Financial Highlights
Revenue increased by 10%; after adjusting for currency effects, acquisitions and a small divestment last year, underlying revenue up by 4% with stronger second half growth of 6%.
Adjusted operating margin of 19.0% largely reflecting additional costs from investment in businesses.
Adjusted profit before tax up by 3% to £54.3m; adjusted EPS up by 5% to 34.8p, reflecting lower effective tax rate.
Strong free cash flow of £31.6m, despite higher capital expenditure from Investment for Growth programme.
Net cash funds of £19.3m at the end of September and undrawn bank facilities of up to £40m available to fund acquisitions.
Full year dividend increased by 9% to 15.7p per share reflecting confidence in long term prospects and strong balance sheet.
Operational Highlights
Strong performance in Life Sciences with underlying revenues up 15%, reflecting the benefits of prior year investments.
Modest underlying revenue growth of 2% in Seals against strong prior year comparatives, with US Seals businesses moving towards more normal GDP plus growth rates.
Acquisition of 80% of Kentek Oy, based in Finland, agreed after year end for a maximum consideration of £11.2m, extending the Seals businesses into new and emerging markets.
Challenging conditions in Europe leading to a 3% reduction in underlying revenues for Controls; some signs of improving conditions in recent months.
Investment for Growth programme continues with £4.4m invested by year end in facilities and IT infrastructure and a further £0.9m expected in 2014 to complete the programme. Management resources also strengthened as part of the programme.
Commenting on the results for the year, Bruce Thompson, Diploma's Chief Executive said:
"Diploma has delivered a robust set of results against strong comparatives and challenging conditions in Europe for much of the year.
The Group has a resilient business model with a good geographic spread of businesses, supported by a strong balance sheet and cash flow. We have made significant investments in the business this year, providing the resources and capacity to support our future growth in key markets and improve our ability to target and develop acquisitions.
Looking ahead, the investments we have made provide a strong platform for growth and the Board is confident that the Group will make further progress this year."
