TIDMMIDW
RNS Number : 2885G
Midwich Group PLC
18 July 2023
18 July 2023
Midwich Group PLC
("Midwich" or "the Group")
Pre-close Trading Statement
Midwich Group (AIM: MIDW), a global specialist audio visual
distributor to the trade market , is pleased to provide a trading
update for the six months ended 30 June 2023 ("H1 2023").
Overall trading was strong in H1 2023, with record first half
revenues and adjusted profit before tax.
Revenue is expected to be in excess of GBP610 million, an
increase of over 7.5% versus H1 2022 (5.1% growth on a constant
currency basis). Organic revenue growth on a constant currency
basis was 2.2% versus H1 2022. Continued recovery in the live
events market was partly offset by slower corporate and education
markets, particularly in the UK & Ireland.
The overall gross margin was around 16.3%, which is
significantly higher than the 14.9% achieved in H1 2022 and the
highest since the previous record in 2019. The mix of sales was the
main factor in this strong growth, driven by higher margin sales
into the live events market.
Adjusted EBIT was around GBP26 million, an increase of over
25.0% versus H1 2022. The EBIT margin was around 4.3% of sales (H1
2022: 3.6%).
Adjusted profit before tax for H1 2023 is expected to be over
GBP21.5 million, compared with GBP19.2 million in the first half of
2022, an increase of over 14.0%.
Trading in EMEA was strong, with revenue around 14.0% higher
than in H1 2022 (around 10.0% on a constant currency basis). The
EMEA audio businesses performed very well leading to strong
improvements in gross and adjusted operating margins in the
region.
Revenue in the UK & Ireland was marginally below H1 2022,
but strong gross margins and overheads management led to a
significant increase in operating profits in the region.
Cash generation was better than the Board's expectations.
Adjusted net debt* increased by around GBP7 million from the prior
year end to GBP103m, as a result of M&A spend and normal
working capital seasonality, less the balance of the GBP50 million
equity issue completed in June 2023. At 1.5x adjusted net debt over
adjusted EBITDA** at the period end, leverage remains comfortably
within the Group's covenants.
Acquisitions
In June 2023, the Group acquired SF Marketing, a specialist
value-add AV distributor in Canada, adding 1,500 new customers and
strengthening relationships with key tier-1 vendors in the audio
and visual markets.
Post the period end, and in line with the stated use of proceeds
of the equity issue in June 2023, the Group has acquired
Toolfarm.com, Inc and Digital Media Promos, Inc (trading as 76
Media) in the US, and HHB Communications Holdings Limited in the
UK. The aggregate cash spent (net of cash acquired) on these three
transactions was around GBP16 million.
Outlook
With order books remaining healthy, unless general economic
conditions deteriorate significantly, the Board expects the
momentum seen in H1 2023 to continue throughout the remainder of
the year. As a result, the Board continues to expect trading
performance for the full year to be in line with its previous
expectations before the positive contribution from the three
acquisitions completed in July.
Midwich will announce its half year results for the six months
ended 30 June 2023 on 5 September 2023.
* Adjusted net debt is borrowings less cash and cash equivalents
and excludes IFRS 16 lease liabilities
** A djusted EBITDA represents operating profit before
acquisition related expenses, share based payments and associated
employer taxes, depreciation and amortisation and includes a
proforma contribution twelve month contribution from
acquisitions
For further information:
Midwich Group plc Tel: +44 (0) 13
Stephen Fenby, Managing Director 7964 9200
Stephen Lamb, Finance Director
Investec Bank plc (NOMAD and Joint Broker Tel: +44 (0) 20
to Midwich) 7597 5970
Carlton Nelson
Ben Griffiths
Berenberg (Joint Broker to Midwich) Tel: +44 (0) 20
Ben Wright 3207 7800
Richard Andrews
Tel: +44 (0) 20
FTI Consulting 3727 1000
Alex Beagley
Tom Hufton
Rafaella de Freitas
About Midwich Group
Midwich is a specialist AV distributor to the trade market, with
operations in EMEA, the UK and Ireland, Asia Pacific and North
America. The Group's long-standing relationships with over 600
vendors, including blue-chip organisations, support a comprehensive
product portfolio across major audio visual categories such as
large format displays, projectors, digital signage and professional
audio. The Group operates as the sole or largest in-country
distributor for a number of its vendors in their respective product
sets.
The Directors attribute this position to the Group's technical
expertise, extensive product knowledge and strong customer service
offering built up over a number of years. The Group has a large and
diverse base of over 20,000 customers, most of which are
professional AV integrators and IT resellers serving sectors such
as corporate, education, retail, residential and hospitality.
Although the Group does not sell directly to end users, it believes
that the majority of its products are used by commercial and
educational establishments rather than consumers.
Initially a UK only distributor, the Group now has around 1,800
employees across the UK and Ireland, EMEA, Asia Pacific and North
America. A core component of the Group's growth strategy is further
expansion of its international operations and footprint into
strategically targeted jurisdictions.
For further information, please visit
www.midwichgroupplc.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTDDLFFXDLLBBQ
(END) Dow Jones Newswires
July 18, 2023 02:00 ET (06:00 GMT)
Midwich (LSE:MIDW)
Historical Stock Chart
From Apr 2024 to May 2024
Midwich (LSE:MIDW)
Historical Stock Chart
From May 2023 to May 2024
