Slide 1: Preliminary Announcement
Preliminary Announcement Year ended 30 September 2011 21 November 2011
Slide 2: Table of Contents
Table of Contents 1. Group Overview 2. Summary 2011 Results 3. Business Review 4. Financial Highlights 5. Outlook and Prospects Products Solutions Values
Slide 3: 1. Group Overview
1. Group Overview
Slide 4: Group Overview
01 Group Overview Diploma PLC is an international Revenue by Geography* group of specialised businesses, supplying technical products and services to the following industries: Rest of world 7% 23% UK 43% Europe Canada 28% North America 50% 20% Continental Europe USA 22% LIFE SEALS CONTROLS SCIENCES
Slide 5: The Diploma Business Model
02 The Diploma Business Model Essential PRODUCTS Essential SOLUTIONS Essential VALUES We focus on businesses We provide solutions We encourage an which supply essential designed to meet entrepreneurial culture products and services customer needs in our businesses • Funded by customers’ • Highly res
Slide 6: The Diploma Investment Case
03 The Diploma Investment Case GDP+ Organic We focus on essential products and services, funded by customers’ operating rather than capital budgets, giving Revenue Growth resilience to revenues (6% p.a. organic growth*) Our attractive operating margins (17-18% average*) are Attractive Margins sustai
Slide 7: Financial Track Record
04 Financial Track Record Five Year Performance EPS growth TSR growth Dividend growth +19% p.a. +21% p.a. +21% p.a. 2011 27.9 2011 258 2011 12.0 2010 18.9 2010 222 2010 9.0 2009 14.8 2009 129 2009 7.8 2008 16.0 2008 107 2008 7.5 2007 13.1 2007 150 2007 5.4 Adjusted 0 EPS in 10 pence 20 30 TSR index,
Slide 8: 2. Summary 2011 Results
2. Summary 2011 Results
Slide 9: Overview of Results
05 Overview of Results Year ended 30 September 2011 2010 Revenue £230.6m £183.5m +26% Adjusted operating profit £45.2m £32.1m +41% Adjusted operating margin 19.6% 17.5% Adjusted profit before tax £44.9m £32.2m +39% Free cash flow £25.0m £29.8m -16% Profit for the year £27.6m £23.0m +20% Adjusted ear
Slide 10: Overview of Results
06 Overview of Results Year ended 30 September Revenue up 26% with continued strong demand and acquisition benefits Adjusted operating profit up 41% to £45.2m; operating margin at record 19.6% Underlying revenue and adjusted operating profit increased by 17% and 31% respectively Strong free
Slide 11: Underlying Revenue Trends
07 Underlying Revenue Trends Underlying growth rates by quarter 2009/10 and 2010/11 24% 18% 17% 16% 14% 11% 8% -1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY2010 FY2011 COMPARATIVES MORE DEMANDING FOR H1 2011/12, PARTICULARLY Q2 Products Solutions Values
Slide 12: Financial KPIs
08 Financial KPIs Five Year Trends 2007 2008 2009 2010 2011 Revenue £124.5m £156.2m £160.0m £183.5m £230.6m Total growth +11% +25% +2% +15% +26% Organic growth +6% +8% -12% +11% +17% Operating margin 16.6% 17.0% 16.0% 17.5% 19.6% Working capital (% revenues) 17.3% 17.2% 17.6% 15.4% 16.1% ROTCE 25.5%
Slide 13: 3. Business Review
3. Business Review
Slide 14: Our Sectors
09 Our Sectors Revenue by Sector and Destination LIFE SCIENCES SEALS CONTROLS 32% of group revenues 35% of group revenues 33% of group revenues 223 employees 432 employees 245 employees 75% Canada 70% North America 56% UK 20% Europe 15% Europe 39% Europe 5% Rest of World 15% Rest of World 5% Rest of
Slide 15: Life Sciences
10 Life Sciences Results Year ended 30 Sept 2011 2010 Revenue £74.4m £55.4m +34% Operating profit £17.1m £11.9m +44% Operating margin 23.0% 21.5% Free cash flow £11.6m £10.1m +15% DHG increased revenues by 41% in UK sterling: Boosted by CMI and BGS acquisitions and exceptional sale of face shiel
Slide 16: Life Sciences: Sector Developments
11 Life Sciences Sector Developments The Healthcare businesses account for almost 80% of sector revenues Steady growth in Healthcare funding and some easing of capital funding Acquisition of CMI and AMT minorities (total £28m investment) CMI and AMT Endoscopy now combined to form Vantage End
Slide 17: Seals
12 Seals Results Year ended 30 Sept 2011 2010 Revenue £80.0m £60.1m +33% Operating profit £14.9m £8.9m +67% Operating margin 18.6% 14.8% Free cash flow £6.9m £7.9m -13% Results benefited from full 12 months of All Seals Underlying sector revenues increased by 26%, after adjusting for currency ef
Slide 18: Seals: Sector Developments
13 Seals Sector Developments The Aftermarket businesses account for just over 60% of sector revenues Revenues increased by over 25%, across all products and geographies Market share gains driven by customer service and inventory levels Warehouse automation project completed, delivering impro
Slide 19: Controls
14 Controls Results Year ended 30 Sept 2011 2010 Revenue £76.2m £68.0m +12% Operating profit £13.2m £11.3m +17% Operating margin 17.3% 16.6% Free cash flow £9.8m £9.9m -1% No significant impact from currency effects or acquisitions – underlying revenue growth of 12% Operating margins improved to
Slide 20: Controls: Sector Developments
15 Controls Sector Developments Modest decline in Defence sector – we have relatively low exposure to major capital projects Commercial Aerospace sales positive with fit out of new and refurbished aircraft – sector may be returning to long term growth rate of 5% p.a. Sharp increase in Motorspo
Slide 21: Acquisition Development
16 Acquisition Development 5 years – 2007 to 2011 Financial Acquisition Life Sciences Seals Controls Year spend £m AMT (75%) – Canada Cabletec – UK 2007 32.1 CBISS - UK M Seals (90%) - Denmark Hawco (8%) - UK 2008 7.6 Somagen (12%) - Canada Snijders - Holland Hitek - UK 2009 11.5 Meditech - Canada R
Slide 22: 4. Financial Highlights
4. Financial Highlights
Slide 23: Profit Before Tax
17 Profit Before Tax Year ended 30 September 2011 2010 £m £m Revenue 230.6 183.5 +26% Adjusted operating profit 45.2 32.1 +41% Operating margin 19.6% 17.5% Finance (expense)/income (0.3) 0.1 Adjusted profit before tax 44.9 32.2 +39% Acquisition related charges (4.8) (3.5) Fair value remeasurements (
Slide 24: Underlying Results
18 Underlying Results Adjusted Revenue Operating Profit 2011 2011 £m £m As reported 230.6 45.2 Forex - translation 0.5 - Forex - transaction - - 231.1 45.2 Acquisitions – CMI (9.0) (2.0) Acquisitions - All Seals (6.2) (1.1) Acquisitions - BGS (2.0) - 213.9 42.1 Movement in underlying results +17% +3
Slide 25: Profit After Tax
19 Profit After Tax Year ended 30 September 2011 2010 £m £m IFRS profit before tax 39.2 26.7 Taxation (11.6) (8.8) Profit after tax - continuing 27.6 17.9 Profit for the year - discontinued - 5.1 Profit for the year 27.6 23.0 Effective tax rate on continuing operations 28.7% 29.2% Earnings per share
Slide 26: Free Cash Flow
20 Free Cash Flow Year ended 30 September 2011 2010 £m £m Operating profit 45.2 32.1 Depreciation 2.1 2.1 Working capital (7.4) 0.1 Pension and share schemes, net 0.4 - Operating cash flow 40.3 34.3 Interest (0.5) 0.1 Taxation (12.4) (9.3) Capital expenditure (1.7) (1.3) Disposal of subsidiaries 0.9
Slide 27: Net Cash Funds
21 Net Cash Funds Year ended 30 September 2011 2010 £m £m Free cash flow 25.0 29.3 Acquisition cash paid (28.2) (11.0) Dividends (14.8) (10.2) (18.0) 8.1 Cash funds brought forward 30.1 21.3 Exchange movement 0.1 0.7 Net cash funds 12.2 30.1 Comprising: Cash funds 17.8 30.1 Borrowings (5.6) - Produc
Slide 28: Shareholders’ Funds
22 Shareholders’ Funds As at 30 September 2011 2010 £m £m Intangible assets, including goodwill 114.4 90.0 Tangible assets 11.4 11.7 125.8 101.7 Net working capital 37.1 28.2 Trading capital employed 162.9 129.9 Retirement benefit obligations (5.4) (5.3) Deferred tax, net (2.0) (1.3) Future purchase
Slide 29: 5. Outlook and Prospects
5. Outlook and Prospects
Slide 30: Outlook and Prospects
23 Outlook and Prospects The Group is well diversified by geography and business area We have a resilient business model we supply essential products and services providing recurring income and stable revenue growth we offer essential solutions, not just products, which support sustainable a
Slide 31: Outlook and Prospects (continued)
24 Outlook and Prospects (continued) There are currently good opportunities for value adding acquisitions: good recent performance on which to base valuations economic uncertainty encourages sale discussions Ungeared balance sheet, committed bank facilities and strong cash flow will fund the
Slide 32: Appendices
Appendices
Slide 33: Life Sciences: Healthcare
1 Life Sciences Healthcare 2011 Life Sciences Sector Revenue Business Model Quality manufacturer branded 21% Environmental products are sourced under exclusive, long term distribution agreements Healthcare 79% Multi-year customer contracts for consumables and service underpin ca 70% of sector re
Slide 34: Healthcare Case Study: Smoke evacuation in electrosurgery
2 Life Sciences Healthcare Case Study: Smoke evacuation in electrosurgery Electrosurgery devices are used in 90% of endoscopic and open surgical procedures to cut and coagulate tissue Inhaling surgical smoke is a hazard for operating room surgical teams We supply smoke evacuation pumps at litt
Slide 35: Life Sciences: Environmental
3 Life Sciences Environmental 2011 Life Sciences Sector Revenue Products Suppliers of highly specialised, 21% Environmental manufacturer branded and essential products: Customised containment Healthcare 79% enclosures for the personal protection of technicians in the research labs of pharmaceutica
Slide 36: Seals: Aftermarket
4 Seals Aftermarket 2011 Seals Sector Revenue Business Model Very compelling product and high service 37% Industrial OEMs offering after equipment is sold into the pre-used market or moves out of warranty (typically first 3 years are controlled by warranty / lease terms of OEMs): Aftermarket 63% E
Slide 37: Aftermarket Case Study: Next day delivery of seals
5 Seals Aftermarket Case Study: Next day delivery of seals A typical large bulldozer or excavator has on average 30–50 seals in its hydraulic cylinders If any of these fail an expensive piece of machinery is out of action We become the supplier of choice once the equipment is sold into the pre
Slide 38: Seals: Industrial OEMs
6 Seals Industrial OEMs 2011 Seals Sector Revenue Products Supplying manufacturers in a diverse 37% Industrial OEMs spread of industry segments with a wide range of specialised industrial (and some retail) products. Range of end use applications includes: Aftermarket 63% Hearing aids Wind turbin
Slide 39: Controls: Market Drivers and Business Model
7 Controls Market Drivers Business Model General industrial economies in Europe, Operate in parallel with principal particularly the UK and Germany. suppliers, who do original design-in Operational funding in Defence & work and supply large quantities to Aerospace, Motorsport and other major new b
Slide 40: Controls: Core Products and End-user Markets
8 Controls Core Products and End-user Markets Lacing Connectors DEFENCE AEROSPACE Identification Tubing RAIL MEDICAL Specialised Junctions wiring MOTORSPORT ENERGY A BROAD RANGE OF ESSENTIAL, INTEGRATED PRODUCTS TO MEET TECHNICALLY DEMANDING APPLICATIONS ACROSS INDUSTRIES Products Solutions Values
Slide 41: Case Study: Complex wiring harnesses
9 Controls Case Study: Complex wiring harnesses Complex wiring harnesses are used to control a range of functions in technically demanding applications In a typical Formula 1 car chassis there are over 1,000 metres of high performance wiring and over 200 individual interconnect components Full
Slide 42: Contact
Contact Bruce M Thompson Chief Executive Officer Nigel P Lingwood Group Finance Director Tel: +44 (0) 20 7549 5700 Fax: +44 (0) 20 7549 5715 Email: investors@diplomaplc.com Tulchan Communications David Allchurch Martin Robinson 12 Charterhouse Square Tel: +44 (0) 20 7353 4200 London EC1M 6AX Email: