Strategy Delivering Further Strong Growth 4 th June 2019 discoverIE - - PowerPoint PPT Presentation

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Strategy Delivering Further Strong Growth 4 th June 2019 discoverIE - - PowerPoint PPT Presentation

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Preliminary results Year ended 31 st March 2019 Strategy Delivering Further Strong Growth 4 th June 2019 discoverIE Group plc Preliminary results FY19 4 th June 2019 A strong year Group sales up +13% Organic growth +8% Record

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SLIDE 1

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Preliminary results Year ended 31st March 2019 4th June 2019

Strategy Delivering Further Strong Growth

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SLIDE 2

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) Estimated lifetime sales value of projects

A strong year

Group sales up +13%

 Organic growth +8% 

Record period end order book +12% (organic)

New project design wins +40%(1)

Underlying operating profit +25%

Underlying EPS +22%

Operating cash flow +29%

3 higher margin acquisitions for £35m, 2 since the year end

1

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SLIDE 3

Preliminary results FY19 – 4th June 2019 discoverIE Group plc discoverIE Group plc

From

  • m F

FY13 13 t to

  • FY18

18:

Sales up > 2x

Underlying EPS up > 2x

Operating profits up > 4x

Share price growth 19% CAGR(2)

Dividend growth 7.6% CAGR(3)

(1) Group revenue, excluding disposed businesses (2) Growth from April 2012 (FY13) to March 2018 (3) Growth from FY13 to FY18

From F FY1 Y19 o

  • ur a

aim im is t is to double E EPS in in 5 ye year ars

FY19 EPS up 22%

We e aim t to provi vide de inve vesto tors w with

Returns of 15 – 20% pa

A progressive dividend

Growth Company

2

FY13 FY14 FY15 FY16 FY17 FY18 FY19

SALES(1)

FY13 FY14 FY15 FY16 FY17 FY18 FY19

UNDERLYING OPERATING PROFIT & EPS

Underlying Operating Profit EPS

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SLIDE 4

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

FINANCIAL REVIEW

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SLIDE 5

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Increas

asing o g operat ating mar argi gin

 Up 0.7ppts to 7.0%

 Excellen

ent c t cash f flow

 Operating cash flow of

£28.6m, up 29%

 93% conversion of

  • perating profit

 Gear

aring r reduced

 Gearing down to 1.7x  1.4x proforma post Apr

placing

 Growi

wing R ROCE(2,3)

 Up 1.7ppts to 15.4%

(1) Underlying profits exclude acquisition-related costs and exceptional items (see Appendices I & II) (2) FY18 reported profit before tax, fully diluted EPS and ROCE restated for prior year adjustment (3) ROCE is underlying operating profit as a percentage of net assets plus net debt

Financial Review

Continued strong growth

4

FY FY19 FY FY18 Growt wth CER ER Growt wth Revenue £438. 8.9m £387.9m +13% +14% Underlying operating profit(1) £30.6m 6m £24.5m +25% +26% Underlying profit before tax(1) £27 27.2m 2m £21.9m +24% Underlying EPS(1) 27 27.2p 2p 22.3p +22% Reported profit before tax(2) £19. 9.3m £14.6m +32% Reported fully diluted EPS(2) 19. 9.4p 14.2p +37% Dividend per share 9.55p 55p 9.00p +6%

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SLIDE 6

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

6 years revenue growth of 150% (16% CAGR) Financial Review

Consistent revenue growth

5

(1) Organic growth excludes acquisitions

Growth FY FY19 Organic(1) 8% Acq 6% CER 14% Currency

  • 1%

Actual 13%

£177m 77m £21 212m 2m £27 271m £288m 88m £338 338m £388m 88m £439m 9m +19% +28 28% +6% +18% +15% +13% FY13 FY14 FY15 FY16 FY17 FY18 FY19

REVENUE

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SLIDE 7

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Underly

lying g op p profit(1

(1) ) of £30.6

.6m

 Up 26% CER (+£6.4m) on FY18  33% CAGR in 6 years

 Underly

lying g op mar argi gin o

  • f 7.0%

0%

 Up 0.7ppts on FY18  Up 3.9ppts in 6yrs  Good progress towards 8.5% target(2)

(1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and II). (2) Mid-term target by Nov 21

Financial Review

6

£5.5m 5m £7.1m 1m £13.4m 4m £16.3m 3m £20.0m 0m £24.5m 5m £30.6 .6m 3.1% 1% 3.4% 4% 4.9% 9% 5.7% 7% 5.9% 9% 6. 6.3% 7. 7.0% FY13 FY14 FY15 FY16 FY17 FY18 FY19

UNDERLYING OP PROFIT & MARGIN

Strong profit growth with increasing margin

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SLIDE 8

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 EBIT

IT d drop t p thru o

  • f

f 13%(2)

2)  Strong organic revenue growth of 8%  Infrastructure investment in D&M to

support growth

 £2.5m contribution from Cursor

Controls and Santon

(1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and II). (2) Increase in CER profits as a percentage of sales growth (organic)

Financial Review

7

Organic growth with good operating leverage

£24.5 .5m £9.8m 8m (£0.4m) (£5.4m) £2.4m (£0.3m) £30.6 .6m

FY FY18 REV EVEN ENUE GM GM OPEX EX AC ACQS FX FX FY FY19

UNDERLYING OPERATING PROFIT

+£4.0m organic

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SLIDE 9

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) UOP is underlying operating profit (2) Organic growth excludes acquisitions (D&M)

Financial Review

CUSTOM M SUPPL PPLY DESIG IGN & N & MANU NUFACTURING ING

Profit growth across both divisions…

Ope perating pr profi fit up p 25 25% % CE CER

 Margin up 0.3ppts to 11.2%  Margin increase reduced by short

term solar slow down

Ope perating pr profi fit up p 15% % CE CER

 Margin up 0.4ppts to 5.0%,

achieving mid-term target

 Strong operating leverage

8

£m D&M 2 266. 66.2 29 29.8 11. 1.2% 219.8 23.9 10.9% 20% 21% 10% 25% Custom Supply 1 172. 2.7 8. 8.6 5.0% 0% 164.2 7.5 4.6% 4% 5% 5% 15% Unallocated (7.8) 8) (7.2) Total (CER) 4 438. 8.9 3 30. 0.6 7. 7.0% 384.0 24.2 6.3% 13% 14% 8% 26% FX 3.9 0.3 Total (reported) 438. 8.9 30. 0.6 7. 7.0% 387.9 24.5 6.3%

Rev even enue UO UOP(1

(1)

%

FY FY19

Rev even enue UO UOP(1

(1)

UO UOP grow rowth %

Rev even enue g e growth

Org rganic (2

(2 )

% Actual al CE CER

FY18 ( (CER ER)

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SLIDE 10

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and II)

Financial Review

… drives EPS increase of 22%

9

 Underlyi

ying ng P PBT up 24% 4%

 Underlyi

ying ng E EPS up up 178%

% in 6 n 6 yrs £m FY FY19 FY FY18 Underlying operating profit(1) 30 30.6 24.5 Finance costs(1) (3.4) 4) (2.6) Underlying PBT(1) 27 27.2 21.9 Effective tax rate 25 25% 24% Underlying PAT 20 20.5 16.6 Fully diluted shares (m) 75 75.4 74.5 Underlying EPS (p) 27 27.2p 2p 22.3p

9.8p 8p 11. 1.8p 15.4p 4p 17. 7.0p 19.2p 2p 22. 22.3p 27 27.2p 2p +20 20% +31% +10% +13% +16% +22% 22% FY13 FY14 FY15 FY16 FY17 FY18 FY19

UNDERLYING EPS

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SLIDE 11

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Strong 0

g 0peratin ing g cash sh flo low(1

(1) )  £28.6m up 29%  93% of underlying operating profit  Well ahead of 85% target despite

higher w/c requirement in D&M.

 Net d

t debt a t at 31 31 M Mar 1 r 19 of £ f £63m 3m

 £13m reduction since last year (ex

acquisitions)

 Gearing ratio(3) reduced to 1.7x  Further reduced to 1.4x post placing

  • n a proforma basis

 Target range 1.5x – 2.0x

 Revo

volvi ving c credi dit f t facility ty increa eased ed to

  • £180m

m (from £ m £120m) m)

 Plus £60m accordion; term extended

to Jun 23 (with option to Jun 24)

 Available for acquisitions and w/c

(1) Operating cash flow defined as EBITDA less working capital and capex – see Appendix III (2) FY18 operating cash flow restated for prior year adjustment (3) Net debt at 31 Mar 19 as a ratio of adjusted EBITDA (Group underlying EBITDA adjusted for a full year of the underlying EBITDA from acquisitions).

OPERATING CASH FLOW(1)

Financial Review

10

Excellent cash flow

FY FY14 FY FY15 FY FY16 FY FY17 FY FY18( 2)

2)

FY FY19 Tar arget 100% 104% 100% 136% 90% 93% 85% % Underlying Operating Profit £7.1m 1m £13. 3.9m £16.3m 3m £27.1m 1m £22. 22.1m £28.6m 6m

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SLIDE 12

Preliminary results FY19 – 4th June 2019 discoverIE Group plc discoverIE Group plc

 Divide

dend nd up 6 p 6%

 88% growth FY dividend in 9yrs  7.2% CAGR

 Maint

ntaini ning ng p progressi sive po policy y

 FY19: 2.8x cover (underlying) and

1.8x cover (reported)

 To exceed 3x cover (underlying)

Financial Review

Increasing dividend

11

1.69p 9p 1.69p 9p 1.82p 1.82p 1.82p 2. 2.20 20p 2.33p 33p 2.45p 5p 2.65p 5p 2.80p 0p 3.40p 0p 3.74p 4p 3.99p 9p 4.36p 6p 4.98p 8p 5.40p 5.72p 6.05 05p 6.35p 5p 6.75p

5.09 09p 5.43 43p 5.81p 1p 6.18p 8p 6.80 80p 7. 7.60 60p 8. 8.05p 8. 8.50p 9.00p 00p 9.55p 5p FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

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SLIDE 13

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

OPERATING REVIEW

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SLIDE 14

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Strong

g organic g growth

 Sales +10%  Orders +11%

 Ope

perating pr profi fit u up p 25 25%

 Operating leverage with 17% organic

EBIT drop through  Enlar

arge ged productio ion f facil ilit itie ies now

  • w operational (

(5.5 .5ks ksqm, +11% 11%)

 Magnetics – Bangalore, India  Fibre optics – Bratislava, Slovakia  Shielding – Seoul, Korea

 Expansi

sion i in n China u unde nderway

 Magnetics (+3.6k sqm)

 Growi

wing S Santon order r book

  • k

Note: At constant exchange rates (CER)

Operating Review

Design & Manufacturing division

13

Growth FY FY19 Organic 10% Acquisitions 11% CER 21% Currency

  • 1%

Actual 20%

£4.7m £12.0 .0m £18.7 .7m £20.6m 6m £23.9 .9m £29.8m 8m 41% 63% 78% 79% 76% 78% FY14 14 FY15 15 FY16 16 FY17 17 FY18 18 FY19 19 Underlying Operating Profit % Group profit contribution £39m 9m £110m £157m 7m £178m 8m £220 220m £266m 66m 19% 38% 49% 52% 57% 61% FY14 14 FY15 15 FY16 16 FY17 17 FY18 18 FY19 19 Sales % Group total

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SLIDE 15

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Wides esprea ead, s strong o

  • rganic g

growth

(1) Sales destination, excluding acquisitions (2) D&M organic growth excluding acquisitions

Operating Review

14

9% 9% 9% 9% 14% 11% 1% 11% 1% 11% 1% 10% 0% 11% 1% 9% 9% Q4 1 4 17 Q1 18 1 18 Q2 1 2 18 Q3 1 3 18 Q4 1 4 18 Q1 19 1 19 Q2 1 2 19 Q3 1 3 19 Q4 1 4 19

QUARTERLY ORGANIC SALES GROWTH(2)

Strong, widespread D&M organic growth

UK UK 13% Germany 13% Nordic ic 29 29% R.O.E. E. 18% 8%

  • N. A

America 12% 2% Asia ia 15% 5%

REVENUE BY REGION

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SLIDE 16

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) Sales growth excluding acquisitions. Target markets are renewable energy, transportation, medical and industrial connectivity

Operating Review

Target markets leading growth

Up from 62% in FY18 15 12% 2%

1% 1% 8% 8% Targ rget M Mark rkets Oth ther M Markets ts Tot

  • tal

ORGANIC GROWTH BY MARKET(1)

Targ rget Markets ts £290m 66% GROUP REVENUE FROM TARGET MARKETS (% of total revenue)

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SLIDE 17

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Good

  • d organi

anic g c growth

 FY Sales +5% (+6% underlying)  H2 sales +8%

 Ope

perating pr profit u up p 15 15%

 Operating leverage (13% EBIT drop through)  Structural efficiencies & tight cost control

 Perfo

forma mance driven b n by Germany, any, I Italy & & Netherland ands

 Cross s

ss selling u up 20% % CER t to

  • £10

10.6m

 Higher gross margins (c.+10ppts v CS GM)

Note: At constant exchange rates (CER)

Operating Review

Custom Supply division

16

£6. 6.9m £7.2m 2m £5.3m 3m £5.5m 5m £7.5m 5m £8. 8.6m FY14 14 FY15 15 FY16 16 FY17 17 FY18 18 FY19 19

UNDERLYING OPERATING PROFIT

£169m 9m £176m 6m £164m 4m £165 65m £164m 4m £173m 3m £7m £7m £7m £3m FY14 14 FY15 15 FY16 16 FY17 17 FY18 18 FY19 19

REVENUE

Ongoing Discontinued

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SLIDE 18

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 £139m

m record rd p/e /e o

  • rd

rder book

  • k

 CER +15%  Organic +12% v FY18

 Hig

High propo portio ion o

  • f recurring

g reven enues es

 Dri

Driven b by

 New project design wins  Repeat revenue growth

FY13 13 FY14 14 FY15 15 FY16 16 FY17 17 FY18 18 F FY19 19

Operating Review

Record order book underpins FY20

17

£52m £50m £65m £73m £85m £109m £122m £139m

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SLIDE 19

Preliminary results FY19 – 4th June 2019 discoverIE Group plc discoverIE Group plc

Renewable energy

Transportation

DESIGN WINS

Cre reati ting future uture gro rowth th

£266m in new project wins

(est lifetime value or ELV)

Represents 16% of current revenue +40% increase on prior year 75% in target markets

(1) Estimated lifetime sales value of projects,

Operating Review

18

Medical Industrial & Connectivity

£92m 2m £127 27m £190m 0m £266m 66m FY16 16 FY17 17 FY18 18 FY19 19

Design wins - ELV(1)(£m)

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SLIDE 20

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Operating Review

Consistent, proven strategy

 Sales

es g growth th w wel ell ahea ead o

  • f GDP over

er th the ec e economic cy cycl cle

 Mo

Move ve u up the he va value c cha hain in into hig highe her ma margin p products

 Acquire b

e busines esses es w with a attractive g e growth prospec ects an and s strong g operating m mar argi gins

 Interna

nationa nalise se t the b busine ness

19

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SLIDE 21

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Focused on growth markets

 Technology revolution driving new product development  Global trends underpinning structural growth  Applications necessitating increased electronic content  Essential components for application-specific solutions

Transportation Medical Renewable Energy Industrial & Connectivity

Au Auto tomoti tive c circuit t sal ales expe pected to to r rise CAG AGR 13.4% % (20 (2016- 20 2021 21) ) IC Insights Medi dical e electr tronics to to gro row CAGR 6 6.8% (20 (2017 -20 2022) 22) Research+Markets Two t thi hirds ds global investment i in po power generation t to 2040 will be be into renewable e energy World Energy Outlook 2017 Overal all m mar arket size f for global al m machi hine-to to-machin ine e conne nnections ns t to rise 1 13.2% CAGR (20 (2016-202 021) Markets-and-Markets

20

Operating Review

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SLIDE 22

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Essential products into growth markets

Medical Renewable Energy Industrial & Connectivity

 Charging  Sensing systems  Power control  Cabin monitoring &

control

 Increasing scale of wind

turbines

 Diversification of solar

systems

 Wireless telematics  Fibre optic connectivity  Communication technologies  Wireless robotics control  Power control  Monitoring & control  Automation & robotics  Advanced surgery  Electric vehicles  Mass transit & route

vehicles

 Autonomous vehicles  High speed rail

Transportation

discoverIE solutions Market drivers Mega trends

Decarb rbonis isatio ion & & Divers rsificatio ion Electr trifi ficati tion n & A Auton

  • nom
  • mou
  • us

vehicles es Conne nnecti tivity ty, autom

  • mation
  • n &

& Industri rial Inte nternet o

  • f

f Thin ings gs Artif ific icial i intellig igence, sensin ing & g & an anal alytics

 Power inductors  Turbine blade pitch

control

 Airflow measurement  Embedded diagnostics  Interface device & cabling  Power systems  Automation & robotics  ‘Smart factories’  Artificial intelligence  Increasing electronic

content

Technology integration

 Decarbonisation  ‘Safety-centric’ agenda  Mass transit & route

vehicles

 Proactive & preventative

medicine

 Technological & biological

fusion

 Predictive analytics  Geopolitical consensus  Growing public awareness  Legislative and regulatory

regimes

 Cost of energy  Remote monitoring &

control

 Quality control  Precision & automation

21

Operating Review

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SLIDE 23

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) As a percentage of Group revenue (2) Mid-term is a 3 to 5 year period starting in Nov 16 (3) FY18 ROCE and cash flow restated for prior year adjustment

Repeat the performance in the next 5 years

85% 10% 40% Lon

  • ng t

term rm ambit itio ion

Operating Review

Good progress towards targets

22

Key Strategic Indicators

Mid id t term Tar arget(2) 1. Increase share of Group revenue from D&M(1) 18% 37% 48% 52% 57% 61% 75%

  • 2. Increase underlying operating margin

3.4% 4.9% 5.7% 5.9% 6.3% 7.0% 8.5%

  • 3. Build sales beyond Europe(1)

5% 12% 17% 19% 19% 21% 30%

Key Performance Indicators

3 y yr t target (FY20 20) 1. Sales growth CER 17% 36% 14% 6% 11% 14% Organic 2% 3% 3%

  • 1%

6% 8%

  • 2. Increase cross-selling

£0.3m £0.9m £3.0m £4.6m £8.8m £10.6m £12m p.a. (was £10m)

  • 3. Underlying EPS growth

20% 31% 10% 13% 16% 22% >10%

  • 4. Dividend growth

10% 11% 6% 6% 6% 6% Progressive

  • 5. ROCE

15.2% 12.0% 11.6% 13.0% 13.7%(3) 15.4% >15%

  • 6. Operating cash flow

100% 104% 100% 136% 90%(3) 93% >85% of Op profit FY FY14 FY FY16 FY FY17 FY FY17 FY FY14 FY FY18 FY FY18 FY FY19 FY FY19 Well ahead

  • f GDP

FY FY15 FY FY15 FY FY16

slide-24
SLIDE 24

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Recent acquisitions continue pace

  • f development

23 Thre Three hi high h quali lity, hi highe her r marg rgin n niche he businesses f for r £35 £35m

 Cursor C

r Contro rols ls – acquire red O October r 2018 18

 Custom trackballs, trackpads & rugged keyboards  Brings additional product capability & international

sales

 Hobart

rt Elect ctroni nics cs – acqu quired A d April 2019 19

 Custom magnetic components  Builds presence in US  Brings manufacturing in Mexico

 Positek

ek – acquired ed Apri ril 2 l 2019

 Custom, high accuracy position sensors  Brings additional sensor products & international

sales

Operating Review

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SLIDE 25

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 14

14 D& D&M acqu quisiti tions, £ £187m spent t since nce 2011 11

 EBIT ROI of D&M acquisitions(1) of

20%, up from 17% in FY18 (v 15% target)

 Consistent profitable growth from

acquisitions

Acquisitions performing well

(1) ROI defined as operating profit attributable to the business over acquisition cost comprising up-front consideration, acquisition expenses, earn-out (once earned), and integration costs (2)All D&M businesses included which were acquired more than 2yrs ago. Excludes recent acquisitions: Santon, Cursor Controls, Hobart Electronics and Positek.

Operating Review

24

115 15% 67% 67% 31% 30% 0% 30% 0% 25 25% 24 24% 12% 2% 12% 2% 3% 3% 20 20% A B C D E F G H I J Overa rall

EBIT ROI(1) % of FY19

Target 1 t 15%

slide-26
SLIDE 26

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Busines ness f fundamen mentals

  • Growth markets
  • Designed-in products, difficult to replace
  • Distinct business, competitive advantage
  • Low customer concentration
  • Good gross margin
  • Low capital investment requirements
  • Acquisitions at the right price

Attract ctive r reward rds

  • GDP++ organic growth
  • High levels of repeating revenue
  • Sustainable margins
  • Reduced risk
  • Cash generative
  • Self-funding growth
  • Earnings accretion

Our business

Operating Review

25

slide-27
SLIDE 27

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Operating Review

Outlook

 The new year has started well with the fundamentals in place for this to

continue

Record order book

High level of design wins

In-line with management’s expectations  Healthy acquisition pipeline 26

slide-28
SLIDE 28

APPENDICES

slide-29
SLIDE 29

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Management believe the adjustments enable a

better understanding of the underlying performance of the business

 Adjustments made to IFRS results are:

 Acquisition/disposal related costs (transaction costs,

earn-outs, amortisation of acquired intangibles, gain or loss on acquisition or disposal, IAS 19 pension charge related to legacy scheme)

 Exceptional items (restructuring, integration, one offs)

 FY18 reported results restated for prior year

adjustment:-

 £1.2m of the £4.0m fraud identified in FY19 was an

exceptional loss in FY18.

Appendix I

Underlying to IFRS reconciliation

28

FY19 (£m) UO UOP Excep ep. Acqs qs Amo mort IA IAS19 IF IFRS Gross profit 145.0 145.0 S&D costs (57.6) (57.6) Admin expenses (56.8) 0.2 (1.8) (5.9) (0.4) (64.7) Operating profit 30 30.6 0.2 .2 (1 (1.8) (5 (5.9) (0.4) 4) 22. 22.7 Net finance costs (3.4) (3.4) Profit before tax 27.2 0.2 (1.8) (5.9) (0.4) 19.3 Taxation (6.7) 0.1 0.5 1.3 0.1 (4.7) Profit after tax 20 20.5 0.3 .3 (1.3) 3) (4. 4.6) (0.3) 3) 1 14. 4.6 Effective tax rate 25% 24% EPS 27 27.2p 2p 19.4p 4p FY18 (£m) UO UOP Excep ep. Acqs qs Amo mort IA IAS19 IF IFRS Gross profit 126.7 126.7 S&D costs (54.5) (54.5) Admin expenses (47.7) (1.2) (0.8) (4.9) (0.3) (54.9) Operating profit 2 24. 4.5 (1.2) 2) (0 (0.8) (4. 4.9) (0.3) 3) 1 17. 7.3 Net finance costs (2.6) (0.1) (2.7) Profit before tax 21.9 (1.2) (0.8) (4.9) (0.4) 14.6 Taxation (5.3) 0.2 1.0 0.1 (4.0) Profit after tax 1 16.6 .6 (1.2) 2) (0 (0.6) (3. 3.9) (0.3) 3) 1 10.6 .6 Effective tax rate 24% 27% EPS 22. 22.3p 14. 4.2p

slide-30
SLIDE 30

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

UNDERLYING ADJUSTMENTS (£m) NET ASSETS (£m) Appendix II

Underlying adjustments & net assets

29

(1) FY18 exceptional items and net assets at 31 Mar 2018 restated for prior year adjustment

Net A Asse ssets

At 3 31 M March ch 2 201 018( 1)

1)

126.8 Net profit after tax 14.6 Dividend paid (6.7) Currency net assets - translation impact (1.1) Gain on defined benefit scheme 0.1 Shares issued 0.1 Share-based payments (incl tax) 0.9 At 3 31 M March ch 2 201 019 134.7 FY FY19 FY FY18 Exceptional items(1) 0.2 (1.2) Acquisition costs (1.8) (0.8) Amortisation of acquired intangibles (5.9) (4.9) Legacy pension - IAS19 (0.4) (0.4) Underlying adjustments (7. 7.9) (7. 7.3) Tax impact of adjustments 2.0 1.3 After tax adjustments (5.9) 9) (6. 6.0)

slide-31
SLIDE 31

Preliminary results FY19 – 4th June 2019 discoverIE Group plc (1) Cash flow for FY18 restated for prior year adjustment (2) Non-cash items are depreciation, amortisation and share based payments. (3) Operating cash flow as a percentage of underlying operating profit. (4) Free cash as a percentage of underlying profit after tax.

Appendix III

Cash flow & net debt

NET DEBT (£m) CASH FLOW (£m)

30

FY FY19 FY FY18(1

(1 )

Underlying profit before tax 27.2 21.9 Finance costs 3.4 2.6 Non cash items(2) 6.4 4.8 Und nderlying ng E EBITDA 37 37.0 29 29.3 Working capital (3.2) (2.9) Capital expenditure (5.2) (4.3) Operat ating c cas ash f flow 28 28.6 22. 22.1 Finance costs (3.4) (2.6) Taxation (3.8) (3.7) Free c ee cash 21 21.4 1 15.8 .8 Target et Operating cash flow %(3) 93% 3% 90% 85% Free cash flow %(4) 104% 4% 95% 90% FY FY19 FY FY18 Net d debt a at 1 t 1 A April (52.4) (30.0) Free cash flow 21.4 15.8 Acquisition related cash flow (24.2) (25.4) Executive options issuance (1.6)

  • Net settlement expense
  • (1.5)

Equity issuance 0.1

  • Net exceptional receipt

1.1 (3.0) Legacy pension (1.7) (1.7) Dividends (6.7) (6.2) Foreign exchange impact 0.7 (0.4) Net d debt a at 3 t 31 M March (63. 3.3) 3) (52.4) 4)

slide-32
SLIDE 32

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Tr Translati tion ef effects

 Sterling weakened significantly in FY17 and FY18

but rose against Nordic currencies during FY19 impacting the Group on translation of overseas results into Sterling by c1%.

 c.85% of Group revenues are non-UK

(mainly € and Nordic).

 Translation impact for FY19:  Sales £3.9m  Underlying operating profit £0.3m

(1) Nordic rate is a weighted average combination of £/NOK, £/SEK and £/DKK rates based on Group sales in each territory.

Operational e effec ects

 Sterling weakened significantly against US$ in FY17.

Although strengthening throughout FY18, weakened again during FY19, and still remains well below the FY16 average rate.

 Approximately 90% of UK cost of goods are non-

Sterling, so impacts on purchase pricing .

 The Group hedges material transactional exposures

for around six months.

 Protects GM at FX rate at time of order.

Appendix IV

Foreign exchange effects

31

£/ £/€ £/Nord

  • rdic (1)

FY19 v FY18 0% 4% FY18 v FY17

  • 5%
  • 2%

FY17 v FY16

  • 13%
  • 12%

£/ £/$ FY19 v FY18

  • 1%

FY18 v FY17 1% FY17 v FY16

  • 13%
slide-33
SLIDE 33

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Opex % Gross margin % Ope pera rating costs ts d down 0 0.4ppts ts

Improving operating efficiency

Lowest ratio since new strategy began Operating margin %

Ope pera rating marg rgin of

  • f 7.0

.0% %

0.7ppts improvement from FY18

Up 3.6ppts in 5 years

Towards mid-term target of 8.5%

Efficiency drives operating margin

32

GM b back to to i its ts h high ghest level

Impact of weaker sterling v $ rates on import costs in FY 18, reversed with better pricing

Appendix V

FY14 FY15 FY16 FY17 FY18 FY19 29.8% 8% 31. 1.1% 1% 32.2% 2% 32.8% 8% 32.7% 7% 33. 33.0% FY14 FY15 FY16 FY17 FY18 FY19 3.4 .4% 4.9 .9% 5. 5.7% 5. 5.9% 6.3 .3% 7.0 .0% FY14 FY15 FY16 FY17 FY18 FY19 26.4% 4% 26.2% 2% 26.5% 5% 26.9% 9% 26.4% 4% 26.0 .0%

slide-34
SLIDE 34

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

 Similar

lar W WC/sale ales r ratio t to last y year

 14.3% of annualised Q4 sales (v 14.4% LY)  Reflects increasing proportion of D&M

(D&M WC at 19% of sales, CS WC at 10%

  • f sales)

 WC u

C up £3.7m 7m organ anically ally i in LTM TM

 Strong organic growth in Q4 of 8%

(£35m annualised sales) = 9% WC rate. well below Group average

(1) Cash to cash cycle (C2C) is the average net number of days from remitting cash to suppliers to receipt of cash from customers (stock days – creditor days + debtor days) (2) Working capital is defined as net inventory, trade & other receivables and trade & other payables. Unallocated working capital is not represented in this chart.

33

Working capital efficiencies

Appendix VI

£21 21m C2 C2C 42 2 £19 19m C2 C2C 35 5 £17 17m C2 C2C 41 1 £18 18m C2 C2C 33 3 £37 37m C2 C2C 93 3 £39 39m C2 C2C 83 3 £51 51m C2 C2C 93 3 £54 54m C2 C2C 83 3 18.7% 7% 13.9% 9% 14. 4.4% 4% 14 14.3% 48% 52% 57% 61% FY1 Y16 FY1 Y17 FY1 Y18 FY1 Y19

WORKING CAPITAL(2)

CS D&M Group SWC% Sales D&M Sales%

slide-35
SLIDE 35

Preliminary results FY19 – 4th June 2019 discoverIE Group plc

Case study: Our unique solutions for Renewable energy

Power i r inductors rs Pitch c contro roller Airflow meas easurem ement

  • Strong and trusted customer relationships across supply chain
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34

Appendix VII