Accrol Group is the UK’s largest independent tissue converter, manufacturing a wide range of kitchen, toilet and facial tissue products for leading retailers. It has three manufacturing sites in the North West of England, with revenues over £135m and more than 300 staff.
We were involved with the business since 2014 and had helped grow revenues by 35% in the two years to 2016. With sales exceeding £100m for the first time, we drove an IPO at an enterprise value of over £115m in June 2016 and exited the business with a 3 x investor return. This rapid growth within the business led to its challenges and the new management team changed course after IPO. Market position was lost, costs escalated and working capital ran out of control. Double-digit operating losses were incurred and a liquidity crisis arose. We were brought back into the business to provide strategic leadership, operational direction and conduct a rescue refinancing to enable the business to survive and recover.
35% sales growth in two years
Sales hit £100m for the first time
Completion of AIM IPO in 2016 with EV of £116m
We focused the business on its core strengths and returned the emphasis to low-cost production, first-class service and product innovation. Simplification reduced operating cost, enhanced production efficiency and improved distribution dynamics.
£28m of fresh equity was invested, alongside a restructured bank deal. The board and management structures were completely revised and revenue per head increased by over 75%. Key business wins were secured from prominent value and grocery retailers to drive top-line and margin growth.
Consumer Revenues continued to grow at over 10% with FY20 forecast to be in excess of £150m.
The gross margin was restored to 30% from single-digit levels in early 2018.
Operating costs were reduced by over £10m through restructuring purchasing, production and distribution processes.
Net debt was reduced from a high of over £40m to less than £22m, with adjusted EBITDA recovered through break-even for FY19 and ahead of expectations at £8m for FY20.
The share price is up over 300% of a low of 6p to 22p as at February 2019.