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Judges Scientific Plc - Another period of solid growth

Judges Scientific PLC - Another period of solid growth
Better than expected first half

Judges Scientific posted further record highs across the board for the first half of 2019 purely driven by organic growth. Revenues were up 9% year-on-year to a record £40.2mln largely thanks to strong growth in North America while other regions remained generally stable with low single-digit ups and downs. Order intake in the first half (1H) of 2019 grew 4% year-on-year, which is well on track with the full-year expectation, with a solid order book of 13.2 weeks. Overall order intake was strong across the regions with double-digit growth year-on-year except in the UK where it was down 22%.

Adjusted operating profit increased 26% to £8.6mln with margin improvement to 21% from 19% in 1H 2018. Such a notable improvement is attributable to increased order intake and a continued drive to optimise operational performance, plus the group reduced customer delivery lead times, hence the one-off performance contribution from a 1.2-week order book compression during the period.

Cash flow during 1H 2019 remained healthy and the group finished 1H with adjusted net cash of £7.4mln, up from £0.9mln at the beginning of 2019.

The management is confident of solid growth

Despite the absence of any material acquisition since January 2018, the group continued healthy organic growth year-to-date. This provides confidence to the management, who revealed a more upbeat outlook for the full-year than previously. The group announced an interim dividend of 15.0p, up from 12.0p for 2018.

We continue to believe Judges Scientific has a sensible portfolio of competitive global businesses to weather macro-environmental impacts, namely Brexit and the US-China trade war in the long run. The group’s strong track record of acquiring new businesses and maintaining or improving their competitive advantages is well demonstrated with a consistent improvement of its ROTIC (return on total invested capital). The group’s ROTIC continued progressing and reached 31.0% for the trailing 12 months ended June 2019, up from 24.2% in June 2018 and 27.6% in December 2018.

Quick facts: Judges Scientific PLC

Price: 5300 GBX

Market: AIM
Market Cap: £332.57 m


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