TIDMDPLM
RNS Number : 3171K
Diploma PLC
28 August 2019
DIPLOMA PLC
12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX
TELEPHONE: +44 (0)20 7549 5700
FACSIMILE: +44 (0)20 7549 5715
FOR IMMEDIATE RELEASE
28 August 2019
DIPLOMA PLC
PRE YEAR END TRADING UPDATE
TRADING IN LINE WITH OUR EXPECTATIONS
ON TRACK FOR ANOTHER GOOD PERFORMANCE IN FY2019
Diploma PLC, the international group supplying specialised
technical products and services, today issues a trading update for
the year ending 30 September 2019.
Group
Trading has remained in line with our expectations with good
underlying growth in Life Sciences and Controls and softer activity
in the Industrial OEM Seals markets, as indicated at the Half Year.
Reported revenues are expected to grow by ca. 13%, comprising
underlying revenue growth of ca. 5% and with ca. 6% being
contributed from acquisitions, net of disposals. Revenues are also
likely to benefit from a ca. 2% currency tailwind.
Operating margin is expected to be modestly ahead of last year,
benefitting from tight control of costs and operating leverage from
growth in revenues.
Life Sciences
Underlying revenues are expected to be up ca. 7% with continued
good growth across most Healthcare business areas and a strong
contribution in the second half from the Environmental
businesses.
Seals
Underlying revenues are expected to be ca. 1% ahead of last year
with good progress within the Aftermarket businesses offsetting the
slowdown in trading activity in the Industrial OEM Seals
businesses, particularly in the US, against very strong
comparatives. VSP has also made an encouraging contribution since
joining the Group in July this year.
Controls
Underlying revenues are expected to be up ca. 7% with further
strong growth from deeper penetration of Fasteners into the
Aerospace market; we are starting to see slightly weaker activity
in the largely UK based Interconnect and Fluid Controls businesses
reflecting the impact from a delayed Brexit, but we are encouraged
by positive developments in our Continental European
businesses.
Financial position
The Group's balance sheet remains strong and the business model
is highly cash generative. Working capital at the year end will
have improved to ca. 16% of revenues largely reflecting a reduction
of inventories held at the Half Year to meet strategic priorities.
At 30 September 2019 the Group is expected to be in a modest net
debt position, following a stronger period for acquisition
spend.
Acquisitions
The Group has spent ca. GBP65m on acquisitions in this financial
year. We are pleased with the transition of VSP into the Group and
are excited by its future growth potential. The Group remains
disciplined in its approach to acquisitions and is in active
discussions regarding further bolt-on opportunities.
Johnny Thomson, Group Chief Executive Officer commented:
"Diploma continues to have a good year. We are on track to
deliver strong underlying growth with positive contributions from
acquisitions and modest margin progression. We are delighted to
welcome VSP into the Group - a great business and an excellent
strategic fit. Despite more uncertain global markets, our growth
opportunities are exciting, our business model remains resilient
and successful, and my colleagues and I continue to build on these
foundations for the future."
The Group's results for the year ending 30 September 2019 will
be announced on 18 November 2019.
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 -
Johnny Thomson, Group Chief Executive
Officer +44 (0)20 7549 5700
Nigel Lingwood, Group Finance Director
Tulchan Communications - +44 (0)20 7353 4200
Martin Robinson
David Allchurch
NOTE TO EDITORS:
Diploma PLC is an international group 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. 2,000 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. GBP1.8bn.
Further information on Diploma PLC can be found at
www.diplomaplc.com
LEI: 2138008OG17VYG8FGR19
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END
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