TIDMAXS
RNS Number : 9690D
Accsys Technologies PLC
27 June 2023
AIM: AXS
Euronext Amsterdam: AXS
27 June 2023
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Preliminary results for the year ended 31 March 2023
Year to
31 March Year to 31 % Change
2023 March 2022
Revenue EUR162.0m EUR120.9m 34%
Gross profit EUR55.2m EUR36.0m 53%
Underlying EBITDA(1) EUR22.9m EUR10.4m 120%
Underlying profit before
tax(2) EUR11.0m EUR1.3m 746%
Period end net debt (EUR44.1m) (EUR27.2m)
Accoya sales volume 63,344m(3) 59,649m(3) 6%
Highlights
-- 34% growth in revenue at EUR162.0m, driven by continuing
strong product demand, higher average sales prices and
implementation of Energy Price Premium (EPP)
-- 6% growth in Accoya sales volumes at 63,344m(3) :
o H2 sales volumes of 39,387m(3) (H1: 23,957m(3) ), representing
growth of 64% on H1, and in excess of our targeted 50% increase
o Record production levels in Q4 reflecting reactors 1-3
returning to production following Arnhem plant shutdown in April
and May and additional production from new fourth reactor from
September 2022
-- 4% points improvement in gross profit margin to 34%, remaining above target level of 30%
-- 120% growth in underlying EBITDA at EUR22.9m, ahead of
previous guidance , reflecting higher revenues and average sales
prices offsetting increased raw material costs
-- Strategic growth projects:
o Arnhem plant - commercial operation of reactor 4 commenced in
September 2022, increasing Arnhem capacity by 33% and generating
record volume production in Q4; production from the plant ramping
up over two years
o Accoya USA JV - construction of new 43,000m(3) plant
progressing well but, as previously announced, has experienced some
delay and cost inflation; commercial operation now expected
mid-2024
o The Board has made good progress on the review of the Tricoya
(Hull) plant and continues to believe in the underlying economics
associated with completing the construction of Hull and will
therefore continue to explore financing options to complete the
plant's construction, including strategic partners and lending
institutions
Notes
(1) Underlying EBITDA is defined as Operating profit/(loss)
before Exceptional items and other adjustments, depreciation and
amortisation, and includes the Group's attributable share of our
USA joint venture's underlying EBITDA. (See note 3 to the financial
statements).
2 Underlying profit before tax is defined as profit before tax
and exceptionals and other adjustments
-- Exceptional non-cash item of EUR86m in relation to Hull
impairment and restructure of the Tricoya consortium
-- Net debt increased by EUR16.9m in the year to EUR44.1m due to
the planned investment into Accoya USA (EUR29m), capex investments
of EUR29.8m into the Arnhem reactor 4 and Tricoya Hull projects
(partially offset by a placing in May 2022 which raised net
proceeds of approximately EUR19m), the reduction in the NatWest
loan (EUR9.4m) and EBITDA generation during the year. The Company's
net debt to EBITDA ratio has improved significantly on the prior
year, now 1.9x (FY22: 2.6x)
-- Outlook: The Group has made a good start to FY24, with
performance in line with the Board's expectations
Stephen Odell, Executive Chair of Accsys, commented :
"Overall, I am pleased with our performance in FY23. Demand for
Accoya and Tricoya has been strong throughout the year as our
customers continue to seek products that deliver outstanding
performance, durability and sustainability. This has enabled us to
substantially offset the wider market pressures from raw materials
costs and supply chain disruption through price increases.
"The year has not been without its challenges, however. In
November we announced that while we had taken 100% control of the
world-first Tricoya project in Hull, we also put the project into a
hold period to assess future capability and funding options. The
Board has made good progress on its review, details of which are
given in this statement. In addition, while we have made good
progress with our USA JV with Eastman, as previously communicated,
construction of the plant at Kingsport has seen some delays and
cost inflation. Both Accsys and Eastman remain fully committed to
delivering the project, which will replicate the proven technology
of our successful plant in Arnhem.
"In the coming year we expect to leverage the benefits from
greater economies of scale associated with higher production
volumes at our plants. FY24 will be a year during which we will
implement actions to ensure the future sustainable growth of the
business and to drive value creation for our shareholders. These
actions include moving towards completion of the Kingsport plant,
which will incur higher costs this year as we invest in people and
infrastructure in readiness for start-up and making key investments
in the core business to support higher volume production. In view
of our increased capacity from the expansion of Arnhem and future
capacity from Kingsport, and in light of some softening of price
and demand in the global construction industry, we are dedicating
more resource to our sales and marketing activity globally,
particularly in the US, to prepare for a greater level of supply as
this project comes online.
"We have made a good start to FY24, with performance in line
with our expectations. With our new executive management team in
place to drive the business forward in its next phase of growth, we
are confident in delivering further financial and operational
progress in the coming year, and in the longer-term demand and
growth opportunity for Accoya and Tricoya."
Enquiries:
Investor Relations / Analysts : Katharine Rycroft, Accsys
Technologies PLC ir@accsysplc.com
Media : Matthew O'Keeffe, Alex Le May, FTI Consulting (UK) +44
(0) 20 3727 1340
Media: Clemens Sassen, Tessa Nelissen, Huijskens Sassen
Communications (NL) +31 (0) 20 68 55 955
Numis Securities (London): Oliver Hardy (NOMAD), Ben Stoop +44
(0) 20 7260 1000
Investec Bank plc (London): Carlton Nelson, Alex Wright +44 (0)
20 7597 5970
ABN Amro (Amsterdam ): Richard van Etten, Dennis van Helmond +31
20 344 2000
There will be a presentation relating to these results at
10.00am UK time on 27 June 2023. 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/mqfoer93
Phone Participants: for those participants who would like to ask
a question live over the phone lines, please register on the
following link. You will then be sent a confirmation email with a
link to dial-in numbers.
https://register.vevent.com/register/BIb99297a25009481989b9e00d77c9da3f
Accsys Technologies PLC
Executive Chair's Report
Introduction
Accsys has made significant progress in the 2023 financial year
as it moves forward with its ambitious plans for growth, despite
particularly challenging macro-economic conditions, which include
the ongoing war in Ukraine, an energy crisis, rising inflation,
supply chain disruption and the pressing need to address climate
change. The resilience of our business against this difficult
backdrop is testament to the attractiveness of our products, the
strength of our business model and the talent and the commitment of
our people.
Overview of the year
The successful completion and startup of reactor 4 in Arnhem,
together with reactors 1-3 returning to production after the
plant's shutdown in April and May 2022, has led to 6% growth in
volumes this year, and our highest ever volume production in Q4.
Demand for our Accoya and Tricoya wood has been strong (and in
excess of our capacity) as customers continue to seek products that
deliver outstanding performance, durability and sustainability.
The Company delivered very strong revenue growth for the year,
underpinned by strong product demand and increases in average sales
prices, despite the production outages linked to the completion of
reactor 4 highlighted above. Underlying EBITDA more than doubled
year on year, ahead of our original expectations, reflecting the
increased average sales prices and an energy price surcharge
mechanism which have successfully offset raw material cost
increases, including the impact of volatile and elevated acetyl and
energy prices in Europe. The core Accoya business is trading well,
has momentum and is cash generative after a period of investment
made to get reactors 1-4 installed and operating well.
The year has not been without its challenges. In November we
announced that while we had taken 100% control of the world-first
Tricoya project in Hull, we also put the project into a hold period
to assess future capability and funding options. While further work
is required to prove the working capabilities of the plant, we have
made good progress on this review over the past six months. We have
also been assessing the cost to complete the project, developing
extensive and detailed work packages in order to do so. This work
stream has confirmed our original assessment of the costs to
complete the project as up to EUR35m.
Over the period, we have also continued to sell Accoya to our
off-take partners, MEDITE and FINSA, both of which convert Accoya
wood into Tricoya and help seed the market. We continue to see good
levels of market demand for the product, which reaffirms our view
of the long-term market potential for Tricoya. Ongoing discussions
with both partners about future arrangements following completion
of the plant remain positive.
We have also been in discussions with certain strategic partners
with a view to providing appropriate funding necessary to complete
the Hull plant's construction. To date, the Company has been unable
to reach acceptable terms with any of these strategic partners.
In view of the strong market dynamics underpinning Tricoya, the
Board of Accsys continues to believe in the underlying attractive
economics and margins associated with completing the construction
of Hull and therefore will continue to explore funding options to
support the plant's construction, including strategic partners and
lending institutions. Absent the availability of third-party
funding, the Company will use modest levels of internally generated
cash to maintain the plant and progress certain pre-construction
works. The Board will continue to engage with stakeholders in
respect of Hull and its future prospects. Despite its belief in the
future potential for Tricoya, the Board is clear that the base
Accsys business must not be compromised to find a solution for
Hull. In the meantime, we will continue to work with our partners
to further develop the Tricoya market using Accoya, including
exploring the expansion of dedicated capacity for greater volume
production within our existing facilities.
We have made good progress with our Accoya USA JV with Eastman.
However, as previously communicated, the project has experienced
some delays and cost inflation. Both Accsys and Eastman remain
fully committed to delivering the project, which will replicate the
proven technology of our successful plant in Arnhem.
FY23 has been another important year for customer relationships,
during which we have had to manage inflationary cost increases
through higher prices, ongoing disruption to supply chains post the
COVID-19 pandemic and our own production capacity limit in the face
of strong customer demand. We are grateful to our customers for
their continued support and have engaged in regular dialogue with
them as we navigate these challenging market conditions.
During the year Accoya's high level of performance and
sustainability was recognised in various prestigious global
industry awards. Accolades include the EmiratesGBC 'Green Building
Product of the year' and the 'Best of Products' award from The
Architect's Newspaper, USA for Accoya Color Grey. We have been
delighted to see Accoya installed and specified on some flagship
architectural projects from London to Rome to the Red Sea,
including Google, where Accoya has been specified on its new HQ
'landscraper' building in Kings Cross, London.
Summary of financial performance
Accsys delivered revenues of EUR162.0m, a 34% increase on the
FY22, reflecting continuing strong demand for our products, higher
average sale prices and the implementation of an Energy Price
Premium to mitigate higher gas prices.
Underlying EBITDA was EUR22.9m, an increase of 120% on the prior
year, and ahead of our previous market guidance of nearly doubling
last year's EBITDA of EUR10.4m.
Group gross margin increased by 4% to 34%, aided by the higher
average sales prices outlined above. Underlying profit before tax
increased by EUR9.7m to EUR11.0m. Statutory loss before tax was
EUR67.1m.
Net debt increased by EUR16.9m in the year to EUR44.1m due to
the planned investment into Accoya USA (EUR29m), capex investments
of EUR29.8m into the Arnhem reactor 4 and Tricoya Hull projects
(partially offset by a placing in May 2022 which raised net
proceeds of approximately EUR19.0m), the reduction in the NatWest
loan (EUR9.4m) and EBITDA generation during the year.
Strategic update
Accoya
During the period we were pleased to complete the expansion of
our plant in Arnhem which adds a new 20,000 cubic metres reactor,
enabling the site's maximum annual capacity to increase to 80,000
cubic metres.
As previously reported, we experienced some unexpected delays in
the final installation, tie-ins and supply of certain equipment for
reactor 4, which resulted in an unexpected second shutdown across
the plant in April and May 2022. In addition, during the
commissioning and testing period in June 2022, we identified a
number of defects to equipment which were repaired over the
following eight weeks.
As a result, reactor 4 commenced commercial operation in
September 2022. Further work on optimising reactor 4 - to reduce
cycle times and deliver more capacity - is planned for the coming
year. In addition, investment in new stacking technology is ongoing
which will provide efficiency improvements across the plant's work
centres.
North America represents the largest potential regional market
for our product. Under our joint venture with Eastman, a world
leader in the production of acetyls, we are building an Accoya
plant in the USA with an initial approximate 43,000 cubic metres
capacity at Eastman's Kingsport, Tennessee site. Under the joint
venture, Accsys holds a 60% interest and Eastman a 40%
interest.
We have made good progress with the construction of the plant,
which commenced in April 2022. Key milestones include the
completion of ground works, ongoing steelwork and main warehouse
construction, installation of the reactors on site, placement of
multiple large sub-contracts and procurement of more than 80% of
major equipment. As we move towards completion of the plant, we
will increase our investment in people and infrastructure in
readiness of start-up and as a result, the project will incur
higher costs in the coming year. As announced in May, the project
has experienced some delays and cost inflation, which is being
experienced throughout the construction industry. Both joint
venture partners continue to be fully engaged in delivering this
strategically important project, which will replicate the proven
technology of our successful plant in Arnhem. In line with our
group commitment to Health & Safety, this has been established
as a key priority at the site and by the 2023-year end we were able
to celebrate over 150,000 hours worked with only one minor first
aid injury.
Our 50,000 square foot Accoya Color manufacturing plant in
Barry, Wales, has increased our ability to convert Accoya wood into
Accoya Color - a product which combines the benefits of Accoya wood
with colour all the way through the wood from surface to core. The
site has a maximum capacity of 12,500 cubic metres per annum.
During the year we made operational improvements to the site which
have enabled us to increase production by 140% to 4,010 cubic
metres. More importantly, this will allow us to further increase
future production in FY24 and to support growing customer
demand.
Accoya Color's unique proposition is proving to be very
attractive to customers in our target markets, particularly in the
decking category where the surface-to-core grey colour requires
less maintenance to retain over the long term. In addition to the
product's existing markets of Germany, Switzerland, Austria and the
US, Accoya Color was launched this year into the new markets of
Australia, New Zealand and France.
Accoya Color generates a higher gross profit per cubic metre
than Accoya and will enhance our product margins over time. As we
increase our Accoya production capacity, we continue to expect
increased Accoya Color sales in the medium term.
At the end of FY23, Accsys launched a new UK national
advertising campaign, "Lasts a Lifetime", highlighting the high
performance of Accoya wood to homeowners. The campaign launched
with a commercial on Sky TV targeting a subset of the homeowner
market audience, supported by digital advertisements running
through the European spring months.
Tricoya
Accsys and its former consortium partners in Tricoya UK Limited
(TUK) have been building the world's first Tricoya plant in Hull.
In November 2022 Accsys agreed with its partners - Ineos, MEDITE,
BGF and Volantis - to acquire 100% ownership of the plant and the
Tricoya group entities (Tricoya Technologies Limited and TUK), in
exchange for 11.9m new shares in Accsys, representing 5.74% of its
issued share capital at that date. Ineos and MEDITE remain
commercial partners with Accsys, retaining their respective acetyls
supply and acetylated wood chip off-take agreements. The
reorganisation gives Accsys the option to take the Tricoya Hull
Project forward on its own terms and to benefit from 100% of the
long-term returns from Tricoya, including any future licencing in
respect of the global Tricoya market opportunity.
At the same time, the Company announced the restructuring of the
debt arrangements between TUK and NatWest, resulting in the
principal debt being reduced by EUR9.4m to EUR6.0m with a new
seven-year term, and no capital repayments during this period.
The Company stopped site activity in November, placing the
project into a hold period to mitigate the risk of weaker economics
on start-up (due to the high and volatile acetyls raw material
prices in Europe) and to allow the Board time to assess the
economics and capability of the plant and its potential returns on
investment.
While further work is required to prove the working capabilities
of the plant, we have made significant and positive progress on
this review over the past six months. Please see further details on
progress with the Board's review in the Executive Chair's
Report.
Building organisational capability
We are making good progress in developing our people and
organisational capabilities to manage growth. Post the year end,
the Company boosted its expertise in the areas of large capital
project management, cost management and financial forecasting
through the appointments of Dr. Jelena Arsic van Os as CEO and
Steven Salo as CFO, both of whom have significant experience in
these areas. As we increase our manufacturing output, we are
strongly focused on strengthening our manufacturing expertise and
leadership. Key senior management appointments during the year
include a Group Manufacturing and Projects Director, a newly
created role which will support Accsys as we expand our operations
and develop our global reach. Management has also been strengthened
by the appointments of new Managing Directors of Tricoya UK and
Accoya Color.
We rely on the skills, experience and commitment of our people
to meet our business goals and to that end, are committed to
investing in their careers. During the year we increased the number
of training and development opportunities for our colleagues around
the group, providing 8,579 total training hours in FY23,
representing 32.5 training hours per colleague. This year's
performance is an increase of 526 hours on the prior year and 4,619
hours since FY21. Together with new leadership training programmes
and talent mapping, this is an ongoing process to ensure we have
the right skills and talent in place to grow our business
effectively.
Innovation & Technology
We conduct regular strategic reviews of our engineering and
technology capabilities and other actions to drive improved
delivery of capital and innovation projects. This has led to the
creation in FY22 of a Global Engineering Centre and Project
Management Office, and further development of our R&D function.
During the year we increased our skills and talent in key areas
including project and portfolio management in addition to
engineering, wood (modification) science and analytical
capabilities.
Our R&D team is focused on both process and product
innovation which impact the short, medium and long-term future of
the business. With production capacity recently expanded in Arnhem,
process optimisation and reliability remain core areas of focus.
Our R&D team works closely with our Sales & Marketing teams
to understand evolving consumer needs and to assess where
innovation can meet those needs.
To build resilience and mitigate risk in our supply chain our
R&D and Supply Chain teams have been exploring alternative wood
species to Radiata pine. The properties of Radiata pine from
certain regions make it well suited to our proprietary acetylation
process. It is also fast growing and available from certified
sources, making it a sustainable choice. However, we want to
broaden our wood supply, both in terms of species and source
location to de-risk our operations as we grow.
This year we were pleased to see positive results from long-term
trials of Accoya made from fast growing Taeda pine from Argentina
and Uruguay with ideal growing conditions and forestry practices
and mills that can meet our requirements. For example, Accoya
cladding made from Taeda has been used to clad the Starbucks
building in Wakefield, UK. Installed in 2020, it has shown the same
durability and performance as Radiata pine. Being able to source
Taeda from South America also makes it an ideal option for supply
to the Kingsport, Tennessee plant. Over the coming year we will be
continuing this work with the view to beginning official commercial
production of Accoya with Taeda.
Intellectual Property
Accsys continues to invest in developing and protecting its
valuable portfolio of intellectual property and confidential
information. Our technology covers not only the physical equipment
and engineering that underpins our manufacturing and production,
but also the processes and methodology we follow in our supply and
production chain: from the way we source our wood, through our wood
modification process, to the way we market and sell Accoya and
Tricoya.
Accsys' holds c.388 patent family members covering 28 distinct
inventions in 45 countries with 75% of the patent family members
now granted. The core technologies associated with our current and
future plants for the production of Accoya and Tricoya wood
products are protected by using a combination of patenting and
branding and trade secrets to maintain our differentiation in the
marketplace and interest to potential licencing partners. Our
principal trademark portfolio covers our Accoya and Tricoya brands,
the Trimarque device and the Accsys company name, protected by
registrations in over 60 countries.
ESG
With its stated purpose of 'Changing wood to change the world',
Accsys is committed to growing and operating its business in a
responsible and sustainable way. Aligned with our values and
business strategy, our ESG framework outlines 10 key material
issues and impact areas on which we are primarily focused.
Having completed Stage One of our 2020 sustainability strategy
roadmap, we are now in Stage Two and are focused on establishing
specific development plans, including setting Science Based Targets
(SBTs) to reduce our emissions intensity per cubic metre of Accoya
produced.
Building on our commitment to transparency, Accsys participated
for a second consecutive year in the S&P Global Corporate
Sustainability Assessment. Accsys scored 43/100 - an improvement of
five points (13%) on the prior year, placing the Company in the top
quintile in the 'Paper & Forest Products' industry
category.
Through our expanding safety programme which includes increased
monitoring, a defined strategy and increasing awareness, we are
building a stronger safety culture across the organisation. During
the year the Company rolled out a number of dedicated safety
learning programmes and initiatives, including a Health &
Safety month in February 2023 which gave our colleagues the
opportunity to participate in group discussions on safety
improvement, training sessions and guest speaker events.
During the year we completed a Board performance evaluation and
internal review which complements our three-yearly cycle of
external evaluations. The results of the evaluation confirmed the
individual and collective commitment and effectiveness of
Directors. The evaluation also supports the Board in understanding
areas of focus as part of its continuous improvement.
Health & Safety (HSE)
Health & Safety is a top priority for the Board and for
Accsys, and the Board-level HSE Committee established in 2022 has
helped support the Board's focus on this key area. Accsys has set
'Zero Harm' as a key target for our operations and is committed to
developing best practice HSE across the Company.
During FY23 we held regular safety briefings for all colleagues
and have issued monthly communications to encourage greater
awareness of safety. As awareness around safety grows, we have seen
corresponding improvements in key HSE performance metrics. During
the year we introduced a digital version of our safety observation
card, submissions of which grew from 1,060 in FY22 to 1,316 this
year. In addition, we have maintained our momentum in leadership
safety tours, holding almost 700 tours over the year. We are
pleased to report that our Total Recordable Incidence Rates
improved from 5.2 to 3.6 per 200,000 hours worked. Our Lost Time
Incident Rate per 200,000 hours worked, however, increased from
0.52 to 0.96 (versus our target 0.5).
Energy & Climate Change
Our approach to Energy & Climate includes a focus on energy
efficiency and process optimisation, assessing the carbon impact of
our products and integrated climate considerations and activities
(e.g. risks and opportunities) across multi-functions across the
business.
We are innovating to minimise our environmental impact across
our operations, in accordance with our Climate Change Policy,
whilst sourcing our raw materials responsibly. In 2023 we
established a steering committee at our Arnhem site to focus on
carbon intensity reduction per cubic metre of Accoya produced.
Additionally, we are using our Scope emissions data to set carbon
reduction targets in alignment with the Science Based Targets
Initiative (SBTi ).
Society & Communities
Accsys has developed a more structured approach to charitable
and community support and its environmental impact through tools
such as charitable giving and colleague engagement. During the year
our colleagues chose three official charity partners to support. In
total Accsys pledged total donations of EUR72,219 towards
charitable activities as well as participating in our chosen
charities' missions through a number of activities, events and
presentations.
In January we organised a colleague volunteering day with our
charity partner Trees4All. Accsys colleagues were invited to join
volunteers from across The Netherlands to plant trees in the Groene
Woud, NL. The day resulted in around 2,000 trees going into the
ground and gave our colleagues the opportunity to give back to the
local community and learn about reforestation.
A one-off donation was also approved by our Charities Committee
to support the Turkey/Syria Earthquake appeal in support of several
colleagues who had relatives and friends in affected areas.
Sustainable & Quality Products
We are committed to a more sustainable world and use abundantly
available wood sources, certified as sustainable by the Forest
Stewardship Council(R) (FSC(R)). Our commitment to responsible
sourcing and manufacturing is recognised by leading accreditation
bodies. This year we achieved Cradle to Cradle(R) (C2C) gold
certification for Accoya Color Grey, as well as being awarded
'Platinum' level (the highest level) for both 'Material Health' and
'Water Stewardship'. Our core product, Accoya has held C2C
certified status since 2010. C2C certified is the global standard
for products that are safe, circular, and responsibly made. Accoya
wood is one of the very few building products to have acquired C2C
certification on the stringent Gold-level. This represents very
high standards of sustainability, alongside the recognised high
performance and durability credentials of the brand.
Capital Raise
In May 2022 the Company completed a EUR19m net capital raise
from shareholders to support the completion of current capital
projects and increase working capital and cashflow headroom. We
extend our thanks to shareholders for their continuing support and
investment in Accsys .
Board Update
The Board's composition brings depth and a range of experience
to Accsys, both supporting and challenging the Executive team in
the execution of the Company's strategy. Post the year end there
has been considerable change, with Rob Harris, Accsys' Chief
Executive Officer, stepping down after three years, and Will Rudge
deciding to leave the Company after 12 years as Chief Financial
Officer.
Rob Harris is succeeded by Dr Jelena Arsic van Os, who will join
the Board as CEO on 1 July 2023, at which point I will return to my
prior role as independent Non-Executive Chair of Accsys. Jelena has
over 20 years' experience in senior executive leadership roles in
large-cap multinational companies and has a proven track record in
transforming and driving complex businesses, delivering on
profitable growth targets and successfully delivering large capital
projects. We are grateful to Rob Harris and wish him success in his
future endeavours.
Will Rudge is succeeded by Steven Salo, who joined Accsys on 1
April 2023. Steven brings significant experience in senior
financial leadership roles, executing high-value corporate and
business development transactions, and driving and shaping
businesses for profitable growth. We take this opportunity to thank
Will Rudge for staying on to support Accsys and transition his
responsibilities to Steven and wish him all the best with the next
step in his career.
Post the year end, in May 2023 we announced that as they reach
the end of their nine-year terms, Sue Farr and Sean Christie, who
chairs the Audit Committee, will step down from the Board at the
conclusion of the AGM in September 2023. In addition, due to
increases in his executive commitments, Alexander Wessels, who
chairs the Company's Remuneration Committee, will also step down
from the Board at the upcoming AGM at the end of his current three
year term.
The Board is seeking to appoint two new high-quality and
experienced independent Non-Executive Directors, with the intention
of one acting as Chair of the Audit Committee, and the second as
Chair of the Remuneration Committee. The search for both these
roles is well underway and the Company plans to give further
updates ahead of the AGM in September.
The Board would like to thank Sue and Sean for their significant
contribution to Accsys over the last nine years and for the support
and guidance they have given to newer members of the board. The
Board also thanks Alexander for his invaluable input to Accsys over
the last three years through his experiences as a CEO. We look
forward to adding two new high-quality Non-Executive Directors to
the Board in due course as we look to deliver on Accsys'
significant potential.
Outlook
In the coming year we expect to leverage the benefits from
greater economies of scale associated with higher production
volumes at our plants. FY24 will also be a year during which we
will implement actions to ensure the future sustainable growth of
the business and to drive value creation for our shareholders.
These actions include moving towards completion of the Kingsport
plant, which will incur higher costs this year as we invest in
people and infrastructure in readiness for start-up and making key
investments in the core business to support higher volume
production. In view of our increased capacity from the expansion of
Arnhem and future capacity from Kingsport, and in light of the
softening of price and demand in the global construction industry,
we are dedicating more resource to our sales and marketing activity
globally, particularly in the US, to prepare for a greater level of
supply as this project comes online.
We have made a good start to FY24, with performance in line with
our expectations. With our new executive management team in place
to drive the business forward in its next phase of growth, we are
confident in delivering further financial and operational progress
in the coming year, and in the longer-term demand and growth
opportunity for Accoya and Tricoya.
Stephen Odell
Executive Chair
26 June 2023
Accsys Technologies PLC
Finance Review
FY23 FY22 Change
%
------------------------- ----------- ----------- -------
Group Revenue EUR162.0m EUR120.9m 34%
Gross Profit EUR55.2m EUR36.0m 53%
Underlying EBITDA EUR22.9m EUR10.4m 120%
Underlying EBIT EUR14.4m EUR4.2m 243%
Underlying profit
before tax EUR11.0m EUR1.3m
Statutory (loss)/profit
before tax (EUR67.1m) EUR1.7m
Cash EUR26.6m EUR42.1m
Adjusted cash EUR16.8m EUR4.3m
Net debt (EUR44.1m) (EUR27.2m)
Accoya Sales volume 63,344m(3) 59,649m(3) 6%
Introduction
Accsys has delivered a good performance in the year, with 34%
revenue growth and a 120% increase in Underlying EBITDA to
EUR22.9m, driven by increased sales prices and strong ongoing
demand for our products.
Net debt increased by EUR16.9m in the year to EUR44.1m due to
the planned investment into Accoya USA (EUR29m), capex investments
of EUR29.8m into the Arnhem reactor 4 and Tricoya Hull projects
(partially offset by a successful placing in May 2022 which raised
net proceeds of approximately EUR19m), the reduction in the NatWest
loan (EUR9.4m) and EBITDA generation during the year.
In November 2022 Accsys agreed to acquire full ownership of the
Tricoya entities, including the Tricoya Hull plant from its
consortium partners for a consideration in Accsys shares (valued at
EUR9.5m). At the same time, the debt facility between TUK and
NatWest was restructured, resulting in the principal debt being
reduced to EUR6m, with a new seven-year term and no capital
repayments during this period.
Following these events, an impairment assessment was required to
be performed under IAS 36 (Impairment of Assets) on the Tricoya
segment's gross assets with an impairment loss of EUR86m being
recognised as a non-cash exceptional item. The calculated
impairment was impacted by:
1) A previously reported increase in the capex to complete the
construction of the Tricoya Hull plant of EUR35m, commencing in 2
years;
2) A higher pre-tax WACC rate (used for the discount rate)
increasing by 3.0% to 13.5%, principally due to higher market
interest rates; and
3) A decrease in the production volume forecast for the plant to 24,000MT (from 30,000MT).
Statement of comprehensive income
Group revenue increased by 34% to EUR162.0m for the year (FY22:
EUR120.9m), driven by continuing strong market demand for Accoya
and Tricoya and an increase in average sales prices during the year
and prior year implemented to address rising raw material costs. An
energy price premium (surcharge) was also successfully added to
customer sales prices in H1 to offset a significant increase in
acetyl costs.
Accoya sales volumes increased 6% to 63,344m(3) following the
successful commissioning and operation of reactor 4 in September
2022. We have continued to see strong underlying demand for Accoya
across our regions and with our Tricoya panel manufacturing
partners. The FY23 regional sales trend on a year-on-year basis
reflects a 10% increase in sales volumes in North America where we
continue to increase marketing, sales, and allocation of product
volumes available to customers as we develop this market ahead of
our US capacity expansion.
Sales volumes increased by 18% to our Tricoya customers (MEDITE
and FINSA) following a drop in allocation in FY22. These sales to
MEDITE and FINSA for the manufacture of Tricoya panels are used to
develop the market for Tricoya products and represent 24% of Accoya
sales volumes (FY22: 22%).
Sales volume by end market FY23 FY22 Change
m(3) m(3) %
------- ------- ------
UK & Ireland 14,667 14,905 (2%)
------- ------- ------
Tricoya 15,193 12,860 18%
------- ------- ------
Rest of Europe 16,584 16,809 (1%)
------- ------- ------
Americas 10,574 9,575 10%
------- ------- ------
Rest-of-World 6,326 5,500 15%
--------------------------- ------- ------- ------
Total 63,344 59,649
------- ------- ------
Other Revenue, which predominantly relates to the sale of our
acetic acid by-product, increased by 21% to EUR16.8m (FY22:
EUR13.9m) due to higher acetic acid sales volume following the ramp
up of production from reactor 4 in Arnhem. Accsys' sales of its
acetic acid by-product back into the same acetyls market continued
to act as a partial hedge to the higher acetic anhydride costs. The
net acetyls cost increased by 19% compared to the prior year.
Raw wood input costs were moderately higher although more stable
than the wider lumber market as we purchase appearance-grade wood
under long-term supply contracts with many of our partners.
Cost of sales increased by 26%, on 6% higher sales volumes and
higher cost of raw materials, primarily in higher raw wood and
acetic anhydride costs.
Group gross profit of EUR55.2m was 53% higher than the prior
year (FY22: EUR36.0m) and gross profit margin increased 4% to
34%.
Underlying other operating costs (excluding depreciation and
amortisation) increased from EUR25.4m to EUR31.6m. This is due to
Tricoya's ongoing running costs being treated as operating
expenditure in the second half following the introduction of
Tricoya UK's hold period and increased legal, insurance and staff
costs during the year.
Depreciation and amortisation charges increased by EUR2.1m to
EUR8.3m following commercial production from reactor 4 in September
2022.
Underlying finance expenses increased EUR0.3m to EUR3.2m
following the interest on Tricoya UK's NatWest facility not being
capitalised post the introduction of the hold period for Tricoya UK
and a full year of interest cost on the De Engh EUR10m loan which
was entered into March 2022.
An impairment loss (exceptional item) of EUR86.0m has been
recognised in the year relating to the Tricoya segment. The
calculated impairment is described in the Introduction and has been
recognised as a non-cash exceptional item.
In regard to the Tricoya Consortium reorganisation completed
during the year, the following exceptional items have been
recognised:
- EUR1.5m expense for advisory fees incurred;
- EUR9.4m income related to the restructuring of the NatWest
loan, decreasing the principal debt from EUR15.4m to EUR6m; and
- EUR1.4m expense related to the value recovery instrument
provided to NatWest, allowing NatWest to recover up to
approximately EUR9.4m, on a contingent basis, depending on the
profitability of the Tricoya Hull plant once operational (see note
23).
An exceptional foreign exchange gain of EUR1.4m was recognised
related to US dollars held as cash for investment into Accoya USA,
which were invested into the joint venture in the first half.
Following the May 2021 capital raise, the amount raised to invest
into Accoya USA was translated into US dollars and held in cash,
ensuring that foreign exchange movements did not decrease the
amount raised below the future US dollar investment into Accoya
USA. This treatment did not meet the requirements for hedge
accounting under IFRS 9, Financial Instruments, and therefore the
foreign exchange gain on the revaluation of the US dollars has been
accounted for in Finance Expenses as an Exceptional item.
In the prior year, redundancy costs of EUR0.1m were recognised
in relation to the purchase of assets in Barry, UK and EUR1.6m
early termination costs related to the refinance of the Group debt
facilities in October 2021, with both classified as exceptional
items.
No other adjustments have been recognised in the current year,
which were previously also excluded from underlying results. These
other adjustments related to foreign exchange differences on the US
dollar cash pledged to ABN Amro for the Letter of Credit provided
to First Horizon Bank ('FHB') as part of the Accoya USA funding
arrangements and pound sterling loan notes repaid in the October
2021 Group refinance. See note 5 for further details.
Underlying profit before tax increased by EUR9.7m to EUR11.0m
(FY22: EUR1.3m). After taking into account exceptional items
(including the impairment loss) and other adjustments, loss before
tax amounted to EUR67.1m (FY22 profit: EUR1.7m).
The tax charge increased by EUR1.8m to EUR2.8m (FY22:
EUR1.0m).
Underlying earnings per share increased to EUR0.05 per share
(FY22: EUR0.01 per share). A statutory loss per share was
recognised of EUR0.19 per share (FY22: profit of EUR0.01 per
share).
Cash flow
Cash flows generated from operating activities before changes in
working capital increased by EUR11.3m to EUR22.7m (FY22: EUR11.4m),
reflecting continued good operational cash flow generated by our
plant in Arnhem.
Inventory levels increased by EUR9.6m during the year with
higher raw material levels held due to the ramp-up of the fourth
reactor, which increases production capacity by 33% but which was
also partially impacted by the delay in start-up of reactor 4 and
the long lead time for raw material purchases from New Zealand.
Inventory balances started to decrease in H2 and are expected to
continue to decrease further in the next financial year.
In May 2022 Accsys completed a successful placing for an issue
of shares in the Company, raising net proceeds of approximately
EUR19.0 million which have been used to strengthen the Group's
balance sheet, increase liquidity headroom and provide additional
working capital and fund additional costs to complete Arnhem's
expansion project.
At 31 March 2023 the Group held cash balances of EUR26.6m, a
EUR15.5m decrease in the year, attributable to construction costs
relating to the Arnhem plant expansion project (EUR7.9m), Tricoya
Hull project (EUR20.1m), the planned investment into Accoya USA
(EUR29m) and the increase in inventory referred to above. This was
partially offset by the placing, EUR10.0m of proceeds from loans
(explained further below), and cash flow generated from operating
activities. When adjusting for the cash pledged for the Letter of
Credit provided to FHB of $10.0m (see note 30), and in the prior
year adjusting for the remaining cash raised in the May 2021 equity
raise to be invested into Accoya USA, Adjusted Cash increased
during the year to EUR16.8m (see note 30).
Financial position
Plant and machinery additions of EUR21.4m (FY22: EUR41.0m)
consisted of the construction of reactor 4 in Arnhem and the
Tricoya plant in Hull.
Trade and other receivables increased to EUR18.1m (FY22:
EUR16.9m), primarily due to higher sales following the ramp up of
reactor 4.
Trade and other payables decreased EUR4.0m to EUR25.9m (FY22:
EUR29.9m), with a decrease in accruals following the completion of
the Arnhem expansion project and the decrease in activity on the
Tricoya plant in Hull.
Amounts payable under loan agreements increased to EUR65.9m
(FY22: EUR64.0m) due to the drawdown of EUR5.0m on the ABN
Revolving credit facility and EUR5.0m on the Tricoya NatWest
EUR17.2m facility, capitalisation of interest on the Tricoya
NatWest loan before the Tricoya NatWest facility was restructured,
decreasing the principal debt from EUR15.4m to EUR6.0m.
Net debt increased by EUR16.9m in the year to EUR44.1m (FY22:
EUR27.2m) due to capex investments of EUR29.8m, investment into
Accoya USA (EUR29m) and the increase in inventory partially offset
by the successful placing (net proceeds of EUR19.0m), cash flow
generated from operating activities and the restructuring of the
Tricoya NatWest facility, decreasing the principal debt on the
facility by EUR9.4m to EUR6.0m.
Going concern
The 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
assessed the Group's trading forecasts, working capital
requirements and covenant compliance for the foreseeable future
under a base case scenario, taking into account the Group's
financial resources including the current cash position and banking
and finance facilities which are currently in place (see note 30
for details of these facilities). The Directors have also assessed
a severe but plausible downside scenario with reduced sales volumes
and lower gross margin, also reflecting the possible impact of
volatile raw material costs.
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
wood from the plant in Arnhem with the collection of on-going
working capital items in line with internally agreed budgets. In
both scenarios, the Directors have assumed no commitment will be
made to complete the construction and start-up of the Tricoya plant
in Hull until appropriate funding arrangements have been put in
place.
The Directors' have taken into account the reorganisation of the
Tricoya consortium and restructuring of its bank debt completed in
November 2022 which resulted in Accsys becoming the 100% owner of
the Tricoya Hull plant and the commitment to fund ongoing working
capital during the hold period. The Directors' have also considered
the possible amount and timing of capital expenditure required to
complete the Accoya plant in the USA, noting that notwithstanding
that the construction project benefits from certain contractual
measures in place with the lead construction contractor, Accsys has
committed to fund its 60% share of cost overruns, should they
arise.
The Directors believe 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. 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, under both the base scenario and severe but
plausible downside scenario, there is sufficient liquidity and
covenant headroom such that there is no material uncertainty with
respect to going concern and have prepared the financial statements
on this basis.
Steven Salo
Chief Financial Officer
26 June 2023
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year
ended 31 March 2023
2023 2023 2023 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Exceptional Exceptional
items and items and
Note Underlying other adjustments* Total Underlying other adjustments* Total
Accoya (R) wood
revenue 143,493 - 143,493 105,053 - 105,053
Tricoya (R) panel
revenue 1,374 - 1,374 1,459 - 1,459
Licence revenue 329 - 329 416 - 416
Other revenue 16,822 - 16,822 13,924 - 13,924
------------------- ----- ----------- ------------------- ---------- ----------- ------------------- ----------
Total revenue 3 162,018 - 162,018 120,852 - 120,852
Cost of sales (106,852) - (106,852) (84,852) - (84,852)
Gross profit 55,166 - 55,166 36,000 - 36,000
Other operating
costs 4 (39,878) (87,453) (127,331) (31,541) (136) (31,677)
Operating profit/
(loss) 8 15,288 (87,453) (72,165) 4,459 (136) 4,323
Finance income 9 - - - - - -
Finance expense 10 (3,224) 9,350 6,126 (2,893) 544 (2,349)
Share of net loss
from joint
venture
accounted for
using the equity
method 29 (1,036) - (1,036) (261) - (261)
Profit/(Loss)
before taxation 11,028 (78,103) (67,075) 1,305 408 1,713
Tax expense 11 (2,787) - (2,787) (1,015) - (1,015)
Profit/(Loss)
for the year 8,241 (78,103) (69,862) 290 408 698
=========== =================== ========== =========== =================== ==========
Items that may be
reclassified to profit
or loss
(Loss)/ gain
arising
on translation
of foreign
operations (61) - (61) 153 - 153
Gain/(loss)
arising
on foreign
currency
cash
flow hedges 42 - 42 - 66 66
Total other
comprehensive
(loss)/gain (19) - (19) 153 66 219
----------- ------------------- ---------- ----------- ------------------- ----------
Total
comprehensive
gain/(loss) for
the year 8,222 (78,103) (69,881) 443 474 917
=========== =================== ========== =========== =================== ==========
Total
comprehensive
gain/(loss) for
the year
is attributable
to:
Owners of Accsys
Technologies PLC 9,509 (48,566) (39,057) 2,083 474 2,557
Non-controlling
interests (1,287) (29,537) (30,824) (1,640) - (1,640)
Total
comprehensive
gain/(loss) for
the year 8,222 (78,103) (69,881) 443 474 917
=========== =================== ========== =========== =================== ==========
Basic
profit/(loss)
per ordinary
share 13 EUR0.05 EUR(0.19) EUR0.01 EUR0.01
Diluted
profit/(loss)
per ordinary
share 13 EUR0.04 - EUR0.01 EUR0.01
The notes on form an integral part of these financial
statements.
* See note 5 for details of exceptional items and other
adjustments.
Accsys Technologies PLC
Consolidated statement of financial position at 31 March
2023
Registered Company 05534340
Note 2023 2022
EUR'000 EUR'000
Non-current assets
Intangible assets 15 10,491 10,834
Investment accounted for using the equity
method 29 30,859 3,216
Property, plant and equipment 16 106,051 176,661
Right of use assets 17 4,044 4,632
Financial asset at fair value through profit
or loss 18 - -
151,445 195,343
----------- -----------
Current assets
Inventories 21 29,946 20,371
Trade and other receivables 22 18,075 16,934
Cash and cash equivalents 30 26,593 42,054
Corporation tax receivable 459 435
Derivative financial instrument - 3
75,073 79,797
----------- -----------
Current liabilities
Trade and other payables 24 (25,896) (29,880)
Obligation under lease liabilities 17 (980) (1,024)
Short term borrowings 30 (9,500) (11,654)
Corporation tax payable (6,082) (3,184)
(42,458) (45,742)
----------- -----------
Net current assets 32,615 34,055
Non-current liabilities
Obligation under lease liabilities 17 (3,755) (4,193)
Other long term borrowings 30 (56,420) (52,335)
Financial guarantee 32 - -
Financial liability at amortised cost 23 (1,383) -
(61,558) (56,528)
----------- -----------
Net assets 122,502 172,870
=========== ===========
Equity
Share capital 25 10,963 9,638
Share premium account 250,717 223,326
Other reserves 26 114,743 114,701
Accumulated loss (254,042) (210,505)
Own shares (8) (6)
Foreign currency translation reserve 129 190
Capital value attributable to owners of
Accsys Technologies PLC 122,502 137,344
Non-controlling interest in subsidiaries 27 - 35,526
Total equity 122,502 172,870
=========== ===========
The financial statements were approved by the Board of Directors
on 26 June 2023 and signed on its behalf by
Stephen Odell
Steven Salo Directors
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended
31 March 2023
Total
equity
Foreign attributable
currency to equity
Share trans- shareholders
capital Share Other Own lation Accumula-ted of the Non-Controlling Total
Ordinary premium reserves Shares reserve Loss company interests Equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance
at 01 April
2021 8,466 189,598 114,635 (36) 37 (213,263) 99,437 37,166 136,603
========= ========= ========= ======= ========= ============= ============== ================= ==========
Profit/(Loss)
for the year - - - - - 2,338 2,338 (1,640) 698
Other
comprehensive
income for
the year - - 66 - 153 - 219 - 219
Share based
payments - - - - - 463 463 - 463
Shares issued 1,172 - - 30 - (43) 1,159 - 1,159
Premium on
shares issued - 35,922 - - - - 35,922 - 35,922
Share issue
costs - (2,194) - - - - (2,194) - (2,194)
Balance
at
31 March
2022 9,638 223,326 114,701 (6) 190 (210,505) 137,344 35,526 172,870
========= ========= ========= ======= ========= ============= ============== ================= ==========
Loss for
the year - - - - - (39,038) (39,038) (30,824) (69,862)
Other
comprehensive
gain/ (loss)
for the year - - 42 - (61) - (19) - (19)
Share based
payments - - - - - 366 366 - 366
Shares issued 731 - - (2) - (22) 707 - 707
Premium on
shares issued - 19,526 - - - - 19,526 - 19,526
Share issue
costs - (1,086) - - - - (1,086) - (1,086)
Aquisition
of subsidiary
shares from
non-controlling
interests 594 8,951 - - - (4,843) 4,702 (4,702) -
Balance
at
31 March
2023 10,963 250,717 114,743 (8) 129 (254,042) 122,502 - 122,502
========= ========= ========= ======= ========= ============= ============== ================= ==========
Share capital is the amount subscribed for shares at nominal
value (note 25).
Share premium account represents the excess of the amount
subscribed for share capital over the nominal value of these
shares, net of share issue expenses. Share issue expenses comprise
the costs in respect of the issue by the Company of new shares.
See note 26 for details concerning Other reserves.
Non-controlling interests relate to the previous investment of
various parties into Tricoya Technologies Limited and Tricoya UK
Limited. The Group purchased the remaining shareholding in the
Tricoya entities in the year (see notes 27 and 28).
Foreign currency translation reserve arises on the
re-translation of the Group's USA subsidiary's net assets which are
denominated in a different functional currency, being US
dollars.
Accumulated losses represent the cumulative loss of the Group
attributable to the owners of the parent.
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March
2023
2023 2022
EUR'000 EUR'000
(Loss)/ profit before taxation (67,075) 1,713
Adjustments for:
Amortisation of intangible assets 780 745
Depreciation of property, plant and equipment,
and right of use assets 7,512 5,419
Impairment loss 86,000 -
Net finance (income)/expense (6,126) 2,350
Equity-settled share-based payment expenses 366 463
Accsys portion of Licence fee received from
joint venture 300 600
Share of net loss of joint venture 1,036 261
Currency translation gains (70) (171)
Cash inflows from operating activities before
changes in working capital 22,723 11,380
========== ==========
(Increase) in trade and other receivables (1,154) (5,058)
(Decrease) in deferred income - (33)
(Increase) in inventories (9,596) (8,110)
Increase in trade and other payables 4,673 4,034
Net cash from operating activities before
tax 16,646 2,213
Tax received 87 56
Net cash from operating activities 16,733 2,269
========== ==========
Cash flows from investing activities
Interest received - -
Investment in property, plant and equipment (29,773) (44,612)
Foreign exchange deal settlement related
to hedging of Hull Capex (81) 190
Investment in intangible assets (437) (714)
Investment in joint venture (28,979) (3,751)
Net cash (used in) investing activities (59,270) (48,887)
========== ==========
Cash flows from financing activities
Proceeds from loans 10,000 54,500
Other finance costs (250) (392)
Interest Paid (2,429) (2,241)
Repayment of lease liabilities (940) (1,089)
Repayment of loans/rolled up interest - (46,939)
Proceeds from issue of share capital 20,258 37,094
Share issue costs (1,086) (2,194)
Net cash from financing activities 25,553 38,739
========== ==========
Net decrease in cash and cash equivalents (16,984) (7,879)
Effect of exchange rate changes on cash and
cash equivalents 1,523 2,335
Opening cash and cash equivalents 42,054 47,598
Closing cash and cash equivalents 26,593 42,054
========== ==========
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Notes to the financial statements for the year ended 31 March
2023
1. Accounting Policies
General Information
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the years
ended 31 March 2023 or 31 March 2022. Statutory accounts for the
year ended 31 March 2022 have been filed with the Registrar of
Companies and those for the year ended 31 March 2023 will be
delivered to the Registrar in due course; both have been reported
on by the auditors. The auditors' report on the Annual Report and
Financial Statements for the year ended 31 March 2022 was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006. The auditors' report on the Annual Report
and Financial Statements for the year ended 31 March 2023 is
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Basis of accounting
The Group's financial statements have been prepared under the
historical cost convention (except for certain financial
instruments and equity investments which are measured at fair
value), in accordance with UK-adopted international accounting
standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. In
addition, the financial statements are also prepared in accordance
with international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union
and the Dutch Financial Markets Supervision Act.
Going Concern
These 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
assessed the Group's trading forecasts, working capital
requirements and covenant compliance for the foreseeable future
under a base case scenario, taking into account the Group's
financial resources including the current cash position and banking
and finance facilities which are currently in place (see note 30
for details of these facilities). The Directors have also assessed
a severe but plausible downside scenario with reduced sales volumes
and lower gross margin, also reflecting the possible impact of
volatile raw material costs.
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. In both scenarios, the Directors have assumed no
commitment will be made to complete the construction and start-up
of the Tricoya(R) plant in Hull until appropriate funding
arrangements have been put in place.
The Directors' have taken into account the reorganisation of the
Tricoya consortium and restructuring of its bank debt completed in
November 2022 which resulted in Accsys becoming the 100% owner of
the Tricoya(R) Hull plant and the commitment to fund ongoing
working capital during the hold period. The Directors' have also
considered the possible amount and timing of capital expenditure
required to complete the Accoya(R) plant in the USA, noting that
notwithstanding that the construction project benefits from certain
contractual measures in place with the lead construction
contractor, Accsys has committed to fund its 60% share of cost
overruns, should they arise.
The Directors believe 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. 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, under both the base scenario and severe but
plausible downside scenario, there is sufficient liquidity and
covenant headroom such that there is no material uncertainty with
respect to going concern and have prepared the financial statements
on this basis.
Exceptional Items
Exceptional items are events or transactions that fall outside
the ordinary activities of the Group and which by virtue of their
size or incidence, have been separately disclosed in order to
improve a reader's understanding of the financial statements. These
include items relating to the restructuring of a significant part
of the Group, impairment losses (or the reversal of previously
recorded exceptional impairments), expenditure relating to the
integration and implementation of significant acquisitions and
other one-off events or transactions, such as re-financing of Group
borrowings. See note 5 for details of exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Group as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained.
As allowed under IFRS 1, some business combinations effected
prior to transition to IFRS, were accounted for using the merger
method of accounting. Under this method, assets and liabilities are
included in the consolidation at their book values, not fair
values, and any differences between the cost of investment and net
assets acquired were taken to the merger reserve. The majority of
the merger reserve arose from a corporate restructuring in the year
ended 31 March 2006 which introduced Accsys Technologies PLC as the
new holding Company.
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in an
adjustment between the carrying amounts of the controlling and
non-controlling interests to reflect their relative interests in
the subsidiary. Any difference between the amount of the adjustment
to non-controlling
interests and any consideration paid or received is recognised
within equity attributable to Accsys Technologies PLC.
When the Group ceases to consolidate or equity account for an
investment because of a loss of control, joint control or
significant influence, any retained interest in the entity is
remeasured to its fair value, with the change in carrying amount
recognised in profit or loss.
Revenue from contracts with customers
Revenue is measured at the fair value of the consideration
receivable. Revenue is recognised to the extent that it is highly
probable that a significant reversal will not occur based on the
consideration in the contract. The following specific recognition
criteria must also be met before revenue is recognised.
Manufacturing revenue
Revenue is recognised from the sale of goods at a point in time
and is measured at the amount of the transaction price received in
exchange for transferring goods. The transaction price is the
expected consideration to be received, to the extent that it is
highly probable that there will not be a significant reversal of
revenue in the future. Revenue is recognised when the Group's
performance obligations under the relevant customer contract have
been satisfied. Manufacturing revenue includes the sale of Accoya
wood, Tricoya panels and other revenue, principally relating to the
sale of acetic acid.
Licensing fees
Licence fees are recognised over the period of the relevant
agreements according to the specific terms of each agreement or the
quantities and/or values of the licensed product sold. The
accounting policy for the recognition of licence fees is based upon
satisfaction of the performance obligations set out in the contract
such as an assessment of the work required before the licence is
signed and subsequently during the design, construction and
commissioning of the licensees' plant, with an appropriate
proportion of the fee recognised upon signing and the balance
recognised as the project progresses to completion. The amount of
any cash received but not recognised as income is included in the
financial statements as deferred income and shown as a
liability.
Finance income
Interest accrues using the effective interest method, i.e. the
rate that discounts estimated future cash receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset.
Finance expenses and borrowing costs
Finance expenses include the fees, interest and other finance
charges associated with the Group's loan notes, credit facilities
and leases, which are expensed over the period that the Group has
access to the loans, facilities and leases.
Foreign exchange gains or losses on the loan notes are included
within finance expenses.
Interest on borrowings directly relating to the construction or
production of qualifying assets are capitalised until such time as
the assets are substantially ready for their intended use or sale.
Where funds have been borrowed specifically to finance a project,
the amount capitalised represents the actual borrowing costs
incurred. Where the funds used to finance a project form part of
general borrowings, the amount capitalised is calculated using a
weighted average of rates applicable to relevant general borrowings
of the Group during the construction period. The capitalisation of
borrowing costs is suspended during extended periods in which it
suspends active development of a qualifying asset.
Share based payments
The Company awards nil cost options to acquire ordinary shares
in the capital of the Company to certain Directors and employees.
The Company has also previously awarded bonuses to certain
employees in the form of the award of deferred shares of the
Company.
In addition the Company has established an Employee Share
Participation Plan under which employees subscribe for new shares
which are held by a trust for the benefit of the subscribing
employees. The shares are released to employees after one year,
together with an additional, matching share on a 1 for 1 basis.
The fair value of options and deferred shares granted are
recognised as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and is charged to
the consolidated statement of comprehensive income over the vesting
period during which the employees become unconditionally entitled
to the options or shares.
The fair value of share options granted is measured using a
modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest only where vesting is dependent upon the
satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Dividends
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders
at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension
and employee benefit schemes on behalf of its employees. These
costs are charged to the consolidated statement of comprehensive
income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the consolidated statement of
comprehensive income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date together with any adjustment to tax payable in
respect of previous years. Current tax includes the expected impact
of claims submitted by the Group to tax authorities in respect of
enhanced tax relief for expenditure on research and
development.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
-- the initial recognition of goodwill;
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination;
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date. Recognition of deferred tax assets
is restricted to the extent that it is probable that future taxable
profits will be available against which the temporary differences
can be utilised.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (the functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each Group company are expressed in Euro, which is the
functional currency of the parent Company, and the presentation
currency of the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange
prevailing on the date of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing at that date.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
reporting date. Income and expense items are translated at the
average monthly exchange rates prevailing in the month in which the
transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in the
foreign currency translation reserve. Such translation differences
are reclassified to profit and loss only on disposal or partial
disposal of the overseas operation.
Foreign exchange hedging
The Group has adopted IFRS 9 hedge accounting in respect of the
cash flow hedging instruments that it uses to manage the risk of
foreign exchange movements impacting on future cash flows and
profitability.
The Group has prospectively assessed the effectiveness of its
cash flow hedging using the 'hedge ratio' of quantities of cash
held in the same currency as future foreign exchange cash flow
quantities related to committed investment in plant and equipment.
The Group has undertaken a qualitative analysis to confirm that an
'economic relationship' exists between the hedging instrument and
the hedged item. It is also satisfied that credit risk will not
dominate the value changes that result from that economic
relationship.
At the end of each reporting period the Group measures the
effectiveness of its cash flow hedging and recognises the effective
cash flow hedge results in Other Comprehensive Income and the
Hedging Effectiveness Reserve within Equity, together with its
ineffective hedge results in Profit and Loss. Amounts are
reclassified from the Hedging Effectiveness Reserve to property,
plant and equipment once construction has been completed or Profit
and Loss when the associated hedged transaction affects Profit and
Loss. Further details are included in note 5.
Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and the
Group will comply with the attached conditions. When the grant
relates to an expense item, it is recognised as income over the
period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. Where the grant relates to
an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected
useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration paid
and the fair value of the identifiable assets and liabilities
acquired. It is capitalised, and is subject to annual impairment
reviews by the Directors. Any impairment arising is charged to the
consolidated statement of comprehensive income. Where the fair
value of the identifiable assets and liabilities acquired is
greater than the fair value of consideration paid, the resulting
amount is treated as a gain on a bargain purchase and is recognised
in the consolidated statement of comprehensive income.
Joint venture
The Group has 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.
Further details concerning the Accoya USA LLC joint venture with
Eastman Chemical Company are included in note 29.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any
amounts by which the carrying value is assessed during an annual
review to have been impaired. At present, the useful economic life
of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's
activities including new processes, process improvements,
identifying new species and improving the Group's existing
products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38
'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to
generate future economic benefits, ability to complete the
development and ability to reliably measure the expenditure) have
been met. These internal development costs are amortised on a
straight line basis over their useful economic life, between 8 and
20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of
bringing the asset to the working condition and location of its
intended use. The capitalisation of costs is suspended during
extended periods in which it suspends active development of a
qualifying asset. Depreciation is provided at rates calculated to
write off the cost less estimated residual value of each asset,
except freehold land, over its expected useful life on a straight
line basis, as follows:
Plant and machinery These assets comprise pilot plants and
production facilities. These facilities are depreciated from the
date they become available for use over their useful lives of
between 5 and 20 years
Office equipment Useful life of between 3 and 5 years
Leased land and buildings Land held under a finance lease is
depreciated over the life of the lease
Freehold land Freehold land is not depreciated
Impairment of non-financial assets
The carrying amount of non-current non-financial assets of the
Group is compared to the recoverable amount of the assets whenever
events or changes in circumstances indicate that the net book value
may not be recoverable, or in the case of goodwill, annually. The
recoverable amount is the higher of value in use and the fair value
less cost to sell. In assessing the value in use, the expected
future cash flows from the assets are determined by applying a
discount rate to the anticipated pre-tax future cash flows. An
impairment charge is recognised in the consolidated statement of
comprehensive income to the extent that the carrying amount exceeds
the assets' recoverable amount. The revised carrying amounts are
amortised or depreciated in line with Group accounting policies. A
previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the consolidated
statement of comprehensive income and is limited to the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognised in prior years. Assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units) for purposes of assessing
impairment.
Leases
To the extent that a right-of-control exists over an asset
subject to a lease, a right-of-use asset, representing the Group's
right to use the underlying leased asset, and a lease liability,
representing the Group's obligation to make lease payments, are
recognised in the consolidated statement of financial position at
the commencement of the lease.
The right-of-use asset is measured initially at cost and
includes the amount of initial measurement of the lease liability,
any initial direct costs incurred, including advance lease
payments, and an estimate of the dismantling, removal and
restoration costs required in terms of the lease. Depreciation is
charged to the consolidated income statement so as to depreciate
the right-of-use asset from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The lease term shall include the period of an
extension option where it is reasonably certain that the option
will be exercised. Where the lease contains a purchase option the
asset is written off over the useful life of the asset when it is
reasonably certain that the purchase option will be exercised.
The lease liability is measured at the present value of the
future lease payments, including variable lease payments that
depend on an index and the exercise price of purchase options where
it is reasonably certain that the option will be exercised,
discounted using the interest rate implicit in the lease, if
readily determinable. If the implicit interest rate cannot be
readily determined, the lessee's incremental borrowing rate is
used. Finance charges are recognised in the consolidated statement
of comprehensive income over the period of the lease.
Lease expenses for leases with a duration of one year or less
and low-value assets are not recognised in the consolidated
statement of financial position, and are charged to the
consolidated income statement when incurred. Low-value assets are
determined based on quantitative criteria.
The Group has used the following practical expedients permitted
by the standard:
- The use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
- Reliance on previous assessments on whether leases are onerous
- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
Inventories
Raw materials, which consist of unprocessed timber and chemicals
used in manufacturing operations, are valued at the lower of cost
and net realisable value. The basis on which cost is derived is a
first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the
lower of weighted average cost of production or net realisable
value. Costs include direct materials, direct labour costs and
production overheads (excluding the depreciation/depletion of
relevant property and plant and equipment) absorbed at an
appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to
completion and costs to be incurred in selling and
distribution.
Fair value measurement
Assets and liabilities that are measured at fair value, or where
the fair value of financial instruments has been disclosed in notes
to the
financial statements, are based on the following fair value
measurement hierarchy:
- level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices); and
- level 3 - inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
Specific valuation methodologies used to value financial
instruments include:
- the fair values of foreign exchange contracts are calculated
as the present value of expected future cash flows based on
observable yield curves and exchange rates; and
- other techniques, including discounted cash flow analysis, are
used to determine the fair values of other financial
instruments
Financial assets
Financial assets and financial liabilities are recognised in the
Group's consolidated statement of financial position when the Group
becomes party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value and in the
case of investments not at fair value through profit or loss, fair
value plus directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted
shares held by the Group are classified as fair value through other
comprehensive income and are stated at fair value. Gains and losses
arising from changes in fair value are recognised directly in other
comprehensive income, with dividends recognised in profit or loss.
Where it is not possible to obtain a reliable fair value, these
investments are held at cost less provision for impairment.
Loans and receivables, which comprise non-derivative financial
assets with fixed and determinable payments that are not quoted on
an active market, are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
Trade receivables are initially recognised at fair value and are
subsequently measured at amortised cost using the effective
interest rate method, less allowance for impairments. The Group has
elected to apply the IFRS 9 practical expedient option to measure
the value of its trade receivables at transaction price, as they do
not contain a significant financing element. The Group applies IFRS
9's 'simplified' approach that requires companies to recognise the
lifetime expected losses on its trade receivables. At the date of
initial recognition, the credit losses expected to arise over the
lifetime of a trade receivable are recognised as an impairment and
are adjusted, over the lifetime of the receivable, to reflect
objective evidence reflecting whether the Group will not be able to
collect its debts.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of
financial position comprise cash at bank and in hand and short-term
deposits, including liquidity funds, with an original maturity of
three months or less. For the purpose of the statement of
consolidated cash flow, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank
overdrafts. Cash and cash equivalents includes cash pledged to ABN
Amro as collateral for the $20million Letter of credit provided to
FHB. See note 30.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially
recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Loans and other borrowings are initially recognised at the fair
value of amounts received net of transaction costs and subsequently
measured at amortised cost using the effective interest method.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another
party and the consideration paid, including any noncash assets
transferred or liabilities assumed, is recognised in profit or loss
as other income or finance costs.
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial
liability at the time the guarantee is issued.
The liability is initially measured at fair value, which is
determined based on the present value of the difference in cash
flows between the contractual payments required under the FHB
borrowing (provided to the Company's joint venture - Accoya USA)
and the payments that are estimated to be required without the
guarantee being provided by Accsys to FHB. To calculate the fair
value of the guarantee, the present value calculation is then
weighted by the probability of the guarantee being called by
FHB.
Where guarantees in relation to loans or other payables of
associates are provided for no compensation, the fair values are
accounted for as contributions and recognised as part of the cost
of the investment.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's shares are classified as equity
instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive Officer. The
Chief Executive Officer is responsible for allocating resources and
assessing performance of the operating segments and has been
identified as steering the committee that makes strategic
decisions.
Alternative Performance Measures
The Group presents certain measures of financial performance,
position or cash flows in the Annual Report and financial
statements that are not defined or specified according to IFRS
(International financial reporting standards). These measures,
referred to as Alternative Performance Measures (APMs), are
prepared on a consistent basis for all periods presented in this
report.
The most significant APMs are:
Net debt
A measure comprising short term and long-term borrowings
(including lease obligations) less cash and cash equivalents. Net
debt provides a measure of the Group's net indebtedness or overall
leverage.
Underlying EBITDA
Operating profit/(loss) before Exceptional items and other
adjustments, depreciation and amortisation and includes the Group's
attributable share of our USA joint venture's underlying EBITDA.
Underlying EBITDA provides a measure of the cash-generating ability
of the business that is comparable from year to year.
Underlying EBIT
Operating profit/(loss) before Exceptional items and other
adjustments and includes the Group's attributable share of our USA
joint venture's underlying EBIT. Underlying EBIT provides a measure
of the operating performance that is comparable from year to
year.
Net Debt / Underlying EBITDA
Net debt divided by trailing 12-month underlying EBITDA. A
measure of the Group's net indebtedness relative to its
cash-generating ability.
Accoya Manufacturing margin
Accoya segmental underlying gross profit excluding Accoya
underlying licence revenue and marketing services expressed as a
percentage over Accoya segmental total revenue excluding Accoya
underlying licence revenue and marketing services. Accoya
Manufacturing margin provides a measure of the profitability of the
Accoya operations relative to revenue.
Adjusted Cash
Cash & cash equivalents less restricted cash and cash raised
through an equity raise to be invested into Accoya USA Joint
Venture. See note 30.
2. Accounting judgements and estimates
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Accounting estimates
Goodwill
The Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated above.
The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations
require the use of judgements in relation to discount rates and
future forecasts (See note 15 & 16). The recoverability of
these balances is dependent upon the level of future licence fees
and manufacturing revenues. While the scope and timing of the
production facilities to be built under the Group's existing and
future agreements remains uncertain, the Directors remain confident
that revenue from own manufacturing, existing licensees, new
licence or consortium agreements will be generated, demonstrating
the recoverability of these balances.
Intellectual property rights (IPR) and property, plant and
equipment
The Group tests the carrying amount of the intellectual property
rights and property, plant and equipment whenever events or changes
in circumstances indicate that the net book value may not be
recoverable. These calculations require the use of estimates in
respect of future cash flows from the assets by applying a discount
rate to the anticipated pre-tax future cash flows. Within this
process, the Group makes a number of key assumptions including
operating margins, production volumes, discount rates, terminal
growth rates and forecast cash flows. Additional information is
disclosed in note 15 & 16, which highlights the estimates
applied in the value-in-use calculations for those CGUs that are
considered most susceptible to changes in key assumptions and the
sensitivity of these estimates. The Group also reviews the
estimated useful lives at the end of each annual reporting period
(See note 15 & 16). The price of Accoya(R) wood and the raw
materials and other inputs vary according to market conditions
outside of the Group's control. Should the price of the raw
materials increase greater than the sales price or in a way which
no longer makes Accoya(R) competitive, then the carrying value of
the property, plant and equipment or IPR may be in doubt and become
impaired. The Directors consider that the current market and best
estimates of future prices mean that this risk is limited.
Valuation of value recovery instrument ("VRI")
These calculations require the use of estimates in respect of
future cash flows and by applying a discount rate to the
anticipated future cash flows. The same future cashflows modelled
in Property, plant and equipment testing are used for this
calculation. Additional information is disclosed in note 16 &
23.
Accounting judgements
In preparing the Consolidated Financial Statements, management
has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical
judgements that have been made in arriving at the amounts
recognised in the Consolidated Financial Statements and the key
sources of uncertainty that have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities
in the next financial year are discussed below:
Financial asset at fair value through profit or loss
The Group has an investment in listed equity shares carried at
nil fair value as a reliable fair value cannot be obtained since
there is no active market for the shares and there is currently
uncertainty around the future funding of the business. The Group
makes appropriate enquiries and considers all of the information
available to it in order to determine the fair value (See note
18).
New standards and interpretations in issue at the date of
authorisation of these financial statements:
New standards, amendments and interpretations
The following amendments to Standards and a new Interpretation
have been adopted for the financial year beginning on 1 April
2022:
-- Onerous Contracts - Cost of Fulfilling a Contract - Amendments to IAS 37;
-- Annual Improvements to IFRS Standards 2018-2020;
-- Reference to the Conceptual Framework - Amendments to IFRS 3;
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - amendments to
IAS 12; and
-- Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
New standards, amendments and interpretations not yet
adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 March 2023 reporting
periods and have not been early adopted by the Group. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable
future transactions.
3. Segmental reporting
The Group's business is the manufacturing of and development,
commercialisation and licensing of the associated proprietary
technology for the manufacture of Accoya wood, Tricoya wood
elements and related acetylation technologies. Segmental reporting
is divided between corporate activities, activities directly
attributable to Accoya, to Tricoya or research and development
activities.
Accoya(R)
Accoya Segment
---------------------------------------------------------------------------------
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya wood revenue 143,494 - 143,494 105,053 - 105,053
Licence revenue 300 - 300 400 - 400
Other revenue 16,773 - 16,773 13,879 - 13,879
Total Revenue 160,567 - 160,567 119,332 - 119,332
Cost of sales (105,608) - (105,608) (83,435) - (83,435)
Gross profit 54,959 - 54,959 35,897 - 35,897
Other operating costs (22,621) - (22,621) (19,116) (133) (19,249)
Profit from operations 32,338 - 32,338 16,781 (133) 16,648
============ ============= =========== ============ ============= ==========
Profit from operations 32,338 - 32,338 16,781 (133) 16,648
Accoya USA EBIT (912) - - (261) - -
EBIT 31,426 - 32,338 16,520 (133) 16,648
------------ ------------- ----------- ------------ ------------- ----------
Depreciation and amortisation 6,832 - 6,832 4,787 - 4,787
Accoya USA Depreciation
and amortisation 211 - - - - -
------------ ------------- ----------- ------------ ------------- ----------
EBITDA 38,469 - 39,170 21,307 (133) 21,435
------------------------------- ------------ ------------- ----------- ------------ ------------- ----------
Revenue includes the sale of Accoya, licence income and other
revenue, principally relating to the sale of acetic acid and other
licensing related income. Revenue also includes sales of lower
visual grade Accoya to Tricoya customers for the purposes of
producing Tricoya(R) panels as a temporary work-around until the
dedicated Tricoya Hull plant is operational.
All costs of sales are allocated against manufacturing
activities in Arnhem and in Barry (Wales) unless they can be
directly attributable to a licensee. Other operating costs include
all costs associated with the operation of the Arnhem and Barry
manufacturing sites, including directly attributable
administration, sales and marketing costs.
See note 5 for explanation of Exceptional items and other
adjustments.
Average headcount = 175 (2022: 162)
The below table shows details of reconciling items to show both
Accoya EBITDA and Accoya 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.
2023 2022
EUR'000 EUR'000
Accoya segmental underlying
EBITDA 38,469 21,307
-------- --------
Accoya (R) underlying
Licence revenue (300) (400)
Accoya segmental underlying EBITDA (excluding.
Licence Income) 38,169 20,907
======== ========
Accoya segmental underlying gross
profit 54,959 35,897
-------- --------
Accoya underlying
Licence revenue (300) (400)
Accoya manufacturing
gross profit 54,659 35,497
======== ========
Accoya Manufacturing
Margin 34.1% 29.8%
2023 2022
Accoya Manufacturing gross profit
- EUR'000 54,659 35,497
Accoya sales volume
- m3 63,344 59,649
Accoya manufacturing gross profit
per m3 863 595
======== ========
Tricoya
Tricoya Segment
--------------------------------------------------------------------------------
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Tricoya panel revenue 1,373 - 1,373 1,459 - 1,459
Licence revenue 29 - 29 16 - 16
Other revenue 49 - 49 45 - 45
Total Revenue 1,451 - 1,451 1,520 - 1,520
Cost of sales (1,244) - (1,244) (1,417) - (1,417)
Gross profit 207 - 207 103 - 103
Other operating costs (5,823) (86,000) (91,823) (3,811) (3) (3,814)
Loss from operations (5,616) (86,000) (91,616) (3,708) (3) (3,711)
============ ============= ========== ============ ============= ==========
Loss from operations (5,616) (86,000) (91,616) (3,708) (3) (3,711)
Depreciation and amortisation 527 - 527 505 - 505
Impairment - 86,000 86,000 - - -
------------ ------------- ---------- ------------ ------------- ----------
EBITDA (5,089) - (5,089) (3,203) (3) (3,206)
------------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Revenue and costs are those attributable to the business
development of the Tricoya process and establishment of Tricoya
Hull Plant.
Other operating costs include pre-operating costs for the
Tricoya(R) Hull Plant.
See note 5 for explanation of Exceptional items and other
adjustments.
Average headcount = 23 (2022: 36), noting a substantial
proportion of the costs to date have been incurred via recharges
from other parts of the Group or have resulted from
contractors.
Corporate
Corporate Segment
--------------------------------------------------------------------------------
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (9,976) (1,453) (11,429) (7,430) - (7,430)
Loss from operations (9,976) (1,453) (11,429) (7,430) - (7,430)
============ ============= ========== ============ ============= ==========
Loss from operations (9,976) (1,453) (11,429) (7,430) - (7,430)
Depreciation and amortisation 866 - 866 805 - 805
------------ ------------- ---------- ------------ ------------- ----------
EBITDA (9,110) (1,453) (10,563) (6,625) - (6,625)
------------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Corporate costs are those costs not directly attributable to
Accoya, Tricoya or Research and Development activities. This
includes management and the Group's corporate and general
administration costs including the head office in London. See note
5 for explanation of Exceptional items and other adjustments.
Average headcount = 33 (2022: 37)
Research and Development
Research & Development Segment
--------------------------------------------------------------------------------
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (1,458) - (1,458) (1,184) - (1,184)
Loss from operations (1,458) - (1,458) (1,184) - (1,184)
============ ============= ========== ============ ============= ==========
Loss from operations (1,458) - (1,458) (1,184) - (1,184)
Depreciation and amortisation 67 - 67 68 - 68
EBITDA (1,391) - (1,391) (1,116) - (1,116)
------------------------------- ------------ ------------- ---------- ------------ -------------
Research and Development costs are those associated with the
Accoya(R) and Tricoya(R) processes. Costs exclude those which have
been capitalised in accordance with IFRS (see note 15).
Average headcount = 13 (2022: 9)
Total
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya/Tricoya
revenue 144,867 - 144,867 106,512 - 106,512
Licence revenue 329 - 329 416 - 416
Other revenue 16,822 - 16,822 13,924 - 13,924
Total Revenue 162,018 - 162,018 120,852 - 120,852
Cost of sales (106,852) - (106,852) (84,852) - (84,852)
Gross profit 55,166 - 55,166 36,000 - 36,000
Other operating
costs (39,878) (87,453) (127,331) (31,541) (136) (31,677)
Profit/ (loss) from
operations 15,288 (87,453) (72,165) 4,459 (136) 4,323
=============== ============= =========== ================ ============= =================
Finance income - - - - - -
Finance expense (3,224) 9,350 6,126 (2,893) 544 (2,349)
Investment in joint
venture (1,036) - (1,036) (261) - (261)
Profit/(Loss) before
taxation 11,028 (78,103) (67,075) 1,305 408 1,713
=============== ============= =========== ================ ============= =================
See note 5 for details of Exceptional items and other
adjustments.
Reconciliation of Underlying EBIT and EBITDA
Year Year
Year ended ended Year ended ended
31 March Year ended 31 March 31 March Year ended 31 March
2023 31 March 2023 2022 31 March 2022
2023 2022
Exceptional Exceptional
items items
& Other & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Profit/ (loss) from
operations 15,288 (87,453) (72,165) 4,459 (136) 4,323
Accoya USA
EBIT (912) - - (261) - -
EBIT 14,376 (87,453) (72,165) 4,198 (136) 4,323
------------ ------------- ---------- ------------ ------------- ----------
Depreciation and
amortisation 8,292 - 8,292 6,164 - 6,164
Accoya USA Depreciation
and amortisation 211 - - - - -
Impairment - 86,000 86,000 - - -
EBITDA 22,879 (1,453) 22,127 10,362 (136) 10,487
============ ============= ========== ============ ============= ==========
Analysis of Revenue by geographical area
of customers: 2023 2022
EUR'000 EUR'000
UK and Ireland 55,395 43,053
Rest of Europe 63,635 45,980
Americas 29,778 21,069
Rest of World 13,210 10,750
162,018 120,852
======== ========
Revenue generated from two customers exceeded 10% of Group
revenue of 2023. These two customers represented 35% & 34% of
the revenue from the United Kingdom and Ireland, relating to Accoya
revenue. Revenue generated from two customers exceeded 10% of Group
revenue of 2022. This included 37% & 34% of the revenue from
the United Kingdom and Ireland, relating to Accoya revenue.
Assets and liabilities on a segmental basis:
Accoya Tricoya Corporate R&D TOTAL Accoya Tricoya Corporate R&D TOTAL
2023 2023 2023 2023 2023 2022 2022 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current
assets 120,459 27,047 3,777 162 151,445 91,278 99,718 4,119 228 195,343
--------- --------- ---------- -------- --------- --------- ---------- ---------- -------- ---------
Current
assets 52,699 3,872 13,630 4,872 75,073 36,899 4,425 33,452 5,021 79,797
--------- --------- ---------- -------- --------- --------- ---------- ---------- -------- ---------
Current
liabilities (22,947) (4,156) (15,299) (56) (42,458) (19,399) (21,112) (5,156) (75) (45,742)
--------- --------- ---------- -------- --------- --------- ---------- ---------- -------- ---------
Net current
assets/(liabilities) 29,752 (284) (1,669) 4,816 32,615 17,500 (16,687) 28,296 4,946 34,055
Non-current
liabilities (2,545) (8,665) (50,289) (59) (61,558) (2,826) (1,252) (52,339) (111) (56,528)
--------- --------- ---------- -------- --------- --------- ---------- ---------- -------- ---------
Net
assets/(liabilities) 147,666 18,098 (48,181) 4,919 122,502 105,952 81,779 (19,924) 5,063 172,870
========= ========= ========== ======== ========= ========= ========== ========== ======== =========
The Investment accounted for using the equity method (Investment
in Accoya USA) is included in the Accoya segment. See note 29.
Analysis of non-current assets (Other than financial
assets and deferred tax): 2023 2022
EUR'000 EUR'000
UK 30,485 107,861
Other countries 116,729 83,251
Un-allocated - Goodwill 4,231 4,231
151,445 195,343
======== ==========
The segmental assets in the current year were predominantly held
in the UK , USA 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). The
increase in Investment accounted for using the equity method
(investment into Accoya USA) incurred in USA. There are no
significant intersegment revenues.
4. Other operating costs
Other operating costs consist of the operating costs, other than
the cost of sales, associated with the operation of the plant in
Arnhem, Barry, the offices in Dallas and London and certain
pre-operating costs associated with the plant in Hull:
2023 2022
EUR'000 EUR'000
Sales and marketing 5,219 5,121
Research and development 990 1,116
Other operating costs 9,720 6,856
Administration costs 15,657 12,284
Exceptional Items 1,453 136
Other operating costs excluding depreciation
and amortisation 33,039 25,513
======== ========
Depreciation and amortisation 8,292 6,164
Impairment loss - exceptional item 86,000 -
Total other operating costs 127,331 31,677
======== ========
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
includes the costs of the Group's head office costs in London and
the US Office in Dallas.
Group average headcount increased from 244 in the year to 31
March 2022, to 245 in the year to 31 March 2023.
During the period, EUR437,000 (2022: EUR714,000) of internal
development & patent related costs were capitalised and
included in intangible fixed assets, including EUR287,000 (2022:
EUR488,000) which were capitalised within Tricoya Technologies
Limited ('TTL'). In addition EUR171,000 of internal costs have been
capitalised in relation to our current Arnhem Accoya plant
expansion project (2022: EUR375,000) and EUR566,000 of internal
costs have been capitalised in relation to our plant build in Hull,
UK (2022: EUR739,000). Both are included within tangible fixed
assets.
The impairment loss is in relation to Tricoya assets, refer to
note 5 and 16.
5. Exceptional items and other adjustments
2023 2022
EUR'000 EUR'000
Redundancy costs in relation to purchase of assets
to grow Accoya Color production - (133)
Early termination of loans - redemption fee & accelerated
amortisation of transaction costs - (1,619)
Advisor fees in relation to Tricoya
consortium reorganisation (1,453) -
Impairment of the Tricoya segment
assets (86,000) -
Partial net derecogition of NatWest
loan 9,353 -
Recognition of Valuation Recovery
Instrument 'VRI' liability (1,383) -
Foreign exchange differences on Corporate USD cash
held for investment into USA JV- incl. in Finance expense 1,380 2,080
Total exceptional items (78,103) 328
---------- ---------
Foreign exchange differences arising on Tricoya & Corporate
cash held - Operating costs - (3)
Foreign exchange differences arising on Loan
Notes - incl. in Finance expense - 231
Foreign exchange differences on Tricoya - Other comprehensive
income/(loss) - 8
Revaluation of USD cash pledged to ABN Amro -
incl. in Finance expense - (148)
Revaluation of FX forwards used for cash-flow hedging
- Other comprehensive income/(loss) - 58
Total other adjustments - 146
---------- ---------
Tax on exceptional items and
other adjustments - -
Total exceptional items and other
adjustments (78,103) 474
========== =========
Exceptional Items
In November 2022, Accsys agreed to acquire full ownership of TUK
(Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from
its Consortium Partners (see note 28). The advisor fees are
associated with advising Accsys on options and resulting corporate
restructuring of the Tricoya consortium.
In November 2022, NatWest agreed to restructure its TUK debt
facility, reducing the principal amount by EUR9.4m to EUR6m, under
a new 7-year term (see note 30). This resulted in the derecognition
of the balance drawn on the NatWest loan on the date of the
restructure of EUR15.4m and recognition of the new EUR6m loan.
Separate to, and in addition to the amended EUR6m loan, NatWest
will be entitled to obtain recovery, via the Value Recovery
Instrument ('VRI') agreement, of up to approximately EUR9.4m, on a
contingent basis, depending on profitability of the Tricoya Hull
plant once operational. The contingent payments to NatWest are
based upon free cash-flow generated by the Hull plant.
A financial liability has been recognised of EUR1.4m (see note
23) in respect of the VRI.
The impairment of the Tricoya segment assets is caused by
i. As reported in November 2022, Identification of additional
time and costs (EUR35m) to complete the plant;
ii. A decrease in the production volume forecast for the plant to 24,000MT (from 30,000MT);
iii. Update to the discount rate applied, 13.5% (increased from
10.5% at 31 March 2022). Refer to note 16 for
review of impairment.
Foreign exchange differences recognised due to US dollars held
for investment into the Accoya USA Joint Venture. Following the May
2021 equity raise, the amount raised to invest into Accoya USA was
translated into US dollars and held in cash ensuring that foreign
exchange movements did not decrease the amount raised below the US
dollar investment into Accoya USA. This treatment did not meet the
requirements for hedge accounting under IFRS 9, Financials
instruments, and therefore the foreign exchange gain on the
revaluation of the US dollars has been accounted for in Finance
expenses.
In the prior year, Accsys purchased certain assets, equipment,
technology and its manufacturing plant in Barry, Wales from Lignia
Wood Company Limited and its administrators for a consideration of
EUR1.2m, including EUR0.5m for raw wood inventory. As part of this
purchase, redundancy costs of EUR133,000 were incurred in relation
to staff at the Barry site.
In the prior year, Accsys completed the refinance of its Group
debt facilities, with a new bilateral agreement with ABN Amro.
Loans previously held with ABN Amro, Cerdia Produktions GmbH,
Bruil, Volantis and Business Growth Fund (BGF) were repaid. Early
redemption fees totalling EUR1.4m were paid, and the amortisation
of previously capitalised transaction fees related to these repaid
loans was accelerated.
Other Adjustments
Other adjustments included in the prior year are no longer
disclosed for the year ended 31 March 2023.
In the prior year, foreign exchange differences in the Tricoya
segment have occurred during the year due to pounds sterling held
for the Hull plant build and to a lesser extent, pounds sterling
held within the Corporate segment for future sterling corporate
costs. The effective portion of the foreign exchange movement is
recognised in other comprehensive income, with the ineffective
portion recognised in Operating costs.
In the prior year, foreign exchange differences also arise on
the pounds sterling denominated loan notes, entered into in a prior
period (see note 30). These exchange rate differences are included
as finance expenses.
6. Employees
2023 2022
EUR'000 EUR'000
Staff costs (including Directors)
consist of:
Wages and salaries 18,584 17,007
Social security costs 2,838 2,620
Other pension costs 1,573 1,381
Share based payments 201 140
23,196 21,148
======== ========
Pension costs relate to defined contribution plan
contributions.
The average monthly number of employees, including
Executive Directors, during the year was as follows:
2023 2022
Sales and marketing, administration, research
and engineering 142 134
Operating 103 110
245 244
===== =====
7. Directors' remuneration
2023 2022
EUR'000 EUR'000
Directors' remuneration consists
of:
Directors' emoluments 1,170 1,168
Company contributions to money purchase
pension schemes 38 43
1,208 1,211
======== ========
Compensation of key management personnel included the following
amounts:
2023 2022
Salary, Share
bonus and based
short-term payments
benefits Pension charge Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rob Harris 642 30 (53) 619 568
William Rudge 102 8 (10) 100 308
744 38 (63) 719 876
============ ======== ========== ======== ========
The Group made contributions to one (2022: one) Director's
personal pension plan, with Robert Harris receiving cash in lieu of
pension.
William Rudge stepped down from the Board following the AGM on
23 September 2022. In the table above, his remuneration is included
up to 23 September 2022.
The figures in the above table are impacted by foreign exchange
noting that the remuneration for R Harris and W Rudge are
denominated in Pounds Sterling.
8. Operating profit
2023 2022
EUR'000 EUR'000
This has been arrived at after
charging/(crediting):
Staff costs 23,196 21,148
Depreciation of property, plant and
equipment, and right of use assets 7,512 5,419
Impairment 86,000 -
Amortisation of intangible
assets 780 745
Operating lease rentals 77 103
Foreign exchange (gains) (70) (171)
Research & Development (excluding
staff costs) 469 416
Fees payable to the Company's auditors for the audit
of the Group's annual financial statements 183 145
Fees payable to the Company's
auditors for other services:
- audit of the Company's subsidiaries
pursuant to legislation 205 110
- audit related assurance
services - 36
Fees payable to Component auditor
for audit of subsidiaries: 182 117
Total audit and audit related
services: 570 408
Additional audit fees were agreed for the 2022 audit of
EUR170,000 which are not included in the table above, including
EUR80,000 for fees payable for the audit of the Group's annual
financial statements and EUR90,000 for fees payable for the audit
of subsidiaries.
9. Finance income
2023 2022
EUR'000 EUR'000
Interest receivable on bank
and other deposits* - -
*EUR1,000 interest received in the year ended 31 March 2023 (31
March 2022: EUR8,000) in relation to cash balances held in Tricoya
UK Ltd was netted off with borrowing costs incurred, with the net
borrowing cost amount related to the Hull project capitalised and
included within property, plant and equipment.
10. Finance expense
2023 2022
EUR'000 EUR'000
Arnhem land and buildings lease
finance charge 179 183
Interest on loans 2,500 2,282
Interest on lease liabilities 115 139
Other finance expenses 430 289
--------- ---------
Total underlying finance expenses 3,224 2,893
Exceptional items and other
adjustments
Foreign exchange (gain)/loss
on loan notes - (231)
Revaluation of USD cash pledged
to ABN Amro - 148
Early termination of loans - redemption fee
& accelerated amortisation of transaction
costs - 1,619
Foreign exchange (gain)/loss on Corporate
USD cash held for investment into USA JV (1,380) (2,080)
Partial derecogition of NatWest
loan (9,353) -
Recognition of Valuation Recovery
Instrument 'VRI' 1,383 -
Total Finance expense (6,126) 2,349
========= =========
11. Tax expense
2023 2022
EUR'000 EUR'000
(a) Tax recognised in the statement
of comprehensive income comprises:
Current tax charge
UK Corporation tax on losses
for the year - -
Research and development tax (credit)/
expense in respect of current year (121) (314)
(121) (314)
Overseas tax at rate of 15% 32 24
Overseas tax at rate of 25% 2,876 1,305
Deferred Tax
Utilisation of deferred tax
asset - -
Total tax charge reported in the statement
of comprehensive income 2,787 1,015
========== ========
2023 2022
EUR'000 EUR'000
(b) The tax charge for the period
is higher than the standard rate of
corporation tax in the UK (2023
& 2022: 19%) due to:
Profit/(Loss) before tax (67,075) 1,713
Expected tax charge at 19%
(2022 - 19%) (12,744) 325
Expenses not deductible in
determining taxable profit 148 142
Tricoya segment assets impairment 16,340 -
Tax (income)/losses for which no deferred
income tax asset was (utilised)/recognised (1,654) 541
Effects of overseas taxation 818 320
Research and development tax charge/
(credit) in respect of prior years 3 (190)
Research and development tax (credit)
in respect of current year (124) (123)
Total tax charge reported in the statement
of comprehensive income 2,787 1,015
========== ========
Deferred tax Deferred tax
assets liabilities
--------------- ----------------
EUR '000 2023 2022 2023 2022
------------------------------------------ ------- ------ ------- -------
At 1 April 484 - (484) -
Credited/ (charged) to the consolidated
income statement 137 484 (137) (484)
At 31 March 621 484 (621) (484)
------------------------------------------ ------- ------ ------- -------
Deferred taxes at the balance sheet date have been measured
using these enacted tax rates and reflected in these financial
statements. See note 19.
12. Dividends Paid
2023 2022
EUR'000 EUR'000
Final Dividend EURNil (2022: EURNil)
per Ordinary share proposed
and paid during year relating
to the previous year's results - -
13. Basic and diluted profit/(loss) per ordinary share
The calculation of profit per ordinary share is based on profit
after tax and the weighted average number of ordinary shares in
issue during the year.
2023 2023 2022 2022
Underlying Total Underlying Total
Basic earnings per share
Weighted average number of
Ordinary shares in issue ('000) 210,693 210,693 190,446 190,446
Profit/(Loss) for the year
attributable to owners of Accsys
Technologies PLC (EUR'000) 9,528 (39,038) 1,930 2,338
Basic profit/(loss) per share EUR 0.05 EUR (0.19) EUR 0.01 EUR 0.01
=========== ============ =========== ==========
Diluted earnings per share
Weighted average number of
Ordinary shares in issue ('000) 210,693 - 190,446 190,446
Equity options attributable
to BGF (see note 31) 8,449 - * 8,449 8,449
Weighted average number of
Ordinary shares in issue and
potential ordinary shares ('000) 219,142 - 198,895 198,895
----------- ------------ ----------- ----------
Profit/(Loss) for the year
attributable to owners of Accsys
Technologies PLC (EUR'000) 9,528 - 1,930 2,338
Diluted profit/(loss) per share EUR 0.04 - * EUR 0.01 EUR 0.01
=========== ============ =========== ==========
* Diluted loss per share is not disclosed for Total diluted loss
per share. 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 to BGF are disclosed in
Note 31, which if exercised, would decrease Total loss per share.
As a result, these are anti-dilutive and therefore shown as
nil.
14. Share based payments
The Group operates a number of share schemes which give rise to
a share based payment charge. The Group operates a Long-Term
Incentive Plan ('LTIP') in order to reward certain members of staff
including the Senior Management team and the Executive
Directors.
Options - total
The following figures take into account options awarded under
the LTIP, together with share options awarded in previous years
under the 2008 Share Option schemes.
Outstanding options granted are as follows:
Weighted average
Number of outstanding remaining
contractual life,
options at 31 March in years
Date of grant 2023 2022 2023 2022
19 September 2013 (LTIP) 443,675 599,880 0.5 1.5
24 June 2016 (LTIP) 130,099 183,320 3.3 4.3
20 June 2017 (LTIP) 100,651 326,999 4.3 5.3
18 June 2018 (LTIP) 185,840 185,840 5.3 6.3
25 June 2019 (LTIP) - 475,258 6.3 7.3
20 November 2019 (LTIP) - 105,699 6.7 7.7
23 December 2019 (LTIP) - 41,468 6.8 7.8
15 July 2020 (LTIP)(1) 850,540 1,172,290 7.3 8.3
23 June 2021 (LTIP) 511,112 868,889 8.3 9.3
12 July 2022 (LTIP) 352,486 - 9.3 -
Total 2,574,403 3,959,643 6.1 6.8
----------- ----------- --------- ---------
1 - 850,540 nil cost options are outstanding in the 2020 LTIP
award at 31 March 2023 but no options are estimated to vest on the
relevant vesting dates in the 2023 calendar year.
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at
01 April 2021 EUR 0.01 3,971,371
========= =============
Granted during
the year EUR 0.00 918,659
Forfeited during
the year EUR 0.00 (210,928)
Exercised during
the year EUR 0.00 (629,459)
Expired during
the year EUR 0.50 (90,000)
Outstanding at
31 March 2022 EUR 0.00 3,959,643
========= =============
Granted during
the year EUR 0.00 620,698
Forfeited during
the year EUR 0.00 (1,570,164)
Exercised during
the year EUR 0.00 (435,774)
Expired during
the year EUR 0.00 -
Outstanding at
31 March 2023 EUR 0.00 2,574,403
========= =============
The exercise price of options outstanding at the end of the year
was EURnil (for LTIP options) (2022: EURnil) and their weighted
average contractual life was 6.1 years (2022: 6.8 years).
Of the total number of options outstanding at the end of the
year 860,265 (2022: 1,296,039) had vested and were exercisable at
the end of the year.
Long Term Incentive Plan ('LTIP')
In 2013, the Group established a Long-Term Incentive Plan, the
participants of which are key members of the Senior Management
Team, including Executive Directors. The establishment of the LTIP
was approved by the shareholders at the AGM in September 2013.
2013 LTIP Award performance conditions and 2016 outcome
The LTIP in 2013 awarded 4,103,456 nil cost options and
2,472,550 vested in the financial year ended 31 March 2017. 443,675
nil cost options remain as at 31 March 2023 after allowing for
forfeitures and options exercised in the year.
2016 LTIP Award performance conditions and 2019 outcome
The LTIP in 2016 awarded 1,070,255 nil cost options and 494,433
vested in the financial year ended 31 March 2020. 130,099 nil cost
options remain as at 31 March 2023 after allowing for forfeitures
and options exercised in the year.
2017 LTIP Award performance conditions and 2020 outcome
The LTIP in 2017 awarded 1,087,842 nil cost options and 326,999
vested in the financial year ended 31 March 2021. 100,651 nil cost
options remain as at 31 March 2023 after allowing for forfeitures
and options exercised in the year.
2018 LTIP Award performance conditions and 2021 outcome
The LTIP in 2018 awarded 1,170,160 nil cost options and 185,840
vested in the financial year ended 31 March 2022. 185,840 nil cost
options remain as at 31 March 2023 after allowing for forfeitures
and options exercised in the year.
2019 LTIP Award performance conditions and 2022 outcome
The LTIP in 2019 awarded 810,520 nil cost options and no options
vested in the financial year ended 31 March 2023.
Awards made in July 2020 and LTIP Award performance
conditions
During the prior year, a total of 1,326,966 LTIP awards were
made primarily to members of the Senior Management team including
the Executive Directors:
The performance targets for 1,255,829 of these awards are as
follows:
Weighting Threshold Stretch Maximum
Metric (% of award)
Vesting (% of maximum) 25% 70% 100%
EBITDA per share in
FY23 60% EUR0.14 EUR0.19 EUR0.24
Total sales volume in
FY 23 (m(3) ) 40% 90,000 105,000 112,720
------------- ---------- -------- --------
-- Vesting is on a straight-line basis between points in the schedule.
-- Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in
line with the business plan and intended stretch of the targets at
the point of award.
-- EBITDA per share targets are set and determined so as to exclude licensing income.
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya and Tricoya.
-- Vesting of the Sales Volume component will be subject to the
achievement of a threshold level of EBITDA
Element A Element B
(EBITDA per (Sales volume
Element share) growth)
Grant date 15 July 20 15 July 20
Share price at grant
date ( EUR ) 1.00 1.00
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details
set out above) EBITDA Sales volume growth
Risk free rate -0.69% -0.69%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 1.00 EUR 1.00
The remaining 71,137 of the awards made in summer 2020 were
specific to individuals dedicated to the Tricoya consortium with
performance measures linked to progress and development of the
Tricoya plant and its subsequent operation. The fair value of these
options were EUR0.998 on their Grant date.
All of the above awards, made in summer 2020 are subject to a
three-year performance period (i.e. year end March 2023) and a
further two-year holding period. In addition, awards are also
subject to malus/ claw-back provisions. As at 31 March 2023, no
share options are estimated to vest.
Awards made in July 2021 and LTIP Award performance
conditions
During the year, a total of 918,659 LTIP awards were made
primarily to members of the Senior Management team including the
Executive Directors:
The performance targets for 863,624 of these awards are as
follows:
Weighting Threshold Maximum
Metric (% of award)
Vesting (% of maximum) 25% 100%
EBITDA per share in FY24 60% EUR0.15 EUR0.24
Cumulative Sales Volume
(FY22 to FY24) (m(3)
) 30% 267,000 297,000
10% 33% on attaining each
of the 3 year milestones:
Y1 - Attain investor
ESG external rating/score
Y2 - Improve or at
least maintain ESG
external rating/score
Y3 - Improve or at
ESG - improvement in least maintain ESG
reporting ratings external rating/score
------------- -----------------------------
-- Vesting is on a straight-line basis between points in the schedule.
-- Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in
line with the business plan and intended stretch of the targets at
the point of award.
-- EBITDA per share targets are set and determined so as to exclude licensing income.
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya and Tricoya.
Element A Element B Element C
(EBITDA per (Sales volume (ESG Reporting
Element share) growth) Metrics)
Grant date 23 Jun 21 23 Jun 21 23 Jun 21
Share price at grant
date ( EUR ) 2.06 2.06 2.06
Exercise price (EUR) 0.00 0.00 0.00
Expected life (years) 3 3 3
Contractual life (years) 10 10 10
Vesting conditions (Details ESG reporting
set out above) EBITDA Sales volume growth metrics
Risk free rate -0.67% -0.67% -0.67%
Expected volatility 20% 20% 20%
Expected dividend yield 0% 0% 0%
Fair value of option EUR 2.06 EUR 2.06 EUR 2.06
The remaining 55,035 of the awards made in summer 2021 were
specific to individuals dedicated to the Tricoya(R) consortium with
performance measures linked to progress and development of the
Tricoya(R) plant and its subsequent operation.
The fair value of these options were EUR2.06 on their Grant
date.
All of the above awards, made in summer 2021 are subject to a
three-year performance period (i.e. year end March 2024) and a
further two-year holding period. In addition, awards are also
subject to malus/ claw-back provisions.
Awards made in July 2022 and LTIP Award performance
conditions
During the year, a total of 620,698 LTIP awards were made
primarily to members of the Senior Management team including the
Executive Directors:
The performance targets for these awards are as follows:
Weighting Threshold Maximum
Metric (% of award)
Vesting (% of maximum) 25% 100%
Cumulative Sales Volume
(FY23 to FY25) (m(3)
) 25% 206,000 232,000
Average Gross contribution
(%) 25% 49.60% 55%
Share performance compared 40% Median Upper quartile
to AIM Index
10% 15% improvement 20% improvement
in in S&P ESG
S&P ESG score score over
over the three-year
ESG - improvement in the three-year period
reporting ratings period
------------- ---------------- ----------------
-- Vesting is on a straight-line basis between points in the schedule.
-- Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in
line with the business plan and intended stretch of the targets at
the point of award.
-- Gross contribution defined as Revenue from sale of
Accoya/Tricoya less Net acetyls and raw wood cost
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya and Tricoya.
-- Share performance is compared to AIM Index performance
excluding Financial services and natural resource stocks
Element Element Element Element
A B C D
(Sales volume (Gross Contribution (Share price (ESG Reporting
Element growth) %) growth) Metrics)
Grant date 12 Jul 22 12 Jul 22 12 Jul 22 12 Jul 22
Share price at grant
date ( EUR ) 1.21 1.21 1.21 1.21
Exercise price (EUR) 0.00 0.00 0.00 0.00
Expected life (years) 3 3 3 3
Contractual life (years) 10 10 10 10
Vesting conditions (Details Gross Contribution ESG reporting
set out above) Sales volume % Share price metrics
Risk free rate 0.45% 0.45% 0.45% 0.45%
Expected volatility 20% 20% 20% 20%
Expected dividend yield 0% 0% 0% 0%
Fair value of option EUR 1.21 EUR 1.21 EUR 0.90 EUR 1.21
All of the above awards, made in summer 2022 are subject to a
three-year performance period (i.e. year end March 2025) and a
further two-year holding period. In addition, awards are also
subject to malus/ claw-back provisions.
Employee Benefit Trust - Share bonus award
137,665 new Ordinary shares are held by an Employee Benefit
Trust as part of the annual bonus, in connection with the employee
remuneration and incentivisation arrangements for the period from 1
April 2021 to 31 March 2022, the beneficiaries of which are
primarily senior employees. Such new Ordinary shares vest if the
employees remain in employment with the Company at the vesting
date, being 1 July 2023 (subject to certain other provisions
including regulations, good-leaver, take-over and Remuneration
Committee discretion provisions). As at 31 March 2023, the
Employment Benefit Trust was consolidated by the Company and the
137,665 shares are recorded as Own Shares within equity.
Employee Share Participation Plan
The Employee Share Participation Plan (the 'Plan') is intended
to promote the long-term growth and profitability of Accsys by
providing employees with an opportunity to acquire an ownership
interest in new Ordinary shares ('Shares') in the Company as an
additional benefit of employment. Under the terms of the Plan, the
Company issues these Shares to a trust for the benefit of the
subscribing employees. The Shares are released to employees after
one year, together with an additional Share on a 1 for 1 matched
basis provided the employee has remained in the employment of
Accsys at that point in time (subject to good leaver provisions).
The Plan is in line with industry approved employee share plans and
is open for subscription by employees once a year following release
of the interim financial results. The maximum amount available for
subscription by any employee is EUR5,000 per annum. In January 2023
various employees subscribed for a total of 203,906 Shares at an
acquisition price of EUR0.81 per Share.
Also during the year, 1 for 1 Matching Shares were awarded in
respect of subscriptions that were made in the previous year as a
result of the participants continuing to remain in employment at
the point of vesting. 174,144 matching shares were issued to
employees in January 2023.
15. Intangible assets
Internal Intellectual Goodwill Total
Development property
costs rights
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 01 April 2021 7,464 74,456 4,231 86,151
============ ============= ========= ========
Additions 178 536 - 714
At 31 March 2022 7,642 74,992 4,231 86,865
============ ============= ========= ========
Additions 57 380 - 437
At 31 March 2023 7,699 75,372 4,231 87,302
============ ============= ========= ========
Accumulated amortisation
At 01 April 2021 2,510 72,776 - 75,286
============ ============= ========= ========
Amortisation 384 361 - 745
At 31 March 2022 2,894 73,137 - 76,031
============ ============= ========= ========
Amortisation 385 395 - 780
At 31 March 2023 3,279 73,532 - 76,811
============ ============= ========= ========
Net book value
At 31 March 2023 4,420 1,840 4,231 10,491
At 31 March 2022 4,748 1,855 4,231 10,834
At 31 March 2021 4,954 1,680 4,231 10,865
Refer to note 16 for the recoverability assessment of these
intangible assets.
16. Property, plant and equipment
Land Plant
and and Office Total
buildings machinery equipment
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 01 April 2021 17,976 146,433 3,885 168,294
========== ========== ========== ========
Additions - 41,012 461 41,473
Foreign currency translation
gain - - 7 7
At 31 March 2022 17,976 187,445 4,353 209,774
========== ========== ========== ========
Additions - 21,376 341 21,717
Foreign currency translation
gain - - 3 3
At 31 March 2023 17,976 208,821 4,697 231,494
========== ========== ========== ========
Accumulated depreciation
At 01 April 2021 995 25,945 1,797 28,737
========== ========== ========== ========
Charge for the year 358 3,550 461 4,369
Foreign currency translation
gain - - 7 7
At 31 March 2022 1,353 29,495 2,265 33,113
========== ========== ========== ========
Charge for the year 358 5,397 572 6,327
Foreign currency translation
gain - - 3 3
Impairment loss - 86,000 - 86,000
At 31 March 2023 1,711 120,892 2,840 125,443
========== ========== ========== ========
Net book value
At 31 March 2023 16,265 87,929 1,857 106,051
At 31 March 2022 16,623 157,950 2,088 176,661
At 1 April 2021 16,981 120,488 2,088 139,557
Plant and machinery assets with a net book value of
EUR24,851,000 are held as assets under construction and are not
depreciated, relating to the Hull Plant (31 March 2022:
EUR93,560,000).
Impairment review
The carrying value of the property, plant and equipment,
internal development costs and intellectual property rights are
split between two cash generating units (CGUs), representing the
Accoya and Tricoya segments and the carrying value of Goodwill is
allocated to the Accoya segment. The recoverable amount of these
CGUs are determined based on a value-in-use calculation which uses
cash flow projections for a period of 5 to 7 years based on latest
financial budgets and discounted at a pre-tax discount rate of
13.5% (31 March 2022: 10.5%) to determine their present value. A
cash flow projection period of 7 years was used for the Tricoya
segment calculation to reflect the future cashflows of the plant,
considering the estimated hold period, remaining completion
activities and production ramp-up.
The key assumptions used in the value in use calculations
are:
- the manufacturing revenues, operating margins and future
licence fees estimated by management;
- the timing of completion of the Tricoya Hull plant;
- the timing of completion of construction of additional facilities (and associated output);
- forecast UK natural gas prices;
- the long term growth rate; and
- the discount rate.
The Directors have determined that an impairment totalling EUR86
million should be recognised in the Tricoya CGU.
The impairment of the Tricoya segment assets is caused by:
(i) As reported in November 2022, Identification of additional
time and costs (EUR35m) to complete the plant;
(ii) A decrease in the production volume forecast for the plant
to 24,000MT (from 30,000MT)l
(iii) Update to the discount rate applied to 13.5% (increased
from 10.5% at 31 March 2022).
Key assumptions applied to the Tricoya CGU were as follows:
-- a discount rate of 13.5%;
-- Project capital costs to bring the plant into commercial
operation of EUR35m;
-- A production capacity of 24,000MT
-- A "hold period" of 2 years from 31 March 2023 (period in
which no construction activities is performed); and
-- a long-term growth rate of 2.5%.
The impact the following changes to these key assumptions would
have, if made in isolation, on the impairment calculated for
the Tricoya CGU is as follows:
-- a 1% increase in the discount rate: increase of EUR7m
-- a 1% decrease in the long-term growth rate : increase of
EUR4m
-- a 12-month extension in the hold period : increase of
EUR9m
-- a 1,000MT increase in the production capacity : decrease of
EUR4m
-- a EUR10m increase in the capital costs to bring the plant
into commercial operation : increase of EUR7m
17. Leases
(i) Amounts recognised in the statement of financial
position
The statement of financial position shows the following amounts
relating to leases:
Right-of-use
assets
------------------
2023 2022
EUR'000 EUR'000
Right-of-use assets
Properties 2,880 4,023
Equipment 1,148 569
Motor Vehicles 16 40
4,044 4,632
======== ========
Minimum lease
payments
2023 2022
EUR'000 EUR'000
Amounts payable under lease
liabilities:
Within one year 1,132 1,250
In the second to fifth years
inclusive 2,085 2,390
After five years 3,502 3,972
Less: future finance charges (1,984) (2,395)
Present value of lease obligations 4,735 5,217
========= =========
Additions to the right-of-use assets during the financial year
were EUR590,000 (2022: EUR801,000).
(ii) Amounts recognised in the statement of profit and loss
The statement of comprehensive income shows the following
amounts relating to leases:
2023 2022
EUR'000 EUR'000
Depreciation charge of right-of-use
assets
Properties 893 807
Equipment 255 209
Motor Vehicles 34 34
1,182 1,050
-------- --------
Interest expense (included in finance cost) 294 322
Expense relating to short-term leases (included in
cost of goods sold and administrative expenses) 60 83
Expense relating to leases of low-value assets that
are not shown above as short-term leases (included
in administrative expenses) 18 20
Expense relating to variable lease payments not included
in lease liabilities (included in administrative expenses) - -
The total cash outflow for leases in 2023
was EUR940,000 (2022: EUR1,089,000)
The Group's leasing activities and how these are accounted
for:
The Group leases various offices, land, equipment and cars.
Rental contracts are typically made for fixed periods of 1-10
years, although, if appropriate, a longer term may be entered into.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants, but leased assets may not be used as
security for borrowing purposes. Lease extension options and lease
termination options are only included in the calculation of the
lease liability if there is reasonable certainty that they will be
exercised. Some of the Group's leases have extension and
termination options attached to them.
Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to the statement of
comprehensive income over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right of use asset is depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
- Variable lease payments that are based on an index or a rate;
- Amounts expected to be payable by the lessee under residual value guarantees;
- The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the Group's incremental
borrowing rate, being the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset of similar economic
environment within similar terms and conditions.
Right of use assets are measured at cost comprising the
following:
- The amount of initial measurement of lease liability;
- Any lease payments made at or before the commencement date
less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Payments associated with short-term leases and leases of low
value are recognised on a straight-line basis as an expense in the
statement of comprehensive income. Short-term leases are leases
with a lease term of 12 months or less. Low-value assets comprise
of small items of office furniture and equipment.
18. Financial asset at fair value through profit or loss
2023 2022
EUR'000 EUR'000
Shares held in Cleantech Building
Materials PLC - -
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China. On 23
December 2016, Cleantech Building Materials PLC acquired Diamond
Wood China. On 19 April 2017 Cleantech Building Materials acquired
the 21,666,734 shares previously owned by the Company and in return
the Company has been issued with 520,001 shares in Cleantech
Building Materials PLC, a listed Company trading on the Nasdaq
First North market in Copenhagen.
There continues to be no active market for these shares as at 31
March 2023. As such a reliable fair value cannot be calculated and
the investment is carried at a nil fair value (2022: nil).
A total of 498,522 shares were held at 31 March 2023.
19. Deferred taxation
The Group has a recognised deferred tax asset of EUR621,000
(2022: EUR484,000) offsetting a recognised deferred tax liability
of EUR621,000 (2022: EUR484,000). See note 11.
The Group also has an unrecognised deferred tax asset of EUR62m
(2022: EUR42m) which is largely in respect of trading losses of the
UK subsidiaries and has been calculated using the tax rate which is
expected to be applicable when the tax losses are expected to be
utilised The deferred tax asset has been recognised only to the
extent of the deferred tax liability, due to the uncertainty of the
timing of future expected profits of the related legal entities
which is dependent on the profits attributable to licensing and
future manufacturing income.
20. Subsidiaries
A list of subsidiary investments, including the name, country of
incorporation and proportion of ownership interest is given in note
4 to the Company's separate financial statements.
21. Inventories
2023 2022
EUR'000 EUR'000
Raw materials and work in progress 24,220 16,978
Finished goods 5,726 3,393
29,946 20,371
======== ========
The amount of inventories recognised as an expense during the
year was EUR89,357,000 (2022: EUR67,698,000). The cost of
inventories recognised as an expense includes a net credit of
EUR9,000 (2022: credit of EUR20,000) in respect of the inventories
sold in the period which had previously been written down to net
realisable value.
22. Trade and other receivables
2023 2022
EUR'000 EUR'000
Trade receivables 14,398 13,162
Other receivables 1,154 736
VAT receivable 1,472 2,203
Prepayments 1,051 833
18,075 16,934
======== ========
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value. Trade
and other receivables in the above table are stated net of
provision for doubtful debts. The majority of trade and other
receivables is denominated in Euros, with EUR1,633,000 of the trade
and other receivables denominated in US Dollars (2022:
EUR3,342,000).
The age of receivables past due but not impaired is as
follows:
2023 2022
EUR'000 EUR'000
Up to 30 days overdue 1,361 1,248
Over 30 days and up to 60 days
overdue 290 -
Over 60 days and up to 90 days
overdue - -
Over 90 days overdue 14 24
1,665 1,272
======== ========
In determining the recoverability of a trade receivable the
Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the
reporting date. Included in the provision are trade receivables and
accrued income with a balance of EUR25,002,000 (2022:
EUR25,002,000).
Movement in provision for doubtful debts:
2023 2022
EUR'000 EUR'000
Balance at the beginning of
the year 25,002 25,002
Net (decrease)/increase of
impairment - -
Balance at the end of the year 25,002 25,002
======== ========
23. Financial liability at amortised cost
2023 2022
EUR'000 EUR'000
Value Recovery Instrument
("VRI") 1,383 -
In November 2022, NatWest agreed to restructure its TUK debt
facility, reducing the principal amount by EUR9.4m to total EUR6m,
under a new 7-year term (see note 30). Separate to, and in addition
to the amended EUR6m loan, under the Value Recovery Instrument
('VRI') agreement , NatWest will be entitled to obtain recovery of
up to approximately EUR9.4m, on a contingent basis, depending on
the profitability of the Tricoya Hull plant once operational.
The valuation of the VRI was calculated on the same future
cashflows modelled for the Tricoya impairment. See note 16 for a
list of the key assumptions.
24. Trade and other payables
2023 2022
EUR'000 EUR'000
Trade payables 17,942 16,655
Other taxes and social security
payable 1,083 1,754
Accruals and deferred income 6,871 11,471
25,896 29,880
======== ========
The decrease in trade and other payables primarily relates to
the timing of accruals associated with the construction of the Hull
plant.
25. Share capital
2023 2022
EUR'000 EUR'000
Allotted - Equity share capital
219,381,693 Ordinary shares of EUR0.05 each (2022:
192,761,322 Ordinary Shares of EUR0.05 each) 10,963 9,638
10,963 9,638
======== ========
All ordinary shares are called up, allotted and fully paid.
In the year ended 31 March 2022:
In May 2021, 20,005,325 Placing Shares and 2,418,918 Open Offer
Shares were issued as part of the capital raise to fund the
Company's investment in expanding its Accoya(R) business into North
America through the construction of a new Accoya plant in the USA
through its joint venture, Accoya USA LLC, with Eastman Chemical
Company (see note 29), as well as to provide additional capital to
support the Company's continued growth. The Shares were issued at a
price of EUR1.65 (GBP1.40) per ordinary share, raising gross
proceeds of EUR36.7 million (before expenses).
Between June and September 2021, a total of 629,460 shares were
issued following the exercise of nil cost options, granted under
the Company's 2013 Long-Term Incentive Plan ('LTIP').
In February 2022, following the subscription by employees in the
prior year for shares under the Employee Share Participation Plan
(the 'Plan'), 189,931 shares were issued as "Matching Shares" at
nominal value under the Plan.
In addition, various employees newly subscribed under the Plan
for 193,424 Shares at an acquisition price of EUR2.015 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 year ended 31 March 2023:
In May 2022, 13,793,103 Placing and Subscription Shares were
issued as part of the capital raise to strengthen the Company's
balance sheet, increase liquidity headroom and fund additional
costs to complete the Arnhem Plant Reactor 4 capacity expansion.
The Shares were issued at a price of EUR1.45 (GBP1.23) per ordinary
share, raising gross proceeds of EUR20 million (before
expenses).
Between August and December 2022, 435,774 Shares were issued
following the exercise of nil cost options, granted under the
Company's 2013 Long Term Incentive Plan ('LTIP').
In July 2022, 137,665 shares were issued to an Employee Benefit
Trust (EBT) at nominal value, as part of the annual bonus, in
connection with the employee remuneration and incentivisation
arrangements for the period from 1 April 2021 to 31 March 2022.
These shares will vest in July 2023, subject to the employees
continuing employment within the Group.
In November 2022, 11,875,801 shares were issued to the Tricoya
Consortium Partners (INEOS, MEDITE , BGF & Volantis) at a price
of EUR0.80 (GBP0.71) per share. This formed part of a Sales
Purchase Agreement with the Tricoya Consortium Partners whereby
Accsys acquired the remaining 38.2% holding in TUK that TTL did not
already own and the 23.5% holding in TTL that it did not already
own. See note 28.
In January 2023, following the subscription by employees in the
prior year for shares under the Employee Share Participation Plan
(the 'Plan'), 174,144 shares were issued as "Matching Shares" at
nominal value under the Plan.
In addition, various employees newly subscribed under the Plan
for 203,906 Shares at an acquisition price of EUR0.81 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).
26. Other reserves
Capital
redemp- Hedging Total
tion Merger Effective-ness Other Other
reserve reserve reserve reserve reserves
EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 01 April 2021 148 106,707 229 7,551 114,635
========= ========= ================ ========= ==========
Total comprehensive income
for the period - - 66 - 66
Balance at 01 March 2022 148 106,707 295 7,551 114,701
========= ========= ================ ========= ==========
Total comprehensive income
for the period - - 42 - 42
Balance at 31 March 2023 148 106,707 337 7,551 114,743
========= ========= ================ ========= ==========
The closing balance of the capital redemption reserve represents
the amounts transferred from share capital on redemption of
deferred shares in a previous year.
The merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
The hedging effectiveness reserve reflects the total accounted
for under IFRS 9 in relation to the Tricoya(R) segment (see 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 (see note 27).
27. Transactions with non-controlling interests
In the year ended 31 March 2022:
No shares were issued in the year ended 31 March 2022.
The total carrying amount of the non-controlling interests in
TTL and Tricoya UK at 31 March 2022 was EUR35.5m (2021:
EUR37.2m).
In November 2021, Accsys agreed a new EUR17m loan to Tricoya UK
to be used towards the Hull plant construction project alongside
existing funding in place for Tricoya UK. The loan accrues
interest, which is rolled up, at a rate between 5.25 and 6.75%
above EURIBOR. The loan is secured and is repayable by 30 September
2023. At 31 March 2022, the Group had lent to Tricoya UK EUR8.8m
under the facility.
In the year ended 31 March 2023:
In November 2022, Accsys purchased the remaining ownership of
TTL and Tricoya UK which it did not previously own via a Sales
Purchase Agreement ('SPA') with the Tricoya consortium partners.
See note 28 for further details.
28. Business combinations
In November 2022, Accsys reached agreement to acquire full
ownership of TUK (Tricoya UK Limited) and TTL (Tricoya Technologies
Limited), from its Consortium Partners (INEOS, MEDITE , BGF &
Volantis). Under the agreement Accsys acquired the remaining 38.2%
holding in TUK that TTL did not already own and the 23.5% holding
in TTL that it did not already own.
Consideration of 11.9 million new ordinary Accsys shares was
provided to the other Tricoya Consortium Partners valued at EUR9.5m
(EUR0.81 per share).
INEOS and MEDITE's respective supply and offtake agreements for
the Hull plant will continue on their current terms.
Tricoya UK and TTL were consolidated in the Group results in the
prior year and continue to be consolidated following this purchase.
The below table reflects the accounting for this acquisition,
whereby the difference between the consideration paid and the
Non-controlling interest balance at the end of October 2022 has
been allocated to accumulated loss.
2023
EUR'000
Non-controlling interest balance
as at 31 March 2022 35,526
NCI share of losses during the
year ended 31 March 2023 (30,824)
Accsys Technologies PLC share
issue as consideration (9,545)
Difference recognised as attributable
to the Accsys Technologies PLC 4,843
Non-controlling interest balance
as at 31 March 2023 -
==========
29. Investment in Joint Venture
In August 2020, Accsys together with Eastman Chemical Company
formed a new Company, Accoya USA LLC, 60% owned by Accsys and 40%
owned by Eastman. Accoya USA LLC is constructing and will operate
an Accoya plant in Kingsport, Tennessee (USA) to serve the North
American market. The plant is designed to initially produce
approximately 43,000 cubic metres of Accoya per annum and to allow
for cost-effective expansion.
Under IFRS 11 - Joint arrangements, the two parties are assessed
to jointly control the entity and Accoya USA is accounted for as a
joint venture and equity accounted for within the financial
statements.
At 31 March 2023, Accsys and Eastman have contributed equity of
$61m to Accoya USA LLC, with a further $5m committed to be
contributed.
An eight-year term loan of $70 million has been provided by
First Horizon Bank ('FHB') of Tennessee, USA. FHB are also
providing a further $10 million revolving line of credit to be
utilised to fund working capital. The FHB term loan is secured on
the assets of Accoya USA and will be supported by Accoya USA's
shareholders, including $50 million through a limited guarantee
provided on a pro-rata basis, with Accsys' 60% share representing
$30 million (see note 32). The interest rate varies between 1.3% to
2.1% over USD LIBOR . Principal repayments commence one year
following the completion and start-up of the facility, and are
calculated on a ten-year amortisation period.
The carrying amount of the equity-accounted investment is as
follows:
2023 2022
EUR'000 EUR'000
Opening balance 3,216 326
Investment in Accoya
USA 28,979 3,751
Less: Accsys proportion (60%) of Licence
fee received (300) (600)
Loss for the year (1,036) (261)
Closing balance 30,859 3,216
========= ========
The Group has equity accounted for the joint venture in these
consolidated accounts.
The income statement, balance sheet and cashflows for Accoya USA
LLC, are set out below:
Accoya USA LLC recorded a loss from operations of EUR1,727,000
for the year ended 31 March 2023, (EUR435,000 for the period ended
31 March 2022). The loss attributable to Accsys Technologies PLC
was EUR1,036,000 for the year ended 31 March 2023, (EUR261,000 for
the period ended 31 March 2022).
Balance Sheet:
2023 2022
EUR'000 EUR'000
Non-current assets
Property, plant
and equipment 69,327 17,589
Right of use assets 6,242 6,403
75,569 23,992
---------- ----------
Current assets
Trade and other 236 -
receivables
Cash and cash equivalents 8,701 235
8,937 235
---------- ----------
Current liabilities
Trade and other
payables (14,682) (10,412)
Obligation under
lease liabilities (455) (345)
Net current liabilities (6,200) (10,522)
Non-current liabilities
Obligation under
lease liabilities (5,875) (5,993)
Other long term
borrowing (9,781) 243
(15,656) (5,750)
---------- ----------
Net assets 53,713 7,720
---------- ----------
Cash flows:
2023 2022
EUR'000 EUR'000
Cash flows from operating activities (1,147) (209)
Cash flows from investing activities (49,568) (7,310)
Cash flows from financing activities 59,181 7,753
Net increase in cash and cash equivalents 8,466 234
========== =========
30. Commitments under loan agreements
2023 2022
EUR'000 EUR'000
Loan obligations
Within one year 9,500 11,654
In the second to fifth years
inclusive 50,288 52,335
In greater than five years 6,132 -
Present value of loan obligations 65,920 63,989
========= =========
Amounts payable under loan agreements -
undiscounted cashflows:
Within one year 10,312 12,973
In the second to fifth years
inclusive 52,976 59,506
After five years 9,962 -
--------- ---------
Less future finance charges (7,330) (8,490)
Present value of loan obligations 65,920 63,989
========= =========
ABN Debt Facilities
In October 2021 Accsys completed the refinance of its Group debt
facilities through a new bilateral agreement with ABN Amro. The new
EUR60m 3-year bilateral facilities agreement with ABN Amro
comprised a
- EUR45m Term Loan Facility and,
- EUR15m Revolving Credit Facility ('RCF') .
- The Term Loan is partially amortising, with 5% of the
principal repayable per annum after 18 months.
- The applicable interest rate for the Term Loan varies between
an all in cost of 1.75% and 3.25% depending on net leverage.
- The RCF interest rate varies between 2.0% and 3.5% above
EURIBOR.
The RCF was subsequently increased to EUR25 million as part of
the Accoya USA financing referred to below, with approximately
EUR20 million utilised for the Letter of credit provided by ABN
Amro to FHB in support of the Accoya USA JV funding arrangements,
the remaining EUR5million was drawn at 31 March 2023.
The new facilities are secured against the assets of the Group
which are 100% owned by the Company and include customary covenants
such as net leverage and interest cover which are based upon the
results and assets which are 100% owned by the Company.
Tricoya(R) Natwest facility:
In March 2017 the Company's subsidiary, Tricoya UK Limited
entered into a six-year EUR17.2 million finance facility agreement
with NatWest Bank 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.
In November 2022, as part of the Tricoya consortium restructure
(see note 28) NatWest agreed to restructure its TUK debt facility,
reducing the principal amount by EUR9.4m to total EUR6m, under a
new 7-year term. Interest will accrue and be rolled up at Euribor
plus a margin, with the margin ranging from 325 to 475 basis
points. No repayments are due until the facility maturity date.
At 31 March 2023, the Group had EUR6.0m (2022: EUR9.9m) borrowed
under the facility.
Separate to, and in addition to the amended EUR6m loan, NatWest
will be entitled to obtain recovery, via the Value Recovery
Instrument ('VRI') agreement, of up to approximately EUR9.4m, on a
contingent basis, depending on profitability of the Tricoya Hull
plant once operational. (See note 23)
Accoya USA facility & De Engh facility:
In March 2022 the Company's joint venture, Accoya USA agreed an
eight-year $70 million loan from First Horizon Bank ('FHB') of
Tennessee, USA in respect of the construction and operation of the
Accoya USA plant. FHB are also providing a further $10 million
revolving line of credit to be utilised to fund working capital.
The FHB term loan is secured on the assets of Accoya USA and is
supported by Accoya USA's shareholders, including $50 million
through a limited guarantee provided on a pro-rata basis, with
Accsys' 60% share representing $30 million (see note 29 & 32).
The interest rate varies between 1.3% to 2.1% over USD LIBOR.
Principal repayments commence one year following the completion and
start-up of the facility, and are calculated on a ten-year
amortisation period. Accoya USA is equity accounted for in these
financial statements, therefore this Borrowing is not included in
the Group's borrowings. (See note 29)
To support Accsys' limited guarantee, Accsys provided a $20
million Letter of Credit ('LC') to FHB. The LC is issued by ABN
Amro, utilising part of the revolving credit facility agreed in
October 2021. To further support the LC, Accsys agreed a EUR10
million convertible loan with De Engh BV Limited ('De Engh') in
March 2022, an investment company based in the Netherlands (the
'Convertible Loan'). The Convertible Loan proceeds were placed with
ABN Amro solely as cash collateral to enable ABN Amro to grant the
$20 million LC to FHB.
The Convertible Loan is unsecured and carries an interest margin
of 6.25% above Euribor. If the Convertible Loan is not repaid
within two years, De Engh has an option (from the end of year two)
to convert the outstanding loan balance to ordinary shares in
Accsys at EUR2.30 per share, otherwise the interest rate increases
by 2% in year three and by a further 2% the following year if the
loan has not been repaid or converted after 3 years. The maximum
term of the Convertible Loan is 3.5 years from March 2022.
Reconciliation to net debt:
2023 2022
EUR'000 EUR'000
Cash and cash equivalents 26,593 42,054
Less:
Amounts payable under loan
agreements (65,920) (63,989)
Amounts payable under lease
liabilities (note 18) (4,735) (5,217)
Net debt (44,062) (27,152)
========== ==========
Restricted cash
The cash and cash equivalents disclosed above and in the
Consolidated statement of cash flow includes $10 million which is
pledged to ABN Amro as collateral for the $20million Letter of
credit provided to FHB (see note 29 & 32).
Reconciliation to adjusted cash:
2023 2022
EUR'000 EUR'000
Cash and cash equivalents 26,593 42,054
Less: Remaining cash raised through May 2021 equity
raise to be contributed to Accoya USA - (27,857)
Less: Cash pledged to ABN for
Letter of Credit (9,828) (9,852)
Adjusted Cash 16,765 4,345
========= ==========
Liabilities from financing Other
activities assets
---------------------------------- ---------- ----------
Borrowings Leases Sub-total Cash Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------- --------- ---------- ---------- ----------
Net debt as at 01 April
2021 (54,290) (5,532) (59,822) 47,598 (12,224)
=========== ========= ========== ========== ==========
Cash flows (7,561) 1,089 (6,472) (7,879) (14,351)
New leases - (801) (801) - (801)
Foreign exchange adjustments 231 (7) 224 2,335 2,559
Other changes (2,369) 34 (2,335) - (2,335)
Net debt as at 31 March
2022 (63,989) (5,217) (69,206) 42,054 (27,152)
=========== ========= ========== ========== ==========
Cash flows (8,445) 940 (7,505) (16,984) (24,489)
New leases - (590) (590) - (590)
Foreign exchange adjustments - 67 67 1,523 1,590
Other changes 6,514 65 6,579 - 6,579
Net debt as at 31 March
2023 (65,920) (4,735) (70,655) 26,593 (44,062)
=========== ========= ========== ========== ==========
31. Equity options
On the 29 March 2017, the Company announced the formation of the
Tricoya Consortium and as part of this, funding was agreed with BGF
Business Growth Fund). In addition to the issue of the Loan Notes,
which have since been repaid as part of the Group re-finance in
October 2021 (see note 30), the Company issued 8,449,172 options
over Ordinary Shares of the Company to BGF exercisable at a price
of GBP0.62 per Ordinary Share at any time until 31 December 2026
(the 'Options').
At 31 March 2023 a total 8,449,172 Options exist attributable to
BGF. This represents 3.9% (2022: 4.4%) of the issued share capital
of the Company as at 31 March 2023.
See notes 30 & 35 for details on the convertible loan agreed
with De Engh BV Limited.
32. Guarantee provided to FHB
In March 2022 the Company's joint venture, Accoya USA agreed an
eight-year $70million loan from First Horizon Bank ('FHB') of
Tennessee, USA in respect of the construction and operation of the
Accoya USA plant and a further $10 million revolving line of credit
to be utilised to fund working capital (see note 28 & 29). The
FHB term loan is supported by Accoya USA's shareholders, including
$50 million through a limited guarantee provided on a pro-rata
basis, with Accsys' 60% share representing $30 million (see note
28).
To support Accsys' limited guarantee, Accsys provided a $20
million Letter of Credit, issued by ABN Amro, to FHB (see note
30).
The $30 million limited guarantee provided to FHB is held at a
fair value of EUR nil, representing a present value calculation of
EUR8.2 million weighted by the estimated probability of FHB calling
on the guarantee being 0%.
33. Financial instruments
Financial instruments
Lease liabilities
Lease creditors of EUR4,735,000 as at 31 March 2023 (2022:
EUR5,217,000) relates to various offices, land, equipment and cars
that the Group leases (see note 17).
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable to owners of the parent
Company, comprising share capital, reserves and accumulated
losses.
The Board reviews the capital structure on a regular basis. As
part of that review, the Board considers the cost of capital and
the risks associated with each class of capital. Based on the
review, the Group will balance its overall capital structure
through new share issues and the raising of debt if required.
The Group's strategy is to maintain a Net Debt / EBITDA ratio of
below 2.5x over the longer term while remaining within covenant
levels set in its ABN Amro loan facility. One of the key covenants
under the ABN Amro facility is the Net Debt/EBITDA ratio based upon
the results and assets which are 100% owned by the Company, with
the covenant test reducing over time from an initial maximum of 4x
to 2.5x. On this basis, Net Debt/EBITDA ratio was calculated at 1.3
for the year ending 31 March 2023.
No final dividend is proposed in 2023 (2022: EURnil). The Board
deems it prudent for the Company to protect as strong a statement
of financial position as possible during the current phase of the
Company's growth strategy.
Financial Instruments by category
Fair value At amortised At fair At fair Total
hierarchy cost value value
though through
profit OCI
2023/ EUR '000 or loss
----------------------------------- ------------ ------------------- --------- --------- ----------
Financial assets
Trade and other receivables 15,552 - - 15,552
Level
Financial asset investments 2 - - - -
Derivative financial instruments Level
(FX forward) 2 - - - -
Cash and cash equivalents 26,593 - - 26,593
Total 42,145 - - 42,145
------------------------------------------------- ------------------- --------- --------- ----------
Fair value At amortised At fair At fair Total
hierarchy cost value value
though through
profit OCI
2022/ EUR '000 or loss
----------------------------------- ------------ ------------------- --------- --------- ----------
Financial assets
Trade and other receivables 13,898 - - 13,898
Level
Financial asset investments 2 - - - -
Derivative financial instruments Level
(FX forward) 2 - 3 - 3
Cash and cash equivalents 42,054 - - 42,054
Total 55,952 3 - 55,955
------------------------------------------------- ------------------- --------- --------- ----------
Fair value At amortised At fair At fair Total
hierarchy cost value value
though through
profit OCI
2023/ EUR '000 or loss
----------------------------------- ------------ ------------------- --------- --------- ----------
Financial liabilities
Borrowings - loans (65,920) - - (65,920)
Lease liabilities (4,735) - - (4,735)
Trade and other payables (17,942) - - (17,942)
Level
Value Recovery Instrument ("VRI") 2 (1,383) - - (1,383)
Derivative financial instruments Level
(FX forward) 2 - -
Total (89,980) - - (89,980)
------------------------------------------------- ------------------- --------- --------- ----------
Fair value At amortised At fair At fair Total
hierarchy cost value value
though through
profit OCI
2022/ EUR '000 or loss
----------------------------------- ------------ ------------------- --------- --------- ----------
Financial liabilities
Borrowings - loans (63,989) - - (63,989)
Lease liabilities (5,217) - - (5,217)
Trade and other payables (16,655) - - (16,655)
Derivative financial instruments Level
(FX forward) 2 - - - -
Total (85,861) - - (85,861)
------------------------------------------------- ------------------- --------- --------- ----------
Money market deposits are held at financial institutions with
high credit ratings (Standard & Poor's rating of A).
All assets and liabilities mature within one year except for the
lease liabilities, for which details are given in note 17 and
loans, for which details are given in note 30.
Trade payables are payable on various terms, typically not
longer than 30 to 60 days with the exception of some major capex
items.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that
adequate financial resources are available for the development of
its business whilst managing its currency, interest rate,
counterparty credit and liquidity risks. The Group's treasury
strategy and policy are developed centrally and approved by the
Board.
Foreign currency risk management
The Group's functional currency is the Euro with the majority of
operating costs and balances denominated in Euros. An increasing
proportion of costs will be incurred in pounds sterling as the
Group's activities associated with the Tricoya(R) plant in Hull
increase, although future revenues will be in Euros or other
currencies. Equity contributions into Accoya USA and a smaller
proportion of revenue and expenditure are incurred in US dollars
and expenditure is also incurred in pounds sterling. In addition
some raw materials, while priced in Euros, are sourced from
countries which are not within the Eurozone. The Group monitors any
potential underlying exposure to other exchange rates.
If exchange rates changed by 5% from exchange rates at 31 March
2023, the effect on the P&L from the revaluation of:
- Trade Receivables - P&L impact would not be material. The
details of the Trade receivables per Currency is disclosed in note
22 with the US Dollar receivables held in Titan Wood Inc, which has
a US Dollar reporting currency.
- Trade payables - P&L impact would be approximately EUR211,000.
Interest rate risk management
Some of the Group's borrowings have variable interest rates
based on a relevant benchmark (ie. EURIBOR) plus an agreed margin.
Surplus funds are invested in short term interest rate deposits to
reduce exposure to changes in interest rates. The Group does not
currently enter into any interest rate hedging arrangements,
although will review the need to do so in respect of the variable
interest rate loan facilities.
Credit risk management
The Group is exposed to credit risk due to its trade receivables
from customers and cash deposits with financial institutions. The
Group's maximum exposure to credit risk is limited to their
carrying amount recognised at the balance sheet date.
The Group ensures that sales are made to customers with an
appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables
at year end to be of good credit quality including those that are
past due (see note 22). The Group is not exposed to any significant
credit risk exposure in respect of any single counterparty or any
group of counterparties with similar characteristics other than the
balances which are provided for as described in note 22.
The Group has credit risk from financial institutions. Cash
deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one
financial institution. All Financial institutions utilised by the
Group, and with which the Group holds cash balances have investment
grade credit ratings.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board, which has built an appropriate liquidity risk management
framework for the management of the Group's short-, medium- and
long-term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profile of financial assets and
liabilities. See note 17 & 30.
Fair value of financial instruments
In the opinion of the Directors, there is no material difference
between the book value and the fair value of all financial assets
and financial liabilities.
34. Capital Commitments
2023 2022
EUR'000 EUR'000
Contracted but not provided for in respect
of property, plant and equipment - 8,327
Included in the above, are amounts relating to the Tricoya plant
under construction in Hull and committed items related to the
Reactor 4 expansion project in Arnhem.
The above table excludes the remaining cash committed to be
contributed to Accoya USA. See note 29 & 30.
35. Related party transactions
Loan from De Engh BV Limited
As part of the Accoya USA JV funding arrangements, Accsys
provided a $20 million Letter of Credit ('LC') to FHB. (see note 30
& 32). To support the LC, Accsys agreed a EUR10 million
convertible loan with De Engh BV Limited ('De Engh') in March 2022,
an investment company based in the Netherlands (the 'Convertible
Loan') and a Accsys shareholder holding 10.57% of Accsys' issued
share capital at 31 March 2023. The Convertible Loan proceeds were
placed with ABN Amro solely as cash collateral to enable ABN Amro
to grant the $20 million LC to FHB.
The Convertible Loan is unsecured and carries an interest margin
of 6.75% above Euribor. If the Convertible Loan is not repaid
within two years, De Engh has an option (from the end of year two)
to convert the outstanding loan balance to ordinary shares in
Accsys at EUR2.30 per share, otherwise the interest rate increases
by 2% in year three and by a further 2% the following year if the
loan has not been repaid or converted after 3 years. The maximum
term of the Convertible Loan is 3.5 years from March 2022.
36. Events occurring after 31 March 2023
There have been no material reportable events since 31 March
2023.
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