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Diploma Plc

Diploma Plc another year of double-digit growth

Diploma Plc (LON:DPLM), today announced preliminary final results for the year ended 30 September 2018.

 

 

Audited

2018

Audited

2017

£m

£m

 

Revenue

485.1

451.9 

+7%

Adjusted operating profit(1)

84.9

78.2

+9%

Adjusted operating margin(1)

17.5%

   17.3%

 +20bps

Adjusted profit before tax(1),(2)

84.8

77.5

+9%

Statutory operating profit

73.2

68.5

+7%

Statutory profit before tax

72.7

66.8

+9%

Statutory profit for the year

54.4

48.2

+13%

Free cash flow(3)

60.5

55.7

+9%

Pence

Pence

Adjusted earnings per share(1),(2)

56.4

49.8

+13%

Basic earnings per share

47.5

42.0

+13%

Total dividend per share

25.5

 23.0 

+11%

(1)   Before acquisition related charges and Chief Executive Officer transition costs

(2)   Before fair value remeasurements

(3)   Before cash payments on acquisitions and dividends

Financial Highlights

· Revenue and adjusted operating profit increased by 7% and 9%, respectively.

· Underlying revenues increased by 7%; 3% increase in revenues from businesses acquired (net of a small disposal), offset by 3% currency headwind.

· Adjusted operating margins improved by 20bps to 17.5%, reflecting benefit of operational leverage from growth in revenues.

· Adjusted profit before tax increased by 9% to £84.8m; adjusted EPS increased by 13% to 56.4p, reflecting benefit from a reduction in US Federal corporate income tax rate.

· Robust free cash flow of £60.5m, including £4.0m realised on sale of business; strong balance sheet with cash funds of £36.0m at end of September.

· Total dividend increased by 11% to 25.5p per share reflecting strong financial position and confidence in Group’s prospects.

Operational Highlights

· In Life Sciences underlying revenues increased by 5%. Healthcare businesses benefited from strong consumable revenues and new premium Surgical and Endoscopy products; Environmental businesses had a mixed year, with stronger revenues in Germany offset by reduced UK revenues.

· In Seals, underlying revenues increased by 10%. Aftermarket and Industrial OEM businesses in North America benefited from buoyant US industrial economy; International Seals businesses reported solid growth in second half of year led by a good performance in Europe.

· In Controls, underlying revenues increased by 5%. The Interconnect and Specialty Fasteners businesses increased revenues helped by stronger industrial markets and success in broadening their customer base; weaker revenues in Fluid Controls were principally due to the absence of a large one-off project.

· Acquisition expenditure was £20.4m with £16.9m invested in the acquisition of FS Cables, taking the Group’s expenditure on value-enhancing businesses over the past five years to ca. £128m; the Group’s return on adjusted trading capital (“ROATCE”) has improved to 24.5%, comfortably exceeding our 20% target.

Commenting on the results for the year, John Nicholas, Diploma’s Executive Chairman said:

“Diploma’s trading performance in 2018 was, once again, very strong. The Group delivered another year of double-digit growth in adjusted earnings per share and generated free cash flow of over £60m. The results demonstrate the resilience of the Group’s businesses and the consistent delivery against the Group’s strategy which has delivered compound double-digit growth in adjusted earnings per share over the past 10 years.

Despite the global macro-economic uncertainty, the Board remains confident that the Group will continue to make further progress in the coming year from a combination of steady “GDP plus” underlying growth and from the Group’s proven and value-enhancing acquisition programme.”