TIDMMIDW
RNS Number : 6210J
Midwich Group PLC
13 September 2016
For Immediate Release 13 September 2016
Midwich Group Plc
("Midwich" or "the Group")
Interim Results for the Six Months Ended 30 June 2016
Midwich, a specialist audio visual and document solutions
distributor to the trade market, today announces its interim
results for the six-month period ended 30 June 2016.
Note Six Months Ended
30 June 2016 30 June 2015 % change
Revenue 158,349 141,300 12%
Gross Profit 24,641 20,558 20%
Gross profit % 15.6% 14.6%
Operating profit 5,575 5,219 7%
Adjusted operating profit 13 7,872 6,414 23%
Adjusted operating profit % 5.0% 4.5%
Profit before tax 3,825 4,451 (14%)
Adjusted profit before tax 13 7,563 6,136 23%
Adjusted profit before tax % 4.8% 4.3%
Profit after tax 2,716 3,353 (19%)
Adjusted profit after tax 13 6,438 4,978 29%
Basic and diluted earnings per
share 3.5p 4.5p (22%)
Adjusted basic and diluted earnings
per share 13 8.7p 6.8p 28%
Interim Dividend per Share 1.5p - n/a
Financial Highlights
-- Revenue increased by 12.1% to GBP158.3 million (11.8% in constant currency)
-- Gross margin increased by 1% to 15.6% due to improved product mix
-- Adjusted operating profit increased by 22.7% to GBP7.9 million (22.4% on constant currency)
-- Adjusted profit before tax improved by 23.3% to GBP7.6 million (22.9% on constant currency)
-- Paying a maiden, interim dividend of 1.53 pence per share (2015: n/a)
Operating Highlights
-- Improved revenue and net profits across all territories
driven by impressive growth in the audio visual business and the
continued roll out of technical brands overseas
-- Significant new distribution agreements, including SMART
Technologies in the UK and Biamp in Australia
-- Successfully listed on AIM in May 2016, positioning the Group
well for its next stage of development and providing a strong
platform for future growth
Post-Period Highlights
-- Acquisition of Holdan Limited, a UK based value-added
distributor serving the UK and European broadcast and professional
video markets
-- Acquisition of the business of Wired Limited, a small New Zealand based AV distributor
Andrew Herbert, Chairman, commented:
"We are pleased with performance over the first six months of
the year, and in particular the continuing progress of the Group
following the successful IPO in May. Sales increased in all
territories, with particularly encouraging growth outside the
UK.
The Group has a strong balance sheet and is well placed to
continue its buy and build strategy in both new and existing
territories. We were pleased to announce recently the acquisitions
of Holdan Limited in the UK and Wired Limited in New Zealand.
The Board remains positive about the financial and operational
prospects of the Group. Traditionally, the Group's financial
performance tends to be slightly weighted towards the second half
of the year, which we anticipate will be the case in the current
year. Whilst it is still very early days, the uncertainties that
have followed the Brexit vote so far appear to have had minimal
impact on our business. Underlying trading since 30 June remains in
line with the Board's expectations. As a result, on a constant
currency basis and before the potential impact of the acquisition
of Holdan, the Board's expectations for the full year remain
unchanged. We expect the addition of Holdan to be modestly earnings
accretive in the full year."
Enquiries:
Midwich Group +44 (0) 13 7964 9200
Stephen Fenby, Managing Director
Anthony Bailey, Finance Director
FTI Consulting +44 (0) 20 3727 1000
Oliver Winters/ Alex Beagley/ Tom Hufton
Note to Editors:
Midwich is a specialist AV and document solutions distributor to
the trade market, with operations in the UK and Ireland, France,
Germany and Australasia. The Group's long-standing relationships
with over 300 vendors, including blue-chip organisations such as
Samsung, LG, Epson and NEC, supports a comprehensive product
portfolio across major audio visual categories such as large format
displays, projectors, digital signage and printers. 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 approximately 10,000 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 493 employees
across the UK, Germany, France, Ireland, Australia and New Zealand,
and in the six months to 30 June 2016, 36 per cent of the Group's
revenues were derived from outside the UK. 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
13 September 2016
Midwich Group Plc
("Midwich" or "the Group")
Interim Results for the six months ended 30 June 2016
INTERIM STATEMENT
MANAGING DIRECTOR'S REPORT
Overview
The Group has performed well in the first six months of 2016.
Our business continues to develop in all markets, with particularly
encouraging performances seen across our overseas businesses. The
momentum of the business has also continued apace with the Group
taking on a number of significant new distribution agreements,
including SMART Technologies in the UK and Biamp in Australia.
Our admission to AIM ("IPO") in May 2016 has been well received
by our customers, vendors and staff as the Group continues to
follow the strategy that made it such a successful independent
business. The Group's senior management team remains highly
ambitious and focussed on driving performance.
Strategy
As stated at the time of IPO, the Group's strategy for growth is
both organic and inorganic, reflecting the contributors to the
successful growth track record in recent years.
The Group's organic growth strategy is focussed on the provision
of market leading support to its customers and vendors. As a
distributor, the Group neither develops product nor does it sell to
the end-users of those products. It is aware that both its vendors
and customers generally have a choice of distribution partner. The
Group's expertise is the provision of services which provide the
greatest assistance to vendors in pushing product out into the
market, and to help customers provide the highest level of support
to their end-users.
Underpinning the Group's growth strategy is its success in
sourcing, executing and integrating its chosen acquisitions. The
Group takes a disciplined approach to acquisitions, seeking to add
capital value without an adverse impact on the existing business.
Acquisitions remain a fundamental aspect of the Group's strategy
and it continues to pursue a strong pipeline of opportunities.
Acquisitions and trading relationships
On 8 September the Group announced the acquisition of Holdan
Limited, a UK based value-added distributor serving the UK and
European broadcast and professonal video markets for a maximum
consideration of approximately GBP7.1m(1) . This followed the
purchase of the business of Wired Limited, a small New Zealand
based AV distributor. As outlined at the time of IPO, the Group's
robust balance sheet means it is well placed to continue its buy
and build strategy both in new and existing territories.
Shortly before the end of the period, the Group signed a
distribution agreement with SMART Technologies to distribute its
products in the UK. SMART is a major supplier of digital
whiteboards, collaboration software and interactive displays for
education, business and government. Although it is too early to
properly assess the potential impact of this new vendor
relationship, the Board is pleased with initial progress.
Trading and Financial Review
Group turnover increased by 12% to GBP158.3 million for the
period (H1 2015: GBP141.3m). Growth was achieved in all
territories, with France and Germany demonstrating the largest
growth at 43% and 23% respectively. Sidev in France continues to
build market share in each of the projection, large format and
technical categories. Kern and Stelly in Germany has focused more
on higher end products in its key projector business, and has made
encouraging progress in developing its large format display and
technical product categories. The UK and Ireland segment grew at
7%, with particularly strong growth being seen in Ireland.
Australasia grew at 10% - a notable performance given that the
business had a large project in the first half of 2015 that did not
recur in 2016.
The Group's gross margin improved by 1% to 15.6%, with
particularly strong performance being seen in Australia (from 12.8%
in the comparative period in 2015 to 15.3% in the first half of
this year). The large fulfillment project in Australia in 2015 was
at a relatively low margin and had a one off impact on the
comparative margin. In addition, high margin brands have also taken
an increasing share of our Australasian business in H1 2016.
The only territory in which gross margins declined was France,
where the large format display category, which grew at the fastest
rate year on year, is currently less profitable than other
categories due to Sidev holding a relatively low market share and
carrying out a higher proportion of fulfillment deals than other
Group companies.
Operating profit (after one-off charges in respect of the IPO of
GBP1.0 million) increased to GBP5.6 million (H1 2015: GBP5.2
million). Adjusting for the IPO costs & amortisation, the total
increase in operating profit of GBP1.4 million to GBP7.9 million
represents growth of 23% on H1 2015. Adjusted operating profit in
the UK and Ireland improved by 11% (after adding back IPO costs),
with particularly strong performance from Square One in Ireland and
Invision in the UK. PSCo (the Group's rental and LED distribution
specialist) had a slower than expected start to the year, following
some product supply issues, but has since improved. Operating
profit in Germany and Australasia grew by over 70% compared with
the prior year, and the profit in France more than doubled (albeit
from a low base in 2015).
Taxation
The tax charge for the period was GBP1.1 million (H1 2015:
GBP1.1 million) which represents an effective tax rate of 22% (H1
2015: 23.5%). The charge in H1 2016 is stated after prior year
credits amounting to an aggregate of GBP0.3m. The Group benefited
from a very small foreign currency gain in H1. Were it to be
sustained, the recent devaluation of Sterling to the Euro and
Australian Dollar should have a positive impact on full year
earnings.
Financial Position
The Group had a net cash outflow from operations before tax of
GBP1.2 million for the period. This included a GBP1.0 million
outflow in respect of one-off IPO costs. The negative movement in
working capital in the period was partly down to normal seasonal
factors in the first half of the year, a stronger increase in
inventory in June 2016 (in expectation of higher trading over the
summer months) and an expected reversal in the abnormally low level
of inventory and trade receivables in Kern & Stelly at 31
December 2015.
The proceeds of the placing at IPO substantially strengthened
the Group's financial position, resulting in net debt at 30 June
2016 of GBP13.9 million (GBP29.8 million at 31 December 2015)
Dividend
The Board is delighted to declare an interim dividend of 1.53p
per share (2015: nil), which will be paid on 21 October 2016 to
those shareholders on the Company's register as at 23 September
2016.
The Board intends to adopt a progressive dividend policy to
reflect the Group's strong earnings potential and cash generative
qualities whilst maintaining an appropriate level of dividend cover
to allow the Board to invest in the Group's long term growth. This
first interim dividend covers the period since the Company's
Admission to AIM.
Outlook
The Board remains positive about the financial and operational
prospects of the Group. Traditionally, the Group's financial
performance tends to be slightly weighted towards the second half
of the year, which we anticipate will be the case in the current
year. Whilst it is still very early days, the uncertainties that
have followed the Brexit vote so far appear to have had minimal
impact on our business. Underlying trading since 30 June remains in
line with the Board's expectations. As a result, on a constant
currency basis and before the potential impact of the acquisition
of Holdan, the Board's expectations for the full year remain
unchanged. We expect the addition of Holdan to be modestly earnings accretive in the full year.
Stephen Fenby
Managing Director
(1) The announcement on 8 September 2016 incorrectly stated a
maximum consideration for Holdan Limited of GBP7.9m. Under the
terms of the sale and purchase agreement entered into by Midwich,
the maximum consideration that might be paid out by the Group
including deferred consideration is c.GBP7.1m
KEY STRENGTHS
The Directors believe that the key strengths of the Group are as
follows
-- Proven buy and build capabilities. The Group has proven
expertise in entering new geographies and product markets through
acquisition and then substantially growing the acquired
businesses.
-- Strong financial track record and delivery of growth
strategy. For each of the last ten years, the Group has delivered
revenue growth and gross margin improvement.
-- Focus on the AV and document solutions markets. Depth of
expertise and focus ensures that the Group has built up a strong
position in the AV and document solutions markets, and is at the
forefront of technological developments.
-- Key long-term, value-add relationships with major vendors and
customers. Expertise and consistent delivery of high value-add
services has built mutually beneficial long-term trading
relationships with the Group's key vendors and customers. The
Group's market insight, highly effective sales and marketing
operations and efficient logistics provide significant value to
both vendors and customers.
-- High value-add distribution with specialisms and bespoke
service offering acting as a key differentiator. The focus on
adding value rather than just cost differentiates the Group from
its competitors and increases its relevance to customers and
vendors. The Group's focus on products and technologies that are in
their early to mid-growth phase increases its ability to provide a
value-add service and enhances the value that vendors and customers
can gain from the Group's offering.
-- Leading competitive position and established international
platform for future growth, underpinned by compelling market
drivers. With strong market positions in most of its product and
geographical markets, the Group is well placed to take advantage of
the opportunities presented by increased demand for AV products and
the development of new technologies.
-- Experienced management team with long-standing industry
expertise. Senior management team with an average of 18 years'
experience in the AV and/or document solutions markets. Experience
gained through distributors, integrators and manufacturers gives an
in-depth understanding of the needs of different parts of the
market.
GROUP STRATEGY AND GROWTH OPPORTUNITIES
The Group's growth strategy is both organic and inorganic,
reflecting the contributors to the successful growth track record
in recent years. Underpinning the Group's growth strategy is its
success in sourcing, executing and integrating its chosen
acquisitions. The Group takes a disciplined approach to
acquisitions, seeking to add capital value without an adverse
impact on the existing business. Acquisitions remain a fundamental
aspect of the Group's strategy, of which it has a strong ongoing
pipeline of multiple opportunities that it will be reviewing and
actively engaging with at any given time. The Group expects its
future acquisitions to fit a similar mould to those it has
completed historically with regards size and valuation. The Board
believe they have had success in acquiring businesses for sensible
multiples and driving good growth post-acquisition and this is
something they will continue to target.
Overall strategy comprises development across the Group's
established jurisdictions, developing jurisdictions and potential
new jurisdictions. It involves continued progression in areas of
technology, product and vendor selection to ensure that the right
growth areas are targeted in order to maximise the value that the
Group can add to customers in a manner that maximises gross
margins.
Established jurisdictions
Across the UK and Ireland, the core focus is on the continued
development of the respective product portfolios and the
appropriate mix of higher margin and higher growth product sets.
Areas of particular focus are currently large format display, LED
display technology, audio and technical products. The development
of the business is reliant on continued success in identifying and
developing the business into new product areas and technologies. In
addition, the success of the Group's operations in its established
markets has been underpinned by the high levels of service provided
to both vendors and customers. The future growth of the business
will continue to be driven by the ability of the Group to
consistently deliver high general service levels and further
penetration of the Midwich Solutions offering across the client
base. The Group will also continue to use selective acquisitions to
enter or grow its presence in market niches where it sees
opportunities. This is most likely to include acquisitions that
will add to the Group's capability in a new or underweight
technology or product area, such as security or broadcast
equipment.
Developing jurisdictions
Across the Group's developing markets - France, Germany,
Australia and New Zealand - the core focus is on driving profitable
market share growth in these regions. The means of driving this
growth will be the continued expansion of the product range, which
are more limited in these geographies than in the Group's more
established UK market, with a bias towards higher margin and
technical products. The Group has established a successful
blueprint in the UK for targeted acquisitions to bolster its
product offering and sector penetration. Bolt-on acquisitions to
either gain access to new areas or increase scale will be a key
focus of the Group in its developing markets.
New jurisdictions
The Group intends to continue executing its successful strategy
of entering into new jurisdictions through carefully targeted
acquisitions, as was the case with its entry into each of the
German, French, Irish and Australasian markets. The Group has so
far chosen to enter new jurisdictions by way of acquisition rather
than organically in order to ensure immediate local market
knowledge, an established brand name and a local reputation.
However, the Group may choose to enter organically in some
circumstances.
The Group takes a disciplined approach to acquisitions with
assessments made as to the long-term strategic rationale of
opportunities based on the following criteria used to assess
opportunities and new markets:
-- Size of the local market
-- Global brand penetration and interest
-- Vendor perceptions
-- Market dynamics
-- Competitive positions
-- Cultural fit of brands and management teams
Further expansion opportunities have been identified across
Europe and the Group expects to increase its European footprint
within three years. Specifically, the Netherlands, Italy, Spain,
Sweden and Poland are large AV European markets and could all
present attractive opportunities for the Group. Outside of Europe,
it is intended that the Group will further develop its Asia Pacific
presence from its current Australasian base.
Unaudited Consolidated Income Statement for the 6 months ended
30 June 2016
Note 30 June 30 June 31 December 2015
2016 2015
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 158,349 141,300 314,283
Cost of sales (133,708) (120,742) (267,322)
---------- ---------- -----------------
Gross profit 24,641 20,558 46,961
Distribution costs (16,001) (14,122) (30,037)
Admin expenses (3,380) (2,382) (6,751)
Exceptional admin expenses 6 (1,018) - -
Other operating income 1,333 1,165 2,468
---------- ---------- -----------------
Operating profit 5,575 5,219 12,641
Finance income - - 4
Finance costs 5 (1,750) (768) (4,087)
---------- ---------- -----------------
Profit before taxation 3,825 4,451 8,558
Taxation (1,109) (1,098) (2,746)
---------- ---------- -----------------
Profit after taxation 2,716 3,353 5,812
Profit for the financial year attributable to:
The company's equity shareholders 2,461 3,146 5,005
Non-controlling interest 255 207 807
---------- ---------- -----------------
2,716 3,353 5,812
========== ========== =================
Basic & diluted earnings per share 3 3.47p 4.47p 7.14p
========== ========== =================
Unaudited Consolidated Statement of Comprehensive Income for 6
months ended 30 June 2016
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the financial
year 2,461 3,146 5,005
Other comprehensive income
- items that may subsequently
be reclassified to profit
/ loss
Foreign exchange (losses)
/ gains on consolidation 1,261 (877) (785)
---------- ---------- ------------
Other comprehensive income
for the financial year,
net of tax 1,261 (877) (785)
---------- ---------- ------------
Total comprehensive income
for the financial year
attributable to the Company's
equity shareholders 3,722 2,269 4,220
========== ========== ============
Total comprehensive income
for the financial year
attributable to non-controlling
interests 255 207 807
========== ========== ============
Total comprehensive income
for the financial year 3,977 2,476 5,027
Unaudited Consolidated Balance Sheet as at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 3,303 3,303 3,303
Intangible assets 18,370 20,665 19,520
Property, plant and equipment 3,424 3,027 3,653
---------- ---------- ------------
25,097 26,995 26,476
Current assets
Inventories 40,351 33,038 37,849
Trade and other receivables 48,015 43,241 42,707
Cash and cash equivalents 14,880 12,040 18,102
---------- ---------- ------------
103,246 88,319 98,658
Current liabilities
Trade and other payables (51,870) (44,620) (52,692)
Financial instruments - (3,299) (6,094)
Deferred consideration - (1,422) -
Borrowings (28,737) (39,811) (41,968)
Current tax (1,995) (1,380) (2,264)
---------- ------------
(82,602) (90,532) (103,018)
---------- ---------- ------------
Net current assets /
(liabilities) 20,644 (2,213) (4,360)
---------- ---------- ------------
Non-current liabilities:
Borrowings - (9,790) (5,908)
Finance lease payables (26) (190) (166)
Deferred tax (3,378) (3,914) (3,664)
---------- ---------- ------------
(3,404) (13,894) (9,738)
---------- ---------- ------------
Net assets 42,337 10,888 12,378
========== ========== ============
Capital and reserves
Share capital 794 1,449 1,398
Share premium 25,857 - -
Investment in own shares (5) (1,000) (1,000)
Retained earnings 15,220 7,853 8,652
Translation reserve 271 (1,082) (990)
Put option reserve - (1,735) (1,735)
Capital redemption reserve 50 - 50
Other reserve 150 1,145 1,145
---------- ---------- ------------
Equity attributable to
owners of parent 42,337 6,630 7,520
Non-controlling interests - 4,258 4,858
---------- ---------- ------------
Total equity 42,337 10,888 12,378
========== ========== ============
Unaudited Consolidated Statement of Changes in Equity for 6
months ended 30 June 2016
For the period ended 30 June 2016
Share Share Investment Retained Translation Put Capital Other Equity Non-controlling Total
capital premium in own earnings reserve option redemption reserve attributable interests
shares reserve reserve to owners
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at 1 January
2016 1,398 - (1,000) 8,652 (990) (1,735) 50 1,145 7,520 4,858 12,378
Profit
for the
period - - - 2,461 - - - - 2,461 255 2,716
Other
comprehensive
Income - - - - 1,261 - - - 1,261 - 1,261
-------- -------- ----------- --------- ------------ -------- ----------- -------- ------------- ---------------- --------
Total
comprehensive
income - - - 2,461 1,261 - - - 3,722 255 3,977
Bonus
share
issue* 663 - (5) (663) - - - 5 - - -
Share
capital
reduction* (1,392) - 1,000 1,392 - - - (1,000) - - -
Issue
of shares* 125 26,647 - - - - - - 26,772 - 26,772
Costs
of share
issue* - (790) - - - - - - (790) - (790)
Acquisition
of
non-controlling
interest
(note
9) - - - 3,378 - 1,735 - - 5,113 (5,113) -
-------- -------- ----------- --------- ------------ -------- ----------- -------- ------------- ---------------- --------
Transactions
with owners (604) 25,857 995 4,107 - 1,735 - (995) 31,095 (5,113) 25,982
At 30
June 2016
(Unaudited) 794 25,857 (5) 15,220 271 - 50 150 42,337 - 42,337
-------- -------- ----------- --------- ------------ -------- ----------- -------- ------------- ---------------- --------
*See note 8
For the period ended 30 June 2015
Share Investment Retained Translation Put Other Equity Non-controlling Total
capital in own earnings reserve option reserve attributable interests
shares reserve to owners
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January
2015 1,449 (1,000) 4,707 (205) (1,735) 1,145 4,361 4,051 8,412
Profit for
the period - - 3,146 - - - 3,146 207 3,353
Other
comprehensive
Income - - - (877) - - (877) - (877)
-------- ----------- --------- ------------ -------- -------- ------------- ---------------- --------
Total
comprehensive
income - - 3,146 (877) - - 2,269 207 2,476
At 30 June
2015
(Unaudited) 1,449 (1,000) 7,853 (1,082) (1,735) 1,145 6,630 4,258 10,888
-------- ----------- --------- ------------ -------- -------- ------------- ---------------- --------
For the year ended 31 December 2015
Share Investment Retained Translation Put Capital Other Equity Non-controlling Total
capital in own earnings reserve option redemption reserve attributable interests
shares reserve reserve to owners of
the parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2015 1,449 (1,000) 4,707 (205) (1,735) - 1,145 4,361 4,051 8,412
Profit for the
year - - 5,005 - - - - 5,005 807 5,812
Other
comprehensive
Income - - - (785) - - - (785) - (785)
-------- ----------- --------- ------------ -------- ----------- -------- ------------- ---------------- --------
Total
comprehensive
income for
the year - - 5,005 (785) - - - 4,220 807 5,027
Purchase of
own shares (51) - (1,060) - - 50 - (1,061) - (1,061)
-------- ----------- --------- ------------ -------- ----------- -------- ------------- ---------------- --------
Transactions
with owners (51) - (1,060) - - 50 - (1,061) - (1,061)
At 31 December
2015
(Audited) 1,398 (1,000) 8,652 (990) (1,735) 50 1,145 7,520 4,858 12,378
======== =========== ========= ============ ======== =========== ======== ============= ================ ========
Unaudited Consolidated Cashflow Statement for 6 months ended 30
June 2016
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash outflow from operating activities
Profit before tax 3,825 4,451 8,558
Depreciation 604 276 810
Amortisation 1,279 1,195 2,473
Gain on disposal of assets (85) - (121)
Foreign exchange (gains)/losses (15) (360) (22)
Finance income - - (4)
Finance costs 1,750 768 4,087
---------- ---------- ------------
Adjusted profit from operations
before changes in working capital 7,358 6,330 15,781
(Increase) / decrease in inventories (2,502) 3,497 (1,265)
(Increase) in trade and other receivables (5,308) (3,700) (3,168)
(Decrease) / increase in trade and
other payables (755) 917 9,104
---------- ---------- ------------
Cash flow from operations (1,207) 7,044 20,452
Income tax paid (1,664) (1,233) (2,248)
---------- ---------- ------------
Net Cash outflow from operating
activities (2,871) 5,811 18,204
Cash flow from investing activities
Acquisition of non-controlling interest (7,454) - -
Business acquisitions - (2,035) (2,170)
Cash acquired within business combination - 686 686
Deferred consideration paid - - (1,422)
Purchase of intangible assets (126) (3) (64)
Purchase of plant and equipment (606) (100) (1,261)
Proceeds on disposal of plant and
equipment 371 - 449
Interest received - - 4
---------- ---------- ------------
Net cash outflow from investing
activities (7,815) (1,452) (3,778)
---------- ---------- ------------
Net cash from financing activities
Issue of shares net of issue costs 25,982 - -
Invoice financing inflows / (outflows) (3,688) 1,293 2,337
Purchase of own shares - - (1,061)
New loans - - 6,500
Repayment of loans (13,424) (3,280) (13,052)
interest paid (390) (779) (1,683)
interest paid on finance leases (10) (6) (22)
Capital element of finance lease
payments (219) (188) (406)
---------- ---------- ------------
Net cash inflow / (outflow) from
financing activities 8,251 (2,960) (7,387)
Net (decrease) / increase in cash
and cash equivalents (2,435) 1,399 7,039
Cash and cash equivalents at beginning
of year 14,351 8,053 8,053
Effects of exchange rate changes 1,222 (517) (741)
-------- ------ -------
Cash and cash equivalents at end
of year 13,138 8,935 14,351
======== ====== =======
Comprising:
Cash at bank 14,880 12,040 18,102
Bank overdrafts (1,742) (3,105) (3,751)
-------- -------- --------
13,138 8,935 14,351
======== ======== ========
Notes to the Interim Consolidated Financial Information
1. GENERAL
The interim financial information for the period to 30 June 2016
is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006.
They do not include all the information required in annual
financial statements in accordance with IFRS, and should therefore
be read in conjunction with the consolidated financial statements
for the year ended 31 December 2015.
2. ACCOUNTING POLICIES
The interim financial information in this report has been
prepared on the basis of the accounting policies set out in the
audited financial statements for the year ended 31 December 2015,
which complied with International Financial Reporting Standards as
adopted for use in the European Union ("IFRS").
The financial information has been prepared on the basis of IFRS
that the Directors expect to be applicable as at 31 December
2016.
The Directors have adopted the going concern basis in preparing
the financial information. In assessing whether the going concern
assumption is appropriate, the Directors have taken into account
all relevant available information about the foreseeable
future.
The statutory accounts for the year ended 31 December 2015,
which were prepared under IFRS, have been delivered to the
Registrar of Companies. The auditors reported on these accounts;
their report was unqualified; did not contain a statement under
section 498(2) or 498(3) of the Companies Act 2006, and did not
include reference to any matters to which the auditor drew
attention by way of emphasis.
3. EARNINGS PER SHARE
Basic earnings per share is based on the profit after tax for
the year and the weighted average number of shares in issue during
the year. Preference shares are non-participating and therefore
excluded.
Diluted earnings per share is calculated by adjusting the
average number of shares in issue during the period to assume
conversion of all dilutive potential ordinary shares. The Company
has no potentially dilutive shares in any period presented. Diluted
loss per share is therefore the same as basic loss per share.
June June December
2016 2015 2015
Profit attributable to equity holders of the Group (GBP'000) 2,461 3,146 5,005
Weighted average number of shares in issue* 71,000,398 70,402,145 70,070,235
----------- ----------- -----------
Basic & diluted earnings per share 3.47p 4.47p 7.14p
=========== =========== ===========
*The weighted average number of shares for the purpose of
earnings per share has been based on the assumed number of shares
as if the bonus issue on 29 April 2016 had occurred at the
beginning of the earliest period presented.
4. SEGMENTAL REPORTING
June June December
2016 2015 2015
Segment revenues: GBP'000 GBP'000 GBP'000
UK & Ireland 109,532 102,337 221,435
France 14,536 10,181 23,981
Germany 24,157 19,590 51,013
Australasia 10,124 9,192 17,854
-------- -------- ---------
Total for continuing operations 158,349 141,300 314,283
-------- ======== =========
June June December
2016 2015 2015
Gross profit by segment: GBP'000 GBP'000 GBP'000
UK & Ireland 17,961 15,525 34,745
France 1,915 1,446 3,301
Germany 3,220 2,407 6,366
Australasia 1,545 1,180 2,549
-------- -------- ---------
Gross profit 24,641 20,558 46,961
-------- ======== =========
June June December
2016 2015 2015
Segment results: GBP'000 GBP'000 GBP'000
UK & Ireland 3,508 4,079 8,944
France 342 152 489
Germany 1,159 661 2,505
Australasia 566 327 703
-------- -------- ---------
Total for continuing operations 5,575 5,219 12,641
Interest income - - 4
Interest expense (1,750) (768) (4,087)
-------- -------- ---------
Profit before tax 3,825 4,451 8,558
-------- ======== =========
Segment assets and liabilities
June June December
2016 2015 2015
Segment assets: GBP'000 GBP'000 GBP'000
UK & Ireland 93,520 89,697 95,732
France 10,561 8,318 7,544
Germany 17,799 12,987 16,824
Australasia 6,463 4,312 5,034
-------- -------- ---------
Total Consolidated Assets 128,343 115,314 125,134
-------- ======== =========
June June December
2016 2015 2015
Segment liabilities: GBP'000 GBP'000 GBP'000
UK & Ireland 65,557 90,147 94,255
France 9,701 6,752 7,056
Germany 5,899 4,610 7,118
Australasia 4,849 2,917 4,327
-------- -------- ---------
Total Consolidated Liabilities 86,006 104,426 112,756
======== ======== =========
Other information:
June June December
2016 2015 2015
Depreciation and amortisation GBP'000 GBP'000 GBP'000
UK & Ireland 1,539 1,209 2,760
France 63 45 95
Germany 207 203 389
Australasia 74 14 39
-------- -------- ---------
Total Consolidated 1,883 1,471 3,283
-------- ======== =========
June June December
2016 2015 2015
Total non-current assets GBP'000 GBP'000 GBP'000
UK & Ireland 20,615 22,356 20,122
Rest of the world 4,482 4,639 6,354
-------- -------- ---------
Total Consolidated 25,097 26,995 26,476
======== ======== =========
5. FINANCE COSTS
June 2016 June 2015 December 2015
GBP'000 GBP'000 GBP'000
Interest on overdraft and invoice discounting 305 265 568
Interest on finance leases 20 13 22
Dividend on preference shares treated as borrowings (14) 31 61
Interest on other loans 79 266 448
Interest & fair value movement on put option liability 1,360 193 2,988
1,750 768 4,087
========== ========== ==============
6. EXCEPTIONAL ADMINISTRATIVE EXPENSES
Exceptional administrative expenses in the period consists of
expenses incurred pertaining to the admission of the company to the
AIM Market.
7. BORROWINGS
On 22 April, the Preference shares classified as a financial
liability were redeemed, settling the financial liability of
GBP3,187,000 in full.
Proceeds from the issue of share capital were also used to pay
the following borrowings balances:
-- Loan notes GBP3,737,000
-- Bank loan GBP6,500,000
8. SHARE CAPITAL
The total allotted share capital of the company is:
Allotted, issued and fully paid
June 2016 June 2015 December 2015
Classed as equity: Number GBP'000 Number GBP'000 Number GBP'000
Ordinary shares of GBP0.01 each 79,448,200 794 - - - -
Ordinary shares of GBP1 each - - 446,000 446 396,000 396
Preference share of GBP1 each - - 4,123,746 4,124 4,123,746 4,124
A Ordinary shares of GBP0.01 each - - 54,000 - 52,500 -
B1 Ordinary shares of GBP0.01 each - - 174,474 3 174,474 2
B2 Ordinary shares of GBP0.01 each - - 9,214 - - -
B3 Ordinary shares of GBP0.01 each - - 7,179 - 7,179 -
B4 Ordinary shares of GBP0.01 each - - 7,179 - - -
B5 Ordinary shares of GBP0.01 each - - 14,358 - 14,358 -
79,448,200 794 4,836,150 4,573 4,768,257 4,522
Shares classed as financial
liabilities:
Preference shares of GBP1 each - - (3,123,746) (3,124) (3,123,746) (3,124)
Total equity 79,448,200 794 1,712,404 1,449 1,644,511 1,398
=========== ======== ============ ======== ============ ========
Share transactions effected during the period (see notes):
Number of shares
Buy
back Write
of down
Issue B5 Redemption of Issue
of Ordinary Share of Preference, Re-designation Bonus of
Opening B1 shares capital Preference B3 and to Ordinary share Ordinary Closing
1 January Ordinary 4 reduction shares B5 shares shares issue shares 30 June
2016 shares* February 13 April 22 April 29 April 29 April 29 April 3 May 2016
Ordinary
shares of
GBP0.01 - - - - - - 669,482 66,278,718 12,500,000 79,448,200
Ordinary
shares of
GBP1 396,000 - - - - - (396,000) - - -
Preference
shares of
GBP1 4,123,746 - - - (3,123,746) (995,193) (4,807) - - -
A Ordinary
shares of
GBP0.01 52,500 - - - - - (52,500) - - -
B1 Ordinary
shares of
GBP0.01 174,474 36,450 - - - - (210,924) - - -
B2 Ordinary
shares of
GBP0.01 - - - - - - - - - -
B3 Ordinary
shares of
GBP0.01 7,179 - - - - (4,331) (2,848) - - -
B4 Ordinary
shares of
GBP0.01 - - - - - - - - - -
B5 Ordinary
shares of
GBP0.01 14,358 (7,179) - - (4,776) (2,403) - - -
4,768,257 36,450 (7,179) - (3,123,746) (1,004,300) - 66,278,718 12,500,000 79,448,200
---------- --------- --------- ---------- ------------ ------------ --------------- ----------- ----------- -----------
Value of shares
GBP'000
Buy
back Write
of down
Issue B5 Redemption of Bonus Issue
Opening of Ordinary Share of Preference, Re-designation share of
1 B1 shares capital Preference B3 and to Ordinary issue Ordinary Closing
January Ordinary 4 reduction shares B5 shares shares 29 shares 30 June
2016 shares* February 13 April 22 April 29 April 29 April April 3 May 2016
Ordinary
shares of
GBP0.01 - - - - - - 6 663 125 794
Ordinary
shares of
GBP1 396 - - (392) - - (4) - - -
Preference
shares of
GBP1 4,124 - - (990) (3,124) (10) (0) - - -
A Ordinary
shares of
GBP0.01 - - - - - - - - - -
B1 Ordinary
shares of
GBP0.01 2 - - - - - (2) - - -
B2 Ordinary
shares of
GBP0.01 - - - - - - - - - -
B3 Ordinary
shares of
GBP0.01 - - - - - - - - - -
B4 Ordinary
shares of
GBP0.01 - - - - - - - - - -
B5 Ordinary
shares of
GBP0.01 - - - - - - - - - -
4,522 - - (1,382) (3,124) (10) - 663 125 794
-------- --------- --------- ---------- ----------- ------------ --------------- ------ --------- --------
* Issue of B1 Ordinary shares took place on the following dates
at a price of GBP21.20 per share:
13 January 10,000
18 January 20,000
4 February 3,700
10 March 2,750
-------
36,450
-------
Notes on share capital movements
As explained further in the admission document, the following
share capital changes (as illustrated in the above tables) have
taken place during the period:
1. Issue of B1 Ordinary shares at GBP21.20 per share as noted
above, creating share premium of GBP772,000
2. Buy back of 7,179 B5 Ordinary shares on 4 February for cancellation at par value
3. Share capital reduction on 13 April, reducing the equity
Preference share capital and Ordinary share capital from GBP1.00
per share nominal value to GBP0.01 per share nominal value
4. Redemption of Preference shares classified as a financial
liability on 22 April, settling the financial liability in full
5. Re-designation of the Preference shares', B3 shares' and B5
shares' percentages on 29 April, and subsequently re-designation of
these as Deferred shares, pursuant to which these Deferred shares
were transferred in favour of the Company for nil consideration and
then cancelled.
6. Re-designation of all remaining categories of shares as GBP0.01 Ordinary shares on 29 April
7. Bonus share issue on 29 April in the proportion of 99
Ordinary shares for each existing Ordinary share
8. Placing of new shares on 3 May (date of admission to the AIM
Market) at GBP2.08 per share, creating share premium of
GBP25,875,000 less issue costs of GBP790,000
All reductions in value of existing share capital have created
additional distributable reserves which have been recorded in
retained earnings. The bonus issue of ordinary shares has used some
of the additional distributable reserves created by the preceding
share capital reductions.
Rights and obligations
Ordinary shares have attached to them full voting, dividend and
capital distribution (including on winding up) rights. They do not
confer any rights of redemption.
Employee benefit trust
The employee benefit trust previously owned 1,000,000 of the
Preference shares. This proportion of the share capital was treated
as equity for disclosure purposes. Further to the above share
capital changes, the employee benefit trust owns 480,700 GBP0.01
Ordinary shares.
9. ACQUISITION OF NON-CONTROLLING INTEREST
On 9 May, the Group exercised a call option to acquire the
remaining 49% non-controlling interest in their subsidiary, Kern
& Stelly Medientechnik GmbH for EUR9,237,000.
As a result of this acquisition, the put option liability and
put option reserve have been derecognised and the non-controlling
interests in equity have been extinguished.
As this company was previously consolidated as a subsidiary, no
other changes in the net assets of the subsidiary included in the
consolidated financial statements arise because no change in
control has occurred.
10. CURRENCY IMPACT
The Group report in Pounds Sterling (GBP) but has significant
revenues and costs as well as assets and liabilities that are
denominated in Euros (EUR) and Australia Dollars (AUD). The table
below sets out the prevailing exchange rates in the periods
reported.
Six months to At 30 June At 31 December
30 June
2016 2015 2016 2015 2015
Average Average
EUR/GBP 1.3004 1.3244 1.2076 1.3916 1.3559
AUD/GBP 1.9658 1.9079 1.8022 1.9822 2.0190
The impact of changes in the key exchange rates from the first
half of 2015 to the first half of 2016 are summarised as
follows:
GBP000 EUR AUD
Impact on revenues 662 (256)
Impact on profit before
tax 25 (8)
Impact on net debt 91 (37)
11. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free of
charge from the Company at Vinces Road, Diss, IP22 4YT.
12. POST BALANCE SHEET EVENTS
Share Awards
On 1 July 2016 the Company issued conditional share awards and
share options to staff. The conditional award was offered to all
staff who had been employed by the Group for at least one year
prior to the IPO date of 6 May 2016. Share options were offered to
a number of senior management around the Group, none of whom were
shareholders at the time of the IPO. All of these share awards will
vest on 1 July 2019. The maximum number of shares which will vest
under these awards is 187,500.
No member of the Board participated in these share awards.
13. ADJUSTMENTS TO REPORTED RESULTS
Six months ended
30 June 30 June
2016 2015
GBP000 GBP000
Operating profit 5,575 5,219
Exceptional administrative costs 1,018 -
Amortisation 1,279 1,195
Adjusted operating profit 7,872 6,414
Profit before tax 3,825 4,451
Exceptional administrative costs 1,018 -
Amortisation 1,279 1,195
Finance costs - put and call option 1,360 193
Finance costs - interest on loan notes
and preference shares 81 297
Adjusted profit before tax 7,563 6,136
Profit after tax 2,716 3,353
Exceptional administrative costs 1,018 -
Amortisation 1,279 1,195
Finance costs - put and call option 1,360 193
Finance costs - interest on loan notes
and preference shares 81 297
Tax impact - at 20% / 20.25% (16) (60)
Adjusted profit after tax 6,438 4,978
Profit after tax 2,716 3,353
Non-controlling interest (255) (207)
Profit after tax attributable 2,461 3,146
Adjusted profit after tax 6,438 4,978
Non-controlling interest (255) (207)
Adjusted profit after tax attributable 6,183 4,771
Number of shares 71,000,398 70,402,145
Reported EPS - pence 3.5p 4.5p
Adjusted EPS - pence 8.7p 6.8p
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKBDQOBKDQCD
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