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Summary
- Diploma PLC had shown reported revenue growth of around 29.0% during H1 FY21.
- The Company will pay an interim dividend of 12.50 pence per share on 16 June 2021.
- The net debt to EBITDA multiple would be expected to remain below 1.0x during FY21.
Diploma PLC (LON:DPLM) is the industrial Company listed on the London stock exchange. DPLM’s shares have generated a return of around 70.51% in the last 12 months. DPLM is listed on the FTSE 250 index.
Company Overview
Diploma PLC (LON:DPLM) is an FTSE 250-listed leading international group engaged in specialized products and services. Moreover, DPLM operates across three broader business segments – Controls, Life Sciences, and Seals.
(Source: Company presentation)
H1 FY21 Financial Highlights (for six months ended 31 March 2021 as of 17 May 2021)
(Source: Company presentation)
Robust Top-line & Bottom-Line business performance - DPLM had reported strong revenue growth of around 29% to £365.20 million during H1 FY21, led by strong contributions made by the acquisitions and positive trading across all sectors during the period. Moreover, the adjusted operating profit rose by around 33% to £66.60 million during the period, driven by the benefits of restructuring completed in the prior year. The adjusted operating margin had demonstrated an improvement of around 60 basis points to 18.2% during the period.
Active High-quality acquisition pipeline – The acquisitions remained a key strategic priority for the Company, and it has a lucrative pipeline of acquisition opportunities. Moreover, DPLM had achieved exceptional underlying revenue and profit contributions during H1 FY21 from the recently completed acquisitions. DPLM had completed the acquisition of Windy City Wire (“WCW”) during September 2020 for the total consideration of around £348 million, which remained the biggest acquisition to date. Moreover, the WCW performance remained ahead of the expectations.
57% growth in free cash flow – DPLM had shown robust growth of 57% in the free cash flow to £34.3 million, driven by good cash conversion maintained during the period. The Company had achieved cash conversion at around 72%, illustrating the strong cash generative capabilities and the resilience of the business model despite the increasing revenue profile.
Growth in Interim dividend – DPLM will pay an interim dividend of 12.50 pence per share on 16 June 2021, while the ex-dividend date will be 27 May 2021, illustrating high confidence in the long-term outlook and growth prospects. The Company had deferred the interim dividend in the prior year.
One Year share price performance of Diploma PLC
(Source: EODHD/Others, Thomson Reuters)
DPLM shares were trading at GBX 2,926.00 and were up by close to 6.40% as of 17 May 2021 at 10:49 AM GMT. The 14-day RSI stood at ~63.58, while the 20-day simple moving average was around GBX 2,846.00. DPLM’s 52-week Low and High were GBX 1,696.00 and GBX 3,038.00, respectively. Diploma PLC had a market capitalization of around £3.43 billion.
Business Outlook
The Company had delivered resilient business performance during H1 FY21, which came out to be better than the expectations. Moreover, DPLM had expected to carry positive momentum across all sectors in H2 FY21 as well. Furthermore, DPLM expects to show a solid growth of around 40% in revenues during FY21 as compared to FY20, while the operating margin would be expected to increase by 19%. On the leverage front, the net debt to EBITDA multiple would likely remain below 1.0x during FY21.
