Midwich Group

Website: Midwich Group
Index: AIM
EPIC: MIDW
Supersector: Industrial Goods and Services
Sector: Support Services
Subsector: Business Support Services
Market Cap: £151.56M
Payout Frequency: Semi-Annual

Midwich Group Dividend Analysis and Summary

Declared dividend and key dates

Proposed final dividend: 3.5p per share
Interim dividend already paid: 1.75p per share
Total dividend for FY2025: 5.25p per share (FY2024: 13.0p; reset lower in line with new policy)
Ex-dividend date: 21/05/2026 (derived from record date)
Record date: 22/05/2026
Payment date: 03/07/2026
DRIP election deadline: 12/06/2026
Coverage: total FY2025 dividend covered ~4.0x by adjusted earnings (Adjusted EPS 22.37p)
Dividend policy: recalibrated to c.25% payout of adjusted EPS; Board still targets a progressive dividend over the medium term

Dividend sustainability and growth outlook

The reset to a ~25% payout materially increases headroom: 4x cover and strong adjusted cash conversion (123%) support the proposed dividend’s affordability.
Balance sheet metrics are reasonable for a distributor: adjusted net debt/EBITDA at 2.17x with covenant headroom (limit 3x); interest cover at 4.7x.
Statutory loss in 2025 was driven by large exceptional items (notably a £27m ERP impairment), while underlying profitability (adjusted PBT £30.5m) remains solid.
Management guides to a return to profit growth in 2026; if delivered, the new lower base could grow progressively, consistent with the stated policy.
Near-term dividend growth likely modest: capital prioritisation toward digital/AI tools, potential M&A resumption, and still-subdued markets suggest disciplined, incremental increases rather than a swift rebound to prior payout levels.

Financial support and capital allocation

Cash generation: working capital actions lifted cash conversion to 123%, underpinning distributions despite softer earnings.
Leverage and liquidity: adjusted net debt fell to £126.0m; ample facility headroom (RCF to 2028; total facilities >£300m).
Capex/opex pivot: ERP rollout paused and impaired, redirecting capital to lower-risk, faster-payback digital and AI initiatives—supportive for future free cash flow.
Capital returns framework: with payout now ~25% of adjusted EPS, Board will consider incremental returns (dividends or buybacks) if excess capital emerges.

Structural and policy changes with dividend implications

Dividend policy reset to c.25% payout of adjusted EPS, with a medium-term progressive intent.
Operational reshaping: exit of a Swiss unit and a small North American business; regional reorganisation planned for 2026 (ANZ into UK&I; SE Asia into EMEA) aiming at efficiency and margin support.
ERP strategy change: rollout paused with impairment; shift to bespoke digital/AI tools may reduce future capex and execution risk.
Management changes: new CFO (March 2026) could influence execution pace on capital allocation and M&A.
M&A outlook: programme likely to resume in 2026—potentially accretive longer term but could increase leverage and compete with near-term dividend growth.

Risks and flags to dividend stability

Market softness persists: Germany weakness, NA vendor loss, and muted demand in mainstream AV may cap earnings recovery in 2026.
Higher finance costs: net interest rose to £13.1m (adjusted), limiting headroom if trading underperforms.
Leverage sensitivity: at 2.17x, still within covenants but exposed if EBITDA dips or if M&A accelerates.
Exceptional items gap: large statutory loss versus adjusted profitability may constrain investor appetite for a rapid dividend rebuild.
FX and regional mix: currency headwinds (-0.6% to revenue/adj. op profit) and regional profit volatility could affect cash generation.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
22/05/2025	04/07/2025	Final	7.50p	GBX
11/09/2025	17/10/2025	Interim	1.75p	GBX

Total (Annual Dividends Per Share): 9.25p

Dividend Yield = Annual Dividends Per Share (9.25p) ÷ Share Price (145.8p) = 6.34%

Ex Dividend Date	Payment Date	Type	Amount	Currency
21/05/2026	03/07/2026	Final	3.5000p	GBX
11/09/2025	17/10/2025	Interim	1.75p	GBX
22/05/2025	04/07/2025	Final	7.50p	GBX
12/09/2024	18/10/2024	Interim	5.50p	GBX
09/05/2024	14/06/2024	Final	11.00p	GBX
21/09/2023	27/10/2023	Interim	5.50p	GBX
04/05/2023	16/06/2023	Final	10.50p	GBX
15/09/2022	26/10/2022	Interim	4.50p	GBX
05/05/2022	17/06/2022	Final	7.80p	GBX
16/09/2021	25/10/2021	Interim	3.30p	GBX
20/05/2021	02/07/2021	Special	3.00p	GBX
14/05/2020	19/06/2020	Final	11.05p	GBX
19/09/2019	25/10/2019	Interim	4.85p	GBX
16/05/2019	21/06/2019	Final	10.60p	GBX
20/09/2018	26/10/2018	Interim	4.60p	GBX
24/05/2018	22/06/2018	Final	9.65p	GBX
21/09/2017	27/10/2017	Interim	4.17p	GBX
25/05/2017	23/06/2017	Final	7.09p	GBX
22/09/2016	21/10/2016	Interim	1.53p	GBX

Year	Interim	Final	Special	Currency	Total	Change
2024	5.500	11.000		GBX	16.500	3.120
2023	5.500	10.500		GBX	16.000	30.080
2022	4.500	7.800		GBX	12.300	95.230
2021	3.300		3.000	GBX	6.300	-42.980
2020		11.050		GBX	11.050	-28.470
2019	4.850	10.600		GBX	15.450	8.420
2018	4.600	9.650		GBX	14.250	26.550
2017	4.170	7.090		GBX	11.260	635.940
2016	1.530			GBX	1.530

Number of Shares:

Payment	Paid	Amount
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