TIDMDPLM
RNS Number : 3310Z
Diploma PLC
15 May 2023
DIPLOMA PLC 10-11 CHARTERHOUSE SQUARE,
LONDON EC1M 6EE
TELEPHONE: +44 (0)20 7549
5700
FACSIMILE: +44 (0)20 7549
5715
This announcement contains inside information
HALF YEAR RESULTS FOR THE SIX MONTHSED 31 MARCH 2023
Strong first half, upgrading full year guidance
HY 2023 HY 2022 Y/y change
---------- ---------- -----------
Revenue GBP582.8m GBP448.5m +30%
Organic revenue growth
(1) 10% 16%
Adjusted operating profit
(2) GBP109.7m GBP82.5m +33%
Adjusted operating margin
(2) 18.8% 18.4% +40bps
Statutory operating profit GBP92.5m GBP58.2m +59%
Free cash flow (3) GBP51.8m GBP37.7m +37%
Free cash flow conversion
(3) 70% 64%
Adjusted earnings per
share (2) 59.1p 47.0p +26%
Basic earnings per share 47.3p 28.6p +65%
Leverage 0.7x 1.2x
Interim dividend per share 16.5p 15.0p +10%
ROATCE 17.8% 17.5%
---------------------------- ---------- ---------- -----------
(1) Adjusted for acquisition and disposal contribution and currency
effects; (2) Before acquisition related and other charges and acquisition
related finance charges; (3) Before cash flows on acquisitions,
disposals and dividends. All alternative performance measures are
defined in note 13 to the condensed consolidated financial statements.
Strong half year financial performance
* Continued strong organic revenue growth of 10%,
mainly volume driven by our revenue diversification
activity.
* Reported revenue growth of 30% with a 12%
contribution from acquisitions and positive FX
benefit of 8%.
* Very strong adjusted operating margin: up 40 bps to
18.8%, reflecting our value-add proposition, and
benefiting from operational leverage net of continued
scaling investments.
* Free cash flow conversion of 70%, ahead of last year.
* ROATCE improved to 17.8%, after an investment of
GBP66m in acquisitions, net of disposals, during the
period.
* 26% growth in adjusted EPS, continuing our long term
track record of double-digit growth.
* Leverage reduced to 0.7x following the recent
placing.
Revenue diversification driving organic growth, building scale
and increasing resilience
* Controls +13% : Sustained double-digit growth at
Windy City Wire ("WCW") and excellent International
Controls momentum. International Controls benefiting
from structural tailwinds and market share gains in
civil aerospace, defence and energy markets.
* Seals +8% : Double-digit growth in International
Seals led by a great contribution from R&G. In North
America, Aftermarket again delivered very strong
geographical market share gains.
* Life Sciences +4% : Momentum accelerating as hospital
staffing and surgical procedures continue to recover
and we benefit from normalising clinical diagnostics
investment post-pandemic.
Targeted acquisitions accelerate organic growth
* Acquired Tennessee Industrial Electronics ("TIE") for
GBP76m, entering the strategically important
Industrial Automation end market in the US. Strong
organic growth potential at accretive operating
margins.
* Small bolt-ons to our core business lines. Completed
seven for total consideration of GBP23m (one of which
was completed in April 2023); average EBIT multiple
under 5x; GBP24m of annual revenue; accretive EBIT
margins; and 20% year one ROATCE.
* Continued portfolio management discipline: disposed
of a non-core, lower margin heating control business
in March, for total consideration of GBP23m.
* Strong near-term M&A pipeline with c.GBP1bn of active
opportunities; we remain disciplined.
Strong cash flow and balance sheet provides further capacity for
growth
* Low capital intensity, cash-generative business model
delivering strong free cash flow with conversion of
70%, ahead of last year.
* Working capital as a percentage of revenue reduced by
60 bps to 17.1% as inventory levels reduce.
* Net debt reduced to GBP154m and Leverage to 0.7x
following GBP233m of cash generated from the recent
capital raise.
Scaling effectively for sustainable growth
* In the businesses: developing target operating models
to deliver customer proposition at scale, supported
by investments in talent, management systems and new
facilities in a number of businesses.
* As a Group: evolving our structure, capability and
culture to support the development of an expanding
Group.
* Submitted net zero targets for SBTi validation.
Increasing full year guidance
* We have delivered a strong first half and the second
half has started positively.
* As we enter the second half we face a very strong
comparative performance period, particularly Q3.
* Our continued strong growth and increasing resilience,
however, give us the confidence to increase our
guidance for the full year:
o We expect organic revenue growth of c.7% for the full year, and
a further c.7% growth from acquisitions, net of disposals.
o We expect operating margin to be at the top of our previously
guided range, c.19%.
o Free cash flow conversion of c.90% which would drive year end
leverage to less than 0.4x before any future acquisition investment.
Commenting, Johnny Thomson, Diploma's Chief Executive said:
"I thank all my brilliant Diploma colleagues for their dedication
to consistently improving our businesses and to delivering great
service to our customers. We have had an excellent first half.
The strong performance, with volume-led growth, encouraging margin
progress and +26% EPS, builds on Diploma's long term compounding
track record. Our upgrade for the full year underscores our increasing
resilience as well as the strength of the business model.
Strategically, we focus on building high quality scalable businesses
for sustainable organic growth. And we have made great progress,
continuing to diversify our organic growth through exciting end
market exposures, penetrating core geographies, and expanding addressable
market with product extension.
We also welcomed eight great new businesses which will help drive
that future organic growth, while incrementally investing in scaling
the businesses and our Group. Our very significant potential for
growth, as we strengthen our business model and margins, gives
us confidence in delivering further resilient quality compounding
in the future. We remain very positive about our short and long
term prospects."
Investor Seminar 2023
On 27(th) June 2023 Diploma will host an Investor Seminar for analysts
and institutional investors in Central London. The event will provide
an opportunity to hear from members of the senior management team
who will provide insight into Diploma's differentiated value-add
business model, why they are excited about the Group's organic
growth potential, and how they scale their businesses and the Group
to ensure sustainable long-term delivery. The event will be broadcast
live at www.diplomaplc.com from 14:00 BST. Those wishing to attend
in person are requested to email ava.jarman@teneo.com for further
details.
---------------------------------------------------------------------------------
Notes:
1. Diploma PLC uses alternative performance measures as key
financial indicators to assess the underlying performance of the
Group. These include adjusted operating profit, adjusted profit
before tax, adjusted earnings per share, free cash flow, leverage
and ROATCE. All references in this Announcement to "organic"
revenues refer to reported results on a constant currency basis,
and after adjusting for any contribution from acquired or disposed
businesses. The narrative in this Announcement is based on these
alternative measures and an explanation is set out in note 13 to
the condensed consolidated financial statements in this
Announcement.
2. Certain statements contained in this Announcement constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of Diploma PLC, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements. Such risks, uncertainties and other factors include, among others, exchange rates, general economic conditions and the business environment.
There will be a presentation of the results to analysts and
investors at 9:00 BST this morning via audio conference call and
webcast. Conference call dial in details:
-- Dial in: +44 (0) 33 0551 0200 (UK-Wide)
-- Confirmation code: Diploma Half Year Results
Register your attendance for the webcast at:
https://brrmedia.news/diploma_plc_hyresults
This presentation will be available after the conference call
at: https://www.diplomaplc.com/investors/financial-presentations/
.
A replay of the audio will be available on the same link after
the event.
For further information please contact:
Diploma PLC - +44 (0)20 7549 5700
Johnny Thomson, Chief Executive Officer
Chris Davies, Chief Financial Officer
Kellie McAvoy, Head of Investor Relations
Teneo - +44 (0)20 7353 4200
Martin Robinson
Olivia Peters
NOTE TO EDITORS:
Diploma PLC is a decentralised, value-add distribution Group.
Our businesses deliver practical and innovative solutions that keep
key industries moving - from energy and infrastructure to
healthcare.
We are a distribution group with a difference. Our businesses
have the technical expertise, specialist knowledge, and long-term
relationships required to deliver value-add products and services
that make our customers' lives easier. These value-add solutions
drive customer loyalty, market share growth and strong margins.
Our decentralised model means our specialist businesses are
agile and empowered to deliver the right solutions for their
customers, in their own way. As part of Diploma, our businesses can
also leverage the additional resources, opportunities and expertise
of a large, international and diversified Group to benefit their
customers, colleagues, suppliers and communities.
We employ c.3,000 colleagues across our three Sectors of
Controls, Seals and Life Sciences. Our principal operating
businesses are located in the UK, Northern Europe, North America
and Australia.
Over the last fifteen years, the Group has grown adjusted
earnings per share (EPS) at an average of c.15% p.a. through a
combination of organic growth and acquisitions. Diploma is a member
of the FTSE 250 with a market capitalisation of c.GBP3.6bn.
Further information on Diploma PLC can be found at
www.diplomaplc.com
The person responsible for releasing this Announcement is John
Morrison, Company Secretary.
LEI: 2138008OGI7VYG8FGR19
HALF YEAR REVIEW TO 31 MARCH 2023
Strong half year performance
The Group has once again delivered a successful six months,
reflecting the benefits of our strategy, value-add proposition and
decentralised model. These, underpinned by the commitment of our
colleagues to deliver excellent customer service, have enabled us
again to deliver double-digit organic growth at high teens
margins.
Revenue in the first half of 2023 was up 30% to GBP582.8m (2022:
GBP448.5m). Organic growth was 10%, mainly volume, driven by our
revenue diversification initiatives. Acquisitions, net of a small
disposal, contributed 12% to reported revenue while foreign
exchange translation added a further 8%.
Positive operational leverage, strong pricing and cost
management have enabled us to invest in scaling our businesses,
while still increasing adjusted operating margin to a strong 18.8%
(2022: 18.4%). Our adjusted operating profit increased by 33% to
GBP109.7m (2022: GBP82.5m). Statutory operating profit rose 59% to
GBP92.5m (2022: GBP58.2m).
Adjusted EPS grew by 26%, continuing our long-term compounding
track record (15% CAGR EPS over 15 years).
Our cash-generative business model supported strong first half
free cash flow conversion of 70% (2022: 64%). Together with the
recent equity raise, this led to net debt of GBP154.0m or 0.7x
leverage at 31 March 2023 (31 March 2022: GBP209.5m and 1.2x).
Returns on capital are a central underpin of our compounding
financial model and we were pleased to report another strong period
with ROATCE of 17.8% (2022: 17.5%).
In light of the strong H1 performance and our confidence in the
Group's prospects, we have declared a 10% increase in the interim
dividend to 16.5p per share (2022: 15.0p). The dividend is payable
on 9 June 2023 to shareholders on the register on 26 May 2023 with
a corresponding ex-dividend date of 25 May 2023.
Revenue diversification strategy driving organic growth
The Group's strategy is to build high quality, scalable
businesses for organic growth. All of our businesses drive this
growth in three ways: capitalising on structurally growing end
markets; increasing penetration of core geographies; and expanding
addressable markets through product range extension. The collective
success of our businesses' growth initiatives drove organic growth
of 10%, with strong trading momentum sustained throughout the first
half.
Revenue GBPm Organic growth
H1 23 H1 22 Change H1 23 H1 22
--------------- ------- ------ ------- -------- -------
Controls 278.8 224.0 +24% +13% +28%
Seals 198.4 137.4 +44% +8% +15%
Life Sciences 105.6 87.1 +21% +4% (7)%
--------------- ------- ------ ------- -------- -------
Group 582.8 448.5 +30% +10% +16%
--------------- ------- ------ ------- -------- -------
Some examples of how our businesses are delivering organic
growth are set out below, with further detail provided in the
Sector reviews on pages 8 to 12.
Positioning to take advantage of structurally growing end
markets. Across the Group we have continued to drive growth through
expansion in structurally growing end markets. A number of
businesses in our Controls sector are gaining share in aerospace,
energy and telecoms markets as well as penetrating the wider
electrification ecosystem. Across our Seals businesses, we are well
exposed to US infrastructure spend and we have diversified into
exciting growing markets such as water treatment and renewable
energy. In Life Sciences, in addition to benefiting from the
recovery of surgical procedures to c.90% of pre-pandemic levels,
our businesses are continuing to diversify, in particular across
diagnostic areas such as molecular testing, allergy and auto-immune
testing, haematology and cancer screening.
Penetration of core developed economies. Over the last six
months we have made progress developing our US and European
exposure. In Controls, for example, we continue to win market share
in the German energy market delivering very strong double-digit
growth. In Seals, we are winning market share in the western and
mid-west states of the US, leveraging the investment in the
facility in Louisville. R&G has enjoyed a very strong first
year in the Group, building out our UK regional position and
product offerings to drive excellent organic growth. In Life
Sciences, we now have a scaled European platform following the
integration of Accuscience, which better positions us for
recovering healthcare markets.
Product range extension. New product development forms an
ongoing component of all our businesses' organic growth
strategies.
-- Controls has delivered outstanding growth from speciality
adhesives having entered that segment through the acquisition of
Techsil in 2021, and Windy City Wire continues to innovate products
to diversify into new markets, leveraging its scaled business model
and strong customer relationships.
-- Following the acquisition of R&G last year, Seals
continues to diversify into wider fluid power products from its
traditional strength across seals and gaskets.
-- Product development is an intrinsic component of our Life
Sciences businesses. The Canadian businesses saw significant growth
through the introduction of new technology in the gastrointestinal
and surgical segments. The European businesses saw similar new
product successes with the single use endoscope in the Urology
segment, the introduction of new ultrasound technology and new
product introductions in the lab and pharmaceutical testing
environments.
Strategically important acquisitions to accelerate growth
Acquisitions are an integral part of our growth strategy. We are
disciplined and selective in our acquisition strategy and will only
consider opportunities that display the following core
characteristics:
-- differentiated value-add customer proposition generating sustainable high gross margins;
-- strong organic growth and scale potential; and
-- capable management teams we can back.
Since 30 September 2022, we have acquired eight high quality
businesses for a total of GBP98m (one of which was completed in
April 2023).
In March, we acquired Tennessee Industrial Electronics ("TIE")
for GBP76m, entering the strategically important Industrial
Automation end market in the US. TIE is a high growth, market
leading value-add distributor of aftermarket parts and repair
services for robotics and CNC machines. It differentiates through
speed to market and superior technical support, driving a strong
organic growth track record and strong margins. The business is
growth, margins and earnings accretive in the first year.
Since 30 September 2022, we have also completed seven bolt-on
acquisitions for a total consideration of GBP23m (one of which was
completed in April 2023), at an average EBIT multiple of under 5x
EBIT. These will add GBP24m of annual revenue to the group at
accretive EBIT margins, driving ROATCE of over 20% from their first
full year.
Continuing our disciplined approach to portfolio management, we
disposed of the lower growth, lower margin Hawco business (heating
controls within the Controls Sector) in March, for a total
consideration of GBP23m.
The Group's acquisition pipeline is very strong and reflects the
Group's focus in recent years to take a more strategic and
structured approach to developing a pipeline across our businesses.
This pipeline is made up of small and mid-sized opportunities
totalling c.GBP1bn in value and with an average target size of
c.GBP20m. In fragmented markets, the pipeline is well diversified
by sector and geography. We remain committed to disciplined
investment of capital and are excited about the opportunities in
this pipeline, which will support the Group's future organic
growth, and deliver compounding earnings growth at high returns
over the long term.
Scaling the Businesses and the Group
To deliver our strategy of building high quality businesses for
sustainable organic growth requires that we scale the businesses,
developing their operating models to continue to deliver great
customer propositions at scale; and at the same time, develop the
Group, optimising structures and practices to support this
growth.
Scaling the Businesses
We have a framework which allows our businesses to make the
journey towards their future stated target operating model. We have
a common set of core competencies (supply chain, operational
excellence, commercial discipline, value-add and route to market)
which underpin their model. We engage leaders from around the Group
in a bespoke development programme - leadership at scale - where
they benefit from best practice sharing in each of these competency
areas.
As well as developing core competencies, scaling our businesses
requires selective investment in capability, in the form of talent,
technology, and facilities. Incrementally reinvesting some of the
benefits we gain from operational leverage and performance
improvement as we grow is a critical aspect of our financial model.
During the period, we have invested in functional leadership across
a number of our businesses, creating or upgrading roles in areas
such as supply chain management, operations, route to market and
support functions. Across each of our Sectors, we are integrating
smaller businesses to create scale platforms such as an integrated
Australian Life Sciences business or an integrated UK Wire &
Cable business. From a technology perspective, we have ERP upgrade
projects underway across a number of businesses as well as
automated warehouse system upgrades in a number of Seals and
Controls businesses. In terms of facilities, we have upgrades and
relocations underway in each of our three Sectors to drive
efficiency and improved customer service as those businesses
continue to grow.
Scaling the Group
Portfolio discipline is key to ensuring the Group scales
sustainably. The right acquisitions, effective integration, and
selective disposals have meant that while the Group has doubled in
size in the last four years, our business unit verticals have
reduced from 20 to 16.
We have clear Group-wide strategic and performance frameworks
which allows us to align through the Sectors and business units.
With a lean, upskilled Executive, Head Office and Senior Leadership
Team, this allows effective execution of our objectives as the
Group scales.
We have brilliant people. We operate the Group through a
decentralised culture, empowering our management teams to own their
people, service, culture and strategic/performance delivery.
Increasingly we complement this with the benefits of the Diploma
Group. This provides access to a network, to a body of best
practice, to leadership development, all of which together
continuously improve our business.
Delivering Value Responsibly
We are making good progress across our businesses with
Delivering Value Responsibly ("DVR"), our Environmental, Social,
and Governance (ESG) programme. During the period we have hired an
experienced Group Sustainability Director and submitted our net
zero targets for validation from the Science Based Targets
initiative (SBTi).
DVR is focused on five core areas.
-- We have strong levels of Colleague Engagement at 79%. We have
engagement plans in each of our businesses.
-- Potential hazard reporting and training are enhancing our Health & Safety culture.
-- Workshops and listening groups are also helping to further
our Diversity, Equity & Inclusion agenda. Over the last four
years our gender diversity has improved, with females now
representing 28% of our senior team (20% in 2019).
-- Our businesses are stepping up engagement with their Supply Chains on our Supplier Code.
-- Further focus on the Environment, including energy workshops,
has seen our businesses diverting waste from landfill and putting
new actions in place across facilities to reduce emissions such as
LED lighting and efficiency initiatives. We have started to
implement solar solutions on our facilities and expect to progress
this further in the coming year.
We are also focused on the positive impact that our Group has on
society and the environment by delivering innovative and
life-saving healthcare solutions, playing a role in renewable
energy generation or contributing to a circular business model both
in the way we partner externally with our customers and suppliers
as well as the way we operate internally.
Increasing full year guidance
We have delivered a strong first half and the second half has
started positively. As we enter the second half we face a very
strong comparative performance period, particularly Q3. Our
continued strong growth and increasing resilience, however, give us
the confidence to increase our guidance for the full year:
-- We expect organic revenue growth of c.7% for the full year,
and a further c.7% growth from acquisitions, net of disposals.
-- We expect operating margin to be at the top of our previously guided range, c.19%.
-- Free cash flow conversion of c.90% which would drive year end
leverage to less than 0.4x before any future acquisition
investment.
SECTOR REVIEW: CONTROLS
The Controls Sector businesses supply specialised wiring, cable,
connectors, fasteners, control devices and adhesives for a range of
technically demanding applications.
Half Year
2023 2022 Change
---------------------------- ------------- --------- -------
Revenue GBP278.8m GBP224.0m +24%
Organic revenue growth +13% +28%
Statutory operating profit GBP57.7m GBP33.8m +71%
Adjusted operating profit GBP64.3m GBP47.0m +37%
Adjusted operating margin 23.1% 21.0% +210bps
---------------------------- ------------- --------- -------
H1 2023 highlights
-- Very strong performance in International Controls with organic revenue growth of 15%.
-- Windy City Wire ("WCW") delivered organic growth of 10%,
building on a very strong comparative period in H1 FY22.
-- Adjusted operating profit increased significantly, 37% higher
at GBP64.3m (2022: GBP47.0m) with a 210bps year-on-year increase in
adjusted operating margin to 23.1% (2022: 21.0%). Both WCW and
International Controls contributed to margin expansion driven by
positive operating leverage and mix into higher margin
products.
-- Strategic acquisition of TIE builds scale and gives access to
the important Industrial Automation end market.
International Controls (51% of Controls Sector revenue)
delivered 15% organic growth in the half, benefiting from market
share gains in recovering civil aerospace markets and structural
tailwinds in UK defence and German energy markets as investment in
these areas remains a critical focus for governments .
Windy City Wire (49% of Controls Sector revenue) continues to
perform strongly, with organic revenue growth of 10% in the period,
following a very strong comparative period of 42% organic growth.
This was driven by a favourable mix of higher value products.
Revenue diversification driving organic growth
The Sector continues to diversify its end markets, gaining share
in Space and Telecoms and benefiting from the wider move to
electrification and green energy as it continues to deliver growth
in the electric vehicles ("EV") and renewable energy end
markets.
Interconnect continues to win market share in structurally
growing end markets across the UK and Europe such as energy,
defence and automotive which are all benefiting from increased
investment and easing supply chain constraints.
The Sector's Fasteners business continues to win market share
and benefit from strong customer demand in the recovering civil
aerospace market in both the UK and US. The business also secured
key contract wins in seats and cabin hardware and has also seen
further diversification of its end markets with good momentum into
space and unmanned aerial vehicles ("UAVs").
Adhesives delivered strong double-digit growth in the period in
its key automotive end markets as well as continued share gains in
the telecommunications and EV markets.
Targeted acquisitions to accelerate growth
During the period, the Sector completed the acquisition of TIE
for GBP76m providing it with access to the important Industrial
Automation end market, which has been a strategic target end market
for some time. TIE also drives product extension (robotics and CNC
machines) as well as deepening geographic penetration in the key US
market.
Two smaller bolt-on acquisitions were completed in the period,
with Eurobond further broadening our product offering in the
Adhesives sector and Shrinktek expanding the sector's offering into
the UK Wire and Cable markets.
Building scale
Significant investment in technology and facilities is underway
as the sector seeks to combine two of its UK Wire and Cable
locations into one state-of-the-art facility and a common ERP
platform.
Sales resource has been added to the European Fasteners business
as part of the strategy to expand in the civil aerospace market and
capitalise on the ongoing strong recovery. Focused investments in
sales resources are also being made into the adhesives market to
capitalise on long-term aerospace and defence opportunities.
Sector review: SEALS
The Seals Sector businesses supply a range of seals, gaskets,
cylinders, components and kits used in heavy mobile machinery and a
diverse range of fluid power products with OEM, Aftermarket and MRO
applications.
Half Year
2023 2022 Change
--------------------------- --------- --------- ------
Revenue GBP198.4m GBP137.4m +44%
Organic revenue growth +8% +15%
Statutory operating profit GBP29.3m GBP17.1m +71%
Adjusted operating profit GBP35.7m GBP25.8m +38%
Adjusted operating margin 18.0% 18.8% -80bps
--------------------------- --------- --------- ------
H1 2023 highlights
-- Very strong International Seals performance with strong
organic growth from R&G following acquisition.
-- Robust performance in North American Seals, benefiting from
returns on the investment into the Aftermarket facility in
Louisville; and very strong performance in our MRO business.
-- Adjusted operating profit increased by 38% to GBP35.7m (2022: GBP25.8m).
-- Invested in scaling projects focusing on automation and
supply chain efficiencies through facilities upgrades.
International Seals (48% of Sector revenue) delivered very
strong organic growth of 12%, principally driven by an excellent
trading performance from R&G in the UK and strong recovery of
capital projects in Australia.
North American Seals (52% of Sector revenue) delivered robust
organic growth of 4% against a very strong comparator (2022: +19%)
with strong growth in our North American Aftermarket and MRO
businesses partly offset by some destocking in industrial OEM end
markets.
Revenue diversification driving organic growth
In International Seals, our UK businesses benefited from
initiatives to diversify into product adjacencies and new end
markets such as wastewater treatment and potash mining. R&G has
made a significant contribution to the organic growth of the sector
since acquisition, driven by strong sales into capital projects
particularly in the pneumatics and industrial markets, underpinned
by solid MRO volumes. Our Australian pump businesses delivered
strong growth fuelled by investments in infrastructure such as
tunnels and wastewater. Anti-Corrosion Technology ("ACT"), which
was acquired in late FY22, has doubled since acquisition,
capitalising on asset protection projects in the oil and gas
industry.
North American Aftermarket delivered strong growth in the repair
segment, driven by increased infrastructure spending. The
investment in our Aftermarket facility in Louisville, Kentucky is
continuing to deliver accelerated growth and market share gains,
particularly in western states, and this is supported by positive
demand in the US infrastructure sector. Our MRO business delivered
strong double-digit growth with the introduction of new value added
products focused on late cycle opportunities in the transportation
sector.
Targeted acquisitions to accelerate growth
In International Seals, three bolt-on acquisitions were added
into the R&G Group. Hedley Hydraulics and Fluid Power Services
bring complementary products, capabilities and geographical
expansion to R&G's Hydraulics sector. Valves Online will
complement and strengthen R&G's capabilities in the online
route to market.
In North American Seals, Hercules OEM completed the bolt-on
acquisition of ITG, a distributor of seals and adhesives for use in
electrical connectors, valves, medical devices and industrial
equipment. ITG is highly complementary and presents the opportunity
to capitalise on operational synergies.
Building scale
The Sector is selectively integrating smaller businesses to form
better scaled platforms and during the period completed the
integration of TotalSeal into FITT Resources in Australia.
Further scaling investments in facilities to establish national
hubs are being made, with examples including a national
distribution hub for R&G and the construction of a new M Seals
facility in Denmark that will become the Nordic hub for the
Sector.
In North American Seals, we have focused on improving the supply
chain; investing in facilities, talent and processes to improve
supply-demand planning and optimise inventory. The Sector continues
to make major investments in warehouse automation and is currently
progressing work to expand the Autostore in Louisville.
Sector review: LIFE SCIENCES
The Life Sciences Sector businesses supply a range of equipment,
consumables, instrumentation and related services to the Healthcare
industry.
Half Year
2023 2022 Change
--------------------------- --------- -------- --------
Revenue GBP105.6m GBP87.1m +21%
Organic revenue growth 4% (7)%
Statutory operating profit GBP16.7m GBP17.2m (3)%
Adjusted operating profit GBP20.9m GBP19.6m +7%
Adjusted operating margin 19.8% 22.5% (270)bps
--------------------------- --------- -------- --------
H1 2023 highlights
-- Organic revenue +4% (2022:(7%)): The Sector has returned to
growth, with momentum accelerating, driven by the recovery of
surgical and operating room procedures to c.90% of pre-Covid
levels.
-- Exciting outlook as governments act to address the
surgical/diagnostics backlogs and increase funding of capital
projects.
-- As expected, the operating margin for the Sector has
declined, primarily due to the acquisition of Accuscience which has
a lower margin with lower capital intensity, plus scaling
investments.
-- Continued investments being made to build scale in the
facilities and systems in Canada and Europe following the
successful completion of the scaling project in Australasia.
Revenue diversification driving organic growth
The Sector's mid to longer-term prospects are exciting. All
businesses in the sector have successfully diversified revenue
streams to capitalise on the recovery of surgical and operating
room procedures; as well as the increased funding for capital
projects. During the period, we have secured contracts across
Canada, the Nordics and Australia as governments and hospitals
increase capacity to clear the surgical backlogs and reinvest in
new medical research laboratories. Growth opportunities remain
positive with a good trajectory of surgical and operating room
procedures fully recovering towards pre-Covid levels as capacity
constraints and staffing shortages in hospitals continue to
ease.
It is also pleasing to see an increasing number of projects won
in early diagnostics and intervention. This was a trend that was
identified early on by the Sector and is now coming to fruition, as
healthcare systems increasingly recognise the importance of testing
and diagnostics capabilities and continually increase investment
into areas such as molecular infectious disease testing and
molecular oncology diagnostics. The Canadian businesses saw
significant growth through the introduction of new technology in
the gastrointestinal and surgical segments. The European businesses
saw similar new product successes with the single use endoscope in
the Urology segment, the introduction of new ultrasound technology
and new product introductions in the lab and pharmaceutical testing
environments.
Looking forward to the product pipeline for H2 and beyond, the
Canadian businesses expect to benefit from the introduction of
pathology automation technology that will bring positive impacts to
laboratory workflow. There is an equally exciting product pipeline
for the European businesses with the entry into a new segment in
Haematology testing and further growth in diagnostic
technologies.
Building scale
In Australia, we have successfully combined the operations of
our two businesses to generate operational efficiencies such as
warehouse process improvements and freight consolidation. Similar
projects are underway in the Canadian and European businesses,
focusing on facilities and ERP systems. Together, these projects
will build three scaled platform businesses to enable the Sector to
capitalise on future growth opportunities.
FINANCE
Summary income statement
Six months to 31 March 2023 Six months to 31 March 2022
----------------
Adjusted(1) Adjust-ments(1) Total Adjusted(1) Adjust-ments(1) Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ---------------- ------------------ ---------- --------------- ------------------ ----------
R evenue 582.8 - 582.8 448.5 - 448.5
Operating expenses (473.1) (17.2) (490.3) (366.0) (24.3) (390.3)
-------------------------- --------- -------------- ----------- -------------- ------------------- -----------
Operating profit 109.7 (17.2) 92.5 82.5 (24.3) 58.2
Financial expense,
net (11.0) (2.8) (13.8) (3.9) (2.0) (5.9)
-------------------------- --------- -------------- ----------- -------------- ------------------- -----------
Profit before
tax 98.7 (20.0) 78.7 78.6 (26.3) 52.3
Tax expense (24.2) 5.2 (19.0) (19.8) 3.4 (16.4)
-------------------------- --------- -------------- ----------- -------------- ------------------- -----------
Profit for the
period 74.5 (14.8) 59.7 58.8 (22.9) 35.9
-------------------------- --------- -------------- ----------- -------------- ------------------- -----------
Earnings per
share
(p)
Adjusted/Basic 59.1p (11.8p) 47.3p 47.0p (18.4p) 28.6p
-------------------------- --------- -------------- ----------- -------------- ------------------- -----------
(1) The Group reports under International Financial Reporting
Standards (IFRS) and references alternative performance measures
where the Board believes that they help to effectively monitor the
performance of the Group and support readers of the Financial
Statements in drawing comparisons with past performance. Certain
alternative performance measures are also relevant in calculating a
meaningful element of Executive Directors' variable remuneration
and our debt covenants. Alternative performance measures are not
considered to be a substitute for, or superior to, IFRS measures.
These are detailed in note 13 to the Condensed Consolidated
Financial Statements.
Reported revenue increased by 30% to GBP582.8m (2022:
GBP448.5m), consisting of organic growth of 10%, a 12% net
contribution from acquisitions and disposals, and an 8% benefit
from foreign exchange translation.
Adjusted operating profit increased by 33% to GBP109.7m (2022:
GBP82.5m) as the operational leverage from the increased revenue,
net of continued investment in scaling projects across the Group,
drove a 40bps year-on-year improvement in the adjusted operating
margin to 18.8% (2022: 18.4%). Statutory operating profit increased
59% to GBP92.5m (2022: GBP58.2m), benefiting from a GBP12.2m profit
on disposal of Hawco at the end of the period, compared with a
small loss of GBP1.6m in the prior year relating to the disposal of
Kentek.
Adjusted profit before tax increased 26% to GBP98.7m (2022:
GBP78.6m). Net adjusted interest expense increased to GBP11.0m
(2022: GBP3.9m), driven both by increased average gross debt, as
borrowings increased to finance acquisitions prior to the share
placing in March, and higher interest rates. The all-in, blended
cost of bank debt increased to 5.5% (2022: 2.1%). Statutory profit
before tax was 50% higher year-on-year at GBP78.7m (2022:
GBP52.3m).
The Group's adjusted effective rate of tax on adjusted profit
before tax was 24.5% (September 2022: 25.0%) marginally reduced
from the year ended 30 September 2022.
Adjusted earnings per share increased by 26% to 59.1p (2022:
47.0p). Basic earnings per share increased by 65% to 47.3p (2022:
28.6p). An equity placing was completed in March 2023, resulting in
a 7.5% increase (9,350,965 new shares) in the issued ordinary share
capital. As at 31 March 2023, the average number of ordinary shares
(which includes any potentially dilutive shares) was 125,927,286
(2022: 124,932,661) and the weighted average number of ordinary
shares in issue was 125,360,523 (2022: 124,520,917).
Cash management
Free cash flow increased by 37% to GBP51.8m (2022:GBP37.7m).
Statutory cash flow from operating activities increased by 53% to
GBP98.1m (2022: GBP64.0m).
Six months Six months
ended ended
31 March 31 March
2023 2022
Funds flow GBPm GBPm
------------------------------------------ ------------ ----------- -----------
Adjusted operating profit 109.7 82.5
Depreciation and other non-cash items 15.2 10.6
Working capital movement (22.8) (27.3)
Interest paid, net (excluding borrowing
fees) (9.8) (2.7)
Tax paid (22.2) (19.9)
Capital expenditure, net of disposal
proceeds (9.5) 3.6
Lease repayments (6.9) (6.3)
Notional purchase of own shares on exercise
of options (1.9) (2.8)
Free cash flow 51.8 37.7
------------------------------------------------ ------ ----------- -----------
Acquisition and disposals (net of cash
acquired/disposed) including acquisition
expenses and deferred consideration (75.9) (24.9)
Proceeds from issue of share capital 232.5 -
(net of fees)
Dividends paid to shareholders and minority
interests (48.6) (37.7)
Foreign exchange 15.1 (3.2)
Net funds flow 174.9 (28.1)
------------------------------------------------ ------ ----------- -----------
Net debt (154.0) (209.5)
------------------------------------------------ ------ ----------- -----------
Working capital increased by GBP22.8m, driven by an increase in
inventories of GBP11.5m and an increase in receivables of GBP17.8m,
both reflective of the revenue growth during the period.
Depreciation and other non-cash items includes GBP13.4m (2022:
GBP10.9m) of depreciation and amortisation of tangible, intangible
and right of use assets and GBP1.8m (2022: deduction of GBP0.3m) of
non-cash items, primarily share-based payments expense.
Interest payments increased by GBP7.1m to GBP9.8m (2022:
GBP2.7m) in line with increased interest charges. Tax payments in
the first half of the year increased by GBP2.3m to GBP22.2m (2022:
GBP19.9m) with the cash tax rate reducing marginally to 22% (2022:
23%).
Capital expenditure increased by GBP4.5m, largely driven by
facility investments in Shoal Group and Hercules Aftermarket. The
prior period benefited from GBP9.3m of proceeds from disposal of
property, plant and equipment. The Group funded the Company's
Employee Benefit Trust with GBP1.9m (2022: GBP2.8m) in connection
with the Company's long term incentive plan.
The Group generated free cash flow of GBP51.8m (2022: GBP37.7m)
a very strong 37% increase on the prior year, resulting in free
cash flow conversion of 70% (2022: 64%).
Net total acquisition expenditure of GBP75.9m (2022: GBP24.9m)
comprises the cash spend for TIE (GBP75.1m), the cash spend for
other acquisitions (GBP10.3m), acquisition fees (GBP4.0m), and
payments in respect of acquisitions completed in prior periods
(GBP8.0m) partially offset by the proceeds received, net of cash
disposed, in respect of the disposal of Hawco (GBP21.5m).
The Group received net proceeds of GBP232.5m from the equity
placing completed in March 2023. Dividends of GBP48.6m (2022:
GBP37.7m) were paid to ordinary and minority interest
shareholders.
Net debt
The Group has a debt facility agreement ("SFA") originally
entered into on 13 October 2020. At 31 March 2023, the SFA
comprises a committed multi-currency revolving facility for an
aggregate principal amount of GBP359.7m, an amortising term loan
for an aggregate principal amount of GBP89.3m ($110.5m), a bullet
term loan for an aggregate principal amount of GBP53.3m ($66.0m)
and a further bullet term loan for an aggregate principal amount of
GBP45.3m. The SFA was recently extended until December 2025.
The Group continues to maintain a robust balance sheet with net
debt (excluding IFRS 16 liabilities) of GBP154.0m (2022: GBP209.5m)
comprised of borrowings of GBP226.1m (2022: GBP342.0m), less cash
funds of GBP72.1m (2022: GBP132.5m). The equity placing completed
in March 2023 drove the reduction in the Group's borrowings.
At 31 March 2023, net debt of GBP154.0m (2022: GBP209.5m)
represented leverage of 0.7x (2022: 1.2x) against a banking
covenant of 3.0x. The Group maintains strong liquidity, with period
end headroom (comprised of undrawn committed facilities and cash
funds) of GBP390m (2022: GBP199m).
The table below outlines the composition of the Group's net debt
at 31 March 2023:
Type Currency Amount GBP equivalent Interest rate exposure
Term loan USD $176.5m GBP142.6m SOFR fixed at 3%
------------ ----------- --------------- -----------------------
RCF USD $29.0m GBP23.4m
------------ ----------- --------------- -----------------------
Term loan GBP GBP45.3m Floating
------------ ----------- --------------- -----------------------
RCF EUR EUR21.0m GBP18.5m Floating
------------ ----------- --------------- -----------------------
Capitalised debt fees net of accrued GBP(3.7)m
interest
--------------- -----------------------
Gross debt drawn at 31 March 2023 GBP226.1m
--------------- -----------------------
Cash & equivalents at period end GBP(72.1)m
--------------- -----------------------
Net debt at 31 March 2023 GBP154.0m
--------------- -----------------------
Defined Benefit Pension
The Group maintains a legacy closed defined benefit pension
scheme in the UK. In the period, the Group funded this scheme with
cash contributions of GBP0.3m (2022: GBP0.2m) which increases
annually on 1 October by 2%.
In Switzerland, local law requires our Kubo business to provide
a contribution-based pension for all employees, which is funded by
employer and employee contributions. The cash contribution to the
scheme was GBP0.2m (2022: GBP0.2m).
Both the UK defined benefit scheme and the Kubo contribution
scheme are accounted for in accordance with IAS 19 (revised). At 31
March 2023, the aggregate accounting pension surplus in these two
schemes was GBP8.8m, compared to a GBP6.4m surplus as at 30
September 2022, reflecting higher returns on the Scheme's assets,
partly offset by a fall in corporate bond yields over the period.
The next formal triennial funding valuation of the UK scheme is
expected to be completed in the second half of FY2023.
Exchange rates
A significant proportion of the Group's revenues (c.75%) are
derived from businesses located outside the UK, principally in the
US, Canada, Australia and Northern Europe. Since 30 September 2022,
Sterling has strengthened against some of the major currencies in
which the Group operates, in particular the US, Canadian, and
Australian dollar, whilst weakening marginally against the Euro and
Danish krone. Compared with the first half of last year, the
average Sterling exchange rate is weaker against all of the major
currencies in which the Group operates. The impact from translating
the results of the Group's overseas businesses into UK sterling has
led to an increase in Group revenues of GBP32.7m; an increase in
the Group's adjusted operating profit of GBP7.3m; and an increase
in net debt of GBP9.9m, compared with the same period last
year.
Going concern
The Directors have assessed the relevant factors surrounding
going concern.
The Group continues to operate against a backdrop of
macroeconomic disruption, including widespread global inflation and
rising interest rates. Accordingly, the Directors have again
considered a comprehensive going concern view. The Group has
carried out an assessment of its projected trading for the 18-month
period through to the year ending 30 September 2024. This
assessment incorporated a downside scenario which demonstrates that
the Group has sufficient liquidity, resources and covenant headroom
to continue in operation for the foreseeable future.
The Group has considerable financial resources, together with a
broad spread of customers and suppliers across different geographic
areas and sectors, often secured with longer term agreements. As a
consequence, the Directors believe that the Group is well placed to
manage its business risks successfully. The Directors confirm there
are no material uncertainties which may cast significant doubt on
the Group's ability to continue as a going concern and these
condensed consolidated financial statements have therefore been
prepared on a going concern basis.
RISKS AND UNCERTAINTIES
The principal risks and uncertainties which may have the largest
impact on performance in the second half of the year are the same
as those described in detail in pages 82-88 of the 2022 Annual
Report & Accounts. In summary these are:
-- Downturn/instability in major markets : adverse changes in
the major markets that the businesses operate in could result in
slowing revenue growth due to reduced or delayed demand for
products and services, or margin pressures due to increased
competition.
-- Supply Chain : the risk that existing distribution agreements
are cancelled, therefore losing access to key distribution
channels; a supplier taking away exclusivity; lead times increasing
as a result of supply chain shortages.
-- Inflationary environment : significant or unexpected cost
increases by suppliers due to the pass through of higher commodity
prices or other price increases, higher trade tariffs and/or
foreign currency fluctuations, could adversely impact profits if
businesses are unable to pass on such cost increases to
customers.
-- Unsuccessful acquisition : the Group may overpay for a
target; the acquired business may experience limited growth
post-acquisition; loss of key customers or suppliers post
integration; potential cultural misfit.
-- Geopolitical disruptions : interruption of trade agreements;
tariffs; change of trade relationships amongst countries in which
we operate; Government budget spending; political elections.
-- Health & safety : our businesses are exposed to health
& safety risks in the environment in which their employees,
contractors, customers, and suppliers operate.
-- Technology & cyber : any disruption or denial of service
may delay or impact decision-making if reliable data is
unavailable; poor information handling or interruption of business
may also lead to reduced service to customers; unintended actions
of employees caused by a cyber-attack may also lead to disruption,
including fraud.
-- Talent & diversity : the loss of key personnel can have
an impact on performance for a limited time period; not having the
right talent or diversity at all levels of the organisation to
deliver our strategy, resulting in reduced financial
performance.
-- Product liability : products supplied by a Group business may
fail in service, which could lead to a claim (notwithstanding the
fact that the Group has liability insurance in place providing
cover for each business).
-- Foreign currency : transactional foreign exchange risk arises
principally with respect to the Group's Canadian and Australian
businesses, where a large proportion of purchases are denominated
in US dollars and Euros.
-- Non-compliance with laws : the Group's businesses are
affected by various statutes, regulations and standards in the
countries and markets in which they operate. Diploma PLC itself is
a listed entity subject to regulation and governance
requirements.
The Directors confirm that the principal risks and uncertainties
and the processes for managing them have not changed materially
since the publication of the 2022 Annual Report & Accounts and
that they remain relevant for the second half of the financial
year.
Chris Davies
Chief Financial Officer 15 May 2023
Responsibility Statement of the Directors in respect of the Half
Year Report 2023
The directors confirm that Condensed Consolidated Financial
Statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors of Diploma PLC and their respective
responsibilities are listed in the Annual Report & Accounts for
2022 and on the Company's website at www.diplomaplc.com .
By Order of the Board
JD Thomson C Davies
Chief Executive Officer Chief Financial Officer
15 May 2023 15 May 2023
Independent review report to Diploma PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Diploma PLC's condensed consolidated interim
financial statements (the "interim financial statements") in the
Half Year Report 2023 of Diploma PLC for the 6 month period ended
31 March 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position as at 31 March 2023;
-- the Condensed Consolidated Income Statement and Condensed
Consolidated Statement of Comprehensive Income for the period then
ended;
-- the Condensed Consolidated Cash Flow Statement for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Report 2023 of Diploma PLC have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Report 2023 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half Year Report 2023, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
Year Report 2023 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half Year Report 2023,
including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Report 2023 based on our
review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
15 May 2023
Condensed Consolidated Income Statement
For the six months ended 31 March 2023
Unaudited Unaudited Audited
Six months to 31 March Six months to 31 March Year
2023 2022 to 30
Sept
2022
Adjusted Adjust- Total Adjusted Adjust- Total Total
(1) ments (1) ments
(1) (1)
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
R evenue 3 582.8 - 582.8 448.5 - 448.5 1,012.8
Operating expenses 2 (473.1) (17.2) (490.3) (366.0) (24.3) (390.3) (868.5)
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
Operating profit 109.7 (17.2) 92.5 82.5 (24.3) 58.2 144.3
Financial expense,
net 4 (11.0) (2.8) (13.8) (3.9) (2.0) (5.9) (14.8)
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
Profit before
tax 98.7 (20.0) 78.7 78.6 (26.3) 52.3 129.5
Tax expense 5 (24.2) 5.2 (19.0) (19.8) 3.4 (16.4) (34.1)
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
Profit for the
period 74.5 (14.8) 59.7 58.8 (22.9) 35.9 95.4
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
Attributable to:
Shareholders of
the Company 6 74.1 (14.8) 59.3 58.5 (22.9) 35.6 94.7
Minority interests 0.4 - 0.4 0.3 - 0.3 0.7
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
74.5 (14.8) 59.7 58.8 (22.9) 35.9 95.4
------------------------- ----- --------- -------- -------- --------- -------- -------- --------
Earnings per share
(p)
Adjusted / Basic 6 59.1p (11.8p) 47.3p 47.0p (18.4p) 28.6p 76.1p
Adjusted / Diluted 58.8p (11.7p) 47.1p 46.9p (18.4p) 28.5p 75.9p
----------------------- ----- --------- -------- -------- --------- -------- -------- --------
(1) Adjusted figures exclude certain items as set out and
explained in the Financial Review and as detailed in Notes 2, 3, 4,
5 and 6. All amounts relate to continuing operations.
The Group has re-presented the Condensed Consolidated Income
Statement to reflect the analysis of expenses based on their
nature. Together with note 2, this provides more information that
is relevant to the users of the financial statements and better
aligns to how management information is reported internally.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2023
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2023 2022 2022
GBPm GBPm GBPm
--------------------------------------------------- ----- ------------------ -------------- ---------
Profit for the period 59.7 35.9 95.4
---------------------------------------------------------- ------------------ -------------- ---------
Items that will not be reclassified
to the Consolidated Income Statement
Actuarial gains in the defined benefit
pension scheme 2.0 - 10.6
Deferred tax on items that will not
be reclassified (0.6) - (2.8)
---------------------------------------------------------- ------------------ -------------- ---------
1.4 - 7.8
---------------------------------------------------------- ------------------ -------------- ---------
Items that may be reclassified to the
Consolidated Income Statement
Exchange rate (losses)/gains on foreign
currency net investments (49.2) 13.7 76.8
(Losses)/gains on fair value of cash
flow hedges (0.3) (0.5) 4.5
Net changes to fair value of cash flow
hedges transferred to the Consolidated
Income Statement (0.7) - (0.4)
Deferred tax on items that may be reclassified 0.2 0.2 (1.1)
-------------------------------------------------------------- ------------------ -------------- ---------
(50.0) 13.4 79.8
------------------------------------------------------------ ------------------ -------------- ---------
Total Comprehensive Income for the period 11.1 49.3 183.0
---------------------------------------------------------- ------------------ -------------- ---------
Attributable to:
Shareholders of the Company 10.7 49.1 182.2
Minority interests 0.4 0.2 0.8
-------------------------------------------------------------- ------------------ -------------- ---------
11.1 49.3 183.0
------------------------------------------------------------ ------------------ -------------- ---------
Condensed Consolidated Statement of C hanges in Equity
For the six months ended 31 March 2023
Share Share Transl-ation Hedging Retained Share-holders' Minority Total
capital premium reserve reserve earnings equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- ------------- ------------- -------- --------- --------------- ------------ -----------
At 1 October
2021
(audited) 6.3 188.6 12.1 0.2 329.1 536.3 4.7 541.0
Total
comprehensive
income - - 13.8 (0.3) 35.6 49.1 0.2 49.3
Share-based
payments - - - - 1.4 1.4 - 1.4
Notional
purchase
of own shares - - - - (2.8) (2.8) - (2.8)
Disposal of
business - - - - - - (1.3) (1.3)
Minority
interest
put option
disposal - - - - 1.2 1.2 - 1.2
Dividends - - - - (37.5) (37.5) (0.2) (37.7)
--------------- -------- ------------- ------------- -------- --------- --------------- ------------ -----------
At 31 March
2022
(unaudited) 6.3 188.6 25.9 (0.1) 327.0 547.7 3.4 551.1
Total
comprehensive
income - - 62.9 3.3 66.9 133.1 0.6 133.7
Share-based
payments - - - - 1.4 1.4 - 1.4
Tax on items
recognised
directly in
equity - - - - 0.4 0.4 - 0.4
Acquisition of
business - - - - - - 2.5 2.5
Minority
interest
put option on
acquisition - - - - (1.9) (1.9) - (1.9)
Minority
interest
acquired - - - - - - (0.3) (0.3)
Dividends - - - - (18.7) (18.7) - (18.7)
--------------- -------- ------------- ------------- -------- --------- --------------- ------------ -----------
At 30
September
2022
(audited) 6.3 188.6 88.8 3.2 375.1 662.0 6.2 668.2
Total
comprehensive
income - - (49.2) (0.8) 60.7 10.7 0.4 11.1
Issue of share
capital
(note 6) 0.5 231.6 - - - 232.1 - 232.1
Share-based
payments - - - - 2.1 2.1 - 2.1
Notional
purchase
of own shares - - - - (1.9) (1.9) - (1.9)
Dividends - - - - (48.3) (48.3) (0.3) (48.6)
--------------- -------- ------------- ------------- -------- --------- --------------- ------------ -----------
At 31 March
2023
(unaudited) 6.8 420.2 39.6 2.4 387.7 856.7 6.3 863.0
--------------- -------- ------------- ------------- -------- --------- --------------- ------------ -----------
Condensed Consolidated Statement of Financial Position
As at 31 March 2023
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2023 2022 2022
Note GBPm GBPm GBPm
--------------------------------------- ------ ---------- ---------- ---------
Non-current assets
Goodwill 9 374.6 269.9 372.3
Acquisition intangible assets 9 451.5 342.2 455.0
Other intangible assets 4.1 3.5 4.1
Property, plant and equipment 49.3 36.4 49.6
Leases - right of use of assets 54.6 53.8 62.4
Retirement benefit assets 8.8 - 6.4
Deferred tax assets 0.4 0.3 0.2
----------------------------------------- ----- ---------- ---------- ---------
943.3 706.1 950.0
--------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventories 216.3 165.1 217.4
Trade and other receivables 173.7 135.4 169.9
Assets held for sale - 2.9 -
Cash and cash equivalents 8 72.1 132.5 41.7
----------------------------------------- ----- ---------- ---------- ---------
462.1 435.9 429.0
--------------------------------------- ----- ---------- ---------- ---------
Current liabilities
Borrowings 8 (29.1) (21.4) (30.5)
Trade and other payables (180.2) (138.0) (189.5)
Current tax liabilities (11.6) (9.1) (11.8)
Other liabilities (14.4) (5.6) (19.0)
Lease liabilities (12.3) (10.1) (12.7)
(247.6) (184.2) (263.5)
--------------------------------------- ----- ---------- ---------- ---------
Net current assets 214.5 251.7 165.5
----------------------------------------- ----- ---------- ---------- ---------
Total assets less current liabilities 1,157.8 957.8 1,115.5
Non -current liabilities
Retirement benefit obligations - ( 4.9 -
)
Borrowings 8 (197.0) (320.6) (340.1)
Lease liabilities (49.3) (50.2) (56.4)
Other liabilities (11.4) (12.1) (12.4)
Deferred tax liabilities (37.1) (18.9) (38.4)
----------------------------------------- ----- ---------- ---------- ---------
Net assets 863.0 551.1 668.2
----------------------------------------- ----- ---------- ---------- ---------
Equity
Share capital 6.8 6.3 6.3
Share premium 420.2 188.6 188.6
Translation reserve 39.6 25.9 88.8
Hedging reserve 2.4 (0.1) 3.2
Retained earnings 387.7 327.0 375.1
----------------------------------------- ----- ---------- ---------- ---------
Total shareholders' equity 856.7 547.7 662.0
Minority interests 6.3 3.4 6.2
----------------------------------------- ----- ---------- ---------- ---------
Total equity 863.0 551.1 668.2
----------------------------------------- ----- ---------- ---------- ---------
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2023
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2023 2022 2022
Note GBPm GBPm GBPm
---------------------------------------- ---------- ------------- ---------- ---------
Cash flow from operating activities 7 98.1 64.0 180.6
Interest paid, net (including borrowing
fees) (11.3) (2.7) (15.0)
Tax paid (22.2) (19.9) (40.6)
---------------------------------------------- ---- ------------- ---------- ---------
Net cash from operating activities 64.6 41.4 125.0
---------------------------------------------- ---- ------------- ---------- ---------
Cash flow from investing activities
Acquisition of businesses (net of
cash acquired) (85.4) (21.9) (173.0)
Deferred consideration paid (8.0) (5.4) (7.1)
Proceeds from sale of business (net
of cash disposed) 21.5 4.2 13.7
Purchase of property, plant and
equipment (9.4) (5.2) (14.3)
Purchase of other intangible assets (0.8) (0.5) (1.1)
Proceeds from sale of property,
plant and equipment 0.7 9.3 9.9
Net cash used in investing activities (81.4) (19.5) (171.9)
---------------------------------------------- ---- ------------- ---------- ---------
Cash flow from financing activities
Proceeds from issue of share capital 236.1 - -
Share issue costs (3.6) - -
Dividends paid to shareholders 11 (48.3) (37.5) (56.2)
Dividends paid to minority interests (0.3) (0.2) (0.2)
Acquisition of minority interests - - (0.3)
Lease repayments (6.9) (6.3) (10.9)
Notional purchase of own shares
on exercise of options (1.9) (2.8) (2.8)
Proceeds from borrowings 8 45.3 141.7 154.8
Repayment of borrowings 8 (171.6) (9.7) (20.0)
Net cash from financing activities 48.8 85.2 64.4
---------------------------------------------- ---- ------------- ---------- ---------
Net increase in cash and cash equivalents 8 32.0 107.1 17.5
Cash and cash equivalents at beginning
of period 41.7 24.8 24.8
Effect of exchange rates on cash
and cash equivalents (1.6) 0.6 (0.6)
---------------------------------------------- ---- ------------- ---------- ---------
Cash and cash equivalents at end of
period 72.1 132.5 41.7
---------------------------------------------------- ------------- ---------- ---------
Notes to the Condensed Consolidated Financial Statements
For the six months ended 31 March 2023
1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
Diploma PLC (the "Company") is a public limited company
registered and domiciled in England and Wales. The condensed set of
consolidated financial statements (the "financial statements") for
the six months ended 31 March 2023 comprise the Company and its
subsidiaries (together referred to as "the Group").
The condensed information presented for the financial year ended
30 September 2022 does not constitute full statutory accounts as
defined in section 434 of the Companies Act 2006. Those statutory
accounts have been reported on by the Company's auditor and
delivered to the Registrar of Companies. The report of the auditor
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Except where otherwise stated, the figures for the six months ended
31 March 2022 were extracted from the 2022 Half Year Report, which
was unaudited.
The Group's audited consolidated financial statements for the
year ended 30 September 2022 are available on the Company's website
( www.diplomaplc.com ) or upon request from the Company's
registered office at Diploma PLC, 10-11 Charterhouse Square,
London, EC1M 6EE.
1.1 Statement of compliance
The financial statements included in this Half Year Announcement
for the six months ended 31 March 2023 have been prepared on a
going concern basis and in accordance with UK-adopted International
Accounting Standard 34, Interim Financial Reporting and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority. The financial statements do not include all of the
information required for full annual consolidated financial
statements and should be read in conjunction with the Group's
audited consolidated financial statements for the year ended 30
September 2022.
The Half Year financial statements were approved by the Board of
Directors on 15 May 2023; they have not been audited by the
Company's auditor.
1.2 Significant accounting policies
The accounting policies applied by the Group in this set of
financial statements are the same as those applied by the Group in
its audited consolidated financial statements for the year ended 30
September 2022, except for the amount included in the Half Year
Report in respect of taxation.
As in previous Half Year Announcements, taxation has been
calculated by applying the Directors' best estimate of the annual
rates of taxation to taxable profits for the period. In the audited
consolidated financial statements for the full year, the taxation
balances are based on draft tax computations prepared for each
business within the Group.
1.3 Risk management
The Group's overall management of financial risks is carried out
by a central team under policies and procedures which are reviewed
by the Board. The financial risks to which the Group is exposed are
those of credit, liquidity, foreign currency, interest rate and
capital management. An explanation of each of these risks and how
the Group manages them is included in the Annual Report &
Accounts for the year ended 30 September 2022. Further explanation
of the Group's principal risks and uncertainties and Going Concern
are set out in the narrative of this Half Year Report.
There is no material difference between the book value and fair
value of the Group's financial assets and financial liabilities as
at 31 March 2023. The basis for determining the fair value is as
follows:
- Derivatives: Forward contracts and interest rate swaps are
designated as level 2 assets (in the fair value hierarchy) and
fair-valued at 31 March 2023 with the gains and losses taken to
equity. The fair value of the forward contracts and interest rate
swaps as at 31 March 2023 amounts to a GBP3.5m asset (30 September
2022: GBP4.4m).
- Trade and other receivables: As the majority of the trade and
other receivables have a remaining life of less than 12 months, the
book value is deemed to be reflective of the fair value.
- Lease and other liabilities: The carrying amount represents
the discounted value of the expected liability which is deemed to
reflect the fair value.
1.4 Estimates and judgements
The preparation of these financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
The accounting estimates and judgements made by management in
applying the Group's accounting policies that have the most
significant effect on the amounts included within these
consolidated financial statements, were the same as those that
applied to the Group's audited consolidated financial statements
for the year ended 30 September 2022 as set out on page 175 of the
2022 Annual Report & Accounts.
2. ANALYSIS OF OPERATING EXPENSES / INCOME
Unaudited Unaudited Audited
Year to
Six months to 31 March Six months to 31 March 30 Sept
2023 2022 2022
Adjusted Adjust-ments Adjusted Adjust-ments
(1) (1) Total (1) (1) Total Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- ------------ ------- -------- ------------ ------- --------
Cost of goods sold (319.4) - (319.4) (247.8) - (247.8) (561.3)
Employee costs (102.0) (1.9) (103.9) (77.7) (1.9) (79.6) (177.5)
Depreciation of property,
plant and equipment (6.3) - (6.3) (4.6) - (4.6) (10.4)
Depreciation of right-of-use
assets (6.7) - (6.7) (6.0) - (6.0) (12.7)
Amortisation (0.4) (25.3) (25.7) (0.3) (18.8) (19.1) (42.8)
Acquisition and other
related items - 10.0 10.0 - (3.6) (3.6) (4.5)
Net impairment (losses)/reversals
on trade receivables (1.1) - (1.1) (0.1) - (0.1) (3.4)
Other operating expenses (37.2) - (37.2) (29.5) - (29.5) (55.9)
----------------------------------- -------- ------------ ------- -------- ------------ ------- --------
Operating (expenses)
/ income (473.1) (17.2) (490.3) (366.0) (24.3) (390.3) (868.5)
----------------------------------- -------- ------------ ------- -------- ------------ ------- --------
(1) The adjustments to operating expenses are made in relation
to acquisition related and other charges totalling GBP17.2m (2022:
GBP24.3m) and comprise GBP25.3m (2022: GBP18.8m) of amortisation of
acquisition intangible assets, GBP4.1m (2022: GBP3.9m) of
acquisition expenses, of which GBP1.9m (2022:GBP1.9m) relates to
WCW deferred remuneration, offset by a GBP12.2m (2022: GBP1.6m net
charge) gain on the disposal of businesses, which is set out in
note 10.
3. BUSINESS SECTOR ANALYSIS
The Chief Operating Decision Maker ("CODM") for the purposes of
IFRS 8 is the Chief Executive Officer. The financial performance of
the Sectors is reported to the CODM monthly and this information is
used to allocate resources on an appropriate basis.
Sector information is presented in this Half Year Announcement
in respect of the Group's business Sectors. The business Sector
reporting format reflects the Group's management and internal
reporting structure. The geographic sector reporting represents
results by origin. The Group's financial results have not,
historically, been subject to significant seasonal trends. In the
year ended 30 September 2022, the Group earned 44.3% of its annual
revenues and 43.1% of its annual adjusted operating profits in the
first six months of the year. This phasing between the first and
second half was partly impacted by the timing of acquisitions which
favoured the second half of the year.
Sector revenue represents revenue from external customers; there
is no inter-Sector revenue. Sector results, assets and liabilities
include items directly attributable to a Sector.
Adjusted operating
Revenue profit Operating profit
6 mths 6 mths 12 mths 6 mths 6 mths 12 mths 6mths 6 mths 12 mths
31 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
Mar
GBPm 2023 2022 2022 2023 2022 2022 2023 2022 2022
-------------------- -------- -------- --------- -------- -------- --------- -------- -------- ---------
By Sector
Life Sciences 105.6 87.1 188.6 20.9 19.6 41.0 16.7 17.2 42.5
Seals 198.4 137.4 331.4 35.7 25.8 62.6 29.3 17.1 46.0
Controls 278.8 224.0 492.8 64.3 47.0 105.8 57.7 33.8 75.3
Corporate - - - (11.2) (9.9) (18.2) (11.2) (9.9) (19.5)
-------------------- -------- -------- --------- -------- -------- --------- -------- -------- ---------
582.8 448.5 1,012.8 109.7 82.5 191.2 92.5 58.2 144.3
-------------------- -------- -------- --------- -------- -------- --------- -------- -------- ---------
By Geographic Area
United Kingdom 137.2 84.0 209.7 14.4 5.6 21.0
Rest of Europe 97.7 79.8 166.7 15.3 15.4 29.3
North America 308.6 250.3 561.0 73.6 56.0 129.5
Rest of World 39.3 34.4 75.4 6.4 5.5 11.4
-------------------- -------- -------- --------- -------- -------- ---------
582.8 448.5 1,012.8 109.7 82.5 191.2
-------------------- -------- -------- --------- -------- -------- ---------
Total assets Total liabilities Net assets
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 31 Mar 30 Sept
Mar
GBPm 2023 2022 2022 2023 2022 2022 2023 2022 2022
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
By Sector
Life Sciences 245.9 187.2 255.1 (45.9) (31.7) (41.7) 200.0 155.5 213.4
Seals 423.3 250.8 432.9 (96.5) (69.2) (103.3) 326.8 181.6 329.6
Controls 643.1 579.1 632.3 (79.7) (78.7) (92.6) 563.4 500.4 539.7
Corporate
assets/(liabilities) 93.1 124.9 58.7 (320.3) (411.3) (473.2) (227.2) (286.4) (414.5)
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
1,405.4 1,142.0 1,379.0 (542.4) (590.9) (710.8) 863.0 551.1 668.2
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
Sector assets exclude cash and cash equivalents, deferred tax
assets and corporate assets that cannot be allocated on a
reasonable basis to a business Sector. Sector liabilities exclude
bank borrowings, retirement benefit obligations, deferred tax
liabilities, acquisition liabilities and corporate liabilities that
cannot be allocated on a reasonable basis to a business Sector.
These items that cannot be allocated on a reasonable basis to a
business Sector are shown collectively as "corporate
assets/(liabilities)".
Capital expenditure Depreciation
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
GBPm 2023 2022 2022 2023 2022 2022
--------------- ------- ------- -------- ------- ------- --------
By Sector
Life Sciences 3.5 2.9 8.0 1.9 1.3 2.9
Seals 3.8 1.1 3.7 2.3 1.3 3.5
Controls 2.7 0.8 2.7 2.4 2.2 4.6
--------------- ------- ------- -------- ------- ------- --------
Corporate 0.2 0.9 0.9 0.1 0.1 0.2
--------------- ------- ------- -------- ------- ------- --------
10.2 5.7 15.3 6.7 4.9 11.2
--------------- ------- ------- -------- ------- ------- --------
A further GBP6.7m (2022: GBP6.0m) of depreciation was incurred
on right of use assets (note 2). Depreciation also includes
amortisation of other intangible assets, largely software.
4. FINANCIAL EXPENSE, NET
31 March 31 March 30 Sept
2023 2022 2022
GBPm GBPm GBPm
---------------------------------------------------------- --------- --------- --------
Interest expense and similar charges
* bank facility and commitment fees (0.7) (0.4) (1.0)
* interest income on short term deposits 0.2 - 0.1
* interest expense on bank borrowings (9.2) (2.1) (7.9)
* notional interest income/(expense) on the defined
benefit pension scheme 0.2 (0.2) -
* amortisation of capitalised borrowing fees (0.1) (0.1) (0.2)
* interest on lease liabilities (1.4) (1.1) (2.6)
Net interest expense and similar charges (11.0) (3.9) (11.6)
* acquisition related finance charges (2.8) (2.0) (3.2)
---------------------------------------------------------- --------- --------- --------
Financial expense, net (13.8) (5.9) (14.8)
---------------------------------------------------------- --------- --------- --------
Acquisition related finance charges includes fair value
remeasurements of put options for future minority purchases
(GBP1.4m (2022: GBP1.0m)), unwind of discount on and remeasurement
of acquisition liabilities (GBP0.9m (2022: GBP0.4m)) and the
amortisation of capitalised borrowing fees on acquisition related
borrowings (GBP0.9m (2022: GBP0.6m)), net of interest income on
deferred receivables from disposals (GBP0.4m (2022: nil)).
5. TAXATION
31 March 31 March 30 Sept
2023 2022 2022
GBPm GBPm GBPm
------------------------------------ --------- --------- --------
UK tax 7.2 1.2 6.7
Overseas tax 11.8 15.2 27.4
Total tax on profit for the period 19.0 16.4 34.1
------------------------------------ --------- --------- --------
Taxation on profits before tax has been calculated by applying
the Directors' best estimate of the annual rates of taxation to
taxable profits for the period. The Group's adjusted effective rate
of tax on adjusted profit before tax is 24.5% (September 2022:
25.0%).
6. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per ordinary 5p share are calculated on the basis
of the weighted average number of ordinary shares in issue during
the period of 125,360,523 (2022: 124,520,917) and the profit for
the period attributable to shareholders of GBP59.3m (2022:
GBP35.6m). Basic earnings per share is 47.3p (2022: 28.6p). Diluted
earnings per share is 47.1p (2022: 28.5p) and is based on the
average number of ordinary shares (which includes any potentially
dilutive shares) of 125,927,286 (2022: 124,932,661). An equity
placing was completed in March 2023, resulting in the issuance of
9,350,965 (7.5% increase) of 5p ordinary shares at a share price of
2,525 pence per placing share, with corresponding fees of
GBP4.2m.
Adjusted earnings per share
Adjusted earnings per share, defined in note 13, is calculated
as follows:
31 Mar 31 Mar 30 Sept
2023 2022 2022
pence pence pence 31
per per per Mar 31 Mar 30 Sept
share share share 2023 2022 2022
GBPm GBPm GBPm
-------------------------------------- ------- ------- -------- ------- ------- --------
Profit before tax 78.7 52.3 129.5
Tax expense (19.0) (16.4) (34.1)
Minority interests (0.4) (0.3) (0.7)
-------------------------------------- ------- ------- -------- ------- ------- --------
Earnings for the period attributable
to
shareholders of the Company 47.3 28.6 76.1 59.3 35.6 94.7
Acquisition related and other
charges and acquisition related
finance charges, net of tax 11.8 18.4 31.4 14.8 22.9 39.2
Adjusted earnings (Note 13.4) 59.1 47.0 107.5 74.1 58.5 133.9
-------------------------------------- ------- ------- -------- ------- ------- --------
7. RECONCILIATION OF OPERATING PROFIT TO CASH FLOW FROM OPERATING ACTIVITIES
31 March 31 March 30 Sept
2023 2022 2022
GBPm GBPm GBPm
---------------------------------------------- ---------------- ------------ --------
Operating profit 92.5 58.2 144.3
Acquisition related and other charges (note
2) 17.2 24.3 46.9
Adjusted operating profit 109.7 82.5 191.2
Depreciation/amortisation of tangible, other
intangible assets and right of use assets 13.4 10.9 23.9
Share-based payments expense 2.1 1.4 2.8
Defined benefit scheme expense (0.3) (0.2) (0.6)
Profit on disposal of assets - (1.5) (1.6)
Acquisition expenses paid (4.0) (1.8) (6.5)
Other non-cash movements - - 0.1
---------------------------------------------- ---------------- ------------ --------
Non-cash items and other 11.2 8.8 18.1
---------------------------------------------- ---------------- ------------ --------
Increase in inventories (11.5) (19.2) (35.6)
Increase in trade and other receivables (17.8) (16.3) (10.6)
Increase in trade and other payables 6.5 8.2 17.5
---------------------------------------------- ---------------- ------------ --------
Increase in working capital (22.8) (27.3) (28.7)
---------------------------------------------- ---------------- ------------ --------
Cash flow from operating activities 98.1 64.0 180.6
---------------------------------------------- ---------------- ------------ --------
8. NET DEBT
The movement in net debt during the period is as follows:
31 March 31 March 30 Sept
2023 2022 2022
GBPm GBPm GBPm
--------------------------------------------------------------- ---- ---------- --- ---------- --- ----------
Net increase in cash and cash 32.0 107.1 17.5
equivalents
Decrease /(Increase) in bank borrowings 127.8 (132.0) (131.3)
--------------------------------------------------------------- ---- ---------- --- ---------- --- ----------
159.8 (24.9) (113.8)
Effect of exchange rates and other
non-cash movements 15.1 (3.2) (33.7)
Decrease/(increase) in net debt 174.9 (28.1) (147.5)
Net debt at beginning of period (328.9) (181.4) (181.4)
--------------------------------------------------------------------- ---------- --- ---------- --- ----------
Net debt at end of period (154.0) (209.5) (328.9)
--------------------------------------------------------------------- ---------- --- ---------- --- ----------
Comprising:
Cash and cash equivalents 72.1 132.5 41.7
Bank borrowings:
(41.9) (188.8) (201.0)
* Revolving credit facility, including accrued interest (189.0) (157.1) (174.3)
4.8 3.9 4.7
* Term loan, including accrued interest (226.1) (342.0) (370.6)
* Capitalised debt fees
--------------------------------------------------------------------- ---------- --- ---------- --- ----------
Net debt at end of period (154.0) (209.5) (328.9)
--------------------------------------------------------------------- ---------- --- ---------- --- ----------
Analysed as:
Repayable within one year 29.1 21.4 30.5
Repayable after one year 197.0 320.6 340.1
--------------------------------------------------------------------- ---------- --- ---------- --- ----------
The Group has a debt facility agreement ("SFA") originally
entered into on 13 October 2020. At 31 March 2023, the SFA
comprises a committed multi-currency revolving facility for an
aggregate principal amount of GBP359.7m, an amortising term loan
for an aggregate principal amount of GBP89.3m ($110.5m), a bullet
term loan for an aggregate principal amount of GBP53.3m ($66.0m)
and a further bullet term loan for an aggregate principal amount of
GBP45.3m. The SFA was recently extended until December 2025.
Interest on the SFA is payable between 125-275bps above the
applicable interbank or risk-free rate, depending on the ratio of
net debt to EBITDA.
At 31 March 2023, the Group had utilised GBP41.9m of the RCF
(2022: GBP188.8m), comprising GBP23.4m ($29.0m) of US dollars and
GBP18.5m (EUR21.0m) of Euros.
Total debt is GBP215.6m (2022: GBP269.8m) comprising net debt of
GBP154.0m (2022: GBP209.5m) which excludes lease liabilities of
GBP61.6m (2022: GBP60.3m). Bank covenants are tested against net
debt, as defined in Note 13.5.
9. GOODWILL AND ACQUISITION INTANGIBLE ASSETS
Goodwill Acquisition
intangible
assets
GBPm GBPm
---------------------- --------- ------------
At 1 October 2021 260.7 344.9
Acquisitions 4.2 9.7
Amortisation charge - (18.8)
Exchange adjustments 5.0 6.4
---------------------- --------- ------------
At 31 March 2022 269.9 342.2
Acquisitions 76.8 86.2
Amortisation charge - (19.6)
Exchange adjustments 25.6 46.2
---------------------- --------- ------------
At 30 September 2022 372.3 455.0
Acquisitions 25.7 51.9
Disposals (4.3) -
Amortisation charge - (25.3)
Exchange adjustments (19.1) (30.1)
---------------------- --------- ------------
At 31 March 2023 374.6 451.5
---------------------- --------- ------------
Goodwill represents the amount paid for future sales growth from
both new customers and new products, operating cost synergies and
employee know-how. The acquisition intangible assets primarily
relate to supplier relationships, customer relationships, brands
and patents and these assets will be amortised over five to fifteen
years.
10. ACQUISITION AND DISPOSAL OF SUBSIDIARIES
Acquisition of Tennessee Industrial Electronics LLC
On 6 March 2023, the Group acquired 100% of the share capital of
Tennessee Industrial Electronics LLC ("TIE"), a distributor of
aftermarket parts and repair services into the US industrial
automation end market for an enterprise value of GBP76m on a debt
free cash free basis. The total investment, net of cash acquired
was GBP75.1m ($90.3m).
The provisional fair value of TIE's net assets acquired
excluding acquisition intangibles, related deferred tax and cash is
GBP9.3m following fair value adjustments of GBP2.7m. The principal
fair value adjustments relate to reductions in inventory (GBP1.7m)
and trade receivables (GBP0.2m), recognition of previously
unrecognised liabilities (GBP0.7m) and write down of property plant
and equipment (GBP0.1m). From the date of acquisition to 31 March
2023, TIE contributed GBP2.4m to revenue and GBP0.6m to adjusted
operating profit. If it had been acquired at the beginning of the
financial year, it would have contributed on a pro-forma basis
GBP14.4m to revenue and GBP3.4m to adjusted operating profit.
However, these amounts should not be viewed as indicative of the
results that would have occurred if TIE had been completed at the
beginning of the year.
Other acquisitions
The Group completed a further six other acquisitions in the
period. This comprised the trade and assets of Shrinktek Polymers
International Limited ("Shrinktek") (11 January 2023), Eurobond
Adhesives Limited ("Eurobond") (23 March 2023) and International
Technologies Group LLC ("ITG") (30 March 2023); 100% of the share
capital of Fluid Power Products Limited ("FPS") (3 October 2022),
Hedley DMB Limited ("Hedley") (4 October 2022) and Valves Online
Limited ("Valves Online") (14 March 2023). The combined initial
consideration for these acquisitions was GBP10.3m, net of cash
acquired of GBP1.8m. Deferred consideration of up to GBP2.6m is
payable based largely on the performance of the businesses in the
period subsequent to their acquisitions. The provisional fair value
of the total net assets acquired excluding intangibles, related
deferred tax and cash is GBP2.2m.
Acquisition expenses
Acquisition expenses of GBP2.7m have been recognised in respect
of the acquisitions completed in the period.
Fair value of net assets acquired
The fair values of net assets acquired during the period,
including the allocation of the surplus over the fair value of the
net assets acquired are provisional, subject to reviews up to the
end of the measurement period of each acquisition.
TIE Others Total
------------------------------ -------------- -------------- --------------
Book Fair Book Fair Book Fair
value value value value value value
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------ ------ ------ ------ ------ ------
Acquisition intangible
assets1 - 44.7 - 7.2 - 51.9
Deferred tax - - - (1.1) - (1.1)
Property, plant and equipment 0.9 0.8 0.2 0.2 1.1 1.0
Inventories 11.2 9.5 1.1 1.1 12.3 10.6
Trade and other receivables 4.3 4.1 2.4 2.4 6.7 6.5
Trade and other payables (4.4) (5.1) (1.5) (1.5) (5.9) (6.6)
------------------------------ ------ ------ ------ ------ ------ ------
Net assets acquired 12.0 54.0 2.2 8.3 14.2 62.3
Goodwill - 21.1 - 4.6 - 25.7
Minority interests - - - - - -
------------------------------ ------ ------ ------ ------ ------ ------
Cash paid 79.6 12.1 91.7
Cash acquired (4.5) (1.8) (6.3)
75.1 10.3 85.4
Deferred consideration - 2.6 2.6
75.1
Total investment 2 12.9 88.0
------------------------------ ------ ------ ------ ------ ------ ------
(1) On the acquisitions completed in the current year, acquired
intangibles relate primarily to customer relationships.
(2) Diploma acquired TIE on a cash free/debt free basis. The
total investment amounts to GBP75.1m (being cash paid net of cash
acquired). Of the initial cash paid, the vendor directed the funds
in escrow to settle outstanding debt of GBP11.7m.
Acquisitions revenue and adjusted operating profit
From the date of acquisition to 31 March 2023, each acquired
business contributed the following to Group revenue and adjusted
operating profit:
Pro forma
Adjusted adjusted
Pro forma operating operating
Acquisition Revenue Adj.1 revenue profit Adj.1 profit
date GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------ ------- ----- --------- ---------- ----- ----------
FPS 3 Oct 2022 1.4 - 1.4 0.3 - 0.3
Hedley 4 Oct 2022 1.9 - 1.9 0.3 - 0.3
Shrinktek 11 Jan 2023 0.3 0.4 0.7 0.1 0.2 0.3
TIE 6 Mar 2023 2.4 12.0 14.4 0.6 2.8 3.4
Valves Online 14 Mar 2023 - 1.7 1.7 - 0.3 0.3
Eurobond 23 Mar 2023 - 0.7 0.7 - 0.1 0.1
ITG 30 Mar 2023 - 0.7 0.7 - 0.2 0.2
6.0 15.5 21.5 1.3 3.6 4.9
--------------------------- ------- ----- --------- ---------- ----- ----------
1 Pro forma revenue and adjusted operating profit has been
extrapolated (as prescribed under IFRS) from the results reported
since acquisition to indicate what these businesses would have
contributed if they had been acquired at the beginning of the
period on 1 October 2022. These amounts should not be viewed as
confirmation of the results of these businesses that would have
occurred if these acquisitions had been completed at the beginning
of the year.
Disposal of Hawco
On 31 March 2023, the Group disposed of its 100% interest in
Hawco Limited ("Hawco") for total proceeds of GBP24.5m. Cash of
GBP21.5m was received, net of cash disposed of GBP2.0m with a
further GBP1.0m deferred for 12 months.
11. DIVIDS
31 31 Mar 30 Sept 31 31 Mar 30 Sept
Mar 2022 2022 Mar 2022 2022
2023 2023
pence pence pence
per per per
share share share GBPm GBPm GBPm
-------------------------------- ------- ------- -------- ------- ------- --------
Final dividend of the prior
year, paid in January 38.8 30.1 30.1 48.3 37.5 37.5
Interim dividend, paid in June 16.5 15.0 15.0 22.1 18.7 18.7
-------------------------------- ------- ------- -------- ------- ------- --------
55.3 45.1 45.1 70.4 56.2 56.2
-------------------------------- ------- ------- -------- ------- ------- --------
Subsequent to the period end, the Directors have declared an
interim dividend of 16.5 per share (2022: 15.0p) which will be paid
on 9 June 2023 to shareholders on the register on 26 May 2023. The
total value of the dividend will be GBP22.1m (2022: GBP18.7m). No
liability has been recognised on the balance sheet at 31 March 2023
in respect of the interim dividend (2022: same). During the period,
the Directors became aware that approximately GBP2.5m of the FY21
interim dividend declared on 17 May 2021 was paid other than in
accordance with the technical requirements of the Companies Act
2006. This was because interim accounts had not been filed at
Companies house prior to the declaration of the dividend. It is
intended that this technical issue, which has no impact on the
Company's financial position, be ratified by a shareholders'
resolution to be proposed in due course.
12. EXCHANGE RATES
The exchange rates used to translate the results of the overseas
businesses were as follows:
Average Closing
------------------------------ ------------------------------
31 March 31 March 30 Sept 31 March 31 March 30 Sept
2023 2022 2022 2023 2022 2022
------------------- --------- --------- -------- --------- --------- --------
US dollar (US$) 1.20 1.34 1.27 1.24 1.32 1.12
Canadian dollar
(C$) 1.63 1.69 1.63 1.68 1.64 1.53
Euro (EUR) 1.14 1.19 1.18 1.13 1.18 1.14
Swiss franc (CHF) 1.13 1.23 1.20 1.13 1.21 1.10
Australian dollar
(A$) 1.79 1.84 1.79 1.85 1.75 1.74
------------------- --------- --------- -------- --------- --------- --------
13. ALTERNATIVE PERFORMANCE MEASURES
The Group reports under International Financial Reporting
Standards (IFRS) and references alternative performance measures
where the Board believes that they help to effectively monitor the
performance of the Group and support readers of the Financial
Statements in drawing comparisons with past performance. Certain
alternative performance measures are also relevant in calculating a
meaningful element of Executive Directors' variable remuneration
and our debt covenants. Alternative performance measures are not
considered to be a substitute for, or superior to, IFRS
measures.
13.1 Revenue Growth
As we are a multi-national Group of companies who trade in a
large number of currencies and also acquire and sometimes dispose
of companies, we also refer to organic performance measures
throughout the Annual Report. These strip out the effects of the
movement in exchange rates and of acquisitions and disposals. The
Board believe that this allows users of the accounts to gain a
better understanding of how the Group has performed.
A reconciliation of the movement in revenue compared to the
prior period is given below.
GBPm %
----------------------------- ------- ----
March 2022 Reported
revenue 448.5
Organic 47.8 10%
Acquisitions and Disposals 53.8 12%
Exchange 32.7 8%
March 2023 Reported revenue 582.8 30%
The Organic revenue growth percentage is the incremental revenue
generated under Diploma's ownership compared to the revenue in the
same period prior to acquisition, at prior period exchange
rates.
The impact of acquisitions on growth is the revenue of the
acquiree prior to the acquisition by Diploma for the comparable
period at prior period exchange rates. The impact of disposals on
growth is the removal of the revenue of the disposed entity in the
comparable post disposal period at prior period exchange rates. The
Acquisitions and Disposals growth percentage is calculated as the
impact of acquisition and disposals divided by the reported revenue
in the prior period.
Exchange translation movements are assessed by re-translating
current period reported values to prior period exchange rates.
13.2 Adjusted operating profit and adjusted operating margin
" Adjusted operating profit" is the operating profit before
adjusting items that would otherwise distort operating profit,
currently and more recently being amortisation of acquisition
intangible assets or goodwill, acquisition expenses,
post-acquisition related remuneration costs and adjustments to
deferred consideration, the costs of a significant restructuring or
rationalisation and the profit or loss relating to the sale of
businesses. These are treated as adjusting items as they are
considered to be significant in nature and/or quantum and where
treatment as an adjusting item provides all our stakeholders with
additional useful information to assess the period-on-period
trading performance of the Group on a like-for-like basis. Adjusted
operating margin is the Group's adjusted operating profit divided
by the Group's reported revenue.
A reconciliation between operating profit as reported under IFRS
and adjusted operating profit is given below:
31 Mar 31 Mar 30 Sep
2023 2022 2022
Note GBPm GBPm GBPm
------------------------------------------- ---- ------ ------ -------
Revenue 582.8 448.5 1,012.8
Operating profit as reported under IFRS 92.5 58.2 144.3
Add: Acquisition related and other charges 17.2 24.3 46.9
------------------------------------------- ---- ------ ------ -------
Adjusted operating profit 2,3 109.7 82.5 191.2
------------------------------------------- ---- ------ ------ -------
Adjusted operating margin 2,3 18.8% 18.4% 18.9%
13.3 Adjusted earnings per share
"Adjusted earnings per share" ("adjusted EPS") is calculated as
the total of adjusted profit before tax, less income tax costs, but
including the tax impact on the items included in the calculation
of adjusted profit, less profit/(loss) attributable to minority
interests, divided by the weighted average number of ordinary
shares in issue during the period of 125,360,523 (2022:
124,520,917), as set out in Note 6. The Directors believe that
adjusted EPS provides an important measure of the earnings capacity
of the Group.
13.4 Free cash flow and free cash flow conversion
Free cash flow is defined as net cash flow from operating
activities, less net capital expenditure on tangible and intangible
assets, and including proceeds received from property disposals,
but before expenditure on business combinations/investments
(including any pre-acquisition debt like items such as pensions or
tax settled post-acquisition) and proceeds from business disposals,
borrowings received to fund acquisitions and dividends paid to both
minority shareholders and the Company's shareholders. "Free cash
flow conversion" reflects free cash flow as a percentage of
adjusted earnings. The Directors believe that free cash flow gives
an important measure of the cash flow of the Group, available for
future investment or distribution to shareholders.
30 Sep
31 Mar 2023 31 Mar 2022 2022
Note GBPm GBPm GBPm
----- ------------------------------------------------------- ---- ------------- ----------- -------
Net increase in cash and cash equivalents 32.0 107.1 17.5
Add: Dividends paid to shareholders and minority interests 48.6 37.7 56.4
Acquisition of minority interests - - 0.3
Acquisition/disposal of businesses (including
net expenses) 67.9 19.5 170.4
Deferred consideration paid 8.0 5.4 7.1
Proceeds from issue of share capital (net of
fees) (232.5) - -
Net repayment of/(proceeds from) borrowings (including
borrowing fees) 127.8 (132.0) (131.3)
------------------------------------------------------------- ---- ------------- ----------- -------
Free cash flow 51.8 37.7 120.4
-------------------------------------------------------------- ---- ------------- ----------- -------
Adjusted earnings (1) 6 74.1 58.5 133.9
-------------------------------------------------------------- ---- ------------- ----------- -------
Free cash flow conversion 70% 64% 90%
-------------------------------------------------------------- ---- ------------- ----------- -------
(1) Adjusted earnings is shown on the face of the condensed
consolidated income statement as profit for the period attributable
to shareholders of the company.
13.5 Leverage
Leverage is net debt, defined as cash and cash equivalents and
borrowings translated at average exchange rates for the reporting
period, divided by EBITDA as defined in the Group's external
facility covenants, which is the Group's adjusted operating profit
adjusting for depreciation and amortisation of tangible and other
intangible assets, the share of adjusted operating profit
attributable to minority interests and the annualisation of EBITDA
for acquisitions and disposals made during the financial year,
excluding the impact of IFRS 16 (Leases). The Directors consider
this metric to be an important measure of the Group's financial
position.
31 Mar 31 Mar 30 Sep
2023 2022 2022
Note GBPm GBPm GBPm
---------------------------------------------- ---- ------- ------- -------
Cash and cash equivalents 8 72.1 132.5 41.7
Borrowings 8 (226.1) (342.0) (370.6)
Re-translation at average exchange rates (4.0) - 23.1
---------------------------------------------- ---- ------- ------- -------
Net debt at average exchange rates (158.0) (209.5) (305.8)
---------------------------------------------- ---- ------- ------- -------
Adjusted operating profit 13.2 109.7 82.5 191.2
Depreciation and amortisation of tangible
and other intangible assets 2 6.7 4.9 11.2
IFRS 16 impact (0.8) (0.6) 1.2
Minority interest share of adjusted operating
profit (0.6) (0.4) (1.1)
Pro forma adjustments1 121.3 91.3 10.2
---------------------------------------------- ---- ------- ------- -------
EBITDA 236.3 177.7 212.7
---------------------------------------------- ---- ------- ------- -------
Leverage 0.7x 1.2x 1.4x
1 Annualisation of adjusted EBITDA, including that of
acquisitions and disposals in the period.
13.6 Trading Capital Employed and ROATCE
Trading capital employed is defined as net assets less cash and
cash equivalents (cash funds) after adding back borrowings (other
than lease liabilities), retirement benefit obligations, deferred
tax, acquisition liabilities in respect of future purchases of
minority interests and deferred consideration. Adjusted trading
capital employed is reported as being trading capital employed plus
goodwill and acquisition related charges previously charged to the
income statement (net of deferred tax on acquisition intangible
assets) and re-translated at the average exchange rates for the
reporting period. Return on Adjusted Trading Capital Employed
(ROATCE) is defined as the pro forma adjusted operating profit,
divided by adjusted trading capital employed, where pro forma
adjusted operating profit is the annualised adjusted operating
profit including that of acquisitions and disposals in the period.
The Directors believe that ROATCE is an important measure of the
profitability of the Group.
31 Mar 31 Mar 30 Sep
2023 2022 2022
Note GBPm GBPm GBPm
------------------------------------------ ---- ------- ------ -------
Net assets as reported under
IFRS 863.0 551.1 668.2
Add/(deduct):
- Deferred tax, net 36.7 18.6 38.2
- Retirement benefit (assets)/obligations (8.8) 4.9 (6.4)
- Net acquisition related
liabilities/assets (net) 23.1 17.7 29.6
- Net debt 8 154.0 209.5 328.9
Trading capital employed 1,068.0 801.8 1,058.5
- Historic goodwill and acquisition
related charges, net of deferred
tax and currency movements 193.4 153.2 99.6
------------------------------------------------- ---- ------- ------ -------
Adjusted trading capital
employed 1,261.4 955.0 1,158.1
Adjusted operating profit 13.2 109.7 82.5 191.2
Pro forma adjustments (1) 115.3 84.8 9.7
------------------------------------------------- ---- ------- ------ -------
Pro forma adjusted operating
profit 225.0 167.3 200.9
------------------------------------------------- ---- ------- ------ -------
ROATCE 17.8% 17.5% 17.3%
------------------------------------------------- ---- ------- ------ -------
(1) Annualisation of adjusted operating profit, including that
of acquisitions and disposals in the period.
13.7 Alternative performance measures
Closest
Measure IFRS measure Definition and reconciliation Purpose
Organic Reported Organic Growth strips out Allows users of the
Growth Revenue Increase the effects of the movement accounts to gain understanding
in exchange rates and of acquisitions of how the Group has
and disposals. performed on a like-for-like
basis, excluding the
effects of exchange
rates and of acquisitions
and disposals.
------------------ --------------------------------------- --------------------------------
Adjusted Operating Statutory operating profit Adjusted Operating
Operating profit excluding separately disclosed Profit is a key
Profit items and can be found on performance measure
the face of the Group Income for the Executive
Statement in the Adjusted Directors' annual
column. bonus structure and
management remuneration.
It also provides all
stakeholders with
additional useful
information to assess
the period-on-period
trading performance
of the Group.
------------------ --------------------------------------- --------------------------------
Adjusted Operating Adjusted operating profit/(loss) Adjusted Operating
Operating profit divided divided by revenue. Margin is a measure
Margin by revenue used to assess and
compare profitability.
It also allows for
ongoing trends and
performance of the
Group to be measured
by the Directors,
management and interested
stakeholders.
------------------ --------------------------------------- --------------------------------
Adjusted Basic earnings Adjusted Earnings (being adjusted Adjusted earnings
earnings per share profit after tax attributable per share is widely
per share to equity shareholders) for used by external stakeholders,
the period attributable to particularly in the
shareholders of the Company investment community.
divided by the weighted average
number of shares in issue,
excluding those held in the
Employee benefit trust which
are treated as cancelled.
A reconciliation of statutory
profit to adjusted profit
for the purpose of this calculation
is provided within note 6
of the financial statements.
------------------ --------------------------------------- --------------------------------
Return on Operating Pro-forma Adjusted Operating ROATCE gives an indication
Adjusted profit and Profit (being the annualised of the Group's capital
Total Capital net assets adjusted operating profit efficiency and is
Employed including that of acquisitions an element of a performance
(ROATCE) and disposals) divided by measure for the Executive
Adjusted Trading Capital Employed. Directors' remuneration.
Adjusted Trading Capital Employed
is reported as being trading
capital employed plus goodwill
and acquisition related charges
previously written off (net
of deferred tax on acquisition
intangible assets) and re-translated
at the average exchange rates
for the reporting period.
------------------ --------------------------------------- --------------------------------
Free cash Net cash The cash flow equivalent of Free cash flow allows
flow generated Adjusted Profit After Tax. us and external parties
from to evaluate the cash
operating A reconciliation of cash and generated by the Group's
activities cash equivalents to free cash operations and is
flow is set out in note 13.4. also a key performance
measure for the Executive
Directors' annual
bonus structure and
management remuneration.
------------------ --------------------------------------- --------------------------------
Net Debt Borrowings Cash and cash equivalents Net Debt is the measure
less cash (cash overnight deposits, by which the Group
other short-term deposits) and interested stakeholders
offset by borrowings which assesses its level
compose of bank loans, excluding of overall indebtedness.
lease liabilities.
------------------ --------------------------------------- --------------------------------
Earnings Operating EBITDA is calculated by taking EBITDA is used as
Before Interest profit Adjusted Operating Profit a key measure to understand
and Tax and adding back depreciation profit and cash generation
plus Depreciation and amortisation. before the impact
and Amortisation of investments (such
("EBITDA") as capital expenditure
and working capital).
It is also used to
derive the Group's
gearing ratio.
------------------ --------------------------------------- --------------------------------
Leverage No direct The ratio of Net Debt to EBITDA The leverage ratio
equivalent over the last 12 months, after is considered a key
making the following adjustments measure of balance
to EBITDA: including any annualised sheet strength and
EBITDA for businesses acquired financial stability
by the Group during that period; by which the Group
the reversal of IFRS 16 accounting; and interested stakeholders
the exclusion of any EBITDA assesses its financial
businesses disposed by the position.
Group during that period;
and the exclusion of the profit
or loss attributable to minority
interest.
------------------ --------------------------------------- --------------------------------
14. RELATED PARTY TRANSACTIONS
There have been no changes to the related party arrangements or
transactions as reported in the 2022 Annual Report &
Accounts.
Transactions between Group companies, which are related parties,
have been eliminated on consolidation and are therefore not
disclosed. Other transactions which qualify to be treated as
related party transactions are: those relating to the remuneration
of key management personnel, which are not disclosed in this Half
Year Report, but will be disclosed in the Group's next Annual
Report & Accounts; and transactions between the Group and the
Group's defined benefit pension plan, which are disclosed within
the Consolidated Cash Flow Statement.
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IR MZGMKLZDGFZM
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