# Accrol Group Holdings plc Appoint Gareth Jenkins as new CEO

- Link: https://www.directorstalkinterviews.com/accrol-group-holdings-plc-appoint-gareth-jenkins-new-ceo/412734826
- Published: 2017-09-07T07:51:31+01:00
- Author: Giles Arbor

**Accrol Group Holdings plc** ([LON:ACRL](https://www.directorstalkinterviews.com/company/accrol-group-holdings/acrl.l)),
the AIM-listed leading independent tissue converter, announced today 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](https://www.directorstalkinterviews.com/ftse-company/ds-smith/smds.l),
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.

> P**eter 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.

 

Zeus Capital:

Accrol has provided a trading update confirming it is trading broadly in line with
expectations. We update our forecasts to reflect a more conservative view of full
year profits. While revenue trends are robust, we are reducing our 2018-20 EPS forecasts
by 2.2% – 5.9%. Also contained within the statement is the announcement of a new
CEO from DS Smith, which we believe is good news given his track record running 
a major division within a [FTSE 100](https://www.directorstalkinterviews.com/news/ftse-100)
business. Although trading conditions are not easy, we continue to believe Accrol
remains attractive, trading on a discount to small cap peers, despite a ROCE approaching
16% and FCF yield of 4.5%.

**Trading update:** The company has provided a trading update confirming it is trading
at the lower end of the consensus range. We believe revenue growth is on track, 
with gross profit margins facing continued pressure. While the group remains well
hedged on FX, paper prices continue to rise, increasing input costs, and customers
remain focused on product re-engineering, which is ultimately putting pressure on
the group’s gross margin. The company are due to report results for the interim 
period ending October 2017 in January 2018.

**New CEO:** We see this as good news given Gareth Jenkin’s track record at DS Smith
PLC where he was Managing Director of the UK Packaging Division. During his time
at DS Smith he held 10 different positions and therefore has extensive strategic,
operational and M&A experience, gained over his 24-year career at the company. Before
taking on the role of Managing Director of UK packaging he was sector director for
retail corrugated, covering 8 operating units in the UK.

**Forecasts:** We are reducing our 2018E – 2020E EPS forecasts by 2.2%- 5.9%. The
downgrade is primarily driven by more prudent gross margin assumptions. The challenging
trading conditions which led us to downgrade forecasts in July (by 4.5% and 6.0%
in 2018E and 2019E respectively) have persisted, leading us to take a more prudent
view of gross profit margins through the forecast period. Price inflation is proving
to be a slow process across the sector. While prices for some products are starting
to increase (e.g. 4-pack of Andrex) prices for key volume products (e.g. 9-packs
of Andrex) have remained stagnant for an extended period of time. While price increases
are not fundamental to our original investment thesis, the more challenging trading
environment post Brexit has made passing increased costs on to customers more difficult.

**Investment view:** On revised forecasts the shares are currently trading on a 
2018E P/E of 11.4x and an EV/EBITDA of 8.7x, which we believe remains attractive
for a business with a rising post tax ROCE approaching 16%. Given the continued 
investment in growth and capacity, we remain comfortable with our original thesis
that this should be a £30m+ EBITDA business based on 200,000 tonnage capacity.

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