|
DIPLOMA PLC
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10-11 CHARTERHOUSE SQUARE, LONDON EC1M
6EE
TELEPHONE: +44
(0)20 7549 5700
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HALF
YEAR RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2024
Strong first half, full year
upgrade
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H1 24
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H1 23
|
Change
|
Revenue
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£638.3m
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£582.8m
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+10%
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Organic revenue growth
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5%
|
10%
|
|
Adjusted operating
profit
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£125.4m
|
£109.7m
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+14%
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Adjusted operating margin
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19.6%
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18.8%
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+80bps
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Statutory operating
profit(1)
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£88.0m
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£92.5m
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(5%)
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Free cash flow
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£66.3m
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£51.8m
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+28%
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Free cash flow conversion
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76%
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70%
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+6ppts
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Adjusted earnings per share
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65.1p
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59.1p
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+10%
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Basic earnings per
share(1)
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43.1p
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47.3p
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(9%)
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Leverage
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0.9x
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0.7x
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Interim dividend per
share
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17.3p
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16.5p
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+5%
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ROATCE
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18.0%
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17.8%
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+20bps
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All alternative performance
measures are defined in note 13 to the Condensed Consolidated
Financial Statements.
1 Statutory operating profit and basic earnings per
share in the prior year include an exceptional gain on the disposal
of Hawco of £12.2m.
•
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Organic revenue growth of 5%,
volume-led with good momentum into the second half.
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•
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Double digit reported revenue
growth includes 8% from acquisitions and an adverse 3% impact of
foreign exchange translation.
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•
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Adjusted operating margin up 80
bps to 19.6%, reflecting our value-add proposition; operational
leverage; disciplined cost management; and accretive
acquisitions.
|
•
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Delivered with discipline: ROATCE
up 20bps to 18.0%; free cash flow conversion up 6ppts to 76%, and
leverage at 0.9x.
|
•
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Ca. £284m invested in six quality
acquisitions, including Peerless for ca. £236m and PAR Group for
ca. £38m, which completed after the period end.
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•
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Upgrading guidance: we now expect
FY24 constant currency revenue growth of ca. 16% (comprising 6%
organic growth and 10% from acquisitions), and an operating margin
of ca. 20.5%. Strong underlying performance and recent acquisitions
contribute equally to the upgrade to operating margin.
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Commenting, Johnny Thomson, Diploma's Chief Executive
said:
"Thank you to all my brilliant
colleagues for their continued dedication and passion for serving
our customers and driving our performance. We've delivered another
strong first half with good volume-led organic growth in a more
challenging market environment. Our momentum is encouraging going
into the second half, underpinning our upgrade to full year
guidance.
"We have welcomed six new quality
businesses into the Group since the start of the year. They include
Peerless and PAR Group - two founder-owned businesses with great
organic growth credentials and strong value-add business models.
"Diploma has a long track record
of double-digit EPS growth at healthy returns. Our current
performance and upgrade reaffirms our confidence in delivering
sustainable quality compounding."
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Revenue diversification driving organic growth and increasing
resilience
•
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Controls +7%: Strong growth
in International Controls with structural tailwinds and market
share gains. Windy City Wire delivered sustained, volume-led growth
in line with Group average.
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•
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Seals +1%: Resilient
performance against a backdrop of customer destocking. Normal
ordering patterns are starting to resume and we expect a stronger
second half.
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•
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Life Sciences +5%: End market
dynamics are now largely normalised post-pandemic, underpinning
strong performance in Canada and Australia.
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Complementary acquisitions driving future organic
growth
•
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Acquisition of US-based Peerless
Aerospace Fastener LLC ("Peerless") for ca. £236m, extending our
established position in aerospace specialty fasteners and
accelerating organic growth through product and geographic
expansion. It is expected to deliver 15% ROATCE and 8% EPS
accretion in year one.
|
•
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Acquisition of UK-based Plastic
and Rubber Group Holdings Limited ("PAR Group") for ca. £38m adds
scale to R&G's Seals & Gaskets division. It is expected to
deliver 14% ROATCE and 1% EPS accretion in year one.
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•
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Four small bolt-ons for £10m;
average EBIT multiple around 4x; £10m of annual revenue; and year
one ROATCE of over 20%.
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•
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Strong M&A pipeline
diversified by Sector, size and geography. Strong cash flow and
balance sheet provides capacity for disciplined acquisitive
growth.
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Scaling effectively for sustainable growth
•
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Expansion of the 'Leadership at
Scale' management development programme.
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•
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Three new state-of-the-art
facilities opened to support future growth in the UK and
Europe.
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•
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Delivered improvements against all
our Delivering Value Responsibly targets.
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•
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Strengthened balance sheet through
the refinancing of the Group's facilities with a structured
Revolving Credit Facility ("RCF") and debut US Private Placement
("USPP") providing ca. £770m of committed facilities with a blend
of maturities out to 2036.
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Upgrading full year 2024 guidance
•
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The momentum in our underlying
business, combined with the contribution from recent acquisitions,
drives an upgrade to previous guidance for FY24:
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|
○
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Constant currency revenue growth
of ca. 16%, up 5ppts from previous guidance, comprising ca. 6%
organic revenue growth and growth from acquisitions of ca.
10%.
|
|
○
|
Strong operating margin of ca.
20.5%, up 80bps from previous guidance. Strong underlying
performance and recent acquisitions contribute equally to the
upgrade.
|
|
○
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EPS growth of ca. 15%, reflecting
strong underlying performance and the contribution of
acquisitions.
|
|
○
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Free cash flow conversion of ca.
90% and leverage of 1.3x.
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Notes:
1. Diploma PLC uses
alternative performance measures as key financial indicators to
assess the underlying performance of the Group. These include
revenue and organic growth, adjusted operating profit/adjusted
operating margin, adjusted earnings per share, free cash flow/free
cash flow conversion, leverage and ROATCE. 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.
A presentation of the results to
analysts and investors will be held at 09:00 GMT via audio
conference call and webcast. Register your attendance for the
webcast at: https://brrmedia.news/DPLM_HY24
Conference call dial in
details:
•
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Dial in: UK-Wide: +44 (0) 33 0551 0200 / UK Toll Free: 0808 109
0700
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•
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Password: Diploma Half
Year
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For further information please
contact:
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Diploma PLC -
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+44 (0)20 7549 5700
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Johnny Thomson, Chief Executive
Officer
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Chris Davies, Chief Financial
Officer
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Holly Gillis, Head of Investor
Relations
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Teneo -
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+44 (0)20 7353 4200
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Martin Robinson
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Camilla Cunningham
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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 ca. 3,500 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 ca. 15% p.a. through a combination of organic growth and
acquisitions.
Diploma is a member of the FTSE
100.
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
BUSINESS REVIEW
Strong first half performance
The Group has delivered a strong
first half performance as we continue to execute our strategy of
building high quality scalable businesses for sustainable
organic growth.
Revenue diversification driving organic growth and increasing
resilience
Revenue in the year
grew 10% to £638.3m (H1 23: £582.8m). Organic growth of 5% was
volume-led, with growth across all three Sectors. Acquisitions
added a further 8% to reported revenue, partially offset by the
adverse 3% impact of foreign exchange translation.
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Revenue £m
|
|
Organic
growth
|
|
H1 24
|
H1 23
|
Change
|
H1 24
|
H1 23
|
|
|
|
|
|
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Controls
|
288.1
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278.8
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+3%
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+7%
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+13%
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Seals
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241.2
|
198.4
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+22%
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+1%
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+8%
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Life Sciences
|
109.0
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105.6
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+3%
|
+5%
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+4%
|
|
|
|
|
|
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Group
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638.3
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582.8
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+10%
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+5%
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+10%
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This strong revenue performance
was replicated across all our key financial metrics:
•
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Operating margins rose 80bps to
19.6% (H1 23: 18.8%), supported by operational leverage,
disciplined cost control and accretive acquisitions. Adjusted
operating profit was up 14% to £125.4m (H1 23: £109.7m).
|
•
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Adjusted earnings per share
("EPS") grew 10% to 65.1p (H1 23: 59.1p), continuing our long-term
compounding track record of double-digit growth (15% CAGR EPS
growth over 15 years).
|
•
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Cash conversion improved year on
year to 76% (H1 23: 70%) reflecting continued disciplined working
capital management.
|
•
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Return on capital is a key
underpin of our compounding financial model. In the period, return
on adjusted trading capital employed ("ROATCE") rose 20bps to 18.0%
(H1 23: 17.8%).
|
In line with our policy, we have
declared a 5% increase in the interim dividend to 17.3p per share
(H1 23: 16.5p), payable on 7 June 2024 to shareholders on the
register on 24 May 2024, with a corresponding ex-dividend date of
23 May 2024.
Positioning behind
structurally growing end markets
We continue to drive growth
through expansion in structurally growing end markets. In
Controls, we have increased
our position in aerospace, organically and through the recent
acquisition of Peerless Aerospace Fastener LLC ("Peerless") and
have also seen strong growth in space, motorsport, defence,
medical, energy and data centres. In Seals, we continue to see growth in
markets benefiting from sustained infrastructure investment, as
well as energy markets and the mining of minerals for batteries
required for electrification. In Life Sciences, continued investment in
In Vitro Diagnostics from health authorities has driven growth
across a range of applications.
Penetration of core
developed economies
In Controls, the acquisition of Peerless
extends our geographic reach in the US from the West Coast to
national coverage, and also extends our capabilities in Europe. In
Seals, we have begun to
explore opportunities to leverage our sales platforms and
distribution networks across our businesses. Our European and UK
fluid power businesses, DICSA and R&G, are collaborating to
expand their respective markets, and in the US, DICSA is working
with Hercules Aftermarket to enhance its distribution capability
out of the Louisville Autostore. We are in the early stages of
these collaborations but believe they will yield exciting
opportunities. In Life
Sciences we have a scaling programme underway in Canada that
will see the creation of eastern and western hubs, enabling better
customer coverage across the country.
Product range
extension
In the first half, our product
offering has grown organically, as we source and develop new
products, and through acquisition. In Controls, Windy City Wire ("WCW")
introduced Audio/Visual ("AV") cabling to its product range driving
growth from existing and new customers. Interconnect expanded its
offering of motorsport connectors which was a strong driver of
growth in the period. In Seals, R&G has continued to extend
its range into adjacent product lines, including DICSA stainless
steel fittings, and VSP increased its position in industrial and
transportation markets through product developments. In
Life Sciences, the
continued adoption of new technologies in areas including urology,
gynaecology and endoscopy has created opportunities for product
expansion and we are increasingly leveraging products between
geographies.
Complementary acquisitions to accelerate
growth
Future organic growth is also
supported by selective acquisitions. Since 30 September 2023, we
have acquired six high-quality businesses for a total of
£284m.
During the period, we completed
four quality bolt-on acquisitions for £10m, with an EBIT multiple
of around 4x and year one ROATCE exceeding 20%. These acquisitions
include Controls and
Seals businesses in the UK
and Europe with more details included in the Sector
reviews.
On 1 May, we completed the
acquisition of US-based Peerless for ca. £236m. This former
family-owned business extends our established position in the
aerospace specialty fasteners market, in the Controls Sector, accelerating organic
growth through product and geographic
expansion. This is highly complementary to our existing Specialty
Fasteners business, extending our capabilities from the interior of
the aircraft cabin, to the airframe. Acquired at a multiple of ca.
7x FY24 earnings before interest and tax
("EBIT"), Peerless is expected to deliver
15% ROATCE and 8% EPS accretion in year one.
On 30 April, we acquired UK-based
PAR Group for ca. £38m. This founder-led business will join the
R&G family of companies in our Seals Sector, adding scale to its Seals
& Gaskets division. Acquired at ca. 7x FY24 EBIT, PAR Group is
expected to deliver 14% ROATCE and 1% EPS accretion in year
one.
Given the completion dates of both
Peerless and PAR Group, there is no impact from either in the first
half results.
Our acquisition pipeline remains
strong with active opportunities across our core geographies and in
all three Sectors.
The recent acquisitions
demonstrate the compelling proposition Diploma offers to owners
selling their businesses. Finding the right home is often an
important part of their decision and we have a strong track record
of preserving legacies; promoting autonomy and accountability;
supporting growth through investment and expertise; and welcoming
new colleagues into our network through which we all benefit from
shared experience.
Scaling the Businesses and the Group
Delivering 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.
At the same time, we are developing the Group, evolving our
structures, capabilities and culture to support this growth and
maintain discipline and appropriate controls.
Scaling takes many forms across
the Group and is an ongoing journey. From the upgrade of systems
and facilities, such as new state-of-the-art facilities in UK Wire
and Cable (Controls), UK
Aftermarket and European OEM (Seals), to enhancing sales
capabilities, such as in Interconnect and Industrial Automation
(Controls) we are
continually investing in scaling our businesses. In Life Sciences, we are increasingly collaborating across geographies to
leverage strong supplier and product relationships from one
business to bring new and improved customer offers to other
regions. Through our Leadership at Scale
programme, we are developing internal senior talent and building
succession, and are investing in growing talent through our
apprenticeship programmes across the Group.
Delivering Value Responsibly
We have made good progress in the
period across all aspects of DVR:
•
|
In Q1 we launched a Groupwide
Health & Safety framework, alongside the introduction of an
external Health & Safety audit program to support our
businesses in driving continuous improvement.
|
•
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In December, our Net Zero targets
were validated by SBTi. We are targeting a 50% reduction in Scope
1&2 emissions and 30% reduction in Scope 3 by 2030, leading to
net zero by 2045.
|
•
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We continue to focus on gender
equality across all our businesses and in the first half of the
year we had gender parity across all hires into our senior
leadership teams.
|
Outlook and full year guidance
We have delivered a strong first
half with good momentum going forward. The positive momentum from
our underlying business, combined with the contribution from new
acquisitions drives an upgrade to previous guidance for
FY24:
•
|
Constant currency revenue growth
of ca. 16%, up 5ppts from previous guidance, comprising ca. 6%
organic revenue, and growth from acquisitions of ca.
10%.
|
•
|
Strong operating margin of ca.
20.5%, up 80bps from previous guidance. Strong underlying
performance and recent acquisitions contribute equally to the
upgrade.
|
•
|
EPS growth of ca. 15% reflecting
strong underlying performance and the contribution of
acquisitions.
|
•
|
Free cash flow conversion of ca.
90% and leverage of 1.3x.
|
SECTOR REVIEW: CONTROLS
The Controls Sector businesses supply specialised wiring,
cable, connectors, fasteners, control devices, adhesives, and
Computer Numerical Control ("CNC") and robotic components for a
range of technically demanding applications.
|
H1 24
|
H1 23
|
Change
|
Revenue
|
£288.1m
|
£278.8m
|
+3%
|
Organic revenue growth
|
+7%
|
+13%
|
|
Statutory operating
profit
|
£53.7m
|
£57.7m
|
(7%)
|
Adjusted operating
profit
|
£69.9m
|
£64.3m
|
+9%
|
Adjusted operating
margin
|
24.3%
|
23.1%
|
+120bps
|
H1 24 highlights
•
|
Share gains in fast growing end
markets in the US, UK and Europe drove strong 7% organic revenue
growth.
|
•
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Adjusted operating profit of
£69.9m grew 9%, with a 120bps year-on-year increase in adjusted
operating margin to 24.3%. Margin expansion was driven by product
mix, operating leverage and margin accretive acquisitions in the
prior year.
|
•
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Strategic acquisition of Peerless
builds scale and expands Specialty Fasteners' presence in key US
and European civil aerospace and defence markets.
|
International Controls (61%
of Controls Sector revenue1) delivered 10% organic
growth in the period, continuing to benefit from market share gains
and strong commercial delivery in civil aerospace and space
markets, and enduring tailwinds in UK and European defence and
energy markets as investment in these areas remains a prime focus
for governments. International Controls continues to diversify its
end markets, gaining share in space and medical and benefiting from
the wider move to electrification and green energy as it continues
to deliver growth in the electric vehicle ("EV") and renewable
energy end markets. Operating
margin improved considerably, principally due to
positive operating leverage on volume growth and mix benefits from
the acquisition of Industrial Automation business, T.I.E., and the
disposal of Hawco, in the prior year. Reported revenue in H1 23
included £15.1m contribution from Hawco, prior to its disposal in
March 2023.
1 Including proforma revenue for Peerless which completed after
the period end
Windy City Wire ("WCW") (39%
of Controls Sector revenue) continues to deliver growth in its core
building automation end market, benefiting during the period from
the expansion in datacentres behind AI growth, which we expect to
provide longer term growth impetus. Organic growth of 4% was
supported by the continued acceleration of growth in newer
applications, including Distributed Antenna Systems ("DAS"), AV and
the roll-out of chip-and-pin terminals to gas stations across the
US. Operating margin improved further, driven by positive operating
leverage and mix benefits of moving into higher margin end markets
and products.
Revenue diversification driving organic
growth
We delivered high single-digit
organic growth in our Interconnect businesses, driven by
robust demand in the defence, motorsport and civil aerospace
markets. Revenues in the German energy market also grew, driven by
share gains and ongoing upgrades to the transmission and
distribution network. Other key growth segments include medical and
US industrial, where we are gaining market share as these end
markets recover post-pandemic.
Our Specialty Fasteners businesses
continued to deliver strong double-digit growth during the first
half, winning further market share and
continuing to benefit from strong customer demand in the civil
aerospace market in the US, Europe and the UK. Further geographic
diversification has been achieved via key aerospace contract wins
in Germany and through strengthening our presence in the US space
market with new key account wins. End market diversification was
supported by good momentum into motorsport, industrial and
electric vertical take-off and landing
("eVTOL") aircraft.
In UK Wire and Cable the impact of softer
demand in UK construction and wholesale end markets was partially
mitigated by increased exposure to major infrastructure projects.
Momentum built towards the end of the period, and we expect a
stronger second half performance.
With the acquisition of T.I.E.
during FY23, we entered the attractive Industrial Automation end market. Since
acquisition, we have invested in enhancing the commercial operation
of the business, including expansion of the sales team to drive
geographic diversification across the US. Whilst strike action in
the automotive market moderated growth at
the start of the year, a favourable mix shift supported margin
improvement and operating profit performance was in line with our
expectations.
Targeted acquisitions to accelerate growth
Two small bolt-on acquisitions
were completed in the period, with Cable and Tubing Solutions
further broadening our medical offering in our German
Interconnect business and supporting growth in this attractive end
market; and Technisil expanding our Specialty Adhesives penetration
in Germany.
The strategic acquisition of Peerless completed on 1 May. The
addition of this US-based value-add aerospace fasteners business,
enables us to build scale and expand our presence and capabilities
in the attractive aerospace and defence end markets in the US and
Europe. Supplying fasteners into the airframe of aircraft, Peerless
is highly complementary to our existing Specialty Fasteners
business, Clarendon, which supplies products into aircraft cabins
and seats. There is no impact of Peerless in these first half
results.
Building scale
Significant investment in
technology and facilities continues as the Sector finalises the
integration of its three UK Wire & Cable locations into one
state-of-the-art automated facility and onto a common ERP platform.
In addition to delivering operational efficiencies, there is a
commercial benefit from this new, integrated structure via enhanced
cross-selling capabilities across previously separate sales
teams.
Supporting end market penetration,
we have invested in specialist sales resource in Interconnect,
enabling expansion in medical, rail and defence markets, and in
Specialty Adhesives to maximise long-term aerospace and defence
opportunities.
Outlook
We have made good strategic
progress in Controls. Our businesses are benefiting from
initiatives to capture growth in structurally growing end markets,
such as medical, energy and EVs, as well as high-growth emerging
markets, such as space and eVTOL. We are also benefiting from
continued geographic diversification as we continue to build scale
in the US and Europe. The Sector has strong momentum into the
second half of the year, and will be boosted further by the
addition of the high growth, high margin Peerless business. We
remain very positive about its outlook.
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 Aftermarket, Original
Equipment Manufacturing (OEM) and Maintenance, Repair and Overhaul
(MRO) applications.
|
H1 24
|
H1 23
|
Change
|
Revenue
|
£241.2m
|
£198.4m
|
+22%
|
Organic revenue growth
|
+1%
|
+8%
|
|
Statutory operating
profit
|
£27.8m
|
£29.3m
|
(5%)
|
Adjusted operating
profit
|
£44.3m
|
£35.7m
|
+24%
|
Adjusted operating
margin
|
18.4%
|
18.0%
|
+40bps
|
H1 24 highlights
•
|
Organic revenue growth of 1%
driven by resilient performance against backdrop of customer
destocking. Signs of normalisation into the second half with
typical ordering patterns starting to resume.
|
•
|
Adjusted operating profit
increased by 24% to £44.3m, driven by operational leverage and
contribution from DICSA.
|
•
|
Acquisition of PAR Group into
R&G expanding capabilities and further diversifying UK
Aftermarket's customer base and end market.
|
International Seals (57% of
Seals Sector revenue2) delivered organic growth of 1%
against strong prior year comparatives; continued destocking by OEM
and reseller customers; and short term market challenges in Europe.
Reported revenue growth was 42%, reflecting prior year
acquisitions, particularly DICSA in the second half of
FY23.
2 Including proforma revenue for PAR Group which completed
after the period end.
North American Seals (43% of
Seals Sector revenue) delivered organic growth of 1% and a further
6% contribution from prior year acquisitions, as strong growth in
MRO mitigated continued destocking by OEM and reseller
customers.
Revenue diversification driving organic
growth
In International Seals, our
UK Aftermarket business,
R&G benefited from diversification into product adjacencies
increasing penetration across its end markets, organically and
through targeted acquisitions. Our Australian Seals businesses delivered
excellent growth, as its strong customer proposition drove share
gains in markets benefiting from sustained infrastructure
investments and continuous strong demand for the mining of the
minerals required for electrification. European OEM businesses continued to be
impacted by customer destocking during the first half, with signs
of normalisation emerging with the resumption of typical ordering
patterns in some areas. In European Aftermarket, DICSA performed
in line with expectations following its acquisition in the second
half of FY23 with good growth in its core stainless steel fittings
that was partially offset by the impact of destocking in some
channels.
In North American Seals,
MRO delivered strong organic growth. We have
increased our position in industrial and transportation markets
through product development and geographical expansion. Prior year
acquisitions also achieved strong organic growth in the period
driven by cross-selling products and services. The US Aftermarket business, Hercules,
delivered a resilient performance following a period of strong
growth in the prior year, supported by high demand for repairs. The
US OEM business was resilient in the face
of continued customer destocking, as product extension and end
market expansion delivered growth. There are signs of more typical
customer buying patterns into the second half.
During the period, the Sector
began to explore intercompany opportunities in fluid power arising
from the acquisition of DICSA. Collaboration is underway between
R&G and DICSA, to expand reach across their respective
established core markets in the UK and Europe. In addition, DICSA
and Hercules Aftermarket are working together to distribute DICSA
product from the Louisville Autostore, leveraging Hercules' sales
and logistics capabilities. We are in the early stages of these
developments but we see exciting growth opportunities
ahead.
Targeted acquisitions to accelerate growth
R&G added two bolt-on
acquisitions during the first half. Fast Gaskets, a distributor of
soft gaskets and rubber sheets, is an approved supplier to the UK
defence industry, and a specialist solution provider into the food
& beverage and pharmaceutical & chemical end markets. Abbey
Hose, a specialist hydraulic and industrial hose distributor,
extends R&G's geographical reach within the UK and creates
access to key infrastructure projects and customers.
We acquired UK-based PAR Group
into R&G on 30 April 2024. It is a very complementary business,
significantly expanding our UK Aftermarket seals & gaskets
capabilities and further diversifying R&G's customer base and
end market exposure. The acquisition presents strong opportunities
for organic growth, synergies and cross-selling.
Building scale
During the period, we opened our
new European OEM M Seals
facility in Denmark. The low-emission, state-of the-art facility
creates a Nordic hub for the Sector, providing improved warehousing
capabilities and a wide range of value-add services to support
future growth. In UK
Aftermarket, we created a National Distribution Centre in
Lincoln that will act as the main stocking location for all our
R&G Hydraulics businesses. We also introduced a hose assembly
Centre of Excellence in Liverpool. Our scaling journey continues in
Australia as we near
completion of the integration of three, previously standalone,
businesses to form one larger business.
In North American Seals, our continued
focus on the supply chain is yielding positive results in
optimising inventory levels and delivering process improvements
within operations and commercial execution. Investments in seal machining, webstore enhancements and new
products position the Aftermarket business well for continued
growth as US infrastructure projects accelerate.
Outlook
The Seals Sector has been
resilient through challenging trading conditions, and continues to
make strategic progress, strengthening its presence across
attractive end markets, building cross-selling opportunities and
scaling our operations. We are well positioned to benefit from the
significant investments into infrastructure projects across the US
and Europe. As we continue to see the resumption of more typical
buying patterns across our OEM and reseller customer bases, we
expect a stronger performance in the second half of the
year.
SECTOR REVIEW: LIFE SCIENCES
The Life Sciences Sector sources and supplies technology
driven value add solutions in the In Vitro Diagnostics ("IVD"),
Scientific and Medtech segments of the Global Healthcare
market.
|
H1 24
|
H1 23
|
Change
|
Revenue
|
£109.0m
|
£105.6m
|
+3%
|
Organic revenue growth
|
5%
|
4%
|
|
Statutory operating
profit
|
£16.9m
|
£16.7m
|
+1%
|
Adjusted operating
profit
|
£21.6m
|
£20.9m
|
+3%
|
Adjusted operating
margin
|
19.8%
|
19.8%
|
-
|
H1 24 highlights
•
|
Organic revenue growth of 5% with
continued momentum led by strong performance and market share gains
in Australia and Canada.
|
•
|
Adjusted operating profit was up
3%, with foreign exchange headwinds partially offsetting organic
growth. Margins were flat year-on-year.
|
•
|
Significant investments in scaling
to support future growth in Canada and Europe.
|
Revenue diversification driving organic
growth
In the first half of the year,
adoption of new technology in healthcare settings and continued
diversification through new product introductions have been the
primary drivers of growth. We are increasingly collaborating across
geographies to leverage strong supplier and product relationships
from one business to bring new and improved customer offers to
other regions. As we aim to scale our Scientific business, we see
medium-term growth opportunities across pharmaceutical, biotech and
food and beverage end markets driven respectively by development of
new patient treatment modalities such as cell and gene therapy, as
well as increased food production quality control regulations.
In Canada, we have seen continued adoption
and implementation of new technologies by hospitals within the
urology, gynaecology and endoscopy specialties creating
opportunities to broaden our product range and grow market share.
IVD testing has grown in this market reflecting ongoing investment.
In Australia, growth has
been driven by the increased demand for genetic preconception
screening supported by increased government investment and
continued growth of our IVD business. Growth in allergy and
autoimmunity testing has been driven by the extension of our
service to existing customers through expanded offerings. In
Europe, organic growth was
broadly flat. Continued growth in IVD and critical care portfolios
in the UK and Ireland, and tender wins in the Nordics drove good
growth. This was offset by the timing of capital projects; product
portfolio optimisation to phase out some lower margin products; and
a supplier contract concluding during the period.
Building scale
Following the successful
integration of our Australian businesses in FY23, we have invested
in scaling our Canadian business. In combining and relocating
sites, and upgrading facilities across Canada, we will improve
customer service; reduce shipment times; deliver operational
improvements and efficiencies; and increase our access to
talent.
In Europe, we completed the
integration of our Nordic Life Sciences businesses enhancing our
customer proposition through the expansion of products and
services.
Outlook
The outlook for the full year
remains positive as we see continued opportunities in new
technology adoption in Canada; expanding the array of diagnostic
testing in Australia; and increased funding of capital projects in
Europe.
FINANCE review
Summary income statement
|
|
|
|
|
|
|
|
Six
months ended 31 March 2024
|
Six
months ended 31 March 2023
|
Adjusted1 £m
|
Adjustments1 £m
|
Total
£m
|
Adjusted1 £m
|
Adjustments1 £m
|
Total
£m
|
|
Revenue
|
|
|
638.3
|
-
|
638.3
|
582.8
|
-
|
582.8
|
|
Operating expenses
|
|
|
(512.9)
|
(37.4)
|
(550.3)
|
(473.1)
|
(17.2)
|
(490.3)
|
|
Operating profit
|
|
|
125.4
|
(37.4)
|
88.0
|
109.7
|
(17.2)
|
92.5
|
|
Financial expense, net
|
|
|
(10.2)
|
-
|
(10.2)
|
(11.0)
|
(2.8)
|
(13.8)
|
|
Profit before tax
|
|
|
115.2
|
(37.4)
|
77.8
|
98.7
|
(20.0)
|
78.7
|
|
Tax expense
|
|
|
(27.6)
|
7.9
|
(19.7)
|
(24.2)
|
5.2
|
(19.0)
|
|
Profit for the period
|
|
|
87.6
|
(29.5)
|
58.1
|
74.5
|
(14.8)
|
59.7
|
|
Earnings per share (p)
|
|
|
|
|
|
|
|
|
|
Adjusted/Basic
|
|
|
65.1p
|
(22.0p)
|
43.1p
|
59.1p
|
(11.8p)
|
47.3p
|
|
¹ The Group reports
under UK-adopted International Accounting Standards 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 10%
to £638.3m (H1 23: £582.8m), consisting of organic growth of 5%, an
8% net contribution from acquisitions and disposals, partly offset
by the adverse 3% impact from foreign exchange
translation.
Adjusted operating profit
increased by 14% to £125.4m (H1 23: £109.7m) as the operational
leverage from increased revenue, disciplined cost management and
accretive acquisitions drove a 80bps year-on-year improvement in
the adjusted operating margin to 19.6% (H1 23: 18.8%).
Statutory operating profit is
£88.0m. The prior year, at £92.5m, benefitted from an exceptional
gain on the disposal of Hawco of £12.2m.
Adjusted profit before tax
increased 17% to £115.2m (H1 23: £98.7m). Net adjusted interest
expense decreased to £10.2m (H1 23: £11.0m), driven largely by the
structure and mix of debt facilities. The all-in, blended cost of
our borrowing facilities decreased to 5.2% (H1 23: 5.5%). Statutory
profit before tax is £77.8m, with prior year of £78.7m benefiting
from the exceptional gain on the disposal of
Hawco.
The Group's adjusted effective
rate of tax on adjusted profit before tax for the period was 24.0%
(FY23: 24.0%), comparable with the year ended 30 September
2023.
Adjusted earnings per share
increased by 10% to 65.1p (H1 23: 59.1p). Basic earnings per share
is 43.1p, with prior year of 47.3p benefiting from 9.7p due to the
exceptional gain on the disposal of Hawco. As at 31 March 2024, the
average number of ordinary shares (which includes any potentially
dilutive shares) was 134,328,842 (H1 23: 125,927,286) and the
weighted average number of ordinary shares in issue was 134,009,865
(H1 23: 125,360,523).
Cash management
Free cash flow increased by 28% to
£66.3m (H1 23: £51.8m). Statutory cash flow from operating
activities increased by 20% to £77.7m (H1 23: £64.7m).
|
|
|
Six
months ended
31
March
2024
|
Six
months ended
31
March
2023
|
Funds flow
|
|
£m
|
£m
|
Adjusted operating
profit
|
|
125.4
|
109.7
|
Depreciation and other non-cash
items
|
|
15.8
|
15.3
|
Working capital
movement
|
|
(17.1)
|
(22.8)
|
Interest paid, net (excluding
borrowing fees)
|
|
(8.2)
|
(9.8)
|
Tax paid
|
|
(33.3)
|
(22.2)
|
Capital expenditure, net of
disposal proceeds
|
|
(4.2)
|
(9.5)
|
Lease repayments
|
|
(9.9)
|
(7.0)
|
Notional purchase of own shares on
exercise of options
|
|
(2.2)
|
(1.9)
|
Free cash flow
|
|
66.3
|
51.8
|
Acquisition and disposals (net of
cash acquired/disposed) including acquisition expenses and
acquisition related deferred (payments)/receipts
|
|
(21.6)
|
(75.9)
|
Proceeds from issue of share
capital (net of fees)
|
|
-
|
232.5
|
Dividends paid to shareholders and
minority interests
|
|
(53.8)
|
(48.7)
|
Foreign exchange
|
|
5.2
|
15.2
|
Net funds flow
|
|
(3.9)
|
174.9
|
Net debt
|
|
(258.6)
|
(154.0)
|
Working capital increased by
£17.1m, driven by an increase in receivables of £16.4m, reflective
of the revenue growth during the period.
Depreciation and other non-cash
items includes £15.6m (H1 23: £13.4m) of depreciation and
amortisation of tangible, intangible and right-of-use assets and
£0.2m (H1 23: £1.9m) of non-cash items, primarily share-based
payments expense largely offset by profit on disposal of tangible
assets.
Interest payments decreased by
£1.6m to £8.2m (H1 23: £9.8m) driven largely by the structure and
mix of debt facilities, in line with the movement of interest in
the income statement. Tax payments in the first half of the year
were higher by £11.1m at £33.3m (H1 23: £22.2m) due to the increase
in the UK corporation tax rate and acquisitions made in
2023.
Net capital expenditure was £5.3m
lower than prior year, benefiting from £5.5m of proceeds from the
disposal of property, plant and equipment. The Group funded the
Company's Employee Benefit Trust with £2.2m (H1 23: £1.9m) in
connection with the Company's long term incentive plan.
The Group generated free cash flow
of £66.3m (H1 23: £51.8m) a very strong 28% increase on the prior
year, resulting in free cash flow conversion of 76% (H1 23:
70%).
Net total acquisition expenditure
of £21.6m (H1 23: £75.9m) comprises the cash spend on four bolt-on
acquisitions (£7.2m), acquisition fees (£2.0m), and acquisition
related deferred payments (£13.4m) which largely relate to WCW
deferred remuneration, partially offset by the deferred
consideration received in respect of the disposal of Hawco
(£1.0m).
Dividends of £53.8m (H1 23:
£48.7m) were paid to ordinary and minority interest
shareholders.
Net debt
The Group has a multi-currency
Revolving Credit Facility agreement ("RCF") with an aggregate
principal amount of £555.0m which was originally entered into on 17
July 2023. The RCF is due to expire in July 2028 with an option to
extend for two further 12-month periods. At 31 March 2024, the
Group had utilised £108.7m of the RCF (2023: £41.8m), comprising
£30.0m of the GBP RCF and £78.7m (€92.0m) of EUR RCF. £446.3m of
the revolving facility remains undrawn.
The Group issued private placement
("PP") notes for an aggregate principal amount of £213.5m (€250.0m)
on 20 March 2024. The PP notes have maturities of 7 years (€75m),
10 years (€100m) and 12 years (€75m).
The Group continues to maintain a
robust balance sheet with net debt (excluding IFRS 16 liabilities)
of £258.6m (H1 23: £154.0m) comprised of borrowings of £318.1m (H1
23: £226.1m), less cash funds of £59.5m (H1 23: £72.1m). This
represented leverage of 0.9x (H1 23: 0.7x) against a Board policy
of below 2.0x and lending covenants of below 3.5x. The Group
maintains strong liquidity, with period end headroom (comprised of
undrawn committed facilities and cash funds) of £506m (H1 23:
£390m).
The table below outlines the
composition of the Group's net debt at 31 March 2024:
Type
|
Currency
|
Amount
|
GBP equivalent
|
Interest rate exposure
|
PP 7 year maturity
|
EUR
|
€75.0m
|
£64.1m
|
Fixed 4.18%
|
PP 10 year maturity
|
EUR
|
€100.0m
|
£85.5m
|
Fixed 4.27%
|
PP 12 year maturity
|
EUR
|
€75.0m
|
£64.1m
|
Fixed 4.38%
|
RCF
|
EUR
|
€92.0m
|
£78.7m
|
Floating
|
RCF
|
GBP
|
£30.0m
|
£30.0m
|
Floating
|
Capitalised debt fees net of
accrued interest
|
(£4.3m)
|
|
|
Gross debt drawn at 31 March 2024
|
£318.1m
|
|
Cash & equivalents at period
end
|
(£59.5m)
|
|
Net debt at 31 March 2024
|
£258.6m
|
|
Defined Benefit Pension
Both the UK defined benefit scheme
and the Kubo contribution scheme are accounted for in accordance
with IAS 19 (revised).
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 £0.4m (H1 23:
£0.3m).
On 26 March 2024, the Trustees
completed a buy-in of the remaining pensioner liabilities in the
Scheme with Just Retirement Limited. The Scheme paid £25.1m to Just
Retirement Limited on 26 March 2024 to fund 100% of the buy-in
premium. As at 31 March 2024, the Group's financial statements
include a net asset of £1.4m (30 September 2023: £6.8m) in respect
of the Group's UK pension scheme. As at 31 March 2024, 95% of the
scheme assets are concentrated in the buy-in policy and we expect
to make no further funding payments.
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 pension deficit in the Swiss scheme was £0.3m (30 September
2023: £0.3m). The cash contribution to the scheme was £0.2m (H1 23:
£0.2m).
Exchange rates
A significant proportion of the
Group's revenues (ca. 80%) are derived from businesses located
outside the UK, principally in the US, Canada, Australia and
Europe. Compared with the first half of last year, the average
Sterling exchange rate is stronger against most 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 a decrease in Group revenues of £20.0m; a decrease in the
Group's adjusted operating profit of £4.5m; and a decrease in net
debt of £1.3m, 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 2025. This assessment incorporated a severe but plausible
downside scenario and the cash consideration for Peerless and PAR
Group after the period end, 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
Effective risk management is a key
component of the discipline that underpins sustainable quality
compounding.
The Group's decentralised
operating model helps mitigate the potential impact of our
principal risks. The principal risks which have the potential to be
material to the performance, position or future prospects of the
Group are described in more detail in pages 44-48 of the 2023
Annual Report & Accounts. This includes more detail on our
overall approach to risk management as well as the specific
mitigation actions in place for our principal risks.
The principal risks are summarised
below (not ranked):
•
|
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.
|
•
|
Failure to attract retain and develop
talent: 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.
|
•
|
Cyber attack: 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.
|
•
|
Supply chain disruption: the
risk of manufacturing lead times increasing as a result of supply
chain shortages or supply chain partners not operating to the same
ethical standards as Diploma.
|
•
|
Loss of key supplier: the
risk that a key supplier revokes a supply agreement and accesses
the market through a competitor or chooses to go direct to market
rather than via a distributor.
|
•
|
Climate - max legislation:
the risk of increasing environmental legislation that adds cost or
complexity to products and services and/or renders some products
obsolete.
|
•
|
Prolonged market downturn:
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.
|
•
|
Geopolitical trade issues:
interruption of trade agreements; change of trade or tariff
relationships amongst countries in which we operate; Government
budget spending and political elections.
|
The Directors confirm that the
principal risks and uncertainties and the processes for managing
them have not changed materially since the publication of the 2023
Annual Report & Accounts and that they remain relevant for the
second half of the financial year.
Chris Davies
Chief Financial
Officer
13 May 2024
Responsibility Statement of the Directors in respect of the
Half Year Report 2024
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 2023 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
|
13 May
2024
|
13 May
2024
|
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 2024 of Diploma PLC
for the 6-month period ended 31 March 2024 (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 2024;
|
•
|
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 2024 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 2024 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 2024,
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 2024 in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
Half Year Report 2024, 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 2024 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
13 May 2024
Condensed Consolidated Income Statement
For the six months ended 31 March 2024
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended 31 Mar
2024
|
Six
months ended 31 Mar 2023
|
Year
ended 30 Sep 2023
|
|
|
|
Adjusted1
|
Adjust-
ments1
|
Total
|
Adjusted1
|
Adjust-
ments1
|
Total
|
Total
|
|
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
|
3
|
638.3
|
-
|
638.3
|
582.8
|
-
|
582.8
|
1,200.3
|
Operating expenses
|
|
2
|
(512.9)
|
(37.4)
|
(550.3)
|
(473.1)
|
(17.2)
|
(490.3)
|
(1,017.0)
|
Operating profit
|
|
|
125.4
|
(37.4)
|
88.0
|
109.7
|
(17.2)
|
92.5
|
183.3
|
Financial expense, net
|
|
4
|
(10.2)
|
-
|
(10.2)
|
(11.0)
|
(2.8)
|
(13.8)
|
(27.7)
|
Profit before tax
|
|
|
115.2
|
(37.4)
|
77.8
|
98.7
|
(20.0)
|
78.7
|
155.6
|
Tax expense
|
|
5
|
(27.6)
|
7.9
|
(19.7)
|
(24.2)
|
5.2
|
(19.0)
|
(37.3)
|
Profit for the period
|
|
|
87.6
|
(29.5)
|
58.1
|
74.5
|
(14.8)
|
59.7
|
118.3
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
Shareholders of the
Company
|
|
6
|
87.2
|
(29.5)
|
57.7
|
74.1
|
(14.8)
|
59.3
|
117.7
|
Minority interests
|
|
|
0.4
|
-
|
0.4
|
0.4
|
-
|
0.4
|
0.6
|
|
|
|
|
87.6
|
(29.5)
|
58.1
|
74.5
|
(14.8)
|
59.7
|
118.3
|
Earnings per share (p)
|
|
|
|
|
|
|
|
|
|
Adjusted / Basic
|
|
6
|
65.1p
|
(22.0p)
|
43.1p
|
59.1p
|
(11.8p)
|
47.3p
|
90.8p
|
Adjusted /
Diluted
|
|
6
|
64.9p
|
(21.9p)
|
43.0p
|
58.8p
|
(11.7p)
|
47.1p
|
90.4p
|
|
|
|
|
|
|
|
|
|
|
| |
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.
Condensed Consolidated Statement of
Comprehensive Income
For the six months ended 31 March 2024
|
|
|
Unaudited
31
Mar
2024
|
Unaudited
31
Mar
2023
|
Audited
30
Sep
2023
|
|
|
|
£m
|
£m
|
£m
|
Profit for the period
|
|
58.1
|
59.7
|
118.3
|
|
|
|
|
|
Items that will not be reclassified to the Consolidated
Income Statement
|
|
|
|
|
Actuarial
(loss)/gain on the defined benefit pension schemes
|
|
(6.0)
|
2.0
|
(0.9)
|
Deferred
tax on items that will not be reclassified
|
|
1.5
|
(0.6)
|
0.2
|
|
|
(4.5)
|
1.4
|
(0.7)
|
|
|
|
|
Items that may be reclassified to the Consolidated Income
Statement
|
|
|
|
Exchange
differences on translation of foreign operations
|
|
(21.0)
|
(49.2)
|
(46.3)
|
Net
investment hedge - net loss
|
|
(0.2)
|
-
|
-
|
(Losses)/gains on fair value of cash flow hedges
|
|
|
(0.3)
|
(0.3)
|
1.8
|
Net changes to fair value of cash
flow hedges transferred to the Consolidated Income
Statement
|
|
|
(2.1)
|
(0.7)
|
(3.8)
|
Deferred tax on items that may be
reclassified
|
|
|
0.6
|
0.2
|
0.5
|
|
|
|
(23.0)
|
(50.0)
|
(47.8)
|
Total Comprehensive Income for the
period
|
|
30.6
|
11.1
|
69.8
|
Attributable to:
|
|
|
|
|
|
Shareholders of the Company
|
|
|
30.2
|
10.7
|
69.3
|
Minority
interests
|
|
|
0.4
|
0.4
|
0.5
|
|
|
|
30.6
|
11.1
|
69.8
|
|
|
|
|
|
| |
Condensed Consolidated Statement of
Changes in Equity
For the six months ended 31 March 2024
|
Share
capital
|
Share
premium
|
Transl-ation
reserve
|
Hedging
reserve
|
Retained
earnings
|
Share-holders'
equity
|
Minority
interests
|
Total
equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 October 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
|
0.5
|
231.6
|
-
|
-
|
-
|
232.1
|
-
|
232.1
|
Share-based payments
|
-
|
-
|
-
|
-
|
2.2
|
2.2
|
-
|
2.2
|
Notional purchase of own
shares
|
-
|
-
|
-
|
-
|
(1.9)
|
(1.9)
|
-
|
(1.9)
|
Dividends
|
-
|
-
|
-
|
-
|
(48.4)
|
(48.4)
|
(0.3)
|
(48.7)
|
At 31 March 2023
(unaudited)
|
6.8
|
420.2
|
39.6
|
2.4
|
387.7
|
856.7
|
6.3
|
863.0
|
Total comprehensive
income
|
-
|
-
|
2.9
|
(0.7)
|
56.4
|
58.6
|
0.1
|
58.7
|
Share-based payments
|
-
|
-
|
-
|
-
|
1.9
|
1.9
|
-
|
1.9
|
Tax on items recognised directly
in equity
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
-
|
0.5
|
Dividends
|
-
|
-
|
-
|
-
|
(22.1)
|
(22.1)
|
-
|
(22.1)
|
At 30 September 2023 (audited)
|
6.8
|
420.2
|
42.5
|
1.7
|
424.4
|
895.6
|
6.4
|
902.0
|
Total comprehensive
income
|
-
|
-
|
(21.2)
|
(1.8)
|
53.2
|
30.2
|
0.4
|
30.6
|
Share-based payments
|
-
|
-
|
-
|
-
|
3.5
|
3.5
|
-
|
3.5
|
Tax on items recognised directly
in equity
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
-
|
0.5
|
Notional purchase of own
shares
|
-
|
-
|
-
|
-
|
(2.2)
|
(2.2)
|
-
|
(2.2)
|
Dividends
|
-
|
-
|
-
|
-
|
(53.6)
|
(53.6)
|
(0.2)
|
(53.8)
|
At 31 March 2024
(unaudited)
|
6.8
|
420.2
|
21.3
|
(0.1)
|
425.8
|
874.0
|
6.6
|
880.6
|
Condensed Consolidated Statement of Financial
Position
As at 31 March 2024
|
|
|
|
Unaudited
31 Mar
2024
|
Unaudited
31 Mar
2023
|
Audited
30 Sep 2023
|
|
|
Note
|
£m
|
£m
|
£m
|
Non-current assets
|
|
|
|
|
|
|
Goodwill
|
|
|
9
|
432.7
|
374.6
|
439.1
|
Acquisition intangible
assets
|
|
|
9
|
486.9
|
451.5
|
520.1
|
Other intangible assets
|
|
|
|
3.5
|
4.1
|
4.2
|
Property, plant and
equipment
|
|
|
|
59.0
|
49.3
|
59.2
|
Leases - right-of-use of
assets
|
|
|
|
77.6
|
54.6
|
71.5
|
Retirement benefit
assets
|
|
|
|
1.4
|
8.8
|
6.8
|
Deferred tax assets
|
|
|
|
0.3
|
0.4
|
0.2
|
|
|
|
|
1,061.4
|
943.3
|
1,101.1
|
Current assets
|
|
|
|
|
|
|
Inventories
|
|
|
|
223.9
|
216.3
|
232.7
|
Trade and other
receivables
|
|
|
|
201.3
|
173.7
|
193.1
|
Cash and cash
equivalents
|
|
|
8
|
59.5
|
72.1
|
62.4
|
|
|
|
|
484.7
|
462.1
|
488.2
|
Current liabilities
|
|
|
|
|
|
|
Borrowings
|
|
|
8
|
-
|
(29.1)
|
(0.3)
|
Trade and other
payables
|
|
|
|
(180.2)
|
(180.2)
|
(191.9)
|
Current tax liabilities
|
|
|
|
(5.9)
|
(11.6)
|
(16.6)
|
Other liabilities
|
|
|
|
(13.7)
|
(14.4)
|
(12.7)
|
Lease liabilities
|
|
|
|
(14.2)
|
(12.3)
|
(15.0)
|
|
|
|
|
(214.0)
|
(247.6)
|
(236.5)
|
Net current assets
|
|
|
|
270.7
|
214.5
|
251.7
|
Total assets less current
liabilities
|
|
|
1,332.1
|
1,157.8
|
1,352.8
|
Non-current liabilities
|
|
|
|
|
|
|
Borrowings
|
|
|
8
|
(318.1)
|
(197.0)
|
(316.8)
|
Lease liabilities
|
|
|
|
(70.0)
|
(49.3)
|
(65.2)
|
Other liabilities
|
|
|
|
(9.0)
|
(11.4)
|
(9.9)
|
Retirement benefit
obligations
|
|
|
|
(0.3)
|
-
|
(0.3)
|
Deferred tax
liabilities
|
|
|
|
(54.1)
|
(37.1)
|
(58.6)
|
|
|
|
|
(451.5)
|
(294.8)
|
(450.8)
|
Net assets
|
|
|
|
880.6
|
863.0
|
902.0
|
Equity
|
|
|
|
|
|
|
Share capital
|
|
|
|
6.8
|
6.8
|
6.8
|
Share premium
|
|
|
|
420.2
|
420.2
|
420.2
|
Translation reserve
|
|
|
|
21.3
|
39.6
|
42.5
|
Hedging reserve
|
|
|
|
(0.1)
|
2.4
|
1.7
|
Retained earnings
|
|
|
|
425.8
|
387.7
|
424.4
|
Total shareholders'
equity
|
|
|
|
874.0
|
856.7
|
895.6
|
Minority interests
|
|
|
|
6.6
|
6.3
|
6.4
|
Total equity
|
|
|
|
880.6
|
863.0
|
902.0
|
Condensed Consolidated Cash Flow Statement
For the six months ended 31 March 2024
|
|
Unaudited 31 Mar 2024
|
Unaudited 31 Mar 2023
|
Audited
30 Sep 2023
|
|
Note
|
£m
|
£m
|
£m
|
Cash flow from operating
activities
|
7
|
122.1
|
98.2
|
257.3
|
Interest paid, net (including
borrowing fees)
|
|
(11.1)
|
(11.3)
|
(26.7)
|
Tax paid
|
|
(33.3)
|
(22.2)
|
(41.4)
|
Net cash inflow from operating
activities
|
|
77.7
|
64.7
|
189.2
|
Cash flow from investing
activities
|
|
|
|
|
Acquisition of businesses (net of
cash acquired)
|
|
(7.2)
|
(85.4)
|
(258.5)
|
Acquisition related deferred
payments/receipts, net
|
|
(12.4)
|
(8.0)
|
(12.3)
|
Proceeds from sale of business
(net of cash disposed)
|
|
-
|
21.5
|
21.5
|
Purchase of property, plant and
equipment
|
|
(9.4)
|
(9.4)
|
(21.6)
|
Purchase of other intangible
assets
|
|
(0.3)
|
(0.8)
|
(1.5)
|
Proceeds from sale of property,
plant and equipment
|
|
5.5
|
0.7
|
1.5
|
Net cash used in investing
activities
|
|
(23.8)
|
(81.4)
|
(270.9)
|
Cash flow from financing
activities
|
|
|
|
|
Proceeds from issue of share
capital
|
|
-
|
236.1
|
236.1
|
Share issue costs
|
|
-
|
(3.6)
|
(4.2)
|
Dividends paid to
shareholders
|
11
|
(53.6)
|
(48.4)
|
(70.5)
|
Dividends paid to minority
interests
|
|
(0.2)
|
(0.3)
|
(0.3)
|
Notional purchase of own shares on
exercise of options
|
|
(2.2)
|
(1.9)
|
(1.9)
|
Proceeds from
borrowings
|
|
213.5
|
45.3
|
579.5
|
Repayment of borrowings
|
|
(205.6)
|
(171.6)
|
(617.3)
|
Principal elements of lease
payments
|
|
(7.9)
|
(6.9)
|
(13.9)
|
Net cash (outflow)/inflow from
financing activities
|
|
(56.0)
|
48.7
|
107.5
|
Net (decrease)/increase in cash
and cash
equivalents
|
8
|
(2.1)
|
32.0
|
25.8
|
Cash and cash equivalents at
beginning of period
|
|
62.4
|
41.7
|
41.7
|
Effect of exchange rates on cash
and cash equivalents
|
|
(0.8)
|
(1.6)
|
(5.1)
|
Cash and cash equivalents at end
of period
|
8
|
59.5
|
72.1
|
62.4
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
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 2024
comprise the Company and its subsidiaries (together referred to as
"the Group").
The condensed information presented
for the financial year ended 30 September 2023 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 2023 were extracted from the 2023 Half Year
Report, which was unaudited.
The Group's audited consolidated
financial statements for the year ended 30 September 2023 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 2024 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 2023.
The Half Year financial statements
were approved by the Board of Directors on 13 May 2024; 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 2023, except for the
amount included in respect of taxation and the application of hedge
accounting for foreign currency hedges and net investment hedges.
The adoption of the new policies in respect of hedging did not have
a material impact over the interim financial statements.
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
2023. Further explanation of the Group's principal risks and
uncertainties and Going Concern are set out in the narrative of
this Half Year Report.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
1.3 Risk management
(Continued)
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 2024. 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 2024 with the
gains and losses taken to equity. The fair value of the forward
contracts and interest rate swaps as at 31 March is £nil (30
September 2023: £2.4m asset).
|
-
|
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 2023 as set
out on page 179 - 180 of the 2023 Annual Report &
Accounts.
2.
ANALYSIS OF OPERATING EXPENSES / (INCOME)
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months to 31 Mar
2024
|
Six months to 31 Mar
2023
|
Year to 30 Sep 2023
|
|
|
Adjusted1
|
Adjust-ments1
|
Total
|
Adjusted1
|
Adjust-ments1
|
Total
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cost of inventories
sold
|
|
345.7
|
5.4
|
351.1
|
319.4
|
-
|
319.4
|
658.0
|
Employee costs
|
|
112.8
|
-
|
112.8
|
102.0
|
1.9
|
103.9
|
210.0
|
Depreciation of property, plant
and equipment
|
|
7.4
|
-
|
7.4
|
6.3
|
-
|
6.3
|
12.8
|
Depreciation of right-of-use
assets
|
|
7.7
|
-
|
7.7
|
6.7
|
-
|
6.7
|
14.8
|
Amortisation
|
|
0.5
|
28.2
|
28.7
|
0.4
|
25.3
|
25.7
|
53.9
|
Net impairment losses on trade
receivables
|
|
0.6
|
-
|
0.6
|
1.1
|
-
|
1.1
|
2.5
|
Other operating
expenses
|
|
38.2
|
3.8
|
42.0
|
37.2
|
(10.0)
|
27.2
|
65.0
|
Operating expenses
|
|
512.9
|
37.4
|
550.3
|
473.1
|
17.2
|
490.3
|
1,017.0
|
1 The adjustments to operating expenses are made in relation to
acquisition related and other charges, as defined in note 13.3,
totalling £37.4m (2023: £17.2m) and comprise £5.4m (2023: £nil) of
fair value adjustments to inventory acquired through acquisitions
recognised in cost of inventories sold, £28.2m (2023: £25.3m) of
amortisation of acquisition intangible assets and £3.8m (2023
£4.1m) of acquisition expenses. During the period ended 31 March
2024, the gain on disposal of businesses was £nil (2023:
£12.2m).
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
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 2023, the Group earned 48.6% of its annual
revenues and 46.3% 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.
|
Revenue
|
Adjusted operating
profit
|
Operating
profit
|
|
6 mths 31
Mar
|
6 mths
31 Mar
|
12 mths
30 Sep
|
6 mths 31
Mar
|
6 mths
31 Mar
|
12 mths
30 Sep
|
6mths 31
Mar
|
6 mths
31 Mar
|
12 mths
30 Sep
|
£m
|
2024
|
2023
|
2023
|
2024
|
2023
|
2023
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
|
|
|
By Sector
|
|
|
|
|
|
|
|
|
|
Controls
|
288.1
|
278.8
|
568.4
|
69.9
|
64.3
|
136.6
|
53.7
|
57.7
|
112.9
|
Seals
|
241.2
|
198.4
|
419.0
|
44.3
|
35.7
|
79.0
|
27.8
|
29.3
|
55.8
|
Life Sciences
|
109.0
|
105.6
|
212.9
|
21.6
|
20.9
|
43.2
|
16.9
|
16.7
|
36.4
|
Corporate
|
-
|
-
|
-
|
(10.4)
|
(11.2)
|
(21.8)
|
(10.4)
|
(11.2)
|
(21.8)
|
|
638.3
|
582.8
|
1,200.3
|
125.4
|
109.7
|
237.0
|
88.0
|
92.5
|
183.3
|
|
|
|
|
|
|
|
|
|
|
By Geographic Area
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
130.8
|
137.2
|
267.1
|
13.9
|
14.4
|
28.8
|
|
|
|
Rest of Europe
|
134.6
|
97.7
|
210.3
|
24.6
|
15.3
|
34.5
|
|
|
|
USA
|
278.3
|
256.5
|
537.6
|
67.7
|
60.3
|
132.2
|
|
|
|
Rest of World
|
94.6
|
91.4
|
185.3
|
19.2
|
19.7
|
41.5
|
|
|
|
|
638.3
|
582.8
|
1,200.3
|
125.4
|
109.7
|
237.0
|
|
|
|
The Group has re-presented the
comparative for the period ended 31 March 2023 in relation to the
geographic segment analysis to reflect USA separately. This is due
to the increasing operations in that territory and provides more
information that is relevant to the users of the financial
statements.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
3.
BUSINESS SECTOR ANALYSIS (Continued)
|
Total
assets
|
Total
liabilities
|
Net assets
|
|
31 Mar
|
31
Mar
|
30
Sep
|
31 Mar
|
31
Mar
|
30
Sep
|
31 Mar
|
31
Mar
|
30
Sep
|
£m
|
2024
|
2023
|
2023
|
2024
|
2023
|
2023
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
|
|
|
By Sector
|
|
|
|
|
|
|
|
|
|
Controls
|
622.2
|
643.1
|
640.4
|
(93.5)
|
(79.7)
|
(96.1)
|
528.7
|
563.4
|
544.3
|
Seals
|
608.1
|
423.3
|
628.9
|
(112.1)
|
(96.5)
|
(119.6)
|
496.0
|
326.8
|
509.3
|
Life Sciences
|
250.7
|
245.9
|
244.1
|
(52.7)
|
(45.9)
|
(43.3)
|
198.0
|
200.0
|
200.8
|
Corporate
assets/(liabilities)
|
65.1
|
93.1
|
75.9
|
(407.2)
|
(320.3)
|
(428.3)
|
(342.1)
|
(227.2)
|
(352.4)
|
|
1,546.1
|
1,405.4
|
1,589.3
|
(665.5)
|
(542.4)
|
(687.3)
|
880.6
|
863.0
|
902.0
|
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
Sep
|
31 Mar
|
31
Mar
|
30
Sep
|
£m
|
2024
|
2023
|
2023
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
By Sector
|
|
|
|
|
|
|
Controls
|
3.3
|
2.7
|
5.9
|
2.4
|
2.4
|
4.6
|
Seals
|
3.2
|
3.8
|
9.0
|
3.2
|
2.3
|
5.0
|
Life Sciences
|
3.1
|
3.5
|
7.9
|
2.2
|
1.9
|
4.0
|
Corporate
|
0.1
|
0.2
|
0.3
|
0.1
|
0.1
|
0.2
|
|
9.7
|
10.2
|
23.1
|
7.9
|
6.7
|
13.8
|
A further £7.7m (2023: £6.7m) of
depreciation was incurred on right-of-use assets (note 2).
Depreciation also includes amortisation of other intangible assets,
largely software.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
4.
FINANCIAL EXPENSE, NET
|
31 Mar
2024
|
31
Mar
2023
|
30
Sep
2023
|
|
£m
|
£m
|
£m
|
Interest (income)/ expense and similar
charges
|
|
|
|
- bank facility and commitment fees
|
0.7
|
0.7
|
1.6
|
- interest income on short term deposits
|
(0.1)
|
(0.2)
|
(0.4)
|
- interest expense on bank borrowings
|
7.8
|
9.2
|
16.6
|
- notional interest income on the defined benefit pension
schemes
|
(0.2)
|
(0.2)
|
(0.4)
|
- amortisation of capitalised borrowing fees
|
-
|
0.1
|
0.2
|
- interest on lease liabilities
|
2.0
|
1.4
|
2.8
|
Net interest expense and similar charges
|
10.2
|
11.0
|
20.4
|
- acquisition related finance charges, net
|
-
|
2.8
|
7.3
|
Financial expense, net
|
10.2
|
13.8
|
27.7
|
Acquisition related finance charges
includes unwind of discount on and remeasurement of acquisition
liabilities of £0.4m expense (2023: £0.9m expense) and the
amortisation of capitalised borrowing fees on acquisition related
borrowings of £0.4m expense (2023: £0.9m expense), net of interest
income on deferred receivables from disposals of £0.2m income
(2023: £0.4m income) and fair value remeasurements of put options
for future minority purchases of £0.6m income (2023: £1.4m
expense).
5.
TAXATION
|
31 Mar
2024
|
31
Mar
2023
|
30
Sep
2023
|
|
£m
|
£m
|
£m
|
UK tax
|
7.7
|
7.2
|
8.9
|
Overseas tax
|
12.0
|
11.8
|
28.4
|
Total tax on profit for the period
|
19.7
|
19.0
|
37.3
|
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 24.0% (September 2023: 24.0%).
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
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 134,009,865 (2023:
125,360,523) and the profit for the period attributable to
shareholders of £57.7m (2023: £59.3m). Basic earnings per share is
43.1p (2023: 47.3p). Diluted earnings per share is 43.0p (2023:
47.1p) and is based on the average number of ordinary shares (which
includes any potentially dilutive shares) of 134,328,842 (2023:
125,927,286).
Adjusted earnings per share
Adjusted earnings per share,
defined in note 13, is calculated as follows:
|
31 Mar
2024
|
31 Mar
2023
|
30
Sep
2023
|
|
|
|
|
pence
per share
|
pence
per
share
|
pence
per
share
|
31 Mar
2024 £m
|
31
Mar
2023
£m
|
30
Sep
2023
£m
|
Profit before tax
|
|
|
|
77.8
|
78.7
|
155.6
|
Tax expense
|
|
|
|
(19.7)
|
(19.0)
|
(37.3)
|
Minority interests
|
|
|
|
(0.4)
|
(0.4)
|
(0.6)
|
Earnings for the period attributable to
shareholders of the Company
|
43.1
|
47.3
|
90.8
|
57.7
|
59.3
|
117.7
|
Acquisition related and other
charges and acquisition related finance charges, net of
tax
|
22.0
|
11.8
|
35.7
|
29.5
|
14.8
|
46.3
|
Adjusted earnings (Note 13.4)
|
65.1
|
59.1
|
126.5
|
87.2
|
74.1
|
164.0
|
7.
RECONCILIATION OF OPERATING PROFIT TO CASH FLOW FROM OPERATING
ACTIVITIES
|
31 Mar
2024
|
31
Mar
2023
|
30
Sep
2023
|
|
£m
|
£m
|
£m
|
Operating profit
|
88.0
|
92.5
|
183.3
|
Acquisition related and other
charges (note 2)
|
37.4
|
17.2
|
53.7
|
Adjusted operating profit
|
125.4
|
109.7
|
237.0
|
|
|
|
|
Depreciation/amortisation of
tangible, other intangible assets and leases - right-of-use
assets
|
15.6
|
13.4
|
28.6
|
Share-based payments
expense
|
3.5
|
2.2
|
4.1
|
Defined benefit pension scheme
payment in excess of interest
|
(0.4)
|
(0.3)
|
(0.6)
|
Profit on disposal of
assets
|
(2.9)
|
-
|
(1.1)
|
Acquisition and disposal expenses
paid
|
(2.0)
|
(4.0)
|
(6.0)
|
Other non-cash
movements
|
-
|
-
|
(0.5)
|
Non-cash items and other
|
13.8
|
11.3
|
24.5
|
Operating cash flow before changes in working
capital
|
139.2
|
121.0
|
261.5
|
(Increase)/Decrease in
inventories
|
(0.1)
|
(11.5)
|
10.8
|
Increase in trade and other
receivables
|
(16.4)
|
(17.8)
|
(8.8)
|
(Decrease)/Increase in trade and
other payables
|
(0.6)
|
6.5
|
(6.2)
|
Increase in working capital
|
(17.1)
|
(22.8)
|
(4.2)
|
Cash flow from operating activities
|
122.1
|
98.2
|
257.3
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
8.
NET
DEBT
The movement in net debt during the
period is as follows:
|
|
31 Mar
2024
£m
|
|
31
Mar
2023
£m
|
|
30
Sep
2023
£m
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash
and cash equivalents
(Increase)/decrease in bank
borrowings
|
|
(2.1)
(7.0)
|
|
32.0
127.7
|
|
25.8
43.8
|
|
|
(9.1)
|
|
159.7
|
|
69.6
|
|
|
|
|
|
|
|
Effect of exchange rates and other
non-cash movements
|
|
5.2
|
|
15.2
|
|
4.6
|
(Increase)/decrease in net debt
|
|
(3.9)
|
|
174.9
|
|
74.2
|
Net debt at beginning of
period
|
|
(254.7)
|
|
(328.9)
|
|
(328.9)
|
Net debt at end of period
|
|
(258.6)
|
|
(154.0)
|
|
(254.7)
|
|
|
|
|
|
|
|
Comprising:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
59.5
|
|
72.1
|
|
62.4
|
|
|
|
|
|
|
|
Bank borrowings:
|
|
|
|
|
|
|
-
Revolving credit facility, including accrued
interest
|
|
(108.9)
|
|
(41.9)
|
|
(321.1)
|
-
Overdraft facilities
|
|
-
|
|
-
|
|
(0.3)
|
-
Term loan, including accrued interest
|
|
-
|
|
(189.0)
|
|
-
|
-
Capitalised debt fees
|
|
4.8
|
|
4.8
|
|
4.3
|
-
Private placement, including accrued
interest
|
|
(214.0)
|
|
-
|
|
-
|
|
|
(318.1)
|
|
(226.1)
|
|
(317.1)
|
Net debt at end of period
|
|
(258.6)
|
|
(154.0)
|
|
(254.7)
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
|
Repayable within one
year
|
|
-
|
|
(29.1)
|
|
(0.3)
|
Repayable after one
year
|
|
(318.1)
|
|
(197.0)
|
|
(316.8)
|
|
|
|
|
|
|
|
The Group has a multi-currency
revolving credit facility agreement ("RCF") with an aggregate
principal amount of £555.0m which was originally entered into on 17
July 2023. The RCF is due to expire in July 2028 with an option to
extend for two further 12-month periods.
At 31 March 2024, the Group had
utilised £108.7m of the RCF (2023: £41.9m), comprising £30.0m of
the GBP RCF and £78.7m (€92.0m) of EUR RCF. £446.3m of the
revolving facility remains undrawn. The RCF balance includes £0.2m
(2023: £0.1m) of accrued interest.
On 20 March 2024, the Group issued
private placement ("PP") notes for an aggregate principal amount of
£213.5m (€250.0m) with maturities of 7 years (€75m), 10 years
(€100m) and 12 years (€75m). The PP balance includes £0.3m of
accrued interest.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
8.
NET
DEBT (Continued)
Capitalised debt fees includes
£4.0m (2023: £4.8m) in relation to the RCF and £0.8m (2023: £nil)
in relation to the PP notes.
The RCF is subject to interest at
variable rates while the PP notes are at fixed rate. At 31 March
2024, fixed rate debt was 67% of total debt.
Total debt is £342.8m (2023:
£215.6m) comprising net debt of £258.6m (2023: £154.0m) which
excludes lease liabilities of £84.2m (2023: £61.6m). Debt covenants
are tested against net debt, as defined in Note 13.6.
9.
GOODWILL AND ACQUISITION INTANGIBLE ASSETS
|
Goodwill
|
Acquisition intangible
assets
|
|
£m
|
£m
|
|
|
|
At 1 October 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
|
Acquisitions
|
63.2
|
88.1
|
Amortisation charge
|
-
|
(23.3)
|
Exchange adjustments
|
1.3
|
3.8
|
At 30 September 2023
|
439.1
|
520.1
|
Acquisitions
|
3.7
|
6.2
|
Amortisation charge
|
-
|
(28.2)
|
Exchange adjustments
|
(10.1)
|
(11.2)
|
At 31 March 2024
|
432.7
|
486.9
|
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 sixteen years.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
10.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES
Acquisitions
The Group completed four
acquisitions in the period. This comprised 100% of the share
capital of Fast Gaskets and Parts Limited ("Fast Gaskets") (04
October 2023), Abbey Hose Company Limited ("Abbey Hose") (22
December 2023) and Technisil GmbH ("Technisil") (28 February 2024),
and the trade and assets of Cable and Tubing Solutions GmbH ("CTS")
(20 November 2023). The combined initial consideration for these
acquisitions was £7.2m, net of cash acquired of £0.8m. Deferred
consideration of up to £2.7m is payable based largely on the
performance of the businesses in the period subsequent to their
acquisitions.
Acquisition expenses
Acquisition expenses of £0.5m
(2023:£2.7m) 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.
|
Total
Acquisitions
|
|
Book value £m
|
Fair value £m
|
Acquisition intangible
assets1
|
-
|
6.2
|
Deferred tax
|
-
|
(1.1)
|
Property, plant and
equipment
|
0.1
|
0.1
|
Inventories
|
0.9
|
1.0
|
Trade and other
receivables
|
0.8
|
1.1
|
Trade and other
payables
|
(0.9)
|
(1.1)
|
Net assets acquired
|
0.9
|
6.2
|
Goodwill
|
-
|
3.7
|
Minority interests
|
-
|
-
|
Cash paid
|
|
8.0
|
Cash acquired
|
|
(0.8)
|
|
|
7.2
|
Deferred consideration
|
|
2.7
|
Total Consideration
|
|
9.9
|
1 On the acquisitions completed in the current period, acquired
intangibles relate primarily to customer relationships.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
10.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES (Continued)
Acquisitions revenue and adjusted
operating profit
From the date of acquisition to 31
March 2024, each acquired business contributed the following to
Group revenue and adjusted operating profit:
|
Acquisition date
|
Revenue
£m
|
Adj.1
£m
|
Pro forma revenue
£m
|
Adjusted operating
profit
£m
|
Adj.1
£m
|
Pro forma adjusted
operating
profit
£m
|
Fast Gaskets
|
04 Oct 2023
|
0.5
|
-
|
0.5
|
0.1
|
-
|
0.1
|
CTS
|
20 Nov 2023
|
1.5
|
0.4
|
1.9
|
0.4
|
0.2
|
0.6
|
Abbey Hose
|
22 Dec 2023
|
1.2
|
1.2
|
2.4
|
0.3
|
0.3
|
0.6
|
Technisil
|
28 Feb 2024
|
-
|
0.1
|
0.1
|
-
|
-
|
-
|
|
|
3.2
|
1.7
|
4.9
|
0.8
|
0.5
|
1.3
|
1 Pro forma revenue and adjusted operating profit have 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 2023. 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 period.
11.
DIVIDENDS
|
31 Mar
2024
|
31 Mar
2023
|
30
Sep
2023
|
31 Mar
2024
|
31 Mar
2023
|
30
Sep
2023
|
|
pence
per share
|
pence
per
share
|
pence
per
share
|
£m
|
£m
|
£m
|
Final dividend of the prior year,
paid in February
|
40.0
|
38.8
|
38.8
|
53.6
|
48.4
|
48.4
|
Interim dividend, paid in
June
|
17.3
|
16.5
|
16.5
|
23.2
|
22.1
|
22.1
|
|
57.3
|
55.3
|
55.3
|
76.8
|
70.5
|
70.5
|
Subsequent to the period end, the
Directors have declared an interim dividend of 17.3p per share
(2023: 16.5p) which will be paid on 7 June 2024 to shareholders on
the register on 24 May 2024. The total value of the dividend will
be £23.2m (2023: £22.1m). No liability has been recognised on the
balance sheet at 31 March 2024 in respect of the interim dividend
(2023: same).
12.
EXCHANGE RATES
The exchange rates used to
translate the results of the overseas businesses were as
follows:
|
Average
|
|
Closing
|
|
31 Mar
|
31
Mar
|
30
Sep
|
|
31 Mar
|
31
Mar
|
30
Sep
|
|
2024
|
2023
|
2023
|
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
|
US dollar (US$)
|
1.26
|
1.20
|
1.23
|
|
1.26
|
1.24
|
1.22
|
Canadian dollar (C$)
|
1.70
|
1.63
|
1.66
|
|
1.71
|
1.68
|
1.65
|
Euro (€)
|
1.16
|
1.14
|
1.15
|
|
1.17
|
1.13
|
1.15
|
Swiss franc (CHF)
|
1.10
|
1.13
|
1.13
|
|
1.14
|
1.13
|
1.12
|
Australian dollar (A$)
|
1.92
|
1.79
|
1.85
|
|
1.94
|
1.85
|
1.89
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.
ALTERNATIVE PERFORMANCE MEASURES
The Group reports under UK-adopted
International Accounting Standards 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 debt covenants. Alternative
performance measures are not considered to be a substitute for, or
superior to, IFRS measures.
13.1 Alternative
performance measures
Measure
|
Closest IFRS measure
|
Definition and reconciliation
|
Purpose
|
Organic growth
|
Reported revenue
increase
|
Organic growth strips out the
effects of the movement in exchange rates and of acquisitions and
disposals.
|
Allows users of the accounts to
gain understanding of how the Group has performed on a
like-for-like basis, excluding the effects of exchange rates and of
acquisitions and disposals.
|
Adjusted operating
profit
|
Operating profit
|
Statutory operating profit
excluding separately disclosed items and can be found on the face
of the Group Income Statement in the Adjusted column.
|
Adjusted operating profit is a key
performance measure for the Executive Directors' annual 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
margin
|
Operating profit divided by
revenue
|
Adjusted operating profit/(loss)
divided by revenue.
|
Adjusted operating margin is a
measure 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 earnings per
share
|
Basic earnings per
share
|
Adjusted earnings (being adjusted
profit after tax attributable to equity shareholders) for the
period attributable to shareholders of the Group 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 the notes to the financial statements.
|
Adjusted earnings per share is
widely used by external stakeholders, particularly in the
investment community.
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.1 Alternative
performance measures (continued)
Return On Adjusted Trading Capital
Employed (ROATCE)
|
Operating profit and net
assets
|
Pro forma adjusted operating
profit (being the annualised adjusted operating profit including
that of acquisitions and disposals) divided by adjusted trading
capital employed. 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 that are consistent with the pro forma adjusted
operating profit.
|
ROATCE gives an indication of the
Group's capital efficiency and is an element of a performance
measure for the Executive Directors' remuneration.
|
Free cash flow
|
Net cash generated from
operating activities
|
The cash flow equivalent of
adjusted profit after tax.
|
Free cash flow allows us and
external parties to evaluate the cash generated by the Group's
operations and is also a key performance measure for the Executive
Directors' annual bonus structure and management
remuneration.
|
Net debt
|
Borrowings less cash
|
Cash and cash equivalents (cash
overnight deposits, other short-term deposits) offset by borrowings
which compose of bank loans, excluding lease
liabilities.
|
Net debt is the measure by which
the Group and interested stakeholders assesses its level of overall
indebtedness.
|
Earnings Before Interest and Tax
plus Depreciation and Amortisation ("EBITDA")
|
Operating profit
|
EBITDA is calculated by taking
adjusted operating profit and adding back depreciation and
amortisation.
|
EBITDA is used as a key measure to
understand profit and cash generation before the impact of
investments (such as capital expenditure and working capital). It
is also used to derive the Group's gearing ratio.
|
Leverage
|
No direct equivalent
|
The ratio of net debt to EBITDA
over the last 12 months (with net debt translated at the average
exchange rates that are consistent with EBITDA), after making the
following adjustments to EBITDA: including any annualised EBITDA
for businesses acquired by the Group during that period; the
reversal of IFRS 16 accounting; the exclusion of any EBITDA
businesses disposed by the Group during that period; and the
exclusion of the profit or loss attributable to minority
interest.
|
The leverage ratio is considered a
key measure of balance sheet strength and financial stability by
which the Group and interested stakeholders assesses its financial
position.
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.2 Revenue Growth
As a multi-national group of
businesses which trades in a large number of currencies, and
acquires and sometimes disposes of companies, organic growth is a
key performance measure and is referred to throughout our
reporting. Organic growth excludes the effects of the movement in
exchange rates and of acquisitions and disposals. The Board
believes that this allows users of the financial statements to gain
a better understanding of the Group's performance.
A reconciliation of the movement in
reported revenue compared to the prior period and the calculation
of organic growth is shown below:
|
£m
|
%
|
H123 Reported revenue (basis for Acquisitions and Disposals /
Exchange Rates impacts)
|
582.8
|
|
Acquisitions and Disposals
1
|
46.6
|
8%
|
Basis for organic growth
impact
|
629.4
|
|
Organic growth
2
|
28.9
|
5%
|
Exchange rates
3
|
(20.0)
|
(3%)
|
H124 Reported revenue
|
638.3
|
|
1
|
The impact of acquisitions 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 is the removal of the revenue of the disposed entity in
the comparable post disposal period at prior period exchange
rates.
|
2
|
Organic growth measures the change
in revenue compared to the prior period, at prior period exchange
rates. For acquisitions, this includes incremental revenues
generated under Diploma's ownership compared to the revenue in the
same period prior to acquisition, at prior period exchange
rates.
|
3
|
Exchange rates movements are
assessed by re-translating current period reported values to prior
period exchange rates.
|
13.3
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 (referred to as acquisition related and other charges) 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:
|
Note
|
31 Mar 2024
£m
|
31 Mar 2023
£m
|
30 Sep 2023
£m
|
Revenue
|
|
638.3
|
582.8
|
1,200.3
|
|
|
|
|
|
Operating profit as reported under
IFRS
|
|
88.0
|
92.5
|
183.3
|
Add: Acquisition related and other
charges
|
2
|
37.4
|
17.2
|
53.7
|
Adjusted operating
profit
|
3
|
125.4
|
109.7
|
237.0
|
Adjusted operating
margin
|
|
19.6%
|
18.8%
|
19.7%
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.4
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 134,009,865 (2023: 125,360,523), as set out in note 6.
The Directors believe that adjusted EPS provides an important
measure of the earnings capacity of the Group.
13.5
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, net proceeds from issue of share capital 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.
|
|
Note
|
31 Mar 2024
£m
|
31 Mar 2023
£m
|
30 Sep 2023
£m
|
Net increase in cash and cash
equivalents
|
8
|
(2.1)
|
32.0
|
25.8
|
Add:
|
Dividends paid to shareholders and
minority interests
|
|
53.8
|
48.7
|
70.8
|
|
Acquisition/disposal of businesses
(including net expenses)
|
|
9.2
|
67.9
|
243.0
|
|
Acquisition related deferred
payments/receipts, net
|
|
12.4
|
8.0
|
12.3
|
|
Proceeds from issue of share
capital (net of fees)
|
|
-
|
(232.5)
|
(231.9)
|
|
Net (proceeds from)/repayment of
borrowings (including borrowing fees)
|
8
|
(7.0)
|
127.7
|
43.8
|
Free cash flow
|
|
66.3
|
51.8
|
163.8
|
Adjusted
earnings1
|
6
|
87.2
|
74.1
|
164.0
|
Free cash flow
conversion
|
|
76%
|
70%
|
100%
|
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.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.6
Leverage
Leverage is net debt, defined as
cash and cash equivalents and borrowings (translated at average
exchange rates that are consistent with EBITDA), divided by EBITDA
as defined in the Group's external debt 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.
|
Note
|
31 Mar 2024
£m
|
31 Mar 2023
£m
|
30 Sep 2023
£m
|
Cash and cash
equivalents
|
8
|
59.5
|
72.1
|
62.4
|
Borrowings
|
8
|
(318.1)
|
(226.1)
|
(317.1)
|
Re-translation at average exchange
rates
|
|
(0.3)
|
(4.0)
|
1.2
|
Net debt at average exchange
rates
|
|
(258.9)
|
(158.0)
|
(253.5)
|
Adjusted operating
profit
|
13.3
|
125.4
|
109.7
|
237.0
|
Depreciation and amortisation of
tangible and other intangible assets
|
2
|
7.9
|
6.7
|
13.8
|
IFRS 16 impact
|
|
(0.4)
|
(0.8)
|
(1.7)
|
Minority interest share of
adjusted operating profit
|
|
(0.5)
|
(0.6)
|
(0.8)
|
Pro forma adjustments1
|
|
141.1
|
121.3
|
21.0
|
EBITDA
|
|
273.5
|
236.3
|
269.3
|
Leverage
|
|
0.9x
|
0.7x
|
0.9x
|
1 Annualisation of adjusted EBITDA, including that of
acquisitions and disposals in the period.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
13.7 Trading
Capital Employed and ROATCE
Trading
capital employed is defined as net assets less cash and cash
equivalents and retirement benefit assets, after adding back
borrowings (other than lease liabilities), deferred tax, retirement
benefit obligations and net acquisition liabilities in respect of
future purchases of minority interests, deferred consideration
payable on acquisitions, and acquisition receivables in respect of
previously completed disposals. 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 that are consistent
with the pro forma adjusted operating profit. 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.
|
Note
|
31 Mar 2024
£m
|
31 Mar 2023
£m
|
30 Sep 2023
£m
|
Net assets as reported under
IFRS
|
|
880.6
|
863.0
|
902.0
|
Add/(deduct):
|
|
|
|
|
- Deferred tax, net
|
|
53.8
|
36.7
|
58.4
|
- Retirement benefit assets,
net
|
|
(1.1)
|
(8.8)
|
(6.5)
|
- Acquisition related
liabilities/assets, net
|
|
20.9
|
23.1
|
19.6
|
- Net debt
|
8
|
258.6
|
154.0
|
254.7
|
Trading capital
employed
|
|
1,212.8
|
1,068.0
|
1,228.2
|
- Historic goodwill and
acquisition related charges, net of deferred tax and currency
movements
|
|
234.9
|
193.4
|
189.4
|
Adjusted trading capital
employed
|
|
1,447.7
|
1,261.4
|
1,417.6
|
Adjusted operating
profit
|
13.3
|
125.4
|
109.7
|
237.0
|
Pro forma
adjustments¹
|
|
134.8
|
115.3
|
19.4
|
Pro forma adjusted operating profit
|
|
260.2
|
225.0
|
256.4
|
ROATCE
|
|
18.0%
|
17.8%
|
18.1%
|
1 Annualisation of adjusted operating profit, including that of
acquisitions and disposals in the period.
14.
REtirement Benefit asset and obligationS
On 26 March 2024, the Trustees
completed a buy-in of the remaining pensioner liabilities in the
Scheme with Just Retirement Limited. The Scheme paid £25.1m to Just
Retirement Limited on 26 March 2024 to fund 100% of the buy-in
premium. As at 31 March 2024, the Group's financial statements
include a net asset of £1.4m (30 September 2023: £6.8m) in respect
of the Group's UK pension scheme. As at 31 March 2024, 95% of the
scheme assets are concentrated in the buy-in policy.
15.
RELATED PARTY TRANSACTIONS
There have been no changes to the
related party arrangements or transactions as reported in the 2023
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.
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 31 March 2024
16. POST
BALANCE SHEET EVENTS
Acquisition of Peerless Aerospace Fastener
LLC
On 27 March 2024, the Group
announced the proposed acquisition of 100% of the membership
interests of Peerless Aerospace Fastener LLC ("Peerless"), a
market-leading distributor of specialty fasteners into the US and
European aerospace markets for an initial cash consideration of
$289.5m (£228m) on a cash-free and debt-free basis. A remaining
3.5% deferred consideration will be paid to management based on
Peerless's FY27 performance, some of which is employment linked.
The conditions to achieve completion of the acquisition of Peerless
were satisfied after period end, resulting in the completion taking
place on 1 May 2024. A purchase price allocation exercise is
currently being performed to determine the fair value of the
acquired net assets and goodwill arising on this
acquisition.
Acquisition of Plastic and Rubber Group Holdings
Limited
On 30 April 2024, the Group
acquired 100% of the share capital of Plastic and Rubber Group
Holdings Limited, a UK-based gaskets specialist for a total
consideration of £37.5m on a cash-free and debt-free basis. A
purchase price allocation exercise is currently being performed to
determine the fair value of the acquired net assets and goodwill
arising on this acquisition.
END