Business
Diploma : Half Year Results 2026 (diploma plc h126 slides)
Diploma : Half Year Results 2026 (diploma plc h126
About this update from Diploma Plc
Image to replace 1 DIPLOMA PLC HALF YEAR RESULTS 2026 A GREAT FIRST HALF HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2026 AGENDA OVERVIEW 01 FINANCIAL PERFORMANCE 02 STRATEGY AND BUSINESS 03 REVIEW 3 DIPLOMA PLC HALF YEAR RESULTS 2026 OVERVIEW 01 OVERVIEW GREAT H1. FURTHER 6% FY26 UPGRADE. STRONG GROWTH AND EXECUTION ↑ 15% Organic growth ↑ 24.5% +300bps Operating margin ↑ 33% Operating profit growth AMBITION WITH DISCIPLINE ↑ 36% EPS growth ↑ 22.7% +360bps Return on capital 1 DIVERSE PORTFOLIO IN ATTRACTIVE MARKETS ACQUISITIONS ACCELERATE GROWTH 15 deals in LTM c. £310m invested 8x EBIT multiple >4,000 opportunities in pipeline Highly cash generative and significant balance sheet headroom FURTHER 6% UPGRADE + 12% + 6% c. 25% Driving operating Organic growth Net acquisition growth Operating margin profit growth > 30% Sustainable quality compounding 1 Return on Adjusted Trading Capital Employed (ROATCE) 01 OVERVIEW BUILDING ON OUR COMPOUNDING RECORD A long track record of double-digit growth since 2000 1 Adjusted EPS Revenue Annualised TSR Diploma PLC FTSE All-Share Last 5 years 21.4% 10.2% Accelerated compounding Five-year trends Reported revenue growth +23% 2 Organic revenue growth +10% Adjusted operating margin 20.2% Adjusted EPS growth +26% 2 Free cash conversion 100% Return on capital 3 18.6% Leverage ratio 4 1.1x 1 Revenue and EPS CAGR | 2 5-year CAGR | 3 Return on Adjusted Trading Capital Employed (ROATCE) | 4 Net debt / EBITDA 01 OVERVIEW DELIVERING Intensely returns focused Highly cash generative Disciplined capital allocation Tight portfolio management Depth and quality of management Powerful decentralised culture SUSTAINABLE QUALITY COMPOUNDING Differentiated value-add business model Structurally growing end market exposure Significant white space Quality and diversity of portfolio Fragmented markets and large acquisition pipeline Strong M&A competitive advantage AMBITIOUS GROWTH DISCIPLINED DELIVERY 01 OVERVIEW A POWERFUL, THRIVING, DECENTRALISED CULTURE Energetic mood Highly engaged team Hear from some of our business leaders on Diploma's culture 8 DIPLOMA PLC HALF YEAR RESULTS 2026 FINANCIAL PERFORMANCE 02 FINANCIAL PERFORMANCE VERY STRONG H1 PERFORMANCE AMBITION… H1 26 H1 25 …WITH DISCIPLINE H1 26 H1 25 Organic revenue growth 15% 9% Free cash flow conversion 76% 78% Revenue growth 17% 14% Return on capital +360bps 22.7% 19.1% Adjusted operating profit margin +300bps 24.5% 21.5% Leverage 0.8x 1.1x Adjusted EPS growth 36% 23% Dividend growth 5% 5% Sustainable quality compounding 02 FINANCIAL PERFORMANCE REVENUE GROWTH Six months ended 31 March £728m +26 % H1 25 Controls +2 % Seals +4 % Life Sciences Net FX acquisitions £851m Organic growth: 15 % H1 26 17 % reported revenue growth Very strong organic growth 02 FINANCIAL PERFORMANCE MARGIN EXPANSION Opex reinvestment Inflation Volume Pricing Six months ended 31 March £157m Net FX acquisitions £209m Value-add Margin formula 24.5% H1 26 21.5% H1 25 33 % operating profit growth +300bps operating margin expansion All profit metrics are adjusted and stated before acquisition related and other charges 02 FINANCIAL PERFORMANCE COMPOUNDING EPS GROWTH Six months ended 31 March 38.7 0.8 (10.4) Interest (0.1) H1 26 109.2p 80.2p H1 25 Operating profit growth Tax FX 36 % EPS growth Continuing our long-term track record All profit and earnings metrics are adjusted and stated before acquisition related and other charges and acquisition related finance charges 02 FINANCIAL PERFORMANCE STRONG CASH CONVERSION Six months ended 31 March £110.7m Free cash flow 208.9 FY 25 4 Net debt £299.4 m Adjusted operating profit 22.7 Depreciation (1.3) Net capex (58.9) Working capital (50.6) Interest and tax (10.1) Other (91.8) Acquisitions (59.5) Dividend (3.9) H1 26 FX Net debt £343.9 m 0.8x Leverage 0.8x Leverage Strong FCF despite significant investment 02 FINANCIAL PERFORMANCE ACQUISITION PROGRESS 15 acquisitions in LTM c.£310m invested c.£40m profit contribution (annualised) c.8x EBIT average multiple 1 1. At the time of acquisition Q2 to date 7 acquisitions for c.£180m 8 acquisitions for c.£130m Q1 26 Q4 25 CDM awaiting completion subject to regulatory approval Acquired Sinus Electronic's adhesives and silicone business 02 FINANCIAL PERFORMANCE DISCIPLINED RETURNS Return on capital (%) £1.6bn capital deployed on acquisitions 22.7 FY21 FY22 FY23 FY24 FY25 H1'26 Optimal returns range 15-20% High returns represents the discipline of compounding 17.4 17.3 18.1 19.1 20.9 High teens returns is our sweet spot Acquisitions must reach 20% Strong returns - ahead of optimal 'high teens' range Recent returns reflect strong performance and lower-than-typical acquisition spend 02 FINANCIAL PERFORMANCE FURTHER 6% UPGRADE TO FY26 Very strong H1 performance Excellent execution in favourable market conditions Further contribution from recent acquisitions Great momentum into H2 Lapping strong H2 comparator Organic revenue growth Net acquisition growth Operating margin +12% up from 9% +6% up from 3% c.25% unchanged Continued compounding All at constant currency 17 DIPLOMA PLC HALF YEAR RESULTS 2026 STRATEGY AND BUSINESS REVIEW 03 STRATEGY AND BUSINESS REVIEW A CLEAR STRATEGY FOR GROWTH Complementary acquisitions to drive future organic growth PRODUCT EXTENSION 03 GEOGRAPHIC EXPANSION 02 END MARKET EXPOSURE 01 GROW Organic growth in 3 buckets: SCALE Value-add business model at scale Powerful decentralised Group at scale Deliver value responsibly 03 STRATEGY AND BUSINESS REVIEW BUCKET 1: ATTRACTIVE GROWTH MARKETS SOME EXAMPLES Energy Automation Aerospace In vitro diagnostics Datacentres Infrastructure Defence Electrification Renewables Water Medtech Scientific Nuclear Space Growth tailwind - building resilience 03 STRATEGY AND BUSINESS REVIEW SPOTLIGHT ON CDM ACQUISITION A value-add provider of custom connectors and cable assembly solutions Significantly increases US defence exposure Strong leadership remaining with business Double-digit revenue CAGR High-teens margins Investment c. $170 m Revenue c. $80 m EBIT multiple c. 11 x Acquisition subject to regulatory approval 03 STRATEGY AND BUSINESS REVIEW Well diversified (by number of opportunities) By sector By geography Seals Controls Life Sciences North America UK & Ireland Europe Australia HEALTHY ACQUISITION PIPELINE Active opportunities >60 Long-term pipeline >4,000 STRONG TRACK RECORD 57 Acquisitions £1.6bn Invested >20% Return on capital FY 19 - present Includes CDM; awaiting completion subject to regulatory approval TARGETED ACQUISITIONS ACCELERATE GROWTH 03 STRATEGY AND BUSINESS REVIEW * Pro forma revenues adjusted for acquisitions to date Defence Energy Automation Aerospace Datacentres ATTRACTIVE GROWTH MARKETS: 38% Specialty fasteners 34% Wire & cable 23% Interconnect solutions 3% Specialty adhesives 2% Industrial automation 59% North America 17% Europe 16% United Kingdom 8% Australasia / other SECTOR REVENUE MIX 60% PERCENTAGE OF GROUP REVENUE * H1 26 HIGHLIGHTS Double digit growth in four largest businesses Excellent execution with attractive market exposures 7 acquisitions - increasing aerospace & defence exposure Positive outlook CONTROLS: EXCELLENT PERFORMANCE H1 26 H1 25 Change Revenue £495.3m £391.3m +27% Organic growth +26% +16% Adjusted operating profit £165.7m £114.4m +45% Adjusted operating margin 33.5% 29.2% +430bps 03 STRATEGY AND BUSINESS REVIEW Strong defence and energy exposure Acquisitions and investment in facilities supporting growth in defence Recent A&D acquisitions supporting growth Attractive aerospace & defence exposure CONTROLS SPOTLIGHT FAVOURABLE MARKET DYNAMICS Strong performance consistent with longterm record Growing datacentre and DAS exposure Investing in US and European business development Outstanding performance POSITIVE OUTLOOK AND ATTRACTIVE LONG TERM PROSPECTS EXCELLENT EXECUTION AND STRONG LEADERSHIP Double-digit organic growth 03 STRATEGY AND BUSINESS REVIEW H1 26 HIGHLIGHTS Sector back in growth North America: Strong performance - improving market conditions and strong execution International: UK market challenging 3 acquisitions in US, Australia and Ireland Improving outlook * Pro forma revenues adjusted for acquisitions to date Infrastructure Nuclear Clean energy ATTRACTIVE GROWTH MARKETS: Water treatment 45% Seals 25% Gaskets 23% Hoses & fittings 7% Pumps & valves 44% North America 23% United Kingdom 20% Europe 13% Australasia / other SECTOR REVENUE MIX 25% PERCENTAGE OF GROUP REVENUE * SEALS: IMPROVING MOMENTUM H1 26 H1 25 Change Revenue £224.9m £226.7m -1% Organic growth +2% 0% Adjusted operating profit £42.5m £42.4m +0% Adjusted operating margin 18.9% 18.7% +20bps 03 STRATEGY AND BUSINESS REVIEW H1 26 HIGHLIGHTS Consistent performance in challenging healthcare markets Focus on business development across medtech and IVD 1 acquisition in Norway Confidence in outlook PERCENTAGE OF GROUP REVENUE * 15% SECTOR REVENUE MIX 45% Europe inc. UK 38% North America 17% Australasia 56% Medtech 38% IVD 6% Scientific and other ATTRACTIVE GROWTH MARKETS: In vitro diagnostics Scientific * Pro forma revenues adjusted for acquisitions to date LIFE SCIENCES: CONSISTENT PERFORMANCE H1 26 H1 25 Change Revenue £130.9m £110.5m +18% Organic growth +4% +6% Adjusted operating profit £25.9m £21.9m +18% Adjusted operating margin 19.8% 19.8% - 03 STRATEGY AND BUSINESS REVIEW DELIVERING SUSTAINABLE QUALITY COMPOUNDING STRONG GROWTH AND EXECUTION AMBITION WITH DISCIPLINE DIVERSE PORTFOLIO IN ATTRACTIVE MARKETS ACQUISITIONS ACCELERATE GROWTH FURTHER 6% UPGRADE We're just getting started 27 DIPLOMA PLC HALF YEAR RESULTS 2026 APPENDIX 04 APPENDIX CONSISTENT STRONG PERFORMANCE Five-year trends 5yr average FY25 FY24 FY23 FY22 FY21 Reported revenue growth +23% 1 +12% +14% +19% +29% +46% Organic revenue growth +10% +11% +6% +8% +15% +12% Adjusted operating margin 20.2% 22.5% 20.9% 19.7% 18.9% 18.9% Adjusted EPS growth +26% 1 +21% +15% +18% +26% +51% Free cash conversion 100% 105% 101% 100% 90% 103% Return on capital 2 18.6% 20.9% 19.1% 18.1% 17.3% 17.4% Leverage ratio 3 1.1x 0.8x 1.3x 0.9x 1.4x 1.1x Dividend growth 17% 5% 5% 5% 26% 42% 04 APPENDIX OUR FINANCIAL MODEL AMBITION… …WITH DISCIPLINE Organic revenue growth is our first priority 5% Capital-light business model drives strong cash conversion 90% Total revenue growth accelerated by quality acquisitions * 10% Capital stewardship focused on strong returns High teens Value-add drives strong operating margins 20%+ Balance sheet discipline maintains prudent leverage <2.0x Compounding EPS growth Double digit Return to shareholders with a progressive dividend 5% Sustainable quality compounding 04 APPENDIX SIGNIFICANT "WHITE SPACE" US CANADA UK&I GERMANY FRANCE SPAIN OTHER EU ANZ CURRENT ADDRESSABLE MARKET CONTROLS Wire & cable Interconnect Specialty fasteners Specialty adhesives Industrial automation SEALS Seals Gaskets Hoses & fittings Pumps & valves LIFE SCIENCES IVD Medtech Scientific GROWING ADDRESSABLE MARKET New product verticals Market Significant Moderate Small White space share 04 APPENDIX DISCIPLINED STEWARDSHIP OF CAPITAL CAPITAL ALLOCATION PRIORITIES 1 2 3 4 SELECTIVE TARGETED RETURNS TO BALANCE SHEET INVESTMENT FOR ACQUISITIONS SHAREHOLDERS PRUDENCE ORGANIC GROWTH TO DRIVE FUTURE ORGANIC GROWTH Capital-light model Acquisitions deliver Progressive dividend Net debt / EBITDA (c.2% capex / revenue) 20% return on capital 1 5% annual growth < 2.0x drives 90% cash over time conversion Return on capital 04 APPENDIX INCOME STATEMENT Six months ended 31 March £m H1 26 H1 25 Change Revenue 851.1 728.5 +17% Adjusted operating profit 208.9 156.9 +33% Operating margin (%) 24.5% 21.5% Financial expense, net (13.0) (14.1) Profit before tax 195.9 142.8 +37% Effective tax rate (%) 25.0% 24.5% Minority interests (0.3) (0.3) Adjusted earnings 146.6 107.5 +36% Weighted average no. shares (m) 134.2 134.1 Adjusted earnings per share 109.2p 80.2p +36% Interim dividend per share 19.1p 18.2p +5% 04 APPENDIX SECTOR REVENUE AND PROFIT Revenue Organic growth H1 26 £m H1 25 £m Change H1 26 % H1 25 % Controls 495.3 391.3 +27% +26 +16 Seals 224.9 226.7 (1%) +2 - Life Sciences 130.9 110.5 +18% +4 +6 Group 851.1 728.5 +17% +15 +9 Adjusted operating profit Adjusted operating margin H1 26 £m H1 25 £m Change H1 26 % H1 25 % Change Controls 165.7 114.4 +45% 33.5 29.2 +430bps Seals 42.5 42.4 +0% 18.9 18.7 +20bps Life Sciences 25.9 21.9 +18% 19.8 19.8 - Central costs (25.2) (21.8) +16% - - - Group 208.9 156.9 +33% 24.5 21.5 +300bps 04 APPENDIX BALANCE SHEET £m, as at 31 March H1 26 H1 25 Goodwill and acquisition intangible assets 1,104.6 1,039.3 Tangible, other intangible, and other financial assets 68.1 62.0 Net lease liabilities (8.7) (3.7) Net working capital 314.3 291.5 Trading capital employed 1,478.3 1,389.1 ROATCE 22.7% 19.1% Retirement benefit assets, net 1.7 1.6 Acquisition liabilities and assets, net (38.5) (23.4) Net debt (343.9) (373.5) Minority interests and deferred tax, net (45.4) (49.6) Total shareholders' funds (excluding minority interests) 1,052.2 944.2 DIPLOMA PLC HALF YEAR RESULTS 2026