# discoverIE Group say strong trading momentum continues

- Link: https://www.directorstalkinterviews.com/discoverie-group-say-strong-trading-momentum-continues/4121051737
- Published: 2022-02-09T07:17:17+00:00
- Author: Giles

**discoverIE Group plc** (LON:DSCV), a leading international designer and manufacturer
of customised electronics for industrial applications, today issued a trading update
covering the four month period to 31 January 2022. 

The strong trading momentum seen in the first half continued during the Period with
a further strengthening of the Group’s order book, and revenue significantly ahead
of the prior year period and two years ago. Accordingly, the Group is on track to
deliver full year underlying earnings for continuing operations ahead of the Board’s
previous expectations, despite ongoing supply chain headwinds.  

Group orders^(1) in the Period continued to be well ahead of sales, growing organically
^(2) by 18% year-on-year and 30% compared with two years ago. The order book at 
31 January 2022 was at a record level of £216m, over 65% higher organically than
both a year ago and two years ago.

Group sales^(1) in the Period were 34% ahead of the prior year at CER^(3), growing
organically by 20% year-on-year and 17% compared with two years ago.

Trading was strong in both of the Group’s new operating divisions announced separately
this morning.

For the 10 months ended 31 January 2022, orders for the continuing Group grew organically
by 42% year-on-year and by 32% compared with two years ago. Sales for the 10-months
were 28% higher at CER and grew organically by 17% and 12% compared with last year
and two years ago.

discoverIE Group has made five acquisitions over the last 16 months for a total 
consideration of £107m on a debt free, cash free basis. Businesses are performing
well, as expected, and integrations are on track.

In the third quarter of the current financial year, the disposals of the Group’s
distribution businesses, Acal BFi and Vertec SA, were announced, subject to customary
approvals. The disposal of Vertec SA completed in January 2022, and the disposal
of Acal BFi is expected to complete during this quarter. The Group’s focus is therefore
now solely on the higher margin design and manufacturing operations which increases
its exposure to structural growth markets and positively impacts Group operating
margin.

The Group is well-funded with good liquidity and strong cash flow. Gearing at 31
January 2022 was 0.9x on a proforma basis^(4). With the Group’s target gearing range
being 1.5x to 2.0x, there is significant headroom for further acquisitions and the
pipeline of possible acquisition opportunities remains strong.

With a clear strategy focused on long-term, high quality, structural growth markets
across Europe, North America and Asia, a diversified customer base, a record order
book and a strong pipeline of acquisition opportunities, discoverIE Group is well
positioned to make further progress on its key priorities.

**Notes**  

1.     Group orders and sales are for continuing operations which exclude the results
of the Acal BFi and Vertec SA businesses following their disposal announcements.

2.     Growth rates refer to the comparable prior year period unless stated. Organic
growth for the Group compared with last year is calculated at constant exchange 
rates (“CER”) and is shown excluding the first 12 months of acquisitions post completion(
Phoenix was acquired in October 2020, Limitor in February 2021, CPI in May 2021,
Antenova in August 2021 and Beacon in September 2021). Organic growth compared with
two years ago excludes the first 24 months of acquisitions so also excludes Sens-
Tech acquired in October 2019.

3.     Growth rates at constant exchange rates (“CER”). The average sterling rate
of exchange against the Euro for the period strengthened by 7% compared with the
average rate for the same period last year, and by 4% on average against the three
Nordic currencies, and by 1% compared with the US dollar rate.

4.     Gearing ratio is defined as net debt divided by underlying EBITDA (annualised
for acquisitions). Proforma gearing factors in the disposal of Acal BFi as if it
had completed at the period end.

5.     This trading update is based upon unaudited management accounts and has been
prepared solely to provide additional information on trading to the shareholders
of discoverIE Group plc. It should not be relied on by any other party for other
purposes. Certain statements made in this update are forward looking statements.
Such statements have been made by the Directors in good faith using information 
available up until the date that they approved this update. Forward looking statements
should be regarded with caution because of the inherent uncertainties in economic
trends and business risks.

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