Last checked at 17 Mar 2011 07:00
DIPLOMA PLC
12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX
TELEPHONE: +44 (0)20 7549 5700
FACSIMILE: +44 (0)20 7549 5715
FOR IMMEDIATE RELEASE
17 March 2011
DIPLOMA PLC
TRADING UPDATE
Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing a trading update, ahead of going into close period at 31 March 2011.
Trading
The strong increase in both revenues and profitability reported in the first quarter has continued through the second quarter, boosted by strong contributions from acquired businesses. Group revenues in the six months ended 31 March 2011 are expected to be ca. 25% ahead of the comparable period in FY2010 and underlying revenues, after adjusting for currency effects and acquisitions, are likely to increase by ca. 16% against the comparable period last year.
The increase in revenues has been achieved while still maintaining tight control of operating costs and operating margins have further improved in each of the Group's three sectors. The combination of increasing revenue and margins will result in a significant increase in operating profit in the six months ending 31 March 2011, compared to the comparable period last year, part of which suffered from the impact of the economic downturn.
Subject to there being no significant changes in the major economies, the Directors expect continuing strength in revenues and operating margins across the Group's businesses and that the Group's adjusted profit before tax* for the year ending 30 September 2011 will be materially ahead of the current market consensus of £36.3m.
Acquisitions
As indicated in the IMS issued on 12 January 2011, pursuant to the Sale and Purchase Agreement dated 28 July 2007 for the acquisition of AMT Vantage Inc, the Group has now completed the acquisition of all of the outstanding shares from the minority shareholders for aggregate consideration of £12.3m (C$19.5m). Together with the acquisition of Carsen Medical Inc. in December 2010, the Group has invested a total of £27.5m during the half year in acquiring businesses.
Financial Position
The continuing strong trading activity, together with a return to the more normal seasonal historic trends in working capital, has contributed to a significant increase in working capital in the first half of the year. Following the payment of dividends to shareholders, including payments to minority shareholders, the Group expects to have net debt of ca. £5m at 31 March 2011. In the second half of the year, the Group expects to generate strong free cash flow, which subject to further acquisition expenditure, should result in the Group having net cash funds at 30 September 2011.
The Directors will provide a further update on trading prospects for the year on Tuesday, 17 May 2011, as part of their announcement of the Group's results for the six months year ending 31 March 2011.
*
| Adjusted profit before tax is defined as profit before tax and before the costs of restructuring or rationalisation of operations, the profit or loss relating to the sale of property or businesses, fair value remeasurements under IAS 32 and IAS 39 in respect of future purchases of minority interests and acquisition related charges, as set out in the Group's FY2010 Annual Report. |
Notes:
1. A copy of this Statement, together with further information about Diploma PLC, may be viewed on its website at www.diplomaplc.com
For further enquiries please contact: | |
Bruce Thompson, Chief Executive Officer | 020 7549 5700 |
Nigel Lingwood, Group Finance Director | 020 7549 5705 |
Simon Bloomfield, Bankside Consultants | 020 7367 8861 |
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 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. 875 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. 14% p.a. through a combination of organic growth and acquisitions. The current market capitalisation is ca. £305m.