DIPLOMA PLC

NOTICE OF ANNUAL GENERAL MEETING

12.00 midday on Wednesday, 15 January 2020 Pewterers' Hall Oat Lane London EC2V 7DE

Diploma PLC

Company Number: 3899848

Registered in England and Wales

Registered Office: 12 Charterhouse Square, London EC1M 6AX

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN YOU SHOULD CONSULT YOUR STOCKBROKER OR OTHER FINANCIAL ADVISOR AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000.

IF YOU HAVE SOLD OR TRANSFERRED ALL YOUR ORDINARY SHARES IN DIPLOMA PLC PLEASE SEND THIS DOCUMENT AND, WHERE RELEVANT, THE ACCOMPANYING FORM OF PROXY TO THE STOCKBROKER OR OTHER AGENT THROUGH WHOM THE SALE OR TRANSFER WAS EFFECTED FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.

Letter from the Chairman

Dear Shareholder,

The Annual General Meeting of Diploma PLC (the "Company") will be held in the Pewterers' Hall, Oat Lane, London EC2V 7DE on Wednesday, 15 January 2020 at 12.00 midday. As you can see from the Notice of the Annual General Meeting which follows this letter, there are 18 items of Business to be discussed.

Recommendation and Action to be Taken

The Board is unanimous in its view that the adoption of the Resolutions set out in the Notice of Annual General Meeting is in the best interests of the Company and its shareholders as a whole. Accordingly, the Board recommends that you vote in favour of the resolutions. Each Director intends to vote in favour of the resolutions in respect of his own beneficial holding, which in aggregate amount to 139,000 shares at the date of this letter.

Ordinary shareholders are requested, whether or not they propose to attend the Annual General Meeting, to complete and return the enclosed form of proxy to Computershare Investor Services PLC (The Pavilions, Bridgwater Road, Bristol, BS99 6ZY), so as to arrive as soon as possible, but in any event by no later than 48 hours before the time of the meeting. The lodging of forms of proxy will not prevent ordinary shareholders from attending and voting in person if they so wish.

In line with best practice, all resolutions for consideration at the Meeting will be decided on a poll, rather than on a show of hands. We believe that a poll is the best way of representing the views of as many shareholders as possible in the voting process, including all votes of shareholders who are unable to attend the Meeting, but who appoint a proxy for the meeting. This means that a shareholder has one vote for every share held.

The results of the poll will be announced through a Regulatory News Service ("RNS") and will be made available on the Company's website as soon as practicable, following the closing of this year's Annual General Meeting.

The Company operates a Long Term Incentive Plan for Executive Directors, being the Diploma PLC 2011 Performance Share Plan (the "PSP"). As the PSP will expire in 2021, the Board has recommended that the 2020 PSP be adopted. The 2020 PSP is subject to shareholder approval of Resolution 13.

In October 2019, Nigel Lingwood announced his intention to retire as Group Finance Director from the Board and remain with the Group for a period of 12 months to ensure a smooth transition of responsibilities. As a consequence, it is proposed that Nigel Lingwood stands for re-election to the Board in order that he can continue as Group Finance Director until the appointment of his successor.

I am sure you will join me in thanking Nigel for his outstanding contribution to the Group since he became Group Finance Director of Diploma PLC in 2001 and in wishing him a long, healthy and well-earned retirement.

I look forward to seeing you at the Annual General Meeting and thank you for your continued support.

Yours faithfully

JE Nicholas Chairman

6 December 2019

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of Diploma PLC will be held at the Pewterers' Hall, Oat Lane, London EC2V 7DE on Wednesday, 15 January 2020 at 12.00 midday, to consider, and if thought fit, approve the following resolutions which will be proposed as Resolutions 1 to 14 (inclusive) as Ordinary Resolutions and Resolutions 15 to 18 as Special Resolutions:

Ordinary Resolutions

1. THAT the audited Financial Statements for the financial year ended 30 September 2019, together with the Reports of the Directors and Auditor thereon, be received and adopted by members. (Resolution 1)
1. THAT a final dividend of 20.5 pence per ordinary share be declared in respect of the year ended 30 September 2019, payable on 22 January 2020 to ordinary shareholders on the register at the close of business on 29 November 2019. (Resolution 2)
1. THAT JE Nicholas, the Chairman of the Company and submitting himself for re-election, be re-elected as a Director. (Resolution 3)
1. THAT JD Thomson, the Chief Executive Officer of the Company, having been appointed by the Board since the last Annual General Meeting and submitting himself for election, be elected as a Director. (Resolution 4)
1. THAT NP Lingwood, the Group Finance Director of the Company and submitting himself for re-election, be re-elected as a Director. (Resolution 5)
1. THAT CM Packshaw, Senior Independent non-Executive Director of the Company and submitting himself for re-election, be re-elected as a Director. (Resolution 6)
1. THAT AP Smith, a non-Executive Director of the Company and submitting himself for re-election, be re-elected as a Director. (Resolution 7)
1. THAT A Thorburn, a non-Executive Director of the Company and submitting herself for re-election, be re-elected as a Director. (Resolution 8)
1. THAT PricewaterhouseCoopers LLP be reappointed as Auditor of the Company. (Resolution 9)
1. THAT the Directors be authorised to set the remuneration of the Auditor. (Resolution 10)
1. THAT the Directors' Remuneration Policy, set out on pages 48 to 53 of the Annual Report & Accounts 2019, which takes effect immediately after the end of the Annual General Meeting on Wednesday, 15 January 2020 (and applies for three years or until replaced by a new or amended policy), be and is hereby approved. (Resolution 11)
1. THAT the Annual Report on Remuneration for the financial year ended 30 September 2019, set out on pages 46, 47 and 54 to 59 of the Annual Report & Accounts 2019, be and is hereby approved. (Resolution 12)
1. That the rules of the Diploma PLC 2020 Performance Share Plan (the "2020 PSP"), produced in draft to this Meeting and for the purposes of identification initialled by the Chairman and the principal terms of which are summarised in this Notice of Annual General Meeting be approved; and the Directors be authorised to:
2. do all things necessary or appropriate to carry the 2020 PSP into effect and to adopt the 2020 PSP; and
3. establish further plans based on the 2020 PSP, or establish schedules to the 2020 PSP, but modified to take account of local tax, exchange control or securities laws in overseas territories provided that any shares made available under such further plans or schedules are treated as counting against the limits on individual and overall participation in the 2020 PSP. (Resolution 13)
1. THAT the Directors be and are hereby generally and unconditionally authorised for the purposes of Section 551 of the Companies Act 2006 (the "Act"), to exercise all the powers of the Company to allot shares and grant rights to subscribe for, or convert any security into, shares:
2. (a)up to an aggregate nominal amount (within the meaning of Section 551(3) and (6) of the Act) of £1,887,326 (such amount to be reduced by the nominal amount allotted or granted under (b) below in excess of such sum); and
3. (b)comprising equity securities (as defined in Section 560 of the Act) up to an aggregate nominal amount (within the meaning of Section 551(3) and (6) of the Act) of £3,774,652 (such amount to be reduced by any allotments or grants made under (a) above) in connection with or pursuant to an offer by way of a rights issue in favour of holders of ordinary shares in proportion (as nearly as practicable) to the respective number of ordinary shares held by them on the record date for such allotment (and holders of any other class of equity securities entitled to participate therein or if the Directors consider it necessary, as permitted by the rights of those securities), but subject to such exclusions or other arrangements as the Directors may consider necessary or appropriate to deal with fractional entitlements, treasury shares, record dates or legal, regulatory or practical difficulties which may arise under the laws of or the requirements of any regulatory body or stock exchange in any territory or any other matter whatsoever;

these authorisations to expire at the conclusion of the Annual General Meeting of the Company in 2021 or on 31 March 2021, whichever is the earlier, save that the Company may before such expiry make any offer or agreement which would or might require shares to be allotted or rights to be granted, after such expiry and the Directors may allot shares, or grant rights to subscribe for or to convert any security into shares in pursuance of any such offer or agreement as if the authority conferred hereby had not expired. (Resolution 14)

Notice of Annual General Meeting continued

Special Resolutions

1. THAT subject to the passing of Resolution 14 above the Directors be and are hereby empowered pursuant to Sections 570 (1) and 573 of the Companies Act 2006 (the "Act") to:
2. (a)allot equity securities (as defined in Section 560 of the Act) of the Company for cash pursuant to the authority conferred by that resolution; and
3. (b)sell ordinary shares (as defined in Section 560(1) of the Act) held by the Company as treasury shares ("Treasury Shares") for cash (as detailed in Section 727 of the Act),

as if Section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited to the allotment of equity securities for cash and the sale of Treasury Shares:

(i) in connection with or pursuant to an offer or invitation to acquire equity securities (but in the case of the authorisation granted under Resolution 15(b), by way of rights issue only) in favour of holders of ordinary shares in proportion (as nearly as practicable) to the respective number of ordinary shares held by such holders on the record date for such allotment or sale (and holders of any other class of equity securities entitled to participate therein or if the Directors consider it necessary, as permitted by the rights of those securities) but subject to such exclusions or other arrangements as the Directors may deem necessary or desirable in relation to fractional entitlements, Treasury Shares, record dates or legal, regulatory or practical problems arising in, or pursuant to, the laws of any territory or the requirements of any regulatory body or stock exchange in any territory or any other matter whatsoever; and
(ii) in the case of the authorisation granted under Resolution 15(a) above (or in the case of any transfer of Treasury Shares) and otherwise than pursuant to paragraph (i) of this resolution, up to an aggregate nominal amount of £283,099.

This power shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2021 or on 31 March 2021, whichever is the earlier, save that the Company may, at any time before the expiry of such power make any offer or enter into any agreement which would or might require equity securities to be allotted, or Treasury Shares to be sold, after the expiry of such power and the Directors may allot equity securities or sell Treasury Shares in pursuance of any such offer or agreement as if such power conferred hereby had not expired. (Resolution 15)

1. THAT, subject to the passing of Resolutions 14 and 15 above, and in addition to the power given by Resolution 15, the Directors be given power pursuant to Sections 570 (1) and 573 of the Companies Act 2006 (the "Act") to:
2. (a)allot equity securities (as defined in Section 560 of the Act) of the Company for cash pursuant to the authorisation conferred by paragraph (a) of Resolution 15; and

(b)sell ordinary shares (as defined in Section 560(1) of the Act) held by the Company as treasury shares ("Treasury Shares") for cash,

as if Section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be:

(i) limited to the allotment of equity securities for cash and the sale of Treasury Shares, up to an aggregate nominal amount of £283,099; and
(ii) used only for the purposes of financing (or refinancing, if the authority is to be used within six months after the original transaction) a transaction which the Directors have determined to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice, or for any other purposes as the Company in general meeting may at any time by special resolution determine.

1. THAT the Company is hereby generally and unconditionally authorised for the purposes of Section 701 of the Companies Act 2006 (the "Act") to make market purchases (within the meaning of Section 693(4) of the Act) of any of its ordinary shares of 5p each in the capital of the Company on such terms and in such manner as the Directors may from time to time determine, provided that:
2. (a) the maximum number of ordinary shares which may be purchased is 11,323,956 representing approximately 10% of the issued ordinary share capital at 5 December 2019;
3. (b)the minimum price which may be paid for each ordinary share is 5p which amount shall be exclusive of expenses, if any;
4. (c) the maximum price (exclusive of expenses) which may be paid for each ordinary share is the higher of:
  - (i) an amount equal to 105% of the average of the middle market quotations for the ordinary shares of the Company as derived from the Daily Official List of the London Stock Exchange plc for the five business days immediately preceding the day on which such share is contracted to be purchased; and
  - (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out;
5. (d)unless previously renewed, revoked or varied, this authority shall expire at the conclusion of the Annual General Meeting in 2021 or on 31 March 2021, whichever is the earlier; and
6. (e) under this authority the Company may make a contract to purchase ordinary shares which would or might be executed wholly or partly after the expiry of this authority, and may make purchases of ordinary shares pursuant to it as if this authority had not expired. (Resolution 17)
1. THAT the period of notice required for general meetings of the Company (other than Annual General Meetings) shall be not less than 14 clear days' notice. (Resolution 18)

By Order of the Board

AJ Gallagher Secretary

Diploma PLC 12 Charterhouse Square London EC1M 6AX

Registered in England and Wales No. 3899848

6 December 2019

Explanatory Notes to the Notice

The following notes explain the proposed resolutions set out in the Notice of Annual General Meeting.

Resolution 1

Ordinary Resolution 1 proposes the receipt and adoption of the audited Financial Statements, together with the Reports of the Directors and the independent Auditor for the year ended 30 September 2019.

Resolution 2

The Directors recommend that shareholders declare a final dividend of 20.5 pence per ordinary share in respect of the year ended 30 September 2019, which, if approved, will be payable on 22 January 2020 to ordinary shareholders on the register at the close of business on 29 November 2019.

Resolutions 3 to 8 – Election or Re-election of Directors

The Board has decided that all Directors of the Company should retire and stand for election or re-election at each Annual General Meeting. As a consequence, Ordinary Resolutions 3 to 8 deal with the election or re-election of each Director of the Board. Having considered the performance of each of the current Directors standing for election or re-election, the Board has concluded that each Director makes a positive and effective contribution to the Board and demonstrates commitment to the role.

Brief biographical details of all Directors seeking election or re-election are set out below and are given on pages 34 and 35 of the Annual Report & Accounts 2019.

John Nicholas (Chairman)

Ordinary Resolution 3 deals with the re-election of John Nicholas as a Director of the Board. John joined the Board in June 2013 and was appointed Chairman in January 2015. John was appointed interim Executive Chairman from the end of August 2018 to 25 February 2019, to carry out the role of Chief Executive Officer until the appointment of a permanent Chief Executive Officer. John Nicholas is an experienced non-Executive Director who provides broad business and leadership experience and the Board believes that he demonstrates effectiveness and strong commitment to the Board. John is a Chartered Certified Accountant with a broad range of commercial experience, having been Group Finance Director at Tate & Lyle PLC and Kidde plc. John is currently non-Executive Chairman of Porvair plc.

Johnny Thomson (Chief Executive Officer)

Ordinary Resolution 4 deals with the election of Johnny Thomson as a Director of the Company, having been appointed by the Board since the last Annual General Meeting. Johnny joined the Board on 25 February 2019 as Chief Executive Officer. Johnny is responsible for the executive management of the Group's business and for the development and execution of the Group's strategy.

Prior to joining Diploma, Johnny worked with Compass Group PLC for nine years to the end of 2018, with the last three years as Group Finance Director of Compass Group PLC and a member of the Board of Compass Group PLC. He has also been Regional Managing Director of both Latin America and CAMEA (Central Asia, Middle East & Africa). Johnny began his career at PricewaterhouseCoopers LLP after which he joined Hilton Hotels in a senior executive role. Johnny has lived and worked in Europe, North America, Asia and across Latin America.

Nigel Lingwood (Group Finance Director)

Ordinary Resolution 5 deals with the re-election of Nigel Lingwood as a Director of the Board. Nigel joined the Board in June 2001 and was appointed Group Finance Director in July 2001. Nigel oversees financial control and reporting and is responsible for the Group's accounting and regulatory compliance functions and financial planning and reporting. As announced by the Company on 8 October 2019, Nigel Lingwood will retire from the Company with effect from 7 October 2020.

Charles Packshaw (Senior Independent non-Executive Director)

Ordinary Resolution 6 deals with the re-election of Charles Packshaw as a Director of the Board. Charles joined the Board in June 2013 and is a member of the Audit, Nomination and Remuneration Committees of the Board. Charles was appointed Senior Independent Director on 27 February 2015. Charles brings considerable relevant financial and business expertise to the Board. Charles was until 31 January 2017 Head of UK Advisory and Managing Director in HSBC's global banking business with over 30 years of City experience, including 18 years at Lazard where he was Head of Corporate Finance. Charles is Senior Independent Director of BMT Group Limited, non-Executive Director at Fram Farmers Ltd and Chair of Prostate Cancer UK. Charles has been a non-Executive Director of two listed companies and is a Chartered Engineer.

Andy Smith (non-Executive Director)

Ordinary Resolution 7 deals with the re-election of Andy Smith as a Director of the Board. Andy joined the Board on 9 February 2015 and is Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees of the Board. Andy is Managing Director, Severn Trent Business Services with responsibility for the company's non-regulated businesses. He has many years of plc Board level experience having previously served on the Boards of The Boots Company as Group HR Director and Severn Trent plc as Water Services Director. Andy is a Mechanical Engineering graduate and has significant operational and HR experience. He has worked in the UK and overseas previously with global businesses including BP, Mars and Pepsi.

Anne Thorburn (non-Executive Director)

Ordinary Resolution 8 deals with the re-election of Anne Thorburn as a Director of the Board. Anne joined the Board on 7 September 2015 and was appointed Chairman of the Audit Committee with effect from 17 November 2015. Anne is also a member of the Nomination and Remuneration Committees of the Board. Anne is a member of the Institute of Chartered Accountants in Scotland and has many years of experience gained from Board level finance roles in listed international industrial companies. Anne has served as the Chief Financial Officer at Exova Group plc, having previously served as Group Finance Director at British Polythene Industries PLC. Anne is a non-Executive Director of TT Electronics plc.

Resolutions 9 and 10

Ordinary Resolution 9 deals with the requirement to appoint an Auditor at every general meeting at which accounts are presented, to hold office until the conclusion of the next such meeting. The Directors, on the recommendation of the Audit Committee, are proposing the reappointment of PricewaterhouseCoopers LLP ("PwC") as the Company's Auditor, PwC having been first appointed in 2018 following a competitive tender.

Ordinary Resolution 10 deals with the standard practice of authorising the Directors to set the Auditor's remuneration.

Resolutions 11 and 12 – Directors' Remuneration

Ordinary Resolutions 11 and 12 deal with Directors' remuneration and seek approval of the Directors' Remuneration Policy and of the Annual Report on Directors' Remuneration during the year under review, respectively.

Resolution 11 is a binding vote to approve the Directors' Remuneration Policy, which will take effect immediately after the end of the Annual General Meeting and will apply for a term of three years until the Annual General Meeting in 2023 or until replaced by a new or amended policy. The Company is required to seek approval for the Directors' Remuneration Policy at least once every three years. The Directors' Remuneration Policy is set out on pages 48 to 53 of the Annual Report & Accounts 2019 and sets out the Company's policy on Directors' remuneration, including Directors' fixed and variable pay, and participation in the Company's long term incentive plan. During the year the Remuneration Committee undertook a detailed review of its Remuneration Policy for Executive Directors to ensure that it remained appropriate as the Company develops.

The Remuneration Committee Chairman's letter includes the context of the changes on page 46. A summary of the principal proposed changes to the Directors' Remuneration Policy are described on page 47 and in the Policy Change Table on page 48 of the Annual Report & Accounts 2019.

Resolution 12 continues the practice of an annual advisory vote to approve the Annual Report on Directors' Remuneration for the year ended 30 September 2019, which is set out as the Annual Report on Remuneration on pages 46, 47 and 54 to 59 of the Annual Report & Accounts 2019.

Resolution 13 – Adoption of the Diploma PLC 2020 Performance Share Plan (the "2020 PSP")

The Diploma Plc 2011 Performance Share Plan ("PSP") will expire in January 2021. It is proposed that future share incentive awards to the Executive Directors and certain other senior management be made under a new long term incentive plan, consistent with the new Remuneration Policy to be proposed for shareholder approval as Resolution 11. The 2020 PSP is designed to incentivise Executive Directors and eligible senior executives by providing a share of the long-term value they create for shareholders. The Remuneration Committee of the Board believes this to be the most appropriate way to recognise superior performance.

The proposed new 2020 PSP has been drafted to take account of current governance guidelines and the terms of the proposed new plan will remain broadly similar to those of the existing PSP, such that awards will continue to be subject to performance conditions which will be measured over a three-year performance period.

Shareholder approval is being sought for the 2020 PSP at the AGM to ensure that the 2020 PSP reflects the proposed new Remuneration Policy. The proposed new Directors' Remuneration Policy, for which shareholder approval is being sought, is set out on pages 48 to 53 of the Annual Report & Accounts 2019.

The main features of the 2020 PSP are summarised in the Appendix to this Notice.

The Rules of the 2020 PSP, together with the other documents for inspection, will be available for inspection during normal business hours from the date of despatch of this Notice until the date of the AGM (Saturdays, Sundays and Public Holidays excepted) at the registered office of the Company, 12 Charterhouse Square, London EC1M 6AX and will also be made available at the AGM for a period of 15 minutes prior to and during the continuance of the AGM.

Resolution 14 – Authority to Allot Shares

The Directors may only allot shares or grant rights to subscribe for, or convert any security into, shares if authorised to do so by shareholders. The previous authority granted by shareholders in respect of the allotment of shares will expire on 15 January 2020. Accordingly, Resolution 14 will be proposed as an Ordinary Resolution. Part (a) of Resolution 14 grants new authority to allot shares and grant rights to subscribe for, or convert any security into, shares up to an aggregate nominal amount of £1,887,326. This amount represents approximately one-third (33.33%) of the total issued ordinary share capital of the Company as at 5 December 2019, the latest practicable date before the publication of the Notice.

In accordance with the institutional guidelines issued by the Investment Association ("IA"), paragraph (b) of Resolution 14 will also authorise Directors to allot, including the ordinary shares referred to in paragraph (a) of Resolution 14, ordinary shares in connection with a pre-emptive offer by way of a rights issue to ordinary shareholders up to a maximum nominal amount of £3,774,652. This amount represents approximately two-thirds (66.67%) of the Company's existing issued share capital calculated as at 5 December 2019, the latest practicable date before the publication of the Notice. The Directors have no present intention of exercising these authorities.

If given, these authorities will expire at the Annual General Meeting in 2021 or 31 March 2021, whichever is the earlier.

Resolutions 15 and 16 –Disapplication of Pre-Emption Rights

The Directors require a power from shareholders to allot equity securities or sell treasury shares where they propose to do so for cash and otherwise than to existing shareholders pro rata to their holdings. The previous power granted by shareholders in respect of the disapplication of Pre-Emption Rights will expire on 15 January 2020. Accordingly, Resolution 15 will be proposed as a Special Resolution to grant such a power. Apart from offers or invitations, the authority will be limited to the allotment of equity securities and sales of treasury shares for cash up to an aggregate nominal amount of £283,099 (being 5% of the issued ordinary share capital at 5 December 2019). If given, this authority will expire on the earlier of 31 March 2021 and the conclusion of the Annual General Meeting in 2021. Your Directors will have due regard to institutional guidelines in relation to any exercise of this authority, in particular the requirement for advance consultation with shareholders and explanation before making any non-pre-emptive cash issue pursuant to this resolution which exceeds 7.5% of the Company's issued share capital in any rolling three-year period. The Directors do not have any present intention of exercising this authority but consider it desirable to have the flexibility to use it, if appropriate. Adherence to these guidelines would not preclude issuances under the authority sought under Resolution 16.

The Directors are seeking this year a further power from shareholders to allot equity securities or sell treasury shares for cash otherwise than to existing shareholders pro rata to their holdings, to reflect the Pre-Emption Group 2015 Statement of Principles for the disapplication of pre-emption rights (the "Statement of Principles"). Accordingly, Resolution 16 will be proposed as a special resolution to grant such a power. The power will be limited to the allotment of equity securities and sales of treasury shares for cash up to an aggregate nominal value of £283,099 (being 5% of the issued ordinary share capital at 5 December 2019).

Resolution 17 – Authority to Make Market Purchases of Ordinary Shares

This Resolution will give the Company authority to purchase its own shares in the market up to a limit of 10% of its issued ordinary share capital. The maximum and minimum prices are stated in the resolution. The Directors believe that it is advantageous for the Company to have the flexibility to make market purchases of its own shares. In the event that shares are purchased, they would either be cancelled (and the number of shares in issue would be reduced accordingly) or, subject to the Companies Act 2006 (the "Act"), be retained as treasury shares. The Act enables companies to hold shares repurchased as treasury shares with a view to possible resale at a future date rather than having to cancel them. The Company will consider holding repurchased shares pursuant to the authority conferred by this resolution as treasury shares. This would give the Company the ability to reissue treasury shares quickly and cost effectively and would provide the Company with additional flexibility in the management of its capital base. The Directors will only exercise this authority if they are satisfied that a purchase would result in an increase in expected earnings per share and would be in the interests of shareholders generally. This resolution is to be renewed for the period ending on the earlier of 31 March 2021 and the conclusion of the Annual General Meeting in 2021.

At the date of this letter the Company does not hold any treasury shares.

Resolution 18 – Notice Period for General Meetings

This Resolution is required under the changes made to the Act to implement the Shareholder Rights Directive. The Act increases the notice period for general meetings of companies such as ours to 21 days, unless certain conditions are met in which case it will be 14 clear days' notice. To ensure that our general meetings (other than Annual General Meetings which will continue to be held on at least 21 clear days' notice) may be held on not less than 14 clear days' notice, one of the conditions needing to be met is that a shareholder resolution reducing the period of notice to not less than 14 clear days has been passed at the immediately preceding Annual General Meeting.

It is intended that this flexibility will only be used for non-routine business where the flexibility is merited by the business of the meeting and it is thought to be in the interests of shareholders generally. The approval will be effective until the Company's next Annual General Meeting.

Information for Shareholders

1. Entitlement to Attend and Vote

Only holders of ordinary shares are entitled to attend and vote at this meeting. Pursuant to the Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference to the Register of Members of the Company at close of business on the day which is two days before the day of the meeting or, if the meeting is adjourned, to the Register of Members of the Company at close of business on the day which is two days before the day of any adjourned meeting. Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting.

2. Poll Voting

In line with best practice, voting at the Annual General Meeting will be on a poll rather than on a show of hands. Each shareholder present at the meeting will be entitled to one vote for every share registered in his or her name and each corporate representative or proxy will be entitled to one vote for each share which he or she represents. Shareholders who vote in advance of the meeting and appoint the Chairman as their proxy, but who attend the meeting in person, need not complete a poll card unless they wish to change their vote. The results of the voting will be announced through RNS and will be published on the Company's website www.diplomaplc.com after the Meeting on Wednesday, 15 January 2020 or as soon as reasonably practicable thereafter.

3. Appointment of Proxies

A member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, to speak and to vote at the meeting. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. A proxy need not be a member of the Company. To be valid any form of proxy must be received by post or by hand (during normal business hours only) by the Company's Registrars, Computershare Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, or at the electronic address provided in the form of proxy/website, in each case no later than 48 hours before the time of the meeting. If you are a CREST member, see note 4 below.

4. CREST Electronic Appointment of Proxies

If you are a member of CREST, you may register the appointment of a proxy by using the CREST electronic proxy appointment service.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting and any adjournment(s) thereof by using the procedures, and to the address, described in the CREST Manual (available via www.euroclear.com/CREST) subject to the provisions of the Company's Articles of Association. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK and Ireland specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID 3RA50) by 12.00 midday on Monday, 13 January 2020. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK and Ireland does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

The appointment of a proxy does not prevent a member who so wishes from attending the meeting and voting in person.

6. Corporate Representatives

Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.

7. Nominated Persons

Any person to whom this Notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated Person") may have a right under an agreement between him/her and the member by whom he/she was nominated, to be appointed (or to have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such right or does not wish to exercise it, he/she may have a right under such an agreement, to give instructions to the member as to the exercise of voting rights. The statement of the rights of the members in relation to the appointment of proxies does not apply to Nominated Persons. Those rights can only be exercised by members of the Company.

8. Documents on Display

Copies of the following documents are available for inspection at the registered office of the Company, 12 Charterhouse Square, London EC1M 6AX during normal business hours on any weekday from the date of this Notice until the close of the Annual General Meeting (Saturdays, Sundays and public holidays excepted) and will be available for inspection at the place of the Annual General Meeting convened for that day from at least 15 minutes prior to the appointed time for the meeting until the meeting is concluded or adjourned:

(a)copies of the Executive Directors' service agreements;

(b)copies of the letters of appointment of non-Executive Directors; and

9. Electronic Publication

A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found at www.diplomaplc.com

10. Electronic Addresses

You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in this Notice (or in any related documents including the Chairman's letter and proxy form) to communicate with the Company for any purposes other than those expressly stated.

11. Shareholders' Right to Ask Questions

Any member attending the Annual General Meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

12. Audit Concerns

Under Section 527 of the Companies Act 2006 (the "Act"), members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company appointed for the financial year beginning on 1 October 2018 ceasing to hold office since the previous meeting at which Annual Report & Accounts were laid in accordance with Section 437 of the Act, (in each case) that the members propose to raise at the Annual General Meeting. The Company may not require the members requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under Section 527 of the Act, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under Section 527 of the Act to publish on a website.

13. Shareholder Resolution

Under Section 338 and Section 338A of the Companies Act 2006, members meeting the threshold requirements in those sections have the right to require the Company (i) to give, to members of the Company entitled to receive notice of the Annual General Meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting and/or (ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request.

14. Issued Share Capital and Total Voting Rights

As at 5 December 2019 the Company's issued share capital consists of 113,239,555 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 5 December 2019 are 113,239,555, of which 18,553 are held by the Diploma Employee Benefit Trust.

Appendix 1

Summary of Diploma PLC 2020 Performance Share Plan

1 General

The operation of the Diploma PLC 2020 Performance Share Plan ("2020 PSP") will be overseen by the Board (or a duly authorised committee) (the "Board"). All decisions relating to awards made to Executive Directors will be taken by the Remuneration Committee of the Board.

Decisions of the Board are final and binding.

Benefits under the 2020 PSP are not pensionable benefits.

2 Eligibility

Employees of the Company and its subsidiaries (the "Group"), including Executive Directors, will be eligible to participate in the 2020 PSP, at the discretion of the Board.

3 Awards under the 2020 PSP

Awards granted under the 2020 PSP will be granted over ordinary shares in the Company ("Shares"), and may be at the discretion of the Board, either:

an option to acquire Shares which may be market value options, nil cost options or nominal cost options; or
a conditional right to acquire Shares in the future.

It is currently intended that awards will be in the form of nil cost options.

Awards may be settled using fully paid Shares. Awards may not be transferred, except on death.

No payment is required for the grant of an award.

4 Timing of awards

Awards may only be granted during the following periods:

the period of 42 days after the day the 2020 PSP is approved by the Company;
the period of 42 days immediately following the end of a closed period (as that term is defined in the Market Abuse Regulation); or
any other period when the Board resolves that exceptional circumstances exist which justify the grant of awards.

Awards may not be granted after the tenth anniversary of the date on which the 2020 PSP is approved by shareholders.

5 Performance and other conditions

Awards may be granted subject to performance conditions, and/or other conditions, that must normally be satisfied in order for awards to vest or become exercisable. All 2020 PSP awards will be subject to performance conditions, with a performance period of not less than 3 financial years. The performance conditions that apply to 2020 PSP awards granted to Executive Directors will be stated in the Directors' Remuneration Policy from time to time approved by the Company's shareholders (the "Remuneration Policy").

The Board may not vary or waive a condition unless circumstances occur which cause the Board to reasonably consider it appropriate to do so. A varied condition should not be materially less or more difficult to satisfy than the original condition.

The 2020 PSP does not permit the automatic waiver of a performance condition.

6 Overall limits

The total number of Shares which may be issued (or committed to be issued) pursuant to awards made under the 2020 PSP on any day must not exceed 10 per cent of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Shares issued or issuable pursuant to awards granted in the previous 10 years under the 2020 PSP and under any other employee share plans operated by the Company. Additionally, a similar limit of 5 per cent applies, when Shares issued (or committed to be issued) pursuant to awards made under the 2020 PSP are aggregated with Shares issued or issuable pursuant to awards granted under any other discretionary employee share plans operated by the Company.

For so long as required by institutional investor guidelines, treasury shares count towards these limits. Shares issued for the purpose of a dividend accrual payment also count towards these limits.

Awards which have lapsed do not count against these limits.

7 Individual limits

No award will be issued to an individual if this will cause the aggregate market value (as at the time of the grant of the award to which the Shares are subject) of all of the Shares to be issued or transferred to him pursuant to any award granted in that financial year to exceed 250 per cent of his base salary. This limit excludes any Shares to be issued or transferred to satisfy a dividend accrual payment.

8 Vesting and exercise of awards

An award will, normally, vest or become exercisable from the date the Board determines the applicable performance conditions have been met.

The vesting or exercise of an award may be delayed due to dealing restrictions.

Awards granted as options may be exercised in whole or part. Options will normally remain exercisable from vesting until ten years after the date of grant, with Board discretion to specify an earlier end date.

On exercise of an option or following vesting of a conditional right to acquire Shares, Shares will be delivered to the participant. However, the Board may decide to settle any award partly or fully in cash instead of Shares. In practice, it is currently intended that awards made to Executive Directors will be settled in Shares, save to the extent Shares are withheld to cover any applicable tax or other withholdings or where there are legal, regulatory or other issues with delivering Shares.

9 Holding period

A holding period may be applied to an award, such that participants may not normally dispose of the Shares acquired or released on exercise or vesting for a specified period after vesting. Some exceptions apply such as for Shares sold to cover taxes and/or social security or to collect any outstanding exercise price.

Awards granted to Executive Directors will be subject to a holding period where required by, and consistent with, the Remuneration Policy, and which is currently five years from the date of grant of awards made post 17 January 2018. Any other awards may be subject to a holding period, for such period determined by the Committee at grant.

Post-termination shareholding requirements will apply to Executive Directors in line with the Company's shareholding policy from time to time and with the Remuneration Policy.

10 Cessation of employment

If a participant ceases to be an employee or a director of a member of the Group, before his award has become exercisable or vests, it will normally lapse.

However, if the reason for such cessation is ill-health, injury or disability (evidenced to the satisfaction of the Board), retirement by agreement with the Board, the transfer of the employing business or company outside of the Group or any other reason at the Board's discretion (a "Good Leaver"), an unvested award will normally:

continue until the normal vesting date;
only vest to the extent the Board determines any performance conditions have been satisfied;
only vest to the extent any other conditions applicable to the award have been satisfied; and
be pro-rated for time.

The Board has discretion where it considers there to be exceptional circumstances to permit the awards of Good Leavers to vest or become exercisable on cessation of employment based on the extent to which the applicable performance conditions have then been met.

In the case of options that do not lapse as a consequence of ceasing employment, there will normally be a 12-month exercise period from the date the performance conditions are determined to have been met following the normal vesting date or where the Board has resolved there are exceptional circumstances 12 months from the date of ceasing employment.

Any holding period will normally continue to apply after ceasing employment.

11 Dividends

Awards may carry the right to receive an amount in cash or Shares relating to the value of dividends that would have been paid over the vesting period in respect of any Shares that vest.

12 Change of control

In the event of a takeover (including a person becoming bound or entitled to acquire Shares under UK company law), scheme of arrangement or proposed voluntary winding up of the Company, awards will vest and, where relevant, will normally be exercisable for a period of six months from the relevant event.

Unvested awards in these circumstances will normally become exercisable or vest:

only to the extent the Board determines any performance conditions have been satisfied;
only to the extent any other conditions applicable to the award have been satisfied; and
on a time pro-rated basis.

Alternatively, if the acquiring entity consents (and in the case of an internal reorganisation) awards may be exchanged for new awards over shares in the acquiring entity on terms substantially similar to the original awards.

The Board may also permit awards to become exercisable or vest where there is a demerger.

Appendix 1 continued

13 Variations in share capital

In the event of a variation in the share capital of the Company, a demerger, special dividend or distribution or any other corporate event which the Board considers justifies an adjustment, the Board may make an adjustment to the number and nominal value of Shares subject to awards and, in the case of an option, the exercise price.

14 Malus and Clawback

The Board may reduce (including to nil) any unvested awards (malus) and to clawback the value of any awards that have vested or become exercisable during a period of two years thereafter in certain circumstances where the Board considers it appropriate, including:

(a)misstatement of financial results by a Group company;

(b)an error or miscalculation when assessing the extent to which a performance condition has been met;

(d)corporate failure.

15 Rights attaching to Shares

All Shares issued under the 2020 PSP will rank equally in all respects with the Shares in issue on that date. Participants will only be entitled to rights attaching to Shares by reference to a record date on or after the date of the allotment or transfer to them.

The Company will apply for the listing and admission to trading of any Shares issued in connection with the 2020 PSP.

16 Amendments and termination

The Board may at any time amend the 2020 PSP in any way. However, the Company must obtain prior shareholder approval for any change which is to the advantage of participants and which relates to eligibility, limitations on the number of shares or cash subject to the 2020 PSP; the maximum entitlement for any participant, the basis for determining a participant's entitlement to, and the terms of Shares or cash provided under the 2020 PSP, the rights of a participant in the event of a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital.

There is an exception for minor amendments to benefit the administration of the 2020 PSP, to comply with or take account of a change in legislation and/or to obtain or maintain favourable tax, exchange control or regulatory treatment of any Group company or any participant.

17 Overseas Plans

The Board may establish plans or schedules based on the 2020 PSP, but modified to take account of any local tax, exchange control or securities laws in other jurisdictions, provided any awards made under such plans or schedules are subject to the individual and overall limits set out in the 2020 PSP.

18 Termination

The Board, or the Company in general meeting, may terminate the 2020 PSP at any time, although this will not affect any subsisting rights under the 2020 PSP.