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£573m windfall for Norfolk business as director paid £3m in dividends

PUBLISHED: 11:49 12 March 2019 | UPDATED: 11:49 12 March 2019

Stephen Fenby, Managing Director of Midwich in Diss.

Stephen Fenby, Managing Director of Midwich in Diss.

Archant Norfolk Photographic © 2016

An East Anglian audio visual distributor has reported a record set of profits, allowing it to pay out £3m in dividends to its managing director.

Midwich is based in Diss, NorfolkMidwich is based in Diss, Norfolk

The Diss-based Midwich Group has reported revenue of £573.7m in the year to December 31, 2018.

This is an increase of more than 20% on last year’s figure of £471.9m.

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Across the board the results look strong, with operating profit at £24.7m up from £20.8m last year.

The group has seen growth across every geographical location, with the UK and Ireland leading the way, following Europe and Asia Pacific.

Revenue brought in by UK operations totalled £315.8m, an improvement of 11.3% on last year.

The report says a boost was given to the region thanks to the acquisition of Sound Technology in December of 2017.

Despite bringing in less revenue at £222m, the continental Europe division saw a huge leap in revenue of 42.2%.

The report reads: “All product categories grew strongly in continental Europe, with technical video, audio and lighting showing the greatest improvement. The gross margins in each of these categories are above average for the division.”

The Asia Pacific region saw growth in sales from £32.1m to £35.9m.

All of the above have provided a healthy return for shareholders, with earnings per share up 19.3% to 27.3p.

Dividends paid out total £11.2m, of which £3m was paid to managing director Stephen Fenby – an increase on £2.5m last year – as well as £312,000 paid out to two other key management staff.

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The group is standing itself in good stead for the future, having entirely purchased three companies in the past two years, as well as buying majority shares in three others.

Those bought in full are New Media, purchased in August 2018, Perfect Sound in September 2018, and Sound Technology in 2017.

A 70% share was purchased in van Domburg in 2017, as well as an 88.5% stake in Earpro in March 2017, and a 65% share of Blonde Robot in December 2018.

The 2018 acquisitions totalled £3.3m for New Media, £682,000 for Perfect Sound, and £1.6m for Blonde Robot.

Whether the group will see returns on these investments are one of the company’s going concerns.

The report reads: “Acquisitions give rise to inherent execution and integration risk. The process of integration may produce unforeseen operating difficulties and expenditures, and may absorb significant attention of the Group’s management.”

However, it adds: “The group only enters into acquisitions after a thorough due diligence exercise which will involve a detailed review of operational resource, financial trends and forecasts.”

Director’s reaction: “The world is our oyster”

Managing director Stephen Fenby has seen the company blossom, having been one of the accountants who helped orchestrate Midwich’s management buyout in 2001.

In 2004 he joined the company as finance director, and took over as managing director in 2010.

He said: “The world is our oyster. I think there are a lot of opportunities out there for us, and we just need to make the most of them. There’s more opportunity for us in the European market, as for a large company we currently have relatively low market share.”

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He continued: “We make sure we look after our people. We don’t have expensive factories or patents, we invest in our people. Whether that’s through a share scheme, or making sure they feel valued and can grow, we couldn’t be the success we are without the expertise and skills of our staff.”

He added: “We want to grow year on year, but I don’t have a magic answer to the secret of our success.”

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