Slide 1: Interim Announcement
Interim Announcement Half Year ended 31 March 2012 14 May 2012
Slide 2: Table of Contents
01 Table of Contents 1. Group Overview 2. Summary of Half Year Results 3. Business Review 4. Financial Highlights 5. Outlook and Prospects
Slide 3: 1. Group Overview
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 services to the following industries: Rest of world 7% 23% UK 43% Europe Canada 28% North America 50% 20% Continental Europe LIFE SEALS CONTROLS USA 22% SCIENCES
Slide 5: The Diploma Business Model
04 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’ combining:
Slide 6: Essential Values
05 Essential Values Small corporate team focuses on strategy and financial control Frequent informal communications and regular formal planning forums Strong, self standing management teams in the operating businesses Good blend of energy, ambition and experience in the senior management cad
Slide 7: The Diploma Investment Case
06 The Diploma Investment Case GDP+ Organic We focus on essential products and services, funded by Revenue Growth customers’ operating rather than capital budgets, giving resilience to revenues Attractive Margins Our attractive operating margins are sustained through the quality of customer service,
Slide 8: Financial Track Record
07 Financial Track Record 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, 0 2006 = 100 100 200
Slide 9: 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 10: 2. Summary of Half Year Results
2. Summary of Half Year Results
Slide 11: Summary of Half Year Results
10 Summary of Half Year Results Six months ended 31 March 2012 2011 Revenue £127.1m £112.6m +13% Adjusted operating profit £26.4m £22.1m +19% Adjusted operating margin 20.8% 19.6% Adjusted profit before tax £26.2m £21.9m +20% Free cash flow £9.7m £7.3m +33% Profit for the period £15.8m £13.2m +20% A
Slide 12: Financial Highlights
11 Financial Highlights Revenues increased by 13% to £127.1m; adjusted operating profit increased by 19% to £26.4m Record operating margin of 20.8% - driven by strong operational leverage in North American Seals Underlying revenue and operating profits increased by 8% and 15% respectively Fr
Slide 13: Operational Highlights
12 Operational Highlights Strong performance from North American Seals, particularly in Aftermarket Steady growth in Healthcare businesses in Canada and Australia Solid contributions from UK Controls, though Continental Europe more challenging Positive contributions from new businesses acqui
Slide 14: Investment for Growth
13 Investment for Growth Ongoing investment programme to support the future growth of the businesses Investment of ca. £2.5m in three major facility moves this financial year: RT Dygert in Minneapolis and Chicago, US (completed in H1 2012) IS-Rayfast in Swindon, UK (planned for H2 2012) Va
Slide 15: 3. Business Review
3. Business Review
Slide 16: Our Sectors
15 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 17: Life Sciences
16 Life Sciences Results Six months ended 31 March 2012 2011 Revenue £39.7m £36.9m +8% Operating profit £9.3m £8.6m +8% Operating margin 23.4% 23.3% DHG increased revenues by 13% in UK sterling and C$: Boosted by CMI acquisition; prior year had exceptional sale of face shields Underlying reven
Slide 18: Life Sciences: Sector Developments
17 Life Sciences Sector Developments Continued steady growth in Healthcare businesses in Canada and Australia Strong sales of capital equipment at Somagen, benefiting from innovative technologies introduced by core suppliers AMT and BGS increased revenues in core electrosurgery and smoke evacu
Slide 19: Seals
18 Seals Results Six months ended 31 March 2012 2011 Revenue £48.0m £37.5m +28% Operating profit £9.9m £6.6m +50% Operating margin 20.6% 17.6% Revenues increased by 28% in UK sterling and US$ Underlying growth of 19% after adjusting for J Royal acquisition Operating margins strengthened by 300
Slide 20: Seals: Sector Developments
19 Seals Sector Developments Aftermarket businesses (60% of sector sales) increased revenues by 21% Robust activity levels in Heavy Construction and Infrastructure (not yet in Residential Construction); good growth in shale gas and surface mining Exceptional performance from HKX – supplying at
Slide 21: Controls
20 Controls Results Six months ended 31 March 2012 2011 Revenue £39.4m £38.2m +3% Operating profit £7.2m £6.9m +4% Operating margin 18.3% 18.1% Underlying revenue growth of 3% - no significant impact from currency effects or acquisitions Strong performances from UK businesses, offsetting softer
Slide 22: Controls: Sector Developments
21 Controls Sector Developments Reduced revenues in Defence & Aerospace – impact of Defence spending reviews only partly mitigated by strong Civil Aerospace Strong sales in Motorsport in the UK, Europe and US and in Energy In General Industrial sector, strong double digit growth in the UK offs
Slide 23: Acquisition Development
22 Acquisition Development Financial Acquisition Life Sciences Seals Controls Year spend £m AMT (75%) – Canada Cabletec – UK 2007 31.6 CBISS - UK M Seals (90%) - Denmark Hawco (8%) - UK 2008 7.9 Somagen (12%) - Canada Snijders - Holland Hitek - UK 2009 12.2 Meditech - Canada RT Dygert - US BGS (80%)
Slide 24: 4. Financial Highlights
4. Financial Highlights
Slide 25: Profit Before Tax
24 Profit Before Tax Six months ended 31 March 2012 2011 £m £m Revenue 127.1 112.6 +13% Adjusted operating profit 26.4 22.1 +19% Operating margin 20.8% 19.6% Net finance expense (0.2) (0.2) Adjusted profit before tax 26.2 21.9 +20% Fair value remeasurements (0.2) (0.2) Acquisition related charges (2
Slide 26: Underlying Results
25 Underlying Results Six months ended 31 March Revenue Adjusted operating profit £m £m As reported – HY2012 127.1 26.4 Forex Translation 0.1 - Transaction - (0.2) 127.2 26.2 Acquisitions CMI (2.2) (0.4) J Royal (3.3) (0.5) Abbeychart - - 121.7 25.3 Increase in underlying results 8% 15% As reported
Slide 27: Profit Before Tax
26 Profit Before Tax Six months ended 31 March 2012 2011 £m £m Adjusted profit before tax 26.2 21.9 IFRS taxation (7.5) (6.1) Adjustments (0.4) (0.3) Adjusted tax (7.9) (6.4) Effective adjusted tax rate 30.2% 29.2% Earnings per share Adjusted 16.1p 13.2p +22% Basic 13.9p 11.2p +24%
Slide 28: Free Cash Flow
27 Free Cash Flow Six months ended 31 March 2012 2011 £m £m Operating profit 26.4 22.1 Depreciation 1.0 1.0 Working capital (7.4) (8.8) Pension and share schemes, net 0.3 0.1 Operating cash flow 20.3 14.4 Finance expense (0.2) (0.3) Taxation (8.7) (5.6) Capital expenditure (1.7) (0.7) Purchase of ow
Slide 29: Net Debt
28 Net Debt Six months ended 31 March 2012 2011 £m £m Free cash flow 9.7 7.3 Acquisition cash paid (14.7) (26.5) Deferred consideration (0.8) (0.9) Dividends (9.6) (10.9) (15.4) (31.0) Net cash funds brought forward 12.2 30.1 Exchange adjustments 0.2 - Net debt (3.0) (0.9)
Slide 30: Shareholders' Funds
29 Shareholders’ Funds 31 Mar 2012 30 Sep 2011 £m £m Goodwill 78.9 74.4 Acquisition intangible assets 30.8 27.3 Tangible assets 12.1 11.4 121.8 113.1 Net working capital 48.1 37.1 Trading capital employed 169.9 150.2 Retirement benefit obligations (5.2) (5.4) Deferred tax, net (1.3) (2.0) Future pur
Slide 31: 5. Outlook and Prospects
5. Outlook and Prospects
Slide 32: Outlook and Prospects
31 Outlook and Prospects Group Seals Life Sciences Resilient business model – North America continues to Steady and growing essential products and perform strongly Healthcare funding in solutions to specialised Aftermarket particularly Canada and Australia markets strong Opportunities in n
Slide 33: 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: