Diploma Regulatory News (DPLM)

14 May 2007 07:00

Diploma PLC14 May 2007 DlPLOMA PLC FOR IMMEDIATE RELEASE 14 May 2007 ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007 Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 March 2007 31 March 2006 30 Sept 2006 £m £m £m Revenue 68.2 63.5 128.2 Operating profit(1) 10.1 9.3 19.4 Profit before tax(2) 10.5 20.3 31.2 Adjusted profit before tax 10.7 9.7 20.4 Free cash flow(2) 1.7 15.2 24.3 Pence Pence Pence Basic earnings per share(2) 30.2 69.9 105.5 Adjusted earnings per share 31.6 28.9 62.8 Dividends per share 9.0 8.0 23.0 Free cash flow per share(2) 7.5 67.1 108.2 (1) before sale of property and amortisation of acquisition intangible assets (2) the results for the comparable period in 2006 included a one-off profit on sale of property of £10.6m and cash proceeds from the sale of property of £11.1m • Revenue and adjusted profit before tax up 7% and 10% respectively; results impacted by losses of £0.5m on currency translation. Operating margins increased to 14.8% (2006: 14.6%). • Adjusting for currency effects and for the contribution from acquisitions, underlying revenue and operating profits were up 8% and 12% respectively. • Results benefited from strong growth in European Controls businesses in Defence, Aerospace and Motorsport. Seals business impacted by slow-down in North American economy but grew modestly on an underlying basis. Life Sciences business was up on the comparable period last year, benefiting from the acquisition of CBISS in October 2006. • Adjusted earnings per share up 9% at 31.6p; interim dividend up 1.0p (+12.5%) to 9.0p. • Free cash flow of £1.7m for the period and cash funds at 31 March 2007 of £28.9m. Commenting on the results for the period, Bruce Thompson, Diploma's Chief Executive said: "The results in the first half demonstrate that underlying organic growthremains robust. With trading conditions experienced in the first half broadlyexpected to continue in the second half of the year and despite the continuingnegative impact of the strength of sterling on the results of the overseasbusinesses, the Group is confident of showing further progress in 2007." Notes: Diploma PLC uses alternative performance measures as key financial indicators toassess the underlying performance of the Group. These include adjusted profitbefore tax, adjusted earnings per share and free cash flow. The narrative inthis Announcement is based on these alternative measures and an explanation isset out in note 2 to the consolidated financial statements in this InterimAnnouncement. For further enquiries please contact: Bruce Thompson, Chief Executive Officer 020 7638 0934Nigel Lingwood, Group Finance Director 020 7448 4875Ian Seaton, Bankside Consultants 020 7367 8891 NOTE TO EDITORS: Diploma PLC is an international group of specialised distribution businessesoperating in three sectors: Life Sciences - suppliers of consumables, instrumentation and related servicesto research, environmental and clinical diagnostic laboratories. Principalcompanies are Anachem, a1-envirosciences and CBISS in Europe and Somagen inCanada. Seals - Suppliers of hydraulic seals, gaskets, cylinders and attachment kits forheavy mobile machinery. Principal companies are Hercules Bulldog SealingProducts and HKX in North America and FPE in the UK. Controls - Suppliers of specialised wiring, connectors, control devices andfasteners for a range of technically demanding applications. Principalcompanies are IS Group in the UK and US, Sommer Filcon in Germany and Hawco inthe UK. Within each of these sectors, the Diploma businesses serve industry segmentswith long term growth potential and with the opportunity for sustainablesuperior margins through the quality of customer service, depth of technicalsupport and value adding activities. Further information on Diploma PLC can be found at www.diplomaplc.com HALF YEAR REVIEW TO 31 MARCH 2007 In the six months ended 31 March 2007, the Group continued to generate growth insales and profits. Group revenue increased by 7% to £68.2m (2006: £63.5m),largely driven by strong growth in the Controls businesses. This performancemore than compensated for slower growth in the North American Seals business. Operating profit, before the sale of property and amortisation of acquisitionintangible assets, increased by 9% to £10.1m (2006: £9.3m). Operating marginsof 14.8% (2006: 14.6%) were slightly ahead of the comparable period last year. Contributions from recent acquisitions (CBISS and a full half year for HKX) onlypartially offset the negative impact on translation of the weaker overseascurrencies. Adjusting for currency effects and acquisitions, the underlyingorganic growth rates in revenue and operating profits were 8% and 12%respectively. Adjusted profit before tax increased by 10% to £10.7m (2006: £9.7m) benefitingfrom increased interest income. Adjusted earnings per share grew by 9% to 31.6p(2006: 28.9p). On a headline IFRS basis, profit before tax was £10.5m (2006:£20.3m) and earnings per share were 30.2p (2006: 69.9p). The comparable periodin 2006 included a profit of £10.6m from the sale of Phase 3 of the Stamfordland. The Directors have declared an increased interim dividend of 9.0p per share(2006: 8.0p) payable on 20 June 2007 to shareholders on the register on 25 May2007. LIFE SCIENCES The Life Sciences businesses increased sales by 4% to £21.3m (2006: £20.4m) withoperating margins increasing to 15.0% (2006: 14.7%). The contribution from thenewly acquired CBISS business more than compensated for the negative impact onthe Somagen business of the weaker Canadian dollar. The core Anachem business achieved good growth in sales with a solid underlyingperformance from its traditional pipette and tips products. Steady progress hasalso been made in a number of new development projects, with the new filtrationproducts in particular showing promising growth. The instrumentation businessalso achieved modest growth with a good contribution from the ReactArray productline. The service businesses, supporting both pipettes and capital instruments, againdelivered good growth and now account for 25% of Anachem's total sales. Anachemis well advanced in the renewal process for the flagship maintenance contractfor Pfizer's main R&D facility in Kent. In addition it has made progress withthe new Cyclertest offering for PCR instruments. The a1-envirosciences group has been expanded by the acquisition of CBISS inOctober 2006. The group now represents over 25% of Life Sciences sectorrevenues and this is projected to increase to 30% by the year end. Thea1-safetech containment products business has made good progress in the halfyear, though facing a strong comparator from the prior year as a result of thelarge order in 2006 from Roche. New containment products have been developedwhich are attracting positive interest from pharmaceutical industry customers inthe UK and Continental Europe. Quotation and demonstration activity in the a1-envirotech analyser businessremained buoyant, with the order bank building towards the end of the period.Good progress was made in the development, in conjunction with the NationalGrid, of a new generation of products for electricity utility companies tomeasure the flow of sulphur hexafluoride (SF6) gases. In the CBISS business, the major driver is the design, engineering and supply ofContinuous Emission Monitoring Systems ("CEMS"). Major CEMS orders were signedtowards the end of the period with Veolia Environmental Services (for large "Energy from Waste" incinerators) and E.ON UK (for power plants). Servicerevenues from long term contracts with CEMS users have remained strong and willcontinue to build, as service contracts are signed for the new systeminstallations. The a1-envirosciences group's gas detection products will now beconsolidated under CBISS management. CBISS will market a broad range ofproducts which offer to customers an upgrade path from single use gas detectiontubes, through gas analysers, to engineered gas monitoring systems. Somagen Diagnostic delivered steady growth in the sales of reagents, which aremostly supplied as part of multi-year reagent rental contracts, funded throughthe operating budgets within hospitals. The established supplier linesperformed well and were boosted by the contribution from the newly introducedTrinity Biotech co-agulation products, which also contributed to growing servicerevenues. New suppliers are important to Somagen to replace revenues lost whenother suppliers are acquired by competitors with their own routes to market;during the past twelve months GeneOhm and DSL have been acquired andconsolidated by competitors. Compared to prior years, overall sales growth was held back by lower sales ofinstruments supplied outside of reagent rental contracts. These instrumentsales have been boosted in previous years by additional tranches of capitalfunding provided by individual Provinces. This year, the additional funding wasnot forthcoming in any of the Provinces. SEALS The Seals businesses saw a decline in sales of 4% in sterling terms to £16.9m(2006: £17.6m). However on a constant currency basis, sales grew by 7%, partlybenefiting from the additional two months contribution from HKX, acquired inNovember 2005. Operating profits remained unchanged on an underlying basis asmargins reduced to 13.6% (2006: 14.8%). The reduction in margins reflected acombination of one-off costs of a limited reorganisation in the Bulldogbusiness, together with additional investments to strengthen the existingoperations. Slowing growth in the US industrial economy and particularly in the constructionsector, has led to generally lower demand and caution within the customer baseof the core Hercules business. Service and order fulfilment levels remainedvery solid throughout the period and Hercules maintained its position in the USmarket; however, domestic seal and tie-rod cylinder sales were somewhat belowthe record levels in the comparable period. In Canada, the closure of theVancouver operation was completed successfully and the Western Canadianoperations have now been consolidated in Edmonton. This newly establishedoperation has met its growth targets in Alberta and has retained a goodproportion of sales with customers in British Columbia; the Ontario and Quebecoperations have experienced less helpful economic conditions. International sales outside of North America experienced strong growth in theperiod benefiting from the increased resources applied to this activity and thecontinuing weakness of the US dollar. These international sales now account for10% of total Hercules sales, with a growing business in South America and with anetwork of export dealers serving niches throughout the world. The Bulldog business matched prior year sales, but with order levelssignificantly higher than both sales and orders in the comparable period.International sales, which represent 60% of Bulldog's business, again werehelped by the weaker US dollar, but the business also benefited from the greatersales focus now evident in the Reno operations. Operating margins were improvedwith further attention on product purchasing and with the re-organisation atReno leading to a gradual reduction in headcount. HKX was acquired in November 2005 and this period's result benefits from anadditional two month contribution compared with the prior half year. HKXresults are driven more strongly by new sales of excavators, which are widelyused in residential construction, as well as commercial and infrastructuresectors. Excavator sales slowed considerably from prior year record levels anddealers delayed placing orders due to the market uncertainty, but also inanticipation of new model introductions. Against this market background, HKXstill achieved growth of 10% on a like-for-like basis, successfully penetratingnew dealer accounts. FPE continued to experience sluggish market conditions in the UK, but exportsprovided growth. In March 2007, FPE completed the acquisition of a small sealdistributor which will now be integrated within FPE's existing operations inDoncaster. CONTROLS The Controls businesses increased sales by 18% to £30.0m (2006: £25.5m) andincreased operating margins to 15.3% (2006: 14.5%). Strong growth was achievedby the IS Group and Sommer Filcon, benefiting from the continued buoyantDefence, Aerospace and Motorsport markets. The IS Group delivered another period of strong growth, with good contributionsfrom all segments of its business. The core Defence and Aerospace businesscontinued to benefit strongly from supplying the Urgent Operational Requirements("UOR"s) of the Ministry of Defence. At the same time, Commercial sales alsoincreased strongly with major orders for sensors and wiring harnesses for powergenerators. The representative office in China is now fully operational and thefocus now is on building relationships with key customers. IS-Motorsport and Clarendon both enjoyed a settled period within F1 racing andClarendon has enhanced its position with the F1 teams in Italy and Germany. Inthe US, ISM Inc has now established itself across all the key racing seriesextending from IRL into ALMS, Grand-Am and Nascar. Plans are in place for a newsales office in South Carolina to be operational by the end of the year to servethe new customer base. Sommer Filcon delivered growth in excess of 30% in the half year, with theprincipal driver being major contract successes in the Filcon connectorbusiness. Filcon is not only reaping the benefits of the delivery of theEurofighter Tranche 2 orders, but also achieved success supplying to othermilitary projects, including the Tornado upgrade and the Tiger and NH90helicopter programmes. Filcon has also had success in non-militaryapplications. While supply to the Airbus A380 project has been delayed, theMotorsport connector business continues to develop well. Filcon is alsobenefiting from the supply of connectors for the Transrapid trains being builtfor the extension of the track in Shanghai. Sommer has continued to develop its business across its target sectors in animproving German economy, with steady growth in the supply of specialised wireand cable and heat shrink tubing to Aerospace, Defence and Motorsport customers.Sommer also had continued success in supplying to the strong medicalinstrument business in Germany. Sales at Hawco were modestly ahead of the comparable period last year with agood performance in Refrigeration compensating for slower sales in Controls. InControls, the market conditions remained challenging as the competitive andpricing pressures on UK based Original Equipment Manufacturers ("OEM"s)continued. In response, Hawco has closed the Bolton based sales operation andconsolidated the sales functions into Guildford. It has also increased thefocus on key customers and introduced a "Quick Pick" range of fast moving, coreproducts. In Refrigeration, Hawco achieved growth by gaining more business from mediumsized OEM accounts, as sales to larger customers slowed. The launch of asimple, clearly priced Contractors Guide, combined again with a focus on mediumsized contractors, boosted sales. FINANCE The Group generated cash from operations of £6.4m in the first half of the yearcompared with £8.1m in the comparable period; investment in working capitalduring the period was £4.8m (2006: £2.3m). This reflected a combination ofadvanced stock purchasing to secure price and supply and the impact of theincreased sales activity in the Controls businesses. These two factorsexacerbated the seasonal increase in working capital seen in previous years atthe half year, some of which is expected to reverse in the second half of theyear. Tax paid in the period of £4.3m included tax due on part of the property gainrealised in 2006, which largely accounted for the increase in tax payments,compared with the prior period. In addition, £0.6m (2006: £0.1m) was providedto the Employee Benefit Trust to purchase ordinary shares in the Company. These additional cash outflows led to a reduction in free cash flow to £1.7mcompared with £15.2m in the comparable period, which last year included £11.1mof net proceeds from the sale of Phase 3 of the Stamford land. The Group acquired CBISS Limited, a leading supplier of equipment and servicesfor environmental monitoring and control, on 9 October 2006 for an initialconsideration of £4.5m, including acquisition expenses and net of cash acquiredwith the business. Further payments up to a maximum of £0.5m are payable basedon the performance of the business in financial years 2007 and 2008. At 31March 2007, goodwill of £4.2m has provisionally been recognised on thisacquisition, pending completion in the second half of the year of a valuation ofany intangible assets in accordance with IFRS 3. In February 2007, the finaltranche of deferred consideration of £0.5m (US$1.0m) was paid in connection withthe acquisition of HKX. After expenditure on acquisitions and dividends, the Group's cash funds at 31March 2007 were £28.9m. CURRENT TRADING The trading conditions experienced in the first half are broadly expected tocontinue in the second half of the year. The Controls businesses are stillbenefiting from buoyant European Defence and Aerospace markets and continue totrade strongly, while the Seals businesses continue to maintain their positionin slower growth markets in North America. In Life Sciences, the environmentalbusinesses (including the newly acquired CBISS) should benefit from strongerorder books entering the second half of the year. With this market background and despite the continuing negative impact of thestrength of sterling on the results of the overseas businesses, the Group isconfident of showing further progress in 2007. BM ThompsonChief Executive Officer 14 May 2007 Consolidated Income Statementfor the six months ended 31 March 2007 Unaudited Unaudited Audited 31 March 31 March 30 Sept Note 2007 2006 2006 £m £m £mREVENUE 3 68.2 63.5 128.2Cost of sales (43.7) (41.0) (82.4) Gross profit 24.5 22.5 45.8Distribution costs (2.1) (1.9) (3.7)Administration costs (12.3) (11.3) (22.7)Amortisation of acquisition intangible assets (0.2) - (0.3) OPERATING PROFIT, BEFORE SALE OF PROPERTY 3 9.9 9.3 19.1Profit on sale of property - 10.6 11.1 OPERATING PROFIT 3 9.9 19.9 30.2Finance income 0.6 0.4 1.0 PROFIT BEFORE TAX 10.5 20.3 31.2Tax expense 4 (3.5) (4.3) (7.0) PROFIT FOR THE PERIOD 7.0 16.0 24.2 Attributable to: Shareholders of the Company 6.8 15.7 23.7 Minority interests 0.2 0.3 0.5 7.0 16.0 24.2EARNINGS PER SHARE Basic and diluted earnings 5 30.2p 69.9p 105.5p All activities, both in the current and previous year, relate to continuingoperations. ALTERNATIVE PERFORMANCE MEASURES (note 2) 31 March 31 March 30 Sept 2007 2006 2006 Note £m £m £m Profit before tax 10.5 20.3 31.2 Less: Profit on sale of property - (10.6) (11.1) Add: Amortisation of acquisition intangible assets 0.2 - 0.3 ADJUSTED PROFIT BEFORE TAX 10.7 9.7 20.4 ADJUSTED EARNINGS PER SHARE 5 31.6p 28.9p 62.8p Consolidated Balance Sheetas at 31 March 2007 Unaudited Unaudited Audited 31 March 31 March 2006 30 Sept 2007 2006 £m £m £mNON-CURRENT ASSETSGoodwill 30.9 31.2 28.0Acquisition intangible assets 1.9 - 2.0Other intangible assets 0.7 0.6 0.6Property, plant and equipment 9.4 10.1 9.5Deferred tax assets 3.1 3.1 3.4 46.0 45.0 43.5CURRENT ASSETSInventories 24.2 22.8 22.9Trade and other receivables 23.6 21.8 20.4Cash and cash equivalents 28.9 30.3 36.7 76.7 74.9 80.0CURRENT LIABILITIESTrade and other payables (21.0) (19.6) (20.9)Current tax liabilities (2.3) (3.9) (2.9)Other liabilities - (1.1) (0.5) (23.3) (24.6) (24.3) NET CURRENT ASSETS 53.4 50.3 55.7 TOTAL ASSETS LESS CURRENT LIABILITIES 99.4 95.3 99.2NON-CURRENT LIABILITIESRetirement benefit obligations (4.6) (4.2) (4.7) NET ASSETS 94.8 91.1 94.5 EQUITYShare capital 1.1 1.1 1.1Capital redemption reserve 0.2 0.2 0.2Translation reserve (1.9) 3.1 0.7Retained earnings 94.0 85.0 90.9 TOTAL SHAREHOLDERS' EQUITY 93.4 89.4 92.9Minority interests 1.4 1.7 1.6 TOTAL EQUITY 94.8 91.1 94.5 Consolidated Statement ofRecognised Income and Expensefor the six months ended 31 March 2007 Unaudited Unaudited Audited 31 March 31 March 30 Sept 2007 2006 2006 £m £m £mExchange rate adjustments on foreign currency net investments (2.6) 0.9 (1.5)Changes in fair value of cash flow hedges - 0.1 0.1Actuarial losses on defined benefit pension schemes - - (0.6)Deferred tax on actuarial losses - - 0.2 Net (expense)/income recognised directly in equity for theperiod (2.6) 1.0 (1.8)Profit for the period 7.0 16.0 24.2 TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD 4.4 17.0 22.4 Attributable to: Shareholders of the Company 4.2 16.7 21.9 Minority interests 0.2 0.3 0.5 4.4 17.0 22.4 Share Capital Translation Hedging Retained Total capital redemption reserve reserve earningsOther Changes in reserveShareholders' Equity £m £m £m £m £m £m At 1 October 2005 1.1 0.2 2.2 (0.1) 71.9 75.3Total recognised income and expense for the period attributable to shareholders - - 0.9 0.1 15.7 16.7Share-based payments expense - - - - 0.4 0.4Purchase of own shares - - - - (0.1) (0.1)Dividends - - - - (2.9) (2.9) At 31 March 2006 1.1 0.2 3.1 - 85.0 89.4Total recognised income and expense for the period attributable to shareholders - - (2.4) - 7.6 5.2Share-based payments expense - - - - 0.1 0.1Dividends - - - - (1.8) (1.8) At 30 September 2006 1.1 0.2 0.7 - 90.9 92.9Total recognised income and expense for the period attributable to shareholders - - (2.6) - 6.8 4.2Share-based payments expense - - - - 0.3 0.3Purchase of own shares - - - - (0.6) (0.6)Dividends - - - - (3.4) (3.4) At 31 March 2007 1.1 0.2 (1.9) - 94.0 93.4 Consolidated Cash Flow Statementfor the six months ended 31 March 2007 Unaudited Unaudited Audited 31 March 31 March 30 Sept 2007 2006 2006 Note £m £m £mCASH FLOWS FROM OPERATING ACTIVITIESCash flow from operations 6 6.4 8.1 20.9Finance income received 0.6 0.4 1.0Tax paid (4.3) (3.5) (7.1) NET CASH FROM OPERATING ACTIVITIES 2.7 5.0 14.8 CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of subsidiaries (net of cash acquired) 7 (4.8) (6.6) (7.0)Deferred consideration paid 7 (0.5) (1.0) (1.0)Proceeds from the sale of property, plant and equipment 0.5 11.1 11.0Purchase of property, plant and equipment (0.6) (0.8) (1.3)Purchase of other intangible assets (0.3) - (0.1) NET CASH (USED IN)/FROM INVESTINGACTIVITIES (5.7) 2.7 1.6 CASH FLOWS FROM FINANCING ACTIVITIESDividends paid to shareholders (3.4) (2.9) (4.7)Dividends paid to minority interests (0.3) (0.3) (0.3)Purchase of own shares (0.6) (0.1) (0.1) NET CASH USED IN FINANCING ACTIVITIES (4.3) (3.3) (5.1) NET (DECREASE)/INCREASE IN CASHAND CASH EQUIVALENTS (7.3) 4.4 11.3Cash and cash equivalents at beginning of year 36.7 25.7 25.7Effect of exchange rates on cash and cashequivalents (0.5) 0.2 (0.3) CASH AND CASH EQUIVALENTS AT END OF PERIOD 28.9 30.3 36.7 ALTERNATIVE PERFORMANCE MEASURES (note 2) 31 March 31 March 30 Sept 2007 2006 2006 £m £m £mNET (DECREASE)/INCREASE IN CASHAND CASH EQUIVALENTS (7.3) 4.4 11.3Add: Dividends paid to shareholders 3.4 2.9 4.7 Dividends paid to minority interests 0.3 0.3 0.3 Acquisition of subsidiaries (net of cash acquired) 4.8 6.6 7.0 Deferred consideration paid 0.5 1.0 1.0 FREE CASH FLOW 1.7 15.2 24.3 Notes to the Financial Statementsfor the six months ended 31 March 2007 1. BASIS OF PREPARATION The interim financial statements have been prepared in accordance with theListing Rules of the Financial Services Authority and on the basis of the IFRSaccounting policies set out in the Group's published accounts for the year ended30 September 2006. This Interim Report, which is unaudited, was approved by the Directors on 14 May2007. It should be read in conjunction with the 2006 Annual Report, whichcontains the most recent audited financial statements. This Interim Report does not constitute statutory financial statements asdefined in section 240 of the Companies Act 1985. The comparative annualfigures for the year ended 30 September 2006 set out in this report have beenextracted from the Group's published accounts for that year which have beenreported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors was unqualified and did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The figuresfor the six months ended 31 March 2006 were extracted from the 2006 InterimReport which was unaudited. 2. ALTERNATIVE PERFORMANCE MEASURES The Group uses a number of alternative (non-Generally Accepted AccountingPractice ("non-GAAP")) financial measures which are not defined within IFRS.The Directors use these measures in order to assess the underlying operationalperformance of the Group and as such, these measures are important and should beconsidered alongside the IFRS measures. The following non-GAAP measures arereferred to in this Interim Report. 2.1 Adjusted profit before tax On the face of the consolidated income statement, "adjusted profit before tax"is separately disclosed, being defined as profit before tax and before the costsof restructuring or rationalisation of operations, the profit or loss relatingto the sale of property and the amortisation and impairment of acquisitionintangible assets. The Directors believe that adjusted profit before tax is animportant measure of the underlying performance of the Group. 2.2 Adjusted earnings per share "Adjusted earnings per share" is calculated as the total of adjusted profit,less income tax costs, but excluding the tax impact on the items included in thecalculation of adjusted profit and the tax effects of goodwill in overseasjurisdictions, less profit attributable to minority interests, divided by theweighted average number of ordinary shares in issue during the period. TheDirectors believe that adjusted earnings per share provides an important measureof the underlying earning capacity of the Group. 2.3 Free cash flow On the face of the consolidated cash flow statement, "free cash flow" isreported, being defined as net cash flow from operating activities, after netcapital expenditure on fixed assets (excluding business combinations), butbefore expenditure on business combinations and dividends paid to both minorityshareholders and the Company's shareholders. The Directors believe that freecash flow gives an important measure of the cash flow of the Group, availablefor future investment. 3. ANALYSIS OF RESULTS Segmental information is presented in this Interim Report in respect of theGroup's business segments, which is the primary basis of segment reporting. Thebusiness segment reporting format reflects the Group's management and internalreporting structure. Revenue Segment operating profit* Operating profit 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2007 2006 2006 2007 2006 2006 2007 2006 2006 £m £m £m £m £m £m £m £m £m By ActivityLife Sciences 21.3 20.4 39.2 3.2 3.0 6.1 3.2 3.0 6.1Seals 16.9 17.6 35.9 2.3 2.6 5.5 2.1 2.6 5.2Controls 30.0 25.5 53.1 4.6 3.7 7.8 4.6 3.7 7.8 68.2 63.5 128.2 10.1 9.3 19.4 9.9 9.3 19.1Unallocated items:Profit on sale of property - - - - - - - 10.6 11.1 68.2 63.5 128.2 10.1 9.3 19.4 9.9 19.9 30.2 By Geographic AreaUnited Kingdom 32.3 28.5 58.7 4.1 3.3 7.2 4.1 13.9 18.3Rest of Europe 12.4 10.0 20.2 2.1 1.8 3.4 2.1 1.8 3.4North America 23.5 25.0 49.3 3.9 4.2 8.8 3.7 4.2 8.5 68.2 63.5 128.2 10.1 9.3 19.4 9.9 19.9 30.2 * before amortisation of acquisition intangible assets and profit on sale of property The profit on sale of property in 2006 of £11.1m arose on disposal of 12.2 acresof land (known as Phase 3) in Stamford, East Midlands for consideration of£11.5m, after expenses. There remains 150 acres of land at Stamford whichcomprises mostly farm land and former quarry land. In the Directors' opinionthe current value of this land is £0.5m (2006: £0.5m). 4. TAXATION 31 March 31 March 30 Sept 2007 2006 2006 £m £m £mUK tax charge 1.6 2.4 3.2Overseas tax charge 1.9 1.9 3.8 Total tax charge 3.5 4.3 7.0 Taxation on profits before tax has been calculated by applying the Directors'best estimate of the annual rate of taxation to taxable profits for the period.The rate of taxation on profit on adjusted profit for the period is 32.7%(2006: 30.9%). Tax of £1.3m was provided at 31 March 2006 on the propertyprofit in the period. 5. EARNINGS PER SHARE Basic and diluted earnings per share Basic and diluted earnings per ordinary share are calculated on the basis of theweighted average number of ordinary shares in issue during the period of22,500,379 (2006: 22,469,915) and the profit for the period attributable toshareholders of £6.8m (2006: £15.7m). There were no potentially dilutive shares. Adjusted earnings per share Adjusted earnings per share is shown by reference to earnings beforeamortisation of acquisition intangible assets, exceptional items and relatedtax. The Directors consider that this gives a clearer indication of theunderlying performance of the Group. Adjusted earnings are calculated asfollows: 31 Mar 2007 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2006 2006 2007 2006 2006 pence pence pence per share per share per share £m £m £m Profit before tax 10.5 20.3 31.2Tax expense (3.5) (4.3) (7.0)Minority interests (0.2) (0.3) (0.5) Earnings for the year attributable to shareholders of the Company 30.2 69.9 105.5 6.8 15.7 23.7Profit on sale of property, net of tax - (41.4) (45.3) - (9.3) (10.2)Amortisation of acquisition intangible assets 1.0 - 1.3 0.2 - 0.3Tax effects on goodwill and acquisition intangible assets 0.4 0.4 1.3 0.1 0.1 0.3 ADJUSTED EARNINGS 31.6 28.9 62.8 7.1 6.5 14.1 6. RECONCILIATION OF CASH FLOW FROM OPERATIONS 31 March 31 March 30 Sept 2007 2006 2006 £m £m £mProfit for period 7.0 16.0 24.2Depreciation 0.9 0.8 1.6Amortisation of acquisition intangibles 0.2 - 0.3Share-based payments expense 0.3 0.4 0.5Finance income (0.6) (0.4) (1.0)Profit on disposal of property - (10.6) (11.1)Tax expense 3.5 4.3 7.0 Operating cash flow before changes in working capital 11.3 10.5 21.5Increase in inventories (0.9) (0.8) (1.6)Increase in trade and other receivables (2.9) (1.6) (0.1)(Decrease)/increase in trade and other payables (1.0) 0.1 1.4Cash paid into defined benefit schemes (0.1) (0.1) (0.3) CASH FLOW FROM OPERATIONS 6.4 8.1 20.9 7. ACQUISITIONS On 9 October 2006, the Group acquired 100% of the share capital of CBISS Limited("CBISS") for consideration, net of cash acquired, of £4.5m. Further deferredconsideration up to a maximum of £0.5m will be payable, depending on theoperating profits of CBISS in each of the years ended 30 September 2007 and2008. In addition, £0.3m was spent during the period in acquiring certain tradeassets, including supply agreements. The provisional fair value of identifiable assets and liabilities of theacquired business, excluding intangible assets, was £1.1m, including cash of£0.8m. Provisional goodwill of £4.2m arose on this acquisition and thisgoodwill will be analysed into its constituent intangible assets, in accordancewith IFRS 3, in the full year financial statements at 30 September 2007. Thecontribution of CBISS to the Group's revenue and operating profit for the sixmonths ended 31 March 2007 was £1.9m and £0.3m respectively. In February 2007, £0.5m (US$1.0m) of deferred consideration was paid to thevendors of HKX Inc as final settlement of their performance payment. 8. DIVIDENDS The Directors have declared an interim dividend of 9.0p per share (2006: 8.0p)payable on 20 June 2007 to shareholders on the register on 25 May 2007. In accordance with IAS 10 "Events after the Balance Sheet Date", this interimdividend has not been reflected in the interim financial statements. The totalvalue of the dividend is £2.0m (2006: £1.8m). 9. EXCHANGE RATES The following exchange rates have been used to translate the results of theoverseas businesses: Average Closing 31 March 31 March 30 Sept 31 March 31 March 30 Sept 2007 2006 2006 2007 2006 2006 US Dollar 1.95 1.75 1.80 1.96 1.73 1.87Canadian Dollar 2.25 2.03 2.05 2.26 2.02 2.08Euro 1.49 1.46 1.46 1.47 1.43 1.47 This information is provided by RNS The company news service from the London Stock Exchange