DJ Accrol Group Holdings PLC Full year results for the year ended 30 April 2016
Financial Highlights(1) — Revenue increased 17% to GBP118m (2015: GBP101m)
— Adjusted Gross Margin increased 2.1% to 28.1% (2015: 26.0%)
— Adjusted EBITDA of GBP15.0m, up 22% (2015: GBP12.3m)
— Continued strong cash generation year-on-year
— Net debt reduced by GBP1.1m
— Successful IPO on London Stock Exchange's AIM market on 10 June 2016
Operational Highlights(1)
— 35% market share of the Discount sector (Discounters accounting for 69% of revenues, up 6% on 2015) after contract wins during the year
— 15% increase in sales to Multiples
— Focus on Private Label products which are taking market share from Brands
— Continued investment in machinery with GBP3.2m invested in two high-speed converting lines
— Capacity increased to 118,000 tonnes with a further 25,000 tonnes to be added
— UK exclusivity secured for a new luxury tissue, NTT (New Textured Tissue)
Commenting on the results, Steve Crossley, Accrol's newly appointed CEO said:
“I am delighted to report a strong first set of results following our listing on AIM in June. FY16 has been a very successful year for Accrol and our focus on supplying Private Label products to both Discounters and Multiples has generated 17% revenue growth. We have continued to invest in new capacity as we ready the business for the next stage of our strategic plan. The current year has started encouragingly and we remain confident in the outlook for FY17.”
The Company's annual report for the year ended 30 April 2016 (including notice of the annual general meeting to be held at Stanley House Hotel, Mellor, Lancashire, BB2 7NP on 30 September 2016 at 11am) (the “annual report”) will shortly be available for downloading from the Company's web site at http://www.accrol.co.uk/investor-relations/.
Notes: (1) 2015 numbers based on unaudited proforma for 12 months ended 30 April 2015.
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Notes to Editors
Accrol manufactures toilet rolls, kitchen rolls and facial tissues as well as other tissue products at the Company's 350,000 sq. ft. manufacturing, storage and distribution facility in Blackburn, Lancashire. Accrol currently manufactures approximately 16 million units per week and supplies some of the UK's largest retailers, providing both Accrol branded and Private Label products (being goods produced under a customer's own brand or under a non-branded or less well-known brand name (“Private Label”)).
CHAIRMAN'S STATEMENT
Overview of the Year
I am pleased to report that 2016 was another successful year for the Group. Revenue grew 17% year-on-year to GBP118.2 million, with adjusted EBITDA up 22.5% to GBP15.0 million(1) . Our strong financial performance has been driven by continued focus on our strategy of growth through Private Label products into Discounter and Multiple retailers, supported by our flexible supply chain and continued investment ahead of growth in state-of-the-art machinery.
Operational Review
We operate 15 converting lines, producing 16.3 million units per week with a c. 7% share of the UK tissue market. We continue to invest in machinery, with a further GBP3.2 million committed on two high-speed converting lines. Capacity headroom is expected to be approximately 25%, ensuring we can continue to deliver new business opportunities.
With a 35% share of the Discount segment we continue to dominate this sector. The Multiple sector is the largest segment of the market and growth in this area remains a key strategic objective.
We have continued to grow existing contracts, both organically and through new products, with the more significant growth through Discounters.
Financial Performance
Revenues grew by GBP17.2 million year-on-year with Discounters providing the majority of the growth(1) . This segment now accounts for 69% of our revenues, up 6% year-on-year, reinforcing our already strong relationships. Revenues from Multiple customers showed an encouraging 15%(1) increase year-on-year growth in this key strategic area. Adjusted EBITDA increased by GBP2.8 million(1) year-on-year mainly due to greater revenues and favourable paper prices. This was partially offset by an increase in overheads due to growing our headcount.
Strategy
We continued to focus on organic growth through Discounters as this sector represents the fastest growing retail area in the UK tissue market and is projected to continue growing at a rate of 10% per annum. The Discounters' tissue offerings are skewed towards Private Label and this is driving growth of Private Label in the market as a whole. Our strategy of focussing on the Discounters and providing Private Label products to Multiples, positions Accrol well to take advantage of new opportunities.
Listing on the AIM Market
On 10 June 2016 Accrol successfully listed on the AIM market. The listing has reduced the Company's debt burden and will increase the Accrol's profile and reputation, enable us to incentivise key employees and provide a platform to execute our strategy.
The listing also provided a partial exit for the founders, the Hussain family, and NorthEdge Capital who invested in Accrol in July 2014. The family will continue to support the management team as external consultants and I would like to thank both the Hussain family and NorthEdge Capital for their support and commitment.
Dividend Policy
As a listed Company, one of our key ongoing objectives is to create shareholder value. The board has committed to a progressive dividend policy with the intention of paying both an interim and final dividend, expected, in aggregate, to represent a 6% yield at the IPO placing price, for the financial year ended 30 April 2017.
Outlook
We have ambitious plans for future growth by building on our strong customer relationships supported by solid financial performance. Our focus on Private Label, 35% share of the Discount market and capital investment over the last five years, positions us well to take advantage of future opportunities.
In the event that there is a period of reduced consumer expenditure following the UK's decision to leave the European Union, it is possible that the move towards non-discretionary Economy and Private Label products will accelerate. If this happens, we believe we are well positioned to benefit as over 50% of our sales are generated from the Discount segment and we are primarily focussed on supplying Private Label products to both Discount and Multiple retailers.
We have started FY17 strongly and believe we are in a good position to deliver the next stage of our strategic plan. We remain confident in the outlook for Accrol in FY17.
On behalf of all our stakeholders, I would like to thank our employees for their hard work and commitment over the past year and look forward to a successful 2017.