TIDMAXS
RNS Number : 3975G
Accsys Technologies PLC
07 May 2014
AIM: AXS
NYSE Euronext Amsterdam: AXS
7 May 2014
ACCSYS TECHNOLOGIES PLC
("Accsys" or the "Company")
Trading Update
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 issues a trading
update for the full financial year ended 31 March 2014 (based on
unaudited figures). Key highlights include:
-- Strong performance with total revenue increasing by 78% to
EUR33.5m (2013: 25% growth to EUR18.8m);
-- Cash balance increased to EUR15.2m (December 2013: EUR14.4m)
due to a combination of revenue growth, licence income and
improvements in working capital;
-- Continuing growth in Accoya(R) wood revenue of 77% to
EUR29.3m (2013: 22% growth to EUR16.6m). Excluding sales to Medite,
Accoya(R) revenue increased by 61% to EUR26.4m (2013: 45% growth to
EUR16.4m);
-- Total Accoya(R) volume sold increased by 88% to 25,391m(3) (2013: 9% growth to 13,471m(3) );
-- Arnhem plant profitability continues to improve, recording a positive EBITDA in the year;
-- The decision concerning Solvay's plant and its location is expected in the next few months;
-- Total of 59 Accoya(R) distributor and agency agreements now
in place, an increase from 42 in 2013 and 35 in 2012; and
-- Tricoya Technologies Limited ('TTL'), our JV with INEOS, continues to make progress:
o Significant work carried out in developing the Process Design
Package for Medite;
o Strong increase in demand for Medite Tricoya;
o Medite Tricoya project has been awarded Life+ subsidy from the
EC, worth up to EUR2.1m.
Financial results (unaudited)
Total revenue for the year ended 31 March 2014 increased by 78%
to EUR33.5m (2013: EUR18.8m). In the same period, excluding sales
to Medite for the manufacture of Tricoya, Accoya(R) revenue
increased by 61% to EUR26.4m (2013: EUR16.4m). Sales to Medite
increased significantly compared to the previous year, during which
Medite had been utilising their earlier initial build-up of stock.
Total revenue also included EUR1.1m of licence income (2013:
EUR0.6m).
Net cash balance as at 31 March 2014 of EUR15.2m represents an
increase of EUR0.8m since 31 December 2013. The increase is due to
the receipt of licence income and the positive effects of changes
in our working capital, which included the utilisation of inventory
which had been built up in advance of expected higher sales in the
final quarter of the year. Cash outflow from operating activities
before changes in working capital decreased significantly in the
year ended 31 March 2014 compared to the prior year and this trend
is expected to continue.
The overall loss for the year has reduced as expected, due to
the higher revenue and resultant improvement in profitability.
However, other operating costs have also increased, in part due to
legal costs associated with the on-going Diamond Wood
arbitration.
Accoya sales and production
Revenue from Accoya(R) customers increased by 61% in the year to
31 March 2014 compared to last year reflecting continuing strong
growth in demand in all regions. Growth has been driven by both
existing and new customers and, while the improving economic
climate has helped, the growth continues to be driven by the ever
increasing awareness of Accoya(R) in the global market place and
its acceptance as the world's leading, high-technology, long-life
wood.
We implemented Accoya(R) price increases in all regions during
the last quarter of the year ended 31 March 2014. While the price
increase was in part attributable to increasing raw material costs,
taken together with increased sales volumes, we expect
profitability to continue to improve in the new financial year.
We now have a total of 59 Accoya(R) distributor and agency
agreements in place (an increase of two since February) covering
most of Europe, Australia, Canada, Chile, China, India, Israel,
Mexico, Morocco, New Zealand, South Africa, parts of South-East
Asia and the USA.
Production of Accoya(R) from our Arnhem plant has increased
significantly in order to meet customer demand. The significant
ramp up in output has been achieved without significant investment
in capital expenditure and the resulting improvements to our
productivity have also contributed to our profitability.
We continue to invest in research and development focussing on
productivity, capacity, new species and product development in
order to meet our customer demands.
Licensing
In December 2013 we announced that our Accoya(R) licence
agreement ('the licence agreement') with Belgian chemical group
Solvay was approved by both parties and is fully effective,
resulting in a new level of cooperation between the two
companies.
The licence agreement grants Solvay exclusive rights for a
minimum 15 year period, renewable at agreed terms, to produce and
to sell Accoya(R) within the Council of Europe from this initial
plant. The licenced territory includes 47 states in the Council of
Europe, but excludes Belgium, Ireland, Luxembourg, the Netherlands
and the United Kingdom which are reserved to Accsys. The licence
agreement also grants Solvay the option to build additional
Accoya(R) production plants in Europe, with the first plant (the
'plant') having a total capacity of c.63,000 m(3) of finished
Accoya(R) output, expected to be operational in the course of
2016.
In return, Accsys will receive a series of licence payments,
which have already commenced and will be made during the phased
construction of the plant, and with royalty payments per volume of
Accoya(R) produced thereafter.
The two companies also signed an amendment to the licence
agreement which includes the possibility of Solvay constructing the
plant in Arnhem on land Accsys currently owns, adjacent to the
Company's existing manufacturing facility and in a phased manner.
Solvay is now reviewing the two options for the optimal plant
location, being either Arnhem, the Netherlands or Freiburg,
Germany.
The decision on the plant and its location will be made by
Solvay in the next few months.
In addition the two companies agreed to examine the best ways to
provide coordinated operational and maintenance services to both
plants, and to review the best form of cooperation between the two
companies going forward.
Further to the licence agreement becoming unconditional in
December 2013, Accsys and Solvay entered a transitional phase in
which Accsys will continue to sell to Accoya distributors in
Solvay's region while working to transfer the relationships to
Solvay.
Solvay's Accoya(R) decking product retail trial is now in its
second year and is expected to be in up to 70 outlets in Europe
compared to 40 last year.
Tricoya Technologies Ltd ('TTL'), the INEOS and Accsys joint
venture, continues to make progress in all areas including
engineering, product development, marketing and business
development.
The market evaluation of Medite Tricoya(R) continues to be
positive with increasing acceptance of the product leading to a
significant increase in demand from customers. TTL signed its first
Tricoya(R) licence agreement with Medite in July 2013 which is
conditional upon Medite obtaining approval from its Board of
Directors later in 2014. Subsequent to then, TTL has carried out
significant work in respect of the Process Design Package which
will enable Medite to complete the necessary detailed design of the
overall plant. In addition, the EC recently awarded the Medite
Tricoya project a subsidy under its Life+ programme worth up to
EUR2.1m and which is expected to benefit Medite and TTL over a
three year period.
TTL continues to develop its relationship with the licence
option holder in Latin America including in respect of market
evaluation and preliminary production planning.
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 ongoing,
the complex nature and investment required by a licensee, means
that the timing and certainty of their completion remains difficult
to predict.
Diamond Wood
In August 2013, 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. The arbitration is on-going. As has been previously
stated, we welcome the opportunity to confirm the validity of our
termination and remain extremely confident that it will be resolved
in our favour. Whilst further details of the arbitration are
subject to confidentiality, Accsys will provide a further update
once the matter has been concluded.
Preliminary results for the year ended 31 March 2014 are
expected to be announced before the end of June 2014.
Commenting, Paul Clegg, CEO of Accsys said:
"The year has seen a step change in the scale of our business.
The extensive efforts we have put into marketing and promoting our
world leading products is now being borne out by our sales volume
growth as our products gain wider market acceptance.
"While the global market opportunity for our products remains
vast, I am conscious that Accsys remains at an early stage of its
long-term journey, with much still to be achieved. However, the
progress we have made during the past financial year, in sales,
licensing and the significant increase in our production levels,
provides me with increased confidence that we are on the right path
and will achieve our objective of profitability in the
near-term.
"It is with great sadness that we recently announced that our
Chairman, Gordon Campbell CBE, had passed away. Gordon joined our
board in 2005 and was instrumental in turning the Company around
during a very difficult period. Gordon will be greatly missed by us
all together with the immense support he gave to both me and
Accsys."
Ends
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via Blytheweigh
PLC Hans Pauli, COO
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
+44 (0) 7989 129658
Paul Weigh +44 (0) 7989 394
Blytheweigh Alex Shilov 027
Frank Neervoort +31 681 734 236
Off the Grid (The Netherlands) Giedo Van Der Zwan +31 624 212 238
Notes to editors:
Accsys Technologies PLC(www.accsysplc.com) is an environmental
science and technology company whose primary focus is on the
production of Accoya(R) wood and technology licensing via its
subsidiary, Titan Wood Limited, which has manufacturing operations
in Arnhem, the Netherlands (through its subsidiary Titan Wood
B.V.), a European office in Windsor, United Kingdom, and an
American office in Dallas, Texas (via its subsidiary Titan Wood,
Inc). All group subsidiaries are ultimately 100% owned by Accsys
and trade as Accsys Technologies. Any references in this
announcement to agreements with Accsys shall mean agreements with
either Accsys or its subsidiary entities unless otherwise
specified. Accsys Technologies PLC is listed on the London Stock
Exchange AIM market and on Euronext Amsterdam by NYSE Euronext,
under the symbols 'AXS'. Accsys' operations comprise three
principal business units: (i) Accoya(R) wood production; (ii)
technology development, focused on a programme of continuous
development of and improvements to the process engineering and
operating protocols for the acetylation of solid wood and the
development of technology for the acetylation of wood elements; and
(iii) the licensing of technology for the production of Accoya(R)
wood and Tricoya(R) wood elements across the globe.
Accoya(R) wood (www.accoya.com) is produced using Accsys'
proprietary patented acetylation technology, that effectively
converts sustainably grown softwoods and non-durable hardwoods into
what is best described as a "high technology wood". Distinguished
by its durability, dimensional stability and, perhaps most
importantly of all, its reliability (in terms of consistency of
both supply and quality), Accoya(R) wood is particularly suited to
exterior applications where performance and appearance are valued.
Unlike most tropical and European hardwoods, its colour does not
degrade when exposed to ultraviolet light. Moreover, the Accoya(R)
wood production process does not compromise the wood's strength or
machinability. The combination of UV resistance, dimensional
stability, durability and retained strength means that Accoya(R)
wood offers a wealth of new opportunities to architects, designers
and specifiers. These benefits result in lower maintenance and
total cost of ownership while using a higher sustainable and
environmental responsible building material. For a full archive of
Accoya(R) news, visit www.accoya.com/news.asp.
Tricoya(R) Wood Elements(www.tricoya.com) are produced using
Accsys' proprietary technology for the acetylation of wood chips,
and particles for use in the fabrication of wood based composites,
including panel products. These composites demonstrate enhanced
durability and dimensional stability which allow them to be used in
a variety of applications that were once limited to solid wood or
man-made products. Exploitation of Accsys' proprietary technology
relating to Tricoya(R) Wood Elements is carried out through Tricoya
Technologies Limited, a joint venture between Accsys and INEOS
Industries Holdings Limited. Tricoya(R) Wood Elements are lauded as
the first major innovation in the wood composites industry in more
than 30 years.
Wood Acetylation is a process which increases the amount of
'acetyl' molecules in wood, thereby changing its physical
properties. When carried out to a sufficient level throughout the
wood, this process protects wood from rot by making it "inedible"
to most micro-organisms and fungi, without - unlike conventional
treatments - making it toxic. It also greatly reduces the wood's
tendency to swell and shrink, making it less prone to cracking and
ensuring that, when painted, it requires dramatically reduced
maintenance.
Accsys Technologies is the trading name of Titan Wood Limited.
ACCOYA(R), TRICOYA(R) and the Trimarque Device are registered
trademarks owned by Titan Wood Limited ("TWL"), a wholly owned
subsidiary of Accsys Technologies PLC, and may not be used or
reproduced without written permission from TWL, or in the case of
the Tricoya(R) registered trademark, from Tricoya Technologies
Limited, a joint venture between TWL and INEOS Industries Holdings
Limited with exclusive rights to exploit the Tricoya(R) brand.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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