TIDMAXS
RNS Number : 7807R
Accsys Technologies PLC
19 June 2018
AIM: AXS
Euronext Amsterdam: AXS
19 June 2018
Accsys Technologies PLC
("Accsys" or the "Company")
Preliminary Results for the year ended 31 March 2018
Doubling of capacity in manufacturing footprint on track to meet
strong demand
Accsys, the chemical technology group, focused on the
acetylation of wood, today announces preliminary results for the
twelve months ended 31 March 2018.
Year to Year to
31 March 2018 31 March 2017
Underlying Statutory Underlying Statutory
Total Group Revenue EUR60.9m EUR60.9m EUR56.5m EUR56.5m
Gross profit EUR13.6m EUR13.6m EUR14.4m EUR14.4m
EBITDA (EUR3.5)m (EUR5.7)m (EUR1.5m) (EUR1.2m)
Loss before tax (EUR8.8)m (EUR10.4)m (EUR4.5m) (EUR4.5m)
Year-end cash balance EUR39.7m EUR41.2m
Year-end net (debt)/cash balance (EUR3.8m) EUR18.0m
Major capacity expansion and strategic progress:
-- Accoya(R) plant expansion completed and in operation from
June 2018 to increase annual capacity by 50% to at least 60,000
cubic metres;
-- Strong demand continues for Accoya(R) , large proportion is
repeat business, expected to generate significant increase in sales
and margins;
-- Construction of transformational Tricoya(R) plant in Hull
remains on track for completion mid-2019 calendar year, supported
by strong sales of Tricoya(R) panels which have increased by 26%
compared to last year reflecting increased demand; and
-- Hull plant, with capacity of 30,000 metric tonnes expected to
become cash flow generative sooner, as a result of the new
Tricoya(R) licence with FINSA.
Financial highlights:
-- Total revenue up by 8% against last year, with Accoya(R)
revenue up 11%, offset by reduced licensing income;
-- Accoya(R) sales volumes up by 7% to 42,676 cubic metres, with
a 15% increase in the second half;
-- Accoya(R) gross margin improved to 24% in the second half
reflecting both price increases, significant volumes sold to Medite
and Rhodia at lower prices and no Accoya(R) licence income;
-- Underlying EBITDA improved to a EUR0.7m loss in the second
half of year compared to EUR2.8m loss in first half;
-- 30% gross margin from the manufacturing of Accoya(R) continues to be achievable; and
-- Increase in net debt reflects significant investment in
capacity increases for both Accoya(R) and Tricoya(R) .
Paul Clegg, Chief Executive commented:
"At the time of the justifiable increased awareness of the
critical importance of alternatives to man-made and fossil based
materials, this year has been a milestone year for Accsys. Our
patented technology and products have seen strong endorsement from
both trade and financial partners. We have continued to see strong
demand for both Accoya(R) and Tricoya(R) , driven by both their
recognised technical performance and their sustainable provenance,
which is becoming increasingly important for both end users and
specifiers alike.
This has been a tremendous boost for our capacity expansion and
has been integral to the major financial backing we received from a
variety of stakeholders during the year. We have reported excellent
progress on the significant increase in our manufacturing footprint
in both Arnhem and Hull to more than double our capacity by
mid-2019, with a 50% increase going live now. This capacity
transformation will make a real difference to both margins and
sales volumes, which have been constrained to date. We are
achieving good results from developing sales to both existing and
new customers in our established markets, as well as newer ones.
Our partnership with FINSA, a pioneer in the field of sustainable
and renewable wood-based solutions, is another important
development for accelerating the commercial future of the new
Tricoya(R) plant in Hull.
It's an exciting time for the whole team at Accsys and we are
looking forward to the next phase of our development with
confidence."
There will be a presentation relating to these results at 09:30
BST on Tuesday 19 June 2018. 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:
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Conference call details for participants:
Participant Telephone Number:
United Kingdom +44 (0)330 336 9411
Netherlands +31 (0)20 703 8261
Confirmation Code: 7937962
Participants will have to quote the above code when dialling
into the conference.
Accsys Technologies PLC
("Accsys" or the "Company")
Voorlopige resultaten voor het boekjaar eindigend op 31 maart
2018
Verdubbeling van de productiecapaciteit ligt op schema om aan de
sterke vraag te voldoen
De chemische technologiegroep Accsys, die zich richt op zeer
duurzame acetylatie van hout, maakt vandaag haar voorlopige
resultaten bekend voor het boekjaar eindigend op 31 maart 2018.
Jaar eindigend Jaar eindigend
per 31 maart 2018 per vrijdag 31 maart 2017
Onderliggend Statutair Onderliggend Statuair
Totale groepsomzet EUR 60,9 mln EUR 60,9 mln EUR 56,5 mln EUR 56,5 mln
Brutowinst EUR 13,6 mln EUR 13,6 mln EUR 14,4 mln EUR 14,4 mln
EBITDA (EUR 3,5) mln (EUR 5,7) mln (EUR 1,5 mln) (EUR 1,2 mln)
Verlies voor belastingen (EUR 8,8) mln (EUR 10,4) mln (EUR 4,5 mln) (EUR 4,5 mln)
Liquide middelen per einde boekjaar EUR 39,7 mln EUR 41,2 mln
Saldo liquide middelen (netto-schuld) per einde (EUR 3,7 mln) EUR 20,1 mln
boekjaar
Grote capaciteitsuitbreiding en strategische vooruitgang:
-- De uitbreiding van de Accoya(R) -fabriek is voltooid en de
productie is sinds juni 2018 gestart om de jaarlijkse capaciteit
met 50% te verhogen tot ten minste 60.000 kubieke meter;
-- Aanhoudende sterke vraag naar Accoya(R) , voor een groot deel
afkomstig van vaste klanten en deze zal naar verwachting een
aanzienlijke toename van de omzet en de marges genereren;
-- De bouw van de Tricoya(R) wood chip acetylatiefabriek in Hull
ligt op schema voor voltooiing halverwege 2019, ondersteund door de
sterke verkoop van de Tricoya(R) -panelen die met 26% is gestegen
in vergelijking met vorig jaar en de toegenomen vraag weerspiegelt;
en
-- De fabriek in Hull, met een capaciteit van 30.000 metrieke
ton, zal naar verwachting sneller cashflow genereren, dankzij de
nieuwe licentieovereenkomst tussen Tricoya(R) en FINSA.
Financiële hoogtepunten:
-- De totale omzet is met 8% gestegen ten opzichte van vorig
jaar, waarbij de omzet van Accoya(R) is gestegen met 11%, ondanks
lagere licentie-inkomsten;
-- De verkoopvolumes van Accoya(R) zijn in het boekjaar met 7%
gestegen tot 42.676 kubieke meter, met een toename van 15% in het
tweede halfjaar;
-- De brutomarge van Accoya(R) verbeterde tot 24% in het tweede
halfjaar en weerspiegelde de prijsstijgingen en de significante
volumes die aan Medite en Rhodia werden verkocht tegen lagere
prijzen maar zonder licentie-inkomsten van Accoya(R) ;
-- Het onderliggende EBITDA-verlies verbeterde tot EUR 0,7
miljoen in het tweede halfjaar in vergelijking met een verlies van
EUR 2,8 miljoen in het eerste halfjaar;
-- Een brutomarge van 30% op de productie van Accoya(R) blijft haalbaar; en
-- De toename van de nettoschuld weerspiegelt de significante
investering in het verhogen van de capaciteit voor zowel Accoya(R)
als Tricoya(R) .
Paul Clegg, Chief Executive, licht toe:
"In deze tijd van toegenomen bewustwording van het belang van
alternatieven voor kunstmatige en op fossielen gebaseerde
materialen, was dit jaar een mijlpaal voor Accsys. Onze
gepatenteerde technologie en producten hebben veel steun gekregen
van financiers en handelspartners. We blijven een sterke vraag naar
zowel Accoya(R) als Tricoya(R) zien, gedreven door zowel de
onderkende technische prestaties als de duurzame oorsprong van de
producten, wat steeds belangrijker wordt voor de eindgebruikers en
de ontwerpers.
Dit was een enorme opsteker voor onze capaciteitsuitbreiding en
een integraal onderdeel van de grote financiële steun die we
gedurende het hele jaar van verschillende belanghebbenden hebben
ontvangen. We hebben uitstekende progressie geboekt ten aanzien van
de significante toename van onze productiefaciliteiten zowel in
Arnhem als in Hull om onze capaciteit medio 2019 meer dan
verdubbeld te hebben, met een toename van 50% die nu live gaat.
Deze capaciteitstransformatie zal een echt verschil maken voor
zowel de marges als de verkoopvolumes, die tot op heden beperkt
zijn gebleven. We behalen goede resultaten door de verkoop te
ontwikkelen voor bestaande en de nieuwe klanten in onze gevestigde
maar ook nieuwere markten. Ons partnerschap met FINSA, een pionier
op het gebied van duurzame en hernieuwbare, op hout gebaseerde
oplossingen, is een andere belangrijke ontwikkeling voor het
versnellen van de commerciële toekomst van de nieuwe Tricoya(R)
-fabriek in Hull.
Het is een opwindende tijd voor het hele Accsys-team en we
kijken vol vertrouwen uit naar de volgende fase van onze
ontwikkeling."
Op dinsdag 19 juni 2017 vindt om 09.30 uur (BST) een presentatie
plaats van deze resultaten. De presentatie vindt plaats via een
online conference call, waarvan de details hieronder staan:
Link naar webcast:
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browser:
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Informatie over conference call voor deelnemers:
Telefoonnummer deelnemers:
Verenigd Koninkrijk +44 (0)330 336 9411
Nederland +31 (0)20 703 8261
Bevestigingscode: 7937962
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inbellen naar de vergadering.
Accsys Technologies PLC
Chairman's Statement
Introduction
This year the focus has been on ensuring our two key capacity
expansion projects are on schedule and within budget whilst
maintaining momentum in sales growth despite the challenges of
operating at maximum production capacity for much of the year. It
is a true credit to all our employees who have supported our
development whilst ensuring we operate to the very highest
standards for Health and Safety.
The construction of the third reactor in Arnhem is now complete
and we are on schedule for it to produce its first batches of
Accoya(R) this month. In the last twelve months our customers have
been exceptionally patient as demand continues to outstrip supply.
We look forward to fulfilling that excess demand over the coming
months as we once again look for double digit growth in the year
ending 31 March 2019.
Following the finalisation of the Tricoya(R) consortium at the
end of the last financial year, substantial progress has been made
with the construction of the new Tricoya(R) chip acetylation plant
in Hull, which remains on track for completion in mid-2019 calendar
year.
We are once again looking forward to a period of significant
growth and being able to satisfy the increasing and pent up demand
for Accoya(R) . This will help us to take advantage of a
substantial market opportunity; one which becomes more relevant in
today's world which is seeking ever more environmentally friendly,
yet high performance construction products. We are also seeing more
interest from partners who see the market potential and wish to
support the growth of both Accoya(R) and Tricoya(R) in both North
America and Asia.
We continue to add experience and breadth to the organisation as
we look forward to the next period of more accelerated growth. This
has included the appointment of Trudy Schoolenberg to the Board as
Senior Independent Director who brings with her significant
operational and corporate experience. We have also strengthened our
management capability with new appointments in Human Resources and
Marketing following the appointment last year of our Head of Group
Operations.
Sales and production
Sales volumes grew by 7% to 42,676 cubic metres for the year,
reflecting that we have been operating at capacity levels which
have limited our ability to grow further in the year and resulted
in pent up demand. Production volumes were impacted by two planned
shut downs in the first half of the year, one more than usual as a
result of work relating to the expansion. Sales of Tricoya(R)
panels by Medite increased by 26% compared to last year reflecting
increasing demand.
Demand for Accoya(R) and Tricoya(R) has increased, and despite
the capacity constraints, growth was recorded in most regions, in
particular the USA although this was from relatively low
volumes.
We continue to believe the total market for Accoya(R) and
Tricoya(R) is in excess of 2.6 million cubic metres per annum,
based upon detailed market assessments. This figure represents a
small fraction of the overall solid wood and wood panel industries
but should also be seen as a longer term aspiration given the
requirement for new manufacturing capacity.
Additional manufacturing capacity
The addition of a third reactor to our Accoya(R) plant in Arnhem
increases our capacity by 50% to in excess of 60,000 cubic metres
per annum, with the potential to generate revenue in excess of
EUR90m annually, at today's prices. The first commercial batches
are anticipated this month and we expect to ramp up production
volumes over the next few months to meet demand for both Accoya(R)
and Tricoya(R) .
The additional capacity has been completed on budget and the
expansion includes the infrastructure for a fourth reactor to be
added at a later date to add a further 20,000 cubic metres of
capacity. As part of our expansion programme, we now have a
significant new warehouse and distribution centre and new offices.
This means that all of our key operations in relation to Accoya(R)
are housed in a single location in Arnhem, which is expected to
result in greater efficiency.
I am also pleased to report that 15 months following the
formation of the Tricoya(R) consortium real progress has been made
with the construction of the dedicated Tricoya(R) wood chip
acetylation plant in Hull which will have an initial design
capacity of 30,000 metric tonnes. Significant construction work has
been completed on site, key equipment ordered, staff recruitment is
ongoing and we remain on track for the construction of the plant to
be completed in mid-2019 calendar year.
During the year we entered a Tricoya(R) brand and panel
manufacturing licence agreement with FINSA, which is expected to
become a significant new customer purchasing Tricoya(R) chips from
the Hull plant. The anticipated future demand for Tricoya(R) chips
indicated by FINSA together with the existing offtake agreement
with Medite, is expected to result in the Hull plant being
significantly loaded and as a consequence cash generative at an
earlier point. We continue to expect the plant to be EBITDA
positive operating at 40% capacity.
Financial Results
Revenue for the year ended 31 March 2018 increased by 8% to
EUR60.9m (2017: EUR56.5m). Within this total, Accoya(R) wood
revenue increased by 11% to EUR56.3m (2017: EUR50.7m) as a result
of a 7% increase in sales volume and the effect of price increases,
while licence income decreased from EUR1.6m to EUR0.2m, reflecting
progress in reaching milestones in the period under our agreement
with our Accoya(R) licensee, Rhodia Acetow.
Gross profit margin decreased from 25% to 22% for a number of
reasons including lower licensing income, as expected, and a number
of largely one-off matters which impacted the first half of the
year including an additional maintenance stop and a reduction in
our inventory of lower grade (B-grade) material. However, the gross
margin in the second half of the year increased to 24.5% compared
to 20.0% in the first half as a result of a price increase
implemented in January 2018 and without some of the one-off items
experienced in the first half. Gross margin should increase further
in the year ending 31 March 2019 as we benefit from the additional
capacity.
Other operating costs (excluding exceptional items) increased by
9.0% to EUR20.2m largely as a result of increased activity
following formation of the Tricoya(R) consortium, wage inflation
and activities to support the expected significant growth in
Accoya(R) volumes.
This resulted in a EUR2.0m increase in underlying Group EBITDA
loss to EUR3.5m (2017: underlying EBITDA loss of EUR1.5m). However
underlying Group EBITDA improved from a EUR2.8m loss in the first
half of the year to a EUR0.7m loss in the second half. This was
largely due to an improvement in the Accoya(R) segment where
underlying EBITDA improved from EUR1.2m profit in the first half of
the year to EUR3.4m profit in the second half of the year as a
result of higher Accoya(R) volumes and price increases.
Balance sheet
The increase in net debt to EUR3.8m (2017: net cash of EUR18m)
largely reflects EUR29.5m of capital expenditure incurred in the
year in respect of the Hull plant and Arnhem expansion and EUR1.8m
cash out-flow attributable to operating activities after changes in
working capital.
During the year we raised EUR12.3m net proceeds from the Firm
Placing and Open Offer (completed in April 2017) and a further
EUR14.4m was raised from BP Chemicals and Medite in respect of the
Hull plant, through the issue of new shares in our Tricoya(R)
subsidiary. We also drew down EUR7.5m under our facility with
Rhodia in respect of the Arnhem expansion.
The net debt balance is expected to increase in the new
financial year as further significant capital expenditure is
incurred in respect of the Hull plant and the Arnhem expansion is
finalised. However group operating cash-flow is expected to be
positive in the new financial year.
Outlook
The additional capacity from the third reactor in Arnhem will
meet the pent up and new demand for Accoya(R) and Tricoya(R) . We
expect sales volumes to grow significantly in the new financial
year, although much of this will be in the second half.
The start-up of the Hull plant in mid-2019 will provide further
additional capacity to meet demand. This also means we will no
longer have to supply Accoya(R) for the manufacture of Tricoya(R) ,
which in conjunction with the capacity expansion in Arnhem would
allow Accoya(R) capacity to approximately double in comparison to
last year.
The new user licence agreement with FINSA is a great endorsement
and an indication of the interest and demand for Tricoya(R) , for
which we also expect sales to increase ahead of the Hull plant
becoming operational. We are also in discussions with a number of
large MDF manufacturers regarding potential licensing arrangements
similar to the FINSA agreement.
There is a high level of interest in developing new capacity for
Accoya(R) and Tricoya(R) both in North America and Asia. These are
likely to involve new partnership arrangements similar to the
Tricoya(R) Consortium in Hull.
In summary, this is an exciting period for our Company. I am
confident that we are very well placed to take advantage of our
strong IP by utilising our increased asset base to ensure we can
maximise growth and returns going forward in both the short and
longer term.
Patrick Shanley
Non-executive Chairman
18 June 2018
Accsys Technologies PLC
Our market
Ever increasing concerns over pollution related to plastics and
other man-made materials means that the superior qualities of our
products are driving customers to choose our
environmentally-friendly materials over established wood and
man-made materials including fossil based products. This gives
enormous scope to increase our penetration of this vast global
market.
Our technology
Accoya(R) and Tricoya(R) are based upon our proprietary wood
acetylation technology.
The physical properties of any material are determined by its
chemical structure. Wood contains an abundance of chemical groups
called "free hydroxyls". Free hydroxyl groups absorb and release
water according to changes in the climatic conditions to which the
wood is exposed. This is the main reason why wood shrinks and
swells. It is also believed that the digestion of wood by enzymes
initiates at the free hydroxyl sites - which is one of the
principal reasons why wood is prone to decay.
Acetylation effectively changes the free hydroxyls within the
wood into acetyl groups, which already naturally exist in wood at
lower levels. This is done by reacting the wood with acetic
anhydride, which comes from acetic acid (commonly known as vinegar
when in its dilute form). When the free hydroxyl group is
transformed to an acetyl group, boosting the acetyl level, the
ability of the wood to absorb water is greatly reduced, rendering
the wood more dimensionally stable and, because it is no longer
digestible, extremely durable.
Market
We believe the potential market for Accoya(R) and Tricoya(R) is
in excess of 2.6 million cubic metres annually.
Last year we sold 42,676 cubic metres of Accoya(R) and our
licensee Medite sold 7,328 cubic metres of Tricoya(R) panels,
however the total global solid wood market is understood to exceed
400 million cubic metres annually and we believe sales in excess of
1 million cubic metres annually are ultimately achievable. While it
may take some time for Accoya(R) and Tricoya(R) to reach their full
market potential and may be limited by availability of
manufacturing capacity, we are confident that continued strong
sales growth can be generated.
Accoya(R) captures the market share in those applications which
require rot, insect and water resistance, i.e. primarily outdoor
products. We focus on the higher-value end of these applications,
where the dual qualities of durability and dimensional stability
offered by Accoya(R) are most highly valued.
The majority of our Accoya(R) sales are to a network of timber
distributors which in turn supply a variety of industries,
principally for joinery (windows and doors) and for decking and
cladding. As we expand, we expect that other opportunities will be
developed as we become able to meet the demands of larger scale
manufacturers and as we continue to develop our product and its
applications.
Tricoya(R) panels' enhanced performance and moisture resistance
makes them particularly suited to external applications including
facades and cladding, soffits and eaves, exterior joinery, wet
interiors, door skins, flooring, signage and marine uses.
Tricoya(R) displaces alternative more expensive or less easily
handled products and opens up major new market opportunities in the
construction sector.
The global market for Tricoya(R) panel products is estimated in
excess of 1.6 million cubic metres and up to approximately 4.5
million cubic metres per annum. This would equate to around 1% of
global MDF manufacturing capacity. Tricoya(R) panels were
introduced to the market by Medite in 2012, manufactured using
chipped Accoya(R) as a production solution in the period before the
dedicated wood chip acetylation plant is completed. Sales of
Tricoya(R) panels have increased significantly each year since
Medite introduced them to the market in 2012, and total panel sales
to date are approximately 25,000m(3) / 2,300,000m(2) , representing
a sales value of approximately EUR39m. Last year sales grew by 26%
to 7,328m(3) .
Both products offer environmental advantages which enable them
to compete with a variety of other less sustainable wood and
man-made products. We believe this will become more important as
global attention increases in respect of the potential harm that
other products, such as plastics and micro plastics can cause.
Accsys Technologies PLC
Business model
Sustainability
Pollution is not a new problem but increased risk to human
health and the environment is now driving specifiers and consumers
to consider the environment in every decision. Through our
innovative technological acetylation platform, we are committed to
manufacturing high performance materials - Accoya(R) and Tricoya(R)
- which are environmentally solutions for the construction
industry. Accoya(R) and Tricoya(R) are made from abundantly
available, fast growing, sustainable, renewable resources with
durability and dimensional stability exceeding the best performing
tropical and temperate hardwoods and manufactured wood and non-wood
panels including plastics.
They are natural building materials with low maintenance and
consistent qualities of the highest performing non-sustainable
man-made materials. They benefit from all positive attributes of
wood such as sustainability, strength and beauty without the
downfalls of poor durability and stability.
Our Key Strengths
Intellectual property ('IP'), expertise and innovation
Our IP is protected at different levels and is exploited in
different ways. We have developed families of patents relating to
our products and processes which provide robust protection and
enable us to market to third parties. Equally important is know-how
and trade secrets covering our process, raw materials, equipment
and products which provide commercial protection and value
generation as well as a basis for on-going innovation.
Branding
Our brands Accoya(R) wood and Tricoya(R) are registered
trademarks in over 50 countries world-wide.
Strong branding and trade mark protection is vital and has
enabled our products to generate a significant presence in a
relatively short time in what is otherwise a fragmented market
place. We portray that our products are high performance, class
leading and sustainable while offering value for money when
considering performance benefits and the product lifecycle.
Business partners
Third parties have contributed to our success and help us meet
our long term strategic targets.
Particular importance is placed upon those which help develop
our technology, products and their place in the market including
equipment manufacturers, wood suppliers, the acetyls industry,
testing and certification bodies as well as wood coating, adhesives
and other system supply specialists. We will continue to work with
others to ensure we develop larger scale manufacturing
capacity.
Our people
Our people are key to our success, with high staff retention and
a commitment to the future of the Company.
Our focus on R&D, innovation and developing long-term growth
market opportunities to exploit our first mover advantage is
dependent on our employees. Value is generated from know-how; from
working with wood products, understanding our brand on a global
basis, to optimising the acetylation process. We develop, motivate
and retain a committed team with necessary skills to help us meet
our objectives.
Our Technology
Our innovative wood processing technology is a platform with
application for use on different solid woods and multiple different
panel products.
We believe wood acetylation is applicable to multiple wood
products and species and we have established a platform technology
that can be developed to generate additional products and uses.
Different species of wood will enable Accoya(R) to be used for new
purposes while opening up greater supply chain opportunities. Our
Tricoya(R) process also has the potential to be used for particle
board manufacture.
How we Create Value
Manufacturing
Accsys' Accoya(R) plant has been improved and had capacity
increased through constant process improvements. This has
demonstrated our process works on an industrial scale and has
confirmed the commercial viability of Accoya(R) and Tricoya(R)
.
The plant returns are expected to be further improved with the
benefit of the new capacity in the new financial year. In addition
it is a centre for carrying out commercial level R&D and for
evaluating further improvements to our processes.
Working with third parties
Working with third parties provides the greatest prospect for
taking advantage of a substantial global market opportunity.
Manufacturing our products provides the greatest opportunity for
generating profit given the value added via our process, and
manufacturing directly ourselves offers significant long term
rewards. We will continue to work with appropriate third parties in
order to achieve our objective of expanding the production
footprint globally, in particular where such parties have resources
or technologies which complement our own.
Our ambition to retain a direct interest in manufacturing whilst
fully exploiting the value of our IP is characterised by our
relationships with BP and Medite in respect of Tricoya(R) , where
the new consortium builds upon a broader level of experience and
capabilities in the acetyls and panel industries.
Outcome
Increasing revenue and returns enable continued investment in
R&D, people and partnerships in order to take advantage of the
substantial opportunity which we believe exists.
Accsys Technologies PLC
Our strategy
Strategic
Priority Developing market and driving growth
Ambition To develop market opportunities into core business to drive
revenue growth
KPIs:
* Accoya(R) and Tricoya(R) volume sold
* Number of distributors
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Approach
* Focus on significant and growth markets, for example
the USA and the joinery market
* Building brand and developing critical mass within
markets
* Developing the substantial environmental advantages
that our products offer
* Development of partnerships to allow the above in
cost effective manner
* Product development focused on significant volume and
value propositions
-------------------------------------------------------------------
Progress
in year * Total volume sold increased by 7% to 42,676 cubic
ended metres, however:
March
2018
o Accoya(R) sales volumes (excluding to Medite) increased
by 10% to 34,617 cubic metres
o Tricoya(R) panel sales by Medite increased by 26% to 7,328
cubic metres
* 64 Accoya(R) distribution and agency agreements in
place (2017: 61)
* Sales volumes have been capacity constrained with
customers on allocation
* USA identified as key growth market - sales volumes
increased by 44%
* Second Tricoya(R) user licence sold, expected to
increase sales into new European markets.
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Priorities
for year * Meeting pent up demand for Accoya(R) from expanded
ending capacity following a significant period of customers
March being on sales allocation
2019
* Increase market seeding to Tricoya(R) in core
European region and develop sales into new key
markets elsewhere globally
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Risks Manufacturing capacity may be limited should sales grow faster
than capacity allows. Our ability to manage demand should
we operate at or near capacity levels could result in negative
market reaction. A delay in expansion of the Tricoya(R) plant
in Hull may result in uncertainty with our customers impacting
sales in the shorter term.
The Group expects to sell new or existing products and services
into other countries or into new markets. However, there
can be no assurance that the Group will successfully execute
this strategy for growth. The development of a mass market
for a new product or process is affected by many factors,
many of which are beyond the control of the Group, including
the emergence of newer and more competitive products or processes
and the future price of raw materials. If a mass market fails
to develop or develops more slowly than anticipated, the
Group may fail to achieve sustainable profitability.
-------------------------------------------------------------------
Strategic
Priority Developing manufacturing capacity
Ambition To grow manufacturing position in Europe and establish new
platforms in key markets in support of, and to enable, demand
growth
KPIs:
* Operational manufacturing capacity
* Manufacturing capacity under construction
--------------------------------------------------------------------
Approach
* Develop and optimise existing sites to benefit from
existing skills and leverage operational and
financial scale
* Identify new international locations and appropriate
partners to develop additional capacity in order to
meet longer term growth potential in global markets
--------------------------------------------------------------------
Progress
in year * Record production from Arnhem plant of 39,148 cubic
ended metres
March
2018
* 3rd Accoya(R) reactor construction significantly
progressed as expected, which will increase capacity
by approximately 20,000 cubic metres per annum.
* Tricoya(R) plant construction commenced, which will
have a capacity of approximately 30,000 metric tonnes
of Tricoya(R) wood chips per annum
--------------------------------------------------------------------
Priorities
for year * Commissioning of construction and ramp up of
ending operations of 3(rd) Accoya(R) reactor
March
2019
* Tricoya(R) plant construction expected to be near
complete ahead of operation in mid-2019 calendar
year.
* Development of initial plans for ensuring additional
manufacturing capacity
* Development of key supply chain relationships and
options in order to support longer term ambition
--------------------------------------------------------------------
Risks Accoya(R) process improvements are likely to be more difficult
to achieve with no certainty that capacity from existing
assets can be increased further. The Tricoya(R) process is
based on our core acetylation knowledge but may present unexpected
design issues requiring more complex engineering.
The Group's Intellectual Property ('IP') protection is afforded
by a combination of trademarks, patents, confidentiality
agreements and the structuring of legal contracts relating
to key licensing, engineering and supply arrangements. Unauthorised
use of the Group's IP may adversely impact its ability to
exploit the technology and lead to additional expenditure
to enforce legal rights. The wide geographical spread of
our products increases this risk due to the increasingly
varied and complex laws and regulations in which we seek
to protect the Group's IP.
The cost and availability of key inputs affects the profitability
of manufacturing whilst also impacting the potential profitability
of third parties interested in licensing the Group's technology.
The price of key inputs and security of supply are managed
by the Group, partly through the development of long term
contractual supply agreements.
Strategic
Priority Research and technology development
Ambition To develop technology and IP programmes to focus on value
and growth, and to manage risk
-------------------------------------------------------------------
Approach
* Optimisation of existing products and technologies
* Pursuit of focused technology solutions which
materially enhance productivity and cost of
production
-------------------------------------------------------------------
Progress
in year * Significant progress made in development of potential
ended March coloured Accoya(R) and other potential end product
2018 developments which would lead to new applications
-------------------------------------------------------------------
Priorities
for year * Finalisation of development of coloured Accoya(R)
ending
March 2019
* Continued development of application of acetylation
to other solid wood applications
* Fully define detailed and focused technology
development programme for implementation from 2019,
based on existing assets, know-how and development
programmes
-------------------------------------------------------------------
Risks Additional applications and new species development remains
uncertain given the inherent nature of R&D. An element of
the Group's strategy for growth envisages existing or new
products being sold into new markets such that slower development
could impact longer term growth.
As our products and IP becomes increasingly valuable, an
increased risk of third parties challenging our IP or seeking
to copy or use it without authorisation develops.
-------------------------------------------------------------------
Strategic
Priority Organisational development
Ambition To develop our people and organisational capability to enable
us to meet our growth objectives
------------------------------------------------------------------
Approach
* Development of Group culture and values
* Build Group's organisation capability to meet growth
objectives
* Focus resource strategy and organisational
development based on strategic plan milestones with
appropriate training and development
------------------------------------------------------------------
Progress
in year * New heads of HR and Communications joined senior
ended March management team; new Non-Executive Director joined
2018 board with significant operational experience
* Undertaken review of many HR related functions to
identify areas for development
------------------------------------------------------------------
Priorities
for year * Review of organisational structure and detailed
ending resource plans
March 2019
* Develop values programme
------------------------------------------------------------------
Risks The Group's success depends on its ability to continue to
attract, motivate and retain highly qualified employees.
The highly qualified employees required by the Group in
various capacities are sometimes in short supply in the
labour market. There are risks associated with operating
a chemical plant and accordingly the health and safety of
our staff is made a priority. We continuously seek improvements
to exceed industry expectations by challenging our methods,
improving our reporting and continuing to learn
------------------------------------------------------------------
Further details of risks and uncertainties are set out
below:
(a) Regulatory, legislative and reputational risks
The Group's operations are subject to extensive regulatory
requirements, particularly in relation to its manufacturing
operations and employment policies. Changes in laws and regulations
and their enforcement may adversely impact the Group's operations
in terms of costs, changes to business practices and restrictions
on activities which could damage the Group's reputation and
brand.
(b) Movements in foreign exchange
The Group's functional currency is the Euro. There is the risk
that movements in the Euro exchange rate against other currencies
may result in significant, unexpected, financial gains and
losses.
The Group's risk management strategy is to minimise the
financial risk associated with exchange rate movements by using
foreign exchange hedging. Where possible, the Group will use
natural hedges where assets and liabilities exist in the same
currency, otherwise it will use foreign exchange derivatives such
as forward contracts to minimise the risk.
The Group aims to hedge certain of its key foreign exchange
risk, taking account of the affordability of appropriate foreign
exchange derivatives.
Accsys Technologies PLC
Chief Executive's Report
Introduction
We have made considerable progress over the last year and I am
particularly pleased that we are now expecting the first output
from the third Accoya(R) reactor this month, after the completion
of a substantial and successful construction project.
The first year of the Tricoya(R) Consortium has been
transformational, with significant progress made in the
construction of the world's first wood chip acetylation plant in
Hull and success in securing an important new partnership with
FINSA.
Safety continues to be our priority and I am pleased to report
that we have had no lost time incidents in the year. We are
continuing a safety awareness programme involving all of our
employees and will continue to target best practice in this
area.
I would again like to thank all of our staff who have worked
with continued dedication towards achieving the Groups objectives,
during a period which has seen all parts of the business operate at
higher levels than before. We have strengthened our Senior
Management Team, with the addition of Heads of Communications and
HR as well as the Head of Group Operations earlier in the year. I
believe the team is in an excellent position to manage our next
significant growth phase.
Accoya(R) - Global performance
Six months Six months
ended ended 30 Year ended Year ended
31 March September 31 March 31 March
2018 2017 2018 2017
Accoya(R) sales volume
- cubic metres 22,850 19,826 42,676 39,790
----------- ----------- ------------- -------------
Accoya(R) production volume
- cubic metres 21,114 18,034 39,148 38,084
----------- ----------- ------------- -------------
Accoya(R) sales EUR30.1m EUR26.2m EUR56.3m EUR50.7m
----------- ----------- ------------- -------------
Licence income EURnil EURnil EURnil EUR1.6m
----------- ----------- ------------- -------------
Manufacturing margin -
% 23.8% 19.5% 21.8% 22.7%
----------- ----------- ------------- -------------
Underlying EBITDA EUR3.4m EUR1.2m EUR4.6m EUR6.0m
----------- ----------- ------------- -------------
Total Accoya(R) sales volume for the year ended 31 March 2018
increased by 7% to 42,676 cubic metres (2017: 39,790 cubic metres)
and total Accoya(R) revenue increased by 11% to EUR56.3m (2017:
EUR50.7m). The larger increase in revenue compared to volume was
attributable to effect of price increases and small change in sales
mix. Excluding sales to Medite for Tricoya(R) panels, sales volumes
increased by 10% to 34,617 cubic metres (2017: 31,532 cubic
metres).
At the time of the justifiable increased awareness of the
critical importance of sustainable alternatives to man-made and
fossil based materials, the overall increase in sales volume in the
year reflects the continued increase in demand for our
environmentally-friendly products although growth has been limited
given production volumes have been at capacity level. Our customers
have been on allocation for much of the year and we are grateful
for their co-operation as we have worked closely with them through
this challenging time in order to manage demand. As a result, we
are well placed to meet pent up demand, as well as new
opportunities now that potential capacity is increasing by 50%. We
expect sales volumes to increase during the remaining part of the
new financial year, as production volumes ramp up following the
completion of commissioning this month.
The 10% growth in Accoya(R) volumes (excluding to Medite)
continues to be driven by repeat business and has been fulfilled by
our network of global distributors which has remained largely
consistent over the last year. Demand is fuelled by an ever
increasing track record and acceptance in our target markets
together with the drive by the industry for high performance yet
sustainable building materials. We continue to develop new sales
opportunities as we demonstrate Accoya(R) 's more entrenched
position in the market.
UK and Ireland remains our largest region, where sales volumes
remained level at 11,994 cubic metres, excluding sales to Medite
for Tricoya(R) (2017: 12,021 cubic metres). Use of Accoya(R) for
door and window production remains the largest application in this
market through the use of Accoya(R) for facades has increased
significantly. The inventory levels of our distributors reduced
during this period under allocations. As a result of strong demand
together with inventory replenishment, we anticipate significant
growth as production from the additional capacity increases in the
new financial year.
9,464 cubic metres of Accoya(R) were sold to Rhodia Acetow
(2017: 8,531 cubic metres). This represented an 11% increase and
reflected our arrangements with them as an Accoya(R) licensee under
which Rhodia has responsibility for most countries in central
Europe and Scandinavia. Subsequent to the year-end we have agreed
an amendment to our off-take agreement with Rhodia which has
reduced the minimum volume Accsys is obliged to supply to Rhodia
for the remaining three years of the agreement. The minimum volume
for the three years ending December 2020 has been reduced from
55,000 cubic metres to 44,990 cubic metres, reflecting both our
recent and potential future production capacity constraints.
Sales in the Americas increased by 43% to 5,494 cubic metres
from relatively small volumes last year, reflecting our focus on
the largest potential market for Accoya(R) . Our sales team has
made significant progress in developing short and longer term
opportunities and I believe this region will also represent a
significant area of growth following the availability of new
production capacity. While sales volumes increased, margins in the
region were impacted by weaker US$ exchange rates, with North
America being the only region where we invoice customers in local
currency rather than Euros.
Sales to the Benelux area decreased by 8% to 3,405 cubic metres,
as a result of lower sales in Belgium. This was attributable to the
prior year including one-off projects and a change in our
distribution structure. We have secured an additional distribution
partner for Belgium, with a strong project pipeline for the
new-year. Sales to the Netherlands increased by 15% despite
customers being on allocation for much of the year, reflecting
changes we made to our sales and marketing approach as well as to
the sales team last year. As a result I am confident sales will
continue to grow for this region with new production capacity.
Sales to the Asia-Pacific region increased by 26% to 3,540 cubic
metres. Sales outside of Diamond Wood's exclusive region, including
to Japan, Australia, New Zealand and India increased by 25%,
reflecting particularly strong growth in Australia and Japan from
both positive collaboration with distributors and the benefit of
repeat business manufacturing companies increasing use of Accoya(R)
.
Sales to customers elsewhere, including Eastern Europe and the
Middle East continue to be relatively small with growth restricted
by production capacity. However, we continue to develop
relationships with distributors and believe that many of these
regions represent excellent longer-term markets.
Volumes of Accoya(R) sold to Medite for the manufacture of
Medite(R) Tricoya(R) Extreme remained relatively flat, at 8,059
cubic metres. While prices increased slightly in the year the
margin for this material continues to be lower than sales to our
regular Accoya(R) customers. This reflects our investment in the
Tricoya(R) project resulting in our shareholding in the Consortium
increasing by 0.5%. Sales are expected to grow significantly in the
new financial year and ahead of the Hull Tricoya(R) plant becoming
operational in mid-2019 calendar year. Sales by Medite of
Tricoya(R) panels increased by 26% to 7,328 cubic metres in the
year to 31 March 2018, reflecting use of Medite's inventory.
We have 64 Accoya(R) distributor, supply and agency agreements
in place covering most of Europe, Australia, Canada, Chile, China,
India, Japan, New Zealand, South Korea, parts of the Middle-East
and South-East Asia, and North America.
No Accoya(R) licence related income was reported in the year
(2017: EUR1.6m) reflecting the contractual milestones in place with
our licensee Rhodia Acetow however further milestones are expected
to be achieved in the new financial year.
Accoya(R) pricing and margin
The gross manufacturing margin (which excludes licensing income)
decreased from 22.7% to 21.8% reflecting a number of one-off
matters reported with the half year results. The gross
manufacturing margin improved from 19.5% in the first half of the
year to 23.8% with the second half of the year also benefiting in
part from a price increase effective from January 2018.
The lower gross margin in the first half of the year was
attributable to the following, largely one-off factors:
In May 2017 we carried out an extra maintenance stop, in
addition to our annual maintenance stop completed in September
2017. The May stoppage related to the expansion however lasted
longer than expected, resulted in lower production volumes and
resulted in EUR0.2m of additional costs.
Raw material prices increased in the first half of the year,
with the cost of acetyls increasing in the first quarter although
this subsequently reduced. The cost of raw wood also increased in
the first half of the year. As a result, we implemented a price
increase for all of our customers from January 2018.
We also reported a one-off cost attributable to a quantity of
lower grade wood sold in the first half of the year which reduced
gross margin by EUR0.5m, but which assisted in the relocation of
inventory to our new warehousing facilities in the second half.
Inventory levels had built up following some challenges in securing
the right mix of raw wood from our suppliers in New Zealand. We
have improved the balance of material being supplied from New
Zealand and factored in the remaining related cost into the new
customer prices implemented from January 2018.
The proportion of sales to Medite and Rhodia increased to
represent 41.6% of total sales volumes in the first half of the
year. Lower priced and lower margin Accoya(R) is sold to Medite
reflecting our investment in Tricoya(R) market seeding and Rhodia
receives discounted prices reflecting their on-going commitment
under their off-take agreement. The proportion of sales to Medite
and Rhodia decreased marginally to 40.6% in the second half of the
year.
We expect the new financial year to benefit from the full effect
of the price increase implemented from 1 January 2018 and we will
continue to keep prices under review as the year progresses. We
also expect to benefit from economies of scale arising from
operating the third reactor and we continue to believe that a gross
margin of 30% is achievable in the longer term.
Expansion of Accoya(R) manufacturing plant
I am very pleased to report that the construction of the third
reactor has recently been completed and is now operational. Full
commissioning is underway with the benefit of additional Accoya(R)
expected later this month.
The expansion has been completed successfully as expected and
the 50% additional production capacity, to in excess of 60,000
cubic metres, will allow us to grow sales volumes significantly in
the remaining part of the new financial year.
At the same time, we completed the chemical infrastructure for
the fourth reactor which means that we can increase capacity by an
additional 20,000 cubic metres both more quickly and at a lower
cost, when demand requires.
To support the additional manufacturing capacity, we have
recruited some additional shift staff and are in the process of
adding to these teams further as we expect to ramp up operations.
The additional capacity is expected to result in improved economies
of scale when operating at higher volumes given the overlap of some
functions and shared overheads with the existing two reactors.
In October 2017 we completed the move into new facilities
adjacent to the plant which includes a new warehouse and
distribution centre, R&D laboratory, maintenance workshops and
office. These facilities were previously spread over a number of
different rented buildings. The new facility has been constructed
by Bruil under the sale and leaseback arrangements we originally
entered into in 2016. We are already seeing the benefits of working
at a single site, with efficiencies expected to be gained from
improved logistics between warehouse and the processing plant as
well as having our Arnhem employees at a single location.
Subsequent to the year-end we have purchased the majority of the
Arnhem land and buildings back from Bruil for a total of EUR23m,
enabling us to benefit from greater flexibility over the use of the
site as well as any potential value appreciation. The acquisition
remains conditional upon Accsys finalising finance terms to fund
the purchase price of EUR23m (plus VAT). Should satisfactory
financing terms not be agreed, the transaction will be unwound, the
property transferred back to Bruil and the previous lease
arrangements will re-commence, all without liability to Accsys.
Tricoya(R) Consortium
Six months Six months
ended 31 ended 30 September Year ended Year ended
March 2018 2017 31 March 31 March
2018 2017
Sales of Medite(R) Tricoya(R)
Extreme panels, by Medite
- cubic metres 3,577 3,751 7,328 5,806
------------ -------------------- ------------- -------------
I am very pleased to report substantial progress by the
Tricoya(R) Consortium since its formation in March 2017.
Detailed engineering by the main contractor, Engie Fabricom, had
commenced prior to the start of the year and this enabled work to
begin on site immediately following the site clearance and
remediation work which was completed in June 2017. Ground works
have been completed and the construction of key structures is
progressing well, including the acetylation tower.
Approximately 90% of key equipment orders have been placed,
including all long lead time items, with the first such items
having been delivered to site.
Co-operation with our Consortium partners, BP and Medite, has
been excellent at all levels of the organisation, including
ensuring that the Consortium benefits from BP's experience at the
Saltend Site and Medite's experience with wood handling.
The plant manager for the new plant started in January 2018 and
we are building a team of approximately 30 staff to operate the
plant. These staff will be recruited during the new financial year
with the early task of developing the operational protocols and
then commissioning the plant in 2019 calendar year.
Medite has continued to develop the market and sales of
Medite(R) Tricoya(R) Extreme panels by Medite have increased by 26%
compared to the same period last year. Demand for Tricoya(R) panels
continues to increase allowing Medite to increase prices. Growth
has more recently being limited as a result of the production
capacity in Arnhem restricting the amount of Accoya(R) that can be
sold to Medite. Sales are expected to increase now that additional
Accoya(R) manufacturing capacity is available ahead of the
dedicated Tricoya(R) plant becoming operational in 2019.
Medite has been responsible for the majority of sales, however
we have commenced sales and marketing activities in regions outside
of Medite's licensed region in order to further increase ultimate
demand for the Hull plant and to seed new markets in respect of
potential additional Tricoya(R) licensees.
In March 2018 we announced a new Tricoya(R) user licence
agreement with FINSA, one of Europe's longest established MDF and
chipboard manufacturers. FINSA has been granted exclusive rights
for manufacturing panels from Tricoya(R) wood elements in Spain and
Portugal, with non-exclusive distribution rights in other
territories. FINSA will sell the panels under the Tricoya(R) brand
and pay a combination of royalty and licence fees to the Tricoya(R)
Consortium, with the first instalment of the licence fee having
been paid in the financial year ended 31 March 2018.
The supply of acetylated material for the production of
Tricoya(R) panels by FINSA will initially be met from the Accoya(R)
plant in Arnhem and then in the form of Tricoya(R) chips from the
new Tricoya(R) plant in Hull.
The anticipated future demand for Tricoya(R) chips indicated by
FINSA together with the existing offtake agreement with Medite, is
expected to result in the Hull plant being significantly loaded and
as a consequence cash generative at an earlier point. The Hull
plant is expected to be EBITDA break-even at approximately 40% of
its production capacity.
EUR17m of capital expenditure has been invested in the year in
respect of the Hull plant (2017: EUR1.4m), out of a total estimated
EUR59m. Operating costs increased to EUR3.2m (2017: EUR1.5m)
reflecting the expected increase in activity levels ahead of the
completion of the Tricoya(R) plant. This has included business
development with an increase in global interest for Tricoya(R) and
progress with potential new partnerships.
We agreed an acceleration of the remaining EUR14.4m of equity
funding due from BP Chemicals and Medite into Tricoya Ventures UK.
This enables us to better manage the foreign exchange risks
associated with the project given much of the construction cost is
denominated in pounds sterling.
Intellectual Property
We continue to focus on and invest heavily in the generation and
protection of intellectual property ('IP') relating to the
innovation associated with our acetylation processes and products
to ensure ongoing differentiation and competitive advantage in the
market place. Recent attention has been given to conducting
thorough reviews of those processes for Accoya(R) and Tricoya(R)
wood products to ensure strong protection is in place. Protection
opportunities are also being considered for the next generation of
technologies associated with our acetylation process to further
improve efficiency, and complementary technologies for our
products.
Patenting and/or maintaining valuable know-how as a trade secret
remains the typical route through which our innovation is
protected. Applications filed now number 288, in 43 countries. To
date, 98 patents have been granted in various countries throughout
the world.
Management of our know-how, including increasing Company-wide
awareness of the importance of protecting and controlling that
know-how, remains an essential element of safeguarding our
innovation, with confidentiality protocols in place to prevent
unauthorised access to such know-how and to place strict
contractual obligations on third parties collaborating with Accsys.
Particular focus is placed on minimising risks when engaging with
third parties, by ensuring Accsys know-how is only shared when
absolutely necessary. Controls are also placed on receiving
confidential information, to prevent protection associated with our
internal research efforts being compromised.
Our well-established trade mark portfolio continues to grow
geographically and covers the key distinctive brands Accoya(R) ,
Tricoya(R) and the Trimarque Device under which products are
marketed, alongside the corporate Accsys(R) brand, including
transliterations in Arabic, Chinese and Japanese. All of our key
brands have now been registered in over 50 countries, becoming
valuable house-hold names in the timber and panel industries.
Recent activity has focused on additional trade mark filings to
further protect the Company brands and to support new products, as
well as providing evidence of use to maintain the validity of our
trade marks throughout the world.
Accsys continues to maintain an active watch on the commercial
and IP activity of third parties to monitor and take action if its
IP rights are being infringed, to identify potentially valuable
third-party IP which could be exploited via a strategic alliance,
in-licence or acquisition, and to obtain an early insight into any
IP which could potentially hinder our commercial activity. The
scope of the IP watch is under regular review, and has recently
been expanded to align with the increased diversity of our research
programmes.
Careful IP management, effected via our qualified in-house IP
manager working in close conjunction with our technology,
engineering, product development, marketing and commercial groups,
and supported where appropriate by external patent and trade mark
attorneys, ensures our IP portfolio is maintained and protected,
and grown in a cost-effective manner, adding value to our
manufacturing and licensing businesses. The IP portfolio continues
to be regularly reviewed to ensure alignment with the Company
objectives, and to confirm fulfilment of obligations to current and
potential future licensees.
Outlook
We are very well positioned to take advantage of the additional
capacity from the expanded Arnhem plant which is now available, and
as result, for our customers to make positive material choices.
I expect Accoya(R) sales volumes will grow significantly in the
remaining part of the new financial year as production volumes ramp
up. This will also result in an improvement in our profitability
with the Group operating at an EBITDA positive level in the
foreseeable future.
We continue to see the demand for Accoya(R) and Tricoya(R)
increasing and believe this is due to a combination of factors. We
have developed a strong brand, distribution network and other key
relationships in the industry. I also believe that there is an
increasing realisation in the industry that products such as
Accoya(R) and Tricoya(R) will serve a long-term role in replacing
environmentally damaging man-made products while crucially being
able to offer all of the attributes of a high performance
product.
We are on track to complete the Tricoya(R) plant in Hull in
mid-2019 calendar year and I believe this will free up additional
Accoya(R) capacity in Arnhem which will be required given the
expected increase in sales. For the longer term, we continue to
explore options to add further additional capacity to meet expected
demand on a global scale and I am very pleased by some of the
discussions we are now having with potential new partners.
Paul Clegg
Chief Executive Officer
18 June 2018
Accsys Technologies PLC
Financial review
Income statement
Revenue
Total revenue for the year ended 31 March 2018 increased by 8%
to EUR60.9m (2017: EUR56.5m). Within this total Accoya(R) wood
revenue increased by 11% to EUR56.3m (2017: EUR50.7m) as a result
of sales volumes increasing by 7%, and price increases implemented
in the period. Accoya(R) revenue includes EUR7.8m of sales to
Medite for the manufacture of Tricoya(R) panels (2017: EUR7.8m),
noting allocations due to capacity constraints in the current
year.
Licence income decreased from EUR1.6m to EUR0.2m, where revenue
in 2017 reflected the agreements with our Accoya(R) licensee Rhodia
Acetow which given the milestone nature of the agreements were not
repeated in 2018. The current period licence income relates to
Tricoya(R) .
Other revenue of EUR4.4m (2017: EUR4.3m) included EUR0.3m
relating to the Sales and Marketing agreement with Rhodia. The
remainder is largely attributable to sales of acetic acid and
remained consistent with prior year given similar production
levels.
Gross margin
Gross profit margin reduced from 25% to 22%, as a result of
lower licence revenue as set out above, and an increase in cost of
sales. The Accoya(R) gross manufacturing margin decreased from 23%
to 22% as a result of a one-off EUR0.5m loss on low grade wood,
increased material costs for raw wood and acetyls, together with an
additional maintenance stop in the period due to tie-ins for the
plant expansion in Arnhem. This was offset by an increase in
pricing as noted above from January 2018.
Following the additional capacity from the third reactor
becoming available in advance of the Hull plant being completed,
our percentage gross margin will depend on our customer sales mix
in particular with sales to Medite and Rhodia which are at a lower
margin. We continue to expect a gross margin from the manufacture
of Accoya(R) of 30% to be achievable thereafter as we benefit from
the additional manufacturing capacity and improved sales mix.
Other operating costs (excluding exceptional items)
Other operating costs (excluding exceptional items) increased by
9% to EUR20.2m (2017: EUR18.6m). The increase in operating costs is
largely due an increase in headcount in the year to an average of
138 (2017: 124), with staff costs excluding foreign exchange
movements increasing by EUR0.8m. This included a share based
payment charge of EUR0.3m (2017: EUR0.9m). EUR0.7m (4%) of the
increase in staff costs are included in the Tricoya(R) segment,
reflecting the increased activities as the Hull plant is built.
We have seen a further increase of EUR0.2m in staff costs and
EUR0.1m in other operating costs attributable to foreign exchange
resulting from the strengthening of sterling during the year. In
addition depreciation increased by EUR0.3m due to increased charges
in Arnhem for the completed infrastructure works and an increase in
office and facility costs of EUR0.2m due to increasing costs for
our expanded plant in Arnhem. Sales and marketing costs have risen
by EUR0.2m during the year as the Group prepares for increased
sales of Accoya(R) from the expanded Arnhem facility and the new
sales of Tricoya(R) chips from the plant in Hull.
Loss from operations
The underlying loss from operations increased to EUR6.6m (2017:
loss of EUR4.2m) due to the reduction in gross margin and the
increase in operating costs, as explained above. Loss from
operations also includes other gains included as an exceptional
item (see below).
Finance income
Finance income of EURnil (2017: EUR2,000) represents interest
receivable on bank deposits. In addition interest was received in
relation to Tricoya(R) cash held in respect of the new plant in
Hull. This has been capitalised and is included in fixed asset
additions.
Finance expense
Finance expense (before exceptional items) of EUR2.2m (2017:
EUR0.3m) includes the interest element arising on the payments
attributable to the sale and leaseback of part of the Group's land
and buildings in Arnhem, together with finance charges arising on
the London office fit-out lease. The majority of the balance
represents interest and other finance charges relating to the Loan
Notes issued to in the prior period to Business Growth Fund and
Volantis relating to the Tricoya(R) project (EUR1.0m) (see note
29). The total charge also includes any finance charges payable in
respect of the Group's working capital facilities.
Exceptional items and other adjustments
Underlying operating cost adjustments include:
-- EUR1.4m annual bonus paid in the current year which was
attributable to the year ended 31 March 2017. The accrual for the
current year bonus is included in underlying operating costs. This
double charge in the year results from a re-alignment of the timing
of recognition of bonuses reflecting the more structured annual
bonus scheme now in place compared to previous years. In addition
the bonus paid in the current year relating to the year ended 31
March 2017 included one-off targets relating to the formation of
the Tricoya(R) consortium.
-- EUR0.2m of exceptional restructuring charge has been recorded
following necessary staff changes following the formation of the
Tricoya(R) consortium.
-- EUR0.6m foreign exchange loss arose from holding cash in
pounds sterling which was held primarily as a cash flow hedge
against future Sterling project expenditure on the new plant in
Hull. This has been impacted by the volatility of the Sterling/Euro
exchange rate (see note 5).
Underlying total comprehensive loss for the year adjustments
also include:
-- EUR0.5m of finance expenses relating to foreign exchange
differences arising on the Sterling denominated loan notes, entered
into in the prior year.
-- EUR0.2m of other comprehensive income in relation to the
Group's adoption of cash flow hedge accounting in respect of the
Tricoya(R) plant construction under IFRS 9, Financial Instruments
(see note 1)
Research & Development expenditure
EUR1.6m was incurred on research and development activities in
the year (2017: EUR1.8m). EUR0.1m (2017: EUR0.2m) has been
capitalised as an intangible asset (see note 16).
Taxation
The net tax credit of EUR0.3m compares to a EUR0.7m net charge
in the prior year. The tax charge for the year ended 31 March 2018
has reduced compared to the prior year as a result of a change to
the Group's transfer pricing policy to more accurately reflect the
Group's business model.
Dividends
No final dividend is proposed in 2018 (2017 final dividend:
EURnil). The Board deems it prudent for the Group to maintain as
strong a balance sheet as possible during the current phase of its
growth strategy.
Earnings per share
Basic and diluted loss per share was EUR0.08 (2017 basic and
diluted loss per share was EUR0.06).
Balance sheet
Intangible assets
Intangible asset additions of EUR0.4m (2017: EUR0.4m)
predominantly relate to capitalised internal development costs for
both Accoya(R) and Tricoya(R) related activities.
Property, plant and equipment
Property, plant and equipment balance increased by EUR39.1m to
EUR60.8m (2017: increase of EUR1.4m). The increase was due to
additions of EUR13.6m relating to the project to expand the Arnhem
Accoya(R) plant through the addition of the third reactor,
including EUR0.4m of capitalised internal staff costs. A further
EUR10.4m is attributable to a new Arnhem warehouse and office
facility finance lease arrangement (see note 28). EUR17.0m relates
to the construction of the Tricoya(R) plant in Hull and EUR1.0m
relates to technology improvements and significant maintenance
items at the Arnhem plant.
Available for sale investments
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China Limited,
which in 19 April 2017 were converted to 520,001 shares in
Cleantech Building Materials PLC. During the year Accsys sold
21,479 shares such that a total of 498,522 shares were held at 31
March 2018. The historical cost of the unlisted shares held at 31
March 2018 is EUR10m (2017: EUR10m). However, a provision for the
impairment of the entire balance of EUR10m continues to be recorded
as at 31 March 2018 (see note 18).
Inventory
The Group had total inventory of EUR13.1m (2017: EUR11.8m),
including finished goods consisting of Accoya(R) EUR2.8m (2017:
EUR5.3m) and raw materials and work in progress, primarily
consisting of unprocessed lumber, being EUR10.3m (2017: EUR6.5m).
The EUR2.5m decrease in finished goods is attributable to higher
sales in the current year, whilst constrained by capacity in our
plant in Arnhem. This is off-set by an increase in raw materials,
attributable to the planned increase in production in the new
financial year to prepare for the start-up of the third reactor in
Arnhem.
Cash and cash equivalents
The Group held cash of EUR39.7m at 31 March 2018 (2017:
EUR41.2m). The decrease in the year is mainly due to cash out-flows
from operating activities before changes in working capital of
EUR4.5m including exceptional items, and expenditure on property,
plant and equipment of EUR29.5m. This is partly offset by EUR12.3m
net proceeds from the issue of share capital in Accsys, EUR14.4m
from the issue of share capital in Tricoya Ventures UK Limited to
non-controlling interests (see note 9), and EUR7.5m from the
drawdown of our loan with Rhodia for the expansion of the plant in
Arnhem. (EUR34.8m of total Group cash balance relates to the
Tricoya(R) consortium and is not directly available for other group
purposes).
EUR2.9m of cash out-flow was attributable to cash flows from
operating activities before changes in working capital (excluding
exceptional items) (2017: EUR0.7m out-flow), as a result of the
increase in the loss before taxation to EUR8.8m (excluding
exceptional items).
EUR2.8m of cash in-flow was attributable to changes in working
capital (2017: EUR0.5m out-flow), including the EUR3.9m increase in
trade and other payables and a EUR0.2m decrease in trade and other
receivables partly offset by a EUR1.3m increase in inventory.
EUR29.9m out-flow in respect of investing activities (2017:
EUR2.6m), included EUR0.4m in respect of capitalised development
costs (2017: EUR0.4m) and EUR29.5m in respect of tangible fixed
assets (2017: EUR6.4m) including in respect of the expansion of the
plant in Arnhem and for the new plant in Hull.
Trade and other receivables
Trade and other receivables have increased to EUR9.3m (2017:
EUR7.6m). Within this, trade receivables increased from EUR4.1m to
EUR6.7m due to high sales in March and with VAT receivable
increased from EUR0.6m to EUR1.5m in line with the increased trade
payables, largely for the plant build in Hull. This was off-set by
a decrease in prepayments from EUR3.3m to EUR2.5m, after an
increase last year due to costs being incurred in respect of the
Company's Firm Placing and Open Offer which completed in April
2017.
Trade and other payables
Trade and other payables increased to EUR18.0m (2017: EUR12.5m).
Included within this, trade payables increased to EUR9.5m (2017:
EUR6.6m), due to an increase in expenditure on tangible fixed
assets for both the Accoya(R) plant in Arnhem, and the Tricoya(R)
plant in Hull. In addition accruals increased from EUR4.5m to
EUR7.1m due largely to EUR4.1m of accruals relating to the
Tricoya(R) plant in Hull (2017: EUR1.0m).
Finance lease creditor
The Group has previously entered into a sale and leaseback
agreement for part of the Arnhem land and buildings. The first
phase resulted in proceeds of EUR2.2m which has been accounted for
as a finance lease. At 31 March 2018 the Group had EUR1.7m as lease
commitments over the remaining life of the lease (2017: EUR1.9m)
(see note 28). The second part of the previous sale and leaseback
of the land in Arnhem was completed in February 2013 and is
accounted for as an operating lease.
The sale of the remaining plot of land completed in August 2016
and under the agreement with the purchaser, Bruil, have constructed
and leased to Accsys new warehouse and office facilities. The
construction is now complete, with a new asset and liability of
EUR10.4m being recognised as at 31 March 2018. A further lease
agreement with Bruil was entered into in the period relating to
infrastructure work associated with the expansion of the chemical
plant. This has been accounted for as a finance lease, with a new
asset and liability of EUR1.9m being recognised as at 31 March 2018
(2017: EUR0.9m).
Long Term Borrowing
Amounts payable under loan agreements increased to EUR29.3m
(2017: EUR20.1m). This increase was largely due to the drawdown of
the remaining Rhodia loan facility of EUR7.5m in the period, which
has been utilised to fund the costs of the third reactor. The
remaining EUR1.7m increase relates to the roll up of interest and
fees on all facilities, as no repayments were due in the year (see
note 29).
Non-controlling interests
Part of the agreements relating to the formation of the
Tricoya(R) Consortium on 29 March 2017 included equity investment
by the consortium members. During the year a total of EUR14.4m of
equity was issued by TVUK to BP and Medite. This has resulted in an
increase in the non-controlling interest of EUR30.3m as at 31 March
2018 (2017: EUR12.6m). In the prior year, the difference between
the cash received and non-controlling interest recorded was due to
the Tricoya(R) Consortium agreements recognising Accsys'
contribution of IP and historical development work, with an implied
pre-funding valuation of EUR35m.
Capital structure
Details of the issued share capital, together with the details
of the movements in the Company's issued share capital in the year
are included in note 24. The Company has one class of ordinary
shares which carry no right to fixed income. Each share carries the
right to one vote at general meetings of the Company. Details of
non-controlling interests associated with TTL and TVUK are
summarised above and set out in note 9.
There are no specific restrictions on the size of a holding nor
on the transfer of the Company's shares, which are both governed by
the general provisions of the Articles of Association and
prevailing legislation. The Directors are not aware of any
agreements between holders of the Company's shares that may result
in restrictions on the transfer of securities or on voting
rights.
Details of employee share schemes are set out in note 15. No
person has any special rights of control over the Company's share
capital and all issued shares are fully paid.
Going concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, and at least 12 months from the date
these financial statements are 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 the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and eventually, of Tricoya(R) chips from
the new plant in Hull, with the collection of on-going working
capital items in line with internally agreed budgets. The Group is
also dependent upon certain banking and finance facilities which
are in place.
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 that 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
18 June 2018
Accsys Technologies PLC
Director's Report for the year ended 31 March 2018
The Directors present their report together with the audited
consolidated financial statements for the year ended 31 March
2018.
Results and dividends
The consolidated statement of comprehensive income for the year
shows the loss for the year.
The Directors do not recommend the proposal of a final dividend
in respect of the current year, consistent with the prior year.
Principal activities and review of the business
The principal activities of the Group are the production and
sale of Accoya(R) solid wood and Tricoya(R) wood elements,
technology and product development as well as the licensing of
technology for the production and sale of Accoya(R) and Tricoya(R)
via the Company's subsidiaries, Titan Wood Limited, Titan Wood
B.V., Titan Wood Technology B.V., Titan Wood Inc., Tricoya
Technologies Limited and Tricoya Ventures UK Limited (collectively
the 'Group'). Manufactured through the Group's proprietary
acetylation processes, these products exhibit superior dimensional
stability and durability compared with alternative natural, treated
and modified woods as well as more resource intensive man-made
materials. A review of the business is set out in the Chairman's
statement and the Chief Executive's report. Accsys Technologies PLC
is a public limited company, which is listed on London Stock
Exchange AIM and Euronext Amsterdam, and incorporated and domiciled
in the UK.
Business model and Strategy
The Business model and Strategy section sets out the Company's
strategy, business model and key performance indicators.
Financial instruments
Details of the use of financial instruments by the Company and
its subsidiary undertakings are set out in Note 31 of the financial
statements.
Share issues
On 24 April 2017 a total of 20,323,986 of EUR0.05 Ordinary
shares were issued at EUR0.69 per share, in accordance with the
Company's capital raise announced on the 29 March 2017.
97,720 shares were issued on 23 June 2017 to an Employee Benefit
Trust ('EBT') at nominal value.
198,154 shares were issued on 27 September 2017 to an Employee
Benefit Trust ('EBT') at nominal value.
106,189 shares were issued on 27 September 2017 to an employee
following the exercise of nil cost options, granted in 2013 under
the Company's 2013 Long Term Incentive Plan ('LTIP')
143,511 shares were issued on 26 February 2018 to an
ex-employee. 118,511 of these Shares were issued following the
exercise of nil cost options, granted in 2013 under the Company's
2013 Long Term Incentive Plan ('LTIP'), with the balance of 25,000
Shares issued as part of the individual's severance terms.
Principal risks and uncertainties
The business, financial condition or results of operations of
the Group could be adversely affected by any of the risks set out
in the Strategic Report. The Group's systems of control and
protection are designed to help manage and control risks to an
appropriate level rather than to eliminate them.
The Directors consider that the principal risks to achieving the
Group's objectives are set out in the Strategic Report.
Greenhouse gas ('GHG') emissions
The table below represents all the emission sources required
under the Companies Act 2006 (Strategic Report and Directors'
Reports) Regulations 2013 for our manufacturing facility in Arnhem,
the Netherlands.
Global GHG emissions data for year 1 April 2017 to 31 March 2018
2017-2018 2016-2017 2015-2016
--------------------------- --------------------------- ----------------------
kg CO2eq
--------------------------------------------------------------------------------
Electricity, heat, steam and
cooling for
own use - GROSS 3,234,185 2,804,839 3,309,630
--------------------------- --------------------------- ----------------------
Electricity, heat, steam and
cooling for
own use - NET (including Renewable
Energy
Credits) 1,941,139 1,511,794 1,651,470
--------------------------- --------------------------- ----------------------
Combustion of fuel & operation of
production
facility (MP4), in Arnhem, the
Netherlands 3,117,809 3,109,664 2,726,868
--------------------------- --------------------------- ----------------------
TOTAL - GROSS 6,351,994 5,914,503 6,036,498
--------------------------- --------------------------- ----------------------
External carbon offsets (Voluntary
Carbon
Offsetting through BP Target
Neutral) - 1,524,000 - 1,524,000 - 1,420,000
--------------------------- --------------------------- ----------------------
TOTAL - NET (including Renewable
Energy
Credits / Carbon offsets) 3,534,948 3,097,458 2,958,338
--------------------------- --------------------------- ----------------------
Chosen intensity measurement:
Emissions
per cubic meter Accoya produced -
GROSS 162 155 181
--------------------------- --------------------------- ----------------------
Chosen intensity measurement:
Emissions
per cubic meter Accoya produced -
NET (including
Renewable Energy Credits / Carbon
offsets) 90 81 88
--------------------------- --------------------------- ----------------------
Notes:
- We have reported on all the emission sources required under
the Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013 for our manufacturing facility in Arnhem, the
Netherlands.
- Due to unavailability of data, GHG emissions related to our
offices and staff travel are not included in the figures above.
- Emissions have been calculated following the GHG Protocol -
Corporate Accounting and Reporting (revised edition) using the
following databases: IPCC 2006 Guidelines for National Greenhouse
Gas Inventories, 2007 IPCC Fourth Assessment Report and Eco-Invent
v3.3.
- Note that following Environmental Reporting Guidelines of
Defra (2013), carbon offsets may be accounted for separately as a
"NET" figure, while the original electricity consumption figures
should be presented as a "GROSS" figure.
- Following the same (Defra 2013) guidelines, the emissions
associated with our supply chain (inputs and outputs) are not
included in the figures above, for readers that are interested in
the supply chain related figures we refer to our publicly available
carbon footprint report:
http://www.accoya.com/wp-content/uploads/2013/09/Verco-Cradle-to-gate-carbon-footprint-update-2012.pdf
and Environmental Product Declaration (EN 15804):
https://www.accoya.com/wp-content/uploads/2015/06/NEPD-376-262-EN-Accsys-Technologies-Accoya-Wood.pdf.
Further details concerning the environmental impact of our
products as a whole are detailed in the Sustainability Report,
including an assessment of the overall life cycle of Accoya(R)
.
Directors
The Directors of the Company during the year and up to the date
of signing the financial statements were:
Sean Christie
Paul Clegg
Sue Farr
Montague John 'Nick' Meyer
Hans Pauli
William Rudge
Patrick Shanley
Trudy Schoolenberg (appointed 1 April 2018)
Directors' indemnities
The Company maintains directors' and officers' liability
insurance which gives appropriate cover for legal action brought
against its Directors. The policy was in force throughout the
period and at the date of the approval of these financial
statements.
Employment policies
The Group operates an equal opportunities policy from
recruitment and selection, through training and development,
appraisal and promotion to retirement. It is our policy to promote
an environment free from discrimination, harassment and
victimisation, where everyone will receive equal treatment
regardless of gender, colour, ethnic or national origin,
disability, age, marital status or sexual orientation. All
decisions relating to employment practises will be objective, free
from bias and based solely upon work criteria and individual
merit.
19% of employees in the year ended 31 March 2018 were female.
25% of the senior management team were female and one of the Board
of Directors was female.
Health and safety
Health and safety is the priority at all levels of the Group, in
particular taking into account the chemical industry in which
Accsys operates. Group companies have a responsibility to ensure
that all reasonable precautions are taken to provide and maintain
working conditions for employees and visitors alike, which are
safe, healthy and in compliance with statutory requirements and
appropriate codes of practice.
The avoidance of occupational accidents and illnesses is given a
high priority. Detailed policies and procedures are in place to
minimise risks and ensure appropriate action is understood in the
event of an incident. A dedicated health and safety officer is
retained at the Group's manufacturing facilities in Arnhem and
Hull.
Significant shareholdings
So far as the Company is aware (further to formal notification),
the following shareholders held legal or beneficial interests in
ordinary shares of the Company exceeding 3%:
-- Teslin Participaties Cooperatief U.A. 12.22%
-- Henderson Group PLC 5.94%
-- Decico BV 5.07%
-- Majedie UK Equity Fund 5.06%
-- Invesco Limited 4.87%
-- The London & Amsterdam Trust Company Limited 4.51%
-- FIL Limited (formerly known as Fidelity International Limited) 4.26%
-- Saad Investments Company Limited 3.92%
-- Zurab Lysov 3.71%
There are no restrictions in respect of voting rights.
Going concern
The Directors have formed a judgement, at the time of approving
the financial statements that there is a reasonable expectation
that the Group has access to adequate resources to continue in
operational existence for at least the next 12 months. Further
details are set out in note 1 to these financial statements.
Corporate Governance
The Company's statement on corporate governance can be found in
the corporate governance report of these financial statements. The
corporate governance report forms part of this directors' report
and is incorporated into it by cross-reference.
Disclosure of information to auditors
Each of the persons who is a Director at the date of the
approval of the Annual Report confirms that:
-- So far as the Director is aware, there is no relevant audit
information of which the Company's Auditors are unaware; and
-- The Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's Auditors are
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their willingness to
continue in office as auditors and a resolution to re--appoint them
will be proposed at the annual general meeting.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- The Group financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Group.
-- The annual report includes a fair review of the development
and performance of the business and the financial position of the
Group and the parent Company, together with a description of the
principal risks and uncertainties that they face.
By order of the Board
Angus Dodwell
Company Secretary
18 June 2018
Accsys Technologies PLC
Corporate Governance
Details of the Company's corporate governance arrangements are
set out below. The Board of Directors acknowledges the importance
of the Principles set out in The UK Corporate Governance Code
issued by the Financial Reporting Council (FRC) in 2016. The FRC's
UK Corporate Governance Code is not currently compulsory for AIM
listed or Euronext listed companies however, during the past year,
the Board has applied its principles as far as practicable and
appropriate for a relatively small public company. The Board is now
reviewing the most appropriate recognised code for it to apply in
advance of AIM rule 26 becoming effective in September 2018.
The Board of Directors
During the year the Board comprised a Non-executive Chairman,
three Non-executive Directors and three Executive Directors, with
an additional Non-executive Director, Trudy Schoolenberg, being
appointed on the 1(st) April 2018 who is also the Senior
Independent Director.
The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the framework
of internal controls. To enable the Board to discharge its duties,
all Directors receive appropriate and timely information. Briefing
papers are distributed to all Directors in advance of Board
meetings. All Directors have access to the advice and services of
the Company Secretary. The appointment and removal of the Company
Secretary is a matter for the Board as a whole. In addition,
procedures are in place to enable the Directors to obtain
independent professional advice in the furtherance of their duties,
if necessary, at the Company's expense.
During the year, all serving Directors attended the quarterly
Board meetings that were held. In addition to the scheduled
meetings there is frequent contact between all the Directors in
connection with the Company's business including Audit and
Nomination and Remuneration committee meetings which are held as
required, but as a minimum twice per annum.
Directors are subject to re-election by the shareholders at
Annual General Meetings. The Articles of Association provide that
Directors will be subject to re-election at the first opportunity
after their appointment and the Board submit to re-election at
intervals of three years.
Day to day operating decisions are made by the Senior Management
Team of which the Chief Executive Officer, the Executive Director,
Corporate Development and Finance Director are members.
Audit Committee
The Audit Committee consisted of Sean Christie (Chairman),
Patrick Shanley, Nick Meyer and Sue Farr, with Trudy Schoolenberg
being appointed on the 1(st) April 2018. The Audit Committee meets
at least twice a year and is responsible for monitoring compliance
with accounting and legal requirements and for reviewing the annual
and interim financial statements prior to their submission for
approval by the Board. The Committee also discusses the scope of
the audit and its findings and considers the appointment and fees
of the external auditors. The Audit Committee continues to believe
that it is not currently appropriate for the Company to maintain a
dedicated internal audit function due to its size.
The Audit Committee considers the independence and objectivity
of the external auditors on an annual basis, with particular regard
to non-audit services. The non-audit fees are considered by the
Board not to affect the independence or objectivity of the
auditors. The Audit Committee monitors such costs in the context of
the audit fee for the period, ensuring that the value of non-audit
service does not increase to a level where it could affect the
auditors' objectivity and independence. The Board also receives an
annual confirmation of independence from the auditors.
Nominations & Remuneration Committee
The Nominations and Remuneration Committee consists of Sue Farr
(Chairman), Patrick Shanley, Sean Christie and Nick Meyer, with
Trudy Schoolenberg being appointed on the 1(st) April 2018. The
Committee's role is to consider and approve the nomination of
Directors and the remuneration and benefits of the Executive
Directors, including the award of share options and bonus share
awards. In framing the Company's remuneration policy, the
Nominations & Remuneration Committee has given full
consideration to Section D of The UK Corporate Governance Code.
Internal Financial Control
The Board is responsible for establishing and maintaining the
Company's system of internal financial control and places
importance on maintaining a strong control environment. The key
procedures which the Directors have established with a view to
providing effective internal financial control are as follows:
-- The Company's organisational structure has clear lines of responsibility;
-- The Company prepares a comprehensive annual budget that is
approved by the Board. Monthly results are reported against the
budget and variances are closely monitored by the Directors;
and
-- The Board is responsible for identifying the major business
risks faced by the Company and for determining the appropriate
courses of action to manage those risks.
The Directors recognise, however, that such a system of internal
financial control can only provide reasonable, not absolute,
assurance against material misstatement or loss.
Relations with shareholders
Communications with shareholders are given high priority.
There is regular dialogue with shareholders including
presentations after the Company's preliminary announcement of the
year-end results and six monthly results. The Board uses the Annual
General Meeting to communicate with investors and welcomes their
participation. The Chairman aims to ensure that the Directors are
available at Annual General Meetings to answer questions.
Directors' attendance record
The attendance of individual Directors at meetings of the Board
and its committees in the year under review was as follows:
Board Audit Committee Nomination
& Remuneration
Committee
Number of meetings Attended Serving(1) Attended(2) Serving Attended(3) Serving
Michael 'Sean' Christie 7 10 3 3 5 5
Paul Clegg 10 10 3 - 1 -
Sue Farr 9 10 3 3 5 5
Hans Pauli 8 10 3 - 1 -
Patrick Shanley 8 10 3 3 5 5
Montague John 'Nick'
Meyer 6 10 2 3 4 5
William Rudge 10 10 3 - 1 -
Whilst all Directors are not members of the Board Committees
they attend by invitation.
Figures in the left hand column denote the number of meetings
attended and figures in the right hand column denote the number of
meetings held whilst the individual held office.
Notes
1. During the year there were 8 full board meetings, of which 2
meetings were convened on an ad hoc basis. In addition, 2 ad hoc
meetings of a committee of the board were convened. Patrick Shanley
and Hans Pauli attended all 8 full board meetings, Sue Farr
attended all 8 board meetings and one committee meeting. Sean
Christie attended 7 out of 8 full board meetings, being unable to
attend 1 ad hoc meeting. Nick Meyer attended 6 out of 8 full board
meetings, being unable to attend 1 ad hoc meeting. William Rudge
and Paul Clegg attended all full board and committee meetings.
2. Messrs Clegg, Pauli and Rudge attended for part of the three
audit committee meetings held on 14 June 2017, 16 November 2017 and
13 March 2018
3. Messrs Clegg, Pauli and Rudge attended for part of the
Nomination & Remuneration Committee meeting held on 2 February
2018.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year ended
31 March 2018
2018 2018 2018 2017 2017 2017
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Before Before
exceptional Exceptional exceptional
items & items and items & Exceptional
other other other items and
Note adjustments* adjustments* Total adjustments* other adjustments* Total
Accoya(R) wood
revenue 56,331 - 56,331 50,655 - 50,655
Licence revenue 200 - 200 1,576 - 1,576
Other revenue 4,380 - 4,380 4,298 - 4,298
------------------ ----- ------------- -------------- ---------- -------------- -------------------- ----------
Total revenue 3 60,911 - 60,911 56,529 - 56,529
Cost of sales (47,270) - (47,270) (42,175) - (42,175)
Gross profit 13,641 - 13,641 14,354 - 14,354
Other operating
costs 4 (20,218) (2,184) (22,402) (18,551) (343) (18,894)
Other gains 5 - 32 32 - 635 635
Operating
(loss)/gain 8 (6,577) (2,152) (8,729) (4,197) 292 (3,905)
Finance income 10 - - - 2 - 2
Finance expense 11 (2,174) 502 (1,672) (302) (258) (560)
(Loss)/Gain
before
taxation (8,751) (1,650) (10,401) (4,497) 34 (4,463)
Tax
credit/(expense) 12 251 - 251 (666) - (666)
(Loss)/gain for
the year (8,500) (1,650) (10,150) (5,163) 34 (5,129)
============= ============== ========== ============== ==================== ==========
(56) - (56) (108) - (108)
Loss arising on
translation of
foreign
operations, which
could
subsequently be
reclassified into
profit or loss
Gain arising on
foreign currency
hedging, which
will not be
reclassified
into
profit or loss - 202 202 - 104 104
Total other
comprehensive
(loss)/income (56) 202 146 (108) 104 (4)
------------- -------------- ---------- -------------- -------------------- ----------
Total
comprehensive
(loss)/gain for
the year (8,556) (1,449) (10,004) (5,271) 138 (5,133)
============= ============== ========== ============== ==================== ==========
Total
comprehensive
(loss)/gain for
the year is
attributable to:
Owners of Accsys
Technologies PLC (7,592) (1,449) (9,040) (5,058) 68 (4,990)
Non-controlling
interests (964) - (964) (213) 70 (143)
Total
comprehensive
(loss)/gain for
the year (8,556) (1,449) (10,004) (5,271) 138 (5,133)
============= ============== ========== ============== ==================== ==========
Basic and diluted
loss per
ordinary
share 14 EUR(0.07) EUR(0.08) EUR(0.05) EUR(0.06)
Prior year has been restated to reflect the adoption of IFRS 9
and to represent exceptional and other adjustments on a consistent
basis (see note 5).
The notes form an integral part of these financial
statements.
* See note 5 for details of exceptional items and other
adjustments
Accsys Technologies PLC
Consolidated statement of financial position as at 31 March
2018
Registered Company 05534340
Note 2018 2017
EUR'000 EUR'000
(restated)
Non-current assets
Intangible assets 16 10,653 10,839
Property, plant and equipment 17 60,835 21,681
Available for sale investments 18 - -
71,488 32,520
-------------------- --------------------
Current assets
Inventories 21 13,125 11,796
Trade and other receivables 22 9,335 7,612
Cash and cash equivalents 39,698 41,173
Corporation tax receivable 1,347 687
63,505 61,268
-------------------- --------------------
Current liabilities
Trade and other payables 23 (18,012) (12,524)
Obligation under finance lease 28 (1,323) (455)
Other Long Term Borrowing 29 (2,062) -
Corporation tax payable (17) (1,620)
(21,414) (14,599)
-------------------- --------------------
Net current assets 42,091 46,669
Non-current liabilities
Obligation under finance lease 28 (12,849) (2,621)
Other Long Term Borrowing 29 (27,235) (20,097)
(40,084) (22,718)
-------------------- --------------------
Net assets 73,495 56,471
==================== ====================
Equity
Share capital 24 5,576 4,531
Share premium account 140,036 128,792
Other Reserves 25 109,425 113,460
Accumulated loss (211,830) (202,944)
Own shares (15) (33)
Foreign currency translation reserve (11) 45
Capital value attributable to owners of Accsys Technologies PLC 43,181 43,851
Non-controlling interest in subsidiaries 30,314 12,620
Total equity 73,495 56,471
==================== ====================
The financial statements were approved by the Board of Directors
on 18 June 2018 and signed on its behalf by
Paul Clegg
William Rudge Directors
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended 31
March 2018
Total
equity
Foreign attributable
currency to equity
Share trans- shareholders
capital Share Other Own lation Accumu-lated of the Non-Controlling Total
Ordinary premium reserves Shares reserve Loss company interests Equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at
31 March
2016 4,495 128,792 107,441 (47) 153 (198,842) 41,992 61 42,053
============= ========= ========= ============ ========= ============= ================ ================= =========
Total
comprehensive
income/(expense)
for the period - - 104 - (108) (4,986) (4,990) (143) (5,133)
Share based
payments - - - - - 884 884 - 884
Shares issued 36 - - 14 - - 50 - 50
Issue of
subsidiary
shares to
non-controlling
interests - - 6,491 - - - 6,491 12,702 19,193
Issue of
subsidiary
shares to
Group companies - - (576) - - - (576) - (576)
Balance at
31 March
2017 4,531 128,792 113,460 (33) 45 (202,944) 43,851 12,620 56,471
============= ========= ========= ============ ========= ============= ================ ================= =========
Total
comprehensive
income/(expense)
for the period - - 202 - (56) (9,186) (9,040) (964) (10,004)
Share based
payments - - - - - 300 300 - 300
Shares issued 1,045 - - 18 - - 1,063 - 1,063
Premium on
shares issued - 13,007 - - - - 13,007 - 13,007
Share issue
costs - (1,763) - - - - (1,763) - (1,763)
Issue of
subsidiary
shares to
non-controlling
interests - - (4,237) - - - (4,237) 18,658 14,421
Balance at
31 March
2018 5,576 140,036 109,425 (15) (11) (211,830) 43,181 30,314 73,495
============= ========= ========= ============ ========= ============= ================ ================= =========
Prior year has been restated to reflect the adoption of IFRS 9
(see note 5).
Share capital is the amount subscribed for shares at nominal
value (note 24).
Share premium account represents the excess of the amount
subscribed for share capital over the nominal value of these
shares, net of share issue expenses. Share issue expenses comprise
the costs in respect of the issue by the Company of new shares.
See note 25 for details concerning Other reserves
Non-controlling interests relates to the investment of various
parties into Tricoya Technologies Limited and Tricoya Ventures UK
Limited (notes 9 and 25).
Own shares represents a total of 97,720 and 198,154 shares
issued to an Employee Benefit Trust ('EBT') at nominal value on 23
June 2017 and 27 September 2017 respectively. These shares shall
vest if the employees, remain in employment with the Company to the
vesting date, being 1 July 2018 (subject to certain other
provisions including good-leaver, take-over and committee
discretion provisions). (note 15).
Foreign currency translation reserve arises on the
re-translation of the Group's USA subsidiary's net assets which are
denominated in a different functional currency, being US
dollars.
Accumulated losses represent the cumulative loss of the Group
attributable to the owners of the parent.
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March
2018
2018 2017
EUR'000 EUR'000
Loss before taxation before exceptional items and other adjustments (8,751) (4,497)
Adjustments for:
Amortisation of intangible assets 582 556
Depreciation of land, property, plant and equipment 2,496 2,157
Net loss on disposal of property, plant and equipment - 55
Net finance expense 2,174 302
Equity-settled share-based payment expenses 300 884
Currency translation losses/(gains) 268 (129)
Cash flows used in operating activities before changes in working
capital (2,931) (672)
Exceptional Items in operating activities (see note 5) (1,617) (517)
Cash outflows from operating activities before changes in working
capital (4,548) (1,189)
===================== ===================
Decrease/(Increase) in trade and other receivables 215 (2,936)
Increase in inventories (1,331) (3,322)
Increase in trade and other payables 3,908 5,737
Net cash used in operating activities before tax (1,756) (1,710)
Tax (paid) (2,013) (745)
Net cash absorbed by operating activities (3,769) (2,455)
===================== ===================
Cash flows from investing activities
Interest received 45 2
Proceeds from disposal of property, plant and equipment 32 4,223
Expenditure on property, plant and equipment (29,530) (6,416)
Expenditure on intangible assets (397) (415)
Net cash used in investing activities (29,850) (2,606)
===================== ===================
Cash flows from financing activities
Proceeds from loans 7,500 20,736
Other financing costs (325) (954)
Interest paid (716) (250)
Repayment of finance lease (322) (173)
Proceeds from issue of share capital 14,079 50
Proceeds from issue of subsidiary shares to non-controlling interests 14,420 19,122
Share issue costs (1,771) (805)
Net cash from financing activities 32,865 37,726
===================== ===================
Net (decrease)/increase in cash and cash equivalents (754) 32,665
Effect of exchange rate changes on cash and cash equivalents (721) 322
Opening cash and cash equivalents 41,173 8,186
Closing cash and cash equivalents 39,698 41,173
===================== ===================
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Notes to the financial statements for the year ending 31 March
2018
1. Accounting Policies
General information
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the
periods ended 31 March 2018 or 31 March 2017. Statutory accounts
for the period ended 31 March 2017 have been filed with the
Registrar of Companies and those for the period ended 31 March 2018
will be delivered to the Registrar in due course; both have been
reported on by the auditors. The auditors' report on the Annual
Report and Financial Statements for the period ended 31 March 2017
was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The auditors' report on the Annual Report and Financial
Statements for the period ended 31 March 2018 is unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Basis of accounting
The Group's financial statements have been prepared under the
historical cost convention (except for certain financial
instruments and equity investments which are measured at fair
value), in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards
Board as endorsed by the European Union, interpretations issued by
the IFRS Interpretations Committee (IFRS IC) and with those parts
of the Companies Act 2006 applicable to companies preparing their
financial statements under adopted IFRS.
Going Concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, and at least 12 months from the date
these financial statements are 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 the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and eventually, of Tricoya(R) chips from
the new plant in Hull, with the collection of on-going working
capital items in line with internally agreed budgets. The Group is
also dependent upon certain banking and finance facilities which
are in place.
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 that 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.
Changes in accounting policies
No new accounting standards, amendments or interpretations have
been adopted in the period which has any impact on these financial
statements, other than noted below.
The accounting policies and methods of computation are
consistent with those applied in the 31 March 2017 annual financial
statements, other than during the period IFRS9, Financial
Instruments has been adopted together with hedge accounting in
respect of the future currency exposures in respect of the
Tricoya(R) plant construction. The previous year's figures have
been restated and represented accordingly. An assessment was
carried out to identify all areas impacted under the adoption of
IFRS 9 and currently there is no other impact for the year ending
31 March 2018.
Exceptional Items
Exceptional items are events or transactions that fall outside
the ordinary activities of the Group and which by virtue of their
size or incidence, have been separately disclosed in order to
improve a reader's understanding of the financial statements. These
include items relating to the restructuring of a significant part
of the Group, impairment losses (or the reversal of previously
recorded exceptional impairments), expenditure relating to the
integration and implementation of significant acquisitions and
other one-off events or transactions. See note 5 for details of
exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Group as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected
prior to transition to IFRS, were accounted for using the merger
method of accounting. Under this method, assets and liabilities are
included in the consolidation at their book values, not fair
values, and any differences between the cost of investment and net
assets acquired were taken to the merger reserve. The majority of
the merger reserve arose from a corporate restructuring in the year
ended 31 March 2006 which introduced Accsys Technologies PLC as the
new holding company.
Further details concerning the Tricoya(R) Consortium are
included in note 9.
Revenue recognition
Revenue is measured at the fair value of the consideration
receivable. Revenue is recognised to the extent that it is probable
that the economic benefit will flow to the Group and that the
revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is
recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the
significant risks and rewards of ownership of the goods have been
passed to the buyer, the timing of which is dependent on the
particular shipment terms. When a customer provides untreated wood
to be processed by the Group in order to produce Accoya(R) ,
revenue is recognised when the Group's obligations under the
relevant customer contract have been substantially completed, which
is before the finished Accoya(R) has been collected by the
customer. Manufacturing revenue includes the sale of Accoya(R) wood
and other revenue, principally relating to the sale of acetic
acid.
Licensing fees and Marketing income
Licence fee and marketing income is recognised over the period
of the relevant agreements according to the specific terms of each
agreement or the quantities and/or values of the licensed product
sold. The accounting policy for the recognition of licence fees is
based upon an assessment of the work required before the licence is
signed and subsequently during the design, construction and
commissioning of the licensees' plant, with an appropriate
proportion of the fee recognised upon signing and the balance
recognised as the project progresses to completion. Marketing
revenue when the company acts as principal is recognised based on
the actual work completed in the period. The amount of any cash or
billings received but not recognised as income is included in the
financial statements as deferred income and shown as a
liability.
Finance income
Interest accrues using the effective interest method, i.e. the
rate that discounts estimated future cash receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset.
Finance expense
Finance expenses include the fees, interest and other finance
charges associated with the Group's loan notes and credit
facilities, which are expensed over the period that the Group has
access to the loans and facilities.
Foreign exchange gains or losses on the loan notes are included
within finance expenses.
Interest on the GBP16.25 million unsecured fixed rate loan notes
issued to Business Growth Fund ('BGF') and Volantis has been
expensed. Interest on the EUR9.5 million term loan drawn down from
Rhodia Acetow GmBH, to part-finance capital expenditure at the
Arnhem plant, has been capitalised as it is directly attributable
to the expansion. In addition interest and other charges on the
EUR17.2m facility with Royal Bank of Scotland Plc, to part-finance
capital expenditure at the Hull plant, has been capitalised as it
is directly attributable to the plant build.
Finance expenses also include an allocation of finance charges
in respect of the sale and leaseback of the Arnhem land and
buildings, and the lease of London Office fit out and furniture,
accounted for as a finance lease. The total finance charge
(calculated as the difference between the total minimum lease
payments and the liability at the inception of the lease) is
allocated over the life of the lease using the sum-of-digits
method.
Share based payments
The Company awards nil cost options to acquire shares of the
Company to certain Directors and employees. The Company also awards
bonuses to certain employees in the form of the award of deferred
shares of the Company.
The fair value of options, deferred shares and matching shares
granted are recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and is
charged to the statement of comprehensive income over the vesting
period during which the employees become unconditionally entitled
to the options or shares.
The fair value of share options granted is measured using a
modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest only where vesting is dependent upon the
satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Dividends
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders
at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension
and employee benefit schemes on behalf of its employees. These
costs are charged to the statement of comprehensive income on an
accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date together with any adjustment to tax payable
in respect of previous years. Current tax includes the expected
impact of claims submitted by the Group to tax authorities in
respect of enhanced tax relief for expenditure on research and
development.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
-- the initial recognition of goodwill,
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination, and
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Recognition of deferred tax
assets is restricted to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (the functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each Group company are expressed in Euro, which is the
functional currency of the parent Company, and the presentation
currency of the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average monthly exchange rates prevailing in the month in which the
transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income, finance expense and the
foreign currency translation reserve.
Foreign exchange hedging
The Group has adopted IFRS 9 hedge accounting in respect of the
cash flow hedging instruments that it uses to manage the risk of
foreign exchange movements impacting on future cash flows and
profitability. In adopting IFRS 9 the Group has retrospectively
applied the standard to restate prior period comparatives.
The Group has prospectively assessed the effectiveness of its
cash flow hedging using the 'hedge ratio' of quantities of cash
held in the same currency as future foreign exchange cash flow
quantities related to committed investment in plant and equipment.
The Group has undertaken a qualitative analysis to confirm that an
'economic relationship' exists between the hedging instrument and
the hedged item. It is also satisfied that credit risk will not
dominate the value changes that result from that economic
relationship.
At the end of each reporting period the Group measures the
effectiveness of its cash flow hedging and recognises the effective
cash flow hedge results in Other Comprehensive Income and the
Hedging Effectiveness Reserve within Equity, together with its
ineffective hedge results in Profit and Loss. Amounts are
reclassified from the Hedging Effectiveness Reserve to Profit and
Loss when the associated hedged transaction affects Profit and
Loss. Further details are included in Note 5.
Apart from the above, the directors do not anticipate that the
application of the IFRS 9 hedge accounting requirements have had a
material impact on the Group's consolidated financial
statements.
Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and the
Group will comply with the attached conditions. When the grant
relates to an expense item, it is recognised as income over the
period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. Where the grant relates to
an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected
useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration paid
and the fair value of the identifiable assets and liabilities
acquired. It is capitalised, and is subject to annual impairment
reviews by the Directors. Any impairment arising is charged to the
statement of comprehensive income. Where the fair value of the
identifiable assets and liabilities acquired is greater than the
fair value of consideration paid, the resulting amount is treated
as a gain on a bargain purchase and has been recognised in the
income statement.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any
amounts by which the carrying value is assessed during an annual
review to have been impaired. At present, the useful economic life
of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's
activities including new processes, process improvements,
identifying new species and improving the Group's existing
products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38
'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to
generate future economic benefits, ability to complete the
development and ability to reliably measure the expenditure) have
been met. These internal development costs are amortised on a
straight line basis over their useful economic life, between 10 and
20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of
bringing the asset to the working condition and location of its
intended use. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset, except
freehold land, over its expected useful life on a straight line
basis, as follows:
Plant and machinery These assets comprise pilot plants and
production facilities. These facilities are depreciated from the
date they become available for use at rates applicable to the asset
lives expected for each class of asset, with rates between 5% and
20%.
Office equipment Between 20% and 50%.
Leased land and buildings Land held under a finance lease is
depreciated over the life of the lease.
Freehold land Freehold land is not depreciated.
Impairment of non-financial assets
The carrying amount of the non-current non-financial assets of
the Group is compared to the recoverable amount of the assets
whenever events or changes in circumstances indicate that the net
book value may not be recoverable, or in the case of goodwill,
annually. The recoverable amount is the higher of value in use and
the fair value less cost to sell. In assessing the value in use,
the expected future cash flows from the assets are determined by
applying a discount rate to the anticipated pre-tax future cash
flows. An impairment charge is recognised in the statement of
comprehensive income to the extent that the carrying amount exceeds
the assets' recoverable amount. The revised carrying amounts are
amortised or depreciated in line with Group accounting policies. A
previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the statement of
comprehensive income and is limited to the carrying amount that
would have been determined, net of depreciation, had no impairment
loss been recognised in prior years. Assets are grouped at the
lowest levels for which there are separately identifiable cash
flows (cash generating units) for purposes of assessing
impairment.
Leases
Operating lease payments are recognised as an expense in the
statement of comprehensive income on a straight-line basis over the
lease term.
Assets held under finance leases are recognised as assets of the
Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are
apportioned between finance expenses and reduction of lease
obligation so as to achieve a constant rate of interest on the
remaining balance of the liability.
Inventories
Raw materials, which consist of unprocessed timber and chemicals
used in manufacturing operations, are valued at the lower of cost
and net realisable value. The basis on which cost is derived is a
first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the
lower of weighted average cost of production or net realisable
value. Costs include direct materials, direct labour costs and
production overheads (excluding the depreciation/depletion of
relevant property and plant and equipment) absorbed at an
appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to
completion and costs to be incurred in selling and
distribution.
Financial assets
Financial assets are classified as cash and cash equivalents,
available for sale investments and loans and receivables, depending
on the purpose for which the asset was acquired. When financial
assets are recognised initially, they are measured at fair value
plus, in the case of investments not at fair value, through profit
or loss directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted
shares held by the Group are classified as available for sale
investments and are stated at fair value. Gains and losses arising
from changes in fair value are recognised directly in equity, with
the exception of impairment losses which are recognised directly in
profit or loss. Where an investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously recognised
in the profit or loss in the year. Where it is not possible to
obtain a reliable fair value, these investments are held at cost
less provision for impairment.
Loans and receivables, which comprise non-derivative financial
assets with fixed and determinable payments that are not quoted on
an active market, are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. They
arise principally from the provision of goods and services to
customers. Trade receivables are initially recognised at fair value
less an allowance for any uncollectible amounts. A provision for
impairment is made when there is objective evidence that the Group
will not be able to collect debts. Bad debts are written off when
identified. The Group has elected to apply the IFRS 9 practical
expedient option to measuring the value of its trade receivables at
transaction price, as they do not contain a significant financing
element. The Group's trade receivables do not have a significant
financing element, as the expected term is less than one year.
Consequently, the Group applies IFRS 9's 'simplified' approach that
requires companies to recognise the lifetime expected losses on its
trade receivables when they do not contain a significant financing
element.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand and short-term deposits,
including liquidity funds, with an original maturity of three
months or less. For the purpose of the statement of consolidated
cash flow, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially
recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Loans and other borrowings are initially recognised at the fair
value of amounts received net of transaction costs and subsequently
measured at amortised cost using the effective interest method.
There have been no modifications to the terms of the Group's loan
agreements requiring disclosure under IFRS 9.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's shares are classified as equity
instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief executive. The chief
executive is responsible for allocating resources and assessing
performance of the operating segments, has been identified as
steering the committee that makes strategic decisions.
2. Accounting judgements and estimates
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Accounting estimates
Useful economic lives of property, plant and equipment
The annual depreciation charge for property, plant and equipment
is sensitive to changes in the estimated useful economic lives and
residual values of the assets. The useful economic lives and
residual values are re-assessed annually. They are amended when
necessary to reflect current estimates, based on technological
advancement, future investments, economic utilisation and the
physical condition of the assets. See note 17 for the carrying
amount of the property plant and equipment, and note 1 for the
useful economic lives for each class of assets.
Inventories
The Group reviews the net realisable value of, and demand for,
its inventory on a monthly basis to provide assurance that recorded
inventory is stated at the lower of cost and net realisable value
after taking into account the age and condition of inventory.
Accounting judgements
In preparing the Consolidated Financial Statements, management
has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical
judgments that have been made in arriving at the amounts recognised
in the Consolidated Financial Statements and the key sources of
uncertainty that have a significant risk of causing a material
adjustment to the carrying value of assets and liabilities in the
next financial year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of fee
income from licensees over the period of the agreement and is
satisfied that the recognition of such revenue is appropriate. The
recognition of fees is based upon an assessment of the work
required before the licence is signed and subsequently during the
construction and commissioning of the licensees' plant, with an
appropriate proportion of the fee recognised upon signing and the
balance recognised as the project progresses to completion. The
Group also considers the recoverability of amounts before
recognising them as income.
Goodwill
The Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated above.
The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations
require the use of judgements in relation to discount rates and
future forecasts (See note 16). The recoverability of these
balances is dependent upon the level of future licence fees and
manufacturing revenues. While the scope and timing of the
production facilities to be built under the Group's existing and
future agreements remains uncertain, the Directors remain confident
that revenue from own manufacturing, existing licensees, new
licence or consortium agreements will be generated, demonstrating
the recoverability of these balances.
Intellectual property rights and property, plant and
equipment
The Group tests the carrying amount of the intellectual property
rights and property, plant and equipment whenever events or changes
in circumstances indicate that the net book value may not be
recoverable. These calculations require the use of estimates in
respect of future cash-flows from the assets by applying a discount
rate to the anticipated pre-tax future cash-flows. The Group also
reviews the estimated useful lives at the end of each annual
reporting period (See note 16 & 17). The price of the Accoya(R)
wood and the raw materials and other inputs vary according to
market conditions outside of the Group's control. Should the price
of the raw materials increase greater than the sales price or in a
way which no longer makes Accoya(R) competitive, then the carrying
value of the property, plant and equipment or IPR may be in doubt
and become impaired. The Directors consider that the current market
and best estimates of future prices mean that this risk is
limited.
Available for sale investments
The Group has an investment in listed equity shares carried at
nil value. The investment is valued at cost less any impairment as
a reliable fair value cannot be obtained since there is no active
market for the shares and there is currently uncertainty around the
future funding of the business. The Group makes appropriate
enquiries and considers all of the information available to it in
order to assess whether any impairment has occurred (See note
18).
Taxation
The tax charge for the year ended 31 March 2018 has reduced
compared to the prior year as a result of a change to the group's
transfer pricing policy to more accurately reflect the business
model.
New standards and interpretations in issue at the date of
authorisation of these financial statements:
New standards, amendments and interpretations
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1 April
2017, have had a material impact on the group or parent company
other than IFRS 9 which has been early adopted as set out
above.
New standards, amendments and interpretations not yet
adopted
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU).
-- IFRS 11 (amendments) 'Joint arrangements'
-- IFRS 14 'Regulatory deferral accounts'
-- IFRS 15 'Revenue from contracts with customers'
-- IFRS 16 'Leases'
-- IAS 1 (amendments) 'presentation of financial statements'
-- IAS 19 (amendments) 'Employee contributions'
-- IAS 16 (amendments) 'property plant and equipment'
-- IAS 38 (amendments) 'Intangible assets'
-- IAS 27 (amendments) 'Separate financial statements'
-- IAS 28 (amendments) 'Associates and joint ventures'
The above standards are expected to be adopted when they become
mandatorily effective. An initial assessment in respect of the
possible impact of IFRS 15 has been undertaken and is not expected
to have a material impact on the financial statements in future
periods. An assessment of IFRS 16 is being undertaken however is
likely to have a material impact given the Group holds a number of
significant lease arrangements.
The Directors do not expect that the adoption of any of the
remaining Standards and Interpretations listed above to have a
material impact on the financial statements of the Group in future
periods.
3. Segmental reporting
The Group's business is the manufacturing of and development,
commercialisation and licensing of the associated proprietary
technology for the manufacture of Accoya(R) wood, Tricoya(R) wood
elements and related acetylation technologies. Segmental reporting
is divided between corporate activities, activities directly
attributable to Accoya(R) , to Tricoya(R) or research and
development activities. This note has been represented to
separately reflect exceptional items and other adjustments within
each segment for the prior year.
Accoya(R)
Accoya Segment
-------------------------------------------------------------------------------------------------------------
Year ending
Year ending 31 31 March Year ending 31 Year ending 31 Year ending 31
March 2018 2018 March 2018 March 2017 March 2017
Year ending 31
Before Exceptional Before March 2017
exceptional items & exceptional
items & other Other items & other Exceptional items &
adjustments Adjustments TOTAL adjustments Other Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R) wood
revenue 56,331 - 56,331 50,655 - 50,655
Licence
revenue - - - 1,576 - 1,576
Other revenue 4,380 - 4,380 4,268 - 4,268
Total Revenue 60,711 - 60,711 56,499 - 56,499
Cost of sales (47,270) - (47,270) (42,175) - (42,175)
Gross profit 13,441 - 13,441 14,324 - 14,324
Other
operating
costs (11,458) (348) (11,806) (10,648) - (10,648)
Other Gain - - - - 635 635
Profit/(Loss)
from
operations 1,983 (348) 1,635 3,676 635 4,311
Profit/(Loss)
from
operations 1,983 (348) 1,635 3,676 635 4,311
Depreciation
and
amortisation 2,661 - 2,661 2,357 - 2,357
---------------- ------------ ----------------- ---------------- -------------------- ------------------
EBITDA 4,644 (348) 4,296 6,033 635 6,668
--------------- ---------------- ------------ ----------------- ---------------- -------------------- ------------------
Revenue includes the sale of Accoya(R) , licence income and
other revenue, principally relating to the sale of acetic acid and
other licensing related income.
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 with all other costs
associated with the operation of the Arnhem manufacturing site,
including directly attributable administration, sales and marketing
costs.
See note 5 for explanation of Exceptional Items and other
adjustments.
Headcount = 105 (2017: 96)
The below table shows details of reconciling items to show both
Accoya(R) EBITDA and Accoya(R) Manufacturing gross profit, both
including and excluding licence and licensing related income, which
has been presented given the inclusion of items which can be more
variable or one-off.
2018 2017
EUR'000 EUR'000
Accoya segmental underlying EBITDA 4,644 6,033
---------------- -----------
Accoya Licence Income - (1,576)
Other income, predominantly for marketing services (253) (338)
Accoya segmental underlying EBITDA (excluding. Licence Income) 4,391 4,118
================ ===========
Accoya segmental gross profit 13,441 14,324
---------------- -----------
Accoya Licence Income - (1,576)
Other income, predominantly for marketing services (253) (338)
Accoya manufacturing gross profit 13,188 12,410
================ ===========
Gross Accoya Manufacturing Margin 22% 23%
Tricoya(R)
Tricoya Segment
---------------------------------------------------------------------------------------------------
Year ending Year Year ending
31 March ending Year ending 31 March Year ending Year ending
2018 31 March 31 March 2017 31 March 31 March
2018 2018 2017 2017
Before Before
exceptional Exceptional exceptional Exceptional
items items items items
& other & Other & other & Other
adjustments Adjustments TOTAL adjustments Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Tricoya(R)
wood
revenue - - - - - -
Licence
revenue 200 - 200 - - -
Other revenue - - - 30 - 30
Total Revenue 200 - 200 30 - 30
Cost of sales - - - - - -
Gross profit 200 - 200 30 - 30
Other
operating
costs (2,653) (763) (3,416) (1,795) 173 (1,622)
Profit/(Loss)
from
operations (2,453) (763) (3,216) (1,765) 173 (1,592)
Profit/(Loss)
from
operations (2,453) (763) (3,216) (1,765) 173 (1,592)
Depreciation
and
amortisation 197 - 197 171 - 171
----------------- ------------- ------------ ------------------ ----------------- ------------
EBITDA (2,256) (763) (3,019) (1,594) 173 (1,421)
--------------- ----------------- ------------- ------------ ------------------ ----------------- ------------
Revenue and costs are those attributable to the business
development of the Tricoya(R) process and establishment of
Tricoya(R) Hull Plant.
See note 5 for explanation of Exceptional Items and other
adjustments.
Headcount = 4 (2017: 4), noting a substantial proportion of the
costs to date have been incurred via recharges from other parts of
the Group or have resulted from contractors.
Corporate
Corporate Segment
---------------------------------------------------------------------------------------------------------------------------------
Year ending 31 Year ending 31 Year ending 31 March
March 2018 March 2018 Year ending 31 2017
Year ending 31 March 2017 Year ending 31
Before March 2018 March 2017
exceptional Before exceptional
items & other Exceptional items & items & other Exceptional items &
adjustments Other Adjustments TOTAL adjustments Other Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R)
wood revenue - - - - - -
Licence
revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other
operating
costs (4,703) (918) (5,621) (4,343) (517) (4,860)
Other Gain - 32 32 - - -
Loss from
operations (4,703) (886) (5,589) (4,343) (517) (4,860)
Loss from
operations (4,703) (886) (5,589) (4,343) (517) (4,860)
Depreciation
and
amortisation 166 - 166 133 - 133
----------------- -------------------- -------------------- -------------------- -------------------- ----------------------
EBITDA (4,537) (886) (5,423) (4,210) (517) (4,727)
-------------- ----------------- -------------------- -------------------- -------------------- -------------------- ----------------------
Corporate costs are those costs not directly attributable to
Accoya(R) , Tricoya(R) or Research and Development activities. This
includes management and the Group's corporate and general
administration costs including the head office in London.
See note 5 for explanation of Exceptional Items and other
adjustments.
Headcount = 19 (2017: 15)
Research and Development
Research & Development Segment
------------------------------------------------------------------------------------------------------------------------------
Year ending 31 Year ending 31 Year ending 31 Year ending 31
March 2018 March 2018 March 2017 March 2017
Year ending 31 Year ending 31
Before March 2018 Before March 2017
exceptional items exceptional items
& other Exceptional items & & other Exceptional items &
adjustments Other Adjustments TOTAL adjustments Other Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R)
wood revenue - - - - - -
Licence
revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other
operating
costs (1,404) (155) (1,559) (1,763) - (1,763)
Loss from
operations (1,404) (155) (1,559) (1,763) - (1,763)
Loss from
operations (1,404) (155) (1,559) (1,763) - (1,763)
Depreciation
and
amortisation 54 - 54 52 - 52
------------------ -------------------- -------------------- ------------------ -------------------- --------------------
EBITDA (1,350) (155) (1,505) (1,711) - (1,711)
-------------- ------------------ -------------------- -------------------- ------------------ -------------------- --------------------
Research and Development costs are those associated with the
Accoya(R) and Tricoya(R) processes. Costs exclude those which have
been capitalised in accordance with IFRS (see note 16).
Headcount = 10 (2017: 9)
Total
TOTAL
-----------------------------------------------------------------------------------------------------------------
Year ending 31 Year ending 31 Year ending 31 Year ending 31
March 2018 Year ending 31 March 2018 March 2017 Year ending 31 March 2017
March 2018 March 2017
Before Before
exceptional Exceptional items exceptional Exceptional items
items & other & Other items & other & Other
adjustments Adjustments TOTAL adjustments Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R)/
Tricoya(R)
wood revenue 56,331 - 56,331 50,655 - 50,655
Licence
revenue 200 - 200 1,576 - 1,576
Other revenue 4,380 - 4,380 4,298 - 4,298
Total Revenue 60,911 - 60,911 56,529 - 56,529
Cost of sales (47,270) - (47,270) (42,175) - (42,175)
Gross profit 13,641 - 13,641 14,354 - 14,354
Other
operating
costs (20,218) (2,184) (22,402) (18,551) (343) (18,894)
Other Gain - 32 32 - 635 635
Profit/(Loss)
from
operations (6,577) (2,152) (8,729) (4,197) 292 (3,905)
Finance income - - - 2 - 2
Finance
expense (2,174) 502 (1,672) (302) (258) (560)
Loss before
taxation (8,751) (1,650) (10,401) (4,497) 34 (4,463)
================ ================== ================= ================ ================== ==================
Profit/(Loss)
from
operations (6,577) (2,152) (8,729) (4,197) 292 (3,905)
Depreciation
and
amortisation 3,078 - 3,078 2,712 - 2,712
---------------- ------------------ ----------------- ---------------- ------------------ ------------------
EBITDA (3,499) (2,152) (5,651) (1,485) 292 (1,193)
--------------- ---------------- ------------------ ----------------- ---------------- ------------------ ------------------
Other adjustments included within finance expenses related to
the revaluation of loan notes with Business Growth Fund ('BGF') and
1798 Volantis Catalyst Fund II ('Volantis'), which are denominated
in pounds sterling.
Analysis of Revenue by geographical area of customers: 2018 2017
EUR'000 EUR'000
UK and Ireland 25,799 25,307
Rest of Europe 15,273 12,984
Americas 8,153 5,810
Benelux 5,998 7,992
Asia-Pacific 5,252 4,009
Rest of World 436 427
60,911 56,529
============= ============
Revenue generated from three customers exceeded 10% of Group
revenue of 2018. This included 79% of the revenue from the rest of
Europe and relates to a mixture of Accoya(R) and Other Revenue. In
addition two other customers represented 37% and 30% respectively,
of the revenue from the United Kingdom and Ireland and relates to
Accoya(R) revenue. Revenue generated from three customers exceeded
10% of Group revenue in 2017 (93% of the revenue from the rest of
Europe, and 33% and 31% respectively, of the revenue from the
United Kingdom and Ireland).
Assets and liabilities on a segmental basis:
Accoya Tricoya Corporate R&D TOTAL Accoya Tricoya Corporate R&D TOTAL
2018 2018 2018 2018 2018 2017 2017 2017 2017 2017
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current
assets 46,411 21,521 3,485 71 71,488 24,140 4,685 3,580 115 32,520
---------- --------- ---------- ----------- --------- --------- ------------- -------------- ----------- ---------
Current
assets 25,112 36,095 (2,084) 4,382 63,505 21,893 36,998 (2,202) 4,579 61,268
---------- --------- ---------- ----------- --------- --------- ------------- -------------- ----------- ---------
Current
liabilities (14,034) (8,318) 983 (45) (21,414) (7,845) (3,900) (2,732) (122) (14,599)
---------- --------- ---------- ----------- --------- --------- ------------- -------------- ----------- ---------
Net current
assets 11,078 27,777 (1,101) 4,337 42,091 14,048 33,098 (4,934) 4,457 46,669
Non-current
liabilities (21,974) (334) (17,776) - (40,084) (4,488) - (18,230) - (22,718)
---------- --------- ---------- ----------- --------- --------- ------------- -------------- ----------- ---------
Net assets 35,515 48,964 (15,392) 4,408 73,495 33,700 37,783 (19,584) 4,572 56,471
========== ========= ========== =========== ========= ========= ============= ============== =========== =========
Analysis of non-current assets (Other than financial
assets and deferred tax):
2018 2017
EUR'000 EUR'000
UK 26,780 7,775
Other countries 40,475 20,513
Un-allocated -
Goodwill 4,231 4,231
71,488 32,520
============== ==============
The segmental assets in the current year were predominantly held
in the UK and mainland Europe (Prior Year Europe). Additions to
property, plant, equipment and intangible assets in the current
year were predominantly incurred in the UK and mainland Europe
(Prior Year Europe). There are no significant intersegment
revenues.
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, the offices in Dallas and London and certain pre-operating
costs associated with the plant in Hull:
2018 2017
EUR'000 EUR'000
Sales and marketing 3,967 3,773
Research and development 1,404 1,711
Depreciation and amortisation 3,078 2,713
Other operating costs 4,135 3,243
Administration costs 7,635 6,833
Exceptional Items and other adjustments 2,184 343
22,402 18,894
======== ========
Administrative costs include cost associated with Business
Development and Legal departments, Intellectual Property as well as
Human Resources, IT, Finance, Management and General Office and
includes the costs of the Group's head office costs in London and
the US Office in Dallas.
The total cost of EUR22,402,000 in the current period includes
EUR3,416,000 in respect of the Tricoya(R) segment, compared to
EUR1,622,000 in the previous period.
Group average headcount increased from 124 in the period to 31
March 2017, to 138 in the period to 31 March 2018.
During the period, EUR397,000 (2017: EUR525,000) of development
costs were capitalised and included in intangible fixed assets,
including EUR337,000 (2017: EUR462,000) which were capitalised
within Tricoya Technologies Limited ('TTL'). In addition EUR446,000
of internal costs have been capitalised in relation to the
expansion of our plant in Arnhem, Netherlands (2017: EUR637,000)
and EUR109,000 of internal costs have been capitalised in relation
to our plant build in Hull, UK (2017: EUR110,000). Both are
included within tangible fixed assets.
5. Exceptional items and other adjustments
Audited Audited
Year Year
ended ended
31 March 31 March
2018 2017
EUR'000 EUR'000
Bonuses paid relating to year
ending 31 March 2017 (1,386) -
Restructuring costs (231) -
Gain from disposal of assets 32 635
Business Development advisory
fees - (517)
Total exceptional items (1,585) 118
--------- ---------
Foreign exchange differences arising on Tricoya
cash held - Operating costs (567) 174
Foreign exchange differences arising on Loan
Notes - incl. in Finance expense 502 (258)
Foreign exchange differences on Tricoya cash
held - Other comprehensive income * 202 104
Total other adjustments 137 20
--------- ---------
Tax on exceptional items and
other adjustments - -
Total exceptional items and
other adjustments (1,448) 138
========= =========
Prior year has been restated to reflect the adoption of IFRS 9
and to represent exceptional and other adjustments on a consistent
basis.
Note*: Items stated above as recorded in Other comprehensive
income have been restated such that in the financial statements for
the year ended 31 March 2017 the EUR104,000 of foreign exchange
gains had been recorded within Operating costs. The restatement has
resulted in a corresponding restatement of the opening balance of
Other Reserves as stated in the Statement of Changes in Equity.
Exceptional Items
EUR1,386,000 relates to the annual bonus paid in the current
year which was attributable to the year ended 31 March 2017.
Separately the accrual for the current year bonus is included in
underlying operating costs. This double charge in the year results
from a re-alignment of the timing of recognition of bonuses
reflecting the more structured annual bonus scheme now in place
compared to previous years. In addition the bonus paid in the
current year relating to the year ended 31 March 2017 included
one-off targets relating to the formation of the Tricoya(R)
consortium. The charge is split between all segments, including
EUR293,000 in Accoya(R) , EUR124,000 in Tricoya(R) , EUR901,000
Corporate and EUR67,000 in R&D.
Other restructuring costs relate to changes required following
the completion of the Tricoya(R) consortium in March 2017. This is
split between all segments, including EUR54,000 in Accoya(R) ,
EUR67,000 Tricoya(R) , EUR18,000 Corporate and EUR92,000
R&D.
Agreements were reached in August 2016 for the sale and
leaseback for the land in Arnhem resulting in proceeds of EUR4.2m
received in the prior period. A resulting gain of EUR635,000 was
recognised in the previous year as a result of the book value of
the land being lower than the sale price. The full amount relates
to the Accoya(R) segment.
Business Development advisory fees were incurred during the
prior year as the Group pursued a one-off long-term opportunity.
The full amount relates to the corporate segment.
Other Adjustments
Foreign exchange differences in the Tricoya(R) segment have
occurred due to pounds sterling held within the consortium in
preparation for the Hull Plant build. The Group has mitigated this
currency exchange risk by adopting hedge accounting in respect of
the Tricoya(R) plant construction under IFRS 9, Financial
Instruments. The prior year has also been represented and restated
to highlight the comparative impact in the prior year. The result
of adopting IFRS 9 is that all of the amount included in Other
Comprehensive Income relates to such foreign exchange gain or
losses in both periods.
Foreign exchange differences also arise on the pounds sterling
denominated loan notes, entered into in the prior year. These
exchange rate differences are included as finance expenses. The
prior year has also been represented to reflect the comparative
impact in the prior year.
6. Employees
2018 2017
EUR'000 EUR'000
Staff costs (including Directors)
consist of:
Wages and salaries 11,293 8,783
Social security costs 1,509 1,186
Other pension costs 739 617
Share based payments 258 908
13,799 11,494
======== ========
The average monthly number of employees, including Executive
Directors, during the year was as follows:
2018 2017
Sales and marketing, administration,
research and engineering 85 78
Operating 53 46
138 124
======= =====
7. Directors' remuneration
2018 2017
EUR'000 EUR'000
Directors' remuneration consists
of:
Directors' emoluments 1,291 1,625
Company contributions to money purchase
pension schemes 49 51
1,340 1,676
======== ========
Compensation of key management personnel included the following
amounts:
2018 2017
Salary, Share
bonus based
and short payments
term benefits Pension charge Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Paul Clegg 473 29 14 516 726
Hans Pauli 329 12 10 351 425
William Rudge 256 8 8 272 333
1,058 49 32 1,139 1,484
=============== ======== ========== ======== ========
The Group made contributions to 2 (2017: 2) Directors' personal
pension plans, with Paul Clegg receiving cash in lieu of pension
from 1 April 2016.
The figures in the above table are impacted by foreign exchange
noting that the remuneration for P Clegg and W Rudge are
denominated in Pounds Sterling. Their total remuneration decreased
by 38% and 54% respectively, when excluding the impact of foreign
exchange.
8. Operating (loss)/gain
2018 2017
EUR'000 EUR'000
This has been arrived at after
charging:
Staff costs 13,799 11,494
Depreciation of property,
plant and equipment 2,496 2,157
Amortisation of intangible
assets 582 556
Operating lease rentals 1,306 1,351
Foreign exchange losses/(gains) 834 (403)
Research & Development (excluding
staff costs) 997 873
Loss on disposal of property,
plant and equipment 3 79
Fees payable to the Company's auditors for the
audit of the Company's annual financial statements 85 65
Fees payable to the Company's auditors
for other services:
- audit of the Company's subsidiaries
pursuant to legislation 147 112
- audit related assurance
services 25 22
-------- --------
Total audit and audit related
services: 257 199
- tax compliance services - 87
- all other services* - 289
-------- --------
Total tax and other services: - 376
* Note: Other services payable to the Company's auditors
excludes EUR0.3m attributable to the Firm Placing and Open offer
which completed in the financial year, and has been deducted from
share premium.
9. Tricoya Technologies Limited
Tricoya Technologies Limited ("TTL") was incorporated in order
to develop and exploit the Group's Tricoya(R) technology for use
within the worldwide panel products market, which is estimated to
be worth more than EUR60 billion annually.
On 29 March 2017 the Group announced the entry into and
successful completion of its agreements for the financing,
construction and operation of the world's first Tricoya(R) wood
elements acetylation plant in Hull with its TTL consortium
investors, being BP, Medite, BGF and Volantis.
The Hull plant will have an initial production capacity of
30,000 tonnes per annum (sufficient to manufacture 40,000 cubic
metres of panels) and scope to expand.
Structurally, Accsys, BP Ventures, Medite, BGF and Volantis have
invested into TTL in the prior year. TTL has then invested,
alongside BP Chemicals and Medite, in Tricoya Ventures UK Limited
("TVUK"), a special purpose subsidiary of TTL that will construct,
own and operate the Hull Plant.
BP have invested EUR20.3 million in the Tricoya(R) Project,
including EUR13.7 million as equity in TVUK by BP Chemicals and
EUR6.6 million as equity in TTL by BP Ventures. All funding was
received by 31 March 2018, with EUR11.3m being received in the year
ended 31 March 2018.
Medite have invested EUR11 million in the Tricoya(R) Project,
including EUR7 million as equity in TTL and EUR4 million as equity
in TVUK. All funding was received by 31 March 2018, with EUR3.1m
being received in the in the year ended 31 March 2018.
The Group is expected to increase its total equity interest in
TTL to 75.9% over the next two years as a result of its continued
supply of lower priced Accoya(R) to Medite to enable continued
market development ahead of the completion of the Hull Plant.
During the year the Group increased its shareholding from 74.6% to
75.1% from the issue of 780,287 shares related to this market
seeding activity.
In the prior year, BGF and Volantis invested an aggregate of
GBP19 million as financial investors into both the Group and TTL.
BGF and Volantis invested on similar terms but are investing
separately, with BGF accounting for 65% of the GBP19 million
total.
Also in the prior year, TVUK entered a six-year EUR17.2 million
(EUR15 million net) finance facility agreement with The Royal Bank
of Scotland Plc in respect of the construction and operation of the
Hull Plant. As at 31 March 2018 the Group have utilised EUR334k of
the facility in relation to fees incurred.
The Group has consolidated the results of TTL and TVUK as
subsidiaries, as it exercises the power to govern the entities in
accordance with IFRS 10. The non-controlling interests in both
entities have been recognised in these Group financial
statements.
The "TTL Group" income statement and balance sheet, consisting
of TTL and its subsidiary TVUK, are set out on the following
page:
TTL Group income statement:
Consolidated Consolidated
2018 2017
EUR'000 EUR'000
Revenue 200 -
Costs:
Staff costs (1,898) (1,145)
Research & development (excluding staff costs) (223) (200)
Intellectual Property (381) (606)
Sales & marketing (376) (12)
Depreciation & Amortisation (197) (171)
EBIT (2,875) (2,133)
====================== =======================
EBIT attributable to Accsys shareholders (1,911) (1,920)
====================== =======================
TTL Group balance sheet:
2018 2017
EUR'000 EUR'000
Non-current assets
Intangible assets 3,390 3,246
Property, plant and equipment 18,119 1,440
21,509 4,686
--------- ---------
Current assets
Receivables due within one year 1,340 612
Cash and cash equivalents 34,754 36,386
36,094 36,998
--------- ---------
Current liabilities
Trade and other payables (8,639) (3,900)
Net current assets 27,455 33,098
Net assets 48,964 37,783
========= =========
Value attributable to Accsys Technologies 18,649 25,163
========= =========
10. Finance income
2018 2017
EUR'000 EUR'000
Interest receivable on bank
and other deposits - 2
11. Finance expense
2018 2017
EUR'000 EUR'000
Arnhem land and buildings
lease finance charge 575 173
Foreign exchange (gain)/loss
on loan notes (502) 257
Loan note related finance
expenses 1,540 13
Other finance expenses 59 117
1,672 560
======== ========
12. Tax expense
2018 2017
EUR'000 EUR'000
(a) Tax recognised in the statement of comprehensive
income comprises:
Current tax expense
UK Corporation tax on profits
for the year - -
Research and development tax credit
in respect of current year (248) (274)
(248) (274)
Overseas tax at rate of 15% (9) 12
Overseas tax at rate of 25% 6 928
Deferred Tax
Utilisation of deferred tax
asset - -
Total tax charge reported in the
statement of comprehensive income (251) 666
========== =========
2018 2017
EUR'000 EUR'000
(b) The tax credit for the period
is lower than the standard rate of
corporation tax in the UK (2018:
19%, 2017: 20%) due to:
Loss before tax (10,401) (4,463)
Expected tax credit at 19%
(2017 - 20%) (1,976) (893)
Expenses not deductible in
determining taxable profit 110 176
(Over)/Under provision in
respect of prior years (29) (114)
Tax losses for which no deferred
income tax asset was recognised 1,860 1,593
Effects of overseas taxation 38 40
Other temporary differences (2) 138
Research and development tax credit
in respect of prior years 15 (34)
Research and development tax credit
in respect of current year (263) (240)
Total tax charge reported in the
statement of comprehensive income (251) 666
========== =========
Changes to the UK corporation tax rates were substantively
enacted as part of Finance Bill 2015 (on 26 October 2015) and
Finance Bill 2016 (on 7 September 2016). These include reductions
to the main rate to reduce the rate to 19% from 1 April 2017 and to
17% from 1 April 2020. Deferred taxes at the balance sheet date
have been measured using these enacted tax rates and reflected in
these financial statements.
13. Dividends Paid
2018 2017
EUR'000 EUR'000
Final Dividend EURNil (2017: EURNil)
per Ordinary share proposed
and paid during year relating to
the previous year's results - -
14. Loss per share
The calculation of loss per ordinary share is based on loss
after tax and the weighted average number of ordinary shares in
issue during the year.
Basic and diluted
earnings per share 2018 2018 2017 2017
Before exceptional Before exceptional
items and other items and other
adjustments Total adjustments Total
Weighted average number
of Ordinary shares in
issue ('000) 111,250 111,250 90,442 90,442
Loss for the year
(EUR'000) (7,536) (9,185) (4,950) (4,986)
Basic and diluted loss
per share EUR (0.07) EUR (0.08) EUR (0.05) EUR (0.06)
======================== =================== ======================== ==================
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.
15. Share based payments
The Group operates a number of share schemes which give rise to
a share based payment charge. The Group operates a Long Term
Incentive Plan ('LTIP') in order to reward certain members of staff
including the senior management team and the executive directors.
As part of the award of nil costs options under the LTIP in 2013,
the recipients relinquished all share options that they held which
had been awarded under the 2005 and 2008 Share Option plans. Other
employees continue to hold options awarded under these earlier
schemes.
Options - total
The following figures take into account options awarded under
the LTIP, together with share options awarded in previous years
under the 2005 and 2008 Share Option schemes.
Outstanding options granted are as follows:
Weighted average
Number of outstanding remaining
contractual life,
options at 31 March in years
Date of grant 2018 2017 2018 2017
20 November 2007 - 48,444 - 0.6
18 June 2008 8,498 8,498 0.3 1.3
8 December 2008 25,211 25,211 0.7 1.7
27 July 2010 - 164,321 2.3 3.3
1 August 2011 115,000 140,000 3.3 4.3
19 September
2013 (LTIP) 2,247,850 2,472,550 5.5 6.5
24 June 2016
(LTIP) 1,015,030 1,070,255 8.3 9.3
20 June 2017
(LTIP) 1,087,842 - 9.3 -
Total 4,499,431 3,929,279 6.9 6.9
----------- ----------- --------- ---------
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at 31 March 2016 EUR 0.51 4,617,415
========= =============
Granted during the year EUR 0.00 1,070,255
Forfeited during the year EUR 0.04 (1,642,805)
Expired during the year EUR 9.15 (115,586)
Outstanding at 31 March 2017 EUR 0.31 3,929,279
========= =============
Granted during the year EUR 0.00 1,087,842
Forfeited during the year EUR 2.15 (245,044)
Exercised during the year EUR 0.00 (249,700)
Expired during the year EUR 0.00 (22,946)
Outstanding at 31 March 2018 EUR 0.15 4,499,431
========= =============
The exercise price of options outstanding at the end of the year
ranged between EURnil (for LTIP options) and EUR12.90 (2017: EURnil
and EUR12.90) and their weighted average contractual life was 6.9
years (2017: 6.9 years).
Of the total number of options outstanding at the end of the
year, 126,236 (2017: 183,532) had vested and were exercisable at
the end of the year. 106,189 options were exercised in the current
year (2017: Nil).
Long Term Incentive Plan ('LTIP')
In 2013, the Group established a Long Term Incentive Plan, the
participants of which are key members of the Senior Management
Team, including Executive Directors. The establishment of the LTIP
was approved by the shareholders at the AGM in September 2013.
A prerequisite of participation in the LTIP in 2013 was for the
beneficiaries to agree to the cancellation of their entire
outstanding share options, providing the Company with a 5%
reduction in the level of dilution to make the new awards. A
cancellation was agreed as the most appropriate action as it would
focus the management team on the new LTIP and not on historical
awards or arrangements.
2013 LTIP Award performance conditions and 2016 outcome
Element A - Vesting was contingent upon continued employment for
three years and share price not falling below EUR0.65 at the end of
the performance period, being the three years ending 20 August
2016. 100% of this element vested.
Element B - was measured against two equally weighted
performance conditions:
Threshold Target Maximum 2016 Outcome
EUR2.38m
EBITDA equated to
(50% of Element 78% of this
B) EUR0m EUR1.6m EUR4m element vesting
----------------- ---------------- --------------- -----------------
Share price Median of the 60th percentile Upper quartile Share price
growth constituents of the of the growth of
(50% of Element of constituents constituents 14% was between
B) the MSCI Europe of the MSCI of the MSCI the 50(th)
Index Europe Index Europe Index and 60(th)
percentile
equating
to 29.5%
of this element
vesting
----------------- ---------------- --------------- -----------------
Potential
Vesting level(1) 25% 60% 100%
----------------- ---------------- --------------- -----------------
Notes:
1. Vesting was on a straight line basis between the respective EBITDA and share price targets.
2. Includes EUR0.3m adjustment made to reflect circumstances not
foreseen at time of award grant
Element C - This element was to vest in full if the share price
is at or above EUR1.30 at the end of the performance period. This
was not met and nil awards vested.
Of the 4,103,456 nil cost options awarded in 2013 2,472,550
vested in the previous period as a result of meeting the
performance conditions set out above, with the remaining 1,630,906
being forfeited. 2,247,850 remain as at 31 March 2018 after
allowing for forfeitures and options exercised in the year.
Awards made in June 2016 and LTIP Award performance
conditions
Following the vesting of the LTIPs awarded in September 2013, a
further award was made to members of the Senior Management Team,
including Executive Directors. A total of 1,070,255 nil cost
options were awarded.
The LTIP plan rules were amended in November 2015 such that
awards made in summer 2016 are subject to a 3 year performance
period (i.e. year end March 2019) and a further 2 year holding
period. In addition, awards are also subject to malus/ claw-back
provisions.
Element A (Share price element)
In relation to 50% of award, the performance target will be
achieved in relation to:
-- 25% for this Element if the share price growth is greater
than the median of the comparator group; and
-- 100% for this Element if the share price growth is greater
than the upper quartile of the comparator group
with straight-line vesting between these points.
Element B (EBITDA element)
In relation to 50% of award, the performance target will be
achieved in relation to:
-- 25% for this Element if EBITDA is greater than or equal to
EUR0.06 per Share;
-- 50% for this Element if EBITDA is greater than or equal to
EUR0.08 Share; and
-- 100% for this Element if EBITDA is greater than or equal to
EUR0.10 Share
with straight-line vesting between these points.
The comparator group for the purposes of Element A is the
constituent companies of the FTSE AIM All Share Index (excluding
the Resource and Financial Services Sectors) as determined by the
Remuneration Committee.
Element A Element B
(Share price (EBITDA per
Element growth) Share)
Grant date 27 Jun 16 27 Jun 16
Share price at grant date
(EUR) 0.81 0.81
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details
set out above) Share Price EBITDA
Risk free rate -0.64% -0.64%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 0.187 EUR 0.749
Awards made in June 2017 and LTIP Award performance
conditions
During the year, a total of 1,087,842 LTIP awards were made
primarily to members of the senior management team including the
executive directors:
The performance targets for 937,014 of these awards are as
follows:
Weighting Threshold Target Maximum
Metric (% of award)
Vesting (% of maximum) 25% 50% 100%
EBITDA per share in
FY20 50% EUR0.04 EUR0.06 EUR0.08
Share Price Growth vs Median N/A Upper Quartile
Comparator Group 50%
------------- ---------- -------- ---------------
-- Vesting is on a straight-line basis between points in the
schedule. There is no vesting for performance below Threshold.
-- EBITDA based on total group EBITDA including licensing
income. Appropriate adjustments may be made to the EBITDA per share
metric ensure fair and consistent performance measurement over the
performance period in line with the business plan and intended
stretch of the targets at the point of award.
-- Comparator Group is the constituent companies of the FTSE AIM
All Share Index (excluding the Resource and Financial Services
Sectors)
Element A Element B
(Total shareholder (EBITDA per
Element return) Share)
Grant date 20 Jun 17 20 Jun 17
Share price at grant
date (EUR) 0.88 0.88
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details
set out above) Share Price EBITDA
Risk free rate -0.60% -0.60%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 0.203 EUR 0.814
The remaining 158,828 of the awards made in summer 2017 were
specific to individuals dedicated to the Tricoya(R) consortium with
performance measures linked to progress and development of the
Tricoya(R) plant and its subsequent operation.
The fair value of these options varied between EUR0.81 and
EUR0.12.
All of the above awards, made in summer 2017 are subject to a
three year performance period (i.e. year end March 2020) and a
further two year holding period. In addition, awards are also
subject to malus/ claw-back provisions.
2005 and 2008 Share Option schemes
Awards made in earlier years had no impact on the income
statement in the current or prior period and given the smaller
number of options remaining, no details have been disclosed.
Employee Benefit Trust - Share bonus award
Following a share issue on 20 June 2017 as part of the annual
bonus, in connection with the employee remuneration and
incentivisation arrangements for the period from 1 April 2016 to 31
March 2017, 295,873 (2017: 679,435) new Ordinary shares were held
by an Employee Benefit Trust, the beneficiaries of which are
primarily other senior employees. Such new Ordinary shares vest if
the employees remain in employment with the Company at the vesting
date, being 1 July 2018 (subject to certain other provisions
including regulations, good-leaver, take-over and nomination and
remuneration committee discretion provisions). As at 31 March 2018,
the Employment Benefit Trust was consolidated by the Company and
the 295,873 shares are recorded as Own Shares within equity. During
the period, 679,435 Ordinary shares awarded in the prior year
vested.
16. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 31 March 2016 5,527 73,292 4,231 83,050
================= ============= ========= ========
Additions 415 - - 415
At 31 March 2017 5,942 73,292 4,231 83,465
================= ============= ========= ========
Additions 396 - - 396
At 31 March 2018 6,338 73,292 4,231 83,861
================= ============= ========= ========
Accumulated amortisation
At 31 March 2016 607 71,463 - 72,070
================= ============= ========= ========
Amortisation 556 - - 556
At 31 March 2017 1,163 71,463 - 72,626
================= ============= ========= ========
Amortisation 307 275 - 582
At 31 March 2018 1,470 71,738 - 73,208
================= ============= ========= ========
Net book value
At 31 March 2018 4,868 1,554 4,231 10,653
At 31 March 2017 4,779 1,829 4,231 10,839
At 31 March 2016 4,920 1,829 4,231 10,980
The carrying value of internal development costs, intellectual
property rights and goodwill on consolidation are split between two
cash generating units, representing the Accoya(R) and Tricoya(R)
segments. The recoverable amount of internal development costs,
intellectual property rights and goodwill relating to each unit is
determined based on a value in use calculation which uses cash flow
projections based on board approved financial budgets. Cash flows
have been projected for a period of 10 years, including a five year
forecast and five years of 2% growth plus assumptions concerning a
terminal value and based on a pre-tax discount rate of 12% per
annum (2017: 13%). The key assumption used in the value in use
calculations is the level of future licence fees and manufacturing
revenues estimated by management over the budget period. These have
been based on past experience and expected future revenues. The
Directors have considered whether a reasonably possible change in
assumptions may result in an impairment. An impairment would arise
if the total volume of forecast Accoya(R) and Tricoya(R)
manufactured is lower than projected sales in future years.
Amortisation is included in Other operating costs within the
Statement of Comprehensive Income.
17. Property, plant and equipment
Land Plant
and and Office
buildings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 31 March 2016 5,251 30,725 1,238 37,214
========== ========== ========== =========
Additions - 7,102 133 7,235
Disposals (3,606) (71) - (3,677)
Foreign currency translation
(loss) - - 8 8
At 31 March 2017 1,645 37,756 1,379 40,780
========== ========== ========== =========
Additions 10,433 31,104 116 41,653
Disposals - - - -
Foreign currency translation
(loss) - - (19) (19)
At 31 March 2018 12,078 68,860 1,476 82,414
========== ========== ========== =========
Accumulated depreciation
At 31 March 2016 541 15,568 833 16,942
========== ========== ========== =========
Charge for the year 117 1,869 171 2,157
Disposals - (9) - (9)
Foreign currency translation
(loss) - - 9 9
At 31 March 2017 658 17,428 1,013 19,099
========== ========== ========== =========
Charge for the year 275 2,024 197 2,496
Disposals - 2 - 3
Foreign currency translation
(loss) - - (19) (19)
At 31 March 2018 933 19,455 1,191 21,579
========== ========== ========== =========
Net book value
At 31 March 2018 11,145 49,405 285 60,835
At 31 March 2017 987 20,328 366 21,681
At 31 March 2016 4,710 15,157 405 20,273
Included within property, plant and equipment are assets with an
initial cost of EUR18,962,000 and a net book value at 31 March 2018
of EUR15,141,000 which has been accounted for as a finance lease.
(See note 28). Assets with a net book value of EUR17.1m are subject
to security agreements associated with the Rhodia loan facility.
See note 29. In addition, plant and machinery assets with a net
book value of EUR19,326,000 and EUR14,768,000 are held as assets
under construction and are not depreciated, relating to the Hull
Plant and the Arnhem plant expansion respectively.
18. Other financial assets
2018 2017
EUR'000 EUR'000
Available for sale investments - -
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China. On 23
December 2016, Cleantech Building Materials PLC acquired Diamond
Wood China. On 19 April 2017 Cleantech Building Materials acquired
the 21,666,734 shares previously owned by the Company and in return
the Company has been issued with 520,001 shares in Cleantech
Building Materials PLC, a listed company trading on the Nasdaq
First North market in Copenhagen and the Wiener Boise of the Vienna
Stock Exchange.
However, the carrying value of the investment is carried at cost
less any provision for impairment, rather than at its fair value,
as there continues to be no active market for these shares as at 31
March 2018, and there is significant uncertainty over the future of
Cleantech Building Materials PLC, and as such a reliable fair value
cannot be calculated.
The historical cost of the listed shares held at 31 March 2018
is EUR10m (2017: EUR10m). However, a provision for the impairment
of the entire balance of EUR10m continues to be recorded as at 31
March 2018.
During the year Accsys sold 21,479 shares at EUR1.50 per share
resulting in a gain of EUR32,000 such that a total of 498,522
shares were held at 31 March 2018.
19. Deferred Taxation
The Group has a deferred tax asset of EURnil (2017: EURnil)
relating to trading losses brought forward.
The Group also has an unrecognised deferred tax asset of EUR26m
(2017: EUR24m) which is largely in respect of trading losses of the
UK subsidiaries. The deferred tax asset has not been recognised due
to the uncertainty of the timing of future expected profits of the
related legal entities which is dependent on the profits
attributable to licensing and future manufacturing income.
20. Subsidiaries
A list of subsidiary investments, including the name, country of
incorporation and proportion of ownership interest is given in note
4 to the Company's separate financial statements.
21. Inventories
2018 2017
EUR'000 EUR'000
Raw materials and work in
progress 10,285 6,447
Finished goods 2,840 5,349
13,125 11,796
======== ========
The amount of inventories recognised as an expense during the
year was EUR42,893,599 (2017: EUR39,030,867). The cost of
inventories recognised as an expense includes a net credit of
EUR31,402 (2017: debit of EUR15,549) in respect of the inventories
sold in the period which had previously been written down to net
realisable value.
22. Trade and other receivables
2018 2017
EUR'000 EUR'000
Trade receivables 6,659 4,133
Other receivables 136 180
Prepayments 2,519 3,269
Accrued income 21 30
9,335 7,612
======== ========
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value. The
majority of trade and other receivables is denominated in Euros,
with EUR714,000 of the trade and other receivables denominated in
US Dollars (2017: EUR637,000).
The age of receivables past due but not impaired is as
follows:
2018 2017
EUR'000 EUR'000
Up to 30 days overdue 350 251
Over 30 days and up to 60
days overdue - -
Over 60 days and up to 90
days overdue - -
Over 90 days overdue 3 98
353 349
======== ========
In determining the recoverability of a trade receivable the
Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the
reporting date. Included in the provision for doubtful debts are
individually impaired trade receivables and accrued income with a
balance of EUR25,001,000 (2017: EUR25,001,000) due from Diamond
Wood.
Movement in provision for doubtful debts:
2018 2017
EUR'000 EUR'000
Balance at the beginning of
the year 25,001 25,002
Net increase/(release) of
impairment if not required 1 (1)
Balance at the end of the
year 25,002 25,001
======== ========
Summary of Receivable Impairments:
2018 2017
EUR'000 EUR'000
Trade receivables - Accoya(R)
wood - -
- -
======== ========
23. Trade and other payables
2018 2017
EUR'000 EUR'000
Trade payables 9,458 6,618
Other taxes and social security
payable 228 201
Accruals and deferred income 8,326 5,705
18,012 12,524
======== ========
24. Share capital
2018 2017
EUR'000 EUR'000
Allotted - Equity share capital
111,513,145 Ordinary shares of EUR0.05 each (2017:
90,643,585 Ordinary shares of EUR0.05 each) 5,576 4,531
5,576 4,531
======== ========
In year ended 31 March 2017:
673,355 shares were issued on 4 July 2016 to an Employee Benefit
Trust ('EBT') at nominal value.
On 15 August 2016, a total of 63,909 of EUR0.05 Ordinary shares
were issued and released to employees together with 63,909 of
EUR0.05 Ordinary shares issued to an employee trust on 14 August
2015.
On 9 February 2017, a total of 16,302 of EUR0.05 Ordinary shares
were issued and released to employees together with 16,302 of
EUR0.05 Ordinary shares issued to an employee trust on 26 January
2016.
In year ended 31 March 2018:
On 24 April 2017 a total of 20,323,986 of EUR0.05 Ordinary
shares were issued at EUR0.69 per share, in accordance with the
Company's capital raise announced on the 29 March 2017.
97,720 shares were issued on 23 June 2017 to an Employee Benefit
Trust ('EBT') at nominal value.
198,154 shares were issued on 27 September 2017 to an Employee
Benefit Trust ('EBT') at nominal value.
106,189 shares were issued on 27 September 2017 to an employee
following the exercise of nil cost options, granted in 2013 under
the Company's 2013 Long Term Incentive Plan ("LTIP")
143,511 shares were issued on 26 February 2018 to an
ex-employee. 118,511 of these Shares were issued and allotted
following the exercise of nil cost options, granted in 2013 under
the Company's 2013 Long Term Incentive Plan ("LTIP"), with the
balance of 25,000 Shares issued as part of the individual's
severance terms.
25. Other reserves
Capital
redemp- Hedging Total
tion Merger Effective-ness Other Other
reserve reserve reserve reserve reserves
EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 31 March 2017 148 106,707 104 6,501 113,460
========= ========= ================ ========= ==========
Total comprehensive income/(expense)
for the period - - 202 - 202
Issue of subsidiary shares
to non-controlling interests - - - (4,237) (4,237)
Balance at 31 March 2018 148 106,707 306 2,264 109,425
========= ========= ================ ========= ==========
The closing balance of the capital redemption reserve represents
the amounts transferred from share capital on redemption of
deferred shares in a previous year.
The merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
The hedging effectiveness reserve reflects the total accounted
for under IFRS 9 in relation to the Tricoya(R) segment (note
1).
The other reserve represents the amounts received for subsidiary
share capital from non-controlling interests (see note 26).
26. Transactions with non-controlling interests
In the year ended 31 March 2017:
On 29 March 2017 and earlier in the same financial year, TTL
issued further Series A Preference shares and transferred Ordinary
shares to non-controlling interests for consideration of EUR15.79
million, resulting in the following non-controlling
shareholdings:
BP Ventures (9%), Medite (12.1%), BGF (2.8%), Volantis
(1.5%)
On 29 March 2017, Tricoya Ventures UK Limited ("TVUK") issued
Ordinary shares to non-controlling interests for consideration of
EUR3.26 million, resulting in the following shareholdings:
BP Chemicals (30%), Medite (8.2%)
In the year ended 31 March 2018:
On 5 September 2017, TTL issued 284,716 shares to Titan Wood
Limited. On 9 February 2018, TTL issued 495,571 shares to Titan
Wood Limited. As a result the non-controlling interests
shareholdings were amended to:
BP Ventures (8.8%), Medite (11.9%), BGF (2.7%), Volantis
(1.5%)
On 20 September 2017, Tricoya Ventures UK Limited ('TVUK')
issued Ordinary shares to non-controlling interests for
consideration of EUR11.50 million. In addition on the 6 October
2017, Tricoya Ventures UK Limited ('TVUK') issued Ordinary shares
to non-controlling interests for consideration of EUR2.92 million.
As a result the non-controlling interests shareholdings remained
unchanged at:
BP Chemicals (30%), Medite (8.2%)
The total carrying amount of the non-controlling interests in
TTL and TVUK at 31 March 2018 was EUR30.31 million (2017: EUR12.62
million).
The Group recognised a decrease in other reserves as summarised
below.
2018 2017
EUR'000 EUR'000
Opening Balance 7,077 885
Carrying amount of non-controlling
interests issued (18,658) (12,702)
Consideration paid by non-controlling
interests 14,420 19,123
Share issue costs relating
to non-controlling interests 1 (229)
Excess of consideration paid recognised
in Group's equity 2,840 7,077
========== ==========
27. Commitments under operating leases
The Group leases land, buildings and machinery under
non-cancellable operating lease agreements. The total future value
of the minimum lease payments that are due is as follows:
2018 2017
EUR'000 EUR'000
Operating lease payments due
Within one year 1,063 1,391
In the second to fifth years
inclusive 2,428 3,194
In greater than five years 5,339 7,332
8,830 11,918
======== ========
The majority of commitments under operating leases relate to the
Group's offices in the UK and U.S.A., together with land in The
Netherlands associated with our warehouse and offices and the land
in Hull used for the Tricoya(R) plant.
During the prior period the Group entered agreements which
resulted in new lease agreements commencing in the year ended 31
March 2018. This includes a lease relating to the land at the
Tricoya(R) plant Saltend site in Hull and a lease over land in
Arnhem, following the sale to Bruil in the period. This lease
agreement also includes substantial new warehouse and office
facilities which are have been constructed by Bruil. The building
element has been accounted for as a finance lease - see note
28.
28. Commitments under finance leases
Agreements were reached in August 2011 for the sale and
leaseback of the land and buildings in Arnhem for a total of EUR4m.
EUR2.2m was received in 2011 with the remaining amount received in
the following year, but accounted for as an operating lease.
In addition, during a prior period agreements were entered into
for the lease of office fit-out and furniture for the London head
office for a total of EUR0.4m.
In addition, in the prior period agreements were entered into
for the sale of the remaining plot of land completed in August
2016. Under the agreement with the purchaser, Bruil, they have
constructed and then leased to Accsys new warehouse and office
facilities. The construction is now complete and therefore an
increase in lease commitments has been recognised in the period.
This has been accounted for as a finance lease, with the new asset
and liability of EUR10.4m being recognised as at 31 March 2018
(2017: EURnil).
A further lease agreement with Bruil was entered into in the
period relating directly to infrastructure work associated with the
expansion of the chemical plant. This has been accounted for as a
finance lease, with a new asset and liability of EUR1.9m being
recognised as at 31 March 2018 (2017: EUR1.0m).
These transactions have resulted in a finance lease creditor of
EUR14.2m as at 31 March 2018.
Minimum lease
payments
2018 2017
EUR'000 EUR'000
Amounts payable under finance
leases:
Within one year 1,390 496
In the second to fifth years
inclusive 5,317 1,770
After five years 15,702 3,016
Less: future finance charges (8,237) (2,206)
Present value of lease obligations 14,172 3,076
========= =========
29. Commitments under loan agreements
2018 2017
EUR'000 EUR'000
Amounts payable under loan
agreements:
Within one year 2,062 -
In the second to fifth years
inclusive 18,097 5,407
In greater than five years 9,138 14,690
29,297 20,097
======== ========
The change in total borrowings in the period of EUR9.2m
consisted of an increase of a EUR7.5m cash-flow arising from the
draw-down of the Rhodia Acetow facility, EUR2.2m of accrued finance
charges, offset by EUR0.5m foreign exchange gain arising on the
Loan Notes.
Loan Notes:
On 29 March 2017 the Group issued GBP16.25 million (EUR18.38
million) of unsecured fixed rate loan notes, due 2021. GBP10.48
million of Loan Notes in principal were issued to Business Growth
Fund ('BGF'), with GBP5.77 million in principal issued to Volantis.
The BGF loan notes are subject to a 7% fixed interest rate for the
duration of their term and the Volantis loan notes are subject to a
7% fixed interest rate until 31 December 2018, with the interest
rate fixed at 9% thereafter. Interest is rolled up until 31
December 2018 on both loans, with further roll up of interest on
the Volantis loan until six-monthly redemption payments of both
loans commence on 31 December 2021 and end on 30 June 2023.
BGF is an investment company that provides long-term equity
funding to growing UK companies to enable them to execute their
strategic plans. Volantis is a global asset management firm
specialising in alternative investment strategies and is owned by
Lombard Odier.
Rhodia Acetow Facility
On 29 December 2016 the Group drew down EUR2 million of its
EUR9.5 million term loan facility with Rhodia Acetow GmBH. The
Group has since drawn down EUR5.5m on 03 November 2017 and EUR2
million on 29 March 2018. The facility is to be used to design,
procure and build an extension to the capacity of the Arnhem Plant,
with a new reactor for the manufacture of Accoya(R) at a design
capacity of approximately 20,000m(3) . This facility secured
against existing Arnhem chemical plant and associated assets and is
subject to interest at 7.5% per annum. At 31 March 2018, the Group
had EUR9.9m (2017: EUR2.0m) borrowed under this facility. Interest
is rolled up until quarterly repayment of the loan commences on 29
December 2018.
Tricoya(R) facility:
On 29 March 2017 the Company's subsidiary (Tricoya Ventures UK
Limited) entered into a six-year EUR17.2 million (EUR15 million
net) finance facility agreement with the Royal Bank of Scotland Plc
in respect of the construction and operation of the Hull Plant. The
facility is secured by fixed and floating charges over all assets
of Tricoya Ventures UK Limited. At 31 March 2017, the Group had
EUR334,000 (2017: EURnil) borrowed under the facility. The majority
of the facility will be drawn down as required, once the funds
provided by shareholders have been fully utilised. Facility
repayments will commence 12 months after practical completion of
the Hull Plant. Interest will accrue at Euribor plus a margin, with
the margin ranging from 325 to 475 basis points.
Trade receivable and inventory facilities:
Working capital facility
In May 2018 the Group amended its working capital facility with
ABN Commercial Finance, initially agreed in 2011. The facility is
now a EUR6.0m credit facility secured upon the receivables and
inventory of the Accoya(R) manufacturing business committed for a
period of 5 years.
Bank guarantee facility
In August 2016 the Group amended its credit facility agreement
with ABN AMRO Bank N.V., which had been initially agreed in 2013.
The facility is contingent liability facility enabling the Group to
issue bank guarantees in order to support the working capital and
other operational commitments of the Group with a limit of
EUR1.5m.
Both facilities are subject to interest at 2% above the ABN AMRO
base rate of 3.4% as at 31 March 2018 (2017: 3.5%). At 31 March
2018, the Group had EURnil (2017: EURnil) borrowed under both of
the facilities.
Reconciliation to net debt/(cash):
2018 2017
EUR'000 EUR'000
Less: Cash and cash equivalents 39,698 41,173
Less:
Amounts payable under loan
agreements (29,297) (20,097)
Amounts payable under finance
leases (note 28) (14,172) (3,076)
Net debt/(cash) (3,771) 18,000
========== ==========
30. Equity options
On 2 February 2016 the Company's subsidiary, Tricoya
Technologies Limited, issued Warrants to subscribe for up to
175,000 of its Series A Preference Shares in favour of BP Ventures
Limited (100,000) and Titan Wood Limited (75,000) at a price of
EUR2.00 per Warrant Share during the "Exercise Period", which
started on 2 February 2016 and runs to the earlier of either (i) 2
February 2021; (ii) the date of an Exit; and (iii) exercise of the
Option.
On the 29 March 2017, the Company announced the formation of the
Tricoya(R) Consortium and as part of this, funding was agreed with
BGF and Volantis (see note 29). In addition to the issue of the
Loan Notes the Company granted options over Ordinary Shares of the
Company to BGF and Volantis exercisable at a price of GBP0.62 per
Ordinary Share at any time until 31 December 2026 (the
'Options')
5,838,954 Options were issued to BGF and 3,217,383 Options were
issued to Volantis. In addition, the Company agreed to use its
reasonable endeavours to obtain shareholder authority at the
subsequent General Meeting to grant to BGF a further option in
respect of 2,610,218 Ordinary Shares and to grant to Volantis a
further option in respect of 1,438,284 Ordinary Shares (the
"Additional Options").
The necessary resolutions were passed at the General Meeting
held on 21 April 2017 and accordingly the Additional Options have
been converted to Options, such that at 31 March 2018 a total
13,104,839 Options exist (with 8,449,172 attributable to BGF and
4,655,667 attributable to Volantis). This represents 11.8% of the
enlarged issued share capital of the Company as at 31 March
2018.
31. Financial instruments
Financial instruments
Finance lease
Agreements were reached in August 2016 for the sale and
leaseback for the land in Arnhem resulting in proceeds of EUR4.2m
received in the year. A resulting gain of EUR635,000 was recognised
as a result of the book value of the land being lower than the sale
price. Under the arrangements, the landlord has constructed a new
warehouse and office building which is connected to Accsys'
existing manufacturing site. This building was built by the
landlord and leased to Accsys over a 20 year period with further
option to renew. The landlord is the same landlord that Accsys sold
land and buildings to in 2011 and 2012 associated with the existing
manufacturing plant.
Finance lease creditors of: EUR1,725,000 as at 31 March 2018
(2017: EUR1,869,000) relates to the sale and leaseback of land and
buildings in Arnhem in 2011 and 2012, EUR10,315,000 as at 31 March
2018 (2017: EURnil) relates to the new warehouse and office
building in Arnhem completed in the year ended 31 March 2018; and
EUR1,947,000 as at 31 March 2018 (2017: EUR948,000) relates to the
infrastructure work for the chemical plant in Arnhem. All of the
above have a 20 year lease period with the ability to extend
further. A further EUR185,000 (2017: EUR255,000) relates to the
fit-out of the London head office.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable to owners of the parent
Company, comprising share capital, reserves and accumulated
losses.
The Board reviews the capital structure on a regular basis. As
part of that review, the Board considers the cost of capital and
the risks associated with each class of capital. Based on the
review, the Group will balance its overall capital structure
through new share issues and the raising of debt if required.
No final dividend is proposed in 2018 (2017: EURnil). The Board
deems it prudent for the Company to protect as strong a statement
of financial position as possible during the current phase of the
Company's growth strategy.
Categories of financial instruments 2018 2017
EUR'000 EUR'000
Available for Sale investments - -
Loans and receivables
Trade receivables 6,659 4,133
Other receivables 136 180
Money market deposits in
Euro 1,325 1,326
Money market deposits in
Sterling 17,067 -
Money at call in Euro 7,506 18,134
Money at call in US dollars 165 77
Money at call in Sterling 13,635 21,635
Money at call in New Zealand
dollars - 1
Financial liabilities at amortised
cost
Trade payables (9,458) (6,618)
Finance lease payable (14,172) (3,076)
Other Payables - -
Loan notes and other long
term borrowings (29,297) (20,097)
(6,434) 15,695
========== ==========
Money market deposits have interest rates fixed for less than
three months at a weighted average rate of 0.36% (2017: 0.14%).
Money market deposits are held at financial institutions with high
credit ratings (Standard & Poor's rating of AA).
All assets and liabilities mature within one year except for the
finance leases, for which details are given in note 28 and loans,
for which details are given in note 29.
Trade payables are payable on various terms, typically not
longer than 30 days with the exception of some major capex
items.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that
adequate financial resources are available for the development of
its business whilst managing its currency, interest rate,
counterparty credit and liquidity risks. The Group's treasury
strategy and policy are developed centrally and approved by the
Board.
Foreign currency risk management
The Group's functional currency is the Euro with the majority of
operating costs and balances denominated in Euros. An increasing
proportion of costs will be incurred in pounds sterling as the
Group's activities associated with the Tricoya(R) plant in Hull
increase, although future revenues will be in Euros or other
currencies. The group's Loan Notes, which were issued to fund these
UK based operations, are denominated in pounds sterling. A smaller
proportion of expenditure is incurred in US dollars and pounds
sterling. In addition some raw materials, while priced in Euros,
are sourced from countries which are not within the Eurozone. The
Group monitors any potential underlying exposure to other exchange
rates. The Group holds a proportion of the cash associated with the
Tricoya(R) Consortium in pounds sterling to reflect the expected
costs associated with the construction of the plant in Hull and
accordingly is accounted for as a cash-flow hedge (see note 5).
Interest rate risk management
The Group's borrowings are limited to fixed rate loans with BGF,
Volantis and Rhodia, together with the sale and leaseback of the
Arnhem land and buildings and the lease of the office fit out and
furniture in London. The interest rate in respect of the unused
loan facility agreed with RBS Bank is variable, based on Euribor
plus a variable margin. Therefore the Group is not significantly
exposed to interest rate risk in relation to financial liabilities.
Surplus funds are invested in short term interest rate deposits to
reduce exposure to changes in interest rates. The Group does not
currently enter into any hedging arrangements, although will review
the need to do so in respect of the variable interest rate loan
facility with RBS Bank.
Credit risk management
The Group is exposed to credit risk due to its trade receivables
due from customers and cash deposits with financial institutions.
The Group's maximum exposure to credit risk is limited to their
carrying amount recognised at the balance sheet date.
The Group ensures that sales are made to customers with an
appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables
at year end to be of good credit quality including those that are
past due (see note 22). The Group is not exposed to any significant
credit risk exposure in respect of any single counterparty or any
group of counterparties with similar characteristics other than the
balances which are provided for as described in note 22.
The Group has credit risk from financial institutions. Cash
deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one
financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board, which has built an appropriate liquidity risk management
framework for the management of the Group's short, medium and long
term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profile of financial assets and
liabilities.
Fair value of financial instruments
In the opinion of the Directors, there is no material difference
between the book value and the fair value of all financial assets
and financial liabilities.
32. Capital Commitments
2018 2017
EUR'000 EUR'000
Contracted but not provided for in respect
of property, plant and equipment 34,461 38,424
Included in the above, are amounts relating to the Engineering,
Procurement and Construction contracts relating to both the
Tricoya(R) plant and the Arnhem expansion project.
33. Post Balance Sheet Events
On 1 May 2018 Accsys announced that it had agreed to purchase
the land and buildings associated with its Accoya(R) plant and
logistics centre in Arnhem from its current landlord, Bruil, having
retained a first right to buy back the property from Bruil in the
event that a third party offered to purchase it, which has now
occurred. The transaction remains conditional upon Accsys
finalising finance terms to fund the purchase price of EUR23
million (plus VAT).
Accsys is currently in discussions in this respect with a third
party bank and will provide a further update in due course. Whilst
the property has been transferred to Accsys, should satisfactory
financing terms not be agreed, the transaction will be unwound, the
property transferred back to Bruil and the previous lease
arrangements will re-commence, all without liability to Accsys.
The acquisition reflects Accsys' ambition to improve overall
financing arrangements. The financing terms, if agreed, are
expected to result in a comparable financial commitment to the
lease, although the asset and corresponding liability will increase
given part of the existing lease arrangement was recognised as an
operating lease.
The arrangement is expected to result in lower overall income
statement charge over the next 20 years, reflecting the ownership
of the freehold. Ownership of the land is also expected to provide
greater flexibility in respect of the use of the land as well as
any potential value appreciation.
Separately, in May 2018 the Group amended its working capital
facility with ABN Commercial Finance, initially agreed in 2011. The
facility is now a EUR6.0m credit facility secured upon the
receivables and inventory of the Accoya(R) manufacturing business
committed for a period of 5 years.
For further information, please contact:
Accsys Technologies PLC Paul Clegg, CEO Via MHP Communications
Hans Pauli, Executive Director, Corporate Development
Will Rudge, FD
Nominated Adviser: Oliver Cardigan
Jamie Lillywhite
Corporate Broking: Christopher Wilkinson
Numis Securities Ben Stoop +44 (0) 20 7260 1000
Tim Rowntree
MHP Communications Kelsey Traynor +44 (0) 20 3128 8100
Frank Neervoort +31 681 734 236
Off the Grid (The Netherlands) Yvonne Derkse +31 622 379 666
Notes to editors:
Accsys Technologies PLC (www.accsysplc.com) is a chemical
technology group whose primary focus is on the production of
Accoya(R) wood and Tricoya(R) wood elements, 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 London, United Kingdom, an
American office in Dallas, Texas (via its subsidiary Titan Wood,
Inc.) and technology licensing associated with the acetylation of
wood elements via its subsidiary Tricoya Technologies Limited. 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,
under the symbols 'AXS'. Accsys' operations comprise four principal
business units: (i) Accoya(R) wood production; (ii) building and
operating of Tricoya(R) wood chip acetylation plant in Hull; (iii)
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
(iv) 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.
Moreover, the Accoya(R) wood production process does not compromise
the wood's strength or machinability. The combination of
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.
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 panel products such as
medium density fibreboard and particle-board. These products
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. 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 subsidiary of TWL with exclusive rights to exploit the
Tricoya(R) brand.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SFAFAAFASEDM
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June 19, 2018 02:00 ET (06:00 GMT)
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