Accrol Group Holdings plc (LON:ACRL), the UK’s leading independent tissue converter, has announced its audited Final Results for the year ended 30 April 2020.
Continuing progress
The Group has continued to perform well across all aspects of the business, delivering accelerating monthly exit run-rates in line with the Board’s expectations. Accordingly, the results for FY20 are ahead of market expectations.
With strong and experienced leadership across the business and a now acceptable operational cost base, the Group has the right foundations on which to begin building an organisation of size and scale. The simple strategy of delivering great-value products with consistent service is enabling the business to outperform the tissue sector. Accrol’s management team is now focused on expanding in the Group’s core markets and diversifying into new personal hygiene and household products, where consumers would benefit greatly from the application of the Accrol model, with great value products delivered through world-class operational efficiency. Accordingly, the Board is confident in the prospects for the Group.
Key financials:
| FY20 | FY19 | FY18 | |
| Underlying results | |||
| Core revenue1 | £133.6m | £116.7m | £115.3m |
| Adjusted gross profit2 | £30.5m | £21.7m | £24.5m |
| Adjusted gross margin | 22.7% | 18.2% | 17.5% |
| Adjusted EBITDA3 | £10.6m | £1.0m | Loss (£5.8m) |
| Adjusted profit/(loss) before tax | £4.7m | (£2.8m) | (£9.1m) |
| Adjusted net debt4 | £17.9m | £27.1m | £33.8m |
| Adjusted earnings/(loss) per share basic | 1.9p | (1.4p) | (7.4p) |
| Reported results | |||
| Revenue | £134.8m | £119.1m | £139.7m |
| Gross profit | £29.5m | £17.6m | £24.5m |
| Gross margin | 21.9% | 14.7% | 17.5% |
| Loss before tax | (£1.9m) | (£14.0m) | (£24.1m) |
| Net debt | £27.9m | £27.1m | £33.8m |
| Loss per share basic and diluted | 0.8p | 6.2p | 18.7p |
| 1 | Core Revenue comprises Toilet Tissue, Kitchen Towel and Facial Tissue sales. |
| 2 | Adjusted gross profit excludes separately disclosed items reported in cost of sales. |
| 3 | Adjusted EBITDA is defined as profit before finance costs, tax, depreciation, amortisation, separately disclosed items and share based payments, is a non-GAAP metric used by management. IFRS 16 impact £2.3m giving £8.3m Adjusted EBITDA pre-IFRS 16. |
| 4 | Adjusted net debt excludes operating type leases recognised on balance sheet in current year in accordance with IFRS 16. |
Highlights, current trading, and outlook:
| · | Delivered core revenue growth of 14.5% in the year, compared to sector growth of 7.7%* |
| · | Gross margin improvement accelerated, increasing by 49% from FY19 to 21.9% (FY19: 14.7%) as the business continues its expansion into higher quality and higher value products |
| · | Ongoing investment in operational efficiency and capacity in FY21 to deliver and maintain a world-class business |
| · | Administration costs already reduced by 43% in last two years, equating to reduction of c.£14.4m |
| · | Separately disclosed items, relating to further restructuring in FY21, are expected to be less than £1.0m, down from £2.2m in the year under review and £7.9m in FY19 |
| · | All employees to be paid no less than the Real Living Wage by H2 FY21 – operational efficiency is not driven by low pay in a sustainable business |
| · | Continued focus on sustainability – intention to source all the Group’s energy requirement from renewables in the short to mid-term, at a lower cost per unit of measure |
| · | On track to meet market expectations in FY21 but the Board remains mindful of the continuing risk of operational disruption posed by COVID-19 |
| · | Opportunities to grow and develop the Group being explored – clear focus on earnings enhancement and the continued improvement of shareholder value |
* Source: IRI data
Dan Wright, Executive Chairman of Accrol, said:
“The business has progressed enormously over the last three years. Despite the many challenges, the management team has simplified the business and created a strong foundation on which to begin the next phase of the Group’s development. I am excited for the future. The team has the ambition, ability and drive to build a much bigger business, applying Accrol’s philosophies on great products at great value and world-class operational efficiency across a wider product range.”
Gareth Jenkins, Chief Executive Officer of Accrol Group, added:
“After joining the organisation, almost three years ago, I reported to shareholders that the core of our business was a good one. Following the completion of the turnaround, this simplified and strengthened organisation provides a firm base on which to build a business of scale, by expanding in our core markets and diversifying into new personal hygiene and household products.
“The opportunities for a relentlessly efficient business, which delivers great-value products, are growing, as the world recalibrates in the aftershock of COVID-19 and consumers move away from brands which offer little value. Whilst the route to improvement is not consistently upward and in a straight line, I have no doubt that the rewards for shareholders looking at the long term, will be significant.”
