Dow Jones kept in the red by PMI boost

Jamie Gordon
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Dow Jones kept in the red by PMI boost
Beginning the week dampened by US-Iranian tensions, the Dow Jones wasn’t allowed to bounce back on Tuesday, as it had the wind taken out of its sails by a PMI induced climb by the dollar. The mood elsewhere was flat. European indices enjoyed some resurgence, but this was largely overshadowed by oil uncertainty and the very real threat of further escalation between the US and Iran. Speaking on today’s updates, Spreadex Financial Analyst Connor Campbell stated,

“Europe’s morning rebound lost some of its shine in the face of the resumption of losses across the pond.”

“Though there is no doubt a lingering undercurrent of uncertainty regarding the situation between the US and Iran softening up the Dow Jones, the fact the dollar got a PMI-boost appeared to be the main catalyst for the index’s losses.”

“An ISM services reading of 55.0, against the 54.5 expected and 53.9 seen last month, allowed the greenback to climb 0.4% against the pound and 0.5% against the euro. In turn the Dow dropped 110 points, causing the index to sink back towards 28600 – still, however, 200 points above Monday’s lows.”

“As mentioned, this took some of the shine off the European indices, with the impact varied across the region. The DAX rose 0.8%, against the 1% climb seen early after the bell, while the CAC lost all of its 0.7% growth to sit flat just above 6000.”

“The FTSE was pretty much in line with where it was at the open, up 0.1% as the gains main in many of its sectors were somewhat undermined by the mini-retreat from BP (LON: BP) and Shell (LON: RDSA) following on from Brent Crude’s own 1% fall.”

Elsewhere in oil, Premier Oil PLC (LON:PMO) purchased two assets from BP and Lekoil Ltd (LON:LEK) made two new personnel appointments.

British Pound fluctuates as PM Johnson anticipates Brexit vote

Ishen Patel
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British Pound fluctuates as PM Johnson anticipates Brexit vote

The British Pound has fallen on Tuesday as investors anticipate the decision to vote on Prime Minister Boris Johnson’s deal to withdraw from the EU.

Following the Conservative landslide, PM Johnson is set to test Parliament again to see whether he can pass his Brexit bill which is looking still quite unlikely.

As Britain’s official deadline to withdraw from the EU is set on January 31st, the British Pound has experienced volatility.

Parliament has allowed three days for debate before MP’s hit the voting both, before the decision is then sent to the House of Lords.

The EU and the UK are yet to set a definitive agreement, which has seen the pound fluctuate over the last few months.

The Pound has seen sharp spikes, a notable rise coming on the announcement of the exit polls in the December election.

A failure to complete negotiations by the end of 2020 cold see the two parties enter default trading terms as defined by the WTO.

A no deal Brexit has been analyzed by members at Danske Bank (CPH:DANSKE) and comments are found below.

“Some no deal Brexit fears have been priced in earlier than we previously thought,” says Mikael Olai Milhøj, Senior Analyst at Danske Bank. “We had thought it would take a while before Brexit would dominate the headlines again but PM Johnson’s renewed promise not to extend the transition period, which is set to end on 31 December 2020, means investors have become slightly more concerned about Brexit,

Johnson this week will look to get the ball rolling as he meets the President of the European commission on Wednesday.

“On Wednesday, UK PM Boris Johnson and European Commission President Ursula von der Leyen will meet to discuss upcoming trade talks, which puts Sterling at risk of heightened volatility. The British Pound has suffered a dramatic sell-off since the historical election last month due to Mr Johnson’s hardline stance on Brexit,” says George Vessey, Currency Strategist at Western Union.

GBP/EUR – Today’s Data

Across Tuesday trading, the Pound opened at 1.1764 and has seen highs of 1.181.

Additionally, the lowest point recorded was 1.1727. Currently the exchange rate lies at 1.176.

Crude Oil continues to experience volatility on tense US-Iran relations

Ishen Patel
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2
Crude Oil continues to experience volatility on tense US-Iran relations

The price of crude oil has continued to rise over the heightened tensions between Donald Trump and Iran.

Since the United States launched the attack a few days ago, which killed Iran’s top military commander could trigger a retaliation and massively disrupt oil supply.

The current price of Brent Crude is $68.23 per barrel, having been priced at $68.91 in the early hours of Tuesday morning.

The Brent Crude price did hit $70.73 which was its highest level since rebels attacked a major Saudi oil facility back in September.

The price of Brent Crude Oil has jumped more than 6% before leveling off since the killing of Qassem Soleimani on Friday.

Iran has made a public statement to retaliate against the US in the Middle East following the attack, as the White House issued the order to conduct a drone attack last week.

Over one fifth of global oil supply flows through the Strait of Hormuz, a shipping route between Oman and Iran.

If the price of oil continues to rise amid speculation over war and conflict, this could have dire consequences for the global economy and drivers have been seeing the price of petrol change over the last few days.

Market analysts at both Goldman Sachs (NYSE: GS) and UBS (SWX: UBSG) have casted doubts on the likelihood of oil prices to rise over $70 per barrel due to strong production outside the Middle East.

UBS said that there will be an expectation that the global oil market will be oversupplied due to production increasing from both the US and Norway, which could offset the price rises caused by US Iran tensions.

Paul Donovan, the chief economist at UBS Global Wealth Management, said the global market’s focus on the oil price after the attack is “a rather 1970s reaction” that is “perhaps not appropriate for 2020”.

“More serious economic damage may come if there is cyber-retaliation – which seems suited to this situation – or from general uncertainty,” Donovan said.

Drivers have already been feeling the effects of climbing oil prices, as the RAC speculated that they could be pushed higher.

“Prices at the pump have already increased by about a penny a litre,” said Simon Williams, who tracks fuel prices for the company.

Petrol is currently £1.27 per litre, with diesel costing £1.32, he said.

But Brian Madderson, the chairman of the Petrol Retailers Association, said: “Prices were due to rise anyway.”

Certainly, the global oil market will remain volatile as the threat of war and retaliation looms and traders look to remain cautious in uncertain times.

Kantar data shows rise of Lidl and Aldi in British supermarket industry

Ishen Patel
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1
Kantar data shows rise of Lidl and Aldi in British supermarket industry

Grocery sales in the UK rose to record numbers in the three month period to December 29, however this was the slowest rate of growth since 2015.

Data from Kantar showed that the big four grocery shops recorded fall in market shares.

This comes at no surprise, and evidently data shows that the German counterparts such as Lidl and Aldi have captivated the British market.

Notably, Ocado Group PLC (LON:OCDO) showed the fastest sales rise along with the German firms.

Ocado saw a rise of 13% in year on year sales from £345 million to £389 million, as it increased its market share to 1.3% compared to the 1.2% figure last year.

For the 12 weeks ending December 29, supermarket sales rose to £29.35 billion from £29.30 billion, representing 0.2% year-on-year growth, which Kantar says is the slowest rise in four years.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: “There was no sign of the post-election rush many had hoped for in the final weeks before Christmas, with shoppers carefully watching their budgets.

“In fact, many of us cut back on traditional and indulgent festive classics. Sales of Christmas puddings were down by 16%, while seasonal biscuits were 11% lower. Turkey sales also fell by 1%, partly down to a shift from whole birds to smaller and cheaper joints such as crowns. Shoppers also popped fewer corks this year, as sparkling wine sales dipped by 8%. However, both beer, up 1%, and still wine, up 2%, were more popular than in 2018.”

Morrisons (LON:MRW) saw their market share slip 0.3% to 10.3%, as sales slumped by 2.9% to £3.01 billion compared to the £3.11 billion figure a year ago.

Asda also saw a similar slip, as the firm totaled its market share at 14.8% representing a 0.4% slip from the 15.2% figure a year ago.

Asda, who are owned by Walmart (NYSE: WMT) reported a sales decline of 2.2% year on year to £4.35 billion.

Tesco PLC (LON:TSCO) who are the biggest of the big four, also saw a slip in their market share.

The FTSE 100 listed firm saw its market share slip from 28.4% to 27.4% as sales fell 1.5% to £8.03 billion.

Sainsbury’s (LON:SBRY) did not see such a significant fall, as sales declined 0.7% year-on-year to £4.69 billion from £4.73 billion with market share at 16.0% compared to 16.1%.

Kantar said: “The slow market made it particularly difficult for the largest retailers to increase sales. The ‘big four’ grocers were especially impacted by customers choosing to make one fewer trip to stores in the latest period.”

Aldi saw their market share rise to 7.8% during the period, as Lidl also grew to 5.9% from their previous 5.3% showing significant gain for the German firms.

Kantar said grocery inflation stood at 0.9 for the 12 week period, with prices rising fastest in markets such as fresh sausages, fresh bacon and fresh lamb, while falling in instant coffee, fresh beef and butter.

Sajid Javid sets March date for new budget unveiling

Ishen Patel
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2
Sajid Javid sets March date for new budget unveiling

The current Chancellor Sajid Javid has set a date for the announcement of his first budget.

This comes at an important time where political tensions have heightened in Hong Kong and China, and the state of global affairs has never been so indecisive.

The ongoing tensions between the United States and Iran have potentially fulled the prospect of war, and legislators all across the globe are preparing themselves for what could be turmoil

Turning to UK politics, Mr Javid has said that billions of pounds will be invested “across the country”.

The Treasury will “prioritise the environment”, he said and reiterated a plan to make use of low borrowing rates to spend on public services.

Indeed, Javid’s comments did receive criticism as John McDonnell said that he questioned whether the Conservative party would be able to invest and match climate change goals.

Mr Javid will update his cabinet colleagues on the performance of the economy before facing MPs later on Tuesday.

He told the BBC: “There will be an infrastructure revolution in our great country.

“We set out in our manifesto during the election how we can afford to invest more and take advantage of the record low interest rates that we are seeing, but do it in a responsible way.

“There will be up to an extra £100bn of investment in infrastructure over the next few years that will be transformative for every part of our country,”

He added: “In the Budget, we will be setting out how we are going to take advantage of all the huge opportunities that Brexit will bring.

“Also, how we are going to help hard-working people in particular – especially with the cost of living – and how we are going to level up across the entire country.”

As PM Johnson continues to tackle issues such as Brexit, and tries to sort out domestic issues, this budget comes at a significant time being the first since the December election.

With such a landslide victory for the Conservatives, there will be big expectations for the government to deliver on its promises to lower income households and particularly the North of England where Labour’s red wall collapsed.

Sajid Javid said the budget would “unleash Britain’s potential, uniting our great country, opening a new chapter for our economy and ushering in a decade of renewal”.

In recent months, Javid has already promised billions of pounds of extra investment in the health service, schools and police, after 10 years of cuts imposed by the financial crisis.

The government announced that they would be increasing the minimum wage for individuals over the age of 25, which would be taking place from April 1.

This move shows a concerned effort by the Conservatives to tackle issues such as income and wealth inequality, but critics will say that this does not go far enough.

Many British operating businesses have citied both political and economic uncertainty as a hamper to business, and this budget revealed will go a long way in understanding the long term governmental plans of the UK economy.

In November, Asda who are owned by Walmart (NYSE:WMT) saw a slump in sales which was caused by political uncertainties and tough market conditions.

Asda said its gross profit rate fell, reflecting price markdowns in clothing following a slow summer season versus last year.

The fall in gross profit rate, plus increased operating expenses, meant operating income was also lower.

“This quarter has afforded consumers little respite from political or economic uncertainty and this has shown in their spending,” said Chief Executive Roger Burnley.

Certainly, many British businesses will be keen to see how the government can promote trading in a period where the British High street seems to be in decline and political uncertainty wraps consumers.

easyHotel appoint new Chief Executive Officer

Ishen Patel
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0
easyHotel appoint new Chief Executive Officer

Easyhotel PLC (LON:EZH) have announced a new chief executive officer in an update on Tuesday.

The firm said that they have appointed Francois Bacchetta as chief executive officer and he is expected to join the company in Spring.

Easyhotel said that Bacchetta is joining the company from easyJet PLC (LON:EZJ) and comes at a period of turbulence for the firm.

The hotel provider said that he has “significant experience” operating in the European travel market including easyHotel’s core growth countries in continental Europe.

Before joining Easyjet, Bacchetta held numerous senior roles including senior marketing positions at global cosmetics group L’Oreal SA (EPA: OR).

“Importantly, Francois has a strong understanding of the “easy” brand and was responsible for the country and growth strategies for his region, whilst bringing experience of managing online trading including digital marketing,” easyHotel said.

Harm Meijer, non-executive chair of easyHotel, said: “Following a comprehensive search, we are pleased that Francois is joining us to lead easyHotel in its aspiration to become a European leader in the super budget hotel segment.”

François Bacchetta added: “easyHotel is a business I greatly admire and I am thrilled to be appointed. With a strong hotel network established in the UK, I believe this is a very exciting time for the brand and I look forward to leading the expansion in Europe as the Group seeks to become a leader in the budget hotel space.”

Turbulent 2019 for easyHotel

In May, the firm said that it had swung to a half year loss.

The budget hotel operator revealed a loss before tax of £0.12 million for the six months to March-end, down from £0.09 million.

The company also said it had invested £14.2 million in new hotel development, alongside £30.3 million in cash.

easyHotel also confirmed £33.9 million of bank financing headroom at the end of the period.

“The hotel market outlook remains uncertain, particularly in the UK where the ongoing Brexit negotiations continue to dampen consumer confidence. We are by no means immune, but the maturing profile of our hotels and our strong development pipeline will support continued growth and enhance our earnings profile. Combined with the careful control of our central costs, these efforts give the Board confidence in meeting its expectations for the year ending 30 September 2019.”

Certainly, the new appointment will signal to shareholders that the firm are making an effort to turn business around in testing market conditions.

Shareholders will be keen to see how the firm responds in the medium and long term and should expect positive results across 2020.

Shares of easyHotel trade at 88p (+1.03%). 7/1/20 13:44BST.

Landore receive updated mineral resource estimate at BAM deposit

Ishen Patel
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0
Landore receive updated mineral resource estimate at BAM deposit

Landore Resources Ltd (LON:LND) have said that an updated mineral resource estimate has increased the gold resources at the BAM deposit.

Landore Canada is engaged in mineral exploration and development, with the present focus of its operations being mineral exploration on the Junior Lake property, located in the province of Ontario.

Landore’s objective is to become a successful mineral explorer and create capital growth for shareholders through the discovery of economic mineral deposits.

The updated estimate was provided by Cube Consulting, and confined that the resources increased at the deposit in Ontario to 31.1 million tonnes at 1.02 grammes per tonne for 1.0 million ounces of gold. This includes 21.9 million tonnes at 1.06 grammes per tonne for 747,000 ounces of gold.

Similar work carried out by Cube Consulting further extended the deposit by 3,700 meters with a recently completed soil programme by Landore identifying “widespread” gold mineralisation along strike to the west for a further 7 kilometres.

The firm said that the February 2019 Preliminary Economic Assessment (PEA) for the BAM Gold project provided a price sensitivity analysis of the ‘Extended case’ which, at a gold price of US$1,300, would produce a Post Tax, Net Present value (NPV) of US$123.71m.

At the current gold price of US$1,560 that Post tax NPV would be elevated to $227.37m, as mentioned in the Tuesday update,

The BAM gold deposit is located approximately mid-way along a highly protective Archean greenstone belt which traverses the Junior Lake Property from east to west for approximately 31 kilometres.

Chief Executive Officer of Landore Resources, Bill Humphries, said:

“Landore’s exploration effort for 2019 concentrated on establishing the potential growth of the BAM Gold Project along strike towards the existing Lamaune Gold project through the highly successful Soil Sampling campaign together with exploration drilling. Whilst the above infill drilling campaign continued to convert Inferred mineralisation into Indicated resource ounces.”

“The directors believe that the continued growth of the BAM Gold Deposit together with the possible future development of new discoveries along this highly prospective 31 kilometre long Archean greenstone belt has further enhanced the likelihood of the Junior Lake Property hosting a multi-million ounce gold deposit.”

Shares of Landore trade at 0.65p (-3.67%). 7/1/20 13:32BST.

888 remain confident for 2020 and report 2019 earnings in line with expectations

Ishen Patel
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1
888 remain confident for 2020 and report 2019 earnings in line with expectations

888 Holdings PLC (LON:888) have told shareholders that they can remain confident in the year ahead.

The betting firm said that it was confident of further progress in the year ahead, as it forecasted for 2019 earnings to be in line with expectations.

888 alluded to strong performance in the second half of the year, which has driven its full year expectations.

December revenue was particularly strong as this figure hit a new monthly high with progress supported by the success of the Orbit casino platform launched in May 2018.

In the first half of 2019, 888 reported pretax profit of $22.2 million, falling from $60.1 million a year before, on $277.3 million in revenue, down from $283.9 million.

In 2018, the company’s pretax profit was $108.7 million on revenue of $529.9 million.

888 said it was pleased by the first-phase rollout of its Poker 8 platform. The company will add “a number of exciting new product features” and will be rolling out the final-phase platform in 2020.

Revenue in the UK continue to increase, 888 said. Italy put in a continued good performance during the second half of the year aided by the success of Casino, it said.

Spanish revenue was bruised by the launch of competitors shared poker liquidity networks between Spain, Portugal and France.

However, the firm has remained confident to deliver shareholders growth and meet market expectations.

Itai Pazner, Chief Executive Officer of 888, said:

“The Group has delivered solid progress in the second half of the financial year underpinned by continued momentum in Casino and Sport. We are very encouraged by the growth in new customers during 2019 with a record of more than one million new customers signing up to 888’s brands during the year. In addition, we were very pleased to end the year with a record revenue month in December.

2019 saw a number of key strategic developments for the Group including the acquisition in March of a sports betting platform and an outstanding sports team based in Dublin. The Post-Merger Integration plan is progressing in line with expectations and 888 remains on track to launch its first proprietary sport product during the first half of 2020. New product development has remained a key focus and competitive advantage for 888 and the success of our Orbit platform across multiple regulated markets during 2019 has been a major achievement for the Group.

We have delivered a strong recovery in our UK business underpinned by a clear and unwavering focus on entertaining recreational customers in a safe and secure environment. Continuous investment in further enhancing responsible gaming processes and tools across all markets will remain a key focus for the Group.

888 has entered 2020 with good momentum across several regulated European markets and, underpinned by further investment in our team, marketing and product development, we remain focused on achieving further progress in the US. With 888’s core strengths as a responsible operator with outstanding technology and diversification across a number of regulated markets, the Board remains confident of further progress in the year ahead.”

888 and BetBright Deal

In March last year, 888 notified the market that they had acquired a rival in BetBright, which was valued in a £15 million deal.

Under the acquisition, BetBright’s Dublin office is set to be integrated into 888. Additionally, the company will receive complete ownership over its technology and product development across its four key betting verticals – Casino, Sport, Poker and Bingo.

“This acquisition of a high-quality and scalable sportsbook is an exciting milestone for 888. It gives the Group the missing piece in our proprietary product and technology portfolio and will enable 888 to own proprietary, end-to-end solutions across the four major online gaming verticals,” Itai Pazner, the Chief Executive commented in a company statement.

GVC vs 888

The move was to take market share away from leaders such as GVC Holdings (LON:GVC).

GVC who run stores such as Coral, saw their shares up in October as the firm lifted its full year guidance. The owner of the Ladbrokes brand increased its core profits forecast, predicting that they will now lie in the range of £670 million – £680 million for the full year.

In addition to the Ladbrokes brand, which is one of the most recognised in the UK, GVC also owns Coral and bwin.

The Coral brand has become synonymous with UK betting, whilst bwin is one of the leading online betting brands in Europe.

“Online momentum remains strong across all major territories, with NGR up 12% in the quarter despite the prior period containing part of the World Cup,” the CEO added.

“This performance continues to be driven by our industry-leading technology, products, brands, marketing capability, and people.”

Additionally, the firm appointed former Homeserve PLC (LON:HSV) chair as its new non-executive chair. This came at a time where GVC were looking to stimulate business and impose their foot holding in the UK market.

The new appointment, in the form of John Michael Barry Gibson has experience in the industry having held senior positions at firms such as William Hill (LON:WMH)

Certainly, 888 will take a bit longer to fully incorporate changes to make the merger a success.

Shareholders will remain optimistic as 888 have given much reassurance to deliver promising results at the start of 2020.

Shares of 888 trade at 157p (-2.60%). 7/1/20 13:17BST.

Itaconix confirms delivery of Zinador to Croda International

Ishen Patel
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1
Itaconix confirms delivery of Zinador to Croda International

Itaconix PLC (LON:ITX) have seen their shares green as the firm updated the market on a new delivery success.

Itaconix designs and manufactures high performance, cost effective and sustainable ingredients that are key components of products in the personal care, homecare and industrial sectors.

They are the world leader in developing and producing bio-based polymers from itaconic acid, combining the versatile chemistry of itaconic acid with breakthrough manufacturing economics.

The firm said today that it has delivered the initial order of polymeric zinc complex Zinador 35L to FTSE 100-listed chemicals firm Croda International PLC (LON:CRDA).

The agreement was initially agreed in 2017, for the supply of its polymer-based odour removal additive Zinador 22L to Croda, for home and industrial applications.

In October, both the firms agreed to expand the deal to include Zinador 35L, which is designed for use in detergent and industrial applications.

John R. Shaw, CEO of Itaconix, stated: “The launch of Zinador™ 35L through our collaboration with Croda is a significant commercial milestone for us. I believe the performance and cost advantages available with Zinador™ 35L can generate new and broader use of our odour control polymers.”

Pleasing results following a mixed period of Itaxonix

In October, the firm said hat they are set to miss annual revenue targets.

Delays in certain customer projects across the last few months have caused supply issues meant that figures will be below the comparative figure one year prior.

As a result of lower expected annual revenues, and one off costs for new product development, Itaconix expects to report loss before interest, taxes, depreciation and amortisation for second half of 2019 broadly in line with the £1.0 million loss recorded in the first half, meaning 2019 Ebitda loss will be roughly £2.0 million

Shareholders will be thoroughly pleased with the announcement made this morning, following a turbulent few months for Itaconix this will give shareholder reassurance that they can develop and grow.

With the backing of a FTSE 100 listed firm, Croda have also beaten competitors such as Victrex (LON:VCT) to partner with a firm in a deal which could have substantial benefits.

Shares in Itaconix jumped 4.92% on this morning’s announcement to 1p. 7/1/20 12:56BST.

Accrol narrow interim loss as shares jump

Ishen Patel
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0
Accrol narrow interim loss as shares jump

Accrol Group Holdings (LON:ACRL) have reported a narrowed interim loss in an update to shareholders on Tuesday.

This comes as part of the company’s turnaround plan and restructuring, which seems to have become a success.

In the six months to October 31, the toilet roll and kitchen roll producer saw its pretax loss narrow to £3.0 million from £9.0 million. Gross profit almost doubled to £12.8 million.

Accrol’s interim revenue grew 13% year-on-year to £65.1 million from £57.6 million.

Additionally, shareholders will be pleased that the company’s gross margin rose to 19.7% from the 12% a year before.

Blackburn-based Accrol attributed the improved performance to its recently completed turnaround plan, which began in February 2018.

The firm also lowered its admin costs by 10% to £9.5 million from the previous £10.6 million figure.

Exceptional costs for financial 2020 are expected to be about £1.0 million, down sharply from £7.9 million in financial 2019.

Customer revenue rose 20% year on year, which was miles ahead of market growth at 8% which will certainly stake shareholder appetite.

The company attributed this to its improved product mix. Accrol does not expect similar growth in the second half but does expects its margin to continue to improve.

Acrrol has not paid a dividend to its shareholders, but expects this to occur in the media term as long as performance remains steady and growth occurs.

The firm ended the update by saying that the firm is confident off of meeting market expectations in the second half. The company noted, however, it is “mindful” of the challenges that can arise following major changes to a business.

Comments

“The financial benefits of these changes are now flowing through to the bottom line at an accelerating rate and these first half results show the improving monthly run rate being achieved by the business. With the turnaround complete and a strong management team in place, the board is now focusing on further automation of the group’s operations and strategic opportunities to diversify, scale and grow the business,” the company explained.

Chair Dan Wright said: “Accrol has been completely transformed by the new leadership team and is now a very different organisation. I am proud to say that our talented and experienced people have proved that it is possible to make good returns from tissue conversion, which has historically been viewed as a low margin sector.

“Group margins are returning to pre-IPO levels, as more robust commercial management programmes and operational efficiencies offset substantially higher comparative input costs. What is particularly pleasing is seeing volume growth at over 20% during this transformational business period.”

Accrol shares jumped 5.08% to 33p. 7/1/20 12:44BST.
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