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discoverIE Group PLC to resume dividend payments as it hits the acquisition trail again

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As a result of the resilient trading, improving outlook and strong balance sheet, the group intends to re-instate dividends

discoverIE Group PLC () is to resume paying dividends now that the outlook for the designer and supplier of customised electronics is improving.

The group, reporting on trading in the six months to the end of September, 2020, said that the business had been affected by the coronavirus (COVID-19) pandemic but noted that orders in both September and October were ahead of sales.

The group exited the first half of its financial year with orders up 6{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} year-on-year on a like-for-like or organic basis. Half-year sales were down 6{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} year-on-year, or 8{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} on an organic basis.

The group’s Design & Manufacturing division saw sales 3{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} lower than last year on a constant exchange rates (CER) basis and 7{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} lower organically, while Custom Supply sales were 10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} lower organically.

Cash flow throughout the first half continued to be strong with gearing at the end of September reduced to 1.05 times annual adjusted underlying earnings (EBITDA) compared to 1.25 times at the end of March.

The group said it would announce the size of the interim dividend at the time of its interim results, which are scheduled to be released on November 30.

Acquisitions have long been a significant part of the discoverIE’s strategy and the group announced another one today. It is to acquire Phoenix America, a designer and manufacturer of magnetically actuated sensors, encoders and related products for industrial customers in the US.

It will pay US$11.0mln (£8.5mln) upfront for the US company, with a further US$1.5mln (£1.2mln) due to be paid, depending on how the acquired business performs over the next three years.

The business will come under discoverIE’s Design & Manufacturing umbrella and should benefit from good cross-selling opportunities in both the US and Europe.

Phoenix reported sales for2019 of US$6.4mln (£4.9mln) with underlying operating profit of US$1.25mln (£1.0mln).

With a clear strategy focused on long-term high-quality growth markets, a strong funnel of design wins and acquisition targets, the group is well-positioned for growth, DiscoverIE’s trading update concluded.

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