REG - Accsys Technologies - Preliminary Results <Origin Href="QuoteRef">ACCS.L</Origin> - Part 3
20/06/2017 07:06
- Part 3: For the preceding part double click ID:nRST5354Ib
8 13 3 3 6 6
Hans Pauli 10 13 1 - - -
Patrick Shanley 10 13 3 3 6 6
Montague John 'Nick' Meyer 8 13 3 3 5 6
William Rudge 13 13 1 - - -
Whilst all Directors are not members of the Board Committees they attend by invitation.
Figures in the left hand column denote the number of meetings attended and figures in the right hand column denote the
number of meetings held whilst the individual held office.
Notes
1. During the year there were 9 full board meetings and 4 meetings of a committee of the board. Patrick Shanley
attended all 9 board meetings and 1 committee meeting. Hans Pauli attended 9 board meetings and one committee meeting. Nick
Meyer attended 8 out of 9 board meetings as did Sue Farr. Sean Christie attended 8 out of 9 board meetings and one
committee meeting.
2. Messrs Clegg, Pauli and Rudge attended part of an audit committee meeting on 7 June 2016, 16 November 2016 and 8
March 2017.
3. Paul Clegg was in attendance for part of 2 meetings of the Nomination and Remuneration Committee.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year ended 31 March 2017
2017 2017 2017 2016
E'000 E'000 E'000 E'000
Note Before exceptional items Exceptional items Note 5 Total Total
Accoya wood revenue 50,655 - 50,655 43,466
Licence revenue 1,576 - 1,576 2,849
Other revenue 4,298 - 4,298 6,454
Total revenue 3 56,529 - 56,529 52,769
Cost of sales (42,175) - (42,175) (34,597)
Gross profit 14,354 - 14,354 18,172
Other operating costs 4 (18,273) (517) (18,790) (18,460)
Other gains - 635 635 -
Operating loss 8 (3,919) 118 (3,801) (288)
Finance income 10 2 - 2 13
Finance expense 11 (560) - (560) (191)
Loss before taxation (4,477) 118 (4,359) (466)
Tax expense 12 (666) - (666) (402)
Loss for the year (5,143) 118 (5,025) (868)
Loss arising on translation of foreign operations, which could subsequently be reclassified into profit or loss (108) - (108) (27)
Total comprehensive loss for the year (5,251) 118 (5,133) (895)
Total comprehensive loss for the year is
attributable to:
Owners of Accsys Technologies PLC (5,108) 118 (4,990) (885)
Non-controlling interests (143) - (143) (10)
Total comprehensive loss for the year (5,251) 118 (5,133) (895)
Basic and diluted loss per ordinary share 14 E(0.06) E(0.05) E(0.01)
The figures for the year ended 31 March 2017 include exceptional costs (see note 5).
The notes on pages 29 to 55 form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of financial position as at 31 March 2017
Registered Company 05534340
Note 2017 2016
E'000 E'000
Non-current assets
Intangible assets 16 10,839 10,980
Property, plant and equipment 17 21,681 20,272
Available for sale investments 18 - -
32,520 31,252
Current assets
Inventories 21 11,796 8,345
Trade and other receivables 22 7,612 5,647
Cash and cash equivalents 41,173 8,186
Corporation tax receivable 687 412
61,268 22,590
Current liabilities
Trade and other payables 23 (12,524) (8,063)
Obligation under finance lease 28 (455) (354)
Corporation tax payable (1,620) (1,425)
(14,599) (9,842)
Net current assets 46,669 12,748
Non-current liabilities
Obligation under finance lease 28 (2,621) (1,947)
Other Long Term Borrowing 29 (20,097) -
(22,718) (1,947)
Net assets 56,471 42,053
Equity
Share capital 24 4,531 4,495
Share premium account 128,792 128,792
Other Reserves 25 113,356 107,441
Accumulated loss (202,840) (198,842)
Own shares (33) (47)
Foreign currency translation reserve 45 153
Capital value attributable to owners of Accsys Technologies PLC 43,851 41,992
Non-controlling interest in subsidiaries 12,620 61
Total equity 56,471 42,053
The financial statements were approved by the Board and authorised for issue on 19 June 2017, and signed on its behalf by
Paul Clegg
William Rudge Directors
The notes on pages 29 to 55 form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended 31 March 2017
Share capital Ordinary Share premium Other reserves Own Shares Foreign currency trans- Accumula-ted Loss Total equity attributable to equity shareholders of the company Non-Controlling interests Total Equity
lation reserve
E000 E000 E000 E000 E000 E000 E000 E000 E000
Balance at 4,440 128,714 106,855 (39) 180 (199,022) 41,128 - 41,128
31 March 2015
Total comprehensive income/(expense) for the period - - - - (27) (858) (885) (10) (895)
Share based payments - - - - - 1,038 1,038 - 1,038
Shares issued 55 - - (8) - - 47 - 47
Premium on shares issued - 78 - - - - 78 - 78
Issue of subsidiary shares to non-controlling interests - - 586 - - - 586 71 657
Balance at
31 March 2016
4,495 128,792 107,441 (47) 153 (198,842) 41,992 61 42,053
Total comprehensive income/(expense) for the period - - - - (108) (4,882) (4,990) (143) (5,133)
Share based payments - - - - - 884 884 - 884
Shares issued 36 - - 14 - - 50 - 50
Premium on shares issued - - - - - - - - -
Issue of subsidiary shares to non-controlling interests - - 6,491 - - - 6,491 12,702 19,193
Issue of subsidiary shares to Group companies - - (576) - - - (576) - (576)
Balance at
31 March 2017
4,531 128,792 113,356 (33) 45 (202,840) 43,851 12,620 56,471
Share capital is the amount subscribed for shares at nominal value (note 24).
Share premium account represents the excess of the amount subscribed for share capital over the nominal value of these
shares, net of share issue expenses. Share issue expenses comprise the costs in respect of the issue by the Company of new
shares.
See note 25 for details concerning Other reserves
Non-controlling interests relates to the investment of various parties into Tricoya Technologies Limited and Tricoya
Ventures UK Limited (notes 9 and 25).
Own shares represents a total of 673,355 shares issued to an Employee Benefit Trust ('EBT') at nominal value on 4 July 2016
and 6,080 shares issued to the EBT at nominal value on 6 July 2015. These shares shall vest if the employees, including the
Executive Directors, remain in employment with the Company to the vesting date, being 1 July 2017 (subject to certain other
provisions including good-leaver, take-over and committee discretion provisions). (note 15).
Foreign currency translation reserve arises on the re-translation of the Group's USA subsidiary's net assets which are
denominated in a different functional currency, being US dollars.
Accumulated losses represent the cumulative loss of the Group attributable to the owners of the parent.
The notes on pages 29 to 55 form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March 2017
2017 2016
E'000 E'000
Loss before taxation (4,359) (466)
Adjustments for:
Amortisation of intangible assets 556 524
Depreciation of land, property, plant and equipment 2,157 2,148
Net (gain)/loss on disposal of property, plant and equipment (580) 35
Net finance expense 558 177
Equity-settled share-based payment expenses 884 1,038
Cash flows generated (used in)/from operating activities before changes in working capital (784) 3,456
Increase in trade and other receivables (2,936) (714)
Decrease in deferred income - (1,661)
Increase in inventories (3,322) (453)
Increase/(Decrease) in trade and other payables 5,737 (176)
Net cash generated (used in)/from operating activities before tax* (1,305) 452
Tax (paid)/received (745) 229
Net cash flows generated (used in)/from operating activities (2,050) 681
Cash flows from investing activities
Interest received 2 5
Proceeds from disposal of property, plant and equipment 4,223 3
Expenditure on property, plant and equipment (6,416) (2,565)
Expenditure on intangible assets (415) (1,490)
Net cash used in investing activities (2,606) (4,047)
Cash flows from financing activities
Proceeds from loans 20,736 -
Other financing costs (954) -
Interest paid (250) (191)
Repayment of finance lease (173) (106)
Proceeds from issue of share capital 50 124
Proceeds from issue of subsidiary shares to non-controlling interests 19,122 1,000
Share issue costs (relating to issue of subsidiary shares) (805) (44)
Net cash generated from financing activities 37,726 783
Net increase/(decrease) in cash and cash equivalents 33,070 (2,583)
Effect of exchange rate changes on cash and cash equivalents (83) (17)
Opening cash and cash equivalents 8,186 10,786
Closing cash and cash equivalents 41,173 8,186
*Cash out-flows from operating activities after changes in working capital included E128,000 in respect of exceptional
costs (2016: Enil).
The notes on pages 29 to 55 form an integral part of these financial statements.
Accsys Technologies PLC
Notes to the financial statements for the year ending 31 March 2017
1. Accounting Policies
General information
The financial information set out in these preliminary results does not constitute the company's statutory accounts for the
periods ended 31 March 2017 or 31 March 2016. Statutory accounts for the period ended 31 March 2016 have been filed with
the Registrar of Companies and those for the period ended 31 March 2016 will be delivered to the Registrar in due course;
both have been reported on by the auditors. The auditors' report on the Annual Report and Financial Statements for the
period ended 31 March 2016 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The auditors' report on the Annual Report and Financial Statements for the period ended 31 March 2017 is unqualified, did
not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Basis of accounting
The Group's financial statements have been prepared under the historical cost convention (except for certain financial
instruments and equity investments which are measured at fair value), in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board as endorsed by the European Union, interpretations
issued by the IFRS Interpretations Committee (IFRS IC) and with those parts of the Companies Act 2006 applicable to
companies preparing their financial statements under adopted IFRS.
Going Concern
The financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational
existence for the foreseeable future, and at least 12 months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future, including taking into account the proceeds from the Firm Placing and Open offer
which was successfully completed on 23 April 2017. These forecasts indicate that, in order to continue as a going concern,
the Group is dependent on the achievement of certain operating performance measures relating to the production and sales of
Accoya® wood from the plant in Arnhem and the collection of on-going working capital items in line with internally agreed
budgets.
The Directors have considered the internally agreed budgets and performance measures and believe that appropriate controls
and procedures are in place or will be in place to make sure that these are met. The Directors believe that while some
uncertainty inherently remains in achieving the budget, in particular in relation to market conditions outside of the
Group's control, that there are a sufficient number of alternative actions and measures that can be taken in order to
achieve the Group's medium and long term objectives.
Therefore the Directors believe that the going concern basis is the most appropriate on which to prepare the financial
statements.
Changes in accounting policies
No new accounting standards, amendments or interpretations have been adopted in the period which have any impact on these
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 income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected prior to transition to IFRS, were accounted for using the
merger method of accounting. Under this method, assets and liabilities are included in the consolidation at their book
values, not fair values, and any differences between the cost of investment and net assets acquired were taken to the
merger reserve. The majority of the merger reserve arose from a corporate restructuring in the year ended 31 March 2006
which introduced Accsys Technologies PLC as the new holding company.
Further details concerning the Tricoya Consortium are included in note 9.
Revenue recognition
Revenue is measured at the fair value of the consideration receivable. Revenue is recognised to the extent that it is
probable that the economic benefit will flow to the Group and that the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the significant risks and rewards of ownership of the goods have
been passed to the buyer, the timing of which is dependent on the particular shipment terms. When a customer provides
untreated wood to be processed by the Group in order to produce Accoya®, revenue is recognised when the Group's obligations
under the relevant customer contract have been substantially completed, which is before the finished Accoya® has been
collected by the customer. Manufacturing revenue includes the sale of Accoya® wood and other revenue, principally relating
to the sale of acetic acid.
Licensing fees and Marketing income
Licence fee and marketing income is recognised over the period of the relevant agreements according to the specific terms
of each agreement or the quantities and/or values of the licensed product sold. The accounting policy for the recognition
of licence fees is based upon an assessment of the work required before the licence is signed and subsequently during the
design, construction and commissioning of the licensees' plant, with an appropriate proportion of the fee recognised upon
signing and the balance recognised as the project progresses to completion. Marketing revenue when the company acts as
principal is recognised based on the actual work completed in the period. The amount of any cash or billings received but
not recognised as income is included in the financial statements as deferred income and shown as a liability.
Finance income
Interest accrues using the effective interest method, i.e. the rate that discounts estimated future cash receipts through
the expected life of the financial instrument to the net carrying amount of the financial asset.
Finance expense
Finance expenses include the fees, interest and other finance charges associated with the Group's loan notes and credit
facilities, which are expensed over the period that the Group has access to the loans and facilities.
Foreign exchange gains or losses on the loan notes are included within finance expenses.
Interest on the £16.25 million unsecured fixed rate loan notes issued to Business Growth Fund ('BGF') and Volantis on 29
March 2017 has been expensed. Interest on the E2 million term loan drawn down from Solvay Acetow GmBH (now known as Rhodia
Acetow GmBH) on 29 December 2016, to part-finance capital expenditure at the Arnhem plant, has been capitalised as it is
directly attributable to the expansion.
Finance expenses also include an allocation of finance charges in respect of the sale and leaseback of the Arnhem land and
buildings, and the lease of London Office fit out and furniture, accounted for as a finance lease. The total finance charge
(calculated as the difference between the total minimum lease payments and the liability at the inception of the lease) is
allocated over the life of the lease using the sum-of-digits method.
Share based payments
The Company awards nil cost options to acquire shares of the Company to certain Directors and employees. The Company also
awards bonuses to certain Directors and employees in the form of the award of deferred shares of the Company.
The fair value of options, deferred shares and matching shares granted are recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and is charged to the statement of comprehensive
income over the vesting period during which the employees become unconditionally entitled to the options or shares.
The fair value of share options granted is measured using a modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual
number of share options that vest only where vesting is dependent upon the satisfaction of service and non-market vesting
conditions.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting condition.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension and employee benefit schemes on behalf of its employees.
These costs are charged to the statement of comprehensive income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of
comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date together with any adjustment to tax payable in respect of previous years. Current tax
includes the expected impact of claims submitted by the Group to tax authorities in respect of enhanced tax relief for
expenditure on research and development.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
· the initial recognition of goodwill,
· the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a
business combination, and
· differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Recognition of deferred
tax assets is restricted to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment
in which it operates (the functional currency). For the purposes of the consolidated financial statements, the results and
financial position of each Group company are expressed in Euro, which is the functional currency of the parent Company, and
the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average monthly exchange rates prevailing in the month in which the transaction took place. Exchange differences
arising, if any, are recognised in other comprehensive income, finance expense and the foreign currency translation
reserve.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received
and the Group will comply with the attached conditions. When the grant relates to an expense item, it is recognised as
income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.
Where the grant relates to an asset they are credited to a deferred income account and released to the statement of
comprehensive income over the expected useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the
consideration paid and the fair value of the identifiable assets and liabilities acquired. It is capitalised, and is
subject to annual impairment reviews by the Directors. Any impairment arising is charged to the statement of comprehensive
income. Where the fair value of the identifiable assets and liabilities acquired is greater than the fair value of
consideration paid, the resulting amount is treated as a gain on a bargain purchase and has been recognised in the income
statement.
Other intangible assets
Intellectual property rights, including patents, which cover a portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any amounts by which the carrying value is assessed during
an annual review to have been impaired. At present, the useful economic life of the intellectual property is considered to
be 20 years.
Internal development costs are incurred as part of the Group's activities including new processes, process improvements,
identifying new species and improving the Group's existing products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38 'Intangible Assets' (including criteria concerning
technical feasibility, ability and intention to use or sell, ability to generate future economic benefits, ability to
complete the development and ability to reliably measure the expenditure) have been met. These internal development costs
are amortised on a straight line basis over their useful economic life, between 10 and 20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of bringing the asset to the working condition and location of
its intended use. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each
asset, except freehold land, over its expected useful life on a straight line basis, as follows:
Plant and machinery These assets comprise pilot plants and production facilities. These
facilities are depreciated from the date they become available for use at rates applicable to the asset lives expected for
each class of asset, with rates between 5% and 20%.
Office equipment Between 20% and 50%.
Leased land and buildings Land held under a finance lease is depreciated over the life of the lease.
Freehold land Freehold land is not depreciated.
Impairment of non-financial assets
The carrying amount of the non-current non-financial assets of the Group is compared to the recoverable amount of the
assets whenever events or changes in circumstances indicate that the net book value may not be recoverable, or in the case
of goodwill, annually. The recoverable amount is the higher of value in use and the fair value less cost to sell. In
assessing the value in use, the expected future cash flows from the assets are determined by applying a discount rate to
the anticipated pre-tax future cash flows. An impairment charge is recognised in the statement of comprehensive income to
the extent that the carrying amount exceeds the assets' recoverable amount. The revised carrying amounts are amortised or
depreciated in line with Group accounting policies. A previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the statement of comprehensive income and is limited to the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognised in prior years. Assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units) for purposes of
assessing impairment.
Leases
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis
over the lease term.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the
lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance
expenses and reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the
liability.
Inventories
Raw materials, which consist of unprocessed timber and chemicals used in manufacturing operations are valued at the lower
of cost and net realisable value. The basis on which cost is derived is a first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the lower of weighted average cost of production or net
realisable value. Costs include direct materials, direct labour costs and production overheads (excluding the
depreciation/depletion of relevant property and plant and equipment) absorbed at an appropriate level of capacity
utilisation. Net realisable value represents the estimated selling price less all expected costs to completion and costs
to be incurred in selling and distribution.
Financial assets
Financial assets are classified as cash and cash equivalents, available for sale investments and loans and receivables,
depending on the purpose for which the asset was acquired. When financial assets are recognised initially, they are
measured at fair value plus, in the case of investments not at fair value, through profit or loss directly attributable
transaction costs.
Except where a reliable fair value cannot be obtained, unlisted shares held by the Group are classified as available for
sale investments and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly
in equity, with the exception of impairment losses which are recognised directly in profit or loss. Where an investment is
disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the profit or loss in the
year. Where it is not possible to obtain a reliable fair value, these investments are held at cost less provision for
impairment.
Loans and receivables, which comprise non-derivative financial assets with fixed and determinable payments that are not
quoted on an active market are initially recognised at fair value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted on an active
market. They arise principally from the provision of goods and services to customers. Trade receivables are initially
recognised at fair value less an allowance for any uncollectible amounts. A provision for impairment is made when there is
objective evidence that the Group will not be able to collect debts. Bad debts are written off when identified.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits,
including liquidity funds, with an original maturity of three months or less. For the purpose of the statement of
consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially recognised at fair value and subsequently carried at amortised
cost using the effective interest method.
Loans and other borrowings are initially recognised at the fair value of amounts received net of transaction costs and
subsequently measured at amortised cost using the effective interest method.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of
a financial liability. The Group's shares are classified as equity instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive. The
chief executive is responsible for allocating resources and assessing performance of the operating segments, has been
identified as steering the committee that makes strategic decisions.
2. Accounting estimates and judgements
In preparing the Consolidated Financial Statements, management has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical judgments that have been made in arriving at the amounts
recognised in the Consolidated Financial Statements and the key sources of estimation and uncertainty that have a
significant risk of causing a material adjustment to the carrying value of assets and liabilities in the next financial
year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of fee income from licensees over the period of the agreement and
is satisfied that the recognition of such revenue is appropriate. The recognition of fees is based upon an assessment of
the work required before the licence is signed and subsequently during the construction and commissioning of the licensees'
plant, with an appropriate proportion of the fee recognised upon signing and the balance recognised as the project
progresses to completion. The Group also considers the recoverability of amounts before recognising them as income.
Goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated
above. The recoverable amounts of cash-generating units have been determined based on value in use calculations. These
calculations require the use of judgements in relation to discount rates and future forecasts (See note 16). The
recoverability of these balances is dependent upon the level of future licence fees and manufacturing revenues. While the
scope and timing of the production facilities to be built under the Group's existing and future agreements remains
uncertain, the Directors remain confident that revenue from own manufacturing, existing licensees, new licence or
consortium agreements will be generated, demonstrating the recoverability of these balances.
Intellectual property rights and property, plant and equipment
The Group tests the carrying amount of the intellectual property rights and property, plant and equipment whenever events
or changes in circumstances indicate that the net book value may not be recoverable. These calculations require the use of
estimates in respect of future cash-flows from the assets by applying a discount rate to the anticipated pre-tax future
cash-flows. The Group also reviews the estimated useful lives at the end of each annual reporting period (See note 16 &
17). The price of the Accoya 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 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.
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.
Available for sale investments
The Group has an investment in unlisted equity shares carried at nil value. The investment is valued at cost less any
impairment as a reliable fair value cannot be obtained since there is no active market for the shares and there is
currently uncertainty around the future funding of the business. The Group makes appropriate enquiries and considers all of
the information available to it in order to assess whether any impairment has occurred (See note 18).
New standards and interpretations in issue but not yet effective at the date of authorisation of these financial
statements:
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been
applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by
the EU).
• IFRS 9 'Financial Instruments'
• IFRS 11 (amendments) 'Joint arrangements'
• IFRS 14 'Regulatory deferral accounts'
• IFRS 15 'Revenue from contracts with customers'
• IFRS 16 'Leases'
• IAS 1 (amendments) 'presentation of financial statements'
• IAS 7 (amendments) 'Cash flow statements'
• IAS 12 (amendments) 'Income taxes'
• IAS 19 (amendments) 'Employee contributions'
• IAS 16 (amendments) 'property plant and equipment'
• IAS 38 (amendments) 'Intangible assets'
• IAS 27 (amendments) 'Separate financial statements'
• IAS 28 (amendments) 'Associates and joint ventures'
The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact
on the financial statements of the Group in future periods.
3. Segmental reporting
The Group's business is the manufacturing of and development, commercialisation and licensing of the associated proprietary
technology for the manufacture of Accoya wood, Tricoya wood elements and related acetylation technologies. Segmental
reporting is divided between corporate activities, activities directly attributable to Accoya, to Tricoya or research and
development activities. This note has been represented and restated following the formation of the Tricoya Consortium to
more appropriately reflect costs associated with Accoya and Tricoya.
2017
Accoya Tricoya Corporate Research & Development TOTAL
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