Specialist distributor Diploma (DPLM) delivered another impressive full-year performance, thanks to a solid contribution from its seals business where adjusted operating profits rose 37 per cent to £20.4m. Sales were particularly strong in the North American after-market business, which helped drive the adjusted operating margins there up from 18.6 per cent to 20.4 per cent. Add that to a hefty dividend hike and the shares remain attractive.
In the life sciences unit, through which Diploma supplies instrumentation and related services to the healthcare and environmental industries, sales rose 5 per cent to £78.4m - that pushed adjusted operating profit up 5 per cent to £18m. Group turnover was also boosted by three acquisitions in the year - J Royal in the US, Abbeychart and Amfast in the UK, and DSL in Australia. Diploma continued to improve its cash flow, too, which rose by 31 per cent at £32.7m - free cash flow in the seals division almost doubled to £13.7m.
Moreover, after increased capital investment of £3.5m, acquisition costs of £22.3m and dividend payments of £14.2m, Diploma was still left with a net cash balance. Further investment is planned in the coming year, with £3m earmarked for new and enlarged facilities and another £2m scheduled for information technology.
Numis Securities expects adjusted pre-tax profit of £57.2m for 2013, giving EPS of 35.2p (from £52.6m and 33.2p for 2012).
| DIPLOMA (DPLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 448p | MARKET VALUE: | £507m | |
| TOUCH: | 445-450p | 12-MONTH HIGH: | 504p | LOW: 295p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 146p* | NET CASH: | £7.9m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 156 | 21.1 | 11.4 | 7.50 |
| 2009 | 160 | 20.5 | 10.8 | 7.80 |
| 2010 | 184 | 26.7 | 14.6 | 9.00 |
| 2011 | 231 | 39.2 | 24.0 | 12.0 |
| 2012 | 260 | 46.0 | 27.9 | 14.4 |
| % change | +13 | +17 | +16 | +20 |
Ex-div: 28 Nov Payment: 23 Jan *Includes intangible assets of £113m, or 100p a share | ||||
