REG - Midwich Group PLC - Year End Trading Update

MidwichAnnouncement

17/01/2024 07:00

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RNS Number : 9112Z  Midwich Group PLC  17 January 2024

17 January 2024

 

Midwich Group plc

("Midwich" or the "Group")

 

Year End Trading Update

 

Record Performance in a Challenging Market

 

Midwich Group plc (AIM: MIDW), a global specialist audio visual distributor to
the trade market, is today providing a trading update for the year ended 31
December 2023.

 

The Group finished the year well and the Board now expects to report record
revenue for 2023 of c.£1.3 billion, representing growth of approximately 7%
over the prior year (6% at constant currency), with organic revenue in line
with the prior year. Positive product mix resulted in gross margin of c.16.8%,
exceeding pre-Covid levels. The Board anticipates reporting adjusted profit
before tax of approximately £50 million, which is in line with market
expectations*.

 

The Group delivered strong cash generation in the year, of around 100%, ahead
of our long-term expectations of 70-80% of adjusted EBITDA. Adjusted net
debt** at 31 December 2023 was c.£90 million (representing approximately 1.3
times adjusted EBITDA***).

 

Stephen Fenby, Group Managing Director, commented:

 

"After two years of exceptional revenue growth, the market backdrop throughout
2023 was much more challenging, with demand for our more mainstream AV
products impacted significantly in many territories. We responded to this by
focusing on our technical product categories, completing a record seven
acquisitions in 2023 and ending the year with a strong M&A pipeline.

 

I am delighted to report that the Group delivered the highest revenue, gross
margins and adjusted profit before tax in its history and, I believe, we made
further market share gains in our biggest regions. Generating a record
performance in a tough market takes an exceptional team and I would like to
thank each of my colleagues together with our customers and vendor partners
for their continued support.

 

Whilst the broader market backdrop remains uncertain, the recent acquisitions
have integrated well and continue to trade broadly in line with our
expectations. Consequently, the Group remains well positioned to continue to
deliver both organic and inorganic growth in 2024 and the longer term."

 

Midwich will announce its final results for the year ended 31 December 2023 on
19 March 2024.

 

*Market consensus based on an average of £50.3m and a range of £49.4m to
£51.0m, as at 16 January 2024

** 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,
amortisation and impairments and, for leverage purposes, includes a proforma
twelve-month contribution from acquisitions

 

For further information:

 

 Midwich Group plc                                        +44 (0) 1379 649200

Stephen Fenby, Managing Director

Stephen Lamb, Finance Director
 Investec Bank plc (NOMAD and Joint Broker to Midwich)    +44 (0) 20 7597 5970

 Carlton Nelson / Ben Griffiths
 Berenberg (Joint Broker to Midwich)                      +44 (0) 20 3207 7800

Ben Wright / Richard Andrews
 FTI Consulting                                           +44 (0) 20 3727 1000

Alex Beagley / Tom Hufton

 

About Midwich Group

 

Midwich Group is a specialist AV distributor, with operations in the UK and
Ireland, EMEA, 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 displays, projectors, technical AV, broadcast, professional audio,
lighting and unified communications. 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 22,000 trade
customers, most of which are professional AV integrators and IT resellers
serving sectors such as corporate, education, retail, residential and
hospitality.

 

Initially a UK only distributor, the Group now has over 1,900 employees across
the UK and Ireland, EMEA, North America and Asia Pacific. 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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