1、Annual Report and Accounts 2018Judges Scientific plc Annual Report and Accounts 2018Cover image:Armfield 22.5 metre recirculating flume with wind over wave simulation and counter current flow.This page:GDS ELDYN Dynamic Triaxial Testing System,used for modelling the effects of dynamic loads applied
2、to soils.For more information visit:ContentsStrategic report1 Highlights2 At a glance6 Chairmans Statement7 Chief Executives Report9 Business model and strategy11 Principal Risks and Uncertainties13 Finance Directors ReportGovernance report16 Board of Directors18 Corporate Governance Statement21 Aud
3、it Committee Report22 Remuneration Report25 Directors reportFinancial statements27 Independent auditors report32 Consolidated statement of comprehensive income33 Consolidated balance sheet34 Consolidated statement of changes in equity35 Consolidated cashflow statement36 Notes to the consolidated fin
4、ancial statements60 Parent company balance sheet61 Parent company statement of changes in equity62 Notes to the parent company financial statements68 Ten year financial historyIBC Company informationContinued positive momentumJudges Scientific plc is an AIM-listed company specialising in the design
5、and production of scientific instruments.Corporate expansion is being pursued,both through organic growth within its subsidiary companies and through the acquisition of top-quality businesses with established reputations in worldwide markets.Investment case Buy and build model within the scientific
6、instrument market Favourable market Long-term growth drivers Large pool of potential acquisitions in global niches Low capital requirements Track record of acquisitions and reputation as a good acquirer Sixteen acquisitions since May 2005 Strict acquisition discipline Buying sustainable businesses a
7、t sensible pricesAnnual report and accounts 2018 Judges Scientific plcHighlightsHighlights Revenues up 9%to a record 77.9 million(2017:71.4 million),including 5.5%Organic*growth;Adjusted*operating profit up 35%to 14.7 million(2017:10.9 million);Statutory operating profit of 10.7 million(2017:5.7 mil
8、lion);Adjusted*basic earnings per share up 39%to 183.4p(2017:131.9p);Statutory basic earnings per share of 137.5p(2017:65.6p);Final dividend of 28p,totalling 40p for the year,an increase of 25%;covered 4.6 times by adjusted earnings;Organic*order intake up 6.2%compared with 2017;Order book at 14.4 w
9、eeks(1 January 2018:14.9 weeks);New 5-year acquisition facilities for aggregate 35 million;Cash generated from operations of 15.7 million(2017:10.9 million);Adjusted*net cash of 0.9 million as at 31 December 2018(31 December 2017:8.0 million net debt);Statutory net cash of 0.7 million at 31 December
10、 2018(31 December 2017:7.6 million net debt);Cash balances of 15.7 million as at 31 December 2018(31 December 2017:10.7 million);*Organic describes the performance of the Group including businesses acquired prior to 1 January 2017.*Adjusted earnings figures exclude adjusting items relating to amorti
11、sation of intangible assets,acquisition-related costs,share based payments and hedging of risks materialising after the end of the year.Adjusted net cash/(debt)includes acquisition-related liabilities and excludes subordinated debt owed by subsidiaries to minority shareholders.77,868Revenue(000)+9%1
12、41516171840,568 56,203 57,285 71,360 77,86814151617187,013 9,250 7,144 10,879 14,73114,731Adjusted operating profit(000)+35%183.4Adjusted undiluted basic earnings per share(pence)+39%82.7109.284.8131.9183.414151617181Judges Scientific plc Annual report and accounts 2018At a glanceSpecialist portfoli
13、oJudges Scientific plc is an AIM-quoted group specialising in the acquisition and development of a portfolio of scientific instrument businesses.Corporate expansion is being pursued,both through organic growth within its subsidiary companies and through the acquisition of top-quality businesses with
14、 established reputations in worldwide markets.Our businessesDia-Stron is the leading manufacturer of automated measurement systems for single fibres and filaments.We are rooted in fibre science and technology:since 1987,we remain at the forefront of innovation in fibre metrology.Our fibre testing ex
15、pertise is globally recognised by the R&D community.Our instrumentation provides a full range of fibre measurement capabilities,from dimensional and mechanical properties(tensile,bending and torsion),to interfacial evaluation and fatigue failure analysis.Additionally,Dia-Stron contract testing servi
16、ces,conducted in our dedicated UK laboratory,are a key offering in building long-term relationships with our customer base.We deliver measurement solutions to support:the hair care industry with product development and advancing hair fibre science;and the technical fibre market with the future of ca
17、rbon,ceramic or natural fibre composite materials.GDS 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.Serv
18、ices include:advanced systems for commercial soil and rock testing laboratories;and bespoke systems for university research in the engineering properties of soil and rock.Scientifica is a multi-award winning,globally recognised brand in nanopositioning,photomanipulation and advanced imaging systems
19、for neuroscience research.We develop cutting-edge equipment with leading scientists for use in neuronal electrophysiology,multiphoton imaging and optogenetics.Our world-class equipment enables researchers to investigate the nervous system and neurological diseases.All equipment is manufactured in th
20、e United Kingdom and exported to more than 40 countries worldwide.We have offices in the United Kingdom and the United States,with Product Consultants based in Germany and China.East Sussex-based Quorum Technologies manufactures market-leading scientific instruments primarily used for electron micro
21、scopy(EM)sample preparation.Electron microscopy is a key research tool in almost every area of scientific endeavour,from the fight against cancer and major diseases,through to food safety and the development of advanced microelectronics and new materials.Awards:2014:Queens Award for Enterprise in In
22、ternational Trade.Key products:Q Series of vacuum coating systems;and PP3010T cryo preparation systems for SEM and FIB/SEM.Founded in 1999,EWB Solutions specialises in the design and manufacture of edge-welded metal bellows where a high integrity hermetic seal is required in the presence of an appli
23、ed movement.Supplied globally,EWB bellows are produced in a wide range of materials,meeting a variety of life and environmental constraints for applications within a diverse range of industries such as:semiconductor processing;particle physics experimentation;material/surface analysis;oncology thera
24、py;and petrochemical processing.Sircal designs,manufactures and distributes rare gas purifiers typically for use in metal analysis utilising the Arc/Spark spectrometry technique.This technique provides qualitative and quantitative analysis of a metallic sample for determination of its purity.The pro
25、ducts are sold worldwide 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 dealers,and test houses.2Strategic reportAnnual report and accounts 2018 Judges Scientific plcDia-StronDia-S
26、trons latest innovation:fibra.one launched in April 2019.An all-in-one solution for multiple measurements on hair tresses including combing,friction and bending.GDS InstrumentsThe GDS hydraulic loading frames are load frames with a hydraulic dynamic actuator mounted on the crossbeam for axial stress
27、/strain cyclic dynamic loading.The frames are available in 100kN,250kN and 1,500kN loads.ScientificaThe HyperScope is Scientificas most advanced multiphoton imaging system yet,enabling simultaneous multiphoton microscopy and photostimulation with exceptional performance.The HyperScope helps research
28、ers answer complex research questions in either in vitro or in vivo samples.Quorum TechnologiesLaunched in August 2018,the Q150V Plus is the latest addition to Quorums market-leading range of sample preparation equipment,offering ultra-fine coating for use in high-resolution electron microscopes.3Ju
29、dges Scientific plc Annual report and accounts 2018At a glance continuedFTTThe iCone Plus Calorimeter is the first in FTTs new interactive range of calorimeters,the i-series.It features the latest technology in control and automation making it the most advanced,reliable and user-friendly cone calori
30、meter in the world.UHV DesignThe TETRAXE is a compact solution for providing X,Y,X tilt manipulation movement within an Ultra High Vacuum(UHV)environment.Oxford CryosystemsThe new desktop Smartstream sample cooling system delivers a stream of nitrogen gas at 170 K(103C),helping scientists study thei
31、r materials at low temperature with the push of a button.Deben20kN Tension,Compression&Torsion Test rig with 1,000C heating for Beamlines.CoolLEDFluorescent kidney image taken using a CoolLED pE-300ultra,Olympus BX51 40X objective and a DP71 colour camera.4Strategic reportAnnual report and accounts
32、2018 Judges Scientific plcUHV Design,founded in 1993,specialises in the design,manufacture and supply of high precision motion,manipulation,heating and cooling(cryogenic)of samples for use in the high and ultra-high vacuum environments for materials research.Globally,our products are essential in ma
33、jor big physics experiments including:high energy particle accelerators such as CERN and SLAC;and synchrotron light sources including PSI(Swiss),Argonne(USA)and the UKs own facility,Diamond.They are also used routinely in laboratory-scale R&D instrumentation focused on new state-of-the-art materials
34、 in:semiconductors;photovoltaics;catalysis;bio-compatible materials.Oxford Cryosystems is a market-leading UK manufacturer of cryogenic devices used mainly for X-ray diffraction and radioastronomy.The company originated in Oxford University in the 1980s and now designs and manufactures a range of ni
35、trogen and helium-based low temperature devices which are exported to leading research institutes worldwide.Oxford Cryosystems products are found in:drug discovery and research labs in major pharmaceutical and biotech companies;chemistry,physics and structural biology labs in universities around the
36、 world;and major national laboratories such as Diamond Light Source,UK,Los Alamos National Lab,USA and Shanghai Synchrotron Radiation Facility,China.Aitchee Engineering is a well-established precision engineering company that can offer high end sheet metalwork,laser cutting and CNC machining.We use
37、state of the art software to take customers drawings and turn them into manufactured goods in Steel,Aluminium,Stainless Steel,Yellow metals or plastics.We can supply large batch-work,call off orders and R&D including prototypes;we can also offer manufacturing process assistance and value engineering
38、.Deben is a precision engineering company providing innovative solutions for SEM and X-Ray CT in-situ tensile testing.Deben also manufactures SEM detectors and a range of SEM accessories including motor control and heating and cooling stages.Product groups:in-situ tensile and compression systems;acc
39、essories for electron beam applications;and imaging and detectors for SEM and TEM.CoolLED is a brand-leading designer and manufacturer of cutting-edge illumination systems for life-sciences microscopy and other applications.CoolLED pioneered the use of LEDs as controllable and environmentally friend
40、ly replacements for mercury-based lamps.Our comprehensive range includes:pE-300 Series an award-winning range of compact triple wavelength LED illumination systems for fluorescence microscopy,Optogenetics,Electrophysiology and other high-speed applications;pE-4000 a patented universal LED illuminati
41、on system for research fluorescence microscopy,with the broadest spectrum of illumination available from 16 selectable wavelengths;pE-340fura a bespoke LED illuminator for Fura-2 ratiometric calcium imaging designed following ground-breaking research at Strathclyde University;and pT-100 for transmit
42、ted imaging techniques including brightfield,darkfield,DIC and phase contrast,a newly released range for 2019.PE.fiberoptics is a leading manufacturer of equipment for testing optical fibers.Optical fibers are the main medium for long distance transmission of telecommunication data.We export 95%of o
43、ur products and have an installed base in approximately 40 countries.Products enable:production of optical fibers;characterisation of optical fiber cables;performance confirmation of installed telecommunication networks;and R&D for new fiber designs.FTT is internationally recognised as the worlds le
44、ading supplier of fire testing instrumentation and has supplied the majority of leading fire research groups and testing laboratories around the world.Our directors and senior researchers participate in UK,ISO,CEN and ASTM standardisation committees to ensure that our instruments are always complian
45、t.These include committees dealing with construction products,electro-technical products,furnishing products and transport applications for instruments such as the Cone Calorimeter,NBS Smoke Density Chamber,EN 50399,SBI,etc.Armfield offers unrivalled experience in the design and provision of teachin
46、g equipment aligned to global Civil,Mechanical,Chemical Engineering and Food Technology curriculums from entry-level Vocational training through to bespoke Research flumes.The Industrial Division designs and manufactures Research&Development systems focusing primarily on the food,beverage,dairy,edib
47、le oil and pharmaceutical industries for businesses of all sizes from Start-up companies to the worlds leading brands.Products and services:ground breaking research and development flumes;market-leading R&D technology;a comprehensive range of Engineering based educational products;worldwide network
48、of agents offering sales support&technical expertise;curriculum mapping;consultation in laboratory design and layout;installation,commissioning and training services;and a product support and after care service.Our businesses continued5Judges Scientific plc Annual report and accounts 2018Chairmans S
49、tatementFor the year ended 31 December 2018I am delighted to report that in the financial year ended 31 December 2018,the Group achieved new records in order intake,revenues,cash generation,adjusted pre-tax profit and adjusted earnings per share.In the absence of an acquisition the Group has achieve
50、d a net cash position at the year end providing a robust position for future corporate development when opportunities arise.Pleasingly the performance has been achieved this year through organic growth and efforts to achieve operational excellence,highlighting the inherent commercial strength of the
51、 businesses within the Group.The long-term growth drivers in the scientific instruments industry remain robust and,whilst volatility in short-term demand remains a feature within our sector,the climate and exchange rates were in our favour as evidenced by the consistently strong demand for our produ
52、cts observed over more than the last two and a half years.Delivering returns to our shareholders remains the core objective of the Group and as such the Board is pleased to be recommending a final dividend of 28p,making a total of 40p in respect of 2018,a 25%increase on the prior year(2017:32p).As a
53、 result of this payment,the Company will have returned to its original shareholders in cumulative dividends more than twice the Companys original subscription price.Strategy The Groups strategy continues to be based on creating shareholder returns through highly selective and carefully structured ac
54、quisitions,underpinned by diversified,solid and consistent earnings and cashflows arising from our existing businesses.The Groups policy is to acquire small/medium-sized scientific instrument companies,paying a disciplined multiple of earnings and to finance any acquisition,ideally,through existing
55、cash resources and/or bank borrowings.We are highly selective in acquiring businesses with sustainable profits and cashflows in order to obtain immediate and enduring earnings enhancement for our shareholders.It is paramount that acquisitions are completed only when the Directors are satisfied that
56、the target business has sound underlying strength.On the back of the growth of our Group it has been able to promptly reduce the acquisition debt,generating the resources to reinvest in further acquisitions,subject always to our prudent approach on gearing.The underlying market for scientific instru
57、ments remains robust and the sectors long-term growth drivers provide comfort that the Group will continue to deliver durable returns for shareholders despite,as we have observed since 2014,the potential for some short-term variability in performance.Long-term market drivers are rooted in the global
58、 expansion of higher education and the need for improved measurement to support the relentless worldwide search for optimisation across science and industry.Our teamThis was the first year of activity for our new COO,Mark Lavelle.His contribution has been very positive and we are confident that his
59、impact on the quality of our operations will provide a strong and growing enhancement to organic profitability.Your Board was strengthened by the addition of Charles Holroyd as an independent Non-Executive Director.His general business acumen and knowledge of our sector will be of great benefit to t
60、he Group.Glynn Reece has left the Board but we are pleased that he will continue his long and successful association with Judges as Company Secretary.Of course,the good performance achieved in 2018 is primarily the result of the great competence and hard work of all our colleagues at every level.The
61、 Board and,I am sure,our shareholders are grateful for their efforts that have created such a positive performance.Alex Hambro Chairman 18 March 2019Delivering returns to our shareholders remains the core objective of the Group and as such the Board is pleased to be recommending a final dividend of
62、28p,making a total of 40p in respect of 2018,a 25%increase on the prior year.”Summary New records achieved in order intake,revenues,cash generation,adjusted pre-tax profit and adjusted earnings per share for the year ended 31 December 2018.Strong organic growth supplemented by efforts to achieve ope
63、rational excellence,highlighting the inherent commercial strength of the businesses within the Group.6Strategic reportAnnual report and accounts 2018 Judges Scientific plcChief Executives ReportFor the year ended 31 December 2018Revenues Group revenues for the financial year ended 31 December 2018 p
64、rogressed from 71.4 million to 77.9 million,an increase of 9%.This reflects Organic growth of 5.5%and the full year contribution of Oxford Cryosystems which was acquired in July 2017.For the year as a whole and excluding the business acquired since 1 January 2017(this is the meaning of“Organic”in th
65、is Report and Accounts),revenues grew strongly across most of the mature economies with UK turnover increasing by 18%,the Rest of Europe up 22%and North America up 11%.China/Hong Kong was down 8%following the strong 39%growth the previous year;the Rest of the World was down by 17%.Customers outside
66、the UK tend to appraise the value of what they purchase in currencies other than Sterling and the weakness in Sterling throughout most of the year assisted the strength of our exports.Country by country,the most impressive swings were in the USA(up 1.9 million)and in the UK(up 1.5 million)followed b
67、y the Czech Republic,Germany and Taiwan.The Group is a strong exporter and well diversified across the globe,with 27%of the Groups revenues earned in North America,30%in the Rest of Europe,10%in China/Hong Kong and 20%in the Rest of the World.Profits Profit before tax and adjusting items progressed
68、37%to 14.3 million(2017:10.4 million).Organic operating contribution was up 30%driven by improved demand throughout the Group,by good progress at the business which had suffered operating issues and by the very favourable exchange rates prevailing since the Brexit vote.The operating subsidiaries com
69、bined produced a Return on Total Invested Capital of 27.6%(2017:20.6%).The Group has continued to invest in the improvement of its existing products and the development of new products.Investment in research and development amounted to 4.6 million in 2018(2017:3.5 million),equivalent to 5.9%of Group
70、 revenue.Earnings per share was enhanced largely by the positive Organic trading performance but also by a full years ownership of Oxford Cryosystems and the impact of our increased shareholdings in Bordeaux Acquisition(from 51%to 75.5%in July 2017)and in PE.fiberoptics(from 51%to 67.5%in August 201
71、8).Basic earnings per share before adjusting items advanced by 39%from 131.9p to 183.4p;fully diluted earnings per share before adjusting items also improved 39%to 180.6p(2017:130.3p).Order intake The positive momentum benefitting the Group since June 2016 continued throughout 2018;this strength was
72、 observed across most Group companies and progress was made across all major export zones with the UK up 22%,Europe ahead by 14%,North America up by 14%and China/Hong Kong up 1%although the Rest of the World was down 15%.This resulted in a 6%increase in Organic order intake compared to 2017.The robu
73、st demand enabled the improved sales and left the Group with a healthy order book at 31 December 2018 representing 14.4 weeks of budgeted sales(2017:14.9 weeks).Cashflow The strong trading performance produced abundant cashflow with cash generated from operations of 15.7 million(2017:10.9 million).A
74、t 31 December 2018 the Group was in a net cash position with adjusted net cash excluding subordinated debt owed to non-controlling shareholders(and for 2017,including sums still due in respect of an acquisition)amounting to 0.9 million(2017:net debt of 8.0 million).Statutory net cash was 0.7 million
75、(2017:statutory net debt of 7.6 million).Dividends Your Board is recommending a final dividend of 28p per share subject to approval at the forthcoming Annual General Meeting on 22 May 2019,which will make a total distribution of 40p per share in respect of 2018(2017:32p per share).Despite the propos
76、ed 25%increase,the total dividend per share is more than four and a half times covered by adjusted earnings per share(2017:four times).The positive momentum benefitting the Group since June 2016 continued throughout 2018;this strength was observed across most Group companies and progress was made ac
77、ross all major export zones.”Summary Group revenues progressed from 71.4 million to 77.9 million,an increase of 9%,made up of organic growth of 5.5%and the full year contribution of Oxford Cryosystems which was acquired in July 2017.Total dividend per share of 40.0p,an increase of 25%and covered 4.6
78、 times by adjusted earnings per share.The long-term fundamentals supporting demand for scientific instruments remain positive.Market demand is being driven primarily by increased worldwide investment in higher education and a growing trend towards optimisation across science and industry;optimisatio
79、n requires measurement.7Judges Scientific plc Annual report and accounts 2018Acquisitions As a buy and build group,the acquisition of new businesses is a fundamental feature of Group strategy.Executing this effectively is required to ensure that long-term value is generated for shareholders.The indu
80、stry in which we operate consists of a multitude of small global niches as highlighted by the diverse nature of the new entrants to our Group.The UK is recognised in this arena as a centre of excellence for product innovation and manufacturing with world-leading businesses.Our Group has built a repu
81、tation over the past decade as an experienced and well-financed buyer and a supportive home for businesses in our sector whose owners wish to sell.We are trusted to act decisively and to complete deals under the initial terms agreed.For the businesses we acquire,the Group offers advice and support w
82、herever necessary,participates in succession planning and implements robust financial controls.We trust subsidiary management teams with the day-to-day running of their businesses.This has been a successful operating model for the Group,as management teams are given responsibility for their own dest
83、inies,as well as an environment in which they can thrive.In 2018 no acquisition was completed.This is a reflection of the disciplined attitude of your Board and the erratic nature of deal origination given that most of our acquisitions arise from the sellers intention to retire.Thirteen years after
84、Judges backed the management buy-out of PE.fiberoptics(“PFO”),one of its original founders retired.PFO offered to buy back half of its own shares using part of its surplus cash.All shareholders except Judges took advantage of the offer and,as a result,the Groups percentage holding in PFO increased f
85、rom 51%to 67.5%.Current trading and prospects Judges has started 2019 with a strong financial position and a solid order book;order intake in the first ten weeks of the new year was ahead of the corresponding prior year period.Our business will continue to be influenced by public spending around the
86、 world and trade tensions(including Brexit)could impact our performance.More significantly,Brexit will be resolved at some point and Sterlings fate ought to be driven again by economic rather than emotional factors;we are well hedged for the current year but a stronger Sterling would not be positive
87、 in the medium term.Our well diversified Group has shown its resilience and the underlying strength of our business justifies some optimism for the current year.David Cicurel Chief Executive 18 March 2019 Dividends continuedThe proposed final dividend,if approved by shareholders,will be payable on 5
88、 July 2019 to shareholders on the register on 7 June 2019 and the shares will go ex-dividend on 6 June 2019.The Companys shareholders are reminded that a Dividend Reinvestment Plan(DRIP)is in place to enable shareholders to automatically reinvest their dividends into additional Judges shares should
89、they so wish.Trading environment The long-term fundamentals supporting demand for scientific instruments remain positive.Market demand is being driven primarily by increased worldwide investment in higher education and a growing trend towards optimisation across science and industry;optimisation req
90、uires measurement.Despite these positive long-term trends,the markets across which Judges and its peers operate are characterised by a degree of shorter-term variability,influenced mostly by government spending,currency fluctuations and the business climate in major trading blocs,particularly the US
91、A and China.In smaller territories,year-on-year comparisons are not necessarily illustrative of performance,partly due to the high value of some individual orders and the long gestation period often occurring before purchasing intentions crystallise into orders and sales.Alongside these external var
92、iables,the uncertainty in research funding in the UK resulting from Brexit may have a continuing influence on commercial activity in some of our businesses.As a large percentage of the Groups sales are overseas,exchange rates have a significant influence on the Groups business:Judges manufacturing c
93、osts are largely denominated in Sterling and most of its revenue originates from countries where the standard of value is the Euro(one quarter of total revenue)or the US Dollar(two thirds of total revenue).The currency movements in the run-up to the Brexit vote and since have had a positive influenc
94、e(mitigated to an extent by hedging)on our margins and our competitiveness.Exchange rates during 2018 have been nearly the most favourable we have seen since 2009.Chief Executives Report continuedFor the year ended 31 December 20188Strategic reportAnnual report and accounts 2018 Judges Scientific pl
95、cAll text to be suppliedBusiness model and strategyBuy and build modelLong-term organic growth driversLow capital useLarge deal pool+Favourable marketTrack record of successful acquisitionsShareholder valueLong term organic growth trends inscience:global higher education;process optimisationLow work
96、ing capital requirementLarge pool of potential acquisitions in global niches Fragmented market with over 2,000 privately held businesses in the UK The UK is a recognised worldwide centre of excellence for scientific instrument development and manufacture Large pool of potential acquisitions;Judges i
97、s highly selective Judges has a strong reputation for being a good acquirerDiverse portfolioOur acquisition strategy points Trusted to honour the terms agreed Trusted to act quickly with secured funding Treats vendors and staff with respect No micromanagement post-acquisitionStrongdividendsSustainab
98、le returnsAnnual report and accounts 2018 Judges Scientific plc9Judges Scientific plc Annual report and accounts 2018Our strategyLeverage expertise and capitalWe use our knowledge of the scientific instrument sector to identify and progress suitable acquisition targets.Through longstanding relations
99、hips,we leverage our access to capital enabling us to act decisively and in a timely fashion.1Accumulate sustainable,established businessesThe companies we acquire have established reputations in worldwide niche markets.Target companies need to meet exacting performance criteria that support sustain
100、able sales,profits and cash generation.We pay three to six times EBIT according to size and borrow up to 2.5 times EBITDA at 24%depending on the Groups level of gearing.2Create an environment where businesses can thriveWe buy successful businesses with long-term futures.Our approach is to create add
101、itional opportunities through guidance,business support,expertise and capital,under an umbrella of robust financial controls.3Repay debt and reinvest profits in further acquisitionsCore value is created through the repayment of debt used to acquire target companies and organic sales growth.4Business
102、 model and strategy continuedDevelop the Group through a“buy-and-build”programme of carefully structured acquisitions,supported by long-term organic individual business development.Timeline of our acquisitionsFire Testing TechnologyUHV DesignGDS InstrumentsSircal InstrumentsQuorum TechnologiesDebenS
103、cientificaArmfieldOxford CryosystemsCoolLEDFIREDia-StronEWB SolutionsPE.fiberopticsAitchee EngineeringKE Developments2005200620072008200920102011201220132014201520162017201810Strategic reportAnnual report and accounts 2018 Judges Scientific plcPrincipal Risks and UncertaintiesInternationalcompetitiv
104、enessAcquisitionsWhy is it important?What are we doing to mitigate the risk?The most significant risk for the Group is that an acquired company does not meet its expected profitability.As an important element of the Groups business strategy is development through acquisition,the Group is also expose
105、d to the risk of insufficient availability of target companies of requisite quality or available within the disciplined price range to which the Group adheres.The Group manages these risks by maintaining relationships with organisations that market appropriate targets and by performing detailed rese
106、arch into potential acquisitions;post-acquisition,the Group provides advice and support to entity management teams as appropriate,in order to facilitate their ongoing performance.Key personnelWhy is it important?What are we doing to mitigate the risk?The Groups future success is dependent on its sen
107、ior management and key personnel and,given the small niche-serving nature of the Groups businesses,there is always a challenge to maintain back-up support in respect of key roles or replace key staff should they leave our organisation.Finding quality executives in our sector is a challenge and it ca
108、n take a long time to replace and/or to prove the suitability of any new executive.The Group encourages succession planning wherever possible and seeks to provide a positive work environment with opportunities for career growth coupled with appropriate remuneration and,where appropriate,longer-term
109、rewards.Currency and foreign exchangeWhy is it important?What are we doing to mitigate the risk?The Group exports the large majority of its products,hence it is exposed to fluctuations in exchange rates which may impact on its competitiveness.Brexit has temporarily improved exchange rates but may ca
110、use uncertainty and greater volatility in the medium term alongside any wider global economic risk.The Group seeks,so far as is practicable,to mitigate these currency effects for the financial year via hedging foreign exchange rates but foreign exchange fluctuations affect the Groups competitiveness
111、 in the medium term.Additional detail is set out in note 25.11Judges Scientific plc Annual report and accounts 2018Economic conditionsWhy is it important?What are we doing to mitigate the risk?The Groups customers are internationally located and are often state owned or those whose liquidity are clo
112、sely linked to government spending.Accordingly,the prevailing uncertainties in the world economy,and particularly the borrowing constraints currently affecting many western nations,represent a risk to the Groups prospects.The Group seeks to trade globally as it operates in small worldwide niches.In
113、the short to medium term,the decision by the UK to leave the EU also creates some uncertainty as it is still not yet clear what shape Brexit will have and hence its impact on Research funding in the UK,on the UK economy and on foreign exchange rates.R&D and products Why is it important?What are we d
114、oing to mitigate the risk?The Group continues to invest in the development of new products to meet the needs of our end customers.There is a risk that our businesses may be unable to develop suitably commercial and technically reliable new products with which to maintain and drive revenue performanc
115、e.There is also a risk that new developments in science will make certain of the Groups products obsolete.The Group maintains a focus on ensuring there are ongoing R&D roadmaps for our businesses and that we continue to invest in well-trained and qualified R&D and operations teams to deliver quality
116、,well-engineered products for our customers.CompetitionWhy is it important?What are we doing to mitigate the risk?The Group faces competition across all its businesses and there can be no certainty that each business will achieve the market penetration it seeks.There is also no guarantee that there
117、will be no new competition or new entrant to the market with better products.The Group seeks to mitigate this through detailed market analysis when considering acquisitions and seeks to acquire companies in small global niches.Additionally,the Group continues to listen carefully to its customers asp
118、irations for product development and,where possible,satisfy those product development requests.On behalf of the BoardDavid CicurelDirector18 March 2019Company registration number:04597315Principal Risks and Uncertainties continued12Strategic reportAnnual report and accounts 2018 Judges Scientific pl
119、cThe Group has four Key Performance Indicators,which are aligned with the ability to reduce acquisition debt and fund dividend payments to shareholders.All four KPIs have improved in 2018 which reflects positive,profitable order intake across the business and its subsequent conversion into cash.”Fin
120、ance Directors ReportFor the year ended 31 December 2018The Groups strategy is based on the acquisition of companies operating in the scientific instruments sector and the continuing generation of profitable performance at its existing subsidiary businesses.The Groups Key Performance Indicators,whic
121、h are aligned with the ability to reduce acquisition debt and fund dividend payments to shareholders,are earnings per share,operating margins,return on invested capital and cashflow generation.All four KPIs have improved in 2018 which reflects positive,profitable order intake across the business and
122、 its subsequent conversion into cash.Revenue Group revenues grew to 77.9 million compared to 71.4 million in 2017,an increase of 9%.This positive revenue growth included 5.5%organic growth in the year(2017:17.8%),which was driven by pleasing performance across our businesses as a whole.The Groups 20
123、17 acquisition also performed as expected.The overall revenue growth was supported by both segments.The Materials Sciences segment revenues grew by 1.0 million to 35.1 million,an increase of 2.8%,and Vacuum revenues improved by 14.9%to 42.8 million(2017:37.3 million).Profits Adjusted operating profi
124、ts grew strongly to 14.7 million from 10.9 million in 2017,an increase of 35%.This improvement was driven by the strong revenue growth and,as a Group that exports more than 85%of our goods,we also benefited from the continued weakness in Sterling albeit to a slightly lesser degree than in 2017.As ou
125、r business has a fairly high fixed cost base,marginal sales improve operating performance,and hence we have seen operating margins continue to improve to 18.9%(2017:15.2%).This margin increase was also supported by significant improvement at the business which had production issues.Adjusted profit b
126、efore tax was 14.3 million compared to 10.4 million in 2017,an increase of 37%.Statutory operating profit increased to 10.7 million(2017:5.7 million),and statutory profit before tax was 10.2 million compared to 5.1 million in 2017.Adjusting items The total pre-tax adjusting items recorded in 2018 we
127、re 4.1 million compared to 5.3 million in 2017.Amortisation of intangible assets recognised upon acquisition,as required under IFRS,totalled 3.6 million compared to 4.6 million last year and due to no acquisitions being completed in the year,there were minimal acquisition costs compared to 0.3 milli
128、on during 2017.Finance costs Net finance costs(excluding adjusting items)totalled 0.4 million(2017:0.5 million).Statutory net finance costs were 0.5 million(2017:0.6 million);the difference is due to the 0.1 million net finance cost of the defined benefit pension scheme acquired with Armfield in 201
129、5.Taxation The Groups tax charge arising from adjusted profit before tax was 2.1 million(2017:1.5 million).The effective tax rate for adjusted profit is 15.0%compared to 14.2%in 2017.The effective tax rate is influenced by the wider regime of reducing UK and US corporate tax rates and by claims for
130、UK research and development tax credits.This year our effective tax rate has increased as our Groups performance has greatly improved and this has reduced,on a percentage basis,the beneficial impact of R&D tax credits.We continue to perform well in the US however the expected increase in tax payable
131、 from this improved performance was mitigated somewhat by the reductions in US Federal tax rates.At the same time,we are still benefiting from a tax rate lower than the standard UK corporation rate and whilst we remain an SME for R&D tax credits,as the Group has less than 500 employees,the Group,as
132、an investor in R&D,will derive benefit from this scheme.Earnings per share Adjusted basic earnings per share significantly improved to 183.4p,compared to 131.9p in 2017,an increase of 39.0%and adjusted diluted earnings per share increased by 38.6%to a total of 180.6p(2017:130.3p).Statutory basic ear
133、nings per share,after reflecting adjusting items which are influenced by the amortisation of intangible assets arising from recent acquisitions,was 137.5p(2017:65.6p)and statutory diluted earnings per share totalled 135.4p(2017:64.8p).Order intake The Group benefited from strong organic order intake
134、 throughout 2018 which followed the positive trend seen through the second half of 2016 and all of 2017.Overall organic order intake was up by 6.2%compared to 2017,and this consistent order intake fuelled the strong performance in 2018 and has given the Group a robust order platform to start 2019.Yo
135、ur Board considers order intake and the resultant year-end order book as an important bellwether to the Groups ability to achieve its expected results.Our order book at 1 January 2019 was a robust 14.4 weeks of budgeted sales(1 January 2018:14.9 weeks).13Judges Scientific plc Annual report and accou
136、nts 2018Return on capital The Group closely monitors the return it derives on the capital invested in its subsidiaries.At 31 December 2018 the annual rate of Return on Total Invested Capital(“ROTIC”)was 27.6%which compares favourably with 20.6%at the end of 2017.This shows that the Groups momentum c
137、ontinues following the recovery in 2017,and reflects continuing good overall performance across our businesses.The annual rate of ROTIC is calculated by comparing attributable earnings excluding central costs,adjusting items and before interest,tax and amortisation(“EBITA”)with the amounts invested
138、in plant and equipment,unamortised intangibles and goodwill and net current assets(excluding cash).ROTIC is influenced by the overall performance of our businesses and the size of,and multiple paid for,acquisitions.We continue to strive to improve ROTIC although we remain cognisant of the downward i
139、mpact that acquiring businesses at higher multiples has on overall ROTIC.Dividends In relation to the financial year ended 31 December 2018 the Company paid an interim dividend of 12.0p per share in November 2018.The Board is recommending a final dividend of 28.0p per share giving a total dividend f
140、or the year of 40.0p per share(2017:32.0p per share),an increase of 25%.Dividend cover is more than four and a half times adjusted earnings per share.Your Groups policy is to pay a progressively increasing dividend provided the Group retains sufficient cash and borrowing resources with which to purs
141、ue its longstanding business acquisition policies.Headcount The Groups total number of employees at year end stood at 483(2017:456).The change in staff numbers during the year was mainly attributable to growth in manufacturing staff required to meet increased demand.Share capital and share options T
142、he Groups issued share capital at 31 December 2018 totalled 6,196,678 Ordinary shares(2017:6,141,128).The shares issued during 2018 arose from the exercise of share options by various members of staff during the year.Share options issued during the year under the 2015 scheme totalled 4,000(2017:85,7
143、92)and the total share options in issue at the year end under both the 2005 and 2015 schemes amounted to 249,675(2017:306,203).Defined benefit pension scheme The Group has a defined benefit pension scheme which was assumed as part of the acquisition of Armfield Limited(“Armfield”)in 2015.This scheme
144、 has been closed to new members from 2001 and closed to new accrual in 2006.The next full actuarial valuation for the scheme will be in 2020 and,subject to this valuation,the annual contributions to the scheme are 0.2 million.The Group accounts for postretirement benefits in accordance with IAS 19 E
145、mployment Benefits.The Consolidated Balance Sheet reflects the net deficit on the pension scheme,based on the market value of the assets of the scheme and the valuation of liabilities using year-end AA corporate bond yields.At 31 December 2018,the pension liability(net of deferred tax)was 1.5 millio
146、n(31 December 2017:1.8 million).The net liability has reduced due to an increase in discount rates during 2018 from 2.5%to 2.8%together with a slight shortening in post-retirement mortality rates,partially offset by reductions in fund assets.Armfield takes its responsibility seriously to ensure the
147、pension is adequately funded whilst also continuing to review appropriate deficit control strategies.Cashflow and net debt This years strong trading performance has resulted in cash generated from operations of 15.7 million(2017:10.9 million).The Group has a strong track record of converting profit
148、into cash,and this is reflected in the high cash conversion rate of 106%(2017:100%).Total capital expenditure on property,plant and equipment amounted to 1.0 million(2017:0.7 million).Year-end cash balances totalled 15.7 million compared to 10.7 million in 2017.The Group ended 2018 in a position of
149、0.9 million of adjusted net cash which compares to 8.0 million of adjusted net debt at the end of 2017,an improvement of 8.9 million.Statutory net cash was 0.7 million(2017:statutory net debt of 7.6 million).This improvement resulted from the strong operational performance across our businesses as a
150、 whole and underpins the business model we are continuing to deliver,enabling investment in acquisitions and the Groups growing dividend(2.1 million).We achieved net cash at 31 December 2018,such that gearing was negative compared to 31 December 2017,which was 0.73 times adjusted operating profit.We
151、 remain committed to maintaining a conservative gearing position whilst at the same time taking the opportunities of acquiring strong,sound businesses at disciplined multiples as illustrated over the history of our Group.The Groups financial position continues to be strong.As noted in my report last
152、 year,we were seeking to renew our banking facilities and,in April 2018,the Group entered into new banking facilities(“Facility”)with Lloyds Banking Group(the“Bank”)which replaced its existing banking arrangements.At the point of refinancing,the Group had a total of 12.9 million outstanding.The Faci
153、lity is for an aggregate 35.0 million consisting of a 10.0 million term loan(“Term Loan”),a committed 20.0 million revolving credit facility(“RCF”)plus a 5.0 million accordion facility,which can be drawn at the discretion of the Bank.The Facility has a five-year term(“Borrowing Term”)with covenants
154、and interest consistent with the previous bank facilities.The Term Loan amortises on a straight-line basis over the Borrowing Term by quarterly instalments.The RCF is repayable in a bullet at the end of the Borrowing Term.The existing lending facilities via Bordeaux Acquisition(“Bordeaux”),the Group
155、s 75.5%owned subsidiary,which owns Deben UK and Oxford Cryosystems,remain unchanged.We continue to appreciate the support of Lloyds Banking Group and the new Facility provides the Group with further capacity to finance acquisitions to support the Groups buy and build strategy.Overall,your Group has
156、had a positive year for performance and we are well placed,with a strong balance sheet and significant available borrowing capacity,to continue with its enduring strategy of achieving growth in earnings via selective acquisitions of strong niche businesses in the scientific instruments sector,alongs
157、ide the ongoing performance of its existing businesses.Brad Ormsby Group Finance Director 18 March 2019Finance Directors Report continuedFor the year ended 31 December 201814Strategic reportAll text to be suppliedAnnual report and accounts 2018 Judges Scientific plc15Governance reportGovernance repo
158、rt16 Board of Directors18 Corporate Governance Statement21 Audit Committee Report22 Remuneration Report25 Directors reportJudges Scientific plc Annual report and accounts 2018Board of DirectorsOur BoardProviding a unique combination of international business,investor and financing experience across
159、public and private markets.R NR ER ER ER R RHon.Alexander Hambro ChairmanAlex Hambro has been active in the private equity sector both in the UK and the USA for some 30 years,during which time he acted as a principal investor,manager and sponsor of private equity and venture capital management teams
160、.In addition to his responsibilities at Judges Scientific plc,Alex is also Chairman of Bapco Closures Holdings Ltd and a Non-Executive Director of Octopus Apollo VCT plc,Hertsford Capital plc,Whitley Asset Management Ltd and Crescent Capital Ltd.Alex is currently a founder partner of Welbeck Capital
161、 Partners LLP,a specialist investment syndicate that deploys secured convertible loan notes to finance growth opportunities for small-cap AIM companies.David Cicurel Chief ExecutiveDavid Cicurel founded Judges in 2002 having spent much of his career as a turnaround specialist and,subsequently,as an“
162、active value”investor operating with his own funds.He has been 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.Brad OrmsbyGroup Finance Director
163、Brad Ormsby is a Chartered Accountant who has significant senior finance and operational experience acquired during nine years at PwC followed by six years at Eurovestech plc,the pan-European development capital fund,and associated companies.Prior to joining Judges Scientific in 2015,Brad was Chief
164、Financial Officer at Kalibrate Technologies plc where he led the companys IPO.Mark LavelleChief Operating OfficerMark Lavelle gained sales&marketing experience with PerkinElmer,and finance experience with Bank of America in London and the USA,then moved into Industrial general management,most recent
165、ly with 15 years at Halma plc.At Halma he was Managing Director of two separate businesses(in Medical Devices and Ion Beam Coating),ran Acquisitions for the group,and led two Divisions(Industrial Safety and Water Analysis&UV)comprising a total of 15 companies in the UK,Europe,the USA and Asia-Pacifi
166、c.He also had responsibility for Innovation at Halma,and subsequently the groups Indian presence.He has been a Pension trustee for the last 12 years.Mark is a Chemistry graduate of the University of Cambridge and holds an MBA from INSEAD in France.16Governance reportAnnual report and accounts 2018 J
167、udges Scientific plcCommittee membershipNon-ExecutiveR R NIndependentR R IAudit CommitteeR R ARemuneration CommitteeR R RRalph CohenNon-Executive Ralph Cohen was the Finance Director of Judges Scientific plc for nearly ten years until his retirement in April 2015.He held various senior executive pos
168、itions within the energy and water divisions of the Paris based Vivendi group between 1981 and 2001,including eight years as Finance Director of a listed subsidiary,followed by positions as Managing Director within that group.He previously spent nine years at Ernst&Young.Latterly he was the founding
169、 partner of MC Consultancy Services,where he was closely associated with major projects,including electricity supply opportunities in Europe and M&A projects.He is also the Non-Executive Chairman of AIM-listed Y Group PLC.Ralph Elman Non-ExecutiveRalph Elman is a former Finance Director of quoted co
170、mpanies Paramount plc,Delyn plc and International Communication&Data plc and Finance Director of businesses within GUS plc and RR Donnelley.Ralph was Senior Partner of accountancy firm Elman Wall and is a Non-Executive Director of a number of private companies.He is Chairman of the Judges Audit Comm
171、ittee.Glynn ReeceCompany SecretaryGlynn Reece is a graduate of Oxford University and a qualified solicitor.Since 1987,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.He is cu
172、rrently a Proprietor of Carl Reiss Meyer,a business that acts as an arranger of pre-flotation finance for small fast growing companies.Charles HolroydNon-Executive Charles Holroyd has a BSc in Electrical and Electronics Engineering from the University of Bristol and an MBA from INSEAD.He is a Charte
173、red Engineer and a Fellow of the Institution of Engineering and Technology.Charles has held senior management positions within a number of publicly quoted companies.Most recently Charles worked at Oxford Instruments plc,which he joined in 1999 and where he served on the board from 2005 until 2013 an
174、d was responsible for group business development including M&A activities.He is the Senior Independent Director and is Chairman of the Remuneration Committee.R R AR R AR R RR R AR R RR IA A NA A NA A NA A N17ExecutiveA A EJudges Scientific plc Annual report and accounts 2018Corporate Governance Stat
175、ementIntroduction I have pleasure in introducing the Corporate Governance Statement.In accordance with the requirements of being AIM quoted we recognise that the application of sound corporate governance is essential in the Groups ongoing success and adopt the principal provisions of the QCA Corpora
176、te Governance Code for Small and Mid-Size Quoted Companies(“QCA guidelines”).This report sets out our approach to Judges governance.Board compositionThe Board is responsible to the shareholders and sets the Groups strategy for achieving long-term success.It is also ultimately responsible for the man
177、agement,governance,controls,risk management,direction and performance of the Group.During the year the Board comprised of three Executive Directors,together with the Non-Executive Chairman and three further Non-Executive Directors.On 1 June 2018,Charles Holroyd was appointed as the Senior Independen
178、t Non-Executive Director,replacing Glynn Reece who stepped down from the Board.Glynn Reece remains with the Group as Company Secretary.Charles has a BSc in Electrical and Electronics Engineering from the University of Bristol and an MBA from INSEAD and is a Chartered Engineer and a Fellow of the Ins
179、titution of Engineering and Technology.Charles has held senior management positions within a number of publicly quoted companies.Most recently,Charles worked at Oxford Instruments plc from 1999 where he served on the board from 2005 until 2013 and was responsible for group business development.The G
180、roup now has one independent Non-Executive Director although under the QCA guidelines,all other Non-Executive Directors are not considered independent by virtue of their tenure,as they have served more than nine years from the date of their first election or were previously an Executive Director of
181、the Company.At the same time,the Company considers that these Non-Executive Directors act independently of the Executive management and that the value of their long association with the Company alongside their deep understanding of the Groups business model ensures that they are best placed to appro
182、priately police adherence to the Groups enduring strategy,which continues to provide shareholders with long-term market-beating performance.Board operationThe Board is responsible for the Companys strategy and for its overall management.The operation of the Board is documented in a formal schedule o
183、f matters reserved for its approval,which is reviewed annually.These include(although not exhaustively)matters relating to:the Groups strategic aims and objectives;the approval of significant acquisitions and expenditure;financial reporting,financial controls and dividend policy;the structure,capita
184、l and financing of the Group;internal control,risk and the Groups risk appetite;effective communication with shareholders;and any changes to Board membership or structure.Board decision makingThe Board has a schedule of matters covering business,financial and operational matters ensuring that all ar
185、eas of Board responsibility are addressed throughout the year.The Chairman,supported by the Company Secretary,is responsible for ensuring the Directors receive accurate and timely information.The Company Secretary compiles the Board papers which are circulated to Directors in advance of meetings.The
186、 Company Secretary prepares and provides minutes of each meeting and every Director is aware of the right to formally minute any concerns.Board meetingsThe main Board meets monthly(except in August)in addition to any ad hoc Board meetings that may be required during the year.Non-Executive Directors
187、communicate directly with Executive Directors between formal Board meetings as required.Directors are expected to attend all meetings of the Board,and the Committees on which they sit,and to devote sufficient time to the Companys affairs to enable them to fulfil their duties as Directors.In the even
188、t that Directors are unable to attend a meeting in person they will endeavour to attend via phone,Skype or similar arrangement.Where they cannot attend,their comments on papers to be considered at the meeting will be discussed in advance with the Chairman so that their contribution can be included i
189、n the wider Board discussion.In accordance with the requirements of being AIM quoted we recognise that the application of sound corporate governance is essential in the Groups ongoing success.”18Governance reportAnnual report and accounts 2018 Judges Scientific plcThe Directors attendance at Board a
190、nd Committee meetings during the year is disclosed in the table below:BoardAuditRemunerationAR Hambro11/111/12/2DE Cicurel11/11BL Ormsby11/11MS Lavelle 11/11RL Cohen11/113/31/1RJ Elman10/113/32/2CJA Holroyd(appointed 1 June 2018)6/61/1GC Reece(retired 1 June 2018)5/51/1Board CommitteesThe Board has
191、delegated specific responsibilities to the Audit and Remuneration Committees,details of which are set out below.As the Board is small,there is no separate nominations committee and consideration of future recommendations for appointments to the Board is considered by a committee of Directors set up
192、at that time.In the recent appointment of Charles Holroyd,a committee of the Chairman,Chief Executive and one other Non-Executive Director was set up to oversee the recruitment process and propose a recommendation to the Board.Each Committee has written terms of reference setting out its duties,auth
193、ority and reporting responsibilities.Copies of all the Committee terms of reference are available on the Companys website()or on request from the Company Secretary.The terms of reference of each Committee are kept under continuous review to ensure they remain appropriate to the Group.Each Committee
194、is comprised of three of the Non-Executive Directors of the Company.The Company Secretary is the secretary of each Committee.Audit CommitteeThe Audit Committee is chaired by Ralph Elman and the other members are Ralph Cohen and Charles Holroyd.Glynn Reece stepped down from this Committee on 1 June 2
195、018 when Charles Holroyd was appointed.The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on.It receives and reviews information and reports from the Groups manageme
196、nt and Auditor relating to the annual financial statements and the accounting and internal control systems in use throughout the Group.It also advises the Board on the appointment of the Auditor,reviews their fees and discusses the nature,scope and results of the audit with the Auditor.The Audit Com
197、mittee meets at least twice a year and has unrestricted access to the Groups Auditor.The Executive Directors and the Chairman attend the Committee meetings by invitation as required.The Audit Committee Report on page 21 contains more detailed information on the Committees role.Remuneration Committee
198、The Remuneration Committee is chaired by Charles Holroyd,the Senior Independent Non-Executive Director.The other members of this Committee are Ralph Elman and Alex Hambro.Alex Hambro stepped down as Chairman of the Remuneration Committee after the appointment of Charles Holroyd.The Remuneration Comm
199、ittee reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment.The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incenti
200、ves pursuant to any share option scheme or equity incentive scheme in operation from time to time.The remuneration and terms and conditions of appointment of the Non-Executive Directors of the Company are set by the Board.The Chief Executive and Group Finance Director are invited to attend for some
201、parts of the Committee meetings where their input is required although they do not take part in any discussion on their own benefits and remuneration.The Remuneration Committee meets at least once per year.The Remuneration Report on pages 22 to 24 contains more detailed information on the Committees
202、 role and the Directors remuneration and fees.Board effectivenessBiographies of the Board on pages 16 and 17 set out the skills,knowledge and experience of the Board and this mix of capabilities enables them to constructively challenge strategy and review performance.Induction of new DirectorsNew Di
203、rectors undergo a programme tailored to the existing knowledge and experience of the Director concerned and ensures they develop the requisite knowledge about the Group such that they can contribute fully from an early stage.Following the appointment of Charles Holroyd in June 2018,his induction inc
204、luded visits to all the Groups businesses to develop his knowledge of the Group.Time commitmentsAll Directors are aware of the time required to fulfil the role prior to appointment and have confirmed their ability to meet the required commitment prior to appointment.This requirement is also included
205、 in their letters of appointment or service contract.The Board is satisfied that the Chairman and each of the Non-Executive Directors is able to devote sufficient time to the Group.DevelopmentThe Company Secretary ensures that all Directors are made aware of changes in relevant legislation and regul
206、ations,with the assistance of the Companys advisers where appropriate.Executive Directors are subject to the Companys performance development review process and will obtain additional professional training as appropriate.External appointmentsIn the appropriate circumstances,the Board may authorise E
207、xecutive Directors to take Non-Executive positions in other companies and organisations,provided the time commitment does not impact upon the Directors ability to perform their role,since such appointments should widen their experience.The Chairman will approve any such appointment.19Judges Scientif
208、ic plc Annual report and accounts 2018Corporate Governance Statement continuedBoard effectiveness continuedConflicts of interestThe Board regularly reviews any Directors conflicts of interest.The Companys Articles of Association provide for the Board to authorise any actual or potential conflicts of
209、 interest.Independent professional adviceDirectors have access to independent professional advice at the Companys expense.In addition,they have access to the advice and services of the Company Secretary who is responsible to the Board for advice on corporate governance matters.Directors and Officers
210、 liability insuranceThe Company has obtained Directors and Officers liability insurance during the year as permitted by the Companys articles.Election of DirectorsIn accordance with the Companys Articles of Association,Ralph Cohen and Ralph Elman will retire and offer themselves for re-election at t
211、he Annual General Meeting.Charles Holroyd will present himself for appointment.Performance evaluationThe Chairman meets with each of the Directors and assesses their effectiveness.He is also responsible for the Executive composition of the Board as evidenced through his Chairmanship of the sub-commi
212、ttee which was responsible for the recruitment of the Groups new Chief Operating Officer.The Chief Executive assesses each Executive Director and provides informal feedback on their performance on a timely basis.Internal controlsThe Board has ultimate responsibility for the Groups system of internal
213、 control and for reviewing its effectiveness.However,any such system of internal control can provide only reasonable,but not absolute,assurance against material misstatement or loss.The Board considers that the internal controls in place are appropriate for the size,complexity and risk profile of th
214、e Group.The principal components of the Groups internal control system include:overview of the day to day activities of the Group by the Executive Directors;all proposed acquisitions are comprehensively reviewed by the Board;a comprehensive annual budgeting process which is approved by the Board;a d
215、ecentralised organisational structure with defined levels of responsibility for all trading subsidiaries,to encourage principled entrepreneurial behaviour whilst minimising risks;rotational visits by the Board to the trading subsidiaries;detailed monthly reporting of performance against budget and f
216、orecast;and central control over key areas such as cash/banking facilities and capital expenditure.The Group continues to assess and develop its internal control system to ensure compliance with best practice for a Group of its size.The Board considers that the introduction of an internal audit func
217、tion is not currently appropriate.Relations with shareholdersThe Group maintains communication with institutional shareholders through individual meetings with Executive Directors,particularly following publication of the Groups interim and full year results.All shareholders are encouraged to attend
218、 the Annual General Meeting which is on 22 May 2019(full details in the Directors Report on pages 25 and 26)at which the Groups activities are considered and questions answered.General information about the Group is also available on the Groups website().This includes a Group overview,detailed infor
219、mation about our trading businesses,details of all recent Group announcements and other relevant investor information.WhistleblowingThe Group has had in place for several years a whistleblowing policy which sets out the formal process by which an employee of the Group may,in confidence,raise concern
220、s about possible improprieties in financial reporting or other matters.Whistleblowing is a standing item on the Boards agenda with updates provided at each meeting.During 2018,there were no incidents for consideration.Alex HambroChairman18 March 201920Governance reportAnnual report and accounts 2018
221、 Judges Scientific plcAudit Committee ReportFor the year ended 31 December 2018On behalf of the Board,I am pleased to present the Audit Committee report for the year ended 31 December 2018.Composition of the CommitteeThe Committee consists of myself(as Chairman),Ralph Cohen and Charles Holroyd.The C
222、hairman and Executive Directors may be invited to attend Committee meetings if required.During the year,the Committee met three times,to review the audit and interim findings and approve the audit plan.The Board is satisfied that I,as Chairman of the Committee,have recent and relevant financial expe
223、rience.I am a Chartered Accountant,I have served as Finance Director in a number of quoted companies and am Non-Executive Director of a number of other companies.Glynn Reece acts as Secretary to the Committee.I report the Committees deliberations at the next Board meeting and the minutes of each mee
224、ting are made available to all members of the Board.Executive Directors may be invited to attend Audit Committee meetings as required.Responsibilities The main duties of the Audit Committee are set out in its Terms of Reference,which are available on the Companys website()and are available on reques
225、t from the Company Secretary.The Committees main duties are to:ensure the integrity of the financial statements(including annual and interim accounts and results announcements);review significant financial reporting judgements and the application of accounting policies thereon;ensure the Annual Repo
226、rt and Accounts are fair,balanced and understandable and recommend their approval to the Board;manage the relationship with the Groups external Auditor and review their suitability and independence;negotiate and approve the external Auditors fee,the scope of their audit and terms of engagement;advis
227、e on the appointment of external Auditors and to review and monitor the extent of the non-audit services undertaken by the Groups external Auditor;review of the risk management and internal control systems;review the assessment of going concern;and assess the need for an internal audit function.Role
228、 of the external AuditorThe Audit Committee monitors the relationship with the external Auditor,Grant Thornton UK LLP,to ensure that auditor independence and objectivity are maintained.As part of its review the Committee also monitors the provision of non-audit services by the external Auditor.An an
229、alysis of fees shared between audit and non-audit services is disclosed in note 8 to the Groups financial statements.Non-audit fees charged by Grant Thornton UK LLP to the Group relate to the provision of financial due diligence services to the Group and were less than 100%of the annual audit fee.No
230、 issues impacting upon the Auditors independence were observed or brought to the Committees attention.Audit processThe external Auditor prepares an audit plan for its review of the full year financial statements.The audit plan sets out the scope of the audit,specific areas of risk to target and audi
231、t timetable.This plan is reviewed and agreed in advance by the Audit Committee.Following its review,the Auditor presented their findings to the Audit Committee for discussion.No matters of significant concern relating to either the Groups internal controls or accounting practices were highlighted by
232、 the Auditor during the year,however,areas of significant risk and other matters of audit relevance are regularly communicated.Internal auditAt present the Group does not have a formal internal audit function and the Committee considers that management is able to derive assurance as to the adequacy
233、and effectiveness of internal controls and risk management procedures without one.As part of the Groups development,a formal internal audit function is intended to be put in place during 2019.Risk management and internal controlsAs described in the Corporate Governance Statement on pages 18 to 20,th
234、e Group has established a framework of risk management and internal control systems and procedures.The Audit Committee is responsible for reviewing the risk management and internal control framework and ensuring that it operates effectively.During the year,the Committee has reviewed the framework an
235、d the Committee is satisfied that the internal control systems in place are currently operating effectively.During 2019,additional focus is being given to internal controls relating to banking arrangements.Ralph ElmanAudit Committee Chairman18 March 2019 21Judges Scientific plc Annual report and acc
236、ounts 2018Remuneration ReportFor the year ended 31 December 2018On behalf of the Board,I am pleased to present the 2018 Directors Remuneration Report,which sets out the remuneration policy and the Directors remuneration for the year.Composition of the CommitteeThe Committee consists of myself(as Cha
237、irman),Alex Hambro and Ralph Elman.Alex Hambro stepped down as Chairman of this Committee after my appointment during 2018.The Chief Executive and Group Finance Director may be invited to attend Committee meetings if required.The Committee met twice during the year.Executive Director remuneration po
238、licyOur remuneration arrangements are designed simply to align the interests of the Executive Directors with shareholders over the short and longer term.The Committee is aware of recent developments in corporate governance and good practice in Executive remuneration and ensures that it is able to be
239、nchmark Executive remuneration against similar AIM quoted businesses,in order to attract,motivate and retain high quality individuals who will,over time,contribute to the ongoing success of the Group.No external remuneration consultants are currently utilised to support the Committees deliberations.
240、To achieve our goal of alignment between shareholders and the Executive Directors,the Group provides competitive pay,split between fixed and performance-related elements.Overall remuneration is reviewed annually and the key elements are explained below:Base salaryThis is set to reflect the market va
241、lue of the role and the individuals performance and contribution to the Group.Base salary is reviewed annually with any changes applied from 1 January.Pension and other benefitsThe Group provides matching contribution of up to 5%of base salary.Additionally,the Group may provide additional benefits s
242、uch as private healthcare,car allowance and life assurance.Annual bonusThe annual bonus for the Executive Directors is set at 25%of base salary upon achieving annual earnings per share targets set within the budget.Additionally,no bonus can be achieved if earnings per share is below a historical hig
243、h watermark.Share optionsShare options are issued to incoming Executive Directors and/or in the course of their employment in order to drive sustained long-term performance supporting the creation of shareholder value.Share options are issued at market value and vest over a period of three years,and
244、,presently,do not have any further performance criteria,although this is under review for future awards.Non-Executive Director fee policyNon-Executive Director fees are set such that the Chairman and Non-Executive Directors receive a base fee for their respective roles designed to be comparable to s
245、imilar AIM quoted companies.Further fees are payable for additional services such as chairing any of the Boards Committees.Fees payable to the Chairman and Non-Executive Directors are fixed and determined by the Board and are reviewed at least every three years.Key Committee activities in 2018The Re
246、muneration Committee operates under the Groups agreed Terms of Reference and determines the Groups remuneration policy in respect of the terms of employment of Executive Directors and their remuneration packages.During the year the Committee met twice and its main activities were:approval of Executi
247、ve Directors bonuses relating to 2017;benchmarking of and review of Executive Director remuneration arrangements for 2019;determining the performance target for the 2019 Executive Director annual bonus arrangements;and review of developments in corporate governance and best practice.Service contract
248、sExecutive DirectorsThe Executive Directors are all employed on service contracts.These are not of a fixed duration and are terminable by either party giving 12 months written notice.Executive Director Date of Service ContractDE Cicurel 24 December 2002BL Ormsby3 March 2015MS Lavelle 15 November 201
249、7Non-Executive DirectorsThe Non-Executive Directors signed letters of appointment with the Company upon appointment for the provision of Non-Executive Directors services,terminable by three months written notice given by either party.Non-Executive DirectorAppointment DateHon.AR Hambro24 December 200
250、2RJ Elman25 October 2005RL Cohen1 May 2015CJA Holroyd1 June 201822Governance reportAnnual report and accounts 2018 Judges Scientific plcDirectors remunerationThe remuneration paid to or receivable by each person who served as a Director during the year was as follows:Salary/fees 000Bonus 000Pension0
251、00Benefits 0002018 total 0002017 total 000Non-Executive DirectorsHon.AR Hambro393940CJA Holroyd(appointed 1 June 2018)1616RL Cohen 262626RJ Elman303030GC Reece(retired 1 June 2018)202048Executive DirectorsDE Cicurel170435218213BL Ormsby 1503782197183MS Lavelle 1684281823623D Barnbrook(retired 31 Dec
252、ember 2017)241Total6191221625782804The 2018 annual bonus of 25%of base salary was awarded to the Executive Directors as a result of exceeding the earnings per share target.In April 2018 BL Ormsby exercised 30,000 share options resulting in a gain on exercise of 256,000.No other Directors exercised o
253、ptions over the Ordinary shares of the Company(2017:no Directors).Implementation of remuneration policy for 2019Base salaryDuring the year,the Committee reviewed the base salary of the Executive Directors and considered individual performance,experience and comparable salary rates and approved the f
254、ollowing salaries for 2019:20190002018000DE Cicurel190170BL Ormsby166150MS Lavelle172168Pension and other benefitsMark Lavelle receives 5%of his base salary as cash in lieu of contributions into a pension scheme and also receives a car allowance.Brad Ormsby receives matched pension contributions of
255、5%of his salary.Chairman and Non-Executive feesThe Chairman and Non-Executive Directors fees were amended as of 1 January 2017 and fixed for three years as follows:000Chairman base fee36Non-Executive Director base fee26Fee for chairing Audit or Remuneration Committee423Judges Scientific plc Annual r
256、eport and accounts 2018Directors interestsAt 31 December 2018,the Directors had the following beneficial interests in the Companys Ordinary shares of 5p each and options to subscribe for shares:Ordinary shares of the Company31 December 20181 January 2018SharesOptionsSharesOptionsNon-Executive Direct
257、orsHon.AR Hambro64,00064,000RL Cohen64,3411,77564,3411,775RJ Elman62,43562,402CJA Holroyd2,016Executive DirectorsDE Cicurel759,3399,275759,2429,275BL Ormsby2,58430,00039260,000MS Lavelle17560,00060,000Dividends paid in the year to Directors who hold shares amounted to 325,000 in aggregate(2017:306,0
258、00).In 2018,the Group continued to award a free“matching share”under the Judges Scientific Share Incentive Plan for every share purchased up to a maximum value of 600 per employee per tax year for all eligible employees who have completed 3 months service within the Group.Shares acquired by Director
259、s,including matching shares,were 97 shares acquired by DE Cicurel(2017:136 shares),96 shares by BL Ormsby(2017:134 shares)and 175 shares by MS Lavelle(2017:nil shares).Options over Ordinary shares in the CompanyNumber of sharesDate of option issueDE CicurelMS LavelleBL OrmsbyRL Cohen2005 Option Sche
260、me28 April 2008 at 124p23 July 2009 at 92p9 May 2011 at 470p25 October 2013 at 1690p1,7751,77530 March 2015 at 1437.5p30,0002015 Option Scheme21 October 2015 at 1402.5p7,50023 November 2017 at 1935.0p60,0009,27560,00030,0001,775Charles HolroydRemuneration Committee Chairman18 March 2019Remuneration
261、Report continuedFor the year ended 31 December 201824Governance reportAnnual report and accounts 2018 Judges Scientific plcDirectors reportFor the year ended 31 December 2018The Directors present their report and audited consolidated financial statements for the year ended 31 December 2018.Comparati
262、ve information is provided for the year ended 31 December 2017.Results and dividendsThe results for the financial year to 31 December 2018 are set out in the Consolidated Statement of Comprehensive Income.The Company paid an interim dividend of 12.0p per Ordinary share on 2 November 2018.At the fort
263、hcoming Annual General Meeting,the Directors will recommend payment of a final dividend for the year of 28.0p per Ordinary share to be paid on Friday 5 July 2019 to shareholders on the register on Friday 7 June 2018.The shares will go ex-dividend on Thursday 6 June 2019.The total dividend proposed f
264、or the 2018 financial year will aggregate to 40.0p,an increase of 25%(2017:32.0p).Going concernThe 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 determi
265、ning that this is the appropriate basis of preparation of the financial statements.The Group ended 2018 in an adjusted net cash position compared with adjusted net debt at 31 December 2017 equal to 32%of equity.This arose through satisfactory performance of the Groups principal operating companies g
266、enerating healthy cashflows,only partially offset by the continued execution of the Groups buy and build strategy where 1.5 million was allocated to increasing the Groups shareholding in one of its majority-owned businesses.The Group has entered 2019 with a strong order book on the back of consisten
267、tly positive trading throughout 2018.Whilst the global economic environment remains uncertain,the Directors consider that the Group is appropriately placed to manage its business risks successfully.The Directors therefore have a reasonable expectation that the Group has adequate resources to continu
268、e in operational existence for the foreseeable future.Therefore,they continue to adopt the going concern basis in preparing the Annual Report and Accounts.Payment policyThe Groups policy is to agree terms and conditions with suppliers in advance and to pay agreed invoices in accordance with the agre
269、ed terms of payment.Creditor days of the Company at the end of the year represented 16 days(2017:16 days).Financial risk management objectives and policiesThe Group utilises financial instruments(see note 21),comprising borrowings,cash and cash equivalents and various other items such as trade recei
270、vables and payables that arise directly from its operations.The main purpose of these financial instruments is to raise finance for the Groups operations.The main risks arising from the Groups financial instruments relate to interest rates,liquidity,credit and foreign currency exposure.The Directors
271、 review and agree policies for managing each of these risks,which are described and evaluated in more detail in note 25 and which are summarised below.Except as stated,the policies have remained unchanged from previous years.1.Interest rate riskThe Group finances its operations through a mixture of
272、bank borrowings,equity and retained profits.With adjusted net cash of 0.9 million(31 December 2017:adjusted net debt of 8.0 million)(see note 20),exposure to interest rate fluctuations remains a low risk to the Group;however,the Groups loans are subject to interest rate hedges,as described in note 2
273、5.2.Liquidity riskThe 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 signifi
274、cant cash balances that the Group currently holds.Additionally,where the Group has already repaid funds into the revolving credit facility,it is able to subsequently redraw these funds should the need arise.3.Credit riskThe Group reviews the credit risk relating to its customers by ensuring,wherever
275、 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 upfront payment or requires letters of credit to be provided.4.Currency riskWith exports represe
276、nting a significant proportion of its sales,the main risk area to which the Group is exposed is that of foreign currencies(principally US$and Euros).The Group adopts a strategy to hedge against this risk by entering into currency options/forward exchange contracts and/or by maintaining a proportion
277、of its bank loans in these currencies,although this strategy does not represent hedging under IFRS 9.The Directors review the value of this economic hedging on a regular basis.There remains,nevertheless,an ongoing threat to the Groups competitive position in international markets from any sustained
278、period of Sterling strength.Forward and option contracts are entered into in both US$and Euros maturing in the subsequent year,aimed at protecting the ensuing years competitive position and margins from adverse currency movements.5.Cashflow riskThe Group manages its cashflow through a mixture of wor
279、king capital,bank borrowings,equity and retained profits.With adjusted net cash of 0.9 million(31 December 2017:adjusted net debt of 8.0 million)(see note 20)and cash and cash equivalents of 15.7 million,the Groups cash position is considered to be a key strength.The Directors present their report a
280、nd audited consolidated financial statements for the year ended 31 December 2018.Comparative information is provided for the year ended 31 December 2017.25Judges Scientific plc Annual report and accounts 2018Disabled employeesApplications for employment by disabled persons are given full and fair co
281、nsideration for accordance with their particular aptitudes and abilities.In the event of employees becoming disabled,every effort is given to retrain them in order that their employment with the Group may continue.It is the policy of the Group that training,career development and promotion opportuni
282、ties should be available to all employees.DirectorsThe following Directors have held office during the year and until the date of signing this report:Hon.AR Hambro Non-Executive ChairmanDE CicurelBL Ormsby MS Lavelle CJA Holroyd appointed 1 June 2018RL Cohen Non-ExecutiveRJ Elman Non-ExecutiveGC Ree
283、ce Non-Executive retired 1 June 2018Statement of Directors responsibilitiesThe 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 financia
284、l year.Under that law the Directors have elected to prepare the Group consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union(IFRSs)and the parent company financial statements in accordance with United Kingdom Accounting Stand
285、ards(United Kingdom Generally Accepted Accounting Practice).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 Group and the parent company for that period.In
286、 preparing each of the Group and parent company financial statements,the Directors are required to:select suitable accounting policies and then apply them consistently;make judgements and accounting estimates that are reasonable and prudent;state whether applicable IFRSs or UK Accounting Standards h
287、ave been followed,subject to any material departures disclosed and explained in the financial statements;and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.The Directors are responsible
288、 for keeping adequate accounting records that are sufficient to show and explain the parent companys transactions and disclose with reasonable accuracy at any time the financial position of the parent company and the Group and enable them to ensure that the financial statements comply with the Compa
289、nies Act 2006.They are also responsible for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.The Directors are responsible for the maintenance and integrity of the corporate and financial information included on t
290、he Companys website.Information published on the website is accessible in many countries and legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.Provision of information to the AuditorThe Directors c
291、onfirm that:so far as each Director is aware,there is no relevant audit information of which the Companys Auditor is unaware;and the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that
292、 the Auditor is aware of that information.AuditorThe Auditor,Grant Thornton UK LLP,has expressed willingness to continue in office.In accordance with section 489(4)of the Companies Act 2006,a resolution to re-appoint Grant Thornton UK LLP will be proposed at the Annual General Meeting.Annual General
293、 MeetingThe Annual General Meeting of the Company will be held on Wednesday 22 May 2019 at 12.00 noon at the Lansdowne Club,9 Fitzmaurice Place,London W1J 5JD.On behalf of the BoardBrad OrmsbyDirector18 March 2019Company registration number:04597315(England and Wales)Directors report continuedFor th
294、e year ended 31 December 201826Governance reportAnnual report and accounts 2018 Judges Scientific plcOpinionOur opinion on the financial statements is unmodifiedWe have audited the financial statements of Judges Scientific plc(the“parent company”)and its subsidiaries(the“Group”)for the year ended 31
295、 December 2018,which comprise the Consolidated statement of comprehensive income,the Consolidated and parent company balance sheets,the Consolidated and parent company statements of changes in equity,the Consolidated cashflow statement and notes to the consolidated financial statements and notes to
296、the parent company financial statements,including a summary of significant accounting policies.The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards(IFRSs)as adopted by the Europe
297、an Union.The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards,including Financial Reporting Standard 101 Reduced Disclosures Framework(United Kingdom Generally Accepted Accounti
298、ng Practice).In our opinion:the financial statements give a true and fair view of the state of the Groups and of the parent companys affairs as at 31 December 2018 and of the Groups profit for the year then ended;the group financial statements have been properly prepared in accordance with IFRSs as
299、adopted by the European Union;the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.Basis for opinionWe
300、 conducted our audit in accordance with International Standards on Auditing(UK)(ISAs(UK)and applicable law.Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report.We are independent of the Group
301、 and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,including the FRCs Ethical Standard as applied to listed entities,and we have fulfilled our other ethical responsibilities in accordance with these requirements.We
302、 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Conclusions relating to going concernWe have nothing to report in respect of the following matters in relation to which the ISAs(UK)require us to report to you where:the Directors use o
303、f the going concern basis of accounting in the preparation of the financial statements is not appropriate;or the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Groups or the parent companys ability to continue
304、to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.Overview of our audit approach Overall materiality:500,000,which represents 3.5%of the Groups adjusted profit before tax;Key audit matter was ide
305、ntified as goodwill impairment;and We performed full-scope audit procedures on the financial statements of Judges Scientific plc and on the financial information of all material trading components.For Armfield Inc.,Scientifica LLC and Dia-Stron Inc.we performed targeted procedures.27Independent audi
306、tors reportTo the members of Judges Scientific plcJudges Scientific plc Annual report and accounts 2018Key audit mattersKey audit matters are those matters that,in our professional judgement,were of most significance in our audit of the financial statements of the current period and include the most
307、 significant assessed risks of material misstatement(whether or not due to fraud)that we identified.These matters included those that had the greatest effect on:the overall audit strategy;the allocation of resources in the audit;and directing the efforts of the engagement team.These matters were add
308、ressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon,and we do not provide a separate opinion on these matters.Key Audit Matter GroupHow the matter was addressed in the audit GroupGoodwill impairmentThere is a risk that goodwill recognised on h
309、istorical acquisitions may be impaired.An annual impairment review is required in order to assess the carrying value of the acquired goodwill.Managements assessment of the potential impairment of the Groups intangible assets incorporated significant judgement regarding relevant assumptions.This incl
310、uded the timing and extent of future profits and cashflows of relevant income-generating units and an estimate of their values in use based on applying an appropriate discount rate.We therefore identified the impairment of goodwill as a significant risk,which was one of the most significant assessed
311、 risks of material misstatement.Our audit work included,but was not restricted to:In the context of IAS 36 Impairment of assets,considering the appropriateness of the methodology applied by management in their assessment of impairment and the judgements applied;Assessing the accounting policy to che
312、ck it is in accordance with the financial reporting framework;Checking of the mathematical accuracy of the impairment models;Checking appropriateness of the forecast growth rates and cashflows by reference to historical performance and actual results;Assessing the weighted average cost of capital ca
313、lculation which is used as the discount rate applied to future cashflows;Performing sensitivity analysis on key assumptions made in the calculations,including the weighted average cost of capital and growth rate applied;and Evaluating the information included in the impairment models for consistency
314、 with our knowledge of the business,discussions with management and corroborating evidence.The Groups accounting policies on goodwill and its impairment are shown in note 2 to the consolidated financial statements and related disclosures are included in note 13 to the consolidated financial statemen
315、ts.Key observationsOur testing did not identify any impairment of goodwill to be recognised within the financial statements or additional factors to consider that would affect the carrying value of goodwill.We found no material errors in the calculations.28Financial statementsIndependent auditors re
316、port continuedTo the members of Judges Scientific plcAnnual report and accounts 2018 Judges Scientific plcOur application of materialityWe define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable
317、person would be changed or influenced.We use materiality in determining the nature,timing and extent of our audit work and in evaluating the results of that work.Materiality was determined as follows:Materiality measureGroup ParentFinancial statements as a wholeFinancial statement materiality is 500
318、,000,which was determined based on the Groups adjusted profit before tax.This benchmark is considered the most appropriate because maximisation of shareholder return is a key measure used by management in assessing performance of the business.This benchmark is unchanged from the prior year.Materiali
319、ty for the current year is higher than the level that we determined for the year ended 31 December 2017,which reflects the increase in the Groups adjusted profit before tax from the prior year.Financial statement materiality is 375,000,which is less than 1%of the parent companys total assets,being r
320、estricted to 75%of Group materiality as it is a component of the Group.This benchmark is considered the most appropriate because the parent company is primarily a holding company of investments.This benchmark is unchanged from the prior year.Materiality for the current year is higher than the level
321、that we determined for the year ended 31 December 2017,which reflects the increase in the Groups adjusted profit before tax from the prior year.Performance materiality used to drive the extent of our testing75%of financial statement materiality.75%of financial statement materiality.Specific material
322、ityWe also determine a lower level of specific materiality for certain areas such as Directors remuneration and related party transactions.We also determine a lower level of specific materiality for certain areas such as Directors remuneration and related party transactions.Communication of misstate
323、ments to the Audit Committee25,000 and misstatements below that threshold that,in our view,warrant reporting on qualitative grounds.18,750 and misstatements below that threshold that,in our view,warrant reporting on qualitative grounds.The graph below illustrates how performance materiality interact
324、s with our overall materiality and the tolerance for potential uncorrected misstatements.Overall materiality Group Overall materiality parent25+75+z75%25%25+75+z75%25%Performance materialityTolerance for potential uncorrected misstatements29Judges Scientific plc Annual report and accounts 2018An ove
325、rview of the scope of our auditOur audit approach was based on a thorough understanding of the Groups business and is risk based.We take into account the size and risk profile of each Group component,any changes in the business and other factors when determining the level of work to be performed at
326、each entity,which in particular included the following considerations:Judges Scientific plc has centralised processes and controls over the key areas of our audit focus.Whilst Group management are responsible for all judgemental processes and significant risk areas in respect of the consolidated acc
327、ounts,each trading subsidiary has a decentralised local accounting function which reports to the local subsidiary management who are responsible for the operations and financial management of the subsidiary companies.We have tailored our audit response accordingly with all Group audit work undertake
328、n by the Group audit team.In assessing the risk of material misstatement to the group financial statements we considered the transactions undertaken by each entity and therefore where the focus of our work was required;We performed full scope audit procedures on the financial statements of Judges Sc
329、ientific plc,and on the financial information of all material trading components.For Armfield Inc.,Scientifica LLC and Dia-Stron Inc.,we performed targeted procedures to audit material transactions and balances affecting the group financial statements;and Our audit approach in the current year is co
330、nsistent with that for the prior year.Other informationThe Directors are responsible for the other information.The other information comprises the information included in the annual report and accounts,other than the financial statements and our auditors report thereon.Our opinion on the financial s
331、tatements does not cover the other information and,except to the extent otherwise explicitly stated in our report,we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements,our responsibility is to read the other information and,in doing so,co
332、nsider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If we identify such material inconsistencies or apparent material misstatements,we are required to determine whether th
333、ere is a material misstatement in the financial statements or a material misstatement of the other information.If,based on the work we have performed,we conclude that there is a material misstatement of this other information,we are required to report that fact.We have nothing to report in this regard.Our opinion on other matters prescribed by the Companies Act 2006 is unmodifiedIn our opinion,bas
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