Accrol returns to profitability, CFO steps down

A day after announcing that it was being investigated by the Financial Conduct Authority, toilet paper maker Accrol Group Holdings said it has returned to profitability.

In an update for the six months to the end of October 2018, the company said its "highly complex" turnaround has been substantially completed and it has now returned to profitability on a monthly basis.

As a result, it expects to deliver a profit for the full year to 30 April 2019 of around £1m at an adjusted EBITDA level.

Accrol said margins since the period end have strengthened as price increases achieved across the business have begun to make full impact in the day-to-day trading. Meanwhile, production efficiencies have improved by more than 70% and the company has exited from lower-margin Away From Home operations to focus on its core business.

Net debt during the period was reduced by £6.7m to £22.6m and top 10 customer revenue grew 11% to £52.5m.

Chief executive officer Gareth Jenkins said: "This is one of the most challenging business turnarounds in which the leadership team and I have ever been involved. Whilst most of the issues we have faced are familiar to the team, it is highly unusual to face so many issues in a single business, at the same time and at such a pace. I am pleased to say that the major actions are now behind us and we are beginning to see results.

"We will never become complacent; ongoing success in the tissue conversion sector requires nothing less than operational excellence. As a board, we are convinced that we have created a more robust business with strong foundations on which to build and, whilst I am sure there will be challenges ahead, the group is on a significantly improved path."

The company also announced in a separate statement that Steve Townsley has stepped down as chief financial officer with immediate effect for health reasons. Hannah Argo, who joined Accrol earlier this month, has been appointed as interim CFO.

The group said she has "extensive" experience in senior financial roles, having worked at Alliance Boots, Robert McBride and Tulip UK.

On Monday, Accrol announced that it was being investigated by the FCA over certain statements it made to the market between 1 April 2017 and 20 November 2017. The group said it was cooperating fully.