DIPLOMA PLC 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

READ MORE IN OUR TALENT REVIEW ON PAGES 12-13

Life Sciences
Controls
Seals

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

CONTENTS
* STRATEGIC REPORT
* CORPORATE GOVERNANCE
* FINANCIAL STATEMENTS
* ADDITIONAL INFORMATION

STRATEGIC REPORT

2025 highlights
About us
Investment case
Chair’s statement
CEO’s review
CFO’s review
Talent review
Our business model
Our strategy
Key performance indicators
Sector review: Controls
Sector review: Seals
Sector review: Life Sciences
Financial review
Delivering Value Responsibly
Risk management and internal control
Engagement with stakeholders and section 172 statement
Viability statement
Non‑financial and sustainability information statement

CORPORATE GOVERNANCE

Chair’s introduction to governance
Governance at a glance
Board of Directors
Audit Committee Report
Nomination Committee Report
Remuneration Committee Report
Directors’ Report

FINANCIAL STATEMENTS

Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated cash flow statement
Notes to the consolidated financial statements
Group accounting policies
Parent company statement of financial position
Parent company statement of changes in equity
Parent company accounting policies
Notes to the parent company financial statements

ADDITIONAL INFORMATION

TCFD statement
Glossary
Subsidiaries of Diploma PLC
Alternative performance measures
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
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

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 1

Strategic Report

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 2

2025 HIGHLIGHTS

11 % Organic revenue growth
21 % Adjusted EPS growth
105 % Free cash flow conversion
0.8 X Net debt/EBITDA
20.9 % Return on adjusted trading capital employed (ROATCE)
5 % Dividend growth
12 % Revenue growth
22.5 % Adjusted operating profit margin

A GREAT YEAR, ADDING TO OUR STRONG 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

	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
Adjusted EPS
Revenue
7-year CAGR: 18%
7% organic growth
18% EPS

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*
Controls	55%
Seals	29%
Life Sciences	16%

* Pro forma revenue adjusted for acquisitions and disposals completed up to 18 November 2025.

WHAT WE DO

Controls
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

Seals
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.
* Our businesses

Life Sciences
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.
* Our businesses

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 3

North America: 53%
Europe: 19%
UK: 18%
Australia/other: 10%

DISCIPLINED DELIVERY AMBITIOUS GROWTH

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.

Strategic Report

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 4

INVESTMENT CASE

Diploma’s business model, focused on specialist products and value‑added services, delivers consistent, high‑quality compounding growth and attractive returns. The Group’s decentralised structure empowers its businesses to operate with agility and entrepreneurialism, whilst maintaining robust financial controls and governance standards. This combination of local focus and central oversight enables Diploma to adapt to market dynamics and capitalise on opportunities across its diverse portfolio.

The Group’s investment case is underpinned by several key strengths:

Resilient Markets: Diploma operates in niche markets with high barriers to entry, characterised by essential products and services that are critical to customers’ operations. These markets often demonstrate resilience through economic cycles.
Strong Organic Growth: The Group has a proven track record of driving strong organic growth, fuelled by its focus on customer needs, product innovation, and expansion within its specialist sectors.
Acquisition Strategy: Diploma pursues a disciplined acquisition strategy, seeking businesses that complement its existing portfolio, offer attractive financial returns, and can be integrated effectively to enhance value.
High Margins and Returns: The specialist nature of Diploma’s offerings allows for strong pricing power and high operating margins. The Group consistently delivers attractive returns on capital employed.
Experienced Management Team: A proven and experienced management team with a deep understanding of the Group’s markets and a clear strategic vision guides Diploma’s growth and operational excellence.
Financial Strength: Diploma maintains a strong balance sheet with prudent leverage, providing financial flexibility to pursue growth opportunities, invest in the business, and return capital to shareholders.
Dividend Growth: The Group has a consistent policy of growing its dividend, reflecting its confidence in its ongoing profitability and cash generation.

These factors collectively position Diploma as an attractive investment proposition, offering sustainable growth, attractive returns, and a commitment to shareholder value creation.

Chair’s statement

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 5

A MESSAGE FROM THE CHAIR

I am pleased to present Diploma PLC’s Annual Report and Accounts for the year ended 30 September 2025. This year has been one of continued strong performance, demonstrating the resilience and adaptability of our business model, the dedication of our people, and the unwavering focus on delivering value to our customers and shareholders.

The global economic environment continues to present challenges, with inflationary pressures, geopolitical uncertainties, and evolving supply chain dynamics. Despite these complexities, Diploma has once again delivered robust financial results, exceeding many of our key performance targets. This achievement is a testament to the strength of our strategy, the effectiveness of our decentralised operating model, and the commitment of our teams across the Group.

Our Performance in 2025

We have achieved significant milestones this year, building on our strong track record of compounding growth. Organic revenue growth was particularly strong at 11%, driven by volume‑led growth across all three of our key sectors: Controls, Seals, and Life Sciences. Reported revenue growth was 12%, reflecting the positive impact of net acquisitions, which were partially offset by foreign exchange movements.

Our operational efficiency and the pricing power inherent in our specialist markets led to a notable increase in our adjusted operating profit margin, which rose by 160 basis points to 22.5%. This expansion demonstrates the quality and resilience of our portfolio.

Earnings per share (EPS) saw robust growth of 21%, reflecting our disciplined approach to capital allocation and our ongoing focus on driving shareholder returns. The return on capital employed also improved, up 180 basis points to 20.9%, underscoring our commitment to efficient capital deployment.

We continued to execute our disciplined acquisition strategy, completing six deals since the start of Q4, representing approximately £90 million in investment. Our healthy pipeline indicates continued strategic M&A activity.

Financially, our strong cash generation and modest leverage, with a net debt to EBITDA ratio of 0.8x, provide us with significant financial firepower and flexibility to pursue further growth opportunities.

The Board is pleased to recommend a dividend increase of 5%, reflecting our confidence in the Group’s sustained profitability and cash generation.

Strategic Progress

Our strategy remains focused on delivering sustainable quality compounding, balancing ambition with discipline. The progress made in 2025 highlights the effectiveness of our business model in driving ambitious organic growth at high margins and with excellent capital returns.

We have continued to invest in our people and our capabilities, ensuring that we remain at the forefront of innovation and customer service within our specialist markets. Our commitment to sustainability and responsible business practices remains a core tenet of our operations, and we are pleased with the progress made across our ESG initiatives.

Our People and Culture

The success of Diploma is intrinsically linked to the talent, dedication, and hard work of our employees around the world. I want to express my sincere gratitude to every member of the Diploma team for their contributions this year. Our culture, built on five core values – customer-centricity, integrity, accountability, collaboration, and being down-to-earth – continues to be a powerful enabler of our success. The decentralised model empowers our local business leaders, fostering an entrepreneurial spirit while upholding strong governance and control frameworks.

Governance and Sustainability

The Board is committed to maintaining the highest standards of corporate governance. We believe that strong governance is essential for long‑term value creation and for building trust with our stakeholders. Details of our governance practices are set out in the Corporate Governance section of this report.

Our commitment to sustainability is integrated into our business strategy. We recognise our responsibility to operate in an environmentally and socially responsible manner, and we continue to focus on reducing our environmental impact, promoting diversity and inclusion, and contributing positively to the communities in which we operate. Further details on our sustainability initiatives can be found in the Non‑financial and sustainability information statement.

Outlook

Looking ahead, while the global economic outlook remains subject to uncertainty, we are confident in the continued strength and resilience of our business model. Our focus remains on driving profitable organic growth, executing our disciplined acquisition strategy, and delivering attractive returns to shareholders. We are well-positioned to navigate the evolving landscape and to continue powering progress across our specialist markets.

I would also like to thank our shareholders for their continued support and confidence in Diploma.

Ian Player
Chair
10 December 2025

CEO’s review

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 6

DELIVERING ON OUR PROMISE

It has been an exceptional year for Diploma, marked by strong financial performance, strategic progress, and a clear demonstration of the underlying strength of our business model. Our team’s unwavering focus on our customers, coupled with our disciplined approach to growth, has enabled us to achieve significant milestones and continue our trajectory of sustainable, quality compounding.

Strong Financial Performance

The financial highlights for the year ended 30 September 2025 are a testament to the effectiveness of our strategy and the dedication of our people.

Revenue Growth: We delivered impressive organic revenue growth of 11%, a clear indicator of the demand for our essential products and services across all three of our core sectors – Controls, Seals, and Life Sciences. This volume-led growth was complemented by reported revenue growth of 12%, which included the positive impact of strategic acquisitions.
Margin Expansion: Our adjusted operating profit margin increased by 160 basis points to 22.5%. This improvement reflects the pricing power of our specialist offerings, our focus on operational efficiency, and the high quality of our diverse portfolio.
Earnings Growth: We achieved a substantial 21% growth in Adjusted EPS, demonstrating our ability to translate revenue growth and margin expansion into strong bottom-line performance.
Return on Capital: Our Return on Adjusted Trading Capital Employed (ROATCE) increased by 180 basis points to 20.9%, reflecting our disciplined approach to capital allocation and our commitment to generating superior returns for our shareholders.
Cash Generation and Leverage: We continued to generate strong free cash flow, enabling us to maintain a healthy balance sheet with a Net Debt to EBITDA ratio of just 0.8x. This financial strength provides us with the flexibility to pursue growth opportunities, both organically and through acquisition.
Acquisitions: Our disciplined acquisition strategy remains a key pillar of our growth. We successfully completed six acquisitions since the start of Q4, deploying approximately £90 million of capital. These acquisitions are carefully selected to enhance our market positions and deliver attractive returns.

Strategic Pillars in Action

Our strategy, focused on delivering sustainable quality compounding through ambitious growth and disciplined execution, is clearly bearing fruit.

Ambitious Growth: The 11% organic revenue growth is a direct result of our customer‑centric approach. We understand the critical needs of our clients and are able to provide the essential products and services that keep their operations running smoothly and safely. Our sales teams are empowered to identify and seize opportunities, driving both volume and value.
Disciplined Execution: Our decentralised model empowers our business leaders to make agile decisions tailored to their local markets, while our robust central governance ensures alignment with our overall strategic objectives. This balance allows us to operate efficiently, manage costs effectively, and maintain high operational standards.
Portfolio Quality: The consistent performance across our Controls, Seals, and Life Sciences sectors underscores the strength and diversity of our portfolio. Each sector is a leader in its respective niche, benefitting from favourable underlying market trends and high barriers to entry.
M&A Momentum: Our acquisition strategy continues to be a significant value driver. The six acquisitions completed in the past year are strategically aligned with our core sectors, strengthening our market positions and expanding our capabilities. Our disciplined approach to sourcing, evaluating, and integrating acquisitions ensures that we deploy capital effectively.

Our Culture: The Foundation of Success

The achievements of the past year are a direct reflection of the talent, hard work, and commitment of our employees worldwide. Our five core values – customer-centricity, integrity, accountability, collaboration, and being down‑to‑earth – are not just words on a page; they are the guiding principles that shape our culture and drive our decision-making.

Our decentralised model fosters an environment where local leaders are empowered to act with initiative and ownership. This entrepreneurial spirit, combined with our FTSE‑level controls and governance, creates a powerful engine for growth. We are committed to developing our people, providing them with the opportunities and support they need to thrive.

Looking Ahead

The year ahead presents both opportunities and challenges. We remain vigilant to the evolving global economic landscape, but we are confident in the inherent resilience of our business model and the strength of our market positions. Our focus will remain on driving profitable organic growth, continuing our disciplined M&A activity, and delivering excellent returns to our shareholders.

I am incredibly proud of what we have achieved together in 2025. The journey of sustainable, quality compounding is ongoing, and I am excited about the opportunities that lie ahead for Diploma.

John Nichols
Chief Executive Officer
10 December 2025

CFO’s review

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 7

FINANCIAL REVIEW

The 2025 financial year has been characterised by strong operational performance and disciplined financial management, resulting in excellent outcomes across all key financial metrics. Our business model continues to demonstrate its resilience and ability to generate sustainable, compounding returns.

Financial Highlights

Revenue: Reported revenue grew by 12% to [Insert 2025 Revenue Figure] million, compared to £[Insert 2024 Revenue Figure] million in the prior year. This growth was driven by robust organic revenue increases of 11%, with an additional 3% contribution from acquisitions, partially offset by a 2% negative impact from foreign exchange movements.
Adjusted Operating Profit: Adjusted operating profit increased by [Insert % Growth]% to £[Insert 2025 Adj. Op. Profit] million, up from £[Insert 2024 Adj. Op. Profit] million in 2024. This reflects the strong revenue growth and an improvement in our adjusted operating profit margin.
Adjusted Operating Profit Margin: Our adjusted operating profit margin improved by 160 basis points to 22.5%, compared to 20.9% in the prior year. This significant improvement is a testament to our specialist market positioning, effective cost management, and the quality of our product and service offerings.
Profit Before Tax: Profit before tax was £[Insert 2025 PBT] million, an increase from £[Insert 2024 PBT] million in 2024. This includes [Mention any significant exceptional items if applicable, e.g., acquisition costs, restructuring charges].
Adjusted Earnings Per Share (EPS): Adjusted EPS grew by an impressive 21% to [Insert 2025 Adj. EPS] pence, from [Insert 2024 Adj. EPS] pence in 2024. This strong performance reflects both profit growth and our efficient capital structure.
Return on Adjusted Trading Capital Employed (ROATCE): ROATCE increased by 180 basis points to 20.9% (2024: 19.1%). This metric highlights our ability to generate strong returns from the capital invested in our trading operations.
Free Cash Flow: Free cash flow generation remained strong, amounting to £[Insert 2025 FCF] million (2024: £[Insert 2024 FCF] million). This strong conversion rate, at 105% of adjusted net profit, underscores the cash-generative nature of our businesses.
Net Debt and Leverage: Our prudent financial management has resulted in a Net Debt to EBITDA ratio of 0.8x at 30 September 2025, well within our target range of below 2.0x. This provides us with significant financial flexibility.
Dividend: The Board is pleased to recommend a final dividend of [Insert Dividend per Share] pence per share, representing a 5% increase on the prior year’s dividend. This reflects our confidence in the Group’s ongoing profitability and cash generation.

Analysis of Performance

The strong performance in 2025 was driven by a combination of factors:

Organic Growth: Our core strategy of focusing on specialist markets with high barriers to entry and essential products continues to yield strong organic growth. Volume increases across all three sectors, supported by effective sales execution, were the primary driver.
Margin Improvement: The 160 basis point increase in our adjusted operating profit margin is a key achievement. This was driven by a combination of effective pricing strategies in markets where we are a critical supplier, coupled with ongoing cost discipline across the Group. The specialist nature of our products and services allows for strong value capture.
Acquisitions: We continue to execute our disciplined acquisition strategy. The six acquisitions completed during the year, for a total consideration of approximately £90 million, are expected to be accretive to earnings and further strengthen our market positions. Integration is progressing well, and we are already realising synergies.
Foreign Exchange: While our international operations provide diversification, currency fluctuations can impact reported results. In 2025, foreign exchange movements had a moderate negative impact on reported revenue, which was outweighed by the strong organic and acquisition-led growth.
Capital Allocation: Our robust free cash flow generation allows us to reinvest in the business, pursue value-enhancing acquisitions, and return capital to shareholders through dividends and potential share buybacks. Our leverage remains low, providing ample capacity for future growth initiatives.

Balance Sheet Strength

Our balance sheet remains strong, with prudent levels of debt and significant liquidity. This financial robustness provides a solid foundation for navigating potential economic uncertainties and capitalising on growth opportunities.

Outlook

We remain optimistic about Diploma’s prospects for the coming year. Our specialist markets are characterised by underlying resilience and favourable long-term trends. Our disciplined approach to growth, focused on both organic expansion and strategic acquisitions, combined with our strong operational execution, positions us well to continue delivering sustained, quality compounding returns. We will continue to manage our costs effectively and maintain our focus on generating strong cash flows.

Stewart Diamond
Chief Financial Officer
10 December 2025

Talent review

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 8

OUR PEOPLE ARE OUR GREATEST ASSET

At Diploma, we recognise that our people are the driving force behind our success. Our culture of empowerment, accountability, and continuous learning is fundamental to our ability to deliver sustainable growth and value to our customers. This year, we have placed a significant emphasis on talent development, engagement, and ensuring that Diploma remains an employer of choice.

Developing Our People

We are committed to providing our employees with the opportunities and resources they need to grow their careers within the Group. Key initiatives include:

Leadership Development Programmes: We continue to invest in developing our current and future leaders through targeted programmes focused on strategic thinking, commercial acumen, and people management. These programmes are designed to equip leaders with the skills necessary to navigate complex business environments and drive performance.
Skills Development and Training: We offer a wide range of training and development opportunities across all levels of the organisation. This includes technical skills training, professional certifications, and soft skills development, ensuring our employees remain at the forefront of their fields.
Succession Planning: Robust succession planning is critical for ensuring business continuity and enabling internal talent progression. We actively identify high-potential employees and provide them with tailored development plans to prepare them for future leadership roles.
Cross-Functional and Cross-Business Exposure: We encourage employees to gain experience across different functions and business units within the Group. This provides valuable exposure to diverse operations and fosters a broader understanding of Diploma’s integrated business model.

Employee Engagement and Culture

Our five core values – customer-centricity, integrity, accountability, collaboration, and being down-to‑earth – are deeply embedded in our culture and guide our daily interactions. We actively promote an environment where employees feel valued, respected, and motivated.

Employee Surveys: Regular employee engagement surveys provide us with valuable insights into employee sentiment and identify areas for improvement. We are committed to acting on this feedback to enhance the employee experience.
Performance Management: Our performance management system is designed to be fair, transparent, and development-oriented. It encourages regular feedback, goal setting, and recognition of achievement.
Diversity and Inclusion: We are committed to fostering a diverse and inclusive workplace where all employees feel welcome and have the opportunity to reach their full potential. We believe that diversity of thought and experience strengthens our organisation.
Health, Safety, and Wellbeing: The health, safety, and wellbeing of our employees are paramount. We maintain rigorous health and safety protocols and promote initiatives that support employee wellbeing.

Talent Acquisition

Attracting and retaining top talent is crucial for our continued growth. Our employer brand highlights our commitment to development, our exciting market opportunities, and our strong company culture. We focus on recruiting individuals who align with our values and possess the skills and ambition to contribute to Diploma’s success.

Looking Forward

As Diploma continues to grow and evolve, our focus on talent remains unwavering. We will continue to invest in our people, nurture our unique culture, and ensure that we have the right talent in place to drive future success. Our commitment to developing and empowering our employees will remain a cornerstone of our strategy.

Our business model

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 9

POWERING PROGRESS THROUGH SPECIALIST MARKETS

Diploma’s business model is designed to deliver sustainable, quality compounding growth by focusing on specialist markets where quality, reliability, and expertise are paramount. We operate a decentralised model, empowering our businesses to be agile and entrepreneurial, while maintaining strong central governance and financial discipline.

Our model can be broken down into the following key components:

Specialist Market Focus:
- We operate in niche segments within the Controls, Seals, and Life Sciences sectors.
- These markets are characterised by high barriers to entry, essential products and services, and strong customer relationships.
- We provide critical components and value-added services that our customers cannot easily substitute.
Decentralised Operating Model:
- Our businesses operate with a high degree of autonomy, led by experienced management teams with deep market knowledge.
- This empowers local decision-making, fostering entrepreneurialism and agility in responding to market dynamics.
- Each business is responsible for its own P&L, driving accountability and a strong focus on performance.
Value-Added Services:
- Beyond product supply, we offer a range of value-added services, including technical support, application expertise, customised solutions, and efficient logistics.
- These services enhance customer loyalty and create stickier customer relationships.
Disciplined M&A Strategy:
- Acquisitions are a key driver of growth, carefully selected to complement our existing portfolio, enhance market positions, and generate attractive financial returns.
- We target businesses with strong management teams, profitable growth potential, and alignment with our core values and strategic objectives.
- Integration is managed diligently to realise synergies and drive value.
Operational Excellence and Efficiency:
- We continuously strive for operational excellence, focusing on efficiency, quality, and reliability across our supply chains and service delivery.
- Our lean operational principles are applied consistently across the Group.
Strong Financial Discipline:
- We maintain robust financial controls and governance, ensuring responsible capital allocation and prudent financial management.
- Our focus on cash generation and maintaining a strong balance sheet provides financial flexibility for growth.
- We aim for high returns on capital employed and a sustainable dividend policy.
Customer Centricity:
- Our customer relationships are at the heart of our business. We strive to understand and meet their evolving needs, providing reliable solutions that enable them to succeed.

How This Delivers Sustainable Growth:

Resilience: Operating in essential, niche markets with high barriers to entry provides resilience against economic downturns.
Profitability: The specialist nature of our offerings allows for strong pricing power and high operating margins.
Compounding: The combination of organic growth, strategic acquisitions, and high returns on capital leads to consistent, compounding value creation over the long term.
Agility: The decentralised model allows us to adapt quickly to changing market conditions and customer demands.

Our business model is not about being the biggest, but about being the best in our chosen specialist markets, delivering critical solutions that power progress for our customers.

Our strategy

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 10

SUSTAINABLE QUALITY COMPOUNDING

Diploma’s strategy is centered on achieving sustainable quality compounding. This means delivering consistent, predictable, and attractive growth in earnings and returns over the long term, balancing ambition with discipline. Our strategy has three interconnected pillars:

Ambitious Growth:
- Organic Growth: We drive organic growth by focusing on the specific needs of our customers in our specialist markets. This involves:
  - Market Penetration: Deepening our relationships with existing customers by expanding our product and service offerings.
Market Development: Identifying and capitalising on growth opportunities within our existing markets, driven by macro trends such as electrification, automation, sustainability, and healthcare advancements.
* Sales Excellence: Empowering our sales teams with the tools, training, and autonomy to identify and convert opportunities.
* Product and Service Innovation: Continuously enhancing our product portfolio and value-added services to meet evolving customer requirements.
- Acquisitions: We pursue a disciplined, value-enhancing acquisition strategy. We seek businesses that:
  - Are leaders in their niche specialist markets.
  - Offer strong growth potential and attractive financial returns.
  - Can be integrated effectively into our existing structure.
  - Have strong management teams aligned with our values.
  - Strengthen our market positions or provide entry into adjacent specialist areas.
Disciplined Execution:
Decentralised Model with Strong Governance: We maintain our successful decentralised operating model, empowering local management teams to drive performance. This is complemented by robust central governance and financial controls that ensure alignment with group strategy and capital discipline.
Operational Excellence: We focus on continuous improvement in our operations to enhance efficiency, quality, and reliability. This includes supply chain optimisation, lean manufacturing principles, and the adoption of best practices across the Group.
Talent Management: We invest in attracting, developing, and retaining the best talent. Our culture, built on our five core values, is key to our success. We provide development opportunities, foster employee engagement, and ensure strong leadership at all levels.
Financial Discipline: Prudent capital allocation, rigorous cost management, and a focus on strong cash generation are fundamental. We aim for high returns on capital employed and maintain a strong balance sheet.
Driving Shareholder Value:
- Compounding EPS Growth: Our primary objective is to deliver consistent, double-digit growth in adjusted EPS over the long term.
- Attractive Returns: We aim to generate high returns on capital employed, demonstrating efficient use of shareholder capital.
- Sustainable Dividend Growth: We are committed to increasing our dividend over time, reflecting our confidence in our profitability and cash generation capabilities.
- Shareholder Communication: We maintain transparent and proactive communication with our shareholders, providing clear insights into our performance, strategy, and outlook.

Key Enablers:

Culture: Our five core values are the bedrock of our organisation, guiding our behaviour and decision-making.
Market Insight: Deep understanding of our specialist markets and customer needs.
Financial Strength: A strong balance sheet provides the flexibility to fund growth initiatives.
Experienced Leadership: A proven management team with a track record of success.

By diligently executing this strategy, Diploma is well-positioned to continue delivering sustainable quality compounding and creating long-term value for all stakeholders.

Key performance indicators

DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2025 11

MEASURING OUR SUCCESS

Our Key Performance Indicators (KPIs) are designed to measure our progress against our strategic objectives and provide insights into the health and performance of our business. We focus on a balanced set of financial and operational metrics that reflect our commitment to sustainable, quality compounding.

Financial KPIs

Revenue Growth (Organic):
- Definition: Year-on-year increase in revenue, excluding the impact of acquisitions and disposals, and currency fluctuations.
- Strategic Alignment: Measures our ability to grow our core business through increased sales volume and market share.
- Target: Achieve consistent mid-to-high single-digit organic revenue growth annually.
Adjusted Operating Profit Margin:
Definition: Adjusted operating profit as a percentage of revenue. Adjusted operating profit excludes items such as amortisation of acquired intangibles, exceptional items, and other non-recurring charges.
- Strategic Alignment: Reflects our pricing power, operational efficiency, and the profitability of our specialist offerings.
- Target: Maintain and grow margins towards our target of 20%+.
Adjusted Earnings Per Share (EPS) Growth:
- Definition: Year-on-year percentage increase in adjusted diluted EPS.
- Strategic Alignment: A key measure of our ability to generate increasing profits for shareholders.
- Target: Deliver double-digit adjusted EPS growth annually.
Return on Adjusted Trading Capital Employed (ROATCE):
Definition: Adjusted trading profit (annualised) divided by average adjusted trading capital employed. Adjusted trading capital employed represents net assets used in trading operations, adjusted for items such as goodwill, intangible assets, and net debt.
- Strategic Alignment: Measures the efficiency and effectiveness with which we deploy capital to generate profits.
- Target: Achieve and maintain returns in the high teens.
Free Cash Flow Conversion:
- Definition: Free cash flow as a percentage of adjusted net profit. Free cash flow is operating cash flow less capital expenditure.
- Strategic Alignment: Indicates the quality of our earnings and our ability to convert profits into cash, enabling reinvestment and shareholder returns.
- Target: Achieve conversion rates of 90%+.
Net Debt / EBITDA:
- Definition: Ratio of net debt to earnings before interest, taxes, depreciation, and amortisation.
- Strategic Alignment: Measures our financial leverage and capacity for further investment and acquisitions.
- Target: Maintain leverage below 2.0x.
Dividend Growth:
- Definition: Year-on-year increase in the total dividend paid per share.
- Strategic Alignment: Demonstrates our commitment to returning value to shareholders and our confidence in sustained profitability.
- Target: Target a 5% annual increase in dividends.

Operational KPIs

Customer Satisfaction:
- Definition: Measured through customer surveys and feedback mechanisms.
- Strategic Alignment: Directly linked to our customer-centric value and ability to retain and grow our customer base.
- Target: Maintain high levels of customer satisfaction.
Employee Engagement:
- Definition: Measured through regular employee engagement surveys.
- Strategic Alignment: Reflects the health of our culture and our ability to attract and retain talent.
- Target: Achieve high and improving employee engagement scores.
Acquisition Integration Progress:
- Definition: Timely and effective integration of acquired businesses, measured against pre-defined synergy targets and operational milestones.
- Strategic Alignment: Critical for realising the value of our acquisition strategy.
- Target: Successful integration of acquisitions within planned timelines and budgets.
Health and Safety Performance:
- Definition: Measured by Lost Time Injury Frequency Rate (LTIFR) and other relevant safety metrics.
- Strategic Alignment: Demonstrates our commitment to the wellbeing of our employees and the responsible operation of our facilities.
- Target: Zero harm, continuously improving safety performance.

We regularly review these KPIs to ensure they remain relevant and provide the necessary insights to guide our strategic decision-making and operational execution.

Sector review: Controls

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ADVANCED TECHNOLOGIES FOR CRITICAL APPLICATIONS

The Controls sector is a cornerstone of Diploma’s business, providing essential components and solutions for a wide range of high-technology industries where precision, reliability, and performance are non-negotiable. Our businesses within this sector deliver advanced technologies that enable critical applications across aerospace, defence, energy, industrial automation, rail, and medical sectors.

Market Position and Offerings

Our Controls businesses are recognised leaders in their respective niches, offering a comprehensive portfolio of products including:

Wires and Cables: High-performance, specialised cables designed for demanding environments, including aerospace-grade wiring, industrial power and control cables, and data transmission solutions.
Connectors and Interconnects: Robust and reliable connectors essential for secure and efficient data and power transfer in critical systems.
Automation Components: A broad range of automation parts, sensors, switches, and control systems that are vital for industrial machinery and process automation.
Electromechanical Components: Essential parts for the assembly and operation of complex equipment.

We serve a diverse customer base, from global OEMs in aerospace and defence to manufacturers of high-speed trains, wind turbines, and advanced medical equipment. The critical nature of our products means that quality and reliability are paramount, and our long-standing relationships with customers are built on trust and consistent delivery.

Market Drivers and Trends

The Controls sector benefits from several strong, long-term market drivers:

Aerospace and Defence: Continued demand for new aircraft, defence systems modernisation, and the increasing complexity of aircraft electronics drive demand for high-reliability wiring, cables, and connectors.
Industrial Automation: The global push for greater efficiency, productivity, and smart manufacturing (Industry 4.0) fuels demand for automation components, sensors, and control systems.
Energy Transition: The growth in renewable energy, particularly wind power and solar, requires specialised cabling and connectors for turbines, substations, and grid infrastructure. The oil and gas sector also requires robust solutions for exploration and production.
Rail Infrastructure: Modernisation of rail networks, including electrification and the introduction of high-speed trains, creates demand for specialised cabling and control systems.
Medical Technology: The increasing sophistication of medical devices and diagnostic equipment requires high-precision wires, cables, and connectors that meet stringent regulatory standards.
Datacentre Growth: The exponential growth in data and cloud computing necessitates advanced cabling and connectivity solutions for high-speed data centres.

Performance and Strategic Focus

The Controls sector delivered strong performance in 2025, with robust organic revenue growth driven by volume increases across its diverse end markets. Our strategy within Controls is focused on:

Deepening Customer Relationships: Working closely with customers to understand their future needs and providing tailored solutions.
Expanding Product Portfolios: Leveraging our expertise to offer a wider range of complementary products and services.
Capitalising on Megatrends: Aligning our offerings with key growth trends such as electrification, automation, and sustainability.
Operational Excellence: Ensuring reliable supply chains and efficient delivery to meet the demanding schedules of our customers.
Strategic Acquisitions: Continuing to acquire businesses that enhance our technological capabilities, market reach, or product offerings within the Controls space.

The Controls sector's ability to provide mission-critical components in highly regulated and technically demanding industries positions it for continued strong performance and growth.

Sector review: Seals

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HIGH-PERFORMANCE SOLUTIONS THAT POWER PROGRESS

The Seals sector is dedicated to providing advanced sealing and fluid power solutions that are crucial for the reliability, efficiency, and longevity of industrial equipment and vehicles across a multitude of sectors. Our businesses in this segment are experts in delivering high-performance products that protect critical machinery, prevent leaks, and ensure optimal operation in challenging environments.

Market Position and Offerings

Our Seals businesses are recognised for their technical expertise, comprehensive product ranges, and commitment to quality. We offer a broad spectrum of solutions, including:

Sealing Solutions: A vast array of gaskets, O-rings, mechanical seals, oil seals, and other specialised sealing products designed to withstand extreme temperatures, pressures, and aggressive media. These are critical for preventing leakage of fluids and gases in engines, hydraulic systems, pumps, valves, and process equipment.
Fluid Power Components: Including hydraulic hoses, fittings, couplings, and hydraulic cylinders that are essential for power transmission in heavy machinery, mobile equipment, and industrial systems.
Industrial Hoses and Fittings: A wide selection of hoses for conveying diverse materials, from water and air to chemicals and abrasive substances, along with compatible fittings and accessories.
Custom Engineered Solutions: We work collaboratively with customers to design and manufacture bespoke sealing and fluid power solutions tailored to specific application requirements.

We serve a broad and diversified customer base, including manufacturers and maintainers of agricultural machinery, construction equipment, mining machinery, commercial vehicles, industrial processing plants, and marine vessels.

Market Drivers and Trends

The Seals sector is driven by fundamental industrial activity and specific growth trends:

Infrastructure Development: Global investment in infrastructure projects, including roads, bridges, and utilities, drives demand for construction and mining equipment, which rely heavily on robust sealing and fluid power systems.
Industrial Production and Maintenance: The ongoing need for efficient and reliable operation of manufacturing plants, processing facilities, and heavy machinery ensures consistent demand for replacement parts and new equipment components.
Agriculture: Modern agricultural practices require advanced machinery that relies on efficient fluid power and reliable seals to optimise performance and minimise downtime.
Transportation and Logistics: The commercial vehicle sector, including trucks and buses, and the logistics industry require durable sealing and fluid power components for engines, transmissions, and hydraulic systems.
Renewable Energy: Wind turbine technology, in particular, requires high-performance seals for gearboxes, hydraulic systems, and nacelles to ensure operational integrity in demanding environmental conditions.
Sustainability and Efficiency: Increasing focus on reducing leaks, improving energy efficiency, and extending equipment life drives demand for higher-performance, longer-lasting sealing solutions.

Performance and Strategic Focus

The Seals sector demonstrated strong performance in 2025, achieving significant organic revenue growth driven by high levels of demand and our ability to secure market share. Our strategic focus within Seals includes:

Technical Expertise and Application Support: Leveraging our deep understanding of sealing technologies to provide expert advice and support to our customers.
Expanding Product Range: Continuously adding new products and solutions to meet the evolving needs of our diverse customer base.
Partnerships with Leading Manufacturers: Collaborating with world-class manufacturers to offer the best-in-class sealing and fluid power products.
Focus on Efficiency and Reliability: Ensuring that our products contribute to the operational efficiency and reliability of our customers' equipment.
Strategic Acquisitions: Pursuing acquisitions that broaden our product offering, enhance our technical capabilities, or expand our geographical reach within the seals and fluid power market.

The Seals sector’s critical role in maintaining the operational integrity of industrial assets, coupled with its exposure to essential global economic activities, positions it for continued robust growth and profitability.

Sector review: Life Sciences

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TECHNOLOGICAL INNOVATIONS THAT DRIVE BETTER PATIENT OUTCOMES

The Life Sciences sector is focused on providing essential products and services that support advancements in healthcare, diagnostics, and scientific research. Our businesses within this segment are dedicated to enabling medical professionals and researchers to improve patient outcomes, drive innovation, and enhance the quality of life.

Market Position and Offerings

Our Life Sciences businesses are trusted partners to hospitals, diagnostic laboratories, pharmaceutical companies, and research institutions. We provide a comprehensive range of products and services, including:

Medical Devices and Equipment: A curated selection of medical devices, surgical instruments, and equipment used in patient care, diagnostics, and therapeutic procedures.
Laboratory Products: A broad array of consumables, reagents, and equipment for research laboratories, clinical diagnostics, and quality control testing.
Diagnostic Solutions: Advanced diagnostic kits, assays, and instruments that enable accurate and timely identification of diseases and health conditions.
Specialty Pharmaceuticals and Consumables: High-quality pharmaceutical products and single-use consumables essential for medical treatments and laboratory workflows.
Technical Services and Support: We offer installation, maintenance, and technical support for the equipment and instruments we supply, ensuring optimal performance and reliability.

Our commitment to quality, regulatory compliance, and technical expertise is paramount in this sector, as the products and services we provide directly impact patient care and scientific discovery.

Market Drivers and Trends

The Life Sciences sector is influenced by several powerful global trends:

Aging Global Population: An increasing elderly population drives higher demand for healthcare services, diagnostic testing, and medical treatments.
Advancements in Medical Technology: Continuous innovation in medical devices, diagnostics, and pharmaceuticals creates new opportunities for specialist suppliers.
Focus on Preventative Healthcare and Early Diagnosis: Increased emphasis on early detection and preventative measures drives demand for sophisticated diagnostic tools and services.
Growth in Biotechnology and Pharmaceutical Research: Significant investment in research and development to discover new therapies and treatments fuels demand for laboratory products and specialised consumables.
Personalised Medicine: The move towards tailored treatments based on individual genetic profiles and disease characteristics requires advanced diagnostic capabilities.
Increased Healthcare Spending: Global healthcare expenditure continues to rise, particularly in emerging markets, supporting demand for a wide range of medical and laboratory products.

Performance and Strategic Focus

The Life Sciences sector delivered strong organic revenue growth in 2025, driven by increasing demand for advanced diagnostics, medical consumables, and laboratory supplies. Our strategic priorities within this sector include:

Expanding Product Portfolio: Continuously sourcing and offering innovative products that address unmet needs in healthcare and research.
Strengthening Distribution Networks: Ensuring efficient and reliable delivery of products to our diverse customer base.
Building Technical Expertise: Investing in our team's knowledge and skills to provide expert advice and support to medical and scientific professionals.
Regulatory Compliance: Maintaining the highest standards of quality and regulatory adherence for all our products and services.
Strategic Acquisitions: Seeking opportunities to acquire businesses that enhance our capabilities in key areas such as diagnostics, medical devices, or specialist consumables, further strengthening our position in the healthcare ecosystem.

The Life Sciences sector's vital role in supporting healthcare delivery and scientific advancement, coupled with favourable demographic and technological trends, ensures its continued growth and importance within Diploma.

Financial review

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