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14 Jan 2009 07:00
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DIPLOMA PLC INTERIM MANAGEMENT STATEMENT Diploma PLC, the international group of businessesΒ supplyingΒ specialisedΒ technicalΒ products and services,Β is todayΒ issuingΒ its first Interim Management StatementΒ of the new financial year,Β aheadΒ of the Company's AGM to be held today atΒ Brewers Hall,Β Aldermanbury Square,Β London, EC2V 7HR atΒ 12.00Β midday. ThisΒ Statement relates to the period from 1 October 2008Β to 31 December 2008Β and includes the first quarter's trading. TheΒ Group continues toΒ benefitΒ from its focus onΒ specialised sectors and supplyingΒ essential products and servicesΒ which areΒ mostlyΒ funded by customers' operating, rather than capital,Β budgets.Β Β With more than 60% of revenues generated outside theΒ UK, the Group has alsoΒ gainedΒ on translationΒ fromΒ the significant deterioration in the value ofΒ UKΒ sterling relative to all other major currencies. With this background, the Board is able to report an increase inΒ GroupΒ revenues of 2%Β overΒ the comparable period last yearΒ although,Β on a constant currency basis,Β GroupΒ revenues reduced by 7% over the comparable period. In Life Sciences, the CanadianΒ HealthcareΒ businesses, which account for over 50% of sector revenue,Β continued to show steadyΒ development.Β Β Revenue from the European businessesΒ were somewhat reducedΒ againstΒ a strong comparable quarter last year. TradingΒ inΒ the USΒ SealsΒ businessesΒ weakenedΒ in the quarter,Β reflectingΒ the difficultΒ marketΒ conditionsΒ in theΒ broaderΒ USΒ industrialΒ economy. Cost reduction programmes implemented in theΒ USΒ operations have partly mitigated the effects of reduced operational leverage. By contrast, the performance of theΒ European Seals businessesΒ was strong. In Controls,Β the European businessesΒ overallΒ delivered a steady performance,Β with a continuedΒ focus on relatively more buoyant, technically driven sectors.Β The deterioration in the value ofΒ UKΒ sterling relative toΒ allΒ other major currencies has had a significantΒ positiveΒ impact onΒ the Group's results on translation. Against the comparable period last year, the US dollar,Β the EuroΒ and the Canadian dollarΒ have appreciated by 25%,Β 16%Β and 6%Β respectively againstΒ UKΒ sterling. Conversely at a transaction level,Β the weakness ofΒ UKΒ sterling and the deterioration of the Canadian dollar relative to the US dollar,Β hasΒ put pressure on gross marginsΒ in theΒ UKΒ and Canadian businesses, by increasing the cost of goods sold. The Group continuedΒ to maintain a strong financial position with cash balances of Β£16.6m at 31 December 2008 and undrawn committed term facilities of Β£25.0m. On 23 December 2008, the Group announced that it hadΒ signed contracts to acquireΒ RT/Dygert,Β a leading supplier of seals, o-rings and custom moulded and machine parts, based in theΒ US, for a maximum consideration of Β£13.2m (US$19.75m). This acquisition formally closed onΒ 12Β January 2009 andΒ theΒ initial consideration paid of Β£9.6m (US$14.4m) has been funded in part from the Group's existing cash resources and in part by drawing down Β£4.7m (US$7.0m) from the Group'sΒ committedΒ bank facility. This acquisition is expected to be immediately earnings enhancing for the Group. In addition, as reported in the 2008 Annual Report, on 5 November 2008, the Group acquired Meditech, a small medical diagnostic company inΒ CanadaΒ for a maximum consideration of Β£1.5m (C$2.9m). On completion, the initial considerationΒ ofΒ Β£1.3m (C$2.4m) was funded out of the Group's existing cash resources. Finally, pursuant to theΒ sale andΒ purchaseΒ agreement signed on 28 August 2007, theΒ Group will shortly be making a paymentΒ to the vendors of AMTΒ of Β£1.1m (C$2.0m)Β asΒ deferredΒ consideration. This payment wasΒ based on the performance of that business during the year ended 30 September 2008. There have been no other significant changes in the position of the Group in the period since the publication of the Annual Report for the year ended 30 September 2008. The next update on trading is expected to be issued as part of the Half Year results for the six months ending 31 March 2009, which are expected to be released on 11 May 2009. Notes: This Interim Management Statement,Β 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 theΒ UKΒ Listing Authority's Disclosure and Transparency Rules. It should not be relied on by any other party, for other purposes. A copy of this Statement, together withΒ furtherΒ information about DiplomaΒ PLC, may be viewed on its websiteΒ atΒ www.diplomaplc.com
NOTE TO EDITORS: Diploma PLCΒ is an international group of businesses supplyingΒ specialisedΒ technical products and services to the Life Sciences, Seals and Controls industries. Diploma achieves stable growth and attractive margins from its focus on supplying specialised technical products to markets which value high levels of customer service, technical support and value adding activities. A high proportion of revenues are generated from essential products and services funded by operating, rather than capital budgets. The Group employs ca. 1,000 employees and its principal operating businesses are located in theΒ UK,Β Germany, US andΒ Canada. Over the last five years, the Group has grown adjusted earnings per share at an average of ca. 21% p.a. through a combination of organic growth and acquisitions. The current market capitalisation is ca. Β£150m. |
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