DISCOVERIE GROUP PLC

discoverIE Group plc

Annual Report and Accounts

for the year ended 31 March 2025

discoverIE Group plc Annual Report and Accounts for the year ended 31 March 2025

Enabling

technology for

a sustainable

world

Grow our

presence

in custom

electronics

P10

How we create

positive impact

P42

A sustainable

and scalable

business model

P14

Strategically

aligned with

sustainable

growth markets

P16

We are the partner of choice for our markets, designing and building customised, niche

solutions to empower global industry.

Scan the QR code to

visit our corporate

website for more

information

Scan the QR

code to read

our 2025

Impact Report

discoverIE Group plc Innovative Electronics

WELCOME TO THE 2025

ANNUAL REPORT

Enabling technology for a sustainable world -

greener, more connected and secure.

Technology is reshaping the

way we generate power, move,

communicate, and secure

our infrastructure, and it is

transforming industries and

everyday life. At the foundation

of these changes lies something

essential – specialised, high-

performance electronics that

enable progress. These are not just

innovations, they are the critical

components that keep the world

connected, secure and sustainable.

That’s where we come in.

discoverIE is a leading international

designer and manufacturer of

niche, customised electronics

for industrial applications. We

create innovative electronics that

deliver value to our customers,

whilst making positive impacts

on the environment, society and

people’s lives.

OUR PURPOSE To create innovative electronics that help

improve the world and people’s lives

OUR VISION To be a leading global innovator in electronics

OUR MISSION To design and manufacture innovative

electronics that help our customers create ever-

better technical solutions around the world.

We aim to achieve this through a motivated,

entrepreneurial and empowered workforce

that adheres to the highest ethical and quality

standards.

LINKED TO THE

UN SDG

Our target markets are aligned with the UN

Sustainable Development Goals (“UN SDGs”)

discoverIE Group plc Innovative Electronics

Financials Key strategic indicators

Highlights

‘Adjusted operating profit’, ‘Adjusted earnings per share (“EPS”)’, ‘Adjusted operating margin’, ‘Adjusted

operating cash flow’, ‘Free cash flow’ and ‘Return on capital employed’ are non-IFRS financial measures

defined in note 6 of the Consolidated Financial Statements.

Carbon emissions are measured on a calendar year basis (e.g. CY2022 shown under FY 2022/23). Our

target is for an absolute Scope 1 & 2 carbon emissions reduction of 65% by CY2025 from a CY2021 base, a

90% Scope 1 & 2 reduction by CY2030 and net-zero across the value chain by CY2040.

GROUP REVENUE ADJUSTED OPERATING

MARGIN

FY25

FY24

FY23

£437.0m

£448.9m

£422.9m

FY25

FY24

FY23

13.1%

11.5%

14.3%

ADJUSTED OPERATING

PROFIT

ADJUSTED OPERATING

CASH FLOW

FY25

FY24

FY23

£57.2m

£51.8m

£60.5m

FY25

FY24

FY23

£59.2m

£48.6m

£62.3m

ADJUSTED EPS

FREE CASH FLOW

FY25

FY24

FY23

36.8p

35.2p

38.7p

FY25

FY24

FY23

£37.0m

£33.0m

£40.4m

REPORTED OPERATING

PROFIT

RETURN ON CAPITAL

EMPLOYED

FY25

FY24

FY23

£31.2m

£34.6m

£42.4m

FY25

FY24

FY23

15.7%

15.9%

15.8%

DIVIDEND PER SHARE CARBON EMISSION

REDUCTIONS

FY25

FY24

FY23

12.0p

11.45p

12.5p

CY24

CY23

CY22

47%

35%

59%

STRATEGIC REPORT

Highlights 01

Chairman’s Statement 02

Group at a Glance 06

Our Strategy 10

Key Strategic Indicators 11

Our Business Model 14

Market Overview 16

Strategic and Operational Review 20

Financial Review 28

Our Engagement with Stakeholders 34

Section 172 Statement 36

Sustainability Report 38

Our Sustainability Strategy 44

Sustainability in Action 48

TCFD Report 53

Risk Management 68

Principal Risks and Uncertainties 73

Viability Statement 79

Non-financial and Sustainability

Information Statement 81

CORPORATE GOVERNANCE

Board of Directors 82

Corporate Governance Report 84

Audit and Risk Committee Report 96

Nomination Committee Report 104

Directors’ Report 106

Directors’ Remuneration Report 110

Statement of Directors’

Responsibilities in Respect of the

Financial Statements 134

FINANCIAL STATEMENTS

Independent Auditor’s Report to the

Members of discoverIE Group plc 136

Consolidated Statement of

Profit or Loss 146

Supplementary Statement of

Profit or Loss Information 146

Consolidated Statement of

Comprehensive Income 147

Consolidated Statement of

Financial Position 148

Consolidated Statement of

Changes in Equity 149

Consolidated Statement of Cash Flows 150

Notes to the Group Consolidated

Financial Statements 151

Company Statement of

Financial Position 206

Company Statement of

Changes in Equity 207

Notes to the Company

Financial Statements 208

ADDITIONAL INFORMATION

Five-Year Record 210

Principal Locations 211

Financial Calendar 2025/26 212

Corporate Information 212

01 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

GROUP REVENUE

£422.9m

(FY 2023/24: £437.0m)

ADJUSTED OPERATING

PROFIT

£60.5m

(FY 2023/24: £57.2m)

ADJUSTED EPS

38.7p

(FY 2023/24: 36.8p)

This year’s results reflect a strong

performance despite broad industrial

destocking. Robust gross margins and

operational efficiencies have driven

further good growth in adjusted

operating profits and margin as well

as adjusted earnings per share. Once

again, the high quality of the Group’s

earnings, along with its capital-

light nature, has delivered excellent

cash flow.

By focusing on structural growth

markets, and avoiding the more

cyclical and consumer-facing markets,

the Group has reduced the impact

on sales from customer destocking

with an improving trend through the

year. The Group continued to make

excellent progress operationally,

generating efficiencies that partly

come from organising our businesses

into clusters, thereby sharing resources

and know-how. These productivity

gains have been supplemented

through further progress on the

acquisition front.

Strategy

The Group’s strategy has remained

consistent for many years and has

delivered sustained and growing

returns for Shareholders. The Group

designs and manufactures high-

quality components which are created

to meet the unique requirements of

each customer, allowing for secure,

long-term revenue streams. Operating

with an international, decentralised

business model allows the Group to

retain an entrepreneurial mindset

close to its customers, reacting quickly

to their needs and operating an

efficient supply-chain. It also enables

the Group to localise manufacturing

in response to customer demand and

global trading conditions. To deliver

consistent, long-term growth we focus

on structurally growing, sustainable

markets driven by increasing

electronic content and where there is

an essential need for our products.

The Group’s established target

markets are industrial automation

& connectivity, medical, renewable

energy and the electrification of

transportation. This year, a fifth target

market was added, the commercial

and defence security market. These

are all global markets, with major

customers that operate internationally

and have a need for the niche

products we create. The addition of

a new target market has increased

our total addressable market to

over $30bn and we see plenty of

opportunity to continue to increase

market share.

Bruce Thompson

Chairman

The Group is building a leading

business that continues to deliver

strong results through the

economic cycle and has again

demonstrated the quality and

resilience of its model.”

discoverIE Group plc Innovative Electronics02

CHAIRMAN’S STATEMENT

Alongside organic growth, acquisitions

are a key factor in the Group’s

compounding growth strategy.

Since 2011, the Group has acquired

28 specialist, value and margin

enhancing, design and manufacturing

businesses which have been

integrated successfully and have

driven further growth. discoverIE has

a disciplined approach to acquisitions

and continues to see opportunities

to grow inorganically in a highly

fragmented market with a strong

pipeline in development.

The Group’s capital-light model

generates strong cash flows

which management reinvests into

accelerating the strategy and delivering

further value creation for Shareholders.

Acquisitions

The Group made two earnings-

accretive acquisitions during the year

for a total consideration of £29m.

Both acquisitions were in the Sensing

& Connectivity division. The Burster

Group (“Burster”), a German-based

designer and manufacturer of specialist

sensors, was acquired in January 2025

as a bolt-on to the Variohm sensing

cluster, and Hivolt Capacitors Limited

(“Hivolt”), a Northern Ireland-based

designer and manufacturer of custom-

built capacitors, was acquired in

August 2024.

The management teams at both

businesses have remained in place

post acquisition and, with the

support structure and cross-selling

opportunities that come from being

part of an enlarged group, we fully

expect to see accelerated growth in

the years ahead.

We welcome the employees of these

businesses into the Group and look

forward to working with them.

Increased dividend

The Board is recommending a 4% (0.35

pence) increase in the final dividend

to 8.60 pence per share, giving a 4%

increase in the full year dividend per

share to 12.5 pence (FY 2023/24: 12.0

pence) and an adjusted earnings to

dividend cover of 3.1 times (FY 2023/24:

3.1 times). The final dividend is payable

on 1 August 2025 to Shareholders

registered on 27 June 2025.

The Board believes in maintaining

a progressive dividend policy along

with a long-term dividend cover

of over three times earnings on an

adjusted basis. This approach, along

with the continued development of

the Group, will enable funding of both

dividend growth and a higher level

of investment in acquisitions from

internally generated resources.

The Company has a Dividend Re-

Investment Programme (“DRIP”),

details of which are available from the

Company’s Registrar, Equiniti. The final

date for DRIP elections for the final

dividend will be 11 July 2025.

Employees and culture

On behalf of the Board, I would like

to thank everybody at discoverIE for

their sustained dedication, hard work,

initiative and support.

The Group comprises approximately

4,500 employees in 20 countries

around the world. By adopting an

entrepreneurial and decentralised

operating environment, together

with rigorous planning, controls and

investment, the Group has created an

ambitious and successful culture.

Record operating

margin and strong

cash flow.

This year saw further significant

benefits derived from operational

efficiencies, tight control of operating

expenses and continuing robust gross

margins, which more than offset the

reduction in organic sales. While Group

sales for the year reduced by 2% CER

to £422.9m, adjusted operating profit

increased by 8% CER to £60.5m, with

operating margins increasing by 1.2ppts

at CER to 14.3%. Higher average net

debt balances drove an increase in

net finance costs for the year of 16%

to £10.4m, with adjusted profit before

tax increasing by 4% to £50.1m, and

adjusted earnings per share increasing

by 5% to 38.7p (FY 2023/24: 36.8p).

The Group will benefit if interest rates

continue to reduce.

On a reported basis, including the

impact of adjusting items of £18.1m,

profit before tax for the year increased

by 44% to £32.0m (FY 2023/24: £22.2m)

with fully diluted earnings per share

increasing by 58% to 25.0p (FY 2023/24:

15.8p).

Free cash flow of £40.4m was

generated during the year, being 9%

higher than last year and representing

106% of adjusted earnings, well

ahead of the Group’s 85% conversion

target. Net debt (excluding IFRS 16)

at 31 March 2025 reduced by £9.7m

to £94.3m (31 March 2024: £104.0m).

Gearing reduced to 1.3x (31 March 2024:

1.5x) while still investing £29m in the

acquisitions of Burster and Hivolt. This

gearing is below the lower end of our

target range of 1.5x to 2.0x and, together

with expected cash flow in the coming

year, provides acquisition funding of

c.£80m while keeping the Group within

its target gearing range.

The direct impact of tariffs is expected

to be minimal. Currently, the Group

manufactures 73% of its products

locally to the customer and the

numerous manufacturing sites enable

production to be further optimised to

increase local manufacturing content

as required to mitigate trade disruption.

03 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

We aim to achieve a culture across the

Group that:

■ is entrepreneurial

■ treats everybody equally and

recognises the importance of

diversity

■ is honest, reliable, trusting and

non-political

■ enables decision-making close

to the customer through a

decentralised structure

■ enables open, constructive

communication with a willingness

to listen

■ is performance driven

Sustainability and positive

impact

The Group continues to make progress

on its net-zero plan, achieving a

59% reduction in Scope 1 & 2 carbon

emissions over the past three years,

relative to the CY2021 baseline. This

progress keeps the Group on track

to meet its interim target of a 90%

reduction in Scope 1 & 2 emissions by

2030. The Group also achieved its goal

of sourcing 80% of our electricity from

renewable or clean sources one year

ahead of the CY2025 target.

In early 2025, the Group reassessed

its climate-related risks and

opportunities, factoring in the newly

acquired businesses. The assessment

confirmed that there were no material

changes to the Group’s climate-related

risk profile.

The Group remains committed to

being a socially responsible employer,

adhering to the highest ethical

standards, with a commitment to

excellent employee relations and to

increasing diversity at all levels of the

business. As of FY 2024/25, female

employees represent 50% of the

Group’s workforce.

Reflecting its achievements in and

focus on sustainability, the Group

received an MSCI ESG “A” rating and

Morningstar Sustainalytics “Negligible”

rating. Additionally, in February 2025,

the Group was awarded a “B” rating

from Carbon Disclosure Project (CDP)

for its 2024 climate disclosure - a

significant improvement from the

prior year’s “D” - reflecting the Group’s

progress in climate disclosures.

Additionally, the Group’s emissions

reduction targets of a 90% decrease

in Scope 1 & 2 by 2030 and net-zero

across the value chain in 2040 were

approved by the SBTi in May 2025.

Board of Directors

On 31 October 2024, Tracey Graham

retired from the Board after nine years.

During this period, Tracey was the

Group’s Remuneration Committee

Chair from March 2019 and Senior

Independent Director from November

2022. We extend our sincere thanks

to Tracey for all her support in

helping lead the Group’s significant

development during her tenure.

From the same date, Celia Baxter,

who has been on the Board since

1 June 2023, took over from Tracey

as Remuneration Committee Chair

and Senior Independent Director.

Celia has many years of executive

and board experience in listed

companies including 13 years as

Group HR Director at Bunzl plc, giving

her an excellent understanding of

decentralised, acquisitive, international

industrial businesses. Celia is also Chair

of the Remuneration Committee at

Dowlais plc, following nine years in

that position at Senior plc and six years

at DS Smith plc.

Summary

The Group is building a leading

business that continues to deliver

strong results through the economic

cycle and has again demonstrated the

quality and resilience of its model.

The market remains highly

fragmented, providing scope to

build further capability and extend

geographic reach through disciplined,

accretive acquisitions. The Board is

excited by the opportunities available

to continue building a business that

attracts and retains a high quality

workforce, delivers essential products

for our customers, grows long-term

returns for our Shareholders, and

contributes to the creation of a

sustainable environment.

With a strong pipeline of

opportunities, the Group is well

positioned for the future.

Bruce Thompson

Chairman

FULL YEAR DIVIDEND PER

12.5p

(FY 2023/24: 12.0p)

TOTAL SHAREHOLDER

RETURN

254%

(FY 2014/15 – FY 2024/25)

CARBON EMISSIONS

REDUCTION

59%

(CY2024 vs CY2021)

discoverIE Group plc Innovative Electronics04

CHAIRMAN’S STATEMENT CONTINUED

THE ESSENTIAL TECHNOLOGY PARTNER

FOR A SUSTAINABLE WORLD

discoverIE is an international group of

businesses that design and manufacture

niche, customised electronic

components for industrial applications.

We serve as an essential technology partner and enabler for our

customers – primarily large, multinational original equipment

manufacturers (“OEMs”) – working closely with them to develop

critical components for highly demanding environments. Our end-

to-end offering of design, prototyping, manufacturing, testing and

certification, provides a seamless, one-stop solution that delivers

peace of mind.

Our components are custom designed and application specific,

often requiring specific configurations even for products that

might otherwise seem similar. While our components are typically

small and often represent a small part of the total system cost,

they are mission critical, long-lasting and must meet rigorous

performance standards. The embedded nature of our products in

large, difficult-to-service-and-replace systems, means failure is not

an option.

We serve a diverse range of industries, with a strong focus on

sustainable, structural growth markets where we can make

a difference to the planet and people’s lives. These include

renewable energy, transportation, medical, security, and industrial

& connectivity.

Learn more about our Customer proposition on page 08

Culture driving excellence

We embrace a decentralised operating

model, and our success hinges on a

culture built on respect, fairness, and

equality. This decentralised structure

strengthens a culture that empowers

our teams, fosters open communication,

and unites us towards our shared vision

and ambitions.

These core values and the collaborative

spirit of our global workforce fuel

our passion for innovation, guide our

decision-making, and propel us towards

achieving our mission of providing the

highest quality products and services to

our customers, whilst creating a positive

impact on the environment, society and

people’s lives.

Core values

■ Dedication and determination –

driven by empowerment and a

sense of ownership

■ Customer centricity – allow those

employees who are closest to

customers to make decisions that

directly affect customer satisfaction

■ Respect, fairness and equality

– create an open, inclusive

environment in which everyone

has an equal opportunity to flourish

and grow

■ Open communication – create

a trusting environment where

information flows freely and

collaboration thrives

■ Target driven – strive for results and

high performance

The importance of cultural fit in

the acquisitions we make

For a decentralised Group like discoverIE,

cultural fit with the businesses we

acquire is crucial to mutual long-term

success. We thrive on empowered

employees and independent decision-

making, close to our customers.

Acquired businesses benefit from being

part of a larger group of like-minded

businesses that are able to meet the

local needs of their stakeholders whilst

retaining their own identity.

By factoring in cultural fit, we ensure

that acquired businesses seamlessly

integrate into our existing structure

and operating framework, preserving

the agility and innovation that makes

discoverIE successful.

RENEWABLE ENERGY

The world will be increasingly powered by renewable

and clean energy as governments prioritise energy

security and achieving climate goals

TRANSPORTATION

Urbanisation and the global push for decarbonisation

are driving the shift towards electric and sustainable

transport systems

MEDICAL

An ageing population, rising chronic disease and

improved healthcare access are increasing demand for

medical equipment and electronic devices

SECURITY

Infrastructure development, heightened security concerns

and defence modernisation are fuelling sustained growth

in demand for advanced security solutions

INDUSTRIAL & CONNECTIVITY

The expansion of the Industrial Internet of Things (“IIoT”),

5G and artificial intelligence is rapidly increasing the

need for high-performance electronic components

Learn more

about our

Target

markets on

pages 16 to 19

Learn more

about our

Investment

proposition

on page 09

Learn more

about our

Sustainability

priorities and

progress on

pages 38 to 52

Our target

markets

Learn more about our Business Model

on pages 14 to 15

05 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

S&C £175.5m M&C £247.4m S&C £36.0m M&C £36.3m

ADJUSTED

OPERATING

PROFIT

REVENUE

GROUP AT A GLANCE

Revenue by

geography (%)

ATLANTIC

OCEAN

ATLANTIC

OCEAN

INDIAN

OCEAN

ARCTIC OCEAN

NORTH AMERICA

25%

12%

ASIA & ROW

15%

REST OF

EUROPE

30%

M&C sales representative

S&C sales representative

M&C manufacturing site

S&C manufacturing site

Our global network of businesses designs

and manufactures differentiated products

for OEM customers worldwide. Our in-

house engineering teams and a global

manufacturing footprint allow us to

deliver ever better, reliable solutions to

meet our customers’ specific needs.

discoverIE is a global

leader in specialist

electronic components

for industrial applications.

NORDICS

18%

0606 discoverIE Group plc Innovative Electronics

SENSING SUBDIVISION

MAGNETICS SUBDIVISION

CONNECTIVITY SUBDIVISION

CONTROLS SUBDIVISION

Indicates our clusters

Our divisions

Sensing & Connectivity (“S&C”)

■ Electronics for wireless transmission, fibre optic and

cable connection, electromagnetic shielding, and

sensing components for measuring movement,

temperature, pressure, position, force and load

■ Consists of two sub-divisions, which are divided into

four clusters and four standalone businesses

■ Operates across nine countries with 19

manufacturing sites

Magnetics & Controls (“M&C”)

■ Electronics for X-ray detection, signal conditioning,

power conversion and switching, monitoring, and

remote control, communication and interface

control

■ Consists of two sub-divisions, which are divided

into two clusters and six standalone businesses

■ Operates across 16 countries with 22

manufacturing sites

REVENUE BY GEOGRAPHY

REVENUE GROWTH

UK – 22%

Nordics – 11%

Rest of Europe – 37%

N. America – 24%

Asia & ROW – 6%

FY23

FY24

FY25

£168.1m

£171.9m

£175.5m

REVENUE BY GEOGRAPHY

REVENUE GROWTH

UK – 6%

Nordics – 22%

Rest of Europe – 24%

N. America – 26%

Asia & ROW – 22%

FY23

FY24

FY25

£280.8m

£265.1m

£247.4m

07 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Essential and unique components

Our products are based

on proven technologies,

which is the foundation

for creating reliable, high-

performance components.

The real challenge

lies in adapting these

technologies to meet

the complex and often

extremely demanding

requirements of specific

applications. This requires

a deep understanding of

the underlying technology

and the application itself.

Our engineers work side-

by-side with customers to

create bespoke solutions

tailored to their unique

needs, whilst also driving

innovation that shapes

the development of next-

generation systems.

With over 40 production

facilities worldwide,

and extensive in-

house capabilities, we

manufacture the majority

of our products ourselves.

This vertical integration

ensures reliable supply and

consistent quality, whilst

also providing the flexibility

and agility needed for

small batch and custom

production – an essential

advantage in today’s

dynamic markets.

Our components are

designed and built for

the most demanding

environments. Because our

products are embedded

into larger systems

where reliability is critical,

failure is not an option.

We go beyond standard

industry requirements by

conducting rigorous testing

in-house – often on 100%

of products made – using

proprietary test systems. As

a result, the return rate on

the millions of components

we produce is low.

We work with customers in

highly regulated markets,

such as medical and

security, where product

certification and regulatory

approval can be complex

and time-consuming.

Many of our design and

manufacturing processes

are pre-certified, helping

customers reduce their

time to market.

In short, our end-to-end

offering of a seamless, one-

stop service solution gives

customers peace of mind.

Product

design and

innovation

Accelerated

time to

market

Reliable

supply

In-house

testing

CASE STUDY

Sensors for critical infrastructure monitoring

A civil engineering company contacted us with an urgent request for

dozens of linear sensors to be fitted to the underside of a motorway bridge

expansion joint for monitoring the bridge’s structural integrity.

The requirements were particularly demanding. The sensor required sub-

millimetre precision (<1mm) under normal conditions and high accuracy

across an extreme operating temperature range of -200

C to +350

Moreover, it needed to be waterproof, corrosion resistant, and delivered

within just one week.

Our team rose to the challenge, designing a sensor featuring a new

differential coil system, which provided exceptional accuracy and thermal

stability. This was further enhanced by incorporating the sensor’s thermal

coefficient of expansion into the electronic temperature compensation

correction, ensuring consistent performance in varying conditions. The

sensors were delivered, on time, in full, to the customer’s satisfaction.

discoverIE Group plc Innovative Electronics08

PARTNERING WITH OUR CUSTOMERS

FOR LONGTERM PROGRESS

Sustainable

growth markets

Increasing electronics content

and electrification of products

and processes continue to drive

demand for electronic components.

We prioritise five markets that are

driven by megatrends and which

are aligned with the UN Sustainable

Development Goals.

Learn more about our Megatrends

on pages 16 to 19

PROJECTED GROWTH IN

OUR TARGET MARKETS

5.6% p.a.

2023-2030

Target markets: Renewable

Energy, Transportation, Medical,

Security and Industrial &

Connectivity

Proven strategy

for growth

Grow organically well ahead of

GDP through the economic cycle

by focusing on structural growth

markets and an expanding product

offering, bolstered by earnings and

margin-enhancing acquisitions.

We have a proven track record of

delivering strategic and financial

targets.

Learn more about our Strategy on

pages 20 to 27

REVENUE GROWTH

7% CAGR

FY2020-FY2025

Strong

financials

Sustainable, profitable growth and

excellent cash generation. Our

strong balance sheet with gearing

below the range of our 1.5x – 2x

target allows headroom for further

acquisitions.

Learn more about our Financial

Performance on pages 28 to 33

ADJUSTED OPERATING

PROFIT GROWTH

14% CAGR

FY2020-FY2025

FREE CASH FLOW

CONVERSION

103%

on average FY2020-FY2025

Differentiated

product offering

We specialise in providing

customised and niche electronic

solutions, utilising established

technologies to create small,

mission-critical components

tailored to meet the unique needs

of our customers. We manufacture

and supply these engineered

components for the lifespan of the

end products.

LONGEST CUSTOMER

RELATIONSHIP

30+ years

Long-lasting customer relationships

and stable, repeat revenue

Consistent

shareholder

returns

Disciplined capital allocation

with a track record of value-

enhancing acquisitions drive capital

appreciation and progressive

dividends.

ADJUSTED EPS GROWTH OF

19% CAGR

FY2015-FY2025

TOTAL SHAREHOLDER

RETURN OF

254%

FY2015-FY2025

1 Cognitive Market Research: Industrial Electronics

Market Report 2025

2 Continuing operations only, i.e. excluding the

disposals of Acal BFi and Vertec SA in 2022 and

the Santon solar business in 2024.

3 Compound Annual Growth Rate.

4 Free cash flow conversion is defined in note 6 of

the Consolidated Financial Statements.

09 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

OUR INVESTMENT PROPOSITION

Nick Jefferies

Group Chief Executive

Our goal is to grow our presence

in custom electronics by driving

organic growth, enhancing

operational efficiency, and

through carefully selected,

value accretive acquisitions.”

OUR STRATEGY

ENGINEERING CONTENT & PRODUCT MIX

VOLUME

High

Low

Standard

components

Total serviceable available

industrial electronics

market est. $30bn

GROW SALES WELL AHEAD OF GDP

ACQUIRE HIGHLY DIFFERENTIATED

BUSINESSES

GENERATE EFFICIENCIES

REDUCE ENVIRONMENTAL IMPACT

Our strategic context

The global non-semiconductor electronic components

market is valued at approximately $300 billion

. Within

this, we operate in a niche segment – custom designed

industrial electronics – estimated at around $30 billion

, and

growing steadily at 5-6% a year

This market is highly fragmented, with many small, subscale

local operators. This fragmentation presents significant

opportunities for discoverIE to grow, both organically and

through acquisitions.

Companies estimates

Non-semiconductor related electronic

components market estimate $300bn

Our strategic aim

Our goal is to grow our presence in custom electronics by

focusing on markets with sustained, long-term growth

prospects. These markets are driven by megatrends, such as

digitalisation, decarbonisation, the need to address security

concerns, and increasing electronic content in industrial

systems – sectors where our products are essential and

increasingly in demand.

Our strategy aligns our portfolio of businesses with these

market dynamics. By leveraging the efficiencies and

synergies within our business clusters, we unlock greater

value and accelerate growth.

We aim to deliver this strategy through a motivated,

entrepreneurial and empowered workforce that adheres to

the highest ethical and quality standards.

Our strategic priorities

Our strategy, which centres on initiatives that enhance

design opportunities for niche, customised products, and

which targets structural growth markets, has delivered

outstanding results. That strategy has remained stable

and consistent for more than a decade and we remain

committed to this path, maintaining a clear focus on four

core strategic priorities.

discoverIE Group plc Innovative Electronics10

KEY STRATEGIC INDICATORS

Over the years, we have made steady progress on our strategic targets, including increasing sales beyond Europe and into

target markets. These targets have now been largely achieved. As the strategy evolves and our priorities are refined, we have

simplified our targets by consolidating the previous key strategic indicators (“KSIs”) and key performance indicators (“KPIs”)

into a focused set of six core KSIs.

SALES GROWTH

ADJUSTED OPERATING

MARGIN

ADJUSTED EARNINGS PER

SHARE GROWTH

Target

Well ahead

of GDP Target 17.0% Target >10%

CER

FY21

FY22

FY23

FY24

FY25

(1%)

28%

15%

(2%)

FY21

FY22

FY23

FY24

FY25

10.2%

10.9%

11.5%

13.1%

14.3%

FY21

FY22

FY23

FY24

FY25

(8%)

31%

20%

ORGANIC

Commentary

Adjusted operating margin was 14.3%,

a year on year increase of 1.2 ppts,

taking growth in adjusted operating

margin to 10.9 ppts since FY 2013/14. It

benefited in the year from operational

efficiencies, tight cost control and

robust gross margins augmented

by higher margin acquisitions. We

achieved a margin of 14.8% in the

second half of the year, close to our 15%

target. Therefore, we have raised our

medium-term target to 17.0%.

Commentary

Excellent organic margin

improvement, together with

contributions from acquisitions,

resulted in a 6% increase in adjusted

operating profit and a 5% increase in

adjusted EPS despite adverse currency

exchange impact. Over the last ten

years, we have grown our adjusted

EPS by 19% CAGR.

FY21

FY22

FY23

FY24

FY25

(4%)

18%

10%

(1%)

(7%)

Commentary

Sales at constant exchange rate

(“CER”) reduced by 2% with organic

sales reducing by 7%. Sales were

impacted by prolonged destocking in

the industrial sector over the last two

years. We remain focused on achieving

strong through-cycle organic growth.

CASH CONVERSION

RETURN ON CAPITAL

EMPLOYED

CARBON EMISSIONS

REDUCTION

Target >85% Target >15% Target 65%

ADJUSTED OPERATING CASH

FLOW CONVERSION

FY21

FY22

FY23

FY24

FY25

14.5%

14.7%

15.9%

15.7%

15.8%

CY22

CY23

CY24

35%

47%

59%

FY21

FY22

FY23

FY24

FY25

128%

80%

94%

103%

Commentary

ROCE for the year was ahead of our

15% target despite the record number

of acquisitions (seven in the past

two years). We acquire businesses

with long-term growth prospects

that are expected to generate high

returns over time. For example, the

acquisitions made prior to FY 2017/18

collectively generated a ROCE of 27%

in FY 2024/25.

Commentary

The target is an absolute reduction

in Scope 1 & 2 emissions in CY2025

against a CY2021 baseline. Scope 1 & 2

emissions reduced further during the

year, being 59% lower on an absolute

basis than CY2021, making excellent

progress towards our targets of a

65% reduction by CY2025 and 90% by

CY2030.

FREE CASH FLOW CONVERSION

FY21

FY22

FY23

FY24

FY25

136%

77%

95%

102%

106%

Commentary

Cash conversion rates were well

ahead of our 85% target. Over the

past 12 years, both operating and

free cash flow conversions have been

consistently strong, reflecting low

capital expenditure requirements and

efficient working capital.

Strategic Report

11 Annual Report and Accounts for the year ended 31 March 2025

Grow sales well ahead

of GDP

We aim to grow sales well ahead of GDP through the

economic cycle by focusing on sustainable, structural growth

markets, namely renewable energy, transportation, medical,

security, and industrial & connectivity – each of which is

projected to grow faster than global GDP. Learn more about

the growth drivers for these markets on pages 16 to 19.

Being in the right markets is only part of the equation.

We drive sales growth by focusing on two areas: product

innovation and commercial discipline. On the innovation

front, we direct our engineering time towards developing

differentiated products built on commercially proven

technologies to maximise return on investment. At the same

time, we partner with research institutes and universities

to commercialise next generation technologies. Our

commercial discipline is reflected in how we manage our

commercial pipeline. We are selective, focusing on design

opportunities that demand unique, value-added solutions

and that offer long-term profitable revenue potential. These

quality design wins translate into consistent, high margin

growth over time.

Progress to date

The industrial sector has experienced a prolonged and

steep destocking period over the past two and half years as

the pandemic-induced inventory surpluses continued to

unwind. Consequently, Group organic sales in FY 2024/25

were 7% lower than the prior year. Despite this temporary

headwind, our through-cycle organic growth, averaging 5%

per annum, remains well ahead of the GDP growth rate in

our core markets of developed economies.

LINK TO KSI

LINK TO RISK

Acquire high quality businesses

Acquisition is an essential part of our growth strategy. The

niche, customised electronic components market is highly

fragmented, offering opportunities for consolidation and

value creation.

We target businesses that embody the core characteristics

we define as the discoverIE DNA. These include:

■ Design & manufacture of electronic components,

modules or systems

■ Differentiated, value-added products and solutions

■ Supplying original equipment manufacturers

■ Long-life products with repeat revenues

■ Operating in markets with excellent growth prospects

■ Strong cash generation and capital light

business models

■ Ambitious, capable management with

entrepreneurial spirit

We have a well-established approach to acquisitions and

portfolio management. By taking a long-term approach to

creating compounding organic growth in acquired businesses,

as well as actively managing the overall portfolio, the Group

consistently generates substantial value.

Progress to date

Since our first design and manufacture acquisition in 2011,

we have invested c.£500m in 28 acquisitions, around a

quarter of which have taken place in the past two years

alone. Group sales have grown from £10m in FY 2009/10 to

£423m today. Our strong track record in acquisitions stems

both from identifying the right businesses and our ability

to enhance their performance. Businesses acquired up to

FY 2017/18 achieved a collective return on capital employed of

27% in FY 2024/25, demonstrating the value our acquisition

strategy creates.

LINK TO KSI

LINK TO RISK

-10

-5

FY15 FY25FY24FY23FY22FY21FY20FY19FY18FY17FY16

(7%)

(1%)

10%

18%

(4%)

10%

11%

(1%)

Organic sales growth (%)

Acquisition geographyOrganic sales growth

discoverIE Group plc Innovative Electronics12

OUR STRATEGY CONTINUED

Generate efficiencies

We achieve efficiencies in three areas: pricing,

manufacturing and operating leverage.

Pricing for value

Our value-based pricing strategy is built on the product

differentiation and substantial value we provide. Whether

developing bespoke solutions for unique applications or

improving existing ones for broader use, our technical

expertise and know-how enable customers to achieve their

desired outcomes. This value add is increasingly reflected in

our rising contribution margins.

Manufacturing efficiencies

Many of our acquisitions bring manufacturing capabilities

into the Group. With over 40 production facilities worldwide,

we continuously optimise our manufacturing footprint. This

includes consolidating sites and sharing capacity in similar

locations, relocating production to achieve cost or volume

efficiencies, or to position manufacturing closer to customers

to improve responsiveness and cost effectiveness.

Operating leverage

As the Group grows, we maintain a disciplined approach to

cost management through phased investment and strategic

resource allocation. Our clustering model also makes it easier to

identify synergies. Learn more about clustering on pages 14 to

15. As scale increases, our drop-through rate will continue to rise,

reflecting strong operating leverage.

Progress to date

We have delivered 15 years of consecutive growth in our

operating margin, increasing from break-even in FY 2009/10

to 14.3% in FY 2024/25. Over the last five years alone, our

adjusted operating margin has increased by 6.3 percentage

points. These gains have been driven primarily by organic

improvement. In the past ten years, we have consistently met

or exceeded our adjusted operating margin targets, which

have been raised five times during the same period.

LINK TO KSI

LINK TO RISK

Reduce environmental impact

KEY STRATEGIC INDICATORS

Sales growth

Adjusted operating

margin

Adjusted EPS

growth

Cash conversion

Return on capital

employed

Carbon emissions

reduction

RISKS

Instability in the

economic environment

Business acquisitions

underperformance

Climate-related

risks

Cyber security

Loss of key

customers

Loss of key suppliers/

supply

Technological

changes

Major business

disruption

Loss of key

personnel

Product liability

Financial controls

Liquidity and debt

covenants

Foreign currency

Non-compliance with legal

and regulatory requirements

FY14 FY25FY24FY15 FY23FY22FY21FY20FY19FY18FY17FY16

3.4

14.3

11.5

13.1

10.9

10.2

8.0

7.0

6.3

5.7

Target

17%

Target

13.5%

Target

12.5%

Target

8.5%

Target

5.9

4.9

Adjusted operating margin growth (%)

Roof-top solar system in Flux Thailand manufacturing site

In November 2022, we announced our commitment to

achieving net-zero emissions and set science-based targets:

■ discoverIE Group plc commits to reduce absolute Scope 1

& 2 GHG emissions 90% by 2030 from a 2021 base year.

■ discoverIE Group plc commits to reach net-zero

greenhouse gas emissions across the value chain by

2040. A detailed transition plan has been published for

our Scope 1 & 2 emissions, from a 2030 base year.

Our Scope 1 & 2 net-zero strategy focuses on four primary

sources of emissions within the Group: electricity, natural

gas, company vehicles, and refrigerants. We have a medium-

term target to reduce absolute emissions by 65% by the end

of CY2025, compared to the CY2021 baseline.

Progress to date

Three years into our net-zero plan, we are making good

progress, with CY2024 Scope 1 & 2 emissions down by 59%

on the CY2021 baseline. This reduction has been driven

largely by switching to clean or renewable electricity sources,

including installing solar panels across facilities where

economically feasible, implementing energy efficiency

measures, and the use of heat pumps where appropriate.

Today, more than 80% of our electricity consumption comes

from renewable or clean sources.

We are also making strides in switching our vehicle fleet

away from fossil fuels. Half (50%) of our company cars are

now electric or hybrid. We have already reduced emissions

from natural gas and refrigerants, and plan to reduce

emissions from these sources further in the coming years. In

May 2025 we received approval for our near and long-term

science-based emissions reduction targets from the SBTi.

LINK TO KSI

LINK TO RISK

Strategic Report

13 Annual Report and Accounts for the year ended 31 March 2025

1. Our resources and key

enablers

Our people

We have c.4,500 colleagues worldwide;

many of them are long-serving

and have a high level of technical

knowledge and experience in

their fields. We encourage local

employment and talent development

so that our colleagues have an in-

depth understanding of the market

where they operate.

Our expertise

For over three decades, we have

cultivated a vast amount of expertise

and technical know-how in the

specialist electronics market. Our

team of electronics, mechanical and

software engineers have a wealth of

knowledge of our core technologies

and diverse application experience.

This allows us to rapidly develop new

products that meet our customers’

evolving needs.

Our intellectual property

We retain the intellectual property

rights of the products designed and

developed for customers. We also have

unique technology, which is used in

many of our customised products.

Our manufacturing capability

We have 41 manufacturing facilities

in 20 countries, including China,

Hungary, India, Mexico, Poland,

Slovakia, Sri Lanka, Thailand, the UK,

and the USA, producing high-quality

products consistently and reliably in

locations close to our customers.

Our financial strength

We have a strong balance sheet

supported by high cash generation,

which allows us to continue to invest

in our people and capabilities, and to

expand geographically.

2. Our core activities

Our main activity is designing

and manufacturing specialist

electronic components for

industrial applications. Our

core strength lies in the deep

understanding of our customers’

design challenges, which allows

us to engineer and manufacture

customised solutions that

meet their needs, as well as

guaranteeing reliable supply

throughout the life cycle of the

end system.

Design and customised

products

We work closely with our

customers, who are primarily

OEMs, to develop better solutions

to solve complex technical

challenges. This often requires

adaptations of standard products

or the development of new ones.

Manufacture and testing

Manufacturing bespoke and

niche products requires a flexible

production model and is often

technically demanding. With

technical know-how and in-house

manufacturing capabilities, we

have control of the production

process, ensuring both quality

and reliability. Quality is assured

through rigorous and repeat

testing, often above that which is

required.

Deliver globally

With manufacturing facilities in

the Americas, Europe and Asia,

we are able to reduce the risks of

logistics disruptions and shorten

delivery lead times. We provide

customers with a consistent

and reliable supply of products

throughout the lifetime of the end

system design.

3. Sustainable approach

The demand for energy-efficient,

sustainable technologies

continues to rise, and we are well

positioned to capitalise on the

value creation opportunities this

shift presents. However, growth

alone is not our only goal. As

a company, we recognise our

broader responsibility to help

shape not just a more connected

and intelligent world, but a more

sustainable one.

Sustainability is embedded

throughout discoverIE. We focus

on markets that align with the UN

Sustainable Development Goals,

and we design durable, energy-

efficient products that minimise

servicing or replacement

needs. We understand that

sustainability is a collective

effort. By collaborating with our

customers on their sustainability

journeys, we help them meet their

sustainability goals, whilst working

to achieve our own.

Our business model is simple. We design and manufacture

niche, customised electronic components for industrial original

equipment manufacturers (“OEMs”) operating in growth markets.

OUR PLANET

Creating a positive

impact on our

environment

OUR PEOPLE

Keeping

our people safe

and happy

OUR PRODUCTS

Ensuring product

reliability and

sustainability

Learn more about our Sustainability

priorities and progress on pages

38 to 52

discoverIE Group plc Innovative Electronics14

OUR BUSINESS MODEL

4. How we do it differently

A decentralised model

We operate a decentralised operating model. Our network of 30 operating

businesses, each specialising in different technological areas, are grouped

under two divisions - Magnetics & Controls and Sensing & Connectivity -

each of which have two sub-divisions. Supported by the Group’s central

resources, each business operates independently under its own brand

and management team, but within a well-defined control framework

and in alignment with discoverIE’s shared vision and strategic goals. This

decentralised approach empowers individual businesses to make their own

decisions, fostering a strong sense of ownership and accountability.

Collaboration through clustering

To encourage collaboration and synergy, businesses within each division

with similar or related technologies are grouped into clusters. These clusters

are led by the leadership teams of the largest operating businesses within

the cluster, minimising layers of management and avoiding unnecessary

bureaucracy. This flat structure allows for faster decision-making and greater

agility, enabling businesses to adapt quickly to changing market demands.

This decentralised model empowers our businesses, whilst fostering

collaboration through the cluster

system. It allows our businesses to

leverage the benefits of autonomy

and agility, whilst still maintaining

a supportive and collaborative

environment across the Group.

The Group’s head office functions,

including legal, finance, M&A,

IT, communications and

sustainability, provide support

to our businesses, enabling

them to grow. The Group risk

and internal audit function

ensures compliance and effective

controls, and that risks are

managed appropriately.

Guided by our values

These are our fundamental beliefs and principles that guide our decision-

making:

Integrity – we act with honesty and openness, treating our partners and

stakeholders fairly

Quality – we strive for excellence and make continuous improvements that

deliver superior value to our customers

Empowerment – we inspire growth and innovation by providing an

entrepreneurial environment

Collaboration – we work together, trust and respect each other

Positive impact – we care about the environment and societies we live in

and commit to making a positive impact

The value we create

Customers

Quality, reliability and efficiency. 100%

on-time, in-full delivery target.

Suppliers

Reliable partnerships and shared

knowledge.

Employees

Empowering and collaborative culture,

and healthy and safe environment.

14%

VOLUNTARY EMPLOYEE

TURNOVER*

*This excludes the abnormal seasonal labour

fluctuations linked to the Chinese New Year.

Non production employee turnover remained

stable at 10% (FY24: 11%)

Shareholders

Attractive returns and growth

opportunities.

254%

TENYEAR TOTAL

SHAREHOLDER RETURN

Communities

Contribution to local employment, tax

revenue, community engagement and

decarbonisation.

£23.7m

TAX AND SOCIAL SECURITY

CONTRIBUTION IN FY2025

59%

REDUCTION IN SCOPE 1 & 2

CARBON EMISSIONS SINCE

CY2021

Shared

knowledge

and expertise

Risk

management

Financial

support

M&A

support

Common

purpose and

strategic goals

ESG

guidance

and support

Strategic

guidance

Economies

of scale

We add value by providing our customers with an end-to-end solution for critical components. By acting as an extension of

our customers’ engineering teams, we help them create ever-better solutions and guarantee a reliable, long-term supply.

This business model is resilient, proven by the Group’s robust and consistent track record.

Strategic Report

15 Annual Report and Accounts for the year ended 31 March 2025

Our products are critical components in a wide range of industrial applications.

We focus on five end markets – renewable energy, transportation, medical,

security, and industrial & connectivity – markets that demonstrate sustainable,

long-term growth driven by global megatrends.

Megatrends drive substantial growth

Megatrends such as electrification, digitalisation and

urbanisation have been major drivers of growth in

electronic components, and will continue to create

significant opportunities in the decades ahead.

Electrification

The electrification of transportation is creating

entirely new markets, such as electric vehicles and the

infrastructure that supports them, and existing modes

of transport such as railways and shipping are being

converted to allow them to run on electricity. Meanwhile,

the global transition toward a low carbon economy is

accelerating demand for renewable energy, energy

storage, and smart energy management systems.

Governments and businesses are investing heavily in

new solutions to reduce their carbon footprint.

Digitalisation

Rapid advances in artificial intelligence, 5G, cloud

computing, and big data analytics have made digital

tools faster, more affordable and more powerful. The

rise of the Industrial Internet of Things (“IIoT”) is driving

digitalisation in factories, energy grids, transport

networks and healthcare systems. Digitalisation depends

on the ever-increasing interconnectedness of devices

and systems, driving strong demand for electronic

components that enable real-time monitoring, predictive

maintenance, and automation at scale.

Urbanisation

Urbanisation is a major growth driver for security,

transportation, and communication technologies.

As cities grow denser, the need to protect people,

infrastructure, and public spaces drives demand for

advanced surveillance, access control, and threat

detection systems. Meanwhile, rising populations require

more efficient and sustainable mobility solutions,

accelerating investment in public transport, electric

vehicles, and smart traffic systems. To support this urban

complexity, high-speed communication networks –

including 5G, fibre optics, and IoT infrastructure – are

essential for real-time connectivity, automation, and the

functioning of smart city ecosystems.

These megatrends present significant opportunities

for discoverIE to deliver innovative solutions to meet

the growing demand for a more sustainable, digitally

connected, and secure future.

Our target markets

For more than a decade, we have maintained a strategic focus

on markets with sustainable, long-term growth prospects,

specifically renewable energy, transportation, medical and

industrial & connectivity. In 2024, we added security, a market

that has seen particularly strong demand in recent years and

which has the same long-term structural growth prospects.

Organic sales in these five target markets have grown at twice

the rate of non-target markets over the last eight years. In

FY2025, 79% of Group revenue was generated from these target

markets. The diversification across these markets, each with

varying cycles and different economic drivers, helps to smooth

out overall cyclicality and provides a more resilient growth

profile for the Group.

79%

REVENUE FROM TARGET MARKETS

(% of total revenue)

% of total revenue

Industrial & connectivity

Medical

Renewables

Transport

Security

Other

EMISSIONS REDUCTION BY SECTOR IN NETZERO

BY 2050 SCENARIO

Other = agriculture, fuel production, transformation and related

process emissions, and direct air capture.

2010 2020

Emissions fall fastest in the power sector, with transport, buildings

and industry seeing steady declines to 2050. Reductions

are aided by the increased availability of low-emission fuels.

2030 2040 2050

Gt CO

-5

Power Transportation Other

Buildings Industry

1616 discoverIE Group plc Innovative Electronics

MARKET OVERVIEW

Electrification

What are the trends

Governments and businesses around the world are setting

ambitious targets and implementing comprehensive plans

to reduce carbon emissions, including phasing out fossil fuels

through the electrification of transport networks and industrial

processes. Electrification is not only essential for achieving

net-zero emissions, it is also a major driver of efficiency and

productivity. This megatrend is poised to reshape many

industries, including:

■ Smart grid and energy management – technologies that

optimise energy distribution, improve grid reliability and

enable more efficient use of electricity

■ Industrial – the electrification of equipment and processes

enables automation and more efficient heating and cooling

systems

■ Transportation – decarbonisation across all transportation

segments – railways, aviation, shipping, trucks and off-road

vehicles – requires new technologies such as battery storage

and retrofitting solutions that enable engines to run on

electricity or other low carbon alternatives such as hydrogen

fuel cells

■ Buildings and homes – smart appliances, connected

devices and automation solutions are enhancing energy

efficiency and comfort, as well as reducing emissions in

residential and commercial spaces

How we are responding

We see significant opportunities in three areas: renewable

energy, energy efficiency, and transportation.

■ Renewable energy – we offer a broad range of power

electronics that enable more efficient renewable power

generation and distribution. Our key focus is on the wind

power market, where we already have a strong position.

We also aim to expand into other renewable sectors, such

as hydro and tidal. Although the solar power market has

become increasingly commoditised, we continue to find

niche opportunities, such as providing encoders in solar

trackers to obtain reliable positioning of tilt and azimuth

angles.

■ Energy efficiency – Our products are designed to be long-

lasting and energy efficient. We continue to develop new

products that further enhance the energy performance of

the systems in which they are embedded.

■ Transportation – our focus in the transportation market

is primarily railways, shipping and specialist and off-

road vehicles. These sectors demand robust, ruggedised

components capable of performing in harsh environments.

We also have a strong presence in retrofitting the shipping

industry to support its shift toward cleaner propulsion

systems. In the automotive sector, our focus is on electric

vehicle infrastructure, such as charging stations.

UN SDG ALIGNMENT

Market trends Technological applications Our solutions

Renewable energy

■ 9.0% CAGR growth in

renewable power generation

2023-2026

Transportation

■ 8.3% CAGR growth in

transportation electrification

2022-2029

Industrial & Connectivity

■ 8.1% CAGR growth in global

industrial electrification

2025-2034

■ Increasing scale in wind

turbines

■ Smart grids

■ Smart charging

■ Battery technologies

■ Hydrogen fuel cells

■ High speed rail

■ Electrification of mass

transport

■ Engine retrofitting

Magnetics

■ Liquid-cooled power reactors for wind power systems

■ Power inducers for electric trains

Controls

■ Ruggedised CPU modules

■ Master controllers for trains

Sensing

■ Pressure sensors for hydrogen-fuelled e-buses

■ Temperature sensors for monitoring industrial heat

processes

Connectivity

■ Battery isolation switches for trains

■ Circuit breakers and services for ships

International Energy Agency: Net-zero by 2050 – A roadmap for the global energy sector, May 2021

International Energy Agency: Electricity Market Report 2024, January 2024

Maximize Market Research: Transportation electrification market (www.maximizemarketresearch.com/market-report/global-transportation-

electrification-market/96601/)

Precedence Research: Global industrial electrification market (www.precedenceresearch.com/industrial-electrification-market#:~:text=The%20

global%20industrial%20electrification%20market%20size%20was%20estimated%20at%20USD,8.10%25%20from%202025%20to%202034)

17 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Digitalisation

What are the trends

The proliferation of high-speed internet connectivity and

the widespread adoption of mobile devices has created

an increasingly connected world. Affordable and reliable

connectivity now enables the seamless exchange of

information, communication and collaboration, driving digital

transformation across industries. Digitalisation can bring

benefits to multiple sectors:

■ Telecommunications and connectivity – digitalisation

depends on robust telecommunications infrastructure. This

involves high-speed internet services, mobile networks, fibre

optic infrastructure and wireless technologies, which stand

to benefit from increasing demand for connectivity and

data transmission.

■ Industrial 4.0 – rapid adoption of artificial intelligence (“AI”)

and IIoT is optimising manufacturing processes. Machines

require built-in components – wired or wireless – to enable

data transmission, real-time monitoring and automation.

■ Healthcare technology – digitalisation is transforming

healthcare through wearable devices, remote patient

monitoring, smart implants, smart inhalers and

portable diagnostic devices. These innovations meet the

growing demand for personalised healthcare, patient

empowerment, and seamless integration with digital

healthcare platforms.

How we are responding

The connected world is built on a foundation of essential

electronic components, and we play a critical role in enabling

this digital ecosystem. We provide solutions that power

connectivity across digital infrastructures. Our components,

such as power controls, sensors, transceivers, and wireless

modules, support key functions including signal processing,

data acquisition, and network infrastructure. This ensures

seamless communication and integration across various devices

and systems. Reliable power is equally crucial, and that is where

our power electronics come in. These include voltage regulators

and power distribution units, which ensure a stable, reliable

energy supply, maintaining optimal performance for digital

equipment.

In recent years, we have further strengthened our capabilities in

the connectivity space with key acquisitions, including leaders in

iIoT antennas (Antenova and 2J Antennas), Power-over-Ethernet

modules (Silvertel), and industrial load sensor technology

(Burster).

UN SDG ALIGNMENT

Market trends Technological applications Our solutions

Medical

■ 12.8% CAGR growth in smart

medical devices market

2025-2030

Transportation

■ 13.0% CAGR growth in smart

transportation market

2025-2034

Industrial & Connectivity

■ 9.8% CAGR growth in industrial

automation market 2022-2029

■ Artificial intelligence and

machine learning

■ 5G/6G technology

■ Big data and analytics

■ Robotic surgery

■ Autonomous systems

Magnetics

■ Power-over-Ethernet modules for power and

wireless connections

Controls

■ Single board computers for electrocardiographs

■ Wireless portable defibrillator

Sensing

■ X-ray detectors for bone density scans

■ Load cells and linear sensors for six-axis robotic arm

control for surgery

Connectivity

■ Antennas for wireless robotic control

■ Antennas for outdoor water meters

Grand View Research: Smart medical devices market (www.grandviewresearch.com/industry-analysis/smart-medical-devices-market)

Precedence Research: Smart transportation market (www.precedenceresearch.com/smart-transportation-market)

Fortune Business Insights: Industrial Automation Market (www.fortunebusinessinsights.com/industry-reports/industrial-automation-market-101589)

1818 discoverIE Group plc Innovative Electronics

MARKET OVERVIEW CONTINUED

Urbanisation

What are the trends

Urbanisation is a powerful driver of growth across the security,

transportation and connectivity markets. As cities expand and

populations become more concentrated, the demand for

safety increases, which fuels investment in advanced security

solutions. Urban environments also house critical infrastructure,

such as utilities, government buildings, and transportation hubs.

They must be protected from physical and cyber threats, further

increasing the need for integrated and intelligent security

systems.

Urbanisation places added pressure on transportation and

communication networks. Growing populations require

efficient, low-emission mobility solutions, driving demand

for public transport, electric vehicles, and smart traffic

management. Meanwhile, the need for connectivity to support

homes, businesses, and smart cities is accelerating investment

in 5G, fibre optics, and IIoT infrastructure.

This megatrend is expected to drive sustained growth across

several of our target markets in the decades ahead:

■ Transportation – urbanisation increases the need for

efficient, mass transportation to move people and goods

sustainably. This fuels growth in public transit systems,

such as rail, metro, and bus electrification, and smart traffic

management.

■ Communication networks – dense urban populations

generate massive demand for data and connectivity,

and digital infrastructure must expand to support this.

This requires fast connectivity – wired or wireless – IIoT

infrastructure, and data centres.

■ Security – crime rates and the risk of sabotage to critical

infrastructure both increase as cities grow more densely

populated. This drives demand for advanced surveillance

systems, robust access control and threat detection

technologies.

How we are responding

We have aligned our capabilities and growth strategy to

meet the rising demand for advanced security solutions. In

September 2024, we expanded our target markets to include

the security sector. We target fast-growing areas such as critical

infrastructure protection, smart surveillance, threat detection

systems and defence, where our custom-designed technologies

can offer mission-critical advantages.

To support the next generation of communication systems, we

continuously develop new products, such as antennas, sensors,

wireless communication modules, and ruggedised electronics,

whilst continuing to acquire new capabilities and technology

platforms.

UN SDG ALIGNMENT

Market trends Technological applications Our solutions

Transportation

■ 7.6% CAGR growth in public

transportation market

2024-2030

Security

■ 8.4% CAGR growth in access

control market 2025-2030

■ 6.0% CAGR growth in

inspection equipment market

2025-2030

Industrial & Connectivity

■ 6.7% CAGR growth in industry

IoT market 2023-2026

■ Advanced X-ray detection

systems

■ 5G/wireless

communications

■ Advanced surveillance

technology

■ Facial recognition

■ Biometric security control

Magnetics

■ Transformers for space shuttles and satellites

Controls

■ Rugged control panels for military equipment

Sensing

■ X-ray detection for airport security scanners

Connectivity

■ Rugged fibre optic connectors for security

communications

■ Advanced video surveillance solutions for public

transport

Grand View Research: Global public transportation market (www.grandviewresearch.com/horizon/outlook/public-transportation-market-size/global)

Grand View Research: Access control market analysis report (www.grandviewresearch.com/industry-analysis/access-control-market-report)

Fortune Business Insights: Global inspection equipment market size (www.fortunebusinessinsights.com/inspection-equipment-market-107682)

Markets and Markets: Industrial IoT market

19 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Good progress towards our

targets

The Group designs and manufactures

essential, customised, high value-

add, technically complex electronic

products, enabling our customers

to create better equipment. Despite

prolonged industry destocking, we

made further good progress this year

towards our near and medium-term

goals, delivering record earnings and

operating margins while continuing to

generate excellent cash flow.

The Group delivered record adjusted

operating profit of £60.5m, up 8% at

CER with second half profits up 12%

CER compared with 4% CER in the first

half. The Group’s adjusted operating

margin increased by 1.2ppt at CER to

14.3%, exceeding our 13.5% target for

this financial year and, with a second

half margin of 14.8%, we have raised our

target to 17% by FY 2029/30 from 15% by

FY 2027/28.

Adjusted operating profit growth was

achieved with operational efficiencies,

strong gross margins and tight control

of operating expenses, more than

offsetting the 3% reduction in sales (2%

reduction at CER). Even with higher

annualised finance costs (up 16%),

adjusted EPS increased by 5% with

H2 2024/25 adjusted EPS up by 15%

compared to a first half reduction of

4%. Including adjusting items, being

acquisition and disposal-related costs,

fully diluted EPS increased by 58% on a

reported basis.

Organically, sales were 7% lower,

reflecting industry destocking and the

normalisation of supply chains. Second

half sales were 4% lower organically

improving over the first half which

reduced by 10%. This was led by the

Group’s major customers recovering

strongly in H2, growing by 13% (H1 -4%)

having led the run into destocking in

the prior year and now leading the

recovery.

Asia was the most resilient territory,

increasing sales organically by 1%, while

UK and German sales both reduced

by 7%, Nordic sales by 3% and the

rest of Europe sales by 4% (returning

to growth in the second half). North

America sales reduced by 16% following

growth of 20% in the prior year.

Orders increased by 8% CER in the

year and by 2% organically, with Asia

up 6%, the US up 4% and Europe up

3% partially offset by the UK reducing

by 1%. The book-to-bill ratio for the

year increased to 0.97 from 0.89 last

financial year. In the final quarter,

orders grew by 15% organically in both

divisions.

With continued strong design wins (up

5% this year and up 30% on two years

ago), the Group is well positioned to

accelerate growth as market conditions

improve.

The Group order book at 31 March 2025

was £161m, representing c.4.5 months

of annualised sales (slightly higher than

historic normal levels) and providing

good visibility for the year ahead

(31 March 2024: £175m). The order book

has reduced from a peak of c.7 months

annualised sales in September 2022

when orders included earlier stocking-

up amid constrained supply chains.

Free cash flow for the year increased

by 9% to £40.4m, with a conversion

rate of 106% being well ahead of our

85% target. Additionally, the proceeds

Nick Jefferies

Group Chief Executive

ADJUSTED OPERATING

MARGIN

14.3%

(FY 2023/24: 13.1%)

RETURN ON CAPITAL

EMPLOYED

15.8%

(FY 2023/24: 15.7%)

The Group delivered

another strong

performance with

record operating

profits and earnings,

despite the prolonged

industry-wide

destocking. Our

flexible production

model, together with

Group-wide operating

efficiencies, more

than offset the weaker

sales, protecting

profitability through

this low point of the

cycle.”

discoverIE Group plc Innovative Electronics20

STRATEGIC AND OPERATIONAL REVIEW

of the Santon solar business disposal

and the deferred consideration from

the sale of Acal BFi three years earlier

helped reduce net debt to £94.3m and

gearing to 1.3x (31 March 2024: net debt

of £104.0m and 1.5x gearing), below our

target range and providing significant

funding capacity.

A flexible business well

positioned in a changing

world

The Group is well positioned in an

environment of rapidly changing global

conditions, with a business model that

is resilient, flexible and innovative.

■ Essential products: the Group’s

products are designed-in and

essential for customers’ applications

while amounting to a small

proportion of their overall system

cost, thereby driving both resilient

gross margins and long-term

repeating revenues.

■ Broad and flexible footprint: a

decentralised model with 41

manufacturing sites and operations

around the world, able to support

customers locally and with the

decarbonisation of their supply

chains.

■ Efficient supply chains: our

manufacturing uses a low

proportion of bought-in

components, the majority being

manufactured in-house from raw

materials and base components,

reducing the Group’s exposure to

external supply chain disruptions.

■ Low energy intensity operations:

the large majority of the Group’s

energy exposure is electricity and

energy costs represent less than

1% of Group revenues, limiting the

Group’s exposure to energy price

rises and operational disruptions.

Additionally, with the installation

of solar panels at some of our sites

as part of our project to reduce

carbon emissions, this percentage

is reducing.

Limited direct impact

expected from US tariffs

Our flexible business model enables

the direct impact of US tariffs to be

minimised. Production can be moved

to other countries. This was the case

in 2018 when tariffs were introduced

on US imports from China. To support

our customers, we moved production

destined for the US from China to our

facilities in India and Mexico, while

passing on tariff costs during the

transition period.

This year, 24% of our Group sales were

in the US of which just over half (52%)

were manufactured locally in one of

our seven US production sites, along

with 18% coming from the UK, 13%

from Europe, 13% from Mexico and

Canada covered by the USMCA free

trade agreement and 4% from Asia

(none now from China). We are able

to increase onshore manufacturing in

the US if customers require, or to move

production to another location, and

once again substantially mitigate the

effects of US tariffs on imports from

around the Group.

Material imports from China into the

US for local manufacturing currently

amount to c.£3-4m, which we expect

to fully mitigate through re-sourcing or

passing on price increases.

While the direct effects on the Group

of the currently proposed tariffs are

expected to be limited, we remain

vigilant of the consequential effects

that widespread tariffs could have

on reducing demand from some

customers. Conversely, we see new

commercial opportunities arising from

tariff-affected competitors.

Record operating margin

and strong cash flow

This year saw further significant

benefits derived from our flexible

production model, operational

efficiencies, tight control of operating

expenses and continuing robust gross

margins, which more than offset

the reduction in organic sales. While

Group sales for the year reduced by 2%

CER to £422.9m, adjusted operating

profit increased by 8% CER to £60.5m,

with operating margins increasing by

1.2ppts at CER to 14.3%. Higher average

net debt balances drove an increase

in net finance costs for the year of 16%

to £10.4m, resulting in adjusted profit

before tax increasing by 4% to £50.1m,

with adjusted earnings per share

increasing by 5% to 38.7p (FY 2023/24:

36.8p). The Group will benefit if interest

rates continue to reduce.

On a reported basis, including the

impact of adjusting items of £18.1m,

profit before tax for the year increased

by 44% to £32.0m (FY 2023/24: £22.2m)

with fully diluted earnings per share

increasing by 58% to 25.0p (FY 2023/24:

15.8p).

Free cash flow of £40.4m was

generated during the year, being 9%

higher than last year and representing

106% of adjusted earnings, well

ahead of the Group’s 85% conversion

target. Net debt (excluding IFRS 16)

at 31 March 2025 reduced by £9.7m to

£94.3m (31 March 2024: £104.0m).

21 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Gearing reduced to 1.3x (31 March 2024:

1.5x) while still investing £29m in the

acquisitions of Burster and Hivolt.

This gearing is below the lower end

of our target range of 1.5x to 2.0x and,

together with expected cash flow in

the coming year, provides acquisition

funding of c.£80m while keeping the

Group within its target gearing range.

Increased dividend

The Board is recommending a 4% (0.35

pence) increase in the final dividend

to 8.60 pence per share, giving a 4%

increase in the full year dividend per

share to 12.5 pence (FY 2023/24: 12.0

pence) and an adjusted earnings

cover of 3.1 times (FY 2023/24: 3.1

times). The final dividend is payable

on 1 August 2025 to Shareholders

registered on 27 June 2025.

The Board believes in maintaining

a progressive dividend policy along

with a long-term dividend cover

of over three times earnings on an

adjusted basis. This approach, along

with the continued development of

the Group, will enable funding of both

dividend growth and a higher level

of investment in acquisitions from

internally generated resources.

A Dividend Reinvestment Plan

(“DRIP”) is provided by Equiniti

Financial Services Limited. The DRIP

enables the Company’s shareholders

to elect to have their cash dividend

payments used to purchase the

Company’s shares. More information

can be found at www.shareview.co.uk/

info/drip The closing date for DRIP

elections is 11 July 2025.

A proven growth strategy

The Group has been built through

a focus on organic growth with

enhanced operational efficiency,

and 28 carefully selected, well-

integrated acquisitions over the past

14 years to create a focused, growth-

oriented, higher margin design and

manufacturing business. We have a

well-developed approach to capital

allocation and see significant scope

for further expansion, with a strong

pipeline of investment opportunities

in development. The Group operates

in a c.$30bn fragmented market with

many smaller players presenting

numerous consolidation opportunities.

The Group’s strategy comprises four

elements:

1. Grow organic sales well ahead

of GDP over the economic cycle

by focusing on high quality

growth target markets for

design opportunities. Operating

in several growth markets and

technology areas derisks growth

by reducing market and customer

concentration, generating a

smoother through-cycle growth

profile.

2. Acquire highly differentiated

businesses with attractive growth

prospects and strong operating

margins, either as new platforms

or as bolt-ons to existing clusters.

3. Generate efficiencies and improve

operating margins through

clustering of businesses to achieve

operational efficiencies, moving up

the value chain into higher margin

products with increased product

innovation and differentiation and

value-based pricing.

4. Reduce our impact on the

environment by achieving net-zero

carbon emissions.

These elements are underpinned

by our core objectives of generating

strong cash flows and long-term

sustainable returns from a capital-light

business model.

Security added as a fifth

target market this year

At our Capital Markets Day in

September 2024, the Group

announced the addition of the security

market as a fifth target market. Along

with our other four target markets

(industrial automation & connectivity,

medical, renewable energy, and the

electrification of transportation),

security is another highly attractive

and fragmented technology-rich

market underpinned by a number of

structural growth drivers. The Group

is already making strong progress

in realising opportunities in this fifth

target market, particularly in areas

such as data centre security.

Long-term growth in these target

markets is being driven by increasing

electronic content and by global

megatrends such as the accelerating

need for industrial automation and

connectivity, increasing security

concerns, an ageing affluent

population, renewable sources of

energy and the electrification of

transport. In total, the five target

markets accounted for around 80% of

sales this year.

discoverIE Group plc Innovative Electronics22

STRATEGIC AND OPERATIONAL REVIEW

CONTINUED

The Group’s focus on these target markets has been driving the Group’s through-cycle organic revenue growth well ahead

of GDP, as well as creating acquisition opportunities.

Continued progress on key strategic indicators

For more than ten years, the Group’s strategic progress and its financial performance have been measured through key

strategic indicators (“KSIs”) and key performance indicators. These are reviewed annually, and targets have been raised

nine times previously, including in June 2023 when a five-year target was set of 15% adjusted operating margin. With the

second-half margin reaching 14.8%, this margin target has now been upgraded again, this time to reach 17% in five years

(by FY 2029/30). From this year, targets have been simplified into seven KSIs, which will be the key business drivers for the

next stage of our development. Two previously monitored KSIs have now been largely achieved and so have been removed:

(i) Sales beyond Europe (target 45%) reached 43% at the half year, having risen from 5% in FY 2013/14; (ii) Target market

sales (target 85%) reached 80%, having risen from c.40% in FY 2013/14 when first set, and will likely remain around that

level as new acquisitions are typically below this level when acquired so have a short-term offsetting effect against existing

businesses. Dividend growth was also previously included as a KPI and while not one of the simplified KSIs, a progressive

dividend policy remains.

For tracking purposes, the KSIs in the tables below remain as reported at the time rather than adjusted for disposals. Targets

are for the medium-term unless stated, with medium-term defined as being around five years. This year’s performance

relative to last year is discussed below.

Key Strategic Indicators FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Targets

1. Increase adjusted operating

margin

6.3% 7.0% 8.0% 10.2% 10.9% 11.5% 13.1% 14.3% 17%

2. Sales growth:

CER 11% 14% 8% -1% 28% 15% 1% -2%

Well ahead of

GDP thru cycleOrganic 11% 10% 5% -4% 18% 10% -1% -7%

3. Adjusted EPS growth 16% 22% 11% -8% 31% 20% 5% 5% >10%

4. Adjusted operating cash

conversion

85% 93% 106% 128% 80% 94% 103% 103% >85% of adjusted

operating profit

5. Free cash conversion

78% 94% 104% 136% 77% 95% 102% 106% >85% of adjusted

earnings

6. ROCE 13.7% 15.4% 16.0% 14.5% 14.7% 15.9% 15.7% 15.8% >15%

7. Carbon emissions Scope 1 & 2

reduction

35% 47% 59% 65% by end

of CY2025

FY 2017/18 to FY 2019/20 are for total operations before disposals as reported at the time.

By FY 2029/30

Defined in note 6 of the attached condensed consolidated Financial Statements.

Carbon emissions are measured on a calendar year basis (e.g. CY2022 shown under FY 2022/23). Target is for absolute Scope 1 & 2 carbon emissions reduction of

65% by the end of CY2025 from CY2021, 90% reduction by CY2030 and net-zero across the value chain by CY2040.

The Group made continued progress on its KSIs during the year, other than sales growth which was impacted by the

prolonged period of industrial customer destocking:

■ Adjusted operating margin was 14.3%, an increase of 1.2ppts on last year (FY 2023/24: 13.1%) taking growth in adjusted

operating margin to over 9ppts in the last 10 years. The Group benefited in the year from operational efficiencies, tight

cost control and robust gross margins augmented by higher margin acquisitions. The Group exceeded its target of

13.5% six months early and with a second half margin of 14.8%, our 15% target for FY 2027/28 has been raised to 17% by FY

2029/30.

■ Sales reduced by 7% organically this year (H1 2024/25: -10%, H2 2024/25: -4%) due to prolonged industry destocking. We

retain our focus on achieving strong through-cycle organic growth, which is supported by our pipeline of design wins.

Over the last 10 years, sales have grown by 5% organically per annum on average.

■ Excellent operational efficiencies, robust gross margins, tight control of operating costs, and contributions from

acquisitions resulted in adjusted operating profit for the year increasing by 8% CER and adjusted EPS increasing by 5%

despite the strength of Sterling during the year. In total, the Group has grown its adjusted EPS by 19% CAGR over the last

ten years.

■ Adjusted operating cash flow and free cash flow conversion rates of 103% and 106% were well 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.

Strategic Report

23 Annual Report and Accounts for the year ended 31 March 2025

■ ROCE for the year was 15.8%, ahead of last year (FY 2023/24: 15.7%) and ahead of our 15% target. Further progress in the

short term is impacted by the record number of acquisitions (seven) in the last two years (most acquisitions are dilutive

to Group ROCE initially before growing). We acquire businesses with long-term growth prospects that are expected to

generate high returns over time. For example, our acquisitions made up to FY 2017/18 generated a collective ROCE of

27% this year. We expect this to continue to grow and for acquisitions made more recently to grow similarly.

■ Scope 1 & 2 carbon emissions reduced further during the year and in CY2024 were 59% lower on an absolute basis than in

CY2021, excellent progress towards our reduction targets of 65% by the end of CY2025 and 90% by CY2030.

Divisional Results

The divisional results for the Group for the year ended 31 March 2025 are set out and reviewed below.

FY 2024/25 FY 2023/24

Revenue

£m

Adjusted

operating

profit

£m

Adjusted

operating

margin

Revenue

£m

Adjusted

operating

profit

£m

Adjusted

operating

margin

Reported

revenue

growth

CER

revenue

growth

Organic

revenue

growth

M&C 247.4 36.3 14.7% 260.1 39.8 15.3% -7% -5% -11%

S&C 175.5 36.0 20.5% 169.5 28.6 16.9% +2% +4% +1%

Unallocated (11.8) (12.3)

Total (CER) 422.9 60.5 14.3% 429.6 56.1 13.1% -2% -7%

FX 7.4 1.1

Total 422.9 60.5 14.3% 437.0 57.2 13.1% -3%

Adjusted operating profit excludes acquisition and disposal-related costs

discoverIE Group plc Innovative Electronics24

STRATEGIC AND OPERATIONAL REVIEW

CONTINUED

Magnetics & Controls

division (“M&C”)

The M&C division designs,

manufactures and supplies highly

differentiated magnetic and power

components, embedded computing,

and interface controls for industrial

applications. The division operates

across 16 countries and comprises two

clusters (Magnetics and Embedded

Systems) and four further businesses.

Almost all products are manufactured

in-house at one of the division’s 22

manufacturing facilities, with its

principal sites being in China, India,

Mexico, Poland, Sri Lanka, Thailand,

the UK and the US. Geographically,

6% of sales by destination are in the

UK, 46% in the rest of Europe, 26% in

North America and 22% in Asia. During

the year, Noratel’s Chinese operations

completed the move to a new facility,

delivering operational improvements

and efficiencies.

Orders of £234.5m were 1% higher

than last year at CER while reducing

by 4% organically as customers

normalised their inventory levels.

There was continuing improvement

through the second half which was

up 4% organically compared to an 11%

reduction in the first half, finishing

the year strongly with 15% growth

in the fourth quarter. The book-to-

bill ratio for the year was 0.95 with

improvement again in the second half

to 0.99 (H1 2024/25: 0.91). The divisional

order book at 31 March 2025 was

£93.6m, being 4.5 months of sales, and

being in line with historic norms.

Sales reduced by 11% organically,

impacted by industry destocking. By

territory, Asia grew by 11% for the year

(having reduced by 24% last year).

Conversely, North America reduced

by 28% (having increased by 35%

last year), the UK reduced by 9%, the

Nordic region reduced by 8% and the

rest of Europe by 12%. The industrial

and security sectors led recovery in the

second half, returning to growth, while

others continued to destock.

There was a 6% contribution to sales

from three acquisitions made in the

last 20 months with Silvertel acquired

in August 2023 plus Shape and DTI

acquired in Q4 2023/24. Including

these acquisitions, sales at CER

reduced by 5%.

With the impact of translation from

a stronger Sterling (on average),

reported divisional revenue reduced

by 7% to £247.4m (FY 2023/24: £265.1m

reported and £260.1m at CER).

Adjusted operating profit of £36.3m

was £3.5m (-9%) lower than last year

at CER and £4.3m lower on a reported

basis (FY 2023/24: £40.6m), reflecting

the net impact of the organic sales

shortfall partially mitigated by flexible

production, operational efficiencies

and robust gross margins, with the

adjusted operating margin reducing

0.6ppts to 14.7% (FY 2023/24: 15.3%

at CER).

Sensing & Connectivity

division (“S&C”)

The S&C division designs,

manufactures and supplies highly

differentiated sensing and connectivity

components for industrial applications.

The division operates across nine

countries and comprises four clusters

and four further businesses. Almost

all products are manufactured

in-house at one of the division’s 19

manufacturing facilities, with its

principal sites being in Hungary, the

Netherlands, Norway, Slovakia, the

UK and the US. Geographically, 22%

of sales by destination are in the UK,

48% in the rest of Europe, 24% in North

America and 6% in Asia.

Divisional orders of £177.4m were

particularly strong, increasing by 18%

at CER and by 12% organically (up 15%

in the final quarter) as earlier design

wins generated new business, for a

book-to-bill ratio of 1.01 improving

from 0.89 last year. The increase in

orders came from the industrial,

security and medical sectors. As with

the destocking phase, S&C exhibits

earlier cycle characteristics than M&C.

Overall, the divisional order book

increased by 3% since 31 March 2024

to £67.0m, representing 4.5 months

of sales, and being in line with historic

norms.

Sales were 1% ahead of last year

organically, with a pick-up through

the year in industrial and connectivity

applications along with strong

demand in data security applications,

offsetting continued destocking

in other sectors. H2 organic sales

increased by 6% compared with a 5%

reduction in the first half. By region,

the Nordics increased by 13% for the

year, the rest of Europe by 7% and

North America by 5%, while the UK

was down 6% and Asia down 34%,

mainly related to local customer

project delays.

This year saw the acquisitions of

Hivolt, a Northern Ireland-based

specialist capacitor designer and

manufacturer, and Burster, a German-

based sensor manufacturer, into the

division. Combined with a 3% sales

increase from these acquisitions and

acquisitions in the prior year, overall

divisional sales increased by 4% CER.

Including the impact of translation

from a stronger Sterling on average,

reported divisional revenue increased

by 2% to £175.5m (FY 2023/24: £171.9m

reported and £169.5m at CER).

Adjusted operating profit of £36.0m

was £7.4m (+26%) higher than last year

at CER and £7.1m (+25%) higher on a

reported basis (FY 2023/24: £28.9m).

The adjusted operating margin of

20.5% was 3.6ppts higher than last year

at CER (FY 2023/24: 16.9%), reflecting

the positive effect of operational

efficiencies, robust gross margins and

higher margin acquisitions.

The Group has a

strong bank of

design wins built

up over many

years, forming the

basis of strong

through-cycle

organic growth.”

Strategic Report

25 Annual Report and Accounts for the year ended 31 March 2025

Design wins driving future

recurring revenues

Our business revenue is created

by engineering development with

customers and, as such, organic

growth is achieved by winning new

design opportunities that lead to

pull-through demand. Project design

wins are therefore an indicator of new

business creation and are achieved by

working with customers at an early

stage in their project design cycle to

identify opportunities. A design win

is registered when our products are

specified into our customers’ designs.

The Group has a strong bank of design

wins built up over many years, forming

the basis of strong through-cycle

organic growth. During the year, new

design wins were registered with an

estimated lifetime value of £355m, an

increase of 5% over last year (and up

30% on two years ago). Conversion

of design wins into revenue by some

customers was delayed during the

inventory destocking phase, and we

expect that as this comes to an end,

along with more buoyant market

conditions, they will convert into new

revenue growth.

Additionally, new project design

activity remains at a high level, being

broad-based across all target markets.

The total pipeline of ongoing projects

continues to be very strong.

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 supports integration and

helps retain a dynamic, decentralised

and entrepreneurial culture.

We acquire high-quality businesses

that are successful with good long-

term growth prospects, paying

a price that reflects this quality

while generating good returns for

Shareholders. 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, 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 and

management transition

Investment:

■ Capital investment in

manufacturing and infrastructure

■ Internationalising operations

■ Expansion through further

acquisitions

■ Upgrading systems such as 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

The Group has acquired 28 design

and manufacturing businesses over

the last 14 years, with the Group’s

continuing revenues increasing to

£423m in FY 2024/25 from £10m in

FY 2009/10. By taking a long-term

approach to creating compounding

growth in acquired and integrated

businesses, the Group has generated

substantial value organically. As

reported in the Finance section, our

ROCE for each acquisition typically

increases over time, broadly in line

with the length of ownership.

During the year, the Group completed

two high margin acquisitions as follows:

i. Hivolt Capacitors Limited (“Hivolt”),

a Northern Ireland-based designer

and manufacturer of custom-built

capacitors for a wide range of high

voltage applications for sale in the

UK and internationally, mainly

into the medical market. Hivolt

was acquired in August 2024 into

the S&C division, for an initial cash

consideration of £3.8m on a debt

free, cash free basis representing

an EBIT multiple of 6x. Additionally,

there is an earn-out of up to

£0.9m payable subject to Hivolt’s

performance up to 31 March 2025.

ii. Burster Group (“Burster”), a

German-based designer and

manufacturer of specialist sensors

for markets closely aligned to the

Group’s target markets. Burster

was acquired in January 2025 into

the Variohm sensors cluster in

the S&C division for an initial cash

consideration of €30.6m (£25.6m)

on a debt free, cash free basis,

representing an EBIT multiple

of 8x. Additionally, there is an

earn-out of up to £10.5m payable

subject to Burster’s performance in

its year ending 31 December 2025.

The Group’s operating model is well

established and has facilitated the

smooth integration of these and

previously acquired businesses.

Sustainability and social

responsibility

The Group creates innovative

electronics that help improve

the world and people’s lives. This

commitment is reflected in our focus

on markets that are aligned with the

UN Sustainable Development Goals

(UN SDGs). More information on how

we work with customers and suppliers

to support the UN SDGs is available on

our website at www.discoverIEplc.com.

discoverIE Group plc Innovative Electronics26

STRATEGIC AND OPERATIONAL REVIEW

CONTINUED

As of June 2025, the Group has

an MSCI ESG rating of “A” and

Morningstar Sustainalytics Regional

(Europe) Top Rated and Industry

(Technology Hardware) Top Rated

with a “Negligible” risk of experiencing

material financial impacts from ESG

factors. In February 2025, the Group

was awarded a “B” for its 2024 climate

disclosure by the Carbon Disclosure

Project (“CDP”), a leading global

environmental disclosure platform

used by over 24,800 organisations

worldwide. This marks a significant

improvement from previous ratings

and reflects the Group’s efforts in

improving climate disclosures.

In early 2025, the Group completed a

reassessment of its climate-related risks

and opportunities, incorporating newly

acquired businesses. The assessment

confirmed that there had been no

material change in the Group’s climate-

related risk profile. Further details will

be found on pages 53 to 67, and on the

discoverIE plc website.

During the year, the Group continued

its progress across a range of ESG-

related areas, including the following:

Scope 1 & 2 emissions: In CY2024,

Scope 1 & 2 emissions reduced by 59%

compared to the CY2021 baseline. The

Group remains on track to achieve its

intermediate target of a 65% reduction

by the end of CY2025 and goal of a

90% reduction in Scope 1 & 2 emissions

by 2030.

■ Environmental targets: The

Group has also progressed well

in its environmental targets. The

proportion of Group revenue

now covered by the ISO 14001

environmental accreditation

increased to 74%, against our target

of 80% (CY2023: 69%). Additionally,

50% of the Group’s car fleet is

now electric or hybrid, meeting

our FY25 target (CY2023: 40%).

The installation of solar panels at

one of the Group’s sites in China

has now been completed, further

advancing the Group’s self-

generation capacity. This initiative

not only reduces emissions but also

enhances energy security. Today,

83% of the electricity consumed

across the Group comes from

renewable or zero-emission sources

(CY 2023:72%), achieving our 80%

clean electricity target a year early.

■ Scope 3 emissions: Scope 3

emissions reporting has been

enhanced. Following the initial

screening of CY2023 emissions,

the Group has standardised its

Scope 3 reporting process and

requirements. The Group is

committed to its net-zero plan set

out in 2022 and its net-zero targets

were approved by SBTi in May 2025.

■ Health & Safety: Three more sites

achieved the occupational health

& safety ISO 45001 accreditation,

bringing coverage to 73% of our

global workforce (CY2023: 60%).

Reflecting the importance that we

place on health & safety, the Group

has adopted a revised Group

Health & Safety Policy, as well as

more rigorous measures to capture

and record incidents occurring and

improved near-miss reporting. As

a result, the number of reported

lost time incidents increased in

2024. Further details can be found

on pages 48 to 49, and on the

discoverIE plc website.

■ Cyber security and AI

governance: The Group has rolled

out a broader and increased

level of cyber security awareness

training and is currently

developing a formal governance

framework for the use of artificial

intelligence, addressing both the

significant opportunities that this

brings to the Group, as well as the

risks it poses.

■ Learning and development: In

addition to local training that

individual businesses already

conduct, the Group has introduced

a new online learning and

development platform, which

has been adopted by ten of our

businesses already. A series of

knowledge sharing webinars

has also been introduced to

encourage collaboration and the

exchange of expertise and best

practices across the Group. An

industrial placement scheme has

been launched in partnership

with the University of Surrey, with

the first group of engineering

students having started training in

September 2024.

Summary and outlook

discoverIE delivered another strong

performance with record operating

profits and earnings, despite

prolonged industry-wide destocking,

which resulted in 3% lower sales for

the year. Adjusted operating margins

increased to 14.3%, comfortably

exceeding our target for the year,

with excellent cash generation once

again. Fourth quarter orders increased

significantly in both divisions, as

inventories normalised.

Our flexible production model

together with Group-wide operating

efficiencies more than offset

lower sales, protecting profitability

through this stage of the cycle. This

is a great strength of the Group,

enabling growth in operating profits

and margins in each of the last 10

years (in-line in the Covid year) and

reducing earnings cyclicality. We

see the potential to deliver further

manufacturing efficiencies and

commercial synergies across the

Group and have upgraded our five-

year operating margin target to 17%.

Whilst we will pass on any incremental

tariff costs, we continue to do all we

can to mitigate them with our local

manufacturing and expect limited

direct impact, although remain

mindful of the volatile economic

conditions and its potential to impact

customers’ demand.

discoverIE is aligned with target

markets which are underpinned by

structural growth drivers and, with the

addition of the security market during

the year, our total market opportunity

increased to over $30bn. With a strong

pipeline of organic and inorganic

opportunities, the Group is well placed

to continue its resilient performance

and development.

Nick Jefferies

Group Chief Executive

Strategic Report

27 Annual Report and Accounts for the year ended 31 March 2025

Simon Gibbins

Group Finance Director

REPORTED OPERATING

PROFIT

£42.4m

(FY2024: £31.2m)

ADJUSTED OPERATING

CASH FLOW

£62.3m

(FY2024: £59.2m)

FREE CASH FLOW

£40.4m

(FY2024: £37.0m)

This is another

strong set of

results against a

tough backdrop,

with record

adjusted operating

profits, margins,

earnings and cash

generation.”

Revenue and orders

Group sales of £422.9m were 2% lower than last year at CER and 3% lower

reported (FY 2023/24: £437.0m). Seven acquisitions in the last two years (Silvertel,

2J Antennas, Shape, IKN and DTI last financial year plus, Hivolt and Burster

this year), added 7% to revenue while the disposal of the Santon solar business

announced last year reduced sales by 2%. Organic sales reduced by 7% following

a year of customer destocking.

Revenue (£m)

2024/25

2023/24 %

Organic sales 388.3 415.9 -7%

Acquisitions 30.7

Disposals 3.9 13.7

Sales at CER 422.9 429.6 -2%

FX translation 7.4

Reported sales 422.9 437.0

-3%

Orders for the year were £411.9m, 8% higher at CER than last year (FY 2023/24:

£382.9m). The extent of customer destocking reduced in the year compared with

last year with a book to bill ratio of 0.97 (FY 2023/24: 0.89), with orders in the year

increasing by 2% organically.

The Group order book continued to normalise during the year, ending at £161m

(c.4.5 months of annualised sales, consistent with pre-Covid levels) (31 March 2024:

£175m).

Group operating profit and margin

Group adjusted operating profit for the year was £60.5m, an 8% increase on last

year at CER and up 6% reported (FY 2023/24: £57.2m). This delivered an adjusted

operating margin of 14.3%, which was 1.2ppt higher than last year at CER and on a

reported basis (FY 2023/24: 13.1%). We exceeded our 13.5% near-term target set for

this year and with the H2 operating margin of 14.8% already close to our medium

target of 15%, we’ve increased our target to 17% by FY 2029/30.

Group reported operating profit for the year (including acquisition and disposal-

related costs as discussed below within Adjusting items) was £42.4m, 36% higher

than last year (FY 2023/24: £31.2m).

discoverIE Group plc Innovative Electronics28

FINANCIAL REVIEW

FY 2024/25 FY 2023/24

£m

Operating

profit

Finance

cost

Profit

before tax

Operating

profit

Finance

cost

Profit

before tax

Adjusted 60.5 (10.4) 50.1 57.2 (9.0)

48.2

Adjusting items

Amortisation of acquired intangibles (16.2) – (16.2)

(16.2) – (16.2)

Net acquisition and disposal

expenses

(1.9) – (1.9)

(9.8)

– (9.8)

Reported 42.4 (10.4) 32.0 31.2 (9.0)

22.2

As shown below, adjusted operating profit growth has been achieved through a combination of robust gross margins,

operational efficiencies and accretive acquisitions offsetting the impact of customer destocking on organic sales.

£m

Adjusted

operating

profit

FY 2023/24 57.2

Gross profit on organic sales reduction (11.4)

Organic gross margin improvement 6.2

Organic operational efficiencies 2.8

Organic profit reduction (2.4)

Profit from acquired companies 6.8

CER growth in operating profits 4.4

Foreign exchange impact (1.1)

Net growth in operating profits 3.3

FY 2024/25 60.5

Through a number of manufacturing and operating initiatives, organic gross margins improved by 1.6ppts and organic

operating costs reduced by 2% with reductions shared across divisions and at Head Office. Gross margin improvement was

delivered despite volume reduction which reflects the Group’s ability to flex capacity resources according to volume.

Sterling was 1% stronger this year compared with our other major currencies (the Euro, US dollar and Nordic currencies),

giving rise to a reduction in adjusted operating profits on translation of £1.1m for the year.

UK employers’ National Insurance rates, which were raised in the UK budget in October 2024, will increase costs for the

Group by c.£0.8m per year from April 2025.

29 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Adjusting items

Adjusting items for the year comprise

the amortisation of acquired

intangibles of £16.2m (FY 2023/24:

£16.2m) together with net acquisition

and disposal expenses of £1.9m

(FY 2023/24: £9.8m).

The amortisation charge for the year of

£16.2m is in line with last year, with the

increased effect of recent acquisitions

offset by FX movements.

Net acquisition and disposal expenses

of £1.9m comprise costs associated

with recent acquisitions of £1.4m and

integration costs of £3.1m (related to

the establishment of our operating

clusters, mainly associated with

removing duplicate positions in our

Magnetics and Sensors clusters) offset

by a gain of £2.6m. This gain comprises

£2.1m profit generated by the sale of

the non-core Santon solar business

announced last year and a net credit of

£0.5m, being the movement in the fair

value of contingent consideration on

past acquisitions.

Financing costs

Net finance costs for the year were

£10.4m (FY 2023/24: £9.0m) and

include a £1.0m charge for leased

assets under IFRS 16 (FY 2023/24:

£0.7m) and a £0.6m charge for

amortised upfront facility costs

(FY 2023/24: £0.6m). Net finance costs

related to our banking facilities were

£8.8m (FY 2023/24: £7.7m), an increase

of 14%, reflecting higher average net

debt balances during the year. The

impact of interest rate increases and

reductions over the last two years was

largely neutral.

During the year, interest rates started

to reduce from the highs at the end

of last year, with the Sterling base

rate reducing by 0.75ppt to 4.5%, the

US Dollar Federal rate by 1ppt to 4.5%

and the ECB lending rate by 1.85ppts

to 2.65%, these being the Group’s

three principal borrowing currencies.

Since the year end, Sterling and ECB

lending rates have both reduced

by a further 0.25ppt. A further 1ppt

reduction in interest rates for all three

of our principal borrowing currencies

would reduce annual finance costs

by approximately £1.3m and increase

annual EPS by c.1.0p or c.3%.

Adjusted tax rate

The adjusted effective tax rate (“ETR”)

for the year was 24% which was 1ppt

lower than last year (FY 2023/24: 25%)

mainly due to increased recognition of

tax losses.

The overall ETR of 23% was 1ppt lower

than the adjusted ETR as shown in the

table below. Last year’s overall ETR was

7ppts higher (FY 2023/24: 30%) mainly

due to there being a lower rate of tax

relief that year on acquisition and

disposal expenses (within adjusted

items above).

FY 2024/25 FY 2023/24

£m PBT ETR PBT ETR

Adjusted 50.1 24% 48.2 25%

Adjusting items:

Amortisation of acquired intangibles (16.2) 19% (16.2) 22%

Net acquisition & disposal expenses (1.9) 79% (9.8)

16%

Total reported 32.0 23% 22.2 30%

Profit before tax and EPS

While adjusted operating profit was up 8% at CER, higher net finance costs resulted in adjusted profit before tax being up

4% (FY 2023/24: £48.2m) at £50.1m (+£1.9m) with adjusted EPS for the year increasing by 5% to 38.7p (FY 2023/24: 36.8p).

FY 2024/25 FY 2023/24

£m PBT EPS PBT EPS

Adjusted 50.1 38.7p 48.2 36.8p

Adjusting items:

Amortisation of acquired intangibles (16.2) (16.2)

Net acquisition & disposal expenses (1.9) (9.8)

Total reported 32.0 25.0p 22.2

15.8p

Reported profit before tax was £32.0m, 44% higher than last year (FY 2023/24: £22.2m) with reported fully diluted earnings

per share of 25.0p, 58% ahead of last year (FY 2023/24: 15.8p).

discoverIE Group plc Innovative Electronics30

FINANCIAL REVIEW CONTINUED

Working capital and asset

return ratios

Working capital at 31 March 2025 was

£79.0m, equivalent to 17.2% of fourth

quarter annualised sales at CER, with

a net additional £3.1m of working

capital from acquisitions and disposals

during the last 12 months offset by

organic working capital reductions

of £0.3m and £1.3m from foreign

exchange translation. Excluding

acquisitions this year which had

high working capital, the equivalent

working capital percentage was 16.5%.

This is 0.1ppt lower than last year when

working capital was £77.5m or 16.6% of

fourth quarter annualised sales.

Working capital KPIs have remained

robust with debtor days of 46 (four

days below last year), creditor days of

80 (in line with last year) and stock

turns of 3.1 (compared to 3.3 last year).

ROCE for the year of 15.8% was 0.8ppts

ahead of our 15% target and 0.1ppt

ahead of the ROCE reported last year

(FY 2023/24: 15.7%).

Organic ROCE (which excludes

acquisitions completed in the last 18

months), was 17.5%; although 0.3ppts

down on last year due to destocking,

we expect this to grow well going

forward. The effect of compounding

growth on acquisitions over time

can be seen in the ROCE for those

businesses acquired more than

seven years ago which in aggregate

have a ROCE of 27% including an

apportionment of Group central costs.

Return on Tangible Capital Employed

(“ROTCE”) for the year, which excludes

goodwill, intangible assets and non-

operational assets, was 52.1% and

illustrates both the strong returns

being generated by the Group’s

operational assets, and the capital-

light requirements of those businesses

with capital expenditure of only 1.4%

of sales in the year (FY 2023/24: 1.1%).

ROTCE was 1.9ppts below last year (FY

2023/24: 54.1%) due to higher right of

use assets this year.

Cash flow

Net debt at 31 March 2025, excluding leases, was £94.3m, compared with £104.0m at 31 March 2024, with the reduction in

the year of £9.7m driven by strong free cash generation and disposal proceeds partly offset by acquisitions and dividends.

£m

2024/25

2023/24

Opening net debt (104.0) (42.7)

Free cash flow (see table below) 40.4 37.0

Dividends (11.7) (11.2)

Acquisitions & integrations (33.3)

(85.3)

Disposals 13.5 (0.1)

Equity issuance (net of taxes) – (0.3)

Foreign exchange impact 0.8

(1.4)

Net debt at 31 March (94.3) (104.0)

Investment in acquisitions and integrations this year of £33.3m comprised £24.3m for the acquisition of Burster in January

2025, £3.5m for the acquisition of Hivolt in July 2024, £2.3m payment of earnouts, and £3.2m of acquisition and integration

expenses. Net disposal receipts of £13.5m included £7.2m related to the disposal of the Santon solar business announced last

year and £5.8m being the deferred consideration from the disposal of Acal BFi which completed in March 2022. All proceeds

have now been received in full, and on time, in relation to both these disposals.

Dividends of £11.7m, were paid during the year, an increase of 4.5% over the prior year. The impact of stronger Sterling in

the year led to an FX gain of £0.8m compared with an FX loss last year of £1.4m. The Group’s policy is to hold net debt in

currencies aligned to the currency of its cash flows as a natural hedge.

Adjusted operating cash flow and free cash flow for the year (see definitions in note 6 to the summary consolidated financial

statements) compared with last year are shown below:

Strategic Report

31 Annual Report and Accounts for the year ended 31 March 2025

£m

2024/25

2023/24

Adjusted profit before tax 50.1 48.2

Net finance costs 10.4

9.0

Non-cash items

15.1 15.9

Adjusted EBITDA 75.6 73.1

IFRS 16 - lease payments (7.5) (6.8)

EBITDA (pre IFRS 16) 68.1 66.3

Changes in working capital 0.3 (2.2)

Capital expenditure (6.1) (4.9)

Adjusted operating cash flow 62.3 59.2

Finance costs (9.0) (7.7)

Taxation (10.6) (12.5)

Legacy pension (2.3) (2.0)

Free cash flow 40.4 37.0

Non-cash items are depreciation, amortisation and share-based payments.

Adjusted EBITDA (pre IFRS 16 lease

payments) of £68.1m was 3% higher

than last year (FY 2023/24: £66.3m)

with operational efficiencies and

contributions from the seven

acquisitions made in the last two years

offsetting the cash impact of reduced

organic sales.

During the year, the Group released

£0.3m into working capital (compared

to a £2.2m investment last year)

reflecting reduced organic sales.

Capital expenditure of £6.1m was

invested during the year, representing

1.4% of sales, a £1.2m increase over last

year (FY 2023/24: £4.9m, 1.1% of sales)

reflecting the capital-light nature

of the business model. This year’s

investment includes a facility move in

China and various new production line

extensions. Capital expenditure levels

are expected to increase to c.£8m for

next year.

A record £62.3m of adjusted operating

cash flow was generated in the year,

an increase of 5% on last year (FY

2023/24: £59.2m) representing 103% of

adjusted operating profit, well ahead

of our 85% target (FY 2023/24: 103%).

Over the last ten years, the Group has

consistently achieved high levels of

operating cash conversion, averaging

over 100%.

Finance cash costs of £9.0m were

£1.3m higher than last year, reflecting

higher average net debt balances

during the year, while corporate

income tax payments of £10.6m were

£1.9m lower than last year reflecting

changes in the timing of payments.

Free cash flow (being cash flow before

dividends, acquisitions and equity

fund raises) of £40.4m was generated

in the year, an increase of 9% over last

year (FY 2023/24: £37.0m) representing

a free cash conversion of 106% of

adjusted earnings, again well ahead of

our 85% target.

Banking facilities

The Group has a £240m syndicated

banking facility which extends to

August 2027. In addition, the Group

has an £80m accordion facility which

it can use, with bank approval, to

extend the total facility up to £320m.

The syndicated facility is available

both for acquisitions and for working

capital purposes, and comprises seven

lending banks.

With net debt (excluding IFRS 16

leases in accordance with our banking

covenants) at 31 March 2025 of

£94.3m, the Group’s gearing ratio at

the end of the year (being net debt

excluding IFRS 16 leases divided by

Adjusted EBITDA as annualised for

acquisitions) was 1.3x compared with

a target gearing range of between

1.5x and 2.0x. Together with cash

generation during FY 2025/26, the

Group has access to acquisition

funding of c.£80m for the year ended

31 March 2026 while remaining within

our target gearing range.

Defined benefit pension

scheme

In January 2025, the Group completed

the buy-in of its legacy UK defined

benefit pension scheme with Just

Retirement Limited for a premium of

£29.1m, funded primarily from existing

scheme assets. The buy-in delivers

greater security to scheme members,

while substantially removing all of the

Group’s exposure to defined benefit

liabilities and investment, longevity,

interest rate and inflation risks in

respect of the scheme. Following

the buy-in, future pension cash costs

should be c.£1.5m per year lower than

this year.

discoverIE Group plc Innovative Electronics32

FINANCIAL REVIEW CONTINUED

Balance sheet

Net assets of £308.0m at 31 March 2025 were £6.4m higher than at the end of the last financial year (31 March 2024: £301.6m).

The increase primarily relates to net profits for the year of £24.6m, partially offset by dividends paid during the year of £11.7m.

The movement in net assets is summarised below:

£m

2024/25

Net assets at 31 March 2024 301.6

Net profit after tax 24.6

Dividend paid (11.7)

Currency net assets – translation impact (3.7)

Loss on defined benefit pension scheme (3.5)

Share-based payments (inc tax) 0.7

Net assets at 31 March 2025 308.0

Risks and uncertainties

The principal risks faced by the Group

are covered in more detail on pages

73 to 78 of this report. These risks

comprise: the economic environment,

particularly linked to the geopolitical

issues arising from the ongoing

conflicts in Ukraine and in the Middle

East; the imposition of US trade tariffs

and counter tariffs; the performance

of acquired companies; climate-

related risks; loss of major customers

or suppliers; technological changes;

major business disruption; cyber

security; loss of key personnel; control

risk; product liability; liquidity and debt

covenants; exposure to adverse foreign

currency movements; and non-

compliance with legal and regulatory

requirements.

The Board reviewed the Group’s

principal risks and the mitigating

actions and processes in place

during the financial year. The Board’s

view is that risks associated with

the macroeconomic environment,

including the impact from US tariffs,

have increased during the financial

year, with no material change to the

relative importance or quantum of the

Group’s other principal risks.

The risk assessment and review are

an ongoing process, and the Board

will continue to monitor risks and

the mitigating actions in place.

The Group’s risk management

processes cover identification, impact

assessment, likely occurrence and

mitigation actions where practicable.

Some level of risk, however, will

always be present. The Group is

well positioned to manage such

risks and uncertainties, if they arise,

given its strong balance sheet,

committed banking facility of £240m

and the adaptability we have as an

organisation.

Simon Gibbins

Group Finance Director

Strategic Report

33 Annual Report and Accounts for the year ended 31 March 2025

Stakeholder engagement remains vital to building a sustainable business and

we interact with many stakeholders at different levels of the Group. Engagement

is carried out by those most relevant to the stakeholder group or issue. The table

below identifies some of our stakeholders and how we engage with them.

Our people

Why it is important to engage

Employee engagement is critical

to our success. We work to create

a diverse and inclusive workplace

where employees can reach their

full potential. Engaging with our

employees ensures we can retain

and develop the best talent. Please

see pages 48 to 49 for more on

employee engagement.

Stakeholder key interests

■ Health and safety

■ Remuneration and benefits

■ Career opportunities

■ Employee engagement

■ Training and development

■ Well-being

■ Reputation

Ways we engage

■ Employee surveys

■ Regular town hall meetings

■ Board and Group management

visits to operating companies

■ Annual performance

evaluations

■ Newsletters

■ Employee events

■ Social media

■ Apprenticeship and placement

programmes

■ Online learning and

development portal

■ Fair pay

■ Recognition and reward

Customers

Why it is important to engage

Understanding the needs of our

customers allows us to provide

application-specific products which

both add value and differentiate our

customers from their competitors.

We engage with our customers to

build trusting relationships from

which we can mutually benefit.

Stakeholder key interests

■ Safety, quality, efficiency and

reliability

■ Engineering capabilities

■ Technical know-how

■ Competitiveness

■ Our availability and

responsiveness

■ Relationship

■ Compliance

■ Convenience

■ Range of products

Ways we engage

■ Customer visits, telephone calls,

engineering visits

■ Participation in industry forums

and events

■ Social media and commercial

websites

■ Contract negotiation,

implementation and

management of ongoing

relationships

■ Customer audits of our

manufacturing facilities

■ Trade shows and exhibitions

■ Distributor conferences

■ Geographical footprint allows

us to meet customers in their

locations

■ Satisfaction surveys

Shareholders

Why it is important to engage

To understand their requirements

and generate returns and value.

We ensure that we provide timely

disclosures and fair, balanced

and understandable information

to Shareholders and investment

analysts and work to ensure that

they have a strong understanding

of our strategy, performance,

culture and ambition.

Stakeholder key interests

■ Growth

■ Financial performance and

economic impact

■ Governance and transparency

■ Operating and financial

information

■ Confidence in the Group’s

leadership

■ Dividend growth

Ways we engage

■ Regular market updates

■ Investor presentations

■ 1x1 and group meetings

■ Site visits

■ Corporate website, including

dedicated investor section

■ Shareholder consultations

■ Annual reports

■ Annual General Meetings

■ Capital Markets Day

■ Investor conferences and

roadshows

discoverIE Group plc Innovative Electronics3434 discoverIE Group plc Innovative Electronics

OUR ENGAGEMENT WITH STAKEHOLDERS

Our operating businesses

Why it is important to engage

We operate a decentralised model

where our operating businesses

are empowered to innovate and

grow, and decision-making takes

place on the frontline and close to

customers. Our companies are key

stakeholders of the Group and are

vital for our growth strategy.

Stakeholder key interests

■ Operational and financial

performance

■ International expansion

■ Capital investment

■ Collaboration

■ Strategic guidance

■ Resources and support

Ways we engage

■ Quarterly business reviews

■ Regular site visits and

management meetings

■ Operating business

management forums

■ Support in specialist areas, such

as tax, legal and commercial,

M&A, and ESG

■ Sustainability workshops

■ Knowledge-sharing webinars

■ Internal audit and compliance

■ Internal conferences

The Group promotes policies and procedures that consider

the interests of the Group’s employees, the need to foster

reasonable business relationships with suppliers, customers

and others, the impact of the Group’s operations on its

workforce, the community and the environment, and

the maintenance of high standards of business conduct.

Our policies and procedures, including our Stakeholder

Engagement Policy, can be found at our Group website

www.discoverIEplc.com/sustainability/company-policies and

are referred to on pages 41 and 89 of this Annual Report and

Accounts.

Day-to-day responsibility for implementation of policies

(other than the Board Diversity Policy) is delegated to the

management of discoverIE’s operating businesses, under the

supervision of the Group Management Committee.

Where appropriate, the Group policies and procedures are

supported by the local operating businesses’ policies, all within

a framework established by the Board and Group Management

Committee, intended to ensure that we operate as a Group to

the highest standards.

The Group also has due diligence processes in place to support

the ongoing assessment and management of risks associated

with both existing and newly acquired companies and the

development of relationships with new suppliers.

These include site visits by both executive and non-executive

management, meetings with customers and suppliers and,

where relevant, asking our suppliers to confirm compliance with

Group policies.

As an international organisation, discoverIE takes account of

cultural differences between the various territories in which it

operates. discoverIE’s values are essential to how it operates and

to the long-term success and growth of the Group.

Management considers environmental, social and governance

matters in its actions and endeavours to show due respect for

human rights and works to high standards of integrity and

ethical propriety.

discoverIE believes that who we are and how we behave matters

not only to our employees but also the many other stakeholders

who have an interest in our business. In the last three years,

none of our staff have been involved in any matters involving

bribery or corruption, and no disciplinary action has been taken

against any person who reported any whistleblowing issue.

Suppliers

Why it is important to engage

Our external supply chain and

our suppliers are critical to our

performance. We engage with

our suppliers to build trusting

relationships from which we can

mutually benefit and to ensure

that they are performing to our

standards and conducting business

to our expectations.

Stakeholder key interests

■ Quality management

■ Cost-efficiency

■ Long-term relationships

■ Responsible procurement, trust

and ethics

■ Technological advances,

including digital solutions

■ Knowledge sharing

Ways we engage

■ Joint customer visits

■ Supplier audits

■ Employee training

■ Regular business reviews

■ Geographical footprint allows

smaller suppliers to operate

globally

■ Logistics efficiencies

■ Supplier conferences

Global communities

Why it is important to engage

We support communities and

groups local and relevant to our

operations and consider the

environmental and social impacts

of our operations.

Stakeholder key interests

■ Local operational impact

■ Health and safety and

environmental performance

■ Employment

Ways we engage

■ Charitable donations and

volunteering

■ Corporate and operating

company websites

■ Local environmental initiatives

■ Prioritising local employment

Strategic Report

35 Annual Report and Accounts for the year ended 31 March 2025 Annual Report and Accounts for the year ended 31 March 2025 35

The Board of discoverIE Group plc takes seriously its duties to act in accordance with

legal requirements and appropriate business and ethical standards. This includes

fulfilling the duties described in Section 172 of the Companies Act 2006 (the “Act”).

Section 172

Duty to promote the success

of the company

A director of a company must act in the

way they consider, in good faith, would

be most likely to promote the success

of the company for the benefit of its

members as a whole, and in doing so

have regard (among other matters) to:

■ The likely consequences of any

decision in the long-term;

■ The interests of the company’s

employees;

■ The need to foster the company’s

business relationships with

suppliers, customers and others;

■ The impact of the company’s

operations on the community and

environment;

■ The desirability of the company

maintaining a reputation for high

standards of business conduct; and

■ The need to act fairly as between

members of the company.

The information below describes how

the Directors have had regard to the

matters referred to in Section 172 of

the Act in performing their duties

and constitutes the Board’s Section

172 Statement for the year ended

31 March 2025.

Section 172 of the Companies Act 2006

(the “Act”) The discoverIE Board’s response

Long-term decision-making (s.172(a))

The Board delegates day-to-day

management and decision-making to its

senior management team, but it maintains

oversight of the Company’s performance,

and reserves to itself specific matters for

approval, including the strategic direction of

the Group, acquisitions and disposals, and

entering into material contracts above set

thresholds.

The Board monitors performance against

strategy and that decision-making is

appropriate by receiving regular updates,

in Board and Committee meetings and at

other intervals, as appropriate.

Processes are in place to ensure that the

Board receives all relevant information to

enable it to make well-judged decisions for

the long-term success of the Company and

its various stakeholders.

In FY2025, the Board:

■ Considered long-term sustainability-related issues and their potential

impact on the Group’s strategy and ongoing performance, including

ongoing monitoring of climate-related risks and opportunities and

the Group’s net-zero targets and related plans. For further details on

our strategy and business model, please see pages 10 to 15 and for

details of progress relating to sustainability, please see pages 44 to 52.

■ Considered a number of acquisition proposals. The Board only

approves an acquisition if it is satisfied, after full consideration, that it

meets the Section 172(1) requirement that it is most likely to promote

the success of the Company for the benefit of its members as a whole,

and it considers the value forecasted to be added to the Group, over

a defined future period. This judgement is recorded. During the year,

the Board approved the acquisitions of Hivolt Capacitors (August

2024) and Burster (January 2025).

■ Received presentations on specific business areas and, through

ongoing discussion with business leaders, determined strategic

priorities for a three-year period, and the development of robust

supporting operating plans.

■ Agreed the Group’s principal risks, considered emerging risks and

received regular risk management and internal control reviews

throughout the year. The Group’s principal risks can be found on

pages 73 to 78, our approach to emerging risks can be found on page

71 and the work of the Audit & Risk Committee can be found in the

Audit & Risk Committee Report on pages 96 to 103.

■ Set annual budgets and capital allocation, and oversaw business

performance against targets, enabling the Board to confirm the

Company’s outlook for the year ahead, the going concern statement

and its longer-term viability.

discoverIE Group plc Innovative Electronics36

SECTION 172 STATEMENT

Section 172 of the Companies Act 2006

(the “Act”) The discoverIE Board’s response

Employee interests (s. 172(b))

The success of the Group depends upon a

highly skilled and motivated workforce, an

entrepreneurial and innovative culture, set

within structures that provide fairness for all.

In FY2025, the Board:

■ Received updates on the impact on staff of global inflation and

specific local issues affecting their livelihoods.

■ Continued to ensure that the communications between the Board,

Group Management Committee, individual operating companies

and Group staff were optimised. Board members and the Group

Management Committee also joined an internal conference in London,

which was attended by over 100 colleagues from across the Group.

■ Reviewed Board and senior management remuneration and

employment relations and arrangements across the Group.

For a summary of our employee engagement activities, please see page

34 and pages 86 to 89.

Relations with external parties (s. 172(c))

The Group works with a huge number and

variety of customers, suppliers and other

third parties. It is of great importance that

relations with those parties are appropriate.

In FY2025, the Board:

■ Regularly considered the marketplaces within which the Group’s

customers operate and the challenges they face, and opportunities

available. This helped shape the way in which resources were

allocated in order to ensure that the Group was well positioned to

meet customer needs.

■ Considered and approved the Company’s Stakeholder Engagement

Policy.

Please see pages 34 to 35 and 41 for more details on our approach to

stakeholder engagement.

Community and environment (s. 172(d))

Wherever the Group operates, it forms

a part of its local community and, more

broadly, seeks to ensure that it provides a

positive contribution to the environment.

In FY2025, the Board:

■ Continued its focus on environmental, social and governance matters,

as demonstrated by the focus of the Sustainability Committee, which

met three times over the course of the year. Further details can be

found in this report on pages 38 to 43.

■ Approved the submission of the Group’s net-zero emissions reduction

plans to the Science Based Targets initiative (SBTi).

■ Continued its support for the Community Foundation for Surrey.

Reputation for high standards of business

conduct (s.172(e))

The Board is responsible for developing a

corporate culture across the Group that

promotes integrity and transparency. It

has established comprehensive systems

of corporate governance, which promote

corporate responsibility and ethical behaviour.

In FY2025, the Board:

■ Received regular reports from the Group Risk Manager designed

to strengthen governance and compliance, integration of new

and recent acquisitions into the Group, and the identification and

management of existing and emerging risks.

■ Approved the Company’s Modern Slavery Act Statement.

Please see page 41 for further details on our Group Policies.

Acting fairly as between members of the

Company (s.172(f))

The Board aims to understand the views of

Shareholders and always to act in their best

interests.

In FY2025, the Board:

■ Maintained close relations with its main Shareholders through regular

dialogue, both after the publication of full-year and half-year results,

and on an ad hoc basis, as well as through attendance at a Capital

Markets Day hosted in London in September 2024.

■ Approved value-enhancing acquisitions, Hivolt Capacitors (August

2024) and Burster (January 2025).

■ Received investor relations updates at every Board meeting and

direct feedback from investors during specific consultation exercises

and on publication of trading results and updates.

■ Communicated with members ahead of the Annual General Meeting

on 26 July 2024 and then met with members at that meeting.

Other key activities

The Board met regularly throughout the year and, in the year ended 31 March 2025, held seven meetings. The Board’s

agenda considers all relevant matters at scheduled meetings.

As part of its regular programme of Board activities, the Board also receives reports from the Group Chief Executive, the

Group Finance Director and the Group General Counsel & Company Secretary, keeping them informed as to financial and

commercial performance and regulatory and legal affairs.

Strategic Report

37 Annual Report and Accounts for the year ended 31 March 2025

Rosalind Kainyah

Chair of the Sustainability Committee

We recognise

that many of the

sustainability

challenges we

face are shared

across industries

and borders. We

are keen to learn

from others and

to collaborate

wherever we can

to find practical,

scalable solutions.”

Dear Shareholder,

Sustainability continues to underpin

our purpose as a business. Our

strategy focuses on customers and

technologies that are crucial to solving

some of our world’s most pressing

environmental and social challenges.

Our target markets are aligned to

selected UN Sustainable Development

Goals – SDG 3 (Good Health and

Well-being), SDG 7 (Affordable and

Clean Energy), SDG 9 (Industry,

Innovation and Infrastructure), SDG 11

(Sustainable Cities and Communities),

and SDG 13 (Climate Action). Through

the design and manufacture of

innovative electronic components, we

support the transition to a low-carbon

economy, promote better healthcare

technologies, and bring people and

communities together through

connectivity solutions – delivering

sustainable growth for our business

and creating long-term value for our

stakeholders.

Our 30 operating businesses have a

presence in 20 countries around the

globe, providing employment to over

4,000 people directly, and more across

our value chain. Most of our businesses

are small- or medium-sized, and

our challenge is to balance relevant

and actionable local programmes

with the regulatory demands of a

large multinational group. We know

that fostering a safe, inclusive, and

supportive environment for our

employees, focused on their personal

development and growth, not only

reflects our values but is essential to

our growth. Likewise, the responsible

use of resources – such as energy, rare

minerals, plastics and water – and

active management of climate risks

are critical to our long-term resilience.

In 2025, we continued to make

meaningful progress across key

environmental and social priorities,

while maintaining strong financial

performance in a challenging market.

Among this year’s highlights:

■ We reduced our Scope 1 & 2 carbon

emissions by 59% compared to our

CY2021 baseline, keeping us on

track to achieve our interim target

of a 65% reduction by 2025 and

90% by 2030.

■ In CY2024, 83% of the electricity

used across the Group was from

renewable or low-carbon sources,

exceeding our 2025 target a

year early.

■ Local teams advanced our

accreditation efforts, with one site

achieving ISO 9001, three achieving

ISO 14001, and three achieving

ISO 45001. In addition, all 20 sites

that were due for recertification of

the above standards successfully

retained their accreditation.

■ We raised our benchmark for

workplace safety by adopting a

more stringent definition of lost

time incidents – now measured

from one day’s absence rather

than five – reflecting the high

standards we set across our

operations.

Since announcing our net-zero

commitment in November 2022,

we have made continuous progress

in improving our carbon reporting.

However, as anticipated, the

complexity and scale of collecting

and standardising Scope 3 carbon

discoverIE Group plc Innovative Electronics38

SUSTAINABILITY REPORT

emissions data for a group as diverse

as ours has resulted in challenges in

presenting year-on-year comparable

reporting. The increase in reported

Scope 3 emissions for CY2024 largely

reflects more comprehensive data

capture rather than an actual rise in

emissions. We are working closely

across our group of operating

businesses and with our greenhouse

gas (“GHG”) calculation service

provider to improve our GHG

emissions reporting quality and

consistency across the value chain.

In May 2025 our GHG reduction

targets were approved by the Science

Based Targets initiative (“SBTi”). Our

science-based net-zero target has

been validated by SBTi as follows:

■ Overall Net-Zero Target: discoverIE

Group plc commits to reach net-

zero greenhouse gas emissions

across the value chain by 2040.

■ Near-Term Targets: discoverIE

Group plc commits to reduce

absolute Scope 1 & 2 GHG

emissions 90% by 2030 from a 2021

base year. discoverIE Group plc also

commits to increase active annual

sourcing of renewable electricity

from 58% in 2021 to 100% by 2030.

discoverIE Group plc further

commits to reduce absolute Scope

3 GHG emissions 42% by 2030

from a 2023 base year.

■ Long-Term Targets: discoverIE

Group plc commits to maintaining

Scope 1 & 2 emissions at a level

less than 10% of 2021 levels from

2030 through to 2040. discoverIE

Group plc also commits to reduce

absolute Scope 3 GHG emissions

90% by 2040 from a 2023 base year.

In order to fulfil the requirements

of SBTi validation, we have now

calculated an estimated figure for

our downstream Scope 3 emissions

in the categories 10, Processing of

sold products; 11, Use of sold products;

and 12, End-of-life treatment of sold

products. Gathering detailed data

for these categories across all our

operating businesses would be

prohibitively time-consuming, and

we have therefore taken advantage of

the provisions within the Greenhouse

Gas Protocol to base our calculation

of emissions in these categories on

certain estimated information. Please

see page 65 of this report for further

details.

The regulatory landscape is evolving

rapidly. While we welcome efforts

to raise the bar on corporate

responsibility, the growing number

and complexity of sustainability-

related regulation in both the UK

and the European Union (“EU”) –

particularly under the EU’s Corporate

Sustainability Reporting Directive

(“CSRD”) – presents challenges,

especially for a group like ours,

where many operating companies

are small and new to these types

of regulations. The demanding

disclosure requirements risk stifling

businesses with excessive bureaucracy

and compliance costs. Navigating

these requirements and the current

uncertainty around some of these

regulations takes significant time and

resource and can risk shifting focus

from long-term value creation

to short-term compliance.

Our response is to stay focused on our

purpose: to design and manufacture

innovative electronics whilst reducing

our environmental impact and

making a positive social contribution.

We remain true to what is right for

our business and our stakeholders

by embedding responsible practices

across our operations and improving

the quality of our sustainability

reporting – keeping ourselves

accountable to you and our other

stakeholders.

Looking ahead, we know there is

more to do. Improving the quality

and consistency of non-financial data

across the Group is a priority. We are

focusing on metrics that allow us to

drive real change – both within each

of our operating companies and

across the Group as a whole – while

deepening our understanding of ESG

risks, opportunities and impacts to

inform strategic business decisions.

We also recognise that many of the

sustainability challenges we face are

shared across industries and borders.

We are keen to learn from others —

whether within or beyond our sector

— and to collaborate wherever we can

to find practical, scalable solutions. If

you have insights, ideas or feedback,

we welcome your engagement.

Rosalind Kainyah

Chair of the Sustainability Committee

3 June 2025

Strategic Report

39 Annual Report and Accounts for the year ended 31 March 2025

The Sustainability Committee is

supported by the Group Sustainability

Team (“GST”), which reports to the

Sustainability Committee and Group

Management Committee (“GMC”).

The GST comprises members with

sustainability, finance, legal and

operations experience. The team is

responsible for monitoring, reviewing,

consolidating and reporting the

Group’s operating businesses’

progress on sustainability. It drives

sustainability initiatives throughout

the Group and works closely with

divisional management and

individual operating businesses

on implementing the Group’s

sustainability strategy.

The GST works closely with the Group

Risk and Internal Audit and Group

Finance teams to identify, assess

and address sustainability risks and

opportunities, including climate-

related and social issues. These risks

are incorporated into our Group-wide

risk management processes along

with all other organisational risks and

opportunities.

The operating businesses’

performance against ESG targets are

incorporated into the annual bonus

process, with 8% of annual bonus

contingent on achieving ESG targets.

The Board

Ultimate responsibility for all Group operations, including sustainability

Sustainability Governance Framework

Whilst the Board has responsibility for overseeing our approach to sustainability, the Sustainability Committee is specifically

dedicated to more detailed consideration of sustainability strategies and policies, and oversees and monitors practices and

performance throughout the organisation. This is complemented by our wider governance structure as outlined in the

diagram below. For further details, see pages 54 to 55 of this report.

Group

Management

Committee

Sustainability

Committee

Remuneration

Committee

Audit & Risk

Committee

Divisional

Management

Group

Sustainability

Team

Operating

Company

Management

Risk & Internal

Audit functions

Key

Reporting line

Collaboration

discoverIE Group plc Innovative Electronics40

SUSTAINABILITY REPORT CONTINUED

Our Policies

As well as the general governance structures in place, discoverIE has a range of policies that it expects all of its businesses to

adhere to. These include the following (all available at www.discoverieplc.com/sustainability/company-policies/):

Policy Comment

Anti-Bribery & Corruption

Policy

■ The Group has a zero tolerance approach to bribery and corruption matters

and this is reflected in our Policy (which has been translated into all of the

Group’s predominant languages) and is supported through our global training

programme.

Board Diversity Policy

■ The Board adopted its first Diversity Policy in May 2021 and updated it in March

2025, with revised targets in line with latest guidance.

Business Ethics Policy

■ The Group is committed to strong ethical values and good corporate practice,

and aims to conduct its operations on sound business principles with trust,

honesty and integrity. This Policy provides a summary of those principles.

Conflict Minerals Policy

■ This Policy seeks to ensure that none of the Group’s operations are exposed to

sourcing conflict minerals anywhere in its operations.

Environmental Policy

■ This Policy summarises the Group’s overall environmental objectives and focus.

Human Rights Policy

■ Respect for the well-being of all people, staff, customers, suppliers and other

stakeholders alike is at the core of who we are and how we work. Treating people

fairly, with dignity and respect is essential to our long-term success.

Modern Slavery Statement

■ The Group is committed to ensuring that no forms of modern slavery exist in its

business operations or supply chains.

Supplier Code of Conduct

■ This Code defines the Group’s basic requirements of suppliers and in particular

their responsibilities to their stakeholders and the environment.

Sustainability Policy

■ This Policy outlines the Group’s commitment and priorities on matters

considered important for the Group’s long-term sustainability.

Group Tax Strategy

■ We seek to minimise exposure to material tax risk, ensure that tax affairs are

managed efficiently, comply with tax laws in all jurisdictions and avoid aggressive

tax planning.

Whistleblowing Policy

■ The Group encourages a “speak up” culture at all levels, if any kind of risk exists or

wrongdoing has occurred. A secure and confidential hotline to an independent

third party is provided and has been made available and advertised to staff at all

Group locations.

Stakeholder Engagement

Policy

■ This Policy summarises the Group’s approach to engaging with all stakeholders

appropriately and equitably.

Strategic Report

41 Annual Report and Accounts for the year ended 31 March 2025

Key

Medical

Industrial &

Connectivity

Renewable energy

Transportation

Security

HOW WE CREATE POSITIVE IMPACTS

Sustainability is an integral part of our business. We create a positive impact on the

world around us and people’s lives through both our products and our operations.

By creating innovative electronics and focusing on five target markets – renewable

energy, transportation, medical, security, and industrial & connectivity – we

contribute to the UN Sustainable Development Goals (“SDGs”). In FY2025, 79% of

the Group’s revenue was from the five UN SDG-aligned target markets.

Ensure healthy lives and

promote well-being for all ages

Ensure access to affordable,

reliable, sustainable and

modern energy for all

Build resilient infrastructure,

promote inclusive and

sustainable industrialisation

and foster innovation

Make cities and human

settlements inclusive, safe,

resilient and sustainable

Take urgent action to combat

climate change and its

impacts

How our products create positive

impacts

We design and make products that

go into medical devices and systems,

such as ultrasound machines and

defibrillators, contributing directly to

the health and well-being of people.

The Group’s sensing products are

used in environmental management

systems, such as indoor temperature

monitoring and water treatment plants.

How our products create positive

impacts

Renewable energy is a target market

for both our magnetics and sensing

products. We provide transformers,

switches and sensors for wind

and solar systems, supporting the

generation and distribution of

renewable and clean energy. Our

products are versatile and can be

adapted for other types of renewable

energy.

How our products create positive

impacts

We supply connectivity solutions

to infrastructure that underpins

the Internet of Things (“IoT”),

enables industrial automation and

digitalisation, and brings people and

communities together.

Our sensing and connectivity

products are used to improve the

resilience of infrastructure, such as

road bridges and railways.

How our products create positive

impacts

Our products play a crucial role in the

electrification of transportation and

energy efficiency. We provide charging

solutions for electric vehicles and

power solutions for mass transport,

such as trains and e-buses, helping

to reduce the use of fossil fuels. Our

magnetics products are used in the

distribution of renewable energy.

Our connectivity solutions enable

people to connect with one another,

building communities and making

them more inclusive.

How our products create positive

impacts

We design products that are more

energy efficient and less harmful to

the environment than the ones they

replace.

Our focus on products that

reduce carbon emissions, aiding

electrification, automation and

improving efficiency assists in

combating climate change.

Applicable markets

Applicable markets Applicable markets

Applicable markets

How our operations create positive

impacts

It is our responsibility to ensure that our

employees operate in safe and healthy

working environments. Each of our

operating businesses conducts health

and safety refresher training every year.

See pages 49 and 52 for health and

safety performance.

We have flexible and hybrid working,

which helps our employees achieve a

better work-life balance as appropriate

to local conditions. Our trained mental

health first aiders provide support to

colleagues on sites.

How our operations create positive

impacts

We support the growth of renewable

energy generation by switching

to renewable energy tariffs where

possible. Higher demand leads to

more investment.

Where economically appropriate,

we invest in renewable energy self-

generation, such as installing rooftop

solar panels. The solar systems installed

in our plants in China, Germany, Sri

Lanka, and Thailand in the last two

years have contributed to our overall

renewable energy generation capacity

and provided over 2.25 million kWh of

electricity in CY2024.

How our operations create positive

impacts

We are an electronic engineering

company and we design and create

innovative electronics that help to

improve the world and people’s lives.

Our engineers work with our

suppliers and customers to create

innovative solutions that solve

technical challenges. Our product

knowledge and technical know-how

enable us to create products for

industrial applications that contribute

to resilient infrastructure.

How our operations create positive

impacts

We are a global company but a local

operator. Our operating businesses

and employees have a strong

connection to the communities in

which they operate. Through our

operating businesses, we create

jobs and contribute to the social

and economic well-being of those

communities through tax revenues,

donations and volunteering.

Our security products ensure that

communities can enjoy personal

safety and a resilient environment.

How our operations create positive

impacts

We play our part in tackling climate

change by reducing carbon

emissions. Our net-zero targets set

out our commitment to reduce

emissions to net-zero within our

operations (Scope 1 & 2) by 2030,

and within our value chain (Scope 3)

by 2040. See our carbon reduction

performance on page 51.

We are also reducing resource

consumption, such as energy and

water, and recycling where possible

in our operations.

discoverIE Group plc Innovative Electronics42

SUSTAINABILITY REPORT CONTINUED

Ensure healthy lives and

promote well-being for all ages

Ensure access to affordable,

reliable, sustainable and

modern energy for all

Build resilient infrastructure,

promote inclusive and

sustainable industrialisation

and foster innovation

Make cities and human

settlements inclusive, safe,

resilient and sustainable

Take urgent action to combat

climate change and its

impacts

How our products create positive

impacts

We design and make products that

go into medical devices and systems,

such as ultrasound machines and

defibrillators, contributing directly to

the health and well-being of people.

The Group’s sensing products are

used in environmental management

systems, such as indoor temperature

monitoring and water treatment plants.

How our products create positive

impacts

Renewable energy is a target market

for both our magnetics and sensing

products. We provide transformers,

switches and sensors for wind

and solar systems, supporting the

generation and distribution of

renewable and clean energy. Our

products are versatile and can be

adapted for other types of renewable

energy.

How our products create positive

impacts

We supply connectivity solutions

to infrastructure that underpins

the Internet of Things (“IoT”),

enables industrial automation and

digitalisation, and brings people and

communities together.

Our sensing and connectivity

products are used to improve the

resilience of infrastructure, such as

road bridges and railways.

How our products create positive

impacts

Our products play a crucial role in the

electrification of transportation and

energy efficiency. We provide charging

solutions for electric vehicles and

power solutions for mass transport,

such as trains and e-buses, helping

to reduce the use of fossil fuels. Our

magnetics products are used in the

distribution of renewable energy.

Our connectivity solutions enable

people to connect with one another,

building communities and making

them more inclusive.

How our products create positive

impacts

We design products that are more

energy efficient and less harmful to

the environment than the ones they

replace.

Our focus on products that

reduce carbon emissions, aiding

electrification, automation and

improving efficiency assists in

combating climate change.

Applicable markets

Applicable markets Applicable markets

Applicable markets

How our operations create positive

impacts

It is our responsibility to ensure that our

employees operate in safe and healthy

working environments. Each of our

operating businesses conducts health

and safety refresher training every year.

See pages 49 and 52 for health and

safety performance.

We have flexible and hybrid working,

which helps our employees achieve a

better work-life balance as appropriate

to local conditions. Our trained mental

health first aiders provide support to

colleagues on sites.

How our operations create positive

impacts

We support the growth of renewable

energy generation by switching

to renewable energy tariffs where

possible. Higher demand leads to

more investment.

Where economically appropriate,

we invest in renewable energy self-

generation, such as installing rooftop

solar panels. The solar systems installed

in our plants in China, Germany, Sri

Lanka, and Thailand in the last two

years have contributed to our overall

renewable energy generation capacity

and provided over 2.25 million kWh of

electricity in CY2024.

How our operations create positive

impacts

We are an electronic engineering

company and we design and create

innovative electronics that help to

improve the world and people’s lives.

Our engineers work with our

suppliers and customers to create

innovative solutions that solve

technical challenges. Our product

knowledge and technical know-how

enable us to create products for

industrial applications that contribute

to resilient infrastructure.

How our operations create positive

impacts

We are a global company but a local

operator. Our operating businesses

and employees have a strong

connection to the communities in

which they operate. Through our

operating businesses, we create

jobs and contribute to the social

and economic well-being of those

communities through tax revenues,

donations and volunteering.

Our security products ensure that

communities can enjoy personal

safety and a resilient environment.

How our operations create positive

impacts

We play our part in tackling climate

change by reducing carbon

emissions. Our net-zero targets set

out our commitment to reduce

emissions to net-zero within our

operations (Scope 1 & 2) by 2030,

and within our value chain (Scope 3)

by 2040. See our carbon reduction

performance on page 51.

We are also reducing resource

consumption, such as energy and

water, and recycling where possible

in our operations.

43 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

Our sustainability strategy has three pillars: Our Planet, Our People and Our

Products, connected to the three aspects of sustainability: environmental, social,

and economic.

Our purpose is to create innovative electronics that help to improve the world

and people’s lives, now and in the future. Achieving our purpose and the long-

term sustainability of our business requires a comprehensive approach.

SCOPE 1 & 2 EMISSIONS

REDUCTION

59%

since CY2021 (CY2023: 47%)

ELECTRICITY FROM

RENEWABLE OR

CLEAN SOURCES

83%

(CY2023: 72%)

GLOBAL WORKFORCE

OPERATING AT SITES

WITH ISO 45001

ACCREDITATION

73%

(CY2023: 60%)

GROUP PRODUCTS

MANUFACTURED

UNDER ISO 9001

94%

(CY2023: 98%)

Our planet

We understand the urgent need

to preserve our planet for future

generations and to mitigate the

impact of climate change. At

discoverIE, we contribute to the

transition to a low carbon economy

– through our products that help

others reduce their emissions,

and through our operations by

committing to become a net-zero

emissions business.

Our focus areas

We focus on reducing greenhouse

gas emissions and energy intensity.

The Group has approved near and

long-term science-based emissions

reduction targets with the SBTi. The

Group commits to reach net-zero

greenhouse gas emissions across

the value chain by 2040, with a

near-term target of reducing Scope

1 & 2 emissions by 90% by 2030

from a 2021 base year and Scope 3

emissions by 42% by 2030 from a

2023 base year.

Our people

Our employees are our most

valuable asset. They are responsible

for developing innovative solutions,

creating high-quality products

and services, and building lasting

relationships with customers. Their

contribution is critical to achieving

our long-term success.

Our focus areas

We aim to maintain a positive and

diverse work environment that

fosters creativity, collaboration

and teamwork. In addition to

ensuring healthy and safe working

conditions, we also focus on

investing in our people through

learning and development to

ensure employees can grow and

thrive.

Our products

We produce high-quality, reliable

products that bring considerable

benefits to customers and the

environment alike.

Our focus areas

We help our customers around

the world create ever better

technical solutions to tackle

key environmental and societal

challenges. By focussing on

sustainable growth markets that

contribute to meeting five UN

SDGs, we are helping to address the

challenges facing the world today.

Our products play a critical role in

the functioning of larger systems,

which have zero tolerance to failure.

We focus on product quality and

reliability, which are paramount to

our customers, and ensures we can

enable them to support the SDGs.

See pages 42 to 43 for details of

how our markets align to the SDGs.

discoverIE Group plc Innovative Electronics44

OUR SUSTAINABILITY STRATEGY

At discoverIE, we contribute to the transition to a low-carbon economy

through our products that help others reduce their emissions, and through our

operations by committing to become a net-zero emissions business.

We understand the urgent need to preserve our planet for

future generations and to mitigate the impact of climate

change.

Greenhouse gas emissions

In November 2022, we announced our commitment to

achieve net-zero emissions and set science-based targets

for the near and long-term. In May 2025 we successfully

received validation from the Science Based Targets initiative

(“SBTi”) for our targets. The Group commits to reach net-

zero greenhouse gas emissions (“GHG”) across the value

chain by 2040. We commit to reduce absolute Scope 1 & 2

GHG emissions 90% by 2030 from a 2021 base year, and to

reduce absolute Scope 3 GHG emissions 42% by 2030 from

a 2023 base year. The Group commits to reduce absolute

Scope 3 GHG emissions 90% by 2040 from a 2023 base

year. We report progress on our reduction targets against

the base years restated to exclude divestments and include

acquisitions, in accordance with the GHG Protocol. We

have published a transition plan for our 90% reduction

in Scope 1 & 2 emissions at www.discoverieplc.com/

sustainability/our-net-zero-commitment/.

Our net-zero plan for Scope 1 & 2 focuses primarily on

addressing four of the Group’s largest emission sources:

electricity, natural gas, company cars and refrigerants, and

aims to achieve an absolute reduction of 65% by CY2025

against the CY2021 baseline.

Further details of how we performed last year can be found

in the Key metrics section on page 51.

We continue to make good progress in reducing our Scope

1 & 2 emissions across the Group, as outlined above. Key

elements in achieving reductions to date include investing

in solar panels at our Noratel manufacturing plant in

Sri Lanka, at our Flux site in Thailand, at our MTC site in

Germany and CPI in the US, and, in the last year, at our

Noratel site in China. We are considering future investments

in solar panels at other sites, where economically

appropriate. Where available, we have also switched our

sites’ electricity supplies to renewable energy sources.

CY2024 emissions were 59% lower than CY2021 (further

details on page 51).

In CY2024, our like-for-like natural gas emissions were 15%

lower than CY2021. This represents an increase on CY2022

and CY2023, as we balance increased activity with the

identification of viable and cost-effective technologies

to replace gas at our remaining sites. In addition, the

prevalence of natural gas as a fuel for heating in industrial

applications means we often acquire new natural gas

emissions with new businesses. 28% of our emissions

from natural gas in CY2024 were generated by companies

acquired since CY2021.

Our progress

■ In CY2024, we reduced Scope 1 & 2 emissions by 59%

compared to the CY2021 baseline

■ 83% of the Group’s electricity is now sourced from

renewable or clean sources

■ 50% of the vehicles in our car fleet are now electric

or hybrid

■ In CY2024, natural gas emissions were 15% lower than the

CY2021 baseline

■ In CY2024, energy intensity was 20% lower than CY2021

■ 74% of revenue is generated by operations with ISO 14001

certification

Our targets

■ Reduce Scope 1 & 2 emissions by 65% by 2025 against

CY2021 baseline and by 90% by 2030

■ Source 80% of energy from zero emission sources by

2025, and 100% by 2030

■ 50% electric vehicles in the company car fleet by 2025

and 100% by 2030

■ Replace at least 90% of gas heating with lower emission

alternatives by 2029

■ Reduce energy intensity by 10% by 2030

■ 80% of revenue covered by ISO 14001 certification

OUR PLANET

Strategic Report

45 Annual Report and Accounts for the year ended 31 March 2025

Through energy audits and increased awareness, we have

achieved more modest reductions at other sites. At our

Variohm Group companies Eurosensor and Herga, for

example, we have invested in improved insulation and

the partial replacement of oil-fired heating with electric

alternatives, coupled with green energy tariffs.

This year, we continued our efforts to identify and calculate

Scope 3 emissions. The exercise covered the upstream

emissions of the entire Group (100% of all Group companies)

and included enhanced data for downstream transport

emissions. In calculating our complete GHG inventory for

the first time, we also developed a methodology to calculate

the emissions of our products resulting from our customers’

processing of those products, their emissions across their

working lifespans, and the emissions from their final disposal.

To do this, we grouped our products into categories with

similar relevant characteristics. Sample products for each

group were assessed and relevant operational data was

used by our carbon calculation provider to calculate typical

emissions for products in each group in each of the relevant

Scope 3 categories. The emissions from these sample groups

were then extrapolated on the basis of units sold and power

consumed, to generate an estimated emissions number for

the Group as a whole. We recognise that this estimate is an

approximation of the emissions generated, and we will work

in future to refine our methodology and data collection to

calculate a more accurate inventory. We can, however, say

with certainty that the vast majority of our Scope 3 emissions

are generated as a result of the small inefficiencies in a

subset of our Magnetics products. The emissions arise when

our products are used in electricity networks which are, as yet,

still highly reliant on fossil fuel energy generation. We have no

direct control over this driver of our Scope 3 emissions, and

thus achievement of any reduction will be highly sensitive

to the conversion of national electricity grids to renewable

energy. More information on our Scope 3 emissions can be

found on pages 65 to 67.

Use of resources

Energy usage

Energy consumption during CY2024 was 9% higher, due to

acquisitions and relatively higher output at more energy-

intensive sites. Like-for-like energy intensity increased by

4% in CY2024 compared to CY2023 and decreased by 20%

compared to CY2021. This is in line with our target to reduce

consumption by 10% by 2030. Most sites have implemented

energy saving measures, such as replacing lighting with

energy efficient LED or fluorescent alternatives and by

installing motion sensors.

Water usage

Our production processes typically require no or very little

water. The water used is mainly for cooling purposes, in

which the water is recycled, and for sanitary and drinking

purposes. Therefore, the risk of water scarcity is not a material

concern for the Group. However, we also recognise that water

is a finite resource, particularly for our businesses in areas

of extremely high water stress, such as India and Mexico,

and reducing water consumption is an essential step in

preserving the environment. Several sites use water-efficient

equipment, such as low-flow toilets and sensor taps. We will

continue work to understand risk, increase awareness and

promote water saving practices throughout the Group.

discoverIE Group plc Innovative Electronics46

OUR SUSTAINABILITY STRATEGY CONTINUED

CASE STUDY

Women in Engineering & Operations

In April 2025, we hosted our first Group-wide ‘discoverIE

Women in Engineering and Operations’ seminar.

Colleagues from ten different operating companies in

seven different countries participated in the event.

Recognising the importance of gender diversity, the

key objectives of the seminar were to:

■ Connect women and enable them to share

experiences, provide peer support and enhance

collaboration between Group operating companies.

■ Inspire with success stories from senior women

leaders. Vertec’s Managing Director Kate O’Reilly

and Antenova’s Operations Director Christy Lin

shared how their careers have progressed and

opportunities and challenges they have faced

along the way.

■ Develop women into future business leaders,

by looking at career development opportunities,

break-out discussion sessions, and a chance to

hear from Celia Baxter, our Senior Independent

Director, who shared her experiences and advice.

The event was well received by the attendees, and

identified concrete actions to further improve diversity

across the Group. We will continue to build on events

such as these, through our programme of diversity

initiatives.

Waste management

We take measures to minimise waste in the manufacture of

products, use recycling options where available and reduce

packaging.

The majority of our products are non-hazardous. Where

hazardous items are involved, environmental risks are

minimised by use of appropriate labelling and technical

information, in conjunction with training and procedures for

handling, storage and disposal.

As an electronic and electrical manufacturer, we follow all

relevant laws and regulations, including the following laws

governing electronic waste handling, storage and disposal:

■ Restriction of the Use of Hazardous Substances in

Electrical and Electronic Equipment Regulations 2004

(“RoHS”)

■ Waste Electrical and Electronic Equipment Regulations

2006 (“WEEE”)

■ Producer Responsibility Obligations (Packaging Waste)

Regulations 2005

■ Waste Batteries and Accumulators Regulations 2009

Whilst plastic packaging is often necessary for protecting

sensitive electronic components, discoverIE is committed

to managing its use of plastics in a responsible and

sustainable manner. One way that many of our businesses

do this is by using recycled and recyclable plastics, where

appropriate. Additionally, we are actively working to replace

foam packaging with more environmentally friendly and

recyclable options. By taking steps to reduce our use of

non-recyclable materials, we are helping to reduce our

environmental footprint and promote more sustainable

business practices.

ISO 14001 accreditation

The ISO 14001 (Environmental Management System)

accreditation is an internationally recognised standard

that sets out certain requirements for environmental

management. It helps organisations improve

environmental performance through more efficient use of

resources and reduction of waste, and provides an objective,

independent view of an organisation’s environmental

credentials.

Three further sites achieved ISO 14001 accreditation in

CY2024. Sites generating 74% of Group revenue are now ISO

14001 certified (CY2023: 69%). This certification is becoming

more important as customers place increasing focus on the

environmental credentials of their value chain. This is in line

with our target of 80% of revenue to be generated by ISO

14001 accredited sites by 2025.

There were no fines relating to environmental non-

compliance during the year or the previous three years.

Strategic Report

47 Annual Report and Accounts for the year ended 31 March 2025

Our employees are highly valued, and we are committed to maintaining

a supportive and inclusive workplace culture that promotes employee

engagement, development and retention.

Our culture

At discoverIE, we believe that a strong culture is key to achieving

our mission and supporting our values. Our culture is built on a

foundation of respect, fairness, and equality. We are committed

to creating an inclusive workplace where everyone feels valued

and empowered to contribute their best work.

Our culture is characterised by:

Diligence and determination:

We are dedicated to our work and take pride in delivering high-

quality products and services to our customers.

Customer-centricity:

We prioritise our customers’ needs and work closely with them

to develop innovative solutions that meet their requirements.

Respect, fairness, and courtesy:

We treat our colleagues with respect, fairness, and courtesy,

recognising that everyone’s contributions are important to our

success.

Open and constructive communication:

We believe in open and honest communication, with a

willingness to listen and consider different perspectives.

Diversity and inclusion:

We value diversity and strive to create an open and inclusive

environment where everyone has an equal opportunity to

succeed.

High performance and target-driven:

We are go-getters, driven by a desire to achieve excellence in

everything we do.

Diversity and inclusion

We are committed to creating an inclusive and welcoming

environment for all our employees. We believe that diversity is

a strength and that everyone should be treated with respect,

dignity and fairness. We are dedicated to providing equal

opportunities for all individuals, regardless of their gender, race/

ethnicity, social background, religion, sexual orientation, family

responsibilities, disabilities, political opinion, age, sensitive

medical condition or trade union membership. We aim to foster

a culture that values diversity and inclusion, where everyone

feels respected, empowered and appropriately rewarded.

Our employment policies are fair, equitable and consistent with

the skills and abilities of our employees and the needs of our

businesses. Our policies aim to ensure that everyone is accorded

equal opportunity for recruitment, training and promotion. We

do not tolerate any form of discrimination, harassment or bias in

the workplace, whether it be sexual, physical or mental.

We recognise that diverse perspectives and backgrounds

are essential to driving innovation, creativity and growth in

our business. Therefore, we are committed to improving the

diversity of our workforce and management team by promoting

within and proactively managing our recruitment process.

Our Board Diversity Policy sets out our aim to achieve a Board

that is diverse, not only in gender and race, but also in cultural

background, experience and expertise. Our Board Diversity

Policy can be found on our website: www.discoverIEplc.com. See

pages 52 and 94 for further details of our diversity.

Our progress

■ Three more sites achieved ISO 45001 certification,

bringing the proportion of employees covered to 73%

of our global workforce

Our targets

■ 80% of workforce in operations certified with ISO

45001 by 2025

OUR PEOPLE

discoverIE Group plc Innovative Electronics48

SUSTAINABILITY IN ACTION

With two female Non-Executive Directors and one Non-

Executive Director from a non-white ethnic minority

background, we have met our target of 33% female

representation at Board level and have met our target of

having at least one person from a non-white ethnic minority

background on the Board.

We recruited our first female managing director of an operating

business during the year and were delighted to welcome Kate

O’Reilly as MD of Vertec. However, gender diversity in the senior

management team overall decreased slightly to 23% female.

Health and safety

We aim to provide healthy and safe working conditions. In

addition to compliance with local regulations, discoverIE

promotes working practices that protect the health, safety and

well-being of its employees and other persons who enter its

premises.

Our commitment to ensuring that none of our colleagues are

injured at work was reinforced in FY2025 as we revised our

definition of a lost time incident (“LTI”) to be more stringent. Our

definition of an LTI is now any incident or accident which results

in an employee being unable to return to work the following day

(previously after five days or more). This brings our definition in

line with industry best practice.

During FY2025, we continued to emphasise the importance

of health and safety training, conducting over 20,000 hours of

training across the Group, equivalent to more than four hours

per employee.

Three sites achieved ISO 45001 (Occupational Health and Safety

Management System) accreditation in the year. This means that

73% of the Group’s workforce now work in operations with the

accreditation, up from 60% previously.

There have been no work-related fatalities in the last five years.

Learning and development

Our businesses are proactive in anticipating both short and

long-term employment needs and skills requirements. All

employees are encouraged to actively engage in their career

development and training opportunities are available across

the Group. We provide technical training to our employees, as

relevant for their role. This is scheduled and tracked.

Some of our operating businesses have structured

apprenticeship and graduate schemes. In July 2024, we

partnered with the University of Surrey on a student placements

scheme, with a focus on engineering and data science. We

launched a pilot programme in the UK, with the first electronics

engineering students now approaching the end of their

placements.

Our employees are actively encouraged to undertake further

learning, such as National Vocational Qualifications or similar

level courses, as well as continuing professional development

to maintain any relevant professional accreditations. The Group

supports the learning and development of our employees

through various initiatives. For example, the ‘discoverIE

Connected’ series of webinars launched in October 2023

covering a variety of topics, such as a technology deep dive,

greenhouse gas emissions management, marketing and

finance encourage knowledge and best practice sharing

across the Group. The Group also has an online learning and

development platform, which enables our operating businesses

to manage their talent development and skill gaps, and our

employees to take control of their learning experience. The vast

majority of employees receive annual performance appraisals,

which include identifying their development needs.

Recruitment and retention

Clear, fair and competitive terms of employment are in place.

It is Group policy to communicate with employees on major

matters to encourage them to take an interest in the affairs

of their employing company and the Group. Each operating

business is encouraged to maintain effective employee

engagement arrangements, including keeping employees

aware of the financial and economic factors affecting their

employing company’s performance. Please see pages 86 to 87

for further details of our engagement.

We remain supportive of the employment and advancement

of disabled persons. Full consideration is given to applications

for employment from disabled persons, where the candidate’s

particular aptitudes and abilities are consistent with meeting

adequately the requirements of the job. Opportunities

are available to disabled employees for training, career

development and promotion. Where existing employees

become disabled, it is the Group’s policy to provide continuing

employment in the same or an alternative position wherever

practicable, and to provide appropriate training and support to

achieve this aim.

We are committed to retaining our talented and skilled

workforce. We achieve this by offering clear and fair terms of

employment, a competitive remuneration policy and regular

communication with our employees on major matters. Our

voluntary staff turnover rate for the year was 14% (excluding

abnormal seasonal fluctuations linked to the Chinese New Year).

Community engagement

We value community engagement and strive to be an active

participant in the local communities where we operate.

We support local good causes by offering opportunities for

employees to volunteer and through charitable donations (no

donations are made to political causes). Our commitment to

community engagement is highlighted by the Group’s support

of the Community Foundation for Surrey as well as a number of

employee volunteering opportunities.

As well as supporting the causes themselves, initiatives such as

these motivate employees and increase their sense of purpose

in working for an organisation that is keen to play a positive role

in society.

Strategic Report

49 Annual Report and Accounts for the year ended 31 March 2025

The Group produces high-quality, reliable products that bring considerable

benefits to customers and the environment alike.

Product responsibility

Our products are essential components of electrical

systems and electronic devices, and play a critical role

in the functioning of larger systems, which tend to have

long lifespans. Quality and reliability are paramount to our

customers. In addition to designing for durability, the high

quality and standards of our products are ensured and

monitored through rigorous testing, which is often above

the requirements of our customers, and the adoption of ISO

9001 Quality Management Systems. As a result, the overall

rejection rates for our products due to quality issues are

negligible.

Product sustainability

The sustainability of our products is a priority. We ensure

raw materials used are from responsible sources, which are

procured in accordance with the principles in our Supplier

Code of Conduct, Modern Slavery Statement and Conflict

Minerals Policy (all are available at www.discoverIEplc.com).

These are verified and monitored through regular local

checks and supplier audits. In the event of non-compliance,

we would engage with the supplier to seek measures

to rectify the non-compliance or seek alternatives if

appropriate. During the year, we repeated our Group-

wide supplier audit programme. This process ensures that

over 50% of our Group-wide spend is audited on a three-

year cycle.

Our magnetic components use raw materials, such as

copper and aluminium, which are essential to electrical

equipment. We design, manufacture and deliver products

with sustainability in mind. Where it is possible, and with

customer permission, recycled raw materials are used

in production processes. We also proactively reduce and

recycle packaging and replace plastics with recyclable

materials such as paper and cardboard.

Our products are components that are often embedded

in larger systems, which means that the likelihood of

replacements being required must be minimised. As

such, our products are designed for long lifespans and

are intended to be energy efficient in order to reduce

downtime.

Our progress

■ In CY2024, 94% of the Group’s products, measured

by revenue, were manufactured under ISO 9001

Quality Management Systems (CY2023: 98%)

Our targets

■ 80% of Group products manufactured under

ISO 9001

OUR PRODUCTS

CASE STUDY

Solar panels drive further emissions reductions

During FY2025, Noratel China became the latest site to add to the

Group’s self-generation capacity for electricity. The Noratel facility

moved to a new 10,500 sqm facility in July 2024 and, by December,

the solar panels were installed and connected, generating

approximately one-third of the site’s power requirements. Not

only does this reduce our GHG emissions footprint at the Group’s

second largest site, but it also reduces our costs and helps to

support future energy security.

discoverIE Group plc Innovative Electronics50

SUSTAINABILITY IN ACTION CONTINUED

Key metrics

Total Emissions (tonnes) Like-for-like Emissions (tonnes)

Location-based CY2021 CY2022 CY2023 CY2024 CY2021 CY2022 CY2023 CY2024

Scope 1 1,488 1,338 1,606 1,546 1,860 1,670 1,762 1,546

Scope 2 9,365 8,710 6,736 6,749 9,633 8,948 6,892 6,749

Total Scope 1 & 2 10,853 10,048 8,342 8,295 11,493 10,618 8,654 8,295

Scope 3 2,626,883 2,640,536 2,680,950 2,640,536

Total emissions 10,853 10,048 2,635,225 2,648,831 11,493 10,618 2,689,604 2,648,831

Intensity – tCO

/ £m revenue

(Scope 1 & 2) 30.73 23.49 18.61 18.99 28.67 22.48 19.63 18.99

Total Emissions (tonnes) Like-for-like Emissions (tonnes)

Market-based CY2021 CY2022 CY2023 CY2024 CY2021 CY2022 CY2023 CY2024

Scope 1 1,488 1,338 1,606 1,546 1,860 1,670 1,762 1,546

Scope 2 6,460 4,392 2,820 2,006 6,761 4,653 2,987 2,006

Total Scope 1 & 2 7,948 5,730 4,426 3,552 8,621 6,323 4,749 3,552

Reduction on CY21 28% 44% 55% 27% 45% 59%

Scope 3 2,626,883 2,640,536 2,680,950 2,640,536

Total emissions 7,948 5,730 2,631,309 2,644,088 8,621 6,323 2,685,699 2,644,088

Intensity – tCO

/ £m revenue

(Scope 1 & 2) 22.50 13.39 9.88 8.13 21.51 13.39 10.78 8.13

Total Emissions (tonnes) Like-for-like Emissions (tonnes)

Location-based CY2021 CY2022 CY2023 CY2024 CY2021 CY2022 CY2023 CY2024

Energy

consumption

(kWh) 25,575,035 24,117,547 22,577,592 24,616,042 28,251,809 26,572,773 23,858,384 24,616,042

Energy intensity

(kWh/£m revenue) 72,406 56,379 50,367 56,366 70,482 56,255 54,120 56,366

UK-based energy

consumption

7.2% 8.9% 10.1% 8.9% N/A N/A N/A N/A

The “Total Emissions” columns include all continuing operations owned by the Group as at the end of each calendar year. The discontinued operations Vertec SA

(disposed January 2022) and Acal BFi (disposed March 2022) are excluded from all figures.

“Like-for-like Emissions” include the assumed impact of emissions from companies acquired since 2021. In accordance with GHG Protocol guidance, historic

emissions for these companies are deemed to be the same in prior years as in the year of acquisition.

The energy consumption of our UK-based businesses as a percentage of our total Group power consumption.

Net-zero KPIs CY2021 CY2024 Target

Carbon reduction – absolute (Scope 1 & 2) n/a 59% 65% reduction by 2025

Energy intensity – continuing operations (kWh/ £m revenue) 72,406 56,366 10% reduction by 2030

% electricity from renewable/clean sources 58% 83% 80% by 2025

Company cars (EV/hybrid)

19% 50% 50% by 2025

ISO 14001 accreditation

61% 74% 80% by 2025

Measured as the percentage of Group company cars that are electric or hybrid.

Measured as a percentage of Group revenue generated by operations with an ISO 14001 accreditation.

Strategic Report

51 Annual Report and Accounts for the year ended 31 March 2025

Health and safety

Lost time incident frequency rate (“LTIFR”) information

FY22 FY23 FY24 FY25

Lost time incidents (“LTIs”)

26 24 19 23

Average headcount

4,522 4,863 4,441 4,492

LTIFR

0.31 0.27 0.20 0.25

LTI, or lost time incident, is defined as a work-related incident resulting in the employee being unable to return to work the following day. Previously, our definition

was any incident which resulted in five or more days lost. Prior year figures have been restated for this change in policy.

Reported headcount includes all full-time and part-time employees and contractors.

LTIFR is the number of LTIs divided by the total work hours in the reported period, multiplying by 100,000 hours (representing the estimated number of working

hours in an employee’s work lifetime).

There were no fatalities among the Group’s employees or contractors during any of the four years stated above.

Gender Diversity

Group Management

Committee Senior Management

Operational

Management

All Employees

FY25

(No.)

FY25

(%)

FY24

(%)

FY25

(No.)

FY25

(%)

FY24

(%)

FY25

(No.)

FY25

(%)

FY24

(%)

FY25

(No.)

FY25

(%)

FY24

(%)

Total 12 – – 47 – – 73 – – 4,517 – –

Male 9 75% 77% 36 77% 72% 45 62% 66% 2,264 50% 52%

Female 3 25% 23% 11 23% 28% 28 38% 34% 2,253 50% 48%

As at 31 March.

Senior Management is the Group Management Committee and direct reports.

Operational Management is the most senior managers in the Group’s operating businesses.

Other ESG KPIs

2024

2025

Target

Our Planet

ISO 14001 accreditation

69% 74% 80%

Company cars (EV/hybrid)

40% 50% 50%

Our People

ISO 45001 accreditation

60% 73% 80%

Voluntary staff turnover

9% 14% <15%

Our Products

ISO 9001 accreditation

98% 94% 80%

Measured as a percentage of Group revenue generated by operations with ISO 14001 accreditation.

Measured as the percentage of Group company cars that are electric or hybrid.

Measured as the percentage of Group employees that work in operations covered by ISO 45001 accreditation.

Measured on a financial year basis (i.e., from 1 April to 31 March). This excludes the abnormal seasonal labour fluctuations linked to the Chinese New Year. Non-

production employee turnover remained stable at 10% (FY24: 11%).

Measured as a percentage of Group revenue generated by operations with ISO 9001 accreditation.

discoverIE Group plc Innovative Electronics52

SUSTAINABILITY IN ACTION CONTINUED

At discoverIE, we understand the urgent need

to preserve our planet for future generations

and to mitigate the impact of climate change.

We contribute to the transition to a low carbon

economy through our products that help

others reduce their emissions, and through our

operations by committing to become a net-zero

emissions business.

Climate-related risks and opportunities are routinely considered in our

strategic and financial planning, operational management, M&A and capital

allocation decisions. In this report, we outline how we identify, assess, and

manage these risks and opportunities, as well as our plan for transitioning to

a low carbon economy.

This report is prepared in accordance with UK Listing Rules 6.6.6 (8) and

the UK Climate-Related Financial Disclosure Requirements (“CFD”), and is

consistent with the recommended disclosures of The Task Force on Climate-

related Financial Disclosures (“TCFD”). Being in the electrical and electronic

components sector, the Group follows the TCFD’s All Sector Guidance in the

preparation of this report.

WHAT’S IN THIS REPORT

Governance

Page 54

Strategy

Page 56

Risk Management

Page 62

Metrics and Targets

Page 64

53 Annual Report and Accounts for the year ended 31 March 2025

Strategic ReportStrategic Report

TCFD REPORT

TCFD recommended disclosures

■ Describe the board’s oversight of climate-

related risks and opportunities

■ Describe management’s role in assessing

and managing climate-related risks and

opportunities

Further information

Read more about our

Risk Management on

pages 68 to 72

The Sustainability Committee was established in April

2022 and currently encompasses all Board members. As all

members of the Board are present at Committee meetings,

the full Board is aware of the matters discussed, including

climate-related issues.

The Group Chief Executive, supported by the Group

Management Committee (“GMC”), is responsible for setting

the Group’s sustainability strategies and targets. The GMC

oversees implementation and reviews progress against

our sustainability commitment and targets. All papers

and updates prepared for the Sustainability Committee,

including those relating to climate change, are reviewed

and discussed by the GMC before submission to the

Sustainability Committee, allowing GMC members to

develop their understanding of sustainability matters and

provide input.

The Group Sustainability Team (“GST”) comprises members

with sustainability, finance, legal and operations experience,

and is responsible for monitoring, reviewing, consolidating

and reporting the Group’s operating businesses’ progress

on sustainability implementation. It reports to the

Sustainability Committee and the GMC. The GST drives

sustainability initiatives throughout the Group, and

works closely with divisional management and individual

operating businesses on implementing the Group’s

sustainability strategy.

Together with the Group Risk and Internal Audit and Group

Finance teams, the GST identifies and assesses climate-

related risks and opportunities, which are then reviewed

and discussed by the GMC. Action plans to mitigate such

risks are drawn up and agreed upon by the GMC, and

investment required to implement these plans are factored

into the annual budgets.

Our sustainability governance framework describes our

approach to managing sustainability, including climate-

related issues.

Sustainability Governance Framework

During FY2025, the Sustainability Committee met

three times and climate change-related matters were

discussed by the Committee at all of these meetings. The

Sustainability Committee reviewed each key action of the

Group’s three sustainability pillars and progress against our

targets. Further details of our sustainability performance

can be found on pages 45 to 52 of this Annual Report and

Accounts.

Governance

While the Board has responsibility for overseeing our approach to sustainability,

the Sustainability Committee (the “Committee”), on behalf of the Board, reviews

the Group’s sustainability strategies and policies, and oversees and monitors

practices and performance against commitments and targets.

During the year, the Sustainability Committee reviewed

and approved the submission of the Group’s net-zero

commitment and associated plans for approval by the

Science Based Targets initiative (“SBTi”). Alongside this, the

Sustainability Committee also spent time considering the

climate-change related risks and opportunities facing the

Group in the context of the TCFD pillars. Each of the risks

and opportunities were reviewed, and those identified as

the most potentially impactful to the Group were discussed

in detail. The Sustainability Committee acknowledges that

this is an evolving process, with the methodologies applied

being continually refined, and that the discussions support

the development of the Committee’s understanding of

these risks and opportunities and provide context for our

net-zero plans.

Please see Sustainability Governance Framework on

page 40 for a diagrammatic overview of our sustainability

governance.

discoverIE Group plc Innovative Electronics54

TCFD REPORT CONTINUED

discoverIE Board

GROUP MANAGEMENT

COMMITTEE

■ Chaired by the Group

Chief Executive

■ Management

responsibility for the

Group’s sustainability

strategies, targets and

performance, guided

by the Sustainability

Committee

■ Ensures sufficient

funding for the

implementation of the

sustainability plans

■ Ensures sustainability

matters are factored

into the consideration of

acquisitions

OPERATING BUSINESS MANAGEMENT

■ Responsible for the implementation of sustainability initiatives guided by the Group

Sustainability Team and progress against their individual ESG objectives

■ Provides suggestions for initiatives and feedback (including from the wider workforce)

■ Shares best practices with other operating businesses

DIVISIONAL

MANAGEMENT

■ Comprises the heads of

the two divisions and

divisional finance

■ Ensures that

operating business

management holds

primary responsibility

and accountability

for sustainability

performance in

collaboration

with the Group

Sustainability Team

■ Oversees major climate

mitigation capital

expenditure

SUSTAINABILITY

COMMITTEE

■ Chaired by an

independent Non-

Executive Director

with years of

combined operational,

management and board-

level experience in ESG

■ Responsible for the

governance of ESG

matters

■ Oversees the Group’s

sustainability approach,

policies, performance and

commitments

■ Ensures that effective

systems and processes

are maintained

GROUP SUSTAINABILITY

TEAM

■ Comprises members

with sustainability,

operational, finance and

legal experience

■ Responsible for driving

sustainability initiatives

throughout the Group

■ Provides guidance to

operating businesses on

sustainability practices

and facilitates knowledge

sharing

■ Ensures alignment with

global best practice

■ Reports to the

Sustainability Committee

and the GMC

OTHER BOARD

COMMITTEES

■ Audit and Risk

Committee assesses and

reviews climate-related

risks and opportunities

as part of the risk

management process

■ Remuneration

Committee works

closely together with the

Sustainability Committee

to ensure pay is aligned

with the Group’s

sustainability objectives

CORPORATE

GOVERNANCE

CODE,

MANAGEMENT

SYSTEMS,

PROCESSES,

POLICIES AND

STANDARDS

GROUP RISK AND

INTERNAL AUDIT

■ Identifies and assesses

ESG-related risks,

including climate

change, in collaboration

with the Group

Sustainability Team

■ Evaluates existing

mitigating actions and

controls

Strategic Report

55 Annual Report and Accounts for the year ended 31 March 2025

Strategy

In 2025, we reviewed the qualitative and quantitative analysis of the resilience of

our business model and strategy under three climate scenarios – RCP2.6, RCP4.5,

and RCP8.5, being the full range from best- to worst-case scenarios projected by

the Intergovernmental Panel on Climate Change (“IPCC”).

TCFD recommended disclosures

■ Describe the climate-related risks and

opportunities the organisation has identified

over the short, medium and long-term

■ Describe the impact of climate-related risks

and opportunities on the organisation’s

businesses, strategy, and financial planning

■ Describe the resilience of the organisation’s

strategy, taking into consideration different

climate-related scenarios, including a 2°C or

lower scenario

Further information

Read more about our Principal Risks and

Uncertainties on pages 73 to 78

This was an update on the full assessment exercise

last completed in 2023. The analysis showed that the

Group’s business model and strategy were not expected

to be materially affected by climate-related risks and

opportunities, and that the net financial impact of climate

change was considered to be immaterial.

In order to better understand the potential financial

impact of climate-related risks on the Group’s Statement of

Financial Position and future cash flows, during the year we

conducted further analysis and financial modelling for the

identified risks and opportunities. The financial impact is

considered in the estimates of future cash flows used in the

Group’s goodwill impairment and viability assessment, as

detailed on pages 79 and 80 of this Annual Report.

We assess and report the climate change-related transition

risks and opportunities on short (up to three years), medium

(three to six years) and long (more than six years) term

bases. For physical risks, we define short term as the period

up to 2030, medium-term up to 2050 and long-term up to

2100. Given the fast-changing and unpredictable nature

of economic and environmental conditions, the potential

financial impact was modelled up to 2030 only.

During the process, we identified and assessed 12 climate

change-related risks, of which eight were transition risks

and four physical. Assessment of these 12 risks can be found

on page 57. Following this, we then prioritised four transition

risks and two physical risks, being those with the highest

risk scores, based on a combination of impact magnitude

and likelihood. We also identified three climate-related

opportunities.

We modelled the financial impact of these six risks and

three opportunities. Assessment of the nine climate-related

risks and opportunities and their potential financial impact

can be found on pages 58 to 61.

The highest ranked transition risk was capital markets

shifting investment to low carbon activities, which may

impede the Group’s acquisition-fuelled growth strategy.

The other key risks include customers and markets

shifting to low carbon substitutes, and raw material price

increases. The financial impact of these risks was modelled

by applying appropriate assumptions of attrition rate to

affected revenues for the RCP2.6 and RCP8.5 scenarios,

respectively.

For the physical risks, we assessed the potential impact

using scenarios RCP4.5 and RCP8.5, as it was judged that

no increased risk would occur under the RCP2.6 scenario.

Aided by the WTW Climate Diagnostic Analytical Tool,

we took full mitigation costs into account. In the case

of possible site relocations due to changes of climate

pattern, we factored in relocation costs such as fit-out, staff

relocation, recruitment and training, and certification, as

well as insurance coverage. Because the risk profiles were

similar for both scenarios, the same mitigation approach

was applied to both scenarios. It is estimated that 44% of

the Group’s 64 locations would be exposed to some sorts

of physical risks, such as heat stress, precipitation and river

floods. Twelve sites (19%) were more vulnerable, and these

were the focus of the mitigation scenario analysis.

Our assumptions for each scenario included the following:

■ Relocation costs of the sites most vulnerable to flooding.

Under RCP4.5 we assumed one relocation in 2029.

Under RCP8.5 we assumed three relocations, with each

of the three most vulnerable sites relocating at a rate of

one a year from 2027 to 2029.

■ A reduction in site productivity, estimated as a 2%

decrease in site gross margin. For RCP4.5 we assumed

this decline would become evident from 2028 onwards,

and from 2026 onwards under RCP8.5.

■ Increasing insurance costs, with a 10% increase assumed

under RCP4.5, and 20% under RCP8.5.

■ Mitigation costs at the sites most vulnerable to

heat stress. We estimated the cost of installing air

conditioning at the four sites most affected. We assumed

a cost of £0.5m in 2027 under RCP4.5, and a cost of £1m

across two years (2026 and 2027) under RCP8.5.

For the climate-related opportunities, we applied an

estimated excess growth rate to each of the opportunities

in the RCP2.6 scenario and halved the rate in the RCP8.5

scenario on the assumption that growth in renewable energy,

electrification of transportation, and automation would

accelerate under the more aggressive reduction scenario.

discoverIE Group plc Innovative Electronics56

TCFD REPORT CONTINUED

We considered materiality both in terms of potential financial impact on the Group and the importance of climate change

to our internal and external stakeholders. The outcome of the assessment showed that under all three scenarios the net

financial impact over the five-year period to 2030 is immaterial and represents c.1-2% of the Group’s operating cash flows.

The net financial impact considered both the increased operational costs of quantifiable climate-related risks and mitigation

costs, offset by the benefits arising from the climate-related opportunities.

Capital markets shift investment to low-carbon activities

Changing customers’ preference to low emissions alternatives

New and emerging technologies substitute our customers’ existing products and services

Increased stakeholder concern or negative stakeholder feedback from lack of climate action plan

Increased energy costs due to increasing carbon taxes and alternative low emission energy sources

Increasing costs of commodity and raw materials

Increased borrowing costs

Mandatory environmental standards or requirements for existing products and services

Extreme weather events such as cyclones or floods

Changes in precipitation patterns and extreme variability in weather patterns

Gradual changes in key climate variables such as temperature, humidity and precipitation

Rising sea levels

POTENTIAL FINANCIAL IMPACT ON THE GROUP

Low

High

Medium

5 9

Low HighMedium

Priority C

(low/medium)

Priority B

(medium/high)

Priority A

(high/very high)

Transition risk

Physical risk

Climate-related risk matrix

In summary, the estimated net financial impact of climate-related risks and opportunities is considered immaterial to the

Group in the short term (up to 2030). However, we also recognise that climate change remains a threat to the Group’s assets

in the long-term and that there are growing expectations amongst our stakeholders that we, as a responsible corporate

citizen, address climate risks in our business operations. As such, we have incorporated climate-related risks into our

principal risks and uncertainties and manage them as such.

Strategic Report

57 Annual Report and Accounts for the year ended 31 March 2025

THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE

The Intergovernmental Panel on Climate Change (“IPCC”) projects four Representative Concentration Pathways (“RCP”)

or scenarios for climate change. RCP2.6 is the peak or best-case scenario where the rise of surface temperature is kept

below 2

C (“2DS”). This is equivalent to IEA’s Sustainable Development Scenario (“SDS”). RCP8.5 is the business-as-usual

(“BAU”) or worst-case scenario, which projects that surface temperature will increase by 4

This is equivalent to the IEA’s Stated Policies Scenario (“STEPS”).

Climate-related risks

Estimated

financial

impact

Timeframe

Scenario

sensitivity

Short Medium Long RCP2.6 RCP8.5

Transition

risks

Capital markets

shifting investment

to low carbon

activities

Unquantifiable

Changing

customer

preferences

£5-9m

Substitution of

existing customer

products

and services

£4-8m

Commodity and

raw material price

increases

£4-8m

Physical

risks

Acute risks,

e.g. extreme

weather events

£6-8m

Chronic risks, e.g.

rising sea levels and

temperature

£6-8m

Climate

opportunities

Acceleration of

renewable energy

market

£6-20m

Electrification of

transportation

£0-1m

Electrification

and automation

of plant

and machinery

£4-9m

discoverIE Group plc Innovative Electronics58

TCFD REPORT CONTINUED

Risk description Our response FY2025 progress

CLIMATERELATED RISKS: TRANSITION RISKS

CAPITAL MARKETS SHIFTING INVESTMENT TO LOW CARBON ACTIVITIES

Our growth strategy relies on both

organic sales generation and acquisitions,

which require capital investment. We

may need to raise additional funding

in the capital markets. The shifting of

investment to low carbon or green

activities may impact our ability to raise

capital or increase our cost of capital,

in turn reducing our ability to invest in

the existing business or acquire new

businesses.

TIMEFRAME

Medium - long term

Our strategy focuses on markets with structural,

sustainable growth, such as renewable energy,

electrification of transportation, industrial

automation and connectivity, all of which

support the transition to a low carbon economy.

We constantly work to target ‘green’ markets

and reduce our greenhouse gas emissions,

and improve capital market perceptions of our

performance in these areas by providing timely

and transparent disclosures.

■ Target market

revenue increased

from 75% to 79%.

■ Net-zero target

approved by SBTi.

■ Publicly

demonstrated

our improvement

in environmental

governance by

increasing our Carbon

Disclosure Project

(“CDP”) rating to B.

CHANGING CUSTOMERS’ PREFERENCE TO LOW EMISSIONS ALTERNATIVES

The majority of our customers are

industrial OEMs. They may adopt

an aggressive approach to reducing

emissions in their value chain. This

could mean developing low emission

versions of their products to reduce their

downstream emissions, or engaging

suppliers with lower emission products

and processes to reduce their upstream

emissions.

TIMEFRAME

Medium - long term

We have long-lasting relationships with our

customers. Our business model of designing

and manufacturing customised electronics

means that we work closely and collaboratively

with our customers, which allows us to

support them in the development of new low-

carbon products and ensures environmental

compliance.

We have set emission reduction targets and

made good progress against these. This helps

our customers reduce their Scope 3 emissions.

We also work closely with our customers and

suppliers to find better solutions to reduce

carbon emissions where possible, such as

replacing plastic packaging with sustainable

options.

■ Reduced Group Scope

1 & 2 emissions for

continuing operations

by 59% against the

CY2021 baseline,

despite acquisitions.

NEW AND EMERGING TECHNOLOGIES SUBSTITUTE OUR CUSTOMERS’ EXISTING

PRODUCTS AND SERVICES

We supply to industrial OEMs. If our

customers’ existing products and

services become obsolete, our ability to

achieve growth well above GDP may be

impacted.

TIMEFRAME

Short - long term

The impact of this risk is minimised, as our

product and technologies portfolio and

customer base are broad. We do not rely

heavily on single customers or end markets.

Our customer concentration is considered low,

with the top 10 customers representing around

a quarter of Group revenue. We continue to

focus our attention on supporting customers in

markets which are essential for the transition to a

low-carbon economy, such as renewable energy.

■ Completed two

more acquisitions

during the year, Hivolt

Capacitors and the

Burster Group. The

acquisitions give the

Group exposure to

new verticals, such as

the transport sector.

Strategic Report

59 Annual Report and Accounts for the year ended 31 March 2025

Risk description Our response FY2025 progress

INCREASING COSTS OF COMMODITY AND RAW MATERIALS

Some of our products use raw materials,

such as copper and aluminium, which

are also used in electric vehicles and

electrification projects. Prices of such

materials are expected to continue

to rise as supply cannot meet rapid

increases in demand. Significant price

rises may cause customers to switch

to low cost suppliers. The raw material

shortage may impact our ability to

continue to supply certain products.

TIMEFRAME

Short - long term

Our products are designed and customised for

specific applications and are priced according

to project specifications and material costs at

the point in time, which to some extent protects

the Group from price fluctuation. Furthermore,

our products are designed in applications and

are often protected by our design IP, preventing

customers switching to low cost suppliers.

Our supply chain is resilient, as tested and

proven during the pandemic. We source

materials and components from multiple

suppliers where possible, except for those

specified by customers. Copper and aluminium

have similar conductivity and can be

interchangeable in some cases.

N/A

CLIMATERELATED RISKS: PHYSICAL RISKS

ACUTE RISKS  EXTREME WEATHER EVENTS SUCH AS CYCLONES OR FLOODS

Increased severity of extreme weather

events, such as cyclones and floods, may

disrupt production activities and incur

higher operating costs.

TIMEFRAME

Short - long term

The Group has 64 sites globally, including 41

manufacturing facilities across Asia, Europe

and North America. Some production activities

can be transferred to other locations to ensure

business continuity, if necessary. We have

experience in moving manufacturing between

sites where circumstances require us to do so.

■ Identified the

manufacturing

sites that are most

vulnerable to extreme

weather and assessed

alternative options

should situations

require.

CHRONIC RISKS  GRADUAL CHANGES IN KEY CLIMATE VARIABLES SUCH AS TEMPERATURE,

HUMIDITY AND PRECIPITATION

Rising average temperature causes heat

stress, drought, wildfires and changes

in rainfall patterns. Some of the Group’s

manufacturing sites are in areas exposed

to heat stress and precipitation, and

some are at risk of rising sea levels.

Our workforce may be affected if the

average temperature continues to rise.

Our supply chain may also be disrupted,

causing delays and cancellations.

TIMEFRAME

Medium - long term

Using the WTW Climate Diagnostic Analytical

Tool, we have identified a number of sites that

may be affected by changing climate patterns

in the next 30 and 80 years. The analysis showed

rising temperatures and precipitation were

likely to impact a number of our businesses.

Based on the insured asset value of each site

and the predicted future impact, we have

prioritised the 12 sites most at risk for further

analysis and investigation. We are now working

on plans that aim to mitigate the key risks

within the next ten years. For leased properties

at high-risk sites, relocation may also be

considered when the lease is up for renewal.

■ We continue to

monitor the ongoing

risk at our most

vulnerable sites.

discoverIE Group plc Innovative Electronics60

TCFD REPORT CONTINUED

Opportunity description Our response

CLIMATERELATED OPPORTUNITIES

ACCELERATION OF RENEWABLE ENERGY

Driven by decarbonisation and increasing regulations,

the renewable energy market will continue to grow

in the RCP8.5 scenario and accelerate in the RCP2.6

scenario. The International Energy Agency has

estimated over 45% of energy generated will be from

renewable sources by 2030.

TIMEFRAME

Short - long term

Renewable energy is one of our target markets, and we are

leading in the fields we serve, such as transformers for wind

turbines. Our products can also be applied to other types of

renewable energy, such as hydro, which will be an addition to

our existing renewable energy exposure.

Our broad range of technologies is applicable to many

parts of the renewable energy value chain. From generation

to transportation and distribution, we will be able to take

advantage of these opportunities.

ACCELERATION OF ELECTRIFICATION OF TRANSPORTATION

Decarbonisation and the recent energy crisis have

driven the acceleration of the electrification of

transportation. This is reflected both in personal

vehicles and mass transportation infrastructure. It

is estimated that over US$ 2.5 trillion will need to be

invested in transportation by 2050 to meet global net-

zero goals.

TIMEFRAME

Short - long term

Transportation is one of the major sources of carbon emissions

globally. Switching to cleaner methods of transportation is

crucial for meeting the net-zero goals of many governments.

Being one of the Group’s target markets, we focus on mass

transportation, such as rail, buses, and ships, and specialist

vehicles, such as delivery trucks. We are targeting retrofitting

ageing systems as well as developing new applications.

In addition, our knowledge and knowhow of magnetic

components will enable us to take advantage of growth in

the electric vehicle infrastructure market, such as charging

stations.

ACCELERATION OF PLANT AND MACHINERY AUTOMATION

Climate change could reduce productivity as the

workforce is impacted and production disrupted. An

increasing number of companies will look to automate

processes to improve efficiency and productivity.

TIMEFRAME

Medium - long term

Industrial and connectivity are our largest target markets. Our

fibre optic and wireless connections and a broad range of

sensing capabilities, essential for automation, will enable us to

continue growing in this market.

Strategic Report

61 Annual Report and Accounts for the year ended 31 March 2025

Risk Management

Climate-related risks are considered one of our principal risks and this is reflected

in our financial reporting. The process for identifying climate-related risks is

integrated into our risk management framework.

As part of the climate change scenario analysis exercise, a

multi-function working group was established in 2022. This

comprises members from finance, divisional management,

risk and internal audit, and the GST. This working group is a

subset of the GMC.

In identifying and assessing climate-related risks to the

Group’s operations, assets, and reputation, we used

primarily a top-down approach. Given the Group’s

decentralised structure, we consider this approach more

appropriate for assessing climate-related risks, particularly

physical ones. However, we have also taken a bottom-up

approach by factoring in the feedback from our operating

businesses where appropriate.

The scenario analysis working group conducted a top-down

review of the Group’s climate-related risks and opportunities

in order to identify new or emerging risks and opportunities.

The assessment considers two categories of climate-related

risks: the transition to a low carbon economy (transition

risks) and risks associated with the physical impacts of

climate change (physical risks). The risks assessed for both

the RCP2.6 and RCP8.5 scenarios were drought, heat stress,

wild fires, precipitation, river and coastal flood, and tropical

cyclones.

How we identify and prioritise climate-

related risks

To assess transition risks, we engaged with each operating

business to better understand the preferences of our

customers, suppliers and employees and the challenges

they face in tackling climate change. The outcome was

factored in during the risk identification process. Each

risk was discussed and scored based on the probability

and magnitude of potential financial impact, and the

multiplication of the two scores determined the materiality

of the risk. Through this process, the most material risks

were identified. Those risks that were deemed to be

quantifiable were included in the financial modelling.

Existing mitigations and progress made were also factored

in during the quantification process. Cost and benefit

analysis for the mitigations of each quantifiable risk was

carried out. A five-year cash flow forecast was modelled for

both RCP2.6 and RCP8.5 scenarios.

TCFD recommended disclosures

■ Describe the organisation’s process for

identifying and assessing climate-related risks

■ Describe the organisation’s process for

managing climate-related risks

■ Describe how processes for identifying,

assessing, and managing climate-related risks

are integrated into the organisation’s overall

risk management

Further information

Read more about our Risk management on pages

68 to 72

For physical risks, we used the WTW Climate Diagnostic

Analytical Tool to help us with scenario analysis. We

assessed our resilience in a time horizon between 10 and 80

years for relatability with asset lifespan, as recommended

by TCFD. The WTW Climate Diagnostic Analytical Tool

considered insured asset value and combined exposure

to extreme weather events (acute risks) and to gradual

changes in weather patterns (chronic risks) for each of our

64 facilities globally, including warehouses and offices.

Based on the insured asset value and risk exposure, each

site scored between 1 and 5 (5 being the highest risk). For

those with the highest scores, mitigation plans were drawn

up, and associated costs were assessed and factored into

the scenario financial models.

Once the climate-related risks were identified and

prioritised, the financial impact of the key risks up to 2030

was modelled and assessed for both RCP2.6 and RCP8.5

scenarios. The key climate risks, mitigation plans, and the

net financial impact in both scenarios were presented

and discussed at the GMC before being reviewed by the

Sustainability Committee, which also included the Chairs of

the Audit Committee and Remuneration Committee.

discoverIE Group plc Innovative Electronics62

TCFD REPORT CONTINUED

How we manage climate-

related risks

We use the scenario analysis

to inform our decision-

making in the following

areas:

■ Strategic and financial planning

■ Capital investment

■ Acquisition suitability assessment

■ Goodwill impairment assessment

■ Insurance

■ Lease renewals and procurement

of new leases

Climate-related risks are managed as

part of the Group risk management

process, alongside other strategic

and operational risks and, as with all

matters in the Group Risk Register,

these risks are reviewed annually.

Action plans to mitigate such risks

are managed and reported at Group

level, whereas the responsibility for

implementing the plans is delegated

to the management of the operating

businesses. A bottom-up review of

climate-related risks is carried out by

the management of each business

as part of their annual enterprise risk

management exercise (please refer to

pages 68 to 72 for further details of our

risk management processes).

The GST conducts annual reviews with

operating business management

at the end of each financial year

regarding progress against their

ESG objectives. This is then reported

to and discussed with the GMC

and Sustainability Committee. The

operating businesses report on ESG

progress, including carbon reduction

actions, in quarterly business reviews

chaired by the divisional heads. The

GST also provides progress updates to

the Sustainability Committee at each

Committee meeting.

Climate-related risks and mitigation

progress are monitored by the

Risk and Internal Audit team on an

ongoing basis, which updates the

Audit and Risk Committee at each

meeting. The GST is responsible

for identifying existing and new

regulation applicable to the Group. It

is supported by the Group’s auditors

and external consultants in this regard,

and provides updates to the GMC and

Sustainability Committee.

Local management are responsible for

identifying new business opportunities

in target markets, and report on

progress to divisional heads on a

quarterly basis. Local management

are also responsible for identifying

opportunities to reduce carbon

emissions, such as the installation of

electric heat pumps, with emissions

reported to the GST quarterly.

Strategic Report

63 Annual Report and Accounts for the year ended 31 March 2025

Metrics and Targets

Since publishing our revised greenhouse gas emissions target to

reduce emissions by 90% on 2021 levels by 2030, we have reduced

our Scope 1 & 2 carbon emissions by 59% against the 2021 baseline.

In November 2022, we announced our commitment to

achieve net-zero emissions and set science-based targets

for the medium and long-term.

Overall Net-Zero Target: discoverIE Group plc commits to

reach net-zero greenhouse gas emissions across the value

chain by 2040.

Near-Term Targets: discoverIE Group plc commits to

reduce absolute Scope 1 & 2 GHG emissions 90% by 2030

from a 2021 base year. discoverIE Group plc also commits

to increase active annual sourcing of renewable electricity

from 58% in 2021 to 100% by 2030. discoverIE Group plc

further commits to reduce absolute Scope 3 GHG emissions

42% by 2030 from a 2023 base year.

Long-Term Targets: discoverIE Group plc commits to

maintain a minimum of 90% absolute Scope 1 & 2 GHG

emissions from 2030 through 2040 from a 2021 base year.

discoverIE Group plc also commits to reduce absolute Scope

3 GHG emissions 90% by 2040 from a 2023 base year.

In order to fulfil the requirements of SBTi validation, we have

now calculated an estimated figure for our downstream

Scope 3 emissions in the categories 10, processing of

sold products; 11, use of sold products; and 12, end-of-life

treatment of sold products. Gathering detailed data for

these categories across all our operating businesses would

be prohibitively time-consuming, and we have therefore

taken advantage of the provisions within the Greenhouse

Gas Protocol to base our calculation of emissions in these

categories on certain estimated information. Please see

page 65 of this report for further details.

We have published a transition plan for net-zero Scope 1 & 2

emissions.

SCOPE 1 & 2 EMISSIONS BY SOURCE OUR NETZERO STRATEGY HAS THREE

PRIORITIES: REDUCE, REPLACE AND REMOVE.

Electricity 52%

Natural gas 25%

Company-owned cars 10%

Refrigerants 6%

Other 7%

To accelerate the transition to net-zero emissions,

we have set out our strategy and a detailed plan to

reduce our Scope 1 & 2 emissions.

Reduce

Replace

Remove

Reduce energy intensity across

the Group

Replace higher carbon energy

sources with lower or zero

carbon options

Invest in removing emissions

that cannot be replaced or

reduced

TCFD recommended disclosures

■ Disclose the metrics used by the organisation

to assess climate-related risks and

opportunities in line with its strategy and risk

management process

■ Disclose Scope 1, Scope 2, and, if appropriate,

Scope 3 GHG emissions, and the related risks

■ Describe the targets used by the organisation

to manage climate-related risks and

opportunities and performance against

targets

Further information

about our

Strategic

and

operational

review

on pages

20 to 27

about our

Key strategic

indicators on

page 11

about our

Our business

model on

pages

14 and 15

Key elements of the plan and all material information are

contained in this report. Supplementary information can

be found in the Road to Net Zero Emissions Report on our

website www.discoverIEplc.com/sustainability/our-net-zero-

commitment/

The following sections outline the progress we have made

in the past year.

discoverIE Group plc Innovative Electronics64

TCFD REPORT CONTINUED

Scope 1 & 2

Our net-zero plan for Scope 1 & 2 focuses primarily on addressing four of the Group’s largest emission sources: electricity, natural

gas, company cars and refrigerants, and aims to achieve an absolute reduction of 65% by 2025 against the 2021 baseline. In calendar

year (CY) 2024, we reduced Scope 1 & 2 emissions for continuing operations in absolute terms by 59%, primarily driven by more sites

switching to renewable sources and reduced electricity consumption.

We report our greenhouse gas emissions using the operational control method to establish our organisational boundary. As

all our subsidiaries are 100% owned by the Group there is no difference between this and the financial control or equity share

methodologies.

Based on the strategy, we have developed the following action plan and milestones:

Action Milestones

Reduce

Reduce energy intensity by promoting process efficiency,

employee awareness and engagement

■ Reduce energy intensity by 10% by 2030

Replace

Install solar panels in Sri Lanka and Thailand ■ Completed in mid-2023

Switch to zero emission energy sources through direct tariffs

or renewable energy certificates (“RECs”)

■ 80% zero emission energy by 2025, and

100% by 2030

Replace gas heating with electric options ■ 90% by 2029

Replace company-owned cars with fully electric vehicles ■ 100% EV by 2030

Remove

Remove all refrigerants ■ 100% removed by 2025

Invest in carbon removal projects to remove residual

emissions

■ From 2030 onwards

By the end of 2024, 83% of our electricity

was from renewable or clean sources

(CY2023: 72%), benefitting from increased

use of renewable tariffs, as well as the

solar systems installed at our Sri Lankan

and Thai sites.

Energy consumption during 2024 was

9% higher in absolute terms than in 2023,

with over half of the increase driven by

acquisitions. Energy intensity increased

by 4% year-on-year, on a like-for-like basis,

but at 20% lower than our 2021 base year,

we remain ahead of our 10% target by

2030. We continue to find ways to reduce

energy consumption, and leverage

our inclusion in programmes such as

the UK’s Energy Savings Opportunity

Scheme (“ESOS”) to drive efficiency at the

operational level.

Scope 3

This year we completed our second

comprehensive Group-wide exercise to

capture data on our Scope 3 emissions.

The exercise sought to cover the entire

Group (including new acquisitions), and

included as many of the Scope 3 sub-

categories defined by the GHG Protocol

as possible. Despite the significant

improvements in processes already

made, we are aware that data collection

in respect of Scope 3 emissions is more

challenging for businesses than for

Scope 1 & 2. The Group will continue to

take this into account as our processes

evolve in future years.

Compliance with SBTi target validation

requires us to calculate emissions for

the downstream Scope 3 categories

processing of sold products (3:10), use

of sold products (3:11) and end-of-life

treatment of sold products (3:12) for

our base year of CY2023. We have

completed the calculation of these

figures based upon a cross-section of

our key products and continue to work

with our businesses to further develop

an acceptable, practical and repeatable

methodology. Influencing the emissions

from the use of sold products category, in

particular, is largely out of our control. It is

driven by the huge variety of applications

for our products and the electrical energy

generation mix of the countries into

which they are sold, and this data is not

readily available. For this reason, we have

focused our Scope 3 reporting of CY2024

at a local business level on categories 1-9,

and will continue to calculate categories

10-12 centrally for the foreseeable future.

Like Scope 1 & 2, Scope 3 emissions were

reported on a calendar year basis, from

1 January to 31 December. This differs

from our financial year to be consistent

with previous emission assessments.

There were three key elements to the

exercise in our second year:

■ To enhance data availability and

accuracy for the categories and sub-

categories that are most relevant and

material to the Group.

■ To calculate a high-level emissions

number for the remaining

downstream Scope 3 (categories 10-

12) emissions in our value chain.

■ To identify the challenges faced in

the accurate and comprehensive

collection of downstream Scope

3 data at local business level and

prepare the Group to complete this

more efficiently and systematically

in future.

A summary of the key findings is as

follows:

■ Our CY2024 Scope 3 emissions for

categories 1-9 were 27% higher than

those identified last year, at c.288,044

tCO

e (CY2023 226,341, restated

for acquisitions and a correction

of upstream transport data). We

believe this increase represents the

improvement in availability and

accuracy of the source data used

to calculate our Scope 3 emissions,

and not an absolute increase in

emissions. We will continue to

enhance accuracy and completeness

in future years.

Strategic Report

65 Annual Report and Accounts for the year ended 31 March 2025

■ The largest upstream category

of Scope 3 emissions was from

purchased goods and services

(Category 1), with that category alone

representing c.77% of total upstream

Scope 3 emissions.

■ The second largest source of

upstream Scope 3 emissions

was freight (Category 4), which

comprised almost 20% of upstream

Scope 3 emissions. This year we were

able to gather a more complete

data set for both upstream and

downstream transportation

categories, and included a higher

volume of primary data in our

calculations. Data collection

for downstream transportation

poses a particular challenge

because the data is often held by

customers rather than the Group.

We will continue to refine the data

collection and accuracy of intra-

Group shipments and customer

distribution.

■ The upstream emissions of our

value chain are dwarfed by the

downstream categories, particularly

Category 11, use of sold products.

Almost 90% of our total Scope 3

emissions are generated by this

category. We pride ourselves on our

products’ potential to aid the global

transition to a low-carbon economy.

However, a small sub-section of our

portfolio generates emissions in use

due to their operation in countries

where the electricity grids still rely

on high-emitting fuels to generate

power. The tiny inefficiencies in these

products, when multiplied up by the

huge through-put of energy over

their long working lives, results in a

large allocated emissions footprint

of over 2.0m tCO

e in any one year.

As national electricity grids become

greener and rely more heavily on

renewable energy sources, we expect

these emissions to decrease.

In terms of the methodology used to

calculate our Scope 3 emissions:

■ For Purchased Goods and Services

(Category 1), we enhanced our

analysis from last year, increasing

the amount of activity-based data

available, particularly in using

the weights and quantities of

raw materials consumed. Where

quantity data was not available, all

other goods and services purchased

used spend-based data relating

to the type of goods and materials

purchased at a generic level (for

example, copper, aluminium, plastics,

paper, etc.). That data was then

processed by our carbon emissions

data capture and calculation tool.

This is in line with the GHG Protocol

reporting methodology but is less

accurate than supplier-specific

data (where such data is available).

It also relies on the correct material

codes having been applied. We

expect our calculations to become

more established and accurate as

we continue to refine our methods

and processes in the coming years.

To this end, we have developed a

taxonomy of purchases for use by our

businesses, to enhance detail and

consistency across our Scope 3:1 data

collection in CY2025.

■ Transportation data was based on

weights carried, distances travelled

and mode of transportation used

where possible. Where such

data was not available, spend on

transportation was used to calculate

an assumed emissions factor.

■ In the centrally-calculated

downstream categories (categories

10-12) we developed a methodology

designed to balance the ambition

for credible emissions numbers

with the need to minimise detailed

information requests to our

operating businesses. To this end, we

developed a methodology whereby

we divided our businesses into

groups based on their operating

characteristics (broadly equivalent

to our sub-divisions) and selected

businesses from each to assess the

processing, in-use and end-of-life

emissions of key products. These

samples were used to develop

standard emissions factors for our

products, which we then used to

extrapolate a Group-wide footprint

by multiplying up the factors by

quantity, weight and/or power output

of the products sold.

We recognise that this is an iterative

process, and our methodology and

systems will be refined over time.

However, within the next 12 months, we

aim to:

■ Publish a Greenhouse Gases

Accounting Manual to support

the many employees across

our businesses involved in data

collection, and ensure accuracy.

Data is collected from 50 separate

operating entities, and this guide

will drive reporting standardisation

across our businesses.

■ Complete the equivalent exercise for

our CY2025 Scope 3 emissions.

■ Develop a transition plan for our

Scope 3 emissions in line with the

recommendations of the Transition

Plan Taskforce (“TPT”).

Building on our existing plan to achieve

a 90% reduction in emissions by 2030

for our Scope 1 & 2 emissions, this work

will help us achieve our ultimate goal of

becoming a net-zero emissions business

across all Scopes 1, 2 and 3 by 2040.

discoverIE Group plc Innovative Electronics66

TCFD REPORT CONTINUED

A summary of each of the categories within Scope 3, and their relevance and materiality to us as a Group, is provided below:

CY2023 CY2024

Category Description tCO

Percent

Scope 3 tCO

Percent

Scope 3

Purchased goods

and services

Extraction, production, and

transportation of goods and services

purchased

149,676 5.6% 212,075 8.0%

Capital goods Extraction, production, and

transportation of capital goods

purchased. Where this is not readily

separable from other expenditure,

items are reported under 3.1

590 0.0% 2,181 0.1%

Fuel- and energy-

related activities

Extraction, production, and

transportation of purchased fuels

and energy that are not already

accounted for in Scope 1 & 2

2,226 0.1% 2,077 0.1%

Upstream

transportation and

distribution

Transportation and distribution of

products and services purchased

58,148 2.2% 53,650 2.0%

Waste generated

in operations

Disposal and treatment of waste

generated in operations

104 0.0% 141 0.0%

Business travel Business travel in employee-owned

cars, hire cars, flights, taxis, rail

journeys and ferries

638 0.0% 2,200 0.1%

Employee

commuting

Transportation of employees

between their homes and

workplaces

2,143 0.1% 2,312 0.1%

Upstream

leased assets

The Group does not operate any

leased assets that are not already

included in Scope 1 & 2

N/A

Downstream

transportation and

distribution

Transport emissions of lorry, sea,

air, and rail freight purchased by

customers

12,817 0.5% 13,409 0.5%

Processing of sold

products

Processing of intermediate products

sold by downstream companies

3,382 0.1% 2,734 0.1%

Use of sold

products

End-use of goods and services sold 2,450,115 91.4% 2,348,740 88.9%

End-of-life

treatment of sold

products

Waste disposal and treatment of

products sold

1,111 0.0% 1,019 0.0%

Downstream

leased assets

The Group does not have assets

leased to other entities

N/A

Franchises The Group does not have franchises N/A

Investments The Group is not involved in financial

investments

N/A

2,680,950 100% 2,640,536 100%

CY2023 figures in the table above are expressed on a “like-for-like” basis, including the assumed impact of emissions from

companies acquired since 2023. In accordance with GHG Protocol guidance, historic emissions for these companies are

deemed to be the same in prior years as in the year of acquisition. This figure is the same as that submitted to SBTi during

our target validation process.

Strategic Report

67 Annual Report and Accounts for the year ended 31 March 2025

Governance and culture

The Board of Directors has overall responsibility for the Group’s risk appetite and risk management strategy. Roles and

responsibilities for managing risks across the discoverIE Group have been clearly defined as shown in the diagram below.

Board

■ Overall responsibility for corporate

strategy and risk management

■ Defines the Group’s appetite for risk

Divisional Management

■ Oversight and review of

operational risks

Group Functions

■ These include Finance,

Treasury, Risk, and Group

Technology Services (“GTS”),

and support operating

companies to integrate into

the Group’s risk management

framework

Group Internal Audit

■ Monitors compliance with

the Group’s internal controls

framework

■ Conducts or commissions

internal audits

Operating Companies

■ Identify internal and external risks

■ Responsible for the implementation

of risk mitigation actions and

internal controls and compliance

with policies

■ Responsible for compliance with

relevant laws

Audit and Risk Committee

■ Reviews effectiveness of Group’s risk management framework

and internal controls

■ Oversees effectiveness of Group Internal Audit

Group Management Committee

■ Management of the Group and delivery of the strategy

■ Monitoring of key risks and compliance with relevant laws

■ Regular reviews of the Group’s risk management framework

Sustainability Committee

■ Oversees the Group’s overall sustainability progress

■ Reviews climate-related risks and the Group’s response

Independent reporting line

The Company’s risk management

framework follows a three lines

of defence model. The first line of

defence is operational management

in our businesses. Day-to-day risk

management controls, policies and

procedures are implemented and

monitored by the local management

teams with oversight and review

by Divisional Management. This is

conducted within a series of delegated

authority levels. Relevant internal

control systems are in place to identify,

evaluate and manage the Group’s

business risks.

The second line of defence comprises

Group functions such as Risk, Finance,

GTS, Treasury, and Tax. This focuses on

monitoring of, and compliance with,

risk and control systems, and processes

implemented by the Group.

The Group Internal Audit function

provides independent assurance of

the operation of risk management

processes, internal controls and

governance, and serves as the third line

of defence. As well as carrying out full

audits on individual entities, the team

conducts thematic audits, focusing

on specific areas across the Group.

All audits conducted by the Group

Internal Audit function are completed

on site. During FY2025, the team also

continued preparations for complying

with the revisions to the UK Corporate

Governance Code, including, in

particular, Provision 29 and the need for

the Board to prepare a statement on

the effectiveness of internal controls.

The Group operates a decentralised

management model that is target and

results driven, with a strong culture of

open, constructive communication

and a willingness to listen. The Group

Internal Audit function applies this

culture in how it operates and reviews

control environments across the Group.

In pursuing the Group strategy, a

number of key objectives are agreed

annually for the Group and for each

business unit. Progress against these

is reported on a regular basis to

Divisional and Head Office functional

management, the Group Management

Committee and the Board. Having a

clear understanding of our strategy

and objectives assists with the effective

identification and management of

existing or emerging risks that have

the potential to prevent or hinder these

objectives from being achieved.

discoverIE Group plc Innovative Electronics68

RISK MANAGEMENT

Risk profile

The Group’s overall risk profile is

mitigated by a number of overriding

factors, including:

■ Our business units operate largely

independently of one another and

so if an issue were to arise in any

one business, it would be unlikely

to affect other businesses in

the Group.

■ We operate in 20 countries and no

single site represents more than 6%

of Group turnover or 13% of Group

profit.

■ Most of the Group’s businesses

operate on separate IT systems,

which assists in minimising the

risks of a major cyber security

incident affecting the wider Group.

During the year, a Group-wide

Cyber Security Framework was

rolled out to all Group businesses

to enhance information security

controls at a business level. In

addition to this, the Group has

implemented consistent web and

end-point security (i.e. security

measures across all devices and

web connections to ensure a

uniform level of protection), as

well as continuing to maintain an

outsourced Security Operations

Centre (“SOC”) to monitor and

respond to IT security threats 24/7.

■ The Group operates from over

60 separate sites so that, if an

incident were to occur at one site,

it would not directly affect the

other businesses within the Group.

We also have business continuity

arrangements in place to identify

where there is scope to switch

production between certain sites if

needed.

■ The Group has very limited

reliance on any single customer or

supplier, with the largest customer

representing approximately 7% of

revenue.

■ The Group manufactures and

sells multiple product lines, across

multiple geographies and market

sectors, removing reliance on

any single revenue stream. This is

further reinforced by the innovative,

bespoke nature of the Group’s

products, which continue to evolve

as circumstances change.

■ The Group operates in structural

growth markets, which reflect long-

term needs and are less cyclical in

nature.

Risk appetite

One of the Group’s core principles is

to deliver its strategic priorities in a

sustainable and responsible manner.

This requires that the Board gives

careful consideration to the nature

and level of risks that the Group should

accept.

The Group draws a clear distinction

between those risks that it is more

willing to take (typically relating to

advancing business prospects) and

those that it is less willing to accept

(e.g. safety, reputational, regulatory or

compliance risks). The following table

provides a summary:

Risk tolerant

(Willing to take greater risk)

Risk neutral

(Taking a balanced approach to risk)

Risk averse

(Taking as little risk as possible)

■ Product innovation

■ Operating in new markets

■ Investment in facilities

■ Business development initiatives

■ Acquisitions and disposals

■ New customers and suppliers in

existing markets

■ Foreign exchange translational risk

■ Product safety

■ Health and safety

■ Cyber risks

■ Regulatory/covenant compliance

■ Foreign exchange transactional risk

■ Markets with greater business cyclicality

■ Environmental risks

The above table provides a high-level summary of the various types of risk that face the Group, with the most significant and

material items being more specifically described in the table of Principal Risks and Uncertainties on pages 73 to 78.

Regardless of the appetite in respect of a particular risk, all risks are identified and managed in the appropriate manner.

Enterprise risk management

discoverIE applies an Enterprise Risk Management framework to identify potential events or circumstances that may affect

the Group and to manage the associated existing and emerging risks. These include climate-related opportunities and risks,

further details of which can be found on pages 53 to 67 of this report. The risk management framework is made up of a

number of discrete steps to identify, assess, mitigate and monitor risks.

Strategic Report

69 Annual Report and Accounts for the year ended 31 March 2025

Two processes are conducted in parallel:

Step 1

■ A top-down review of the Group Risk Register to:

– identify new or emerging risks

– assess changes to existing risks

– consider the potential impact and likelihood

of risks

– evaluate existing mitigating actions and

controls

– consider the residual risks remaining after

the applications of the Group’s internal

control processes (and if appropriate, the

implementation of further mitigating

actions)

■ A bottom-up review by the management of each

business to:

– identify new or emerging risks

– assess changes to existing risks

– consider the potential impact of risks

– evaluate existing mitigating actions and

controls

– consider residual risks (and if appropriate

the implementation of further mitigating

actions)

The top-down review of the Group Risk Register is conducted by the Group Risk team, Divisional

Management, Group Technology Services, and the internal Group Sustainability Team. The bottom-up review

is conducted by the management team within each business with support from the Risk team.

Step 2

■ Comparison of the results of the top-down and bottom-up identification processes above. The benefits of

conducting both top-down and bottom-up reviews are:

– increased assurance that all risks have been identified, with input from multiple perspectives

– ensuring alignment between local management and Head Office

– ensuring that businesses take ownership of the risks most relevant to their individual operating unit

– ensuring that controls in place to mitigate risks at the operating unit level are appropriate

■ An assessment of any differences identified and update of the Group Risk Register as appropriate. The

Group Risk team conducts a review of any risks identified through the bottom-up process to determine

whether they require escalation to the Group Risk Register. Risks suggested for escalation to the Group

Risk Register are reviewed in the first instance by the Group Management Committee.

Step 3

■ Review of the Group Risk Register by the Group Management Committee. This review focuses on:

– the materiality of each of the risks identified

– prioritisation of the allocation of the Group’s resources to the most important areas

– clarity of ownership for each of the risks identified

This review takes into account the Group’s risk appetite in respect of the various types of risk identified.

The Group Risk Register is then updated as appropriate following the review.

This is then summarised in a table of principal risks and uncertainties, the final version of which (for

FY2025) is set out on pages 73 to 78.

Step 4

■ Review by the Audit and Risk Committee – this includes:

– consideration of the Group’s risk management framework

– review of the Group Risk Register

– identification of any other areas of potential risk

– review of the table of principal risks and uncertainties

– challenging actual or potential control weaknesses

– review of the effectiveness of the Group’s internal controls and risk management systems

These processes are conducted twice each financial year:

■ an interim review, typically completed shortly ahead of announcement of the Group’s interim results, focuses

predominantly on changes during the first half of the year

■ a comprehensive review of all risks within the Group Risk Register is completed shortly prior to the Group’s full-year

preliminary results announcement

The processes ultimately lead to the compilation of the Group’s principal risks and uncertainties (“PRUs”), of which further

detail can be found on pages 73 to 78.

discoverIE Group plc Innovative Electronics70

RISK MANAGEMENT CONTINUED

The Group Risk function is continually

looking to improve the Group’s

Enterprise Risk Management

framework. During FY2024 the

Group Risk function was subject to a

maturity assessment, which assessed

the effectiveness of the function

against recognised risk management

standards, such as ISO 31000 and

the Committee of Sponsoring

Organizations of the Treadway

Commission (“COSO”) Internal Control

- Integrated Framework. The aim

of this exercise was to ensure the

function is best placed to manage

the risks the Group currently faces

and is effectively horizon scanning for

new risks. Actions identified as part

of this assessment were completed

during FY2025 to further improve

the effectiveness of the Group Risk

function. The Group Risk function also

regularly attends round-table events

with service providers and peers to

ensure that its activities are aligned

with leading practices.

A key element in assessing the

Group’s principal risks is considering

likelihood and potential magnitude of

impact, over a range of time horizons,

as well as whether the risks are new

or emerging, or have changed in

importance during the year. The below

diagram provides a summary of the

PRUs on that basis.

Emerging Risks

To complement our existing enterprise

risk management framework, we have

enhanced and refined our approach

to managing emerging risks. These

risks are reviewed as part of our

formal risk management process and

are also considered in the day-to-

day operations of the Group and its

operating companies.

We assess the emerging risk

landscape across three time horizons:

short-term (0–3 years), medium-term

(4–10 years), and long-term (10+ years).

Our assessments are informed by:

■ Emerging risk factors identified

at the operating company level

through a bottom-up process

■ Insights from leading external

thought leaders on global

emerging risks

■ Input from members of the

Board and Group Management

Committee on emerging

risk trends

Each emerging risk is assigned

a dedicated owner at Group

Management Committee level.

These risks are recorded in the

Group Risk Register and monitored

continuously throughout the year.

These owners are responsible for

tracking the development of risks and

implementing appropriate mitigation

strategies as needed.

Impact

IncreasingDecreasing

Decreasing Increasing

Likelihood

1 2

13 1411

Instability in the economic environment

Business acquisition underperformance

Climate-related risks

Cyber security

Loss of key customers

Loss of key suppliers/supply

Technological changes

Major business disruption

Loss of key personnel

Product liability

Financial controls

Liquidity and debt covenants

Foreign currency

Non-compliance with legal and

regulatory requirements

KEY

Category of risk:

Strategic risk

Operational risk

Financial risk

Regulatory/

Compliance risk

Strategic Report

71 Annual Report and Accounts for the year ended 31 March 2025

Objective:

foster a culture of

risk management

to effectively

execute discoverIE’s

sustainable strategy

Ongoing monitoring,

mitigation and

improvement

In addition to the processes outlined

above, key risks, and the internal

control processes adopted to address

these risks, are monitored on an

ongoing basis. Among other controls,

this includes a review by the Group

Management Committee in all of

its regularly scheduled governance

meetings (typically six per year) and

escalation to the Board of any material

developments as and when they arise.

discoverIE continually pursues

improvements in its Enterprise

Risk Management Framework. A

summary of this continual cycle of

risk identification, establishment of

systems and processes to mitigate,

communication and ongoing

monitoring, is outlined in the diagram

opposite.

discoverIE Group plc Innovative Electronics72

RISK MANAGEMENT CONTINUED

Focus on principal risks

This section of the Strategic Report provides an overview of the Group’s approach to managing risk, focusing on the major

risk factors to implementing the Group’s strategy and business model. It is not an exhaustive list of all possible risks. Additional

uncertainties exist, some of which may not be known to the Group and could have a negative effect on the Group’s financial position

and performance. The principal risks and uncertainties detailed below were considered in assessing the long-term viability of the

Group. The viability statement can be found on pages 79 to 80. In line with the risk appetite statement found on page 69, the Group

takes a risk averse approach to managing its principal risks.

The numbering of the below risks does not represent the ranking of these risks by the Group.

Risk description Potential impact Mitigating actions Change in the year

STRATEGIC RISK

INSTABILITY IN THE ECONOMIC ENVIRONMENT

Risk of decline

in financial

performance

due to recession,

or geopolitical

changes

■ Reduction in sales

■ Lower margins

■ Closure of

factories and

suppliers stopping

production

■ Difficulty raising

equity and debt,

impacting ability to

acquire businesses

■ Market position as a specialist supplier

focused on core target markets with

diversified locations and product offerings

■ A long-term credit facility is in place with

significant headroom

■ Careful monitoring of customers in

relevant geographies to identify any

issues early

■ Flexible production and warehouse

facilities to enable movement of

production and supply to other countries

if required

■ Vigilance entering markets that are

politically or financially unstable

■ Increased global tariffs

■ Continued conflicts in

the Middle East and

Ukraine

Link to KSIs:

BUSINESS ACQUISITION UNDERPERFORMANCE

A degree of

uncertainty

exists in valuing

acquisitions

and evaluating

potential

synergies

Post-acquisition

risks arise due to

change of control

and integration

challenges

Failure to deliver

targets from

business plan

during first three

years

■ Financial

impact due to

underperformance

of acquisitions

■ Loss of key

employees and

their expertise

■ Expected synergies

are not realised

■ Operational, financial and legal due

diligence on target businesses

■ Appropriate warranties and indemnities

from vendors

■ Use of earn-out structures to incentivise

key management

■ Monitoring of the acquired business

performance against budget and forecast

■ Hiring of experienced finance and

management personnel

■ Where possible, new acquisitions become

part of a cluster reporting operationally to

an existing established senior business

■ Dedicated staff managing tailored

onboarding process for all new acquisitions

■ Acquisition assurance programme put in

place by Group Internal Audit function to

check alignment to essential Group controls

■ Two new acquisitions

in the year (for a total

of £29m)

Link to KSIs:

KEY STRATEGIC INDICATORS

Sales growth

Adjusted operating

margin

Adjusted earnings per

share growth

Cash conversion

Return on capital

employed

Carbon emissions

reduction

Strategic Report

73 Annual Report and Accounts for the year ended 31 March 2025

PRINCIPAL RISKS AND UNCERTAINTIES

Risk description Potential impact Mitigating actions Change in the year

CLIMATERELATED RISKS

Global warming

leads to greater

extremes of

weather events

and other local

issues, which may

cause production

disruptions

and increase

operational costs

Rising

temperatures and

sea levels may

adversely affect

several of the

Group’s sites

Supply chains

are affected

by climate

change on their

operations

Our products or

other activities

or decisions

in relation to

climate-related

risks may be

judged negatively

by external

stakeholders

Failure to

meet new

ESG reporting

requirements

due to unreliable

emissions data

and/or resource

constraints

■ The operations of

Group facilities are

affected by the

impact of climate

change (e.g.,

through weather-

related events)

■ Reduced revenue

due to component

and material

shortages

■ Increased

commodity and

raw material

costs due to

rapid increase

in demand and

supply shortages.

This may also lead

to reduced sales

as some products

become less or

non-profitable

■ Reduced sales

due to customer

revenues being

impacted by

climate-related

effects on their

businesses

■ Unable to raise

capital to fund

acquisitions and/

or increased

finance costs due

to reputational

impact and

deterioration

of relationships

with external

stakeholders

and staff

■ An assessment of the physical risks of

climate change to the Group’s facilities

conducted using the WTW Climate

Diagnostic analysis concluded that

such risks are considered to be low

impact overall for the Group. Those sites

considered to be at high physical risk are

insured for loss of revenue for 18 months

resulting from climate-related disruptions.

See the TCFD Report on pages 62 and 63

for further details. The sites acquired in

FY2025 have been assessed using similar

methodology and are considered low risk

■ The Group has diverse supply chains

and the ability to switch from individual

suppliers that encounter issues. The agility

of the Group’s decentralised operating

model enables us to deal with supply

issues promptly and effectively

■ Given the Group’s target markets,

customer revenues are expected to

increase as a result of climate-related

matters, which could offset the risk impact

in other areas

■ The Group has a comprehensive plan to

reduce emissions within its operations

and has committed to a 90% reduction in

emissions for Scope 1 & 2 by 2030 and net-

zero across the value chain by 2040

■ ESG matters are discussed at all meetings

of the Board, Sustainability Committee

and Group Management Committee, to

ensure that the right activities are being

prioritised and implemented. ESG targets

are established at a Group and operating

company level to ensure effective

management of ESG matters

■ Good progress made

against Scope 1 & 2 net-

zero emissions plan, with

an absolute reduction

of 59% on the CY2021

baseline. See further

details on page 51

■ Refreshed our Scope 3

assessment. See further

details on page 46

■ Rolled out ESG objectives

to individual operating

businesses

■ Businesses have achieved

their ESG objectives in

year, including obtaining

ISO accreditation where

relevant

■ Dedicated ESG resources

at the Group level to

ensure data quality and

reporting standards

are met

■ Carbon reporting system

in place across the Group

to help streamline data

collection, consolidation

and reporting on

greenhouse gas

■ Sustainability Policy in

place across the Group

Link to KSIs:

KEY STRATEGIC INDICATORS

Sales growth

Adjusted operating

margin

Adjusted earnings per

share growth

Cash conversion

Return on capital

employed

Carbon emissions

reduction

discoverIE Group plc Innovative Electronics74

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Risk description Potential impact Mitigating actions Change in the year

OPERATIONAL RISK

CYBER SECURITY

System

downtime, loss

of data and/or

financial impact

due to external

attack

■ Business disruption

■ Reduced service to

customers

■ Financial loss

■ Theft of and/

or access to

confidential data

■ Reputational

damage

■ Different operating units operating

on separate IT systems and networks

minimises risk of a major incident

impacting the wider Group

■ Next generation endpoint security, DNS

monitoring and web security solution

■ Outsourced SOC (Security Operations

Centre) provides 24/7 continuous security

monitoring

■ Digital Forensics and Incident Response

(“DFIR”) Service

■ Cyber security training platform rolled out

across the Group

■ Backup procedures in place

■ General increase in cyber

risks globally, driven by

a rise in the number

and sophistication of

cyber attacks and the

emergence of new

technologies such as

artificial intelligence

■ Revised cyber security

framework rolled out to

all businesses

■ Detailed review

completed on

outsourced IT support

at a number of Group

businesses, and remedial

actions put in place

■ Cyber threat exposure

assessment completed at

Group businesses

Link to KSIs:

LOSS OF KEY CUSTOMERS

A key customer

moves to a

competitor,

significantly

reduces

operations

or goes into

insolvency

■ Loss of

market share

■ Increased risk of

bad debt

■ Reduced

profitability and

cash flow

■ Low dependence on any single customer

(the largest customer represents c.7% of

Group revenues)

■ Culture of high-quality service and long-

term customer relationships

■ Robust quality management systems

(including ISO 9001)

■ Customer satisfaction surveys completed by

all operating companies on a regular basis

■ Regular dialogue with local management in

relation to sales and design pipeline

■ Global economic

instability creating

additional pressure on

customers

Link to KSIs:

LOSS OF KEY SUPPLIERSSUPPLY

A key supplier

suffers major

business

disruption or

quality issues

or goes into

insolvency

■ Negative impact

on production

■ Damaged

relationships with

key customers

■ Reduced sales

■ Low dependency on any single supplier

■ Dual source suppliers in place where

possible

■ Long-term supplier relationships, enhanced

by strong customer relationships

■ Monitoring of market and technological

developments, including input from

customers

Link to KSIs:

Strategic Report

75 Annual Report and Accounts for the year ended 31 March 2025

Risk description Potential impact Mitigating actions Change in the year

TECHNOLOGICAL CHANGES

The development

of new

technologies

that gives rise to

significant new

competition

or renders our

products obsolete

■ Reduced sales

■ Loss of

market share

■ Inventory write-offs

■ The Group is diversified into a number of

differentiated technology units

■ Focus on established technologies with

low capital requirements

■ Group-wide conference held to discuss use

cases and best practice relating to AI

■ Businesses work closely with core

customers on new engineering projects to

ensure products meet their needs

■ All businesses contribute to a design

pipeline aimed at widening the product

portfolio

■ Emergence of AI

presents both a risk

and opportunity for

the Group

■ Acquisitions in the year

increase the number

of technologies within

the Group

Link to KSIs:

MAJOR BUSINESS DISRUPTION

Sustained

disruption to

production

arising from a

major incident at

one or more sites

Global pandemic

■ Insufficient

production to

deliver goods

on order

■ Damaged

relationships with

key customers

■ Reduced sales

■ Reputational

damage

■ Ability to transfer between sites

■ Not overly reliant on one site for sales

Maximum revenue derived from a single

site is equal to 6% of Group turnover

■ Insurance coverage

■ Assessment of alternative

manufacturing locations

undertaken as part of

TCFD analysis

Link to KSIs:

LOSS OF KEY PERSONNEL

Key employees

leave, and

effective

replacements

cannot be

recruited on a

timely basis

■ Loss of expertise

■ Potential business

disruption

■ Reduced growth

■ Insufficient

resources

■ Reputational

damage

■ Staff development, training programmes

and succession planning

■ Remuneration based on personal

objectives and business success

■ Regular remuneration benchmarking

■ Use of earn-out structures to incentivise

key management of acquired companies

■ The number of separate business units,

each with their own management

teams, minimises the risk that the

underperformance of any one business

impacts the Group as a whole

■ Recruitment market

remains challenging

Link to KSIs:

KEY STRATEGIC INDICATORS

Sales growth

Adjusted operating

margin

Adjusted earnings per

share growth

Cash conversion

Return on capital

employed

Carbon emissions

reduction

discoverIE Group plc Innovative Electronics76

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Risk description Potential impact Mitigating actions Change in the year

PRODUCT LIABILITY

A failure in one

of our products

results in serious

injury, death,

damage to

property or

non-compliance

with product

regulations

■ Non-compliance

with quality

standards

■ Financial loss

■ Reputational

damage

■ Quality inspection controls before

products are shipped to customers

■ Terms and conditions limit companies’

liabilities

■ As a number of the Group’s products

are customised for individual customers,

this reduces the risk relating to any one

product and/or customer

■ Product liability insurance in place

covering all Group companies

Link to KSIs:

FINANCIAL RISK

FINANCIAL CONTROLS

Inadequate

financial controls

resulting

in financial

misreporting,

poor decision

making and

fraudulent

activity

■ Financial loss

■ Reputational

damage

■ Group policies, manuals and guidance are

provided to Group companies to outline the

Group’s requirements in relation to financial

controls

■ Programme of internal audits across

Group companies to review adequacy of

control environment

■ External audit undertaken on material

Group entities

■ Fraud risk assessment performed by the

Group Internal Audit function yearly

■ Regular review of accounts by senior

management

■ A whistleblowing hotline is in place and

available for use by all employees

Link to KSIs:

LIQUIDITY AND DEBT COVENANTS

There is a breach

of funding terms/

covenants

■ Insufficient

cash resources

to support the

Group’s activities

■ The Group has a revolving credit facility of

£240m, which runs to August 2027 with

£101m available to be drawn down at the

year-end

■ Central treasury function oversees the

Group’s cash resources and financing

requirements

■ Regular review of headroom against

committed facilities and financial

covenants

■ Working capital controls and monitoring of

key working capital metrics

■ Issuance of equity from time to time to

support acquisitions programme

■ Acquiring high margin, high cash-

generative businesses

■ Gearing reduced in the

year from 1.5x to 1.3x

Link to KSIs:

Strategic Report

77 Annual Report and Accounts for the year ended 31 March 2025

Risk description Potential impact Mitigating actions Change in the year

FOREIGN CURRENCY

The Group

transacts in

many currencies

for both its

purchases and

sales, which differ

to its reporting

currency, and so

the Group has

translational and

transactional

exposures to

foreign currency

fluctuations

■ Reduction of the

Group’s reported

results

■ Volatility in

operating margins

■ Use of forward currency contracts to

hedge committed and forecast sales

and purchases in foreign currency (the

Group policy is not to hedge translation

exposures)

■ Currency borrowings as a natural hedge

against same currency assets

■ Central review of foreign currency

exposures

Link to KSIs:

REGULATORYCOMPLIANCE RISK

NONCOMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS

Unintentional

failure to comply

with international

and local legal

and regulatory

requirements

■ Fines or penalties

■ Reputational

damage

■ The Group hires employees with relevant

skills and uses external advisers to keep up

to date with changes in regulations and

legal requirements in order to remain in

compliance

■ Internal control framework including

Group policies, procedures and training

in risk areas such as export controls and

supplier and customer credit risk. Annual

internal controls self-assessments used to

identify and address gaps in control within

Group businesses

■ Annual supplier audits undertaken across

the Group to ensure compliance with

Supplier Code of Conduct

■ Ongoing internal audit reviews assess

compliance with Group policies

■ A whistleblowing hotline is in place and

available for use by all employees

■ Insurance covers all standard categories of

insurable risk

■ Work undertaken by

Group Internal Audit

function to ensure

compliance with

revisions to UK Corporate

Governance Code

which were finalised in

January 2024

Link to KSIs:

KEY STRATEGIC INDICATORS

Sales growth

Adjusted operating

margin

Adjusted earnings per

share growth

Cash conversion

Return on capital

employed

Carbon emissions

reduction

discoverIE Group plc Innovative Electronics78

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

In accordance with section 4.31 of the 2018 UK Corporate Governance Code, the

Directors have assessed the viability of the Group over a three-year period to

31 March 2028.

In making this assessment, the

Directors have considered the Group’s

current financial position, recent and

historic financial performance and

forecasts, its strategy and business

model and the principal risks and

uncertainties.

Viability assessment period

The Directors have concluded that the

most appropriate time period over

which to assess the Group’s prospects

for this purpose should be the three-

year period ending 31 March 2028. The

selection of this period is consistent

with the Group’s strategic planning

process, its review of external

credit facilities, and its assessment

of the Group’s principal risks and

uncertainties.

Viability base case

The financial projections for this

three-year period are based upon

the Group’s budget for the year

ending 31 March 2026 and forecast

progression thereon. The budget is a

consolidation of sales, profits, working

capital and cash flow forecasts made

by each operating company and

head office, incorporating associated

key risk factors, including acquired

company forecasts and associated

contingent consideration payments,

latest views on supplier and customer

payments impacting working capital,

interest rates and applicable foreign

exchange and tax rates.

The budget for the financial year

ending 31 March 2026 and the

projections for the financial years FY

2026/27 and FY 2027/28 assume steady

sales growth (in total, “The Viability

Base Case”).

Banking facilities and

headroom

The Group has a syndicated banking

facility of £240m, which is committed

up to the end of August 2027. The

Group is currently in the process of

renewing its facility and it is expected

to complete within the next 12 months

under similar terms. In addition, the

Group has an £80m accordion facility,

which it can use to extend the total

facility up to £320m. 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 (excluding

IFRS 16) to Facility EBITDA

(being Adjusted EBITDA plus

the annualisation of acquisitions,

excluding IFRS 16), of less than

3.0x and

2. Interest cover: Facility EBITDA to

interest (excluding IFRS 16 and

amortised upfront costs) greater

than 4.0x.

At 31 March 2025, the Group had net

debt of £94.3m and was significantly

inside these covenants with gearing of

1.3x and interest cover of 7.8x.

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 2025.

79 Annual Report and Accounts for the year ended 31 March 2025

Strategic Report

VIABILITY STATEMENT

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 73 to

78, 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 impact

of US tariffs and counter tariffs 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

consumer 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 2025/26, with

FY 2026/27 sales flat on the reduced

FY 2025/26 level, and modest growth

in FY 2027/28. Additionally, gross

margin was reduced, working capital

materially increased, significant one-off

expenditures included (product liability,

major customer insolvency or litigation,

climate change, cyber-security incident,

inventory obsolescence), interest rates

increased and the Group effective tax

rate increased.

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 6.7% in FY 2025/26 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 81 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 73 to 78

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.

discoverIE Group plc Innovative Electronics80

VIABILITY STATEMENT CONTINUED

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:

Environmental matters

■ Please see our Sustainability Report on pages 38 to 43.

■ Our TCFD Report is on pages 53 to 67, including a detailed discussion of climate-

related risks and opportunities on pages 56 to 61.

■ Please see pages 62 to 63 for our general approach to risk management and

pages 40 to 41, and 54 to 55 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 84 to 95.

Employee matters

■ Please see pages 48 to 49 (Our People), page 34 (Our people engagement),

page 37 (Section 172 statement) and pages 86 to 89 (Employee engagement).

Social matters

■ Please see pages 34 to 35 and 49.

Human rights

■ Please see pages 41, 48 to 49, 86 to 89 and 122.

Anti-bribery and

corruption matters

■ Please see page 41 (Anti-Bribery & Corruption Policy and Whistleblowing Policy).

■ Please also see pages 35, 84 and 99 to 101.

Business model

■ Please see pages 14 to 15 for our Business Model.

■ Please see pages 05 and 16 for our target markets, pages 12 to 13 for a summary

of our strategy and pages 06 to 07 for a summary of the Group.

Policies

■ The following codes, policies

and standards can be

found at our Group website

(www.discoverIEplc.com):

– Sustainability Policy

– Whistleblowing Policy

– Business Ethics Policy

– Anti-Bribery & Corruption Policy

– Modern Slavery Statement

– Group Tax Strategy

– Board Diversity Policy

– Supplier Code of Conduct

– 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.

Principal risks

■ Where principal risks have been identified in relation to any of the matters listed

above, these can be found on pages 73 to 78.

Non-financial KPIs

■ Our non-financial key performance indicators are set out on pages 51 and 52.

The Strategic Report, as set out on pages 01 to 81, has been approved by the Board.

On behalf of the Board

Nick Jefferies Simon Gibbins

Group Chief Executive Group Finance Director

3 June 2025 3 June 2025

Strategic Report

81 Annual Report and Accounts for the year ended 31 March 2025

NONFINANCIAL AND SUSTAINABILITY

INFORMATION STATEMENT

LENGTH OF TENURE

INDEPENDENCE

Bruce Thompson

Non-Executive Chairman

Nick Jefferies

Group Chief Executive

Simon Gibbins

Group Finance Director

Celia Baxter

Senior Independent

Director

Clive Watson

Non-Executive Director

Rosalind Kainyah

Non-Executive Director

Greg Davidson

Group General Counsel &

Company Secretary

N R S G N S G S

A N R S A N R S A N R S G

Appointment to the Board

Non-Executive Director

since February 2018 and

Non-Executive Chairman

since November 2022.

Appointment to the Board

January 2009

Appointment to the Board

July 2010

Appointment to the Board

Non-Executive Director

since June 2023, Senior

Independent Director and

Chair of Remuneration

Committee since

November 2024

Appointment to the Board

September 2019

Appointment to the Board

January 2022

Appointment to the Board

November 2019

Tenure

7 years

Tenure

16 years

Tenure

14 years

Tenure

2 years

Tenure

5 years

Tenure

3 years

Tenure

N/A

Independent

Yes

Independent

Yes

Independent

Yes

Independent

Yes

Independent

Previous experience

Bruce brings a wide range

of strategic and leadership

expertise to the Board

with proven experience

of growing international

industrial businesses.

During his executive career,

Bruce was Chief Executive

Officer of Diploma plc.

Prior to joining Diploma,

Bruce was a director

with the technology and

management consulting

firm Arthur D. Little Inc.,

both in the UK and the USA.

Previous experience

Nick joined discoverIE as

Group Chief Executive in

2009. He started his career

as an electronics engineer

for Racal Defence (now part

of Thales plc), before joining

Toshiba and then Hitachi’s

European electronic

component businesses.

Prior to discoverIE, he

was General Manager

for electronics globally at

Electrocomponents plc.

Previous experience

Simon brings significant

financial expertise and

experience gained at an

international level. Prior to

joining the Group, he was

at Shire plc for nine years,

latterly as Global Head of

Finance and Deputy CFO,

and at ICI plc for six years in

various senior finance roles,

both in the UK and overseas.

His earlier career was spent

with Coopers & Lybrand

where he qualified as a

chartered accountant.

Previous experience

Celia brings many years

of senior management,

executive and board

experience in several

FTSE 250 and FTSE 100

companies, and has a good

understanding of industrial

businesses that have grown

by acquisition. She spent her

executive career in Human

Resources, starting with Ford

Motor Company and then

KPMG, before moving on to

Tate & Lyle plc, Enterprise Oil

and Hays plc. More recently,

at Bunzl plc, she was a

member of the Executive

Committee responsible for

HR and sustainability.

Previous experience

Clive is a Chartered

Accountant and brings

wide-ranging experience

in senior financial roles

to the Board. Prior to

retirement from executive

roles, he spent almost 13

years as Group Finance

Director of Spectris plc,

having previously held a

number of other senior

finance positions both

in the UK and overseas.

He also served as Senior

Independent Director

and Audit Committee

Chairman of Spirax-Sarco

Engineering plc.

Previous experience

Rosalind has extensive

experience in sustainability

matters and currently

runs Kina Advisory, an ESG

consultancy. Previously,

she was VP, External

Affairs & Corporate Social

Responsibility at Tullow

Oil and held various roles

at De Beers SA, latterly as

President of De Beers Inc. in

the USA.

Previous experience

Greg joined discoverIE

in November 2019 and is

responsible for legal and

company secretarial affairs.

He is a qualified lawyer

with extensive experience

of technology, corporate

and commercial matters.

His experience includes

five years at Wiggin & Co

LLP, with clients focused

predominantly in the

technology sector and, prior

to joining discoverIE, 16

years at RM plc, with seven

years as General Counsel &

Company Secretary.

External appointments

Avon Technologies plc,

Non-Executive Director

and Chair.

External appointments

None.

External appointments

None.

External appointments

Dowlais Group plc, Senior

Independent Director

and Remuneration

Committee Chair.

Volution Group plc, Non-

Executive Director.

External appointments

Breedon Group plc, Senior

Independent Director and

Chair of the Audit & Risk

Committee.

Kier Group plc, Non-

Executive Director.

Trifast plc, Senior

Independent Director and

Chair of the Audit & Risk

Committee.

External appointments

GEM Diamonds Ltd, Non-

Executive Director.

WE Soda Ltd, Non-Executive

Director.

EnQuest plc, Non-Executive

Director.

External appointments

None.

discoverIE Group plc Innovative Electronics82

BOARD OF DIRECTORS

LENGTH OF TENURE

INDEPENDENCE

Bruce Thompson

Non-Executive Chairman

Nick Jefferies

Group Chief Executive

Simon Gibbins

Group Finance Director

Celia Baxter

Senior Independent

Director

Clive Watson

Non-Executive Director

Rosalind Kainyah

Non-Executive Director

Greg Davidson

Group General Counsel &

Company Secretary

N R S G N S G S A N R S

A N R S A N R S

Appointment to the Board

Non-Executive Director

since February 2018 and

Non-Executive Chairman

since November 2022.

Appointment to the Board

January 2009

Appointment to the Board

July 2010

Appointment to the Board

Non-Executive Director

since June 2023, Senior

Independent Director and

Chair of Remuneration

Committee since

November 2024

Appointment to the Board

September 2019

Appointment to the Board

January 2022

Appointment to the Board

November 2019

Tenure

7 years

Tenure

16 years

Tenure

14 years

Tenure

2 years

Tenure

5 years

Tenure

3 years

Tenure

N/A

Independent

Yes

Independent

Yes

Independent

Yes

Independent

Yes

Independent

Previous experience

Bruce brings a wide range

of strategic and leadership

expertise to the Board

with proven experience

of growing international

industrial businesses.

During his executive career,

Bruce was Chief Executive

Officer of Diploma plc.

Prior to joining Diploma,

Bruce was a director

with the technology and

management consulting

firm Arthur D. Little Inc.,

both in the UK and the USA.

Previous experience

Nick joined discoverIE as

Group Chief Executive in

2009. He started his career

as an electronics engineer

for Racal Defence (now part

of Thales plc), before joining

Toshiba and then Hitachi’s

European electronic

component businesses.

Prior to discoverIE, he

was General Manager

for electronics globally at

Electrocomponents plc.

Previous experience

Simon brings significant

financial expertise and

experience gained at an

international level. Prior to

joining the Group, he was

at Shire plc for nine years,

latterly as Global Head of

Finance and Deputy CFO,

and at ICI plc for six years in

various senior finance roles,

both in the UK and overseas.

His earlier career was spent

with Coopers & Lybrand

where he qualified as a

chartered accountant.

Previous experience

Celia brings many years

of senior management,

executive and board

experience in several

FTSE 250 and FTSE 100

companies, and has a good

understanding of industrial

businesses that have grown

by acquisition. She spent her

executive career in Human

Resources, starting with Ford

Motor Company and then

KPMG, before moving on to

Tate & Lyle plc, Enterprise Oil

and Hays plc. More recently,

at Bunzl plc, she was a

member of the Executive

Committee responsible for

HR and sustainability.

Previous experience

Clive is a Chartered

Accountant and brings

wide-ranging experience

in senior financial roles

to the Board. Prior to

retirement from executive

roles, he spent almost 13

years as Group Finance

Director of Spectris plc,

having previously held a

number of other senior

finance positions both

in the UK and overseas.

He also served as Senior

Independent Director

and Audit Committee

Chairman of Spirax-Sarco

Engineering plc.

Previous experience

Rosalind has extensive

experience in sustainability

matters and currently

runs Kina Advisory, an ESG

consultancy. Previously,

she was VP, External

Affairs & Corporate Social

Responsibility at Tullow

Oil and held various roles

at De Beers SA, latterly as

President of De Beers Inc. in

the USA.

Previous experience

Greg joined discoverIE

in November 2019 and is

responsible for legal and

company secretarial affairs.

He is a qualified lawyer

with extensive experience

of technology, corporate

and commercial matters.

His experience includes

five years at Wiggin & Co

LLP, with clients focused

predominantly in the

technology sector and, prior

to joining discoverIE, 16

years at RM plc, with seven

years as General Counsel &

Company Secretary.

External appointments

Avon Technologies plc,

Non-Executive Director

and Chair.

External appointments

None.

External appointments

None.

External appointments

Dowlais Group plc, Senior

Independent Director

and Remuneration

Committee Chair.

Volution Group plc, Non-

Executive Director.

External appointments

Breedon Group plc, Senior

Independent Director and

Chair of the Audit & Risk

Committee.

Kier Group plc, Non-

Executive Director.

Trifast plc, Senior

Independent Director and

Chair of the Audit & Risk

Committee.

External appointments

GEM Diamonds Ltd, Non-

Executive Director.

WE Soda Ltd, Non-Executive

Director.

EnQuest plc, Non-Executive

Director.

External appointments

None.

COMMITTEE

MEMBERSHIP

Audit and Risk

Committee

Nomination

Committee

Sustainability

Committee

Group

Management

Committee

Remuneration

Committee

Chairman of the

Committee

1-5 years

6-10 years

Over 10 years

Independent

Non-independent

83 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Chairman’s Governance Overview:

discoverIE is a strong business, with a clear purpose and set of values. This is underpinned by a governance structure that

enables the Group’s long-term objectives to be met.

The Group’s performance over the last year was underpinned by our governance arrangements. These structures help ensure

we are well positioned for continued growth and to meet the social and environmental challenges facing the Group today.

Bruce Thompson

Compliance with the UK Corporate Governance Code 2018

During the year ended 31 March 2025, the Company fully complied with the UK Corporate Governance Code 2018 (the

“Code”), with one exception. The Company conducted an externally facilitated Board evaluation in 2022 and provision 21 of

the Code would require the Board to conduct another during FY2025. The Board conducted a set of evaluations (see page

95 for further details) but this was not externally facilitated. The Board intends to conduct an externally facilitated review in

the year ending 31 March 2026.

Section Progress made

Board Leadership and

Company Purpose

The Board leads from the front in setting the tone for the business and has

established a clear purpose, set of values and strategy, taking into account

the interests of our various stakeholders. The right resources, structures and

processes are in place to ensure that these are then implemented properly

throughout the Group.

Division and

Responsibilities

The respective roles and responsibilities of the Executive and Non-

Executive Directors are clear and consistently applied, providing for

constructive and effective dialogue and clear accountability.

Composition, Succession

and Evaluation

The Board has a healthy balance of skills, knowledge and experience and the

appointment process is rigorous and carefully applied. Annual evaluations

keep the effectiveness of the Board and its Committees under regular review

to ensure this remains the case. During the year ended 31 March 2025, an

evaluation of the Board and its Committees was completed.

Audit, Risk and Internal

Controls

The Board has established clear processes and procedures to ensure

that risks are carefully identified, monitored and mitigated against and

then reported externally in an open and transparent manner. This helps

ensure that the Company’s financial statements are fair, balanced and

understandable. Effective risk management is critical to achieving our

strategy.

Remuneration

Remuneration supports the Company’s strategy and is appropriate to the

nature and size of the business. The Board has clear processes in place and

aims to report in a straightforward and easy to understand way, with a view

to providing external stakeholders with reassurance that pay, performance

and wider interests are aligned.

Bruce Thompson

Chairman

Our corporate governance structures

continue to underpin the long-term

success of the Group.”

CORPORATE GOVERNANCE REPORT

discoverIE Group plc Innovative Electronics84

Current composition and

changes to the Board in

the year

Details of the current members of the

Board are set out on pages 82 and 83.

Celia Baxter is Senior

Independent Director and Chair

of the Remuneration Committee

(succeeding Tracey Graham who

retired on 31 October 2024), Clive

Watson is Chair of the Audit and Risk

Committee and Rosalind Kainyah is

Chair of the Sustainability Committee.

All of the Non-Executive Directors

have considerable expertise in their

respective roles.

Section 172 Statement

The Board takes all of its duties

seriously, including those set out in

section 172 of the Companies Act 2006.

The statement required by section

172(1), explaining how it has taken

those duties into account, can be

found on pages 36 and 37.

Stakeholder engagement

We engage proactively with our

stakeholder groups. Further details

can be found on pages 34and 35 and

pages 86 to 89.

Sustainability

Provision 1 of the Code deals with the

Company generating value over the

long-term in the context of future risks

and opportunities. This is addressed

in the Sustainability Report and in

the Risk Management section of

this Annual Report and Accounts.

Further details of how climate-related

risks and opportunities are assessed

and managed can be found in the

Sustainability Report.

Good governance

Following the introduction of the

2018 UK Corporate Governance Code,

the Board reviewed the Group’s

governance frameworks and its

purpose, culture and values. This

was reviewed during the year ended

31 March 2023 and was updated as

set out below. Our purpose, culture

and values are communicated to

our workforce through internal

newsletters, meeting colleagues in-

person, town hall meetings, digital

channels and corporate brochures.

Our Purpose:

To create innovative electronics that help to improve the world and people’s lives.

Vision

To be a leading global innovator in

electronics.

Mission

To design and manufacture innovative

customised electronics that help our

customers create ever better technical

solutions around the world. We aim

to achieve this through a motivated,

entrepreneurial and empowered

workforce that adheres to the highest

ethical and quality standards.

In doing so, we expect to create value

for Shareholders, while being seen as

an attractive and responsible employer

and a trusted partner for customers and

suppliers.

Strategy

To grow our business in custom and differentiated electronics for niche industrial

applications by focusing on markets with structural, sustained growth prospects,

complemented by value-enhancing acquisitions.

This is underpinned by strong cash generation and our commitment to the UN

Sustainable Development Goals.

Strategic Priorities

This strategy comprises the following priorities:

• Grow sales well ahead of GDP through the economic cycle by focusing on

sustainable, structural growth markets

• Acquire high quality businesses with attractive growth prospects, strong and

sustainable margins, and discoverIE DNA

• Generate efficiencies and improve operating margin through effective pricing and

increased product innovation and differentiation

• Reduce environmental impact by achieving net-zero carbon emissions

Progress against our objectives is measured through our key strategic indicators.

Details are set out on page 11.

Culture

• Dedication and determination – driven by empowerment

and a sense of ownership

• Customer centricity – allow employees closest to the

customers to make decisions that directly affect customer

satisfaction

• Respect, fairness and equality – create an open and inclusive

environment in which everyone has an equal opportunity to

flourish and grow

• Open communication – create a trusting environment where

information flows freely and collaboration thrives

• Target driven – strive for results and high performance

Values

• Integrity – we act with honesty and openness, treating our

partners and stakeholders fairly

• Quality – we strive for excellence and make constant

improvements that deliver superior value to our customers

• Empowerment – we inspire growth and innovation by

providing an entrepreneurial environment

• Collaboration – we work together, trust and respect

each other

• Positive impact – we care about the environment and

societies we live in and commit to making a positive impact

Board Leadership and Company Purpose

85 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Employee engagement

Our employees are highly valued and

skilled and we depend upon their

dedication and hard work for the

Group’s success. Our decentralised

business model relies on the expertise

of our teams in different businesses

and across different locations. Our

strategy recognises the benefits of

maintaining our businesses’ individual

identities, whilst contributing to

the success of the Group overall.

The Board therefore considers it

most appropriate that engagement

activities are carried out directly at a

local level, with all feedback received

by any member of the Board shared

with the rest of the Board.

The below summarises why and how

the Board and senior management

both from Head Office and within our

businesses engage, how it influences

our strategic thinking, the feedback

we receive as to any key concerns, and

other factors that affect the day-to-day

working environment.

Why we engage

■ The well-being, dedication and

performance of our people are

critical to our continued success

as a Group, the products that are

delivered to and relationships

maintained with customers and, as

a result, the value delivered to all of

our stakeholders.

■ An engaged workforce can

help us achieve our long-term

strategic goals.

■ Knowledgeable and well-trained

employees help in the continued

development of new and

innovative products, both for us

and our customers.

■ Strong working relations help

attract and retain talent.

We aim for a well-motivated workforce

and recognise that, without their

commitment, the Group would not

have achieved its various successes

over the last several years. This is both

in terms of financial performance and

our wider contribution to tackling the

issues facing the world today, such

as climate change and the need to

reduce carbon emissions. As such,

it is important to the Board that our

colleagues know how highly they are

valued and that it recognises that our

success depends on their continued

invaluable contribution to the Group.

How we engage

A range of employee engagement

mechanisms are in place, including

employee surveys, performance

evaluations, ESG workshops,

newsletters, apprenticeship and

graduate programmes, employee

assistance programmes, employee

conferences and town hall meetings.

The Board receives updates at every

meeting from the Group Chief

Executive, the Group General Counsel

& Company Secretary and other senior

managers on a range of employee-

related matters, including any local

issues encountered, health and safety

matters and the general health and

well-being of our workforce. This was

particularly important during the

pandemic and more recently during

the cost-of-living crisis. The Audit &

Risk Committee also receives details of

any whistleblowing reports, the steps

taken to investigate, and any follow-up

actions identified as a result.

Reviewing, embedding and managing our culture

Site visits

The Board, both individually

and as a whole, conduct

regular site visits during

which Directors engage

with colleagues at all levels

(see page 87 for a summary

of recent visits).

ESG workshops

Ad hoc ESG workshops are

carried out by the Group

Sustainability Team which

reports to the GMC and the

Sustainability Committee.

Newsletters

The Board receives periodic

newsletters summarising

recent events and activities

in operating businesses and

amongst our colleagues.

Health &

safety reports

The Board reviews health &

safety reports at every Board

meeting and discusses any

key events or themes

that may arise.

Culture reviews

The Board periodically

reviews the desired culture

of the Group and revises the

Group’s vision, mission and

values as relevant. The last

such review was conducted

in January 2023.

Internal Audit

reports

The Audit & Risk Committee

reviews the results of all

internal audits. Those

audits cover a wide range

of matters, including those

related to HR, culture, staff

morale and health & safety.

Whistleblowing

reports

The Audit & Risk Committee

receives a summary of all

whistleblowing reports

and discusses any material

topics that arise as a result.

People reviews

The Nomination Committee

routinely conducts reviews

of the Group’s senior

leadership teams (see page

105). These reviews include

consideration of matters,

including talent and

succession planning.

HOW OUR BOARD MONITORS CULTURE

We embrace a

decentralised operating

model, and our success

hinges on a culture built

on respect, fairness, and

equality, that empowers

our teams locally, fosters

open communication,

and unites us towards our

shared ambitions.

Engagement is

conducted using a variety

of methods, starting

within businesses at a

local level, complemented

by oversight from Head

Office, and by the Board

engaging directly.

The diagram opposite

provides a summary.

Board Leadership and Company Purpose continued

discoverIE Group plc Innovative Electronics86

CORPORATE GOVERNANCE REPORT CONTINUED

However, it is the personal

interactions that the Board and senior

management have that provide the

most direct and valuable feedback.

Since 2009, the Board has visited

the Group’s operating sites, meeting

management and employees directly.

In recent years, this has included visits

in 2017 to Flux (Asnaes, Denmark), in

2018 to Myrra and Noratel (Guangdong,

China) and in 2019 to Cursor Controls

(Newark, UK). During the pandemic

these visits ceased but the Board

continued with various forms of

engagement, including in particular

a virtual meeting with a team from

Noratel involving nine colleagues

covering a range of areas within the

business.

In FY2023, following the easing of

lockdown restrictions, the Board

resumed its schedule of face-to-face

meetings and this has continued

since. Further details are given below.

These visits enable all members

of the Board to meet with people

directly and because the interaction

is between all members of the Board,

as opposed to just one or two holding

this responsibility, this means that the

Board is able to meet with a wider

cross-section of our global workforce.

It also enables the different experience

and perspectives that each of our

Board members brings to contribute

to engagement, thereby fostering a

much broader range of interactions

than would otherwise be the case.

The below provides a summary of the Board’s visits over the last couple of years:

Date Board member(s) Site

April 2022 Rosalind Kainyah Cursor Controls

April 2022 Rosalind Kainyah Sens-Tech

October 2022 Bruce Thompson

Nick Jefferies

Hectronic

October 2022 Bruce Thompson

Clive Watson

Sens-Tech

November 2022 Nick Jefferies

Simon Gibbins

CPI, Beacon

January 2023 Bruce Thompson

Simon Gibbins

Tracey Graham

Nick Jefferies

Rosalind Kainyah

Clive Watson

Variohm

February 2023 Bruce Thompson

Nick Jefferies

Limitor

May 2023 Nick Jefferies

Simon Gibbins

Magnasphere, Phoenix America

September 2023 Celia Baxter Cursor Controls

October 2023 Celia Baxter Variohm Eurosensor

November 2023 Celia Baxter Sens-Tech

January 2024 Bruce Thompson

Celia Baxter

Simon Gibbins

Tracey Graham

Nick Jefferies

Rosalind Kainyah

Clive Watson

MTC

April 2024 Bruce Thompson

Nick Jefferies

CPI, Phoenix America, Shape, Magnasphere, Beacon

May 2024 Nick Jefferies DTI

July 2024 Nick Jefferies

Simon Gibbins

Positek

January 2025 Nick Jefferies Sens-Tech

March 2025 Nick Jefferies Myrra China, Noratel China, DTI

April 2025 Nick Jefferies CPI, Beacon, Shape

87 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Board Leadership and Company Purpose continued

During these visits the Board seeks to

better understand:

■ The nature of each business,

the products it makes and the

customers and markets it serves

■ Any operational challenges or

constraints that the business

may face

■ Opportunities that have been

identified for future product

innovation and business growth

■ Employee morale and motivation,

working conditions, local skills

and expertise, and the strength

of relations among the workforce

generally and with the local senior

management team

■ Relations between the business

and the wider Group

■ Where a business sits within a

cluster of Group companies, how

that cluster is working together

and the opportunities and

challenges that this brings

■ Possible future acquisition targets

that may complement the existing

business

■ Any health and safety concerns

In addition to regularly scheduled

business reviews, several members of

the Group Management Committee

(“GMC”) conduct routine functional

meetings and other site visits with our

businesses.

Updates from these visits are reported

to the Board, either directly or via the

Group Chief Executive. These reports

typically include the matters referred

to above, thereby enabling the Board

to have oversight of workforce relations

and benefit from their collective input.

The Audit & Risk Committee also

receives updates at every meeting

from the Risk & Internal Audit team,

following internal audits that have

been conducted at each site. One

key item that is checked on all

internal audits is that the Group’s

whistleblowing posters are clearly

displayed at all sites, so that if there

are any matters that staff wish to raise

in confidence, and anonymously if

preferred, they know the channels

through which they can do so.

For further details on our Global

Whistleblowing Policy and the

independent helpline available to all

staff globally, please see page 41.

As well as numerous visits throughout

the year by members of the GMC,

an internal conference was held in

September 2024 in London, bringing

together over 100 of the Group’s senior

leaders, together with the Board and

GMC. That conference fostered further

collaboration and knowledge sharing

between the Board, GMC and all of our

global businesses on a wide range of

discoverIE Group plc Innovative Electronics88

CORPORATE GOVERNANCE REPORT CONTINUED

matters. This has led to a number of

initiatives which are still underway.

One area of key focus for the Board

is to ensure that the right leadership

teams are in place at all of our

businesses. As well as guiding those

businesses generally, these leaders

shape the day-to-day experience

of the people within each of those

businesses, and regular direct

employee engagement is delegated

to them. On behalf of the Board, the

Nomination Committee regularly

reviews the most senior leaders

throughout the Group and, in FY2025,

that review covered over 100 of

our most senior business leaders.

Please see page 104 and 105 of the

Nomination Committee Report for

further details.

Outcomes of engagement

The purpose of the various forms of

engagement is as follows:

■ To deepen the Board’s knowledge,

by using the expertise and insights

of our workforce.

■ To assess the culture of the Group.

■ To identify any issues or concerns

that staff may have.

■ To ensure that the employee’s

voice is heard.

The Group’s core strategy is well

established and has been settled

for several years. As such, employee

engagement helps influence the

Board’s decision-making as to how that

strategy is implemented in practice.

For example:

■ During the pandemic, it was

crucial that our businesses

adapted to flexible working

arrangements.

■ Over the last few years, the need to

support staff during the cost-of-

living crisis has been highlighted

and addressed. The Group’s

Human Rights Policy includes

a commitment to pay wages

at rates that are meaningfully

ahead of minimum statutory

rates. As part of its annual review

of pay and working conditions,

the Remuneration Committee

received updates on pay rises

being given to our colleagues

globally, how they compared to

local rates of inflation and how they

compared to local minimum wage

requirements.

■ The Group closely monitored

the political, economic and

social situation in Sri Lanka.

Additional allowances, food and

transportation were consequently

provided.

■ In light of a general desire to

increase knowledge-sharing

and collaboration between

Group companies, an internal

communication platform has been

set up, to enable people in similar

functions at all levels to work

together to solve common issues.

■ Regular webinars have been

held for colleagues in operating

businesses across the Group

to share best practice and

knowledge, covering a variety of

topics such as greenhouse gas

emissions, technology deep dives

and finance.

■ In October 2022, the UK workforce

employer pension rate was

increased.

■ Following interest from staff, a

salary sacrifice electric vehicle car

scheme was rolled out to our UK

businesses in FY2023.

■ Given the rise in living costs, the

Group rolled out an employee

rewards programme across our

UK businesses to help support

our employees through these

challenging times.

■ Our employee assistance

programme provides our

employees with various types

of support, including advice on

financial difficulties, and mental

health and well-being.

The metrics and other measures that

are used by the Board to help assess

employee relations include:

■ Staff turnover rates (see page 52 for

more details)

■ Pay rates globally (both in absolute

terms and in relation to local

inflation and minimum wages)

■ Accident frequency rates (see page

52 for more details)

■ Whistleblowing reports

■ Employee rewards programme

registration and activities

■ The level of collaboration activities

between businesses

■ Diversity (see pages 52 and 94 for

more details)

■ Gender pay gap data (UK only)

Policies and procedures

The Board puts in place a range of

policies and procedures that support

employees in their various business

activities. These policies consider the

need to foster reasonable business

relationships with suppliers, customers

and others, the impact of the Group’s

operations on its workforce, the

community and the environment, and

the maintenance of high standards

of business conduct. Our policies and

procedures include the following:

■ Sustainability Policy

■ Human Rights Policy

■ Group Health and Safety Policy

■ Anti-Bribery and Corruption Policy

■ Business Ethics Policy

■ Whistleblowing Policy

■ Board Diversity Policy

■ Supplier Code of Conduct

■ Modern Slavery Statement

■ Conflict Minerals Policy

■ Environmental Policy

■ Group Tax Strategy

In addition to the above, clear and

fair terms of employment are in

place throughout the Group. The

Group remains supportive of the

employment and advancement

of disabled persons and full

consideration is given to applications

for employment from disabled

persons, where the candidate’s

particular aptitudes and abilities

are consistent with meeting the

requirements of the job. Opportunities

are available to disabled employees

for training, career development

and promotion. Where existing

employees become disabled, it is the

Group’s policy to provide continuing

employment, wherever practicable,

in the same or an alternative position

and to provide appropriate training

and support to achieve this aim.

89 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Board Leadership and Company Purpose continued

Time allocation, Board and Committee meetings and attendance

During the year, attendance by Directors at Board and Committee meetings was as follows:

Committees

Director Board

Audit

and Risk Remuneration Nomination Sustainability

Overall

Attendance %

Bruce Thompson 7 / 7 – 4 / 4 2 / 2 3 / 3 100%

Celia Baxter 7 / 7 3 / 3 4 / 4 2 / 2 3 / 3 100%

Simon Gibbins 6 / 7 – – – 3 / 3 90%

Tracey Graham

4 / 4 1 / 1 1 / 1 – 1 / 1 100%

Nick Jefferies 7 / 7 – – 2 / 2 3 / 3 100%

Rosalind Kainyah 7 / 7 3 / 3 4 / 4 1 / 1

3 / 3 100%

Clive Watson 6 / 7 3 / 3 3 / 4 2 / 2 2 / 3 84%

Retired 31 October 2024

The Nomination Committee meeting that Rosalind Kainyah did not attend was to discuss her own appointment

Time is provided at the start and the end of each meeting for the Chairman to meet privately with the Senior Independent

Director and Non-Executive Directors. The Board’s commitments are taken into account in the preparation and planning of

meetings to ensure that all Directors are able to allocate sufficient time to discharge their responsibilities.

Board approval is required prior to any Director accepting any external appointments.

discoverIE Group plc Innovative Electronics90

CORPORATE GOVERNANCE REPORT CONTINUED

Board activities

Topic Key activities and discussions in FY 2024/25 Key priorities in FY 2025/26

Strategy

■ Reviewed and approved the acquisitions of Hivolt

Capacitors and Burster

■ Reviewed key strategic indicators (“KSIs”)

■ Reviewed the Group’s approach to sustainability

practices and reporting, as well as priorities and

progress against targets

■ Consider acquisitions as identified

and determine the appropriate

course of action

■ Keep KSIs under review

■ Keep the Group’s dividend policy

under review

■ Continue to focus on international

growth in key markets, including

expansion into North America

■ Review of the Group’s long-term

sustainability related targets

Risk and risk

management

■ Carried out a robust assessment of principal and

emerging risks (see pages 73 to 78 and 57 to 61)

■ Considered the Group’s exposure to climate-

related and other ESG risks

■ Conducted a further roll-out of the Group’s Anti-

Bribery Policy and related training

■ Reviewed internal audit reports and actions

taken to address findings identified

■ Continued work in preparation for the coming

into force of Provision 29 of the Corporate

Governance Code 2024

■ Review key risks and ensure

that the Group’s internal control

process remains appropriate

Governance

■ Continued focus on the composition, balance

and effectiveness of the Board

■ Signed off and published the Group’s modern

slavery statement

■ Engaged with institutional Shareholders,

investors and other stakeholders throughout

the year

■ Reviewed and approved the 2024 Annual Report

■ Build further understanding and

plan actions in relation to new

regulations over the period

Organisational

capacity

■ Monitored health and safety performance across

the Group. Regular Board updates received on

actions improving health and safety

■ Received presentations by senior management

including on M&A strategy

■ Continue to monitor health

and safety performance across

the Group

■ Consideration of the Group’s

capacity as it continues to grow

Board

development

■ Continued focus on the composition, balance and

effectiveness of the Board

■ Reviewed Board and Committee composition and

discussed and acted on the recommendations of

the Nomination Committee

■ Undertook an evaluation of the Board, its

Committees and individual Directors

■ Focus on increasing diversity both

for the Board and across the Group

more generally

91 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Division of Responsibilities

discoverIE is led by a strong and experienced Board with a broad range of skills, experience and knowledge.

Throughout the year under review, the Board consisted of Bruce Thompson as Non-Executive Chairman, Tracey Graham

as Senior Independent Director (until her retirement on 31 October 2024), Celia Baxter as Senior Independent Director

(from 1 November 2024), Rosalind Kainyah and Clive Watson as Non-Executive Directors, with Nick Jefferies as Group Chief

Executive and Simon Gibbins as Group Finance Director.

The Non-Executive Directors constructively challenge management proposals where appropriate and carefully monitor

management performance and reporting on an ongoing basis. The Company has both a Chairman and a Group Chief

Executive.

There is a clear division of responsibilities, which has been agreed by the Board, and a summary of their respective roles is

described below.

Role of the Chairman

■ Responsible for leading the Board,

which includes the operation of

the Board’s overall procedures.

■ Providing a forum for constructive

discussion and ensuring receipt of

clear and timely information.

■ Overseeing Corporate Governance

matters.

■ Leading the performance

evaluations of the Group Chief

Executive, the Non-Executive

Directors and the Board.

The Chairman, in conjunction with the

Group Company Secretary, ensures

that Directors receive a full, formal and

tailored induction to the Group and

ongoing training as relevant.

Role of the Group Chief

Executive

■ Leading the development and

implementation of the Group’s

strategy.

■ Communicating with Shareholders

and other stakeholders.

■ Responsible for the day-to-day

management of the Group’s

businesses and reporting on their

progress to the Board.

■ Leading the Group Management

Committee.

The Group Chief Executive is assisted

in meeting his responsibilities by the

Group Management Committee.

Role of the Board

■ Setting the strategy.

■ Oversight of the management of

discoverIE.

■ Review of KSIs.

■ Review of acquisitions and

corporate transactions.

■ Recommending or declaring

dividends.

■ Approval of financial statements,

business plans, financing and

treasury matters.

■ Approval of major capital

expenditure and commitments.

■ Maintaining sound internal

controls and risk management

systems.

■ Review of the Group’s overall

corporate governance.

■ Any litigation of a material nature.

As set out on the following page,

certain matters are delegated to the

Group Management Committee and

to the Audit and Risk, Remuneration,

Nomination and Sustainability

Committees.

discoverIE Group plc Innovative Electronics92

CORPORATE GOVERNANCE REPORT CONTINUED

Governance framework

The Board

Chaired by Bruce Thompson

The Board meets a minimum of six times a year.

It is accountable to Shareholders for the long-term success of the Group. This is achieved via a clear division of

responsibilities between the Chairman and Group Chief Executive, the setting of strategic aims and ensuring that the

necessary resources are in place.

Nomination

Committee

Chaired by

Bruce Thompson

The Nomination

Committee regularly

reviews the structure,

size and composition

of the Board and

its Committees.

It identifies and

nominates suitable

candidates to be

appointed to the

Board (subject to

Board approval) and

considers diversity,

culture, talent and

succession generally.

Further information

on the Nomination

Committee is on pages

104 to 105.

Audit and Risk

Committee

Chaired by

Clive Watson

The Audit and Risk

Committee has

responsibility for

overseeing and

monitoring the

Group’s financial

statements,

accounting processes,

audit processes

(internal and external),

and controls.

Further information

on the Audit and Risk

Committee is on pages

96 to 102.

Remuneration

Committee

Chaired by

Celia Baxter

The Remuneration

Committee reviews

and recommends

to the Board the

framework and policy

for the remuneration

of the Chairman,

the Executive

Directors and the

Group Management

Committee.

The Committee

ensures that the

remuneration policy of

the Group reflects the

Group’s strategy.

Further information

on the Remuneration

Committee is on pages

110 to 133.

Sustainability

Committee

Chaired by

Rosalind

Kainyah

The Sustainability

Committee reviews

the Group’s ESG plans

and arrangements,

seeking to align

with best practice

and underpinning

the long-term

sustainability of

the Group.

Further information

on the Sustainability

Committee is on pages

38 to 52.

Group Management Committee

The Group Management Committee is chaired by Nick Jefferies, Group Chief Executive, and comprises Simon Gibbins,

the Group Finance Director, the Group Commercial Directors, Head of Corporate Development, Group General

Counsel & Company Secretary, Group Financial Controller, Head of Tax, Head of Acquisitions, Head of Risk & Internal

Audit, Head of Investor Relations and Group Development, and Group Projects Director. Further information about

Committee members can be found on the Group’s website www.discoverIEplc.com.

The Committee typically meets 12 times a year (six times to discuss governance matters and six times to discuss

operational matters) and is responsible for the Group’s day-to-day operations, for delivering results, and for driving

growth and ensuring that this is done in a sustainable and ethical manner.

93 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Composition, succession and evaluation

Current composition

The biographies of the current

members of the Board are set out on

pages 82 and 83.

Work of the Nomination

Committee

The Nomination Committee Report,

which can be found on pages 104

and 105, describes the work of the

Nomination Committee in ensuring that

the Board continues to have the right

mix of skills, knowledge and experience,

and the process for ensuring that

there is an effective process in place for

succession planning.

Independence

The independence of the Non-

Executive Directors is reviewed annually.

The Board considers that the Non-

Executive Directors bring strong,

independent oversight and continue

to demonstrate independence. The

Board recognises the recommended

term for Non-Executive Directors as

set out in the Code and is mindful of

the need for suitable succession.

Celia Baxter is the Senior Independent

Director and is available to

Shareholders should they have

concerns that cannot be resolved

through other channels.

Induction

All new Directors receive induction

training on joining the Board and

are expected to regularly update and

refresh their skills and knowledge, with

the Company providing the necessary

resources, as required. The induction

programme includes meeting with

the Group’s senior management

and visits to key locations, as well as a

comprehensive briefing pack.

Board composition

The composition of the Board, both as

at 31 March 2025 and as at the date of

this Annual Report and Accounts, is

set out below

■ The Board is 33% female

■ The Senior Independent Director

(Celia Baxter) is female

■ The Board has one Director from a

minority ethnic background

discoverIE collects the data used for

these purposes from members of

the Board and Group Management

Committee on a voluntary basis,

with each person confirming their

gender and ethnicity. The senior

positions are defined as Chairman,

Group Chief Executive (“CEO”), Group

Finance Director (“CFO”) and Senior

Independent Director (“SID”). The

Group Management Committee

is considered to be the Company’s

executive management as defined by

the Listing Rules.

Gender diversity

Number

of board

members

Percentage

of the board

Number of senior

positions on the

board (CEO, CFO,

SID and Chair)

Number in

Executive

Management

Percentage

of Executive

Management

Men 4 67% 3 8 73%

Women 2 33% 1 3 27%

Not specified / prefer not to say 0 0% 0 0 0%

Ethnic diversity

Ethnicity

Number

of board

members

Percentage

of the board

Number of senior

positions on the

board (CEO, CFO,

SID and Chair)

Number in

Executive

Management

Percentage

of Executive

Management

White British or other White

(including minority-white groups) 5 83% 4 8 73%

Mixed / Multiple Ethnic Groups 0 0% 0 0 0%

Asian / Asian British 0 0% 0 3 27%

Black / African / Caribbean / Black

British 1 17% 0 0 0%

Other ethnic group, including Arab 0 0% 0 0 0%

Not specified / prefer not to say 0 0% 0 0 0%

The Company confirms that, both as at 31 March 2025 and as at the date of this Annual Report and Accounts, it meets the

targets on board diversity specified in Listing Rules 6.6.6(9) and 14.3.30(1), save for the requirement for 40% of the Board to be

women (currently 33%). The reason for not meeting that target is as follows. As explained in our Board Diversity Policy (which can

be found on our website at www.discoverieplc.com/sustainability/company-policies), the Company is committed to maintaining

a diverse Board that is appropriate for the size and nature of the Group and, at present, it has been determined that this is met

by maintaining a Board of six Directors, comprising two Executive Directors and four independent Non-Executive Directors. All

of the current Directors of the Board provide a valuable contribution to the success of the Group, and it would be inappropriate

to either seek to remove one of the current male Directors and replace them with a female Director, or to maintain a larger

Board, simply to enable the Company to confirm compliance with this requirement. The current composition of the Board has

been considered as appropriate and in the best interests of all stakeholders. If it is determined in future that a Board of seven or

more members is appropriate, we would target maintaining a minimum 40% female board representation.

discoverIE Group plc Innovative Electronics94

CORPORATE GOVERNANCE REPORT CONTINUED

Evaluation

In accordance with the Code, the

Board and each of its Committees

undertake an evaluation each financial

year. Such evaluations were completed

during the year ended 31 March 2025.

As noted in last year’s report, the

Company conducted an externally

facilitated set of evaluations during

the year ended 31 March 2022 and

intends to conduct an externally

facilitated review in the year ending

31 March 2026.

A summary of the process and

findings for the 2025 evaluation are

provided below.

Step 1

Each Director considers his or

her individual performance, the

performance of the Chairman and

the overall performance of the Board

and each of its Committees by

using questionnaires. Additionally,

Celia Baxter, as Senior Independent

Director, considered the performance

of the Chairman based on the

feedback received.

Step 2

The results of the evaluation are

discussed by the Board and actions for

improvement are decided upon.

A summary of the 2025 Board

evaluation is detailed in the box below.

Step 3

One-on-one discussions are held

between the Chairman and Senior

Independent Director on the

evaluation of the Chairman and

between the Chairman and the Non-

Executive Directors on their respective

evaluations.

Re-election

In accordance with the Code, all

Directors stand for re-election annually

at each AGM.

Audit, risk and internal

control

The Strategic Report notes that

delivering the Group’s strategic

priorities in a sustainable and

responsible manner requires careful

consideration to be given by the Board

to the nature and level of risks that the

Group should accept.

The Board’s approach to risk

generally, including the identification,

management and mitigation of

risks (including internal controls),

is described in further detail in the

following sections of this Annual

Report and Accounts:

■ Our approach to Risk

Management is described on

pages 68 to 72.

■ The Group’s Principal Risks and

Uncertainties are set out on pages

73 to 78.

■ The Audit and Risk Committee

Report on pages 96 to 102

summarises how the Committee

provides oversight, and supports

the Board, in relation to audit, risk

and internal controls generally.

■ The Board’s approach to climate-

related risks and opportunities can

be found in the TCFD Report (see

pages 53 to 67.)

Remuneration

The Board’s approach to remuneration

is set out in the Remuneration Report

(see pages 110 to 133).

Approval

This Corporate Governance Report

has been approved by the Board and

signed on its behalf by

Greg Davidson

Group General Counsel and Company

Secretary

Summary of the 2025 Board evaluation

Board composition

The composition of the Board was positively rated.

Board’s expertise and knowledge

The Board’s understanding of the views of major investors and other stakeholders was rated positively, and all members of the

Board were especially keen to continue visits to our operating businesses to interact with staff directly (a visit by the entire Board

to one of our sites in Poland is scheduled for September 2025). It was acknowledged that none of the individual members of

the Board have in-depth digital experience but it was agreed that this was already sufficiently addressed through the regular

briefings given by management which in the year included, for example, a specific briefing on artificial intelligence, as well as

knowledge acquired externally via other sources. It was also acknowledged that this was an area that would be difficult for any one

individual to cover and that it was more important to ensure that the Group has in place resources and controls to both exploit the

opportunities presented in this area, as well as manage the risks.

Board dynamics

The interaction among and between Board members was rated highly, with there being a positive atmosphere and strong

relationships, set in the context of proper and constructive challenge.

Management of meetings

The management of meetings and the structure of the Committees, together with Board support, were appropriate.

Risk management

The effectiveness with which the Board takes risk into account when making decisions was positively rated. The Group’s approach

to risk is set out in the Risk Management section of this Annual Report on pages 68 to 72.

95 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Clive Watson

Chair of the Audit & Risk Committee

Dear Shareholder,

I am pleased to report on the activities

of the Audit and Risk Committee (the

“Committee”) during the year under

review.

Role of the Committee

The Committee’s role is central in

bringing together the Group’s risk

management activities and control

framework to ensure adherence

to policies, the integrity of financial

reporting and the maintenance of

a strong, risk-focused culture. The

Committee oversees and reviews the

management of risk, financial results,

and the Group Internal Audit function.

This includes reviews of recent and

upcoming regulatory changes and

the Group’s exposure to all risks and

opportunities, including those related

to climate change and the changes to

the UK Corporate Governance Code

announced in January 2024. As Chair

of the Audit and Risk Committee, I

attend the Annual General Meeting

and make myself available for any

Shareholder questions within the

Committee’s remit.

Key responsibilities of

the Committee:

■ Consideration of the

appropriateness of the accounting

principles, policies and practices

adopted in the Group’s accounts

■ Review of external financial

reporting and associated

announcements to ensure they are

fair, balanced and understandable

■ Managing the appointment and

remuneration of the Group’s

external auditor, together with an

assessment of the effectiveness

and independence of the audit,

including the policy on the award

of non-audit services

■ Initiating and supervising a

competitive tender process for

the external audit, as and when

required

■ Oversight of the Group Internal

Audit function

■ Ensuring the effectiveness of

the Group’s risk management

processes and internal controls

■ Oversight and update of the Group

risk register

■ Oversight of the Group’s

whistleblowing procedures in

conjunction with the Board. If any

issues are reported that require

further investigation, this is

typically conducted by the Group

Internal Audit function, which

reports back to the Committee

as to its findings and whether

any further action is necessary or

desirable. Additionally, where any

investigations reveal wrongdoing,

or where remedial actions

are required, the Committee

maintains oversight of those

actions until such time as it is

satisfied that the underlying issues

have been adequately addressed.

■ Monitoring compliance with the

UK Corporate Governance Code

Meetings

During the year, the Committee met

three times and also met privately with

the external auditor. The Committee

comprised the people shown in the

table above, all of whom are Non-

Executive Directors.

In addition to the Committee

members, the Group Chairman, Group

Chief Executive Officer, Group Finance

The Committee

fulfils an essential

role in overseeing

the Group’s risk

management

and controls

framework.”

Members

Member

since

Clive Watson (Chair) 2019

Tracey Graham

(until 31 October

2024) 2017

Rosalind Kainyah 2022

Celia Baxter 2023

The Group Company Secretary acts

as Secretary to the Committee.

discoverIE Group plc Innovative Electronics96

AUDIT AND RISK COMMITTEE

REPORT

Director, representatives from the

external auditor, the Head of Risk and

Internal Audit and the Head of Group

Reporting attended some or all of

these meetings by invitation. As Chair

of the Committee, I maintain direct

communication with the external

auditor and the Head of Risk and

Internal Audit, independently of the

management of the Company.

Meetings of the Committee are

scheduled so as to ensure the

Committee is informed fully, and

on a timely basis, on areas of

significant risks and judgement. The

Committee also receives sufficient,

reliable and timely information from

management on significant changes

to financial accounting standards

and reporting requirements,

regulatory and governance changes

and developments concerning risk

management, fraud prevention and

detection, and cyber security. As Chair

of the Committee, I report to the Board

on any significant matters arising from

the activities of the Committee.

The Board is satisfied that the

members of the Committee have

both recent and relevant experience

(as set out on pages 82 and 83).

The Committee is satisfied that the

Group’s executive compensation

arrangements do not prejudice robust

controls and good stewardship.

Committee activities

during FY 2024/25 and

FY 2025/26 to date

May 2024

■ Reviewed the results of the

external audit of the 2024 Annual

Report and Accounts

■ Reviewed the going concern and

viability statements

■ Reviewed the 2024 Annual Report

and Accounts, including assessing

and confirming the presentation

of the consolidated Statement

of Profit and Loss and that the

Report was fair, balanced and

understandable

■ Assessed and agreed the

independent status of the external

auditor

■ Discussed the transition

arrangements between

PriceWaterhouseCooper LLP and

Deloitte LLP (“Deloitte”) as the

Group’s external auditor

■ Discussed the overall adequacy

and effectiveness of the Group’s

internal controls and reviewed the

Group Internal Audit function’s

annual opinion on the Group’s

control framework

■ Reviewed the half yearly update of

the Group Risk Register, including

agreeing key risks for inclusion

in the 2024 Annual Report and

Accounts

November 2024

■ Reviewed half-year results and

judgemental accounting areas

■ Reviewed the results of the interim

review conducted by the external

auditor

■ Reviewed the external auditor’s

preliminary view of FY 2024/25

audit planning considerations

■ Reviewed the half yearly update of

the Group Risk Register, including

risk reporting by each operating

business

■ Discussed the updates to the

UK Corporate Governance Code

due to come into effect from

1 January 2025 (effective for the

Company from the financial year

ending 31 March 2026)

■ Reviewed a fraud risk assessment

undertaken by the Risk & Internal

Audit team

■ Considered the results of an

external review of the Group’s

export control processes

■ Reviewed proposed changes to the

Committee’s Terms of Reference

(which were then recommended

to the Board)

January 2025

■ Reviewed the external audit

planning report for the 2025

Annual Report and Accounts

(including review and approval of

audit scope and fees)

■ Reviewed and approved the 2025

Annual Report and Accounts

timetable along with the approach

for ensuring the Annual Report

would be fair, balanced and

understandable

■ Agreed a risk management and

internal audit programme and

resource requirements in detail for

FY 2025/26, and at a higher level for

the following three years to ensure

all businesses would be audited

over a four-year cycle

■ Considered and approved a revised

Non-Audit Services Policy

■ Annual review and update of the

Group’s Tax Strategy

■ Reviewed the Group’s Anti-

Bribery & Corruption Policy and its

implementation

97 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

May 2025

■ Reviewed the results of the

external audit of the 2025 Annual

Report and Accounts

■ Reviewed the going concern and

viability statements

■ Reviewed the 2025 Annual

Report and Accounts, including

assessing and confirming that

the Report was fair, balanced and

understandable

■ Assessed and agreed the

independent status of the external

auditor

■ Discussed the overall adequacy

and effectiveness of the Group’s

internal controls, including

reviewing the Group Internal Audit

function’s annual opinion on the

Group’s control framework

■ Reviewed progress against the

recommendations arising from

the external quality assessment

■ Half-yearly review of the Group

Risk Register, including agreeing

key risks for inclusion in the 2025

Annual Report and Accounts

Standing items

The following matters were

covered at all of the above

Audit and Risk Committee

meetings:

■ Private session with the external

auditor without management

presence

■ Update on internal audits

conducted and progress with

management’s implementation of

actions

■ Update on alignment of newly

acquired businesses to Group

policies and procedures

■ Review of regulatory updates

■ Update on risk management

projects

■ Update on fraud and

whistleblowing reports

After each meeting of the Committee,

the Chair of the Committee reports

to the Board, to enable the Board to

discharge its responsibilities.

Fair, balanced and

understandable

The Committee has, at the request

of the Board, reviewed this year’s

Annual Report and Accounts to assess

whether it presents a fair, balanced

and understandable view of the

Company’s position and prospects.

The Committee’s review took account

of the process by which the Annual

Report and Accounts are prepared,

which includes analysis of changes

to applicable reporting requirements

and standards, and a robust schedule

of review and verification by senior

management and external advisers

to ensure disclosures are accurate.

The Committee is satisfied that,

taken as a whole, the Annual Report

and Accounts is fair, balanced

and understandable and provides

the information necessary for

Shareholders to assess the Group’s

position and performance, business

model and strategy, and has advised

the Board accordingly.

discoverIE Group plc Innovative Electronics98

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Significant accounting matters considered and decisions taken

As part of the monitoring of the integrity of the financial statements, the Committee assesses whether suitable accounting

policies have been adopted and whether management has made appropriate estimates and judgements. The viewpoint of

the external auditor is sought when undertaking these assessments.

During the year, the Committee’s review of significant accounting and financial reporting issues included a focus on the

following key areas:

Impairment of

goodwill

Consideration of the carrying value of goodwill and the assumptions underlying the

impairment review. The judgements in relation to goodwill impairment largely relate to the

assumptions underlying the calculations of the recoverable amount of each of the Group’s

four sub-divisions being tested for impairment, primarily the achievability of long-term plans

and macroeconomic assumptions underlying the valuation process. The assumptions are

sensitised to ensure that there is adequate headroom between the recoverable amount and

the carrying value of the sub-divisions being tested for impairment.

Accounting for

acquisitions and

disposals

A review of the accounting for acquisitions and disposals in FY 2024/25, including the

appropriateness of the assumptions used in assessing the fair value of the assets and

liabilities acquired, as well as assumptions used to estimate the fair value of the contingent

consideration at its initial recognition and its subsequent measurement, including discount

rate and trading forecasts.

Valuation of the

legacy defined

benefit pension

scheme

A review of the appropriateness of the assumptions used in the valuation of the legacy

defined benefit pension scheme under IAS 19 – Employee Benefits.

The recognition

and valuation

of judgemental

provisions

A review of the appropriateness of the assumptions used in the recognition and valuation

of judgemental provisions, which relate mainly to onerous contracts, inventory, severance,

indemnities, acquisition earn-out arrangements, long-term incentive plans, restructuring and

integration.

Presentation of

adjusted profit

adjustments

A review of the appropriateness of items disclosed as acquisition and disposal-related costs

(including amortisation of acquired intangibles and acquisition and disposal expenses) in

the Supplementary Statement of Profit or Loss Information and notes to the Group Financial

Statements, in line with the Group’s stated policy.

Climate-related

financial disclosures

An evaluation of the impact of climate change on the Group in accordance with the TCFD

framework. The process involved a review of risks and opportunities from climate change and

evaluating the quantifiable financial impact on the Group under different climate change

scenarios.

Going concern and

viability-related

financial disclosures

A review of the paper prepared by management on the Group’s going concern and viability

assessment, including underlying forecasts, cash flow assumptions and downside scenarios.

The Committee was satisfied that

each of the matters set out above had

been fully and adequately addressed

by the Executive Directors and then

reviewed by the external auditor, and

that the disclosures made in this

Annual Report and Accounts were

appropriate.

In respect of each significant matter

reviewed, the Committee considered

the assumptions made, the

reasonableness of judgements made

and how such matters have been

presented. The Committee evaluated

and challenged each of these to

ensure that the Annual Report and

Accounts are complete and accurate

in all material respects.

Tax and Treasury

The Committee typically meets

annually with the Head of Tax and the

Group Treasurer to review the key tax

and financing matters affecting the

Group and to understand the areas

of focus in the forthcoming year. In

FY 2024/25, these meetings were

conducted by the Board.

Risk management and

internal controls

The Board has overall responsibility

for the Group’s risk appetite and risk

management strategy, including

determining the nature and extent

of the risks it is willing to take in

achieving the Group’s strategy and

objectives. In order to discharge these

duties effectively, the Board is also

required to ensure the effectiveness

of the risk management strategy

and framework, and internal controls

systems.

99 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Oversight of risk management is

undertaken by the Committee, in

accordance with its terms of reference.

In order to ensure the effectiveness

of the risk management and internal

control systems, the Committee

undertook a number of key activities

during the year, including:

■ Consideration of the risk

management activities during

the year, including a particular

focus on cyber security, and any

related incidents, including how

those incidents were handled and

whether any action was required,

either in response to the specific

incident itself or in the business

more widely in response to lessons

learnt from any such incident

■ Review of risk management and

reporting to ensure effectiveness

and that the balance between risk

and opportunity was in keeping

with the Group’s risk appetite

■ Regular meetings with members

of senior management and the

Group Internal Audit function

■ Review of reports on control

matters and challenge of

management’s response to any

matters raised

■ Review of the maturity assessment

conducted against the Group’s

Risk Management function to

ensure that it continues to align

with best practice

■ Evaluation and challenge of the

results and recommendations of

audits undertaken by the Group

Internal Audit function and the

external auditor

■ Review of the resource

requirements of the Group Internal

Audit function

■ Review of the annual Audit and

Risk Committee agenda

Preparation for changes

in audit and governance

reform

The Audit and Risk Committee,

on behalf of the Board, is currently

mapping the material internal controls

that underpin the Group’s reporting,

to ensure that any strengthening of

controls or further assurance desired

can be implemented ahead of the

revised Code Provision 29 coming into

force from 2026. This supports our

continued focus on enhancing our risk

management framework.

Developments and enhancements

have continued to be made to the

Group’s internal control and risk

management processes during the

year, further details of which are set

out below. The Committee has been

pleased with the enhancements being

made to the Group’s internal control

and risk management framework

and the preparations for enabling an

explicit conclusion on the effectiveness

of internal controls within the FY27

Annual Report.

This work has included:

■ The embedding of critical controls

aligned to the Committee of

Sponsoring Organizations of

the Treadway commission

(“COSO”) 2013 framework and

implementation of agreed

remediation actions

■ The issue of an updated Group

Accounting Manual and Internal

Controls Manual to all Group

companies

■ The issue of a revised Group

Reporting Manual to all Group

companies

■ The roll-out and embedding of a

revised Cyber Security Framework

aligned to Center for Internet

Security (“CIS 8”)

■ The embedding of a Group

governance, risk and compliance

system to provide a more efficient

way to document, test and

evidence internal controls

■ Defined a target operating model

for risk, control and internal audit

■ A detailed update at each meeting

on the progress being made to

enhance the internal controls

framework

The Committee will continue to

receive regular updates and engage

closely with management on any

changes that might benefit the

Group’s existing approach to internal

controls and to ensure compliance

with legislation and best practice as

they are updated.

The corporate criminal offence of

failure to prevent fraud comes into

effect on 1 September 2025 and the

Committee has placed a specific

focus on monitoring the Group’s

activities to ensure compliance with

this new legislation. As a result, the

Group now conducts annual fraud risk

assessments, has issued guidance to

businesses within the Group on fraud

‘red flags’, and has rolled out training

related to the failure to prevent

fraud offence. The work undertaken

complements the Group’s existing

risk management framework and

its preparations for compliance with

Provision 29 of the UK Corporate

Governance Code, further enhancing

discoverIE’s overall control framework.

Throughout the year, the Committee

has monitored the Group’s internal

control and risk management systems

and, at its meeting in May, specifically

reviewed the effectiveness of these.

Internal Audit

The Group Internal Audit function’s

primary purpose is to provide risk-

based and independent assurance,

advice and insight to help improve

all aspects of the organisation’s

governance and system of internal

control, including management of

risk. The remit of the internal audit

function covers discoverIE Group plc

and all of its subsidiaries. Resource in

the function remained fixed during

FY 2024/25 with three full-time staff,

as well as support from external

consultants and outsourced providers.

Further details on the operation of

the Group Internal Audit function can

be found in the Risk Management

section on pages 68 to 72.

The Committee has overall

responsibility for reviewing the

effectiveness of the Group’s risk

management and internal control

systems framework as well as the

Group Internal Audit function. As

part of this, we ensure that the

Group Internal Audit function has

unrestricted scope, the necessary

resources, and appropriate access to

information to enable it to perform

its function effectively. The suitability

of resources available to the Group

Internal Audit function was considered

in the year. The Committee also

discoverIE Group plc Innovative Electronics100

AUDIT AND RISK COMMITTEE REPORT CONTINUED

reviews regular updates on internal

audit work carried out and the actions

taken by management to implement

the recommendations of internal audit

reviews.

The Head of Risk and Internal Audit

and I meet regularly between

Committee meetings to ensure the

team can effectively discharge its

duties and to discuss pertinent issues,

such as changes in legislation. Outside

of the scheduled meetings, I have

conducted the following activities on

behalf of the Committee related to

Risk and Internal Audit:

■ Reviewed the self-assessment

of the Group’s compliance with

the revised Institute of Internal

Auditors (“IIA”) Global Internal Audit

Standards effective from January

2025 (November 2024)

■ Reviewed and approved

the internal audit charter

(November 2024)

■ Input into the Group Risk and

Internal Audit team’s plans for FY26

(April 2025)

A programme of internal audit

activities has been completed during

the year. The scope of work carried out

by the Group Internal Audit function

generally focuses on the internal

financial and operational controls

within each business, particularly in

recently acquired businesses. Further

internal audit work is outsourced to

external providers, where appropriate.

The Group Internal Audit function

was subject to an External Quality

Assessment (“EQA”) in August 2022.

This assessment concluded that

the function had made significant

progress in meeting most of the

Standards, as well as the Definition,

Core Principles and the Code of Ethics,

which form the mandatory elements

of the Institute of Internal Auditors’

International Professional Practices

Framework (“IPPF”), the globally

recognised standard for quality in

internal auditing. The function will be

subject to a further self-assessment

exercise against the revised IIA Global

Internal Audit Standards during FY26

to ensure it is best prepared for its next

EQA due in FY28.

Control Environment

While no system of controls can

provide absolute assurance against

material misstatement or loss, the

Group’s systems are designed to

manage, rather than eliminate, the

risk of failure to achieve business

objectives and provide reasonable,

and not absolute, assurance against

material misstatement or loss. As

part of the annual review of the

effectiveness of the Group’s internal

controls, the Committee, on behalf of

the Board, has regard to the design

of the risk management framework,

including the three lines of defence

model, the significance of the risks

involved, the likelihood and severity

of an event occurring, and the

costs associated with any relevant

controls. The formal Annual Opinion

for FY 2024/25 issued by the Group

Internal Audit function was reviewed

by the Committee, concluding that

there were no material failings or

weaknesses identified in the Group’s

internal control systems. Where

improvements are identified through

internal audits or through the Group’s

external audit remedial actions are put

in place and progress monitored by

the Audit & Risk Committee.

The principal components of the

Group’s systems of control are:

■ A well defined organisational

structure with short and clear

reporting lines

■ Recruitment of high-quality staff

■ An ongoing process for the

identification, regular review and

management of the principal risks

and issues affecting the business,

both at Group and operating levels

■ In-house and outsourced internal

audit activities

■ An ongoing review of regulatory

compliance

■ A regular review of the principal

suppliers and customers of the

Group, and how each impacts

upon the Group’s businesses

■ A comprehensive planning

process, which starts with a

strategic plan and culminates in

an annual budget and a long-

term plan

■ Regular rolling forecasting

throughout the year of orders,

sales, profitability, cash ﬂow,

working capital and balance sheets

■ A monthly review by divisional

management of operating

company performances against

budget and forecast, plus bi-

monthly reviews by the Group

Management Committee

and Board

■ Clearly defined procedures for

the authorisation of major new

investments and commitments

■ A requirement for each operating

company to maintain a system of

internal controls appropriate to its

own local business environment.

Recognising that where individual

businesses are small there are

inherent limitations.

The Finance team is responsible for

producing financial information that

is timely, accurate and in accordance

with applicable laws and regulations.

In addition, it is responsible for the

distribution of financial information,

both internally and externally. Key

financial and operational performance

is reported on a timely basis and

measured against both the Board

approved budget, management’s

rolling forecasts and comparable

information from prior periods. A

review of the financial statements

is completed by management to

ensure that the financial position and

results of the Group are appropriately

reﬂected. All financial information

published externally by the Group is

approved by the Board.

The above procedures apply to

discoverIE Group plc and all of its

subsidiary companies.

External audit

The Committee is responsible for

managing the relationship with

the Group’s external auditor on

behalf of the Board including

their appointment, remuneration,

independence and performance.

During the year, the Committee’s

activities in respect of external audit

were as follows:

101 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

■ Overseeing the transition to

Deloitte as the Group’s new

external auditor

■ Considering and approving the

appointment of Deloitte as the

external auditor as a resolution at

the 2024 Annual General Meeting

■ Considering and approving the

audit approach and scope of the

audit undertaken by Deloitte and

related fees

■ Agreeing reporting materiality

thresholds

■ Reviewing reports on audit

findings

■ Considering and approving letters

of representation issued to the

external auditor

■ Considering the independence of

the external auditor.

Audit performance

and effectiveness

The performance and effectiveness of

the external auditor, and the related

audit, is reviewed annually by the

Committee. This covers the robustness

of the audit at both a Head Office and

entity level.

The review covers the following:

■ Robustness of the audit plan and,

in particular, the identification of

significant risks

■ Execution of the above plan,

including the external auditor’s

ability to challenge management

on key accounting judgements

and assumptions adopted

■ Ensuring the external auditor

demonstrates a deep and

thorough knowledge of the

business to enable them to reach

appropriate conclusions on key

accounting judgements

■ Quality of reports provided to the

Committee

■ Communication between

the external auditor and the

Committee

■ Feedback from management on

the quality of the audit team

■ Professional scepticism of the

external auditor.

The Committee concluded that

the audit team had the necessary

professionalism, experience and

understanding of the business to carry

out a thorough and robust audit in

FY 2024/25.

External auditor

independence

The Committee believes that the

provision of non-audit services to the

Group is closely related to external

auditor independence and objectivity.

The Committee recognises that the

independence of the external auditor

may risk becoming compromised if it

also acts as the Company’s consultant

and adviser to any material extent.

The Committee accepts that certain

work of a non-audit nature is best

undertaken by the external auditor. The

Committee reviewed its policy on the

provision of non-audit services during

the year to ensure that there is no

likelihood of any impairment of external

auditor independence or objectivity.

Fees for non-audit services provided

by the external auditor during the

financial year totalled £83,500 (FY

2023/24: £123,000). Of that total of

£80,000 related to the interim review

(FY 2023/24: £112,000) and £3,500 (2024:

£11,000) related to reporting required by

regulators in overseas countries. These

were not considered to adversely impact

the independence of the external

auditor, were in line with the Group’s

policy on non-audit services and were

permissible under ethical standards.

Key areas of focus in

2025/26

■ Continuing assessment of

ESG-related risks and reporting

requirements

■ Monitoring the Group’s activities

to comply with the revisions to

the UK Corporate Governance

Code effective from January 2025.

Specifically, the agreement and

development of an assurance

framework over material controls

to support the Group meeting

the reporting requirements of

Provision 29 of the Corporate

Governance Code.

Terms of reference

The Committee’s terms of reference

are available upon request and

are on the Company’s website:

www.discoverIEplc.com

Clive Watson

Chair of the Audit and Risk Committee

3 June 2025

discoverIE Group plc Innovative Electronics102

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Corporate Governance

103 Annual Report and Accounts for the year ended 31 March 2025

2024/25 key achievements

■ Review of talent and succession

planning

■ Review of Board composition

and size

■ Review of the Company’s Board

Diversity Policy

■ Identified priorities for the

coming year

Key areas of focus in

2025/26

■ Continuing focus on diversity

across the Group

■ Continued evaluation of

knowledge and skills

Dear Shareholder,

During the year, the Committee met

twice, with all Committee members

attending (other than where re-

appointment related to a member

who was conflicted) and participating

in a separate evaluation process, which

identified areas for improvement.

The Committee’s recommendations

were made after careful consideration

of the independence, performance

and ability to continue to contribute

to the Board of the relevant people,

in the light of the knowledge, skills,

commitment and experience required.

Composition

The majority of the Committee

members are independent Non-

Executive Directors. During the year

under review, the Committee was

chaired by me, with Celia Baxter,

Tracey Graham (until 31 October 2024),

Clive Watson, Rosalind Kainyah and

Nick Jefferies as Committee members.

The Committee specifically considered

the size and composition of the Board

in FY2025 and, given the size and

nature of the Group, determined that

it was appropriate at the present time

to maintain a Board of six Directors,

comprising four Non-Executive

Directors and two Executive Directors.

Please see pages 94 to 95 of the

Corporate Governance Report for

more details.

Key responsibilities

The Committee’s key duties are:

■ To review the structure, size and

composition (including the skills,

knowledge and experience) of the

Board and to recommend changes

where appropriate

■ To consider succession planning

for the Directors and the right

balance of skills, knowledge,

experience and diversity on

the Board

■ To identify and nominate

candidates to fill Board vacancies,

having previously prepared

a description of the role and

capabilities required for a

particular appointment

■ To review the leadership needs of

the organisation, both executive

and non-executive

■ To make recommendations to the

Board on the reappointment of

any Non-Executive Director at the

conclusion of their specified term

of office and on appointments to

the Audit and Risk, Remuneration

and Sustainability Committees

■ To review, as part of the annual

assessment exercise, the time

commitment of the Non-Executive

Directors to the role and to their

external appointments.

This year’s

succession

planning exercise

re-affirmed the

strength and

depth of our

management

teams across the

Group.”

Bruce Thompson

Chairman of the Nomination

Committee

Members

Member

since

Bruce Thompson

(Chairman) 2018

Celia Baxter 2023

Tracey Graham

(until 31 October 2024) 2018

Nick Jefferies 2009

Rosalind Kainyah 2022

Clive Watson 2021

The Group Company Secretary acts

as Secretary to the Committee.

discoverIE Group plc Innovative Electronics104

NOMINATION COMMITTEE

REPORT

Appointment of Directors

The Committee’s principal role is to

make recommendations to the Board

on suitable candidates to fill Board

vacancies as and when they arise, or

when other changes or appointments

may be desirable. In managing this

process, the Committee takes into

account the Board’s existing balance

of skills, knowledge and experience

and has due regard for diversity.

Unless the appointment is as an

Executive Director, for which a suitable

candidate is available from within

the Group, the Committee will create

a shortlist of suitable candidates for

final selection by the Committee.

References from appropriate third

parties will then be taken on the

prospective Director. Candidates

meet all members of the Committee,

which then makes recommendations

to the Board. Adopted practice is for

all members of the Board to meet

with the relevant candidate before an

appointment is made.

As noted in last year’s Annual Report

and Accounts, Celia Baxter succeeded

Tracey Graham as both Senior

Independent Director and Chair of the

Remuneration Committee following

Tracey Graham’s retirement from the

Board on 31 October 2024.

Diversity and succession

planning

The Board is committed to a culture

which attracts and retains talented

people and to ensure that a proper

process exists for succession

planning for the Board and senior

management.

The Company’s Board Diversity Policy

can be found on the Company’s

website www.discoverIEplc.com

Please see page 52 of this report for

a summary of the Group’s current

gender diversity and page 94 of the

Corporate Governance Report for the

current Board composition.

Terms of reference

The Committee’s terms of reference

are available upon request and

are on the Company’s website:

www.discoverIEplc.com

Bruce Thompson

Chairman of the Nomination

Committee

3 June 2025

FOCUS ON TALENT AND

SUCCESSION

■ The Committee oversees

and reviews the output from

regular reviews of the Group’s

key roles and talent carried out

by the Group Management

Committee.

■ A comprehensive review was

conducted in FY2025, with

the process covering over

100 people from across the

Group’s senior management

teams. This followed a similar

review conducted in FY2023

that covered 92 people. The

Committee considers it

crucial to maintain a regular

programme of such reviews.

■ Reviews such as these help

ensure that long-term and

emergency succession plans are

in place for all senior/key roles.

It also considers the personal

aspirations and opportunities

for the people in those roles, as

well as both cultural alignment

and diversity across the

wider Group.

■ Both the 2023 review, and the

more recent review conducted

in FY2025, confirmed the

Committee’s belief in the

strength and talent of the

Group’s management teams

and wider employee population.

105 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Greg Davidson

Group General Counsel &

Company Secretary

The Directors’ report for the financial year ended 31 March 2025 is set out below.

Certain matters required to be included in the Directors’ report are included in

the Strategic report, as the Board considers them to be of strategic importance,

as follows:

Section Progress made

Future business developments Throughout the Strategic Report

(pages 01 to 81)

Risk management Risk management and principal risks and

uncertainties (pages 68 to 78)

Employee engagement Please see pages 34, and 86 to 89

Greenhouse gas emissions Sustainability Report (pages 38 to 52)

Stakeholder engagement Please see pages 34 to 35

Corporate Governance Statement Corporate Governance Report (pages 82 to

134)

The Group’s policies and processes

for managing capital, financial risk

management objectives, financial

instruments and hedging activities,

and exposure to credit and liquidity

risk, are disclosed in note 27 to the

Group Financial Statements.

Both the Directors’ report and the

Strategic Report have been drawn up

in accordance with English company

law. The liabilities of the Directors

in connection with that report shall

be subject to the limitations and

restrictions provided by such law.

Financial results and

dividends

The audited consolidated Financial

Statements set out the results of

the Group for the financial year to

31 March 2025 and are shown on

pages 146 to 205. The key strategic

indicators of the business are set out in

the Strategic report on page 11.

The Directors recommend a

final dividend of 8.60p per share

(2023/24: 8.25p) which, together with

the interim dividend of 3.90p per share

(2023/24: 3.75p), makes a total dividend

for the year of 12.5p per ordinary share

(2023/24: 12.00p). Subject to approval

by Shareholders of the recommended

final dividend, the dividend award

to Shareholders for 2024/25 will

total £12.1m (2023/24: £11.5m). If

approved, the Company will pay

the final dividend on 1 August 2025

to Shareholders on the register of

members at 27 June 2025.

The Board believes that, as an

acquisitive growth company,

maintaining a progressive dividend

policy, with the long-term dividend

covered over three times by adjusted

earnings, is appropriate to enable both

dividend growth and a higher level of

investment from internally generated

resources.

As an acquisitive

growth company,

the Board believes

in maintaining

a progressive

dividend policy

that enables both

dividend growth

and a higher level

of investment from

internally generated

resources.”

discoverIE Group plc Innovative Electronics106

DIRECTORS’ REPORT

Directors

Board membership and biographical

details of the Directors are on pages

82 and 83 and are incorporated by

reference.

Copies of Executive Directors’ service

contracts are available to Shareholders

for inspection at the Company’s

registered office and at the Annual

General Meeting. Details of the

Directors’ remuneration and service

contracts and their interests in the

shares of the Company are included in

the Directors’ Remuneration Report,

which is set out on pages 110 to 133.

Powers of the Directors

The Board of Directors is responsible

for the management of the business

of the Company and may exercise all

the powers of the Company, subject to

the Company’s Articles of Association

(the “Articles”), the Companies Act

2006, and any directions given by the

Shareholders by special resolution.

The Articles may be amended by a

special resolution of the Company’s

Shareholders.

Appointment and

replacement of Directors

The Board can appoint a Director but

anyone so appointed must be elected

by an ordinary resolution at the next

General Meeting. All Directors offer

themselves for re-election at each

Annual General Meeting.

Directors’ conflicts of

interest

The Company has procedures in place

for managing conflicts of interest.

Should a Director become aware that

they, or any of their connected parties,

have any interest in an existing or

proposed transaction with discoverIE,

they should notify the Board in writing

or at the next Board meeting. Internal

controls are in place to ensure that any

related party transactions involving

Directors, or their connected parties,

are conducted on an arm’s length basis.

Directors have a continuing duty to

update any changes to these conflicts.

Directors’ indemnity

The Articles of the Company contain

an indemnity in favour of the Directors,

which is a qualifying third party

indemnity within the meaning of

s.234 of the Companies Act 2006.

This was in force throughout the year

ended 31 March 2025 and at the time

of the approval of this Annual Report

and Accounts. Directors of subsidiary

undertakings are also subject to this

qualifying third party indemnity.

In addition, each Director of the

Company has entered into a Deed

of Indemnity with the Company,

which operates only in excess of any

right to indemnity that a Director

may enjoy under any such other

indemnity or contract of insurance.

The Company has also arranged

appropriate insurance cover in respect

of legal action against its Directors and

officers.

Share capital

As at 31 March 2025, the Company’s

issued share capital consisted of

96,356,109 ordinary shares of 5p each

(no shares are held in treasury).

Details of movements in the

Company’s issued share capital can be

found in note 30 to the Group financial

statements.

Restrictions on transfer of

securities in the Company

There are no restrictions on the transfer

of securities in the Company, except

that certain restrictions may from

time to time be imposed by laws

and regulations (for example, insider

trading laws such as the Market Abuse

Regulation) and pursuant to the

Listing Rules of the Financial Conduct

Authority, whereby certain employees

of the Company require the approval of

the Company to deal in the Company’s

ordinary shares. The Company is not

aware of any agreements between

holders of securities that may result in

restrictions on the transfer of securities.

Rights and obligations

attaching to shares

Subject to the Articles, the Companies

Act 2006 and other Shareholders’

rights, shares in the Company may be

issued with such rights and restrictions

as the Shareholders may by ordinary

resolution decide, or, if there is no such

resolution, as the Board may decide,

provided it does not conflict with any

resolution passed by Shareholders.

The rights attached to any class of

shares can be amended if approved,

either by 75% of Shareholders holding

the issued shares in the class by

amount, or by special resolution

passed at a separate meeting of the

holders of the relevant class of shares.

Every member and every duly

appointed proxy present at a General

Meeting or class meeting has, upon

a show of hands, one vote and every

member present in person or by proxy

has, upon a poll, one vote for every

share held.

107 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

No person holds securities in the Company carrying special

rights with regard to control of the Company.

Substantial shareholdings

As at 31 March 2025, the Company had been notified of, or

was aware of, the following major shareholdings equal to, or

greater than, 3% of the issued share capital of the Company:

Shareholder

Holdings

of ordinary

shares (5p)

% of issued

capital

Kempen Capital Management NV 9,367,239 9.72

Impax Asset Management 6,998,337 7.26

BlackRock, Inc. 6,967,278 7.23

Montanaro Asset Management 4,550,000 4.72

Aberdeen 4,306,226 4.47

Columbia Threadneedle 4,129,364 4.29

Swedbank Robur 3,966,000 4.12

Martin Currie Investment 3,243,298 3.37

NFU Mutual 2,987,212 3.10

As at 1 June 2025, the Company had been notified of, or was

aware of, the following Shareholders holding 3% or more of

the issued share capital of the Company:

Shareholder

Holdings

of ordinary

shares (5p)

% of issued

capital

Kempen Capital Management NV 10,087,986 10.47

BlackRock, Inc. 6,711,760 6.97

Impax Asset Management 6,575,881 6.82

Montanaro Asset Management 4,220,000 4.38

Aberdeen 3,999,604 4.15

Swedbank Robur 3,966,000 4.12

Columbia Threadneedle 3,373,022 3.50

Martin Currie Investment 3,337,000 3.46

NFU Mutual 2,992,841 3.11

Authority to purchase own shares

At the Annual General Meeting held on 26 July 2024,

Shareholders authorised the Company to purchase in

the market up to 10% of its issued share capital (9,635,610

ordinary shares) and, as at 31 March 2025, all of this authority

remained in force and unused. This authority is renewable

annually, and a special resolution will be proposed at the

2025 Annual General Meeting to renew it. The Directors will

only purchase the Company’s shares in the market if they

believe it is in the best interest of Shareholders generally.

Change of control

Details of the Group’s borrowing facilities are provided in the

Financial Review section of the Strategic Report on pages

28 to 33. These agreements contain a change of control

provision, which may result in the facility being withdrawn

or amended upon a change of control of the Group.

The Group is party to a number of commercial agreements

which, in line with industry practice, may be affected by

a change of control following a takeover bid. There are no

agreements between the Company and its Directors or

employees providing for compensation for loss of office or

employment which occurs because of a takeover bid.

Political donations

There were no political donations during the year

(FY 2023/24: nil).

Auditor and disclosure of information to

auditor

Deloitte LLP has indicated its willingness to continue in

office and a resolution to re-appoint it as auditor will be

proposed at the forthcoming Annual General Meeting.

Each of the Directors in office as at the date of this report

confirms that:

■ so far as the Director is aware, there is no relevant audit

information of which the Group and Company’s auditors

are unaware; and

■ they have taken all the steps that they ought to have

taken as a Director in order to make themselves aware

of any relevant audit information and to establish that

the Group and Company’s auditors are aware of that

information.

Annual General Meeting

The Notice of the Annual General Meeting to be held at

11.30 am on Thursday 24 July 2025 will be sent to Shareholders

separately from this report. The venue for the meeting is

2 Chancellor Court, Occam Road, Guildford, Surrey, GU2 7AH.

Details of the arrangements for that meeting will be as set

out in the Notice for that meeting.

Going concern

For the reasons explained in the Viability Statement on pages

79 to 80, the Directors continue to adopt the going concern

basis in preparing this Annual Report and Accounts.

By order of the Board

Greg Davidson

Group General Counsel &

Company Secretary

3 June 2025

2 Chancellor Court

Occam Road

Surrey Research Park

Guildford

Surrey GU2 7AH

Registered number: 02008246

discoverIE Group plc Innovative Electronics108

DIRECTORS’ REPORT CONTINUED

Corporate Governance

109 Annual Report and Accounts for the year ended 31 March 2025

The Committee consults with the Group Chief Executive and Group Finance

Director who may attend meetings by invitation of the Committee Chair,

although neither is involved in deciding their own remuneration. The Group

Company Secretary acts as Secretary to the Committee. The Directors’

Remuneration Report has been approved by the Board.

2024/25 key achievements

■ Received strong Shareholder

support for the 2024 Directors’

Remuneration Report and for the

revised Directors’ Remuneration

Policy put to votes at the 2024

Annual General Meeting

■ Approved bonus outcomes for

2023/24 performance and the

vesting of the 2021 LTIP award;

reviewed anticipated outcomes

for the 2024/25 bonus and 2022

LTIP awards

■ Setting of appropriate 2024/25

annual bonus and LTIP measures,

and targets for Executive Directors

and senior management

■ Considered wider workforce

remuneration and approved the

implementation of out-of-cycle

cost of living adjustments for areas

with high rates of inflation

■ Undertook a review of senior

executive pay below the Board

■ Considered gender pay gap data

and initiatives to close the gap

■ Reviewed other remuneration-

related items within the 2024

UK Corporate Governance Code

and received an update from the

Committee’s independent adviser

on market trends and the latest

views from investors and proxy

voting agencies

Areas of focus in 2025/26

■ Review the competitiveness and

structure of remuneration for

Executive Directors and senior

management and its alignment

with strategy, taking into account

pay across the wider workforce

■ Set annual bonus and LTIP

measures and targets for 2025/26

■ Determine incentive outcomes

for Executive Directors and senior

management in respect of

2024/25; and receive updates on

2026 bonus and LTIP outcomes

■ Keeping abreast of corporate

governance and regulatory

developments

■ Monitoring of performance against

all personal objectives for the

Executive Directors and Group

Management Committee

■ Sign off on the 2025 Directors’

Remuneration Report and respond

to Shareholder feedback at the

2025 Annual General Meeting, as

required

Our remuneration

policies and

practices continue

to support the

strategy of the

business.”

Celia Baxter

Chair of the Remuneration

Committee

Members

Member

since

Tracey Graham

(Chair until

31 October 2024) 2016

Celia Baxter

(Chair from

1 November 2024) 2023

Bruce Thompson 2018

Clive Watson 2020

Rosalind Kainyah 2022

discoverIE Group plc Innovative Electronics110

DIRECTORS’ REMUNERATION

REPORT

Annual statement

Information not subject to audit.

Dear Shareholder,

On behalf of the Board, I am

pleased to present our Directors’

Remuneration Report for the year

ended 31 March 2025, my first since

becoming Chair of the Remuneration

Committee on 1 November 2024. I

would like to take this opportunity to

thank my predecessor, Tracey Graham,

for providing me with a thorough

handover and for guiding the

Remuneration Committee through

the Policy review, which resulted in

very strong Shareholder support for

the Directors’ Remuneration Policy at

the 2024 Annual General Meeting.

This report comprises:

■ This Annual Statement, which

summarises the work of the

Remuneration Committee (the

“Committee”) in FY 2024/25 and

remuneration outcomes for

the year.

■ The Directors’ Remuneration

Policy (the “Policy”) approved by

Shareholders at our 2024 Annual

General Meeting.

■ The Annual Report on

Remuneration, which provides (i)

details of the remuneration earned

by Directors and the link between

Company performance and pay in

the year ended 31 March 2025, and

(ii) how we intend to implement the

Policy in FY 2025/26.

Business performance and

resulting remuneration

outcomes for the year

ended 31 March 2025

The Group made further progress

in FY 2024/25 towards our near and

medium-term goals, delivering record

earnings and operating margins,

whilst continuing to generate

excellent cash flow, despite prolonged

industry destocking.

The Group delivered adjusted

operating profit of £60.5m, up 8% at

CER, and adjusted operating margin

increased by 1.2ppt at CER to 14.3%,

exceeding our 13.5% target for this

financial year. Organically, sales

were 7% lower, reflecting industry

destocking and the normalisation of

supply chains. Free cash flow for the

year increased by 9% to £40.4m, with

a conversion rate of 106%, being well

ahead of our target of 85%, driven

by another strong working capital

performance. Design wins were also

up 5% in the year.

We have also continued to make good

progress on our ESG (Environmental,

Social and Governance) objectives. Our

Scope 1 & 2 carbon emissions were 59%

down in CY2024 against the CY2021

baseline. Importantly, our near and

long-term science-based emissions

reduction targets have now been

approved by the Science Based Target

initiative (“SBTi”), demonstrating the

level of commitment we have as a

Group. Please see page 45 of this

report for more details. Three more

sites achieved the occupational health

and safety ISO 45001 accreditation,

bringing coverage to 73% of our global

workforce, up from 6% just a few

years ago. We have made continued

progress against all of our ESG

objectives and further details can be

found in this report on pages 38 to 52.

Delivering record earnings, as well

as continued progress against

non-financial objectives, against an

economic backdrop of prolonged

industry destocking, demonstrates

the long-term commitment of the

Group’s leadership and the quality of

our business and its operating model.

With our alignment to target markets

with structural growth drivers, a strong

pipeline of organic and inorganic

opportunities, and a dedicated and

strong leadership team, the Group is

well positioned to continue its resilient

performance and development.

Annual bonus for

FY 2024/25

The annual bonus for both Executive

Directors for FY 2024/25 was based on

Group adjusted operating profit (60%),

adjusted operating cash flow (24%),

strategic objectives (8%) and ESG

objectives (8%).

Based on the performance as set out

above, actual adjusted operating profit

of £60.5m was between threshold

and target, adjusted operating cash

flow of £62.3m was above maximum,

and the strategic and ESG-related

objectives were determined to have

been substantially met. This results

in an overall bonus payout of 55.5%

of maximum for both Executive

Directors.

The Remuneration Committee has

considered whether any adjustment

is required to the formulaic outcomes

to reflect the underlying financial

and non-financial performance of the

business and decided that no such

adjustment is appropriate given the

overall performance of the business

during the year.

In line with the Directors’

Remuneration Policy, as the Executive

Directors have met their shareholding

requirements (1,289% and 651% of

salary respectively), 20% of the bonus

111 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

earned will be deferred in share

awards. Full details of the bonus

outcome for FY 2024/25 is set out in

the Annual Report on Remuneration.

2022 LTIP vesting

The Group Chief Executive and Group

Finance Director received awards

under the LTIP on 21 June 2022 that

were based on relative TSR (Total

Shareholder Return) and adjusted

EPS (earnings per share) performance

criteria, each with an equal weighting.

■ Relative TSR – discoverIE delivered

a TSR over the three-year period to

31 March 2025 which ranked the

Company below median and, as

such, none of this part of the award

vested.

■ EPS – adjusted EPS grew by

31.5% over the three-year period,

resulting in 68% of this element of

the award vesting.

Taken together, this has resulted in

34% of these LTIP awards vesting.

The Committee believes this is an

appropriate reflection of performance

over the last three years and has not

applied any discretion to the formulaic

vesting outcome. These vested awards

will be subject to a two-year holding

period.

Approval of the 2024 Policy

During the year ended 31 March 2024,

the Committee reviewed Executive

Directors’ pay arrangements

and proposed a new Directors’

Remuneration Policy to Shareholders

at the 2024 Annual General Meeting.

Shareholders were very supportive,

with over 96% of Shareholders voting in

favour of the new Policy.

Application of policy in

2025

As part of the 2024 Policy review, we

sought to increase the Group Chief

Executive’s salary to £590,000 (11.3%

increase) and the Group Finance

Director’s salary to £392,000 (13%

increase) from 1 April 2024. Despite

strong shareholder support, as the

2023/24 year end approached, the

Executive Directors requested not

to take any increases in light of the

macroeconomic volatility and cost

pressures in place at the time. The

Committee kept the timing of the

increases under review during 2024/25

and, as the year progressed, we felt it

appropriate to wait until the start of

2025/26 before making a decision on

timing of implementation.

Reflecting another resilient

performance in a challenging trading

environment and last year’s executive

director pay freeze, the Committee

believes it is fair and appropriate to

increase the Executive Directors’

salaries from 1 April 2025. However,

reflecting continued cost pressures

and once again at the Executive

Directors’ request, the Committee has

decided to implement the previously

agreed base salary increases, but

on a phased basis. Accordingly, the

Group Chief Executive’s base salary

will be set at £550,000 and the Group

Finance Director’s at £360,000 (both

3.8% increases) from 1 April 2025. The

workforce increases for 2025/26 vary

between the countries within which

we operate, with some being up to 15%,

and the average UK increase being

3%. The Committee will consider the

appropriate time to apply the second

increase which will seek to position

base salaries at £590,000 and £392,000

for the Group Chief Executive and

Group Finance Director respectively

plus the UK 2025/26 workforce increase

of 3%, which, when implemented,

would increase the salaries to £608,000

and £404,000 respectively.

Our approach to other elements of

remuneration will be as follows:

■ Pension: The pension contribution

for Executive Directors is an

entitlement of up to 8% of salary,

the same as the UK workforce rate.

■ Bonus: The bonus opportunity will

be 150% of salary for the Group

Chief Executive and 125% of salary

for the Group Finance Director,

in line with policy. The measures

remain unchanged from the

previous year and will be based on

adjusted operating profit (60%),

adjusted operating cash flow

(24%) and non-financial objectives

(16%). The non-financial objectives

element will continue to be split

into two equal parts with 8% based

on strategic objectives and 8% on

ESG-related objectives.

■ LTIP: The award to the Group Chief

Executive will be 175% of salary

and 160% of salary for the Group

Finance Director. The Committee

and the Executive Directors have

agreed, once again, that it is not

the right time to implement the

increased grant level approved by

shareholders at last year’s policy

review. The Committee has decided

that the 2025 LTIP performance

measures will be relative TSR

(50%) and adjusted EPS growth

(50%). The removal of the carbon

emissions metric does not reflect

any diminution of our commitment

to delivering our net-zero goals, as

evidenced by the fact that, in May

2025, the Group’s net-zero targets

were formally approved by the

SBTi. Significant progress has been

made in this area and existing LTIP

awards already include carbon

emission reduction targets covering

the period to 2027. The Group

continues to work hard to build a

more sustainable business, and we

retain our net-zero plan to reduce

Scope 1 & 2 emissions to by 90% by

2030 and Scope 3 emissions by 90%

by 2040. Any residual emissions

will be offset by carbon capture or

abatement projects to achieve our

net-zero goal. Since CY2021, Scope

1 & 2 emissions have reduced by

59%. Environmental metrics will

continue to feature in our 2025/26

annual bonus plan. Further details

of the approach for 2024/25 and

the performance targets can be

found in the Annual Report on

Remuneration.

The Remuneration Committee will

consider the share price at the time

of grant when finalising LTIP award

levels, expected to be in June 2025. At

the current time, based on the current

share price, the Committee’s intention

is to grant at the normal award levels

but will consider, at the point of vesting,

whether there have been any windfall

gains and if an adjustment to the

vesting outcome is appropriate.

There will be a single advisory vote

at the upcoming Annual General

Meeting to approve this Directors’

Remuneration Report. I hope you find

the information in the report clear and

are able to support both resolutions. If

you have any questions on our Policy or

on this Report, then please contact me

via the Company Secretary.

Celia Baxter

Chair of the Remuneration Committee

3 June 2025

discoverIE Group plc Innovative Electronics112

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration at a glance

In determining the 2024 Remuneration Policy, the Committee considered the

following factors: clarity, simplicity, risk, predictability, proportionality and alignment

to culture. Further details can be found on page 117 of the 2024 Annual Report.

Executive Directors

In this section, we show the link between corporate performance for the year

under review and the remuneration outcomes for the Executive Directors.

The key features of the Executive Directors’ remuneration for the year ended

31 March 2025 are also shown.

Remuneration outcomes for the Executive Directors

for the year ended 31 March 2025

Nick

Jefferies

£000

Simon

Gibbins

£000

Salary FY 2024/25 530 340

Bonus (£k and

as % of salary)

441 83% 240 69%

Taxable benefits 14 15

Pension benefits/allowance 42 28

Value of LTIP vesting

285 34% 171 34%

Single figure of total remuneration 1,313 794

In accordance with the Remuneration Policy, 20% of the bonus will be deferred in shares.

The values shown are estimates based on the average three-month share price to 31 March 2025 (£6.03).

Awards are subject to a two-year holding period.

REVENUE

£422.9m

ADJUSTED OPERATING

PROFIT

£60.5m

ADJUSTED EPS

38.7p

Directors’ Remuneration Policy

This part of the Directors’ Remuneration Report sets out

the Directors’ Remuneration Policy which was approved

at the Annual General Meeting on 26 July 2024 and which

took formal effect from that date. It has been prepared

in accordance with the Companies Act 2006 (the “Act”)

and the Large and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008 (as amended).

The Committee reviewed the Executive Directors’

remuneration packages to ensure that they reflect the

Company’s own particular circumstances and are aligned

with the Company’s key strategic objectives, as set out in

the Strategic Report, and with the long-term interests of its

Shareholders.

Key objectives of our

reward policy

The Remuneration Committee undertook a comprehensive

review of the Executive Directors’ remuneration

arrangements and engaged with the Company’s largest

Shareholders on the proposed changes. The Committee

has developed a set of principles and aims to ensure that

directors’ remuneration is:

■ Aligned with the Group’s strategy at this stage of its

development and supports the business’s medium and

long-term plans

■ Better aligned with practice internally and externally

■ Competitive and fair compared against companies of

our size and geographical complexity

■ Focused on delivering long-term sustainable returns

■ Compliant with Shareholders’ latest views on executive

pay and the requirements of the UK Corporate

Governance Code

■ Able to attract and retain high calibre Executive

Directors and senior managers in a challenging and

competitive business environment

■ Simple, delivering an appropriate balance between fixed

and variable pay.

When implementing the policy, the

Committee:

■ Takes account of pay and employment conditions

elsewhere in the Group

■ Ensures that incentive arrangements encourage

responsible behaviour in all aspects of the Company’s

business, including financial, social, environmental

and governance aspects; do not encourage excessive

risk-taking; and are compatible with the Company’s

risk policies and procedures. The Committee has the

discretion to take these factors into account when

adjudicating bonus and LTIP outcomes

■ Enters into open dialogue and consults with key

Shareholders, when looking to make material changes

to its approach to paying Executive Directors

■ Considers market practice in terms of the structure and

levels of executive remuneration.

113 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Remuneration Policy table

Element,

purpose and

link to strategy Operation Maximum opportunity Performance targets

Base salary

To recognise

knowledge, skills

and experience,

as well as reflect

the scope and

size of the role

and to attract and

retain quality staff.

Salaries are normally reviewed

annually with increases typically

effective from 1 April.

In determining Executive

Directors’ salaries, the

Remuneration Committee takes

into account:

■ Each Director’s role,

competence, experience and

performance;

■ Average change in broader

workforce pay; and

■ Total organisational salary

budgets.

Salaries are also benchmarked

against companies of a

comparable size and complexity

and against companies which

operate internationally, in similar

sectors.

There is no prescribed

maximum or maximum

increase.

However, any percentage

increases will ordinarily be

in line with those across the

wider workforce.

Salary increases may be

higher in exceptional

circumstances, such as

the need to retain a critical

executive, or an increase in

the scope of the executive’s

role (including promotion to

a more senior role) and/or in

the size of the Group.

Although there are no formal

performance conditions,

any increase in base salary

is only implemented after

careful consideration of

individual contribution and

performance and having

due regard to the factors

set out in the “Operation”

column of this table.

Benefits

To help retain

executives

and remain

competitive in the

marketplace.

Directors, along with other senior

UK executives, may receive certain

benefits such as a car allowance,

life assurance and critical illness

cover, and family medical

insurance.

Any reasonable business-related

expense (and any tax thereon) can

be reimbursed if determined to be

a taxable benefit.

Executive Directors will be eligible

to participate in any all-employee

share plan operated by the

Company, on the same terms as

other eligible employees.

For external and internal

appointments or relocations,

the Company may pay certain

relocation and/or incidental

expenses and provide tax

equalisation, as appropriate.

There is no prescribed

maximum as insurance cover

can vary based on market

rates.

The maximum level of

participation in all-employee

share plans is subject to

the limits imposed by the

relevant tax authority from

time to time.

Not applicable

Pension

To facilitate long-

term savings

provisions.

The Company operates a defined

contribution pension scheme.

Executive Directors may receive

a contribution to the pension

scheme or take a cash allowance

in lieu of pension contributions.

The maximum contribution

rate for current and future

Executive Directors will be

the workforce contribution

rate in the home country

which is currently 8% of salary

in the UK.

Not applicable

discoverIE Group plc Innovative Electronics114

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element,

purpose and

link to strategy Operation Maximum opportunity Performance targets

Annual bonus

To reward the

achievement of

annual financial

and strategic

business targets.

Bonus is based on performance

targets determined and reviewed

by the Committee which are

selected to be relevant for the year

in question.

Any payment is discretionary and

the bonus payable is determined

by the Committee after the

financial year end, based on

performance against these targets.

Financial objectives are updated

to reﬂect acquisitions, disposals

and currency movements during

the year.

One third of any bonus earned

will be deferred into share awards

which vest after three years. For

Executive Directors that have

met their shareholding guideline,

deferral reduces to 20% of any

bonus earned. Dividends may

accrue on deferred bonus shares.

Malus and clawback provisions

apply to cash and deferred

elements of the bonus. Further

details are provided in the notes to

the Policy table.

The maximum bonus

opportunity is 150% of

salary for the Group Chief

Executive and 125% of

salary for other Executive

Directors. Maximum bonus

is payable for significant

over-achievement of financial

and non-financial bonus

objectives.

Typically, no more than

50% of the maximum

bonus opportunity will be

payable for achieving target

performance.

The Committee sets

performance measures and

targets that are appropriately

stretching each year, taking

into account key strategic

and financial priorities

and ensuring there is an

appropriate balance between

incentivising Executive

Directors to meet targets,

while ensuring they do not

drive unacceptable levels

of risk or inappropriate

behaviours.

Financial measures may

include (but are not limited

to) adjusted operating profit,

working capital and cash

flow. Non-financial measures

may include strategic

measures directly linked to

the Company’s priorities.

A graduated scale of

targets is normally set for

each measure, with no

payout for performance

below a threshold level of

performance.

The Committee has

discretion to amend the

pay-out should any formulaic

outcome not reflect the

Committee’s assessment of

overall business or individual

performance.

115 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Element,

purpose and

link to strategy Operation Maximum opportunity Performance targets

Long-Term

Incentive Plan

To motivate

Executives

to deliver

Shareholder value

over the longer

term.

Awards of conditional shares

or nil-cost options are typically

granted annually, which vest

after three years dependent on

the achievement of performance

conditions and continued service.

Vested awards are subject to a

two-year post-vesting holding

period (net of tax, if applicable).

Dividend equivalents may be paid

in respect of awards to the extent

they vest by reference to dividends

declared during the award’s

vesting period and holding period.

Malus and clawback provisions

apply to vested and unvested

LTIP awards. Further details are

provided in the notes to the Policy

table.

Vested share awards are settled

through a combination of

shares purchased in the market

and newly issued shares, as

appropriate. The Company

monitors the number of shares

issued under the schemes and

their impact on dilution limits.

The maximum award in

respect of any one financial

year is an award over

shares of market value at

grant of 200% of salary. The

Committee will engage

with Shareholders prior to

increasing award levels from

FY 2024/25 levels.

The Committee may increase

the grant size of an LTIP

award on grant (subject to

the maximum award limit)

if the award terms include

that participants bear the

cost of the Company’s liability

to employer’s National

Insurance arising on the

settlement of their awards.

The increased award size

ensures that the participants

are in a neutral position on an

after-tax basis, assuming no

change in tax rates.

The Company is committed

to remaining within The

Investment Association’s 10%

dilution limit.

Performance metrics reflect

the Group’s strategic goals

and milestones.

The performance conditions

may include, and are not

limited to, relative TSR,

earnings per share growth,

return-based measures,

strategic measures and ESG-

related objectives.

The Committee retains

discretion to set alternative

weightings or performance

measures for awards granted

over the life of the policy.

Threshold performance

will normally result in no

more than 25% of the award

vesting.

The Committee retains

discretion to adjust vesting

levels taking into account

such factors as it considers

relevant, including, but

not limited to, the overall

performance of the

Company or the relevant

Participant who holds the

Award.

Shareholding

guidelines

To further align

the interests

of Executives

with those of

Shareholders.

Executive Directors are expected

to accumulate shares to the value

of the relevant shareholding

requirement.

Wholly owned shares or share

awards held which are no longer

subject to performance conditions

count towards the requirement

(on a net of tax basis, if applicable).

Shares held by a Director’s spouse

or dependents count towards the

guideline.

Executive Directors are required

to retain at least 50% of their net

of tax vested share awards until

the in-employment shareholding

guideline is met.

The current Executive

Directors are required to build

up and hold shareholdings to

the value of 250% of salary.

Any new Executive Directors

appointed will be required

to build up and hold

shareholdings to the value of

200% of salary.

Post cessation: Executive

Directors are normally

required to hold shares at

a level equal to the lower

of their shareholding at

cessation and 200% of

salary, for two years post-

employment, from share

awards granted after 29 July

2021. This excludes any share

awards vesting from share

plan awards made before

this date and excludes shares

purchased with own funds.

Not applicable.

discoverIE Group plc Innovative Electronics116

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element,

purpose and

link to strategy Operation Maximum opportunity Performance targets

Chairman and

Non-Executive

Director fees

Provision of a

competitive

fee to attract

Non-Executives

who have a

broad range of

experience and

skills.

Fees are normally reviewed

annually to ensure that they reflect

an individual’s time commitment

and responsibilities.

Annual fees are paid in 12 equal

monthly instalments during the

year.

Fees for the Non-Executive

Directors are determined by the

Chairman and the Executive

Directors. When determining

fees, due regard is given to fees

paid to Non-Executive Directors

in other similarly-sized UK quoted

companies, the time commitment

and the responsibilities of the roles.

Non-Executive Directors

cannot participate in any of

the Company’s share incentive

schemes and no Director is

involved in any decision regarding

their own remuneration.

Additional fees, over and above

the base fee payable to the Non-

Executive Directors, are payable

for chairing the Audit and Risk,

Remuneration and Sustainability

Committees and for acting as

Senior Independent Director.

Additional fees may be provided

for chairing any other major

Committee established by the

Board or for material additional

work undertaken.

The Chairman’s fee is reviewed

annually and is set by the

Committee (excluding the

Chairman). The fee payable to

the Chairman is typically an all-

encompassing fee for all duties

performed.

There is no limit on the

individual fee level.

Not eligible to participate

in any performance-related

elements of remuneration.

117 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Notes to the Remuneration

Policy table

Performance conditions and

target setting

Each year, the Committee will

determine the weightings, measures

and targets as well as timing of grants

and payments for the annual bonus

and LTIP plans within the approved

Policy and relevant plan rules (or

documents). The Committee considers

a number of factors which assist in

forming a view. These include, but are

not limited to, the strategic priorities

for the Company over the short to

long-term, Shareholder feedback, the

risk profile of the business and the

macroeconomic climate.

The current Annual Bonus Scheme

is measured against a balance of

profitability, cash and the delivery of

key strategic areas of importance for

the business. Other measures may

apply in future years depending on

the priorities at the start of each year

under the three-year Policy period.

The LTIP measures currently used

are adjusted EPS growth targets and

relative TSR. These measures were

identified as those most relevant

to driving sustainable bottom-line

business performance and providing

value for Shareholders.

Targets are set against the annual

and long-term plans, taking into

account analysts’ forecasts, the

Company’s strategic plans, prior year

performance, estimated vesting

levels and the affordability of pay

arrangements. Targets are set to

provide an appropriate balance of

risk and reward to ensure that, while

being motivational for participants,

maximum payments are only made

for exceptional performance.

Malus and clawback

Malus and clawback provisions

apply to the cash and deferred

elements of the annual bonus

and to LTIP awards. The malus

and clawback provisions may be

enforced in the event of material

misstatement, serious misconduct,

errors in calculation or calculations

based on inaccurate or misleading

information or assumptions, corporate

failure (entailing the appointment

of an administrator or liquidator)

and material reputational damage.

Malus or clawback as relevant may

be effected in a number of ways,

including by a reduction in the

amount of any future bonus or

subsisting award, the vesting of any

subsisting award or future share

award and/or a requirement to make a

cash payment. In respect of bonus or

deferred bonus the relevant discovery

period expires three years from the

payment of the bonus or grant of

the deferred award as relevant. In

respect of LTIP awards, the relevant

discovery period expires on the second

anniversary of the vesting of the

awards.

Discretions and judgements

The Committee will operate the annual

bonus plan and long-term incentive

plan according to their respective rules

and ancillary documents. Consistent

with market practice, the Committee

has discretion in a number of respects

in relation to the operation of each plan.

Discretions include:

■ who participates in the plan

■ determining the timing of grants

of awards and/or payments

■ determining the quantum of an

award and/or payment

■ determining the extent of vesting

■ how to deal with a change

of control or restructuring of

the Group

■ whether or not an Executive

Director or a senior manager is

a good/bad leaver for incentive

plan purposes and whether the

proportion of awards that vest do

so at the time of leaving or at the

normal vesting date(s)

■ whether and how an award

may be adjusted in certain

circumstances (e.g., for a rights

issue, a corporate restructuring or

for special dividends)

■ what the weighting, measures and

targets should be for the annual

bonus plan and LTIP plans from

year to year

■ the ability within the Policy to vary

and/or adjust targets and/or set

different measures or weightings

for inflight annual bonus and LTIP

plans, if events occur that cause it to

consider it appropriate to do so, and,

in the case of the LTIP, any amended

performance conditions are not

materially less challenging than the

original conditions would have been

but for the events in question

■ the ability to use its judgement to

make adjustments to published

outturns for significant events or

changes in the Company’s asset

base that were not envisaged

when the targets were originally

set or for changes to accounting

standards, to ensure that the

performance conditions achieve

their original purpose

■ reduce or apply other restrictions

to an award if, after taking into

account all circumstances known to

the Committee, it determines that

the amount which a participant

would otherwise receive pursuant

to an incentive award in accordance

with its terms would result in the

participant receiving an amount

which the Committee considers

cannot be justified or which the

Committee considers to be an

unfair or undeserved benefit to the

participant

■ override formulaic outcomes to

the bonus and the LTIP in order to

ensure that outcomes reflect true

underlying business performance

or to reduce awards if the business

has suffered an exceptional

negative event in order to ensure

that outcomes reflect overall

corporate performance

■ reduce or waive the post-

employment shareholding

requirement in the event of

ill health or death. The post-

employment shareholding

requirement would normally

fall away on a change of control,

although the Committee reserves

the right to continue its application

where there is a merger involving a

share-for-share exchange

■ amend the Policy with regard to

minor or administrative matters

where it would be, in the opinion of

the Committee, disproportionate to

seek or await Shareholder approval

discoverIE Group plc Innovative Electronics118

DIRECTORS’ REMUNERATION REPORT CONTINUED

Any discretion exercised by the Committee in the adjustment of performance conditions will be fully explained to

Shareholders in the relevant report.

Legacy arrangements

The proposed and previous directors’ remuneration policies give authority to the Company to honour any commitments

entered into with current or former Directors (that have been disclosed to Shareholders in previous remuneration reports)

or internally promoted future Directors (in each case, such as the payment of a pension or the unwind of legacy share plans).

Details of any payments to former Directors will be set out in the relevant remuneration report as they arise.

Recruitment (and appointment) Policy

The remuneration package for a new Executive Director would be set in accordance with the terms of the Company’s

approved Remuneration Policy in force at the time of appointment. Similar considerations may also apply where a Director

is promoted to the Board from within the Group.

Element Recruitment policy

Base salary

The salary positioning for new Executive Director appointments will take into account

a number of factors, including the current pay for other Executive Directors (in situ and

departed), market levels of pay, the expertise, skills and experience of the individual, business

need, location and his or her current level of pay.

Where the Committee has set the salary of a new appointment at a discount to the market

level initially until proven, they may receive an uplift or a series of planned increases (above

the workforce increase) to bring the salary to the appropriate market position over time.

Benefits

Benefits provision would be in line with the Policy.

The Committee may agree that the Company will meet appropriate relocation costs and/or

incidental expenses or tax equalisation as appropriate.

Pension

Pension contribution (or a cash allowance in lieu of contribution) provision will be no more

than the general workforce contribution rate for that location in place at the time.

Annual bonus

Eligible to take part in the annual bonus, with a maximum bonus opportunity not in excess of

the limits set out in the policy. Participation will be on a pro rata basis to reflect the time in the

role in the year of appointment.

Depending on the timing of the appointment, the Committee may deem it appropriate

to set different annual bonus performance conditions for the first performance year of

appointment.

Long-Term

Incentive Plan

An LTIP award may be granted upon appointment but not in excess of the limits set out in

the policy.

An LTIP award may be made shortly following an appointment (assuming the Company is

legally permitted to do so). The Committee may deem it appropriate to set different LTIP

performance conditions than apply for other awards made during the year of appointment.

Compensation

for forfeited

remuneration

The approach in respect of compensation for forfeited remuneration in respect of a previous

employer will be considered on a case-by-case basis taking into account all relevant factors,

such as performance achieved or likely to be achieved, the proportion of the performance

period remaining and the form of the award.

The Committee retains the ability to make use of the relevant Listing Rule to facilitate the

“buy-out”. Any “buy-out” awards would normally take account of the nature, time horizons

and performance requirements attached to the awards forfeited.

In the case of an internal appointment, any variable pay element awarded in respect of the

prior role would be allowed to pay out according to its terms, adjusted as relevant to take into

account the appointment.

Chairman and Non-

Executive Directors

For the appointment of a new Chairman or Non-Executive Director, the fee arrangement

would be set in accordance with the approved Policy.

119 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Service contracts

It is the Company’s policy that Executive Directors should have service contracts incorporating a maximum notice period of

one year. However, it may be necessary occasionally to offer longer initial notice periods to new Executive Directors.

Non-Executive Directors have letters of appointment for a term of three years, subject to re-appointment by Shareholders at

each Annual General Meeting. In line with the UK Corporate Governance Code, they are generally renewed for no more than

nine years in aggregate. Non-Executive Directors are not eligible for payment on termination, other than payment to the

end of their three-month notice periods (six months for the Chairman).

Name Role

Date of original

appointment Expiry of current term

Bruce Thompson Chairman 26 February 2018 25 February 2027

Nick Jefferies Group Chief Executive 5 January 2009 12 months by either Director or Company

Simon Gibbins Group Finance Director 10 June 2010 12 months by either Director or Company

Rosalind Kainyah Non-Executive Director 1 January 2022 31 December 2027

Clive Watson Non-Executive Director 2 September 2019 1 September 2028

Celia Baxter Non-Executive Director 1 June 2023 31 May 2026

Other than their service contracts, no contract of significance, to which any member of the discoverIE Group is a party and

in which a Director is or was materially interested, subsisted at the end of, or during, the year.

Policy on payment for loss of office

Under the terms of their service contracts, any termination payments are not predetermined but are determined in

accordance with the Director’s contractual rights, taking account of the circumstances and the Director’s duty to mitigate

loss. The Company’s objective is to manage its exposure to the risk of a potential termination payment.

The table below sets out key provisions for Executive Directors leaving the Company under their service contracts and the

incentive plan rules.

Element Termination Policy

Fixed pay

On termination, the Company may make a payment in lieu of notice (“PILON”) which is equal to the

aggregate of the base salary and cash equivalent of other benefits for the unexpired notice period.

The Company may pay the PILON either as a lump sum or in equal monthly instalments, from the date

on which the employment terminates until the end of the relevant period. If alternative employment is

commenced, for each month that instalments of the PILON remain payable, the monthly amount paid

may be reduced by the amount received from such alternative employment.

Annual

bonus

Upon cessation of employment, there will be no entitlement to bonus for the year of exit and any unvested

Deferred Share Bonus Plan (“DSBP”) awards shall ordinarily lapse.

If identified as a “good leaver”

for the purposes of the bonus plan, the bonus payout will be pro-rated for

time based on the Committee’s reasonable assessment of the achievement of the performance measures

in respect of the relevant financial year. The bonus for the year of termination may be paid in cash or a mix

of cash and deferred share bonus awards.

If identified as a “good leaver”

under the DSBP, awards shall vest on the earlier of the normal vesting date

and the second anniversary of cessation other than in the case of death where awards vest early.

LTIP

Upon cessation of employment, any unvested LTIP awards shall ordinarily lapse. Any vested awards which

remain subject to a holding period will not be subject to forfeiture.

If identified as a “good leaver”

under the LTIP, outstanding awards will normally vest on their normal

vesting dates (or on such earlier date as the Committee may determine, for example in the case of death),

normally with a pro rata reduction for service in the normal vesting period up until the date of leaving

and in each case subject to the outcome of the performance conditions (assessed on normal timetable or

early as relevant). Holding periods will expire on the earlier of their normal two-year expiry or the second

anniversary of ceasing to be a Director.

Good leaver reasons include cessation of employment by reason of ill health, injury, disability, redundancy, retirement with the agreement of the Committee, the

participant’s office or employment being with a company which ceases to be a Group member or relating to a business which is transferred to a person who is not

a Group member, or for any other reason at the Committee’s discretion.

discoverIE Group plc Innovative Electronics120

DIRECTORS’ REMUNERATION REPORT CONTINUED

The Committee may also agree to make payments in reimbursement of a reasonable level of outplacement and legal fees

and tax thereon in connection with a settlement agreement. The Committee may agree payments it considers reasonable

in settlement of legal claims. This may include an entitlement to compensation in respect of leavers’ statutory rights under

employment protection legislation in the UK or in other jurisdictions.

Change of control or restructuring

On a change of control, all DSBP and LTIP awards will be released, subject to performance requirements and will ordinarily

be prorated according to completion of the vesting period. In line with market practice and the Plan rules, the final

treatment of any awards is subject to the discretion of the Committee.

There are no enhanced bonus provisions on a change of control.

External appointments

The Executive Directors are entitled to accept one appointment outside the Group, provided that the Chairman’s permission

is obtained in advance of accepting an appointment and specific approval is given by the Board. Neither of the Executive

Directors who served during the year held any Non-Executive appointments outside the Group.

Illustration of the application of the Executive Directors’ Remuneration Policy

The bar charts below illustrate some possible outcomes of the application of the Policy (approved by Shareholders at the

Annual General Meeting on 26 July 2024) for the year ending 31 March 2026.

Group Chief Executive Group Finance Director

Minimum On-target

£0

£250

£500

£750

£1,000

£1,250

£1,500

£1,750

£2,000

£2,250

£2,750

£2,500

£608k £1,261k £2,395k £2,877k

£404k

£773k £1,430k

£1,718k

£0

£250

£500

£750

£1,000

£1,250

£1,500

£1,750

£2,000

£2,250

£2,750

£2,500

48%100%

33%

19%

Maximum

25%

35%

40%

Max with

growth

21%

29%

33%

17%

£’000

Minimum On-target

100%

52%

29%

19%

Maximum

28%

32%

40%

Max with

growth

23%

26%

34%

17%

£’000

£3,000

Fixed Annual Bonus Long-term incentive Share price growth

Minimum in the bar charts above is fixed remuneration only (i.e., 2026 salary, pension and the value of 2025 benefits as disclosed in the single figure table)

Target assumes that 25% of the LTIP award vests (based on an award with a face value of 175% and 160% of salary for the Group Chief Executive and Group Finance

Director, respectively) and bonuses have been earned at the target levels (75% of salary for the Group Chief Executive and 62.5% of salary for the Group Finance

Director)

Maximum assumes that the LTIP award vests in full (based on an award with a face value of 175% and 160% of salary for the Group Chief Executive and Group

Finance Director) and the maximum bonus (150% and 125% of salary for the Group Chief Executive and Group Finance Director respectively) has been earned

Maximum plus share price growth – this is based on the maximum scenario set out above but with a 50% share price increase applied to the value of LTIP awards

Projected values do not take into account dividend accrual or additional awards granted as a result of any agreement by an

Executive Director to incur the Company’s liability to employers’ National Insurance.

121 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Comparison with

remuneration policy for

other employees

The main difference in the

Remuneration Policy between the

Executive Directors and employees

in general is the split of fixed and

performance related pay, such as

bonus and long-term incentives.

Overall the percentage of performance

related pay, in particular longer-

term incentive pay, is greater for

the Executive Directors. This reflects

that Executive Directors have more

freedom to act and the consequences

of their decisions are likely to have a

broader and more far-reaching time

span of effect than those decisions

made by employees with more limited

responsibility. As a consequence,

only Executive Directors, and other

key senior employees in the Group,

participate in the LTIP. Differing bonus

arrangements (which are normally

discretionary) operate elsewhere in

the organisation and depend on the

specific role and the country in which

the employee operates.

The Company’s approach to salary

reviews is consistent throughout

the Company with consideration

given to responsibility, experience,

performance, salary levels in

comparable organisations and the

Company’s ability to pay. Employees

are entitled to standard benefits

according to their country of

employment.

Consideration of

employment conditions

elsewhere in the Group

The Committee is provided annually

with information on the salaries and

proposed increases for the senior

direct reports of the Chief Executive

Officer, as well as data on the average

salary increases for teams in each

region within the Group. In addition,

the Committee reviews and agrees all

grants of share awards.

The Committee considers the

general base salary increase within

the geographical regions for the

broader employee population when

determining the annual salary

increases for the Executive Directors

and is cognisant of the Group’s overall

employment arrangements when

reviewing and implementing the

Executive Directors’ Remuneration

Policy.

Employee Engagement

As outlined on pages 34 and 86 to

89, there are a range of employee

engagement initiatives in place

across the Group and, as part of

this employee engagement, the

Company explains how its strategy

links to remuneration and provides

the opportunity for employees to

ask questions and provide feedback

on that strategy. The Group also

consults on global inflationary

pressures and pay rises, and will take

local conditions into account, with

higher rises being implemented

in those countries where staff face

the greatest pressure. As noted in

the Group’s Human Rights Policy

(available at www.discoverieplc.com),

the Group states that it is committed

to paying wages at rates that are

meaningfully ahead of local minimum

statutory rates.

Consideration of

Shareholder views

The Committee receives updates

on the views of Shareholders and

their representative bodies on best

practice either directly or from its

independent adviser and takes these

into account when making decisions

on executive pay. The Committee

seeks the views of key Shareholders

on matters of remuneration in which

it believes they may be interested. As

part of the design of the Directors’

Remuneration Policy, the Committee

wrote in November 2023, and then

again in April 2024, to its largest

Shareholders, representing 70% of

our issued share capital, and met with

or received feedback from almost all

we engaged with (covering 65% of

issued share capital). The feedback

received was very supportive and

this comprehensive Shareholder

consultation exercise helped shape

the Policy that was approved by

Shareholders at the Annual General

Meeting on 26 July 2024.

discoverIE Group plc Innovative Electronics122

DIRECTORS’ REMUNERATION REPORT CONTINUED

Annual Report on Remuneration

The table below shows the total remuneration earned by Executive Directors for the year ended 31 March 2025 and the

prior year.

Single total figure of remuneration for each Executive Director (audited)

Salary

£000

Benefits

£000

Pension

£000

Bonus

£000

LTIP

3, 4

£000

Total

£000

Total fixed

remuneration

£000

Total

variable

remuneration

£000

Nick Jefferies

FY25 530 14 42 441 285 1,313 586 726

FY24 530 12 42 500 448 1,533 585 949

Simon Gibbins

FY25 340

15 28 240 171 794 383 411

FY24 347 13 28 273 268 929 388 541

Taxable benefits comprise car allowance and family medical insurance.

For performance in the year under review, a bonus of 83% and 69% of salary was earned by Nick Jefferies and Simon Gibbins, respectively. Further details of

performance against the targets can be found on pages 123 to 125. In accordance with the Remuneration Policy, 20% of these bonuses will be deferred in shares.

The values in the above table include the cash and deferred elements in line with the reporting requirements. No discretion was applied by the Remuneration

Committee.

The LTIP award granted to Nick Jefferies and Simon Gibbins on 21 June 2022 will vest on 23 June 2025, with 34% vesting. Further details of performance against

the targets can be found on page 126. The original awards comprised 131,364 awards for Nick Jefferies and 78,619 awards for Simon Gibbins. Based on the average

three-month share price to 31 March 2025 of £6.03, the estimated total values of the vested awards are £269,601 for Nick Jefferies and £161,351 for Simon Gibbins.

As the share price at the date of grant (£6.79) is higher than the three-month average share price to 31 March 2025 (£6.03), none of the FY25 LTIP values in the

above table are attributable to share price growth. No discretion was applied by the Remuneration Committee. Vested awards will attract dividend equivalents for

the period between the date of grant and the earlier of the end of the two-year holding period or the date of exercise. The values shown in the table also include

dividend equivalents of £15,559 for Nick Jefferies and £9,312 for Simon Gibbins.

The LTIP values for FY24 were estimated last year based on the three-month average share price to 31 March 2024. The values have been updated to reflect the

actual share price on the vesting date (£6.74). The values shown also include dividend equivalents of £21,684 for Nick Jefferies and £12,961 for Simon Gibbins.

Simon Gibbins’ salary for FY25 was c. £7,000 lower than FY24 due to him having purchased one week of unpaid leave during the year.

Single total figure of remuneration for Non-Executive Directors (audited)

Basic fee Committee Chair fees SID fee Total

FY25

FY24

FY25

FY24

FY25

FY24

FY25

FY24

Bruce Thompson 187,200 187,200 – – – – 187,200 187,200

Celia Baxter

1, 2

52,500 43,750 4,167 – 4,167 – 60,833 43,750

Tracey Graham

30,625 52,500 5,833 10,000 5,833 10,000 42,292 72,500

Rosalind Kainyah 52,500 52,500 10,000 10,000 – – 62,500 62,500

Clive Watson 52,500 52,500 10,000 10,000 – – 62,500 62,500

Joined the Board on 1 June 2023.

Senior Independent Director and Chair of the Remuneration Committee from 1 November 2024.

Retired from the Board on 31 October 2024.

Incentive outcomes for Executive Directors for the year ended 31 March 2025

Annual bonus in respect of performance for the year (audited)

The maximum bonus opportunity for the year under review was 150% and 125% of salary for the Group Chief Executive and

the Group Finance Director, respectively. Annual bonuses for the year under review were based on a sliding scale of adjusted

operating profit targets (60%), adjusted operating cash flow (24%) and the achievement of non-financial objectives (16%).

Based on the performance during the year, adjusted operating profit of £60.5m was between threshold and target, and

adjusted operating cash flow of £62.3m was above maximum. Non-financial objectives were determined to have been

substantially met. This performance has resulted in bonuses of 55.5% of maximum.

123 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Full details, including the targets set and performance against each of the metrics, are provided in the table below:

Weighting Threshold

Target

(35%

payable)

Stretch

(50%

payable)

Maximum

(100%

payable) Actual

Bonus

earned

(% of

maximum)

Group adjusted

operating profit (£m) 60% £55.7m £61.9m £63.8m £68.1m £60.5m 27.1%

Adjusted operating

cash flow 24% £50.0m £55.6m £57.3m £61.2m £62.3m 100%

Strategic objectives 8% See below 90%

ESG objectives 8% See below 100%

Outcome (% of max) 55.5%

Threshold payout under both the adjusted operating profit target and the adjusted operating cash flow measure is nil. For 2024/25 only, the amount payable for

target was reduced to 35% of maximum.

Each Executive Director was given a number of individual non-financial strategic and ESG objectives, tailored to their role

and to business requirements in the year. Nick Jefferies and Simon Gibbins each substantially achieved these objectives.

Nick Jefferies

Objective Performance Assessment

General Non-Financial Objectives

1. Design wins ■ Design wins up 5% Achieved

2. Acquisitive growth ■ Completed acquisitions of Hivolt Capacitors

(August 2024) and Burster (January 2025),

and development of strong pipeline of further

opportunities

Substantially

achieved

3. Improve margins ■ Adjusted operating margin up 1.2ppt to 14.3% Achieved

4. Develop clusters ■ Increased collaboration between businesses

across the Group, including joint sales

initiatives and product development

Achieved

5. People development ■ Group-wide management review completed,

including succession and development plans,

as well as a number of key promotions and

internal transfers

Achieved

6. Deliver Capital Markets Day & Management

Conference

■ Successful CMD and Conference delivered

September 2024

Achieved

ESG Objectives

1. Reduce carbon emissions on an absolute basis

towards CY2025 target of 65%

■ CY2024 Scope 1 & 2 emissions 59% lower than

CY2021, in line with CY2025 target

Achieved

2. Define and monitor Group-wide ESG

objectives

■ Good alignment of operating businesses’ ESG

objectives and delivery

Achieved

discoverIE Group plc Innovative Electronics124

DIRECTORS’ REMUNERATION REPORT CONTINUED

Simon Gibbins

Objective Performance Assessment

General Non-Financial Objectives

1. Equity and debt funding to support

acquisition plans

■ Funding plans updated to ensure sufficient

capacity to meet future acquisition plans

Achieved

2. Manage interest on debt appropriately ■ Debt well managed in response to market

conditions

Substantially

achieved

3. Opex and capex management ■ Significant savings delivered, helping the Group

to deliver increased profitability

Achieved

4. Deliver Capital Markets Day & Management

Conference

■ Successful CMD and Conference delivered

September 2024

Achieved

5. Manage analyst & investor base ■ Continued strong engagement with both

analysts and investors throughout the year

Achieved

6. Deliver buy-in of pension scheme ■ Buy-in completed January 2025 Achieved

7. Transition of auditor ■ Smooth transition from PWC to Deloitte

delivered

Achieved

ESG Objectives

1. Support for development of ESG initiatives

and additional reporting

■ Further development in multiple areas (see

Sustainability Report for more details)

Achieved

2. Finalise preparation ahead of upcoming

changes in UK Corporate Governance Code

■ Plans established to meet upcoming reporting

requirements (see Corporate Governance

Report for more details)

Achieved

3. Implement corporate communications tool ■ Plans finalised on schedule and within budget Achieved

The Committee assessed these achievements against the pre-set personal objectives and in the context of overall business

performance and decided to award Nick Jefferies and Simon Gibbins a 95% payout for this element of their respective

bonuses. This means that, for the year under review, Nick Jefferies earned a bonus of 83% of salary and Simon Gibbins earned

a bonus of 69% of salary. In accordance with the Remuneration Policy, 20% of all bonuses are deferred into shares, as follows:

Bonus

outcome

(% of

maximum)

Bonus

opportunity

(% of salary)

Bonus

outcome

Cash

element

80%

Deferred

element

20%

Nick Jefferies 55% 150% £441,028 £352,822 £88,206

Simon Gibbins 55% 125% £240,460 £192,368 £48,092

Deferred share awards vest three years after grant, subject to continued service. Other than the malus and clawback terms

referred to on page 118, there are no performance conditions attached to these shares. Further details can be found in

Appendix 1 to the Notice for the 2024 Annual General Meeting (available on our website at www.discoverieplc.com).

125 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

2022 LTIP vesting (audited)

LTIP Awards were granted on 21 June 2022 to Nick Jefferies and Simon Gibbins with vesting dependent on relative TSR

performance against a comparator group made up of constituents of the FTSE Small Cap Index excluding Investment Trusts

(50%) and the growth in adjusted EPS over the three-year period ending 31 March 2025 (50%). The specific targets were as

follows:

Relative TSR ranking against the FTSE Small Cap excluding Investment Trusts (50% weighting)

Relative TSR ranking against peers % of award vesting Actual performance

Upper quartile (or above) 100% the Company’s TSR over

the period was -25.8%,

which was below median,

resulting in nil vesting of

this element

Between median and upper quartile Straight-line vesting between 25% and 100%

Below median performance 0%

Adjusted EPS Performance (50% weighting)

Adjusted EPS growth from FY22 to FY25 % of award vesting Actual performance

Equal to or above 12ppts p.a. 100% 9.6ppts p.a. growth over the

three-year period, which

was between threshold and

the maximum, resulting in

68% vesting of this element

Between 5ppts p.a. and 12ppts p.a. Straight-line vesting between 25% and 100%

Below 5ppts p.a. 0%

The TSR measure resulted in nil vesting of that element, and the EPS measure vested 68% and, therefore, 34% of the 2022

LTIP award will vest on 23 June 2025. The EPS element was subject to the Committee being satisfied as to the Group’s return

on capital employed (“ROCE”) over the performance period. The Committee has considered ROCE for that period and was

satisfied that the EPS element should vest in full. The vested awards are subject to a two-year holding period, during which

period dividends will accrue on the vested awards. Dividends also accrued between the date of grant and vesting.

Director

Date of

grant

Number

of awards

granted

Vesting

outcome

Number

of vested

awards

Value of

vested

awards

Nick Jefferies 21 June 2022 131,364

34%

44,710 £285,160

Simon Gibbins 21 June 2022 78,619 26,758 £170,663

The estimated value of the vested awards is based on the three-month average share price to 31 March 2025 (£6.03). The

values shown also include dividend equivalents of £15,559 for Nick Jefferies and £9,312 for Simon Gibbins.

Share awards made during the year (audited)

The following LTIP awards were granted on 12 June 2024:

Director

Face value

as % of

salary Face value

Number

of shares

Threshold

vesting

(% of

face value)

Maximum

vesting

(% of

face value)

End of

performance

period

Nick Jefferies 175% £927,644 128,839

25% 100%

31 March 2027

Simon Gibbins 160% £555,174 77,108 31 March 2027

The face value of the awards is based on a share price of £7.20, being the three-day average share price directly prior to the grant of the award.

In addition to the grants set out above, 7,228 awards were granted to Simon Gibbins (with a face value of £52,042, based

on a share price of £7.20), in return for him bearing a proportion of the Company’s liability to employer’s National Insurance

arising on exercise. The additional award ensures he is in a neutral position on an after-tax basis. The award was granted on

the same date and under the same conditions as those set out in the table above.

discoverIE Group plc Innovative Electronics126

DIRECTORS’ REMUNERATION REPORT CONTINUED

Vesting of these awards is subject to the following performance conditions:

Relative TSR ranking against the FTSE 250 excluding Investment Trusts (45% weighting)

Relative TSR ranking against peers % of award vesting

Upper quartile (or above) 100%

Between median and upper quartile Straight-line vesting between 25% and 100%

Below median performance 0%

Adjusted EPS growth (45% weighting)

Adjusted EPS growth % of award vesting

Equal to or above 12ppts per annum 100%

Between 5ppts and 12ppts per annum Straight-line vesting between 25% and 100%

Below 5ppts per annum 0%

Carbon emission reduction (10% weighting)

Reduction in carbon emissions between CY2021 and

CY2025 % of award vesting

Equal to or above 70% 100%

Between 50% and 70% Straight-line vesting between 25% and 100%

Below 50% 0%

For the TSR and adjusted EPS elements, performance is measured over three years from 1 April 2024 to 31 March 2027. For

the TSR measure, one-month average prices are used prior to the start and end of the performance period. In the case of the

adjusted EPS measure, performance is measured based on growth from FY 2023/24 to FY 2026/27. For the carbon emissions

element, performance is measured based on the reduction in the Group’s carbon emissions between CY2021 and CY2026

measured on an underlying basis (i.e. like-for-like disregarding acquisitions) and on the assumption that the methodology

used to calculate CY2026 outcome is no harder than that used to calculate CY2022 carbon emissions.

Vested shares will be subject to an additional two-year holding period.

Deferred bonus share awards were granted on 26 June 2024. As part of the terms of the bonus relating to FY 2023/24, 20% of

the annual bonus for both Executive Directors was deferred into shares.

Director Grant date

Face value

(20% of

FY24 bonus,

net of tax)

Number

of shares

Vesting

date

Nick Jefferies 26 June 2024 £53,037 7,764 26 June 2027

Simon Gibbins 26 June 2024 £28,944 4,237 26 June 2027

Shares were acquired at a market price of £6.77 per share.

Pension arrangements (audited)

Pension contributions/cash allowances for the Executive Directors are set out in the single figure table on page 123 of this

Report and were based on a contribution rate of 8%, in line with the UK employee pension contribution rate.

127 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Directors’ interests under the Long-Term Incentive Plans

Movements in the Executive Directors’ holdings of nil-cost options under the LTIPs during the year are shown below. Values

are calculated using the closing share price on 31 March 2025 (£5.44). No awards were exercised or lapsed in the year. The

performance criteria for the 2024 LTIPs are set out on page 127.

Movements during the year

Number

held at

31.03.24

Vested

but not

exercised

value at

31.03.2025

Grant

date

When

exercisable

Number

held at

31.03.2025 Granted Vested Exercised Lapsed

Nick

Jefferies

242,788(v) – – – – 242,788 242,788 1,320,767 31/03/2017 Mar 2022 to Mar 2027

123,998(v) – – – – 123,998 123,998 674,549 29/03/2018 Mar 2023 to Mar 2028

166,236(v) – – – – 166,236 166,236 904,324 30/04/2019 Apr 2024 to Apr 2029

127,039(v)

1, 2

– – – – 127,039 127,039 691,092 30/06/2020 Jul 2025 to Jun 2030

63,310(v)

– 63,310 – 11,172 74,482 63,310 344,406 29/07/2021 Jul 2026 to Jul 2031

131,364(nv)

– – – – 131,364 – 714,620 21/06/2022 Jun 2027 to Mar 2032

100,794(nv) – – – – 100,794 – 548,319 14/06/2023 Jun 2028 to Mar 2033

128,839(nv) 128,839 – – – – – 700,884 12/06/2024 Jun 2029 to Mar 2034

Simon

Gibbins

106,900(v) – – – – 106,900 106,900 581,536 31/03/2017 Mar 2022 to Mar 2027

63,190(v)

– – – – 63,190 63,190 343,754 29/03/2018 Mar 2023 to Mar 2028

92,006(v)

– – – – 92,006 92,006 500,513 30/04/2019 Apr 2024 to Apr 2029

62,500(v)

– – – – 62,500 62,500 340,000 30/06/2020 Jul 2025 to Jun 2030

37,843(v)

– 37,843 – 6,678 44,521 37,843 205,866 29/07/2021 Jul 2026 to Jul 2031

78,619(nv)

4, 9

– – – – 78,619 – 427,687 21/06/2022 Jun 2027 to Mar 2032

60,323(nv)

– – – – 60,323 – 328,157 14/06/2023 Jun 2028 to Mar 2033

77,108(nv)

77,108 – – – – – 419,468 12/06/2024 Jun 2029 to Mar 2034

(v) = vested; (nv) = non-vested

The award, in the form of a nil-cost option over 127,039 shares in the Company, was made to Nick Jefferies on 30 June 2020. The performance conditions attached

to the award resulted in 100% vesting on 3 July 2023.

An additional award of 13,985 nil-cost options was made on 30 June 2020 such that Nick Jefferies is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on a proportion of the Company’s liability to employer’s National Insurance on the June 2020 award. This is in addition to

the 127,039 shares set out above and is subject to the same vesting and exercise conditions.

An additional award of 12,413 nil-cost options was made on 29 July 2021 such that Nick Jefferies is in a net neutral position after tax, assuming unchanged tax rates,

as a result of his agreement to take on a proportion of the Company’s liability to employer’s National Insurance on the July 2021 award. This is subject to the same

vesting and exercise conditions as the main award.

The performance conditions attached to the award will result in 34% vesting on 23 June 2025.

An additional award of 13,916 nil-cost options was made on 29 March 2018 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the March 2018 award. 75.9% of the 2018 award vested on

29 March 2021; meaning 63,190 options from the “base award” vested and 20,065 options from the “base award” lapsed; and 10,562 options from the NI element

vested and 3,353 options from the NI element lapsed.

An additional award of 15,379 nil-cost options was made on 30 April 2019 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the April 2019 award. This is in addition to the 92,006

shares set out above.

An additional award of 10,446 nil-cost options was made on 30 June 2020 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the June 2020 award. This will vest in full on 3 July 2023.

An additional award of 7,441 nil-cost options was made on 29 July 2021 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax rates,

as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the July 2021 award. This is subject to the same vesting and

exercise conditions.

An additional award of 7,370 nil-cost options was made on 21 June 2022 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the June 2022 award. This is subject to the same vesting

and exercise conditions. As noted above, 33% of this award will vest on 23 June 2025, meaning that 26,229 options from the “base award” will vest and 52,390

options from the “base award” will lapse; and 2,459 options from the NI element will vest and 4,911 options from the NI element will lapse.

An additional award of 5,655 nil-cost options was made on 8 June 2023 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the June 2023 award. This is subject to the same vesting

and exercise conditions.

An additional award of 7,228 nil-cost options was made on 12 June 2024 such that Simon Gibbins is in a net neutral position after tax, assuming unchanged tax

rates, as a result of his agreement to take on the Company’s liability to employer’s National Insurance on the June 2024 award. This is subject to the same vesting

and exercise conditions.

discoverIE Group plc Innovative Electronics128

DIRECTORS’ REMUNERATION REPORT CONTINUED

Directors’ share interests (audited)

The interests of the Directors who held office as at 31 March 2025 (including family interests) in ordinary shares (fully paid, 5p)

of the Company, were as follows:

Shares held at 31 March 2025

Unencumbered

Nil cost

options

vested but

not exercised

and outside

of holding

period

Nil cost

options

vested but

subject to

additional

holding

period

Nil cost

options

unvested and

subject to

performance

conditions

Unencumbered

shares held at

31 March 2024

Value of

current

shareholding

(% of salary)

Nick Jefferies 1,303,722

533,022 190,349 360,997 1,264,370 1,289%

Simon Gibbins 430,535

262,096 100,343 216,050 402,153 651%

Bruce Thompson 75,000 – – – 49,000

Clive Watson 36,471 – – – 22,900

Rosalind Kainyah 656 – – – 656

Celia Baxter 7,642 – – – 2,791

Nick Jefferies holds 1,303,722 shares outright. In line with the Remuneration Policy, 20% of bonuses from FY 2019/20 onwards were deferred into shares. The figure

of 1,303,722 includes the shares bought with those deferred bonuses.

Simon Gibbins holds 430,535 shares outright. In line with the Remuneration Policy, 20% of bonuses from FY 2021/22 onwards were deferred into shares. The figure

of 430,535 includes the shares bought with those deferred bonuses.

Options subject to the additional holding period are not capable of exercise. No further performance conditions apply.

The interests of all Directors at 1 June 2025 are unchanged from those at 31 March 2025. The values of current shareholdings

for Nick Jefferies and Simon Gibbins have been valued using the share price as at 31 March 2025 of £5.44 and include all

options that have vested but remain unexercised and are based on salaries as at 1 June 2025.

Both of the Executive Directors have met the current shareholding requirements. In accordance with the remuneration

policy, Executive Directors are required to build up/maintain a shareholding of at least 250% of salary within seven years.

The figures for shares/ nil cost options subject to performance conditions exclude any additional awards to Executive

Directors in respect of employer’s National Insurance.

New Executive Directors are required to build up/maintain a shareholding of at least 200% of salary, including LTIP shares

where performance conditions no longer apply.

Dilution

The Company’s share schemes are funded through a combination of shares purchased in the market and newly issued shares,

as appropriate. The Company monitors the number of shares issued under the schemes and their impact on dilution limits.

As at 31 March 2025, approximately 5.3m shares (5.5% in the last ten years) have been, or may be, issued to settle awards

made in the last ten years in connection with all share schemes and executive share schemes, respectively. The Company is

committed to remaining within The Investment Association’s 10% in 10 years dilution limit.

Payments for loss of office (audited)

There were no payments for loss of office during the year.

Payments to past Executive Directors (audited)

There were no payments to past Executive Directors during the year.

This represents the end of the audited section of the Report.

129 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Pay for performance

The graph below shows Total Shareholder Return (TSR) in terms of change in value (with dividends deemed to be reinvested

gross on the ex-dividend date) of an initial investment of £100 on 31 March 2015 between that date and 31 March 2025

in a holding of the Company’s shares, compared with the corresponding TSR in a hypothetical holding of £100 invested

in the FTSE 250 Index. The index has been chosen because it is considered to be a reasonable comparator in terms of

the Company’s size and its share liquidity. The accompanying table details the Group Chief Executive’s single figure of

remuneration and actual variable pay outcomes over the same period.

31 Mar 2015 31 Mar 2016 31 Mar 2017 31 Mar 2018 31 Mar 202531 Mar 2019 31 Mar 2020 31 Mar 2021 31 Mar 202331 Mar 2022 31 Mar 2024

300

250

200

150

100

400

350

discoverIE Return Index FTSE 250 Return Index Source: Datastream (a LSEG product)

Total Shareholder Return

Group Chief Executive single figure of total remuneration history

Nick Jefferies was Group Chief Executive throughout the period shown in the table below.

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Single figure of total

remuneration (£’000) 1,321 665 1,803 1,796 2,093 1,717 2,580 2,245 1,533

1,313

Salary (£’000) 425 429 438 453 467 443 490 510 530 530

Bonus outcome

(% of maximum) 60 43.5 63.7 69.2 62.0 60.1 100 76 63 55.5

LTIP outcome

(% of maximum) 100 – 100 100 100 75.9 100 100 85 34

Turnover (£m) 288 338 387.9 438.9 466.4 454.3 379.2 448.9 437.0 422.9

Adjusted operating profit (£m) 16 20 24.5 30.6 37.1 35.2 41.4

51.8 57.2 60.5

Continuing operations.

The LTIP values for 2024 were estimated last year based on the three-month average share price to 31 March 2024. The values have been updated to reflect the

actual share price on the vesting date (£6.74).

discoverIE Group plc Innovative Electronics130

DIRECTORS’ REMUNERATION REPORT CONTINUED

Group Chief Executive remuneration

Annual percentage change in remuneration of Directors and employees

As required by the 2019 regulations, the table below shows a comparison of the annual change of each individual Director’s

pay to the annual change in average UK employee pay. discoverIE Group plc has no employees itself and therefore the

Committee has selected this comparator group on the basis that the Executive Directors are UK-based. Average employee

pay is based on a full-time equivalent (“FTE”) calculation.

% change from

2020 to 2021

% change from

2021 to 2022

% change from

2022 to 2023

% change from

2023 to 2024

% change from

2024 to 2025

Salary

fees Benefits Bonus

Salary

fees Benefits Bonus

Salary

fees Benefits Bonus

Salary

fees Benefits Bonus

Salary

fees Benefits Bonus

Employees 5% 0% 44% 5% 0% 153% 5% 59% 13% 6% 1% 6% 1% 8% -32%

Executive Directors

Nick Jefferies -5% -3% -8% 11%

2% 121% 4% -8% -21% 4% -37% -13% 0% 0% -12%

Simon Gibbins -5% -3% -8% 11%

2% 129% 3% 26% -23% 4% 4% -13% -2% 0% -12%

Non-Executive Directors

Malcolm

Diamond -5% – – 11%

– – -29%

– – – – – – – –

Tracey Graham -5% – – 11%

– – 13%

– – -42%

– –

Rosalind Kainyah n/a

– – n/a

– – 397%

– – 4% – – 0% – –

Bruce Thompson -5% – – 11%

– – 94%

– – 70%

– – 0% – –

Clive Watson -5% – – 11%

– – 6% – – 4% – – 0% – –

Celia Baxter

– –

39%

Salaries and fees for the year ended 31 March 2021 were voluntarily reduced by all Directors by 20% for three months in light of the pandemic, as explained in the

2022 Annual Report. Without that reduction, the underlying increase in salary and fees from 2021 to 2022 was 5%.

Joined the Board in January 2022.

The reduction in Malcolm Diamond’s fee in FY 2022/23 reflects his retirement from the Board on 1 November 2022.

The increase in Tracey Graham’s fees for FY 2022/23 and FY 2023/24 reflects her appointment as Senior Independent Director from 1 November 2022.

The increase in Rosalind Kainyah’s fee in FY 2022/23 reflects her appointment towards the end of FY 2021/22, with FY 2022/23 showing a full year of fees, as well as

her appointment as Chair of the Sustainability Committee from 1 April 2022.

The increase in Bruce Thompson’s fees for FY 2022/23 and FY 2023/24 reflects his appointment as Chairman from 1 November 2022.

Tracey Graham retired as at 31 October 2024.

The increase in Celia Baxter’s fee in FY 2024/25 reflects her appointment part way though FY 2023/24 and her appointment part way through FY 2024/25 as Senior

Independent Director and Chair of the Remuneration Committee.

CEO pay ratio

The table below sets out the pay ratios for the Group Chief Executive in relation to the equivalent pay for the lower quartile,

median and upper quartile employees (calculated on a full-time basis). The principal reason for the changes between 2020,

2021 and 2022 are the changes in the overall remuneration of the Group Chief Executive, with a voluntary reduction in salary

and bonuses in 2021 during Covid and a full bonus payout in 2022. In 2023, the ratios returned closer to pre-pandemic levels.

The 2025 median CEO pay ratio of 39:1 is lower than last year (45:1). This reflects the lower variable remuneration earned by

the Group Chief Executive this year (see above).

Year Method

25th

percentile

pay ratio

Median

pay ratio

75th

percentile

pay ratio

2025 Option B 47:1 39:1 21:1

2024 Option B 60:1 45:1 26:1

2023 Option B 86:1 69:1 43:1

2022 Option B 117:1 68:1 44:1

2021 Option B 63:1 47:1 25:1

2020 Option B 83:1 57:1 40:1

The Company determined the remuneration figures for the employee at each quartile with reference to a date of 31 March 2025.

The Group used calculation method B as the Gender Pay Gap data is already collated for UK employees and was therefore readily available.

Following a review, the Committee was satisfied that the three individuals reported on are representative of the lower quartile, median and upper quartile

employees. No adjustments or estimates were used.

131 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

Set out in the table below is the total pay and benefits as well as the salary component of remuneration for the employees

identified as being at the relevant percentiles.

25th

percentile Median

75th

percentile

Salary £25,924 £31,000 £50,000

Total pay and benefits £27,997 £33,526 £61,250

Importance of the spend on pay

The table below shows the importance of the spend on pay for all employees across the globe compared with the returns

distributed to Shareholders, during the year under review and the prior financial year. The information is based on like-for-

like constant currency and includes annualised prior year acquisitions.

2025

£m

2024

£m

change

Remuneration paid to or receivable by all employees 116.8 112.1 4%

Distributions to Shareholders by way of dividends (net of share issues) 11.7 11.2 4%

Statement of implementation of the remuneration policy in the financial year ending

31 March 2026

The table below sets out a summary of how the remuneration policy will apply during 2025/26.

Remuneration

element Remuneration for year ending 31 March 2026

Base salary

■ Salaries for FY 2025/26 are:

– £550,000 for the Group Chief Executive (3.8% increase).

– £360,000 for the Group Finance Director (3.8% increase).

As set out in the Annual Statement, the Committee will seek to implement the salaries agreed at the

time of the 2024 Policy approval on a phased basis. The Committee will consider the appropriate timing

of the next increase which will be in addition to the general UK workforce increase of 3% for 2025/26.

Base salary increases across the Group for FY 2025/26 vary according to local conditions, with up to 15% in

some countries.

Pension

■ Cash equivalent of 8% of salary (in line with the UK workforce).

Annual

bonus

■ The maximum bonus opportunity will be 150% of salary for Group Chief Executive and 125% of salary

for Group Finance Director.

■ Target bonus opportunity is 50% of maximum.

■ Performance metrics are based 60% on adjusted operating profit, 24% on adjusted operating cash

flow, 8% on strategic objectives, and 8% on ESG matters. Due to the close link between targets and

the long-term strategy, the bonus targets for the year ending 31 March 2026 have not been disclosed

in this report due to commercial sensitivity. However, further information on these bonus targets will

be disclosed in next year’s Annual Report and Accounts.

■ Mandatory deferral of 20% of any bonus earned into discoverIE share awards for a period of three

years under the Deferred Share Bonus Plan (where Executive Directors have met their shareholding

guideline; one third of bonus earned is deferred if that guideline is not met).

discoverIE Group plc Innovative Electronics132

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration

element Remuneration for year ending 31 March 2026

LTIP

■ LTIP awards for FY 2025/26 will be at 175% of salary for the Group Chief Executive and 160% of salary for

the Group Finance Director

which is in line with last year and lower than the proposed LTIP policy limit.

■ Performance metrics and targets will be based 50% on adjusted EPS growth and 50% on relative TSR.

■ The adjusted EPS range will require growth of 5% p.a. for threshold vesting and 12% p.a. growth for full

vesting. Vesting of the EPS element shall also be subject to an underpin requiring the Committee to be

satisfied with the Group’s annual rate of return on capital employed (“ROCE”) over the measurement

period.

■ The TSR peer group will be the FTSE 250 (excluding Investment Trusts). Threshold vesting (25%) will

apply for median performance and full vesting (100%) will require upper quartile or higher.

Shareholding

guidelines

■ A shareholding guideline of 250% of salary applies for the Group Chief Executive and Group Finance

Director.

Additional awards may be granted to the Group Finance Director in return for him bearing some of the Company’s liability to employers’ National Insurance arising

on the exercise of the grant referred to above. The additional award ensures that he is in a neutral position on an after-tax basis, assuming no change in the tax rate.

The fees for the Non-Executive Directors for the year ending 31 March 2025/26 will be as follows:

As at 1 April 2025

Basic fee

(£)

Committee

Chair fee

(£)

SID fee

(£)

Total

Bruce Thompson 193,750 – – 193,750

Celia Baxter 54,340 10,350 10,350 75,040

Rosalind Kainyah 54,340 10,350 – 64,690

Clive Watson 54,340 10,350 – 64,690

As noted in the 2023/24 Directors’ Remuneration Report, the fees for the Non-Executive Directors were not increased in

2024/25. A 3.5% increase in fees will be implemented for 2025/26 (as reflected in the table above).

Role of the Remuneration Committee

The Committee is responsible for considering and making recommendations to the Board on the remuneration of the

Executive Directors. In doing so, it reports to the Board on how it has discharged its responsibilities and operates within agreed

terms of reference, which can be found on the Group’s website. The members of the Committee are set out on page 110.

The Committee also considers the recommendations of the Group Chief Executive with regard to senior management who

are not Executive Directors, in determining their remuneration packages, including bonuses, incentive payments, share

options and other share-based awards. The Group Company Secretary provides administrative support.

Advisers

During the year, the Committee received independent advice on executive remuneration from FIT Remuneration

Consultants LLP (“FIT”). FIT was appointed by the Committee following a competitive tender process. FIT is a signatory to

the Remuneration Consultants’ Code of Conduct. FIT does not provide any services other than advice to the Remuneration

Committee and the Committee considers FIT to be independent and objective. The fees paid to FIT for advising the

Committee for the financial year ended 31 March 2025 were £47,667, based partly on a fixed fee basis and partly on

time spent.

Shareholder voting

As at 1 April 2024 For

Against Withheld

2024 binding vote on the Directors’

Remuneration Policy 75,169,860 96.03% 3,111,165 3.97% 5,712

2024 approval of the Remuneration Report

(excl. Policy) 77,383,278 98.85% 900,574 1.15% 2,885

Includes votes at the Chairman’s discretion.

A vote “withheld” is not a vote in law and is not counted in the calculation of the proportion of votes for and against the resolution.

133 Annual Report and Accounts for the year ended 31 March 2025

Corporate Governance

The Directors are responsible for preparing the Annual Report and the financial

statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are

required to prepare the Group financial statements in accordance with United Kingdom adopted international accounting

standards. The Directors have chosen to prepare the parent Company financial statements in accordance with United

Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including

FRS 101 “Reduced Disclosure Framework”. Under Company law the Directors must not approve the financial statements

unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of

the Company for that period.

In preparing the parent Company financial statements, the Directors are required to:

■ select suitable accounting policies and then apply them consistently;

■ make judgements and accounting estimates that are reasonable and prudent;

■ state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed

and explained in the financial statements; and

■ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will

continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:

■ properly select and apply accounting policies;

■ present information, including accounting policies, in a manner that provides relevant, reliable, comparable and

understandable information;

■ provide additional disclosures when compliance with the specific requirements of the financial reporting framework

are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the

entity’s financial position and financial performance; and

■ make an assessment of the Company’s ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for

safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud

and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on

the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial

statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

■ the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair

view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the

consolidation taken as a whole;

■ the Strategic Report includes a fair review of the development and performance of the business and the position of

the Company and the undertakings included in the consolidation taken as a whole, together with a description of the

principal risks and uncertainties that they face; and

■ the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the

information necessary for Shareholders to assess the Company’s position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 3 June 2025 and is signed on its behalf by:

Nick Jefferies Simon Gibbins

Group Chief Executive Group Finance Director

3 June 2025 3 June 2025

discoverIE Group plc Innovative Electronics134

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

IN RESPECT OF THE FINANCIAL STATEMENTS

Corporate Governance

135 Annual Report and Accounts for the year ended 31 March 2025

Report on the audit of the financial statements

1. Opinion

In our opinion:

■ the financial statements of discoverIE Group plc (the ‘Company’) and its subsidiaries (the ‘Group’) give a true and

fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2025 and of the Group’s profit for

the year then ended;

■ the Group financial statements have been properly prepared in accordance with United Kingdom adopted

international accounting standards;

■ the Company financial statements have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and

■ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

■ the Consolidated Statement of Profit or Loss;

■ the Consolidated Statement of Comprehensive Income;

■ the Consolidated Statements of Financial Position;

■ the Consolidated Statements of Changes in Equity;

■ the Consolidated Statement of Cash Flows;

■ the related notes 1 to 36 to the Consolidated financial statements;

■ the Company Statements of Financial Position;

■ the Company Statements of Changes in Equity; and

■ the related notes 1 to 12 to the Company financial statements.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable

law and United Kingdom adopted international accounting standards. The financial reporting framework that has been

applied in the preparation of the Company financial statements is applicable law and United Kingdom Accounting

Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial

statements section of our report.

We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our

audit of the financial statements in the UK, including the Financial Reporting Council’s (the ”FRC’s”) Ethical Standard as

applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. The non-audit services provided to the Group and Company for the year are disclosed in note 33 to the Group

financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard

to the Group or the Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

136 discoverIE Group plc Innovative Electronics

INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF discoverIE Group plc

3. Summary of our audit approach

Key audit matters

The key audit matter that we identified in the current year was the

appropriateness of revenue recognised in the correct accounting period

(revenue ‘cut-off’).

Materiality

The materiality that we used for the Group financial statements was £2.3m

which was determined on the basis of adjusted profit before tax.

Scoping

We used component auditors to test specific account balances in 28

reporting units across 13 countries and the Group engagement team

performed audits on seven reporting units at group level including the

Company. This covered 72% of Group revenue, 84% of profit before tax and

79% of net assets.

Changes to our approach

The year ended 31 March 2025 is our first year as auditor of the Group. We

have been independent since 1 April 2024 and commenced our transition

activities from that date. Our work included:

■ Preparing a detailed audit transition plan;

■ Shadowing the predecessor auditor through the 31 March 2024 year audit

through attendance at key meetings;

■ Reviewing the predecessor auditor’s audit files;

■ Holding transition workshops with key operational and component

management teams including internal audit, tax, legal, and Group

finance teams throughout our audit planning; and

■ Holding a series of planning meetings with our component audit teams

and undertaking Group audit team visits to a number of key markets and

components.

These procedures developed our understanding of the Group and informed

our risk assessment, including our materiality, scoping, and identification of

key audit matters.

In the prior year, the predecessor auditor identified the Carrying value of

goodwill (Group), Accounting for acquisitions (Group) and the Carrying

value of investments (Company) as key audit matters. We do not consider

these to be key audit matters in the current year as these areas did not have

a significant effect on our overall audit strategy, allocation of resources or

direction of efforts of the engagement team:

■ Having assessed the carrying values of goodwill and investments,

given the increased level of headroom demonstrated in the directors’

assessment; and

■ In relation to accounting for acquisitions, there have been fewer

acquisitions in the current year compared with last year.

137 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

4. Conclusions relating to

going concern

In auditing the financial statements,

we have concluded that the directors’

use of the going concern basis of

accounting in the preparation of the

financial statements is appropriate.

Our evaluation of the directors’

assessment of the Group’s and

Company’s ability to continue to adopt

the going concern basis of accounting

included:

■ obtaining an understanding

of the processes and controls

underpinning the director’s

forecasting of financial

performance and cash flows;

■ assessing the Group’s borrowing

facilities explained in Note 23 to

the Group financial statements,

including the total amounts

available, the repayment dates,

and related covenants;

■ testing the mechanical and

logical accuracy of management’s

forecasts, and liquidity and

sensitivity calculations;

■ assessing the forecasts in

comparison to historical

performance, industry

expectations, and external data

points;

■ challenging the downside

scenarios modelled by the Group,

including their reverse stress

tests, in consideration of recent

experience and whether they were

sufficiently severe;

■ evaluating whether other events

or conditions, for example

potential trade volatility arising

from changing tariff regimes,

are appropriately considered in

forecasts and downside scenarios;

■ assessing the requirements of

the financial covenants and

the potential risk of a covenant

breach; and

■ assessing the appropriateness of

the disclosures provided in note 2

of the Group financial statements.

Based on the work we have performed,

we have not identified any material

uncertainties relating to events

or conditions that, individually or

collectively, may cast significant doubt

on the Group’s and Company’s ability

to continue as a going concern for a

period of at least twelve months from

when the financial statements are

authorised for issue.

In relation to the reporting on how the

Group has applied the UK Corporate

Governance Code, we have nothing

material to add or draw attention to

in relation to the directors’ statement

in the financial statements about

whether the directors considered

it appropriate to adopt the going

concern basis of accounting.

Our responsibilities and the

responsibilities of the directors with

respect to going concern are described

in the relevant sections of this report.

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall

audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

138 discoverIE Group plc Innovative Electronics

INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF discoverIE Group plc

CONTINUED

5.1. Appropriateness of revenue recognised in the correct accounting period

(revenue ‘cut-off’)

Key audit matter description

The Group recognised revenue of £422.9 million in 2025 (2024: £437.0 million)

of which the significant majority is earned through sale of goods in the form

of a range of customised electronics for industrial applications. Refer to

Notes 4 and 5 to the Group financial statements for analysis by nature and

operating segment. The Group recognises revenue from sale of goods at a

point in time on shipment, on delivery, or when goods are accepted by the

customer, depending on the incoterm used for the sale transaction.

Revenue should be recognised once control of goods has passed to the

customer in line with the relevant incoterms and the Group’s revenue

recognition policy. The Group is highly disaggregated and operates in a

number of different jurisdictions, trading under a range of incoterms, and

utilises different IT infrastructure in different businesses. That leads to a risk

that revenue is recognised at an inappropriate time due to an incorrect

determination of when control has passed. There could be an incentive to

recognise revenue in one period or another, in order to meet budgets or

targets, and so we consider the cut-off of revenue to represent a key audit

matter and a potential fraud risk.

How the scope of our audit

responded to the key audit

matter

We have performed the following procedures to address this key audit

matter:

■ obtaining an understanding of the revenue cycle and relevant controls in

place to address the risk of inappropriate cut-off;

■ identified a pre- and post- year end ‘risk period’ for sales transactions

for which there may be judgement as to whether control has passed

as at the year-end and assessing a sample of those sales transactions

against purchase orders, despatch documentation, and sales invoices,

as necessary in order to determine whether revenue is recognised in the

correct period; and

■ testing credit notes issued post year end and assessing the

appropriateness of the reason for the credit note while also evaluating

whether it aligns with the Group’s revenue recognition policy.

Key observations

We concluded that the revenue recognition policies of the Group are

reasonable, and that they are applied appropriately.

139 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the

economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in

planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements Company financial statements

Materiality

£2.3 million (FY24 predecessor auditor:

£2.4 million)

£2.0 million (FY24 predecessor auditor:

£3.0 million)

Basis for determining

materiality

We determined materiality on the basis of

5% of forecasted adjusted profit before tax,

this represents 4.6% of final adjusted profit

before tax, as disclosed in note 6 to the

financial statements.

The predecessor auditor determined Group

materiality based on 5% of adjusted profit

before tax.

Company materiality equates to 0.5% of net

assets, which is capped at 90% of Group

materiality.

The predecessor auditor determined

Company materiality based on 1% of total

assets.

Rationale for the

benchmark applied

We have used adjusted profit before tax

for determining materiality. Adjusted

profit before tax is defined as profit before

tax excluding acquisition and disposal

related costs. This is considered to be a key

benchmark as this metric is important

to the users of the financial statements

(investors and analysts being the key users

for a listed entity) because it provides a

means of evaluating performance of the

business on a consistent basis and hence its

ability to pay a return on investment to the

investors.

As the ultimate holding company of the

Group we consider net assets to be an

appropriate benchmark for our materiality

determination.

Adjusted PBT (£50.1m)

Group materiality

Component performance

materiality range

£2.3m

£0.6 - 1.3m

£0.12m

Audit and Risk Committee

reporting threshold

140 discoverIE Group plc Innovative Electronics

INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF discoverIE Group plc

CONTINUED

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected

and undetected misstatements exceed the materiality for the financial statements as a whole.

Group financial statements Parent company financial statements

Performance

materiality

65% of Group materiality (FY24 predecessor

auditor: 75%)

65% of Company materiality (FY24

predecessor auditor: 75%)

Basis and rationale

for determining

performance

materiality

In determining performance materiality, we considered the following factors:

a. the fact that this is the first year of our audit tenure;

b. the quality of the control environment and whether we were able to rely on controls;

c. the disaggregated nature of the Group and relative size of individual businesses;

d. the nature, volume and size of misstatements in the previous audit; and

e. low turnover of management and key accounting personnel.

6.3. Error reporting

threshold

We agreed with the Audit and

Risk Committee that we would

report to the Committee all audit

differences in excess of £115,000

(FY24 predecessor auditor: £120,000),

as well as differences below that

threshold that, in our view, warranted

reporting on qualitative grounds.

We also report to the Audit and Risk

Committee on disclosure matters

that we identified when assessing the

overall presentation of the financial

statements.

7. An overview of the scope

of our audit

7.1. Identification and

scoping of components

The Group is highly disaggregated

and operates in 20 countries, with

41 manufacturing locations and 35

total components, including those

at head-office. Our definition of

component is aligned to the reporting

unit structure within the Group. Our

audit was scoped by obtaining an

understanding of the Group and its

environment, including Group-wide

controls, and assessing the risks of

material misstatement at the Group

and component level.

Our determination of which

components to include in our audit

scope considered:

■ qualitative and quantitative risk

factors, in consideration of the

Group materiality of £2.3 million;

■ the structure of internal reporting

within the Group;

■ changes to the Group arising

from acquisitions, disposals, or

restructuring events; and

■ the outcome of recent internal

audit reports, or other indications

of increased risk identified by

management or the directors.

For the purposes of our Group audit

we have performed audit procedures

on one or more classes of transactions,

or account balances, on components

which represent 72% of revenue, 84%

of profit before tax, and 79% of net

assets. Our work has been completed

to component performance

materiality levels which were lower

than Group materiality, ranging from

£0.6 million to £1.3 million.

As each of the components maintains

separate financial records, we have

engaged component auditors from

the Deloitte member firms in China,

Denmark, France, Germany, India,

Norway, Poland, Slovakia, Sri Lanka

and Sweden to perform procedures

under our direction and supervision as

further described in section 7.4 below.

At a Group level we have tested the

consolidation processes, and have

performed a review at group level on

components and balances that were

not subject to audit procedures.

72%

28%

Revenue

Specified account balances

and transactions

Review at group level

84%

16%

Profit before

tax

79%

21%

Net assets

141 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

7.2. Our consideration of the

control environment

We have obtained an understanding

of the control environment, including

consideration of relevant IT systems.

The disaggregated nature of the

Group and the fact that most of

the Group’s businesses operate on

separate IT systems is important to our

testing approach. Our approach has

principally been designed to inform

our risk assessment and, as such, we

initially obtained an understanding of

relevant IT systems used worldwide.

For certain IT systems in use at

either a number of components, or

at larger components, we obtained

an understanding of general IT

controls. We did not rely on the

effective operation of IT controls at any

component and instead performed

substantive audits with supporting

analytics where possible.

More broadly, we did not plan to rely

on the operating effectiveness of

controls (automated or otherwise).

This strategy reflected our knowledge

of the control environment and in

particular: the disaggregated nature

of the business which brings inherent

segregation of duty challenges in

certain smaller businesses; limited

formality of the control environment

with regards to retention of evidence

of a control’s operation sufficient

for our testing purposes; and our

understanding of the audit approach

of the predecessor auditor. The Group

continues to invest time in addressing

observations on IT and entity level

controls as explained in the Audit and

Risk Committee Report on page 101.

7.3. Our consideration of

climate-related risks

In planning our audit we considered

the potential impact of climate

change on the Group’s business

and on the balances in the financial

statements. The Group has assessed

the risks and opportunities of climate

change and have summarised the

outputs of that assessment on pages

73 to 78 of the Annual Report.

We have considered whether the

outputs of the assessment, as

disclosed in the basis of preparation,

on page 151 of the Annual Report, are

consistent with our understanding of

the business and with the forecasts

which are used to support account

balances (including goodwill), the use

of the going concern assumption,

and the explanations given in the

viability statement. We did not

identify any additional risks of material

misstatement as a result of the

assessment and have considered it as

part of our wider response to forecasts,

and audit of related account balances.

In considering the disclosures

presented as part of the Strategic

Report, we engaged our ESG

specialists to assess compliance with

the TCFD and CFD requirements and

the recommendations made by both

the Task Force and FRC as set out in

their thematic reviews. We have also

assessed whether these disclosures

are materially consistent with the

financial statements and reflect

our understanding of the Group’s

approach to climate.

7.4. Working with other

auditors

The audit work completed by

our component audit teams was

performed under the direction

and supervision of the Group audit

team. We were directly involved

in planning discussions, including

discussions related to fraud, and risk

assessment conclusions. We provided

our component teams with detailed

instructions and maintained frequent

communication throughout the

planning, interim, and final audit

stages. We reviewed component audit

working papers which were significant

to the Group audit conclusions, and

challenged findings and observations

based on reporting we received.

Senior members of our Group audit

team visited 12 component locations

across the UK, the US, Poland, and

Norway. We attended all audit close

meetings either in-person or via

conference calls.

8. Other information

The other information comprises the

information included in the Annual

Report, other than the financial

statements and our auditor’s report

thereon. The directors are responsible

for the other information contained

within the Annual Report.

Our opinion on the financial

statements does not cover the other

information and, except to the extent

otherwise explicitly stated in our

report, we do not express any form of

assurance conclusion thereon.

Our responsibility is to read the other

information and, in doing so, consider

whether the other information is

materially inconsistent with the

financial statements or our knowledge

obtained in the course of the audit,

or otherwise appears to be materially

misstated.

If we identify such material

inconsistencies or apparent material

misstatements, we are required to

determine whether this gives rise

to a material misstatement in the

financial statements themselves.

If, based on the work we have

performed, we conclude that there is

a material misstatement of this other

information, we are required to report

that fact.

We have nothing to report in

this regard.

142 discoverIE Group plc Innovative Electronics

INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF discoverIE Group plc

CONTINUED

9. Responsibilities of

directors

As explained more fully in the

directors’ responsibilities statement,

the directors are responsible for

the preparation of the financial

statements and for being satisfied

that they give a true and fair view,

and for such internal control as the

directors determine is necessary to

enable the preparation of financial

statements that are free from material

misstatement, whether due to fraud

or error.

In preparing the financial statements,

the directors are responsible for

assessing the Group’s and the

Company’s ability to continue as

a going concern, disclosing as

applicable, matters related to going

concern and using the going concern

basis of accounting unless the

directors either intend to liquidate

the Group or the Company or to

cease operations, or have no realistic

alternative but to do so.

10. Auditor’s

responsibilities for the

audit of the financial

statements

Our objectives are to obtain

reasonable assurance about whether

the financial statements as a whole

are free from material misstatement,

whether due to fraud or error, and to

issue an auditor’s report that includes

our opinion. Reasonable assurance is

a high level of assurance, but is not a

guarantee that an audit conducted in

accordance with ISAs (UK) will always

detect a material misstatement when

it exists. Misstatements can arise from

fraud or error and are considered

material if, individually or in the

aggregate, they could reasonably be

expected to influence the economic

decisions of users taken on the basis of

these financial statements.

A further description of our

responsibilities for the audit of the

financial statements is located on

the FRC’s website at: www.frc.org.

uk/auditorsresponsibilities. This

description forms part of our

auditor’s report.

11. Extent to which the

audit was considered

capable of detecting

irregularities, including

fraud

Irregularities, including fraud,

are instances of non-compliance

with laws and regulations. We

design procedures in line with our

responsibilities, outlined above, to

detect material misstatements in

respect of irregularities, including fraud.

The extent to which our procedures

are capable of detecting irregularities,

including fraud is detailed below.

11.1. Identifying and

assessing potential risks

related to irregularities

In identifying and assessing risks of

material misstatement in respect of

irregularities, including fraud and non-

compliance with laws and regulations,

we considered the following:

■ the nature of the industry and

sector, control environment and

business performance including

the design of the Group’s

remuneration policies, key drivers

for directors’ remuneration, bonus

levels and performance targets;

■ the Group’s own assessment of the

risks that irregularities may occur

either as a result of fraud or error;

■ results of our enquiries of

management, internal audit,

the directors and the Audit and

Risk Committee about their own

identification and assessment of

the risks of irregularities, including

those that are specific to the

Group’s sector;

■ any matters we identified having

obtained and reviewed the Group’s

documentation of their policies

and procedures relating to:

■ identifying, evaluating and

complying with laws and

regulations and whether they

were aware of any instances of

non-compliance;

■ detecting and responding

to the risks of fraud and

whether they have knowledge

of any actual, suspected or

alleged fraud;

■ the internal controls

established to mitigate risks of

fraud or non-compliance with

laws and regulations;

■ the matters discussed among

the audit engagement team

including component audit teams

and relevant internal specialists,

including tax, valuations, pensions,

IT, and forensic specialists

regarding how and where fraud

might occur in the financial

statements and any potential

indicators of fraud

As a result of these procedures, we

considered the opportunities and

incentives that may exist within the

organisation for fraud and identified

the greatest potential for fraud in

the appropriateness of revenue

recognised in the correct accounting

period (revenue ‘cut-off’). In common

with all audits under ISAs (UK), we

are also required to perform specific

procedures to respond to the risk of

management override.

We also obtained an understanding of

the legal and regulatory frameworks

that the Group operates in, focusing

on provisions of those laws and

regulations that had a direct effect

on the determination of material

amounts and disclosures in the

financial statements. The key laws

and regulations we considered in this

context included the UK Companies

Act, UK Listing Rules, pensions

legislation, and tax legislation.

In addition, we considered provisions

of other laws and regulations that do

not have a direct effect on the financial

statements but compliance with

which may be fundamental to the

Group’s ability to operate or to avoid a

material penalty.

143 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

11.2. Audit response to risks

identified

As a result of performing the above, we

identified the appropriateness revenue

recognised in the correct accounting

period (revenue ‘cut-off’) as a key audit

matter related to the potential risk of

fraud. The key audit matters section of

our report explains the matter in more

detail and also describes the specific

procedures we performed in response

to that key audit matter.

In addition to the above, our procedures

to respond to risks identified included

the following:

■ reviewing the financial statement

disclosures and testing to

supporting documentation to

assess compliance with provisions

of relevant laws and regulations

described as having a direct effect

on the financial statements;

■ enquiring of management, the

Audit and Risk Committee and

in-house legal counsel concerning

actual and potential litigation and

claims;

■ performing analytical procedures

to identify any unusual or

unexpected relationships that

may indicate risks of material

misstatement due to fraud;

■ reading minutes of meetings of

those charged with governance,

reviewing internal audit reports

and reviewing correspondence

with HMRC; and

■ in addressing the risk of

fraud through management

override of controls, testing the

appropriateness of journal entries

and other adjustments; assessing

whether the judgements made in

making accounting estimates are

indicative of a potential bias; and

evaluating the business rationale

of any significant transactions that

are unusual or outside the normal

course of business.

We also communicated relevant

identified laws and regulations and

potential fraud risks to all engagement

team members including internal

specialists and component audit

teams, and remained alert to

any indications of fraud or non-

compliance with laws and regulations

throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance

with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

■ the information given in the strategic report and the directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial statements; and

■ the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the

course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

13. Corporate Governance Statement

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that

part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained

during the audit:

■ the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and

any material uncertainties identified set out on page 108;

■ the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why

the period is appropriate set out on page 79;

■ the directors’ statement on fair, balanced and understandable set out on page 98;

■ the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

page 91;

■ the section of the Annual Report that describes the review of effectiveness of risk management and internal control

systems set out on page 101; and

■ the section describing the work of the Audit Committee set out on page 96.

144 discoverIE Group plc Innovative Electronics

INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF discoverIE Group plc

CONTINUED

14. Matters on which we

are required to report by

exception

14.1. Adequacy of

explanations received and

accounting records

Under the Companies Act 2006 we

are required to report to you if, in our

opinion:

■ we have not received all the

information and explanations we

require for our audit; or

■ adequate accounting records have

not been kept by the Company,

or returns adequate for our audit

have not been received from

branches not visited by us; or

■ the Company financial statements

are not in agreement with the

accounting records and returns.

We have nothing to report in

this regard.

14.2. Directors’ remuneration

Under the Companies Act 2006

we are also required to report if in

our opinion certain disclosures of

directors’ remuneration have not been

made or the part of the directors’

remuneration report to be audited is

not in agreement with the accounting

records and returns.

We have nothing to report in

this regard.

15. Other matters which we

are required to address

15.1. Auditor tenure

Following the recommendation

of the Audit and Risk Committee,

Deloitte were appointed by the

shareholders on 26 July 2024 to audit

the financial statements for the year

ending 31 March 2025 and subsequent

financial periods. The period of

total uninterrupted engagement

including previous renewals and

reappointments of the firm is one

year, covering the year-ended

31 March 2025.

15.2. Consistency of the audit

report with the additional

report to the Audit and Risk

Committee

Our audit opinion is consistent with

the additional report to the Audit and

Risk Committee we are required to

provide in accordance with ISAs (UK).

16. Use of this report

This report is made solely to the

company’s members, as a body, in

accordance with Chapter 3 of Part

16 of the Companies Act 2006. Our

audit work has been undertaken so

that we might state to the company’s

members those matters we are

required to state to them in an auditor’s

report and for no other purpose. To the

fullest extent permitted by law, we do

not accept or assume responsibility to

anyone other than the company and

the company’s members as a body, for

our audit work, for this report, or for the

opinions we have formed.

As required by the Financial Conduct

Authority (FCA) Disclosure Guidance

and Transparency Rule (DTR) 4.1.15R –

DTR 4.1.18R, these financial statements

will form part of the Electronic Format

Annual Financial Report filed on

the National Storage Mechanism

of the FCA in accordance with DTR

4.1.15R – DTR 4.1.18R. This auditor’s

report provides no assurance over

whether the Electronic Format Annual

Financial Report has been prepared

in compliance with DTR 4.1.15R – DTR

4.1.18R.

Jane Makrakis FCA

(Senior Statutory Auditor)

for and on behalf of Deloitte LLP

Statutory Auditor

Reading, United Kingdom

03 June 2025

145 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Notes

2025

£m

2024

£m

Revenue 4 422.9 437.0

Operating costs 7 (380.5) (405.8)

Operating profit 7 42.4 31.2

Finance income 9 3.7 3.9

Finance costs 9 (14.1) (12.9)

Profit before tax 32.0 22.2

Tax expense 10 (7.4) (6.7)

Profit for the year 24.6 15.5

Earnings per share 14

Basic, profit for the year 25.6p 16.2p

Diluted, profit for the year 25.0p 15.8p

The above consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes.

SUPPLEMENTARY STATEMENT

OF PROFIT OR LOSS INFORMATION

FOR THE YEAR ENDED 31 MARCH 2025

Alternative performance measures Notes

2025

£m

2024

£m

Operating profit 7 42.4 31.2

Add back: Net acquisition and disposal expenses 6 1.9 9.8

Amortisation of acquired intangible assets 19 16.2 16.2

Adjusted operating profit 60.5 57.2

Profit before tax 32.0 22.2

Add back: Net acquisition and disposal expenses 6 1.9 9.8

Amortisation of acquired intangible assets 19 16.2 16.2

Adjusted profit before tax 50.1 48.2

Adjusted earnings per share - diluted 6 38.7p 36.8p

Adjusted earnings per share - basic 6 39.7p 37.8p

146 discoverIE Group plc Innovative Electronics

CONSOLIDATED STATEMENT

OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 MARCH 2025

Notes

2025

£m

2024

£m

Profit for the year 24.6 15.5

Other comprehensive loss:

Items that will not be subsequently reclassified to profit or loss:

Actuarial loss on defined benefit pension scheme 32 (4.7) (1.2)

Tax credit relating to defined benefit pension scheme 10 1.2 0.3

(3.5) (0.9)

Items that may be subsequently reclassified to profit or loss:

Exchange differences on translation of foreign subsidiaries (3.7) (7.7)

(3.7) (7.7)

Other comprehensive loss for the year, net of tax (7.2) (8.6)

Total comprehensive income for the year, net of tax 17.4 6.9

The above consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

147 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2025

Notes

2025

£m

2024

£m

Non-current assets

Property, plant and equipment 15 23.0 20.5

Intangible assets – goodwill 17 244.2 231.7

Intangible assets – other 19 92.2 97.8

Right of use assets 16 27.4 20.6

Pension asset 32 – 0.3

Other receivables 21 – 0.2

Deferred tax assets 10 10.1 9.9

396.9 381.0

Current assets

Inventories 20 82.9 80.1

Trade and other receivables 21 74.4 88.8

Current tax assets 1.5 1.3

Cash and cash equivalents 22 139.3 110.8

Assets held for sale 12 – 6.7

298.1 287.7

Total assets 695.0 668.7

Current liabilities

Trade and other payables 29 (81.1) (87.5)

Loans and borrowings 23 (95.0) (78.7)

Lease liabilities 16 (6.2) (5.7)

Current tax liabilities (8.2) (8.3)

Provisions 26 (5.0) (5.2)

(195.5) (185.4)

Non-current liabilities

Other payables 29 (6.2) (4.6)

Loans and borrowings 23 (138.6) (136.1)

Lease liabilities 16 (21.2) (14.4)

Pension liability 32 (0.5) –

Provisions 26 (4.0) (3.6)

Deferred tax liabilities 10 (21.0) (23.0)

(191.5) (181.7)

Total liabilities (387.0) (367.1)

Net assets 308.0 301.6

Equity

Share capital 30 4.8 4.8

Share premium 192.0 192.0

Merger reserve 2.9 2.9

Currency translation reserve (5.8) (2.1)

Retained earnings 114.1 104.0

Total equity 308.0 301.6

The above consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

The Financial Statements on pages 146 to 205 were approved by the Board of Directors on 3 June 2025 and signed on its

behalf by:

Nick Jefferies Simon Gibbins

Group Chief Executive Group Finance Director

148 discoverIE Group plc Innovative Electronics

CONSOLIDATED STATEMENT

OF FINANCIAL POSITION

AS AT 31 MARCH 2025

Attributable to equity holders of the Company

capital

£m

premium

£m

Merger

reserve

£m

Currency

translation

reserve

£m

Retained

earnings

£m

Total

equity

£m

At 1 April 2023 4.8 192.0 2.9 5.6 98.3 303.6

Profit for the year – – – – 15.5 15.5

Other comprehensive loss – – – (7.7) (0.9) (8.6)

Total comprehensive (loss)/income – – – (7.7) 14.6 6.9

Share-based payments including tax – – – – 2.3 2.3

Dividends (note 13) – – – – (11.2) (11.2)

At 31 March 2024 4.8 192.0 2.9 (2.1) 104.0 301.6

Profit for the year – – – – 24.6 24.6

Other comprehensive loss – – – (3.7) (3.5) (7.2)

Total comprehensive (loss)/income – – – (3.7) 21.1 17.4

Share-based payments including tax – – – – 0.7 0.7

Dividends (note 13) – – – – (11.7) (11.7)

At 31 March 2025 4.8 192.0 2.9 (5.8) 114.1 308.0

The above consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

149 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

CONSOLIDATED STATEMENT

OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2025

Notes

2025

£m

2024

£m

Net cash flow from operating activities 25 46.4 41.2

Investing activities

Acquisition of businesses, net of cash acquired (27.7) (82.8)

Contingent consideration related to business acquisitions (2.3) –

Proceeds from business disposals 13.3 –

Purchase of property, plant and equipment (5.4) (4.8)

Purchase of intangible assets – software (0.7) (0.1)

Interest received 3.5 3.9

Net cash used in investing activities (19.3) (83.8)

Financing activities

Proceeds from borrowings 24 37.5 79.4

Repayment of borrowings 24 (33.2) (28.9)

Payment of lease liabilities (6.5) (6.1)

Dividends paid 13 (11.7) (11.2)

Net cash (used in)/generated from financing activities (13.9) 33.2

Net increase in cash and cash equivalents

13.2 (9.4)

Net cash and cash equivalents at 1 April 31.5 43.4

Effect of exchange rate fluctuations (1.0) (2.5)

Net cash and cash equivalents at 31 March 43.7 31.5

Reconciliation to cash and cash equivalents in the consolidated

Statement of Financial Position

Net cash and cash equivalents shown above 43.7 31.5

Add back: bank overdrafts 23 95.6 79.3

Cash and cash equivalents presented in current assets in the consolidated

Statement of Financial Position 22 139.3 110.8

Further information on the consolidated Statement of Cash Flows is provided in notes 24 and 25.

The above consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

150 discoverIE Group plc Innovative Electronics

CONSOLIDATED STATEMENT

OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2025

1. Reporting entity and authorisation of Financial Statements

The consolidated Financial Statements, which comprise the results of discoverIE Group plc (“the Company”) and its

subsidiaries (collectively referred to as “the Group”), for the year ended 31 March 2025 were authorised for issue by the Board

of Directors on 3 June 2025. discoverIE Group plc is a public limited company incorporated and domiciled in England, UK

and the registered office is disclosed on page 212. The Company’s ordinary shares are traded on the London Stock Exchange.

The material accounting policies adopted by the Group are set out in note 2 and have been applied consistently to all years

presented in these consolidated Financial Statements.

2. Accounting policies

Statement of compliance

The Group’s consolidated Financial Statements have been prepared and approved by the Directors in accordance with

UK-adopted International Accounting Standards (“UK-adopted IAS”) in conformity with the requirements of the Companies

Act 2006 and the disclosure guidance and transparency rules sourcebook of the United Kingdom’s Financial Conduct

Authority.

The separate Financial Statements of the Company have been prepared and approved by the Directors in accordance

with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS 101”). On publishing the Company’s Financial

Statements here together with the Group’s Financial Statements, the Company is taking advantage of the exemption in

section 408 of the Companies Act 2006 not to present its individual Statement of Profit or Loss and related notes that form a

part of these approved Financial Statements.

The following exemptions from the requirements of the UK-adopted IAS have been applied in the preparation of the

Company’s Financial Statements, in accordance with FRS 101:

■ Cash Flow Statement and respective disclosures and information;

■ Disclosures in relation to capital management;

■ Disclosures in relation to financial instruments;

■ Disclosures in respect of the compensation of key management personnel; and

■ Disclosures in respect of transactions between two or more members of the Group.

For the following disclosures, as the Group’s consolidated Financial Statements include the equivalent disclosures, the

Company has taken the exemptions available under FRS 101:

■ IFRS 2 ‘Share-based payments’ in respect of Group equity-settled share-based payments;

■ Certain disclosures required by IFRS 13 ‘Fair Value Measurement’.

Basis of preparation

The Group’s consolidated Financial Statements and the Company’s Financial Statements are prepared under the historical

cost convention, unless otherwise stated.

The Group’s and Company’s Financial Statements are presented in Pounds Sterling and all values are rounded to the

nearest hundred thousand except as otherwise indicated.

The Group has engaged in an ongoing review of expected climate change impacts on the business and its assets and

liabilities to establish any adjustments required and any reporting necessary in its consolidated Financial Statements for the

year ended 31 March 2025. The ongoing risk assessment is detailed within the climate-related risks and opportunities section

on page 74 of the Risk Management section and in the TCFD Report on pages 53 to 67 in the Strategic Report.

The process has involved a review of all balance sheet line items and future cash flows, to identify if any of these items is

expected to be materially impacted in a negative or positive way by weather, legislative, societal or revenue/cost changes.

The conclusion of the review was that, whilst there will undoubtedly be impacts on the Group, the highly disaggregated

nature of the operations of the Group and the target markets the Group operates in, significantly reduces the risk profile

of the Group to impacts from weather-related changes. The changes necessary to achieve the Group’s net-zero by 2040

commitment is not expected to have a materially adverse impact on the cash flows of the Group and indeed, warmer

climates may present enhanced opportunities in our target markets as disclosed on pages 16 to 19 and 56 to 61 of this report.

Societal and legislative impacts are not considered to have a material impact on any one segment such that we need to

report in a different way to previous years. Judgements are not considered to be significant, although clearly understanding

of climate change is developing with time. The area with the most judgement is goodwill impairment testing and a

description is given in note 18 of the incremental processes undertaken to assess the climate change impact on the

valuations. Management review has concluded that there is no material impact and that no further disclosure is required.

151 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2025

Going concern

In line with IAS 1 ‘Presentation of Financial Statements’ and revised guidance on risk management, internal control and

related financial and business reporting, management has taken into account all available information about the future for

a period of at least, but not limited to, 12 months from the date of approval of the Financial Statements when assessing the

Group’s and Company’s ability to continue as a going concern.

The Group’s business activities, together with factors which may adversely impact its future development, performance and

position, are set out in the Strategic Report on pages 20 to 27. The financial position of the Group, its cash flows, liquidity

position and borrowing facilities are described in the Finance Review section of the Strategic Report on pages 28 to 33.

The Group’s forecasts and projections, taking account of the sensitivity analysis of changes in trading performance, show

that the Group is well placed to operate within its current debt facilities of £240m committed up to the end of August 2027.

The Viability Base Case, as stated on pages 79 to 80 has been subjected to sensitivity analysis involving flexing a number of

the underlying key assumptions, both individually and in conjunction. The sensitivities take into account the principal risks

and uncertainties set out on pages 73 to 78, 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 impact of US tariffs and counter tariffs 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, the impact of US tariffs and counter tariffs and significant reduction in consumer

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 2025/26, with FY 2026/27 sales flat on the reduced FY 2025/26 level, and modest growth

in FY 2027/28. Additionally, gross margin was reduced, working capital materially increased, significant one-off expenditures

included (product liability, major customer insolvency or litigation, climate change, cyber-security incident, inventory

obsolescence), interest rates increased and the Group effective tax rate increased.

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. As a

consequence, the Directors believe that the Group is well placed to manage its principal risks and uncertainties as disclosed

on pages 73 to 78 of the Strategic Report.

Reverse stress 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 6.7% in FY 2025/26 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 Company acts as a holding company for investments in the subsidiaries and does not engage in any trading activities

directly and thus is dependent on the trading activities of its subsidiaries. The Company holds sufficient net current assets as

at 31 March 2025 to continue as a going concern.

The Directors are confident that the Company and the Group have sufficient resources to continue in operational existence

for at least 12 months from the date of approval of the Financial Statements. Accordingly, they continue to adopt the going

concern basis in preparing the Annual Report and Financial Statements.

Basis of consolidation

The Group’s consolidated Financial Statements consolidate the results of discoverIE Group plc and entities controlled by the

Company (its subsidiaries).

The consolidated Financial Statements comprise the Financial Statements of the Group and its subsidiaries for the year

ended 31 March 2025. Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or

has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its

control over it. In assessing control, the Group takes into account: (i) the power over the investee (i.e. existing rights that give

it the current ability to direct its relevant activities); (ii) exposure, or rights, to variable returns from its involvement with the

investee; and (iii) the ability to use its power over the investee to affect its returns.

2. Accounting policies continued

152 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

The Group reassesses whether or not it controls a subsidiary if facts and circumstances indicate that there are changes

to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control

and ceases when the Group loses control of the subsidiary. Assets, liabilities, profits and losses of a subsidiary acquired or

disposed of during the year are included in the consolidated Financial Statements from the date control commences until

the date control ceases.

When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies in line

with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to

transactions between members of the Group are eliminated in full on consolidation.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the

aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling

interest in the acquiree.

When the Group acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate

classification and designation in accordance with the contractual terms, economic circumstances and relevant conditions at

the acquisition date.

Any contingent consideration payable to the vendor is measured and recognised at fair value through profit and loss

(“FVTPL”) at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in

accordance with IFRS 9 ‘Financial Instruments: Classification and measurement’ in the consolidated Statement of Profit

or Loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the acquisition-date fair value of the consideration

transferred and the amount recognised for the non-controlling interest over the net identifiable amounts of the fair value

of assets acquired and the liabilities assumed in exchange for the business combination. Assets acquired and liabilities

assumed in transactions separate to the business combinations, such as the settlement of pre-existing relationships or

post-acquisition remuneration arrangements, are accounted for separately from the business combination in accordance

with their nature and applicable standard. Identifiable intangible assets, meeting either the contractual-legal or separability

criterion are recognised separately from goodwill. Contingent liabilities representing a present obligation are recognised if

the acquisition-date fair value can be measured reliably.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of

impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the

Group’s four sub-divisions. Within each of these sub-divisions are aggregated business units (cash-generating units

(“CGUs”) with similar characteristics) that are expected to benefit from the business combination. Each sub-division to

which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal

management purposes and shall not be larger than any of the Group’s operating segment.

Where goodwill forms part of a CGU, and part of the operation within that unit is disposed of, the goodwill associated with

the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal of

the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed

of and the portion of the CGU retained.

Non-current assets held for sale

An asset or liability is classified as held for sale if it is available for immediate sale in its present condition subject only to terms

that are usual and customary for sales of such assets and that it is highly probable the asset will be sold within one year from

the date of classification. Non-current assets classified as held for sale and the assets of a disposal group classified as held

for sale are presented separately from the other assets in the consolidated Statement of Financial Position. The liabilities of

a disposal group classified as held for sale are presented separately from other liabilities in the consolidated Statement of

Financial Position. Additional disclosures are provided in note 12.

Investments (Company only)

Investments in subsidiary and associated undertakings are stated initially at cost, being the fair value of the consideration

given and including directly attributable transaction costs. The carrying values are reviewed for impairment if events or

changes in circumstances indicate the carrying values may not be recoverable.

2. Accounting policies continued

153 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Intangible assets – other

Other intangible assets that are separately acquired by the Group are stated at cost less accumulated amortisation and

impairment losses. Other intangible assets acquired through a business combination are recognised at fair value at the date

of acquisition less accumulated amortisation and impairment losses from the date of acquisition. Amortisation is charged to

the Statement of Profit or Loss within operating costs on a straight-line basis over the useful economic lives of the intangible

assets. The estimated useful economic lives are as follows:

(a) Software (implementation costs of IT systems) 3 to 10 years

(b) Acquired intangible assets:

– Customer relationships 5 to 12 years

– Patents Patent term

Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated

intangible asset arising from the Group’s development activities is capitalised only if all of the following conditions are met:

(a) an asset is created that can be identified; (b) it is probable that the asset created will generate future economic benefits;

and (c) the development cost of the asset can be measured reliably. Internally generated intangible assets are amortised on

a straight-line basis over their useful lives between five and ten years and charged to the Statement of Profit or Loss.

The Group only capitalises costs relating to the configuration and customisation of Software-as-a-service arrangements

(“SaaS”) as intangible assets where control of the asset exists. Costs that are paid to SaaS suppliers in advance of the service

provided are recognised in prepayments and amortised over the service period.

All other development expenditure is written off in the accounting period in which it is incurred.

Property, plant and equipment

Items of owned property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost consists of all those elements which are directly attributable to bringing the asset into working condition for its

intended use. Where there has been an indication of impairment in value such that the recoverable amount of an asset

falls below its net book value, provision is made for such impairment. Wherever possible, individual assets are tested for

impairment. However, impairment can often be tested only for groups of assets because the cash flows upon which the

calculation is based do not arise from the use of a single asset. In these cases, impairment is measured for the smallest

group of assets (“CGU”) that produces a largely independent income stream.

The cost of property, plant and equipment is charged to the Statement of Profit or Loss on a straight-line basis over the

assets’ estimated useful economic lives, taking into account their estimated residual value. The principal annual rates of

depreciation are:

Land and buildings Freehold property 2% to 4% per annum

Leasehold buildings Shorter of lease term and useful life

Land Not depreciated

Leasehold improvements 10% to 20% per annum or over the life of the lease if shorter

Plant and equipment 5% to 33% per annum

Impairment of non-financial assets

The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any

indication of impairment. If such an indication exists, the asset’s recoverable amount is estimated. An impairment loss

is recognised whenever the carrying amount of the asset or its cash generating unit exceeds its recoverable amount.

Impairment losses are recognised in the Statement of Profit or Loss.

The recoverable amount of assets is the greater of their net selling price and value-in-use. In assessing value-in-use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely

independent cash inflows, the recoverable amount is determined for the CGU to which the asset belongs. A CGU is the

smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other

assets or groups of assets.

2. Accounting policies continued

154 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

When estimating the future cash flows for the value-in-use calculation, the Group includes projections of cash outflows

including central costs that are necessarily incurred to generate the cash inflows and that can be directly attributed or

allocated on a reasonable and consistent basis to each CGU.

Impairment losses recognised in respect of CGUs are allocated first against the carrying value of any goodwill allocated to

that unit, and then against the carrying values of other assets in the unit, on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed when

there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to

determine the recoverable amount.

Financial instruments

Financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions

of the instrument.

Unconditional receivables and payables are recognised as assets or liabilities when the Group becomes a party to the

contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash. However, recognition of financial

assets to be acquired and financial liabilities to be incurred as a result of a firm commitment to purchase or sell goods or

services, such as trade receivables and trade payables, is usually delayed until at least one of the parties has performed under

the agreement and the ordered goods or services have been shipped, delivered or rendered.

A forward contract that is within the scope of IFRS 9, such as a forward foreign exchange contract, is recognised as an asset

or a liability on the commitment date at which point the fair value of the right and obligation are usually equal and the net

fair value of the forward contract on initial recognition is zero. If the net fair value of the right and obligation is not zero, the

contract is recognised as an asset or liability.

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or

it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risk and rewards

of ownership of the financial asset are transferred, or in which the Group neither transfers nor retains substantially all of the

risks and rewards of ownership and it does not retain control of the financial asset.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or have expired.

The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability

are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On

derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid is

recognised in the Statement of Profit or Loss.

Offsetting financial instruments

Financial assets and liabilities are only offset, and the net amount reported in the Statement of Financial Position, when

there is a legally enforceable right to offset and there is an intention to settle on a net basis or realise the asset and the

liability simultaneously.

Allowance for expected credit losses

The Group measures loss allowances for financial assets, including trade receivables, at an amount equal to lifetime

expected credit losses (“ECL”). This requires consideration of both historical and forward-looking information when

considering potential impairment of trade receivables. A provision matrix is used to calculate the expected credit loss, which

is based upon historical observed default rates adjusted for forward-looking information to create an adjusted default rate,

which is applied to the outstanding invoices at the balance sheet date.

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Credit-impaired financial assets

At each reporting date the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial

asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of

the financial asset have occurred, such as a significant change in the credit risk profile of a customer, a debt has become

significantly overdue or a contract default.

Write-off of financial assets

The gross carrying amount of a financial asset is written down to its recoverable amount when the Group has no reasonable

expectation of recovering a financial asset in its entirety or a portion thereof.

2. Accounting policies continued

155 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange risks arising from operational

activities. It principally employs forward foreign exchange contracts to hedge the risks associated with foreign currency

fluctuations relating to certain firm commitments and highly probable forecast transactions. The fair value of derivative

foreign exchange instruments is determined on initial recognition at forward market exchange rates at inception of the

contract and subsequently remeasured based on forward market exchange rates at the balance sheet date.

Inventories

Inventories comprise finished goods, goods held for resale, raw materials and work in progress and are stated at the lower of

cost and net realisable value after making allowance for any obsolete or slow-moving items. Cost comprises direct materials,

inward carriage and, where applicable, direct labour costs and those overheads that have been incurred in bringing the

inventories to their present location and condition.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term deposits with an original maturity of three months or

less. Bank overdrafts represent short-term borrowings repayable on demand and are shown within other financial liabilities

in the Statement of Financial Position.

The cash balances are separately presented gross in the consolidated Statement of Financial Position, rather than netted off

against overdrafts held either by the same entity, or other Group entities, with the same bank. Refer to note 22.

Borrowings

Borrowings are recognised initially at fair value less directly attributable transaction costs. Subsequent to initial recognition,

borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the

Statement of Profit or Loss over the period of the borrowings on an effective interest basis.

Provisions

A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and

it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect is material,

provisions are discounted to present value. The unwinding of the discount is recognised as a finance cost in the Statement

of Profit or Loss.

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the

restructuring has either commenced or has been publicly announced. Future operating costs are not provided for.

The Group also recognises provisions for dilapidation, warranty, retirement indemnity and severance.

Leasing

The Group assesses at contract inception whether a contract is, or contains, a lease, that is, if the contract conveys the right

to control the use of an identified asset for a period of time in exchange for consideration.

Separating components of a contract

Contracts usually combine different kinds of obligation of the supplier, which may be formed by lease components or lease

and non-lease components, such as maintenance or services. The Group identifies the lease and non-lease components

and accounts for those separately, applying the relevant standard to each one. Consideration is allocated to each lease

component on the basis of the relative standalone price of the lease component and the aggregate standalone price of the

non-lease component.

Lease term

The Group considers the lease term as the non-cancellable period of the lease plus periods covered by an option to extend or

an option to terminate if the lessee is reasonably certain to exercise the extension option or not exercise the termination option.

i) Right of use assets

The Group recognises right of use assets at the commencement date of the lease. Right of use assets are measured at cost,

less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost

of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, any lease payments

made at or before the commencement date, provision for decommissioning the asset at the end of the contract, less any

lease incentives received.

Right of use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives

of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the

exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

2. Accounting policies continued

156 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

ii) Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease

payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed

payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts

expected to be paid under residual value guarantees, where applicable.

The lease payments also include, when applicable, the exercise price of a purchase option which is reasonably certain to be

exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising

the option to terminate.

Variable lease payments that do not depend on an index or a rate are usually recognised as expenses in the period in which

the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease

commencement date if the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate is a

combination of country-specific government bond yields, used as a proxy for a risk-free rate, calculated over various periods

linked to existing lease terms. This rate is adjusted for borrowing costs and risks specific to each entity of the Group.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for

the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, such

as a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the

underlying asset.

Any adjustment of the lease liability is reflected as an adjustment to the right of use asset. If the carrying amount of the

right of use asset has already been reduced to zero, the remaining remeasurement is recognised in the Statement of Profit

or Loss.

The Group has adopted the practical expedient under IFRS 16 not to recognise right of use assets and lease liabilities for

short-term leases, with a lease term of 12 months or less, and leases in which the underlying asset is of low value. Lease

payments relating to these leases are expensed to the Statement of Profit or Loss on a straight-line basis over the lease term.

Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred, in accordance with the effective

interest rate method.

Pensions

Payments to defined contribution pension schemes are charged as an expense as they fall due.

In respect of defined benefit pension schemes, the position recognised in the consolidated Statement of Financial Position

represents the present value of the defined benefit obligation, reduced by the fair value of the scheme assets.

Obligations to provide future benefits to employees earned through prior service are estimated and discounted to present

value. Plan assets are measured at fair value. The cost of providing benefits under the defined benefit plans is determined by

actuarial valuation, using the projected unit credit method.

Any pension asset surplus would be fully recoverable by the Group in line with the rules of the scheme. Therefore, the IAS 19

surplus is recognised in full under current accounting standards.

Actuarial remeasurement of the net defined benefit asset or liability comprises (a) actuarial gains and losses, (b) the

return on plan assets in excess of the amount included in net interest on the net defined benefit asset or liability, and (c)

any change in the effect of the asset ceiling (where applicable), excluding any amount included in net interest on the net

defined benefit asset or liability; and is recognised immediately in the Statement of Financial Position with a corresponding

entry in retained earnings through Other Comprehensive Income in the period in which it occurs. Remeasurement gains or

losses are not reclassified to profit or loss in subsequent periods.

Share-based payments

Certain employees of the Group receive remuneration in the form of share-based payments, whereby employees render

services as a consideration for equity instruments (equity-settled transactions). The Group operates a “Long-Term Incentive

Plan“– (“LTIP”) and an “Approved and unapproved executive share option scheme” – (“CSOP”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date the grant is

made, calculated using an option pricing model, and is recognised as an expense over the three-year vesting period, which

ends on the date on which the relevant employees become fully entitled to the award. In valuing equity-settled transactions,

no account is taken of non-market vesting conditions.

2. Accounting policies continued

157 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

For the LTIP, at each reporting date before vesting, the cumulative expense is calculated, representing the extent to which

the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions

and hence the number of equity instruments that will ultimately vest, also taking into consideration the impact of forfeitures

and cancellations during the year. The movement in cumulative expense since the previous reporting date is recognised in

the Statement of Profit or Loss, with a corresponding entry in equity.

The CSOP awards are subject only to continuing service of the employee. At each reporting date, the cumulative expense,

calculated on a straight-line basis over the three-year vesting period, and taking into consideration forfeitures and

cancellations during the year, is recognised in the Statement of Profit or Loss, with a corresponding entry in equity.

The issuance by the Company to its subsidiaries’ employees of a grant of options over the Company’s shares represents

additional capital contributions by the Company in its subsidiaries. The additional capital contribution is based on the fair

value of the grant issued, allocated over the underlying grant’s vesting period.

Taxation

Income tax comprises current tax and deferred tax.

Current tax is the amount of income taxes payable/(recoverable) in respect of the taxable profit/(taxable loss) for a period

and any adjustments to tax payable in respect of previous years. Current tax assets and liabilities are measured at the

amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted

or substantively enacted by the reporting date. Management periodically evaluates positions taken in tax returns with

respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable

that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the

most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the

uncertainty.

Deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their

carrying amounts in the Financial Statements, with the following exceptions:

■ where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction

that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

■ in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the

timing of the reversal of the temporary differences can be controlled by the Group and it is probable that the temporary

differences will not reverse in the foreseeable future; and

■ deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which

the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply

when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the

reporting date.

Income tax is charged or credited directly to equity or Other Comprehensive Income if it relates to items that are credited

or charged to equity or Other Comprehensive Income respectively. Otherwise, income tax is recognised in the Statement of

Profit or Loss.

The Group has performed an assessment of its potential exposure to income taxes arising under Pillar Two legislation.

The Group’s annual revenue does not meet the relevant €750m threshold, therefore no Pillar Two disclosures have been

included.

Foreign currency translation

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange

ruling at the reporting date and gains or losses on translation are included in the Statement of Profit or Loss.

The Group recognises currency gains and losses arising from the retranslation of the opening net assets of foreign

operations as a movement on reserves, net of tax. The differences that arise from translating the results of overseas

businesses at average rates of exchange, and their assets and liabilities at closing rates, are dealt with in a separate currency

translation reserve. All other currency gains and losses are dealt with in the consolidated Statement of Profit or Loss.

2. Accounting policies continued

158 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Revenue recognition

The Group realises revenue from its principal activities through the sale of highly differentiated electronic products into five

target markets: renewable energy, transportation, medical, industrial & connectivity and security.

Revenue is recognised in a way that depicts the transfer of promised goods or services to customers in an amount that

reflects the consideration to which the Group expects to be entitled in exchange for those goods or services, excluding value

added tax and other sales related taxes. Transaction price is allocated to each performance obligation on the basis of the

relative standalone selling prices of each distinct good or service promised in the contract. If a standalone selling price is not

observable, the Group estimates it.

The transaction price may include a discount or a variable amount of consideration that relates to all or part of the contract.

The Group will review the requirements and specify when the variable amount should be allocated to one or more, but not

all, performance obligations in the contract.

Control of a good or service is obtained when the customer has the ability to direct the use of and obtain substantially all

the benefits from the good or service. The Group recognises revenue from product sales at a point in time on shipment, on

delivery or when goods are accepted by the customer, depending on the Incoterm used for the sale transaction.

Product support and maintenance services are recognised over the period of the service delivery as the customer receives

the benefit of the service over time; progress is measured by reference to service periods.

When another party is involved in providing goods or services to the customer, the Group determines whether the nature

of its promise is a performance obligation to provide the specified goods or services itself (principal) or to arrange for those

goods or services to be provided by the other party (agent) and recognises revenue accordingly.

Contract balances

Receivables

Receivables are billed under the terms of the contract for delivered goods and services that are not conditional on anything

other than the passage of time. They are recognised initially at the amount of consideration that is unconditional and are

subsequently measured at amortised cost using the effective interest method, less loss allowance. These assets are classified

as trade receivables.

Certain businesses participate in receivables working capital programmes and have the ability to choose whether to receive

payment earlier than the normal due date, for specific customers on a non-recourse basis. As at 31 March 2025, eligible

receivables under these programmes have been factored and derecognised in line with the derecognition criteria of IFRS 9

‘Financial Instruments’.

Contract liabilities

Contract liabilities represent the Group’s unsatisfied obligation(s) for the transfer of goods or services to the customer

for which consideration has been received from the customer; and/or advance payments received from a customer in

consideration of future performance obligations.

Segment reporting

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision

maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the

operating segments, has been identified as the Board.

Dividends paid

Dividends are recognised when they meet the criteria for recognition as a liability. In relation to final dividends, this is

when the dividend is approved by the Shareholders in the Annual General Meeting, and in relation to interim dividends,

when paid.

Dividend income

Dividend income is recognised in the Statement of Profit or Loss on the date on which the Group’s right to receive payment

is established.

2. Accounting policies continued

159 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Reserves

Share premium: Proceeds received in excess of the nominal value of shares issued, net of any transaction costs.

Merger reserve: Relates to historic equity transactions.

Currency translation reserve: Gains and losses arising on re-translating net assets of overseas operations into sterling.

Retained earnings: All other net gains and losses and transactions with owners not recognised elsewhere.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and

assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The

estimates and associated assumptions are based on historical experience and other applicable factors, the results of which

form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from

other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from

these estimates and any revisions to estimates are recognised prospectively.

Information about judgements, assumptions and estimation uncertainties as at 31 March 2025 that could result in a material

adjustment to the carrying amount of assets and liabilities in the next financial year is addressed as follows:

Key sources of estimation uncertainties

■ Fair value of contingent consideration in a business combination (Group only): Estimates are made in the

assessment of the fair value of the contingent consideration for its initial recognition and its subsequent measurement.

Estimates used include discount rate and trading forecasts. Note 28 provides details on sensitivity of contingent

consideration.

3. New accounting standards and financial reporting requirements

New standards applied

The Group has applied the following standards and amendments for the first time for its annual reporting period

commencing 1 April 2024:

■ IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants and classification of liabilities as

current or non-current – Amendment

■ IFRS 16 Leases: Lease liability in a Sale and Leaseback – Amendment

■ IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosures: Supplier Finance Arrangements –

Amendment

These and other amendments, changes and improvements to IFRS issued by the International Accounting Standard Board

(“IASB”) have had no material impact on the Group and Company’s current financial results or financial position.

New standards not yet applied

Certain new accounting standards, amendments to accounting standards and interpretations have been published that are

not mandatory for the 31 March 2025 reporting period and have not been early adopted by the Group. The impact of IFRS 18

‘Presentation and Disclosure in Financial Statements’ is currently being assessed and it is not yet practicable to quantify the

effect. IFRS 18 will be applicable for the Group for the year ending 31 March 2028.

2. Accounting policies continued

160 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

4. Revenue

Group revenue is analysed below:

2025

£m

2024

£m

Sale of goods 417.7 431.4

Rendering of services 5.2 5.6

Total revenue 422.9 437.0

5. Operating segment information

The Reportable Operating Segments of the Group include two distinct divisions, Magnetics & Controls (“M&C”) and Sensing

& Connectivity (“S&C”). Within each of these reportable operating segments are aggregated business units with similar

characteristics such as the nature of customers, products, risk profile and economic characteristics.

Management monitors the operating results of its business units separately for the purpose of making decisions about

resource allocation and performance assessment. Segment performance is reported and evaluated based on operating

profit or loss earned by each segment. Unallocated costs relate to central head office administration costs that are not

directly attributable to the Operating Segments.

Segment revenue and results

2025

Magnetics

& Controls

£m

Sensing &

Connectivity

£m

Unallocated

Costs

£m

Total

£m

Revenue 247.4 175.5 – 422.9

Result

Adjusted operating profit/(loss) 36.3 36.0 (11.8) 60.5

Net acquisition and disposal expenses 0.5 (2.4) – (1.9)

Amortisation of acquired intangible assets (6.3) (9.9) – (16.2)

Operating profit/(loss) 30.5 23.7 (11.8) 42.4

2024

Magnetics

& Controls

£m

Sensing &

Connectivity

£m

Unallocated

Costs

£m

Total

£m

Revenue 265.1 171.9 – 437.0

Result

Adjusted operating profit/(loss) 40.6 28.9 (12.3) 57.2

Net acquisition and disposal expenses (2.2) (7.6) – (9.8)

Amortisation of acquired intangible assets (6.6) (9.6) – (16.2)

Operating profit/(loss) 31.8 11.7 (12.3) 31.2

161 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Segment assets and liabilities

For the purposes of monitoring segment performance and allocating resources between segments, the Directors monitor

the net assets attributable to each segment. Assets and liabilities are allocated to reportable segments, with the exception

of the pension liability/asset, tax assets and liabilities, cash, borrowings and overdrafts, central assets (Head Office assets) and

central liabilities (Head Office liabilities), as shown below:

2025

Assets and liabilities

Magnetics

& Controls

£m

Sensing &

Connectivity

£m

Unallocated

£m

Total

£m

Segment assets (excluding goodwill and other intangible assets) 119.1 85.0 204.1

Goodwill and other intangible assets 138.6 197.8 336.4

257.7 282.8 540.5

Central assets 3.6 3.6

Cash and cash equivalents 139.3 139.3

Current and deferred tax assets 11.6 11.6

Total assets 257.7 282.8 154.5 695.0

Segment liabilities (64.4) (45.4) (109.8)

Central liabilities (13.9) (13.9)

Pension liability (0.5) (0.5)

Loans and borrowings (233.6) (233.6)

Current and deferred tax liabilities (29.2) (29.2)

Total liabilities (64.4) (45.4) (277.2) (387.0)

Net assets/(liabilities) 193.3 237.4 (122.7) 308.0

2024

Assets and liabilities

Magnetics

& Controls

£m

Sensing &

Connectivity

£m

Unallocated

£m

Total

£m

Segment assets (excluding goodwill and other intangible assets) 124.7 74.4 199.1

Goodwill and other intangible assets 146.7 182.8 329.5

271.4 257.2 528.6

Central assets 11.1 11.1

Cash and cash equivalents 110.8 110.8

Pension asset 0.3 0.3

Current and deferred tax assets 11.2 11.2

Assets classified as held for sale 6.7 6.7

Total assets 271.4 263.9 133.4 668.7

Segment liabilities (65.2) (45.2) (110.4)

Central liabilities (10.6) (10.6)

Loans and borrowings (214.8) (214.8)

Current and deferred tax liabilities (31.3) (31.3)

Total liabilities (65.2) (45.2) (256.7) (367.1)

Net assets/(liabilities) 206.2 218.7 (123.3) 301.6

5. Operating segment information continued

162 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Other segment information

Depreciation and

amortisation

Additions to non-current

assets

2025

£m

2024

£m

2025

£m

2024

£m

Magnetics & Controls 13.2 12.8 12.0 42.2

Sensing & Connectivity 14.8 14.7 37.4 54.0

Central 0.4 0.3 0.1 0.1

28.4 27.8 49.5 96.3

1 Includes depreciation and amortisation of right of use assets, property, plant and equipment and intangibles.

2 Magnetics & Controls additions to non-current assets comprised intangible assets £0.5m (2024: £15.8m), goodwill £nil (2024: 20.0m), right of use assets

£7.7m (2024: 3.2m) and tangible assets £3.8m (2024: £3.2m). Sensing & Connectivity additions to non-current assets comprised intangible assets £11.9m

(2024: £17.1m), goodwill £15.5m (2024: £29.3m), right of use assets £6.8m (2024: £5.3m) and tangible assets £3.2m (2024: £2.3m). Central additions to non-

current assets comprised right of use assets of £0.1m (2024: £0.1m).

Geographical information

The Group’s revenue from external customers based on customer locations and information about its segment assets

(excluding pension asset) by geographical location are detailed below:

Revenue from external

customers

Non-current

assets

2025

£m

2024

£m

2025

£m

2024

£m

UK 52.8 52.5 137.0 140.1

Europe 199.4 206.1 135.5 115.9

North America, Asia and Rest of world 170.7 178.4 124.4 124.7

422.9 437.0 396.9 380.7

In the year ended 31 March 2025, the Group had no customer that represented 10% or more of total Group revenue

(2024: no customer).

6. Adjusted performance measures

These Financial Statements include adjusted performance measures that are not prepared in accordance with IFRS. These

alternative performance measures have been selected by management to assist them in making operating decisions as

they represent the underlying operating performance of the Group and facilitate internal comparisons of performance

over time.

Adjusted performance measures are presented in these Financial Statements as management believe they provide

investors with a means of evaluating performance of the Group on a consistent basis, similar to the way in which

management evaluates performance, that is not otherwise apparent on an IFRS basis, given that certain strategic non-

recurring and acquisition-related items that management does not believe are indicative of the underlying operating

performance of the Group are included when preparing financial measures under IFRS. The trading results of acquired

businesses are included in adjusted performance.

The Directors consider there to be the following key adjusted performance measures:

Adjusted operating profit

“Adjusted operating profit” is defined as operating profit excluding acquisition and disposal related costs (namely

amortisation of acquired intangible assets and acquisition and disposal expenses).

Acquisition and disposal expenses comprise transaction costs relating to acquisitions and disposals, contingent

consideration relating to the retention of former owners of acquired businesses, adjustments to previously estimated

contingent consideration, costs related to integration of acquired businesses into the Group and restructuring costs and

expenses incurred in relation to the disposal of the Santon solar business unit, including its losses incurred following the

announcement of its closure.

5. Operating segment information continued

163 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Adjusted EBITDA

“Adjusted EBITDA” is defined as adjusted operating profit with depreciation, amortisation, equity-settled share-based

payment expense and IAS 19 pension cost added back.

Adjusted operating margin

“Adjusted operating margin” is defined as adjusted operating profit divided by revenue.

Adjusted profit before tax

“Adjusted profit before tax” is defined as profit before tax excluding acquisition and disposal related costs (namely

amortisation of acquired intangible assets and acquisition and disposal expenses).

Adjusted tax charge / Adjusted effective tax rate (“ETR”)

“Adjusted tax charge” is defined as the tax charge adjusted for the tax effect of the acquisition and disposal related costs

(namely amortisation of acquired intangible assets and acquisition and disposal expenses).

“Adjusted ETR” is defined as adjusted tax charge divided by adjusted profit before tax.

Adjusted profit after tax

“Adjusted profit after tax” is defined as adjusted profit before tax less adjusted tax charge.

Adjusted earnings per share

“Adjusted earnings per share - diluted” is calculated as adjusted profit before tax reduced by the adjusted tax charge, divided

by the weighted average number of ordinary shares (for diluted earnings per share purposes) in issue during the year.

“Adjusted earnings per share - basic” is calculated as adjusted profit before tax reduced by the adjusted tax charge, divided

by the weighted average number of ordinary shares (for basic earnings per share purposes) in issue during the year.

Adjusted operating cash flow / Adjusted operating cash conversion

“Adjusted operating cash flow” is defined as adjusted EBITDA, plus/minus the investment in, or release of, working capital

and less the cash cost of capital expenditure and lease payments.

“Adjusted operating cash conversion” is defined as adjusted operating cash flow divided by adjusted operating profit.

Free cash flow / Free cash flow conversion

“Free cash flow” is defined as net cash flow before dividend payments, the cost of acquisitions and proceeds from business

disposals.

“Free cash flow conversion” is free cash flow divided by adjusted profit after tax.

Return on capital employed (“ROCE”) / Return on tangible capital employed (“ROTCE”)

“ROCE” is defined as adjusted operating profit, including the annualisation of profits of acquired businesses, as a percentage

of net assets excluding net debt, deferred consideration related to discontinued operations, assets held for sale and legacy

defined benefit pension asset/(liability).

“ROTCE” is defined as ROCE excluding the value of acquired goodwill and intangibles, lease liabilities, provisions and tax

balances.

Organic and CER revenue growth

“CER revenue growth” is defined as growth rates at constant exchange rates.

“Organic revenue growth” is defined as CER revenue growth adjusted for the effect of acquisitions in the last 12 months and

excluding last year’s announced disposal of the Santon solar business unit.

Gearing ratio

Gearing ratio is defined as net debt divided by adjusted EBITDA, including the annualisation of acquired businesses,

excluding lease payments.

The tables below show the reconciliation to the IFRS reporting measures, for the main adjusted performance measures used

by the Group.

6. Adjusted performance measures continued

164 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Adjusted operating profit / Adjusted EBITDA

Adjusted operating profit and EBITDA are calculated as follows:

2025

£m

2024

£m

Operating profit 42.4 31.2

Add back Net acquisition and disposal expenses (a) 1.9 9.8

Amortisation of acquired intangibles 16.2 16.2

Adjusted operating profit 60.5 57.2

Add back Depreciation and amortisation 12.4 12.5

Share-based payment and IAS 19 pension cost 2.7 3.4

Adjusted EBITDA 75.6 73.1

a. Net acquisition and disposal expenses comprise £1.4m of transaction costs in relation to the acquisition of Burster, Hivolt

and ongoing transactions and £3.1m of integration and restructuring expenses related to the establishment of our

operating clusters mainly associated with removing duplicate positions in our Magnetics and Sensing clusters, offset by

£0.5m credit relating to the movement in fair value of contingent consideration and assets acquired on past acquisitions

and £2.1m gain on disposal of the Santon solar business as announced in the prior year.

During the prior year, net acquisition and disposal expenses of £9.8m comprised £3.1m of transaction costs in relation to

the acquisition of Silvertel, 2J, Shape, DTI, IKN and ongoing transactions, £0.8m charge relating to the movement in fair

value of contingent consideration and assets acquired on past acquisitions and £5.9m of costs in relation to the disposal

of the Santon solar business unit.

Adjusted profit before tax

Adjusted profit before tax is calculated as follows:

2025

£m

2024

£m

Profit before tax 32.0 22.2

Add back Net acquisition and disposal expenses 1.9 9.8

Amortisation of acquired intangible assets 16.2 16.2

Adjusted profit before tax 50.1 48.2

Adjusted effective tax rate

Adjusted effective tax rate (“ETR”) is calculated as follows:

2025

£m

2024

£m

Adjusted profit before tax 50.1 48.2

Total tax charge 7.4 6.7

Add back tax effect of net acquisition and disposal expenses and amortisation of

acquired intangible assets 4.6 5.3

Adjusted tax charge 12.0 12.0

Adjusted effective tax rate 24.0% 24.9%

6. Adjusted performance measures continued

165 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Adjusted profit after tax / Adjusted earnings per share

Adjusted profit after tax and earnings per share are calculated as follows:

2025

£m

2024

£m

Profit for the year 24.6 15.5

Add back Net acquisition and disposal expenses 1.9 9.8

Amortisation of acquired intangible assets 16.2 16.2

Tax charge relating to the above adjustments (4.6) (5.3)

Adjusted profit after tax 38.1 36.2

2025

Number

2024

Number

Weighted average number of shares for basic earnings per share 96,028,934 95,835,775

Effect of dilution – share options 2,398,601 2,450,593

Adjusted weighted average number of shares for diluted earnings per share 98,427,535 98,286,368

Adjusted earnings per share - diluted 38.7p 36.8p

Adjusted earnings per share - basic 39.7p 37.8p

Adjusted operating cash flow / Free cash flow

2025

£m

2024

£m

Adjusted EBITDA 75.6 73.1

Lease payments (7.5) (6.8)

EBITDA (incl. lease payments) 68.1 66.3

Changes in working capital 0.3 (2.2)

Capital expenditure (6.1) (4.9)

Adjusted operating cash flow 62.3 59.2

Net interest paid (9.0) (7.7)

Tax payments (10.6) (12.5)

Legacy pension scheme funding (2.3) (2.0)

Free cash flow 40.4 37.0

6. Adjusted performance measures continued

166 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

ROCE / ROTCE

ROCE and ROTCE are calculated as follows:

2025

£m

2024

£m

Net assets 308.0 301.6

Less Deferred consideration in relation to disposed businesses (0.3) (6.3)

Net debt 94.3 104.0

IAS 19 pension liability/(asset) 0.5 (0.3)

Assets held for sale – (6.7)

Capital employed 402.5 392.3

Less Goodwill (244.2) (231.7)

Acquired intangible assets (90.4) (96.2)

Deferred tax assets and liabilities 10.9 13.1

Current tax assets and liabilities 6.7 7.0

Lease liabilities 27.4 20.1

Provisions 9.0 8.8

Trading capital employed 121.9 113.4

Adjusted operating profit 60.5 57.2

Add Annualisation of acquired businesses 3.0 4.2

Annualised operating profit 63.5 61.4

ROCE 15.8% 15.7%

ROTCE 51.7% 54.1%

Organic and CER revenue growth

Organic and CER revenue growth are calculated as follows:

2025

£m

2024

£m

Revenue 422.9 437.0

FX translation impact – (7.4)

Adjusted (CER) revenue 422.9 429.6

Acquisitions and disposals (34.6) (13.7)

Organic revenue 388.3 415.9

Organic growth for the Group compared with last year is calculated at constant exchange rates (“CER”) and is shown

excluding the first 12 months of acquisitions post completion (Silvertel in August 2023, 2J Antennas Group (“2J”) in

September 2023, Shape, DTI and IKN in Q4 2023/24, Hivolt in August 2024 and Burster in January 2025) and the results of last

year’s announced disposal of the Santon solar business unit.

6. Adjusted performance measures continued

167 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Gearing ratio

Gearing ratio is calculated as follows:

2025

£m

2024

£m

Net debt 94.3 104.0

Adjusted EBITDA 75.6 73.1

Lease payments (7.5) (6.8)

Annualisation of acquired businesses 3.0 4.2

Covenant EBITDA 71.1 70.5

Gearing ratio 1.3 1.5

7. Operating profit

2025

£m

2024

£m

Revenue 422.9 437.0

Direct materials/direct labour (236.8) (255.0)

Other cost of goods sold (4.6) (5.0)

Selling and distribution costs (40.9) (41.0)

Administrative expenses (98.2) (104.8)

Operating profit 42.4 31.2

Operating costs are as follows:

2025

£m

2024

£m

Employee costs (note 8) 118.8 114.7

Depreciation of property, plant and equipment (note 15) 4.5 4.7

Depreciation of right of use assets (note 16) 7.3 6.6

Amortisation of other intangible assets (note 19) 16.6 16.5

(Gain)/costs related to disposal group (note 6) (2.1) 5.9

Expected credit losses (note 21) 0.2 0.4

Net foreign exchange differences (0.4) 0.8

Inventories:

Cost of inventories 196.0 218.6

Write-down of inventories to net realisable value 0.5 0.4

Other expenses 39.1 37.2

Operating costs 380.5 405.8

2025

£m

2024

£m

Operating costs 380.5 405.8

Less Net acquisition and disposal expenses (1.9) (9.8)

Amortisation of acquired intangibles (16.2) (16.2)

Adjusted operating costs 362.4 379.8

6. Adjusted performance measures continued

168 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

8. Employee costs and Directors’ emoluments

2025

£m

2024

£m

Wages and salaries 99.6 97.2

Social security costs 13.1 11.2

Other pension costs 4.1 3.7

Share-based payments (note 31) 2.0 2.6

118.8 114.7

The average monthly number of employees (including Executive Directors) during the year was as follows:

2025 2024

Sales and marketing 389 349

Manufacturing and services 3,559 3,630

Administration 447 462

4,395 4,441

At 31 March 2025 the Group had 4,497 employees (2024: 4,543).

Directors’ emoluments

2025

2024

Aggregate emoluments in respect of qualifying services 1,580,707 1,675,544

Aggregate employer contribution to a defined contribution pension scheme and pay in lieu of

pension for two directors 70,165 70,164

1,650,872 1,745,708

Highest paid Director

Emoluments in respect of qualifying services 985,059 1,042,670

Employer contribution to a defined contribution pension scheme and pay in lieu of pension 42,407 42,406

1,027,466 1,085,076

Aggregate emoluments for the Non-Executive Directors were £415,325 (2024: £428,450). Further details of all Directors’

emoluments are provided in the Remuneration Report on pages 110 to 133.

9. Finance income/(costs)

2025

£m

2024

£m

Interest receivable and similar income 3.7 3.9

Finance income 3.7 3.9

Finance costs on bank loans and overdrafts (12.5) (11.6)

Finance costs on lease liabilities (1.0) (0.7)

Amortisation of borrowing costs (0.6) (0.6)

Finance costs (14.1) (12.9)

169 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

10. Tax expense

The major components of the corporation tax expense are summarised below:

2025

£m

2024

£m

Current taxation:

UK adjustments in respect of prior years (0.5) (0.3)

(0.5) (0.3)

Overseas tax 11.3 10.8

Overseas adjustments in respect of prior years (0.6) (1.3)

10.7 9.5

Total current taxation expense 10.2 9.2

Deferred taxation

Origination and reversal of temporary differences within the UK (0.4) (0.8)

Origination and reversal of temporary differences overseas (1.9) (1.9)

Adjustment in respect of prior years (0.2) 0.3

Increased recognition of historical losses (0.5) (0.1)

Impact of tax rate changes 0.2 –

Total deferred taxation credit (2.8) (2.5)

Tax expense reported in the consolidated Statement of Profit or Loss 7.4 6.7

Tax recognised in other comprehensive expense

2025

£m

2024

£m

Decrease in deferred tax liability on pension 1.2 0.3

Tax reported in other comprehensive expense 1.2 0.3

Tax recognised in equity

2025

£m

2024

£m

Decrease in deferred tax asset on share-based payments (1.3) (0.3)

Tax reported in equity (1.3) (0.3)

The effective rate of taxation for the year is lower (2024: higher) than the standard rate of taxation in the UK of 25% (2024:

25%). A reconciliation of the tax expense applicable to the profit before tax, at the statutory tax rate, to the actual tax expense

at the Group’s effective tax rate for the years ended 31 March 2025 and 31 March 2024 respectively is presented below:

2025

£m

2024

£m

Profit before tax 32.0 22.2

Profit before taxation multiplied by standard rate of corporation tax in the UK of 25% (2024: 25%) 8.0 5.6

Effect of:

Differences in overseas tax rates (0.2) 0.3

Tax losses not recognised (0.1) 0.5

Non-deductible expenses 1.3 1.7

Increased recognition of historical losses (0.5) (0.1)

Impact of tax rate changes on deferred tax 0.2 –

Adjustments to deferred taxation expense in respect of prior years (0.2) 0.3

Adjustments to current taxation expense in respect of prior years (1.1) (1.6)

Total tax reported in the consolidated Statement of Profit or Loss 7.4 6.7

170 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Deferred tax

Deferred tax liabilities

2025

£m

2024

£m

Accelerated capital allowances (0.7) (0.5)

Intangibles (17.5) (20.2)

Pensions – (0.1)

Other temporary differences (2.8) (2.2)

Gross deferred tax liabilities (21.0) (23.0)

Deferred tax assets

Decelerated capital allowances 0.2 –

Pensions 0.6 0.5

Tax losses 0.9 1.8

Share-based payment plans 3.0 4.2

Other temporary differences 5.4 3.4

Gross deferred tax assets 10.1 9.9

£5.0m of deferred tax assets (2024: £5.1m) and £4.9m of deferred tax liabilities (2024: £4.8m) are expected to be recovered or

settled no more than 12 months after the reporting period. £5.1m of deferred tax assets (2024: £4.8m) and £16.1m of deferred

tax liabilities (2024: £18.2m) are expected to be recovered or settled more than 12 months after the reporting period.

Movements in deferred tax

Accelerated

capital

allowances

£m

Intangibles

£m

Pensions

£m

Tax

losses

£m

Share-

based

payments

£m

Other

temporary

differences

£m

Total

£m

At 1 April 2023 (0.4) (18.3) (0.1) 3.2 4.4 1.3 (9.9)

(Charged)/credited

- to profit and loss (0.1) 3.8 0.2 (1.4) 0.1 (0.1) 2.5

- to other comprehensive income – – 0.3 – – – 0.3

- directly to equity – – – – (0.3) – (0.3)

Exchange differences on

translation of foreign subsidiaries – 0.3 – – – – 0.3

Acquisition-related movements – (6.0) – – – – (6.0)

At 31 March 2024 (0.5) (20.2) 0.4 1.8 4.2 1.2 (13.1)

(Charged)/credited

- to profit and loss – 3.1 (1.0) (0.9) 0.1 1.5 2.8

- to other comprehensive income – – 1.2 – – – 1.2

- directly to equity – – – – (1.3) – (1.3)

Exchange differences on

translation of foreign subsidiaries – 0.3 – – – (0.1) 0.2

Acquisition-related movements – (0.7) – – – – (0.7)

At 31 March 2025 (0.5) (17.5) 0.6 0.9 3.0 2.6 (10.9)

At 31 March 2025, £nil (2024: £1.4m) of the deferred tax asset in respect of tax losses relates to tax jurisdictions in which tax

losses were incurred in the current or preceding period. The recognition of the deferred tax asset is supported by forecasts of

sufficient future taxable profits in the relevant jurisdictions.

At 31 March 2025, the Group had not recognised any deferred tax asset in respect of tax losses of approximately £23.2m

(2024: £26.1m). Deferred tax assets are not recognised where there is insufficient evidence that losses will be utilised.

10. Tax expense continued

171 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

At 31 March 2025, a £1.8m deferred tax liability (2024: £1.3m) has been recognised for withholding taxes payable on the

remittance of certain of the Group’s overseas subsidiaries’ unremitted earnings. The aggregate amount of unremitted

earnings on which deferred tax has not been recognised is £21.4m (2024: £19.9m). No deferred tax has been recognised on

this amount as the Group is able to control the timing of these distributions and is not expecting to distribute these profits

in the foreseeable future.

11. Business combinations

Acquisitions in the year ended 31 March 2025

Acquisition of Hivolt

On 1 August 2024, the Group completed the acquisition of 100% of the outstanding ordinary shares of Hivolt Capacitors

Limited (“Hivolt”), a company incorporated in the United Kingdom. Hivolt is a designer and manufacturer of custom-built

capacitors for specialised applications involving high voltages and the acquisition is set to strengthen the Group’s position in

the electronics market and enhance its offering across key target sectors, including medical and transportation.

Hivolt was acquired for an initial consideration of £3.8m on a cash free, debt free basis, before expenses, funded from the

Group’s existing debt facilities. The cash consideration paid of £8.5m includes cash acquired of £5.0m net of deductions for

accrued tax and other liabilities and adjustments of £0.3m. In addition, a contingent payment of up to £0.9m will be payable

subject to Hivolt achieving certain financial performance conditions over the period between 1 April 2024 and 31 March 2025.

The fair value of the identifiable assets and liabilities of Hivolt at the date of acquisition was:

Fair value

recognised

at acquisition

£m

Intangible assets – other (incl. customer relationships) 2.6

Property, plant and equipment 0.1

Right of use assets 0.2

Inventories 0.6

Trade and other receivables 0.2

Cash acquired 5.0

Trade and other payables (0.4)

Current tax liabilities (0.1)

Deferred tax liabilities (0.7)

Lease liabilities (0.2)

Total identifiable net assets 7.3

Goodwill arising on acquisition 2.1

Total investment 9.4

Discharged by

Initial cash consideration 8.5

Contingent consideration 0.9

9.4

Net cash outflows in respect of the acquisition comprise:

Total

£m

Cash consideration 8.5

Transaction costs (included in operating cash flows)

0.1

Net cash acquired (5.0)

3.6

Acquisition costs of £0.1m were expensed as incurred in the period ended 31 March 2025. These were included within operating costs.

10. Tax expense continued

172 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Included in cash flow from investing activities is the cash consideration of £8.5m, offset by the net cash acquired of £5.0m.

From the date of acquisition to 31 March 2025, Hivolt contributed £2.0m to revenue and a profit of £0.3m to profit after tax of

the Group. If the business combination had taken place at the beginning of the year, the consolidated revenue for the Group

would have been £423.9m and the consolidated profit after tax for the Group would have been £24.7m.

The goodwill is attributable to the workforce and the high profitability of the acquired business. It will not be deductible for

tax purposes. Included in the £2.1m of goodwill recognised above are certain intangible assets that cannot be individually

separated and reliably measured, due to their nature. These include the value of expected operational benefits. All the

acquired receivables are expected to be collected.

Acquisition of Burster

On 15 January 2025, the Group completed the acquisition of the Burster Group (“Burster”), by acquiring the limited

partnership interest in burster präzisionsmesstechnik GmbH & Co. KG. Burster is a German-based designer and

manufacturer of specialist sensors.

Burster was acquired for an initial consideration of £25.6m on a cash free, debt free basis, before expenses, funded from the

Group’s existing debt facilities. The cash consideration paid of £25.5m includes cash acquired of £1.3m net of deductions for

accrued tax and other liabilities and adjustments of £1.4m. In addition, a contingent payment of up to £10.5m (€12.4m) will

be payable subject to Burster achieving certain financial performance conditions in its year ending 31 December 2025.

The fair value of the identifiable assets and liabilities of Burster at the date of acquisition was:

Fair value

recognised

at acquisition

£m

Intangible assets – other (incl. customer relationships) 9.1

Property, plant and equipment 1.5

Right of use assets 2.8

Inventories 6.8

Trade and other receivables 0.9

Cash acquired 1.3

Trade and other payables (1.3)

Current tax liabilities (0.4)

Lease liabilities (2.8)

Total identifiable net assets 17.9

Goodwill arising on acquisition 13.4

Total investment 31.3

Discharged by

Initial cash consideration 25.5

Contingent consideration 5.8

31.3

Net cash outflows in respect of the acquisition comprise:

Total

£m

Cash consideration 25.5

Transaction costs (included in operating cash flows)

0.7

Net cash acquired (1.3)

24.9

Acquisition costs of £0.7m were expensed as incurred in the period ended 31 March 2025. These were included within operating costs.

Included in cash flow from investing activities is the cash consideration of £25.5m, offset by the net cash acquired of £1.3m.

11. Business combinations continued

173 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

From the date of acquisition to 31 March 2025, Burster contributed £4.8m to revenue and a loss of £0.9m to profit after tax of

the Group. If the business combination had taken place at the beginning of the year, the consolidated revenue for the Group

would have been £435.4m and the consolidated profit after tax for the Group would have been £24.5m.

The goodwill is attributable to the workforce and the high profitability of the acquired business. It will be deductible for tax

purposes. Included in the £13.4m of goodwill recognised above are certain intangible assets that cannot be individually

separated and reliably measured, due to their nature. These include the value of expected operational benefits. All the

acquired receivables are expected to be collected.

Acquisitions in the year ended 31 March 2024

There have been no changes to the provisional fair values of the assets and liabilities acquired in the prior year.

Acquisition of Silvertel

On 30 August 2023, the Group completed the acquisition of Silver Telecom Limited (“Silvertel”), a company incorporated in

the United Kingdom by acquiring 100% of the shares of its parent company SLV Holdings Limited. Silvertel is a designer and

manufacturer of differentiated, high-performance Power-over-Ethernet (“PoE”) modules and complementary products for

global industrial electronic connectivity markets.

Silvertel was acquired for an initial cash consideration of £23.0m before expenses, funded from the Group’s existing debt

facilities. In addition, contingent payments of up to £23.0m will be payable subject to Silvertel’s EBIT performance over the

next four years. This includes up to £4.0m payable subject to continuous employment during the performance period.

The fair value of the identifiable assets and liabilities of Silvertel at the date of acquisition was:

Fair value

recognised

at acquisition

£m

Intangible assets – other (incl. customer relationships) 9.3

Property, plant and equipment 0.1

Right of use assets 0.2

Inventories 2.6

Trade and other receivables 1.4

Net cash 1.6

Trade and other payables (0.9)

Current tax liabilities (0.4)

Deferred tax liabilities (2.4)

Lease liabilities (0.2)

Total identifiable net assets 11.3

Goodwill arising on acquisition 14.5

Total investment 25.8

Discharged by

Initial cash consideration 23.0

Contingent consideration 2.8

25.8

Net cash outflows in respect of the acquisition comprise:

Total

£m

Cash consideration 23.0

Transaction costs (included in operating cash flows)

0.6

Net cash acquired (1.6)

22.0

Acquisition costs of £0.6m were expensed as incurred in the period ended 31 March 2024. These were included within operating costs.

11. Business combinations continued

174 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Included in cash flow from investing activities for the year ended 31 March 2024 is the cash consideration of £23.0m and the

pre-acquisition tax settled of £0.3m, offset by the net cash acquired of £1.6m.

The contingent consideration of £2.8m recognised on acquisition has been subsequently measured and released based on

latest forecast performance of the business.

From the date of acquisition to 31 March 2024, Silvertel contributed £3.5m to revenue and a loss of £0.9m to profit after tax of

the Group. If the business combination had taken place at the beginning of the year, the consolidated revenue for the Group

would have been £440.0m and the consolidated profit after tax for the Group would have been £15.5m.

The goodwill was attributable to the workforce and the high profitability of the acquired business. It will not be deductible

for tax purposes. Included in the £14.5m of goodwill recognised above were certain intangible assets that cannot be

individually separated and reliably measured, due to their nature. These include the value of expected operational benefits.

Acquisition of 2J Antennas

On 12 September 2023, the Group completed the acquisition of 2J Antennas Group (“2J”), by acquiring 100% equity and

voting rights of 2J Antennas, s.r.o. (Slovakia), 2J Antennas UK Limited and 2J Antennas USA Corp.

2J is a leading designer and manufacturer of high-performance antennas for industrial electronic connectivity applications.

2J was acquired for an initial cash consideration of £44.9m (€52.4m), before expenses, funded from the Group’s existing debt

facilities.

The fair value of the identifiable assets and liabilities of 2J at the date of acquisition was:

Fair value

recognised

at acquisition

£m

Intangible assets – other (incl. customer relationships) 16.2

Property, plant and equipment 0.5

Right of use assets 0.2

Inventories 2.8

Trade and other receivables 1.9

Cash and cash equivalents 1.3

Overdraft (0.4)

Trade and other payables (1.1)

Current tax (1.6)

Deferred tax liabilities (3.4)

Lease liabilities (0.2)

Total identifiable net assets 16.2

Goodwill arising on acquisition 28.7

Total investment 44.9

Discharged by

Cash 44.9

Net cash outflows in respect of the acquisition comprise:

Total

£m

Cash consideration 44.9

Transaction costs (included in operating cash flows)

1.0

Net cash acquired (0.9)

45.0

Acquisition costs of £1.0m were expensed as incurred in the period ended 31 March 2024. These were included within operating costs.

11. Business combinations continued

175 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Included in cash flow from investing activities for the year ended 31 March 2024 is the cash consideration of £44.9m and

settlement of pre-acquisition tax liabilities of £0.1m, offset by the net cash acquired of £0.9m.

From the date of acquisition to 31 March 2024, 2J contributed £7.5m to revenue and loss of £1.0m to profit after tax of the

Group. If the business combination had taken place at the beginning of the year, the consolidated revenue for the Group

would have been £442.2m and the consolidated profit after tax for the Group would have been £15.1m.

The goodwill was attributable to the workforce and the high profitability of the acquired business. It will not be deductible

for tax purposes. Included in the £28.7m of goodwill recognised above were certain intangible assets that cannot be

individually separated and reliably measured, due to their nature. These include the value of expected operational benefits.

Other acquisitions

Shape

On 24 January 2024, the Group completed the acquisition of Shape LLC (“Shape”), a company incorporated in the US, by

acquiring 100% of the membership interests of Shape LLC.

Shape is a US-based designer and manufacturer of specialty transformer equipment. Shape was acquired for an initial cash

consideration of £7.9m ($10.0m), before expenses, funded from the Group’s existing debt facilities.

DTI

On 6 March 2024, the Group completed the acquisition of Diamond Technologies, Inc. (“DTI”), a company incorporated in the

US, by acquiring 100% of DTI shares.

DTI specialises in customised data collection products geared primarily to original equipment manufacturers (“OEM”),

including OEM focused embedded barcode, RFID, vision and embedded gateway and controller solutions. DTI was acquired

for an initial cash consideration of £6.6m ($8.4m), before expenses, funded from the Group’s existing debt facilities. In

addition, a contingent payment of up to £3.2m will be payable subject to DTI’s financial performance over the next three

years, subject to the seller’s continuous employment during the performance period.

IKN

On 16 March 2024, the Group completed the acquisition of IKN AS (“IKN”), a company incorporated in Norway, by acquiring

100% of IKN AS shares.

IKN specialises in products and services for data centres, networking and cabling systems. IKN was acquired for an initial

cash consideration of £2.5m (NOK 33.6m), before expenses, funded from the Group’s existing debt facilities. In addition,

a contingent payment of up to £0.3m (NOK 3.4m) will be payable subject to IKN’s revenue performance over the period

ending 31 December 2024 and subject to IKN achieving certain integration targets.

11. Business combinations continued

176 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

The combined fair value of the identifiable assets and liabilities of the three acquisitions above, at the date of acquisition was:

Fair value

recognised

acquisition

£m

Intangible assets – other (incl. customer relationships) 7.3

Property, plant and equipment 0.1

Right of use assets 1.1

Inventories 2.8

Trade and other receivables 2.4

Net cash 0.8

Trade and other payables (2.1)

Current tax liabilities (0.1)

Deferred tax liabilities (0.2)

Lease liabilities (1.1)

Total identifiable net assets 11.0

Goodwill arising on acquisition 6.3

Total investment 17.3

Discharged by

Initial cash consideration 17.2

Contingent consideration 0.1

17.3

Net cash outflows in respect of the acquisition comprise:

Total

£m

Cash consideration 17.2

Transaction related bonuses 0.8

Transaction costs (included in operating cash flows)

0.9

Net cash acquired (0.8)

18.1

Acquisition costs of £0.9m were expensed as incurred in the period ended 31 March 2024. These were included within operating costs.

Included in cash flow from investing activities in the year ended 31 March 2024 is the cash consideration of £17.0m and the

transaction bonus of £0.8m, offset by the net cash acquired of £0.8m. An additional £0.2m related to an adjustment of the

purchase price for the IKN acquisition was paid and a credit of £0.2m received for the DTI acquisition by the Group during

the year. These were included in the cash flow from investing activities for the year ended 31 March 2025.

From the date of acquisition to 31 March 2024, IKN, DTI and Shape contributed £2.1m to revenue and profit of £0.1m to profit

after tax of the Group. If the business combination had taken place at the beginning of the year, the consolidated revenue

for the Group would have been £453.2m and the consolidated profit after tax for the Group would have been £15.8m.

The goodwill was attributable to the workforce and the high profitability of the acquired businesses. It will not be deductible

for tax purposes. Included in the £6.1m of goodwill recognised above were certain intangible assets that cannot be

individually separated and reliably measured, due to their nature. These include the value of expected operational benefits.

11. Business combinations continued

177 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

12. Business disposed

During the year ended 31 March 2025, the Group completed the disposal of its Santon solar business unit (the “disposal

group”) based in the Netherlands, which was previously classified as held for sale, for consideration of £2.6m.

In conjunction with this disposal, the Group also completed the sale of its manufacturing facility in the Netherlands for a

total consideration of £5.0m. The overall loss on disposal was £3.8m, of which £2.1m gain was recognised in the year and

£5.9m loss in the prior year.

The disposals of both the solar business unit and the manufacturing facility generated a net cash inflow of £7.2m after costs.

The disposal group is not considered to be a major line of operation. Accordingly, its results are not presented as a

discontinued operation for the years ended 31 March 2025 and 31 March 2024.

13. Dividends

Dividends recognised in equity as distributions to equity holders in the year:

2025

£m

2024

£m

Equity dividends on ordinary shares:

Final dividend for the year ended 31 March 2024 of 8.25p (2023: 7.90p) 7.9 7.6

Interim dividend for the year ended 31 March 2025 of 3.90p (2024: 3.75p) 3.8 3.6

Total amounts recognised as equity distributions during the year 11.7 11.2

Proposed for approval at AGM:

2025

£m

2024

£m

Equity dividends on ordinary shares:

Final dividend for the year ended 31 March 2025 of 8.60p (2024: 8.25p) 8.3 7.9

Summary

Dividends per share declared in respect of the year 12.50p 12.00p

Dividends per share paid in the year 12.15p 11.65p

Dividends paid in the year £11.7m £11.2m

14. Earnings per share

Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary equity holders of the

Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is the basic earnings per share after allowing for the dilutive effect of the conversion into ordinary

shares of the weighted average number of options outstanding during the year.

The following reflects the income and share data used in the basic and diluted earnings per share calculations.

2025

£m

2024

£m

Profit after tax for the year 24.6 15.5

2025

Number

2024

Number

Weighted average number of shares for basic earnings per share 96,028,934 95,835,775

Effect of dilution – share options 2,398,601 2,450,593

Adjusted weighted average number of shares for diluted earnings per share 98,427,535 98,286,368

Basic earnings per share 25.6p 16.2p

Diluted earnings per share 25.0p 15.8p

At the year-end, there were 2,648,415 ordinary share options in issue that could potentially dilute adjusted earnings per share

in the future, of which 2,398,601 are currently dilutive (2024: 2,713,941 in issue and 2,450,593 dilutive).

178 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

15. Property, plant and equipment

Land and

buildings

£m

Leasehold

improvements

£m

Plant and

equipment

£m

Total

£m

Cost

At 1 April 2023 9.4 4.1 43.1 56.6

Additions 0.9 0.3 3.6 4.8

Disposals – – (1.2) (1.2)

Business acquired (note 11) – – 0.7 0.7

Assets held for sale (note 12) restated

(3.1) – (2.8) (5.9)

Exchange adjustments restated

0.1 0.8 (2.1) (1.2)

At 31 March 2024 restated

7.3 5.2 41.3 53.8

Additions 0.5 1.3 3.6 5.4

Disposals – – (2.4) (2.4)

Business acquired (note 11) – – 1.6 1.6

Exchange adjustments (0.5) – (0.8) (1.3)

At 31 March 2025 7.3 6.5 43.3 57.1

Accumulated depreciation

At 1 April 2023 3.1 1.9 26.4 31.4

Charge for the year 0.3 0.5 3.9 4.7

Assets held for sale (note 12) restated

(0.6) – (0.7) (1.3)

Disposals – – (1.0) (1.0)

Exchange adjustments restated

0.6 – (1.1) (0.5)

At 31 March 2024 restated

3.4 2.4 27.5 33.3

Charge for the year 0.3 0.6 3.6 4.5

Disposals – – (2.4) (2.4)

Exchange adjustments (0.5) – (0.8) (1.3)

At 31 March 2025 3.2 3.0 27.9 34.1

Net book value at 31 March 2025 4.1 3.5 15.4 23.0

Net book value at 31 March 2024 3.9 2.8 13.8 20.5

Prior year cost and accumulated depreciation have been re-presented from £55.2m to £53.8m and £34.7m to £33.3m, respectively, to reflect the correct

positions for the Assets held for sale, which had previously been presented net. There were no changes to the net book value at 31 March 2024.

Land and buildings includes land with a cost of £1.0m (2024: £0.8m) that is not subject to depreciation.

At 31 March 2025 the Group had contractual capital expenditure commitments for plant and equipment and leasehold

improvements of £0.4m (2024: £0.2m) for which no provision has been made.

16. Leases

16.1 Leasing arrangements

The Group leases manufacturing and warehousing facilities, offices and various items of plant, machinery, equipment and

vehicles.

Manufacturing and warehouse facilities generally have lease terms between three and ten years. Lease contracts generally

include extension and termination options.

179 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

16.2 Carrying value of right of use assets

Set out below are the carrying amounts of right of use assets recognised and movements during the year:

Land and

buildings

£m

Plant and

machinery

£m

Total

£m

At 1 April 2023 17.1 2.1 19.2

Exchange adjustments (0.5) 0.1 (0.4)

Additions/modifications 5.9 1.2 7.1

Depreciation charge (5.4) (1.2) (6.6)

Terminations (0.2) – (0.2)

Business acquired (note 11) 1.3 0.2 1.5

At 31 March 2024 18.2 2.4 20.6

Exchange adjustments (0.1) – (0.1)

Additions/modifications 10.6 1.0 11.6

Depreciation charge (6.2) (1.1) (7.3)

Terminations (0.1) (0.3) (0.4)

Business acquired (note 11) 2.9 0.1 3.0

At 31 March 2025 25.3 2.1 27.4

16.3 Carrying value of lease liabilities

Set out below are the carrying amounts of lease liabilities and the movements during the year:

Total

£m

At 1 April 2023 (18.8)

Exchange adjustments 0.5

Additions/modifications (6.6)

Interest for the year (0.7)

Lease payments 6.8

Terminations 0.2

Business acquired (note 11) (1.5)

At 31 March 2024 (20.1)

Exchange adjustments 0.2

Additions/modifications (11.4)

Interest for the year (1.0)

Lease payments 7.5

Terminations 0.4

Business acquired (note 11) (3.0)

At 31 March 2025 (27.4)

2025

£m

2024

£m

Current liabilities 6.2 5.7

Non-current liabilities 21.2 14.4

27.4 20.1

Payment of lease liabilities is shown under Financing Activities in the consolidated Statement of Cash Flows.

16. Leases continued

180 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

16.4 Amounts recognised in the consolidated Statement of Profit or Loss

2025

£m

2024

£m

Depreciation of right of use assets 7.3 6.6

Interest expense (included in finance costs) 1.0 0.7

8.3 7.3

During the year ended 31 March 2025, a total of £0.1m was recognised in the consolidated Statement of Profit or Loss relating

to payments under short-term and low-value leases (2024: £0.2m).

16.5 Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These

terms are used to maximise operational flexibility in terms of managing contracts. Extension and termination options which

are reasonably certain not to be exercised are included in the measurement of the lease liability and right of use asset.

There are no lease contracts in place as at 31 March 2025 which include variable lease payments (2024: none).

17. Intangible assets – goodwill

Cost £m

At 1 April 2023 188.1

Business acquired (note 11) 49.3

Exchange adjustments (4.0)

At 31 March 2024 233.4

Business acquired (note 11) 15.5

Disposal (1.7)

Exchange adjustments (3.0)

At 31 March 2025 244.2

Impairment £m

At 31 March 2024 (1.7)

Disposal 1.7

At 31 March 2025 –

Net book value at 31 March 2025 244.2

Net book value at 31 March 2024 231.7

18. Impairment testing of goodwill

The Group’s operations are organised into two distinct divisions, Magnetics & Controls (“M&C”) and Sensing & Connectivity

(“S&C”). Each of these divisions comprises two sub-divisions. Within each sub-division are aggregated business units (“CGUs”)

that share similar characteristics such as the nature of customers, products, risk profile and economic characteristics.

With the increased number of acquisitions and the anticipated synergies across the Group’s businesses in particular within

a sub-division, the Group’s management has transitioned from monitoring individual CGUs separately to aggregating the

performance outputs of each of the four sub-divisions. This approach is adopted to facilitate the assessment of performance,

resource allocation, and strategic decision-making.

For the year ended 31 March 2025, the Group’s management has determined that the lowest level within the Group at which

the goodwill is monitored for internal management purposes consists of the four sub-divisions, each comprising a number

of CGUs. Therefore, according to IAS 36.82, goodwill is tested for impairment at the level that reflects the way the Group

manages its operations and with which the goodwill would naturally be associated.

16. Leases continued

181 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

The carrying value of goodwill is analysed as follows:

2025

£m

Restated

2024

£m

Magnetics & Controls 104.9 106.4

Magnetics 38.2 38.5

Controls 66.7 67.9

Sensing & Connectivity 139.3 125.3

Sensing 73.0 60.2

Connectivity 66.3 65.1

Total 244.2 231.7

Prior year restated to change presentation from individual CGUs to the four sub-divisions after changes to the way goodwill is tested for impairment as

described above.

The movement in goodwill compared to prior year relates mainly to the movement in foreign exchange rates and to Hivolt

and Burster which were acquired in the year into the Sensing & Connectivity division (note 11).

The recoverable amount of each sub-division is based on value-in-use calculations. The key assumptions used in these

calculations relate to future revenue growth (being the five-year sales Compound Annual Growth Rate – “CAGR”), discount

rates and long-term growth rates beyond the first five years. Cash flow forecasts for the five-year period from the reporting

date are based on the FY 2025/26 Board approved budget and management projections thereon, which are based on

historical experience and market outlook.

Cash flow projections included in the impairment review models include management’s view of the impact of climate

change, including costs related to the effects of climate change, as well as the future costs of the Group’s commitment to

achieve a 90% reduction in Scope 1 and 2 carbon emissions by 2030.

A long-term growth rate (“LTGR”) beyond the five-year period of 2% has been applied consistently in the value-in-use

calculations (2024: 2%) and is based on the average long-term inflation targets.

Discount rates reflect the current market assessment of the risks specific to each of the four sub-divisions and were

estimated based on the average percentage weighted average cost of capital for the industry and then further adjusted for

country-specific risk.

The table below discloses the discount rates and growth rates:

Pre-tax discount rate 5-year sales CAGR

2025

Restated

2024

2025

Restated

2024

Magnetics 13.0 12.8 5.5 4.4

Controls 12.3 12.7 8.3 3.2

Sensing 12.5 12.7 7.6 4.8

Connectivity 12.4 12.3 6.9 8.5

Prior year restated to change presentation from individual CGUs to the four sub-divisions after changes to the way goodwill is tested for impairment as

described above.

Sensitivity to changes in assumptions

The Group’s forecast is based on a range of assumptions to determine the value of expected future cash flows. Deviations

against those plans and assumptions in terms of revenue and margin projections, operating and capital costs and

successful achievement of strategic objectives are all inherently uncertain. Headroom in the impairment test for each of the

four sub-divisions has been tested for sensitivity to reasonably possible adverse changes in forecast cash flows, discount rates

and long-term growth rates. Adequate headroom is available against material impairment risk.

18. Impairment testing of goodwill continued

182 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

19. Intangible assets – other

Acquired intangibles

Software &

development

£m

Customer

relationships

£m

Patents &

brands

£m

Total

£m

Cost

At 1 April 2023 4.7 144.1 5.7 154.5

Business acquired (note 11) 0.6 32.2 – 32.8

Additions 0.1 – – 0.1

Disposals (0.3) – – (0.3)

Assets held for sale (note 12) restated

– (2.2) (2.6) (4.8)

Exchange adjustment restated

(0.2) (3.2) 0.6 (2.8)

At 31 March 2024 restated

4.9 170.9 3.7 179.5

Business acquired (note 11) – 11.7 – 11.7

Additions 0.7 – – 0.7

Disposals (0.2) – – (0.2)

Exchange adjustment (0.1) (2.2) (0.1) (2.4)

At 31 March 2025 5.3 180.4 3.6 189.3

Accumulated amortisation

At 1 April 2023 3.5 64.0 3.1 70.6

Charge for the year 0.3 15.8 0.4 16.5

Impairment charge

– 0.3 0.7 1.0

Assets held for sale (note 12) restated

– (2.2) (2.3) (4.5)

Disposals (0.3) – – (0.3)

Exchange adjustment restated

(0.2) (2.0) 0.6 (1.6)

At 31 March 2024 restated

3.3 75.9 2.5 81.7

Charge for the year 0.4 15.8 0.4 16.6

Disposals (0.1) – – (0.1)

Exchange adjustment (0.1) (0.9) (0.1) (1.1)

At 31 March 2025 3.5 90.8 2.8 97.1

Net book value at 31 March 2025 1.8 89.6 0.8 92.2

Net book value at 31 March 2024 restated

1.6 95.0 1.2 97.8

Write-down of acquired intangibles related to the disposal group (note 12).

Prior year cost and accumulated amortisation have been re-presented from £184.2m to £179.5m and £86.4m to £81.7m, respectively, to reflect the

correct positions for the Assets held for sale, which had previously been presented net. There were no changes to the net book value at 31 March 2024.

183 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

20. Inventories

2025

£m

2024

£m

Finished goods and goods for resale 29.2 27.9

Raw materials and work in progress 53.7 52.2

Total inventories 82.9 80.1

At 31 March 2025, the provision for realisable value included within total inventories was £11.5m (2024: £8.5m).

21. Trade and other receivables

Current

2025

£m

2024

£m

Trade receivables 63.5 69.3

Other receivables 5.1 13.1

VAT receivable 3.0 2.6

Prepayments 2.8 3.8

74.4 88.8

Trade receivables are non-interest bearing; are generally on 30 to 60 days’ terms and are shown net of expected credit losses.

Current year other receivables includes £0.3m (2024: £6.1m) related to the current portion of the deferred consideration

receivable for the disposal of the Vertec Scientific business.

All of the Group’s trade and other receivables are regularly reviewed for indicators of impairment. The credit risk exposure

inherent in the Group’s trade receivables is measured and recognised as an impairment provision on initial recognition,

based on the expected credit loss method, as required by IFRS 9. Specific provision for impairment may also be required

where a specific increase in credit risk is identified, or a credit event has occurred. Provisions for general credit risk exposure

is measured with reference to the age of a receivable as debts which are overdue present a specific impairment risk

indicator regarding recoverability.

In total, the Group has recognised impairment provisions of £2.2m (2024: £2.3m), against trade receivables. This includes a

total of £1.4m (2024: £1.2m) of specific provisions for impairment due to increased default risk and unresolved disputes, as

well as a provision for expected credit losses of £0.8m (2024: £1.1m). Across the Group, general expected credit loss risk has

been assessed to be low due to the size, nature and diversification of customers across the divisions. The small decrease

during the year is mainly attributable to macro-economic factors such as decrease in interest rates, which are incorporated

in the assessment of the Group’s expected credit losses performed annually.

The movements in the impairment provisions for trade receivables during the year were as follows:

2025

£m

2024

£m

At 1 April 2.3 2.2

Charge for the year 0.2 0.4

Exchange adjustments (0.3) (0.3)

At 31 March 2.2 2.3

184 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Details of the net trade receivables ageing are set out below:

Overdue

Total

£m

Not yet due

£m

<30 days

£m

30–60 days

£m

60–90 days

£m

90–120 days

£m

>120 days

£m

2025

Gross 65.7 54.0 6.3 3.0 0.7 0.2 1.5

Provision (2.2) (0.2) – – (0.3) (0.2) (1.5)

Net 63.5 53.8 6.3 3.0 0.4 – –

2024

Gross 71.6 59.1 8.5 1.5 0.7 0.4 1.4

Provision (2.3) (0.5) – (0.1) (0.1) (0.2) (1.4)

Net 69.3 58.6 8.5 1.4 0.6 0.2 –

Non-Current

2025

£m

2024

£m

Other receivables – 0.2

Other receivables amount to £nil (2024: £0.2m). The £0.2m for the year ended 31 March 2024 was deferred consideration

receivable in relation to the disposal of Vertec Scientific SA Proprietary Limited, disclosed under current other receivables for

the year ended 31 March 2025.

22. Cash and cash equivalents

2025

£m

2024

£m

Cash at bank and in hand 139.3 110.8

The cash balances are separately presented gross in the consolidated Statement of Financial Position, rather than netted

off against overdrafts held either by the same entity, or other Group entities, with the same bank. The net cash position as at

31 March 2025 after netting off against overdrafts is £43.7m (2024: £31.5m). Refer to note 24 and analysis of movements.

Cash at bank earns interest at floating rates, based on daily bank deposit rates. The Group only deposits cash surpluses with

major banks of high credit standing (£118.8m with financial institutions with credit rating of AA- (2024: £89.8m), £13.0m

with financial institutions with credit rating of A+ (2024: £12.1m), and the remaining balance of £7.5m with various financial

institutions with credit rating of A- or higher (2024: £8.9m)) in line with its treasury policy. The fair value of cash and cash

equivalents is £139.3m (2024: £110.8m).

21. Trade and other receivables continued

185 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

23. Other financial liabilities

Current Non-current

Effective

interest

rate % Maturity

2025

£m

2024

£m

2025

£m

2024

£m

Bank overdrafts Variable On demand 95.6 79.3 – –

Unsecured bank loans Variable – – 0.1 0.1

Revolving Credit Facility (“RCF”) Variable – – 139.3 137.4

Capitalised debt costs (0.6) (0.6) (0.8) (1.4)

Loans and borrowings 95.0 78.7 138.6 136.1

Lease liabilities 6.2 5.7 21.2 14.4

Trade and other payables (note 29) 70.7 73.8 6.2 4.6

Total other financial liabilities 171.9 158.2 166.0 155.1

Interest on overdrafts is based on floating rates linked to SONIA, SOFR and EURIBOR.

Included in unsecured bank loans is a Euro-denominated loan of £0.1m (2024: £0.1m).

At 31 March 2025, the RCF drawdowns of £139.3m (2024: £137.4m) were denominated in Sterling, US Dollar and Euro which

bear interest based on SONIA, SOFR and EURIBOR, plus a facility margin.

Trade and other payables above include only contractual obligations.

The maturity of the gross contractual financial liabilities is as follows:

At 31 March 2025

Within

1 year

£m

2–5

years

£m

years

£m

Total

£m

Floating rate 95.0 138.6 – 233.6

Lease liabilities 7.2 16.1 8.5 31.8

Trade and other payables 70.7 6.2 – 76.9

172.9 160.9 8.5 342.3

At 31 March 2024

Within

1 year

£m

2–5

years

£m

years

£m

Total

£m

Floating rate 78.7 136.1 – 214.8

Lease liabilities 6.4 12.2 4.1 22.7

Trade and other payables 73.8 4.6 – 78.4

158.9 152.9 4.1 315.9

The carrying amount of the Group’s other financial liabilities excluding lease liabilities is denominated in the following

currencies:

2025

£m

2024

£m

Sterling 98.7 86.0

Euro 116.8 93.3

US Dollar 65.6 82.4

Other currencies 29.4 31.5

310.5 293.2

186 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

24. Movements in cash and net debt

Year to 31 March 2025

1 April

2024

£m

Cash flow

£m

Non-cash

changes

£m

31 March

2025

£m

Bank loans over one year (137.5) (4.3) 2.4 (139.4)

Capitalised debt costs 2.0 – (0.6) 1.4

Lease liability (20.1) 7.5 (14.8) (27.4)

Liabilities arising from financing activities (155.6) 3.2 (13.0) (165.4)

Cash and cash equivalents 110.8 29.6 (1.1) 139.3

Bank overdrafts (79.3) (16.4) 0.1 (95.6)

Net cash 31.5 13.2 (1.0) 43.7

Net debt (incl. lease liability) (124.1) 16.4 (14.0) (121.7)

Remove: lease liability 20.1 (7.5) 14.8 27.4

Net debt

(104.0) 8.9 0.8 (94.3)

Net debt is an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure is the aggregate of loans and

borrowings (current and non-current) and cash and cash equivalents.

Bank loans over one year above include £139.3m (2024: £137.4m) drawn down against the Group’s revolving credit facility.

Bank overdrafts reflect the aggregated gross overdrawn balances of Group companies (even if those companies have other

positive cash balances). The overdrafts and cash and cash equivalents are held with the Group’s relationship banks.

Year to 31 March 2024

1 April

2023

£m

Cash flow

£m

Non-cash

changes

£m

31 March

2024

£m

Bank loans over one year (88.1) (51.1) 1.7 (137.5)

Capitalised debt costs 2.0 0.6 (0.6) 2.0

Lease liability (18.8) 6.8 (8.1) (20.1)

Liabilities arising from financing activities (104.9) (43.7) (7.0) (155.6)

Cash and cash equivalents 83.9 29.2 (2.3) 110.8

Bank overdrafts (40.5) (38.6) (0.2) (79.3)

Net cash 43.4 (9.4) (2.5) 31.5

Net debt (incl. lease liability) (61.5) (53.1) (9.5) (124.1)

Remove: lease liability 18.8 (6.8) 8.1 20.1

Net debt (42.7) (59.9) (1.4) (104.0)

187 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

25. Reconciliation of cash flows from operating activities

2025

£m

2024

£m

Profit for the year 24.6 15.5

Tax expense 7.4 6.7

Net finance costs 10.4 9.0

Depreciation of property, plant and equipment 4.5 4.7

Depreciation of right of use assets 7.3 6.6

Amortisation of intangible assets – other 16.6 16.5

Write-down of assets related to disposal group – other intangible assets – 1.0

Write-down of asset related to disposal group – goodwill – 1.7

Loss on disposal of property, plant and equipment – 0.2

Loss on disposal of intangible assets 0.1 –

Change in provisions 0.1 2.6

Pension scheme funding (2.3) (2.0)

IAS 19 pension charge 0.7 0.8

Gain on disposal of business (2.1) –

Associated taxes on LTIPs – (0.3)

Impact of equity-settled share-based payment expense and associated taxes 2.0 2.6

Operating cash flows before changes in working capital 69.3 65.6

Decrease in inventories 5.4 14.5

Decrease/(Increase) in trade and other receivables 5.8 (3.0)

Decrease in trade and other payables (10.0) (11.1)

Decrease in working capital 1.2 0.4

Cash generated from operations 70.5 66.0

Interest paid (12.5) (11.6)

Interest paid on lease liabilities (1.0) (0.7)

Income taxes paid (10.6) (12.5)

Net cash flow from operating activities 46.4 41.2

2025

£m

2024

£m

Net cash flow from operating activities 46.4 41.2

Working capital 1.0 7.5

Gain/(loss) on disposal 2.1 (4.6)

Payment of lease liabilities (6.5) (6.1)

Capital expenditure (6.1) (4.9)

Interest received 3.5 3.9

Free cash flow 40.4 37.0

188 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

26. Provisions

Retirement

and

severance

indemnity

£m

Dilapidation

£m

Other

£m

Total

£m

At 1 April 2023 2.0 2.7 1.2 5.9

Arising during the year 0.4 0.5 2.5 3.4

Arising from business combinations 0.1 0.1 0.1 0.3

Utilised / released (0.1) – (0.4) (0.5)

Exchange difference (0.3) – – (0.3)

At 31 March 2024 2.1 3.3 3.4 8.8

Arising during the year 0.5 0.2 1.6 2.3

Arising from business combinations 0.6 – 0.2 0.8

Utilised / released (0.6) – (2.2) (2.8)

Exchange difference (0.1) – – (0.1)

At 31 March 2025 2.5 3.5 3.0 9.0

Analysis of total provisions:

2025

£m

2024

£m

Current 5.0 5.2

Non-Current 4.0 3.6

9.0 8.8

The retirement indemnity provision of £2.4m (2024: £2.0m), relates to retirement and leaving indemnity schemes in Sri

Lanka £0.9m (2024: £0.9m), India £0.6m (2024: £0.6m), France £0.2m (2024: £0.2m), Germany £0.6m (2024: £0.1m), Denmark

£0.1m (2024: £0.1m) and Slovakia £nil (2024: £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 of mortality rates, staff

turnover (16% up to age of 54 and zero thereafter) (2024: 16% up to the age of 54 and zero thereafter), retirement age

(60 years) (2024: 60 years), discount rate (11% p.a.) (2024: 12% p.a.) and salary increases (9% p.a.) (2024: 10% p.a.).

The severance provision of £0.1m (2024: £0.1m) relates to severance costs payable to employees.

The dilapidation provision of £3.5m (2024: £3.3m) 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 £0.9m (2024: £0.4m), restructuring provisions of £1.3m (2024: £1.9m)

and other provisions of £0.8m (2024: £1.1m). The provisions greater than one year are expected to be utilised within one to

three years.

27. Financial risk controls

Management of financial risk

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 2025, would have increased the

Group’s profit before tax by approximately £1.3m (2024: £1.3m).

189 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Management of foreign exchange risk

The Group’s Shareholders’ equity, earnings and cash flows are exposed to foreign exchange risks, due to the mismatch

between the currencies in which it purchases inventory and the final currency of sale to its customers.

It is Group policy to hedge identified significant foreign exchange exposure on its committed operating cash flows. This is

carried out centrally based on forecast orders and sales.

The US Dollar and Euro represent the main foreign exchange translational exposures for the Group. The following table

demonstrates the sensitivity of the Group’s profit before tax to a 10% strengthening in Sterling against US Dollar and Euro.

Profit before tax – gain/(loss)

2025

£m

2024

£m

10% strengthening in Sterling against Euro (1.9) (0.5)

10% strengthening in Sterling against US Dollar (1.1) (1.1)

Management of credit risk

Credit risk exists in relation to customers, banks and insurers. Exposure to credit risk is mitigated by maintaining credit

control procedures across a wide customer base.

The Group is exposed to credit risk that is primarily attributable to its trade and other receivables. This is minimised by

dealing with recognised creditworthy third parties who have been through a credit verification process. The maximum

exposure to credit risk is limited to the carrying value of trade and other receivables.

As well as credit risk exposures inherent within the Group’s outstanding receivables, the Group is exposed to counterparty

credit risk arising from the placing of deposits and entering into derivative financial instrument contracts with banks and

financial institutions. The Group manages exposure to this credit risk by entering into financial instrument contracts only

with highly credit-rated authorised counterparties which are reviewed and approved annually by the Board.

Counterparties’ positions are monitored on a regular basis to ensure that they are within the approved limits and that there

are no significant concentrations of credit risks. The Group’s largest customer is approximately 7% (2024: 7%) of Group sales.

Management of liquidity risk

The Group manages its exposure to liquidity risk and maximises its flexibility in meeting changing business needs through

the cash generation of its operations, combined with bank borrowings and access to long-term debt. In its funding strategy,

the Group’s objective is to maintain a balance between the continuity of funding and flexibility through the use of overdrafts,

bank loans and facilities.

At 31 March 2025, the Group had net cash of £43.7m (2024: £31.5m). The Group had total working capital facilities available of

£245.6m (2024: £246.8m) with a number of major UK and overseas banks, of which £240m (2024: £240m) were committed

facilities. The Group had drawn £139.3m against total facilities at 31 March 2025 (2024: £137.4m). In addition, the Group has

an £80m accordion facility that it can use to extend the total facility up to £320m. The syndicated facility is available both for

acquisitions and for working capital purposes. The facilities are subject to certain financial covenants, which had significant

headroom at 31 March 2025.

Management of capital

The Group’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain

robust capital ratios to support the development of the business with a view to providing strong returns to Shareholders. In

order to maintain or adjust the capital structure, the Group increases bank borrowings, issues new shares or changes the

amount of dividends paid to Shareholders. In respect of this objective, the Group has a target gearing range of between 1.5

and 2.0 times. Gearing at 31 March 2025 was at the bottom of the range at 1.3 times (2024: 1.5).

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 23, cash and cash

equivalents in note 22 and equity attributable to Shareholders.

27. Financial risk controls continued

190 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Fair values

The Group’s principal non-derivative financial instruments comprise bank loans and overdrafts, cash and short-term

borrowings. The Group also holds other financial instruments such as trade receivables and trade payables that arise directly

from the Group’s trading operations.

Derivative financial instruments are represented by short-term foreign currency forward contracts placed by the Group with

external banks as part of the Group’s cash management and foreign currency risk management activities. The fair value of

derivative foreign exchange instruments is determined on initial recognition at forward market exchange rates at inception

of the contract and subsequently remeasured based on forward market exchange rates at the balance sheet date. As at

31 March 2025, the gross cash inflows/outflows for foreign exchange forward contracts was £31.9m, mainly in Euro and US

Dollar. The fair value of these derivatives included within trade and other payables was £0.2m (2024: £nil).

The carrying values of the Group’s trade and other receivables, trade and other payables and assets held for sale are

disclosed in notes 21, 29 and 12. The carrying value of these items approximates book value due to the short maturity of these

instruments.

The carrying values of the Group’s other financial assets and financial liabilities are set out below by category. Carrying values

for all financial assets and liabilities are equivalent to fair values.

Carrying

amount

2025

£m

Fair

value

2025

£m

Carrying

amount

2024

£m

Fair

value

2024

£m

Financial assets at amortised cost

Cash at bank and in hand 139.3 139.3 110.8 110.8

Deferred consideration 0.3 0.3 6.3 6.3

Financial liabilities at amortised cost

Bank overdrafts and short-term borrowings (95.6) (95.6) (79.3) (79.3)

Non-current interest-bearing loans and borrowings:

Floating rate borrowings (138.0) (138.0) (135.5) (135.5)

Lease liabilities (27.4) (27.4) (20.1) (20.1)

Financial liabilities at fair value through profit and loss (“FVTPL”)

Contingent consideration (9.3) (9.3) (6.7) (6.7)

The methods and assumptions used to determine the fair value of financial assets and liabilities are set out below.

All material changes in fair value of financial instruments as at the balance sheet date have been recognised in the

consolidated Statement of Profit or Loss. Impairment reviews did not identify any material impairment of financial assets

from carrying values as reported at the balance sheet date and, as such, no material impairments are included in the

consolidated Statement of Profit or Loss.

Fair value methods and assumptions

Forward foreign exchange contracts (forwards) – the fair value of forward foreign currency contracts is determined with

reference to observable yield curves and foreign exchange rates at the reporting date. The FX contracts outstanding with

banks at the year-end had a maturity of one year or less.

Loans and borrowings – the fair value of loans and borrowings has been calculated by discounting future cash flows, where

material, at prevailing market interest rates.

Fair Value Hierarchy

For financial assets and financial liabilities measured at fair value, as set out in the tables above, the fair value measurement

techniques are based upon applying unadjusted, quoted market rates or prices or inputs other than quoted prices that are

observable for the assets or liability either directly or indirectly.

IFRS 13 ‘Financial Instruments: Disclosures’ requires financial instruments measured at fair value to be analysed into a fair

value hierarchy based upon the valuation technique used to determine fair value. The highest level in this hierarchy is Level 3

within which inputs that are not based on observable market data for the asset or liability are applied.

28. Financial assets and liabilities

191 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

The valuation techniques used by the Group for the measurement of derivative financial instruments, loans and deferred

consideration are considered to be within Level 2, which includes inputs other than quoted prices included within Level 1

that are observable either directly or indirectly.

Contingent consideration is included in Level 3 of the fair value hierarchy. The fair value is determined considering the

expected payment, discounted to present value using a risk-adjusted discount rate. The expected payment is determined

separately in respect of each individual earn-out agreement taking into consideration the expected level of profitability

of each acquisition. The unobservable inputs are the projected forecast measures that are assessed on an annual basis.

Changes in the fair value of contingent consideration relating to updated projected forecast performance measures are

recognised in the consolidated Statement of Profit or Loss in the period that the change occurs.

Reconciliation of Level 3 fair value of contingent consideration payable on acquisitions:

2025

£m

2024

£m

At 1 April 6.7 4.1

Contingent consideration arising from current year acquisitions payable in future years 6.7 3.0

Contingent consideration paid in the current year relating to previous years’ acquisitions (2.3) –

Costs charged to the consolidated Statement of Profit or Loss:

Subsequent adjustments on acquisitions (1.7) (0.3)

Exchange difference 0.1 (0.1)

At 31 March 9.3 6.7

Subsequent adjustments on acquisitions of £1.7m credit (2024: £0.3m credit) and exchange differences of £0.1m (2024:

£0.1m) are included within operating costs.

Contingent consideration is sensitive to forecast operating profits of the relevant acquired businesses. At 31 March 2025, the

estimated fair value of contingent consideration payable on acquisitions would increase by £5.0m (2024: £2.4m) if projected

forecast profits were higher and decrease by £5.7m (2024: £2.4m) if projected forecast were lower by c.20%.

29. Trade and other payables

Current

2025

£m

2024

£m

Trade payables 42.3 44.7

Other payables 26.7 27.9

Accrued expenses and contract liabilities 12.1 14.9

81.1 87.5

Trade payables are non-interest bearing and are settled in accordance with credit terms. Other payables and accrued

expenses are non-interest bearing and are settled throughout the year. Included in current year other payables is contingent

consideration of £3.1m relating to acquisitions in the current and prior years (2024: £2.2m), employee-related payable of

£13.5m (2024: £14.7m), VAT payable of £4.2m (2024: £4.0m), a total of £3.5m of customers deposits (2024: £3.6m) and £2.4m

other payables (2024: £3.4m).

Contract liabilities relate to contracts with customers, recognised and measured in accordance with the requirements

of IFRS 15, and relate to either advance payments received for goods to be delivered in the future or amounts invoiced in

respect of performance obligations which are not yet satisfied in full and due to be satisfied within a period of 12 months

from the reporting date.

Contract liabilities as at 31 March 2025 amounted to £1.7m (2024: £1.2m). Revenue recognised in the reporting period that

was included in the contract liability balance at the beginning of the period amounted to £1.3m (2024: £1.0m).

Certain businesses in the Group participate in supply chain finance arrangements whereby suppliers may elect to receive

early payment of their invoices from a bank by factoring their receivable from discoverIE entities. Under this arrangement,

the term of invoices payable by the Group can be extended by 30-45 days from the original invoice due date, which impacts

the timing of payment but does not alter the value of the recognised liability. Included within trade payables is £2.1m (2024:

£2.0m) subject to such an arrangement.

28. Financial assets and liabilities continued

192 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Non-Current

2025

£m

2024

£m

Other payables 6.2 4.6

Included in non-current trade and other payables is £6.2m contingent consideration relating to acquisitions in the current

and prior years (2024: £4.5m).

30. Share capital

Allotted, called up and fully paid

2025

Number

2025

£m

2024

Number

2024

£m

Ordinary shares of 5p each 96,356,109 4.8 96,356,109 4.8

During the year to 31 March 2025, no shares were issued to the Group’s Employee Benefit Trust (2024: nil). At 31 March 2025

the Trust held 299,219 shares (2024: 414,600). During the year to 31 March 2025, employees exercised 115,381 share options

under the terms of the various share option schemes (2024: 275,492).

31. Share-based payment plans

The Group operates various share-based payment plans. The various schemes are explained below and have been separated

into two separate disclosures. The charge to the consolidated Statement of Profit or Loss in respect of each of these

schemes is:

2025

£m

2024

£m

a) discoverIE Group plc long-term incentive plan (“the LTIP”) 2.0 2.6

b) Approved and unapproved executive share option schemes – –

2.0 2.6

a) The LTIP

The LTIP involves a conditional award of shares on a grant of a nil-cost option. The award of shares to Executive Directors

and senior management is recommended by the Remuneration Committee on the basis of various factors such as their

contribution to the Group’s success. The LTIPs are equity-settled and there are no cash-settled alternatives. The vesting of

an award is dependent on the individual’s continued employment for a three-year period from the date of grant and the

satisfaction by the Company of certain performance conditions. The exercise of the awards is also subject to a two-year

holding period from the date of vesting.

For awards made in the year ended 31 March 2025, the performance conditions are as follows:

■ 45% of the award is based on the Company’s comparative total shareholder return (“TSR”) against a comparator group

made up of the constituents of the FTSE250 Index;

■ 45% of the award is based on the Company’s absolute earnings per share (“EPS”) performance;

■ 10% of the award is subject to the Company’s ESG performance (“ESG”), based on the Company’s reduction in carbon

emissions;

■ For certain operational management, 25% of the award is based on the Company’s absolute earnings per share (“EPS”)

performance and 75% of the award is based on local earnings targets.

29. Trade and other payables continued

193 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Awards are valued using the Monte Carlo model and Black-Scholes model. No non-market performance conditions were

included in the fair value calculations. The fair value per award granted and the assumptions used in the calculation are

as follows:

Awards granted in the year ended 31 March 2025:

Grant date

12 June

2024

TSR

12 June

2024

EPS

12 June

2024

ESG

12 June

2024

EPS/Local

Share price at grant date £7.17 £7.17 £7.17 £7.17

Exercise price nil nil nil nil

Number of employees 15 15 15 36

Shares under option 235,229 235,229 52,273 178,744

Vesting period (years) 3 3 3 3

Expected volatility 39.36% 39.36% 39.36% 39.36%

Option life (years) 10 10 10 10

Expected life (years) 5 5 5 5

Risk-free rate of return 4.37% 4.37% 4.37% 4.37%

Expected dividend yield nil nil nil nil

Fair value £3.81 £6.56 £6.56 £6.72

Awards granted in the year ended 31 March 2024:

Grant date

14 June

2023

TSR

14 June

2023

EPS

14 June

2023

ESG

14 June

2023

EPS/Local

Share price at grant date £9.38 £9.38 £9.38 £9.38

Exercise price nil nil nil nil

Number of employees 15 15 15 22

Shares under option 184,082 184,082 40,907 82,637

Vesting period (years) 3 3 3 3

Expected volatility 40.83% 40.83% 40.83% 40.83%

Option life (years) 10 10 10 10

Expected life (years) 5 5 5 5

Risk-free rate of return 4.72% 4.72% 4.72% 4.72%

Expected dividend yield nil nil nil nil

Fair value £6.49 £8.90 £8.90 £8.91

The expected volatility is based on historical volatility over the period of time commensurate with the expected term

immediately prior to the date of grant. The expected life is the average expected period to exercise. The risk-free rate of

return used in the valuation is the rate of interest obtainable from government securities over a period commensurate with

the expected term of the equity incentive.

The total charge for the year relating to the LTIP schemes was £2.0m (2024: £2.6m).

31. Share-based payment plans continued

194 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Outstanding LTIP

A summary of the awards that have been granted under the LTIP and remain outstanding is given below:

At 31 March 2025

Outstanding at

1 April 2024

Granted

during the year

Forfeited

during the year

Exercised

during the year

Outstanding at

31 March 2025

Exercise

dates

5,500 – – (5,500) – 2022–2026

452,990 – – – 452,990 2023–2027

312,508 – – – 312,508 2023–2028

614,531 – – (103,877) 510,654 2024–2029

506,328 – (2,619) (679) 503,030 2025–2030

358,925 – (72,456) (345) 286,124 2026–2031

574,015 – (13,560) – 560,455 2027–2032

488,500 – (10,867) – 477,633 2028–2033

– 701,475 – – 701,475 2029–2034

3,313,297 701,475 (99,502) (110,401) 3,804,869

At 31 March 2024

Outstanding at

1 April 2023

Granted

during the year

Forfeited

during the year

Exercised

during the year

Outstanding at

31 March 2024

Exercise

dates

5,500 – – – 5,500 2022–2026

629,140 – – (176,150) 452,990 2023–2027

390,924 – (3,834) (74,582) 312,508 2023–2028

620,943 – (6,412) – 614,531 2024–2029

547,867 – (41,539) – 506,328 2025–2030

371,739 – (12,814) – 358,925 2026–2031

592,086 – (18,071) – 574,015 2027–2032

– 491,708 (3,208) – 488,500 2028–2033

3,158,199 491,708 (85,878) (250,732) 3,313,297

The weighted average remaining contractual life for the share options outstanding at 31 March 2025 is 5.9 years (2024: 6.2

years) and the weighted average share price for the exercises during the year ended 31 March 2025 was £6.85 (2024: £8.07).

The range of exercise prices for options outstanding at the end of the year was £nil (2024: £nil).

b) Approved and unapproved executive share option schemes

The Group operates an approved and an unapproved executive share option scheme, the rules of which are similar in all

material respects. The grant of options to senior management is recommended by the Remuneration Committee on the

basis of their contribution to the Group’s success. The options vest after three years.

The exercise price of the options is equal to the closing mid-market price of the shares on the trading day prior to the date of

the grant. Exercise of all options is subject to continued employment. The life of each option granted is ten years. There are

no cash settlement alternatives.

Options are valued using the Black-Scholes model. No non-market performance conditions were included in the fair value

calculations.

The fair value per option granted during the year and the assumptions used in the calculation are as follows:

31. Share-based payment plans continued

195 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Grant date

12 June

2024

14 June

2023

Share price at grant date £7.17 £9.38

Exercise price £7.24 £9.18

Number of employees 11 10

Shares under option 28,285 19,011

Vesting period (years) 3 3

Expected volatility 37.80% 37.51%

Option life (years) 10 10

Expected life (years) 6.5 6.5

Risk-free rate of return 4.37% 4.72%

Expected dividends expressed as a dividend yield 1.67% 1.22%

Fair value £2.67 £3.82

The expected volatility is based on historical volatility over the period of time commensurate with the expected term

immediately prior to the date of grant. The expected life is the average expected period to exercise. The risk-free rate of

return used in the valuation is the rate of interest obtainable from government securities over a period commensurate with

the expected term of the equity incentive.

The total charge for the year relating to the approved and unapproved share option schemes was £35,000 (2024: £39,000).

Outstanding share options under the executive share option schemes

A summary of the options over ordinary shares that have been granted under the approved and unapproved executive

share option schemes and remain outstanding is given below:

At 31 March 2025

Outstanding at

1 April 2024

Granted

during the

year

Forfeited

during the

year

Exercised

during the

year

Outstanding at

31 March 2025

Exercise price

(pence)

Exercise

dates

6,144 – – – 6,144 421.17 2022–2029

11,374 – (4,792) – 6,582 603.60 2023–2030

11,731 – (6,548) – 5,183 803.00 2024–2031

13,855 – (5,474) – 8,381 686.80 2025–2032

17,882 – (5,678) – 12,204 918.00 2026–2033

– 28,285 (7,730) – 20,555 724.00 2027–2034

60,986 28,285 (30,222) – 59,049

At 31 March 2024

Outstanding at

1 April 2023

Granted

during the

year

Forfeited

during the

year

Exercised

during the

year

Outstanding at

31 March 2024

Exercise price

(pence)

Exercise

dates

1,691 – – (1,691) – 219.50 2020–2027

9,580 – – (9,580) – 402.00 2021–2028

10,693 – – (4,549) 6,144 421.17 2022–2029

11,374 – – – 11,374 603.60 2023–2030

11,731 – – – 11,731 803.00 2024–2031

15,179 – (1,324) – 13,855 686.80 2025–2032

– 19,011 (1,129) – 17,882 918.00 2026–2033

60,248 19,011 (2,453) (15,820) 60,986

31. Share-based payment plans continued

196 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

31. Share-based payment plans continued

Changes in share options

A reconciliation of option movements over the year to 31 March 2025 is shown below:

2025 2024

Number

Weighted

average

exercise

price Number

Weighted

average

exercise

price

Outstanding at 1 April 60,986 £7.35 60,248 £5.88

Granted 28,285 £7.24 19,011 £9.18

Exercised – – (15,820) £3.88

Forfeited (30,222) £7.52 (2,453) £7.93

Outstanding at 31 March 59,049 £7.21 60,986 £7.35

Exercisable at 31 March 29,249 £5.99 17,518 £5.40

The weighted average remaining contractual life for the share options outstanding at 31 March 2025 is 7.5 years

(2024: 7.7 years).

The range of exercise prices for options outstanding at the end of the year was £4.21 to £9.18 (2024: £4.21 to £9.18).

32. Pension

Defined contribution schemes

The Group makes payments to various defined contribution pension schemes, the assets of which are held in separately

administered funds. In the United Kingdom, the main scheme is the discoverIE Group plc Employee Pension Scheme

(“the discoverIE scheme”). Contributions by both employees and Group companies are held in externally invested trustee-

administered funds.

The Group contributes a specified percentage of earnings for members of the discoverIE scheme, and thereafter has

no further obligations in relation to the discoverIE scheme. At 31 March 2025, 99 employees were active members of the

discoverIE scheme (2024: 94). The total cost charged to the consolidated Statement of Profit or Loss in relation to the UK-

based discoverIE scheme was £491,000 (2024: £459,000). Employer contributions in respect of other UK-based schemes and

overseas pension schemes were £906,000 (2024: £650,000) and £2,673,000 (2024: £2,812,000) respectively. Total contributions

payable in the next financial year are expected to be at rates broadly similar to those in FY 2024/25 but based on actual salary

levels in FY 2025/26.

Defined benefit schemes

The acquisition of the Sedgemoor Group in June 1999 brought with it certain defined benefit pension schemes, together

“the Sedgemoor Scheme”. The Sedgemoor Scheme is funded by the Group, provides retirement benefits based on final

pensionable salary and its assets are held in a separate trustee-administered fund.

Following the acquisition of the Sedgemoor Group, the Sedgemoor Scheme was closed to new members. Shortly thereafter,

employees were given the opportunity to join the discoverIE scheme and future service benefits ceased to accrue to

members under the Sedgemoor Scheme.

Contributions to the Sedgemoor Scheme are determined in accordance with the advice of independent, professionally

qualified actuaries and are set based upon funding valuations carried out every three years.

On 21 January 2025, the Trustee entered into a bulk annuity “buy-in” policy with an insurance company. This policy covers

all known current members of the Scheme and its fair value matches the present value of the benefits insured. To fund the

premium, the Group paid cash contributions to the Scheme of £4.5m in 2025, of which £3.0m came from an escrow account

set up to the benefit of the Trustee.

Other than the Trustee bank account, the buy-in policy is the only asset now held by the Trustee as part of the Scheme’s

investment strategy. Under the terms of the policy, the Trustee will receive income equal to the pension benefits that have

been insured. This largely removes exposure to the Group from pension scheme investment, inflation and longevity risks.

Residual differences between the benefits currently insured under the buy-in policy and those paid out by the Fund are

allowed for within the IAS19 figures.

197 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Based upon the results of the triennial funding valuation at 31 March 2024, the Sedgemoor Scheme’s Trustee agreed with

Sedgemoor Limited on behalf of the participating employers to make regular payments totalling £0.4m over the year to

31 March 2026, with subsequent contributions of £0.4m p.a. increasing by 3% each April payable over the period to May

2030. These contributions, payable monthly, will continue to be paid into an escrow account to the benefit of the Trustee

unless and until the scheme is wound up. In addition, 12 payments of £50k will be paid monthly from June 2025 to May

2026 directly to the Scheme. Additional payments to either the Scheme or the escrow account will also be made to cover

any back payments due to members following completion of the data cleansing and GMP equalisation projects, currently

estimated to be £0.9m and are due to be paid in instalments from Q4 calendar 2025 to Q2 calendar 2026. For the year

ended 31 March 2025, a total of £0.8m (2024: £2.0m) was paid into the escrow account and £1.5m was paid directly into the

Scheme (2024: £nil).

The main actuarial assumptions used are set out as follows:

2025 2024

Rate of increase of pensions in payment 2.4% 2.5%

Discount rate 5.6% 4.8%

Inflation assumption – RPI 3.3% 3.4%

Inflation assumption – CPI* 2.2% 2.3%

*3.2% from 2030

The discount rate is based on the yields on AA grade sterling corporate bonds at the reporting date.

Pensioner mortality assumptions are based on 110% of the rates in the ‘S4NA’ table, projected from 2013 and with long-term

improvement rates in line with CMI 2023 projections based on each member’s actual date of birth with a long-term annual

rate of improvement of 1.25% pa. These projections are the “core” projections released by the CMI, other than allowing for a

20% weighting of 2022 and 2023 mortality data reflecting our best estimate impact on long term mortality trends.

The weighted average duration of the defined benefit obligation at 31 March 2025 was 9 years (2024: 10 years).

The Directors consider that were a pension asset to be realised in respect of this scheme after all member benefits have

been paid and after the scheme is wound up, this would be fully recoverable by the Group in line with the rules of the

scheme.

The charges recognised in the consolidated Statement of Profit or Loss in respect of defined benefit schemes are as follows:

2025

£m

2024

£m

Pension charge (recognised in operating costs) 0.7 0.9

32. Pension continued

198 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

Past service cost

The charges recognised in the consolidated Statement of Comprehensive Income are as follows:

Remeasurement (losses)/gains:

2025

£m

2024

£m

Return on plan assets (excluding amounts included in net interest expense) (7.6) (1.4)

Actuarial changes arising from changes in actuarial assumptions 2.9 0.2

Actuarial loss recorded in the consolidated Statement of Comprehensive Income (4.7) (1.2)

There was £nil additional actuarial loss relating to the unfunded retirement and leaving indemnity schemes (note 26)

recorded in the consolidated Statement of Comprehensive Income.

The fair value of assets and expected rates of return used to determine the amounts recognised in the consolidated

Statement of Financial Position are as follows:

2025

£m

2024

£m

Bonds – 6.9

Cash 0.2 5.9

Liability-driven investments – 6.3

Asset-backed security – 9.0

Bulk annuity policy 23.3 –

Fair value of scheme assets 23.5 28.1

Present value of funded defined benefit obligations (24.0) (27.8)

(Liability)/asset recognised in the consolidated Statement of Financial Position (0.5) 0.3

Over the year to 31 March 2025, the surplus reduced from £0.3m to £0.5m deficit. The movement related to pension

administration costs of £0.7m (2024: £0.8m) and actuarial losses of £4.7m (2024: £1.2m) recognised in the consolidated

Statement of Comprehensive Income.

32. Pension continued

199 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Changes in the present value of the defined benefit obligation are as follows:

2025

£m

2024

£m

Opening defined benefit obligations 27.8 28.6

Net interest cost 1.3 1.3

Actuarial losses/(gains) due to:

Experience on benefit obligation (0.7) 0.1

Changes in financial assumptions (1.9) (0.1)

Changes in demographic assumptions (0.4) (0.2)

Benefits paid (2.1) (1.9)

Closing defined benefit obligations 24.0 27.8

Changes in the fair value of the scheme assets are as follows:

2025

£m

2024

£m

Opening fair value of scheme assets 28.1 30.9

Interest on scheme assets 1.3 1.4

Actual return on plan assets less interest on plan assets (7.6) (1.4)

Pension administration costs (0.7) (0.9)

Contributions 4.5 –

Benefits paid (2.1) (1.9)

Closing fair value of scheme assets 23.5 28.1

Sensitivities

The sensitivity of the 2025 pension liabilities to changes in assumptions are as follows:

Assumption Change in assumption

Increase in

scheme deficit

£m

Discount rate Decrease by 0.5% 1.1

Inflation Increase by 0.5% 0.4

Life expectancy Increase by 1 year 1.1

Following the buy-in, any such changes above would result in a corresponding change in the asset and no net impact on

the balance sheet position.

33. Auditors’ remuneration

During the year the Group paid fees for the following services from auditors:

2025

£m

2024

£m

Auditors’ remuneration:

Audit of the Group Financial Statements (including the Company) 0.7 0.8

Audit of local subsidiary Financial Statements 0.8 1.0

Total audit fee 1.5 1.8

Audit-related assurance services:

Review of the half year interim statement 0.1 0.1

Audit fees 1.6 1.9

The fee for non-audit services was £83,500 (2024: £123,000), of which £80,000 (2024: £112,000) relates to interim review and

£3,500 (2024: £11,000) relates to reporting required by regulators in overseas countries.

32. Pension continued

200 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

34. Related party disclosures

As at 31 March 2025 the Group’s subsidiaries are set out below. Unless otherwise stated, the Group holds (directly or

indirectly) 100% of the total voting rights of all subsidiaries.

Except where noted, all material subsidiaries have a 31 March year-end and the shares carry the same voting rights as their

effective interest.

UK-registered subsidiaries that qualify to take the statutory audit exemption as set out within section 479A of the

Companies Act 2006 for the year ended 31 March 2025 are listed below. discoverIE Group plc will guarantee the debts and

liabilities of those companies at the balance sheet date in accordance with section 479C of the Companies Act 2006.

Audit exempt entities within section 479A of Companies Act 2006

Name Company Number

CDT 123 Limited 09637514

Contour Holdings Limited 06846542

Cursor Controls Holdings Limited 09472278

CustomDesignTechnologies Limited 03207845

discoverIE Electronics Limited 06556285

discoverIE Nordic Holdings Limited 09056483

Herga Technology Limited 00533707

SLV Holdings Limited 09943868

Santon Switchgear Limited 03207845

Variohm Holdings Limited 05783452

Xi-Tech Limited 07068708

Sens-Tech Limited 00668759

Contour Electronics Limited 02773976

Cursor Controls Limited 04105605

Variohm-Eurosensor Limited 02736925

discoverIE Management Services Ltd 02036196

discoverIE Holdings Ltd 01618416

Noratel UK Limited 04136659

Vertec Scientific Limited 01677833

Silver Telecom Limited 03434576

Hivolt Capacitors Limited NI029851

2J Antennas UK Limited 08356756

Antenova Limited 03835617

Stortech Electronics Limited 02217300

With the exception of Hivolt Capacitors Limited, the country of incorporation and registration for the entities above is England

and Wales and the registered address is 2 Chancellor Court, Occam Road, Surrey Research Park, Guildford, Surrey, GU2 7AH.

The country of incorporation and registration for Hivolt Capacitors Limited is Northern Ireland and the registered address is

Maydown Industrial Estate, Derry, BT47 6UQ.

Name and nature of business Registered address

Country of

incorporation

and registration

Management Services - Head Office

discoverIE Management Services Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Operating Companies

2J Antennas s.r.o Štefánikova 61, 085 01 Bardejov Slovakia

2J Antennas UK Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

2J Antennas USA Corporation 2020 W Guadalupe Rd, Suite 8, Gilbert, Arizona, 85233 USA

201 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Name and nature of business Registered address

Country of

incorporation

and registration

Antenova Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

burster Inc. 50207 Hayes Road, Shelby Township, MI 48315 USA

burster präzisionsmesstechnik

GmbH & Co KG

Nymphenburger Str. 3, c/o McDermott Will & Emery

Lawyers Tax Consultants LLP, 80335 Munich

Germany

Calculagraph Company (trading as Control

Products Inc)

280 Ridgedale Avenue, East Hanover, New Jersey 07936 USA

Coil-Tran de Mexico, S.A. DE C. V.

Calle Matamoros 124, Colonia Centro, Municipio

Agualeguas, Nuevo Leon, CP 65800

Mexico

Coil-Tran LLC (trading as Hobart

Electronics and Noratel US)

160 South Illinois Street, Hobart, Indiana, 46342-4512 USA

Contour Electronics Asia Limited Room 601, 6/F Shing Yip Industrial Building, 19-21 Shing

Yip Street, Kwun Teng, Kowloon

Hong Kong

Contour Electronics Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Cursor Controls Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

CustomDesignTechnologies Ltd 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Danselbud Noratel Transformator sp. z o.o. ul. Szczecinska 1K, Dobra Szczecinska PL-72-003 Poland

Diamond Technologies Inc. 43 Broad Street, Unit C103, Hudson, MA 01749 USA

EMC Innovation Limited

Woolim Lions Valley B-909 & 910, 283 Bupyeong-daero,

Bupyeong-gu, Incheon

South Korea

Flux A/S Industrivangen 5, 4550 Asnaes Denmark

Flux International Limited 41/27, 23 Village No. 6, Phuncharoen Lane, Bangna-Trad

K.M. 16.5 Road, Bang Chalong Sub-district, Bang Phli

District, Samut Prakan Province, 10540

Thailand

Foshan Noratel Electric Co Limited

10, Plainvim (Foshan Nanhai) International Intelligent

Industrial Park, 12-1 Huasha Road, Shishan, Nanhai

Foshan, Guangdong Province

China

Foss Fiberoptisk Systemsalg AS Dansrudveien 45, N-3036 Drammen Norway

Foss Fibre Optics s.r.o Odborárska 52, 831 02 Bratislava Slovakia

Hectronic AB Åkaregatan 2, 754 54 Uppsala Sweden

Hivolt Capacitors Limited Maydown Industrial Estate, Derry, BT47 6UQ Northern Ireland

Limitor GmbH Dieselstraße 22, 73660 Urbach Germany

Limitor Hungaria Kft Pécs, Makay István út 13/b, 7634 Hungary

Limitor Solutions GmbH Dieselstraße 22, 73660 Urbach Germany

Logic PD, Inc. (trading as Beacon

Embedded Works)

6201 Bury Drive, Eden Prairie, MN 55346 USA

Magnasphere Corporation 850 New Burton Road, Suite 201, Dover, DE 19904 USA

MTC Micro Tech Components GmbH Josef-Krätz-Strasse 13, 89407 Dillingen a.d. Donau Germany

Myrra Deutschland GmbH Marie – Curie – Str. 4/1, D – 71083 Herrenberg Germany

Myrra Hong Kong Limited 42/F Central Plaza,18 Harbour Road, Wanchai Hong Kong

Myrra Power sp. z o.o. Ul Warszawska 1, 05-310 Kaluszyn Poland

Myrra SAS 2 Boulevard de La Haye, 77600 Bussy-Saint-Georges France

Noratel AS Elektroveien 7, 3300 Hokksund Norway

Noratel Canada Inc 267 Matheson Boulevard East, Unit 2, Mississauga, ON

L4Z 1X8

Canada

Noratel Denmark A/S Metalvej 7F, 4000 Roskilde Denmark

34. Related party disclosures continued

202 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

34. Related party disclosures continued

Name and nature of business Registered address

Country of

incorporation

and registration

Noratel Finland OY Kiertokatu 5, PB 11, 24280 Salo, Helsinki Finland

Noratel Germany AG Elsenthal 53, DE-94481 Grafenau, Bremen Germany

Noratel India Power Components Pvt

Limited

Nila Technopark, Trivandrum, Kerala, 695581 India

Noratel International (Private) Limited P.O Box 15, Phase II, KEPZ, Katunayake Sri Lanka

Noratel Power Engineering LLC 3780 Kilroy Airport Way, Suite 200, Long Beach, CA 90822 USA

Noratel Sp. z o.o. ul. Szczecinska 1K, Dobra Szczecinska, PL-72-003 Poland

Noratel Sweden AB Lars Lindahlsväg 2, Box 108, Laxå 69522 Sweden

Noratel UK Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

NSI bvba Kapittelstraat 18, 3740 Bilzen Belgium

Santon Circuit Breaker Services B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Santon GmbH Oberstrasse 1, Altes Rathaus Hinsbeck, Postfach 5217,

41334 Nettetal

Germany

Santon Group B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Santon Holland B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Santon International B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Sens-Tech Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Shape LLC 850 New Burton Road, Suite 201, Dover DE 19904 USA

Silver Telecom Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Stortech Electronics Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Variohm-Eurosensor Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Vertec Scientific Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Zhongshan Myrra Electronic Co Limited

39-2 Industrial Road, Xiaolan Industrial Park, Xiaolan

Town, 528400, Zhongshan, Guandong Province

China

Holding Companies

Aramys SAS 2 Boulevard de la Haye, Parc Gustave Eiffel, 77600 Bussy-

Saint-Georges

France

CDT 123 Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Contour Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Cursor Controls Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

discoverIE Electronics Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

discoverIE Europe Holding BV Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

discoverIE France Holdings SAS 2 Boulevard de la Haye, Parc Gustave Eiffel, 77600 Bussy-

Saint-Georges

France

discoverIE General Partner GmbH Talstraße 1 – 5, 76593 Gernsbach Germany

discoverIE German Acquisition GmbH

Talstraße 1 – 5, 76593 Gernsbach Germany

discoverIE German Holdings GmbH Nymphenburger Str. 3, c/o McDermott Will & Emery

Lawyers Tax Consultants LLP, 80335 Munich

Germany

discoverIE Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

203 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Name and nature of business Registered address

Country of

incorporation

and registration

discoverIE Nordic Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

discoverIE US Holdings Inc. 850 New Burton Road, Suite 201, Dover, DE 19904 USA

EWAC Holding B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Sedgemoor Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

SLV Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Trafo Holding AS Elektroveien 7, 3300 Hokksund Norway

Variohm Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Xi-Tech Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Dormant Companies

Acal Electronics Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

ACTECH Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Advanced Crystal Technology Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Amega Electronics Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Bosunmark Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Gothic Crellon Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Heason Technology Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Radiatron Components Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Radiatron Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Sedgemoor Group Pension Trustees Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Sedgemoor Group Supplementary Pension

Trustees Limited

2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Sedgemoor Holdings Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Townsend-Coates Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Coil-Mag LLC (trading as IMAG Electronics) 160 South Illinois Street, Hobart, Indiana, 46342-4512 USA

Herga Technology Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Santon Hekendorpstraat B.V. Hekendorpstraat 69, 3079 DX Rotterdam Netherlands

Santon Switchgear Limited 2 Chancellor Court, Occam Road, Surrey Research Park,

Guildford, Surrey, GU2 7AH

England & Wales

Zhongshan Myrra Electronic Co Limited, Foshan Noratel Electric Co Limited and EMC Innovation Limited have 31 December year-ends.

15% of Coil-Tran de Mexico SA de CV is owned by local management.

34. Related party disclosures continued

204 discoverIE Group plc Innovative Electronics

NOTES TO THE GROUP CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 MARCH 2025

34. Related party disclosures continued

Related parties

Remuneration of key management personnel

The Group considers key management personnel as defined in IAS 24 ‘Related Party Disclosures’ to be the members of the

Group Management Committee as set out on page 93. Remuneration is set out below in aggregate. The charge for share-

based payments of £1.8m (2024: £2.3m) relates to the Group’s LTIP as detailed in note 31.

2025

£m

2024

£m

Short-term employee benefits 4.6 4.7

Pension benefits 0.2 0.2

Share-based payments 1.8 2.3

6.6 7.2

Terms and conditions of transactions with related parties

All transactions with related parties were on an arm’s length basis. Outstanding balances at year-end are unsecured and

settlement occurs in cash.

Transactions with other related parties

There were no transactions with Directors (other than the payment of salaries and fees and the provision of employee

benefits as outlined in the Remuneration Report) during the year.

35. Exchange rates

The profit and loss accounts of overseas subsidiaries are translated into Sterling at average rates of exchange for the year and

consolidated Statements of Financial Position are translated at year-end rates. The main currencies are the US Dollar, the

Euro and the Norwegian Krone. Details of the exchange rates used are as follows:

Year to 31 March 2025 Year to 31 March 2024

Closing

rate

Average

rate

Closing

Rate

Average

rate

US Dollar 1.2947 1.2754 1.2643 1.2566

Euro 1.1971 1.1883 1.1695 1.1585

Norwegian Krone 13.6624 13.8861 13.6814 13.3524

36. Event after the reporting date

There were no matters arising, between the balance sheet date and the date on which these Financial Statements were

approved by the Board of Directors, requiring adjustment in accordance with IAS 10 “Events after the Reporting Period”. The

following important non-adjusting events should be noted:

Dividends

A final dividend of 8.60p per share (2024: 8.25p), amounting to a dividend of £8.3m (2024: £7.9m) and bringing the total

dividend for the year to 12.50p (2024: 12.0p), was declared by the Board on 3 June 2025. The Group Financial Statements do

not reflect this dividend.

205 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

Notes

2025

£m

2024

£m

Non-current assets

Investments 5 191.3 189.3

Deferred tax asset 6 0.8 1.4

Debtors 6 88.7 88.7

280.8 279.4

Current assets

Debtors

6 4.1 5.2

Cash at bank and in hand 55.8 33.1

59.9 38.3

Total assets 340.7 317.7

Current liabilities

Creditors: amounts falling due within one year 7 (48.5) (31.2)

(48.5) (31.2)

Total liabilities (48.5) (31.2)

Net assets 292.2 286.5

Capital and reserves

Called up share capital 8 4.8 4.8

Share premium account 192.0 192.0

Merger reserve 2.9 2.9

Profit and loss account 92.5 86.8

Total Shareholders’ funds 292.2 286.5

The profit of the Company for the financial year ended 31 March 2025 was £15.4m (2024: £24.4m).

These Financial Statements on pages 206 to 209 were approved by the Board of Directors on 3 June 2025 and signed on its

behalf by:

Nick Jefferies Simon Gibbins

Group Chief Executive Group Finance Director

It has been identified that amounts owed by subsidiary undertakings and deferred tax assets totalling £88.7m and £1.4m, respectively, at 31 March 2024

had previously been presented within current assets in error, and should have been presented within non-current assets. There was no expectation that

they would be recovered within 12 months and therefore did not meet the criteria to be classified as current assets. The comparative balance sheet has

accordingly been restated to show these balances within non-current assets. There has been no impact on net assets or the result for the year as a result

of this restatement.

206 discoverIE Group plc Innovative Electronics

COMPANY STATEMENT

OF FINANCIAL POSITION

AS AT 31 MARCH 2025

capital

£m

premium

£m

Merger

reserve

£m

Profit and

loss

account

£m

Total

£m

At 1 April 2023 4.8 192.0 2.9 71.0 270.7

Profit for the year – – – 24.4 24.4

Share-based payments – – – 2.6 2.6

Dividends – – – (11.2) (11.2)

At 31 March 2024 4.8 192.0 2.9 86.8 286.5

Profit for the year – – – 15.4 15.4

Share-based payments – – – 2.0 2.0

Dividends

– – – (11.7) (11.7)

At 31 March 2025 4.8 192.0 2.9 92.5 292.2

Refer to note 13 of the consolidated Financial Statements.

At 31 March 2025, an amount of £66.9m (2024: £63.2m) out of the total £92.5m (2024: £86.8m) in the profit and loss account is

available for distribution, subject to filing these Financial Statements with Companies House. When making a distribution to

Shareholders, the Directors determine profits available for distribution by reference to guidance on realised and distributable

profits under the Companies Act 2006 issued by the Institute of Chartered Accountants in England and Wales and the

Institute of Chartered Accountants of Scotland in April 2017. The profits of the Company have been received in the form

of dividends from subsidiary companies which have been paid to the Company in cash. The availability of distributable

reserves in the Company is dependent on dividends received from subsidiary companies meeting the definition of

qualifying consideration within the guidance referred to above, and on the available cash resources of the Group and other

accessible sources of funds. The level of distributable reserves is subject to any future restrictions or limitations at the time

such distribution is made.

207 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

COMPANY STATEMENT

OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2025

1. Basis of preparation

The separate Financial Statements of the Company have been prepared for all periods presented, in accordance with

Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS 101”) and in accordance with the Companies

Act 2006. These Financial Statements are prepared on the going concern basis and under the historical cost convention

modified for fair values, as described in note 2 to the consolidated Financial Statements.

2. Summary of material accounting policies

The summary of material accounting policies for the Company is described in note 2 to the consolidated Financial Statements.

3. Profit of the Company

The profit of the company for the financial year was £15.4m (2024: £24.4m). Dividend income received from subsidiary

undertakings amounted to £24.9m (2024: £34.4m). By virtue of section 408(3) of the Companies Act 2006, the Company is

exempt from presenting a separate Statement of Profit or Loss.

4. Employees

The Directors also provide services to other group undertakings and received remuneration from a subsidiary group

undertaking, discoverlE Management Services Limited, in respect of services to the Group. Directors’ emoluments are

shown in note 8 to the consolidated Financial Statements.

5. Investments

Subsidiary

undertakings

£m

At 1 April 2023 187.0

Impairment of investment (0.3)

Share-based payments 2.6

At 31 March 2024 189.3

Share-based payments 2.0

At 31 March 2025 191.3

Details of all direct and indirect holdings in subsidiaries are provided in note 34 of the consolidated Financial Statements.

Equity investments in subsidiary undertakings are reviewed annually for indicators of impairment of the carrying value,

measured at cost less accumulated impairment losses. Where the net assets of a subsidiary fall below the carrying amount

of the investment, an impairment test is performed. The impairment test compares the carrying amount to the estimated

recoverable amount, calculated based on value in use of the forecast business cash flows, discounted at the Company’s pre-

tax discount rate.

6. Debtors

2025

£m

2024

£m

Amounts falling due within one year:

Corporation tax 2.0 2.8

Other debtors 2.0 2.3

Prepayments 0.1 0.1

4.1 5.2

Amounts falling due within over one year:

Amounts owed by subsidiary undertakings 88.7 88.7

Amounts owed by subsidiary undertakings bore interest at a Sterling base rate plus a margin of 1.75% (2024: 1.75%). All

amounts are repayable on demand. There are no material expected credit losses recognised for these receivables.

At 31 March 2025, the Company has recognised a deferred tax asset of £0.8m (2024: £1.4m) in respect of losses. Deferred tax

assets are recognised to the extent that there are sufficient forecast future taxable profits against which the Company’s

losses can be offset. At 31 March 2025, the Company had not recognised a deferred tax asset in respect of tax losses of £2.1m

(2024: £4.3m).

208 discoverIE Group plc Innovative Electronics

NOTES TO THE COMPANY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2025

7. Creditors: amounts falling due within one year

2025

£m

2024

£m

Bank loans and overdrafts 6.3 7.6

Amounts owed to subsidiary undertakings 40.2 21.4

Other payables 0.7 0.7

Accruals 1.3 1.5

48.5 31.2

Amounts owed to subsidiary undertakings bore interest at a nil rate (2024: nil rate) and are repayable on demand.

8. Called up share capital

Allotted, called up and fully paid

2025

Number

2025

£m

2024

Number

2024

£m

Ordinary shares of 5p each 96,356,109 4.8 96,356,109 4.8

During the year to 31 March 2025, no shares were issued to the Group’s Employee Benefit Trust (2024: nil).

At 31 March 2025, there were outstanding options for employees of subsidiaries to purchase up to 3,863,918 (2024: 3,374,283)

ordinary shares of 5p each between 2022 and 2034 at prices ranging from £nil per share to £9.18 per share. These are subject

to certain performance conditions as disclosed in note 31 of the consolidated Financial Statements. During the year to

31 March 2025, employees exercised 115,381 share options under the terms of the various schemes (2024: 275,492). The shares

exercised during the year ended 31 March 2025 were settled by the Trust.

9. Related parties

The Company is exempt under the terms of FRS 101 from disclosing related party transactions with wholly owned entities

that are part of the Group as these transactions are fully eliminated on consolidation.

10. Financial guarantees

The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These guarantees are

financial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest

payments when due in accordance with the terms of their borrowings. Borrowings by subsidiary undertakings totalling

£139.3m (2024: £137.4m) which are included in the Group’s borrowings (note 23) have been guaranteed by the Company.

11. Share-based payments

For detailed disclosures of share-based payments granted to the employees of subsidiaries refer to note 31 of the

consolidated Financial Statements.

12. Post balance sheet events

There were no matters arising, between the statement of financial position date and the date on which these financial

statements were approved by the Board of Directors, requiring adjustment in accordance with IAS 10 ‘Events after the

reporting period’. The following important non-adjusting events should be noted:

Dividends

A final dividend of 8.60p per share (2024: 8.25p), amounting to a dividend of £8.3m (2024: £7.9m) and bringing the total

dividend for the year to 12.50p (2024: 12.0p), was declared by the Board on 3 June 2025.

209 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

2025

£m

2024

£m

2023

£m

2022

£m

2021

£m

Consolidated Statement of Profit or Loss –

continuing operations

Revenue 422.9 437.0 448.9 379.2 302.8

Adjusted operating profit 60.5 57.2 51.8 41.4 30.8

Adjusted profit before tax 50.1 48.2 46.3 37.6 27.2

Profit before tax 32.0 22.2 29.1 17.1 13.5

Profit for the year from continuing operations 24.6 15.5 21.3 9.7 9.5

Earnings per share – continuing operations

Adjusted earnings per share 38.7p 36.8p 35.2p 29.4p 22.4p

Diluted earnings per share 25.0p 15.8p 21.7p 10.1p 10.3p

Dividend per share 12.50p 12.0p 11.45p 10.8p 10.15p

Consolidated Statement of Financial Position

Net debt (94.3) (104.0) (42.7) (30.2) (47.2)

Non-current assets 396.9 381.0 335.9 326.5 244.6

Net assets 308.0 301.6 303.6 290.4 208.4

The figures up to 2022 exclude the results of discontinued operations mainly related to the disposal of the Acal BFi business.

210 discoverIE Group plc Innovative Electronics

FIVE YEAR RECORD

Group head office

Location Company City

United Kingdom discoverIE Group plc

discoverIE Management Services

Guildford

Operating companies

Location Company City

United Kingdom 2J Antennas UK

Antenova Limited

CDT

Contour Electronics

Cursor Controls

Heason Technology

Herga Technology

Hivolt Capacitors

Noratel UK

Positek

Sens-Tech

Silvertel

Stortech Electronics

Variohm-Eurosensor

Vertec Scientific

Waterlooville

Brackley

Hook

Newark

Horsham

Bury St. Edmunds

Derry

Nantwich

Cheltenham

Egham

Newport

Harlow

Towcester

Reading

Belgium NSI Bilzen

Canada Noratel Canada Toronto

China Mainland Antenova China

Foshan Noratel Electric

Zhongshan Myrra Electronic

Shanghai

Foshan City

Zhongshan

Denmark Flux

Noratel Denmark

Asnaes

Roskilde

Finland Noratel Finland Salo

France Myrra SAS Bussy St Georges

Germany Burster

Limitor

MTC Micro Tech Components

Noratel Germany

Variohm-Eurosensor

Gernsbach

Urbach

Dillingen

Bremen and Grafenau

Heidelberg

Hong Kong Contour Asia

Myrra Hong Kong

Kowloon

Wanchai

Hungary Limitor Hungaria Pécs

India Noratel India Power Components Bangalore and Trivandrum

Mexico Noratel Agualeguas, Nogales

Netherlands Santon Rotterdam

Norway Foss

Noratel Norway

Drammen

Hokksund

Poland Myrra Poland

Noratel Poland

Warsaw

Szczecinska

Slovakia 2J Antennas

Foss Fibre Optics

Bardejov

Bratislava

South Korea EMC Innovation Incheon

Sri Lanka Noratel International Katunayake

Sweden Hectronic

Noratel Sweden

Uppsala

Laxå and Vӓxjӧ

Taiwan Antenova Asia Taipei

Thailand Flux International Samut Prakan

USA 2J Antennas

Beacon EmbeddedWorks

Burster

Control Products Inc (CPI)

Diamond Technologies (DTI)

Noratel US

Magnasphere

Phoenix America

Shape

Gilbert, AZ

Eden Prairie, MN

Twinsberg, OH

East Hanover, NJ

Hudson, MA

Hobart, IN

Goshen, IN and Waukesha, WI

Fort Wayne, IN

Addison, IL

211 Annual Report and Accounts for the year ended 31 March 2025

Financial Statements

PRINCIPAL LOCATIONS

Annual General Meeting 24 July 2025

Results

Interim results for the six months to 30 September 2025

Preliminary announcement for the year to 31 March 2026

Annual Report 2026

Early December 2025

Early June 2026

Late June 2026

CORPORATE INFORMATION

Registered office

discoverIE Group plc

2 Chancellor Court

Occam Road

Surrey Research Park

Guildford

Surrey

GU2 7AH

Telephone: 01483 544500

Incorporated in England and Wales

with registered number: 02008246

Auditors

Deloitte LLP

Corporate solicitors

White & Case LLP

Principal bankers

AIB Group (UK) plc

Clydesdale Bank plc

Citibank NA Inc

Danske Bank A/S

Fifth Third Commercial Bank

HSBC Bank UK plc

KBC Bank NV

Registrar

Equiniti Limited

Highdown House

Yeoman Way

Worthing

West Sussex

BN99 3HH

www.shareview.co.uk

Stockbroker

Peel Hunt LLP

212 discoverIE Group plc Innovative Electronics

FINANCIAL CALENDAR 202526

The production of this report supports the work of the

Woodland Trust, the UK’s leading woodland conservation

charity. Each tree planted will grow into a vital carbon store,

helping to reduce environmental impact as well as creating

natural havens for wildlife and people.

213 Annual Report and Accounts for the year ended 31 March 2025

Additional Information

discoverIE Group plc

2 Chancellor Court

Occam Road, Surrey Research Park

Guildford, Surrey

GU2 7AH

Telephone +44 (0)1483 544500

www.discoverIEplc.com

discoverIE Group plc Annual Report and Accounts for the year ended 31 March 2025

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