Interim Management Statement

RNS Number : 6510X

Diploma PLC

15 January 2014

 



DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

15 January 2014

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 2014, ahead of the Company's AGM to be held today at 12.00, midday. This Statement relates to the period from 1 October 2013 to date and is based on the first quarter's trading.

Trading Summary

Group revenues in the first quarter ended 31 December 2013 were 4% ahead of the comparable period last year. On an underlying basis, after adjusting for the impact of currencies, revenues increased by 6%. The revenues of the overseas businesses have been adversely impacted on translation by the appreciation of UK sterling, in particular against the Canadian and Australian dollars and to a lesser extent against the US dollar. There was no material impact from acquisitions completed last year. Operating margins remained in line with those achieved in the comparable period last year.

In the Life Sciences sector, revenues were 2% ahead of the comparable period last year (8% ahead on an underlying basis). There was strong growth in the European Environmental businesses, but solid underlying growth in Healthcare revenues was held back on translation to UK sterling. In the Seals sector, revenues increased by 4% with both the US and the European Seals businesses contributing to this increase. In the Controls sector, trading has improved in line with expectations with revenues 8% ahead of last year and benefitting from a more confident trading environment in both the UK and Germany.

Financial Position

The Group has a robust balance sheet and has a proven track record of strong cash generation. In the quarter ended 31 December 2013, trading cash flow remained healthy. Free cash flow in the quarter was ca. £5m benefitting from lower capital expenditure as the Group's Investment for Growth programme reduces in scale.  Net cash funds increased to ca. £22.0m at 31 December 2013.

On 22 December 2013, the Group acquired Ramsay Services, a small Industrial OEM Seals business based in Newcastle, UK for consideration of £1.3m; in January 2014, the Group also spent £0.3m on acquiring 4% of the outstanding minority interest in DSL.

On 13 January 2014 the Group completed the acquisition of 80% of Kentek Oy, for initial consideration of £9.7m (€11.7m), having received approval from the competition authorities in Russia. Kentek Oy is a specialised distributor of filters and related products, used in heavy mobile machinery and industrial equipment applications. The business is based in Finland with operations in Russia and the Baltic States and will extend the reach of the Group's Seals businesses into new and emerging markets.

There have been no other significant changes in position of the Group in the period since the publication of the Annual Report & Accounts for the year ended 30 September 2013.

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. 1,100 employees and its principal operating businesses are located in the UK, Germany, US, Canada and Australia.

Over the last five years, the Group has grown adjusted earnings per share at an average of ca. 17% pa through a combination of organic growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £800m.

Further information on Diploma PLC, together with a copy of this Announcement, is available at www.diplomaplc.com

 

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