REG - Accsys Technologies - Preliminary Results <Origin Href="QuoteRef">ACCS.L</Origin> - Part 5
20/06/2017 07:06
- Part 5: For the preceding part double click ID:nRST5354Id
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At 31 March 2017 658 17,428 1,013 19,099
Net book value
At 31 March 2017 987 20,328 366 21,681
At 31 March 2016 4,710 15,157 405 20,272
At 31 March 2015 4,827 14,633 88 19,548
Included within property, plant and equipment are assets with an initial cost of E7,544,000 and a net book value at 31
March 2017 of E4,442,000 which has been accounted for as a finance lease. (See note 28). Assets with a net book value of
E18.8m are subject to security agreements associated with the Solvay loan facility. See note 30.
18. Other financial assets
2017 2016
E'000 E'000
Available for sale investments - -
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. After the year-end, 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.
The carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair value,
as there was no active market for these shares as at 31 March 2017, and there is significant uncertainty over the future of
Diamond Wood, and as such a reliable fair value cannot be calculated.
The historical cost of the listed shares held at 31 March 2017 is E10m (2016: E10m). However, a provision for the
impairment of the entire balance of E10m continues to be recorded as at 31 March 2017.
19. Deferred Taxation
The Group has a deferred tax asset of Enil (2016: Enil) relating to trading losses brought forward.
The Group also has an unrecognised deferred tax asset of E24.0m (2016: E23.2m) which is largely in respect of trading
losses of the UK subsidiaries. The deferred tax asset has not been recognised due to the uncertainty of the timing of
future expected profits of the related legal entities which is dependent on the profits attributable to licensing and
future manufacturing income.
20. Subsidiaries
A list of subsidiary investments, including the name, country of incorporation and proportion of ownership interest is
given in note 4 to the Company's separate financial statements.
21. Inventories
2017 2016
E'000 E'000
Raw materials and work in progress 6,447 2,534
Finished goods 5,349 5,811
11,796 8,345
The amount of inventories recognised as an expense during the year was E39,030,867 (2016: E30,985,787). The cost of
inventories recognised as an expense includes a net debit of E15,549 (2016: credit of E203,129) in respect of the
inventories sold in the period which had previously been written down to net realisable value.
22. Trade and other receivables
2017 2016
E'000 E'000
Trade receivables 4,133 4,051
Other receivables 180 180
Prepayments 3,269 916
Accrued income 30 500
7,612 5,647
Prepayments increased as at 31 March 2017 to E3.3m, due in large part to costs associated with the Company's capital raise,
which completed post year end (see note 33).
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 E637,000 of the trade and other receivables
denominated in US Dollars (2016: E380,000).
The age of receivables past due but not impaired is as follows:
2017 2016
E'000 E'000
Up to 30 days overdue 251 258
Over 30 days and up to 60 days overdue - 61
Over 60 days and up to 90 days overdue - 0
Over 90 days overdue 36 4
288 323
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 E25,001,000 (2016: E25,001,000) due
from Diamond Wood.
Movement in provision for doubtful debts:
2017 2016
E'000 E'000
Balance at the beginning of the period 25,002 25,021
Net increase/(release) of impairment if not required (1) (19)
Balance at the end of the period 25,001 25,002
Summary of Receivable Impairments:
2017 2016
E'000 E'000
Trade receivables - Accoya wood * - 1
- 1
* The impairment of Accoya® wood receivables related to two Accoya® customers.
23. Trade and other payables
2017 2016
E'000 E'000
Trade payables 6,618 4,301
Other taxes and social security payable 201 321
Other payables - 402
Accruals and deferred income 5,705 3,039
12,524 8,063
24. Share capital
2017 2016
E'000 E'000
Allotted - Equity share capital
90,643,585 Ordinary shares of E0.05 each (2016: 89,890,019 Ordinary shares of E0.05 each) 4,531 4,495
4,531 4,495
In year ended 31 March 2016:
891,044 shares issued on 6 July 2015 and 16,123 shares issued on 10 December 2015 to an Employee Benefit Trust ('EBT') at
nominal value.
On 6 July 2015, a total of 20,000 of E0.05 Ordinary shares were released to an employee following the exercise of options
granted in a prior year.
On 14 August 2015, a total of 27,825 of E0.05 Ordinary shares were issued and released to employees together with 27,825 of
E0.05 Ordinary shares issued to trust on 18 August 2014.
On 14 August 2015, a total 63,909 of E0.05 Ordinary shares were issued to a trust under the terms of the Employee Share
Participation Plan. On 11 December 2015, a total of 16,302 of E0.05 Ordinary shares were issued to a trust under the terms
of the Employee Share Participation Plan.
On 20 January 2016, a total of 53,922 of E0.05 Ordinary shares were issued and released to employees together with 53,922
of E0.05 Ordinary shares issued to trust on 19 January 2015.
In year ended 31 March 2017:
673,355 shares were issued on 4 July 2016 to an Employee Benefit Trust ('EBT') at nominal value.
On 15 August 2016, a total of 63,909 of E0.05 Ordinary shares were issued and released to employees together with 63,909 of
E0.05 Ordinary shares issued to an employee trust on 14 August 2015.
On 9 February 2017, a total of 16,302 of E0.05 Ordinary shares were issued and released to employees together with 16,302
of E0.05 Ordinary shares issued to an employee trust on 26 January 2016.
Post year-ended 31 March 2017:
On 24 April 2017 a total of 20,323,986 of E0.05 Ordinary shares were issued at E0.69 per share, in accordance with the
Company's capital raise announced on the 29 March 2017 (see note 33).
25. Other reserves
Capital redemp- Warrant reserve Merger reserve Other reserve Total Other reserves
tion reserve
E000 E000 E000 E000 E000
Balance at (151) - 106,707 885 107,441
31 March 2016
Share Warrants issued - - - - -
Issue of subsidiary shares to non-controlling interests 299 - - 6,192 6,491
Issue of subsidiary shares to Group companies - - - (576) (576)
Balance at 148 - 106,707 6,501 113,356
31 March 2017
The closing balance of the capital redemption reserve represents the amounts transferred from share capital on redemption
of deferred shares in a previous period. The movement in the current period reflects obligations ceasing from the
investment by BP Ventures into Tricoya Technologies Limited upon the finalisation of the full consortium.
The merger reserve arose prior to transition to IFRS when merger accounting was adopted.
The other reserve represents the amounts received for subsidiary share capital from non-controlling interests (see note
26).
26. Transactions with non-controlling interests
On 3 February 2016, Tricoya Technologies Limited ("TTL") issued 500,000 Series A Preference shares for the consideration of
E1m for 3% equity share capital of TTL.
On 29 March 2017 and earlier in the financial year, TTL issued further Series A Preference shares and transferred Ordinary
shares to non-controlling interests for consideration of E15.79 million, resulting in the following non-controlling
shareholdings:
BP Ventures (9%), Medite (12.1%), BGF (2.8%), Volantis (1.5%)
On 29 March 2017, Tricoya Ventures UK Limited ("TVUK") issued Ordinary shares to non-controlling interests for
consideration of E3.26 million, resulting in the following shareholdings:
BP Chemicals (30%), Medite (8.2%)
The total carrying amount of the non-controlling interests in TTL and TVUK at 31 March 2017 was E12.62 million.
The Group recognised an increase in other reserves as summarised below.
2017 2016
E'000 E'000
Opening Balance 885 -
Carrying amount of non-controlling interests issued (12,702) (71)
Consideration paid by non-controlling interests 19,123 1,000
Share issue costs relating to non-controlling interests (229) (44)
Excess of consideration paid recognised in Group's equity 7,077 885
27. Commitments under operating leases
The Group leases land, buildings and machinery under non-cancellable operating lease agreements. The total future value of
the minimum lease payments that are due is as follows:
2017 2016
E'000 E'000
Operating lease payments due
Within one year 1,019 1,075
In the second to fifth years inclusive 1,625 2,901
In greater than five years 173 1,205
2,817 5,181
The majority of commitments under operating leases relate to the Group's offices in the UK, The Netherlands and U.S.A. and
land in The Netherlands which is adjacent to our plant.
During the period the Group entered agreements which are expected to result in new lease agreements commencing in the year
ended 31 March 2018. This includes a lease relating to the land at the Tricoya plant Saltend site in Hull and a lease over
land in Arnhem, following the sale to Bruil in the period. This lease agreement also includes substantial new warehouse and
office facilities which are currently being constructed by Bruil. The building element will be accounted for as a finance
lease - see note 28.
28. Commitments under finance leases
Agreements were reached in August 2011 for the sale and leaseback of the land and buildings in Arnhem for a total of E4m.
E2.2m was received in 2011 with the remaining amount received in the following year, but accounted for as an operating
lease.
In addition, during the prior period agreements were entered into for the lease of office fit-out and furniture for the
London head office for a total of E0.4m.
In addition, in the current period agreements were entered into for the sale of the remaining plot of land completed in
August 2016. Under the agreement with the purchaser, Bruil, they will construct and then lease to Accsys new warehouse and
office facilities. The construction is not expected to complete until later in the new financial year and therefore no
lease has been recognised in the period. A further lease agreement with Bruil was entered into in the period relating
directly to infrastructure work associated with the expansion of the chemical plant. This has been accounted for as a
finance lease, with a new asset and liability of E1.0m being recognised as at 31 March 2017.
These transactions have resulted in a finance lease creditor of E3.1m as at 31 March 2017.
Minimum lease payments
2017 2016
E'000 E'000
Amounts payable under finance leases:
Within one year 496 375
In the second to fifth years inclusive 1,770 1,403
After five years 3,016 1,490
Less: future finance charges (2,206) (967)
Present value of lease obligations 3,076 2,301
29. Commitments under loan agreements
2017 2016
E'000 E'000
Amounts payable under loan agreements:
Within one year - -
In the second to fifth years inclusive 5,407 -
In greater than five years 14,690 -
20,097 -
Loan Notes:
On 29 March 2017 the Group issued £16.25 million (E18.38 million) of unsecured fixed rate loan notes, due 2021. £10.48
million of Loan Notes in principal were issued to Business Growth Fund ('BGF'), with £5.77 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.
Rhodia Acetow Facility
On 29 December 2016 the Group drew down E2 million of its E9.5 million term loan facility with Rhodia Acetow GmBH (formerly
known as Solvay Acetow GmBH). The facility is to be used to design, procure and build an extension to the capacity of the
Arnhem Plant, with a new reactor for the manufacture of Accoya at a design capacity of approximately 20,000m3. This
facility secured against existing Arnhem chemical plant and associated assets and is subject to interest at 7.5% per annum.
At 31 March 2017, the Group had E2m (2016: Enil) borrowed under this facility. Interest is rolled up until quarterly
repayment of the loan commences on 29 December 2018.
Tricoya facility:
On 29 March 2017 the Company's subsidiary (Tricoya Ventures UK Limited) entered into a six-year E17.2 million (E15
million net) finance facility agreement with the Royal Bank of Scotland Plc in respect of the construction and operation of
the Hull Plant. The facility is secured by fixed and floating charges over all assets of Tricoya Ventures UK Limited. At 31
March 2017, the Group had Enil (2016: Enil) borrowed under the facility which will be drawn down, as required, once the
funds provided by shareholders have been fully utilised. 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:
Trade receivables facility
In August 2016 the Group amended its working capital facility with ABN Commercial Finance, initially agreed in 2011. The
facility is now a E3.0m credit facility secured upon the receivables and inventory of the Accoya manufacturing business.
Inventories facility
In August 2016 the Group amended its credit facility agreement with ABN AMRO Bank N.V., which had been initially agreed in
2013. The facility is 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 E1.5m.
Both facilities are subject to interest at 2% above the ABN AMRO base rate of 3.5% as at 31 March 2017 (2016: 3.6%). At 31
March 2017, the Group had Enil (2016: Enil) borrowed under both of the facilities.
30. Equity options
On 2 February 2016 the Company's subsidiary, Tricoya Technologies Limited, issued Warrants to subscribe for up to 175,000
of its Series A Preference Shares in favour of BP Ventures Limited (100,000) and Titan Wood Limited (75,000) at a price of
E2.00 per Warrant Share during the "Exercise Period", which started on 2 February 2016 and runs to the earlier of either
(i) 2 February 2021; (ii) the date of an Exit; and (iii) exercise of the Option.
On the 29 March 2017, the Company announced the formation of the Tricoya 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 £0.62 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
are expected to be converted to Options, such that in total 13,104,839 Options will exist (with 8,449,172 attributable to
BGF and 4,655,667 attributable to Volantis). This represents 11.8% of the enlarged issued share capital of the Company,
following the Firm Placing and Open offer having been completed in April 2017.
In addition, following the issue of Ordinary Shares by the Company resulting from the Firm Placing and Open offer the
exercise price was adjusted to £0.5971 per Ordinary Share.
31. Financial instruments
Financial instruments
Finance lease
Agreements were reached in August 2016 for the sale and leaseback for the land in Arnhem resulting in proceeds of E4.2m
received in the period. A resulting gain of E635,000 was recognised as a result of the book value of the land being lower
than the sale price. Under the arrangements, the landlord has agreed to construct a new warehouse and office building which
will be connected to Accsys's existing manufacturing site. This building will be built by the landlord and leased to Accsys
over a 20 year period with further option to renew. The landlord is the same landlord that Accsys sold land and buildings
to in 2011 and 2012 associated with the existing manufacturing plant.
Finance lease creditors of: E1,869,000 as at 31 March 2017 (2016: E1,977,000) relates to the sale and leaseback of land and
buildings in Arnhem in 2011 and 2012 over 15 year lease terms and E255,000 as at 31 March 2017 (2016: E325,000) relates to
a lease of the London head office.
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 2017 (2016: Enil). The Board deems it prudent for the Company to protect as strong a
statement of financial position as possible during the current phase of the Company's growth strategy.
Categories of financial instruments 2017 2016
E'000 E'000
Available for Sale investments - -
Loans and receivables
Trade receivables 4,133 4,051
Other receivables 180 180
Money market deposits in Euro 1,326 2,621
Money at call in Euro 18,134 5,210
Money at call in US dollars 77 175
Money at call in Sterling 21,635 95
Money at call in New Zealand dollars 1 85
Financial liabilities at amortised cost
Trade payables (6,618) (4,301)
Finance lease payable (3,076) (2,301)
Other Payables - (402)
Loan notes and other long term borrowings (20,097) -
15,695 5,413
Money market deposits have interest rates fixed for less than three months at a weighted average rate of 0.14% (2016:
0.59%). Money market deposits are held at financial institutions with high credit ratings (Standard & Poor's rating of
AA).
All assets and liabilities mature within one year except for the finance leases, for which details are given in note 28 and
loans, for which details are given in note 29.
Trade payables are payable on various terms, typically not longer than 30 days.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
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
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 does not currently enter into any hedging arrangements, although will continue to monitor appropriateness of
doing so.
Interest rate risk management
The Group's borrowings are limited to fixed rate loans with BGF, Volantis and Solvay, together with the sale and leaseback
of the Arnhem land and buildings, and the lease of the office fit out and furniture in London. The interest rate in respect
of the unused loan facility agreed with RBS 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 hedging arrangements, although will review the need to do so in respect of the variable interest rate loan facility
with RBS Bank.
Credit risk management
The Group is exposed to credit risk due to its trade receivables due from customers and cash deposits with financial
institutions. The Group's maximum exposure to credit risk is limited to their carrying amount recognised at the balance
sheet date.
The Group ensures that sales are made to customers with an appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables at year end to be of good credit quality including those
that are past due (see note 22). The Group is not exposed to any significant credit risk exposure in respect of any single
counterparty or any group of counterparties with similar characteristics other than the balances which are provided for as
described in note 22.
The Group has credit risk from financial institutions. Cash deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one financial institution.
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
2017 2016
E'000 E'000
Contracted but not provided for in respect of property, plant and equipment 38,424 695
Included in the above, are amounts relating to the Engineering, Procurement and Construction contracts relating to both the
Tricoya plant and the Arnhem expansion project. In addition, the figure includes further commitments relating to the
Arnhem expansion project.
33. Post Balance Sheet Events
On 29 March 2017, Accsys announced the details of a proposed Firm Placing and Open Offer to raise proceeds of up to
approximately E14,023,550 (before expenses) through the issue of 17,400,000 Firm Placing Shares and up to 2,923,986 Open
Offer Shares, at the Offer Price of E0.69 per New Ordinary Share.
The Open Offer closed for acceptances on 20 April 2017. Accsys received valid acceptances under the Open Offer and its
Excess Application Facility in respect of 12,965,475 New Ordinary Shares, representing an over-subscription in excess of
four times the 2,923,986 New Ordinary Shares available under the Open Offer and Excess Application Facility. As
applications under the Excess Application Facility could not be satisfied in full, such New Ordinary Shares available were
allocated in such manner as the Directors determined, in their absolute discretion in accordance with the terms set out in
the Prospectus.
The gross proceeds raised under the Open Offer were therefore the maximum amount of E2.0m. Accordingly, the aggregate
amount raised pursuant to the Firm Placing and Open Offer was E14.0m before expenses, being E12.3m net of expenses.
This information is provided by RNS
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