DiscoverIE : Preliminary results for the year ended 31 March 2021

Strong second half recovery with record order book and excellent cash generation

discoverIE Group plc (LSE: DSCV, 'discoverIE' or 'the Group'), a leading international designer, manufacturer and supplier of customised electronics to industry, today announces its results for the year ended 31 March 2021 ('FY 2020/21' or the 'Year').

Highlights

• Strong second half order growth⁽⁵⁾ with sales returning to organic growth⁽⁶⁾ by year end
  • H2 orders up 12% organically and 40% above H1
  • H2 sales up 10% on H1 and returned to organic growth for the last two months
  • Record year end order book, up 11% organically to £181m
• Resilient trading during pandemic reflects strength of operating model and target market⁽⁷⁾ focus
  • Group adapted quickly to pandemic, creating safe working practices and maintaining service levels
  • Full year Group sales 6% lower organically with target markets well ahead of wider markets
  • Gross margin increased by 0.6ppts to 34.2% (FY 2019/20: 33.6%)
  • Underlying operating expenses reduced by 2% and working capital by 13%
  • Underlying PBT recovered to be 3% higher than last year in H2, and 4% lower for the year
  • EPS of 26.0p, ahead of expectations
• Excellent cash generation with resumption of acquisitions and dividends in H2
  • £38m of free cash flow, up 38% on last year and 157% of post-tax profit
  • Two acquisitions completed during H2 for £21m (Phoenix and Limitor)
  • ROCE⁽⁸⁾ for the year recovered well to 14.5% (H2: 15.6%; H1 12.7%)
  • Year-end gearing down to 1.1x, well below target range of 1.5x to 2.0x
  • Full year dividend increased by 6% over FY 2018/19 (last full dividend payment)
• Key strategic initiatives on track towards FY 2024/25 targets
  • 65% of Group sales in D&M⁽⁹⁾, up 1ppt, with a target of greater than 75%
  • Sales in target markets of 70%, up 2ppts, with a target of 85%
  • Carbon emissions reduced by 19% and by 6% underlying⁽¹⁰⁾
  • Underlying operating margin of 7.7%, 0.3ppts lower, with a target of 12.5%
• New year has started well with record order book
  • Strong order intake continues and ahead of sales
  • Organic sales growth over the last two years
  • Completed US sensor acquisition (Control Products Inc) in May 2021
  • Strong pipeline of acquisition opportunities

Nick Jefferies, Group Chief Executive, commented:

'This year challenged us in ways we couldn't have foreseen. Our dedicated employees responded quickly, creating a new normal operating environment with COVID safety at its core, whilst continuing operations with minimal disruption to customers.

The second half saw a strong recovery following the uncertainty of the first half, with orders increasing organically by 12% year-on-year and the Group returning to organic sales growth by the year end. A record order book, up 15%, leads the way for sales growth in the year ahead. Together with robust gross margins and tight management of expenditure throughout the year, underlying earnings ended the year ahead of expectations.

Cash generation was excellent with £38m of free cash flow for the year reducing gearing to 1.1x. As well as demonstrating the cash generating capability of our businesses and the strength of the operating model, this provides us with the capacity to pursue further value enhancing acquisitions.

The new financial year has started well with organic sales growth ahead of last year and the year before and continuing strong orders running ahead of sales across all territories.

With a clear strategy focussed on long-term high quality growth markets, a diversified customer base, excellent order book and a strong pipeline of acquisition opportunities, we are well positioned to make further progress on our key strategic priorities.'

Analyst and investor presentation

A virtual results briefing for analysts and investors will be held today at 9.30am (UK time) via a live webinar.

If you would like to join the webinar, please contact Buchanan at [e-mail].

Enquiries:

discoverIE Group plc
Nick Jefferies - Group Chief Executive
Simon Gibbins - Group Finance Director
01483 544 500

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

Notes:

⁽¹⁾ 'Underlying Operating Profit', 'Underlying EBITDA', 'Underlying Operating Expenses', '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 £11.1m, acquisition and merger expenses of £2.0m and the IAS19 pension charge relating to a legacy defined benefit scheme of £1.4m) totalling £14.5m. Equivalent underlying adjustments within the FY 2019/20 underlying results totalled £13.3m. For further information, see note 5 of the attached summary financial statements.
⁽²⁾ Free cash flow is cash flow before dividends, acquisitions and equity fund raising.
⁽³⁾ Gearing is defined as net debt divided by underlying EBITDA (excluding IFRS 16, annualised for acquisitions).
⁽⁴⁾ No final dividend declared for FY 2019/20 as part of COVID cash saving measures. The final dividend for this year is 6% higher than the last full dividend declared in FY 2018/19.
⁽⁵⁾ Growth rates are at constant exchange rates ('CER') and refer to the comparable prior year period unless stated. The average sterling rate of exchange against the Euro weakened by 2% compared with the average rate last year, and by 2% on average against the three Nordic currencies, but strengthened by 3% compared with the US dollar rate for last year.
⁽⁶⁾ Organic growth for the Group is calculated at CER and is shown excluding the first 12 months of acquisitions post completion (Sens-Tech was acquired in October 2019, Phoenix in October 2020 and Limitor in February 2021).
⁽⁷⁾ Target markets are renewable energy, medical, transportation, industrial & connectivity.
⁽⁸⁾ Return on capital employed ('ROCE') is defined as underlying operating profit as a percentage of net assets plus net debt, including an annualisation of acquisitions.
⁽⁹⁾ D&M is the Group's Design & Manufacturing division.
⁽¹⁰⁾ Carbon emission reductions were 19% from CY 2019 to CY 2020 on a like-for-like basis excluding acquisitions in CY 2020; on an underlying basis (i.e with emissions adjusted to normalise the impact of COVID-19), carbon emission reductions were 6%.

Notes to Editors:

About discoverIE Group plc

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

The Group provides application-specific components to original equipment manufacturers ('OEMs') internationally. 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 key markets driven by structural growth and increasing electronic content, namely renewable energy, medical, transportation and industrial & connectivity, the Group aims to achieve organic growth that is well ahead of GDP and to supplement that with targeted complementary acquisitions. The Group has an ongoing commitment to reducing the impact of its operations on the environment, while its key markets are aligned with a sustainable future.

The Group employs c.4,400 people and its principal operating units are located in Continental Europe, the UK, China, Sri Lanka, India and North America.

The Group is listed on the Main Market of the London Stock Exchange and is in the top quartile of the FTSE Small Cap Index, classified within the Electrical Components and Equipment subsector, and has revenues of over £450m.

Preliminary Results for the year ended 31 March 2021 (504KB PDF)