Further Strong Growth 24 th June 2020 Preliminary results FY20 24 th - - PowerPoint PPT Presentation

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Preliminary results Year ended 31st March 2020 24th June 2020

Strategy Delivering Further Strong Growth

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

◼

Group sales up 6%, organic +2%

◼ D&M organic +5% ◼

Underlying operating profit +21%

◼

Underlying EPS +11%

◼

Excellent cash conversion: 106% of operating profits

◼

Three acquisitions in the year for £74m

◼ Integrating well ◼

Record order book +13%

◼

COVID-19 arrives in Q4 in China, subsequently spreading internationally

A good year with excellent cash generation

1

Preliminary results FY20 – 24th June 2020 discoverIE Group plc discoverIE Group plc

From m FY13 3 to FY18:

◼

Sales(1) up > 2x

◼

Underlying EPS up > 2x

◼

Operating profits up > 4x

◼

Share price growth 19% CAGR(2)

◼

Dividend growth 7.6% CAGR(3)

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

From m FY19 our aim has been to double underlying EPS in 5 years

◼

FY19 + FY20 op profits up 51%

◼

FY19 + FY20 EPS up 35%

We aim m to provide inve vestors with

◼

Returns of 15 – 20% pa

◼

A progressive dividend

Sustainable growth Company

2

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

SA SALE LES(1)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

FINANCIAL REVIEW

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Financial Review

Strong growth in returns and cash generation

4

◼ Increasin

ing operatin ing margin in

◼ Up 1.0ppt to 8.0%

◼ Excellent cash

h performance ce

◼ Operating cash flow up 37% to

£39.3m

◼ 106% operating cash conversion

◼ Growin

ing ROCE CE(2)

◼ Up 0.6ppts to 16.0%

(1) Underlying measures exclude acquisition-related costs (see Appendices I and III) (2) ROCE is underlying operating profit (annualised for Sens-Tech) as a percentage of net assets plus net debt

FY20 FY19 Growth CER Growth Revenue £466.4m £438.9m +6% +8% Underlying operating profit(1) £37.1m £30.6m +21% +23% Underlying profit before tax(1) £32.8m £27.2m +21% Underlying EPS(1) 30.2p 27.2p +11%

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Financial Review

Ongoing revenue growth

5

Revenue up 120% in 6 years (14% CAGR)

(1) Organic sales growth excludes the first 12 months of acquisitions.

Grow

• wth

FY20 Organic(1) 2% Acq 6% CER 8% Currency

• 2%

Actual 6%

Preliminary results FY20 – 24th June 2020 discoverIE Group plc (1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and III). (2) Prior mid-term target was Nov 21. New target of 12.5% in the next 5 years.

Financial Review

6

◼ Unde

derlyin ing operatin ing profit it(1)

1) of £37.1m

1m

◼ Up £6.5m on FY19 (+21%

reported & +23% CER)

◼ 23% CAGR in last 3 years

◼ Unde

derlyin ing operatin ing margin in of 8.0%

◼ Up 1.0ppts on FY19 ◼ Up 4.6ppts in 6yrs ◼ Sens-Tech increases pro forma

margin to 8.5% = mid term target(2)

Growing profit and margin

Preliminary results FY20 – 24th June 2020 discoverIE Group plc (1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and III).

Financial Review

7

Earnings enhanced by acquisition contribution

◼ Unde

derlyin ing operatin ing profit it up 23% CER

◼ Organic revenue growth of 2% ◼ Gross margin up 0.6ppts to 33.6% ◼ Reduced 0.4ppts organically ◼ Opex at 25.6% of sales, the lowest

level since strategy began.

◼ Continued investment in D&M

• ffset by savings in CS

◼ Acquisition contributions from

Cursor Controls, Hobart, Positek & Sens-Tech

◼ Organic EBIT reduced £1.0m; includes £1.4m investment in D&M future growth initiatives ◼ Offset by £8m benefit from acquisitions

Preliminary results FY20 – 24th June 2020 discoverIE Group plc (1) EBIT is underlying operating profit (2) Organic growth excludes the first 12 months of acquisitions.

Financial Review

CUSTO TOM SUPPLY DESIGN & MANUFACT CTURI RING

D&M continuing to drive Group performance…

Operatin ing profit it up £8.7m 7m CER

◼ Profits up 30% CER ◼ Margin up 1.6pts CER to 12.8%

Operatin ing profit it reduce ced d £1.2m CER

◼ Margin down 0.7ppts to 4.3%.

8

£m D&M 297.9 38.1 12.8% 263.0 29.4 11.2% 12% 13% 5% 30% Custom Supply 168.5 7.3 4.3% 170.8 8.5 5.0% (2%) (1%) (4%) (14%) Unallocated (8.3) (7.8) Total (CER) 466.4 37.1 8.0% 433.8 30.1 6.9% 6% 8% 2% 23% FX 5.1 0.5 Total (reported) 466.4 37.1 8.0% 438.9 30.6 7.0%

Revenue EBIT(1) %

FY20

Revenue EBIT(1) EBIT(1) growth %

Revenue growth

Organic(2) % Actual CER

FY19 (CER)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc (1) Underlying measures exclude acquisition-related costs and exceptional items (see Appendices I and III) (2) Fully diluted EPS

Financial Review

… delivering 11% EPS growth

9

◼ Underlying PBT up 21%

◼ Finance costs up £0.9m

◼ Underlying EPS up 11% to 30.2p

◼ Up c.150% in 6yrs (17% CAGR)

◼ Reported PBT/EPS impac

acted by acquisition volume ume

◼ £74m on acquisitions (inc £4m

expenses, 2 placings)

£m FY20 FY19 Growth Underlying operating profit(1) 37.1 30.6 21% Finance costs (4.3) (3.4) Underlying PBT(1) 32.8 27.2 21% Effective tax rate 20% 25% Underlying PAT(1) 26.2 20.5 28% Fully diluted shares (m) 86.9 75.4 15% Underlying EPS(1) (p) 30.2p 27.2p 11% Reported PBT 19.5 19.3 Reported EPS(2) (p) 16.5p 19.4p

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

OPERATING CASH FLOW(1)

Financial Review

10

Excellent cash generation

(1) Operating cash flow defined as EBITDA less working capital, capex and IFRS 16 lease charges – see Appendix IV (2) Net debt at 31 Mar 20 as a ratio of adjusted EBITDA (Group underlying EBITDA adjusted for a full year of the underlying EBITDA from acquisitions).

◼ Strong operating cash flow(1)

◼ £39.3m for FY20, up 37% ◼ 106% of underlying operating profit ◼ Consistently high conversion rate over

the last 7 years.

◼ Net debt at 31 Mar 20 of £61.3m

3m

◼ Gearing(2) of 1.25x from 1.6x proforma

at H1. LT target range 1.5 –2.0x

◼ Revo

volvi ving credit facility of £180m m

◼ Plus £60m accordion ◼ Term extended to June 24

◼ Eligible in principle for BofE CCFF

◼ Not expected to be required.

FY14 FY15 FY16 FY17 FY18 FY19 FY20 Target 100% 104% 100% 136% 90% 93% 106% 85% % Underlying Operating Profit

£7.1m £13.9m £16.3m £27.1m £22.1m £28.6m £39.3m

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

11

Financial Review

Increasingly cash generative, disciplined use of capital

◼ Free cash flow at 54%

• f EBITDA

◼ Increasing strongly in

the last 2yrs

◼ 104% of underlying PAT

(v 85% target)

◼ Increasing self funding

capacity for acquisitions

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

OPERATING REVIEW

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Response to COVID-19 pandemic

Priority has been employee & trading partner safety and cash preservation

13

Decisive ve respons ponse:

◼ Balance

ce sheet & liquidit idity

◼ Gearing of 1.25x with £180m facility and nearly

£120m headroom

◼ Eligibility in principle for BoE CCFF

• Not expected to be required

◼ Operation

ional contin inuit ity main intain ined

◼ Each business enacting emergency operating plan ◼ Safe working conditions established ◼ Over 650 employees working from home

◼ Cash

h conservation ion & cost reduct ction ions

◼ Deferral of non essential capex and other discretionary spend ◼ Deferral of bonuses & pay rises together with a new hiring freeze ◼ Final dividend not proposed ◼ 20% salary reduction for the Board and Group Executive for 3 months ◼ Continued focus on working capital efficiency ◼ Acquisitions deferred, but pipeline development continues

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Status of operations during COVID-19

▪ 27 manufact cturin ing facil ilit itie ies across 17 countrie ies

▪ All open, some with reduced but growing capacity ▪ Several sites granted essential supplier status

▪ 6 sites temporaril ily closed d by governme ment manda date (c. 1 mth mth) ) – all since reopened

▪ China (2 sites) shut from Chinese New Year, recovering quickly in March ▪ Sri Lanka closed end of March, re-opened late April ▪ India (2 sites) closed end of March, both re-opened by early May ▪ US (California) closed mid March, re-opened end of April ▪ Gradual re-opening to ensure safe working

▪ New operatin ing proce cedu dures with h safe ▪ workin ing condit dition ions establis ished

▪ Split shifts with no overlap ▪ Social distancing policies introduced by reconfiguring operations ▪ Enhanced cleaning procedures ▪ Closed canteens ▪ Face to face meetings replaced with video calls ▪ Business travel cancelled

14

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc discoverIE Group plc

Helping customers fight the virus

15

Supporting customers’ rapid development and supply of essential components ▪ Over 60 customer projects: ▪ 24 ventilator projects ▪ 8 fluid / chemical analysers ▪ 7 temperature sensing projects ▪ 5 air purification projects ▪ 5 hospital beds ▪ Various other related projects

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc discoverIE Group plc

16 41% 41% 12% 25% 22% 22% Power Magnetics Components Systems

D&M clusters Revenue share

▪ Capital light model with capex c.2%/rev ▪ R&D investment c. 2%/rev

▪ Customer specific development

Operating Review

Design & Manufacturing division

▪ 64% Group Revenues

▪ 6% Organic CAGR over last 5 years ▪ Generating 84% of FY20 Group profit contribution

▪ 13% operating margin

▪ 2ppts improvement in last 5 years

▪ 14 acquisitions completed since 2011

▪ Increasing specialist capability and international reach ▪ 27 manufacturing sites in 17 countries

Preliminary results FY20 – 24th June 2020 discoverIE Group plc Note: At constant exchange rates (CER)

Operating Review

Design & Manufacturing division

17

◼ 5% organic

c growth

◼ Sales +5% ◼ Orders +4%

◼ 2.8x increase in 5yr sales

◼ 27% CAGR profit growth

◼ Regional manuf

ufact ctur uring

◼ Flexible & adaptable ◼ Lower risk

◼ £1.4m

m inve vestme ment in future growth

◼ Investme

ment in IT systems ms

◼ Tailored to business needs

◼ Manageme

ment deve velopme ment programm mme Growth FY20 Organic 5% Acquisitions 8% CER 13% Currency

• 1%

Actual 12%

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

▪ Growth ahead of wider markets with lower cyclicality

• Target markets – resilient
• Slowing growth rates driven by non-target markets
• COVID-19 impact in Q4 was £4m sales, £1.5m EBIT; H2 growth would have been 5%

▪ Asia drives international growth

• Western multinational customers

(1) Sales destination

Operating Review

Widespread D&M organic growth

18

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

▪ Target market sales grew at 9% organically

▪ Higher growth, less cyclical than wider market

▪ Target markets account for 72% (PY: 66%) of D&M revenue

▪ New design wins account for >90%, future growth driver

Operating Review

Target markets continue to drive organic growth

19

Preliminary results FY20 – 24th June 2020 discoverIE Group plc Note: At constant exchange rates (CER)

Operating Review

Custom Supply division

20

◼ Organic sales down 4%

◼ Market slowdown prior to CV19 ◼ Profits down by £1.2m CER

◼ Continue

ued growth in Italy and Benelux ux

◼ Germany impacted by wider slow

down caused by auto sector

◼ UK, and France also down

◼ RSG power business now

integrated

◼ Manag

agement development programme mme

◼ Cross selling up 8% CER to £11.4m

m

◼ Higher gross margins (c.+10ppts v CS

GM)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

◼ £159m

m record order book

◼ CER +13% ◼ Organic +7% v FY19

◼ High proportion of recurring

reve venue ues

◼ Driven by

◼ New project design wins ◼ Repeat revenue growth

FY13 FY14 FY15 FY16 FY17 FY18 FY19

Operating Review

Record order book underpins FY21

21

£52m £50m £65m £73m £85m £109m £122m £141m £159m

Preliminary results FY20 – 24th June 2020 discoverIE Group plc discoverIE Group plc

Renewable energy

Transportation

DESIGN WINS

Creatin ing future ure growth

£260m in new project wins

(est lifetime value or ELV)

Wins represent 16% of current revenue Wins up 37% over 2 years >90% of D&M in target markets

(1) Estimated lifetime sales value of projects,

Operating Review

22

Medical Industrial & Connectivity

£92m £127m £190m £266m £260m

FY1 Y16* FY1 Y17 FY1 Y18 FY1 Y19 FY2 Y20

Design wins - ELV(1) (£m)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Operating Review

Consistent, proven strategy

◼ Sales growth

h well ahead of GDP over the economic ic cycle

◼ Move up the value chain

in into highe her margin in produ duct cts

◼ Acquir

ire businesses with attract ctiv ive growth h prospect cts and d strong operatin ing margin ins

◼ Furthe

her internatio ionalise the busin iness

◼ Generate strong cash

h flows and d long term sustain inable returns

23

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Focused on sustainable growth markets

▪ Global trends driving structural growth ▪ Product development driven by technology ▪ Increasing electronic content ▪ Essential products ▪ Markets aligned with UN SDG*

24 Transpo portatio ion Medic dical In Indu dustria ial & Con

• nnect

ctiv ivit ity

Smart transportation market to grow 18.7% CAGR globally (2019 19-24) Research & Markets Medica cal elect ctronics to grow 8% CAGR R (2018 18 - 2024) TechSci Research 70% of growth in global elect ctrici city produ duct ction (2017-23) will be into renewabl ble energy gy International Energy Agency Industrial market for Semico condu duct ctors to grow 10.8% CAGR R (2018 18-22); IoT market to grow 18.7% CAGR 2019 19-24 24 Markets-and-Markets

Renewa wabl ble En Energy

* UN SDG United Nations Sustainable Development Goals

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

25 ▪ Enablers of new sustainable capabilities ▪ Smart agriculture ▪ Efficient food manufacturing systems ▪ Efficient water use/management ▪ Water quality improvement

Growth th areas where re electron tronics s will drive efficiency, intellige gence and susta tainability ty

Exa Example ple: Re Resour urce ce Opt Optimisation Indus dustri rial & l & Co Connecti ctivity

Industrial al market for Semiconductors to grow w 10.8% % CAGR (201 018-22) 22); IoT market to grow w 18.7% % CAGR 2019-24 24 Markets-and-Markets

Indus dustri rial & l & Co Connecti ctivity

▪ Industrial applications that support & enable sustainability ▪ Energy efficiency, automation & communication ▪ Focus on improvement

Refining our industrial market focus

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

◼ 14 D&M acquisitions, £268m

m spent since 2011

◼ Average EBIT ROI of D&M

acquisitions(1) since acquisition of 17% (v 15% target)

Acquisitions performing well

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

Operating Review

26

Average EBIT ROI (1)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Operating Review

Good progress towards targets

27

Revis ised d targets for the next 5 years

(1) As a percentage of Group revenue (2) Mid-term was a period to Nov 2020 (3) New targets for the five-year period to Mar 2025 (4) A final dividend has not been proposed due to COVID-19 (5) Includes an annualisation of the results of Sens-Tech acquired in Oct 2019 n/d – not previously disclosed

Key Key St Strategic ic In Indic icators Mid term New Targets(2) Targets(3) 1. Increase share of Group revenue from D&M(1) 18% 37% 48% 52% 57% 61% 64% 75% > 75%

• 2. Increase underlying operating margin

3.4% 4.9% 5.7% 5.9% 6.3% 7.0% 8.0% 8.5% 12.5%

• 3. Build sales beyond Europe(1)

5% 12% 17% 19% 19% 21% 27% 30% 40%

• 4. Target Market Sales(1)

n/d n/d n/d 56% 62% 66% 68% New 85% Key Key Performance In Indic icators 1. Sales growth CER 17% 36% 14% 6% 11% 14% 8% D&M Organic 3% 9% 3%

• 1%

11% 10% 5% Group Organic 2% 3% 3%

• 1%

6% 8% 2%

• 2. Increase cross-selling

£0.3m £0.9m £3.0m £4.6m £8.8m £10.6m £11.4m £12m p.a.

• 3. Underlying EPS growth

20% 31% 10% 13% 16% 22% 11% >10%

• 4. Dividend growth

10% 11% 6% 6% 6% 6% n/a(4) Progressive

• 5. ROCE

15.2% 12.0% 11.6% 13.0% 13.7% 15.4% 16.0%(5) >15% 6 Operating cash flow 100% 104% 100% 136% 90% 93% 106% >85% of Op profit FY14 FY16 FY17 FY17 FY14 Well ahead

• f GDP

FY19 FY19 FY18 FY18 FY20 FY20 FY15 FY15 FY16 Targets

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

28

Business funda damentals

▪ Growth markets ▪ Designed-in products, difficult to replace ▪ Distinct business, competitive advantage ▪ Low customer concentration ▪ Design, not price led ▪ Low capital requirements ▪ Acquisitions at the right price

Attract ctiv ive rewards ds

▪ GDP++ organic growth ▪ High levels of repeating revenue ▪ Sustainable margins ▪ Reduced risk ▪ Good gross margins ▪ Cash generative ▪ Earnings accretion

Our business

Operating Review

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Operating Review

Outlook

29 ◼

FY20: Fundamentals are in place for long term growth to continue

◼

Target markets outperforming wider market

◼

Record order book ending FY20

◼

High level of design wins

◼

Strong cash generation

◼

Healthy acquisition pipeline ◼

Resilient trading in Q1

◼

Sales running at -10% YoY organic

◼

D&M 3 month order book consistent with prior year

◼

Book to bill ratio of 0.85:1 reflects market conditions & shorter term ordering

◼

June orders and sales tracking ahead of May. ◼

A robust & flexible business

◼

Strong financial position

◼

Clear strategy

◼

Performing well

APPENDICES

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

◼ Management believe the adjustments enable a

better understanding of the underlying performance of the business

◼ Adjustments made to IFRS results are:

◼ Acquisition/disposal related costs (transaction costs,

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

◼ Exceptional items (restructuring, one offs)

Appendix I

Underlying to IFRS reconciliation

31

FY20 (£m)

Underlying

Excep. Acqs Amort IAS19 IFRS Gross profit 156.7 156.7 S&D costs (58.1) (58.1) Admin expenses (61.5) (4.0) (9.0) (0.3) (74.8) Operating profit 37.1 0.0 (4.0) (9.0) (0.3) 23.8 Net finance costs (4.3) (4.3) Profit before tax 32.8 0.0 (4.0) (9.0) (0.3) 19.5 Taxation (6.6) (0.1) 1.5 (5.2) Profit after tax 26.2 0.0 (4.1) (7.5) (0.3) 14.3 Effective tax rate 20% 27% EPS 30.2p 16.5p FY19 (£m)

Underlying

Excep. Acqs Amort IAS19 IFRS Gross profit 145.0 145.0 S&D costs (57.7) (57.7) Admin expenses (56.7) 0.2 (1.8) (5.9) (0.4) (64.6) Operating profit 30.6 0.2 (1.8) (5.9) (0.4) 22.7 Net finance costs (3.4) (3.4) Profit before tax 27.2 0.2 (1.8) (5.9) (0.4) 19.3 Taxation (6.7) 0.1 0.5 1.3 0.1 (4.7) Profit after tax 20.5 0.3 (1.3) (4.6) (0.3) 14.6 Effective tax rate 25% 24% EPS 27.2p 19.4p

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Opex % Gross margin % Opera rating g costs down wn 0.4ppts

◼

Improving operating efficiency

◼

Lowest ratio since strategy began Operating margin %

Opera rating g margi gin of 8.0%

◼

1.0ppt improvement from FY19

◼

Up 4.6ppts in 6 years

◼

Proforma of 8.5% including acquisitions = mid-term target

Efficiency drives operating margin

32

GM at its highe hest level

◼

GM has increased c7ppts since strategy began

Appendix II

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

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

Underlying adjustments & net assets

33

Net Assets

At 31 March 2019 134.7 Net profit after tax 14.3 Dividend paid (8.1) Currency net assets - translation impact (4.6) Gain on defined benefit scheme 1.9 Shares issued 60.5 Share-based payments (incl tax) 1.8 At 31 March 2020 200.5 FY20 FY19 Exceptional items

• 0.2

Acquisition costs (4.0) (1.8) Amortisation of acquired intangibles (9.0) (5.9) Legacy pension - IAS19 (0.3) (0.4) Underlying adjustments (13.3) (7.9) Tax impact of adjustments 1.4 2.0 After tax adjustments (11.9) (5.9)

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Appendix IV

Cash flow & net debt

NET DEBT (£m) CASH FLOW (£m)

34

(1) Non-cash items are depreciation, amortisation and share based payments. Includes £6.6m for IFRS 16 depreciation in FY20. (2) Operating cash flow as a percentage of underlying operating profit. (3) Free cash as a percentage of underlying profit after tax.

CASH FLOW (%)

FY20 FY19 Underlying profit before tax 32.8 27.2 Finance costs 4.3 3.4 Non cash items(1) 13.5 6.4 Underlying EBITDA 50.6 37.0 Working capital 1.6 (3.2) Capital expenditure (6.3) (5.2) IFRS 16 (6.6)

• Operating cash flow

39.3 28.6 Finance costs (3.7) (3.4) Taxation (6.4) (3.8) Executive options issuance (0.1) (1.6) Net exceptional receipt

• 1.1

Legacy pension (1.8) (1.7) Free cash 27.3 19.2 FY20 FY19 Net debt at 1 April (63.3) (52.4) Free cash 27.3 19.2 Dividends (8.1) (6.7) Acquisition related cash flow (75.9) (24.2) Equity issuance 60.5 0.1 Foreign exchange impact (1.8) 0.7 Net debt at 31 March (61.3) (63.3) FY20 FY19 Target Operating cash flow %(2) 106% 93% 85% Free cash flow %(3) 104% 94% 85%

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

◼ Similar WC/sales ratio

io to last year

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

now 64% of sales, offset by D&M reducing WC/sales ratio.

◼ D&M WC at 17.7% of sales, CS WC at 11.1%

• f sales).

◼ KPIs improve on last year

◼ Debtor days: 52 (FY19: 54) ◼ Creditor days: 63 (FY19: 63) ◼ Stock turns;

5.2 (FY19: 5.1)

• CS: 10.9, D&M: 3.7

(1) Working capital is defined as net inventory, trade & other receivables and trade & other payables. Unallocated working capital is not represented in this chart.

35

Working capital efficiencies

Appendix V

Preliminary results FY20 – 24th June 2020 discoverIE Group plc (1) Nordic rate is a weighted average combination of £/NOK, £/SEK and £/DKK rates based on Group sales in each territory.

Appendix VI

Foreign exchange effects

36

Translation ion effects

◼ Sterling weakened significantly in FY17 and FY18

but strengthened slightly in FY19 and FY20 (impacting the Group on translation of overseas sales into Sterling in FY20 by c1%)

◼ c.87% of Group revenues are non-UK

(mainly €, Nordic and US$).

◼ Translation impact for FY20: ◼ Sales £5.0m ◼ Underlying operating profit £0.5m

Operation ional effect cts

◼ Sterling weakened against US$ in FY17 and again in

FY20.

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

Sterling, so impacts on purchase pricing .

◼ The Group hedges material transactional exposures

from point of order through to payment

◼ Protects GM at FX rate at time of order.

£/$ FY20 v FY19

• 3%

FY19 v FY18

• 1%

FY18 v FY17 1% FY17 v FY16

• 13%

£/€ £/Nordic(1) FY20 v FY19 1% 4% FY19 v FY18 0% 4% FY18 v FY17

• 5%
• 2%

FY17 v FY16

• 13%
• 12%

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Appendix VII

IFRS 16

37

Impact on Balance ce Sheet

◼ On adoption of IFRS 16 the Group recognised

liabilities in relation to leases which had previously been classified as operating leases. These liabilities were measured at the PV of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as at 1 April 2019.

◼ The Group has not restated prior year

comparators, with right of use assets being set equal to lease liabilities at the date of transition in line with the simplified approach under IFRS 16.

Impact on P/L Impact on bankin ing covenants

◼ Financial covenants are calculated on a frozen GAAP

basis, ie pre IFRS 16.

FY20 Lease expense 6.6 Depreciation (6.6) Underlying op profit 0.0 Interest (0.6) Underlying PBT (0.6)

31 Mar 20 Right of use assets 21.1 Lease liabilities (20.0) Net liability 1.1

Preliminary results FY20 – 24th June 2020 discoverIE Group plc discoverIE Group plc

Dividend

38

◼ Final divide

idend d not prop

• pos
• sed

◼ COVID-19, Cash preservation

◼ Intentio

ion to resume interim im divide idend d for H1 21 subject to tradin ding condit dition ions

◼ Progressiv

ive policy icy remain ins

◼ To exceed 3.0x cover (underlying) ◼ FY19: 2.8x cover (underlying) and

1.8x cover (reported) ◼ Divid

idend d growth h of 7% CAGR R up to FY19 Appendix VIII

Preliminary results FY20 – 24th June 2020 discoverIE Group plc

Essential products into growth markets

Medic dical Renewa wabl ble En Energy In Indu dustria ial & Con Connectiv ivit ity

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

control

◼ Increasing scale of wind

turbines

◼ Diversification of solar

systems

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

vehicles

◼ Autonomous vehicles ◼ High speed rail

Transportation

discoverIE solutions Market drivers Mega trends

Decar arbo bonisat sation & Diversi sifi ficat ation Electrificat ation & Autonomous s vehicle les Connectivity, automat ation & Indust ustrial l Internet of Things Artificial al intell lligence, sensi sing & analytics

◼ Power inductors ◼ Turbine blade pitch

control

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

content

Technology integration

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

vehicles

◼ Proactive & preventative

medicine

◼ Technological & biological

fusion

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

regimes

◼ Cost of energy ◼ Remote monitoring &

control

◼ Quality control ◼ Precision & automation

39

Appendix IX