Trading Statement

RNS Number : 1851N

Diploma PLC

16 January 2019

 

DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

TELEPHONE: [phone]

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FOR IMMEDIATE RELEASE

16 January 2019

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 2019, ahead of the Company's AGM to be held today at 12.00, midday.

Trading Summary

The Group has made a solid start to the year with overall trading in line with expectations. Reported Group revenues in the first quarter ended 31 December 2018 increased by 9% over the comparable period last year.  At constant exchange rates, Group revenues increased by 8%, with acquisitions completed last year, net of a small disposal, contributing 4% and underlying growth of 4%. The weakening of UK Sterling during the past quarter provided a small benefit of 1% to reported Group revenues.

In the Life Sciences Sector, reported and underlying revenues were up 4%, supported by encouraging growth across several revenue streams, particularly in the Canadian Surgical and Endoscopy businesses. In the Seals Sector, reported revenues increased by 2% (up 3% on an underlying basis) driven by the continuation of strong trading in the International Seals businesses. In International Seals, underlying revenues were up 11% against a weak comparative,  supported by good growth from more robust Oil & Gas markets and recent contract wins. In North America, underlying revenues were 3% below a very strong comparative last year.  In the Industrial OEM business revenues were impacted in the first quarter by some delays in deliveries in the initial weeks of their ERP implementation. However, demand remained solid in the quarter and revenues are expected to be recovered in the coming months. Underlying Aftermarket sales remained robust and were 1% ahead of a very strong comparative last year. In the Controls Sector, reported revenues were up 24% reflecting the contribution from FS Cables and Gremtek acquired in August 2018 and October 2018, respectively. Underlying revenues were up 6% with strong contributions from the IS Group and Clarendon Specialty Fasteners businesses driven substantially by continuing robust demand in the Aerospace and Defence sectors.

The Group's operating margin in the first quarter remained in line with expectations and slightly below the comparable period last year. The Group maintains 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 2018 were ca. £28m.

CEO Succession

The Company has made a separate Announcement today confirming that Johnny Thomson has been appointed as Chief Executive Officer of Diploma PLC.

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.   Diploma PLC uses alternative performance measures as key financial indicators to assess the underlying performance of the Group.  All references in this Statement to "underlying" revenues refer to reported results on a constant currency basis and before any contribution from acquired or disposed businesses.

3.   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]
Nigel Lingwood, Group Finance Director
John Nicholas, Chairman
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. 1,800 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. 13% p.a. through a combination of underlying growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £1.4bn.

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

LEI: 2138008OG17VYG8FGR19

 

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