REG - Accrol Group Hldgs - Trading Update

Accrol groupAnnouncement

12/01/2022 07:00

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RNS Number : 1386Y  Accrol Group Holdings PLC  12 January 2022

12 January 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

 

Accrol (AIM: ACRL), the UK's leading independent tissue converter, today
provides the following trading update for the current financial year ending 30
April 2022 ("FY22").

 

In the period since the Company's last trading update of 20 October 2021, the
Group has experienced further inflationary pressure on input costs including
pulp prices, supply chain costs and most significantly energy costs.  In
light of these cost increases, the Group has implemented further cost
efficiencies and has engaged with all its customers successfully securing
substantial price increases, over and above those secured in mid-2021 and, as
a result, the Board was confident of meeting its revised expectations for
FY22.

 

However, unavoidable surcharges to parent reel prices, relating to exceptional
energy price increases, have very recently been levied on the Company, which
will significantly impact margins. The management team has experience of
successfully managing inflationary pressures and the Board is confident that
this is a timing issue and that further cost increases, including these recent
surcharges, will continue to be passed on successfully to Accrol's customers.
The underlying business is in good shape and the Board remains confident in
the medium-term prospects for the Group.

 

Despite continued supply chain disruption, particularly at ports, around the
world and specifically in the UK, the business continues to manage customer
supply well, having secured and maintained additional stocks in paper and
finished goods.

 

In FY22, revenue is now expected to grow by 17% to c.£160m (FY21: £136.6m),
generating adjusted EBITDA(1) of c.£9.0m (FY21: £15.6m) with margin recovery
anticipated in FY23.

 

The Group continues to operate well within its existing banking covenants and
has more than sufficient liquidity to meet its existing and future needs.

 

In light of the above and the short-term but inherent volatility of earnings
experienced in the current year, the Board has concluded that it is now
appropriate for Accrol to conduct a full strategic review of its business.
Such review will be designed to capitalise on the evident strength of the
business' market position, its balance sheet, and its solvency, underpinned by
significant banking support, to ensure that the shareholder value is
optimised.

 

A further update will be provided with the Groups H1 2022 results, which will
be announced on 18(th) January 2022.

 

(1 )Adjusted EBITDA is defined as profit before finance costs, tax,
depreciation, amortisation, separately disclosed items and share based
payments

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 £2.1bn UK retail tissue market.

 

For more information, please visit www.accrol.co.uk
(http://www.accrol.co.uk/) .

 

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