Trading Statement

RNS Number : 0469C

Diploma PLC

17 January 2018

 

DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

TELEPHONE: [phone]

FACSIMILE: [phone]

FOR IMMEDIATE RELEASE

17 January 2018

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 2018, ahead of the Company's AGM to be held today at 12.00, midday.

Trading Summary

The Group has made a good start to the year with overall trading in line with expectations. Reported Group revenues in the first quarter ended 31 December 2017 increased by 10% over the comparable period last year.  At constant exchange rates, Group revenues increased by 14%, with acquisitions completed during the last twelve months contributing 6% and underlying growth of 8%. The general strengthening of UK Sterling in the second half of 2017 against all major currencies except the Euro, has provided an overall headwind of 4% to reported Group revenues.

In the Life Sciences Sector, reported revenues were up 20%, with a strong contribution from Abacus dx, the Australian diagnostic business acquired in April last year. On an underlying basis, revenues were up 10% reflecting much stronger capital sales, having secured last year a new endoscope product line and against a weak comparative. In the Seals Sector, reported revenues increased by 6% (up 9% on an underlying basis) principally driven by strong trading activity across the North American businesses. In International Seals, revenues were unchanged from last year with stronger trading in the European businesses being offset by weaker performances in Russia and Australia. In the Controls Sector, reported revenues were up 7% (up 5% on an underlying basis) against a very strong comparative last year. All the Controls businesses benefitted from stronger European markets.

The Group's operating margin remains in line with expectations and slightly ahead of the comparable period last year. The Group has a robust balance sheet and has a proven track record of strong cash generation which the Group seeks to reinvest in acquiring new businesses to accelerate growth. Cash funds at 31 December 2017 were £21.9m.

CEO Succession

The process to identify a CEO successor is making good progress and an announcement will be made in due course.

Impact of US Tax Legislation

Diploma PLC notes the enactment of the Tax Cuts and Jobs Act in the United States on 22 December 2017 which will reduce the statutory rate of US Federal corporate income tax to 21%, effective from 1 January 2018. While the full implications of this new US tax legislation on the Group are still being reviewed, Diploma PLC estimates that the Group's adjusted effective tax rate for the year ending 30 September 2018 will reduce to ca. 24% from 26.5% reported at 30 September 2017. There will be no material one-off charges or credits as a result of the change in tax rate.

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.

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]
Martin Robinson
David Allchurch

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. 1,700 employees and its principal operating businesses are located in the UK, Northern Europe, North America and Australia.

Over the last ten years, the Group has grown adjusted earnings per share at an average of ca. 14% p.a. through a combination of underlying growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £1.3bn.

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

LEI: 213800OG17VYG8FGR19

 

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