Half Year Results
24/01/2023 07:00
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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.£30.5m. 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 £230m and £15.5m respectively."
Key Financials H1 23 H1 22 Change
Revenue £121.1m £73.7m 64.3%
Gross margin 18.0% 24.7% (6.7%)
Adjusted EBITDA(1) £7.1m £5.0m 42.0%
Adjusted profit before tax(2) £3.2m £0.5m £2.7m
Loss before tax (£0.9m) (£3.5m) £2.6m
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) £30.5m £21.6m (£8.9m)
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 £7.1m, 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.£1.5m at acquisition in
2021 to exit FY23 with anticipated sales of c.£6m
· 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.£230m and Adjusted
EBITDA marginally ahead of market expectations in FY23, despite an annualised
increase in costs of over £80m
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/
(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 (mailto: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 c£2.5bn 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.£6m,
compared to £1.5m 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 £80 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/ (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 £121.1m (H1 22: £73.7m), an increase of £47.4m
(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 £21.7m (H1 22: £18.2m), an increase of
£3.5m (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 £7.1m (H1 22: £5.0m), an increase of £2.1m
(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 £0.5m (H1 22: £0.7m), 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 £5.3m (H1 22: £6.1m), of which £3.1m
(H1 22: £2.9m) related to the amortisation of intangible assets.
Share-based payments
The total charge for the Period under IFRS 2 "Share-based payments" was £0.6m
(H1 22: £0.6m). 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 £1.6m (H1 22: £1.1m), resulting in a loss before
taxation of £0.9m (H1 22: £3.5m). 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 £30.5m (H1 22: £21.6m). The net cash flow
from operating activities was £6.1m (H1 22: £0.9m) with the increase
reflecting improved operating margins offset by an investment into working
capital of £1.0m (H1 22: £3.4m 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 £5.8m (H1 22: £3.5m), which primarily
related to the continued automation of production facilities. Lease payments
of £3.0m (H1 22: £3.4m) include leases capitalised in accordance with IFRS
16.
Balance Sheet
The Group had net assets of £82.7m (H1 22: £82.7m), 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 £27.0m to £35.0m to
recognise the significant growth in revenue. The Group also maintains a
£17.0m 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.£3m 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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April
2022
Continuing operations Note £'000 £'000 £'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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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 October 2022 As at 31 October 2021 As at 30 April 2022
Note £'000 £'000 £'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 redemption reserve Retained earnings/ (deficit) Total
Share capital Share premium
£'000 £'000 £'000 £'000 £'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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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 October 2021 Year
ended 31 ended 30 April 2022
October 2022
£'000 £'000 £'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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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 - £465,000 (31 October 2021: £430,000)
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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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 October 2022 As at 31 October 2021 As at 30
April 2022
£'000 £'000 £'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 31 October 2022 As at 31 October 2021 As at 30
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 ended 31 October 2022 Six months ended 31 October 2021 Year Current Non-current
ended 30 April 2022
£'000 £'000 £'000 £'000 £'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 ended 31 October 2022 Six months ended 31 October 2021 Year
ended 30 April 2022
£'000 £'000 £'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
£'000 £'000 £'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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