Investigation launched into toilet roll maker as company announces fall in profits

Troubled toilet roll manufacturer Accrol has announced a fall in profits.

The announcement came a day after the Blackburn firm revealed it is being investigated by the Financial Conduct Authority for statements made to the Stock Market.

No mention of the investigation, which covers 2017, was made in this morning’s update to the Stock Market.

During the period under investigation shares were suspended on the Stock Market and jobs were cut.

The business has endured a torrid three years and the current management team have put together a turnaround package.

Accrol has also announced that chief financial officer Steve Townsley is stepping down from the board and his role for health reasons.

The firm said the operational aspects of the comprehensive turnaround launched last February have now been completed.

The financial benefits of the changes are beginning to accrue and are starting to flow through to the bottom line.

Accrol said there has been a return to profitability on a monthly basis which positions the group well to deliver the boardd’s revised performance expectations for the full year.

Revenues fell to £57.6m from £67.5m and gross profit fell to £6.9m from £12.6m. Loss before tax was £9m compared to £18.1m the previous year.

Dan Wright, chairman of Accrol, said: “The business has changed beyond recognition since February 2018 and will exit the current financial year in a much stronger position operationally than it has ever been in before.

“We have delivered a highly complex restructuring, whilst absorbing a 29% increase in average tissue prices and now expect to deliver profit for the full year to 30 April 2019.

“Knowing the scale and complexities of the task in hand, I am very pleased with the outcomes achieved internally to date.

“My only disappointment is that, as previously announced, we are, in effect, three months behind where we expected to be on the financial recovery.

“I believe Accrol has a bright future; one in which the group delivers better levels of return throughout fluctuating macro-economic cycles.”

Hannah Argo, who joined Accrol this month, has been appointed as Interim CFO.

Hannah has extensive experience in senior financial roles gained with a number of global Blue Chip FMCG and Pharma businesses, including Alliance Boots, Robert McBride and latterly Tulip UK.

Dan Wright said: “Hannah is a proven and dynamic CFO with excellent communication and motivational skills.

“She is a strategic thinker, who is equally at home with the operational details. Her all-round business knowledge and a strong commercial focus are well suited to the Group’s current needs. I look forward to working with her and extend a warm welcome to the Group.

“On behalf of the Board, I thank Steve for the short but important role he has played in the turnaround of the group. We wish him well.”

Chief executive 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.”