Latest News
06 August 2009
Second Interim Management Statement
in respect of year ending 30 September 2009
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 2009 to date.
Trading
The Group has continued to demonstrate its resilient characteristics in the face of the weak trading environment. Revenues for the year to date, in UK sterling, are 1% above the comparable period last year, reflecting similar trends to those reported in the first half of the year. The Group continued to benefit from the contributions from the businesses acquired during the year and from the positive impact, on the translation of the results of overseas businesses, of a weaker UK sterling against the comparable period in 2008. Adjusting for currency effects and acquisitions, revenues for the year to date have decreased by 12%.
In the Life Sciences sector, year to date revenues are 4% ahead of the prior year comparable period, with growth driven principally by the strong performances in the Canadian Healthcare businesses. Revenues from the European businesses continued to be affected by customers delaying capital expenditure, but operating margins are now benefiting from earlier cost reduction initiatives.
The Seals sector businesses continued to face difficult trading conditions, though with some signs of stability now appearing in the core North American businesses. The European seals businesses have been impacted by the downturn in industrial activity in Continental Europe, but trading conditions in the aftermarket sector have stabilised. Operating margins, though still lower than the prior year, are benefiting from cost reductions initiated earlier in the year in the North American businesses and more recently in Europe. Year to date sector revenues in UK sterling terms remain 16% ahead of last year, but have benefited strongly from currency translation and the acquisition of RTD Seals.
In the Controls sector, year to date revenues are 11% down on the prior year comparable period. The UK Controls businesses have continued to experience mixed trading conditions, with Military Aerospace and Defence markets benefiting from ongoing up-grade, refurbishment and maintenance programmes and Calibration services also performing well. However, demand in the Motorsport market has been softer and the general Commercial and Industrial business has been more exposed to the downturn in UK industrial markets. In Germany, the market downturn came later and there has been a greater impact on these businesses from reduced activity in major projects and export led business.
Financial Position
The Group's cash flow generation has continued to be strong, benefiting from the ongoing focus on working capital, with further reductions achieved in stock and debtor balances. As at 31 July 2009, the Group's net cash funds had increased to a level in excess of £12.0m, compared with £5.5m reported at 31 March 2009.
The Group continues to maintain a strong balance sheet, underpinned by a committed multi-currency facility of ca. £18m, which expires in November 2010.
There have been no other material changes in the position of the Group in the period since the publication of the Interim Report for the six months ended 31 March 2009.
Outlook
The Group's recent management results indicate that trading volumes in the Group's key geographic markets are broadly stable and that operating margins are benefiting from cost reduction programmes, commenced earlier in the financial year. The Board therefore remains confident of being able to report results for the year which are in line with current market expectations.
Over the longer term, the Board is satisfied that, with a reduced cost base, the Group is well positioned in its key markets to benefit strongly from a recovery in global economic conditions.
Notes:
- 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.
- The Group's results for the year ending 30 September 2009 are expected to be released in mid November 2009.
- 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. 1,000 employees and its principal operating businesses are located in the UK, Germany, US and Canada.
In the last five years ended 30 September 2008, 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. £160m.