Slide 1: Preliminary Announcement
Preliminary Announcement Year ended 30 September 2014 17 November 2014
Slide 2: Contents
Preliminary Announcement Contents 1. Introduction and Overview LIFE SCIENCES 2. Financial Results SEALS 3. Business Review CONTROLS 4. Outlook and Prospects 01
Slide 3: 1. Introduction and Overview
1. Introduction and Overview
Slide 4: Our Business Model
Preliminary Announcement 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
Slide 5: Our Growth Strategy
Preliminary Announcement Our Growth Strategy ACQUIRE BUILD GROW > Fit with Group’s > Investment to build > Businesses maintain their business model a solid foundation distinct sales and > Marketing led with strong for growth: marketing identity customer relationships > New facilities > Synergies man
Slide 6: Our Corporate Objectives
Preliminary Announcement Our Corporate Objectives STRONG DOUBLE-DIGIT UPPER QUARTILE PROGRESSIVE DIVIDEND GROWTH EPS GROWTH TSR GROWTH 2014 36.1 2014 469 2014 17.0 2013 34.8 2013 434 2013 15.7 2012 33.1 2012 306 2012 14.4 +20% p.a. +36% p.a. +17% p.a. 2011 27.9 2011 199 2011 12.0 2010 18.9 2010 171
Slide 7: Overview of 2014 Results
Preliminary Announcement Overview of 2014 Results > Underlying revenue growth of 8% with strong performance across all three Sectors > Adjusted operating margins remained robust at 18.5% of revenue > Translational currency effects reduced revenue and operating profit and offset contributions from ac
Slide 8: 2. Financial Results
2. Financial Results
Slide 9: Overview of Results
Preliminary Announcement Overview of Results Year ended 30 September x 2014 2013 Revenue £305.8m £285.5m +7% Adjusted operating profit £56.7m £54.3m +4% Adjusted operating margin 18.5% 19.0% Adjusted profit before tax £56.2m £54.3m +3% Free cash flow £37.8m £31.6m +20% Acquisition spend £16.5m £2.2m
Slide 10: Financial Highlights
Preliminary Announcement Financial Highlights > Underlying revenue and adjusted > Adjusted profit before tax and operating profit both increased by 8%, adjusted EPS increased by 3% and 4% after adjusting for currency effects respectively to £56.2m and 36.1p and acquisitions > Free cash flow increase
Slide 11: Profit Before Tax
Preliminary Announcement Profit Before Tax Year ended 30 September x 2014 2013 £m £m Revenue 305.8 285.5 +7% Adjusted operating profit 56.7 54.3 +4% Adjusted operating margin (%) 18.5% 19.0% Net interest expense (0.5) - Adjusted profit before tax 56.2 54.3 +3% Acquisition related charges (6.4) (5.6)
Slide 12: Revenue Bridge
Preliminary Announcement Revenue Bridge 15.4 (17.7) 22.6 305.8 285.5 Translational impact on full year results has been to reduce Group revenues and adjusted operating profit by £17.7m and £4.1m respectively 11
Slide 13: Foreign Exchange
Preliminary Announcement Foreign Exchange Average rates in UK Sterling 2014 2013 US$ 1.66 1.56 +6% C$ 1.80 1.59 +13% Euro 1.23 1.19 +3% A$ 1.81 1.58 +15% Average rates in US Dollars 2014 2013 C$ 1.09 1.02 +7% A$ 1.09 1.01 +8% 12
Slide 14: Adjusted Operating Margin
Preliminary Announcement Adjusted Operating Margin + Tight control of operating costs in the Healthcare businesses Transactional currency effects in Canadian Adjusted operating and Australian + margin Healthcare businesses Operational leverage from benefits of Investment for Growth 18.5% Acquisition
Slide 15: Taxation and Earnings per Share
Preliminary Announcement Taxation and Earnings per Share Year ended 30 September x 2014 2013 Adjusted profit before tax £56.2m £54.3m Reported taxation (13.7) (13.7) Adjustments (1.1) (1.1) Adjusted tax (14.8) (14.8) Effective adjusted tax rate 26.3% 27.3% Earnings per share Adjusted 36.1p 34.8p +4%
Slide 16: Free Cash Flow
Preliminary Announcement Free Cash Flow Year ended 30 September x 2014 2013 £m £m Adjusted operating profit 56.7 54.3 Depreciation 2.5 2.5 Working capital (4.6) (1.1) Pension and share schemes, net 0.4 0.2 Operating cash flow, before acquisition expenses 55.0 55.9 -2% Interest paid, net (0.3) (0.2)
Slide 17: Cash
Preliminary Announcement Cash Year ended 30 September x 2014 2013 £m £m Free cash flow 37.8 31.6 Acquisition cash paid (16.4) (1.6) Deferred consideration (0.1) (0.6) Dividends (18.4) (17.6) 2.9 11.8 Cash brought forward 19.3 7.9 Exchange adjustments (0.9) (0.4) Cash at 30 September 21.3 19.3 16
Slide 18: Acquisitions
Preliminary Announcement Acquisitions > Acquisitions are an integral part of the Group’s growth strategy > £16.5m spent on acquisitions during the year: > £9.9m on 80% of Kentek – extends Seals business into new geographic markets and adds filter products > £5.0m on five small bolt-on acquisitions –
Slide 19: Acquisition Spend
Preliminary Announcement Acquisition Spend (£) 16.5m • Life Sciences – Chemzyme, 31.6m 28.2m DSL (20%) • Seals – Ramsay, Kentek (80%), HPS (49%), AB Seals 22.3m • Controls – SFC, Sacee 12.2m 11.0m 8.0m 7.9m 0.3m 2.2m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 80% of TPD acquired shortly after
Slide 20: Shareholders' Funds and ROATCE
Preliminary Announcement Shareholders’ Funds and ROATCE As at 30 September x 2014 2013 £m £m Goodwill 80.2 78.5 Acquisition intangible assets 28.6 26.7 Tangible assets and investments 14.6 15.4 Net working capital 54.2 47.8 Trading capital employed - reported 177.6 168.4 Retirement benefit obligatio
Slide 21: 3. Business Review
3. Business Review
Slide 22: Our Sectors: Revenue by Sector and Destination
Preliminary Announcement Our Sectors Revenue by Sector and Destination LIFE SCIENCES SEALS CONTROLS 30% of group revenues 39% of group revenues 31% of group revenues 334 employees 604 employees 312 employees 67% Canada 68% North America 58% UK 19% Europe 24% Europe 34% Continental Europe 14% Rest of
Slide 23: Life Sciences Segmentation
Preliminary Announcement Life Sciences Segmentation Healthcare 80% Diploma Healthcare Group (“DHG”) supplies medical devices and related consumables and services to the healthcare industries in Canada and Australia Environmental The a1-group supplies environmental 20% analysers, containment enclosur
Slide 24: Life Sciences Operating Results
Preliminary Announcement Life Sciences Operating Results Year ended 30 Sept 2014 2013 Revenue £91.4m £93.2m -2% Adjusted operating profit £19.7m £20.9m -6% Adjusted operating margin 21.6% 22.4% > Underlying revenues increased by 9% after adjusting for currency > Good growth in both Healthcare and En
Slide 25: Life Sciences Sector Developments
Preliminary Announcement Life Sciences Sector Developments > In Healthcare, strong consumable revenues offset weaker capital equipment and service revenues > ERP project well advanced – Somagen completed, Vantage LIFE SCIENCES in process and AMT to follow in 2015 > DHG Australia building critical ma
Slide 26: TPD Acquisition
Preliminary Announcement TPD Acquisition > DHG acquired 80% of Technopath Distribution (“TPD”) shortly after the year end > TPD is an established supplier to Biotech, Clinical and Medical markets in Ireland and the UK with revenues of ca. €15m > TPD shares key suppliers with DHG in Canada and also a
Slide 27: Seals Segmentation
Preliminary Announcement Seals Segmentation Aftermarket 60% Next day delivery of seals, seal kits, O-rings, gaskets, filters and cylinder components for the repair of heavy mobile machinery Industrial OEMs Supply of seals, O-rings and custom moulded and machined parts 40% to manufacturers of special
Slide 28: Seals Operating Results
Preliminary Announcement Seals Operating Results Year ended 30 Sept 2014 2013 Revenue £119.8m £106.1m +13% Adjusted operating profit £21.7m £19.5m +11% Adjusted operating margin 18.1% 18.4% > Underlying revenues increased by 7% after adjusting for currency and acquisitions: > Aftermarket businesses
Slide 29: Seals Sector Developments
Preliminary Announcement Seals Sector Developments > Good growth in HFPG Aftermarket Seals business in North America, despite disruption from severe weather > Unified European Aftermarket Seals group taking shape, SEALS centred on FPE Seals; AB Seals added during the year > Kentek acquisition brings
Slide 30: Controls Segmentation
Preliminary Announcement Controls Segmentation Interconnect 70% Wiring, harness components and fasteners used in specialised applications in Aerospace, Defence, Motorsport, Energy, Medical and Industrial Fluid Controls Temperature, pressure and fluid control products used in the Food, 30% Beverage a
Slide 31: Controls Operating Results
Preliminary Announcement Controls Operating Results Year ended 30 Sept 2014 2013 Revenue £94.6m £86.2m +10% Adjusted operating profit £15.3m £13.9m +10% Adjusted operating margin 16.2% 16.1% > Underlying revenues increased by 8% after adjusting for currency and acquisitions > Gross margins remained
Slide 32: Controls Sector Development
Preliminary Announcement Controls Sector development > Strong growth in Interconnect, driven by improved markets in the UK and Germany, particularly Civil Aerospace, Energy and Motorsport CONTROLS > Acquisition of SFC strengthened the fasteners business and added design skills and added-value assemb
Slide 33: 4. Outlook and Prospects
4. Outlook and Prospects
Slide 34: The Diploma Investment Case
Preliminary Announcement The Diploma Investment Case GDP+ ORGANIC We focus on essential products and services, funded by customers’ REVENUE GROWTH operating rather than capital budgets, giving resilience to revenues Our attractive operating margins are sustained through the quality ATTRACTIVE of cus
Slide 35: Current Trading and Outlook
Preliminary Announcement Current Trading and Outlook Group Life Sciences Seals > Strong underlying > 9% underlying revenue > 7% underlying revenue performance across all growth growth three Sectors > Strong consumable > Strong Industrial OEM > Resilient business model revenues performance and recove
Slide 36: 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 Web: www.diplomaplc.com 12 Charterhouse Square London EC1M 6AX Tulchan Communications: David Allchurch Martin Robinson Tel: +44