TIDMACRL
RNS Number : 9073Y
Accrol Group Holdings PLC
18 May 2021
18 May 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Accrol Group Holdings plc
("Accrol, the "Group" or the "Company")
TRADING UPDATE
For the full year ended 30 April 2021
Accrol (AIM: ACRL), the UK's leading independent tissue
convertor, announces the following trading update ahead of its
Final Results for the year ended 30 April 2021 ("FY21" or the
"Period"), which are scheduled to be released in July 2021.
Substantial progress has been made on gross margins in the
Period, which are ahead of market expectations. This has been
achieved through the Group's relentless drive for operational
excellence and the Board is very pleased to report, once again,
that the business is now more operationally efficient than it has
ever been.
Adjusted earnings are expected to be in line with expectations,
despite a lower than anticipated increase in sales in the year,
resulting from consumer COVID-19 panic-buying of branded products
in the early stages of the pandemic. Sales across the whole
industry have been depressed in recent months, while consumer
stockpiling unwound.
Accrol's market share continued to rise in FY21 and is now 16%,
compared to 13% in FY20. Given the ongoing focus on operational
improvement and the Group's strong market positioning, the Board is
increasingly confident in the prospects for the business, and this
is demonstrated by the further investment in manufacturing capacity
(detailed below).
FY21 financials
Total revenues in FY21 increased by 1.5% to GBP136.8m (FY20:
GBP134.8m). Group volumes on a like for like basis declined by
3.9%, against a total market decline of 5.5%(1) . Accrol continued
to increase its share with the discounters, despite a sector
decline of 12% in the year.
With growing momentum in the grocer sector, the Group is well
placed to capitalise on consumers' return to the discounters, as
the country re-opens and volumes normalise.
Net debt (pre-IFRS16) at the end of the Period was GBP14.6m,
compared with GBP18.1m at 31 October 2020 and GBP17.9m at 30 April
2020. This reduction has been delivered, despite the acquisition of
John Dale Ltd announced in April 2021 for a net cash consideration
of GBP3.9m, and an expansion in raw material and finished good
stock levels to support service responsiveness.
Acquisitions & other developments
The integration of Leicester Tissue Company ("LTC"), acquired in
November 2020 for an initial consideration of GBP35.0m, continues
to progress well, with annualised cost synergies of GBP3.0m now
expected, which is three times higher than announced on
acquisition. These are being driven through operational
improvements across the wider group. The revenue synergies
previously announced have all started but growth here has been
slower, reflecting the market conditions in the period since
acquisition. LTC provides a geographic, strategic and financial
platform for the Group's growth ambitions and we anticipate further
tangible benefits as the integration progresses.
The Group also recently announced the acquisition of John Dale
Ltd, a highly scalable flushable and bio-degradable wet wipes
business. The business provides a well invested platform to build a
business of scale, in an attractive segment of the tissue market.
Early integration activities have progressed as planned. The Group
expects to use the site to build a fully flushable wet wipe
business capable of taking an appropriate market share of this
GBP0.5bn sector.
The Group continues to invest in its core operations and will be
adding further capacity at its Leyland converting plant from Q3 of
FY22, to fulfil the expected increase in volume demand. In
addition, the Group is making progress on its paper mill
development plans and the Board expects to update the market in the
near term.
Outlook
Whilst remaining mindful of the ongoing challenges of the
COVID-19 pandemic, the Board views the future with confidence,
building on the Group's strengthened customer relationships,
improved levels of service and quality, and its higher value
product range. The Group expects volumes across the UK tissue
sector to normalise in H1 22 and that its main market, the
discounters, will grow strongly, as the UK returns to pre-pandemic
shopping patterns.
Input costs already announced by the industry are increasing
significantly in the near term given the rise in global pulp prices
and other commodities. Raw material stock levels have been expanded
to provide some short-term mitigation, whilst price recovery
measures are enacted. The Group is making good early progress in
recovering these higher costs, as it moves into the new financial
year.
As previously announced, the Board intends to restore dividend
payments and expects to propose a final dividend for FY21 of no
less than 0.5p per ordinary share.
Gareth Jenkins, Chief Executive Officer, said:
"I am pleased to report a continued improvement across the
enlarged group, and I am particularly proud of our employees, who
have responded magnificently, keeping all our operations open and
maintaining the highest standards in service and product quality
for our customers.
"The integration of LTC, which is now complete, has delivered
some fantastic results that will benefit the wider group in the
long term. In this pandemic year, we have fully automated our
largest factory, installed a business-wide operating system, and
grown our margins further. We now have a business capable of
benefitting further, as the UK exits lockdown, and we remain
excited about the future for the Group."
(1) Kantar data based on retail sales for the period from May
2020 to March 2021
Enquiries:
Accrol Group Holdings plc
Dan Wright, Executive Chairman Via Belvedere Communications
Gareth Jenkins, Chief Executive Officer
Richard Newman, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser
& Broker)
Dan Bate / Jordan Warburton Tel: +44 (0) 161 831
1512
Dominic King / John Goold Tel: +44 (0) 203 829
5000
Liberum Capital Limited (Joint Broker) Tel: +44 (0) 20 3100
2222
Clayton Bush / Edward Thomas
Belvedere Communications Limited
Cat Valentine Tel: +44 (0) 7715 769
078
Keeley Clarke Tel: +44 (0) 7967 816
525
Llew Angus Tel: +44 (0) 7407 023
147
accrolpr@belvederepr.com
Overview of Accrol
Accrol Group Holdings plc is a leading tissue converter and
supplier of toilet tissues, kitchen rolls, facial tissues and wet
wipes to many of the UK's leading discounters and grocery retailers
across the UK. Following the recent acquisitions of LTC in
Leicester and John Dale Ltd in Flint, North Wales, the Group now
operates from six manufacturing sites, including four in
Lancashire, which generate revenues totalling c.16% of the GBP1.9bn
UK retail tissue market.
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END
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