We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Midwich Group Plc | LSE:MIDW | London | Ordinary Share | GB00BYSXWW41 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 435.00 | 434.00 | 444.00 | 435.00 | 435.00 | 435.00 | 4,145 | 08:48:45 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 1.29B | 26.82M | 0.2597 | 16.75 | 449.14M |
From Apr 2019 to Apr 2024
TIDMMIDW
RNS Number : 7217L
Midwich Group PLC
10 September 2019
10 September 2019
Midwich Group plc
("Midwich" or the "Group")
Interim results for the six months ended 30 June 2019
Strong revenue and profit growth together with further acquisitions in H1 2019
Midwich, a specialist audio visual ("AV") distributor to the trade market with operations across the UK and Ireland, Continental Europe and Asia Pacific, today announces its Interim Results for the six months ended 30 June 2019.
Statutory financial highlights
Hot Features
Premium
Six months ended
30 June 2019 30 June 2018(1) Total growth
GBPm GBPm %
Revenue 314.8 264.1 19%
Gross profit 52.2 42.9 22%
Gross profit % 16.6% 16.2%
Operating profit 10.5 11.1 (6%)
Profit before tax 11.3 11.8 (5%)
Profit after tax 9.0 9.1 (1%)
Reported EPS - pence 11.06 11.30 (2%)
Adjusted financial highlights
Six months ended
30 June 2019 30 June 2018(1) Total growth Growth at constant
GBPm GBPm % currency %
Revenue 314.8 264.1 19% 20%
Gross profit 52.2 42.9 22% 22%
Gross profit % 16.6% 16.2%
Adjusted operating
profit(2) 14.6 13.5 9% 9%
Adjusted operating
profit % 4.6% 5.1%
Adjusted profit
before tax(2) 13.7 12.9 6% 7%
Adjusted profit
after tax(2) 10.5 9.7 8% 8%
Adjusted EPS - pence 12.78 12.02 6%
Interim dividend
per share 4.85p 4.60p 5%
(1) Restated to reflect the adoption of IFRS 16. Adjusted measures are also restated to include amortisation of patents and software
(2) Definitions of the alternative performance measures are set out in Note 2
Financial highlights
-- Revenue increased 19.2% to GBP314.8 million (19.7% on constant currency basis) including organic revenue growth of 5.1%
-- Gross margin of 16.6%, 0.4 percentage points ahead of H1 2018
-- Adjusted operating profit(2) increased by 8.6% to GBP14.6 million (9.1% on constant currency basis)
-- Adjusted profit before tax(2) increased by 6.2% to GBP13.7 million (6.7% on constant currency basis)
-- Adjusted EPS(2) increased 6% to 12.78p (H1 2018: 12.02p) -- Operating cash conversion ahead of prior year at 28% of adjusted EBITDA (H1 2018: 7%) -- Interim dividend declared of 4.85 pence per share (Interim 2018: 4.60 pence per share)
Operational highlights
-- Revenue growth across all territories -- Strong net operating profit growth in UK & Ireland and Continental Europe -- Lower Asia Pacific profit compared with very strong, project-driven, prior year comparatives -- Prior year acquisitions integrated and performing well
-- The three businesses acquired in the first half of 2019 have increased both our geographic presence and specialist audio capabilities, with these value-added businesses positively impacting Group gross margin
-- Strong acquisition pipeline across a number of regions -- Investments to enter two new markets organically:
o Broadcast in Benelux
o Core AV distribution in South East Asia
-- Investments in information technology, compliance, acquisition and integration capabilities support the Group's growth strategy.
Post period highlights
-- July 2019 - Complementary specialist lighting capabilities added to Earpro in Iberia through the acquisition of 100% of the share capital of Entertainment Equipment Supplies S.L. ("EES")
-- July 2019 - Opened a new UK & Ireland southern showroom and demo facility in Bracknell
Stephen Fenby, Managing Director of Midwich Group plc, commented:
"The Group has had another strong first half and I am pleased with our overall performance, particularly given political and economic uncertainties around the globe. The increase in the Group's gross margin percentage reflects strong performance from the core business and a positive contribution from the acquisitions made in 2018 and the first half of 2019. The more specialist nature of the acquired businesses ensures that our value add to customers and vendors continues to increase.
We have been busy working on opportunities to extend the Group's reach and capabilities through the period and were pleased to complete the acquisitions of MobilePro (Switzerland), Prase (Italy) and AV Partner (Norway), each of which represents the Group's entry into a new territory. In addition, the acquisitions of Prase and (post period end) EES in Spain have strengthened the Group's capabilities in the audio and lighting markets respectively. We continue to have a healthy pipeline of strategic opportunities and have invested in the Group's acquisition and integration teams in the first half. We will continue our disciplined approach to acquire businesses that add value while both strengthening and diversifying our product offering and geographical reach.
The strong performance reported in the first half and contributions from recent acquisitions, give the Board confidence in the prospects for the Group."
Enquiries:
Midwich Group plc Stephen Fenby, Managing Director Stephen Lamb, Finance Director +44 (0) 1379 649200 FTI Consulting Alex Beagley / Tom Hufton / Fern Duncan +44 (0) 20 3727 1000 Investec Bank plc James Rudd / Carlton Nelson +44 (0) 20 7597 5970 Berenberg Ben Wright / Mark Whitmore / Laure Fine +44 (0) 20 3207 7800
Notes to editors
Midwich is a specialist AV distributor to the trade market, with operations in the UK and Ireland, Continental Europe and Asia Pacific. The Group's long-standing relationships with over 400 vendors, including blue-chip organisations, support a comprehensive product portfolio across major audio visual categories such as large format displays, projectors, digital signage and professional audio. The Group operates as the sole or largest in-country distributor for a number of its vendors in their respective product sets.
The Directors attribute this position to the Group's technical expertise, extensive product knowledge and strong customer service offering built up over a number of years. The Group has a large and diverse base of over 17,000 customers, most of which are professional AV integrators and IT resellers serving sectors such as corporate, education, retail, residential and hospitality. Although the Group does not sell directly to end users, it believes that the majority of its products are used by commercial and educational establishments rather than consumers.
Initially a UK only distributor, the Group now has over 900 employees across the UK and Ireland, Continental Europe and Asia Pacific. A core component of the Group's growth strategy is further expansion of its international operations and footprint into strategically targeted jurisdictions.
For further information, please visit www.midwichgroupplc.com
Managing Director's Report
Overview
The Group has performed strongly in the first six months of 2019, with double digit revenue growth and a further increase in our gross margin percentage.
Acquisitions made in the last twelve months are performing well and have contributed positively towards the Group's gross and net profits. These acquisitions have helped to grow the Group's presence in Europe and South East Asia, as well as strengthening our capabilities in the broadcast and professional audio markets.
We have also launched a start-up broadcast activity in the Benelux and opened a new office in Singapore to help drive our business across South East Asia.
The Group continues to experience growth in the displays, broadcast and audio categories.
Strategy
The Group's strategy is to focus on markets and product areas where it can leverage its value-add services, technical expertise, and sales and marketing skills. Services, skills and geographies are developed either in-house or through acquisition.
Using its focused market knowledge and skills, the Group provides its vendors with support to build and execute plans to grow market share. The Group supports its customers to win and then deliver successful projects.
The Group has successfully used acquisitions both to enter new geographical markets and to add both expertise and new product areas. Once acquired and integrated, businesses are supported to grow organically and increase profitable market share. The Group continues to pursue a strong pipeline of opportunities across a number of regions.
Acquisitions
The Group completed three acquisitions in the first half of 2019 with an additional acquisition closing shortly after the period end.
On 17 January 2019, the Group acquired 100% of the share capital of MobilePro AG ("MobilePro"), a Swiss value-added distributor of audio visual products. Based in Zurich, MobilePro is a market leading AV distributor to the Swiss trade market. The business provides a comprehensive product offering across projection, display and interactive technologies.
On 31 January 2019, the Group acquired 80% of the share capital of Prase Engineering S.p.A ("Prase"), an Italian value-added distributor of AV products. Based near Venice, Prase is a specialist AV distributor, with a strong heritage in the solution driven professional audio market, where the business operates with high-end specialist brands. More recently, the Company has successfully added key video brands, such as LG and Epson, to its portfolio.
On 3 May 2019, the Group acquired 100% of the share capital of AV Partner AS ("AV Partner"), a Norwegian value-added distributor of AV products. Based in Oslo, AV Partner is a specialist distributor, with a market leading position in the Norwegian projection market. In recent months, it has built a displays business and has also moved into new enlarged premises with dedicated warehousing and demo facilities.
Post period end, on 1 July 2019, the Group completed the acquisition of 100% of EES, a Spanish value-added distributor of lighting and lighting infrastructure products. Based near San Sebastian, EES distributes products from key vendors including Robe, Verlinde and Prolyte on an exclusive basis to the Spanish trade market, with a particular focus on customers servicing the live events and rental sectors.
On 29 April 2019, the Group also acquired the remaining 10.5% of the issued share capital of Holdan, a value-added distributor of technology solutions focused on the broadcast, professional video and traditional audio-visual markets. The consideration for this was satisfied by the issue of 300,212 new ordinary shares of 1p each in the Group.
A strong acquisition pipeline, together with the Group's strong balance sheet, means it is well placed to continue its buy and build strategy both in new and existing territories.
New showroom facility
In July 2019, Midwich UK & Ireland opened a new 50,000 sqft+ southern showroom and demo facility (Innovation House) located in Bracknell, Berkshire.
This state-of-the-art showroom will be one of the largest multi-vendor experience centres in the UK and will showcase the Group's wide-ranging technologies.
Trading and financial review
Group revenue increased by 19.2% to GBP314.8 million for the six months to 30 June 2019 (H1 2018: GBP264.1 million).
The Group achieved a gross profit margin for the period of 16.6%, a 0.4 percentage point increase on H1 2018 and a 0.1 percentage point increase on FY 2018. Growth in margin resulted from both a positive mix effect from the higher gross profit margin businesses acquired in the last twelve months and continued gross profit improvement in the core business. Reported operating profit was impacted by growth in acquisition related expenses and amortisation of acquired intangibles, reflecting the increase in acquisition activity across the Group; together with an increase in share based payment charges.
Adjusted operating profit was GBP14.6 million (H1 2018: GBP13.5 million), which represents growth of 8.6%. The growth in adjusted operating profit reflects the overall increase in revenue and gross profit partially offset by investment in the infrastructure required to support the anticipated continued growth of the Group, in particular the central acquisition & integration teams, as well as its start-up businesses in South East Asia and Benelux.
Based on a constant currency analysis, using the current period exchange rates across both periods, Group revenue grew by 19.7% and Group Adjusted operating profit grew by 9.1%. The Group received only a marginal negative impact from movements in foreign exchange rates in the period to 30 June 2019.
Regional highlights
Six months ended
30 June 30 June Total growth Growth Organic
2019 2018(1) % at constant growth %
GBPm GBPm currency
%
Revenue
UK & Ireland 154.0 153.6 0.3% 0.4% 0.4%
Continental
Europe 138.0 93.5 47.5% 48.4% 14.0%
Asia Pacific 22.8 17.0 33.9% 36.6% (2.1%)
Total Global 314.8 264.1 19.2% 19.7% 5.1%
Gross profit
margin
UK & Ireland 17.8% 17.1% +0.7 ppts
Continental
Europe 15.0% 14.2% +0.8 ppts
Asia Pacific 18.1% 20.0% (1.9) ppts
Total Global 16.6% 16.2% +0.4 ppts
Adjusted operating
profit(2)
UK & Ireland 9.8 9.1 7.2% 7.2%
Continental
Europe 5.0 3.7 37.8% 38.6%
Asia Pacific 1.2 1.8 (31.8%) (30.0%)
Group costs (1.4) (1.1)
Total Global 14.6 13.5 8.6% 9.1%
Adjusted finance
costs (0.9) (0.6)
Adjusted profit
before tax(2) 13.7 12.9 6.2% 6.7%
(1) Restated to reflect the adoption of IFRS 16. Adjusted measures are also restated to include amortisation of patents and software
(2) Definitions of the alternative performance measures are set out in Note 2
UK & Ireland
Revenue in the UK & Ireland increased by 0.4% in the period on a constant currency basis. There was good growth in the core AV business, driven by demand for large format displays, LED and broadcast technologies. As expected, this was partially offset by managed decline in document solutions, and tougher trading conditions for the small part of the business that addresses the consumer market.
The UK & Ireland segment's gross profit margin increased to 17.8%, a 0.7 percentage point increase on H1 2018 and a 0.4 percentage point increase on FY 2018. The UK & Ireland has benefitted from a favourable product mix attributable to an increase the proportion of display sales.
Adjusted operating profit increased by 7.2% in the UK & Ireland.
Continental Europe
Revenue in Continental Europe increased by 47.5% due to the impact of recent acquisitions and particularly strong performances in France, Germany and the Netherlands. Organic growth of 14.0% reflected strong performance in all major product categories, with particularly strong growth in displays, audio and broadcast. We entered three new geographies in the first half though the acquisitions of Prase in Italy, MobilePro in Switzerland and AV Partners in Norway. These recent acquisitions, together with the two prior year acquisitions in France and Germany, have traded well and are contributing to an increase in the region's gross profit margin to 15.0% compared with 14.2% in the first half of 2018.
Adjusted operating profit in Continental Europe grew by 38.6%, at constant currency, benefitting from the impact of recent acquisitions.
Asia Pacific
Growth in Asia Pacific revenues of 33.9% (36.6% at constant currency) benefitted from the Blonde Robot acquisition completed in December 2018. On an organic basis, Asia Pacific was marginally down on the same period in 2018, which included an exceptional level of project activity.
The Asia Pacific gross profit margin of 18.1%, was 1.9 percentage points below H1 2018, due to the high margin project activity in the prior year.
Adjusted operating profit in Asia Pacific at GBP1.2 million (H1 2018: GBP1.8 million) was impacted by the reduction in gross profit together with the investment in opening a new South East Asia AV business in H1 2019.
The Board notes that, according to trade body AVIXA, Asia Pacific is the largest AV region in the world. The market appears to be fragmented but represents an interesting opportunity for the Group over the long term.
Group costs
Group costs for the half year were GBP1.4 million (H1 2018: GBP1.1 million). The increase reflects additional investment in legal, compliance, information technology and acquisition & business integration capabilities to support the Group's growth strategy.
Adoption of IFRS 16 and update to alternative performance measures
The Group adopted IFRS 16 Leases for H1 2019 and prior period comparatives have been restated. The IFRS 16 adoption has not materially affected the results and a reconciliation to amounts previously reported is included in Note 10.
As a result of the adoption of IFRS 16 the Group has revised its definitions of adjusted profit measures. The revised adjusted operating profit includes depreciation and amortisation of right to use assets, patents and software. Adjusted profit before tax also includes these charges and the interest cost of leases recognised under IFRS 16.
IFRS 16 adoption and inclusion of amortisation of patents and software in adjusted metrics reduce adjusted operating profit in H1 2019 by GBP0.1 million (H1 2018: GBPNil) and adjusted profit before tax by GBP0.2 million (H1 2018: GBP0.1 million).
Finance costs
Finance costs for the period were an income of GBP0.8 million (H1 2018: GBP0.7 million). Adjusted finance costs for the period were an expense of GBP0.9 million (H1 2018: GBP0.5 million). The increase in adjusted finance costs reflects the additional finance costs associated with financing the Group's acquisitions. The adjustments to finance costs include foreign exchange losses on borrowings for acquisitions of GBP0.1 million (H1 2018: Nil), an income from movements in deferred and contingent considerations of GBP0.9 million (H1 2018: GBP0.1 million), and an income from movements in put option liabilities over non-controlling interests of GBP0.9 million (H1 2018: GBP1.1 million).
Taxation
The reported tax charge for the period was GBP2.3 million (H1 2018: GBP2.7 million). The adjusted effective tax rate for the period was 23.8% (H1 2018: 24.8%) calculated based on the adjusted tax charge for the period divided by adjusted profit before tax.
Cash flows and financing
The Group had an adjusted net cash inflow from operations before tax of GBP4.9 million for the period (H1 2018: GBP1.1 million) which benefitted from strong working capital management and was ahead of the Board's expectations given the traditionally more working capital intensive first half when compared with the full year. The Board is comfortable that the Group's long term average cash conversion rate remains unchanged.
In February, the Group increased its revolving credit facility to GBP20 million (GBP15 million at 31 December 2018) and added a small term facility in Spain to support its acquisition strategy.
The Group has acted to hedge certain exchange rate and interest rate exposures in H1. This includes borrowing in Euros to finance European acquisitions and using financial instruments to fix part of the Group's interest charges. These instruments are marked to market at the end of each reporting period, with the change in valuation recognised in the income statement. Given any amounts recognised generally arise from market movements and accordingly bear no direct relation to the Group's underlying performance any gains or losses have been excluded from adjusted profit measures.
Net debt
Net debt, excluding IFRS 16 Leases liabilities, was GBP53.8 million at 30 June 2019 (GBP41.2 million at 30 June 2018) and net debt at 30 June 2019 including IFRS 16 was GBP71.3 million (GBP51.1 million at 30 June 2018). The adoption of IFRS 16 resulted in an increase in net debt of GBP17.1 million at 30 June 2019 (GBP9.6 million at 30 June 2018).
Dividend
The Board is pleased to declare an interim dividend of 4.85 pence per share (H1 2018: 4.60 pence per share), which will be paid on 25 October 2019 to those shareholders on the Company's register as at 20 September 2019. The last day to elect for dividend reinvestment ("DRIP") is 4 October 2019.
The Board continues to adopt a progressive dividend policy to reflect the Group's strong earnings and cash flow while maintaining an appropriate level of dividend cover to allow for investment in longer-term growth. The Board intends to pay future dividends within a cover range of 2 to 2.5 times adjusted earnings.
Outlook
The Board recognises that there is negative sentiment in the global economy, impacted by matters such as the US/China tariff dispute, Brexit and political change in certain territories. Historically, the AV industry has proven to be relatively robust in challenging economic periods. Performance in the year to date has been in line with the Board's expectations and we remain confident in the prospects for the Group.
Stephen Fenby
Managing Director
Unaudited consolidated income statement for the 6 months ended 30 June 2019
Note 30 June 30 June 31 December 2018
2019 2018
Unaudited Unaudited Audited
(Restated)(1) (Restated)(1)
GBP'000 GBP'000 GBP'000
Revenue 314,842 264,099 573,682
Cost of sales (262,600) (221,220) (479,120)
---------- -------------- -----------------
Gross profit 52,242 42,879 94,562
Distribution costs (32,804) (26,803) (56,329)
Administrative expenses (10,834) (6,396) (16,317)
Other operating income 1,862 1,445 3,025
---------- -------------- -----------------
Operating profit 10,466 11,125 24,941
Adjusted operating profit 14,630 13,470 30,267
Costs of acquisitions (306) (43) (365)
Share based payments (1,275) (410) (1,120)
Employer taxes on share based payments (280) (145) (221)
Amortisation of brands, customer and supplier
relationships (2,303) (1,747) (3,620)
---------------------------------------------------------- ----- ---------- -------------- -----------------
10,466 11,125 24,941
Finance income 19 7 81
Finance costs 5 797 703 (3,991)
---------- -------------- -----------------
Profit before taxation 11,282 11,835 21,031
Taxation (2,249) (2,726) (5,774)
---------- -------------- -----------------
Profit after taxation 9,033 9,109 15,257
========== ============== =================
Profit for the financial period/year attributable to:
The Company's equity shareholders 8,753 8,981 14,696
Non-controlling interests 280 128 561
---------- -------------- -----------------
9,033 9,109 15,257
========== ============== =================
Basic earnings per share 3 11.06p 11.30p 18.50p
Diluted earnings per share 3 10.90p 11.22p 18.33p
(1) Comparative information is restated for the adoption of IFRS 16 (note 10) and reclassification of the amortisation for patents and software within the adjusted profit alternative performance measures.
Unaudited consolidated statement of comprehensive income for 6 months ended 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
(Restated)(1) (Restated)(1)
GBP'000 GBP'000 GBP'000
Profit for the period/financial year 9,033 9,109 15,257
Other comprehensive income
Items that will be reclassified subsequently
to profit or loss:
Foreign exchange gains/(losses) on consolidation 299 (296) 162
---------- -------------- --------------
Other comprehensive income for the financial
period/year, net of tax 299 (296) 162
Total comprehensive income for the period/financial
year 9,332 8,813 15,419
========== ============== ==============
Attributable to:
Owners of the Parent Company 8,983 8,692 14,870
Non-controlling interests 349 121 549
9,332 8,813 15,419
========== ============== ==============
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
Unaudited consolidated statement of financial position as at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
(Restated)(1) (Restated)(1)
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 13,655 9,416 11,568
Intangible assets 33,256 20,720 24,766
Right of use assets 16,615 9,190 10,141
Property, plant and equipment 10,982 7,594 7,028
Deferred tax assets 2,147 1,105 1,421
---------- -------------- --------------
76,655 48,025 54,924
Current assets
Inventories 90,599 74,015 74,379
Trade and other receivables 107,258 84,704 83,139
Derivative financial instruments 116 - 25
Cash and cash equivalents 16,201 24,806 16,685
---------- -------------- --------------
214,174 183,525 174,228
Current liabilities
Trade and other payables (112,667) (89,529) (97,729)
Put option liabilities over non-controlling
interests (2,302) - (1,746)
Deferred and contingent considerations (5,806) (384) (4,005)
Borrowings and financial liabilities (46,638) (67,244) (36,838)
Current tax (3,685) (2,785) (2,892)
---------- -------------- --------------
(171,098) (159,942) (143,210)
Net current assets 43,076 23,583 31,018
---------- -------------- --------------
Total assets less current liabilities 119,731 71,608 85,942
Non-current liabilities
Trade and other payables (641) (156) (736)
Put option liabilities over non-controlling
interests (4,271) (4,092) (4,654)
Deferred and contingent considerations (2,869) - (757)
Borrowings and financial liabilities (40,846) (8,620) (16,108)
Deferred tax liabilities (7,324) (4,091) (5,512)
Other provisions (1,607) - (56)
---------- -------------- --------------
(57,558) (16,959) (27,823)
Net assets 62,173 54,649 58,119
========== ============== ==============
Equity
Share capital 799 794 794
Share premium 27,752 25,855 25,855
Share based payment reserve 3,100 1,338 1,837
Investment in own shares (7) (5) (5)
Retained earnings 27,604 25,469 27,535
Translation reserve 2,095 1,402 1,865
Put option reserve (6,329) (3,638) (4,532)
Capital redemption reserve 50 50 50
Other reserve 150 150 150
---------- -------------- --------------
Equity attributable to owners of
Parent Company 55,214 51,415 53,549
Non-controlling interests 6,959 3,234 4,570
Total equity 62,173 54,649 58,119
========== ============== ==============
(1) Comparative information is restated
for the adoption of IFRS 16 (note
10).
Unaudited consolidated statement of changes in equity for 6 months ended 30 June 2019
For the period ended 30 June 2019
Equity
Share attributable
Investment based Put Capital to owners
Share Share in own payment Retained Translation option redemption Other of the Non-controlling
capital premium shares reserve earnings reserve reserve reserve reserve Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January
2019 previously
reported 794 25,855 (5) 1,837 27,766 1,861 (4,532) 50 150 53,776 4,570 58,346
Change of
accounting
policies
(note 10) - - - - (231) 4 - - - (227) - (227)
-------- -------- ----------- -------- --------- ------------ -------- ----------- --------- ------------- ---------------- --------
Restated
1 January
2019 794 25,855 (5) 1,837 27,535 1,865 (4,532) 50 150 53,549 4,570 58,119
Profit for
the period - - - - 8,753 - - - - 8,753 280 9,033
Other
comprehensive
income - - - - - 230 - - - 230 69 299
---------------- --------
Total
comprehensive
income for
the period - - - - 8,753 230 - - - 8,983 349 9,332
Shares issued 2 - (2) - - - - - - - - -
Share based
payments - - - 1,275 - - - - - 1,275 - 1,275
Deferred
tax on share
based payments - - - 16 - - - - - 16 - 16
Share options
exercised - 24 - (28) 4 - - - - - - -
Acquisition
of subsidiaries
(note 7) - - - - - - (2,886) - - (2,886) 2,883 (3)
Acquisition
of
non-controlling
interests
(note 8) 3 1,873 - - (246) - 1,089 - - 2,719 (843) 1,876
Dividends
paid - - - - (8,442) - - - - (8,442) - (8,442)
Balance at
30 June 2019
(Unaudited) 799 27,752 (7) 3,100 27,604 2,095 (6,329) 50 150 55,214 6,959 62,173
======== ======== =========== ======== ========= ============ ======== =========== ========= ============= ================ ========
For the period ended 30 June 2018 (restated)(1)
Equity
Share attributable
Investment based Put Capital to owners
Share Share in own payment Retained Translation option redemption Other of the Non-controlling
capital premium shares reserve earnings reserve reserve reserve reserve Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January
2018
previously
reported 794 25,855 (5) 751 24,331 1,691 (3,638) 50 150 49,979 3,113 53,092
Change of
accounting
policies
(note
10) - - - - (203) - - - - (203) - (203)
-------- -------- ----------- -------- --------- ------------ -------- ----------- --------- ------------- ---------------- --------
Restated 1
January 2018 794 25,855 (5) 751 24,128 1,691 (3,638) 50 150 49,776 3,113 52,889
Profit for
the period - - - - 8,981 - - - - 8,981 128 9,109
Other
comprehensive
income - - - - - (289) - - - (289) (7) (296)
---------------- --------
Total
comprehensive
income for
the period - - - - 8,981 (289) - - - 8,692 121 8,813
Share based
payments - - - 410 - - - - - 410 - 410
Deferred tax
on share
based
payments - - - 177 - - - - - 177 - 177
Dividends
paid - - - - (7,640) - - - - (7,640) - (7,640)
Balance at
30 June 2018
(Unaudited) 794 25,855 (5) 1,338 25,469 1,402 (3,638) 50 150 51,415 3,234 54,649
======== ======== =========== ======== ========= ============ ======== =========== ========= ============= ================ ========
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
For the year ended 30 December 2018 (Restated)(1)
Equity
Share attributable
Share Investment based Put Capital to owners
Share in own payment Retained Translation option redemption Other of the Non-controlling
capital premium shares reserve earnings reserve reserve reserve reserve Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January
2018
previously
reported 794 25,855 (5) 751 24,331 1,691 (3,638) 50 150 49,979 3,113 53,092
Change of
accounting
policies
(note 10) - - - - (203) - - - - (203) - (203)
-------- -------- ----------- -------- --------- ------------ -------- ----------- --------- ------------- ---------------- ---------
Restated
1 January
2018 794 25,855 (5) 751 24,128 1,691 (3,638) 50 150 49,776 3,113 52,889
Profit for
the year - - - - 14,696 - - - - 14,696 561 15,257
Other
comprehensive
income - - - - - 174 - - - 174 (12) 162
---------------- ---------
Total
comprehensive
income for
the year - - - - 14,696 174 - - - 14,870 549 15,419
Share based
payments - - - 1,120 - - - - - 1,120 - 1,120
Deferred
tax on share
based
payments - - - (34) - - - - - (34) - (34)
Acquisition
of
subsidiaries
(note 7) - - - - - - (894) - - (894) 908 14
Dividends
paid - - - - (11,289) - - - - (11,289) - (11,289)
Balance at
31 December
2018 794 25,855 (5) 1,837 27,535 1,865 (4,532) 50 150 53,549 4,570 58,119
======== ======== =========== ======== ========= ============ ======== =========== ========= ============= ================ =========
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
Unaudited consolidated cashflow statement for 6 months ended 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
(Restated)(1) (Restated)(1)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 11,282 11,835 21,031
Depreciation 2,444 2,015 4,176
Amortisation 2,385 1,828 3,792
Gain/(loss) on disposal of assets 11 (5) 27
Share based payments 1,275 410 1,120
Foreign exchange (gains)/losses (193) 195 4
Finance income (19) (7) (81)
Finance costs (797) (703) 3,991
---------- -------------- --------------
Profit from operations before changes
in working capital 16,388 15,568 34,060
Increase in inventories (7,588) (11,031) (9,468)
Increase in trade and other receivables (12,145) (8,343) (3,221)
Increase in trade and other payables 7,706 4,888 10,246
---------- -------------- --------------
Cash inflow from operations 4,361 1,082 31,617
Income tax paid (3,016) (3,543) (7,377)
---------- -------------- --------------
Net cash inflow/(outflow) from operating
activities 1,345 (2,461) 24,240
Cash flows from investing activities
Acquisition of businesses, net of cash
and debt acquired (15,869) - (6,724)
Deferred and contingent considerations
paid (2,955) (5,507) (5,507)
Purchase of intangible assets (979) (357) (778)
Purchase of plant and equipment (3,010) (1,734) (2,360)
Proceeds on disposal of plant and equipment 326 219 382
Interest received 19 7 81
---------- -------------- --------------
Net cash outflow from investing activities (22,468) (7,372) (14,906)
Cash from financing activities
Dividends paid (8,442) (7,640) (11,289)
Invoice financing inflows/(outflows) 3,052 9,678 (8,704)
Proceeds from borrowings 24,976 159 12,240
Repayment of loans (1,293) (9) (2,107)
Interest paid (962) (522) (1,362)
Interest on leases (173) (125) (268)
Capital element of lease payments (969) (867) (1,725)
---------- -------------- --------------
Net cash inflow/(outflow) from financing
activities 16,189 674 (13,215)
Net decrease in cash and cash equivalents (4,934) (9,159) (3,881)
Cash and cash equivalents at beginning
of period/year 16,357 20,010 20,010
Effects of exchange rate changes 267 (331) 228
Cash and cash equivalents at end of
period/year 11,690 10,520 16,357
========== ============== ==============
Comprising:
Cash at bank 16,201 24,806 16,685
Bank overdrafts (4,511) (14,286) (328)
11,690 10,520 16,357
======== ========= =======
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
Notes to the interim consolidated financial information
1. General information
The interim financial information for the period to 30 June 2019 is unaudited and does not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006.
The interim consolidated financial information does not include all the information required for statutory financial statements in accordance with IFRS, and should therefore be read in conjunction with the consolidated financial statements for the year ended 31 December 2018.
2. Accounting policies
Basis of preparation
The interim financial information in this report has been prepared on the basis of the accounting policies set out in the audited financial statements for the year ended 31 December 2018, except as amended for the implementation of IFRS 16 'Leases', which was adopted on 1 January 2019. The audited financial statements for the year ended 31 December 2018 complied with International Financial Reporting Standards as adopted for use in the European Union ("IFRS").
The Group has elected to apply the full retrospective approach to the transition to IFRS 16. The full retrospective approach requires the transition to be implemented with restatement of the prior year results as if IFRS 16 had always been applied. Adoption of the IFRS 16 has resulted in the recognition of Right of use assets and lease liabilities with a corresponding increase in depreciation charges and finance costs offset by a reduction in operating lease costs in the income statement.
The directors have adopted the going concern basis in preparing the financial information. In assessing whether the going concern assumption is appropriate, the directors have taken into account all relevant available information about the foreseeable future.
The statutory accounts for the year ended 31 December 2018, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors reported on these accounts; their report was unqualified; did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006, and did not include reference to any matters to which the auditor drew attention by way of emphasis.
Use of alternative performance measures
The Group has defined certain measures that it uses to understand and manage performance. These measures are not defined under IFRS and they may not be directly comparable with other companies' adjusted measures. These non-GAAP measures are not intended to be a substitute for any IFRS measures of performance, but management has included them as they consider them to be key measures used within the business for assessing the underlying performance.
Growth at constant currency: This measure shows the year on year change in performance after eliminating the impact of foreign exchange movement, which is outside of management's control.
Organic growth: This is defined as growth at constant currency growth excluding acquisitions until the first anniversary of their consolidation.
Adjusted operating profit: Adjusted operating profit is disclosed to indicate the Group's underlying profitability. It is defined as profit before acquisition related expenses, share based payments and associated employer taxes and amortisation of brand, customer and supplier relationship intangible assets.
Adjusted EBITDA: This represents operating profit before acquisition related expenses, share based payments and associated employer taxes, depreciation and amortisation.
Adjusted profit before tax: This is profit before tax adjusted for acquisition related expenses, share based payments and associated employer taxes, amortisation of brand, customer and supplier relationship intangible assets, changes in deferred or contingent considerations and put option liabilities over non-controlling interests, foreign exchange gains or losses on borrowings for acquisitions, fair value movements on derivatives for borrowings, and financing fair value remeasurements.
Adjusted profit after tax: This is profit after tax adjusted for acquisition related expenses, share based payments and associated employer taxes, amortisation of brand, customer and supplier relationship intangible assets, changes in deferred or contingent considerations and put option liabilities over non-controlling interests, foreign exchange gains or losses on borrowings for acquisitions, fair value movements on derivatives for borrowings, and financing fair value remeasurements and the tax thereon.
Adjusted EPS: This is adjusted profit after tax less profit, amortisation of brand, customer and supplier relationship intangible assets and tax thereon due to non-controlling interests divided by the weighted number of shares outstanding.
3. Earnings per share
Basic earnings per share is calculated by dividing the profit after tax for the period/year attributable to equity shareholders of the Company by the weighted average number of shares outstanding during the period/year.
Diluted earnings per share is calculated by adjusting the profit after tax for the period/year attributable to equity shareholders of the Company for the fair value (measured in accordance with IFRS 2) of any goods or services to be supplied to the Group in the future under the share options granted by the financial reporting date and dividing it by the weighted average number of shares outstanding during the period/year adjusted for the effects of all dilutive potential ordinary shares.
The Group's earnings per share and diluted earnings per share, are as follows:
June June December
2019 2018 2018
(Restated)(1) (Restated)(1)
Profit attributable to equity holders
of the Parent Company (GBP'000) 8,753 8,981 14,696
Weighted average number of shares outstanding(2) 79,078,793 79,448,200 79,448,200
Dilutive (potential dilutive) effect
of share options 1,175,685 605,798 725,002
----------- --------------- ---------------
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share 80,254,478 80,053,998 80,173,202
=========== =============== ===============
Basic earnings per share 11.06p 11.30p 18.50p
=========== =============== ===============
Diluted earnings per share 10.90p 11.22p 18.33p
=========== =============== ===============
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
(2) Comparative earnings per share calculations were based on the number of shares issued rather than the number of shares outstanding and therefore excluded the weighted average number of own shares held. Comparative earnings per share calculations have not been restated for the weighted average number of own shares held as the effect is not material.
4. Segmental reporting
Continental Asia Other Total
UK & Ireland Europe Pacific
June 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------- ------------ -------------- ------------- ----------
Revenue 154,078 137,975 22,789 - 314,842
Gross profit 27,406 20,714 4,122 - 52,242
Gross profit % 17.8% 15.0% 18.1% - 16.6%
Adjusted operating
profit 9,760 5,057 1,195 (1,382) 14,630
Cost of acquisitions - - - (306) (306)
Share based payments (535) (399) (98) (243) (1,275)
Employer taxes on
share based
payments (83) (145) (9) (43) (280)
Amortisation of
brand, customer
and supplier
relationships (1,277) (888) (138) - (2,303)
Operating profit 7,865 3,625 950 (1,974) 10,466
---------------------- ------------- ------------ -------------- ------------- ----------
Net interest received 816
----------
Profit before tax 11,282
==========
Other segmental information
Continental Asia Other Total
UK & Ireland Europe Pacific
June 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 127,048 143,751 19,655 375 290,829
Segment liabilities (98,282) (114,017) (16,007) (350) (228,656)
---------------------- ------------- ------------ -------------- ------------- ----------
Segment net assets 28,766 29,734 3,648 25 62,173
Depreciation 1,198 1,057 189 - 2,444
Amortisation 1,323 916 146 - 2,385
UK International Total
Other segmental information GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ----------------------------- ----------
Non-current assets 28,624 48,031 76,655
Continental Asia Other Total
June 2018 UK & Ireland Europe Pacific
(Restated)(1) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------- ------------ -------------- ------------- ----------
Revenue 153,555 93,526 17,018 - 264,099
Gross profit 26,230 13,250 3,399 - 42,879
Gross profit % 17.1% 14.2% 20.0% - 16.2%
Adjusted operating
profit 9,107 3,670 1,751 (1,058) 13,470
Cost of acquisitions - - - (43) (43)
Share based payments (231) (116) (42) (21) (410)
Employer taxes on
share based
payments (57) (62) (11) (15) (145)
Amortisation of
brands, customer
and supplier
relationships (1,278) (450) (19) - (1,747)
Operating profit 7,541 3,042 1,679 (1,137) 11,125
---------------------- ------------- ------------ -------------- ------------- ----------
Net interest received 710
----------
Profit before tax 11,835
==========
Other segmental
information
Continental Asia Other Total
June 2018 UK & Ireland Europe Pacific
(Restated)(1) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 140,187 77,574 13,006 783 231,550
Segment liabilities (123,470) (45,201) (8,113) (117) (176,901)
---------------------- ------------- ------------ -------------- ------------- ----------
Segment net assets 16,717 32,373 4,893 666 54,649
Depreciation 1,097 786 132 - 2,015
Amortisation 1,337 467 24 - 1,828
UK International Total
Other segmental information GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ----------------------------- ----------
Non-current assets 25,114 22,911 48,025
(1) Comparative information is restated for the adoption of IFRS 16 (note 10) and reclassification of the amortisation for patents and software within the adjusted profit alternative performance measures.
UK & Continental Asia Other Total
Ireland Europe Pacific
December 2018 (Restated)(1) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ------------ --------- --------- ---------
Revenue 315,808 222,017 35,857 - 573,682
Gross profit 54,890 33,086 6,586 - 94,562
Gross profit % 17.4% 14.9% 18.4% - 16.5%
Adjusted operating profit 19,541 10,276 2,935 (2,485) 30,267
Costs of acquisitions - - - (365) (365)
Share based payments (557) (382) (106) (75) (1,120)
Employer taxes on share based
payments (72) (109) (14) (26) (221)
Amortisation of brands, customer
and supplier relationships (2,557) (1,005) (58) - (3,620)
Operating profit 16,355 8,780 2,757 (2,951) 24,941
---------------------------------- --------- ------------ --------- --------- ---------
Net interest paid (3,910)
---------
Profit before tax 21,031
=========
(1) Comparative information is restated for the adoption of IFRS 16 (note 10) and reclassification of the amortisation for patents and software within the adjusted profit alternative performance measures.
UK & Continental Asia Other Total
Other segmental information Ireland Europe Pacific
December 2018 (Restated)(1) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment assets 117,144 91,977 19,689 342 229,152
Segment liabilities (103,076) (52,891) (14,710) (356) (171,033)
---------------------------------- ---------- -------------- --------- -------------- ----------
Segment net assets/(liabilities) 14,068 39,086 4,979 (14) 58,119
Depreciation 2,222 1,670 284 - 4,176
Amortisation 2,672 1,050 70 - 3,792
UK International Total
Other segmental information GBP'000 GBP'000 GBP'000
-------------------------------------------------------------- --------- -------------- ----------
Non-current assets 23,222 31,702 54,924
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
5. Finance costs
December
June 2019 June 2018 2018
(Restated)(1) (Restated)(1)
GBP'000 GBP'000 GBP'000
Interest on overdrafts and invoice discounting
facilities 535 418 1,042
Interest on leases 172 125 268
Interest on other loans and fair value movements
on derivatives relating to foreign exchange 208 4 151
Foreign exchange gains or losses on borrowings
for acquisitions and fair value movements
on derivatives for borrowings 129 - -
Interest, foreign exchange and other finance
costs of deferred and contingent considerations (924) (147) 2,219
Interest, foreign exchange and other finance
costs of put option liabilities over non-controlling
interests (917) (1,103) 311
(797) (703) 3,991
=========== ============= =============
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
6. Share capital
The total allotted share capital of the Parent Company is:
Allotted, issued and fully paid
June 2019 June 2018 December 2018
Classed as equity: Number GBP'000 Number GBP'000 Number GBP'000
Issued and fully paid
ordinary shares of
GBP0.01 each
Opening balance 79,448,200 794 79,448,200 794 79,448,200 794
Shares issued 525,212 5 - - - -
Closing balance 79,973,412 799 79,448,200 794 79,448,200 794
========== ======= ========== ======= ========== =======
During the period Midwich Group plc issued 300,212 shares in order to settle the put option liability and acquire the remaining shares in Holdan Limited, and issued 225,000 shares into an employee benefit trust. There were no share transactions effected during the comparative period or the year to 31 December 2018.
Employee benefit trusts
In 2016 Midwich Group plc allocated 480,700 shares into Midwich Group plc 2016 Share Incentive Plan, an employee benefit trust. As at 30 June 2019 392,800 of these shares were transferred to Midwich Employees' Share Trust, a separate employee benefit trust for the SIP. During the period 7,700 shares were transferred to employees from the Midwich Employees' Share Trust, as share options were exercised. During the period Midwich Group plc set up Midwich Group plc 2019 Jersey Employee Benefit Trust, a new employee benefit trust and issued 225,000 to shares to the trust.
A reconciliation of LTIP option movements during the current and comparative period, and the year to 31 December 2018 is as follows:
Six months Six months Twelve
to June to June months
2019 2018 to December
2018
Outstanding at 1 January 1,460,900 788,000 788,000
Granted - 75,000 684,400
Lapsed (9,400) (1,000) (11,500)
Outstanding at period end 1,451,500 862,000 1,460,900
========== ========== ============
A reconciliation of SIP option movements during the current and comparative period, and the year to 31 December 2018 is as follows:
Six months Six months Twelve
to June to June months
2019 2018 to December
2018
Outstanding at 1 January 284,300 227,000 227,000
Granted - 91,500 91,500
Lapsed (6,100) (12,500) (34,200)
Exercised (7,700) - -
Outstanding at period end 270,500 306,000 284,300
========== ========== ============
7. Business combinations
Acquisitions were completed by the Group during the comparative periods to increase scale, broaden its addressable market and widen the product offering.
Subsidiaries acquired
Acquisition Principal activity Date of Proportion Fair value
acquisition acquired of consideration
(%) GBP'000
MobilePro Distribution of audio visual 17 January
AG products to trade customers 2019 100% 882
Distribution of professional
Prase Engineering audio products to trade 31 January
SpA customers 2019 80% 11,534
AV Partner Distribution of audio visual
AS products to trade customers 3 May 2019 100% 5,467
Distribution of professional
Bauer & Trummer broadcast equipment to trade 23 August
GmbH customers 2018 100% 3,311
Distribution of professional
Sound Directions audio products to trade 5 September
France SAS customers 2018 100% 682
Blonde Robot Distribution of audio visual 4 December
Pty Limited products to trade customers 2018 65% 1,687
2019 acquisitions
Fair value of consideration transferred:
2019 MobilePro Prase AV Partner
AG Engineering AS
SpA
GBP'000 GBP'000 GBP'000
Cash 882 6,108 3,225
Deferred and contingent considerations - 5,426 2,242
--------- ------------ ----------
Total 882 11,534 5,467
========= ============ ==========
During the period the Group recognised acquisition costs of GBP17k in relation to the acquisition of the remaining shares of Holdan Limited, GBP44k in relation to the acquisition of MobilePro AG, GBP109k in relation to the acquisition of Prase Engineering SpA, GBP70k in relation to the acquisition of AV Partner AS, GBP42k in relation to other acquisitions not completed before the end of the period, GBP9k in relation to the incorporation of Midwich Asia Pte Limited, and GBP15k on other potential future acquisitions.
On acquisition of Prase Engineering SpA the Group recognised GBP2,886k in relation to the initial present value of the put option liabilities to acquire the remaining non-controlling interest.
Fair value of acquisitions
2019 MobilePro AG Prase Engineering SpA AV Partner AS
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 451 370 1,195
Intangible assets - customer relationships 165 1,504 1,193
Intangible assets - supplier contracts 327 3,110 2,241
Intangible assets - brands 534 382 142
Right of use assets 1,548 69 1,370
Plant and equipment 59 2,497 8
------------ --------------------- -------------
3,084 7,932 6,149
Current assets
Inventories 3,742 3,604 1,285
Trade and other receivables 2,162 8,830 983
Current tax - - 33
Cash and cash equivalents 42 1,439 13
------------ --------------------- -------------
5,946 13,873 2,314
Current liabilities
Trade and other payables (3,747) (4,370) (839)
Borrowings and financial liabilities (1,749) (90) -
Current tax (1) (403) -
------------ --------------------- -------------
(5,497) (4,863) (839)
Non-current liabilities
Borrowings and financial liabilities (2,093) (69) (1,370)
Deferred tax liabilities (218) (1,286) (787)
Other provisions (340) (1,169) -
------------ --------------------- -------------
(2,651) (2,524) (2,157)
Non-controlling interests - (2,884) -
------------ --------------------- -------------
Fair value of net assets acquired attributable to
equity shareholders of the Parent Company 882 11,534 5,467
============ ===================== =============
Goodwill acquired in 2019 relates to the workforce, synergies and sales know how. Goodwill arising on all the acquisitions has been allocated to the Continental Europe segment.
Gross contractual amounts of trade and other receivables acquired in 2018 were GBP12,110k, with bad debt provisions of GBP135k.
Net cash outflow on acquisition of subsidiaries
MobilePro AG Prase Engineering SpA AV Partner AS
GBP'000 GBP'000 GBP'000
Consideration paid in cash 882 6,108 3,225
Less: cash and cash equivalent balances acquired (42) (1,439) (13)
Plus: borrowings acquired 3,842 159 1,370
------------ --------------------- -------------
Net cash outflow 4,682 4,828 4,582
============ ===================== =============
2018 acquisitions
Fair value of consideration transferred:
2018 Bauer Sound Blonde
& Trummer Directions Robot
GmbH France Pty Limited
SAS
GBP'000 GBP'000 GBP'000
Cash 1,354 628 1,687
Deferred and contingent considerations 1,957 54 -
---------- ----------- ------------
Total 3,311 682 1,687
========== =========== ============
Acquisition costs of GBP119k in relation to the acquisition of Bauer & Trummer GmbH, GBP47k in relation to the acquisition of Sound Directions France SAS, GBP83k in relation to the acquisition of Blonde Robot Pty Limited, and GBP116k in relation to other acquisitions not completed before the end of the year were expensed to the income statement during the year ended 31 December 2018.
On acquisition of Blonde Robot Pty Limited the Group recognised GBP894k in relation to the initial present value of the put option liabilities to acquire the remaining non-controlling interest.
Fair value of acquisitions
2018 (Restated)(1) Bauer & Trummer GmbH Sound Directions France SAS Blonde Robot Pty Limited
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 1,022 174 935
Intangible assets - customer
relationships 1,051 105 1,808
Intangible assets - supplier
contracts 1,349 159 427
Intangible assets - brands 337 18 270
Right of use assets 1,153 179 210
Plant and equipment 140 23 86
-------------------- --------------------------- ------------------------
5,052 658 3,736
Current assets
Inventories 702 61 1,164
Trade and other receivables 550 698 2,309
Cash and cash equivalents 327 211 -
-------------------- --------------------------- ------------------------
1,579 970 3,473
Current liabilities
Trade and other payables (1,045) (628) (1,746)
Current tax - - (53)
Derivative financial
instruments - - (23)
Borrowings and financial
liabilities (265) (52) (1,776)
-------------------- --------------------------- ------------------------
(1,310) (680) (3,598)
Non-current liabilities
Borrowings and financial
liabilities (1,116) (173) (211)
Deferred tax (894) (93) (747)
Other provisions - - (58)
-------------------- --------------------------- ------------------------
(2,010) (266) (1,016)
Non-controlling interests - - (908)
-------------------- --------------------------- ------------------------
Fair value of net assets
acquired attributable to
equity shareholders of the
Parent Company 3,311 682 1,687
==================== =========================== ========================
(1) Comparative information is restated for the adoption of IFRS 16 (note 10).
Goodwill acquired in 2018 relates to the workforce, synergies and sales know how. Goodwill arising on the Bauer & Trummer GmbH and Sound Directions France SAS acquisitions has been allocated to the Continental Europe segment. Goodwill arising on the Blonde Robot Pty Limited acquisition has been allocated to the APAC segment.
Gross contractual amounts of trade and other receivables acquired in 2018 were GBP3,589k, with bad debt provisions of GBP32k.
Net cash outflow on acquisition of subsidiaries
Bauer & Trummer GmbH Sound Directions France SAS Blonde Robot Pty Limited
GBP'000 GBP'000 GBP'000
Consideration paid in cash 1,354 628 1,687
Less: cash and cash equivalent
balances acquired (327) (211) -
Plus: borrowings acquired 1,381 225 1,987
-------------------- --------------------------- ------------------------
Net cash outflow 2,408 642 3,674
==================== =========================== ========================
8. Acquisition of non-controlling interest
On 29 April 2019, the Group the acquired the remaining 10.5% non-controlling interest in Holdan Limited of GBP843k, for a consideration of GBP1,875k. GBP1,089k of the put option reserve was transferred to retained earnings when the put option liability was extinguished.
9. Currency impact
The Group reports in Pounds Sterling (GBP) but has significant revenues and costs as well as assets and liabilities denominated in Euros (EUR) and Australian Dollars (AUD). The table below sets out the prevailing exchange rates in the periods reported.
Six months Six months At 30 June At 30 June At 31 December
to 30 June to 30 June 2019 2018 2018
2019 2018
Average Average
EUR/GBP 1.143 1.136 1.118 1.131 1.115
AUD/GBP 1.824 1.777 1.814 1.788 1.809
NZD/GBP 1.917 1.921 1.895 1.950 1.902
USD/GBP 1.292 - 1.273 - 1.277
CHF/GBP 1.297 - 1.241 - -
NOK/GBP 11.176 - 10.851 - -
Applying the current period foreign exchange rates across the first half of 2018 had the following impact on reported results:
EUR AUD NZD
GBP000 GBP000 GBP000
Increase/(decrease) in revenue due to change in
foreign exchange rate: (653) (401) 3
Decrease in profit before tax due to change in foreign
exchange rate: (29) (40) -
Increase/(decrease) in net debt due to change in
foreign exchange rate: 175 (17) (2)
10. Changes in accounting standards
The Group has adopted IFRS 16 from 1 January 2019 using the full retrospective approach. Comparative financial results have been restated as if IFRS 16 had always been adopted. Adoption of IFRS 16 requires that leases longer than 12 months are recognised as liabilities and initially measured at the present value of the future lease payments. The present value of future lease payments is discounted at the implicit interest rate of the lease if it can be readily determined and at the lessee's incremental borrowing rate if the implicit interest rate can't be easily determined. Leases are subsequently measured at amortised cost.
The adoption of IFRS 16 also requires the recognition of right of use assets, which are initially measured at the same value as the lease liability but are subsequently measured at the original value of the lease liability cost less accumulated depreciation and impairment losses.
As a result of the adoption of IFRS 16 the Group reports an increase in depreciation and interest costs with a corresponding decrease in rental costs in the statement of financial performance.
The impact of adopting IFRS 16 on the financial performance and position of the Group for the comparative periods is as follows:
30 June 2018 30 June 2018 30 June 2018
Previously presented Impact of IFRS 16 Restated
GBP'000 GBP'000 GBP'000
Revenue 264,099 - 264,099
Cost of sales (221,220) - (221,220)
-------------------- ----------------- ------------
Gross profit 42,879 - 42,879
Distribution costs (26,803) - (26,803)
Administrative expenses (6,495) 99 (6,396)
Other operating income 1,445 - 1,445
-------------------- ----------------- ------------
Operating profit 11,026 99 11,125
Finance income 7 - 7
Finance costs 821 (118) 703
-------------------- ----------------- ------------
Profit before taxation 11,854 (19) 11,835
Taxation (2,736) 10 (2,726)
-------------------- ----------------- ------------
Profit after taxation 9,118 (9) 9,109
==================== ================= ============
30 June 30 June 30 June
2018 2018 2018
Previously Impact Restated
presented of IFRS
16
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 9,068 348 9,416
Intangible assets 20,720 - 20,720
Right of use assets - 9,190 9,190
Property, plant and equipment 7,990 (396) 7,594
Deferred tax assets 930 175 1,105
----------- ----------- -------------
38,708 9,317 48,025
Current assets
Inventories 74,015 - 74,015
Trade and other receivables 84,704 - 84,704
Cash and cash equivalents 24,806 - 24,806
----------- ----------- -------------
183,525 - 183,525
Current liabilities
Trade and other payables (89,529) - (89,529)
Deferred and contingent considerations (384) - (384)
Borrowings and financial liabilities (66,015) (1,229) (67,244)
Current tax (2,785) - (2,785)
----------- ----------- -------------
(158,713) (1,229) (159,942)
Net current assets 24,812 (1,229) 23,583
----------- ----------- -------------
Total assets less current liabilities 63,520 8,088 71,608
Non-current liabilities
Trade and other payables (156) - (156)
Put option liabilities over non-controlling
interests (4,092) - (4,092)
Borrowings and financial liabilities (324) (8,296) (8,620)
Deferred tax liabilities (4,091) - (4,091)
----------- ----------- -------------
(8,663) (8,296) (16,959)
Net assets 54,857 (208) 54,649
=========== =========== =============
31 December 31 December 31 December
2018 2018 2018
Previously Impact Restated
presented of IFRS
16
GBP'000 GBP'000 GBP'000
Revenue 573,682 - 573,682
Cost of sales (479,120) - (479,120)
----------- ----------- -----------
Gross profit 94,562 - 94,562
Distribution costs (56,329) - (56,329)
Administrative expenses (16,511) 194 (16,317)
Other operating income 3,025 - 3,025
----------- ----------- -----------
Operating profit 24,747 194 24,941
Finance income 81 - 81
Finance costs (3,751) (240) (3,991)
----------- ----------- -----------
Profit before taxation 21,077 (46) 21,031
Taxation (5,792) 18 (5,774)
----------- ----------- -----------
Profit after taxation 15,285 (28) 15,257
=========== =========== ===========
31 December 31 December 31 December
2018 2018 2018
Previously Impact Restated
presented of IFRS
16
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 11,188 380 11,568
Intangible assets 24,766 - 24,766
Right of use assets - 10,141 10,141
Property, plant and equipment 7,391 (363) 7,028
Deferred tax assets 1,222 199 1,421
----------- ----------- -----------
44,567 10,357 54,924
Current assets
Inventories 74,379 - 74,379
Trade and other receivables 83,139 - 83,139
Derivative financial instruments 25 - 25
Cash and cash equivalents 16,685 - 16,685
----------- ----------- -----------
174,228 - 174,228
Current liabilities
Trade and other payables (97,729) - (97,729)
Put option liabilities over non-controlling
interests (1,746) - (1,746)
Deferred and contingent considerations (4,005) - (4,005)
Borrowings and financial liabilities (35,151) (1,687) (36,838)
Current tax (2,892) - (2,892)
----------- ----------- -----------
(141,523) (1,687) (143,210)
Net current assets 32,705 (1,687) 31,018
----------- ----------- -----------
Total assets less current liabilities 77,272 8,670 85,942
Non-current liabilities
Trade and other payables (736) - (736)
Put option liabilities over non-controlling
interests (4,654) - (4,654)
Deferred and contingent considerations (757) - (757)
Borrowings and financial liabilities (7,211) (8,897) (16,108)
Deferred tax liabilities (5,512) - (5,512)
Other provisions (56) - (56)
----------- ----------- -----------
(18,926) (8,897) (27,823)
Net assets 58,346 (227) 58,119
=========== =========== ===========
11. Copies of interim report
Copies of the interim report are available to the public free of charge from the Company at Vinces Road, Diss, IP22 4YT.
12. Events after the reporting period
On 1 July 2019 the Group acquired 100% of Entertainment Equipment Supplies SL, a specialist distributor of lighting and lighting infrastructure products based in San Sebastian, Spain.
13. Adjustments to reported results
Six months ended
30 June 30 June
2019 2018
(Restated)(1)
GBP000 GBP000
Operating profit 10,466 11,125
Cost of acquisitions 306 43
Share based payments 1,275 410
Employer taxes on share based payments 280 145
Amortisation of brands, customer and supplier relationships 2,303 1,747
-------- -------------
Adjusted operating profit 14,630 13,470
Depreciation 2,444 2,015
Amortisation of patents and software 82 81
-------- -------------
Adjusted EBITDA 17,156 15,566
Increase in adjusted inventories (7,588) (11,031)
Increase in adjusted trade and other receivables (12,145) (8,343)
Increase in adjusted trade and other payables 7,426 4,888
Adjusted cash flow from operations 4,849 1,080
Adjusted EBITDA cash flow conversion 28.3% 6.9%
Profit before tax 11,282 11,835
Cost of acquisitions 306 43
Share based payments 1,275 410
Employer taxes on share based payments 280 145
Amortisation of brands, customer and supplier relationships 2,303 1,747
Foreign exchange losses on borrowings for acquisitions 129 -
Finance costs - deferred and contingent considerations (924) (147)
Finance costs - put option liabilities over non-controlling
interests (917) (1,103)
-------- -------------
Adjusted profit before tax 13,734 12,930
Profit after tax 9,033 9,109
Cost of acquisitions 306 43
Share based payments 1,270 410
Employer taxes on share based payments 280 145
Amortisation of brands, customer and supplier relationships 2,303 1,747
Foreign exchange losses on borrowings for acquisitions 129 -
Finance costs - deferred and contingent considerations (924) (147)
Finance costs - put option liabilities over non-controlling
interests (917) (1,103)
Tax impact (1,026) (481)
-------- -------------
Adjusted profit after tax 10,459 9,723
Profit after tax 9,033 9,109
Non-controlling interest (280) (128)
---------- ----------
Profit after tax attributable to equity holders of
the Parent Company 8,753 8,981
Adjusted profit after tax 10,459 9,723
Non-controlling interest (280) (128)
Amortisation attributable to NCI (144) (63)
Deferred tax on amortisation attributable to NCI 70 15
---------- ----------
Adjusted profit after tax attributable to equity
holders of the Parent Company 10,105 9,547
Weighted average number of ordinary shares 79,078,793 79,448,200
Diluted weighted average number of ordinary shares 80,254,478 80,053,998
Basic adjusted earnings per share 12.78p 12.02p
Diluted adjusted earnings per share 12.59p 11.93p
(1) Comparative information is restated for the adoption of IFRS 16 (note 10) and reclassification of the amortisation for patents and software within the adjusted profit alternative performance measures.
14. Interim dividend
The interim dividend proposed for the six months to 30 June 2019 of 4.85 pence (30 June 2018: 4.60 pence) relates to profits earned over the period.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR SSAFMUFUSESU
(END) Dow Jones Newswires
September 10, 2019 02:00 ET (06:00 GMT)
1 Year Midwich Chart |
1 Month Midwich Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
