TIDMACRL
RNS Number : 7367Y
Accrol Group Holdings PLC
18 January 2022
18 January 2022
Accrol Group Holdings plc
("Accrol, the "Group" or the "Company")
HALF YEAR RESULTS
Continued progress in a challenging environment
Accrol (AIM: ACRL), the UK's leading independent tissue
converter, announces its unaudited results for the six months ended
31 October 2021 ("H1 22" or the "Period").
Gareth Jenkins, Chief Executive Officer of Accrol, said:
"This has been one of the most challenging periods in the
industry that I have experienced in my 25-year career. Tissue
pricing has reached unprecedented levels, driven by escalating
energy costs (rising as much as 500% for certain suppliers) and
global sea freight charges, combined with increased UK transport
costs, resulting from HGV driver shortages.
"Despite the challenges, the Group is on track to recover the
cost increases that it has absorbed, as a result of these
challenging market dynamics, from its supportive retailer customer
base. Whilst the profitability of the Group will be impacted in the
short-term, due to the time-lag on price increase implementation
(averaging 2-3 months), we expect to exit the year in a strong
position both operationally and commercially.
"Improving market conditions during the period did, however,
result in month-on-month growth throughout H1 22, as shopping
behaviours started to normalise. Q2 revenues were 17% higher than
Q1 and market share was 15.3%, as we entered H2 22. We have also
seen pleasing progress at John Dale, our biodegradable wet wipe
business. The flushable range of products has been well received by
retailers and wet wipe sales were up 33% in the first six months of
ownership. In addition, our new direct to consumer markets,
supplied by our Oceans brand (revenues up c.140% in last six
months, compared to prior six months) and our recently launched
Amazon offering."
Key financials
H1 22 H1 21 Change
Revenue GBP73.7m GBP62.3m 18.3%
Gross margin 24.7% 23.7% 4.2%
Adjusted EBITDA(1) GBP5.0m GBP5.4m -6.7%
Adjusted profit before tax(2) GBP0.7m GBP2.6m (GBP1.9m)
Loss before tax (GBP3.5m) (GBP0.5m) (GBP3.0m)
Adjusted diluted earnings/(loss)
per share 0.2p 0.9p (0.7p)
Diluted (loss) per share (0.8p) (0.2p) (0.6p)
Adjusted net debt(3) GBP21.6m GBP18.1m 19.4%
(1) Adjusted EBITDA is defined as profit before finance costs,
tax, depreciation, amortisation, separately disclosed items
and share based payments
(2) Adjusted profit before tax is defined as loss before tax,
amortisation, separately disclosed items and share based
payments
(3) Adjusted net debt excludes operating type leases recognised
on balance sheet in accordance with IFRS 16
Highlights
-- Revenue growth of 18.3% to GBP73.7m, reflecting the successful scaling and diversification
of the business since the acquisitions of Leicester Tissue Company ("LTC") and John Dale ("JD")
-- Improving trend throughout the Period with Q2 revenues (GBP39.8m) 17% higher than Q1 (GBP33.9m)
-- Gross margins improved versus H1 21, despite raw material cost increases
-- Adjusted EBITDA of GBP5.0m achieved, despite increased operational costs caused by supply
chain issues
-- Significant price increases delivered in the Period with a supportive retail customer base
-- Strong performance from JD with a 33% increase in its biodegradable wet wipe sales in the
first six months of ownership
-- Strong market position maintained, despite a 1% reduction in market size and ongoing impacts
of the pandemic in Q1
-- LTC and JD acquisitions fully integrated and synergies being realised, as anticipated
-- Business continued to operate safely throughout the Period with zero lost time accidents
Current trading and outlook
-- Stronger volume momentum, as the Group entered H2 22
-- Operational improvements on track with the final automation
of the Leyland site to complete by the end of March 2022,
which, alongside the final machine installation, will complete
the major investment into the Group's Tissue business
-- Despite a slower than anticipated recovery from the discount
retailers, many discounters have announced accelerated
store openings over the next 12 months, from which the
Group is well positioned to benefit
-- Following another uplift in energy costs impacting all
parent reel suppliers, a further product price increase
is being implemented. A successful outcome to this process
is supported by Accrol's strong position in a tightening
market for finished tissue products and parent reels.
-- A full strategic review is being initiated to capitalise
on the evident strength of the business' market position,
its balance sheet, and its solvency, underpinned by significant
banking support, to ensure that shareholder value is optimised
-- Group on track to deliver revenue growth of 17% to c.GBP160m
and Adjusted EBITDA of c.GBP9.0m, despite an annualised
increase in costs of c.GBP50m
Dan Wright, Executive Chairman of Accrol, said:
"On 12 January, we issued a trading update as unavoidable
surcharges to parent reel prices, relating to exceptional energy
price increases, were levied on the Company, and this, together
with further inflationary pressure on input costs since the end of
H1 22, will impact growth in the current year.
"To mitigate these further significant cost increases, the Group
is engaged with all its customers to achieve further substantial
price increases, over and above those secured in mid-2021. This is
an ongoing process but the initial response from all our customers
has been very supportive. These price increases will start to
impact from February onwards.
"Despite facing short-term price recovery challenges in H2 22,
the Group continues to strengthen its market position with the
operational foundations in place to enable future growth. The Board
is confident that the strong pricing actions taken in FY22, to
recover unprecedented cost increases, will ensure a strong recovery
of margins and profitability in FY23."
For further information, please contact:
Accrol Group Holdings plc
Dan Wright, Executive Chairman Via Belvedere Communications
Gareth Jenkins, Chief Executive Officer
Richard Newman, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser
& Broker)
Dan Bate / Jordan Warburton Tel: +44 (0) 161 831 1512
Dominic King Tel: +44 (0) 203 829 5000
Liberum Capital Limited (Joint Broker) Tel: +44 (0) 20 3100 2222
Clayton Bush / Edward Thomas
Belvedere Communications Limited
Cat Valentine Tel: +44 (0) 7715 769 078
Keeley Clarke Tel: +44 (0) 7967 816 525
accrolpr@belvederepr.com
Overview of Accrol
Accrol Group Holdings plc is a leading tissue converter and
supplier of toilet tissues, kitchen rolls, facial tissues, and wet
wipes to many of the UK's leading discounters and grocery retailers
across the UK. Following the recent acquisitions of LTC in
Leicester and JD in Flint, North Wales, the Group now operates from
six manufacturing sites, including four in Lancashire, which
generate revenues totalling c.16% of the cGBP2.1bn UK retail tissue
market.
For more information, please visit www.accrol.co.uk .
OPERATIONAL REVIEW
Summary of progress
The Group's progress has continued strongly despite the ongoing
well-reported macro challenges. We have built a UK business with
scale, geographic footprint and innovation, which is able to
continue volume and market share growth. We are well positioned to
benefit from the significant growth expected across our sector with
many of the discount retailers having announced accelerated store
openings over the next 12 months.
Group revenues increased by 18.3% versus H1 21, reflecting the
successful scaling and diversification of the business since the
acquisitions of LTC and JD, with month-on-month growth throughout
the Period and into H2 22. Our market share reduced slightly in the
Period to 15.3% (FY 21: 15.9%), in a market that showed an overall
decline of 1%, reflecting a weaker performance in Q1. Revenues in
Q2 showed a strong recovery, as the impacts of the pandemic started
to fully unwind. Post Period end, our market share has continued to
grow month on month, as revenues continued to increase.
However, much of our hard work and achievement has been
overshadowed by the short-term impact of the significant increases
in raw material costs, UK supply chain costs, as well as global sea
freight charges, which are currently dominating the narrative.
I would like to take this opportunity to thank our employees
across the Group, who have been fantastic, working relentlessly to
meet the challenges presented. Our absence rate has been less than
3%, which is outstanding for our industry, and even more notable
considering the continued high levels of COVID-19 in the areas in
which we operate. I am particularly proud that our lost time
accident rate dropped to zero in the Period and it is thanks to our
team that our service record to our retailer base continues to be
strong, despite the challenging environment.
The challenges
Whilst the Group's supply chain has shown significant resilience
in H1 22, considerable raw material cost increases were absorbed
and shortages managed with the usual 3-month time lag between the
impact of the costs and being able to pass them on to customers. I
am pleased to report that cost increases passed on though price
increases to date amount to over GBP40 million on an annualised
basis.
To better understand what has been happening, it is worth
detailing the events and performance on a quarterly basis.
Q1 22
In Q1, tissue prices began to increase, with the usual 3-month
time horizon, and Accrol was engaging successfully with its
customer base to pass on these additional costs. Over the last 18
months, the Group has put in place indexation agreements with many
customers to enable it to better manage these fluctuations. To help
mitigate the supply chain challenges, the Group actively increased
its raw material and finished goods stock positions to ensure its
supply positions. Logistics bottlenecks in incoming parent reels
and UK transportation had significant impact in the quarter but the
Group's careful management of this ensured service levels to all
customers remained high, albeit with significant related on-costs
to the business.
Q2 22
In Q2, the recovery of the cost increases incurred in Q1
progressed well across all retailers. Further increases of c.20% on
tissue prices were forecast across the industry, with additional
increases across all other raw materials including cartons,
corrugated, plastic wrap, paper wrap and core board. Many of these
cost increases were being driven by significant upward movements in
energy cost, impacting all aspects of the supply chain. The total
cost to the business of the first two tissue price increases was
c.GBP40 million on an annualised basis. Significant recovery of
these increased costs was achieved from retailers, with many price
increases being agreed that would positively impact in Q3 and fully
across Q4, given the usual 3-month time lag. Margins in H1 showed
an improvement on the same period in the prior financial year,
showing the robustness of the business model and the improved
relationships the business has with its customer base.
Q3 22
As the Group entered Q3, accelerating energy costs were
impacting the paper reel supply, which, over a short period of time
(c.5 months) saw energy costs for some suppliers increase by up to
500%, as hedging positions came to a close. Several suppliers in
different regions globally ceased trading. As a percentage of the
overall selling price of paper, energy costs currently comprise as
much as 50% (previously 10%), meaning that without significant
paper price increases the industry was unsustainable. As announced
in the Group's Trading Update on 12 January 2022, these sharp and
rapid (the average time horizon reduced significantly) price rises
in paper costs have materially impacted Accrol in the short term.
As with previous paper price increases, however, these are in the
process of being recovered from customers. A successful outcome to
this process is supported by Accrol's strong position in a
tightening market for finished tissue products and parent
reels.
The Board expects significant margin recovery by the end of Q4
22 and Accrol is expected to enter FY23 with good margins and an
operationally well-placed business to take advantage of the UK
market, which is forecast to grow significantly as the planned new
store openings across many discounters begin to take effect.
Commercial Development
We continue to make good progress to develop our product range
and add new sales channels. The Group has secured an extended sole
supply position with Morrisons for its paper category and increased
its own brands, Magnum and Oceans, into an initial 100 stores. The
Magnum brand is also in Poundland, Wilko, Iceland and other
independents and continues to grow strongly with a current Retail
Sales Value of c.GBP20 million pa.
We have secured our Softy facial tissue brand with Sainsburys,
from February 2022 and other Accrol branded ranges now being
supplied into Unitas, which represents 33,000 independent
retailers.
Oceans, which is the Group's plastic free brand sold direct to
consumers, continues to gain traction, growing 143% in the Period.
It is now available in a retail pack and on Amazon, where all of
Accrol's other branded products are also now available.
The development of wet wipes is making good progress. Further
accreditation has been achieved, including Fine to Flush and BRCGS
(UK Retailers Accreditation), which will help to drive growth
further across all retailers. In addition, the Group has secured
business with Ocado, across all biodegradable wet wipes, and we are
actively cross selling wipes into existing retailers offering a
'one stop shop' for paper products.
CURRENT TRADING AND OUTLOOK
Despite continued supply chain disruption, particularly at ports
around the world and specifically in the UK, the business continues
to manage customer supply well, having secured and maintained
additional stocks in paper and finished goods.
Whilst short-term profitability has been unavoidably impacted by
these significant prices increases, despite having recovered
c.GBP40 million from customer price increases to date, the Group is
confident in its ability to recover the further cost increases,
albeit with an approximately 3-month time lag.
As previously announced, FY22, revenue is now expected to grow
by 17% to c.GBP160m (FY21: GBP136.6m), generating adjusted
EBITDA(1) of c.GBP9.0m (FY21: GBP15.6m) with margin recovery
anticipated in FY23. The Group continues to operate well within its
existing banking covenants and has more than sufficient liquidity
to meet its existing and future needs.
Accrol continues to strengthen its market position with the
operational foundations in place to enable future growth. Volumes
are continuing to strengthen with overall Tissue sales from Q1 to
Q2 rising by 17% - Toilet Tissue up 16%, the newly improved kitchen
towel range up 18%, and facial tissue up 1%, with our newly
acquired JD business growing by 8% and our biodegradable wet wipes
sales up 33%. The Board is confident that the strong pricing
actions, taken to recover unprecedented cost increases, will ensure
a strong recovery of margins and profitability in FY23.
STRATEGIC REVIEW
Notwithstanding the resilient performance of the Group under
exceptional macro pressures, in light of the short-term but
inherent volatility of earnings experienced in the current year, as
announced in the Group's Trading Update on 12 January 2022, the
Board has concluded that it is appropriate for Accrol to conduct a
full strategic review of its business. Such review will be designed
to capitalise on the evident strength of the business' market
position, its balance sheet, and its solvency, underpinned by
significant banking support, to ensure that shareholder value is
optimised, and the Company will provide an update on progress in
due course.
Gareth Jenkins
Chief Executive Officer
FINANCIAL REVIEW
Revenue
Revenue for the Period to 31 October was GBP73.7m (H1 21:
GBP62.3m), an increase of GBP11.4m (18.3%) compared to H1 21,
reflecting the increased scale and diversification of the Group
following the acquisition of LTC in November 2020 and JD in April
2021. Month on month revenues increased steadily during the Period
as volumes strengthened and price increases started to impact.
Gross profit
In line with the wider market, pressures on the Group's raw
material supply chains increased during the Period and, whilst they
have shown significant resilience and supply shortages,
considerable cost increases had to be absorbed in the short
term.
Gross profit as a percentage of revenue at 24.6% (H1 21: 23.7%)
was lower than FY21 exit rates, as higher input costs were only
partially mitigated by pricing increases in the Period, given the
lag in timing of implementation with retail customers.
Adjusted EBITDA
Adjusted EBITDA(1) declined slightly to GBP5.0m (H1 21:
GBP5.4m), reflecting an increase in operating costs driven by
distribution pressures, notably the availability of HGV drivers,
and the increased scale of the operational cost base following the
acquisitions of LTC and JD.
Separately disclosed items
Separately disclosed items totalled GBP0.7m (H1 21: GBP0.6m) of
which GBP0.4m related to incremental costs of supply chain
disruption, particularly at ports and in securing additional
vehicles to ensure continuity of service to our customers. Other
items largely related to operational restructuring measures and
specific COVID-19 related costs within the manufacturing
environment.
Depreciation and amortisation
The total charge for the Period was GBP6.1m (H1 21: GBP3.2m) of
which GBP2.7m (H1 21: GBP1.2m) related to the amortisation of
intangible assets. This increase reflects the Group's acquisitions
of LTC and JD.
Share-based payments
The total charge for the Period under IFRS 2 "Share-based
payments" was GBP0.6m (H1 21: GBP1.3m). This charge related to the
awards made under the 2021 Long Term Incentive Plan, that was
approved on 5 March 2021.
Operating profit and earnings per share
Net finance costs were GBP1.1m (H1 21: GBP0.8m), resulting in a
loss before taxation of GBP3.5m (H1 21: GBP0.5m). Basic losses per
share were 0.8 pence (H1 21: 0.2 pence). Adjusted diluted earnings
per share were 0.2 pence (H1 21: 0.9 pence)
Dividends
A payment of GBP1.6m (equating to 0.5 pence per share) was made
on 30 September 2021, in respect of the final dividend for the year
ended 30 April 2021. No interim dividend will be paid and the
payment of a final dividend for FY22 will be considered by the
Board as part of the Company's strategic review.
Cashflow
The Group's adjusted net debt was GBP21.6m (H1 21: 18.1m). The
net cash flow from operating activities was GBP0.9m (H1 21:
GBP8.7m) with the reduction reflecting a working capital outflow of
GBP3.4m (H1 21: GBP4.0m inflow). This outflow reflected a reduction
in trade payables over the Period, as payments were made for
incremental raw materials stocks that were purchased at the end of
FY21 in order to reduce supply chain risks.
Capital expenditure in the Period was GBP3.4 m (H1 21: GBP6.4m)
including GBP1.2m (H1 21: GBP1.1m) in respect intangible assets
that include IT infrastructure and product development costs. Lease
payments of GBP3.4m (H1 21: GBP2.2m) include leases capitalised in
accordance with IFRS 16. The increase arises as results of the
acquisitions of LTC and JD.
Balance Sheet
The Group's balance sheet reflects the acquisitions of LTC and
JD with net assets increasing to GBP82.7m (H1 21: GBP46.0m). The
increase in intangible assets represent mostly goodwill and
customer relationships arising upon acquisition.
Investment
The final automation of the Leyland site is due to be completed
by the end of March 22, notably on time and to budget. Alongside a
final machine installation, this will complete all major
investments into the Tissue businesses with only c.GBP3m investment
required in existing machinery per year going forward for general
maintenance capital. This will result in the Group having four
state-of-the-art fully automated factories in Blackburn (x2),
Leyland and Leicester operating at significantly lower cost
levels.
The Group has continued to develop its mill plans but, in light
of the current spike in energy costs and building material cost
inflation, investment in a mill will form a part of the strategic
review announced in the Trading Update on 12 January 2022.
Richard Newman
Chief Financial Officer
HALF YEAR CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Income Statement
For six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months Year
ended 31 ended 31 ended 30
October October April
2021 2020 2021
Continuing operations Note GBP'000 GBP'000 GBP'000
Revenue 4 73,709 62,306 136,594
Cost of sales (55,526) (47,532) (98,710)
---------------------------------- ----- ----------- ----------- ----------
Gross profit 18,183 14,774 37,884
Administration costs (14,480) (10,221) (27,072)
Distribution costs (6,083) (4,262) (11,424)
Group operating (loss)/profit (2,380) 291 (612)
Finance costs 7 (1,198) (918) (2,196)
---------------------------------- ----- ----------- ----------- ----------
Finance income 7 111 124 242
---------------------------------- ----- ----------- ----------- ----------
Loss before taxation (3,467) (503) (2,566)
Tax credit/(charge) 8 795 94 (74)
---------------------------------- ----- ----------- ----------- ----------
Loss for the period attributable
to equity shareholders (2,672) (409) (2,640)
---------------------------------- ----- ----------- ----------- ----------
Loss per share (pence)
Basic 6 (0.8) (0.2) (1.1)
Diluted 6 (0.8) (0.2) (1.1)
---------------------------------- ----- ----------- ----------- ----------
Group Operating (loss)/profit (2,380) 291 (612)
Adjusted for:
Depreciation & Amortisation 6,072 3,176 8,306
Share based payments 638 1,250 3,245
Separately disclosed items 5 675 649 4,705
Adjusted EBITDA 5,005 5,366 15,644
---------------------------------- ----- ----------- ----------- ----------
Consolidated Interim Statement of Comprehensive Income
For six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months
ended ended 31 Year
31 October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Loss for the period attributable
to equity shareholders (2,672) (409) (2,640)
Total comprehensive expense attributable
to equity shareholders (2,672) (409) (2,640)
------------------------------------------ ------------ ----------- ------------
Consolidated Interim Balance Sheet
As at 31 October 2021
Unaudited Unaudited Audited
31 October 31 October 30 April
2021 2020 2021
Note GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and
equipment 65,207 43,131 63,341
Intangible assets 60,408 26,754 61,763
Lease receivables 4,680 5,368 5,027
Deferred tax asset - 895 -
------------------------------- ----- ----------- ----------- ----------
Total non-current assets 130,295 76,148 130,131
------------------------------- ----- ----------- ----------- ----------
Current assets
Inventories 20,787 12,830 23,185
Trade and other receivables 24,487 17,550 26,480
Lease receivables 689 662 675
Derivative financial
instruments - 203 -
Cash and cash equivalents 3,074 5,791 7,604
------------------------------- ----- ----------- ----------- ----------
Total current assets 49,037 37,036 57,944
------------------------------- ----- ----------- ----------- ----------
Total assets 179,332 113,184 188,075
------------------------------- ----- ----------- ----------- ----------
Current liabilities
Borrowings 9 (17,488) (14,102) (12,349)
Trade and other payables (39,593) (28,531) (47,031)
Derivative financial
instruments (2) - (120)
Income taxes - - (300)
Provisions 10 (7,327) (368) (7,321)
Total current liabilities (64,410) (43,001) (67,121)
------------------------------- ----- ----------- ----------- ----------
Total assets less current
liabilities 114,922 70,183 120,954
------------------------------- ----- ----------- ----------- ----------
Non-current liabilities
Borrowings 9 (29,310) (24,024) (30,851)
Deferred tax liabilities (2,886) - (3,666)
Provisions 10 - (186) -
Total non-current liabilities (32,196) (24,210) (34,517)
------------------------------- ----- ----------- ----------- ----------
Total liabilities (96,606) (67,211) (101,638)
------------------------------- ----- ----------- ----------- ----------
Net assets 82,726 45,973 86,437
------------------------------- ----- ----------- ----------- ----------
Capital and reserves
Share capital 319 195 311
Share premium 108,782 68,015 108,782
Capital redemption reserve 27 27 27
Retained earnings (26,402) (22,264) (22,683)
Total equity shareholders' funds 82,726 45,973 86,437
-------------------------------------- ----------- ----------- ----------
Consolidated Interim Statement of Changes in Equity
For six months ended 31 October 2021
Capital Retained
Share Share redemption earnings/
capital premium reserve (deficit) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30 April 2021
(audited) 311 108,782 27 (22,683) 86,437
Comprehensive income
Loss for the period - - - (2,672) (2,672)
Total comprehensive expense - - - (2,672) (2,672)
-------------------------------- ---------- ---------- ------------ ----------- --------
Transactions with owners
recognised directly in
equity
---------- ---------- ------------ -----------
Proceeds from shares
issued 8 - - - 8
Share-based payment (inc.
tax) - - - (1,047) (1,047)
Total transactions recognised
directly in equity 8 - - (1,047) (1,039)
-------------------------------- ---------- ---------- ------------ ----------- --------
Balance at 31 October
2021 (unaudited) 319 108,782 27 (26,402) 82,726
-------------------------------- ---------- ---------- ------------ ----------- --------
Consolidated Interim Cash Flow Statement
For six months ended 31 October 2021
Unaudited Unaudited Audited
Six months Six months Year
ended 31 ended 31 ended
October October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating (loss)/profit (2,380) 291 (612)
Adjustment for:
Depreciation 3,401 1,940 4,786
Amortisation of intangible
assets 2,671 1,236 3,520
Share based payments 638 1,250 3,245
----------------------------------------- ------------ ------------ ----------
Operating cash flows before movements
in working capital 4,330 4,717 10,939
Decrease/(increase) in inventories 2,398 (3,457) (8,553)
Decrease in trade and other
receivables 1,994 3,130 604
(Decrease)/increase in trade
and other payables (7,688) 4,467 14,800
Increase/(decrease) in provisions 6 13 (418)
(Increase)/decrease in derivatives (118) (175) 148
----------------------------------------- ------------ ------------ ----------
Cash generated from operations 922 8,695 17,520
Tax received 15 40 40
----------------------------------------- ------------ ------------ ----------
Net cash flows from operating
activities 937 8,735 17,560
----------------------------------------- ------------ ------------ ----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (2,300) (5,331) (9,112)
Purchase of intangible assets (1,222) (1,114) (1,702)
Acquisition of subsidiaries
net of cash acquired - - (32,235)
Receipt of capital element
of leases 334 321 650
Lease interest received 111 124 242
Net cash flows used in investing
activities (3,077) (6,000) (42,157)
----------------------------------------- ------------ ------------ ----------
Cash flows from financing
activities
Proceeds of issue of ordinary
shares 8 - 42,610
Cost of raising equity - - (1,727)
Amounts received from factors 76,284 69,995 151,645
Amounts paid to factors (74,391) (75,221) (161,489)
New finance leases 1,940 131 1,694
Repayment of capital element
of leases (3,404) (2,241) (5,764)
Advance/(repayment) of bank
loans - 3,266 (997)
Transaction costs of bank
facility - (306) (413)
Dividends paid (1,594) - -
Interest paid (1,233) (715) (1,505)
----------------------------------------- ------------ ------------ ----------
Net cash flows used in financing
activities (2,390) (5,091) 24,054
---------------------------------------- ------------ ------------ ----------
Net decrease in cash and
cash equivalents (4,530) (2,356) (543)
Cash and cash equivalents at
beginning of the period 7,604 8,147 8,147
---------------------------------------- ------------ ------------ ----------
Cash and cash equivalents
at period end 3,074 5,791 7,604
----------------------------------------- ------------ ------------ ----------
The notes below form part of these condensed interim financial
statements.
Notes to the Interim Financial Statements
For six months ended 31 October 2021
1. General Information
Accrol Group Holdings plc (the "Company") and its subsidiaries
(together "the Group") is incorporated in the United Kingdom with
company number 09019496.
The registered address of the Company is the Delta Building,
Roman Road, Blackburn, United Kingdom, BB1 2LD.
The Company's shares are quoted on the Alternative Investment
Market.
The principal activity of the Company and its subsidiaries
(together the 'Group') is soft paper tissue conversion.
The condensed consolidated interim financial information was
approved and authorised for issue by a duly appointed and
authorised committee of the Board of Directors on 18 January
2022.
This condensed interim financial information has not been
audited or reviewed by the Company's auditor.
Forward looking statements
Certain statements in this results announcement are forward
looking. The terms "expect", "anticipate", "should be", "will be"
and similar expressions identify forward-looking statements.
Although the Board of Directors believes that the expectations
reflected in these forward-looking statements are reasonable, such
statements are subject to a number of risks and uncertainties and
events could differ materially from these expressed or implied by
these forward-looking statements.
2. Basis of preparation
This condensed consolidated interim financial information for
the six months ended 31 October 2021 should be read in conjunction
with the Group's Annual Report and Accounts for the year ended 30
April 2021, prepared and approved by the Directors in accordance
with International Financial Reporting Standards as adopted by the
EU ('Adopted IFRSs'), IFRIC Interpretations and the Companies Act
2006.
The interim financial statements included in this report are not
audited and do not constitute statutory accounts within the meaning
of the Companies Act 2006. The Annual Report and accounts for the
year ended 30 April 2021 have been filed with Companies House. The
Group's auditor, BDO LLP have reported on those accounts and their
report was unqualified.
The interim financial statements have been prepared on a going
concern basis and on the historical cost convention modified for
the revaluation of certain financial instruments.
In assessing the Group's ability to continue as a going concern,
the Board has reviewed the Group's cash flow and profit forecasts.
The impact of potential risks and related sensitivities to the
forecasts were considered, whilst assessing the available
mitigating actions.
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. The Group continues to monitor the
impact of the COVID-19 pandemic on performance along with the
ongoing disruption of the supply chain, particularly at ports,
exacerbated by the national shortage of haulage drivers.
The Board has formed a judgement that there is reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
the going concern basis has been adopted in preparing the interim
financial statements.
3. Accounting Policies
The accounting policies applied in preparing the unaudited
interim financial statements are consistent with those used in
preparing the statutory financial statements for the year ended 30
April 2021 as set out in the Group's Annual Report and
Accounts.
4. Revenue
The Group has one type of revenue and class of business.
The analysis of geographical area of destination of the Group's
revenue is set out below:
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
United Kingdom 71,855 57,874 127,107
Europe 1,854 4,432 9,487
---------------- ----------- ----------- ------------
Total 73,709 62,306 136,594
---------------- ----------- ----------- ------------
5. Separately disclosed items
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Acquisition professional fees - - 2,150
Acquisition integration costs - - 724
--------------------------------- ----------- ----------- ------------
Acquisition related items - - 2,874
--------------------------------- ----------- ----------- ------------
Operational restructure 145 327 ,1,034
COVID-19 costs 43 245 670
Set up & exit costs relating to
Skelmersdale warehouse 5 6 12
FCA investigation legal costs - - 22
Supply chain disruption 430 - -
Other 52 71 93
--------------------------------- ----------- ----------- ------------
Other items 675 649 1,831
---------------------------------
Total 675 649 4,705
--------------------------------- ----------- ----------- ------------
Operational restructure costs - GBP145,000 (31 October 2020:
GBP327,000)
Salary and settlement costs due to the reorganising and
restructuring of its operations to improve the long-term
profitability and efficiencies .
COVID-19 - GBP43,000 (31 October 2020: GBP245,000)
The Group incurred incremental costs principally relating to
overtime and temporary labour, to cover employees who were in
isolation during this period. There were additional costs for COVID
safety representatives and also PPE/cleaning costs.
Supply chain disruption - GBP430,000 (31 October 2020:
GBPnil)
The Group has incurred additional costs due to ongoing
disruption of the supply chain, particularly at ports, exacerbated
by the national shortage of haulage drivers.
6. Loss per share
The basic loss per share is calculated by dividing the loss
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
period.
Diluted loss per share is calculated by dividing the loss above
by the weighted average number of shares in issue during the year,
adjusted for potentially dilutive shares.
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Loss for the period attributable
to equity shareholders (2,672) (409) (2,640)
Number Number Number
'000 '000 '000
Issued ordinary shares at beginning
of period 311,355 195,247 195,247
Effect of shares issued in the
period 4,088 - 51,214
----------- ----------- ------------
Basic weighted average number of
shares at end of period 315,443 195,247 246,461
Effect of conversion of Accrol
Group Holdings plc share options - - -
Diluted weighted average number
of shares at end of period 315,443 195,247 246,461
Basic loss per share (pence) (0.8) (0.2) (1.1)
Diluted loss per share (pence) (0.8) (0.2) (1.1)
For the periods above, no adjustment has been made to the
weighted average number of shares for the purpose of the diluted
loss per share calculation as the effect would be
anti-dilutive.
7. Finance costs
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Bank loans and overdrafts 375 402 661
Finance lease interest 521 313 844
Amortisation of finance fees 106 196 438
Unwind of discount on provisions 196 7 253
Total finance costs 1,198 918 2,196
---------------------------------- ----------- ----------- ------------
Lease interest income 111 124 242
Total finance income 111 124 242
----------------------- ---- ---- ---------
Net finance costs 1,087 794 1,954
-------------------- ------ ---- -----------
8. Taxation
The taxation credit recognised is based on management's best
estimate of the weighted average annual tax rate expected for the
full financial year.
The tax credit for the period has been calculated at an
effective rate of 22.9% (half year ended 31 October 2020: 18.6%;
year ended 30 April 2021: 19%).
9. Borrowings
Unaudited Unaudited Audited
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Current
Bank facility 1,854 2,949 1,821
Factoring facility 5,869 6,591 3,975
Leases 9,765 4,562 6,553
------------------------------------- --------------- ----------- ------------
Total current 17,488 14,102 12,349
------------------------------------- --------------- ----------- ------------
Non-current
Bank facility 9,880 11,810 9,807
Leases 19,430 12,214 21,044
------------------------------------- --------------- ----------- ------------
Total non-current 29,310 24,024 30,851
------------------------------------- --------------- ----------- ------------
Total current & non-current 46,798 38,126 43,200
------------------------------------- --------------- ----------- ------------
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
Total borrowings (excluding finance
fees) 47,064 38,633 43,572
Less: lease receivables (5,369) (6,030) (5,702)
Less: cash and cash equivalents (3,074) (5,791) (7,604)
Net debt 38,621 26,812 30,266
------------------------------------- --------------- ----------- ------------
Less: leases recognised on adoption
of IFRS16 (17,008) (8,709) (15,628)
Adjusted net debt (excl leases recognised
on adoption of IFRS16) 21,613 18,103 14,638
------------------------------------------- --------- -------- ------------
10. Provisions
Unaudited Unaudited Audited
31 October 31 October 30 April
2021 2020 2021 Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Onerous contracts 172 554 358 172 -
Contingent consideration 6,800 - 6,608 6,800 -
Other 355 - 355 355 -
Total provisions 7,327 554 7,321 7,327 -
-------------------------- ----------- ----------- ----------- ----------- ------------
The onerous contract provision of GBP172,000 relates to a
logistics agreement resulting from the decision to exit from the
Skelmersdale facility.
Other provisions of GBP355,000 arose on the Group's acquisition
of Leicester Tissue Company and John Dale, relating to dilapidation
and other compliance provisions.
The contingent consideration relates to the acquisition of
Leicester Tissue Company.
11. Dividends
On 30 September 2021, the Company paid a final dividend of 0.5p
per share for the year ended 30 April 2021, totalling
GBP1,594,000.
12. Non-GAAP measures
Adjusted profit before tax
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Reported (loss) before tax (3,467) (503) (2,566)
Adjustment for:
Amortisation 2,671 1,236 3,520
Separately disclosed items 675 649 4,705
Share based payment 638 1,250 3,245
Discount unwind on contingent consideration 192 - 239
--------------------------------------------- ----------- ----------- ------------
Adjusted profit before tax 709 2,632 9,143
--------------------------------------------- ----------- ----------- ------------
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 Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2021 2020 April 2021
GBP'000 GBP'000 GBP'000
Earnings attributable to shareholders (2,672) (409) (2,640)
Adjustment for:
Amortisation 2,671 1,236 3,520
Separately disclosed items 675 649 4,705
Share based payment 638 1,250 3,245
Discount unwind on contingent consideration 192 - 239
Tax effect of adjustments above (961) (596) (2,225)
--------------------------------------------- ----------- ----------- ------------
Adjusted earnings attributable
to shareholders 543 2,130 6,844
--------------------------------------------- ----------- ----------- ------------
Number Number Number
GBP'000 GBP'000 GBP'000
Basic weighted average number of
shares 315,443 195,247 246,461
Dilutive share options 3,152 30,463 10,675
Diluted weighted average number
of shares 318,595 225,710 257,136
pence pence pence
Adjusted earnings per share 0.2 1.1 2.7
Diluted adjusted earnings per share 0.2 0.9 2.6
For the periods above, no adjustment has been made to the
weighted average number of shares for the purpose of the diluted
earnings per share calculation as the effect would be
anti-dilutive.
13. Events after the balance sheet date
There are no subsequent events after the reporting date which
require disclosure other than those already announced in the
trading update of 12(th) January 2022.
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END
IR KDLFFLFLBBBZ
(END) Dow Jones Newswires
January 18, 2022 02:00 ET (07:00 GMT)
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