Good morning, everyone. Great to have you with us. Thanks for joining. I'm here, as usual, with our Finance Director, Barbara Gibbes. For the agenda for today, I'll start with an overview. Barbara will then take you through the numbers and our prospects for the year ahead, and then I'll come back to update you on progress with our strategy. There'll be plenty of time for questions, as usual, at the end. Let's get straight into it. It's been a really successful year for Diploma. We've made great progress with our performance and our strategic goals. I want to thank all my Diploma colleagues for their huge commitment this year. I also want to thank our management teams for their agility, structure, and accountability, leading our people and businesses successfully through the pandemic.
More broadly, I'm really pleased with progress in developing our talent, structures, and culture as the organization scales. Delivering value responsibly, our ESG program has progressed significantly and is increasingly embedded in our businesses. We continue to focus on developing high-quality, scalable businesses for organic growth. Hard work on our revenue initiatives, together with an improved demand environment, have delivered really strong growth across all our sectors. Our value-add distribution model, together with rigorous operational management, have enabled us to successfully navigate the challenges of a tight labor market, supply chain disruption, and inflation. This ensured both customer fulfillment and strong margins in the year. We are excited about the opportunity to drive organic growth and create value through acquisitions. We do that with a disciplined approach to building the portfolio around high-quality, scalable businesses.
We made 10 strategically important acquisitions in the year, spending around GBP 450 million and including five completed in the final quarter. We also disposed of two small non-core businesses. Our largest acquisition, Windy City Wire, delivered an outstanding performance well ahead of our business plan. To summarize, we have a great team, the results for the year are very strong, the strategy is clear and working, and we have a conservative balance sheet. We move forward well-positioned for long-term growth at sustainably high margins. A few words on delivering value responsibly, our ESG program. We've established a clear ESG framework and metrics built around five focus areas, colleague engagement, health and safety, diversity, equity, and inclusion, supply chain, and the environment. My Diploma colleagues have been absolutely brilliant this year in difficult circumstances.
Our 79% engagement score in our first group engagement survey is above industry averages and underscores our colleagues' strong affiliation to their businesses. It's also an affirmation of how we have prioritized their well-being during the pandemic. We have defined our positive impact revenues, our products and services that benefit society or the environment, and we'll focus on growing in these areas. We are working with our supply partners to ensure we have a sustainable supply chain. Increasingly, our operations are embedding environmental considerations into their standard processes. Over the next year, we will be setting robust targets. We can make a meaningful difference by embedding DVR within our commercial and operational activity. More on this later. Our results for the year were very strong across all the key metrics of our financial model.
We are pleased with our underlying growth of 12%, reflecting not only the improved demand environment, but also hard work on our growth initiatives. Reported growth of 46% represents a step change in scale with 10 high-quality, strategically important acquisitions in the year. Windy City Wire's performance was outstanding. Despite the inflationary environment, our margins are encouraging at 18.9%, up 270 basis points on last year. Our EPS growth is therefore 50%, and our proposed full-year dividend growth is 42%. Cash flow conversion of over 100 was excellent. The quality of our acquisitions performance has improved our return on capital from 16.5% at the half-year to 17.4%. Finally, we have a conservative balance sheet giving us flexibility for future acquisitions. Overall, a very strong performance. Barbara will now take you through the financials.
Thank you, Johnny. Good morning, everyone. We have delivered a strong set of financial results for 2021. Johnny has already walked you through the highlights. I will tell you more about what has driven our revenue growth, margin expansion, and very strong cash conversion in the following slides, starting with revenues. Overall, our reported revenues have increased by 46% in 2021 to GBP 787 million. Underlying growth was 12%, resulting from strong trading performances in all three sectors. I'm particularly pleased to be able to report underlying growth of 7% versus 2019. Acquisitions contributed a material 38%, while foreign exchange translation was a 4% headwind. Breaking it down by sector means underlying growth rates were 16% for Controls, 7% for Seals, and 14% for Life Sciences. There are three key drivers of this performance.
Firstly, we are focused on organic revenue initiatives as we continue to diversify our businesses, increase our penetration of existing markets, and expand our addressable markets. Secondly, we have capitalized on the return of demand, which accelerated sharply into the second half with a spike in Q3. Third, our underlying growth also benefits from the organic growth contributed by recent acquisitions under our ownership. You'll all be very well aware of the current inflationary environment. All of our businesses have worked extremely hard to mitigate the impact on customers through excellent supply chain management. Where this has not been possible, our value-add proposition means that we can pass on price increases and protect our margins. Around one-third of our 12% underlying growth relates to price increases, two-thirds to volume growth. Moving on now to talk about the impact of COVID on our growth performance.
It's worth reflecting on underlying growth rates before, during, and after COVID, which is what we are showing here. Mid-single digit underlying growth is normal for Diploma. That is what we delivered in 2019. It's also what we expect for 2022, mid-single digit underlying growth. This growth will be weighted to the first half. Let's have a look at the margin next. In 2021, we've increased our operating margin by 270 basis points from 16.2% to 18.9%. Versus 2019 the margin is 110 basis points higher. This margin expansion has been driven as follows. Our management teams work exceptionally hard to contain inflationary pressures. Where that is not possible, with the benefits of the value-add proposition, we can pass price increases to our customers. This pricing power sustains our margins.
We've benefited from operating leverage as volumes have increased. Throughout the year we have controlled our operating expenditure, some of it depressed because of continuing Covid travel restrictions. We've benefited from the accretive impact of acquisitions in the current year, particularly Windy City Wire. Finally, we have then carefully reinvested in operating expenditure and will continue to do so into 2022 in order to sustain our business model as we scale. Now let's take a look at the financial performance of the individual sectors. Our Controls sector posted an underlying growth rate of 16%. International Controls delivered 8% underlying growth, a strong performance, and we were really pleased to see our international Controls businesses back in growth over 2019 by the end of the year. This was driven by our organic revenue initiatives, which have resulted in strong growth outside of civil aerospace.
We remain confident in the long-term prospects for aerospace and our businesses are positioned to take market share as demand improves. From a margin perspective, International Controls improved its margin after last year's restructuring activities and then benefited from operating leverage as volumes returned. The control sector margin also benefited from the accretive impact of Windy City. Turning to the seals sector, underlying growth was 7%, a strong performance given the sector's resilience during COVID. North American seals grew by 5% with the Louisville facility coming on stream and international seals, which has been very successful in diversifying its end segments, grew by 9%. The seals margin increased to 17.6% with good operational leverage offsetting investments in facility and growth. Finally, Life Sciences was the sector to show a V-shaped recovery after COVID, regaining access to hospitals and laboratories.
Underlying growth for the sector was 14%, helped by GBP 9 million of ventilator sales, which will not recur in 2022. We're yet to see a meaningful contribution from elective surgical backlogs, but expect this to support growth over the next few years. The operating margin was very strong at 23.9%, reflecting a combination of lower than usual travel costs and good operating leverage. Let's look at the items further down the income statement that we haven't covered yet. Interest expense has increased in line with the increased leverage following the Windy City Wire acquisition at the beginning of the year. The average interest rate is 2.3%. The effective tax rate has increased to just over 25% as a result of a greater U.S. weighting in our profit mix.
EPS grew very strongly over 50% higher year-on-year, and the total dividend has increased 42% to GBP 0.426 for the full year, thereby maintaining 2x dividend cover. Let's have a look at net debt and cash flow. Our cash flow conversion has been really strong at 103%. This was driven by good working capital management with debtor days lower year-on-year. We also benefit from a cash tax rate of 17%. We have been, and will continue to invest selectively in stock given market conditions. Next year's cash conversion may be a fraction below 2021, but still in line with our financial model of around 90%. Excluding Windy City Wire, our net M&A spend in the year was GBP 96.9 million, which includes gross acquisition spend of GBP 105 million.
During the second half, we invested over GBP 50 million in five high-quality acquisitions to accelerate our growth. We also received proceeds of GBP 12 million from the sale of a non-core business in Life Sciences. Our second disposal for a similar amount completed following the year-end, so the proceeds are not included. Net debt ended the year at GBP 181 million or 1.1 times EBITDA. At the half year we guided to leverage of below one times. If we exclude the H2 acquisitions, we would have been at 0.8 times as we deleveraged faster than expected. This gives us good headroom and flexibility to invest in further acquisitions. Let's have a closer look at the built-in acquisition spend of around GBP 100 million.
When we put in the capital structure to finance the Windy City Wire acquisition, we deliberately built in enough flexibility to continue with the deployment strategy of adding value-add built on acquisitions that build scalable businesses and accelerate underlying growth. Our approach to acquisitions remains disciplined. First of all, investments need to fit strategically, and we have financial hurdle rates. We've had success for you in this respect, with acquisitions in the year adding GBP 90 million of annualized revenues, and we have achieved this by remaining financially disciplined, paying a modest average multiple of around 7x. During 2021, excluding Windy City Wire, we have made nine acquisitions, five of which were in H2. We have deployed our capital across all three sectors and all offer strong growth and returns characteristics.
Our disciplined portfolio approach applies to existing as well as future investments, and consequently, we have disposed of two s mall non-core businesses, one in life sciences in Q4 and another in International Sales after year-end. We ended the year with good capacity for future investment. Finally, I wanted to comment on current trading and our outlook. We're working very hard to manage the continuing supply chain and labor disruption and inflation, and all three sectors are seeing good trading trends coming into 2022. We are positive about our outlook and expect mid-single-digit underlying growth for the full year. Remember that this will be H1 weighted. The net impact of the acquisitions and disposals we have made in 2021 will add around 5% to 2022 revenue.
Overall, we therefore expect reported revenue growth to be broadly in line with our financial model at 10% at a continuing high double-digit margin of 18%-19%. Cash conversion will be closer to our long-term financial model. Despite the uncertainties, our outlook for the year ahead is very positive.
Thank you, Barbara. A reminder now of our strategy. It's clear, unchanged, and exciting. We are building high-quality, scalable businesses for organic growth. We'll do this by diversifying our businesses. There is significant opportunity for complementary acquisitions to accelerate our organic growth. As a group, we will focus our organic and inorganic growth around scalable business lines. To execute our value-add business model at scale, we will continuously improve the core competencies of our business model to maintain great customer service and therefore sustain our pricing power and margins. We will do this with incremental development of our business capability. As the group grows, we are evolving our structures, talent, and culture too. Delivering value responsibly has become central to our commercial and operational strategy. It is a source of value creation for all of our stakeholders.
We will continue to develop our framework and to improve our environmental and social performance. This strategy will deliver our compounding financial model through the cycle, long-term organic growth of 5% and total growth of 10%, sustainably high margins and great cash conversion with a strong balance sheet and high-teens returns for our shareholders. In the slides ahead, I will take you through how we grow and how we develop our operations to execute at scale. Let's start then with growth. We have significant long-term growth runway. From a market perspective, we are positioning our businesses to take advantage of positive structural investment trends, for example, in technology or renewables, healthcare diagnostics, or infrastructure. We're under-penetrated in large core markets such as the U.S., Europe, and the U.K.
By extending our product ranges, either incrementally within our businesses or with investment from a portfolio basis, we can continue to grow our addressable markets. Finally, fragmented markets mean there will continue to be acquisition opportunities in the long term. Within the businesses, we are developing our commercial capability to diversify and scale. At a group level, we are focusing our management structures and M&A around scalable business lines within the sectors. We can deliver long-term double-digit growth. Let's look at our progress within the three sectors. Controls represents around 45% of the group today, has performed very well, and made significant strategic progress. Our business lines of interconnect, wire and cable, and specialty fasteners have traditionally been concentrated in certain end segments, such as aerospace, and mostly in the U.K.
The businesses have a clear strategy to expand their addressable market organically and inorganically by diversifying product, customer set, and geographical reach. At a group level, we have also identified new business lines, different product groupings with similar business model characteristics that we are pursuing for further portfolio diversification and organic growth. It's been a fantastic year of progress against these strategic objectives. The businesses have expanded product and end segments, and as a result, our International Controls businesses, despite the impact of the deflated aerospace market, returned to growth much quicker than expected and are now up on 2019 levels. Increasingly, we are positioning ourselves in growth end markets such as renewables, technology and infrastructure. Acquisitions in the final quarter have accelerated the strategy. In Specialty Fasteners, we acquired AHW to provide a greater U.S. presence.
In Wire and Cable, we acquired SWA to provide additional scale in the U.K. Finally, we also acquired Techsil, a quality specialty adhesives business in the U.K. and a starting point in an exciting new business line. The acquisition of Windy City Wire was a step change. The business was our first material entry into the U.S. for the sector. It provides access to the high-growth technology-enabled end segments, and the customer proposition and platform provide huge potential for market share gains. The progress with Controls this year has been fantastic and the future is promising. Seals represents around 32% of the group. The sector was very resilient through the pandemic. We made significant strategic progress, and I feel excited about its future. Our U.S. businesses are well positioned to capitalize on structural tailwinds, particularly additional investment from the new infrastructure bill.
The transition to our state-of-the-art facility in Louisville will allow us to accelerate our market share in North American aftermarket. We will expand our geographical and product capability organically and through acquisitions in our U.S. OEM and MRO businesses. Internationally, we can diversify our businesses by products and end segments. We also see significant opportunities to develop the portfolio in large core economies where we are currently underrepresented. Our progress in the year has been very positive. In North America, the transition to Louisville was a significant operational undertaking, and it was a huge success for the team to execute it in the midst of labor and supply chain pressures. We are working hard on our growth plans for under-penetrated regions, which are starting to deliver market share gains in the Midwest and West Coast.
Our U.S. OEM and MRO businesses have progressed well too, and the acquisition of PDI has extended our MRO geographical reach in gaskets. International Seals has performed very well, our most resilient sector through the pandemic. The businesses continue to expand into new sectors, including renewables, medical and food. After the acquisition of PUMPNSEAL last year, we acquired FITT Resources earlier this year to significantly strengthen our Australian presence. Since the year-end, we disposed of Kentek, a small non-core business in Russia, to provide more portfolio focus. It's been a great year for Seals, and I'm really encouraged about the prospects for the year ahead. Life sciences represents around 23% of the group. We're in good shape after a sharp recovery in the performance, coupled with significant strategic progress. Our businesses are very well- positioned to take advantage of positive medium to long-term structural tailwinds.
We haven't yet seen that increase in surgical procedures to clear the backlog, but this will inevitably come in the next few years. Longer term, increasing investment in research and testing will benefit our diagnostics businesses. For ourselves, we grow our supplier and product pipeline to diversify and scale while also expanding our segment capability. We also expand geographically, particularly developing our European footprint. Progress this year has been great. The team's focus on product pipeline development has contributed to strong growth, including in new segments such as urology, gynecology, and obesity. We've made great strides in Europe with the acquisitions of Simonsen & Weel in Denmark and Kungshusen in Sweden, both quality businesses selling products we know in well-established distribution markets. During the year, we disposed of a1-envirosciences, one of our small environmental businesses, to provide more portfolio focus.
It's been a great year for the life sciences team in very challenging circumstances. The performance has been excellent and the strategic progress encouraging. We're excited about the future. Delivering value responsibly, our ESG program, is a huge potential driver of growth and value. A large proportion of our revenues are generated from the sale of products, services and solutions that benefit society or the environment or support the transition to a more sustainable future. Some examples, waste and pollution control, such as chemical transportation gaskets in our U.S. MRO business or preventative health care such as our diagnostics businesses, or even systems for safe environments such as our first responder networks in Windy City Wire. We've been embedding responsible growth opportunities into our commercial plans and are excited that our growth will have an increasingly positive impact.
Acquisitions continue to be an important part of future organic growth and scale. We operate in fragmented markets, giving us opportunities to make acquisitions in our business lines according to the growth strategy I've just set out. We target businesses with strong value-add distribution characteristics and high growth margins with organic growth potential and great management teams. Once acquired, we add value by driving accelerated growth, whether it be through unlocking investments, providing management expertise or even cross-selling products. In some cases, we also add value through scale benefits. We've developed a more proactive approach to our corporate development with more process, structure, and talent, enabling us to generate a bigger pipeline of opportunities. This gives us options, allowing us to do more deals than historically while retaining our portfolio and financial discipline. We've had an excellent year this year.
We'll continue to remain disciplined, and while we can't guarantee a linear deal flow, our pipeline is encouraging. Now onto our operational strategy. You will have seen this slide before. As we grow, it is fundamental that we develop both our businesses and our group in order to successfully execute for our customers and sustain our margins. There are five core competencies which are common to all of our businesses and underpin the success of our business model. Pricing, route to market, value- add, operational excellence, and strategic supply chain. By developing our performance in these five areas, we will continue to successfully execute at scale. Our capability, talent, technology, and facility are the catalysts for this development. This is not a one-size-fits-all approach. Each business will have its own journey.
It is also not overnight, but rather continuous improvement facilitated by the group and sectors to allow definition of best practice guidance and a network of sharing. The pandemic has helped us accelerate this operational strategy. Some examples. The route to market or sales core competency focuses on how we diversify and scale. We're having great success in broadening our addressable markets and developing process and capability to deliver our growth strategy. Supply chain management has obviously been severely tested of late. We're developing a more strategic, proactive, and broader approach to our supply chain. Finally, operational excellence. We're using our increasing scale to improve our warehouse management, including modernizing our processes to be more effective and efficient for our customers, introducing more automation and improving our environmental footprint. The core competencies journey requires continual development of our capability. Our approach to technology is deliberately pragmatic.
We've been upgrading our U.S. digital web store platform and some warehouse management and back office systems. As time goes on and with further scale, this will become a more important focus area in our strategy. Talent development has been my number one focus area in the last few years. We now have a full executive team, and they have developed and gelled fantastically. We are pragmatically evolving the structures underneath the sectors to ensure that we have the right management as our business lines grow. We have a comprehensive framework for talent development, which is now embedded in the businesses. From a cultural perspective, we are complementing our strong decentralized culture with a group identity to provide access to a network for continuous improvements. I believe this is critical to sustaining the group's success.
I mentioned that delivering value responsibly is embedded into our strategy and touched already on the commercial or growth aspects. From a more general or operational perspective, we have now defined our framework for ESG, including definition of metrics aligned to the UN SDGs. The level of awareness and engagement in the businesses is really positive, and we have many initiatives underway. We will carry out engagement surveys annually and respond to feedback to ensure Diploma remains a great place for colleagues to work. We're focused on the health, safety and well-being of our colleagues, together with diversity, equity, and inclusion within our teams. As a distributor, it is critical that we work with our supply partners to ensure responsible environmental and social practices.
Assessing our partners by ESG performance will become part of our strategic supply chain core competency, and we will be asking our partners to sign up to our Supplier Code of Conduct in 2022. Finally, on environment, we measure our Scope 1 and 2 emissions. In 2022, we will start to measure our waste and to define our Scope 3 carbon emissions. We will also define a net-zero roadmap and timetable. Across the whole program, during 2022, we will be measuring performance, defining targets, and implementing plans for improvement. I'm excited that we can make a meaningful difference in the coming years. Summarizing. It's been a great year for Diploma. Very good results and plenty of strategic progress. Despite the macroeconomic uncertainties, we feel well positioned to deliver another good performance in 2022.
We have a clear strategy to build high quality, scalable businesses for attractive long-term organic growth. Our focus on operational competency and capability will sustain our value- add business model and margins. With our ESG framework at the heart of what we do, we will drive value in a responsible way for all of our stakeholders. We aim to deliver attractive long-term growth at sustainably high margins. I'll now hand you back over to the moderator for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will now take our first question from James Ferrow from Barclays. Please go ahead. Your line is open.
Morning. Three questions, please. Firstly, you had a bit of a flurry of bolt-ons in the fourth quarter. Can you just comment on whether there was any change of market conditions there or whether it was just the timing of working on a lot of them and they all came through in Q4 ? The second question is just on Windy City. Could you give a bit of an indication on the benefit there of copper price inflation so we can really understand the underlying volume trends in that business? T hen the third one is just on U.S. aftermarket, where in a statement you referenced about starting to see some market share benefits coming through in California. Can you just talk a bit more about the strategy to grow there?
Is that servicing existing customers across the broader footprint, or are you targeting new customers? If it's the latter, what's your sales and marketing approach to go out and gain that share? Thank you.
Hi, James. Thanks for that. I will answer the first one on bolt-ons and the third one on U.S. aftermarket, and then I'll let Barbara talk about Windy City price and volume. Yes, there's no doubt the conditions for acquisitions have clearly been quite hot over the last 12 months or so. I guess after a period during the pandemic when acquisitions were more difficult to do. I would also say, however, that, a lot of the hard work that we've been putting into it has really started to pay off.
I mentioned a bit earlier about putting a bit more talent capability, a bit more processing, and a, a more qualified and better, let's say, corporate development team working very closely with the businesses has really paid off for us. We feel really positive about the way that's worked. As time goes on, I certainly wouldn't be promising 10 acquisitions in a year. As I said, we feel quietly confident about the pipeline. On the U.S. aftermarket market share, yes, it's early days. It's been a hell of a successful journey for the North American aftermarket team to make the transition to Louisville. I t's a huge undertaking at any time, given the technology and hardware involved in that platform.
To do it during the conditions of labor and supply chain pressures has been exceptional. We've really focused on that operational aspect first and foremost, and made sure, of course, that we are fulfilling for our customers as successfully as possible. However, as I indicated in the presentation, increasingly, we're able now to turn our eyes towards the market with the operations more stable, and we're starting to see some benefits. T o your point about existing versus new, of course, we can grow share with our existing customers, but it also gives us access to new, particularly repair shop customers on the West Coast, the Midwest, and some other areas, maybe the Northeast too, that potentially haven't looked at us before because of our cutoff times and price to market.
With, of course, a bit more sales resource on the ground, a bit more marketing behind the Louisville facility and everything it can bring, we're starting to see the start of those. We're starting to see the market share gains coming through. I would just stress it's early days, which is encouraging for the year or two ahead.
Hi, James. On the Windy City Wire organic growth, we've got a growth rate there of 26%, and I would say, just over half of that is price and just under half of that is volume. Now, you should bear in mind that it's a spot pricing business, so that passes through. They'll pass it on the way up and on the way down. What's really encouraging is that the volume growth there is really, really strong, and they are obviously exposed to high growth end market. That's a very good tailwind going into 2022.
Perfect. Thank you.
As a reminder, to ask a question, press star one. We will now take the next question from Henry Carver from Peel Hunt. Please go ahead. Your line is open.
Thanks. M orning, guys. Just a couple from me. One, following up on the market share gain theme. With Windy City Wire, can you give an idea of roughly what the market was growing at and what gains they're making? I guess, is there an opportunity or what opportunity is there for Windy City Wire to grow outside the U.S.? Are there other companies with similar models outside the U.S.? And then the other one was just on aerospace. Can you remind us how much we're looking forward to come back in aerospace as and when that market recovers? Thanks.
Okay, I'll do the first one. Barbara, you can touch on the aerospace one. Thanks, Henry, for the questions. The market share gain Windy City Wire. Yes, look, it's quite a difficult market to get to the detail behind the exact numbers. I think when we talked about Windy City at the time of the deal, we would say that the overall premium low voltage wire and cable market is probably growing around mid-single digits. However, they are very much exposed to higher growth technology enabled end segments, data centers, digital antenna, and that takes your base growth rate up from mid-single digit to high single- digit. Then on top of that, you have the fact that they're taking market share in that environment.
That takes you into the double-digit growth, which they have seen over the course of the last 10 years or so, and particularly during the course of the last 12 months, as Barbara just talked about. We're really excited about Windy City, as you can tell. Their first year was absolutely exceptional. I do believe that there's going to be a continuation of their strong performance in the future. They're well positioned, as I say, in these higher growth end segments. They're taking market share through the quality of their customer proposition, the control they have over the supply chain in this environment. They have a great platform of depots t echnology to continue to grow and deliver for their customers.
We're very excited about it. In terms of the outside of the U.S., yes, there is potential. I think I've said this over the course of the last year or so. I'm moving at quite a slow pace with that deliberately because we've wanted to get Windy City Wire properly into the group onboarded. They've had massive potential and opportunity which they're delivering on. In time, I guess the cherry on the cake will be to look towards expanding what they can do together with our current wire and cable businesses in the international arena. There's no rush for us to do that.
On Controls, Henry, if you recall, the International Controls business was about 20% aerospace-facing before COVID, and obviously that declined very sharply. What we are seeing is obviously we are backing growth for the sector as a whole, even before aerospace is fully back now, which is great. But in terms of the aerospace bit, we are probably just over half back, so there's just under half to come, which should come by 2023-2024. It's also worth bearing in mind that the organic revenue initiatives that have been going on in those businesses, they've actually worked on their market share during this downtime, so they should be able to capitalize very strongly from when that market fully comes back.
Brilliant. Thanks, guys. It's very clear.
Thanks, Henry.
We will take the next question from David Brockton from Numis. Please go ahead. Your line is open.
Good morning, all. Actually, just one broad question, please, around supply chain constraints. You're clearly doing well there and while, it's an industry challenge, one could also view it as an opportunity. I just wondered if you can give us any insight that you may have in terms of how well you're performing versus others, what you're seeing in terms of lead times and whether the businesses may be relatively benefiting in terms of newer customers coming to the business as a result. Thanks.
Thanks, David. Well, look, the first thing to say is that it is pretty tough. We've done a good job to see it off, but so far. I shouldn't underestimate the operational work that's required to do that. It is tough. We're still seeing, as you would expect, raw material shortages impacting, challenges around manufacturing capacity, and of course, challenges around logistics and freight, as you will no doubt understand. That is still very much ongoing. For us, how do we see it? I can't really necessarily talk about others, but how do I feel about us? I think there's two key drivers for us, in how we are managing it.
The first one is, I guess, the power of our decentralized model. We should never underestimate this, but the quality of our local management teams, empowered as they are to manage customers and suppliers, have been incredibly agile and rigorous in getting us through and continuing to get us through some of these tough conditions. That's the first thing. The second thing is, I do think that the value-add servicing model that we have gives us some advantages in this type of situation. F irst of all, we have very, very close customer relationships. We're obviously supplying critical products and services, and those relationships just allow us to work in closer partnership with our customers and indeed where necessary to pass on pricing.
Part of the model is also about the relationships that we have to build with our supply chain, and those are equally important in this environment, and indeed have put us in some favorable positions in terms of prioritizing our business for their product flow. I think the value-add distribution model does give us some advantages. In fact, it's what I think can help us to sustain our margins for the year ahead, and beyond.
Thank you very much.
Once again, as a reminder to ask a question, press star one. We will now take the next question from Sam Bland from JP Morgan. Please go ahead. Your line is open.
Hi. Thanks for taking the question. I've got two or three, please. Could I ask, the 5% organic growth assumption going forward, is that from market growth and you think the markets are growing that fast, or is there an embedded market share gain assumption in that?
I suppose where you do target that 5% revenue growth, is that all volume growth or do you tend to assume that you'll put part of that 5% or roughly your mid-single digit is an assumed price increase also? You gave that helpful chart on the two-thirds, one-third split of the revenue growth this year. Have you seen any increase in customer churn off the back of some of these recent price increases or have the customers been fairly sticky? Thank you.
Well, just in terms of the future 5% organic growth, look, the first thing I'd say is that it's our number one priority, our number one performance measure. That's what we're focused around. I'd love to do 5% or a little better if we can over the long term as we get bigger. I do think that probably that where there's an assumption there that the underlying markets, I guess GDP, whatever you want to call it, will grow a fraction less than that, 2%-3%, whatever it is. As I've outlined, our opportunity to penetrate further into new end markets to broaden our product portfolio and our addressable markets through product that just gives us the potential to step up our organic growth over the long term. You asked also about, I think, price and volume, is that right?
Yes
Are we expecting to see any customer churn? I think is what you said. Well, look, as you can imagine, pretty much the whole market at the moment is somewhat sensitized to price increases within the chain. That doesn't mean that every conversation is easy, of course. There is a little more sensitivity to it right now. Because, as I mentioned a minute ago, because of the relationships we have with our customers, we're able, where we can, to pass on sensible price increases. What we try to do first and foremost is to manage supply chain costs, as much as we can before we pass it on to our customers.
It's very much part of our value-add model to service our customers and to do so by doing the best distribution job that we can so that we impact them with price in the least way possible. To a large degree, we've managed to pass on prices without any customer disruption or churn. Clearly this is an ongoing discussion and we'll continue to manage price through our customers as we need to and as inflation continues.
Understood. Thank you very much.
We don't have any further questions, so I would like to turn the conference back to our host for any additional or closing remarks.
Yes, thank you. Thank you everyone for joining us this morning. Just a few remarks. We're feeling really good about where we're positioned today. As I said earlier, we've got a really good team. The results are strong, and we've got positive prospects for the year ahead. I think the strategy is clear and is working, and we feel well positioned for long-term growth and for sustaining our good margins. Thank you very much again for joining us, and we look forward to seeing you soon.