COVID-19 update

RNS Number : 9465H

Midwich Group PLC

30 March 2020

 

30 March 2020

Midwich Group plc

("Midwich", the "Company" or the "Group")

COVID-19 update

Midwich, a specialist audio visual distributor to the trade market, today provides an update in light of the constantly evolving COVID-19 situation.

Throughout this crisis we have prioritised protecting the health and wellbeing of our team, utilising particularly our remote working capabilities.

The situation in respect of COVID-19 continues to evolve rapidly across the countries in which the Group operates. The extent to which our business is currently affected varies by country, but we have taken actions across the Group to preserve cash and liquidity. Measures undertaken include the temporary suspension of acquisition activities and capital expenditure together with tighter controls on working capital and overheads. To further preserve cash, the Board has taken the decision to withdraw its intention to propose a final dividend for 2019.

Balance sheet and liquidity

In January 2020, the Group signed a new three year £50 million revolving credit facility which has unutilised capacity of £37.8 million. This facility also includes a £30 million accordion option and can be extended by a further two years, both at the bank's discretion. In February 2020, the Group successfully completed an equity fundraising of £39.7m, of which £21m was used in connection with the acquisition of Starin Marketing, Inc. The Group also has numerous working capital facilities (totalling over £100 million) which provide further funding flexibility to our businesses. At 31 December 2019, the Group had closing adjusted net debt/adjusted EBITDA of 1.4x. The Board believes that this balance sheet strength, together with a strong and supportive relationship with our banking partners, means that the Group is well placed to deal with current uncertainties.

The Board notes that, although our end user markets have been adversely affected by the COVID-19 situation to varying degrees, the Group continues to supply solutions into critical end user markets and also to facilitate remote working and communication. In particular, working with its customers, the Group has recently supplied solutions to support the UK and Italian governments in their battle with COVID-19.

Current trading

While it is too early to accurately determine the evolving impact of COVID-19 on the Group's performance in the current financial year, the Board believes that the audio visual industry is one of long term structural growth and that we are well positioned for when markets begin to return to normal.

Annual General Meeting ("AGM")

The Company is not authorised under its articles to hold a virtual or hybrid AGM, so the AGM will take place on 11 May 2020 and, subject to changes in government guidance, it will be held at Midwich's office in Diss Norfolk. The Board will be encouraging shareholders to submit their proxies as early as possible. In the exceptional current circumstances, the Board considers the health of the Company's shareholders and its employees to be of paramount importance and asks shareholders not to attend the meeting in person. Final details of the AGM will be confirmed when the 2019 Annual Report is published and distributed in the coming weeks.

For further information:

Midwich Group plc Stephen Fenby, Managing Director Stephen Lamb, Finance Director	Tel: [phone]
Investec Bank plc (NOMAD and Joint Broker to Midwich) James Rudd Carlton Nelson	Tel: [phone]
Berenberg (Joint Broker to Midwich) Ben Wright Mark Whitmore Alix Mecklenburg-Solodkoff	Tel: [phone]
FTI Consulting Alex Beagley Tom Hufton Fern Duncan Rafaella de Freitas	Tel: [phone]

About Midwich Group

Midwich is a specialist AV distributor to the trade market, with operations in the UK and Ireland, Continental Europe, Asia-Pacific and North America. The Group's long-standing relationships with over 500 vendors, including blue-chip organisations, support a comprehensive product portfolio across major audio visual categories such as large format displays, projectors, digital signage, unified communications 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 1,000 employees across the UK and Ireland, Continental Europe, 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

 

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