TIDMACRL
RNS Number : 9366B
Accrol Group Holdings PLC
26 September 2018
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
26 September 2018
Accrol Group Holdings plc
("Accrol Group", the "Company" or, together with its
subsidiaries, the "Group")
AIM: ACRL
Unaudited Final Results for the year ended 30 April 2018 and
Banking Update
Accrol Group, the UK's leading independent tissue converter,
announces its Unaudited Final Results for the year ended 30 April
2018 ("FY18"). The Audited Final Results will be available
shortly.
It has been a difficult year for the Group and its stakeholders
in which its performance was significantly impacted by four major
issues, namely an escalation in internal costs, input cost
increases, an inability to agree timely price increases with
customers and adverse foreign exchange rate movements.
Unaudited FY18 Results
Unaudited Restated FY17 Change
FY18 (3)
Revenue GBP139.7m GBP134.2m GBP5.5m
----------- -------------- -----------
Adjusted EBITDA (GBP5.8m) GBP15.2m (GBP21.0m)
(1)
----------- -------------- -----------
Adjusted (Loss)/profit (GBP11.2m) GBP10.1m (GBP21.3m)
before tax (2)
----------- -------------- -----------
(Loss)/profit before (GBP24.1m) GBP8.6m (GBP32.7m)
tax
----------- -------------- -----------
Net debt GBP33.8m GBP19.2m GBP14.6m
----------- -------------- -----------
Note 1: A number of post year adjustments have negatively
affected Adjusted EBITDA and these include a loss of GBP0.24
million due to PoundWorld going into administration in June 2018
and a further loss of GBP0.14 million through a change in our
accounting policy on goods sold below cost.
Note 2: Exceptional costs include GBP5.7 million of cash items
incurred during the year including GBP3.7 million relating to FX
hedging losses. The remaining GBP7.2 million non-cash items include
GBP3.2m provision for exiting onerous contracts and GBP2.5 million
impairment of fixed assets.
Note 3: Restated to correct prior period accounting errors
resulting in a reduction to Adjusted EBITDA and Profit before tax
of GBP0.8 million.
Basis of preparation - The Group's accounts have been prepared
on a going concern basis, however the audit opinion is expected to
contain an emphasis of matter qualification in respect of going
concern. This is due to the particular sensitivity of the forecast
to the sterling/USD rate, parent reel pricing and the delivery of
the final elements of the operational and commercial turnaround.
Further details are presented in Note 2 to the accounts below.
Notwithstanding the above, the directors confirm that, after due
consideration, they have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Banking Update
Further to the announcement of 15 May 2018 titled "Proposed
Placing to raise GBP8 million" and specifically the sections on the
Company's banking facilities and financial covenants, the Company
is pleased to announce that it has entered into an agreement with
HSBC plc to amend the financial covenants contained in its
facilities to bring them in line with the Company's latest
financial forecasts, incorporating a reasonable view of financial
sensitivity headroom. These covenants comprise standard liquidity
(minimum cash balance) and asset coverage covenants together with a
covenant based on minimum EBITDA levels (the "EBITDA Covenant"),
the EBITDA Covenant being the one that was amended.
Outlook
The macro environment continues to be challenging: USD strength
allied with other currencies' volatility; continued high paper
costs; and upward pressure on labour and other operating costs
create significant headwinds. The decline of Sterling against the
USD since the beginning of the year has an annualised negative
impact on costs of cGBP5m alone. However, the business has a
management team who have faced such commercial challenges before;
the support of a growing customer base, which is well positioned to
adapt to a market without brands; and a plan which is on track to
manage costs back to industry-leading levels.
Accrol's trading performance remains sensitive to external
macro-economic variables, including the Sterling/USD exchange rate
and parent reel pricing, which can have a significant effect,
positively or negatively, on the Company's financial performance.
However, the new Board and management team is committed to building
a business which is capable of riding such fluctuations to deliver
appropriate levels of return to shareholders.
Despite the current headwinds faced by the business, the Group's
performance in the first half of FY19 is as the Board expected and
the directors believe that Accrol is on track to achieve market
expectations for FY19. Net debt as at 31 August 2018 was
GBP25m.
Post year end Placing and Open Offer
Post the year end, the Company raised a further GBP7.5 million
(net of expenses) by way of a Placing and a further GBP1.8 million
(net of expenses) by way of Open Offer in June 2018. The Board
thanks its shareholders and bank for their patience and
support.
Progress of the turnaround plan
A comprehensive turnaround plan, focused on improving
operational efficiency, winning new business, optimising pricing
and strengthening the core management team, has been implemented.
Under the direction of the new executive management team, this
turnaround is gathering pace and is now well advanced in all key
areas. A detailed update on the Group's progress since the year end
is provided below.
A great deal has been accomplished: customer confidence has been
restored; the operating model has been re-engineered to minimise
waste and optimise efficiency; and substantial cost has been
extracted. The balance sheet is being repaired, through a focus on
tight working capital management, controlled investment and
restored cash profitability. The Board remains mindful, however,
that the operational changes, implemented in H1, must be
consolidated in H2 before the business can be restored to
controlled growth and appropriate levels of profitability.
Post year end highlights:
Simplification and strengthening the core business
progressing
-- Banking covenants reset to bring them in line with the Company's
latest financial forecasts incorporating a reasonable view
of financial sensitivity headroom
-- Board and senior management team strengthened
-- Exit from Skelmersdale facility agreed, bringing associated
savings of GBP5 million annually from October 2018
-- Away From Home ("AFH") business exited in August 2018
-- Product range, families of products and tissues types simplified
further to drive operational and financial efficiencies
-- Headcount reduced 43% at the end of August 2018 from a high
point in July 2017
-- New IT system being implemented, providing an end to end
solution by Q4 FY19
-- Tissue supply sources expanded - more options and increased
access to latest global paper production
-- Improved S&OP process implemented to improve flow of raw
material stocks into the business
Recovery and growth being delivered
-- Long-term pricing arrangements re-negotiated
-- Significant volume growth secured from two of the top four
grocery retailers in the UK
-- Additional sales to existing leading discount retailers
-- Market leading product innovation - first UK tissue converter
to offer plastic free packaging
Dan Wright, Executive Chairman of Accrol Group, said:
"FY18 has been incredibly tough for the Group, its shareholders
and other stakeholders. However, the retrospective figures we are
announcing today do not reflect the Group's current position. The
new Board and management team is creating a business which is
stronger: streamlined, commercial and innovative. Whilst there is
still more to do over the next six months, a great deal has been
achieved post year end and I look forward to reporting on the
Group's financial progress at the half year end."
Gareth Jenkins, CEO of Accrol Group, added:
"We have ambitious plans to continue to grow profitably, which
will be the result of delivering great value, quality products to
the consumer. The business is in a strong position due to the
breadth of retailers we supply and the changing dynamic of buying
habits away from the previously dominant, big brands. The
differentiated position with customers, built on our investment and
innovation-led expertise, and the changing market dynamics
reinforces our confidence in the long-term prospects for the
Group."
For further information, please contact:
Accrol Group Holdings plc
Dan Wright, Executive Chairman Tel: +44 (0) 1254 278 844
Gareth Jenkins, Chief Executive Officer
Steve Townsley, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser
& Broker)
Dan Bate / Andrew Jones Tel: +44 (0) 161 831 1512
Dominic King / John Goold Tel: +44 (0) 203 829 5000
Belvedere Communications Limited
Cat Valentine (cvalentine@belvederepr.com) Tel: +44 (0) 7715 769 078
Kim Van Beeck (kvbeeck@belvederepr.com)
Notes to Editors
Accrol Group Holdings plc, based in Lancashire, is a leading
tissue converter and supplier of toilet rolls, kitchen rolls and
facial tissues, as well as other tissue products, to major
discounters and grocery retailers throughout the UK.
Accrol operates from three sites:
-- A manufacturing, storage and distribution facility in Blackburn;
-- A facial tissue plant, also in Blackburn; and
-- A manufacturing, storage and distribution facility in Leyland.
CHAIRMAN'S STATEMENT
This is my first statement as Executive Chairman of Accrol
Group, a role to which I acceded in February 2018.
The Group's issues during FY18 have been well documented since
the profit warning we announced in October 2017, shortly after the
appointment of our new CEO, Gareth Jenkins. In summary, Accrol's
financial performance was impacted significantly by an escalation
in internal costs, rapidly increasing input costs and adverse
foreign exchange rate movements, exacerbated by the Company's
hedging policy at the time. This resulted in an unaudited loss
before tax for FY18 of GBP24.1 million.
Unaudited Results
Unaudited Restated FY17 Change
FY18 (3)
Revenue GBP139.7m GBP134.2m GBP5.5m
-------------- -------------- -----------
Adjusted EBITDA (GBP5.8m)(1) GBP15.2m (GBP21.0m)
-------------- -------------- -----------
Adjusted (Loss)/profit (GBP11.2m)(2) GBP10.1m (GBP21.3m)
before tax
-------------- -------------- -----------
(Loss)/profit before (GBP24.1m) GBP8.6m (GBP32.7m)
tax
-------------- -------------- -----------
Net debt GBP33.8m GBP19.2m GBP14.6m
-------------- -------------- -----------
Note 1: A number of post year adjustments have negatively
affected Adjusted EBITDA and these include a loss of GBP0.24
million due to PoundWorld going into administration in June 2018
and a further loss of GBP0.14 million through a change in our
accounting policy on goods sold below cost.
Note 2: Exceptional costs include GBP5.7 million of cash items
incurred during the year including GBP3.7 million relating to FX
hedging losses. The remaining GBP7.2 million non-cash items include
GBP3.2m provision for exiting onerous contracts and GBP2.5 million
impairment of fixed assets.
Note 3: Restated to correct prior period accounting errors
resulting in a reduction to Adjusted EBITDA and Profit before tax
of GBP0.8 million.
Post year end Placing and Open Offer
Post the full year end, the Company raised a further GBP7.5
million (net of expenses) by way of a Placing and a further GBP1.8
million (net of expenses) by way of Open Offer in June 2018 to:
-- Continue the implementation of the restructuring programme
to improve operational efficiencies and support commercial
growth; and
-- Support the future working capital requirements of the Group.
Progress of the turnaround plan
The Board and senior management team of Accrol has changed
fundamentally in the last 12 months. I am proud to lead this new,
invigorated and appropriately experienced team, which is effecting
a comprehensive turnaround plan, focused on improving operational
efficiency, winning new business and pricing.
The foundations of the business are solid, notably Accrol's
exposure to the thriving discounter segment and, with the consumer
shift away from brands, the Group's luxury private label
capabilities. We are intent on returning Accrol to the core
capabilities on which its previous growth and success were built -
commitment to customer service, emphasis on lowest-cost production
and investment in product innovation, to deliver a stronger, more
resilient and profitable business.
A great deal has been accomplished: customer confidence has been
restored; the operating model has been re-engineered to minimise
waste and optimise efficiency; and substantial cost has been
extracted. The balance sheet is being repaired, through a focus on
tight working capital management, controlled investment and
restored cash profitability. The Board remains mindful, however,
that the operational changes, implemented in H1, must be
consolidated in H2 before the business can be restored to
controlled growth and appropriate levels of profitability.
The turnaround is on track, despite foreign exchange headwinds,
and it is our firm belief that a successful outcome for
shareholders and all the Group's stakeholders is achievable in the
mid-term.
This recovery and progress would not have been possible without
the support of our shareholders, who funded two substantial
Placings and an Open Offer, and our bank, HSBC, who has remained
supportive throughout. This funding has enabled us to accelerate
the turnaround of the business and maintain the confidence of other
stakeholders. As recently announced, a revised banking structure
with appropriate covenant levels has now been put in place with the
support of HSBC.
I also thank my colleagues throughout the organisation at Accrol
for their resilience and unremitting hard work through turbulent
times.
Looking ahead
As we move into H2 FY19, attention will be focused on our
customers, helping them add value and ensuring all parties can grow
profitably, and completing the implementation of our cost reduction
turnaround plan.
Primary areas of focus over the next six months will be:
-- The agreed exit of all external warehousing and implementation
of new supply chain agreements;
-- The completion of the product simplification process; and
-- Further improvements in operational output per head driven
by simplification and discipline.
Our actions to increase the number of our suppliers and to
simplify tissue types is expected to impact working capital
positively from the end of Q4 FY19. We have implemented a more
flexible and appropriate forward buying strategy, in order to
assist with our management of short-term adverse foreign exchange
movements. An ongoing focus on all input costs is also expected to
negate any wage inflation. Whilst we have already improved our
procurement process significantly, we will continue to make
adjustments and invest small amounts of capital to remove any
unnecessary operational costs in the business.
Board changes
The Board of Accrol has changed significantly over the past 12
months. Gareth Jenkins joined as our new CEO in September 2017. I,
having joined the Board as non-executive director in December 2017,
took on the role of Executive Chairman in February 2018. More
recently, we welcomed a new non-executive director, Euan Hamilton
(August 2018) as well as Steve Townsley (June 2018), as our new
Chief Financial Officer. In addition, Mark Dewhurst, who joined in
September 2018, our new Chief Operating Officer brings significant
operational expertise. These appointments have significantly
enhanced the Board's and the senior management team's turnaround
and financial expertise.
I am confident that we now have a Board which will support,
effect and contribute to a successful turnaround strategy and our
future growth ambitions. I look forward to working with all the
directors to ensure the best possible outcome for shareholders.
Dividend
As previously announced, the Board will not be proposing a final
dividend. It remains the Board's intention to return to the
dividend list at the earliest appropriate opportunity.
Outlook
The macro environment continues to be challenging: USD strength
allied with other currencies' volatility; continued high paper
costs; and upward pressure on labour and other operating costs
create significant headwinds. The decline of Sterling against the
USD since the beginning of the year has an annualised negative
impact on costs of cGBP5m alone. However, the business has a
management team of substance, who have faced such commercial
challenges before; the support of a growing customer base, which is
well positioned to adapt to a market without brands; and a plan
which is on track to manage costs back to industry-leading
levels.
Accrol's trading performance remains sensitive to external
macro-economic variables, including the Sterling/USD exchange rate
and parent reel pricing, which can have a significant effect,
positively or negatively, on the Company's financial performance.
However, the new Board and management team is committed to building
a business which is capable of riding such fluctuations to deliver
appropriate levels of return to shareholders.
Despite the current headwinds faced by the business, the Group's
performance in the first half of FY19 is as the Board expected and
the directors believe that Accrol is on track to achieve market
expectations for FY19. Net debt as at 31 August 2018 was
GBP25m.
Dan Wright
Executive Chairman
26 September 2018
CHIEF EXECUTIVE OFFICER'S REVIEW
The Group has reported an Unaudited adjusted EBITDA loss of
GBP5.8 million (FY17: profit GBP15.2 million). The significant step
back from the previous years' performance resulted from an
escalation in internals costs, driven by new external warehousing,
shift changes and head count increases. In addition, the business
experienced rapidly increasing input costs and had long-term
adverse FX hedges that it was unable to pass on in the early part
of the year. Despite the very challenging period, revenue increased
by 3% in total, 6% in the core consumer sector and 12% in toilet
tissue.
Whilst I am disappointed to be reporting a loss for FY18, I
joined Accrol because I believed its core business and markets were
strong. Despite all the challenges the Group has faced since
October last year, this has not changed. Accrol has a strong
position with all the major discounters and now the major grocery
retailers in the UK to supply private label toilet roll, kitchen
towel and facial tissues.
Strategy
Following a strategic review undertaken in the weeks following
my appointment, it was very clear that action needed to be taken
urgently to address operational inefficiencies and create a
low-cost base from which the business could trade profitably. By
concentrating on its traditional core strengths of low operational
costs, machine efficiency and simplifying the range, the Group
could return to its strong pre-IPO foundations on which to build an
even stronger, more efficient business.
I am pleased to report that the turnaround plan is advancing
well. However, it will take time to complete the final
improvements, which we have already begun, to ensure the business
is positioned to fully capitalise on the opportunities arising from
the consumers shift away from major, well-known tissue brands as
these continue to decline.
As a business, we are dedicated to operational efficiency and
innovation that delivers significant market leading value for
consumers. We aim to be the leading supplier of tissue-based
products by being able to adapt to the acceleration in the
discounter channel and the changing consumer buying demands.
Market overview
The decline of branded toilet roll sales through the major
multiples and discount market continues. Over the last 12 months,
the leading branded player has reported declines in sales of 6%
year on year (The Grocer, March 2018). Discount and own branded
products, however, have enjoyed a continuing increase in sales of
8.5% in Toilet Tissue. Own label sales now make up 48.4% of the
toilet roll/tissue market, compared to 47% in March 2017 (Source:
Kantar). I am pleased to report that our own sales in toilet tissue
in the same period outperformed the market, growing by 12%, giving
me considerable confidence for the successful future of the
business.
People
Good businesses start with the right people. It was clear that
improvement was required across a number of levels of the
organisation. The new management team we have put in place is of
high calibre. The Group's Head of Manufacturing was replaced in
November last year, when we appointed an FMCG operations expert
with over 30-years' experience, most recently as UK Operations
Director for Sonoco. Factory Managers at two of the Group's sites
were also replaced in the first quarter of FY19, bringing in
industry expertise from our major competitors.
Our most recent senior management appointment is Mark Dewhurst
who joins from DS Smith where his final role was North Europe
Operations Director. I am absolutely delighted that he has chosen
to join Accrol. His decision endorses my own view that Accrol has
an exciting future. I am certain that his knowledge of the industry
and experience in transformational change and sustainable business
improvement will benefit the Group significantly and, our
shareholders.
Whilst amalgamating the right team takes time, we have already
strengthened significantly across all departments and levels of the
business and will continue to look for the best talent internally
and externally as we grow. Everyone in the organisation is
beginning to understand the role they play in making Accrol a
better business. We are focused on employing dedicated, skilled and
motivated people, who have clear and simple targets and actions to
deliver to make the business better every day.
Customers
At the core of our business is the broad range of customers we
serve. Everything we do is focused on their requirements. The way
consumers shop is changing at a rapid pace. Our broad customer base
gives us market insight across all consumer purchasing channels and
our flexibility enables us to take advantage of this changing
buying platform. Accrol is also the only UK tissue converter to
offer a plastic free option.
This approach has enabled us to secure significant new business
wins, a key part of the Group's turnaround strategy, and to improve
pricing arrangements. Since February 2018, in line with our budget
expectations, we have secured revenue as follows:
-- Volume on an extended contract with a major retailer worth
GBP10 million pa
-- A new two-year agreement with a major discounter worth an
additional GBP10 million pa
-- Volume growth and contract extension with a major discounter
worth an additional GBP5 million pa
-- A two-year agreement with a major retailer for toilet roll
business initially worth GBP12 million pa
-- Essential price increases with our customers
The business now has in place a number of longer-term supply
agreements with appropriate commercial terms.
Suppliers
We will continue the simplification process across the total
supply chain, taking a ruthless approach to non-essential costs and
producing the best possible products of the highest quality - the
basics done well at value.
A supplier review continues with a further six tissue suppliers
being added to the portfolio from Asia, South America, the Middle
East and Europe. The Accrol business model enables the organisation
to continue to source the latest developments in tissue technology.
This ensures the best available materials are used to meet the
changing dynamics with retailers and consumers.
Operations
For the business to thrive and prosper it has to be a low cost,
operationally efficient one and supply products to markets that
deliver the right levels of return. To this end, we have made
significant operational changes to the business:
-- The closure of the Group's low margin Away From Home operations
in August 2018;
-- In September 2018, the lease on Skelmersdale was transferred
for the entirety of the current 8.5 years still outstanding
to a third party group. Accrol will relocate all product
to newly installed racking and warehousing facilities at
its three locations in Blackburn and Leyland. This is expected
to deliver savings in excess of GBP5 million per year. The
costs for delivering this change are in line with our budget
expectations;
-- Head count has been reduced by c.43% since July 2017, despite
an increase in sales volume;
-- The number of SKUs, families of products and tissue types
have now been substantially reduced by c.74%, c.60% and
c.73% respectively;
-- The implementation of an "end to end" Oracle based system
is underway. This is expected to replace the existing finance
system by Q4 of FY19. In addition, as part of the migration
of finished goods stock back to the sites, a materials management
system will give full visibility of raw materials and finished
goods in real time to help support the businesses drive
to reduce stock throughout the supply chain; and
-- Adopting the latest paper types to help the Group remain
competitive and lead innovation in the industry to benefit
the consumer.
These changes are an important part of the Board's turnaround
plan and demonstrate the significant improvements which have been
made to date.
Health and safety
Accrol takes the Health and Safety of its employees very
seriously. Since October 2017 the business has employed an
independent former HSE lead inspector to advise the new H&S
teams that are in place covering all sites. In the last seven
months to the end of July, we have seen an 8% reduction in our
overall accident rates and a 4% reduction in near miss reporting
compared to the previous seven-month period.
The business continues to work proactively with the HSE
following the previous investigation and they remain supportive
throughout the positive changes the business is making with regard
to health and safety of its employees.
Outlook
The turnaround plan has started well. Whilst we have made
considerable progress in the first five months of FY19, there is
still a great deal to do. As a team, we have absolute clarity that,
as we deliver the turnaround, we also strengthen Accrol's
fundamental business proposition, delivering growth through
exceptional quality, service and innovations.
We have ambitious plans to continue to grow profitably, which
will be the result of delivering great value, quality products to
the consumer. The business is in a strong position due to the
breadth of retailers we supply and the changing dynamic of buying
habits away from the previously dominant, big brands. The
differentiated position with customers, built on our investment and
innovation-led expertise, and the changing market dynamics
reinforces our confidence in the long-term prospects for the
Group.
We still have a challenging six months ahead of us to complete
all the major turnaround actions and ensure these are embedded into
the organisation. Whilst the business has advanced considerably
since the year end, the issues we have had to tackle have been
significant. The work we have undertaken will provide strong
foundations on which to return the Group to profitability. This,
combined with the strength of our markets and the quality our
products, gives the Board real confidence in the successful future
of the Group.
Gareth Jenkins
Chief Executive Officer
26 September 2018
GROUP FINANCIAL REVIEW
Unaudited results overview
Unaudited Restated Change
FY18 (3)
FY17
Revenue GBP139.7m GBP134.2m GBP5.5m
----------- ---------- -----------
Gross profit GBP24.5m GBP37.1m (GBP12.6m)
----------- ---------- -----------
Adjusted EBITDA (GBP5.8m) GBP15.2 (GBP21.0m)
(1) m
----------- ---------- -----------
Finance costs GBP0.7m GBP1.1m (GBP0.4m)
----------- ---------- -----------
Adjusted (loss)/profit before tax (11.2m) GBP10.1m (GBP21.3m)
(2)
----------- ---------- -----------
(Loss)/profit before tax (GBP24.1m) GBP8.6m (GBP32.7m)
----------- ---------- -----------
Exceptional items (GBP12.9m) (GBP1.6m) (GBP11.3m)
----------- ---------- -----------
Free cash flow (GBP24.5m) GBP7.4m (GBP31.9m)
----------- ---------- -----------
Net debt GBP33.8m GBP19.2m GBP14.6m
----------- ---------- -----------
Net debt/adjusted EBITDA (5.80x) 1.26x
----------- ---------- -----------
(Loss)/earnings per share - basic (GBP0.19) GBP0.07 (GBP0.26)
----------- ---------- -----------
Note 1: A number of post year adjustments have negatively
affected Adjusted EBITDA and these include a loss of GBP0.24
million due to PoundWorld going into administration in June 2018
and a further loss of GBP0.14 million through a change in our
accounting policy on goods sold below cost.
Note 2: Exceptional costs include GBP5.7 million of cash items
incurred during the year including GBP3.7 million relating to FX
hedging losses. The remaining GBP7.2 million non-cash items include
GBP3.2m provision for exiting onerous contracts and GBP2.5 million
impairment of fixed assets.
Note 3: Restated to correct prior period accounting errors
resulting in a reduction to Adjusted EBITDA and Profit before tax
of GBP0.8 million.
Basis of preparation of unaudited FY18 accounts
The Group's accounts have been prepared on a going concern
basis, however the audit opinion is expected to contain an emphasis
of matter qualification in respect of going concern. This is due to
the particular sensitivity of the forecast to the sterling/USD
rate, parent reel pricing and the delivery of the final elements of
the operational and commercial turnaround, specifically:
-- Delivery of operational savings generated by a reduction
of sites and employees;
-- Impact on raw materials costs of changes in paper type and
product specification;
-- Maintenance of newly agreed parent reel prices; and
-- Successful management of any foreign exchange downside through
price increases or further cost reductions.
Further details are presented in Note 2 to the accounts.
Notwithstanding the above, the directors confirm that, after due
consideration, they have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Sales increased but cost escalation and foreign exchange
challenges hit profit and cash
Sales of Private Label products into Discounters and Multiples
drove year on year growth of 4.2% in revenues. However, profit
before tax profit before tax declined GBP32.7 million to a loss of
GBP24.1 million. Net debt increased by 76% to GBP33.8 million.
Key performance indicators
Unaudited 2018 Restated Change
GBP'000 2017
GBP'000
Revenue 139,738 134,163 4.2%
---------------- --------- --------
Adjusted gross margin(1) 17.5% 27.9%
---------------- --------- --------
Adjusted EBITDA(2) (5,824) 15,227 (138%)
---------------- --------- --------
Finance costs 713 1,129 (36.8%)
---------------- --------- --------
(Loss)/profit before tax (24,069) 8,565 (381%)
---------------- --------- --------
(Loss)/profit after tax (19,963) 6,708 (398%)
---------------- --------- --------
Free cash flow(3) (24,502) 7,384 (432%)
---------------- --------- --------
Net debt 33,773 19,210 76%
---------------- --------- --------
Net debt/adjusted EBITDA (5.80x) 1.26x
---------------- --------- --------
(Loss)/earnings per share - basic (GBP0.19) GBP0.07
---------------- --------- --------
Note 1: Adjusted gross margin, which is defined as gross profit
excluding the (loss)/gain on derivative financial instruments is a
non-GAAP metric used by management and is not an IFRS
disclosure.
Note 2: Adjusted EBITDA, which is defined as profit before
finance costs, tax, depreciation, amortisation, and exceptional
items, is a non-GAAP metric used by management and is not an IFRS
disclosure.
Note 3: Free cash flow, which is net cash flow from operating
activities is a GAAP measure used by management.
Two adjustments have been made to Adjusted EBITDA post year end,
comprising -GBP0.24 million due to PoundWorld going into
administration in June 2018 and a further -GBP0.14 million through
a change in our accounting policy on goods sold below cost. As a
result, the Group's Adjusted EBITDA has moved from a loss in line
with market expectations of GBP5.4 million to a loss of GBP5.8
million.
Percentage of revenues
2018 2017
Multiple 8% 8%
----- -----
Other 16% 18%
----- -----
Discounter 76% 74%
----- -----
Unaudited income statement
Unaudited Restated
2018 2017
GBP'000 GBP'000
----------------------------------------- ---------- ---------
Revenue 139,738 134,163
----------------------------------------- ---------- ---------
Cost of sales (115,232) (97,016)
----------------------------------------- ---------- ---------
Gross profit 24,506 37,147
Administration expenses (33,177) (16,000)
Distribution costs (14,685) (11,453)
----------------------------------------- ---------- ---------
Operating (loss)/profit (23,356) 9,694
----------------------------------------- ---------- ---------
Analysed as:
Adjusted EBITDA(2) (5,824) 15,227
Depreciation (2,612) (1,910)
Amortisation (2,041) (2,042)
Exceptional items (12,879) (1,581)
----------------------------------------- ---------- ---------
Operating (loss)/profit (23,356) 9,694
----------------------------------------- ---------- ---------
Finance costs (713) (1,129)
----------------------------------------- ---------- ---------
(Loss)/Profit before tax (24,069) 8,565
Tax credit/(charge) 4,106 (1,857)
----------------------------------------- ---------- ---------
(Loss)/profit for the year attributable
to equity shareholders (19,963) 6,708
----------------------------------------- ---------- ---------
Gross margin % 17.5% 27.7%
Adjusted gross margin %(1) 17.5% 27.7%
----------------------------------------- ---------- ---------
Note 1: Adjusted gross margin, which is defined as gross profit
excluding the (loss)/gain on derivative financial instruments is a
non-GAAP metric used by management and is not an IFRS
disclosure.
Note 2: Adjusted EBITDA, which is defined as profit before
finance costs, tax, depreciation, amortisation, and exceptional
items, is a non-GAAP metric used by management and is not an IFRS
disclosure.
Revenues
Group revenue increased by 4.2% to GBP139.7 million (FY17:
GBP134.2 million) with growth in sales not only coming from the
Discounters but, also, the multiples. This revenue growth was
achieved despite a GBP5 million reduction in Away From Home
revenue, as the Group exited a high revenue/low margin contract. In
terms of products, revenue from toilet tissue showed the highest
year on year growth of 12% or GBP8 million. As a proportion of
revenue, toilet tissue increased from 51% in FY17 to 55% in the
year under review.
Gross margin
Adjusted gross margin was 17.5% (FY17: 27.7%). Adjusted gross
margin excludes the impact of unrealised gains and losses on
outstanding forward foreign currency contracts, valued at the
Balance Sheet date. It does include the impact of the underlying
softening of sterling against dollar (2018 1.31 vs 2017 1.39),
which contributed 4.1% to the 10.2% decrease in adjusted gross
margin.
Other contributors to the decrease in adjusted gross margin
include:
-- Paper cost inflation;
-- Added complexities of running three sites - two production
and one warehousing; and
-- Drag on operational efficiency of establishing the new Leyland
site.
Administration costs
Administrative costs increased by GBP17.2 million to GBP33.2
million (FY17: GBP16.0 million). This increase includes charges of
GBP2.5 million for the impairment of fixed assets, GBP4.4 million
of FX hedging losses and GBP6.0 million of other exceptional costs
(up from GBP1.6 million in 2017). Other exceptional costs include
restructuring costs of GBP1.1 million and GBP4.0 million relating
to the exit from the Skelmersdale distribution site.
In addition, the Company bore the full year costs of
Skelmersdale adding GBP6.2 million to the cost base year on year.
The productive capacity of Leyland is continuing to improve, helped
by the addition of a new line in September 2018. We believe this
site, with its improved capacity and operational efficiencies, will
prove an important asset for Accrol. Skelmersdale site will be
exited in October 2018, as planned.
Distribution costs
Distribution costs as a percentage of revenue increased by 2.0%
to 10.5% (FY17: 8.5%). The introduction of the Skelmersdale
facility in May 2017, however, added a 'shunting' cost of GBP1.3
million with finished goods being moved from Leyland and Blackburn
to the Skelmersdale site for storage, prior to onward shipping to
customers. This cost will be removed from the business with the
planned closure of Skelmersdale in October 2018. There was also an
increase in the cost of handling the shipping of parent reel
stock.
Operating cost summary
Key Cost 2017 2018 Plan for FY19
Skelmersdale facility Nil Full year Removed from H2
---------- ---------- --------------------
Shunting to Skelmersdale Nil Full year Reduced H1, removed
H2
---------- ---------- --------------------
Skelmersdale Operation Nil Full Year Removed from H2
---------- ---------- --------------------
Leyland start up 4 months Full year Add a 3rd Line 3 in
H1
---------- ---------- --------------------
Away From Home complexity Full Year Full year Removed from Q2
---------- ---------- --------------------
Finance costs
Finance costs decreased in the year by GBP0.4 million to GBP0.7
million (FY17: GBP1.1 million). This represented the cessation of
any payments on shareholder loan notes. The ongoing costs were flat
year on year.
Taxation
The significant level of losses incurred in the year allowed the
Company to reclaim tax paid on prior year profits. Subsequent to
year end, the Company successfully recovered GBP2.0 million.
Unaudited balance sheet
Property, plant and equipment
There were no substantive investments in plant and machinery in
the year. The two new lines in Leyland were brought onstream and a
more detailed review of asset value was undertaken, leading to an
impairment charge of GBP2.5 million, including those assets
relating to the Away From Home business from which we are exiting.
At the end of the year a third line at Leyland was ordered and
deposit of GBP0.8 million paid, subsequently covered by an
equipment finance lease in FY19.
Intangibles
Intangibles comprised mainly goodwill and customer
relationships. Under IFRS, goodwill is not amortised but is subject
to an impairment review on at least an annual basis. The Directors
performed a review during the period, which involved making
assumptions about the future performance of the business. After
carefully considering various scenarios that could occur and after
looking at sensitivities on these scenarios, the Directors
concluded that no impairment was required. It is worth noting,
however that the profitability of the Group remains sensitive to
foreign exchange rates and parent reel prices.
Working capital
Actual
-------------------------
2018 2017 Change
GBPm GBPm GBPm
----------------------------- ------- ------- -------
Inventories 14.1 15.0 (0.9)
Trade and other receivables 30.0 23.8 6.2
Trade and other payables (13.9) (19.1) 5.2
----------------------------- ------- ------- -------
30.2 19.7 10.5
----------------------------- ------- ------- -------
Both raw material stocks and finished goods stock remained in
line with last year. However, a GBP0.7 million provision was made
for slow moving and obsolete stock, as the Group focuses on a
simplified range of paper types and products. This provision
includes the carriage cost for goods that will be sold below cost.
There remains opportunity for the Company to tighten the supply
chain and reduce stockholding further.
The increase in receivables reflects customer mix and timing.
Our customers remain good payers. However, post year end PoundWorld
went into administration; a provision of GBP0.2 million has been
made to reflect the associated uncollectable debt.
The trade payables figure decreased by GBP5.2m on the prior
year, mainly due to the change in the Company's credit rating. The
suspension of trading in the Company's shares on 5 October 2017
caused the credit insurance sector to step back from Accrol and
terms were cut; to proforma in many cases. We are actively managing
this position and expect it to improve in line with Company's
trading performance.
Unaudited borrowings and cash flow
Actual
-----------------------
2018 2017 Change
GBPm GBPm GBPm
--------------------------- ------ ------ -------
Bank loan facility 15.0 13.0 2.0
Finance leases 0.5 0.6 (0.1)
Factoring facility 18.7 9.5 9.2
--------------------------- ------ ------ -------
Borrowings 34.2 23.1 11.1
Cash and cash equivalents (0.4) (3.9) 3.5
--------------------------- ------ ------ -------
Net debt 33.8 19.2 14.6
--------------------------- ------ ------ -------
As part of the share placing in October 2017, the Group's
Revolving Credit Facility of GBP16 million and the Invoice discount
facility of GBP23 million were both maintained. Post year end, new
covenants have been agreed and the facilities continue. The first
pay down of the RCF, totalling GBP1 million, is planned for 31
October 2018, which will include a contribution from the funds
raised from the Group's exit of Away From Home.
There was a GBP24.5 million cash outflow from operations in the
year (FY17: cash inflow of GBP7.4 million) due largely to the
Group's operating losses. A Placing in December 2017 raised funds
of GBP18 million through the issue of 36m shares at 50p raising
GBP16.8 million (net of expenses). The outflow was further funded
through increased usage of the invoice discounting facility (up 97%
at GBP9.2 million). Net debt increased by GBP14.6 million, up 76%
on FY17. The Board remains committed to generating cash from
operations and reducing net debt. A Placing of 66.2 million shares
in June 2018, post year end, raised a further GBP9.2 million (net
of expenses).
Steve Townsley
Chief Financial Officer
26 September 2018
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the year ended 30 April 2018
Unaudited Restated
Continuing operations Note 2018 2017
GBP'000 GBP'000
Revenue 4 139,738 134,163
Cost of sales (115,232) (97,016)
--------------------------------------- ------ ---------- ---------
Gross profit 24,506 37,147
Administration expenses (33,177) (16,000)
Distribution costs (14,685) (11,453)
Operating (loss)/profit (23,356) 9,694
Analysed as:
--------------------------------------
- Adjusted EBITDA(1) (5,824) 15,227
- Depreciation (2,612) (1,910)
- Amortisation of intangible
assets 9 (2,041) (2,042)
- Exceptional items 5 (12,879) (1,581)
--------------------------------------- ------ ---------- ---------
Operating (loss)/profit (23,356) 9,694
Finance costs 7 (713) (1,129)
--------------------------------------- ------ ---------- ---------
(Loss)/profit before tax (24,069) 8,565
Tax credit/(charge) 8 4,106 (1,857)
--------------------------------------- ------ ---------- ---------
(Loss)/profit for the year
attributable to equity shareholders (19,963) 6,708
--------------------------------------- ------ ---------- ---------
(Loss)/earnings per share
GBP GBP
Basic (loss)/earnings per
share 6 (0.19) 0.08
Diluted (loss)/earnings per
share 6 (0.19) 0.07
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
YEARED 30 APRIL 2018
Unaudited Restated
2018 2017
GBP'000 GBP'000
(Loss)/profit for the year attributable to
equity shareholders (19,963) 6,708
Other comprehensive income/(expense) for the
year
Revaluation of derivative financial instruments(2) 2,868 (2,868)
Tax relating to components of other comprehensive
income (545) 545
---------------------------------------------------- ---------- ---------
Total comprehensive (loss)/income attributable
to equity shareholders (17,640) 4,385
---------------------------------------------------- ---------- ---------
The notes are an integral part of these consolidated financial
statements.
Note 1: Adjusted EBITDA, which is defined as profit before
finance costs, tax, depreciation, amortisation and exceptional
items, is a non-GAAP metric used by management and is not an IFRS
disclosure.
Note 2: Items that could potentially be reclassified
subsequently to profit and loss.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 April 2018
Unaudited Restated
2018 2017
Note GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 24,723 26,914
Intangible assets 9 27,701 29,742
Deferred tax assets 8 - 545
---------------------------------- ----- ------------ -----------
Total non-current assets 52,424 57,201
---------------------------------- ----- ------------ -----------
Current assets
Inventories 14,057 14,981
Trade and other receivables 29,987 23,780
Current tax asset 2,198 -
Cash and cash equivalents 431 3,867
Derivative financial instruments - 841
---------------------------------- ----- ------------ -----------
Total current assets 46,673 43,469
---------------------------------- ----- ------------ -----------
Total assets 99,097 100,670
---------------------------------- ----- ------------ -----------
Current liabilities
Borrowings 11 (21,670) (9,709)
Trade and other payables (13,858) (19,105)
Income taxes payable - (814)
Provisions (492) -
Derivative financial instruments (668) (3,235)
Total current liabilities (36,688) (32,863)
---------------------------------- ----- ------------ -----------
Non-current liabilities
Borrowings 11 (11,759) (13,146)
Deferred tax liabilities 8 (2,352) (4,276)
Provisions 10 (2,672) -
Derivative financial instruments - (474)
Total non-current liabilities (16,783) (17,896)
---------------------------------- ----- ------------ -----------
Total liabilities (53,471) (50,759)
---------------------------------- ----- ------------ -----------
Net assets 45,626 49,911
---------------------------------- ----- ------------ -----------
Capital and reserves
Share capital 12 129 93
Share premium 58,832 41,597
Hedging reserve - (2,323)
Capital redemption reserve 27 27
Retained earnings (13,362) 10,517
Total equity shareholders' funds 45,626 49,911
----------------------------------------- ------------ -----------
The financial statements were approved by the Board of Directors
on 25 September 2018.
Signed on behalf of the Board
of Directors
Gareth Jenkins Steven Townsley
Chief Executive Officer Chief Financial Officer
Company Registration Number
09019496
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2018
Retained
Capital earnings
Share Share Hedging redemption / (accumulated
Note capital Premium reserve reserve losses) Total
equity
Restated Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 May 2016 13 84 - - 5,005 5,102
Comprehensive
income/(expense)
Profit for the year
- restated - - - - 6,708 6,708
Revaluation of
derivative
financial instruments - - (2,868) - - (2,868)
Tax relating to
components
of other comprehensive
income - - 545 - - 545
Total comprehensive
income - - (2,323) - 6,708 4,385
------------------------- ------- ---------- ---------- ---------- ------------- ---------------- -------------
Transactions with owners
recognised directly
in equity
Bonus issue of shares 64 (64) - - - -
Proceeds from shares
issued 43 43,285 - - - 43,328
Buy back of deferred
shares for
consideration
of GBP1 (27) - - 27 - -
Issue of share warrants
- restated - - - - 302 302
Transaction costs - (1,708) - - 166 (1,542)
Dividends - - - - (1,860) (1,860)
Share based payments - - - - 196 196
Total transactions
recognised
directly in equity 80 41,513 - 27 (1,196) 40,424
------------------------- ------- ---------- ---------- ---------- ------------- ---------------- -------------
Balance at 30 April
2017 and at 1 May 2017 93 41,597 (2,323) 27 10,517 49,911
Comprehensive
(expense)/income
Loss for the year - - - - (19,963) (19,963)
Revaluation of
derivative
financial instruments - - 2,868 - - 2,868
Tax relating to
components
of other comprehensive
income - - (545) - - (545)
Total comprehensive
income - - 2,323 - (19,963) (17,640)
------------------------- ------- ---------- ---------- ---------- ------------- ---------------- -------------
Transactions with owners
recognised directly
in equity
Proceeds from shares
issued 12 36 17,964 - - - 18,000
Transaction costs - (729) - - - (729)
Dividends - - - - (3,720) (3,720)
Share based payments - - - - (196) (196)
Total transactions
recognised
directly in equity 36 17,235 - - (3,916) 13,355
------------------------- ------- ---------- ---------- ---------- ------------- ---------------- -------------
Balance at 30 April
2018 129 58,832 - 27 (13,362) 45,626
------------------------- ------- ---------- ---------- ---------- ------------- ---------------- -------------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 April 2018
Unaudited 2017
Note 2018 Restated
GBP'000 GBP'000
Cash flows from operating activities
Operating (loss)/profit (23,356) 9,694
Adjustment for:
Depreciation of property, plant and
equipment 2,612 1,910
Impairment of property, plant and equipment 2,502 -
Profit on disposal of property, plant
and equipment - (26)
Amortisation of intangible assets 9 2,041 2,042
Grant income (118) (212)
Exceptional items 4,214 1,016
Impairment of trade receivables 380 -
Impairment of trade receivables - exceptional 350 -
Share based payments (196) 196
Issue of share warrants - 302
----------------------------------------------- ----- ---------- ---------
Operating cash flows before movements
in working capital (11,571) 14,922
Decrease/(increase) in inventories 924 (5,620)
Increase in trade and other receivables (6,937) (2,334)
(Decrease)/increase in trade and other
payables (5,511) 6,696
----------------------------------------------- ----- ---------- ---------
Cash (used in)/generated from operations (23,095) 13,664
Tax paid (830) (2,149)
Interest paid (577) (4,131)
----------------------------------------------- ----- ---------- ---------
Net cash flows from operating activities (24,502) 7,384
----------------------------------------------- ----- ---------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (2,923) (4,417)
Proceeds from sale of property, plant
and equipment - 56
----------------------------------------------- ----- ---------- ---------
Net cash flows used in investing activities (2,923) (4,361)
----------------------------------------------- ----- ---------- ---------
Cash flows from financing activities
Proceeds of issue of ordinary shares 18,000 43,328
Cost of raising finance (729) (1,971)
Increase in amounts due to factors 9,154 2,038
New finance leases 200 -
Repayment of capital element of finance
leases (227) (10,737)
Repayment of bank loans - (3,900)
Receipt of new bank loans 2,000 12,730
Transaction costs of bank facility (689)
Repayment of shareholder loans / loan
notes - (41,240)
Dividend paid to ordinary shareholders (3,720) (1,860)
----------------------------------------------- ----- ---------- ---------
Net cash flows (from) financing activities 23,989 (1,612)
----------------------------------------------- ----- ---------- ---------
Net (decrease)/increase in cash and
cash equivalents (3,436) 1,411
Cash and cash equivalents at beginning
of the year 3,867 2,456
----------------------------------------------- ----- ---------- ---------
Cash and cash equivalents at year end 431 3,867
----------------------------------------------- ----- ---------- ---------
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INFORMATION
1. General information
Accrol Group Holdings plc (the "Company") was incorporated with
company number 09019496. It is a public company limited by shares
and is domiciled in the United Kingdom. The registered address of
the Company is the Delta Building, Roman Road, Blackburn,
Lancashire, BB1 2LD.
The Company's subsidiaries are Accrol Holdings Limited, Accrol
UK Limited and Accrol Papers Limited, which together with the
Company form the Accrol Group Holdings plc Group (the "Group").
2. Summary of significant accounting policies
A summary of the significant accounting policies is set out
below. These have been applied consistently in the financial
statements.
Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ('IFRS') as adopted for use in the EU, IFRS
Interpretation Committee ('IFR IC') interpretations and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
The consolidated financial statements have been prepared on a
going concern basis under the historical cost convention, as
modified by financial liabilities (including derivative
instruments) at fair value through profit or loss. The consolidated
financial statements are presented in pounds sterling and all
values are rounded to the nearest thousand pounds, except where
otherwise indicated.
The prior year comparatives have been restated in accordance
with IAS 8 'Accounting Policies, Changes in Accounting Estimates
and Errors'. Further details can be found in note 14.
Standards, amendments and interpretations to existing standards
that are not yet effective
Certain new accounting standards and interpretations have been
published that are not mandatory for the 30 April 2018 reporting
period and have not been early adopted by the Group. The Group will
undertake an assessment of the impact of the following new
standards and interpretations in due course, although they are not
expected to have a material impact on the consolidated financial
statements in the year of application when the relevant standards
come into effect.
-- Amendments to IFRS 2 'Share based payments' Classification
and Measurement' (effective 1 January 2018)
-- Amendments to IFRS 4 'Insurance contracts' Amendments regarding
implementation of IFRS 9 (effective 1 January 2018)
-- Amendments to IAS 28 'Investments in associates and joint
ventures' regarding short-term exemptions covering transition
provisions of IFRS 7, IAS 19 and IFRS 10 (effective 1 January
2018)
-- Amendments to IAS 40 'Investment property' transfer of property
(effective 1 January 2018)
-- IFRIC 22 'Foreign currency transactions and advance consideration'
(effective 1 January 2018)
-- Annual Improvements 2014-2016 (effective 1 January 2018)
-- Amendments to IFRS 1 'First-time adoption of IFRS' regarding
short term exemptions covering transition provisions of
IFRS 7, IAS 19 and IFRS 10 (effective 1 January 2019)
-- Amendments to IAS 19 'Employee benefits' Plan amendment,
curtailment or settlement (effective 1 January 2019)
-- IFRIC 23 'Uncertainty over Income Tax' (effective 1 January
2019)
-- Annual Improvements 2015-2017 (effective 1 January 2019)
The Group has begun an assessment of the impact of the following
new standards:
IFRS 9 'Financial Instruments' (effective 1 January 2018)
This standard addresses the classification, measurement and
derecognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment
model for financial assets.
It is the intention that hedging relationships that qualified
for hedge accounting in accordance with IAS 39 are to be regarded
by the Group as continuing hedging relationships under IFRS 9.
IFRS 9 introduces an expected loss model for recognising
impairment of financial assets held at amortised cost, whereas
under IAS 39 impairment was only recognised when objective evidence
of such impairment existed. This change of approach will require
the Group to consider forward looking information to calculate
expected credit losses and is anticipated to have a small but
immaterial change to the level of impairment recognised.
IFRS 9 also includes the requirement for lenders of intercompany
loans to consider forward looking information to calculate expected
credit losses. This change will apply to the Company financial
statements only. Despite there being no present intention of the
Company to demand repayments, were demand to be made at the
reporting date, it is deemed that the relevant subsidiaries would
be unable to repay the intercompany loan in full within 12 months,
therefore an impairment and adjustment to opening retained earnings
may be required.
IFRS 15 'Revenue from Contracts with Customers' (effective 1
January 2018)
This standard establishes the principles that an entity applies
when reporting information about the nature, amount, timing and
uncertainty of revenue and cash flows from a contract with a
customer. In particular it requires the entity to identify distinct
performance obligations within a contract with a customer and
attribute values accordingly.
The Group will shortly conclude on the impact of the performance
obligation criteria and the determination of the transaction price
on the timing and value of revenue, but given that there is little
complexity within the sales process (revenue recognised when goods
are delivered) the Group does not expect to be materially affected
by the new standard.
IFRS 16 'Leases' (effective 1 January 2019)
IFRS 16 introduces a single lessee accounting model, removing
the distinction between operating and finance leases. This will
result in almost all leases being recognised on the Statement of
Financial Position, as an asset (to recognise the right to use a
leased item) and a financial liability (requirement to make lease
payments).
The Group will assess the requirements of IFRS 16 against its
existing operating leases including any exemptions it may make by
the end of the next financial year in order to report on the
potential impact.
There are no other standards that are not yet effective and that
would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future
transactions.
Going Concern
The Chairman's review and the Chief Executive's review outline
the business activities of the Group along with the factors which
may affect its future development and performance. The financial
review discusses the Group's financial position, along with details
of cash flow and liquidity. Further details of the borrowing
facilities are set out in note 11.
The Group has recently agreed revised bank covenant tests for
the revolving credit facility that underpins its borrowings. In
assessing the Group's ability to continue as a going concern, the
Board has reviewed the Group's cash flow and profit forecasts
against these covenants. The impact of potential risks and related
sensitivities to the forecasts were considered in assessing the
likelihood of a breach of the covenants, whilst identifying what
mitigating actions are available to the Group to avoid a potential
breach.
The Group's performance is dependent on a number of market and
macroeconomic factors particularly the sensitivity to the price of
parent reels and the sterling/USD exchange rate which are
inherently difficult to predict. In addition, the significant
activity in restructuring and re-positioning the operational and
commercial side of the business increase the uncertainty in future
forecasts. Specifically, a range of assumptions underpin the profit
and cashflow forecasts for the next 12 months including:
-- Delivery of operational savings generated by a reduction
of sites and employees;
-- Impact on raw materials costs of changes in paper type and
product specification;
-- Maintenance of newly agreed parent reel prices; and
-- Successful management of any foreign exchange downside through
price increases or further cost reductions.
Failure to achieve the above would slow down the return to
profitability and result in lower adjusted EBITDA with a consequent
negative impact on EBITDA covenant headroom. Without the support of
the bank, the Group would be unable to meet its liabilities as they
fall due. Given the timing and execution risks associated with
achieving the forecast the directors have concluded that it is
necessary to draw attention to this as a material uncertainty which
may cast doubt upon the Group's ability to continue as a going
concern in the basis of preparation to the financial
statements.
The directors have confirmed that, after due consideration, they
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the financial information in accordance with
IFRS requires estimates and assumptions to be made that affect the
value at which certain assets and liabilities are held at the
balance sheet date and also the amounts of revenue and expenditure
recorded in the year. The Directors believe the accounting policies
chosen are appropriate to the circumstances and that the estimates,
judgements and assumptions involved in its financial reporting are
reasonable.
Accounting estimates made by the Group's management are based on
information available to management at the time each estimate is
made. Accordingly, actual outcomes may differ materially from
current expectations under different assumptions and
conditions.
The estimates and assumptions for which there is a significant
risk of a material adjustment to the financial information within
the next financial year are set out below.
Critical accounting judgements in applying the entity's
accounting policies
Exceptional items
During the course of the year the Group incurred expenditure
that is not linked directly to the normal trading of the business.
This is particularly the case when undergoing significant
structural change as his been the case in recent years. In order to
better explain the underlying performance of the business,
management makes a judgement as to which costs should be included
in exceptionals and disclosed separately.
Critical accounting estimates in applying the entity's
accounting policies
Goodwill and intangible asset impairment
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment based on the recoverable
amount of its sole CGU. The recoverable amount is determined based
on value in use calculations. The use of this method requires the
estimation of future cash flows and the determination of a pre-tax
discount rate in order to calculate the present value of the cash
flows. The Group's trading performance remains sensitive to a
number of key variables, including the sterling/US$ exchange rate
and parent reel pricing, which could have a significant affect
(positive or negative) on the Group's cashflows.
More information including carrying values is included in note
9.
4. Revenue
The analysis of geographical area of destination of the Group's
revenue is set out below:
Unaudited Restated
2018 2017
GBP'000 GBP'000
United Kingdom 133,132 131,294
Europe 6,606 2,869
------------------ ---------- ---------
Total 139,738 134,163
------------------ ---------- ---------
5. Exceptional items
Unaudited
2018 2017
GBP'000 GBP'000
Setting up and subsequent exit 3,961 -
from Skelmersdale site
Reorganisation and restructure 1,109 -
Impairment of property, plant 2,502 -
and equipment
Loss on derivative financial instruments 4,377 -
Professional fees relating to
the AIM flotation - 208
Early settlement charges on finance
leases - 454
Acquisition deal fees - 352
Consultancy fees - 567
Other 930 -
------------------------------------------ ---------- --------
12,879 1,581
------------------------------------------ ---------- --------
Exceptional items for the current and prior year are included
within administration expenses.
The exceptional items are described below:
Year ended 30 April 2018
Setting up and subsequent exit from Skelmersdale site
Skelmersdale set up costs of GBP315,000 include duplicated costs
relating to redundant space, additional deliveries and
staffing.
Charges of GBP3,646,000 relate to the decision to exit from the
Skelmersdale facility and logistics agreements. This primarily
comprises onerous contract provisions of GBP3,164,000 and trade
receivable provisions of GBP350,000.
Reorganisation and restructure
Costs associated with the exit of the previous management team,
the recruitment of a new management team against an unfavourable
background and the dual running of roles to drive rapid change.
Impairment of property, plant and equipment
The charge of GBP2,502,000 comprises GBP2,056,000 to create the
space to absorb Skelmersdale stockholding and GBP446,000 relating
to the Away from Home market.
Loss on derivative financial instruments
The charge comprises the early settlement costs of unrequired
foreign exchange forward contracts, plus charges relating to
forward contracts that when crystallised were not used to purchase
raw materials.
Other
Other costs primarily comprise the HSE fine and associated
defence costs (GBP212,000), the decision to release value in
working capital despite the short-term cost (GBP254,000) and costs
relating to the exit from the Away from Home market
(GBP190,000).
6. (Loss)/earnings per share
The basic (loss)/earnings per share is calculated by dividing
the profit attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during
the year. Diluted earnings per share is calculated by dividing the
(loss)/profit after tax by the weighted average number of shares in
issue during the year, adjusted for potentially dilutive share
options. The following reflects the income and share data used in
the earnings per share calculations:
Unaudited Restated
2018 2017
GBP'000 GBP'000
(Loss)/profit for the year attributable
to shareholders (19,963) 6,708
Number Number
Basic weighted average number of
shares (1) 106,820,221 88,145,846
Dilutive share options - 1,321,025
Diluted weighted average number of
shares 106,820,221 89,466,871
GBP GBP
Basic (loss)/earnings per share (0.19) 0.08
Diluted (loss)/earnings per share (0.19) 0.07
Note 1: In the year ended 30 April 2017, the basic weighted
average number of shares was calculated by excluding the D class of
shares as this class is subject to a dividend cap that does not
materially impact upon the profit due to the remaining Ordinary
equity shareholders.
No adjustment has been made in 2018 to the weighted average
number of shares for the purpose of the diluted earnings per share
calculation as the effect would be anti-dilutive.
The earnings per share figures for 2017 have been corrected
following discussions with the FRC. The figure for basic and
diluted earnings per share of GBP0.09, presented in last year's
accounts, should have been GBP0.08. The impact of the prior year
restatements reduces the diluted earnings per share figure to
GBP0.07. Furthermore, it should be noted that the corrected number
for 2016 is GBP0.11 not GBP576.26 as stated in the accounts to
2017. The difference arises due to a restatement to correctly
reflect the effect on earnings per share of the bonus issue,
subdivision and reorganisation of shares which occurred on 1 June
2016 in preparation for the company's IPO.
Subsequent to the reporting date, as disclosed in note 12,
further ordinary shares were issued which will impact upon the
basic and diluted earnings per share calculations for the year
ended 30 April 2019.
7. Finance costs
Unaudited
2018 2017
GBP'000 GBP'000
Finance costs on pre-IPO debt
structure
Shareholder loans - 478
- 478
Finance costs on post-IPO debt
structure
Bank loans and overdrafts 277 368
Finance lease interest 23 80
Interest on factoring facility 277 160
Amortisation of finance fees 136 43
--------------------------------- ---------- --------
713 651
-------------------------------- ---------- --------
Total finance costs 713 1,129
--------------------------------- ---------- --------
8. Income tax expense
Tax credited/(charged) in the income statement
Unaudited Restated
2018 2017
GBP'000 GBP'000
Current income tax
Current tax on profits for the
year - (2,059)
Adjustment in respect of prior 2,182 -
periods
------------------------------------------ ---------- ---------
Total current income tax credit/(charge) 2,182 (2,059)
------------------------------------------- ---------- ---------
Deferred tax
Origination and reversal of temporary
differences 2,434 223
Adjustment in respect of prior (436) -
periods
Change in tax rate (74) (21)
------------------------------------------- ---------- ---------
Total deferred tax credit 1,924 202
------------------------------------------- ---------- ---------
Tax credit/(charge) in the income
statement 4,106 (1,857)
------------------------------------------- ---------- ---------
The tax credit for the year is lower (2017: charge is higher)
than the effective rate of Corporation Tax in the UK of 19% (2017:
19.92%). The differences are explained below:
Unaudited Restated
2018 2017
GBP'000 GBP'000
(Loss)/profit before income tax (24,069) 8,565
Effective rate 19% 19.92%
At the effective income tax rate 4,573 (1,706)
Expenses not deductible for tax
purposes (118) (130)
Adjustment in respect of prior (436) -
periods
Change in rate 87 (21)
----------------------------------- ---------- ---------
Total tax credit/(charge) 4,106 (1,857)
----------------------------------- ---------- ---------
During the year the Group recognised the following deferred tax
assets/(liabilities):
Accelerated Derivative
capital Intangible financial
allowances assets instruments Losses Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 April 2016 (1,527) (3,016) - - 65 (4,478)
Credit/(charge)
in year - restated (168) 375 - - (5) 202
Credit to equity - - 545 - - 545
30 April 2017
- restated (1,695) (2,641) 545 - 60 (3,731)
--------------------- ------------ ----------- ------------- --------- -------- --------
Credit/(charge)
in year 552 404 127 901 (60) 1,924
Charge to equity - - (545) - - (545)
--------------------- ------------ ----------- ------------- --------- -------- --------
30 April 2018 (1,143) (2,237) 127 901 - (2,352)
--------------------- ------------ ----------- ------------- --------- -------- --------
The following is the analysis of deferred tax balances for
financial reporting purposes:
Unaudited Restated
2018 2017
Deferred tax assets - 545
Deferred tax liabilities (2,352) (4,276)
-------------------------- ---------- ---------
(2,352) (3,731)
-------------------------- ---------- ---------
The deferred tax asset in the prior year was recognised on the
loss on cash flow hedges. The credit has been taken to the hedging
reserve.
A deferred tax asset of GBP901,000 relating to current year
losses has been recognised in the year, on the basis that,
following a review of forecasts, management expect that these will
be recovered against future taxable profits.
Deferred tax expected to be settled within 12 months of the
reporting date is approximately GBP261,000 (2017: GBP58,000).
The Finance Act 2016 reduced the main rate of corporation tax to
19% from 1 April 2017. A future rate reduction to 17% from 1 April
2020, was substantively enacted on 15 September 2016. Therefore,
the rate of 19% (2017: 20%) has been reflected in the consolidated
financial statements and deferred tax assets and liabilities have
been measured at the rate expected to be in effect when the
deferred tax asset or liability reverses. Deferred tax has been
provided at the rate of 17% as at 30 April 2018 (2017: 18%).
9. Intangible assets
Customer Order
Goodwill relationships book Other Total
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 April 2016 14,982 20,427 86 - 35,495
Additions - - - 40 40
------------------- ----------- --------------- -------- -------- --------
At 30 April 2017 14,982 20,427 86 40 35,535
Additions - - - - -
------------------ ----------- --------------- -------- -------- --------
At 30 April 2018 14,982 20,427 86 40 35,535
------------------- ----------- --------------- -------- -------- --------
Amortisation
At 30 April 2016 - 3,665 86 - 3,751
Charge for the
year - 2,042 - - 2,042
------------------- ----------- --------------- -------- -------- --------
At 30 April 2017 - 5,707 86 - 5,793
Charge for the
year - 2,041 - - 2,041
------------------- ----------- --------------- -------- -------- --------
At 30 April 2018 - 7,748 86 - 7,834
------------------- ----------- --------------- -------- -------- --------
Net book value
At 30 April 2018 14,982 12,679 - 40 27,701
------------------- ----------- --------------- -------- -------- --------
At 30 April 2017 14,982 14,720 - 40 29,742
------------------- ----------- --------------- -------- -------- --------
The balance for Goodwill, Customer relationships and Order book
arose on the Group's acquisition of Accrol Holdings Limited and are
attributed to the sole cash-generating unit ('CGU').
The customer relationships are amortised over 10 years, with
approximately seven years remaining.
Impairment test for goodwill
Goodwill is monitored for internal management purposes at the
Group's sole CGU level. The recoverable amount of the CGU has been
determined based on a value in use calculation using cash flow
projections based on financial budgets approved by the board
covering a three year period. Cash flows beyond this period are
extrapolated using the estimated growth rates stated in the key
assumptions.
The key assumptions used in the value in use calculations are a
pre-tax discount rate of 9.5% (2017: 13%) and a long term growth
rate of 2% (2017: 2%). The discount rate is derived from the
Group's weighted average cost of capital and is calculated with
reference to latest market assumptions for the risk free rate,
equity market risk premium and the cost of debt. The values reflect
both past experience and external sources of information.
Goodwill is tested for impairment on at least an annual basis,
or more frequently if events or changes in circumstance indicate
that the carrying value may be impaired. In the years under review
management's value in use calculations have indicated no
requirement to impair.
Sensitivity to changes in assumptions
The Group's trading performance remains sensitive to a number of
key variables, including the sterling/US$ exchange rate, parent
reel pricing and the speed of business change, which could have a
significant effect (positive or negative) on the Company's
profitability. Of these, the greatest sensitivity is to the
sterling/US$ exchange rate, which currently has a very broad
forecast range due to the uncertainties surrounding Brexit. The
exchange rate used in management's forecasts assume a weighted
average forecast rate. Should sterling weaken significantly, profit
recovery would need to be built on price increases.
The estimates of the recoverable amounts associated with these
CGU affords significant head room over the carrying value, however
should price increases not be possible, the Group may need to
recognise an impairment loss.
10. Provisions
Created
As at 1 May in the As at 30
2017 year April 2018 Current Non current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Onerous Contracts - 3,164 3,164 492 2,672
------------------- ------------- -------- ------------ -------- ------------
- 3,164 3,164 492 2,672
--------------------------------- -------- ------------ -------- ------------
The onerous contract provisions relate to the decision to exit
from the Skelmersdale facility and logistics agreements (see note
5).
11. Borrowings
Unaudited
2018 2017
GBP'000 GBP'000
Current
Revolving Credit facility 2,770 -
Factoring facility 18,677 9,523
Finance leases 223 186
---------------------------- ---------- --------
21,670 9,709
--------------------------- ---------- --------
Non-current
Revolving Credit facility 11,455 12,778
Finance leases 304 368
11,759 13,146
--------------------------- ---------- --------
Finance costs incurred to arrange the revolving credit facility
have been capitalised and are being amortised through interest
payable. Unamortised finance costs at 30 April 2018 are GBP775,000
(2017: GBP222,000).
Finance costs are not included in the loan maturity table
below
Unaudited
2018 2017
Loan maturity analysis GBP'000 GBP'000
Within one year 21,900 9,709
Between one and two years 2,216 185
Between two and five years 10,088 13,183
After five years - -
----------------------------- ---------- --------
34,204 23,077
---------------------------- ---------- --------
The following amounts remain undrawn 2018
and available 2017
GBP'000 GBP'000
Revolving credit facility 1,000 3,000
Factoring facility 2,852 13,043
3,852 16,043
-------------------------------------- -------- --------
The Group's bank borrowings are secured by way of fixed and
floating charge over the Group's assets. As at 30 April 2018 this
comprised property, plant and equipment of GBP24,723,000,
inventories of GBP14,057,000 and trade receivables of
GBP27,845,000.
HSBC Revolving Credit Facility agreement ("Bank facility")
At 30 April 2018 the Group had drawn GBP15 million against a
Revolving Credit Facility ("RCF"). The original GBP18 million
facility, dated 2 June 2016, was for a period of five years. The
facility was amended and restated on 7 December 2017 and further
amended on 19 January 2018, principally affecting financial
covenant tests. On 25 September 2018, revised covenants and
amendments to the scheduled repayments were agreed. The revised
facility is now as follows:
-- 30 April 2018: GBP16 million
-- 31 October 2018: GBP15 million
-- 30 April 2019: GBP13 million
-- 30 April 2020: GBP11 million
Interest charged on the facility is at LIBOR plus a margin of
2.25%. A commitment fee of 40% of applicable margin on any undrawn
RCF is also payable.
The Obligors are Accrol Group Holdings plc, Accrol UK Limited,
Accrol Holdings Limited and Accrol Papers Limited. Any guarantees
and security each have previously granted in favour of HSBC
remained in respect of all liabilities arising under the RCF
agreement.
HSBC GBP23 million factoring credit facility ("Factoring
facility")
The Group has a GBP23 million multi-currency revolving credit
facility to provide factoring financing for general working capital
requirements. Under the terms of this facility the drawdown is
based upon gross debtors less a retention (typically 20%), with the
remaining debt funded. Each drawing under the facility is repayable
within a maximum of 90 days from date of invoice for jurisdictions
within the United Kingdom and 120 days for other countries.
Covenants
The Group is subject to financial covenants in relation to the
Bank Facility and the Factoring facility. The bank facility
covenants are EBITDA targets and asset cover ratios, with limits
set on exceptional costs and capital expenditure. The covenants in
relation to the Factoring Facility cover the following: a) Debt
dilution, b) Disputed debt and c) Tangible net worth. Breach of the
covenants would render any outstanding borrowings subject to
immediate settlement.
12. Share capital and reserves
2018 2017
Called up, allotted and fully paid GBP'000 GBP'000
Ordinary shares of GBP0.001 each 129 93
------------------------------------------ -------------- --------------
129 93
------------------------------------------ -------------- --------------
The number of ordinary shares in issue is set out below:
2018 2017
Number Number
Ordinary shares of GBP0.001 each 129,012,002 93,012,002
On 11 December 2017, 36,000,000 GBP0.001 ordinary shares were
issued at a price of 50 pence per share.
Subsequent to the reporting date, on 1 June 2018, 53,333,334
GBP0.001 ordinary shares were issued and on 8 June 2018 a further
12,901,200 ordinary shares of GBP0.001 were issued.
On 2 June 2016 warrants were issued to Zeus Capital Limited
entitling the holder to subscribe for 2,790,361 at a price of GBP1
per share any time up to the 10(th) anniversary of the Company
admission to the AIM market.
13. Events after the balance sheet date
On 1 June 2018 the Group raised GBP7.5m (net of expenses) by way
of a Placing and a further GBP1.8m (net of expenses) on 8 June 2018
by way of Open Offer.
In September 2018 revised bank covenants on the existing
facilities were agreed with HSBC, to provide greater financial
stability for the Group.
14. Prior year restatement
It has been identified that certain of the Group's accounting
policies and processes were not correctly applied at the close of
the year ended 30 April 2017. Due to the materiality of the errors
a restatement of the consolidated income statement, the
consolidated cash flow statement and consolidated statement of
changes in equity for the year ended 30 April 2017, and the
consolidated statement of financial position as at 30 April 2017 is
required.
In aggregate, the effect of the prior period restatements is to
reduce net assets at 30 April 2017 by GBP366,000 and to reduce
profit after tax for the period ended 30 April 2017 by GBP668,000.
There is no impact of the restatements on net assets as at 30 April
2016.
The nature and effect of individual adjustments are described
below.
Revenue recognition
Sales to the value of GBP890,000 should not have been booked in
the year to 30 April 2017 as the products remained at the Group's
premises at the reporting date and therefore title did not pass to
the relevant customers. Associated costs of GBP623,000 were
charged, resulting in an overstatement of gross profit of
GBP267,000.
Carriage costs
A review of a supplier statement reconciliation as at 30 April
2017 identified that certain liabilities in relation to carriage
costs had not been recognised. As a result cost of sales was
understated (and therefore gross profit overstated) by
GBP265,000.
Share warrants
As part of the Initial Public Offering, on 2 June 2016 share
warrants were issued to Zeus Capital for their services provided to
the Company in their capacity as nominated advisor. The costs
associated with the issue of the warrants were not accounted for in
the prior year. An exercise has been performed to assess the fair
value of the warrants issued, and this has had the impact of
increasing administration expenses, and therefore reducing
operating profit, by GBP302,000.
Summary
A summary of the combined impact of the prior year adjustments
on the consolidated income statement and consolidated statement of
cash flows for the year ended 30 April 2017 and on the consolidated
statement of financial position as at 30 April 2017 are as
follows:
Consolidated income statement for the year ended 30 April
2017
30 April Revenue Carriage Share 30 April
2017 As recognition costs warrants 2017 Restated
published
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------- ------------- --------- ---------- ---------------
Revenue 135,053 (890) - - 134,163
Gross profit 37,679 (267) (265) - 37,147
Operating profit 10,528 (267) (265) (302) 9,694
Profit before tax 9,399 (267) (265) (302) 8,565
Tax (2,023) 53 53 60 (1,857)
Profit after tax 7,376 (214) (212) (242) 6,708
Adjusted EBITDA 16,061 (267) (265) (302) 15,227
------------------- ----------- ------------- --------- ---------- ---------------
Consolidated statement of financial position as at 30 April
2017
30 April
30 April Revenue Share warrants 2017 Restated
2017 recognition Carriage
As published costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------------- -------------- ----------- ----------------- ---------------
Inventories 14,358 623 14,981
Trade and other
receivables 24,670 (890) - - 23,780
Deferred tax liabilities (4,336) 60 (4,276)
Trade and other
payables (18,840) - (265) - (19,105)
Income tax payable (920) 53 53 - (814)
Net Assets 50,277 (214) (212) 60 49,911
-------------------------- --------------- -------------- ----------- ----------------- ---------------
Consolidated statement of cash flows for the year ended 30 April
2017
30 April
30 April Revenue Share warrants 2017 Restated
2017 recognition Carriage
As published costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------- -------------- ----------- ----------------- ---------------
Operating cash flows
before movements
in working capital 15,454 (267) (265) - 14,922
Increase in inventories (4,997) (623) - - (5,620)
Increase in trade
and other receivables (3,224) 890 - - (2,334)
Increase in trade
and other payables 6,431 - 265 - 6,696
------------------------- --------------- -------------- ----------- ----------------- ---------------
The impact on basic and diluted EPS for the year ended 30 April
2017 was a reduction of GBP0.01 to GBP0.07.
EPS calculation
The earnings per share figures for 2017 have been corrected
following an enquiry from the FRC (see note 6).
15. Alternative performance measures
The Group uses a number of alternative performance measures to
assess business performance and provide additional useful
information to shareholders about the underlying performance of the
Group.
Adjusted earnings per share
The adjusted earnings per share is calculated by dividing the
adjusted earnings attributable to ordinary equity holder of the
parent by the weighted average number of ordinary shares
outstanding during the year. The following reflects the income and
share data used in the adjusted earnings per share calculation.
Unaudited Restated
2018 2017
GBP'000 GBP'000
(Loss)/earnings attributable to shareholders (19,963) 6,708
Adjustment for:
Amortisation 2,041 2,042
Exceptional items 12,879 1,581
Tax effect of adjustments above (2,835) (524)
---------------------------------------------- ------------ -----------
Adjusted (loss)/earnings attributable to
shareholders (7,878) 9,807
---------------------------------------------- ------------ -----------
Number Number
Basic weighted average number of shares(1) 106,820,221 88,145,846
Dilutive share options - 1,321,025
Diluted weighted average number of shares 106,820,221 89,466,871
GBP GBP
Basic adjusted earnings per share (0.07) 0.11
Diluted adjusted earnings per share (0.07) 0.11
Note 1: In the year ended 30 April 2018 and 2017, the basic
weighted average number of shares was calculated by excluding the D
class of shares, as this class is subject to a dividend cap that
does not materially impact upon the profit due to the remaining
Ordinary equity shareholders.
Reconciliation from GAAP- defined reporting measures to the
Group's alternative performance measures
Management use these measurements to better understand the
underlying business of the Group.
Consolidated income statement
2018 2017
GBP'000 GBP'000
(a) Adjusted gross margin Unaudited Restated
Revenue 139,738 134,163
Gross profit 24,506 37,147
Adjusted gross profit 24,506 37,147
Gross margin 17.5% 27.7%
Adjusted gross margin 17.5% 27.7%
(b) Adjusted EBITDA
Operating profit (23,356) 9,694
Adjusted for:
Depreciation 2,612 1,910
Amortisation 2,041 2,042
Exceptional items 12,879 1,581
Adjusted EBITDA (5,824) 15,227
------------------------------- ---------- ---------
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.
END
FR LQLBLVKFBBBZ
(END) Dow Jones Newswires
September 26, 2018 02:01 ET (06:01 GMT)
Accrol (LSE:ACRL)
Historical Stock Chart
From Apr 2024 to May 2024
Accrol (LSE:ACRL)
Historical Stock Chart
From May 2023 to May 2024