Discoverie Group Plc · LSE:DSCV
Discoverie — Investor Presentation (December 2021)
31 slides from Discoverie's investor presentation, December 2021
Slide 1: Investor presentation December 2021
Investor presentation December 2021 discoverIE Group plc December 2021
Slide 2: Introduction to discoverIE
Introduction to discoverIE ◼ International specialist electronic engineering firm ◼ Designing and manufacturing customised electronic components ◼ Highly differentiated products ◼ Supplying Original Equipment Manufacturers (OEMs) ◼ Essential products, repeating revenue ◼ Sustainable growth markets ◼
Slide 3: Sustainable growth Company, resilient in tough conditions
Sustainable growth Company, resilient in tough conditions We aim to provide investors with ◼ Returns of 15 – 20% pa +23% CAGR(1) ◼ A progressive dividend +6% CAGR(1) Since FY18 our aim has been to double underlying EPS in 5 years again ◼ FY19 + FY20 op profits up 78% (3) ◼ FY19 + FY20 EPS up 62% ◼ C
Slide 4: Our business
Our business Business fundamentals Attractive rewards ▪ Growth markets ▪ GDP++ organic growth ▪ Designed-in products, difficult to replace ▪ High levels of repeating revenue ▪ Distinct business, competitive advantage ▪ Sustainable margins ▪ Low customer concentration ▪ Reduced risk ▪ Design, not pri
Slide 5: Consistent, proven strategy
Consistent, proven strategy ◼ Sales growth well ahead of GDP over the economic cycle ◼ Move up the value chain into higher margin products ◼ Acquire businesses with attractive growth prospects and strong operating margins ◼ Further internationalise the business ◼ Generate strong cash flows and long
Slide 6: Focused on delivering key targets
Focused on delivering key targets Key Strategic Indicators Prior FY25 Revised FY25 FY14 FY15 FY16 FY17 FY18 FY19 H1 20 H1 22 Targets Targets 1. Increase share of Group revenue from D&M (1) 18% 37% 48% 52% 57% 61% 63% 100% >75% 100% 2. Increase underlying operating margin 3.4% 4.9% 5.7% 5.9% 6.3% 7.0
Slide 7: Focused on sustainable growth markets
▪ Global trends driving structural growth FOCUSED ON ▪ Product development driven by technology SUSTAINABLE ▪ Increasing electronic content GROWTH MARKETS ▪ Essential products ▪ Markets aligned with UNGC SDGs(1) Renewable Transportation Medical Industrial & Energy Connectivity Artificial Connectivit
Slide 8: ESG progress
STRATEGY UPDATE ESG progress TARGET: 50% carbon reduction(1) by 2025 Action Plan Progress to date Environmental ◼ Switching to renewable ◼ Two of our largest sites (in Poland) have electricity sources switched to renewable energy sources ◼ Installing renewable ◼ Sri Lanka solar panel project phase 1
Slide 9: Design & Manufacturing division
Design & Manufacturing division ▪ 9%1 Organic CAGR over last 4 years REVENUE BY REGION ▪ 77% in faster growing target markets UK ▪ 14%2 operating margin 10% Asia 23% Germany ▪ 19 acquisitions completed since 2011 12% ▪ Increasing specialist capability and international reach ▪ Capital light model wi
Slide 10: Strong cash flow and returns
Strong cash flow and returns Operating & ◼ Strong growth in operating & free cash flow (LTM) free cash flows ◼ Consistently high conversion rate ◼ Aiming to be self sufficient in funding over time ◼ High quality acquisitions over 11 years ◼ £360m invested in 19 D&M acquisitions, £190m new equity ◼ G
Slide 11: Acquisition case study – Noratel Group
Acquisition case study – Noratel Group ◼ Acquired July 2014 Noratel FY15-21 ◼ Products – Power Transformers Revenue growth 7% CAGR ◼ Developments since acquisition: Operating margin 10% → 14% ◼ Developed long term strategic plan ROCE 12% → 24% ◼ Organic growth in target markets ◼ Upscaled production
Slide 12: Latest trading, financing & dividends
Latest trading, financing & dividends ◼ Half Year Results Latest recommendations (1) ◼ Strong organic orders & sales growth v last year Latest Rec Date (+64% & +15%) and v pre covid period 2yrs ago (+34% & +8%). Peel Hunt 1,200p Buy Dec-21 ◼ Sale of Acal BFi for £50m concludes exit from Berenberg 1,
Slide 13: Appendix: Board, GEC & History
APPENDIX Board, GEC & History
Slide 14: Board of Directors
Board of Directors Malcolm Diamond MBE - Chairman Bruce Thompson – Senior Non-Executive Director Malcolm was appointed a Non-Executive Director in November 2015 and Bruce joined the Board as a Non-Executive Director in February 2018. He became Chairman in April 2017. Malcolm was previously Chief Exe
Slide 15: Group Executive Management
Group Executive Management Nick Jefferies – Group Chief Executive* Simon Gibbins – Group Finance Director* Nick was appointed Group Chief Executive in January 2009. His Simon was appointed as Group Finance Director in July 2010. A Chartered experience of electronics and the components industry comes
Slide 16: History since incorporation
History since incorporation BFi Optilas Compotron, Myrra, YEG & Variohm Cursor Beacon Incorporation Hectronic & Noratel Flux Sens-Tech Limitor (£59m) & SAS RSG Holdings Controls MTC (£71m) (£3m) (£58m) (£13m) Antenova (£13m) (total £9m) (total £13m) (£12m) (£19m) (£18m) Admission to the official lis
Slide 17: Appendix: Sales model and customers
APPENDIX Sales model and customers
Slide 18: Our engineering led sales model
Our engineering led sales model ▪ Customer needs ▪ Helping customers solve their technical challenges to create more efficient, productive and sustainable equipment and comply with increasingly stringent environmental, health, safety and performance requirements. ▪ Enduring customer relationships ▪
Slide 19: Our customers
Our customers discoverIE Group plc December 2021 19
Slide 20: Appendix: Target Markets
APPENDIX Target Markets
Slide 21: Essential products into growth markets
Essential products into growth markets Technology discoverIE Mega trends Market drivers integration solutions Decarbonisation ◼ Geopolitical consensus ◼ Increasing scale of wind ◼ Power inductors ◼ Growing public awareness turbines ◼ Turbine blade pitch & Diversification ◼ Legislative and regulatory
Slide 22: Renewable Energy
Renewable Energy Applications Airflow, temperature and pressure switches Wind measurement and pitch controller Turbine power converters and inductors High voltage, high current DC and AC switches Power supply for pitch controller discoverIE Group plc December 2021 22
Slide 23: Medical
Medical Applications Embedded computers and displays Foot switches to control the height and position of the operating table Cabling and connectors for medical equipment Toroidal isolation transformers used in C-Arm X-ray machines and X-ray generators Power isolator and protection for operating thea
Slide 24: Transportation
Transportation Applications Rail carriage door controls and connectors Driver desk indicators and controls, speedometer and monitors Vehicle electrification charging infrastructure Drum switches and connectors Transformers and inductors, smaller battery solutions for in-train power discoverIE Group
Slide 25: Industrial & Connectivity
Industrial & Connectivity Applications Power unit for satellite propulsion Wireless communications for industrial metering Telematics for remote control of industrial equipment Power & signal electronics for industrial drive unit Position sensor for extensometers Fibre optic switching module for tes
Slide 26: Case study: Our unique solutions for Renewable energy
Case study: Our unique solutions for Renewable energy ▪ Strong and trusted customer relationships across supply chain ▪ Providing innovation-led, bespoke solutions to essential customer requirements ▪ Multi-year design cycles provide strong visibility & recurring revenues ▪ Complementary technologie
Slide 27: Appendix: Sustainability in action
APPENDIX Sustainability in action
Slide 28: Our planet, Our people, Our products
Our planet, Our people, Our products Environmental, Social & Governance (ESG) priorities for a better world Environment Health & Safety Diversity Governance Tonnes CO2/£m turnover Accidents per employee Gender split Internal audit covers 80% Head office staff Group EBIT & 67% Group 22.91 64% Stock o
Slide 29: Sustainability in action: Electrification of Transportation
Sustainability in action Advancing the Electrification of Transportation discoverIE Group plc December 2021 29
Slide 30: Sustainability in action: Quality of life and care
Sustainability in action Enhancing the Quality of life and care for people discoverIE Group plc December 2021 30
Slide 31: END
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