TIDMACRL
RNS Number : 6876L
Accrol Group Holdings PLC
17 May 2022
17 May 2022
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
FY22 in line with market expectations
Accrol (AIM: ACRL), the UK's leading independent tissue
converter, announces the following trading update ahead of its
Final Results for the year ended 30 April 2022 ("FY22" or the
"Period"), which are scheduled to be released in September
2022.
In the period since the Company's last trading update of 12
January 2022, the Group has continued to demonstrate resilience
against a challenging backdrop of rapid cost inflation. As a
result, revenue, adjusted EBITDA, and adjusted profit before tax
for FY22 are expected to be in line with market expectations(1)
.
The Group has successfully navigated the substantial
inflationary pressures on input costs, including pulp, energy, and
supply chain, by engaging constructively with its customers to
pass-on these additional costs, through significant price increases
and further process efficiencies.
Highlights
FY22
-- Revenue, adjusted EBITDA, and adjusted profit before tax
for FY22 in line with market expectations(1)
-- Successful recovery of all increased input costs secured
by the end of Q4 FY22
-- Market share by revenue increased to 16.0% (H1 FY22: 15.3%)
and by volume to 19.5% (H1 FY22: 18.9%)
-- New customers secured and deeper penetration of key accounts,
through increasing product diversity - notably Amazon, Unitas
(30k convenience stores) and Ocado
-- Final elements of the extensive automation programme and
machine investment in the Tissue business completing in Q1
FY23. Only planned modest levels of maintenance investment
capital required going forward
Outlook
-- Revenue for the year ending 30 April 2023(1) ("FY23") now
expected to be in the range of GBP200m to GBP220m, as a
result of the successful recovery of all input cost increases
-- The Group is well positioned to benefit from its product
range and its supply positions across the discount retailers
as their growth accelerates following the pandemic and the
inflationary pressures now impacting consumers
-- Increasing Board confidence in FY23 outcome
(1) For the purposes of this announcement, the Group believes
market consensus for the year ended April 2022 to be revenue of
GBP160m, adjusted EBITDA of GBP9m and adjusted PBT of GBP1m, and
the for the year ended April 2023, revenue of GBP185m, adjusted
EBITDA of GBP15m and adjusted PBT of GBP7m.
FY22 Financials
The overall UK tissue market has grown by 0.7% to GBP2.1bn(2)
based on retail sale value, reflecting the inflationary pressures
within the market. Accrol's market share growth has returned,
increasing to 16.0%(2) from 15.3%(2) at H1 FY22 (FY21: 15.9%)(2) ,
reflecting the strong recovery of the discounter retailers in
recent months. ((2) Source: Kantar)
Total revenues in FY22 increased by 17% to GBP159.4m (FY21:
GBP136.6m). Market conditions continued to improve throughout the
year with shopping behaviours becoming more normalised as COVID
related restrictions were eased and then removed completely.
Net debt (pre-IFRS16) at 30 April 2022 was GBP27.5m, (31 October
2021: GBP21.6m), following the Group's accelerated investment in
automation and the necessary expansion in working capital to manage
supply constraints and rising costs.
The Group recently amended and extended its existing banking
arrangements, through to August 2024 providing additional
facilities to support its growth. These new facilities provide
increased headroom in both the scale, tenure and liquidity of the
facilities and the associated banking covenants. The amended
facilities provide an additional GBP8.5m of funding headroom, an
increase of c.25% over and above the previous arrangements that
would have expired in August 2023. Given the breadth and depth of
the Group's historic automation and machine investment programme,
any material future capital investment will be capacity and
earnings enhancing.
Foreign exchange
The majority of the Group's tissue requirement is fulfilled
through the purchase of parent reels in US dollars. Forward foreign
currency contracts are used in the purchase process for this
product. The nature of these contracts allows time for the Company
to manage any significant and unforeseen movements in the exchange
rate through pricing agreements with its customers.
Strategic review
The Strategic Review, announced on 12 January 2022, is ongoing
and the Board intends to provide a full update in the FY22 results
announcement in September.
Outlook
Whilst remaining mindful of the extremely challenging external
environment, the Board views the prospects for Accrol with
increasing confidence, given the strong recovery of input cost
rises, 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 return
to pre-pandemic levels and that its main market, the discount
retailers, will grow strongly, as consumers seek value and quality,
given tighter household budgets.
Gareth Jenkins, Chief Executive Officer of Accrol, said:
"This has been the most challenging period in the industry that
I have experienced, with tissue pricing reaching unprecedented
levels, driven by energy prices and supply constraints. We have
successfully recovered these increased input costs to date and are
confident we can continue to recover any further rises through
innovation, efficiency and our supportive retailer customer
base.
"We have a well invested business and exit the year in a strong
position both operationally and commercially."
Dan Wright, Executive Chairman of Accrol, added:
" The new improved banking arrangements demonstrate continued
confidence in the Group's operating performance and ongoing support
for our development plans. The investments we have already made
into the efficiency of our operations have served us well through
these incredibly challenging times and we are confident that they
will bear considerable fruit in FY23 and beyond."
The Group has produced a short video to showcase its operations
and investment in the extensive automation of the business. Click
here: Accrol Today .
For further information, please contact:
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 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
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 JD in Flint, North Wales, the Group now operates from
six manufacturing sites, including four in Lancashire, which
generate revenues totalling c.16% of the cGBP2.1bn UK retail tissue
market.
For more information, please visit www.accrol.co.uk .
Link for Accrol Today video:
https://www.accrol.co.uk/our-business/
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END
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