Acquisitions drive revenue growth at Diploma

The FTSE 250 firm said of that, businesses acquired contributed 9% and underlying revenue increased by 2%.

Adjusted operating margin at the technical services group reduced to 17.2%, which its board said reflected ongoing transactional currency effects in Healthcare and initial dilution from acquired businesses.

The company’s adjusted profit before tax increased by 4% to £30.4m, and adjusted earnings per share grew 5% to 19.5p, which it said was helped by a slightly lower tax rate.

Diploma’s free cash flow increased 85% during the period to £23m, benefiting from a lower investment in working capital and £2.3m from the sale of legacy properties.

"The group has delivered further robust growth in the first half of the year, despite the weaker macroeconomic backdrop and the adverse impact of foreign exchange, with acquired businesses adding 9% to revenues,” commented chief executive Bruce Thompson.

He said the results reinforced the resilience of Diploma’s business model, which aims to deliver GDP-plus organic revenue growth, with value-creating acquisitions accelerating the growth to the target double-digit level.

“Last year was a record year for acquisitions and we have continued this momentum into the first half of this year with acquisition spend of £30m.

“With challenging trading conditions likely to persist through the second half of the year, we will continue to take advantage of our strong financial position to target further acquisition opportunities to support future growth and deliver shareholder value,” Thompson added.

The company has spent a total of £80m on its acquisition strategy since January 2014.

At period end, it had net debt of £17.4m, and declared a 7% increase in the interim dividend to 6.2p.