Diploma Regulatory News (DPLM)

DIPLOMA PLC

12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

30 July 2012

DIPLOMA PLC

SECOND INTERIM MANAGEMENT STATEMENT

IN RESPECT OF YEAR ENDING 30 SEPTEMBER 2012

Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing its second Interim Management Statement which relates to the period from 1 April 2012 to date.

Trading Summary

Revenues for both the year to date and for the third quarter were 13% ahead of the comparable period in 2011 benefitting from recent acquisitions, together with continuing strong trading in the Group's North American Seal businesses. After adjusting for currency effects and acquisitions, underlying revenues for the year to date increased by 7%. The underlying increase in third quarter revenues was 5% against a strong prior year comparative.

The incremental investment being made in facilities, IT and management to support future growth, as described in the Half Year Report, has begun to impact operating margins which, as anticipated, are now slightly below the record level reported in the first half of the year.

In Seals, revenues for the year to date are 28% ahead of the prior comparable period, benefiting from the contribution from J Royal acquired in December 2011. Underlying growth in Seals continues to be strong, but the rate of growth has slowed somewhat from that seen in the first half of the year. In Life Sciences, revenue growth for the year to date has been 4%, with strong growth in consumable revenues in the Canadian Healthcare businesses, but held back by the phasing of capital sales. In Controls, revenue growth for the year to date has been 6%, reflecting the benefit from recent acquisitions, together with a small improvement in trading activity in Germany, although this has been offset by a softening in activity across some of the UK markets.

Acquisition of Diagnostic Solutions

On 6 June 2012, the Group completed the acquisition of 80% of Diagnostic Solutions Pty Ltd ("DSL"), from Ms E de Gooyer and Mr P West for cash consideration of £3.0m (A$4.8m); the outstanding 20% of shares are subject to put and call options exercisable from October 2014 at an agreed multiple of earnings before interest and tax. DSL, which is based in Melbourne, Australia, supplies a range of consumables and instruments used in the diagnostic testing of blood, tissue and other samples in the pathology laboratories across Australia. Its activities are very similar to the Group's existing Somagen business in Canada and will be complementary to the Group's existing BGS business in Australia. 

Financial Position

The Group's cash flow has continued to be strong and as anticipated at the half year, growth in working capital has slowed and overall working capital should begin to fall in the final quarter of the year.

Since 31 March 2012, the Group has invested a further £6.6m on acquisitions net of cash acquired, taking the total spend on acquisitions to £22.1m for the year to date. As a result of this additional investment the Group continues to be in a small net debt position at the end of July 2012 (31 March 2012: £3.0m net debt). However, the Group remains well funded with bank facilities of £20m and an option to extend these facilities to £40m.

There have been no other material changes in the financial position of the Group in the period since the publication of the Half Year Report for the six months ended 31 March 2012.

Outlook

The Board remains confident that the Group will report further good progress in the second half of the year.

Notes:

1. This Interim Management Statement, which is based upon unaudited management accounts, has been prepared solely to provide additional information to the shareholders of Diploma PLC in order to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules. 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. The Group's results for the year ending 30 September 2012 are expected to be released in mid November 2012.

3. A copy of this Statement, together with further information about Diploma PLC, may be viewed on its website at www.diplomaplc.com

Enquiries:

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. 1,000 employees and its principal operating businesses are located in the UK, Germany, US and Canada.

Over the last five years, the Group has grown adjusted earnings per share at an average of ca. 19% p.a. through a combination of organic growth and acquisitions. Diploma is a member of the FTSE 250 with a market capitalisation of ca. £500m.