# Accrol Group Holdings plc Group Operationally efficient: profitability restored

- Link: https://www.directorstalkinterviews.com/accrol-group-holdings-plc-group-operationally-efficient-profitability-restored/412791787
- Published: 2019-09-03T07:13:50+01:00
- Author: Giles Arbor

**Accrol Group Holdings plc** ([LON: ACRL](https://www.directorstalkinterviews.com/company/accrol-group-holdings/acrl.l)),
the UK’s leading independent tissue converter, announced today its audited Final
Results for the year ended 30th April 2019.

**Summary of progress**

The scale and pace of change implemented in the business in FY19 to effect a successful
and rapid turnaround were extraordinary. Accrol is now a simpler, stronger and more
operationally efficient business than it has ever been. Monthly profitability has
been restored, despite input cost headwinds of £10.8m, the Group is cash generative
and net debt is reducing. With a highly experienced senior leadership team in place
and the Group’s primary market growing rapidly, the re-engineered business is ready
to capitalise on this opportunity.

The financial results in FY19 were as expected and, despite strengthening foreign
exchange headwinds, the Group remains on track to meet market expectations in the
year ending 30 April 2020.

**Key financials:**

|   | FY19 | FY18 | 
| Underlying results |   |   | 
| Core revenue | £116.7m | £115.3m | 
| Adjusted gross profit^(1) | £21.7m | £24.5m | 
| Adjusted gross margin | 18.2% | 17.5% | 
| Adjusted EBITDA^(2) | Profit £1.0m | Loss £5.8m | 
| Adjusted loss per share basic and diluted | 1.4p | 7.4p | 
|   |   |   | 
| Reported results |   |   | 
| Revenue | £119.1m | £139.7m | 
| Gross profit | £17.6m | £24.5m | 
| Gross margin | 14.7% | 17.5% | 
| Loss before tax | £14.0m | £24.1m | 
| Net debt | £27.1m | £33.8m | 
| Loss per share basic and diluted | 6.2p | 18.7p |

(1) Adjusted gross profit excludes turnaround and operational costs reported in 
cost of sales;

(2) Adjusted EBITDA is defined as profit before finance costs, tax, depreciation,
amortisation, turnaround and operational costs and share based payments, is a non-
GAAP metric used by management and is not an IFRS disclosure.

**Analysis of core revenue:**

Core revenue comprises retail sales of Toilet Tissue, Kitchen Towel and Facial Tissue.
It excludes the Away From Home (“AFH”) business, exited in June 2018.

|   | FY19 | FY18 | Change | 
|   |   |   |   | 
| Core revenue | £116.7m | £115.3m | £1.4m |

**Current trading and outlook:**

· Accrol is now profitable, cash generative and fit for purpose

· Total exceptional costs in FY20, including costs associated with FCA investigation,
are expected to reduce to c.£1.0m (FY19: £7.9m), c.£0.5m of which will relate to
final turnaround activities.

· The Board has approved in principle the investment in further machine capacity
and the Group will continue to optimise production through automation

· Net debt is expected to continue to improve as the business grows

· Brand-killer: Accrol perfectly positioned to capitalise on the accelerating consumer
shift from expensive established brands to best value tissue products

· The Board continues to explore opportunities to grow the business and de-risk 
its exposure to FX and tissue price volatility

· Despite strengthening FX headwinds, the Group remains on track to meet market 
expectations in FY20

**Dan Wright, Executive Chairman of Accrol Group Holdings, said:**

> “The new Board and management team of Accrol delivered a complex and comprehensive
> turnaround plan in FY19, simplifying and strengthening the business to improve
> efficiency and optimise operational performance. Following the conclusion of this
> restructuring, I am pleased to say that I believe the business is more operationally
> efficient and fit for purpose than it has ever been.
> “By the end of the year, we achieved our stated objective to return the Group 
> to monthly profitability and I am pleased to report that the reengineered business
> is showing resilience in the face of strengthening FX headwinds. The Group is 
> beginning to secure enhanced credit terms from its key suppliers and capitalising
> on this initiative is a core element of our continued working capital management
> and improving debt profile.
> “The Group has delivered improving levels of monthly profitability since the year
> end. As such, we are on track to meet market expectations in FY20 and the Board
> is confident that the Group will exit FY20 at an accelerating monthly run rate.”

**Gareth Jenkins, Chief Executive Officer of Accrol, added:**

> “The heavy lifting of the turnaround is now behind us and the ongoing challenge
> of maintaining consistent delivery of low cost, quality product to our customers
> remains. We are now able to instil continuous improvement disciplines into an 
> operation that is fit for purpose.
> “As the new financial year progresses, we will continue to be innovative in our
> approach to winning new business and take steps to bring our low cost, high service
> brand-killer approach to different products and markets.
> “We keep a watchful eye on the strength of the pound and will take the steps necessary
> to mitigate the risks of continued currency weakness, but that should not distract
> us from profitably meeting our customers’ needs. The business has now been reset.
> There is a huge opportunity for the Group in the rapidly growing personal hygiene
> value market and, whilst there is more to do, the Board has real confidence that
> the foundations have been laid for a successful future.”

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