TIDMAXS
RNS Number : 7906T
Accsys Technologies PLC
25 November 2013
AIM: AXS
NYSE Euronext Amsterdam: AXS
25 November 2013
ACCSYS TECHNOLOGIES PLC ("Accsys" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
Accsys, the environmental science and technology company whose
primary focus is on the production and technology licensing of
Accoya(R) wood and Tricoya(R) wood elements, today announces
interim results for the six months ended 30 September 2013.
Unaudited Unaudited Change
six months six months
to 30 Sept to 30 Sept
2013 2012
Total Group Revenue EUR15.8m EUR9.1m +74%
Gross profit EUR3.5m EUR1.9m +84%
Improved
Loss before tax EUR3.8m EUR5.4m 30%
Period end cash balance EUR16.9m EUR20.7m -18%
Highlights
-- Strong performance, in line with market expectations;
-- Highly encouraging trend of revenue growth, with increases
across all key global territories; total revenue increased 74%
compared to the corresponding period last year, and by 62% compared
to the preceding six month period;
-- Revenue from the sale of Accoya(R) increased by 80% to
EUR13.9m in the first half of the year compared to the
corresponding period last year;
-- Group level gross operating margin increased to 22% (Year to
31 March 2013: 18%) as a result of economies of scale benefits and
sales price increases;
-- Arnhem plant is now profitable, recording a positive EBITDA
of EUR0.9m (2012: loss of EUR0.5m) as a result of record production
levels; gross manufacturing profit margin increased from 15% to
19%;
-- 56% reduction in cash out-flow from operating activities
(before changes in working capital) to EUR1.7m (2012: EUR3.9m);
-- Strong balance sheet maintained with cash balance of EUR16.9m at 30 September 2013;
-- Continued close working relationship with Solvay ahead of
their formal approval of the Accoya(R) wood licence agreement which
is expected by the end of this year;
-- Tricoya Technologies Ltd, our JV with Ineos formed in order
to exploit Tricoya(R) wood elements globally, entered into a joint
development, production and distribution licence agreement in July
with Medite, to build and run a Tricoya plant with an initial
capacity of 30,000 metric tonnes with exclusive rights to sell in
UK, Ireland and the Netherlands;
-- Total of 50 distribution or agency agreements now in place,
an increase of eight since 31 March 2013, covering most of Europe,
Australia, Canada, Chile, India, Israel, Morocco, North America,
New Zealand and parts of East and South East Asia; and
-- TRADA extended the service life of Accoya(R) windows to at
least 70 years, demonstrating Accoya performs significantly better
than even the most durable hardwood timbers.
Paul Clegg, Chief Executive commented: "Accsys has had a highly
productive first half of the year. The investment made in sales and
marketing over the last two years is now delivering a sustainable
trend of highly encouraging revenue growth across all our key
global sales territories.
"The combination of sales momentum and encouraging progress
towards unconditional licence agreements with Solvay and Medite,
alongside continuing discussions with a number of other parties,
leaves us very well positioned to achieve profitability at a Group
level in the medium-term, and I am comfortable that we will meet
market expectations for the full year."
There will be a presentation relating to these results at 10:00
GMT on Monday 25 November 2013. 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:
http://www.media-server.com/m/p/i3mxokys
Conference call details for participants:
Participant Telephone Number: +44(0)20 3427 1919 UK Toll
Confirmation Code: 6126963
Participants will have to quote the above code when dialling
into the conference.
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via Blythe Weigh
PLC Hans Pauli, COO Communications
Will Rudge, FD
Nominated Adviser: Oliver
Cardigan
Corporate Broking: Christopher
Wilkinson +44 (0) 20 7260
Numis Securities Ben Stoop 1000
+44 (0) 20 7138
3204
Paul Weigh +44 (0) 7989 129658
Blythe Weigh Communications Eleanor Parry +44 (0) 7551 293620
Frank Neervoort +31 681 734 236
Off the Grid (The Netherlands) Giedo Van Der Zwan +31 624 212 238
Accsys Technologies PLC
Chairman's statement
Encouraging results demonstrate sustained operational
momentum
Accsys has continued to make strong progress in developing the
market for Accoya(R) , licensing our technologies worldwide and
moving towards profitability.
Revenue increased by 74% to EUR15.8m reflecting the increasing
demand for our products, with all 10 of our top sales geographies,
accounting for 91% of total revenue, recording growth in the
period.
Manufacturing profitability has improved significantly, with
gross manufacturing profit margin improving from 15% to 19% and the
Arnhem plant recording EBITDA of EUR0.9m compared to a loss of
EUR0.5m in the previous year. This improvement is due to economies
of scale achieved from the higher Accoya(R) production volumes as
well as price increases implemented during the period. The Group
loss before tax decreased by 29% to EUR3.8m and our balance sheet
remains strong with a cash balance of EUR16.9m at 30 September 2013
(31 March 2013: EUR20.5m).
We continue to work closely with Solvay regarding their
Accoya(R) licence in Europe, working with them across a number of
business areas including engineering, sales and marketing. The
licence agreement remains conditional upon the approval of their
Board of Directors, which continues to be expected by the end of
this year.
Tricoya Technologies Limited ('TTL'), our joint venture with
Ineos, has also made good progress, having now been operating for a
year. In July an agreement was entered into granting Medite a
licence to build and operate a plant to manufacture an initial
capacity of 30,000 metric tonnes per annum of Tricoya. Since then,
Medite has begun to make a series of technology based licence fees
payments while TTL has commenced work in developing the necessary
Process Design Package. The licence, which includes exclusive
rights to market and sell in Ireland, the Netherlands and the
United Kingdom, remains conditional upon Medite obtaining approval
from its Board of Directors, which is expected in 2014.
During the period, we took the decision to terminate our licence
agreement with Diamond Wood as a result of Diamond Wood's failure
to comply with their contractual obligations. Diamond Wood
subsequently served a notice of arbitration challenging our
position. We welcome the opportunity of arbitration to confirm the
validity of our termination and are extremely confident that the
arbitration will be resolved in our favour.
Confident of meeting full year expectations; well placed to
capitalise on market opportunities
Our strong sales growth has continued into the second half of
the financial year. We are comfortable we will meet market
expectations for the full year and remain confident that we will
achieve our objective of sustainable profitability in the
medium-term.
I expect continued progress with our licensees, Solvay and
Medite, and look forward to reporting further developments in due
course. Accsys and TTL continue to develop a number of new and
existing potential Accoya(R) and Tricoya(R) licence opportunities
respectively, with counterparties whose combined existing total
wood product manufacturing or processing capacity is in excess of
10 million m(3) per annum. While these discussions remain on-going,
the complex nature and investment required by a licensee means that
the timing and certainty of their completion remain difficult to
predict.
Taken together, I am able to look forward with confidence that
we are now entering a new phase of consistent growth and
progression. The progress has been attributable to the significant
investment in sales and marketing activities over the last two
years and the consistent effort expended by the entire workforce. I
am highly encouraged by the progress the Company has made in the
first six months of the financial year and am confident that the
senior management team, which has remained unchanged since November
2010, will continue to take Accsys forward in its next stage of
development.
Gordon Campbell
Chairman
22 November 2013
Accsys Technologies PLC
Chief Executive's statement
Record manufacturing revenue underscores continuing
progression
Accsys has made significant progress in its three main business
areas in the period with total revenue increasing by 74% to
EUR15.8m (2012: 9.1m). The main business areas have all contributed
to Accsys' progression, with record Accoya(R) manufacturing and
sales volumes produced in Arnhem, significant progression made with
our existing licensees, Solvay and Medite and the development of
new license opportunities, together with a continued investment in
research and development to ensure we will continue to be well
placed in the future to create and take advantage of
opportunities.
In addition, we continue to focus on furthering our
sustainability credentials and were pleased to be admitted as a
founder member of the Social Stock Exchange in June. More recently
Accoya(R) has been awarded an A Rating NL Green Label, a
sustainability label for products and services in the exterior
environment in the Netherlands, adding to the many existing
accreditations Accsys has obtained.
Further market penetration across all key geographies
Revenue from the sale of Accoya(R) increased by 80% to EUR13.9m
in the first half of the year compared to the same six months in
the previous year. Within this, sales to Accoya(R) customers
(excluding sales to Medite) increased by 62% to EUR12.4m. Sales of
Accoya(R) to Medite resumed at the end of the previous financial
year, following a period in which Medite had built up initial stock
levels, resulting in revenue of EUR1.4m in the period (2012: nil).
Revenue from the sale of Accoya also increased by 56% in the first
half of the year compared to the second half of the previous
financial year.
Growth has been achieved in all regions and is attributable to
both existing and new distributors. For example, revenue in the
United Kingdom grew by 77%, all derived from existing distributors.
We have added new distributors in Spain, Ukraine and South Africa
and in addition, following the termination of our licence agreement
with Diamond Wood, we are now working directly with companies
distributing Accoya(R) in China and South-East and other parts of
East Asia. In particular, we have recently brought into effect
distribution agreements covering Malaysia, Philippines, Japan and
Singapore. We are confident that this region of Asia remains a key
growth market for Accoya(R) .
Put together, we now have a total of 50 distribution or agency
agreements covering most of Europe, Australia, New Zealand, North
America, Chile, and large parts of Africa and Asia.
The growth in Accoya(R) sales has resulted in an improvement in
the manufacturing gross margin which increased from 15% to 19%.
This improvement is largely due to the higher volumes being
produced at our Arnhem plant and the resulting economies of scale,
together with price increases implemented during the period. The
Arnhem plant is now profitable at an EBITDA level generating
EUR0.9m (2012: EBITDA loss of EUR0.5m) whilst operating at
approximately 60% of its current capacity. We expect the
improvement in gross margin to continue as we benefit from further
sales growth.
In September we held our third world-wide Accoya(R) sales
conference. The two day event involved 90 participants representing
40 companies, including leading European coating and ironmongery
suppliers which met in Bremen, Germany, home of our distributor,
Enno Roggemann. Of the participants, 57 representatives were from
existing or potential distributors and customers operating in 30
countries around the world. The conference included visits to a
window manufacturer, a distributor and coatings supplier who all
endorsed Accoya(R) .
Accoya(R) continued to receive independent validation in the
period, with the Timber Research and Development Association,
TRADA, an internationally recognised centre of excellence on the
specification and use of timber and wood products, publishing a new
report on the market leading durability benefits of Accoya(R) with
its expected service life now independently reported as extending
to 70 years when used for window joinery in the UK and Europe.
We have continued to invest in research and development,
including work on developing a number of new species of wood to be
acetylated. Following on from the introduction of US origin
Accoya(R) Alder last year, we have implemented European origin
Accoya Alder(R) and made progress in developing commercial tests of
a number of other species at end user manufacturing facilities with
positive results. The ability to commercially acetylate species
other than radiata pine will enable Accsys to increase its product
offering, with other species offering different characteristics
allowing new applications as well as introducing alternative raw
material sourcing options for Accsys and licensees.
Continuing progress with licensing activity
Our licence agreement with Solvay remains conditional upon the
formal approval of Solvay's board of directors, which is expected
by the end of this year. Ahead of this, we have been working
closely with Solvay in many areas, actively planning on the next
steps. We are finalising the full Process Design Package which will
enable Solvay to complete the planning and engineering design
required for them to construct their own plant and includes
assistance with regulatory and other requirements.
In addition, we have continued to work very closely together to
develop the Accoya(R) market in the European countries to which
Solvay will gain exclusivity. For example, following the success of
the Accoya(R) retail decking trial in France and Germany, plans are
in place to extend the trial in 2014 with greater participation at
existing and new store chains. We are also working with larger size
manufacturers with a view to them adopting Accoya(R) in proven
application areas. The close relationship includes both working
with and training of new Solvay personnel across different
operational areas.
In addition, the Solvay team also attended the World-wide
Accoya(R) sales conference at which they re-affirmed their
dedication to Accoya(R) and presented to our customers and
potential new customers as to why Accoya(R) is a logical new
business area for them, building upon their industrial expertise
while promoting greater sustainability.
As announced on 16 August, following robust legal advice we took
the decision to terminate our licence agreement with Diamond Wood
under which they had previously been granted the rights to
construct and then run an Accoya(R) plant in China and parts of
South East Asia. As we previously reported, Diamond Wood
continually failed to make progress in this respect despite the
significant amount of support and work carried out by Accsys since
2007.
Subsequently, Diamond Wood served a notice of arbitration in
which it is seeking confirmation that the licence is still in force
and seeking damages for the losses it has suffered from the
termination. We are fully engaged in the arbitration process and
welcome the opportunity it will provide to confirm the validity of
Accsys' termination. We remain extremely confident that the
arbitration will be resolved in our favour.
Tricoya(R) Technologies Limited ('TTL')
TTL, our joint venture with Ineos formed to exploit Accsys'
intellectual property associated with Tricoya(R) and to accelerate
its global deployment, has now been operating for a year and has
made solid progress in this time. In July TTL entered into a joint
development, production and distribution licence agreement with
Medite to allow Medite to build and operate a plant to manufacture,
market and sell Tricoya(R) , with an initial plant capacity of
30,000 metric tonnes per annum. In return, Medite has begun to make
a series of technology-based licence payments which will be
followed by royalty fees payable per metric tonne of
production.
The licence is conditional upon Medite obtaining approval from
its Board of Directors, which is expected in 2014, prior to plant
construction. Medite will have exclusive rights to market and sell
in Ireland, The Netherlands, and the United Kingdom and
non-exclusive rights in other territories.
Following the agreement, TTL has commenced work in producing the
Process Design Package which will enable Medite to complete the
necessary detailed design of the overall plant. At the same time,
TTL continues to work closely with Medite concerning engineering as
well as in developing the market.
TTL continues to progress a number of other licence
opportunities.
Additional patent awards strengthens Intellectual Property
position
During the period we received confirmation from the Patent
Offices in China, Indonesia and the USA of the grant of Accoya(R)
process patent claims which successfully secure monopoly rights for
our process in those territories for 20 years from the patent
application filing date. These granted patents are in addition to
the recently obtained product and process patents in New Zealand
and Singapore, and further strengthens Accsys' patent portfolio,
securing protection for Accsys, its licensees and distributors
across the globe. These additional grants will act to further
strengthen Accsys' patent portfolio in key global markets.
Accsys has continued to file new patent applications in the
recent period and now owns seven different Accoya(R) patent
families, with 32 patents granted and 18 further applications,
filed in a total of 30 countries world-wide.
In respect of Tricoya(R) , TTL benefits from five published
patent families with a total of 52 published product and process
patent applications filed in key territories across the world.
Our principal brands, Accoya, Accsys, Tricoya and the Trimarque
Device, including Arabic, Chinese and Japanese transliterations,
are protected by trademark registration in 56 countries throughout
the world with pending applications in a further single country.
These registrations and applications cover our corporate identity
and the products we sell as well as those to be sold by our
licensees and distributors.
Confident of meeting expectations and achieving Group
profitability in the medium-term
Accsys has had a highly productive first half of the year. The
investment made in sales and marketing over the last two years is
now delivering a sustainable trend of highly encouraging revenue
growth across all our key global sales territories.
The combination of sales momentum and encouraging progress
towards unconditional licence agreements with Solvay and Medite,
alongside continuing discussions with a number of other parties,
leaves us very well positioned to achieve profitability at a Group
level in the medium-term, and confident of meeting market
expectation for the full year.
Paul Clegg
Chief Executive
22 November 2013
Accsys Technologies PLC
Financial Review
Statement of comprehensive income
Group revenue increased by 74% to EUR15.8m for the six months
ended 30 September 2013 (2012: EUR9.1m). Revenue from Accoya(R)
(included within manufacturing revenue) increased by 80% to
EUR13.9m, reflecting growth achieved in all regions. EUR525,000 of
licence income was recorded in the period (2012: EUR553,000)
representing revenue generated in the period from the licence with
Solvay. The increase in total revenue of 74% is less than the
increase previously reported for the five months to August 2013 as
a result of the timing of licence income in September 2012. Other
revenue, which mainly includes the sale of acetic acid as a
by-product from our production process, increased by 64% to EUR1.4m
(2012: EUR0.8m) as a result of higher production levels.
Gross margin increased from 20.5% to 22% compared to the same
period in the previous year. This was driven by a significant
improvement in the gross manufacturing margin which increased from
15% to 19%. This margin is expected to improve further as our
production volumes increase.
Other operating costs decreased from EUR7.2m to EUR6.8m. The
decrease is partly attributable to a reduction in sales and
marketing costs, noting that the costs in the previous year were
higher due to the timing of certain exhibitions. In addition there
was a reduction in research and development costs and other
operating costs however some of these have effectively been
reallocated into the share of joint venture loss.
The share of joint venture loss of EUR0.4m compares to EUR0.4m
loss recorded in the second half of the previous financial year.
Within this, TTL recorded revenue of EUR0.1m attributable to the
licence agreement with Medite.
The Group headcount increased from 94 at 30 September 2012 to 97
at 31 March 2013 and then to 102 at 30 September 2013 reflecting an
increase in activity levels, for example in sales and
marketing.
The decrease in the loss before tax by 30% to EUR3.8m (2012:
EUR5.4m) can largely be attributed to the improvement in revenue
and gross margin.
Cash flow and financial position
At 30 September 2013, the Group held cash balances of EUR16.9m,
representing a EUR3.5m reduction compared to 31 March 2013. The
reduction included the cash out-flow from operating activities
(before changes in working capital) of EUR1.7m, being a 56%
reduction compared to the same period in the prior year (2012:
EUR3.9m). In addition, cash out-flows were also attributable to an
increase in working capital of EUR1.0m, investment in our joint
venture TTL of EUR0.4m, purchases of property plant and equipment
of EUR0.4m and capitalised development costs of EUR0.3m. These have
been offset by a EUR0.3m receipt of research and development tax
credits.
Risks and uncertainties
The Group's principal risks and uncertainties are unchanged from
those set out in its 2013 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, the Group is
dependent on achieving certain operating performance measures
relating to the production and sales of Accoya(R) wood from the
plant in Arnhem and the collection of on-going working capital
items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe, while some uncertainty inherently
remains in achieving the budget, in particular in relation to
market conditions outside of the Group's control, that there are a
sufficient number of alternative actions and measures that can be
taken in order to achieve the Group's medium and long term
objectives. Therefore, the Directors believe that the going concern
basis is the most appropriate on which to prepare the financial
statements.
William Rudge
Finance Director
22 November 2013
Accsys Technologies PLC
Directors responsibility statement
The Directors confirm to the best of their knowledge:
-- The condensed financial statements contained in the half year
report 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 Management Report (Narrative) 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
22 November 2013
Accsys Technologies PLC
Consolidated s tatement of comprehensive income for the six
months ended 30 September 2013
Note Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Total Total Total
Accoya(R) wood revenue 13,869 7,690 16,555
Licence revenue 525 553 553
Other revenue 1,375 840 1,714
------------------------------------ ----- ------------- ------------- ----------
Total revenue 2 15,769 9,083 18,822
Total cost of sales (12,300) (7,219) (15,474)
Gross profit 3,469 1,864 3,348
Other operating costs 3 (6,828) (7,224) (13,548)
Loss from operations (3,359) (5,360) (10,200)
Share of joint venture loss 5 (390) - (430)
Finance income 79 107 206
Finance expense (122) (124) (244)
Loss before taxation (3,792) (5,377) (10,668)
Tax charge (340) (108) (355)
Loss for the period (4,132) (5,485) (11,023)
------------- ------------- ----------
(Loss)/gain arising on translation
of foreign operations (32) 17 14
Total comprehensive loss for
the period (4,164) (5,468) (11,009)
============= ============= ==========
Basic and diluted loss per
ordinary share 4 EUR(0.01) EUR(0.01) EUR(0.03)
The notes set out on pages 14 to 21 form part of these condensed
financial statements.
Accsys Technologies PLC
Consolidated s tatement of financial position at 30 September
2013
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
Note 2013 2012 2013
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 8,398 7,814 8,226
Investment in joint venture 5 64 - 62
Property, plant and equipment 6 21,696 24,799 22,271
Deferred tax 422 1,219 866
30,580 33,832 31,425
---------- ---------- ----------
Current assets
Inventories 5,433 3,987 4,860
Trade and other receivables 4,251 3,031 3,688
Cash and cash equivalents 16,937 20,731 20,467
Corporation tax 384 516 623
27,005 28,265 29,638
---------- ---------- ----------
Current liabilities
Trade and other payables (3,444) (3,402) (3,357)
Obligation under finance
lease (264) (280) (264)
(3,708) (3,682) (3,621)
---------- ---------- ----------
Non-current liabilities
Obligation under finance
lease (1,905) (1,928) (1,924)
(1,905) (1,928) (1,924)
---------- ---------- ----------
Net current assets 23,297 24,583 26,017
Total net assets 51,972 56,487 55,518
Equity and reserves
Share capital - Ordinary
shares 7 4,389 4,091 4,332
Share premium account 128,648 124,941 128,588
Capital redemption reserve 148 148 148
Warrants reserve 235 82 235
Merger reserve 106,707 106,707 106,707
Retained deficit (188,133) (179,504) (184,511)
Own shares (48) (39) (39)
Foreign currency translation
reserve 26 61 58
Total equity 51,972 56,487 55,518
The notes set out on pages 14 to 21 form part of these condensed
financial statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the six months
ended 30 September 2013
Foreign
currency
Share Capital trans-
capital Share redempt-ion Warrant Merger Own lation Retained
Ordinary premium reserve reserve reserve Shares reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 4,091 124,941 148 82 106,707 (39) 61 (179,504) 56,487
30 Sept 2012
(unaudited)
Total
comprehensive
income/(expense)
for the period - - - - - - (3) (5,538) (5,541)
Expiry of
warrants - 82 - (82) - - - - -
Share based
payments - - - - - - - 531 531
Shares issued 241 - - - - - - - 241
Premium on
shares issued - 3,565 - - - - - - 3,565
Share Warrants
issued - - - 235 - - - - 235
Balance at
31 March
2013 4,332 128,588 148 235 106,707 (39) 58 (184,511) 55,518
========= ======== ============ ========= ========= ======== ========= ========== ========
Total
comprehensive
income/(expense)
for the period - - - - - - (32) (4,132) (4,164)
Expiry of - - - - - - - - -
warrants
Share based
payments - - - - - - - 510 510
Shares issued 57 60 - - - (9) - - 108
Premium on - - - - - - - - -
shares issued
Share Warrants - - - - - - - - -
issued
Balance at 4,389 128,648 148 235 106,707 (48) 26 (188,133) 51,972
30 Sept 2013
(unaudited)
========= ======== ============ ========= ========= ======== ========= ========== ========
The notes set out on pages 14 to 21 form part of these condensed
financial statements.
Own shares represents 4,765,666 issued to an Employee Benefit
Trust at nominal value on 9 July 2013.
On 12 August 2013, a total of 497,854 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan.
On 13 September 2013, a total of 415,332 of Ordinary shares were
issued and released to employees together with the 415,332 of
Ordinary shares issued to trust on 7 September 2012.
Accsys Technologies PLC
Consolidated statement of cash flow for the six months ended 30
September 2013
Unaudited Unaudited Audited
6 months 6 months Year End
30 Sept 30 Sept 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Profit before taxation (3,792) (5,377) (10,668)
Adjustments for:
Amortisation of intangible assets 175 145 306
Depreciation of property, plant and equipment 996 967 1,950
Net gain on disposal of property, plant
and equipment - - (113)
Recognition of reduction of investment
in joint venture 398 - 438
Finance expense 43 17 39
Equity-settled share-based payment expenses 509 396 927
Cash outflows from operating activities
before changes in working capital (1,671) (3,852) (7,121)
(Increase)/decrease in trade and other
receivables (567) 549 (12)
Increase in inventories (572) (865) (1,739)
Decrease/(increase) in trade and other
payables 144 23 (66)
Net cash absorbed by operating activities
before tax (2,666) (4,145) (8,938)
Tax received 344 796 795
Net cash absorbed by operating activities (2,322) (3,349) (8,143)
========== ========== =========
Cash flows from investing activities
Interest received 79 107 206
Expenditure on capitalised internal development (348) (381) (861)
Disposal of property, plant and equipment - - 1,699
Purchase of property, plant and equipment (420) (152) (293)
Purchase of intangible assets (23) - (44)
Investments in joint ventures (400) - (500)
Net cash absorbed by investing activities (1,112) (426) 207
========== ========== =========
Cashflows from financing activities
Finance expenses (19) (17) (36)
Interest Paid (122) (124) (244)
Proceeds from issue of share capital 69 62 4,112
Share issue costs - - (15)
Net cash from financing activities (72) (79) 3,817
========== ========== =========
Net decrease in cash and cash equivalents (3,506) (3,854) (4,119)
Effect of exchange differences on restatement
of non Euro functional currency (23) 11 12
Opening cash and cash equivalents 20,466 24,574 24,574
Closing cash and cash equivalents 16,937 20,731 20,467
========== ========== =========
The notes set out on pages 14 to 21 form part of these interim
financial statements.
Accsys Technologies PLC
Notes to the financial statements for the 6 months ended 30
September 2013
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 "interim financial reporting" as
adopted for use in the European Union. The financial information
for the six months ended 30 September 2013 and the six months ended
30 September 2012 is unaudited. The comparative financial
information for the full year ended 31 March 2013 does not
constitute the group's statutory financial statements for that
period although it has been derived from the statutory financial
statements 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.
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 2014
Annual Report. The accounting policies and methods of computation
are consistent with those applied in the 31 March 2013 annual
financial statements.
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, the Group is
dependent on achieving certain operating performance measures
relating to the production and sales of Accoya(R) wood from the
plant in Arnhem and the collection of on-going working capital
items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe, while some uncertainty inherently
remains in achieving the budget, in particular in relation to
market conditions outside of the Group's control, that there are a
sufficient number of alternative actions and measures that can be
taken in order to achieve the Group's medium and long term
objectives.
Therefore, the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
2. Segmental reporting
The Group's business is the development, commercialisation and
licensing of proprietary technology for the manufacture of
Accoya(R) wood, Tricoya(R) wood elements and related acetylation
technologies. Segmental reporting is divided between licensing
activities, the manufacturing and sale of Accoya(R) and research
and development activities.
Result by Segment: Licensing
---------------------------------
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31
March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Revenue 525 553 553
Cost of sales - - -
Gross profit/(loss) 525 553 553
Other operating costs (3,341) (3,758) (6,780)
Loss from operations (2,816) (3,205) (6,227)
Loss from Operations (2,816) (3,205) (6,227)
Depreciation and amortsation 207 173 347
EBITDA (2,609) (3,032) (5,880)
------------------------------- ---------- ---------- ---------
Manufacturing
---------------------------------
Revenue 15,244 8,530 18,269
Cost of sales (12,300) (7,219) (15,474)
Gross profit/(loss) 2,944 1,311 2,795
Other operating costs (2,934) (2,747) (5,528)
Profit/(loss) from operations 10 (1,436) (2,733)
Profit/(loss) from operations 10 (1,436) (2,733)
Depreciation and amortsation 931 908 1,833
EBITDA 941 (528) (900)
------------------------------- ---------- ---------- ---------
Research and Development
---------------------------------
Revenue - - -
Cost of sales - - -
Gross profit/(loss) - - -
Other operating costs (553) (719) (1,240)
Loss from operations (553) (719) (1,240)
Loss from Operations (553) (719) (1,240)
Depreciation and amortsation 33 32 76
EBITDA (520) (687) (1,164)
------------------------------- ---------- ---------- ---------
Total
---------------------------------
Revenue 15,769 9,083 18,822
Cost of sales (12,300) (7,219) (15,474)
Gross profit/(loss) 3,469 1,864 3,348
Other operating costs (6,828) (7,224) (13,548)
Loss from operations (3,359) (5,360) (10,200)
Share of joint venture loss (390) - (430)
Finance income 79 107 206
Finance expense (122) (124) (244)
Loss before taxation (3,792) (5,377) (10,668)
Loss from Operations (3,359) (5,360) (10,200)
Share of joint venture loss (390) - (430)
Depreciation and amortsation 1,171 1,113 2,256
========== ========== =========
EBITDA (2,578) (4,247) (8,374)
------------------------------- ---------- ---------- ---------
Licensing
Revenue is attributable to fees received or receivable in
relation to the licensing of the Group's technology to third
parties.
Other operating costs include all remaining costs unless they
are directly attributable to Manufacturing or Research and
Development. This includes the costs of the Dallas and Windsor
offices, marketing, business development and the majority of the
Group's administration costs.
Headcount = 21 (2012: 19)
Manufacturing
Revenue includes the sale of Accoya(R) and other revenue,
principally relating to the sale of acetic acid.
All costs of sales are allocated against manufacturing
activities in Arnhem unless they can be directly attributable to a
licensee.
Other operating costs include depreciation of the Arnhem
property, plant and equipment together will all other costs
associated with the operation of the Arnhem manufacturing site,
including directly attributable administration costs.
Headcount = 67 (2012: 61)
Research and Development
Costs are associated with various R&D activities associated
with Accoya(R) products and processes. The costs are reported
excluding EUR348,000 of costs which have been capitalised in
accordance with international financial reporting standards. (2011:
EUR381,000).
Headcount = 14 (2012: 14)
Assets and liabilities cannot be readily allocated to the three
segments and therefore no additional segmental information has been
disclosed.
Analysis of revenue by geographical destination:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Netherlands 3,839 3,060 6,181
United
Kingdom 3,243 1,832 3,531
Ireland 1,713 94 450
USA 1,356 342 1,055
Germany 1,147 845 1,506
Switzerland 1,074 825 1,596
Norway 612 344 763
Belgium 586 349 659
China 518 296 542
France 236 121 200
India 231 180 458
New Zealand 208 142 332
Austria 185 - -
Canada 159 145 403
Italy 154 155 227
Australia 139 135 418
Czech
Republic 102 25 85
Other 267 193 417
15,769 9,083 18,822
========== ========== =========
The segmental assets in the current and previous periods were
predominantly held in Europe. Additions to property, plant,
equipment and intangible assets in the current and previous periods
were predominantly incurred in Europe. Sales to Ireland included
the sales to Medite which resumed at the end of the previous
financial year.
3. 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 Windsor.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Sales and marketing 1,391 1,559 2,908
Research and development 553 719 1,240
Depreciation and amortisation 1,171 1,113 2,256
Other operating
costs 888 1,069 2,104
Administration
costs 2,825 2,764 5,040
6,828 7,224 13,548
======================= ========== =========
Administrative costs include costs associated with the Human
Resources, IT, Finance, Management, General Office, Business
Development and Legal departments.
The Group headcount increased from 94 at 30 September 2012 to 97
at 31 March 2013 and then to 102 at 30 September 2013.
During the period EUR348,000 of development costs were
capitalised and are included within intangible fixed assets
(2012:EUR381,000). This includes EUR169,000 in respect of the
Accoya(R) licence Process Design Package.
4. 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 2013 2012 2013
Weighted average number of Ordinary
shares in issue ('000) 435,790 406,310 419,650
Loss for the period (EUR'000) (4,132) (5,485) (11,023)
Basic and diluted loss per share EUR(0.01) EUR(0.01) EUR(0.03)
========== ========== ==========
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.
5. Share of joint venture losses
On 5 October 2012, Accsys entered into a 50:50 joint venture,
Tricoya Technologies Limited ('TTL'), with INEOS to exploit Accsys'
intellectual property surrounding its proprietary Tricoya(R) wood
elements acetylation technology and processes, which is expected to
lead to the accelerated global deployment of Tricoya.
TTL was granted rights to exploit Accsys' Tricoya(R) technology
and also benefits from a licence of any intellectual property held
by INEOS that may assist the joint venture in maximising the value
of the Tricoya(R) proposition. Profits generated by TTL are to be
shared between Accsys and INEOS in a way that reflects each party's
interest. The contribution of Accsys' Tricoya(R) intellectual
property to the Joint Venture will be reflected through a
disproportionate future profit share which will create significant
value for Accsys.
TTL has been accounted in the Accsys Group accounts using the
equity method. The TTL results for the period from 1 April 2013 to
30 September 2013, together with the balance sheet as at 30
September 2013 are set out below:
Income statement for TTL joint venture:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Revenue 100 - -
Costs:
Staff costs 610 - 590
Research & development (excluding
staff costs) 111 - 163
Intellectual Property 79 - 76
Sales & marketing 80 - 31
Total operating costs 880 - 860
========== ========== =========
Joint venture loss 780 - 860
========== ========== =========
Group share of joint venture loss 390 - 430
========== ========== =========
Tricoya Technologies Limited statement of financial position at
30 September 2013:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2013 2012 2013
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 415 - 93
Current assets
Receivables due within one year 93 - 89
Cash and cash equivalents 465 - 324
Total current assets 558 - 413
---------- ---------- ---------
Current liabilities
Trade and other payables (814) - (366)
Net current assets (256) - 47
---------- ---------- ---------
Net assets 159 - 140
========== ========== =========
50% attributable to Accsys Technologies 79 - 70
Less elimination of mark-up on recharged
costs (15) - (8)
========== ========== =========
Intangible assets represents internal development costs
capitalised relating to the development of the Tricoya product and
production process, including the production of the first process
design package which will applied to the licence agreement with
Medite.
6. Property, plant and equipment
Land and Plant Office
buildings and machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 31 March 2012 6,880 26,959 612 34,451
Additions - 120 32 152
Foreign currency translation
gain/(loss) - - - -
At 30 September 2012 6,880 27,079 644 34,603
Additions - 131 9 140
Disposals (1,672) (20) - (1,692)
Foreign currency translation
gain/(loss) - - 3 3
At 31 March 2013 5,208 27,190 656 33,054
Additions 27 326 61 414
Disposals - - - -
Foreign currency translation
gain/(loss) - - - -
At 30 September 2013 5,235 27,516 717 33,468
=========== =============== =========== ========
Depreciation
At 31 March 2012 75 8,293 469 8,837
Charge for the period 56 876 35 967
Foreign currency translation
gain/(loss) - - - -
At 30 September 2012 131 9,169 504 9,804
Charge for the period 61 895 26 982
Disposals - (7) - (7)
Foreign currency translation
gain/(loss) - - 4 4
At 31 March 2013 192 10,057 534 10,783
Charge for the period 58 888 43 989
Disposals - - - -
Foreign currency translation
gain/(loss) - - - -
At 30 September 2013 250 10,945 577 11,772
=========== =============== =========== ========
Net book value
At 31 March 2012 6,805 18,666 143 25,614
At 30 September 2012 6,749 17,910 140 24,799
At 31 March 2013 5,016 17,133 122 22,271
At 30 September 2013 4,985 16,571 140 21,696
7. Share capital
On 6 July 2012, the Company issued 3,926,666 Ordinary shares to
an Employee Benefit Trust at nominal value.
On 8 August 2012, the Company issued 783,283 new Ordinary shares
in respect of the vesting of matching shares held in the Employee
share scheme under which 28 employees subscribed in August
2011.
On 7 September 2012, a total of 415,332 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan.
On 19 October 2012, a total of 23,529,412 of Ordinary shares
were issued to INEOS following the receipt of subscription monies
totalling EUR4,000,000.
On 18 January 2013, a total of 369,423 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan.
On 23 January 2013, a total of 130,831 of Ordinary shares were
issued and released to employees together with the 130,831 of
Ordinary shares issued to trust on 23 January 2012.
On 9 July 2013, a total of 4,765,666 of Ordinary shares were
issued to an Employee Benefit Trust at nominal value.
On 12 August 2013, a total of 497,854 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan.
On 13 September 2013, a total of 415,332 of Ordinary shares were
issued and released to employees together with the 415,332 of
Ordinary shares issued to trust on 7 September 2012.
8. Related party transactions
In the period ended 30 September 2013, there were a number of
related party transaction with the Tricoya Technologies Limited
joint venture, all of which arose in the normal course of business,
totalling EUR518,000 (2012: Nil). At the end of the period
EUR253,000 of the total amount was payable from TTL to Accsys group
companies (2012: Nil). There were no related party transactions in
the year ended 31 March 2012.
9. Other matters
On 16 August 2013 Accsys announced it had terminated its licence
agreement with Diamond Wood China Limited ('Diamond Wood').
Accsys entered a licence agreement with Diamond Wood in 2007
which was subsequently amended and superseded on various occasions,
the last being in August 2010. Under the terms of the licence
agreement, Diamond Wood was granted exclusive rights to construct
and then run an Accoya acetylation plant in China and parts of
South East Asia. However as the Company has previously reported,
Diamond Wood failed to make progress in this respect despite the
significant amount of support and work carried out by Accsys since
2007.
Following legal advice, notice of termination of the licence
agreement was served by Accsys in August 2013, in accordance with
Accsys' contractual and legal rights, as a result of Diamond Wood's
failure to comply with its contractual obligations (the
"Termination").
On 17 September 2013 a notice of arbitration was served by
Diamond Wood in which it indicates it is seeking confirmation that
the licence agreement is still in force and seeking damages for the
losses it has suffered from the Termination. Accsys is fully
engaging in the arbitration process and welcomes the opportunity it
will provide to ask the arbitrators to confirm the validity of
Accsys' Termination.
Following robust legal advice firmly supporting Accsys'
Termination, Accsys remains extremely confident that the
arbitration will be resolved in its favour. Accordingly no
provision has been booked in respect of the potential amounts which
could become due should Accsys not be successful in the arbitration
process.
Whilst further details of the arbitration are subject to
confidentiality, Accsys will provide a further update once the
matter has been concluded.
Accsys Technologies PLC
Independent review report to Accsys Technologies PLC
Introduction
We have been engaged by the company to review the condensed
consolidated set of financial statements in the half-yearly
financial report for the six months ended 30 September 2013, which
comprises the Consolidated statement of comprehensive income,
Consolidated statement of financial position, Consolidated
statement of changes in equity and the interim statement of cash
flow and related notes. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM and Euronext Amsterdam by NYSE Euronext Rules for Companies
which require that the financial information must be presented and
prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report have been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of the AIM and Euronext Amsterdam by NYSE Euronext Rules
for Companies and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
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 half-yearly financial report for the half year ended 30
September 2013 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union, the AIM and
Euronext Amsterdam by NYSE Euronext Rules for Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
London
22 November 2013
Notes:
a) The maintenance and integrity of the Accsys Technologies PLC
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial report
since it was initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFLALDLSFIV
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