Discoverie : Preliminary Results for the year ended 31 March 2018

05 Jun 2018

Strong growth in sales, earnings and order book

discoverIE Group plc (LSE: DSCV, 'discoverIE', the 'Group' or the 'Company'), a leading international designer, manufacturer and supplier of customised electronics to industry, today announces its results for the year ended 31 March 2018.

Highlights

• Strong growth in sales, orders, profits and earnings
  • Sales up 15% (+11% CER⁽²⁾) and orders up 14% (+11% CER)
  • Underlying operating profit up 23% (+18% CER)
  • Underlying earnings per share up 16%
• Organic growth driven by strong performance from the D&M division
  • D&M organic sales up 11% - now 59% of annualised⁽⁴⁾ Group sales (FY 2016/17: 52%)
  • Group organic sales⁽³⁾ up 6%
• Good progress on key strategic and performance targets
  • Underlying operating margin increased to 6.3% (FY 2016/17: 5.9%)
  • Annualised international sales up to 23% (FY 2016/17: 19%)
  • Cross-selling revenue of £8.8m, nearly double last year (FY 2016/17: £4.6m)
  • ROCE⁽⁵⁾ of 15.5% (FY 2016/17: 13.0%)
  • Operating cash flow⁽⁶⁾ of £20.9m, in line with our conversion target
  • Full year dividend increased by 6%
• Santon acquired on 1 February 2018 and settling in well
• Group well positioned for further growth
  • Record year end order book of £122m (+12% CER)
  • Strong growth in number and value of new project design wins
  • Further acquisition opportunities developing

Nick Jefferies, Group Chief Executive, commented:

'As expected, this has been a year of good progress. The Design & Manufacturing division has delivered strong organic growth in revenue and profits and in Custom Supply, the efficiency programme of last year has delivered much improved profitability.

The Group order book grew by 12% CER to reach a new record level of £122m and the value of new projects won during the year continued to grow well, particularly in our target markets; both are important for building organic growth. To support this, we have invested in additional production capacity at three sites with one more underway in the coming year.

We have a healthy pipeline of acquisition opportunities with a number being developed in line with our stated objectives.

Trading in the new year has started well with continuing growth in orders and sales and the Group is well positioned to continue benefiting from the technology changes that are underway in our target markets. We look forward to making further progress in the year ahead.'

For further information, please contact:

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

Instinctif Partners
Mark Garraway
Helen Tarbet
James Gray
020 7457 2020

Notes:

(1) 'Underlying Operating Profit', 'Underlying EBITDA', 'Underlying Operating Costs', '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 (including earnouts and integration costs of £0.8m, amortisation of acquired intangible assets of £4.9m and the IAS19 pension charge relating to a legacy defined benefit scheme of £0.4m) totalling £6.1m for FY 2017/18. Equivalent adjustments, also including exceptional items within the FY 2016/17 underlying results totalled £12.4m. For further information, see note 5 of the attached summary financial statements.

(2) Growth rates at constant exchange rates ('CER'). The average sterling rate of exchange for the year weakened 5% against the Euro compared with the average rate for last year, strengthened 1% against the US Dollar and weakened 2% on average against the three Nordic currencies. See Finance Review section for reconciliation of CER sales and operating costs to reported numbers.

(3) Organic growth for the Group is calculated at CER including the equivalent pre-acquisition period of Variohm which was acquired last financial year (on 20 January 2017) and excluding the sales from Acal BFi Spain which was closed during December 2016 and the Santon Group ('Santon') which was acquired on 1 February 2018.

(4) Annualised sales factors in the estimated full year impact of Santon, acquired on 1 February 2018.

(5) Return on capital employed ('ROCE') is defined as underlying operating profit as a percentage of net assets (including goodwill) plus net debt. ROCE of 15.5% excludes the recent Santon acquisition as it had only been owned for 2 months. Including Santon for those 2 months, ROCE was 13.5%.

(6) 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.

(7) 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 (previously Acal plc) is an international group of businesses that designs, manufactures and supplies innovative components for electronic applications.

The Group provides application-specific components to original equipment manufacturers ('OEMs') internationally. With in-house engineering capability, we are able to design components to meet customer requirements, which are then manufactured and supplied, usually on a repeating basis, for their ongoing production needs. This generates a high level of repeating revenue and long term customer relationships.

By focusing on key markets which are driven by structural growth and increasing electronic content, namely renewable energy, transportation, medical and industrial connectivity, the Group aims to achieve organic growth that is well ahead of GDP and to supplement that with targeted complementary acquisitions.

The Group employs c.4,000 people and its principal operating units are located in Continental Europe, the UK, China, Sri Lanka, India and North America.

The Group is listed on the Main Market of the London Stock Exchange and is a member of the FTSE Small Cap Index, classified within the Electrical Components and Equipment subsector, and has revenue of £0.4bn. Over the last five years, revenue and underlying earnings per share have doubled.

05 Jun 2018 Preliminary Results for the year ended 31 March 2018 (572KB PDF)

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