
47)
-)
(6)
228)
(59)
169)
10.
Interest receivable and payable
12. Dividends
2011)
£000)
2010)
£000)
2011
2010
p/share
£000 p/share
£000
Interest receivable - short-term bank deposits
7)
7)
Interest payable - bank and hire purchase loans
Interest payable - loan notes
(195)
-)
(132)
(5)
Final dividend for the previous year
Interim dividend for the current year
5.0
3.3
8.3
210
141
351
3.7
2.5
6.2
154
105
259
Net interest payable
(195)
(137)
188)
130)
The directors will propose a final dividend of 6.7p per share,
amounting to £287,000, for payment on 6 July 2012. As this
remains conditional on shareholders’ approval, provision has not
been made in these consolidated financial statements.
Dividends declared by subsidiaries that are not wholly-owned are
paid to the non-controlling interest in the period in which they are
declared and amounted to £73,500 in the year (2010: £83,300).
23
attributable
Earnings Weighted
average
to equity number of
holders of
shares
the parent
company
£000
no.
Earnings
per share
pence
Profit after tax including exceptional
items for calculation of basic and
diluted earnings per share
Add-back exceptional items net of tax
and non-controlling interest, as applicable:
Charge relating to derivative
financial instruments
Amortisation of intangible assets
Acquisition-related transactions costs
Basic and diluted profit after tax,
excluding exceptional items
333
1,279
183
65
1,860
Number of shares for calculation of
basic earnings per share including
exceptional items
Dilutive effect of potential shares
Number of shares for calculation of
diluted earnings per share including
exceptional items
Dilutive effect of potential derivative
financial instruments
Number of shares for calculation of
diluted earnings per share excluding
exceptional items
4,131,588
134,197
4,265,785
265,603
4,531,388
Basic earnings per share (including exceptional items)
Diluted earnings per share (including exceptional items)
Basic earnings per share (excluding exceptional items)
Diluted earnings per share (excluding exceptional items)
8.1
7.8
45.0
41.0
13. Earnings per share
Year to 31 December 2010
Options and warrants over Ordinary shares and rights of
conversion of the Convertible Redeemable shares are described in
notes 24 and 25. The calculation of the basic earnings per share is
based on the earnings attributable to Ordinary shareholders
divided by the weighted average number of shares in issue during
the period. The calculation of diluted earnings per share is based
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 in line with the treasury method
prescribed in IAS 33. This regards the assumed proceeds from
these instruments as having been received from the issue of
Ordinary shares at the average market price of Ordinary shares
during the period. The difference between the number of
Ordinary shares issued on the assumed exercise of the dilutive
options and warrants and the number of Ordinary shares that
would have been issued at the average market price of Ordinary
shares during the period is treated as an issue of Ordinary shares
for no consideration, and thus dilutive.
Reconciliations of the earnings and the weighted average number
of shares used in the calculations are set out below:
Year to 31 December 2011
Earnings) Weighted
Earnings
average per share
attributable)
to equity) number of
holders of)
shares
the parent)
company)
£000)
1,920)
no.
Profit after tax including exceptional
items for calculation of basic and
diluted earnings per share
Add-back exceptional items net of tax
and non-controlling interest, as applicable:
pence
Charge relating to derivative
financial instruments
Net insurance recovery
Amortisation of intangible assets
Acquisition-related transactions costs
Utilisation of prior year tax losses
Basic and diluted profit after tax,
excluding exceptional items
351)
(224)
481)
95)
(35)
2,588)
Number of shares for calculation of
basic earnings per share including
exceptional items
Dilutive effect of potential shares
Number of shares for calculation of
diluted earnings per share including
exceptional items
Dilutive effect of potential derivative
financial instruments
Number of shares for calculation of
diluted earnings per share excluding
exceptional items
4,243,571
231,433
4,475,004
432,959
4,907,963
Basic earnings per share (including exceptional items)
Diluted earnings per share (including exceptional items)
Basic earnings per share (excluding exceptional items)
Diluted earnings per share (excluding exceptional items)
45.2
42.9
61.0
52.7
24
14. Property, plant and equipment
Cost / deemed cost
1 January 2010
Additions
Acquisitions
Disposals
31 December 2010
Additions
Acquisitions
Disposals and reclassifications
31 December 2011
Depreciation
1 January 2010
Charge
Disposals
31 December 2010
Charge
Disposals and reclassifications
31 December 2011
Net book value - 31 December 2011
Net book value – 31 December 2010
Plant &)
machinery)
£000)
Fixtures,)
fittings &)
equipment)
£000)
Motor)
vehicles)
£000)
Property)
& building)
improvements)
£000)
354)
122)
-)
-)
476)
15)
23)
(48)
466)
276)
47)
-)
323)
61)
(47)
337)
129)
153)
340)
52)
1)
(69)
324)
75)
-)
(23)
376)
132)
83)
(56)
159)
64)
(14)
209)
167)
165)
52)
34)
-)
(19)
67)
-)
28)
-)
95)
21)
12)
(9)
24)
23)
-)
47)
48)
43)
658)
-)
-)
-)
658)
489)
534)
-)
1,681)
54)
9)
-)
63)
22)
-)
85)
1,596)
595)
Total)
£000)
1,404)
208)
1)
(88)
1,525)
579)
585)
(71)
2,618)
483)
151)
(65)
569)
170)
(61)
678)
1,940)
956)
15. Goodwill
Cost
1 January
Addition in year
31 December
2011
£000
5,290
26
5,316
2010
£000
4,497
793
5,290
An analysis of goodwill by business segment is given in note 7.
The increase in goodwill during 2011 related to the acquisition
of Deben UK Limited.
There have been no impairment charges in either 2011 or 2010.
Goodwill is tested annually for impairment by reference to the
value in use of the relevant cash generating units, which are the
group’s business segments. This is calculated on the basis of
projected cash flows for the following five years derived from
detailed budgets for the ensuing year based on past experience,
with subsequent years including modest nominal rates of sales
and cost growth of 3% per annum and generally steady gross
margins. The 3% long term growth rate takes into account both
UK and overseas markets. These cash flows are adjusted to
present day values at a discount rate based on a weighted
average cost of capital of 12.24% (2010: 11.88%) per annum,
calculated by reference to year-end data on equity values and
interest, dividend and tax rates. The long term growth rate and
discount rate is consistent for all segments on the basis that
they all operate in similar markets and are exposed to similar
risks. The residual value at the end of the five years, computed
by reference to projected year six cash flows and discounted, is
also included. There was no requirement for any impairment
provision at 31 December 2011.
The directors have considered the sensitivity of the key
assumptions and have concluded that any possible changes that
may be reasonably contemplated in these key assumptions
would not result in the value in use falling below the carrying
value of goodwill, given the amount of headroom available.
25
16. Other intangible assets
Gross carrying amount
1 January 2010
Additions
31 December 2010
Additions
31 December 2011
Amortisation and impairment
1 January 2010
Charge for the year
31 December 2010
Charge for the year
31 December 2011
Carrying amount 31 December 2011
Carrying amount 31 December 2010
Non- Distribution
agreements
compete
agreement
£000
Research
and
development
£000
Sales order
backlog
£000
Brand and
domain
names
£000
Customer
relationships
Total
£000
£000
180
-
180
250
430
20
36
56
76
132
298
124
335
7
342
221
563
335
7
342
221
563
-
-
170
72
242
350
592
65
74
139
94
233
359
103
209
-
209
1,354
1,563
209
-
209
357
566
997
-
1,413
79
1,492
2,869
4,361
819
254
1,073
1,155
2,228
2,133
419
£000
496
-
496
220
716
172
133
305
219
524
192
191
23
-
23
474
497
18
4
22
188
210
287
1
An analysis of other intangible assets by business segment is given in note 7. The additions to other intangible assets during 2011 related to the acquisition
of Deben UK Limited.
17.
Inventories
18. Trade and other receivables
Raw materials
Work in progress
Finished goods
2011
£000
1,573
469
10
2010
£000
1,521
349
53
2,052
1,923
Trade receivables
Prepayments and accrued income
Other receivables
2011
£000
2,343
205
1,126
2010
£000
2,199
160
156
3,674
2,515
In 2011, a total of £8,529,000 of inventories was included in the
income statement as an expense (2010: £6,316,000). This
includes an amount of £198,000 (2010: £85,000) resulting from
write-downs of inventories. The carrying amount of inventories
held at fair value less costs to sell is £12,000 (2010: £23,000).
There were no reversals of previous write-downs that were
recognised in the income statement in either 2011 or 2010. All
group inventories form part of the assets pledged as security in
respect of bank loans.
26
The carrying value of receivables, all of which are short-term, is
considered a reasonable approximation of fair value. All trade
and other receivables have been reviewed for impairment with
no material provision being required.
In addition, some of the unimpaired trade receivables were past
due at the balance sheet date as follows:
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
Greater than one year
2011
£000
807
66
9
7
889
2010
£000
958
43
-
-
1,001
19. Trade and other payables
22. Maturity of borrowings and net debt
Trade payables
Accruals and deferred income
Social security and other taxes
Other payables
2011
£000
1,466
1,367
261
371
2010
£000
1,368
891
241
230
3,465
2,730
All amounts are short-term and their carrying values are
considered reasonable approximations of fair value. Other
payables also include £10,682 (2010: £12,500) of non equity
shares classed as financial liabilities (see note 25).
20. Current portion of long-term borrowings
Bank loan
Subordinated loans
2011
£000
1,265
497
1,762
2010
£000
800
-
800
All amounts are short-term and their carrying values are
considered reasonable approximations of fair value.
The subordinated loans were advanced by minority
shareholders in Bordeaux Acquisition Limited. They are
unsecured, interest free and repayable at the discretion of
that company.
21. Long-term borrowings
Bank loan
2011
£000
2010
£000
3,419
2,530
31 December 2011
Bank Subordinated
loans
loan
£000
£000
Repayable in less than 6 months
Repayable in months 7 to 12
Current portion of long-term
borrowings
Repayable in years 1 to 5
Later than 5 years
Total borrowings
Less:
interest included above
cash and cash equivalents
Total net debt
31 December 2010
686
772
1,458
3,611
109
5,178
494
3,954
730
497
-
497
-
-
497
-
-
497
Bank Subordinated
loans
loan
£000
£000
Repayable in less than 6 months
Repayable in months 7 to 12
Current portion of long-term
borrowings
Repayable in years 1 to 5
Total borrowings
Less:
interest included above
cash and cash equivalents
Total net debt
475
466
941
2,708
3,649
319
2,542
788
-
-
-
-
-
-
-
-
Total
£000
1,183
772
1,955
3,611
109
5,675
494
3,954
1,227
Total
£000
475
466
941
2,708
3,649
319
2,542
788
A proportion of the group’s bank loans is drawn in foreign
currencies to provide a hedge against assets denominated in
those currencies. The Sterling equivalent at 31 December 2011
of loans denominated in US$ was £772,000 (2010: £1,094,000)
and in Euros was £893,000 (2010: £652,000). These amounts
are included in the figures above for bank loans, repayable in
years 1 to 5.
Borrowings comprise three bank loans secured on assets of the
group. The repayment profile of borrowings is as set out in
note 22:
•
The first loan is repayable in quarterly instalments over the
period ending 30 June 2014 and bears interest at 3.25%
above LIBOR-related rates.
The second loan is repayable in quarterly instalments with
a final payment in March 2016 and bears interest at 3.25%
above LIBOR-related rates.
The third loan is repayable in quarterly instalments over
the period ending 31 March 2019 and bears interest at
3.75% above LIBOR-related rates.
•
•
27
23. Deferred tax assets/(liabilities)
1 January
Acquisition in year – amount recognised
– attributable to intangible assets
Credit to income statement in the year
Attributable to the derivative financial instruments
31 December
Deferred tax balances relate to temporary
differences as follows:
Accelerated capital allowances
Provisions allowable for tax in subsequent period
Intangible assets
Attributable to the derivative financial instruments
Total
2011)
£000)
2010)
£000)
348)
(12)
(774)
363)
(47)
(122)
(35)
20)
(533)
426)
(122)
(188)
-)
(22)
85)
473)
348)
(27)
16)
(114)
473)
348)
Amounts provided in respect of deferred tax are computed at
25% (2010: 27%).
The group has unrelieved tax losses at 31 December 2011 of
£192,000 (2010: £325,000). The ability to utilise these losses,
which reside in the parent company, is significantly affected by the
impact of exchange rates on borrowings in foreign currencies,
which by their very nature are unpredictable. The group has
therefore not recognised a deferred tax asset (2011: £48,000;
2010: £88,000) in respect of these losses as it cannot be
considered probable that taxable profits will be available in the
near term against which they can be utilised. However they are
available to be offset against future profits of the parent company.
24. Share capital
Authorised - Ordinary shares of 5p each
10,000,000 shares
2011
£000
2010
£000
500
500
Allotted, called up and fully paid - Ordinary shares of 5p each
1 January: 4,180,242 shares (2010: 4,040,678)
Exercise of share options: 3,000 shares (2010: 6,000)
Exercise of warrants to subscribe:
23,840 shares (2010: 133,564)
Conversion of Convertible Redeemable shares:
82,885 shares (2010: nil)
31 December: 4,289,967 shares (2010: 4,180,242)
209
-
1
4
214
202
-
7
-
209
Allotments of Ordinary shares in 2011 were made:
(a) to satisfy the exercise of 3,000 share options on 6 October 2011
when the share price was 405p (2010: the exercise of 3,000 share
options on each of 27 September 2010 and 19 November 2010
when the share price was 322p and 410p respectively);
28
(b) to satisfy the exercise of warrants to subscribe for 23,840
shares on 27 May 2011 when the share price was 472.5p
(2010: the exercise of warrants to subscribe for 133,564 shares
on 20 May 2010 when the share price was 180p); and
(c) On the conversion of 727,026 Convertible Redeemable shares
into 82,885 Ordinary shares on 27 June 2011 when the
Ordinary share price was 477.5p.
Equity share options and warrants
At 31 December 2011, options had been granted and remained
outstanding in respect of 348,000 Ordinary shares in the company,
all priced by reference to the mid-market price of the shares on the
date of grant and all exercisable, following a 3-year vesting period,
between the third and tenth anniversaries of grant, as below:
2011 2010
Number)Weighted) Number) Weighted
average
exercise
price
p/share
average)
exercise)
price)
p/share)
2005 Approved Plan
198,850)
Outstanding at 1 January
25,500)
Granted in year
Exercised or lapsed in year
(13,000)
Outstanding at 31 December 211,350)
112.1)
472.4)
133.5)
154.2)
179,850)
22,000)
(3,000)
198,850)
104.8
169.2
94.0
112.1
Of which exercisable at
31 December
129,450)
109.4)
84,000)
100.8
2005 Unapproved Plan
108,150)
Outstanding at 1 January
28,500)
Granted in year
Exercised or lapsed in year
-)
Outstanding at 31 December 136,650)
104.7)
470.0)
-)
)180.9)
111,150)
-)
(3,000)
108,150)
104.6
-
103.5
104.7
Of which exercisable at
31 December
92,550)
106.8)
67,000)
100.3
Total
307,000)
Outstanding at 1 January
54,000)
Granted in year
Exercised or lapsed in year
(13,000)
Outstanding at 31 December 348,000)
109.5)
471.1)
133.5)
164.7)
291,000)
22,000)
(6,000)
307,000)
104.7
169.2
98.8
109.5
Of which exercisable at
31 December
222,000)
108.4)
151,000)
100.6
Exercise prices at 31 December 2011 ranged from 92p/share to
470.0p/share (2010: 92p/share to 191.5p/share), with a weighted
average remaining contractual life of 6.40 years (2010: 6.92 years).
Options over 10,000 shares were conditional upon the
achievement of earnings targets in 2011.
24. Share capital - continued
Options have been granted to two directors as follows:
20 October 2005 at 101.5p
22 March 2006 at 103.5p
23 March 2007 at 106.5p
24 September 2007 at 94p
28 April 2008 at 124p
23 July 2009 at 92p
9 May 2011 at 470p
Number of shares
Mr D Barnbrook
Mr R L Cohen
5,000
10,000
10,000
5,000
10,000
10,000
5,000
55,000
37,000
-
-
10,000
10,000
10,000
5,000
72,000
The market price of the company’s Ordinary shares on
31 December 2011 was 407.5p, the highest price during 2011
was 500.0p on 1 July, the lowest price during 2011 was 365.0p
on 6 to 10 January and the price on 20 March 2012 was 637.5p.
In accordance with IFRS 2, a Black Scholes valuation model has
been used. This has indicated that no material expense is
required to be charged for the years ended 31 December 2011
and 31 December 2010. As such, no adjustment has been made
to either the consolidated or parent company financial
statements.
Warrants to subscribe
Loeb Aron & Company Limited, the brokers who conducted a
share placing in 2008, were granted unquoted warrants to
subscribe for Ordinary shares in the company at an exercise
price of £1.10 per share, expiring on 20 May 2013 and
relating to 23,840 shares. These warrants were exercised on
27 May 2011.
Convertible Redeemable shares
The conversion rights set out in note 25 would have
resulted in the issue of 490,275 Ordinary shares if conversion
of all the Convertible Redeemable shares had taken place on
31 December 2011.
25. Convertible Redeemable shares classed as
financial liabilities
Authorised
5,000,000 shares of 1p each
Allotted – shares of 1p each - 1/4p called up and paid
1 January 2011: 5,000,000 shares (2010: 5,000,000)
Conversion into Ordinary shares: 727,026 shares
(2010: nil) (see note 24)
31 December 2011: 4,272,974 shares (2010: 5,000,000)
2011)
£000)
2010
£000
50)
12)
(1)
11)
50
12
-
12
In accordance with IAS 32, Financial Instruments: Presentation,
the Convertible Redeemable shares are classified as financial
liabilities. Under the terms of IAS 39 Financial Instruments,
Recognition and Measurement, the conversion feature within
the Convertible Redeemable shares is deemed to represent an
embedded derivative financial instrument. As such, it is a
requirement that they be fair-valued at each accounting date,
with changes in fair-value being recognised through the Income
Statement. The recent increase in the market price of the
company’s Ordinary shares has correspondingly increased the
fair value of the Convertible Redeemable shares, resulting in a
£304,000 charge before tax (£351,000 after tax) in the year
ended 31 December 2011 relating to the derivative financial
instrument (2010: £1,279,000 after tax).The reduction in the
provision arising on a conversion into Ordinary shares during
the year has been transferred directly to equity.
Under the Articles of Association the principal conditions attached
to 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, any surplus assets
remaining after payment of liabilities shall be applied:
i)
ii)
Firstly in equally repaying the paid up capital on both the
Ordinary shares and the Convertible Redeemable
shares;
Secondly in distributing the remainder 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 is to consider a resolution for
the winding up of the company.
The Convertible Redeemable shares are convertible no later
than 31 December 2014 into such number of Ordinary
shares as would represent 10.26% of the company’s Ordinary
share capital as enlarged if all remaining convertible shares
had been converted at 31 December 2011 (2010: 12%); the
exercise price is 95p per Ordinary share less amounts already
paid on the Convertible Redeemable shares.
The holders of Convertible Redeemable shares shall (subject
to the provisions of the Companies Acts) be entitled at any
time to redeem at any time all or any of the Convertible
Redeemable shares outstanding out of any profits or monies
of the company which may lawfully be applied for such
purpose.
•
•
•
Proposals to amend the redemption terms of the Convertible
Redeemable shares are described in the Directors’ Report.
29
26. Emoluments of directors and key
management personnel
27. Employees
Executive directors
Non-executive directors
Total directors’ emoluments:
Emoluments
Defined contribution pension scheme contributions
Emoluments of the highest paid director:
Emoluments
Defined contribution pension scheme contributions
2011
no.
2010
no.
3
3
6
3
3
6
£000
£000
490
12
502
153
-
153
405
10
415
127
5
132
During the year two directors participated in a
defined contribution pension scheme (2010: two)
Compensation of key management personnel
Emoluments, benefits, pension contributions
and social security costs
1,064
871
Short term employee benefits:
Salaries including bonuses and social security costs
Company car allowance and other benefits
Total short term employee benefits
Post-employment benefits:
Defined contribution pension plans
Total post-employment benefits:
980
41
1,021
43
43
820
25
845
26
26
Total remuneration
1,064
871
Key management personnel comprise directors of the parent
company and the managing directors of the principal operating
companies. The compensation of the non-executive directors of
the parent company is determined by the Board of directors as
a whole, that of the executive directors of the parent company
is determined by the Remuneration Committee of the Board
(comprising the non-executive directors) and that of the
managing directors of the principal operating companies is
determined by the group Chief Executive.
Number of employees
By function – manufacturing
By function – sales and administration
By business segment
Materials Sciences group
Vacuum group (pro-rata for 2011 – 76 at
end of 2011)
head office (including 3 non-executive
directors in both years)
Employment costs
Wages and salaries
Social security costs
Pension costs
28. Financial instruments
2011
no.
2010
no.
71
64
56
61
135
117
55
72
8
50
59
8
135
117
2011
£000
4,879
521
145
2010
£000
4,147
438
112
5,545
4,697
The group’s policies on treasury management and financial
instruments are given in the directors’ report.
Fair value of financial instruments
Financial instruments include the borrowings set out in note 22.
All financial instruments denominated in foreign currencies are
translated at the rate of exchange ruling at the balance sheet
date. The directors believe that there is no material difference
between the book value and fair value of all financial
instruments.
Borrowing facilities
The group had an undrawn committed overdraft facility of
£500,000 at 31 December 2011 (2010: £500,000).
Trade payables
All amounts are short-term (all payable within six months) and
their carrying values are considered reasonable approximations
of fair value. The values are set out in note 19.
30
Fair value hierarchy
The fair value hierarchy has the following levels:
• Level 1: quoted prices (unadjusted) in active markets for
• Level 2:
• Level 3:
identical assets or liabilities
inputs other than quoted prices included
within Level 1 that are observable for the asset or
liability, either directly (ie as prices) or indirectly
(ie derived from prices)
inputs for the asset or liability that are not
based on observable market data
(unobservable inputs).
The derivative financial instruments in respect of the Convertible
Redeemable shares are measured at fair value in accordance with
the fair value hierarchy and are classed as level 2.
Summary of financial assets and financial liabilities by category
Financial Assets
Trade and other receivables
Cash and cash equivalents
Loans and receivables
Financial Liabilities
Derivative financial instruments
Financial liabilities designated at fair value
through profit or loss
Trade payables
Accruals
Other payables
Current portion of long-term borrowings
Long-term borrowings
Financial liabilities measured at amortised cost
Total financial liabilities
Net financial liabilities
Non financial assets and financial liabilities
not within the scope of IAS 39
Property, plant and equipment
Goodwill
Other intangible assets
Inventories
Prepayments and accrued income
Social security and other taxes
Current tax payable
Deferred tax (liabilities)/assets
2011)
£000)
3,469)
3,954)
7,423)
2010)
£000)
2,355)
2,542)
4,897)
1,739)
1,739)
1,752)
1,752)
1,466)
1,367)
371)
1,762)
3,419)
8,385)
1,368)
891)
230)
800)
2,530)
5,819)
10,124)
7,571)
(2,701)
(2,674)
1,940)
5,316)
2,133)
2,052)
205)
(261)
(851)
(122)
10,412)
956)
5,290)
419)
1,923)
160)
(241)
(550)
348)
8,305)
Total equity
7,711)
5,631)
Financial assets
The group’s financial assets (which are summarised in note 29 –
credit risk) comprise cash and cash equivalents and trade and
other receivables.
•
The amounts derived from these assets and included as
interest income in the income statement are £7,000
(2010: £7,000).
Cash and cash equivalents are principally denominated in
sterling and earn interest at floating rates.
There is no material difference between the book and fair
values of the financial assets.
At 31 December 2011 the group had trade receivables
denominated in foreign currency as follows: Euros -
£318,000 (2010: £118,000) and US Dollars - £217,000
(2010: £598,000).
•
•
•
Financial liabilities
The group’s principal financial liabilities are bank loans, trade and
other payables, derivative financial instruments and Convertible
Redeemable shares classed as financial liabilities:
•
•
The costs attributable to these liabilities and included as
interest expense in the income statement amounted to
£195,000 (2010: £137,000), as analysed in note 10. Foreign
exchange losses attributable to bank loans (see below) and
included as operating costs in the income statement
amounted to £3,000 (2010: £4,000); this approximately
equates to the foreign exchange gains arising in the
subsidiary companies whose currency exposure the
foreign exchange bank loans are designed to hedge.
A proportion of the bank loans are denominated in foreign
currencies to provide a hedge against currency risk on
group assets, as described in note 22.
29. Risk management objectives and policies
The group is exposed to market risks, arising predominantly from
currency exposure resulting from its export activities, interest
rate fluctuation on its loans and deposits and credit and liquidity
risks. Risk management strategies are co-ordinated by the board
of directors of the parent company.
Foreign currency sensitivity
The group exports a substantial proportion of its sales, frequently
denominated in foreign currencies (principally in US$ and Euros).
Exposure to currency rate fluctuations exists from the moment a
sales order is confirmed through to the time when the related
remittance is converted into Sterling. This exposure is computed
monthly (along with offsetting exposure on purchases, generally of
minimal amounts) and counter-balanced by the conversion of a
proportion of the group’s bank loans into equivalent foreign
currencies. The net exposure to risk is therefore substantially
reduced. Residual exposure is the difference between the net
exposure and the converted bank loans, both translated into
Sterling at each date of measurement.
31
29. Risk management objectives and policies - continued
31 December 2011
Sterling)
equivalent)
of US$)
£000)
Sterling)
equivalent)
of €)
£000)
Sterling loans denominated in foreign
currencies at year-end
Residual exposure at year-end – long
Impact on pre-tax profits of a 5%
variation in exchange rate on year-end
residual exposure
Impact on equity of a 5% variation
in exchange rate on year-end
residual exposure
772)
89)
4)
3)
893)
311)
15)
11)
31 December 2010
Sterling)
equivalent)
of US$)
£000)
Sterling)
equivalent)
of €)
£000)
Sterling loans denominated in foreign
currencies at year-end
Residual exposure at year-end – short
Impact on pre-tax profits of a 5%
variation in exchange rate on year-end
residual exposure
Impact on equity of a 5% variation
in exchange rate on year-end
residual exposure
1,094)
(29)
1)
1)
652)
(14)
1)
1)
Interest rate sensitivity
The group’s interest rate exposure arises in respect of its bank
loans, which are LIBOR-linked for interest rate purposes and its
surplus funds, which are bank base-rate-linked. The group’s
sensitivity to interest rate changes is as follows:
Bank loans outstanding at year-end
Impact on pre-tax profits of a 1% change in
LIBOR
Impact on equity of a 1% change in LIBOR
Surplus funds at year-end
Impact on pre-tax profits of a 1% change in
bank base rates
Impact on equity of a 1% change in bank
base rates
2011
£000
4,684
47
2010
£000
3,330
33
35
24
3,954
39
2,542
25
29
18
32
Credit risk
The group’s exposure to credit risk is limited to the carrying
amounts of financial assets recognised at the balance sheet date,
as follows:
Cash and cash equivalents
Trade and other receivables
2011
£000
3,954
3,674
2010
£000
2,542
2,515
7,628
5,057
The group reviews the credit risk relating to its customers by
ensuring wherever possible that 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 to be provided. The directors
consider that all the group’s financial assets that are not
impaired at each of the reporting dates under review are of
good credit quality, including those that are past due
(see note 18). None of the financial assets are secured by
collateral or other credit enhancements.
Group companies generally trade through overseas agents and
credit exposure to an individual agent can be significant at
times. No counterparties owed more than 10% each of the
group’s total trade and receivables at 31 December 2011. At
31 December 2010, one counterparty owed more than 10% of
the group’s total trade and other receivables, being the China
agent of Fire Testing Technology Limited (19.1%).
The credit risk for liquid funds and other short-term financial
assets is considered small. The substantial majority of these
assets is deposited with Bank of Scotland, part of the Lloyds
Banking Group. The British Government holds a substantial
interest in this group.
Liquidity risk
The group’s longer-term financing needs, principally in respect of
business acquisitions, are satisfied by bank loans, with the
objective of servicing repayments from the cash flow arising
from the businesses acquired. For short and medium term
financial needs, the group regularly compares its projected
requirements with available cash and borrowing facilities; the
directors continue to augment existing cash surpluses with a
£500,000 borrowing facility from the group’s bank to provide an
additional margin of liquidity (none of which was outstanding
during 2011) and which has been increased since
31 December 2011 to £4 million – see note 32.
The periods of maturity of the group’s borrowings are set out
in note 22. The maturity of all trade and other payables is
within the period of less than six months.
Price risk
The group’s price risk exposure arises in respect of the value of
the derivative financial instrument which is affected by
fluctuations in the group’s share price. The group’s sensitivity to
such changes is as follows:
Operating profit
Impact on pre-tax profits of a 10% change
in share price
30. Operating lease commitments
Operating lease payments expensed during the year:
Land and property
Vehicles
Minimum operating lease commitments falling due:
Within one year – Land and property
Within one year – Vehicles
Between one and five years – Land and property
Between one and five years – Vehicles
2011
£000
3,074
227
2010
£000
799
236
2011
£000
2010
£000
249
24
273
199
14
213
224
25
249
224
23
247
213
18
231
375
17
392
Total commitment
462
623
Land and property leases represent operating sites leased at
East Grinstead, Laughton, Ashford, Ringmer and Wokingham.
The earliest exits to these leases fall during May 2013, February
2014, March 2013, May 2012 and December 2016 respectively.
31. Acquisition of Deben UK Limited
On 18 March 2011, the company’s 51% subsidiary, Bordeaux
Acquisition Limited (“Bordeaux”) acquired the entire issued
share capital of Deben UK Limited (“Deben”), a company based
in the UK. The total cost of acquisition, all of which was paid in
cash, includes the components stated below. There was no net
asset value to the Bordeaux Group (Bordeaux Acquisition
Limited and Deben UK Limited combined) at the point of
acquisition as the debt taken on to finance the consideration of
Deben UK Limited is held in Bordeaux Acquisition Limited. On
this basis there was no value arising at the date of acquisition in
respect of the 49% non-controlling interest in Bordeaux
Acquisition Limited. Value for the non-controlling interest arises
only from post-acquisition profits of the Bordeaux Group.
Payment to vendors
Gross cash inherited on acquisition
Cash retained in the business
Payment to vendors in respect of surplus working capital
(paid in August 2011)
Total consideration transferred
Acquisition-related transaction costs charged in the
Income Statement
£000)
3,260)
1,655)
(293)
1,362)
4,622)
196)
The amounts recognised for each class of the acquiree’s assets,
liabilities and contingent liabilities at the acquisition date are
as follows:
Pre-)
acquisition)
carrying)
amount)
£000)
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Deferred tax liabilities
Trade payables
Current tax liability
Total liabilities
Net identifiable assets
and liabilities
Goodwill arising on acquisition
Total cost of acquisition
585)
-)
349)
574)
1,655)
3,163)
(12)
(336)
(314)
(662)
2,501)
Adjustment)
to fair value)
£000)
-)
2,869)
-)
-)
-)
2,869)
(774)
-)
-)
(774)
2,095)
Recognised)
at)
acquisition)
date)
£000)
585)
2,869)
349)
574)
1,655)
6,032)
(786)
(336)
(314)
(1,436)
4,596)
26)
4,622)
The goodwill that arose on the combination can be attributed
to Deben’s profitability.
33
The figures described below include interest charges that have
been incurred by Bordeaux Acquisition Limited.
The acquisition of Deben resulted in profit after tax attributable
to equity holders of the parent company of £199,000 in the 41
weeks from 18 March 2011 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
£134,000 after tax.
If Deben had been acquired on 1 January 2011, based on
pro-forma 2010 results, revenue for the group for the period to
31 December 2011 would have increased by £422,000 and
profit after tax attributable to equity holders of the parent
company would have increased by £48,000 after allowing for
interest costs but before charging amortisation of intangible
assets (a reduction of £24,000 after charging additional
amortisation of intangible assets of £72,000).
32. Post balance sheet events
On 6 March 2012, the company acquired the entire issued share
capital of Global Digital Systems Limited (“GDS”). GDS designs,
manufactures and sells instruments used to test the physical
properties of soil and rocks .The company’s investment in GDS
amounted to approximately £8.1 million, including estimated
transaction costs of £450,000. An additional payment will be
made to reflect the working capital available at completion in
excess of the ongoing requirements of the business, which the
directors expect to be covered by the cash inherited on
completion. The acquisition was financed by existing cash
resources, a £2.5 million increase in bank loans and an increase
from £0.5 million to £4 million in overdraft facilities.
GDS’s unaudited financial statements for the year ended
31 October 2011 showed net tangible assets of £1,718,000.
Sales amounted to £4,900,000, on which the company
generated operating profits of £877,000. The directors believe
that, had the business been owned by the group during that
year and excluding one-off items, GDS would have generated
operating profits in the order of £1,275,000 (before interest,
tax, amortisation of intangible assets and expensed
transaction costs).
Accounts to the date of completion will be drawn up promptly.
However at the time of finalising these financial statements the
information required under IFRS 3R concerning the net
identifiable assets and liabilities acquired was not yet available.
Also on 6 March 2012 Deben completed the acquisition of the
trade and certain assets of KE Developments Limited (“KE”).
Fixed asset purchases amounted to £40,000 and the company
will purchase inventories from the vendor as required over a
period of 5 years (having paid a deposit of £50,000 on
completion).
maximum of £300,000 will be payable monthly at reducing rates
over a 5 year period, based on sales of KE products.
In addition, deferred consideration up to a
34
INDEPENDENT AUDITOR’S
REPORT
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
•
adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement
with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are
not made; or
•
•
• we have not received all the information and explanations we
require for our audit.
Other matter
We have audited the parent company financial statements of Judges
Scientific plc for the year ended 31 December 2011 which comprise
the parent company balance sheet and notes 1 to 14.The financial
reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 directors and auditors
We have reported separately on the consolidated financial statements
of Judges Scientific plc for the year ended 31 December 2011.
Paul Houghton
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
East Midlands
28 March 2012
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for the preparation of
the parent company financial statements and for being satisfied that
they give a true and fair view. Our responsibility is to audit and
express an opinion on the parent company financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland).Those standards require us to comply with
the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm
Opinion on financial statements
In our opinion the parent company financial statements:
•
give a true and fair view of the state of the company's affairs as at
31 December 2011;
• have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matter prescribed by the Companies
Act 2006
In our opinion the information given in the Directors' Report for the
financial year for which the financial statements are prepared is
consistent with the parent company financial statements.
36
PARENT COMPANY
BALANCE SHEET
Fixed assets
Tangible assets
Investments in subsidiaries
Current assets
Debtors
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
Total net assets
Capital and reserves
Called up share capital
Share premium
Profit and loss account
Shareholders’ funds
Note
3
4
5
6
7
9
10
10
10
2011)
£000)
1,016)
8,361)
9,377)
1,656)
724)
2,380)
(1,206)
1,174)
10,551)
(1,634)
8,917)
214)
3,195)
5,508)
8,917)
2010)
£000)
569)
7,834)
8,403)
1,902)
610)
2,512)
(1,037)
1,475)
9,878)
(2,530)
7,348)
209)
3,092)
4,047)
7,348)
In accordance with the exemptions permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been
presented.
These parent company financial statements were approved by the board on 28 March 2012
D.E. Cicurel
Director
R.L. Cohen
Director
37
NOTES TO THE PARENT
COMPANY FINANCIAL
STATEMENTS
1. General information
These separate financial statements of the parent company have
been prepared under the historical cost convention and in
accordance with applicable United Kingdom Accounting
Standards.
2. Accounting policies
2.1 Tangible fixed assets
Property is stated at cost, net of depreciation and any provision
for impairment.
Depreciation is provided at annual rates calculated to write off
the cost less residual value of each asset over its expected
useful life at the following rate:
•
Property: 2% straight-line on cost of buildings (excluding
the estimated value of land).
2.2 Investments
All material equity-settled share-based payments are ultimately
recognised as an expense in the profit and loss account, with a
corresponding credit to "other reserve".
If vesting periods or other non-market vesting conditions apply,
the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected
to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment
prior to vesting is recognised in the current period. The impact
of the revision of the original estimates, if any, is recognised in
the profit and loss account over the remaining vesting period,
with a corresponding adjustment to the appropriate reserve.
No adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different to
that estimated on vesting. Upon exercise of share options, the
proceeds received net of attributable transaction costs are
credited to share capital and, where appropriate, share premium.
Fixed asset investments in subsidiaries are stated at cost less
provision for impairment.
2.6 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.
2.7 Convertible Redeemable shares
In accordance with FRS 25, the Convertible Redeemable shares
have been recorded as a current liability at the net proceeds
received and any future conversion into Ordinary shares has
not been taken into account. The underlying finance cost is not
reflected until conversion takes place.
2.3 Taxation
Current tax is provided at amounts expected to be paid or
recovered either directly or through group relief arrangements.
Tax assets and liabilities are calculated at rates that are
expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the
balance sheet date.
2.4 Pensions
The company operates a defined contribution pension scheme
for employees and directors.The assets of the scheme are held
by investment managers separately from those of the company
and group. The pension costs charged against operating results
represent the amount of the contributions payable to the
scheme in respect of the accounting period.
2.5 Share-based payments
FRS 20 has been applied, where the effect is material, to equity-
settled share options granted on or after 7 November 2002 and
not vested prior to 1 January 2006. The Black Scholes valuation
model is used and, up to 31 December 2011, has indicated that
no material adjustment to results is required. The impact of a
material adjustment would be reflected in the accounts of any
affected subsidiary company.
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values. Where
employees are rewarded using share-based payments, the fair
values of employees’ services are determined indirectly by
reference to the fair value of the instrument granted to the
employee. This fair value is appraised at the grant date and
excludes the impact of non-market vesting conditions.
38
3. Tangible assets
Cost
1 January 2011
Additions in 2011
31 December 2011
Depreciation
1 January 2011
Charge
31 December 2011
Net book value - 31 December 2011
Net book value - 31 December 2010
4.
Investments in subsidiaries
Cost
1 January
Addition – acquisition of a 51% share of
Bordeaux Acquisition Ltd (see note 13)
31 December
Property
£000
591
454
1,045
22
7
29
1,016
569
2010
£000
7,834
-
7,834
2011
£000
7,834
527
8,361
The group’s trading subsidiaries at 31 December 2011, all of
which were incorporated and operate in the United Kingdom,
were as follows:
Company
Principal activity
Class of shares % held
Fire Testing
Technology
Limited
Design and assembly of Ordinary £1
fire testing instruments
100%
All of the above companies are owned directly by Judges
Scientific plc, with the exception of Aitchee Engineering Limited
and Sircal Instruments (UK) Limited, both of which are owned
directly by Fire Testing Technology Limited, and Deben UK
Limited, which is wholly-owned by a 51%-owned intermediate
holding company, Bordeaux Acquisition Limited.
5. Debtors
Amounts owed by group companies
Corporation tax - group relief owed by
group companies
Prepayments and accrued income
2011
£000
1,620
-
2010
£000
1,777
95
36
30
1,656
1,902
Included in amounts owed by group companies are:
•
the sum of £244,000 (2010: £244,000) which is repayable
on demand at any time after 30 June 2013 provided that all
liabilities to third parties falling due on or before that date
have been met; and
a loan to Fire Testing Technology Limited, made during
2010 to finance the acquisition of Sircal Instruments (UK)
Limited, amounting to £1,316,000 at 31 December 2011.
This loan is unsecured, repayable on demand and bears
interest at the rate of 7.5% per annum.
•
Except as stated, all amounts are recoverable in less than
1 year.
“A” Ordinary £1 100% of “A”
6. Creditors: amounts falling due within one year
PE.fiberoptics Design and assembly
Limited
of fibre-optic testing
instruments
UHV Design Design and manufacture Ordinary £1
of instruments used to
Limited
manipulate objects
in ultra high vacuum
chambers
Aitchee
Engineering
Limited
Manufacture of
engineering parts
and finished products
Quorum
Technologies
Limited
Design, manufacture
and distribution of
instruments that
prepare samples for
examination in electron
microscopes
Sircal
Instruments
(UK) Limited
Design, manufacture
and distribution of
rare gas purifiers for
use in metals analysis
Ordinary £1
100%
Ordinary £1
100%
Ordinary £1
100%
Deben UK
Limited
Design and manufacture Ordinary £1
of devices used to enable
or improve the
observation of objects
under a microscope
51%
class; being
51% of total
equity
100%
Accruals and deferred income
Social security and other taxes
Current portion of bank loan
Other creditors
2011
£000
207
88
900
11
1,206
2010
£000
166
59
800
12
1,037
Other creditors comprise £10,682 (2010: £12,500) of non
equity shares classed as financial liabilities (see note 25 to the
consolidated financial statements).
7. Creditors: amounts falling due after more than one year
Bank loan
2011
£000
2010
£000
1,634
2,530
The bank loan is secured on assets of the group (including the
assets of the parent company), is repayable in quarterly
39
instalments over the period ending 30 June 2014 and bears
interest at 3.25% above LIBOR-related rates. The repayment
profile of borrowings is as follows:
Repayable in less than 1 year
Repayable in years 1 to 5
Bank loan
£000
1,002
1,708
2,710
A proportion of the company’s bank loans is drawn in foreign
currencies to provide a hedge against group assets
denominated in those currencies. The Sterling equivalent at
31 December 2011 of loans denominated in US$ was £772,000
(2010: £1,094,000) and in Euros was £893,000 (2010: £652,000).
These amounts are included in the figures above for bank loans,
repayable in years 1 to 5.
The parent company has a contingent liability in respect of its
cross-guarantees of bank overdraft facilities made available to it
and its subsidiary companies amounting in aggregate to
£500,000 (none of which was outstanding during 2011)
and which has been increased since 31 December 2011 to
£4 million – see note 14.
8. Taxation
The parent company had unrelieved tax losses at
31 December 2011 of £192,000 (2010: £325,000). The ability
to utilise these losses is significantly affected by the impact of
exchange rates on borrowings in foreign currencies, which by
their very nature are unpredictable. The parent company has
therefore not recognised a deferred tax asset (2011: £48,000;
2010: £88,000) in respect of these losses as it cannot be
considered probable that taxable profits will be available in the
near term against which they can be utilised. However they
are available to be offset against future profits of the
parent company.
9.
Share capital
Details relating to the parent company’s share capital are set
out in notes 24 and 25 to the consolidated financial statements.
10. Statement of movements in shareholders’ funds
Share
capital
Share Profit and)
loss)
account)
premium
account
£000
£000
£000)
Total)
share-)
holders’)
funds)
£000)
1 January 2011
209
3,092
4,047)
7,348)
-
Profit for the year
Shares issued in the year
5
Dividends paid in the year -
-
103
-
1,812)
(351)
1,812)
108)
(351)
31 December 2011
214
3,195
5,508)
8,917)
The profit for the financial year in the accounts of the parent
company amounted to £1,812,000 (2010: £1,437,000).
Details relating to the dividends paid in the year are set out in
note 12 to the consolidated financial statements.
11. Related party transactions
The company is exempt under the terms of FRS 8 from
disclosing transactions with its wholly owned subsidiaries.
Funds were advanced by the company to its newly-formed
51%-owned subsidiary, Bordeaux Acquisition Limited, to facilitate
its activities as the purchaser during the year and subsequent
owner of the entire share capital of Deben UK Limited. The
maximum amount advanced was £632,000, of which £517,000
was outstanding at 31 December 2011. There are no interest
or repayment terms to these advances.
Dividends paid in the year to directors who hold shares
amounted to £57,000 in aggregate (2010: £45,000).
40
12. Directors and employees
14. Post balance sheet events
On 6 March 2012, the company acquired the entire issued share
capital of Global Digital Systems Limited ("GDS"). GDS designs,
manufactures and sells instruments used to test the physical
properties of soil and rocks. .The company’s investment in GDS
amounted to approximately £8.1 million including estimated
transaction costs of £450,000. An additional payment will be
made to reflect the working capital available at completion in
excess of the ongoing requirements of the business, which the
directors expect to be covered by the cash inherited on
completion. The acquisition was financed by existing cash
resources, a £2.5 million increase in bank loans and an increase
from £0.5 million to £4 million in overdraft facilities. Further
details of the transaction are set out in note 32 to the
consolidated financial statements.
Also on 6 March 2012 Deben completed the acquisition of the
trade and certain assets of KE Developments Limited. Further
details of this transaction are set out in note 32 to the
consolidated financial statements.
Total directors’ emoluments
Emoluments
Defined contribution pension
scheme contributions
Emoluments of the highest paid director
Emoluments
Defined contribution pension
scheme contributions
2011
£000
490
12
2010
£000
405
10
502
415
153
-
127
5
153
132
During the year, two directors participated in a defined
contribution pension scheme (2010: two)
Employees
Number of directors
Administrative staff
Total
no.
no.
6
2
8
6
2
8
13. Acquisition of Deben UK Limited
On 18 March 2011, the company acquired a 51% interest in a
newly-incorporated company, Bordeaux Acquisition Limited
(“Bordeaux”), which in turn acquired the entire issued share
capital of Deben UK Limited (“Deben”). Deben designs,
manufactures and sells devices used to enable or to improve the
observation of objects under microscopes. The minority
shareholders in Bordeaux are the former owners of Deben.
The company’s investment in Bordeaux amounted to £517,000
and took the form of equity and subordinated debt. The
company also guaranteed bank loans drawn by Bordeaux to
finance the acquisition and amounting at the date of acquisition
to £2,422,000 (£2,149,000 outstanding at 31 December 2011).
Further details of the transaction are set out in note 31 to the
consolidated financial statements.
41
NOTICE OF CLASS MEETING OF ORDINARY
SHAREHOLDERS
Notice is hereby given that a class meeting of the Ordinary shareholders of
Judges Scientific plc (the "Company") in accordance with Article 47 of the
Articles of Association of the Company and pursuant to Section 630
Companies Act 2006, will be held at The Lansdowne Club, 9 Fitzmaurice Place,
London W1X 6JD on Wednesday 30 May 2012 at 12:00 noon for the purpose
of dealing with the following business:
Special Resolution
To consider and, if thought fit, to pass the following resolution:
That, subject to and conditional upon the approval of such adoption by the
members of the Company by way of a special resolution to be proposed at the
next Annual General Meeting (the "AGM"), consent is given by the Ordinary
shareholders of the Company for the adoption of the regulations presented to
the meeting and signed by the Company Secretary for the purpose of
identification (the "New Articles") as the Articles of Association of the
Company in substitution for and to the exclusion of the existing Articles of
Association of the Company.
By Order of the Board
RL Cohen
Company Secretary
East Grinstead
4 May 2012
Notes:
Registered Office:
Unit 19, Charlwoods Road
West Sussex RH19 2HL
1 Resolution 1 is being proposed in accordance with Art 47 of the current
Articles of Association of the Company and pursuant to Section 630
Companies Act 2006 which provides that the rights attached to a class of
shares may only be varied or abrogated with the consent in writing of the
holders of three quarters in nominal value of the issued shares of the class
or with the sanction of a special resolution passed at a separate general
meeting of the holders of the shares of the class.
Ordinary shareholders will have received in the same document as this
Notice a separate notice of annual general meeting (the "AGM Notice"),
and will note resolution 7 in the AGM Notice which will be put to
members of the Company at the annual general meeting which follows this
class meeting and which proposes that the Company adopts the New
Articles as its Articles of Association.
One effect of the change to the New Articles is that the rights attaching to
the Convertible Redeemable shares in respect of their redemption would
be amended. Given the effect upon the redemption value of the
Convertible Redeemable shares for a period ending on 28 December 2012,
the board considers that this represents a change to the rights of the
Ordinary shares and therefore the purpose of resolution 1 of this class
meeting is to provide appropriate consent from the holders of Ordinary
shares to this change, to enable the Company (subject to approval by the
members of the Company by way of a special resolution) to adopt the
New Articles in accordance with resolution 7 in the AGM.
2 A member entitled to attend and vote at the meeting convened by the
Notice set out above is entitled to appoint one or more proxies to attend
and, on a poll, vote in his/her place. A proxy need not be a member of the
Company.
3 To appoint more than one proxy you may photocopy the Form of Proxy.
Please indicate the proxy holder’s name and the number of shares in
relation to which they are authorised to act as your proxy (which, in
aggregate, should not exceed the number of shares held by you). Please
also indicate if the proxy is one of multiple instructions being given. All
forms must be signed and should be returned together in the same
envelope.
4
To be valid, the instrument appointing a proxy together with any power of
attorney or other authority under which it is signed or a notarially
certified copy of such power or authority, must be deposited at the
registered office of the Company not less that 48 hours before the time
fixed for holding the meeting or any adjournment thereof.
5 The completion and return of a form of proxy will not preclude a member
of the Company from attending and voting in person at the meeting should
he/she so wish.
6 Pursuant to Regulation 41 of The Uncertificated Securities Regulations
2001, only those members registered in the Register of Members of the
Company as at 12:00 noon on 28 May 2012 (being not more than 48 hours
prior to the time fixed for the meeting) or, if the meeting is adjourned,
such time being not more than 48 hours prior to the time fixed for the
adjourned meeting are entitled to attend or vote at the meeting in respect
of the number of Ordinary shares registered in their name at that time.
Changes to entries in the Register after 12:00 noon on 28 May 2012 shall
be disregarded in determining the rights of any person to attend or vote at
the meeting.
7
In order to facilitate voting by corporate representatives at the meeting,
arrangements will be put in place at the meeting so that (i) if a corporate
shareholder has appointed the Chairman of the meeting as its corporate
representative to vote on a poll in accordance with the directions of all of
the other corporate representatives for that shareholder at the meeting,
then on a poll those corporate representatives will give voting directions
to the Chairman and the Chairman will vote (or withhold a vote) as
corporate representatives in accordance with those directions; or (ii) any
corporation which is a member can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a
member provided that they do not do so in relation to the same shares.
Annex
Explanatory notes of principal changes to the Company’s Articles of Association
1. General
Provisions in the current Articles which refer to the Companies Act 1985
have now been removed and replaced in the proposed Articles with the
equivalent provisions of the Companies Act 2006, being the legislation now
currently in force.
2. Redemption of Convertible Redeemable shares
The current Articles contain a provision that the sum paid on each
Convertible Redeemable share redeemed will be the amount paid up or
credited as paid up on each such share.
The proposed Articles contain an additional provision so that, for the
period to 28 December 2012, the sum payable on each Convertible
Redeemable share redeemed will be the ‘Adjusted Redemption Sum’.
The Adjusted Redemption Sum is calculated by reference to the market
value of the Ordinary shares into which the redeemed shares might
otherwise have been converted, less the amount that would have been
payable on such conversion, less a 15% discount on the net of these two
amounts. As with the current Articles, the Adjusted Redemption Sum also
includes the repayment of the amount paid up or credited as paid up on
each Convertible Redeemable share redeemed.
The proposed change to the Articles is intended to accelerate conversion
and/or redemption of the Convertible Redeemable shares, as set out in the
Chairman’s Statement accompanying the 2011 Annual Report.
The proposed Articles contain provisions which, for the period to 28
December 2012, permit the holders of the Convertible Redeemable shares
to receive an enhanced return of capital (broadly in line with their rights
on conversion) on a winding up of the Company.
3. Variation of class rights
It is proposed that the new Articles contain provisions which reflect the
procedure in respect of varying class rights contained in the Companies
Act 2006. These provisions state that such rights may be varied, modified,
extended, abrogated or surrendered in such manner (if any) as may be
provided by those rights.
4.
Information rights
Provisions of the Companies Act 2006 permit the Company to serve
notices upon its shareholders requiring information about interests in its
shares. The proposed Articles permit the Company to require the
provision of additional information in relation to any such notices (which is
considered to be helpful to the Company for the purposes of further
understanding any beneficial interests in its shares) and set out the
circumstances in which that information is deemed to have been provided
by a body corporate.
42
Form of Proxy
for the Class Meeting of the Ordinary Shareholders of Judges Scientific plc on 30 May 2012 at 12:00 noon at The Lansdowne Club,
9 Fitzmaurice Place, London W1X 6JD
If you are unable to attend the Class Meeting, you may appoint a proxy to exercise all or any of your rights to attend, speak
and vote in your place. A proxy need not be a member of Judges Scientific plc but must attend the meeting to represent you. A proxy
must vote as you have instructed.
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,
provided each proxy is appointed to exercise rights attached to different shares. Please indicate for the 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 Resolution or any other business at the meeting (including amendments to the Resolution).
I/We
of
Chairman of the meeting or
(Block Letters)
appoint the
as my/our proxy in
respect of
attend and, on a poll, to vote on my/our behalf at the Class Meeting of the Ordinary shareholders of Judges Scientific plc to be held at
12:00 noon on 30 May 2012, and at any adjournment(s) of that meeting.
Ordinary shares to
For
Against
Vote
Withheld
1
Adoption of new Articles
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 indicate here with an ‘X’ if this proxy is one of multiple appointments being made.
Please post this form once you have completed it to the address printed overleaf. To be valid, this form must be received
no later than 48 weekday hours before the time fixed for holding the meeting or any adjournment thereof.
Please refer to the notes in the Notice of Meeting to which this proxy relates if you require any assistance.
Any alterations to this form must be initialled.
Mailing address for Form of Proxy
The Company Secretary, Judges Scientific plc, Unit 19, Charlwoods Road,
East Grinstead,West Sussex RH19 2HL
Mailing address for Form of Proxy
The Company Secretary, Judges Scientific plc, Unit 19, Charlwoods Road,
East Grinstead,West Sussex RH19 2HL
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NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the ninth Annual General Meeting of Judges
Scientific plc (the "Company") will be held at The Lansdowne Club, 9
Fitzmaurice Place, London W1X 6JD at 12:10 pm for the purpose of
dealing with the following business of which items 6, 7, 8 and 9 are
special business.
Ordinary Business
1. To receive and adopt the reports of the directors and the auditor
and the audited financial statements of the Company for the year
ended 31 December 2011.
2. To re-appoint Hon Alexander Hambro, who retires by rotation, as a
director.
3. To re-appoint David Barnbrook, who retires by rotation, as a director.
4. To approve a final dividend of 6.7 pence per Ordinary share.
5. To re-appoint Grant Thornton UK LLP as auditor 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 auditor for the year ending 31 December 2012.
Special Business
To consider and, if thought fit, to pass the following resolutions, as to the
resolution numbered 6 as an ordinary resolution and as to the
resolutions numbered 7, 8 and 9 as special resolutions:
Ordinary Resolution
6. That the directors of the Company be and are hereby generally and
unconditionally authorised pursuant to section 551 of the Companies
Act 2006 (the "Act") to allot shares in the Company and to grant
rights to subscribe for or to convert any security into shares in the
Company up to a maximum aggregate nominal amount of £216,548
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 shares to be allotted or
rights to subscribe for or convert securities into shares to be granted
after such expiry and the directors of the Company may allot shares or
grant rights to subscribe for or convert securities into shares in
pursuance of such offer, agreement or other arrangement as if the
authority conferred hereby had not expired, this authority to replace
any previous authority which is hereby revoked with immediate effect.
Special Resolutions
7. That, subject to the Company having obtained appropriate consent
from the holders of the Ordinary shares and the Convertible
Redeemable shares of the Company respectively in relation to the
variation of the rights attaching thereto the regulations presented to
the meeting and signed by the Company Secretary for the purpose of
identification (the "New Articles") are hereby adopted as the Articles
of Association of the Company in substitution for and to the
exclusion of the existing Articles of Association of the Company.
8. That:
(a) subject to and conditional upon the passing of resolution 6 above, the
directors of the Company be and they are hereby empowered
pursuant to section 570 of the Act to allot equity securities (as
defined for the purposes of section 560 of the Act) for cash, pursuant
to the authority granted by resolution 6 above, as if section 561 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 recognised
regulatory body or stock exchange; and
(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) of
equity securities for cash up to an aggregate nominal amount of
£216,548
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 any
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.
(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 any overseas territory or the requirements
of any recognised regulatory body or stock exchange; 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.
9. That the Company be and is hereby generally and unconditionally
authorised for the purpose of section 701 of the Act to make one or
more market purchases (within the meaning of section 693(4) of the
Act) of Ordinary shares of 5 pence each in the capital of the
45
Company on such terms and in such manner as the directors of the
Company may from time to time determine, provided that:
being given. All forms must be signed and should be returned
together in the same envelope.
(a) the maximum aggregate number of Ordinary shares hereby
authorised to be purchased is 649,211 (representing
approximately 14.99 per cent. of the Company’s issued share
capital);
(b) the minimum price which may be paid for such shares is the
nominal value of 5 pence per Ordinary share (exclusive of
expenses);
(c) unless the Company makes market purchases of its own
Ordinary shares by way of a tender or partial offer made to all
holders of Ordinary shares on the same terms, the maximum
price (exclusive of expenses) which may be paid for an Ordinary
share shall not be more than five per cent. above the average of
the market values for an Ordinary share as derived from the AIM
Appendix to the London Stock Exchange Official List for the five
business days immediately preceding the date on which the
Ordinary share is purchased;
(d) unless previously renewed, varied or revoked, the authority
hereby conferred shall expire at the conclusion of the next
Annual General Meeting of the Company to be held in 2013 or
15 months from the date of passing of this resolution, whichever
shall be the earlier; and
(e) the Company may validly make a contract or contracts to
purchase Ordinary shares under the authority hereby conferred
prior to the expiry of such authority which will or may be
executed wholly or partly after the expiry of such authority and
may make a purchase of Ordinary shares in pursuance of any
such contract or contracts.
By Order of the Board
RL Cohen
Company Secretary
4 May 2012
Notes:
Registered Office:
Unit 19, Charlwoods Road
East Grinstead
West Sussex RH19 2HL
1 A member entitled to attend, speak and vote at the meeting
convened by the Notice set out above is entitled to appoint one or
more proxies to exercise all or any of your rights to attend, speak
and vote at a general meeting of the Company. A proxy need not be a
member of the Company. A Form of Proxy is enclosed for your use.
Please carefully read the instructions on how to complete the form.
2 To be valid, the instrument appointing a proxy together with any
power of attorney or other authority under which it is signed or a
notarially certified copy of such power or authority, must be
deposited at the registered office of the Company not less than 48
weekday hours before the time fixed for holding the meeting or any
adjournment thereof.
3 To appoint more than one proxy you may photocopy the Form of
Proxy. Please indicate the proxy holder’s name and the number of
shares in relation to which he/she is authorised to act as your proxy
(which, in aggregate, should not exceed the number of shares held by
you). Please also indicate if the proxy is one of multiple instructions
46
4 The completion and return of a Form of Proxy will not preclude a
member of the Company from subsequently attending and voting in
person at the meeting should he/she so wish. If you appoint a proxy
and attend the meeting in person, your proxy appointment will
automatically be terminated.
5 Pursuant to Regulation 41 of The Uncertificated Securities Regulations
2001, only those members registered in the Register of Members of
the Company as at 12:10 pm on 28 May 2012 (being not more than 48
weekday hours prior to the time fixed for the Meeting) or, if the
Meeting is adjourned, such time being not more than 48 weekday
hours prior to the time fixed for the adjourned meeting are entitled to
attend or vote at the meeting in respect of the number of Ordinary
shares registered in their name at that time. Changes to entries in the
Register after that time shall be disregarded in determining the rights
of any person to attend or vote at the meeting.
6
7
In the case of joint holders the vote of the first-named holder on the
Register of Members (whether voting in person or proxy) will be
accepted to the exclusion of the votes of the other joint holders.
In order to facilitate voting by corporate representatives at the
meeting, arrangements will be put in place at the meeting so that (i) if
a corporate shareholder has appointed the Chairman of the meeting
as its corporate representative to vote on a poll in accordance with
the directions of all of the other corporate representatives for that
shareholder at the meeting, then on a poll those corporate
representatives will give voting directions to the Chairman and the
Chairman will vote (or withhold a vote) as corporate representatives
in accordance with those directions; or (ii) any corporation which is a
member can appoint one or more corporate representatives who
may exercise on its behalf all of its powers as a member provided
that they do not do so in relation to the same shares.
8 David Cicurel and a number of other shareholders are deemed to be
acting in concert with him and together hold at the date of this Notice
1,203,715 shares representing 27.8% of the issued share capital of the
Company ("the Concert Party"). The directors note that Resolution 9
if passed by shareholders, is unlikely to be implemented in full until
either the Concert Party’s shareholding in the Company is
appropriately diluted by an issue of new shares or the composition of
the Concert Party is narrowed or shareholders pass a resolution to
approve a "Rule 9" waiver from the Panel on Takeovers and Mergers,
though no such waiver is currently being sought.
9 The Chairman of the Company, in his statement to shareholders
accompanying the 2011 Annual Report, referred to the opinion of the
directors that it would be beneficial to encourage the early
conversion and/or redemption of the Convertible Redeemable
shares. Resolution 7, if passed by shareholders, will introduce new
Articles of Association to give effect to this aim. A fuller description
of this change, together with a summary of other minor amendments,
is attached as an Annex to the Notice of class meeting of
Ordinary shareholders.
Form of Proxy
for the Annual General Meeting of Judges Scientific plc on 30 May 2012 at 12:10 pm at The Lansdowne Club, 9 Fitzmaurice Place,
London W1X 6JD
If you are unable to attend the Annual General Meeting, you may appoint a proxy to exercise all or any of your rights to
attend, speak and vote in your place. A proxy need not be a member of Judges Scientific plc but must attend the meeting to represent
you. A proxy must vote as you have instructed.
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, provided each proxy is appointed to exercise rights attached to different shares. 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).
If you wish to appoint a proxy other than the Chairman of the meeting you may do so by
I/We
of
Chairman of the meeting or
(Block Letters)
appoint the
as my/our proxy in
respect of
attend and, on a poll, to vote on my/our behalf at the Annual General Meeting of Judges Scientific plc to be held at 12:10 pm on 30 May 2012,
and at any adjournment(s) of that meeting.
Ordinary shares to
For
Against
Vote
Withheld
1
2
3
4
5
6
7
8
9
Approval and adoption of Annual Report and Accounts
Re-appointment of Hon Alexander Hambro
Re-appointment of David Barnbrook
Approval of final dividend
Re-appointment of auditor
Authority to allot shares
Adoption of new articles
Authority to disapply pre-emption rights
Authority to make market purchases
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 indicate here with an ‘X’ if this proxy is one of multiple appointments being made.
Please post this form once you have completed it to the address printed overleaf. To be valid, this form must be received
no later than 48 weekday hours before the time fixed for holding the meeting or any adjournment thereof.
Please refer to the notes in the Notice of Meeting to which this proxy relates if you require any assistance.
Any alterations to this form must be initialled.
Mailing address for Form of Proxy
The Company Secretary, Judges Scientific plc, Unit 19, Charlwoods Road
East Grinstead,West Sussex RH19 2HL
Mailing address for Form of Proxy
The Company Secretary, Judges Scientific plc, Unit 19, Charlwoods Road,
East Grinstead,West Sussex RH19 2HL
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COMPANY INFORMATION
Directors
The Hon. Alexander Robert Hambro (Non-Executive Chairman)
David Elie Cicurel (Chief Executive)
David Barnbrook (Chief Operating Officer)
Ralph Leslie Cohen (Finance Director)
Ralph Julian Elman (Non-Executive Director)
Glynn Carl Reece (Non-Executive Director)
Stockbroker
Shore Capital Stockbrokers Ltd
Bond Street House
14 Clifford Street
London W1S 4JU
Company Secretary
Ralph Leslie Cohen
Registered Office
Unit 19, Charlwoods Road
East Grinstead
West Sussex RH19 2HL
Registrar
Capita Registrars
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
Auditor
Grant Thornton UK LLP
Statutory Auditor
Chartered Accountants
Regent House
80 Regent Road
Leicester LE1 7NH
Principal Bankers
Lloyds Bank Corporate Markets
125 Colmore Row
Birmingham B3 3SF
Solicitors
Withers LLP
16 Old Bailey
London EC4M 7EG
Registered in England and Wales, Company No. 4597315
Judges Scientific plc
Judges Scientific plc
Unit 19, Charlwoods Road
East Grinstead
West Sussex RH19 2HL
01342.323600
Tel:
01342.323608
Fax:
Website: www.judges.uk.com
E-mail: enquiries@judges.uk.com