Diploma PLC Trading Statement (4556I)
August 31 2016 - 2:00AM
UK Regulatory
TIDMDPLM
RNS Number : 4556I
Diploma PLC
31 August 2016
DIPLOMA PLC
12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX
TELEPHONE: +44 (0)20 7549 5700
FACSIMILE: +44 (0)20 7549 5715
FOR IMMEDIATE RELEASE
31 August 2016
DIPLOMA PLC
TRADING UPDATE
Diploma PLC, the international group of businesses supplying
specialised technical products and services, is today issuing a
Trading Update for the year ending 30 September 2016.
Trading Summary
The Group has delivered a robust performance in the second half
of the year and is on track to report results for the full year in
line with expectations.
Reported revenues for the year ending 30 September 2016 are
expected to increase by ca. 14%, with acquisitions incrementally
contributing ca. 8% to Group revenues. Translational currency
effects are expected to add ca. 4% to Group revenues, driven by the
substantial decline in UK Sterling since the Brexit decision in
June 2016. On an underlying basis, after adjusting for the impact
of acquisitions and currency effects, Group revenues for the year
are expected to increase by ca. 2%.
In Life Sciences, underlying revenue growth for the full year is
expected to be ca. 3%. After strong capital equipment sales in the
first half of the year, revenue growth in the second half has
slowed as anticipated against more demanding comparatives. In
Seals, underlying revenue growth is expected to be ca. 1%. Trading
activity in North America continues to be challenging, with modest
growth in the core seals businesses offset by reduced revenues in
the more cyclical excavator kit business. A robust trading
performance by the European Seals businesses offset weaker demand
in Australia. In Controls, market conditions have improved for the
Interconnect businesses, particularly in the Aerospace and Defence
sectors. This second half performance, together with a strong
contribution from the Specialty Fasteners businesses, means that
Controls is expected to report underlying growth of ca. 3% for the
year.
Operating margins have remained robust in the second half and
are expected to be broadly consistent with the first half and to
remain ca. 100bps below the prior year. Realised blended exchange
rates for the C$ and A$ against the US$ in the Healthcare
businesses have remained in line with the first half of the year
and there has been limited operational leverage across the Group's
businesses in low growth markets.
Acquisitions
Acquisitions remain an important part of the Group's growth
strategy. In the year to date, the Group has spent ca. GBP33m on
acquisitions, including the acquisition in July 2016 of a further
10% of the minority shareholding held in TPD, the Healthcare
business in Ireland for ca. GBP2m. The pipeline for further
acquisitions remains encouraging.
Financial Position
The Group's free cash flow for the year ending 30 September 2016
is likely to be substantially ahead of last year, helped by reduced
investment in working capital in the second half of the year. The
Group's balance sheet is also very strong and is expected to return
to a modest net cash funds position at 30 September 2016, with the
Group retaining access to further funds through its GBP50m
multi-currency revolving facility.
The Group's results for the year ending 30 September 2016 will
be announced on Monday, 21 November 2016.
Notes:
1. This Trading Update, which is based upon unaudited management
accounts, has been prepared solely to provide additional
information to the shareholders of Diploma PLC. 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
+44 (0)20 7549
Diploma PLC - 5700
Bruce Thompson, Chief Executive
Officer
Nigel Lingwood, Group Finance
Director
+44 (0)20 7353
Tulchan Communications - 4200
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. 1,500 employees and its principal
operating businesses are located in the UK, Northern Europe, North
America and Australia.
Over the last five years, the Group has grown adjusted earnings
per share at an average of ca. 15% p.a. through a combination of
organic growth and acquisitions. Diploma is a member of the FTSE
250 with a market capitalisation of ca. GBP950m.
Further information on Diploma PLC can be found at
www.diplomaplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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