Deferred Share Buyback

RNS Number : 5508D

Accrol Group Holdings PLC

11 July 2016

 

11 July 2016

Accrol Group Holdings plc (the "Company" or "Accrol")

Deferred Share Buyback

Accrol Group Holdings plc, the AIM listed leading independent tissue converter, today announces completion of the buyback of deferred shares in the Company.

The Company has bought back 27,476,142 deferred shares of £0.001 each (the "Deferred Shares") held by shareholders of the Company on the share register as at 1 June 2016, for total consideration of £1 (the "Share Buyback"), further details of which can be found in the Company's AIM admission document dated 2 June 2016.

Following the Share Buyback there will be no Deferred Shares in issue and the issued share capital of the Company will consist of 93,012,002 ordinary shares of £0.001 each.

For further information please contact:
Zeus Capital Limited
(Nominated Adviser & Broker)
Dan Bate / Jonathan Sharp	Tel: [phone]
Dominic King / Adam Pollock / Mike Seabrook	Tel: [phone]
Camarco
(Media enquiries)
Jennifer Renwick / Billy Clegg	Tel: [phone]

Notes to Editors

Accrol manufactures toilet rolls, kitchen rolls and facial tissues as well as other tissue products at the Company's 350,000 sq. ft. manufacturing, storage and distribution facility in Blackburn, Lancashire. Accrol currently manufactures approximately 16 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.

Technology and converting lines - Accrol has committed capital expenditure of c.£18.2 million in the last three years. The Group currently has 15 converting lines in operation providing capacity of approximately 118,000 tonnes per annum. Additional capacity of c.25,000 tonnes per annum has recently been obtained with the purchase of two new machines, however these are yet to be installed. 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 (71 per cent. of revenues in the year ended 30 April 2015) 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 ("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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