NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2026
15. Leases continued
The carrying value of goodwill is analysed as follows: 17. Impairment testing of goodwill continued
15.4 Amounts recognised in the consolidated Statement of Profit or Loss
2026 £m
2025 £m
2025 (restated) 1 £m
2026 £m 39.5 81.7 121.2 46.0 82.0 128.0 249.2
7.4
Depreciation of right-of-use assets
7.3 1.0 8.3
Magnetics
38.2 79.7 117.9 45.6
1.3
Interest expense (included in finance costs)
Controls
8.7
Magnetics & Controls
During the year ended 31 March 2026, a total of £0.2m was recognised in the consolidated Statement of Profit or Loss relating to payments under short-term and low-value leases (2025: £0.1m). 15.5 Extension and termination options Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. Extension and termination options which are reasonably certain not to be exercised are considered in the measurement of the lease liability and right-of-use asset. There are no lease contracts in place as at 31 March 2026 which include variable lease payments (2025: none). 16. Intangible assets – goodwill
Sensing
Connectivity
80.7 126.3 244.2
Sensing & Connectivity
Total
1 During the year, to enhance alignment and commonality across our businesses, one business was reclassified from M&C to S&C and one business from S&C to M&C. Prior year figures have been restated to reflect these reclassifications. There is no impact to the Group position. The movement in goodwill compared to prior year relates mainly to the movement in foreign exchange rates and to Storm Interface which was acquired in the year into the Magnetics & Controls division (note 11). The recoverable amount of each operating unit is based on value-in-use calculations. The key assumptions used in these calculations relate to future revenue growth (being the five-year sales Compound Annual Growth Rate – “CAGR”), discount rates and long-term growth rates beyond the first five years. Cash flow forecasts for the five-year period from the reporting date are based on the FY 2026/27 Board approved budget and management projections thereon, which are based on historical experience and market outlook. Cash flow projections included in the impairment review models include management’s view of the impact of climate change, including costs related to the effects of climate change, as well as the future costs of the Group’s commitment to achieve net-zero Scope 1 and 2 carbon emissions by 2030. A long-term growth rate (“LTGR”) beyond the five-year period of 2% has been applied consistently in the value-in-use calculations (2025: 2%) and is based on the average long-term inflation targets. Discount rates reflect the current market assessment of the risks specific to each of the four sub-divisions and were estimated based on the average percentage weighted average cost of capital for the industry and then further adjusted for country-specific risk. The table below discloses the discount rates and growth rates:
Cost
£m
At 1 April 2024
233.4
Business acquired (note 11)
15.5
Disposal
(1.7) (3.0)
Exchange adjustments
At 31 March 2025
244.2
Business acquired (note 11) Exchange adjustments
2.9
2.1
At 31 March 2026
249.2
Impairment
£m
At 31 March 2025 and 31 March 2026
–
Net book value at 31 March 2026 Net book value at 31 March 2025
249.2 244.2
Pre-tax discount rate
5-year sales CAGR
2025 (restated) %
2025 (restated) %
17. Impairment testing of goodwill The Group’s operations are organised into two distinct divisions, Magnetics & Controls (“M&C”) and Sensing & Connectivity (“S&C”). Each of these divisions comprises two operating units. Within each operating unit are aggregated business units (“CGUs”) that share similar characteristics such as the nature of customers, products, risk profile and economic characteristics. With the increased number of acquisitions and the anticipated synergies across the Group’s businesses in particular within an operating unit, the Group's management has transitioned from monitoring individual CGUs separately to aggregating the performance outputs of each of the four operating units. This approach is adopted to facilitate the assessment of performance, resource allocation and strategic decision-making. The Group’s management has determined that the lowest level within the Group at which the goodwill is monitored for internal management purposes consists of the operating units, each comprising a number of CGUs. Therefore, according to IAS 36.82, goodwill is tested for impairment at the level that reflects the way the Group manages its operations and with which the goodwill would naturally be associated.
2026 %
2026 %
14.2 12.5 12.5 12.6
6.1 7.5 9.0
Magnetics
14.2 12.5 12.6 12.5
5.5 8.3 6.7
Controls Sensing
Connectivity 7.4 The pre-tax discount rate and the 5-year CAGR for the prior year have been restated and are now calculated on a weighted average basis for the Group of CGUs included in each operating unit, in line with current year. Sensitivity to changes in assumptions 10.2 The Group’s forecast is based on a range of assumptions to determine the value of expected future cash flows. Deviations against those plans and assumptions in terms of revenue and margin projections, operating and capital costs and successful achievement of strategic objectives are all inherently uncertain. Headroom in the impairment test for each of the four operating units has been tested for sensitivity to reasonably possible adverse changes in forecast cash flows, discount rates and long-term growth rates. Adequate headroom is available against material impairment risk.
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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