Diploma Regulatory News (DPLM)

DIPLOMA PLC

12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

TELEPHONE: +44 (0)20 7549 5700

FACSIMILE: +44 (0)20 7549 5715

FOR IMMEDIATE RELEASE

20 January 2016

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 2016, 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 2015 increased by 6% on a reported basis over the comparable period last year. At constant exchange rates, Group revenues increased by 11%, with acquisitions completed during the last twelve months contributing 9% and underlying organic growth of 2%. However, currency movements and in particular the further substantial depreciation of the Canadian and Australian currencies against UK sterling, reduced reported Group revenues by 5%.

In the Life Sciences Sector, revenues were 4% below the comparable period last year reflecting the impact of currency movements on translation of the results of the Healthcare businesses. However, on an underlying basis revenues increased by 7% driven by stronger sales of capital equipment and good performances in the Irish and Australian businesses. In the Seals Sector, revenues increased by 22% (1% ahead on an underlying basis), benefitting from the Kubo and Swan Seals businesses acquired last year and from WCIS acquired at the beginning of this financial year. In the Controls Sector, reported revenues were 3% below last year (2% reduction on an underlying basis). The Specialty Fastener business achieved good growth in the period as anticipated, but the UK Interconnect and Fluid Controls businesses continue to experience weak activity, particularly in general Industrial markets.

The Group operating margin is in line with expectations, with the substantial depreciation in the Canadian and Australian currencies against the US dollar again negatively impacting margins on a transactional basis in the Healthcare businesses (ca. 25% of the Group's revenues). This currency impact, along with lower initial margins in the acquired businesses, has as anticipated led to a softer margin in the first quarter compared with that achieved in the comparable period last year.

Financial Position

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. In the quarter ended 31 December 2015 the Group generated strong free cash flow of ca. £9m. As previously reported, on 12 October 2015 the Group completed the acquisition of 100% of West Coast Industrial Seals Pty Limited based in Australia and its affiliate based in New Caledonia for maximum consideration of £9.8m, of which £8.5m was initially paid on completion. Net cash funds at 31 December 2015 were £3.9m, compared with £3.0m reported at 30 September 2015.

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.

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. £800m.

Further information on Diploma PLC, together with a copy of this Announcement, is available at www.diplomaplc.com