7 March 2012 – acquisition
The company has completed the acquisition of Global Digital Systems Ltd for a cash consideration of £7.65m. An additional payment will be made to reflect the working capital available at completion in excess of the ongoing requirements of the business but it is expected that this payment will be covered by the cash inherited on completion. The acquired busines designs, manufactures and sells instruments used to test the physical properties of soil and rocks. The products are sold worldwide to academic institutions and commercial customers conducting geotechnical research or providing testing services in relation to large civil engineering projects. The company was established in 1979 and is based in Hook, Hampshire.
Global Digital Systems’ unaudited accounts for the year ended 31 October 2011 show revenues of £4.9m and pre-tax profits of £879k. Operating profit adjusted to eliminate non-recurring items and to reflect Judges’ practices would have amounted to £1.27m. The accounts show net tangible assets of £1.7m including cash of £809k.
It is expected that the deal, which is Judges’ largest to date, will be immediately and significantly earnings enhancing. We continue to rate the company and its management very highly and fully expect the share price to move higher in due course. Preliminary results are due to be released on 29 March and a BUY rating is easily justified.