ANNUAL REPORT AND ACCOUNTS 2025

POWERING

PROGRESS

Diploma PLC is a group of specialist businesses that provide critical products and

value‑added services to customers across a wide range of markets – where quality,

reliability and expertise matter most. We help our customers run smarter, safer and stronger.

We provide the bolts that hold planes and race cars together, design the sealsthat make

wind turbines work and help surgeons find the best solutions to save lives.

POWERING

PROGRESS

IN MORE PLACES THAN YOU’D IMAGINE

ADVANCED

TECHNOLOGIES

FOR CRITICAL

APPLICATIONS

HIGH PERFORMANCE

SOLUTIONS THAT

POWER PROGRESS

TECHNOLOGICAL

INNOVATIONS

THATDRIVE BETTER

PATIENT OUTCOMES

Life SciencesControls Seals

READ MORE ON PAGE 22 READ MORE ON PAGE 26 READ MORE ON PAGE 30

READ MORE IN OUR TALENT REVIEW ON PAGES 12-13

We believe in doing the right thing, even when it’s

challenging, because integrity is non‑negotiable

Accountability is paramount, holding us responsible

for our actions and decisions

We firmly believe in growing together and becoming

greater thanthe sum of our parts

We are down to earth maintaining a culture of humility

and approachability

Strategic Report Corporate Governance Financial Statements Additional informationCorporate Governance Financial Statements Additional information

CONTENTS

STRATEGIC REPORT

2 2025 highlights

3 About us

4 Investment case

5 Chair’s statement

6 CEO’s review

9 CFO’s review

12 Talent review

14 Our business model

16 Our strategy

20 Key performance indicators

22 Sector review: Controls

26 Sector review: Seals

30 Sector review: Life Sciences

34 Financial review

38 Delivering Value Responsibly

42 Risk management and

internalcontrol

49 Engagement with stakeholders

andsection 172 statement

53 Viability statement

54 Non‑financial and sustainability

information statement

CORPORATE GOVERNANCE

56 Chair’s introduction to governance

58 Governance at a glance

60 Board of Directors

65 Audit Committee Report

71 Nomination Committee Report

76 Remuneration Committee Report

98 Directors’ Report

FINANCIAL STATEMENTS

102 Independent auditors’ report

110 Consolidated income statement

111 Consolidated statement

ofcomprehensive income

112 Consolidated statement

ofchanges in equity

113 Consolidated statement

offinancial position

114 Consolidated cash flow statement

115 Notes to the consolidated financial

statements

145 Group accounting policies

154 Parent company statement

offinancial position

154 Parent company statement

ofchanges in equity

155 Parent company accounting policies

156 Notes to the parent company

financial statements

ADDITIONAL INFORMATION

157 TCFD statement

162 Glossary

163 Subsidiaries of Diploma PLC

166 Alternative performance measures

168 Five year record

IBC Shareholder information

DISCOVER MORE ABOUT DIPLOMA

AT DIPLOMAPLC.COM

ACCOUNTABILITY AND

EMPOWERMENT UNDERPIN

OURSUCCESS

Our culture plays a critical role in supporting growth. Our

decentralised model empowers local business leaders while

maintaining FTSE‑level controls and governance. We have five

core values that guide our decision‑making and actions:

We are customer-centric, ensuring that our

customers’ needs remain at the forefront

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 1

Strategic Report

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 20252

7-year CAGR:

18% revenue

7% organic growth

18% EPS

2025 HIGHLIGHTS

Organic revenue growth

Model: 5%

Adjusted EPS growth

Model: Double digit

105

Free cash flow conversion

Model: 90%

0.8

Net debt/EBITDA

Model: <2.0x

20.9

Return on adjusted trading

capital employed (ROATCE)

Model: High teens

Dividend growth

Model: 5%

Revenue growth

Model: 10%*

* At constant currency.

22.5

Adjusted operating

profitmargin

Model: 20%+

HIGHLIGHTS

READ MORE ON PAGE 9

A GREAT YEAR, ADDINGTO

OUR STRONG

TRACK RECORD

LONG-TERM TRACK RECORD

Sustainable quality compounding is the result of

ambitionwith discipline. Our business model andstrategy

are designed to support the delivery ofambitious organic

growth at high margins and withgreat capital returns.

OUR MODEL DELIVERS COMPOUNDINGGROWTH...

• Very strong organic growth of 11% ‑ volume‑led growth in all three Sectors

• Reported growth of 12%, +3% from net acquisitions partially offset

by foreign exchange

• Margin up 160 basis points to 22.5% ‑ demonstrating the quality

ofourportfolio

• Strong EPS growth of 21% – reflecting our ambition

• Return on capital up 180 basis points to 20.9% ‑ demonstrating

our discipline

• Acquisition momentum ‑ six deals since start of Q4 for c.£90m.

Healthy pipeline

• Financial firepower - strong cash generation and modest leverage

at 0.8x

...BUILDING ON OUR LONG TRACKRECORD OF DOUBLE-DIGIT

REVENUE AND EARNINGS GROWTH

Adjusted EPS Revenue

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Strategic Report Corporate Governance Financial Statements Additional information

ABOUT US

READ MORE ON PAGE 22 READ MORE ON PAGE 26 READ MORE ON PAGE 30

A DIVERSE GROUP OF BUSINESSES

DELIVERING CRITICAL SOLUTIONS

WHO WE ARE

Diploma PLC is a group of specialist

businesses that provide critical

products and value‑added services

to customers across a wide range

of markets – where quality, reliability

and expertise matter most.

WHERE WE OPERATE

% Group revenue*

WHAT WE DO

55%

Group revenue

29%

Group revenue

16%

Group revenue

Advanced technologies for critical

applications in aerospace, energy,

infrastructure, medical and rail.

Our businesses provide wires and

cables, connectors and automation

parts for use in high‑tech industries and

equipment, from aircraft and F1 cars to

datacentres and medical devices.

Our businesses Our businesses Our businesses

Reliable, high-performance sealing

and

fluid power solutions that protect

equipment, power innovation and

drive uptime across industries.

Our businesses provide gaskets,

hydraulic hoses and fittings for

maintaining heavy machinery and

vehicles, from tractors to wind turbines.

Smart solutions that advance

diagnostics, drive better patient

outcomes and improve lives.

Our businesses provide medical

equipment, lab products and

diagnostics equipment for use

inhospitals and test labs.

CCUSCIENCE

Controls Seals Life Sciences

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 3

North America: 53%

Europe: 19%

UK: 18%

Australia/other: 10%

* Pro forma revenue adjusted for acquisitions and

disposals completed up to 18 November 2025.

DISCIPLINED

DELIVERY

AMBITIOUS

GROWTH

Strategic Report

Diploma delivers sustainable quality compounding, consistently balancing ambition with discipline. We have along track record

of profitable growth which has accelerated in recent years, delivering 18% compound annual EPS growth over the last 7 years.

DELIVERING SUSTAINABLE

QUALITY COMPOUNDING

INVESTMENT CASE

READ MORE ON PAGE 6

SUSTAINABLE QUALITY COMPOUNDING

Differentiated value‑add

business model

Structurally growing end

marketexposure

Significant white space

Quality and diversity

of portfolio

Fragmented markets and large

acquisition pipeline

Strong M&A competitive

advantage

Intensely returns

focused

Highly cash

generative

Disciplined capital

allocation

Tight portfolio

management

Depth and quality

ofmanagement

Powerful decentralised

culture

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 20254

Strategic Report Corporate Governance Financial Statements Additional information

CHAIR’S STATEMENT

POWERING PROGRESS

THROUGH

OURCULTURE

Our colleagues are the cornerstone

of Diploma’s success and our culture

and values play a pivotal role in

fostering employee engagement and

development. Last year, we introduced

employee engagement as part of our

executive remuneration package. Our

Group Colleague Engagement scores

continue to indicate excellent levels

of engagement across the Group at

78%. Over the last year, members of

the Board have had the opportunity

to meetwith colleagues in the US,

Canada, the UK and Europe across

allthree Sectors of the Group. It is

veryimportant to me that the Board

spends time in the businesses and we

will continue to do so throughout FY26.

Board changes

We have a strong Board, which is

wellplaced to represent the interests

ofourshareholders and wider stakeholders

in the years ahead.

I was delighted to welcome Katie

Bickerstaffe as Senior Independent

Director and Ian El‑Mokadem as

Independent Non‑Executive Director

to the Board on 1 October 2024 and

15 January 2025, respectively. Their

appointments have strengthened

the Board’s collective skillset, with

both bringing extensive business and

operational experience from their roles

as chief executives.

Chris Davies resigned as Group CFO

in August 2025 following a company

event where his personal behaviour did

not meet the high standards Diploma

requires. His resignation was unrelated

to the Group’s financial performance.

We thank Chris for his contribution

during his time with Diploma.

Wilson Ng was subsequently appointed

Acting Chief Financial Officer. The Board’s

confidence in Wilson – who had held the

position of Group Financial Controller

for three years – has been borne out

by the diligence and commitment he

has demonstrated during his first few

months in role. A process to identify a

permanent successor is well underway.

Dividends

Diploma has a progressive dividend

policy that aims to increase dividend

per share by 5% each year. We see this

as an important part of compounding

discipline. Based on the strong performance

in the year, the Board is recommending

a final dividend of 44.1p (2024: 42.0p).

makingthe proposed full year dividend

62.3p (2024: 59.3p), a 5% increase.

Looking forward

Diploma is very well positioned to

continue its success. Whilst some

markets remain challenging, we are

confident that the diversity of our

businesses and end markets and

the strength of our business model,

combined with the dedication of

our colleagues, will drive strong

performance into the future.

On behalf of the Board, I would like

to thank all of our colleagues for their

enormous contributions to Diploma’s

success over the last year as we look

forward to the year ahead.

David Lowden

Chair

This has been another strong

year for Diploma. We have not

only delivered an excellent

financial performance, we

have also continued to evolve

as an organisation that values

its people, embraces change

andremains resilient in the face

ofachangingworld.

Fostering an empowered

andpositive culture

Our powerful decentralised culture,

characterised by its entrepreneurial

spirit, accountability and exceptional

leadership, has been instrumental in

delivering strong financial performance.

Diploma fosters a shared culture that

celebrates the unique strengths of

each business and drives our collective

success. Across the Group, our teams

continue to demonstrate ambition and

resilience, even in some challenging

market conditions.

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 5

Strategic Report

6 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025

CEO’S REVIEW

ANOTHER YEAR OF STRONG

PERFORMANCE AND

GREAT PROGRESS

That discipline is central to how we

approach acquisitions. We have

welcomed seven new, high‑quality

businesses across our three Sectors,

including six since the start of July.

Wealso divested some small businesses

– an infrequent but important part of

our portfolio discipline.

I thank all my brilliant colleagues whose

performance and progress collectively

drives great results. It’s been another

great year for Diploma.

On a journey

Diploma today is not the same

business I joined in 2019. Then, we

were a UK‑centric, industrial‑focused

distribution group ‑ a very successful

one. Over several decades, we had

delivered significant growth and

shareholder returns. This success was

built around two key features – strong

value‑add customer propositions and

a powerful decentralised culture. It is

the same two features that underpin our

success today – our secret sauce. But,

over the last few years we have evolved.

We have become more ambitious.

Wehavebecome more focused.

Wehave maintained discipline.

Through our strategy we have driven our

businesses to think bigger than the niche

they once operated in – expanding into

new end markets, across geographies

and into broader product sets.

This evolution has strengthened us.

Ithas diversified our businesses and

ourportfolio and accelerated our

growth. We are now more resilient

toeconomic cycles.

In 2019, our portfolio was narrower

andmore exposed to industrial cycles.

We continue to succeed in the same

spaces, driving growth as we take

our strong value‑add propositions

to thousands of customers, but

today, theyrepresent a much smaller

proportion of our portfolio. We have

broadened our exposure to attractive

markets in structural growth – aerospace,

clean energy, diagnostics, datacentres,

to name a few. This has, in turn, made

our growth more structural.

As in the past, we have continued to

effectively deploy capital into bolt‑on

acquisitions, maintaining the discipline

Diploma has always been known for.

More recently, we have scaled our

acquisition capabilities – welcoming

new talent, improving processes and

adding strategic focus. And, we have

grown our pipeline – this gives us the

freedom to walk away from anything

that doesn’t meet our high bar.

We have achieved a lot. But we’re only

getting started. The opportunities

ahead are vast, and exciting. We are

building an ever‑stronger platform to

continue delivering sustainable quality

compounding long into the future.

This has been a year of strong

financial performance and great

strategic progress, building on

a decades‑long track record

ofcompounding growth and

strong returns.

Organic growth is our priority. This year

it has exceeded our expectations at 11%.

High margins reflect the strength ofour

value‑add customer propositions. This

year we improved operating margin

by 160 basis points, to 22.5%. Strong

cash generation builds our firepower

for investment. This year, free cash flow

conversion was very strong at 105%.

We have a robust balance sheet with

modest leverage.

We run Diploma by balancing ambition

with discipline. Adjusted earnings

per share growth of 21% reflects our

ambition. Return on capital (ROATCE) of

20.9% demonstrates the discipline that

we live and breathe. The combination of

our ambition and our discipline delivers

sustainable quality compounding.

Strategic Report Corporate Governance Financial Statements Additional information

CEO’S REVIEW CONTINUED

Strategic progress

The Group’s strategy is to build

high‑quality, scalable businesses

forsustainable organic growth.

ORGANIC GROWTH IS OUR PRIORITY

Our ambition is reflected in our organic

growth. Our success is driven by it.

We drive organic growth through three

buckets: increasing our exposure into

structurally growing end markets;

expanding further into core developed

geographies; and extending our product

range to expand addressable markets.

This strategy drives both sustainable

organic growth and increased resilience.

This has been another great year for

organic growth. Peerless, Clarendon,

Windy City Wire, and Life Sciences

North America, have been stand‑out

performers, all delivering double‑digit

organic growth. Impressive performances

driven by impressive teams. But, I am

as pleased with the businesses that

haven’t delivered such strong growth

but have dug deep and delivered great

improvement in tough markets – Hercules

OEM and DICSA, to name a couple.

Our strongest performances have been

supported by attractive end market

positions – aerospace, datacentres,

diagnostics. It is in strategic end market

expansion where we see some of our most

exciting opportunities in the years ahead.

We’re investing behind this,

selectivelyintroducing strategic

marketexpertise in some key focus

areas to accelerateprogress.

We have identified a number of attractive

growth markets. We already have

an established presence in some

of these markets ‑ for example,

aerospace, defence, infrastructure, in

vitro diagnostics – and we are seeking

opportunities to extend our presence.In

other markets – for example, datacentres,

automation, clean energy, scientific ‑ we

are in the early stages of establishing a

presence and are building on the great

work that has already been happening

tomake these parts of the business more

meaningful. And, there are some markets

that we’re exploring – for example, water

treatment, energy storage, nuclear ‑

where we have a very small footprint

today. There is a lot for us to go for.

TARGETED ACQUISITIONS

ACCELERATE ORGANIC GROWTH

Since 2019, we’ve acquired 48

businesses investing £1.4bn to drive

future organic growth and strong returns.

Some newly acquired businesses

are quick out of the starting blocks,

surpassing our expectations in year

one.Others take a little longer, requiring

more effort and perhaps more change

than we anticipated. But, they all

deserve their place in our portfolio.

We have seen strong acquisition

momentum in recent months. This

follows a period of more modest

investment, reflecting the challenging

market. Macro events have created

uncertainty and we’ve seen fewer

quality assets coming to market. I’m

delighted with the acquisitions we have

made – seven deals for a total of £93m.

And I’m pleased with the momentum we

are seeing ‑ six deals since the start of Q4.

Our pipeline is very healthy – bigger

than ever and filled with opportunities

to unlock growth across exciting,

fragmented markets. We have a

disciplined process that prioritises

quality over quantity and ensures

an intense focus on returns. Our

proposition to sellers is compelling

– cementing us as a buyer of choice.

There’s lots to go for and we have

considerable financial firepower.

READ MORE ABOUT OUR STRATEGY ON PAGE 16

SCALING FOR SUSTAINABLE GROWTH

We probably talk more about the ‘grow’

part of our strategy than the ‘scaling’

part. They’re equally important.

If we don’t scale at the same pace

as our growth, our growth can’t be

sustained. And, if we don’t preserve

oursecret sauce as we scale, our

growth won’t be sustained.

The majority of my time is spent on

building capability. It’s our biggest driver

of success. Every one of the 3,400

people in Diploma is on their own scaling

journey – myself included. As our leaders

develop and grow, their teams also step

up, so that our capabilities continue to

build at every level of the organisation.

We further build on the investments

we make in developing our people

by bringing in new talent as well.

Growing future succession within

our Group is critically important and

is something we’re very focused on

– but it’s something that takes time.

Our recently‑launched graduate

programme, in the US and the UK, is

designed to develop our businesses

and build the leaders of tomorrow.

It’sthe first programme we’ve run and

it’s something I’m very excited about.

The new year has seen a Group‑wide

focus on scaling our capabilities in

Sales Excellence. Following a fantastic

event earlier in the year which brought

together 75 leaders from across every

business in the Group to share, learn

and collaborate, our businesses are

now driving improvement through the

individual sales excellence plans they all

developed. I’m excited about what they

will deliver.

In the coming year, we will be selectively

investing in specialist strategic market

expertise, introducing a number of roles

that will focus on specific markets to

accelerate future growth.

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 7

Strategic Report

CEO’S REVIEW CONTINUED

At the same time as consciously

scaling our businesses and our Group,

we consciously preserve our secret

sauce. Our differentiated culture

of commerciality, accountability,

and continuous improvement is

thriving in our businesses. And we

complement that with a connectivity

and performance ownership mentality

across our decentralised Group.

When coupled with our value‑add

propositions, this drives loyalty and

share of wallet, reputation and market

share potential, and pricing power

andstrong margins.

Delivering Value Responsibly

Our businesses deliver essential products

and services that help industries run

smarter, safer and stronger – whether

that’s providing life‑saving healthcare

solutions, enabling renewable energy

generation or supporting a circular

economy through aftermarket repairs.

Our Delivering Value Responsibly (DVR)

framework focuses on three themes – our

people, doing business responsibly, and

the environment ‑ through which we can

have a meaningful, positive impact. There

are some great success stories from the

year – including solid progress on health

and safety, colleague engagement and

inclusion – making Diploma an even safer,

better and fairer place to work.

An exciting future

FY26 is off to a strong start.

We remain focused on executing

our strategy of building high‑quality,

scalable businesses for organic

growth. By continuing to effectively

balance ambition and discipline we

are confident in continuing to deliver

sustainable quality compounding over

the long term, in good times and bad.

I am fuelled by excitement for what

Diploma can deliver in the years to

come. We’re just getting started.

Johnny Thomson

Chief Executive Officer

READ MORE IN OUR TALENT REVIEW ON PAGE 12 READ MORE ABOUT OUR PEOPLE ON PAGE 39

Energetic

mood

Highly engaged

colleagues

A powerful, thriving

decentralised

culture

Developing

the next

generation

of leaders

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 20258

Strategic Report Corporate Governance Financial Statements Additional information

FURTHER COMMENTARY RELATING TO THE

FY25 FINANCIAL RESULTS CAN BE FOUND

IN THE FINANCIAL REVIEW ON PAGES 34-37

CFO’S REVIEW

AMBITIOUS GROWTH

DISCIPLINED

DELIVERY

Structural growth markets

drivestrong organic growth

Organic growth is our first priority

and is what our strategy is designed

to deliver. Our value‑add businesses

drive growth through end‑market

exposure, geographic expansion

andproductextension.

Our portfolio is well diversified and it is

increasingly more exposed to structural

growth end markets. Historically, we

have grown organically at an average

of 5%. Over the last 7 years, we have

stepped this up to 7%.

We delivered 11% organic growth in FY25.

As always in a portfolio, performance

varied across our businesses. We have

seen some impressive double‑digit

growth in a number of businesses,

supported by market tailwinds and driven

by strong execution. We have seen some

more challenged performances, hindered

by market conditions in many cases.

Our strategy is to accelerate our organic

growth with targeted acquisitions, and

our financial model demonstrates that

we can deliver double‑digit revenue

growth within our leverage policy.

We do not set specific annual targets

for acquisitions. We’re focused on the

right deals, not the number of deals

–ambition with discipline.

On average, since FY19, net

acquisitions have added 11% per

annum to the top line. This year, has

been lower, at 3%, reflecting more

modest investment in bringing new

businesses into the Group, as well

assome small disposals.

Value-add solutions drive

highoperating margin

This year, we delivered an operating

margin of 22.5%, an increase of 160

basis points on the prior year. Again,

this is the portfolio effect, as some

businesses saw a meaningful step up

– such as Peerless – while others saw

a dip in margins – such as some of our

Life Sciences businesses. Reflecting

our local‑for‑local business models,

we have limited exposure to tariffs.

Where we do have exposure, we have

successfully passed through pricing

and margins have not been impacted.

Diploma’s operating margins are

sustainable above 20%. This is

underpinned by our strong value‑add

customer propositions. Margins have

structurally stepped up over recent years.

This reflects operational leverage and

accretive margins in recent acquisitions,

alongside continued reinvestment.

Our diversified portfolio delivers a broad

range of operating margins. Typically,

our lower margin businesses have lower

asset intensity, whilst those requiring

more inventory to support their customer

propositions are compensated with higher

margins. What is most important isthe

return each business generates.

Our financial model recognises that

each business should deliver sustainable

operating leverage. However, three factors

mean margins may not expand every year:

1) business mix; 2) the margin profile of

acquired businesses; and 3) the level of

reinvestment. In the coming year, we will

be upweighting investment in capability,

selectively introducing strategic end

market expertise, enhancing our assurance

platforms, and building our general

management capabilities.

The combination of our growth and

margin drives the double‑digit adjusted

earnings per share growth included

in our financial model. This year,

wedelivered 21% growth.

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 9

Strategic Report

Capital-light model drives strongcash conversion

Our capital‑light business model drives strong cash conversion, and this means we have significant firepower

to invest inourgrowth.

Our financial model demonstrates a sustainable 90% conversion through our disciplined approach.

FY25 cash conversion was105%. Working capital increased by less than prior year while growing organic

revenue by 11%. Capital expenditure at 1% ofrevenue was below the 2% we typically expect.

Ingrained discipline drives

strongreturns

Our key returns metric, Return on

Adjusted Trading Capital Employed

(ROATCE), adds back accounting

adjustments, such as acquisition

related amortisation. This means our

performance is driven by genuine

economic factors. We believe our

optimal returns range is high‑teens,

while deploying significant capital

withdiscipline.

FY25 returns stepped a little above this

level – a very strong 20.9%, up by 180 basis

points on the prior year. This is a reflection

of: 1) a lower level of acquisition spend in

the year; and 2) exceptional returns from

the FY24 acquisition, Peerless. While this

year’s performance has been very strong,

delivering a Group return on capital of over

20% is not our goal. The high‑teens sweet

spot for Diploma reflects the right level

of

disciplined investment for growth.

Achieving this requires both consistent

operational discipline and a disciplined

approach when making acquisitions.

We have simple but strict criteria for

potential acquisitions and we focus on

the time needed to reach our required

level of returns.

Sustainable Quality Compounding

Sustainable quality compounding combines ambition with

discipline. Our business model and strategy are designed

to support the delivery of strong organic growth, at high

margins andwith great returns on capital.

As a result, we

have a long track record of

delivering ambitious compounding

earningsgrowth.

Our financial model lays out how we will continue to deliver

this in a set of medium‑term financial outcomes. This has

consistently delivered superior shareholder returns and will

continue to drive compounding value over the long‑term.

CFO’S REVIEW CONTINUED

AMBITION... ...WITH DISCIPLINE

MODEL FY25

Organic revenue growth

isourfirstpriority

5% 11%

Total revenue growth

acceleratedby qualityacquisitions

10%* 12%

Value-add drives strong

adjusted operatingmargins

20%+ 22.5%

Compounding

adjusted EPSgrowth

Double

digit

21%

MODEL FY25

Capital-light business model

drives strong cashconversion

90% 105%

Capital stewardship focused

on strong ROATCE

High

teens

20.9%

Balance sheet discipline

maintains prudent leverage

<2.0x 0.8x

Return to shareholders

withaprogressive dividend

5% 5%

* At constant currency.

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 202510

Strategic Report Corporate Governance Financial Statements Additional information

CFO’S REVIEW CONTINUED

Since the start of FY25, we have

completed seven deals for a combined

investment of c.£93m at an average EBIT

multiple of 8x (including two deals after

year end for c.£37m). This more modest

investment than our recent average is itself

a clear demonstration of our disciplined

approach. While many more opportunities

were considered, we walked away from a

lot of deals during the year because they

were not right for Diploma.

We are as disciplined about the effective

recycling of capital as we are about its

deployment. Over the past five years, we

have completed nine disposals at average

multiples of 6x, including some small

disposals during FY25 for a combined

£47m, at average multiples of 6x.

Wedon’t divest due to underperformance

– we see that as our job to resolve –

but we view it as key to responsible

stewardship of capital to find new homes

for businesses that no longer align with

our strategy or business model. While

portfolio discipline is very important to

our strategy, we have a collection of high

quality businesses and do not expect to

make divestments on a regular basis.

Balance sheet discipline

drivesfirepower

Our Board policy is to maintain the net debt

to EBITDA ratio (leverage) below 2x, with

covenants allowing up to 3.5x. As a result

of our strong cash generation, leverage

reduces at approximately 0.4x per annum.

Reflecting the more modest investment

in acquisitions made during the year, we

ended FY25 with a leverage ratio of 0.8x.

There is, therefore, significant headroom

for future investment.

We maintain a well‑supported balance

sheet. Over the last 18 months, we

have secured £885m, through the

combination of our revolving credit

facility and US private placement

notes,termed in tranches out to 2036.

To build our financial firepower to fund

our growth ambitions, we intend to raise

further finance over and above the existing

level of our facilities while staying within

the guidelines of our financial model.

Progressive dividend enhances

strong shareholder returns

Paying a progressive dividend is integral to

our discipline and we have a 25-year track

record of doing so. Our financial model

includes dividends growing by 5% per

annum. The 62.3p dividend proposed for

FY25, represents a 5% increase.

FY26 guidance

We expect another strong performance in

FY26. Organic growth is expected to be

6%. This is significantly weighted to the

first half reflecting the very strong H2’25

comparator. Operating margin is expected

to be flat at c.22.5%.

Acquisitions announced to date, net of

disposals, will contribute 2% to reported

revenue. Of course, any further acquisitions

made throughout the year will increase

thiscontribution.

Wilson Ng

Acting Chief Financial Officer

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 11

Strategic Report

12 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025

TALENT REVIEW

EMPOWERING

OUR PEOPLE

on resetting and building leadership

capability across our MDcommunity.

In recognition of the importance of these

roles, we have enhanced the remuneration

framework for our MD cohort to attract

and retain the highest‑quality talent. We

strengthened our leadership bench by

refreshing our MDcohort with external

hires, while alsopromoting internal talent

into senior roles to support succession

and growth. This investment reflects a

considered reset in how we approach

leadership — viewing it not as a one‑off

initiative, but as an ongoing, deliberate

practice essential to sustaining our

performance and delivering on our

long‑term ambitions.

Building the right skills and capabilities is

critical to the success of our MDs. During

the year, we ran a leadership development

event tailored specifically to the demands

of being an MD in Diploma. It was

designed to stretch and inspire, helping

leaders deepen their capabilities and

confidence in driving growth. Alongside

this, we committed time to personally

discuss the development plan of every

MD, ensuring each leader had clarity and

support for their individual growth journey.

Building succession for the future

It is critical to our long‑term success

that we have a strong and sustainable

succession pipeline. Preparing the

next generation of leaders is central

toensuring our business continues

togrow with strength and agility.

We were excited to launch our first

graduate programme in early FY26.

Theprogramme, running in both the

US and the UK, is designed to develop

talent across our businesses and build

the leaders of tomorrow. Our first

cohort will join us later this financial

year, marking an important milestone in

our journey to build a diverse and robust

pipeline. In tandem with this, we are

focused on building the bench strength

required to lead and grow our business

through identifying and nurturing key

high‑potential talent in the organisation.

We have taken considered action to

strengthen our leadership infrastructure,

including our Sector leadership, business

CFOs and HR leaders, as well as the

addition of experienced sales leadership

across a number of businesses to

accelerate growth. Scaling the Group

is akey part of our strategy. As our

footprint grows, we are evolving our

structures and capabilities to ensure we

remain fit for the future. Aligned with our

growth strategy we undertake targeted

analysis of key markets, such as the US,

to ensure access to broad and diverse

talent poolsthat will enable us to keep

pace with the scale of our ambitions.

Together, these actions reflect our

commitment to capability development

and succession — laying the foundations

today for a leadership pipeline that will

drive long term success.

Diversity, equity and inclusion

A diverse, equitable and inclusive

culture is a competitive advantage.

Itsupports our growth by bringing diverse

perspectives and experience to our

workforce, delivering better outcomes.

Our goal is to create an inclusive culture

inwhich everyone can thrive.

Our people and culture are the

foundation of our growth, and

strong leadership is a critical factor

as we continue to scale. As a

decentralised and lean organisation,

strong leadership empowers local

accountability, ensures agility,

anddrives performance.

Exceptional leaders set the tone for our

culture, inspire colleagues and create

the conditions for brilliant execution.

Building and sustaining a diverse pipeline

of future leaders is therefore one of

our highest people priorities. Alongside

this, we continue to foster an engaging

culture that motivates colleagues to

deliver outstanding service to our

customers each and every day.

Fuelling growth through leadership

Our growth is only possible through the

strength of our leaders. In a decentralised

organisation like ours, the role of the

business Managing Director (MD) is

pivotal — bringing strategy to life locally,

empowering teams and ensuring agility

in execution. Recognising this, during

the year we placed renewed emphasis

Strategic Report Corporate Governance Financial Statements Additional information

READ MORE ABOUT OUR DVR FRAMEWORK ON PAGES 38-41

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 13

TALENT REVIEW CONTINUED

on the previous year, it remains well

above the external benchmark of 68%,

underscoring the strength of our culture

and leadership. Notably, our Learning &

Development score increased by 14%,

reflecting the positive impact of targeted

investments in capability‑building. Key

initiatives included the roll‑out of a

comprehensive line manager training

programme, expanded access to online

learning modules, and a greater emphasis

on apprenticeships across several UK

businesses. These actions are integral to

our strategy of developing internal talent

pipelines, strengthening capability, and

supporting higher levels of engagement,

retention, and performance over the

longterm.

By FY30 we are targeting 40% female

representation across our Top 150

(Senior Management Team). We are

making steady progress, with 32%

women in our SMT compared with

20%in FY19. Within the Executive Team,

gender diversity has improved from

10%in FY23 to 30% in FY25.

Across the Group, women represent

32% of the total workforce, a 1.3

percentage point increase since FY24.

Our continued focus on senior hiring

has helped to deliver a shift in gender

balance and we were delighted to

feature in this year’s FTSE Women

Leaders Review, recognised as one

ofthe top three FTSE 100 companies

that have made considerable progress

in our senior leadership representation.

Beyond gender, 10% of our senior

management team is from an ethnic

minority background and we have

increased the ethnic diversity of our

Executive Team to 20%, which combined

means that 50% of the Executive Team

have a diverse characteristic. Within our

corporate centre, diversity continues

to improve, and we are delighted to

report that 71% of our employees have

adiversecharacteristic.

Being representative of the

communities in which we operate

remains a priority and a source of

strength for our business. To underline

this commitment, and in line with the

Parker Review recommendations, we

have set ourselves an ethnicity target

for Senior Leadership by FY27. We

continue to focus on building diversity

through inclusive hiring, intentional

leadership, and by actively celebrating

the diversity of our colleagues.

Culture

Our culture remains a key differentiator.

As a decentralised, service‑led business,

engaged teams are fundamental to both

performance and growth. Protecting and

strengthening colleague engagement

is therefore essential to maintaining our

cultural advantage, particularly during

periods of rapid growth and change.

To underline this, the remuneration of

senior leaders now has a direct link

toengagement outcomes.

In FY25, our employee engagement

score was 78%. While this represents

a modest 1 percentage point decline

POWERING PROGRESS

THROUGH

OURPEOPLE

leaders

Looking ahead, we remain focused

onfostering high levels of engagement

and further strengthening our culture.

Continued investment in leadership

and colleague development will ensure

that our culture continues to be a

source of competitive advantage as we

grow. A disciplined focus on capability

development remains a key enabler

of Diploma’s high‑growth strategy —

ensuring we have the leadership depth

and organisational resilience to deliver

sustained performance.

Donna Catley

Group HR Director

In April, we brought together business

leaders from across the Group for a two‑day

event in London focused on delivering Sales

Excellence. This was a great opportunity

for teams from across the world to share

insights and ideas, explore opportunities

for collaboration andcelebrate the people

behind our success.

Strategic Report

OUR BUSINESS MODEL

DELIVERING SUSTAINABLE

QUALITY COMPOUNDING

We are a lean decentralised Group operating a diverse portfolio of businesses that serve multiple end markets, from aerospace to

healthcare and renewables to datacentres. We’re not here to standardise our businesses, suppress their unique identities, disempower

local leaders or add bureaucracy or unnecessary cost. We are here to drive ambitious growth and deliver itwith discipline.

THE CORPORATE CENTRE

The Corporate Centre supports the effective execution of our strategy focusing on capital allocation and performance

management. Our lean central team of around 40 people comprises functional experts who support our businesses to grow

and scale, whilst also delivering the compliance and control obligations of a FTSE 100 group.

OUR SECTORS

Our small Sector leadership teams provide focused support and strategic oversight.

This structure enables us to grow and scale while preserving the power of our decentralised model.

Controls

International Controls International SealsWindy City Wire North American Seals

Seals

Life Sciences

HOW WE OPERATE

OUR BUSINESSES

17 agile, entrepreneurial businesses with dynamic accountable leaders. All of our businessesareunique and they deliver success in different

ways through our powerful decentralised model. However, there are some common characteristics to all Diploma businesses:

A strong value-add customer proposition A clear growth trajectory Delivered bybrilliant people with strongleadership

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 202514

Strategic Report Corporate Governance Financial Statements Additional information

OUR BUSINESS MODEL CONTINUED

OUR FINANCIAL MODEL THE SECRET TO OUR SUCCESS

We operate a diverse portfolio of capital‑light businesses with strong value‑add

propositions in attractive end markets. Our strategy is to grow and scale each

business through disciplined execution, driving strong organic growth, consistent

high returns and excellent cash generation.

We continually enhance the quality of our portfolio by reinvesting in organic

growth,scaling our businesses and the Group, and pursuing targeted,

value‑accretive acquisitions.

Our investment approach is disciplined with high return thresholds. Each year we

invest in scaling our businesses ‑ upgrading facilities, enhancing technology and

developing talent. We also deploy capital on targeted acquisitions that accelerate

organic growth and support sustainable long‑term performance.

An essential partner providing

value-add solutions

Value‑add is our key differentiator.

Eachof our businesses provides

a service far beyond sourcing and

reselling products. The value‑add is

different for each business. Whether it’s

technical expertise, speed to market

or product customisation, wecreate

solutions that deliver better outcomes

for customers and make their lives

easier. The products and services

our businesses provide are critical

to customer value chains. They’re

typically low‑cost components funded

from operating expenditure, where

the value‑add far exceeds the cost

oftheproduct. Thismodel drives:

• Loyalty and share of wallet;

• Grows reputation and

market share potential;

• Pricing power and strongmargins.

A powerful decentralised model

enabled by brilliant people

Our decentralised model means our

businesses are able to deliver solutions

for their customers in their own way by

leveraging their specialist knowledge,

close customer relationships and

market experience. Each business

operates independently with local

accountability, decision‑making and

leadership. At the same time, they

benefit from being part of a large,

multinational Group: networks, central

expertise, collaboration and best

practice sharing. Through this model,

we have a long history of delivering

strong shareholder value and generating

meaningful shareholder impact.

LEARN MORE AT

DIPLOMAPLC.COM/ABOUT-US

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 15

DISCIPLINED

DELIVERY

AMBITIOUS

GROWTH

Strategic Report

VALUE-ADD BUSINESS MODEL AT SCALE

POWERFUL DECENTRALISED GROUP AT SCALE

OUR STRATEGY

THE RIGHT STRATEGY FOR

SUSTAINABLE GROWTH

To deliver sustainable quality compounding, our strategy focuses on growth, scale and delivering value responsibly.

The discipline of continuous improvement is essential to sustain growth and build the right capability for the future.

END MARKET

EXPOSURE

GEOGRAPHIC

PENETRATION

PRODUCT

EXTENSION

ORGANIC GROWTH IN THREE BUCKETS:

COMPLEMENTARY ACQUISITIONS TO DRIVE FUTURE ORGANIC GROWTH

DELIVER VALUE RESPONSIBLY

Our strategy supports our businesses in delivering their value‑add missions. It simultaneously delivers environmental and societal value,

and commercial benefit to Diploma. Our Delivering Value Responsibly (DVR) framework focuses on six metrics through which we can have

ameaningful, positive impact on our businesses, our people and our environment.

READ MORE ON PAGE 38

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 202516

GROW

SCALE

Strategic Report Corporate Governance Financial Statements Additional information

OUR STRATEGY CONTINUED

Our strategy supports the individual

scaling journey of each business so

that they can deliver great customer

propositions at scale. It also means

developing our Group to sustain

execution as we grow. This can be

through investment in talent and

developing teams, investment in

technology systems and processes,

and investing in facilities. Scale is about

building the capability and capacity to

support ambitious growth plans whilst

retaining the qualities which underpin

our businesses’ success.

Each business has its own scaling plan,

however, there are core attributes and

competencies which are common to all:

value‑add, route to market, operational

excellence, supply chain management,

commercial discipline and sales

excellence. We are selective in these

scaling investments and require high

returns from them.

READ MORE IN THE CEO’S REVIEW ON PAGE 6

AND THE SECTOR REVIEWS ON PAGES 22-33

We are committed to executing our

strategy whilst being environmentally,

socially and ethically responsible. We

support our businesses to make Diploma

an even safer, better and fairer place to

work. We collaborate with our colleagues,

suppliers and customers to deliver our

sustainability targets, including our

SBTi-approved net zero targets.

By concentrating the efforts of our

large, diverse, and decentralised

Group on three core areas, we can

drive meaningful progress against

oursustainability targets.

READ MORE ON PAGES 38-41

DISCOVER MORE AT

DIPLOMAPLC.COM/SUSTAINABILITY

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 17

GROW

Our strategy is focused on sustainable organic growth

in three buckets:

SCALE

Scaling our businesses and our

Group for sustained growth

DELIVER VALUE

RESPONSIBLY

Ensuring we grow and scale

in a way that is socially and

environmentally responsible

We have an exciting opportunity to access structurally

high‑growth end markets, such as renewables, datacentres,

electrification, aerospace, industrial automation, in vitro

diagnostics and infrastructure. We have increased our

exposure in these markets, but still have a very small share,

meaning there is lots to go for.

SEE PAGE 18

We remain focused on the US, Canada, the UK, Europe and

Australia. We have minimal market share – or none at all – in

most of our product verticals across our core geographies,

sowe do not need to look to higher-risk, developing markets

for growth. There is lots to go for in our existing geographies.

SEE PAGE 19

We expand our addressable markets by extending our

product offering. We do this through continuous product

innovation; coordinated cross‑selling across different Group

businesses; or, selectively, through building out new product

lines that fit our value‑add model.

SEE PAGE 19

We make complementary acquisitions to drive future organic growth. Acquisitions

also help us to build scale and resilience, bring in new talent and expertise, and

drive great returns on capital. Most of our acquisitions are bolt‑ons to existing

businesses but, occasionally, we execute larger deals which provide a platform

for accelerated growth. We have a clear set of criteria to determine businesses

that may bea good fit for us, strategically and culturally: a value-add customer

proposition, a clear growth trajectory and strong leadership. We are incredibly

disciplined in our acquisition process and have high return thresholds.

READ MORE IN THE CEO’S REVIEW ON PAGE 6 AND THE SECTOR REVIEWS ON PAGES 22-33

Positioning

behind fast-

growing

endmarkets

Expanding

our footprint

in core

geographies

Extending

our product

offer

Increasing exposure to attractive growth markets

Over the last five years the Group has significantly grown its presence in attractive

growth

markets. Some examples include renewables, datacentres, electrification,

aerospace, industrial automation, in vitro diagnostics and infrastructure.

AEROSPACE

DATACENTRES

IVD

INDUSTRIAL

AUTOMATION

CLEAN ENERGY

WATER

Long‑term growth in aerospace

is being driven by OEM backlogs,

supply chain constraints, and

rising passenger demand in

civil aviation. The aerospace

fasteners market, in particular,

ishighly fragmented and critical

to aircraft manufacturing, creating

significant opportunities for

specialised suppliers.

Accelerating market

growthisbeing driven by rising

AI‑related demands for power,

infrastructure, and advanced

liquid cooling solutions, creating

significant opportunities across

the datacentre and technology

supply chain.

Preventative healthcare is

accelerating as governments and

health authorities prioritise keeping

patients out of hospital. Growing

public and private investment

across allergy and autoimmune

testing, pre‑conception and

cancer screening, and emerging

technologies such as genomics

is driving growth opportunities

across the sector.

Long‑term growth in industrial

automation is being driven

by manufacturing reshoring,

increased adoption by OEMs to

address labour shortages, and

the replacement and upgrading

of ageing CNC machines and

industrial robots.

The shift toward renewables,

electrification, and smart

infrastructure drives increased

demand for high‑performance

components used in energy,

industrial and building applications

as customers invest in upgrading

and decarbonising systems.

Population growth, climate

pressures, and ageing systems

are driving demand for water

management and treatment

solutions. Diploma’s products

and services – particularly in

fluid controls, seals, and flow

solutions – support customers

in maintaining and upgrading

critical infrastructure.

Strategic Report

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 202518

OUR STRATEGY CONTINUED

ATTRACTIVE

GROWTH

MARKETS

Our businesses serve multiple end markets and we have a diverse

customer base, from original equipment manufacturers and repair

shopsto scientists and surgeons.

We have exciting opportunities at different stages of development

The diversity of our portfolio and breadth of exposure across markets bring

resilience to Group revenue. We seek opportunities that increase our exposure

tomarkets with positive structural investment trends. Our customers in these

markets have complex needs that are met through ourvalue-add propositions.

We position ourselves in our existing and established end markets to increase

market share and leverage growth. We also have exciting opportunities in early

stage and exploratory end markets.

ESTABLISHED

Supporting long-term structural growth

EARLY STAGE EXPLORATORY

Aerospace Datacentres Water

Defence

Automation Energy storage

Infrastructure Clean energy Nuclear

IVD

Scientific

Strategic Report Corporate Governance Financial Statements Additional information

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 19

GEOGRAPHIC AND PRODUCT

WHITE SPACE

OUR STRATEGY CONTINUED

We focus on core developed

geographies ‑ the US, Canada, the

UK, Europe and Australia ‑ where

our value‑add solutions are valued

and we have great opportunity

forgrowth.

Exciting growth prospects:

geographic and product

whitespace

We have significant white space

opportunity to expand our geographical

reach and extend our product offering.

In our core developed geographies,

our penetration remains very small and

there are opportunities to expand in all

of these markets. As well as extending

product ranges within existing product

verticals, we occasionally add new

verticals which pave the way for

futureexpansion.

Geographical penetration and product

extension are deliver