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")


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.



--  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 


--  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.


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 

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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May 17, 2022 10:04 ET (14:04 GMT)

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