TIDMAXS
RNS Number : 6233C
Accsys Technologies PLC
22 June 2021
AIM: AXS
Euronext Amsterdam: AXS
22 June 2021
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Preliminary results for the year ended 31 March 2021
Profitability progression and strategic progress
Accsys, the fast-growing and eco-friendly company that combines
chemistry and technology to create high performance, sustainable
wood building products, announces its preliminary results for the
year ended 31 March 2021 ("FY 21").
Year to Year to
31 March 2021 31 March 2020
--------------------- ------------------------- ------------------------
Underlying Underlying Statutory
Statutory
--------------------- ----------- ------------ ----------- -----------
Total Group Revenue EUR99.8m EUR99.8m EUR90.9m EUR94.1m
Gross profit EUR33.1m EUR33.1m EUR27.5m EUR30.7m
EBITDA(2) EUR10.1m EUR10.4m EUR7.0m EUR10.0m
EBIT(3) EUR4.4m EUR4.6m EUR1.4m EUR4.4m
Profit/(loss)
before tax EUR1.1m EUR0.3m (EUR2.2m) EUR1.5m
Period end net
(debt)(4) (EUR12.2m) (EUR25.2m)
Accoya(R) sales
volume 60,466m(3) 57,842m(3)
Key highlights:
-- Revenue up 10% and sales volumes up 4.5% with a rapid
recovery after the initial impact of COVID-19 in the first
quarter.
-- Strong profitability progression: Group underlying EBITDA(2)
up 44% to EUR10.1m and Accoya(R) Manufacturing margin(1) up 340bps
to 33.4%, driven by higher sales prices. Our second consecutive
year of positive EBIT.
-- Accoya(R) performance drove a 61% increase in Group Operating
cashflow(5) , with continuing significant market demand in excess
of production capacity.
-- Robust balance sheet with EUR13.0m reduction in Group Net
Debt(4) with strong Accoya(R) cash generation.
-- Strategic progress towards 2025 target of increasing production capacity five-fold(6) :
o World-first Tricoya(R) (Hull) plant construction in final
stages of completion despite ongoing challenges. The Group is
taking over the project and is evaluating the most effective way to
complete the construction following termination of the EPC
contract.
o Accoya(R) Arnhem plant fourth reactor on track to be
operational Q4 FY22.
o Accoya(R) USA JV on track for investment decision in summer
2021 following successful Accsys' EUR35m net capital raise in May
2021 to fund Accsys' equity share of JV.
-- Living our purpose of "Changing wood to change the world":
formal sustainability strategy first Sustainability Report
published during the year and increased operational safety
commitments.
Notes
(1) Accoya(R) Manufacturing margin is defined as Accoya(R)
segmental underlying gross profit (excluding Licence income and
marketing services) divided by Accoya(R) segmental revenue
(excluding Licence income and marketing services) (See note 3 to
the financial statements)
(2) Underlying EBITDA is defined as Operating profit/(loss)
before Exceptional items and other adjustments, depreciation and
amortisation, and includes the Group's attributable share of our
USA joint venture's underlying EBITDA. (See note 3 to the financial
statements).
(3) Underlying EBIT is defined as Operating profit/(loss) before
Exceptional items and other adjustments and includes the Group's
attributable share of our USA joint venture's underlying EBIT. (See
note 3 to the financial statements)
(4) Net debt is defined as short term and long-term borrowings
(including lease obligations) less cash and cash equivalents. (See
note 29 to the financial statements).
(5) Group operating cashflow is Cash inflows from operating
activities before changes in working capital and exceptional
items.
(6) Accsys has set a '5x' production capacity growth target, to
achieve 200k m(3) equivalent production capacity by 2025, from the
2019 level of 40k m(3)
Robert Harris, CEO commented :
"This has been a year of clear progress for the Group. We
managed the initial challenges presented by the pandemic and have
delivered growth in revenues, profits and margins, alongside
progress on our sustainability agenda; Changing Wood to Change the
World. We have also increased our commitment to safety and the
wellbeing of our people and the environment during the year.
As focus on sustainability grows, demand continues to exceed
supply for our sustainable products and underpins our strategic
growth plans which progressed well during the year. We are
finalising the construction of our Hull plant and the fourth
reactor at Arnhem, which will double our capacity as a Group.
Additionally, following the close of our year, we announced a
successful equity raise to support our joint venture with Eastman
Chemical Company to build an Accoya(R) USA plant. This raise was
significantly oversubscribed and will allow us to address the
substantial North American market where demand continues to
grow.
We expect revenue growth as the additional capacity at Arnhem
becomes operational. Further to our update earlier this month
regarding the status of the Hull plant, we are taking over the
project and are evaluating the most effective way to complete the
construction following termination of the EPC contract, and are in
the process of validating the remaining works, costs and timeline
for completing the project.
Group overheads will increase next year given the investment in
our organisation for growth and ahead of the planned Hull plant
start-up.
Longer term, for Accsys as a whole, we expect to continue to
achieve improving profitability as each step in our growth journey
allows us to significantly increase the level of sales and take
advantage of economies of scale associated with higher operating
levels. As the focus on the carbon footprint of the built
environment continues to sharpen, we expect significant demand for
our high-performance and sustainable products and remain on track
to meet this demand through increasing our capacity fivefold by
2025."
I remain confident in the significant long-term growth
opportunities ahead and in our ability to execute our strategy in
pursuit of sustainable growth for our world-leading high
performance, sustainable construction products".
There will be a presentation relating to these results at
10:00am UK time on 22 June 2021. The presentation will take the
form of a webcast and conference call, details of which are
below:
Webcast link (for audio and visual presentation):
Click on the link below or copy and paste ALL of the following
text into your browser:
https://edge.media-server.com/mmc/p/tqdotmxd
Conference call details (audio only - not recommended for use in
conjunction with the webcast link):
Event Passcode : 7634169
United Kingdom - Local: +44 (0) 2071 928338
United Kingdom - National free phone: 0800 279 6619
Netherlands - Local: +31 (0) 207 956 614
Netherlands - National free phone: 0800 023 5015
-USA - Local: +1 6467 413 167
-USA - National free phone: 18 778 709 135
Ends
For further information, please contact:
Accsys, Investor Relations ir@accsysplc.com
Sarah Ogilvie
Numis Securities (London) +44 (0) 20 7260
Oliver Hardy (NOMAD), Ben Stoop 1000
Investec Bank plc (London) +44 (0) 20 7597
Carlton Nelson, Alex Wright 5970
ABN AMRO (Amsterdam)
Richard van Etten, Dennis van Helmond +31 20 344 2000
FTI Consulting (UK) +44 (0) 20 3727
Matthew O'Keeffe, Alex Le May 1340
Off the Grid (The Netherlands)
Frank Neervoort, Yvonne Derske +31 681 734 236
Accsys Technologies PLC
Chairman's Statement
Overview
I am proud to introduce my first full year results as Accsys'
Chairman.
The purpose, values, strategy and the people at Accsys are all
geared towards making a positive and lasting impact in the world.
During the challenges of COVID-19 the Group has maintained a clear
focus on its purpose, and on the health and safety of our
people.
This has been an unprecedented year due to the challenges that
COVID-19 has presented. With the determination and adaptability of
our people, we have been able to keep our products flowing to our
customers, keep each other safe, and keep delivering on our
strategy.
2021 Performance
Accsys has delivered a strong financial performance for the
year. With underlying revenue growth up 10% to EUR99.8m and sales
volumes up 4.5% to 60,466m(3) , the business demonstrated
resilience with a rapid recovery after the initial impact of
COVID-19 in the first quarter of the 2021 financial year.
We recorded strong progression of the Group's profitability with
underlying Group EBITDA up 44% to EUR10.1m and an Accoya(R)
Manufacturing margin of 33.4%. We have also reported our second
consecutive year of positive EBIT. This reflects the ongoing
development of the Group's financial profile as Accsys grows and
gains scale and as awareness of Accsys grows.
The Group finished the year with a robust financial position,
with a EUR13m reduction in net debt to EUR12.2m.
Strategic development
During the year the Group has made further progress on its
strategic development. This includes progress towards the 2025
production capacity goal of 200,000m(3) , and also on the Group's
four strategic priorities including our organisational
development.
Construction of the world's first Tricoya(R) production plant,
in Hull, UK, made further progress towards completion despite
significant continuing challenges.
This project, together with the current expansion at Arnhem to
add a fourth reactor will add an additional 60,000m(3) to bring our
total production capacity to 120,000m(3) .
The Group has made progress on the significant goal of
establishing its first Accoya(R) plant outside Europe. Planning for
the construction of an Accoya(R) plant in North America was
progressed through a new joint venture established with Eastman
Chemical Company. A market assessment has been completed and the
feasibility and design work is underway on the ground. An
investment decision is expected this coming summer.
Accsys maintains four priorities for its strategic development
and during the year, the Group has made good progress against
these. Among them, the need to build organisational capability is
particularly key at this point in the Group's development. Rob and
his team are making very good progress in this regard and Accsys is
evolving and developing its processes, systems, and talent, ready
to manage the growth ahead.
Capital Raise
In May 2021 the Group completed a successful EUR35m net capital
raise. This has provided the funding Accsys needs for its
anticipated equity share of the joint venture to build the new
40,000m(3) Accoya(R) plant in North America.
The Board and I were pleased with the strong level of
shareholder participation in the financial raise, both through the
institutional placing and the retail open offer, both of which were
significantly oversubscribed. We extend our thanks to shareholders
for their continuing support and new shareholders for their
investment in Accsys.
ESG
Accsys has made significant progress in developing our
sustainability this year. We completed a strategic review of our
ESG approach, including a stakeholder consultation.
The outcome was our first standalone ESG report and framework
published 30 November 2020. I encourage all of our stakeholders to
read this report, it marks the start of a new chapter in Accsys'
growth and evolution as a force for sustainable change in the world
and embedding ESG into our operational DNA. I would like to thank
those investors and stakeholders who gave their time to share their
views and help shape the report and framework.
We have significantly expanded the number of ESG metrics we
report and for the 2021 financial year we expect to also report our
ESG data to the GRI and SASB standards alongside the Annual
Report.
Since joining Accsys over a year ago, I have been impressed with
the good governance processes in place relative to Accsys' global
corporate size, and in the Group's commitment to foster a fair and
inclusive culture, with engaged and motivated people. This can be
seen in the results of the second Employee Engagement survey
completed this year.
Our Board
I joined the Board on 23 June 2020 as Chairman designate and
assumed the role of Chairman following Patrick Shanley's retirement
as Chairman after nine years in September 2020. I have enjoyed this
past year, joining the Group at an exciting inflection point in its
growth and development and being able to work with a Board of a
high calibre.
Alexander Wessels also joined the Board as Non-Executive
Director, and member of the Nomination, Remuneration and Audit
Committees in September 2020. With over 30 years of chemical,
pharmaceutical and process industry experience, Alexander's passion
for developing talent and integrating ESG in growth strategies has
been a valuable, complementary addition to our Board.
At the time of writing, it is difficult to predict whether we
will be able to hold our AGM in person this year due to the
pandemic. While we very much hope that this may be possible,
ultimately, we will hold the meeting in the safest manner and in
compliance with the government guidelines at the time.
Looking ahead
Accsys is a business that I am proud to have joined and at a
time where the world is increasingly looking for sustainable
construction products. Through the Group's recent work in its US
joint venture, we have been able to reconfirm the significant
demand and growth opportunity for our products through independent
market research. I strongly believe that Accsys is well positioned
to seize the large global market opportunity for its products and
its 2025 '5x' increased production capacity target.
I look forward to working with the Board and the executive team
as Accsys continues to deliver its growth strategy and capitalise
on the market opportunity ahead.
Stephen Odell
Non Executive Chairman
21 June 2021
Accsys Technologies PLC
Chief Executive's Report
Introduction
In my first full year as CEO of Accsys, our team has delivered a
strong set of results for the year ended 31 March 2021 that
demonstrate the agility of our business and the high levels of
underlying demand for our products. We have continued to make
strategic progress in building our organisational capability under
our ambitious growth strategy to expand production capacity five
times by 2025.
We have strengthened our corporate and product brands, embraced
our values, improved 'how' we work and our talent development and
engagement, and driven forward with our core purpose of "Changing
wood to change the world". While ongoing challenges in the final
completion of our Hull plant are disappointing, we have continued
to make progress even through the difficult circumstances of the
past year, and our overall growth, results and achievements in the
year have been very encouraging.
We remain committed to our strategic priorities that will enable
us to achieve our goals and fulfil the substantial growth potential
in our markets. In the period, we have made further progress in our
development of new production capacity and global expansion. The
new plant and expansions being built at Hull and in Arnhem, are
expected to double our total Group production capacity from
60,000m(3) to 120,000m(3) . We are making good progress in our
preparations for a North American plant through our Accoya(R) USA
JV with Eastman Chemical Company.
In November 2020 we published our new ESG framework and
Sustainability report, marking a significant step forward in our
commitment to both our own corporate sustainability ambitions and
our alignment to the UN Sustainable Development Goals. We have
developed and integrated our approach to ESG and sustainability
into our business, led by our purpose, values and the issues
important to us and our stakeholders.
The year has not been without challenges. Many of our staff have
carried the burden of COVID-19 on their personal lives, and for
office-based staff, many have missed the face-to-face work and
rapport with colleagues. Amidst this we have found new ways of
working together, and strengthening our global team: new processes
driving efficiency and global collaboration, new initiatives
bringing us closer together across our teams and sites, and growing
our team with world class talent in new roles and strategic remits
for engineering, research and development, health and safety and
on-site management and operations.
COVID-19
The COVID-19 pandemic has presented a challenging year for
people and businesses worldwide. The effects of the pandemic on
Accsys' full year performance can be seen primarily in the initial
disruption to sales flows in the first quarter, and in contributing
to the additional delay and challenges in completing construction
and bringing production online at our Hull plant.
Our priority in managing the pandemic has been to ensure the
safety and well-being of our people. Operationally, we introduced
new protocols and workflow practices for site-based employees. The
remainder of our workforce continues to be successfully flexed to
home working around the applicable government rules and employees'
personal circumstances, a change that also gives us greater
adaptability around unforeseen events in future. The way that we
have adapted and responded to these dynamic times is something we
are all proud of.
Colleagues and teams throughout the business also showed great
agility and responsiveness in managing not just the challenges
posed to some of our customers and supply chains, but also the very
rapid recovery in demand that followed. This has at times stretched
our inventory levels, and we want to thank our partners, customers
and suppliers for helping us meet as much of the strong demand for
our products as possible.
Preserving our balance sheet and ability to execute our growth
plans remained a key focus, during the pandemic and beyond. In the
first quarter of FY21, COVID-19 and the measures taken by
governments to reduce the spread of the virus caused lower than
previously anticipated sales in certain key geographies while
Accsys was part-way through the completion of significant capacity
expansion projects. Ensuring that we can continue to allocate our
capital to these long-term growth projects, through strong cost and
working capital management, was an important area of focus in the
earlier part of the year.
As a result of the initial reduced sales, Accsys received some
government support in The Netherlands and the UK to support
operations through the initial stages of the pandemic. At that
time, Directors and other senior staff accepted a 20% reduction in
their pre-tax salary for four months as part of our impact
mitigation measures. Relative to many other organisations around
the world, the impact of the pandemic on Accsys' financial
performance has been limited by the strong underlying product
demand and rapid recovery in sales volumes. As a consequence, once
the scope of impacts and resilience became clear after the
year-end, we have paid back in full the government grants received,
and in May 2021 paid back the salary difference to all employees
below the senior-management team level, reflecting their hard work
throughout that challenging period.
Summary of results
The Group has delivered a strong 12 months driven by the
Accoya(R) business during which we have grown revenues, profits and
seen a strong cash performance despite the challenges presented by
the COVID-19 pandemic. Total revenue for the 12 months ended 31
March 2021 increased by 10% to EUR99.8m (FY20: EUR90.9m). Accoya(R)
sales volumes of 60,466 cubic metres represent a 4.5% increase
compared to last year.
Overall, these results were driven by the strong performance of
the Accoya(R) business. Average sales prices improved as a result
of product price increases that took effect during the year. This
improved pricing was one of the main drivers in helping underlying
gross margin to increase to 33% compared to 30% last year.
As a result, Group underlying EBITDA increased by 44% to
EUR10.1m (FY20: EUR7.0m). This increase in part reflected the
ability to redirect production volumes during the start of the
period which was most impacted by COVID-19.
The Group has finished the year in a strong financial position.
A combination of the strong Accoya(R) performance and cash
generation, together with later than anticipated capex and working
capital outflow from delays in the Hull plant construction meant
that Group Net debt decreased to EUR12.2m at 31 March 2021 from
EUR25.2m as at 31 March 2020.
Accoya (R) - Global performance
Accoya (R) segment Year ended Year ended Change
- summary of results 31 March 31 March - %
2021 2020
Accoya (R) sales volume
- cubic metres 60,466 57,842 4.5%
------------- ------------- ---------
Underlying Accoya(R)
segmental revenue EUR97.6m EUR90.0m 8%
------------- ------------- ---------
Accoya (R) wood revenue EUR91.1m EUR82.8m 10%
------------- ------------- ---------
Licence income(1) EUR0.4m EUR3.2m (88%)
------------- ------------- ---------
Acetic acid sales EUR5.8m EUR6.7m (13%)
------------- ------------- ---------
Manufacturing margin
- % 33.4% 30.0% +3.4%
------------- ------------- ---------
Underlying EBITDA EUR21.4m EUR16.9m +27%
------------- ------------- ---------
Underlying EBIT EUR17.1m EUR12.6m +36%
------------- ------------- ---------
Note 1 - FY20 Licence income was reported as exceptional income
and relates to the Cerdia termination agreement.
The Accoya(R) business performed strongly in FY21 with strong
EBITDA growth and a good cash flow performance.
Revenue from the sale of Accoya (R) increased by 10% to EUR91.1m
compared to the prior year. This reflects a strong performance
particularly in the last three quarters of the year, after the
initial 13% reduction in Accoya(R) volumes sold in the first
quarter largely as a result of the COVID-19 disruption to our sales
channels. We saw this impact most strongly in April 2020 when
customer supply chains were initially disrupted. Sales volumes
recovered strongly with demand exceeding our production capacity
across the remainder of the year.
As a result, full year Accoya volumes sold were 4.5% above the
prior year, with our production at Arnhem largely at capacity. Our
full year production volume result reflects three factors: 1) Sales
returned quickly to pre-COVID-19 levels in the second quarter, 2)
Demand continues to exceed our production capacity with strong
underlying demand for Accoya(R) and 3) Some supply chain disruption
during the year to our wood material sourcing led us to utilise and
reduce our inventory levels. As a result, we ended the year with
lower than usual inventory levels, but which will be rebuilt into
the new financial year.
Revenue growth in the period has been supported by an increase
in average sales prices. Price rises were implemented in the last
financial year for all customers, including all Accoya (R)
customers from 1 January 2020, and have benefitted the 2021
financial year and were maintained through the COVID-19 period.
From 1 April 2020, the European markets were successfully
transitioned into our direct sales and marketing channels, from
their previous exclusive licence to Cerdia also removing the
previous Cerdia discount arrangements which supported
profitability. A further price increase took effect in November
2020 including to address an expected increase in raw material
costs.
2021 2020 Increase
m3 m3 %
UK & Ireland 14,937 15,564 (4%)
Tricoya(R) 15,891 14,134 12%
Rest of Europe 13,388 13,567 (1%)
Americas 6,642 5,935 12%
Benelux 5,186 4,201 23%
Asia-Pacific 3,998 4,118 (3%)
RoW 424 323 31%
60,466 57,842 5%
======= ======= ==========
Overall, we have continued to see strong underlying demand for
Accoya across our regions and with our Tricoya(R) panel
manufacturing partners. This demand continues to be in excess of
our current production capacity.
During FY21 our total annual sales volume growth and regional
sales trends also reflect some disruption to supply chains from
COVID-19 particularly in the UK and USA which were impacted more
significantly by COVID-19 than others. The USA performed strongly
in the second half, as we continue to ramp up our sales and
marketing activity and increase allocation in the region to support
our future production expansion plans there. Strong growth in
Benelux reflects prioritisation of sales efforts to build the local
market as a more significant contribution to the overall sales
mix.
Demand for Tricoya chips from our panel manufacturing partners
remains strong, and sales volumes to our Tricoya(R) licensees for
the production of Tricoya(R) panels increased by 12% which was also
supported by the impact of price increases.
Accoya (R) manufacturing gross margin increased to 33.4% (FY20:
30.0%), driven by the price increases referred to above and
strategic decisions to optimise operations around COVID-19
challenges. We completed our annual maintenance shut down ahead of
schedule in the first half of the financial year to take advantage
of reduced production levels when COVID-19 was causing significant
uncertainty. Subsequently we operated all three Accoya (R) reactors
at full capacity to meet demand during the year.
The launch into selected regions at the end of the last
financial year of Accoya(R) Color, a true colour wood product that
is tinted throughout the material, has gone well with the first
commercial orders received and demand increasing across the year.
While the production ramp-up and limited Accoya(R) stock
availability will limit near term sales as anticipated, we expect
increased Accoya(R) Color sales in the medium term with its unique
proposition proving attractive to customers in our target markets.
This will be supported by increased sales and marketing activity
overall to drive end consumer awareness and demand.
Accoya (R) strategic progress
During the period we have made good progress in our planned
expansion of Accoya (R) production capacity at our existing Accoya
(R) plant in Arnhem in 2021. Under these plans we expect to
increase the site capacity by 33% to 80,000 cubic metres by adding
a fourth reactor. The detailed engineering is complete, and we
began ground works for construction in February 2021, with good
progress since then including the delivery to site of the new
reactor in May and key procurement orders placed. We have also
secured the full permit required for the construction project and
recruited the additional people required.
The broader expansion project also includes increased chemical
storage and an upgrade of our wood handling equipment, which is
also being progressed, with the order for equipment placed. The
expansion remains on track to be operationally complete by the end
of Q1 calendar year 2022.
North America represents the largest potential regional market
for our product. New independent market research has confirmed an
achievable market for Accoya(R) in North America of up to 948,500m3
per annum within a wider addressable market of up to approximately
9.6 million m3. North America is a market that Accoya(R) already
has a growing footprint in, but in which we are significantly
constrained by the volume of product we can deliver to customers
from our Arnhem production capacity. We have strong foundations for
growth in the region with a number of key distributor customers in
place and have rolled out our Approved Manufacturers Programme for
our distributors' customers, which has been highly successful in
Europe. During 2021 we have also made good progress in our plans to
expand our manufacturing footprint into North America and build a
new Accoya(R) plant there.
In August 2020 we formed a joint venture with Eastman Chemical
Company (NYSE: EMN), a world leader in the production of acetyls,
to construct an Accoya(R) plant in USA. Under the JV, Accsys holds
a 60% interest and Eastman a 40% interest.
Since August we have made good progress in our initial planning
and feasibility work, and in preparing the commercial agreements
needed. Work has spanned various areas including developing
site-specific engineering plans, detailed capex estimates and
financial planning the formalising of working protocols between the
parties as well as project financing planning. We expect to
complete the final aspects of this, including the detailed
front-end engineering design in the summer of 2021 and are
targeting to make the final investment decision at this stage
also.
We believe Eastman is a strong collaborative JV partner who
brings multiple benefits to the Accoya(R) USA JV given its leading
position in the production of acetyls, a key raw material in
Accoya(R) production, as well as its extensive experience in
building and operating chemical plants. The plant will be located
on Eastman's operating site in Kingsport, Tennessee, USA, which
offers cost and geographical benefits by being adjacent to
Eastman's existing acetyls operations.
The initial plant designs will target a two-reactor 40,000 m3
capacity plant, while the plans and site also allow for further
efficient expansion (subject to market conditions) of up to eight
reactors in total. Importantly, the plant will replicate the
success of our Accoya(R) plant in Arnhem by duplicating our
existing Accoya(R) technology and operational know-how.
The planning to date confirms the strong financial returns from
the plant itself, with a targeted pre-tax IRR of over 20%. In
addition, Accsys will licence its technology to the Accoya(R) USA
JV, with sales and marketing support also expected to be provided
by Accsys under a separate fee bearing agreement with the Accoya(R)
USA JV.
We expect that the plant will take approximately two years to
construct from the point of final investment decision which is
targeted for summer 2021. Following construction, sales are
expected to ramp up over a further two years to the plant's full
production capacity.
In May 2021, we successfully completed the issuance of new share
capital to fund Accsys' equity share of the project, through a
placing and open offer. Further details on the financing for the
USA plant can be found in the Financial review.
Tricoya (R)
Strategic progress
The construction of the world's first Tricoya(R) plant at Hull
is in its final stages. During the year, construction work on the
Tricoya(R) plant in Hull was progressed but was impacted by
COVID-19 related challenges, and recent engineering changes. While
construction progress resumed over the summer of 2020, the final
stages of construction have been taking longer than
anticipated.
As a result, in April of 2021 we updated our guidance that at
that time we expected a three to six month delay to the lead
contractor's schedule, and full operational ramp-up of the plant
would likely commence in H2 FY22.
Subsequent to this in early June 2021, we received a notice from
the lead contractor responsible for the delivery of the plant,
Engie Fabricom UK Limited, purporting to terminate the engineering,
procurement and construction (EPC) agreement for the project by
reason of force majeure arising out of the COVID-19 pandemic.
With the contract now terminated, Engie Fabricom has spent the
last two weeks demobilising from the site, ensuring that the
handover of the site to Accsys is completed safely and securely.
Work has commenced to develop the detailed plans necessary to
complete the remaining items of construction and commissioning of
the plant. Given the relatively advanced status of the project, we
are now evaluating the potential to project manage the final works
directly and may not need to appoint another lead contractor. Our
team is conducting a comprehensive GAP analysis which will be
completed following obtaining full access to the site which is
expected this week, together with receipt of the project
documentation held by Engie Fabricom. This will enable us to
validate the remaining works, costs, timeline and people required
to complete construction and for commissioning required for full
operation of the plant to be carried out. Once this evaluation has
been completed, we shall update the market with our expectations
for the start-up of the plant and likely remaining associated costs
to completion.
Notwithstanding the delays and challenges, our planning for the
plant continues to allow for the ramp-up of production to full
capacity over approximately three years following start-up. This
reflects that this is the first plant of its type and that various
modifications and operating improvements may be identified once the
plant is initially operational. Once at capacity, we continue to
expect that a gross margin of approximately 40% should be
achievable. This is higher than the Accoya(R) plant gross margin
due to lower wood input costs and a higher level of automation
attributable to the continuous process used for the Tricoya (R)
process.
We continue to explore the opportunity to expand Tricoya(R)
production into Malaysia through the on-going feasibility study
with PETRONAS Chemicals Group Berhad for the construction of a
Tricoya(R) plant in Malaysia. The full decision to progress with
the plant will only follow after the Hull Tricoya(R) plant has been
operational for a sufficient period to ensure that any engineering
learnings can be factored into the Malaysian plant design.
In June 2020, BP, a minority investment partner in the
Tricoya(R) consortium, announced the sale of its petrochemicals
business to INEOS, which saw the transfer of the Tricoya investment
from December 2020. We have been pleased to welcome and work
together with INEOS alongside our wider consortium partners.
Group Strategic Development
The Group has four strategic priorities that we focus on to
enable us to achieve our goals and fulfil the substantial growth
potential for Accoya(R) and Tricoya(R) in our markets.
Grow product demand
During the period we have made good progress in developing
market opportunities to drive our revenue growth.
Following the launch of our new product website in June 2020,
which includes a 'Where to Buy' section to connect visitors to our
customers, we increased the number of our customers trained and
included on the site by 50% in the second half of the year.
We launched our global Approved Manufacturer Programme in the
2021 financial year. We have extended this from the UK initially to
now include the DACH and Benelux regions and North America over the
course of the year. This engagement, and two-way support with our
distributors and manufacturers, strengthens our brand at all levels
and expands the reach of our customers and, by extension, our
product.
Practice manufacturing excellence
With the significant global market opportunity for our products,
building additional production capacity in global markets is a key
element of our growth strategy. We have made progress during the
year in our projects to grow our Manufacturing position in Europe,
North America, and Malaysia.
With our specific progress set out in the segmental summaries
above, these projects are:
-- Accoya(R) , Fourth reactor expansion at Arnhem, the Netherlands
-- Tricoya(R) , New plant construction at Hull, UK
-- Accoya(R) , New plant to be constructed in USA
-- Tricoya(R) , New plant to be constructed in Malaysia
In late 2019 we set out our target to increase our production
volume capacity by five times, by 2025. Through the construction of
new plants and capacity expansions at our existing plants, we
intend to increase the annual volume production capacity from
40,000 m3 per annum, to around 200,000 m3 and m3 equivalent per
annum.
Develop our Technology
Accsys continues to invest heavily in growing, researching,
developing and protecting its valuable portfolio of intellectual
property and confidential information. Our technology covers not
only the physical equipment and engineering that underpins our
manufacturing and production, but also the processes and
methodology we follow in our entire supply and production chain,
from the way we prepare our wood to the way we market and sell
Accoya(R) in the market.
We continue to develop all aspects of our technology, including
our process technology where we continually aim for the best
efficiency and best quality for our products and production. During
the year we have hired additional people to support our R&D and
reorganised our R&D activities as a centre of excellence to
support the expanding Group.
We have reviewed and implemented new improved procedures seeking
to safeguard as much as possible our proprietary information and
are working with teams across the Group to ensure better
understanding of, and training on, our confidentiality
protocols.
Accsys' patent portfolio totals 356 patent family members,
covering 27 distinct inventions in over 40 countries. Over 60% of
the patent family members have now been granted, including 179 of
the 27 distinct inventions in Europe, USA or China, including
notable grants protecting acetylated MDF panel in Europe and
Malaysia. By using a combination of patenting and know-how we
continue to invest in the generation and protection of core
technologies associated with our current and future plants for the
production of Accoya(R) and Tricoya(R) wood products.
Our principal trademark portfolio covers our brands Accoya(R) ,
Tricoya(R) , the Trimarque device and Accsys(R) , protected by
registration in over 60 countries, with recent trademark activity
focused on increasing the strength of those brands, and securing
protection for the new corporate logo and our 'changing wood to
change the world' strapline.
Accsys continues to maintain an active watch on the commercial
and IP activity of third parties to ensure its IP rights are not
infringed, and to identify any IP which could potentially hinder
our commercial activity. In 2021 we completed an additional
worldwide patent search which has reconfirmed our freedom to
operate position, as we continue our Accoya(R) joint venture in the
United States and our plans for a Tricoya(R) joint venture in
Malaysia.
Build organisational capability
In 2021, we have continued to develop the group by investing in
people and processes to better support our growth including through
a programme focussing on operational effectiveness and addressing
areas identified from the employee engagement survey carried out at
the end of last financial year. T he Group continues to invest in
its Organisational capability with new Heads of department hired in
HSE, Technology, Engineering, IT, Investor Relations & Acetyls
management. We are also developing processes and systems to support
our growth and ensure that the Group can expand effectively
including into new locations.
While developing and building world-first, market-disruptive
technology has its inherent challenges, as an organisation we are
increasing our focus on the execution of our construction and other
development projects. Our construction planning and project
management approaches are incorporating more detailed engineering
principles in order to improve delivery, and we have added new
skills and talent into the company in the period to manage the
growth in this area ahead.
Health and safety
As Accsys continues to grow, safety remains at the core of our
business. We have worked hard to develop our new Health &
Safety strategy, our processes, safety messaging, policies and
associated metrics to help us measure performance. During the 2021
financial year we have also changed our working practices to keep
our people safe in a COVID-19 environment. While in the year we
experienced three Lost Time Incidents (LTIs), up from two in FY20,
we are seeing a positive response to the new strategy and
initiatives. Preventative and leading actions and indicators
improved considerably, with more than double the number of Toolbox
Talks and Management Safety Tours conducted, and much higher
engagement with hazard, near miss and safety opportunity internal
reporting.
Unfortunately, as previously reported, an incident resulting in
a serious injury to one of our contractors occurred on our Arnhem
site. The incident involved a routine tanker unloading operation at
the production plant. The incident has been investigated and
various root causes have been identified. A number of important and
significant actions to further improve this process have now been
implemented.
The incident serves as a reminder that health and safety of our
employees, partners, contractors and other associates and
stakeholders must remain the top priority as Accsys continues to
grow to more sites and geographies.
Environment, Social and Governance
This year has been important in the development of our approach
to ESG and sustainability, with the launch of our first
Sustainability Report in November 2020. This was one output of
extensive work both internally and with our stakeholders to make
sure we are focusing on the right areas and topics. We established
our 10 key material issues and impact areas and created an ESG
framework that aligns with our purpose, values and strategy,
defines our approach to these issues, and contributes to five main
UN Sustainable Development goals, with additional impacts on seven
more.
The approach we are taking is to ensure that ESG and
sustainability are not simply 'additional' factors or
considerations, but meaningful and integrated with our business. We
have created a new ESG Committee and added a dedicated ESG Manager
within the business to advance our approach and roadmap, engage our
colleagues throughout the business, and further refine and develop
the details of our ESG strategy. We continue to have a strong focus
on responsible sourcing and product sustainability: 100% of our
products are made from FSC(R) certified sustainable wood from
well-managed forests and 100% of our key materials suppliers are
screened against social and environmental criteria. The increase in
annual sales volumes means that more sequestered CO2 than ever
before is safely stored in our products, for decades ahead. Further
detail on our ESG performance can be found in our Sustainability
Report.
Significant work has been done to expand and improve our data
recording and management for these areas, giving us robust and
useful information and metrics with which to make informed
decisions and plans rather than just well-meaning statements of
intent. In our Sustainability Report we significantly increased the
number of reported ESG-related metrics and data points. I'm very
pleased that we have quickly built further on that and expect to
report to GRI and SASB standards alongside our Annual Report this
year and are currently developing ambitious but realistic internal
targets for key performance indicators.
The internal action plans developed for each issue have been
progressed well. For some topics this is a continuation of the high
standards already in place, such as responsible sourcing and
sustainable and quality products , and in other areas such as
People and Wellbeing, Health and Safety, and Society and
Communities there have been some great steps forward. We have
established new global functions, teams and strategies for HSE,
Technology and Engineering, and seen very positive results of our
second Accsys People employee engagement survey a reflection of the
many workstreams improving the lives, wellbeing and enablement of
our colleagues. More can be read about our engagement survey in our
Sustainability report.
We have also established a new Charities Committee and approach
aligned to our business' locations, activities and purpose.
Outlook
As focus on sustainability grows, demand continues to exceed
supply for our sustainable products and underpins our strategic
growth plans which progressed well during the year. Construction of
our Hull plant is in its final stages and the fourth reactor at
Arnhem is progressing, and, as these complete we will double our
capacity as a Group. Additionally, following the close of our year,
we announced a successful equity raise to support our joint venture
with Eastman Chemical Company to build an Accoya(R) USA plant. This
raise was significantly oversubscribed and will allow us to address
the substantial North American market where demand continues to
grow.
We expect revenue growth as the additional capacity at Arnhem
becomes operational. Further to our update earlier this month
regarding the status of the Hull plant, we are taking over the
project and completion of construction following termination of the
EPC contract, and are in the process of validating the remaining
works, costs and timeline for completing the project. Group
overheads will increase next year given the investment in our
organisation for growth and ahead of the planned Hull plant
start-up..
Longer term, for Accsys as a whole, we expect to continue to
achieve improving profitability as each step in our growth journey
allows us to significantly increase the level of sales and take
advantage of economies of scale associated with higher operating
levels. As the focus on the carbon footprint of the built
environment continues to intensify, we expect significant demand
for our high-performance and sustainable products and remain on
track to meet this demand through increasing our capacity fivefold
by 2025."
I remain confident in the significant long-term growth
opportunities ahead and in our ability to execute our strategy in
pursuit of sustainable growth.
Rob Harris
Chief Executive
21 June 2021
Accsys Technologies PLC
Financial review
FY21 FY20 Change
%
-------------------------- ----------- ----------- -------
Underlying Group
Revenue EUR99.8m EUR90.9m 10%
Underlying Gross
Profit EUR33.1m EUR27.5m 20%
Underlying EBITDA EUR10.1m EUR7.0m 44%
Underlying EBIT EUR4.4m EUR1.4m 214%
Underlying profit/(loss)
before tax EUR1.1m (EUR2.2m)
Statutory profit
before tax EUR0.3m EUR1.5m
Year-end cash
balance EUR47.6m EUR37.2m
Year-end net debt
balance (EUR12.2m) (EUR25.2m)
Accoya(R) Sales
volume 60,466m(3) 57,842m(3) 4.5%
Overview
Accsys delivered a strong financial performance in the financial
year with underlying Group revenue up 10% to EUR99.8m and
underlying EBITDA up 44% to EUR10.1m. Accoya(R) sales volume
increased by 4.5%, having performed strongly following the
significant reduction in certain geographies in April 2020 (down
35% year on year) resulting from COVID-19 disrupting our customers'
supply chains. Despite the challenges of COVID-19 during the year,
we were pleased to deliver an increase of EUR3.0m in underlying
EBIT to EUR4.4m (FY20: EUR1.4m), principally driven by a 340bps
increase in our Accoya(R) manufacturing margin to 33.4% (2020:
30.0%).
The Accoya(R) business continued to perform strongly driving a
EUR4.5m increase in Group operating cashflow before working capital
changes and exceptional items to EUR11.8m (2020: EUR7.3m)
contributing to a EUR13.0m reduction in Group net debt in the year.
This ensured the preservation of the capital raised in December
2019 for the Arnhem Reactor 4 expansion project and the Hull
Tricoya(R) plant.
The impact of COVID-19 on the financial performance of the
business in the 2021 financial year can be seen through the initial
impact on sales volumes and revenues as outlined below, and in the
implications for the construction of the Hull plant as discussed
elsewhere in these reports. Overall, our Accoya(R) operating
business has come through the pandemic in good financial shape and
proven its resilience.
Statement of comprehensive income
Underlying Group revenue increased by 10% to EUR99.8m for the
year ended 31 March 2021 (2020: EUR90.9m). Higher sales volumes
together with higher average selling prices resulted in revenue
from Accoya(R) wood increasing by 10% to EUR91.1m. The Group
benefited from full price sales to the former "Cerdia" region
during the period, following the early termination of the
commercial agreements with Cerdia International Gmbh ("Cerdia")
effective from 1 April 2020.
Included within Accoya(R) revenue, are sales of lower priced
Accoya for the manufacture of Tricoya(R) panels, which increased to
EUR18.3m (2020: EUR15.3m). These sales are used to develop the
market for Tricoya(R) products, ahead of the start-up of the
Tricoya(R) plant, currently under construction in Hull.
Tricoya(R) panel revenue of EUR2.1m (2020: EUR0.5m) represented
sales of Tricoya(R) panels, purchased from our Tricoya(R)
licensees, to sell into other geographies in order to provide
market seeding material for the global Tricoya(R) market.
Licence revenue of EUR0.4m was attributable to the new licence
agreement entered into in August 2020 with Accoya USA LLC, a JV
company formed with Eastman Chemical Company to construct and
operate an Accoya(R) wood production plant to serve the North
American market. Accoya USA LLC is accounted for as a joint venture
and equity accounted for in these results. EUR3.2m of exceptional
Licence revenue was recorded in the prior year which related to the
termination fee associated with the early termination of the Cerdia
commercial arrangements. The amount was deducted from the on-going
loan from Cerdia on 1 April 2020. Licence revenue of EUR0.3m was
reflected in our Tricoya(R) segment in the prior year period.
Other revenue of EUR6.2m (2020: EUR7.3m) predominantly relates
to the sale of acetic acid which decreased compared to the prior
year due to lower average acetic acid prices.
Underlying gross margin increased from 30% to 33% compared to
the previous year with the Accoya(R) manufacturing gross margin
increasing 340bps to 33.4%. These increases were driven by higher
average selling prices, following a 22% decrease (to 26%) in
Accoya(R) sold in the year at discounted prices (for Tricoya(R)
panels manufacture). This compared to 48% sold in the prior year
which included sales to Cerdia and for Tricoya(R) , following the
termination of the commercial agreements with Cerdia with effect
from 1 April 2020. General sales price increases were also
successfully implemented in January 2020 and November 2020,
although these were partially offset by upward variable costs
pressures, with higher wood costs, and higher net acetyls costs as
compared to the prior year. Higher net acetyls costs were
particularly impacted by lower acetic acid prices, although an
increase in acetic anhydride pricing was seen in Q4 FY21 which has
continued into the FY22 financial year. This has been partially
offset by an increase in acetic acid prices in Q1 FY22.
Underlying other operating costs excluding depreciation and
amortisation, increased by EUR2.3m to EUR22.8m. This increase was
due to an increase in staff costs & related recruitment costs,
following the majority of the remaining Hull operating team being
hired in H2 and as the Group continues to invest in its
Organisational capability with new Heads of department hired in
HSE, Technology, Engineering, IT, Investor Relations & Acetyls
management. The staff costs increase also included a higher
share-based payment charge and a related increase in the National
insurance accrual resulting from the Group's share price
increasing.
A change in the nature of the bonus awards compared to the prior
year also increased the bonus expense with bonus awards in the
prior year being granted as share awards vesting in July 2021, with
the cost of the awards spread over the vesting period (2 1/4
years). In the current year, bonus awards are currently expected to
be awarded as cash bonuses, with the full expense of these awards
expensed in the financial year. The current year bonus scheme has
also been extended to incentivise and reward more of the company's
employees.
The above staff cost movements were partially offset by lower
staff travel costs and COVID-19 related temporary salary decreases
for the Directors & Senior management team (EUR0.2m) with the
remainder of the employees repaid their COVID-19 related temporary
salary decreases shortly after year end.
Depreciation and amortisation charges were largely in line with
the prior year.
Underlying finance expenses decreased to EUR3.3m (2020: EUR3.5m)
in line with lower average borrowings.
Share of net loss from joint venture of EUR0.1m relates to the
Group's attributable share (60%) of Accoya USA LLC's net loss for
the year. The net loss relates to operating costs, including market
research, external studies and legal fees, incurred during the
current pre-investment stage of the project.
Exceptional income recognised in H1 attributable to COVID-19
related government support funding received from the UK and
Netherlands governments (the UK Government's Coronavirus Job
Retention Scheme and NOW respectively) totalling EUR0.6m, was
reversed in H2 following the decision to repay these funds in full.
These repayments were made in Q1 FY22.
Other adjustments, excluded from the underlying results, include
a foreign exchange loss of EUR0.8m (2020: gain of EUR0.5m) on loans
held in pounds sterling with BGF and Volantis and foreign exchange
differences on cash held in pounds sterling, which is used
primarily to act as a cash flow hedge against future sterling
project expenditure on the new plant being constructed in Hull and
to a lesser extent, as a cashflow hedge against future sterling
corporate costs. The effective portions of the cash flow hedges are
recognised in Other comprehensive income.
Underlying profit before tax increased by EUR3.3m to EUR1.1m
(2020: loss of EUR2.2m). After taking into account exceptional
items and other adjustments, a profit before tax was reported of
EUR0.3m (2020: EUR1.5m).
The tax charge of EUR1.3m (FY20: EUR0.6m) reflects the improved
profitability of the Group.
Cash-flow
Cash flow generated from operating activities of EUR20.2m
compared to EUR2.4m in the prior year, reflects the strong
operational cash flow being generated by the Group and careful
working capital management during the year. Inventory levels were
managed lower during H1, following the initial COVID-19 impact, and
despite endeavours to increase inventory levels in H2, they
remained lower than planned at the end of the financial year. As a
result, we anticipate working capital increasing in the first half
of the new financial year, in particular as inventory levels are
expected to increase back to ideal operating levels and also to
support the expected increase in production capacity coming on
stream.
At 31 March 2021, the Group held cash balances of EUR47.6m,
representing a EUR10.4m increase in the year. The cash increase in
the year is attributable to the cashflow generated from operating
activities referred to above, equity funding received totalling
EUR9.5m, explained further below, partially offset by investments
in tangible fixed assets of EUR11.7m.
Investment in property, plant and equipment of EUR21.4m during
the year reflects the construction progress made on the Tricoya(R)
plant project in Hull (EUR14.4m) and the Arnhem Accoya(R) Reactor 4
expansion project (EUR4.8m). The difference between the property,
plant and equipment additions of EUR21.4m and capital investment in
the Consolidated statement of cash flow of EUR11.7m principally
relates to an increase in capex payables of EUR9.0m reflecting the
milestone nature of the construction, with the capital investment
in the Consolidated statement of cash flow reflecting actual
payments made in the period.
The Group received EUR6.0m of equity funding during the year
from our Tricoya(R) consortium partners related to funding the
completion of the Tricoya(R) plant in Hull and other Tricoya(R)
related activities.
The Group also received a one-off cash amount of GBP2.8m
(EUR3.3m) from Volantis following their exercise of 4,655,667
options at GBP0.5971 exercise price. These options were issued
under the 2017 capital raise for Accsys' initial investment into
the Tricoya(R) consortium (see note 30 to the financial
statements).
Loan repayments of EUR2.5m and interest payments of EUR1.8m were
made during the year (2020: EUR5.3m), with the decrease compared to
the prior year due to repayments of EUR0.5m relating to the ABN
AMRO EUR14m term loan being deferred to the end of the loan term,
as a COVID-19 action taken by ABN AMRO together with lower interest
payments on the Cerdia loan, following the EUR3.2m reduction in the
loan balance from 1 April 2020.
Trade and other receivables decreased to EUR12.3m (2020:
EUR15.3m) following the Cerdia termination fee (EUR3.2m), which was
raised as a receivable at 31 March 2020, being deducted from the
on-going Cerdia loan on 1 April 2020.
Total inventory decreased in the year to EUR12.3m (2020:
EUR16.9m), with both finished goods (EUR1.4m decrease) and raw
materials (EUR3.3m decrease) reducing compared to the prior year.
Levels of Accoya(R) inventory remain low, with the finished goods
balance representing approximately 2 1/2 weeks of sales. I nventory
levels are expected to increase, firstly to increase our current
"lower than normal" raw material levels and secondly to support the
expected increase in production capacity coming on stream.
The increase in trade and other payables to EUR29.8m (2020:
EUR16.9m) is primarily due to the timing of accruals associated
with the construction of the Hull plant with actual cash payments
being lower, reflecting the timing of milestone payments in
relation to construction.
Financial position
The Group has closed the year in a strong financial position,
and the Group's balance sheet remains robust.
Net debt decreased by EUR13.0m in the year to EUR12.2m due to
the strong cashflow generated from operating activities (EUR20.2m)
referred to above, partially offset by Capex investment of
EUR11.7m.
The Group held cash balances of EUR47.6m at 31 March 2021
together with EUR6.0m headroom on the ABN AMRO committed working
capital facility and EUR7.9m headroom on the Tricoya(R) Natwest
EUR17.2m facility.
Amounts payable under loan agreements decreased to EUR54.3m
(FY20: EUR57.3m) primarily relating to the EUR3.2m termination fee
associated with the early termination of the Cerdia commercial
agreements, which was deducted from the Cerdia loan on 1 April
2020.
In May 2021 (post year-end), Accsys completed a successful
Placing and open offer for an issue of shares in the company,
raising gross proceeds of approximately EUR37 million. The net
proceeds from this are to be used primarily to fund the Group's
investment in expanding its Accoya(R) business into North America
through the construction of a new Accoya(R) USA plant, through its
joint venture with Eastman Chemical Company ('Eastman'), as well as
to provide additional capital to support the Group's continued
growth and ongoing development. The planned Accoya USA plant
project has been estimated to cost approximately $130m and is
expected to be funded through a combination of project finance debt
and through equity from Accsys and Eastman. Accsys has a 60% share
of the joint venture with Eastman holding a 40% share.
Going concern
These consolidated financial statements are prepared on a going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future, and at least 12
months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have
assessed the Group's trading forecasts and working capital
requirements for the foreseeable future under a base case scenario
taking into account the Group's financial resources including the
current cash position and banking and finance facilities which are
currently in place (see note 29 for details of these facilities)
and the possible further impact of COVID-19.
The Directors have also assessed a severe but plausible downside
scenario with reduced sales volumes and lower gross margin. These
forecasts indicate that, in order to continue as a going concern,
the Group is dependent on achieving certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem with the collection of on-going working
capital items in line with internally agreed budgets.
The Directors' have also considered the possible amount and
timing of capital expenditure required to complete the Tricoya(R)
plant in Hull following the recent purported termination of the
engineering, procurement and construction contract by the main
contractor. This has been considered together with the current
expansion of the Arnhem operation and intended investment in the
USA, noting that the full forecast project costs have not yet been
committed to. There are a sufficient number of alternative actions
and measures within the control of the Group that can and would be
taken in order to ensure on-going liquidity including reducing /
deferring costs in some discretionary areas as well as larger
capital projects if necessary.
The Directors believe that while some uncertainty always
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control and
uncertainty over future cash flows in completing the Hull plant
construction as set out above, together with the continued
heightened risk that COVID-19 entails, there is sufficient
liquidity under the severe but plausible downside such that there
is no material uncertainty with respect to going concern. Therefore
the Directors believe that the going concern basis is the most
appropriate on which to prepare the financial statements.
William Rudge
Finance Director
21 June 2021
Accsys Technologies PLC
Our Market
Our Market
A significant growth opportunity
Overview
Accsys' products are positioned within the substantial global
wood products market, a subset of the wider building and
construction market.
Macro-economic trends, wider societal 'megatrends' and market
penetration opportunities provide us with significant growth and
demand drivers within our market.
With demand for our products exceeding our volume of supply,
currently a key enabler for sales growth is growing our volume of
production capacity. Our '5x by 2025' production target is a key
goal in our growth strategy, further details of which can be read
in the CEO's Report.
Market size
We operate within the global wood products industry which
produces approximately 800 million cubic metres per annum,
according to the UN Food & Agriculture Organization. As our
products compete with and displace other non-wood building
materials from concrete to plastics, the market in which we operate
is even larger.
We have used independent market research to estimate that by
continuing in our current market approach, with prioritised
targeting of regions and product use applications, the potential
achievable market for Accoya(R) and Tricoya(R) is in excess of 2.6
million cubic metres annually.
Our achievable market figure has three important factors behind
it:
-- Firstly, we know that our products outperform competing
materials most strongly when used outdoors. The global outdoor wood
market is estimated to be around 14% of the global lumber or
sawnwood market.
-- Secondly, our products compete with the high value end of the
outdoor wood market, representing around a quarter of the global
outdoor wood market.
-- Thirdly, our targets for Accoya and Tricoya are currently 6
geographic markets and 4 product use categories, and our achievable
market figure reflects only this scope.
Based on these factors, within the broader global market for
solid wood, our target of an achievable 1 million cubic metres for
Accoya(R) still only represents a fraction of the addressable
market opportunity. The global market for Tricoya(R) panel products
is estimated to be at least 1.6 million cubic metres per annum,
equating to around 1% of global MDF manufacturing capacity.
Demand drivers
There are three main types of drivers of demand for our
products
Industry demand drivers
Principally used as exterior wood building products, demand for
Accoya(R) and Tricoya(R) is influenced by certain growth and demand
dynamics within the wider construction industry.
Economic growth
Over time, construction - the main driver of wood consumption -
increases as a result of rising GDP per capita, associated economic
development and standards of living rising.
Construction & Redevelopment
Our products are used in new constructions as well as
refurbishment, redevelopment and remodelling for commercial and
residential buildings and projects. Underlying drivers include
social and market expectations of building usages, performance, and
design, as well as regulatory changes (e.g. building safety,
maintenance, sustainability, and energy performance).
One-off events can also impact construction and redevelopment
growth, as seen with the COVID-19 pandemic causing consumers to
spend more time at home and increases in home improvement.
Megatrends
The superior performance and sustainability characteristics of
our products tie into a number of broader macroeconomic trends.
Sustainability
The world is coming to a consensus that action is needed to
address climate change. 36% of global energy use is accounted for
by the building and construction sector.
In addition to decarbonisation, the 'Race to Zero', and setting
of carbon neutral targets, there is also an increasing focus on the
renewability of resources: reducing embodied carbon in materials
and buildings and shifting to the circular economy philosophy. Many
countries and even global businesses now have mandatory,
legislative targets to be carbon neutral by 2050; decarbonisation
is not simply an option but an obligation.
Shifting consumer priorities
Consumers in our geographic end markets continue to shift
towards products that have a lower environmental impact. This can
be seen everywhere, from the types of shopping bags or drinking
straws we use, to the cars we drive.
In the built environment, the trend is the same. We can see
evidence all over the world of mass timber buildings- using
renewable, carbon-storing wood instead of concrete and steel. Wood
is the increasingly popular 'green building material' choice, with
its natural look and feel and particular favour shown for natural
and sustainable products over non-renewable tropical woods
Increasing customer importance is being placed on whole life
cycle considerations - both of costs and environmental impacts.
Lifestyle changes
Socio-economic changes drive a cultural shift in expectations
for residences and commercial buildings. There is increasing demand
for high performance and low maintenance wood products suitable for
outdoor use, with this segment expected to grow faster than for
softwood grades generally. Causes of this include lifestyle changes
across economies
Market penetration
Our products are most frequently chosen for their exceptional
performance and characteristics across all climates. The
exceptional performance, sustainability and quality of Accsys'
products are fundamental to our proposition. With this valued
competitive advantage against other woods and non-wood materials,
we believe we can grow faster than the market through market
penetration and share gains.
Market share and growth
Accsys has developed as a company and has developed its markets
substantially since proving the commercial viability of acetylated
wood. We have grown market share and brand awareness in the
industry through market seeding under our current model of
distributor supply and manufacturer support.
Competitive advantage and material substitution
Accoya(R) solid wood has class-leading properties that match or
improve upon the unsustainable alternatives, combined with its
certified sustainability credentials. Our acetylation process
substantially reduces the effects of water on the wood,
dramatically reducing susceptibility to swelling, shrinking and
decay - all but eliminating the traditional drawbacks of wood,
while enhancing the positives.
Architects, specifiers, manufacturers, and end-customers no
longer need to choose between performance and sustainability, with
Accoya(R) offering clear advantages over non-renewable,
unsustainable, and heavily polluting alternatives such as tropical
hardwoods, synthetics and plastics or mined metals.
Tricoya(R) panels' enhanced performance and suitability for use
in 'wet' environments not only improves their appeal compared to
traditional panel products, but also opens completely new use
scenarios and design possibilities. Tricoya(R) displaces
alternative more expensive or less easily handled products and
opens up major new market opportunities in the construction sector;
and sales of Tricoya(R) panels have increased significantly each
year since their introduction to the market.
Both products offer not just ultra-high quality and performance
but also market-leading warranties and service life, along with the
sustainable benefits and credentials that make them so attractive
in this increasingly environmentally responsible world.
Targeted segment penetration
With products that could be described as 'disruptive' to the
existing materials on offer, and with demand exceeding production
capacity, we have focused on developing the regions and product
applications to support rapid but sustainable growth. This means
targeting the product categories and use cases for which our
products are particularly well-suited, offering the most
substantial and easily understood advantages over other
materials.
The majority of our Accoya(R) sales are to a network of timber
distributors which in turn supply a variety of industries,
principally for joinery (windows and doors), decking and cladding.
Accoya(R) is primarily selected for use by architects,
manufacturers and specifiers for its high- performance
characteristics. We focus on these applications as Accoya(R) offers
particularly clear and compelling advantages over traditional
alternatives, both in material performance as well as
sustainability.
Tricoya(R) panels are currently manufactured using chipped
Accoya(R) wood, in advance of the completion of the dedicated
Tricoya(R) wood chip acetylation plant in Hull, UK. Agreements have
been secured with MEDITE and FINSA, who are expected to use the
Tricoya(R) acetylated wood elements in place of traditional wood
chip feedstock to create, market and sell Tricoya(R) panels.
Sales of Tricoya(R) panels have increased significantly each
year since MEDITE introduced them to the market in 2012, being used
both in place of 'traditional' panels and in applications where
wood panels would not have previously been feasible.
As we expand our manufacturing capacity, we will be targeting
not just development of and expansion into new regional markets,
but also into more application types as we continue to develop our
product range.
Route to market
Our focus on marketing and selling to our distributors and their
customers has been a very successful route to establish our
products in the market as we challenge traditional preconceptions
about material choice. We have built and developed strong
relationships with our distributor networks in key territories.
Through training, support and engagement with them and their
manufacturing customers, we develop brand and product advocates
throughout the value chain.
We are seeking to significantly increase the awareness of the
benefits of Accoya(R) with end users and consumers. Currently our
extended sales network with our partners and customers is a major
driver of end-user demand - expert recommendation being highly
valued in our markets - however we are already seeing evidence of
Accoya(R) in particular gaining a very positive reputation with
enthusiastic property and home owners as well. The Accoya(R) brand
was refreshed in FY2021, supported by a new website and
consumer-facing digital campaigns. The integration of our Approved
Manufacturer Programme with location- and application-based 'Where
to Buy' listings on the
new website has resulted in significantly increased throughput
of demand to vendors of Accoya(R) products: benefitting our brand,
our customers, and end-consumers. By developing our multi-channel
marketing strategy, coupled with continued close support with our
distributors and manufacturers, we will ensure that we continue to
build on our strong market position.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year
ended 31 March 2021
2021 2021 2021 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Exceptional items Exceptional items
and other and other
Note Underlying adjustments* Total Underlying adjustments* Total
Accoya (R) wood
revenue 91,095 - 91,095 82,836 - 82,836
Tricoya (R)
panel revenue 2,091 - 2,091 512 - 512
Licence revenue 419 - 419 293 3,200 3,493
Other revenue 6,198 - 6,198 7,268 - 7,268
----------------- ----- --------------------- -------------------- -------------------- ----------- ------------------- --------------------
Total revenue 3 99,803 - 99,803 90,909 3,200 94,109
Cost of sales (66,714) - (66,714) (63,402) - (63,402)
Gross profit 33,089 - 33,089 27,507 3,200 30,707
Other operating
costs 4 (28,559) 103 (28,456) (26,143) (165) (26,308)
Operating profit 8 4,530 103 4,633 1,364 3,035 4,399
Finance income 10 1 - 1 - - -
Finance expense 11 (3,250) (900) (4,150) (3,517) 626 (2,891)
Share of net
loss from joint
venture
accounted for
using the
equity method 28 (144) - (144) - - -
Profit/(Loss)
before taxation 1,137 (797) 340 (2,153) 3,661 1,508
Tax (expense) 12 (1,251) - (1,251) (454) (177) (631)
Profit/(Loss)
for the year (114) (797) (911) (2,607) 3,484 877
===================== ==================== ==================== =========== =================== ====================
Items that may
be reclassified
to profit or
loss
Gain/(loss)
arising on
translation of
foreign
operations 5 - 5 (11) - (11)
Gain/(loss)
arising on
foreign
currency cash
flow hedges - 192 192 - (280) (280)
Total other
comprehensive
income/(loss) 5 192 197 (11) (280) (291)
--------------------- -------------------- -------------------- ----------- ------------------- --------------------
Total
comprehensive
gain/(loss) for
the year (109) (605) (714) (2,618) 3,204 586
===================== ==================== ==================== =========== =================== ====================
Total
comprehensive
gain/(loss) for
the year
is attributable
to:
Owners of Accsys
Technologies
PLC 1,279 (605) 674 (1,080) 3,204 2,124
Non-controlling
interests (1,388) - (1,388) (1,538) - (1,538)
Total
comprehensive
gain/(loss) for
the year (109) (605) (714) (2,618) 3,204 586
===================== ==================== ==================== =========== =================== ====================
Basic and
diluted
profit/(loss)
per ordinary
share 14 EUR0.01 EUR0.00 EUR(0.01) EUR0.02
The notes form an integral part of these financial
statements.
* See note 5 for details of exceptional items and other
adjustments.
Accsys Technologies PLC
Consolidated statement of financial position as at 31 March
2021
Registered Company 05534340
Note 2021 2020
EUR'000 EUR'000
Non-current assets
Intangible assets 16 10,865 10,986
Investment accounted for using the equity method 28 326 -
Property, plant and equipment 17 139,557 122,123
Right of use assets 18 4,859 4,536
Financial asset at fair value through profit or loss 19 - -
155,607 137,645
----------- -----------
Current assets
Inventories 22 12,262 16,932
Trade and other receivables 23 12,314 15,308
Cash and cash equivalents 47,598 37,238
Corporation tax receivable 183 283
Derivative financial instrument 134 -
72,491 69,761
----------- -----------
Current liabilities
Trade and other payables 24 (29,810) (16,867)
Obligation under lease liabilities 18 (948) (859)
Short term borrowings 29 (9,664) (5,265)
Corporation tax payable (1,863) (640)
Derivative financial instrument - (330)
(42,285) (23,961)
----------- -----------
Net current assets 30,206 45,800
Non-current liabilities
Obligation under lease liabilities 18 (4,584) (4,262)
Other long term borrowing 29 (44,626) (52,048)
(49,210) (56,310)
----------- -----------
Net assets 136,603 127,135
=========== ===========
Equity
Share capital 25 8,466 8,114
Share premium account 189,598 186,390
Other reserves 26 114,635 112,551
Accumulated loss (213,263) (214,394)
Own shares (36) -
Foreign currency translation reserve 37 32
Capital value attributable to owners of Accsys Technologies PLC 99,437 92,693
Non-controlling interest in subsidiaries 9 37,166 34,442
Total equity 136,603 127,135
=========== ===========
The financial statements were approved by the Board of Directors
on 21 June 2021 and signed on its behalf by
Robert Harris
William Rudge Directors
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended
31 March 2021
Total equity
Foreign attributable
currency to equity
Share trans- shareholders
capital Share Other Own lation Accumula-ted of the Non-Controlling Total
Ordinary premium reserves Shares reserve Loss company interests Equity
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 01
April 2019 5,900 145,429 109,521 (9) 43 (217,424) 43,460 30,123 73,583
========= ======== ========= ======= ========= ============= ============== ================= ========
Total
comprehensive
income/(expense)
for the period - - (280) - (11) 2,415 2,124 (1,538) 586
Share based
payments - - - - - 615 615 - 615
Shares issued 2,214 - - 9 - - 2,223 - 2,223
Premium on shares
issued - 44,281 - - - - 44,281 - 44,281
Share issue costs - (3,320) - - - - (3,320) - (3,320)
Issue of
subsidiary
shares to
non-controlling
interests - - 3,310 - - - 3,310 5,857 9,167
Balance at
31 March 2020 8,114 186,390 112,551 - 32 (214,394) 92,693 34,442 127,135
========= ======== ========= ======= ========= ============= ============== ================= ========
Total
comprehensive
income/(expense)
for the period - - 192 - 5 477 674 (1,388) (714)
Share based
payments - - - - - 717 717 - 717
Shares issued 352 - - (36) - (63) 253 - 253
Premium on shares
issued - 3,215 - - - - 3,215 - 3,215
Share issue costs - (7) - - - - (7) - (7)
Issue of
subsidiary
shares to
non-controlling
interests - - 1,892 - - - 1,892 4,112 6,004
Balance at
31 March 2021 8,466 189,598 114,635 (36) 37 (213,263) 99,437 37,166 136,603
========= ======== ========= ======= ========= ============= ============== ================= ========
Share capital is the amount subscribed for shares at nominal
value (note 25).
Share premium account represents the excess of the amount
subscribed for share capital over the nominal value of these
shares, net of share issue expenses. Share issue expenses comprise
the costs in respect of the issue by the Company of new shares.
Own shares include 727,250 shares issued as part of the
Company's reward, incentivisation and retention strategy and in
light of the Coronavirus (Covid-19) pandemic, in lieu of cash
bonuses for the year ended 31 March 2020. These shares shall vest
if the employees, including the Executive Directors, remain in
employment with the Company to the vesting date, being 1 July
2021.
See note 26 for details concerning Other reserves.
Non-controlling interests relates to the investment of various
parties into Tricoya Technologies Limited and Tricoya UK Limited
(notes 9 and 27).
Foreign currency translation reserve arises on the
re-translation of the Group's USA subsidiary's net assets which are
denominated in a different functional currency, being US
dollars.
Accumulated losses represent the cumulative loss of the Group
attributable to the owners of the parent.
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March
2021
2021 2020
EUR'000 EUR'000
Profit/ (loss) before taxation before exceptional items and other adjustments 1,137 (2,153)
Adjustments for:
Amortisation of intangible assets 803 664
Depreciation of property, plant and equipment, and right of use assets 4,934 4,939
Net finance expense 3,352 3,352
Equity-settled share-based payment expenses 717 615
Accsys portion of Licence fee received from joint venture 600 -
Share of net loss of joint venture 144 -
Currency translation loss/(gains) 110 (79)
Cash inflows from operating activities before changes in working capital and exceptional
items 11,797 7,338
Exceptional Items in operating activities (see note 5) - 3,200
Cash inflows from operating activities before changes in working capital 11,797 10,538
========== ==========
(Increase) in trade and other receivables (159) (2,427)
(Decrease)/Increase in deferred income (42) 190
Decrease/(Increase) in inventories 4,670 (2,924)
Increase/(Decrease) in trade and other payables 3,864 (3,164)
Net cash generated from operating activities before tax 20,130 2,213
Tax received 71 165
Net cash from operating activities 20,201 2,378
========== ==========
Cash flows from investing activities
Interest received 5 19
Investment in property, plant and equipment (11,674) (22,040)
Foreign exchange deal settlement related to hedging of Hull Capex (258) 307
Investment in intangible assets (682) (861)
Investment in joint venture (1,070) -
Net cash (used in) investing activities (13,679) (22,575)
========== ==========
Cash flows from financing activities
Proceeds from loans - 4,500
Other finance costs (80) (79)
(Repayment of) trade facility draw down - (1,825)
Interest Paid (1,831) (2,370)
Repayment of lease liabilities (1,308) (1,022)
Repayment of loans/rolled up interest (2,474) (2,942)
Proceeds from issue of share capital 3,468 46,504
Proceeds from issue of subsidiary shares to non-controlling interests 6,004 9,167
Share issue costs (7) (3,320)
Net cash from financing activities 3,772 48,613
========== ==========
Net increase in cash and cash equivalents 10,294 28,416
Effect of exchange rate changes on cash and cash equivalents 66 (35)
Opening cash and cash equivalents 37,238 8,857
Closing cash and cash equivalents 47,598 37,238
========== ==========
The notes form an integral part of these financial
statements.
Accsys Technologies PLC
Notes to the financial statements for the year ended 31 March
2021
1. Accounting Policies
General Information
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the years
ended 31 March 2021 or 31 March 2020. Statutory accounts for the
year ended 31 March 2020 have been filed with the Registrar of
Companies and those for the year ended 31 March 2021 will be
delivered to the Registrar in due course; both have been reported
on by the auditors. The auditors' report on the Annual Report and
Financial Statements for the year ended 31 March 2020 was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006. The auditors' report on the Annual Report
and Financial Statements for the year ended 31 March 2021 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 accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
Going Concern
These consolidated financial statements are prepared on a going
concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future, and at least 12
months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have
assessed the Group's trading forecasts and working capital
requirements for the foreseeable future under a base case scenario
taking into account the Group's financial resources including the
current cash position and banking and finance facilities which are
currently in place (see note 29 for details of these facilities)
and the possible further impact of COVID-19.
The Directors have also assessed a severe but plausible downside
scenario with reduced sales volumes and lower gross margin. These
forecasts indicate that, in order to continue as a going concern,
the Group is dependent on achieving certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem with the collection of on-going working
capital items in line with internally agreed budgets.
The Directors' have also considered the possible amount and
timing of capital expenditure required to complete the Tricoya(R)
plant in Hull following the recent purported termination of the
engineering, procurement and construction contract by the main
contractor. This has been considered together with the current
expansion of the Arnhem operation and intended investment in the
USA, noting that the full forecast project costs have not yet been
committed to. There are a sufficient number of alternative actions
and measures within the control of the Group that can and would be
taken in order to ensure on-going liquidity including reducing /
deferring costs in some discretionary areas as well as larger
capital projects if necessary.
The Directors believe that while some uncertainty always
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control and
uncertainty over future cash flows in completing the Hull plant
construction as set out above, together with the continued
heightened risk that COVID-19 entails, there is sufficient
liquidity under the severe but plausible downside such that there
is no material uncertainty with respect to going concern. Therefore
the Directors believe that the going concern basis is the most
appropriate on which to prepare the financial statements.
Exceptional Items
Exceptional items are events or transactions that fall outside
the ordinary activities of the Group and which by virtue of their
size or incidence, have been separately disclosed in order to
improve a reader's understanding of the financial statements. These
include items relating to the restructuring of a significant part
of the Group, impairment losses (or the reversal of previously
recorded exceptional impairments), expenditure relating to the
integration and implementation of significant acquisitions and
other one-off events or transactions. See note 5 for details of
exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Group as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained.
As allowed under IFRS 1, some business combinations effected
prior to transition to IFRS, were accounted for using the merger
method of accounting. Under this method, assets and liabilities are
included in the consolidation at their book values, not fair
values, and any differences between the cost of investment and net
assets acquired were taken to the merger reserve. The majority of
the merger reserve arose from a corporate restructuring in the year
ended 31 March 2006 which introduced Accsys Technologies PLC as the
new holding company.
Further details concerning the Tricoya(R) Consortium are
included in note 9.
Revenue from contracts with customers
Revenue is measured at the fair value of the consideration
receivable. Revenue is recognised to the extent that it is highly
probable that a significant reversal will not occur based on the
consideration in the contract. The following specific recognition
criteria must also be met before revenue is recognised.
Manufacturing revenue
Revenue is recognised from the sale of goods and is measured at
the amount of the transaction price received in exchange for
transferring goods. The transaction price is the expected
consideration to be received, to the extent that it is highly
probable that there will not be a significant reversal of revenue
in the future. Revenue is recognised when the Group's performance
obligations under the relevant customer contract have been
satisfied. Manufacturing revenue includes the sale of Accoya(R)
wood, Tricoya(R) panels and other revenue, principally relating to
the sale of acetic acid.
Licensing fees and Marketing income
Licence fees and marketing income are recognised over the period
of the relevant agreements according to the specific terms of each
agreement or the quantities and/or values of the licensed product
sold. The accounting policy for the recognition of licence fees is
based upon satisfaction of the performance obligations set out in
the contract such as an assessment of the work required before the
licence is signed and subsequently during the design, construction
and commissioning of the licensees' plant, with an appropriate
proportion of the fee recognised upon signing and the balance
recognised as the project progresses to completion. Marketing
revenue, when the Company acts as principal, is recognised based on
the actual work completed in the period. The amount of any cash or
billings received but not recognised as income is included in the
financial statements as deferred income and shown as a
liability.
Finance income
Interest accrues using the effective interest method, i.e. the
rate that discounts estimated future cash receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset.
Finance expenses and borrowing costs
Finance expenses include the fees, interest and other finance
charges associated with the Group's loan notes and credit
facilities, which are expensed over the period that the Group has
access to the loans and facilities.
Foreign exchange gains or losses on the loan notes are included
within finance expenses.
Interest on borrowings directly relating to the construction or
production of qualifying assets are capitalised until such time as
the assets are substantially ready for their intended use or sale.
Where funds have been borrowed specifically to finance a project,
the amount capitalised represents the actual borrowing costs
incurred. Where the funds used to finance a project form part of
general borrowings, the amount capitalised is calculated using a
weighted average of rates applicable to relevant general borrowings
of the Group during the construction period.
Share based payments
The Company awards nil cost options to acquire ordinary shares
in the capital of the Company to certain Directors and employees.
The Company has also previously awarded bonuses to certain
employees in the form of the award of deferred shares of the
Company.
In addition the Company has established an Employee Share
Participation Plan under which employees subscribe for new shares
which are held by a trust for the benefit of the subscribing
employees. The shares are released to employees after one year,
together with an additional, matching share on a 1 for 1 basis.
The fair value of options and deferred shares granted are
recognised as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and is charged to
the consolidated statement of comprehensive income over the vesting
period during which the employees become unconditionally entitled
to the options or shares.
The fair value of share options granted is measured using a
modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest only where vesting is dependent upon the
satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Dividends
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders
at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension
and employee benefit schemes on behalf of its employees. These
costs are charged to the consolidated statement of comprehensive
income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the consolidated statement of
comprehensive income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date together with any adjustment to tax payable in
respect of previous years. Current tax includes the expected impact
of claims submitted by the Group to tax authorities in respect of
enhanced tax relief for expenditure on research and
development.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
-- the initial recognition of goodwill;
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination;
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date. Recognition of deferred tax assets
is restricted to the extent that it is probable that future taxable
profits will be available against which the temporary differences
can be utilised.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (the functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each Group company are expressed in Euro, which is the
functional currency of the parent Company, and the presentation
currency of the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange
prevailing on the dates of the transactions. At each reporting
date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
reporting date. Income and expense items are translated at the
average monthly exchange rates prevailing in the month in which the
transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in the
foreign currency translation reserve. Such translation differences
are reclassified to profit and loss only on disposal or partial
disposal of the overseas operation.
Foreign exchange hedging
The Group has adopted IFRS 9 hedge accounting in respect of the
cash flow hedging instruments that it uses to manage the risk of
foreign exchange movements impacting on future cash flows and
profitability.
The Group has prospectively assessed the effectiveness of its
cash flow hedging using the 'hedge ratio' of quantities of cash
held in the same currency as future foreign exchange cash flow
quantities related to committed investment in plant and equipment.
The Group has undertaken a qualitative analysis to confirm that an
'economic relationship' exists between the hedging instrument and
the hedged item. It is also satisfied that credit risk will not
dominate the value changes that result from that economic
relationship.
At the end of each reporting period the Group measures the
effectiveness of its cash flow hedging and recognises the effective
cash flow hedge results in Other Comprehensive Income and the
Hedging Effectiveness Reserve within Equity, together with its
ineffective hedge results in Profit and Loss. Amounts are
reclassified from the Hedging Effectiveness Reserve to Profit and
Loss when the associated hedged transaction affects Profit and
Loss. Further details are included in note 5.
Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and the
Group will comply with the attached conditions. When the grant
relates to an expense item, it is recognised as income over the
period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. Where the grant relates to
an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected
useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration paid
and the fair value of the identifiable assets and liabilities
acquired. It is capitalised, and is subject to annual impairment
reviews by the Directors. Any impairment arising is charged to the
consolidated statement of comprehensive income. Where the fair
value of the identifiable assets and liabilities acquired is
greater than the fair value of consideration paid, the resulting
amount is treated as a gain on a bargain purchase and is recognised
in the consolidated statement of comprehensive income.
Joint venture
The Group has entered into a joint venture agreement with
Eastman Chemical Company, forming Accoya USA LLC. The Group applies
IFRS 11 for this joint arrangement, and following assessment of the
nature of this joint arrangement, has determined it to be a joint
venture. Interest in the joint venture is accounted for using the
equity method, after initially being recognised at cost.
Further details concerning the Accoya USA LLC joint venture with
Eastman Chemical Company are included in note 28.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any
amounts by which the carrying value is assessed during an annual
review to have been impaired. At present, the useful economic life
of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's
activities including new processes, process improvements,
identifying new species and improving the Group's existing
products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38
'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to
generate future economic benefits, ability to complete the
development and ability to reliably measure the expenditure) have
been met. These internal development costs are amortised on a
straight line basis over their useful economic life, between 8 and
20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of
bringing the asset to the working condition and location of its
intended use. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset, except
freehold land, over its expected useful life on a straight line
basis, as follows:
Plant and machinery These assets comprise pilot plants and
production facilities. These facilities are depreciated from the
date they become available for use over their useful lives of
between 5 and 20 years
Office equipment Useful life of between 3 and 5 years
Leased land and buildings Land held under a finance lease is
depreciated over the life of the lease
Freehold land Freehold land is not depreciated
Impairment of non-financial assets
The carrying amount of non-current non-financial assets of the
Group is compared to the recoverable amount of the assets whenever
events or changes in circumstances indicate that the net book value
may not be recoverable, or in the case of goodwill, annually. The
recoverable amount is the higher of value in use and the fair value
less cost to sell. In assessing the value in use, the expected
future cash flows from the assets are determined by applying a
discount rate to the anticipated pre-tax future cash flows. An
impairment charge is recognised in the consolidated statement of
comprehensive income to the extent that the carrying amount exceeds
the assets' recoverable amount. The revised carrying amounts are
amortised or depreciated in line with Group accounting policies. A
previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the consolidated
statement of comprehensive income and is limited to the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognised in prior years. Assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units) for purposes of assessing
impairment.
Leases
To the extent that a right-of-control exists over an asset
subject to a lease, a right-of-use asset, representing the Group's
right to use the underlying leased asset, and a lease liability,
representing the Group's obligation to make lease payments, are
recognised in the consolidated statement of financial position at
the commencement of the lease.
The right-of-use asset is measured initially at cost and
includes the amount of initial measurement of the lease liability,
any initial direct costs incurred, including advance lease
payments, and an estimate of the dismantling, removal and
restoration costs required in terms of the lease. Depreciation is
charged to the consolidated income statement so as to depreciate
the right-of-use asset from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The lease term shall include the period of an
extension option where it is reasonably certain that the option
will be exercised. Where the lease contains a purchase option the
asset is written off over the useful life of the asset when it is
reasonably certain that the purchase option will be exercised.
The lease liability is measured at the present value of the
future lease payments, including variable lease payments that
depend on an index and the exercise price of purchase options where
it is reasonably certain that the option will be exercised,
discounted using the interest rate implicit in the lease, if
readily determinable. If the implicit interest rate cannot be
readily determined, the lessee's incremental borrowing rate is
used. Finance charges are recognised in the consolidated income
statement over the period of the lease.
Lease expenses for leases with a duration of one year or less
and low-value assets are not recognised in the consolidated
statement of financial position, and are charged to the
consolidated income statement when incurred. Low-value assets are
determined based on quantitative criteria.
The Group has used the following practical expedients permitted
by the standard:
- The use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
- Reliance on previous assessments on whether leases are onerous
- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
Inventories
Raw materials, which consist of unprocessed timber and chemicals
used in manufacturing operations, are valued at the lower of cost
and net realisable value. The basis on which cost is derived is a
first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the
lower of weighted average cost of production or net realisable
value. Costs include direct materials, direct labour costs and
production overheads (excluding the depreciation/depletion of
relevant property and plant and equipment) absorbed at an
appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to
completion and costs to be incurred in selling and
distribution.
Fair value measurement
Assets and liabilities that are measured at fair value, or where
the fair value of financial instruments has been disclosed in notes
to the
financial statements, are based on the following fair value
measurement hierarchy:
- level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices); and
- level 3 - inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
Specific valuation methodologies used to value financial
instruments include:
- the fair values of foreign exchange contracts are calculated
as the present value of expected future cash flows based on
observable yield curves and exchange rates; and
- other techniques, including discounted cash flow analysis, are
used to determine the fair values of other financial
instruments
Financial assets
Financial assets and financial liabilities are recognised in the
Group's consolidated statement of financial position when the Group
becomes party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value and in the
case of investments not at fair value through profit or loss, fair
value plus directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted
shares held by the Group are classified as fair value through other
comprehensive income and are stated at fair value. Gains and losses
arising from changes in fair value are recognised directly in other
comprehensive income, with dividends recognised in profit or loss.
Where it is not possible to obtain a reliable fair value, these
investments are held at cost less provision for impairment.
Loans and receivables, which comprise non-derivative financial
assets with fixed and determinable payments that are not quoted on
an active market, are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
Trade receivables are initially recognised at fair value and are
subsequently measured at amortised cost using the effective
interest rate method, less allowance for impairments. The Group has
elected to apply the IFRS 9 practical expedient option to measure
the value of its trade receivables at transaction price, as they do
not contain a significant financing element. The Group applies IFRS
9's 'simplified' approach that requires companies to recognise the
lifetime expected losses on its trade receivables. At the date of
initial recognition, the credit losses expected to arise over the
lifetime of a trade receivable are recognised as an impairment and
are adjusted, over the lifetime of the receivable, to reflect
objective evidence reflecting whether the Group will not be able to
collect its debts.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of
financial position comprise cash at bank and in hand and short-term
deposits, including liquidity funds, with an original maturity of
three months or less. For the purpose of the statement of
consolidated cash flow, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially
recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Loans and other borrowings are initially recognised at the fair
value of amounts received net of transaction costs and subsequently
measured at amortised cost using the effective interest method.
There have been no modifications to the terms of the Group's loan
agreements requiring disclosure under IFRS 9.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's shares are classified as equity
instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive Officer. The
Chief Executive Officer is responsible for allocating resources and
assessing performance of the operating segments and has been
identified as steering the committee that makes strategic
decisions.
Alternative Performance Measures
The Group presents certain measures of financial performance,
position or cash flows in the Annual Report and financial
statements that are not defined or specified according to IFRS
(International financial reporting standards). These measures,
referred to as Alternative Performance Measures (APMs), are
prepared on a consistent basis for all periods presented in this
report.
The most significant APMs are:
Net debt
A measure comprising short term and long-term borrowings
(including lease obligations) less cash and cash equivalents. Net
debt provides a measure of the Group's net indebtedness or overall
leverage.
Underlying EBITDA
Operating profit/(loss) before Exceptional items and other
adjustments, depreciation and amortisation and includes the Group's
attributable share of our USA joint venture's underlying EBITDA.
Underlying EBITDA provides a measure of the cash-generating ability
of the business that is comparable from year to year.
Underlying EBIT
Operating profit/(loss) before Exceptional items and other
adjustments and includes the Group's attributable share of our USA
joint venture's underlying EBIT. Underlying EBIT provides a measure
of the operating performance that is comparable from year to
year.
Effective interest rate
Net interest expense (excluding capitalisation of interest)
expressed as a percentage of trailing 13-month average net debt
provides a measure of the cost of borrowings.
Net Debt / Underlying EBITDA
Net debt divided by trailing 12-month underlying EBITDA. A
measure of the Group's net indebtedness relative to its
cash-generating ability.
Accoya(R) Manufacturing margin
Accoya(R) segmental underlying gross profit excluding Accoya(R)
underlying licence revenue and marketing services expressed as a
percentage over Accoya(R) segmental total revenue excluding
Accoya(R) underlying licence revenue and marketing services.
Accoya(R) Manufacturing margin provides a measure of the
profitability of the Accoya(R) operations relative to revenue.
2. Accounting judgements and estimates
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Accounting estimates
Goodwill
The Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated above.
The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations
require the use of judgements in relation to discount rates and
future forecasts (See note 16 & 17). The recoverability of
these balances is dependent upon the level of future licence fees
and manufacturing revenues. While the scope and timing of the
production facilities to be built under the Group's existing and
future agreements remains uncertain, the Directors remain confident
that revenue from own manufacturing, existing licensees, new
licence or consortium agreements will be generated, demonstrating
the recoverability of these balances.
Intellectual property rights (IPR) and property, plant and
equipment
The Group tests the carrying amount of the intellectual property
rights and property, plant and equipment whenever events or changes
in circumstances indicate that the net book value may not be
recoverable. These calculations require the use of estimates in
respect of future cash flows from the assets by applying a discount
rate to the anticipated pre-tax future cash flows. Within this
process, the Group makes a number of key assumptions including
operating margins, discount rates, terminal growth rates and
forecast cash flows. Additional information is disclosed in note 16
& 17, which highlights the estimates applied in the
value-in-use calculations for those CGUs that are considered most
susceptible to changes in key assumptions and the sensitivity of
these estimates. The Group also reviews the estimated useful lives
at the end of each annual reporting period (See note 16 & 17).
The price of Accoya(R) wood and the raw materials and other inputs
vary according to market conditions outside of the Group's control.
Should the price of the raw materials increase greater than the
sales price or in a way which no longer makes Accoya(R)
competitive, then the carrying value of the property, plant and
equipment or IPR may be in doubt and become impaired. The Directors
consider that the current market and best estimates of future
prices mean that this risk is limited.
Useful economic lives of property, plant and equipment
The annual depreciation charge for property, plant and equipment
is sensitive to changes in the estimated useful economic lives and
residual values of the assets. The useful economic lives and
residual values are reassessed annually. They are amended when
necessary to reflect current estimates, based on technological
advancement, future investments, economic utilisation and the
physical condition of the assets. See note 17 for the carrying
amount of the property plant and equipment, and note 1 for the
useful economic lives for each class of assets.
Inventories
The Group reviews the net realisable value of, and demand for,
its inventory on a monthly basis to provide assurance that recorded
inventory is stated at the lower of cost and net realisable value
after taking into account the age and condition of inventory.
Commercial negotiations
The Group is party to a number of commercial negotiations in the
ordinary course of business, including with relation to
construction of the Hull plant. Management consults with internal
and external experts, and utilises its best estimate to account for
any relevant financial effect from these negotiations (including
the value of amounts to be capitalised and any payables or
provisions required to settle such negotiations), when they become
apparent.
Accounting judgements
In preparing the Consolidated Financial Statements, management
has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical
judgements that have been made in arriving at the amounts
recognised in the Consolidated Financial Statements and the key
sources of uncertainty that have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities
in the next financial year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of fee
income from licensees over the period of the agreement and is
satisfied that the recognition of such revenue is appropriate. The
recognition of fees is based upon satisfaction of the performance
obligations set out in the contract such as an assessment of the
work required before the licence is signed and subsequently during
the 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. Revenue is recognised to the extent
that it is highly probable that a significant reversal will not
occur.
Financial asset at fair value through profit or loss
The Group has an investment in listed equity shares carried at
nil fair value as a reliable fair value cannot be obtained since
there is no active market for the shares and there is currently
uncertainty around the future funding of the business. The Group
makes appropriate enquiries and considers all of the information
available to it in order to determine the fair value (See note
19).
Consolidation of subsidiaries
The Group considers all relevant facts and circumstances when
assessing whether it meets the IFRS 10 requirements to consolidate
Tricoya Technologies Limited (TTL) and Tricoya UK Limited (Tricoya
UK). The Group has consolidated the results of TTL and Tricoya UK
as subsidiaries, as it exercises the power to govern the entities
in accordance with IFRS 10. See note 9.
Joint venture
The Group considers all relevant facts and circumstances when
assessing whether it meets the IFRS 11 requirements to account for
Accoya USA LLC as a joint venture. The Group has equity accounted
for Accoya USA LLC within these financial statements. See note
28.
New standards and interpretations in issue at the date of
authorisation of these financial statements:
New standards, amendments and interpretations
The following amendments to Standards and a new Interpretation
have been adopted for the financial year beginning on 1 April
2020:
-- Definition of Material - Amendments to IAS 1 and IAS 8;
-- Definition of Business - Amendments to IFRS 3;
-- Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7; and
-- Revised Conceptual Framework for Financial Reporting
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
New standards, amendments and interpretations not yet
adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 March 2021 reporting
periods and have not been early adopted by the Group. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable
future transactions.
3. Segmental reporting
The Group's business is the manufacturing of and development,
commercialisation and licensing of the associated proprietary
technology for the manufacture of Accoya(R) wood, Tricoya(R) wood
elements and related acetylation technologies. Segmental reporting
is divided between corporate activities, activities directly
attributable to Accoya(R) , to Tricoya(R) or research and
development activities.
Accoya(R)
Accoya (R) Segment
----------------------------------------------------------------------------------------------------
Year ended 31 Year ended 31 Year ended 31 Year ended 31
March 2021 Year ended 31 March 2021 March 2020 Year ended 31 March 2020
March 2021 March 2020
Exceptional Exceptional
items & Other items & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R) wood
revenue 91,095 - 91,095 82,836 - 82,836
Licence revenue 400 - 400 5 3,200 3,205
Other revenue 6,142 6,142 7,187 - 7,187
Total Revenue 97,637 - 97,637 90,028 3,200 93,228
Cost of sales (64,713) - (64,713) (62,878) - (62,878)
Gross profit 32,924 - 32,924 27,150 3,200 30,350
Other operating
costs (15,725) - (15,725) (14,527) - (14,527)
Other Gain - - - - - -
Profit from
operations 17,199 - 17,199 12,623 3,200 15,823
=============== ============== =============== =============== ============== ===============
Profit from
operations 17,199 - 17,199 12,623 3,200 15,823
Accoya(R) USA
EBITDA (144) - - - - -
EBIT 17,055 - 17,199 12,623 3,200 15,823
--------------- -------------- --------------- --------------- -------------- ---------------
Depreciation
and
amortisation 4,371 - 4,371 4,323 - 4,323
--------------- -------------- --------------- --------------- -------------- ---------------
EBITDA 21,426 - 21,570 16,946 3,200 20,146
---------------- --------------- -------------- --------------- --------------- -------------- ---------------
Revenue includes the sale of Accoya(R) , licence income and
other revenue, principally relating to the sale of acetic acid and
other licensing related income.
All costs of sales are allocated against manufacturing
activities in Arnhem unless they can be directly attributable to a
licensee. Other operating costs include all costs associated with
the operation of the Arnhem manufacturing site, including directly
attributable administration, sales and marketing costs.
See note 5 for explanation of Exceptional items and other
adjustments.
Average headcount = 140 (2020: 130)
The below table shows details of reconciling items to show both
Accoya(R) EBITDA and Accoya(R) Manufacturing gross profit, both
including and excluding licence and licensing related income, which
has been presented given the inclusion of items which can be more
variable or one-off.
2021 2020
EUR'000 EUR'000
Accoya (R) segmental underlying EBITDA 21,426 16,946
-------- --------
Accoya (R) underlying Licence revenue (400) (5)
Other income, predominantly for marketing services - (168)
Accoya (R) segmental underlying EBITDA (excluding. Licence Income) 21,026 16,773
======== ========
Accoya (R) segmental underlying gross profit 32,924 27,150
-------- --------
Accoya (R) underlying Licence revenue (400) (5)
Other income, predominantly for marketing services - (168)
Accoya (R) manufacturing gross profit 32,524 26,977
======== ========
Accoya (R) Manufacturing Margin 33.4% 30.0%
Tricoya(R)
Tricoya (R) Segment
----------------------------------------------------------------------------------------------------
Year ended 31 Year ended 31 Year ended 31 Year ended 31
March 2021 Year ended 31 March 2021 March 2020 Year ended 31 March 2020
March 2021 March 2020
Exceptional Exceptional
items & Other items & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Tricoya(R)
panel revenue 2,091 - 2,091 512 - 512
Licence revenue 19 - 19 288 - 288
Other revenue 56 - 56 81 - 81
Total Revenue 2,166 - 2,166 881 - 881
Cost of sales (2,001) - (2,001) (524) - (524)
Gross profit 165 - 165 357 - 357
Other operating
costs (3,668) 103 (3,565) (3,607) (165) (3,772)
Loss from
operations (3,503) 103 (3,400) (3,250) (165) (3,415)
=============== ============== =============== =============== ============== ===============
Loss from
operations (3,503) 103 (3,400) (3,250) (165) (3,415)
Depreciation
and
amortisation 563 - 563 397 - 397
--------------- -------------- --------------- --------------- -------------- ---------------
EBITDA (2,940) 103 (2,837) (2,853) (165) (3,018)
---------------- --------------- -------------- --------------- --------------- -------------- ---------------
Revenue and costs are those attributable to the business
development of the Tricoya(R) process and establishment of
Tricoya(R) Hull Plant.
See note 5 for explanation of Exceptional items and other
adjustments.
Average headcount = 22 (2020: 17), noting a substantial
proportion of the costs to date have been incurred via recharges
from other parts of the Group or have resulted from
contractors.
Corporate
Corporate Segment
----------------------------------------------------------------------------------------------------
Year ended 31 Year ended 31 Year ended 31 Year ended 31
March 2021 Year ended 31 March 2021 March 2020 Year ended 31 March 2020
March 2021 March 2020
Exceptional Exceptional
items & Other items & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R) wood
revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating
costs (8,048) - (8,048) (6,786) - (6,786)
Other Gain - - - - - -
Loss from
operations (8,048) - (8,048) (6,786) - (6,786)
=============== ============== =============== =============== ============== ===============
Loss from
operations (8,048) - (8,048) (6,786) - (6,786)
Depreciation
and
amortisation 715 - 715 731 - 731
--------------- -------------- --------------- --------------- -------------- ---------------
EBITDA (7,333) - (7,333) (6,055) - (6,055)
---------------- --------------- -------------- --------------- --------------- -------------- ---------------
Corporate costs are those costs not directly attributable to
Accoya(R) , Tricoya(R) or Research and Development activities. This
includes management and the Group's corporate and general
administration costs including the head office in London. See note
5 for explanation of Exceptional items and other adjustments.
Average headcount = 29 (2020: 23)
Research and Development
Research & Development Segment
----------------------------------------------------------------------------------------------------
Year ended 31 Year ended 31 Year ended 31 Year ended 31
March 2021 Year ended 31 March 2021 March 2020 Year ended 31 March 2020
March 2021 March 2020
Exceptional Exceptional
items & Other items & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya(R) wood
revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating
costs (1,118) - (1,118) (1,223) - (1,223)
Loss from
operations (1,118) - (1,118) (1,223) - (1,223)
=============== ============== =============== =============== ============== ===============
Loss from
operations (1,118) - (1,118) (1,223) - (1,223)
Depreciation
and
amortisation 88 - 88 152 - 152
EBITDA (1,030) - (1,030) (1,071) - (1,071)
---------------- --------------- -------------- --------------- --------------- -------------- ---------------
Research and Development costs are those associated with the
Accoya(R) and Tricoya(R) processes. Costs exclude those which have
been capitalised in accordance with IFRS (see note 16).
Average headcount = 9 (2020: 9)
Total
Total
----------------------------------------------------------------------------------------------------
Year ended 31 Year ended 31 Year ended 31 Year ended 31
March 2021 Year ended 31 March 2021 March 2020 Year ended 31 March 2020
March 2021 March 2020
Exceptional Exceptional
items & Other items & Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Accoya (R)
/Tricoya (R)
revenue 93,186 - 93,186 83,348 - 83,348
Licence revenue 419 - 419 293 3,200 3,493
Other revenue 6,198 - 6,198 7,268 - 7,268
Total Revenue 99,803 - 99,803 90,909 3,200 94,109
Cost of sales (66,714) - (66,714) (63,402) - (63,402)
Gross profit 33,089 - 33,089 27,507 3,200 30,707
Other operating
costs (28,559) 103 (28,456) (26,143) (165) (26,308)
--------------- -------------- --------------- --------------- -------------- ---------------
Profit from
operations 4,530 103 4,633 1,364 3,035 4,399
=============== ============== =============== =============== ============== ===============
Finance income 1 - 1 - - -
Finance expense (3,250) (900) (4,150) (3,517) 626 (2,891)
Investment in
joint venture (144) - (144) - - -
Profit/(Loss)
before
taxation 1,137 (797) 340 (2,153) 3,661 1,508
=============== ============== =============== =============== ============== ===============
See note 5 for details of Exceptional items and other
adjustments.
Reconciliation of
underlying
earnings
Year ended Year ended Year ended
31 March 31 March Year ended 31 31 March
2021 2021 Year ended 31 March 2020 2020 Year ended 31
Exceptional March 2021 Exceptional March 2020
items & items &
Other Other
Underlying Adjustments TOTAL Underlying Adjustments TOTAL
------------- ------------- -------------- -------------- ------------- --------------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Profit from
operations 4,530 103 4,633 1,364 3,035 4,399
Accoya(R) USA
EBITDA (144) - - - - -
EBIT 4,386 103 4,633 1,364 3,035 4,399
------------- ------------- -------------- -------------- ------------- --------------
Depreciation and
amortisation 5,737 - 5,737 5,603 - 5,603
EBITDA 10,123 103 10,370 6,967 3,035 10,002
============= ============= ============== ============== ============= ==============
Analysis of Revenue by geographical area of customers: 2021 2020
EUR'000 EUR'000
UK and Ireland 41,890 39,208
Rest of Europe 27,187 24,962
Americas 13,170 10,949
Benelux 9,701 8,510
Asia-Pacific 7,360 6,293
Rest of World 495 987
99,803 90,909
======== ========
Revenue generated from two customers exceeded 10% of Group
revenue of 2021. These two customers represented 36% & 40% of
the revenue from the United Kingdom and Ireland, relating to
Accoya(R) revenue. Revenue generated from three customers exceeded
10% of Group revenue of 2020. This included 62% of the revenue from
the rest of Europe and relates to a mixture of Accoya(R) ,
Licensing, and Other Revenue. In addition, two other customers
represented 33% and 35% respectively, of the revenue from the
United Kingdom and Ireland and relate to Accoya(R) revenue.
Assets and liabilities on a segmental basis:
Accoya Tricoya Accoya Tricoya
(R) (R) Corporate R&D TOTAL (R) (R) Corporate R&D TOTAL
2021 2021 2021 2021 2021 2020 2020 2020 2020 2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 64,994 85,696 4,620 297 155,607 62,143 70,638 4,773 91 137,645
--------- --------- --------- ------- --------- --------- -------- --------- ------- ---------
Current assets 34,752 13,134 19,567 5,038 72,491 38,777 10,896 15,330 4,758 69,761
--------- --------- --------- ------- --------- --------- -------- --------- ------- ---------
Current liabilities (16,706) (18,933) (6,576) (70) (42,285) (11,692) (9,407) (2,833) (29) (23,961)
--------- --------- --------- ------- --------- --------- -------- --------- ------- ---------
Net current
assets/(liabilities) 18,046 (5,799) 12,991 4,968 30,206 27,085 1,489 12,497 4,729 45,800
Non-current
liabilities (21,798) (9,990) (17,262) (160) (49,210) (27,740) (8,727) (19,843) - (56,310)
--------- --------- --------- ------- --------- --------- -------- --------- ------- ---------
Net
assets/(liabilities) 61,242 69,907 349 5,105 136,603 61,488 63,400 (2,573) 4,820 127,135
========= ========= ========= ======= ========= ========= ======== ========= ======= =========
Analysis of non-current assets (Other than financial assets and deferred tax): 2021 2020
EUR'000 EUR'000
UK 90,344 75,435
Other countries 61,032 57,979
Un-allocated - Goodwill 4,231 4,231
155,607 137,645
======== ========
The segmental assets in the current year were predominantly held
in the UK and mainland Europe (Prior Year UK and mainland Europe).
Additions to property, plant, equipment and intangible assets in
the current year were predominantly incurred in the UK and mainland
Europe (Prior Year UK and mainland Europe). There are no
significant intersegment revenues.
4. Other operating costs
Other operating costs consist of the operating costs, other than
the cost of sales, associated with the operation of the plant in
Arnhem, the offices in Dallas and London and certain pre-operating
costs associated with the plant in Hull:
2021 2020
EUR'000 EUR'000
Sales and marketing 3,847 3,295
Research and development 1,030 1,071
Other operating costs 6,013 6,742
Administration costs 11,932 9,432
Exceptional Items and other adjustments (103) 165
Other operating costs excluding depreciation and amortisation 22,719 20,705
======== ========
Depreciation and amortisation 5,737 5,603
Total other operating costs 28,456 26,308
======== ========
Administrative costs include costs associated with Business
Development and Legal departments, Intellectual Property as well as
Human Resources, IT, Finance, Management and General Office and
includes the costs of the Group's head office costs in London and
the US Office in Dallas.
The total cost of EUR22,719,000 in the current period includes
EUR3,002,000 in respect of the Tricoya (R) segment, compared to
EUR3,375,000 in the previous year.
Group average headcount increased from 179 in the year to 31
March 2020, to 199 in the year to 31 March 2021.
During the period, EUR682,000 (2020: EUR860,000) of internal
development & patent related costs were capitalised and
included in intangible fixed assets, including EUR524,000 (2020:
EUR701,000) which were capitalised within Tricoya Technologies
Limited ('TTL'). In addition EUR336,000 of internal costs have been
capitalised in relation to our current Arnhem Accoya(R) plant
expansion project (2020: EUR204,000) and EUR38,000 of internal
costs have been capitalised in relation to our plant build in Hull,
UK (2020: EUR44,000). Both are included within tangible fixed
assets.
5. Exceptional items and other adjustments
2021 2020
EUR'000 EUR'000
Cerdia contract termination fee - Licence revenue - 3,200
Total exceptional items - 3,200
-------- --------
Foreign exchange differences arising on Tricoya (R) & Corporate cash held - Operating costs 103 (165)
Foreign exchange differences arising on Loan Notes - incl. in Finance expense (900) 626
Foreign exchange differences on Tricoya (R) & Corporate cash held - Other comprehensive
income/(loss) 18 (96)
Revaluation of FX forwards used for cash-flow hedging - Other comprehensive income/(loss) 174 (184)
Total other adjustments (605) 181
-------- --------
Tax on exceptional items and other adjustments - (177)
Total exceptional items and other adjustments (605) 3,204
======== ========
Exceptional Items
During the year, the Group received Government grants relating
to the COVID-19 response, of which EUR460,000 was received in the
Netherlands (Netherlands NOW scheme), and EUR135,000 in the UK (UK
Coronavirus job retention scheme). In the interim results, these
amounts were recognised as Exceptional income. It was decided
before the reporting date, given the overall performance of the
Group in the year, to repay both of the Government grants received,
with the exceptional income reversed.
In the prior year, the exceptional licence fee revenue of
EUR3.2m resulted from the early termination of the Cerdia
commercial agreements. This amount previously included in
receivables was recorded as a reduction to net debt from 1st April
2020, with the fee offset against our loan held with Cerdia which
continues.
Other Adjustments
Foreign exchange differences in the Tricoya(R) segment have
occurred due to pounds sterling held within the consortium for the
ongoing Hull plant build and to a lesser extent, pounds sterling
held within the Corporate segment for future sterling corporate
costs. The Group has mitigated this currency exchange risk by
adopting hedge accounting under IFRS 9, Financial Instruments. The
effective portion of the foreign exchange movement is recognised in
other comprehensive income, with the ineffective portion recognised
in Operating costs.
Foreign exchange differences also arise on the pounds sterling
denominated loan notes, entered into in a prior period (see note
29). These exchange rate differences are included as finance
expenses.
6. Employees
2021 2020
EUR'000 EUR'000
Staff costs (including Directors) consist of:
Wages and salaries 14,394 12,249
Social security costs 2,206 1,768
Other pension costs 1,008 894
Share based payments 869 537
18,477 15,448
======== ========
The average monthly number of employees, including Executive Directors, during the year was
as follows:
2021 2020
Sales and marketing, administration, research and engineering 112 99
Operating 87 80
199 179
===== =====
7. Directors' remuneration
2021 2020
EUR'000 EUR'000
Directors' remuneration consists of:
Directors' emoluments 1,187 1,443
Company contributions to money purchase pension schemes 41 49
1,228 1,492
======== ========
Compensation of key management personnel included the following
amounts:
2021 2020
Salary, bonus and short term benefits Pension Share based payments charge Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Rob Harris 553 26 33 612 224
William Rudge 314 15 61 390 306
Paul Clegg(1) - - - - 680
867 41 94 1,002 1,210
====================================== ======== ============================ ======== ========
The Group made contributions to 1 (2020: 2) Director's personal
pension plan, with Robert Harris receiving cash in lieu of
pension.
The figures in the above table are impacted by foreign exchange
noting that the remuneration for R Harris and W Rudge are
denominated in Pounds Sterling.
(1) Paul Clegg's amounts above for 2020 represent the
remuneration received for the period to 31 December 2019, when he
resigned as a Director.
8. Operating profit
2021 2020
EUR'000 EUR'000
This has been arrived at after charging/(crediting):
Staff costs 18,477 15,448
Depreciation of property, plant and equipment, and right of use assets 4,934 4,939
Amortisation of intangible assets 803 664
Operating lease rentals 32 28
Foreign exchange (gains) 110 (81)
Research & Development (excluding staff costs) 524 624
Fees payable to the Company's auditors for the audit of the Group's annual financial
statements 73 78
Fees payable to the Company's auditors for other services:
- audit of the Company's subsidiaries pursuant to legislation 84 71
- audit related assurance services 34 26
Fees payable to Component auditor for audit of subsidiaries: 98 93
- other audit related services 14 -
-------- --------
Total audit and audit related services: 303 268
In addition to the above, in the year ended 31 March 2020, fees
of EUR273,000 related to the working capital review for the
December 2019 equity fundraise were paid to the Company's external
auditors. These fees were accounted for in Share Premium as Share
issue costs.
9. Tricoya Technologies Limited
Tricoya Technologies Limited ("TTL") was incorporated in order
to develop and exploit the Group's Tricoya(R) technology for use
within the worldwide panel products market, which is estimated to
be worth more than EUR60 billion annually.
On 29 March 2017 the Group announced the entry into and
successful completion of its agreements for the financing,
construction and operation of the world's first Tricoya(R) wood
elements acetylation plant in Hull with its TTL consortium
investors, being BP, MEDITE, BGF and Volantis.
The Hull plant will have a targeted production capacity of
30,000 metric tonnes per annum (sufficient to manufacture 40,000
cubic metres of panels) and scope to expand.
Structurally, Accsys, BP Ventures, MEDITE, BGF and Volantis have
invested into TTL in 2017. TTL has then invested, alongside BP
Chemicals and MEDITE, in Tricoya UK Limited ("Tricoya UK"), a
special purpose subsidiary of TTL that will construct, own and
operate the Hull Plant. The company changed its name from Tricoya
Ventures UK Limited to Tricoya UK Limited on 3rd September
2020.
INEOS Acetyls Investments Limited ("INEOS") acquired BP
Ventures' share capital of TTL and BP Chemicals share capital of
Tricoya UK on 31 December 2020.
INEOS (through acquiring BP's share of TTL & Tricoya UK)
have invested EUR31.8 million in the Tricoya(R) Project, including
EUR23.3 million as equity in Tricoya UK and EUR8.5 million as
equity in TTL. All funding was received by 31 March 2021, with
EUR2.4m being received in the year ended 31 March 2021.
MEDITE have invested EUR15.0 million in the Tricoya(R) Project,
including EUR8.4 million as equity in TTL and EUR6.6 million as
equity in Tricoya UK. All funding was received by 31 March 2021,
with EUR3.0m being received in the year ended 31 March 2021. A
further 495,310 TTL shares were issued as a result of MEDITE
continuing to seed the market with Tricoya(R) panels ensuring
continued market development ahead of the completion of the Hull
Plant.
In the period to 31 March 2021, the Group's shareholding in TTL
decreased from 77.8% to 76.5% which included a further investment
of EUR4.5m.
In the year ended 31 March 2017, BGF and Volantis invested an
aggregate of GBP19.0 million as financial investors into both the
Group and TTL. BGF and Volantis invested on similar terms but are
investing separately, with BGF accounting for 65% of the GBP19.0
million total.
In the year ended 31 March 2017, Tricoya UK entered a six-year
EUR17.2 million finance facility agreement with Natwest Bank plc
(formerly called The Royal Bank of Scotland PLC) in respect of the
construction and operation of the Hull Plant. As at 31 March 2021
the Group have utilised EUR9.3m (2020: EUR8.7m) of the
facility.
The Group has consolidated the results of TTL and Tricoya UK as
subsidiaries, as it exercises the power to govern the entities in
accordance with IFRS 10. The non-controlling interests in both
entities have been recognised in these Group financial
statements.
The "TTL Group" income statement and balance sheet, consisting
of TTL and its subsidiary Tricoya UK, are set out below:
TTL Group income statement:
Consolidated Consolidated
2021 2020
EUR'000 EUR'000
Revenue 2,178 881
Cost of sales (1,999) (538)
Gross profit 179 343
Operating costs:
Staff costs (2,582) (2,879)
Research & development (excluding staff costs) (217) (228)
Intellectual Property (255) (203)
Sales & marketing (122) (388)
Depreciation & Amortisation (563) (397)
EBIT (3,560) (3,752)
============= =============
EBIT attributable to Accsys shareholders (2,172) (2,214)
============= =============
TTL Group balance sheet:
2021 2020
EUR'000 EUR'000
Non-current assets
Intangible assets 4,376 4,216
Property, plant and equipment 79,999 65,557
Right of use assets 1,321 865
85,696 70,638
---------- ----------
Current assets
Receivables due within one year 1,232 2,378
Inventory - 53
Cash and cash equivalents 11,464 8,399
FX Derivative Asset 134 -
12,830 10,830
---------- ----------
Current liabilities
Trade and other payables (20,159) (10,419)
FX Derivative Liability - (330)
Net current assets (7,329) 82
Non-current liabilities
Other long term borrowing (8,955) (8,284)
(8,955) (8,284)
Net assets 69,412 62,435
---------- ----------
Value attributable to Accsys Technologies 32,246 27,993
========== ==========
Value attributable to Non-controlling interest 37,166 34,442
========== ==========
TTL Group cash flows:
2021 2020
EUR'000 EUR'000
Cash flows from operating activities (841) (2,417)
Cash flows from investing activities (6,400) (19,178)
Cash flows from financing activities 10,306 23,104
Net increase/(decrease) in cash and cash equivalents 3,065 1,509
========= ==========
10. Finance income
2021 2020
EUR'000 EUR'000
Interest receivable on bank and other deposits* 1 -
*EUR5,000 interest received in the year ended 31 March 2021 (31
March 2020: EUR19,000) in relation to cash balances held in Tricoya
UK Ltd was netted off with borrowing costs incurred, with the net
borrowing cost amount related to the Hull project capitalised and
included within property, plant and equipment.
11. Finance expense
2021 2020
EUR'000 EUR'000
Arnhem land and buildings lease finance charge 187 200
Foreign exchange loss/(gain) on loan notes 900 (626)
Interest on loans 2,767 3,108
Interest on lease liabilities 296 209
4,150 2,891
======== ========
12. Tax expense
2021 2020
EUR'000 EUR'000
(a) Tax recognised in the statement of comprehensive income comprises:
Current tax charge
UK Corporation tax on losses for the year - -
Research and development tax expense in respect of current year 24 28
24 28
Overseas tax at rate of 15% 11 (30)
Overseas tax at rate of 25% 1,216 633
Deferred Tax
Utilisation of deferred tax asset - -
Total tax charge reported in the statement of comprehensive income 1,251 631
======== ========
2021 2020
EUR'000 EUR'000
(b) The tax charge for the period is higher than the standard rate of
corporation tax in the UK (2021 & 2020: 19%) due to:
Profit/(Loss) before tax 340 1,508
Expected tax charge at 19% (2020 - 19%) 65 287
Expenses not deductible in determining taxable profit 153 116
Over provision in respect of prior years - (41)
Tax losses for which no deferred income tax asset was recognised 880 135
Effects of overseas taxation 130 106
Research and development tax charge in respect of prior years 79 129
Research and development tax (credit) in respect of current year (56) (101)
Total tax charge reported in the statement of comprehensive income 1,251 631
======== ========
Deferred taxes at the balance sheet date have been measured
using these enacted tax rates and reflected in these financial
statements.
13. Dividends Paid
2021 2020
EUR'000 EUR'000
Final Dividend EURNil (2020: EURNil) per Ordinary share proposed
and paid during year relating to the previous year's results - -
14. Basic and diluted profit/(loss) per ordinary share
The calculation of profit per ordinary share is based on profit
after tax and the weighted average number of ordinary shares in
issue during the year.
2021 2021 2020 2020
Underlying Total Underlying Total
Basic earnings per share
Weighted average number of Ordinary shares in issue ('000) 164,890 164,890 132,721 132,721
Profit/(Loss) for the year attributable to owners of Accsys
Technologies PLC (EUR'000) 1,274 477 (1,069) 2,415
Basic profit/(loss) per share EUR 0.01 EUR 0.00 EUR (0.01) EUR 0.02
=========== ========== ============ ==========
Diluted earnings per share
Weighted average number of Ordinary shares in issue ('000) 164,890 164,890 132,721 132,721
Equity options attributable to Volantis - - 4,656 4,656
Equity options attributable to BGF 8,449 8,449 8,449 8,449
Weighted average number of Ordinary shares in issue and
potential ordinary shares ('000) 173,339 173,339 145,826 145,826
----------- ---------- ------------ ----------
Profit/(Loss) for the year attributable to owners of Accsys
Technologies PLC (EUR'000) 1,274 477 (1,069) 2,415
Diluted profit/(loss) per share EUR 0.01 EUR 0.00 EUR (0.01) EUR 0.02
=========== ========== ============ ==========
15. Share based payments
The Group operates a number of share schemes which give rise to
a share based payment charge. The Group operates a Long Term
Incentive Plan ('LTIP') in order to reward certain members of staff
including the Senior Management team and the Executive Directors.
As part of the award of nil costs options under the LTIP in 2013,
the recipients relinquished all share options that they held which
had been awarded under the 2005 and 2008 Share Option plans. Other
employees continue to hold options awarded under these earlier
schemes.
Options - total
The following figures take into account options awarded under
the LTIP, together with share options awarded in previous years
under the 2008 Share Option schemes.
Outstanding options granted are as follows:
Number of outstanding Weighted average remaining
options at 31 March contractual life, in years
Date of grant 2021 2020 2021 2020
1 August 2011 90,000 90,000 0.3 1.3
19 September 2013 (LTIP) 918,226 2,177,675 2.5 3.5
24 June 2016 (LTIP) 482,827 482,827 5.3 6.3
20 June 2017 (LTIP) 326,999 338,275 6.3 7.3
18 June 2018 (LTIP) 185,840 829,882 7.3 8.3
25 June 2019 (LTIP) 541,049 593,376 8.3 9.3
20 November 2019 (LTIP) 105,699 105,699 8.7 9.7
23 December 2019 (LTIP) 41,468 41,468 8.8 9.8
15 July 2020 (LTIP) 1,267,657 - 9.3 -
Total 3,959,765 4,659,202 6.5 5.8
----------- ---------- ------------- -------------
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at 1 April 2019 EUR 0.10 4,935,421
========= ============
Granted during the year EUR 0.00 810,520
Forfeited during the year EUR 0.00 (1,086,739)
Exercised during the year EUR 0.00 -
Expired during the year EUR 0.00 -
Outstanding at 31 March 2020 EUR 0.10 4,659,202
========= ============
Granted during the year EUR 0.00 1,326,966
Forfeited during the year EUR 0.00 (766,954)
Exercised during the year EUR 0.00 (1,259,449)
Expired during the year EUR 0.00 -
Outstanding at 31 March 2021 EUR 0.12 3,959,765
========= ============
The exercise price of options outstanding at the end of the year
ranged between EURnil (for LTIP options) and EUR0.50 (2020: EURnil
and EUR0.50) and their weighted average contractual life was 6.5
years (2020: 5.8 years).
Of the total number of options outstanding at the end of the
year 1,818,052 (2020: 2,750,502) had vested and were exercisable at
the end of the year.
Long Term Incentive Plan ('LTIP')
In 2013, the Group established a Long Term Incentive Plan, the
participants of which are key members of the Senior Management
Team, including Executive Directors. The establishment of the LTIP
was approved by the shareholders at the AGM in September 2013.
2013 LTIP Award performance conditions and 2016 outcome
The LTIP in 2013 awarded 4,103,456 nil cost options and
2,472,550 vested in the financial year end 31 March 2017. 918,226
nil cost options remain as at 31 March 2021 after allowing for
forfeitures and options exercised in the year.
2016 LTIP Award performance conditions and 2016 outcome
The LTIP in 2016 awarded 1,070,255 nil cost options and 482,827
vested in the financial year end 31 March 2020. 482,827 nil cost
options remain as at 31 March 2021 after allowing for forfeitures
and options exercised in the year.
2017 LTIP Award performance conditions and 2016 outcome
The LTIP in 2017 awarded 1,087,842 nil cost options and 326,999
vested in the financial year end 31 March 2021. 326,999 nil cost
options remain as at 31 March 2021 after allowing for forfeitures
and options exercised in the year.
Awards made in June 2018 and LTIP Award performance
conditions
During the year ended March 2019, a total of 1,170,160 LTIP
awards were made primarily to members of the Senior Management team
including the Executive Directors:
The performance targets for 993,220 of these awards are as
follows:
Weighting Threshold Maximum
Metric (% of award)
Vesting (% of maximum) 25% 100%
EBITDA per share in
FY21 60% EUR0.05 EUR0.13
Total sales volume (subject
to Group EBITDA being
breakeven or positive) 40% 70,000 85,000
------------- ---------- --------
-- Vesting is on a straight-line basis between points in the
schedule. There is no vesting for performance below Threshold.
-- EBITDA based on total Group EBITDA excluding licensing
income. Appropriate adjustments may be made to the EBITDA per share
metric to ensure fair and consistent performance measurement over
the performance period in line with the business plan and intended
stretch of the targets at the point of award.
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya(R) and Tricoya(R) .
Element A Element B
(EBITDA per (Sales volume
Element share) growth)
Grant date 19 Jun 18 19 Jun 18
Share price at grant
date ( EUR ) 0.91 0.91
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details Sales volume
set out above) EBITDA growth
Risk free rate -0.55% -0.55%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 0.842 EUR 0.842
The remaining 176,940 of the awards made in summer 2018 were
specific to individuals dedicated to the Tricoya(R) consortium with
performance measures linked to progress and development of the
Tricoya(R) plant and its subsequent operation.
The fair value of these options were EUR0.842 on their Grant
date.
All of the above awards, made in summer 2018 are subject to a
three year performance period (i.e. year end March 2021) and a
further two year holding period. In addition, awards are also
subject to malus/ claw-back provisions. As at 31 March 2021, the
expected vesting amount is estimated to be 185,840 share
options.
Awards made in year ended 31 March 2020 and LTIP Award
performance conditions
During the prior year, a total of 810,520 LTIP awards were made
primarily to members of the Senior Management team including the
Executive Directors:
The performance targets for 686,049 of these awards are as
follows:
Weighting Threshold Target Maximum
Metric (% of award)
Vesting (% of maximum) 25% 70% 100%
EBITDA per share in
FY22 60% EUR0.10 EUR0.14 EUR0.22
Total sales volume in
FY22 (m(3) ) 40% 82,000 86,000 100,000
------------- ---------- -------- --------
-- Vesting is on a straight-line basis between the above points.
-- Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in
line with the business plan and intended stretch of the targets at
the point of award.
-- EBITDA per share targets are set and determined so as to exclude licensing income.
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya(R) and Tricoya(R) .
Element A Element B
(EBITDA per (Sales volume
Element share) growth)
Grant date 25 Jun 19 25 Jun 19
Share price at grant
date ( EUR ) 1.32 1.32
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details Sales volume
set out above) EBITDA growth
Risk free rate -0.74% -0.74%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 1.221 EUR 1.221
On 20(th) November 2019 and 23(rd) December 2019, a total of
147,167 LTIP awards (included in the 686,049 LTIP awards above)
were made to 2 new employees with the same performance targets as
illustrated above. The fair value of these awards were EUR1.05 per
option.
The remaining 124,471 of the awards made in summer 2019 were
specific to individuals dedicated to the Tricoya(R) consortium with
performance measures linked to progress and development of the
Tricoya(R) plant and its subsequent operation.
The fair value of these options were EUR1.221 on their Grant
date.
All of the above awards, made in the year ended 31 March 2020
are subject to a three year performance period (i.e. year end March
2022) and a further two year holding period. In addition, awards
are also subject to malus/ claw-back provisions.
Awards made in July 2020 and LTIP Award performance
conditions
During the year, a total of 1,326,966 LTIP awards were made
primarily to members of the Senior Management team including the
Executive Directors:
The performance targets for 1,255,829 of these awards are as
follows:
Weighting Threshold Stretch Maximum
Metric (% of award)
Vesting (% of maximum) 25% 70% 100%
EBITDA per share in
FY23 60% EUR0.14 EUR0.19 EUR0.24
Total sales volume in
FY 23 (m(3) ) 40% 90,000 105,000 112,720
------------- ---------- -------- --------
-- Vesting is on a straight-line basis between points in the schedule.
-- Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in
line with the business plan and intended stretch of the targets at
the point of award.
-- EBITDA per share targets are set and determined so as to exclude licensing income.
-- Sales Volume is defined as combined sales volume (in cubic
metres, or equivalent) of Accoya(R) and Tricoya(R) .
-- Vesting of the Sales Volume component will be subject to the
achievement of a threshold level of EBITDA
Element A Element B
(EBITDA per (Sales volume
Element share) growth)
Grant date 15 July 20 15 July 20
Share price at grant
date ( EUR ) 1.00 1.00
Exercise price (EUR) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details Sales volume
set out above) EBITDA growth
Risk free rate -0.69% -0.69%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option EUR 0.998 EUR 0.998
The remaining 71,137 of the awards made in summer 2020 were
specific to individuals dedicated to the Tricoya(R) consortium with
performance measures linked to progress and development of the
Tricoya(R) plant and its subsequent operation.
The fair value of these options were EUR0.998 on their Grant
date.
All of the above awards, made in summer 2020 are subject to a
three year performance period (i.e. year end March 2023) and a
further two year holding period. In addition, awards are also
subject to malus/ claw-back provisions.
2008 Share Option schemes
Awards made in earlier years had no impact on the income
statement in the current or prior year and given the smaller number
of options remaining, no details have been disclosed.
Employee Benefit Trust - Share bonus award
Following a share issue on 23 June 2020 as part of the annual
bonus, in connection with the employee remuneration and
incentivisation arrangements for the period from 1 April 2019 to 31
March 2020, 727,250 (2020: nil) new Ordinary shares were held by an
Employee Benefit Trust, the beneficiaries of which are primarily
senior employees. Such new Ordinary shares vest if the employees
remain in employment with the Company at the vesting date, being 1
July 2021 (subject to certain other provisions including
regulations, good-leaver, take-over and Remuneration Committee
discretion provisions). As at 31 March 2021, the Employment Benefit
Trust was consolidated by the Company and the 727,250 shares are
recorded as Own Shares within equity.
Employee Share Participation Plan
During the prior year, the Company re-introduced the Employee
Share Participation Plan (the 'Plan') for subscription. The Plan is
intended to promote the long term growth and profitability of
Accsys by providing employees with an opportunity to acquire an
ownership interest in new Ordinary shares ('Shares') in the Company
as an additional benefit of employment. Under the terms of the
Plan, the Company issues these Shares to a trust for the benefit of
the subscribing employees. The Shares are released to employees
after one year, together with an additional Share on a 1 for 1
matched basis provided the employee has remained in the employment
of Accsys at that point in time (subject to good leaver
provisions). The Plan is in line with industry approved employee
share plans and is open for subscription by employees once a year
following release of the interim financial results. The maximum
amount available for subscription by any employee is EUR5,000 per
annum. In February 2021 various employees subscribed for a total of
195,524 Shares at an acquisition price of EUR1.43 per Share.
Also during the year, 1 for 1 Matching shares were awarded in
respect of subscriptions that were made in the previous year as a
result of the participants continuing to remain in employment at
the point of vesting. 198,219 matching shares were issued to
employees in February 2021.
16. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 April 2019 6,796 73,582 4,231 84,609
============ ============= ========= ========
Additions 391 469 - 860
At 31 March 2020 7,187 74,051 4,231 85,469
============ ============= ========= ========
Additions 277 405 - 682
At 31 March 2021 7,464 74,456 4,231 86,151
============ ============= ========= ========
Accumulated amortisation
At 1 April 2019 1,796 72,023 - 73,819
============ ============= ========= ========
Amortisation 350 314 - 664
At 31 March 2020 2,146 72,337 - 74,483
============ ============= ========= ========
Amortisation 364 439 - 803
At 31 March 2021 2,510 72,776 - 75,286
============ ============= ========= ========
Net book value
At 31 March 2021 4,954 1,680 4,231 10,865
At 31 March 2020 5,041 1,714 4,231 10,986
At 31 March 2019 5,000 1,559 4,231 10,790
Refer to note 17 for the recoverability assessment of these
intangible assets.
17. Property, plant and equipment
Land and Plant and Office
buildings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 01 April 2019 17,976 103,676 2,685 124,337
========== ========== ========== ========
Additions - 22,015 555 22,570
Foreign currency translation profit - - 3 3
At 31 March 2020 17,976 125,691 3,243 146,910
========== ========== ========== ========
Additions - 20,742 651 21,393
Foreign currency translation (loss) - - (9) (9)
At 31 March 2021 17,976 146,433 3,885 168,294
========== ========== ========== ========
Accumulated depreciation
At 01 April 2019 279 19,409 1,244 20,932
========== ========== ========== ========
Charge for the year 358 3,287 207 3,852
Foreign currency translation profit - - 3 3
At 31 March 2020 637 22,696 1,454 24,787
========== ========== ========== ========
Charge for the year 358 3,249 351 3,958
Foreign currency translation (loss) - - (8) (8)
At 31 March 2021 995 25,945 1,797 28,737
========== ========== ========== ========
Net book value
At 31 March 2021 16,981 120,488 2,088 139,557
At 31 March 2020 17,339 102,995 1,789 122,123
At 1 April 2019 17,697 84,267 1,441 103,405
Plant and machinery assets with a net book value of
EUR80,853,000 are held as assets under construction and are not
depreciated, relating to the Hull Plant, and EUR5,716,000 relating
to the further expansion of the Arnhem Plant (31 March 2020:
EUR66,409,000 relating to the Hull Plant, EUR725,000 relating to
the Arnhem Plant).
The carrying value of the property, plant and equipment,
internal development costs and intellectual property rights are
split between two cash generating units (CGUs), representing the
Accoya(R) and Tricoya(R) segments and the carrying value of
Goodwill is allocated to the Accoya(R) segment. The recoverable
amount of these CGUs are determined based on a value-in-use
calculations which uses cash flow projections based on latest board
approved financial budgets. Cash flows have been projected for a
period of 12 years, including a five year forecast and seven years
of 1.8% growth rate plus assumptions concerning a terminal value
discounted at a pre-tax discount rate of 10.5% (2020: 10.0%) to
determine their present value.
The key assumptions used in the value in use calculations
are:
- the manufacturing revenues, operating margins & future
licence fees estimated by management,
- the completion of construction of additional facilities on time (and associated output),
- the long term growth rate and
- the discount rate.
The Directors have determined that there has been no impairment
to either CGU. The Directors have considered whether a reasonably
possible change in assumptions may result in an impairment. The CGU
most susceptible to an impairment given a change in assumptions is
the Tricoya(R) CGU. Key assumptions applied to this CGU were as
follows:
- a discount rate of 10.5%,
- a long-term sales growth rate of 1.8%, and
- Gross margin of approximately 40%.
The headroom in the value-in-use model for this CGU would be
reduced to nil if the following adverse changes to those key
assumptions were made in isolation:
- a 2.1% increase to the discount rate,
- a 1.2% reduction in the long-term sales growth rate and
- a 5% decrease to Gross margin.
- an increase of 130% above assumed remaining costs to complete the plant
18. Leases
(i) Amounts recognised in the statement of financial
position
The statement of financial position shows the following amounts
relating to leases:
Right-of-use assets
-------------------------
2021 2020
EUR'000 EUR'000
Right-of-use assets
Properties 4,113 3,708
Equipment 671 745
Motor Vehicles 75 83
4,859 4,536
============ ===========
Minimum lease payments
2021 2020
EUR'000 EUR'000
Amounts payable under lease liabilities:
Within one year 1,208 1,044
In the second to fifth years inclusive 2,631 2,787
After five years 4,369 3,441
Less: future finance charges (2,676) (2,151)
Present value of lease obligations 5,532 5,121
============ ===========
Additions to the right-of-use assets during the financial year
were EUR1,303,000 (2020: EUR1,542,000).
(ii) Amounts recognised in the statement of profit and loss
The statement of profit and loss shows the following amounts
relating to leases:
The Group's leasing activities and how these are accounted
for:
2021 2020
EUR'000 EUR'000
Depreciation charge of right-of-use
assets
Properties 664 783
Equipment 279 258
Motor Vehicles 33 26
976 1,067
-------- --------
Interest expense (included in finance cost) 483 408
Expense relating to short-term leases (included
in cost of goods sold and administrative expenses) 30 27
Expense relating to leases of low-value assets
that are not shown above as short-term leases
(included in administrative expenses) 2 1
Expense relating to variable lease payments
not included in lease liabilities (included
in administrative expenses) - -
The total cash outflow for leases in 2021
was EUR1,308,000 (2020: EUR1,022,000)
The Group leases various offices, land, equipment and cars.
Rental contracts are typically made for fixed periods of 1-10
years, although, if appropriate, a longer term may be entered into.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.
Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to the statement of
comprehensive income over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right of use asset is depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
- Variable lease payments that are based on an index or a rate;
- Amounts expected to be payable by the lessee under residual value guarantees;
- The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the Group's incremental
borrowing rate, being the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset of similar economic
environment within similar terms and conditions.
Right of use assets are measured at cost comprising the
following:
- The amount of initial measurement of lease liability;
- Any lease payments made at or before the commencement date
less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Payments associated with short-term leases and leases of low
value are recognised on a straight-line basis as an expense in the
statement of comprehensive income. Short-term leases are leases
with a lease term of 12 months or less. Low-value assets comprise
of small items of office furniture and equipment.
19. Financial asset at fair value through profit or loss
2021 2020
EUR'000 EUR'000
Shares held in Cleantech Building Materials PLC - -
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China. On 23
December 2016, Cleantech Building Materials PLC acquired Diamond
Wood China. On 19 April 2017 Cleantech Building Materials acquired
the 21,666,734 shares previously owned by the Company and in return
the Company has been issued with 520,001 shares in Cleantech
Building Materials PLC, a listed company trading on the Nasdaq
First North market in Copenhagen.
There continues to be no active market for these shares as at 31
March 2021, and there is significant uncertainty over the future of
Cleantech Building Materials PLC. As such a reliable fair value
cannot be calculated and the investment is carried at a nil fair
value (2020: nil).
The carrying value is similar to the previous accounting
treatment under IAS 39, under which the historical cost of the
listed shares of EUR10m was offset by a provision for impairment of
the entire balance of EUR10m, resulting in a nil carrying
value.
A total of 498,522 shares were held at 31 March 2021.
20. Deferred taxation
The Group has a deferred tax asset of EURnil (2020: EURnil)
relating to trading losses brought forward.
The Group also has an unrecognised deferred tax asset of EUR30m
(2020: EUR26m) which is largely in respect of trading losses of the
UK subsidiaries. The deferred tax asset has been recognised only to
the extent of the deferred tax liability, due to the uncertainty of
the timing of future expected profits of the related legal entities
which is dependent on the profits attributable to licensing and
future manufacturing income.
21. 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.
22. Inventories
2021 2020
EUR'000 EUR'000
Raw materials and work in progress 7,339 10,660
Finished goods 4,923 6,272
12,262 16,932
======== ========
The amount of inventories recognised as an expense during the
year was EUR60,907,693 (2020: EUR57,167,975). The cost of
inventories recognised as an expense includes a net credit of
EUR2,739 (2020: credit of EUR47,982) in respect of the inventories
sold in the period which had previously been written down to net
realisable value.
23. Trade and other receivables
2021 2020
EUR'000 EUR'000
Trade receivables 9,836 8,611
Other receivables 575 3,520
VAT receivable 1,013 2,552
Prepayments 890 625
12,314 15,308
======== ========
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 EUR1,597,056 of the trade and other receivables denominated in
US Dollars (2020: EUR1,246,000).
The age of receivables past due but not impaired is as
follows:
2021 2020
EUR'000 EUR'000
Up to 30 days overdue 409 806
Over 30 days and up to 60 days overdue 6 18
Over 60 days and up to 90 days overdue - -
Over 90 days overdue 49 5
464 829
======== ========
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 EUR25,002,000 (2020: EUR25,002,000) due from Diamond
Wood.
Movement in provision for doubtful debts:
2021 2020
EUR'000 EUR'000
Balance at the beginning of the year 25,239 25,002
Net (decrease)/increase of impairment (237) 237
Balance at the end of the year 25,002 25,239
======== ========
24. Trade and other payables
2021 2020
EUR'000 EUR'000
Trade payables 9,451 7,827
Other taxes and social security payable 1,104 779
Accruals and deferred income 19,255 8,261
29,810 16,867
======== ========
The increase in Trade and other payables primarily relates to
the timing of accruals associated with the construction of the Hull
plant with actual cash payments being lower, reflecting the timing
of milestone payments in relation to construction.
25. Share capital
2021 2020
EUR'000 EUR'000
Allotted - Equity share capital
169,324,264 Ordinary shares of EUR0.05 each (2020: 162,288,155 Ordinary shares of EUR0.05
each) 8,466 8,114
8,466 8,114
======== ========
In year ended 31 March 2020:
On 23 December 2019, 27,239,764 Firm Placing Shares and
16,855,474 Open Offer Shares were issued as part of the capital
raise to fund the Arnhem plant expansion, completion of the
Tricoya(R) plant in Hull, preliminary work in the United States and
working capital requirements related to these activities. The
Shares were issued at a price of EUR1.05 per Ordinary share,
raising gross proceeds of EUR46.3 million (before expenses).
During the year, the Group re-introduced the Employee Share
Participation Plan (see note 15 for further details). In February
2020 various employees subscribed for a total of 204,612 Shares at
an acquisition price of EUR1.095 per Share, with these shares
issued to a trust, to be released to the employees after one year,
together with an additional share on a matched basis (subject to
continuing employment within the Group).
In the prior year, 173,915 Shares were issued to the Employee
Benefit Trust ('EBT') with these vesting on 1 July 2019. Of these
Shares, beneficiaries elected to sell 106,448 Shares in the market,
with a sale date of 31 July 2019.
In the year ended 31 March 2021:
1,259,449 shares were issued on 12 May 2020 following the
exercise of nil cost options, granted under the Company's 2013 Long
Term Incentive Plan ('LTIP').
727,250 shares were issued to an Employee Benefit Trust ('EBT')
on 29 June 2020 at nominal value, in lieu of cash bonuses for the
year ended 31 March 2020. These shares will vest on 1 July 2021,
subject to the employees continuing employment within the
Group.
In February 2021, following the subscription by employees in the
prior year for shares under the Employee Share Participation Plan
(the 'Plan'), 198,219 shares were issued as "Matching Shares" at
nominal value under the Plan.
In addition, various employees newly subscribed under the Plan
for 195,524 Shares at an acquisition price of EUR1.43 per share,
with these shares issued to a trust, to be released to the
employees after one year, together with an additional share on a
matched basis (subject to continuing employment within the
Group).
On 26 March 2021, the Company announced that Lombard Odier Asset
Management (USA) Corp on behalf of 1798 Volantis Catalyst Fund II
Ltd ('Volantis') exercised options over a total of 4,655,667
ordinary shares in the Company for a total consideration of
GBP2,779,898.77 (exercise price of GBP0.5971 per ordinary share)
(see note 30 to the financial statements).
26. Other reserves
Hedging
Capital redemp- Effective-ness
tion reserve Merger reserve reserve Other reserve Total Other reserves
EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 01 April
2019 148 106,707 317 2,349 109,521
================ =============== ===================== ============== =====================
Total comprehensive
(expense) for the
period - - (280) - (280)
Issue of subsidiary
shares to
non-controlling
interests - - - 3,310 3,310
Balance at 31 March
2020 148 106,707 37 5,659 112,551
================ =============== ===================== ============== =====================
Total comprehensive
income for the
period - 192 - 192
Issue of subsidiary
shares to
non-controlling
interests - - - 1,892 1,892
Balance at 31 March
2021 148 106,707 229 7,551 114,635
================ =============== ===================== ============== =====================
The closing balance of the capital redemption reserve represents
the amounts transferred from share capital on redemption of
deferred shares in a previous year.
The merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
The hedging effectiveness reserve reflects the total accounted
for under IFRS 9 in relation to the Tricoya(R) & Corporate
segments (see note 1).
The other reserve represents the amounts received for subsidiary
share capital from non-controlling interests net with the carrying
amount of non-controlling interests issued (see note 27).
27. Transactions with non-controlling interests
In the year ended 31 March 2020:
On 25 May 2019, TTL issued 252,464 shares to Titan Wood Limited.
On 25 November 2019, TTL issued 238,024 shares to Titan Wood
Limited for a consideration of EUR0.5m. An additional 61,976 shares
were issued to non-controlling interests for a consideration of
EUR0.1m. On 23 December 2019, TTL issued 4,620,156 shares to Titan
Wood Limited for a consideration of EUR9.2m, and an additional
1,401,523 shares were issued in consideration for continued
provision of discounted Accoya(R) to MEDITE for market seeding
purposes. 887,643 shares were issued to non-controlling interests
for a consideration of EUR1.8m. As a result the non-controlling
interests' shareholdings were amended to:
BP Ventures (8.6%), MEDITE (10.2%), BGF (2.2%), Volantis
(1.2%)
On 23 December 2019, Tricoya UK issued 11,015,599 Ordinary
shares to Tricoya Technologies Ltd for a consideration of EUR11.0m,
and an additional 4,322,394 shares were issued in consideration for
continued provision of discounted Accoya(R) to MEDITE for market
seeding purposes. 7,268,573 shares were issued to non-controlling
interests for consideration of EUR7.3 million. As a result the
non-controlling interests' shareholdings were amended to:
BP Chemicals (30.9%, MEDITE 6.2%)
In the year ended 31 March 2021:
On 15 June 2020, TTL issued 281,919 shares to Titan Wood Limited
for a consideration of EUR0.6m. An additional 68,081 shares were
issued to non-controlling interests for a consideration of EUR0.1m.
On 2 July 2020, TTL issued 90,956 shares to Titan Wood Limited for
a consideration of EUR0.2m. An additional 416,694 shares were
issued to non-controlling interests for a consideration of EUR0.8m
and an additional 495,310 shares were issued in consideration for
continued provision of discounted Accoya(R) to MEDITE for market
seeding purposes. On 29 October 2020, TTL issued 1,862,356 shares
to Titan Wood Limited for a consideration of EUR3.7m. An additional
498,987 shares were issued to non-controlling interests for a
consideration of EUR1.0m. On 31 December 2020, BP Ventures' share
capital of TTL was acquired by INEOS Acetyls Investments Limited
("INEOS"). As a result the non-controlling interests' shareholdings
were amended to:
INEOS (8.5%), MEDITE (11.3%), BGF (2.6%), Volantis (1.1%)
On 17 July 2020, Tricoya UK issued 486,572 Ordinary shares to
Tricoya Technologies Ltd for a consideration of EUR1.0m. An
additional 1,600,530 shares were issued to non-controlling
interests for consideration of EUR1.6m. On 29 October 2020, Tricoya
UK issued 3,972,686 Ordinary shares to Tricoya Technologies Ltd for
a consideration of EUR4.0m. An additional 2,452,798 shares were
issued to non-controlling interests for consideration of EUR2.5m.
On 31 December 2020, BP Chemicals' share capital of Tricoya UK was
acquired by INEOS. As a result the non-controlling interests'
shareholdings were amended to:
INEOS (30.0%, MEDITE 8.2%)
The total carrying amount of the non-controlling interests in
TTL and Tricoya UK at 31 March 2021 was EUR37.17m (2020:
EUR34.44m).
The Group recognised an increase in other reserves as summarised
below.
2021 2020
EUR'000 EUR'000
Opening Balance 6,235 2,925
Carrying amount of non-controlling interests issued (4,112) (5,857)
Consideration paid by non-controlling interests 6,004 9,167
Share issue costs relating to non-controlling interests - -
Excess of consideration paid recognised in Group's equity 8,127 6,235
========= =========
28. Investment in Joint Venture
In August 2020, Accsys together with Eastman Chemical Company
formed a new company, Accoya USA LLC, with the intention to
construct and operate an Accoya(R) wood production plant to serve
the North American market.
The new company has been formed with Accsys having a 60% equity
interest and Eastman having a 40% equity interest, with the two
parties assessed to jointly control the entity as defined under
IFRS 11 - Joint arrangements. Accoya USA is accounted for as a
joint venture and equity accounted for within the financial
statements. A technology licence has also been entered into with
Accoya USA LLC so that front-end engineering and design for the
proposed plant in the USA can be completed.
The plant is being designed to initially produce approximately
40,000 cubic metres of Accoya(R) per annum and to allow for
cost-effective expansion.
A decision whether to proceed to the next stage with plant
construction, and as to funding, is targeted for summer 2021,
following the completion of the initial engineering and design
work.
The carrying amount of the equity-accounted investment is as
follows:
2021 2020
EUR'000 EUR'000
Investment in Accoya(R) USA 1,070 -
Less: Accsys proportion (60%) of Licence fee received (600) -
Loss for the year (144) -
Closing balance 326 -
29. Commitments under loan agreements
2021 2020
EUR'000 EUR'000
Amounts payable under loan agreements:
Within one year 9,664 5,265
In the second to fifth years inclusive 44,626 50,967
In greater than five years - 1,081
Present value of loan obligations 54,290 57,313
========= ==========
Within one year 12,012 5,644
In the second to fifth years inclusive 49,714 61,855
After five years - 1,120
---------
Less future finance charges (7,436) (11,306)
Present value of loan obligations 54,290 57,313
========= ==========
The change in total borrowings in the year of EUR3m primarily
related to the EUR3.2m termination fee associated with the early
termination of the Cerdia commercial agreements, which was deducted
from the Cerdia loan on 1 April 2020.
Facilities relating to purchase of Arnhem land and
buildings:
On 1 August 2018 the Group entered into a package of facilities
to fully finance the purchase of the land and buildings in Arnhem.
The partially amortising package of loans includes the
following:
- EUR14.0m loan with ABN Amro Bank. The loan is partially
repayable over a five year term with a final payment of EUR9.25m.
Interest is fixed at 3% and the loan is secured on the land and
buildings.
- EUR5.0m lease loan with ABN Asset Based Finance is repayable
over a five year term with an implied interest rate of
approximately 3%. The loan is secured on the first two Accoya (R)
reactors.
- EUR4.0m loan with Bruil, the seller and previous landlord. The
balance is repayable from July 2021 to July 2023 with interest
fixed at 5%. The loan is unsecured.
Loan Notes:
On 29 March 2017 the Group issued GBP16.3 million (EUR18.4
million) of unsecured fixed rate loan notes. GBP10.5 million of
Loan Notes in principal were issued to Business Growth Fund
('BGF'), with GBP5.8 million in principal issued to Volantis. The
BGF loan notes are subject to a 7% fixed interest rate for the
duration of their term and the Volantis loan notes are subject to a
7% fixed interest rate until 31 December 2018, with the interest
rate fixed at 9% thereafter. Interest is rolled up until 31
December 2018 on both loans, with further roll up of interest on
the Volantis loan until six-monthly redemption payments of both
loans commence on 31 December 2021 and end on 30 June 2023.
BGF is an investment company that provides long-term equity
funding to growing UK companies to enable them to execute their
strategic plans. Volantis is a global asset management firm
specialising in alternative investment strategies and is owned by
Lombard Odier.
Cerdia Production Facility:
The EUR9.5 million term loan facility with Cerdia Production
GmbH was used to design, procure and build the Arnhem plant's third
reactor. This facility is secured against the third reactor of the
Arnhem chemical plant and associated assets and is subject to
interest at 7.5% per annum. At 31 March 2021, the Group had EUR4.2m
(2020: EUR8.3m) borrowed under this facility. Quarterly repayments
of the loan commenced on 21 December 2018 until November 2025.
In a prior year, the Group entered into an agreement with Cerdia
Producktions GmbH ("Cerdia") under which Accsys took on
responsibility for commercial activities under agreements with
Cerdia relating to Accoya(R) wood, which terminated as of 1 April
2020 (the "Termination Agreement"). Under the terms of the
Termination Agreement, payments to Accsys included fees of EUR3.2
million, which was recognised as an exceptional item in the year
ended 31 March 2020. The EUR3.2 million was deducted from the loan
balance on 1 April 2020, with subsequent repayments for the
remaining term of the loan being reduced accordingly.
Tricoya(R) facility:
On 29 March 2017 the Company's subsidiary, Tricoya UK Limited
entered into a six-year EUR17.2 million finance facility agreement
with Natwest Bank plc in respect of the construction and operation
of the Hull Plant. The facility is secured by fixed and floating
charges over all assets of Tricoya UK Limited. At 31 March 2021,
the Group had EUR9.3m (2020: EUR8.7m) borrowed under the facility.
The facility is to be drawn down as required, and facility
repayments will commence 12 months after practical completion of
the Hull Plant. Interest will accrue at Euribor plus a margin, with
the margin ranging from 325 to 475 basis points.
Trade receivable and inventory facilities:
Working capital facility
The working capital facility with ABN Commercial Finance is a
EUR6.0m credit facility secured upon the receivables and inventory
of the Accoya(R) manufacturing business committed for a period of 5
years. At 31 March 2021, the facility was undrawn (2020:
undrawn).
Bank guarantee facility
The facility with ABN AMRO Bank N.V. is a contingent liability
facility enabling the Group to issue bank guarantees in order to
support the working capital and other operational commitments of
the Group with a limit of EUR1.5m.
Both facilities are subject to interest at 2% above the ABN AMRO
base rate.
Reconciliation to net debt:
2021 2020
EUR'000 EUR'000
Cash and cash equivalents 47,598 37,238
Less:
Amounts payable under loan agreements (54,290) (57,313)
Amounts payable under lease liabilities (note 18) (5,532) (5,121)
Net debt (12,224) (25,196)
========== ==========
Liabilities from financing activities Other assets
Borrowings Leases Sub-total Cash Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Net debt as at 31 March 2019 (56,909) (2,021) (58,930) 8,857 (50,073)
Adjustment on initial application of IFRS 16 - (2,247) (2,247) - (2,247)
Net debt as at 01 April 2019 (56,909) (4,268) (61,177) 8,857 (52,320)
Cash flows 267 1,022 1,289 28,416 29,705
New leases - (1,542) (1,542) - (1,542)
Foreign exchange adjustments 626 4 630 (35) 595
Other changes (1,297) (337) (1,634) - (1,634)
Net debt as at 31 March 2020 (57,313) (5,121) (62,434) 37,238 (25,196)
Cash flows 2,474 1,308 3,782 10,294 14,076
Decrease in Cerdia Loan from Termination fee 3,200 - 3,200 - 3,200
New leases - (1,303) (1,303) - (1,303)
Foreign exchange adjustments (900) (76) (976) 66 (910)
Other changes (1,751) (340) (2,091) - (2,091)
Net debt as at 31 March 2021 (54,290) (5,532) (59,822) 47,598 (12,224)
30. Equity options
On the 29 March 2017, the Company announced the formation of the
Tricoya (R) Consortium and as part of this, funding was agreed with
BGF and Volantis (see note 29). In addition to the issue of the
Loan Notes the Company granted options over Ordinary Shares of the
Company to BGF and Volantis exercisable at a price of GBP0.62 per
Ordinary Share at any time until 31 December 2026 (the
'Options').
5,838,954 Options were issued to BGF and 3,217,383 Options were
issued to Volantis. In addition, the Company agreed to use its
reasonable endeavours to obtain shareholder authority at the
subsequent General Meeting to grant to BGF a further option in
respect of 2,610,218 Ordinary Shares and to grant to Volantis a
further option in respect of 1,438,284 Ordinary Shares (the
"Additional Options").
The necessary resolutions were passed at the General Meeting
held on 21 April 2017 and accordingly the Additional Options had
been converted to Options.
On 26 March 2021, the Company announced the Options issued to
Volantis had been exercised in full for a total consideration of
GBP2,779,898.77 payable to the Company, representing an exercise
price per Ordinary Share of GBP0.62 as agreed on 29 March 2017
(adjusted to GBP0.5971 following a subsequent share issuance in
April 2017).
At 31 March 2021 a total 8,449,172 Options exist attributable to
BGF. This represents 5.0% (2020: 8.1%) of the issued share capital
of the Company as at 31 March 2021.
31. Financial instruments
Financial instruments
Lease liabilities
Lease creditors of EUR5,532,000 as at 31 March 2021 (2020:
EUR5,121,000) relates to various offices, land, equipment and cars
that the Group leases (see note 18).
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable to owners of the parent
Company, comprising share capital, reserves and accumulated
losses.
The Board reviews the capital structure on a regular basis. As
part of that review, the Board considers the cost of capital and
the risks associated with each class of capital. Based on the
review, the Group will balance its overall capital structure
through new share issues and the raising of debt if required.
No final dividend is proposed in 2021 (2020: EURnil). The Board
deems it prudent for the Company to protect as strong a statement
of financial position as possible during the current phase of the
Company's growth strategy.
Financial
Instruments by
category
Fair value hierarchy At amortised cost At fair value though At fair value Total
2021/ EUR '000 profit or loss through OCI
Financial assets
Trade and other receivables 10,411 - - 10,411
Financial asset
investments Level 2 - - - -
Derivative
financial
instruments (FX
forward) Level 2 - 134 - 134
Cash and cash equivalents 47,598 - - 47,598
Total 58,009 134 - 58,143
----------------- -------------------- -------------------- ----------
Fair value hierarchy At amortised cost At fair value though At fair value Total
2020/ EUR '000 profit or loss through OCI
Financial assets
Trade and other receivables 12,131 - - 12,131
Financial asset
investments Level 2 - - - -
Derivative
financial
instruments (FX
forward) Level 2 - - - -
Cash and cash equivalents 37,238 - - 37,238
Total 49,369 - - 49,369
----------------- -------------------- -------------------- ----------
Fair value hierarchy At amortised cost At fair value though At fair value Total
2021/ EUR '000 profit or loss through OCI
Financial
liabilities
Borrowings - loans (54,290) - - (54,290)
Lease liabilities (5,532) - - (5,532)
Trade and other payables (9,451) - - (9,451)
Derivative
financial
instruments (FX
forward) Level 2 - - - -
Total (69,273) - - (69,273)
----------------- -------------------- -------------------- ----------
Fair value hierarchy At amortised cost At fair value though At fair value Total
2020/ EUR '000 profit or loss through OCI
Financial
liabilities
Borrowings - loans (57,313) - - (57,313)
Lease liabilities (5,121) - - (5,121)
Trade and other payables (7,827) - - (7,827)
Derivative
financial
instruments (FX
forward) Level 2 - (330) - (330)
Total (70,261) (330) - (70,591)
----------------- -------------------- -------------------- ----------
Money market deposits are held at financial institutions with
high credit ratings (Standard & Poor's rating of A).
All assets and liabilities mature within one year except for the
lease liabilities, for which details are given in note 18 and
loans, for which details are given in note 29.
Trade payables are payable on various terms, typically not
longer than 30 to 60 days with the exception of some major capex
items.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that
adequate financial resources are available for the development of
its business whilst managing its currency, interest rate,
counterparty credit and liquidity risks. The Group's treasury
strategy and policy are developed centrally and approved by the
Board.
Foreign currency risk management
The Group's functional currency is the Euro with the majority of
operating costs and balances denominated in Euros. An increasing
proportion of costs will be incurred in pounds sterling as the
Group's activities associated with the Tricoya(R) plant in Hull
increase, although future revenues will be in Euros or other
currencies. The Group's Loan Notes, which were issued to fund these
UK based operations, are denominated in pounds sterling. A smaller
proportion of expenditure is incurred in US dollars and pounds
sterling. In addition some raw materials, while priced in Euros,
are sourced from countries which are not within the Eurozone. The
Group monitors any potential underlying exposure to other exchange
rates. The Group holds a proportion of the cash associated with the
Tricoya(R) Consortium in pounds sterling and has purchased fx
forward contracts with a nominal amount of GBP5.85m (2020: nominal
amount of GBP5.85m) to reflect the expected costs associated with
the construction of the plant in Hull and are accordingly accounted
for as a cash flow hedge (see note 5).
Interest rate risk management
The Group's borrowings are limited to fixed rate loans with BGF,
Volantis, Cerdia, ABN Amro and Bruil, together with the remaining
Arnhem finance lease and the lease of the office fit out and
furniture in London. The interest rate in respect of the loan
facility agreed with Natwest Bank is variable, based on Euribor
plus a variable margin. Therefore the Group is not significantly
exposed to interest rate risk in relation to financial liabilities.
Surplus funds are invested in short term interest rate deposits to
reduce exposure to changes in interest rates. The Group does not
currently enter into any interest rate hedging arrangements,
although will review the need to do so in respect of the variable
interest rate loan facility with Natwest Bank.
Credit risk management
The Group is exposed to credit risk due to its trade receivables
receivable from customers and cash deposits with financial
institutions. The Group's maximum exposure to credit risk is
limited to their carrying amount recognised at the balance sheet
date.
The Group ensures that sales are made to customers with an
appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables
at year end to be of good credit quality including those that are
past due (see note 23). 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 23.
The Group has credit risk from financial institutions. Cash
deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one
financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board, which has built an appropriate liquidity risk management
framework for the management of the Group's short, medium and long
term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profile of financial assets and
liabilities.
Fair value of financial instruments
In the opinion of the Directors, there is no material difference
between the book value and the fair value of all financial assets
and financial liabilities.
32. Capital Commitments
2021 2020
EUR'000 EUR'000
Contracted but not provided for in respect of property, plant and equipment 10,808 10,859
Included in the above, are amounts relating to the Engineering,
Procurement and Construction contracts relating to the Tricoya(R)
plant under construction in Hull and committed items related to the
Reactor 4 expansion project in Arnhem.
33. Events occurring after 31 March 2021
Capital raise
In May 2021, Accsys completed a successful Placing and open
offer for an issue of shares in the company, raising gross proceeds
of approximately EUR37 million. The net proceeds are to be used
primarily to fund the Group's investment in expanding its Accoya(R)
business into North America through the construction of a new
Accoya(R) USA plant, through its joint venture with Eastman
Chemical Company, as well as to provide additional capital to
support the Company's continued growth and ongoing development.
Termination letter received from Lead contractor on Tricoya Hull
plant construction
In early June 2021, we received a notice from the lead
contractor responsible for the delivery of the plant, Engie
Fabricom UK Limited, purporting to terminate the engineering,
procurement and construction (EPC) agreement for the project by
reason of force majeure arising out of the COVID-19 pandemic.
With the contract now terminated, Engie Fabricom has spent the
last two weeks demobilising from the site, ensuring that the
handover of the site to Accsys is completed safely and securely.
Work has commenced to develop the detailed plans necessary to
complete the remaining items of construction and commissioning of
the plant. Given the relatively advanced status of the project, we
are now evaluating the potential to project manage the final works
directly and may not need to appoint another lead contractor. Our
team is conducting a comprehensive GAP analysis which will be
completed following obtaining full access to the site, which is
expected this week, together with receipt of the project
documentation held by Engie Fabricom. This will enable us to
validate the remaining works, costs, timeline and people required
to complete construction and for commissioning required for full
operation of the plant to be carried out. Once this evaluation has
been completed, we shall update the market with our expectations
for the start-up of the plant and likely remaining associated costs
to completion.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR EAAKFADAFEAA
(END) Dow Jones Newswires
June 22, 2021 02:00 ET (06:00 GMT)
Accsys Technologies (LSE:AXS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Accsys Technologies (LSE:AXS)
Historical Stock Chart
From Apr 2023 to Apr 2024