DiscoverIE : Preliminary results for the year end 31 March 2022

Record growth and development

discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a leading international designer and manufacturer of customised electronics for industrial applications, today announces its results for the year ended 31 March 2022 ("FY 2021/22" or "the Year").

Continuing Operations(1)	FY 2021/22	FY 2020/21	Growth %	FY 2019/20	Growth(2) %
Revenue	£379.2m	£302.8m	+25%	£303.3m	+25%
Underlying operating profit(3)	£41.4m	£30.8m	+34%	£30.8m	+34%
Underlying operating margin(3)	10.9%	10.2%	+0.7ppts	10.2%	+0.7ppts
Underlying EPS(3)	29.4m	22.4p	+31%	24.4p	+20%
Reported opearting profit	£20.9m	£17.1m	+22%	£17.8m	+17%
Total Operations
Reported fully diluted EPS	26.3p	13.0p	+102%	16.3p	+61%
Gearing	0.6x	1.1x	(0.5x)	1.25x	(0.65x)
Full year dividend per share	10.8p	10.15p	+6%	2.97p	+264%(4)

Highlights

• Record growth in orders & sales driven by focus on structurally growing target markets
  • 76% of sales into UNSDG aligned sectors of renewables, medical, transport, industrial & connectivity
  • Organic⁽⁵⁾ orders: +36% (v FY 2020/21) and +32% (v pre-Covid period FY 2019/20)
  • Organic sales: +18% (v FY 2020/21) and +14% (v FY 2019/20)
  • Total sales +25% (v FY 2020/21) and +25% (v FY 2019/20)
• Delivering strong financial performance
  • Underlying operating profit from continuing operations: +34%
  • Underlying EPS from continuing operations: +31%
• Excellent progress towards key strategic targets
  • Underlying operating margin increased by 0.7ppts to 10.9% (target: 13.5%)
  • Like-for-like carbon emissions⁽⁶⁾ reduced by 33% since CY 2019 (v 50% target by 2025)
  • Free cash flow conversion⁽⁷⁾ over two years of 102% of net profit (v 85% target)
• Three international acquisitions completed for £85m; well supported equity placing for net £53m
  • Beacon, Antenova and CPI; now fully integrated
• Sale of Acal BFi completes exit from the business of distribution
  • Continuing operations arranged into two new divisions: Magnetics & Controls ("M&C") and Sensing & Connectivity ("S&C")
• Group well positioned for further growth
  • Record order book of £224m (organic: +62% v Mar 2021; +71% v Mar 2020)
  • Pipeline of acquisition opportunities remains strong
  • Gearing⁽⁸⁾ of 0.6x, well below our target of 1.5x to 2.0x; significant funding headroom available
  • New financial year started well - continued strong organic revenue growth

Nick Jefferies, Group Chief Executive, commented:

"These results reflect the strength of the discoverIE business model which is performing well in good demand conditions and an inflationary environment and follows a resilient performance through the weaker Covid conditions of the year before. With record growth in orders, sales, order book and underlying earnings per share, which increased by 31%, continuing revenues and earnings are now well ahead of the pre-Covid period. I would like to thank all of our employees around the Group for their tremendous effort and flexibility over the last two years that has led to these results.

We are also making good progress on our sustainability initiatives. By switching our sites to renewable sources of energy where possible, the Group's like-for-like carbon emissions were 33% lower in calendar year 2021 than 2019 and we are on track to achieve our goal of a 50% reduction by 2025.

Following the Group's exit during the year from the business of distribution, discoverIE is now solely focused on the design and manufacture of customised electronics for industrial applications; our continuing focus is on achieving organic growth and new design wins in sustainable target markets, together with accretive acquisitions. The Group is well-funded, with a strong balance sheet and cash flow, and has significant funding headroom for further acquisitions.

The new financial year has started well, with continued strong growth in organic sales, and the order book at record high levels. While supply chain headwinds and inflationary pressures remain, they are expected to be manageable.

With a clear strategy focused on long-term, high quality, structural and sustainable growth markets across Europe, North America and Asia, a diversified customer base, a record order book and a strong pipeline of acquisition opportunities, the Group is well positioned to make further good progress in the year ahead."

Analyst and investor presentation:

A results briefing for analysts and investors will be held today at 9.30am (UK time). If you would like to join in person or via the live webinar, please contact Buchanan at [e-mail].

Enquiries:

discoverIE Group plc
Nick Jefferies - Group Chief Executive
Simon Gibbins - Group Finance Director
Lili Huang - Head of Investor Relations
01483 544 500

Buchanan
Chris Lane, Toto Berger, Jack Devoy
[e-mail]
020 7466 5000

Notes:

(1) Continuing operations excludes the results of the Acal BFi and Vertec SA businesses, and profit on sale, following their disposals during the year. These two businesses have been treated under IFRS 5 as discontinued operations.
(2) This is the two year growth from FY2019/20 to FY2021/22
(3) 'Underlying Operating Profit', 'Underlying Operating Margin", 'Underlying Profit before Tax' and 'Underlying EPS' are nonIFRS financial measures used by the Directors to assess the underlying performance of the Group. These measures relate to continuing operations and exclude acquisition-related costs (amortisation of acquired intangible assets of £14.0m and acquisition expenses of £6.5m) totalling £20.5m. Equivalent underlying adjustments within the FY 2020/21 underlying results totalled £13.7m. For further information, see note 5 of the attached summary financial statements.
(4) A final dividend was not proposed for FY2019/20 due to Covid.
(5) Organic growth for the Group compared with last year is calculated at constant exchange rates ("CER") and is shown excluding the first 12 months of acquisitions post completion (Phoenix was acquired in October 2020, Limitor in February 2021, CPI in May 2021, Antenova in August 2021 and Beacon in September 2021). Organic growth compared with two years ago excludes the first 24 months of acquisitions so also excludes Sens-Tech acquired in October 2019. The average Sterling rate of exchange against the Euro strengthened by 5% compared with the average rate last year, by 2% on average against the three Nordic currencies, and by 5% compared with the US dollar rate for last year.
(6) Target is for Scope 1 and Scope 2 carbon emissions and is based on an intensity measure of tonnes of CO2 equivalent per £m revenue (tCO2e/£m revenue). Historic figures have been adjusted to exclude disposals in FY22 and acquisitions completed in the last 12 months.
(7) Free cash flow is cash flow before dividends, acquisitions, disposals and equity issuance. Free cash flow conversion rate of 136% of net profit in FY21 (linked to an inflow of working capital with organic sales down 4%), 77% in FY22 (linked to an outflow of working capital with organic sales up 18%) giving 102% for the 2 year period (with organic sales up 14%).
(8) Gearing ratio is defined as net debt divided by underlying EBITDA (annualised for acquisitions).
(9) Growth rates for the period FY 2017/18 to FY 2021/22 exclude the Covid year FY 2020/21 so the growth from FY 2019/20 to FY 2021/22 is treated as one year.
(10) Unless stated, growth rates refer to the comparable prior year period.

Notes to Editors:

About discoverIE Group plc

discoverIE Group plc is an international group of businesses that designs and manufactures innovative electronic components for industrial applications.

The Group provides application-specific components to original equipment manufacturers ("OEMs") internationally through its two divisions, Magnetics & Controls, and Sensing & Connectivity. By designing components that meet customers' unique requirements, which are then manufactured and supplied throughout the life of their production, a high level of repeating revenue is generated with long term customer relationships.

With a focus on sustainable key markets driven by structural growth and increasing electronic content, namely renewable energy, medical, electrification of transportation and industrial automation & connectivity, the Group aims to achieve organic growth that is well ahead of GDP and to supplement that with complementary acquisitions. The Group has an ongoing commitment to reducing the impact of its operations on the environment and with its key markets aligned with a sustainable future, MSCI has awarded the Group an ESG "A" rating.

The Group employs c.4,900 people across 20 countries with its principal operating units located in Continental Europe, the UK, China, Sri Lanka, India and North America.

discoverIE is listed on the Main Market of the London Stock Exchange and is a member of the FTSE250, classified within the Electrical Components and Equipment subsector.

Preliminary results for the year end 31 March 2022 (703KB PDF)