Midwich Group [1] (AIM: MIDW), a global specialist audio visual distributor to the trade market, today announces its unaudited full year results for the year ended 31 December 2020.
Stephen Fenby, Managing Director of Midwich Group plc said “2020 was a challenging year for everyone and I would like to take this opportunity to thank all of our employees, partners and suppliers for their tireless hard work and continued support. We delivered a robust performance in the year, thanks to our proven business model and our position as a true value add distributor in the global AV market. We announced our entry into the US, the world’s largest AV market, in February 2020 and post period end, entered the Middle East, giving us true global scale. Whilst we have experienced a slowdown in some of our sectors, we have also witnessed improved performances in others and our results in the second half of the year exceeded the Board’s expectations. We are well placed through our diversified geographical and multi-sector footprint, combined with long-term vendor relationships, to continue to deliver growth and take advantage of market opportunities, both organically and through acquisition.”
Financial highlights
- A record revenue performance despite the challenges from the global pandemic, highlighting the resilience of the business
- Revenue increased by 3.7% to £711.8 million (3.3% on a constant currency basis) (2019: £686.2m)
- Group revenues improved consistently from April, such that the Group’s organic revenue decline of 22% in the first half of the year reduced to a 7% decline in the second half of the year
- Gross margin was impacted by COVID-19 disruption, but is expected to recover over time
- Adjusted profit before tax reduced to £14.2 million (2019: £31.2 million) as a direct result of COVID-19 disruption
- Adjusted EPS decreased to 11.2p (2019: 28.5p)
- An exceptional year of operating cash conversion at 194.4% of adjusted EBITDA
- Strong balance sheet, with year-end adjusted net debt to EBITDA of 0.9x (2019:1.4x), providing financial flexibility
Operational highlights
- Resilient operational performance – a robust recovery in the second half exceeded the Board’s original expectations at the onset of the pandemic
- Acquisitions made in 2019 and 2020 have been fully integrated and are delivering a positive contribution to the Group
- Entry into the strategically important North American market through the acquisition of Starin Marketing Inc. (“Starin”)
- Established specialist unified communications capabilities, as well as the addition of numerous new vendors
- Successful equity placing and refinancing to fund Starin acquisition investment
- Continue to have a strong acquisition pipeline across a number of regions and technologies
Post-period end
- Completed the acquisition of a majority stake in NMK Electronics ENT. [2], a value-added distributor of AV products based in the UAE and Qatar, marking Group’s entry into the Middle East
- Trading since the year end in line with management expectations