VIABILITY STATEMENT CONTINUED
NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT
Banking facilities and headroom The Group has a syndicated banking facility of £240m, which is committed up to the end of May 2030, with the option to extend until May 2032. In addition, the Group has an £80m accordion facility, which it can use to extend the total facility up to £320m, subject to bank approval. The syndicated facility is available both for acquisitions and for working capital purposes. The Group’s financial covenants for its banking facility are 1. Gearing: Net debt to Facility EBITDA (being Adjusted EBITDA plus the annualisation of acquisitions), of less than 3.5x and 2. Interest cover: Adjusted EBITDA to interest (excluding IFRS16 interest and amortisation of upfront costs) greater than 4.0x. At 31 March 2026, the Group had net debt of £80.5m and was significantly inside these covenants with gearing of 1.2x and interest cover of 9.6x. The Viability Base Case model shows increasing headroom with annually reducing levels of net debt and gearing, and increasing interest cover compared with the position at 31 March 2026. Downside sensitivities The Viability Base Case has been subjected to downside sensitivity analysis involving flexing a number of the underlying main assumptions, both individually and in conjunction. The sensitivities take into account the principal risks and uncertainties set out on pages 79 to 84, notably instability in the economic environment, underperformance of acquired businesses, climate-related risks, loss of key customers and suppliers, major business disruption, liquidity restriction, debt covenants, interest rate increases, the continued impact of US tariffs and counter tariffs, the ongoing impact of the Middle East conflict and adverse foreign currency movements. The most severe but plausible downside scenario assumes a worsening of the economic environment caused by a number of factors including geo-political events and significant reduction in customer demand due to continuing inflationary pressures and elevated interest rates. This downside scenario results in a significant decline in the second half sales of FY 2026/27, with FY 2027/28 sales flat on the reduced FY 2026/27 level, and modest growth in FY 2028/29. Additionally, gross margin was reduced, working capital materially increased, significant one-off expenditures included (product quality and liability, major customer insolvency or litigation, irrecoverable customer debt, climate change, cyber-security incident, inventory and technology obsolescence), interest rates increased and the Group effective tax rate increased.
In accordance with sections 414CA and 414CB of the Companies Act 2006, we set out below where the relevant non-financial information we need to report against can be found in this Annual Report:
After factoring in these significant additional downsides to the Viability Base Case, there remains good headroom both in terms of liquidity and our debt covenants. This is supported by the fact that the Group sells a wide portfolio of different products across a diverse set of industries and geographies, has low customer / supplier concentration, a global supply chain network, diverse manufacturing capacity, and has well-established relationships with its customers. These factors are considered important in mitigating many of the risks that could affect the long-term viability of the Group. Reverse testing has also been applied to the most plausible downside scenario to determine the level of additional downside that would be required before the Group would breach its debt covenants or current liquidity headroom during the assessment period. The reverse stress test was conducted on the basis that certain mitigating actions would be undertaken to reduce overheads and capital expenditure during the period as sales declined and, on that basis, a fall in adjusted operating margin to below 6.3% in FY 2026/27 would be required before such a breach occurred. The Board considers the possibility of such a scenario to be remote and further mitigation, such as hiring freezes, pay and bonus reductions, headcount reductions, reduction in planned capital expenditure, equity raises and suspension of dividend payments, would be available if future trading conditions indicated that such an outcome were possible. The Strategic Report on pages 01 to 87 sets out the key details of the Group’s financial performance, capital management, business environment and principal risks and uncertainties. Based on the Directors’ assessment, the Board has a reasonable expectation that, taking into account the Group’s current position, having regard to the committed borrowing facilities available to the Company, and subject to the principal risks and uncertainties faced by the business as documented on pages 79 to 84 of the Strategic Report, the Group will be able to continue in operation and to meet its liabilities as they fall due for the three-year period of their assessment. Going concern Based on the assessment outlined above, the Directors also believe that it is appropriate to continue to adopt the going concern basis in preparing the Group financial statements for a period of at least, but not limited to, 12 months from the date of approval of the Group financial statements.
Environmental matters
■ Please see our Sustainability Report on pages 42 to 73. ■ Our Climate Analysis Report is on pages 57 to 73, including a detailed discussion of climate-related risks and opportunities on pages 60 to 66. ■ Please see pages 74 to 78 for our general approach to risk management and pages 44 to 45, and 58 to 59 for a summary of our governance framework relating to sustainability matters and climate-related risks in particular. These governance arrangements fit within our broader governance framework, which can be seen in our Corporate Governance Report on pages 90 to 102. ■ Please see pages 52 to 54 (Our People), page 38 (Our people engagement), page 40 (Section 172 statement) and pages 92 to 95 (Employee engagement).
Employee matters
Social matters
■ Please see pages 38 to 39 and 52 to 54.
Human rights
■ Please see pages 45 to 52, 54 and 91 to 95.
Anti-bribery and corruption matters
■ Please see page 45 (Anti-Bribery & Corruption Policy and Whistleblowing Policy). ■ Please also see pages 39, 90 and 95 to 96. ■ Please see pages 16 to 17 for our Business Model. ■ Please see pages 18 to 23 for our target markets, pages 10 to 13 for a summary of our strategy and pages 08 to 09 for a summary of the Group.
Business model
– Group Tax Strategy – Board Diversity Policy – Supplier Code of Conduct
Policies
■ The following codes, policies and standards can be found on our Group website (www.discoverIEplc.com): – Sustainability Policy – Whistleblowing Policy – Business Ethics Policy – Anti-Bribery & Corruption Policy – Modern Slavery Statement
– Conflict Minerals Policy – Environmental Policy – Human Rights Policy – Stakeholder Engagement Policy
Outcome of policies
■ The above policies contribute to the overall governance framework of the Group, providing common standards that operating companies and suppliers must observe. ■ The Group has a proven, flexible and resilient business model, as demonstrated by its strong financial performance over several years. These are underpinned by the Group’s governance arrangements in general, including the Policies summarised above. ■ The Group has good relations with its various stakeholders, including staff, customers and suppliers. The above Policies help support those relations. ■ Where principal risks have been identified in relation to any of the matters listed above, these can be found on pages 79 to 84.
Principal risks
Non-financial KPIs
■ Our non-financial key performance indicators are set out on pages 56 and 71.
The Strategic Report, as set out on pages 01 to 87, has been approved by the Board.
On behalf of the Board
Nick Jefferies
Simon Gibbins
Group Chief Executive
Group Finance Director
2 June 2026
2 June 2026
86
87
discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
Made with FlippingBook - professional solution for displaying marketing and sales documents online