Accrol Group Holdings plc
(“Accrol” or the “Group”)
FINAL RESULTS 2023
FY24 EBITDA now expected to be ahead of previous Board expectations, driven by accelerating margin recovery
Accrol (AIM: ACRL), the UK’s leading independent tissue converter, announces its audited final results for the year ended 30 April 2023 (“FY 23” or the “Period”), which show strong growth in both revenue and profit, driven by increasing market share and volumes.
Gareth Jenkins, Chief Executive Officer of Accrol, said:
“The Group has performed strongly in a challenging year, gaining further market share through its great value product range, broad retailer base, and new routes to market and is in an enviable position to take advantage of the changing dynamics in consumer spending, which are particularly evident in the tissue market.
“Accrol is the lowest cost tissue convertor in the UK and is fully automated across all tissue sites, having completed all major converting strategic capital investments in the year. With the development and focus on market leading products, for softness in Toilet Tissue and absorbency for Kitchen Towel, we have generated significant volume and market share growth across all sectors of our business.”
“The cost-of-living crisis is continuing to drive consumer demand for great value products and the Group is confident of achieving further volume and profit growth in FY24, as it continues to build on its market leading position. Our focus on increasing volumes, business mix and efficiency has already delivered an improvement in margins back to pre-pandemic levels in the first few months of the new financial year. This margin recovery has been quicker than expected and we now expect FY24 EBITDA will be ahead of the Board’s prior expectations.
| Key Financials | FY23 | FY22 | Change |
| Revenue | £241.9m | £159.4m | 52% |
| Adjusted gross margin1 | 19.7% | 23.3% | (3.6%) |
| Adjusted EBITDA2 | £15.6m | £9.1m | 71% |
| EBITDA Margin | 6.4% | 5.7% | 0.7% |
| Adjusted profit before tax3 | £6.5m | £1.1m | £5.4m |
| Adjusted diluted earnings per share | 1.8p | 0.3p | 1.5p |
| Adjusted net debt4 | £26.8m | £27.5m | £0.7m |
| 1 | Adjusted gross margin is defined as gross margin before depreciation and separately disclosed items |
| 2 | Adjusted EBITDA is defined as profit before finance costs, tax, depreciation, amortisation, separately disclosed items and share based payments |
| 3 | Adjusted profit before tax is defined as profit before amortisation, separately disclosed items and share based payments |
| 4 | Adjusted net debt excludes operating type leases recognised on the balance sheet in accordance with IFRS 16 |
Market expectations as at 25 September 2023 for FY23 (Shore Capital & Zeus) and FY24 respectively – Revenue £241.8m EBITDA £15.5m and Revenue £230m EBITDA £19.5m.
FY 23 highlights:
| · | Group volumes increased by 7.7%, compared to an overall flat tissue market |
| · | Market share increased by 200bps to 21.5% (FY22: 19.5%) |
| · | Gross margins in H2 FY23 improved significantly, as volumes in higher margin products increased and the benefit of earlier price increases flowed through |
| · | Water industry-approved flushable wet wipe sales have grown by 169%, since the acquisition of the Group’s first wet wipes business in 2021 |
| · | The Group’s subscription model, plastic-free, Oceans brand continues to grow strongly with revenue up 45% year on year |
| · | Our first licensing partnership, has progressed well in the year with the product now stocked in three major UK retailers and growing, with further license agreements planned. |
| · | Strong ESG progress with significant and tangible advances in all targeted areas |
| · | Chris Welsh succeeded Richard Newman as Chief Financial Officer, having joined the Group from INEOS Chemicals in October 2022 |
Current trading and outlook
| · | Known volume gains will positively impact H2 FY24 with the Group well positioned to grow ahead of the overall private label sector | |
| · | Revenues are expected to fall marginally as tissue prices reduce and therefore on shelf pricing declines as inflationary pressures ease | |
| · | EBITDA margins recovered back to pre-pandemic levels, driven by the combination of improving product mix and the full effect of prior price increases flowing through | |
| · | Anticipate FY24 EBITDA will be ahead of the Board’s prior expectations | |
| · | The Board views the future with increasing confidence, while remaining mindful of the continuing inflationary environment and other macro challenges |
Dan Wright, Executive Chairman of Accrol, said:
“The Group has delivered a very strong set of results of which we are very proud. The management team successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs, through further process efficiencies and by engaging constructively with our customers to pass-on these additional costs.
“We have a strong, market leading position, with a clear focus on remaining the lowest cost producer of any scale. Our product mix is strengthening margins and cash generation is growing. We are, therefore, confident that our FY24 EBITDA will be ahead of initial Board expectations.”
| For further information, please contact: | |
| Accrol Group Holdings plc | |
| Dan Wright, Executive Chairman | Via Belvedere Communications |
| Gareth Jenkins, Chief Executive Officer | |
| Chris Welsh, 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 |
| Shore Capital Stockbrokers (Joint Broker) | Tel: +44 (0) 20 7408 4090 |
| Malachy McEntyre / Mark Percy / James Thomas | |
| Belvedere Communications Limited | |
| Cat Valentine | Tel: +44 (0) 7715 769 078 |
| Keeley Clarke | Tel: +44 (0) 7967 816 525 |
| accrolpr@belvederepr.com |