We believe that sustainable quality compounding comes from a balance of ambition with discipline, and we have encapsulated this as our “financial model”. The financial model is not a forecast, it is there to set a level of expectations for sustainable delivery.
Diploma has a long track record of delivering sustainable, compounding financial performance:
Value-add distribution is at the core of every Diploma business. We distribute specialised products that are mission critical in our customers’ value chains; low component cost relative to their budget; usually in their operating rather than capital budgets; and with a ‘service wrapper’ of technical expertise, convenience or customer productivity. The differentiated value-add proposition at the heart of each of our businesses drives important outcomes: loyalty, and therefore share of wallet; a strong reputation, and therefore growing market share; and pricing power, and therefore attractive margins.
"My relationship with VSP was a true partnership. They help me solve problems. And for me, therein lies the sale. If I’m getting a solution, rather than just the product, then you got my business."
Mike Barkle, VSP customer
Organic growth is our priority. Diploma is made up of 15 business units, each with significant growth potential in three ‘buckets’:
This strategy drives organic growth, scale and resilience. In fragmented markets, we can accelerate organic growth with complementary acquisitions. We have a strong track record over the last four years, investing around £840m in 31 acquisitions which are growing organically at an average of 15% and driving returns of more than twice our cost of capital. We have an exciting pipeline of around 50 near-term, active opportunities worth around £1bn. Importantly, we are extremely disciplined and focus on businesses with the right:
Diploma has demonstrated resilience through systemic shocks such as the global financial crisis and the pandemic, and this resilience is increasing:
As we grow, we naturally need to do things differently, whilst always preserving our value-add customer proposition and our decentralised culture. Building effective scale is therefore key to sustaining long-term delivery. We develop our businesses’ operating models: investing incrementally in talent, technology and facilities to deliver their customer propositions at scale. To manage a growing decentralised Group, we ensure that we have a focused portfolio, governed by simple strategic and financial frameworks. We have lean structures and dynamic leaders, and we complement the local culture with the power of the Group – the ‘Diploma identity’: leadership; networks; commercial collaboration; and best practice sharing.
75 senior leaders
Our decentralised culture is critical to successful delivery. Our customers and value propositions, as well as our management and performance, are all local. We believe in ownership at the front of the organisation. We have commercial, accountable and empowered management teams, and we support their development with leadership programmes to equip them to manage bigger businesses. We have excellent colleague engagement – a competitive advantage – and we actively manage this with local initiatives to promote safe, inclusive, and engaging environments.