Interim Management Statement

RNS Number : 7228V

Diploma PLC

18 January 2012

 



DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

18 January 2012

DIPLOMA PLC

FIRST INTERIM MANAGEMENT STATEMENT

Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing its first Interim Management Statement in respect of the year ending 30 September 2012, 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 2011 to date and therefore includes the first quarter's trading.

Trading Summary

Group revenues in the first quarter ended 31 December 2011, which is seasonally the quietest quarter of the year, were 16% ahead of the comparable period last year.  On an underlying basis, after adjusting for currency effects and acquisitions, revenues increased by 11% against the comparable period last year.  Group operating margins remained at similar levels to last year.

In the Life Sciences sector, revenues were 27% ahead of the comparable period last year, boosted by the contribution from CMI, acquired in December 2010, and strong sales of capital instrumentation.  In the Seals sector, revenues increased by 19%, with both the North American and European businesses experiencing strong demand and a good first quarter contribution from the recently established  Chinese operation.  In the Controls sector, revenues were 3% ahead of the comparable period last year, with a strong performance in the UK, but with trading in Continental Europe constrained by market uncertainty. 

Acquisition of J Royal Co. Inc

On 13 December 2011, we announced the acquisition of J Royal Co. Inc ("J Royal"), an important extension to the Group's developing Industrial OEM Seals business in North America.  At the same time, contracts were exchanged for the acquisition of a 10% shareholding in Kunshan J. Royal Precision Products Inc ("JRPP"), a related Chinese supplier.

Financial Position

In the quarter ended 31 December 2011, the Group generated free cash flow of ca. £3m.  The initial cash consideration of £10.4m for the acquisition of J Royal, which was in part financed by a further drawdown from the Group's existing borrowing facility, together with the final payment of deferred consideration for CMI, amounted to £11.2m in aggregate.  As a result, net cash funds were reduced over the period by ca. £8m to ca. £4m at 31 December 2011.  Further consideration of up to £2m relating to the acquisitions of J Royal and JRPP are expected to be paid during the next quarter.

The Group retains undrawn borrowing facilities of ca. £7.5m and has the option to extend this facility, subject to market pricing, by a further £20m.

There have been no other significant changes in the position of the Group in the period since the publication of the Annual Report & Accounts for the year ended 30 September 2011.

Outlook

The Group has made an encouraging start to the year and we see good opportunities for further development, both organically and through acquisition.  Although underlying growth rates are likely to slow as we enter a period of tougher comparatives, the Board remains confident of making good progress in this financial year.

The next update on trading is expected to be issued in March 2012, prior to entering the close period in respect of the Half Year results for the six months ending 31 March 2012. An Investor Day will be held for Investors and Analysts on 1 February 2012, details of which are available from Tulchan Communications.

Notes:

1.   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.  Certain statements made in this Statement are forward-looking statements.  Such statements have been made by the Directors in good faith using information available up until the date that they approved this Statement.  Forward-looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks.

2.   A copy of this Statement, together with further information about Diploma PLC, may be viewed on its website at www.diplomaplc.com

Diploma PLC -	[phone]
Bruce Thompson, Chief Executive Officer
Nigel Lingwood, Group Finance Director
Tulchan Communications -	[phone]
David Allchurch
Martin Robinson

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's businesses are focussed on supplying essential products and services which are funded by the customers' operating rather than their capital budgets, providing recurring income and stable revenue growth.

Our businesses then design their individual business models to closely meet the requirements of their customers, offering a blend of high quality customer service, deep technical support and value adding activities. By supplying essential solutions, not just products, we build strong long term relationships with our customers and suppliers, which support attractive and sustainable margins.

Finally we encourage an entrepreneurial culture in our businesses through our decentralised management structure. We want our managers to feel that they have the freedom to run their own businesses, while being able to draw on the support and resources of a larger group.  These essential values ensure that decisions are made close to the customer and that the businesses are agile and responsive to changes in the market and the competitive environment.

The Group employs ca. 900 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. 19% p.a. through a combination of organic growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £400m.

 

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