STRATEGIC AND OPERATIONAL REVIEW CONTINUED
Acquisitions The market is highly fragmented with many opportunities to acquire. Currently, the Group’s pipeline consists of around 250 potential targets, of which a number are in the active outreach phase and live deal negotiation at any time. The businesses we acquire are typically led by entrepreneurs who wish to remain with the business for a period following acquisition. We encourage this as it enables integration and helps retain a dynamic, decentralised and entrepreneurial culture. We acquire high-quality businesses with good growth prospects and attractive operating margins. We invest in these businesses for growth and operational performance development. According to the circumstances, we add value in some or all of the following areas: Strategy and operations: ■ Creating a long-term strategy for growth with operational leverage ■ Grouping businesses into clusters ■ Generating operational efficiencies ■ Internationalising sales channels ■ Accelerating organic growth by focusing sales development onto target market areas and expanding the customer base, including through cross-selling ■ Developing the product range People: ■ Investing in management capability ■ Enabling peer networking and collaboration ■ Increasing diversity ■ Succession planning Investment: ■ Capital investment in manufacturing and infrastructure ■ Internationalising operations ■ Expansion through further acquisitions ■ Upgrading systems, including IT Controls and support: ■ Implementing robust financial measurement, KPIs and controls ■ Finance and related support, such as treasury, banking, legal, tax and insurance ■ Risk management and internal audit Sustainability: ■ Aligning sustainability strategies with those of the Group ■ Creating carbon emission reduction plans ■ Inclusion in the Group’s SBTi-aligned net-zero carbon emission reduction programme ■ Providing training and development
Magnetics & Controls Division (“M&C”) The M&C division designs, manufactures and supplies highly differentiated magnetic and power components, and embedded computing and interface controls for industrial applications. This division operates across 16 countries through two operating units, Magnetics and Controls. The Magnetics operating unit (“Magnetics”) comprises our magnetic cluster of Noratel, Shape, Myrra and Flux. The Controls operating unit (“Controls”) comprises our cluster of embedded computing and interface controls businesses (Beacon, Hectronic and DTI), our human-machine interface (“HMI”) cluster (Cursor Controls and Storm) and two business platforms (Sens-Tech & Vertec). Almost all products are manufactured in-house, with the division’s principal facilities being in China, India, Mexico, Poland, Sri Lanka, Thailand, the UK and the US. Geographically, 5% of sales by destination are in the UK, 50% in the rest of Europe, 25% in North America and 20% in Asia. During the year, Flux, our high-reliability magnetics business, expanded its manufacturing capacity in Thailand, while Noratel, our power magnetics business, commenced construction of a new, larger facility in Bangalore to replace its existing facility (due to complete in the first half of the new financial year). In December 2025, the Group completed the acquisition of Keymat Technology Ltd, a UK-based designer and manufacturer of differentiated assistive HMI products, into the division, to sit alongside our existing Cursor Controls business. Keymat trades under the name Storm Interface (“Storm”). Orders in the year increased by 12% CER and by 11% organically to £274.8m (FY 2024/25: £246.0m CER) with a book-to-bill ratio of 1.03 driven by strong order growth in both Magnetics and Controls. Sales increased by 2% CER and organically, with good growth in Magnetics being partly offset by destocking in Controls which has now worked through with sales in Controls returning to growth in the final quarter. By territory, Europe (including the UK) and Asia grew by 3% offset by North America down 2%. With little FX impact this year, reported divisional revenue also increased by 2% to £267.0m (FY 2024/25: £260.8m reported). Adjusted operating profit of £41.7m was £1.0m (-2%) lower than last year at CER and £1.3m (-3%) lower on a reported basis (FY 2024/25: £43.0m) reflecting good organic sales growth in the lower margin Magnetics unit offset by sales reductions in the higher margin Controls unit. This mix effect also impacted adjusted operating margin which at 15.6% was 0.8ppts lower at CER than last year and 0.9ppts lower on a reported basis (FY 2024/25: 16.5%). Sensing & Connectivity Division (“S&C”) The S&C division designs, manufactures and supplies highly differentiated sensing and connectivity components for industrial applications. This division operates across ten countries through two operating units, Sensing and Connectivity. The Sensing operating unit (“Sensing”) comprises our sensing cluster of Variohm, Burster,
The Group has acquired 30 design and manufacturing businesses over the last 15 years, with the Group’s continuing revenues increasing to £443m in FY 2025/26 from £10m in FY 2009/10. By taking a long-term approach to generating compounding growth, the Group has generated substantial value. The Group’s consistent returns reflect an evolving balance between the strong and growing ROCE of those businesses acquired earlier supporting the lower initial ROCE of those acquired more recently as they grow into delivery of their targets. With plans in place in each business, as growth returns following the end of the extended industry destocking, we fully expect returns in all businesses to increase. In December 2025, the Group acquired Keymat Technology Ltd trading under the name Storm Interface (“Storm”), a UK-based designer and manufacturer of differentiated assistive HMI electronic products, primarily tactile and audible content navigation devices for the visually impaired, for sale in the UK, EU and US. The need for such products is driven by the roll out of legislation in Europe, UK and North America that requires assistive interfaces in consumer facing electronic equipment. Storm was acquired into the Controls operating unit in our M&C division alongside our existing Cursor Controls business, for an initial cash consideration of £5.5m on a debt free, cash free basis together with an earn-out of up to £2.2m payable subject to Storm’s performance up to 31 March 2026. A full pay out is expected to be made. In April 2026, following receipt of regulatory approvals, the Group completed the acquisition of Trival Antene d.o.o. (“Trival”), a Slovenian-based designer and manufacturer of communication antennas and masts for defence applications, for an initial cash consideration of €45.5m (£39.9m) on a debt free, cash free basis, before expenses. In addition, deferred consideration of up to €1.65m (£1.45m) will be payable subject to certain conditions twelve months from completion and an earn-out of up to €5.5m (£4.8m) will be payable subject to Trival achieving certain growth and performance conditions in the period up to 31 March 2028. Trival’s antennas are used in land-based defence applications such as handheld, mobile and fixed radio communications systems and are sold internationally into c.70 countries. Trival has a strong track record of revenue growth and is accretive to both adjusted earnings and adjusted operating margin. Trival has become part of our Connectivity operating unit within the S&C division alongside our two RF businesses, 2J and Antenova. Since the year end, we have announced the acquisition, subject to regulatory approval, of 90% of 3Gmetalworx (“3G”), a North American designer and manufacturer of electromagnetic shielding and thermal management products, for a cash consideration of $67.5m (£49.6m) on a debt free, cash free basis. Ongoing management will continue to hold 10% of 3G. These management shares will be subject to a put / call option exercisable between the third and fifth anniversary of the date of completion. Once exercised, the Group will own 100% of the business.
CPI, Limitor, Magnasphere, Phoenix and Positek. The Connectivity operating unit (“Connectivity”) comprises the RF & Wireless cluster (2J, Antenova and Trival from April 2026), the Components cluster (Contour, Stortech and CDT), the Fibre Communications cluster (Foss and IKN) and four business platforms (MTC, Santon, Silvertel and Hivolt). Almost all products are manufactured in-house, with the division’s principal facilities being in Hungary, the Netherlands, Norway, Slovakia, the UK and the US. Geographically, 18% of sales by destination are in the UK, 54% in the rest of Europe, 20% in North America and 8% in Asia. During the year, we completed the merger of two of our UK Components businesses, Contour and Stortech, into one site. Additionally, our MTC electromagnetic shielding business expanded its manufacturing capacity in South Korea. Since the year-end, the Group has completed the acquisition of Trival Antene d.o.o. (“Trival”), a Slovenian-based designer and manufacturer of communication antennas for defence applications, into the Connectivity operating unit, and announced the acquisition of 3G. Divisional orders in the year reduced by 4% organically to £173.0m against a strong prior year comparator, with a return to growth in the second half (H1: -10%; H2: +2%). Including the Burster acquisition last year, orders were up 4% CER with a book-to-bill ratio for the year of 0.98 with good improvement in the second half (H1: 0.92; H2: 1.04). The reduction in orders came mainly in Transportation and Medical (following strong growth last year) partly offset by other markets which were broadly flat. Divisional sales increased by 2% organically, with sales in North America increasing by 4%, Europe (including the UK) increasing by 2% and Asia broadly flat. Combined with a 6% sales contribution from the Burster acquisition, overall divisional sales increased by 8% CER. With little Sterling translation impact this year, reported divisional revenue increased by 9% to £176.3m (FY 2024/25: £162.1m reported and £162.5m at CER). Adjusted operating profit of £31.4m was £2.0m (+7%) higher than last year at CER and £2.1m (+7%) higher on a reported basis (FY 2024/25: £29.3m). The adjusted operating margin of 17.8% was 0.3ppts lower than last year (FY 2024/25: 18.1%). Strong bank of design wins will drive future recurring revenues The Group has a strong bank of design wins, forming the basis of the Group’s through-cycle organic growth. During the year, new opportunities and design wins were ahead of last year, building on the bank of previously registered wins that are commencing production. Over the last eighteen months, conversion of design wins into revenue was delayed in some areas due to customers’ inventory destocking activities. This has now generally completed and we are starting to see new revenue and growth. New project design activity remains at a high level, being broad-based and across all our markets. The total pipeline of ongoing projects continues to be very strong.
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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