OUR STRATEGY
KEY STRATEGIC INDICATORS
A Sales growth
B Adjusted operating margin
C Adjusted earnings per share growth
The strength of our decentralised, engineering-led model lies in its ability to combine local agility with Group scale, enabling our businesses to deliver differentiated solutions and respond to customers’ needs quickly while driving operational efficiencies. It positions us well to deliver sustained organic and acquisition-led growth in structurally attractive markets.”
Target 17%
Target >10%
Target Well ahead of GDP
CER
4%
5%
13.8%
FY25 FY24 FY26 FY23
FY25 FY24 FY26 FY23
FY25 FY24 FY26 FY23
5% 5%
(2%)
14.3%
1%
13.1%
20%
15%
11.5%
31%
28%
10.9%
FY22
FY22
FY22
Organic
Commentary Adjusted operating margin was 0.5 ppts lower than last year due to increased investment in engineering and sales capacity and additional manufacturing capacity to support future growth. Since FY14, adjusted operating margin has increased by 10 ppts with approximately half coming from organic improvement and half from higher margin acquisitions.
Commentary Following a return to organic sales growth and with operational investment to support future growth, adjusted operating profit for the year increased by 1% at constant exchange rates (“CER”), with adjusted EPS increasing by 4%. In total, the Group has grown its adjusted EPS by 14% CAGR over the past 10 years.
2%
FY25 FY24 FY26 FY23
Nick Jefferies Group Chief Executive
(7%)
(1%)
10%
Our strategic context The global market for non-semiconductor-related electronic components is valued at approximately $300 billion 1 . Within this, we operate in a niche segment: custom-designed industrial electronics. The total serviceable available market of industrial electronic components is estimated at around $30 billion 1 and is growing steadily at 5–6% per year 1 . This market is dominated by custom-made components. The low-volume, high-mix nature of these products offers limited advantage to companies focused on standard components. As a result, the market remains highly fragmented, with many small, subscale local operators and relatively few large-scale players. This fragmentation represents significant opportunities for discoverIE to grow, both organically and through acquisitions. Non-semiconductor-related electronic components market estimated at $300bn
Our strategic aim Our goal is to grow our presence in custom electronics by focusing on markets with sustained, long-term growth. These markets are underpinned by megatrends, such as digitalisation, decarbonisation, heightened security requirements, and the increasing electronic content of industrial systems. These are the sectors where our products are essential and demand is rising. Our strategy aligns our portfolio of businesses with these market dynamics. By leveraging efficiencies and synergies across our business clusters, we unlock greater value and accelerate growth. We will deliver this strategy through a motivated, entrepreneurial and empowered workforce, operating to the highest ethical and quality standards. Our strategic priorities Our strategy centres on growing organically and through acquisitions, whilst generating efficiencies and reducing environmental impact. This approach has remained more or less the same and has proven to be effective over the years. We remain committed to it, with a clear focus on the four core strategic priorities:
18%
FY22
Commentary Sales growth resumed as customers’ order patterns and inventory levels normalised. Over the last decade, sales have grown by c.5% CAGR organically. D Cash conversion
E Return on capital employed
F Carbon emissions reduction
Target >85%
Target >15%
Target 65%
Adjusted operating cash flow conversion
15.2%
91%
68%
FY25 FY24 FY26 FY23 FY22
FY25 FY24 FY26 FY23 FY22
CY24 CY23 CY25 CY22
15.9% 15.8% 15.7%
103% 103%
59%
47%
Total serviceable available market for industrial electronic components: c.$30bn p.a. ▪ Highly fragmented ▪ Many small, subscale operators ▪ Differentiated, application-specific products ▪ Typically custom-designed
94%
35%
14.7%
80%
Free cash flow conversion
Commentary ROCE for the year was slightly below last year but above our target. The rate of Group ROCE improvement is tempered by acquisitions in the short term, but is expected to benefit from their contribution over the longer term as their additional growth compounds. We acquire businesses with long-term growth prospects that are expected to generate high returns over time. For example, the businesses acquired up to FY 2017/18 generated 28% ROCE this year. We expect this to continue and for acquisitions made more recently to grow similarly.
Commentary Our medium-term target was a 65% absolute reduction in Scope 1 and 2 emissions in CY2025 versus the CY2021 baseline. In CY2025, we exceeded this target, reducing Scope 1 and 2 emissions by 68%, paving the way to net-zero Scope 1 and 2 emissions by CY2030. This reduction was achieved primarily by switching to clean or renewable electricity. 85% of our electricity consumption now comes from renewable or clean sources.
▪ Quality and performance over price ▪ Typically ordered in small batches
Company’s estimates
1
92%
FY25 FY24 FY26 FY23
106%
Grow sales well ahead of GDP
102%
95%
Acquire highly differentiated businesses
77%
FY22
Commentary In the past 10 years, both adjusted
Generate efficiencies
Standard components
operating cash and free cash conversions have been consistently strong, averaging around 100% through-cycle, reflecting low capital expenditure requirements and efficient working capital.
Reduce environmental impact
▶ Read more about our strategic pillars on pages 12 to 13
Volume
High
Low
10
11
discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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