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 EBITDA1 | £7.1m | £5.0m | 42.0% |
| Adjusted profit before tax2 | £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 debt3 | £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/.
| 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 |