Interim Management Statement

RNS Number : 6548N

Diploma PLC

30 July 2014

 

DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

30 July 2014

DIPLOMA PLC

SECOND INTERIM MANAGEMENT STATEMENT

Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing its second Interim Management Statement which relates to the period from 1 April 2014 to date and is based on the third quarter's trading.

Trading Summary

Overall trading has been consistent with expectations at the half year, with Group revenues for the nine months ended 30 June 2014, 6% ahead of the comparable period last year.  On an underlying basis, after adjusting for currency effects and acquisitions, revenues increased by 8%.  Acquisitions contributed £9m to Group revenue during the period, although this was more than offset by the adverse translation effect of the stronger UK sterling on the results of the overseas businesses.  Operating margins have generally remained robust, despite the anticipated weakening in gross margins in the Group's Healthcare businesses as the existing currency hedging contracts expire and are replaced by more expensive contracts.

Against stronger second half comparatives, each of the Group's three Sectors has continued to make good progress and has benefited from more favourable macro-economic conditions. In Life Sciences, underlying revenues were up 8% on the comparable period last year, benefiting again from strong consumable and service revenues, offsetting weaker capital revenues.  In Seals, underlying revenues were up 6%, reflecting a more favourable performance in the US Aftermarket and continuing good growth in the Industrial OEM businesses. In Controls, underlying revenues were up 9%, although the rate of growth has slowed in certain market segments. 

Acquisitions

In June 2014, the Group completed the acquisition of Specialty Fasteners, a small UK distributor of fasteners, for a maximum consideration of £2.9m and in July 2014, the Group acquired the assets and goodwill of Chemzyme, a small Healthcare distributor in Australia for a maximum consideration of £0.7m (A$1.2m). Year to date, the Group has now spent ca. £15m on acquisitions.  Acquisitions remain an integral part of the Group's growth strategy and the Group has an improving pipeline of opportunities.

Financial Position

Free cash flow remains strong, benefitting from lower capital expenditure as the Group's Investment for Growth programme reduces.  After payment of the interim dividend in June of £6.1m and further expenditure since 1 April 2014 on acquiring new businesses of £2.8m, net cash funds at 30 June 2014 were ca. £10m. In June 2014, the Group renewed its bank facilities with a £25m multi-currency revolving facility and an accordion option to increase it to £50m.

There have been no other significant changes in the financial position of the Group in the period since the publication of the Half Year Results for the six months ended 31 March 2014.

The Group's results for the year ended 30 September will be announced on Monday, 17 November 2014. 

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. 1,300 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% p.a. through a combination of organic growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £700m.

Further information on Diploma PLC can be found at www.diplomaplc.com

 

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