MIDWICH GROUP PLC

Earnings Release • Sep 3, 2024

National Storage Mechanism | Additional information RNS Number : 6033C Midwich Group PLC 03 September 2024 3 September 2024 Midwich Group plc ("Midwich", the "Company" or the "Group") Interim results for the six months ended 30 June 2024 Robust performance with record gross margins despite market challenges; full year expectations 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 2024 ("H1 2024"). Statutory financial highlights Six months ended 30 June 2024 ��m 30 June 2023 ��m Growth % Revenue 646.1 610.4 5.8% Gross profit 111.8 99.6 12.2% Gross profit % 17.3% 16.3% Operating profit 12.8 18.6 (30.9%) Profit before tax 10.1 15.6 (34.9%) Profit after tax 7.4 11.6 (36.1%) Reported EPS - pence 6.50 12.14 (46.5%) Interim dividend per share - pence 5.5 5.5 Adjusted financial highlights Six months ended 30 June 2024 ��m 30 June 2023 ��m Growth % Growth at constant currency % Revenue 646.1 610.4 5.8% 7.5% Gross profit 111.8 99.6 12.2% 14.1% Gross profit % 17.3% 16.3% Adjusted operating profit 1 22.0 26.4 (16.8%) (15.1%) Adjusted operating profit % 3.4% 4.3% Adjusted profit before tax 1 17.2 21.8 (20.8%) (20.1%) Adjusted profit after tax 1 12.6 16.1 (21.9%) Adjusted EPS - pence 1 11.22 16.93 (33.7%) 1 Definitions of the alternative performance measures are set out in Note 2 Financial highlights �� Revenue increased 5.8% (7.5% at constant currency) to ��646.1m. �� Acquired businesses contributed 8.7% growth (at constant currency) with organic revenues down 1.2% despite market share gains. �� Significant improvement in gross margins to 17.3% from 16.3% in the prior year, driven by continued shift in sales mix towards technical products, in line with the Group's strategy. �� Operating cash conversion in line with Board's expectations at 13%, which reflects typical seasonal investments in working capital (H1 2023: 27%). Full year expectations remain at 70-80%. �� Adjusted net debt of ��132.2m at period end with leverage ^ at 2.0x, to reduce to approximately 1.8-1.9x by the year end. �� Interim dividend declared of 5.5 pence per share (Interim 2023: 5.5p). Operational highlights �� Against a backdrop of continued challenging market conditions in several key markets, the Group's diverse product and geographic portfolio resulted in revenue growth of 7.5% at constant currency, and further market share gains with many of the Group's key vendors. �� Technical product revenue grew by over 13%, reflecting a mix of both organic growth and the impact of acquisitions, with technical products now almost two thirds of the Group's revenue. This included strong performances in the technical video, audio, LED and rental categories driven by end user investments in live events and entertainment. �� Strong performance in North America, with sales up 69.0%, organic revenue up 16.8% and record gross margins of 19.7%. �� In January 2024, the Group acquired California based The Farm, a sales representative to manufacturers acting as the exclusive value added sales agent on behalf of its vendor partners, primarily in the audio and technical video segments. Post period trading and outlook �� A positive start to the second half, with a return to growth in July, and the Board continues to expect organic sales growth in H2 2024. �� The Group has now made substantial progress with its overhead reduction programme, which is expected to be largely complete in the current financial year and deliver estimated annualised savings of over ��5m from early FY25. �� On 31 July 2024, the Group acquired the remaining 70% stake in Dry Hire Lighting Limited ("DHL"), a supplier to the UK live events market. �� Management also continues to pursue selective bolt-on acquisition opportunities across a number of regions. �� Whilst the Board expects macroeconomic conditions to remain challenging in certain markets for the remainder of this year, there have been early signs of the market stabilising, reflected in positive trading in the first two months of the second half. As a result of this, and the continued focus on the Group's long-term strategy, the Board continues to expect trading performance for the full year to be in line with its previous expectations. ^ 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: "Our performance in H1 2024 demonstrated the robustness of Midwich's offering, against a tough market backdrop, with the Group delivering revenue growth of 7.5% at constant currency and a significant improvement in our Group gross profit percentage, moving from 16.3% in H1 2023 to a new record of 17.3%. The AV market at the end of 2023, and through the first half of 2024, was affected by a degree of oversupply of mainstream products and associated discounting. Demand in corporate and education markets remained subdued, although this was largely offset by ongoing strength in the live event and entertainment sectors. This change in mix is reflected in both a further increase in the mix of technical video and audio products sold by the Group and the higher gross margins. Whilst it is prudent to assume macroeconomic conditions in certain markets, such as the UK & Ireland, will likely remain challenging for the remainder of 2024, we have seen some signs of the market stabilising in recent weeks, with market survey data indicating a recovery in pricing in the second half of the year. Trading since the start of July has been in line with the Board's expectations and slightly ahead of 2023. The Group has acted to become even stronger during recent months, ahead of the anticipated market recovery, with a focus on adding new vendor opportunities, further targeted acquisitions and a tight focus on overhead efficiencies. These actions position the Group well to return to operating profit growth in H2 2024. I would like to thank our team, customers and vendors for their unwavering support during 2024 to date." There will be a meeting and webinar for sell-side analysts and investors at 10:45am BST today, 3 September 2024, the details of which can be obtained from FTI Consulting: midwich@fticonsulting.com. For further information: Midwich Group plc Stephen Fenby, Managing Director Stephen Lamb, Finance Director +44 (0) 1379 649200 Investec Bank plc (NOMAD and Joint Broker to Midwich) Carlton Nelson / Ben Griffiths +44 (0) 20 7597 5970 Berenberg (Joint Broker to Midwich) Ben Wright / Richard Andrews +44 (0) 20 3207 7800 FTI Consulting Alex Beagley / Tom Hufton / Matthew Young +44 (0) 20 3727 1000 About Midwich Group Midwich Group is a specialist AV distributor, with operations in the UK and Ireland, EMEA, Asia Pacific and North America. The Group's long-standing relationships with over 800 vendors, including blue-chip organisations, support a comprehensive product portfolio across major audio visual categories such as displays, projectors, technical AV, broadcast, professional audio, lighting and unified communications. 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 24,000 trade customers, most of which are professional AV integrators and IT resellers serving sectors such as corporate, education, retail, residential and hospitality. Initially a UK only distributor, the Group now has almost 1,900 employees across the UK and Ireland, EMEA, North America 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 continued to navigate challenging trading conditions in the first half of 2024, particularly in the UK & Ireland, and has delivered a solid result despite this backdrop. In line with our long-term strategy, we achieved further sales growth in higher margin technical products, with the result that gross margins increased to record levels in the period. Technical products now represent almost two thirds of the Group's revenue compared to 21% at IPO in 2016. When market conditions are more challenging, maintaining a consistent high service level to our customers and vendors becomes an even greater priority for the Group, so we remain a long-term trusted partner. We continue to work hard to provide exceptional service and have also increased our 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. We believe that this resulted in some oversupply of products and associated discounting. Whilst we have largely maintained gross margins in mainstream product categories, revenue declined in this category. Demand in the live event and entertainment sectors has remained strong which resulted in a further increase in the mix of technical video and audio products sold by the Group and the higher gross margins. 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 at above GDP rates going forwards. 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 2024. Working capital management continues to be a key focus for the Group with a small operating cash inflow in the period reflecting the normal seasonal investment in working capital. We expect operating cash generation for the full year to be in line with our long-term trend of 70-80% of adjusted EBITDA. Trading performance Revenue in H1 2024 grew by 7.5% (constant currency basis) to ��646.1m. Organic revenue declined by 1.2%. Compared with H1 2023, organic revenue grew strongly in North America, but was slightly lower in other regions. 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 gross margin percentage of 17.3%, was a 1.0 percentage point improvement on H1 2023, and also a Group record. There were strong gross margin improvements in both North America and EMEA due to the increased mix of technical product sales, which reflected the positive impact of recent acquisitions. In a challenging market, the robust gross margin performance in the UK & Ireland was testament to the quality of our teams and the added value that they provide to our customers. Overheads increased as expected during the period. The majority of the overhead increase was attributable to the acquisitions completed in the last twelve months, together with labour cost inflation, which is now showing signs of easing, and further investment in the Middle East. The adjusted operating profit margin reduced to 3.4% in H1 2024 from 4.3% in H1 2023. Given the challenging market conditions, we have identified targeted cost actions to improve future profitability. These actions are expected to be largely completed in the current year with estimated annualised savings of over ��5m from early 2025. The exceptional costs (approximately ��3m) associated with these actions will be excluded from adjusted operating profit. Products Overall revenue from the two mainstream product areas (displays and projection) declined by around 10%, reflecting the wider market dynamics. These mainstream categories now account for less than a third of Group revenue as we continue to diversify into specialist areas. The gross margin on mainstream categories was broadly in line with the same period last year. Revenue in the technical product areas grew by over 13%, through a mix of both organic growth and the impact of acquisitions. There were strong performances in the technical video, audio, LED and rental categories driven by end user investments in live events and entertainment. The overall margin on these categories also improved compared to the same period last year. The Board continues to believe that the complexity and breadth of the AV market highlight 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. The Group has a strong pipeline of new brands which will have a positive impact from the second half of 2024. 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. 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. Historically, 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 continues to pursue a strong pipeline of opportunities, either self-sourced or, increasingly, through approaches by business owners who wish to join a strong AV focused group. The Group has continued to deliver on this strategy in 2024, with the successful integration of the businesses acquired in 2023, the addition of two acquisitions in the year to date, and the ongoing development of our Middle East business. The Board continues to focus on strengthening the Group's product offering, technical expertise and geographical reach. Acquisitions The Group completed one small acquisition during H1 2024 and exercised its put and call option to acquire the remaining 20% of its Middle Eastern business during the period. In January 2024, the Group acquired The Farm North West LLC and The Farm Norcal LLC ("The Farm"), a west coast manufacturers' representative and technical services provider. Based in Silicon Valley, The Farm has now been integrated into the Group's U.S. operation, Starin Marketing, to expand its geographical footprint and enhance its current levels of customer and manufacturer support. On 31 July 2024, post the period-end, the Group acquired the remaining 70% of DHL, having previously acquired a 30% stake in 2023. DHL is a provider of dry hire lighting services to trade customers primarily operating in the UK live events market. These acquisitions bring new technologies, customers and vendor relationships, further delivering on the Group's strategy to grow earnings both organically and through selective acquisitions of strong, complementary businesses. The acquisition pipeline remains healthy, and the management team continues to review attractive opportunities in a number of markets and regions. Outlook Whilst the Board believes it is prudent to assume macroeconomic conditions in certain markets, such as the UK & Ireland, will likely remain challenging for the remainder of 2024, market survey data indicates an expected return to growth in mainstream product demand in a number of our key geographies during H2 2024. The Group has a strong pipeline of new vendor opportunities as well as selected bolt-on acquisition opportunities it continues to review which, when combined with a tight focus on overheads efficiencies in H2, means that the Board's expectations of adjusted operating profit for the full year remain in line with its expectations. Despite some softness in the AV market so far in 2024, according to research published by industry trade body AVIXA in July 2024, the global AV market is expected to grow at an annualised rate of 5.4% in the five years to 2029. 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 Board believes that, despite early signs of improvement, the Group's major markets will remain challenging across the remainder of 2024. However, order books remain steady and underpin the Board's confidence in the Group's outlook for the current year and beyond. Trading since the end of H1 has been in line with the Board's expectations for the full year. Regional highlights Six months ended 30 June 2024 ��m 30 June 2023 ��m Total growth % Growth at constant currency % Organic growth % Revenue UK & Ireland 233.1 234.0 (0.4%) (0.3%) (4.2%) EMEA 274.6 281.3 (2.4%) (0.2%) (2.9%) Asia Pacific 23.3 25.2 (7.7%) (4.1%) (4.1%) North America 115.1 69.9 64.7% 69.0% 16.8% Total Global 646.1 610.4 5.8% 7.5% (1.2%) Gross profit margin UK & Ireland 17.0% 17.7% (0.7) ppts EMEA 16.7% 15.5% 1.2 ppts Asia Pacific 15.8% 17.5% (1.7) ppts North America 19.7% 14.5% 5.2 ppts Total Global 17.3% 16.3% 1.0 ppts Adjusted operating profit1 UK & Ireland 8.5 13.9 (39.0%) (38.8%) EMEA 11.2 12.5 (10.8%) (8.6%) Asia Pacific (0.5) 0.1 North America 5.3 3.0 79.3% 84.0% Group costs (2.5) (3.1) Total Global 22.0 26.4 (16.8%) (15.1%) Adjusted net finance costs (4.8) (4.6) Adjusted profit before tax1 17.2 21.8 (20.8%) (20.1%) 1 Definitions of the alternative performance measures are set out in Note 2 All percentages referenced in this section below are at constant currency unless otherwise stated. UK & Ireland ("UK&I") Revenue in the UK&I was in line with H1 2023, but down 4.2% on an organic basis. The Group has its highest market shares in this region and the challenging market backdrop resulted in relatively soft demand, and a degree of oversupply and associated discounting in mainstream product categories. Stronger demand in markets such as live events, entertainment and hospitality supported further growth in technical product sales. After an exceptional performance in H1 2023, gross margins held up well in the period at 17.0% (H1 2023: 17.7%). The two small acquisitions completed in H2 2023 have now been fully integrated. Based on industry data, combined with our own analysis of customer and vendor activity, we believe that the mainstream market should begin to recover in the second half of 2024. Our long-term focus on increasing the mix of technical product sales has helped us grow or maintain market shares in the UK&I and we remain confident that the pro AV market will continue to grow faster than GDP in the medium term. Overheads in the UK&I increased, as expected, in the period, reflecting the impact of the 2023 acquisitions and labour cost inflation. This resulted in a decline in adjusted operating profit of 38.8% to ��8.5m (H1 2023: ��13.9m). Stronger mainstream product demand and the impact of additional new brands, combined with targeted cost reductions, are expected to result in a stronger operating profit performance in the second half of the year. EMEA In EMEA, the Group's biggest region by revenue, sales fell by only 0.2% on a constant currency basis. Organic revenue declined by 2.9% reflecting a reduction in mainstream product sales largely offset by increased technical product revenue. Although the mainstream markets have been challenging in Northern Europe, we have continued to build market share across EMEA, with notable performances in Southern Europe and the Middle East, where strong demand for technical solutions, including pro audio and live event solutions, continued. The acquisitions completed in 2023 are contributing well. Gross profit margins improved to 16.7% (H1 2023: 15.5%) because of favourable product mix and the benefit of the acquisition of prodyTel in November 2023. Adjusted operating profit in EMEA was ��11.2m (H1 2023: ��12.5m), down 8.6% on the prior year due to the combined impact of lower revenue and further investment in growth areas such as the Middle East. A seasonally stronger second half, combined with cost efficiencies, is expected to result in a return to operating profit growth in H2 2024. Asia Pacific Revenue in Asia Pacific was down 4.1% on the prior year (H1 2023: +2.3%). New brands, added in the last twelve months, are now beginning to build momentum in the region with a return to growth in the second quarter of the year. Demand for larger projects also increased in the period. The Asia Pacific gross profit margin of 15.8% (H1 2023: 17.5%) reflected a higher mainstream product mix. The adjusted operating loss in Asia Pacific was ��0.5m (H1 2023: ��0.1m profit). North America Revenue in North America increased by 69.0% (H1 2023: 18.7%) reflecting both a full contribution from SFM in Canada (acquired in June 2023), and further market share gains in the United States. Organic revenue growth of 16.8% (H1 2023: 5.3%) reflected demand for unified communications solutions, an increase in customer wallet share and higher project activity. The record gross margins in the region at 19.7% (H1 2023: 14.5%) are attributable to the positive mix impact from the acquisition of SFM and The Farm (January 2024). The Farm, which enhances the region's sales capabilities, has now been fully integrated into the Starin business. Adjusted operating profit in North America was significantly ahead of the prior year at ��5.3m (H1 2023: ��3.0m). Group costs Group costs for the half year were ��2.5m (H1 2023: ��3.1m) reflecting the focus on costs and lower levels of performance-related staff costs. Operating profit Adjusted operating profit for the period at ��22.0m (H1 2023: ��26.4m) is stated before the impact of acquisition related expenses of ��0.3m (H1 2023: ��0.3m), restructuring costs of ��0.5m (2023: nil), share based payments and associated employer taxes of ��2.6m (H1 2023: ��2.8m) and amortisation of acquired intangibles of ��5.8m (H1 2023: ��4.8m). The reported operating profit for the period was ��12.8m (H1 2023: ��18.6m). Exceptional costs In response to the more challenging mainstream product market conditions, the Group made some targeted cost reductions in both discretionary expenditure and headcount in the period as part of a productivity programme that has continued into the second half of the year. This programme is expected to result in savings of c.��3.5m in H2 2024, with associated one-off costs of c.��3.0m (including ��0.5m in H1 2024). These one-off costs are deemed to be exceptional and have been excluded from the Group's adjusted profit measures. Annualised savings from this programme are expected to be over ��5m from early 2025. 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 1.7% and 1.6% 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; this provides a natural hedge for transactional activity. Net finance costs Adjusted net finance costs for the period were an expense of ��4.8m (H1 2023: ��4.6m) and mainly relate to the financing costs of the Group's revolving credit facility which is used to fund its acquisition investments. Reported net finance costs were ��2.7m (H1 2023: ��3.0m). The adjustments to net finance costs include fair value movements in derivatives and foreign exchange movement on borrowings for acquisitions of (��0.6m) (H1 2023: (��1.5m)), valuation changes in deferred and contingent considerations of (��0.9m) (H1 2023: ��0.3m), and movements in put option liabilities over non-controlling interests of (��0.6m) (H1 2023: (��0.4m)). Taxation The reported tax charge for the period was ��2.8m (H1 2023: ��4.0m). The adjusted effective tax rate was 27.1%; (H1 2023: 26.1%) calculated based on the adjusted tax charge divided by adjusted profit before tax. The increase in effective tax rate is mainly attributable to the introduction of corporation tax in the United Arab Emirates and geographic mix. Cash flows and net debt The Group had an adjusted net cash inflow from operations before tax of ��3.6m for the period (H1 2023: ��8.2m inflow). The 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 continued focus on cash management resulted in a reduction in total working capital, as a percentage of annualised revenue, compared to the same period in the prior year. 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 ��2.7m (H1 2023: ��2.4m) and included investment in rental assets in UK&I. An investment of ��4.9m in intangible fixed assets (H1 2023: ��5.9m) was predominantly in relation to the Group's new ERP solution, which went live in its first country at the end of the period. Adjusted net debt (excluding leases liabilities), was ��132.3m at 30 June 2024 (��102.1m at 30 June 2023), equivalent to 2.0x adjusted EBITDA. 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 ��21.8m at 30 June 2024 (��22.8m 30 June 2023). Total net debt was ��154.1m at 30 June 2024 (��124.9m at 30 June 2023). The Group's has a revolving credit facility of ��175m which is primarily used for acquisition investments. Approximately 63% of the facility was drawn at 30 June 2024 (54% at 31 December 2023). This facility is supported by six banks, runs to June 2028 and has an adjusted net debt to adjusted EBITDA covenant ratio of 3 times and an adjusted interest cover covenant of 4 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. Dividend The Board is pleased to declare an interim dividend of 5.5 pence per share (H1 2023: 5.5p). This will be paid on 18 October 2024 to those shareholders on the Company's register as at 13 September 2024. The last day to elect for dividend reinvestment ("DRIP") is 27 September 2024. The Board believes in 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. Stephen Fenby Managing Director Unaudited consolidated income statement for the 6 months ended 30 June 2024 Note 30 June 2024 30 June 2023 31 December 2023 Unaudited Unaudited Audited ��'000 ��'000 ��'000 Revenue 4 646,134 610,442 1,289,144 Cost of sales (534,369) (510,868) (1,072,675) Gross profit 4 111,765 99,574 216,469 Distribution costs (74,405) (61,126) (130,873) Administrative expenses (28,012) (23,411) (51,029) Other operating income 3,479 3,514 7,016 Operating profit 4 12,827 18,551 41,583 Adjusted operating profit 4 21,997 26,424 59,593 Costs of acquisitions (302) (306) (1,489) Restructuring costs (503) - - Share based payments (2,419) (2,385) (4,738) Employer taxes on share based payments (131) (370) (603) Amortisation of brands, customer and supplier relationships (5,815) (4,812) (11,180) 12,827 18,551 41,583 Share of profit after tax from associate 30 - 24 Finance income 275 63 293 Finance costs 5 (2,984) (3,018) (5,353) Profit before taxation 10,148 15,596 36,547 Taxation (2,758) (4,037) (7,621) Profit after taxation 7,390 11,559 28,926 Profit for the financial period/year attributable to: The Company's equity shareholders 6,620 10,959 26,817 Non-controlling interests 770 600 2,109 7,390 11,559 28,926 Basic earnings per share 3 6.50p 12.14p 27.98p Diluted earnings per share 3 6.33p 11.76p 27.06p Unaudited consolidated statement of comprehensive income for 6 months ended 30 June 2024 30 June 30 June 31 December 2024 2023 2023 Unaudited Unaudited Audited ��'000 ��'000 ��'000 Profit for the period/financial year 7,390 11,559 28,926 Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Actuarial gains and (losses) on retirement benefit obligations - - (172) Items that will be reclassified subsequently to profit or loss: Foreign exchange losses on consolidation (2,481) (6,307) (5,432) Other comprehensive income for the financial period/year, net of tax (2,481) (6,307) (5,604) Total comprehensive income for the period/financial year 4,909 5,252 23,322 Attributable to: Owners of the Parent Company 4,574 5,015 21,681 Non-controlling interests 335 237 1,641 4,909 5,252 23,322 Unaudited consolidated statement of financial position as at 30 June 2024 Note 30 June 30 June 31 December 2024 2023 2023 Unaudited Unaudited Audited ��'000 ��'000 ��'000 Assets Non-current assets Investments 329 - 299 Goodwill 54,285 38,443 51,216 Intangible assets 120,679 86,095 117,009 Right of use assets 19,032 20,955 21,051 Property, plant and equipment 16,537 15,890 16,640 Deferred tax assets 839 3,092 617 211,701 164,475 206,832 Current assets Inventories 184,322 168,262 165,588 Trade and other receivables 239,442 236,967 223,826 Derivative financial instruments 2,455 4,033 2,084 Cash and cash equivalents 31,229 20,095 56,135 457,448 429,357 447,633 Current liabilities Trade and other payables (242,089) (220,621) (230,915) Derivative financial instruments (9) (176) (26) Put option liabilities over non-controlling interests (16,295) (9,301) (21,958) Deferred and contingent considerations (875) (9,642) (11,694) Borrowings and financial liabilities (57,786) (65,531) (49,146) Current tax (372) (2,685) (179) (317,426) (307,956) (313,918) Net current assets 140,022 121,401 133,715 Total assets less current liabilities 351,723 285,876 340,547 Non-current liabilities Trade and other payables (3,654) (1,694) (3,915) Put option liabilities over non-controlling interests (786) (6,231) (743) Deferred and contingent considerations (5,882) - (3,685) Borrowings and financial liabilities (127,498) (79,481) (113,180) Deferred tax liabilities (18,458) (12,563) (18,920) Other provisions (3,978) (3,635) (3,960) (160,256) (103,604) (144,403) Net assets 191,467 182,272 196,144 Equity Share capital 6 1,042 1,033 1,033 Share premium 116,959 116,959 116,959 Share based payment reserve 9,039 10,404 10,843 Investment in own shares 6 (618) (20) (616) Retained earnings 65,630 51,448 63,093 Translation reserve (1,654) (588) 392 Put option reserve (14,783) (10,799) (18,649) Capital redemption reserve 50 50 50 Other reserve 150 150 150 Equity attributable to owners of Parent Company 175,815 168,637 173,255 Non-controlling interests 15,652 13,635 22,889 Total equity 191,467 182,272 196,144 Unaudited consolidated statement of changes in equity for 6 months ended 30 June 2024 For the period ended 30 June 2024 Share capital Share premium Investment in own shares Retained earnings Other reserves Equity attributable to owners of the Parent Non-controlling interests Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 (note 7 ) Balance at 1 January 2024 1,033 116,959 (616) 63,093 (7,214) 173,255 22,889 196,144 Profit for the period - - - 6,620 - 6,620 770 7,390 Other comprehensive income - - - - (2,046) (2,046) (435) (2,481) Total comprehensive income for the year - - - 6,620 (2,046) 4,574 335 4,909 Shares issued (note 6 ) 9 - (9) - - - - - Share based payments - - - - 2,300 2,300 - 2,300 Deferred tax on share based payments - - - - (425) (425) - (425) Share options exercised - - 7 3,678 (3,679) 6 - 6 Acquisition of non-controlling interest (note 9 ) - - - 3,706 3,866 7,572 (7,572) - Dividends paid (note 14 ) - - - (11,467) - (11,467) - (11,467) Balance at 30 June 2024 (unaudited) 1,042 116,959 (618) 65,630 (7,198) 175,815 15,652 191,467 For the period ended 30 June 2023 Share capital Share premium Investment in own shares Retained earnings Other reserves Equity attributable to owners of the Parent Non-controlling interests Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 (note 7 ) Balance at 1 January 2023 889 67,047 (5) 46,023 6,782 120,736 13,398 134,134 Profit for the period - - - 10,959 - 10,959 600 11,559 Other comprehensive income - - - - (5,944) (5,944) (363) (6,307) Total comprehensive income for the year - - - 10,959 (5,944) 5,015 237 5,252 Shares issued (note 6 ) 144 49,912 (23) - - 50,033 - 50,033 Share based payments - - - - 2,357 2,357 - 2,357 Deferred tax on share based payments - - - - (124) (124) - (124) Share options exercised - - 8 3,854 (3,854) 8 - 8 Dividends paid (note 14 ) - - - (9,388) - (9,388) - (9,388) Balance at 30 June 2023 (unaudited) 1,033 116,959 (20) 51,448 (783) 168,637 13,635 182,272 For the year ended 31 December 2023 (audited) Share capital Share premium Investment in own shares Retained earnings Other reserves Equity attributable to owners of the Parent Non-controlling interests Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 (note 6 ) (note 7 ) Balance at 1 January 2023 889 67,047 (5) 46,023 6,782 120,736 13,398 134,134 Profit for the year - - - 26,817 - 26,817 2,109 28,926 Other comprehensive income - - - (172) (4,964) (5,136) (468) (5,604) Total comprehensive income for the year - - - 26,645 (4,964) 21,681 1,641 23,322 Shares issued (note 6) 144 49,912 (23) - - 50,033 - 50,033 Shares purchases (note 6 ) - - (600) - - (600) - (600) Share based payments - - - - 4,661 4,661 - 4,661 Deferred tax on share based payments - - - - (434) (434) - (434) Share options exercised - - 12 5,407 (5,409) 10 - 10 Acquisition of subsidiaries (note 8) - - - - (7,850) (7,850) 7,850 - Dividends paid (note 14 ) - - - (14,982) - (14,982) - (14,982) Balance at 31 December 2023 1,033 116,959 (616) 63,093 (7,214) 173,255 22,889 196,144 Unaudited consolidated cashflow statement for 6 months ended 30 June 2024 30 June 30 June 31 December 2024 2023 2023 Unaudited Unaudited Audited ��'000 ��'000 ��'000 Cash flows from operating activities Profit before tax 10,148 15,596 36,547 Depreciation 4,956 3,817 9,286 Amortisation 5,938 5,067 11,818 (Gain)/loss on disposal of assets 46 (65) 763 Share based payments 2,300 2,357 4,661 Foreign exchange (gains)/losses (1,513) (3,529) (2,467) Share of profit after tax from associate (30) - (24) Finance income (275) (63) (293) Finance costs 2,984 3,018 5,353 Profit from operations before changes in working capital 24,554 26,198 65,644 (Increase)/decrease in inventories (18,734) 2,353 10,524 (Increase)/decrease in trade and other receivables (15,213) (9,138) 9,637 Increase/(decrease) in trade and other payables 10,716 (15,094) (9,429) Cash inflow from operations 1,323 4,319 76,376 Income tax paid (5,290) (6,134) (12,586) Net cash inflow/(outflow) from operating activities (3,967) (1,815) 63,790 Cash flows from investing activities Acquisition of businesses net of cash acquired (2,803) (20,215) (42,359) Deferred consideration paid (12,325) (9,300) (9,300) Investment in associate - - (275) Purchase of intangible assets (4,929) (5,945) (10,364) Purchase of plant and equipment (2,680) (2,442) (5,605) Proceeds on disposal of plant and equipment 189 226 198 Interest received 276 63 293 Net cash outflow from investing activities (22,272) (37,613) (67,412) Cash from financing activities Gross proceeds on issue of shares - 51,250 51,250 Costs associated with shares issued - (1,217) (1,217) Purchase of own shares - - (600) Proceeds on exercise of share options 6 8 10 Acquisition of non-controlling interest (5,036) - (61) Dividends paid (11,467) (9,388) (14,982) Invoice financing inflows 3,368 2,948 (3,009) Proceeds from borrowings 17,328 1,525 39,228 Repayment of loans (571) (16,436) (19,690) Interest paid (4,816) (4,240) (9,360) Interest on leases (443) (419) (651) Capital element of lease payments (2,362) (2,235) (5,235) Net cash inflow from financing activities (3,993) 21,796 35,683 Net decrease in cash and cash equivalents (30,232) (17,632) 32,061 Cash and cash equivalents at beginning of period/year 52,053 20,938 20,938 Effects of exchange rate changes (36) (409) (946) Cash and cash equivalents at end of period/year 21,785 2,897 52,053 Comprising: Cash at bank 31,229 20,095 56,135 Bank overdrafts (9,444) (17,198) (4,082) 21,785 2,897 52,053 Notes to the interim consolidated financial information 1. General information The interim financial information for the period to 30 June 2024 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 UK adopted International Accounting Standards ("IAS"), and should therefore be read in conjunction with the consolidated financial statements for the year ended 31 December 2023. 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 2023. The audited financial statements for the year ended 31 December 2023 were prepared in accordance with UK adopted International Accounting Standards ("IAS") in conformity with the requirements of the Companies Act 2006. 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 2023, 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 IAS 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 IAS 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. Constant currency: This eliminates the impact of foreign exchange movement, which is outside of management's control. Growth at constant currency: This measure shows the year on year change in performance at constant currency. 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, restructuring costs, share based payments and associated employer taxes and amortisation of brand, customer and supplier relationship intangible assets and impairments. Share based payments are adjusted to the provide transparency over the costs. Adjusted EBITDA: This represents operating profit before acquisition related expenses, share based payments and associated employer taxes, depreciation and amortisation. Adjusted net finance costs: These represent the net financing costs of the Group's credit facilities less interest income and excludes non-cash items relating to 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 before tax: This is adjusted operating profit less adjusted finance costs. Adjusted taxation: This represents taxation less the tax impact of the adjusting items included within adjusted profit before tax. Adjusted profit after tax: This is adjusted profit before profit less adjusted taxation. Adjusted EPS: Adjusted EPS is EPS calculated using the basis of adjusted profit after tax instead of profit after tax after deducting adjustments to profit after tax due to non-controlling interests. Adjusted net debt: Net debt is borrowings less cash and cash equivalents. Adjusted net debt excludes leases. Adjusted net debt: Adjusted EBITDA: This is calculated as per the Group's RCF debt facility covenant and includes the benefit of proforma annualised earnings for acquisitions completed in the last 12 months. 3. Earnings per share Basic earnings per share is calculated by dividing the profit after tax attributable to equity shareholders of the Company by the weighted average number of shares outstanding during the year. Shares outstanding is the total shares issued less the own shares held in employee benefit trusts. Diluted earnings per share is calculated by dividing the profit after tax attributable to equity shareholders of the Company by the weighted average number of shares in issue during the 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 2024 June 2023 December 2023 Profit attributable to equity holders of the Parent Company (��'000) 6,620 10,959 26,817 Weighted average number of shares outstanding 101,918,847 90,242,805 95,852,306 Dilutive (potential dilutive) effect of share options 2,688,918 2,974,694 3,233,327 Weighted average number of ordinary shares for the purposes of diluted earnings per share 104,607,765 93,217,499 99,085,633 Basic earnings per share 6.50p 12.14p 27.98p Diluted earnings per share 6.33p 11.76p 27.06p 4. Segmental reporting 30 June 2024 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Revenue 233,123 274,608 23,301 115,102 - 646,134 Gross profit 39,633 45,804 3,673 22,655 - 111,765 Gross profit % 17.0% 16.7% 15.8% 19.7% - 17.3% Adjusted operating profit 8,484 11,228 (468) 5,301 (2,548) 21,997 Cost of acquisitions - - - - (302) (302) Restructuring costs (94) (323) (54) (13) (19) (503) Share based payments (910) (750) (117) (69) (573) (2,419) Employer taxes on share based payments (35) (54) 2 (3) (41) (131) Amortisation of brand, customer and supplier relationships (2,191) (2,026) (126) (1,472) - (5,815) Operating profit 5,254 8,075 (763) 3,744 (3,483) 12,827 Share of profit after tax from associate 30 Net interest expense (2,709) Profit before tax 10,148 Other segmental information June 2024 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Segment assets 284,049 252,758 24,679 107,585 78 669,149 Segment liabilities (222,984) (156,462) (21,536) (76,082) (618) (477,682) Segment net assets 61,065 96,296 3,143 31,503 (540) 191,467 Depreciation 2,181 1,622 334 819 - 4,956 Amortisation 2,214 2,050 132 1,542 - 5,938 Segment country information UK ��'000 Germany ��'000 USA ��'000 Other ��'000 Total ��'000 Non-current assets 94,226 27,554 28,751 61,170 211,701 Deferred tax assets - - - 839 839 Non-current assets excluding deferred tax 94,226 27,554 28,751 60,331 210,862 30 June 2023 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Revenue 234,022 281,284 25,252 69,884 - 610,442 Gross profit 41,450 43,580 4,427 10,117 - 99,574 Gross profit % 17.7% 15.5% 17.5% 14.5% - 16.3% Adjusted operating profit 13,909 12,583 101 2,957 (3,126) 26,424 Cost of acquisitions - - - - (306) (306) Share based payments (947) (733) (158) (48) (499) (2,385) Employer taxes on share based payments (112) (167) (12) (5) (74) (370) Amortisation of brand, customer and supplier relationships (2,142) (1,781) (136) (753) - (4,812) Operating profit 10,708 9,902 (205) 2,151 (4,005) 18,551 Share of profit after tax from associate - Net interest expense (2,955) Profit before tax 15,596 Other segmental information June 2023 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Segment assets 246,154 241,682 23,532 81,069 1,395 593,832 Segment liabilities (187,844) (170,034) (19,600) (32,691) (1,391) (411,560) Segment net assets 58,310 71,648 3,932 48,378 4 182,272 Depreciation 1,501 1,666 275 375 - 3,817 Amortisation 2,248 1,812 144 863 - 5,067 Other segmental information UK ��'000 International ��'000 Total ��'000 Non-current assets 73,239 91,236 164,475 Deferred tax assets 1,806 1,286 3,092 Non-current assets excluding deferred tax 71,433 89,950 161,383 31 December 2023 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Revenue 474,722 589,270 47,643 177,509 - 1,289,144 Gross profit 85,699 92,287 8,025 30,458 - 216,469 Gross profit % 18.1% 15.7% 16.8% 17.2% - 16.8% Adjusted operating profit 27,110 28,122 (245) 9,425 (4,819) 59,593 Costs of acquisitions - - - - (1,489) (1,489) Share based payments (1,905) (1,389) (274) (102) (1,068) (4,738) Employer taxes on share based payments (180) (258) (13) (9) (143) (603) Amortisation of brands, customer and supplier relationships (5,247) (3,614) (267) (2,052) - (11,180) Operating profit 19,778 22,861 (799) 7,262 (7,519) 41,583 Share of profit after tax from associate 24 Interest (5,060) Profit before tax 36,547 December 2023 UK & Ireland ��'000 EMEA ��'000 Asia Pacific ��'000 North America ��'000 Other ��'000 Total ��'000 Segment assets 265,463 276,633 22,471 89,838 60 654,465 Segment liabilities (197,062) (182,015) (18,575) (59,936) (733) (458,321) Segment net assets 68,401 94,618 3,896 29,902 (673) 196,144 Depreciation 3,570 3,640 642 1,434 - 9,286 Amortisation 5,623 3,684 284 2,227 - 11,818 Segment country information UK ��'000 Germany ��'000 USA ��'000 Other ��'000 Total ��'000 Non-current assets 92,509 29,404 20,942 63,977 206,832 Deferred tax assets - 310 135 172 617 Non-current assets excluding deferred tax 92,509 29,094 20,807 63,805 206,215 5. Finance costs June 2024 June 2023 December 2023 ��'000 ��'000 ��'000 Interest on overdraft and invoice discounting 1,061 1,413 3,894 Interest on leases 451 419 651 Interest on loans 3,460 2,756 5,214 Fair value movements on foreign exchange derivatives 87 141 54 Other interest costs 4 2 88 Fair value movements on derivatives for borrowings (192) (763) 1,219 Foreign exchange gains on borrowings for acquisitions (430) (751) (554) Interest, foreign exchange and other finance costs of deferred and contingent considerations (873) 243 (4,150) Interest, foreign exchange and other finance costs of put option liabilities (584) (442) (1,063) 2,984 3,018 5,353 6. Share capital The total allotted share capital of the Parent Company is: Allotted, issued and fully paid June 2024 June 2023 December 2023 Classed as equity: Number ��'000 Number ��'000 Number ��'000 Issued and fully paid ordinary shares of ��0.01 each Opening balance 103,251,326 1,033 88,879,912 889 88,879,912 889 Shares issued 993,800 9 14,371,414 144 14,371,414 144 Closing balance 104,245,126 1,042 103,251,326 1,033 103,251,326 1,033 During the period Midwich Group plc issued 993,800 shares (2023: 2,312,476) into an employee benefit trust. During the prior period the Group also issued 12,058,938 shares for total proceeds less issue cost of ��50,033k. Own shares held in employee benefit trusts June 2024 June 2023 December 2023 Number ��'000 Number ��'000 Number ��'000 Issued and fully paid ordinary shares of ��0.01 each Opening balance 1,770,282 616 501,460 5 501,460 5 Shares issued 993,800 9 2,312,476 23 2,312,476 23 Shares purchased - - - - 149,838 600 Exercise of share options (830,958) (7) (833,092) (8) (1,193,492) (12) Closing balance 1,933,124 618 1,980,844 20 1,770,282 616 A reconciliation of LTIP option movements during the current and comparative period, and the year to 31 December 2023 is as follows: Six months to June 2024 Six months to June 2023 Twelve months to December 2023 Outstanding at 1 January 3,885,946 4,115,317 4,115,317 Granted - - 1,047,711 Lapsed 7,000 (10,200) (177,490) Exercised (746,058) (827,992) (1,099,592) Outstanding at period end 3,146,888 3,277,125 3,885,946 Weighted average remaining contractual life 0.9 years 1.0 years 1.1 years A reconciliation of SIP option movements during the current and comparative period, and the year to 31 December 2023 is as follows: Six months to June 2024 Six months to June 2023 Twelve months to December 2023 Outstanding at 1 January 276,300 280,800 280,800 Granted 186,600 111,300 111,300 Lapsed (11,400) (3,300) (21,900) Exercised (84,900) (5,100) (93,900) Outstanding at period end 366,600 383,700 276,300 Weighted average remaining contractual life 2.0 years 1.6 years 1.4 years 7. Other reserves Movement in other reserves for the year ended 30 June 2024 (Unaudited) Share based payment reserve Translation reserve Put option reserve Capital redemption reserve Other reserve Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Balance at 1 January 2024 10,843 392 (18,649) 50 150 (7,214) Other comprehensive income - (2,046) - - - (2,046) Total comprehensive income for the period - (2,046) - - - (2,046) Share based payments 2,300 - - - - 2,300 Deferred tax on share based payments (425) - - - - (425) Share options exercised (3,679) - - - - (3,679) Acquisition of non-controlling interest (note 9 ) - - 3,866 - - 3,866 Balance at 30 June 2024 9,039 (1,654) (14,783) 50 150 (7,198) Movement in other reserves for the year ended 30 June 2023 (Unaudited) Share based payment reserve Translation reserve Put option reserve Capital redemption reserve Other reserve Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Balance at 1 January 2023 12,025 5,356 (10,799) 50 150 6,782 Other comprehensive income - (5,944) - - - (5,944) Total comprehensive income for the period - (5,944) - - - (5,944) Share based payments 2,357 - - - - 2,357 Deferred tax on share based payments (124) - - - - (124) Share options exercised (3,854) - - - - (3,854) Balance at 30 June 2023 10,404 (588) (10,799) 50 150 (783) Movement in other reserves for the year ended 31 December 2023 (Audited) Share based payment reserve Translation reserve Put option reserve Capital redemption reserve Other reserve Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Balance at 1 January 2023 12,025 5,356 (10,799) 50 150 6,782 Other comprehensive income - (4,964) - - - (4,964) Total comprehensive income for the year - (4,964) - - - (4,964) Share based payments 4,661 - - - - 4,661 Deferred tax on share based payments (434) - - - - (434) Share options exercised (5,409) - - - - (5,409) Acquisition of subsidiary (note 8) - - (7,850) - - (7,850) Balance at 31 December 2023 10,843 392 (18,649) 50 150 (7,214) 8. Business combinations Acquisitions were completed by the Group during the current and comparative periods to increase scale, broaden its addressable market and widen the product offering. Subsidiaries acquired Acquisition Principal activity Date of acquisition Proportion acquired (%) Fair value of consideration ��'000 The Farm Distribution of audio visual products to trade customers 19 January 2024 100% 7,613 prodyTel Distribution of professional audio products to trade customers 10 November 2023 51% 8,170 Pulse Cinemas Distribution of specialist home cinema products to trade customers 31 July 2023 100% 1,715 Video Digital Distribution of broadcast products to trade customers 21 July 2023 100% 1,364 HHB Distribution of professional audio products to trade customers 12 July 2023 100% 21,078 76 Media Distribution of broadcast products to trade customers 5 July 2023 100% 1,123 Toolfarm Distribution of video editing software to trade customers 5 July 2023 100% 5,057 SF Marketing Distribution of audio visual products to trade customers 31 May 2023 100% 21,369 2024 acquisitions Fair value of consideration transferred 2024 The Farm ��'000 Cash 2,948 Deferred consideration 292 Contingent consideration 4,373 Total 7,613 Acquisition costs of ��302k in relation to the acquisitions of The Farm and other acquisitions not completed by the period end were expensed to the income statement during the period ended 30 June 2024. Fair value of acquisitions 2024 The Farm ��'000 Non-current assets Goodwill 3,512 Intangible assets - brands 352 Intangible assets - customer relationships 1,135 Intangible assets - supplier relationships 3,895 Right of use assets 236 Property, plant and equipment 3 9,133 Current assets Trade and other receivables 403 Cash and cash equivalents 145 548 Current liabilities Trade and other payables (218) Borrowings and financial liabilities (32) (250) Non-current liabilities Borrowings and financial liabilities (205) Deferred tax (1,613) (1,818) Non-controlling interests - Fair value of net assets acquired attributable to equity shareholders of the Parent Company 7,613 Goodwill acquired in 2024 relates to the workforce, synergies and sales know how. Goodwill arising on the The Farm acquisition has been allocated to the North America segment. Net cash outflow on acquisition of subsidiaries 2024 The Farm ��'000 Consideration paid in cash 2,948 Less: cash and cash equivalent balances acquired (145) Net cash outflow 2,803 Plus: borrowings acquired 237 Net debt outflow 3,040 Fair value of considerations 2023 SF Marketing HHB prodyTel Others ��'000 ��'000 ��'000 ��'000 Cash 20,215 13,087 7,406 7,706 Deferred consideration 1,154 - - 689 Contingent consideration - 7,991 764 864 Total 21,369 21,078 8,170 9,259 Costs of ��1,489k were expensed to the income statement during the year in relation to acquisitions. Fair value of acquisitions 2023 SF Marketing HHB prodyTel Others ��'000 ��'000 ��'000 ��'000 Non-current assets Goodwill 3,792 4,259 4,744 3,391 Intangible assets - patents and software 284 - - 2 Intangible assets - brands 1,702 702 487 680 Intangible assets - customer relationships 2,485 5,082 3,751 1,722 Intangible assets - supplier relationships 6,924 7,095 9,052 4,493 Right of use assets 972 140 297 55 Property, plant and equipment 686 36 162 239 16,845 17,314 18,493 10,582 Current assets Inventories 10,792 3,836 959 702 Trade and other receivables 9,217 2,674 1,784 1,176 Derivative financial instruments 21 - - - Cash and cash equivalents 118 3,794 634 1,510 20,148 10,304 3,377 3,388 Current liabilities Trade and other payables (9,690) (3,092) (1,093) (2,672) Borrowings and financial liabilities (700) - - (3) Current tax - - (129) (146) (10,390) (3,092) (1,222) (2,821) Non-current liabilities Borrowings and financial liabilities (2,781) (501) (357) (117) Deferred tax (2,453) (2,947) (4,271) (1,773) (5,234) (3,448) (4,628) (1,890) Non-controlling interests - - (7,850) - Fair value of net assets acquired attributable to equity shareholders of the Parent Company 21,369 21,078 8,170 9,259 Goodwill acquired in 2023 relates to the workforce, synergies, sales and purchasing knowledge and experience. Goodwill arising on the SF Marketing, Toolfarm and 76 Media acquisitions has been allocated to the North America segment. Goodwill arising on the Video Digital and prodyTel acquisitions has been allocated to the Europe Middle East and Africa segment. Goodwill arising on the HHB and Pulse Cinemas acquisitions has been allocated to the United Kingdom and Republic of Ireland segment. Net cash outflows of acquisitions 2023 SF Marketing HHB prodyTel Others ��'000 ��'000 ��'000 ��'000 Consideration paid in cash 20,215 13,087 7,406 7,706 Less: cash and cash equivalent balances acquired (118) (3,794) (634) (1,509) Net cash outflow 20,097 9,293 6,772 6,197 Plus: borrowings acquired 3,481 501 357 120 Net debt outflow 23,578 9,794 7,129 6,317 9. Acquisition of non-controlling interest During the period to 30 June 2024 the Group exercised a call option to acquire the remaining 20% non-controlling interest in Midwich International Limited, which had a value of ��7,572k. The present value of the option exercised was ��9,627k, of which ��5,036k was paid during the period. The remaining liability is due to be paid in 2025. ��3,866k of the put option reserve was transferred to retained earnings when this call option was exercised and the put option was extinguished. 10. Currency impact The Group reports in Pounds Sterling (GBP) but has significant revenues and costs as well as assets and liabilities that are denominated in other currencies including Euros (EUR), Dollars (USD) Canadian Dollars (CAD) and Australian Dollars (AUD). The table below sets out the exchange rates in the current and prior periods. Six months to 30 June 2024 Six months to 30 June 2023 At 30 June 2024 At 30 June 2023 At 31 December 2023 Average Average EUR/GBP 1.170 1.144 1.180 1.165 1.154 AUD/GBP 1.915 1.841 1.893 1.910 1.868 NZD/GBP 2.076 1.987 2.074 2.075 2.013 USD/GBP 1.267 1.236 1.264 1.271 1.275 CHF/GBP 1.121 1.128 1.136 1.137 1.073 NOK/GBP 13.437 12.925 13.461 13.619 12.947 AED/GBP 4.650 4.540 4.641 4.667 4.678 QAR/GBP 4.608 4.500 4.600 4.626 4.637 SAR/GBP 4.750 4.583 4.743 4.769 4.769 CAD/GBP 1.713 1.648 1.730 1.682 1.682 The following tables illustrate the effect of changes in foreign exchange rates in the EUR, AUD, NZD, USD, CHF, NOK, AED, QAR, SAR and CAD relative to the GBP on the profit before tax and net assets. The amounts are calculated retrospectively by applying the current period exchange rates to the prior period results so that the current period exchange rates are applied consistently across both periods. Changing the comparative result illustrates the effect of changes in foreign exchange rates relative to the current period result. Applying the current period exchange rates to the results of the prior period has the following effect on the translation of profit before tax and net assets of foreign entities: Profit before tax Revised 2023 2023 Impact Impact ��'000 ��'000 ��'000 % EUR 15,387 15,596 (209) (1.3%) AUD 15,602 15,596 6 -% NZD 15,597 15,596 1 -% USD 15,569 15,596 (27) (0.2%) CHF 15,593 15,596 (3) -% NOK 15,590 15,596 (6) -% AED 15,514 15,596 (82) (0.5%) QAR 15,585 15,596 (11) (0.1%) SAR 15,602 15,596 6 -% CAD 15,587 15,596 (9) (0.1%) All currencies 15,262 15,596 (334) (2.1%) Net assets Revised 2023 2023 Impact Impact ��'000 ��'000 ��'000 % EUR 181,474 182,272 (798) (0.4%) AUD 182,304 182,272 32 -% NZD 182,274 182,272 2 -% USD 182,355 182,272 83 -% CHF 182,274 182,272 2 -% NOK 182,300 182,272 28 -% AED 182,371 182,272 99 0.1% QAR 182,290 182,272 18 -% SAR 182,274 182,272 2 -% CAD 181,684 182,272 (588) (0.3%) All currencies 181,152 182,272 (1,120) (0.6%) 11. Events after the reporting date On 31 July 2024, the Group acquired the remaining 70% of the share capital of Dry Hire Lighting Limited, a Company based in High Wycombe, United Kingdom. The business specialises in the rental of lighting products to the trade market. The consideration is comprised of an initial payment of ��3.0m, a deferred consideration of ��0.5m due later in 2024, and a contingent consideration of up to ��0.8m payable in 2026. 12. 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. 13. Adjustments to reported results Six months ended 30 June 2024 30 June 2023 ��000 ��000 Operating profit 12,827 18,551 Cost of acquisitions 302 306 Restructuring costs 503 - Share based payments 2,419 2,385 Employer taxes on share based payments 131 370 Amortisation of brands, customer and supplier relationships 5,815 4,812 Adjusted operating profit 21,997 26,424 Depreciation 4,956 3,817 Amortisation of patents and software 123 255 Adjusted EBITDA 27,076 30,496 (Increase)/decrease in inventories (18,734) 2,353 (Increase) in trade and other receivables (15,213) (9,138) Increase/(decrease) in adjusted1 trade and other payables 10,466 (15,492) Adjusted cash flow from operations 3,595 8,219 Adjusted EBITDA cash flow conversion 13.3% 27.0% Profit before tax 10,148 15,596 Cost of acquisitions 302 306 Restructuring costs 503 - Share based payments 2,419 2,385 Employer taxes on share based payments 131 370 Amortisation of brands, customer and supplier relationships 5,815 4,812 Derivative fair value and foreign exchange gains and losses on acquisition borrowings (622) (1,514) Finance costs - deferred and contingent considerations (873) 243 Finance costs - put option liabilities over non-controlling interests (584) (443) Adjusted profit before tax 17,239 21,755 Profit after tax 7,390 11,559 Cost of acquisitions 302 306 Restructuring costs 503 - Share based payments 2,419 2,385 Employer taxes on share based payments 131 370 Amortisation of brands, customer and supplier relationships 5,815 4,812 Derivative fair value and foreign exchange gains and losses on acquisition borrowings (622) (1,514) Finance costs - deferred and contingent considerations (873) 243 Finance costs - put option liabilities over non-controlling interests (584) (443) Tax impact (1,917) (1,636) Adjusted profit after tax 12,564 16,082 Profit after tax 7,390 11,559 Non-controlling interest (NCI) (770) (600) Profit after tax attributable to equity holders of the Parent Company 6,620 10,959 Adjusted profit after tax 12,564 16,082 Non-controlling interest (770) (600) Share based payments attributable to NCI (9) (7) Employer taxes on share based payments attributable to NCI - - Amortisation of brands, customer and supplier relationships attributable to NCI (472) (243) Tax impact attributable to NCI 119 45 Adjusted profit after tax attributable to equity holders of the Parent Company 11,432 15,277 Weighted average number of ordinary shares 101,918,847 90,242,805 Diluted weighted average number of ordinary shares 104,607,765 93,217,499 Adjusted basic earnings per share 11.22p 16.93p Adjusted diluted earnings per share 10.93p 16.39p 1 Excludes the movement in cash settled share based payments 14. Dividends During the period the Group declared a final dividend of 11.00 pence per share. (30 June 2023: 10.50 pence per share). After the period end the Group declared an interim dividend for the six months to 30 June 2024 of 5.50 pence (30 June 2023: 5.50 pence per share) that 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. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. END IR SSFFMEELSEDU