Despite posting record revenues and dividends, the market balked at Judges Scientific 's (JDG) half-year results, which chairman Alex Hambro described as "a period of contrast, with success in the pursuit of earnings-enhancing acquisitions and frustration in respect of short-term trading performance".
Acquisitions can only really be called a success if they continually deliver. Just six months ago, the scientific instruments specialist was heralding the 34 per cent contribution to earnings growth provided by Armfield, the engineering and research equipment manufacturer Judges acquired at the beginning of 2015. Since then, slowing order intake has impaired the division's revenues, while the contribution of CoolLED and Di-Stron - the two companies Judges bought in the period under review - were simply deemed "satisfactory".
Despite an expected increase in net debt, the balance sheet does not appear to have worsened substantially in the period, although investors will be concerned that the organic order book - Judge's key source of earnings visibility - had fallen from 82 to 75 days by the end of June. Following these results, analysts at WH Ireland downgraded full-year EPS forecasts by 17 per cent from 100p to 82.8p and - "expressing some caution over the likely speed of the recovery" - lowered 2017 expectations by a similar percentage.
JUDGES SCIENTIFIC (JDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,315p | MARKET VALUE: | £80.2m | |
| TOUCH: | 1,280-1,350p | 12-MONTH HIGH: | 1,920p | LOW: 1,165p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 63 | |
| NET ASSET VALUE: | 341p* | NET DEBT: | 49% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 24.9 | -1.5 | -24.7 | 8.1 |
| 2016 | 27.3 | -0.7 | -16.5 | 9.0 |
| % change | +9 | - | - | +11 |
Ex-div: 6 Oct Payment: 4 Nov *Includes intangible assets of £23.5m, or 386p a share | ||||
