JUDGES SCIENTIFIC PLC (JDG) March 2026 Capital Markets Day Transcript

Welcome, everyone. Thank you for joining and delighted to be leading this, my first retail webinar as CEO. I'm going to start just by saying how the agenda overall will work here and the points that we're going to cover. So I'm going to give some introductory remarks and talk a little about the highlights from our financial year 2025, 2025, the investments that we've made and the key takeaways. Talk a little bit about the executive team and our business model. I'm then going to hand over to Brad, who will talk in more detail about the specifics of our performance through 2025. Brad is then going to hand back to myself and my colleague Ian to talk through our buy build the fundamentals of our buy and build strategy acquisitions and the organic growth model after which we'll talk about some of the fundamentals and finally some time for Q&A so one of the key takeaways that we'll talk about is undoubtedly that financial year 25 25 has been a disappointing year but the fundamentals are intact so in that context it probably makes sense to have a chat about what are the fundamentals so what is judges scientific and what is our business model so if you can move us to the first slide please thank you yeah generally scientific is a a buy and build group in scientific instrument markets and the important aspects to realize here are that we are we're founded on three pillars of shareholder value okay so that the markets in which we play and the businesses that we seek to acquire all benefit from long-term drivers so long-term secular drivers are underlying growth drivers this particularly relates to long-term demand for scientific instrumentation and scientific techniques for academic research and how those techniques and academic research inevitably find their way into commercial applications and industrial applications both in terms of research and processes we also benefit from a large deal pool a large potential pool or pool of potential companies available for acquisition. Typically, we might deal with companies that are founder-owned. A founder has led the company for a period of time. Perhaps they've reached a stage where they want to retire. And at that point, they're looking for opportunities for how they can divest the business. uh the other pillar of our shareholder value is low capital use so we are we specialize in targeting businesses um that are uh that have a foundation of low capital use so we absolutely want to focus on businesses um that are very high return on capital high cash conversion and together that then allows us to generate cash and repay debt and together those things have compounded shareholder value moving down the left hand side another key aspect of our strategy is we have an extensive and well diversified customer base globally so in customers in university in industry and in other research and compliance laws but our diversification is broader than that so we're geographically diverse uh our companies uh are more than 85 percent of our revenue um is is exported and we're also diversified in the context of the scientific techniques that we invest in so we are agnostic in our choice of scientific techniques we have a broad base of capabilities within the group our strategy is a buy and build strategy people might think of it as serial compounding so it's based on acquisitions and organic growth we seek to acquire businesses into the group that meet the criteria we'll talk a little bit more about about that later on then to invest in those businesses to amplify their strengths and to help them grow and help them grow in the long term so we are quite we always acquire businesses in the context of holding on to that business forever we never require a business in the context of exiting that business but we intend to invest in that business and have it become part of our organic growth portfolio through the execution of that strategy over the last 20 years we've achieved 25 acquisitions a total dividend distribution of 9.8 times the 2005 admission price 19% CAGR on total revenue revenue, 7% CAGR on organic revenue, 23% CAGR on total EBIT and 8% CAGR on organic EBIT.

Next slide please.

We have an experienced management team and there's also been some recent additions and investments in that management team. If I go down the right hand side first, we were joined recently by Rick Armitage as our group acquisitions executive, bolstering and expanding our acquisitions team. I should also say here, with the planned succession, David moved to a non-executive chair role, but he also continues to assist us on acquisitions. It was always David's superpower, and it's something that absolutely he wanted to remain involved in, and we wanted him to remain involved in that aspect of what we do. So he remains as part of our acquisitions process, and Rick has further bolstered that. We also welcome John Dunn as a portfolio chief executive. John joined us from Halmer, and he chairs a portfolio of our companies, as does Ian Wilcock, a group commercial director. Mark Lavelle, who stepped down from the PLC board after our AGM last year, remains with the company and is working centrally, particularly focused on operational excellence. And I'm here with my colleague Brad as Chief Financial Officer. So I want to highlight here the key aspects and key takeaway messages for our presentation today. we've had a disappointing financial 25 despite a strong start but as mentioned the fundamentals remain intact so at a strong start in q1 we delivered a geotech coring contract as expected that contract was delivered uh and executed well that happened in q1 we also in q1 benefited from strong order intake. However, the situation changed slightly around March, where restrictions in US federal funding started to be introduced. There were really two layers to this. The first context was around uncertainty. So there started to be conversations about specific universities and beyond that, specific areas of funding and which projects might be funded or not. And that had an almost immediate impact on us in terms of previously budgeted projects and projects for some discretionary spend being held. Subsequent to that, we then saw the real impact of funding cuts and the funding cuts started to be seen in terms of longer term projects being put on hold or cancelled. and really the restrictions in U.S. federal funding is the key and material impact for our 2025. We saw a significant downturn in orders in Q2 and Q3. Beyond this though we did see some geographic and market diversification that partly mitigated the U.S. impact. We saw some growth in Asia, we saw some growth in parts of Europe and we also saw where there was resilience across the group. it was with those companies that had some exposure to industrial applications. We'll talk a little bit more about that later on. And also those companies that had delivered new products recently. That really focuses us on where we can make a difference. We are very mindful that there are certain things like the US's approach to federal funding or the geopolitical climate that we cannot influence. But we can focus on controlling the controllables. And by controlling what we're best what we can control we better navigate those things that we can't control so the things that we want to highlight are investing for growth in talent investing in innovation operational capacity and operational improvements and working directly with those companies that are experiencing some product specific and product line challenges we also as i mentioned our previous slide invested in management team and the plan succession with Rick joining us, with John joining us, and with David's move to non-exec chair and my appointment. The key takeaway is that despite it being a challenging year, a disappointing year, and despite this being the second successive year of disappointing results, the underlying fundamentals remain intact. We have a portfolio of strong exporting companies and global niches that maintains solid margins our overall margin just below 20% was perhaps a little disappointing by our own measures but it's still a solid result we have a robust cash conversion enabling a rapid repayment of debt and a 10% increase in dividend but also reconfirm that our strategy remains unchanged we have confidence in our long-term demand drivers the long-term requirement for scientific instrumentation and scientific techniques in academic research shifting into commercial and industrial applications we believe remain solid we are committed to our

disciplined acquisition process and we are committed to our structured decentralized organic growth methodology all of which we'll talk about more later and next slide please i'm now going to hand over to brad will take us through our performance review thank you tim and hello everyone if you can move to the next slide please let me take you through the results for the past year and you know as tim's already touched on you know it's a disappointing for us again that we've had challenging and and difficult trading results

um you know we started the year quite well um the geotech coring expedition we had a solid order book gave us confidence for the year and then unfortunately the effect of the US academic research funding cuts bit and it progressively degraded our performance throughout the rest of the year. So let's look at the results and total revenue is up nine percent to 146 million this was a combination of total organic revenue growth of six percent plus a full year contribution of our 2024 acquisitions going back into the um organic revenue growth for a moment um on a like-for-like basis and that's if you strip out the coring expedition which we didn't which we had in 25 but didn't have in 24 then like for like organic revenue growth is only two percent and behind that was you know a drop in order intake which was disappointing for us we started as we said we started the year quite well g1 was quite a good quarter for us but then no ongoing decline afterwards so overall the japan operating profits were flat at 28 million uh yeah an effect positive supportive positive support from that from the geotech coring expedition and in fairness to geotech as a whole a good recovery from the whole business but if you strip your tech out from these results the rest of our organic businesses went back by a third which was a you know a disappointment we'll see this illustrated a bit better in my bridge later we move from profits the cash generation the group has a strong track record of generating good profits and turning those profits into cash we generated 33 million of cash from operations a cash conversion of 118% so we've kept our discipline in this area for more than the past two years and we've also been able to reduce overall levels of working capital. This cash generation serves to support our policy of providing shareholders with progressively increasing dividend returns and this year we're proposing a final dividend of 82.3 pence per share an increase of 10% on the prior year which if approved at the AGM will provide a full year dividend of 115 pence per share but it is our second year running of minimum given an increase as a consequence of the disappointing trading and the cash generation has served to enable us to invest seven million in capex this year to pay three million corporate taxes distribute seven million to our shareholders and in line with our buy and build strategy also enable us to acquire the remaining stake in our subsidiary geotex brazilian business and still reduced our net debt and adjusted net debt at the end of the year was down 8 million to 43.6 million and we had gearing of one and a half times at year end significant headroom on our covenants and still a strong balance sheet position so looking out to 26 and we still have a tricky trading environment we start this year with a lower than preferred order book and with order intake which is not buoyant and with global geopolitics as they are weighing heavily on the economic outlook and whilst we have the first positive signs out of the us of the first steps to restore that the hiatus in the research funding we are yet to see the funds flow and consequently any formal green shoots of recovery and therefore the guidance that we provided shareholders with in our January trading update still stands moving on to the next slide please I'm just going to pick up two things on here one Tim touched on just before our margins which have declined and it's disappointing whilst we've managed to grow revenue costs have grown at the same rate and that's really an effect of a certain amount of investment in head office costs in line with the succession planning that Tim talked about before but also a number of our businesses investing for growth which unfortunately didn't come and consequently we took some actions later in the year to adjust that but the effect of those adjustments have not had a material effect on the 25 results. Now, we also have material adjusting items. We just want to talk about those for a moment. The largest component, 10 million of that, is the non-cash amortization of the intangible assets we recognize when we acquire businesses. But there are two other material items to talk about this year. The first relates to our 2024 acquisition of Rockwash, and that came with a significant earn out which when you acquire a business under the acquisition accounting rules you have to make your best estimate for how much you think you're going to have to pay for that earn out and so we did that and at the end of 2024 we had an acquisition payable of 2 million and at the same time when you do that you also have to increase your goodwill and intangible assets and so we had a further two million that was in line with that two million of payable now during 2025 it became apparent and we've seen the first signs of that at the half year that that rockwash's performance may not get them an earn out and it turned out that actually no earn out was payable so consequently we've reversed an acquisition payable of two million with a credit into adjusting items of two million and at the same time we've also impaired those assets, the goodwill and intangible assets that were created as a result of creating the payable. And so we've also had a 2 million debit. So overall, no net effect in the P&L and no cash effect either. But something worthy of note. At the same time, we have also recognised a 2.3 million impairment to the group's goodwill for its investment in on field as a consequence of a prolonged period of under performance so moving on to the next slide and just to take everyone through the graph and there are three lines on it as i always explain a red line a black line and a green line the red line is our internal sales budget which we set once a year as part of our budgeting process the black line is our trading 12 months of orders and the green line is the last four months of orders annualized the end of the graph is the middle of March this year so what are we looking for we're looking for ideally for the black line to be at least touching the red line by the end of the year such that we've had sufficient orders with which to satisfy our sales budget and ideally for the green line to be tracking the red line so we have optimal operational capacity now if you look at the graph and take you back to the middle of 24 you can see that we started building momentum in orders you look at the green line and to a degree the black line that kept rising up and actually the first quarter was good and we were still going well but when you got to the end of q1 it turned and then it tumbled and it only started to improve during q4 although if you compare the size of the q4 on the green line to what it was at the end of 24 there was a big difference and this is why when we've explained it now results that organic intake was up four percent at the end of the first half by the end of august it was flat and by the end of the year it was minus six percent and whilst we've had areas of decent performance both in china and in europe this certainly did not they are not able to offset the significant effect of a near on 25 drop in north America. If you go back and look at the graph for the last couple of years and you compare the black line with our sales budget you may be forgiven for thinking we've been a bit optimistic with our budgeting and in fairness the consequence of that is that for 2026 we've had a reset and consequently why at the start of this year our budget was aligned with the trading 12 months of orders. So as we go into 2026 we have a lower than preferred order book and orders year-to-date are behind the same period in 25. However it's fair to say that the 25 comparative had no effects in relation to the US academic research funding cuts.

Moving to the next slide please.

Moving on to the breach and this reconciles between 2024 and 2025 profit contribution of our businesses before central costs they're the two big blocks either end of the graph and reconciling between these have a big block of organic growth a large part of that is the geotech recovery which included coring expedition but also growth at six other companies including five that achieved the record but at the same time there was a sizable drop from decline at 12 of our companies and this included a couple of our businesses with end market specific challenges and a couple of our businesses with challenges in relation to products and Ian will talk a little bit about what we're doing to address these in a short while. The effect of the US federal cuts cut across both the growth and the decline with exactly with it exacerbating decline and reducing the growth and then the final block is the full year effect of our prior acquisitions so moving on to the next slide and just going back to cash flows for a moment now we a good cash generation this year cash conversion was 118 which on the face of it was a little bit down on the prior year but the prior year was inflated by the fact that we had advanced payment for the coring contract and if we regularize this cash conversion this year was actually 136 compared with 104 last year so it's clear discipline on both cash conversion and also helping look at how we can reduce the higher than desired levels of working capital is working and we've gone down to 16 percent this year but the goal for us is to reach ten percent and that's ten percent of annual revenue and if we do that we can release up to eight million of cash which is a significant opportunity for us and lots of focus will continue on that and ian will also talk a little bit about some of the things we're doing to help release some of that over the coming couple of years net debt continued to drop when we finished the year with a leverage of one and a half times compared with 1.7 times the prior year with significant headroom in our covenants, significant borrowing capacity and the continued strong support of our group of banks, Lloyds, Santander and HSBC, who this year have replaced Bank of Ireland in the banking group, and we're delighted to have them on board. So moving on to the next slide. I won't dwell too long on return on token invested capital or ROTIC, other than say it's a key measure for us. we start on the left hand side when we required FTT and we paid nearly five times so we start around 20% and grow neurotic thereafter requires improved financial performance and or acquiring businesses at lower multiples and you can see as you go across the graph when we acquired the bigger businesses GDS scientific are in the early teens and we paid six times for them there were big deals for us back then when we also acquired Geotech in May 22 and paid seven times the smaller deals minimally affect ROTIC now and whilst we managed to increase our ROTIC for the year end by 1.3% to 17.8% at year end we still have a long way to go and big improvements in our financial performance for us to be able to achieve our long-term target which is 30% then moving on to the next slide please and I won't dwell on this slide other than to say diversification works for us. What I mean by that is in a year where we suffered significantly in the US the group has still managed to deliver earnings that are more than two-thirds of its previous record but at the same time it's clear to us that we could and should be better diversified particularly in our exposure to industry and again I keep giving Ian something to do and he'll be talking a little bit about what we're doing to address this so moving on to my last slide and this slide summarizes some key financial statistics about the long-term success of this group revenue profits and earnings per share have all grown strongly over our history and we continue to have long-term high quality CAGR organic revenue of seven percent with associated EBIT growth of eight percent over 19 years dividends have grown strongly over the life of the group and we're proposing an increase of 10 percent to the full year dividend and the compound growth of the dividend remains above 20 percent and the groups continue to focus on cash generation serve to protect it in times of challenging market conditions enables us to rapidly pay down acquisition debt and support that progressive dividend policy on that note we'll pass back to tim talk through the growth strategy thank you brad great so um yeah ian and

i principally ian i have to say we'll talk through the growth strategy i'll talk us through um the the acquisition side and hand over to ian to talk about some of the organic initiatives so um next slide please so yeah buy and build strategy as i mentioned before split across acquisitions on organic growth so if we move straight to acquisitions on the next slide the headline here is strict discipline if I talk through some of the attributes of a target businesses and an emphasize what that means for us so what makes a target business for judges in the judges model we are looking for strong exporters in global niche markets for scientific instruments and techniques but i think important to emphasize uh that we are somewhat agnostic about what the exact scientific techniques are so we have a broad diversification of techniques within the group we're also looking for cultural alignment uh so a focus on innovation a focus on entrepreneurialism openness and frugality in how the business is managed. We ask and expect the MDs of our businesses to lead those businesses as if they are the owners. So we are looking for the owners of businesses from whom we are acquiring to also be leading those businesses figuratively and literally as if they are the owners. We also look for robust margins. That demonstrates differentiation and pricing power and we look for we look for businesses that generate sustainable EBIT and cash flows at high return on sales a key takeaway from there is that we are we are focused on high quality businesses we are not focused on the turnarounds for example deal parameters we paid three times to seven times EBIT more typically we pay four times to six times according to size we have flexibility in our deal structure what we mean from that is we include things like earnouts where that's required there have been some occasions where former owners have also brought back into the business in some context so where it's important that we allow some flexibility in the deal structure to make sure that we can unlock deals and we're funded with cash debt, borrowing up to three times EBITDA, three to eight percent. In 2025, we finalized the acquisition of a minority holding in Geotech de Brazil. Geotech de Brazil is the Brazilian-based services part of the Geotech business. An 18 percent minority share that was not acquired at the time that we acquired Geotech was acquired last year for 1.9 million plus excess cash and earn out of up to 0.7 million and that's low risk for us it was a business that we knew and understood and has been immediately earnings enhancing the talk through uh the the key attributes of the deals uh through those um the green dots at the bottom so we buy high quality businesses so we don't we don't focus on turnarounds we look for high quality in the attributes that i mentioned above and also we buy businesses that are for sale the owners have come to a conclusion that it's time for a transaction that that is the deal pool within which within which we look deals can be characterized by long incubation so although a lot of a lot of the deal flow that we look at is inbound we also do develop relationships with potential companies and potential sellers but some of those could be a decade or more in terms of incubation before the seller comes to conclusion that now is the right time for them to sell crystallization is notoriously erratic what we mean by that is that we can't always be certain around when the seller is going to decide that it's the right time for them when the process is going to work out or exactly the timing of this we absolutely do not look to target ourselves with one deal a year or achieving a particular deal that's an important attribute in the context of this of this next circle we aim to do deals it's a fundamental part of what we are and who we are we need to do deals but not any specific deal so we must always have the opportunity to walk away we don't tend to focus very on on um uh very specific uh areas of technology that means for example there's only there's only three companies and we have to acquire all of them we don't put ourselves in a situation where we can't walk away from a deal okay so we aim to do deals but we need but not any specific deal and david over the last 20 years built built judges a reputation as an honorable acquirer we are very conscious that we do lots of deals but generally speaking the people from whom we acquire are going to go through one deal, maybe two, but typically one deal in their lifetime. This is a process which is stressful. This is a process to which they're not used to. And we see it as vital that we have an honorable approach to that process. And we don't chip.

So whatever we agree in the heads, subject to not finding anything materially different through our diligence process, that's the deal that we honor to provide that certainty to the seller. the model then is to generate cash reduce debt and repeat i'll now pass to ian on the next slide to talk about our organic growth strategy okay thanks very much tim and hello everybody um okay so this slide really covers our model um and i'm not i'm sure everyone on the slide on the call is not familiar necessarily with our model but the keyword is decentralized um and i'll explain what what that means in a minute the left-hand side is talks to our kind of framework and structure of the of the business the right-hand side is more about our culture and our growth ambitions um so we're a decentralized group which puts considerable autonomy and responsibility and indeed trust on the individual businesses uh you know 20 plus businesses that we have across the group um and really starting on the the top left-hand side strong leadership teams that model only works if we do indeed have that so strong leadership team so we spend a considerable degree of time focusing on our leadership our leadership skill sets um 2021-25 has actually been a bit of a year of change for us we actually changed out seven of our mds for different reasons and you know please please don't take away the impression that we're a higher and fine group that's absolutely not our culture at all um but you know for different reasons mds changed we changed seven And whenever this happens, it's an opportunity to bring in additional capabilities and so on. And not just MD, all of our businesses will have strong leadership teams covering finance, sales and marketing operations, engineering and so on, all of the disciplines you'd expect. So 2025 has been a year of considerable talent recruitment. And I think we all believe that we now have the strongest leadership teams we've ever had in our businesses. Focusing on the middle circle there, robust governance and financial controls, of course, a decentralized group only really works if you do have some controls. So, of course, you've got your usual financial controls, as you would expect in any business. But we also make sure we have a rigorous set of controls, particularly around export control, for example, and the training there. Cybersecurity is obviously a big theme for us and making sure we're up to speed on that, doing that correctly. And more recently, for example, we've implemented an AI best use policy. I mean, partly to, if you like, set a set of floor in terms of our minimum standards expected, so we've got responsible use, but also frankly, more focus on best case examples of where you can get growth using AI. I should also stress, though, that the whole, whilst there is robust governance and financial controls, we do aim for it to be as light touch as possible. We do not want to encumber in our businesses with overarching processes and systems. And indeed, in the centre, we do not have the resources for that anyway. We are deliberately an asset-like business and have a small centre. All of our resources, as much as possible, are out in our businesses. So if the left-hand side is working correctly, there's good autonomy and accountability to the centre. We can now focus on the right-hand side, which is really about our growth culture and how do we aim to do that. so the top right one is leveraging group right experience we have incredible people across our businesses in all of the disciplines I've mentioned and one thing we've made good progress on in 25 is is creating communities and leadership groups in all these disciplines so we have a really maturing sales leadership group taking our top sales directors looking at best practice there could be for example looking at training could be looking at CRM pipeline management and so on we do the same in operations um particularly looking at things like working capital which i'll talk about a little bit later it could be an engineering around recruitment best practices uh patenting patent best practices and these these communities have been tremendously successful in sharing best practice creating almost like a self-starting community um amongst themselves you know our businesses are all small businesses it can be a little bit lonely i guess in time so it's creating these wider communities and that they're really self-starting um through that then we in the middle point we can also promote excellence so we of course in our roles we see some tremendously interesting uh strategies and and projects that we do and then uh we we really try to promote some some excellence across the group um one of the things we've done quite recently is looking at application of ai for growth um and we've had a number of projects across the group for example an ai service engine to in one of our businesses to hugely improve customer service and knowledge management within within the business another one focused on business development to enable us to rapidly move into a new vertical market using existing technology in an area we were less familiar with so that was that was very exciting and the bottom right is encouraging ambition i'm going to talk a little bit later about that but that really talks to our strategy process we aim we we task the businesses to come forward with ambitious strategies which will uh double um double a bit in usually three to five year kind of time frame um and i'll but i will talk about that a little bit later um next slide please so we we've listened to uh requests over the years for a little bit more detail of individual businesses we have talked uh about geotech in the past but we thought we'd lift a little little bit and pick up some some themes to explore now the first one of these is identifying certain long-term growth drivers and my colleagues have already mentioned that we've had good success in 25 in selling to industry in fact that's been one of the the bright spots of the year in otherwise been quite a difficult year and here's three businesses which have done really well in taking core scientific techniques often which have been developed in an academic environment and applying them to uh to business um you know we all know the the the uh industrial market so it is much larger than than our academic market so there's huge potential cool egg would be a kind of poster child for that for us um taking a a core scientific technique in this case led for led illumination traditionally for fluorescence microscopy which is a core technique in spatial biology and in life science firstly applying it to automated fluorescence so this is in the diagnostics world in industry but then taking it to a completely new uh area which is semiconductor inspection uh and then that's you know an exciting growing theme for us the other two businesses diastron and scientific also have very very strong um industrial sales as well all three businesses are trading at a record so that that was a real bright spot for us um the next slide please um really talks about specific challenges we've had now we've alluded in the past uh in communications to specific product related issues we've had in some businesses so we thought we'd lift the lid on that a little bit and the three businesses in this case we're talking about are listed there on the left um our first one is fire testing technology um which is a kind of fire science business it looks at uh you know as the name would imply testing materials to certain standards for use in in often in buildings um market leaders for many years um business ran into certain product obsolescence pro product problems um increased competition and that's caused us to actually needs to accelerate some investment uh in that in that space um to know to recover what is otherwise a very strong strong business and strong brand uh it's a multi-year project we're right in the middle of it but it is it has caused um you know financial performance issues and and uh and so on but it's something where we're absolutely focused on at the moment the second one would be armfield it's it's a slightly different uh product related challenge but nevertheless equally serious um armfield has many products it sells uh equipment for education in academic university environments largely and also food science food technology um coming out of covid in and the period after that um traditionally on fields outsourced a lot of of its manufacturing ran into numerous uh supply chain issues and supply suppliers exiting the market so it caused this to find a lot of new suppliers caused this a lot to require um to insource a lot of stuff and across because it's so many products it's actually been a multi-year multi-year project which we are still in the thick of have made some good progress in 25 and continues to do so but it but it has been an area of big focus for us and the final one is the scientific care which is a slightly different example it's again it's a product related example our ideal judges product if you like is a product which sells in a niche it has a strong market share and technological advantages in the in the niche and you know enables us therefore to uh you know to get pricing power and so on where we do not have that and and we we recognize it came to recognizing one of the scientific products what was not didn't have those characteristics we looked at a number of options and in the end we decided to exit that particular market and obviously had to take some cost uh and and run through that in 20 in 25 as well um and we did it of course respectfully with it a view to you know looking after existing customers for a certain period as well it's also worth pointing out actually that both armfield and scientific are our businesses with some of the most exposure to the us and u.s academic market so that hasn't helped the whole picture for the these two businesses okay next slide please um so this slide looks at the disciplined ambition and how do we set the right culture so that we um you know we get the business to really focus on growth obviously stems from having the right leadership in there in the first place that I've talked about but once we've got that we then absolutely encourage a focus on where the growth markets are where the growth opportunities are we do that a number of ways we have an annual strategy process about to kick off actually in towards the end of Q2 and here we look at as I alluded to we want them to put together plans which will double EBIT in three to five years they need to take a very market intimate view obviously that comes from a knowledge of where the opportunities lie in the market it also comes with a discipline of focusing on the right areas and not too many areas so we in the process we have what's called key strategic initiatives no more than six preferably fewer and these are the key things the business is going to do over multi-years which is going to deliver that growth we then monitor these on a monthly basis with the management teams the other thing we're doing um this year which we'll talk about i think in future communications is really focusing on innovation and how we measure innovation innovation is obviously the life blood in blood in for future growth um and there is indeed a strong correlation between those businesses which have done well in in 20 um in 24 25 and their ability to consistently deliver uh products to the market which will take market share and indeed the reverse um so we're going to become formed with a vitality index which will be a measure of the percentage of revenue coming from new products uh or margin from new products and that's something we will um we will communicate in in in future future future communications okay and then final slide from me i think i've saved the best for last uh which is the improved working capital performance um everyone's favorite topic brab's already alluded to the fact we made some progress in 25 but not as much as we would have liked so we are targeting another 8 million improvement in working capital and a lot of that will come from better inventory management and once you Pareto it out it's really about half a dozen of our businesses which have got the biggest challenge, complex set of reasons. If it was that easy, we would have already fixed it, I guess. Some of it is around procurement maturity and procurement teams, some of it around ERP, MRP systems and the correct use of them or indeed having them in the first place. Some of them is around sort of working progress processes and so on. So there's a complex set of challenges in these these half a dozen or so businesses here we are leaning on our operations network which i talked about earlier and actually uh but also this is something that mark's working on um we're taking our top operations leaders uh in the group and helping with task force basically to help these half a dozen businesses to really focus on best practice to help them drive their working capital to where they they want it to be so i expect to report on some progress on on that throughout the year. Okay, well, I hope we appreciate a bit of a deep dive into some of our businesses, some of our challenges and opportunities. I shall hand back over to Tim.

Thank you, Ian. Great. Okay, if we could move to the next slide, please. So I'm going to bring the presentation to an end just by talking about the outlook and investment case, and then we'll move into Q&A. So firstly, the outlook, if we can move to the next slide, please. so the the summary points here um uh for 2026 uh sorry it's just moved so yeah that's right slide 23. um i think it's uh it's fair to state the obvious the geopolitical turbulence continuing into 2026 um and and you know acknowledging that that's things that those are clearly things that we can't control and in many cases things that you know it's it's unclear yet what the full outcome of those would be, but significant levels of turbulence continuing into this year. We'd also highlight that uncertainties remain around US federal funding. So since our January update, trading update, the US Congress has approved the next round of the 2026 budget for US funding of scientific academic research and that funding was restored to prior levels there or thereabouts. We see that as really positive news insofar as the opposite would obviously have been very negative news. But at the moment there remains uncertainty around how the funding will actually flow. So the positive is that it's been signed, it's been signed into law and particularly that there was very strong bipartisan support for that bill which is something that isn't heard of particularly often at the moment in the US. So we do see that as a long-term positive indicator that the US does want to return to some sense of normality in terms of funding fundamental scientific research as a core driver of societal growth an improvement um but what remains uncertain at the moment is the timing you know how those funds would actually be dispersed through the various fund granting bodies uh like the national science foundation the national institute of health and in terms uh in in turn how that funding will find its way into grant applications so you know there remain uncertainties around around that funding situation for us. You'll have seen from the order book chart earlier after a strong Q1 last year we had a much weaker Q2 and Q3 a little bit of recovery in Q4 but still lower than ideal and the result of which was that we brought forward into 2026 a lower than desired order book 15.7 weeks. Our year-to-date order intake is 17% behind the same period last year. As Brad mentioned earlier, it's worth reminding that that is relative to our strongest period last year. And it's also worth mentioning that it's still early during the year. So at 17%, it could be a couple of instrument orders or a stocking order from an OEM or a distributor that could shift that percentage by a few points either way but it's still behind where we would like it to be. All of this reinforcing for us that the key thing that we need to do is control the controllables. There are various things that we just don't have control of like the geopolitical turbulence but if we control the controllables as best we can then we stand a much better chance of navigating those things that we can't control and for us restoring performance is key. we reiterate we have confidence in the long-term drivers and the business model is intact we think in the long term that underlying demand for the types of products and services that we provide will will continue to grow there will continue to be demand for scientific instrumentation servicing academic research and growing into commercial and industrial applications and our business model of disciplined acquisitions and our organic growth model remains intact and we remain committed to it. Our 2026 guidance is for earnings per share between 200 and 250 pence so that remains unchanged fire update in January. We'd also like to remind that at the moment we believe the next Geotech coring expedition is expected in early 2027 in other words the 2026 guidance does not include the geotech coring expedition okay i'll move on to the next slide now please which is the final slide reminder of our investment case i think the key things to remind here the business model three pillars of our shareholder value the long-term drivers the large deal pool and the low capital use those remain the same and remain intact. We have a robust business model that we pursue with discipline. Earnings enhancing acquisitions. We are diversified by geography and diversified by application with that agnostic approach to the businesses that we acquire. And we deliver dividend growth of 10% plus for 19 years, a CAGR of 21% since 2005. With that, I'll bring the presentation to an end and we'll move to our Q&A. Thank you very much.

Thank you for the presentation. We have had a number of questions pre-submitted and submitted live. Just as a reminder, if you would like to ask a question, please type them into the Q&A box situated on the right hand side of your screen. Our first question is, could you please address why your capital allocation strategy does not include a more substantial share repurchase programme, especially since your shares currently seem to trade significantly low significantly below their intrinsic value wouldn't a share repurchase program be a more tax efficient way to reward shareholders than a cash dividend thanks so yeah it is something that that we have been discussing and discuss on a regular basis but i will hand over to brand for that uh for that question yeah thanks to um it's quite clear that we understand that the uh the share price is lower than it that it had been for some time

but when you actually do the maths and you look at the return you get for a share buyback at the moment and the consequence especially in a year where we expect our performance to go backwards given the circumstances that we've already communicated to the market and what what doing a share buyback program would do for us would be to increase our leverage take us much more highly levered and therefore add quite a significant cost to our interest such that for any reduction you or improvement you get in in context of the savings you get by reducing dilution um the impact on owners per share is actually less than that that you get for dilution So at the moment, unless our share price was substantially lower than where it is at the moment, it actually isn't a very good value for shareholders, particularly if you're comparing the use of that capital compared with completing an acquisition, which gives you a much better return on your money, particularly on average that we get 20% return on our money when we acquire a business. so I appreciate it's a very reasonable question to ask if we're in a period where we really didn't foresee the ability to complete acquisitions then I think share buybacks may become a more pressing question for us but as it stands at the moment we feel it's not the best use of of shareholders funds.

If I maybe layer something on there as well I assume the point around tax efficiency is uh regarding potentially a choice between dividends uh or share buyback and we're also we're very cognizant that you know our shareholder base will include many different people and institutions with different demands and different requirements um but we we wish to continue to provide our shareholders with a means to generate income without having to sell down their shareholding thank you next we have are you still finding good businesses to buy or is it getting harder so that the the context of that question if it's intended in a long-term view i think yeah yes we are still finding good businesses to buy so we don't we don't see it as something which is getting um uh which is getting which is getting harder in a sort of sustained or systemic way uh i think what we would highlight is the current the current environment is challenging okay there are we are looking to acquire high quality businesses um high quality businesses uh with work with owners who wish to sell but they may not wish to sell off the back of a poor year if there's been a poor year or they may have a particular number in mind and that number in mind may imply a higher a higher multiple or a higher valuation if they're if they're not performing at their best at the moment. So what we're tending to find is that sellers are patient and we need to be patient as well. While there may be opportunities to acquire lower quality businesses, that's not our strategy.

Thank you. And where do you think the biggest business risks are right now?

I think, I mean, clearly there are the various geopolitical risks that we've mentioned, which, you know, the main risk there, I guess, is the unknown we should highlight. And I wonder whether it might be a question, but our direct exposure to the Middle East is not very much, around 2% of revenue. So in that sense, there is not a huge risk to the group as a whole in that respect. But it does rather depend upon the extent to which that conflict grows or escalates or what the knock-on effects are. So for sure, that is a major concern for us. The other major concern is obviously the timing associated with the return of US federal funding and our exposure to that. I guess I'd also highlight the requirement. We talked about focusing on controlling the controllables and helping those businesses who are experiencing some challenges to get those fixed. So the longer that takes us or the longer that goes on for is some degree of risk as well.

Thank you.

Ian, anything else you'd want to highlight in there?

I think it's pretty comprehensive. I think I'd maybe just add the, you know, with governments around the world potentially under financial stress, there might be a question on academic funding more genuinely not just in the in the us obviously we we hope that's not the case but um we don't know i mean and that we still sell you know obviously more than half of our end user customers are in academic institutions yes that's a very good point and of course we know that the um the uk government is also talking about funding associated with some fundamental research okay if that if that's a theoretical critical research perhaps where we're less directly impacted by it but it's clearly an example of a government making a choice of where it wants to deploy it's a limited set of funds to

and so yeah that's that that is a wider risk for us as well thank you our next question is if the u.s doesn't recover and there's no big project what does normal look like now Brad do you want to take that?

Yeah I mean I think that it's a stretch to think that the US will not recover. The question is about the timing of it so I would challenge that theory to say that the US understands as the consequence of signing the bill and with cross-party support that you know investment in R&D in the US is what has made that economy great for the best part of the last hundred years and I don't believe that anyone across you know across government as a whole and that's that's a strong statement for me to make in fairness really believes that we shouldn't do proper research so I don't believe that that is a long-term event maybe not even a medium-term event but the question is in the next few months so a year or so whether it starts coming back to the rate that we hope it can it should come back to and so i'm not sure i could call it a new normal and and you know i think we have an expectation that our businesses produce high quality equipment for markets that need their equipment and that we shouldn't be expecting the expected performance for 26 to be our norm and I don't think we should strive for it either.

I think it's also worth adding and just re-emphasizing, Brad, that the guidance we have put out for 26 does not assume a recovery in the US. But I know you said that, but just to re-emphasize that point.

Absolutely, Terry. and we are um you know so that's why i'm my expectation is that this is not the new normal but it's a base we build from thanks both yeah i agree our guidance 200 to 250 was based on no recovery in the us and no coring contract but we absolutely wouldn't regard that as the new norm thank you next we have organic growth excluding geotech will there be a recovery by 2026 and how is diversification progressing with regard to clients dependent on government budgets well I was going to say I think the um the second part of that question is um I think Ian covered that earlier in the presentation and the first part well it if you compare our results or our predicted results for this year coming to last year that the flat answer to that is that we shouldn't expect 26 to be a year of a return to organic growth unfortunately however what we do believe and i said this earlier is that fundamentally the conditions over the medium and long term exist for us to be able to continue to grow and at least the long-term CAGR of seven percent that we've done over the last 19 years and there's no one across our team that believes any differently but we do know that every so often there can be moments when we have a hiatus but we need to work very very hard to try and avoid that.

Thank you. Even though acquiring companies at your target multiples might be harder in continental Europe, Asia or the US, assuming you don't find the perfect fit is your pipeline actively looking at international m&a at all right now and if so would you be open to new standalone platforms or are you strictly focused on synergy driven bolt-ons like bossanova or lucille great question um so as the way i'd answer that is uh come at it from a couple of points of view um the majority of companies that we've acquired are clearly uk based companies, with the exception of an acquisition in the US and an acquisition in Switzerland.

But it will be incorrect to think of us as a solely UK focused acquirer. We recognise that we need to raise our profile. And so it's something we absolutely want to do is to raise our profile for acquisitions, certainly in the US, certainly in Europe, possibly wider than that as well and yeah we absolutely would consider uh acquiring businesses outside of outside of the uk um the the fact that the businesses that we have acquired uh thinking about luciole and bossanova have been uh synergistic bolt-ons i'd say is is actually rather rather coincidence than anything else it's not it's not that um that's our focus for for acquisitions outside um outside the uk uh where where i might say that there might be um an area for us to consider is you know would we if we were looking to acquire somewhere um outside the uk as a standalone entity would that be a completely new market or would the base something which is at least some sense of synergy with a market that we already have some uh some involvement in so that might be a consideration, but probably not a limitation. So yeah, we're absolutely interested in acquiring overseas.

Thank you, Tim. Our next question is, have you seen increased competition from Chinese firms acquiring UK scientific companies for IP?

I think the simple answer to that is yes, we generally see a higher level of competition from Chinese companies.

Ian, do you want to do you want to layer a bit more on that yeah i think i think i'd answer that in two ways one is certainly within china itself um there is a lot of innovation going on there's some very competent um competitors um not that we fear that you know in many ways competition is good um and they are increasing the best of the amazing are increasing you know coming uh uh you know and approaching the you know the world the world market um uh whilst we should be cognizant of that and appreciative of that i actually um confident that with the relentless focus on innovation that i've talked about and our the agility that our businesses have and that market understanding i think you know we we can come through that um so we see that actually is a something we need to do with obviously and in fact i alluded to with the fire testing technology business that is in fact one of the reasons why that product update and that investment we need to do as a direct response of the Chinese situation but it's something it doesn't overly worry me but it's certainly something we're cognizant of it.

Thank you our next question is Rick Armitage joined the team almost a year ago but we've yet to see acquisitions come through while I acknowledge that the M&A environment might not be the best can you share any qualitative insights on the M&A front since Rick joined the team has the pipeline gotten larger have things progressed through the pipeline thank you very much so I think the simple answer to that is yes there is activity there is outreach and response to it to as well to inbound inquiries we are are ongoing conversations with the number of opportunities,

but I'd highlight the points that I raised on my slide earlier. This is notoriously erratic in how it progresses. So we are pleased that we have that additional bandwidth and it is allowing us to move through and sift through opportunities quicker. Rick is providing an excellent level of outreach, of investigation and of triage in some description, which is proving very effective for us. But yeah, I acknowledge that other than the Geotech de Brazil, there was not an acquisition closed last year.

Thank you, Tim. Next, we have Brad.

There was a 1.9 million acquisition of Geotech de Brazil, but I cannot see any corresponding cash outlay in the investing or financing activities of the cash flow statement motivated by wanting to understand free cash flow that's okay um you may have missed the um the short summary in the acquisition note that explains that what we're doing with the um that acquisition is we're actually paying it over 60 monthly installments so it is a um it is a long-term payable that we have so that's why you won't have seen the amount going out um we owe it and we're quite happy to have um to acknowledge that we that we owe it and it's an acquisition payable on the balance sheet but we haven't yet settled it all because we're paying it over five years um additionally there is a potential earn out of up to 0.7 million and that will be payable based on next year's performance and if they achieve the maximum, then we'd be paying that in 2027. That would be a lump sum. I hope that answers your question.

Thank you, Brad. Our next question is, the rules for vesting management options have been weakened, and I believe the new threshold is 5% per annum growth. Given the recent performance of the company, wouldn't it be more aligned with interest of all of the shareholders if the company went back to the old minimum 10 per annum growth vesting threshold even if the awards were scaled up somewhat i.e more lucrative upside but awarded only when the performance sorry only when the performance really is exceptional rather than just barely inflation matching noted um i i have to say i'd have to take guidance on what the historical was because my understanding was the historical was closer to 5% and it moved to 10% for a period of time.

So it's moving the 5% back down to where it was historically. But I mean, the question is certainly noted and that's a conversation that we would be having with our remuneration committee.

Thank you.

Our next question is, knowing that organic revenue was not increasing, why were steps not taken in advance during the year to cut costs to match the adjusted revenue leading to a fall in profits i think i'll if i may i'll take that one initially but then also uh brady and please please come in so i think um the point i'd make there is that there were uh several examples during the year of actions that were taken on on cost so for example uh right at the beginning of the year um there was some restructuring in scientifico after we exited the product line uh some so yes some costs associated with that but also costs coming out of the business um and then throughout the year there were actions taken uh on cost uh on on headcount i should say that resulted in some restructuring costs and reduced reduced head count i'd also mention that uh correspondingly there were some investments and we mentioned already some of the investments in R&D and engineering effort required at companies including FTT and management capability management bandwidth generally investing in talent across the group and particularly where there were growth opportunities. So we did take action but we acknowledge though that there was an increase in the overhead that closely matched the revenue increase.

I would add a little bit to this which is firstly that the issue in relation to the US came out at the end of Q1 when we had a pretty good first quarter. It becomes an emerging issue which we originally thought wouldn't be as significant and maybe that's our naivety but when we were at the year end result last year we did explain that we thought it wouldn't be that significant so um it took time before we realized it was it was bigger than perhaps we thought it would be and for the fact that it was prolonged um the second thing i would say is which is an easy thing for us to do which is to say well if your revenue is not going to be as high then you should cut a requisite amount of costs and i think an important thing for us to say is we're not a sort of slash and burn type organization and we certainly don't have the aggressive mindset about short-term cost-cutting that you would find in a U.S. corporate and we think that's important and for good reason because we're trying to build for the long term and if every time you have a what you believe might be a short-term hiccup and you you slash your costs you damage your culture and you damage your long-term outlook so I think the other side to this is also that we've taken and challenged our businesses about taking the right steps as a consequence of not having a successful a successful year as we hope we had last year and on the back of the fact that we had a tougher year for us in 24 as well and i think we took prudent and decisions as a consequence now i would note one other thing which is that if you read our accounts carefully you'll note that we haven't ever certainly during my 11 years of tenure ever recorded exceptional items for restructuring costs and we haven't done so this year either and so we treat those costs as a cost of doing business and such that those costs go through our trading p&l so part of the reason we also have slightly higher costs is the effect of the cost of making those changes is also in our trading p&l not separated out like a one-off item yeah and i think just to add to that brad i think it to some extent that hides the fact that several businesses did go through some difficult restructuring with all the costs for that a lot of that was mid-year but the reasons you've just said i had to go through the p and l and we

will only see the benefit we are only seeing the benefit of that this year from a from an overhead standpoint yep thank you our next question is what makes you confident that the geotech coring expedition will take place in three out of four typical years given that the last four years suggest more of a two out of four max is more likely what sorry the next part is what impact do you think the environment um sorry what impact do you think the environment of longer term higher oil prices would have on the likelihood of expeditions to take place and their profitability Thanks.

So yeah, great questions. So I'll address them in order. The customer base for these pressure-coring expeditions is relatively small. Historically, this has been related to country-sponsored expeditions, and those sponsoring countries have been Japan, China, India, and the US. and what I mean by that is that the overall landscape here is relatively small in terms of the the people and the organizations involved in this and we are well known in that landscape and well established and know and understand what's happening and the people involved in there so there are conversations ongoing all the time we hesitate to call it a pipeline because what what what uh always remains unclear is the exact timing of these things and geotech really doesn't have um a say in in the timing it tends to be dictated more around um uh seasonal issues depending on uh for which country in which location this is and these are major projects major undertakings involving you know multiple activities multiple or projects, the hiring of a vessel, and so forth. So they tend to be long lead time and with some significant uncertainty in the timing. But our knowledge of and conversations with the people involved in this sort of ecosystem gives us a good degree of confidence in that sort of regularity of those expeditions. The second point I'll respond to, but i'll say um very openly that it's you know it's it's rather speculative uh our sense of via a high high oil prices or correlation with the oil price or a correlation of um the realization of uh how how sensitive the world is to certain restrictions for example the straight the straits of who has who has control over that um would you know it would beg the question well is that going to accelerate uh countries who are currently rely on that to take a look at alternative arrangements alternative whether that means a faster transition to um uh to to to wind power for example or other green energy green energy technologies or whether that means investigating alternative hydrocarbons um and yeah it is it is the case that uh the methane hydrates that are part of these coring or that form the basis of these coring expeditions are vast resources of alternative hydrocarbons and so yeah it's rather speculative we just we just don't know and these things would take many many years to develop but it could be that if the oil price stays at a sustained high and if the volatility in that particular region remains the case then you know that that could be a long-term driver for that.

Thank you. Next we have, you mentioned in your report that this is the final year of increased capital expenditure. How should we view the situation from now on?

To extend the words for all of the other viewers, the comment is in relation to capital projects within the group and this is, we're coming to the end of what I think has been almost a sort of what feels a bit like a four-year project of a number of our businesses moving and either us funding a new building acquisition and its subsequent refurbishment or something similar to that and the last one of our businesses are in the middle of their final steps of their move their building will be ready I think at the within the next few weeks and so as it stands at the moment we have no large capital projects that I can see on the horizon such that that should mean that a couple of million less a year will be spent on on capex for the foreseeable future I hope that helps answer thank you our next question is after the armfield pension buyout is there any material DB pension scheme exposure across the rest of the portfolio I'm glad to say that this was the only scheme we had it should be within the next month or two no longer on the group's books and I'm glad to say that we've been able to secure and guarantee the future of all of the pensions within the Armfield defined benefit pension scheme and there are no other defined benefit pension schemes within the group.

Thank you. Our next question is what percentage of group revenues come from replacement parts, maintenance, consumables, spending on existing instruments versus new equipment sales?

Do you have that number to hand? I don't have that number to hand. It's a very good question. Yeah. Around 85% of our group's revenue is instruments, spares, etc. And around 15% is services, of which a large chunk of that relates to services that are outside what you've just mentioned so some of the maintenance revenue will be quite low maybe one percent one to two percent something like that um a few percent for spares what i can't really give you much of a clarity on is the sort of replacement um instrument cost because that's a slight i just don't have the detail for that unfortunately at the moment we are i would say we are we are cognizant that's area that we can probably improve on um we're conscious across our group we have businesses

that have been selling um instrumentation to their end users for uh decades so a significant install base um and so an opportunity to to uh you know increase the level of service and service related revenue through value-added services um is absolutely something that we that we want to look at improving across the group.

Thank you both. Next we have, do subsidiary businesses ever make their own acquisitions or are they all done by HQ?

So the simple answer is they're all done by HQ. There might be examples and situations where a subsidiary suggests or brings an acquisition to us, that's happened on a number of occasions, but the actual implementation or development of the you know the running of the acquisition process is something which is done at a group level but there are also some cases where um the acquired company is from a from a structural perspective is acquired by one of our other group companies um but you know essentially the acquisition process is run by group thank you our next question is does the ambition for businesses to double EBIT over the next sorry over three to five years implied judges ambition is for organic EBIT growth well above historic levels of eight percent if I may I'll I'll respond initially to this and then Ian can I get your get your views as well I think the context I'd like to frame this in is by saying why it is that we that we challenge the companies in that way so that you know the the strategy plan process asks the companies to respond to the challenge how would you be or become a business that doubles in size every three to five years and as as the question says that that implies 15 to 25 percent growth a year which is higher than our historic normal um and i i think in that in that context what what we're implying there is that um continuing to do as you as you are as you were delivers high single digit growth if you're planning and attempting and trying and investing in growing significantly higher than that 15 to 25 percent then you are by definition doing something very deliberate about it and it's that deliberateness that we're that we're seeking to capture there in the planning process asking the companies to work iteratively in a sense to try and identify what are the few, and Ian mentioned earlier, four to six and potentially most impactful initiatives that they could work on to deliver a higher level of growth above the underlying growth. And then what do they need to do to turn those initiatives into actions?

Ian, anything to add on that?

I'm not sure I'll get much to add other than just to emphasise that yeah it gets them to think big and not sort of incrementally and I think it's really the key message that to get across the ambition that they should be looking to drive.

Thank you we are now moving on to our final question for today if you have any further questions please email the team who'll respond to any questions that weren't covered today.

Our final question is what is the likely impact of the conflict in the Middle East given the number of universities in the uae and other countries in the region so um we mentioned earlier our revenue exposure to the middle east excluding israel is maybe a couple of percent at the moment so in that sense that the direct material impact for us is not great not not not huge i mean um what i think uh where there is uncertainty is how long this goes on for and what it might mutate into, whether it turns into a much larger issue in terms of energy challenge, supply chain challenge, and as I say, how long that goes on for. And in that sense, I'm not sure we're in a position to give a definitive response on that, about how big that could be.

Thank you. That's all the questions that we have time for today. So I'll hand back over to the management team for any closing remarks.

Thanks, Evie. So yeah, final closing remark is to thank everyone for attending, I hope this was useful and thank you to Ian and Brad for your contributions as well.