Diploma plc (LON: DPLM) have provided preliminary results for the year ended 30th September 2019, reporting double-digit growth in revenues and earnings.
|Underlying revenue growth||5%||7%|
|Adjusted operating profit(1)||97.2||84.9||+14%|
|Adjusted operating margin(1)||17.8%||17.5%||+30bps|
|Adjusted profit before tax(1),(2)||96.5||84.8||+14%|
|Statutory operating profit||84.1||73.2||+15%|
|Statutory profit before tax||83.5||72.7||+15%|
|Free cash flow(3)||56.5||60.5||-7%|
|Adjusted earnings per share (1),(2)||64.3p||56.4p||+14%|
|Basic earnings per share||54.7p||47.5p||+15%|
|Total dividend per share||29.0p||25.5p||+14%|
|(1) Before acquisition related charges and Chief Executive Officer transition costs in 2018|
(2) Before fair value remeasurements
(3) Before cash payments on acquisitions and dividends
Strong performance with underlying growth across all three Sectors
· Reported growth of 12%, comprising 5% underlying revenue growth, 5% contribution from acquisitions and a 2% currency benefit
· Adjusted operating margin up 30bps to 17.8%, with stronger gross margins and a tight control of costs
· Double-digit growth in adjusted EPS and dividends
Strong trading and operating leverage in Life Sciences
· Underlying revenues up 7% with good performance across Healthcare businesses
· Adjusted operating margin up 120bps benefiting from strong operating leverage
Underlying growth in Seals against background of softer industrial markets
· Underlying revenues up 1% with solid growth from US Aftermarket and International Seals
· US Industrial OEM faced more challenging trading environment from softer Industrial markets and ERP implementation issues at start of year which impacted service levels and revenue growth
· Adjusted operating margin unchanged as stronger Aftermarket margins were offset by investments to resolve ERP issues
Another robust performance in Controls
· Underlying revenue growth of 9% benefiting from another excellent year in Specialty Fasteners and a good contribution from Interconnect
· Adjusted operating margin up 10bps with benefits from operational leverage offsetting impact of businesses acquired at initial lower margins
Record investment in acquisitions
· £78.3m spent on acquisitions this year to access new markets and broaden products and services supplied, in line with strategy
· Pipeline of acquisition opportunities is healthy, but opportunities remain competitive
Strong balance sheet and cash generation
· Net debt of £15.1m at year end; ca £54m of facilities unused
· Free cash flow of £56.5m reflecting strong cash inflow to working capital in second half of year, as strategic inventories successfully unwound
· Uncertain political and economic environment impacting Industrial markets
· Remain confident of further progress in the current financial year as moderately lower underlying growth will be offset by a strong contribution from acquisitions.
Commenting on the results, Johnny Thomson, Diploma Group Chief Executive Officer said:
“Diploma has delivered another strong set of results with double-digit revenue and earnings growth in the year. We were also delighted to welcome four new businesses into the group, all of which are strategically important and have exciting prospects. The political and economic outlook remains uncertain, but I am confident our resilient business model will support a consistently strong performance again in the year ahead.
We have also reviewed and refreshed our strategy since I joined. Our plans are about continuity, building on the strong foundations of our value-add distribution model, focusing on the development of the organisation’s capability to deliver that model at scale and focusing on the significant growth opportunities in our core markets and products. I am excited by the prospect of working with my colleagues to deliver more success for Diploma in the future.”
· Diploma PLC uses alternative performance measures as key financial indicators to assess the underlying performance of the Group. These include adjusted operating profit, adjusted profit before tax, adjusted earnings per share, free cash flow and ROATCE. All references in this Preliminary Announcement (“Announcement”) to “underlying” revenues or operating profits refer to reported results on a constant currency basis and before any contribution from acquired or disposed businesses. The narrative in this Announcement is based on these alternative measures and an explanation is set out in notes 2 and 3 to the consolidated financial statements in this Announcement.
· Certain statements contained in this Announcement constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of Diploma PLC, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such risks, uncertainties and other factors include, among others, exchange rates, general economic conditions and the business environment.