Slide 1: Full year results
Full year results Year ended September 2020 16 November 2020 Consistently delivering value
Slide 2: Agenda
Agenda 01 Overview 02 Financial results 03 Business review and strategy 04 Summary and outlook 05 Q&A 2
Slide 3: Significant progress in 2020
Significant progress in 2020 Successfully managing Covid-19 Building high quality, scalable businesses for sustainable growth Exciting organic growth potential across all Sectors Significant cultural and management evolution Encouraging pipeline of high quality bolt-on acquisitions Continued focus o
Slide 4: Full year results
Full year results Reported Underlying Adjusted Free cash Progressive revenue revenue operating flow dividend growth growth margin -1% -7% 16.2% +28% 30.0p Extremely resilient performance 4
Slide 5: Financial Results
Financial Results Consistently delivering value 5
Slide 6: Financial Highlights
Financial Revenue Adjusted Highlights operating profit £538.4m £87.1m Extremely resilient 2019: £544.7m 2019: £97.2m performance -1% -10% • Underlying revenue Adjusted Free growth of -7% operating margin cash flow • Adjusted operating 16.2% £72.5m margin robust 2019: 17.8% 2019: £56.5m • Strong free
Slide 7: Profit before tax
Profit before tax Year ended 30 September 2020 2019 £m £m Revenue 538.4 544.7 -1% Adjusted operating profit 87.1 97.2 -10% Adjusted operating margin (%) 16.2% 17.8% Interest expense (2.7) (0.7) Adjusted profit before tax 84.4 96.5 -13% Acquisition related charges (17.3) (13.1) Fair value remeasureme
Slide 8: Free cash flow
Free cash flow Year ended 30 September 2020 2019 £m £m Adjusted operating profit 87.1 97.2 Depreciation 12.7 5.4 Decrease/(increase) in working capital 9.5 (9.4) Previous CEO transition costs paid - (1.3) Pension and share schemes, net 0.6 0.4 Other movements (1.5) - Operating cash flow, before acqu
Slide 9: Cash funds/(net bank debt)
Cash funds/(net bank debt) Year ended 30 September 2020 2019 £m £m Free cash flow 72.5 56.5 Acquisition cash paid (13.8) (77.2) Deferred consideration paid (1.1) (1.1) (Repayment of)/Proceeds from borrowings, net (42.1) 41.1 Dividends paid (23.4) (30.1) (7.9) (10.8) Proceeds from issue of Share Capi
Slide 10: Capital structure and liquidity
Capital structure and liquidity Capital structure • Equity raise proceeds of £189.2m to finance WCW acquisition post year -end • New financing package • $170m term loan, £135m fully revolving multi -currency facility • 3x net debt : EBITDA covenant • 3 year term + 2 one-year extensions (to December
Slide 11: Current trading
Current trading Underlying growth rate trajectory very encouraging Q3 Q4 September Life Sciences -19% 0% +2% Seals -12% -7% -4% Controls -34% -20% -18% Group -21% -9% -7% 11
Slide 12: Guidance – current view of FY21
Guidance – current view of FY21 On track to deliver results in line with market expectations* Expecting a Diploma performance in FY21 with a return to underlying mid-single digit revenue growth Operating margin for the full year expected to be consistent with historic 17-18% range Growth in revenues
Slide 13: Business Review and Strategy
Business Review and Strategy Consistently delivering value 13
Slide 14: Diploma strategy
Diploma strategy Consistently delivering value Focus Strengthen Develop our our growth our core organisational competencies capability • Attractive, Five core competencies Building the capabilities developed markets to operate value-add model to execute at scale at scale • Focus on organic growth •
Slide 15: The Group
The Group Well diversified by Sector and geography Revenue by Sector Revenue by geography b y d e s ti n a ti o n 20% 25% 35% 40% 45% 35% Seals Controls Life Sciences US Europe International Ap p r o x i ma t e S e c to r a n d ge o gr a p h y s p l i t a f te r i n c l u s i o n o f Wi n d y C i ty
Slide 16: Seals
Seals Strong trading through the year with excellent prospects Full year ended 30 Sept 2020 2019 • Performed well through the crisis – least impacted sector Revenue £242.1m £220.6m +10% • Excellent contribution from VSP • Transition to Louisville facility opens up Adjusted operating profit £36.0m £3
Slide 17: Focus our growth: New Louisville facility
Focus our growth: New Louisville facility • Facility investment to support next phase of Aftermarket growth as business scales • State-of-the-art, robotic grid technology • Expands reach of Aftermarket Seals across USA on next-day delivery guarantee basis • $8 million investment over two years now c
Slide 18: Controls
Controls Action taken to deliver return to growth in FY21 • Sector most affected by crisis due to UK Full year ended 30 Sept 2020 2019 and Civil Aerospace exposures Revenue £156.6m £178.3m -12% • Restructuring complete: businesses focused on growth with positive trends for FY21 Adjusted operating pr
Slide 19: Focus our growth: Windy City Wire
Focus our growth: Windy City Wire • Expands Controls presence in key industrials market of the US • Value-add customer proposition with attractive margins • Significant potential in structurally high growth end segments • Completed 16 October and successfully onboarded • Increased opportunities as p
Slide 20: Life Sciences
Life Sciences Rapid recovery, potential for accelerated growth in FY21 • Sharp declines in Q3 as hospitals / labs Full year ended 30 Sept 2020 2019 focused on the virus Revenue £139.7m £145.8m -4% • Rapid recovery in Q4 continues as procedures largely returned to normal Adjusted operating profit £28
Slide 21: Focus our growth: Sustainable product pipeline
Focus our growth: Sustainable product pipeline • Growing healthcare spend in specialty surgery, GI endoscopy and diagnostics • Product lifecycle management is key • Expanding range of tier 2 and 3 products as funnel to higher revenue contribution • Covid-19 to increase healthcare spend in clinical r
Slide 22: Core Competencies: Executing our value add model at scale
Core Competencies: Executing our value add model at scale End Markets Supply chain Operational Route to Commercial Product management excellence market discipline 22
Slide 23: Organisational Capability: Talent development
Organisational Capability: Talent development Talent Technology Facility Established a balanced and high performing Group executive team Replenished MD pool across the Group Focusing on key functions in the business Embedding talent management processes Progress on succession: more to do Progress on
Slide 24: Delivering value responsibly
Delivering value responsibly Business Model Purpose Strategy DeliveringValue Responsibly Making a Difference to Colleagues, Responsibility Values Culture Customers & Suppliers, Communities Governance How? Delivering Value Responsibly Reporting Guidelines Policies Risk Management 24
Slide 25: Summary and Outlook
Summary and Outlook Significant progress in FY20 Continue to build high quality, scalable businesses Significant management and cultural development Exciting organic growth potential across all Sectors Encouraging pipeline of high quality bolt-on acquisitions Confident in our future prospects 25
Slide 26: Q&A
Q&A Consistently delivering value
Slide 27: Appendix
Appendix Consistently delivering value 27
Slide 28: Value-add proposition
Value-add proposition Essential Products Essential Solutions Essential Values Critical to Responsive Decentralised model customers needs customer service Deep technical Opex budgets Customer-orientated support Added value Accountable for Range of end markets services performance execution Sustainabl
Slide 29: Balance sheet
Balance sheet 2020 2019 £m £m Goodwill and acquisition intangible assets 246.2 251.1 Tangible and other intangible assets 30.9 29.4 Net lease liabilities (2.1) - Net working capital 86.6 96.6 Trading capital employed - reported 361.6 377.1 Working capital as % of revenue 16.0% 16.5% ROATCE 19.1% 22.
Slide 30: Financial KPIs
Financial KPIs Five year trends 2020 2019 2018 2017 2016 Revenue £538.4m £544.7m £485.1m £451.9m £382.6m Total growth -1% +12% +7% +18% +15% Underlying growth -7% +5% +7% +7% +3% Adjusted operating margin 16.2% 17.8% 17.5% 17.3% 17.2% Working capital (% revenues) 16.0% 16.5% 15.1% 15.0% 16.6% Free c
Slide 31: Consistently delivering value
Johnny Thomson Chief Executive Officer Barbara Gibbes Chief Financial Officer Tel: +44 (0) 20 7549 5700 Email: investors@diplomaplc.com Web: www.diplomaplc.com Consistently delivering value 12 Charterhouse Square London EC1M 6AX Tulchan Communications Martin Robinson Olivia Peters Guy Bates Tel: +44