TIDMAXS
RNS Number : 8373G
Accsys Technologies PLC
30 November 2020
AIM: AXS
Euronext Amsterdam: AXS
30 November 2020
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Interim Results for the six months ended 30 September 2020
Strong sales recovery, improved profitability and good strategic
progress
Accsys, the fast-growing and eco-friendly company that combines
chemistry and technology to create high performance, sustainable
wood building products, announces its interim results for the six
months ended 30 September 2020 ("H1 FY 21").
H1 FY H1 FY 20 Change
21 %
Total Group revenue EUR42.9m EUR44.0m (3%)
Underlying gross
profit EUR14.3m EUR12.8m +12%
Accoya(R) Manufacturing
margin(1) 33.5% 28.6% +490bps
Underlying EBITDA(2) EUR4.3m EUR2.5m +72%
Underlying EBIT(3) EUR1.6m (EUR0.4m)
Underlying (loss)
before tax (EUR0.1m) (EUR2.2m)
Profit/(loss) before
tax EUR1.0m (EUR1.6m)
Period end net (debt)(4) (EUR16.3m) (EUR59.3m)
Accoya(R) sales
volume 26,422m(3) 28,113m(3) (6%)
Key highlights:
-- Resilient Group revenue performance supported by Accoya(R)
sales volumes; Strong rebound and rapid recovery following the
significant impact from COVID-19 in April.
-- Improved profitability driven by higher average selling
prices: Underlying gross margin of 33% (H1 FY20: 29%) and
underlying EBITDA(2) up 72% to EUR4.3m.
-- Accoya(R) business performed strongly driving an EUR2.8m
increase in Group operating cashflow(5) to EUR5.4m (H1 FY20:
EUR2.6m) together with rigorous working capital management
resulting in a EUR8.9m reduction in Group Net Debt in the
period.
-- Good progress on e xecution of strategic growth projects:
o World-first Tricoya(R) (Hull) plant construction on track to
complete Q1 CY2021 with commissioning to follow; Accoya(R) (Arnhem)
plant expansion with addition of fourth reactor on schedule.
o Accoya(R) USA JV progressing well, targeting investment
decision in H1 CY2021.
-- Ongoing sustainability focus: Review completed with new ESG
strategy and metrics published in expanded Sustainability Report(6)
; further aligning to our purpose: Changing wood to change the
world.
-- Continued focus on growth strategy and remain on track to
deliver our '5x' production capacity target by 2025.
Notes
(1) Accoya(R) Manufacturing margin is defined as Accoya(R)
segmental underlying gross profit (excluding Licence income and
marketing services) divided by Accoya(R) segmental revenue
(excluding Licence income and marketing services) (See note 2 to
the financial statements)
(2) Underlying EBITDA is defined as Operating profit/(loss)
before Exceptional items and other adjustments, depreciation and
amortisation. (See note 4 to the financial statements). Exceptional
items included Government payroll related COVID-19 grants received
of EUR0.6m
(3) Underlying EBIT is defined as Operating profit/(loss) before
Exceptional items and other adjustments. (See note 4 to the
financial statements).
(4) Net debt is defined as short term and long-term borrowings
(including lease obligations) less cash and cash equivalents. (See
note 12 to the financial statements).
(5) Group operating cashflow is Cash inflows from operating
activities before changes in working capital.
(6) The ESG report is available on the Accsys website at:
www.accsysplc.com/changing-the-world
Robert Harris, CEO commented :
"Accsys has delivered an excellent first half year, underpinned
by continued strong demand for our products and supported by our
operational agility which allowed us to adapt quickly in the face
of the pandemic. Sales of our sustainable, high-performance
Accoya(R) and Tricoya(R) wood products bounced back rapidly as the
initial disruptions from lockdown measures eased, and as we adapted
to better manage these challenges. We have built on this with
continued good progression in our profitability.
"Whilst COVID-19 continues to cause uncertainty more generally
and there remains a consequent risk of further disruption, the
second half of the financial year has started well without the
disruption experienced during the first lockdown. Strong demand has
continued, with record sales levels in October whilst production is
being maintained at capacity levels.
"Execution of our strategic growth plans progressed well during
the period as we work to expand our production capacity to meet
untapped global demand. Construction of the world's first
Tricoya(R) production plant, in Hull, UK, remains on track and has
accelerated after the initial more severe lockdown. The erection of
the acetylation tower structure was completed in October.
Additionally, the project to expand our Accoya(R) plant in the
Netherlands remains on schedule. We also continue to make good
progress in evaluating the construction of a facility in North
America with Eastman to serve this significant and growing
market.
"Sustainability sits at Accsys' core and we have today published
our Sustainability Report, setting out our ESG strategy, framework
and priorities aligned to our purpose: Changing wood to change the
world.
"Our IP and processes ensure that our products benefit from
strong competitive advantages and are aligned to the global shift
in consciousness towards sustainability. Looking ahead, we continue
to see significant growth potential and opportunity for
expansion".
There will be a presentation relating to these results at
10:00am UK time on 30 November 2020. The presentation will take the
form of a webcast and conference call, details of which are
below:
Webcast link (for audio and visual presentation):
Click on the link below or copy and paste ALL of the following
text into your browser:
https://edge.media-server.com/mmc/p/x5ua67pi
Conference call details (audio only - not recommended for use in
conjunction with the webcast link):
Event Passcode : 5193925
Local - United Kingdom: +44 (0) 2071 928338
National free phone - United Kingdom: 0800 279 6619
Local - Amsterdam, Netherlands: +31 (0) 207 956 614
National free phone - Netherlands: 0800 023 5015
Local - USA: +1 6467 413 167
National free phone - USA: 18 778 709 135
Ends
For further information, please contact:
Accsys, Investor Relations ir@accsysplc.com
Sarah Ogilvie
Numis Securities (London) +44 (0) 20 7260
Oliver Hardy (NOMAD), Ben Stoop 1000
Investec Bank plc (London) +44 (0) 20 7597
Carlton Nelson, James Rudd, Alex Wright 5970
ABN Amro (Amsterdam)
Richard van Etten, Geertje Cornelissen +31 20 344 2000
FTI Consulting (UK) +44 (0) 20 3727
Matthew O'Keeffe, Alex Le May 1340
Off the Grid (The Netherlands)
Frank Neervoort, Yvonne Derske +31 681 734 236
Chief Executive's statement
Introduction
I am very pleased to report results for the six months ended 30
September 2020 that demonstrate the resilience of our business and
the continuing strong demand for our products. We have also made
good progress in executing our growth strategy and our core purpose
of "Changing wood to change the world" as well as building our
organisational capability.
In the period we re-launched our key values. Firstly, we value
ambition and our results reflect our determination to grow our
company, and the demand and the sale of our products. Secondly, we
respect and value all stakeholders. COVID-19 remains a global event
that challenges all organisations to reflect on how they support
and ensure the health and well-being of their people, and I am
proud of the actions Accsys has and will continue to take in this
regard. Finally, we are committed to safety, quality and
sustainability.
Today we are also launching our Sustainability Report,
representing the first formal output from our on-going program me
to comprehensively review and measure our approach to Environment,
Social and Governance ('ESG') matters. This programme will ensure
that these key matters are aligned with our corporate purpose and
the management of them is embedded in our organisation as we
continue our growth journey.
We remain committed to our strategic priorities that will enable
us to achieve our goals and fulfil the substantial growth potential
in our markets. In the period, we have made good progress in our
development of new production capacity and global expansion, both
in our Accoya(R) plant expansion at Arnhem, Netherlands, and in our
Tricoya(R) new plant construction at Hull, UK, as well as in our US
and Malaysian market expansion plans.
COVID-19
Our ongoing priority in managing the effects of COVID-19 across
our business is to protect the health and safety of our people. The
protocols we have introduced for our operational site-based
employees include changing site workflow practices and shift
patterns. This has given us greater adaptability in managing
COVID-safe government working protocols than previously. The
remainder of our workforce continues to be successfully flexed to
home working around the applicable government rules and employees'
personal circumstances. I am proud of the way our people have
handled the challenges presented by COVID-19 and how we have
together adapted and responded to these dynamic times.
Preserving our balance sheet and ability to execute our growth
plans remains a key focus. COVID-19 and the measures taken by
governments to reduce the spread of the virus caused lower than
previously anticipated sales during a period when Accsys was
part-way through the completion of significant capacity expansion
projects. Ensuring that we can continue to allocate our capital to
these long-term growth projects remains an important area of focus.
This has been enabled through strong cost and working capital
management including reducing third party costs and non-essential
hiring and temporary salary reductions. Together these have helped
reduce our net debt in the period by EUR8.9m.
As previously announced, Accoya(R) sales recovered quickly after
the initial pandemic disruption in April, due to the continued
strength in demand for the product. We have been agile in our
operations, redirecting sales volumes geographically to mitigate
disruption and optimising our annual site shutdown timing around
COVID-19. We continued to work on developing market awareness and
long-term demand for our products. Both Accoya(R) and Tricoya(R)
are products that are and will increasingly disrupt traditional
wood building product markets. We are starting to move beyond
traditional B2B marketing and helping end-consumers directly
understand their product substitution choices and leading them away
from less sustainable and lower performance materials. This will
help grow underlying market demand further and increase brand
recognition, which we believe, will help drive sales volumes as our
future increased production capacity comes online.
Summary of results
The Group has delivered excellent financial performance against
the backdrop of COVID-19, with strong EBITDA growth and strong
cash-flow driven by our Accoya(R) business.
Total revenue for the six months ended 30 September 2020 reduced
by 3% to EUR42.9m (H1 FY20: EUR44.0m). Accoya(R) sales volumes of
26,422 cubic metres represent a 6% reduction compared to last year
due to COVID-19 impacting sales in April when customer supply
chains were initially disrupted. Sales volumes recovered strongly
since then with demand exceeding our production capacity in the
latter part of the period, a trend which has continued into the
second half of the year.
Average sales prices improved as a result of price increases for
Accoya(R) customers from 1 January 2020 and the taking over of
sales directly to the former Cerdia region from 1 April 2020. This
improved pricing helped underlying gross margin to increase to 33%
compared to 29% last year, when also taking account of EUR0.4m of
licence income relating to the new Accoya(R) joint venture with
Eastman in the USA.
As a result, and with an on-going focus on operating costs,
which remained relatively stable in the period, group underlying
EBITDA increased by 72% to EUR4.3m (H1 FY20: EUR2.5m). Gross
contribution continues to be impacted by the proportion of sales
used towards the production of Tricoya (R) ahead of the Hull plant
being completed, with the proportion increasing from 23.5% to 27.5%
of the total volume sold in the period. This increase in part
reflected the ability to redirect production volumes during the
start of the period which was most impacted by COVID-19.
Net debt decreased to EUR16.3m at 30 September 2020 from
EUR25.2m as at 31 March 2020. The EUR8.9m decrease was due to
EUR9.7m in-flow from operating activities (H1 FY20: EUR2.6m)
reflecting the strong operational cashflow being generated by the
Group together with positive changes in working capital, helped by
careful management of inventory and receivables given the
uncertainty arising from COVID-19. Investment in property, plant
and equipment included additions excluding capitalised interest of
EUR9.8m predominantly related to the construction progress on the
Tricoya(R) plant in Hull, offset by a EUR6.1m movement in capex
payables, due to the milestone nature of the construction. A
EUR3.2m non-cash movement decreasing Net debt was also reflected,
with the Cerdia termination fee offset against the Cerdia loan from
the start of April 2020, as previously reported.
Accoya (R) - Global performance
Six months Six months Year
ended 30 ended 30 Change ended
September September 31 March
2020 2019 2020
Accoya (R) sales volume
- cubic metres 26,422 28,113 (6%) 57,842
----------- ----------- --------- ----------
Underlying Accoya(R)
segmental revenue EUR41.8m EUR43.7m (4%) EUR90.0m
----------- ----------- --------- ----------
Accoya (R) sales revenue EUR38.7m EUR40.2m (4%) EUR82.8m
----------- ----------- --------- ----------
Licence income(1) EUR0.4m - EUR3.2m
----------- ----------- --------- ----------
Acetic acid sales EUR2.6m EUR3.3m (21%) EUR6.7m
----------- ----------- --------- ----------
Manufacturing margin
- % 33.5% 28.6% +4.9% 30.0%
----------- ----------- --------- ----------
Underlying EBITDA EUR9.2m EUR7.6m +21% EUR16.9m
----------- ----------- --------- ----------
Underlying EBIT EUR7.0m EUR5.3m +32% EUR12.6m
----------- ----------- --------- ----------
1 - FY20 Licence income was reported as exceptional income and
relates to the Cerdia termination agreement
Overall, the Accoya(R) business continued to perform strongly in
H1 FY21 with strong EBITDA growth and a good cash flow
performance.
Revenue from the sale of Accoya (R) decreased by 4% to EUR38.7m
in the first half of the year compared to the equivalent period in
the previous year. This was due to a 6% reduction in Accoya(R)
volumes sold, largely as a result of the COVID-19 disruption to our
sales channels in the first quarter. Sales returned quickly to
pre-COVID-19 levels in the second quarter and demand is now
exceeding our production capacity with strong underlying demand for
Accoya(R) .
The reduction in volumes was partially offset by an increase in
the average sales price. Price rises were implemented for all
customers, including all Accoya (R) customers from 1 January 2020,
and have been maintained through the COVID-19 period. From 1 April
2020, we have successfully transitioned the European markets into
our direct sales and marketing channels, which were previously
under exclusive licence to Cerdia. This has also supported improved
profitability by the removal of previous discount arrangements with
Cerdia.
A further price increase has been announced to our customers in
the final quarter of this calendar year to reflect anticipated raw
material cost increases and strong product demand.
Sales volume by H1 FY21 H1 FY20 Increase
region
m3 m3 %
UK & Ireland 5,878 8,048 (27%)
Rest of Europe 7,102 6,236 14%
Tricoya(R) 7,275 6,620 10%
Americas 2,231 3,111 (28%)
Benelux 2,461 2,010 22%
Asia-Pacific 1,316 1,880 (30%)
RoW 159 208 (24%)
26,422 28,113 (6%)
======== ======== =========
Sales by region varied as some regions particularly in the UK
and USA which were impacted more significantly by COVID-19 in the
first quarter than others. This was partially offset by redirecting
sales to less affected markets in this period, including to
Germany, the Nordic region and to our Tricoya (R) customers.
The transition of Cerdia's customers to Accsys on 1 April 2020
was implemented smoothly and this also enabled us to implement a
sales and marketing campaign in Germany stimulating new sales
despite it then being a very uncertain time due to COVID-19.
As noted above, sales to our Tricoya(R) licensees for the
production of Tricoya(R) panels increased resulting in 27.5% of
total sales volumes (H1 FY20: 23.5%). Together with price
increases, this resulted in revenue to Tricoya (R) customers
increasing by 22%.
The first half of the year included our annual maintenance shut
down for our Accoya (R) plant which was completed successfully and
ahead of schedule to take advantage of reduced production levels
when COVID-19 was causing significant uncertainty. Following this,
we have operated all three Accoya (R) reactors at full capacity to
meet demand.
Accoya (R) manufacturing gross margin increased to 33.5% (H1 FY
20: 28.6%). Most of the increase was due to the price increases
referred to above as well as changes in the sales mix.
Raw wood input prices remained relatively stable in the period,
however the cost of acetic anhydride, our key chemical raw
material, reduced compared to last year as a result of the
reduction in oil prices globally. We anticipate some increases in
raw material prices in the second half of the year, although expect
this to be met by the sales price increases already announced to
our customers.
Accoya (R) strategic progress
We have continued to progress our planned expansion of Accoya
(R) production capacity at our existing Accoya (R) plant in Arnhem
by 33% to 80,000 cubic metres by adding a fourth reactor. An
engineering, procurement and management services contract for the
project has been entered into and various workstreams are underway
including detailed engineering. Key long lead-time equipment orders
have been placed including the reactor itself. Construction is
targeted to commence once the necessary permits are in place. The
broader expansion project also includes increased chemical storage
and a planned upgrade of our wood handling equipment, which is also
being progressed. The expansion remains on track to be
operationally complete by the end of Q1 calendar year 2022. Our
plans on this project will provide Accsys with greater control over
timing, should COVID-19 cause unexpected disruption impacting our
sales more significantly in the future.
In August 2020 we formed a joint venture with Eastman Chemical
Company (NYSE: EMN), a world leader in the production of acetyls,
in respect of a proposed Accoya(R) plant in USA. This represents
the first stage of our operational expansion outside of Europe and
into the largest market opportunity for Accoya(R) . It would allow
us to replicate our established Accoya(R) business and technology
geographically into a market with significant potential and
represents a compelling commercial opportunity.
The JV and an associated licence agreement with the new JV
company, "Accoya USA LLC" were the first formal step in the
planning for an Accoya(R) plant in the USA. Work is now progressing
in a number of areas including developing site-specific engineering
plans and detailed capex estimates, the formalising of working
protocols between the parties as well as examining financing
options. We expect to complete these workstreams in the first half
of the 2021 calendar year, enabling a full investment decision to
be made in the next financial year.
Tricoya (R)
Strategic progress
Our construction of the world's first Tricoya(R) plant at Hull
made good progress in the period and remains on track to be
completed in Q1 calendar year 2021, followed by commissioning and
to be operational in the first half of calendar year 2021.
As previously reported, construction work on the Tricoya(R)
plant in Hull was impacted by COVID-19. Since the initial
disruption on site work has accelerated, and we continue to work
with the lead contractor to ensure construction work is completed
as quickly and as safely as possible. We reached an important
milestone in October when the top three floors of the nine-floor
acetylation tower were lifted into place. Remaining work to
complete the construction, including mechanical and electrical
work, is also progressing well with the number of staff on site
having increased.
We continue to work with the lead engineering contractor to plan
the necessary commissioning activities which will follow this and
remain confident that we will be able to benefit from the
additional capacity from the first part of the new financial
year.
We continue to work towards minimising costs on the project and
to ensure that additional costs arising due to the unprecedented
nature of the delays, are not material to the project as a whole.
Our planning allows for the plant to ramp-up production to full
capacity over approximately three years following start-up. This
reflects that this is the first plant of its type and that various
modifications and operating improvements may be identified once the
plant is operational. Once at capacity, we continue to expect that
a gross margin of approximately 40% should be achievable. This is
higher than the Accoya(R) plant gross margin due to lower wood
input costs and a higher level of automation attributable to the
continuous process used for the Tricoya (R) process.
We are also exploring the opportunity to expand Tricoya(R)
production into Malaysia. A feasibility study continues to be
progressed with PETRONAS Chemicals Group Berhad for the
construction of a Tricoya(R) plant in Malaysia. As previously
reported, the full decision to progress with the plant will follow
after the Hull Tricoya(R) plant becomes operational in order to
ensure that any engineering learnings can be factored into the
Malaysian plant design.
Following the announcement by BP, a minority investment partner
in the Tricoya(R) consortium, in June 2020 to sell its
petrochemicals business to Ineos, we have started the process of
discussing future plans with Ineos once the changeover which
includes BP's Tricoya(R) stake is complete, and we look forward to
working with Ineos in the future.
Group Strategic Development
With the significant global market opportunity for our products,
building additional production capacity in global markets is a key
element of our growth strategy. In the first half of FY2021, we
have continued to develop the group by investing in people and
processes to better support our growth including through a
programme focussing on operational effectiveness and addressing
areas identified from the employee engagement survey carried out at
the end of last financial year. We are also developing processes
and systems to support our growth and ensure that the group can
expand effectively including into new locations.
While developing and building world-first, market-disruptive
technology has its inherent challenges, as an organisation we are
increasing our focus on the execution of our construction and other
development projects. Our construction planning and project
management approaches are incorporating more detailed engineering
principles in order to improve delivery.
The launch at the end of the last financial year of Accoya(R)
Color, a true colour wood product that is tinted throughout, has
gone well with the first commercial orders received in the period
and with increasing demand. While the production ramp-up and
limited Accoya(R) stock availability will limit near term sales as
anticipated, we expect increased Accoya(R) Color sales in the
medium term.
Intellectual property
Accsys continues to invest heavily in growing, researching,
developing and protecting its valuable portfolio of intellectual
property and confidential information. We have recently reviewed
and implemented new improved procedures seeking to safeguard as
much as possible our proprietary information and are working with
teams across the Group to ensure better understanding of, and
training on, our confidentiality protocols.
Accsys's patent portfolio totals 330 patent family members,
covering 27 distinct inventions in over 40 countries. Over 60% of
the patent family members have now been granted, including 17 of
the 27 distinct inventions in Europe, USA or China. By using a
combination of patenting and know-how we continue to invest in the
generation and protection of core technologies associated with our
current and future plants for the production of Accoya(R) and
Tricoya(R) wood products.
Our principal trademark portfolio covers our brands Accoya(R) ,
Tricoya(R) , the Trimarque device and Accsys(R) , protected by
registration in over 60 countries, with recent trademark activity
focused on increasing the strength of those brands, and securing
protection for the new corporate logo and our 'changing wood to
change the world' strapline.
Accsys continues to maintain an active watch on the commercial
and IP activity of third parties to ensure its IP rights are not
infringed, and to identify any IP which could potentially hinder
our commercial activity. Accsys has recently conducted an
additional worldwide patent search which has reconfirmed our
freedom to operate position, as we continue our Accoya(R) joint
venture in the United States and our plans for a Tricoya(R) joint
venture in Malaysia.
Health and safety
As Accsys continues to grow, safety remains one of our core
values and an area we have worked hard to develop improvement in
our safety process, policies and metrics such as lost time incident
rates.
Unfortunately we have recorded an incident resulting in a
serious injury to one of our contractors. The incident, involving a
routine operation at the Arnhem production plant, has been
investigated and root cause has been established. A number of
important actions to further improve protocols have arisen from
it.
The incident serves as a reminder that health and safety of our
employees, partners, contractors and other associates and
stakeholders must remain the top priority as Accsys continues to
grow to more sites and geographies.
Environment, Social and Governance
We are very pleased to launch our Sustainability Report
following the commencement of our project to enhance and embed ESG
practices in the group. While sustainability lies at the heart of
Accsys given the green credentials of our products, our ESG
programme began with a materiality assessment, which included a
stakeholder engagement survey, to help us identify the most
important topics relevant to Accsys and our stakeholders.
We have since developed the first steps of putting in place more
detailed measures to enable us to monitor and report our progress
and these are set out in the Sustainability Report. We believe that
this will help our stakeholders to better understand the positive
impact Accsys has but will also enable us to frame our ambitions
for the future in a way which will provide greater value as we
grow. In our report, we identify the 10 issues and impact areas
that are most relevant and important to us as an organisation, and
to our stakeholders, following the extensive research and
stakeholder consultation process. Under these 10 issues we have
identified over 30 themes and goals and developed action plans.
Our 10 key issue and impact areas are:
-- Governance, management & advocacy: We strive for
first-class governance, management and stakeholder relationships to
sustain our growing scale.
-- Health & safety: Targeting zero harm by practising
continuing health and safety excellence, improved monitoring, and
embedding the importance of health and safety in our company
culture.
-- People & wellbeing: Ensuring the wellbeing of our people
through employee engagement, diversity and inclusion, development
and talent management, and rewards and recognition.
-- Innovation & technology: Innovating and utilising
technology with sustainability and quality as our goals, going
above and beyond to make a positive impact on a global scale.
-- Fair & ethical conduct: Upholding our commitment to high
ethical standards, ensuring our processes and procedures are
strengthened as we continue to grow.
-- Sustainable & quality products: Ensuring our products
continue to meet high standards of quality and sustainability by
achieving accreditations and certifications - while always meeting
our customers' needs.
-- Responsible sourcing: Sourcing timber responsibly, working
with our suppliers to ensure our needs are met and forging new
partnerships to ensure the secure supply of sustainable
materials.
-- Energy & climate change: Mitigation, adaptation and
life-cycle impact - commitment to monitoring, managing and reducing
the overall negative impacts of our operations, while maximising
the beneficial impacts of our business and products on the
world.
-- Ecological footprint: Working to minimise the ecological
impact of our operations, particularly focusing on reducing water
and waste, and adopting a circular economy approach to materials
use instead of 'take-make-waste'.
-- Society & communities: Creating a positive environmental
and social impact through a variety of activities aligned with our
purpose of "Changing wood to change the world".
To make sure these issues are core to our ongoing growth,
success and overall strategic development, we have aligned these
issues to our purpose, which together form the framework for our
ESG strategy. Under each of these 10 issues, we have identified an
expanded set of reporting metrics, and a timeline for the ongoing
development and expansion of our ESG activities.
Outlook
I have now been with Accsys for a year. While COVID-19 has made
it a dynamic first 12 months as we navigated the changing
landscape, I have been incredibly impressed by the commitment,
talent and ambition of our people here at Accsys. As a company,
there is a deep passion and belief in our products and purpose, and
strong skill and experience across the organisation. This will
support us as we propel forwards to execute our growth plans and
achieve our goals.
The resilient performance of our business in such a challenging
period confirms the underlying strength of our products and the
significant demand and growth opportunity ahead of us.
While COVID-19 continues to cause uncertainty more generally and
there remains a consequent risk of further disruption, the second
half of the financial year has started well without the disruption
experienced during the first lockdown. Strong demand has continued,
and production is being maintained at capacity levels. October saw
record sales levels with demand continuing through November. In
addition, construction activity in Hull has also continued
throughout this period.
Looking further ahead, we continue to focus on our key strategic
pillars of growing product demand, practicing manufacturing
excellence, developing our technology and building our
organisational capability.
We continue to see significant long-term growth potential and
significant opportunity for expansion. We remain on track to
deliver our '5x' production capacity growth target by 2025, by
increasing our global production capacity from 40,000 cubic metres
in 2019 to the equivalent of 200,000 cubic metres.
The next additional capacity is expected to come on stream early
in the next financial year, with the Hull plant creating much
needed dedicated Tricoya (R) capacity, but also freeing up
production capacity in the Accoya (R) plant in Arnhem. This would
bring us to a combined 100,000 m(3) equivalent annual production
capacity once the Hull plant is live. The 4(th) Accoya (R) reactor
is on track to then increase total group capacity to the equivalent
of 120,000 cubic metres by March 2022, which will be double today's
capacity. The potential Accoya (R) plant in the USA provides a
significant opportunity to target a key growth market by providing
us with a second Accoya (R) plant. The progression of the Group's
operations into new geographies also requires us to invest more in
our organisational capability to ensure we maintain our growth
trajectory.
Looking at our profitability, following our tight control and
temporary reductions in costs in H1 FY21 around COVID-19, we expect
our cost base to increase marginally in H2 FY21 as we resume some
initiatives and spending to support growth. Longer term, we expect
to continue to achieve improving profitability as each step in our
growth journey allows us to significantly increase the level of
sales and take advantage of economies of scale associated with
higher operating levels.
While being mindful of the challenges the pandemic presents, I
remain confident in the significant long-term growth opportunities
ahead and in our ability to execute our strategy in pursuit of
sustainable growth.
Rob Harris
Chief Executive
27 November 2020
Financial Review
Introduction
Accsys made excellent financial progress in the first half of
the 2021 financial year. The Group delivered a resilient revenue
and Accoya(R) sales volume performance during the first half, with
a strong and rapid recovery following the significant impact from
COVID-19 in April on sales. Despite the challenges of COVID-19, we
were pleased to deliver an increase in underlying EBIT of EUR2.0m
to EUR1.6m (H1 FY20: loss of EUR0.4m), principally driven by a
490bps increase in our Accoya(R) manufacturing margin to 33.5% (HY1
FY20 : 28.6%).
The Accoya(R) business continued to perform strongly driving a
EUR2.8m increase in Group operating cashflow before working capital
changes to EUR5.4m (H1 FY20: EUR2.6m) resulting in a EUR8.9m
reduction in Group Net Debt in the period.
Statement of comprehensive income
Group revenue decreased by 3% to EUR42.9m for the six months
ended 30 September 2020 (H1 FY20: EUR44.0m).
Accoya(R) sales volumes were 6% lower, but recovered strongly
following the impact to sales volumes in April 2020 (down 35% year
on year) resulting from COVID-19 disrupting our distribution
channels, with customer demand exceeding our production capacity by
the end of the period. The lower sales volumes were partially
offset by higher average selling prices resulting in revenue from
Accoya(R) wood decreasing by only 4% to EUR38.7m. The Group
benefited from full price sales to the former "Cerdia" region
during the period, following the early termination of the
commercial agreements with Cerdia International Gmbh ("Cerdia")
effective from 1 April 2020.
Included within Accoya(R) wood revenue are sales for the
manufacture of Tricoya(R) panels, which increased by 22% to EUR8.3m
(H1 FY20: EUR6.8m). These sales are used to develop the market for
Tricoya(R) products, ahead of the start-up of the Tricoya(R) plant,
currently under construction in Hull.
Tricoya(R) panel revenue of EUR1.1m (H1 FY20: EUR0.1m)
represented sales of Tricoya(R) panels, purchased from our
Tricoya(R) licensees, to sell into other geographies in order to
provide initial market seeding material for the global Tricoya(R)
market.
Licence revenue of EUR0.4m was attributable to the licence
agreement entered into with Accoya USA LLC, a JV company formed
with Eastman Chemical Company, with the intention to construct and
operate an Accoya(R) wood production plant to serve the North
American market. Accoya USA LLC is accounted for as a joint venture
and equity accounted for in these interim results. Licence revenue
of EUR0.3m was reflected in our Tricoya(R) segment in the prior
year period.
Other revenue of EUR2.7m (H1 FY20: EUR3.5m) predominantly
relates to the sale of acetic acid, with the decrease on the prior
year period principally due to lower average acetic acid prices and
lower production levels during the period.
Underlying Gross margin increased from 29.0% to 33.3% compared
to the prior year period, with the Accoya(R) manufacturing gross
margin also increasing by 490bps to 33.5%. These increases were
principally driven by higher average selling prices but also due to
lower average net acetyls prices. 28% of Accoya(R) sold in the
period was sold at discounted prices (for Tricoya(R) panels
manufacture). This compared to 46% in the prior year which included
sales to Cerdia and for Tricoya(R) , noting the commercial
agreements with Cerdia were terminated with effect from 1 April
2020.
Underlying other operating costs excluding depreciation and
amortisation, decreased from EUR10.3m to EUR10.0m. This decrease
was largely due to COVID-19 related temporary salary reductions for
employees (including for the directors and senior management team)
amounting to EUR0.3m. These mitigating actions together with
careful cost management during the period more than offset the
increase in average headcount of 14 compared to the prior year
period.
Depreciation and amortisation charges were largely in line with
the prior year.
Underlying finance expenses decreased to EUR1.7m (H1 FY20:
EUR1.8m) in line with lower average Borrowings.
Exceptional items in the period included COVID-19 related staff
support funding from the Netherlands and UK governments totalling
EUR0.6m. The government support schemes were claimed as a result of
the significant reduction in revenue experienced in the first
quarter as well as the delay experienced in the Tricoya(R) plant
construction project, both caused by COVID-19. These support
mechanisms and the above-mentioned salary reductions had ceased by
the beginning of August 2020.
Other adjustments for the period include a foreign exchange gain
of EUR0.5m (HY1 FY20: EUR0.6m) on loans held in pounds sterling
with BGF and Volantis and foreign exchange differences on cash held
in pounds sterling, which is used primarily to act as a cash flow
hedge against future sterling project expenditure on the new plant
being constructed in Hull and to a lesser extent, as a cashflow
hedge against future sterling corporate costs. The effective
portions of the cash flow hedges are recognised in Other
comprehensive income.
Underlying loss before tax improved by EUR2.1m to EUR0.1m loss,
from a loss before tax in the prior year period of EUR2.2m. After
taking into account exceptional items and other adjustments, profit
before tax increased by EUR2.6m to EUR1.0m (H1 FY20: loss of
EUR1.6m).
The tax expense of EUR0.6m (H1 FY20: EUR0.1m) reflects the
improved profitability of the Group.
Cash flow
Cash flow generated from operating activities of EUR9.7m
compared to EUR2.6m in the prior year period, reflects the strong
operational cash flow being generated by the Group and close
working capital management during the period as a result of the
uncertainty caused by COVID-19. As a result, we anticipate working
capital increasing in the second half of the year, in particular as
inventory levels are expected to increase to support the expected
increase in production capacity coming on stream.
At 30 September 2020, the Group held cash balances of EUR43.0m,
representing a EUR5.7m increase in the period from 31 March 2020.
The cash increase in the period is attributable to the cash flow
generated from operating activities referred to above, partially
offset by investments in tangible fixed assets of EUR3.7m.
Property, plant and equipment additions of EUR10.1m (H1 FY20:
EUR6.7m) in the period consisted of the construction of the
Tricoya(R) plant build in Hull (EUR8.7m) reflecting the
construction progress made on the project and initial costs related
to the 4(th) Reactor expansion project in Arnhem (EUR0.8m), with
the prior year period primarily relating to construction on the
Tricoya(R) plant build in Hull.
The difference between the property, plant and equipment
additions of EUR10.1m and capex investment in the Condensed
consolidated statement of cash flow of EUR3.7m principally relates
to an increase in capex payables of EUR6.1m reflecting the
milestone nature of the construction, with the capex investment
amount reflecting actual payments made in the period.
The Group also received EUR2.6m of equity during the period from
our Tricoya(R) consortium partners relating to the funding of the
Tricoya(R) plant in Hull and other Tricoya(R) related
activities.
Loan repayments and interest payments were EUR1.9m during the
period (H1 FY20: EUR2.7m), with the decrease compared to last year
principally due to repayments of EUR0.5m relating to the ABN AMRO
EUR14m term loan being deferred to the end of the loan term, as a
COVID-19 action taken by ABN AMRO together with lower interest
payments on the Cerdia loan, following the EUR3.2m reduction in the
loan balance from 1 April 2020.
Trade and other receivables increased marginally to EUR10.6m (H1
FY20: EUR10.4m), with a decrease in trade receivables and VAT
receivables balances more than offset by an increase in other
receivables.
Total inventory was marginally lower in the period at EUR15.7m (
H1 FY20: EUR15.9m) with a EUR1.3m decrease in raw materials
partially offset by a EUR1.1m increase in finished goods and work
in progress inventory. Levels of Accoya(R) inventory remain low,
with the finished goods balance representing approximately three
weeks of sales.
The increase in trade and other payables to EUR24.8m (H1 FY20:
EUR19.1m) is primarily due to accruals associated with the
construction of the Hull plant with actual cash payments being
lower, reflecting the timing of milestone payments in relation to
construction.
Financial position
Amounts payable under loan agreements decreased to EUR54.5m (H1
FY20: EUR57.6m) primarily relating to the termination fee
associated with the early termination of the Cerdia commercial
agreements, which was deducted from the Cerdia loan on 1 April
2020.
Net debt decreased by EUR8.9m in the current period to EUR16.3m
due to the strong cashflow generated from operating activities
(EUR9.7m) referred to above partially offset by Capex investment of
EUR3.7m.
The Group's balance sheet remains robust, following the Group's
EUR46.3 million (before expenses) capital raise in December 2019,
the careful management of working capital in the first half of the
financial year and the cash generated from operations. The Group
held cash balances of EUR43.0m at 30 September 2020, as well as
EUR5.2m
headroom on the ABN AMRO committed working capital facility and
EUR8.2m headroom on the Tricoya(R) RBS EUR17.2m (EUR14.6m net)
facility.
We remain very confident as to the Group's long-term prospects,
our business fundamentals and the significant opportunities for our
sustainable products.
Risks, uncertainties & Brexit
As described on page 49 to 55 of the 2020 Annual report, the
business, financial condition or results of operations of the Group
could be adversely affected by a number of risks. 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.
These specific principal risks and related mitigations (as
described in the 2020 Annual report) as currently identified by
Accsys' risk management process, have not changed significantly
since the publication of the last Annual Report.
These risks relate to the following areas:
Health, Safety & Environment; Hull plant; COVID-19; Sale of
Products; Manufacturing; Expansion; IT; Supply of raw materials;
Licensing/Partnering; Finance; Litigation & disputes;
Protection of Intellectual Property & trade secrets; Personnel;
Governance, Compliance & Law; Brexit and Investor & Public
relations.
It is noted that risks associated with health and safety remains
high, in particular in light of the incident described in the CEO's
review. In addition, the risks associated with Brexit remain under
close review in light of the absence of a trade deal although we do
not anticipate a significant impact on the group's activities in
the event that the transition period ends without a trade deal
being reached.
Going concern
These condensed consolidated 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 taking into account the
banking and finance facilities which are currently in place (See
Note 12 for details of these facilities) and the possible further
impact of COVID-19. The Directors have also reviewed a severe but
plausible downside scenario with reduced sales volumes and lower
gross margin. These forecasts indicate that, in order to continue
as a going concern, the Group is dependent on achieving certain
operating performance measures relating to the production and sales
of Accoya(R) wood from the plant in Arnhem with the collection of
on-going working capital items in line with internally agreed
budgets. The Directors' have also considered the level and timing
of capital expenditure required in relation to the new plant in
Hull which is currently being built and further expansion of the
Arnhem operation noting that the full forecast project cost has not
yet been committed to.
The Directors believe that while some uncertainty always
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control and on
this occasion with the continued heightened risk that COVID-19
entails, that there is no material uncertainty. There are a
sufficient number of alternative actions and measures within the
control of the Group that can and would be taken in order to ensure
on-going liquidity including reducing/deferring costs in some
discretionary areas as well as larger capital projects if
necessary.
Therefore the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
William Rudge
Finance Director
27 November 2020
Directors responsibility statement
The Directors confirm to the best of their knowledge that:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
Group during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
By order of the Board
Angus Dodwell
Company Secretary
27 November 2020
Condensed consolidated s tatement of comprehensive income for
the six months ended 30 September 2020
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
6 months 6 months 6 months 6 months 6 months 6 months Year Year Year
ended ended ended ended ended ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March 31 March
2020 2020 2020 2019 2019 2019 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Underlying Exceptional Total Underlying Exceptional Total Underlying Exceptional Total
items & items & items &
other other other
adjustments* adjustments* adjustments*
Accoya(R) wood
revenue 38,676 - 38,676 40,161 - 40,161 82,836 - 82,836
Tricoya(R) panel
revenue 1,110 - 1,110 58 - 58 512 - 512
Licence revenue 402 - 402 280 - 280 293 3,200 3,493
Other revenue 2,745 - 2,745 3,494 - 3,494 7,268 - 7,268
----------------- ----- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- ---------
Total revenue 2 42,933 - 42,933 43,993 - 43,993 90,909 3,200 94,109
Cost of sales (28,609) 230 (28,379) (31,184) - (31,184) (63,402) - (63,402)
Gross profit 14,324 230 14,554 12,809 - 12,809 27,507 3,200 30,707
Other operating
costs excluding
depreciation
and
amortisation (10,004) 347 (9,657) (10,339) 2 (10,337) (20,540) (165) (20,705)
EBITDA 4,320 577 4,897 2,470 2 2,472 6,967 3,035 10,002
Depreciation and
amortisation (2,765) - (2,765) (2,906) - (2,906) (5,603) - (5,603)
Total other
operating costs 3 (12,769) 347 (12,422) (13,245) 2 (13,243) (26,143) (165) (26,308)
----- ----------- ------------- ---------- ----------- ------------- ---------- ----------- -------------
Operating
profit/(loss) 1,555 577 2,132 (436) 2 (434) 1,364 3,035 4,399
Finance income 1 - 1 - - - - - -
Finance expense (1,657) 485 (1,172) (1,770) 612 (1,158) (3,517) 626 (2,891)
Share of net
profits of joint
ventures
accounted for
using the equity
method 14 - - - - - - - - -
Profit/(loss)
before taxation (101) 1,062 961 (2,206) 614 (1,592) (2,153) 3,661 1,508
Tax expense 5 (587) - (587) (65) - (65) (454) (177) (631)
Profit/(loss)
for the period (688) 1,062 374 (2,271) 614 (1,657) (2,607) 3,484 877
----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- ---------
(Loss)/gain
arising on
translation of
foreign
operations (153) - (153) 3 - 3 (11) - (11)
(Loss) arising
on foreign
currency cash
flow hedges - (428) (428) - (300) (300) - (280) (280)
Total other
comprehensive
(loss)/income (153) (428) (581) 3 (300) (297) (11) (280) (291)
Total
comprehensive
(loss)/gain for
the period (841) 634 (207) (2,268) 314 (1,954) (2,618) 3,204 586
=========== ============= ========== =========== ============= ========== =========== ============= =========
Total
comprehensive
loss for the
year is
attributable to:
Owners of Accsys
Technologies
PLC (266) 763 497 (1,687) 383 (1,304) (1,080) 3,204 2,124
Non-controlling
interests (575) (129) (704) (581) (69) (650) (1,538) - (1,538)
Total
comprehensive
(loss)/gain for
the period (841) 634 (207) (2,268) 314 (1,954) (2,618) 3,204 586
=========== ============= ========== =========== ============= ========== =========== ============= =========
Basic and
diluted
profit/(loss)
per ordinary
share 6 EUR(0.00) EUR0.01 EUR(0.01) EUR(0.01) EUR(0.01) EUR0.02
The notes set out on pages 19 to 35 form an integral part of
these condensed financial statements.
* See note 4 for details of exceptional items and other
adjustments.
Condensed consolidated s tatement of financial position at 30
September 2020
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 March
30 Sept 30 Sept 2020
Note 2020 2019
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 8 10,882 10,841 10,986
Property, plant and equipment 9 130,273 108,165 122,123
Right of use assets 4,273 4,625 4,536
Investment in joint venture 14 470 - -
145,898 123,631 137,645
---------- ---------- -----------
Current assets
Inventories 15,678 15,900 16,932
Trade and other receivables 10,560 10,414 15,308
Cash and cash equivalents 42,967 3,301 37,238
Corporation tax receivable 252 417 283
FX derivative asset - 21 -
69,457 30,053 69,761
---------- ---------- -----------
Current liabilities
Trade and other payables (24,803) (19,069) (16,867)
Obligation under lease liabilities (857) (889) (859)
Short term borrowings 12 (6,201) (6,059) (5,265)
Corporation tax payable (1,271) (193) (640)
FX derivative liability (129) - (330)
(33,261) (26,210) (23,961)
---------- ---------- -----------
Net current assets 36,196 3,843 45,800
Non-current liabilities
Obligation under lease liabilities (3,913) (4,111) (4,262)
Other long term borrowing 12 (48,298) (51,528) (52,048)
(52,211) (55,639) (56,310)
---------- ---------- -----------
Total net assets 129,883 71,835 127,135
Equity
Share capital 10 8,213 5,900 8,114
Share premium account 186,383 145,429 186,390
Other reserves 11 112,928 109,221 112,551
Accumulated loss (212,969) (218,234) (214,394)
Own shares (36) - -
Foreign currency translation reserve (121) 46 32
Capital value attributable to owners of Accsys Technologies PLC 94,398 42,362 92,693
Non-controlling interest in subsidiary 35,485 29,473 34,442
Total equity 129,883 71,835 127,135
The notes set out on pages 19 to 35 form an integral part of
these condensed financial statements.
Condensed consolidated s tatement of changes in equity for the
six months ended 30 September 2020
Total equity
Foreign attributable
currency to equity
Share trans- shareholders
capital Share Other Own lation Accumulated of the Non-Controlling Total
Ordinary premium reserves Shares reserve loss company interests Equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at
30 Sept 2019
(unaudited) 5,900 145,429 109,221 - 46 (218,234) 42,362 29,473 71,835
========= ======== ========= ======== ========= ============ ============== ================= ========
Total comprehensive
(expense)/gain for
the period - - 20 - (14) 3,421 3,427 (888) 2,539
Share based payments - - - - - 419 419 - 419
Shares issued 2,214 - - - - - 2,214 - 2,214
Premium on shares
issued - 44,281 - - - - 44,281 - 44,281
Share issue costs - (3,320) - - - - (3,320) - (3,320)
Issue of subsidiary
shares to
non-controlling
interests - - 3,310 - - - 3,310 5,857 9,167
Balance at
31 March 2020 8,114 186,390 112,551 - 32 (214,394) 92,693 34,442 127,135
========= ======== ========= ======== ========= ============ ============== ================= ========
Total comprehensive
(expense)/gain for
the period - - (428) - (153) 1,078 497 (704) (207)
Share based payments - - - - - 410 410 - 410
Shares issued 99 - - (36) - (63) - - -
Premium on - - - - - - - - -
shares issued
Share issue costs - (7) - - - - (7) - (7)
Issue of subsidiary
shares to
non-controlling
interests - - 805 - - - 805 1,747 2,552
Balance at
30 Sept 2020
(unaudited) 8,213 186,383 112,928 (36) (121) (212,969) 94,398 35,485 129,883
========= ======== ========= ======== ========= ============ ============== ================= ========
See note 11 for details concerning other reserves.
Shares issued represent a total of 1,259,449 and 727,250 shares
issued to an Employee Benefit Trust ('EBT') at nominal value on 12
May 2020 and 29 June 2020 respectively.
1,259,449 shares were issued and allotted following the vesting
in August 2016 and recent exercise of nil cost options, granted in
2013 under the Company's 2013 Long Term Incentive Plan.
727,250 shares were issued as part of the Company's reward,
incentivisation and retention strategy and in light of the
Coronavirus (COVID-19) pandemic, in lieu of cash bonuses for the
year ended 31 March 2020. These shares shall vest if the employees,
including the Executive Directors, remain in employment with the
Company to the vesting date, being 1 July 2021 (subject to certain
other provisions including regulatory, good-leaver, take-over and
committee discretion provisions).
Non-controlling interests relates to the investment of various
parties into Tricoya Technologies Limited and Tricoya UK Limited
(note 7).
The notes set out on pages 19 to 35 form an integral part of
these condensed financial statements.
Condensed consolidated s tatement of cash flow for the six
months ended 30 September 2020
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Profit/(loss) before taxation before exceptional items and other adjustments (101) (2,206) (2,153)
Adjustments for:
Amortisation of intangible assets 393 324 664
Depreciation of property, plant and equipment and right of use assets 2,372 2,581 4,939
Net finance expense 1,656 1,770 3,352
Equity-settled share-based payment expenses 410 197 615
Currency translation loss/(gain) 60 (56) (79)
Cash inflows from operating activities before changes in working capital and
exceptional items 4,790 2,610 7,338
Exceptional Items in operating activities (see note 4) 595 - 3,200
Cash inflows from operating activities before changes in working capital 5,385 2,610 10,538
========== ========== =========
Decrease/(increase) in trade and other receivables 2,154 2,474 (2,427)
Increase in deferred income - 270 190
Decrease/(increase) in inventories 1,254 (1,892) (2,924)
Increase/(decrease) in trade and other payables 809 (1,038) (3,164)
Net cash from/(used in) operating activities before tax 9,602 2,424 2,213
Tax received 76 150 165
Net cash from operating activities 9,678 2,574 2,378
========== ========== =========
Cash flows from investing activities
Interest received 2 6 19
Investment in property, plant and equipment (3,700) (6,521) (22,040)
Settlement of FX derivative (392) (59) 307
Investment in intangible assets (289) (375) (861)
Net cash used in investing activities (4,379) (6,949) (22,575)
========== ========== =========
Cashflows from financing activities
Proceeds from loans - 2,000 4,500
Other finance costs (32) (33) (79)
Proceeds from/(repayment of) trade facility draw down 827 159 (1,825)
Interest Paid (1,058) (1,209) (2,370)
Repayment of lease liabilities (443) (586) (1,022)
Repayment of loans/rolled up interest (888) (1,470) (2,942)
Proceeds from issue of share capital/sale of own shares - 7 46,504
Proceeds from issue of subsidiary shares to non-controlling interests 2,552 - 9,167
Share issue costs (7) - (3,320)
Net cash from financing activities 951 (1,132) 48,613
========== ========== =========
Net increase/(decrease) in cash and cash equivalents 6,250 (5,507) 28,416
Effect of exchange loss on cash and cash equivalents (521) (49) (35)
Opening cash and cash equivalents 37,238 8,857 8,857
Closing cash and cash equivalents 42,967 3,301 37,238
========== ========== =========
The notes set out on pages 19 to 35 form an integral part of
these condensed financial statements.
Notes to the financial statements for the six months ended 30
September 2020
1. Accounting policies
General Information
The principal activity of the Group is the production and sale
of Accoya(R) solid wood and exploitation of technology for the
production and sale of Accoya(R) wood and Tricoya(R) wood chips.
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.
The Company is a public limited company, which is listed on AIM
in the United Kingdom and Euronext in the Netherlands, and is
domiciled in the United Kingdom. The registered office is
Brettenham House, 19 Lancaster Place, London, WC2E 7EN.
The condensed consolidated financial statements were approved on
27 November 2020. These condensed consolidated financial statements
have been reviewed, not audited.
Basis of accounting
The Group's condensed consolidated financial statements in these
interim results have been prepared in accordance with IFRS issued
by the International Accounting Standards Board as endorsed by the
European Union, in particular International Accounting Standard
(IAS) 34 "interim financial reporting" and the disclosure and
transparency rules of the Financial Conduct Authority. The
financial information for the six months ended 30 September 2020
and the six months ended 30 September 2019 is unaudited. The
comparative financial information for the full year ended 31 March
2020 does not constitute the Group's statutory financial statements
for that period although it has been derived from the statutory
financial statements for the year then ended. A copy of those
statutory financial statements has been delivered to the Registrar
of Companies and which were approved by the Board of Directors on
22 June 2020. The auditors' report on those accounts was
unqualified and did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 31 March 2020.
Accounting policies
No new accounting standards, amendments or interpretations have
been adopted in the period which have any impact on these condensed
financial statements, or are expected to affect the Group's 2021
Annual Report.
Other than as described below the accounting policies adopted
are consistent with those followed in the preparation of the
Group's annual financial statements for the year ended 31 March
2020.
Joint arrangement
As detailed in note 14, the Group entered into a joint venture
agreement with Eastman Chemical Company, forming Accoya USA LLC.
The Group applies IFRS 11 for this joint arrangement, and following
assessment of the nature of this joint arrangement, has determined
it to be a joint venture. Interest in the joint venture is
accounted for using the equity method, after initially being
recognised at cost.
Going concern
These condensed consolidated 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 taking into account the
banking and finance facilities which are currently in place (See
Note 12 for details of these facilities) and the possible further
impact of COVID-19. The Directors have also reviewed a severe but
plausible downside scenario with reduced sales volumes and lower
gross margin. These forecasts indicate that, in order to continue
as a going concern, the Group is dependent on achieving certain
operating performance measures relating to the production and sales
of Accoya(R) wood from the plant in Arnhem with the collection of
on-going working capital items in line with internally agreed
budgets. The Directors' have also considered the level and timing
of capital expenditure required in relation to the new plant in
Hull which is currently being built and further expansion of the
Arnhem operation noting that the full forecast project cost has not
yet been committed to.
The Directors believe that while some uncertainty always
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control and on
this occasion with the continued heightened risk that COVID-19
entails, that there is no material uncertainty. There are a
sufficient number of alternative actions and measures within the
control of the Group that can and would be taken in order to ensure
on-going liquidity including reducing/deferring costs in some
discretionary areas as well as larger capital projects if
necessary.
Therefore the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
2. Segmental reporting
The Group's business is the manufacturing of and development,
commercialisation and licensing of the associated proprietary
technology for the manufacture of Accoya(R) wood, Tricoya(R) wood
chips 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.
Accoya (R)
Accoya(R) Segment
-------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31
September September September September September September March March March
2020 2020 2020 2019 2019 2019 2020 2020 2020
Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL
items & items & items &
Other Other Other
Adjustments Adjustments Adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R)
wood revenue 38,676 - 38,676 40,161 - 40,161 82,836 - 82,836
Licence
revenue 400 - 400 - - - 5 3,200 3,205
Other revenue 2,739 - 2,739 3,494 - 3,494 7,187 - 7,187
Total Revenue 41,815 - 41,815 43,655 - 43,655 90,028 3,200 93,228
Cost of sales (27,550) 230 (27,320) (31,123) - (31,123) (62,878) - (62,878)
Gross profit 14,265 230 14,495 12,532 - 12,532 27,150 3,200 30,350
Other
operating
costs
excluding
depreciation
and
amortisation (5,100) 249 (4,851) (4,965) - (4,965) (10,204) - (10,204)
EBITDA 9,165 479 9,644 7,567 - 7,567 16,946 3,200 20,146
Depreciation
and
amortisation (2,132) - (2,132) (2,224) - (2,224) (4,323) - (4,323)
Profit from
operations 7,033 479 7,512 5,343 - 5,343 12,623 3,200 15,823
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 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 138 (H1 FY20: 128)
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.
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Accoya(R) segmental underlying EBITDA 9,165 7,567 16,946
-------------- -------------- ----------
Accoya(R) underlying Licence Income (400) - (5)
Other income, predominantly for
marketing services - (84) (168)
Accoya(R) segmental manufacturing
EBITDA (excluding licence income) 8,765 7,483 16,773
============== ============== ==========
Accoya(R) segmental gross profit 14,265 12,532 27,150
-------------- -------------- ----------
Accoya(R) Licence Income (400) - (5)
Other income, predominantly for
marketing services - (84) (168)
Accoya(R) Manufacturing gross profit 13,865 12,448 26,977
============== ============== ==========
Gross Accoya(R) Manufacturing Margin 33.5% 28.6% 30.0%
Tricoya(R)
Tricoya(R) Segment
--------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31
September September September September September September March March March
2020 2020 2020 2019 2019 2019 2020 2020 2020
Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL
items & items & items &
Other Other Other
Adjustments Adjustments Adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ -----------
Tricoya(R)
panel
revenue 1,110 - 1,110 58 - 58 512 - 512
Licence
revenue 2 - 2 280 - 280 288 - 288
Other revenue 6 - 6 - - - 81 - 81
Total Revenue 1,118 - 1,118 338 - 338 881 - 881
Cost of sales (1,059) - (1,059) (61) - (61) (524) - (524)
Gross profit 59 - 59 277 - 277 357 - 357
Other
operating
costs
excluding
depreciation
and
amortisation (1,243) 72 (1,171) (1,334) 2 (1,332) (3,210) (165) (3,375)
EBITDA (1,184) 72 (1,112) (1,057) 2 (1,055) (2,853) (165) (3,018)
Depreciation
and
amortisation (247) - (247) (210) - (210) (397) - (397)
Loss from
operations (1,431) 72 (1,359) (1,267) 2 (1,265) (3,250) (165) (3,415)
Revenue and costs are those attributable to the business
development of the Tricoya(R) process and establishment of the
Tricoya(R) Hull Plant.
See note 4 for explanation of Exceptional Items and other
adjustments.
Average headcount = 18 (H1 FY20: 18), 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
-------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31
September September September September September September March March March
2020 2020 2020 2019 2019 2019 2020 2020 2020
Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL
items & items & items &
Other Other Other
Adjustments Adjustments Adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Total Revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other
operating
costs
excluding
depreciation
and
amortisation (3,203) 16 (3,187) (3,475) - (3,475) (6,055) - (6,055)
EBITDA (3,203) 16 (3,187) (3,475) - (3,475) (6,055) - (6,055)
Depreciation
and
amortisation (345) - (345) (394) - (394) (731) - (731)
Loss from
operations (3,548) 16 (3,532) (3,869) - (3,869) (6,786) - (6,786)
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 4 for explanation of Exceptional Items and other
adjustments.
Average headcount = 26 (H1 FY20: 20).
Research and Development
Research and Development Segment
---------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31
September September September September September September March March March
2020 2020 2020 2019 2019 2019 2020 2020 2020
Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL
items & items & items &
Other Other Other
Adjustments Adjustments Adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ------------
Total Revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other
operating
costs
excluding
depreciation
and
amortisation (458) 10 (448) (565) - (565) (1,071) - (1,071)
EBITDA (458) 10 (458) (565) - (565) (1,071) - (1,071)
Depreciation
and
amortisation (41) - (41) (78) - (78) (152) - (152)
Loss from
operations (499) 10 (489) (643) - (643) (1,223) - (1,223)
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 IAS 38. (see note 8).
See note 4 for explanation of Exceptional Items and other
adjustments.
Average headcount = 8 ( H1 FY20 : 10).
Total
Total
------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 months
September September September September September September March March ended 31
2020 2020 2020 2019 2019 2019 2020 2020 March
2020
Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional
items & items & items & TOTAL
Other Other Other
Adjustments Adjustments Adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R) wood
revenue 38,676 - 38,676 40,161 - 40,161 82,836 - 82,836
Tricoya(R)
panel revenue 1,110 - 1,110 58 - 58 512 - 512
Licence
revenue 402 - 402 280 - 280 293 3,200 3,493
Other revenue 2,745 - 2,745 3,494 - 3,494 7,268 - 7,268
Total Revenue 42,933 - 42,933 43,993 - 43,993 90,909 3,200 94,109
Cost of sales (28,609) 230 (28,379) (31,184) - (31,184) (63,402) - (63,402)
Gross profit 14,324 230 14,554 12,809 - 12,809 27,507 3,200 30,707
Other
operating
costs
excluding
depreciation
and
amortisation (10,004) 347 (9,657) (10,339) 2 (10,337) (20,540) (165) (20,705)
EBITDA 4,320 577 4,897 2,470 2 2,472 6,967 3,035 10,002
Depreciation
and
amortisation (2,765) - (2,765) (2,906) - (2,906) (5,603) - (5,603)
Profit/(Loss)
from
operations 1,555 577 2,132 (436) 2 (434) 1,364 3,035 4,399
Finance income 1 - 1 - - - - - -
Finance
expense (1,657) 485 (1,172) (1,770) 612 (1,158) (3,517) 626 (2,891)
Profit/Loss)
before
taxation (101) 1,062 961 (2,206) 614 (1,592) (2,153) 3,661 1,508
See note 4 for explanation of Exceptional Items and other
adjustments.
Segmental reporting continued
Assets and liabilities on a segmental basis:
Accoya(R) Tricoya(R) Corporate R&D TOTAL
Sept 2020 Sept 2020 Sept 2020 Sept 2020 Sept 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 61,915 79,278 4,634 71 145,898
----------- ----------- ----------- ----------- -----------
Current assets 26,982 10,325 26,637 5,513 69,457
----------- ----------- ----------- ----------- -----------
Current liabilities (8,604) (16,684) (7,941) (32) (33,261)
----------- ----------- ----------- ----------- -----------
Net current assets 18,378 (6,359) 18,696 5,481 36,196
Non-current liabilities (23,730) (8,956) (19,525) - (52,211)
----------- ----------- ----------- ----------- -----------
Net assets 56,563 63,963 3,805 5,552 129,883
=========== =========== =========== =========== ===========
Cash and cash equivalents 2,890 9,561 30,468 48 42,967
=========== =========== =========== =========== ===========
Borrowings (29,302) (9,395) (20,572) - (59,269)
=========== =========== =========== =========== ===========
Investment in PPE (Capex) 1,220 2,299 160 21 3,700
=========== =========== =========== =========== ===========
Accoya(R) Tricoya(R) Corporate R&D TOTAL
Sept 2019 Sept 2019 Sept 2019 Sept 2019 Sept 2019
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 62,170 56,464 4,831 166 123,631
----------- ----------- ----------- ----------- -----------
Current assets 24,488 3,235 (2,933) 5,263 30,053
----------- ----------- ----------- ----------- -----------
Current liabilities (12,517) (7,576) (5,997) (120) (26,210)
----------- ----------- ----------- ----------- -----------
Net current assets 11,971 (4,341) (8,930) 5,143 3,843
Non-current liabilities (29,798) (6,292) (19,549) - (55,639)
----------- ----------- ----------- ----------- -----------
Net assets 44,343 45,831 (23,648) 5,309 71,835
=========== =========== =========== =========== ===========
Cash and cash equivalents 113 2,268 891 29 3,301
=========== =========== =========== =========== ===========
Borrowings (35,603) (6,362) (20,550) (72) (62,587)
=========== =========== =========== =========== ===========
Investment in PPE (Capex) 804 5,294 423 - 6,521
=========== =========== =========== =========== ===========
Accoya(R) Tricoya(R) Corporate R&D TOTAL
March 2020 March 2020 March 2020 March 2020 March 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 62,143 70,638 4,773 91 137,645
----------- ----------- ----------- ----------- -----------
Current assets 38,777 10,896 15,330 4,758 69,761
----------- ----------- ----------- ----------- -----------
Current liabilities (11,692) (9,407) (2,833) (29) (23,961)
----------- ----------- ----------- ----------- -----------
Net current assets 27,085 1,489 12,497 4,729 45,800
Non-current liabilities (27,740) (8,727) (19,843) - (56,310)
----------- ----------- ----------- ----------- -----------
Net assets 61,488 63,400 (2,573) 4,820 127,135
=========== =========== =========== =========== ===========
Cash and cash equivalents 9,501 8,399 19,278 60 37,238
=========== =========== =========== =========== ===========
Borrowings (32,338) (9,142) (20,954) - (62,434)
=========== =========== =========== =========== ===========
Investment in PPE (Capex) 2,448 18,935 657 - 22,040
=========== =========== =========== =========== ===========
The segmental assets in the current year were predominantly held
in the UK and mainland Europe (Prior Year UK and mainland Europe).
Additions to property, plant, equipment and intangible assets in
the current year were predominantly incurred in the UK and mainland
Europe (Prior Year UK and mainland Europe). There are no
significant intersegment revenues.
Segmental reporting continued
Analysis of underlying revenue by geographical destination:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
UK & Ireland 17,495 19,052 39,208
Rest of Europe 13,136 11,974 24,962
Benelux 4,458 3,978 8,510
Americas 4,926 5,575 10,949
Asia-Pacific 2,858 3,287 6,293
Rest of World 60 127 987
42,933 43,993 90,909
========== ========== =========
Sales to UK and Ireland include the sales to MEDITE.
3. Other operating costs
Other operating costs consist of the operating costs, other than
the cost of sales, associated with the operation of the plant in
Arnhem, the offices in Dallas and London and certain pre-operating
costs associated with the plant in Hull:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Sales and marketing 1,476 1,653 3,295
Research and development 448 565 1,071
Other operating
costs 2,743 2,950 6,742
Administration
costs 5,567 5,171 9,432
Exceptional Items and other adjustments (577) (2) 165
Other operating costs excluding
depreciation and amortisation 9,657 10,337 20,705
========== ========== =========
Depreciation and amortisation 2,765 2,906 5,603
Total other operating costs 12,422 13,243 26,308
========== ========== =========
Administrative costs include costs associated with Business
Development and Legal departments, Intellectual Property as well as
Human Resources, IT, Finance, Management and General Office and
include the costs of the Group's head office costs in London, the
US office in Dallas and the Hull office.
The total cost of EUR12.4m in the current period includes
EUR1.4m in respect of Tricoya(R) segment (H1 FY20: EUR1.5m).
Group average employee headcount increased to 190 in the period
to 30 September 2020, from 176 in the period to 30 September
2019.
During the period, the Group received Government grants relating
to the COVID-19 response, of which EUR460,000 was received in the
Netherlands (Netherlands NOW scheme), and EUR135,000 in the UK (UK
Coronavirus job retention scheme). Of the Netherlands total,
EUR230,000 was recognised as a reduction to cost of sales, and
EUR230,000 as a reduction to operating costs. In addition to the
Government payroll related COVID-19 grants, temporary salary
reductions for employees (including for the Directors and Senior
Management team) amounted to EUR315,000. Of the total EUR680,000
reduction to operating expense, EUR301,000 relates to the Accoya(R)
segment, EUR161,000 to the Tricoya(R) segment, EUR200,000 to the
Corporate segment, and EUR18,000 to the R&D segment.
During the period, EUR289,000 (H1 FY20: EUR375,000) of internal
development & patent related costs were capitalised and
included in intangible fixed assets, including EUR218,000 (H1 FY20:
EUR320,000) which were capitalised within Tricoya Technologies
Limited ('TTL'). EUR18,000 of internal costs have been capitalised
in relation to our plant build in Hull, UK (H1 FY20: EUR32,000).
Both are included within tangible fixed assets.
4. Exceptional Items and Other Adjustments
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Government grant income 595 - -
Cerdia contract termination fee - Licence revenue - - 3,200
Total exceptional items 595 - 3,200
--------- --------- ---------
Foreign exchange differences arising on Tricoya(R) cash held - Operating costs (18) 2 (165)
Foreign exchange differences arising on Loan Notes - incl. in Finance expense 485 612 626
Foreign exchange differences on cash held - Other comprehensive (loss) (237) (113) (96)
Revaluation of FX forwards used for cash-flow hedging - Other comprehensive
(loss) (191) (187) (184)
Total other adjustments 39 314 181
--------- --------- ---------
Tax on exceptional items and other adjustments - - (177)
Total exceptional items and other adjustments 634 314 3,204
========= ========= =========
Exceptional Items
In the prior year, an exceptional licence fee revenue of EUR3.2m
resulted from the early termination of the Cerdia commercial
agreements. The amount was recorded as a reduction to net debt from
1 April 2020, with the fee offset against our loan held with Cerdia
which continues.
Other Adjustments
Foreign exchange differences in the Tricoya(R) segment have
occurred due to pounds sterling held within the consortium for the
ongoing Hull plant build and to a lesser extent, pounds sterling
held within the Corporate segment for future sterling corporate
costs. The Group has mitigated these currency exchange risks by
adopting hedge accounting under IFRS 9, Financial Instruments. The
effective portion of the foreign exchange movement is recognised in
other comprehensive income, with the ineffective portion recognised
in Operating costs.
Foreign exchange differences also arise on the pounds sterling
denominated loan notes, entered into in a prior period. These
exchange rate differences are included as finance expenses.
5. Tax expense
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
(a) Tax recognised in the statement
of comprehensive income comprises:
Current tax expense/(credit)
UK Corporation tax on losses for the
year - - -
Research and development tax (credit)/expense
in respect of current year (45) 65 28
(45) 65 28
Overseas tax at rate of 15% 4 - (30)
Overseas tax at rate of 25% 628 - 633
Deferred Tax
Utilisation of deferred tax asset - - -
Total tax expense reported in the statement
of comprehensive income 587 65 631
========== ========== =========
6. Profit/(loss) per share
Unaudited Unaudited Unaudited Unaudited Audited Audited
6 months 6 months 6 months 6 months Year Year
ended ended ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March
2020 2020 2019 2019 2020 2020
Underlying Total Underlying Total Underlying Total
Weighted average number of
Ordinary shares in issue ('000) 163,823 163,823 117,988 117,988 132,721 132,721
Profit/(Loss) for the period attributable
to owners of Accsys Technologies PLC
(EUR'000) (113) 1,078 (1,690) (1,007) (1,069) 2,415
Basic and diluted profit/(loss) per share EUR(0.00) EUR0.01 EUR(0.01) EUR(0.01) EUR(0.01) EUR0.02
Basic and diluted losses per share are based upon the same
figures. IAS 33 "Earning per share" defines Dilutive share options
as share options which would decrease profit per share or increase
loss per share. Equity options if exercised, would decrease the
loss per share.
7. 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 a targeted production capacity of
30,000 metric 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 2017. TTL has then invested, alongside BP
Chemicals and MEDITE, in Tricoya UK Limited ("Tricoya UK"), a
special purpose subsidiary of TTL that will construct, own and
operate the Hull Plant. The company changed its name from Tricoya
Ventures UK Limited to Tricoya UK Limited on 3rd September
2020.
BP have invested EUR29.5 million in the Tricoya(R) Project,
including EUR21.4 million as equity in Tricoya UK by BP Chemicals
and EUR8.1 million as equity in TTL by BP Ventures. All funding was
received by 30 September 2020, with EUR0.1m being received in the
period ended 30 September 2020.
MEDITE have invested EUR14.1 million in the Tricoya(R) Project,
including EUR8.0 million as equity in TTL and EUR6.1 million as
equity in Tricoya UK. All funding was received by 30 September
2020, with EUR2.1m being received in the period ended 30 September
2020 and a further issue of 495,311 shares as a result of MEDITE
continuing to seed the market with Tricoya(R) panels ensuring
continued market development ahead of the completion of the Hull
Plant.
In the period to 30 September 2020, the Group's shareholding in
TTL decreased from 77.8% to 76.3% following investment of
EUR0.7m.
In the year ended 31 March 2017, BGF and Volantis invested an
aggregate of GBP19.0 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 GBP19.0
million total. BGF have invested EUR2.5 million in the Tricoya(R)
Project as equity in TTL. All funding was received by 30 September
2020, with EUR0.4m being received in the period ended 30 September
2020.
In October 2020, post the interim reporting date, Accsys
(EUR3.7m), BP Ventures (EUR0.4m), MEDITE (EUR0.5m) and BGF
(EUR0.1m) together invested EUR4,7m into TTL. TTL invested EUR4m of
this amount received into Tricoya UK. In addition, BP Chemicals
invested EUR1.9m and MEDITE invested EUR0.5m into Tricoya UK.
In the year ended 31 March 2017, Tricoya UK entered a six-year
EUR17.2 million (EUR14.6 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 30 September 2020 the Group
have utilised EUR9.0m (2020: EUR8.7m) of the facility.
The Group has consolidated the results of TTL and Tricoya UK 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 Tricoya UK Ltd, are set out below:
TTL Group income statement:
Consolidated Consolidated Consolidated
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Tricoya(R) panel revenue 1,110 58 511
Licence revenue 2 280 288
Other income 6 - 82
Total revenue 1,118 338 881
Cost of Sales Tricoya(R) panel (1,059) (61) (538)
Gross profit 59 277 343
Costs:
Staff costs (902) (983) (2,879)
Research & development (excluding staff costs) (108) (16) (228)
Intellectual Property (77) (98) (203)
Other Operating costs (131) (388) (388)
Depreciation & Amortisation (247) (210) (397)
EBIT (1,406) (1,418) (3,752)
EBIT attributable to Accsys shareholders (704) (768) (2,214)
Tricoya(R) panel revenue represents panels purchased by Tricoya
Technologies Ltd from MEDITE, sold to customers in other regions as
market seeding.
Included within staff costs are the amounts received under the
UK Government furlough scheme, and lower costs due to temporary
salary reductions, totalling EUR161,000.
TTL Group balance sheet at 30 September 2020:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 4,263 3,970 4,216
Property, Plant and Equipment 74,187 51,632 65,557
Right of use assets 829 862 865
79,279 56,464 70,638
Current assets
Trade and other receivables 772 946 2,378
Inventory 151 - 53
Cash and cash equivalents 9,561 2,268 8,399
FX Derivative Asset - 21 -
10,484 3,235 10,830
Current liabilities
Trade and other payables (17,094) (8,354) (10,419)
FX Derivative liability (129) - (330)
(17,223) (8,354) (10,749)
Non-current liabilities
Long term borrowing (8,586) (5,514) (8,284)
(8,586) (5,514) (8,284)
Net current assets (6,739) (5,119) 81
Net assets 63,954 45,831 62,435
Value attributable to Accsys Technologies 28,469 16,358 27,993
Value attributable to Non-controlling interest 35,485 29,473 34,442
8. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 31 March 2019 6,796 73,582 4,231 84,609
Additions 209 166 - 375
At 30 September 2019 7,005 73,748 4,231 84,984
Additions 182 303 - 485
At 31 March 2020 7,187 74,051 4,231 85,469
Additions 95 194 - 289
At 30 September 2020 7,282 74,245 4,231 85,758
Accumulated amortisation
At 31 March 2019 1,796 72,023 - 73,819
Amortisation 171 153 - 324
At 30 September 2019 1,967 72,176 - 74,143
Amortisation 179 161 - 340
At 31 March 2020 2,146 72,337 - 74,483
Amortisation 180 213 - 393
At 30 September 2020 2,326 72,550 - 74,876
Net book value
At 31 March 2019 5,000 1,559 4,231 10,790
At 30 September 2019 5,038 1,572 4,231 10,841
At 31 March 2020 5,041 1,714 4,231 10,986
At 30 September 2020 4,956 1,695 4,231 10,882
9. Property, plant and equipment
Land and buildings Plant and machinery Office equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
Opening balance at 31 March 2019 17,976 103,676 2,685 124,337
Additions - 6,480 265 6,745
Foreign currency translation gain - - 4 4
At 30 September 2019 17,976 110,156 2,954 131,086
Additions - 15,535 290 15,825
Foreign currency translation (loss) - - (1) (1)
At 31 March 2020 17,976 125,691 3,243 146,910
Additions - 9,904 198 10,102
Foreign currency translation (loss) - - (9) (9)
At 30 September 2020 17,976 135,595 3,432 157,003
Depreciation
Opening balance at 31 March 2019 279 19,409 1,244 20,932
Charge for the period 179 1,702 104 1,985
Foreign currency translation gain - - 4 4
At 30 September 2019 458 21,111 1,352 22,921
Charge for the period 179 1,585 103 1,867
Foreign currency translation (loss) - - (1) (1)
At 31 March 2020 637 22,696 1,454 24,787
Charge for the period 179 1,604 168 1,951
Foreign currency translation gain - - (8) (8)
At 30 September 2020 816 24,300 1,614 26,730
Net book value
At 31 March 2019 17,697 85,998 1,577 105,272
At 30 September 2019 17,518 89,045 1,602 108,165
At 31 March 2020 17,339 102,995 1,789 122,123
At 30 September 2020 17,160 111,295 1,818 130,273
Plant and machinery assets with a net book value of
EUR73,876,000 relating to the Hull Plant are held as assets under
construction and are not depreciated, and EUR1,478,000 relating to
the further expansion of the Arnhem Plant (31 March 2020:
EUR66,409,000 relating to the Hull Plant and EUR725,000 relating to
the further expansion of the Arnhem Plant).
The carrying value of property, plant and equipment on
consolidation is split between two cash generating units,
representing the Accoya(R) and Tricoya(R) segments. The recoverable
amount of property, plant and equipment 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 12 years, including a five year
forecast and seven years of 1.8% growth plus assumptions concerning
a terminal value and based on a pre-tax discount rate of 10% per
annum (31 March 2020: 10%).
The key assumptions used in the value in use calculations
are:
-- the level of future licence fees and manufacturing revenues
estimated by management;
-- the completion of construction of additional facilities on
time (and associated output); and
-- the discount rate.
The Directors have considered whether a reasonably possible
change in assumptions may result in an impairment. The CGU most
susceptible to an impairment given a change in assumptions is the
Tricoya(R) CGU.
The impact on the value in use determined is:
-- Reduction in sales growth rate by 1% = EUR17m
-- Increase in discount rate by 1% = EUR14m
10. Share capital
In the period ended 30 September 2019:
Of the Ordinary Shares which had been issued to the EBT in the
previous year, 145,918 Ordinary Shares vested on 01 July 2019. Of
these beneficiaries elected to sell 106,448 Ordinary Shares in the
market, with sale date of 31 July 2019.
In the period ended 31 March 2020:
On 23 December 2019, 27,239,764 Firm Placing Shares and
16,855,474 Open Offer Shares were issued as part of the capital
raise to fund the Arnhem plant expansion, completion of the
Tricoya(R) plant in Hull, preliminary work in the United States and
working capital requirements related to these activities. The
Shares were issued at a price of EUR1.05 per Ordinary share,
raising gross proceeds of EUR46.3 million (before expenses).
The Group's Employee Share Participation Plan (see note 15 of
the Group Financial Statements for the year ended 31 March 2020 for
further details) was re-introduced in November 2019. In February
2020 various employees subscribed for a total of 204,612 Shares at
an acquisition price of EUR1.095 per Share, with these shares
issued to a trust, to be released to the employees after one year,
together with an additional share on a matched basis (subject to
continuing employment within the Group).
In the period ended 30 September 2020:
1,259,449 Shares were issued on 12 May 2020 to an Employee
Benefit Trust ('EBT') following the exercise of nil cost options,
granted under the Company's 2013 Long Term Incentive Plan
("LTIP").
727,250 shares were issued on 29 June 2020 to an EBT at nominal
value, representing the annual bonus payable to Group employees for
the year ended 31 March 2020, which has been paid in the form of
shares rather than cash on this occasion, as previously set out in
the 2020 Annual Report.
11. Other Reserves
Capital redemp- Hedging Effective-ness
tion reserve Merger reserve reserve Other reserve Total Other reserves
EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 31 March
2019 148 106,707 317 2,349 109,521
Total Comprehensive
(expense) for the
period - - (300) - (300)
Balance at 30 September
2019 148 106,707 17 2,349 109,221
Issue of subsidiary
shares to
non-controlling
interests - - - 3,310 3,310
Total Comprehensive
income for the period - - 20 - 20
Balance at 31 March
2020 148 106,707 37 5,659 112,551
Issue of subsidiary
shares to
non-controlling
interests - - - 805 805
Total Comprehensive
(expense) for the
period - - (428) - (428)
Balance at 30 September
2020 148 106,707 (391) 6,464 112,928
The closing balance of the capital redemption reserve represents
the amounts transferred from share capital on redemption of
deferred shares in a prior period.
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) and Corporate
segments (note 1).
The other reserve represents the amounts received for subsidiary
share capital from non-controlling interests net with the carrying
amount of non-controlling interests issued.
12. Commitments under loan agreements
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
Amounts payable under loan
agreements:
Within one year 6,703 7,736 5,644
In the second to fifth years
inclusive 56,336 60,010 61,855
In greater than five years 223 1,901 1,120
Less future finance charges (8,763) (12,060) (11,306)
Present value of loan obligations 54,499 57,587 57,313
The decrease in total borrowings in the period since 31 March
2020 of EUR2.8m consisted of a reduction of EUR3.2m from the Cerdia
Production facility, explained further below, repayment on the
Cerdia loan of EUR0.4m and repayment on the ABN lease loan of
EUR0.4m, and EUR0.5m foreign exchange gain arising on the loan
notes with BGF & Volantis, offset by a EUR0.8m drawdown on our
working capital facility and EUR0.9m of accrued finance
charges.
Facilities relating to purchase of Arnhem land and
buildings:
On 1 August 2018 the Group entered into a package of facilities
to fully finance the purchase of the land and buildings in Arnhem.
The partially amortising package of loans includes the
following:
- EUR14.0m loan with ABN Amro Bank. The loan is partially
repayable over a five-year term with a final payment of EUR9.25m.
Interest is fixed at 3% and the loan is secured on the land and
buildings. During the period, repayments totalling EUR0.5m were
deferred by ABN Amro Bank, as a COVID-19 action, to the end of the
loan term.
- EUR5.0m lease loan with ABN Asset Based Finance is repayable
over a five-year term with an implied interest rate of
approximately 3%. The loan is secured on the first two Accoya(R)
reactors.
- EUR4.0m loan with Bruil, the seller and previous landlord. The
balance is repayable from July 2021 to July 2023 with interest
fixed at 5%. The loan is unsecured.
Loan Notes:
On 29 March 2017 the Group issued GBP16.3 million (EUR18.4
million) of unsecured fixed rate loan notes, due 2021. GBP10.5
million of Loan Notes in principal were issued to Business Growth
Fund ('BGF'), with GBP5.8 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.
Cerdia Production Facility:
The EUR9.5 million term loan facility with Cerdia Production
GmBH was used to design, procure and build the third reactor of the
Arnhem Plant. This facility is secured against the third reactor of
the Arnhem chemical plant and associated assets and is subject to
interest at 7.5% per annum. At 30 September 2020, the Group had
EUR4.6m (31 March 2020: EUR8.3m) borrowed under this facility.
Quarterly repayments of the loan commenced on 21 December 2018 and
continue until November 2025.
In a prior period, the Group entered into an agreement with
Cerdia Produktions GmbH ("Cerdia") under which Accsys took on
responsibility for commercial activities under agreements with
Cerdia relating to Accoya(R) wood, which terminated as of 1 April
2020 (the "Termination Agreement"). Under the terms of the
Termination Agreement, payments to Accsys included fees of EUR3.2
million, which was recognised as an exceptional item in the year
ended 31 March 2020. The EUR3.2 million was deducted from the loan
balance on 1 April 2020, with subsequent repayments for the
remaining term of the loan being reduced accordingly
Tricoya(R) facility:
On 29 March 2017 the Company's subsidiary, Tricoya UK Limited
entered into a six-year EUR17.2 million (EUR14.6 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 UK Limited. At 30 September 2020, the Group had EUR9.0m
(31 March 2020: EUR8.7m) borrowed under the facility. The facility
is to be drawn down as required, and 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
The facility is a EUR6.0m credit facility with ABN Commercial
Finance secured upon the receivables and inventory of the Accoya(R)
manufacturing business committed for a period of 5 years. At 30
September 2020, the Group had drawn EUR0.8m (31 March 2020: EURnil)
on this facility.
Bank guarantee facility
The EUR1.5m bank guarantee facility is held with ABN AMRO Bank
N.V. enabling the Group to issue bank guarantees in order to
support the working capital and other operational commitments of
the Group.
Both facilities are subject to interest at 2% above the ABN AMRO
base rate.
Reconciliation to net (debt)/cash:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
Cash and cash equivalents 42,967 3,301 37,238
Less:
Amounts payable under loan
agreements (54,499) (57,587) (57,313)
Amounts payable under lease
liabilities (4,770) (5,000) (5,121)
Net (debt)/cash (16,302) (59,286) (25,196)
Group Net Debt includes Net cash held in the Tricoya(R) segment
of EUR0.2m (31 March 2020 : Net debt of EUR0.7m), with Net Debt of
EUR16.5m (31 March 2020 : EUR24.5m) held in the remainder of the
Group.
13. Transactions with non-controlling interests
In the period ended 30 September 2019:
On 25 May 2019, TTL issued 252,464 shares to Titan Wood Limited.
As a result, the non-controlling interests' shareholdings were
amended to:
BP Ventures (8.4%), MEDITE (11.4%), BGF (2.6%), Volantis
(1.4%).
In the period ended 31 March 2020:
On 25 November 2019, TTL issued 238,024 shares to Titan Wood
Limited for a consideration of EUR0.5m. An additional 61,976 shares
were issued to non-controlling interests for a consideration of
EUR0.1m.
On 23 December 2019, TTL issued 4,620,156 shares to Titan Wood
Limited for a consideration of EUR9.2m,
and an additional 1,401,523 shares were issued in consideration
for continued provision of discounted Accoya(R) to MEDITE for
market seeding purposes. 887,643 shares were issued to
non-controlling interests for a consideration of EUR1.8m. As a
result, the non-controlling interests' shareholdings were amended
to:
BP Ventures (8.6%), MEDITE (10.2%), BGF (2.2%), Volantis
(1.2%).
On 23 December 2019, Tricoya UK Ltd issued 11,015,599 Ordinary
shares to Tricoya Technologies Ltd for a consideration of EUR11.0m,
and an additional 4,322,394 shares were issued in consideration for
continued provision of discounted Accoya(R) to MEDITE for market
seeding purposes. 7,268,573 shares were issued to non-controlling
interests for consideration of EUR7.3 million. As a result, the
non-controlling interests' shareholdings were amended to:
BP Chemicals (30.9%, MEDITE 6.2%).
In the period ended 30 September 2020:
TTL issued 372,875 shares to Titan Wood Limited for a
consideration of EUR0.7m. 484,774 shares were issued to
non-controlling interests for a consideration of EUR0.9m and an
additional 495,311 shares were issued to MEDITE in consideration
for continuing to seed the market with Tricoya(R) panels ensuring
continued market development ahead of the completion of the Hull
Plant. As a result, the non-controlling interests' shareholdings
were amended to:
BP Ventures (8.5%), MEDITE (11.4%), BGF (2.6%), Volantis
(1.2%).
Tricoya UK Ltd issued 486,572 Ordinary shares to Tricoya
Technologies Ltd for a consideration of EUR1.0m. 1,600,530 shares
were issued to non-controlling interests for consideration of
EUR1.6 million. As a result, the non-controlling interests'
shareholdings were amended to:
BP Chemicals (30.0%, MEDITE 8.2%).
Transactions with non-controlling Unaudited Unaudited Audited
interests
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2020 2019 2020
EUR'000 EUR'000 EUR'000
Opening balance 6,235 2,925 2,925
Carrying amount of non-controlling
interests issued (1,747) - (5,857)
Consideration paid by non-controlling
interests 2,552 - 9,167
Excess of consideration paid
recognised in Group's equity 7,040 2,925 6,235
14. Investment in Joint Venture
On 11 August 2020, Accsys together with Eastman Chemical Company
formed a company, Accoya USA LLC, with the intention to construct
and operate an Accoya(R) wood production plant to serve the North
American market.
The new company has been formed with Accsys owning 60% and
Eastman owning 40%, with the two parties assessed to jointly
control the entity as defined under IFRS 11 - Joint arrangements. A
technology licence has also been entered into with Accoya USA LLC
so that front-end engineering and design for the proposed plant in
the USA can be completed.
The plant is being designed to initially produce approximately
40,000 cubic metres (17 million board feet) of Accoya(R) per annum
and to allow for cost-effective expansion.
A decision whether to proceed to the next stage with plant
construction, and as to funding, is expected to be made following
the initial engineering and design work which is expected to be
completed in the first half of the 2021 calendar year.
The carrying amount of the equity-accounted investment is as
follows:
Unaudited
6 months
ended
30th Sept
2020
EUR'000
Opening balance -
Additions 470
Profit/(loss) for
the period -
Closing balance 470
15. Post Balance Sheet Events
There have been no material reportable events since 30 September
2020.
Independent review report to Accsys Technologies PLC
Report on the consolidated interim financial statements
Our conclusion
We have reviewed Accsys Technologies Plc's consolidated interim
financial statements (the "interim financial statements") in the
Interim Results of Accsys Technologies Plc for the 6 month period
ended 30 September 2020. Based on our review, nothing has come to
our attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the AIM
Rules for Companies.
What we have reviewed
The interim financial statements comprise:
-- the Condensed consolidated statement of financial position as
at 30 September 2020;
-- the Condensed consolidated statement of comprehensive income
for the period then ended;
-- the Condensed consolidated statement of cash flow for the
period then ended;
-- the Condensed consolidated statement of changes in equity for
the period then ended; and
-- the explanatory notes to the interim financial
statements.
The interim financial statements included in the Interim Results
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Results, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the Interim Results in
accordance with the AIM Rules for Companies which require that the
financial information must be presented and prepared in a form
consistent with that which will be adopted in the company's annual
financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 November 2020
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END
IR PPGQCGUPUGAB
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