Midwich indicates acquisition strategy remains going forward

Audio visual specialist Midwich is holding its annual general meeting this morning, sharing an update with investors that covers a successful 2019 and the current market conditions.

This time last year, the theme of the AGM was around acquisitions, with the distributor making it clear that it wanted to use that strategy as a means of growth.

This time around, there will still be opportunities to discuss the progress made on that front, with four deals sealed in 2019, but clearly a lot of the focus will be on how the firm is faring against a backdrop of the Covid-19 pandemic.

Audio visual products have been a category in demand during the early weeks of the lockdown as remote workers looked to invest in tools that would enable them to keep productive and foster collaboration.

Context issued its latest analysis of the progress the channel was making in Q2 last week and pointed to a number of areas in which Midwich operates as those expected to see continued high demand, including AV systems, software and licences.

But some product categories have suffered delays, with vendors rightly prioritising NHS customers, and that has increased the pressure during April.

Andrew Herbert, chairman of Midwich, made a statement at the AGM indicating that the approach the company took last year had served it well and it would maintain the same course.

“The group delivered a strong performance in 2019, achieving revenue and profit growth while successfully completing four acquisitions,” he said. “We remain committed to our established strategy of delivering strong organic growth, supplemented by targeted acquisitions, as well as building our expertise in a broader range of markets and products.”

Acquisitions made last year included Prase in Italy and MobilePro in Switzerland back in January, and Norwegian distributor AV Partner in May. Already in 2020, Midwich has sealed a deal for US AV distributor Starin Marketing.

Herbert acknowledged that the coronavirus was having an impact on the business and that would remain the case for most of the second quarter.

“The coronavirus crisis has led to very challenging trading conditions over the past two months and we anticipate this will continue at least until lockdown conditions, particularly in Europe and North America, are significantly eased,” he said. “At this stage, it is unclear how quickly overall business will return to more normal levels.”

Herbert assured investors that the business was in a robust position and more than able to weather the storm.

At the end of March, the business gave an update that summarised its financial position, reminding investors that it had signed a new three-year £50m revolving credit facility which had unutilised capacity of £37.8m in January. This facility also includes a £30m accordion option and could be extended by two more years.

Herbert added: “The actions we have taken across the group to preserve cash and liquidity and reduce cost, coupled with our strong balance sheet and extensive credit facilities, gives the board confidence that the group is well placed to deal with the continuing uncertainty, and that it will be in a strong position to respond once markets start to recover.”