Millbrook Scientific Instruments plc

June 06, 2005 04:18 ET

Millbrook Scientific Instruments plc Final Results

LONDON, UNITED KINGDOM--(CCNMatthews - June 6, 2005) - Millbrook Scientific Instruments plc (AIM:MBK), the designer and manufacturer of innovative scientific instruments that measure nanoscale properties of thin films and coatings, announces its Final Results for the year ended 31 March 2005.


- Group doubles in size through acquisition of Micro Materials Limited.

- Successful move from OFEX to AIM.

- Turnover 85% higher than previous year at Pounds Sterling 1.64 million.

- Sales growth (including acquisitions) averages 88% p.a. over four years.

- Group achieves first positive EBITDA of Pounds Sterling 83,000 compared with previous year loss of Pounds Sterling 161,000.

- Greatly expanded global customer base of 150 (2004: 40) companies and universities.

- Queen's Award to Enterprise won by Millbrook Instruments Limited for 265% increase in exports over three years.

- Expansion of product portfolio via dynamic development programme.

Commenting on the results, Dr Peter Stefanini, Executive Chairman, said:

"Last year saw a substantial advance for Millbrook. Not only have we increased the scale of our operations but we have also made the Group significantly more profitable. We now have a broader and more secure base and will use this to strengthen our position globally. The move to AIM underlines the seriousness of our resolve to become a major player in the nanoscience sector."

For further information:

Millbrook Scientific Instruments plc Tel: +44 (0) 1254 699 606

Dr Peter Stefanini, Executive Chairman

Seymour Pierce Limited Tel: +44 (0) 20 7107 8000

Sarah Wharry / Jeremy Porter,
Corporate Finance

Media enquiries:

Abchurch Tel: +44 (0) 20 7398 7700

Henry Harrison-Topham / Samantha Robbins



Last year was one of remarkable achievement for the Group. The acquisition of Micro Materials Limited - anticipated in my statement last year, virtually doubled the size of the Group, taking us into exciting new applications in nanoscience. The Group now offers specialised instrumentation for measuring chemical, optical and mechanical properties of surfaces at the nanoscale level. In Micro Materials we acquired a profitable company with a strongly growing income stream, a highly talented management team, and access to a much larger customer base. The Group's listing on AIM some three months later fulfilled another promise made in my statement last year.

Turnover increased by 85% to Pounds Sterling 1.64 million. Even more importantly the Group generated, for the first time since it was formed, a positive EBITDA, of Pounds Sterling 83,000. Compared with a loss of Pounds Sterling 161,000 in 2003-4, this represents an improvement of Pounds Sterling 244,000. This significant achievement is in part due to the contribution from Micro Materials but is also the result of underlying organic growth.

In the case of the MiniSIMS, growth has been a spectacular 265% over three years, a performance which was recognised by the grant of the Queen's Award for Enterprise to Millbrook Instruments Limited. We are proud to have won such a prestigious accolade.

Looking ahead, we see substantial organic growth in 2005-6 based on encouraging forward order levels. We also have in place a dynamic development programme which is broadening our product range and extending our reach to new customers. We intend to augment this growth by further acquisitions and to this end keep a close watch on the nanoscience sector for suitable opportunities.

Quite apart from its growth in numerical terms, I feel that Millbrook has over the last year grown up, from being a developing start-up company to a business with genuine breadth and depth. This is reflected not only in our product portfolio but also in our management.


EBITDA of Pounds Sterling 83,000, though encouraging, would have been significantly higher had we been able to ship all the instruments for which we received orders. In particular two instruments with a sales value of Pounds Sterling 258,000 and destined for India, were held up awaiting export licences, one of which was subsequently not granted.

Before exceptional costs of listing on AIM and amortisation of goodwill, the Group achieved a small profit of Pounds Sterling 3,000 before tax.

The balance sheet for the Group is significantly stronger as a result of a private placing in September and improved financial performance. Working capital management has improved with an increase of 38% in working capital year-on-year supporting the significantly higher level of sales activity.

Net cash outflow from operating activities was Pounds Sterling 144,000 a very much lower figure than the Pounds Sterling 330,000 absorbed by operations last year.

Acquisition of Micro Materials Limited

On 3 September 2004 we completed the acquisition of Micro Materials Limited, a company with a record of profit growth over a number of years as well as a substantial base of installed instruments. This acquisition has extended the Group's portfolio into another key sector of nanoscience, the measurement of mechanical properties of ultra thin films and coatings. Micro Materials is the technology leader in this sector, thought to be growing at 25% per year, with a significant competitive edge over the other players.

With a global spread of users in sectors such as automotive, biomedical, pharmaceutical, electronics and specialist materials as well as a large number of universities and research institutes, Micro Materials' extensive customer base is compatible with those of our other operating companies.

We acquired a company with a strong team in place. Most importantly the owners remained with the business: the founder, Jim Smith, whose technical creativity has been the driving force, as Technical Director, and his partner, Paul Grasske, as Managing Director. They had recruited a team of high calibre scientists and technicians which we have been fortunate to inherit.

The consideration for Micro Materials was Pounds Sterling 265,000 in cash and 1.85 million shares, a total value of Pounds Sterling 404,000 before expenses. Your Board consider this to have been an excellent deal given the current performance and future potential of this business. A private placing raised Pounds Sterling 453,000, which provided adequate funds for the acquisition as well as the costs of the subsequent move from OFEX to AIM.


On 15 December 2004 the Company's shares were listed on the AIM market of the London Stock Exchange. The motivation for moving to AIM was to achieve greater liquidity in our shares and to encourage support from new institutional shareholders. In addition, a reluctance to accept OFEX traded shares on the part of some potential vendors was in danger of limiting our "buy and build" strategy. The removal of this limitation will assist our growth.

Markets and Marketing

It is sometimes difficult to communicate to investors (particularly if they are non-scientists) how our products are used and why end users are prepared to pay Pounds Sterling 50,000 to Pounds Sterling 150,000 for an instrument to characterise surfaces. In fact surface engineering is a key technology underpinning many products and processes. The market in the UK alone for engineering coatings in 2005 has been estimated at Pounds Sterling 7 billion and the joint report by The Royal Society and The Royal Academy of Engineering on Nanoscience and Nanotechnologies published in July last year confirmed the increasing importance of surface engineering in a variety of industries and applications.

In particular, the replacement of monolithic materials with coated or multi-layer materials is proceeding apace. This change is directed at achieving performance improvements, material savings, environmental impact benefits or other factors in improving cost effectiveness. The layers and coatings in question are frequently nanoscale and require specialised instrumentation to investigate, measure and characterise them. This is where Millbrook comes in, with instrumentation which provides chemical surface information (the Millbrook MiniSIMS), optical information (the Aquila nkd) and nano-mechanical information (the Micro Materials NanoTest.)

The market for these instruments is expected to grow strongly as a result of the growth in surface engineering and also as a result of the need for measurement, whether in the development of new systems or in quality control. To give specific examples, materials producers, Corus and Pilkington, each purchased Millbrook instruments because an increasing proportion of their output of metals and glass respectively incorporates nanoscale coatings. Coated glass in particular is now widespread, typical applications being self-cleaning glass and glass which transmits visible light but reflects heat. Other sectors which have purchased Millbrook's instruments for surface characterisation include automotive, biomaterials, ceramics, electronics, magnetic storage, optical, pharmaceuticals, and polymers.

Some of the more interesting sales in the last year include a MiniSIMS to the European Space Centre for aerospace applications, an nkd spectrophotometer to Vision Labs (the testing laboratory for Specsavers) for quality control of spectacle lens coatings, and a NanoTest to the Venice Nanotechnology Centre.

As far as geographical coverage is concerned, there was good sales growth in Europe and this has become the Group's principal market accounting for 51% of sales. We have continued to sell effectively to Asia, which accounted for 31% of sales, with Japan, South Korea, Singapore, Malaysia, India and China figuring strongly. We have put some effort into developing the Indian market and have been rewarded with success. However, where orders have been received from defence related organisations in India, we have experienced some difficulty in securing export licences. We do not believe that our instruments contribute to the risk of nuclear proliferation and have made representations to Government to this effect. The USA accounted for 17% of sales. Some improvement has been achieved in sales to this market but there is still much more to do.

It would be impossible for the Group to cover these global markets adequately using its own sales resources alone. Therefore all key territories, some twenty in total, are serviced by agents or distributors. We monitor the performance of these companies and replace them where they are underperforming.

The Group now has an installed base of users numbering around 150. There are substantial opportunities within this user base for additional sales. Positive experience of one instrument may facilitate the sale of another. Of course, the untapped market outside this base is many times larger and there are significant synergies to be exploited of which the joint workshop, showcasing all the Group's products, is probably the most effective.

Websites are extremely important when selling technically sophisticated products to a global customer base. We have re-designed our websites so that information is presented clearly and targeted at specific audiences.

Technology and product development

At Millbrook Instruments Limited, the inevitable result of success in sales has been the need to devote more resource to production and service. For this reason development has not proceeded as quickly as we had anticipated and the new versions of the MiniSIMS will not now be launched until the second half of this year.

To recap, these include a Time of Flight (TOF) version of the MiniSIMS with a greatly extended mass range and superior sensitivity, a prototype of which has been demonstrated to a group of existing customers and has attracted significant interest, and a large sample version, which will accommodate samples up to 100mm in diameter, 100 times larger in area than the current maximum sample size. Both products will be priced at a premium to the standard instrument and offered as upgrades to existing systems.

The TOF is particularly targeted at users in the polymer and biomedical sectors. The large sample system, where we already have three advance orders to satisfy, will find application in situations where customers wish to examine larger objects, the data storage sector (computer hard discs etc) is a case in point. A carousel accessory that transforms the large sample holder into an automated multiple sample testing system will increase the attraction of the instrument in the quality control sector where high throughput and reduced operator involvement are priorities.

Developments at Aquila Instruments Limited outlined in last year's Chairman's Statement have been completed. The Aquila nkd spectrophotometer range has been extended to include two new options: a confocal microscope attachment and an ellipsometer. The former, for which orders have already been received, allows the instrument to be used on curved and irregular surfaces making it more suitable for general applications in precision optics. The latter extends its performance into the measurement of ultra-thin coatings.

Micro Materials' development programme has concentrated on exploiting its unique patent protected technology in impact testing and on extending the scope of the instrumentation in high and low temperature testing. Already well ahead of the competition in offering a high temperature stage that can operate at 500 degreesC, Micro Materials is now engaged in a collaborative project at Birmingham University to develop a low temperature stage targeted principally at polymer testing applications. Further work is also in progress to develop new calibration standards that represent an advance on those available from the competition.

Technical directors from the three operating companies meet quarterly to exchange information and report on technological progress. These joint meetings, supplemented by informal contacts between the technical teams, ensure that experience within the Group is optimised for problem solving and idea generation. Although the three technologies in Millbrook are quite distinct, there are degrees of commonality and areas of overlap. Software for example is central to all our instrumentation and it is our intention to keep ahead in this key area. Similarly, there are new fast growing sectors, such as biomaterials, where we are active and wish to increase our involvement.


We were pleased to welcome to the Board last September Paul Grasske and Henry Boyden.

Paul was appointed an executive director of the Group on the acquisition of Micro Materials Limited. He is a chartered accountant with extensive experience in finance and general management. As managing director of Micro Materials Limited he is responsible for running that company, a role he performed for six years prior to the acquisition. Since April 2005 Paul has also been responsible at board level for Aquila Instruments Limited.

Henry joined the Board as a non-executive director following the September share placing. He represents an investor group, which made a substantial investment at that time, and now has a shareholding of 14% in the Company (including 2.67% held by Henry himself.) He has been an advisor to and investor in small businesses for ten years and brings a valuable perspective to the Board's deliberations.

At the end of last year Dr David Lovering stepped down from the Board to concentrate on the growth of Aquila Instruments Limited and in particular the development of its technology. I should like to thank David for his valuable contribution to Board discussions over the last two years.

The Board has had a number of very important and demanding decisions to make over the last year relating to the acquisition of Micro Materials, the share placing and the AIM listing. I have greatly valued the high quality input from Board members and their commitment to the success of the Group.


The Group employs 27 people at its sites in Blackburn, Wrexham and Cambridge, which compares with 12 people at the end of the previous year. Most of this increase has arisen from the acquisition of Micro Materials.

Our policy is to ensure that staff are trained to carry out a wide range of tasks so that resources can be concentrated where they are needed. This flexibility among production, service and development engineers enables us to keep overheads low and yet respond to business demands.

Our attitude to future growth has been uncompromising and we have invested in high calibre people in order to shape our Group for the opportunities ahead. In our kind of high technology business, there is no asset more important than good people and we have therefore seen it as vital that we recruit wisely, train thoroughly and continuously motivate people.

Motivation is particularly important in retaining staff. We appoint young scientists and engineers to positions that carry a high level of responsibility at an early stage in their career and provide a working environment in which everyone has a high degree of autonomy.

The Group's Enterprise Management Incentive Share Option Scheme is designed to provide additional incentive to staff. All staff with more than six months service qualify for share options under this scheme.

The Future

The level of demand for our instruments as measured by forward orders and prospects is significantly higher than at this stage last year. We cannot of course be certain if this will be maintained as the year progresses, but the indicators are positive.

I believe that markets for the Group's products will continue to grow strongly. The underlying drivers for growth in nanoscience and surface engineering are favourable and continue to give us confidence for the future. The applications for our products are global and encompass many industrial sectors, so that we are not unduly vulnerable to a particular geographical or sector downturn.

We will continue to exploit the strong position we have established across our global base of users, and will source new clients from the vast untapped reservoir of universities and industrial concerns yet to purchase a Millbrook instrument. To facilitate growth we will ensure that our sales and technical teams are strengthened to match the demands of customers so that we can respond to opportunities quickly and decisively.

New products resulting from our development programme will make a substantial contribution to growth this year. In addition, there are further product developments in the pipeline which will be launched after appropriate testing has been completed.

Growth by acquisition remains a key feature of our plans and we are continually assessing opportunities. Our "buy and build " strategy is aimed at increasing the scale of the Group's operations, broadening its technology base and extending its market reach. Our objective is to make Millbrook a major player in nanoscience. We believe that this represents the best strategy for enhancing shareholder value over the medium to long term.


I should like to end this review by thanking all our staff for their dedicated work during the last year and their commitment to the business and its success. I should also like to thank our customers and suppliers without whom we would not have a business, and our professional advisers for helping us achieve a number of landmarks in 2004-5. Finally my sincere thanks to our investors who have made the funds available for us to grow the Group successfully.

Dr Peter Stefanini

Executive Chairman

6 June 2005

for the year ended 31 March

2005 2004
Notes Continuing Acquisition
activities Total Total
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

TURNOVER 2 1,021,234 613,786 1,635,020 883,448

Cost of sales 375,777 324,967 700,744 333,820

Gross profit 645,457 288,819 934,276 549,628

expenses (590,178) (261,070) (851,248) (710,787)
Profit / (loss)
before interest,
amortisation and
exceptional item 55,279 27,749 83,028 (161,159)
item 3 (130,800) -

Depreciation and
amortisation of
IPR (78,742) (19,475)

Amortisation of
goodwill (148,624) (136,040)
OPERATING LOSS (275,138) (316,674)

Bank Interest
receivable 3,587 4,889

Interest payable
and similar
charges (4,577) (3,805)
ACTIVITIES BEFORE TAX (276,128) (315,590)

Taxation 10,458 -
PERIOD (265,670) (315,590)

Loss per share 5
Basic (0.791p) (1.123p)
Diluted (0.720p) (0.986p)

Loss per share
item 5
Basic (0.402p) (1.123p)
Diluted (0.366p) (0.986p)

Earnings per
item and
amortisation 5
Basic 0.041p (0.631p)
Diluted 0.037p (0.554p)

at 31 March

Group Group Company Company
Notes 2005 2004 2005 2004
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

Intangible assets 1,368,189 1,131,946 - -
Tangible assets 172,652 63,294 - -
Investments - - 1,630,197 1,209,964
1,540,841 1,195,240 1,630,197 1,209,964

Stock 301,228 180,094 - -
Debtors 724,230 361,108 1,126,405 852,686
Cash at bank
and in hand 38,266 63,604 2,797 47,686
1,063,724 604,806 1,129,202 900,372
falling due
one year (696,824) (253,676) (79,305) (21,266)
ASSETS 366,900 351,130 1,049,897 879,106
LIABILITIES 1,907,741 1,546,370 2,680,094 2,089,070

falling due
after more than
one year (55,690) (22,207) - -

CHARGES (5,770) - - -

NET ASSETS 1,846,281 1,524,163 2,680,094 2,089,070

Called up share
capital 1,893,019 1,405,000 1,893,019 1,405,000
Share premium
account 777,861 678,092 777,861 678,092
Profit and loss
account (824,599) (558,929) 9,214 5,978
6 1,846,281 1,524,163 2,680,094 2,089,070

for the year ended 31 March

2005 2004
Pounds Pounds
Notes Sterling Sterling
OPERATING ACTIVITIES 7 (143,925) (329,912)

Interest received 3,587 4,889
Interest paid (4,577) (3,805)
(990) 1,084

Payments to acquire
intangible fixed assets (119,539) (25,950)
Payments to acquire
tangible fixed assets (138,211) (55,100)
(257,750) (81,050)

UK corporation tax paid (12,169) -

Purchase of subsidiary
undertaking (281,483) -
(281,483) -

FINANCING (696,317) (409,878)

Issue of ordinary share
capital 517,212 -
Share issue costs (21,924) -
New loans 60,000
Loan repayments (14,517) ( 9,517)
540,771 ( 9,517)

DECREASE IN CASH (155,546) (419,395)


at 31 March 2005


The group accounts consolidate the accounts of Millbrook Scientific Instruments PLC and its subsidiary undertakings drawn up to 31 March 2005. No profit and loss account is presented for Millbrook Scientific Instruments PLC as permitted by Section 203 of the Companies Act 1985.

Millbrook Instruments Limited, Aquila Instruments Limited and Micro Materials Limited have been included in the Group accounts using the acquisition method of accounting.


Turnover represents the amounts derived from the provisions of goods and services which fall into the group's ordinary activities, stated net of value added tax.

The group operates in one principal area of activity, that of the manufacture and supply of scientific instruments. It generates turnover on a worldwide basis.

Turnover is analysed as follows: -

2005 2004
activities Acquisition Total
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

United Kingdom 155,428 127,655 283,083 160,874
Asia 320,715 186,732 507,447 393,753
Europe (excluding UK) 321,045 237,571 558,616 178,694
USA 224,046 61,828 285,874 150,127
Total 1,021,234 613,786 1,635,020 883,448


The Group was admitted to AIM on 15 December 2004. The costs of Admission were funded from part of the proceeds of the private share placing in August 2004. These costs cannot be treated as a deduction from the share premium account as would have been the case if the funds had been raised at Admission.

Accordingly the costs of Admission (Pounds Sterling 130,800) have been treated as an exceptional item in the current year.


The Group's financial statements for the year to 31 March 2004 have been restated to reflect the capitalisation of development costs incurred prior to that date in respect of the Time of Flight and Large Sample Handling options for the Millbrook MiniSIMS instrument. These projects have now reached the stage where, in accordance with the accounting policies of the Group, the costs can be capitalised and amortised over a period not exceeding five years. The loss before interest, tax, depreciation and amortisation for the year ended 31 March 2004 has been reduced by Pounds Sterling 25,940 as a result of this adjustment.

Amortisation of the total cost of these developments will commence on 1 April 2005.


2005 2004
Pounds Pounds
Sterling Sterling

Basic weighted average number
of shares in the period 33,580,952 28,100,000
Diluted weighted average number
of shares in the period 36,898,536 31,967,850

Loss attributable to members
of the parent undertaking (265,670) (315,590)
Basic loss per share (0.791p) (1.123p)
Diluted loss per share (0.720p) (0.986p)

Loss attributable to members
of the parent undertaking
before exceptional item (134,870) (315,590)
Basic loss per share (0.402p) (1.123p)
Diluted loss per share (0.366p) (0.986p)

Earnings attributable to
members of the parent
undertaking before exceptional
item and amortisation of
goodwill 13,754 (179,550)
Basic profit / (loss) per
share 0.041p (0.631p)
Diluted profit / (loss) per
share 0.037p (0.554p)

The loss per share (basic and diluted) has been calculated on the result after tax attributable to the ordinary shareholders and the weighted average number of shares in issue in the period.

The loss per share (basic and diluted) before exceptional items has been calculated on the result after tax adjusted by the exceptional cost of Pounds Sterling 130,800 relating to the company's admission to AIM.

The profit per share (basic and diluted) before exceptional item and amortisation of goodwill has been calculated on the results after tax adjusted by the exceptional cost of Pounds Sterling 130,800 relating to the company's Admission to AIM and the charge for amortisation of goodwill (Pounds Sterling 148,624).


2005 2004
Pounds Pounds
Sterling Sterling

Loss for the period (265,670) (315,590)
Share capital issued 488,019 -
Premium on shares issued 121,693 -
Share issue costs (21,924) -
322,118 (315,590)
Opening shareholders' funds 1,524,163 1,839,753
Closing shareholders' funds 1,846,281 1,524,163


2005 2004
Pounds Pounds
Sterling Sterling

Operating loss (275,138) (316,664)
Depreciation 52,645 15,633
Amortisation of intellectual
property rights 26,095 3,842
Amortisation of goodwill 148,624 136,040
Release of capital grants (2,448) -
Increase in stock (71,466) (65,625)
Increase in debtors (62,131) (164,211)
Increase in creditors 39,894 61,073
(143,925) (329,912)

Annual General Meeting

The Annual General Meeting of the Company for the Period Ending 31 March 2005 will be held at the offices of George Davies Solicitors, Fountain Court, 68 Fountain Street, Manchester, M2 2FB on the 21st July 2004 at 11:00 a.m.

Report and Accounts

The figures for the period to 31 March 2005 do not constitute full accounts within the meaning of the Companies Act 2003. The figures have been audited by Edwards Veeder and their report was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985

Copies of the Report and Accounts will be despatched to Shareholders on 17 June 2005 and will be available from the Company's office at Blackburn Technology Centre, Challenge Way, Blackburn, Lancashire, BB1 5QB.

Statutory Accounts for 2005 will be delivered to the Registrar of Companies following the Annual General Meeting.

Contact Information