TIDMDSCV
RNS Number : 2987J
discoverIE Group plc
04 December 2018
4 DECEMBER 2018
discoverIE Group plc
Interim results for the six months ended 30 September 2018
Strategy delivering further strong growth
discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a
leading international designer, manufacturer and supplier of
customised electronics to industry, today announces its interim
results for the six months ended 30 September 2018.
H1 2018/19 H1 2017/18 Growth CER(2)
% Growth
%
Revenue GBP211.7m GBP190.2m +11% +12%
Underlying operating
profit(1) GBP14.5m GBP11.8m +23% +25%
Underlying profit before
tax(1) GBP12.9m GBP10.4m +24%
Underlying EPS(1) 13.0p 10.5p +24%
Reported profit before
tax GBP6.4m GBP6.9m -7%
Reported fully diluted
EPS 6.3p 6.5p -3%
Interim dividend per
share 2.8p 2.65p +6%
Highlights
-- Strong growth in sales, orders, profits and earnings
o Sales up 12% CER(2) and orders up 13% CER
o Underlying operating profit up 23% (+25% CER)
o Underlying earnings per share up 24%
-- Widespread organic growth(3) across both divisions
o Design & Manufacturing division (D&M) organic sales
growth, excluding acquisitions, of 10%
o Custom Supply organic sales up 2% with UK returning to
growth
o Strong growth in target markets
-- Good progress towards key strategic and performance targets
o Underlying operating margin increased to 6.8% (H1 2017/18:
6.2%)
o Growing D&M division now accounts for 60% of Group sales
(H1 2017/18: 57%)
o Cross-selling of GBP4.9m, up 17% on last year (H1 2017/18:
GBP4.2m)
o Interim dividend increased by 6%
-- Group well positioned for further growth
o Record period end order book of GBP131m (+18% CER,
year-on-year)
o Further strong growth in the value of new project design wins,
up 40%
o Completion of the acquisition of Cursor Controls for GBP19m on
17 October 2018
o Further acquisition opportunities developing
Nick Jefferies, Group Chief Executive, commented:
"The Group's first half performance has been strong with
underlying earnings per share increasing by 24%, driven by
broad-based organic growth, the continued move towards higher value
products and good operating leverage.
The organic growth of our established Design & Manufacturing
businesses was 10% and reflects our focus on higher growth markets.
The Custom Supply division delivered a good performance, with
improving profitability being driven by operational efficiency and
a return to growth in the UK.
Over 60% of Group revenue is now derived from our target markets
of renewable energy, transportation, medical and industrial
connectivity. Design wins have continued to grow strongly,
increasing by 40% year-on-year, with 80% being in these target
markets.
Trading in the second half has started well with further strong
growth. We are on track to deliver full year earnings in line with
our expectations and we have a healthy pipeline of acquisition
opportunities being developed.
With a record order book and a high level of design wins
together with the additional capability brought in with the recent
acquisition of the higher margin Cursor Controls Group, we are well
positioned for continued growth."
For further information, please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies Group Chief Executive
Simon Gibbins Group Finance Director
Instinctif Partners 020 7457 2020
Mark Garraway
James Gray
Notes:
(1) 'Underlying Operating Profit', 'Underlying EBITDA',
'Underlying Operating Costs', 'Underlying Profit before Tax' and
'Underlying EPS' are non-IFRS financial measures used by the
Directors to assess the underlying performance of the Group. These
measures exclude acquisition-related costs (amortisation of
acquired intangible assets of GBP2.9m, acquisition costs of
GBP0.4m, the IAS19 pension charge relating to a legacy defined
benefit scheme of GBP0.3m) totalling GBP3.6m and an exceptional
charge of GBP2.9m for H1 2018/19. Equivalent underlying adjustments
within the H1 2017/18 underlying results totalled GBP3.5m. For
further information, see note 2 of the attached summary financial
statements.
(2) Growth rates at constant exchange rates ("CER"). The average
sterling rate of exchange weakened 1% against the Euro compared
with the average rate for last year, and strengthened 3% against
both the US Dollar and on average against the three Nordic
currencies.
(3) Organic growth for the Group is calculated at CER and is
shown both excluding acquisitions (Santon was acquired last
financial year on 1 February 2018), and overall (including
acquisitions).
(4) Unless stated, growth rates refer to the comparable prior year period.
(5) The information contained within this announcement is deemed
by the Group to constitute inside information as stipulated under
the Market Abuse Regulation, Article 7 of EU Regulation 596/2014.
Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Notes to Editors:
About discoverIE Group plc
discoverIE Group plc is an international group of businesses
that designs, manufactures and supplies innovative components for
electronic applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally. With in-house
engineering capability, we are able to design components to meet
customer requirements, which are then manufactured and supplied,
usually on a repeating basis, for their ongoing production needs.
This generates a high level of repeating revenue and long term
customer relationships.
By focusing on key markets which are driven by structural growth
and increasing electronic content, namely renewable energy,
transportation, medical and industrial connectivity, the Group aims
to achieve organic growth that is well ahead of GDP and to
supplement that with targeted complementary acquisitions.
The Group employs c.4,300 people and its principal operating
units are located in Continental Europe, the UK, China, Sri Lanka,
India and North America.
The Group is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE Small Cap Index, classified
within the Electrical Components and Equipment subsector, and has
revenue of GBP0.4bn. Over the last five years, revenue and
underlying earnings per share has more than doubled.
Chairman's Statement
I am pleased to report that the Group has delivered another
strong set of results with further growth in sales, profits and
earnings. Management continues to make good progress on the Group's
strategic and operational objectives with further improvements
towards our mid-term targets.
Strategy
The Group is an international leader in customised electronics,
focusing on structurally growing markets driven by increasing
electronic content, where there is an essential need for our
products. The Group's product range is highly differentiated with
the majority being either partly or fully customised for specific
customer applications.
With our key markets being worldwide, management sees the
opportunity to continue expanding beyond Europe (currently 20% of
Group sales), as well as within Europe, as we continue our strategy
of building a global electronics design and manufacturing
group.
Group Results
Group sales for the first half increased by 11% to GBP211.7m and
by 12% at constant exchange rates ("CER").
First half underlying operating profit, which excludes
acquisition-related costs and exceptional items, increased by
GBP2.7m to GBP14.5m (up 23% and up 25% at CER). Underlying profit
before tax increased by GBP2.5m to GBP12.9m (up 24%).
The underlying operating margin increased by 0.6ppts to 6.8%
reflecting the ongoing focus on higher margin products and customer
solutions.
Underlying earnings per share for the period increased by 24% to
13.0p (H1 2017/18: 10.5p).
Net debt at 30 September 2018 was GBP62.6m (H1 2017/18:
GBP37.6m), with a Group gearing ratio of 1.85 times, defined as net
debt divided by underlying EBITDA (annualised for acquisitions) and
within our target range of 1.5 to 2.0 times. The increase of
GBP25.0m primarily relates to the acquisition of the Santon Group
towards the end of the last financial year. Excluding spend on
acquisitions, net debt was GBP2.3m lower than last year.
Acquisition
On 17 October this year, the Group acquired the Cursor Controls
Group ("Cursor Controls"), a designer and manufacturer of human to
machine interface products for an initial consideration of GBP19.0m
on a debt free, cash free basis, and contingent payment of up to
GBP4.0m payable subject to the business achieving certain profit
growth targets during the three-year period ended 31 December 2021.
Cursor Controls is based in the UK and Belgium.
Cursor Controls has significant alignment with our core
technologies, market and sector focus and is settling in well. We
are delighted to welcome their employees into the Group.
Dividend
The Board is pleased to declare an increase in the interim
dividend of 6% to 2.8p per share (H1 2017/18: 2.65p per share).
Since 2010, the full year dividend per share has risen by 77%.
The Board's policy is to maintain a progressive, long-term
dividend cover of between 2 and 3 times underlying earnings.
The interim dividend is payable on 14 January 2019 to
shareholders registered on 21 December 2018.
Summary
By focusing on structural growth markets and responding
effectively to complex customer requirements, the Group has evolved
into a higher quality business that is making excellent progress
and delivering strong results.
The customised electronics market remains highly fragmented
offering scope to build the Group's technology capability and
extend its geographic coverage through disciplined acquisitions.
Combined with continued organic growth, the Board and management
continue to be excited by the opportunities ahead to build a global
business, that attracts and retains high quality employees,
delivers value to our customers, and grows returns for our
shareholders.
Malcolm Diamond
Chairman
4 December 2018
Strategic, Operational and Financial Review
Overview
Over recent years the Group has pursued a clear strategy,
investing in initiatives that enhance design opportunities for
customised products with customers in targeted growth markets
namely renewable energy, transportation, medical and industrial
connectivity. The benefits are evident in these results with strong
levels of organic revenue growth throughout the established
business units in the D&M division driving a 23% increase in
Group underlying operating profits. In the Custom Supply division,
greater efficiency and a return to growth in the UK resulted in an
18% increase in the division's underlying operating profits.
Group sales increased by 12% CER and 11% on a reported basis
after taking account the translation impact of a slightly stronger
Sterling in the period. Organic sales growth (excluding
acquisitions) in the D&M division was 10% and 7% for the Group
overall. There was an expected temporary fall in Santon's solar
sales following regulatory changes in relation to Chinese solar
feed-in tariffs, which had been anticipated in the acquisition
price structure, and which resulted in overall Group organic growth
being 3%.
Group orders also performed well, growing by 13% CER, when
including acquisitions, to GBP217.8m. Excluding acquisitions,
orders in D&M grew by 13% organically. This resulted in another
record period end order book at 30 September 2018 of GBP131m (up
18% CER year-on-year, and up 13% organically).
Project design wins, a proxy measurement for new business
creation, grew strongly again during the period. The estimated
lifetime sales value of design wins during the year was GBP126m, an
increase of 40% compared with last year, with over 80% of these
wins being in our target markets.
Strong revenue growth, coupled with improving gross margins has
driven a 23% increase in underlying operating profit, rising by
GBP2.7m to GBP14.5m (25% CER), with underlying EPS increasing by
24% to 13.0p.
Group Strategy
The Group designs, manufactures and supplies highly
differentiated, innovative components for electronic
applications.
Core to our value proposition is the understanding of customers'
design challenges so as to design and manufacture products for
their specific needs, which we then manufacture and supply over the
lifetime of their production generating a repeating revenue,
typically for five to seven years.
In this fragmented market, we acquire design and manufacturing
businesses offering products that meets the needs of our customers.
Customers are mostly mid-sized and international OEMs (original
equipment manufacturers) operating across multiple sites and
regions. Our four target markets of renewable energy,
transportation, medical and industrial connectivity, are long term,
international growth markets driven by structural growth factors,
such as the need for clean energy, where customers depend on our
products, and where there is a need for custom products.
Customers choose our products because they help them create
differentiated, next generation end products.
Our strategy comprises four elements:
1. Grow sales well ahead of GDP over the economic cycle by focusing on structural growth markets;
2. Move up the value chain by continuing to build revenues in the higher margin D&M division;
3. Acquire businesses with attractive growth prospects and strong operating margins;
4. Internationalise the business by developing sales in North America and Asia.
The Group's progress with its strategic objectives is measured
through key strategic indicators ("KSIs"), while progress with its
financial performance is measured through key performance
indicators ("KPIs"). Our KSIs are mid-term targets over a 3 to 5
year period from November 2016 while our KPIs are 3 year targets
starting in March 2017.
Key Strategic Indicators
FY14 FY15 FY 16 FY 17 FY 18 H1 19 Mid
term
Target(2)
-----
1. Increase share
of Group revenue
from D&M(1) 18% 37% 48% 52% 57% 60% 75%
2. Increase underlying
operating margin 3.4% 4.9% 5.7% 5.9% 6.3% 6.8% 8.5%
3. Build sales
beyond Europe(1) 5% 12% 17% 19% 19% 20% 30%
(1) As a proportion of Group revenue
(2) Mid-term is a 3 to 5 year period starting in Nov 16
The Group has made further good progress with its KSIs during
this period:
- The higher margin D&M division delivered 60% of Group
sales (H1 2017/18: 57%), generating 78% of the Group's underlying
operating profit contribution (H1 2017/18: 78%); importantly,
customer concentration remains low with no one customer accounting
for more than 4% of Group sales;
- The increasing proportion of the D&M division has helped
to improve the Group operating margin by 0.6ppts over H1 last year
to 6.8% (H1 2017/18: 6.2%) and by 0.5ppts over the last financial
year (FY 2017/18: 6.3%); and
- Sales beyond Europe in H1 represented 20% of Group revenue
(from 19% for FY2017/18) improving as a result of the acquisition
of Santon (for which over 50% of sales in the period were outside
Europe). On an annualised basis, including the acquired Cursor
Controls business, for which over 60% of sales are outside Europe,
this would rise to 21%. We continue to seek acquisitions with
international revenues.
Key Performance Indicators
FY14 FY15 FY FY FY H1 3 yr target
16 17 18 19 (FY20)
1. Sales growth
Well ahead
CER 17% 36% 14% 6% 11% 12% of GDP
Organic 2% 3% 3% (1)% 6% 7%(2)
2. Increase cross-selling GBP0.3m GBP0.9m GBP3.0m GBP4.6m GBP8.8m GBP9.7m(3) GBP10m p.a.
3. Underlying EPS
growth 20% 31% 10% 13% 16% 24% >10%
4. Dividend growth 10% 11% 6% 6% 6% 6% Progressive
5. ROCE(1) 15.2% 12.0% 11.6% 13.0% 13.5%(4) 14.8% >15%
>85% of
underlying
6. Operating cash operating
flow(1) 100% 104% 100% 136% 85% 84% profit
(1) Defined in Note 2 of the attached summary financial
statements; calculated based on last 12 months.
(2) Organic growth excluding acquisitions. Including
acquisitions, growth was 3%
(3) Annualised sales (H1 19: GBP4.9m, H1 18: GBP4.2m)
(4) Includes Santon. Excluding Santon, ROCE last year was
15.5%.
The Group has also made good progress with its KPIs this
period:
- Organic sales growth for the period excluding acquisitions of
7% was ahead of GDP, with good growth in both divisions (D&M
increasing by 10% excluding acquisitions and Custom Supply by 2%)
reflecting the sustained focus on higher growth target markets;
- Cross-selling generated GBP4.9m of Group sales, an increase of
17% over the prior year; on an annualised basis, cross-sales of
GBP9.7m are close to reaching our 3 year target of GBP10m p.a.;
- Underlying EPS growth for the period was very strong at 24%
(FY 2017/18: 16%). First half growth is well ahead of our annual
target of exceeding 10% and reflects widespread organic growth and
improved gross margins;
- Strong growth in underlying operating profit has driven a
1.3ppt increase in return on capital employed to 14.8% compared
with the return for FY 2017/18 of 13.5% (including the acquisition
of Santon), on track for our 3 year target of exceeding 15%;
- Over the last 12 month period, operating cash flow was 84% of
underlying operating profit; while slightly below our 85% target,
this reflects the working capital required to achieve the strong
first half sales growth in our established D&M businesses, and
the further expected growth in the second half. Over the last 5
years, operating cash flow averaged 100% of underlying operating
profits.
Divisional Results
Divisional and Group performances for the half year ended 30
September 2018 are set out and reviewed below.
H1 2018/19 H1 2017/18 Revenue CER Organic
growth revenue revenue
growth growth
------------------------------
Revenue Underlying Margin Revenue Underlying Margin
GBPm operating GBPm operating
profit profit
(1) (1)
GBPm GBPm
-------- ----------- ------- -------- ----------- -------
Design &
Manufacturing 127.8 14.2 11.1% 108.2 11.8 10.9% 18% 20% 10%
Custom Supply 83.9 3.9 4.6% 82.0 3.3 4.0% 2% 2% 2%
Unallocated
costs (3.6) (3.3)
-------- ----------- ------- -------- ----------- ------- -------- --------- ---------
Total 211.7 14.5 6.8% 190.2 11.8 6.2% 11% 12% 7%
-------- ----------- ------- -------- ----------- ------- -------- --------- ---------
(1) Underlying operating profit excludes acquisition-related
costs, and exceptional items (see below).
With approximately 85% of Group sales in non-Sterling
currencies, the translation of Group results into Sterling has been
slightly impacted by stronger Sterling year-on-year with Group
revenue growth reducing from 12% CER to 11% on a reported
basis.
Design & Manufacturing Division
The D&M division designs, manufactures and supplies highly
differentiated, innovative components for electronic applications.
Over 80% of the products are manufactured in-house, the balance
being manufactured by approved third party contractors. The
division's principal manufacturing facilities are in China, India,
the Netherlands, Poland, Sri Lanka and Thailand. During the period,
production ramp up began in our new, larger production facilities
in Bangalore, India for magnetic components; Bratislava, Slovakia
for fibre optic components and Seoul, Korea for electromagnetic
shielding products. Additionally, we commenced the expansion of our
magnetic components production facility in China which, when
complete, will increase Myrra's Asian capacity by around 70%.
The benefit of design wins from previous years generating new
revenue and strong demand from our key target markets helped to
deliver excellent organic growth in the division, continuing the
momentum seen last year with organic growth in sales and orders,
excluding acquisitions, of 10% and 13% respectively. Strong growth
was seen in Germany (+14%), North America (+11%) and particularly
in Asia (+25%) which now accounts for 18% of D&M revenues.
The effect of new China / US tariffs is limited. Of the GBP11m
first half sales into the USA, GBP2.5m were manufactured in China
and are now subject to a tariff of, mostly, 25%. With other
production sites in India, Sri-Lanka and Thailand, we are able to
move production to other countries.
Overall organic sales growth of 10%, combined with a 10% sales
increase from acquisitions, resulted in overall sales increasing by
20% CER. Including the impact of translation, reported divisional
revenue increased by 18% to 127.8m (H1 2017/18: GBP108.2m). Overall
orders for the division increased by 13% organically
year-on-year.
Divisional revenue was 60% of Group revenue (H1 2017/18: 57%)
representing further good progress towards our mid-term target for
D&M to reach 75% of Group revenue, and generated 78% of the
Group's underlying profit contribution (H1 2017/18: 78%).
Underlying operating profit of GBP14.2m was GBP2.4m (+20%)
higher than last year (H1 2017/18: GBP11.8m) and up GBP2.6m CER
(+22%). The underlying operating margin of 11.1% was 0.2ppt higher
than last year (H1 2017/18: 10.9%).
Santon
In February 2018, the Group acquired the Santon Group, a Dutch
based designer and manufacturer of highly differentiated, patented,
direct current ("DC") switches for use in solar, industrial and
transportation markets. The acquisition was consistent with the
Group's strategy of targeting structural growth markets, in this
case renewable energy and transportation, building on its position
in niche components for solar power and its established position in
wind power.
Santon was acquired for an initial consideration of EUR27.0m
(GBP23.7m) on a debt free, cash free basis together with a payment
of EUR2.5m (GBP2.2m) for capital expenditure previously incurred on
the automation of their production facilities. Additionally,
contingent consideration of up to EUR10m (GBP8.8m) was payable for
achievement of profit growth targets up to 31 December 2018 ("the
First Contingent Payment") with up to a further EUR12.5m (GBP10.9m)
payable for achievement of higher profit growth targets up to 31
December 2020 ("the Second Contingent Payment").
Sales in Santon's solar division slowed during the first half
following changes to Chinese feed-in tariffs in the first quarter,
as the market adapted. Since the end of September, orders in its
solar division have recovered. The potential for the Chinese tariff
reduction and the subsequent temporary drop in sales was
anticipated in the acquisition price structure at the time of
acquisition. As a result, a repayment was made to the Group by the
vendor of the EUR2.5m (GBP2.2m) capital expenditure contribution
made by the Group at the time of acquisition and the First
Contingent Payment now looks unlikely to be made.
Industrial division sales grew strongly during the first half
and are expected to continue to grow, having recently won a number
of new projects which are due for delivery in the second half of
this year.
The growth prospects for Santon remain excellent. Its high
performance switches are suitable for a number of growth markets,
in particular transportation such as rail, energy storage, solar
energy and industrial markets where it can benefit from access to
the Group's wider product, customer and territory base. A number of
initiatives are underway to develop these opportunities.
Cursor Controls
In October 2018, the Group acquired the Cursor Controls Group, a
UK based designer and manufacturer of human to machine interface
("HMI") products for medical, industrial and transportation
applications. Its products include trackballs, touchpads and rugged
keyboards, which are custom designed for specific applications, and
are highly complementary to the Group's existing business. The
acquisition is consistent with discoverIE's strategic focus on
structural growth markets with over 60% of its revenues being
derived from medical and industrial sectors. Over 90% of its sales
are to international markets, with 40% being into North America,
Asia and other non-EU markets. The business, which is based in
Newark, UK, with manufacturing facilities in the UK and Belgium,
will operate within the Group's D&M division whilst retaining
its distinct brand identity.
Cursor Controls has been acquired for an initial cash
consideration of GBP19.0m on a debt free, cash free basis, before
expenses, and generated revenue of GBP7.9m for its year ended 31
December 2017, with an underlying operating profit of GBP2.1m for
an underlying operating margin of 26%. In addition, a contingent
payment of up to GBP4.0m will be payable subject to Cursor Controls
achieving certain profit growth targets during the three-year
period ended 31 December 2021.
Since acquisition, Cursor Controls has performed well, winning a
large new order from a major international customer. As with other
acquisitions, we expect the business to benefit from access to
discoverIE's broader, international customer base, to create new
revenue opportunities from cross-selling within the Group.
Custom Supply Division
The Custom Supply division provides customised electronic,
photonic and medical products for technically demanding
applications in industrial, medical and healthcare markets. The
business operates similarly to the D&M division, but mostly
with products sourced from third party suppliers rather than
manufactured in-house. As such, operating margins are lower than in
D&M. A key element of the division's strategy is to grow the
proportion of cross-sales from manufactured products from the
D&M division in a manner that complements, but does not compete
with or limit growth of our highly valued third party suppliers,
thereby enhancing the Group's overall value proposition to
customers and suppliers.
Given the complex and bespoke nature of the offering, a high
degree of technical knowledge is required during the sales process
with the division's in house engineers helping customers to solve
their design challenges. The Group is the only industrial
electronics business which provides such a comprehensive range of
customer-specific products and solutions across Europe. The
division comprises two businesses, Acal BFi and Vertec.
Acal BFi supplies industrial markets and accounts for the
majority of Custom Supply revenue. It supplies products from a
selected group of manufacturers (including the Group's D&M
businesses) to customers in five technology areas: Communications
& Sensors, Power & Magnetics, Electromechanical &
Cabling, Microsystems, and Imaging & Photonics. The business
operates across Europe, with centralised warehousing in Germany and
the UK, purchasing, finance, customer contact management and IT
systems. Vertec supplies exclusively-sourced medical imaging and
radiotherapy products into medical and healthcare markets in the UK
and South Africa.
The division's trading performance in the first half was good,
generating 2% organic sales growth in the period and 4% growth in
the second quarter, with good growth across Continental Europe.
Excluding one large order shipment in the prior year, first half
underlying organic growth was 6%. Growth also returned to the UK
with sales up 1% for the period and up 5% in the second quarter.
The divisional book to bill ratio for the period was 1.01.
Including translation movements, reported divisional revenue
increased by 2% to GBP83.9m (H1 2017/18: GBP82.0m). Underlying
operating profit of GBP3.9m was GBP0.6m (+18%) higher than last
year (H1 2017/18: GBP3.3m) while the underlying operating margin
was 4.6%, 0.6ppts higher than the same period last year, and well
on the way to achieving our mid-term target margin for this
division of 5%.
Target Markets
The Group focuses on four target markets, which accounted for
60% of Group turnover in the first half, up from 56% last year:
renewable energy, transportation, medical and industrial
connectivity. These are driving the Group's organic revenue growth
well ahead of GDP and are a key focus of the acquisition strategy.
During the period, D&M revenue from the Group's target markets
grew by 13% organically compared to 6% in other markets. Growth in
these markets is driven by increasing electronic content in
products and the differentiation that our customised products
create for customers. Our target markets are driven by fundamental
structural growth factors.
i) Renewable Energy
Renewable energy pricing is fast approaching, and in some cases
has fallen below, the cost of fossil fuels, driving widespread
adoption. Wind energy farms are driven by increasing size and scale
with the requirement for more powerful and efficient electronic
equipment to enable them, whereas solar energy demand is driven by
ease of distributed installation creating more and smaller systems.
According to the World Energy Outlook 2017, two thirds of global
investment in power generation up to 2040 will be into renewable
energy, primarily wind and solar.
ii) Transportation
The transportation market offers many opportunities,
particularly in vehicle electrification, mass transit and route
vehicles, and logistics. In all areas of transportation,
electronics content is increasing. IC Insights, an electronics
market research company, expects integrated circuit sales, a proxy
for electronic content, into the automotive market to rise by a
CAGR of 13.4% between 2016 and 2021.
iii) Medical
New technology is creating new applications and opportunities in
medical equipment diagnostics, monitoring and control many of which
require electronic equipment to facilitate it. A report by
Research+Markets forecasts the global sales of medical electronics
to grow by a CAGR of 6.8% between 2017 and 2022.
iv) Industrial Connectivity
Wireless technology is creating a revolution in the ability to
monitor and control remotely. Smart metering, telematics equipment
and general industrial communication applications are generating
opportunities widely. A report by the research firm
Markets-and-Markets, expects the overall market size for global
machine-to-machine connections to rise by 13.2% CAGR between 2016
and 2021.
Cross-selling
Cross-selling between Group businesses creates new sales
opportunities in other Group customers, geographies and markets. It
creates stronger, better customer relationships and typically
generates higher gross margins due to the focus on higher value
added product solutions.
It takes roughly three years for cross-selling to become
established within an acquired business, due to project design
lead-in cycles, but then proceeds to add a significant additional
revenue channel, as evidenced by the Group's longer standing
acquisitions of MTC and Myrra, which both now count intra Group
cross-sales as one of their largest sources of revenue. In the
first half of this year, cross-selling revenue increased by 17%
year-on-year to GBP4.9m (H1 2017/18: GBP4.2m) as new designs and
order book came into production. Cross-selling accounts for 2.3% of
Group revenue.
With annualised cross-selling revenue of GBP9.7m, we expect to
achieve our mid-term target of GBP10m p.a in the second half of the
year.
Acquisitions
There are numerous opportunities to acquire businesses that will
enhance, strengthen and build the Group. Acquisitions, at the right
price, which build complementary product and/or geographic
capability and supply common markets and customers, create future
organic growth opportunities and build value for shareholders.
We acquire businesses that are successful, profitable and
growing in our existing and adjacent technology areas, with good
growth prospects and long term growth drivers similar to the
Group's target markets.
Typically, the businesses we acquire are led by entrepreneurial
managers who wish to remain following acquisition. We encourage
this, as it helps to retain an entrepreneurial culture with a
decentralised structure.
The D&M division operates a decentralised structure with
business units operating to pre-agreed business plans. Depending
upon the circumstances, we add value in some or all of the
following areas:
- Internationalising sales channels and expanding the customer
base, including via Group cross-selling initiatives;
- Developing and expanding the product range;
- Investing in management capability ('scaling up') and succession planning;
- Investment and efficiencies in manufacturing & infrastructure;
- Enabling growth with larger customers as a consequence of the stronger Group balance sheet;
- Finance and administrative support, such as treasury, banking,
legal, pension, tax & insurance, risk & control; and
- Expanding the business through further acquisitions.
In February 2018, Santon was acquired and has been integrated
into the D&M division, and in October this year, Cursor
Controls was acquired. As with previous acquisitions, both are
expected to benefit from the access they now have to the Group's
broad customer base and international reach, creating new revenue
opportunities from cross-selling within the Group.
Group Results
Revenue and Orders
Organic sales excluding acquisitions increased by 7% in the
period to GBP211.7m, and with the Santon business adding 5% of
acquired revenue, overall sales increased by 12% CER. Including a
small translation impact of a slightly stronger Sterling on average
during the period, reported revenues increased by 11% year-on-year.
The impact of the temporary fall in Santon sales following changes
in Chinese solar feed-in tariffs resulted in Group organic sales
growth (including acquisitions) reducing to 3%.
Group orders increased by 13% CER to GBP217.8m with a positive
book to bill ratio of 1.03.
The Group's order book increased by 18% CER and by 13%
organically year-on-year, to reach another record period end high
of GBP131m.
Gross Margin and Profit
Group gross margin improved during the first half to 33.0%,
0.8ppts higher than last year, with organic growth from both
divisions. Gross profit grew by 14% and by 15% CER to GBP69.9m, as
the Group continues to move up the value chain. The increase
related to the acquisition of the higher margin Santon business, a
combination of manufacturing and purchasing efficiencies, and in
some cases, justifiable price increases to customers.
The Group continues with its policy of hedging transactions from
the point of order through to payment, typically hedging around six
months of the order book.
Underlying Operating Costs
Group underlying operating costs increased by 13% CER. Excluding
the impact of the Santon acquisition, underlying operating costs
increased by 6% organically reflecting investment in D&M
businesses to support strong revenue growth in the period and over
the longer term. Underlying operating costs as a percentage of
sales increased by 0.2ppts to 26.2% compared with last year.
GBPm H1 2018/19 H1 2017/18 %
Organic operating costs 51.9 49.1 6%
Acquisition operating
costs 3.5
----------- ----
Underlying operating
costs (CER) 55.4 49.1 13%
FX translation 0.3
Underlying adjustments
(see below) 6.4 3.4
Reported operating costs 61.8 52.8 17%
GBPm H1 2018/19 H1 2017/18
Selling and distribution
costs 27.8 26.4
Administrative expenses 34.0 26.4
----------- -----------
Reported operating costs 61.8 52.8
----------- -----------
Group Operating Profit and Margin
Group underlying operating profit for the period was GBP14.5m,
an increase of GBP2.7m (+23%) on last year, and up 25% CER,
delivering a Group underlying operating margin of 6.8%, up 0.6ppts
on last year.
Reported Group operating profit for the period (after accounting
for the underlying adjustments discussed below) was GBP8.1m,
compared with GBP8.4m last year.
GBPm H1 2018/19 H1 2017/18
Operating Finance Profit Operating Finance Profit
profit cost before profit cost before
tax tax
---------- ---------- -------- --------
Underlying 14.5 (1.6) 12.9 11.8 (1.4) 10.4
Underlying adjustments
Earn-out accruals - - - (1.1) - (1.1)
Acquisition expenses (0.4) - (0.4) - - -
Amortisation of acquired
intangibles (2.9) - (2.9) (2.2) - (2.2)
Exceptional charge
(US) (2.9) - (2.9) - - -
IAS 19 pension cost (0.2) (0.1) (0.3) (0.1) (0.1) (0.2)
Reported 8.1 (1.7) 6.4 8.4 (1.5) 6.9
Underlying Adjustments
Underlying adjustments for the period comprise acquisition costs
of GBP0.4m (H1 2017/18: nil), the amortisation of acquired
intangibles of GBP2.9m (H1 2017/18: GBP2.2m) and the IAS19 legacy
pension cost of GBP0.3m (H1 2017/18: GBP0.2m).
The GBP0.7m increase in the amortisation charge since last year
to GBP2.9m relates to the amortisation of intangibles acquired with
Santon.
Following the period end, internal control processes identified
a fraud, perpetrated against the Group in one of its US
subsidiaries. Strong and decisive action has been taken to resolve
the matter and the Group is expecting to recover the loss, which is
also covered by insurance. Until then, a provision of GBP2.9m has
been made in respect of the gross loss associated with this. On the
basis that the loss is recovered, reported Group operating profit
increased by 31%.
Financing Costs
Financing costs comprise underlying finance costs (being
interest and facility fees arising from the Group's banking
facilities) of GBP1.6m, together with an IAS19 legacy pension
finance charge of GBP0.1m. For the half year, total finance costs
were GBP1.7m (H1 2017/18: GBP1.5m).
Underlying finance costs for the period of GBP1.6m were GBP0.2m
higher than last year due to increased debt levels following the
acquisition on Santon on 1 February 2018.
Underlying Tax Rate
The underlying effective tax rate for the first half was 25%, 1%
higher than last year's rate for the full year due to increasing
profitability in higher tax jurisdictions.
The overall effective tax rate of 27% was higher than the
underlying effective tax rate due to no tax relief on acquisition
costs (within underlying adjustments above).
Profit Before Tax and EPS
Underlying profit before tax for the period increased GBP2.5m
(+24%) to GBP12.9m compared with last year (H1 2017/18: GBP10.4m),
driving growth in underlying EPS for the period of 24% to 13.0p (H1
2017/18: 10.5p). The increase in underlying EPS was slightly lower
than the increase in underlying profit before tax due mainly to the
increased underlying effective tax rate for the period.
After the underlying adjustments discussed above, reported
profit before tax was GBP6.4m compared with GBP6.9m for last year
with reported fully diluted earnings per share of 6.3p compared
with 6.5p last year. On the basis that the exceptional US loss
discussed above will be recovered, reported profit before tax and
fully diluted earnings per share were up 35% and 40%
respectively.
GBPm H1 2018/19 H1 2017/18
PBT EPS PBT EPS
------ ------ ------
Underlying 12.9 13.0p 10.4 10.5p
Underlying adjustments
Earn-out accruals - (1.1)
Acquisition expenses (0.4) -
Amortisation of acquired
intangibles (2.9) (2.2)
Exceptional charge (2.9) -
(US)
IAS 19 pension cost (0.3) (0.2)
Reported 6.4 6.3p 6.9 6.5p
Working Capital
Working capital at 30 September 2018 was GBP75.4m, equivalent to
17.3% of annualised second quarter sales at CER. This compares with
working capital of GBP63.9m at 30 September 2017, 16.7% of last
year's annualised second quarter sales. Of the GBP11.5m increase
since last year, GBP5.3m results from strong organic growth in the
D&M division and from the investment in inventory to drive
expected growth levels for the second half of the year. The balance
is the working capital of Santon, which was acquired in February
2018.
The D&M division working capital was 22% of sales and 13% in
Custom Supply reflecting the higher D&M inventory requirements
for raw materials as well as finished goods, and goods in-transit
from Asia. In the first half of the year, D&M sales grew to 60%
of Group sales from 57% of Group sales 12 months ago.
In anticipation of short term disruption at borders following
Brexit, the Group is planning to increase inventory by GBP2m to
GBP3m in the second half of the year. This will partly offset the
natural reduction of inventory that should result following the
expected second half sales growth.
Cash Flow
Net debt at 30 September 2018 was GBP62.6m, compared with
GBP52.4m at 31 March 2018 and GBP37.6m at 30 September 2017. The
increase of GBP25.0m since last year largely relates to the
acquisition of Santon. Excluding spend on acquisitions, net debt
reduced by GBP2.3m from last year.
H1 Last
12 Months
H1 2018/19 2017/18
Net debt at 31 March (52.4) (30.0) (37.6)
Free cash flow (see
table below) 2.1 - 16.7
Acquisition related
cash flow (2.3) (0.4) (27.3)
Exceptional items (2.9) (0.7) (4.0)
Legacy pension (0.9) (0.8) (1.8)
Dividends (4.7) (4.3) (6.6)
Executive options issuance (1.1) - (2.6)
Foreign exchange impact (0.4) (1.4) 0.6
Net debt at 30 Sept (62.6) (37.6) (62.6)
Net acquisition costs of GBP2.3m were mainly earn-out payments
made in respect of Variohm.
Dividend payments increased by GBP0.4m (+7%) to GBP4.7m
following the 6% increase of the final dividend last year and a 1%
increase in the number of basic shares since last year, following
exercises by executives giving rise to employers NIC costs of
GBP1.1m in the period. Total dividend payments made in the last 12
months were GBP6.6m. The Group will continue to review the level of
future dividend growth in relation to its policy of maintaining a
long term dividend cover of 2 to 3 times underlying earnings per
share.
Operating cash flow and free cash flow (see definitions in note
2 to the interim financial statements) for the period, compared
with the first half of last year, and the last 12 months, are shown
below:
Last
12
GBPm H1 2018/19 H1 2017/18 Months
Underlying profit before
tax 12.9 10.4 24.4
Finance costs 1.6 1.4 2.8
Non-cash items* 3.0 2.2 5.6
----------- ----------- --------
Underlying EBITDA 17.5 14.0 32.8
Working capital (10.2) (9.0) (5.3)
Capital expenditure (1.9) (1.6) (4.6)
----------- --------
Operating cash flow 5.4 3.4 22.9
Finance costs (1.6) (1.4) (2.8)
Taxation (1.7) (2.0) (3.4)
----------- --------
Free cash flow 2.1 - 16.7
----------- --------
* Non-cash items are depreciation, amortisation and share based
payments
Underlying EBITDA of GBP17.5m was 25% higher than last year.
GBP10.2m was invested into working capital partly as a result of
the strong growth in first half D&M sales (up 10% organically
excluding acquisitions) and partly into inventory to support
expected sales growth in the second half of the year. Typically,
the Group benefits from greater operational cash generation in the
second half of a year with inflows of working capital following
utilisation of inventory built at the half year (H1 2017/18 saw an
outflow of working capital of GBP9.0m in the first half followed by
a reduction in working capital in the second half of GBP4.9m for a
net investment of GBP4.1m for the year). Over the last 12 months,
GBP5.3m has been invested in working capital to support strong
organic sales growth of 9% in the second quarter, being annualised
additional sales of GBP36m CER. This additional working capital
equates to 14% of sales, below the average working capital for the
Group of 17% for the period.
Capital expenditure of GBP1.9m was GBP0.3m higher than last
year; investment of GBP3.5m is expected in the second half to
support increased production capability in the D&M division.
Tax payments were GBP0.3m lower in the first half compared with
last year, due to an increased use of losses during this
period.
The second half of last year generated GBP17.5m of operating
cash totalling GBP22.9m over the last 12 months being 84% of
underlying operating profit during that period, slightly below our
85% target. Over the last 5 years, the Group has achieved an
average conversion rate of 100%. Our free cash conversion over the
last 12 months was 91% of profit after tax, slightly ahead of our
90% target.
Banking Facilities
The Group has a 5-year GBP120m syndicated banking facility which
extends to July 2021. In addition, the Group has a GBP30m accordion
facility which it can use to extend the total facility up to
GBP150m. The syndicated facility is available both for acquisitions
and for working capital purposes.
With net debt at 30 September 2018 of GBP62.6m, the Group's
gearing ratio was 1.85 times, being defined as net debt divided by
underlying EBITDA (annualised for acquisitions).
Balance Sheet
Net assets of GBP133.0m at 30 September 2018 were GBP3.7m higher
than at the end of the last financial year (31 March 2018:
GBP129.3m). The increase primarily relates to the net profit for
the period partly offset by the payment of last year's final
dividend. The movement in net assets is summarised below:
GBPm H1 2018/19
Net assets at 31 March
2018 129.3
Net profit after tax 4.7
Dividend paid (4.7)
Currency net assets -
translation impact 2.7
Gain on defined benefit
scheme 0.5
Equity issue 0.1
Share based payments
(inc tax) 0.4
Net assets at 30 Sep
2018 133.0
The Group's IAS19 pension liability, associated with its legacy
defined benefit pension scheme, reduced during the period by
GBP1.2m, from GBP3.0m at 31 March 2018 to GBP1.8m at 30 September
2018. This mainly follows improvements in gilt and corporate bond
rates during the period which has reduced the value of longer term
pension liabilities. Annual payments of GBP1.7m are payable
(growing by 3% each year in accordance with the plan agreed with
the pension trustee in 2009) until March 2022. The latest triennial
valuation process as at 31 March 2018, is underway.
Risks and Uncertainties
The principal risks faced by the Group are set out on pages 36
to 41 of the Group's Annual Report for year ended 31 March 2018, a
copy of which is available on the Group's website:
www.discoverieplc.com. These risks include but are not limited to:
instability in the economic environment, particularly within
Europe; the impact arising from the UK's decision to leave the
European Union; the performance of acquired companies; loss of
major customers or suppliers; technological change; major business
disruption; cyber security; loss of key personnel, product
liability, liquidity and debt covenants; exposure to adverse
foreign currency movements; and obligations in respect of a legacy
defined benefit pension scheme.
The Group's risk management processes cover identification,
impact assessment, likely occurrence and mitigation actions. 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 and its 5-year committed banking
facility of GBP120m.
Summary and Outlook
The Group's first half performance has been strong with
underlying earnings per share increasing by 24%, driven by
broad-based organic growth, the continued move towards higher value
products and good operating leverage.
The organic growth of our established Design & Manufacturing
businesses was 10% and reflects our focus on higher growth markets.
The Custom Supply division delivered a good performance, with
improving profitability being driven by operational efficiency and
a return to growth in the UK.
Over 60% of Group revenue is now derived from our target markets
of renewable energy, transportation, medical and industrial
connectivity. Design wins have continued to grow strongly,
increasing by 40% year-on-year, with 80% being in these target
markets.
Trading in the second half has started well with further strong
growth. We are on track to deliver full year earnings in line with
our expectations and we have a healthy pipeline of acquisition
opportunities being developed.
With a record order book and a high level of design wins
together with the additional capability brought in with the recent
acquisition of the higher margin Cursor Controls Group, we are well
positioned for continued growth.
Nick Jefferies
Group Chief Executive
Simon Gibbins
Group Finance Director
4 December 2018
Condensed consolidated income statement
for the six months ended 30 September
2018
Unaudited Unaudited
six months six months Audited
ended ended year
30 Sept 2018 30 Sept ended
GBPm 2017 31 Mar 2018
notes GBPm GBPm
Revenue 4 211.7 190.2 387.9
Cost of sales (141.8) (129.0) (261.2)
-------------------------------------- -------- ---------------- ------------- --------------
Gross profit 69.9 61.2 126.7
Selling and distribution costs (27.8) (26.4) (54.5)
Administrative expenses (including
exceptional items) (34.0) (26.4) (53.7)
Operating profit 4 8.1 8.4 18.5
Finance revenue 0.2 0.1 0.4
Finance costs (1.9) (1.6) (3.1)
Profit before tax 6.4 6.9 15.8
Tax expense 7 (1.7) (2.0) (4.0)
Profit for the period 4.7 4.9 11.8
-------------------------------------- -------- ---------------- ------------- --------------
Earnings per share
Basic 9 6.5p 6.9p 16.7p
Diluted 9 6.3p 6.5p 15.8p
-------------------------------------- -------- ---------------- ------------- --------------
Supplementary income statement
information
Unaudited Unaudited Audited
six months six months year
Underlying Performance Measure Notes ended ended ended
30 Sept 2018 30 Sept 31 Mar 2018
GBPm 2017 GBPm
GBPm
Operating profit 4 8.1 8.4 18.5
Add: Acquisition costs 5 0.4 1.1 0.8
Exceptional items 5 2.9 - -
Amortisation of acquired
intangible assets 5 2.9 2.2 4.9
IAS 19 pension administrative
charge 0.2 0.1 0.3
-------------------------------------- -------- ---------------- ------------- --------------
Underlying operating profit 14.5 11.8 24.5
-------------------------------------- -------- ---------------- ------------- --------------
Profit before tax 6.4 6.9 15.8
Add: Acquisition costs 5 0.4 1.1 0.8
Exceptional items 5 2.9 - -
Amortisation of acquired
intangible assets 5 2.9 2.2 4.9
Total IAS 19 pension charge 5 0.3 0.2 0.4
Underlying profit before tax 12.9 10.4 21.9
-------- ---------------- -------------
Underlying earnings per share
Basic 9 13.5p 11.2p 23.4p
Diluted 9 13.0p 10.5p 22.3p
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2018
Unaudited Unaudited
six months six months Audited
ended ended year
30 Sept 30 Sept ended
2018 2017 31 Mar 2018
GBPm GBPm GBPm
--------------------------------------------- ------------ ------------- -------------
Profit for the period 4.7 4.9 11.8
--------------------------------------------- ------------ ------------- -------------
Other comprehensive income:
Items that will not be subsequently
reclassified to profit or loss:
Re-measurement gain on defined benefit
pension scheme 0.6 0.8 2.1
Deferred tax credit relating to defined
benefit pension scheme (0.1) - (0.3)
--------------------------------------------- ------------ ------------- -------------
0.5 0.8 1.8
--------------------------------------------- ------------ ------------- -------------
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on translation
of foreign subsidiaries 2.7 (0.4) (3.5)
2.7 (0.4) (3.5)
--------------------------------------------- ------------ ------------- -------------
Other comprehensive income/(loss)
for the period, net of tax 3.2 0.4 (1.7)
--------------------------------------------- ------------ ------------- -------------
Total comprehensive income for the
period, net of tax 7.9 5.3 10.1
--------------------------------------------- ------------ ------------- -------------
Condensed consolidated statement of financial position
at 30 September 2018
Unaudited Audited
Unaudited at 30 Sept at 31 March
Notes at 30 Sept 2017 2018
2018 GBPm GBPm
GBPm Restated* Restated*
------------------------------- -------- ------------ ------------ -------------
Non-current assets
Property, plant and equipment 24.0 15.7 23.4
Intangible assets - goodwill 78.2 73.2 76.6
Intangible assets - other 27.9 25.7 30.2
Deferred tax assets 6.4 5.4 5.8
------------------------------- -------- ------------ ------------ -------------
136.5 120.0 136.0
------------------------------- -------- ------------ ------------ -------------
Current assets
Inventories 64.8 54.6 60.6
Trade and other receivables 88.1 75.8 84.6
Current tax assets 1.1 - 1.3
Cash and cash equivalents 11 17.8 15.3 21.9
------------------------------- -------- ------------ ------------ -------------
171.8 145.7 168.4
------------------------------- -------- ------------ ------------ -------------
Total assets 308.3 265.7 304.4
Current liabilities
Trade and other payables (77.5) (66.5) (82.1)
Other borrowings 11 (4.1) (2.3) (6.4)
Current tax liabilities (5.2) (3.2) (4.2)
Provisions (2.2) (2.3) (0.9)
------------------------------- -------- ------------ ------------ -------------
(89.0) (74.3) (93.6)
------------------------------- -------- ------------ ------------ -------------
Non-current liabilities
Trade and other payables - (3.3) (0.7)
Other borrowings 11 (76.3) (50.6) (67.9)
Pension liability (1.8) (5.0) (3.0)
Provisions (1.4) (1.5) (2.8)
Deferred tax liabilities (6.8) (5.9) (7.1)
(86.3) (66.3) (81.5)
------------------------------- -------- ------------ ------------ -------------
Total liabilities (175.3) (140.6) (175.1)
------------------------------- -------- ------------ ------------ -------------
Net assets 133.0 125.1 129.3
------------------------------- -------- ------------ ------------ -------------
Equity
Share capital 3.7 3.5 3.6
Share premium account 106.9 108.9 106.9
Merger reserve 2.9 3.0 2.9
Currency translation reserve 6.2 6.6 3.5
Retained earnings 13.3 3.1 12.4
Total equity 133.0 125.1 129.3
------------------------------- -------- ------------ ------------ -------------
*Prior Year Restatements
31 March 2018
1. In accordance with IFRS3, a measurement period adjustment has
been made to the prior year. Figures have been restated relating to
the Santon acquisition; refer to note 6 for details.
30 September 2017
2. Contingent consideration payable relating to acquisitions has
been reclassified from provisions to trade and other payables.
3. Debt costs have been reclassified from cash and cash
equivalents to other financial liabilities
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2018
Attributable to equity holders of the Company
----------------------- -------------------------------------------------------------------------
Currency
Share Share Merger translation Retained Total
capital premium reserve reserve earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 2018 3.6 106.9 2.9 3.5 12.4 129.3
Profit for the period - - - - 4.7 4.7
Other comprehensive
income - - - 2.7 0.5 3.2
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
Total comprehensive
income - - - 2.7 5.2 7.9
Shares issued 0.1 - - - (0.1) -
Share-based payments - - - - 0.5 0.5
Dividends - - - - (4.7) (4.7)
At 30 September 2018
- unaudited 3.7 106.9 2.9 6.2 13.3 133.0
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
At 1 April 2017 3.5 106.0 2.9 7.0 4.4 123.8
Profit for the period - - - - 4.9 4.9
Other comprehensive
income - - - (0.4) 0.8 0.4
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
Total comprehensive
income - - - (0.4) 5.7 5.3
Share-based payments - - - - 0.3 0.3
Dividends - - - - (4.3) (4.3)
At 30 September 2017
- unaudited 3.5 106.0 2.9 6.6 6.1 125.1
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
At 1 April 2017 3.5 106.0 2.9 7.0 4.4 123.8
Profit for the period - - - - 11.8 11.8
Other comprehensive
income - - - (3.5) 1.8 (1.7)
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
Total comprehensive
income - - - (3.5) 13.6 10.1
Shares issued 0.1 0.9 - - - 1.0
Notional repurchase
of share options - - - - (1.5) (1.5)
Share-based payments - - - - 2.1 2.1
Dividends - - - - (6.2) (6.2)
At 31 March 2018 -
audited 3.6 106.9 2.9 3.5 12.4 129.3
----------------------- ---------- ---------- ---------- ------------- ----------- ---------
Condensed consolidated statement of cash flows
for the six months ended 30 September 2018
Unaudited Unaudited
six months six months Audited
ended ended year
30 Sept 30 Sept ended
2018 2017 31 Mar 2018
Notes GBPm GBPm GBPm
---------------------------------------------- ------ ------------ ------------ -------------
Net cash (outflow)/inflow from operating
activities 10 (1.4) (0.3) 15.0
Investing activities
Acquisitions of shares in subsidiaries
and businesses - (0.1) (24.6)
Acquisition related contingent consideration (2.0) - (0.8)
Purchase of property, plant and equipment (1.7) (1.5) (3.7)
Purchase of intangible assets - software (0.3) (0.1) (0.6)
Proceeds from disposal of property 0.1 - -
plant and equipment
Interest received 0.2 0.1 0.4
Net cash used in investing activities (3.7) (1.6) (29.3)
---------------------------------------------- ------ ------------ ------------ -------------
Financing activities
Proceeds from borrowings 7.6 - 20.4
Repayment of borrowings (1.0) (0.1) (1.5)
Dividends paid (4.7) (4.3) (6.2)
Notional repurchase of shares - - (1.5)
Net cash generated from/(used in)
financing activities 1.9 (4.4) 11.2
---------------------------------------------- ------ ------------ ------------ -------------
Net decrease in cash and cash equivalents (3.2) (6.3) (3.1)
Cash and cash equivalents at beginning
of period 16.2 19.8 19.8
Net foreign exchange differences 0.4 (0.7) (0.5)
---------------------------------------------- ------ ------------ ------------ -------------
Cash and cash equivalents at end
of period 13.4 12.8 16.2
---------------------------------------------- ------ ------------ ------------ -------------
Reconciliation to cash and cash equivalents
in the condensed consolidated statement
of financial position
Cash and cash equivalents shown above 13.4 12.8 16.2
Add bank overdrafts 4.4 2.5 5.7
Cash and cash equivalents in the
condensed consolidated statement
of financial position 17.8 15.3 21.9
---------------------------------------------- ------ ------------ ------------ -------------
Further information on the condensed consolidated statement of
cash flows is provided in note 11.
Notes to the interim condensed consolidated financial
statements
for the six months ended 30 September 2018
1. Corporate information
discoverIE Group plc ("the Company") is incorporated and
domiciled in England and Wales. The Company's shares are traded on
the London Stock Exchange. The interim condensed consolidated
financial statements consolidate the financial statements of
discoverIE Group plc and entities controlled by the Company
(collectively referred to as "the Group").
The interim condensed consolidated financial statements for the
six months ended 30 September 2018 were authorised for issue by the
Board of Directors on 4 December 2018. They do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006, and are unaudited.
2. Basis of preparation and accounting policies
The interim condensed consolidated financial statements for the
six months to 30 September 2018 have been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Conduct Authority and IAS 34 'Interim Financial Reporting' as
adopted by the European Union. They do not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
annual financial statements for the year ended 31 March 2018, which
were prepared in accordance with IFRS as adopted by the European
Union.
The results for the year ended 31 March 2018 are based on
audited statutory financial statements prepared in accordance with
IFRS as adopted by the European Union. These financial statements
were filed with the Registrar of Companies and contain a report of
the auditor, which was unqualified and which does not contain a
statement under section 498 of the Companies Act 2006. The
consolidated financial statements of the Group for the year ended
31 March 2018 ("FY18 Annual Accounts") are available on request
from the Company's registered office or on its website.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
The principal accounting policies adopted in the preparation of
these interim condensed consolidated financial statements are
included in the consolidated financial statements for the year
ended 31 March 2018. All other accounting policies have been
consistently applied to all periods presented. The significant
estimates and judgements made by management in preparing the
financial information were consistent with those applied to the
consolidated financial statements for the year ended 31 March
2018.
Underlying Performance Measures
The Group uses a number of alternative non Generally Accepted
Accounting Practice ("non-GAAP") financial measures which are not
defined within IFRS. The Directors use these measures in order to
assess the underlying operational performance of the Group and, as
such, these measures are important and should be considered
alongside the IFRS measures. The following non-GAAP measures are
referred to in these interim condensed consolidated financial
statements.
Underlying operating profit
"Underlying operating profit" is defined as operating profit
excluding acquisition costs, exceptional items, amortisation of
acquired intangible assets and the IAS19 pension administration
charge relating to the Group's legacy defined benefit pension
scheme.
Acquisition costs comprise all attributable costs in connection
with business acquisitions and related integration into the Group,
they include contingent consideration where it is treated as an
expense and movement in contingent consideration where it is
treated as purchase price.
Underlying EBITDA
"Underlying EBITDA" is defined as underlying operating profit
with depreciation, amortisation and equity settled share-based
payment expense added back.
Underlying profit before tax
"Underlying profit before tax" is defined as profit before tax
excluding acquisition costs, exceptional items, amortisation of
acquired intangible assets and the total IAS19 pension charge
relating to the Group's legacy defined benefit pension scheme.
Underlying effective tax rate
"Underlying effective tax rate" is defined as the effective tax
rate on underlying profit before tax.
Underlying earnings per share
"Underlying earnings per share" is calculated as underlying
profit before tax reduced by the underlying effective tax rate,
divided by the weighted average number of ordinary shares (for
diluted earnings per share purposes) in issue during the
period.
Operational cash flow
"Operational cash flow" is defined as Underlying EBITDA adjusted
for the investment in, or release of, working capital and less the
cash cost of capital expenditure.
Free cash flow
"Free cash flow" is defined as net cash flow before exceptional
items, payments to the legacy defined benefit pension scheme,
dividend payments, net proceeds from equity fund raising, the cost
of acquisitions and proceeds from business disposals.
Return On Capital Employed ("ROCE")
"ROCE" is defined as underlying operating profit as a percentage
of net assets (including goodwill) plus net debt.
Organic basis
Reference to 'organic' basis included in the Chairman's
statement and the Strategic, Operational and Financial Review means
at constant exchange rates ("CER"), and is shown both excluding
acquisitions (Santon was acquired last financial year on 1 February
2018) and overall (including acquisitions).
Exceptional items
The Group discloses exceptional items by virtue of their nature,
size or incidence so as to allow a better understanding of the
underlying trading performance of the Group. The Group includes,
where material, the profit or loss on disposal of property,
investments or businesses and other financial assets, asset
impairments and significant restructuring costs in exceptional
items.
3. New accounting standards and financial reporting
requirements
New standards effective in the current reporting period
The following standards, which have been issued by the IASB,
became applicable for the current accounting period:
International Accounting Standards (IAS/IFRS/IFRIC)
----------------------------------------------------------------
IFRS 9 Financial Instruments: Classification and measurement
IFRS 15 Revenue from Contracts with Customers
IFRS9: The main area of consideration for the Group is the
impairment of trade receivables. Adoption does not have a material
effect on the measurement and presentation of the Group
Consolidated Financial Statements.
IFRS15: Adoption does not have a material effect on the
measurement and presentation of the Group Consolidated Financial
Statements. This reflects the relatively non-complex and largely
standardised terms and conditions applicable to the Group's revenue
contracts.
New standards not yet effective
IFRS 16, 'Leases' will require lessees to recognise a lease
liability reflecting future lease payments and a 'right-of-use
asset' for virtually all lease contracts. Under IAS 17, lessees are
required to make a distinction between a finance lease (on balance
sheet) and an operating lease (off balance sheet). The standard is
effective for annual periods beginning on or after 1 January 2019.
The Group will complete its assessment of the likely impact of IFRS
16 by 31 March 2019. The Group does not intend to early adopt IFRS
16. The new standard will result in most of the Group's current
operating leases (as defined under IAS 17) being recognised on
balance sheet. As at 31 March 2018, the Group had non-cancellable
operating lease commitments of GBP15.8m (as shown in note 30 to the
2018 financial statements). The Group does not intend to restate
prior year comparatives when the new standard is adopted, with
lease asset values equal to lease liabilities at the date of
transition in line with the 'simplified approach' under IFRS
16.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group in the current or future reporting periods.
4. Segmental reporting
The Group organises its businesses into two divisions, Design
& Manufacturing and Custom Supply:
-- The Design & Manufacturing division manufactures custom
electronic products that are uniquely designed or modified from a
standard product for a specific customer requirement. The products
are manufactured at one of our in-house manufacturing facilities
or, in some cases, by third party contractors.
-- The Custom Supply division provides technically demanding,
customised electronic, photonic and medical products to the
industrial, medical and healthcare markets, both from a range of
high-quality, international suppliers (often on an exclusive basis)
and from discoverIE's Design & Manufacturing division.
These two divisions have been assessed as the reportable
operating segments of the Group. Within each reportable operating
segment are aggregated businesses units with similar
characteristics such as the method of acquiring products for sale
(manufacturing versus distribution), the nature of customers and
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 without allocation of central administration costs
including directors' salaries, investment revenue and finance
costs, and income tax expense.
Six months to 30 September 2018 - unaudited
Design & Custom Unallocated Total operations
Manufacturing Supply costs GBPm
GBPm GBPm GBPm
Revenue 127.8 83.9 - 211.7
------------------------------------ --------------- -------- ------------ -----------------
Underlying operating profit/(loss) 14.2 3.9 (3.6) 14.5
Acquisition costs (0.4) - - (0.4)
Exceptional items (2.9) - - (2.9)
Amortisation of acquired
intangible assets (2.9) - - (2.9)
IAS 19 pension charge - - (0.2) (0.2)
Operating profit/(loss) 8.0 3.9 (3.8) 8.1
------------------------------------ --------------- -------- ------------ -----------------
Six months to 30 September 2017 - unaudited
Design & Custom Unallocated Total operations
Manufacturing Supply costs GBPm
GBPm GBPm GBPm
Revenue 108.2 82.0 - 190.2
------------------------------------ --------------- -------- ------------ -----------------
Underlying operating profit/(loss) 11.8 3.3 (3.3) 11.8
Acquisition costs (1.1) - - (1.1)
Amortisation of acquired
intangible assets (2.2) - - (2.2)
IAS 19 pension charge - - (0.1) (0.1)
------------------------------------ --------------- -------- ------------ -----------------
Operating profit/(loss) 8.5 3.3 (3.4) 8.4
------------------------------------ --------------- -------- ------------ -----------------
Year to 31 March 2018 - audited
Design & Custom Unallocated Total operations
Manufacturing Supply costs GBPm
GBPm GBPm GBPm
Revenue 222.6 165.3 - 387.9
------------------------------------ --------------- -------- ------------ -----------------
Underlying operating profit/(loss) 24.2 7.5 (7.2) 24.5
Acquisition costs (0.8) - - (0.8)
Amortisation of acquired
intangible assets (4.9) - - (4.9)
IAS 19 pension charge - - (0.3) (0.3)
Operating profit/(loss) 18.5 7.5 (7.5) 18.5
------------------------------------ --------------- -------- ------------ -----------------
5. Underlying profit before tax
Unaudited
six months Unaudited Audited
ended six months year
30 Sept ended ended
2018 30 Sept 2017 31 Mar 2018
GBPm GBPm GBPm
Profit before tax 6.4 6.9 15.8
Add back: Acquisition costs (a) 0.4 1.1 0.8
Exceptional items (b) 2.9 - -
Amortisation of acquired
intangibles (c) 2.9 2.2 4.9
IAS19 pension costs (d) 0.3 0.2 0.4
------------------------------------------- ----- ------------ -------------- -------------
Underlying profit before
tax 12.9 10.4 21.9
-------------------------------------------------- ------------ -------------- -------------
The tax impact of the underlying profit adjustments above is a
credit of GBP1.5m (FY 2017/18: GBP1.3m).
a) GBP0.3m acquisition costs incurred primarily in relation to
the acquisition of Cursor Controls (see note 14), and GBP0.1m of
accrued contingent consideration costs relating to the acquisition
of Contour.
FY 2017/18 GBP1.2m acquisition costs relating primarily to the
acquisition of Santon, and GBP0.3m of acquisition integration cost
relating to the manufacturing integration between the Plitron and
Noratel business. These costs were partially offset by a GBP0.7m
net credit adjustment to contingent consideration for acquired
businesses.
b) Following the period end, internal control processes
identified a fraud, perpetrated against the Group in one of its US
subsidiaries. Strong and decisive action has been taken to resolve
the matter and the Group is expecting to recover the loss, which is
covered by insurance. Until then, a provision of GBP2.9m has been
made in respect of the gross loss associated with this.
c) Amortisation charge for intangible assets recognised for business combinations.
d) Pension costs related to the Group's legacy defined benefit pension scheme (see note 12).
6. Business combinations
There were no new business combinations during the period.
The Santon acquisition completed on 1 February 2018 and the
provisional accounting for the acquisition was reflected in the
March 2018 financial statements. During the first half of this
year, the acquisition date fair values have been reassessed in
light of information and circumstances that existed at the
acquisition date. The impact of the re-assessment has been to
reduce the fair value of the acquired net assets by GBP1.4m and
reduce the fair value of consideration transferred to the seller by
GBP6.8m. As a result, the value of acquired intangibles including
goodwill on acquisition has reduced by GBP8.2m to GBP12.2m.
The figures at 31 March 2018 have been restated to reflect the
re-assessment above.
7. Taxation
The underlying tax charge for the period was GBP3.2m (H1
2017/18: GBP2.5m) giving an underlying effective tax rate on
underlying profit before tax of 25% (H1 2017/18: 24%) which is
slightly higher than the rate of 24% for FY 2017/18.
The tax credit in respect of the underlying adjustments was
GBP1.5m (H1 2017/18: GBP0.5m). This gives an overall tax charge for
the period of GBP1.7m (H1 2017/18: GBP2.0m) on profit before tax of
GBP6.4m (H1 2017/18: GBP6.9m) which is an effective tax rate of
27%.
8. Dividends
The Directors have declared an interim dividend of 2.80 pence
per share (H1 2017/18: 2.65 pence) payable on 14 January 2019 to
shareholders on the register at 21 December 2018.
In accordance with IAS 10, this dividend has not been reflected
in the interim results. The cash cost of the interim dividend will
be GBP2.1m (H1 2017/18: GBP1.9m).
9. Earnings per share
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2018 2017 2018
GBPm GBPm GBPm
Profit for the period 4.7 4.9 11.8
--------------------------------------------- ------------ ------------ -----------
No No No
Weighted average number of shares for basic
earnings per share 72,006,637 70,688,381 70,797,217
Effect of dilution - share options 2,503,447 4,333,577 3,666,253
--------------------------------------------- ------------ ------------ -----------
Adjusted weighted average number of shares
for diluted earnings per share 74,510,084 75,021,958 74,463,470
--------------------------------------------- ------------ ------------ -----------
Earnings per share - basic 6.5p 6.9p 16.7p
Earnings per share - diluted 6.3p 6.5p 15.8p
--------------------------------------------- ------------ ------------ -----------
At the period end, there were 2.6 million ordinary share options
in issue that could potentially dilute earnings per share in the
future, of which 2.5 million are currently dilutive (30 September
2017: 4.8 million in issue and 4.3 million dilutive, 31 March 2018:
4.6 million in issue and 3.7 million dilutive).
Underlying earnings per share
Underlying earnings per share are calculated as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2018 2017 2018
GBPm GBPm GBPm
Profit for the period 4.7 4.9 11.8
Acquisition costs 0.4 1.1 0.8
Exceptional items 2.9 - -
Amortisation of acquired intangible assets 2.9 2.2 4.9
IAS 19 pension costs 0.3 0.2 0.4
Tax effects of acquisition costs, exceptional
items, amortisation of acquired intangible
assets and IAS 19 pension costs (1.5) (0.5) (1.3)
Underlying profit for the period 9.7 7.9 16.6
----------------------------------------------- ------------ ------------ -----------
No No No
Weighted average number of shares for basic
earnings per share 72,006,637 70,688,381 70,797,217
Effect of dilution - share options 2,503,447 4,333,577 3,666,253
----------------------------------------------- ------------ ------------ -----------
Adjusted weighted average number of shares
for diluted earnings per share 74,510,084 75,021,958 74,463,470
----------------------------------------------- ------------ ------------ -----------
Underlying earnings per share - basic 13.5p 11.2p 23.4p
Underlying earnings per share - diluted 13.0p 10.5p 22.3p
----------------------------------------------- ------------ ------------ -----------
10. Reconciliation of cash flow from operating activities
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2018 2017 2018
GBPm GBPm GBPm
----------------------------------------------- ------------ ------------ --------
Profit for the period 4.7 4.9 11.8
Taxation expense 1.7 2.0 4.0
Net finance costs 1.7 1.5 2.7
Depreciation of property, plant and equipment 2.3 1.6 3.5
Amortisation of intangible assets 3.2 2.5 5.5
Acquisition related contingent consideration - (0.3) -
- earn-outs
Change in provisions 0.1 0.4 (3.5)
Pension scheme funding (0.9) (0.8) (1.7)
IAS 19 pension administration charge 0.2 0.1 0.3
Equity-settled share based payment expense
and associated taxes (0.7) 0.3 0.7
----------------------------------------------- ------------ ------------ --------
Operating cash flows before changes in
working capital 12.3 12.2 23.3
----------------------------------------------- ------------ ------------ --------
Increase in inventories (2.8) (5.1) (7.7)
(Increase)/decrease in trade and other
receivables (4.8) 2.2 (0.6)
(Decrease)/increase in trade and other
payables (2.6) (6.1) 6.7
----------------------------------------------- ------------ ------------ --------
Increase in working capital (10.2) (9.0) (1.6)
----------------------------------------------- ------------ ------------ --------
Cash generated from operations 2.1 3.2 21.7
Interest paid (1.8) (1.5) (3.0)
Net income taxes paid (1.7) (2.0) (3.7)
----------------------------------------------- ------------ ------------ --------
Net cash (outflow)/inflow from operating
activities (1.4) (0.3) 15.0
----------------------------------------------- ------------ ------------ --------
11. Closing net debt
At At
30 Sept 30 Sept At
2018 2017 31 Mar 2018
GBPm GBPm GBPm
------------------------------------------- --------- --------- -------------
Borrowings - current - overdrafts (4.4) (2.5) (5.7)
Borrowings - current portion of long term
debt - (0.1) (1.0)
Borrowings - non current (76.8) (51.3) (68.5)
Capitalised debt cost 0.8 1.0 0.9
Cash and cash equivalents 17.8 15.3 21.9
------------------------------------------- --------- --------- -------------
Closing net debt (62.6) (37.6) (52.4)
------------------------------------------- --------- --------- -------------
Reconciliation of movement in cash and net debt
Six months Six months
ended ended Year
30 Sept 30 Sept ended
2018 2017 31 Mar 2018
GBPm GBPm GBPm
------------------------------------------- ----------- ----------- -------------
Net decrease in cash and cash equivalents (3.2) (6.3) (3.1)
Proceeds from borrowings (7.6) - (20.4)
Repayment of borrowings 1.0 0.1 1.5
------------------------------------------- ----------- ----------- -------------
Decrease in net cash before translation
differences (9.8) (6.2) (22.0)
Translation and other non-cash changes (0.4) (1.4) (0.4)
------------------------------------------- ----------- ----------- -------------
Decrease in net cash (10.2) (7.6) (22.4)
Net debt at beginning of the period (52.4) (30.0) (30.0)
------------------------------------------- ----------- ----------- -------------
Net debt at end of the period (62.6) (37.6) (52.4)
------------------------------------------- ----------- ----------- -------------
Supplementary information to the statement
of cash flows
Six months Six months
ended ended Year
30 Sept 30 Sept ended
2018 2017 31 Mar 2018
Underlying Performance Measure GBPm GBPm GBPm
Decrease in net cash before translation
differences (9.8) (6.2) (22.0)
Add: Business acquisitions 2.3 0.4 25.4
Exceptional cash flow 2.9 0.7 1.8
Executive options issuance 1.1 - -
Legacy pension scheme funding 0.9 0.8 1.7
Dividends paid 4.7 4.3 6.2
Notional repurchase of share options - - 1.5
Free cash flow 2.1 - 14.6
----------------------------------------------- ----------- ----------- -------------
Net finance costs 1.6 1.4 2.6
Taxation 1.7 2.0 3.7
----------------------------------------------- ----------- ----------- -------------
Operating cash flow 5.4 3.4 20.9
----------------------------------------------- ----------- ----------- -------------
12. Pension liability
The acquisition of the Sedgemoor Group in June 1999 included a
defined benefit pension scheme, the Sedgemoor Group Pension Fund
("the Sedgemoor Scheme"). The Sedgemoor Scheme, which is funded by
the Company, provides retirement benefits based on final
pensionable salary. Its assets are held in a separate
trustee-administered fund. Following the acquisition of the
Sedgemoor Group, the Sedgemoor Scheme was closed to new members.
Shortly thereafter, employees were given the opportunity to join
the Acal pension scheme and future service benefits ceased to
accrue to members under the Sedgemoor Scheme. Contributions to the
Sedgemoor Scheme are determined in accordance with the advice of
independent, professionally qualified actuaries.
During the period, the financial position of the Sedgemoor
Scheme has been updated in line with changes in actuarial
assumptions and cash contributions made to the Scheme. The
valuation used for IAS 19 disclosures has been based on the most
recent valuation at 31 March 2018 updated to take account of the
requirements of IAS 19 in order to assess the liabilities of the
scheme as at 30 September 2018.
The IAS 19 defined benefit pension scheme liability at 30
September 2018 was GBP1.8m (31 March 2018: GBP3.0m). The movement
principally relates to the changes in actuarial movements and cash
contributions in the period.
The liabilities of the defined benefit scheme are expected to
increase in the future in relation to the guaranteed minimum
pension equalisation. At present it is anticipated there is an
inequality of benefits between male and female members who have a
guaranteed minimum pension. Following the ruling in the High Court
case on 26 October 2018, the Lloyds Banking Group case, certain
legal and actuarial issues remain unresolved and the Company is
taking further advice to determine the impact.
13. Exchange rates
The principal exchange rates used to translate the results of
overseas businesses are as follows:
Six months ended 30 Six months ended 30 Year ended 31 March
Sept 2018 Sept 2017 2018
----------- ---------------------- ---------------------- ----------------------
Closing Average Closing Average Closing Average
rate rate rate rate rate rate
Euro 1.1270 1.1314 1.1341 1.1149 1.1430 1.1345
US dollar 1.3046 1.3336 1.3389 1.3273 1.4083 1.3261
----------- ---------- ---------- ---------- ---------- ---------- ----------
14. Post balance sheet event
On 17 October 2018, subsequent to the period end, the company
completed the acquisition of Cursor Controls Group via the
acquisition of 100% of the share capital and voting equity
interests of its holding company Castlegate 737 Limited ("Cursor
Controls"). The group was acquired for an initial cash
consideration of GBP19.0m on a debt free, cash free basis, before
expenses, funded from existing debt facilities. In addition, a
contingent payment of up to GBP4.0m will be payable subject to
Cursor Controls achieving certain profit growth targets during the
three year period ended 31 December 2021.
15. Interim report
A copy of the interim report will be available for inspection at
the Company's registered office:
2 Chancellor Court, Occam Road, Surrey Research Park, Guildford,
GU2 7AH.
Current regulations permit the Company not to send copies of its
interim results to shareholders. Accordingly, the 2018 interim
results published on 4 December 2018 will not be sent to
shareholders. The 2018 interim results and other information about
discoverIE Group plc are available on the Company's website at
www.discoverieplc.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BRBDDGUGBGIX
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