A loo roll manufacturer intends to float on AIM on 10 June offering investors a juicy dividend yield of 6%.

Accrol, which achieved sales of £100 million in 2015 and has an EBITDA (earnings before interest, tax, depreciation and amortisation) compound annual growth rate of 13.7%, is very cash generative thanks to its model of buying and converting industrial paper reels as oppose to manufacturing them.

‘We’re very good at sourcing reels, which leads to strong EBITDA. We have low working capital requirements and our cashflow conversion rate is around 70% to 75%, which leads to the 6% prospective dividend yield,’ says Accrol’s chief financial officer James Flude.

The Blackburn-based company plans to use the IPO proceeds to refinance the business and support further growth. The discount market, where Accrol has a 35% market share, is growing at 10% a year but Flude sees bigger growth potential in the supermarket sector, where its share is just 7%.

‘We’re eyeing up major contracts with the grocers,’ he says.

The group is considering acquisitions but Flude says there aren’t many opportunities because the kitchen roll, toilet paper and facial tissue market is highly consolidated with only five key players. Accrol also manufactures hand towels and hygiene rolls - a market that is extremely fragmented.

At first glance Accrol looks attractive.