Slide 1: 2022 Full Year Results
2022 FULL YEAR RESULTS March 2023 1
Slide 2: Financial Highlights
FINANCIAL HIGHLIGHTS “Record revenue growth with Revenue Growth Organic growth profit ahead of £1,204m 40.7% 20.7% expectations” 2021: £856m CFX: 38.6% 2021: 18.9% Gross Margin Adjusted operating profit1 Adjusted PBT2 15.3% £51.1m £45.2m 2021: 15.3% Margin: 4.2% 2021: £31.9m Final Dividend Total Div
Slide 3: Strengths and Defensibility
STRENGTHS AND DEFENSIBILITY ✓ Focus on the AV market; ✓ Key long-term, value-add relationships with major vendors and customers; ✓ High value-add distribution with specialisms and bespoke service offering, acting as a key differentiator; ✓ Leading competitive position and established international p
Slide 4: Long Track Record of Growth
LONG TRACK RECORD OF GROWTH Sixteen years of unbroken revenue growth The Group has achieved compound annual growth in revenue and adjusted operating profit since IPO in 2016 of CAGR over 16 years of 15% (21% since 2019) 22% and 19% respectively, testament to the strength of our long-term strategy an
Slide 5: Profitability Trends
PROFITABILITY TRENDS Gross Margin Adjusted PBT - £m 50 45.2 Gross margin in line with the prior year at 15.3%. Gap closed from H1. 40 31.9 29.1 31.2 30 24.3 Good recovery in live events (“in-person” activities) offset by aged stock 17.9 20 11.7 14.6 14.2 provision swing despite significant recovery
Slide 6: Current Landscape
CURRENT LANDSCAPE General Market Conditions • All geographical markets now open; • Product shortages largely eased – still some delays in audio/ technical products; • Global logistics back to pre-pandemic levels; • Corporate market stronger; • Education sector remains strong; • Live events and enter
Slide 7: Long Term Growth Strategy Remains Unchanged
LONG TERM GROWTH STRATEGY REMAINS UNCHANGED Why? How? Success Measures Specialisation Relevance Portfolio management Growth in technical product sales1 Profitability Acquisition Long term growth in gross margin Defensibility Value add services Geographical Support Acquisition Number of territories C
Slide 8: Revenue Development of the Business
REVENUE DEVELOPMENT OF THE BUSINESS Specialisation 2021 2022 7% 6% • New technical product 36% categories increase this 30% segment significantly Displays (2019 36%); Projection Displays • Displays and projection Technical Projection now 41% of sales (2019 Other Technical 57%); 42% 53% Other 14% 11%
Slide 9: Low Concentration of Customers and Vendors
LOW CONCENTRATION OF CUSTOMERS AND VENDORS Vendors • Reduced vendor • Largest supplier accounts for 11% of sales; concentration dilutes risk • Top 10 vendors account for 45% sales; • Significant gains from • 12 of our top 20 vendors have started working with us in the last 5 years; winning and growi
Slide 10: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Macro Pro AV industry trends: • Return of in-person activities has resulted in significant demand increase which suppliers are struggling to keep up with • General recession risk higher, but “if confidence in gathering in-person is still on the upswing when a recession hits,
Slide 11: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Our growth in 2022 (CFX): North America – 60% EMEA (incl UK&I) – 38% (Organic 17%) UK&I – 72% (Organic 18%) Midwich growth is materially faster than the market in each region Two of the three regions are now above pre pandemic levels 11
Slide 12: Significant Market Opportunity
SIGNIFICANT MARKET OPPORTUNITY Substantial addressable Market Opportunity to grow remains Significant Note: Assumes £1=$1.22 in 2022 and 2027 and £1-= $1.37 in 2021 2027 global revenue scenarios: (£ million) Addressable market is an estimate based on: Possible additions not taken into account: Targe
Slide 13: Revenue Bridge 2022
REVENUE BRIDGE 2022 £1,204m Organic 20.7% M&A FX +40.7% vs 2021 17.9% 2.1% +60.0% 38.6% +16.8% +14.3% Revenue increase (CFX) £856m +18.4% 20.7% Organic revenue increase 13 13
Slide 14: UK & Ireland (41% Group Revenue)
UK & IRELAND (41% GROUP REVENUE) AV HUB EXPERIENCE CENTRE, EDINBURGH 10 • Performance in the UK & Ireland was significantly ahead of last year, with revenue up 72%, including the benefit of acquisitions at the start of the year. Organic growth of 18.4%. Offices in • Technical product categories, suc
Slide 15: EMEA (45% Group Revenue)
EMEA (45% GROUP REVENUE) 14 • The EMEA region comprises our businesses in France, Germany, Switzerland, Benelux, Offices in Norway, Italy, Iberia, and the Middle East. EMEA • Revenue, on a constant currency basis, increased by 16.8% to £535.0 million, with organic growth also being 16.8%. • Our audi
Slide 16: Asia Pacific (4% Group Revenue)
ASIA PACIFIC (4% GROUP REVENUE) 6 • After a delayed post-pandemic reopening in the region, our Asia Pacific business improved in the latter part of the year and finished with revenue growth of 18.5% to £53.8 million (14.3% growth on a constant currency basis). Offices in • The overall gross margin p
Slide 17: North America (10% Group Revenue)
NORTH AMERICA (10% GROUP REVENUE) • Starin, our North American business, performed well in the year, with revenues increasing by 78.2% to £123.1 million (60.0% in US$). • The gross margin at 14% achieved was below the 2021 level, due the increase in unified communications mix, but we believe this is
Slide 18: Trading Results
TRADING RESULTS • Record revenue growth of 41%. • Organic growth of 20.7% with Summary Income Statement significant market share gains. Constant • Gross margin in line with 2021; £m Actual change currency ahead of prior year by c.0.5% 2022 2021 change excluding the impact of aged Revenue 1,204.1 856
Slide 19: Strong Balance Sheet
STRONG BALANCE SHEET • Non-current assets: Acquisitions of DVS and Nimans in Q1 2022. Balance Sheet (31 December) • Increase in working capital £m 2022 2021 reflects the growth in revenue. Non-current assets 150.9 107.5 • Adjusted net debt of £96.0m Inventories 159.8 125.8 (£58.0m at December 2021).
Slide 20: Investing in Growth
INVESTING IN GROWTH • Adjusted net cash flow from operations of £31.7m (2021: Cash Flow £18.1m). £m 2022 2021 • Strong cash conversion of 54% Adjusted EBITDA 58.5 40.1 given the high level of organic (Increase) in stock (15.7) (36.5) growth (+21%) and associated (Increase) in receivables (70.7) (12.
Slide 21: Acquisitions
ACQUISITIONS January February 2022 2022 Cardiff, UK Manchester, UK • 2019/20 revenue £37.4m • 2020 revenue £114m • Specialist security products distributor • Long established and highly regarded distributor of UC, telecoms, networking and AV • Strength in CCTV, intercom and access technologies contr
Slide 22: Summary and Outlook
SUMMARY AND OUTLOOK Proven long-term financial track record Revenue growth 19.5% CAGR of Good every year since adjusted PBT cash 2005 over 9 years generation Strong market position Market Proven Strong leadership acquisition organic positions model growth Positioned for growth New vendors and Acquis
Slide 23: Appendices
Midwich Group Plc
Slide 24: Experienced Management Team and Board
EXPERIENCED MANAGEMENT TEAM AND BOARD Andrew Herbert Stephen Fenby Stephen Lamb Mike Ashley Hilary Wright Non-Executive Managing Director Finance Director Non-Executive Director Non-Executive Director Chairman Group Finance Director of Domino Joined Midwich as Finance Joined end July 2018 Extensive
Slide 25: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM Stephen Fenby Tom Sumner Mark Lowe Stephen Lamb Michael Broadbent Managing Director Managing Director - Managing Director – Finance Director Managing Director – EMEA UK and Ireland Asia Pacific Joined Midwich as Finance Director in Joined Midwich in 2007 Joined Midwich Busi
Slide 26: End User Markets
END USER MARKETS End User Markets - Estimated Share 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Source: Midwich estimates 2020 2021 2022 26 26
Slide 27: AVIXA Market Report 2022
Command and control: Live events: AVIXA MARKET REPORT 2022 Control rooms Hardware and software used to provide turnkey Conferencing and live event AV solutions for collaboration: shows or temporary Hardware and software facilities. Includes rental that enable and staging equipment communication betw
Slide 28: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Growth in hybrid learning expecting to slow after the investment made in the last two years Strong surge in live performance 28
Slide 29: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Display growth driven particularly by LED (12.4% CAGR) although flat panel displays still expected to grow at the average market rate Expected strong growth in cameras for conferencing or surveillance Definitions: Content management hardware includes servers, media players,
Slide 30: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Five year expected growth rates Despite different growth rates, market segments remain in the same order Drop in residential segment as people spend less time at home 30
Slide 31: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 *The recovery year is the year in which revenues for pro AV exceed the peak values set in 2019 31 31
Slide 32: AVIXA Market Report 2022
AVIXA MARKET REPORT 2022 Integration services regaining top spot as demand increases. Demand for integration services is rising as end users resume project work in the core markets. This is shifting revenue back from heavy emphasis on cloud services. Manage services are rising, though with some blur
Slide 33: Brunico Arena - Ice Rink Audio
CASE STUDY BRUNICO ARENA - ICE RINK AUDIO • New building requiring best-in-class sound for players and audiences. • Prase, a Midwich Group company, supported integrator to test the sound distance and reverberation, delivered a full simulation of the audio coverage. • Prase supported the design of th
Slide 34: Royal Shakespeare Company – Barbican
CASE STUDY ROYAL SHAKESPEARE COMPANY – • Award-winning sound designer Tony Gayle BARBICAN took up the RSC’s challenge of designing a unique soundscape. • Delivered through a HARMAN JBL Professional compact line array sound system, supplied by Autograph Sound via Midwich Group company Sound Technolog
Slide 35: Why Midwich?
WHY MIDWICH? WHY OUR CUSTOMERS CHOOSE US WHY OUR VENDORS CHOOSE US Nurturing Training and Vertical Credit/business Working Market focus Efficient Scale and Marketing and long-term events market focus services together logistics flexibility sales support relationships 100% Market and Award-winning Pe
Slide 36: Demand Drivers in the AV Industry
DEMAND DRIVERS IN THE AV INDUSTRY Driver Reason Examples • Touch screen in shopping centre reduces need for help desk staff Reduces people costs • Touch screen ordering in fast food outlet reduces serving staff Cost Saving Reduces waste • Elimination of posters reduces paper waste Saves time • Video
Slide 37: Environmental, Social & Governance
ENVIRONMENTAL, SOCIAL & GOVERNANCE “Supporting the community - pictured are members of the Midwich team based in Diss, Norfolk preparing to contribute to the community with a local litter pick” People images (grab?); page 43 37
Slide 38: Materiality Assessment
MATERIALITY ASSESSMENT Working with an external consultant we conducted a detailed materiality assessment to prioritise our focus and inform our strategy decisions. 38
Slide 39: New Midwich Sustainability Strategy
NEW MIDWICH SUSTAINABILITY STRATEGY We have developed a sustainability strategy focused on 4 key areas. 39
Slide 40: Midwich Sustainability: Focus for 2023
MIDWICH SUSTAINABILITY: FOCUS FOR 2023 Our people and Our environmental Our solutions Our channel giving back performance To care about our team and local community. To manage and reduce emissions and To promote AV solutions that help people to To support a sustainable value chain to Developing skil
Slide 41: Group Results Highlights
GROUP RESULTS HIGHLIGHTS 12 MONTHS ENDED 31 DECEMBER 2022 12 months to 12 months to Constant 31 December 31 December Growth % currency 2022 2021 growth % £m £m Revenue 1,204.1 856.0 41% 39% Gross Profit 183.7 131.3 40% 38% Gross profit margin 15.3% 15.3% Adjusted operating profit1 51.1 34.0 50% 46%
Slide 42: Regional Results Highlights – 2022
REGIONAL RESULTS HIGHLIGHTS – 2022 Region Revenue Revenue CFX % Org % GP % 2022 GP % 2021 GP % 2022 £m 2021 £m Change UK&I 492.2 286.1 72.1% 18.4% 16.1% 15.8% +0.3% EMEA 535.0 455.4 16.8% 16.8% 14.6% 14.7% -0.1% APAC 53.8 45.4 14.3% 14.3% 17.3% 17.5% -0.2% North America 123.1 69.1 60.0% 60.0% 14.0%
Slide 43: Adjustments to Statutory Results – 2022
ADJUSTMENTS TO STATUTORY RESULTS – 2022 £m 2022 2021 Statutory operating profit/(loss) 35.0 21.0 Acquisition related expenses 0.4 0.5 Share based payments and employer taxes 6.2 5.3 Amortisation of acquired intangibles 9.4 7.2 Adjusted operating profit 51.1 34.0 Statutory profit after tax 16.9 13.5
Slide 44: Modelling Considerations
MODELLING CONSIDERATIONS 1 2023 deferred consideration for DVS/Nimans £9.3m paid in Q1. Acquisitions Up to £14m to be paid in 2024 past acquisitions. ERP programme resumed with initial "go live" expected late 2023. ERP amortisation Amortisation of core platform will be c£2.5m per annum. Expected to
Slide 45: Midwich Group Plc
Midwich Group Plc