Interim Management Statement

RNS Number : 5894L

Diploma PLC

14 January 2009

 



<> 12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX TELEPHONE: [phone] FACSIMILE: [phone] FOR IMMEDIATE RELEASE 14 January 2009

DIPLOMA PLC INTERIM MANAGEMENT STATEMENT Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing its first Interim Management Statement of the new financial year, ahead of the Company's AGM to be held today at Brewers Hall, Aldermanbury Square, London, EC2V 7HR at 12.00 midday. This Statement relates to the period from 1 October 2008 to 31 December 2008 and includes the first quarter's trading. The Group continues to benefit from its focus on specialised sectors and supplying essential products and services which are mostly funded by customers' operating, rather than capital, budgets.  With more than 60% of revenues generated outside the UK, the Group has also gained on translation from the significant deterioration in the value of UK sterling relative to all other major currencies.  With this background, the Board is able to report an increase in Group revenues of 2% over the comparable period last year although, on a constant currency basis, Group revenues reduced by 7% over the comparable period. In Life Sciences, the Canadian Healthcare businesses, which account for over 50% of sector revenue, continued to show steady development.  Revenue from the European businesses were somewhat reduced against a strong comparable quarter last year. Trading in the US Seals businesses weakened in the quarter, reflecting the difficult market conditions in the broader US industrial economy.  Cost reduction programmes implemented in the US operations have partly mitigated the effects of reduced operational leverage. By contrast, the performance of the European Seals businesses was strong. In Controls, the European businesses overall delivered a steady performance, with a continued focus on relatively more buoyant, technically driven sectors.  The deterioration in the value of UK sterling relative to all other major currencies has had a significant positive impact on the Group's results on translation.  Against the comparable period last year, the US dollar, the Euro and the Canadian dollar have appreciated by 25%, 16% and 6% respectively against UK sterling.  Conversely at a transaction level, the weakness of UK sterling and the deterioration of the Canadian dollar relative to the US dollar, has put pressure on gross margins in the UK and Canadian businesses, by increasing the cost of goods sold. The Group continued to maintain a strong financial position with cash balances of £16.6m at 31 December 2008 and undrawn committed term facilities of £25.0m.   On 23 December 2008, the Group announced that it had signed contracts to acquire RT/Dygert, a leading supplier of seals, o-rings and custom moulded and machine parts, based in the US, for a maximum consideration of £13.2m (US$19.75m). This acquisition formally closed on 12 January 2009 and the initial consideration paid of £9.6m (US$14.4m) has been funded in part from the Group's existing cash resources and in part by drawing down £4.7m (US$7.0m) from the Group's committed bank facility.  This acquisition is expected to be immediately earnings enhancing for the Group. In addition, as reported in the 2008 Annual Report, on 5 November 2008, the Group acquired Meditech, a small medical diagnostic company in Canada for a maximum consideration of £1.5m (C$2.9m). On completion, the initial consideration of £1.3m (C$2.4m) was funded out of the Group's existing cash resources. Finally, pursuant to the sale and purchase agreement signed on 28 August 2007, the Group will shortly be making a payment to the vendors of AMT of £1.1m (C$2.0m) as deferred consideration. This payment was based on the performance of that business during the year ended 30 September 2008. There have been no other significant changes in the position of the Group in the period since the publication of the Annual Report for the year ended 30 September 2008. The next update on trading is expected to be issued as part of the Half Year results for the six months ending 31 March 2009, which are expected to be released on 11 May 2009. Notes: This Interim Management Statement, which is based upon unaudited management accounts, has been prepared solely to provide additional information to the shareholders of Diploma PLC in order to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied on by any other party, for other purposes.   A copy of this Statement, together with further information about Diploma PLC, may be viewed on its website at www.diplomaplc.com For further enquiries please contact: Bruce Thompson, Chief Executive Officer 020 7549 5700 Nigel Lingwood, Group Finance Director 020 7549 5705 Simon Bloomfield, Bankside Consultants 020 7367 8861 NOTE TO EDITORS: Diploma PLC is an international group of businesses supplying specialised technical products and services to the Life Sciences, Seals and Controls industries. Diploma achieves stable growth and attractive margins from its focus on supplying specialised technical products to markets which value high levels of customer service, technical support and value adding activities. A high proportion of revenues are generated from essential products and services funded by operating, rather than capital budgets. The Group employs ca. 1,000 employees and its principal operating businesses are located in the UK, Germany, US and Canada. Over the last five years, the Group has grown adjusted earnings per share at an average of ca. 21% p.a. through a combination of organic growth and acquisitions. The current market capitalisation is ca. £150m.

 

END

 

 

IMSEAXFDFSFNEFE