DIPLOMA PLC PRELIMINARY ANNOUNCEMENT Year ended 30 September 2002

1
DIPLOMA PLCPRELIMINARY ANNOUNCEMENT Year
ended 30 September 2002

• PRESENTATION OF HIGHLIGHTS
• 18 November 2002

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PRESENTATION STRUCTURE I Overview of
Strategy and Results The Group maintains its
focus on Specialised Distribution businesses with
the potential for growth and superior
margins II Financial Highlights The Group
achieved creditable results in difficult market
conditions. Cash flow again has
been strong III Review of
Operations The performance of the businesses
demonstrates their inherent resilience IV
Prospects and Plans Actions taken during 2002
give a firm foundation for progress in 2003.
Acquisitions continue to be an
important element of the growth strategy
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• I Overview - Group strategy
• The strategy is clear and consistent
• To invest in Specialised Distribution
  businesses .
• .with long term growth potential.
• . and with the opportunity for
  sustainable superior margins.
• . through the quality of customer
  service, depth of technical support
• and value-adding activities
• The objective is to build more
  substantial, broader based businesses in the
  three sectors
• - Life Sciences
• - Seals Components
• - Interconnect

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I Overview - Results
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I Overview - Highlights

• Creditable results achieved in difficult market
  conditions
• Further progress achieved against each of the
  Group strategies
• Strong cash flow supplemented by property sales
• Return of capital through on market purchase
• Restructuring of US and European operations
  provides a lower cost base
• benefits to accrue in 2003
• Successful disposal of first parcel of Stamford
  land

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II Financial Highlights Profit before tax

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II Financial Highlights Underlying profit
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II Financial Highlights Profit after tax
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II Financial Highlights Exceptional items
and goodwill
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II Financial Highlights Free cash flow
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II Financial Highlights Net funds
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II Financial Highlights Group Balance Sheet
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III Review of Operations

• Life Sciences Seals
  Components Interconnect
• Anachem
  Hercules Bulldog Sealing
  IS Rayfast
• a1-biotech
  Products
  IS Motorsport
• Envirotech
  Fluid Power Equipment
  Clarendon
• Sommer
• 37 of Group Sales
  38 of Group Sales 25 of
  Group Sales

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III Review of Operations Life Sciences
markets

• Sector has good long term growth prospects but
  past year has been challenging
• Severe budget constraints within major
  pharmaceutical companies have impacted
  Instrumentation sales
• In particular, genomics sector has slowed
  significantly following completion of Human
  Genome project
• However, Consumable and Services segments have
  remained resilient
• Sales have decreased 4 to 26.9m operating
  profits have fallen back further

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III Review of Operations Life Sciences
initiatives

• Increased investment in Pipettes Plastic
  consumables business and associate pipette
  servicing
• UK and German operations of a1-biotech
  rationalised
• Launch of new Mitsubishi elemental analysers
• New range of enclosures for potent powders
  introduced
• Envirotech in Dusseldorf developing according to
  plan

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III Review of Operations Seals Components
markets

• Attraction of recurring revenue stream due to
  short product life times and regular replacement
  cycles
• Growth slowed in all end markets and equipment
  operators quickly cut back on new purchases
• Initial impact on the aftermarket with reductions
  in inventories of replacement parts and delays in
  repair work
• After a pause, demand for RMO supplies has
  improved ahead of OEM equipment sales
• Sales increased by 31 to 28.2m, assisted by
  contribution from Bulldog operating profits
  increased by similar magnitude

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III Review of Operations Seals Components
initiatives

• Acquisition of Bulldog gave boost to
  international business and broadened customer and
  product base
• Immediate priority was to secure customer base by
  improving Bulldog service levels
• In Q4, we brought together Hercules and Bulldog
  into a single entity Hercules Bulldog Sealing
  Products
• New IT system will service all Hercules Bulldog
  locations as well as FPE
• Benefits projected from streamlined back office
  systems and increased purchasing power

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III Review of Operations Interconnect markets

• Weak markets in commercial aerospace and in
  Germany in general
• Growth to offset these negative trends by
  focusing on more buoyant segments
• - Defence
• - Marine
• - Space
• - Medical
• Reduced number of F1 teams and changes to F1
  testing rules gives different demand profile
• Sales increased by 12 to 18.6m, assisted by
  contribution from Clarendon operating profits
  increased by similar percentage

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III Review of Operations Interconnect
initiatives

• Extension of Motorsport products and markets
  through Clarendon acquisition
• IS Motorsport Inc. established as a credible
  supplier to IRL/CART teams
• Growth in IS Rayfast for specialist marking
  services for wire identification
• Advances by Sommer in new market segments and
  geographic regions in Germany
• Dowatronic acquisition used to strengthen
  presence in Bavaria and in satellite and defence
  markets

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IV Prospects and Plans Current trading

• Operating profit from continuing businesses was
  broadly flat year on year
• However, the second half showed a good
  improvement over both the first half of
• the year and the second half of the
  prior year
• The businesses have started the new financial
  year in line with budget expectations
• Actions taken in 2002 to reduce costs should
  provide a firm foundation for
• progress in 2003

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Prospects and Plans Group strategies

• We will continue to invest in the existing
  businesses to build leading market positions and
• critical mass
• Specifically, action plans are in place against
  each of the principal Group strategies
• Focus on growth market segments 4.
  Geographic expansion
• Customer relationships 5.
  Efficient and responsive infrastructure
• Added Value Services 6. Strong
  focused management

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IV Prospects and Plans - Acquisitions

• We will continue to seek suitable acquisitions to
  accelerate growth
• There has been significant activity in 2002 in
  the search for acquisitions
• - ca. 150 real opportunities identified
  and screened in the year
• - visits to and/or detailed review of
  some 20 shortlisted targets
• The results in terms of acquisitions completed
  is disappointing
• - Clarendon, in December 2001 (3.3m)
• - Dowatronic Kabelsystems in April 2002
  (0.2m)
• However, a number of larger acquisition
  opportunities reached a relatively advanced
  stage
• - Several are still active
• Efforts expended in 2002 are expected to lead
  to results in 2003