Shares in Midwich (MIDW) were aloft as the market digested a half-a-point rate cut, so the extent to which an 11 per cent increase in adjusted operating profit influenced the move is difficult to say. We do know continental Europe overtook the UK and Ireland as the audiovisual specialist's largest geographic sales market, up by more than two-fifths to £321m, with top-line activity in the latter locales flat, which management attributed to an exit from a small range of consumer products and the managed reduction in the document solutions business.
Its Asia Pacific business delivered a 44 per cent hike in revenue, led by a contribution from the acquisition of Australia-based company Blonde Robot in December 2018. Gross margin in the region, however, fell to 17.7 per cent from 18.4 per cent, due to an exceptional level of high-margin project activity in 2018. Adjusted operating profit also fell by 7.5 per cent to £2.7m from £2.9m, as the group invested in the launch of a Southeast Asian audiovisual business.
Chief executive Stephen Fenby said that the company might face some challenges in its supply chain and demand due to the coronavirus, but as more employers consider their capacities for flexible working, the company “may see an uptake in demand for video and audio conferencing”.
Berenberg forecasts adjusted EPS of 30.59p and adjusted pre-tax profits of £36m in 2020, up from 28.49p and £31m in 2019.
| MIDWICH (MIDW) | ||||
| ORD PRICE: | 491p | MARKET VALUE: | £432m | |
| TOUCH: | 466-493p | 12-MONTH HIGH: | 640p | LOW: 456p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 66p* | NET DEBT: | 107%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 (Jade 320 Ltd)*** | 314 | 8.6 | 7.1 | nil |
| 2016 | 370 | 12.1 | 10.9 | 8.62 |
| 2017 | 472 | 18.9 | 17.1 | 13.82 |
| 2018 (restated) | 574 | 21.0 | 18.5 | 15.20 |
| 2019 | 686 | 23.8 | 21.7 | 15.90 |
| % change | +20 | +13 | +17 | +5 |
| Ex-div: | 14 May | |||
| Payment: | 19 Jun | |||
| *Includes intangible assets of £45.3m, or 52p a share **Includes lease liabilities of £16.7m ***Pro-forma figures for previous holding companies. | ||||
