Specialist distribution group Diploma has put on a resilient show by announcing an expectation-beating 18 per cent rise in full-year adjusted pre-tax profits. The group specialises in life sciences, seals and controls products and, while its markets are sensitive to economic strains, its focus on essential operational products - rather than those linked to capital spending - should help insulate it from current economic difficulties.
Indeed, while much of the growth achieved during the year reflected acquisitions and favourable currency movements, Diploma still managed respectable organic growth - up 3 per cent in both revenue and operating profits (excluding currency effects). Margins are also holding up and management is confident that Diploma's scale and strong position in niche markets should make this sustainable.
After 2007's busy period for deals, this financial year was relatively quiet on the acquisition front, and Diploma's strong cash flows helped lift net cash by £3.3m. The group hopes to use its strong financial position, which includes a £20m loan facility, to snap up bargain acquisitions in the downturn. So broker Panmure Gordon is sticking by its forecasts of EPS of 17.04p for the full-year (16.41p in 2008).
| DIPLOMA (DPLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 128p | MARKET VALUE: | £145m | |
| TOUCH: | 125-128p | 12-MONTH HIGH: | 198p | LOW: 106p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 95p* | NET CASH: | £15.7m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p)** |
|---|---|---|---|---|
| 2004 | 101 | 15.4 | 10.5 | 3.40 |
| 2005 | 111 | 17.2 | 10.5 | 4.00 |
| 2006 | 128 | 31.2 | 21.1 | 4.60 |
| 2007 | 141 | 22.3 | 12.7 | 5.40 |
| 2008 | 172 | 21.8 | 11.8 | 7.50 |
| % change | +22 | -2 | -7 | +39 |
Ex-div: 26 Nov Payment: 21 Jan *Includes intangible assets of £71.4m, or 63p a share **Adjusted for 4-for-1 bonus issue | ||||
