Accrol Group Holdings PLC (LON:ACRL) said it plans to restore dividends sooner than expected as it reported improving half-year cash flows.
The toilet paper and tissue maker expects to propose a final dividend of no less than 0.5p per share for the year ending April 30, 2021.
With strong organic sales growth, improving profit margins and a positive contribution from the £41.8m acquisition of the Leicester Tissue Company (LTC) completed in November, the company said it is confident of delivering a strong performance in the second half and that results for the year will be “at least in line with market expectations”.
In the six months to end-October, 2020, revenues of £62.3mln were down 4% on the prior year, which Accrol said was an effect of the panic buying in the first national coronavirus lockdown.
A drive to deliver higher-value products led to gross profit margins improving and underling profits (EBITDA) rising 69% to £5.4mln and reported pre-tax losses falling to £0.5mln from £3.0mln a year earlier.
With cash generation continuing to strengthen, net debt for the full year is expected to be below consensus market forecasts of around £12.2mln, the board expects, even after the intended dividend payment.
Flushed with success, executive chairman Dan Wright said: “Our strategy to supply the widest possible group of retailers, furthered by our acquisition of LTC in November 2020, gives us the strongest opportunity to grow profitably and deliver double digit EBITDA margins.”
He added that the acquisition and the appointment of new chief financial officer Richard Newman “puts the enlarged business in an even stronger position to grow into adjacent markets and through vertical integration”.