REG - Accsys Technologies - Half-year Report
21/11/2023 07:15
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RNS Number : 1164U Accsys Technologies PLC 21 November 2023
AIM: AXS
Euronext Amsterdam: AXS
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
21 November 2023
Accsys Technologies PLC
("Accsys", "the Group" or the "Company")
Interim results for the six months ended 30 September 2023
Accsys, the fast-growing company that enhances the natural properties of wood
to make high performance and sustainable building products, today announces
its unaudited interim results for the six months to 30 September 2023 (H1
FY24).
Six months to 30 Sep 2023
Six months to 30 Sep 2022 % Change
Revenue €71.2m €58.9m 21%
Gross profit €20.3m €18.1m 12%
Underlying EBITDA(1) €1.6m €4.5m (64%)
Period end net debt(3) (€48.2m) (€61.4m)
Adjusted cash(4) €10.8m €7.2m
Highlights
· 21% growth in revenue at €71.2m, driven by good product demand,
higher average sales prices and increased production capacity following
reactor 4 start-up in September 2022
· 20% growth in Accoya sales volumes at 28,807m(3):
o Strong growth of Accoya in Rest of World and Rest of Europe markets, up
42% and 28% respectively
o 30% growth in Accoya for Tricoya production at 8,393m(3), supporting our
belief in Tricoya market potential
· 2 percentage points decline in gross profit margin to 29%,
reflecting higher raw material costs and wood inventory optimisation
· 64% decrease in underlying EBITDA at €1.6m: volume growth and
higher average Accoya prices offset by:
o Increased pre-operational costs in Accoya plant in Kingsport, US, ahead of
completion in mid-2024 and Tricoya UK plant operating costs, due to a change
in accounting treatment(5)
o Increased operating expenditure on sales & marketing, executive
recruitment and engineering costs
· Strategic growth projects:
o Arnhem - plant performing well; efficiency improvements ongoing
o Accoya plant in Kingsport, US - construction of new 43,000m(3) plant
progressing well and in line with plan; on-track for completion and commercial
operation in mid-2024
· Tricoya UK plant project - while Accsys continues to believe in
the market potential for Tricoya, in view of the current operating environment
and shift of Company focus on the Accoya plant in Kingsport, US, the Board is
undertaking a review of the viability, strategic interest and financial
capabilities of its Tricoya UK plant in Hull. The review will be conducted in
early calendar year 2024
· Exceptional item(2) of €1.2m in relation to organisational
re-alignment and cost savings initiatives: Actions being taken to deliver
annual cost savings of €3.0m+. Impairment loss (non-cash) of €7.0m
recognised in the period relating to the Tricoya segment due to an increase in
the discount rate used following an increase in market interest rates and the
Company specific market volatility factor
· Net debt at 30 September 2023 of €48.2m, an increase of €4.1m
since the FY23 year end, reflecting capex of €2.0m, increase in working
capital and inventory position and scheduled loan interest payments partially
offset by EBITDA generation during the period
· Fundraising: The Company today announces a fundraising to raise
gross new proceeds of approximately €24m and an extension of its debt
facilities. The proceeds of the fundraising will allow Accsys to complete the
delivery of its Accoya plant in Kingsport, US, in mid-2024, strengthen its
balance sheet and increase working capital headroom in the face of a
challenging macro trading environment. Decisive action has been taken to
secure the fundraising and a debt extension package to ensure the Company has
the funding platform necessary to execute its growth strategy
Notes
(1) Underlying EBITDA is defined as operating profit/(loss) before exceptional
items and other adjustments, depreciation and amortisation, and includes the
Group's attributable share of our USA joint venture's underlying EBITDA. (See
note 2 to the financial statements).
(2) Other exceptional items recognised in the prior year include €58m for
the impairment of Tricoya segment assets and €0.5m related to advisor fees
related to the Tricoya consortium reorganisation.
(3 ) Net debt at 31 March 2023 was €44.1m.
(4) Adjusted cash excludes cash pledged for the Letter of Credit provided to
FHB of €10m.
(5) Tricoya UK's ongoing running costs are being treated as operating
expenditure in the first half of FY24 following the introduction of Tricoya
UK's hold period in H2 FY23.
Dr. Jelena Arsic Van Os, Chief Executive Officer of Accsys, commented:
"In navigating the challenging macro-economic conditions of the first half of
the year, our new management team has shown unwavering commitment in reshaping
Accsys towards a less complex business model with increased execution focus.
As we reflect on our business performance, we acknowledge and proactively
address short-term obstacles. However, our confidence in our innovative
product range remains unshaken, with the conviction that our Accoya and
Tricoya premium offerings set us apart in the market, representing substantial
untapped potential. To ensure delivery on this potential, the Company has
raised today approximately €24m of new proceeds from our shareholders to
improve near-term liquidity and enable us to finalise the construction of our
Accoya plant in Kingsport, US, which alongside our wider operations,
strengthens Accsys's position for growth in both the medium and longer term."
Current trading and outlook
Current market conditions remain challenging, reflecting ongoing difficult
macro conditions across our markets, with sales volumes under continued
pressure as distributors reduce their inventory levels ahead of the upcoming
holiday period. Sales performance by region remains mixed. Despite the
economic environment, we have continued to maintain our premium price point on
both our Accoya and Tricoya products, reflecting their sustainable, durable
and high-performance qualities.
The Board does not expect trading conditions to improve materially until the
middle of the 2024 calendar year. The second half of the financial year is
typically stronger than H1, due to increased sales in the Northern Hemisphere
in anticipation of the peak construction season. Accordingly, the Board
believes there will be an improvement in product demand in Q4 FY24, aided by
the unwind of distributor destocking that has taken place in recent months.
However, despite these factors, given the current market backdrop and expected
sales volume for the remainder of this financial year, the Board believes that
the FY24 results will be below current market expectations.
The remainder of the current financial year will see continued focus on
completion of the Kingsport plant and on building demand for Accoya globally,
as FY24 will see an increase in Company's capacity in conjunction with the
transfer of volumes from Arnhem to Kingsport. The Company will also focus on
delivering continuous operational improvements at Arnhem. With its unique
product portfolio set in a growth industry, increased capacity at Arnhem and
future capacity coming from the new plant in Kingsport, we believe Accsys is
well positioned for future growth. We are broadening our global distributor
network, developing our Approved Manufacturers Programme ("AMP") and
accelerating sales & marketing activity, particularly in the US, which
will support our regional growth. While Accsys continues to believe in the
attractive market and growth potential for Tricoya, in view of the current
operating environment and shift of company focus on the Accoya plant in
Kingsport, US, the Board is undertaking a review of the viability, strategic
interest and financial capabilities of its Tricoya UK plant in Hull.
This announcement comprises inside information for the purposes of EU MAR and
UK MAR. The person responsible for making this announcement is Nick Hartigan,
General Counsel and Company Secretary, Accsys Technologies PLC.
Enquiries:
Investor Relations / Analysts: Katharine Rycroft, Accsys Technologies PLC
ir@accsysplc.com
(mailto:ir@accsysplc.com)
Media: Matthew O'Keeffe, Alex Le May, FTI Consulting
(UK)
+44 (0) 20 3727 1340
Media: Clemens Sassen, Tessa Nelissen, Huijskens Sassen Communications
(NL) +31 (0) 20 68 55 955
Deutsche Numis (London): Oliver Hardy (NOMAD), Ben
Stoop
+44 (0) 20 7260 1000
ABN AMRO (Amsterdam): Julie Wakkie, Diederik Berend
+31 20 628 5789
Accsys Technologies PLC
Chief Executive's Report
Overview of H1 FY24
Revenue and volumes in H1 FY24 were 20% ahead of the prior year. However,
demand for our products softened in some of our markets towards the end of the
half, reflecting exceptionally difficult trading conditions in the building
materials, construction and residential housing markets globally.
Demand for Accsys' premium wood products has, up until the late summer of this
year, always exceeded supply. The quality and desirability of Accoya and
Tricoya continues to be widely recognised throughout the industry and has
allowed us to implement a disciplined pricing strategy. With increased
capacity at Arnhem, we have been able to give our customers and distributors
the opportunity to purchase and hold more products than in recent years. As
the global construction industry has slowed, customers have been holding
inventory and experiencing slowing order books. Correspondingly, new orders
for our products began to slow over the summer as distributors worked down
their stock levels.
In view of this trading environment, we announced on 1 September 2023 that
sales volumes and revenues for FY24 were likely to be below market
expectations. We took immediate and decisive steps to reduce operating costs,
optimise working capital and implement cost saving initiatives and have made
good progress on this over the last few months, details of which can be found
on page 5. In parallel, we are taking actions to accelerate our sales approach
to stimulate demand and achieve greater market penetration.
Our plant in Arnhem performed well in H1 FY24. During the period we have
continued to focus on its efficiency, including further work on optimising
reactor 4 to reduce cycle times and deliver more capacity and also implement
other operational improvement programmes across the site, focusing on cost,
safety and reliability.
We have also made good progress with our Accoya USA JV in Kingsport,
Tennessee. Construction is now c.78% complete and equipment setting c.87%
complete. The project remains on track for commercial operation in mid-2024.
Accsys continues to believe in the attractive market and growth potential for
Tricoya, with product demand remaining strong. In view of the current
operating environment and shift of company focus on the Accoya USA project,
the Board is undertaking a review of the viability, strategic interest and
financial capabilities of its Tricoya UK plant in Hull.
Summary of financial performance
Accsys delivered revenues of €71.2m in H1 FY24, a 21% increase on the prior
year, driven by good product demand, higher average sales prices and increased
production capacity following the start-up of reactor 4 in September 2022.
Despite good revenue growth, Underlying EBITDA decreased by €2.9m to
€1.6m. Volume growth and higher average Accoya prices were offset by higher
average wood prices, partially offset by lower net acetyls cost. Increased
pre-operational costs in the Kingsport plant ahead of completion, higher
Tricoya UK plant operating costs due to a change in accounting treatment(5),
and increased operating expenditure on sales & marketing, executive
recruitment and engineering costs also contributed.
Gross margin weakened by two percentage points to 29% (H1 FY23: 31%),
reflecting higher raw material costs and wood inventory optimisation.
Underlying loss before tax was €5.0m (H1 FY23: loss of €0.6m). Statutory
loss before tax was €13.1m (H1 FY23: €56.3m).
Net debt increased by €4.1m to €48.2m since the FY23 year end, reflecting
capex payments of €2.0m, an increase in working capital and scheduled loan
interest payments, partially offset by EBITDA generation during the period.
An exceptional operating cost of €1.2m has been recognised in the period in
relation to organisational realignment and cost savings initiatives, including
headcount reductions, which are expected to deliver annual savings of more
than €3.0m. An impairment loss (exceptional non-cash item) of €7.0m has
been recognised in the period relating to the Tricoya segment (H1 FY23:
€58.0m) due to an increase in the discount rate used following an increase
in market interest rates and the Company specific market volatility factor.
Summary of product financial performance - Accoya and Tricoya
H1 FY24 Growth on PY
Accoya revenue €68.2m +16%
Accoya sales volumes 28,807m(3) +20%
Sales volume by end market H1 FY24 Growth on PY
m3
UK & Ireland 6,165 +6%
Rest of Europe 7,385 +28%
North America 4,218 +4%
Rest of World 2,646 +42%
Tricoya 8,393 +30%
Revenues from Accoya grew by 16% in the first half of FY24 to €68.2m, driven
by good product demand and increased production capacity following the
commercial start-up of reactor 4 in Arnhem in September 2022. Accoya volumes
grew by 20% to 28,807m(3). Sales volumes in all our end markets grew year on
year, with particularly strong performances recorded in the Rest of World
(+42%) and Rest of Europe (+28%) regions.
Revenues from Accoya for Tricoya as a percentage of total sales volumes
increased in H1 FY24 and now represent 29% of total sales volumes, versus 24%
at the end of the FY23. Accoya for Tricoya revenues in H1 FY24 grew by 31% to
€11.4m, driven by continued strong product demand. Our Accoya for Tricoya
partners remain committed and supportive. Tricoya panel revenue also increased
to €2.9m in H1 FY24.
Update on strategic growth projects - Accoya and Tricoya
Accoya
In September 2022, we completed the expansion of our plant in Arnhem, adding a
new fourth reactor with capacity for an additional 20,000 cubic metres, and
enabling the site's maximum annual capacity to increase to 80,000 cubic
metres. A large proportion of current capacity is being used to seed the US
market, with 16% of FY23 sales volumes going to North America.
In addition to the aforementioned operational improvement programmes across
the plant, other self-help measures to reduce costs and improve manufacturing
quality include improved target operating models that will drive
simplification within operations. As we look to minimise wastage, we will also
introduce new scanning technology which will allow us to identify any material
flaws in Accoya wood prior to being converted into Accoya Color.
Under our joint venture with Eastman, a world leader in the production of
acetyls, we are building an Accoya plant in the US at Eastman's Kingsport,
Tennessee site. The plant has been designed with scalability in mind and is
being built to enable future rapid expansion. Under the joint venture, Accsys
holds a 60% interest and Eastman a 40% interest. Both joint venture partners
continue to be fully engaged in delivering this strategically important
project, which will replicate the proven technology of our successful plant in
Arnhem but with additional improvements, most notably relating to integration
of Eastman's acetyls supply to the new plant - not only is this a safer
process, but it will significantly reduce logistical expense, storage costs
and working capital.
We have continued to make good progress with the construction of the plant
during H1 FY24. Key milestones include the completion of ground works, ongoing
steelwork and main warehouse construction, installation of the reactors on
site, placement of multiple large sub-contracts and procurement of major
equipment. As we move towards completion of the plant, we have commenced
execution of the resourcing plan along with increasing operational readiness
activities which will, in the short term, lead to increased costs being
incurred. The total cost of completion of Kingsport is now estimated to be
c.15% higher than previously communicated at approximately $160m.
Our Accoya Color manufacturing plant in Barry, Wales, has increased our
ability to convert Accoya wood into Accoya Color. In H1 FY24 we produced
2,434m(3) of Accoya Color (H1 FY23: 2,937m(3)), with volumes impacted by
current market weakness. Average sales prices were, however, c.10% higher than
in the prior year - a highly credible performance given the current market
backdrop. Although sales fell by 16% in the Germany, Switzerland and Austria
region (DACH) in H1 FY24, our other markets - including North America -
delivered sales growth of 10% on the prior year. Post 30 September 2023,
product sales have continued to gain momentum in North America, with current
orders indicating higher volume growth in H2 FY24 than in H1 FY24.
As we increase our Accoya production capacity, we continue to expect increased
Accoya Color sales in the medium term. In addition to the product's existing
markets, Accoya Color was launched in the UK in November 2023 with further
market launches in development.
Tricoya
Demand for our Tricoya products remains strong despite limited production and
we are continuing to grow the market with both existing and new customers. In
addition, we will continue our R&D on sourcing alternative wood species
for Tricoya which have a shorter supply chain.
Accsys stopped site activity at the Tricoya UK plant in Hull in November 2022,
placing the project into a hold period to mitigate the risk of weaker
economics on start-up and to allow the Board time to assess the economics and
capability of the plant and its potential returns on investment. The Company
is using modest levels of internally generated cash (c.€0.5m per month) to
maintain the plant and progress certain pre-construction works. These include
mechanical preservation works, detailed construction work scoping, planning
and cost estimating, completion of minor construction packages, software
programming and documentation validation. The remaining costs relate to
employee & office, landlord and insurance costs.
Accsys continues to believe in the attractive market and growth potential for
Tricoya, with product demand remaining strong. In view of the current
operating environment and shift of company focus to the Kingsport project in
the US, the Board is undertaking a review of the viability, strategic interest
and financial capabilities of its Tricoya UK plant in Hull.
Reducing operating costs and optimising working capital
In our trading statement on 1 September 2023, we announced that we are taking
immediate and decisive actions to reduce operating costs and optimise working
capital. Our aim is to re-set and implement a lean operating business model
and to right-size the business, delivering annual cost savings of more than
€3.0m. This is being achieved through organisational alignment, including
headcount reductions - all of which are in non-operational areas - both
centrally (London head office) and locally across our international
operations. In this way Accsys is creating cleaner reporting lines and a
simplified business structure. In addition, we have reduced the use of interim
labour and manual stacking in our Arnhem plant and have significantly scaled
back on the use of third party consultants. Other actions taken during the
period include implementing additional cost controls across all of our
operations, cutting non-discretionary spend and eventually moving to automated
functions and controls.
Going forward, a key focus for the Company will be the effective management of
our supply chain. We are in the process of reducing our wood buying to return
to normalised inventory levels and are looking at options in respect of
anhydride supply to reduce costs.
Accelerating our sales approach
In our September statement, we stated that we would accelerate our sales
approach to stimulate demand and achieve greater market penetration in our
core and emerging markets. Since then, we have accelerated our sales &
marketing activity by adding necessary distribution in key markets. During the
period we appointed six new distributors; two in Belgium, and one each in
Greece, Italy, the UK and the USA. The Company now has 67 distributors of its
products and 661 AMPs worldwide, of which 111 AMPs and eight distributors are
in the Americas. In H1 FY24, the Company added 56 AMPs to its global network,
bringing a total of 85 AMPs in the year to date.
With room to progress further and develop new markets to help build further
global product demand, Accsys continues to establish key window, door,
decking and cladding manufacturing partners through its AMPs and broad
network. Lead generation and brand awareness campaigns continue to promote
Accoya to its key audiences and support the sell through of materials
downstream.
As part of the organisational alignment, the Company is appointing additional
heads in the US and France and engaging with multiple partners in the growing
Middle East region. This year we appointed our first Marketing Coordinator and
Sales Manager in France to execute our sales & marketing strategy. The new
team is focusing on developing the AMP programme in France as well as working
on an Approved Installer Programme. It has made significant progress this year
to date, on-boarding 22 new AMPs with training and best practice in the
production and use of Accoya, to help guarantee high-quality products for end
users. During the period we also appointed a new Marketing Manager in the DACH
region.
Capital Raise
We have today announced a fundraising to raise gross new proceeds of
approximately €24m and an extension of our debt facilities. The proceeds of
the fundraising allow us to complete the delivery of our US plant in Kingsport
in mid-2024, strengthen our balance sheet and increase working capital
headroom in the face of a challenging macro trading environment.
Dr. Jelena Arsic Van Os
Chief Executive Officer
21 November 2023
Accsys Technologies PLC
Finance Review
Statement of comprehensive income
H1 FY24 revenue increased by 21% to €71.2m in H1 FY24 (H1 FY23: €58.9m),
driven by continuing demand for our products, higher average sales prices and
increased production capacity following the start-up of reactor 4 in Arnhem in
September 2022.
Accoya sales volumes increased by 20% to 28,807m(3), reflecting additional
capacity and also a weaker comparable period last year following production
downtime in Arnhem during the tie-in and installation of reactor 4 in 2022.
While demand for both Accoya and Tricoya has been good in H1, demand has
softened across some of our regions towards the end of H1 FY24 and into H2
FY24 as our distributors began to experience a softening in the global
construction and building materials markets.
Accoya for Tricoya sales volumes increased by 30%, with revenues increasing by
31% to €11.4m. Accoya sales to our customers for the manufacture of Tricoya
panels are currently used to develop the market for Tricoya products and now
represent 29% of total Accoya sales volumes (H1 FY23: 27%).
Other Revenue, which predominantly relates to the sale of our acetic acid
by-product into the acetyls market, decreased by 36% to €4.9m (H1 FY23:
€7.6m), reflecting lower acetic acid sales prices. These sales act as a
partial hedge to acetic anhydride costs which also decreased during the
period. Net acetyls costs decreased on the prior year.
Raw wood input costs were higher year on year, with higher wood mix costs in
addition to moderately higher average wood prices.
Cost of sales increased by 25%, with 20% higher sales volumes and higher raw
wood costs being partially offset by lower acetic anhydride costs.
While gross profit of €20.3m was 12% higher than in the prior year (H1 FY23:
€18.1m), gross profit margin fell by two percentage points to 29%. This
reflects our use of higher-cost appearance grade wood for Accoya for Tricoya
production during H1 FY24 as we have sought to continue to lower inventory
levels which increased during 2022 in anticipation of the start-up of reactor
4. In H2 FY24 we will return to using less expensive Spanish radiata pine and
other wood chip grade wood for Accoya for Tricoya production.
Underlying other operating costs (excluding depreciation and amortisation)
increased from €13.3m to €17.7m. This is due to Tricoya UK's ongoing
running costs being treated as operating expenditure in the first half
following the introduction of Tricoya UK's hold period in H2 FY23. It is also
the result of increased investment in sales & marketing, higher
engineering costs and greater spend on executive recruitment.
Depreciation and amortisation charges increased by €1.3m to €4.8m
following commercial production from reactor 4 in September 2022.
Underlying finance expenses increased €0.1m to €1.6m following the
interest on Tricoya UK's NatWest facility not being capitalised post the
introduction of the hold period for Tricoya UK in H2 FY23, higher market
interest rates on the variable rate borrowings held partially offset by a
foreign exchange gain on the cash pledged to ABN AMRO which is held in US
dollars (see note 11).
An impairment loss (exceptional non-cash item) of €7.0m has been recognised
in the period relating to the Tricoya segment (H1 FY23: €58.0m) due to an
increase in the discount rate used following an increase in market interest
rates and the Company specific market volatility factor.
An exceptional operating cost of €1.2m has been recognised in the period for
restructuring costs relating to reducing Accsys' administrative operating cost
base.
No other adjustments have been recognised in the current period which were
previously also excluded from underlying results. These other adjustments
related to foreign exchange differences on the US dollar cash pledged to ABN
AMRO and other foreign exchange differences on cash held in the prior year
period. See note 4 for further details.
Accsys' share of its US joint venture (Accoya USA LLC) net loss, which is
accounted for using the equity method, increased by €0.8m to €1.2m (H1
FY23: €0.4m) as the entity increases its pre-operating activity as it
progresses towards completion in mid-2024.
Underlying loss before tax increased by €4.4m to €5.0m (H1 FY23: €0.6m).
After taking into account exceptional items (including the impairment loss and
restructuring cost) and other adjustments in the prior year period, loss
before tax amounted to €13.1m (FY23: €56.3m).
The tax charge of €0.4m in the first half was in line with the prior year.
Underlying loss per share increased to €0.02 per share (H1 FY23: € nil per
share). A statutory loss per share was recognised of €0.06 per share (H1
FY23: €0.13 per share).
Cash flow
Cash flows generated from operating activities before changes in working
capital decreased by €2.9m to €1.8m (H1 FY23: €4.7m), reflecting the
operational cash flow generated by our plant in Arnhem, partly offset by the
change in treatment on operating costs for the Tricoya UK plant following the
introduction of the hold period in H2 FY23.
Inventory levels increased by €1.9m during the period with higher finished
good levels partially offset by lower raw material levels which are being
closely managed.
At 30 September 2023, the Group held cash balances of €20.8m, a €5.8m
decrease in the period, attributable to capex payments of €2.0m, the first
scheduled loan repayment of €2.25m on the Group's ABN AMRO term loan, and
the increase in inventory referred to above. This was partially offset by cash
flow generated from operating activities. When adjusting for the cash pledged
to ABN AMRO of $10.0m (see note 11), adjusted cash decreased by €6.0m during
the period to €10.8m.
Financial position
Plant and machinery additions of €1.1m (H1 FY23: €20.5m) consisted
primarily of maintenance capex for the Arnhem plant.
Trade and other receivables increased to €13.6m (H1 FY23: €11.3m),
primarily due to higher sales than in H1 FY23.
Trade and other payables reduced by €5.2m to €21.4m (H1 FY23: €26.6m),
attributable to a decrease in creditors following the completion of the Arnhem
expansion project and lower activity at the Tricoya UK plant in Hull.
Amounts payable under loan agreements decreased to €64.2m during the period
(FY23: €65.9m) following the first scheduled loan repayment of €2.25m on
the Group's ABN AMRO term loan partially offset by interest capitalised on the
Tricoya NatWest €6.0m facility (€0.3m) and interest accrued on the ABN
AMRO and De Engh loans payable in October 2023.
Net debt increased by €4.1m in the period to €48.2m (FY23: €44.1m) due
to capex investments of €2.0m and the increase in inventory and loan
interest payments partially offset by EBITDA generation during the period.
Risks and uncertainties
As described on page 50 to 55 of the Accsys 2023 Annual Report, the business,
financial condition or results of operations of the Group could be adversely
affected by a number of risks. The Group's systems of control and protection
are designed to help manage and control risks to an appropriate level rather
than to eliminate them. These specific principal risks and related mitigations
- as currently identified by Accsys' risk management process - have not
changed significantly since the publication of the 2023 Annual Report in July
of this year.
These risks relate to the following areas: finance, health, safety &
environment; Tricoya UK plant; Kingsport plant; licensing/partnering and
protection of intellectual property; market and supply chain disruption;
manufacturing; talent; sale of products; environmental, social &
governance (ESG) and sustainability; IT; reputational risk and governance,
compliance & law.
Going concern
The condensed 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 for the 12 months from the
date these financial statements are approved (the 'going concern period'). As
part of the Group's going concern review, the Directors have assessed the
Group's trading forecasts, working capital and liquidity requirements, and
bank facility covenant compliance for the going concern period under a base
case scenario and a severe but plausible downside scenario.
The cash flow forecasts used for the going concern assessment represent the
Directors' best estimate of trading performance and cost implications in the
market based on current agreements, market experience and consumer demand
expectations. The economic environment has remained challenging throughout the
financial year (explained further in the management discussion of the results)
and it is not known how long this will continue to directly impact the
business and customer behaviour. For the purposes of the Group's going concern
assessment, the Directors have therefore made assumptions on the likely future
cash flows. These forecasts indicate that, in order to continue as a going
concern, the Group is dependent on achieving a certain level of performance
relating to the production and sale of Accoya, and the management of its
working capital.
In both scenarios, the Directors have assumed no commitment will be made to
complete the construction and start-up of the Tricoya UK plant in Hull unless
the Board definitively determines to proceed with the project and appropriate
levels of funding arrangements are obtained to do so. In the downside
scenario, it is assumed that the Group discontinues its financial support in
relation to the Tricoya UK plant.
The Directors' have also considered the possible quantum and timing of funding
required to complete the plant currently under construction by Accoya USA LLC,
and for the initial operational working capital requirements of the entity.
Notwithstanding that the construction project benefits from certain
contractual measures in place with the lead engineering, construction and
procurement contractor, Accsys has a contractual obligation to fund its 60%
share of Accoya USA LLC on a pro rata basis with its joint venture partner
(Eastman Chemicals Company).
The Group is also dependent on the Group's financial resources including its
existing cash position, banking and finance facilities, and the proceeds from
the fundraise, and the amended bank facilities announced today (see note 14
for details) which are assumed in both scenarios.
Capital Raise
The gross proceeds from the fundraise of approximately €34m (which includes
approximately €24m of gross new proceeds for the Company) include:
1) An equity Placing of between approximately €13m and €15m which
will be settled on 23 November 2023. Certain of the Company's major
shareholders have committed to provide approximately €13m of new equity
through the equity Placing.
2) The issue of between approximately €9m and €11m new 6 year term
convertible loan notes and the repricing and reissue of the existing €10m De
Engh convertible loan note (see note 11) have also been arranged on 21
November 2023, subject to the completion of the equity cash Placing.
On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO
debt facilities referenced in note 11 and extend these by a further 18 months
to March 2026. The facilities have also been amended to provide for the
release of €10m of cash collateral held by ABN AMRO, €7.5m of which will
be used to repay a portion of the term loan with the balance providing the
Group with additional liquidity. The amendment of the facilities also allows
for an 18-month amortisation holiday. The extension is subject to the
completion of the equity Placing (see note 14 for further details).
The Directors have also considered a severe but plausible downside scenario
against the base case with reduced Accoya sales volumes. The Directors do not
expect the assumptions in the severe but plausible downside scenario to
materialise, but should they unfold, the Group has several mitigating actions
it can implement to manage its going concern risk, such as deferring
discretionary capital expenditure and implementing further cost reductions to
maintain a sufficient level of liquidity and covenant headroom during the
going concern period. The combined impact of the above downside scenarios and
mitigations does not trigger a minimum liquidity breach or covenant breach at
any point in the going concern period.
The Directors are confident that the equity Placing will be completed on 21
November 2023. However, in the unlikely situation that the capital raise was
not to be completed, the Group would need to obtain alternate financing in an
expedited fashion, in order to be able to discharge its liabilities. It is not
certain that the Group would be able to obtain any such financing on
commercially acceptable terms. This would give rise to a material uncertainty
which may cast significant doubt on the Group's ability to continue as a going
concern.
After carefully considering all the factors explained in this statement, the
Directors believe that it is most appropriate to prepare these financial
statements on the going concern basis. These financials statements therefore
do not include the adjustments that would result if the Group was unable to
continue as a going concern.
Steven Salo
Chief Financial Officer
21 November 2023
Accsys Technologies PLC
Condensed consolidated statement of comprehensive income for the six months
ended 30 September 2023
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
6 months 6 months 6 months 6 months 6 months 6 months Year Year Year
ended ended ended ended ended ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March 31 March
2023 2023 2023 2022 2022 2022 2023 2023 2023
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Underlying Exceptional items & other adjustments* Total Underlying Exceptional items & other adjustments* Total Underlying Exceptional Total
items & other adjustments*
Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,493 - 143,493
Tricoya panel revenue 2,918 - 2,918 201 - 201 1,374 - 1,374
Licence revenue 46 - 46 11 - 11 329 - 329
Other revenue 4,930 - 4,930 7,584 - 7,584 16,822 - 16,822
2 71,207 - 71,207 58,884 - 58,884 162,018 - 162,018
Total revenue
(50,865) - (50,865) (40,742) - (40,742) (106,852) - (106,852)
Cost of sales
20,342 - 20,342 18,142 - 18,142 55,166 - 55,166
Gross profit
Other operating costs 3 (22,482) (8,200) (30,682) (16,773) (58,481) (75,254) (39,878) (87,453) (127,331)
Operating (loss)/profit (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165)
Net finance expense (1,610) 89 (1,521) (1,530) 2,699 1,169 (3,224) 9,350 6,126
Share of net loss of joint venture accounted for using the equity method 13 (1,211) - (1,211) (403) - (403) (1,036) - (1,036)
(Loss)/profit before taxation (4,961) (8,111) (13,072) (564) (55,782) (56,346) 11,028 (78,103) (67,075)
Tax expense 5 (420) - (420) (357) - (357) (2,787) - (2,787)
(Loss)/profit for the period (5,381) (8,111) (13,492) (921) (55,782) (56,703) 8,241 (78,103) (69,862)
Items that may be reclassified to profit or loss
Gain/(loss) arising on 22 - 22 67 - 67 (61) - (61)
translation of foreign operations
Gain arising on foreign currency cash flow hedges - - - - 90 90 42 - 42
Total other comprehensive income/(expense) 22 - 22 67 90 157 (19) - (19)
Total comprehensive (5,359) (8,111) (13,470) (854) (55,692) (56,546) 8,222 (78,103) (69,881)
(loss)/gain for the period
Total comprehensive (loss)/gain for the year is attributable to:
Owners of Accsys Technologies PLC (5,359) (8,111) (13,470) (214) (26,155) (26,369) 9,509 (48,566) (39,057)
Non-controlling interests - - - (640) (29,537) (30,177) (1,287) (29,537) (30,824)
Total comprehensive (5,359) (8,111) (13,470) (854) (55,692) (56,546) 8,222 (78,103) (69,881)
(loss)/gain for the period
Basic (loss)/profit per ordinary share 6 €(0.02) €(0.06) €(0.00) €(0.13) €0.05 €(0.19)
Diluted (loss)/profit per ordinary share 6 - - - - €0.04 -
The notes form an integral part of these condensed financial statements.
* See note 4 for details of exceptional items and other adjustments.
Accsys Technologies PLC
Condensed consolidated statement of financial position at 30 September 2023
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
Note 2023 2022 2023
€'000 €'000 €'000
Non-current assets
Intangible assets 7 10,369 6,852 10,491
Investment accounted for using the equity method 13 29,648 31,942 30,859
Property, plant and equipment 8 96,612 140,422 106,051
Right of use assets 4,210 4,087 4,044
Financial asset at fair value through profit or loss - - -
140,839 183,303 151,445
Current assets
Inventories 31,812 32,354 29,946
Trade and other receivables 13,643 11,333 18,075
Cash and cash equivalents 20,780 18,123 26,593
Corporation tax receivable 460 503 459
66,695 62,313 75,073
Current liabilities
Trade and other payables (21,411) (26,620) (25,896)
Obligation under lease liabilities (943) (790) (980)
Short term borrowings 11 (9,500) (19,686) (9,500)
Corporation tax payable (6,500) (3,615) (6,082)
Derivative financial instrument - (77) -
(38,354) (50,788) (42,458)
Net current assets 28,341 11,525 32,615
Non-current liabilities
Obligation under lease liabilities (3,845) (3,806) (3,755)
Other long term borrowing 11 (54,680) (55,210) (56,420)
Financial guarantee - - -
Financial liability at amortised cost (1,293) - (1,383)
(59,818) (59,016) (61,558)
Total net assets 109,362 135,812 122,502
Equity
Share capital 9 11,002 10,343 10,963
Share premium account 250,717 241,662 250,717
Other reserves 10 114,743 114,791 114,743
Accumulated loss (267,243) (236,584) (254,042)
Own shares (8) (6) (8)
Foreign currency translation reserve 151 257 129
Capital value attributable to owners of Accsys Technologies PLC
109,362 130,463 122,502
Non-controlling interest in subsidiaries - 5,349 -
Total equity 109,362 135,812 122,502
The notes form an integral part of these condensed financial statements.
Accsys Technologies PLC
Condensed consolidated statement of changes in equity for the six months ended
30 September 2023
Ordinary share capital Share premium Other reserves Own Shares Foreign currency trans- Accumulated loss Total equity attributable to equity shareholders of the company Non-Controlling interests Total Equity
lation reserve
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at 9,638 223,326 114,701 (6) 190 (210,505) 137,344 35,526 172,870
31 March 2022
(Loss) for the year - - - - - (26,526) (26,526) (30,177) (56,703)
Other comprehensive income for the year - - 90 - 67 - 157 - 157
Share based payments - - - - - 462 462 - 462
Shares issued 705 - - - - (15) 690 - 690
Premium on shares issued - 19,422 - - - - 19,422 - 19,422
Share issue costs - (1,086) - - - - (1,086) - (1,086)
Balance at 10,343 241,662 114,791 (6) 257 (236,584) 130,463 5,349 135,812
30 Sept 2022
(unaudited)
(Loss) for the year - - - - - (12,512) (12,512) (647) (13,159)
Other comprehensive income for the year - - (48) - (128) - (176) - (176)
Share based payments - - - - - (96) (96) - (96)
Shares issued 26 - - (2) - (7) 17 - 17
Premium on shares issued - 104 - - - - 104 - 104
Share issue costs - - - - - - - - -
594 8,951 - (4,843) 4,702 (4,702) (0)
Acquisition of subsidiary shares from non-controlling interests
Balance at 10,963 250,717 114,743 (8) 129 (254,042) 122,502 - 122,502
31 March 2023
Profit/(Loss) for the year - - - - - (13,492) (13,492) - (13,492)
Other comprehensive income for the year - - - - 22 - 22 - 22
Share based payments - - - - - 330 330 - 330
Shares issued 39 - - - - (39) - - -
Share issue costs - - - - - - - - -
Balance at 11,002 250,717 114,743 (8) 151 (267,243) 109,362 - 109,362
30 Sept 2023
(unaudited)
Ordinary share capital is the amount subscribed for shares at nominal value
(note 9).
Share premium represents the excess of the amount subscribed for ordinary
share capital over the nominal value of these shares, net of share issue
expenses.
See note 10 for details concerning other reserves.
Non-controlling interests relate to the previous investment of various parties
into Tricoya Technologies Limited and Tricoya UK Limited. The Group purchased
the remaining shareholding in the Tricoya entities in the year ended 31 March
2023.
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 condensed financial statements.
Accsys Technologies PLC
Condensed consolidated statement of cash flow for the six months ended 30
September 2023
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2023 2022 2023
€'000 €'000 €'000
(Loss) before taxation (13,072) (56,346) (67,075)
Adjustments for:
Amortisation of intangible assets 391 389 780
Depreciation of property, plant and equipment and right of use assets 4,378 3,095 7,512
Impairment loss 7,000 58,000 86,000
Net (gain) on disposal of property, plant and equipment - (3) -
Net finance expense/(income) 1,521 (1,169) (6,126)
Equity-settled share-based payment expenses 330 462 366
Accsys portion of licence fee received from joint venture - - 300
Share of net loss of joint venture 1,211 403 1,036
Currency translation gain/(loss) 66 (156) (70)
Cash inflows from operating activities before changes in working capital 1,825 4,675 22,723
Decrease/(increase) in trade and other receivables 4,451 5,550 (1,154)
(Increase) in inventories (1,868) (11,982) (9,596)
(Decrease)/Increase in trade and other payables (3,778) (515) 4,673
Net cash from operating activities before tax 630 (2,272) 16,646
Tax received 0 6 87
Net cash from operating activities 630 (2,266) 16,733
Cash flows from investing activities
Investment in property, plant and equipment (2,023) (22,595) (29,773)
Foreign exchange deal settlement related to hedging of Hull capex - - (81)
Investment in intangible assets (268) (207) (437)
Investment in joint venture - (29,132) (28,979)
Net cash used in investing activities (2,291) (51,934) (59,270)
Cash flows from financing activities
Proceeds from loans - 10,000 10,000
Other finance costs (36) (173) (250)
Interest paid (1,311) (992) (2,429)
Repayment of lease liabilities (706) (538) (940)
Repayment of loans (2,250) - -
Proceeds from issue of share capital - 20,112 20,258
Share issue costs - (1,086) (1,086)
Net cash from financing activities (4,303) 27,323 25,553
Net (decrease) in cash and cash equivalents (5,964) (26,877) (16,984)
Effect of exchange gain on cash and cash equivalents 151 2,946 1,523
Opening cash and cash equivalents 26,593 42,054 42,054
Closing cash and cash equivalents 20,780 18,123 26,593
The notes form an integral part of these condensed financial statements.
Accsys Technologies PLC
Notes to the financial statements for the six months ended 30 September 2023
1. Accounting policies
General Information
The principal activity of the Group is the production and sale of Accoya solid
wood and exploitation of technology for the production and sale of Accoya wood
and Tricoya wood chips. Manufactured through the Group's proprietary
acetylation processes, these products exhibit superior dimensional stability
and durability compared with alternative natural, treated and modified woods
as well as more resource intensive man-made materials.
The Company is a public limited company, which is listed on AIM in the United
Kingdom and Euronext in the Netherlands, and is domiciled in the United
Kingdom. The registered office is 4(th) Floor, 3 Moorgate Place, London EC2R
6EA.
The condensed consolidated financial statements were approved on 21 November
2023. These condensed consolidated financial statements have not been audited.
Basis of
accounting
The Group's condensed consolidated financial statements in these interim
results have been prepared in accordance with IFRS issued by the International
Accounting Standards Board as endorsed by the European Union and as adopted
for use in the United Kingdom, in particular International Accounting Standard
(IAS) 34 "interim financial reporting" and the AIM Rules for Companies and the
Dutch Financial Markets Supervision Act.
The financial information for the six months ended 30 September 2023 and the
six months ended 30 September 2022 is unaudited. The comparative financial
information for the full year ended 31 March 2023 does not constitute the
Group's statutory financial statements for that period although it has been
derived from the statutory financial statements for the year then ended. A
copy of those statutory financial statements has been delivered to the
Registrar of Companies and which were approved by the Board of Directors on 26
June 2023. The auditors' report on those accounts was unqualified and did not
contain a statement under 498(2) or 498(3) of the Companies Act 2006. This
financial information is to be read in conjunction with the annual report for
the year ended 31 March 2023, which has been prepared in accordance with both
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.
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 March 2023.
Accounting policies
No new accounting standards, amendments or interpretations have been adopted
in the period which have any impact on these condensed financial statements,
or are expected to affect the Group's annual report for the year ended 31
March 2024. The accounting policies applied for preparation of condensed
consolidated financial statements are consistent with those of the annual
financial statements for the year ended 31 March 2023, as described in those
financial statements.
Going concern
The condensed 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 for the 12 months from the
date these financial statements are approved (the 'going concern period'). As
part of the Group's going concern review, the Directors have assessed the
Group's trading forecasts, working capital and liquidity requirements, and
bank facility covenant compliance for the going concern period under a base
case scenario and a severe but plausible downside scenario.
The cash flow forecasts used for the going concern assessment represent the
Directors' best estimate of trading performance and cost implications in the
market based on current agreements, market experience and consumer demand
expectations. The economic environment has remained challenging throughout the
financial year (explained further in the management discussion of the results)
and it is not known how long this will continue to directly impact the
business and customer behaviour. For the purposes of the Group's going concern
assessment, the Directors have therefore made assumptions on the likely future
cash flows. These forecasts indicate that, in order to continue as a going
concern, the Group is dependent on achieving a certain level of performance
relating to the production and sale of Accoya, and the management of its
working capital.
1. Accounting policies (continued)
Going concern (continued)
In both scenarios, the Directors have assumed no commitment will be made to
complete the construction and start-up of the Tricoya UK plant in Hull unless
the Board definitively determines to proceed with the project and appropriate
levels of funding arrangements are obtained to do so. In the downside
scenario, it is assumed that the Group discontinues its financial support in
relation to the Tricoya UK plant.
The Directors' have also considered the possible quantum and timing of funding
required to complete the plant currently under construction by Accoya USA LLC,
and for the initial operational working capital requirements of the entity.
Notwithstanding that the construction project benefits from certain
contractual measures in place with the lead engineering, construction and
procurement contractor, Accsys has a contractual obligation to fund its 60%
share of Accoya USA LLC on a pro rata basis with its joint venture partner
(Eastman Chemicals Company).
The Group is also dependent on the Group's financial resources including its
existing cash position, banking and finance facilities, and the proceeds from
the fundraise, and the amended bank facilities announced today (see note 14
for details) which are assumed in both scenarios.
Capital Raise
The gross proceeds from the fundraise of approximately €34m (which includes
approximately €24m of gross new proceeds for the Company) include:
1) An equity Placing of between approximately €13m and €15m which
will be settled on 23 November 2023. Certain of the Company's major
shareholders have committed to provide approximately €13m of new equity
through the equity Placing.
2) The issue of between approximately €9m and €11m new 6 year term
convertible loan notes and the repricing and reissue of the existing €10m De
Engh convertible loan note (see note 11) have also been arranged on 21
November 2023, subject to the completion of the equity cash Placing.
On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO
debt facilities referenced in note 11 and extend these by a further 18 months
to March 2026. The facilities have also been amended to provide for the
release of €10m of cash collateral held by ABN AMRO, €7.5m of which will
be used to repay a portion of the term loan with the balance providing the
Group with additional liquidity. The amendment of the facilities also allows
for an 18-month amortisation holiday. The extension is subject to the
completion of the equity Placing (see note 14 for further details).
The Directors have also considered a severe but plausible downside scenario
against the base case with reduced Accoya sales volumes. The Directors do not
expect the assumptions in the severe but plausible downside scenario to
materialise, but should they unfold, the Group has several mitigating actions
it can implement to manage its going concern risk, such as deferring
discretionary capital expenditure and implementing further cost reductions to
maintain a sufficient level of liquidity and covenant headroom during the
going concern period. The combined impact of the above downside scenarios and
mitigations does not trigger a minimum liquidity breach or covenant breach at
any point in the going concern period.
The Directors are confident that the equity Placing will be completed on 21
November 2023. However, in the unlikely situation that the capital raise was
not to be completed, the Group would need to obtain alternate financing in an
expedited fashion, in order to be able to discharge its liabilities. It is not
certain that the Group would be able to obtain any such financing on
commercially acceptable terms. This would give rise to a material uncertainty
which may cast significant doubt on the Group's ability to continue as a going
concern.
After carefully considering all the factors explained in this statement, the
Directors believe that it is most appropriate to prepare these financial
statements on the going concern basis. These financials statements therefore
do not include the adjustments that would result if the Group was unable to
continue as a going concern.
2. Segmental reporting
Accoya
Accoya Segment
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying Exceptional items & other adjustments
TOTAL
Underlying Exceptional items & other adjustments
TOTAL
Underlying Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,494 - 143,494
Licence revenue - - - - - - 300 - 300
Other revenue 4,885 - 4,885 7,584 7,584 16,773 - 16,773
Total revenue 68,198 - 68,198 58,672 - 58,672 160,567 - 160,567
Cost of sales (48,132) - (48,132) (40,580) - (40,580) (105,608) - (105,608)
Gross profit 20,066 - 20,066 18,092 - 18,092 54,959 - 54,959
Other operating costs (13,527) - (13,527) (10,035) - (10,035) (22,621) - (22,621)
Profit from operations 6,539 - 6,539 8,057 - 8,057 32,338 - 32,338
Profit from operations 6,539 - 6,539 8,057 - 8,057 32,338 - 32,338
Share of Accoya USA EBIT (1,150) - - (403) - - (912) - -
EBIT 5,389 - 6,539 7,654 - 8,057 31,426 - 32,338
Depreciation and amortisation 4,137 - 4,137 2,786 - 2,786 6,832 - 6,832
Accoya USA Depreciation and amortisation 104 - - - - - 211 - -
EBITDA 9,630 - 10,676 10,440 - 10,843 38,469 - 39,170
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 196 (H1 FY23: 184)
6 months ended 30 September 2023 6 months ended 30 September 2022 Year
ended 31
March
2023
€'000 €'000 €'000
Accoya segmental underlying EBITDA 9,630 10,440 38,469
Accoya underlying licence Income - - (300)
Accoya segmental manufacturing EBITDA (excluding licence income) 9,630 10,440 38,169
Accoya segmental gross profit 20,066 18,092 54,959
Accoya licence Income - - (300)
Accoya manufacturing gross profit 20,066 18,092 54,659
Gross Accoya manufacturing margin 29.4% 30.8% 34.1%
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
€ € €
Accoya(®) Manufacturing gross profit - €'000 20,066 18,092 54,659
Accoya(®) sales volume - m(3) 28,807 23,957 63,344
Accoya(®) manufacturing gross profit per m(3) 697 755 863
2. Segmental reporting (continued)
Tricoya
Tricoya Segment
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Tricoya panel revenue 2,918 - 2,918 201 - 201 1,373 - 1,373
Licence revenue 46 - 46 11 - 11 29 - 29
Other revenue 45 - 45 - - - 49 - 49
Total revenue 3,009 - 3,009 212 - 212 1,451 - 1,451
Cost of sales (2,733) - (2,733) (162) - (162) (1,244) - (1,244)
Gross profit 276 - 276 50 - 50 207 - 207
Other operating costs (3,796) (7,000) (10,796) (1,733) (57,997) (59,730) (5,823) (86,000) (91,823)
Loss from operations (3,520) (7,000) (10,520) (1,683) (57,997) (59,680) (5,616) (86,000) (91,616)
Loss from operations (3,520) (7,000) (10,520) (1,683) (57,997) (59,680) (5,616) (86,000) (91,616)
Depreciation and amortisation 267 - 267 258 - 258 527 - 527
Impairment - 7,000 7,000 - 58,000 58,000 - 86,000 86,000
EBITDA (3,253) - (3,253) (1,425) 3 (1,422) (5,089) - (5,089)
Revenue includes direct Tricoya panel sales made by the Company, which are
purchased from our Tricoya Customers. The sale of Accoya to customers who
produce the Tricoya panels are included within the Accoya segment.
Other operating costs include pre-operating costs for the Tricoya UK plant.
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 10 (H1 FY23: 31)
Corporate
Corporate Segment
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Total revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other operating costs (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429)
Loss from operations (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429)
(Loss) from operations (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429)
Depreciation and amortisation 332 - 332 406 - 406 866 - 866
EBITDA (3,937) (1,200) (5,137) (3,871) (484) (4,355) (9,110) (1,453) (10,563)
See note 4 for explanation of Exceptional items and other adjustments.
Average headcount = 16 (H1 FY23: 16).
2. Segmental reporting (continued)
Research and Development
Research & Development Segment
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Total revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other operating costs (890) - (890) (728) - (728) (1,458) - (1,458)
Loss from operations (890) - (890) (728) - (728) (1,458) - (1,458)
Loss from operations (890) - (890) (728) - (728) (1,458) - (1,458)
Depreciation and amortisation 33 - 33 34 - 34 67 - 67
EBITDA (857) - (857) (694) - (694) (1,391) - (1,391)
Costs exclude those which have been capitalised in accordance with IAS 38.
(see note 7).
See note 4 for explanation of Exceptional items and other adjustments.
Average headcount = 13 (H1 FY23: 14).
2. Segmental reporting (continued)
Total
TOTAL
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,493 - 143,493
Tricoya panel revenue 2,918 - 2,918 201 - 201 1,374 - 1,374
Licence revenue 46 - 46 11 - 11 329 - 329
Other revenue 4,930 - 4,930 7,584 - 7,584 16,822 - 16,822
Total revenue 71,207 - 71,207 58,884 - 58,884 162,018 - 162,018
Cost of sales (50,865) - (50,865) (40,742) - (40,742) (106,852) - (106,852)
Gross profit 20,342 - 20,342 18,142 - 18,142 55,166 - 55,166
Other operating costs (22,482) (8,200) (30,682) (16,773) (58,481) (75,254) (39,878) (87,453) (127,331)
(Loss)/Profit from operations (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165)
Finance expense (1,610) 89 (1,521) (1,530) 2,699 1,169 (3,224) 9,350 6,126
Investment in joint venture (1,211) - (1,211) (403) - (403) (1,036) - (1,036)
(Loss)/Profit before taxation (4,961) (8,111) (13,072) (564) (55,782) (56,346) 11,028 (78,103) (67,075)
See note 4 for explanation of Exceptional Items and other adjustments.
Reconciliation of underlying earnings
Reconciliation of underlying earnings
6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2023 6 months ended 30 September 2022 6 months ended 30 September 2022 6 months ended 30 September 2022 12 months ended 31 March 12 months ended 31 March 12 months ended 31 March
2023
2023
2023
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
Underlying
Exceptional items & other adjustments
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
(Loss)/Profit from operations (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165)
Share of Accoya USA EBIT (1,150) - - (403) - - (912) - -
EBIT (3,290) (8,200) (10,340) 966 (58,481) (57,112) 14,376 (87,453) (72,165)
Depreciation and amortisation 4,769 - 4,769 3,484 - 3,484 8,292 - 8,292
Accoya USA depreciation and amortisation 104 - - - - - 211 - -
Impairment - 7,000 7,000 - 58,000 58,000 - 86,000 86,000
EBITDA 1,583 (1,200) 1,429 4,450 (481) 4,372 22,879 (1,453) 22,127
2. Segmental reporting (continued)
Segmental reporting continued
Assets and liabilities on a segmental basis:
Accoya Tricoya Corporate R&D TOTAL
Sept 2023 Sept 2023 Sept 2023 Sept 2023 Sept 2023
€'000 €'000 €'000 €'000 €'000
Non-current assets 115,770 19,969 4,971 129 140,839
Current assets 37,680 3,581 19,823 5,611 66,695
Current liabilities (12,063) (12,925) (13,314) (52) (38,354)
Net current assets/(liabilities) 25,617 (9,344) 6,509 5,559 28,341
Non-current liabilities (2,240) (7,514) (50,025) (39) (59,818)
Net assets 139,147 3,111 (38,545) 5,649 109,362
Accoya Tricoya Corporate R&D TOTAL
Sept 2022 Sept 2022 Sept 2022 Sept 2022 Sept 2022
€'000 €'000 €'000 €'000 €'000
Non-current assets 122,915 55,803 4,390 195 183,303
Current assets 35,276 3,827 23,141 69 62,313
Current liabilities (10,998) (32,006) (7,718) (66) (50,788)
Net current assets/(liabilities) 24,278 (28,179) 15,423 3 11,525
Non-current liabilities (2,547) (1,174) (55,210) (85) (59,016)
Net assets 144,646 26,450 (35,397) 113 135,812
Accoya Tricoya Corporate R&D TOTAL
March 2023 March 2023 March 2023 March 2023 March 2023
€'000 €'000 €'000 €'000 €'000
Non-current assets 120,459 27,047 3,777 162 151,445
Current assets 52,699 3,872 13,630 4,872 75,073
Current liabilities (22,947) (4,156) (15,299) (56) (42,458)
Net current assets/(liabilities) 29,752 (284) (1,669) 4,816 32,615
Non-current liabilities (2,545) (8,665) (50,289) (59) (61,558)
Net assets 147,666 18,098 (48,181) 4,919 122,502
The segmental assets in the current year were predominantly held in the UK,
USA and mainland Europe (Prior Year UK and mainland Europe). Additions to
property, plant, equipment and intangible assets in the current year were
predominantly incurred in the UK and mainland Europe (Prior Year UK and
mainland Europe). The increase in Investment accounted for using the equity
method (investment into Accoya USA LLC) incurred in USA. There are no
significant intersegment revenues.
2. Segmental reporting (continued)
Segmental reporting continued
Analysis of revenue by geographical destination:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2023 2022 2023
€'000 €'000 €'000
UK & Ireland 23,292 21,182 55,395
Rest of Europe 28,638 22,400 63,635
Americas 13,296 11,084 29,778
Rest of World 5,981 4,218 13,210
71,207 58,884 162,018
Sales to UK and Ireland include the sales to MEDITE.
3. Other operating costs
Other operating costs consist of the operating costs, other than the cost of
sales, associated with the operation of the plant in Arnhem, the site in
Barry, the offices in Dallas and London and certain pre-operating costs
associated with the plant in Hull:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2023 2022 2023
€'000 €'000 €'000
Sales and marketing 3,136 2,200 5,219
Research and development 857 694 990
Other operating costs 6,858 4,491 9,720
Administration costs 6,862 5,904 15,657
Exceptional Items and other adjustments (refer to note 4) 1,200 481 1,453
Other operating costs excluding depreciation and amortisation 18,913 13,770 33,039
Depreciation and amortisation 4,769 3,484 8,292
Impairment loss 7,000 58,000 86,000
Total other operating costs 30,682 75,254 127,331
Administrative costs include costs associated with Human Resources, IT, Legal,
Business Development, Finance, Management and General Office and include the
costs of the Group's London and Dallas offices.
Group average employee headcount decreased to 235 in the period to 30
September 2023, from 245 in the period to 30 September 2022.
4. Exceptional Items and Other Adjustments
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2023 2022 2023
€'000 €'000 €'000
Advisor fees in relation to Tricoya consortium reorganisation - (484) (1,453)
Impairment of the Tricoya segment assets (7,000) (58,000) (86,000)
Partial net derecogition of NatWest loan - - 9,353
Revaluation of Valuation Recovery Instrument "VRI" liability 89 - (1,383)
Foreign exchange differences on USD cash held for investment into USA JV- - 1,380 1,380
incl. in Finance expense
Restructuring costs (1,200) - -
Total exceptional items (8,111) (57,104) (78,103)
Foreign exchange differences arising on Tricoya cash held - Operating costs - 3 -
(loss)/profit
Foreign exchange differences on cash held - Other comprehensive profit/(loss) - 167 -
Revaluation of USD cash pledged to ABN Amro - incl. in Finance expense - 1,319 -
Revaluation of FX forwards used for cash-flow hedging - Other comprehensive - (77) -
(loss)/profit
Total other adjustments - 1,412 -
Tax on exceptional items and other adjustments - - -
Total exceptional items and other adjustments (8,111) (55,692) (78,103)
Exceptional Items
In the period:
- an exceptional operating cost of €1.2m has been recognised for
restructuring costs relating to decreasing the Group's administrative
operating cost base.
- An impairment loss (non-cash item) of €7.0m has been
recognised in the period relating to the Tricoya segment
(FY23: €86.0m) due to an increase in the discount
rate to 14.5% used following an increase in market interest rates and the
Company specific market volatility factor. In the prior year, an impairment of
the Tricoya segment assets was recognised, due to identification of additional
time and costs (€35m) to complete the plant; a decrease in the estimated
maximum production capacity of the plant once commercially operational from
30,000MT to 24,000MT; and the discount rate applied was updated to 13.5%.
In the prior year:
- an exceptional operating cost was recognised for advisor fees
associated with advising Accsys on acquiring the full ownership of TUK
(Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from its previous
Tricoya Consortium Partners.
- NatWest also agreed to restructure its TUK debt facility,
reducing the principal amount by €9.4m to €6m, under a new 7-year term.
This resulted in the derecognition of the balance drawn on the NatWest loan on
the date of the restructure of €15.4m and recognition of the new €6m loan.
- Separate to, and in addition to the amended €6m loan, NatWest
is entitled to obtain recovery, via the Value Recovery Instrument ("VRI")
agreement, of up to approximately €9.4m, on a contingent basis, depending on
profitability of the Tricoya UK plant once operational. A financial liability
was recognised of €1.4m in the prior year in respect of the VRI.
- Foreign exchange differences were recognised due to US dollars
held for investment into Accoya USA LLC. Following the May 2021 equity raise,
the amount raised to invest into Accoya USA was translated into US dollars and
held in cash ensuring that foreign exchange movements did not decrease the
amount raised below the US dollar investment into Accoya USA. This treatment
did not meet the requirements for hedge accounting under IFRS 9, Financials
instruments, and therefore the foreign exchange gain on the revaluation of the
US dollars has been accounted for in Finance expenses.
Other Adjustments
Other adjustments included in the prior year are no longer disclosed for the
period ended 30 September 2023.
5. Tax expense
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2023 2022 2023
€'000 €'000 €'000
(a) Tax recognised in the condensed consolidated statement of comprehensive
income comprises:
Current tax expense/(credit)
UK Corporation tax on losses for the period - - -
Research and development tax credit in respect of current period - (68) (121)
- (68) (121)
Overseas tax at rate of 15% 19 6 32
Overseas tax at rate of 25% 401 419 2,876
Deferred Tax
Utilisation of deferred tax asset - - -
Total tax expense reported in the condensed consolidated statement of 420 357 2,787
comprehensive income
6. Basic and diluted profit/ (loss) per ordinary share
Unaudited Unaudited Unaudited Unaudited Audited Audited
6 months 6 months 6 months 6 months Year Year
ended ended ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March
2023
2023
2022
2022
2023
2023
Basic earnings per share Underlying Total Underlying Total Underlying Total
Weighted average number of 218,395 218,395 204,358 204,358 210,693 210,693
ordinary shares in issue ('000)
Profit/(Loss) for the period attributable to owners of Accsys Technologies PLC (5,381) (13,492) (281) (26,526) 9,528 (39,038)
(€'000)
Basic profit/(loss) per share €(0.02) €(0.06) €(0.00) €(0.13) €0.05 €(0.19)
Diluted earnings per share
Weighted average number of ordinary shares in issue ('000) - - - - 210,693 -
Equity options attributable to BGF -* -* -* -* 8,449 -*
Weighted average number of ordinary shares in issue and potential ordinary - - - - 219,142 -
shares ('000)
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC - - - - 9,528 -
(€'000)
Diluted profit/(loss) per share -* -* -* -* €0.04 -*
* IAS 33 "Earning per share" defines Dilutive share options as share options
which would decrease profit per share or increase loss per share. 8,449,000
equity options held by BGF if exercised would decrease the Loss per share. As
a result, these are anti-dilutive and therefore shown as nil.
7. Intangible assets
Internal Intellectual
development property
costs rights Goodwill Total
€'000 €'000 €'000 €'000
Cost
At 31 March 2022 7,642 74,992 4,231 86,865
Additions 27 180 - 207
At 30 September 2022 7,669 75,172 4,231 87,072
Additions 30 200 - 230
At 31 March 2023 7,699 75,372 4,231 87,302
Additions 35 234 - 269
At 30 September 2023 7,734 75,606 4,231 87,571
Accumulated amortisation
At 31 March 2022 2,894 73,137 - 76,031
Amortisation 197 192 - 389
Impairment loss 2,855 945 - 3,800
At 30 September 2022 5,946 74,274 - 80,220
Amortisation 188 203 - 391
Impairment loss (2,855) (945) - (3,800)
At 31 March 2023 3,279 73,532 - 76,811
Amortisation 198 193 - 391
At 30 September 2023 3,477 73,725 - 77,202
Net book value
At 31 March 2022 4,748 1,855 4,231 10,834
At 30 September 2022 1,723 898 4,231 6,852
At 31 March 2023 4,420 1,840 4,231 10,491
At 30 September 2023 4,257 1,881 4,231 10,369
Refer to note 8 for the recoverability assessment of these intangible assets.
8. Property, plant and equipment
Land and buildings Plant and machinery Office equipment Total
€'000 €'000 €'000 €'000
Cost or valuation
Opening balance at 31 March 2022 17,976 187,445 4,353 209,774
Additions - 20,476 15 20,491
Foreign currency translation - - 19 19
At 30 September 2022 17,976 207,921 4,387 230,284
Additions - 900 326 1,226
Foreign currency translation - - (16) (16)
Opening balance at 31 March 2023 17,976 208,821 4,697 231,494
Additions - 1,142 206 1,348
Foreign currency translation - - 4 4
At 30 September 2023 17,976 209,963 4,907 232,846
Depreciation
Opening balance at 31 March 2022 1,353 29,495 2,265 33,113
Charge for the period 179 2,104 247 2,530
Foreign currency translation - - 19 19
Impairment loss - 54,200 - 54,200
At 30 September 2022 1,532 85,799 2,531 89,862
Charge for the period 179 3,293 302 3,774
Foreign currency translation - - 7 7
Impairment loss - 31,800 - 31,800
Opening balance at 31 March 2023 1,711 120,892 2,840 125,443
Charge for the period 179 3,342 266 3,787
Foreign currency translation - - 4 4
Impairment loss - 7,000 - 7,000
At 30 September 2023 1,890 131,234 3,110 136,234
Net book value
At 31 March 2022 16,623 157,950 2,088 176,661
At 30 September 2022 16,444 122,122 1,856 140,422
At 31 March 2023 16,265 87,929 1,857 106,051
At 30 September 2023 16,086 78,729 1,797 96,612
Plant and machinery assets with a net book value of €17,851,000 relating to
the Tricoya UK plant are held as assets under construction and are not
depreciated (31 March 2023: €24,851,000).
8. Property, plant and equipment (continued)
Impairment review
The carrying value of the property, plant and equipment, internal development
costs and intellectual property rights are split between two cash generating
units (CGUs), representing the Accoya and Tricoya segments and the carrying
value of Goodwill is allocated to the Accoya segment. The recoverable amount
of these CGUs are determined based on a value-in-use calculation which uses
cash flow projections for a period of 5 to 7 years based on latest financial
budgets and discounted at a pre-tax discount rate of 14.5% (31 March 2023:
13.5%) to determine their present value. A cash flow projection period of 7
years was used for the Tricoya segment calculation to reflect the future
cashflows of the plant, considering the estimated hold period, remaining
completion activities and production ramp-up.
The key assumptions used in the value in use calculations are:
- the manufacturing revenues, operating margins and future licence fees
estimated by management;
- the timing of completion of the Tricoya Hull plant;
- the timing of completion of construction of additional facilities (and
associated output);
- forecast UK natural gas prices;
- the long term growth rate; and
- the discount rate.
The Directors have determined that an impairment totalling €93m should be
recognised in the Tricoya CGU, of which €7m was recognised in the period
ending 30 September 2023.
The increase in the impairment of the Tricoya segment assets is caused by an
increase in market indicators & interest rates used to calculate the
discount rate utilised in the value in use calculation. The discount rate
increased by 1% to 14.5% (13.5% at 31 March 2023).
Key assumptions applied to the Tricoya CGU were as follows:
• a discount rate of 14.5%;
• project capital costs to bring the plant into commercial operation of
€35m;
• a production capacity of 24,000MT
• a "hold period" of 2 years from 30 September 2023 (period in which limited
construction activities is performed); and
• a long-term growth rate of 2.5%.
The impact the following changes to these key assumptions would have, if made
in isolation, on the impairment calculated for
the Tricoya CGU is as follows:
• a 1% increase in the discount rate: increase of €6m;
• a 1% decrease in the long-term growth rate: increase of €3m;
• a 12-month extension in the hold period: increase of €9m;
• a 6,000MT increase in the production capacity: decrease of €18m; and
• a €10m increase in the capital costs to bring the plant into commercial
operation: increase of €7m.
9. Share capital
In the period ended 30 September 2022:
In May 2022, 13,798,103 ordinary shares were issued as part of the capital
raise to strengthen the Company's balance sheet, increase liquidity headroom
and fund additional costs to complete the Arnhem Plant Reactor 4 capacity
expansion. The ordinary shares were issued at a price of €1.45 (£1.23) per
ordinary share, raising gross proceeds of €20m (before expenses).
In July 2022, 137,665 shares were issued to an Employee Benefit Trust at
nominal value, as part of the annual bonus, in connection with the employee
remuneration and incentivisation arrangements for the period from 1 April 2021
to 31 March 2022. These shares vested in July 2023, subject to the employees
continuing employment within the Group.
In the period ended 31 March 2023:
Between August and December 2022, 435,774 Shares were issued following the
exercise of nil cost options, granted under the Company's 2013 Long Term
Incentive Plan ('LTIP').
In November 2022, 11,875,801 ordinary shares were issued to the tricoya
consortium partners (INEOS, MEDITE , BGF & Volantis) at a price of €0.80
(£0.71) per share. This formed part of a sale and purchase agreement with the
Tricoya Consortium Partners whereby Accsys acquired the remaining 38.2%
holding in Tricoya UK Ltd that Tricoya Technologies Ltd did not already own
and the 23.5% holding in Tricoya Technologies Ltd that it did not already own.
In January 2023, following the subscription by employees in the prior year for
shares under the Employee Share Participation Plan (the 'Plan'), 174,144
ordinary shares were issued as "Matching Shares" at nominal value under the
Plan.
9. Share capital (continued)
In addition, various employees newly subscribed under the Plan for 203,906
ordinary shares at an acquisition price of €0.81 per share, with these
shares issued to a trust, to be released to the employees after one year,
together with an additional share on a matched basis (subject to continuing
employment within the Group).
In the period ended 30 September 2023:
Between July and August 2023, 775,191 shares were issued following the
exercise of nil cost options, granted under the Company's 2013 LTIP.
In July 2023, 222,232 ordinary shares were issued to an Employee Benefit Trust
at nominal value, as part of the annual bonus, in connection with the employee
remuneration and incentivisation arrangements for the period from 1 April 2022
to 31 March 2023. These ordinary shares will vest in July 2024, subject to the
employees continuing employment within the Group.
10. Other Reserves
Capital redemp- Warrant reserve Merger reserve Hedge Effective-ness reserve Other reserve Total Other reserves
tion reserve
€000 €000 €000 €000 €000 €000
Balance at 30 September 2022 148 - 106,707 385 7,550 114,791
Total Comprehensive income for the period - - - (48) - (48)
Balance at 31 March 2023 148 - 106,707 337 7,550 114,743
Total Comprehensive income for the period - - - - - -
Balance at 30 September 2023 148 - 106,707 337 7,550 114,743
The closing balance of the capital redemption reserve represents the amounts
transferred from share capital on redemption of deferred shares in a prior
period.
The merger reserve arose prior to transition to IFRS when merger accounting
was adopted.
The hedge effectiveness reserve reflects the total accounted for under IFRS 9
in relation to the Tricoya segment.
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.
11. Commitments under loan agreements
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 2023 30 Sept 2022 31 March 2023
Amounts payable under loan agreements - undiscounted cashflows:
Within one year 11,462 20,133 10,312
In the second to fifth years inclusive 48,841 61,210 52,976
After five years 10,519 - 9,962
Less future finance charges (6,642) (6,447) (7,330)
Present value of loan obligations 64,180 74,896 65,920
11. Commitments under loan agreements (continued)
ABN AMRO Debt Facilities
In October 2021 Accsys entered a 3-year bilateral facilities agreement with
ABN which comprises of a
- €45m term loan facility and,
- €25m Revolving Credit Facility ('RCF') .
- The term loan has bi-annual payments of €2.25m from April
2023.
- Term loan interest varies between 1.75% and 3.25% depending on
net leverage.
- RCF interest rate varies between 2.0% and 3.5% above EURIBOR.
Approximately €20m of the RCF was utilised to provide a letter of credit to
FHB in support of the Accoya USA JV funding arrangements, and the remaining
€5m was drawn at 30 September 2023.
The ABN AMRO facilities are secured against the assets of the Group which are
100% owned by the Company (excluding the Tricoya companies) and €10m of cash
collateral, and include net leverage and interest cover covenants which are
based upon the results and assets of these entities.
NatWest facility:
In November 2022, Tricoya UK Limited (the Company's subsidiary) agreed with
NatWest Bank plc to restructure its debt facility, reducing the principal
amount to a €6m loan with a 7 year term. The facility is secured by fixed
and floating charges over all assets of Tricoya UK Limited.
Interest is calculated with the margin ranging from 325 to 475 basis points
plus Euribor and capitalised during the 7 year term. No repayments are due
until the facility maturity date.
At 30 September 2023, the Group had €6.4m (31 March 2023: €6.2m) borrowed
under the facility.
Tricoya UK Limited also provided a Value Recovery Instrument ("VRI") agreement
to NatWest, to recover up to approximately €9.4m, on a contingent basis,
depending on profitability of the Tricoya UK plant once operational. The
contingent payments to NatWest are based upon free cash-flow generated by the
Tricoya UK plant.
First Horizon Bank facility:
In March 2022 the Company's joint venture, Accoya USA LLC agreed an eight-year
$70m loan from First Horizon Bank ('FHB') of Tennessee, USA in respect of the
construction and operation of the Accoya USA plant and a $10m RCF to fund
working capital. The FHB term loan is secured on the assets of Accoya USA and
is supported by Accoya USA's shareholders, including $50m through a limited
guarantee provided on a pro-rata basis, with Accsys' 60% share representing
$30m, supported by a $20m Letter of Credit ('LC') provided by ABN AMRO to FHB.
The interest rate varies between 1.3% to 2.1% over USD LIBOR.
Accoya USA LLC is equity accounted for in these financial statements,
therefore this Borrowing is not included in the Group's borrowings. (See note
13)
De Engh convertible loan:
In March 2022, Accsys agreed a 3.5 year, €10m convertible loan with De Engh
BV Limited ('De Engh'), an investment company based in the Netherlands (the
'Convertible Loan'), and shareholder in Accsys Technologies PLC.
The Convertible Loan is unsecured and carries an interest margin of 6.25%
above Euribor, increasing by 2% in year three and a further 2% in the
following year. Interest is payable quarterly and there are no principal
payments during the term of the loan. The Convertible Loan is convertible from
the end of year two to ordinary shares in the Company Accsys at €2.30 per
share.
11. Commitments under loan agreements (continued)
Reconciliation to net (debt)/cash:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 2023 30 Sept 2022 31 March 2023
Cash and cash equivalents 20,780 18,123 26,593
Less:
Amounts payable under loan agreements (64,180) (74,896) (65,920)
Amounts payable under lease liabilities (4,788) (4,596) (4,735)
Net (debt)/cash (48,188) (61,369) (44,062)
Restricted cash
The cash and cash equivalents disclosed above and in the condensed
consolidated statement of cash flow includes $10m which is pledged to ABN AMRO
as collateral.
Reconciliation to adjusted cash:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 2023 30 Sept 2022 31 March 2023
Cash and cash equivalents 20,780 18,123 26,593
Less:
Cash pledged to ABN AMRO (10,016) (10,949) (9,828)
Adjusted cash 10,764 7,174 16,765
12. Transactions with non-controlling interests
In the period ended 30 September 2022:
No shares were issued in the period to 30 September 2022.
The total carrying amount of the non-controlling interests in Triocya
Technologies Ltd and Tricoya UK Ltd at 30 September 2022 was €36.2m.
In the period ended 31 March 2023:
In November 2022, Accsys purchased the remaining ownership of Tricoya
Technologies Ltd and Tricoya UK Ltd which it did not previously own via a
Sales Purchase Agreement ('SPA') with the Tricoya consortium partners.
13. Investment in Joint Venture
In August 2020, Accsys together with Eastman Chemical Company formed a new
company, Accoya USA LLC, 60% owned by Accsys and 40% owned by Eastman. Accoya
USA LLC is constructing and will operate an Accoya plant in Kingsport,
Tennessee (USA) to serve the North American market. The plant is designed to
initially produce approximately 43,000 cubic metres of Accoya per annum and to
allow for cost-effective expansion.
Under IFRS 11 - Joint arrangements, the two parties are assessed to jointly
control the entity and Accoya USA LLC is accounted for as a joint venture and
equity accounted for within the financial statements.
At 30 September 2023, Accsys and Eastman have contributed equity of $61m to
Accoya USA LLC, with a further $5m committed to be contributed. There were no
equity injections during the period ending 30 September 2023.
See note 11 for details of debt funding.
The carrying amount of the equity-accounted investment is as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 Sept 2023 30 Sept 2022 31 March 2023
€'000 €'000 €'000
Opening balance 30,859 3,216 3,216
Investment in Accoya USA LLC - 29,129 28,979
Less: Accsys proportion (60%) of licence fee received - - (300)
Loss for the period (1,211) (403) (1,036)
Closing balance 29,648 31,942 30,859
The Group has equity accounted for the joint venture in these condensed
consolidated financial statements.
The income statement, balance sheet and cashflows for Accoya USA LLC, are set
out below:
Accoya USA LLC recorded a loss from operations of €2,019,000 for the period
ended 30 September 2023 (€963,000 for the period ended 30 September 2022).
The loss attributable to Accsys Technologies PLC was €1,211,000 for the
period ended 30 September 2023 (€403,000 for the period ended 30 September
2022).
Balance Sheet: Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 Sept 2023 30 Sept 2022 31 Mar 2023
€'000 €'000 €'000
Non-current assets
Property, plant and equipment 101,629 37,963 69,327
Right of use assets 6,242 7,084 6,242
107,871 45,047 75,569
Current assets
Debtors 149 578 236
Cash and cash equivalents 10,385 31,628 8,701
10,534 32,206 8,937
Current liabilities
Trade and other payables (12,562) (11,194) (14,682)
Obligation under lease liabilities (408) (416) (455)
Short term borrowings - - -
Net current liabilities (2,436) 20,596 (6,200)
Non-current liabilities
Obligation under lease liabilities (5,951) (6,604) (5,875)
Other long term borrowing (46,304) 1,457 (9,781)
(52,255) (5,147) (15,656)
Net assets 53,180 60,496 53,713
13. Investment in Joint Venture (continued)
Cash flows: Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 Sept 2023 30 Sept 2022 31 Mar 2023
€'000 €'000 €'000
Cash flows from operating activities 1,378 239 (1,147)
Cash flows from investing activities (33,829) (19,022) (49,568)
Cash flows from financing activities 33,844 48,426 59,550
Net increase in cash and cash equivalents 1,393 29,643 8,835
Foreign exchange gain/(loss) 291 1,750 (369)
Net increase in cash and cash equivalents 1,684 31,393 8,466
14. Post Balance Sheet Events
The Company has today announced a Fundraising to raise new gross proceeds of
approximately €24m and an extension of its debt facilities.
The Fundraise is proposed to include:
· A Placing to raise gross proceeds of approximately €13m to
€15m
· The issue of between €9 and €11m new convertible loan notes
alongside the repricing and reissue of the existing De Engh €10m convertible
loan (see note 11) in-line with the terms of the new convertible loan notes.
Together, the convertible loan notes amount to between €19 and €21m. The
convertible loan notes terms are proposed as following:
o 6 year term
o fixed rate coupon of 9.5% which will be rolled up for the first 2.5 years,
deferred and paid in cash over the remaining 3.5 years
o convertible into ordinary shares of the Company at a price of 83.22 euro
cents per share
o unsecured and non-transferrable
Amendments to ABN AMRO borrowing facilities
· The Company has reached an agreement with ABN AMRO to extend the
Company's main €40.5m term loan facility and €25m revolving credit
facility ('RCF') by 18 months from October 2024 to 31 March 2026. The new
agreement will have a repayment holiday to July 2025, quarterly repayments of
€1.125m thereafter and a release of the existing cash collateral of €10m,
with €7.5m utilised to repay a portion of the term loan facility and the
remaining €2.5m being utilised for general liquidity purposes. Borrowing
costs will range between 3 - 4% over Euribor for the RCF and over 1.34% in
respect of the term loan facility.
· The net debt / EBITDA covenant will increase to 2.75x over three
quarters ending 30 September 2024, 31 December 2024 and 31 March 2025. All
other financial covenants will remain the same.
· This amendment agreement with ABN AMRO is conditional on the
Company raising €24m through the Fundraising and will become effective upon
completion of the proposed Fundraising.
Use of Fundraising proceeds
The use of the Fundraising proceeds is as follows:
· Approximately €22m will be used to fund Accsys's share of
Accoya USA. The total construction cost for the US plant is now expected to be
approximately $160m. It is expected that approximately €15.5m of the
Fundraising proceeds will be used to complete construction and approximately
€6.5m to fund operations as the US plant targets a steady ramp up in volume
and operations.
· Approximately €2.0m will be used for general liquidity and
working capital purposes.
The Directors are of the belief that the issue of the convertible loan notes
along with the proposed Placing and amendments to the ABN AMRO borrowing
facilities are in the best interests of the Company and strengthens the
Company's funding position during a key period of investment.
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