Interim Results
Diploma PLC
08 May 2006
FOR IMMEDIATE RELEASE 8 May 2006
Announcement of Interim Results
for the six months ended 31 March 2006
Unaudited Unaudited Unaudited
Six months ended Six months ended Year ended
31 March 2006 31 March 2005 30 Sept 2005
(Restated*) (Restated*)
Revenue £63.5m £54.5m £111.3m
Operating profit, before exceptional items £9.3m £7.8m £16.2m
Profit before tax, before exceptional items £9.7m £8.1m £16.9m
Profit before tax, after exceptional items £20.3m £8.3m £17.1m
Adjusted earnings per share 28.9p 25.3p 52.9p
Basic earnings per share 69.9p 24.8p 52.0p
Dividends per share 8.0p 7.0p 20.0p
*The results for the six months ended 31 March 2006 have been prepared in accordance with International
Financial Reporting Standards. The results for the comparative periods have been restated on a comparable
basis.
• Strong growth in sales and operating profits, up 17% and 19% respectively, driven by the North
American Seals business, Somagen in Canada and IS Rayfast in the UK.
• Underlying operating profits up 10%, after adjusting for the acquisition of HKX and a benefit of £0.4m
on currency translation.
• Profit before tax and exceptional items up 20% to £9.7m; operating margin at 14.6% (2005: 14.3%).
• Proceeds of £11.4m, before expenses, from sale of Stamford land Phase 3 completed in February 2006;
exceptional profit before tax of £10.6m.
• Earnings per share, after adjusting for exceptional items, amortisation of acquisition intangible assets
and related tax, up 14% at 28.9p; basic earnings per share were 69.9p. Interim dividend up 1.0p to
8.0p.
• Strong free cash flow of £15.2m (2005: £4.3m) boosted by proceeds from Phase 3 Stamford land. Cash
funds at 31 March 2006 were £30.3m.
Commenting on the results for the period, Bruce Thompson, Diploma's Chief Executive said:
'The Group continues to benefit from generally strong trading conditions in North America. Specific market
opportunities in the UK and Germany have also contributed to enhance the Group's results. While these
favourable trading conditions prevail, the Group is confident of showing continued progress in 2006.'
www.diplomaplc.com
REGISTERED IN ENGLAND. NUMBER 3899848.
20 BUNHILL ROW, LONDON EC1Y 8UD.
For further enquiries please contact:
Bruce Thompson, Chief Executive Officer 020 7638 0934
Nigel Lingwood, Group Finance Director 020 7448 4875
Ian Seaton, Bankside Consultants 020 7367 8891
NOTE TO EDITORS:
Diploma PLC is a specialised international distribution group operating in three
sectors:
Life Sciences - Distributors of consumables, instrumentation and related
services to research, development and diagnostic laboratories. Principal
companies are Anachem Group and a1 envirosciences in Europe, and Somagen in
Canada.
Seals - Next day delivery of hydraulic kits, gaskets and cylinders, for mobile
machinery. Principal companies are Hercules Bulldog Sealing Products and HKX in
North America and FPE in the UK.
Controls - Distributors of specialised wiring, connectors and control devices
for a range of technically demanding applications. Principal companies are IS
Group in the UK and US, Sommer & Filcon in Germany and Hawco in the UK.
Within each of these sectors, the Diploma businesses serve industry segments
with long term growth potential and with the opportunity for sustainable
superior margins through the quality of customer service, depth of technical
support and value adding activities.
Further information on Diploma PLC can be found at www.diplomaplc.com
HALF YEAR REVIEW TO 31 MARCH 2006
In the six months to 31 March 2006, the Group continued to generate strong
growth in sales and profits. The main driver for growth was the North American
Seals business which delivered strong organic growth, improved operating margins
and absorbed the new HKX acquisition. Other strong performers were Somagen in
Canada and IS Rayfast in the UK. The Group also benefited from an appreciation
in overseas exchange rates which contributed £0.4m to operating profits,
relative to the comparable period in 2005.
This Interim Report has been prepared in accordance with International Financial
Reporting Standards ('IFRS') and the prior year results have been restated to
ensure comparability.
Sales increased by 17% to £63.5m (2005: £54.5m) and profit before exceptional
items and tax increased by 20% to £9.7m (2005: £8.1 m).
Operating margins were maintained at a healthy 14.6% (2005: 14.3%). A
significant increase in operating margins in the Seals sector more than offset a
reduction in Life Sciences and all three sectors now generate broadly similar
margins.
The sale of the 12.2 acre former Williamson Cliff production site, known as
Stamford land Phase 3, was completed in February 2006.The proceeds received on
sale were £11.4m, before expenses and an exceptional profit before tax of £10.6m
was generated. Taxation of £1.3m has been provided on the exceptional profit.
Group profit before tax, after exceptional items, was £20.3m (2005: £8.3m).
Adjusted earnings per share, which are stated after excluding exceptional items,
increased by 14% to 28.9p, compared with 25.3p in the prior year. Basic earnings
per share were 69.9p (2005: 24.8p).
The Directors have declared an increased interim dividend of 8.0p per share
(2005: 7.0p) payable on 14 June 2006 to shareholders on the register on 19 May
2006.
LIFE SCIENCES
The Life Science businesses increased sales by 17% to £20.4m (2005: £17.5m) with
operating margins of 14.7% (2005:16.6%). Strong performances from Somagen and
a1-envirosciences, the former boosted by the appreciation of the Canadian
dollar, offset lower operating margins in the Anachem core business.
Somagen delivered growth in sales of both consumables and capital products.
There were particularly strong performances in sales of reagent kits for
Cellular Pathology, Point of Care and Allergy applications; capital sales also
benefited from further releases of government funding, with Ontario being the
main beneficiary. The appreciation of the Canadian dollar against both Sterling
and the US dollar gave benefits both in terms of translation of sales and
profits and in purchasing products from US suppliers.
a1-envirosciences performed strongly in the period with the environmental
analysis businesses in the UK and Germany delivering record sales. Sales of
automated systems were particularly strong as customers in the Electricity,
Water, Petrochemical and Chemical industries continued to seek productivity
gains from high throughput sample testing. The new start-up operation in
Switzerland made a strong start and benefited from a one-off project to install
more than 100 vented balance safety enclosures in newly built laboratories for
Roche.
The core Anachem Bioscience business maintained its market leading position in
pipettes, tips and service through sustained investment in direct marketing,
on-line promotions and extensive field sales coverage. In addition, a new
Laboratory Filtration Products unit began trading in the period with attractive
supplier franchises and experienced personnel. These investments however reduced
operating margins in the consumables businesses and sales of instruments
remained difficult as customers continued to delay purchasing decisions.
SEALS
The Seals businesses increased sales by 32% to £17.6m (2005: £13.3m) and
operating margins increased to 14.8% (2005:11.3%).The newly acquired HKX
business made a good initial contribution to results, but more than half of the
growth in sector sales came from the continuing businesses.
The largely North American business of Hercules Bulldog delivered solid growth
in favourable market conditions. Double digit growth in both seal and cylinder
sales in the US was fuelled by strong economic activity and the continued
success of the tie-rod replacement programme. New suppliers from Asia Pacific
were brought on line to improve the supply chain and a range of new catalogues
introduced, displaying the broader product line and new pricing. These
initiatives, combined with tight operational control in the core Hercules
business in Clearwater, Florida, led to a significant increase in operating
margins.
Solid growth was also achieved in the Canadian seals businesses despite a slower
North American automotive industry impacting economic activity in Ontario and
partly Quebec. The Edmonton operation continued to benefit from the strong
oil-driven Alberta economy. The Bulldog gaskets and seals business in Reno
experienced somewhat mixed fortunes. The US domestic business was held back by
cut backs in purchasing by Bulldog's largest domestic customer, but
international export sales grew as new sales and marketing initiatives began to
impact.
In the UK, FPE made progress in a sluggish domestic market and it has begun
distributing its new up-dated catalogue. FPE also made modest progress in export
markets.
HKX, a leading provider of hydraulic system kits for the installation of
attachments on excavators, was acquired in November 2005. HKX offers customers a
colour coded kit system with easy to use instructions that simplify the
installation process. The kits substantially reduce the time and skill levels
required to install attachments. Since acquisition, HKX has delivered results
ahead of expectations with double digit sales growth, as its concept is rolled
out to the large North American excavator dealerships. This performance is
particularly creditable as HKX had, during the months leading up to its
acquisition, completed the relocation of its operations to a larger facility and
implemented a major upgrade to its IT systems.
CONTROLS
The Controls businesses increased sales by 8% to £25.5m (2005: £23.7m) and
maintained operating margins at 14.5% (2005:14.3%). Overall a solid performance
by the businesses, boosted by exceptionally strong results from the IS Group.
The IS Group delivered double digit growth in sales from its UK operations where
Ground Defence and Military Marine sales were very strong. Major stocking
programmes established at the end of the last financial year ensured that IS
Rayfast was able to respond, with high levels of customer service, to demand
generated from the defence industry UOR's (urgent operational requirements).The
new Otto range of high performance switches also strengthened the product
offering in supplying to a range of major weapons programmes.
Outside the UK defence industry, IS Rayfast also benefited from larger one-off
orders from the Oil and Gas and Power Generation sectors. Sales to the Asia
Pacific region also increased as relationships were strengthened in the growing
Chinese aerospace sector. In Motorsport, activity was also strong as the
Clarendon fastener business, in particular, benefited as Formula 1 teams
redesigned engines (from V10 to V8) to comply with FIA directives.
Sommer & Filcon grew steadily as they continued to exploit opportunities to
market the expanded product range to the traditional customer base, as well as
new customers. Order levels were particularly strong at Filcon where significant
connector orders were secured on the Eurofighter Tranche 2 and Tornado upgrade
programmes, as well as several Helicopter and Tank programmes. In February 2006,
Sommer joined Filcon in achieving the ISO EN9001: 2000 quality approval which
will assist in cross-selling initiatives.
Sales at Hawco were flat overall, with growth in the Refrigeration business
offsetting the more difficult Controls markets. Hawco's Controls business
continues to be exposed to the twin threats of UK customers moving manufacturing
to lower cost locations, as well as direct competition from Asia Pacific
suppliers. Work continues to source quality, competitively priced products and
to enhance sales and support capabilities. In the Refrigeration and Cooling
business, Hawco delivered solid results by offering a broad range of
competitively priced components combined with excellent customer service and
support.
FINANCE
The Group generated a strong cash flow from operations in the first half of the
year of £8.1m compared with £5.3m in the comparable period. Tax paid this year
of £3.5m was significantly higher than last year, largely reflecting the
increase in underlying profitability. However, with net proceeds of £11.1m
received from the sale of the Stamford land Phase 3 and capital expenditure of
£0.8m (in line with depreciation), free cash flow, which is before acquisitions
and dividends, was £15.2m compared with £4.3m in the comparable period.
The Group acquired HKX Inc on 29 November 2005 for a maximum consideration of
£7.2m (US$12.5m). During the half year, £6.6m (US$11.5m) was paid as cash
consideration, with up to a further £0.6m (US$1.0m) payable based on the
performance of the business in calendar year 2006. The maximum consideration
payable, in excess of the net assets, will be £6.2m and this has provisionally
been attributed to goodwill at this stage; its allocation to intangible assets
in accordance with IFRS 3 will be completed at 30 September 2006. Deferred
consideration of £1.0m (C$2.0m) was also paid to the vendors of Somagen as final
settlement of their performance payment. After the acquisition and dividend
payments, the Group's cash funds at 31 March 2006 were £30.3m.
CURRENT TRADING
The Group continues to benefit from generally strong trading conditions in North
America. Specific market opportunities in the UK and Germany have also
contributed to enhance the Group's results. While these favourable trading
conditions prevail, the Group is confident of showing continued progress in
2006.
Bruce Thompson
Chief Executive Officer
8 May 2006
Consolidated Income Statement
for the six months ended 31 March 2006
Unaudited Unaudited Unaudited
31 March 2006 31 March 2005 Year ended
(Restated) 30 Sept
Before Before 2005
exceptional Exceptional exceptional Exceptional (Restated)
items items Total items items Total Total
Note £m £m £m £m £m £m £m
Revenue 2 63.5 63.5 54.5 54.5 111.3
Operating profit 2 9.3 - 9.3 7.8 - 7.8 16.2
Pension curtailment gain 3 - - - - 0.2 0.2 0.2
Profit on disposal of fixed
assets 3 - 10.6 10.6 - - - -
Profit before finance income
and tax 2 9.3 10.6 19.9 7.8 0.2 8.0 16.4
Finance income 0.4 - 0.4 0.3 - 0.3 0.7
Profit before tax 9.7 10.6 20.3 8.1 0.2 8.3 17.1
Tax expense 4 (3.0) (1.3) (4.3) (2.4) (0.1) (2.5) (5.0)
Profit for the period 6.7 9.3 16.0 5.7 0.1 5.8 12.1
Attributable to:
Shareholders of the Company 15.7 5.6 11.7
Minority interests 0.3 0.2 0.4
16.0 5.8 12.1
Earnings per 5p share 5
Basic and diluted earnings 69.9p 24.8p 52.0p
Adjusted earnings 28.9p 25.3p 52.9p
All activities both in the current and prior year, relate to continuing
operations.
Statement of Recognised Income and Expense for the six months ended 31 March 2006
Unaudited Unaudited Unaudited
31 March 31 March 30 Sept
2006 2005 2005
(Restated) (Restated)
Note £m £m £m
Exchange rate adjustments on foreign currency net
investments 0.9 (0.4) 2.2
Adjustment on adoption of IAS 39 10 (0.1) - -
Changes in fair value of cash flow hedges 0.1 - -
Actuarial losses on defined benefit pension schemes - - (0.6)
Net income recognised directly in equity for the period 0.9 (0.4) 1.6
Profit for the period 16.0 5.8 12.1
Total recognised income and expense for the period 16.9 5.4 13.7
Attributable to:
Shareholders of the Company 16.6 5.2 13.3
Minority interests 0.3 0.2 0.4
16.9 5.4 13.7
Consolidated Balance Sheet as at 31 March 2006
Unaudited Unaudited Unaudited
31 March 31 March 30 Sept
2006 2005 2005
(Restated) (Restated)
Note £m £m £m
Non-current assets
Goodwill 8 31.2 23.3 24.6
Other intangibles assets 0.6 0.6 0.6
Property, plant and equipment 10.1 9.5 9.8
Deferred tax assets 3.1 2.9 3.1
45.0 36.3 38.1
Current assets
Inventories 22.8 20.3 21.3
Trade and other receivables 21.8 19.7 19.7
Cash and cash equivalents 7 30.3 19.7 25.7
74.9 59.7 66.7
Current liabilities
Trade and other payables (19.6) (17.2) (19.1)
Current tax liabilities (3.9) (3.0) (2.9)
Other liabilities (1.1) (1.4) (1.3)
(24.6) (21.6) (23.3)
Net current assets 50.3 38.1 43.4
Total assets less current liabilities 95.3 74.4 81.5
Non-current liabilities
Retirement benefit obligations (4.2) (3.8) (4.4)
Net assets 91.1 70.6 77.1
Equity
Share capital 1.1 1.1 1.1
Capital redemption reserve 0.2 0.2 0.2
Translation reserve 3.1 (0.4) 2.2
Retained earnings 85.0 68.2 71.9
Total shareholders' equity 11 89.4 69.1 75.4
Minority interests 1.7 1.5 1.7
Total equity 91.1 70.6 77.1
Consolidated Cash Flow Statement for the six months ended 31 March 2006
Unaudited Unaudited Unaudited
31 March 31 March 30 Sept
2006 2005 2005
(Restated) (Restated)
Note £m £m £m
Cash flows from operating activities
Cash flow from operations 6 8.1 5.3 16.4
Finance income received 0.4 0.3 0.7
Tax paid (3.5) (1.0) (3.7)
Net cash from operating activities 5.0 4.6 13.4
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired) 8 (7.6) - (0.3)
Proceeds from the sale of property, plant and equipment 11.1 0.4 0.4
Purchase of property, plant and equipment (0.8) (0.4) (0.8)
Purchase of intangible assets - (0.3) (0.6)
Net cash from/(used) in investing activities 2.7 (0.3) (1.3)
Cash flows from financing activities
Dividends paid to shareholders (2.9) (2.5) (4.1)
Dividends paid to minority interests (0.3) - -
Purchase of own shares (0.1) - (0.5)
Net cash used in financing activities (3.3) (2.5) (4.6)
Net increase in cash and cash equivalents 4.4 1.8 7.5
Cash and cash equivalents at beginning of period 25.7 17.9 17.9
Effect of exchange rates on cash and cash equivalents 0.2 - 0.3
Cash and cash equivalents at end of period 7 30.3 19.7 25.7
Notes to the Financial Statements
for the six months ended 31 March 2006
1. BASIS OF PREPARATION
The Group has previously prepared its financial statements under UK Generally
Accepted Accounting Principles ('UK GAAP'). Following a directive issued by the
European Parliament, the Group is required to prepare its 2006 consolidated
financial statements in accordance with International Financial Reporting
Standards ('IFRS'), as adopted for use in the European Union. The Group has
chosen not to adopt IAS 34 'Interim Financial Statements'.
Accordingly, this Interim Report has been prepared in accordance with the
Listing Rules of the Financial Services Authority and using IFRS accounting
policies consistent with those the Directors expect to apply in the Group's
first annual IFRS financial statements for the year ending 30 September 2006.
However, although this financial information is based on the Director's best
knowledge of standards and interpretations, this may change. For example, IFRS
standards and IFRC interpretations are subject to ongoing review and possible
amendment or interpretative guidance and are still subject to change.
Therefore, until the Group prepares its first set of financial statements in
accordance with IFRS, as adopted for use in the European Union, the possibility
cannot be excluded that the accompanying financial information may have to be
adjusted.
For these interim financial statements, the Group has applied accounting
policies consistent with those required by IFRS and which were set out in a
separate Announcement published by the Group on the 25 January 2006, entitled
'The Impact of International Financial Reporting Standards'. A copy of this
Announcement is available on the Company's website at www.diplomaplc.com. With
the exception of those accounting policies discussed in the Announcement and the
accounting policy on financial instruments, referred to below, no other
accounting policy has been amended from those disclosed in the audited financial
statements for the year ended 30 September 2005.
In addition to the changes in accounting policies identified in the
Announcement, with effect from 1 October 2005, the Group has adopted IAS 39
'Financial Instruments: Recognition and Measurement'. The impact on the
financial statements of adopting IAS 39 is set out in Note 10. As permitted by
IFRS 1, comparative information for financial instruments for the six months
ended 31 March 2005 and the year ended 30 September 2005 has been prepared in
accordance with UK GAAP.
This Interim Report, which is unaudited, was approved by the Directors on 8 May
2006. It should be read in conjunction with the Announcement entitled 'The
Impact of International Financial Reporting Standards', as published by the
Group on 25 January 2006 and the 2005 Annual Report, which contains the most
recent audited financial statements.
This Interim Report does not constitute statutory financial statements as
defined in section 240 of the Companies Act 1985. The comparative annual figures
for the year ended 30 September 2005 set out in this report have been extracted
from the Announcement entitled 'The Impact of International Financial Reporting
Standards', as published by the Group on the 25 January 2006. Statutory
consolidated financial statements for the Group for the year ended 30 September
2005, prepared in accordance with UK GAAP, on which the auditors gave an
unqualified opinion and did not include a statement under section 237(2) or (3)
of the Companies Act 1985, have been filed with the Registrar of Companies.
2. ANALYSIS OF RESULTS
Segmental information is presented in this Interim Report in respect of the
Group's business segments, which are the primary basis of segment reporting.
The business segment reporting format reflects the Group's management and
internal reporting structure.
Revenue Operating profit* Profit before finance income
and tax
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2006 2005 2005 2006 2005 2005 2006 2005 2005
£m £m £m £m £m £m £m £m £m
By Activity
Life Sciences 20.4 17.5 34.7 3.0 2.9 4.9 3.0 3.1 5.1
Seals 17.6 13.3 27.6 2.6 1.5 4.0 2.6 1.5 4.0
Controls 25.5 23.7 49.0 3.7 3.4 7.3 3.7 3.4 7.3
63.5 54.5 111.3 9.3 7.8 16.2 9.3 8.0 16.4
Unallocated items:
Profit on sale of properties - - - - - - 10.6 - -
63.5 54.5 111.3 9.3 7.8 16.2 19.9 8.0 16.4
By Geographic Area
United Kingdom 28.5 27.1 55.7 3.3 3.6 7.4 13.9 3.8 7.6
Rest of Europe 10.0 8.5 17.0 1.8 1.4 2.7 1.8 1.4 2.7
North America 25.0 18.9 38.6 4.2 2.8 6.1 4.2 2.8 6.1
63.5 54.5 111.3 9.3 7.8 16.2 19.9 8.0 16.4
* before exceptional items and tax
At 30 September 2005 the Group revised its definition of revenue to exclude
recovery of freight costs from customers. Recovered freight costs are now
deducted from distribution costs. Total recovered freight costs in the six
month period ended 31 March 2005 were £1.3m (Life Sciences £0.2m, Seals £0.9m,
Controls £0.2m). Comparatives for the six months ended 31 March 2005 have been
restated. This adjustment has not impacted operating profit or profit after
tax.
Revenue by geographical area is stated by origin, which with the exception of
North America, is not materially different from revenue by destination. In
North America, revenue of £2.2m (out of £25.0m) is to customers based outside
North America.
3. EXCEPTIONAL ITEMS
(a) The profit on disposal of fixed assets in 2006 arose from the sale of 12.2 acres of land (known as Phase 3)
in Stamford, East Midlands for consideration of £11.1m, after expenses. Tax of £1.3m has been provided on
this disposal, having taken account of available surplus capital tax losses. There remains a further 150
acres of land at Stamford which comprises mostly farm land and former quarry land. In the Directors' opinion
the current value of this land is £0.5m.
(b) The pension curtailment gain arose on 31 March 2005 from the termination of the defined benefit scheme
operated by a subsidiary company in the Group.
4. TAXATION
31 March 31 March 30 Sept
2006 2005 2005
£m £m £m
UK tax charge 2.4 1.1 2.5
Overseas tax charge 1.9 1.4 2.5
Total tax charge 4.3 2.5 5.0
Taxation on profits before tax has been calculated by applying the Directors'
best estimate of the annual rate of taxation to taxable profits for the period.
The rate of taxation on profit, before exceptional items, for the period is
30.9% (2005: 29.6%). Tax of £1.3m (2005: £0.1m) has been provided on
exceptional items in the period.
5. EARNINGS PER ORDINARY SHARE
Basic and diluted earnings per share
Basic and diluted earnings per ordinary share are calculated on the basis of the
weighted average number of ordinary shares in issue during the period of
22,469,915 (2005: 22,542,538) and the profit for the period attributable to
shareholders of £15.7m (2005: £5.6m). There were no potentially dilutive
shares.
Adjusted earnings per share
Adjusted earnings per share are shown by reference to earnings before
amortisation of acquisition intangible assets, exceptional items and related
tax. The Directors consider that this gives a clearer indication of the
underlying performance of the Group. Adjusted earnings are calculated as
follows:
31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept
2006 2005 2005 2006 2005 2005
pence pence pence
per share per share per share £m £m £m
Profit for the period attributable to
shareholders
69.9 24.8 52.0 15.7 5.6 11.7
Exceptional items, net of tax (41.4) (0.4) (0.4) (9.3) (0.1) (0.1)
Tax effects on goodwill 0.4 0.9 1.3 0.1 0.2 0.3
Adjusted earnings 28.9 25.3 52.9 6.5 5.7 11.9
6. RECONCILIATION OF CASH FLOW FROM OPERATIONS
31 March 31 March 30 Sept
2006 2005 2005
£m £m £m
Profit for period 16.0 5.8 12.1
Depreciation 0.8 0.7 1.5
Share based payments expense 0.4 0.2 0.5
Finance income (0.4) (0.3) (0.7)
Pension curtailment gain - (0.2) (0.2)
Profit on disposal of fixed assets (10.6) - -
Tax expense 4.3 2.5 5.0
Operating cash flow before changes in working capital 10.5 8.7 18.2
Increase in inventories (0.8) (0.2) (0.6)
(Increase)/decrease in trade and other receivables (1.6) 0.2 0.6
Decrease in trade and other payables (0.2) (3.3) (1.8)
Increase/(decrease) in other liabilities 0.2 (0.1) -
Cash flow from operations 8.1 5.3 16.4
7. CASH AND CASH EQUIVALENTS
1 October Cash flow Exchange 31 March
2005 movement 2006
£m £m £m £m
Cash at bank 6.1 (1.3) 0.2 5.0
Short term deposits 19.6 5.7 - 25.3
Cash and cash equivalents 25.7 4.4 0.2 30.3
8. ACQUISITIONS
On the 29 November 2005, the Group acquired 100% of the share capital of HKX
Incorporated ('HKX'), a leading provider of hydraulic system kits for the
installation of attachments on excavators. The initial consideration was
US$10.5m (£6.0m), including expenses, and a further US$1.0m (£0.6m) was paid in
March 2006. Further deferred consideration up to a maximum of US$1.0m (£0.6m)
will be payable in January 2007 depending on the gross profit of HKX for the
twelve months ending 31 December 2006.
The provisional fair value of identifiable assets and liabilities of the
acquired business, excluding intangible assets, was US$1.8m (£1.0m), including
cash of US$0.2m (£0.1m). Provisional goodwill of £6.2m arose on this
acquisition and this goodwill will be analysed into its constituent intangible
assets, in accordance with IFRS 3, in the full year financial statements at 30
September 2006.
The contribution of the acquired business to the Group's revenue and operating
profit for the six months ended 31 March 2006 was £2.1m and £0.4m respectively.
In November 2005, £1.0m (C$2.0m) of deferred consideration was paid to the
vendors of Somagen Diagnostics Inc as final settlement of their performance
payments.
9. DIVIDENDS
The Directors have declared an interim dividend of 8.0p per share (2005: 7.0p)
payable on 14 June 2006 to shareholders on the register on 19 May 2006.
In accordance with IAS 10 'Events after the Balance Sheet Date', this interim
dividend has not been reflected in the interim financial statements. The total
value of the dividend is £1.8m (2005: £1.6m).
10. OPENING BALANCE SHEET ADJUSTMENT
The Group adopted IAS 32 'Financial Instruments: Disclosure and Presentation'
and IAS 39 'Financial Instruments: Recognition and Measurement' as from 1
October 2005.
An adjustment has been made to reduce opening equity as at 1 October 2005 by
£0.1m and increase trade and other payables by £0.1m. This adjustment represents
the difference between the book value and fair value of the Group's forward
foreign exchange contracts at 1 October 2005. Comparative information has not
been restated, as permitted by IFRS 1.
11. RECONCILIATION OF MOVEMENT IN TOTAL SHAREHOLDERS' EQUITY
Unaudited Unaudited Unaudited
31 March 31 March 30 Sept
(Restated) (Restated)
2006 2005 2005
£m £m £m
Total shareholders' equity at beginning of period 75.4 65.9 65.9
Total recognised income and
expense for the period 16.6 5.2 13.3
Share based payments expense 0.4 0.4 0.7
Purchase of own shares (0.1) - (0.5)
Dividends (2.9) (2.4) (4.0)
Total shareholders' equity at end of period 89.4 69.1 75.4
12. EXCHANGE RATES
Average Closing
31 31 30 31 31 30
March March Sept March March Sept
2006 2005 2005 2006 2005 2005
US Dollar 1.75 1.89 1.84 1.73 1.89 1.77
Canadian Dollar 2.03 2.30 2.27 2.02 2.29 2.05
Euro 1.46 1.44 1.46 1.43 1.45 1.47
13. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
The reconciliations of equity as at 1 October 2004 (the date of transition to
IFRS) and 30 September 2005 and the reconciliation of profit for the year to 30
September 2005, including details of significant accounting policies, were
published on 25 January 2006 in an Announcement entitled 'The Impact of
International Financial Reporting Standards'. The full Announcement is set out
on the Company's website, www.diplomaplc.com.
The reconciliation from UK GAAP to IFRS of profit for the six months ended 31
March 2005, and of total shareholders' equity as at 31 March 2005, has been
included below to enable a comparison to be made to the 2005 published interim
results.
Reconciliation of profit from UK GAAP to IFRS
Unaudited
31 March
2005
£m
Profit for the period reported under UK GAAP 4.8
Share based payments 0.1
Pension costs 0.2
Exceptional pension curtailment gain 0.2
Reversal of goodwill amortisation 0.7
Deferred taxation (0.2)
Profit for the period reported under IFRS 5.8
Reconciliation of total shareholders' equity from UK GAAP to IFRS
Unaudited 31
March
2005
£m
Total shareholders' equity reported under UK GAAP at 31 March 2005 66.6
Share based payments 0.4
Retirement benefit obligations, gross of tax (3.1)
Reversal of goodwill amortisation 0.7
Dividends 1.6
Deferred taxation 2.9
Total shareholders' equity reported under IFRS at 31 March 2005 69.1
None of the IFRS adjustments affect the free cash flow of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
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