Acquisition

RNS Number : 8335I

Judges Scientific PLC

19 March 2010

 



19 March 2010

JUDGES SCIENTIFIC plc

("Judges Scientific", "Judges" or the "Company")

ACQUISITION OF SIRCAL INSTRUMENTS (UK) LIMITED

Judges Scientific, the parent company of a group that specialises in the design, manufacture and sale of scientific instruments, announces that its wholly-owned subsidiary, Fire Testing Technology Limited ("FTT"), has today completed the acquisition of the entire issued share capital of Sircal Instruments (UK) Limited ("Sircal") for a consideration of £1 million, payable in cash.  An additional payment will be made to reflect the working capital available at completion in excess of the ongoing requirements of the business. Such payment is expected by Judges to be more than covered by the cash inherited at completion.

Sircal designs, manufactures and distributes rare gas purifiers for use in metals analysis utilising the Arc Spark spectrometry technique. This technique provides qualitative and quantitative analysis of a metallic sample. The process does not require complicated sample preparation and is widely used in the metals industry. When accurate measurements are required, the process must be carried out in an environment free from the type of contaminants that would affect the performance of the metal; the test is therefore conducted in an atmosphere of rare gas (usually argon) that is itself sufficiently free from contamination.  The function of the purifier is to achieve the required rare gas purity.

The principal markets for Arc Spark spectrometry relate to the production of speciality steel, cast iron, aluminium and other non-ferrous metals. These are the markets served by Sircal, directly or through OEM customers who manufacture spectrometers. In contrast to the majority of Judges' existing operations, Sircal is largely reliant on the private sector. The vast majority of Sircal's production is exported, as is the case with the other businesses in the Judges group. Judges believes the company to be a clear world leader in the market for purifiers used in metals analysis. Sircal's revenues include a significant element of consumables (approximately 30% in the last financial year).

The two vendors were among the founders of Sircal in 1981 and since 2004 have been its only employees. It has been agreed that they will assist Judges during a three-month transition period while the business is transferred to FTT's premises, where it will be operated by the FTT team. Judges Scientific will not assume responsibility for Sircal's existing premises. The Board of Judges believes that risk is reduced in such an acquisition where the purchaser does not inherit responsibility for staff or premises.

Sircal's unaudited accounts for the year ended 30 September 2009 show sales of £785,000 on which the company generated operating profits of £337,000. Net tangible assets at 30 September 2009 amounted to £423,000, including £458,000 of cash and cash equivalents. Sircal's operating profits figure of £337,000 reflects the way the business has been operated historically; the Board of Judges believes that, had the business been owned by the Company during that period, it would have generated a contribution in the order of £270,000. The Board expects the acquisition to be earnings-enhancing in the current year.

The Bank of Scotland has made available to Judges a £1 million extension to the £3 million term loan which was arranged in June 2009 to finance the acquisition of Quorum Technologies Limited and to refinance the Company's outstanding borrowings at that time. In addition, a £500,000 overdraft facility continues to be available to the Company.

Alex Hambro, Chairman of Judges, commented: "I am delighted that we have purchased another niche instrument business and that we have been able to do so without issuing shares. We regard our level of indebtedness as prudent, Sircal comes without the usual fixed cost commitments and the nature of its customer base will serve to moderate the Group's current bias towards public sector markets. This acquisition should prove earnings-enhancing in the current year, while providing an unusually low level of added risk".

Enquiries:

David Cicurel, CEO, Judges Scientific:                                      Tel: [phone]

Pascal Keane, Shore Capital:                                                    Tel: [phone]

Melvyn Marckus, Cardew Group:                                             Tel: [phone]

Web sites:

Judges Scientific:                       www.judges.uk.com

Sircal:                                       www.sircal.co.uk

 

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