STRATEGIC AND OPERATIONAL REVIEW CONTINUED
For tracking purposes, the KSIs in the table below remain as reported at the time rather than adjusted for disposals. Targets are for the medium-term unless stated, defined as being around five years. This year’s performance relative to last year is discussed below.
Key Strategic Indicators FY18 1
FY19 1
FY20 1
FY21 FY22 FY23 FY24 FY25 FY26 Targets
1. Increased adjusted operating margin
13.8%
6.3% 7.0% 8.0% 10.2% 10.9% 11.5% 13.1% 14.3%
17% 2
2. Sales growth: CER
5% 2% 4%
11% 14% 8% -1% 28% 15% 1% -2% 11% 10% 5% -4% 18% 10% -1% -7% 16% 22% 11% -8% 31% 20% 5% 5%
Well ahead of GDP thru cycle
Organic
3. Adjusted EPS growth 4. Adjusted operating cash conversion 3
>10%
>85% of adjusted operating profit >85% of adjusted earnings
91%
85% 93% 106% 128% 80% 94% 103% 103%
92%
5. Free cash conversion 3
78% 94% 104% 136% 77% 95% 102% 106% 13.7% 15.4% 16.0% 14.5% 14.7% 15.9% 15.7% 15.8%
15.2%
>15%
6. ROCE 3
7. Carbon emissions reduction 4
68%
35% 47% 59%
Net-zero 5
1 Results for FY 2017/18 to FY 2019/20 are for total operations before disposals as reported at the time. 2 By FY 2029/30. 3 Defined in note 6 of the Group consolidated Financial Statements. 4 Carbon emissions are measured on a calendar year basis (e.g. CY2022 shown as FY 2022/23) with emission reduction shown since CY2021. 5 Net-zero Scope 1 and 2 by CY2030 and net-zero with Scope 3 by 2040.
Divisional results The divisional results for the Group for the year ended 31 March 2026 are set out and reviewed below. During the first half this year, the Sens-Tech business was reclassified from S&C to M&C and our Silvertel business was reclassified from M&C to S&C, so as to better align operational similarities. Comparatives have been restated accordingly.
The Group made further progress on its KSIs during the year: ■ Adjusted operating margin was 13.8%, a reduction of 0.4ppts CER on last year. This reduction followed increased operational investment during the year in engineering and sales capacity in the US and Europe, and additional manufacturing capacity in Asia to support future growth. On an annualised basis and including recent high margin acquisitions, the adjusted operating margin is ahead of last year and accordingly, we remain on track for our 17% margin target by FY2029/30. Since FY14, adjusted operating margin has increased by 10ppts with approximately half coming from organic growth and efficiencies, and half from higher margin acquisitions. Going forward, acquisitions are expected to account for around two-thirds of margin improvement. ■ Sales increased this year by 5% CER and by 2% organically as customers’ inventories returned to appropriate levels and normal ordering patterns resumed. Sales improved through the year culminating in 5% organic growth in the final quarter. The average full year organic growth in three of our four operating units was 5%. This was partly offset by the Controls operating unit where certain customers had continued to destock during the year. The trend in Controls also improved through the year with final quarter organic sales back into growth. We remain focused on achieving strong through-cycle organic growth which is supported by our pipeline of design wins. Over the last decade, sales have grown by c.5% CAGR organically.
■ Following a return to organic sales growth and with operational investment to support future growth, adjusted operating profit for the year increased by 1% CER, with adjusted EPS increasing by 4%. In total, the Group has grown its adjusted EPS by 14% CAGR over the last 10 years. ■ Adjusted operating cash flow and free cash flow conversion rates of 91% and 92% continue to be comfortably ahead of our 85% targets. Over the last 10 years, both adjusted operating cash conversion and free cash conversion have been consistently strong, averaging around 100% through-cycle, reflecting low capital expenditure requirements and efficient working capital. ■ ROCE for the year of 15.2% was above our target although slightly below last year (FY 2024/25: 15.8%). 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 we expect will generate high returns over time. For example, our acquisitions made up to FY 2017/18 generated a collective ROCE of 28% this year. We expect this to continue growing and for acquisitions made more recently to grow similarly. ■ Scope 1 & 2 carbon emissions reduced further during the year and in CY 2025 were 68% lower on an absolute basis than in CY 2021, 3ppts better than the 65% reduction target for CY 2025 that we set 4 years ago. Our next target is to achieve net-zero (Scope 1 & 2) by CY 2030.
FY 2025/26 Adjusted operating profit 1
FY 2024/25 3 Adjusted operating profit 1
Reported revenue growth
CER revenue growth
Organic revenue growth
Revenue £m
Revenue £m
£m Margin 2
£m Margin
267.0 176.3
41.7 31.4
15.6% 17.8%
M&C 3 (CER) S&C 3 (CER) Unallocated Total (CER)
260.8 162.5
42.7 29.4 (11.8)
16.4% 18.1%
+2% +2% +2% +9% +8% +2%
(12.1) 61.0
443.3
13.8%
423.3
60.3
14.2%
+5% +2%
FX
(0.4)
0.2
443.3
61.0
13.8%
Total
422.9
60.5
14.3%
+5%
1 Adjusted operating profit excludes acquisition and disposal-related costs 2 Margin refers to adjusted operating margin 3 Two businesses were transferred between M&C and S&C so prior year divisional results have been restated (see note 5 of the Group consolidated Financial Statements). There was no impact to the Group results.
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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