Diploma PLC — Proxy Solicitation & Information Statement 2010

Dec 6, 2010

DIPLOMA PLC

(the ''Company'')

(Incorporated in England and Wales with registered number 3899848)

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Diploma PLC will be held in the Brewers Hall, Aldermanbury Square, London, EC2V 7HR on Wednesday, 12 January 2011 at 12.00, midday, to consider, and if thought fit, approve the following resolutions which will be proposed as to Resolutions 1 to 9 (inclusive) and Resolution 12 and 13 as Ordinary Resolutions and Resolutions 10, 11 and 14 as Special Resolutions:

ORDINARY BUSINESS

• 1. THAT the Financial Statements for the financial year ended 30 September 2010, together with the Reports of the Directors and Auditors thereon, be received and adopted by members. (Resolution 1)
• 1. THAT a final dividend of 6.2 pence per ordinary share be declared in respect of the year ended 30 September 2010, payable on 19 January 2011 to ordinary shareholders on the register at the close of business on 3 December 2010. (Resolution 2)
• 1. THAT in accordance with Article 106 of the Company's Articles of Association I Henderson, a Director of the Company and submitting himself for re-appointment, be re-appointed as a Director. (Resolution 3)
• 1. THAT in accordance with Article 106 of the Company's Articles of Association NP Lingwood, a Director of the Company and submitting himself for re-appointment, be re-appointed as a Director. (Resolution 4)
• 1. THAT in accordance with Article 106 of the Company's Articles of Association IM Grice, a Director of the Company and submitting himself for re-appointment, be re-appointed as a Director. (Resolution 5)
• 1. THAT Deloitte LLP be re-appointed as Auditors of the Company. (Resolution 6)
• 1. THAT the Directors be authorised to set the remuneration of the Auditors. (Resolution 7)

SPECIAL BUSINESS

• 1. THAT the Directors' Remuneration Report for the financial year ended 30 September 2010 as set out on pages 35 to 40 of the Annual Report be and is hereby received and approved. (Resolution 8)
• 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:
• (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
• (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 2012 or on 12 April 2012, 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 9)

• 1. THAT subject to the passing of Resolution 9 above the Directors be and are hereby empowered pursuant to Sections 570 and 573 of the Companies Act 2006 (the ''Act'') to:
• (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
• (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 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 9(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 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 9 (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 2012 or on 12 April 2012, 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 10)

• 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:
• (a) the maximum number of ordinary shares which may be purchased is 11,323,956 representing approximately 10 per cent. of the issued ordinary share capital at 3 December 2010;
• (b) the minimum price which may be paid for each ordinary share is 5p which amount shall be exclusive of expenses, if any;
• (c) the maximum price (exclusive of expenses) which may be paid for each ordinary share is an amount equal to 105 per cent. 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;
• (d) unless previously renewed, revoked or varied, this authority shall expire at the conclusion of the Annual General Meeting in 2012 or on 12 April 2012, whichever is the earlier; and
• (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 11)
• 1. THAT the Diploma PLC 2011 Performance Share Plan (the ''PSP'') as summarised in Appendix 1 to the Chairman's letter to Shareholders dated 6 December 2010, a copy of the Rules of which is produced to this Meeting and for the purpose of identification initialled by the Chairman, be approved and established and the Directors of the Company be authorised to do all acts and things which they may consider necessary or desirable to bring the PSP into effect and to adopt the PSP with such modifications as they may consider necessary or desirable to bring it into effect and/or to take account of the requirements of the UK Listing Authority and best practice. (Resolution 12)
• 1. THAT the Diploma PLC 2011 Share Matching Plan (the ''SMP'') as summarised in Appendix 2 to the Chairman's letter to Shareholders dated 6 December 2010, a copy of the Rules of which is produced to this Meeting and for the purpose of identification initialled by the Chairman, be approved and established and the Directors of the Company be authorised to do all acts and things which they may consider necessary or desirable to bring the SMP into effect and to adopt the SMP with such modifications as they may consider necessary or desirable to bring it into effect and/or to take account of the requirements of the UK Listing Authority and best practice. (Resolution 13)
• 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 14)

By Order of the Board NP Lingwood Secretary

Diploma PLC 12 Charterhouse Square London, EC1M 6AX

6 December 2010

NOTES:

• 1. Only holders of ordinary shares are entitled to attend and vote at this meeting. 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, Bridgewater 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 3 below.
• 1. 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.
• 1. Alternatively, 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 (formerly CRESTCo) 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 noon on 10 January 2011. 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 (formerly CRESTCo) 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.

• 1. The appointment of a proxy does not prevent a member who so wishes from attending the meeting and voting in person.
• 1. Copies of Executive Directors' service agreements and copies of the terms and conditions of appointment of Non-executive Directors of the Company, together with a copy of the Articles of Association, are available for inspection at the Company's registered office at 12 Charterhouse Square, London, EC1M 6AX during normal business hours 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 from 11.45 a.m. until the conclusion of the meeting.
• 1. A copy of the draft Rules of the PSP is available for inspection at the Company's registered office during normal business hours from the date of this notice until the date of the Annual General Meeting and will be available for inspection at the place of the meeting for at least 15 minutes prior to and during the meeting.
• 1. A copy of the draft Rules of the SMP is available for inspection at the Company's registered office during normal business hours from the date of this notice until the date of the Annual General Meeting and will be available for inspection at the place of the meeting for at least 15 minutes prior to and during the meeting.
• 1. Pursuant to Regulation 41 of the Uncertified 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.
• 1. 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.
• 1. 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.
• 1. A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found at www.diplomaplc.com.
• 1. 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 2009 ceasing to hold office since the previous meeting at which annual accounts and reports 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.
• 1. 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.

• 1. As at 3 December 2010 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 3 December 2010 are 113,239,555, of which 732,973 are held by the Diploma Employee Benefit Trust.
• 1. 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 6 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.