NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2026
24. Reconciliation of cash flows from operating activities
25. Provisions
2026 £m
2025 £m
Retirement and severance indemnity £m
Profit for the year
29.0
24.6
Dilapidation £m
Other £m
Total £m
7.1 9.1 5.1
Tax expense
7.4
Net finance costs
10.4
At 1 April 2024
2.1
3.3 0.2
3.4
8.8 2.3 0.8
Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets – other Loss on disposal of property, plant and equipment
4.5 7.3
Arising during the year
0.5 0.6
1.6
7.4
Arising from business combinations
– – –
0.2
16.6
16.6
Utilised/released
(0.6) (0.1)
(2.2)
(2.8) (0.1)
0.1
–
Exchange difference
–
–
Loss on disposal of intangible assets
0.1 0.1
At 31 March 2025
2.5 1.0
3.5 0.2
3.0 0.5
9.0
(1.0) (1.0)
Change in provisions
Arising during the year
1.7
Pension scheme funding IAS 19 pension charge Gain on disposal of business
(2.3)
Utilised/released At 31 March 2026
(1.1)
–
(1.5)
(2.6)
0.9
0.7
2.4
3.7
2.0
8.1
–
(2.1)
1.4
Impact of equity-settled share-based payment expense and associated taxes
2.0
2026 £m
2025 £m
Operating cash flows before changes in working capital
74.7
69.3
Analysis of total provisions:
(0.2) (10.3)
(Increase)/Decrease in inventories
5.4 5.8
3.8 4.3
Current
5.0 4.0 9.0
(Increase)/Decrease in trade and other receivables Increase/(Decrease) in trade and other payables
Non-current
3.0
(10.0)
8.1
(7.5)
Changes in working capital
1.2
Cash generated from operations
67.2
70.5 (12.5)
The retirement indemnity provision of £2.3m (2025: £2.4m), relates to retirement and leaving indemnity schemes in Sri Lanka £1.0m (2025: £0.9m), India £0.5m (2025: £0.6m), France £0.1m (2025: £0.2m), Germany £0.6m (2025: £0.6m) and Denmark £0.1m (2025: £0.1m). The schemes are unfunded. The service cost, representing deferred salaries accruing to employees, is included as an operating expense and determined by reference to local laws and actuarial assumptions where applicable. The key actuarial assumptions used in relation to valuation of the Sri Lankan scheme comprise mortality rates, staff turnover (12% up to age of 54 and zero thereafter) (2025: 16% up to the age of 54 and zero thereafter), retirement age (60 years) (2025: 60 years), discount rate (9.5% p.a.) (2025: 11% p.a.) and salary increases (9% p.a.) (2025: 9% p.a.). The severance provision of £0.1m (2025: £0.1m) relates to severance costs payable to employees. The dilapidation provision of £3.7m (2025: £3.5m) relates to exit costs to be incurred at the end of leasehold contracts for properties within the Group. Other provisions relates primarily to warranty provisions £1.0m (2025: £0.9m), restructuring provisions of £0.4m (2025: £1.3m) and other provisions of £0.6m (2025: £0.8m). The provisions greater than one year are expected to be utilised within one to three years.
(9.9) (1.3) (10.7)
Interest paid
Interest paid on lease liabilities
(1.0)
Income taxes paid
(10.6) 46.4
Net cash flow from operating activities
45.3
2026 £m
2025 £m
Net cash flow from operating activities
45.3
46.4
1.8
Working capital Gain on disposal
1.0 2.1
–
(6.6) (6.6)
Payment of lease liabilities
(6.5) (6.1)
Capital expenditure Interest received
2.7
3.5
26. Financial risk management Management of financial risk
Free cash flow
36.6
40.4
The main financial risks faced by the Group are credit risk, liquidity risk and market risk, which include interest rate risk and currency risk. The Board regularly reviews these risks and has approved written policies covering the use of financial instruments to manage these risks. The Group Finance Director retains the overall responsibility and management of financial risk for the Group. Most of the Group’s financing and interest rate and foreign currency risk management is carried out centrally at Group head office. The Board approves policies and procedures setting out permissible funding and hedging instruments, exposure limits and a system of authorities for the approval of transactions. Management of interest rate risk The Group has exposure to interest rate risk arising principally from changes in Euro, Sterling and US Dollar interest rates. The Group does not have any hedges in place at the year-end against exposure to interest rate risk. A 1% decrease in interest rates on the Group's debt position during the year ended 31 March 2026, would have increased the Group’s profit before tax by approximately £1.2m (2025: £1.3m).
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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