9 September 2025

Midwich Group plc

("Midwich", the "Company" or the "Group")

Interim results for the six months ended 30 June 2025

Robust performance despite ongoing challenging market conditions; year-end outlook unchanged

Midwich Group (AIM: MIDW), a global specialist audio visual distributor to the trade market, today announces its Interim Results for the six months ended 30 June 2025 ("H1 2025").

Statutory financial highlights

Adjusted financial highlights ¹

^{1 Definitions of the alternative performance measures are set out in note 2}

^{2 Restated, see note 16 for further details.}

Financial highlights

Operational highlights

Post period trading and outlook

^{^}For these purposes Adjusted EBITDA includes proforma EBITDA for acquisitions acquired in the last 12 months.

Stephen Fenby, Managing Director of Midwich Group plc, commented:

"The first half of 2025 has been challenging for our industry, with education and corporate expenditure suppressed due to several factors such as high government debt, low or negative GDP growth and tariff uncertainty. As a result, we have seen reduced demand and price erosion of mainstream products which has contributed to compressed net margins.  However, our higher margin technical product categories, which represent over two thirds of H1 sales, continue to be more resilient.

Despite the macro backdrop, the Group has been proactive with its initiatives to drive improved future performance by developing new vendor and customer relationships, building new revenue streams and pursuing operating and cost saving efficiencies. These include implementing AI solutions to improve the efficiency of the business.

Midwich remains a leading player in a large global industry, and we continue to maintain or grow market share in key profitable regions, with a focus on delivering the best service to our customers and vendors. There is no doubt that the first half of 2025 has been tough, and I recognise that the additional workload on my colleagues is significant.  I, along with the Board, would like to thank them for their continued efforts.

The initiatives and actions taken to expand our reach and improve performance means we continue to look forward with confidence."

There will be a meeting and webinar for sell-side analysts and investors at 9.30am BST today, 9 September 2025, the details of which can be obtained from FTI Consulting: [email protected].

For further information:

About Midwich Group

Specialisation at scale.

Midwich Group is a network of businesses which partner with the world's leading technology companies to accelerate their growth. Selling into over 50 countries from 23 global locations, the Group specialises in audiovisual technology - whether in state-of-the-art meeting rooms or on a festival main stage, our solutions help the world connect, communicate, or experience wow moments.

Taking technology further.

With services ranging from product distribution to complex system design, focused marketing campaigns to flexible financing solutions, and showcase events to seed funding for startups, the Group's ever-expanding offering is designed to add value and solve its partners' biggest challenges. This has enabled the Group to maintain strong relationships with global manufacturers and a diverse customer base of over 21,000, including professional integrators, event production companies and IT resellers in sectors such as education, corporate, retail and live events.

Enabling tomorrow.

With around 1,800 employees across the UK and Ireland, EMEA, Asia Pacific and North America, the Company is committed to being a responsible employer. The Group wants to do the right thing and actively works to limit its impact on the environment and communities, and recognises the importance of giving back - find out more about our sustainability activities here.

For further information, please visit www.midwichgroupplc.com

Managing Director's Report

Overview

The Group has continued to navigate challenging trading conditions in H1 2025. Whilst we believe our addressable part of the $300bn+ global AV market will return to growth in the near future, we continue to take actions to improve our business in both the short-term and for the future. Over the last twelve months we have increased our focus on both customer and vendor engagement, which has resulted in increased share of wallet with many of our customers, the successful launch of new vendors across the Group, and strengthened existing vendor relationships. In line with our long-term strategy, we continue to focus on higher margin technical products, which now represent over two thirds of Group revenue in the period compared to 21% at IPO in 2016.

The Board has also taken selected pro-active decisions with respect to our cost base, including further targeted headcount and overhead savings in the first half of the year to offset inflation and position the Group for profit growth when demand returns to normal levels. These savings resulted in a reduction in Group headcount of about 5%, despite continued investment in growth areas such as the Middle East.

The Board also approved a new digital strategy with a focus on agility, artificial intelligence ("AI") and digital solutions. This approach is expected to deliver new customer solutions, such as software distribution, a global ecommerce platform and AI driven process automation and productivity tools with benefits expected to be delivered from 2026. The Board also took the difficult decision to move away from deploying a single global ERP solution, reflecting our ability to deliver the benefits from emerging digital tools and AI, combined with re-evaluating the cost, pace and rollout risk from a single ERP deployment. A comprehensive review of the Group's approach to ERP deployment and future benefits is underway and is expected to be concluded in the coming months. Whilst this has yet to be finalised, the review may lead to an impairment of the ERP intangible asset, which is currently held at a carrying value of around £30m, in the second half of the year.

When market conditions are more challenging, maintaining a consistently high service level to our customers and vendors becomes an even greater priority to ensure we remain a long-term trusted partner. Due to our exceptional service, we have increased market share with many of the Group's key vendors in the period. Our focus on developing our offering in the AV market continues to be beneficial for our customers and vendors alike.

The impact of subdued demand in corporate and education markets, driven by wider macro-economic factors, has continued beyond our, and the wider AV industry's, expectations at the beginning of the year. The oversupply of products, highlighted previously, has continued into 2025, which has led to further price erosion in mainstream product categories. We have seen small margin erosion in some display and UC product categories. Demand in the live event and entertainment sectors has remained robust, and we have seen particular growth in areas such as commercial drones, lighting, rental and cables.

We believe that we have the best team in the industry and our long-term view (supported by independent market research) remains that the AV industry will continue to grow above GDP rates going forward. However, the ongoing delayed market recovery resulted in some short-term pressure on adjusted operating margins. We expect these to recover through operating leverage as the market returns to normal, but the Group has also acted to deliver targeted efficiencies to improve profitability in the second half of 2025.

The Group delivered a better than expected adjusted operating cash inflow in the period as a direct result from a tight focus on working capital. We expect adjusted cash flow conversion for the full year to be in line with our long-term trend of 70-80% of adjusted EBITDA.

Trading performance

Revenue in H1 2025 of £620.3m reduced 2.7% compared to H1 2024 (constant currency basis). Organic revenue declined by 3.5%. Compared with H1 2024, organic revenue returned to growth in UK&I and APAC, but declined in both EMEA and North America. Based on our customer and vendor data, combined with independent market data, we believe that the decline in these territories is significantly less than the overall market decline, with Midwich maintaining or expanding its market share in key markets.

The Group's gross margin percentage of 17.7%, was 0.3 percentage points below the recent record achieved in H1 2024. There were strong gross margin improvements in UK&I, whilst lower margins in both North America and EMEA reflect mix factors and, particularly the transition away from a higher margin technical vendor in Canada.

Overheads benefitted from Group-wide targeted savings over the last twelve months and were in line with H1 2024, despite the ongoing inflationary pressures and the impact of prior year acquisitions. The adjusted operating profit margin reduced to 2.7% in H1 2025 from 3.4% in H1 2024.

Products

Overall revenue from the two mainstream product areas (displays and projection) declined by around 7%, reflecting a combination of market softness and a targeted reduction in sales of products with excess market capacity in Germany. Excluding Germany, mainstream product sales across the Group were slightly ahead of the prior year. These mainstream categories accounted for less than a third of Group revenue in H1 2025 as we continue to diversify into specialist areas. The gross margin on mainstream categories was marginally below the same period last year due to the ongoing price pressure in the displays market.

Revenue in the technical product areas were slightly below H1 2024, with the decline attributable to the lower levels of demand in Germany and the planned transition to new technical vendors in Canada as previously disclosed. Excluding these, technical product revenue grew by over 4%. There were strong performances in the broadcast, lighting, security and rental categories driven by the impact of new vendors and increased market share.

The Board continues to believe that the complexity and breadth of the AV market highlights the need for manufacturers to use a high-quality specialist distributor, such as Midwich. We continue to have significant success with the roll out of brand relationships acquired over the last few years, together with the expansion of existing relationships into new territories and increasing our share of wallet with customers.

Customers

The Group's focus has always been on seeking to provide our customers with consistently high levels of service and support. Although our customer base tends to be adaptable and resilient, we are aware that softer demand in some areas, combined with higher interest rates, have caused some challenges. We continue to use our distribution expertise and value add advice to support our customers through these challenges and to accommodate the needs of the channel. This focus has allowed us to increase our share of wallet with many of our customers including our global accounts.

Strategy

The Group's strategy remains clearly focused on markets and product areas where it can leverage its value add services, technical expertise, and sales and marketing skills. Services, expertise and geographies are developed either in-house or through acquisitions.

Using its 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 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 has continued to deliver on its strategy in 2025, with the successful integration of the businesses acquired in 2024, the strengthening of customer and vendor relationships, and new investments in digital tools to support profitable growth.

The Board continues to focus on strengthening the Group's product offering, technical expertise and geographical reach.

Acquisitions

Whilst the Group did not complete any acquisitions in the period, it continues to identify, prioritise and engage with targeted companies. Acquisitions remain a core part of the Group's medium-term strategy as they bring new technologies, customers and vendor relationships which grow earnings both organically and through adding strong complementary businesses.

The acquisition pipeline remains healthy, and the management team continues to review attractive opportunities in a number of markets and regions.

Dividend

The Board remains disciplined in its approach to capital allocation and has taken the decision to recalibrate the dividend policy reflecting a c.25% payout ratio of adjusted EPS to better direct capital towards growth opportunities, both organic and acquisition related, that can deliver superior long-term returns for Midwich shareholders.

Whilst the revised payout ratio provides a sustainable framework, the Board's focused approach to capital allocation will continue to prioritise growth & reinvestment opportunities to drive future returns for the business. In addition, Midwich will continue to allocate any excess capital to shareholder returns via dividends or share buybacks, as appropriate. 

The Board is pleased to declare an interim dividend of 1.75 pence per share (H1 2024: 5.5p). This will be paid on 17 October 2025 to those shareholders on the Company's register as at 12 September 2025. The last day to elect for dividend reinvestment ("DRIP") is 26 September 2025.

Outlook

Whilst the Board believes it is prudent to assume macroeconomic conditions in certain markets, particularly Germany, France and the US, will likely remain challenging for the remainder of 2025, the Group has many opportunities to grow market share, expand into new product areas and achieve further operating efficiencies.

Despite some softness in the AV market so far in 2025, according to research published by industry trade body AVIXA in July 2025, the global AV market is expected to grow at an annualised rate of 3.9% in the five years to 2030.

The Board concurs that the wider AV industry is well positioned for long-term growth and believes that the Group is very well placed to take advantage of growth opportunities. In particular, the Group's ongoing focus on more specialist areas of the market should help to sustain higher gross margins and drive incremental profit opportunities. The Group has a strong pipeline of new vendor opportunities which, when combined with positive current trading and steady order books at the start of the second half, and a tight focus on overhead efficiencies, means that the Board's expectations of adjusted operating profit for the full year remain unchanged.

Regional highlights

^{1 Definitions of the alternative performance measures are set out in note 2.}

^{2 Restated, see note 16 for further details.}

All percentages referenced in this section below are at constant currency unless otherwise stated.

The use of adjusted performance measures is per the definitions of set out in note 2.

UK & Ireland ("UK&I")

Revenue in the UK&I grew by 5.0% compared to H1 2024. Of this 2.8% was organic, with the balance attributable to the small acquisitions completed in 2024.  Whilst the market backdrop in the UK continues to be challenging, the region has benefitted from increasing market share, the launch of commercial drone solutions in its broadcast division, and targeted overhead reductions. Continued strong demand in markets such as live events, entertainment and security supported further growth in technical product sales.

UK&I gross margins increased to 18.4% (H1 2024: 17.6%) reflecting a positive product mix impact. Operating profit increased by 35.1% as a result of both operating leverage and the impact of cost reduction activity completed over the last twelve months. The small acquisitions completed in 2024 have now been fully integrated and are contributing well.

Whilst industry data, and our own analysis of customer and vendor sentiment, both indicate that pro AV market will continue to grow faster than GDP in the medium term, we believe that the market headwinds will continue in the near-term. We remain confident that our focus on customer service and partnering with our vendors combined with investment in automation and technology will allow us to further build on our market leading position in the UK&I.

EMEA

Revenue in EMEA, which reduced by 7.3% vs H1 2024, was impacted by significant softness in the German corporate end user market alongside major delays to purchase decisions in education ahead of new federal funding being made available later in 2025. Outside of Germany (which represents around one third contribution for the EMEA region), the Group saw revenue growth of approximately 3% in the rest of EMEA, reflecting stronger demand for more technical, higher margin, product categories.

The higher margin, more technical solutions focused EMEA businesses in southern Europe and the Middle East have continued to perform well with the UAE business now back to full operating capacity following the warehouse fire in December 2024. Gross profit margins declined to 16.8% (H1 2024: 17.2%) reflecting the previously flagged disruption in our French business following the ERP go live last year. This is expected to return to normal by the end of 2025.

The reduction in adjusted operating profit in EMEA of £6.2m (H1 2024: £11.2m), was mainly attributable to the challenges in Germany and France. There continues to be a focus on productivity in the region through both overhead control and investment in automation and technology.

The recently approved economic stimulus programme in Germany, which includes significant education funding is now expected to have only a limited impact on 2025, but is projected to generate a material boost in demand from 2026. A seasonally stronger second half, combined with cost efficiencies, is expected to result in a material uplift in EMEA operating profit in H2 2025.

Asia Pacific

Revenue in Asia Pacific of £22.3m was 1.7% ahead of H1 2024 with new brands, added in the last two years, continuing to build momentum in the region. The Asia Pacific gross profit margin of 15.4% (H1 2024: 16.4%) reflected a higher mainstream product mix. The adjusted operating loss in Asia Pacific was £0.4m (H1 2024: -£0.5m).

North America

North American revenues declined by 8.5% compared to H1 2024, resulting from disruption associated with tariff uncertainty and the planned transition to new technical vendors in Canada. Gross margins in the region at 18.4% (H1 2024: 20.8%) remain above the Group average, with the reduction attributable to the vendor transition in Canada. This also impacted operating profit which reduced to £2.2m in the period (H1 2024: £5.3m).

As trade negotiations are finalised, and new vendors come on stream, we expect to see this region return to growth and deliver strong profitability over the medium term.

Group costs

Group costs for the half year were £2.9m (H1 2024: £2.5m) reflecting investment in digital solutions.

Operating profit

Adjusted operating profit for the period at £16.6m (H1 2024: £22.0m) is stated before the impact of acquisition related expenses of £0.2m (H1 2024: £0.3m), restructuring costs of £3.1m (H1 2024: £0.5m), share based payments and associated employer taxes of £1.6m (H1 2024: £2.6m) and amortisation of acquired intangibles of £7.1m (H1 2024: £5.8m). The reported operating profit for the period was £4.7m (H1 2024: £12.8m).

Exceptional costs

In response to the ongoing challenging mainstream product market conditions, the Group made further targeted cost reductions in both discretionary expenditure and headcount in the period as part of its productivity programme. This programme is expected to result in annualised savings of over £5.0m, following one-off costs of £3.1m in H1 2025 (H1 2024: £0.5m). These one-off costs are deemed to be exceptional and have been excluded from the Group's adjusted profit measures.

Movement in foreign exchange

Compared to the prior year, Sterling strengthened in the period. These movements reduced reported revenue and adjusted operating profit in H1 by 1.6% and 1.1% respectively. Based on current exchange rates this trend is expected to continue for the remainder of the year. Note, the Group makes most of its sales and purchases in local currency which provides a natural hedge for transactional activity.

Other gains and losses and net finance costs

Other gains and losses totalled £1.6m loss (H1 2024: £2.0m gain). These include the impact of gains and losses on derivatives related to foreign exchange and acquisition financing and changes in the valuation of deferred consideration related to past acquisitions. Reported finance costs, net of finance income, were £6.1m (H1 2024: £4.7m).

Adjusted net finance costs for the period were £7.0m (H1 2024: £4.8m). Of this, £6.1m related to net interest expenses, which mainly relate to the financing costs of the Group's revolving credit facility, which is used to fund its acquisition investments, with the balance related to derivative costs attributable to recent foreign exchange volatility. The increase in interest costs relate to higher group debt levels in the period.

Taxation

The reported tax credit for the period was £0.5m (H1 2024: £2.8m charge). The adjusted effective tax rate was 26.2%; (H1 2024: 27.1%) calculated based on the adjusted tax charge divided by adjusted profit before tax. The change in effective tax rate is mainly attributable to geographic mix.

Cash flows and net debt

The Group's adjusted cash flow conversion, calculated comparing adjusted cash flow from operations with adjusted EBITDA, was 60% (H1 2024: 13%). Whilst first half is traditionally more working capital intensive, when compared with the full year due to the seasonality of demand, especially in the education sector, a tight focus on working capital combined with the reduction in revenue supported strong cash generation in the period. The Board is comfortable that the Group's long-term average annual cash conversion rate (70-80%) remains sustainable.

Gross capital spend on tangible assets was £3.7m (H1 2024: £2.7m) and included investment in rental assets in UK&I. An investment of £3.3m in intangible fixed assets (H1 2024: £4.9m) was predominantly in relation to ERP and digital tools investments.

Adjusted net debt increased by £17.6m from the prior year end to £148.2m, as a result of deferred acquisition payments and working capital movements. Group leverage at 2.5x (adjusted net debt compared to adjusted EBITDA) at the period end, is expected to reduce to approximately 2.2x-2.3x by the year end and remains comfortably within the Group's covenants.

The adoption of IFRS 16 in 2019 resulted in an increase in recognised lease liabilities (predominantly for office, showroom and warehouse facilities). Lease liabilities excluded from adjusted net debt totalled £20.5m at 30 June 2025 (£21.8m at 30 June 2024). Total net debt was £168.7m at 30 June 2025 (£154.1m at 30 June 2024).

The Group has a revolving credit facility of £175m which is primarily used for acquisition investments. Approximately 85% of the facility was drawn at 30 June 2025 (81% at 31 December 2024). This facility is supported by six banks, runs to June 2028 and has an adjusted net debt to adjusted EBITDA covenant ratio of three times and an adjusted interest cover covenant of four times 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. Other borrowing facilities are to provide working capital financing. The Group has access to total facilities of c.£300m.  

The Group has various instruments to hedge certain exchange rate and interest rate exposures. These include borrowing in local currency to finance acquisitions and 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.

Stephen Fenby

Managing Director