Financial Highlights
Revenue increased by 10% to £139.7m; underlying revenue increased by 2%, after adjusting for currency effects and acquisitions.
Adjusted operating margin reduced to 19.3% in line with expectations and reflecting impact of Investment for Growth programme.
Adjusted profit before tax increased by 3% to £26.9m; adjusted EPS increased by 6% to 17.0p, reflecting a lower effective tax rate.
Free cash flow increased by 25% to £12.1m, despite higher capital expenditure of £2.6m from on-going investment programme; net funds of £7.3m at the end of March.
Interim dividend increased by 19% to 5.0p per share reflecting Board's decision to increase the interim dividend as a proportion of total dividend.
Operational Highlights
Strong performance from Life Sciences, particularly in the Healthcare businesses.
Modest underlying growth in the Seals businesses against very strong prior year comparatives; challenging conditions for the European Controls businesses leading to small reduction in underlying revenues.
Positive contributions from new businesses acquired last year; in Seals, from J Royal in the US, in Controls, from Amfast and Abbeychart in the UK and in Life Sciences, from DSL in Australia.
Continued investment in the Group's facilities, IT infrastructure and in management as part of the on-going Investment for Growth programme.
Commenting on the results for the period, Bruce Thompson, Diploma's Chief Executive said:
"Diploma has made further progress in the first half against strong comparatives. Whilst the macroeconomic backdrop remains challenging, particularly in Europe, the Group has a resilient business model that is well diversified by geography and business area and a track record of delivering stable revenue growth and sustainable attractive margins.
The Life Sciences businesses are continuing to perform strongly and the Seals businesses are expected to make further progress in the second half of the year, as comparatives become less demanding. Underlying trading activity in the Controls businesses is likely to continue to be challenging, while European markets remain subdued. The pipeline of acquisition opportunities remains promising and is growing with the additional resources, although the current uncertain economic background has lengthened transaction processes and is delaying completion of target acquisitions.
The Board remains confident that despite the challenging economic environment, the investments being made in the business to provide the platform for growth, both organically and by acquisition, will allow the Group to deliver further progress in the second half of the year and in the longer term."
