30 January 2024
Accrol Group Holdings plc
(“Accrol, the “Group” or the “Company”)
HALF YEAR RESULTS
Strong performance, with margins and volume continuing to grow,
and uplift in FY25 expectations
Accrol (AIM: ACRL), the UK’s leading independent tissue converter, announces its results for the six months ended 31 October 2023 (“H1 FY24” or the “Period”).
The Board is pleased to report that the Group performed strongly in H1 FY24. While revenue reduced as expected, as prices eased following the significant inflationary-led increases in FY23, branded volumes continued to grow in our key markets, rising by 45% in H1 FY24, and margins returned to pre-pandemic levels rising by 930bp to 27.3%.
The Group is firmly on track to deliver FY24 results in line with the Board’s expectations and, following the acquisition of Severn Delta Limited (“Severn Delta”), now expects to outperform its previous expectations for FY25.
| Key Financials | H1 FY24 | H1 FY23 | Change |
| Revenue | £100.3m | £121.1m | (17.2%) |
| Adjusted Gross margin1 | 27.3% | 18.0% | 930bps |
| Adjusted EBITDA2 | £10.2m | £7.1m | 43.7% |
| Adjusted profit before tax3 | £5.0m | £3.2m | £1.8m |
| Profit/(loss) before tax | £0.4m | (£0.9m) | £1.3m |
| Adjusted diluted earnings per share | 1.2p | 0.7p | 0.5p |
| Diluted earnings per share | 0.2p | (0.2p) | 0.4p |
| Adjusted net debt5 | £25.5m | £30.5m | (£5.0m) |
Market expectations (Shore Capital & Zeus) as at 29 January 2024 for FY24 and FY25 respectively – Revenue £205.0m EBITDA £21.0m and Revenue £211.1m EBITDA £21.9m.
Gareth Jenkins, Chief Executive Officer of Accrol, said:
“We are pleased with the Group’s performance which has come in ahead of our initial expectations at the start of the financial year. We continue to deliver by producing great quality and value products, which meet every consumer’s budget. Our unrivalled retail relationships and robust supply model ensure that we can continue to deliver strong results in this dynamic market environment. The Group is delivering on its strategy and is well positioned to deliver further growth, as it builds upon its broad customer base and market-leading products.”
H1 FY24 highlights:
| · | Private label market share increased to 55% in the Period (H1 FY23: 54%, H1 FY22: 50%) and is still growing against the traditional brands. |
| · | Strong EBITDA performance of £10.2m (H1 FY23: £7.1m), as margins returned to pre-pandemic levels quicker than expected, and inflationary pressures ease compared to FY23. |
| · | Return to profit before tax – £0.4m, an improvement of £1.3m. |
| · | Margin enhancing volume growth achieved throughout the Period in core products. |
| · | Adjusted net debt2 at 31 October 2023 reduced by £5m to £25.5m (H1 FY23: £30.5m), as a result of strong cash generation driven by the operational efficiencies of the business. |
| · | Strong performance in wet wipe business with a 33% increase in biodegradable sales – annualised sales run rate of c.£8m anticipated by FY24 end, up from c.£1.5m at acquisition. |
| · | Capital expenditure in core tissue business has normalised, driving improved free cash flow generation, following completion of investment in automation and capacity to achieve of one of the lowest cost bases in the industry. |
| · | Pocket-pack line introduced into facial tissue facility, driven by customer demand, further widening the product range. |
Post period end
| · | Acquisition of Severn Delta in January 2024, a £5m revenue wet wipe and tumble dryer sheets business, in line with strategy to broaden product offering. Severn Delta will be integrated into the Group’s fast-growing wet wipes business in H2 FY24. |
| · | The acquisition brings significant increased scale in wet wipes and brings new products to the Group by producing household, disinfectant wipes and tumble dryer sheets. |
| · | New long-term agreement signed with a global FMCG group to supply a well-known branded product under licence – due to launch in March 2024. |
Current trading and outlook
| · | Strong margin performance in H2 FY24 to date – driven by continued delivery of high quality, best-value products to our customer base. |
| · | Further volume growth expected, driven by the Group’s strong private label supply position, great brands, the new licenced products, which are benefiting from the cost-of-living pressures impacting consumers. |
| · | Adjusted net debt on track to reduce to c.1x EBITDA by year end, even after the acquisition of Severn Delta. |
| · | The Group on track to deliver FY24 revenue c.£205m and adjusted EBITDA in line with the Board’s expectations of at least £21m in – up 34% year-on-year. |
| · | Severn Delta expected to positively impact adjusted EBITDA in FY25. |
Dan Wright, Executive Chairman of Accrol, said:
“Over the last four years, Accrol has been transformed as an organisation into a leading manufacturer of private label, own branded and now licensed tissue products to the UK market. Our state-of-the-art businesses are in an incredibly strong position to benefit from the rapid and significant growth in the in these markets, and we have considerable further capacity to drive these opportunities. The growth in our branded range and the partnerships we are developing, to bring high quality valued licensed products with global brands, continues to strengthen our pricing and margin improvement. We look forward with increased confidence to the continued growth of the business.“
| 1 | Adjusted Gross margin is defined as gross margin after direct depreciation |
| 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, share based payments and gains/(losses) on derivative instruments |
| 5 | Adjusted net debt excludes operating type leases recognised on the balance sheet in accordance with IFRS 16 |
| For further information, please contact: | |
| Accrol Group Holdings plc | |
| Dan Wright, Executive Chairman | Via Belvedere Communications |
| Gareth Jenkins, Chief Executive Officer | |
| Christopher 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 / Isobel Jones | |
| Belvedere Communications Limited | |
| Cat Valentine | Tel: +44 (0) 7715 769 078 |
| Keeley Clarke | Tel: +44 (0) 7967 816 525 |
| accrolpr@belvederepr.com |