Pre-close Trading StatementSource: RNS
19 July 2022
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 2022 ("H1 2022").
Trading was strong in H1 2022, with revenue expected to be in excess of £560 million, an increase of over 45% versus H1 2021, and a record first half for the Group. Organic revenue growth was approximately 27% versus H1 2021, with strong contributions from the Nimans and DVS businesses, which were both acquired early in H1 2022.
The overall gross margin was around 15.0%, which is broadly in line with H1 2021. The Group has seen a partial return of live events and in-person activities in a number of markets. Should these conditions continue, the Board expects to see stronger gross margins coming through in the second half of the year.
Adjusted profit before tax for H1 2022 is expected to be over £19 million, compared with £13.0 million in the first half of 2021, an increase of nearly 50%.
Performance in the UK & Ireland was significantly ahead of H1 2021, with revenue up 85%. The contributions from Nimans and DVS supplemented strong organic growth in this region.
Trading in North America was also very strong, with revenue increasing by over 90%. In EMEA, after substantial growth in the first half of 2021, revenue grew by 17% in H1 2022.
Cash generation was in line with the Board's expectations. Net debt increased by around £55 million, as a result of M&A spend and working capital increases due to normal seasonality and the significant growth in the business. At 2.1x adjusted net debt* over adjusted EBITDA** at the period end, leverage remains comfortably within the Group's covenants.
With order books remaining very strong, unless general economic conditions deteriorate significantly, the Board expects the momentum seen in H1 2022 to continue throughout the remainder of the year. As a result, the Board now expects trading performance for the full year will be slightly ahead of its previous expectations.
Midwich will announce its half year results for the six months ended 30 June 2022 on 6 September 2022.
* Adjusted net debt is borrowings less cash and cash equivalents and excludes IFRS 16 lease liabilities
** Adjusted 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
Stephen Fenby, Managing Director
Stephen Lamb, Finance Director
Tel: +44 (0) 13 7964 9200
Investec Bank plc (NOMAD and Joint Broker to Midwich)
Tel: +44 (0) 20 7597 5970
Berenberg (Joint Broker to Midwich)
Tel: +44 (0) 20 3207 7800
Rafaella de Freitas
Tel: +44 (0) 20 3727 1000
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 1,500 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