Appointment of Chief Executive and Trading Update

RNS Number : 0409Q

Accrol Group Holdings PLC

07 September 2017

 

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Accrol Group Holdings plc

Appointment of Chief Executive Officer and Trading Update

Accrol Group Holdings plc (the "Company" or "Accrol"), the AIM-listed leading independent tissue converter, announces that Gareth Jenkins has been appointed as Chief Executive Officer with effect from 11 September 2017.

Gareth joins the Company having spent 24 years at DS Smith plc, one of Europe's leading packaging companies manufacturing corrugated solutions for the retail, FMCG and industrial markets.  He spent the last four years as Managing Director of the UK & Ireland packaging division and has extensive strategy, commercial, M&A and operational experience, gained in both the UK and in Europe.

Gareth will replace Steve Crossley, who is leaving the Company and stepping down from the Board with immediate effect to pursue other interests.

The Board confirms that the Company continues to trade in line with market expectations in terms of revenue, with profitability being broadly in line with market expectations.

Peter Cheung, Chairman of Accrol, commented: "We are very pleased to be joined by someone of Gareth's calibre, and we look forward to benefiting from his wealth of experience built during a 24 year career at DS Smith plc. I would like to thank Steve for the contribution that he has made to Accrol, in particular his contribution to a successful IPO, and we wish him well for the future."

Information on Gareth required to be disclosed under Schedule Two, paragraph (g) (i)-(viii) of the AIM Rules for Companies:

Gareth Paul Jenkins, aged 49, is not currently a director of any other company.

In addition, Gareth has held the following directorships in the past five years:

·     DS Smith Business Services Limited

·     DS Smith Corrugated Packaging Limited

·     DS Smith Display Holding Limited

·     DS Smith Packaging Limited

·     CREO Retail Marketing Holdings Limited

·     CREO Retail Marketing Ltd

·     CREO Property Limited

·     TRM Packaging Limited

·     TRM Trustees Limited

·     The Stone Trough Company Ltd (dissolved via voluntary strike-off on 18 March 2014)

Gareth has no interests in the share capital of Accrol Group Holdings plc.

There is no further information on Gareth required to be disclosed under Schedule Two, paragraph (g) (i)-(viii) of the AIM Rules for Companies.

For further information please contact:
Zeus Capital Limited (Nominated Adviser & Joint Broker)
Dan Bate / Andrew Jones	Tel: [phone]
Dominic King / John Goold	Tel: [phone]
Liberum Capital Limited (Joint Broker)
Clayton Bush / Chris Clarke/ Lucy Sharma / Dominik Götzenberger	Tel: [phone]
Camarco (Media enquiries)
Jennifer Renwick / Kimberley Taylor	Tel: [phone]

Notes to Editors

Accrol manufactures toilet rolls, kitchen rolls and facial tissues as well as other tissue products. The Company operates out of c. 900,000 sq. ft. of manufacturing, storage and distribution facilities across Lancashire. Accrol currently manufactures approximately 18 million units per week and supplies some of the UK's largest retailers, providing both Accrol branded and Private Label products (being goods produced under a customer's own brand or under a non-branded or less well-known brand name ("private label")).

The Group's competitive advantage lies in its market positioning, operational process and flexibility. Key components of the business model are:

Production process - The Directors believe the Group obtains a competitive advantage through its model of acquiring and converting the large tissue reels that are Accrol's raw materials ("Parent Reels") as opposed to manufacturing Parent Reels from pulp and recycled fibre and subsequently converting. This requires a lower fixed overhead and provides flexibility in Parent Reel sourcing which allows the Group to take advantage of favourable pricing opportunities and production technology advancements, especially in a market of excess supply.

Technology and converting lines - Accrol has invested c.£18.2 million over the last three years with c. £4.0 million committed to a new machine for delivery in March 2018. The Group currently has 17 converting lines in operation providing capacity of approximately 143,000 tonnes per annum. The Group's operating machinery allows conversion of a wide variety of tissue grades, adding flexibility to the Parent Reel sourcing process and allowing manufacture of a wide range of product types.

Manufacturing private label products - The majority of Accrol's products (84 per cent. of revenues in the year ended 30 April 2017) are private label and whilst the Group also develops and supplies branded products, the ability to supply customers with goods under its own brand has allowed penetration into retailers operating in the discount market ("Discounters") and the UK's largest retailers ("Multiples"). Accrol can launch a new private label product within six weeks of instruction from a retailer.

Production flexibility - Accrol is able to manufacture toilet rolls, kitchen rolls, facial tissue and certain products used outside a consumer's home ("Away from Home" or "AFH"), providing a "one-stop shop" solution for customers in the tissue market. The ability to produce these goods and supply Multiples, Discounters, local retailers and wholesalers ("Independents") and the AFH market is a competitive advantage and the Directors do not believe any competitors can offer the same flexibility across all of these market channels.

Macro-economic impact on raw material prices - There is currently a global over-supply of both pulp and Parent Reels, with additional capacity forecast to be brought on stream through to 2019. As such, Parent Reel prices are currently relatively low and are expected to remain so for the foreseeable future. Low Parent Reel prices allow Accrol to manufacture at a lower cost, enhancing margin and providing pricing flexibility to win new orders. Overcapacity drives increased flexibility of supply and provides Accrol with a choice of pricing and technology when sourcing Parent Reels.

Market positioning - Having won a number of contracts with Discounters in recent years and benefitting from the organic growth within this market, the Directors believe Accrol is well positioned to take advantage of the growth in the discount market and Multiples' increased focus on private label products.

 

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