TIDMDSCV
RNS Number : 2641H
discoverIE Group plc
23 November 2022
23 NOVEMBER 2022
discoverIE Group plc
Interim results for the six months ended 30 September 2022
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 GBP219.7m GBP174.3m +26% +23%
Underlying operating
profit(1) GBP25.6m GBP18.0m +42% +37%
Underlying operating
margin(1) 11.7% 10.3% +1.4ppts +1.2ppts
Underlying profit
before tax(1) GBP23.5m GBP16.1m +46%
Underlying EPS(1) 17.8p 13.0p +37%
Reported profit
before tax GBP14.8m GBP6.4m +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
o Group sales up 23% CER with a book-to-bill of 1.08
o Group organic(3) sales up 14% with growth across both
divisions (M&C: +17%; S&C: +11%)
o Organic gross margins stable despite inflation headwinds
o Underlying operating profit up 42%
o Underlying EPS up 37%
-- Further progress made towards key targets
o Underlying operating margin increased by 1.4ppts to 11.7%
o Sales beyond Europe increased to 41% of total sales (FY
2021/22: 40%)
o Sales into target markets(4) of 77% (FY 2021/22: 76%)
o Free cash conversion(5) of 72% of underlying earnings
reflecting strong sales growth
o Carbon emissions reduced further, by c. 40% (like-for-like)
since CY 2019(6)
-- New net zero commitment
o Group announces SBTi aligned net zero carbon emissions
commitment by 2030(7)
-- Group well positioned for further growth
o Record order book of GBP257m (organic: +21% v Sep 2021)
o Strong pipeline of acquisition opportunities in
development
o Period-end gearing(8) of 0.8x, well below our target of 1.5x
to 2.0x; good funding headroom available
Nick Jefferies, Group Chie f 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 discoverie@buchanan.uk.com.
Enquiries :
discoverIE Group plc 01483 544 500
Nick Jefferies Group Chief Executive
Simon Gibbins Group Finance Director
Lili Huang Head of Investor Relations
Buchanan 020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
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 GBP7.8m and acquisition &
disposal expenses of GBP0.9m) totalling GBP8.7m. Equivalent
underlying adjustments within the H1 2021/22 underlying results
totalled GBP9.7m. 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.
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.5,000 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.
Strategic, Operational and Financial Review
Overview
The Group is focused on the design and manufacture of customised
and niche, innovative electronics. We have made further strong
progress this Period towards our medium-term goals of becoming a
higher operating margin Group, supplying UN SDG-aligned target
markets, internationally, and generating strong cash flow. Our low
gearing leaves good headroom for further earnings accretive
acquisitions and to take advantage of opportunities presented by
the current market backdrop.
The first half saw strong organic sales growth of 14%,
underlying operating profit growth of 42% and underlying EPS growth
of 37%. This continued the good progress of the previous four years
which saw compound annualised growth in the ongoing Group of 10% in
organic sales, 34% in underlying operating profit and 26% in
underlying EPS.
First half Group sales increased by 26% overall, with
performance in our target markets (which now account for 77% of
Group sales) continuing to be strong. This growth supported
delivery of an underlying operating margin of 11.7%, up 1.4ppts
year-on-year and well on track to achieving our 13.5% target by FY
2024/25. Organic sales growth was widespread, with the UK
increasing by 11%, Germany by 18%, Nordics by 16%, other European
countries by 28%, US by 10% and India by 53%. Following several
years of strong growth, China reduced by 3%. Expansion of
production capacity was commenced during the Period in India,
Germany and the UK, all of which are expected to be operational
next financial year.
Orders continued at a high level and ahead of sales with a
book-to-bill ratio of 1.08 resulting in a record order book at the
Period end of GBP257m, 21% ahead organically compared with 12
months ago. As previously stated , the order book level is expected
to begin normalising as it starts to convert into sales during the
second half of this financial year.
The Group continues to manage widespread supply chain and
inflationary headwinds actively and effectively with organic gross
margins in the Period maintained at the same level as last
year.
Positioned well in a changing world
The Group is well positioned in an environment of rapidly
changing global conditions, proving both resilient and
flexible.
- Essential products: the Group's products are essential for
customers' applications to function and amount to a small
proportion of their overall system cost.
- Broad footprint: 30 manufacturing sites and operations around
the world, able to support customers operating internationally and
respond quickly to production movements.
- Efficient supply chains: our manufacturing uses a low
proportion of bought-in components, the majority being manufactured
in-house from raw materials and base components, reducing our
exposure to external supply chain disruptions.
- Low energy intensity operations: the large majority of the
Group's energy exposure is electricity and with operations mainly
being manual or semi-automated, energy costs represent less than 1%
of Group revenues, limiting the Group's exposure to current energy
price rises.
With a capital light business model, a diversified technology
and product portfolio and a broad customer base (the Group's
largest customer is c.7% of Group sales), the Group has grown
strongly over a sustained period and was resilient during the
pandemic. We expect it to continue to do so in a changing
world.
Group Results Summary
Group sales for the first half increased by 26% to GBP219.7m
(+23% CER), with first half underlying operating profit, which
excludes acquisition & disposal-related costs, increasing by
37% CER to GBP25.6m. Underlying profit before tax increased by 46%
to GBP23.5m, with underlying earnings per share for the period
increasing by 37% to 17.8p (H1 2021/22: 13.0p).
After underlying adjustments for acquisition &
disposal-related costs, profit before tax for the Period on a
reported basis increased by 131% to GBP14.8m (H1 2021/22: GBP6.4m)
with fully diluted earnings per share increasing by 65% to 10.9p
(H1 2021/22: 6.6p).
Free cash flow of GBP24.3m was generated over the last 12
months, being 11% higher than last financial year and representing
72% of underlying earnings. While this conversion rate is below our
85% target, it follows strong organic growth in the Period along
with additional inventory to support expected second half growth,
and an additional GBP6m inventory to secure supply of certain
materials. Net debt at 30 September 2022 was GBP45.2m (30 September
2021: GBP75.6m) with a gearing ratio of 0.8x. This is well below
our target range of 1.5x to 2.0x and leaves good headroom for
further accretive acquisitions.
Increased Dividend
The Board is pleased to declare an increase in the interim
dividend of 6% to 3.55p per share (H1 2021/22: 3.35p per share).
Since 2010, the annual dividend per share has more than
doubled.
The Board believes in maintaining a progressive dividend policy
along with a long-term dividend cover of over three times earnings
on an underlying basis. This approach along with the continued
growth of the Group will enable funding of both dividend growth and
a higher level of investment in acquisitions from internally
generated resources.
The interim dividend is payable on 13 January 2023 to
shareholders registered on 16 December 2022.
New Chairman and Senior Independent Director
As previously announced, Bruce Thompson became Chairman of the
Group on 1 November 2022 with Malcolm Diamond retiring from the
Board. We extend our sincere thanks to Malcolm for his guidance and
support in leading the Group into the next stage of its development
and wish him a very happy retirement.
Bruce has been a Non-Executive Director of the Group since
February 2018, and the Group's Senior Independent Director since
March 2019. Tracey Graham, a member of the Board since November
2015 and Chair of the Remuneration Committee, succeeded Bruce as
Senior Independent Director from the same date.
Sustainability and Social Responsibility
The Group provides innovative electronics that help customers
create new technologies for a sustainable world. Applications which
use our products help to reduce power consumption and increase
efficiency, such as wind turbines for renewable energy, charging
infrastructure for electric vehicles and wireless and fibre optic
communications. This focus on sustainability forms the core of our
target markets where, through focused initiatives, we aim to grow
our revenues organically. These trends are reported in our key
strategic indicators as target market sales. Additionally, the
Group has reduced focus on market areas that are inconsistent with
a long-term sustainability agenda.
Our target markets are aligned to the UN Sustainable Development
Goals with our aim being to achieve 85% of sales from those target
markets by the end of FY 2024/25. During the Period, sales from
target markets were 77% of Group sales. We also aim to increase the
proportion of the Group's operations covered by ISO14001, the
international standard for environmental management, from 31% in FY
2020/21 to 80% by CY 2025. Please refer to the Group's Impact
Report which is available on the Group's website and illustrates
how we are helping to meet the global sustainability agenda.
During the Period a number of initiatives were undertaken to
improve our sustainability and diversity including:
i) Environmental
- Finalised and announced SBTi aligned plan to achieve net zero
for Scope 1 and 2 carbon emissions by 2030 and for Scope 3 by
2040;
- Further adoption of sustainable electricity sources resulting
in carbon emissions reducing on a like-for-like basis by an
estimated 40% since CY 2019 (CY 2021: 33% reduction);
- Accelerated Sri Lanka solar panel installation project, with
both phases 2 and 3 expected to complete early in 2023 - once
complete, we anticipate the three phases will reduce scope 1 &
2 Group emissions by 15%;
- Plans to commence installation of solar panels at the
manufacturing facility in Thailand, which will meet the majority of
the power requirement of the facility by the time of completion in
mid-2023;
- Initiated programme for quantifying full Scope 3 carbon emissions;
- Continued energy audit roll-outs with an aim to complete by the end of 2023;
- Initiated ISO14001 Environmental Management Systems
accreditation process at five Group sites.
ii) Social
- Initiated ISO45001 Occupational Health and Safety Management
Systems accreditation process at seven Group sites;
- Provided assistance and cost of living support to employees in
Sri Lanka site during the political crisis;
- Commenced review of CSR Policy.
iii) Governance
- Established Sustainability Committee of the Board, effective 1 April 2022;
- Introduced ESG objectives and targets into bonus schemes for
each Group Executive Committee member and into the management
incentive schemes for each operating business;
- Updated Board Diversity Policy in June 2022;
- Commenced study on detailed scenario analysis to quantify the
potential financial impact of climate change as required by TCFD
reporting;
- Disclosed environmental data through Carbon Disclosure Project
for the first time, improving data transparency and benchmarking
progress against global standards.
Group Strategy
The Group designs and manufactures customised and niche
electronic components, operating internationally and focusing on
structurally growing markets that are driven by increasing
electronic content and where there is an essential need for our
products. With our target markets and global customer base, the
business is expanding internationally (41% of Group sales now being
outside Europe) as we build a geographically diverse electronics
group.
The Group has been built through organic growth with operational
efficiency and 20 carefully selected and integrated acquisitions
over the past 12 years to create a specialist, growth-oriented,
higher margin design and manufacturing business. We have a
well-developed approach to acquisitions and the use of capital, and
see significant scope for the further expansion with a number of
opportunities in development.
The Group's strategy comprises four elements:
1. Grow sales well ahead of GDP over the economic cycle by
focussing on the structural growth markets that form our
sustainable target markets;
2. Improve operating margins by moving up the value chain into higher margin products;
3. Acquire businesses with attractive growth prospects and strong operating margins;
4. Further internationalise the business by developing
operations in North America and Asia.
These elements are underpinned by core objectives of generating
strong cash flows from a capital-light business model and
delivering long-term sustainable returns while progressing towards
net zero carbon emissions and reducing our impact on the
environment.
Target Markets
Our four target markets of renewable energy, medical,
electrification of transportation, and industrial automation &
connectivity account for 77% of Group sales. These markets are
expected to drive the Group's organic revenue growth well ahead of
GDP over the economic cycle and create acquisition opportunities.
For the Group, these markets deliver above average revenue growth
and resilience: over the last six years, target market sales grew
organically by 12% CAGR while non-target markets grew by 7% CAGR
and were more resilient during FY 2020/21 (the Covid year) when
target market sales declined by only 3% compared with a 9% decline
in non-target markets.
Growth in these target markets is being driven by increasing
electronic content and by global mega trends such as the
accelerating need for renewable sources of energy, an ageing
affluent population, vehicle electrification and industrial
automation and connectivity.
During the Period, target market sales grew organically by 14%,
comprising slower renewable energy demand (-6%) against strong
prior year demand and being offset by growth of 20% in the other
target markets. Over the same period, non-target markets, which
accounted for 23% of Group revenues, grew by 17% organically,
recovering strongly from a much lower level following the pandemic
and reflecting their greater cyclicality.
Key Strategic and Performance Indicators
Since 2014, the Group's progress with its strategic objectives
and its financial performance has been measured through key
strategic indicators ("KSIs") and key performance indicators
("KPIs"). The KSI targets have been raised each time they have been
achieved, and in November 2021 the targets were increased again at
the time the exit from the business of distribution was announced.
For tracking purposes, the KSIs and KPIs in the tables below remain
as reported at the time rather than adjusted for disposals. This
Period's growth relative to last year is discussed below.
Key Strategic Indicators
FY14 FY18 FY19 FY20 FY22(1) H1 FY25
23 Targets
1. Increase underlying
operating margin 3.4% 6.3% 7.0% 8.0% 10.9% 11.7% 13.5%
2. Build sales beyond Europe(2) 5% 19% 21% 27% 40% 41% 45%
3. Increase target market
sales (2) 62% 66% 68% 76% 77% 85%
4. Carbon emissions reduction(3) 6% 33% c.40% 65%
(was 50%)
(1) FY 2021/22 shown as performance over the pre-Covid period FY
2019/20 as this reflects the actual ongoing development of the
business. FY 2013/14 to FY 2019/20 are for total operations before
disposals, as reported at the time.
(2) As a percentage of Group revenue.
(3) First test was CY 2020 compared to CY 2019. Target year is
CY 2025. Upgraded target is an absolute carbon emissions reduction
from CY 2021.
The Group made further significant progress with its KSIs during
the Period:
- Underlying operating margin was 11.7%, an increase of 1.4ppts
on the first half last year (H1 2021/22: 10.3%) and 0.8ppts higher
than last year in total (FY 2021/22: 10.9%). The Group benefited
from strong organic sales growth during the Period with operating
leverage through efficiency gains and stable gross margins, and
remains on track to achieve its 13.5% target in FY 2024/25.
- Sales beyond Europe for the Period increased by 3ppts to 41%
of Group revenue compared with a year ago and by 1ppt compared with
FY 2021/22, mainly linked to the sales annualisation of the US
acquisition of Beacon in September 2021. The target for FY 2024/25
is 45%.
- Target market sales in the Period increased by 1ppt to 77% of
Group revenue compared with FY 2021/22 target market sales of 76%.
The target for FY 2024/25 is 85% subject to acquisitions during
this time frame.
- Carbon emissions reduced during the Period and are now an
estimated 40% lower on a like-for-like basis than in 2019; good
progress towards our target of 50% by CY 2025. Following this, we
have today announced our commitment to achieve net zero emissions
by 2030 for Scope 1 & 2 (SBTi aligned) and by 2040 for Scope 3.
Accordingly, we are upgrading our existing target for CY 2025 from
a reduction of 50% from a base in CY 2019 (on a like-for-like
intensity basis) to an absolute reduction of 65% from a base in CY
2021, on the path to achieving net zero by 2030. This upgrade would
be approximately equivalent to increasing the level of reduction
since CY 2019 from 50% to 75%.
Key Performance Indicators
FY14 FY18 FY19 FY20 FY22(1) H1 Target
23
1. Sales growth
Well ahead
CER 17% 11% 14% 8% 27% 23% of GDP
Organic 3% 11% 10% 5% 14% 14%
2. Underlying
EPS growth 20% 16% 22% 11% 20% 37% >10%
3. Dividend
growth 10% 6% 6% 6%(2) 6% 6% Progressive
4. ROCE (3) 15.2% 13.7% 15.4% 16.0% 14.7% 15.2% >15%
>85% of underlying
5. Operating operating
profit conversion(3) 100% 85% 93% 106% 101% 75% profit
------
6. Free cash >85% of underlying
conversion(3) 94% 104% 102% 72% earnings
------
(1) FY 2021/22 shown as growth over the pre-Covid period FY
2019/20 as this reflects the actual ongoing growth of the business.
FY 2013/14 to FY 2019/20 are for total operations before disposals
as reported at the time.
(2) 6% increase in the H1 2019/20 interim dividend; a final
dividend was not proposed for FY 2019/20 due to Covid.
(3) Defined in note 2 of the attached summary financial
statements.
The Group also made further significant progress with its KPIs
during the Period. This Period's growth relative to last year is
discussed below.
- Organic sales increased by 14% this Period of which
approximately 8% was related to volume and mix effects and 6% to
price. Since FY 2017/18, organic sales have grown by 10% per annum
on average, illustrating the strong through-cycle organic growth of
the business.
- Underlying EPS increased by 37% compared with last year.
- The interim dividend is being increased by 6%, continuing our
progressive policy whilst providing for a higher proportion of
investment in acquisitions from internally generated resources.
This progressive policy has seen a doubling of the dividend per
share since 2010, whilst dividend cover on an underlying basis
increased to 2.7x for the last financial year.
- ROCE for the year was 15.2%, 0.5ppts higher than last year (FY
2021/22: 14.7%). The increase follows strong growth in
profitability during the Period.
- Operating cash flow for the last 12 months increased by 11%
compared with last financial year with operating profit conversion
into cash of 75% and free cash conversion of 72%. These were lower
than our 85% targets resulting from a combination of strong organic
sales growth and GBP6m increase in inventory to secure supply of
certain materials. Over the last ten years, both operating cash
conversion and free cash conversion have been consistently strong
at well over 90% reflecting the tight management of working capital
and expenditure through the economic cycle.
Divisional Results
The divisional results for the Group for the six months ended 30
September 2022 are set out and reviewed below.
H1 2022/23 H1 2021/22 Reported CER Organic
revenue revenue revenue
growth growth Growth
------------------------------
Revenue Underlying Margin Revenue Underlying Margin
GBPm operating GBPm operating
profit(1) profit(1)
GBPm GBPm
-------- ----------- ------- -------- ----------- -------
M&C 136.5 18.0 13.2% 105.4 12.8 12.1% 30% 26% 17%
S&C 83.2 13.6 16.3% 68.9 11.1 16.1% 21% 19% 11%
Unallocated (6.0) (5.9)
Total 219.7 25.6 11.7% 174.3 18.0 10.3% 26% 23% 14%
(1) Underlying operating profit excludes acquisition-related costs
Magnetics & Controls Division ("M&C")
The M&C division designs, manufactures and supplies highly
differentiated magnetic and power components, embedded computing
and interface controls, all for industrial applications through
eight businesses operating across 17 countries. The large majority
of the products are manufactured in-house at one of the division's
20 manufacturing facilities, with its principal ones being in
China, India, Mexico, Poland, Sri Lanka and Thailand.
Geographically, 5% of sales are in the UK by destination, 50% in
the rest of Europe, 20% in North America and 25% in Asia.
Despite ongoing economic challenges in Sri Lanka, our facility
there, which accounts for around 6% of Group sales, has continued
to operate at expected output levels throughout the Period and the
Group continues to provide support to local employees. Construction
has also commenced in Kerala, India, of a new larger production
facility which will supersede our existing plant there next year. C
apacity is also being expanded in the UK to support future
growth.
Orders increased by 3% CER to GBP144.8m and organically reduced
by 3% on the back of very strong prior year comparators. The rate
of orders remained high and ahead of sales with a book-to-bill
ratio of 1.06:1. Together with a record order book, this resulted
in sales growing by 17% organically, with strong organic growth
across all regions except China: Europe & UK growing
organically by 24%, North America by 11% and Asia by 5% where
strong growth in India offset a reduction in China.
Combined with a 9% sales increase from acquisitions, overall
sales increased by 26% CER. Including the impact of translation
from a weaker Sterling on average, reported divisional revenue
increased by 30% to GBP136.5m (H1 2021/22: GBP105.4m). This was
achieved despite ongoing supply chain headwinds, in particular
semiconductor shortages which have delayed sales in two businesses
within the division.
Underlying operating profit of GBP18.0m was GBP4.7m (+35%)
higher than last year at CER and GBP5.2m (+41%) higher on a
reported basis (H1 2021/22: GBP12.8m). The underlying operating
margin of 13.2% was 1.1ppts higher than last year (H1 2021/22:
12.1%), reflecting the positive effect of organic growth, stable
gross margins and strong operating efficiencies.
Sensing & Connectivity Division ("S&C")
The S&C division designs, manufactures and supplies highly
differentiated sensing and connectivity components for industrial
applications through 13 businesses operating across nine countries.
The majority of the products are manufactured in-house at one of
the division's 10 manufacturing facilities, with its principal ones
being in Hungary, the Netherlands, Norway, Slovakia, the UK and the
US. Geographically, 19% of sales are in the UK by destination, 47%
in the rest of Europe, 15% in North America and 19% in Asia.
Further capacity is being built in Germany.
As with the M&C division, orders remained at high levels
increasing by 8% CER to GBP92.1m and by 3% organically despite the
very strong comparators of last year, with a book-to-bill ratio of
1.11:1. Together with a record order book, this resulted in sales
growing by 11% organically, with 7% organic growth across Europe
& UK, 11% in North America and 28% growth in Asia including 31%
in China.
Combined with an 8% sales increase from acquisitions, overall
sales increased by 19% CER. Including the impact of translation
from a weaker Sterling on average, reported divisional revenue
increased by 21% to GBP83.2m (H1 2021/22: GBP68.9m).
Underlying operating profit of GBP13.6m was GBP2.3m (+20%)
higher than last year at CER and GBP2.5m (+23%) higher on a
reported basis (H1 2021/22: GBP11.1m). The underlying operating
margin of 16.3% was 0.2ppts higher than last year (H1 2021/22:
16.1%), which, as with M&C division, reflects the positive
effect of organic growth, stable gross margins and operating
efficiencies.
Design Wins
Project design wins are a measure of new business creation. By
working with customers at an early stage in their project design
cycle, opportunities are identified for our products to be
specified into their designs, in turn leading to future recurring
revenue streams.
The Group has a strong bank of design wins built up over
numerous years, creating the basis for the Group's organic growth
in orders and sales. During the Period, Design wins increased by 6%
over last year with 85% of design wins being in the Group's target
markets. This was achieved despite some customers' diversion of
their engineering resources to improve supply chain
availability.
Additionally, new project design activity remains at a high
level, being broad-based across all target markets and the total
pipeline of ongoing projects continues at a very high level.
Acquisitions
The businesses we acquire are typically led by entrepreneurs who
wish to remain for a period following acquisition which we
encourage as it helps retain a decentralised, entrepreneurial and
dynamic culture. The market remains highly fragmented with many
opportunities to acquire and consolidate.
We acquire businesses that are successful and profitable with
good growth prospects and where we invest for growth and
operational performance development. According to the
circumstances, we add value in some of or all of the following
areas:
Strategy, sales and products:
- Developing the longer-term strategy of the business;
- Internationalising sales channels and expanding the customer
base, including via cross-selling initiatives and focusing sales
development onto target market areas;
- Increasing focus on opportunity generation;
- Developing and expanding the product range;
- Developing and implementing sustainability initiatives.
People management:
- Investing in management capability ('scaling up');
- Peer networking and collaboration;
- Succession planning and management transition.
Investment:
- Capital investment in manufacturing and infrastructure;
- Improving manufacturing efficiency;
- Infrastructure efficiencies, such as warehousing and freight;
- Expansion through further acquisitions.
Controls and support:
- Implementing robust financial controls;
- Finance and related support, such as treasury, banking, legal, tax and insurance;
- Risk management and internal audit;
- Sustainability initiatives such as energy audits, carbon
emission reductions and ISO standards accreditation.
The Group has acquired 20 design and manufacturing businesses
over the last 12 years, supporting the increase in continuing Group
revenues to GBP379m in FY 2021/22 from GBP10m in FY 2009/10. During
the Period, the Group completed its latest acquisition: CDT, a
UK-based designer and manufacturer of customised plastic enclosures
for circuit boards, membrane keypads and associated electronics
components for GBP5.0m on a debt free, cash free basis .
Acquisition spend was lower during the Period reflecting the
Group's disciplined returns criteria in an environment of increased
volatility and where vendor expectations remain elevated. As
private company valuations become more realistic and forecast
visibility improves, we expect the pace of transaction activity to
increase. The Group looks to acquire high quality businesses with
long term growth prospects and to pay a price that reflects this
quality whilst generating good returns for shareholders.
The Group's operating model is well established and has
facilitated the smooth integration of acquired businesses. Through
a combination of investment in efficiency and leveraging of the
broader Group's commercial infrastructure, the businesses acquired
since 2011 and owned for at least two years delivered a return on
investment of 21% this Period, an increase of 2.2ppts over last
year.
Group Financial Results
Revenue and Orders
Group sales of GBP219.7m were 14% higher organically than last
year (H1 2021/22: GBP174.3m) and with acquisitions (CPI, Antenova
and Beacon acquired last year, and CDT this year) adding 9%, Group
sales increased by 23% CER. A weaker Sterling on average during the
Period, particularly compared with the US Dollar, increased sales
by 3% on translation for a total growth in reported Group sales of
26%.
H1
Revenue (GBPm) 2022/23 H1 2021/22 %
Reported 219.7 174.3 26%
FX translation impact 3.8
------------ ----
Underlying (CER) 219.7 178.1 23%
Acquisitions / disposals (12.4) 3.0
Organic 207.3 181.1 14%
Sales this Period were driven by ongoing strong order rates,
building on a record year-end order book at 31 March 2022. Group
orders this Period increased by 5% CER to GBP236.9m, reducing by 1%
organically against very strong prior year comparators (last year
orders grew by 64% organically and by 34% organically compared with
the pre-Covid period H1 2019/20) as customers extended their order
book periods in response to the tight global supply conditions.
The book-to-bill ratio for the Period was 1.08:1 and accordingly
the order book continued to increase to a new record level of
GBP257m at 30 September 2022, growing by 21% organically from a
year ago and by 26% CER.
Group Operating Profit and Margin
Group underlying operating profit for the Period was GBP25.6m, a
42% increase on last year (H1 2021/22: GBP18.0m), and 37% higher at
CER, delivering an underlying operating margin of 11.7%, 1.4ppts
higher than last year (H1 2021/22: 10.3%).
Reported Group operating profit for the Period (after accounting
for the underlying adjustments discussed below) was GBP16.9m, 104%
higher than last year (H1 2021/22: GBP8.3m), linked to higher
underlying operating profits and lower spend on acquisitions &
disposals during the Period.
GBPm H1 2022/23 H1 2021/22
Operating Finance Profit Operating Finance Profit
profit Cost before profit cost before
tax tax
---------- ---------- -------- --------
Underlying 25.6 (2.1) 23.5 18.0 (1.9) 16.1
Underlying adjustments
Acquisition & disposal
expenses (0.9) - (0.9) (3.3) - (3.3)
Amortisation of acquired
intangibles (7.8) - (7.8) (6.4) - (6.4)
Reported 16.9 (2.1) 14.8 8.3 (1.9) 6.4
Underlying operating profit growth has been achieved through a
combination of organic growth, efficient operational execution and
acquisitions.
GBPm Underlying
Operating
Profit
H1 2021/22 18.0
Gross profit on organic
sales growth 9.5
Organic gross margin (0.4)
Investment in opex (4.1)
Organic profit growth
- operations 5.0
Profit from acquired
companies 1.9
Foreign exchange impact 0.7
H1 2022/23 25.6
Operationally, two thirds (GBP5.0m) of the incremental profits
in the Period were generated from organic sales growth of GBP26.2m,
being a strong drop through ratio of 19% (being organic profit
growth as a percentage of organic sales growth), and deriving
largely form internal efficiencies and scale. During the Period,
there was further investment in operating expenditure of 9% across
both divisions to support future organic growth. Gross margins
remained stable being broadly at the same level organically as last
year. This is despite ongoing inflationary supply chain
headwinds.
Acquisitions contributed GBP1.9m of underlying operating profit
comprising CPI, Antenova and Beacon acquired last year and CDT
acquired this year.
While Sterling has been slightly stronger this Period versus 12
months ago, compared with the Euro (+1%) and Nordic currencies
(+2%), it has weakened significantly compared to the US Dollar
(-12%). This gave rise to an increase in underlying operating
profits on translation of GBP0.7m.
Underlying Adjustments
Underlying adjustments for the Period comprise acquisition &
disposal expenses of GBP0.9m (H1 2021/22: GBP3.3m), and the
amortisation of acquired intangibles of GBP7.8m (H1 2020/21:
GBP6.4m).
Acquisition & disposal expenses of GBP0.9m are the costs
associated with the acquisition during the Period of CDT in June
2022 and accrued contingent consideration cost relating to the
acquisitions of Limitor, Phoenix and CPI. The GBP1.4m increase in
the amortisation charge since last year to GBP7.8m primarily
relates to the amortisation of the intangibles for Beacon and
Antenova which were acquired towards the end of the first half last
year. The annualised amortisation charge for next year is
approximately GBP16m.
Financing Costs
Net finance costs for the Period were GBP2.1m (H1 2021/22:
GBP1.9m) and include a GBP0.4m charge for leased assets under IFRS
16 (H1 2021/22: GBP0.3m) and GBP0.4m charge for amortised upfront
facility costs (H1 2021/22: GBP0.2m). Finance costs related to our
banking facilities of GBP1.3m (H1 2021/22: GBP1.4m) reflect
marginally lower average net borrowing during the Period.
Financing costs are expected to increase in the second half with
rising base rates for Sterling, US Dollars and Euros. On average,
base rates are expected to increase by 2.5ppts over the first half
average with every 1ppt increase in base rates increasing financing
costs by c.GBP0.6m per annum.
Underlying Tax Rate
The underlying effective tax rate ("ETR") in the first half was
26%, marginally higher than last year's rate (H1 2021/22: 25%) due
to profit mix towards higher tax territories.
The overall ETR was 28% (H1 2021/22: 54%). This was higher than
the underlying ETR due to there being no tax relief on
acquisition-related expenses (within underlying adjustments above).
The overall ETR was much higher last year due to the ETR on
intangibles being impacted by the planned increase in the UK
corporate tax rate from 19% to 25% from 1 April 2023, resulting in
a one-off increase in the deferred tax liability (a non-cash
item).
GBPm H1 2022/23 H1 2021/22
PBT ETR PBT ETR
------- ------- ----
Group underlying 23.5 26% 16.1 25%
Acquisition & disposal
expenses (0.9) 0% (3.3) 4%
Amortisation of acquired
intangibles (7.8) 24% (6.4) 7%
Total reported 14.8 28% 6.4 54%
Profit Before Tax and EPS
Underlying profit before tax for the Period of GBP23.5m was
GBP7.4m higher (+46%) than last year (H1 2020/21: GBP16.1m), with
underlying EPS for the Period increasing by 37% to 17.8p (H1
2021/22: 13.0p). The increase in underlying EPS was lower than the
increase in underlying profit before tax due to the issuance of new
equity in September 2021 increasing the number of fully diluted
shares by 6% to 98.6m shares (H1 2021/22: 93.3m shares) and a
marginally higher tax rate.
GBPm H1 2022/23 H1 2021/22
PBT EPS PBT EPS
------ ------ ------
Underlying 23.5 17.8p 16.1 13.0p
Underlying adjustments
Acquisition & disposal
expenses (0.9) (3.3)
Amortisation of acquired
intangibles (7.8) (6.4)
Reported 14.8 10.9p 6.4 3.2p
After the underlying adjustments above, reported profit before
tax for continuing operations was GBP14.8m, an increase of GBP8.4m
(+131%) compared with last year (H1 2021/22: GBP6.4m). With the
reported effective tax rate for the Period of 28% being much lower
than last year's rate of 5% (for the reasons mentioned above), the
resulting reported fully diluted earnings per share for continuing
operations was 10.9p, 7.7p higher than last year (H1 2021/22:
3.2p).
Last Year's Disposals
Last year, the Group disposed of the Acal BFi and Vertec SA
distribution businesses which together were treated for accounting
purposes as a discontinued operation. In accordance with IFRS 5,
net profits of the discontinued operation last year were shown
separately to the results of the continuing operations.
GBPm H1 2022/23 H1 2021/22
PAT EPS PAT EPS
----- ----- ------
Continuing operations 10.8 10.9p 3.0 3.2p
Discontinued operations 3.2 3.4p
Total operations 10.8 10.9p 6.2 6.6p
Working Capital
Working capital at 30 September 2022 was GBP74.7m, equivalent to
16.5% of first half annualised sales at CER. This is 1.0ppt higher
than last year when working capital was GBP54.8m (excluding
acquisition and LTIP related costs of GBP2.7m) or 15.5% of first
half annualised sales. Absolute working capital has increased by
GBP11m to support the strong organic growth in sales, by GBP6m
invested in inventories to secure supply and by GBP3m on
translation due to net weakness in Sterling. Excluding the
additional inventory of GBP6m, working capital would have reduced
by 0.3ppts of first half annualised sales.
Working capital KPIs have remained robust with debtors days of
49 (in line with last year), creditor days of 78 (4 days higher
than last year) and stock turns of 3.0 (0.1 turn lower than last
year).
Cash Flow
Net debt at 30 September 2022 was GBP45.2m compared with
GBP30.2m at 31 March 2022 and GBP75.6m at 30 September 2021.
GBPm H1 Last
H1 12 Months
2022/23 2021/22
Opening net debt (30.2) (47.2) (75.6)
Free cash flow (see
table below) 10.6 8.1 24.3
Acquisition & disposals (13.2) (84.2) 21.8
Equity issuance (net
of taxes) (0.6) 53.4 (1.4)
Dividends (7.1) (6.2) (10.3)
Foreign exchange impact (4.7) 0.5 (4.0)
Net debt at 30 Sept (45.2) (75.6) (45.2)
Net acquisition/disposal-related costs of GBP13.2m in the Period
comprised GBP5.0m for the acquisition of CDT in June 2022 (on debt
free, cash free basis) and GBP6.3m on earnout payments in respect
of Cursor and CPI. Additionally, there were GBP1.9m of expenses
associated with acquisitions and disposals during the Period.
The final dividend for last financial year of GBP7.1m, which was
paid in July 2022, was 15% higher than that paid in the previous
year following a 6% increase in the final dividend declared last
year and a 6% increase in equity following the share issuance in
September 2021 at the time of the Beacon acquisition.
Sterling significantly weakened during the Period in particular
compared to the US Dollar. Based on the closing rates at 30
September 2022 compared with the rates at 30 September 2021,
Sterling fell 18% compared to the US Dollar and also reduced by 3%
against the Euro. With the Group's policy being to hold net debt in
currencies linked to the currency of its cash flows, currency held
debt increased on translation partially matching the increase in
underlying EBITDA that arises, in order to protect the gearing of
the Group.
Operating cash flow and free cash flow (see definitions in note
2 to the interim financial statements) for the Period, compared
with the first half of last year, and for the last 12 months, are
shown below:
GBPm Last
H1 H1 12
2022/23 2021/22 Months
Underlying Profit
before tax 23.5 16.1 45.0
Net finance costs 2.1 1.9 4.0
Non-cash items 6.9 6.1 13.3
---------- ---------- ---------
Underlying EBITDA 32.5 24.1 62.3
IFRS 16 (2.8) (2.4) (5.5)
---------- ---------- ---------
EBITDA (pre IFRS16) 29.7 21.7 56.8
Changes in working
capital (10.3) (6.0) (14.5)
Capital expenditure (2.6) (2.4) (5.7)
Operating cash flow 16.8 13.3 36.6
Finance costs (2.0) (1.7) (3.5)
Taxation (3.2) (2.6) (6.8)
Legacy pensions (1.0) (0.9) (2.0)
Free cash flow 10.6 8.1 24.3
Underlying EBITDA of GBP32.5m was 35% higher than last year (H1
2021/22: GBP24.1m) reflecting strong organic sales growth combined
with contributions from the four acquisitions made since the first
half of last year.
During the Period, the Group invested GBP10.3m in working
capital to support strong organic sales growth this Period and to
secure inventory supply where necessary. In total, a net GBP14.5m
has been invested in working capital over the last 12 months of
which GBP6m is to support inventory supply, which should reduce
when markets normalise.
Capital expenditure of GBP2.6m was invested during the Period,
slightly ahead of last year (H1 2021/22: GBP2.4m) including various
new production line extensions, ERP upgrades and ESG initiatives
e.g. additional solar panels in Sri Lanka, the largest Group
facility. Capital expenditure levels are expected to increase in
the second half to around GBP9m for the full year as we continue to
invest in additional capacity and roll out of our ESG
initiatives.
GBP16.8m of operating cash was generated in the first half up
26% on last year (H1 2021/22: GBP13.3m). Together with GBP19.8m
generated in the second half of last year, a total of GBP36.6m of
operating cash was generated over the last 12 months representing
75% of underlying operating profit. While this is below our 85%
target, we expect to see a return to achieving or exceeding target
once markets normalise. Over the last nine years, the Group has
consistently achieved high levels of cash conversion, averaging in
excess of 100%.
Finance cash costs of GBP2.0m were ahead of last year on the
back of higher average interest rates, while corporate income tax
payments of GBP3.2m were GBP0.6m ahead of last year reflecting
higher profitability. Further payment of taxes in the second half
of c.GBP6m are expected.
Free cash flow (being cash flow before dividends, acquisitions
and equity) of GBP10.6m was generated in the first half up 31% on
last year (H1 2021/22: GBP8.1m). Together with GBP13.7m generated
in the second half last year, a total of GBP24.3m of free cash flow
was generated over the last 12 months being a free cash conversion
of 72% of underlying earnings; again we expect this to increase to
at or above our 85% target once markets normalise.
Banking Facilities
The Group has a GBP240m syndicated banking facility which
extends to June 2026, with an option exercisable by the Group to
extend the facility by a further year to June 2027. In addition,
the Group has an GBP80m accordion facility which it can use to
extend the total facility up to GBP320m. The syndicated facility is
available both for acquisitions and for working capital purposes,
and comprises seven lending banks.
With net debt at 30 September 2022 of GBP45.2m, the Group's
gearing ratio at the end of the Period (being net debt divided by
underlying EBITDA as annualised for acquisitions) was 0.8x. With
our target gearing range being between 1.5x and 2.0x, there is good
funding capacity for future acquisitions.
Balance Sheet
Net assets of GBP313.1m at 30 September 2022 were GBP22.7m
higher than at the end of the last financial year (31 March 2022:
GBP290.4m). The increase primarily relates to the net profit after
tax for the Period of GBP10.7m together with the balance sheet
translation increase following Sterling weakness during the Period
of GBP18.1m partially offset by last year's final dividend of
GBP7.1m paid during this Period. The movement in net assets is
summarised below:
GBPm H1
2022/23
Net assets at 31 March
2022 290.4
Net profit after tax 10.7
Dividend paid (7.1)
Currency net assets -
translation impact 18.1
Gain on defined benefit
scheme 0.6
Share based payments
(inc tax) 0.4
Net assets at 30 September
2022 313.1
Defined Benefit Pension Scheme
The Group's IAS 19 pension asset, associated with its legacy
defined benefit pension scheme, increased during the last 12 months
by GBP4.2m from GBP0.1m at 30 September 2021, to GBP4.3m at 30
September 2022 (31 March 2022: GBP2.7m). The key drivers were the
increase in corporate bond yields together with the annual payment
made during the year of GBP1.9m , partly offset by increases in
future inflation expectations.
An annual payment of GBP1.9m is currently payable, growing by 3%
each year until April 2024 in accordance with the plan agreed with
the pension trustee as part of the last agreed triennial valuation
dated 31 March 2021.
Risks and Uncertainties
The principal risks faced by the Group are set out on pages 54
to 59 of the Group's Annual Report for year ended 31 March 2022, a
copy of which is available on the Group's website:
www.discoverieplc.com. These risks comprise: the economic
environment, particularly linked to the geo-political issues
arising from the ongoing Ukraine conflict and also from Covid; the
performance of acquired companies; climate-related risks; loss of
major customers or suppliers; technological changes; major business
disruption; cyber security; loss of key personnel; inventory
obsolescence; product liability; liquidity and debt covenants;
exposure to adverse foreign currency movements; and non-compliance
with legal and regulatory requirements.
During the Period, the Board has continued to review the Group's
existing and emerging risks and the mitigating actions and
processes in place. Following this review, the Board believes there
has been no material change to the relative importance or quantum
of the Group's principal risks for the remaining six months of the
current financial year.
The risk assessment and review are an ongoing process, and the
Board will continue to monitor risks and the mitigating actions in
place. The Group's risk management processes cover identification,
impact assessment, likely occurrence and mitigation actions where
practicable. Some level of risk, however, will always be present.
The Group is well positioned to manage such risks and
uncertainties, if they arise, given its strong balance sheet,
committed banking facility of GBP240m and the adaptability we have
as an organisation.
Summary and Outlook
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 .
Nick Jefferies
Group Chief Executive
Simon Gibbins
Group Finance Director
23 November 2022
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The maintenance and integrity of the discoverIE Group plc
website is the responsibility of the directors.
The directors of discoverIE Group plc are listed in the
discoverIE Group plc annual report for 31 March 2022, with the
exception of the following changes in the period: Malcolm Diamond
resigned on 1 November 2022. A list of current directors is
maintained on the discoverIE Group Plc website:
www.discoverieplc.com .
By order of the board
Nick Jefferies S M Gibbins
Group Chief Executive Group Finance Director
23 November 2022
Independent review report to discoverIE Group plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed discoverIE Group plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the interim statement of discoverIE Group plc for the 6 month
period ended 30 September 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 30 September 2022;
-- the condensed consolidated statement of profit or loss and
condensed consolidated statement of comprehensive income for the
period then ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim
statement of discoverIE Group plc have been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
statement and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim statement, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the interim
statement in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the interim statement, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim statement based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
23 November 2022
Condensed consolidated statement of profit or loss
Restated
Unaudited ([1])
Six months Unaudited
ended Six months Audited
30 Sept ended Year
2022 30 Sept ended
GBPm 2021 31 Mar 2022
Notes GBPm GBPm
Continuing operations
Revenue 5 219.7 174.3 379.2
Operating costs (202.8) (166.0) (358.3)
Operating profit 16.9 8.3 20.9
Finance income 0.3 0.2 0.4
Finance costs (2.4) (2.1) (4.2)
Profit before tax 14.8 6.4 17.1
Tax expense 8 (4.1) (3.4) (7.4)
Profit for the period from continuing
operations 10.7 3.0 9.7
-------------------------------------------- -------- ------------- ------------ -------------
Discontinued operations
Profit for the period from discontinued
operations - 3.2 15.5
Profit for the period 10.7 6.2 25.2
-------------------------------------------- -------- ------------- ------------ -------------
Earnings per share
Basic, profit from continuing
operations 10 11.2p 3.3p 10.4p
Diluted, profit from continuing
operations 10 10.9p 3.2p 10.1p
Basic, profit for the year 10 11.2p 6.9p 27.1p
Diluted, profit for the year 10 10.9p 6.6p 26.3p
-------------------------------------------- -------- ------------ -------------
Supplementary statement of profit or loss information
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
Underlying Performance Measure Notes 30 Sept 30 Sept 31 Mar 2022
2022 2021
m m
GBPm GBPm GBPm
Operating profit 16.9 8.3 20.9
Add: Acquisition and disposal
expenses 0.9 3.3 6.5
Amortisation of acquired intangible
assets 7.8 6.4 14.0
Underlying operating profit 25.6 18.0 41.4
-------- ------------- ------------
Profit before tax 7 14.8 6.4 17.1
Add: Acquisition and disposal
expenses 7 0.9 3.3 6.5
Amortisation of acquired intangible
assets 7 7.8 6.4 14.0
Underlying profit before tax 7 23.5 16.1 37.6
-------- ------------- ------------
Underlying earnings per share
- diluted 10 17.8p 13.0p 29.4p
The above condensed consolidated statement of profit or loss
should be read in conjunction with the accompanying notes.
Condensed consolidated statement of comprehensive income
Unaudited Unaudited
Six months Six months Audited
ended ended Year
30 Sept 30 Sept ended
2022 2021 31 Mar 2022
GBPm GBPm GBPm
--------------------------------------------- ------------- ------------- --------------
Profit for the period 10.7 6.2 25.2
--------------------------------------------- ------------- ------------- --------------
Other comprehensive income/(loss):
Items that will not be subsequently
reclassified to profit or loss:
Actuarial gain on defined benefit
pension scheme 0.8 0.4 2.2
Deferred tax charge relating to defined
benefit pension scheme (0.2) (0.1) (0.5)
--------------------------------------------- ------------- ------------- --------------
0.6 0.3 1.7
--------------------------------------------- ------------- ------------- --------------
Items that may be subsequently reclassified
to profit or loss:
Exchange gain on translation of foreign
subsidiaries 18.1 2.7 9.6
Reclassification of exchange differences
on disposal of businesses - - (2.0)
18.1 2.7 7.6
--------------------------------------------- ------------- ------------- --------------
Other comprehensive income for the
period, net of tax 18.7 3.0 9.3
--------------------------------------------- ------------- ------------- --------------
Total comprehensive income for the
period, net of tax 29.4 9.2 34.5
--------------------------------------------- ------------- ------------- --------------
The above condensed consolidated statement of comprehensive
income should be read in conjunction with the accompanying
notes.
Condensed consolidated statement of financial position
Restated
Notes Unaudited Unaudited Audited
at 30 Sept at 30 Sept at 31 March
2022 2021 ([2]) 2022
GBPm GBPm GBPm
--------------------------------- -------- ------------- ------------- --------------
Non-current assets
Property, plant and equipment 24.6 22.8 23.5
Intangible assets - goodwill 190.0 172.7 175.7
Intangible assets - other 90.1 96.6 87.6
Right of use assets 22.5 22.5 21.9
Pension asset 16 4.3 0.1 2.7
Other receivables 6.0 - 5.9
Deferred tax assets 8.7 11.0 9.2
--------------------------------- -------- ------------- ------------- --------------
346.2 325.7 326.5
--------------------------------- -------- ------------- ------------- --------------
Current assets
Inventories 92.8 70.1 77.8
Trade and other receivables 82.2 63.9 78.0
Current tax assets 1.3 1.8 1.6
Cash and cash equivalents 14 34.2 19.9 39.4
--------------------------------- -------- ------------- ------------- --------------
210.5 155.7 196.8
--------------------------------- -------- ------------- ------------- --------------
Assets in a disposal group - 91.2 -
classified as held for sale
Total assets 556.7 572.6 523.3
Current liabilities
Trade and other payables (100.3) (88.1) (104.8)
Other financial liabilities (5.1) (2.1) (2.0)
Lease liabilities (5.3) (4.6) (4.7)
Current tax liabilities (10.2) (8.0) (7.7)
Provisions (1.6) (2.0) (1.7)
--------------------------------- -------- ------------- ------------- --------------
(122.5) (104.8) (120.9)
--------------------------------- -------- ------------- ------------- --------------
Non-current liabilities
Trade and other payables (3.7) (1.4) (2.7)
Other financial liabilities (74.3) (119.6) (67.6)
Lease liabilities (16.8) (17.0) (16.4)
Provisions (4.5) (4.5) (4.2)
Deferred tax liabilities (21.8) (21.0) (21.1)
(121.1) (163.5) (112.0)
--------------------------------- -------- ------------- ------------- --------------
Liabilities in a disposal group - (35.4) -
classified as held for sale
Total liabilities (243.6) (303.7) (232.9)
--------------------------------- -------- ------------- ------------- --------------
Net assets 313.1 268.9 290.4
--------------------------------- -------- ------------- ------------- --------------
Equity
Share capital 4.7 4.7 4.7
Share premium account 192.0 192.0 192.0
Merger reserve 3.4 13.7 10.5
Currency translation reserve 23.0 - 4.9
Retained earnings 90.0 58.5 78.3
Total equity 313.1 268.9 290.4
--------------------------------- -------- ------------- ------------- --------------
The above condensed consolidated statement of financial position
should be read in conjunction with the accompanying notes.
Condensed consolidated statement of changes in equity
Attributable to equity holders of the Company
--------------------- -------------------------------------------------------------------------------------
Currency
Share Share Merger translation Retained Total
capital premium reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2022 4.7 192.0 10.5 4.9 78.3 290.4
Profit for the period - - - - 10.7 10.7
Other comprehensive
income - - - 18.1 0.6 18.7
------------------------------- ---------- ---------- ---------- ------------- ----------- -----------
Total comprehensive
income - - - 18.1 11.3 29.4
Share-based payments
including tax - - - - 0.4 0.4
Transfer to retained
earnings - - (7.1) - 7.1 -
Dividends - - - - (7.1) (7.1)
---------- ---------- ---------- ------------- ----------- -----------
At 30 September 2022
- unaudited 4.7 192.0 3.4 23.0 90.0 313.1
------------------------------- ---------- ---------- ---------- ------------- ----------- -----------
At 1 April 2021 4.4 138.8 19.9 (2.7) 48.4 208.8
Prior period restatement
(note 2) - - - - (0.4) (0.4)
------------------------------- ---------- ---------- ---------- ------------- ----------- -----------
At 1 April 2021 (restated) 4.4 138.8 19.9 (2.7) 48.0 208.4
Profit for the period - - - - 6.2 6.2
Other comprehensive
income - - - 2.7 0.3 3.0
------------------------------- ---------- ---------- ---------- ------------- ----------- -----------
Total comprehensive
income - - - 2.7 6.5 9.2
Shares issued 0.3 53.2 - - - 53.5
Share-based payments
including tax - - - - 4.0 4.0
Transfer to retained
earnings - - (6.2) - 6.2 -
Dividends - - - - (6.2) (6.2)
---------- ---------- ---------- ------------- ----------- -----------
At 30 September 2021
- unaudited (restated)
([3]) 4.7 192.0 13.7 - 58.5 268.9
------------------------------- ---------- ---------- ---------- ------------- ----------- -----------
As at 30 September 2022, the Company's issued share capital
consisted of 95,456,109 ordinary shares of 5p each (31 March 2022:
95,456,109 ordinary shares of 5p each).
As at 30 September 2022, the Employee Share Trust held 81,001
shares (31 March 2022: 168,425). During the six-months period to 30
September 2022, employees exercised 87,424 (year ended 31 March
2022: 1,170,882) share options under the terms of the various share
option schemes.
On 2 September 2021, 5,350,194 shares were issued for a gross
consideration of GBP55.0m before costs and GBP53.5m after costs.
The shares were issued at 1,028 pence per share, which is equal to
the mid-market closing price on 2 September 2021. GBP0.3m was share
capital with the balance of GBP53.2m being allocated to share
premium account.
At 30 September 2022, an amount of GBP0.5m out of total GBP3.4m
in the merger reserve is available for distribution.
The above condensed consolidated statement of changes in equity
should be read in conjunction with the accompanying notes.
Condensed consolidated statement of cash flows
Notes
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar 2022
2022 2021 GBPm
GBPm GBPm
-------------------------------------------- ------ ------------- ------------- --------------
Net cash inflow from operating activities 13 8.5 13.5 30.9
Investing activities
Acquisitions of businesses (net of
cash acquired) (7.0) (83.9) (84.5)
Business disposal proceeds - - 37.3
Purchase of property, plant and equipment (2.4) (2.6) (5.4)
Purchase of intangible assets - software (0.2) (0.2) (0.8)
Proceeds from disposal of property,
plant and equipment - - 0.4
Interest received 0.3 0.2 0.4
Net cash used in investing activities (9.3) (86.5) (52.6)
-------------------------------------------- ------ ------------- ------------- --------------
Financing activities
Net proceeds from the issue of shares - 53.4 53.4
Proceeds from borrowings 11.0 100.0 94.1
Repayment of borrowings (9.7) (56.5) (102.3)
Payment of lease liabilities (2.4) (3.1) (6.4)
Cash-settled share-based payments - - (0.1)
Dividends paid (7.1) (6.2) (9.4)
Net cash (used in)/generated from
financing activities (8.2) 87.6 29.3
-------------------------------------------- ------ ------------- ------------- --------------
Net (decrease)/increase in cash
and cash equivalents (9.0) 14.6 7.6
Cash and cash equivalents at beginning
of period 36.9 28.2 28.2
Net foreign exchange differences 0.6 1.0 1.1
-------------------------------------------- ------ ------------- ------------- --------------
Cash and cash equivalents at end
of period 28.5 43.8 36.9
-------------------------------------------- ------ ------------- ------------- --------------
Reconciliation to cash and cash
equivalents in the condensed consolidated
statement of financial position
Cash and cash equivalents shown above 28.5 43.8 36.9
Less cash within assets held for - (26.2) -
sale
Add bank overdrafts 5.7 2.3 2.5
Cash and cash equivalents in the
condensed consolidated statement
of financial position 34.2 19.9 39.4
-------------------------------------------- ------ ------------- ------------- --------------
Further information on the condensed consolidated statement of
cash flows is provided in note 13.
The above condensed consolidated statement of cash flows should
be read in conjunction with the accompanying notes.
Notes to the condensed consolidated interim financial
statements
1. General information
discoverIE Group plc ("the Company") is incorporated and
domiciled in England, UK. The Company's shares are traded on the
London Stock Exchange. The interim condensed consolidated financial
statements consolidate the financial statements of discoverIE Group
plc and entities controlled by the Company (collectively referred
to as "the Group").
The condensed consolidated interim financial statements for the
six months period ended 30 September 2022 were authorised for issue
by the Board of Directors on 23 November 2022.
The condensed consolidated interim financial statements for the
six-month period ended 30 September 2022 are unaudited but have
been subject to an independent review by the auditors. These
condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31 March
2022 were approved by the board of directors on14 June 2022 and
delivered to the registrar of Companies. The report of the auditors
on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
2. Basis of preparation and accounting policies
This condensed consolidated interim financial report for the six
months period ended 30 September 2022 has been prepared in
accordance with the UK-adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules (DTR) sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim report does not include all of the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 March 2022, which has been prepared in accordance
with UK-adopted international accounting standards and with
requirements of the Companies Act 2006, and any public
announcements made by discoverIE Group plc during the interim
reporting period.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting
period.
New standards and interpretations applied for the first time
There were no standards, amendments or interpretations applied
for the first time that had a material impact for the Group.
Going Concern
As at 30 September 2022 the Group's financial position remains
robust with a GBP240m syndicated banking facility committed to the
end of June 2026, with an option exercisable by the Group to extend
the facility by a further year to June 2027. In addition, the Group
has a GBP80m accordion facility which it can use to extend the
total facility to GBP320m. The syndicated facility is available
both for acquisitions and working capital purposes. Net debt as at
30 September 2022 was GBP45.2m compared with GBP30.2m at the year
end. The Group's gearing ratio at the end of the period (being net
debt divided by underlying EBITDA as annualised for acquisitions)
was 0.8x compared with 0.6x at 31 March 2022. This compares with a
financial covenant of less than 3.0x.
The Directors have reviewed the latest available forecasts to
assess the cash requirements of the Group to continue in
operational existence for a minimum period of 12 months from the
date of approval of these interim financial statements. The
Directors have also reviewed the downside scenarios to the
forecasts taking into account the principal risks and uncertainties
as set out in the annual report and accounts for the year ended 31
March 2022. None of the scenarios result in a breach of the Group's
available debt facility or covenants and accordingly the Directors
continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements.
Prior period restatement
Change in accounting policy - Software as a Service ('SaaS')
arrangement
As disclosed in the annual report for the year ended 31 March
2022 , the Group changed its accounting policy relating to the
capitalisation of certain software costs. This change follows the
IFRIC Interpretation Committee's agenda decision published in April
2021 and relates to the capitalisation of costs of configuring or
customising application software under 'Software as a Service'
('SaaS') arrangements. The change in accounting policy led to
adjustments amounting to a GBP0.4m reduction in intangible assets
and a GBP0.4m reduction in retained earnings at the beginning of
the earliest period presented at 1 April which resulted in the 30
September 2021 consolidated statement of financial position to be
restated. The 30 September 2021 consolidated statement of profit or
loss and statement of other comprehensive income have not been
restated, as the impact on them is immaterial. Refer to the annual
report for the year ended 31 March 2022 for details of the new
accounting policy applied and the transitional method adopted.
Presentation of the consolidated statement of profit or loss
The Group has changed the presentation of the consolidated
statement of profit and loss for the period ending 30 September
2021 to align to changes made for the year ended 31 March 2022, by
amalgamating cost of sales, selling and distribution costs, and
administrative expenses into one line item namely operating costs.
There is no change to operating profit, profit before tax and
profit for the period ending 30 September 2021 as a result of these
presentational changes as demonstrated in the table below:
As per 30 September 2021 accounts
Six months
ended
30 Sept
2021
GBPm
--------------------------------- -------------
Revenue 174.3
Cost of Sales (107.1)
----------------------------------- -------------
Gross profit 67.2
Selling and distribution costs (18.0)
Administrative expenses (40.9)
----------------------------------- -------------
Operating profit 8.3
----------------------------------- -------------
As per 30 September 2022 accounts (with changes in
presentation)
Six months
ended
30 Sept
2021
GBPm
------------------- -----------
Revenue 174.3
Operating costs (166.0)
--------------------- -----------
Operating profit 8.3
--------------------- -----------
Underlying Performance Measures
These condensed interim financial statements include alternative
performance measures that are not prepared in accordance with IFRS.
These alternative performance measures have been selected by
management to assist them in making operating decisions as they
represent the underlying operating performance of the Group and
facilitate internal comparisons of performance over time.
Alternative performance measures are presented in these
condensed interim financial statements as management believe they
provide investors with a means of evaluating performance of the
Group on a consistent basis, similar to the way in which management
evaluates performance, that is not otherwise apparent on an IFRS
basis, given that certain strategic non-recurring and acquisition
related items that management does not believe are indicative of
the underlying operating performance of the Group are included when
preparing financial measures under IFRS. The trading results of
acquired businesses are included in underlying performance.
The Directors consider there to be the following alternative
performance measures:
Underlying operating profit
"Underlying operating profit" is defined as operating profit
from continuing operations excluding acquisition related costs
(namely amortisation of acquired intangible assets and acquisition
and disposal expenses).
Acquisition and disposal expenses comprise transaction costs,
contingent consideration relating to the retention of former owners
of acquired businesses, adjustments to previously estimated
contingent consideration, and costs related to integration of
acquired businesses into the Group.
Underlying EBITDA
"Underlying EBITDA" is defined as underlying operating profit
with depreciation, amortisation and equity settled share-based
payment expense added back.
Underlying profit before tax
"Underlying profit before tax" is defined as profit before tax
from continuing operations excluding acquisition related costs
(namely amortisation of acquired intangible assets and acquisition
and disposal expenses).
Underlying effective tax rate
"Underlying effective tax rate" is defined as the effective tax
rate on underlying profit before tax.
Underlying earnings per share
"Underlying earnings per share" is calculated as underlying
profit before tax reduced by the underlying effective tax rate,
divided by the weighted average number of ordinary shares (for
diluted earnings per share purposes) in issue during the
period.
Operating cash flow
"Operating cash flow" is defined as underlying EBITDA adjusted
for the investment in, or release of, working capital and less the
cash cost of capital expenditure.
Free cash flow
"Free cash flow" is defined as net cash flow from continuing
operations before dividend payments, net proceeds from equity fund
raising, the cost of acquisitions and proceeds from business
disposals.
Return On Capital Employed ("ROCE")
"ROCE" is defined as underlying operating profit from continuing
operations including the annualisation for acquisitions as a
percentage of net assets excluding net debt, deferred consideration
related to discontinued operations and legacy defined benefit
pension asset/(liability).
3. New accounting standards and financial reporting
requirements
New standards not yet effective
Certain new accounting standards and interpretations have been
published that are not mandatory for the period covered in these
condensed consolidated interim financial statements and have not
been early adopted by the Group. None of these are expected to have
a material impact on the Group's financial results in the current
or future reporting periods.
4. Critical estimates and critical judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results might differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 March
2022.
5. Revenue
Group revenue is analysed below:
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- --------
Sale of goods 216.6 169.6 370.0
Rendering of services 3.1 4.7 9.2
------------------------------------------- ----------- ----------- --------
Total revenue from continuing operations 219.7 174.3 379.2
------------------------------------------- ----------- ----------- --------
The Group's revenue from external customers by geographical location
is detailed below:
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- --------
UK 22.7 19.4 41.8
Rest of Europe 107.4 88.5 181.2
Rest of the World 89.6 66.4 156.2
Total revenue from continuing operations 219.7 174.3 379.2
------------------------------------------- ----------- ----------- --------
6. Segmental reporting
The Reportable Operating Segments of the Group includes two
distinct divisions, Magnetics & Controls ("M&C") and
Sensing & Connectivity ("S&C"). Within each of these
reportable operating segments are aggregated business units with
similar characteristics such as the nature of customers, products,
risk profile and economic characteristics.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
reported and evaluated on operating profit or loss earned by each
segment.
Six months ended 30 September 2022
Magnetics Sensing Unallocated Total continuing
& Controls & Connectivity costs operations
GBPm GBPm GBPm GBPm
Revenue 136.5 83.2 - 219.7
------------------------------------- ------------ ---------------- ------------ -----------------
Underlying operating profit/(loss) 18.0 13.6 (6.0) 25.6
Acquisition and disposal expenses - (1.2) 0.3 (0.9)
Amortisation of acquired intangible
assets (3.1) (4.7) - (7.8)
Operating profit/(loss) 14.9 7.7 (5.7) 16.9
------------------------------------- ------------ ---------------- ------------ -----------------
6. Segmental reporting (continued)
Six months ended 30 September 2021
Magnetics Sensing Unallocated Total continuing
& Controls & Connectivity costs operations
GBPm GBPm GBPm GBPm
Revenue 105.4 68.9 - 174.3
------------------------------------- ------------ ---------------- ------------ -----------------
Underlying operating profit/(loss) 12.8 11.1 (5.9) 18.0
Acquisition and disposal expenses (2.0) (1.3) - (3.3)
Amortisation of acquired intangible
assets (1.9) (4.5) - (6.4)
Operating profit/(loss) 8.9 5.3 (5.9) 8.3
------------------------------------- ------------ ---------------- ------------ -----------------
Year ended 31 March 2022
Magnetics Sensing Unallocated Total continuing
& Controls & Connectivity costs operations
GBPm GBPm GBPm GBPm
Revenue 234.7 144.5 - 379.2
------------------------------------- ------------ ---------------- ------------ -----------------
Underlying operating profit/(loss) 29.8 23.3 (11.7) 41.4
Acquisition and disposal expenses (1.4) (5.1) - (6.5)
Amortisation of acquired intangible
assets (4.8) (9.2) - (14.0)
Operating profit/(loss) 23.6 9.0 (11.7) 20.9
------------------------------------- ------------ ---------------- ------------ -----------------
For the purposes of monitoring segment performance and
allocating resources between segments, the directors monitor the
net assets attributable to each segment. Assets and liabilities are
allocated to reportable segments, with the exception of the pension
liability, tax assets and liabilities, cash and all borrowings,
central assets (Head Office assets) and central liabilities (Head
Office liabilities), as demonstrated below:
Segment assets and liabilities
Magnetics Sensing
at 30 Sept 2022 & Controls & Connectivity Unallocated Total
Assets and liabilities GBPm GBPm GBPm GBPm
--------------------------------------- ------------ ---------------- ------------ --------
Segment assets (excluding goodwill
and other intangible assets) 141.9 76.9 218.8
Goodwill and other intangible
assets 135.9 144.2 280.1
--------------------------------------- ------------ ---------------- ------------ --------
277.8 221.1 498.9
--------------------------------------- ------------ ---------------- ------------ --------
Central assets 9.3 9.3
Cash and cash equivalents 34.2 34.2
Pension asset 4.3 4.3
Current and deferred tax assets 10.0 10.0
--------------------------------------- ------------ ---------------- ------------ --------
Total assets 277.8 221.1 57.8 556.7
--------------------------------------- ------------ ---------------- ------------ --------
Segment liabilities (80.8) (43.8) (124.6)
Central liabilities (7.6) (7.6)
Other financial liabilities (79.4) (79.4)
Current and deferred tax liabilities (32.0) (32.0)
--------------------------------------- ------------ ---------------- ------------ --------
Total liabilities (80.8) (43.8) (119.0) (243.6)
--------------------------------------- ------------ ---------------- ------------ --------
Net assets 197.0 177.3 (61.2) 313.1
--------------------------------------- ------------ ---------------- ------------ --------
6. Segmental reporting (continued)
Magnetics Sensing
at 30 Sept 2021 & Controls & Connectivity Unallocated Total
Assets and liabilities GBPm GBPm GBPm GBPm
--------------------------------------- ------------ ---------------- ------------ --------
Segment assets (excluding
goodwill and other intangible
assets) 113.2 62.7 175.9
Goodwill and other intangible
assets 129.9 139.4 269.3
--------------------------------------- ------------ ---------------- ------------ --------
243.1 202.1 445.2
--------------------------------------- ------------ ---------------- ------------ --------
Central assets 3.4 3.4
Cash and cash equivalents 19.9 19.9
Pension asset 0.1 0.1
Current and deferred tax assets 12.8 12.8
Assets in a disposal group
classified as held for sale 91.2 91.2
--------------------------------------- ------------ ---------------- ------------ --------
Total assets 243.1 202.1 127.4 572.6
--------------------------------------- ------------ ---------------- ------------ --------
Segment liabilities (69.2) (34.3) (103.5)
Central liabilities (14.1) (14.1)
Other financial liabilities (121.7) (121.7)
Current and deferred tax liabilities (29.0) (29.0)
Liabilities in a disposal
group classified as held for
sale (35.4) (35.4)
--------------------------------------- ------------ ---------------- ------------ --------
Total liabilities (69.2) (34.3) (200.2) (303.7)
--------------------------------------- ------------ ---------------- ------------ --------
Net assets 173.9 167.8 (72.8) 268.9
--------------------------------------- ------------ ---------------- ------------ --------
Magnetics Sensing
at 31 March 2022 & Controls & Connectivity Unallocated Total
Assets and liabilities GBPm GBPm GBPm GBPm
--------------------------------------- ------------ ---------------- ------------ --------
Segment assets (excluding goodwill
and other intangible assets) 126.3 69.4 195.7
Goodwill and other intangible
assets 126.7 136.6 263.3
--------------------------------------- ------------ ---------------- ------------ --------
253.0 206.0 459.0
--------------------------------------- ------------ ---------------- ------------ --------
Central assets 11.4 11.4
Cash and cash equivalents 39.4 39.4
Pension asset 2.7 2.7
Current and deferred tax assets 10.8 10.8
--------------------------------------- ------------ ---------------- ------------ --------
Total assets 253.0 206.0 64.3 523.3
--------------------------------------- ------------ ---------------- ------------ --------
Segment liabilities (77.5) (41.9) (119.4)
Central liabilities (15.1) (15.1)
Other financial liabilities (69.6) (69.6)
Current and deferred tax liabilities (28.8) (28.8)
--------------------------------------- ------------ ---------------- ------------ --------
Total liabilities (77.5) (41.9) (113.5) (232.9)
--------------------------------------- ------------ ---------------- ------------ --------
Net assets 175.5 164.1 (49.2) 290.4
--------------------------------------- ------------ ---------------- ------------ --------
7. Underlying profit before tax
Six months
ended Six months Year
30 Sept ended ended
2022 30 Sept 2021 31 Mar 2022
GBPm GBPm GBPm
Profit before tax 14.8 6.4 17.1
Add back: Acquisition and
disposal expenses (a) 0.9 3.3 6.5
Amortisation of acquired
intangibles (b) 7.8 6.4 14.0
Underlying profit before
tax 23.5 16.1 37.6
-------------------------------------------------- ----------- -------------- -------------
The tax impact of the underlying profit adjustments above is a
credit of GBP1.9m (H1 2021/22: GBP0.6m).
a) Acquisition and disposal expenses of GBP0.9m comprise GBP0.5m
of transaction costs in relation to the acquisition of CDT and
ongoing transactions; GBP0.7m of charge relating to the movement in
fair value of contingent consideration on past acquisitions; and
GBP0.3m credit relating to disposal costs in connection with the
Acal BFi disposal in the prior year.
7. Underlying profit before tax (continued)
During the prior year the acquisition and disposal expenses of
GBP3.3m comprised GBP1.6m of transaction costs in relation to the
acquisition of CPI, Antenova, Beacon and ongoing transactions;
GBP1.3m of charge relating to the movement in fair value of
contingent consideration on past acquisitions; and GBP0.4m charge
in relation to the integration of acquired businesses in North
America.
b) Amortisation charge relates to intangible assets recognised
as part of business combinations. The increase in the charge to the
corresponding period in the prior year reflects the impact of
acquisitions in the prior year, the acquisition of CDT in the
current financial year and movement in foreign exchange.
8. Taxation
Income tax expense is recognised based on management's estimate
of the weighted average effective annual income tax rate expected
for the full financial year, in accordance with IAS 34 'Interim
financial reporting'.
The underlying tax charge for the period was GBP6.0m (H1
2021/22: GBP4.0m) giving an underlying effective tax rate on
underlying profit before tax of 25.5% (H1 2021/22: 25.0%), 0.4%
higher than the rate for FY 2021/22 of 25.1%.
The tax credit in respect of the underlying profit adjustments
was GBP1.9m (H1 2021/22: GBP0.6m). This gives an overall tax charge
for the period of GBP4.1m (H1 2021/22: GBP3.4m) on profit before
tax of GBP14.8m (H1 2021/22: GBP6.4m) which is an effective tax
rate of 27.7% (H1 2021/22: 54.0%). The higher effective rate is
partly due to limited tax relief available on acquisition and
disposal expenses. In addition, the prior period tax credit on
amortisation of acquired intangibles was impacted by the increase
in the UK corporation tax rate from 19% to 25% with effect from FY
2023/24 onwards, which was substantively enacted in May 2021.
9. Dividends
The Directors have declared an interim dividend of 3.55 pence
per share (H1 2021/22: 3.35 pence) payable on 13 January 2023 to
shareholders on the register at 16 December 2022.
In accordance with IAS 10, this dividend has not been reflected
in the interim results. The cash cost of the interim dividend will
be GBP3.4m (H1 2021/22: GBP3.2m).
The final dividend of GBP7.1m for the year ended 31 March 2022
was paid on 2 August 2022.
10. Earnings per share
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2022 2021 2022
GBPm GBPm GBPm
Continuing operations 10.7 3.0 9.7
Discontinued operations - 3.2 15.5
----------------------------------------------- ----------- ----------- -----------
Profit for the period 10.7 6.2 25.2
----------------------------------------------- ----------- ----------- -----------
Number Number Number
Weighted average number of shares for basic
earnings per share 95,375,108 89,606,780 93,015,684
Effect of dilution - share options 3,201,151 3,701,699 2,783,673
----------------------------------------------- ----------- ----------- -----------
Adjusted weighted average number of shares
for diluted earnings per share 98,576,259 93,308,479 95,799,357
----------------------------------------------- ----------- ----------- -----------
Earnings per share from continuing operations
- basic 11.2p 3.3p 10.4p
Earnings per share from continuing operations
- diluted 10.9p 3.2p 10.1p
Earnings per share - basic 11.2p 6.9p 27.1p
Earnings per share - diluted 10.9p 6.6p 26.3p
----------------------------------------------- ----------- ----------- -----------
At the period end, there were 4.1 million ordinary share options
in issue that could potentially dilute earnings per share in the
future, of which 3.2 million are currently dilutive (30 September
2021: 4.1 million in issue and 3.7 million dilutive, 31 March 2022:
3.0 million in issue and 2.8 million dilutive).
Underlying earnings per share
Underlying earnings per share are calculated as follows:
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2022 2021 2022
GBPm GBPm GBPm
Profit for the period from continuing
operations 10.7 3.0 9.7
Acquisition and disposal expenses 0.9 3.3 6.5
Amortisation of acquired intangible assets 7.8 6.4 14.0
Tax effects of acquisition expenses and
amortisation of acquired intangible assets (1.9) (0.6) (2.0)
Underlying profit for the period 17.5 12.1 28.2
--------------------------------------------- ----------- ----------- -----------
Number Number Number
Weighted average number of shares for basic
earnings per share 95,375,108 89,606,780 93,015,684
Effect of dilution - share options 3,201,151 3,701,699 2,783,673
--------------------------------------------- ----------- ----------- -----------
Adjusted weighted average number of shares
for diluted earnings per share 98,576,259 93,308,479 95,799,357
--------------------------------------------- ----------- ----------- -----------
Underlying earnings per share - diluted 17.8p 13.0p 29.4p
11. Business combinations
Acquisitions in the period ended 30 September 2022
Acquisition of CDT
On 30(th) June 2022, the Group completed the acquisition of CDT
123 Limited and CustomDesignTechnologies Ltd ("CDT") via the
purchase of 100% of the share capital and voting equity interests
of CDT 123 Limited which is a company incorporated in the United
Kingdom.
CDT was acquired for an initial cash consideration of GBP4.9m,
before expenses, funded from the Group's existing debt
facilities.
The provisional fair value of the identifiable assets and
liabilities of CDT at the date of acquisition were:
Provisional fair value
recognised at acquisition
GBPm
------------------------------------- ----------------------------
Intangible assets - other (customer
relationships) 2.0
Right of use assets 0.3
Inventories 0.9
Trade and other receivables 0.3
Net cash 0.3
Trade and other payables (0.3)
Current tax liabilities (0.3)
Deferred tax liabilities (0.5)
Lease liabilities (0.3)
Total identifiable net assets 2.4
Provisional goodwill arising
on acquisition 2.5
--------------------------------------- ---------------------------
Total investment 4.9
--------------------------------------- ---------------------------
Discharged by
Cash 4.9
--------------------------------------- ---------------------------
Included in the GBP2.5m of goodwill recognised above are certain
intangible assets that cannot be individually separated and
reliably measured from the acquiree, due to their nature. These
include the value of expected operational benefits. All the
acquired receivables are expected to be collected.
Net cash outflows in respect of the acquisition comprise:
Total
GBPm
------------------------------------------------ -------
Cash consideration 4.9
Transaction costs of the acquisition (included
in operating cash flows) (1) 0.2
Net cash acquired (0.3)
-------------------------------------------------- -------
4.8
------------------------------------------------ -------
1) Acquisition costs of GBP0.2m were expensed as incurred in the
six months period to 30 September 2022. These were included within
administrative expenses.
Included in cash flow from investing activities is the cash
consideration of GBP4.9m and the net cash acquired of GBP0.3m.
Acquisition in the year ended 31 March 2022
On 13 May 2021, 25 August 2021 and 2 September 2021, the Group
completed the acquisition of Control Products Inc ('CPI'), Antenova
Limited ('Antenova') and Beacon EmbeddedWorks ('Beacon'),
respectively. Details of these business combinations were disclosed
in note 11 of the Group's annual financial statements for the year
ended 31 March 2022. Since 31 March 2022, there were no material
changes to the fair value of assets and liabilities acquired.
12. Goodwill
Cost GBPm
----------------------------------------- ------
At 1 April 2021 164.7
Arising from business combinations 53.7
Business disposed (46.2)
Exchange adjustments 3.5
----------------------------------------- ------
At 31 March 2022 175.7
Arising from business combinations 2.5
Exchange adjustments 11.8
At 30 September 2022 190.0
----------------------------------------- ------
Impairment
----------------------------------------- ------
At 1 April 2021 (36.8)
Business disposed 36.8
----------------------------------------- ------
At 31 March 2022 and 30 September 2022 -
----------------------------------------- ------
Net book value at 30 September 2022 190.0
----------------------------------------- ------
Net book value at 31 March 2022 175.7
----------------------------------------- ------
Impairment testing of goodwill
Following the under-performance of a CGU within the Sensing
& Connectivity division, which represents 3% of the total
carrying amount of goodwill in the Group as at 30 September 2022,
management recalculated the recoverable amount of the CGU as at 30
September 2022. The recoverable amount of the CGU was determined
based on value-in-use calculations, consistent with the methods
used as at 31 March 2022. For details, see note 18 of the Group's
annual report.
The key assumptions made in estimating the value of the future
cash flow are a long-term growth rate of 2%, a pre-tax discount
rate of 11.9% and a 4 Year Sales CAGR of 6.25%. The headroom for
this CGU is GBP8m at the date of the assessment, therefore, no
impairment was recognised as at 30 September 2022.
The table below shows the reduction in headroom created by a
change in assumptions:
Reduction
in headroom
GBPm
-------------------------------------- -------------
Long-term growth rate - 1% decrease 2.3
Pre-tax discount rate - 1% increase 3.0
Sales CAGR - 1% decrease 2.8
--------------------------------------------- -------------
None of the changes to individual assumptions above would lead
to the carrying amount of the CGU exceeding its recoverable
amount.
The assumptions that would result in the recoverable amount
equalling the carrying amount are 4 years sales CAGR of 5% (a
reduction of 1.25 percentage points), reduction in long term growth
by 0.5ppts reduction in operating margin of 23%, and a pre-tax
discount rate of 12.8% (an increase of 0.9 percentage points).
13. Reconciliation of cash flow from operating activities
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2022 2021 2022
GBPm GBPm GBPm
----------------------------------------------- ----------- ----------- --------
Profit for the period 10.7 6.2 25.2
Taxation expense 4.1 4.8 10.7
Net finance costs 2.1 2.0 4.1
Depreciation of property, plant and equipment 2.4 2.4 4.7
Depreciation of right of use assets 3.0 3.4 6.1
Amortisation of intangible assets 8.1 6.7 14.5
Gain on business disposal - - (6.6)
Gain/(loss) on disposal of property, plant
and equipment - 0.1 (0.1)
Change in provisions (0.3) 0.6 (0.3)
Pension scheme funding (1.0) (0.9) (1.9)
IAS 19 pension charge 0.3 0.2 0.6
Contingent consideration related to business (4.2) - -
acquisitions
Business disposal costs (1.2) - -
Equity-settled share-based payment expense
and associated taxes 0.6 1.4 1.3
----------------------------------------------- ----------- ----------- --------
Operating cash flows before changes in
working capital 24.6 26.9 58.3
----------------------------------------------- ----------- ----------- --------
Increase in inventories (9.1) (11.8) (17.7)
Increase in trade and other receivables (0.8) (6.9) (24.9)
(Decrease)/Increase in trade and other
payables (0.6) 10.5 26.8
----------------------------------------------- ----------- ----------- --------
Decrease in working capital (10.5) (8.2) (15.8)
----------------------------------------------- ----------- ----------- --------
Cash generated from operations 14.1 18.7 42.5
Interest paid (2.0) (1.8) (3.7)
Interest paid on lease liabilities ([4]) (0.4) (0.4) (0.8)
Net income taxes paid (3.2) (3.0) (7.1)
----------------------------------------------- ----------- ----------- --------
Net cash inflow from operating activities 8.5 13.5 30.9
----------------------------------------------- ----------- ----------- --------
14. Closing net debt
At At
30 Sept 30 Sept At
2022 2021 31 Mar 2022
GBPm GBPm GBPm
------------------------------------------ --------- --------- -------------
Bank overdrafts (5.7) (2.3) (2.5)
Bank loans under one year - (0.2) -
Bank loans over one year (75.8) (120.1) (67.8)
Capitalised debt cost 2.1 0.9 0.7
Cash and cash equivalents 34.2 19.9 39.4
Cash and cash equivalents in assets held - 26.2 -
for sale
------------------------------------------ --------- --------- -------------
Closing net debt (45.2) (75.6) (30.2)
------------------------------------------ --------- --------- -------------
Bank overdrafts are repayable on demand with interest based on
floating rates linked to SONIA.
Included in bank loans over one year are USD-denominated loans
of GBP2.6m (31 March 2022: GBP2.2m) carrying floating interest
rates linked to LIBOR, GBP73.1m (31 March 2022: GBP65.5m) of RCF
drawdowns denominated in Sterling, US Dollars and Euros which bear
interest based on SONIA, SOFR and EURIBOR, plus a facility margin,
and Euro-denominated loans of GBP0.1m (31 March 2022: GBP0.1m)
carrying fixed interest rates.
Cash and cash equivalent earns interest at floating rates on
daily bank deposit rates .
14. Closing net debt (continued)
Lease liabilities of GBP22.1m (31 March 2022: GBP21.1m) has been
presented separately in the consolidated statement of financial
position. The increase of GBP1m during the six-month period to 30
September 2022 consisted of additions/modifications of GBP2.6m,
interest accruals of GBP0.4m and translation differences of GBP1m,
offset by lease payment of GBP3m. Certain businesses in the Group
participate in supply chain finance arrangements whereby suppliers
may elect to receive early payment of their invoices from a bank by
factoring their receivable from discoverIE entities. Included
within trade payables is GBP2.5m (31 March 2022: GBP0.9m) subject
to such an arrangement.
During May 2022, the Group increased its syndicated banking
facility from GBP180m to GBP240m and extended the remaining term of
the facility by two years out to four years ending in June 2026,
with an option exercisable by the Group to extend the facility by a
further year to June 2027. In addition, the Group has an GBP80m
accordion facility which it can use to extend the total facility up
to GBP320m. The increase and extension in the facility has been
accounted for as a modification, in accordance with IFRS 9
'Financial Instruments', with no impact in the consolidated
statement of profit or loss as a result of the increase and
extension of the facility.
Reconciliation of movement in cash and net debt
Six months Six months
ended ended Year
30 Sept 30 Sept ended
2022 2021 31 Mar 2022
GBPm GBPm GBPm
------------------------------------------ ----------- ----------- -------------
Net (decrease)/increase in cash and cash
equivalents (9.0) 14.6 7.6
Proceeds from borrowings (11.0) (100.0) (94.1)
Repayment of borrowings 9.7 56.5 102.3
------------------------------------------ -----------
(Decrease)/increase in net cash before
translation differences (10.3) (28.9) 15.8
Translation and other non-cash changes (4.7) 0.5 1.2
------------------------------------------ ----------- ----------- -------------
(Decrease)/increase in net cash (15.0) (28.4) 17.0
Net debt at beginning of the period (30.2) (47.2) (47.2)
------------------------------------------ ----------- ----------- -------------
Net debt at end of the period (45.2) (75.6) (30.2)
------------------------------------------ ----------- ----------- -------------
Supplementary information to the statement
of cash flows
Six months
Six months ended
ended 30 Sept Year
30 Sept 2021 ended
2022 restated 31 Mar 2022
([5])
Underlying Performance Measure GBPm GBPm GBPm
(Decrease)/increase in net cash before
translation differences (10.3) (28.9) 15.8
Add: Business acquisitions and disposals 13.2 86.7 87.6
Dividends paid 7.1 6.2 9.4
Less: Net proceeds from share issue (and
related taxes) 0.6 (53.4) (52.6)
Discontinued operations - (2.5) (38.4)
Free cash flow 10.6 8.1 21.8
-------------------------------------------- ----------- ----------- -------------
Legacy pension scheme funding 1.0 0.9 1.9
Net finance costs 2.0 1.7 3.2
Taxation 3.2 2.6 6.2
-------------------------------------------- ----------- ----------- -------------
Operating cash flow 16.8 13.3 33.1
-------------------------------------------- ----------- ----------- -------------
15. Fair value measurement of financial instruments
The Group's principal non-derivative financial instruments
comprise bank loans and overdrafts, cash and short term borrowings.
The Group also holds other financial instruments such trade
receivables and trade payables that arise directly from the Group's
trading operations.
Derivative financial instruments are represented by short-term
foreign currency forward contracts placed by the Group with
external banks as part of the Group's cash management and foreign
currency risk management activities.
15. Fair value measurement of financial instruments (continued)
The fair value of derivative foreign exchange instruments is
determined on initial recognition at forward market exchange rates
at inception of the contract and subsequently remeasured based on
forward market exchange rates at the balance sheet date. As at 30
September 2022, the fair value of derivatives was GBP0.5m (31 March
2022: GBPnil).
The carrying value of the Group's trade and other receivables
and trade and other payables approximates their book value due to
the short maturity of these instruments. The carrying value of the
Group's other financial assets and financial liabilities at 30
September 2022 are set out below by category. Carrying values for
these financial assets and liabilities are equivalent to fair
values.
Carrying Fair
amount value
GBPm GBPm
----------------------------------------------------- --------- -------
Financial assets
Cash and cash equivalent 34.2 34.2
----------------------------------------------------- --------- -------
Financial liabilities at amortised cost
Bank overdrafts and short-term borrowings (5.7) (5.7)
Non-current interest-bearing loans and borrowings:
Fixed and floating rate borrowings (75.8) (75.8)
Derivative liability (0.5) (0.5)
Lease liabilities (22.1) (22.1)
Contingent consideration (6.0) (6.0)
----------------------------------------------------- --------- -------
The methods and assumptions used to determine the fair value of
financial assets and liabilities are set out below.
All material changes in fair value of financial instruments as
at the balance sheet date have been taken to the condensed
consolidated statement of profit or loss. Impairment reviews did
not identify any material impairment of financial assets from
carrying values as reported at the balance sheet date and, as such,
no material impairments are included in the condensed consolidated
statement of profit or loss.
Fair Value Methods and Assumptions
Forward foreign exchange contracts (forwards) - the fair value
of forward foreign currency contracts is determined with reference
to observable yield curves and foreign exchange rates at the
reporting date. The FX contracts outstanding with banks at the
year-end had a maturity of two years or less.
Loans and borrowings - the fair value of loans and borrowings
has been calculated by discounting future cash flows, where
material, at prevailing market interest rates.
Fair Value Hierarchy
For financial assets and financial liabilities measured at fair
value, as set out in the tables above, the fair value measurement
techniques are based upon applying unadjusted, quoted market rates
or prices or inputs other than quoted prices that are observable
for the assets or liability either directly or indirectly.
IFRS 13 'Financial Instruments: Disclosures' requires financial
instruments measured at fair value to be analysed into a fair value
hierarchy based upon the valuation technique used to determine fair
value. The highest level in this hierarchy is Level 3 within which
inputs that are not based on observable market data for the asset
or liability are applied.
The valuation techniques used by the Group for the measurement
of derivative financial instruments and loans are considered to be
within Level 2, which includes inputs other than quoted prices
included within Level 1 that are observable either directly or
indirectly. Contingent consideration is included in Level 3 of the
fair value hierarchy. The fair value is determined considering the
expected payment, discounted to present value using a risk adjusted
discount rate. The expected payment is determined separately in
respect of each individual earn-out agreement taking into
consideration the expected level of profitability of each
acquisition.
16. Pension
The acquisition of the Sedgemoor Group in June 1999 included a
defined benefit pension scheme, the Sedgemoor Group Pension Fund
("the Sedgemoor Scheme"). The Sedgemoor Scheme, which is funded by
the Company, provides retirement benefits based on final
pensionable salary. Its assets are held in a separate
trustee-administered fund. Following the acquisition of the
Sedgemoor Group, the Sedgemoor Scheme was closed to new members.
Shortly thereafter, employees were given the opportunity to join
the discoverIE pension scheme and future service benefits ceased to
accrue to members under the Sedgemoor Scheme. Contributions to the
Sedgemoor Scheme are determined in accordance with the advice of
independent, professionally qualified actuaries.
During the period, the financial position of the Sedgemoor
Scheme has been updated in line with changes in actuarial
assumptions and cash contributions made to the Scheme. The
valuation used for IAS 19 disclosures has been based on the most
recent valuation as at 31 March 2021 updated to take account of the
requirements of IAS 19 in order to assess the liabilities of the
scheme as at 30 September 2022.
The IAS 19 defined benefit pension scheme asset as at 30
September 2022 was GBP4.3m (31 March 2022: GBP2.7m). The movement
principally relates to increase in corporate bond yields together
with the annual payment made during the year of GBP1.9m. These are
partly offset by increases in future inflation expectations. An
annual payment of GBP1.9m is currently payable, growing by 3% each
year until April 2024 in accordance with the plan agreed with the
pension trustee as part of the last agreed triennial valuation
dated 31 March 2021.
17. Exchange rates
The principal exchange rates used to translate the results of
overseas businesses are as follows:
Six months ended Six months ended 30 Year ended 31 March
30 Sept 2022 Sept 2021 2022
----------- ------------------- ---------------------- ----------------------
Closing Average Closing Average Closing Average
rate rate rate rate rate rate
US Dollar 1.1040 1.2189 1.3456 1.3883 1.3123 1.3668
Euro 1.1325 1.1744 1.1621 1.1650 1.1821 1.1761
Norwegian
Krone 11.9862 11.7728 11.8125 11.8918 11.479 11.856
----------- --------- -------- ---------- ---------- ---------- ----------
18. Events occurring after the reporting period
There were no matters arising, between the statement of
financial position date and the date on which these consolidated
interim financial statements were approved by the Board of
Directors, requiring adjustment in accordance with IAS 34 'Interim
financial reporting'.
19. Interim report
A copy of the interim report will be available for inspection at
the Company's registered office:
2 Chancellor Court, Occam Road, Surrey Research Park, Guildford,
GU2 7AH.
Current regulations permit the Company not to send copies of its
interim results to shareholders. Accordingly, the 2022 interim
results published on 23 November 2022 will not be sent to
shareholders. The 2022 interim results and other information about
discoverIE Group plc are available on the Company's website at
www.discoverieplc.com.
[1] Presentation of the consolidated statement of profit or loss
for the period ending 30 September 2021 restated. Refer to note 2
for details.
[2] See note 2 for details of the SaaS-related prior period
restatement.
[3] See note 2 for details of the SaaS-related prior period
restatement.
[4] In the prior year interim financial statements, interest
paid on lease liabilities were presented under Financing
activities.
[5] Restated to exclude cash flows for discontinued
operations.
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END
IR BLBDBLSDDGDD
(END) Dow Jones Newswires
November 23, 2022 02:00 ET (07:00 GMT)
DiscoverIE (AQSE:DSCV.GB)
過去 株価チャート
から 11 2024 まで 12 2024
DiscoverIE (AQSE:DSCV.GB)
過去 株価チャート
から 12 2023 まで 12 2024
