Slide 1: Preliminary Announcement
Preliminary Announcement Year ended 30 September 2012 19 November 2012
Slide 2: Table of Contents
01 Table of Contents 1. Group Overview 2. Summary of 2012 Results LIFE SCIENCES 3. Business Review SEALS 4. Financial Highlights CONTROLS 5. Growth Strategy
Slide 3: 1. Group Overview
. DIPLOMA? Lc 1. Group Overview
Slide 4: Group Overview
03 Group Overview Diploma PLC is an international Revenue by Geography* group of specialised businesses, supplying technical products and Rest of the World services to the following industries: 7% Canada 27% 22% UK North America Europe 54% 39% LIFE Continental SCIENCES SEALS CONTROLS USA 27% 17% Eur
Slide 5: Our Business Model
04 Our Business Model Essential Products Essential Solutions Essential Values = recurring income and = sustainable and = agility and responsiveness stable revenue growth attractive margins > Focus on essential > Highly responsive > Entrepreneurial culture products and services customer service > Dec
Slide 6: Our Growth Strategy
05 Our Growth Strategy ACQUIRE BUILD GROW > Fit with Group’s > Investment to build a > Businesses maintain business model solid foundation for their distinct sales growth: and marketing identity > Marketing led with strong customer > New facilities and IT > Synergies managed relationships systems wi
Slide 7: Financial Track Record
06 Financial Track Record EPS growth TSR growth Dividend growth +20% p.a. +21% p.a. +22% p.a. 2012 33.1 2012 262 2012 14.4 2011 27.9 2011 170 2011 12.0 2010 18.9 2010 147 2010 9.0 2009 14.8 2009 86 2009 7.8 2008 16.0 2008 107 2008 7.5 Adjusted 0 EPS 10 in pence 20 30 40 TSR index, 0 end 100 Sept 200
Slide 8: 2. Summary of 2012 Results
DIPLOMA? LC 2. Summary of 2012 Results
Slide 9: Overview of Results
08 Overview of Results Year ended 30 September 2012 2011 Revenue £260.2m £230.6m +13% Adjusted operating profit £52.8m £45.2m +17% Adjusted operating margin 20.3% 19.6% Adjusted profit before tax £52.6m £44.9m +17% Free cash flow £32.7m £25.0m +31% Adjusted earnings per share 33.1p 27.9p +19% Total
Slide 10: Financial Highlights
09 Financial Highlights > Revenues increased by 13% to £260.2m; adjusted operating profit increased by 17% to £52.8m > Adjusted operating margin of 20.3% (+70bps) - driven by strong operational leverage in North American Seals > Underlying revenue and operating profits increased by 6% and 11% respec
Slide 11: Underlying Revenue Trends
10 Underlying Revenue Trends 12% 8% 6% 5% 5% 4% Q1 Q2 HY Q3 Q4 FY TRENDING BACK TO GDP+ GROWTH AGAINST STRONG COMPARATIVES
Slide 12: Operational Highlights
11 Operational Highlights > Underlying growth of 13% in Seals; particularly strong growth in North American Aftermarket > Good underlying growth of 5% in Life Sciences; strong sales of capital equipment in first half > Underlying growth of 2% in Controls, held back by reduced activity in Continental
Slide 13: Investment for Growth
12 Investment for Growth > Major facility moves: Cash investment (£m) > RT Dygert and All Seals in the US; 2012 2013 2014 Total Vantage in Canada and IS-Rayfast in the UK Facilities 1.5 1.6 - 3.1 IT infrastructure 0.2 0.9 0.8 1.9 > New IT systems in Seals, Controls and Environmental businesses; 1.7
Slide 14: Acquisition Development
13 Acquisition Development Financial Acquisition Life Sciences Seals Controls Year Spend (£m) 2008 7.9 Somagen (12%) - Canada Snijders - Holland Hitek - UK 2009 12.2 Meditech - Canada RT Dygert - US BGS (80%) – Australia 2010 11.0 Somagen (8%) - Canada All Seals - US ET Fisher - Germany AMT (25%) –
Slide 15: Financial KPIs
14 Financial KPIs Five Year Trends 2008 2009 2010 2011 2012 Revenue £156.2m £160.0m £183.5m £230.6m £260.2m Total growth +25% +2% +15% +26% +13% Organic growth +8% -12% +11% +17% +6% Operating margin 17.0% 16.0% 17.5% 19.6% 20.3% Working capital (% revenues) 17.2% 17.6% 15.4% 16.1% 16.5% ROTCE 22.4%
Slide 16: 3. Business Review
. . DIPLOMA ? Lc 3. Business Review
Slide 17: Our Sectors
16 Our Sectors Revenue by Sector and Destination LIFE SCIENCES SEALS CONTROLS 30% of group revenues 38% of group revenues 32% of group revenues 270 employees 489 employees 292 employees 75% Canada 76% North America 58% UK 17% Europe 12% Europe 35% Europe 8% Rest of World 12% Rest of World 7% Rest of
Slide 18: Life Sciences
17 Life Sciences Operating Results Year ended 30 Sept 2012 2011 Revenue £78.4m £74.4m +5% Operating profit £18.0m £17.1m +5% Operating margin 23.0% 23.0% Free cash flow £13.3m £11.6m +15% > DHG revenue growth of 5% in Canadian dollars after adjusting for: > Acquisitions of DSL in 2012 and CMI in 201
Slide 19: Life Sciences Sector Developments
18 Life Sciences Sector Developments > The Healthcare businesses account for over 80% of sector revenues > Investment in newly formed Vantage business (CMI and AMT Endoscopy): > Sales team integration and training > Strengthened management in service and operations > Move to new facility in October
Slide 20: Seals
19 Seals Operating Results Year ended 30 Sept 2012 2011 Revenue £99.9m £80.0m +25% Operating profit £20.4m £14.9m +37% Operating margin 20.4% 18.6% Free cash flow £13.7m £6.9m +99% > Aftermarket businesses – revenue growth of 14% after adjusting for currency > Industrial OEM businesses - revenue gro
Slide 21: Seals Sector Developments
20 Seals Sector Developments > Continued strong growth in Aftermarket businesses (ca. 60% of sector revenues): > Further operational leverage in core North American business > Significant investment in Industrial OEM businesses (ca. 40% of sector revenues): > Acquisition of J Royal in US and 10% of
Slide 22: Controls
21 Controls Operating Results Year ended 30 Sept 2012 2011 Revenue £81.9m £76.2m +7% Operating profit £14.4m £13.2m +9% Operating margin 17.6% 17.3% Free cash flow £10.0m £9.8m +2% > Underlying revenue growth of 2% after adjusting for currency and acquisitions of Abbeychart and Amfast > Revenue grow
Slide 23: Controls Sector Developments
22 Controls Sector Developments > Acquisition of Amfast in May 2012 extends Clarendon fastener business into Civil Aerospace sector – operational and back office functions to be integrated > Acquisition of Abbeychart in March 2012 extends the Hawco Group’s involvement in the Food & Beverage sector –
Slide 24: 4. Financial Highlights
DIPLOMA? LC 4. Financial Highlights
Slide 25: Profit Before Tax
24 Profit Before Tax Year ended 30 September 2012 2011 £m £m Revenue 260.2 230.6 +13% Adjusted operating profit 52.8 45.2 +17% Operating margin 20.3% 19.6% Net interest expense (0.2) (0.3) Adjusted profit before tax 52.6 44.9 +17% Acquisition related charges (6.4) (4.8) Fair value remeasurements (0.
Slide 26: Underlying Results
25 Underlying Results Year ended 30 September Adjusted Revenue operating profit £m £m As reported – FY2012 260.2 52.8 Forex Translation 0.7 - Transaction - (0.5) 260.9 52.3 Acquisitions J Royal (9.1) (1.4) Abbeychart, Amfast, DSL, CMI (9.3) (1.3) Divestment a1-envirosciences (Switzerland) 1.9 0.4 24
Slide 27: Taxation
26 Taxation Year ended 30 September 2012 2011 £m £m Adjusted profit before tax 52.6 44.9 IFRS taxation (14.4) (11.6) Adjustments (0.7) (1.3) Adjusted tax (15.1) (12.9) Effective adjusted tax rate 28.7% 28.7% Earnings per share Adjusted 33.1p 27.9p +19% Basic (IFRS) 27.9p 24.0p +16%
Slide 28: Free Cash Flow
27 Free Cash Flow Year ended 30 September 2012 2011 £m £m Operating profit 52.8 45.2 Depreciation 2.1 2.1 Working capital (5.2) (7.4) Pension and share schemes, net 0.5 0.4 Operating cash flow 50.2 40.3 Interest paid, net (0.3) (0.5) Taxation (13.7) (12.4) Capital expenditure (3.5) (1.7) Purchase of
Slide 29: Net Debt
28 Net Debt Year ended 30 September 2012 2011 £m £m Free cash flow 32.7 25.0 Acquisition cash paid (21.5) (27.3) Deferred consideration (0.8) (0.9) Dividends (14.3) (14.8) (3.9) (18.0) Net funds brought forward 12.2 30.1 Exchange adjustments (0.4) 0.1 Net funds 7.9 12.2 Comprising: Cash funds 11.4 1
Slide 30: Shareholders' Funds
29 Shareholders’ Funds As at 30 September 2012 2011 £m £m Goodwill 79.8 74.4 Acquisition intangible assets 32.2 27.3 Investment 0.7 - Tangible assets 13.0 11.4 125.7 113.1 Net working capital 44.4 37.1 Trading capital employed 170.1 150.2 Retirement benefit obligations (5.4) (5.4) Deferred tax, net
Slide 31: 5. Growth Strategy
DIPLOMA? LC 5. Growth Strategy
Slide 32: Growth Strategy
31 Growth Strategy > The Group is well diversified by geography and business area > Our resilient business model delivers “GDP plus” organic growth > essential products and services give recurring income and stable revenue growth > essential solutions support sustainable and attractive margins > ess
Slide 33: Current Trading
32 Current Trading Group Seals Life Sciences > Resilient business model > Robust underlying growth > Good start to the year > Good geographic spread in key markets in North > Benefiting from America investments made last > Strong balance sheet and robust cash flow > Aftermarket continues year to con
Slide 34: Contact
Contact Bruce M Thompson Tel: +44 (0) 20 7549 5700 Fax: +44 (0) 20 7549 5715 Chief Executive Officer Email: investors@diplomaplc.com Nigel P Lingwood 12 Charterhouse Square Group Finance Director London EC1M 6AX Tulchan Communications David Allchurch Martin Robinson Tel: +44 (0) 20 7353 4200 Email: