TIDMMIDW
RNS Number : 2302M
Midwich Group PLC
20 January 2021
20 January 2021
Midwich Group Plc
("Midwich" or "the Group")
Year End Trading Update
Midwich Group (AIM: MIDW), a specialist audio visual distributor
to the trade market with operations across the UK and Ireland,
EMEA, Asia Pacific and North America, is today providing a trading
update for the year ended 31 December 2020.
Despite the ongoing challenges of the coronavirus pandemic, the
Group's trading recovery continued in the second half of the year
and, as a consequence of a strong close in November and December,
the Board now expects to report revenue for 2020 as a whole in
excess of GBP710 million, representing growth of approximately 4%
over the prior year (4% at constant currency). Underlying sales
before the effect of in-year acquisitions were 7% lower in the
second half of the year than in the comparative period in 2020,
compared with 22% lower in the first half, giving an overall
decline of 14% for the year.
As a result of this strong performance, the Board now
anticipates reporting adjusted profit before tax for 2020 of
approximately GBP14 million, significantly ahead of its prior
expectations.
A number of the Group's end user markets, such as hospitality
and events, continue to be depressed as a result of lockdown
restrictions in various territories. As these are often more
profitable areas, gross margins continued to be held back in the
second half of the year.
The Group's focus on working capital management has led to
strong cash generation, with net debt reducing to approximately
GBP20 million at 31 December 2020 (2019: GBP53 million).
The current lockdowns that are in place in many of the Group's
key geographical markets mean that market conditions for the
Group's products and services are likely to be impacted for at
least the first half of 2021. In view of this uncertainty, although
trading strengthened as we closed 2020, the Board currently
considers it too early to revise its expectations for 2021.
Stephen Fenby, Group Managing Director of Midwich,
commented:
"I am pleased with the Group's significant achievements in what
was a very challenging year for both the world economy and our
industry.
Despite significant challenges, we managed to continue our
long-term year-on-year revenue growth. Although markets for many of
our higher margin product areas were significantly depressed (and
continue to be so), I am pleased that the Group was able to grow
its share of the business available. This demonstrates that our
service levels have remained high and that we are well placed to
capitalise on future market demand when it returns fully.
The Group has made substantial progress in acquiring new brands
while also exiting from lower margin or unprofitable relationships.
In particular, we have enhanced our offering in the unified
communications, collaboration and audio segments through the
year.
Our acquisition of Starin Marketing in the US in February 2020,
followed by the announcement in December of the acquisition of NMK
in the Middle East, represent the Group's entry into two
strategically important markets. These acquisitions should
substantially enhance our ability to serve international
integrators and their global end user project rollouts. As a result
of these acquisitions, the Group now has a foothold in all
strategically important global regions and will look to build on
that presence in the years to come. Our enhanced team represents by
far the strongest in the industry and our acquisition pipeline
remains healthy."
Midwich will announce its final results for the year ended 31
December 2020 on 9 March 2021.
For further information:
Midwich Group plc Tel: +44 (0) 13
Stephen Fenby, Managing Director 7964 9200
Stephen Lamb, Finance Director
Investec Bank plc (NOMAD and Joint Broker Tel: +44 (0) 20
to Midwich) 7597 5970
James Rudd
Carlton Nelson
Berenberg (Joint Broker to Midwich) Tel: +44 (0) 20
Ben Wright 3207 7800
Mark Whitmore
Alix Mecklenberg-Solodkoff
FTI Consulting Tel: +44 (0) 20
Alex Beagley 3727 1000
Tom Hufton
Rafaella de Freitas
About Midwich Group
Midwich is a specialist AV distributor to the trade market, with
operations in the UK and Ireland, EMEA, 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 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 1,000
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
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