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Results & Reports

Simon Gibbins

"discoverIE performed well in the first half. We are making excellent progress towards our margin targets with a 1.4ppts increase in underlying operating margin, reflecting the leverage in our technology clusters, that is enabling efficiencies and creating value from acquisitions."

Simon Gibbins,
Group Finance Director

Half Year Results Highlights Half Year Results Performance Summary

Half Year Results Highlights

Sales growth with operating efficiencies driving strong first half results

  • Group sales up 4% CER on strong comparators (+23% CER last year) 
  • Organic(4) sales up 1% (M&C: +2%; S&C: +1%) 
  • Gross margins robust and significant operational efficiencies 
  • Underlying operating profit up 17% CER 
  • Underlying EPS up 8% 

Further good progress towards key targets

  • Underlying operating margin increased by 1.4ppts to 12.9%
  • Operating cash flow for the last 12 months up 36% with a 91% conversion rate(5) 
  • ROCE(6) of 15.1%, in line with target
  • Carbon emissions reduced by c.45% in absolute terms since CY 2021(7)

Supply chain, order book and lead times normalised

  • Period end order book of £203m, c.5 months of sales, provides good forward visibility

Excellent acquisition returns of 19.2% EBIT ROI(8) demonstrate value creation

Two high-margin acquisitions completed for £65m

  • 2J and Silvertel integrations underway and progressing as planned 
  • Period-end gearing(9) of 1.6x at lower end of target range 1.5x to 2.0x

Group well positioned for further growth

  • Record bank of design wins (up 23% to £190m ELV(10)), with significant further opportunities
  • Strong acquisition pipeline
  • On track to deliver full year underlying earnings in line with the Board’s expectations
(4) Organic growth for the Group compared with last year is calculated at CER and is shown excluding the first 12 months of acquisitions post completion (CDT in June 2022, Magnasphere in January 2023, Silvertel in August 2023 and 2J in September 2023).
(5) Operating cash flow is cash flow from operations including investment in working capital and capital expenditure.
(6) ROCE is defined as annualised H1 2023/24 underlying operating profit including the annualisation of acquisitions, as a percentage of net assets excluding net debt, deferred consideration related to discontinued operations and legacy defined benefit pension asset/(liability).
(7) CY 2025 target is to reduce scope 1 & 2 carbon emissions by 65% on an absolute basis (base year CY 2021).
(8) EBIT ROI for acquisitions is the total annualised H1 2023/24 underlying operating profit for each business owned for greater than two years divided by total cost of those acquisitions including acquisition expenses, earn outs (as accrued) and integration costs.
(9) Gearing ratio is defined as net debt divided by underlying EBITDA (excluding IFRS 16; annualised for acquisitions).
(10)ELV is estimated lifetime value
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Half Year Results Performance Summary

H1 2023/24 H1 2022/23 Growth % CER(3) Growth %
Revenue (1) £222.0m £222.6m 0% +4%
Underlying operating profit(2) £28.6m £25.6m +12% +17%
Underlying operating margin(1,2) 12.9% 11.5% +1.4ppts +1.4ppts
Underlying profit before tax(2) £25.1m £23.5m +7%
Underlying EPS(2) 19.2p 17.8p +8%
Reported profit before tax £16.0m £14.8m +8%
Reported fully diluted EPS 11.7p 10.9p +7%
Interim dividend per share 3.75p 3.55p +6%
(1) Revenue for H1 2022/23 and the related underlying operating margin have been restated to include £2.9m of one-off increase in semiconductor costs at nil margin passed through to customers. £5m of similar costs passed through to customers were included in revenue for FY 2022/23. See note 2 of the attached condensed consolidated interim financial statements.
(2) ‘Underlying Operating Profit’, ‘Underlying Operating Margin”, ‘Underlying EBITDA’, ‘Underlying Profit before Tax’ and ‘Underlying EPS’ are non-IFRS financial measures used by the Directors to assess the underlying performance of the Group. These measures exclude acquisition-related costs (amortisation of acquired intangible assets of £7.7m and acquisition expenses of £1.4m) totalling £9.1m. Equivalent underlying adjustments within the H1 2022/23 underlying results totalled £8.7m. For further information, see note 7 of the attached condensed consolidated interim financial statements.
(3) Growth rates at constant exchange rates (“CER”). The average Sterling rate of exchange weakened 2% against the Euro compared with the average rate for the same period last year whilst strengthening 9% on average against the three Nordic currencies and 3% against the US Dollar.
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