OUR STRATEGY CONTINUED
Key strategic indicators A Sales growth B
Risks 1
Adjusted operating margin Return on capital employed
C Adjusted EPS growth
6 Supply chain resilience
7 Technology,
Market, geopolitical and trade environment
2 Business
3 Climate-
4 Cyber security and digital resilience
5 Customer
innovation and product relevance
acquisition under- performance
related risks
demand, key customer and end-market risk
F Carbon emissions reduction
D Cash conversion
E
11 Financial
8 Major business disruption
9 Loss of key personnel
10 Product
12 Liquidity and financing
13 Foreign currency
14 Legal, regulatory, and compliance
quality and liability
Controls and Reporting
Grow sales well ahead of GDP
Acquire high-quality businesses
Generate efficiencies
Reduce environmental impact
We aim to grow sales well ahead of GDP through the economic cycle by focusing on sustainable, structural growth markets, namely renewable energy, transportation, medical, security, and industrial & connectivity – each of which is projected to grow faster than global GDP. Learn more about the growth drivers for these markets on pages 22 to 23. Being in the right markets is only part of the equation. We drive sales growth by focusing on two areas: product innovation and commercial discipline. On the innovation front, we direct our engineering time towards developing differentiated products built on commercially proven technologies to maximise return on investment. Our commercial discipline is reflected in how we manage our design pipeline. We are selective, focusing on design opportunities that demand unique, value-added solutions and that offer long-term profitable revenue potential. These quality design wins translate into consistent, high-margin growth over time. Progress to date The industrial sector experienced a prolonged and steep destocking period between 2023 and 2025 as the pandemic-induced inventory surpluses unwound. Although destocking in most of the end markets ended in the second half of 2025, demand recovery has been slow due to the uncertainty around the US tariffs introduced in April 2025. In FY 2025/26, Group sales increased by 5% CER and 2% organically. Despite the temporary headwinds, our through-cycle organic growth in the past ten years, averaging 4% per annum, remains well ahead of the GDP growth rate in our core markets of developed economies.
Acquisition is an essential part of our growth strategy. The niche, customised electronic components market is highly fragmented, offering opportunities for consolidation and value creation. We target businesses that embody the core characteristics we define as the discoverIE DNA. These include: ■ Design & manufacture of electronic components, modules or systems ■ Differentiated, value-added products and solutions ■ Supplying original equipment manufacturers ■ Long-life products with repeat revenues ■ Operating in markets with excellent growth prospects ■ Strong cash generation and capital-light business models ■ Ambitious, capable management with entrepreneurial spirit We have a well-established approach to acquisitions and portfolio management. By taking a long-term approach to creating compounding organic growth in acquired businesses, as well as actively managing the overall portfolio, the Group consistently generates substantial value. Progress to date Since our first design and manufacture acquisition in 2011, we have invested over £550m in 30 acquisitions, over a quarter of which have taken place in the past three years alone. Group sales have grown from £10m in FY 2009/10 to £443m today. Our strong track record in acquisitions stems both from identifying the right businesses and our ability to enhance their performance over time. This is evident in the consistent return on capital employed. Between FY 2020/21 and FY 2025/26, the Group delivered on average 15.3% ROCE.
We achieve efficiencies in three areas: pricing, manufacturing and operating leverage.
We received approval for our near and long-term science- based emissions reduction targets from the SBTi in May 2025: ■ discoverIE Group plc commits to reduce absolute Scope 1 and 2 GHG emissions by 90% by 2030 from a 2021 base year. ■ discoverIE Group plc commits to reach net-zero greenhouse gas emissions across the value chain by 2040. Our Scope 1 and 2 net-zero strategy focuses on four primary sources of emissions within the Group: electricity, natural gas, company vehicles, and refrigerants. We had a medium- term target to reduce absolute emissions by 65% by the end of CY2025 compared to the CY2021 baseline. An updated transition plan has been published for our emissions across the value chain for Scopes 1, 2 and 3. Progress to date Five years into our net-zero plan, we exceeded our medium- term target by reducing Scope 1 and 2 emissions by 68% in CY2025 versus the CY2021 baseline. This reduction was driven primarily by switching to clean or renewable electricity, including installing solar panels at sites where economically feasible, implementing energy-efficiency measures, and deploying heat pumps where appropriate. 85% of our electricity consumption now comes from renewable or clean sources. We are also accelerating the transition of our vehicle fleet away from fossil fuels. Over half (58%) of our company cars are now electric or hybrid. Natural gas is now our largest emissions source, representing 35% of total CY2025 emissions. In March 2025, we approved a plan to replace gas heating in Poland, one of our largest natural gas-consuming sites. We are also evaluating further measures to reduce emissions from natural gas and refrigerants.
Pricing for value – Our value-based pricing strategy is built on the product differentiation and substantial value we provide. Whether developing bespoke solutions for unique applications or improving existing ones for broader use, our technical expertise and know-how enable customers to achieve their desired outcomes. This value add is increasingly reflected in our rising contribution margins. Manufacturing efficiencies – Many of our acquisitions bring manufacturing capabilities into the Group. With over 40 production facilities worldwide, we continuously optimise our manufacturing footprint. This includes consolidating sites and sharing capacity in similar locations, relocating production to achieve cost or volume efficiencies, or to position manufacturing closer to customers to improve responsiveness and cost-effectiveness. Operating leverage – As the Group grows, we maintain a disciplined approach to cost management through phased investment and strategic resource allocation. Our clustering model also makes it easier to identify synergies. Learn more about clustering on pages 16 and 17. As scale increases, our drop-through rate will continue to rise, reflecting strong operating leverage. Progress to date In FY 2025/26, following two years of no growth amidst industrial destocking, we resumed investment to support anticipated growth following the end of destocking, leading to higher operational costs. Adjusted operating margin was 0.5ppts lower compared to the previous year. Prior to that, we delivered 15 years of consecutive growth in our operating margin, increasing from break-even in FY 2009/10 to 14.3% in FY 2024/25. These gains were driven primarily by organic improvement. In the past ten years, we have consistently met or exceeded our adjusted operating margin targets, which have been raised five times during the same period. Adjusted operating margin
Organic sales growth
Acquisition geography
Scope 1 and 2 emissions reduction
Target 17%
10000
15
-26%
20
Target 13.5%
8,756
14.3
18%
13.8
13.1
15
8000
12
-18%
Target 12.5%
11.5
10.9
11%
10
Target 8.5%
10.2
10%
10%
(2,296)
6000
-14%
9
Target 7%
8.0
5
-10%
5%
(1,575)
7.0
3%
4000
6
6.3
2%
5.9
5.7
2,804
(1,199)
0
4.9
(1%)
(1%)
(882)
(4%)
2000
3
-5
(7%)
0
0
-10
CY25
CY21
CY22
CY23
CY24
CY25
FY26 FY25
FY15
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
FY26 FY21 FY22 FY23 FY24 FY25 FY17 FY18 FY19 FY20
FY16
Link to Risk 1
Link to Risk 1 4 5 7 8
Link to Risk 2 5 8 10 11 13
Link to Risk 1
Link to KSI A B E F
Link to KSI A
Link to KSI B C D E F
Link to KSI F
2 10 12
2 10 12
12
13
discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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