Monday, February 14, 2011

DPLM.L - director purchases

On 10-Feb-2011, director John Rennocks bought 30k shares at 299.25p, for a value of £90k. Previously, I had reoprted partial sales by directors on the exercise of options in Jan. Diploma supplies a range of products to the healthcare and enivronmental industries. It supplies seals (gaskets, cylinders, etc.) for heavy machinery. It also provides controls (wiring, connectors, and control devices) for a range of applications.

For what it's worth, which probably isn't much, DPLM was enumerated amongst a list of "strong buys" in Nasdm100 best-rated UK stocks by analysts (link)

DPLM is trading at 299.75p, with a market capitalisation of 339m. It has yield of 3.1%, and a PER of 14.9, and an extremely strong balance sheet.

In Dec 2010, it acquired CMI, the leading supplier in Canada of automated endoscope reprocessors, disinfectants and detergents which are used in hospitals and private clinics. CMI's revenues to y/e/ 31 July 2010 were £8.3. It's net assets after the deal completion are estimated to be approximately £2.4m. Its PBT was £0.7m after shareholder bonuses, which will not apply after the acquisition. DPLM paid £14.2m for the acquisition before acquisition costs, and there is a further deferred consideration of a maximum of £1.9m. Bruce Thompson, CEO if DPLM, said "This acquisition provides an excellent oppotunity to build a broader and more substantial business serving the growing GI Endoscopy market across Canada". (link) The acquisition looks far from being a bargain, though, IMHO.

In this interim management statement issued on 12-Jan-2011 for the year ending 30-Sep-2011, the company reported acquisition and currency-adjusted increase in revenues of 17%, but noted that the comparatives were weak. It stated that margins strengthened, largely driven by operational leverage.

A statement of its outlook reveals: "The continuing strength in revenues and operating margins, together with contributions from recent acquisitions, provides confidence that the Group should achieve good progess in 2011".

Analysts estimate 15% earnings growth in 2011, and a further 8% in 2012.

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