discoverIE (DSCV) exited its first half with a record order book, up 18 per cent at constant currencies to £131m and a positive book to bill ratio of 1.03. With order volumes traditionally skewed to the second half, investors in the customised electronics group (formerly Acal) might realistically expect improved top-line visibility at the end of FY2019.
Operating costs were on the rise, due in part to the February acquisition of Santon, a Netherlands based designer and manufacturer of custom switches, coupled with increased investment in the design and manufacturing arm, which recorded organic sales growth of 10 per cent during the period. discoverIE is intent on moving up "the value chain", a process aided by the Santon deal, and evidenced by an 80 basis point increase in the gross margin. Combine this with double-digit revenue growth and underlying operating profit came in at £14.5m, a 23 per cent year-on-year increase.
Although underlying earnings have more than doubled over the past five years, management still aims to complete around two acquisitions a year. The group acquired Cursor Controls, which manufactures keyboards and trackpads, in October, and chief executive officer Nick Jefferies points to “a lot [of opportunities] in the pipeline”.
Broker Peel Hunt forecasts pre-tax profits of £26.3m for the March 2019 year-end, with EPS of 26.2p, up from £21.9m and 22.3p lin FY2018.
| discoverIE (DSCV) | ||||
| ORD PRICE: | 368p | MARKET VALUE: | £270m | |
| TOUCH: | 363-377p | 12-MONTH HIGH: | 456p | LOW: 324p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 181p* | NET DEBT: | 47% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 190 | 6.9 | 6.9 | 2.65 |
| 2018 | 212 | 6.4 | 6.5 | 2.80 |
| % change | +11 | -7 | -6 | +6 |
| Ex-div: | 20 Dec | |||
| Payment: | 14 Jan | |||
| Includes intangible assets of £106m, or 145p a share | ||||
