First Day of Dealings on AIM

RNS Number : 7326A

Accrol Group Holdings PLC

10 June 2016

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR TRANSMITTED, DISTRIBUTED TO, OR SENT BY, ANY NATIONAL OR RESIDENT OR CITIZEN OF ANY SUCH COUNTRIES OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS.

This announcement is an advertisement and not an admission document or a prospectus and does not constitute or form part of an offer to sell or issue or a solicitation of an offer to subscribe for or buy any securities nor should it be relied upon in connection with any contract or commitment whatsoever. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of the information in the admission document (the "Admission Document") which was published by Accrol Group Holdings plc (the "Company" or "Accrol" and together with its subsidiaries, the "Group") on 2 June 2016 in connection with the proposed admission of its ordinary shares to trading on AIM, a market operated by London Stock Exchange plc ("Admission"). Copies of the Admission Document are available at the registered office of the Company and on its website, www.accrol.co.uk/investorrelations, subject to applicable securities laws or regulations.

10 June 2016

Accrol Group Holdings plc

First Day of Dealings on AIM

Accrol Group Holdings plc, a leading independent tissue converter, is pleased to announce that Admission and dealings in its Ordinary Shares on the AIM market of the London Stock Exchange will commence at 08:00am today. Following Admission, dealings will commence under the TIDM code ACRL and its ISIN number is GB00BZ6VT592. Zeus Capital Limited ("Zeus Capital") are Nominated Adviser and Sole Broker to the Company.

The Company, together with Zeus Capital, successfully raised approximately £63.5 million (before expenses) by placing approximately 63.5 million existing and new ordinary shares with investors at a placing price of 100 pence per ordinary share (the "Placing").  Accrol's market capitalisation on Admission, based on the placing price, is approximately £93 million. 

The net proceeds of the Placing of new ordinary shares will be used by the Group to repay all shareholder loan notes and refinance existing debt.   The directors and the proposed directors of the Company (together the "Directors") believe that Admission will provide the business with an increased reputation and profile and the ability to incentivise key employees, as well as providing a platform for the Group to execute its strategy.

The Company's AIM admission document can be viewed at www.accrol.co.uk/investorrelations.

Peter Cheung, Chairman of Accrol, commented: "We are delighted to have received such a high level of interest from institutional investors for our AIM listing. On behalf of the board I would like to take this opportunity to welcome our new shareholders to the business.  We look forward to implementing our strategy and embarking upon this new stage in Accrol's development together."

For further information please contact:

 

Accrol Group Holdings plc
Peter Cheung, Chairman	Tel: [phone]
James Flude, Chief Financial Officer
Zeus Capital Limited (Nominated Adviser & Broker)
Corporate Finance		Tel: [phone]
Dan Bate / Jonathan Sharp
Corporate Broking		Tel: [phone]
Dominic King / Adam Pollock / Mike Seabrook		http://www.zeuscapital.co.uk/

Media enquiries: Camarco
Billy Clegg Jennifer Renwick	Tel: [phone]                 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.

Strategy

The Company has identified key areas of operation to focus on improving the Group's performance going forward:

·     Organic Growth through Discounters

o  The discount market is projected to grow at 10 per cent. per annum and represents the fastest growing retail sector within the UK tissue market. Accrol has a 35 per cent. market share of the discount market.

·     Increasing market share through Multiples

o  Increase orders and win new contracts with some of the UK's largest retailers through more focused customer service and a wider product set arising from planned new product development and innovation.

o  Providing private label products to such Multiples.

·     Operational improvements and capacity utilisation

o  Increasing the efficiency of the current converting process through incremental changes to production line management and techniques and running additional capacity through some of the newest machinery.

o  Increasing capacity to service any new orders with immediate effect.

DIRECTORS AND PROPOSED DIRECTORS

Peter Cheung (Executive Chairman, aged 56)

Peter has a strong financial and operational background having accumulated over 30 years' international experience in blue chip manufacturing, fast moving consumer goods and retail environments, with c. 20 years as a main board director.

Peter has worked alongside private equity firms since 1997 and served on the board of AM Paper (SCA Soft Tissue) as Corporate Development Director, TMD Friction as Chief Financial Officer, Jemella Group (ghd) as Chief Operating Officer and Chairman of the Operating Board. He is a qualified CIMA accountant.

Peter was appointed Chairman of Accrol in November 2014. He has over 10 years' experience in the soft tissue industry, including 8 years with Georgia Pacific.

Stephen Roy Crossley (Proposed Chief Executive Officer, aged 58)

Steve has over 30 years' experience in UK food manufacturing and distribution at senior management or board level, including at Unigate plc and Northern Foods plc where Steve held various positions, including as Operating Board Director and Divisional Managing Director of Chilled Foods.

Most recently, from September 2014 until May 2016, Steve was Chief Executive Officer at Bright Blue Foods, where he helped restructure, transition and re-finance the Company with a new investor. Steve has also had roles as Group Executive Board Director of Samworth Brothers (November 2010 to August 2014) and Managing Director of Grampian Country Pork (September 2006 to September 2008).

In addition, Steve has experience working with venture capitalists and banks to raise capital for investment in new business ventures.

Steve will be appointed to the board on Admission.

James Paul Maurice Flude (Chief Financial Officer, aged 41)

James joined Accrol as Chief Financial Officer in January 2015 and is responsible for the Group's finance function. He has over 13 years of industry experience in finance roles gained in blue chip and private equity backed businesses. This included two years at Northern Foods plc in internal audit and financial reporting and six years at ghd in a number of senior roles. Whilst at ghd, James was key in delivering the first private equity buyout with Lloyds Development Capital in July 2006 and the second buyout with Montagu Private Equity in July 2007.

James qualified as a Chartered Accountant with Arthur Andersen and holds a BSC Hons in Pure

Mathematics from Birmingham University and a PhD in Mathematical Physics from the University of

Nottingham.

Joanne Carolyn Lake (Proposed Independent Non-Executive Director, aged 52)

Joanne has over 30 years' experience in accountancy and investment banking primarily with Panmure Gordon, Evolution Securities, Williams de Broë and Price Waterhouse. She is Deputy Chairman of AIM quoted Mattioli Woods plc and Main Market listed Henry Boot PLC and is also a non-executive director of AIM quoted Gateley (Holdings) Plc and Morses Club PLC.

Joanne will be appointed to the board on Admission.

Stephen Hammett (Proposed Independent Non-Executive Director, aged 57)

Steve has over 25 years' experience with Tesco plc both in the UK as well as internationally. He has held various CEO roles with Tesco in Turkey, Thailand, Czech Republic and Slovakia.

More recently, Steve was the President of Al Futtaim Private, and responsible for the growth of its retail brands, through c.400 stores in nine Middle East and North Africa markets. Steve currently holds a position on the Food Board of the Co-operative Group in the role of interim customer director, responsible for c.3,000 stores.

Steve will be appointed to the board on Admission.

 

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this Announcement, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations or statements relating to expectations in relation to shareholder returns, dividends or any statements preceded by, followed by or that include the words "targets", "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof, are forward looking statements.

 Such forward looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results and performance to be materially different from future results and performance expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future.

 These forward looking statements speak only as of the date of this Announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.

 

END

 

 

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