Diploma Plc · LSE:DPLM
Diploma — Investor Day (February 2017)
55 slides from Diploma's investor day presentation, Feb 1, 2017
Slide 1: Capital Markets Day, 1st February 2017
Life Sciences Wednesday 1st February 2017 Seals Controls
Slide 2: Introduction
Life Introduction Sciences Bruce Thompson Seals Wednesday 1st February 2017 Controls
Slide 3: Key Objectives
Key Objectives To show the Group’s To demonstrate the To give confidence in To introduce you progress over the last resilience of the the substantial further to the strong and five years in executing Group’s businesses “runway for growth” experienced senior its strategy and and the high barriers ove
Slide 4: Five Year Development
Five Year Development Group five year revenue CAGR 33% 2011 32% 27% 2016 29% Life Sciences 11% p.a. underlying organic 230.6m £ 382.6m £ Seals growth 4% p.a. Controls 35% 44% >75% of revenues generated outside the UK Larger, broader based businesses in all three Sectors 03
Slide 5: Five Year Development
Five Year Development Adjusted EPS growth TSR growth Dividend growth +8% p.a. +26% p.a. +11% p.a. 316 41.9 20.0 36.1 38.2 17.0 18.2 33.1 34.8 236 233 27.9 218 14.4 15.7 154 12.0 100 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Market ca. £400m ca. £1.2bn
Slide 6: Executive Management Group
Executive Management Group Strong and broad-based senior management team to drive growth strategy 05
Slide 7: Video available
Video available at: http://www.diplomaplc.com/about-us/overview 06
Slide 8: Today's Agenda
Today’s Agenda 09.00 Arrival and Registration 09.30 – 09.50 Introduction Presentation 10.00 – 10.40 Sector Presentation 1 10.45 – 11.25 Sector Presentation 2 11.30 – 12.10 Sector Presentation 3 12.15 – 12.30 Closing Remarks and Group Q&A 12.30 Buffet Lunch 07
Slide 9: Logistics
Logistics ‒ We will now break into three groups to rotate through the Sector break- out sessions, which will each last ca. 40 minutes ‒ If you look at your badges, you will see a coloured sticker: Life Sciences Seals Controls Seals Controls Life Sciences Controls Life Sciences Seals ‒ After the brea
Slide 10: Life Sciences
Life Sciences Wednesday 1st February 2017 Seals Controls
Slide 11: Life Sciences - Healthcare
Life Sciences - Healthcare Wednesday 1st February 2017
Slide 12: Dan Brown, CEO, Diploma Healthcare Group
Dan Brown CEO Diploma Healthcare Group 11
Slide 13: DHG – Operating Businesses
DHG – Operating Businesses Toronto, Canada 235 Employees Edmonton, AB Kitchener, ON Kitchener, ON Melbourne, SA Melbourne, SA Ballina, TP Canada Canada Canada Australia Australia Ireland 74 53 22 20 23 43 Employees Employees Employees Employees Employees Employees 12
Slide 14: Five Year Development
Five Year Development Five year revenue CAGR: 9% p.a. 16% 5% Canada 2011 2016 91.7m 16% 58.9m Australia £ £ Ireland & UK 68% 95% 13
Slide 15: DHG Healthcare
DHG Healthcare Acquire, Build, Grow strategy Acquisition of BGS and DSL in Acquisition of Acquisition of Vantage integrated Diagnostic Solutions Australia brought Chemzyme – fully Technopath with AMT Surgical to - entry into Clinical under single integrated into Distribution – form a single strong D
Slide 16: Video available
Video available at: http://www.diplomaplc.com/media-centre/video-library/ 15
Slide 17: Focus on Niche Market Segments
Focus on Niche Market Segments Clinical Specialty Surgical Diagnostics Electro-Surgery MI Surgery GI/Endoscopy Biotechnology How doctors determine Operations completed Surgeons employ new Use of imaging Rapid testing disease and monitor with modern scalpels technologies for equipment to for microbia
Slide 18: Competitive Positioning
Competitive Positioning ‒ Quality manufacturer-branded products sourced under long term distribution agreements ‒ Multi-year customer contracts for consumables and service underpin ca. 70% of revenues ‒ Full service solutions provided by highly qualified technical specialists ‒ Financing of capital
Slide 19: Geographic markets
Geographic markets Canada Australia Ireland UK Healthcare expenditure Ca. £120bn Ca. £90bn Ca. £20bn Ca. £180bn As % of GDP 10.1% 9.3% 9.4% 9.8% 5-year growth 2-3% p.a. 4-5% p.a. 2-3% p.a. 3-4% p.a. 10-year growth 4-5% p.a. 6-7% p.a. 4-5% p.a. 5-6% p.a. Public : private 71 : 29 67 : 33 69 : 31 79 :
Slide 20: Growth Opportunities – Existing Businesses
Growth Opportunities – Existing Businesses Focus on growth segments Value-added services Minimally invasive/image assisted Bundle technical support and other technologies, healthcare optimisation value-added services into longer term and safety, specialised diagnostics contracts Manage product life-
Slide 21: Growth Opportunities - Leverage Product Portfolio
Growth Opportunities - Leverage Product Portfolio Clinical diagnostics Electrosurgery MI Surgery GI/Endoscopy Digestive Health Biotechnology 20
Slide 22: Growth Opportunities – International Expansion
Growth Opportunities – International Expansion Europe Asia Pacific Explore opportunities in Europe, Target countries with well funded building from TPD base – e.g. Nordic Healthcare systems (spend > 8.5% countries (Sweden, Denmark and Norway) and Benelux of GDP) – e.g. Singapore, Malaysia Expanded s
Slide 23: Key Messages
Key Messages The Healthcare business A robust platform has There is substantial Use acquisitions of has developed substantially been established with further runway for growth established local over the five years high barriers to entry over the next five years: distribution businesses to ‒ Increase
Slide 24: Seals
Seals Wednesday 1st February 2017
Slide 25: Dr James Routh and Darin Clause
Dr James Routh Darin Clause Group Managing Director Senior Vice President International Seals Diploma North America 24
Slide 26: Principal operations
Principal operations North America (by destination) Europe (by destination) Rest of World (by destination) 56% 34% 10% of sector 408 employees of sector 356 employees of sector 38 employees revenues 11 locations revenues 10 locations revenues 5 locations Aftermarket Industrial OEM 25
Slide 27: Five Year Development
Five Year Development Five year revenue CAGR: 16% p.a. 16% 31% North American 41% Aftermarket 2011 2016 North American 27% £ 80.0m 57% 166.6m £ Industrial OEM International 28% 26
Slide 28: Acquisitions over past five years
Acquisitions over past five years / J Royal Kentek Ramsay, AB Seals Kubo Group WCIS & Swan Seals Extension of North Extension of Building critical mass Extension of Entry into the Seals American Industrial European Seals in UK Seals market; European Seals market in Australia; OEM business into busin
Slide 29: Aftermarket
Aftermarket High service model for resilient repair and maintenance market Principal market driver: Heavy Construction & Infrastructure investment Next day delivery of seals, seal kits, O-rings, gaskets, filters and cylinder components for the repair of heavy mobile machinery, e.g: ‒ Bulldozers & ex
Slide 30: Video available
Video available at: http://www.diplomaplc.com/media-centre/video-library/ 29
Slide 31: Growth Opportunities – North American Aftermarket
Growth Opportunities – North American Aftermarket E-commerce New products Promotion of e-commerce Webstore – Addition of new product lines – goal to increase utilisation by 20%+ e.g. lifting slings, aftermarket year-over-year cylinders for skid-steer equipment Growth market focus Acquisitions Target
Slide 32: Industrial OEM Business Model
Industrial OEM Business Model Customer Compound selection Testing and Supply to application and product design approval OEM customer ‒ Partnering with customers ‒ Design engineering of sealing ‒ Material testing and ‒ Ex-stock availability of to establish a full solution in conjunction with characte
Slide 33: Industrial OEM Case Study
Industrial OEM Case Study Development & Supply of Specialised Sealing Solution Delivered ‒ Customer was not a sealing specialist and required >10m seals technical advice and guidance Since 2009 ‒ Worked with customer to develop an effective solution: Project success factors: ‒ Compound selection inc
Slide 34: Industrial OEM Case Study
Industrial OEM Case Study Poppet Seal – Fuel Dispensing Application Project success factors: ‒ Improved fuel dispensing ‒ Customer manufactures fuel accuracy through new design dispensing products with demanding seal challenges ‒ Cycle testing completed ‒ Changing fuel standards (>1 million cycles)
Slide 35: Growth Opportunities – North American Industrial OEM
Growth Opportunities – North American Industrial OEM Geographic extension Cross-selling Build out from strong positions in Each business has specific experience, the Eastern States (J Royal), Mid-West skills and approvals for different (RT Dygert and HPS) and the West compounds and end-use applicati
Slide 36: Growth Opportunities – International
Growth Opportunities – International Post-acquisition investment Synergies Invest in recent acquisitions to Create synergies through cross-selling, generate higher revenue growth and e-commerce, joint purchasing and improved operating margins own-brand development Geographic extension Acquisitions F
Slide 37: Key Messages
Key Messages The Seals business has A robust platform has There is a substantial We have the people with developed substantially been established with runway for further growth the capabilities to deliver over the last five years high barriers to entry over the next five years on the opportunity ‒ F
Slide 38: Controls – Interconnect
Controls – Interconnect Wednesday 1st February 2017
Slide 39: Gustav Röber, Alessandro Lala, John Hunt
Gustav Röber Alessandro Lala John Hunt Director Managing Director Managing Director Corporate Development IS-Group Clarendon 38
Slide 40: Principal Businesses
Principal Businesses Interconnect Cable harnessing products Connectors Specialty fasteners Cable accessories Swindon & Weston-super-Mare, UK Munich, Leicester, Swindon Houghton Regis, Stuttgart, Germany Germany & Totnes, UK Tewkesbury & Indianapolis, US Plymouth, UK 56% of revenue 10% of revenues 23
Slide 41: Five Year Development
Five Year Development Five year revenue CAGR: 8% p.a. 11% 9% IS-Group 15% 2011 23% 2016 Filcon £ 55.5m £ 80.2m 56% Clarendon Cablecraft* 76% 10% *6 months only 40
Slide 42: Interconnect Markets
Interconnect Markets Aerospace Industrial Motorsport Energy & Medical & Defence Infrastructure & Scientific 36% 29% 18% 15% 2% 41
Slide 43: Video available
Video available at: http://www.diplomaplc.com/media-centre/video-library/ 42
Slide 44: IS-Group – Competitive Positioning
IS-Group – Competitive Positioning ‒ High performance, manufacturer-branded products, sourced under long term distribution agreements ‒ Strong technical knowledge to specify products for customer applications ‒ Ex-stock availability and full range of value-added services ‒ Focus on refurbishment, up
Slide 45: Growth Opportunities – IS-Group
Growth Opportunities – IS-Group Cable harnessing specialist E-commerce Establish a clear, differentiated Introduce advanced e-commerce identity as the dominant player platform with user-friendly front end, in cable harnessing comprehensive product database and on-line technical support Transnational
Slide 46: Clarendon Specialty Fasteners
(@llarendon Specialty Fasteners
Slide 47: Clarendon Specialty Fasteners
Clarendon Specialty Fasteners Acquire, Build, Grow strategy £7.3m (revenue) £10.0m £13.5m £15.7m £18.3m Acquisition of Investment in IT Acquisition of SFC Clarendon Specialty Clarendon business Amfast in the UK – systems; in the UK – adds Fasteners formed fully separated extended strengthened own-br
Slide 48: Clarendon Air Solution
Clarendon Air Solution Once lower bin Material handler Scan is sent is empty, release scans the frames to our ERP, stock from the (no need to scan and orders are upper bin each barcode) automatically generated Material handler Parts are shipped Warehouse receives parts same or next day operator pick
Slide 49: Growth Opportunities – Clarendon
Growth Opportunities – Clarendon Aircraft interiors growth Value-added services Continue to penetrate the Aircraft Implement Clarendon Air solution Interiors market in Europe, Asia and together with enhanced digital emerging markets presence through customer portals Engineered products Acquisitions
Slide 50: Cablecraft
@= CABLECRAFT creative wiring solutions
Slide 51: Cablecraft Acquisition
Cablecraft Acquisition Extension of Interconnect activities ‒ Acquired in March 2016 ‒ Leading supplier of cable accessory products used to identify, connect, secure and protect electrical cables ‒ Own-branded and manufactured products account for 70-80% of revenues ‒ Extends the range of markets se
Slide 52: Case Study - Crossrail
Case Study - Crossrail ‒ The London Crossrail project has a length of 62 miles Project success factors: ‒ Dedicated Rail Team ‒ Rail infrastructure requires ‒ Network Rail and London cable and cable accessories Underground certified that are certified for use on products, including low the railways
Slide 53: Growth Opportunities – Cablecraft
Growth Opportunities – Cablecraft Post-acquisition investment Product development Strengthen salesforce and sales Continue developing own branded structure to focus on growth markets products to support customers’ and generate higher revenue growth requirement Cross selling Acquisitions Each busines
Slide 54: Key Messages
Key Messages The Interconnect A robust platform with There is substantial further We have a strong business has developed high barriers to entry runway for growth over the management team to substantially over the has been established next five years: deliver on the growth five years ‒ Create a broa
Slide 55: Diploma PLC
DIPLOMA PLC