DIPLOMA PLC
ANNUAL REPORT AND ACCOUNTS 2002
Document1  27/11/02  3:49 pm  Page 1 CONTENTS
01 FINANCIAL HIGHLIGHTS
02 GROUP STRUCTURE 
03 CHAIRMAN’S STATEMENT
04 CHIEF EXECUTIVE OFFICER’S REVIEW 
06 REVIEW OF OPERATIONS
12 FINANCE DIRECTOR’S REVIEW 
14 BOARD OF DIRECTORS AND ADVISORS
15 DIRECTORS’ REPORT 
17 CORPORATE GOVERNANCE
19 REMUNERATION REPORT
21 DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL STATEMENTS 
21 INDEPENDENT AUDITORS’ REPORT
22 GROUP PROFIT AND LOSS ACCOUNT
23 BALANCE SHEETS
24 GROUP CASH FLOW STATEMENT
25 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
25 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
26 NOTES TO THE FINANCIAL STATEMENTS
40 GROUP ACCOUNTING POLICIES
42 PRINCIPAL SUBSIDIARIES
42 FINANCIAL CALENDAR AND SHAREHOLDER INFORMATION
43 NOTICE OF ANNUAL GENERAL MEETING
44 FIVE YEAR RECORD
Diploma PLC is a Group of specialised distribution 
businesses serving industries 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.
COMPANY STATEMENT
Document1  27/11/02  3:49 pm  Page 3 2002 2001
Turnover from continuing businesses £73.7m £66.3m
Operating profit from continuing businesses, £8.9m £8.8m
before exceptional items and goodwill amortisation
Profit before tax, exceptional items and goodwill amortisation £9.9m £10.9m
Profit before tax, after exceptional items £10.1m £8.7m
Basic earnings per share 31.2p 21.5p
Adjusted earnings per share 29.4p 30.2p
Dividends per share 14.0p 13.0p
Net assets per share 225p 221p
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 01
l Operating profit from continuing businesses, before exceptional items and goodwill 
amortisation, up to £8.9m from £8.8m.
l Profit before tax, after exceptional items of £10.1m compared with £8.7m last year.
l Basic earnings per share 31.2p; after adjusting for exceptional items and goodwill 
amortisation, 29.4p.
l Full year dividend up by 1.0p to 14.0p per share; 2.1 times covered by Adjusted 
earnings per share.
l Operating cash flow of £9.9m and proceeds of £3.0m from sales of properties. 
Net funds of £26.9m at end of year.
l On market purchase of own shares returned £8.5m to shareholders; number of ordinary
shares in issue at year end is 22.6m (2001: 25.2m).
l Restructuring of US and European operations provides a lower cost base; benefits to 
accrue in 2003.
l
Disposal of first seven acres of Stamford land completed after 30 September 2002 
for £2.6m cash, before expenses.
Financial Highlights
c86076 1.Front  27/11/02  3:44 pm  Page 3 LIFE SCIENCES
Distributors of instrumentation,
consumables and related 
services to the Life Science
research laboratories of the
major pharmaceutical and
biotechnology companies, 
universities and research
institutions
BUSINESSES
Anachem
a1-biotech
Envirotech
Life Sciences 
contributes
37%
of core Group turnover
SEALS & COMPONENTS
Catalogue based distributors of
hydraulic seal kits, cylinder
components and gaskets to
repair and maintenance 
operations (RMOs) serving a
broad range of mobile 
machinery after-markets
BUSINESSES
Hercules Bulldog Sealing
Products
FPE
Seals & Components 
contributes
38% 
of core Group turnover
INTERCONNECT
Distributors of high 
performance wiring, thermal
shrink fit components, fastners
and interconnect products
supplied into defence,
aerospace, motorsport and
wider electronics markets
BUSINESSES
IS Rayfast
IS Motorsport
Clarendon
Sommer
Interconnect 
contributes
25% 
of core Group turnover
Total Sales
2002
£26.9m
(2001: £28.1m)
Total Sales
2002
£28.2m
(2001: £21.6m)
Total Sales
2002
£18.6m
(2001: £16.6m)
02  DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
GROUP STRUCTURE
c86076 1.Front  27/11/02  3:44 pm  Page 4 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 03
CHAIRMAN’S STATEMENT
Since the year end, we have completed the sale of a
first parcel of our property in Stamford for £2.6m in
cash, before expenses. I am particularly pleased by
this achievement as it is the first step in realising
the rewards of effort over many years. We will 
continue to pursue the sale of further parcels of
land, including the former brickworks site which is
now vacant following the closure of Williamson Cliff
during the year.
In view of the continuing strong cash generation,
robust balance sheet and encouraging results
achieved in difficult market conditions, the Directors
are recommending an increased final dividend of 
9.0 pence (8.0 pence), raising the total dividend 
payment for the year to 14.0 pence (13.0 pence), 
an increase of 7.7%.
EMPLOYEES AND DIRECTORS
In July this year, we welcomed John Rennocks to 
the Board as an independent Non-executive 
Director of the Company. John brings to Diploma his 
considerable experience as a finance director of a
number of companies and also in a range of 
non-executive roles and I look forward to his 
contribution. I should also like to thank our 
employees, who make an essential contribution to
the successful development of our businesses.
CURRENT TRADING
Although operating profit from continuing 
businesses was broadly flat year on year, the second
half showed a good improvement over both the 
first half of the year and the second half of the prior 
year. The Group’s businesses have started the new
financial year in line with budget expectations and
the actions we have taken in 2002 to reduce costs in
both our US and European operations should provide
a firm foundation for progress in 2003.
Christopher Thomas
Chairman
18 November 2002
We have experienced difficult economic and trading
conditions this year in most sectors in which we
operate. However against this background, the 
businesses have demonstrated their inherent
resilience and have achieved a creditable result.
Actions taken during the year to consolidate our
businesses to achieve a lower cost base, give me 
confidence that we are well positioned to take
advantage of any economic or market recovery. 
The Board remains committed to maximising value 
to shareholders through the expansion of the Group
both by investment in the existing businesses and by 
acquisition.
The current economic environment is creating a 
number of interesting corporate opportunities and
Diploma’s strong balance sheet should allow the
Group to capitalise on this. However, the Board 
continues to review the Group’s capital 
requirements and this may result in future returns 
of surplus capital through share buy-backs.
RESULTS AND DIVIDENDS
Profit before tax increased by 16.1% to £10.1m 
from £8.7m benefiting from exceptional profits of
£1.1m made on the sale of surplus properties. 
After excluding exceptional items and goodwill 
amortisation, operating profits of the continuing
businesses were £8.9m compared with £8.8m last
year. Sales of the continuing businesses, with 
contributions from the Bulldog and Clarendon 
acquisitions, increased by 11.2% to £73.7m.
Basic earnings per share were 31.2 pence compared
with 21.5 pence last year. Adjusted earnings per
share, which are after excluding exceptional items
and goodwill amortisation, were 29.4 pence 
compared with 30.2 pence last year.
Cash flow, historically a strength of the Diploma
Group, has again been positive. Operating cash 
flow of £9.9m was supplemented by cash proceeds 
of £3.0m from the sale of surplus properties. 
After acquisitions and returning £8.5m cash to
shareholders through an on market share purchase
undertaken in December 2001, the Group’s net cash
funds decreased by £4.8m to £26.9m at the end of
the year.
The businesses have achieved a creditable result in difficult
market conditions, demonstrating their inherent resilience.
Cash flow again has been strong.
c86076 1.Front  27/11/02  3:44 pm  Page 5 04 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
CHIEF EXECUTIVE OFFICER’S REVIEW
The Group’s strategy is 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 other 
value-adding activities. The objective is to build
more substantial, broader based businesses which
meet these criteria in the three sectors of Life
Sciences, Seals & Components and Interconnect.
With difficult economic and market conditions facing
all of our businesses, the priority this year has been
to continue the strategic development of the Group
while at the same time pursuing operating 
efficiencies to maintain profitability. This has been
achieved with further progression against each of
the principal Group strategies. Sales from the 
continuing businesses increased by 11% to £73.7m
(2001 : £66.3m) and operating profits were 
maintained at £8.9m (2001 : £8.8m). There have
been contributions to both sales and operating profits
from newly acquired businesses, but off-setting 
these have been similar levels of investment costs 
in start-up operations. The underlying performance 
of the businesses demonstrates their inherent
resilience.
FOCUS ON GROWTH MARKET SEGMENTS
While the Life Sciences sector continues to have
excellent long term growth prospects, this past year
has been challenging for all industry participants.
The major wave of research work related to the
Human Genome project has passed through and the
follow-on application research work in both
genomics and proteomics has yet to take up the
strain. The major pharmaceutical companies, with
less confidence in the flow through their drug
pipelines, are also carefully scrutinising all purchases
of higher value instruments. Our response has 
been to reduce resources applied to the weaker
Instrumentation segments while increasing 
investment in the Consumables and Service 
segments which have remained resilient.
The attraction of the Seals & Components sector is
the recurring revenue stream due to the relatively
short lifetime and regular replacement cycle of the
product. As growth slowed in all end-use sectors,
mobile equipment operators quickly cut back on new
purchases from equipment OEM’s. Initially, this also
impacted the aftermarket with reductions in the
inventories of replacement parts and delays in repair
work. After a pause however, the demand for repair
and maintenance parts has improved ahead of any
recovery in OEM equipment purchases.
The Interconnect sector has been impacted by weak
markets in commercial aerospace and in Germany in
general. To offset these negative trends, growth has
been generated by focusing on more buoyant 
segments such as Defence, Marine, Space and
Medical. Market share gains have also been achieved
in the Motorsport market, fuelled by the acquisition
of Clarendon in the UK and the IS Motorsport 
start-up in the US.
CUSTOMER RELATIONSHIPS
A high priority for all our businesses is to build on
strong customer relationships within our selected
product/market segments. Selling a broader range of
products into key customer accounts strengthens the
ties with customers, as well as creating barriers to
entry against competitors.
The acquisition of Clarendon has added a range of
high performance fasteners to our Interconnect
product portfolio. This has strengthened 
relationships with key customers in the Motorsport
sector as well as generating many cross-selling
opportunities with IS Rayfast.
In a similar way, with the acquisition of Bulldog in
the US, we are now able to supply a broader range 
of sealing products (now including specialist gasket
kits) to our customers in North America and 
internationally.
c86076 1.Front  27/11/02  3:44 pm  Page 6 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 05
ADDED VALUE SERVICES
We are constantly seeking to identify opportunities
for new service offerings to complement our product
sales. Again this strengthens customer relationships
and gives justification for superior margins.
The Service offerings in our Life Sciences businesses
have been particularly important in offsetting the
effect of slower instrument sales. As part of their
overall spending reviews, several industrial 
customers have begun to consolidate the 
maintenance and repair of their instruments by 
seeking to appoint a single contractor or supplier to
co-ordinate the servicing of all the equipment on
site. Anachem has been at the forefront of this 
initiative and during the year successfully arranged
one of the earliest of these contracts with Pfizer.
Strong growth has also been achieved in our pipette
servicing business.
GEOGRAPHIC EXPANSION
Where we have achieved success in specific 
product/market segments, we seek to extend this
into other geographies.
The acquisition of Bulldog, in addition to broadening
the product range and customer base, has most
importantly increased the international spread of our
Seals & Components business. In this sector 35% of
our sales are now outside the US.
The expansion of Anachem’s environmental business
into Germany and IS Motorsport into the US 
demonstrate the alternative investment approach of
using start-up operations to expand geographically.
EFFICIENT AND RESPONSIVE INFRASTRUCTURE
We continue to invest in infrastructure and systems
to give operational efficiencies and to provide a
solid foundation for growth. This is an important 
element of value added by the Group when 
transforming small, owner managed companies into
more substantial, broader based businesses.
Following a programme of investment over the last
2-3 years, our principal businesses are all operating
from purpose built or newly expanded facilities
designed for efficient operations and with a scale 
to support significant future growth.
Investment is also ongoing in the areas of IT and 
e-commerce to ensure high levels of customer service
as well as operational efficiency. As part of this 
continuing investment, a new integrated IT system
which will service all the Seals & Components 
businesses, has been selected and will be installed
during the year.
STRONG FOCUSED MANAGEMENT
Our culture has always been to ensure that strong,
self standing management teams are in place in the
operating businesses. Management progression has
been effected to ensure appropriate and strong 
management teams are in place, motivated and
rewarded according to success in their businesses. 
With this management model, it is important not 
to overburden the businesses with centralised 
management and head office costs and this year
these costs have reduced by over 16%. The Group
head office is small and has very specific roles with
the businesses in helping formulate and monitor
their strategies, in developing management and in
exerting financial control.
Bruce Thompson
Chief Executive Officer
18 November 2002
The Group maintains its focus on Specialised Distribution
businesses with the potential for growth and superior 
margins.
c86076 1.Front  27/11/02  3:44 pm  Page 7 A close dialogue with end users helps
Anachem to refine its added value services
and develop new product lines
Life 
Sciences
Ø Scientists can have their 
pipettes back within the day 
when one of Anachem’s field 
based technicians runs an 
on-site maintenance and 
calibration workshop.
Ø Laboratory staff need to 
handle potent powders safely 
while still performing their 
duties efficiently. We have 
developed a new range of 
enclosures to respond to this 
need. 
Ø The range of ReactArray process 
optimisation products was 
expanded during the year with 
the introduction of the new 
215SW workstation.
06  DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
REVIEW OF OPERATIONS 
c86076 1.Front  27/11/02  3:44 pm  Page 8 in particular slowed significantly through the year
following the completion of research work associated
with the Human Genome project. Anachem took
action in the second half to rationalise the UK and
German operations of a1-biotech. This will reduce
costs while continuing to promote a more specialised
range of genomic instrumentation.
ReactArray, Anachem’s specialised process 
optimisation product, countered the general trend
and performed well. The product range continued to
be expanded with the introduction of a new robotic
workstation designed to link the automated liquid
handling process to the specialist ReactArray 
reaction vessels. Gains were also made in the capital
service business which grew by 13% year on year.
ENVIRONMENTAL
The growing environmental business had another
successful year and increased sales in the UK by
18%. The Mitsubishi range continued to make gains
with the launch of new elemental analysers and a
new range of enclosures for potent powders was
introduced. Envirotech GmbH, our new start-up 
operation in Düsseldorf, is developing according to
plan and is broadening our base in the sector.
The Anachem group of companies supply Instrumentation,
Consumables and Services to the Life Sciences research
laboratories of the major pharmaceutical and biotechnology
companies, universities and research institutions.
Sales in our Life Sciences businesses have decreased
by 4% to £26.9m and operating profits have fallen
back further than sales. Good advances were made 
in the Consumables, Service and Environmental 
segments of the business. However these gains were
offset by sales reductions in the Instrumentation
segments, where pharmaceutical and biotechnology
companies have reduced expenditure. Operating
profits have been impacted further by £0.4m of
operating losses in the new German operations and
investment of £0.3m in the ReactArray product line.
PIPETTES & PLASTICS
Anachem’s Pipette & Plastics consumables business,
with the associated pipette servicing activity, now
accounts for ca. 40% of our total Life Science sales.
The Consumables and Service segments are more
insulated from reduced budgets in Pharmaceutical
and Biotechnology sectors and have benefited from
strong demand from academia and research 
institutions. Our consumables sales matched the
strong performance of the previous year and 
pipette servicing grew by 15% through new 
contracts and a broader range of service offerings.
INSTRUMENTATION
With severe budget constraints within major 
pharmaceutical customers, Anachem’s 
instrumentation business suffered. Sales of higher
value instruments for use in pharmaceutical and
genetic research were down by almost 30% compared
to the previous year. Growth in the genomics sector 
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 07
REVIEW OF OPERATIONS LIFE SCIENCES
c86076 1.Front  27/11/02  3:44 pm  Page 9 08  DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
REVIEW OF OPERATIONS
Combining the strengths of Hercules and
Bulldog expands our product range, buying
power and geographic reach
Seals & 
Components
Ø Bulldog’s facility in Reno, 
Nevada manufactures over 
1 million soft gaskets annually.
It also has the flexibility to 
accommodate short production 
runs for specialised off-road 
mobile equipment.
Ø The merger of Hercules and
Bulldog provides the 
opportunity to install a 
single back office system 
while maintaining strong 
sales and marketing 
identities for different 
markets and geographies.
Ø Outside North America, 
Hercules Bulldog sells to local 
country distributors supplying a
range of tractive parts for 
mobile equipment repair and 
maintenance.
c86076 1.Front  27/11/02  3:44 pm  Page 10 Our Seals & Components businesses increased sales
by 31% to £28.2m and increased operating profits by
a similar magnitude.
The sales performance was boosted by a full year
contribution from Bulldog, but equally important
were strong sales performances from both Hercules
and FPE in challenging market conditions. Operating
profits increased strongly in line with sales, as 
overheads were tightly controlled and benefits
flowed through from prior year actions. A major 
restructuring has been completed in North America,
grouping together our activities into Hercules
Bulldog Sealing Products.
HERCULES BULLDOG SEALING PRODUCTS
Hercules performed well in a sluggish and uncertain
US economy. The company continued to promote its
products aggressively and to increase its product
range, growing its sales in US dollar terms by 5%
year on year. Gross margins were somewhat lower 
as competitors cut their prices to attempt to hold 
market share but Hercules demonstrated tight 
control over overheads and delivered solid growth 
in operating profits in both the US and Canada.
Bulldog (Pevco) was acquired immediately prior to
the start of the year at broadly net asset value.  
It had been operating at close to break-even 
operating profit for several years. The acquisition
has given a substantial boost to our international
business outside the US since well over half of
Bulldog’s business was represented by export sales. 
It has also broadened our customer base to include
parts distributors supplying to specialised diesel
engine rebuilders. Finally it has broadened the 
product line with a range of specialised gaskets.
The immediate priority post acquisition, was to
secure the customer base by increasing service levels
and delivery performance. By June 2002, we were
ready to start the process of combining the Hercules
and Bulldog companies into a single entity. The
merger was completed on 30 September 2002 and
there is now a single US corporate entity, Hercules
Bulldog Sealing Products with three trading 
divisions - Domestic US, Canada and International.
Exceptional costs of £0.6m have been incurred in
implementing this new structure.
FLUID POWER EQUIPMENT (FPE)
FPE grew sales by 10% and delivered excellent profit
growth as the benefits of earlier reorganisation
activity and infrastructure investment began to 
take effect.
The new IT system to be installed this year will 
service all the Hercules Bulldog locations as well 
as FPE and will enable back office systems to be
streamlined and the full benefits of the group’s 
purchasing power to be achieved.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 09
Hercules Bulldog Sealing Products and FPE offer a next day
delivery service for hydraulic seal kits, cylinder components
and gaskets, supplied to repair and maintenance operations
(RMOs) serving a broad range of mobile machinery 
aftermarkets.
REVIEW OF OPERATIONS SEALS & COMPONENTS
c86076 1.Front  27/11/02  3:44 pm  Page 11 10  DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
REVIEW OF OPERATIONS
Attention to detail and close working 
relationships with high quality manufacturers
allow us to develop successful niche 
offerings.
Interconnect
ØWorking closely with the 
naval dockyards and a 
specialist manufacturer, we 
introduced these lightweight,
corrosion – free junction 
boxes.
Ø Our sales engineers in 
Germany developed a unique 
set of connectors for use on 
the solar panels of satellites.
Ø The acquisition of Clarendon, 
with its range of specialist 
fasteners, allows us to service
the broader needs of our 
Motorsport customers.
c86076 1.Front  27/11/02  3:45 pm  Page 12 Our Interconnect companies increased overall sales
by 12% to £18.6m and increased operating profits by
a similar percentage.
Sales were boosted by the acquisitions of Clarendon
in December 2001, Dowatronic in April 2002 and the
first full year of trading by IS Motorsport in the US.
These contributions countered the effects of weak
markets in Aerospace and Germany. Start-up 
operating losses of £0.1m in the US and increased
facility costs at IS Rayfast were offset by reductions
in other overhead costs.
IS RAYFAST
IS Rayfast started the year with a strong order 
book but was impacted by the downturn in the
Aerospace market and by a generally subdued UK 
manufacturing environment. IS Rayfast managed to
maintain its sales performance with gains in the
Marine and Defence markets. Specialist printing and 
marking services for wire identification also made a
good contribution. The Symonds Cableform range of
high performance lacing cords and adhesives,
acquired in September 2001, was integrated into 
IS Rayfast and achieved its objectives.
IS MOTORSPORT
In the UK, fewer Formula 1 teams finished the 
season than started and there were changes to car
testing rules which resulted in a different demand
profile for suppliers. However the introduction of our
Kanban product replenishment service helped us to
take market share and progress was made in export
markets such as Japan.
In the US, IS Motorsport achieved its initial objective
of establishing itself as a credible supplier to the
IRL/CART open wheel racing series teams. 
The priority in 2003 is to consolidate these initial
gains and broaden the customer base to include
other segments of the diverse US Motorsport 
industry.
CLARENDON
Clarendon, acquired in December 2001, is a supplier 
of high performance fasteners and seals to the UK
Motorsport industry. Clarendon met its sales budget
and made a strong profit contribution. In the final
quarter of the year, Clarendon secured new business
with a major UK supplier to US racing teams.
SOMMER
Sommer performed well to maintain its sales 
performance of the previous year in a depressed
German manufacturing market. In particular, demand
was weak from harness suppliers to wireless base
stations and other telecommunication 
infrastructure projects. However, Sommer made
advances in other market segments and geographic
regions within Germany. It also used the acquisition
of Dowatronic to strengthen its presence in the
region of Bavaria as well as in the satellite and
defence segments.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 11
The IS Group, Clarendon and Sommer are distributors of high
performance wiring, thermal shrink components, fasteners
and interconnect products supplies into Defence, Aerospace,
Motorsport and Commercial Electronics.
REVIEW OF OPERATIONS INTERCONNECT
c86076 1.Front  27/11/02  3:45 pm  Page 13 RESULTS FOR THE YEAR
Profit before tax, goodwill amortisation and 
exceptional items for the year ended 30 September
2002 was £9.9m compared with £10.9m last year.
The second half of the year contributed £5.3m to the
result, compared with £4.6m in the first half of the
year and £4.8m in the second half of last year.
The Group’s continuing businesses achieved 
operating profits, before goodwill amortisation and
exceptional items of £8.9m, marginally up against 
last year’s £8.8m and assisted by the contribution
from Clarendon, acquired in December 2001. After 
adjusting for the net impact of acquisitions, 
discontinued businesses, and other one-off items,
underlying profits were 4% below last year.  
INTEREST INCOME
Interest income was £1.0m compared with £1.2m last
year, partly reflecting the capital return of £8.5m
made in December 2001. Average net cash funds
were higher than last year, but interest rates were
lower.
EXCEPTIONAL ITEMS
Exceptional items before tax contributed net profits
of £0.5m compared with a net loss of £2.1m last
year. An analysis of the exceptional items is set out
in Note 6.  
Exceptional items included costs of £0.6m, 
which were mainly redundancy costs, incurred in 
restructuring the Group’s US operations. The Group’s
US operations, which will benefit from lower costs
from this exercise, are now merged into one entity.
The closure of Williamson Cliff, announced on 28
February 2002, gave rise to exceptional costs of
£0.6m, and again were mainly redundancy costs.
The business closed during the summer. 
During 2002 the Group disposed of two surplus 
properties which had been retained from recent
divestments. These generated cash proceeds of
£3.0m and profits of £1.1m.   
Since 30 September 2002, the Group has sold seven
acres of its property near Stamford in the East
Midlands for cash of £2.6m, before expenses. Since
1973, the Group has owned approximately 150 acres
of land adjoining the Williamson Cliff operation in
Stamford. A large part of this land comprises
environmental and geological sites of special 
importance, but the Group has identified distinct
parcels of land which are likely to have development
potential. Having successfully completed the sale of
seven acres, the Group is now pursuing the sale of a
further eight acre site. There are also reasonable
prospects for medium term development of the
twelve acre brickworks site formally occupied by
Williamson Cliff. These should give rise to
exceptional profits in future years.
TAXATION
The current year tax charge of £3.0m on profit
before goodwill amortisation and exceptional items
represents an effective tax rate of 30.3% which is
consistent with last year.
EARNINGS AND DIVIDENDS
Earnings per share, adjusted for exceptional items
and goodwill amortisation, were 29.4 pence
compared with 30.2 pence last year.
With a proposed final dividend of 9.0 pence, total
dividends for the year are 14.0 pence, an increase of
7.7% on the prior year. Dividend cover against 
earnings before exceptional items and goodwill
amortisation is 2.1 times.
ACQUISITIONS
On 20 December 2001 the Group acquired Clarendon,
a distributor of fasteners, for £3.3m, net of cash
acquired of £0.2m. A further £0.2m was incurred on
purchasing a small distributor business in Germany.
The initial acquisition of Clarendon was financed 
by the issue of Loan Notes and both acquisitions 
included an element of deferred consideration.
Accordingly only £2.2m in cash has been paid 
during the year.
12 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
FINANCE DIRECTOR’S REVIEW
47.5
52.8
58.4
73.7
66.3
1998
1999
2000
2001
2002
7.4
8.0
7.8
8.8
8.9
1998
1999
2000
2001
2002
16.8
10.3
14.4
21.7
20.3
1998
1999
2000
2001
2002
Turnover (£m)
(continuing operations)
Operating profit before 
goodwill and exceptional items
(£m) (continuing operations)
Return on trading 
capital employed (%)
c86076 1.Front  27/11/02  3:45 pm  Page 14 CASH FLOW
The continuing businesses generated a strong 
operating cash flow of £9.9m compared with £8.6m
last year, benefiting from good control of working
capital.
The proceeds from the sale of surplus properties of
£3.0m, together with the strong operating cash flow,
helped offset the impact of returning £8.5m of cash
to shareholders.
At 30 September 2002 the Group’s net cash funds
had fallen £4.8m to £26.9m from £31.7m last year.
FINANCIAL POSITION
Shareholders’ funds fell £4.7m to £50.9m at 30
September 2002 reflecting the impact of returning
£8.5m capital to shareholders.
Return on trading capital employed, after taking
account of goodwill, both capitalised and written off
directly to reserves, was 20.3% compared with 21.7%
last year.
PENSIONS
A pension provision of £0.9m was retained last year
to provide for any shortfall arising from the triennial
actuarial valuations of the Group’s defined benefit
schemes due to be completed during 2002. These
valuations have shown a satisfactory funding
position and £0.6m of the provision has been
released to profit. The remaining provision of £0.3m
will be amortised to profit in future years.
The additional disclosures required by FRS 17
Retirement Benefits in the second year of the 
transitional rules are set out in Note 26. The sharp 
fall in equity markets in September 2002, together
with the lower bond yield applied in valuing the 
liabilities, has led to an increase in the deficit in 
the Principal Schemes to £5.0m at 30 September
2002. Had the Group opted to account for pensions
in accordance with FRS 17, the charge to operating
profit  would have remained unchanged at £0.3m;
however £3.2m would have been charged in the 
Statement of Total Recognised Gains and Losses, 
essentially representing the movement in the value 
of the pension schemes during 2002.
TREASURY RISK MANAGEMENT
The Group maintains a small treasury function 
which operates under Board guidelines covering
management of exchange exposure and interest rate
risk.  All transactions entered into by the treasury
function are required to be in support of, or as a
consequence of, underlying commercial transactions.
The Group regularly reviews its foreign exchange
exposure in respect of net assets held in currencies
other than sterling. At 30 September 2002, its non-
sterling net assets of overseas businesses were
£14.6m (2001 : £13.9m), principally held in the
United States. At the present time the Group has
decided not to hedge its exposure back into sterling.
Approximately 40% of the Group’s turnover and
operating profit relates to business operations in 
the United States and Germany. There has been a
negative impact in the year of £0.7m and £0.1m
respectively on turnover and operating profits
earned overseas from movements in exchange rates.
In addition to the overseas businesses, the Group’s
UK businesses are also exposed to fluctuations in
exchange rates as a significant amount of their stock
purchases are denominated in foreign currencies.
The Group manages its exposure to these exchange
rate fluctuations through the use of forward foreign
exchange contracts.
The Group continues to manage the net cash 
position in a manner designed to maximise interest
income, while at the same time minimising any risk
to these funds. Surplus cash funds are deposited
with commercial banks for periods of between one
and six months. At 30 September 2002, the Group
had net funds of £26.9m (2001 : £31.7m) of which
£25.8m (2001 : £28.4m) were held on deposit.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 13
The continuing businesses generated a strong operating
cash flow of £9.9m benefiting from good control of 
working capital.
c86076 1.Front  27/11/02  3:45 pm  Page 15 AJC THOMAS (71)*†‡
Chairman
Joined the Board in 1969.
Became Non-executive on 
5 June 2001, after more than 30
years as Chairman and Chief
Executive of the Company.
NP LINGWOOD ACA (43)
Group Finance Director and
Company Secretary
Joined the Company in June
2001 and appointed Group
Finance Director on 3 July 2001.
He was previously Group
Financial Controller of Uniq plc.
JL RENNOCKS (57)†‡
Non-executive
Joined the Board in July 2002.
He is Chairman of 
KS Biomedix plc and a 
Director of Foreign & Colonial
Investment Trust Plc. He has
previously been Executive
Director – Finance at Corus
Group Plc and Finance Director of
PowerGen Plc and Smith &
Nephew plc.
BM THOMPSON (47)
Chief Executive Officer
Joined the Board in 1994 and
appointed Chief Executive Officer
in 1996. He was previously
Director of 
Arthur D Little Inc’s Technology
Management Practice in the
United States.
I HENDERSON (46)
Joined the Board as a Director in
1998. He was previously a
Director of Glenchewton plc and
of ANC Holdings Limited.
LORD STEWARTBY (67)*†‡
Non-executive
Joined the Board in 1990. He
previously held a number of
Ministerial appointments in 
HM Government including
Economic Secretary to 
HM Treasury. He is Deputy
Chairman of Standard 
Chartered PLC and Chairman of
The Throgmorton Trust plc.
W REID (65)*†‡
Non-executive
Joined the Board in 1994. He is
Chairman of Jacques Vert PLC. He
was previously a Director of
various businesses within
J Mowlem & Co plc and
RTZ Corporation PLC.
*Member of the Remuneration Committee
†Member of the Audit Committee
‡Member of the Nomination Committee
14 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
BOARD OF DIRECTORS
ADVISORS
Investment Bankers
Lazard
21 Moorfields
London EC2P 2HT
Auditors
PricewaterhouseCoopers
1 Embankment Place
London WC2N 6RH
Corporate Stockbrokers
Evolution Beeson Gregory
The Registry
Royal Mint Court
London EC3N 4LB
Solicitors
Ashurst Morris Crisp
Broadwalk House
5 Appold Street
London EC2A 2HA
c86076 2.Front  27/11/02  3:42 pm  Page 14 The Directors present their report and the audited financial statements for the year ended 30 September 2002.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the distribution of specialised products and services. A description of the
activities of each of the subsidiaries is presented on page 2. A review of the activities of the Group during the
financial year and an analysis of turnover and profit are presented in the Review of Operations and Finance
Director’s Review on pages 6 to 13. An indication of future developments is contained in the Chairman’s
Statement and Chief Executive Officer’s Review on pages 3 to 5.
RESULTS AND DIVIDENDS
The profit for the financial year attributable to shareholders was £7.2m (2001: £5.4m). The Directors
recommend a final dividend of 9.0p per share (2001: 8.0p), to be paid, if approved, on 
21 January 2003. This, together with the interim dividend of 5.0p per share paid on 2 July 2002, amounts to
14.0p for the year (2001: 13.0p). This leaves a retained profit of £4.2m to be transferred to reserves.
ACQUISITIONS
Details of acquisitions during the year are set out in Note 22 to the financial statements.
SHARE CAPITAL
On 7 December 2001, in accordance with the authority given to the Directors’ by the shareholders, the
Company repurchased and cancelled 2,516,434 shares of 5 pence each, representing 10% of the Company’s
issued share capital, for £8.5m. The reason for the repurchase was to enhance earnings. Details of movements
in share capital are set out in Note 19.
SUBSEQUENT EVENT
On 5 November 2002, the Group disposed of seven acres of land situated in Stamford and owned by a
subsidiary company, for cash proceeds of £2.6m, before expenses. The net book value of this land was
negligible.
SUBSTANTIAL SHAREHOLDINGS
In addition to the Directors’ shareholdings set out on page 20, at the date of this report the Company has been
notified by the following that they hold a disclosable beneficial interest of 3% or more in the issued ordinary
share capital of the Company:
Percentage of
ordinary share
capital
Morley Fund Management Limited 11.32
UBS Global Asset Management (UK) Limited 5.74
M&G Investment Management Limited 5.28
Herald Investment Management Limited 4.75
Unicorn Asset Management Limited 4.61
Friends Ivory & Sime plc 3.90
Legal and General Investment Management Limited 3.77
As far as the Directors are aware there were no other notifiable interests.
EMPLOYEES
The Group is committed to a policy of equal opportunities in employment by which the Group has and continues
to:
l select, recruit, develop and promote the very best people, basing its judgement solely on suitability for
the job;
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 15
DIRECTORS’ REPORT
c86076 2.Front  27/11/02  3:42 pm  Page 15 l ensure that all applicants and employees receive fair and equal treatment irrespective of sex, marital
status, nationality, colour, race, ethnicity, national origin or disability;
l encourage diversity in its workforce reflecting, where practical, the diversity of the working population;
l maintain a working environment free from sexual and racial harassment or intimidation;
l ensure that all employment conditions and job requirements reflect its commitment to equal
opportunities.
Where people become disabled during the course of their employment, every practical effort is made to retain
their services and to provide retraining if necessary. All employees are eligible for appropriate training, career
development and promotion, and disabled people are not treated any differently in this respect.
DIRECTORS
The persons currently serving as Directors of the Company are shown on page 14. On 11 July 2002 
JL Rennocks was appointed as an independent Non-executive Director of the Company. AJC Thomas and BM
Thompson retire from the Board by rotation at the Annual General Meeting on 8 January 2003 and being
eligible, offer themselves for re-election. JL Rennocks having been appointed since the last Annual General
Meeting and being eligible, offers himself for re-election. Directors’ beneficial interests in the Company’s
ordinary share capital at 30 September 2002 are set out in the Remuneration Report. 
CHARITABLE AND POLITICAL DONATIONS
The UK companies of the Group made donations for charitable purposes during the year which amounted to
£3,000. No political donations were made.
PAYMENT POLICY
The Group does not have a formal code that it follows with regard to payments to suppliers. Members of the
Group agree payment terms with its suppliers when it enters into binding purchasing contracts for the supply
of goods and services. Suppliers are, in that way, made aware of these terms. Group companies seek to abide
by these payment terms when they are satisfied that the supplier has provided the goods or services in
accordance with the agreed terms and conditions. At 30 September 2002 the amount of trade creditors shown
in the Group balance sheet represents 45 days of average purchases.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 11.00 am on 8 January 2003 in the Members’ Room, Chartered
Accountants’ Hall, Moorgate Place, London EC2P 2BJ. The Notice of Meeting, which is included on page 43,
includes a Special Resolution which would renew the Directors’ authority to make market purchases of its own
shares until the conclusion of the Company’s Annual General Meeting in 2004. The Directors will only employ
this authority so long as any such purchase of the Company’s shares is earnings enhancing.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office and a resolution
for their reappointment as auditors of Diploma PLC will be proposed at the Annual General Meeting in
accordance with the provisions of Section 385 of the Companies Act 1985.
By order of the Board
NP Lingwood
Company Secretary
18 November 2002
16 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
DIRECTORS’ REPORT
c86076 2.Front  27/11/02  3:42 pm  Page 16 COMPLIANCE STATEMENT
The Board recognises the importance of high standards of corporate governance and supports the Principles of
Good Governance contained in the Combined Code published in June 1998 (“the Code”) and appended to the
Listing Rules of the Financial Services Authority. The Board confirms that the Company complies with the
requirements of Section 1 of the Code and has done so throughout the year.
The manner in which the Group applies the principles of good corporate governance, as defined by the Code, is
described below.
DIRECTORS
The Board comprises four Non-executive Directors, including the Chairman, and three Executive Directors,
providing a wide range of skills and experience. The roles of the Chairman, who is Non-executive, and the Chief
Executive Officer are separate and clearly defined, and the Board considers the majority of its Non-executives
to be independent. The biographical details of the Board members are set out on page 14. All Directors must
stand for election at the first Annual General Meeting after they are appointed. The Articles provide that all
Directors will stand for re-election at least every three years. The senior independent Non-executive Director is
Lord Stewartby.
The Executive Directors have service contracts which are subject to 12 months’ notice of termination by the
Company or the Executive Director.
The Board meets regularly to review financial performance and strategy and has a formal schedule of matters
specifically reserved to it for decision. The main Board papers comprising an agenda and formal Board reports
together with briefing papers on specific matters are sent to the Directors in advance of each meeting. All
members of the Board have access to the advice and services of the Company Secretary and may take
independent professional advice as required at the expense of the Company. There are a number of Standing
Committees of the Board to which various matters are delegated. Membership of the Committees is set out on
page 14. The Committees all have terms of reference, brief details of which are set out below.
Nomination Committee
The Board as a whole is responsible for the appointment of its own members, and for nominating them for
election by shareholders on first appointment and thereafter for re-election at three yearly intervals. A
Nomination Committee comprising the Non-executive Directors under the chairmanship of AJC Thomas is
responsible for recommending new members to the Board for appointment.
Remuneration Committee
The Remuneration Report on pages 19 and 20 details the constitution and role of the Remuneration
Committee, and how the principles of the Code relating to Directors’ remuneration have been applied. The
Committee is chaired by AJC Thomas.
Audit Committee
The Audit Committee has a formal written constitution and comprises the four Non-executive Directors. It is
chaired by Lord Stewartby. The Committee receives reports from management, and from the external auditors
on the external audit, on a regular basis and reviews the financial controls of the Group and the scope of, and
matters arising out of, the audit. It considers annually whether the Group should set up an internal audit
function. It also keeps under review the nature and extent of non-audit services provided to the Group by the
external auditors.
DIRECTORS’ REMUNERATION
Details of Directors’ Remuneration are set out in the Remuneration Report on pages 19 and 20. This Report
sets out compliance with the Code’s requirements with regard to remuneration matters.
RELATIONS WITH SHAREHOLDERS
The Company maintains regular contact with major shareholders to communicate clearly the Group’s objectives
and monitors movements in significant shareholdings. Notice of the Annual General Meeting is sent to
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 17
CORPORATE GOVERNANCE
c86076 2.Front  27/11/02  3:42 pm  Page 17 shareholders at least twenty working days prior to the Meeting. In the absence of a poll being called, Proxy
votes cast will be declared after each resolution has been dealt with on a show of hands. The Chief Executive
Officer and Company Secretary generally deal with questions from individual shareholders. All shareholders
have the opportunity to put questions at the Company’s Annual General Meeting when the Chairman and Chief
Executive Officer give a statement on the Company’s performance during the year, together with a statement
on current trading conditions. The Chairman of the Board and of the Remuneration and Audit Committees will
normally be available to answer questions at the meeting.
ACCOUNTING, INTERNAL CONTROL AND AUDIT
The respective responsibilities of the Directors and auditors in connection with the financial statements are
explained on page 21. The Directors’ statement on going concern is set out below.
The Directors are responsible for the Group’s system of internal control and for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other
irregularities. The Code refers to internal controls in the widest sense, including operational and compliance
controls and risk management as well as internal financial controls.
During the year the Board has carried out a further risk assessment process on the key financial, operational
and compliance risks to identify, evaluate and manage significant risks to the Group’s business. The
assessments have been effected at both Group and individual company level. They included common definitions
of risk and ensure, as far as practicable, that the policies and procedures established by the Board are
appropriate to manage the perceived risks to the Group. During the year, the risk assessment process revealed
no significant risks of which the Board was not previously aware. Each operating unit is required to prepare an
annual self assessment report of internal control and these are reviewed by the Board. 
The day to day running of the Group’s business is delegated to the Executive Directors of the Company. The
Executive Directors visit each operating unit on a regular basis and meet with both operational and finance
management and staff.
Key financial and operational measures are reported on a weekly and/or monthly basis and are measured
against both budget and interim forecasts which have been approved and reviewed by the Board. The Board has
established a clear organisational structure with defined authority levels.
The Board acknowledges that it is responsible for the Group’s  system of internal control and for reviewing its
effectiveness. As with all such systems, internal control is designed to manage rather than eliminate the risk of
failure to achieve business objectives and can only provide reasonable and not absolute assurance against
material misstatement or loss.
Throughout the year, the Group has been in full compliance with the Combined Code provisions on internal
control.
The Board keeps under review the need for internal audit in the Group. The Board’s current view is that a
separate function is not required given that the Group’s financial control resource carries out those internal
audit functions which are considered appropriate for a Group of the size and nature of Diploma PLC.
GOING CONCERN
The Directors have reviewed the Group’s budget for 2002/03 and are satisfied that it is appropriate to prepare
the financial statements on the going concern basis.
18 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
CORPORATE GOVERNANCE
c86076 2.Front  27/11/02  3:42 pm  Page 18 CONSTITUTION
The Remuneration Committee of Diploma PLC is constituted in accordance with the Combined Code. The
Remuneration Committee, chaired by AJC Thomas, includes two other independent Non-executive Directors and
meets as appropriate during the year. Except when matters concerning his own position are being considered,
the Chief Executive Officer is normally invited to attend the meetings to assist the Committee, as set out in
the Combined Code. Any matter affecting the Chairman is discussed by the Remuneration Committee without
the Chairman present.
POLICY
The Committee has given full consideration to the provisions of Schedule A of the Combined Code and the
following:
l the importance of recruitment, motivation and retention of high quality management;
l the culture of linking reward to overall corporate and individual employees’ performance.
The policy of the Remuneration Committee is to pay competitive market salaries and associated benefits,
having regard to the Director’s experience, the size and complexity of the job, and any other relevant factors
(such as special expertise or market requirements necessary to acquire a new recruit) in order to attract,
retain and motivate executives and to link individual rewards to the long term success of the Group.
The Remuneration Committee monitors practices in other companies to ensure that it remains in touch with
current best practice in the market.
DIRECTORS’ REMUNERATION
The total remuneration of the Directors of the Company for the year ended 30 September 2002 was:
2002 2001
£000 £000
Salary 600 570
Bonus 75 85
Long Term Incentive Scheme - 30
Ex-gratia payment - 50
Other benefits 68 68
Non-executive Directors’ fees 49 43
792 846
Pension costs 73 113
865 959
Subject to an overriding discretion by the Remuneration Committee after taking an overall view of the
Company’s performance, annual bonuses may be earned by Executive Directors based on the achievement of
pre-agreed targets for profit before tax in the year, and the Remuneration Committee’s assessment of strategic
and personal performance. The Remuneration Committee has authority to grant an individual a discretionary
bonus if it considers the circumstances justify such action. Performance bonuses are pensionable.
The base salaries of Executive Directors are reviewed annually, having regard to personal performance, Group
performance and the competitive market practice.
Non-executive Directors receive fees as set out below. Fees are set by the Board as a whole and were last
reviewed in November 2002. The Chairman who is a Non-executive Director received a salary of £80,000 per
annum for his services during the year ended 30 September 2002. Since 1 October 2002, the Chairman’s
remuneration is at the rate of £70,000 per annum.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 19
REMUNERATION REPORT
c86076 2.Front  27/11/02  3:42 pm  Page 19 The fee or salary, bonus and other benefits for each of the Directors during the year were:
Long Term Perfor- Prior
Salary Incentive mance Other Year
& Fees Scheme Bonus Benefits Total Total
£000 £000 £000 £000 £000 £000
I Henderson 140 - 15 11 166 185
NP Lingwood 145 - 15 13 173 54
W Reid 23 - - - 23 23
JL Rennocks* 6 - - - 6 -
Lord Stewartby 20 - - 9 29 29
AJC Thomas 80 - - 18 98 124
BM Thompson 235 - 45 17 297 314
AMR Parkinson - - - - - 117
649 – 75 68 792 846
* JL Rennocks was appointed to the Board on 11 July 2002.
PENSIONS
The Executive Directors receive pension contributions from the Group which are paid into money-purchase
schemes. No Directors are members of the Groups’ defined benefit schemes. The pension contributions paid
into the schemes on behalf of the Directors are as follows:
2002 2001
£000 £000
BM Thompson 36 36
I Henderson 19 17
NP Lingwood 18 6
AMR Parkinson - 54
73 113
LONG TERM INCENTIVE SCHEMES
Long Term Incentive Schemes (“LTISs”) are provided to Executive Directors. BM Thompson and 
I Henderson were offered a LTIS on 24 January 2001 and 26 February 2001 respectively whereby they will each
receive a bonus related to growth in earnings per share over the three years ending 30 September 2003, share
price enhancement from 1 October 2000 to 30 September 2003 and personal performance. The award
assessment date is 30 September 2003. NP Lingwood was offered a LTIS on 28 January 2002 whereby he will
receive a bonus related to growth in earnings per share over the three years ending 
30 September 2004, share price enhancement from 1 October 2001 to 30 September 2004 and personal
performance. The award assessment date is 30 September 2004. A maximum amount of £500,000 is payable to
BM Thompson and £250,000 each to I Henderson and NP Lingwood.
DIRECTORS’ SHAREHOLDINGS
Ordinary shares of 5p each
30 September 1 October
2002 2001
I Henderson 17,842 17,842
NP Lingwood 5,000 2,500
W Reid - -
JL Rennocks - -
Lord Stewartby 25,000 25,000
AJC Thomas 530,813 530,813
BM Thompson 100,000 75,000
None of the Directors hold any shares non-beneficially. There were no changes to the Directors’ shareholdings
between 30 September 2002 and 18 November 2002.
20 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
REMUNERATION REPORT
c86076 2.Front  27/11/02  3:42 pm  Page 20 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 21
The Directors are required by the Companies Act 1985 to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and
of the profit or loss for the financial year.
The Directors consider that in preparing the financial statements (on pages 22 to 42), the Company has used
appropriate accounting policies, consistently applied, and supported by reasonable and prudent judgements and
estimates, and that all financial reporting standards which they consider to be applicable have been followed.
The Directors have responsibility for ensuring that the Company keeps accounting records which disclose with
reasonable accuracy the financial position of the Company and which enable them to ensure that the financial
statements comply with the Companies Act 1985.
The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other irregularities.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF DIPLOMA PLC
We have audited the financial statements which comprise the profit and loss account, the balance sheets, the cash
flow statement, the statement of total recognised gains and losses, the reconciliation of movements in shareholders’
funds and the related notes which have been prepared under the historical cost convention and the accounting
policies set out in the statement of accounting policies.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors are responsible for preparing the Annual Report. As described above, this includes responsibility for
preparing the financial statements in accordance with applicable United Kingdom law and accounting standards.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements,
UK Auditing Standards issued by the Auditing Practices Board and the Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly
prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is
not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit, or if information specified by law or the
Listing Rules regarding Directors’ remuneration and transactions is not disclosed.
We read the other information contained in the Annual Report and consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements.
We review whether the Corporate Governance statement on pages 17 and 18 reflects the Company’s compliance with
the seven provisions of the Combined Code specified for our review by the Listing Rules, and we report if it does not.
We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or to
form an opinion on the effectiveness of the Company’s or Group’s corporate governance procedures or its risk and
control procedures.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the
preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we
also evaluated the overall adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group
at 30 September 2002 and of the profit and cash flows of the Group for the year then ended and have been properly
prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors, London 18 November 2002
DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL STATEMENTS
c86076 3.Accounts  27/11/02  3:41 pm  Page 21 30 September 2002 30 September 2001
Before Goodwill Before Goodwill
goodwill and goodwill and
and exceptional and exceptional
exceptional items exceptional items
items (note 6) Total items (note 6) Total
Note £m £m £m £m £m £m
Turnover 1
Continuing operations 71.7 71.7 66.3 66.3
Acquisitions 2.0 2.0 - -
73.7 73.7 66.3 66.3
Discontinued operations 1.9 1.9 20.6 20.6
75.6 75.6 86.9 86.9
Operating profit 1,3
Continuing operations 8.2 (0.5) 7.7 8.8 (0.1) 8.7
Acquisitions 0.7 (0.1) 0.6 - - -
8.9 (0.6) 8.3 8.8 (0.1) 8.7
Discontinued operations - - - 0.9 - 0.9
8.9 (0.6) 8.3 9.7 (0.1) 9.6
Non-Operating items 6
Continuing operations – 
Profit on disposal of fixed assets - 1.1 1.1 - 0.1 0.1
Discontinued operations –
Loss on closure of business - (0.6) (0.6) - - -
Profit/(loss) on sale of businesses - 0.3 0.3 - (2.2) (2.2)
8.9 0.2 9.1 9.7 (2.2) 7.5
Interest income 1.0 - 1.0 1.2 - 1.2
Profit/(loss) on ordinary activities 
before tax 9.9 0.2 10.1 10.9 (2.2) 8.7
Taxation 7 (3.0) 0.2 (2.8) (3.2) - (3.2)
Profit/(loss) on ordinary activities 
after tax 6.9 0.4 7.3 7.7 (2.2) 5.5
Minority interests 21 (0.1) (0.1)
Profit for the financial year 7.2 5.4
Dividends 8 (3.0) (3.3)
Retained profit for the year 20 4.2 2.1
Earnings per 5p share 9
On basic and diluted earnings 31.2p 21.5p
On adjusted earnings 29.4p 30.2p
The notes on pages 26 to 42 form part of these accounts.
22 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 30 September 2002
c86076 3.Accounts  27/11/02  3:41 pm  Page 22 Group Company
2002 2001 2002 2001
Note £m £m £m £m
Fixed assets
Intangible assets: Goodwill 10 4.8 2.0 - -
Tangible assets 11 9.8 12.0 - -
Investments 12 - - 51.6 51.6
14.6 14.0 51.6 51.6
Current assets
Stocks 13 14.8 14.3 - -
Debtors 14 12.2 13.5 - -
Cash and bank deposits 15 27.7 31.7 - -
54.7 59.5 - -
Creditors: Amounts falling due within one year 16 (17.3) (16.2) (45.9) (47.4)
Net current assets/(liabilities) 37.4 43.3 (45.9) (47.4)
Total assets less current liabilities 52.0 57.3 5.7 4.2
Provisions for liabilities and charges 17 (0.6) (1.3) - -
51.4 56.0 5.7 4.2
Capital and reserves
Called up equity share capital 19 1.1 1.3 1.1 1.3
Capital redemption reserve 20 0.2 - 0.2 -
Profit and loss account 20 49.6 54.3 4.4 2.9
Shareholders’ funds 50.9 55.6 5.7 4.2
Equity minority interests 21 0.5 0.4 - -
51.4 56.0 5.7 4.2
The financial statements were approved by the Board of Directors on 18 November 2002 and signed on its
behalf by:
BM Thompson Chief Executive
NP Lingwood Finance Director
The notes on pages 26 to 42 form part of these accounts.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 23
BALANCE SHEETS 
as at 30 September 2002
c86076 3.Accounts  27/11/02  3:41 pm  Page 23 2002 2002 2001 2001
Note £m £m £m £m
Net cash inflow from operating activities 23 9.9 9.4
Returns on investments and servicing of finance
Interest received 1.0 1.2
Equity dividends paid to minority interests - (0.1)
1.0 1.1
Taxation
UK corporation tax paid (2.1) (2.1)
Overseas tax paid (0.8) (0.6)
(2.9) (2.7)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1.3) (1.7)
Proceeds from the sale of tangible fixed assets 3.0 0.8
1.7 (0.9)
Acquisitions and disposals
Acquisition of businesses 22 (2.2) (4.1)
Proceeds from disposal of businesses 22 - 12.9
(2.2) 8.8
Equity dividends paid (3.0) (3.0)
Cash inflow before use of liquid resources and financing 4.5 12.7
Management of liquid resources
Decrease/(increase) in short term deposits 2.6 (28.4)
Financing
Return of capital (8.5) -
Decrease in cash in the year 24 (1.4) (15.7)
The notes on pages 26 to 42 form part of these accounts.
24 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
GROUP CASH FLOW STATEMENT
for the year ended 30 September 2002
c86076 3.Accounts  27/11/02  3:41 pm  Page 24 2002 2001
£m £m
Profit for the financial year 7.2 5.4
Currency translation adjustment on foreign currency net investments (0.7) 0.3
Tax credit/(charge) on foreign exchange adjustment 0.3 (0.1)
Total recognised gains and losses for the year 6.8 5.6
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
for the year ended 30 September 2002
2002 2001
£m £m
Profit for the financial year 7.2 5.4
Dividends (3.0) (3.3)
Retained profit for the year 4.2 2.1
Currency translation adjustments on foreign currency net investments, net of tax (0.4) 0.2
Return of capital (8.5) -
Net (reduction)/increase in shareholders’ funds (4.7) 2.3
Shareholders’ funds at beginning of year 55.6 53.3
Shareholders’ funds at end of year 50.9 55.6
The notes on pages 26 to 42 form part of these accounts.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 25
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 September 2002
c86076 3.Accounts  27/11/02  3:41 pm  Page 25 1 ANALYSIS OF RESULTS
Operating profit
before goodwill Profit/(loss)
amortisation, exceptional before interest
Turnover items and taxation and taxation
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
By Business Segment
Specialised Distribution 73.7 66.3 8.9 8.8 9.4 8.8
Discontinued operations 1.9 20.6 – 0.9 (0.3) (1.3)
75.6 86.9 8.9 9.7 9.1 7.5
By Geographic Area
United Kingdom 39.9 39.6 5.5 5.1 6.6 5.1
Rest of Europe 7.6 7.3 0.9 1.5 0.9 1.5
United States of America 26.2 19.4 2.5 2.2 1.9 2.2
Specialised Distribution 73.7 66.3 8.9 8.8 9.4 8.8
Discontinued operations 1.9 20.6 – 0.9 (0.3) (1.3)
75.6 86.9 8.9 9.7 9.1 7.5
Turnover by geographical area is stated by origin which, with the exception of the USA, is not materially
different from turnover by destination. In the USA, turnover of £3.7m (out of £26.2m) is to customers
based outside Europe and North America.
The Specialised Distribution business segment includes the expenses of the Group head office; in 2001
these were shown in a seperate business segment, together with the results of Williamson Cliff. In 2002
the results of Williamson Cliff are included as discontinued operations; in 2001 discontinued operations
also included Special Steels. The comparative results have been restated accordingly.
Included in Specialised Distribution is turnover and operating profit before goodwill amortisation and
exceptional items of £2.0m and £0.7m, respectively, which relates to acquisitions completed during the
financial year; after goodwill amortisation, profit before interest and taxation relating to acquisitions is
£0.6m.
2 ANALYSIS OF NET ASSETS
2002 2001
Europe USA Total Europe USA Total
By Business Segment £m £m £m £m £m £m
Specialised Distribution 12.8 10.7 23.5 11.9 10.9 22.8
Discontinued operations 1.0 – 1.0 1.4 0.1 1.5
Trading Capital Employed 13.8 10.7 24.5 13.3 11.0 24.3
Net cash 26.1 0.8 26.9 30.7 1.0 31.7
39.9 11.5 51.4 44.0 12.0 56.0
The trading capital employed in Europe includes £3.1m (2001: £1.9m) relating to Continental Europe.
26 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 26 3 OPERATING PROFIT
Continuing Discontinued
operations operations Total
2002 2002 2002 2001
£m £m £m £m
The Group’s results are analysed as follows:
Sales 73.7 1.9 75.6 86.9
Cost of sales (50.1) (1.8) (51.9) (60.1)
Gross profit 23.6 0.1 23.7 26.8
Other operating income 0.2 – 0.2 0.2
Distribution costs (3.7) – (3.7) (3.7)
Administration expenses (11.8) (0.1) (11.9) (13.7)
Operating profit 8.3 – 8.3 9.6
Continuing operations includes turnover of £2.0m, cost of sales of £1.0m and administrative costs of
£0.4m relating to acquisitions completed during the year.
Goodwill amortisation of £0.3m (2001: £0.1m) has been included in administration expenses. Exceptional
costs of £0.6m (2001: £nil) offset by exceptional income of £0.3m (2001: £nil), have been included in
administration expenses.
The Group’s results include charges/(credits) for:
2002 2001
£m £m
Depreciation of tangible fixed assets – annual charge 1.3 1.5
– exceptional write-down – 0.6
Goodwill amortisation 0.3 0.1
Income from property rentals, net (0.2) (0.2)
Expenses of Group head office* 1.5 1.8
Directors’ Long Term Incentive Schemes - 0.2
Auditors’ remuneration
– Group audit fees 0.1 0.1
– Group taxation fees paid to PricewaterhouseCoopers 0.1 0.2
Group audit fees include £2,000 (2001: £2,000) in respect of audit fees for the Company.
* Excluding Directors’ Long Term Incentive Schemes.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 27
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 27 28 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
4 GROUP STAFF COSTS
Group staff costs, including Directors’ emoluments:
2002 2001
£m £m
Wages and salaries 13.5 15.1
Social security costs 1.3 1.4
Other pension costs 0.5 0.6
15.3 17.1
The average number of employees, including Executive Directors, during the year were:
2002 2001
Number Number
Specialised Distribution 498 387
Discontinued operations 54 250
Number of employees – average 552 637
Number of employees – year end 487 562
5 DIRECTORS’ REMUNERATION
Directors’ emoluments and interests are given in the Remuneration Report on pages 19 and 20.
6 GOODWILL AND EXCEPTIONAL ITEMS
Goodwill Exceptional Goodwill Exceptional
amortisation items Total amortisation items Total
2002 2002 2002 2001 2001 2001
£m £m £m £m £m £m
Operating profit
Continuing operations
(a)
(0.3) (0.3) (0.6) (0.1) – (0.1)
Non operating items
Profit on sale of fixed assets – 1.1 1.1 – 0.1 0.1
Loss on closure of business
(b)
– (0.6) (0.6) – – –
Profit/(loss) on sale of businesses
(c)
– 0.3 0.3 – (2.2) (2.2)
(0.3) 0.5 0.2 (0.1) (2.1) (2.2)
Tax credit on exceptional items – 0.2 0.2 – – –
(0.3) 0.7 0.4 (0.1) (2.1) (2.2)
(a) Costs of £0.6m have been incurred in completing a restructuring of the Group’s US operations, of
which £0.4m will be paid in 2002/2003. In addition a provision of £0.3m retained in respect of
certain liabilities relating to a defined benefit pension scheme has been released to profit.
(b) A loss of £0.6m was incurred on closing the business of Williamson Cliff, which was announced on 
28 February 2002.
(c) The profit on sale of businesses comprises £0.3m of proceeds received on closure of a pension
scheme relating to a divested company. The loss on sale of businesses last year relates to the
disposal of Henry Whitham & Son Limited and Carbon & Alloy Inc and the disposal of the businesses
carried on by AG Alloys Limited and Abacon Telecommunications Inc.
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 28 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 29
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
7 TAXATION
(a) Analysis of taxation charge in year:
2002 2001
£m £m
Charge on profit on ordinary activities
UK corporation tax at 30% (2001: 30%) 2.4 2.6
Less: double taxation relief (0.5) (0.1)
1.9 2.5
Overseas tax 0.9 0.7
Taxation charge 2.8 3.2
Classified as:
Trading activities 3.0 3.2
Exceptional items, credit (0.2) –
2.8 3.2
(b) Factors affecting the tax charge for the year:
The tax charge on profit before tax is reconciled to the expected charge based on the standard
corporation tax in the UK as follows:
2002 2001
£m £m
Expected tax charge at 30% 3.0 2.6
Exceptional items relating to capital items (0.3) 0.7
Goodwill amortisation in UK 0.1 –
Differences in overseas taxation rates 0.1 0.1
Tax relief on overseas goodwill (0.1) (0.1)
Prior year items - (0.1)
2.8 3.2
8 DIVIDENDS
2002 2001 2002 2001
pence pence
per share per share £m £m
Interim paid 5.0 5.0 0.9 1.3
Final proposed 9.0 8.0 2.1 2.0
14.0 13.0 3.0 3.3
9 EARNINGS PER ORDINARY SHARE
Basic and Diluted earnings per share
Basic and diluted earnings per ordinary share are calculated on the basis of the weighted average number
of ordinary shares in issue during the year of 23,116,726 (2001: 25,164,345) and the profit for the
financial year, after minority interests, of £7.2m (2001: £5.4m). There were no potentially dilutive shares.
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 29 Adjusted earnings per share
Adjusted earnings per share is shown by reference to earnings before goodwill amortisation, exceptional
items and related tax. The Directors consider that this gives a clearer indication of the underlying
performance of the Group. Earnings before goodwill amortisation, exceptional items and related tax are
calculated as follows:
2002 2001 2002 2001
pence pence
per share per share £m £m
Profit for the financial year, after minority interests 31.2 21.5 7.2 5.4
Goodwill amortisation 1.3 0.4 0.3 0.1
Exceptional items, net of tax (3.1) 8.3 (0.7) 2.1
Adjusted earnings 29.4 30.2 6.8 7.6
10 INTANGIBLE ASSETS: GOODWILL
2002
£m
Cost
At 1 October 2001 2.2
Goodwill arising on acquisitions during the year 3.1
At 30 September 2002 5.3
Amortisation
At 1 October 2001 0.2
Amortisation charge for the year 0.3
At 30 September 2002 0.5
Net Book Value
At 30 September 2002 4.8
At 1 October 2001 2.0
In accordance with the accounting policy for goodwill, described on page 40, goodwill arising on
acquisitions since 1 April 1998 has been capitalised. Goodwill arising on businesses acquired prior to
1 April 1998 amounting to £20.3m (2001: £20.3m) has been written off to reserves in prior years.
30 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 30 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 31
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
11 TANGIBLE ASSETS
Fixtures,
fittings,
Freehold Plant and vehicles &
Group properties machinery equipment Total
£m £m £m £m
Cost
At 1 October 2001 12.0 3.7 6.5 22.2
Foreign exchange adjustments (0.1) (0.1) (0.1) (0.3)
Additions – 0.3 1.0 1.3
Disposals (1.8) (0.5) (0.7) (3.0)
At 30 September 2002 10.1 3.4 6.7 20.2
Depreciation
At 1 October 2001 3.0 3.2 4.0 10.2
Charged in year 0.2 0.2 0.9 1.3
Disposals (0.1) (0.3) (0.7) (1.1)
At 30 September 2002 3.1 3.1 4.2 10.4
Net Book Value
At 30 September 2002 7.0 0.3 2.5 9.8
At 1 October 2001 9.0 0.5 2.5 12.0
Land included above but not depreciated is £2.0m (2001: £2.7m). The net book value of freehold property
includes £0.9m (2001: £2.8m) of properties relating to divested companies. Capital commitments
contracted, but not provided were £0.4m (2001: £0.4m).
12 INVESTMENTS
Company
£m
Shares in Group undertakings
At 1 October 2001 51.6
At 30 September 2002 51.6
Details of the principal subsidiaries are set out on page 42.
13 STOCKS
Group
2002 2001
£m £m
Raw materials and consumables 6.1 5.5
Finished goods and goods held for resale 8.7 8.8
14.8 14.3
14 DEBTORS
Group Company
2002 2001 2002 2001
£m £m £m £m
Trade debtors 11.1 12.2 – –
Other debtors 0.5 0.5 – –
Prepayments and accrued income 0.6 0.8 – –
12.2 13.5 – –
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 31 15 CASH AND BANK DEPOSITS
Group
2002 2001
£m £m
Cash at bank 1.9 3.3
Short term deposits 25.8 28.4
27.7 31.7
16 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
2002 2001 2002 2001
£m £m £m £m
Unsecured Loan Notes 0.8 – – –
Trade creditors 5.9 5.7 – –
Amounts owed to Group companies – – 43.9 45.4
Corporation tax 2.5 2.7 – –
Other creditors 1.4 2.0 – –
Other taxes and social security 0.8 0.9 – –
Proposed dividend 2.0 2.0 2.0 2.0
Accruals and deferred income 3.9 2.9 – –
17.3 16.2 45.9 47.4
During the year, £3.0m Guaranteed Unsecured Loan Notes 2001 - 2003 (“Notes”) were issued as
consideration for the acquisition of Clarendon Engineering Supplies Limited. In September 2002 £2.2m of
these Notes were redeemed by the Noteholder. The Notes bear interest at 0.95% below LIBOR. The Notes
are redeemable at par at the discretion of the Noteholder. Any Notes outstanding on 31 December 2003
will be repaid by the Company.
17 PROVISIONS FOR LIABILITIES AND CHARGES
Group
2002 2001
£m £m
Deferred taxation – –
Provisions 0.6 1.3
0.6 1.3
Deferred tax includes a liability of £0.2m which relates to capital allowances on fixed assets in excess of
depreciation and an asset of £0.2m relating to other timing differences. No provision for deferred taxation
has been made for taxation payable on the distribution of reserves by overseas subsidiary undertakings.
Provisions includes £0.3m (2001: £0.9m) in respect of a pension provision held against a defined benefit
pension scheme. During the year £0.6m was released to profit as exceptional items as described in note 6,
with the remaining £0.3m to be amortised to profit over the average service life of the employees.
Provisions also includes £0.3m (2001: £0.4m) in respect of an onerous property lease. During the year,
£57,000 was utilised and the balance is expected to be utilised over a period of six years.
32 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 32 18 FINANCIAL INSTRUMENTS
Policy
A discussion of the Group’s objectives and policies with regard to financial instruments is set out in the
Finance Director’s Review on page 13. Short term debtors and creditors have been excluded from the
following disclosures, other than the foreign currency disclosures.
Interest rate and currency profile
At the year end, and throughout the year, the Group has maintained cash funds comprising of cash at
bank and short term deposits. The Group has no term borrowing facilities, but maintains ‘on demand’ bank
overdrafts.
2002 2001
Sterling US$ Euro Total Sterling US$ Euro Total
£m £m £m £m £m £m £m £m
Cash at bank 0.8 0.3 0.8 1.9 1.5 1.0 0.8 3.3
Short term deposits 23.8 0.5 1.5 25.8 27.6 – 0.8 28.4
24.6 0.8 2.3 27.7 29.1 1.0 1.6 31.7
Unsecured Loan Notes (0.8) – – (0.8) – – – –
23.8 0.8 2.3 26.9 29.1 1.0 1.6 31.7
The short term deposits, cash at bank and Unsecured Loan Notes are all interest bearing at rates linked to
LIBOR.
Net foreign currency monetary assets/(liabilities) at 30 September 2002 and 2001
After taking account of short term debtors and creditors, at 30 September 2002 the Group had foreign
currency monetary assets comprising outstanding forward foreign exchange contracts in aggregate of
£4.5m (2001: £nil), of which £3.1m related to Euros, £0.7m to US$ and £0.7m to Yen.
Fair values of financial instruments
At 30 September 2002 and 2001 there was no material difference between the book value and the fair
value of the Group’s financial assets and liabilities.
19 SHARE CAPITAL
2002 2001 2002 2001
Authorised Number Number £m £m
Ordinary shares of 5p each 35,000,000 35,000,000 1.7 1.7
Allotted, issued and fully paid
Equity – Ordinary shares of 5p each 22,647,911 25,164,345 1.1 1.3
On 7 December 2001, the Company repurchased and cancelled 2,516,434 Ordinary shares of 5 pence each,
representing 10% of the Company’s issued share capital.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 33
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 33 20 RESERVES
Capital Profit and
redemption loss
reserve account Total
£m £m £m
Group
At 1 October 2001 – 54.3 54.3
Retained profit for the year – 4.2 4.2
Repurchase and cancellation of ordinary shares – (8.3) (8.3)
Transfer to capital redemption reserve 0.2 (0.2) –
Exchange loss, net of tax – (0.4) (0.4)
At 30 September 2002 0.2 49.6 49.8
Company
At 1 October 2001 – 2.9 2.9
Retained profit for the year – 10.0 10.0
Repurchase and cancellation of ordinary shares – (8.3) (8.3)
Transfer to capital redemption reserve 0.2 (0.2) –
At 30 September 2002 0.2 4.4 4.6
On 7 December 2001, the Company repurchased and cancelled 2,516,434 Ordinary shares of 5 pence each.
The shares were purchased out of distributable profits for £8.5m, including expenses. An amount equal to
the nominal value of the shares purchased has been transferred to a capital redemption reserve. 
At 30 September 2002, goodwill written off directly against profit and loss account reserves amounted to
£20.3m (2001: £20.3m).
21 MINORITY INTERESTS
Group
£m
At 1 October 2001 0.4
Dividends –
Share of profit for the year 0.1
At 30 September 2002 0.5
34 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 34 22 BUSINESS ACQUISITIONS AND DISPOSALS
On 20 December 2001, the Group acquired the whole of the share capital of Clarendon Engineering
Supplies Limited (“Clarendon”) for £3.3m, net of cash acquired of £0.2m. On 1 April 2002, the Group
acquired the trade and certain assets and liabilities of Dowatronic-Kabelsysteme GmbH (“Dowatronic”) 
for £0.2m.
Cash flows in respect of acquisitions and disposals comprise:
Acquisitions Disposals
2002 2001 2002 2001
£m £m £m £m
Tangible fixed assets – 0.1 – (3.4)
Stocks 0.3 1.6 – (10.9)
Debtors 0.2 1.6 – (5.8)
Creditors (0.1) (0.5) – 3.7
Taxation – – – 0.4
Minority’s share of net assets in subsidiaries – 0.8 – 0.7
Net assets acquired/(disposed) 0.4 3.6 – (15.3)
Net loss on disposal of businesses – – – 2.2
Goodwill arising on acquisitions/disposal 3.1 0.5 – 0.2
Net assets acquired/(disposed) 3.5 4.1 – (12.9)
Cash paid/(received) 2.4 2.8 – (12.0)
(Cash)/overdraft acquired/(sold) (0.2) 1.3 – (0.9)
Cash paid/(received), net of expenses 2.2 4.1 – (12.9)
Loan Notes issued and outstanding 0.8 – – –
Deferred consideration 0.5 – – –
Total consideration paid/(received) 3.5 4.1 – (12.9)
The fair value of assets acquired are set out above.
The book value of assets acquired in respect of Clarendon was £0.4m and fair value adjustments of £0.1m
were made to reduce the carrying value of stock and debtors to bring the provisions into line with the
Group’s accounting policies. The book value of assets acquired in respect of Dowatronic was £0.1m.
Goodwill of £3.0m arose on the acquisition of Clarendon, and £0.1m arose on the acquisition of
Dowatronic.
Deferred consideration of £0.4m is payable on the acquisition of Clarendon based on the performance of
the company during the year ended 30 September 2002. This will be satisfied by the issue of a further
£0.4m of Loan Notes. Deferred consideration of £0.1m is payable on the acquisition of Dowatronic based
on the sales performance of the business during the period ending 31 March 2004.
These transactions have been accounted for as acquisitions and consolidated in the financial statements
from the date of acquisition.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 35
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 35 23 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES
2002 2001
£m £m
Operating profit 8.3 9.6
Depreciation 1.3 1.5
Amortisation of goodwill 0.3 0.1
Increase in stocks (0.9) (1.8)
Decrease/(increase) in debtors 1.1 (1.6)
Increase in creditors 0.8 0.7
(Decrease)/increase in provisions (0.7) 0.9
Costs incurred on business closure/sale, net (0.3) -
Net cash inflow from operating activities 9.9 9.4
The net cash inflow from operating activities of £9.9m (2001: £9.4m) includes £nil (2001: £0.8m)
relating to discontinued businesses.
24 RECONCILIATION OF NET CASH FLOWS TO THE MOVEMENT IN NET FUNDS
2002 2001
£m £m
Decrease in cash in the year (1.4) (15.7)
(Decrease)/increase in short term deposits (2.6) 28.4
Change in net funds resulting from cash flows (4.0) 12.7
Increase in debt due within one year (0.8) –
Exchange adjustment – (0.1)
Net funds at start of year 31.7 19.1
Net funds at end of year 26.9 31.7
25 ANALYSIS OF NET FUNDS
Other 
1 October non-cash Exchange 30 September
2001 Cash flow movement movement 2002
£m £m £m £m £m
Cash at bank and in hand 3.3 (1.4) – – 1.9
Short term deposits 28.4 (2.6) – – 25.8
31.7 (4.0) – – 27.7
Guaranteed Unsecured Loan Notes 2001-2003 – – (0.8) – (0.8)
Net funds 31.7 (4.0) (0.8) – 26.9
36 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 36 26 PENSION SCHEMES
The Group operates a number of pension schemes in the UK of both the defined benefit and defined
contribution type. The defined benefit schemes are generally non-contributory schemes covering
employees of certain subsidiaries, and the assets of these schemes are held in separate trustee
administered funds. The schemes are funded in accordance with rates recommended by independent
qualified actuaries on the basis of triennial or shorter period reviews using the projected unit method. All
of the schemes were fully funded at the date of their last actuarial review.
The two principal defined benefit schemes operated by the Group (”the Principal Schemes“) are the
Diploma Holdings PLC Permanent Staff Pension and Assurance Scheme (”the PLC Scheme“) and the
Anachem Limited Retirement Benefits Scheme (”the Anachem Scheme“).
Actuarial Valuations
The PLC Scheme is a hybrid scheme with a closed defined benefit section and a defined contribution
section. The accrual of benefits on a final salary basis ceased from 5 April 2000 and the Group does not
currently contribute to the defined benefit section. An actuarial valuation of the defined benefit section
of the PLC Scheme was carried out as at 6 April 2000. The principal actuarial assumptions adopted were
that, over the long term, the annual rate of return on investments would be 4% higher than both the
annual increase in present and future pensions, and in retail inflation. The market value of the assets at
the date of valuation was £6.8m. The actuarial valuation showed assets sufficient to cover 114% of the
liabilities of the PLC Scheme. The next valuation will be carried out based on the position at 6 April 2003.
The Anachem Scheme was actuarially valued as at 5 April 2001 using the projected unit method. The
principal actuarial assumptions adopted were that, over a long term, the annual investment return would
be 3.25% greater than the increase in pensionable remuneration, 3.75% greater than both the increase in
present and future pensions, and in retail inflation. The market value of the assets at the date of the
valuation was £4.2m. The actuarial valuation showed assets sufficient to cover 108% of the benefits
accruing to members of the Anachem Scheme. The next valuation will be carried out based on the
position at 5 April 2004.
The Group’s total pension charge, before exceptional items, was £0.5m (2001: £0.6m) of which £0.3m
(2001: £0.3m) related to the defined benefit schemes.
FRS 17 Accounting
The aggregate fair value of the assets held by the Principal Schemes at 30 September 2002 and 2001 and
the expected rate of return assumed for the next year are as follows:
Fair value Expected rate of return
2002 2001 2002 2001
£m £m
Equities 4.4 4.6 8.5% 8.0%
Bonds 0.6 0.7 5.5% 6.0%
Cash 2.6 4.2 4.0% 4.0%
7.6 9.5
On an FRS 17 basis, the major assumptions used by the actuaries of the Principal Schemes to calculate
the scheme liabilities at 30 September 2002 and 2001 were:
2002 2001
Inflation 2.25% 2.50%
Rate of increase in pensionable pay 3.75% 4.00%
Rate of increase in pensions in payment 2.25% 2.50%
Rate used to discount scheme liabilities 5.50% 6.00%
At 30 September 2002, the present value of scheme liabilities using these assumptions was £12.6m
(2001: £11.0m). The implied deficit in the Principal Schemes on an FRS 17 basis is £5.0m (2001: £1.5m).
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 37
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 37 38 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
If the above amounts had been recognised in the financial statements, the Group’s shareholders’ funds
and profit and loss reserve at 30 September 2002 and 2001 would have been as follows:
Shareholders’ Funds Profit and Loss Reserve
2002 2001 2002 2001
£m £m £m £m
As reported – excluding pension deficit 50.9 55.6 49.6 54.3
Reverse SSAP 24 accounting provision 0.3 0.9 0.3 0.9
Pension deficit (5.0) (1.5) (5.0) (1.5)
Related deferred tax asset 1.5 0.5 1.5 0.5
Restated – including pension deficit 47.7 55.5 46.4 54.2
In respect of the Principal Schemes, the following amounts would have been recognised in the primary
financial statements in the year ended 30 September 2002 under the requirements of FRS 17:
Profit and Loss Account
2002
£m
Operating profit:
Current service cost (0.3)
Other finance income/(expense):
Expected return on pension scheme assets 0.6
Interest on pension scheme liabilities (0.8)
(0.2)
Net charge in profit and loss account (0.5)
Statements of Total Recognised Gains and Losses (“STRGL”)
2002
£m
Actual return less expected return on pension scheme assets (1.5)
Experience gains and losses arising on the scheme liabilities (0.6)
Change in assumptions at 30 September 2002 underlying the present value of the
scheme liabilities (1.1)
Actuarial loss recognised in the STRGL (3.2)
The movement in the overall pension deficit, calculated in accordance with the method prescribed in FRS17,
is as follows:
£m
Deficit in the Principal Schemes at beginning of year: (1.5)
Current service cost (0.3)
Employer contributions 0.2
Other finance expense (0.2)
Actuarial loss recognised in STRGL (3.2)
Deficit in the Principal Schemes at end of year (5.0)
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 38 Set out below are details of experience gains and losses in respect of the Principal Schemes for the year
ended 30 September 2002:
£m
(a) Difference between the expected and actual return on scheme assets: (1.5)
— as a percentage of scheme assets 20%
(b) Experienced gains and losses of scheme liabilities: (0.6)
— as a percentage of scheme liabilities 5%
(c) Amount recognised in STRGL (3.2)
— as a percentage of scheme liabilities 25%
27 SUBSEQUENT EVENT
On 5 November 2002 the Group disposed of seven acres of land situated in Stamford owned by a
subsidiary company for cash proceeds of £2.6m, before expenses. The net book value of the land was
negligible.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2002
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 39
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 39 40 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
GROUP ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements are prepared under the historical cost convention and in accordance with
applicable accounting standards, all of which, with the exception of the accounting policy on deferred
taxation, have been applied consistently throughout the year and the preceding year. FRS 19 ‘Deferred
Taxation’ has been adopted with effect from 1 October 2001 and represents a change in accounting policy.
However this has had no impact on profit for the current year, or the previous year, or on shareholders’
funds and consequently the comparative figures have not required restatement. In addition the Directors
continue to implement FRS 17 ‘Retirement Benefits’ in accordance with the transitional arrangements set
out in this Standard and the disclosure requirements are set out in note 26 of these financial statements.
CONSOLIDATION
The Group financial statements consolidate the accounts of the Company and its subsidiary undertakings,
the principal of which are set out on page 42. The results of businesses acquired or sold during the year
are included in the Group financial statements from the date of acquisition or to the date of disposal. A
separate profit and loss account is not presented for Diploma PLC as permitted by S230 of the Companies
Act 1985.
GOODWILL
On the acquisition of a subsidiary, business or associate, fair values are attributed to the net assets
acquired. Where the fair value of the consideration exceeds the aggregate value of these assets, the
difference is treated as goodwill. In accordance with FRS 10, goodwill arising on acquisitions since 1 April
1998 is capitalised on the Group balance sheet and amortised in equal instalments over its useful
economic life. In the absence of indications to the contrary, the useful economic life is assumed to be no
more than 20 years. As permitted by the transitional provisions of FRS 10, goodwill that arose on
businesses acquired prior to 1 April 1998 will, to the extent not already charged against operating profit,
remain written off to reserves. In the event of subsequent disposal of any of these businesses, the
attributable goodwill will be taken into account in determining the profit or loss on sale. A credit of
equal amount to reserves will ensure that there is no impact on shareholders’ funds.
A review for the potential impairment of capitalised goodwill is carried out if events or changes in
circumstances indicate that the carrying amount of that goodwill may not be recoverable. Such
impairment reviews are performed in accordance with FRS 11. Impairments are recorded in the profit and
loss account.
TURNOVER
Turnover represents the values of goods and services sold to third parties, excluding taxes.
TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at cost less accumulated depreciation and provision for impairment. A
review for the potential impairment of a tangible fixed asset is carried out if events or changes in
circumstances indicate that the carrying amount of a tangible fixed asset may not be recoverable. Such
impairment reviews are performed in accordance with FRS 11. Impairments are recorded in the profit and
loss account.
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 40 GROUP ACCOUNTING POLICIES
DEPRECIATION
Depreciation is provided on all tangible fixed assets except freehold land, at annual rates calculated to
write-off the cost of each asset over its estimated useful life on a straight line basis. The estimated
useful lives range from four to eight years with the exception of freehold buildings, which are depreciated
over 50 years and leasehold property, which is depreciated over the period of the lease.
INVESTMENTS
All investments are stated at cost. Provision is made to reflect any impairment in the carrying value of a
subsidiary in accordance with FRS 11. Impairments are recorded in the profit and loss account.
STOCKS
Stocks are stated at the lower of cost and net realisable value.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed by
the balance sheet date and which could give rise to an obligation to pay more or less tax in the future.
Deferred tax assets are recognised to the extent that they are expected to become recoverable.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the
periods in which timing differences reverse.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated into sterling at the rates ruling at
the end of the financial year except when covered by an open foreign exchange contract in which case
the rate of exchange specified in the contract is used.
Profits and losses on exchange arising from the retranslation of the opening balance sheets of overseas
subsidiary undertakings at the beginning of the year, or the date of acquisition, where later, and any
foreign currency borrowings used to finance or hedge long term foreign investments are taken directly to
reserves. The results of overseas subsidiary undertakings are translated into sterling at average rates for
the year.
Transactions in foreign currencies are translated at the rate of exchange ruling at the date of transactions,
or where applicable, the contracted rate. All profits and losses on exchange are credited or charged to
operating profit.
FINANCIAL INSTRUMENTS
Gains and losses on forward foreign exchange contracts, which hedge future purchases and sales
denominated in foreign currencies, are taken to the profit and loss account on maturity to match the
underlying transactions.
The disclosures required under FRS 13 “Derivatives and Other Financial Instruments: Disclosures” relating
to the management of financial instruments and their impact on the Group’s risk profile, performance and
financial condition are set out in note 18 to the financial statements.
LEASED ASSETS
Rentals arising on operating leases are charged in the profit and loss account on a straight line basis over
the lease term.
PENSIONS
The Group operates defined benefit and defined contribution pension schemes. The expected costs of the
defined benefit schemes are charged against profit so as to spread the cost of pensions over the service
lives of the employees in the schemes. Variations from the regular cost are spread over the expected
remaining service lives of employees in each scheme. Contributions to the defined benefit schemes are
determined on the basis of professional actuarial advice in accordance with statutory requirements.
Payments to defined contribution schemes are charged against profit as incurred.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 41
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 41 Group Country of
percentage of incorporation or
equity capital registration
SPECIALISED DISTRIBUTION
Life Sciences
Anachem Limited* 100% England
a1 technologies GmbH 100% Germany
Seals Components
Hercules Bulldog Sealing Products Incorporated 100% USA
Fluid Power Equipment Limited* 80% England
Interconnect
IS Rayfast Limited 100% England
IS Motorport Incorporated 100% USA
Clarendon Engineering Supplies Limited 100% England
Sommer GmbH 100% Germany
OTHER COMPANIES
Diploma Holdings PLC 100% England
Diploma Holdings Incorporated 100% USA
Williamson Cliff Limited* 100% England
The companies marked* are directly held by Diploma Holdings PLC, the sole subsidiary of Diploma PLC. 
A full list of subsidiaries will be annexed to the next Annual Return of Diploma PLC to be filed with the
Registrar of Companies.
FINANCIAL CALENDAR AND SHAREHOLDER INFORMATION
Announcements (provisional dates)
Half Year results announced 12 May 2003
Full Year results announced 17 November 2003
Annual Report and Accounts posted to shareholders 1 December 2003
Annual General Meeting 7 January 2004
Dividends (provisional dates)
Interim announced 12 May 2003
Paid 1 July 2003
Final announced 17 November 2003
Paid (if approved) 20 January 2004
Report and Accounts: Copies can be obtained from the Company Secretary at the address shown below.
Share Registrar – Computershare Services PLC: The Company’s Registrar is Computershare Services PLC,
PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH. Telephone: 0870 7020010.
Shareholders’ enquiries: If you have any enquiry about the Company’s business or about something
affecting you as a shareholder (other than questions dealt with by Computershare Services PLC) you are
invited to contact the Company Secretary at the address shown below.
Secretary and Registered Office:
N P Lingwood ACA, 20 Bunhill Row, London EC1Y 8UD. Telephone: 020 7638 0934. Fax: 020 7638 7651.
Registered in England and Wales, number 3899848.
Web site: Diploma’s web site is www.diplomaplc.com
42 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
PRINCIPAL SUBSIDIARIES
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 42 Notice is hereby given that the Annual General Meeting of Diploma PLC will be held on Wednesday, 
8 January 2003 at 11.00 a.m. in The Members’ Room, Chartered Accountants’ Hall, Moorgate Place,
London EC2P 2BJ to consider, and if thought fit, approve the following resolutions which will be proposed
as to resolutions numbered 1 to 6 (inclusive) as Ordinary Resolutions and as to resolution number 7 as a
Special Resolution:
ORDINARY BUSINESS
1. THAT the audited accounts of the Company for the year ended 30 September 2002, together with the
Reports of the Directors and Auditors, be received and adopted by the members.
2. THAT a final dividend of 9.00p per share be declared on the Ordinary Share Capital of the Company
for the year ended 30 September 2002.
3. THAT the auditors, PricewaterhouseCoopers, be re-appointed and the Directors authorised to fix their
remuneration.
4. THAT Mr AJC Thomas who retires as a Director by rotation, be re-appointed as a Director.
5. THAT Mr BM Thompson who retires as a Director by rotation, be re-appointed as a Director.
6. THAT Mr JL Rennocks, having been appointed to the Board since the last Annual General Meeting, be
re-appointed as a Director.
SPECIAL BUSINESS
7. THAT the Company be and is hereby authorised to make market purchases (within the meaning of
Section 163(3) of the Companies Act 1985) of Ordinary Shares of 5p each in the capital of the
Company (“Ordinary Shares”) provided that:
(i) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is
2,264,791 or, if less, 10% of the Company’s issued Ordinary Share Capital at the date of this
meeting;
(ii) the minimum price which may be paid for such Ordinary Shares is 5p per share;
(iii) the maximum price which may be paid for such Ordinary Shares is 5% above the average of the
middle market quotations of the Ordinary Shares derived from The London Stock Exchange Daily
Official List for the 5 business days immediately preceding the day on which the Ordinary
Shares are contracted to be purchased;
(iv) the authority hereby conferred shall expire on the earlier of 8 April 2004 and the conclusion of
the next Annual General Meeting of the Company, unless such authority is renewed, revoked or
varied prior to such expiry; and
(v) the Company may make a contract or contracts to purchase Ordinary Shares under the authority
hereby conferred prior to the expiry of such authority which will or may be executed wholly or
partly after the expiry of such authority, and may make a purchase of Ordinary Shares in
pursuance of any such contract or contracts.
By Order of the Board,
NP Lingwood, Secretary 20 Bunhill Row,
18 November 2002 London EC1Y 8UD
Notes
1 A member of the Company who is entitled to attend and vote is entitled to appoint one or more proxies to attend and vote
on a poll in his stead. A proxy need not be a member of the Company. To be effective, instruments of proxy must be received
by the Company’s Registrars, Computershare Services PLC, PO Box 1075, The Pavilions, Bridgwater Road, Bristol BS99 3FA, not
less than 48 hours before the time appointed for holding the meeting.
2 The appointment of a proxy does not prevent a member who so wishes from attending the meeting and voting in person.
3 There will be available at the Company’s registered office during usual business hours, and also on the day, and at the place,
of the meeting from 10.45 a.m. until its conclusion:
(i) the register of directors’ interests in the shares of the Company and its subsidiaries;
(ii) the service contracts of Mr BM Thompson, Mr I Henderson and Mr NP Lingwood.
4 To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a person
entitled to attend and vote may cast), a person must be entered on the register of holders of the ordinary shares of the
Company by no later than 11.00 a.m. on the 6 January 2003, being 48 hours before the time fixed for the meeting. Changes
to entries on the register after this time shall be disregarded in determining the rights of any person to attend or vote at the
meeting.
DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002 43
NOTICE OF ANNUAL GENERAL MEETING
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 43 2002 2001 2000 1999 1998
£m £m £m £m £m
Turnover
– Continuing operations 73.7 66.3 58.4 52.8 47.5
– Discontinued operations 1.9 20.6 35.2 189.2 245.4
75.6 86.9 93.6 242.0 292.9
Operating profit before goodwill and exceptional items
– Continuing operations 8.9 8.8 7.8 8.0 7.4
– Discontinued operations – 0.9 0.3 2.9 11.7
8.9 9.7 8.1 10.9 19.1
Interest income/(costs), net 1.0 1.2 2.3 0.1 (0.5)
Profit before tax and exceptional items 9.9 10.9 10.4 11.0 18.6
Goodwill amortisation (0.3) (0.1) – – –
Exceptional credits/(charges), net 0.5 (2.1) (1.9) 9.2 (5.6)
10.1 8.7 8.5 20.2 13.0
Taxation (2.8) (3.2) (4.2) (3.8) (6.6)
Profit after tax 7.3 5.5 4.3 16.4 6.4
Capital structure
Shareholders’ funds 50.9 55.6 53.3 93.9 81.9
Minority interest 0.5 0.4 1.8 3.2 2.5
Less: net cash (26.9) (31.7) (19.1) (19.9) –
Trading capital employed 24.5 24.3 36.0 77.2 84.4
Cash flow from – operating activities 9.9 9.4 10.3 20.9 22.2
Cash flow from – (acquisitions)/disposals of businesses (2.2) 8.8 43.9 16.6 3.7
Per ordinary share (pence)
Basic earnings 31.2 21.5 10.5 32.0 11.1
Adjusted earnings 29.4 30.2 18.0 14.0 21.9
Dividends 14.0 13.0 12.0 9.0 14.5
Net assets 225 221 211 187 163
Dividend cover 2.1 2.3 1.5 1.6 1.5
Ratios % % % % %
Return on trading capital employed 20.3 21.7 14.4 10.3 16.8
Operating profit/sales – continuing operations 12.1 13.3 13.4 15.2 15.6
Notes
1 Shareholders’ funds represent share capital and reserves.
2 Net cash includes cash at bank and short term deposits less bank overdrafts and loan notes.
3 Trading capital employed is defined as net assets less net funds plus minority interests.
4 Return on trading capital employed represents operating profit as a percentage of trading capital employed (as adjusted for the effect of the
timing of major acquisitions and disposals) including all goodwill arising on acquisitions (whether capitalised or charged to reserves).
5 Adjusted earnings per share is calculated in accordance with note 9 to the financial statements. Comparatives have not been restated to take
account of the returns of capital.
6 Net assets per share have been calculated by dividing shareholders’ funds by the number of ordinary shares in issue at the year end.
7 Dividend cover is calculated on Adjusted earnings as defined in note 9 to the financial statements.
8 Comparatives have not been restated for the impact of new Financial Reporting Standards.
9 In April 2000, a return of capital was completed by means of a Scheme of Arrangement. This achieved the result of returning £50.3m of capital
to shareholders while reducing the number of shares in issue to 25.2m shares. In December 2001 a further 2.5m shares were repurchased
reducing the number of shares in issue to 22.6m shares.
10 The divestment of the Special Steels Division and Abacon Telecommunications was completed in the year ended 30 September 2001. The
divestment of the Electronic Components Division and Robert Lee was completed in the year ended 30 September 2000. The divestment of 
IG and South Hills Datacomm was completed in the years ended 30 September 1999 and 1998 respectively.
44 DIPLOMA PLC ANNUAL REPORT AND ACCOUNTS 2002
FIVE YEAR RECORD
c86076 4.Notes_to_End  27/11/02  3:41 pm  Page 44 Designed by BHX Communications Limited 0121 444 1119.  Produced by Imprima De Bussy Limited 020 7902 7200.
Document1  27/11/02  3:49 pm  Page 4 DIPLOMA PLC
20 Bunhill Row
London
EC1Y 8UD
www.diplomaplc.com
Tel 020 7638 0934
Fax 020 7638 7651
Document1  27/11/02  3:49 pm  Page 2