REG - Midwich Group PLC - Pre-close Trading Statement

MidwichAnnouncement

19/07/2022 07:00

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RNS Number : 8807S  Midwich Group PLC  19 July 2022

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.

Outlook

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                                       Tel: +44 (0) 13 7964 9200

 Stephen Fenby, Managing Director

 Stephen Lamb, Finance Director

 Investec Bank plc (NOMAD and Joint Broker to Midwich)   Tel: +44 (0) 20 7597 5970

 Carlton Nelson

 Ben Griffiths

 Berenberg (Joint Broker to Midwich)                     Tel: +44 (0) 20 3207 7800

 Ben Wright

 Mark Whitmore

 Alix Mecklenberg-Solodkoff

                                                         Tel: +44 (0) 20 3727 1000

 FTI Consulting

 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 1,500 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
(http://www.midwichgroupplc.com/)

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