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Accrol Group Holdings - Half Year Results

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Accrol Group Holdings plc

("Accrol", the "Group" or the "Company")

HALF YEAR RESULTS

Ongoing improvement in financial returns and restoration of dividend in FY21

Accrol (AIM: ACRL), the UK's leading independent tissue converter, announces its results for the six months ended 31 October 2020 ("H1 21" or the "Period").

Summary of progress

 

 

H1 21

 

H1 20

 

H1 19

H1 21 vs

H1 20

Reported results

 

 

 

 

Revenue

£62.3m

£65.1m

£57.6m1

-4.3%

 

 

 

 

 

Gross profit

£14.8m

£12.8m

£6.9m

+ £2.0m

Gross margin

23.8%

19.7%

12.0%

+ 410bp

Loss before tax

(£0.5m)

(£3.0m)

(£9.0m)

+ £2.5m

Net debt (pre IFRS 16 impact)

£18.1m

£24.8m

£22.6m

+  £6.7m

Net debt (post IFRS 16 impact)

£26.8m

£37.4m

-

+  £10.6m

 

 

 

 

 

Underlying results

 

 

 

 

Consumer Revenue2

£62.3m

£64.5m

£53.9m

-3.4%

Adjusted gross profit3

£15.4m

£13.0m

£9.9m

+ £2.4m

Adjusted gross margin

24.7%

20.0%

17.2%

+ 470bp

Adjusted EBITDA4

£5.4m

£3.2m

(£1.1m)

+ £2.2m

 

1

Includes revenue from discontinued "Away From Home" operations

2

Excludes revenue from discontinued "Away From Home" operations

3

Defined as gross profit before exceptional items.  This is a non-GAAP metric used by management and is not an IFRS disclosure

4

Defined as profit before finance costs, tax, depreciation, amortisation, share based payments, IFRS 16 changes and exceptional items. This is a non-GAAP metric used by management and is not an IFRS disclosure

All aspects of the business operated safely and successfully throughout the pandemic with no furloughing or government support being accessed in any way

Adjusted EBITDA increased by 69%, compared with H1 20, with returns improving to 8.7% of Group revenue

Margin improvement driven by more selective product mix, resulting adjusted gross profit 18% ahead of H1 20

 

*

After adjustment for reduction in brands sold at a discount and the increase in retailer margin during the Period

Post H1 21 highlights:

Strategic ambition demonstrated with a successful placing and open offer to fund the acquisition of LTC in November 2020 for a total maximum consideration of £41.8m:

-  Well invested modern machine asset base providing transformational step change in Group capacity (now c.£220m including facial tissue)

-  Initial EBITDA multiple paid for LTC will fall from 7.8x to 5.5x, if LTC achieves criteria for payment of maximum deferred consideration

-  Central UK location provides significant logistic cost advantages for the enlarged group

Richard Newman appointed as the Group's new CFO from 1 February 2021

Full automation of the Blackburn site delivered on time and to budget, completing the final major operational change at the site


Current trading and outlook:

The integration of LTC has begun well with no issues to report and volumes across the Group strengthening further in H2 21 as expected

Margins and cash generation are continuing to strengthen, as new products are rolled out across the wider customer base

Net debt reducing at a faster rate than anticipated, as a result of ongoing margin improvement and cash generation, and is expected to be below consensus market expectations for FY21, even after the intended dividend payment

The Board is confident that the Group is fully on track to deliver FY21 results at least in line with market expectations with the business continuing to deliver strong organic growth

The Board intends to restore dividend payments and expects to propose a final dividend for FY21 of no less than 0.5p per ordinary share

Dan Wright, Executive Chairman of Accrol, said:

Gareth Jenkins, Chief Executive Officer of Accrol, said: