Midwich Group Regulatory News (MIDW)

29 March 2017

Midwich Group plc

("Midwich" or "the Group")

Acquisition of Earpro S.A.

Midwich, a specialist audio visual and document solutions distributor to the trade market with operations in the UK and Ireland, France, Germany and Australasia, is pleased to announce it has entered into a binding agreement to acquire a majority stake in Earpro S.A. ("Earpro" or the "Company"), a value-added distributor of audio, video and lighting solutions in Spain and Portugal. The acquisition values the equity of Earpro at approximately €11.0m, including a net cash balance of approximately €3.2m.

Earpro is a specialist audio and visual distributor focused on three technology categories - audio, lighting and video. The Company has a notable heritage in the solution driven professional audio market where the business operates with mid to high end, specialist brands. The Company distributes key audio vendors including Shure and a range of brands under the Harman umbrella.

The acquisition of Earpro marks Midwich's entry into the Spanish and Portuguese markets, territories the Group has identified as important in its international expansion. The acquisition is further delivery of the Group's strategy, stated at IPO to grow operations through a combination of organic development and selective acquisitions.

Earpro is headquartered in Barcelona and has a team of 45. The Company generated unaudited revenues of around €21 million in 2016 which represented growth of around 7% on 2015.

The acquisition has been funded from the Group's existing cash resources. The structure of consideration is in line with the Group's previous approaches, with 88% of Earpro being acquired up front. Midwich has options to acquire the remaining 12%, over the next three years on a pre-determined methodology linked primarily to earnings growth and subject to a €2.5 million cap. Consideration for the initial 88% of the Company is split €5.8 million on completion and €3.9 million after 12 months with the business expected to have net cash balances at completion of at least €3.2 million. The initial stake being acquired is from non-employee private shareholders in the business with the Managing Director, who will remain in his position, owning the retained stake.

Stephen Fenby, Managing Director of Midwich commented:

"The acquisition of Earpro marks Midwich's entry into the Spanish and Portuguese markets, enabling the Group to trade with a broad customer base across a variety of customer segments. The addition of this territory to the Group's portfolio increases Midwich's geographical coverage, with the Group operating in territories which account for approximately 60% of the European audio visual market. Earpro's expertise and reputation in the professional audio market represent a strong complementary fit to the Group's activities. I look forward to welcoming the Earpro team into the Midwich Group and working with them to further develop this exciting market."

Enquiries:

Notes to Editors:

Midwich is a specialist AV and document solutions distributor to the trade market, with operations in the UK and Ireland, France, Germany and Australasia. The Group's long-standing relationships with over 300 vendors, including blue-chip organisations such as Samsung, LG, Epson and NEC, supports a comprehensive product portfolio across major audio visual categories such as large format displays, projectors, digital signage and printers. 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 approximately 10,000 customers, most of which are professional AV integrators and IT resellers serving sectors such as corporate, education, retail, residential and hospitality. Although the Group does not sell directly to end users, it believes that the majority of its products are used by commercial and educational establishments rather than consumers.

Initially a UK only distributor, the Group now has over 500 employees across the UK, Germany, France, Ireland, Australia and New Zealand, and in the year to 31 December 2016, 33 per cent of the Group's revenues were derived from outside the UK and Ireland. 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