TIDMACRL
RNS Number : 6143N
Accrol Group Holdings PLC
24 January 2023
24 January 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Accrol Group Holdings plc
("Accrol, the "Group" or the "Company")
HALF YEAR RESULTS
Strong progress across all businesses and products
Accrol (AIM: ACRL), the UK's leading independent tissue
converter, announces its unaudited results for the six months ended
31 October 2022 ("H1 23" or the "Period").
Gareth Jenkins, Chief Executive Officer of Accrol, said :
" The Board is pleased to report that the Group performed
strongly in H1 FY23, delivering substantial growth in volume,
revenue, and profit, as well as further strengthening its market
position. The Group continues to demonstrate its resilience against
the challenges of input cost inflation, and we successfully
leveraged our supply position with customers to recover all
additional costs incurred in the Period.
"The Group delivered a notable 14% volume growth in the Period,
against an overall market which grew by just 1%. This was achieved
by offering the consumer great value products which suit every
budget. Our strengthened supply model and established relationships
with the retailers will ensure that the Group is well positioned to
deliver strong results in difficult market conditions.
"As announced in our trading update on 21 November, adjusted net
debt at 31 October 2022 was lower than anticipated at c.GBP30.5m.
This was achieved despite a significant increase in tissue stocks,
as the Group continued to manage uncertainty in its supply chains
and the effect of strikes at UK ports. This working capital
position is unwinding, as we progress through H2 and trading
conditions normalise. Adjusted net debt at the full year end
remains on track with market forecasts, which were lowered at the
time of the trading update to less than 1.5x EBITDA.
"The Group has performed well in H2 to date and is on track to
achieve revenue and adjusted EBITDA growth for the year ending 30
April 2023 ("FY23") marginally ahead of expectations at GBP230m and
GBP15.5m respectively."
Key Financials H1 23 H1 22 Change
Revenue GBP121.1m GBP73.7m 64.3%
Gross margin 18.0% 24.7% (6.7%)
Adjusted EBITDA(1) GBP7.1m GBP5.0m 42.0%
Adjusted profit before tax(2) GBP3.2m GBP0.5m GBP2.7m
Loss before tax (GBP0.9m) (GBP3.5m) GBP2.6m
Adjusted diluted earnings per
share 0.7p 0.2p 0.5p
Diluted loss per share (0.2p) (0.8p) 0.6p
Adjusted net debt(3) GBP30.5m GBP21.6m (GBP8.9m)
[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 profit before
amortisation, separately disclosed items and share based
payments.
3 Adjusted net debt excludes operating type leases recognised on
the balance sheet in accordance with IFRS 16.
H1 23 highlights:
-- Accrol's market share by volume increased further to 21.5%
(FY22: 19.5%), compared to a flat overall UK market
-- Private label sector strengthened in the Period with Accrol's
volumes continuing to outpace the sector - the Group's
share of private label now totals 46% (FY22: 44%)
-- Private label volumes ahead of pre-pandemic levels and
growing at an unprecedented rate against those of the traditional
brands (Q1 FY23: 54% vs Q1 FY22: 50%)
-- Strong EBITDA performance of GBP7.1m, despite considerable
inflation driven input cost rises and supply chain issues,
which impacted margin in the short term as additional costs
were recovered
-- Significant price increases implemented in the Period through
a supportive retail customer base
-- Strong performance from John Dale with a 33% increase in
biodegradable wet wipe sales - this business has grown
sales from c.GBP1.5m at acquisition in 2021 to exit FY23
with anticipated sales of c.GBP6m
-- Final investment in automation and capacity concluded in
Q1 on time and in budget - major investment programme into
the Group's tissue business now completed
People
-- Richard Newman, Chief Financial Officer, to step down at
the end of April but will stay with the Group until the
full year results which are expected by September 2023.
He will be succeeded by Chris Welsh, who joined the Group
from Ineos Chemicals in October 2022
Current trading and outlook
-- Strong volume performance in H2 to date, driven by continued
strengthening of private label
-- Gross margins expected to continue to improve in H2 and
into FY24, as time lag impact on price increases works
through - any further input cost increases will be mitigated
in the main by new index linked contracts
-- Group on track to deliver revenue growth of 50% to c.GBP230m
and Adjusted EBITDA marginally ahead of market expectations
in FY23, despite an annualised increase in costs of over
GBP80m
Strategic Review update
The Group has today announced the outcomes of its strategic
review, which defines the Group's medium-term ambitions:
-- Continued focus on core toilet and kitchen towel business;
-- To grow the facial and wet wipes business;
-- To develop a licensed business model and grow direct to
consumer Oceans brand;
-- Build a sustainable paper mill;
-- Acquire selectively to strengthen and extend Accrol's product
offering; and
-- Maximise medium term tangible shareholder returns through
a combination of dividends and, potentially, share buybacks.
Dan Wright, Executive Chairman of Accrol, said:
" Over the last four years, Accrol has been transformed as an
organisation to one that currently supplies c.21.5% of the UK
market's tissue volumes and has considerable further capacity. Our
state-of-the-art businesses are in an incredibly strong position to
benefit in a private label market, which is growing rapidly and
significantly. Our customer base is strong and varied and the
ability to pass-on cost increases swiftly has been evidenced in the
Group's Half Year Results, also announced today. We look forward
with increased confidence, having clearly identified where we can
grow the business."
The Strategic Review Outcomes announcement is available on the
Company's website:
https://www.accrol.co.uk/investors/regulatory-news/ .
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 (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 volumes totalling c.21.5% of the cGBP2.5bn UK retail
tissue market.
For more information, please visit www.accrol.co.uk.
OPERATIONAL REVIEW
Summary of progress
The Group made strong progress in the Period, successfully
navigating the ongoing well-reported macro challenges. Over the
last four years, we have built a business with increased scale,
operational efficiency, and product diversity, which has enabled
sustainable growth in both volume and market share. We are well
positioned to benefit from the significant further growth expected
from private label and discount retailers, as consumers seek
greater value given the ongoing cost-of-living pressures.
Group revenues increased by 64.3% in the Period, when compared
to H1 FY22, due to a strengthening in volume demand of 14% and the
successful recovery of input price increases from all customers.
Our market share in volume terms also increased in the Period to
21.5% (FY22: 19%), in a market that showed an overall increase of
1%.
The success of Accrol's simplified range is demonstrated by this
increase in market share and increase in customers, which has grown
from c.6% to 21.5% since 2017. No one customer represents more than
20% of total revenue. The Group has also made progress on the
development of higher margin, third party licensed brands, which
are a part of the Group's mid to long-term growth ambitions for
revenue growth in its core toilet and kitchen towel business.
Key performance improvements in the Period included:
-- Production increased by 57 million rolls in H1 FY23 compared
to H1 FY22;
-- Wet wipes sales doubled in the Period and volumes have more
than tripled since John Dale was acquired 24 months ago.
Sales in FY23 expected to be c.GBP6m, compared to GBP1.5m
on acquisition;
-- Two new lines installed in the Blackburn facial tissue business,
which was transferred from the John Dale site, reducing
our cost base there and driving increased outputs in Blackburn;
-- Automation programme completed with installation of one
new line, which went operational in the New Year;
-- New warehouse opened in Leyland to improve supply chain
efficiency and further reduce inbound costs;
-- Attained and retained our Living Wage employer accreditation;
-- Relationships with all our key customers strengthened and
Accrol's position as the UK's leading private-label supplier
consolidated further;
-- Successfully delivered major price increases recovering
over GBP80 million in additional costs to the business;
and
-- Transitioned all toilet roll products to 38mm core, significantly
increasing rolls per journey and taking 12% of the Group's
lorries off the road.
The market
The Group's markets are covered in detail with a full update in
the Strategic Review Outcomes announcement, published today.
People
Engaged, well-trained people are a key part of our business
model and sustainability. We have an outstanding team and I would
like to thank everyone for their continued hard work and
commitment, which has enabled the Group to perform so well in these
challenging economic conditions.
Richard Newman, the Group's Chief Financial Officer, has
informed the Company of his intention to step down from the Board
and his role as Chief Financial Officer ("CFO") at the end of April
2023. He will remain in the business until the FY23 audit process
is completed and the FY23 Final Results are released, no later than
September 2023.
Richard joined Accrol in early in 2021 with the remit to
professionalise and transform the finance function of the Group and
has established a finance infrastructure capable of serving a much
larger business. Richard has strengthened the finance team through
the recruitment of high-quality people and has helped to lead the
business through a challenging period of significant cost
inflation.
Chris Welsh, Group Financial Controller, who joined Accrol from
Ineos Chemicals in October 2022 as part of the Board's succession
planning, will step up into the role of Chief Financial Officer
from the start of May 2023. Chris is a highly skilled and
experienced financial executive, who has held several senior roles
at Ineos in the last seven years, latterly as Head of Financial
Reporting at its Enterprises Division. Chris is a Chartered
Accountant, who qualified with PwC in 2015.
Environmental, Social and Governance ("ESG")
The business has delivered the following key improvements in the
last 12 months:
-- 15% reduction in tissue waste;
-- 15% more rolls per journey, resulting is a 12% reduction
in vehicles used;
-- Zero waste to landfill;
-- 7% less plastic packaging;
-- 3% energy reduction;
-- 8% reduction in carbon emissions, despite the business
growing 14%;
-- 22% females in leadership roles up from 6% in 2020;
-- Sedex membership;
-- All sites BRCGS accredited to A or AA;
-- 89% of employees are "proud to work at Accrol"; and
-- Living Wage Accredited Employer.
A full update on the Group's progress is available in our second
ESG Report, which was published in November 2022. This is available
to view on the Group's website: https://www.accrol.co.uk/esg/ .
Current Trading and Outlook
The outcomes of the Strategic Review announced today showcase
the Group's strengths and the market opportunity. Accrol's main
markets, the discount retailers and private label products,
continue to grow strongly, driven by the ongoing cost-of-living
crisis. The latest industry data is demonstrating a continuation of
the consumer shift away from the traditional tissue brands into
best value, private label alternatives.
The Group's increasingly strong market position and customer
relationships, combined with its plans for a paper mill, mean
Accrol is very well positioned to capitalise on this forecast
market growth. The business has delivered substantial increases in
volumes in the Period, significantly ahead of the wider market, and
the Board is increasingly confident that the growth trajectory of
the business, as set out in the strategic review, is both
attainable and sustainable. The volume growth seen in the first
half is expected to continue, following a strong start to H2.
Whilst always mindful of the wider economic uncertainties, the
Group's model is robust, and the Board is confident the Group to be
on track to deliver results for FY23 marginally ahead of market
expectations.
Gareth Jenkins
Chief Executive Officer
FINANCIAL REVIEW
Revenue
Revenue in the Period was GBP121.1m (H1 22: GBP73.7m), an
increase of GBP47.4m (64.3%) compared to H1 22. This increase in
revenue represents a growth in volume of 14% as demand in the
private label market strengthened to above pre-pandemic levels. The
Group also successfully delivered significant price increases to
demonstrate resilience against the pressures of rising cost price
inflation.
Gross profit
Gross profit for the Period was GBP21.7m (H1 22: GBP18.2m), an
increase of GBP3.5m (19.2%) compared to H1 22. Gross profit as a
percentage of revenue at 18.0% (H1 22: 24.7%) was lower than H1 22,
as higher input costs were only partially mitigated by pricing
increases in the Period, given the relative time lag of
implementing pricing pass throughs with retail customers.
In line with the wider market, the Group continued to experience
supply chain disruption around the world and specifically at
shipping ports in the UK. The business continues to manage customer
supply well; having invested into working capital and secured
additional key raw material products to maintain consistent
supply.
Adjusted EBITDA
Adjusted EBITDA increased to GBP7.1m (H1 22: GBP5.0m), an
increase of GBP2.1m (42.0%), compared to H1 22; largely reflecting
the robust gross margin performance. Operating costs remain a key
focus of the Group and, despite general price inflationary
pressures, have largely remained flat to maintain EBITDA profit
margin.
Separately disclosed items
Separately disclosed items totalled GBP0.5m (H1 22: GBP0.7m),
all of which related to exceptional incremental costs of supply
chain disruption, particularly at ports.
Depreciation and amortisation
The total charge for the Period was GBP5.3m (H1 22: GBP6.1m), of
which GBP3.1m (H1 22: GBP2.9m) related to the amortisation of
intangible assets.
Share-based payments
The total charge for the Period under IFRS 2 "Share-based
payments" was GBP0.6m (H1 22: GBP0.6m). This charge related to the
awards made under the 2022 Long Term Incentive Plan, that was
approved on 5 March 2021.
Operating profit and earnings per share
Net finance costs were GBP1.6m (H1 22: GBP1.1m), resulting in a
loss before taxation of GBP0.9m (H1 22: GBP3.5m). Basic losses per
share were 0.2 pence (H1 22: 0.8 pence). Adjusted diluted earnings
per share were 0.7 pence (H1 22: 0.2 pence).
Dividends
The Group intends to resume dividend payments, as soon as is
practicable, with a prudent and sustainable dividend cover of
c.2.5x - 3.5x. In addition, the Group also intends to request from
shareholders the authority to buy back its ordinary shares. The
Board is mindful of liquidity constraints but sees significant
value in the current Accrol equity valuation and seeks the
flexibility to act accordingly.
Cashflow
The Group's adjusted net debt was GBP30.5m (H1 22: GBP21.6m).
The net cash flow from operating activities was GBP6.1m (H1 22:
GBP0.9m) with the increase reflecting improved operating margins
offset by an investment into working capital of GBP1.0m (H1 22:
GBP3.4m outflow). This net working capital outflow primarily
represented an investment into building inventory, securing
additional key raw material products to maintain consistent supply
during supply chain disruptions at UK ports.
Capital expenditure in the Period was GBP5.8m (H1 22: GBP3.5m),
which primarily related to the continued automation of production
facilities. Lease payments of GBP3.0m (H1 22: GBP3.4m) include
leases capitalised in accordance with IFRS 16.
Balance Sheet
The Group had net assets of GBP82.7m (H1 22: GBP82.7m), as at 31
October 2022. Property, plant and equipment increased reflecting
the renewal of property related leases, capitalised in accordance
with IFRS16. During the Period, the Group increased its
multi-currency factoring facility, used to provide financing for
general working capital requirements, from GBP27.0m to GBP35.0m to
recognise the significant growth in revenue. The Group also
maintains a GBP17.0m revolving credit facility and continues to
operate within the associated covenants attached to this
facility.
Investment
The final automation of the Leyland site was completed in the
Period, notably on time and to budget which, alongside a final
machine installation, completed 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 now positions the Group well with four state-of-the-art fully
automated factories in Blackburn (x2), Leyland and Leicester
operating at significantly lower cost levels.
Outlook
The Group is well invested with adjusted net debt on track to be
less than 1.5x EBITDA by the current year end (FY22: 3.0x). The
Group's margins, which were impacted by the time-lag on price
increases, are recovering in H2 FY23 and we are confident that this
recovery to continue throughout FY24.
Richard Newman
Chief Financial Officer
olidated Interim Income Statement
For six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months Year
ended 31 ended 31 ended 30
October October April
2022 2021 2022
Continuing operations Note GBP'000 GBP'000 GBP'000
Revenue 4 121,072 73,709 159,450
Cost of sales (99,332) (55,526) (123,211)
---------------------------------- ----- ----------- ----------- ----------
Gross profit 21,740 18,183 36,239
Administration costs (13,429) (14,480) (23,687)
Distribution costs (7,651) (6,083) (12,778)
Group operating profit/(loss) 660 (2,380) (226)
Finance costs 7 (1,770) (1,198) (2,522)
---------------------------------- ----- ----------- ----------- ----------
Finance income 7 166 111 216
---------------------------------- ----- ----------- ----------- ----------
Loss before taxation (944) (3,467) (2,532)
Tax credit 8 179 795 835
---------------------------------- ----- ----------- ----------- ----------
Loss for the period attributable
to equity shareholders (765) (2,672) (1,697)
---------------------------------- ----- ----------- ----------- ----------
Loss per share (pence)
Basic 6 (0.2) (0.8) (0.5)
Diluted 6 (0.2) (0.8) (0.5)
---------------------------------- ----- ----------- ----------- ----------
Group Operating (loss)/profit 660 (2,380) (226)
Adjusted for:
Depreciation & Amortisation 5,348 6,072 11,351
Share based payments 565 638 508
Separately disclosed items 5 487 675 (2,577)
Adjusted EBITDA 7,060 5,005 9,056
---------------------------------- ----- ----------- ----------- ----------
Consolidated Interim Statement of Comprehensive Income
For six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months
ended ended 31 Year
31 October October ended 30
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Loss for the period attributable
to equity shareholders (765) (2,672) (1,697)
Total comprehensive expense attributable
to equity shareholders (765) (2,672) (1,697)
------------------------------------------ ------------ ----------- ------------
Consolidated Interim Balance Sheet
As at 31 October 2022
Unaudited Unaudited Audited
As at 31 As at 31
October October As at 30
2022 2021 April 2022
Note GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and
equipment 87,276 65,207 77,803
Intangible assets 56,782 60,408 58,958
Lease receivables 4,233 4,680 4,325
------------------------------- ----- ---------- ---------- ------------
Total non-current assets 148,291 130,295 141,086
------------------------------- ----- ---------- ---------- ------------
Current assets
Inventories 36,767 20,787 26,241
Trade and other receivables 31,868 24,487 31,592
Lease receivables 888 689 703
Derivative financial
instruments - - 805
Cash and cash equivalents 7,590 3,074 243
------------------------------- ----- ---------- ---------- ------------
Total current assets 77,113 49,037 59,584
------------------------------- ----- ---------- ---------- ------------
Total assets 225,404 179,332 200,670
------------------------------- ----- ---------- ---------- ------------
Current liabilities
Borrowings 9 (37,886) (17,488) (26,482)
Trade and other payables (62,498) (39,593) (52,367)
Financial instruments (154) (2) -
Income taxes - - (300)
Provisions 10 - (7,327) (33)
Total current liabilities (100,538) (64,410) (79,182)
------------------------------- ----- ---------- ---------- ------------
Total assets less current
liabilities 124,866 114,922 121,488
------------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Borrowings 9 (39,274) (29,310) (35,169)
Deferred tax liabilities (2,922) (2,886) (3,100)
Provisions 10 - - (275)
Total non-current liabilities (42,196) (32,196) (38,544)
------------------------------- ----- ---------- ---------- ------------
Total liabilities (142,734) (96,606) (117,726)
------------------------------- ----- ---------- ---------- ------------
Net assets 82,670 82,726 82,944
------------------------------- ----- ---------- ---------- ------------
Capital and reserves
Share capital 319 319 319
Share premium 108,782 108,782 108,782
Capital redemption reserve 27 27 27
Retained earnings (26,458) (26,402) (26,184)
Total equity shareholders' funds 82,670 82,726 82,944
-------------------------------------- ---------- ---------- ------------
Consolidated Interim Statement of Changes in Equity
For six months ended 31 October 2022
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 2022
(audited) 319 108,782 27 (26,184) 82,944
Comprehensive income
Loss for the period - - - (765) (765)
Total comprehensive expense - - - (765) (765)
--------------------------------- ---------- ---------- ------------ ----------- --------
Transactions with owners
recognised directly in equity
---------- ---------- ------------ -----------
Share-based payment (inc.
tax) - - - 491 491
Total transactions recognised
directly in equity - - - 491 491
--------------------------------- ---------- ---------- ------------ ----------- --------
Balance at 31 October 2022
(unaudited) 319 108,782 27 (26,458) 82,670
--------------------------------- ---------- ---------- ------------ ----------- --------
Consolidated Interim Cash Flow Statement
For six months ended 31 October 2022
Unaudited Unaudited Audited
Six months Six months Year
ended 31 October ended 31 ended 30
2022 October 2021 April 2022
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating profit/(loss) 660 (2,380) (226)
Adjustment for:
Depreciation 2,248 3,401 5,857
Impairment of property, plant
and equipment - - 965
Amortisation of intangible
assets 3,100 2,671 5,494
Loss on disposal of property, plant
and equipment (10) - (296)
Acquisition contingent consideration - - (6,277)
Share based payments 565 638 508
------------------------------------------ ------------------ -------------- ------------
Operating cash flows before movements
in working capital 6,563 4,330 6,025
(Increase)/decrease in inventories (10,525) 2,398 (3,056)
(Increase)/decrease in trade and
other receivables (277) 1,994 (5,112)
Increase/(decrease) in trade and
other payables 9,944 (7,688) 5,422
(Decrease)/increase in provisions (608) 6 (934)
Decrease/(increase) in derivatives 958 (118) (925)
------------------------------------------ ------------------ -------------- ------------
Cash generated from operations 6,055 922 1,420
Tax received - 15 15
------------------------------------------ ------------------ -------------- ------------
Net cash flows from operating
activities 6,055 937 1,435
------------------------------------------ ------------------ -------------- ------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (3,867) (2,300) (4,987)
Proceeds from sale of property,
plant and equipment 10 - 48
Purchase of intangible assets (1,938) (1,222) (3,145)
Receipt of capital element
of leases 536 334 674
Lease interest received 166 111 216
Net cash flows used in investing
activities (5,093) (3,077) (7,194)
------------------------------------------ ------------------ -------------- ------------
Cash flows from financing
activities
Proceeds of issue of ordinary
shares - 8 8
Amounts received from factors 145,251 76,284 187,204
Amounts paid to factors (142,645) (74,391) (172,436)
New finance leases 1,691 1,940 1,939
Repayment of capital element
of leases (3,039) (3,404) (5,463)
Advance/(repayment) of bank
loans 7,000 - (9,000)
Transaction costs of bank facility (98) - (115)
Dividends paid - (1,594) (1,594)
Interest paid (1,775) (1,233) (1,354)
------------------------------------------ ------------------ -------------- ------------
Net cash flows from/(used) in
financing activities 6,385 (2,390) (1,602)
----------------------------------------- ------------------ -------------- ------------
Net increase/(decrease) in cash and
cash equivalents 7,347 (4,530) (7,361)
Cash and cash equivalents at beginning
of the period 243 7,604 7,604
------------------------------------------ ------------------ -------------- ------------
Cash and cash equivalents
at period end 7,590 3,074 243
------------------------------------------ ------------------ -------------- ------------
The notes below form part of these condensed interim financial
statements.
Notes to the Interim Financial Statements
For six months ended 31 October 2022
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 20 January
2023.
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 2022 should be read in conjunction
with the Group's Annual Report and Accounts for the year ended 30
April 2022, 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 2022 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 2022 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
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
United Kingdom 114,086 71,855 149,914
Europe 6,986 1,854 9,536
---------------- ----------- ----------- ------------
Total 121,072 73,709 159,450
---------------- ----------- ----------- ------------
5. Separately disclosed items
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Acquisition contingent consideration - - (6,277)
Acquisition professional fees - - 766
Acquisition integration costs - - 85
-------------------------------------- ----------- ----------- ------------
Acquisition related items - - (5,426)
-------------------------------------- ----------- ----------- ------------
COVID-19 costs - 43 153
Impairment of property, plant and
equipment - - 965
Accounting policy change - - 637
Supply chain disruption 465 430 696
Other 22 202 398
-------------------------------------- ----------- ----------- ------------
Other items 487 675 2,849
--------------------------------------
Total 487 675 (2,577)
-------------------------------------- ----------- ----------- ------------
Supply chain disruption - GBP465,000 (31 October 2021:
GBP430,000)
The Group has incurred additional costs primarily in the form of
demurrage due to ongoing disruption of the supply chain,
particularly at UK ports.
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 after
tax 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
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Loss for the period attributable
to shareholders (765) (2,672) (1,697)
Number Number Number
'000 '000 '000
Issued ordinary shares at beginning
of period 318,878 311,355 311,355
Effect of shares issued in the
period - 4,088 5,792
----------- ----------- ------------
Basic weighted average number of
shares at end of period 318,878 315,443 317,147
Effect of conversion of Accrol
Group Holdings plc share options - - -
Diluted weighted average number
of shares at end of period 318,878 315,443 317,147
Basic loss per share (pence) (0.2) (0.8) (0.5)
Diluted loss per share (pence) (0.2) (0.8) (0.5)
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
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Bank loans and overdrafts 852 375 791
Lease interest 820 521 1,354
Amortisation of finance fees 98 106 179
Unwind of discount on provisions - 196 198
Total finance costs 1,770 1,198 2,522
---------------------------------- ----------- ----------- ------------
Lease interest income 166 111 216
Total finance income 166 111 216
----------------------- ---- ---- ---------
Net finance costs 1,604 1,087 2,306
-------------------- ------ ------ -----------
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 19% (half year ended 31 October 2021: 23%; year
ended 30 April 2022: 19%).
9. Borrowings
Unaudited Unaudited Audited
As at 31 As at 31
October October As at 30
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Current
Bank facility 9,790 1,854 2,692
Factoring facility 21,348 5,869 18,743
Leases 6,748 9,765 5,047
------------------------------------- ------------ ---------- ------------
Total current 37,886 17,488 26,482
------------------------------------- ------------ ---------- ------------
Non-current
Bank facility - 9,880 -
Leases 39,274 19,430 35,169
------------------------------------- ------------ ---------- ------------
Total non-current 39,274 29,310 35,169
------------------------------------- ------------ ---------- ------------
Total current & non-current 77,160 46,798 61,651
------------------------------------- ------------ ---------- ------------
Unaudited Unaudited Audited
As at As at 31
31 October October As at 30
2022 2021 April 2022
Total borrowings (excluding finance
fees) 77,371 47,064 61,959
Less: lease receivables (5,121) (5,369) (5,028)
Less: cash and cash equivalents (7,590) (3,074) (243)
Net debt 64,660 38,621 56,688
------------------------------------- ------------ ---------- --------------
Less: leases recognised on adoption
of IFRS16 (34,142) (17,008) (29,142)
Adjusted net debt (excl leases
recognised on adoption of IFRS16) 30,518 21,613 27,546
------------------------------------- --------- --------- ------------
10. Provisions
Unaudited Unaudited Audited
Six months Six months
ended 31 ended 31 Year
October October ended 30
2022 2021 April 2022 Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Onerous contracts - 172 33 - -
Contingent consideration - 6,800 - - -
Other - 355 275 - -
Total provisions - 7,327 308 - -
-------------------------- ------------ ----------- ------------ -------- ------------
The contingent consideration relates to the acquisition of
Leicester Tissue Company in 2021 which has subsequently been fully
resolved.
11. Dividends
The Company did not pay a final dividend for the year ending 30
April 2022 nor does it propose an interim dividend for the period
ending 31 October 2022.
12. Non-GAAP measures
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
2022 2021 April 2022
GBP'000 GBP'000 GBP'000
Earnings attributable to shareholders (765) (2,672) (1,697)
Adjusted for:
Amortisation 3,100 2,671 5,494
Separately disclosed items 487 675 (2,577)
Share based payment 565 638 508
Discount unwind on contingent consideration - 192 192
Tax effect of adjustments above (954) (961) (832)
--------------------------------------------- ----------- ----------- ------------
Adjusted earnings attributable
to shareholders 2,433 543 1,088
--------------------------------------------- ----------- ----------- ------------
Number Number Number
GBP'000 GBP'000 GBP'000
Basic weighted average number of
shares 318,878 315,443 317,147
Dilutive share options 11,119 3,152 11,119
Diluted weighted average number
of shares 329,997 318,595 328,266
Pence pence Pence
Adjusted earnings per share 0.8 0.2 0.3
Diluted adjusted earnings per share 0.7 0.2 0.3
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 have been no material events after the balance sheet
date.
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