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LONDON (Alliance News) - Toilet tissue maker Accrol Group Holdings PLC axed its final dividend Wednesday after sinking to a steep annual loss despite revenue rising, as exceptional costs bite.
For the financial year ended April, Accrol swung to a pretax loss of GBP24.1 million from a profit of GBP8.6 million the year prior. This was despite revenue rising 4.1% to GBP139.7 million from GBP134.2 million the year before.
Profit performance was hurt by a sharp rise in cost of sales to GBP115.2 million from GBP97.0 million the year prior. Other costs also jumped, with administration expenses doubling to GBP33.2 million amid a number of one-off charges and distribution costs rising 28% to GBP14.7 million from the year before.
Among the larger exceptional charges were a GBP4.4 million foreign exchange hedging loss, GBP2.5 million in impairments costs, and a GBP4.0 million in costs associated with exiting Accrol's distribution site in Skelmersdale.
"Financial 2018 has been incredibly tough for the group, its shareholders and other stakeholders," Accrol Executive Chairman Dan Wright said. "However, the retrospective figures we are announcing today do not reflect the group's current position. The new board and management team is creating a business which is stronger: streamlined, commercial and innovative. Whilst there is still more to do over the next six months, a great deal has been achieved post year end and I look forward to reporting on the group's financial progress at the half year end."
Accrol will not pay a final dividend, compared to a 4.0 pence per share payment made the year prior. The final dividend cut alongside the same treatment of its interim payment means no distributions will be made for the recent year, compared to 6.0p the year prior.
The firm emphasised, however that it intends to "return to the dividend list at the earliest appropriate opportunity".
Accrol Chief Executive Officer Gareth Jenkins added: "We have ambitious plans to continue to grow profitably, which will be the result of delivering great value, quality products to the consumer. The business is in a strong position due to the breadth of retailers we supply and the changing dynamic of buying habits away from the previously dominant, big brands. The differentiated position with customers, built on our investment and innovation-led expertise, and the changing market dynamics reinforces our confidence in the long-term prospects for the group."
Accrol also said it has entered into an agreement with HSBC Holdings PLC to amend the financial covenants on its banking facilities. The minimum earnings before interest, taxes, depreciation and amortisation covenants were adjusted to take a "reasonable view of financial sensitivity headroom" in line with Accrol's lower profit expectations.
Shares in Accrol were 4.1% lower at 18.70 pence on Wednesday.