An international group of businesses supplying specialised technical products and services. They operate globally in three distinct sectors - Life Sciences; Seals and Controls. I have a holding in my growth portfolio (epic code: DPLM).
Diploma released a pre-close trading statement on their six month results today. Revenues on an underlying basis after adjusting for currency effects and acquisitions, are expected to increase by ~7%. This is slightly ahead of the 6% underlying growth seen in the first quarter here.
Controls are expected to show underlying growth of ~10%; Life Sciences ~7% and Seals ~4%.
This is a strong underlying performance, but exchange rates have adversely affected the results of the overseas businesses when translated into Sterling. Diploma have about 75% of their revenues generated outside the UK, so for the half year they are likely to increase by ~5% and adjusted profit before tax is expected to be similar to last year.
Management state that free cash flow has been strong, benefiting from lower capital expenditure. Net cash funds at 31 March 2014 are expected to be ~£7m down from £19.3m at 30 September, but this allows for an approximate £24m outlay on acquisitions and dividends since the year-end.
Results are clearly being held back by the significant adverse currency movements and therefore management expects that adjusted profit before tax for this financial year is likely to be at a similar level to last year. This has had a negative effect on the share price today down -7.6% as I write, but with the exception of the currency headwinds, the business looks to be in fine shape.
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