Companies: DPLM   

Following a period of major restructuring, Diploma is producing some excellent results, despite difficult trading conditions. The company, which operates in the specialist distribution sectors of 'life sciences', 'seals and components', and 'controls and interconnects', managed to raise pre-tax profits (excluding exceptional gains and goodwill amortisation) by 7% to £10.6m in the year to September, on sales increased 5% to £77.1m (from continuing businesses). This was ahead of expectations, mostly due to a £300,000 profit contribution from temperature, pressure measurement and control devices distributor Hawco, which was bought for a maximum of £6.3m in July. Diploma had a cash pile of £29.3m at the end of September with which to pursue further acquisitions. The next likely buy is defence and aerospace connectors distributor Filcon Electronic, an outfit that produced £1m of profits before interest and tax in 2002. Management announced they were hoping to complete the pruchase of this venture for a maximum of £4.3m. It looks an attractive deal, even before any cost savings. With dividends totalling 15p and pre-tax profits expected to rise to £11.9m in 2004 (to produce 31.2p of EPS), Diploma's shares continue to look good value.