23 November 2022
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Strong growth in sales, operating margin & earnings; net zero commitment announced

discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a leading international designer and manufacturer of customised electronics to industry, today announces its interim results for the six month period ended 30 September 2022 ("H1 2022/23" or the "Period").

H1 2022/23

H1 2021/22

Growth %

CER(2) growth %

Revenue

£219.7m

£174.3m

+26%

+23%

Underlying operating profit(1)

£25.6m

£18.0m

+42%

+37%

Underlying operating margin(1)

11.7%

10.3%

+1.4ppts

+1.2ppts

Underlying profit before tax(1)

£23.5m

£16.1m

+46%

Underlying EPS(1)

17.8p

13.0p

+37%

Reported profit before tax

£14.8m

£6.4m

+131%

Reported fully diluted EPS

10.9p

6.6p

+65%

Interim dividend per share

3.55p

3.35p

+6%


Highlights

  • Sales growth with efficiencies driving strong financial performance
    • Group sales up 23% CER with a book-to-bill of 1.08
    • Group organic(3) sales up 14% with growth across both divisions (M&C: +17%; S&C: +11%)
    • Organic gross margins stable despite inflation headwinds
    • Underlying operating profit up 42%
    • Underlying EPS up 37%
  • Further progress made towards key targets
    • Underlying operating margin increased by 1.4ppts to 11.7%
    • Sales beyond Europe increased to 41% of total sales (FY 2021/22: 40%)
    • Sales into target markets(4) of 77% (FY 2021/22: 76%)
    • Free cash conversion(5) of 72% of underlying earnings reflecting strong sales growth
    • Carbon emissions reduced further, by c. 40% (like-for-like) since CY 2019(6)
  • New net zero commitment
    • Group announces SBTi aligned net zero carbon emissions commitment by 2030(7)
  • Group well positioned for further growth
    • Record order book of £257m (organic: +21% v Sep 2021)
    • Strong pipeline of acquisition opportunities in development
    • Period-end gearing(8) of 0.8x, well below our target of 1.5x to 2.0x; good funding headroom available

Nick Jefferies, Group Chief Executive, commented:

"DiscoverIE performed well in the first half, with further strong growth in sales and order book along with good operating efficiencies, leading to 37% growth in underlying earnings per share.

We continue to focus on generating organic growth in sustainable markets, enhanced by earnings accretive acquisitions. Alongside this, good progress is being made in reducing our carbon emissions and today we have announced our commitment to reach net zero scope 1 & 2 emissions by 2030 and scope 3 by 2040.

The second half has started well with continued organic sales growth over last year and a record order book level, which we expect to begin to normalise as it converts into sales through the second half of the year. The Group is on track to deliver full year underlying earnings in line with the Board's expectations.

We are well positioned in a changing world. Our products are essential in customers' applications and amount to a small proportion of their spend, providing us with revenue visibility and stable margins. Additionally, our broad international footprint enables us to respond quickly to production movements.

The discoverIE business model has proven resilient through differing market conditions and with a pipeline of acquisition opportunities and a strong balance sheet, the Group is well positioned to make further progress."

Analyst and investor presentation:

A results briefing for sell side analysts and investors will be held today at 9.30am (UK time) at the offices of Peel Hunt. If you would like to join in person or via the live webinar, please contact Buchanan at [email protected]

Enquiries:

[email protected] 01483 544 500

Nick Jefferies

Simon Gibbins

Lili Huang

Group Chief Executive

Group Finance Director

Head of Investor Relations

Buchanan 020 7466 5000

Chris Lane, Toto Berger, Jack Devoy

[email protected]

Notes:

(1) 'Underlying Operating Profit', 'Underlying Operating Margin", 'Underlying EBITDA', 'Underlying Profit before Tax' and 'Underlying EPS' are non-IFRS financial measures used by the Directors to assess the underlying performance of the Group. These measures exclude acquisition-related costs (amortisation of acquired intangible assets of £7.8m and acquisition & disposal expenses of £0.9m) totalling £8.7m. Equivalent underlying adjustments within the H1 2021/22 underlying results totalled £9.7m. For further information, see notes 2 and 7 of the attached condensed consolidated interim financial statements.
(2) Growth rates at constant exchange rates ("CER"). The average Sterling rate of exchange strengthened 1% against the Euro compared with the average rate for the same period last year and strengthened 2% on average against the three Nordic currencies while weakening by 12% against the US Dollar.
(3) Organic growth for the Group compared with last year is calculated at CER and is shown excluding the first 12 months of acquisitions post completion (CPI was acquired in May 2021, Antenova in August 2021, Beacon in September 2021 and CDT in June 2022).
(4) Target markets are renewable energy, medical, transportation, industrial & connectivity.
(5) Free cash flow is cash flow before dividends, acquisitions and equity fund raising.
(6) Original target was to reduce scope 1 & 2 carbon emissions in CY 2019 by 50% on a like-for-like basis by CY 2025. Target increased this Period to an absolute carbon emissions reduction of 65% since CY 2021.
(7) Net Zero carbon emissions by 2030 defined as Net Zero Scope 1 & 2 emissions as defined by SBTi along with a commitment to achieve net zero scope 3 emissions by 2040
(8) Gearing ratio is defined as net debt divided by underlying EBITDA (excluding IFRS 16; annualised for acquisitions).
(9) Unless stated, growth rates refer to the comparable prior year period.
(10) The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulation, Article 7 of EU Regulation 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

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discoverIE Group plc published this content on 23 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2022 08:04:06 UTC.