TIDMAXS
RNS Number : 2956L
Accsys Technologies PLC
03 July 2014
AIM: AXS
NYSE Euronext Amsterdam: AXS
3 July 2014
ACCSYS TECHNOLOGIES PLC ('Accsys', the 'Company' or the
'Group')
Preliminary results for the year ended 31 March 2014
Accsys, the chemical technology group focussed on the
development and commercialisation of a range of transformational
technologies based upon the acetylation of solid wood (Accoya(R) )
and wood elements (Tricoya(R) ) for use as class leading,
environmentally sustainable construction materials, today announces
preliminary results for the year ended 31 March 2014.
2014 2013 Change
Total Group Revenue EUR33.5m EUR18.8m +78%
Gross profit EUR7.8m EUR3.3m +132%
Improved
Loss before tax (EUR8.2m) (EUR10.7m) 23%
Improved
Underlying loss before tax(1) (EUR7.5m) (EUR10.7m) 30%
Period end cash balance EUR15.2m EUR20.5m -26%
(1) Underlying loss excludes EUR726,000 of legal costs
associated with the Diamond Wood arbitration.
Highlights
-- Highly encouraging performance, marginally ahead of market expectations;
-- Very strong revenue growth of 78%, with increases recorded
across all geographic territories;
-- Gross profit more than doubled, with Group gross operating
margin improved to 23% (2013: 18%), driven by higher sales volumes,
price increases and improved operating efficiency;
-- Increased awareness and market acceptance for Accoya(R)
through further enhancement of global distribution network; 19 new
Accoya(R) distribution and agency agreements signed in the period,
bringing the total to 61 (2013: 42); extensive coverage now in
place across Europe, the Americas and Asia-Pacific;
-- Arnhem manufacturing facility reported inaugural annual
profit, delivering EBITDA of EUR2.4 million (2013: loss of EUR0.9
million); gross manufacturing margin improved to 20% (2013:
15%);
-- Significant licensing progress achieved:
- Accoya(R) licence agreement with Solvay became fully effective
in December 2013; Solvay's decision concerning the investment in
its plant and its location is expected in next few months; Accsys
and Solvay are also currently in discussions examining the scope of
a possible cooperation agreement between the parties;
- TTL, Accsys' 50:50 joint venture with INEOS, entered licence
agreement with Medite in July 2013; formal Medite Board approval
expected later this financial year;
- Post period end, in July 2014, licence option agreement,
covering the majority of Latin America, between TTL and Masisa was
extended and Masisa Tricoya(R) Super MDF launched;
-- Diamond Wood licence agreement was terminated in August 2013
following robust legal advice; the subsequent arbitration process
is currently in progress and details are subject to
confidentiality; an update will be made once the matter is
concluded; and
-- Balance sheet strength maintained with cash balance of
EUR15.2 million at 31 March 2014 (30 September 2013: EUR16.9
million).
Outlook
-- Strong start to the current financial year, with continuing sales growth;
-- Short-term focus on driving operational efficiencies in order
to achieve and enhance the manufacturing capacity at Arnhem
plant;
-- Confident of making further licensing progress in current financial year.
Paul Clegg, Chief Executive commented: "Accsys enjoyed a highly
encouraging financial year, delivering progress on all fronts. Our
rate of revenue growth demonstrates the traction our products are
gaining in the global marketplace. This growth has enabled us to
more than double gross profits, helping to reduce our rate of cash
burn and maintain a healthy balance sheet with more than adequate
financial strength to see us through to profitability in the
medium-term.
"While broadening and deepening the market penetration of our
products remains key, the current financial year brings a new, most
welcome, challenge of maximising capacity at our Arnhem
manufacturing facility in order to meet the market demand our sales
and marketing efforts have created.
"In terms of licensing, our licence with Solvay is now formally
approved, and we await the final Solvay decision on the plant and
its location. This represents a strong validation of our products
and processes, and we have made significant progress towards
securing our first, fully effective Tricoya(R) licence with
Medite.
"Overall, I am confident that Accsys is now very well positioned
to take advantage of the significant investment that has been made
over the last few years in sales, marketing, R&D and business
development, enabling the Company to further increase sales volumes
and margins while simultaneously progressing licensing
opportunities with existing and potential licensees."
There will be a presentation relating to these results at 10:00
BST on 3 July 2014. The presentation will take the form of a web
based conference call, details of which are below:
Webcast link:
Click here or copy and paste ALL of the following text into your
browser: http://www.media-server.com/m/p/hka6j6qk
Conference call details for participants:
Participant Telephone Number: +44 (0)20 3427 1910 (UK Toll)
Confirmation Code: 1861672
Participants will have to quote the above code when dialling
into the conference.
Ends
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via Blytheweigh
PLC Hans Pauli, COO
Will Rudge, FD
Nominated Adviser: Oliver
Cardigan
Corporate Broking: Christopher
Wilkinson +44 (0) 20 7260
Numis Securities Ben Stoop 1000
+44 (0) 20 7138
3204
+44 (0) 7989 129
658
Paul Weigh +44 (0) 7989 394
Blytheweigh Alex Shilov 027
Frank Neervoort +31 681 734 236
Off the Grid (The Netherlands) Giedo Van Der Zwan +31 624 212 238
Accsys Technologies PLC
Chairman's Statement
Introduction
I am very pleased to report that Accsys has enjoyed an excellent
financial year, delivering considerable revenue increases and
taking significant steps forward in licensing the Company's
proprietary technologies. Together these support my confidence that
Accsys continues to be on the right path towards achieving its long
term objective of delivering sustainable profitability.
Our positive position is only marred by the very sad news that
Gordon Campbell passed away in April. Gordon joined the board in
2005, became our chairman in 2010 and was instrumental in turning
the Company around in what was a very difficult period. I have been
appointed Chairman while we review the composition of the
board.
Financial Summary
Total revenue for the year ended 31 March 2014 increased by 78%
to EUR33.5m (2013: 26% growth to EUR18.8m). In the same period,
Accoya(R) revenue, excluding sales to Medite for the manufacture of
Tricoya(R) , increased by 61% to EUR26.4m (2013: 45% growth to
EUR16.4m). Total revenue also included EUR1.1m of licence income
(2013: EUR0.6m) reflecting progress with our Accoya(R) licensee,
Solvay.
Gross profit margin for the Group improved from 18% to 23%,
resulting from increased Accoya(R) volumes, price increases,
operating efficiencies and higher licence income. Other operating
costs increased by 11% to EUR15.0m (2013: EUR13.5m) largely due to
EUR726,000 of legal costs associated with the Diamond Wood
arbitration process and an increase in staff costs. As a result,
the EBITDA loss reduced by 31% to a EUR5.7m loss (2013: EUR8.4m
loss).
The Arnhem manufacturing facility generated a positive EBITDA of
EUR2.4m compared to a loss of EUR0.9m in the prior year. We
continue to believe this illustrates the potential returns a
prospective licensee may be able to generate.
The decrease in the cash balance to EUR15.2m as at 31 March 2014
(2013: EUR20.5m) is the result of EUR3.6m of cash out-flows from
operating activities before changes in working capital, a 50%
decrease compared to the previous year. Further cash out-flows were
attributable to EUR0.5m expenditure in respect of capitalised
development costs, EUR0.6m in respect of tangible fixed assets and
an investment of EUR1.2m in Tricoya Technologies Limited, our JV
with INEOS. Working capital improved significantly, with a EUR0.3m
decrease in the period compared to a EUR1.8m increase in the prior
year. We continue to believe that the Company has sufficient funds
to take it through to profitability.
Progress on all fronts
The increase in revenue has been driven by the ever increasing
demand for Accoya(R) resulting from increased awareness, market
acceptance and a greater global network. We have increased the
number of Accoya(R) distribution and agency agreements by 19 making
a total of 61 covering most of Europe, Australia, Canada, Chile,
China, India, Israel, Mexico, Morocco, New Zealand, South Africa,
parts of South-East Asia and the USA.
We implemented two price increases in the period with another
planned for later in this financial year which, together with an
on-going project to improve the efficiency of our production
process and the economies of scale resulting from the higher
volumes, means I am confident that our operating margins will
continue to improve.
We made two significant steps concerning the licensing of
Accoya(R) . In August 2013 we announced that we had taken the
decision to terminate our licence agreement with Diamond Wood which
held manufacturing and distribution rights in China and much of
South-East Asia. The decision was made as a result of their failure
to comply with their contractual obligations and following robust
legal advice. While Diamond Wood subsequently served a notice of
arbitration upon us, we announced that we have welcomed the
opportunity to confirm the validity of our termination. The
arbitration process is currently in progress and, whilst further
details of the arbitration are subject to confidentiality, Accsys
will provide a further update once the matter has been
concluded.
In December 2013 Solvay, the Belgian chemical group, approved
their Accoya(R) licence agreement which gives them exclusive rights
in Europe (with the exception of Benelux, UK and Ireland). The
licence agreement is now fully effective, however at the same time
we agreed to explore the possibility of locating their plant in
Arnhem. Solvay is currently reviewing two options for the optimal
plant location, being either Arnhem, the Netherlands or Freiburg,
Germany and the decision concerning the investment in its plant and
its location will be made by Solvay in the next few months.
In addition the two companies are currently in discussions
examining the scope of a possible cooperation agreement between the
two companies.
Tricoya Technologies Limited ('TTL'), our joint venture with
INEOS concerning Tricoya(R) wood elements, has also made strong
progress in its first full year following its formation in October
2012.
In July 2013, TTL entered a licence agreement with Medite
granting rights to build and operate a plant to manufacture, market
and sell Tricoya(R) . The licence agreement is conditional upon the
approval of Medite's board of directors which is expected later
this financial year. At the same time, the market evaluation of
Medite Tricoya(R) continues with a significant increase in sales to
customers.
Post period end, in May 2014, TTL's licence option holder in
Latin America, Masisa, paid to extend its licence option and
undertook to carry out an evaluation of Tricoya(R) , including
market testing, with the launch of Masisa Tricoya(R) Super MDF.
Outlook
The continuing increase in global demand for Accoya(R)
demonstrates the acceptance and the overall market potential of our
products. It also confirms that the long term opportunity for
Accsys and its ability to monetise its intellectual property
remains both substantial and exciting.
I believe we have entered a new phase in the development of the
Company as we transition from a company which has focussed on
R&D and initial market seeding into a company which is
increasingly focussed on ensuring how the demand we have created
can be met and how we best extract value from our technologies and
the experience that we have developed.
The start to the new financial year continues to support this
and I believe we are in a strong position to achieve our objective
of making the Group profitable.
Patrick Shanley
Non-executive Chairman
2 July 2014
Accsys Technologies PLC
Chief Executive's Report
Increasing awareness and product acceptance results in record
Accoya(R) sales
Revenue from Accoya(R) customers increased by 61% to EUR26.4m in
the year to 31 March 2014 (2013: EUR16.4m) reflecting continuing
strong growth in demand in all global regions. Growth has been
driven by both existing and new customers and, while the improving
economic climate has helped, the growth continues to be driven by
the ever increasing awareness and acceptance of Accoya(R) in the
global market place. This was particularly the case in the United
Kingdom where Accoya(R) sales grew by 93% without having added any
new distributors. We believe this is also attributable to the
United Kingdom benefiting from a particularly focussed technical
sales method over the last few years and which we are now seeking
to roll out in certain other countries.
In addition we sold EUR2.9m of Accoya(R) to Medite for the
manufacture of Tricoya(R) , a significant increase compared to the
EUR157,000 sold in the previous year during which Medite had been
utilising their earlier initial build-up of stock.
We now have a total of 61 Accoya(R) distributor and agency
agreements in place (an increase of 19 since last year) covering
most of Europe, Australia, Canada, Chile, China, India, Israel,
Mexico, Morocco, New Zealand, South Africa, parts of South-East
Asia and the USA. The increase includes new distributors in the
USA, Spain, South Africa, Israel, Ukraine, and a number in Diamond
Wood's former territory including Thailand, Malaysia, Philipipines,
Japan and Singapore.
We implemented price increases twice during the year, the latter
of which is largely expected to impact the new financial year. In
addition, we are already planning a further price increase later
this financial year. The price increases reflect a combination of
the overall state of the market into which we are selling,
increased prices of some raw materials and our ambition to further
improve our margins in order to achieve profitability as soon as
possible.
Sales in the first quarter of the new financial year have
continued to show positive growth compared to the same period last
year. However, given the significant impact of sales to Medite in
the period compared to the year before we expect a greater
challenge in achieving a similar overall growth rate in the current
financial year. In addition, as noted below, the Arnhem production
facility has been operating at a significantly greater level.
Accoya(R) continues to be used for an increasing number of
prominent or demanding projects around the world. Go to
www.accoya.com to see some of these examples.
Arnhem plant delivers inaugural profit; focus turns to enhancing
capacity and operational efficiency to drive growth
The total volume of Accoya(R) sold in the year increased by 88%
to 25,391m(3) . This was an enormous accomplishment by the
manufacturing team and was achieved without the need of significant
capital investment and with a relatively limited increase in
production staff. As a result, total manufacturing revenue
increased by 77% to EUR32.4m (2013: EUR18.3m). The larger increase
in volumes sold compared to revenue reflects the different mix of
Accoya(R) sold in the period, in particular noting the higher
volumes sold to Medite.
The difference between EUR26.4m of sales to Accoya(R) customers
and EUR32.4m manufacturing revenue is attributable to sales to
Medite (EUR2.9m) and other revenue, primarily the sale of acetic
acid, a bi-product from our manufacturing process.
Gross manufacturing margin increased significantly, to 20%
(EUR6.6m) compared to 15% (EUR2.8m) last year. This was achieved
due to a combination of the increased volumes (and associated
economies of scale), the impact of price increases and the on-going
project to improve our process efficiency. The improved
profitability also resulted in the manufacturing segment (which
includes 68% of the Group's headcount) reporting a positive EBITDA
of EUR2.4m compared to a loss of EUR0.9m in the prior year. We
continue to believe this illustrates the potential returns a
prospective licensee may be able to generate.
In the new financial year, we are focussed on achieving and
maximising the production capacity at Arnhem. This includes
implementing a number of process and production changes which have
been identified from previous R&D projects which will help
increase the production capacity together with the continued
optimisation of short term production constraints as a result of
the rapid increase in production.
Safety is always given a top priority as the industry in which
we work is considered a high risk industry. We have worked
consistently to understand these risks, learn from previous
incidents and implement risk-mitigating processes, technologies and
behaviour patterns. We will continue to strive to create an
environment free from harm and accidents.
Licensing - Fully effective Accoya(R) licence agreed with
Solvay; decision on plant location expected shortly
In December 2013 our Accoya(R) licence agreement ('the licence
agreement') with Belgian chemical group Solvay was approved by both
parties and became fully effective, resulting in a new level of
cooperation between the two companies.
The licence agreement grants Solvay exclusive rights for a
minimum 15 year period, renewable at agreed terms, to produce and
to sell Accoya(R) within the Council of Europe from an initial
plant. The licenced territory includes 47 states in the Council of
Europe, but excludes Belgium, Ireland, Luxembourg, the Netherlands
and the United Kingdom which are reserved to Accsys. The licence
agreement also grants Solvay the option to build additional
Accoya(R) production plants in Europe, with the first plant (the
'plant') having a total capacity of c.63,000 m(3) of finished
Accoya(R) output expected to be operational in the course of
2016.
In return, Accsys will receive a series of licence payments,
which have already commenced and will be made during the phased
construction of the plant, and with royalty payments per volume of
Accoya(R) produced thereafter.
The two companies also signed amendments to the licence
agreement which include the possibility of Solvay constructing the
plant in Arnhem on land Accsys currently owns, adjacent to the
Company's existing manufacturing facility and in a phased manner.
Solvay is currently reviewing the two options for the optimal plant
location, being either Arnhem, the Netherlands or Freiburg,
Germany.
The decision on the investment in the plant and its location is
expected to be made by Solvay in the next few months.
In addition the two companies are currently in discussions
examining the scope of a possible cooperation agreement between the
two companies.
Further to the licence agreement becoming unconditional in
December 2013, Accsys and Solvay entered a transitional phase in
which Accsys will continue to sell to Accoya(R) distributors in
Solvay's region while working to transfer the relationships to
Solvay. Solvay's Accoya(R) decking product retail trial is now in
its second year and is expected to be in 70 outlets in Europe, with
several new store chains participating, compared to 40 last
year.
Following Solvay's approval of the licence agreement, in January
2014 Accsys delivered a Process Design Package to Solvay which
enables Solvay to complete the planning and engineering design
required for them to construct their own plant.
In August 2013, we announced that we took the decision to
terminate our licence agreement with Diamond Wood as a result of
Diamond Wood's failure to comply with their contractual
obligations. Diamond Wood subsequently served a notice of
arbitration challenging our position. As we have previously stated,
we welcome the opportunity to confirm the validity of our
termination. The arbitration process is currently in progress and
whilst further details of the arbitration are subject to
confidentiality, Accsys will provide a further update once the
matter has been concluded.
Accsys and TTL continue to develop a number of new and existing
potential Accoya(R) and Tricoya(R) licence opportunities
respectively, with counterparties whose combined existing total
wood product manufacturing or processing capacity is in excess of
10 million m(3) per annum. While these discussions remain on-going,
the complex nature and investment required by a licensee means that
the timing and certainty of their completion remain difficult to
predict.
Tricoya Technologies Limited ('TTL'); encouraging progress
towards first fully effective licence
TTL, the INEOS and Accsys joint venture formed to exploit our
intellectual property associated with Tricoya(R) , continues to
make progress in all areas including engineering, product
development, marketing and business development.
In July 2013 TTL entered into a joint development, production
and distribution licence agreement with Medite to allow Medite to
build and operate a plant to manufacture, market and sell
Tricoya(R) , with an initial plant capacity of 30,000 metric tonnes
per annum. In return, Medite has begun to make a series of
technology-based licence payments which will be followed by royalty
fees payable per metric tonne of production.
The licence is conditional upon Medite obtaining approval from
its Board of Directors, which is expected later this financial
year, prior to plant construction. Medite will have exclusive
rights to market and sell in Ireland, The Netherlands, and the
United Kingdom and non-exclusive rights in other territories. TTL
has subsequently been developing the Process Design Package which
is required to complete the necessary detailed design of the
overall plant.
The market evaluation of Medite Tricoya(R) continues to be
positive with increasing acceptance of the product leading to a
significant increase in sales to customers. This is partly
reflected by the sales of Accoya(R) to Medite for the manufacture
of Medite Tricoya(R) , prior to dedicated facilities for wood
acetylation being built. These sales increased in the period to
EUR2.9m compared to EUR157,000 in the prior year.
In November 2013, the European Commission awarded the Medite
Tricoya project a subsidy under its Life+ programme. The subsidy is
worth up to EUR2.1m and is expected to benefit both Medite and TTL
over a three year period.
In May 2014, TTL's relationship with its licence option holder
in Latin America, Masisa, took a step forward with the extension of
the option and agreement to carry out an evaluation of Tricoya(R)
including market testing, production testing and development of
finished end-products with the launch of Masisa Tricoya(R) Super
MDF.
Masisa has industrial facilities in Chile, Argentina, Brazil,
Venezuela and Mexico as well as commercial operations in over 40
countries. Its main panel products are MDP (medium density
particleboard), MDF (medium density fibreboard) and Melamine
boards. The option agreement, originally signed in April 2012, if
exercised, grants Masisa exclusive production and distribution
rights for Tricoya(R) for the Latin American market, excluding
Brazil, for which the sales and marketing rights are
non-exclusive.
Intellectual Property
During the period we received confirmation from the Patent
Offices in China, Indonesia and the USA of the grant of Accoya(R)
process patent claims which successfully secure monopoly rights for
our process in those territories for 20 years from the patent
application filing date. These granted patents further strengthens
Accsys' patent portfolio, securing protection for Accsys, its
licensees and distributors across the globe.
We can also confirm the purchase from the US company
Weyerhaeuser, of their US patent covering the use of
electromagnetic radiation in methods for the acetylation of
wood.
Accsys has continued to file new patent applications in the
recent period and now owns seven different Accoya(R) patent
families, with 26 patents granted and 18 further applications,
filed in a total of 30 countries world-wide.
In respect of Tricoya(R) , TTL benefits from five published
patent families with a total of 67 published product and process
patent applications filed in key territories across the world.
Our principal brands, Accoya(R) , Accsys, Tricoya(R) and the
Trimarque Device, including Arabic, Chinese and Japanese
transliterations, are protected by trademark registration in 56
countries throughout the world with pending applications in a
further single country. These registrations and applications cover
our corporate identity and the products we sell as well as those to
be sold by our licensees and distributors.
Other developments
Accoya(R) recently became Svanen Certified, a world-leading
Nordic eco-label, adding to the many eco-labels that Accoya(R) and
Tricoya(R) have already obtained and further supporting the
positive environmental credentials that our products can boast.
(See our Sustainability Report for further details). We continue to
carry out a wide range of certification and performance tests to
confirm the superior performance qualities of Accoya(R) and
Tricoya(R) .
For example, Accoya(R) has outperformed leading Class 1 timbers
in recent tests carried out by the Australian Forest Research
Company (AFRC). Initial laboratory tests by ARFC tested Accoya(R)
against five different fungi found in Australia. Accoya(R) showed
exceptionally high levels of resistance to decay against all five
fungal species and excelled against Western Red Cedar (durability
class 2) and Spotted Gum (durability class 1). Accoya(R) also
out-performed chromated copper aresenate (CCA) H4 high level wood
preservation, Western Red Cedar, Merbau and Teak in nine year,
ground durability testing in New Zealand.
Strong start to the current financial year; confident of making
further progress
The last financial year has marked a significant step in Accsys'
development. The strong sales growth and significant steps forward
with our licensees demonstrate the ever increasing acceptance of
our products and help confirm what we believe is the very
significant long term potential for our technologies.
The new financial year has started well with continuing sales
growth, however we face ever evolving challenges. These include how
we manage the increasing demand, both in the short term from our
facility in Arnhem, and in the longer term by executing the licence
agreements we have agreed so far as well crystallising the other
business development discussions which we have been holding.
The financial position of the company is strong and we are
becoming ever closer to achieving, first, a cash-flow break-even
position, followed by overall profitability. We believe the
expected increase in sales this year, together with another planned
increase in our prices will enable us to achieve these milestones
in the foreseeable future.
Overall, I am confident that Accsys is now very well positioned
to take advantage of the significant investment that has been made
over the last few years in sales, marketing, R&D and business
development, enabling the Company to further increase sales volumes
and margins while simultaneously progressing licensing
opportunities with existing and potential licensees.
Paul Clegg
Chief Executive Officer
2 July 2014
5
Accsys Technologies PLC
Strategic Report
Strategy and business model
Products and Process
Manufactured through Accsys' highly sustainable proprietary
acetylation processes, Accoya(R) wood and Tricoya(R) wood elements
exhibit superior dimensional stability, durability and other
important benefits when compared with alternative natural, treated
and modified woods as well as more resource intensive man-made
materials.
The attributes of Accoya(R) wood make it a highly effective
solution for a wide range of external applications including doors,
windows, cladding, decking, shutters, louvres, civil works,
landscaping, outdoor furniture and more.
The possibilities for the use of Tricoya(R) wood elements as the
key component with panel products are ever expanding but include
facade cladding, fascia and soffit panels and other secondary
exterior applications, window components; wet interiors, including
wall linings in swimming pools, bathrooms, wet rooms, changing
rooms; speciality furniture including lockers, cubicles, chairs and
tables, play frames, tree houses and exterior composite furniture;
signage; automotive parts and sports equipment.
While the underlying chemistry associated with wood acetylation
has been around for many years, we are the only organisation to
have successfully commercialised it on an industrial scale for our
product categories.
Market potential
We believe the potential market for Accoya(R) and Tricoya(R) is
in excess of 2.5 million m(3) annually. To put this into
perspective, during the last year we sold 25,391m(3) , however the
total global solid wood market is understood to exceed 400 million
m(3) annually. The global wood based panel sector is approximately
290 million m(3) annually.
Environmental benefits
We believe our products offer a significant benefit when
considering the global desire to reduce the negative impacts on our
environment. Our products are the most environmentally friendly
building solutions over their full life cycle, made from abundantly
available, fast growing, sustainably sourced, renewable resources,
yet with durability and dimensional stability exceeding the best
performing tropical hardwoods. They are natural building materials
with low maintenance and consistent qualities of the highest
performing non-sustainable man-made materials; while benefitting
from all positive attributes of wood (sustainability, strength,
beauty) without the downfalls (poor durability &
stability).
Accoya(R) 's carbon footprint significantly outperforms most
other commonly used building materials such as concrete, PVC, MDF
and plywood as well as a range of tropical hardwoods such as azobe
and red meranti. Through the photosynthesis process trees absorb
CO(2) and as a result 1m(3) of wood may store over 1 ton of CO(2)
for its lifetime. Our process takes fast growing, sustainably
sourced wood and converts into a long last construction material,
which can be incinerated for energy production at the end of its
life. This has enabled us to demonstrate that Accoya(R) is carbon
negative over its extended life cycle.
See the Sustainability report for further details.
Business model
Our overall business model is best explained in the following
three phases. We have recently entered the third phase:
Phase 1 (Completed: 2003 to 2009)
Construction and operation of proof of concept acetylation
plant:
-- We acquired the pilot production plant assets and all
associated intellectual property rights following many years of
research and development activities regarding the acetylation of
wood species
-- We completed the construction of full scale proof of concept
production plant in Arnhem in 2007; a culmination of 16 years
R&D in the Netherlands.
-- We completed the first commercial production trial runs and
carried out stringent product scoping and testing
-- We established a comprehensive global brand strategy for Accoya(R) and Tricoya(R)
-- 1(st) commercial sales of Accoya(R)
Phase 2 (Completed: 2008 to 2013)
This involved the transition of the Arnhem proof of concept
plant to stand-alone commercial manufacturing facility. This was
carried out during a significant global economic recession and
during which Accsys completed two fund raisings and wrote off
significant amounts from our balance sheet:
-- Formed a stable and experienced management team
-- Created and developed worldwide market and brand for Accoya(R)
-- Created brand and marketing strategy including web and
digital mediums
-- Carried out extensive 3(rd) party testing and validated
Accoya(R) performance benefits
-- We established and expanded global distribution network to
increase sales capacity and prove demand
-- We enabled the provision of technical sales, marketing and
operational support
-- Continuous manufacturing improvement
-- We carried out R&D projects focusing upon improving
quality and finding efficiencies to reduce cycle time and increase
name plate capacity
-- We expanded our Arnhem site from an R&D project to a
commercially viable facility
-- We streamlined our support activities such as procurement,
maintenance and logistics
-- Financial stability via generation of positive EBITDA at Arnhem manufacturing Company
-- We increased capacity utilisation
-- Improved gross margin through reduction of unit production
costs and market sensitive price increases
-- Focused operating cost control and active working capital
management
-- Protection of IP - Established world-wide patent portfolio to
cover both core acetylation and enabling technologies
-- Development of Tricoya(R) acetylation feedstock principles and market testing of Tricoya(R)
-- Establish value adding relationships with key industry players
-- Formed joint venture with INEOS for the exploitation
Tricoya(R) wood elements acetylation technology and processes
-- Key commercial and technical relationships developed with
wood suppliers, coatings manufacturers and research institutes on a
global basis.
-- Strategic relationships with companies such as BP
Phase 3 (Commenced: 2013 onwards)
Manufacturing:
-- Production of Accoya(R) at Arnhem plant continues to seed new
markets and drive demand for Accoya(R) as well as for use as a
feedstock in the production of Tricoya(R)
-- Continued focus on reducing cycle time to increase Arnhem capacity and profitability
Meeting global demand:
-- Ongoing licensing of Accoya(R) acetylation technology to
achieve multiple licence agreements, including Solvay, to satisfy
global demand for solid wood
-- Development of extended global distributor network
-- Development of detailed engineering documents for licensees
-- Development of a model to benefit further from our expertise
by assisting 3(rd) parties in areas including sales, marketing,
product and technical development, operations and maintenance.
-- Continued close co-operation between Accsys and INEOS within
the TTL joint venture, to further develop and facilitate the
licensing of Tricoya(R)
Research and Development:
-- Continued R&D and product development activities to generate future value
-- Further development of new species, end products and
additional applications to aid licencing discussions and maximise
value
-- Strengthened protection of intellectual property
Brand
-- Continued development, advancement and protection of globally
established Accoya(R) and Tricoya(R) brands
Key performance indicators
We consider the following to be key performance indicators by
which progress in the development of the business may be
assessed:
-- Sales values of Accoya(R) wood and the geographic spread of these sales;
-- Profitability of the Arnhem plant;
-- Annual nameplate capacity of the Accoya(R) wood production facility in Arnhem;
-- The volume of Accoya(R) (in m(3) ) and Tricoya(R) (in metric
tonnes) of licensee production facilities either committed to by
third parties, or in use;
-- Process improvements to reduce progressively the direct cost
per m(3) to produce Accoya(R) wood, optimising the utilisation of
direct materials, utilities and capacity utilised in the wood
modification process.
Progress against these indicators is detailed in the Chief
Executive's Report.
Principal risks and uncertainties
The principal risks and uncertainties are set out in the
Directors' Report.
Accsys Technologies PLC
Financial Review
Income statement
Revenue
Total revenue for the year ended 31 March 2014 increased by 78%
to EUR33.5m (2013: EUR18.8m). In the same period, Accoya(R) revenue
increased by 61%, excluding sales to Medite for the manufacture of
Tricoya(R) , to EUR26.4m (2013: EUR16.4m). We sold EUR2.9m of
Accoya(R) to Medite for the manufacture of Tricoya(R) , a
significant increase compared to the EUR157,000 sold in the
previous year during which Medite had been utilising their earlier
initial build-up of stock. Total revenue also included EUR1.1m
(2013: EUR0.6m) of licence income attributable to Solvay. Other
revenue, which includes the sale of acetic acid, increased by 80%
to EUR3.1m (2013: EUR1.7m).
Gross margin
Gross profit margin improved from 18% to 23%, resulting from
increased Accoya(R) sales, increased licence income, price
increases and improved operating efficiencies. The gross
manufacturing margin increased from 15% to 20%.
Other operating costs
Other operating costs increased by 11% to EUR15.0m (2013:
EUR13.5m). This increase was attributable to higher administration
costs and in particular EUR726,000 of legal costs incurred in the
period in respect of the Diamond Wood arbitration process, together
with higher staff costs. The Group continued to invest in sales and
marketing with costs of EUR2.9m (2013: EUR2.9m) and research and
development with costs of EUR1.2m (2013: EUR1.2m).
Headcount increased marginally to 101 (2013: 96) as a result of
the significantly higher overall activity levels. Overall staff
costs increased by 9% to EUR9.0m (2013: EUR8.3m) attributable to
the higher headcount and an increase in the charge for share based
payments to EUR1.2m (2013: EUR0.9m).
Loss from operations
The loss from operations decreased by 29% to EUR7.2m (2012: loss
of EUR10.2m) due to the improvement in gross margin described
above.
Finance income
Finance income of EUR155,000 (2013: EUR206,000) represents
interest receivable on bank deposits.
Finance expense
The finance expense of EUR226,000 (2012: EUR244,000) is due to
interest element arising on the payments attributable to the sale
and leaseback of part of the Group's land and buildings in
Arnhem.
Share of joint venture loss
On 5 October 2012, Accsys entered into a 50:50 joint venture
with INEOS to exploit Accsys' intellectual property surrounding its
proprietary Tricoya(R) wood elements acetylation technology and
processes, which is expected to lead to the accelerated global
deployment of Tricoya(R) . The company, Tricoya Technologies
Limited ('TTL'), is developing and exploiting Accsys' Tricoya(R)
technology for use within MDF, particle board and wood plastic
composites in a worldwide panel products market estimated to be
worth more than EUR60 billion annually.
TTL has been accounted in the Accsys Group accounts using the
equity method. During the period, TTL recorded revenue of
EUR153,000 (2013: nil) and total costs of EUR2.0m (2013: EUR0.9m)
resulting in Accsys' share of loss of EUR0.9m (2013: EUR0.4m). (See
note 7 for further details.)
Taxation
The net tax charge of EUR699,000 (2013: EUR355,000) primarily
represents a tax charge arising from the utilisation of tax losses
of EUR866,000 previously recognised offset by research and
development tax credits of EUR169,000 (2013: EUR286,000)
attributable to activities carried out in the current year.
Dividends
No final dividend is proposed in 2014 (2013 final dividend:
EURNil). The Board deems it prudent for the Company to maintain as
strong a balance sheet as possible during the current phase of the
Company's growth strategy.
Earnings per share
Basic and diluted loss per share was EUR0.02 (2013 basic and
diluted loss per share was EUR0.03).
Balance sheet
Intangible assets
Intangible asset additions of EUR459,000 (2013: EUR953,000)
predominantly relate to capitalised internal development costs
including EUR152,000 (2013: EUR456,000) in respect of the Accoya(R)
licence Process Design Package.
Property, plant and equipment
Property, plant and equipment additions of EUR0.6m (2013:
EUR0.3m) predominantly relate to technology improvements and items
of maintenance equipment at our Arnhem production facility. During
the prior period the Group entered into a sale and leaseback
agreement for part of the Arnhem land which has been accounted for
as a operating lease and has resulted in the disposal of EUR1.7m of
land in the prior period. See note 15.
Available for sale investments
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China Limited.
The historical cost of the unlisted shares held at 31 March 2014 is
EUR10m (2013: EUR10m). However, a provision for the impairment of
the entire balance of EUR10m continues to be recorded, as at 31
March 2014 there is considerable doubt as to whether Diamond Wood
will continue as a going concern. See note 16.
Inventory
The Group had total inventory balances of EUR6.1m (2013:
EUR4.9m). Finished goods consisting of Accoya(R) represented
EUR2.6m (2013: EUR3.0m) and raw materials and work in progress,
primarily consisting of unprocessed lumber, being EUR3.5m (2013:
EUR1.8m). The increase is attributable to anticipated increased
sales in the new financial year.
Cash and cash equivalents
The Group had cash and bank deposits of EUR15.2m at the end of
the period (2013: EUR20.5m). The decrease in the year is mainly the
result of EUR3.6m of cash out-flows from operating activities
before changes in working capital, noting however that this
represented a 50% decrease compared to the previous year. Further
cash out-flows were attributable to EUR0.5m expenditure in respect
of capitalised development costs, EUR0.6m in respect of tangible
fixed assets and EUR1.2m investment in Tricoya Technologies
Limited, our JV with INEOS. Working capital improved significantly,
with a EUR0.3m decrease in the period compared to a EUR1.8m
increase in the prior year.
Trade and other receivables
Trade and other receivables have increased to EUR4.5m (2013:
EUR3.7m). Within this, trade receivables increased from EUR2.3m to
EUR3.1m reflecting the significantly higher sales levels.
Trade and other payables
Trade and other payables have increased to EUR5.6m (2013:
EUR3.4m). Included within this, trade payables increased from
EUR2.3m to EUR3.4m largely as a result of the increased activity
levels. In addition, accruals and deferred income increased from
EUR0.9m to EUR1.7m largely as a result of EUR0.9m received from the
European Community in respect of a Life + subsidy relating to the
Medite Tricoya(R) project.
Finance lease creditor
The Group has previously entered into a sale and leaseback
agreement for part of the Arnhem land and buildings. The first
phase was resulted in proceeds of EUR2.2m which has been accounted
for as a finance lease. At 31 March 2014 there are EUR3.5m of
payments committed to over the remaining life of the lease (2013:
EUR3.7m) (see note 24). The second part of the sale and leaseback
of the land in Arnhem was completed in February 2013, however this
has been accounted for as an operating lease (see note 23).
Capital structure
Details of the issued share capital, together with the details
of the movements in the Company's issued share capital in the year
are included in note 22. The Company has one class of ordinary
shares which carry no right to fixed income. Each share carries the
right to one vote at general meetings of the Company.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights.
Details of employee share schemes are set out in Note 13. No
person has any special rights of control over the Company's share
capital and all issued shares are fully paid.
Going concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, which is deemed to be at least 12
months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have
reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate
that, in order to continue as a going concern, the Group is
dependent on the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and the collection of on-going working
capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe, while some uncertainty inherently
remains in achieving the budget, in particular in relation to
market conditions outside of the Group's control, that there are a
sufficient number of alternative actions and measures that can be
taken in order to achieve the Group's medium and long term
objectives.
Therefore, the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
William Rudge
Finance Director
2 July 2014
Accsys Technologies PLC
Directors Report for the year ended 31 March 2014
The Directors present their report together with the audited
consolidated financial statements for the year ended 31 March
2014.
Results and dividends
The consolidated statement of comprehensive income for the year
is set out on page 33, and shows the loss for the year.
The Directors do not recommend the proposal of a final dividend
in respect of the current year, consistent with the prior year.
Principal activities and review of the business
The principal activity of the Group is the production and sale
of Accoya(R) solid wood and licensing of technology for the
production and sale of Accoya(R) wood and Tricoya(R) wood elements
via the Company's 100% owned subsidiaries, Titan Wood Limited,
Titan Wood B.V., Titan Wood Technology B.V. and Titan Wood Inc
(collectively the 'Group') and its joint-venture with INEOS,
Tricoya Technologies Limited. Manufactured through the Group's
proprietary acetylation processes, these products exhibit superior
dimensional stability and durability compared with alternative
natural, treated and modified woods as well as more resource
intensive man-made materials. A review of the business is set out
in the Chairman's statement and the Chief Executive's report on
pages 1 to 5. Accsys Technologies PLC is incorporated in the United
Kingdom.
Strategic Report
The Strategic Report, on page 6, sets out the Company's
strategy, business model and key performance indicators.
Financial instruments
Details of the use of financial instruments by the Company and
its subsidiary undertakings are set out in Note 25 of the financial
statements.
Share issues
On 5 July 2013, a total of 4,765,666 shares were issued to an
Employment Benefit Trust, the beneficiaries of which were to be the
Executive Directors and Senior Managers (see note 13).
On 13 September 2013, a total of 415,332 of Ordinary shares were
issued and released to employees together with the 497,854 of
Ordinary shares issued to trust on 12 August 2013. (See note
13).
On 20 January 2014, a total of 369,423 of Ordinary shares were
issued and released to employees.
Principal risks and uncertainties
The business, financial condition or results of operations of
the Group could be adversely affected by any of the risks set out
below. The Group's systems of control and protection are designed
to help manage and control risks to an appropriate level rather
than to eliminate them.
The Directors consider that the principal risks to achieving the
Group's objectives are those set out below.
(a) Economic and market conditions
The Group's operations comprise the manufacture of Accoya(R)
wood and licensing the technology to manufacture Accoya(R) and
Tricoya(R) wood elements to third parties. The cost and
availability of key inputs affects the profitability of the Group's
own manufacturing whilst also impacting the potential profitability
of third parties interested in licensing the Group's technology.
The price of key inputs and security of supply are managed by the
Group, partly through the development of long term contractual
supply agreements.
An element of the Group's strategy for growth envisages the
Group selling new or existing products and services into other
countries or into new markets. However, there can be no assurance
that the Group will successfully execute this strategy for growth.
The development of a mass market for a new product or process is
affected by many factors, many of which are beyond the control of
the Group, including the emergence of newer and more competitive
products or processes and the future price of raw materials. If a
mass market fails to develop or develops more slowly than
anticipated, the Group may fail to achieve profitability.
The Group has intangible assets amounting to EUR8.3m. The
carrying values of these assets are dependent on new or existing
licensees building their production plants and executing their
business plans.
(b) Regulatory, legislative and reputational risks
The Group's operations are subject to extensive regulatory
requirements, particularly in relation to its manufacturing
operations and employment policies. Changes in laws and regulations
and their enforcement may adversely impact the Group's operations
in terms of costs, changes to business practices and restrictions
on activities which could damage the Group's reputation and
brand.
(c) Employees
The Group's success depends on its ability to continue to
attract, motivate and retain highly qualified employees. The highly
qualified employees required by the Group in various capacities are
sometimes in short supply in the labour market.
(d) Intellectual property
The Group's strategy of licensing technology depends upon
maintaining effective protection of its intellectual properties
worldwide. Protection is afforded by a combination of trademarks,
patents, secrecy, confidentiality agreements and the structuring of
legal contracts relating to key licensing, engineering and supply
arrangements. Unauthorised use of the Group's intellectual property
may adversely impact its ability to license the technology and lead
to additional expenditure to enforce legal rights. The wide
geographical spread of our products increases this risk due to the
increasingly varied and complex laws and regulations in which we
seek to protect the Group's intellectual property.
(e) Litigation
During the period the group terminated its licence agreement
with Diamond Wood who subsequently served a notice of arbitration
against Accsys. Further details are provided in note 28.
Greenhouse gas ('GHG') emissions
The table below represents all the emission sources required
under the Companies Act 2006 (Strategic Report and Directors'
Reports) Regulations 2013 for our manufacturing facility in Arnhem,
the Netherlands.
2014 2013
kg CO(2) kg CO(2)
eq eq
Electricity, heat, steam and cooling
for own use - GROSS 2,800,294 2,292,045
Electricity, heat, steam and cooling
for own use - NET (including Renewable
Energy Credits) 40,211 49,128
Combustion of fuel & operation of
production facility (MP4), in Arnhem,
the Netherlands 2,263,107 2,194,196
TOTAL - GROSS 5,063,401 4,486,241
TOTAL - NET (including Renewable Energy
Credits) 2,303,318 2,243,324
Chosen intensity measurement: Emissions
per cubic meter Accoya produced -
GROSS 210 303
Chosen intensity measurement: Emissions
per cubic meter Accoya produced -
NET (including Renewable Energy Credits) 95 151
Notes:
- Due to unavailability of data, GHG emissions related to our
offices and staff travel our not included. Emissions have been
calculated following the GHG Protocol - Corporate Accounting and
Reporting (revised edition) using the following databases: IPCC
2006 Guidelines for National Greenhouse Gas Inventories, 2007 IPCC
Fourth Assessment Report and Eco-Invent v3.
- Following Environmental Reporting Guidelines of Defra (2013),
carbon offsets due to e.g. purchase of Renewable Energy Credits may
be accounted for separately as a "NET" figure, while the original
electricity consumption figures are presented as a "GROSS"
figure.
- Following the same (Defra 2013) guidelines, the emissions
associated with our supply chain (inputs and outputs) are not
included in the figures above, for readers that are interested in
the supply chain related figures we refer to our publicly available
carbon footprint report:
http://www.accoya.com/wp-content/uploads/2013/09/Verco-Cradle-to-gate-carbon-footprint-update-2012.pdf.
Further details concerning the environmental impact of our
products as a whole are detailed in the Sustainability Report,
including an assessment of the overall life cycle of Accoya.
Directors
The Directors of the Company during the year and up to the date
of signing the financial statements were:
Paul Clegg
Hans Pauli
Gordon Campbell (Died, 26 April 2014)
Patrick Shanley
Montague John 'Nick' Meyer
William Rudge
Directors' indemnities
The Company maintains directors' and officers' liability
insurance which gives appropriate cover for legal action brought
against its Directors.
Employment policies
The Group operates an equal opportunities policy from
recruitment and selection, through training and development,
appraisal and promotion to retirement. It is our policy to promote
an environment free from discrimination, harassment and
victimisation, where everyone will receive equal treatment
regardless of gender, colour, ethnic or national origin,
disability, age, marital status or sexual orientation. All
decisions relating to employment practises will be objective, free
from bias and based solely upon work criteria and individual
merit.
17% of employees in the period were female. 10% of the senior
management team were female and none of the Board of Directors was
female.
Health and safety
Health and safety is given top priority at all levels of the
Group, in particular taking into account the chemical industry in
which Accsys operates. Group companies have a responsibility to
ensure that all reasonable precautions are taken to provide and
maintain working conditions for employees and visitors alike, which
are safe, healthy and in compliance with statutory requirements and
appropriate codes of practice.
The avoidance of occupational accidents and illnesses is given a
high priority. Detailed policies and procedures are in place to
minimise risks and ensure appropriate action is understood in the
event of an incident. A dedicated health and safety officer is
retained at the Group's manufacturing facility.
Significant shareholdings
So far as the Company is aware (further to formal notification),
the following shareholders held legal or beneficial interests in
ordinary shares of the Company exceeding 3%:
-- Royal Bank of Canada 5.73%
-- OP-Pohjola Group Central Cooperative 5.55%
-- INEOS 5.43%
-- OP-Henderson Global Investors 5.16%
-- The London & Amsterdam Trust Company Limited 5.13%
-- FIL Limited (formerly known as Fidelity International Limited) 4.93%
-- Invesco Limited 4.87%
-- Saad Investments Company Limited 3.92%
-- Zurab Lysov 3.71%
There are no restrictions in respect of voting rights.
Going concern
The Directors have formed a judgement, at the time of approving
the financial statements, that there is a reasonable expectation
that the Group has access to adequate resources to continue in
operational existence for the foreseeable future. Further details
are set out in Note 1 to these financial statements.
Corporate Governance
The company's statement on corporate governance can be found in
the corporate governance report on pages 30 to 31 of these
financial statements. The corporate governance report forms part of
this directors' report and is incorporated into it by
cross-reference
Disclosure of information to auditors
Each of the persons who is a Director at the date of the
approval of the Annual Report confirms that:
-- So far as the Director is aware, there is no relevant audit
information of which the Company's Auditors are unaware; and
-- The Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's Auditors are
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their willingness to
continue in office as auditors and a resolution to re--appoint them
will be proposed at the annual general meeting.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- The Group financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Group.
-- The annual report includes a fair review of the development
and performance of the business and the financial position of the
Group and the parent Company, together with a description of the
principal risks and uncertainties that they face.
By order of the Board
Angus Dodwell
Company Secretary
2 July 2014
Accsys Technologies PLC
Corporate Governance
Details of the Company's corporate governance arrangements are
set out below. The Board of Directors acknowledges the importance
of the Principles set out in The UK Corporate Governance Code
issued by the Financial Reporting Council. Neither the 2010 or 2012
UK Corporate Governance Code are compulsory for AIM listed or
Euronext listed companies. The Board has applied the principles as
far as practicable and appropriate for a relatively small public
company.
The Board of Directors
During the period, the Board comprised a Non-executive Chairman,
two Non-executive Directors and three Executive Directors. Gordon
Campbell, the Non-executive Chairman in the period, very sadly died
in April 2014. Patrick Shanley was appointed Chairman while a
permanent replacement is being considered.
The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the framework
of internal controls. To enable the Board to discharge its duties,
all Directors receive appropriate and timely information. Briefing
papers are distributed to all Directors in advance of Board
meetings. All Directors have access to the advice and services of
the Company Secretary. The appointment and removal of the Company
Secretary is a matter for the Board as a whole. In addition,
procedures are in place to enable the Directors to obtain
independent professional advice in the furtherance of their duties,
if necessary, at the Company's expense.
During the year, all serving Directors attended the quarterly
Board meetings that were held. In addition to the scheduled
meetings there is frequent contact between all the Directors in
connection with the Company's business including Audit and
Nomination and Remuneration committee meetings which are held as
required, but as a minimum twice per annum.
Directors are subject to re-election by the shareholders at
Annual General Meetings. The Articles of Association provide that
Directors will be subject to re-election at the first opportunity
after their appointment and the Board submit to re-election at
intervals of three years.
Day to day operating decisions are made by the Senior Management
Team of which the Chief Executive Officer, the Chief Operating
Officer and Finance Director are members.
Audit Committee
The Audit Committee consists of Patrick Shanley (Chairman), Nick
Meyer and, until April 2014, Gordon Campbell. The Audit Committee
meets at least twice a year and is responsible for monitoring
compliance with accounting and legal requirements and for reviewing
the annual and interim financial statements prior to their
submission for approval by the Board. The Committee also discusses
the scope of the audit and its findings and considers the
appointment and fees of the external auditors. The Audit Committee
continues to believe that it is not currently appropriate for the
Company to maintain a dedicated internal audit function due to its
size.
The Audit Committee considers the independence and objectivity
of the external auditors on an annual basis, with particular regard
to non-audit services. The non-audit fees are considered by the
Board not to affect the independence or objectivity of the
auditors. The Audit Committee monitors such costs in the context of
the audit fee for the period, ensuring that the value of non-audit
service does not increase to a level where it could affect the
auditors' objectivity and independence. The Board also receives an
annual confirmation of independence from the auditors.
Nominations & Remuneration Committee
The Nominations and Remuneration Committee consists of Nick
Meyer (Chairman), Patrick Shanley and, until April 2014, Gordon
Campbell. The Committee's role is to consider and approve the
nomination of Directors and the remuneration and benefits of the
Executive Directors, including the award of share options and bonus
share awards. In framing the Company's remuneration policy, the
Nominations & Remuneration Committee has given full
consideration to Section D of The UK Corporate Governance Code.
Internal Financial Control
The Board is responsible for establishing and maintaining the
Company's system of internal financial control and places
importance on maintaining a strong control environment. The key
procedures which the Directors have established with a view to
providing effective internal financial control are as follows:
-- The Company's organisational structure has clear lines of responsibility;
-- The Company prepares a comprehensive annual budget that is
approved by the Board. Monthly results are reported against the
budget and variances are closely monitored by the Directors;
and
-- The Board is responsible for identifying the major business
risks faced by the Company and for determining the appropriate
courses of action to manage those risks.
The Directors recognise, however, that such a system of internal
financial control can only provide reasonable, not absolute,
assurance against material misstatement or loss.
Relations with shareholders
Communications with shareholders are given high priority.
There is regular dialogue with shareholders including
presentations after the Company's preliminary announcement of the
year-end results and six monthly results. The Board uses the Annual
General Meeting to communicate with investors and welcomes their
participation. The Chairman aims to ensure that the Directors are
available at Annual General Meetings to answer questions.
Directors' attendance record
The attendance of individual Directors at meetings of the Board
and its committees in the year under review was as follows:
Nominations
& Remuneration
Board Audit Committee Committee
Number of meetings Attended(1) Serving Attended Serving Attended Serving
Gordon Campbell 7 13 3 3 4 4
Paul Clegg 11 13 3 - 3 -
Hans Pauli 10 13 3 - - -
Patrick Shanley 7 13 3 3 4 4
Montague John
'Nick' Meyer 7 13 3 3 4 4
William Rudge 11 13 3 - - -
Whilst all Directors are not members of the Board Committees
they attend by invitation.
Figures in the left hand column denote the number of meetings
attended and figures in the right hand column denote the number of
meetings held whilst the individual held office.
Notes
1 A number of board committee meetings were held in the year in
addition to the scheduled board meetings in order to address
certain routine matters such as the issue of shares in respect of
the Employee Share Scheme.
Accsys Technologies PLC
Statement of Directors' responsibilities
Directors' responsibilities
The Directors are responsible for preparing the Annual Report,
the Remuneration Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, and the parent company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the company and of
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether IFRSs as adopted by the European Union and
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the Group and
parent company financial statements respectively;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and the Group and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year
ended 31 March 2014
2014 2013
EUR'000 EUR'000
Note Total Total
Accoya(R) wood revenue 29,293 16,555
Licence revenue 1,134 553
Other revenue 3,085 1,714
------------------------------------- ----- ---------- ----------
Total revenue 2 33,512 18,822
Total cost of sales (25,753) (15,474)
Gross profit 7,759 3,348
Other operating costs 3 (14,973) (13,548)
Operating loss 6 (7,214) (10,200)
Share of joint venture loss 7 (905) (430)
Finance income 8 155 206
Finance expense 9 (226) (244)
Loss before taxation (8,190) (10,668)
Tax charge 10 (699) (355)
Loss for the period (8,889) (11,023)
========== ==========
(36) 14
(Loss)/Gain arising on translation
of foreign operations, which
could subsequently be reclassified
into profit or loss
Total comprehensive loss for
the year (8,925) (11,009)
========== ==========
Basic and diluted loss per
ordinary share 12 EUR(0.02) EUR(0.03)
Accsys Technologies PLC
Consolidated statement of financial position at 31 March
2014
Registered Company 05534340
Note 2014 2013
EUR'000 EUR'000
Non-current assets
Intangible assets 14 8,333 8,226
Investment in joint venture 340 62
Property, plant and equipment 15 20,740 22,271
Available for sale investments 16 - -
Deferred tax 17 - 866
29,413 31,425
---------- ----------
Current assets
Inventories 19 6,053 4,860
Trade and other receivables 20 4,477 3,688
Cash and cash equivalents 15,185 20,467
Corporation tax 446 623
26,161 29,638
---------- ----------
Current liabilities
Trade and other payables 21 (5,557) (3,357)
Obligation under finance lease 24 (264) (264)
(5,821) (3,621)
---------- ----------
Net current assets 20,340 26,017
Non-current liabilities
Obligation under finance lease 24 (1,871) (1,924)
(1,871) (1,924)
---------- ----------
Net assets 47,882 55,518
========== ==========
Equity and reserves
Share capital - Ordinary shares 22 4,392 4,332
Share premium account 128,648 128,588
Capital redemption reserve 148 148
Warrants reserve 235 235
Merger reserve 106,707 106,707
Accumulated loss (192,223) (184,511)
Own shares (47) (39)
Foreign currency translation reserve 22 58
Total equity 47,882 55,518
========== ==========
The financial statements were approved by the Board and
authorised for issue on 2 July 2014, and signed on its behalf
by;
Paul Clegg )
William Rudge ) Directors
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended
31 March 2014
Foreign
Capital currency
Share redemp- trans-
capital Share tion Warrant Merger Own lation Retained
Ordinary premium reserve reserve reserve Shares reserve earnings Total
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at
31 March 2012 4,040 124,887 148 82 106,707 - 44 (174,415) 61,493
Total
comprehensive
income/(expense)
for the period - - - - - - 14 (11,023) (11,009)
Expiry of
warrants - 82 - (82) - - - - -
Share based
payments - - - - - - - 927 927
Shares issued 292 - - - - (39) - - 253
Premium on shares
issued - 3,619 - - - - - - 3,619
Share Warrants
issued - - - 235 - - - - 235
Balance at
31 March 2013 4,332 128,588 148 235 106,707 (39) 58 (184,511) 55,518
========= ========= ========= ========= ========= ========= ========= ========== =========
Total
comprehensive
income/(expense)
for the period - - - - - - (36) (8,889) (8,925)
Share based
payments - - - - - - - 1,177 1,177
Shares issued 60 - - - - (8) - - 52
Premium on shares
issued - 60 - - - - - - 60
Balance at
31 March 2014 4,392 128,648 148 235 106,707 (47) 22 (192,223) 47,882
========= ========= ========= ========= ========= ========= ========= ========== =========
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.
Capital redemption reserve represents the amounts transferred
from share capital on redemption of deferred shares.
Merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
Own shares represents 4,765,666 shares issued to an Employee
Benefit Trust at nominal value on 5 July 2013. These shares shall
vest if the employees, including the Executive Directors, remain in
employment with the Company to the vesting date, being 1 July 2014
(subject to certain other provisions including good-leaver,
take-over and committee discretion provisions). See note 13.
Shares issued in the prior year together with share premium
arose from the subscription for 23,529,412 new ordinary shares in
Accsys, at a price of EUR0.17 per share by INEOS Industries
Holdings Limited and 1,698,869 shares issued under the Employee
Share Participation Plan. See note 13. At the same time the Company
executed a warrant instrument in favour of INEOS, allowing INEOS
the opportunity to purchase up to a further 16,468,236 shares at a
price of EUR0.21 per share at certain times until October 2016. The
warrant reserve represents the value attributable to these
warrants. During the prior period, EUR82,000 attributable to
previously issued warrants was transferred to retained earnings as
the warrants expired.
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.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March
2014
2014 2013
EUR'000 EUR'000
Loss before taxation (8,190) (10,668)
Adjustments for:
Amortisation of intangible assets 352 306
Depreciation of land, property, plant and
equipment 2,024 1,950
Recognition of reduction of investment in
joint venture 922 438
Net loss/(gain) on disposal of property,
plant and equipment 77 (113)
Net finance expense 71 39
Equity-settled share-based payment expenses 1,177 927
Cash flows from operating activities before
changes in working capital (3,567) (7,121)
(Decrease) in trade and other receivables (253) (12)
(Increase) in inventories (1,194) (1,739)
Increase/(decrease) in trade and other payables 1,757 (66)
Net cash used by operating activities before
tax (3,257) (8,938)
Tax received 344 795
Net cash flows from operating activities (2,913) (8,143)
======== =========
Cash flows from investing activities
Interest received 124 206
Expenditure on capitalised internal development (459) (861)
Disposal of property, plant and equipment - 1,699
Purchase of property, plant and equipment (572) (293)
Purchase of intangible assets (23) (44)
Investments in joint ventures (1,200) (500)
Net cash used by investing activities (2,130) 207
======== =========
Cash flows from financing activities
Interest paid (226) (244)
Repayment of finance lease (54) (36)
Proceeds from issue of share capital 70 4,112
Share issue costs - (15)
Net cash from financing activities (210) 3,817
======== =========
Net decrease in cash and cash equivalents (5,253) (4,119)
Effect of exchange rate changes on cash
and cash equivalents (29) 12
Opening cash and cash equivalents 20,467 24,574
Closing cash and cash equivalents 15,185 20,467
======== =========
The notes on pages 22 to 46 form part of these financial
statements.
Accsys Technologies PLC
Notes to the financial statements for the year ended 31 March
2014
1. Accounting Policies
General information
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the
periods ended 31 March 2014 or 31 March 2013. Statutory accounts
for the period ended 31 March 2013 have been filed with the
Registrar of Companies and those for the period ended 31March 2014
will be delivered to the Registrar in due course; both have been
reported on by the auditors. The auditors' report on the Annual
Report and Financial Statements for the period ended 31 March 2013
was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The auditors' report on the Annual Report and Financial
Statements for the period ended 31 March 2014 is unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Basis of accounting
The Group's financial statements have been prepared under the
historical cost convention (except for certain financial
instruments and equity investments which are measured at fair
value), in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards
Board as endorsed by the European Union and with those parts of the
Companies Act 2006 applicable to companies preparing their
financial statements under adopted IFRS. The Company has elected to
prepare its parent company financial statements in accordance with
UK Generally Accepted Accounting Practice (UK GAAP).
Going Concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, which is deemed to be at least 12
months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have
reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate
that, in order to continue as a going concern, the Group is
dependent on the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and the collection of on-going working
capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe that while some uncertainty
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control, that
there are a sufficient number of alternative actions and measures
that can be taken in order to achieve the Group's medium and long
term objectives.
Therefore the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
Risks and uncertainties
The net assets as at 31 March 2014 of EUR48m contain balances in
relation to the Group's goodwill, capitalised internal development
costs and intellectual property rights of EUR8.3m. The
recoverability of these balances is dependent upon the Group's
existing licensees progressing with the completion of their
manufacturing facilities or the signing of other new licence
agreements. While the scope and timing of the production facilities
to be built by the Group's existing and future licensees remains
uncertain, the Directors remain confident that revenue from either
existing licensees or new licensees will be generated,
demonstrating the recoverability of these balances.
In addition, the carrying value of the EUR20.7m of property,
plant and equipment, which primarily relate to the Arnhem plant,
are dependent upon the future profitable sales of Accoya(R) wood
made there. The price of the Accoya(R) wood and the raw materials
and other inputs vary according to market conditions outside of the
Group's control. Should the price of the raw materials increase
greater than the sales price or in a way which no longer makes as
Accoya(R) competitive, then the carrying value of the property,
plant and equipment may be in doubt and become impaired. The
Directors consider that the current market and best estimates of
future prices means that this risk is limited.
Changes in accounting policies
In the current period, the following new and revised Standards
and Interpretations have been adopted. Their adoption has not had
any significant impact on the amounts reported in these financial
statements but may impact the accounting for future transactions
and arrangements:
-- IFRS 13 'Fair Value Measurement' - The Group has applied IFRS
13 for the first time in the current period. IFRS 13 establishes a
single source of guidance for fair value measurements and
associated disclosures. The scope of IFRS 13 is broad, applying to
both financial instruments and non-financial instruments. The
application of IFRS 13 has not had any impact on the amounts
recognised in the consolidated financial statements.
-- IAS 1 (amendment) 'Financial Statement Presentation' - This
amendment requires that items of other comprehensive are identified
between those that could be subsequently reclassified into profit
and loss and those which could not.
Business combinations
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Group as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected
prior to transition to IFRS, were accounted for using the merger
method of accounting. Under this method, assets and liabilities are
included in the consolidation at their book values, not fair
values, and any differences between the cost of investment and net
assets acquired were taken to the merger reserve. The majority of
the merger reserve arose from a corporate restructuring in the year
ended 31 March 2006 which introduced Accsys Technologies PLC as the
new holding company.
Joint ventures
A jointly controlled entity is an entity in which the Group
holds a long term interest and shares joint control over strategic,
financial and operating decisions with one or more other venturers
under a contractual arrangement. The Group's share of the assets,
liabilities, income, expenditure and cash flows of such jointly
controlled entities are accounted for using the equity method. The
equity method records the Group's share of the results of the joint
venture entity on a separate line in the Group's financial
statements.
The total carrying values of investments in joint ventures
represent the cost of each investment including the carrying value
of any goodwill, the share of post-acquisition retained earnings,
any other movements in reserves and any long term debt interests
which in substance form part of the Group's net investment. The
carrying values of joint ventures are reviewed on a regular basis
and if an impairment in value has occurred, the carrying value is
impaired in the period in which the relevant circumstances are
identified. The Group's share of a joint venture's losses in excess
of its interest in that associate is not recognised unless the
Group has an obligation to fund such losses.
Unrealised gains arising from transactions with associates are
eliminated against the investment to the extent of the Group's
interest in the investee. Unrealised losses are eliminated in the
same way, but only to the extent that there is no evidence of
impairment.
Revenue recognition
Revenue is measured at the fair value of the consideration
receivable. Revenue is recognised to the extent that it is probable
that the economic benefit will flow to the Group and that the
revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is
recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the
significant risks and rewards of ownership of the goods have been
passed to the buyer, the timing of which is dependent on the
particular shipment terms. When a customer provides untreated wood
to be processed by the Group in order to produce Accoya(R) ,
revenue is recognised when the Group's obligations under the
relevant customer contract have been substantially completed, which
is before the finished Accoya(R) has been collected by the
customer. Manufacturing revenue includes the sale of Accoya(R) wood
and other revenue, principally relating to the sale of acetic
acid.
Licence fee income
Licence fee income is recognised over the period of the relevant
agreements according to the specific terms of each agreement or the
quantities and/or values of the licensed product sold. The
accounting policy for the recognition of licence fees is based upon
an assessment of the work required before the licence is signed and
subsequently during the design, construction and commissioning of
the licensees' plant, with an appropriate proportion of the fee
recognised upon signing and the balance recognised as the project
progresses to completion. The amount of any cash or billings
received but not recognised as income is included in the financial
statements as deferred income and shown as a liability.
Finance income
Interest accrues using the effective interest method, i.e. the
rate that discounts estimated future cash receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset.
Finance expense
Finance expenses include the fees associated with the Group's
credit facilities which are expensed over the period which the
Group has access to the facilities.
Finance expenses also include an allocation of finance charges
in respect of the sale and leaseback of the Arnhem land and
buildings accounted for as a finance lease. The total finance
charge (calculated as the difference between the total minimum
lease payments and the liability at the inception of the lease) is
allocated over the life of the lease using the sum-of-digits
method.
Share based payments
The Company awards share options and nil cost options to acquire
shares of the Company to certain Directors and employees. The
Company also awards bonuses to certain Directors and 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, deferred shares and matching shares
granted are recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and is
charged to the statement of comprehensive income over the vesting
period during which the employees become unconditionally entitled
to the options or shares.
The fair value of share options granted is measured using a
modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest only where vesting is dependent upon the
satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Dividends
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders
at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension
and employee benefit schemes on behalf of its employees. These
costs are charged to the statement of comprehensive income on an
accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date together with any adjustment to tax payable
in respect of previous years. Current tax includes the expected
impact of claims submitted by the Group to tax authorities in
respect of enhanced tax relief for expenditure on research and
development.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
-- the initial recognition of goodwill,
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination, and
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Recognition of deferred tax
assets is restricted to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (the functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each Group company are expressed in Euro, which is the
functional currency of the parent Company, and the presentation
currency of the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average monthly exchange rates prevailing in the month in which the
transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income and the foreign currency
translation reserve.
Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and the
Group will comply with the attached conditions. When the grant
relates to an expense item, it is recognised as income over the
period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. Where the grant relates to
an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected
useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration paid
and the fair value of the identifiable assets and liabilities
acquired. It is capitalised, and is subject to annual impairment
reviews by the Directors. Any impairment arising is charged to the
statement of comprehensive income.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any
amounts by which the carrying value is assessed during an annual
review to have been impaired. At present, the useful economic life
of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's
activities including new processes, process improvements,
identifying new species and improving the Group's existing
products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38
'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to
generate future economic benefits, ability to complete the
development and ability to reliably measure the expenditure) have
been met. These internal development costs are amortised on a
straight line basis over their useful economic life, between 10 and
20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of
bringing the asset to the working condition and location of its
intended use. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset, except
freehold land, over its expected useful life on a straight line
basis, as follows:
Plant and machinery These assets comprise pilot plants and
production facilities. These facilities are depreciated from the
date they become available for use at rates applicable to the asset
lives expected for each class of asset, with rates between 5% and
20%.
Office equipment Between 20% and 50%.
Leased land Land held under a finance lease is depreciated over
the life of the lease.
Freehold land Freehold land is not depreciated.
Impairment of non-financial assets
The carrying amount of the non-current non-financial assets of
the Group is compared to the recoverable amount of the assets
whenever events or changes in circumstances indicate that the net
book value may not be recoverable, or in the case of goodwill,
annually. The recoverable amount is the higher of value in use and
the fair value less cost to sell. In assessing the value in use,
the expected future cash flows from the assets are determined by
applying a discount rate to the anticipated pre-tax future cash
flows. An impairment charge is recognised in the statement of
comprehensive income to the extent that the carrying amount exceeds
the assets' recoverable amount. The revised carrying amounts are
amortised or depreciated in line with Group accounting policies. A
previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the statement of
comprehensive income and is limited to the carrying amount that
would have been determined, net of depreciation, had no impairment
loss been recognised in prior years. Assets are grouped at the
lowest levels for which there are separately identifiable cash
flows (cash generating units) for purposes of assessing
impairment.
Leases
Operating lease payments are recognised as an expense in the
statement of comprehensive income on a straight-line basis over the
lease term.
Assets held under finance leases are recognised as assets of the
Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are
apportioned between finance expenses and reduction of lease
obligation so as to achieve a constant rate of interest on the
remaining balance of the liability.
Inventories
Raw materials, which consist of unprocessed timber and chemicals
used in manufacturing operations are valued at the lower of cost
and net realisable value. The basis on which cost is derived is a
first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the
lower of weighted average cost of production or net realisable
value. Costs include direct materials, direct labour costs and
production overheads (including the depreciation/depletion of
relevant property and plant and equipment) absorbed at an
appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to
completion and costs to be incurred in selling and
distribution.
Financial assets
Financial assets are classified as cash and cash equivalents,
available for sale investments and loans and receivables, depending
on the purpose for which the asset was acquired. When financial
assets are recognised initially, they are measured at fair value
plus, in the case of investments not at fair value through profit
or loss, directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted
shares held by the Group are classified as available for sale
investments and are stated at fair value. Gains and losses arising
from changes in fair value are recognised directly in equity, with
the exception of impairment losses which are recognised directly in
profit or loss. Where an investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously recognised
in the profit or loss in the year. Where it is not possible to
obtain a reliable fair value, these investments are held at cost
less provision for impairment.
Loans and receivables, which comprise non-derivative financial
assets with fixed and determinable payments that are not quoted on
an active market are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. They
arise principally from the provision of goods and services to
customers. Trade receivables are initially recognised at fair value
less an allowance for any uncollectible amounts. A provision for
impairment is made when there is objective evidence that the Group
will not be able to collect debts. Bad debts are written off when
identified.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand and short-term deposits,
including liquidity funds, with an original maturity of three
months or less. For the purpose of the statement of consolidated
cash flow, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
Other financial liabilities
Trade payables are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method.
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.
Accounting estimates and judgements
In preparing the Consolidated Financial Statements, management
has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical
judgments that have been made in arriving at the amounts recognised
in the Consolidated Financial Statements and the key sources of
estimation and uncertainty that have a significant risk of causing
a material adjustment to the carrying value of assets and
liabilities in the next financial year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of
licence fee income over the period of the agreement and is
satisfied that the recognition of such revenue is appropriate. The
recognition of licence fees is based upon an assessment of the work
required before the licence is signed and subsequently during the
construction and commissioning of the licensees' plant, with an
appropriate proportion of the fee recognised upon signing and the
balance recognised as the project progresses to completion. The
Group also considers the recoverability of amounts before
recognising them as income.
Goodwill
The Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated above.
The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations
require the use of judgments in relation to discount rates and
future forecasts. (See note 14)
Intellectual property rights and property, plant and
equipment
The Group tests the carrying amount of the intellectual property
rights and property, plant and equipment whenever events or changes
in circumstances indicate that the net book value may not be
recoverable. These calculations require the use of estimates in
respect of future cash-flows from the assets by applying a discount
rate to the anticipated pre-tax future cash-flows. The Group also
reviews the estimated useful lives at the end of each annual
reporting period. (See note 14)
Inventories
The Group reviews the net realisable value of, and demand for,
its inventory on a monthly basis to provide assurance that recorded
inventory is stated at the lower of cost and net realisable value
after taking into account the age and condition of inventory. (See
note 19)
Available for sale investments
The Group has an investment in unlisted equity shares carried at
nil value. The investment is valued at cost less any impairment as
a reliable fair value cannot be obtained since there is no active
market for the shares and there is currently uncertainty around the
future funding of the business. The Group makes appropriate
enquiries and considers all of the information available to it in
order to assess whether any impairment has occurred. (See note
16)
New standards and interpretations in issue but not yet effective
at the date of authorisation of these financial statements:
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU).
-- IFRS 9 'Financial Instruments'
-- IFRS 10 'Consolidated Financial Statements'
-- IFRS 12 'Disclosure of Interests in Other Entities'
-- IAS 27 (amendments) 'Separate financial statements'
-- IAS 28 (amendments) 'Associates and joint ventures'
-- IAS 32 (amendments) 'Financial instruments presentation'
-- IAS 36 (amendments) 'Recoverable Amount Disclosures for Non-Financial Assets'
The Directors do not expect that the adoption of the Standards
and Interpretations listed above will have a material impact on the
financial statements of the Group in future periods.
2. Segmental reporting
The Group's business is the development, commercialisation and
licensing of proprietary technology for the manufacture of
Accoya(R) wood, Tricoya(R) wood elements and related acetylation
technologies. Segmental reporting is divided between licensing
activities, the manufacturing and sale of Accoya(R) and research
and development activities.
Licensing, Management
Result by Segment: & Business Development
2014 2013
EUR'000 EUR'000
Revenue 1,134 553
Cost of sales - -
Gross profit 1,134 553
Other operating
costs (7,680) (6,780)
Impairment of licensee
receivables - -
Loss from operations (6,546) (6,227)
Loss from Operations (6,546) (6,227)
Depreciation and
amortisation 412 347
------------ ------------
EBITDA (6,134) (5,880)
------------------------ ------------ ------------
Manufacturing
Revenue 32,378 18,269
Cost of sales (25,753) (15,474)
Gross profit 6,625 2,795
Other operating
costs (6,142) (5,528)
Profit/(loss) from
operations 483 (2,733)
Profit/(loss) from
Operations 483 (2,733)
Depreciation and
amortisation 1,910 1,833
------------ ------------
EBITDA 2,394 (900)
------------------------ ------------ ------------
ResearchandDevelopment
Revenue - -
Cost of sales - -
Gross profit/(loss) - -
Other operating
costs (1,151) (1,240)
Loss from operations (1,151) (1,240)
Loss from Operations (1,151) (1,240)
Depreciation and
amortisation 54 76
------------ ------------
EBITDA (1,096) (1,164)
------------------------ ------------ ------------
Total
Revenue 33,512 18,822
Cost of sales (25,753) (15,474)
Gross profit 7,759 3,348
Other operating
costs (14,973) (13,548)
Impairment of licensee
receivables - -
Loss from operations (7,214) (10,200)
Share of joint venture
loss (905) (430)
Finance income 155 206
Finance expense (226) (244)
Loss before taxation (8,190) (10,667)
Loss from Operations (7,214) (10,200)
Share of joint venture
loss (905) (430)
Depreciation and
amortsation 2,376 2,256
------------ ------------
EBITDA (5,743) (8,374)
------------------------ ------------ ------------
Licensing, Management & Business Development
Revenue is attributable to fees in relation to the licensing of
the Group's technology to third parties.
Other operating costs include all remaining costs unless they
are directly attributable to Manufacturing or Research and
Development. This includes marketing, business development,
management and the majority of the Group's administration costs
including the head office in Windsor as well as the US office.
Headcount = 21 (2013: 21)
Manufacturing
Revenue includes the sale of Accoya(R) and other revenue,
principally relating to the sale of acetic acid.
All costs of sales are allocated against manufacturing
activities in Arnhem unless they can be directly attributable to a
licensee.
Other operating costs include depreciation of the Arnhem
property, plant and equipment together will all other costs
associated with the operation of the Arnhem manufacturing site,
including directly attributable administration costs.
Headcount = 67 (2013: 62)
Research and Development
Costs are associated with various R&D activities associated
with Accoya(R) and processes. The costs are reported excluding
EUR455,000 of costs which have been capitalised in accordance with
international financial reporting standards. (2013:
EUR861,000).
Headcount = 13 (2013: 13)
Assets and liabilities cannot be readily allocated to the three
segments and therefore no additional segmental information has been
disclosed.
Analysis of Revenue by geographical
area of customers: 2014 2013
EUR'000 EUR'000
UK and Ireland 11,300 3,983
Benelux 8,822 6,842
Rest of Europe 7,501 4,611
Americas 3,376 1,585
Asia-Pacific 1,901 1,292
Rest of World 612 509
33,512 18,822
======== ========
Revenue generated from one customer exceeded 10% of Group
revenue of 2014, represented by 43% of the revenue from the United
Kingdom and relates to manufacturing revenue. Revenue generated
from no single customer exceeded 10% of Group revenue in 2013.
Analysis of non-current assets (Other than
financial assets and deferred tax): 2014 2013
EUR'000 EUR'000
UK 4,491 4,133
Other countries 20,690 22,195
Un-allocated - Goodwill 4,231 4,231
29,412 30,559
======== ========
The segmental assets in the current year and the previous year
were predominantly held in Europe. Additions to property, plant,
equipment and intangible assets in the current year and the
previous year were predominantly incurred in Europe.
3. Other operating costs
Other operating costs consist of the operating costs, other than
the cost of sales, associated with the operation of the plant in
Arnhem and the offices in Dallas and Windsor:
2014 2013
EUR'000 EUR'000
Sales and marketing 2,882 2,908
Research and development 1,151 1,240
Depreciation and amortisation 2,377 2,256
Other operating costs 2,243 2,104
Administration costs 6,320 5,040
14,973 13,548
======== ========
During the period EUR726,000 of Administration costs related to
legal costs incurred in the period associated with the Diamond Wood
arbitration. (See Note 28)
During the period, EUR459,000 (2013: EUR953,000) of development
costs were capitalised and included in intangible fixed assets.
This includes EUR152,000 in respect of the Accoya(R) licence
Process Design Package (2013: EUR456,000).
Administration costs also include the costs associated with the
Group's head office in Windsor, the US office in Dallas together
with business development and management costs.
4. Employees
2014 2013
EUR'000 EUR'000
Staff costs (including Directors)
consist of:
Wages and salaries 6,469 6,160
Social security costs 926 756
Other pension costs 434 422
Share based payments 1,177 927
9,006 8,265
======== ========
The average monthly number of employees,
including Executive Directors, during
the year was as follows: Number Number
Administration, research and
engineering 67 66
Operating 34 30
101 96
======== ========
5. Directors' remuneration
2014 2013
EUR'000 EUR'000
Directors' remuneration consists
of:
Directors' emoluments 894 829
Company contributions to money purchase
pension schemes 47 44
941 873
================== ========
Compensation of key management personnel included the following
amounts:
2014 2013
Pension
Total Total
Salary, Share
bonus based
and short payments
term benefits charge
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Paul Clegg 356 28 442 826 761
Hans Pauli 242 12 139 393 365
William Rudge(1) 151 7 74 232 93
749 47 655 1,451 1,219
=============== ======== ========== ======== ========
1 - William Rudge was appointed as Finance Director on the 1
October 2012.
The Group made contributions to 3 (2013: 3) Directors' personal
pension plans.
6. Operating loss
2014 2013
EUR'000 EUR'000
This has been arrived at after
charging:
Staff costs 9,006 8,265
Legal costs - Diamond Wood
arbitration (note 28) 726 -
Depreciation of property,
plant and equipment 2,024 1,950
Amortisation of intangible
assets 352 306
Operating lease rentals 1,011 165
Fees payable to the Company's auditors for the
audit of the Company's annual accounts 63 62
Fees payable to the Company's auditors
for other services:
- audit of the Company's subsidiaries
pursuant to legislation 80 79
- audit related assurance
services 24 25
- tax compliance services 53 57
- all other services 27 5
Foreign exchange losses 65 65
Research & Development (excluding
staff costs) 535 636
Loss on disposal of property,
plant and equipment 77 114
7. Share of joint venture losses
On 5 October 2012, Accsys entered into a 50:50 joint venture
with INEOS to exploit Accsys' intellectual property surrounding its
proprietary Tricoya(R) wood elements acetylation technology and
processes, which is expected to lead to the accelerated global
deployment of Tricoya. The company, Tricoya Technologies Limited
('TTL'), will develop and exploit Accsys' Tricoya technology for
use within MDF, particle board and wood plastic composites in a
worldwide panel products market estimated to be worth more than
EUR60 billion annually.
As part of the transaction, TTL was granted rights to exploit
Accsys' Tricoya(R) technology and will also benefit from a licence
of any intellectual property held by INEOS that may assist the
joint venture in maximising the value of the Tricoya(R)
proposition. Profits generated by TTL will be shared between Accsys
and INEOS in a way that reflects each party's interest. The
contribution of Accsys' Tricoya(R) intellectual property to the
Joint Venture is reflected through a disproportionate future profit
share which is expected to create significant value for Accsys.
TTL has been accounted for in the Accsys Group accounts using
the equity method. The TTL results in the prior year are for the
period from 5 October 2012 to 31 March 2013.
Income statement of TTL joint venture:
2014 2013
EUR'000 EUR'000
Revenue 153 -
Costs:
Staff costs 1,230 590
Research & development (excluding staff costs) 278 163
Intellectual Property 133 76
Sales & marketing 322 31
Joint venture loss 1,810 860
======== ========
Group share of joint venture loss 905 430
======== ========
Investment in joint venture at 1 April 62 -
Group share of loss reported (905) (430)
Less elimination of mark-up on recharged staff
costs (17) (8)
Investments in joint venture 1,200 500
Carrying value of joint venture at 31 March 340 62
======== ========
Tricoya Technologies Limited statement of financial position at
31 March 2014:
2014 2013
EUR'000 EUR'000
Non-current assets
Intangible assets 1,382 93
Current assets
Receivables due within one year 150 89
Cash and cash equivalents 499 324
649 413
-------- --------
Current liabilities
Trade and other payables (1,302) (366)
Net current assets (653) 47
Net assets 729 140
======== ========
50% attributable to Accsys Technologies 364 70
Less elimination of mark-up on recharged costs (17) (8)
======== ========
Equity and reserves
Share capital 3,400 1,000
Accumulated loss (2,671) (860)
Total equity 729 140
======== ========
8. Finance income
2014 2013
EUR'000 EUR'000
Interest receivable on bank
and other deposits 155 206
9. Finance expense
2014 2013
EUR'000 EUR'000
Arnhem land sale and leaseback
finance charge 226 244
10. Tax expense
2014 2013
EUR'000 EUR'000
(a) Tax recognised in the statement of comprehensive
income comprises:
Current tax expense
UK Corporation tax on profits
for the year - -
Research and development tax credit
in respect of prior years - (26)
Research and development tax credit
in respect of current year (169) (286)
(169) (312)
Overseas tax at rate of 15% 2 11
Overseas tax at rate of 25% - -
Deferred Tax
Under/(over) provision in
respect of prior years - -
Utilisation of deferred tax
asset 866 656
Total tax charge reported in the
statement of comprehensive income 699 355
======== =========
2014 2013
EUR'000 EUR'000
(b) The tax credit for the period
is lower than the standard rate of
corporation tax in the UK (2012:
26%, 2011: 28%) due to:
Loss profit before tax (8,190) (10,668)
Expected tax credit at 23%
(2013 - 24%) (1,884) (2,560)
Expenses not deductible in
determining taxable profit 367 295
Over provision in respect
of prior years (383) (7)
Losses transferred to deferred tax
asset but not recognised 2,420 2,293
Effects of overseas taxation 67 21
Other temporary differences (57) 1
Research and development tax credit
in respect of prior years - 26
Research and development tax credit
in respect of current year 169 286
Total tax charge reported in the
statement of comprehensive income 699 355
======== =========
11. Dividends Paid
2014 2013
EUR'000 EUR'000
Final Dividend EURNil (2013: EURNil)
per Ordinary share proposed
and paid during year relating to
the previous year's results - -
12. Loss per share
The calculation of loss per ordinary share is based on loss
after tax and the weighted average number of ordinary shares in
issue during the year.
Basic and diluted earnings per
share 2014 2013
Weighted average number of Ordinary
shares in issue ('000) 437,412 419,650
Loss for the year (EUR'000) (8,889) (11,023)
Basic and diluted loss per share EUR(0.02) EUR(0.03)
========== ==========
Basic and diluted losses per share are based upon the same
figures. There are no dilutive share options as these would
increase the loss per share.
13. Share based payments
The group operates a number of share schemes which give rise to
a share based payment charge. During the period, the group
introduced a new Long Term Incentive Plan ('LTIP') in order to
reward members of the senior management team and the executive
directors. As part of the award of nil costs options under the
LTIP, the recipients relinquished all share options that they held
which had been awarded under the 2005 and 2008 Share Option plans.
Other employees continue to hold options awarded under these
earlier schemes.
In addition, the group operates an Employee Share Participation
Plan, which is available to all employees, and also makes annual
awards under the Employee Benefit Trust. Details of all these
schemes are given below:
Long Term Incentive Plan ('LTIP')
During the period, the group established a new Long Term
Incentive Plan, the participants of which are key members of the
management team. The establishment of the LTIP was approved by the
shareholders at the AGM in September 2013. Further background
details are set out in the Remuneration Report and were included in
the Notice of 2013 Annual General Meeting.
A prerequisite of participation in the new LTIP was for the
management team to agree to the cancellation of their entire
outstanding share
options, providing the Company with a 5% reduction in the level
of dilution to make the new awards. A cancellation was agreed as
the most appropriate action as it would focus the management team
on the new LTIP and not on historical awards or arrangements.
Details of the cancellation of the share options (previously
awarded under the 2005 and 2008 Share Option schemes) are set out
further below.
LTIP overview
Under the newly established LTIP awards can be granted on a
discretionary basis to key members of the management team. During
the period, an initial 'one off' grant was made in order to focus
the management team on the growth of the Company over the next
three years. Awards were granted in the form of nil-cost options
and consist of the following 'elements':
Element Objective Description
-------- ------------------------ --------------------------------------------------
A Retention based In consideration to agreeing to the cancellation
award of the participant's existing options,
to lock-in executives a proportion of the new share award vests
who on continuity of employment over the next
have contributed three years.
to the To ensure there is no value shift to the
turnaround participants via the cancellation, this
element requires an additional three years
of services from the participant and will
be forfeited if the share price at the
end of the performance period is below
EUR0.13.
-------- ------------------------ --------------------------------------------------
B Performance based This element aligns the participant to
share the future success of the Company by linking
award the level of vesting to EBITDA and share
price growth against the constituents
of the MSCI Europe Index (or another other
broad based European index as deemed appropriate
by the Remuneration Committee).
-------- ------------------------ --------------------------------------------------
C Exceptional performance This element ensures that if significant
multiplier value is created for shareholders then
participants will be entitled to receive
an appropriate proportion of this value.
-------- ------------------------ --------------------------------------------------
Performance conditions
Awards granted under the LTIP are subject to continued
employment and satisfaction of the performance conditions.
Performance will be measured at the end of a three year performance
period for each Element.
Element A - Vesting is contingent upon continued employment for
three years and share price not falling below EUR0.13 at the end of
the performance period.
Element B - Measured against two equally weighted performance
conditions:
Threshold Target Maximum
-------------------- ----------------- ----------------- -----------------
EBITDA
(50% of Element
B) EUR0m EUR1.6m EUR4m
-------------------- ----------------- ----------------- -----------------
Share price growth Median of the 60th percentile Upper quartile
(50% of Element constituents of of the of the
B) the MSCI Europe constituents of constituents of
Index the MSCI the MSCI
Europe Index Europe Index
-------------------- ----------------- ----------------- -----------------
Vesting level(1) 25% 60% 100%
-------------------- ----------------- ----------------- -----------------
Notes:
1. Vesting is on a straight line basis between the respective
EBITDA and share price targets.
Element C - This element vests in full if the share price is at
or above EUR0.26 at the end of the performance period.
Awards made in period
Immediately following the establishment of the new LTIP in
September 2013, awards were made to members of the management team.
A total of 21,393,185 nil cost options were awarded. 7,966,667 were
allocated as Element A, 9,187,881 as Element B and 4,238,637 were
allocated as Element C. At the same time, a total of 22,281,146 of
old options were cancelled.
Element A was designed to recognise the contribution made by
individuals to the turnaround of the Company and the cancellation
of the existing options was a prerequisite for participation in the
LTIP. The quantum of Element A for each participant was linked to
the expected value of the existing options which were cancelled
where there was a reasonable probability of payout. As a result,
under IFRS 2, the award of Element A was accounted for as a
modification of the existing share options and as the award was
designed to avoid any transfer of value, the resulting share based
payment charge is the same as if the existing options had not been
cancelled.
Elements B and C have been accounted for as new awards with the
fair value calculated based on a modified Black-Scholes model
assuming inputs described below:
Element B
Element Element B (i) (ii) Element C
Grant date 19 Sep 13 19 Sep 13 19 Sep 13
Share price at grant
date (EUR) 0.14 0.14 0.14
Exercise price (EUR) 0.00 0.00 0.00
Expected life (years) 3 3 3
Contractual life (years) 10 10 10
Vesting conditions Exeptional
(Details set out above) EBITDA Share Price Multiplier
Risk free rate 0.48% 0.48% 0.48%
Expected volatility 40% 40% 40%
Expected dividend
yield 0% 0% 0%
Fair value of option EUR 0.129 EUR 0.078 EUR 0.044
No LTIP options vested in the period.
2005 and 2008 Share Option schemes
The following share options awarded under the group's 2005 and
2008 Share Option schemes impacted the current or preceding
financial year;
Options granted on 1 March 2005 fully vested during 2011. These
options may be exercised until 30 March 2015. At 31 March 2014,
269,265 (2013: 269,265) of these options were outstanding with an
exercise price of EUR0.32.
Options granted on 28 March 2007 at an exercise price of EUR2.59
per Ordinary share vest to one third of the options granted upon
achievement of each of the following:
-- Cumulative EUR5 million licence income recognised under Group accounting policies
-- Cumulative EUR20 million revenue from sales of Accoya(R) wood
-- Announcement of annual Group distributable earnings exceeding EUR5 million
Once vested, these options may be exercised until 31 March 2017.
At 31 March 2014, 896,699 (2013: 2,343,034) of these options were
outstanding at an exercise price of EUR1.83.
Options granted on 20 November 2007 vest to one third of the
options granted upon achievement of each of the following:
-- Annual Accoya(R) wood production exceeds 23,000m(3) in a financial year
-- Annual Accoya(R) wood sales revenue exceeds EUR26 million in financial year
-- The second pair of reactors in the wood modification plant
are processing more than 25 batches per month
Once vested these options may be exercised until 20 November
2017. At 31 March 2014, 242,236 (2013: 298,900) of these options
were outstanding at an exercise price of EUR2.58.
Options granted on 18 June 2008 vest to one third of the options
granted upon achievement of each of the following:
-- Announcement of audited Annual Accoya(R) wood sales revenue
exceeds EUR20 million in financial year
-- Announcement of audited annual Group distributable earnings exceeding EUR15 million
-- Announcement of audited cumulative EUR75 million gross
licence revenue recognised under Group accounting policies
Once vested these options may be exercised until 18 June 2018.
At 31 March 2014, 42,498 (2013: 99,161) of these options were
outstanding at an exercise price of EUR1.98.
Options granted on 8 December 2008 vest to one third of the
options granted upon achievement of each of the following:
-- Announcement of audited Annual Accoya(R) wood sales revenue
exceeds EUR20 million in financial year
-- Announcement of audited annual Group distributable earnings exceeding EUR15 million
-- Announcement of audited Cumulative EUR75 million gross
licence revenue recognised under Group accounting policies
Once vested these options may be exercised until 8 December
2018. At 31 March 2014, 206,822 (2013: 213,905) of these options
were outstanding at an exercise price of EUR0.97.
Options granted on 19 November 2009 were fully exchanged in the
period for new awards issued under the LITP. Previously, 30% of the
options were to vest upon achievement of median Total Shareholder
Return ('TSR'). Full vesting of the options granted was to occur
upon achievement of upper quartile TSR measured over a three year
period. At 31 March 2014, nil (2013: 2,557,424) of these options
were outstanding at an exercise price of EUR0.35.
Options granted on 1 April 2010 were fully exchanged in the
period for new awards issued under the LITP. Previously 30% of the
options were to vest upon achievement of median TSR. Full vesting
of the options granted was to occur upon achievement of upper
quartile TSR measured over the three year period. At 31 March 2014,
nil (2013: 1,017,354) of these options were outstanding at an
exercise price of EUR0.32.
Options granted on 27 July 2010 were partially exchanged in the
period for new awards issued under the LITP. 30% of the options
vest on achievement of median TSR. Once vested, these options may
be exercised until 27 July 2020. Full vesting of the options
granted occurs upon achievement of upper quartile TSR measured over
the three year period. At 31 March 2014, 821,620 (2013: 6,075,005)
of these options were outstanding at an exercise price of
EUR0.24.
Options granted on 1 April 2011 were fully exchanged in the
period for new awards issued under the LITP. Previously, 30% of the
options were to vest upon achievement of median TSR. Full vesting
of the options granted was to occur upon achievement of upper
quartile TSR measured over the three year period. At 31 March 2014,
nil (2013: 718,173) of these options were outstanding at an
exercise price of EUR0.17.
Options granted on 1 August 2011 were partially exchanged in the
period for new awards issued under the LITP. 30% of the options
vest on achievement of median TSR. Full vesting of the options
granted occurs upon achievement of upper quartile TSR measured over
the three year period. Once vested, these options may be exercised
until 1 August 2021. At 31 March 2014, 800,000 (2013: 7,437,982) of
these options were outstanding at an exercise price of EUR0.10.
Options granted on 2 August 2012 were fully exchanged in the
period for new awards issued under the LITP. Previously, 30% of the
options were to vest on achievement of median TSR. Full vesting of
the options was to occur upon achievement of upper quartile TSR
measured over the three year period. At 31 March 2014, nil (2013:
4,418,173) of these options were outstanding at an exercise price
of EUR0.15.
TSR is measured on a relative basis compared to the FTSE Small
Cap index over a three year period from grant date. Unless
discretion is exercised by the Nomination & Remuneration
Committee, all options are forfeit following an option holder's
termination of contract.
The weighted average fair value of each option granted during
the prior year was EUR0.06. No options were granted under the 2005
or 2008 Share Option schemes in the period.
The fair value of share options granted under the 2005 and 2008
Share Option Schemes during the previous years was calculated based
on a modified Black-Scholes model assuming inputs shown below:
Grant date August 2012 August 2011 April 2011 July 2010 April 2010
Share price at
grant date (EUR) 0.15 0.10 0.17 0.34 0.46
Exercise price
(EUR) 0.15 0.10 0.17 0.34 0.46
Expected life
(years) 3 3 3 3 3
Contractual life
(years) 10 10 10 10 10
Risk free rate 1.83% 1.54% 2.25% 2.30% 2.00%
Expected volatility 85% 85% 85% 60% 60%
Expected dividend
yield 0% 0% 0% 0.0% 0.0%
Fair value of
option EUR 0.060 EUR 0.040 EUR 0.070 EUR 0.106 EUR 0.143
Volatility was estimated by reference to the historic volatility
since October 2005 when the Company's shares were listed on AIM.
The resulting fair value is expensed over the vesting period of the
options on the assumption that a proportion of options will lapse
over the service period as employees leave the Group.
Options - total
The following figures take into account options awarded under
the LTIP in the period together with share options awarded in
previous years under the 2005 and 2008 Share Option schemes.
Outstanding options granted are as follows:
Weighted average
Number of outstanding remaining
contractual life,
options at 31 March in years
Date of grant 2014 2013 2014 2013
1 March 2005 269,265 269,265 0.9 1.9
28 March 2007 747,958 2,343,034 3 4
20 November 2007 242,236 298,900 3.6 4.6
18 June 2008 42,498 99,161 4.3 5.3
8 December 2008 206,821 213,905 4.7 5.7
19 November 2009 - 2,557,424 5.6 6.6
1 April 2010 - 1,017,354 6 7
27 July 2010 821,620 6,075,005 6.3 7.3
1 April 2011 - 718,173 7 8
1 August 2011 800,000 7,437,982 7.3 8.3
2 August 2012 - 4,418,173 8.3 9.3
19 September
2013 (LTIP) 21,393,185 - 9.5 -
Total 24,523,583 25,448,374 8.9 7.5
----------- ----------- --------- ---------
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at
31 March 2012 EUR0.43 21,257,694
========= =============
Granted during
the year EUR0.15 4,418,173
Forfeited during
the year EUR0.22 (227,493)
Outstanding at
31 March 2013 EUR0.38 25,448,374
========= =============
Granted during the year
- LTIP EUR 0.00 21,393,185
Cancellation of options
(in relation to LTIP) EUR 0.32 (22,281,147)
Forfeited during
the year EUR1.66 (36,831)
Outstanding at
31 March 2014 EUR0.11 24,523,582
========= =============
The exercise price of options outstanding at the end of the year
ranged between EURnil (for LTIP options) and EUR2.58 (2013: EUR0.10
and EUR2.58) and their weighted average contractual life was 8.9
years (2013: 7.5 years).
Of the total number of options outstanding at the year-end,
1,012,500 (2013: 1,831,287) had vested and were exercisable at the
end of the year. No options were exercised in the current or
previous year.
Employee Benefit Trust - Share bonus award
On 5 July 2013, in connection with employee remuneration and
incentivisation arrangements for the period from 1 July 2013 to 30
June 2014, 4,765,666 (2013: 3,926,666) new Ordinary shares were
issued to an Employee Benefit Trust, the beneficiaries of which are
primarily the Executive Directors and Senior Managers. Such new
Ordinary Shares vest if the employees remain in employment with the
Company at the vesting date, being 1 July 2014 (subject to certain
other provisions including regulations, good-leaver, take-over and
nomination and remuneration committee discretion provisions).
As at 31 March 2014, the Employment Benefit Trust was
consolidated by the Company and the 4,765,666 shares are recorded
as Own Shares within equity. During the period, all 3,926,666
awarded in the prior year vested.
Employee Share Participation Plan
During the year, the Company continued to operate the Employee
Share Participation Plan (the 'Plan') that was initiated in the
prior year. 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 twice a year following release of annual and half
yearly financial results. The maximum amount available for
subscription by any employee is EUR5,000 per annum.
During the year ended 31 March 2014 the plan was open for
subscription once. In July 2013 various employees subscribed for a
total of 497,854 Shares at an acquisition price of EUR0.14 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 all participants continuing to remain in employment at
the point of vesting. 369,423 Matching shares were issued to
employees in January 2014 and 415,423 Matching shares were issued
to employees in July 2013.
14. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 31 March 2012 535 73,200 4,231 77,966
Additions 861 92 - 953
At 31 March 2013 1,396 73,292 4,231 78,919
============ ============= ========= ========
Additions 459 - - 459
At 31 March 2014 1,855 73,292 4,231 79,378
============ ============= ========= ========
Accumulated amortisation
At 31 March 2012 16 70,371 - 70,387
Amortisation 39 267 - 306
At 31 March 2013 55 70,638 - 70,693
============ ============= ========= ========
Amortisation 77 275 352
At 31 March 2014 132 70,913 - 71,045
============ ============= ========= ========
Net book value
At 31 March 2014 1,723 2,379 4,231 8,333
At 31 March 2013 1,341 2,654 4,231 8,226
At 31 March 2012 519 2,829 4,231 7,579
The carrying value of internal development costs, intellectual
property rights and goodwill on consolidation have been allocated
for impairment testing purposes to one cash generating unit being
the Group's licensing operations. The recoverable amount of
internal development costs, intellectual property rights and
goodwill relating to this operation is determined based on a value
in use calculation which uses cash flow projections based on board
approved financial budgets. Cash flows have been projected for a
period of 10 years plus assumptions concerning a terminal value,
corresponding with the expected minimum life of the intellectual
property rights and based on a pre tax discount rate of 20% per
annum (2013: 20%). The key assumption used in the value in use
calculations is the level of future licence fees estimated by
management over the budget period. These have been based on past
experience and expected future revenues. A 5% increase in the
discount rate or a 15% reduction in expected revenues would not
give rise to an impairment.
15. Property, plant and equipment
Land Plant
and and Office
buildings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 31 March 2012 6,880 26,958 612 34,450
Additions - 252 41 293
Disposals (1,672) (20) - (1,692)
Foreign currency translation
gain/(loss) - - 3 3
At 31 March 2013 5,208 27,190 656 33,054
========== ========== ========== ========
Additions 43 444 85 572
Disposals - (116) - (116)
Foreign currency translation
gain/(loss) - - (9) (9)
At 31 March 2014 5,251 27,518 732 33,501
========== ========== ========== ========
Accumulated depreciation
At 31 March 2012 75 8,293 468 8,836
Charge for the year 117 1,771 62 1,950
Disposals - (7) - (7)
Foreign currency translation
gain/(loss) - - 4 4
At 31 March 2013 192 10,057 534 10,783
========== ========== ========== ========
Charge for the year 115 1,818 91 2,024
Disposals - (39) - (39)
Foreign currency translation
gain/(loss) - - (7) (7)
At 31 March 2014 307 11,836 618 12,761
========== ========== ========== ========
Net book value
At 31 March 2014 4,944 15,682 114 20,740
At 31 March 2013 5,016 17,133 122 22,271
At 1 April 2012 6,805 18,665 144 25,614
Included within property, plant and equipment are assets with an
initial cost of EUR6,252,000 and a net book value at 31 March 2014
of EUR4,056,000 which has been accounted for as a finance lease
under the terms of the sale and leaseback agreement entered into in
the prior year. See note 24.
16. Other financial assets
2014 2013
EUR'000 EUR'000
Available for sale investments - -
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China. The
Group does not currently have an intention to dispose of its
investment in Diamond Wood in the foreseeable future.
The carrying value of the investment is carried at cost less any
provision for impairment, rather than at its fair value, as there
is no active market for these shares, and there is significant
uncertainty over the future of Diamond Wood, and as such a reliable
fair value cannot be calculated.
The historical cost of the unlisted shares held at 31 March 2014
is EUR10m (2013: EUR10m). However, a provision for the impairment
of the entire balance of EUR10m continues to be recorded, as at 31
March 2014 there is considerable doubt as to whether Diamond Wood
will continue as a going concern. See note 28.
17. Deferred Taxation
The Group has a deferred tax asset of EURnil (2013: EUR866,000)
relating to trading losses brought forward. The deferred tax asset
has been recognised on the basis that trading profits are expected
to be recorded in the related legal entities in the foreseeable
future. These expected trading profits are attributable to the
production of Accoya(R) wood and the recharge of research and
development activities to other Group companies.
The Group also has an unrecognised deferred tax asset of
EUR23,087,000 (2013: EUR21,543,000) which is largely in respect of
trading losses of the UK subsidiary. The deferred tax asset has not
been recognised due to the uncertainty of the timing of future
expected profits of the related legal entity attributable to
licensing activities.
Movements in recognised deferred tax asset:
2014 2013
EUR'000 EUR'000
Opening balance 866 1,522
Recognition of deferred tax
asset - -
Derecognition of deferred
tax asset - -
Utilisation of deferred tax
asset (866) (656)
Closing balance - 866
======== ========
18. 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.
19. Inventories
2014 2013
EUR'000 EUR'000
Materials and work in progress 3,492 1,816
Finished goods 2,561 3,044
6,053 4,860
======== ========
The amount of inventories recognised as an expense during the
year was EUR23,969,284 (2013: EUR13,172,827). The cost of
inventories recognised as an expense includes a net credit of
EUR409,412 (2013: EUR512,813) in respect of the inventories sold in
the period which had previously been written down to net realisable
value.
20. Trade and other receivables
2014 2013
EUR'000 EUR'000
Trade receivables 3,060 2,294
Other receivables 385 249
Prepayments 1,031 1,145
4,476 3,688
======== ========
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value. The
majority of trade and other receivables is denominated in Euros,
with EUR355,000 of the trade receivables denominated in US$ (2013:
EUR166,000).
The age of receivables past due but not impaired is as
follows:
2014 2013
EUR'000 EUR'000
Up to 30 days overdue 183 755
Over 30 days and up to 60
days overdue 136 49
Over 60 days and up to 90
days overdue (14) 11
Over 90 days overdue 3 9
308 824
======== ========
In determining the recoverability of a trade receivable the
Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the
reporting date. Included in the provision for doubtful debts are
individually impaired trade receivables and accrued income with a
balance of EUR25,001,000 (2013: EUR25,001,000) due from Diamond
Wood.
Movement in provision for doubtful debts:
2014 2013
EUR'000 EUR'000
Balance at the beginning of
the period 25,051 25,110
Release of impairment (32) (59)
Balance at the end of the
period 25,019 25,051
======== ========
Summary of Receivable Impairments:
2014 2013
EUR'000 EUR'000
Trade receivables - Accoya(R)
wood * 18 50
18 50
======== ========
* The impairment of Accoya(R) wood receivables relates to a
number of Accoya(R) customers.
21. Trade and other payables
2014 2013
EUR'000 EUR'000
Trade payables 3,790 2,333
Other taxes and social security
payable 110 86
Accruals and deferred income 1,657 938
5,557 3,357
======== ========
22. Share capital
2014 2013
EUR'000 EUR'000
Allotted - Equity share capital
439,219,864 (2013: 433,171,589) Ordinary
shares of EUR0.01 each 4,392 4,332
4,392 4,332
======== ========
On 5 July 2012, a total of 3,926,666 shares were issued to an
Employment Benefit Trust, the beneficiaries of which were to be the
Executive Directors and Senior Managers (see note 13).
On 8 August 2012, a total of 783,283 of Ordinary shares were
issued and released to employees together with the 783,283 of
Ordinary shares issued to trust on 2 August 2011. (See note
13).
On 7 September 2012, a total of 415,332 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan. (See note 13).
On 19 October 2012, a total of 23,529,412 of Ordinary shares
were issued to INEOS following the receipt of subscription monies
totalling EUR4,000,000.
On 18 January 2013, a total of 369,423 of Ordinary shares were
issued to a trust under the terms of the Employee Share
Participation Plan. (See note 13).
On 23 January 2013, a total of 130,831 of Ordinary shares were
issued and released to employees together with the 130,831 of
Ordinary shares issued to trust on 23 August 2012. (See note
13).
On 5 July 2013, a total of 4,765,666 shares were issued to an
Employment Benefit Trust, the beneficiaries of which were to be the
Executive Directors and Senior Managers (see note 13).
On 13 September 2013, a total of 415,332 of Ordinary shares were
issued and released to employees together with the 497,854 of
Ordinary shares issued to trust on 12 August 2013. (See note
13).
On 20 January 2014, a total of 369,423 of Ordinary shares were
issued and released to employees.
23. Commitments under operating leases
The Group leases land, buildings and machinery under
non-cancellable operating lease agreements. The total future value
of the minimum lease payments that are due is as follows:
2014 2013
EUR'000 EUR'000
Operating lease payments due
Within one year 1,003 978
In the second to fifth years
inclusive 1,210 1,345
In greater than five years 1,477 1,475
3,690 3,798
======== ========
The majority of commitments under operating leases relate to the
Group's offices in the UK, the Netherlands and U.S.A. and land in
the Netherlands which is adjacent to our plant.
24. Commitments under finance leases
Agreements were reached in August 2011 for the sale and
leaseback of the land and buildings in Arnhem for a total of EUR4m.
EUR2.2m was received in 2011 with the remaining amount received in
the prior year, but accounted for as an operating lease. The
transaction has resulted in a finance lease creditor of EUR2.1m as
at 31 March 2014:
Minimum lease
payments
2014 2013
EUR'000 EUR'000
Amounts payable under finance
leases:
Within one year 280 280
In the second to fifth years
inclusive 1,120 1,120
After five years 2,053 2,332
Less: future finance charges (1,318) (1,544)
Present value of lease obligations 2,135 2,188
======== ========
25. Financial instruments
Financial instruments
Finance lease
Agreements were reached in August 2011 for the sale and
leaseback of the land and buildings in Arnhem under which a total
of EUR4m was to received. EUR2.2m was received in 2011 with the
remaining amount received in the prior year. Subject to the terms
of the agreement, the buyer has committed to build new storage
facilities which will also allow for an improvement in wood
handling logistics. The transaction has resulted in a finance lease
creditor of EUR2,135,000 as at 31 March 2014 (2013: EUR2,188,000).
The total lease term is 15 years. (See note 23 and 24).
Warrants
In addition to INEOS's joint investment programme with Accsys
into the Tricoya business, where INEOS Industries Holdings Limited
subscribed to 23,529,412 new ordinary shares in Accsys, at a price
of EUR0.17 per share on 19 October 2012, the Company also executed
a warrant instrument in favour of INEOS, allowing INEOS the
opportunity to purchase up to a further 16,468,236 shares at a
price of EUR0.21 per share at certain times up until 19 October
2016. All 16,468,236 warrants remained unexercised at 31 March
2014.
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 owners of the parent Company,
comprising share capital, reserves and accumulated losses.
The Board reviews the capital structure on a regular basis. As
part of that review, the Board considers the cost of capital and
the risks associated with each class of capital. Based on the
review, the Group will balance its overall capital structure
through new share issues and the raising of debt if required.
No final dividend is proposed in 2014 (2013: EURNil). The Board
deems it prudent for the Company to protect as strong a statement
of financial position as possible during the current phase of the
Company's growth strategy.
Categories of financial instruments 2014 2013
EUR'000 EUR'000
Available for Sale investments - -
Loans and receivables
Trade receivables 3,060 2,294
Other receivables 385 249
Money market deposits in
Euro 11,791 15,768
Money at call in Euro 2,483 2,180
Money at call in US dollars 602 459
Money at call in Sterling 114 671
Money at call in New Zealand
dollars 195 375
Liquidity fund in Euro - 1,013
Financial liabilities at amortised
cost
Trade payables (3,790) (2,333)
Accruals (1,149) (938)
Finance lease payable (2,135) (2,188)
11,556 17,550
======== ========
Money market deposits have interest rates fixed for less than
three months at a weighted average rate of 1.58% (2013: 1.17%).
Money market deposits are held at financial institutions with high
credit ratings (Standard & Poor's rating of AA).
All assets and liabilities mature within one year except for the
finance lease, for which details are given in note 24.
Trade payables are payable on various terms, typically not
longer than 30 days.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates. There is also a risk associated with the available for sale
investment.
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
Currency exposures are limited as the Group's functional
currency is the Euro with the majority of operating costs and
balances denominated in Euros. A smaller proportion of expenditure
is incurred in US dollars and pounds sterling. In addition some raw
materials, while priced in Euros, are sourced from countries which
are not within the Eurozone. The Group monitors any potential
underlying exposure to other exchange rates.
Interest rate risk management
The Group's borrowings are limited to the sale and leaseback of
the Arnhem land and buildings and therefore it is not exposed to
interest rate risk in relation to financial liabilities. Surplus
funds are invested in short term interest rate deposits to reduce
exposure to changes in interest rates. The Group does not enter
into any hedging arrangements.
Credit risk management
The Group is exposed to credit risk due to its trade receivables
due from customers and cash deposits with financial institutions.
The Group's maximum exposure to credit risk is limited to their
carrying amount recognised at the balance sheet date.
The Group ensures that sales are made to customers with an
appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables
at year end to be of good credit quality including those that are
past due (note 20). 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 20.
The Group has credit risk from financial institutions. Cash
deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one
financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board, which has built an appropriate liquidity risk management
framework for the management of the Group's short, medium and long
term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profile of financial assets and
liabilities.
In addition to the sale and leaseback of the Arnhem land and
buildings described above, the Group entered new finance facilities
secured on trade receivables and inventories:
Trade receivables facility
On 28 February 2011 the Group entered a trade receivable
financing and credit management agreement with Fortis Commercial
Banking for a period of at least two years from the closing date
and with a facility limit of EUR1.5m. After two years the agreement
renews for rolling one year periods. The facility is secured upon
the Group's trade receivable. At 31 March 2014, EURnil had been
drawn down under the agreement.
Inventories facility
On 17 January 2013 the Group entered a credit facility agreement
with ABN AMRO Bank N.V. with a facility limit of EUR3.0m for the
financing of the Group's operating activities. The facility is
secured against the inventories of the Group.
Both facilities are subject to interest at 1.5% above the ABN
AMRO base rate of 4.0% as at 31 March 2014 (2013: 4.2%). At 31
March 2014, the Group had EURnil (2013: EURnil) borrowed under both
of the facilities.
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.
26. Related party transactions
In the year ended 31 March 2014, there were a number of related
party transaction with the Tricoya Technologies Limited joint
venture, all of which arose in the normal course of business,
totalling EUR1,070,000 (2013: EUR618,000). The 2013 amount covered
the period from October 2012 to March 2013. At the end of the
period EUR298,404 (2013: EUR237,000) of the total amount was
payable from TTL to Accsys group companies (2013: EUR237,000).
27. Capital Commitments
2014 2013
EUR'000 EUR'000
Contracted but not provided for in respect
of property, plant and equipment - 72
28. Other matters
On 16 August 2013 Accsys announced it had terminated its licence
agreement with Diamond Wood China Limited ('Diamond Wood').
Accsys entered a licence agreement with Diamond Wood in 2007
which was subsequently amended and superseded on various occasions,
the last being in August 2010. Under the terms of the licence
agreement, Diamond Wood was granted exclusive rights to construct
and then run an Accoya acetylation plant in China and parts of
South East Asia. However as the Company has previously reported,
Diamond Wood failed to make progress in this respect despite the
significant amount of support and work carried out by Accsys since
2007.
Following legal advice, notice of termination of the licence
agreement was served by Accsys in August 2013, in accordance with
Accsys' contractual and legal rights, as a result of Diamond Wood's
failure to comply with its contractual obligations (the
"Termination").
On 17 September 2013 a notice of arbitration was served by
Diamond Wood in which it indicated it is seeking confirmation that
the licence agreement is still in force and seeking damages for the
losses it has suffered from the Termination. The arbitration is
on-going and as has been previously stated, we welcome the
opportunity to confirm the validity of our termination.
Following robust legal advice firmly supporting Accsys'
Termination no provision has been booked in respect of the
potential amounts which could become due should Accsys not be
successful in the arbitration process.
Legal costs of EUR726,000 have been incurred and recorded in the
period within Other Operating Costs in relation to the
arbitration.
The arbitration process is currently in progress and, whilst
further details of the arbitration are subject to confidentiality,
Accsys will provide a further update once the matter has been
concluded.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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