Trading Statement

RNS Number : 6634C

Diploma PLC

21 January 2015

 

DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

21 January 2015

DIPLOMA PLC

FIRST QUARTER TRADING UPDATE

Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing its first quarter trading update in respect of the year ending 30 September 2015, ahead of the Company's AGM to be held today at 12.00, midday.

Trading Summary

Group revenues in the first quarter ended 31 December 2014 were 14% ahead of the comparable period last year. On an underlying basis, which is after adjusting for the impact of currencies and acquisitions, revenues increased by 4% which is in line with Board expectations that underlying growth will trend towards our target "GDP plus" rates.

The businesses acquired during the past year contributed 12% to revenues, although revenues reduced by 2% when the results of the overseas businesses were translated into UK sterling. The benefit from the strong appreciation in the US dollar was more than offset by further depreciation in the Group's other trading currencies, relative to the comparable period last year.  Operating margins remained in line with those achieved in the comparable period last year, with the anticipated weaker margin in the Life Sciences businesses (transactional currency effects) largely offset by stronger margins earned in the Seals businesses.

In the Life Sciences sector, revenues were 14% ahead of the comparable period last year (3% ahead on an underlying basis) and included a strong contribution from the newly acquired TPD business in Ireland. In the Seals sector, revenues increased by 25% (9% ahead on an underlying basis), benefitting from the contributions from businesses acquired last year and from strong growth in the US Seals businesses. In the Controls sector, reported revenues remained marginally ahead of last year (3% reduction on an underlying basis). The Controls businesses experienced weaker demand in European markets in the first quarter, though there has been some improvement since early December 2014.

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 2014, trading cash flow remained healthy, with free cash flow of ca. £5m in the quarter. On 6 October 2014 the Group completed the acquisition of 80% of Technopath Distribution for cash consideration of £11.1m, including debt acquired of £1.5m and on 19 December 2014, the Group made an initial cash payment of £0.6m to acquire a further 10% of the shares outstanding in Kentek Oy. Net cash funds at 31 December 2014 were ca. £14m, compared with £21.3m reported at 30 September 2014.

Notes:

1.   This trading update is based upon unaudited management accounts and has been prepared solely to provide additional information on trading to the shareholders of Diploma PLC.  It should not be relied on by any other party for other purposes.  Certain statements made in this update 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.

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 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 20% p.a. 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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