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Edited Transcript of DPLM.L earnings conference call or presentation 13-May-19 8:00am GMT

Half Year 2019 Diploma PLC Earnings Presentation

London May 21, 2019 (Thomson StreetEvents) -- Edited Transcript of Diploma PLC earnings conference call or presentation Monday, May 13, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jonathan Thomson

Diploma PLC - CEO & Director

* Nigel P. Lingwood

Diploma PLC - Group Finance Director & Executive Director

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Conference Call Participants

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* Henry Carver

Peel Hunt LLP, Research Division - Analyst

* Jane Linsdey Sparrow

Barclays Bank PLC, Research Division - Director

* Julian Charles Cater

Numis Securities Limited, Research Division - Analyst

* William Kirkness

Jefferies LLC, Research Division - Equity Analyst

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Presentation

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Jonathan Thomson, Diploma PLC - CEO & Director [1]

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Good morning, everyone, and welcome to Diploma's first half results presentation. My name is Johnny Thomson. And I'm joined today, of course as usual, by Nigel Lingwood, the group's Finance Director. I've been Chief Executive of Diploma for a little under 3 months now. I'm delighted to be here, my first results day. And I'm very much looking forward to working with you all over the next few years.

Today, I'm going to give you an overview of the group's performance. Nigel will take you through the financials, and I'll come back to talk about the sectors, my first impressions as CEO, and finally, to give a few comments on our outlook. There will be plenty of time for questions and answers at the end.

The group's had a strong first half of the year, in line with our expectations. Growth of 11% was underpinned by an encouraging 6% underlying growth. Our margins improved by 20 basis points, supporting 14% progression in EPS, and we're declaring a 10% increase in our interim dividend, reflecting strong financial position and our confidence in the group's growth prospects. Free cash flow was GBP 14 million, and our balance sheet remains strong as we continue to develop our acquisition opportunities in the second half of the year. Our full year performance expectations, therefore, are positive and unchanged.

Nigel?

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Nigel P. Lingwood, Diploma PLC - Group Finance Director & Executive Director [2]

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Thank you. Thank you, Johnny. Good morning, ladies and gentlemen. So looking at the half year results for the 6 months ended 31 March 2019. During the half year, we achieved an 11% increase in reported revenue to GBP 260.4 million and a 12% increase in adjusted operating profit to GBP 45.6 million. As adjusted, operating margin moved up 20 bps to 17.5%, which is the same as we achieved in the full year last year.

After adjusting for acquisitions completed in the last 12 months and a small currency tailwind, we had a good 6% increase in underlying revenues. Adjusted PBT was up 13% at GBP 45.5 million, the free cash flow fell in the half year to GBP 14 million after strategic investment in inventory, as I previously indicated at the trading update in late March. We spent GBP 7.5 million on acquisitions, and we ended the period with cash funds at GBP 22 million. Adjusted EPS was up 14%, which reflected the additional benefit from a full half year of the U.S. tax cuts announced on the 1st of January 2018. And finally, we have increased the interim dividend gain -- dividend again, this time by 10% to 8.5p, reflecting the strong financial position and confidence in the group's growth prospects.

So summing up. We have good underlying growth of 6%, a robust increase of 20 bps in the operating margin and good cash flow -- free cash flow, GBP 14 million.

Before turning to the detail of the results, let me just take you through a bridge of revenue. So this bridge's reported revenue, growth of 11% to underlying revenue growth of 6%. The impact from a slightly weaker U. K. sterling, particularly against the U.S. and Canadian dollars on translation of overseas results was GBP 2.9 million or 1%. Acquisitions, net of a small disposal, contributed GBP 9.3 million or 4%. This was GBP 4.9 million from the acquisition completed in October of Gremtek and GBP 7.5 million of incremental revenues in the acquisitions last year of FS Cables in Coast. We also disposed of Bulldog last year, and that accounted for GBP 3.1 million. So that provides growth in group underlying revenue of 6%, with Life Sciences contributing 5%, sales 4% and control 9%, which Johnny will come back to explain later.

So if we go back to the income statement, adjusted operating profit up 12% at GBP 45.6 million, reflecting the adjusted operating margin up 20 bps over the comparable period to 17.5%. This was driven by a slightly stronger gross margin, but there was also some operating leverage as costs were tightly controlled and revenues increased more strongly. We had just GBP 100,000 of interest costs on the pension scheme deficit, so we get adjusted profit before tax of GBP 45.5 million, up 13% from last year.

Now below this line, we have acquisition-related charges of GBP 5.5 million, principally being the amortization of acquired intangible assets, and we have a small adjustment to fair value the put options that are held by minority shareholders in Kentek and M Seals. So with these items deducted below adjusted PBT, we arrive at a statutory profit for tax also up 13% at GBP 40.1 million.

The group's effective tax rate was reduced to 23.7% at March 2019 from 24.5% last year. Again, the driver to this was a benefit of full 6 months period for the reduction in the U.S. federal corporate tax rate from 35% to 21% which came into effect on the 1st of January '18 and from some dilution from U.K. acquired businesses where the tax rate is lower. So this reduction in effective tax rate boosts the increase in adjusted EPS to 14%.

So turning to free cash flow. Operating cash flow was 6% below the comparable period at GBP 30.1 million. And you will see that this reduction is primarily due to the increased investment in working capital in this period, up GBP 5.7 million to GBP 16.9 million. Much of this increases has arisen from a decision to build strategic inventory to mitigate the impact of both the disruptive Brexit, but also to meet specific customer and product requirements as well. Beyond that strategic increase in inventory, the increase in working capital is entirely consistent with the growth in trading activity and with the trends that we see in each first half of the year. The businesses have set firm plans to wind down their strategic inventory build over the next 6 months. These actions, together with a seasonal reduction in working capital in the second half the year, will be consistent with historical trends and provides us with confidence that we will see overall working capital falling back to more normal levels by the end of this year 30 September, i.e. towards the 15% working capital revenue metric from the 17% that we've reported at 31 March.

Moving down the cash flow. Tax paid at GBP 9.6 million remained broadly in line with last year and represented a cash tax rate of 21%, again, the benefit of the U. S. tax cut coming through there. Capital expenditure was GBP 3.5 million, up GBP 1.2 million on last year.

Briefly, in Life Sciences, the health care businesses spent GBP 1.4 million on acquiring new hospital field equipment for placement in hospitals. In Seals, GBP 600,000 was invested in both new ER projects -- ERP projects that we've commenced, but also on completing the one in the U.S. Industrial OEM business. And in controls, we spent GBP 400,000 completing the refurbishment and expansion of our facility in Sommer in Germany. This is the GBP 1.8 million project, which is coming on time. It will be complete later this month. And we're looking at opportunities to do a sale and leaseback on that property.

So after spending GBP 2.9 million to fund the company's long-term incentive scheme, we ended the period with free cash flow of GBP 14 million, which was GBP 3.7 million below last year. We spent GBP 6.4 million of that free cash flow on the acquisition of Gremtek, a small control sector business based in France, and we spent GBP 1.1 million on deferred consideration payable to the vendors of FS Cables acquired last August. So after paying the final dividend to shareholders in January this year of GBP 20.5 million, we ended the period with a net cash of GBP 22 million. Of course, the second half of the year is historically when the group generates most of its free cash flow. And this cash flow, together with a committed bank facility of up to GBP 60 million, provides the group with substantial resources to apply to acquisitions.

Now as you know, acquisitions are very much an integral part of the group's strategy. Although we only spent GBP 7.5 million on acquisitions in this half year, we have continued to see new opportunities come forward. Some of these are coming forward from the last 1 or 2 years and have come back to kick off a process, and some of them are just completely new. But as I've mentioned before, these opportunities are nearly always nowadays in the form of structured sales processes with several rounds of documentation until we manage to gain exclusivity, and as such, remain very competitive. But we remain disciplined in our valuation criteria. And while we were optimistic about acquiring some quality business this year, we are realistic that because of the valuation criteria, we can never commit to the timing of these acquisitions or even if we will complete them. But we definitely had a healthy pipeline, and we do remain optimistic about acquiring quality businesses this year.

So finally, turning to the balance sheet. Trading capital employed of GBP 298 million, this increase reflecting the investment in working capital and in acquiring Gremtek. The annualized ROATCE, now this is our return on adjusted trading capital employed, effectively a fully invested capital that remains strong at 24.2%, well above our threshold of 20%. And of course, as I've mentioned, our key metric of working capital to revenue increased to 17% from 15.8%, reflecting that larger investment in working capital.

We continue with the closed defined benefit pension scheme, which has a net liability of GBP 10.3 million and continues to be funded at around GBP 0.5 million a year in cash. And our acquisition liabilities now only comprise the put options held by the minority shareholders in Kentek and M Seals, and that's both at 10%. These options are now crystallized and are likely to be exercised over the coming 12 months. So at 31 March, we have total shareholders' equity of GBP 294.1 million.

And I will now hand you back to Johnny who will talk you through the performances of the businesses. Thank you

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Jonathan Thomson, Diploma PLC - CEO & Director [3]

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Good, Nigel. Thank you very much. So I would like now to remind you of what it is that we do. I'll then review each of our sectors and turn and give some of my initial impressions of the group.

Our business model is based on sourcing and distributing specialized products, technical solutions and value-add servicing to a diverse range of end customers. These products attend our customers operating needs rather than capital needs. The focus on a provision of a broad range of specialized products at short notice accompanied by technical servicing allows us to differentiate ourselves in the supply chain and add real value to our customers. Our margins are a reflection of this added value, and of course, our cost control. We operate globally in 3 distinct sectors. The diversity, therefore, of our geographies, product ranges and end customers allows us greater access to growth and somewhat protects us from broader economic cycles.

We have excellent businesses in our Life Sciences sector, representing 28% of the group's revenues. They are specialized in niche product sectors, particularly clinical diagnostics, surgical and endoscopy and in our important end markets of Australia and Canada. We have highly qualified technicians who support the medical community in designing and sourcing these products. I work closely with our suppliers to ensure the next generation of medical device and consumables are being developed.

Product lifecycle management is key to the sector's successful development, and I feel we're making real progress in this area. Although never without risk, our long-term customer and supplier relationships as well as ongoing development of new and exciting product ranges will continue to drive growth and margin opportunities. There are structural growth drivers as populations age and medicine advances, plenty of opportunity to develop a broader product portfolio and further end markets for us to explore. So the prospects for Life Sciences are very positive.

We've made good progress in Life Sciences in the first half with growth of 5%. Growth in health care itself was 6%. The quality of our clinical diagnostic businesses in Canada and Australia is impressive. We are taking advantage of new product opportunities and deep-rooted partnerships with the medical profession and manufacturers to stay ahead of technological requirements in the niche spaces.

In surgical, we have won a new regional customer group in Canada for smoke evacuation, continue to drive good capital sales as a lead into future consumable revenue streams and have placed our new endoscopy products into the market.

Despite pressure in the health care budgets, we are pleased with the margin progression in the half. This is driven in part by ensuring we have new and profitable product ranges coming on board and in part, by a tight cost control.

The Seals business is our biggest at 39% of the group. We have scaled operations in aftermarket and industrial OEM in the most attractive markets in the world, the U.S. Our scale and position in this market allows us to invest in talent, technology and facilities to sustain future growth. As an example, we are excited to be developing a second state-of-the-art automated distribution center in Louisville, Kentucky. With scale and investment advantages, we target to grow above GDP levels through the cycle.

Internationally, we have been and continue to develop important positions in key markets around the world. We are excited at the prospects to penetrate further into our current markets, taking advantages of scale and to enter some important new markets in the future.

The Seal sector grew by 4% in the first half. We are encouraged by a 9% growth in International Seals, and we remain positive about the prospects for the rest of the year. North American Seals was flat in the first half. So a few thoughts on the short term: an influx of new machinery since the U.S. tax reform somewhat dampened the aftermarket repairs in the first half. Challenges with our Industrial OEM ERP implementation at the start of the year affected our service delivery and performance. And finally, there are some early signals of slower industrial growth in the market, impacting our industrial seals businesses more generally.

We are, however, very positive about the future prospects for the following key reasons: firstly, aftermarket sales are beginning to pick up again as we enter the second half of the year, and the ERP issues are largely resolved in the OEM business. Secondly, we note encouraging signals on our U.S. infrastructure bill, which should benefit the aftermarket sector in the coming years. And the recent spike in new equipment investment will soon flow out of warranty and into our repairs market. And finally, we have plenty of opportunity to continue to improve our business, investing in talent, technology and a new distribution facility. So the prospects for Seals are exciting.

The Controls business is 33% of group revenue but has been becoming a more important contributor over time. The large majority of the business are interconnect products and specialty fasteners, delivering significant value-add service across a diverse range of end customers. We are excited about continually expanding our product offering. And while the history of this sector has been predominantly U.K. based, we have started some careful expansion into the U.S. and Europe. We're very pleased with the underlying growth of 9% in Controls, complemented by 2 very good strategic bolt-on acquisitions: FS Cables and Gremtek.

The interconnect group's growth was 7%. Our U.K. businesses broadened product scope have penetrated further into Europe. While there may be some Brexit-related stocking supporting this, we continue to feel positive about the growth rates into the second half. We are delighted to welcome FS Cables into the group in August of 2018, complementing our existing cable craft business. It is also encouraging that we're making positive strides into Continental Europe. We continue to successfully develop our German business, establishing a strong foothold in this important market. And the acquisition of Gremtek in October 2018 gives us entry into the French market.

Specialty fasteners has been performing excellently with growth of 17%. We have strong trading relationships with manufacturers and contractors in the civil airspace markets. And so we have taken advantage of the positive structural trends in that sector. Margins have progressed well in the half, with a focus on gross margin and tight cost control. While we may see some Brexit-related destocking impact, we remain excited about prospects in Controls in the second half.

So in my first 2 months, I have visited all of the businesses in the group. I've spent considerable amounts of time with the leadership teams. I've started to understand our businesses and the dynamics of our markets better, and I've met many of our bigger shareholders. My initial impressions are very positive. This supports the due diligence I did before I joined, and I'm sure they won't be too much of a surprise to you. The group has some fantastic fundamentals. The people I've met have been open, committed and passionate about what they do. It's a decentralized model, one that I'm very familiar with in my time running Compass businesses, and our people certainly demonstrates the local accountability necessary to operate this model successfully. They are agile and customer orientated, a key factor in making us niche and differentiated in our distributor model. We have some strong positions and important markers, such as U.S. Seals, U.K. Controls and health care, Australia and Canada. And finally, the track record for organic performance delivery, bolt-on acquisitions and shareholder value creation is unquestionable. I joined because of these exciting foundations that provide a fantastic platform. I wouldn't have joined Diploma if I didn't also think there was opportunity to develop the group in the future. Like all good businesses, we must continue to evolve. It would be complacent of us to stand still.

The foundations I have just described must, of course, be preserved. But here's a few initial thoughts on how we might develop into this next phase.

Firstly, we could focus on and leverage core common Diploma capabilities to improve our business model, thus optimizing our performance as we get bigger and insulating ourself from disruption in our deep specialization. This can be done without affecting the decentralized approach, local accountability and our niche customer orientated model. That's important. Secondly, the development of our talent should be a priority. With scale, our businesses require a more strategic and less tactical commercial approach to grow organically and a structured approach to the necessary incremental investment in technology and advanced facility management that scale demands.

And finally, our portfolio of market sectors and products is generally strong. As we look forward, however, we will be very clear to focus our resources on developing in core scalable markets and products, without commoditizing the model. In doing so, our approach to M&A will progress to recognize that we now compete for assets in a more structured and competitive environment. This will all be a natural and measured evolution of the business, with the objective of maintaining the excellent track record of shareholder value creation. Having been through such a journey in a decentralized model with Compass, I feel well positioned to manage this over the coming years. I am excited to have joined such a great business with such a fantastic opportunity. And after more time in the business, I'll elaborate further on these impressions in November.

And so finally, a few words on our outlook. We have made a strong start to the year. Although there are some early signals of slower industrial Seals markets, our business model is resilient and successful, and we still have plenty of opportunity to improve. We're optimistic about the acquisition pipeline. And our full year expectations are positive and unchanged.

So we'll take your questions now. If you can raise your hand, someone will come with a microphone. And if you wouldn't mind stating your name and institution before your question, I'd be very grateful. Thank you.

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Questions and Answers

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Henry Carver, Peel Hunt LLP, Research Division - Analyst [1]

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It's Henry Carver from Peel Hunt. Just one query on the aftermarkets in the U.S. Seals, just to get a feel for this sort of influx of new machinery coming on stream, when that started? And if warranties are typically sort of 3 years, are they still? Or are they longer than that or shorter? Just to get a feel for when we might see that market come back in earnest.

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Jonathan Thomson, Diploma PLC - CEO & Director [2]

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I think, in general, we've seen an uptick in the capital investment over the last year, 18 months or so. My experience -- and Nigel should add to this, but my experience would be around about 2 years before they come out and into warranty. And so I guess that references my comment to the presentation about why we're positive about aftermarket trends in the next year or 2.

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Nigel P. Lingwood, Diploma PLC - Group Finance Director & Executive Director [3]

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Yes. I mean I may just add. Johnny's absolutely right there in that you'd expect it in about 18 months because that's when the Trump tax cuts came through. You got full depreciation on the new capital equipment, which was important on the new Tier 4 machinery. And it is 2 years warranty or I think about 2,400 hours. And the way they're working in the field, we expect to see some of that benefit coming out in the second half of the year.

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Jane Linsdey Sparrow, Barclays Bank PLC, Research Division - Director [4]

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Jane Sparrow from Barclays. Just a couple on your initial impressions, Johnny. Can you sort of give a -- maybe just an example of how you mean to leverage common capability without impacting that local accountability. I know it's initial impressions, so you might not have too much detail, but just the sort of -- a couple of examples maybe.

And then the second one on the recognizing the approach for M&A has to progress to reflect that you now compete in slightly different processes. What does that mean in terms of compromising on returns criteria?

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Jonathan Thomson, Diploma PLC - CEO & Director [5]

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Sure. Well, just on the first point on core competency. I mean having had the advantage of going to every single business very, very quickly, what's been encouraging for me has been, while there are, of course, different sectors and different products within the system, actually, the core competencies behind the model are very, very consistent. Now what, therefore, is interesting to me is the opportunity to be able to share best practice. I think it sounds fairly obvious, but doing it in a informal networking capacity and giving people the tools to be able to improve their businesses with reference to where we're exceptional at it without reinventing the wheel, I think, is both natural and doesn't necessarily compromise their local accountability here. And my expectation would be that, eventually, that if we're reviewing the business and there's a particular area where they have some challenges that I would expect them as good managers to be able to reach out to germinate another country and say, you've got the tools, and you've got the capability, show me how to do it. And so I think, as I said, natural evolution means connecting up those dots. So that's the first one.

The second point on M&A. I mean as we get and as we have got bigger, of course, we start to compete with fractionally big -- for fractionally bigger assets, which just means that we poke our head above the parapet and into processes that are structured, perhaps, run by banks, et cetera, and with more people involved, so they had become a little more competitive. At the end of the day, we have a good track record, as Nigel pointed out, to maintaining discipline. That discipline will not change, and return on capital will still be very much part of our key metrics. Might we have to pay a turn or 2 more for certain really important strategic assets that we see, particularly the U.S.? Perhaps, but we wouldn't expect that to fundamentally change our disciplined approach. And that's why we don't give any commitment to what we might do in the second half of the year.

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William Kirkness, Jefferies LLC, Research Division - Equity Analyst [6]

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It's Will Kirkness from Jefferies. Firstly, just on trading. Could you talk about current trading in that Industrial Seals business? There's something that wasn't flagged up at the sort of the preclose or something that has changed. I just wondered if you could talk generally about the rates there. And then just a couple for Johnny. Just wondered, firstly, where you've added to headcount most.

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Jonathan Thomson, Diploma PLC - CEO & Director [7]

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I'm sorry?

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William Kirkness, Jefferies LLC, Research Division - Equity Analyst [8]

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Where you added to headcount most since you've been with the group? And then secondly, you talked about tech and facilities. I just wonder whether we should anticipate a step-up in CapEx.

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Nigel P. Lingwood, Diploma PLC - Group Finance Director & Executive Director [9]

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Sure. Johnny?

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Jonathan Thomson, Diploma PLC - CEO & Director [10]

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You want to take first one?

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Nigel P. Lingwood, Diploma PLC - Group Finance Director & Executive Director [11]

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Yes. I think, increasingly, over the last few weeks, we've read and seen indications in that industrial OEM space, both internationally but particularly in the U.S., that there is slower activity. So we've seen some of our larger customers either asking us to delay delivery of orders or we've seen just inventory -- reported inventories being a little higher and people slowing down again with orders. And that's quite consistent with what we're hearing from other industrial players in these markets as well. So we're just a little cautious. Remember, industrial manufacturing is early cycle. It -- way back in 2009, that's where we saw the first signs of things slowing down. The aftermarket follows quite a lot later. So across the businesses, perhaps also Kubo in Switzerland and Seals in Denmark, again, just a little bit of slowdown in activity. But you have to remember, last year, we were reporting 14% underlying growth in these businesses. I mean it was exceptionally strong. We can't do that every year. So we'd expect to see some slowing at some stage.

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Jonathan Thomson, Diploma PLC - CEO & Director [12]

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And just on the headcount point, I don't necessarily believe that we'll be investing significantly more in headcount. There may be some incremental changes to bring in some expertise that I feel the group might need for the long term, for example, we have an HR Director for Diploma starting in a few weeks’ time. But it's very much incremental, as I said, in evolution nor revolution. And on the tech and facilities point, you should not expect significant changes in the investment profile of the group. This is a decentralized model. I'm used to working in this environment, and large technological implementations don't necessarily work in our kind of environment. We've already started making some investments, as I talked about, with the Louisville facility. And obviously, we'd done some ERP implementation, so it's already baked into the investment profile. And I wouldn't expect that to change materially over the future.

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Julian Charles Cater, Numis Securities Limited, Research Division - Analyst [13]

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It's Julian Cater from Numis. Two unrelated questions, please. First, you alluded to your own Brexit build in terms of inventory and the plans to unwind that in the second half. And just linking that with the comments that you made about your Controls business and some of your customers bringing that forward, are you also seeing your customers start to unwind the inventory that they built up in the run up to margin? How should we think about Controls' growth in the second half of this year?

And then my second question, in terms of the new facility you're developing and in the state of the Seals business. Is that focused on increasing the sort of geographic coverage in -- for the next-day delivery? Or should we also think about that in terms of broadening the product range as well to sort of grow your addressable market?

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Jonathan Thomson, Diploma PLC - CEO & Director [14]

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Would you like to take the first one? And I'll take the second one.

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Nigel P. Lingwood, Diploma PLC - Group Finance Director & Executive Director [15]

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Yes. Sure. So as you rightly say, the Controls businesses, as you did expect, we have buffered up probably about a couple of million of inventory in advance of the 31st March deadline, which we are now very much focused on winding down over the next 6 months. Have we seen -- it's difficult to tell what's happening with our customers. I mean everything you hear anecdotally says that a lot of people are doing the same thing, so one would expect that to be unwinding over the next 6 months. April has started off reasonably well, and we haven't seen any obvious signs of that unwinding yet. But I guess our view is cautious over the next 6 months just as to when that stock will unwind because it's definitely being built up out there.

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Jonathan Thomson, Diploma PLC - CEO & Director [16]

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For the underlying -- I mean I should just say, the underlying Controls growth is very much there. Brexit, to one side. So whether it's 9/10 of a percent or whether it's a fraction lower than that, over the long term, I feel really, really positive about Controls growth. And just going back to the facilities, I mean I'm really excited about this facility in Louisville. I think to your question, that is part of why I'm excited about the runway for organic growth, because at the moment, in our biggest market, in our biggest sector, we don't have the reach across the whole country. And that should be a signal of how much organic growth potential the business has. So by moving into this facility, of course, we broaden our geographical reach within the U. S., firstly.

I think, secondly, it gives us a more advanced capability set because, of course, part of the move is around automation and the technology that goes with that. And that, therefore, once you've done that, the opportunity to look to broaden the products that's going through it increases too. Of course, some of this is going to be incremental, and we're going to learn a little bit as we go. But I think it's incredibly positive for the business. And again, to my point about having scale in some markers that allows you to make this kind of investment without commoditizing the model is critically important.

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Unidentified Analyst, [17]

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It's [Kern] from [More Investment]. I'm wondering how hands-on in operations will you be relative to, let's say, Bruce? So are there any sort of granular KPIs that you're tracking at the operating subsidiary level? And just the level of touch that's going to be required?

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Jonathan Thomson, Diploma PLC - CEO & Director [18]

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That's an interesting question. Well, look, I'll go back to what I said in my presentation about the importance of maintaining a decentralized model. That's my history. That's Diploma's history, and I believe that it's very much the foundation for the management approach too. Don't forget, in order to maintain this customer-orientated niche offer at the front end, we need commercial, agile and accountable managers. And if I'm stamping all over them every 5 minutes, then you're going to lose that. So that's certainly not what I intend to do. Of course, I've been running the businesses pretty intensively over the next couple of months. And of course, I may be a fraction more involved than Bruce was in his last year or 2, but I think that's probably natural. What I would like to do is coming back to my first impressions is perhaps to help people from a supporting capacity, putting the governance to one side to provide the tools and capabilities to improve their own businesses, as I said to Jane a fraction earlier. So I guess part of -- an important part of my time and my job will be to help design what those core capabilities are, to give them some form of substance and to allow people to network and contact each other to be able to take their businesses forward, and that's what I'll be encouraging. So it certainly won't be trampling all over their local accountability.

Are there any more? Last call. We're done. Well, thank you very much, everybody. We'll see you soon.