Sustainable quality compounding

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.

Quality compounding track record

Diploma has a long track record of delivering sustainable, compounding financial performance:

  • Consistent, strong organic revenue growth: 5% on average for the last 15 years, accelerating to 7% over the last 3.
  • Accelerated by targeted acquisitions: driving total revenue growth to 14% CAGR over the last 15 years, accelerating to 23% over the last 3.
  • Value-add customer propositions driving sustainably high margins: averaging 18% over the last 15 years, increasing to 19% over the last 3.
  • Strong, compounding EPS growth: 15% over the last 15 years, accelerating to 19% over the last 3.
  • Consistent, strong cash conversion: 90% free cash conversion driving prudent balance sheet leverage.
  • Sustainable, high returns: ROATCE consistently in the high teens.

Differentiated value-add businesses

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.

Significant growth potential

Organic growth is our priority. Diploma is made up of 15 business units, each with significant growth potential in three ‘buckets’:

  1. Structurally growing end-markets: our products and services serve structurally growing end-markets, and we are increasingly positioning towards these to provide a greater growth tailwind.
  2. Penetrating core geographies: we are underpenetrated in our core geographies of the US, Europe and the UK. We do not need to enter tougher, risker countries to grow.
  3. Extending our product capability: we do this incrementally, and we do it more strategically too at a portfolio level to open up new product verticals and grow our addressable market.

Complementary acquisitions to drive future organic growth

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:

  • Core characteristics: value-add with high gross margin; organic growth in one or more of our ‘buckets’; and capable management teams we can back.
  • Strategic fit: within our tightly managed portfolio.
  • Financial criteria: 20% ROATCE potential, year one for bolt-ons.


Diploma has demonstrated resilience through systemic shocks such as the global financial crisis and the pandemic, and this resilience is increasing:

  • Diversification in the three buckets drives revenue resilience;
  • The value-add nature of our products and services drives margin resilience; and
  • Our low capital intensity drives resilient cash flows.

Scaling our decentralised Group

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.

Powerful, decentralised culture

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.