Diploma Regulatory News (DPLM)

DIPLOMA PLC

12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

TELEPHONE: +44 (0)20 7549 5700

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FOR IMMEDIATE RELEASE

31 August 2016

DIPLOMA PLC

TRADING UPDATE

Diploma PLC, the international group of businesses supplying specialised technical products and services, is today issuing a Trading Update for the year ending 30 September 2016.

Trading Summary

The Group has delivered a robust performance in the second half of the year and is on track to report results for the full year in line with expectations.

Reported revenues for the year ending 30 September 2016 are expected to increase by ca. 14%, with acquisitions incrementally contributing ca. 8% to Group revenues. Translational currency effects are expected to add ca. 4% to Group revenues, driven by the substantial decline in UK Sterling since the Brexit decision in June 2016. On an underlying basis, after adjusting for the impact of acquisitions and currency effects, Group revenues for the year are expected to increase by ca. 2%.

In Life Sciences, underlying revenue growth for the full year is expected to be ca. 3%. After strong capital equipment sales in the first half of the year, revenue growth in the second half has slowed as anticipated against more demanding comparatives. In Seals, underlying revenue growth is expected to be ca. 1%. Trading activity in North America continues to be challenging, with modest growth in the core seals businesses offset by reduced revenues in the more cyclical excavator kit business. A robust trading performance by the European Seals businesses offset weaker demand in Australia. In Controls, market conditions have improved for the Interconnect businesses, particularly in the Aerospace and Defence sectors. This second half performance, together with a strong contribution from the Specialty Fasteners businesses, means that Controls is expected to report underlying growth of ca. 3% for the year.

Operating margins have remained robust in the second half and are expected to be broadly consistent with the first half and to remain ca. 100bps below the prior year. Realised blended exchange rates for the C$ and A$ against the US$ in the Healthcare businesses have remained in line with the first half of the year and there has been limited operational leverage across the Group's businesses in low growth markets.

Acquisitions

Acquisitions remain an important part of the Group's growth strategy. In the year to date, the Group has spent ca. £33m on acquisitions, including the acquisition in July 2016 of a further 10% of the minority shareholding held in TPD, the Healthcare business in Ireland for ca. £2m. The pipeline for further acquisitions remains encouraging.

Financial Position

The Group's free cash flow for the year ending 30 September 2016 is likely to be substantially ahead of last year, helped by reduced investment in working capital in the second half of the year. The Group's balance sheet is also very strong and is expected to return to a modest net cash funds position at 30 September 2016, with the Group retaining access to further funds through its £50m multi-currency revolving facility.

The Group's results for the year ending 30 September 2016 will be announced on Monday, 21 November 2016.

Notes:

1. This Trading Update, which is based upon unaudited management accounts, has been prepared solely to provide additional information to the shareholders of Diploma PLC. 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. A copy of this Statement, together with further information about Diploma PLC, may be viewed on its website at www.diplomaplc.com

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. £950m.

Further information on Diploma PLC can be found at www.diplomaplc.com