Unaudited full year results

About this update from Midwich Group Plc

[{"type":"text","content":"\n \n 19 March 2024 \n   \n Midwich Group plc \n (\"Midwich\" or the \"Group\") \n   \n Unaudited full year results \n   \n Record financial performance and market share gains in FY23 \n   \n Midwich Group (AIM: MIDW), a global specialist audio visual (\"AV\") distributor to the trade market, today announces its unaudited full year results for the year ended 31 December 2023. \n   \n Statutory financial highlights \n   \n \n \n \n \n \n \n \n Year to \n 31 December 2023 \n  £m \n \n \n Year to \n 31 December 2022 \n  £m \n \n \n Total growth % \n \n \n \n \n Revenue \n \n \n 1,289.1 \n \n \n 1,204.1 \n \n \n 7% \n \n \n \n \n Gross profit \n \n \n 216.5 \n \n \n 183.7 \n \n \n 18% \n \n \n \n \n Operating profit \n \n \n 41.6 \n \n \n 35.1 \n \n \n 19% \n \n \n \n \n Profit before tax \n \n \n 36.5 \n \n \n 24.9 \n \n \n 47% \n \n \n \n \n Profit after tax \n \n \n 28.9 \n \n \n 16.9 \n \n \n 72% \n \n \n \n \n Basic EPS - pence \n \n \n 27.98 \n \n \n 17.32 \n \n \n 62% \n \n \n \n \n Dividend - pence per share 1 \n \n \n 16.5 \n \n \n 15.0 \n \n \n 10% \n \n \n \n \n   \n Adjusted financial highlights 2 \n   \n \n \n \n \n \n \n \n Year to \n 31 December 2023 \n £m \n \n \n Year to \n 31 December 2022 \n  £m \n \n \n Total growth \n  % \n \n \n Growth at constant currency \n % \n \n \n \n \n Revenue \n \n \n 1,289.1 \n \n \n 1,204.1 \n \n \n 7% \n \n \n 7% \n \n \n \n \n Gross profit \n \n \n 216.5 \n \n \n 183.7 \n \n \n 18% \n \n \n 18% \n \n \n \n \n Gross profit margin % \n \n \n 16.8% \n \n \n 15.3% \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit \n \n \n 59.6 \n \n \n 51.1 \n \n \n 17% \n \n \n 17% \n \n \n \n \n Adjusted profit before tax \n \n \n 50.0 \n \n \n 45.2 \n \n \n 11% \n \n \n 11% \n \n \n \n \n Adjusted profit after tax \n \n \n 38.5 \n \n \n 34.1 \n \n \n 13% \n \n \n \n \n \n \n \n Adjusted EPS - pence \n \n \n 37.46 \n \n \n 36.08 \n \n \n 4% \n \n \n \n \n \n \n \n Adjusted net debt ratio \n \n \n 1.1x \n \n \n 1.6x \n \n \n \n \n \n \n \n \n \n \n   \n 1 Total of interim and final dividends. \n 2 Definitions of the alternative performance measures are set out in note 1 \n   \n Financial highlights \n \n \n \n \n ·    \n \n \n Another record financial performance with further market share gains achieved \n \n \n \n \n ·    \n \n \n Revenue increased 7.1% to £1,289.1m (2022: £1,204.1m), reflecting a good organic growth performance, against a challenging global market backdrop, and a contribution from the seven acquisitions completed in the year \n \n \n \n \n ·    \n \n \n Revenue growth of 6.8% at constant exchange rates, including 0.8% organic growth \n \n \n \n \n ·    \n \n \n Highest ever gross profit margins of 16.8%, substantially ahead of the prior year (2022: 15.3%) driven by stronger technical product sales \n \n \n \n \n ·    \n \n \n Adjusted operating profit growth of 16.6% to £59.6m (16.8% on a constant currency basis) \n \n \n \n \n ·    \n \n \n Net debt to Adjusted EBITDA at the period end reduced to c.1.1 times, well within the Board's comfort range \n \n \n \n \n ·    \n \n \n Proposed final dividend of 11.0p bringing the full year dividend to 16.5p (2022: 15.0p) \n \n \n \n \n   \n \n \n   \n \n \n \n \n Operational highlights \n \n \n \n \n ·    \n \n \n The Group continued to deliver strong technical product growth, increasing specialisation particularly in the audio market, inline with the Group's stated strategy \n \n \n \n \n ·    \n \n \n Entry into the Canadian pro audio market through the acquisition of S.F. Marketing Inc. \n \n \n \n \n ·    \n \n \n Completion of six further acquisitions during the period, including prodyTel, with integration progressing well \n \n \n \n \n ·    \n \n \n Successful equity placing of £50m in June 2023, to support the Group's acquisition strategy \n \n \n \n \n ·    \n \n \n Compound annual growth in revenue and adjusted operating profit since IPO (in 2016) of 20% and 18% respectively, with attractive levels of return on capital. This is testament to the strength of the Group's long-term strategy and quality of our team \n \n \n \n \n ·    \n \n \n Management continues to see a robust future acquisition pipeline across a number of key geographies and technologies \n \n \n \n \n   \n Stephen Fenby, Managing Director of Midwich Group plc, commented: \n   \n \"The Group had another strong year, both operationally and financially, improving all key metrics in a highly challenging market. Our performance reflects the fundamental strength of the business, our customer and vendor relationships, our geographic and technical solution diversity and, most of all, the skills and dedication of our team.  \n   \n \"Despite lower demand for mainstream products, stronger technical product sales led to our highest ever gross margin percentage. A strong increase in adjusted operating profit of 17% helped us to achieve adjusted profit before tax in excess of £50 million for the first time. \n   \n \"Although still early into the new financial year, and being mindful of the continued challenging general economic conditions, we remain confident that 2024 will see yet another year of growth in excess of the overall market.\" \n   \n Analyst meeting/webinar \n There will be a meeting and webinar for sell-side analysts at 9.00am GMT today, 19 March 2024, the details of which can be obtained from FTI Consulting: [email protected] . \n   \n   \n For further information: \n   \n \n \n \n \n Midwich Group plc Stephen Fenby, Managing Director Stephen Lamb, Finance Director \n \n \n +44 (0) 1379 649200 \n \n \n \n \n Investec Bank plc   (NOMAD and Joint Broker to Midwich) \n Carlton Nelson / Ben Griffiths \n \n \n +44 (0) 20 7597 5970 \n \n \n \n \n Berenberg   (Joint Broker to Midwich) Ben Wright / Richard Andrews \n \n \n +44 (0) 20 3207 7800 \n \n \n \n \n FTI Consulting Alex Beagley / Tom Hufton /  Matthew Young \n \n \n +44 (0) 20 3727 1000 \n [email protected] \n \n \n \n \n About Midwich Group \n   \n Midwich is a specialist AV distributor to the trade market, with operations in EMEA, the UK and Ireland, Asia Pacific and North America. The Group's long-standing relationships with its 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 most of its vendors in their respective product sets. \n   \n 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 24,000 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. \n   \n Initially a UK only distributor, the Group now has around 1,800 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. \n   \n For further information, please visit  www.midwichgroupplc.com \n   \n Chair's Statement \n   \n Midwich has had another very strong year and I am pleased to be able to report further strategic progress for the Group in 2023, including record results, further development of our leadership team, and a new market entry in what has been our busiest year for acquisitions. \n   \n Our diversity of geographies and technical solutions enabled the Group to respond to a challenging market backdrop. The strong results are testament to our team's exceptional knowledge and commitment. \n   \n Whilst the Pro AV market has consistently grown above GDP, there were a number of unprecedented challenges in 2023. After two years of post-pandemic bounce back, the pressures of macro economic slowdowns, higher interest rates and labour market disputes impacted demand for our mainstream products. The Group responded to this well, by focusing on value-added technical solutions and, as such, achieved both significant margin improvements and further market share gains across our biggest regions. \n   \n Record results \n   \n Group revenue increased by 6.8%, at constant currency, (organic 0.8%) to £1.3bn which, combined with a record gross margin of 16.8% (2022: 15.3%), resulted in adjusted operating profit of £59.6m, up 16.5% on the prior year. Despite higher interest rates in the period, the Group achieved adjusted profit before tax of £50m for the first time. \n   \n The Group has achieved compound annual growth in revenue and adjusted operating profit since our IPO in 2016 of 20% and 18% respectively, which is testament to the strength of our long-term strategy and the quality of our teams. Whilst early into the new year, the wider economic backdrop continues to remain challenging. Nevertheless, the Board believes that the structural increase in the use of AV solutions will see robust AV demand in the years ahead. \n   \n Over the longer term, the Pro AV market is forecast to grow by an average of 5.6% (AVIXA) per annum for the next five years and the Group is well placed to benefit from this. Despite the Group's significant revenue, it represented less than 4% of our estimate of our target addressable global Pro AV market and the Group continues to have ambitious growth plans. \n   \n Acquisitions in the year \n   \n Alongside record profitability, I am pleased that the Group was also able to complete seven strategically aligned acquisitions in the year. \n   \n In June 2023, the Group completed the acquisition of S.F. Marketing, Inc. (\"SFM\"), a specialist value-add AV distributor based in Canada. Founded in 1978 and based in Montreal, SFM is a leading value-add distributor of professional AV, with heritage in the professional audio market. It has 146 employees and over 1,500 customers. The business has grown through long standing relationships with tier-1 brands and developing a reputation for offering exceptional levels of service, which remains a key focus of the business's strategy. \n   \n SFM is the Group's second investment in the strategically important North American region, following the acquisition of Starin in 2020. SFM is Midwich's first physical presence in Canada, which represents 2.6% of the global AV market. \n   \n In July 2023, the Group made five further acquisitions, each of which add expertise and new product areas to existing territories. \n   \n Starin, the US arm of the Group, expanded its broadcast technology offering with the acquisitions of Toolfarm.com, Inc and Digital Media Promos, Inc (trading as 76 Media). Toolfarm.com, distributes video software products and plugins, with a particular focus on 3D and motion graphics, whilst 76 Media is a value-add distributor of high-end video storage and media asset management hardware to the US market. \n   \n In the UK and Ireland, the Group completed the acquisition of HHB Communications Holdings Limited (\"HHB\"), a leading supplier of specialist professional audio equipment, content creation products, and music technology. Founded in 1976 and with 55 employees, HHB has built a name for itself in the broadcasting, media and entertainment market and has supported many notable post production facilities, film, gaming, recording studios, and broadcasters with its products used by the likes of Warner Brothers, BBC, Sky and Pinewood Studios. Representing manufacturers such as RØDE, Genelec, and AVID from its three London locations, HHB joining the Group further develops Midwich's offering in these strategically important markets. \n   \n Furthermore, in the UK and Ireland, the Group acquired Pulse Cinemas Holdings Limited trading as Pulse Cinemas. Founded in 2003, Pulse Cinemas is a home cinema distributor with an established reputation for delivering beautiful cinema spaces with class-leading luxury brands. Pulse Cinemas enhances the UK and Ireland business' custom installation offering and also brings state-of-the-art home cinema demonstration facilities. \n   \n In Spain, Midwich Iberia acquired Video Digital Soluciones S.L. trading as Video Digital. Video Digital is a Barcelona based distributor of Pro AV equipment in Spain and Portugal with a strong position in the broadcast market, working with a range of leading manufacturers, including Blackmagic Design. \n   \n In November 2023, the Group acquired prodyTel Distribution Gmbh (\"prodyTel\"), a distributor of professional audio and technical solutions products based near Nuremberg, Germany. Based in Stein, on the outskirts of Nuremberg, prodyTel was founded in 2003, originally as a manufacturer of audio codecs before switching its focus to distribution in 2014. From there, it has developed a strong vendor portfolio, including premium brands Biamp, Aver and Jabra, with a particular focus on the corporate and education market. \n   \n These acquisitions bring new technologies, customers and vendor relationships, further delivering the Group's strategy to grow margins and earnings, both organically and through selective acquisitions of strong complementary businesses. They also expand our reach in the strategically important North American market. \n The integration of these businesses is progressing well, and we have thoroughly enjoyed welcoming over 250 new team members to the Group. \n   \n The oversubscribed equity raise in June 2023 was fully deployed in the year to finance these acquisitions and we are highly appreciative of existing shareholders' and new investors' support. \n   \n We anticipate a continuation of our expansion strategy through both organic growth and acquisition of complementary businesses and believe that our balance sheet and bank facilities position us well to achieve this. The acquisition pipeline remains healthy, and the management team continues to review attractive opportunities. \n   \n Dividend \n   \n The Board understands the importance of dividends for many of our investors and is pleased to recommend a final dividend of 11.0p per share which, if approved, will be paid on 14 June 2024 to all shareholders on the register as on 10 May 2024. The last day to elect for dividend reinvestment (\"DRIP\") is 23 May 2024. With the interim dividend of 5.5p per share, this represents a total dividend for the year of 16.5p per share. The combined value of the interim and proposed final dividends is covered 2.3 times by adjusted earnings. \n   \n The Board continues to support a progressive dividend policy to reflect the Group's strong growth and cash flow. \n   \n Corporate Governance and sustainability \n   \n Membership of the Board remained stable throughout 2023, and we continue to follow a hybrid approach to our meetings, mixing in person with unified communications solutions for our meetings. The Board met ten times during the year and received regular updates from the Executive Leadership Team (\"ELT\"). \n   \n In line with prior years, the Board completed a self-evaluation exercise during 2023, reinforcing our commitment to, and success in, establishing a strong corporate governance framework. We took the opportunity of this review to confirm our strong and effective governance and reaffirmed the role of the Board and its individual members in ensuring compliance with the QCA code. \n   \n The Nominations Committee has reviewed the skills and experience of Board members individually and collectively. There were no major issues or concerns raised about the effectiveness of the Board or its individual members and concluded that the size and composition of the Board remain appropriate at this stage of the Group's development. \n   \n In line with the Board's succession planning, and the evolving governance environment, it was determined to add a further Non-executive Director with relevant finance and governance experience. Following a search and interview process, we are delighted to welcome Alison Seekings to the Board. Alison brings a wealth of accounting, governance and technology company experience to the Group and she is expected to become the Chair of the Audit Committee after completing her onboarding. \n   \n The Group has a broad international footprint with the majority of its revenue coming from outside the UK and Ireland and the Board welcomes the cultural diversity that this brings. The Midwich culture is an open and welcoming one and we have been recognised for this. For example, in 2023 we won 'Audio Visual Distributor of the Year' at the Technology Reseller Awards 23 and our Tech Xpo event won Best Partner Event (Distributor) in the CRN Sales and Marketing Awards 2023. The Board understands the importance of diversity of gender and ethnicity and is committed to ensuring that diversity will be a key consideration in the appointment of future Directors and senior leaders. \n   \n The Group is committed to doing the right thing for the wider society; community engagement is embedded in our DNA. Our teams are passionate about making a difference and once again stepped up their time commitment for our nominated good causes. I'm delighted to report our Gift of AV programme raised a record amount for charity in the year. \n   \n This year we further enhanced our work on formalising our approach to environmental matters by engaging a third party to support us in adopting the Mandatory Climate-related Financial Disclosures incorporating the Task Force on Climate-related Financial Disclosure (\"TCFD\") aligned reporting. This includes changes to our environment-related governance, risk management, scenario analysis, carbon reporting and net zero target setting. \n   \n The Group continues to apply the QCA code as its governance framework and has assessed compliance with the newly revised QCA code (November 2023) which applies from our 2024 annual report. The Board welcomes the enhanced QCA code requirements and has chosen to adopt the majority of additional code requirements early in this year's annual report. We continue to engage with our largest shareholders through regular face to face meetings and inviting them to join us for office/showroom tours and at our AV trade shows. \n   \n The Board recognises its duty to have regard to broader stakeholder interests and, in addition to developing our sustainability strategy this year, our teams shared industry-leading ideas with a wide audience through our Midwich Live social media broadcasts. \n   \n People \n   \n The success of any company is down to the quality of its leadership and its people, and this is even more important in a challenging market. I believe that we have the best teams in the industry, and they have once again delivered exceptional service to vendors, customers and end users alike. The Board has a strong belief in rewarding success and ensuring that engagement levels are high. Share ownership by our people is a core part of our engagement strategy and I believe that our employee share plans continue to incentivise exceptional business performance. \n   \n In 2023, I was also delighted to see how our businesses responded to the market conditions. Our teams went above and beyond to support our existing customers and vendors, onboard new brand relationships and welcome the seven new businesses acquired during the year. Our culture and values are at the heart of how we do everything in the Group, and we have continued to invest resources in maintaining the spirit of Midwich. This includes tangible changes, such as a step up in staff benefits and further free share awards, to a focus on community involvement and wellbeing, and expanding opportunities to work with colleagues in other businesses. Our teams continue to address every challenge with commitment and determination, and it is this positive approach that is the main driver of our market share gains and continued profit growth. \n   \n The Board has regular interaction with the Executive Directors together with the Managing Directors of our key operating units. This year we have also spent time with the new Group Management Team (\"GMT\") which is an expanded leadership group responsible for both the delivery of the long-term strategic objectives of the Group and the successful execution of the operating plans. This team is working well and shows the strength and depth of the Group's leadership to support future growth. \n   \n On behalf of the Board, I would like to thank all employees and our partners for their commitment and hard work and congratulate them on achieving an impressive performance in a challenging year. \n   \n Andrew Herbert \n Non-executive Chair \n   \n Managing Director's Review \n   \n Overview \n   \n I am delighted to report that 2023 was another record year for Midwich. After two years of exceptional growth, the market was more challenging in 2023, with macroeconomic factors impacting demand for our more mainstream products. \n   \n Despite challenging market conditions, our team responded brilliantly, delivering record revenue, our biggest ever annual improvement in gross margin to 16.8% (our highest ever gross margin) and, as a result, we reached £50m of adjusted profit before tax for the first time. \n   \n The Group continued to deliver on its strategy of growth and increasing specialisation. In particular, sales of technical products reached 59% of Group revenue in 2023, we entered the Canadian Pro AV market, total revenue reached £1.3bn, and our team has expanded to over 1,800 people. \n   \n We have built a globally diversified, agile and responsive business that can adapt quickly to changes in market conditions. Our values-based culture is focused on the needs of our vendors and customers and our partnership approach to both helped us to increase our market shares in our key markets during the year. \n   \n Business performance \n   \n Group revenue increased by 6.8%^ to £1.3bn in 2023, with gross margins reaching 16.8% (2022: 15.3%). Both were records for the Group and reflect our strong performances in each of our biggest regions. The exceptional increase in gross margin reflects the favourable mix benefit from our strategic focus on value-added technical products. \n   \n We take a measured approach to investment, investing in our teams and operational capabilities whilst targeting improvements in operating profit margins. In 2023, adjusted operating profit increased by 16.8%^ to £59.6m, which represents an adjusted operating profit margin of 4.6%, up from 4.2% in the prior year. \n   \n Disciplined working capital management contributed to strong operating cash generation, with operating cash at 114% of adjusted EBITDA ahead of our long-term average of c.80%. This helped mitigate some of the headwinds from higher interest rates and contributed to a record adjusted profit before tax of £50.0m (2022: £45.2m). \n   \n We ended the year with leverage (adjusted net debt to adjusted EBITDA) of c.1.1 times which was better than market expectations and the prior year (2022: 1.6 times). This, combined with our long-term bank facilities, provides significant capacity for the Group to continue to pursue both organic and inorganic opportunities. \n   \n Technologies and volatility in end user markets \n   \n Third party data (Futuresource Consulting) for 2023 shows double digit declines in a number of the mainstream Pro AV product categories and an overall mid-single digit decline in the Pro AV distribution market. \n   \n The Group's overall growth of 6.8%^, with organic growth of 0.8%, demonstrates further market share gains for Midwich in 2023. The Group adapted to the evolving market conditions, working closely with our customers and vendors to meet the changes in market demand. \n   \n In broad terms, we categorise our products into mainstream and specialist technical categories. Mainstream products cover displays and projectors, which comprised an aggregate of 35% of Group revenue in 2023 (2022: 40%). Specialist categories cover technologies which require greater pre and post-sales support and hence tend to carry higher margins. This group covers categories such as audio, technical video and broadcast and represented 59% of total sales compared with 54% in 2022. A core part of the Group's long-term strategic focus is to become more specialist. \n   \n Displays and projection are at the core of the majority of Pro AV projects, and we are the leading distributor of high-end displays and projection in many of our businesses. Despite a challenging market, which third party data indicates declined at double digit rates in 2023, our display and projection business reduced by only 6.6% in the year, but is still c.15% larger than it was pre-pandemic. LED solutions, which continue to gain share from displays and projection in the larger format categories, continued to experience very strong growth, up 23% in the year, and we believe we have established a strong market position in this category. These products require a higher level of expertise to distribute effectively, and hence tend to carry a higher overall gross margin. \n   \n Growing our technical product categories has been a particular focus of the business for many years, and in 2023 revenues in this category increased by 18%. This was driven by increased demand from entertainment and live events together with improved product availability. There was strong growth in both professional audio and lighting, particularly in EMEA and North America. Technical video, which includes image processing, digital signage, connectivity and control, is now the Group's largest product category and saw double digit growth in 2023. This reflects increasing complexity of Pro AV solutions in many end user environments. \n   \n Investing in the future \n   \n The global Pro AV market is in excess of $300bn (AVIXA), of which our assessment of the Group's Target Addressable Market (\"TAM\") is c$45bn. Whilst I believe that we are the leading global specialist Pro AV distributor, our £1.3bn revenue in 2023 represents less than 1% of the global market and 3-4% of our TAM. The opportunity for the future remains enormous and we will continue to target growth both organically and through acquisition. \n   \n In the last two years we have invested further in our M&A capabilities, which allowed us to complete seven acquisitions in 2023. This was a significant step-up from our post-IPO average of two to three deals per annum. We acquire businesses to enter new geographies or add to our product set and technical capabilities. The 2023 acquisitions brought entry into the Canadian Pro AV market and added specialist capabilities in pro audio, home cinema, technical video, broadcast and software. \n   \n Organically, we also continue to invest in our business. Over the last year we added to our commercial teams, our M&A and integration capabilities and further strengthened our finance and IT groups. \n   \n In a relatively tough market, we raised £51m of equity funding in June 2023. This over-subscribed fundraise was used in the year for our acquisition programme and I wish to thank both our long-term and new shareholders for their support. \n   \n Our values and culture \n   \n Midwich is our people, their skills, experience, relationships and attitude. We promote trust, honesty, hard work, integrity, humility and creativity, and value everyone's ideas and contribution. Team engagement is of critical importance, and we saw improvements in our engagement survey in 2023. Our approach is to reward success, and we continue to adapt to the changing work environment. In the last twelve months, we have evolved our approach to hybrid working, stepped up employee benefits and increased our engagement with our nominated charities, our communities and our environment. \n   \n The 2023 acquisitions also added over 250 people to the Midwich family and we very much look forward to working with our new colleagues to accelerate the growth in their businesses. \n   \n Outlook \n   \n The Group has a proven capability to grow ahead of its markets both organically and through acquisition. I believe that we have further enhanced the strength of our relationships with our customers and vendors alike over the last twelve months. However, our team is not complacent; we recognise that we operate in a competitive market where both vendors and customers have a choice of which partners to work with. Of our top 40 vendors in 2023, we were either exclusive or the number one distributor for the vast majority. Our focus is to ensure that we provide the best service possible and continue to develop our offering. \n   \n We also have a strong pipeline of acquisition opportunities which will enable us to continue our strategy of entering new geographical markets and expanding our range of products. \n   \n Looking to the longer-term, with the global AV market expected by AVIXA to grow at 5.6% per annum over the five years to 2028, I believe our Group is very well positioned for the future. \n   \n The challenging market conditions seen last year have continued into 2024 and we do not expect a near-term improvement in mainstream product growth whilst demand for technical products has remained strong in the first few months of 2024. \n   \n ^at constant currency \n   \n Financial Review \n   \n 2023 was a strong year for the Group with record revenue, gross margin and adjusted profit before tax. Midwich further consolidated its position in the market by completing seven acquisitions and entering the Canadian market. Group revenue increased to £1.3bn (2022: £1.2bn). Challenging macroeconomic conditions impacted demand for our mainstream products, but the Group's focus on technical product categories, which represents 59% of the group's revenue, resulted in a record increase in gross margin to 16.8% (2022: 15.3%). \n   \n Adjusted operating profit of £59.6m (2022: £51.1m) was a Group record and up by 16.8% at constant currency (2022: 46%). Statutory operating profit (before adjustments) was £41.6m (2022: £35.1m). \n   \n There was strong operating cash generation, with operating cash conversion at 114% (2022: 54%). Our adjusted net debt to adjusted EBITDA ratio at c.1.1x (2022: 1.6x) positions us well for future acquisitions and our revolving credit facility gives us funding capacity to support our growth strategy. \n   \n Statutory financial highlights \n \n \n \n \n \n   \n \n \n \n \n Year to 31 \n December 2023 \n \n \n \n \n Year to 31 \n December 2022 \n \n \n \n \n Total growth \n \n \n \n \n \n Revenue \n \n \n £1,289.1m \n \n \n £1,204.1m \n \n \n 7% \n \n \n \n \n Gross profit \n \n \n £216.5m \n \n \n £183.7m \n \n \n 18% \n \n \n \n \n Operating profit \n \n \n £41.6m \n \n \n £35.1m \n \n \n 19% \n \n \n \n \n Profit before tax \n \n \n £36.5m \n \n \n £24.9m \n \n \n 47% \n \n \n \n \n Profit after tax \n \n \n £28.9m \n \n \n £16.9m \n \n \n 72% \n \n \n \n \n \n Basic EPS - pence \n \n \n \n \n  27.98p \n \n \n \n \n  17.32p \n \n \n \n \n 62% \n \n \n \n \n \n   \n Adjusted financial highlights 1 \n \n \n \n \n \n   \n \n \n \n \n Year to 31 December 2023 \n \n \n \n \n Year to 31 \n December 2022 \n \n \n \n \n Total growth \n \n \n \n \n Growth at \n constant \n currency \n \n \n \n \n \n Revenue \n \n \n £1,289.1m \n \n \n £1,204.1m \n \n \n 7% \n \n \n 7% \n \n \n \n \n Gross profit \n \n \n £216.5m \n \n \n £183.7m \n \n \n 18% \n \n \n 18% \n \n \n \n \n Gross profit margin % \n \n \n 16.8% \n \n \n 15.3% \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit \n \n \n £59.6m \n \n \n £51.1m \n \n \n 17% \n \n \n 17% \n \n \n \n \n Adjusted operating profit margin % \n \n \n 4.6% \n \n \n 4.2% \n \n \n \n \n \n \n \n \n \n \n Adjusted profit before tax \n \n \n £50.0m \n \n \n £45.2m \n \n \n 11% \n \n \n 11% \n \n \n \n \n Adjusted profit after tax \n \n \n £38.5m \n \n \n £34.1m \n \n \n 13% \n \n \n \n \n \n \n \n \n Adjusted EPS - pence \n \n \n \n \n 37.46p \n \n \n \n \n 36.08p \n \n \n \n \n 4% \n \n \n \n \n   \n \n \n \n \n \n  1 Definitions of the alternative performance measures are set out on page 28 . \n   \n Currency movements increased Group revenue and reduced adjusted operating profit in the year by 0.3% and 0.1% respectively. The currency impact in the prior year increased revenue by 2.1% and adjusted operating profit by 4.1%. \n Organic growth in revenue was 0.8% (2022: 20.7%). Adjusted EPS growth in 2023 was diluted by the equity fundraise, for acquisition purposes, in June 2023. \n The Group's operating segments are the UK and Ireland, EMEA, Asia Pacific and North America. The Group is supported by a central team. \n Regional highlights \n \n \n \n \n \n   \n \n \n \n \n Year to 31 \n December 2023 \n £m \n \n \n \n \n Year to 31 \n December 2022 \n £m \n \n \n \n \n Total \n growth \n % \n \n \n \n \n Growth at \n constant \n currency \n % \n \n \n \n \n Organic \n growth \n % \n \n \n \n \n \n Revenue \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n UK & Ireland \n \n \n 474.7 \n \n \n 492.2 \n \n \n (3.6%) \n \n \n (3.6%) \n \n \n (8.1%) \n \n \n \n \n EMEA \n \n \n 589.3 \n \n \n 535.0 \n \n \n 10.2% \n \n \n 8.9% \n \n \n 8.0% \n \n \n \n \n Asia Pacific \n \n \n 47.6 \n \n \n 53.8 \n \n \n (11.4%) \n \n \n (7.3%) \n \n \n (7.3%) \n \n \n \n \n \n North America \n \n \n \n \n 177.5 \n \n \n \n \n 123.1 \n \n \n \n \n 44.2% \n \n \n \n \n 45.5% \n \n \n \n \n 8.1% \n \n \n \n \n \n Total Global \n \n \n 1,289.1 \n \n \n 1,204.1 \n \n \n 7.1% \n \n \n 6.8% \n \n \n 0.8% \n \n \n \n \n Gross profit margin \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n UK & Ireland \n \n \n 18.1% \n \n \n 16.1% \n \n \n 2.0ppts \n \n \n \n \n \n \n \n \n \n \n EMEA \n \n \n 15.7% \n \n \n 14.6% \n \n \n 1.1ppts \n \n \n \n \n \n \n \n \n \n \n Asia Pacific \n \n \n 16.8% \n \n \n 17.3% \n \n \n (0.5)ppts \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n \n \n 17.2% \n \n \n \n \n 14.0% \n \n \n \n \n 3.2ppts \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n Total Global \n \n \n 16.8% \n \n \n 15.3% \n \n \n 1.5ppts \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit 1 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n UK & Ireland \n \n \n 27.1 \n \n \n 26.5 \n \n \n 2.3% \n \n \n 2.1% \n \n \n \n \n \n \n \n EMEA \n \n \n 28.1 \n \n \n 22.7 \n \n \n 23.8% \n \n \n 23.9% \n \n \n \n \n \n \n \n Asia Pacific \n \n \n (0.3) \n \n \n 1.4 \n \n \n (118%) \n \n \n (119%) \n \n \n \n \n \n \n \n North America \n \n \n 9.5 \n \n \n 6.4 \n \n \n 46.4% \n \n \n 48.6% \n \n \n \n \n \n \n \n \n Group costs \n \n \n \n \n (4.8) \n \n \n \n \n (5.9) \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n Total Global \n \n \n 59.6 \n \n \n 51.1 \n \n \n 16.6% \n \n \n 16.8% \n \n \n \n \n \n \n \n \n Adjusted finance costs \n \n \n \n \n (9.6) \n \n \n \n \n (5.9) \n \n \n \n \n (61.0%) \n \n \n \n \n (60.5%) \n \n \n \n \n   \n \n \n \n \n \n \n Adjusted profit before tax 1 \n \n \n \n \n 50.0 \n \n \n \n \n 45.2 \n \n \n \n \n 10.7% \n \n \n \n \n 11.1% \n \n \n \n \n   \n \n \n \n \n \n   \n 1    Definitions of the alternative performance measures are set out on page 28 . \n   \n The financial performance of each segment during the year was: \n UK & IRELAND \n After two years of unprecedented growth, the UK and Ireland segment revenue reduced by 3.6% (2022: +72.1%) to £474.7m (2022: £492.2m). Technical product categories remained strong whilst demand for mainstream products was subdued due to challenging market conditions. The gross profit margin increased significantly to 18.1% (2022: 16.1%), reflecting a focus on higher margin products. This resulted in an adjusted operating profit of £27.1m (2022: £26.5m), an increase of 2.3% (2022: 108.3%). \n EMEA \n The EMEA segment revenue grew 10.2% (2022: 17.5%) to £589.3m (2022: £535.0m). Gross profit increased to £92.3m (2022: £78.0m) at a gross profit margin of 15.7% (2022: 14.6%), with the increase in margin attributable to a favourable change in product mix. The region produced an adjusted operating profit of £28.1m (2022: £22.7m), an increase of 23.8% (2022: 6.4%). In constant currency, revenue grew 8.9% (2022: 16.8%) and adjusted operating profit increased 23.9% (2022: 3.2%). \n ASIA PACIFIC \n The Asia Pacific segment, which is mainly Australia, continues to see a high level of competition in a subdued market. Revenue reduced by 11.4% to £47.6m (2022: +18.5% to £53.8m), generating gross profit of £8.0m (2022: £9.3m) at a gross profit margin of 16.8% (2022: 17.3%). Adjusted operating losses were £0.3m (2022: £1.4m profit). On a constant currency basis, revenue reduced by 7.3% (2022: 14.3%). \n NORTH AMERICA \n The entry into Canada in June 2023 supported further strong growth in the North America region of 44.2% (2022: 78.2%) to £177.5m (2022: £123.1m). Gross margins were 17.2% (2022: 14.0%) with the increase attributable to the positive impact from the SFM acquisition whilst adjusted operating profit grew by 46.4% (2022: 41.3%) to £9.5m (2022: £6.4m). On a constant currency basis, revenue increased by 45.5% (2022: 60.0%) and adjusted operating profit grew 48.6% (2022: 27.1%). \n Group costs \n Group costs for the year were £4.8m (2022: £5.9m). Group costs include central support for sales, finance, compliance, human resources, information technology and executive management. \n Exceptional administration costs relate to acquisition-related expenses. These increased to £1.5m (2022: £0.4m) due to the step up in M&A activity in the year with seven transactions closed in 2023 (2022: two). \n Adjusted finance costs \n Adjusted finance costs at £9.6m (2022: £5.9m) mainly reflect the interest costs on borrowings for historical acquisition investments and working capital. Finance costs increased during the year mainly because of interest rate increases during the period. Reported net finance costs of £5.1m (2022: £10.1m) include interest costs on Group borrowings, the change in valuation of both deferred consideration and put and call options and the revaluation of loans and financial instruments. \n Profit before tax \n The Group reported a profit before taxation of £36.5m (2022: £24.9m) and adjusted profit before tax of £50.0m (2022: £45.2m); the increase using constant currency rates was 11.1% (2022: 37.5%). \n Tax \n The adjusted effective tax rate was 23.1% in 2023 (2022: 24.5%), which reflects the mix of tax rates in the geographies where the Group operates. \n Earnings per share \n Following a successful equity placing in June 2023, the average number of shares in issue increased to 95.9m (2022: 88.3m). At 31 December 2023, there were 103.3m shares in issue. \n Basic earnings per share is calculated on the total profit of the Group attributable to shareholders. Basic EPS for the year was 27.98p (2022: 17.32p). Adjusted EPS increased by 4% (2022: 41%) to 37.46p (2022: 36.08p). This was below the increase in adjusted profit after tax due to the equity issued in 2023. \n Dividend \n The Board has recommended a final dividend of 11.0p per share, which, together with the interim dividend of 5.5p per share, gives a total dividend for 2023 of 16.5p per share (2022: 15.0p). If approved by shareholders at the AGM, the final dividend will be paid on 14 June 2024 to shareholders on the register on 10 May 2024. The last day to elect for dividend reinvestment (\"DRIP\") is 23 May 2024. \n Cash flow \n \n \n \n \n \n   \n \n \n \n \n Year to \n 31 December \n 2023 \n £m \n \n \n \n \n Year to \n 31 December \n 2022 \n £m \n \n \n \n \n \n Adjusted operating profit \n \n \n 59.6 \n \n \n 51.1 \n \n \n \n \n \n Add back depreciation and unadjusted amortisation \n \n \n \n \n 9.9 \n \n \n \n \n 7.4 \n \n \n \n \n \n Adjusted EBITDA \n \n \n 69.5 \n \n \n 58.5 \n \n \n \n \n Decrease/(Increase) in stocks \n \n \n 10.5 \n \n \n (15.7) \n \n \n \n \n Decrease/(Increase) in debtors \n \n \n 8.2 \n \n \n (70.7) \n \n \n \n \n \n (Decrease)/Increase in creditors 1 \n \n \n \n \n (8.7) \n \n \n \n \n 59.6 \n \n \n \n \n \n \n Adjusted cash flow from operations \n \n \n \n \n 79.6 \n \n \n \n \n 31.7 \n \n \n \n \n \n \n Adjusted EBITDA cash conversion \n \n \n \n \n 114% \n \n \n \n \n 54% \n \n \n \n \n \n   \n 1    Excluding the movement in accruals for employer taxes on share based payments . \n   \n The Group's adjusted operating cash flow conversion, calculated comparing adjusted cash flow from operations with adjusted EBITDA, was 114% (2022: 54%). Strong working capital management, together with more measured revenue growth in 2023, resulted in cash conversion ahead of the long-term average for the Group. Our expectation of long-term cash conversion remains between 70% and 80%. \n Gross capital spend on tangible assets was £5.6m (2022: £5.3m) and included investment in facilities together with rental asset purchases in the UK and Ireland. An investment of £10.4m (2022: £5.8m) in intangible fixed assets included £10.1m (2022: £5.3m) in relation to the Group's new ERP solution. \n Net debt \n Reported net debt reduced from £119.4m at 31 December 2022 to £106.2m at 31 December 2023. The Group's reported net debt continues to be impacted by the adoption of IFRS 16 in 2019, which results in approximately £23.6m of lease liabilities (2022: £23.4m) being added to net debt. As noted in the prior year, the Group's focus is net debt excluding leases (\"adjusted net debt\"). The impact of leases on net debt is excluded from the Group's main banking covenants. \n Adjusted net debt at 31 December 2023 was £82.6m (2022: £96.0m). This reduction can be attributed to the June 2023 equity placing (£50.0m net of fees), less M&A and deferred consideration payments in the year (£52.0m, 2022: £26.5m) and supported by strong operating cash generation. \n In December 2023, the Group exercised its option to extend its £175m revolving credit facility by twelve months to mid-2028. This facility is supported by six banks and has an adjusted net debt to adjusted EBITDA covenant ratio of 3x and an adjusted interest cover covenant of 4x adjusted EBITDA. The EBITDA covenant is calculated on a historical twelve month basis and includes the full benefit of the prior year's earnings of any businesses acquired. \n Most of the Group's other borrowing facilities are to provide working capital financing. Whilst the use of such facilities is typically linked to trading activity in the borrowing company, these facilities provide liquidity, flexibility and headroom to support the Group's organic growth. As at 31 December 2023, the Group has access to total facilities of over £300m (2022: over £200m). \n The Group has a strong balance sheet with a closing adjusted net debt/adjusted EBITDA ratio of 1.1x (2022: 1.6x). This, combined with the Group's underlying cash generation, equips it well to fund short-term movements in working capital as well as to continue to pursue accretive acquisitions. The Group targets a long-term adjusted net debt to adjusted EBITDA (including pro forma acquisition earnings) range of 1.5x-2.0x, although we may go above this in the short term following acquisition investments, before returning to our target range through cash generation. \n Goodwill and intangible assets \n The Group's goodwill and intangible assets of £168.5m (2022: £111.8m) arise from the various acquisitions undertaken. Each year, the Board reviews goodwill for impairment and, as at 31 December 2023, the Board believes there are no indications of impairment. The intangible assets arising from business combinations, for exclusive supplier contracts, customer relationships and brands, are amortised over an appropriate period. \n Working capital \n Working capital management is a core part of the Group's performance. Growth in working capital in the year was driven by the impact of acquisitions partially offset by a reduction in organic working capital. As at 31 December 2023, the Group had working capital (trade and other receivables plus inventories less trade and other payables) of £154.6m (2022: £150.7m). This represented 12.0% of current year revenue (2022: 12.5%). The Group uses a range of different techniques to write down inventory to the lower of cost and net realisable value, including a formulaic methodology based on the age of inventory. The aged inventory methodology writes down inventory by a specific percentage based on time elapsed from the purchase date. There was no change in this methodology in the year. As at 31 December 2023, the Group's inventory provision was £18.5m (10.0% of cost) (2022: £18.8m, 10.5% of cost). \n Statutory measures \n The Group reports alternative performance measures, which are defined on page 28 . These measures reflect the key metrics used in the day-to-day management of the Group. \n The alternative profit related performance measures exclude acquisition related costs, impairments, certain share-based payments and a number of non-cash related finance charges related to the re-valuation of financial instruments. Users should exercise caution in relying on alternative performance measures which should be seen as supplementary information in addition to the statutory disclosures. \n Adjusted return on capital employed \n Adjusted return on capital employed is an alternative performance measure. \n The director's believe that this is an important measure of the investment returns of the Group \n \n \n \n \n \n Calculation \n \n \n \n \n 2023 \n £'000 \n \n \n \n \n 2022 \n £'000 \n \n \n \n \n \n Total equity \n \n \n 196,144 \n \n \n 134,134 \n \n \n \n \n Total debt \n \n \n 106,191 \n \n \n 119,424 \n \n \n \n \n Accumulated amortisation of acquired intangibles \n \n \n 52,969 \n \n \n 42,600 \n \n \n \n \n Right of use assets \n \n \n (21,051) \n \n \n (21,559) \n \n \n \n \n Acquisition related liabilities \n \n \n 38,080 \n \n \n 33,407 \n \n \n \n \n \n Closing capital employed \n \n \n \n \n 372,333 \n \n \n \n \n 308,006 \n \n \n \n \n \n \n Average capital employed \n \n \n \n \n 340,169 \n \n \n \n \n 266,222 \n \n \n \n \n \n \n Adjusted operating profit \n \n \n \n \n 59,593 \n \n \n \n \n 51,108 \n \n \n \n \n \n \n Adjusted return on capital employed \n \n \n \n \n 17.5% \n \n \n \n \n 19.2% \n \n \n \n \n \n   \n The Group continues to deliver a strong return on capital. \n The Group completed an equity fundraise and seven acquisitions in 2023 (2022: Two) which significantly increased the capital employed. If in-year acquisitions were included on a proforma basis, from 1st January, the adjusted return on capital employed would have been c19% (2022: c19%). \n \n Adjustments to reported results \n \n \n \n \n \n   \n \n \n \n \n 2023 \n £'000 \n \n \n \n \n 2022 \n £'000 \n \n \n \n \n \n Operating profit \n \n \n 41,583 \n \n \n 35,053 \n \n \n \n \n Acquisition costs \n \n \n 1,489 \n \n \n 435 \n \n \n \n \n Share based payments \n \n \n 4,738 \n \n \n 6,031 \n \n \n \n \n Employer taxes on share based payments \n \n \n 603 \n \n \n 176 \n \n \n \n \n \n Amortisation of brands, customer and supplier relationships \n \n \n \n \n 11,180 \n \n \n \n \n 9,413 \n \n \n \n \n \n \n Adjusted operating profit \n \n \n \n \n 59,593 \n \n \n \n \n 51,108 \n \n \n \n \n \n Net finance costs \n \n \n (5,060) \n \n \n (10,137) \n \n \n \n \n Derivative fair value movements and foreign exchange gains and losses on borrowings for acquisitions \n \n \n 659 \n \n \n (1,194) \n \n \n \n \n Finance costs - deferred and contingent consideration \n \n \n (4,150) \n \n \n 508 \n \n \n \n \n \n Finance costs - put option \n \n \n \n \n (1,063) \n \n \n \n \n 4,866 \n \n \n \n \n \n \n Adjusted net finance costs \n \n \n \n \n (9,614) \n \n \n \n \n (5,957) \n \n \n \n \n \n Profit before tax \n \n \n 36,547 \n \n \n 24,916 \n \n \n \n \n Acquisition costs \n \n \n 1,489 \n \n \n 435 \n \n \n \n \n Share based payments \n \n \n 4,738 \n \n \n 6,031 \n \n \n \n \n Employer taxes on share based payments \n \n \n 603 \n \n \n 176 \n \n \n \n \n Amortisation of brands, customer and supplier relationships \n \n \n 11,180 \n \n \n 9,413 \n \n \n \n \n Derivative fair value movements and foreign exchange gains and losses on borrowings for acquisitions \n \n \n 659 \n \n \n (1,194) \n \n \n \n \n Finance costs - deferred and contingent consideration \n \n \n (4,150) \n \n \n 508 \n \n \n \n \n \n Finance costs - put option \n \n \n \n \n (1,063) \n \n \n \n \n 4,866 \n \n \n \n \n \n \n Adjusted profit before tax \n \n \n \n \n 50,003 \n \n \n \n \n 45,151 \n \n \n \n \n \n Profit after tax \n \n \n 28,926 \n \n \n 16,855 \n \n \n \n \n Acquisition costs \n \n \n 1,489 \n \n \n 435 \n \n \n \n \n Share based payments \n \n \n 4,738 \n \n \n 6,031 \n \n \n \n \n Employer taxes on share based payments \n \n \n 603 \n \n \n 176 \n \n \n \n \n Amortisation of brands, customer and supplier relationships \n \n \n 11,180 \n \n \n 9,413 \n \n \n \n \n Derivative fair value movements and foreign exchange gains and losses on borrowings for acquisitions \n \n \n 659 \n \n \n (1,194) \n \n \n \n \n Finance costs - deferred and contingent consideration \n \n \n (4,150) \n \n \n 508 \n \n \n \n \n Finance costs - put option \n \n \n (1,063) \n \n \n 4,866 \n \n \n \n \n \n Tax impact \n \n \n \n \n (3,930) \n \n \n \n \n (3,018) \n \n \n \n \n \n \n Adjusted profit after tax \n \n \n \n \n 38,452 \n \n \n \n \n 34,072 \n \n \n \n \n \n Profit after tax \n \n \n 28,926 \n \n \n 16,855 \n \n \n \n \n \n Non-controlling interest \n \n \n \n \n (2,109) \n \n \n \n \n (1,562) \n \n \n \n \n \n \n Profit after tax attributable to owners of the Parent Company \n \n \n \n \n 26,817 \n \n \n \n \n 15,293 \n \n \n \n \n \n Adjusted profit after tax \n \n \n 38,452 \n \n \n 34,072 \n \n \n \n \n Non-controlling interest \n \n \n (2,109) \n \n \n (1,562) \n \n \n \n \n \n Adjustments to profit after tax due to NCI \n \n \n \n \n (439) \n \n \n \n \n (650) \n \n \n \n \n \n \n Adjusted profit after tax attributable to owners of the Parent Company \n \n \n \n \n 35,904 \n \n \n \n \n 31,860 \n \n \n \n \n \n Number of shares for EPS \n \n \n 95,852,306 \n \n \n 88,299,098 \n \n \n \n \n Reported EPS - pence \n \n \n 27.98 \n \n \n 17.32 \n \n \n \n \n \n Adjusted EPS - pence \n \n \n \n \n 37.46 \n \n \n \n \n 36.08 \n \n \n \n \n \n   \n The Directors present adjusted operating profit, adjusted profit before tax, and adjusted profit after tax as alternative performance measures in order to provide relevant information relating to the performance of the Group. Adjusted profits are a reflection of the underlying trading profit and are important measures used by Directors for assessing Group performance. The definitions of the alternative performance measures are set out in note to the consolidated financial statements. \n \n \n   \n Unaudited consolidated income statement for the year ended 31 December 2023 \n   \n   \n \n \n \n \n   \n \n \n Notes \n \n \n 2023 \n \n \n   \n \n \n 2022 \n \n \n   \n \n \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n \n \n 1,289,144 \n \n \n \n \n \n 1,204,049 \n \n \n \n \n \n \n \n Cost of sales \n \n \n \n \n \n \n (1,072,675) \n \n \n \n \n \n \n \n (1,020,335) \n \n \n \n \n \n \n \n \n Gross profit \n \n \n \n \n \n 216,469 \n \n \n \n \n \n 183,714 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Distribution costs \n \n \n \n \n \n (130,873) \n \n \n \n \n \n (109,042) \n \n \n \n \n \n \n \n Administrative expenses \n \n \n \n \n \n (51,029) \n \n \n \n \n \n (45,592) \n \n \n \n \n \n \n \n Other operating income \n \n \n \n \n \n 7,016 \n \n \n \n \n \n 5,973 \n \n \n \n \n \n \n \n Operating profit \n \n \n \n \n \n \n 41,583 \n \n \n \n \n \n \n \n 35,053 \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Comprising \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit \n \n \n \n \n \n 59,593 \n \n \n \n \n \n 51,108 \n \n \n \n \n \n \n \n Costs of acquisitions \n \n \n 3 \n \n \n (1,489) \n \n \n \n \n \n (435) \n \n \n \n \n \n \n \n Share based payments \n \n \n \n \n \n (4,738) \n \n \n \n \n \n (6,031) \n \n \n \n \n \n \n \n Employer taxes on share based payments \n \n \n \n \n \n (603) \n \n \n \n \n \n (176) \n \n \n \n \n \n \n \n Amortisation of brands, customer relationships, and supplier relationships \n \n \n \n \n \n (11,180) \n \n \n \n \n \n (9,413) \n \n \n \n \n \n \n \n \n \n \n \n \n \n 41,583 \n \n \n \n \n \n 35,053 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share of profit after tax from associate \n \n \n \n \n \n 24 \n \n \n \n \n \n - \n \n \n \n \n \n \n \n Finance income \n \n \n \n \n \n 293 \n \n \n \n \n \n 95 \n \n \n \n \n \n \n \n Finance costs \n \n \n 4 \n \n \n \n (5,353) \n \n \n \n \n \n \n \n (10,232) \n \n \n \n \n \n \n \n \n Profit before taxation \n \n \n \n \n \n 36,547 \n \n \n \n \n \n 24,916 \n \n \n \n \n \n \n \n Taxation \n \n \n \n \n \n \n (7,621) \n \n \n \n \n \n \n \n (8,061) \n \n \n \n \n \n \n \n \n Profit after taxation \n \n \n \n \n \n \n 28,926 \n \n \n \n \n \n \n \n 16,855 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the financial year attributable to: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n The Company's equity shareholders \n \n \n \n \n \n 26,817 \n \n \n \n \n \n 15,293 \n \n \n \n \n \n \n \n Non-controlling interest \n \n \n \n \n \n 2,109 \n \n \n \n \n \n 1,562 \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n 28,926 \n \n \n \n   \n \n \n \n 16,855 \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic earnings per share \n \n \n 5 \n \n \n 27.98p \n \n \n \n \n \n 17.32p \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Diluted earnings per share \n \n \n 5 \n \n \n 27.06p \n \n \n \n \n \n 16.74p \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The financial statements are also comprised of the notes on pages 20 to 44 . \n \n Unaudited consolidated statement of comprehensive income for the year ended 31 December 2023 \n   \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n 2023 \n \n \n   \n \n \n 2022 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the financial year \n \n \n \n \n \n \n \n \n \n \n \n 28,926 \n \n \n \n \n \n 16,855 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Other comprehensive income \n Items that will not be reclassified subsequently to profit or loss: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Actuarial gains and (losses) on retirement benefit obligations \n \n \n \n \n \n \n \n \n \n \n \n (172) \n \n \n \n \n \n 588 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Items that will be reclassified subsequently to profit or loss: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Foreign exchange gains and (losses) on consolidation \n \n \n \n \n \n \n \n \n \n \n \n \n (5,432) \n \n \n \n \n \n \n \n 8,282 \n \n \n \n \n \n Other comprehensive income for the financial year, net of tax \n \n \n \n \n \n \n \n \n \n \n \n (5,604) \n \n \n \n \n \n 8,870 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive income for the year \n \n \n \n \n \n \n \n \n \n \n \n \n 23,322 \n \n \n \n \n \n \n \n 25,725 \n \n \n \n \n \n   \n Attributable to: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Owners of the Parent Company \n \n \n \n \n \n \n \n \n \n \n \n 21,681 \n \n \n \n \n \n 23,419 \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n \n \n \n \n \n \n 1,641 \n \n \n \n \n \n 2,306 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n 23,322 \n \n \n \n \n \n \n \n 25,725 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The financial statements are also comprised of the notes on pages 20 to 44 . \n   \n   \n   \n   \n Unaudited consolidated statement of financial position as at 31 December 2023 \n   \n \n \n \n \n   \n \n \n   \n \n \n Notes \n \n \n \n \n \n 2023 \n \n \n \n \n \n 2022 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n Assets \n \n \n   \n \n \n   \n \n \n \n \n \n £'000 \n \n \n \n \n \n £'000 \n \n \n \n \n Non-current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Investments \n \n \n \n \n \n \n \n \n \n \n \n 299 \n \n \n \n \n \n - \n \n \n \n \n Goodwill \n \n \n \n \n \n \n \n \n \n \n \n 51,216 \n \n \n \n \n \n 35,765 \n \n \n \n \n Intangible assets \n \n \n \n \n \n \n \n \n \n \n \n 117,009 \n \n \n \n \n \n 76,002 \n \n \n \n \n Right of use assets \n \n \n \n \n \n \n \n \n \n \n \n 21,051 \n \n \n \n \n \n 21,559 \n \n \n \n \n Property, plant and equipment \n \n \n \n \n \n \n \n \n \n \n \n 16,640 \n \n \n \n \n \n 14,961 \n \n \n \n \n Deferred tax assets \n \n \n \n \n \n \n \n \n \n \n \n \n 617 \n \n \n \n \n \n \n \n 2,567 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 206,832 \n \n \n \n \n \n 150,854 \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Inventories \n \n \n \n \n \n \n \n \n \n \n \n 165,588 \n \n \n \n \n \n 159,823 \n \n \n \n \n Trade and other receivables \n \n \n \n \n \n \n \n \n \n \n \n 223,826 \n \n \n \n \n \n 218,612 \n \n \n \n \n Derivative financial instruments \n \n \n \n \n \n \n \n \n \n \n \n 2,084 \n \n \n \n \n \n 4,630 \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n \n \n 56,135 \n \n \n \n \n \n \n \n 25,855 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 447,633 \n \n \n \n \n \n 408,920 \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n \n \n \n \n \n \n \n \n \n (230,915) \n \n \n \n \n \n (225,899) \n \n \n \n \n Derivative financial instruments \n \n \n \n \n \n \n \n \n \n \n \n (26) \n \n \n \n \n \n (1,483) \n \n \n \n \n Put option liabilities over non-controlling interests \n \n \n \n \n \n \n \n \n \n \n \n (21,958) \n \n \n \n \n \n - \n \n \n \n \n Deferred and contingent considerations \n \n \n \n \n \n \n \n \n \n \n \n (11,694) \n \n \n \n \n \n (9,275) \n \n \n \n \n Borrowings and financial liabilities \n \n \n \n \n \n 6 \n \n \n \n \n \n (49,146) \n \n \n \n \n \n (44,955) \n \n \n \n \n Current tax \n \n \n \n \n \n \n \n \n \n \n \n \n (179) \n \n \n \n \n \n \n \n (3,541) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (313,918) \n \n \n \n \n \n (285,153) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n Net current assets \n \n \n \n \n \n \n \n \n \n \n \n 133,715 \n \n \n \n \n \n 123,767 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n Total assets less current liabilities \n \n \n \n \n \n \n \n \n \n \n \n 340,547 \n \n \n \n \n \n 274,621 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n \n \n \n \n \n \n \n \n \n (3,915) \n \n \n \n \n \n (1,872) \n \n \n \n \n Put option liabilities over non-controlling interests \n \n \n \n \n \n \n \n \n \n \n \n (743) \n \n \n \n \n \n (15,975) \n \n \n \n \n Deferred and contingent considerations \n \n \n \n \n \n \n \n \n \n \n \n (3,685) \n \n \n \n \n \n (8,157) \n \n \n \n \n Borrowings and financial liabilities \n \n \n \n \n \n 6 \n \n \n \n \n \n (113,180) \n \n \n \n \n \n (100,324) \n \n \n \n \n Deferred tax liabilities \n \n \n \n \n \n \n \n \n \n \n \n (18,920) \n \n \n \n \n \n (10,576) \n \n \n \n \n Other provisions \n \n \n \n \n \n \n \n \n \n \n \n \n (3,960) \n \n \n \n \n \n \n \n (3,583) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (144,403) \n \n \n \n \n \n (140,487) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n \n \n \n \n \n \n \n 196,144 \n \n \n \n \n \n \n \n 134,134 \n \n \n \n \n \n Equity \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share capital \n \n \n \n \n \n 8 \n \n \n \n \n \n 1,033 \n \n \n \n \n \n 889 \n \n \n \n \n Share premium \n \n \n \n \n \n \n \n \n \n \n \n 116,959 \n \n \n \n \n \n 67,047 \n \n \n \n \n Share based payment reserve \n \n \n \n \n \n \n \n \n \n \n \n 10,843 \n \n \n \n \n \n 12,025 \n \n \n \n \n Investment in own shares \n \n \n \n \n \n \n \n \n \n \n \n (616) \n \n \n \n \n \n (5) \n \n \n \n \n Retained earnings \n \n \n \n \n \n \n \n \n \n \n \n 63,093 \n \n \n \n \n \n 46,023 \n \n \n \n \n Translation reserve \n \n \n \n \n \n \n \n \n \n \n \n 392 \n \n \n \n \n \n 5,356 \n \n \n \n \n Put option reserve \n \n \n \n \n \n \n \n \n \n \n \n (18,649) \n \n \n \n \n \n (10,799) \n \n \n \n \n Capital redemption reserve \n \n \n \n \n \n \n \n \n \n \n \n 50 \n \n \n \n \n \n 50 \n \n \n \n \n Other reserve \n \n \n \n \n \n \n \n \n \n \n \n \n 150 \n \n \n \n \n \n \n \n 150 \n \n \n \n \n \n Equity attributable to owners of the Parent Company \n \n \n \n \n \n \n \n \n \n \n \n 173,255 \n \n \n \n \n \n 120,736 \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n \n \n \n \n \n \n \n 22,889 \n \n \n \n \n \n \n \n 13,398 \n \n \n \n \n \n Total equity \n \n \n \n \n \n \n \n \n \n \n \n \n 196,144 \n \n \n \n \n \n \n \n 134,134 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The financial statements are also comprised of the notes on pages 20 to 44 . The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2024 and were signed on its behalf by: \n   \n   \n   \n Mr S B Fenby \n Director                                                                                                                                               Company registration number: 08793266 \n \n \n   \n Unaudited consolidated statement of changes in equity for the year ended 31 December 2023 \n \n \n \n \n   \n \n \n Share \ncapital \n \n \n Share premium \n \n \n Investment in own shares \n \n \n Retained \nearnings \n \n \n   \n Other reserves \n \n \n Equity attributable to owners of the Parent \n \n \n Non-controlling interests \n \n \n Total \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n   \n \n \n (note 8 ) \n \n \n \n \n \n \n \n \n \n \n \n (Note 9 ) \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 January 2023 \n \n \n 889 \n \n \n 67,047 \n \n \n (5) \n \n \n 46,023 \n \n \n 6,782 \n \n \n 120,736 \n \n \n 13,398 \n \n \n 134,134 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 26,817 \n \n \n - \n \n \n 26,817 \n \n \n 2,109 \n \n \n 28,926 \n \n \n \n \n Other comprehensive income \n \n \n - \n \n \n - \n \n \n - \n \n \n (172) \n \n \n (4,964) \n \n \n (5,136) \n \n \n (468) \n \n \n (5,604) \n \n \n \n \n Total comprehensive income for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 26,645 \n \n \n (4,964) \n \n \n 21,681 \n \n \n 1,641 \n \n \n 23,322 \n \n \n \n \n Shares issued (note 8 ) \n \n \n 144 \n \n \n 49,912 \n \n \n (23) \n \n \n - \n \n \n - \n \n \n 50,033 \n \n \n - \n \n \n 50,033 \n \n \n \n \n Shares purchases (note 8 ) \n \n \n - \n \n \n - \n \n \n (600) \n \n \n - \n \n \n - \n \n \n (600) \n \n \n - \n \n \n (600) \n \n \n \n \n Share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 4,661 \n \n \n 4,661 \n \n \n - \n \n \n 4,661 \n \n \n \n \n Deferred tax on share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (434) \n \n \n (434) \n \n \n - \n \n \n (434) \n \n \n \n \n Share options exercised \n \n \n - \n \n \n - \n \n \n 12 \n \n \n 5,407 \n \n \n (5,409) \n \n \n 10 \n \n \n - \n \n \n 10 \n \n \n \n \n Acquisition of subsidiaries (note 12 ) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (7,850) \n \n \n (7,850) \n \n \n 7,850 \n \n \n - \n \n \n \n \n Dividends paid (note 13 ) \n \n \n - \n \n \n - \n \n \n - \n \n \n (14,982) \n \n \n - \n \n \n (14,982) \n \n \n - \n \n \n (14,982) \n \n \n \n \n Balance at 31 December 2023 \n \n \n 1,033 \n \n \n 116,959 \n \n \n (616) \n \n \n 63,093 \n \n \n (7,214) \n \n \n 173,255 \n \n \n 22,889 \n \n \n 196,144 \n \n \n \n \n   \n For the year ended 31 December 2022 \n \n \n \n \n   \n \n \n Share \ncapital \n \n \n Share premium \n \n \n Investment in own shares \n \n \n Retained \nearnings \n \n \n   \n Other reserves \n \n \n Equity attributable to owners of the Parent \n \n \n Non-controlling interests \n \n \n Total \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n   \n \n \n (note 8 ) \n \n \n \n \n \n \n \n \n \n \n \n (Note 9 ) \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Balance at 1 January 2022 \n \n \n 887 \n \n \n 67,047 \n \n \n (5) \n \n \n 39,078 \n \n \n (1,887) \n \n \n 105,120 \n \n \n 9,276 \n \n \n 114,396 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 15,293 \n \n \n - \n \n \n 15,293 \n \n \n 1,562 \n \n \n 16,855 \n \n \n \n \n Other comprehensive income \n \n \n - \n \n \n - \n \n \n - \n \n \n 588 \n \n \n 7,538 \n \n \n 8,126 \n \n \n 744 \n \n \n 8,870 \n \n \n \n \n Total comprehensive income for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 15,881 \n \n \n 7,538 \n \n \n 23,419 \n \n \n 2,306 \n \n \n 25,725 \n \n \n \n \n Shares issued (note 8 ) \n \n \n 2 \n \n \n - \n \n \n (2) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 6,006 \n \n \n 6,006 \n \n \n - \n \n \n 6,006 \n \n \n \n \n Deferred tax on share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (1,093) \n \n \n (1,093) \n \n \n - \n \n \n (1,093) \n \n \n \n \n Share options exercised \n \n \n - \n \n \n - \n \n \n 2 \n \n \n 766 \n \n \n (767) \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n \n \n Acquisition of subsidiaries (note 12 ) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (6,933) \n \n \n (6,933) \n \n \n 6,933 \n \n \n - \n \n \n \n \n Dividends paid (note 13 ) \n \n \n - \n \n \n - \n \n \n - \n \n \n (10,901) \n \n \n - \n \n \n (10,901) \n \n \n - \n \n \n (10,901) \n \n \n \n \n Acquisition of non-controlling interest (note 11 ) \n \n \n - \n \n \n - \n \n \n - \n \n \n 1,199 \n \n \n 3,918 \n \n \n 5,117 \n \n \n (5,117) \n \n \n - \n \n \n \n \n Balance at 31 December 2022 \n \n \n 889 \n \n \n 67,047 \n \n \n (5) \n \n \n 46,023 \n \n \n 6,782 \n \n \n 120,736 \n \n \n 13,398 \n \n \n 134,134 \n \n \n \n \n   \n The financial statements are also comprised of the notes on pages 20 to 44 . \n   \n   \n   \n Unaudited consolidated statement of cash flows for the year ended 31 December 2023 \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n 2023 \n \n \n   \n \n \n 2022 \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n £'000 \n \n \n   \n \n \n £'000 \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit before tax \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 36,547 \n \n \n \n \n \n 24,916 \n \n \n \n \n Depreciation \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 9,286 \n \n \n \n \n \n 7,039 \n \n \n \n \n Amortisation \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 11,818 \n \n \n \n \n \n 9,807 \n \n \n \n \n Loss on disposal of assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 763 \n \n \n \n \n \n 141 \n \n \n \n \n Share based payments \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 4,661 \n \n \n \n \n \n 6,006 \n \n \n \n \n Foreign exchange (gains)/losses \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (2,467) \n \n \n \n \n \n 3,827 \n \n \n \n \n Share of profit after tax from associate \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (24) \n \n \n \n \n \n - \n \n \n \n \n Finance income \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (293) \n \n \n \n \n \n (95) \n \n \n \n \n Finance costs \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,353 \n \n \n \n \n \n \n \n 10,232 \n \n \n \n \n \n Profit from operations before changes in working capital \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 65,644 \n \n \n \n \n \n 61,873 \n \n \n \n \n (Increase)/decrease in inventories \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 10,524 \n \n \n \n \n \n (15,670) \n \n \n \n \n (Increase)/decrease in trade and other receivables \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 9,637 \n \n \n \n \n \n (70,654) \n \n \n \n \n Increase/(decrease) in trade and other payables \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (9,429) \n \n \n \n \n \n \n \n 59,779 \n \n \n \n \n \n Cash inflow from operations \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 76,376 \n \n \n \n \n \n 35,328 \n \n \n \n \n Income tax paid \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (12,586) \n \n \n \n \n \n \n \n (9,142) \n \n \n \n \n \n Net cash inflow from operating activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 63,790 \n \n \n \n \n \n 26,186 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Acquisition of subsidiaries net of cash acquired \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (42,359) \n \n \n \n \n \n (22,372) \n \n \n \n \n Deferred consideration paid \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (9,300) \n \n \n \n \n \n (198) \n \n \n \n \n Investment in associate \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (275) \n \n \n \n \n \n - \n \n \n \n \n Purchase of intangible assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (10,364) \n \n \n \n \n \n (5,760) \n \n \n \n \n Purchase of plant and equipment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (5,605) \n \n \n \n \n \n (5,328) \n \n \n \n \n Proceeds on disposal of plant and equipment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 198 \n \n \n \n \n \n 140 \n \n \n \n \n Interest received \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 293 \n \n \n \n \n \n \n \n 95 \n \n \n \n \n \n Net cash used in investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (67,412) \n \n \n \n \n \n (33,423) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net cash flows from financing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Proceeds on issue of shares \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 51,250 \n \n \n \n \n \n - \n \n \n \n \n Costs associated with shares issued \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (1,217) \n \n \n \n \n \n - \n \n \n \n \n Purchase of own shares \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (600) \n \n \n \n \n \n - \n \n \n \n \n Proceeds on exercise of share options \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 10 \n \n \n \n \n \n 1 \n \n \n \n \n Acquisition of non-controlling interest \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (61) \n \n \n \n \n \n (3,974) \n \n \n \n \n Dividends paid \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (14,982) \n \n \n \n \n \n (10,901) \n \n \n \n \n Invoice financing inflows/(outflows) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (3,009) \n \n \n \n \n \n 14,282 \n \n \n \n \n Proceeds from borrowings \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 39,228 \n \n \n \n \n \n 31,304 \n \n \n \n \n Repayment of loans \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (19,690) \n \n \n \n \n \n (4,947) \n \n \n \n \n Interest paid \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (9,360) \n \n \n \n \n \n (5,217) \n \n \n \n \n Interest on leases \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (651) \n \n \n \n \n \n (602) \n \n \n \n \n Capital element of lease payments \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (5,235) \n \n \n \n \n \n \n \n (4,126) \n \n \n \n \n \n Net cash inflow/(outflow) from financing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 35,683 \n \n \n \n \n \n 15,820 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 32,061 \n \n \n \n \n \n 8,583 \n \n \n \n \n Cash and cash equivalents at beginning of financial year \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 20,938 \n \n \n \n \n \n 11,639 \n \n \n \n \n Effects of exchange rate changes \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (946) \n \n \n \n \n \n \n \n 716 \n \n \n \n \n \n Cash and cash equivalents at end of financial year \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 52,053 \n \n \n \n \n \n \n \n 20,938 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Comprising: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash at bank \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 56,135 \n \n \n \n \n \n 25,855 \n \n \n \n \n Bank overdrafts \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (4,082) \n \n \n \n \n \n \n \n (4,917) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 52,053 \n \n \n \n \n \n \n \n 20,938 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The financial statements are also comprised of the notes on pages 20 to 44 . \n \n Notes to the unaudited consolidated financial statements \n   \n 1.      Accounting policies \n   \n General information and nature of operations \n Midwich Group plc (\"the Company\") is a public limited company incorporated in England and Wales and listed on the London Stock Exchange's Alternative Investment Market (AIM). The principal activity of Midwich Group plc and its subsidiary companies (\"the Group\") is the distribution of Audio Visual Solutions to trade customers. \n Basis of preparation \n The consolidated financial statements of Midwich Group plc have been prepared in accordance with UK adopted International Accounting Standards (\"IAS\") in conformity with the requirements of the Companies Act 2006. \n The financial statements have been prepared under the historical cost convention as modified for financial instruments at fair value and in accordance with applicable accounting standards. \n 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.  \n Basis of consolidation \n The Consolidated Financial Statements incorporate the results of Midwich Group plc and entities controlled by the Company (its subsidiaries). A subsidiary is a company controlled directly by the Group. Control is achieved where the Group has the power over the investee, rights to variable returns and the ability to use the power to affect the investee's returns. Income and expenses of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of control. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Parent Company. \n The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. \n Non-controlling interests in the net assets of consolidated subsidiaries are identified separately within the Group's equity. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholders' share of changes in equity since the date of the combination. Non-controlling interests are measured initially at fair value. \n Acquisition-related costs are expensed as incurred and all intra-group transactions, balances, income and expenses are eliminated in full on consolidation. \n Acquisition of interests from non-controlling shareholders \n Acquisitions of non-controlling interests in subsidiaries are accounted for as transactions between shareholders. There is no remeasurement to fair value of net assets acquired that were previously attributable to non-controlling shareholders. \n Going concern \n In considering the going concern basis for preparing the financial statements, the Board considers the Group's objectives and strategy, its principal risks and uncertainties in achieving its goals and objectives which are set out in the Strategic Report. The Board has undertaken a review of going concern under three scenarios: 1) our base plan, 2) a downside scenario and 3) a reverse stress test for the period to 31 December 2025. The sensitivity and reverse stress tests are based on a model that allows the Group to assess its liquidity, solvency and compliance with banking covenants based on inputs for future trading performance. Varying the inputs into the model allows the Group to assess the impact of potential adverse trading conditions. \n The directors consider the working capital and finance facilities of the business to be adequate to fund its operations and growth strategy. The Group has a variety of finance facilities available to it including a revolving credit facility which expires in 2028 and secured invoice discounting facilities which require renewal in the forecast period. The directors are confident that they will be able to renew the secured invoice discounting facilities given the secured nature of the facility and state of the business. Notwithstanding, this represents an uncertainty and further models (base plan and reverse stress test) have been prepared to assess going concern without the use of on demand facilities. The base case continues to demonstrate the Group's ability to continue as a going concern. The reverse stress test demonstrates that the Group can withstand severe adverse trading conditions. In assessing the ability to withstand severe adverse trading conditions, the directors have also considered mitigating actions available to them. \n There are no material uncertainties that cast significant doubt on the Group's ability to continue as a going concern and the Group continues to adopt the going concern basis in preparing consolidated financial statements. The Group's strategy remains unchanged, and we will continue to focus on profitable organic growth complemented by targeted acquisitions. \n Revenue \n Revenue arises from the sale of goods, provision of ancillary services, and the rental of products. \n Revenue from the sale of goods is recognised on despatch when control of the products is transferred to the customer. All performance obligations are met on despatch when the customer obtains control to direct the goods within the sales channel and incurs the risk of obsolescence. This includes revenue recognised for bill and hold arrangements where the goods are despatched to a warehouse and held on behalf of the customer. \n Ancillary services include support services, managed services, licences, transport, installations, removals, warranties, and repairs. Where contracts for ancillary services include multiple performance obligations the transaction price is allocated to each separate performance obligation within the contact based on estimated cost-plus margin. Revenues from support services, managed services, and warranties are recognised over time as the services are performed. Revenues from all other ancillary services including licences, transport, installations, removals, and repairs are recognised at a point in time upon delivery of the service. Revenues from licences comprise the services to arrange for the provision of the licence. \n Revenue from the rental of products via an operating lease is recognised on a straight-line basis over the lease term. Changes in the price or duration of a lease that were not part of the original terms and conditions are accounted for as a lease modification and recognised as a new lease from the effective date of the modification. \n Proceeds from the sale of rental assets are recognised as sales of goods. Revenue for the sale of rental assets is recognised at the point in time when the control is transferred, at which point the customer obtains the ability to direct the goods in the channel and incurs the risk of obsolescence. \n Finance income and costs \n Interest income and expense is recognised using the effective interest method which calculates the amortised cost of a financial asset or liability and allocates the interest income or expense over the relevant period.  The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability. Other finance costs include the changes in fair value of derivatives and other financial instruments measured at fair value through profit or loss. \n Goodwill \n Goodwill represents the future economic benefits arising from business combinations which are not individually identified and separately recognised. Goodwill is carried at cost as established at the date of acquisition of the business less any accumulated impairment losses. \n Intangible assets other than goodwill \n Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of other intangible assets are assessed as finite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in administrative expenses. \n Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. \n Amortisation is calculated on a straight-line basis over the estimated useful life of the asset as follows: \n \n \n \n \n ·  Patents and licences \n \n \n 3-10 years \n \n \n \n \n ·  Software \n \n \n 3-15 years \n \n \n \n \n ·  Brands \n \n \n 5-15 years \n \n \n \n \n ·  Customer relationships \n \n \n 5-15 years \n \n \n \n \n ·   Supplier relationships \n \n \n 5-15 years \n \n \n \n \n Right of use assets \n Right of use assets are recognised at the commencement date of the lease when the asset is available for use. Right of use assets are initially measured at cost including initial direct costs incurred and the initial value of the lease liability.  Right of use assets are subsequently measured at cost less any accumulated depreciation, impairment losses, and adjustments arising from lease modifications that are not a termination of the lease. \n Depreciation is calculated on a straight-line basis on all right of use assets as follows: \n \n \n \n \n ·  Land and buildings \n \n \n Over the period of the lease up to a maximum of 50 years \n \n \n \n \n ·  Plant and equipment \n \n \n Over the period of the lease up to a maximum of 10 years \n \n \n \n \n ·  Rental assets \n \n \n Over the period of the lease up to a maximum of 10 years \n \n \n \n \n Modifications to leases that decrease the scope of the lease are treated as a partial or full termination of a lease. A gain or loss on disposal is recognised when there is termination of a lease. \n Property, plant and equipment \n Property, plant and equipment are stated at historical cost less any depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably. All other costs, including repairs and maintenance costs, are charged to the income statement in the period in which they are incurred. \n Depreciation is calculated on a straight-line basis on property, plant and equipment as follows: \n \n \n \n \n ·  Land \n \n \n Not depreciated \n \n \n \n \n ·  Freehold buildings \n \n \n 50 years \n \n \n \n \n ·  Leasehold improvements \n \n \n Over the period of the lease up to a maximum of 50 years \n \n \n \n \n ·  Rental assets \n \n \n 3-10 years \n \n \n \n \n ·  Plant and equipment \n \n \n 3-10 years \n \n \n \n \n Depreciation is provided on cost less residual value. The residual value, depreciation methods and useful lives are reassessed annually. Each asset's estimated useful life has been assessed for limitations in its physical life and for possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all machinery and equipment, with annual reassessments for major items. Changes in estimates are accounted for prospectively. The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales proceeds, net of selling costs, and the carrying amount of the asset and is recognised in the income statement. \n Impairment of non-financial assets including goodwill \n For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination. Each unit to which goodwill is allocated represents the lowest level within the Group that independent cash flows are monitored. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. \n At each reporting date, the Group reviews the carrying amounts of non-current assets excluding goodwill to determine whether there is any indication that they have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the estimate is the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or cash-generating unit is estimated to be less than the carrying amount, then the carrying amount of the asset or cash-generating unit is reduced to the recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. An impairment loss is recognised as an expense immediately. An impairment loss recognised for goodwill is not reversed in subsequent periods. Where an impairment loss on other non-financial assets subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior periods. A reversal of an impairment loss is recognised in the income statement immediately. \n Inventory \n Inventory is valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow-moving items. Cost comprises purchase price and directly attributable costs incurred in bringing products to their present location and condition. Some goods are held on behalf of customers and are not included within the Group's inventory.  \n Financial instruments \n Financial instruments are contracts that give rise to financial assets or financial liabilities and are recognised when the Group becomes a party to the contractual provisions of the instrument. \n Derivatives are financial instruments that have a value that changes in response to a specific external factor and do not have a significant initial investment. \n Financial assets \n Financial assets include trade and other receivables, cash and cash equivalents, and derivative financial instruments with a positive market value. \n The Group classifies financial assets into two categories: \n \n \n \n \n ·  financial assets measured at amortised cost; and \n \n \n \n \n ·   financial assets measured at fair value through profit or loss. \n \n \n \n \n The classification of a financial asset depends on the Group's business model for managing the asset and the contractual cash flow characteristics associated with the asset. \n Financial assets measured at amortised cost are initially measured at fair value plus directly attributable transaction costs and subsequently measured using the effective interest method. The effects of discounting within the effective interest method are omitted if immaterial. \n Financial assets measured at fair value through profit and loss are initially and subsequently measured at fair value. Transaction costs directly attributable to the acquisition of the financial asset are recognised in the profit and loss. \n Investments in equity instruments that are not held for trading are classified as financial assets and are measured at fair value through profit and loss. \n Financial assets with embedded derivatives are recognised as hybrid contracts and are classified in their entirety and not in separate components. \n Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. \n Financial liabilities \n Financial liabilities include trade and other payables; deferred considerations; put option liabilities; borrowings; and derivative financial instruments with a negative market value. \n The Group classifies financial liabilities into three categories: \n \n \n \n \n ·  financial liabilities measured at amortised cost; \n \n \n \n \n ·  financial liabilities measured at fair value through profit or loss; and \n \n \n \n \n ·   contingent consideration recognised in a business combination. \n \n \n \n \n Financial liabilities measured at amortised cost are initially measured at fair value minus directly attributable transaction costs and subsequently measured using the effective interest method. The effects of discounting within the effective interest method are omitted if immaterial. Where the contractual cash flows of the financial liability are renegotiated or otherwise modified the financial liability is recalculated at the present value of the modified contractual cash flows discounted at the financial liability's original effective interest rate. \n Financial liabilities measured at fair value through profit or loss are initially and subsequently measured at fair value. Transaction costs directly attributable to the issue of the financial liability are recognised in the profit and loss. \n Contingent consideration recognised in a business combination is initially and subsequently measured at fair value. \n Financial liabilities with embedded derivatives are recognised as hybrid contracts and are classified in their entirety and not in separate components unless: \n \n \n \n \n ·  the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the financial liability; \n \n \n \n \n ·  a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and \n ·   the hybrid contract is not measured at fair value with changes in fair value recognised in profit or loss. \n \n \n \n \n Financial liabilities are derecognised when they are extinguished, discharged, cancelled, or expire. \n Cashflows in respect of deferred considerations, including contingent considerations, are reported as an investing cash flows because they are cash flows that arise from obtaining control of subsidiaries. \n Trade and other receivables \n Trade and other receivables are financial assets recognised when the Group becomes party to the contractual provisions of the instrument. \n Trade and other receivables are initially measured at transaction price plus directly attributable transaction costs. Transaction price is equivalent to fair value for trade and other receivables that do not contain a significant financing component. Where trade and other receivables do contain a significant financing component the fair value is equivalent to the transaction price adjusted for the effects of discounting. The effects of discounting are not adjusted if it is expected at the inception of the contract that there will be a period of one year or less from when the goods or services are transferred to the customer to the payment date. \n Trade and other receivables are subsequently measured at amortised cost using the effective interest method less expected credit losses. Expected credit losses are calculated based on probability weighted amounts derived from a range of possible outcomes that are based on reasonable supporting information and discounted for the time value of money. The Group applies the simplified approach to measure the loss allowance at an amount equal to lifetime expected credit losses including where trade receivables contain a significant financing component. The effects of expected credit losses are omitted if immaterial. \n Supplier rebates and other income \n Supplier rebates include promotional income and are recognised when the conditions attached to the rebate have been satisfied and after deducting any probable liability to repay the rebate. Supplier rebates are deducted from inventory or recorded within cost of sales depending on the contractual terms of the rebate. Promotional income from suppliers does not relate to the purchase of inventory and is therefore recognised within other income. \n Cash and cash equivalents \n Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid investments with origina...

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