REG - discoverIE Group plc - Preliminary results
04/06/2025 07:00
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RNS Number : 3022L discoverIE Group plc 04 June 2025
4 JUNE 2025
discoverIE Group plc
Preliminary results for the year ended 31 March 2025
Strong through-cycle performance delivering record earnings & cash flow;
upgrading medium-term operating margin target to 17%
discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a leading
international designer and manufacturer of customised electronics to industry,
today announces its preliminary results for the year ended 31 March 2025 ("FY
2024/25" or "the year").
FY 2024/25 FY Growth % CER((2)) growth %
2023/24
Revenue £422.9m £437.0m -3% -2%
Adjusted operating profit((1)) £60.5m £57.2m +6% +8%
Adjusted operating margin((1)) 14.3% 13.1% +1.2ppt +1.2ppt
Adjusted profit before tax((1)) £50.1m £48.2m +4%
Adjusted EPS((1)) 38.7p 36.8p +5%
Reported profit before tax £32.0m £22.2m +44%
Reported fully diluted EPS 25.0p 15.8p +58%
Full year dividend per share 12.5p 12.0p +4%
Highlights
· Adjusted operating profit up 8% CER
o Adjusted operating margin of 14.3% (H2: 14.8%), up 1.2ppts, well ahead of
FY 2024/25 13.5% target
o Record adjusted EPS up 5%, exceeding the top end of market expectations
· Revenue down 2% CER as industry-wide inventory correction works
through
o Full year sales -7% organic((3)), improving through the year (H1: -10%,
H2: -4%)
· Orders return to growth up 2% organic, led by S&C up 12%
(later-cycle M&C: -4%)
o Q4 pick-up with both divisions increasing by 15% organically
· Excellent free cash flow((4)) of £40.4m, up 9% with a conversion
rate of 106%, well above 85% target
o Additionally, proceeds from Santon Solar Business & Acal BFi disposals
received in full (£13m)
o Buy-in of legacy defined benefit scheme (c.£1.5m cash savings per year)
o Year-end gearing((5)) of 1.3x, below the lower end of target range (1.5x
to 2.0x)
· Further progress towards other key targets
o ROCE((6)) of 15.8% (up 0.1ppt) with ROTCE of 52%
o Carbon emissions reduced by 59% since CY 2021((7)), well on track for 65%
target in CY 2025
· Two earnings-accretive, bolt-on acquisitions for initial
consideration of £29m
o c.£80m funding capacity for further acquisitions
· Adjusted operating margin target upgraded to 17% by FY 2029/30
(from 15% by FY 2027/28)
· Outlook: Growth drivers remain strong with the Group well
positioned
o Over £350m((8)) of new design wins in the year support growth into the
medium-term
o High growth security market added as a fifth target market
o Strong pipeline of acquisition opportunities
o Group will benefit from further reductions in interest rates
o Limited direct impact from US tariffs
Nick Jefferies, Group Chief Executive, commented:
"discoverIE delivered another strong performance with record operating profits
and earnings, despite prolonged industry-wide destocking which resulted in 3%
lower sales for the year. Adjusted operating margins increased to 14.3%,
comfortably exceeding our target for the year, with excellent cash generation
once again. Fourth quarter orders increased significantly in both divisions,
as inventories normalised.
Our flexible production model together with Group-wide operating efficiencies
more than offset lower sales, protecting profitability through this stage of
the cycle. This is a great strength of the Group, enabling growth in operating
profits and margins in each of the last 10 years (in-line in the Covid year)
and reducing earnings cyclicality. We see the potential to deliver further
manufacturing efficiencies and commercial synergies across the Group and have
upgraded our five-year operating margin target to 17%.
Whilst we will pass on any incremental tariff costs, we continue to do all we
can to mitigate them with our local manufacturing and expect limited direct
impact, although remain mindful of the volatile economic conditions and its
potential to impact customers' demand.
discoverIE is aligned with target markets which are underpinned by structural
growth drivers and, with the addition of the security market during the year,
our total market opportunity increased to over $30bn. With a strong pipeline
of organic and inorganic opportunities, the Group is well placed to continue
its resilient performance and development."
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 Burson 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
Henry Carver Director of Investor Relations
Burson
Buchanan
020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
Notes:
(1) Following a review of alternative performance measures ("APMs") of
other companies, the Group has renamed its 'Underlying' measures as 'Adjusted'
in order to make the term consistent with other companies. The definitions of
these APMs have not changed and are consistent with prior years. 'Adjusted
operating profit', 'Adjusted operating margin', 'Adjusted EBITDA', 'Adjusted
profit before tax', 'Adjusted EPS', 'Adjusted operating cash flow' and 'Free
cash flow' are non-IFRS financial measures used by the Directors to assess the
performance of the Group. These measures exclude acquisition and disposal
related costs (amortisation of acquired intangible assets of £16.2m and net
acquisition and disposal expenses of £1.9m) totalling £18.1m. Equivalent
Adjusting Items within the FY 2023/24 adjusted results totalled £26.0m.
'Adjusted EBITDA' also excludes IFRS 16, non-cash share-based payments cost
and IAS19 pension costs in line with the Group's banking covenant. For further
information, see note 6 of the attached condensed consolidated financial
statements.
(2) Growth rates at constant exchange rates ("CER"). In calculating CER
for the year, the average Sterling rate of exchange strengthened 3% against
the Euro compared with the average rates for last year, 1% against the US
Dollar and 3% on average against the three Nordic currencies.
(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
(Silvertel in August 2023, 2J Antennas Group ("2J") in September 2023, Shape,
DTI and IKN in Q4 2023/24, Hivolt in August 2024 and Burster in January 2025)
and excluding last year's announced disposal of the Santon solar business
unit. For further information, see note 6 of the attached condensed
consolidated financial statements.
(4) Free cash flow is cash flow available for the payment of dividends and
investment in acquisitions. Free cash flow conversion is free cash flow
divided by adjusted profit after tax. See definitions in note 6 of the
attached condensed consolidated financial statements.
(5) Gearing ratio is defined as net debt divided by adjusted EBITDA
(excluding IFRS 16; annualised for acquisitions).
(6) ROCE is defined as FY 2024/25 adjusted operating profit including the
annualisation of acquisitions, as a percentage of net assets excluding net
debt, deferred consideration related to disposed businesses and legacy defined
benefit pension asset/(liability).
(7) CY 2025 target is to reduce scope 1 & 2 carbon emissions by 65% on
an absolute basis (base year CY 2021).
(8) This represents estimated lifetime value (ELV)
(9) Unless stated, growth rates refer to the comparable prior year.
Sequential growth compares to the immediately preceding period e.g. H2 2024/25
would be compared to H1 2024/25 on an organic basis.
(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 design and
manufacture 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, high quality customer relationships.
With a focus on key markets driven by structural growth, increasing electronic
content and sustainability, namely medical, electrification of transportation,
renewable energy, security 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 is committed to
reducing the impact of its operations on the environment in order to reach net
zero. With its key markets aligned with a sustainable future, the Group has
been awarded an ESG "A" rating by MSCI and is Regional (Europe) Top Rated and
Industry (Technology Hardware) Top Rated by Sustainalytics.
The Group employs c.4,500 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 FTSE 250, classified within the Electrical Components and
Equipment subsector.
Strategic and Operational Review
Good progress towards our targets
The Group designs and manufactures essential, customised, high value-add,
technically complex electronic products, enabling our customers to create
better equipment. Despite prolonged industry destocking, we made further good
progress this year towards our near and medium-term goals, delivering record
earnings and operating margins while continuing to generate excellent cash
flow.
The Group delivered record adjusted operating profit of £60.5m, up 8% at CER
with second half profits up 12% CER compared with 4% CER in the first half.
The Group's adjusted operating margin increased by 1.2ppt at CER to 14.3%,
exceeding our 13.5% target for this financial year and, with a second half
margin of 14.8%, we have raised our target to 17% by FY 2029/30 from 15% by FY
2027/28.
Adjusted operating profit growth was achieved with operational efficiencies,
strong gross margins and tight control of operating expenses, more than
offsetting the 3% reduction in sales (2% reduction at CER). Even with higher
annualised finance costs (up 16%), adjusted EPS increased by 5% with H2
2024/25 adjusted EPS up by 15% compared to a first half reduction of 4%.
Including adjusting items, being acquisition and disposal-related costs, fully
diluted EPS increased by 58% on a reported basis.
Organically, sales were 7% lower, reflecting industry destocking and the
normalisation of supply chains. Second half sales were 4% lower organically
improving over the first half which reduced by 10%. This was led by the
Group's major customers recovering strongly in H2, growing by 13% (H1 -4%)
having led the run into destocking in the prior year and now leading the
recovery.
Asia was the most resilient territory, increasing sales organically by 1%,
while UK and German sales both reduced by 7%, Nordic sales by 3% and the rest
of Europe sales by 4% (returning to growth in the second half). North America
sales reduced by 16% following growth of 20% in the prior year.
Orders increased by 8% CER in the year and by 2% organically, with Asia up 6%,
the US up 4% and Europe up 3% partially offset by the UK reducing by 1%. The
book-to-bill ratio for the year increased to 0.97 from 0.89 last financial
year. In the final quarter, orders grew by 15% organically in both divisions.
With continued strong design wins (up 5% this year and up 30% on two years
ago), the Group is well positioned to accelerate growth as market conditions
improve.
The Group order book at 31 March 2025 was £161m, representing c.4.5 months of
annualised sales (slightly higher than historic normal levels) and providing
good visibility for the year ahead (31 March 2024: £175m). The order book has
reduced from a peak of c.7 months annualised sales in September 2022 when
orders included earlier stocking-up amid constrained supply chains.
Free cash flow for the year increased by 9% to £40.4m, with a conversion rate
of 106% being well ahead of our 85% target. Additionally, the proceeds of the
Santon solar business disposal and the deferred consideration from the sale of
Acal BFi three years earlier helped reduce net debt to £94.3m and gearing to
1.3x (31 March 2024: net debt of £104.0m and 1.5x gearing), below our target
range and providing significant funding capacity.
A flexible business well positioned in a changing world
The Group is well positioned in an environment of rapidly changing global
conditions, with a business model that is resilient, flexible and innovative.
- Essential products: the Group's products are designed-in and
essential for customers' applications while amounting to a small proportion of
their overall system cost, thereby driving both resilient gross margins and
long-term repeating revenues.
- Broad and flexible footprint: a decentralised model with 41
manufacturing sites and operations around the world, able to support customers
locally and with the decarbonisation of their supply chains.
- 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 the Group's exposure to external
supply chain disruptions.
- Low energy intensity operations: the large majority of the Group's
energy exposure is electricity and energy costs represent less than 1% of
Group revenues, limiting the Group's exposure to energy price rises and
operational disruptions. Additionally, with the installation of solar panels
at several of our sites as part of our project to reduce carbon emissions,
this percentage is reducing.
Limited direct impact expected from US tariffs
Our flexible business model enables the direct impact of US tariffs to be
minimised. Production can be moved to other countries. This was the case in
2018 when tariffs were introduced on US imports from China. To support our
customers, we moved production destined for the US from China to our
facilities in India and Mexico, while passing on tariff costs during the
transition period.
This year, 24% of our Group sales were in the US of which just over half (52%)
were manufactured locally in one of our seven US production sites, along with
18% coming from the UK, 13% from Europe, 13% from Mexico and Canada covered by
the USMCA free trade agreement and 4% from Asia (none now from China). We are
able to increase onshore manufacturing in the US if customers require, or to
move production to another location, and once again substantially mitigate the
effects of US tariffs on imports from around the Group.
Material imports from China into the US for local manufacturing currently
amounts to c.£3-4m, which we expect to fully mitigate through re-sourcing or
passing on price increases.
While the direct effects on the Group of the currently proposed tariffs are
expected to be limited, we remain vigilant of the consequential effects that
widespread tariffs could have on reducing demand from some customers.
Conversely, we see new commercial opportunities arising from tariff-affected
competitors.
Record operating margin and strong cashflow
This year saw further significant benefits derived from our flexible
production model, operational efficiencies, tight control of operating
expenses and continuing robust gross margins, which more than offset the
reduction in organic sales. While Group sales for the year reduced by 2% CER
to £422.9m, adjusted operating profit increased by 8% CER to £60.5m, with
operating margins increasing by 1.2ppts at CER to 14.3%. Higher average net
debt balances drove an increase in net finance costs for the year of 16% to
£10.4m, resulting in adjusted profit before tax increasing by 4% to £50.1m,
with adjusted earnings per share increasing by 5% to 38.7p (FY 2023/24:
36.8p). The Group will benefit if interest rates continue to reduce.
On a reported basis, including the impact of adjusting items of £18.1m,
profit before tax for the year increased by 44% to £32.0m (FY 2023/24:
£22.2m) with fully diluted earnings per share increasing by 58% to 25.0p (FY
2023/24: 15.8p).
Free cash flow of £40.4m was generated during the year, being 9% higher than
last year and representing 106% of adjusted earnings, well ahead of the
Group's 85% conversion target. Net debt (excluding IFRS 16) at 31 March 2025
reduced by £9.7m to £94.3m (31 March 2024: £104.0m). Gearing reduced to
1.3x (31 March 2024: 1.5x) while still investing £29m in the acquisitions of
Burster and Hivolt. This gearing is below the lower end of our target range of
1.5x to 2.0x and, together with expected cash flow in the coming year,
provides acquisition funding of c.£80m while keeping the Group within its
target gearing range.
Increased dividend
The Board is recommending a 4% (0.35 pence) increase in the final dividend to
8.60 pence per share, giving a 4% increase in the full year dividend per share
to 12.5 pence (FY 2023/24: 12.0 pence) and an adjusted earnings cover of 3.1
times (FY 2023/24: 3.1 times). The final dividend is payable on 1 August 2025
to Shareholders registered on 27 June 2025.
The Board believes in maintaining a progressive dividend policy along with a
long-term dividend cover of over three times earnings on an adjusted basis.
This approach, along with the continued development of the Group, will enable
funding of both dividend growth and a higher level of investment in
acquisitions from internally generated resources.
A Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial
Services Limited. The DRIP enables the Company's shareholders to elect to have
their cash dividend payments used to purchase the Company's shares. More
information can be found at www.shareview.co.uk/info/drip
(https://url.uk.m.mimecastprotect.com/s/FCRWCk6r5IX3OLu2fjSG7Rlx?domain=urldefense.com)
. The closing date for DRIP elections is 11 July 2025.
A proven growth strategy
The Group has been built through a focus on organic growth with enhanced
operational efficiency, and 28 carefully selected, well-integrated
acquisitions over the past 14 years to create a focused, growth-oriented,
higher margin design and manufacturing business. We have a well-developed
approach to capital allocation and see significant scope for further
expansion, with a strong pipeline of investment opportunities in development.
The Group operates in a c.$30bn fragmented market with many smaller players
presenting numerous consolidation opportunities.
The Group's strategy comprises four elements:
1. Grow sales well ahead of GDP over the economic cycle by focusing on
high quality growth target markets for design opportunities. Operating in
several growth markets and technology areas derisks growth by reducing market
and customer concentration, generating a smoother through cycle growth
profile.
2. Acquire highly differentiated businesses with attractive growth
prospects and strong operating margins, either as new platforms or as bolt-ons
to existing clusters.
3. Generate efficiencies and improve operating margins through
clustering of businesses to achieve operational efficiencies, moving up the
value chain into higher margin products with increased product innovation and
differentiation and value-based pricing.
4. Reduce our impact on the environment by achieving net zero carbon
emissions.
These elements are underpinned by our core objectives of generating strong
cash flows and long-term sustainable returns from a capital-light business
model.
Security added as a fifth target market this year
At our Capital Markets Day in September 2024, the Group announced the addition
of the security market as a fifth target market. Along with our other four
target markets (industrial automation & connectivity, medical, renewable
energy, and the electrification of transportation), security is another highly
attractive and fragmented technology-rich market underpinned by a number of
structural growth drivers. The Group is already making strong progress in
realising opportunities in this fifth target market, particularly in areas
such as data centre security.
Long-term growth in these target markets is being driven by increasing
electronic content and by global megatrends such as the accelerating need for
industrial automation and connectivity, increasing security concerns, an
ageing affluent population, renewable sources of energy and the
electrification of transport. In total, the five target markets accounted for
around 80% of sales this year.
The Group's focus on these target markets has driven the Group's through-cycle
organic revenue growth well ahead of GDP, as well as creating acquisition
opportunities.
Continued progress on key strategic indicators
For more than 10 years, the Group's strategic progress and its financial
performance have been measured through key strategic indicators ("KSIs") and
key performance indicators. These are reviewed annually, and targets have been
raised nine times previously, including in June 2023 when a five-year target
was set of 15% adjusted operating margin. With the second-half margin reaching
14.8%, this margin target has now been upgraded again, this time to reach 17%
in five years (by FY 2029/30). From this year, targets have been simplified
into seven KSIs, which will be the key business drivers for the next stage of
our development. Two previously monitored KSIs have now been largely achieved
and so have been removed: (i) Sales beyond Europe (target 45%) reached 43% at
the half year, having risen from 5% in FY 2013/14; (ii) Target market sales
(target 85%) reached 80%, having risen from c.40% in FY 2013/14 when first
set, and will likely remain around that level as new acquisitions are
typically below this level when acquired so have a short-term offsetting
effect against existing businesses. Dividend growth was also previously
included as a KPI and while not one of the simplified KSIs, a progressive
dividend policy remains.
For tracking purposes, the KSIs in the tables below remain as reported at the
time rather than adjusted for disposals. Targets are for the medium-term
unless stated, with medium-term defined as being around five years. This
year's performance relative to last year is discussed below.
Key strategic indicators
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Target
1. Increase adjusted operating margin 6.3% 7.0% 8.0% 10.2% 10.9% 11.5% 13.1% 14.3% 17%((2))
2. Sales growth
CER 11% 14% 8% -1% 28% 15% 1% -2% Well ahead of
GDP thru cycle
Organic 11% 10% 5% -4% 18% 10% -1% -7%
3. Adjusted EPS growth 16% 22% 11% -8% 31% 20% 5% 5% >10%
4. Adjusted operating cash conversion((3)) 85% 93% 106% 128% 80% 94% 103% 103% >85% of adjusted operating profit
5. Free cash conversion((3)) 78% 94% 104% 136% 77% 95% 102% 106% >85% of adjusted
earnings
6. ROCE((3)) 13.7% 15.4% 16.0% 14.5% 14.7% 15.9% 15.7% 15.8% >15%
7. Carbon emissions Scope 1 & 2 reduction((4)) 35% 47% 59% 65% by end of CY 2025
(1) FY 2017/18 to FY 2019/20 are for total operations before disposals as
reported at the time.
(2) By FY 2029/30
(3) Defined in note 6 of the attached condensed consolidated financial
statements.
(4) Carbon emissions are measured on a calendar year basis (e.g. CY 2022
shown under FY 2022/23). Target is for absolute Scope 1 & 2 carbon
emissions reduction of 65% by the end of CY 2025 from CY 2021, net zero Scope
1 & 2 by CY 2030 and net zero Scope 3 by CY 2040.
The Group made continued progress on its KSIs during the year, other than
sales growth which was impacted by the prolonged period of industrial customer
destocking:
- Adjusted operating margin was 14.3%, an increase of 1.2ppts on last
year (FY 2023/24: 13.1%) taking growth in adjusted operating margin to over
9ppts in the last 10 years. The Group benefited in the year from operational
efficiencies, tight cost control and robust gross margins augmented by higher
margin acquisitions. The Group exceeded its target of 13.5% six months early
and with a second half margin of 14.8%, our 15% target for FY 2027/28 has been
raised to 17% by FY 2029/30.
- Sales reduced by 7% organically this year (H1 2024/25: -10%, H2
2024/25: -4%) due to prolonged industry destocking. We retain our focus on
achieving strong through-cycle organic growth, which is supported by our
pipeline of design wins. Over the last 10 years, sales have grown by 5%
organically per annum on average.
- Excellent operational efficiencies, robust gross margins, tight
control of operating costs, and contributions from acquisitions resulted in
adjusted operating profit for the year increasing by 8% CER and adjusted EPS
increasing by 5% despite the strength of Sterling during the year. In total,
the Group has grown its adjusted EPS by 19% CAGR over the last 10 years.
- Adjusted operating cash flow and free cash flow conversion rates of
103% and 106% were well ahead of our 85% targets. Over the last 10 years, both
adjusted operating cash conversion and free cash conversion have been
consistently strong, averaging around 100% through-cycle, reflecting low
capital expenditure requirements and efficient working capital.
- ROCE for the year was 15.8%, ahead of last year (FY 2023/24: 15.7%)
and ahead of our 15% target. Further progress in the short term is impacted by
the record number of acquisitions (seven) in the last two years (most
acquisitions are dilutive to Group ROCE initially before growing). We acquire
businesses with long-term growth prospects that are expected to generate high
returns over time. For example, our acquisitions made up to FY 2017/18
generated a collective ROCE of 27% this year. We expect this to continue to
grow and for acquisitions made more recently to grow similarly.
- Scope 1 & 2 carbon emissions reduced further during the year and
in CY 2024 were 59% lower on an absolute basis than in CY 2021, excellent
progress towards our reduction targets of 65% by the end of CY 2025 and net
zero by CY 2030.
Divisional results
The divisional results for the Group for the year ended 31 March 2025 are set
out and reviewed below.
FY 2024/25 FY 2023/24((1)) Reported revenue growth CER revenue growth Organic revenue
Growth
Revenue £m Adjusted Adjusted operating margin Revenue £m Adjusted Adjusted operating margin
operating profit((2)) operating profit((2))
£m £m
M&C 247.4 36.3 14.7% 260.1 39.8 15.3% -7% -5% -11%
S&C 175.5 36.0 20.5% 169.5 28.6 16.9% +2% +4% +1%
Unallocated (11.8) (12.3)
Total (CER) 422.9 60.5 14.3% 429.6 56.1 13.1% -2% -7%
FX 7.4 1.1
Total 422.9 60.5 14.3% 437.0 57.2 13.1% -3%
(1) Last year's results stated at CER
(2) Adjusted operating profit excludes acquisition and disposal-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, for
industrial applications. The division operates across 16 countries and
comprises two clusters (Magnetics and Embedded Systems) and four further
businesses. Almost all products are manufactured in-house at one of the
division's 22 manufacturing facilities, with its principal sites being in
China, India, Mexico, Poland, Sri Lanka, Thailand, the UK and the US.
Geographically, 6% of sales by destination are in the UK, 46% in the rest of
Europe, 26% in North America and 22% in Asia. During the year, Noratel's
Chinese operations completed the move to a new facility, delivering
operational improvements and efficiencies.
Orders of £234.5m were 1% higher than last year at CER while reducing by 4%
organically as customers normalised their inventory levels. There was
continuing improvement through the second half which was up 4% organically
compared to an 11% reduction in the first half, finishing the year strongly
with 15% growth in the fourth quarter. The book-to-bill ratio for the year was
0.95 with improvement again in the second half to 0.99 (H1 2024/25: 0.91). The
divisional order book at 31 March 2025 was £93.6m, being 4.5 months of sales,
and being in line with historic norms.
Sales reduced by 11% organically, impacted by industry destocking. By
territory, Asia grew by 11% for the year (having reduced by 24% last year).
Conversely, North America reduced by 28% (having increased by 35% last year),
the UK reduced by 9%, the Nordic region reduced by 8% and the rest of Europe
by 12%. The industrial and security sectors led recovery in the second half,
returning to growth, while others continued to destock.
There was a 6% contribution to sales from three acquisitions made in the last
20 months with Silvertel acquired in August 2023 plus Shape and DTI acquired
in Q4 2023/24. Including these acquisitions, sales at CER reduced by 5%.
With the impact of translation from a stronger Sterling (on average), reported
divisional revenue reduced by 7% to £247.4m (FY 2023/24: £265.1m reported
and £260.1m at CER). Adjusted operating profit of £36.3m was £3.5m (-9%)
lower than last year at CER and £4.3m lower on a reported basis (FY 2023/24:
£40.6m), reflecting the net impact of the organic sales shortfall partially
mitigated by flexible production, operational efficiencies and robust gross
margins, with the adjusted operating margin reducing 0.6ppts to 14.7% (FY
2023/24: 15.3% at CER).
Sensing & Connectivity division ("S&C")
The S&C division designs, manufactures and supplies highly differentiated
sensing and connectivity components for industrial applications. The division
operates across nine countries and comprises four clusters and four further
businesses. Almost all products are manufactured in-house at one of the
division's 19 manufacturing facilities, with its principal sites being in
Hungary, the Netherlands, Norway, Slovakia, the UK and the US. Geographically,
22% of sales by destination are in the UK, 48% in the rest of Europe, 24% in
North America and 6% in Asia.
Divisional orders of £177.4m were particularly strong, increasing by 18% at
CER and by 12% organically (up 15% in the final quarter) as earlier design
wins generated new business, for a book-to-bill ratio of 1.01 improving from
0.89 last year. The increase in orders came from the industrial, security and
medical sectors. As with the destocking phase, S&C exhibits earlier cycle
characteristics than M&C. Overall, the divisional order book increased by
3% since 31 March 2024 to £67.0m, representing 4.5 months of sales, and being
in line with historic norms.
Sales were 1% ahead of last year organically, with a pick-up through the year
in industrial and connectivity applications along with strong demand in data
security applications, offsetting continued destocking in other sectors. H2
organic sales increased by 6% compared with a 5% reduction in the first half.
By region, the Nordics increased by 13% for the year, the rest of Europe by 7%
and North America by 5%, while the UK was down 6% and Asia down 34%, mainly
related to local customer project delays.
This year saw the acquisitions of Hivolt, a Northern Ireland-based specialist
capacitor designer and manufacturer, and Burster, a German-based sensor
manufacturer, into the division. Combined with a 3% sales increase from these
acquisitions and acquisitions in the prior year, overall divisional sales
increased by 4% CER. Including the impact of translation from a stronger
Sterling on average, reported divisional revenue increased by 2% to £175.5m
(FY 2023/24: £171.9m reported and £169.5m at CER).
Adjusted operating profit of £36.0m was £7.4m (+26%) higher than last year
at CER and £7.1m (+25%) higher on a reported basis (FY 2023/24: £28.9m). The
adjusted operating margin of 20.5% was 3.6ppts higher than last year at CER
(FY 2023/24: 16.9%), reflecting the positive effect of operational
efficiencies, robust gross margins and higher margin acquisitions.
Design wins driving future recurring revenues
Our business revenue is created by engineering development with customers and,
as such, organic growth is achieved by winning new design opportunities that
lead to pull-through demand. Project design wins are therefore an indicator of
new business creation and are achieved by working with customers at an early
stage in their project design cycle to identify opportunities. A design win is
registered when our products are specified into our customers' designs.
The Group has a strong bank of design wins built up over many years, forming
the basis of strong through-cycle organic growth. During the year, new design
wins were registered with an estimated lifetime value of £355m, an increase
of 5% over last year (and up 30% on two years ago). Conversion of design
wins into revenue by some customers was delayed during the inventory
destocking phase, and we expect that as this comes to an end, along with more
buoyant market conditions, they will convert into new revenue growth.
Additionally, new project design activity remains at a high level, being
broad-based across all target markets. The total pipeline of ongoing projects
continues to be very strong
Acquisitions
The market is highly fragmented with many opportunities to acquire. Currently,
the Group's pipeline consists of around 250 potential targets, of which a
number are in the active outreach phase and live deal negotiation at any time.
The businesses we acquire are typically led by entrepreneurs who wish to
remain with the business for a period following acquisition. We encourage this
as it enables integration and helps retain a dynamic, decentralised and
entrepreneurial culture.
We acquire high-quality businesses that are successful with good long-term
growth prospects, paying a price that reflects this quality while generating
good returns for Shareholders. We invest in these businesses for growth and
operational performance development. According to the circumstances, we add
value in some or all of the following areas:
Strategy and operations:
- Creating a long-term strategy for growth with operational leverage
- Grouping businesses into clusters
- Generating operational efficiencies
- Internationalising sales channels
- Accelerating organic growth by focusing sales development onto
target market areas, expanding the customer base including through
cross-selling
- Developing the product range
People:
- Investing in management capability
- Enabling peer networking and collaboration
- Increasing diversity
- Succession planning and management transition
Investment:
- Capital investment in manufacturing and infrastructure
- Internationalising operations
- Expansion through further acquisitions
- Upgrading systems such as IT
Controls and support:
- Implementing robust financial measurement, KPIs and controls
- Finance and related support, such as treasury, banking, legal, tax
and insurance
- Risk management and internal audit
Sustainability:
- Aligning sustainability strategies with those of the Group
- Creating carbon emission reduction plans
- Inclusion in the Group's SBTi-aligned net zero carbon emission
reduction programme
- Providing training and development
The Group has acquired 28 design and manufacturing businesses over the last 14
years, with the Group's continuing revenues increasing to £423m in FY 2024/25
from £10m in FY 2009/10. By taking a long-term approach to creating
compounding growth in acquired and integrated businesses, the Group has
generated substantial value organically. As reported in the Finance section,
our ROCE for each acquisition typically increases over time, broadly in line
with the length of ownership.
During the year, the Group completed two high margin acquisitions as
follows:
i) Hivolt Capacitors Limited ("Hivolt"), a Northern Ireland-based
designer and manufacturer of custom-built capacitors for a wide range of high
voltage applications for sale in the UK and internationally, mainly into the
medical market. Hivolt was acquired in August 2024 into the S&C division,
for an initial cash consideration of £3.8m on a debt free, cash free basis
representing an EBIT multiple of 6x. Additionally, there is an earn-out of up
to £0.9m payable subject to Hivolt's performance up to 31 March 2025.
ii) Burster Group ("Burster"), a German-based designer and
manufacturer of specialist sensors for markets closely aligned to the Group's
target markets. Burster was acquired in January 2025 into the Variohm sensors
cluster in the S&C division for an initial cash consideration of €30.6m
(£25.6m) on a debt free, cash free basis, representing an EBIT multiple of
8x. Additionally, there is an earn-out of up to £10.5m payable subject to
Burster's performance in its year ending 31 December 2025.
The Group's operating model is well established and has facilitated the smooth
integration of these and previously acquired businesses.
Sustainability and social responsibility
The Group creates innovative electronics that help improve the world and
people's lives. This commitment is reflected in our focus on markets that are
aligned with the UN Sustainable Development Goals (UN SDGs). More information
on how we work with customers and suppliers to support the UN SDGs is
available on our website at www.discoverIEplc.com.
As of June 2025, the Group has an MSCI ESG rating of "A" and Morningstar
Sustainalytics Regional (Europe) Top Rated and Industry (Technology Hardware)
Top Rated with a "Negligible" risk of experiencing material financial impacts
from ESG factors. In February 2025, the Group was awarded a "B" for its 2024
climate disclosure by the Carbon Disclosure Project ("CDP"), a leading global
environmental disclosure platform used by over 24,800 organisations worldwide.
This marks a significant improvement from previous ratings and reflects the
Group's efforts in improving climate disclosures.
In early 2025, the Group completed a reassessment of its climate-related risks
and opportunities, incorporating newly acquired businesses. The assessment
confirmed that there had been no material change in the Group's
climate-related risk profile. Further details will be found in the Group's
2025 Annual Report and Accounts which will be published later this month and
on its corporate website.
During the year, the Group continued its progress across a range of
ESG-related areas, including the following:
- Scope 1 & 2 emissions: In CY 2024, Scope 1 & 2 emissions
reduced by 59% compared to the CY 2021 baseline. The Group remains on track to
achieve its intermediate target of a 65% reduction by the end of CY 2025 and
its net zero goal for Scope 1 & 2 emissions by 2030.
- Environmental targets: The Group has also progressed well in its
environmental targets. The proportion of Group revenue now covered by the ISO
14001 environmental accreditation increased to 74%, against our target of 80%
(CY 2023: 69%). Additionally, 50% of the Group's car fleet is now electric or
hybrid, meeting our FY25 target (CY 2023: 40%). The installation of solar
panels at one of the Group's sites in China has now been completed, further
advancing the Group's self-generation capacity. This initiative not only
reduces emissions but also enhances energy security. Today, 83% of the
electricity consumed across the Group comes from renewable or zero-emission
sources (CY 2023: 72%), achieving our 80% clean electricity target a year
early.
- Scope 3 emissions: Scope 3 emissions reporting has been enhanced.
Following the initial screening of CY 2023 emissions, the Group has
standardised its Scope 3 reporting process and requirements. The Group is
committed to its net zero plan set out in 2022 and its net zero targets were
approved by SBTi in May 2025.
- Health & Safety: Three more sites achieved the occupational
health & safety ISO 45001 accreditation, bringing coverage to 73% of our
global workforce (CY 2023: 60%). Reflecting the importance that we place on
health & safety, the Group has adopted a revised Group Health & Safety
Policy, as well as more rigorous measures to capture and record incidents
occurring and improved near-miss reporting. As a result, the number of
reported lost time incidents increased in 2024. Further details will be found
in the Group's 2025 Annual Report and Accounts.
- Cyber security and AI governance: The Group has rolled out a
broader and increased level of cyber security awareness training and is
currently developing a formal governance framework for the use of artificial
intelligence, addressing both the significant opportunities that this brings
to the Group, as well as the risks it poses.
- Learning & development: In addition to local training that
individual businesses already conduct, the Group has introduced a new online
learning and development platform, which has been adopted by 10 of our
businesses already. A series of knowledge sharing webinars has also been
introduced to encourage collaboration and the exchange of expertise and best
practices across the Group. An industrial placement scheme has been launched
in partnership with the University of Surrey, with the first group of
engineering students having started training in September 2024.
Summary and outlook
discoverIE delivered another strong performance with record operating profits
and earnings, despite prolonged industry-wide destocking which resulted in 3%
lower sales for the year. Adjusted operating margins increased to 14.3%,
comfortably exceeding our target for the year, with excellent cash generation
once again. Fourth quarter orders increased significantly in both divisions,
as inventories normalised.
Our flexible production model together with Group-wide operating efficiencies
more than offset lower sales, protecting profitability through this stage of
the cycle. This is a great strength of the Group, enabling growth in operating
profits and margins in each of the last 10 years (in-line in the Covid year)
and reducing earnings cyclicality. We see the potential to deliver further
manufacturing efficiencies and commercial synergies across the Group and have
upgraded our five-year operating margin target to 17%.
Whilst we will pass on any incremental tariff costs, we continue to do all we
can to mitigate them with our local manufacturing and expect limited direct
impact, although remain mindful of the volatile economic conditions and its
potential to impact customers' demand.
discoverIE is aligned with target markets which are underpinned by structural
growth drivers and, with the addition of the security market during the year,
our total market opportunity increased to over $30bn. With a strong pipeline
of organic and inorganic opportunities, the Group is well placed to continue
its resilient performance and development.
Nick
Jefferies
Group Chief Executive
Group Financial Results
Revenue and orders
Group sales of £422.9m were 2% lower than last year at CER and 3% lower
reported (FY 2023/24: £437.0m). Seven acquisitions in the last two years
(Silvertel, 2J, Shape, IKN and DTI last financial year plus Hivolt and Burster
this year), added 7% to revenue while the disposal of the Santon solar
business announced last year reduced sales by 2%. Organic sales reduced by 7%
following a year of customer destocking.
Revenue (£m) FY FY 2023/24
2024/25 %
Organic sales 388.3 415.9 -7%
Acquisitions 30.7
Disposals 3.9 13.7
Sales at CER 422.9 429.6 -2%
FX translation 7.4
Reported sales 422.9 437.0 -3%
Orders for the year were £411.9m, 8% higher at CER than last year (FY
2023/24: £382.9m). The extent of customer destocking reduced in the year
compared with last year with a book to bill ratio of 0.97 (FY 2023/24: 0.89),
with orders in the year increasing by 2% organically.
The Group order book continued to normalise during the year, ending at £161m
(c.4.5 months of annualised sales, consistent with pre-Covid levels) (31 March
2024: £175m).
Group operating profit and margin
Group adjusted operating profit for the year was £60.5m, an 8% increase on
last year at CER and up 6% reported (FY 2023/24: £57.2m). This delivered an
adjusted operating margin of 14.3%, which was 1.2ppt higher than last year at
CER and on a reported basis (FY 2023/24: 13.1%). We exceeded our 13.5%
near-term target set for this year and with the H2 operating margin of 14.8%
already close to our medium target of 15%, we've increased our target to 17%
by FY 2029/30.
Group reported operating profit for the year (including acquisition and
disposal-related costs as discussed below within Adjusting items) was £42.4m,
36% higher than last year (FY 2023/24: £31.2m).
£m FY 2024/25 FY 2023/24
Operating Finance Profit before tax Operating profit Finance cost Profit before tax
profit cost
Adjusted 60.5 (10.4) 50.1 57.2 (9.0) 48.2
Adjusting items:
Amortisation of acquired intangibles (16.2) - (16.2) (16.2) - (16.2)
Net acquisition & disposal expenses (1.9) - (1.9) (9.8) - (9.8)
Reported 42.4 (10.4) 32.0 31.2 (9.0) 22.2
As shown below, adjusted operating profit growth has been achieved through a
combination of robust gross margins, operational efficiencies and accretive
acquisitions, offsetting the impact of customer destocking on organic sales.
£m Adjusted
operating
profit
FY 2023/24 57.2
Gross profit on organic sales reduction (11.4)
Organic gross margin improvement 6.2
Organic operational efficiencies 2.8
Organic profit reduction (2.4)
Profit from acquired companies 6.8
CER growth in operating profits 4.4
Foreign exchange impact (1.1)
Net growth in operating profits 3.3
FY 2024/25 60.5
Through a number of manufacturing and operating initiatives, organic gross
margins improved by 1.6ppts and organic operating costs reduced by 2% with
reductions shared across divisions and at Head Office. Gross margin
improvement was delivered despite volume reduction which reflects the Group's
ability to flex capacity resources according to volume.
Sterling was 1% stronger this year compared with our other major currencies
(the Euro, US dollar and Nordic currencies), giving rise to a reduction in
adjusted operating profits on translation of £1.1m for the year.
UK employers' National Insurance rates which were raised in the UK budget in
October 2024, will increase costs for the Group by c.£0.8m per year from
April 2025.
Adjusting items
Adjusting items for the year comprise the amortisation of acquired intangibles
of £16.2m (FY 2023/24: £16.2m) together with net acquisition and disposal
expenses of £1.9m (FY 2023/24: £9.8m).
The amortisation charge for the year of £16.2m is in line with last year,
with the increased effect of recent acquisitions offset by FX movements.
Net acquisition and disposal expenses of £1.9m comprise costs associated with
recent acquisitions of £1.4m and integration costs of £3.1m (related to the
establishment of our operating clusters, mainly associated with removing
duplicate positions in our Magnetics and Sensors clusters) offset by a gain of
£2.6m. This gain comprises £2.1m profit generated by the sale of the
non-core Santon solar business announced last year and a net credit of £0.5m,
being the movement in the fair value of contingent consideration on past
acquisitions.
Financing costs
Net finance costs for the year were £10.4m (FY 2023/24: £9.0m) and include a
£1.0m charge for leased assets under IFRS 16 (FY 2023/24: £0.7m) and a
£0.6m charge for amortised upfront facility costs (FY 2023/24: £0.6m). Net
finance costs related to our banking facilities were £8.8m (FY 2023/24:
£7.7m), an increase of 14%, reflecting higher average net debt balances
during the year. The impact of interest rate increases and reductions over the
last two years was largely neutral.
During the year, interest rates started to reduce from the highs at the end of
last year, with the Sterling base rate reducing by 0.75ppt to 4.5%, the US
Dollar Federal rate by 1ppt to 4.5% and the ECB lending rate by 1.85ppts to
2.65%, these being the Group's three principal borrowing currencies. Since the
year end, Sterling and ECB lending rates have both reduced by a further
0.25ppt. A further 1ppt reduction in interest rates for all three of our
principal borrowing currencies would reduce annual finance costs by
approximately £1.3m and increase annual EPS by c.1.0p or c.3%.
Adjusted tax rate
The adjusted effective tax rate ("ETR") for the year was 24% which was 1ppt
lower than last year (FY 2023/24: 25%) mainly due to increased recognition of
tax losses.
The overall ETR of 23% was 1ppt lower than the adjusted ETR as shown in the
table below. Last year's overall ETR was 7ppts higher (FY 2023/24: 30%) mainly
due to there being a lower rate of tax relief that year on net acquisition and
disposal expenses (within adjusted items above).
£m FY 2024/25 FY 2023/24
PBT ETR PBT ETR
Adjusted 50.1 24% 48.2 25%
Adjusting items:
Amortisation of acquired intangibles (16.2) 19% (16.2) 22%
Net acquisition & disposal expenses (1.9) 79% (9.8) 16%
Total reported 32.0 23% 22.2 30%
Profit before tax and EPS
While adjusted operating profit was up 8% at CER, higher net finance costs
resulted in adjusted profit before tax being up 4% (FY 2023/24: £48.2m) at
£50.1m (+£1.9m) with adjusted EPS for the year increasing by 5% to 38.7p (FY
2023/24: 36.8p).
£m FY 2024/25 FY 2023/24
PBT EPS PBT EPS
Adjusted 50.1 38.7p 48.2 36.8p
Adjusting Items:
Amortisation of acquired intangibles (16.2) (16.2)
Net acquisition & disposal expenses (1.9) (9.8)
Reported 32.0 25.0p 22.2 15.8p
Reported profit before tax was £32.0m, 44% higher than last year (FY 2023/24:
£22.2m) with reported fully diluted earnings per share of 25.0p, 58% ahead of
last year (FY 2023/24: 15.8p).
Working capital and asset returns ratios
Working capital at 31 March 2025 was £79.0m, equivalent to 17.2% of fourth
quarter annualised sales at CER with a net additional £3.1m of working
capital from acquisitions and disposals during the last 12 months offset by
organic working capital reductions of £0.3m and £1.3m from foreign exchange
translation. Excluding acquisitions this year which had high working capital,
the equivalent working capital percentage was 16.5%. This is 0.1ppt lower than
last year when working capital was £77.5m or 16.6% of fourth quarter
annualised sales.
Working capital KPIs have remained robust with debtor days of 46 (four days
below last year), creditor days of 80 (in line with last year) and stock turns
of 3.1 (compared to 3.3 last year).
ROCE for the year of 15.8% was 0.8ppts ahead of our 15% target and 0.1ppt
ahead of the ROCE reported last year (FY 2023/24: 15.7%).
Organic ROCE (which excludes acquisitions completed in the last 18 months),
was 17.5%; although 0.3ppts down on last year due to destocking, we expect
this to grow well going forward. The effect of compounding growth on
acquisitions over time can be seen in the ROCE for those businesses acquired
more than seven years ago which in aggregate have a ROCE of 27% including an
apportionment of Group central costs.
Return on Tangible Capital Employed ("ROTCE") for the year, which excludes
goodwill, intangible assets and non-operational assets, was 52.1% and
illustrates both the strong returns being generated by the Group's operational
assets, and the capital-light requirements of those businesses with capital
expenditure of only 1.4% of sales in the year (FY 2023/24: 1.1%). ROTCE was
1.9ppts below last year (FY 2023/24: 54.1%) due to higher right of use assets
this year.
Cash flow
Net debt at 31 March 2025, excluding leases, was £94.3m, compared with
£104.0m at 31 March 2024, with the reduction in the year of £9.7m driven by
strong free cash generation and disposal proceeds partly offset by
acquisitions and dividends.
£m FY FY
2024/25 2023/24
Opening net debt (104.0) (42.7)
Free cash flow (see table below) 40.4 37.0
Dividends (11.7) (11.2)
Acquisitions & integrations (33.3) (85.3)
Disposals 13.5 (0.1)
Equity issuance (net of taxes) - (0.3)
Foreign exchange impact 0.8 (1.4)
Net debt at 31 March (94.3) (104.0)
Investment in acquisitions and integrations this year of £33.3m comprised
£24.3m for the acquisition of Burster in January 2025, £3.5m for the
acquisition of Hivolt in July 2024, £2.3m payment of earnouts, and £3.2m of
acquisition and integration expenses. Net disposal receipts of £13.5m
included £7.2m related to the disposal of the Santon solar business announced
last year and £5.8m being the deferred consideration from the disposal of
Acal BFi which completed in March 2022. All proceeds have now been received in
full, and on time, in relation to both these disposals.
Dividends of £11.7m, were paid during the year, an increase of 4.5% over the
prior year. The impact of stronger Sterling in the year led to an FX gain of
£0.8m compared with an FX loss last year of £1.4m. The Group's policy is to
hold net debt in currencies aligned to the currency of its cash flows as a
natural hedge.
Adjusted operating cash flow and free cash flow for the year (see definitions
in note 6 to the summary consolidated financial statements) compared with last
year are shown below:
£m FY FY
2024/25 2023/24
Adjusted profit before tax 50.1 48.2
Net finance costs 10.4 9.0
Non-cash items((1)) 15.1 15.9
Adjusted EBITDA 75.6 73.1
IFRS 16 - lease payments (7.5) (6.8)
EBITDA (pre IFRS 16) 68.1 66.3
Changes in working capital 0.3 (2.2)
Capital expenditure (6.1) (4.9)
Adjusted operating cash flow 62.3 59.2
Finance costs (9.0) (7.7)
Taxation (10.6) (12.5)
Legacy pension (2.3) (2.0)
Free cash flow 40.4 37.0
1. Non-cash items are depreciation, amortisation and share-based
payments.
Adjusted EBITDA (pre IFRS 16 lease payments) of £68.1m was 3% higher than
last year (FY 2023/24: £66.3m) with operational efficiencies and
contributions from the seven acquisitions made in the last two years
offsetting the cash impact of reduced organic sales.
During the year, the Group released £0.3m into working capital (compared to a
£2.2m investment last year) reflecting reduced organic sales. Capital
expenditure of £6.1m was invested during the year, representing 1.4% of
sales, a £1.2m increase over last year (FY 2023/24: £4.9m, 1.1% of sales)
reflecting the capital-light nature of the business model. This year's
investment includes a facility move in China and various new production line
extensions. Capital expenditure levels are expected to increase to c.£8m for
next year.
A record £62.3m of adjusted operating cash flow was generated in the year, an
increase of 5% on last year (FY 2023/24: £59.2m) representing 103% of
adjusted operating profit, well ahead of our 85% target (FY 2023/24: 103%).
Over the last 10 years, the Group has consistently achieved high levels of
operating cash conversion, averaging over 100%.
Finance cash costs of £9.0m were £1.3m higher than last year, reflecting
higher average net debt balances during the year, while corporate income tax
payments of £10.6m were £1.9m lower than last year reflecting changes in the
timing of payments.
Free cash flow (being cash flow before dividends, acquisitions and equity fund
raises) of £40.4m was generated in the year, an increase of 9% over last year
(FY 2023/24: £37.0m) representing a free cash conversion of 106% of adjusted
earnings, again well ahead of our 85% target.
Banking facilities
The Group has a £240m syndicated banking facility which extends to August
2027. In addition, the Group has an £80m accordion facility which it can use,
with bank approval, to extend the total facility up to £320m. The syndicated
facility is available both for acquisitions and for working capital purposes,
and comprises seven lending banks.
With net debt (excluding IFRS 16 leases in accordance with our banking
covenants) at 31 March 2025 of £94.3m, the Group's gearing ratio at the end
of the year (being net debt excluding IFRS 16 leases divided by Adjusted
EBITDA as annualised for acquisitions) was 1.3x compared with a target gearing
range of between 1.5x and 2.0x. Together with cash generation during FY
2025/26, the Group has access to acquisition funding of c.£80m for the year
ended 31 March 2026 while remaining within our target gearing range.
Defined benefit pension scheme
In January 2025, the Group completed the buy-in of its legacy UK defined
benefit pension scheme with Just Retirement Limited for a premium of £29.1m,
funded primarily from existing scheme assets. The buy-in delivers greater
security to scheme members, whilst substantially removing all of the Group's
exposure to defined benefit liabilities and investment, longevity, interest
rate and inflation risks in respect of the scheme. Following the buy-in,
future pension cash costs should be c.£1.5m per year lower than this year.
Balance sheet
Net assets of £308.0m at 31 March 2025 were £6.4m higher than at the end of
the last financial year (31 March 2024: £301.6m). The increase primarily
relates to net profits for the year of £24.6m, partially offset by dividends
paid during the year of £11.7m. The movement in net assets is summarised
below:
£m FY
2024/25
Net assets at 31 March 2024 301.6
Net profit after tax 24.6
Dividend paid (11.7)
Currency net assets - translation impact (3.7)
Loss on defined benefit pension scheme (3.5)
Share-based payments (inc tax) 0.7
Net assets at 31 March 2025 308.0
Risks and uncertainties
The principal risks faced by the Group are covered in more detail in the
Group's 2025 Annual Report and Accounts, which will be published later this
month. These risks comprise: the economic environment, particularly linked to
the geopolitical issues arising from the ongoing conflicts in Ukraine and in
the Middle East; the imposition of US trade tariffs and counter tariffs; 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; control risk; product liability;
liquidity and debt covenants; exposure to adverse foreign currency movements;
and non-compliance with legal and regulatory requirements.
The Board reviewed the Group's principal risks and the mitigating actions and
processes in place during the financial year. The Board's view is that risks
associated with the macroeconomic environment, including the impact from US
tariffs, have increased during the financial year with no material change to
the relative importance or quantum of the Group's other principal risks.
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 £240m and the adaptability we have as an
organisation.
Simon Gibbins
Group Finance Director
Consolidated Statement of Profit or Loss
for the year ended 31 March 2025
Notes 2025 2024
£m £m
Revenue 4 422.9 437.0
Operating costs (380.5) (405.8)
Operating profit 7 42.4 31.2
Finance income 3.7 3.9
Finance costs (14.1) (12.9)
Profit before tax 32.0 22.2
Tax expense (7.4) (6.7)
Profit for the year 24.6 15.5
Earnings per share 11
Basic, profit for the year 25.6p 16.2p
Diluted, profit for the year 25.0p 15.8p
Supplementary Statement of Profit or Loss information
for the year ended 31 March 2025
Alternative performance measures Notes 2025 2024
£m £m
Operating profit 42.4 31.2
Add back: Net acquisition and disposal expenses 1.9 9.8
Amortisation of 16.2 16.2
acquired intangible assets
Adjusted operating profit 6 60.5 57.2
Profit before tax 32.0 22.2
Add back: Net acquisition and disposal expenses 1.9 9.8
Amortisation of 16.2 16.2
acquired intangible assets
Adjusted profit before tax 6 50.1 48.2
Adjusted earnings per share - diluted 6 38.7p 36.8p
Adjusted earnings per share - basic 6 39.7p 37.8p
The above consolidated Statement of Profit or Loss should be read in
conjunction with the accompanying notes.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2025
Notes 2025 2024
£m £m
Profit for the year 24.6 15.5
Other comprehensive loss:
Items that will not be subsequently reclassified to profit or loss:
Actuarial loss on defined benefit pension scheme 16 (4.7) (1.2)
Tax credit relating to defined benefit pension scheme 1.2 0.3
(3.5) (0.9)
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign subsidiaries (3.7) (7.7)
(3.7) (7.7)
Other comprehensive loss for the year, net of tax (7.2) (8.6)
Total comprehensive income for the year, net of tax 17.4 6.9
The above consolidated Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.
Consolidated Statement of Financial Position
as at 31 March 2025
Notes 2025 2024
£m £m
Non-current assets
Property, plant and equipment 23.0 20.5
Intangible assets - goodwill 12 244.2 231.7
Intangible assets - other 92.2 97.8
Right of use assets 27.4 20.6
Pension asset - 0.3
Other receivables - 0.2
Deferred tax assets 10.1 9.9
396.9 381.0
Current assets
Inventories 82.9 80.1
Trade and other receivables 74.4 88.8
Current tax assets 1.5 1.3
Cash and cash equivalents 139.3 110.8
Assets held for sale 9 - 6.7
298.1 287.7
Total assets 695.0 668.7
Current liabilities
Trade and other payables (81.1) (87.5)
Loans and borrowings (95.0) (78.7)
Lease liabilities (6.2) (5.7)
Current tax liabilities (8.2) (8.3)
Provisions (5.0) (5.2)
(195.5) (185.4)
Non-current liabilities
Trade and other payables (6.2) (4.6)
Loans and borrowings (138.6) (136.1)
Lease liabilities (21.2) (14.4)
Pension liability 16 (0.5) -
Provisions (4.0) (3.6)
Deferred tax liabilities (21.0) (23.0)
(191.5) (181.7)
Total liabilities (387.0) (367.1)
Net assets 308.0 301.6
Equity
Share capital 15 4.8 4.8
Share premium 192.0 192.0
Merger reserve 2.9 2.9
Currency translation reserve (5.8) (2.1)
Retained earnings 114.1 104.0
Total equity 308.0 301.6
The above consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.
The Financial Statements were approved by the Board of Directors on 3 June
2025 and signed on its behalf by:
Nick Jefferies Simon Gibbins
Group Chief Executive Group Finance Director
Consolidated Statement of Changes in Equity
for the year ended 31 March 2025
Attributable to equity holders of the Company
Share Share premium Merger reserve Currency translation reserve Retained earnings Total
capital £m £m £m £m equity
£m £m
At 1 April 2023 4.8 192.0 2.9 5.6 98.3 303.6
Profit for the year - - - - 15.5 15.5
Other comprehensive loss - - - (7.7) (0.9) (8.6)
Total comprehensive (loss)/income - - - (7.7) 14.6 6.9
Share-based payments including tax - - - - 2.3 2.3
Dividends (note 13) - - - - (11.2) (11.2)
At 31 March 2024 4.8 192.0 2.9 (2.1) 104.0 301.6
Profit for the year - - - - 24.6 24.6
Other comprehensive loss - - - (3.7) (3.5) (7.2)
Total comprehensive (loss)/income - - - (3.7) 21.1 17.4
Share-based payments including tax - - - - 0.7 0.7
Dividends (note 13) - - - - (11.7) (11.7)
At 31 March 2025 4.8 192.0 2.9 (5.8) 114.1 308.0
The above consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the year ended 31 March 2025
Notes 2025 2024
£m £m
Net cash flow from operating activities 14 46.4 41.2
Investing activities
Acquisition of businesses, net of cash acquired (27.7) (82.8)
Contingent consideration related to business acquisitions (2.3) -
Proceeds from business disposals 13.3 -
Purchase of property, plant and equipment (5.4) (4.8)
Purchase of intangible assets - software (0.7) (0.1)
Interest received 3.5 3.9
Net cash used in investing activities (19.3) (83.8)
Financing activities
Proceeds from borrowings 37.5 79.4
Repayment of borrowings (33.2) (28.9)
Payment of lease liabilities (6.5) (6.1)
Dividends paid 10 (11.7) (11.2)
Net cash (used in)/generated from financing activities (13.9) 33.2
Net increase in cash and cash equivalents 1 13.2 (9.4)
Net cash and cash equivalents at 1 April 31.5 43.4
Effect of exchange rate fluctuations (1.0) (2.5)
Net cash and cash equivalents at 31 March 43.7 31.5
Reconciliation to cash and cash equivalents in the consolidated Statement of
Financial Position
Net cash and cash equivalents shown above 43.7 31.5
Add back: bank overdrafts 95.6 79.3
Cash and cash equivalents presented in current assets in the consolidated 139.3 110.8
Statement of Financial Position
The above consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.
Notes to the Group consolidated Financial Statements
for the year ended 31 March 2025
1. Publication of non-statutory accounts
The preliminary results were authorised for issue by the Board of Directors on 3 June 2025. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2025 or 31 March 2024, but is derived from those accounts. Statutory accounts for 2024 have been delivered to the Registrar of Companies whereas those for 2025 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 2006.
2. Basis of preparation
The Group's consolidated Financial Statements have been prepared in accordance
with UK-adopted International Accounting Standards (UK adopted IAS) and with
requirements of the Companies Act 2006 applicable to companies reporting under
those standards. The consolidated financial statements are prepared under the
historical cost convention, unless otherwise stated.
The Group consolidated Financial Statements are presented in pounds sterling
and all values are rounded to the nearest hundred thousand except as otherwise
indicated.
3. Going concern
In line with IAS 1 "Presentation of Financial Statements" and revised guidance
on "risk management, internal control and related financial and business
reporting", management has taken into account all available information about
the future for a period of at least, but not limited to, 12 months from the
date of approval of the Financial Statements when assessing the Group's and
Company's ability to continue as a going concern.
The Group's business activities, together with factors which may adversely
impact its future development, performance and position, are set out above in
this press release. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the Strategic and
Operational Review section of this press release.
The Group's forecasts and projections, taking account of the sensitivity
analysis of changes in trading performance, show that the Group is well placed
to operate within its current debt facilities of £240m committed up to the
end of August 2027.
The Viability Base Case has been subjected to sensitivity analysis involving
flexing a number of the underlying key assumptions, both individually and in
conjunction. The sensitivities take into account the principal risks and
uncertainties, notably instability in the economic environment,
underperformance of acquired businesses, climate-related risks, loss of key
customers and suppliers, major business disruption, liquidity restriction,
debt covenants, interest rate increases, the impact of US tariffs and counter
tariffs and adverse foreign currency movements.
The most severe but plausible downside scenario assumes a worsening of the
economic environment caused by a number of factors including geo-political
events, the impact of US tariffs and counter tariffs and significant reduction
in consumer demand due to continuing inflationary pressures and elevated
interest rates. This downside scenario results in a significant decline in the
second half sales of FY 2025/26, with FY 2026/27 sales flat on
the reduced FY2025/26 level, and modest growth in FY 2027/28. Additionally,
gross margin was reduced, working capital materially increased, significant
one-off expenditures included (product liability, major customer insolvency or
litigation, climate change, cyber-security incident, inventory obsolescence),
interest rates increased and the Group effective tax rate increased.
After factoring in these significant additional downsides to the Viability
Base Case, there remains good headroom both in terms of liquidity and our debt
covenants. This is supported by the fact that the Group sells a wide portfolio
of different products across a diverse set of industries and geographies, has
low customer / supplier concentration, a global supply chain network, diverse
manufacturing capacity, and has well-established relationships with its
customers. These factors are considered important in mitigating many of the
risks that could affect the long-term viability of the Group. As a
consequence, the Directors believe that the Group is well placed to manage its
principal risks and uncertainties as disclosed in the Strategic Report.
Reverse stress testing has also been applied to the most plausible downside
scenario to determine the level of additional downside that would be required
before the Group would breach its debt covenants or current liquidity headroom
during the assessment period. The reverse stress test was conducted on the
basis that certain mitigating actions would be undertaken to reduce overheads
and capital expenditure during the period as sales declined and, on that
basis, a fall in adjusted operating margin to below 6.7% in FY 2025/26 would
be required before such a breach occurred. The Board considers the possibility
of such a scenario to be remote and further mitigation, such as hiring
freezes, pay and bonus reductions, headcount reductions, reduction in planned
capital expenditure, equity raises and suspension of dividend payments, would
be available if future trading conditions indicated that such an outcome were
possible.
The Company acts as a holding company for investments in the subsidiaries and
does not engage in any trading activities directly and thus is dependent on
the trading activities of its subsidiaries. The Company holds sufficient net
current assets as at 31 March 2025 to continue as a going concern.
The Directors are confident that the Company and the Group have sufficient
resources to continue in operational existence for at least 12 months from the
date of approval of the Financial Statements. Accordingly, they continue to
adopt the going concern basis in preparing the Annual Report and Financial
Statements.
4. Revenue
Group revenue is analysed below:
2025 2024
£m £m
Sale of goods 417.7 431.4
Rendering of services 5.2 5.6
Total revenue 422.9 437.0
5. Operating segment information
The Reportable Operating Segments of the Group include 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 based on operating
profit or loss earned by each segment. Unallocated costs relate to central
head office administration costs that are not directly attributable to the
Operating Segments.
Segment revenue and results
2025 Magnetics & Controls Sensing & Connectivity Unallocated
Costs Total
£m £m
£m £m
Revenue 247.4 175.5 - 422.9
Result
Adjusted operating profit/(loss) 36.3 36.0 (11.8) 60.5
Net acquisition and disposal expenses 0.5 (2.4) - (1.9)
Amortisation of acquired intangible assets (6.3) (9.9) - (16.2)
Operating profit/(loss) 30.5 23.7 (11.8) 42.4
2024 Magnetics & Controls Sensing & Connectivity Unallocated Total
Costs
£m £m £m
£m
Revenue 265.1 171.9 - 437.0
Result
Adjusted operating profit/(loss) 40.6 28.9 (12.3) 57.2
Net acquisition and disposal expenses (2.2) (7.6) - (9.8)
Amortisation of acquired intangible assets (6.6) (9.6) - (16.2)
Operating profit/(loss) 31.8 11.7 (12.3) 31.2
6. Adjusted performance measures
These Financial Statements include adjusted 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.
Adjusted performance measures are presented in these 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 adjusted performance.
The Directors consider there to be the following key adjusted performance
measures:
Adjusted operating profit
"Adjusted operating profit" is defined as operating profit excluding
acquisition and disposal related costs (namely amortisation of acquired
intangible assets and acquisition and disposal expenses).
Acquisition and disposal expenses comprise transaction costs relating to
acquisitions and disposals, contingent consideration relating to the retention
of former owners of acquired businesses, adjustments to previously estimated
contingent consideration, costs related to integration of acquired businesses
into the Group and restructuring costs and expenses incurred in relation to
the disposal of the Santon solar business unit, including its losses incurred
following the announcement of its closure.
Adjusted EBITDA
"Adjusted EBITDA" is defined as adjusted operating profit with depreciation,
amortisation, equity-settled share-based payment expense and IAS 19 pension
cost added back.
Adjusted operating margin
"Adjusted operating margin" is defined as adjusted operating profit divided by
revenue.
Adjusted profit before tax
"Adjusted profit before tax" is defined as profit before tax excluding
acquisition and disposal related costs (namely amortisation of acquired
intangible assets and acquisition and disposal expenses).
Adjusted tax charge / Adjusted effective tax rate ("ETR")
"Adjusted tax charge" is defined as the tax charge adjusted for the tax effect of the acquisition and disposal related costs (namely amortisation of acquired intangible assets and acquisition and disposal expenses).
"Adjusted ETR" is defined as adjusted tax charge divided by adjusted profit before tax.
Adjusted profit after tax
"Adjusted profit after tax" is defined as "Adjusted profit before tax less
adjusted tax charge.
Adjusted earnings per share
"Adjusted earnings per share - diluted" is calculated as adjusted profit
before tax reduced by the adjusted effective tax charge, divided by the
weighted average number of ordinary shares (for diluted earnings per share
purposes) in issue during the year.
"Adjusted earnings per share - basic" is calculated as adjusted profit before
tax reduced by the adjusted effective tax charge, divided by the weighted
average number of ordinary shares (for basic earnings per share purposes) in
issue during the year.
Adjusted operating cash flow / Adjusted operating cash conversion
"Adjusted operating cash flow" is defined as adjusted EBITDA, plus/minus the
investment in, or release of, working capital and less the cash cost of
capital expenditure and lease payments.
"Adjusted operating cash conversion" is defined as adjusted operating cash
flow divided by adjusted operating profit.
Free cash flow / Free cash flow conversion
"Free cash flow" is defined as net cash flow before dividend payments, the
cost of acquisitions and proceeds from business disposals.
"Free cash flow conversion" is free cash flow divided by adjusted profit after
tax.
Return on capital employed ("ROCE") / Return on tangible capital employed ("ROTCE")
"ROCE" is defined as adjusted operating profit, including the annualisation of
profits of acquired businesses, as a percentage of net assets excluding net
debt, deferred consideration related to discontinued operations, assets held
for sale and legacy defined benefit pension asset/(liability).
"ROTCE" is defined as ROCE excluding the value of acquired goodwill and
intangibles, lease liabilities, provisions and tax balances.
Organic and CER revenue growth
"CER revenue growth" is defined as growth rates at constant exchange rates.
"Organic revenue growth" is defined as CER revenue growth adjusted for the
effect of acquisitions in the last 12 months and excluding last year's
announced disposal of the Santon solar business unit.
Gearing ratio
Gearing ratio is defined as net debt divided by adjusted EBITDA, including the
annualisation of acquired businesses, excluding lease payments.
The tables below show the reconciliation to the IFRS reporting measures, for the main adjusted performance measures used by the Group.
Adjusted operating profit / Adjusted EBITDA
Adjusted operating profit and EBITDA are calculated as follows:
2025 2024
£m £m
Operating profit 42.4 31.2
Add back Net acquisition and disposal expenses (a) 1.9 9.8
Amortisation of 16.2 16.2
acquired intangibles
Adjusted operating profit 60.5 57.2
Add back Depreciation and amortisation 12.4 12.5
Share-based payment and IAS 2.7 3.4
19 pension cost
Adjusted EBITDA 75.6 73.1
a. Net acquisition and disposal expenses comprise £1.4m of transaction
costs in relation to the acquisition of Burster, Hivolt and ongoing
transactions and £3.1m of integration expenses related to the establishment
of our operating clusters mainly associated with removing duplicate positions
in our Magnetics and Sensing clusters, offset by £0.5m credit relating to the
movement in fair value of contingent consideration and assets acquired on past
acquisitions and £2.1m gain on disposal of the Santon solar business as
announced in the prior year.
During the prior year, net acquisition and disposal expenses of £9.8m
comprised £3.1m of transaction costs in relation to the acquisition of
Silvertel, 2J, Shape, DTI, IKN and ongoing transactions, £0.8m charge
relating to the movement in fair value of contingent consideration and assets
acquired on past acquisitions and £5.9m of costs in relation to the disposal
of the Santon solar business unit.
Adjusted profit before tax
Adjusted profit before tax is calculated as follows:
2025 2024
£m £m
Profit before tax 32.0 22.2
Add back Net acquisition and disposal expenses 1.9 9.8
Amortisation of 16.2 16.2
acquired intangible assets
Adjusted profit before tax 50.1 48.2
Adjusted effective tax rate
Adjusted effective tax rate ("ETR") is calculated as follows:
2025 2024
£m £m
Adjusted profit before tax 50.1 48.2
Total tax charge 7.4 6.7
Add back tax effect of net acquisition and disposal expenses and amortisation
of acquired intangible assets
4.6 5.3
Adjusted tax charge 12.0 12.0
Adjusted effective tax rate 24.0% 24.9%
Adjusted profit after tax / Adjusted earnings per share
Adjusted profit after tax and earnings per share are calculated as follows:
2025 2024
£m £m
Profit for the year 24.6 15.5
Add back Net acquisition and disposal expenses 1.9 9.8
Amortisation of 16.2 16.2
acquired intangible assets
Tax charge relating to the above adjustments (4.6) (5.3)
Adjusted profit after tax 38.1 36.2
2025 2024
Number Number
Weighted average number of shares for basic earnings per share 96,028,934 95,835,775
Effect of dilution - share options 2,398,601 2,450,593
Adjusted weighted average number of shares for diluted earnings per share 98,427,535 98,286,368
Adjusted earnings per share - diluted 38.7p 36.8p
Adjusted earnings per share - basic 39.7p 37.8p
Adjusted operating cash flow / Free cash flow
2025 2024
£m £m
Adjusted EBITDA 75.6 73.1
Lease payments (7.5) (6.8)
EBITDA (incl. lease payments) 68.1 66.3
Changes in working 0.3 (2.2)
capital
Capital expenditure (6.1) (4.9)
Adjusted operating cash flow 62.3 59.2
Net interest paid (9.0) (7.7)
Tax payments (10.6) (12.5)
Legacy pension scheme funding (2.3) (2.0)
Free cash flow 40.4 37.0
ROCE / ROTCE
ROCE and ROTCE are calculated as follows:
2025 2024
£m £m
Net assets 308.0 301.6
Less: Deferred consideration in relation to (0.3) (6.3)
disposed businesses
Net debt 94.3 104.0
IAS 19 pension 0.5 (0.3)
(asset)/liability
Assets held for sale - (6.7)
Capital employed 402.5 392.3
Less: Goodwill (244.2) (231.7)
Acquired intangible assets (90.4) (96.2)
Deferred tax assets and 10.9 13.1
liabilities
Current tax assets and 6.7 7.0
liabilities
Lease liabilities 27.4 20.1
Provisions 9.0 8.8
Trading capital employed 121.9 113.4
Adjusted operating profit 60.5 57.2
Add: Annualisation of acquired businesses 3.0 4.2
Annualised operating profit 63.5 61.4
ROCE 15.8% 15.7%
ROTCE 51.7% 54.1%
Organic and CER revenue growth
Organic and CER revenue growth are calculated as follows:
2025 2024
£m £m
Revenue 422.9 437.0
FX translation impact - (7.4)
Adjusted (CER) revenue 422.9 429.6
Acquisitions and disposals (34.6) (13.7)
Organic revenue 388.3 415.9
Organic growth for the Group compared with last year is calculated at constant
exchange rates ("CER") and is shown excluding the first 12 months of
acquisitions post completion (Silvertel in August 2023, 2J Antennas Group
("2J") in September 2023, Shape, DTI and IKN in Q4 2023/24, Hivolt in August
2024 and Burster in January 2025) and the results of last year's announced
disposal of the Santon solar business unit.
Gearing ratio
Gearing ratio is calculated as follows:
2025 2024
£m £m
Net debt 94.3 104.0
Adjusted EBITDA 75.6 73.1
Lease payments (7.5) (6.8)
Annualisation of acquired businesses 3.0 4.2
Covenant EBITDA 71.1 70.5
Gearing ratio 1.3 1.5
7. Operating profit
2025 2024
£m £m
Revenue 422.9 437.0
Direct materials/direct labour (236.8) (255.0)
Other cost of goods sold (4.6) (5.0)
Selling and distribution costs (40.9) (41.0)
Administrative expenses (98.2) (104.8)
Operating profit 42.4 31.2
8. Business combinations
Acquisitions in the year ended 31 March 2025
Acquisition of Hivolt
On 1 August 2024, the Group completed the acquisition of 100% of the
outstanding ordinary shares of Hivolt Capacitors Limited ("Hivolt"), a company
incorporated in the United Kingdom. Hivolt is a designer and manufacturer of
custom-built capacitors for specialised applications involving high voltages
and the acquisition is set to strengthen the Group's position in the
electronics market and enhance its offering across key target sectors,
including medical and transportation.
Hivolt was acquired for an initial consideration of £3.8m on a cash free,
debt free basis, before expenses, funded from the Group's existing debt
facilities. The cash consideration paid of £8.5m includes cash acquired of
£5.0m net of deductions for accrued tax and other liabilities and adjustments
of £0.3m. In addition, a contingent payment of up to £0.9m will be payable
subject to Hivolt achieving certain financial performance conditions over the
period between 1 April 2024 and 31 March 2025.
The fair value of the identifiable assets and liabilities of Hivolt at the
date of acquisition was:
Fair value
recognised
at acquisition
£m
Intangible assets - other (incl. customer relationships) 2.6
Property, plant and equipment 0.1
Right of use assets 0.2
Inventories 0.6
Trade and other receivables 0.2
Cash acquired 5.0
Trade and other payables (0.4)
Current tax liabilities (0.1)
Deferred tax liabilities (0.7)
Lease liabilities (0.2)
Total identifiable net assets 7.3
Goodwill arising on acquisition 2.1
Total investment 9.4
Discharged by
Initial cash consideration 8.5
Contingent consideration 0.9
9.4
Net cash outflows in respect of the acquisition comprise:
Total
£m
Cash consideration 8.5
Transaction costs (included in operating cash flows) (1) 0.1
Net cash acquired (5.0)
3.6
1) Acquisition costs of £0.1m were expensed as incurred in the period
ended 31 March 2025. These were included within operating costs.
Included in cash flow from investing activities is the cash consideration of
£8.5m, offset by the net cash acquired of £5.0m.
The goodwill is attributable to the workforce and the high profitability of
the acquired business. It will not be deductible for tax purposes. Included in
the £2.1m of goodwill recognised above are certain intangible assets that
cannot be individually separated and reliably measured, due to their nature.
These include the value of expected operational benefits. All the acquired
receivables are expected to be collected.
Acquisition of Burster
On 15 January 2025, the Group completed the acquisition of the Burster Group
("Burster"), by acquiring the limited partnership interest in burster
präzisionsmesstechnik GmbH & Co. KG. Burster is a German-based designer
and manufacturer of specialist sensors.
Burster was acquired for an initial consideration of £25.6m on a cash free,
debt free basis, before expenses, funded from the Group's existing debt
facilities. The cash consideration paid of £25.5m includes cash acquired of
£1.3m net of deductions for accrued tax and other liabilities and adjustments
of £1.4m. In addition, a contingent payment of up to £10.5m (€12.4m) will
be payable subject to Burster achieving certain financial performance
conditions in its year ending 31 December 2025.
The fair value of the identifiable assets and liabilities of Burster at the
date of acquisition was:
Fair value
recognised
at acquisition
£m
Intangible assets - other (incl. customer relationships) 9.1
Property, plant and equipment 1.5
Right of use assets 2.8
Inventories 6.8
Trade and other receivables 0.9
Cash acquired 1.3
Trade and other payables (1.3)
Current tax liabilities (0.4)
Lease liabilities (2.8)
Total identifiable net assets 17.9
Goodwill arising on acquisition 13.4
Total investment 31.3
Discharged by
Initial cash consideration 25.5
Contingent consideration 5.8
31.3
Net cash outflows in respect of the acquisition comprise:
Total
£m
Cash consideration 25.5
Transaction costs (included in operating cash flows) (1) 0.7
Net cash acquired (1.3)
24.9
1) Acquisition costs of £0.7m were expensed as incurred in the period
ended 31 March 2025. These were included within operating costs.
Included in cash flow from investing activities is the cash consideration of
£25.5m, offset by the net cash acquired of £1.3m.
The goodwill is attributable to the workforce and the high profitability of
the acquired business. It will be deductible for tax purposes. Included in the
£13.4m of goodwill recognised above are certain intangible assets that cannot
be individually separated and reliably measured, due to their nature. These
include the value of expected operational benefits. All the acquired
receivables are expected to be collected.
9. Business disposed
During the year ended 31 March 2025, the Group completed the disposal of its
Santon solar business unit (the "disposal group") based in the Netherlands,
which was previously classified as held for sale, for consideration of £2.6m.
In conjunction with this disposal, the Group also completed the sale of its
manufacturing facility in the Netherlands for a total consideration of £5.0m.
The overall loss on disposal was £3.8m, of which £2.1m gain was recognised
in the year and £5.9m loss in the prior year.
The disposals of both the solar business unit and the manufacturing facility
generated a net cash inflow of £7.2m after costs.
The disposal group is not considered to be a major line of operation.
Accordingly, its results are not presented as a discontinued operation for the
years ended 31 March 2025 and 31 March 2024.
10. Dividends
2025 2024
Dividends recognised in equity as distributions to equity holders in the year: £m £m
Equity dividends on ordinary shares:
Final dividend for the year ended 31 March 2024 of 8.25p (2023: 7.90p) 7.9 7.6
Interim dividend for the year ended 31 March 2025 of 3.90p (2024: 3.75p) 3.8 3.6
Total amounts recognised as equity distributions during the year 11.7 11.2
2025 2024
Proposed for approval at AGM: £m £m
Equity dividends on ordinary shares:
Final dividend for the year ended 31 March 2025 of 8.60p (2024: 8.25p) 8.3 7.9
Summary
Dividends per share declared in respect of the year 12.50p 12.00p
Dividends per share paid in the year 12.15p 11.65p
Dividends paid in the year £11.7m £11.2m
11. Earnings per share
Basic earnings per share is calculated by dividing the net profit for the year
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share is the basic earnings per share after allowing for
the dilutive effect of the conversion into ordinary shares of the weighted
average number of options outstanding during the year.
The following reflects the income and share data used in the basic and diluted
earnings per share calculations.
2025 2024
£m £m
Profit after tax for the year 24.6 15.5
2025 2024
Number Number
Weighted average number of shares for basic earnings per share 96,028,934 95,835,775
Effect of dilution - share options 2,398,601 2,450,593
Adjusted weighted average number of shares for diluted earnings per share 98,427,535 98,286,368
Basic earnings per share 25.6p 16.2p
Diluted earnings per share 25.0p 15.8p
At the year-end, there were 2,648,415 ordinary share options in issue that
could potentially dilute adjusted earnings per share in the future, of which
2,398,601 are currently dilutive (2024: 2,713,941 in issue and 2,450,593
dilutive).
12. Intangible assets - goodwill
Cost
£m
At 1 April 2023 188.1
Business acquired (note 11) 49.3
Exchange adjustments (4.0)
At 31 March 2024 233.4
Business acquired (note 11) 15.5
Disposal (1.7)
Exchange adjustments (3.0)
At 31 March 2025 244.2
Impairment £m
At 31 March 2024 (1.7)
Disposal 1.7
At 31 March 2025 -
Net book value at 31 March 2025 244.2
Net book value at 31 March 2024 231.7
The Group's operations are organised into two distinct divisions, Magnetics
& Controls ("M&C") and Sensing & Connectivity ("S&C"). Each of
these divisions comprises two sub-divisions. Within each sub-division are
aggregated business units ("CGUs") that share similar characteristics such as
the nature of customers, products, risk profile and economic characteristics.
With the increased number of acquisitions and the anticipated synergies across
the Group's businesses in particular within a sub-division, the Group's
management has transitioned from monitoring individual CGUs separately to
aggregating the performance outputs of each of the four sub-divisions. This
approach is adopted to facilitate the assessment of performance, resource
allocation, and strategic decision-making.
For the year ended 31 March 2025, the Group's management has determined that
the lowest level within the Group at which the goodwill is monitored for
internal management purposes consists of the four sub-divisions, each
comprising a number of CGUs. Therefore, according to IAS 36.82, goodwill is
tested for impairment at the level that reflects the way the Group manages its
operations and with which the goodwill would naturally be associated.
The carrying value of goodwill is analysed as follows:
2025 Restated(1)
£m 2024
£m
Magnetics & Controls 104.9 106.4
Magnetics 38.2 38.5
Controls 66.7 67.9
Sensing & Connectivity 139.3 125.3
Sensing 73.0 60.2
Connectivity 66.3 65.1
Total 244.2 231.7
(1) Prior year restated to change presentation from individual CGUs to the
four sub-divisions after changes to the way goodwill is tested for impairment
as described above.
The movement in goodwill compared to prior year relates mainly to the movement
in foreign exchange rates and to Hivolt and Burster which were acquired in the
year into the Sensing & Connectivity division.
13. Movements in cash and net debt
Year to 31 March 2025 Cash flow Non-cash changes 31 March
1 April £m £m 2025
2024 £m
£m
Bank loans over one year (137.5) (4.3) 2.4 (139.4)
Capitalised debt costs 2.0 - (0.6) 1.4
Lease liability (20.1) 7.5 (14.8) (27.4)
Liabilities arising from financing activities (155.6) 3.2 (13.0) (165.4)
Cash and cash equivalents 110.8 29.6 (1.1) 139.3
Bank overdrafts (79.3) (16.4) 0.1 (95.6)
Net cash 31.5 13.2 (1.0) 43.7
Net debt (incl. lease liability) (124.1) 16.4 (14.0) (121.7)
Remove: lease liability 20.1 (7.5) 14.8 27.4
Net debt (1) (104.0) 8.9 0.8 (94.3)
(1) Net debt is an alternative performance measure as it is not defined in
IFRS. The most directly comparable IFRS measure is the aggregate of loans and
borrowings (current and non-current) and cash and cash equivalents.
Bank loans over one year above include £139.3m (2024: £137.4m) drawn down
against the Group's revolving credit facility.
Bank overdrafts reflect the aggregated gross overdrawn balances of Group
companies (even if those companies have other positive cash balances). The
overdrafts and cash and cash equivalents are held with the Group's
relationship banks.
Year to 31 March 2024 1 April Cash flow Non-cash changes 31 March
2023 £m £m 2024
£m £m
Bank loans over one year (88.1) (51.1) 1.7 (137.5)
Capitalised debt costs 2.0 0.6 (0.6) 2.0
Lease liability (18.8) 6.8 (8.1) (20.1)
Liabilities arising from financing activities (104.9) (43.7) (7.0) (155.6)
Cash and cash equivalents 83.9 29.2 (2.3) 110.8
Bank overdrafts (40.5) (38.6) (0.2) (79.3)
Net cash 43.4 (9.4) (2.5) 31.5
Net debt (incl. lease liability) (61.5) (53.1) (9.5) (124.1)
Remove: lease liability 18.8 (6.8) 8.1 20.1
Net debt (42.7) (59.9) (1.4) (104.0)
14. Reconciliation of cash flows from operating activities
2025 2024
£m £m
Profit for the year 24.6 15.5
Tax expense 7.4 6.7
Net finance costs 10.4 9.0
Depreciation of property, plant and equipment 4.5 4.7
Depreciation of right of use assets 7.3 6.6
Amortisation of intangible assets - other 16.6 16.5
Write-down of assets related to disposal group - other intangible assets - 1.0
Write-down of asset related to disposal group - goodwill - 1.7
Loss on disposal of property, plant and equipment - 0.2
Loss on disposal of intangible assets 0.1 -
Change in provisions 0.1 2.6
Pension scheme funding (2.3) (2.0)
IAS 19 pension charge 0.7 0.8
Gain on disposal of business (2.1) -
Associated taxes on LTIPs - (0.3)
Impact of equity-settled share-based payment expense and associated taxes 2.0 2.6
Operating cash flows before changes in working capital 69.3 65.6
Decrease in inventories 5.4 14.5
Decrease/(Increase) in trade and other receivables 5.8 (3.0)
Decrease in trade and other payables (10.0) (11.1)
Decrease in working capital 1.2 0.4
Cash generated from operations 70.5 66.0
Interest paid (12.5) (11.6)
Interest paid on lease liabilities (1.0) (0.7)
Income taxes paid (10.6) (12.5)
Net cash flow from operating activities 46.4 41.2
15. Share capital
2025 2025 2024 2024
Allotted, called up and fully paid Number £m Number £m
Ordinary shares of 5p each 96,356,109 4.8 96,356,109 4.8
During the year to 31 March 2025, no shares were issued to the Group's
Employee Benefit Trust (2024: nil). At 31 March 2025 the Trust held 299,219
shares (2024: 414,600). During the year to 31 March 2025, employees exercised
115,381 share options under the terms of the various share option schemes
(2024: 275,492).
16. Pension
The acquisition of the Sedgemoor Group in June 1999 brought with it certain
defined benefit pension schemes, together "the Sedgemoor Scheme". The
Sedgemoor Scheme is funded by the Group, provides retirement benefits based on
final pensionable salary and 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 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 and are set based
upon funding valuations carried out every three years.
On 21 January 2025, the Trustee entered into a bulk annuity "buy-in" policy
with an insurance company. This policy covers all known current members of the
Scheme and its fair value matches the present value of the benefits insured.
To fund the premium, the Group paid cash contributions to the Scheme of £4.5m
in 2025, of which £3.0m came from an escrow account set up to the benefit of
the Trustee.
Other than the Trustee bank account, the buy-in policy is the only asset now
held by the Trustee as part of the Scheme's investment strategy. Under the
terms of the policy, the Trustee will receive income equal to the pension
benefits that have been insured. This largely removes exposure to the Group
from pension scheme investment, inflation and longevity risks. Residual
differences between the benefits currently insured under the buy-in policy and
those paid out by the Fund are allowed for within the IAS19 figures.
Based upon the results of the triennial funding valuation at 31 March 2024,
the Sedgemoor Scheme's Trustee agreed with Sedgemoor Limited on behalf of the
participating employers to make regular payments totalling £0.4m over the
year to 31 March 2026, with subsequent contributions of £0.4m p.a.
increasing by 3% each April payable over the period to May 2030. These
contributions, payable monthly, will continue to be paid into an escrow
account to the benefit of the Trustee unless and until the scheme is wound up.
In addition, 12 payments of £50k will be paid monthly from June 2025 to May
2026 directly to the Scheme. Additional payments to either the Scheme or the
escrow account will also be made to cover any back payments due to members
following completion of the data cleansing and GMP equalisation projects,
currently estimated to be £0.9m and are due to be paid in instalments from Q4
calendar 2025 to Q2 calendar 2026. For the year ended 31 March 2025, a total
of £0.8m (2024: £2.0m) was paid into the escrow account and £1.5m was paid
directly into the Scheme (2024: nil).
17. Exchange rates
The profit and loss accounts of overseas subsidiaries are translated into
Sterling at average rates of exchange for the year and Statements of Financial
Position are translated at year-end rates. The main currencies are the US
Dollar, the Euro and the Norwegian Krone. Details of the exchange rates used
are as follows:
Year to 31 March 2025 Year to 31 March 2024
Closing Average Closing Average
rate rate Rate rate
US Dollar 1.2947 1.2754 1.2643 1.2566
Euro 1.1971 1.1883 1.1695 1.1585
Norwegian Krone 13.6624 13.8861 13.6814 13.3524
18. Event after the reporting date
There were no matters arising, between the balance sheet date and the date on
which these Financial Statements were approved by the Board of Directors,
requiring adjustment in accordance with IAS 10 "Events after the Reporting
Period". The following important non-adjusting events should be noted:
Dividends
A final dividend of 8.60p per share (2024: 8.25p), amounting to a dividend of
£8.3m (2024: £7.9m) and bringing the total dividend for the year to 12.50p
(2024: 12.0p), was declared by the Board on 3 June 2025. The Group Financial
Statements do not reflect this dividend.
1 Further information on the consolidated Statement of Cash Flows is
provided in note 14.
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