TIDMAXS
RNS Number : 1065X
Accsys Technologies PLC
30 November 2010
AIM: AXS
NYSE Euronext Amsterdam: AXS
ACCSYS TECHNOLOGIES PLC ("Accsys" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Financial Highlights
-- Solid performance in terms of revenue from sales of Accoya(R)
wood which increased by 81% to EUR6.5m (2009: EUR3.6m);
-- Total revenue of EUR7.2 million (2009: EUR9.3 million)
included EURnil attributable to licence income (2009: EUR5.4m);
-- Significant improvement in manufacturing gross margin from
48% loss in 2009 to 2% loss in 2010. Total margin (including
licence income) decreased from a 22% profit to a 2% loss;
-- Pre-tax loss of EUR7.6 million (2009: loss of EUR8.0
million);
-- Management action to reduce other operating costs resulted in
a decrease by 24% to EUR7.4m when compared to the same period in
previous year (see note 4 for details of other operating
costs);
-- Net cash position of EUR6.6 million (2009: EUR9.5m); and
-- In order to meet the expected demand for Accoya(R), the
expansion of our Arnhem plant is being planned, with the intention
of increasing capacity by 50%.
Operational Highlights
-- Detailed discussions in progress with potentially significant
licensing and strategic partners;
-- Record production and sales volume of Accoya(R) wood from
Arnhem production plant, with sales volumes increasing by 93% to
6,537m3 compared to the same period last year;
-- Our licensee, Diamond Wood, announced it has signed an
agreement with an Asian investor group and the imminent funding of
its first Accoya(R) wood factory in Asia by the end of 2010;
-- Three additional distribution agreements signed in the period
including a New Zealand distributor and a US tolling agreement
making a total of 21 distribution, agency or supply agreements;
-- First shipments of Accoya(R) wood to India;
-- Gordon Campbell appointed Chairman replacing Willy
Paterson-Brown and Patrick Shanley appointed as a Non-Executive
Director;
-- Restructuring exercise has resulted in a predominantly new
senior management team leading focused business units; and
-- Further successful full scale trial production run of the
manufacture of Medite Tricoya(R).
There will be a presentation relating to these results at 9:30am
GMT on Wednesday 1 December 2010. The presentation will take the
form of a web based conference call, details of which are
below:
Webcast link: Click Here
Or copy and paste ALL of the following text into your browser:
c6beff324c6a2a87940f91ad5855d&portal_id=d2fa018e8edd8114d9ca59f7577b6433
Conference call details for participants:
Participant Telephone Number: +44 (0)20 7806 1968 UK Toll
Confirmation Code: 4062313
Participants will have to quote the above code when dialling
into the conference.
Paul Clegg, CEO of Accsys, commented:
"We have had a successful six months including record production
and sales levels of Accoya(R) wood at our Arnhem plant. Three
distribution, agency or supply agreements have been signed,
including a New Zealand distributor making a total of 21
distribution, agency and supply agreements in operation. These,
together with the first shipments of Accoya(R) to India, continue
to demonstrate our progression towards establishing Accoya(R) wood
as truly global brand. In addition, I am pleased by the continuing
progress in the development of Tricoya(R) with joint development
partners, Medite Europe Limited.
Whilst the economic climate continues to be challenging, Accsys
is making good progress in driving forward the business in terms of
distribution agreements, developing new potential licence
agreements and focussing on providing the platform to grow the
business and deliver future value for shareholders."
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via Citigate Dewe
PLC Hans Pauli, CFO Rogerson
Stephen Mischler
Matrix Corporate Capital Nick Stone
LLP Edmund Glover +44 20 3206 7000
Citigate Dewe Rogerson Ginny Pulbrook +44 20 7282 2945
Malcolm Robertson +44 20 7282 2867
Suzanne Bakker +31 20 575 4023
Chairman's statement
Operating Review
I am pleased to report that following the challenging times of
last year we are now making good progress in respect of our longer
term objectives. Paul Clegg, who has now been Chief Executive
Officer for more than a year, has continued with the help of Hans
Pauli, who took over as Chief Financial Officer and Chief Operating
Officer in April this year, to lead organisational and process
changes throughout the Group.
These changes have enabled us to produce and sell more Accoya(R)
wood than ever before from our plant in Arnhem, while we have also
made significant progress in furthering several new potential
licence agreements.
Accoya(R) wood
Revenue from sales of Accoya(R) wood produced by our Arnhem
plant increased by 81% to EUR6.5m in the first half of the year
compared to the same six months in the previous year. In the first
quarter of the financial year, revenue had increased by 46% to
EUR3.2m compared to the equivalent quarter in the previous year
which was followed by a 130% increase to EUR3.3m in the second
quarter.
The increase in sales together with process improvements has
enabled us to come close to generating a positive gross margin in
the six months to 30 September 2010; progress which supports our
objective of making the plant break-even by the end of the 2011
calendar year.
We have signed three further distribution, agency or supply
agreements in the last six months, making a total of 21
distribution, agency and supply agreements in operation. One of the
new agreements has extended our geographic coverage to New Zealand,
which together with the first shipments of Accoya(R) to India,
continues to demonstrate our progression towards establishing
Accoya(R) wood as a truly global brand.
In addition, working with our partners, we have developed new
product offerings for higher volume product markets including
laminated window frames and fencing components.
Technology development
I am pleased to confirm that we were able to carry out another
plant shut down this year in October, carrying out further process
improvements and maintenance. The plant was fully operational again
after just two weeks, compared to nearly two months last year.
This typifies the changes and improvements that we have made
over the last year which have also enabled us to produce a record
amount of Accoya(R) over the six months to 30 September 2010 with
the 8,728m3 produced being a 50% increase on the previous six
months. This enabled us to increase stock levels ahead of the plant
shut down in October.
I am particularly pleased by the results of a recent report by
the New Zealand Forest Research Institute, Scion, who carried out a
five year field test confirming that acetylated wood outperforms
other naturally durable and treated species in terms of fungi
resistance and decay, even in ground contact.
In September, a second industrial trial of the manufacture of
Tricoya(R) was successfully carried out at Medite's (our joint
development partner) plant in Ireland, representing another
important step towards production consistency.
Progress with licensing activity
Following the signing of a revised licence agreement with
Diamond Wood China Limited ('Diamond Wood') in June 2010, we were
pleased to recently announce that Diamond Wood has signed an
agreement with an Asian investor group and the subsequent imminent
funding of its first Accoya(R) factory in Asia by the end of
2010.
Discussions with a number of potential new licensees and
strategic partners are actively underway and I remain confident
that the discussions will lead to mutually beneficial arrangements
which will enable Accsys to achieve its long term objectives.
Financial Review
Statement of comprehensive income
The Group recorded revenue of EUR7.2m for the six months ended
30 September 2010 (2009: EUR9.3m) and a pre-tax loss of EUR7.6m
(2009: EUR8m). Total manufacturing revenue increased by 82% to
EUR7.2m (2009: EUR4.0m). Included within manufacturing revenue,
revenue from Accoya(R) wood increased by 81% to EUR6.5m reflecting
continued increase in demand and production at our Arnhem facility.
No licence income was recorded in the period (2009: EUR5.4m)
reflecting the delays experienced by our licensees.
Headcount decreased over the last six months from 107 to 101 at
30 September 2010, with associated restructuring costs of EUR0.2m.
This represents a 22% decrease from the peak headcount of 130 in
March 2009. Total headcount, including contractors, has decreased
from a peak of 147 in March 2009 to 114 at 30 September 2010.
Together with the impact of the restructuring in the previous year,
other operating costs (excluding restructuring costs) for the six
months to September 2010 have reduced by 19% (EUR1.7m) to EUR7.3m
compared to the same period in the previous year.
Cash flow and financial position
At 30 September 2010, the Group held cash balances of EUR6.6m.
The EUR11.6m reduction in cash compared to 31 March 2010 is mainly
attributable to the reported loss together with increases in
inventory of EUR3.2m and trade and other receivables of EUR0.8m
together with a reduction in trade and other payables of EUR0.6m.
The increase in inventory is attributable to the build up of stock
levels ahead of the plant close down in October.
Risks and uncertainties
Other than as noted below, the Group's principle risks and
uncertainties are unchanged from those set out in its 2010 Annual
Report.
Going concern
These condensed financial statements are prepared on a going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future, which is deemed
to be at least 12 months from the date these interim results were
approved.
The Directors believe that while the long term profitability of
the group will be determined by its ability to licence the Group's
technology, the timing of the agreements which will generate
further licence income remain uncertain. As a result, the expansion
of the Arnhem plant is being planned with the intention of
increasing capacity by 50% in order to meet the expected demand for
Accoya(R).
The Directors are expecting to raise funds from a number of
potential sources in order to meet the costs of construction and
on-going operating costs during the period until it is expected
that the expanded plant will generate sufficient income to make the
Group cash-flow positive. The Directors have commenced discussions
with some of these potential sources of funding and are confident
that funds will be raised; however no binding agreements are yet in
place.
The Directors believe that the going concern basis is the most
appropriate basis on which to prepare the condensed financial
statements although the fact that the funds have not yet been
raised constitutes a material uncertainty that may cast doubt over
the company's ability to continue as a going concern in that the
company may be unable to realise its assets and liabilities in the
normal course of business.
Outlook
Despite the continuing difficult economic climate, we have seen
a continued increase in demand for Accoya(R) wood both in
established markets and in new geographies and applications. We
continue to make significant progress with potential new licensees
and expect to further increase the global coverage of Accoya(R)
wood as the demand continues to increase and the number of
distribution, agency and supply agreements also increases.
However, we accept that some of these licence relationships may
take time before they generate sustainable profits. It is also
appropriate to maximise the return from our operating plant in
Arnhem. Therefore we anticipate raising new finance in order to
fund the expansion of the Arnhem plant and to meet the Group's
operating costs until this expansion is complete and a sufficient
level of licence income and revenue from Accoya(R) has been
secured. The proposed expansion will enable the plant to generate
sufficient profits to be able to meet the remainder of the Group's
operating costs in the future.
Gordon Campbell
Chairman
29 November 2010
Directors responsibility statement
The Directors confirm to the best of their knowledge:
-- The condensed financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" as adopted by
the EU;
-- The interim results include a fair review of the information
required by DTR 4.2.7R being an indication of important events that
have occurred during the first six months of the financial year and
a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- The interim results include a fair review of the information
required by DTR 4.28R being disclosure of related party
transactions and changes therein since the last annual report.
By order of the Board
Angus Dodwell
Company Secretary
29 November 2010
Consolidated condensed statement of comprehensive income for the
six months ended 30 September 2010
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Year Year
6 months 6 months 6 months 6 months 6 months 6 months Year End End End
30 30 31
30 September 30 September September 30 September 30 September September 31 March 31 March March
2010 2010 2010 2009 2009 2009 2010 2010 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Diamond
Before Wood
Diamond Wood write-
write- offs offs
Before Before and and
Restructuring Restructuring Restructuring Restructuring restructuring restructuring
Costs costs Total Costs costs Total costs costs Total
Accoya(R) wood
revenue 6,524 - 6,524 3,627 - 3,627 9,136 - 9,136
Licence revenue - - - 5,367 - 5,367 6,688 - 6,688
Other revenue 680 - 680 336 - 336 899 - 899
---------------- ---- ------------- ------------- --------- ------------- ------------- --------- ------------- ------------- --------
Total revenue 3 7,204 - 7,204 9,330 - 9,330 16,723 - 16,723
Total cost of
sales (7,377) - (7,377) (7,292) - (7,292) (14,572) - (14,572)
Gross
(loss)/profit (173) - (173) 2,038 - 2,038 2,151 - 2,151
Other operating
costs before
restructuring
costs 4 (7,236) - (7,236) (8,956) - (8,956) (17,772) - (17,772)
Restructuring
costs 4 - (202) (202) - (878) (878) - (862) (862)
---------------- ---- ------------- ------------- --------- ------------- ------------- --------- ------------- ------------- --------
Total other
operating
costs (7,236) (202) (7,438) (8,956) (878) (9,834) (17,772) (862) (18,634)
Impairment of
licensee
receivables 5 - - - - - - - (25,458) (25,458)
Impairment of
equity
investment 5 - - - - - - - (10,000) (10,000)
Loss from
operations (7,409) (202) (7,611) (6,918) (878) (7,796) (15,621) (36,320) (51,941)
Finance income 11 - 11 14 - 14 18 - 18
Finance expense (33) - (33) (246) - (246) (291) - (291)
Loss before
taxation (7,431) (202) (7,633) (7,150) (878) (8,028) (15,894) (36,320) (52,214)
Tax
(charge)/credit (281) - (281) (294) - (294) 75 - 75
Loss for the
period (7,712) (202) (7,914) (7,444) (878) (8,322) (15,819) (36,320) (52,139)
============= ============= ========= ============= ============= ========= ============= ============= ========
(Loss)/gain arising on
translation of
foreign operations (10) - (10) - - - 23 - 23
Total comprehensive
loss for the period (7,722) (202) (7,924) (7,444) (878) (8,322) (15,796) (36,320) (52,116)
============= ============= ========= ============= ============= ========= ============= ============= ========
The notes set out on pages 11 to 16 form part of these condensed
financial statements.
Consolidated condensed statement of financial position at 30
September 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
Note 2010 2009 2010
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 7,456 7,720 7,588
Property, plant and
equipment 7 26,680 27,998 26,972
Available for sale
investments 8 - 10,000 -
Deferred tax 2,366 2,371 2,644
Trade receivables - 3,200 -
36,502 51,289 37,204
Current assets
Inventories 6,952 3,767 3,755
Trade and other receivables 9,542 41,217 8,741
Cash and cash equivalents 6,640 9,512 18,258
Corporation tax 41 - 36
23,175 54,496 30,790
Current liabilities
Trade and other payables 5,887 20,878 6,437
Corporation tax - 107 -
5,887 20,985 6,437
Net current assets 17,288 33,511 24,353
Total net assets 53,790 84,800 61,557
Equity and reserves
Share capital - Ordinary
shares 9 2,006 1,564 2,006
Share premium account 98,748 78,726 98,748
Capital redemption
reserve 148 148 148
Warrants reserve 82 82 82
Merger relief reserve 106,707 106,707 106,707
Retained earnings (153,914) (102,427) (146,157)
Foreign currency
translation reserve 13 - 23
Total equity 53,790 84,800 61,557
The notes set out on pages 11 to 16 form part of these condensed
financial statements.
Consolidated statement of changes in equity for the six months
ended 30 September 2010
Foreign
currency
Share Share Capital Merger trans-
capital capital Share redempt-ion Warrant relief lation Retained
Ordinary Deferred premium reserve reserve reserve reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at
31 March 2009 1,556 - 78,191 148 82 106,707 - (94,345) 92,339
Total
comprehensive
income for
the period - - - - - - - (8,322) (8,322)
Share based
payments - - - - - - - 240 240
Shares issued
in the period 7 - - - - - - - 7
Share options
exercised 1 - - - - - - - 1
Premium on
shares issued - - 556 - - - - - 556
Share issue
costs - - (21) - - - - - (21)
Balance at
30 September
2009
(unaudited) 1,564 - 78,726 148 82 106,707 - (102,427) 84,800
Total
comprehensive
income for
the period - - - - - - 23 (43,817) (43,794)
Share based
payments - - - - - - - 87 87
Shares issued
in the period 442 - - - - - - - 442
Premium on
shares issued - - 21,077 - - - - - 21,077
Share issue
costs - - (1,055) - - - - - (1,055)
Balance at
31 March 2010 2,006 - 98,748 148 82 106,707 23 (146,157) 61,557
Total
comprehensive
income for
the period - - - - - - (10) (7,914) (7,924)
Share based
payments - - - - - - - 157 157
Balance at
30 September
2010
(unaudited) 2,006 - 98,748 148 82 106,707 13 (153,914) 53,790
======== ======== ======= =========== ======= ======= ======== ========= ========
The notes set out on pages 11 to 16 form part of these condensed
financial statements.
Consolidated condensed statement of cash flow for the six months
ended 30 September 2010
Unaudited Unaudited Audited
6 months 6 months Year End
30 September 30 September 31 March
2010 2009 2010
EUR'000 EUR'000 EUR'000
Profit before taxation (7,633) (8,028) (52,214)
Adjustments for:
Amortisation of intangible
assets 132 132 264
Depreciation of property,
plant and equipment 787 740 1,609
Loss on disposal of property,
plant and equipment 8 658 999
Finance (income)/expense (11) 232 229
Impairment of receivables
and investment - - 35,458
Equity-settled share-based
payment expenses 157 240 327
Cash flows from operating
activities before changes
in working capital (6,560) (6,026) (13,328)
(Increase)/decrease in trade
and other receivables (821) 4,168 5,592
(Increase)/decrease in inventories (3,192) 1,122 1,144
Decrease in trade and other
payables (542) (7,759) (7,307)
Cash absorbed by operating
activities (11,115) (8,495) (13,899)
Tax paid (8) (56) (103)
Net cashflows from operating
activities (11,123) (8,551) (14,002)
============= ============= =========
Cash flows from investing
activities
Interest received 11 14 18
Purchase of available for
sale investments - (2,000) (4,000)
Disposal of property, plant
and equipment 22 2 2
Purchase of property, plant
and equipment (521) (1,753) (2,029)
Net cash absorbed by investing
activities (488) (3,737) (6,009)
Cashflows from financing
activities
Proceeds from loans - 4,000 4,000
Finance expenses - (246) (246)
Proceeds from issue of share
capital - 556 17,167
Share issue costs - (13) (160)
Net cash from financing
activities - 4,297 20,761
============= ============= =========
Effect of exchange differences
on restatement of non Euro
functional currency (7) - 5
Net (decrease)/increase
in cash and cash equivalents (11,611) (7,991) 750
Opening cash and cash equivalents 18,258 17,503 17,503
Closing cash and cash equivalents 6,640 9,512 18,258
============= ============= =========
The notes set out on pages 11 to 16 form part of these interim
financial statements.
Notes to the condensed financial statements for the 6 months
ended 30 September 2010
1. Accounting policies
Basis of accounting
The Group's condensed financial statements in these interim
results have been prepared in accordance with International
Accounting Standard (IAS) 34 as adopted for use in the European
Union. The financial information for the six months ended 30
September 2010 and the six months ended 30 September 2009 is
unaudited. The comparative financial information for the full year
ended 31 March 2010 does not constitute the group's statutory
financial statements for that period although it has been derived
from the statutory financial statement for the year then ended. A
copy of those statutory financial statements has been delivered to
the Registrar of Companies. The auditors' report on those accounts
was unqualified and did not contain a statement under 498(2) or
498(3) of the Companies Act 2006 and did not include reference to
the going concern status of the group.
Changes in accounting policies
No new accounting standards, amendments or interpretations have
been adopted in the period which have any impact on these condensed
financial statements, or are expected to affect the Group's 2011
Annual report.
Going concern
These condensed financial statements are prepared on a going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future, which is deemed
to be at least 12 months from the date these interim results were
approved.
As part of the Group's going concern review, the Directors have
reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate
that, in order to continue as a going concern, additional finance
is required to fund working capital.
The Directors believe that while the long term profitability of
the group will be determined by its ability to licence the Group's
technology, the timing of the agreements which will generate
further licence income remain uncertain. As a result, the expansion
of the Arnhem plant is being planned with the intention of
increasing capacity by 50% in order to meet the expected demand for
Accoya(R).
The Directors are expecting to raise funds from a number of
potential sources in order to meet the costs of construction and
on-going operating costs during the period until it is expected
that the expanded plant will generate sufficient income to make the
Group cash-flow positive. The Directors have commenced discussions
with some of these potential sources of funding and are confident
that funds will be raised; however no binding agreements are yet in
place.
The Directors believe that the going concern basis is the most
appropriate basis on which to prepare the condensed financial
statements although the fact that the funds have not yet been
raised constitutes a material uncertainty that may cast significant
doubt over the company's ability to continue as a going concern in
that the company may be unable to realise its assets and
liabilities in the normal course of business.
2. Related party transactions
Willy Paterson-Brown is a director of Khalidiya Investments SA.
During the six months to 30 September 2010, the Group was charged
EUR213,534 (September 2009: EUR136,400) by Khalidiya Investments SA
in respect of director's services, EUR6,318 (September 2009:
EUR158,715) in respect of expenses for a number of employees, and
EUR69,501 (September 2009: EUR210,947) in respect of office and
related costs. At 30 September 2010 EUR121,000 (2009: EUR86,122)
was owing to Khalidiya Investments SA. Willy Paterson-Brown
resigned as a director of the Group with effect from 30 September
2010.
3. Segmental reporting
The Group's business is the development, commercialisation and
licensing of proprietary technology for the manufacture of
Accoya(R) wood and related acetylation technologies. Segmental
reporting is divided between licensing activities, the
manufacturing and sale of Accoya(R) and research and development
activities. Licensing revenue includes revenue attributable to fees
received or receivable in relation to the licensing of the Group's
technology to third parties. Manufacturing revenue includes the
sale of Accoya(R) wood and other revenue, principally relating to
the sale of acetic acid. Revenue is allocated between licence fees
and the product manufactured at the Group's Arnhem facility. All
costs of sales are allocated against the manufacturing activities
in Arnhem unless they can be directly attributable to a licensee.
Other operating costs incurred in the Netherlands are attributed to
the manufacturing segment unless they can be directly attributable
to research and development, with all remaining other operating
costs allocated to licensing.
Licensing Manufacturing
Unaudited Unaudited Audited Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
2010 2009 2010 2010 2009 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue - 5,367 6,688 7,204 3,963 10,035
Cost of sales - (1,434) (1,857) (7,377) (5,858) (12,715)
Gross
profit/(loss) - 3,933 4,831 (173) (1,895) (2,680)
Other
operating
costs (3,632) (4,789) (8,992) (2,828) (3,537) (7,447)
Restructuring
costs (202) (792) (818) - (86) (44)
-------------- --------- --------- -------- --------- --------- --------
Total other
operating
costs (3,834) (5,581) (9,810) (2,828) (3,623) (7,491)
Impairment of
licensee
receivables - - (25,458) - - -
Impairment of
equity
investment - - (10,000) - - -
Loss from
operations (3,834) (1,648) (40,437) (3,001) (5,518) (10,171)
Research and
Development Total
Unaudited Unaudited Audited Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
2010 2009 2010 2010 2009 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue - - - 7,204 9,330 16,723
Cost of sales - - - (7,377) (7,292) (14,572)
Gross
profit/(loss) - - - (173) 2,038 2,151
Other
operating
costs (776) (630) (1,333) (7,236) (8,956) (17,772)
Restructuring
costs - - - (202) (878) (862)
-------------- --------- --------- -------- --------- --------- --------
Total other
operating
costs (776) (630) (1,333) (7,438) (9,834) (18,634)
Impairment of
licensee
receivables - - - - - (25,458)
Impairment of
equity
investment - - - - - (10,000)
Loss from
operations (776) (630) (1,333) (7,611) (7,796) (51,941)
Finance income 11 14 18
Finance
expense (33) (246) (291)
Loss before
taxation (7,633) (8,028) (52,214)
Analysis of revenue by geographical area:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2010 2009 2010
EUR'000 EUR'000 EUR'000
Netherlands 2,068 1,517 3,112
Germany 1,300 242 1,375
China 1,221 6,295 9,129
United Kingdom 1,164 679 1,767
North America 759 307 776
Switzerland 297 27 98
Other 395 263 466
7,204 9,330 16,723
========== ========== =========
4. Other operating costs
Other operating costs consist of the operating costs, other than
the cost of sales, associated with the operation of the plant in
Arnhem and the offices in Dallas and London:
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2010 2009 2010
EUR'000 EUR'000 EUR'000
Sales and marketing 1,639 2,070 3,569
Research and development 776 630 1,333
Depreciation and amortisation 927 872 1,873
Other operating costs 624 1,823 4,032
Administration costs 3,270 3,561 6,965
Restructuring costs 202 878 862
7,438 9,834 18,634
========= ========= =========
During the period headcount reduced from 107 to 101, including a
reduction as a result of the continuing restructuring of the
Group's operations. The headcount reduction attributable to the
restructuring resulted in one-off termination payments of
EUR202,000 in the period relating to members of management. The
total restructuring costs in the year ended March 2010 were
EUR878,000 which related to termination payments made to staff
which helped reduce headcount from 126 at the start of the previous
year to 107 at 31 March 2010. It is expected that other operating
costs will reduce further during the second half as a result of
these headcount reductions.
5. Impairment of Assets
In June 2010 the Group agreed an amended licence agreement with
Diamond Wood. Under Diamond Wood's revised business plan (which is
subject to the completion of their fundraising) the capacity of the
plant to be built in the first phase is significantly smaller than
that previously expected.
As a result, in the year ended 31 March 2010, it was considered
that net receivables (consisting of trade receivables, accrued
income, prepayments and deferred income) of EUR25.5m relating to
Diamond Wood may no longer be recoverable and were therefore
provided for. This provision reflected the expected change to
Diamond Wood's business plan in respect of both the timing and the
total capacity of the plant that Diamond Wood may now build
compared to previously expected. The impairment included EUR17.2m
of net receivables (trade receivables, accrued income and deferred
income), which was attributable to 48% of the total revenue
recognised in respect of our previous contract with Diamond Wood to
date. The remaining 52% had been received in cash.
In addition, pending conclusion of Diamond Wood finalising its
funding arrangements, a provision for the impairment of the entire
balance of the equity investment of EUR10m was recorded as at 31
March 2010. As at 30 September 2010, the funding had not been
secured and accordingly the provision for 100% of the historical
cost continues to be recognised.
Summary of Diamond Wood balances impaired:
30 Sept 30 Sept 31 March
2010 2009 2010
EUR'000 EUR'000 EUR'000
Trade Receivables and accrued
income - - 25,966
Deferred income - - (8,800)
Prepayments - Licensing commission - - 7,467
Prepayments - Basic engineering
plan - - 825
- - 25,458
-------- -------- ---------
Equity Investment - - 10,000
Total impairment - - 35,458
======== ======== =========
6. Loss per share
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
Basic and diluted loss per share 2010 2009 2010
Weighted average number of Ordinary
shares in issue ('000) 200,603 155,993 162,237
Loss for the period (EUR'000) (7,914) (8,322) (52,139)
Basic and diluted loss per share EUR(0.04) EUR(0.05) EUR(0.32)
========== ========== ==========
Basic and diluted losses per share are based upon the same
figures. There are no dilutive share options as these would
increase the loss per share.
7. Property, plant and equipment
Freehold Plant Office
land and machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 31 March 2009 6,815 24,708 373 31,896
Additions - 1,378 8 1,386
Disposals - (751) (1) (752)
At 30 September 2009 6,815 25,335 380 32,530
Additions - 169 14 183
Disposals - (400) - (400)
At 31 March 2010 6,815 25,104 394 32,313
Additions - 379 141 520
Disposals - (36) - (36)
At 30 September 2010 6,815 25,447 535 32,797
========= =============== =========== ========
Depreciation
At 31 March 2009 - 3,614 269 3,883
Charge for the period - 688 52 740
Disposals - (90) (1) (91)
At 30 September 2009 - 4,212 320 4,532
Charge for the period - 828 41 869
Disposals - (60) - (60)
At 31 March 2010 - 4,980 361 5,341
Charge for the period - 754 28 783
Disposals - (6) - (6)
At 30 September 2010 - 5,728 389 6,117
========= =============== =========== ========
Net book value
At 30 September 2009 6,815 21,123 60 27,998
At 31 March 2010 6,815 20,124 33 26,972
At 30 September 2010 6,815 19,719 146 26,680
8. Available for sale investments
During the period ended 30 September 2009, Accsys Technologies
PLC purchased an additional 8,333,334 unlisted ordinary shares in
Diamond Wood for EUR0.48 each. This investment brought Accsys
Technologies PLC's holdings in Diamond Wood to 21,666,734 shares,
which represented a holding of 15.4%. There has been no change in
the investment since that date.
The carrying value of the investment is carried at cost less any
provision for impairment, rather than at its fair value, as there
is no active market for these shares, and there was uncertainty
over the potential fundraising efforts of Diamond Wood, and as such
a reliable fair value cannot be calculated.
The historical cost of the unlisted shares at 30 September 2010
is EUR10m (2009: EUR10m). However, a provision for the impairment
of the entire balance of EUR10m continues to be recorded, as at 30
September 2010 the conclusion of Diamond Wood finalising its
funding arrangements was still pending.
Subsequent to the period end, Accsys received a letter from
Diamond Wood which announced, among other things, that Diamond Wood
had recently signed "an agreement with an Asian investor group and
the subsequent imminent funding of the first Accoya(R) factory in
Asia by the end of 2010." No further details of the agreement have
been made available to us. In the event Diamond Wood completes the
fund-raising, the equity investment balance may be revalued.
9. Share capital
Options over 80,000 ordinary shares were exercised during the
year ended 31 March 2010 at a price of EUR0.46 each.
On 10 February 2010, following the publication of a prospectus,
the Company issued 44,232,226 new Ordinary shares for EUR0.4865
each. Proceeds of EUR16,603,073 were received net of expenses of
EUR1,076,000 (EUR139,000 of which were paid in cash with the
remainder paid by way of issue of new Ordinary shares). In
addition, at the same time, EUR4,000 000 relating to an existing
loan was converted to the new Ordinary shares.
There have been no changes to share capital in the six months to
30 September 2010.
10. Post balance sheet events
Subsequent to the period end, the Group received a letter from
Diamond Wood concerning the status of its funding. See note 8 for
further details.
INDEPENDENT REVIEW REPORT TO ACCSYS TECHNOLOGIES PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the interim results for the six months
ended 30 September 2010 which comprises the consolidated condensed
statement of comprehensive income, the consolidated condensed
statement of changes in equity, the consolidated condensed
statement of financial position, the consolidated condensed cash
flow statement and the related notes.
We have read the other information contained in the interim
financial statements and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The interim results, including the financial information
contained therein, are the responsibility of and have been approved
by the Directors. The Directors are responsible for preparing the
interim results in accordance with the rules of both the London
Stock Exchange for companies trading securities on the Alternative
Investment Market and Euronext Amsterdam by NYSE Euronext which
require that the interim financial statements be presented and
prepared in a form consistent with that which will be adopted in
the Company's annual accounts having regard to the accounting
standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim results
based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of both the London Stock Exchange for companies trading
securities on the Alternative Investment Market and Euronext
Amsterdam by NYSE Euronext and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim results for the six months ended 30 September 2010is
not prepared, in all material respects, in accordance with the
rules of both the London Stock Exchange for companies trading
securities on the Alternative Investment Market and Euronext
Amsterdam by NYSE Euronext.
Emphasis of Matter - Going Concern
Without qualifying our conclusion, we draw your attention to the
disclosures made in note 1 to the interim results concerning the
Group's ability to continue as a going concern. The Group is
dependent on the raising of new funds in order to fund working
capital, in a timely manner in order to continue as a going
concern. While the Directors are confident that the required funds
will be raised, there are no binding agreements in place, therefore
there is a material uncertainty over whether these funds will be
raised. This, along with the matters disclosed in note 1 to the
condensed financial statements, indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern. The condensed
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
Julian Frost (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
29 November 2010
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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