TIDMDPLM
RNS Number : 2115M
Diploma PLC
20 January 2021
DIPLOMA PLC
12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX
TELEPHONE: +44 (0)20 7549 5700
FACSIMILE: +44 (0)20 7549 5715
FOR IMMEDIATE RELEASE
20 January 2021
DIPLOMA PLC
FIRST QUARTER TRADING UPDATE
STRONG TRADING AND THREE HIGH QUALITY BOLT-ON ACQUISITIONS IN
Q1
Diploma PLC, the international group supplying specialised
products and services, is today issuing its first quarter trading
update in respect of the year ending 30 September 2021, ahead of
the Company's closed door AGM today at 12.00, midday.
Group
Diploma has made a strong start to the year with improved trends
in underlying trading across all of the Group's three Sectors in
the first quarter. The Group delivered underlying revenues in line
with last year's pre-Covid comparative, reflecting strong execution
of our organic growth initiatives. Reported Group revenues in the
first quarter ended 31 December 2020 increased by 24% over the
comparable period, driven by an excellent first quarter
contribution from Windy City Wire (WCW) which is trading very well
following a smooth transition into the Group.
The following table sets out the year-on-year revenue
performance by Sector for Q1 alongside a reminder of the exit rates
reported for September 2020:
Sector performance Q1 S ept 20
----------------------------- ----- ---------
Life Sciences Underlying +8% + 2%
Reported +10%
Seals Underlying -2% - 4%
Reported -0%
Controls Underlying -1% - 18%
Reported +71%
Group Underlying +0% - 7%
Reported +24%
Life Sciences
Life Sciences delivered strong underlying growth of 8%, driven
by an encouraging performance in consumables in both clinical
diagnostics and specialty surgical equipment in Australia and
Canada, as well as higher than normal levels of capital
installations due to pent up demand from last year's lockdowns. In
Q2, we expect growth rates to moderate with lockdowns in Canada
impacting capital sales and surgical procedures. However, the
Sector remains well positioned to capitalise on the backlog of
surgical procedures and lab testing as the year progresses.
Seals
Seals traded well with underlying revenues improving to -2%. The
Group continues to see strong performances from International Seals
due to the diversity of end markets and North American Aftermarket
due to continued strong repair shop demand. The North American OEM
business has been recovering well in the last two quarters, and we
are confident in its prospects under a strengthened management
team. The transition to the new Aftermarket automated facility in
Louisville has completed successfully and will support future
market share gains.
Controls
Underlying revenues have seen a strong recovery since the start
of year, improving to -1% reflecting the execution of initiatives
to diversify the Sector's revenue streams. Reported revenues were
up 71% due to the contribution from WCW. After a smooth transition
into the Group WCW is trading very well, growing both revenues and
profits broadly in line with their impressive track record and
ahead of our initial expectations. Some benefits from Brexit
inventory build in Q1 are likely to unwind in the coming weeks and,
along with the impact of further UK lockdowns, may impact Q2
trading in Controls. However, the Sector's healthier revenue
profile will underpin a return to growth this year.
Acquisitions
Bolt-on acquisitions remain a core part of the Group's strategy.
The first quarter has been active with GBP48.8m invested in three
high quality, strategically important bolt-on acquisitions to build
scale in core markets and enhance our organic growth ambitions:
-- Simonsen & Weel (annualised revenues ca.GBP25m), an
excellent Healthcare business based in Denmark and building the
Life Sciences Sector's presence in Northern Europe;
-- FITT Resources (annualised revenues ca.GBP13m), a well
established, high quality Seals business that significantly
strengthens the Sector's footprint in Eastern Australia; and
-- P ower Dynamics (annualised revenues ca.GBP5m), a gasket
bolt-on for VSP within our NA Seals business, expanding VSP's
presence across the Northern US.
Financial position
As previously stated, the Group's equity raise in September 2020
allowed Diploma to retain balance sheet flexibility following the
acquisition of WCW. This has enabled the Group to pursue its
bolt-on acquisition strategy while maintaining a strong financial
position. After three bolt-on acquisitions in Q1, net debt at
year-end is expected to be at around 1.2x EBITDA.
Outlook
Inevitably uncertainties remain with respect to the duration and
impact of the Covid-19 pandemic. However, while the pandemic may
modestly affect Q2 revenues, we are pleased with the Group's
trading performance. Excluding the contribution from the
acquisitions completed in the quarter, full year expectations for
the underlying business remain positive and unchanged.
Enquiries:
Diploma PLC -
Johnny Thomson, Chief Executive +44 (0)20 7549
Officer 5700
Barbara Gibbes, Chief Financial
Officer
+44 (0)20 7353
Tulchan Communications - 4200
Martin Robinson
Olivia Peters
Notes:
1. This trading update is based upon unaudited management
accounts and has been prepared solely to provide additional
information on trading to the shareholders of Diploma PLC. It
should not be relied on by any other party for other purposes.
Certain statements made in this update are forward-looking
statements. Such statements have been made by the Directors in good
faith using information available up until the date that they
approved this Statement. Forward-looking statements should be
regarded with caution because of the inherent uncertainties in
economic trends and business risks.
2. Diploma PLC uses alternative performance measures as key
financial indicators to assess the underlying performance of the
Group. All references in this Statement to "underlying" revenues
refer to reported results on a constant currency basis and before
any contribution from acquired or disposed businesses.
3. A copy of this Statement, together with further information
about Diploma PLC, may be viewed on its website at
www.diplomaplc.com
LEI: 2138008OGI7VYG8FGR19
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