Year End Trading Update

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 Stephen Fenby, Managing Director Stephen Lamb, Finance Director	[phone]
Investec Bank plc (NOMAD and Joint Broker to Midwich) Carlton Nelson / Ben Griffiths	[phone]
Berenberg (Joint Broker to Midwich) Ben Wright / Richard Andrews	[phone]
FTI Consulting Alex Beagley / Tom Hufton	[phone]

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

 

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