REG - Accsys Technologies - Preliminary results for the year end 31 March 2023
27/06/2023 07:15
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RNS Number : 9690D Accsys Technologies PLC 27 June 2023
AIM: AXS
Euronext Amsterdam: AXS
27 June 2023
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Preliminary results for the year ended 31 March 2023
Year to 31 March 2023
Year to 31 March 2022 % Change
Revenue €162.0m €120.9m 34%
Gross profit €55.2m €36.0m 53%
Underlying EBITDA(1) €22.9m €10.4m 120%
Underlying profit before tax(2) €11.0m €1.3m 746%
Period end net debt (€44.1m) (€27.2m)
Accoya sales volume 63,344m(3) 59,649m(3) 6%
Highlights
· 34% growth in revenue at €162.0m, driven by continuing strong
product demand, higher average sales prices and implementation of Energy Price
Premium (EPP)
· 6% growth in Accoya sales volumes at 63,344m(3):
o H2 sales volumes of 39,387m(3) (H1: 23,957m(3)), representing growth of
64% on H1, and in excess of our targeted 50% increase
o Record production levels in Q4 reflecting reactors 1-3 returning to
production following Arnhem plant shutdown in April and May and additional
production from new fourth reactor from September 2022
· 4% points improvement in gross profit margin to 34%, remaining
above target level of 30%
· 120% growth in underlying EBITDA at €22.9m, ahead of previous
guidance, reflecting higher revenues and average sales prices offsetting
increased raw material costs
· Strategic growth projects:
o Arnhem plant - commercial operation of reactor 4 commenced in September
2022, increasing Arnhem capacity by 33% and generating record volume
production in Q4; production from the plant ramping up over two years
o Accoya USA JV - construction of new 43,000m(3) plant progressing well but,
as previously announced, has experienced some delay and cost inflation;
commercial operation now expected mid-2024
o The Board has made good progress on the review of the Tricoya (Hull) plant
and continues to believe in the underlying economics associated with
completing the construction of Hull and will therefore continue to explore
financing options to complete the plant's construction, including strategic
partners and lending institutions
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 3 to the financial statements).
2 Underlying profit before tax is defined as profit before tax and
exceptionals and other adjustments
· Exceptional non-cash item of €86m in relation to Hull
impairment and restructure of the Tricoya consortium
· Net debt increased by €16.9m in the year to €44.1m due to the
planned investment into Accoya USA (€29m), capex investments of €29.8m
into the Arnhem reactor 4 and Tricoya Hull projects (partially offset by a
placing in May 2022 which raised net proceeds of approximately €19m), the
reduction in the NatWest loan (€9.4m) and EBITDA generation during the year.
The Company's net debt to EBITDA ratio has improved significantly on the prior
year, now 1.9x (FY22: 2.6x)
· Outlook: The Group has made a good start to FY24, with
performance in line with the Board's expectations
Stephen Odell, Executive Chair of Accsys, commented:
"Overall, I am pleased with our performance in FY23. Demand for Accoya and
Tricoya has been strong throughout the year as our customers continue to seek
products that deliver outstanding performance, durability and sustainability.
This has enabled us to substantially offset the wider market pressures from
raw materials costs and supply chain disruption through price increases.
"The year has not been without its challenges, however. In November we
announced that while we had taken 100% control of the world-first Tricoya
project in Hull, we also put the project into a hold period to assess future
capability and funding options. The Board has made good progress on its
review, details of which are given in this statement. In addition, while we
have made good progress with our USA JV with Eastman, as previously
communicated, construction of the plant at Kingsport has seen some delays and
cost inflation. Both Accsys and Eastman remain fully committed to delivering
the project, which will replicate the proven technology of our successful
plant in Arnhem.
"In the coming year we expect to leverage the benefits from greater economies
of scale associated with higher production volumes at our plants. FY24 will be
a year during which we will implement actions to ensure the future sustainable
growth of the business and to drive value creation for our shareholders. These
actions include moving towards completion of the Kingsport plant, which will
incur higher costs this year as we invest in people and infrastructure in
readiness for start-up and making key investments in the core business to
support higher volume production. In view of our increased capacity from the
expansion of Arnhem and future capacity from Kingsport, and in light of some
softening of price and demand in the global construction industry, we are
dedicating more resource to our sales and marketing activity globally,
particularly in the US, to prepare for a greater level of supply as this
project comes online.
"We have made a good start to FY24, with performance in line with our
expectations. With our new executive management team in place to drive the
business forward in its next phase of growth, we are confident in delivering
further financial and operational progress in the coming year, and in the
longer-term demand and growth opportunity for Accoya and Tricoya."
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
Numis Securities (London): Oliver Hardy (NOMAD), Ben
Stoop
+44 (0) 20 7260 1000
Investec Bank plc (London): Carlton Nelson, Alex
Wright
+44 (0) 20 7597 5970
ABN Amro (Amsterdam): Richard van Etten, Dennis van
Helmond
+31 20 344 2000
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Accsys Technologies PLC
Executive Chair's Report
Introduction
Accsys has made significant progress in the 2023 financial year as it moves
forward with its ambitious plans for growth, despite particularly challenging
macro-economic conditions, which include the ongoing war in Ukraine, an energy
crisis, rising inflation, supply chain disruption and the pressing need to
address climate change. The resilience of our business against this difficult
backdrop is testament to the attractiveness of our products, the strength of
our business model and the talent and the commitment of our people.
Overview of the year
The successful completion and startup of reactor 4 in Arnhem, together with
reactors 1-3 returning to production after the plant's shutdown in April and
May 2022, has led to 6% growth in volumes this year, and our highest ever
volume production in Q4. Demand for our Accoya and Tricoya wood has been
strong (and in excess of our capacity) as customers continue to seek products
that deliver outstanding performance, durability and sustainability.
The Company delivered very strong revenue growth for the year, underpinned
by strong product demand and increases in average sales prices, despite the
production outages linked to the completion of reactor 4 highlighted above.
Underlying EBITDA more than doubled year on year, ahead of our original
expectations, reflecting the increased average sales prices and an energy
price surcharge mechanism which have successfully offset raw material cost
increases, including the impact of volatile and elevated acetyl and energy
prices in Europe. The core Accoya business is trading well, has momentum and
is cash generative after a period of investment made to get reactors 1-4
installed and operating well.
The year has not been without its challenges. In November we announced that
while we had taken 100% control of the world-first Tricoya project in Hull, we
also put the project into a hold period to assess future capability and
funding options. While further work is required to prove the working
capabilities of the plant, we have made good progress on this review over the
past six months. We have also been assessing the cost to complete the project,
developing extensive and detailed work packages in order to do so. This work
stream has confirmed our original assessment of the costs to complete the
project as up to €35m.
Over the period, we have also continued to sell Accoya to our off-take
partners, MEDITE and FINSA, both of which convert Accoya wood into Tricoya and
help seed the market. We continue to see good levels of market demand for
the product, which reaffirms our view of the long-term market potential for
Tricoya. Ongoing discussions with both partners about future arrangements
following completion of the plant remain positive.
We have also been in discussions with certain strategic partners with a view
to providing appropriate funding necessary to complete the Hull plant's
construction. To date, the Company has been unable to reach acceptable terms
with any of these strategic partners.
In view of the strong market dynamics underpinning Tricoya, the Board of
Accsys continues to believe in the underlying attractive economics and margins
associated with completing the construction of Hull and therefore will
continue to explore funding options to support the plant's construction,
including strategic partners and lending institutions. Absent the availability
of third-party funding, the Company will use modest levels of internally
generated cash to maintain the plant and progress certain pre-construction
works. The Board will continue to engage with stakeholders in respect of Hull
and its future prospects. Despite its belief in the future potential for
Tricoya, the Board is clear that the base Accsys business must not be
compromised to find a solution for Hull. In the meantime, we will continue to
work with our partners to further develop the Tricoya market using Accoya,
including exploring the expansion of dedicated capacity for greater volume
production within our existing facilities.
We have made good progress with our Accoya USA JV with Eastman. However, as
previously communicated, the project has experienced some delays and cost
inflation. Both Accsys and Eastman remain fully committed to delivering the
project, which will replicate the proven technology of our successful plant in
Arnhem.
FY23 has been another important year for customer relationships, during which
we have had to manage inflationary cost increases through higher prices,
ongoing disruption to supply chains post the COVID-19 pandemic and our own
production capacity limit in the face of strong customer demand. We are
grateful to our customers for their continued support and have engaged in
regular dialogue with them as we navigate these challenging market
conditions.
During the year Accoya's high level of performance and sustainability was
recognised in various prestigious global industry awards. Accolades include
the EmiratesGBC 'Green Building Product of the year' and the 'Best of
Products' award from The Architect's Newspaper, USA for Accoya Color Grey. We
have been delighted to see Accoya installed and specified on some flagship
architectural projects from London to Rome to the Red Sea, including Google,
where Accoya has been specified on its new HQ 'landscraper' building in Kings
Cross, London.
Summary of financial performance
Accsys delivered revenues of €162.0m, a 34% increase on the FY22, reflecting
continuing strong demand for our products, higher average sale prices and the
implementation of an Energy Price Premium to mitigate higher gas prices.
Underlying EBITDA was €22.9m, an increase of 120% on the prior year, and
ahead of our previous market guidance of nearly doubling last year's EBITDA of
€10.4m.
Group gross margin increased by 4% to 34%, aided by the higher average sales
prices outlined above. Underlying profit before tax increased by €9.7m to
€11.0m. Statutory loss before tax was €67.1m.
Net debt increased by €16.9m in the year to €44.1m due to the planned
investment into Accoya USA (€29m), capex investments of €29.8m into the
Arnhem reactor 4 and Tricoya Hull projects (partially offset by a placing in
May 2022 which raised net proceeds of approximately €19.0m), the reduction
in the NatWest loan (€9.4m) and EBITDA generation during the year.
Strategic update
Accoya
During the period we were pleased to complete the expansion of our plant in
Arnhem which adds a new 20,000 cubic metres reactor, enabling the site's
maximum annual capacity to increase to 80,000 cubic metres.
As previously reported, we experienced some unexpected delays in the final
installation, tie-ins and supply of certain equipment for reactor 4, which
resulted in an unexpected second shutdown across the plant in April and May
2022. In addition, during the commissioning and testing period in June 2022,
we identified a number of defects to equipment which were repaired over the
following eight weeks.
As a result, reactor 4 commenced commercial operation in September 2022.
Further work on optimising reactor 4 - to reduce cycle times and deliver more
capacity - is planned for the coming year. In addition, investment in new
stacking technology is ongoing which will provide efficiency improvements
across the plant's work centres.
North America represents the largest potential regional market for our
product. Under our joint venture with Eastman, a world leader in the
production of acetyls, we are building an Accoya plant in the USA with an
initial approximate 43,000 cubic metres capacity at Eastman's Kingsport,
Tennessee site. Under the joint venture, Accsys holds a 60% interest and
Eastman a 40% interest.
We have made good progress with the construction of the plant, which commenced
in April 2022. 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 more than
80% of major equipment. As we move towards completion of the plant, we will
increase our investment in people and infrastructure in readiness of start-up
and as a result, the project will incur higher costs in the coming year. As
announced in May, the project has experienced some delays and cost inflation,
which is being experienced throughout the construction industry. 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. In line with our group commitment to Health &
Safety, this has been established as a key priority at the site and by the
2023-year end we were able to celebrate over 150,000 hours worked with only
one minor first aid injury.
Our 50,000 square foot Accoya Color manufacturing plant in Barry, Wales, has
increased our ability to convert Accoya wood into Accoya Color - a product
which combines the benefits of Accoya wood with colour all the way through the
wood from surface to core. The site has a maximum capacity of 12,500 cubic
metres per annum. During the year we made operational improvements to the site
which have enabled us to increase production by 140% to 4,010 cubic metres.
More importantly, this will allow us to further increase future production in
FY24 and to support growing customer demand.
Accoya Color's unique proposition is proving to be very attractive to
customers in our target markets, particularly in the decking category where
the surface-to-core grey colour requires less maintenance to retain over the
long term. In addition to the product's existing markets of Germany,
Switzerland, Austria and the US, Accoya Color was launched this year into the
new markets of Australia, New Zealand and France.
Accoya Color generates a higher gross profit per cubic metre than Accoya and
will enhance our product margins over time. As we increase our Accoya
production capacity, we continue to expect increased Accoya Color sales in the
medium term.
At the end of FY23, Accsys launched a new UK national advertising campaign,
"Lasts a Lifetime", highlighting the high performance of Accoya wood to
homeowners. The campaign launched with a commercial on Sky TV targeting a
subset of the homeowner market audience, supported by digital advertisements
running through the European spring months.
Tricoya
Accsys and its former consortium partners in Tricoya UK Limited (TUK) have
been building the world's first Tricoya plant in Hull. In November 2022 Accsys
agreed with its partners - Ineos, MEDITE, BGF and Volantis - to acquire 100%
ownership of the plant and the Tricoya group entities (Tricoya Technologies
Limited and TUK), in exchange for 11.9m new shares in Accsys, representing
5.74% of its issued share capital at that date. Ineos and MEDITE remain
commercial partners with Accsys, retaining their respective acetyls supply and
acetylated wood chip off-take agreements. The reorganisation gives Accsys the
option to take the Tricoya Hull Project forward on its own terms and to
benefit from 100% of the long-term returns from Tricoya, including any future
licencing in respect of the global Tricoya market opportunity.
At the same time, the Company announced the restructuring of the debt
arrangements between TUK and NatWest, resulting in the principal debt being
reduced by €9.4m to €6.0m with a new seven-year term, and no capital
repayments during this period.
The Company stopped site activity in November, placing the project into a hold
period to mitigate the risk of weaker economics on start-up (due to the high
and volatile acetyls raw material prices in Europe) and to allow the Board
time to assess the economics and capability of the plant and its potential
returns on investment.
While further work is required to prove the working capabilities of the plant,
we have made significant and positive progress on this review over the past
six months. Please see further details on progress with the Board's review in
the Executive Chair's Report.
Building organisational capability
We are making good progress in developing our people and organisational
capabilities to manage growth. Post the year end, the Company boosted its
expertise in the areas of large capital project management, cost management
and financial forecasting through the appointments of Dr. Jelena Arsic van Os
as CEO and Steven Salo as CFO, both of whom have significant experience in
these areas. As we increase our manufacturing output, we are strongly
focused on strengthening our manufacturing expertise and leadership. Key
senior management appointments during the year include a Group Manufacturing
and Projects Director, a newly created role which will support Accsys as we
expand our operations and develop our global reach. Management has also been
strengthened by the appointments of new Managing Directors of Tricoya UK and
Accoya Color.
We rely on the skills, experience and commitment of our people to meet our
business goals and to that end, are committed to investing in their careers.
During the year we increased the number of training and development
opportunities for our colleagues around the group, providing 8,579 total
training hours in FY23, representing 32.5 training hours per colleague. This
year's performance is an increase of 526 hours on the prior year and 4,619
hours since FY21. Together with new leadership training programmes and talent
mapping, this is an ongoing process to ensure we have the right skills and
talent in place to grow our business effectively.
Innovation & Technology
We conduct regular strategic reviews of our engineering and technology
capabilities and other actions to drive improved delivery of capital and
innovation projects. This has led to the creation in FY22 of a Global
Engineering Centre and Project Management Office, and further development of
our R&D function. During the year we increased our skills and talent in
key areas including project and portfolio management in addition to
engineering, wood (modification) science and analytical capabilities.
Our R&D team is focused on both process and product innovation which
impact the short, medium and long-term future of the business. With production
capacity recently expanded in Arnhem, process optimisation and reliability
remain core areas of focus. Our R&D team works closely with our Sales
& Marketing teams to understand evolving consumer needs and to assess
where innovation can meet those needs.
To build resilience and mitigate risk in our supply chain our R&D and
Supply Chain teams have been exploring alternative wood species to Radiata
pine. The properties of Radiata pine from certain regions make it well suited
to our proprietary acetylation process. It is also fast growing and available
from certified sources, making it a sustainable choice. However, we want to
broaden our wood supply, both in terms of species and source location to
de-risk our operations as we grow.
This year we were pleased to see positive results from long-term trials of
Accoya made from fast growing Taeda pine from Argentina and Uruguay with ideal
growing conditions and forestry practices and mills that can meet our
requirements. For example, Accoya cladding made from Taeda has been used to
clad the Starbucks building in Wakefield, UK. Installed in 2020, it has shown
the same durability and performance as Radiata pine. Being able to source
Taeda from South America also makes it an ideal option for supply to the
Kingsport, Tennessee plant. Over the coming year we will be continuing this
work with the view to beginning official commercial production of Accoya with
Taeda.
Intellectual Property
Accsys continues to invest in developing and protecting its valuable portfolio
of intellectual property and confidential information. Our technology covers
not only the physical equipment and engineering that underpins our
manufacturing and production, but also the processes and methodology we follow
in our supply and production chain: from the way we source our wood, through
our wood modification process, to the way we market and sell Accoya and
Tricoya.
Accsys' holds c.388 patent family members covering 28 distinct inventions in
45 countries with 75% of the patent family members now granted. The core
technologies associated with our current and future plants for the production
of Accoya and Tricoya wood products are protected by using a combination of
patenting and branding and trade secrets to maintain our differentiation in
the marketplace and interest to potential licencing partners. Our principal
trademark portfolio covers our Accoya and Tricoya brands, the Trimarque device
and the Accsys company name, protected by registrations in over 60 countries.
ESG
With its stated purpose of 'Changing wood to change the world', Accsys is
committed to growing and operating its business in a responsible and
sustainable way. Aligned with our values and business strategy, our ESG
framework outlines 10 key material issues and impact areas on which we are
primarily focused.
Having completed Stage One of our 2020 sustainability strategy roadmap, we are
now in Stage Two and are focused on establishing specific development plans,
including setting Science Based Targets (SBTs) to reduce our emissions
intensity per cubic metre of Accoya produced.
Building on our commitment to transparency, Accsys participated for a second
consecutive year in the S&P Global Corporate Sustainability Assessment.
Accsys scored 43/100 - an improvement of five points (13%) on the prior year,
placing the Company in the top quintile in the 'Paper & Forest Products'
industry category.
Through our expanding safety programme which includes increased monitoring, a
defined strategy and increasing awareness, we are building a stronger safety
culture across the organisation. During the year the Company rolled out a
number of dedicated safety learning programmes and initiatives, including a
Health & Safety month in February 2023 which gave our colleagues the
opportunity to participate in group discussions on safety improvement,
training sessions and guest speaker events.
During the year we completed a Board performance evaluation and internal
review which complements our three-yearly cycle of external evaluations. The
results of the evaluation confirmed the individual and collective commitment
and effectiveness of Directors. The evaluation also supports the Board in
understanding areas of focus as part of its continuous improvement.
Health & Safety (HSE)
Health & Safety is a top priority for the Board and for Accsys, and the
Board-level HSE Committee established in 2022 has helped support the Board's
focus on this key area. Accsys has set 'Zero Harm' as a key target for our
operations and is committed to developing best practice HSE across the
Company.
During FY23 we held regular safety briefings for all colleagues and have
issued monthly communications to encourage greater awareness of safety. As
awareness around safety grows, we have seen corresponding improvements in key
HSE performance metrics. During the year we introduced a digital version of
our safety observation card, submissions of which grew from 1,060 in FY22 to
1,316 this year. In addition, we have maintained our momentum in leadership
safety tours, holding almost 700 tours over the year. We are pleased to report
that our Total Recordable Incidence Rates improved from 5.2 to 3.6 per 200,000
hours worked. Our Lost Time Incident Rate per 200,000 hours worked, however,
increased from 0.52 to 0.96 (versus our target 0.5).
Energy & Climate Change
Our approach to Energy & Climate includes a focus on energy efficiency and
process optimisation, assessing the carbon impact of our products and
integrated climate considerations and activities (e.g. risks and
opportunities) across multi-functions across the business.
We are innovating to minimise our environmental impact across our operations,
in accordance with our Climate Change Policy, whilst sourcing our raw
materials responsibly. In 2023 we established a steering committee at our
Arnhem site to focus on carbon intensity reduction per cubic metre of Accoya
produced. Additionally, we are using our Scope emissions data to set carbon
reduction targets in alignment with the Science Based Targets Initiative
(SBTi).
Society & Communities
Accsys has developed a more structured approach to charitable and community
support and its environmental impact through tools such as charitable giving
and colleague engagement. During the year our colleagues chose three official
charity partners to support. In total Accsys pledged total donations of
€72,219 towards charitable activities as well as participating in our chosen
charities' missions through a number of activities, events and
presentations.
In January we organised a colleague volunteering day with our charity partner
Trees4All. Accsys colleagues were invited to join volunteers from across The
Netherlands to plant trees in the Groene Woud, NL. The day resulted in around
2,000 trees going into the ground and gave our colleagues the opportunity to
give back to the local community and learn about reforestation.
A one-off donation was also approved by our Charities Committee to support the
Turkey/Syria Earthquake appeal in support of several colleagues who had
relatives and friends in affected areas.
Sustainable & Quality Products
We are committed to a more sustainable world and use abundantly available wood
sources, certified as sustainable by the Forest Stewardship Council® (FSC®).
Our commitment to responsible sourcing and manufacturing is recognised by
leading accreditation bodies. This year we achieved Cradle to Cradle® (C2C)
gold certification for Accoya Color Grey, as well as being awarded 'Platinum'
level (the highest level) for both 'Material Health' and 'Water Stewardship'.
Our core product, Accoya has held C2C certified status since 2010. C2C
certified is the global standard for products that are safe, circular, and
responsibly made. Accoya wood is one of the very few building products to have
acquired C2C certification on the stringent Gold-level. This represents very
high standards of sustainability, alongside the recognised high performance
and durability credentials of the brand.
Capital Raise
In May 2022 the Company completed a €19m net capital raise from shareholders
to support the completion of current capital projects and increase working
capital and cashflow headroom. We extend our thanks to shareholders for their
continuing support and investment in Accsys.
Board Update
The Board's composition brings depth and a range of experience to Accsys, both
supporting and challenging the Executive team in the execution of the
Company's strategy. Post the year end there has been considerable change, with
Rob Harris, Accsys' Chief Executive Officer, stepping down after three years,
and Will Rudge deciding to leave the Company after 12 years as Chief Financial
Officer.
Rob Harris is succeeded by Dr Jelena Arsic van Os, who will join the Board as
CEO on 1 July 2023, at which point I will return to my prior role as
independent Non-Executive Chair of Accsys. Jelena has over 20 years'
experience in senior executive leadership roles in large-cap multinational
companies and has a proven track record in transforming and driving complex
businesses, delivering on profitable growth targets and successfully
delivering large capital projects. We are grateful to Rob Harris and wish
him success in his future endeavours.
Will Rudge is succeeded by Steven Salo, who joined Accsys on 1 April 2023.
Steven brings significant experience in senior financial leadership roles,
executing high-value corporate and business development transactions, and
driving and shaping businesses for profitable growth. We take this
opportunity to thank Will Rudge for staying on to support Accsys and
transition his responsibilities to Steven and wish him all the best with the
next step in his career.
Post the year end, in May 2023 we announced that as they reach the end of
their nine-year terms, Sue Farr and Sean Christie, who chairs the Audit
Committee, will step down from the Board at the conclusion of the AGM in
September 2023. In addition, due to increases in his executive commitments,
Alexander Wessels, who chairs the Company's Remuneration Committee, will also
step down from the Board at the upcoming AGM at the end of his current three
year term.
The Board is seeking to appoint two new high-quality and experienced
independent Non-Executive Directors, with the intention of one acting as Chair
of the Audit Committee, and the second as Chair of the Remuneration Committee.
The search for both these roles is well underway and the Company plans to give
further updates ahead of the AGM in September.
The Board would like to thank Sue and Sean for their significant contribution
to Accsys over the last nine years and for the support and guidance they have
given to newer members of the board. The Board also thanks Alexander for his
invaluable input to Accsys over the last three years through his experiences
as a CEO. We look forward to adding two new high-quality Non-Executive
Directors to the Board in due course as we look to deliver on Accsys'
significant potential.
Outlook
In the coming year we expect to leverage the benefits from greater economies
of scale associated with higher production volumes at our plants. FY24 will
also be a year during which we will implement actions to ensure the future
sustainable growth of the business and to drive value creation for our
shareholders. These actions include moving towards completion of the Kingsport
plant, which will incur higher costs this year as we invest in people and
infrastructure in readiness for start-up and making key investments in the
core business to support higher volume production. In view of our increased
capacity from the expansion of Arnhem and future capacity from Kingsport, and
in light of the softening of price and demand in the global construction
industry, we are dedicating more resource to our sales and marketing activity
globally, particularly in the US, to prepare for a greater level of supply as
this project comes online.
We have made a good start to FY24, with performance in line with our
expectations. With our new executive management team in place to drive the
business forward in its next phase of growth, we are confident in delivering
further financial and operational progress in the coming year, and in the
longer-term demand and growth opportunity for Accoya and Tricoya.
Stephen Odell
Executive Chair
26 June 2023
Accsys Technologies PLC
Finance Review
FY23 FY22 Change %
Group Revenue €162.0m €120.9m 34%
Gross Profit €55.2m €36.0m 53%
Underlying EBITDA €22.9m €10.4m 120%
Underlying EBIT €14.4m €4.2m 243%
Underlying profit before tax €11.0m €1.3m
Statutory (loss)/profit before tax (€67.1m) €1.7m
Cash €26.6m €42.1m
Adjusted cash €16.8m €4.3m
Net debt (€44.1m) (€27.2m)
Accoya Sales volume 63,344m(3) 59,649m(3) 6%
Introduction
Accsys has delivered a good performance in the year, with 34% revenue growth
and a 120% increase in Underlying EBITDA to €22.9m, driven by increased
sales prices and strong ongoing demand for our products.
Net debt increased by €16.9m in the year to €44.1m due to the planned
investment into Accoya USA (€29m), capex investments of €29.8m into the
Arnhem reactor 4 and Tricoya Hull projects (partially offset by a successful
placing in May 2022 which raised net proceeds of approximately €19m), the
reduction in the NatWest loan (€9.4m) and EBITDA generation during the year.
In November 2022 Accsys agreed to acquire full ownership of the Tricoya
entities, including the Tricoya Hull plant from its consortium partners for a
consideration in Accsys shares (valued at €9.5m). At the same time, the debt
facility between TUK and NatWest was restructured, resulting in the principal
debt being reduced to €6m, with a new seven-year term and no capital
repayments during this period.
Following these events, an impairment assessment was required to be performed
under IAS 36 (Impairment of Assets) on the Tricoya segment's gross assets with
an impairment loss of €86m being recognised as a non-cash exceptional item.
The calculated impairment was impacted by:
1) A previously reported increase in the capex to complete the
construction of the Tricoya Hull plant of €35m, commencing in 2 years;
2) A higher pre-tax WACC rate (used for the discount rate) increasing by
3.0% to 13.5%, principally due to higher market interest rates; and
3) A decrease in the production volume forecast for the plant to
24,000MT (from 30,000MT).
Statement of comprehensive income
Group revenue increased by 34% to €162.0m for the year (FY22: €120.9m),
driven by continuing strong market demand for Accoya and Tricoya and an
increase in average sales prices during the year and prior year implemented to
address rising raw material costs. An energy price premium (surcharge) was
also successfully added to customer sales prices in H1 to offset a significant
increase in acetyl costs.
Accoya sales volumes increased 6% to 63,344m(3) following the successful
commissioning and operation of reactor 4 in September 2022. We have continued
to see strong underlying demand for Accoya across our regions and with our
Tricoya panel manufacturing partners. The FY23 regional sales trend on a
year-on-year basis reflects a 10% increase in sales volumes in North America
where we continue to increase marketing, sales, and allocation of product
volumes available to customers as we develop this market ahead of our US
capacity expansion.
Sales volumes increased by 18% to our Tricoya customers (MEDITE and FINSA)
following a drop in allocation in FY22. These sales to MEDITE and FINSA for
the manufacture of Tricoya panels are used to develop the market for Tricoya
products and represent 24% of Accoya sales volumes (FY22: 22%).
Sales volume by end market FY23 FY22 Change
m(3) m(3) %
UK & Ireland 14,667 14,905 (2%)
Tricoya 15,193 12,860 18%
Rest of Europe 16,584 16,809 (1%)
Americas 10,574 9,575 10%
Rest-of-World 6,326 5,500 15%
Total 63,344 59,649
Other Revenue, which predominantly relates to the sale of our acetic acid
by-product, increased by 21% to €16.8m (FY22: €13.9m) due to higher
acetic acid sales volume following the ramp up of production from reactor 4 in
Arnhem. Accsys' sales of its acetic acid by-product back into the same acetyls
market continued to act as a partial hedge to the higher acetic anhydride
costs. The net acetyls cost increased by 19% compared to the prior year.
Raw wood input costs were moderately higher although more stable than the
wider lumber market as we purchase appearance-grade wood under long-term
supply contracts with many of our partners.
Cost of sales increased by 26%, on 6% higher sales volumes and higher cost of
raw materials, primarily in higher raw wood and acetic anhydride costs.
Group gross profit of €55.2m was 53% higher than the prior year (FY22:
€36.0m) and gross profit margin increased 4% to 34%.
Underlying other operating costs (excluding depreciation and amortisation)
increased from €25.4m to €31.6m. This is due to Tricoya's ongoing running
costs being treated as operating expenditure in the second half following the
introduction of Tricoya UK's hold period and increased legal, insurance and
staff costs during the year.
Depreciation and amortisation charges increased by €2.1m to €8.3m
following commercial production from reactor 4 in September 2022.
Underlying finance expenses increased €0.3m to €3.2m following the
interest on Tricoya UK's NatWest facility not being capitalised post the
introduction of the hold period for Tricoya UK and a full year of interest
cost on the De Engh €10m loan which was entered into March 2022.
An impairment loss (exceptional item) of €86.0m has been recognised in the
year relating to the Tricoya segment. The calculated impairment is described
in the Introduction and has been recognised as a non-cash exceptional item.
In regard to the Tricoya Consortium reorganisation completed during the year,
the following exceptional items have been recognised:
- €1.5m expense for advisory fees incurred;
- €9.4m income related to the restructuring of the NatWest loan,
decreasing the principal debt from €15.4m to €6m; and
- €1.4m expense related to the value recovery instrument
provided to NatWest, allowing NatWest to recover up to approximately €9.4m,
on a contingent basis, depending on the profitability of the Tricoya Hull
plant once operational (see note 23).
An exceptional foreign exchange gain of €1.4m was recognised related to US
dollars held as cash for investment into Accoya USA, which were invested into
the joint venture in the first half. Following the May 2021 capital 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 future US dollar investment into Accoya USA. This
treatment did not meet the requirements for hedge accounting under IFRS 9,
Financial Instruments, and therefore the foreign exchange gain on the
revaluation of the US dollars has been accounted for in Finance Expenses as an
Exceptional item.
In the prior year, redundancy costs of €0.1m were recognised in relation to
the purchase of assets in Barry, UK and €1.6m early termination costs
related to the refinance of the Group debt facilities in October 2021, with
both classified as exceptional items.
No other adjustments have been recognised in the current year, 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 for the Letter of Credit provided to First Horizon Bank ('FHB') as part
of the Accoya USA funding arrangements and pound sterling loan notes repaid in
the October 2021 Group refinance. See note 5 for further details.
Underlying profit before tax increased by €9.7m to €11.0m (FY22: €1.3m).
After taking into account exceptional items (including the impairment loss)
and other adjustments, loss before tax amounted to €67.1m (FY22 profit:
€1.7m).
The tax charge increased by €1.8m to €2.8m (FY22: €1.0m).
Underlying earnings per share increased to €0.05 per share (FY22: €0.01
per share). A statutory loss per share was recognised of €0.19 per share
(FY22: profit of €0.01 per share).
Cash flow
Cash flows generated from operating activities before changes in working
capital increased by €11.3m to €22.7m (FY22: €11.4m), reflecting
continued good operational cash flow generated by our plant in Arnhem.
Inventory levels increased by €9.6m during the year with higher raw material
levels held due to the ramp-up of the fourth reactor, which increases
production capacity by 33% but which was also partially impacted by the delay
in start-up of reactor 4 and the long lead time for raw material purchases
from New Zealand. Inventory balances started to decrease in H2 and are
expected to continue to decrease further in the next financial year.
In May 2022 Accsys completed a successful placing for an issue of shares in
the Company, raising net proceeds of approximately €19.0 million which have
been used to strengthen the Group's balance sheet, increase liquidity headroom
and provide additional working capital and fund additional costs to complete
Arnhem's expansion project.
At 31 March 2023 the Group held cash balances of €26.6m, a €15.5m decrease
in the year, attributable to construction costs relating to the Arnhem plant
expansion project (€7.9m), Tricoya Hull project (€20.1m), the planned
investment into Accoya USA (€29m) and the increase in inventory referred to
above. This was partially offset by the placing, €10.0m of proceeds from
loans (explained further below), and cash flow generated from operating
activities. When adjusting for the cash pledged for the Letter of Credit
provided to FHB of $10.0m (see note 30), and in the prior year adjusting for
the remaining cash raised in the May 2021 equity raise to be invested into
Accoya USA, Adjusted Cash increased during the year to €16.8m (see note 30).
Financial position
Plant and machinery additions of €21.4m (FY22: €41.0m) consisted of the
construction of reactor 4 in Arnhem and the Tricoya plant in Hull.
Trade and other receivables increased to €18.1m (FY22: €16.9m), primarily
due to higher sales following the ramp up of reactor 4.
Trade and other payables decreased €4.0m to €25.9m (FY22: €29.9m), with
a decrease in accruals following the completion of the Arnhem expansion
project and the decrease in activity on the Tricoya plant in Hull.
Amounts payable under loan agreements increased to €65.9m (FY22: €64.0m)
due to the drawdown of €5.0m on the ABN Revolving credit facility and
€5.0m on the Tricoya NatWest €17.2m facility, capitalisation of interest
on the Tricoya NatWest loan before the Tricoya NatWest facility was
restructured, decreasing the principal debt from €15.4m to €6.0m.
Net debt increased by €16.9m in the year to €44.1m (FY22: €27.2m) due to
capex investments of €29.8m, investment into Accoya USA (€29m) and the
increase in inventory partially offset by the successful placing (net proceeds
of €19.0m), cash flow generated from operating activities and the
restructuring of the Tricoya NatWest facility, decreasing the principal debt
on the facility by €9.4m to €6.0m.
Going concern
The consolidated financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence for the
foreseeable future, and at least 12 months from the date these financial
statements are approved.
As part of the Group's going concern review, the Directors have assessed the
Group's trading forecasts, working capital requirements and covenant
compliance for the foreseeable future under a base case scenario, taking into
account the Group's financial resources including the current cash position
and banking and finance facilities which are currently in place (see note 30
for details of these facilities). The Directors have also assessed a severe
but plausible downside scenario with reduced sales volumes and lower gross
margin, also reflecting the possible impact of volatile raw material costs.
These forecasts indicate that in order to continue as a going concern the
Group is dependent on achieving certain operating performance measures
relating to the production and sales of Accoya wood from the plant in Arnhem
with the collection of on-going working capital items in line with internally
agreed budgets. In both scenarios, the Directors have assumed no commitment
will be made to complete the construction and start-up of the Tricoya plant in
Hull until appropriate funding arrangements have been put in place.
The Directors' have taken into account the reorganisation of the Tricoya
consortium and restructuring of its bank debt completed in November 2022 which
resulted in Accsys becoming the 100% owner of the Tricoya Hull plant and the
commitment to fund ongoing working capital during the hold period. The
Directors' have also considered the possible amount and timing of capital
expenditure required to complete the Accoya plant in the USA, noting that
notwithstanding that the construction project benefits from certain
contractual measures in place with the lead construction contractor, Accsys
has committed to fund its 60% share of cost overruns, should they arise.
The Directors believe there are a sufficient number of alternative actions and
measures within the control of the Group that can and would be taken in order
to ensure on-going liquidity including reducing/deferring costs in some
discretionary areas as well as larger capital projects if necessary. The
Directors believe that while some uncertainty always inherently remains in
achieving the budget, in particular in relation to market conditions outside
of the Group's control, under both the base scenario and severe but plausible
downside scenario, there is sufficient liquidity and covenant headroom such
that there is no material uncertainty with respect to going concern and have
prepared the financial statements on this basis.
Steven Salo
Chief Financial Officer
26 June 2023
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year ended 31 March
2023
2023 2023 2023 2022 2022 2022
€'000 €'000 €'000 €'000 €'000 €'000
Note Underlying Exceptional items and other adjustments* Total Underlying Exceptional items and other adjustments* Total
Accoya® wood revenue 143,493 - 143,493 105,053 - 105,053
Tricoya® panel revenue 1,374 - 1,374 1,459 - 1,459
Licence revenue 329 - 329 416 - 416
Other revenue 16,822 - 16,822 13,924 - 13,924
Total revenue 3 162,018 - 162,018 120,852 - 120,852
Cost of sales (106,852) - (106,852) (84,852) - (84,852)
Gross profit 55,166 - 55,166 36,000 - 36,000
Other operating costs 4 (39,878) (87,453) (127,331) (31,541) (136) (31,677)
Operating profit/ (loss) 8 15,288 (87,453) (72,165) 4,459 (136) 4,323
Finance income 9 - - - - - -
Finance expense 10 (3,224) 9,350 6,126 (2,893) 544 (2,349)
Share of net loss from joint venture accounted for using the equity method 29 (1,036) - (1,036) (261) - (261)
Profit/(Loss) before taxation 11,028 (78,103) (67,075) 1,305 408 1,713
Tax expense 11 (2,787) - (2,787) (1,015) - (1,015)
Profit/(Loss) for the year 8,241 (78,103) (69,862) 290 408 698
Items that may be
reclassified to profit or loss
(Loss)/ gain arising on translation of foreign operations (61) - (61) 153 - 153
Gain/(loss) arising on foreign currency cash 42 - 42 - 66 66
flow hedges
Total other comprehensive (loss)/gain (19) - (19) 153 66 219
Total comprehensive gain/(loss) for the year 8,222 (78,103) (69,881) 443 474 917
Total comprehensive gain/(loss) for the year
is attributable to:
Owners of Accsys Technologies PLC 9,509 (48,566) (39,057) 2,083 474 2,557
Non-controlling interests (1,287) (29,537) (30,824) (1,640) - (1,640)
Total comprehensive gain/(loss) for the year 8,222 (78,103) (69,881) 443 474 917
Basic profit/(loss) per ordinary share 13 €0.05 €(0.19) €0.01 €0.01
Diluted profit/(loss) per ordinary share 13 €0.04 - €0.01 €0.01
The notes on form an integral part of these financial statements.
* See note 5 for details of exceptional items and other adjustments.
Accsys Technologies PLC
Consolidated statement of financial position at 31 March 2023
Registered Company 05534340
Note 2023 2022
€'000 €'000
Non-current assets
Intangible assets 15 10,491 10,834
Investment accounted for using the equity method 29 30,859 3,216
Property, plant and equipment 16 106,051 176,661
Right of use assets 17 4,044 4,632
Financial asset at fair value through profit or loss 18 - -
151,445 195,343
Current assets
Inventories 21 29,946 20,371
Trade and other receivables 22 18,075 16,934
Cash and cash equivalents 30 26,593 42,054
Corporation tax receivable 459 435
Derivative financial instrument - 3
75,073 79,797
Current liabilities
Trade and other payables 24 (25,896) (29,880)
Obligation under lease liabilities 17 (980) (1,024)
Short term borrowings 30 (9,500) (11,654)
Corporation tax payable (6,082) (3,184)
(42,458) (45,742)
Net current assets 32,615 34,055
Non-current liabilities
Obligation under lease liabilities 17 (3,755) (4,193)
Other long term borrowings 30 (56,420) (52,335)
Financial guarantee 32 - -
Financial liability at amortised cost 23 (1,383) -
(61,558) (56,528)
Net assets 122,502 172,870
Equity
Share capital 25 10,963 9,638
Share premium account 250,717 223,326
Other reserves 26 114,743 114,701
Accumulated loss (254,042) (210,505)
Own shares (8) (6)
Foreign currency translation reserve 129 190
Capital value attributable to owners of Accsys Technologies PLC 122,502 137,344
Non-controlling interest in subsidiaries 27 - 35,526
Total equity 122,502 172,870
The financial statements were approved by the Board of Directors on 26 June
2023 and signed on its behalf by
Stephen Odell
Steven Salo
Directors
The notes form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended 31 March 2023
Share capital Ordinary Share premium Other reserves Own Shares Foreign currency trans- Accumula-ted Loss Total equity attributable to equity shareholders of the company Non-Controlling interests Total Equity
lation reserve
€000 €000 €000 €000 €000 €000 €000 €000 €000
Balance at 01 April 2021 8,466 189,598 114,635 (36) 37 (213,263) 99,437 37,166 136,603
Profit/(Loss) for the year - - - - - 2,338 2,338 (1,640) 698
Other comprehensive income for the year - - 66 - 153 - 219 - 219
Share based payments - - - - - 463 463 - 463
Shares issued 1,172 - - 30 - (43) 1,159 - 1,159
Premium on shares issued - 35,922 - - - - 35,922 - 35,922
Share issue costs - (2,194) - - - - (2,194) - (2,194)
Balance at
31 March 2022
9,638 223,326 114,701 (6) 190 (210,505) 137,344 35,526 172,870
Loss for the year - - - - - (39,038) (39,038) (30,824) (69,862)
Other comprehensive gain/ (loss) for the year - - 42 - (61) - (19) - (19)
Share based payments - - - - - 366 366 - 366
Shares issued 731 - - (2) - (22) 707 - 707
Premium on shares issued - 19,526 - - - - 19,526 - 19,526
Share issue costs - (1,086) - - - - (1,086) - (1,086)
Aquisition of subsidiary shares from non-controlling interests 594 8,951 - - - (4,843) 4,702 (4,702) -
Balance at
31 March 2023
10,963 250,717 114,743 (8) 129 (254,042) 122,502 - 122,502
Share capital is the amount subscribed for shares at nominal value (note 25).
Share premium account represents the excess of the amount subscribed for share
capital over the nominal value of these shares, net of share issue expenses.
Share issue expenses comprise the costs in respect of the issue by the Company
of new shares.
See note 26 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 (see notes 27
and 28).
Foreign currency translation reserve arises on the re-translation of the
Group's USA subsidiary's net assets which are denominated in a different
functional currency, being US dollars.
Accumulated losses represent the cumulative loss of the Group attributable to
the owners of the parent.
The notes form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March 2023
2023 2022
€'000 €'000
(Loss)/ profit before taxation (67,075) 1,713
Adjustments for:
Amortisation of intangible assets 780 745
Depreciation of property, plant and equipment, and right of use assets 7,512 5,419
Impairment loss 86,000 -
Net finance (income)/expense (6,126) 2,350
Equity-settled share-based payment expenses 366 463
Accsys portion of Licence fee received from joint venture 300 600
Share of net loss of joint venture 1,036 261
Currency translation gains (70) (171)
Cash inflows from operating activities before changes in working capital 22,723 11,380
(Increase) in trade and other receivables (1,154) (5,058)
(Decrease) in deferred income - (33)
(Increase) in inventories (9,596) (8,110)
Increase in trade and other payables 4,673 4,034
Net cash from operating activities before tax 16,646 2,213
Tax received 87 56
Net cash from operating activities 16,733 2,269
Cash flows from investing activities
Interest received - -
Investment in property, plant and equipment (29,773) (44,612)
Foreign exchange deal settlement related to hedging of Hull Capex (81) 190
Investment in intangible assets (437) (714)
Investment in joint venture (28,979) (3,751)
Net cash (used in) investing activities (59,270) (48,887)
Cash flows from financing activities
Proceeds from loans 10,000 54,500
Other finance costs (250) (392)
Interest Paid (2,429) (2,241)
Repayment of lease liabilities (940) (1,089)
Repayment of loans/rolled up interest - (46,939)
Proceeds from issue of share capital 20,258 37,094
Share issue costs (1,086) (2,194)
Net cash from financing activities 25,553 38,739
Net decrease in cash and cash equivalents (16,984) (7,879)
Effect of exchange rate changes on cash and cash equivalents 1,523 2,335
Opening cash and cash equivalents 42,054 47,598
Closing cash and cash equivalents 26,593 42,054
The notes form an integral part of these financial statements.
Accsys Technologies PLC
Notes to the financial statements for the year ended 31 March 2023
1. Accounting Policies
General Information
The financial information set out in these preliminary results does not
constitute the company's statutory accounts for the years ended 31 March 2023
or 31 March 2022. Statutory accounts for the year ended 31 March 2022 have
been filed with the Registrar of Companies and those for the year ended 31
March 2023 will be delivered to the Registrar in due course; both have been
reported on by the auditors. The auditors' report on the Annual Report and
Financial Statements for the year ended 31 March 2022 was unqualified, did not
draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006. The auditors'
report on the Annual Report and Financial Statements for the year ended 31
March 2023 is unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Basis of accounting
The Group's financial statements have been prepared under the historical cost
convention (except for certain financial instruments and equity investments
which are measured at fair value), in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. In addition, the
financial statements are also prepared in accordance with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union and the Dutch Financial Markets
Supervision Act.
Going Concern
These consolidated financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence for the
foreseeable future, and at least 12 months from the date these financial
statements are approved.
As part of the Group's going concern review, the Directors have assessed the
Group's trading forecasts, working capital requirements and covenant
compliance for the foreseeable future under a base case scenario, taking into
account the Group's financial resources including the current cash position
and banking and finance facilities which are currently in place (see note 30
for details of these facilities). The Directors have also assessed a severe
but plausible downside scenario with reduced sales volumes and lower gross
margin, also reflecting the possible impact of volatile raw material costs.
These forecasts indicate that, in order to continue as a going concern, the
Group is dependent on achieving certain operating performance measures
relating to the production and sales of Accoya(®) wood from the plant in
Arnhem with the collection of on-going working capital items in line with
internally agreed budgets. In both scenarios, the Directors have assumed no
commitment will be made to complete the construction and start-up of the
Tricoya(®) plant in Hull until appropriate funding arrangements have been put
in place.
The Directors' have taken into account the reorganisation of the Tricoya
consortium and restructuring of its bank debt completed in November 2022 which
resulted in Accsys becoming the 100% owner of the Tricoya(®) Hull plant and
the commitment to fund ongoing working capital during the hold period. The
Directors' have also considered the possible amount and timing of capital
expenditure required to complete the Accoya(®) plant in the USA, noting that
notwithstanding that the construction project benefits from certain
contractual measures in place with the lead construction contractor, Accsys
has committed to fund its 60% share of cost overruns, should they arise.
The Directors believe there are a sufficient number of alternative actions and
measures within the control of the Group that can and would be taken in order
to ensure on-going liquidity including reducing/deferring costs in some
discretionary areas as well as larger capital projects if necessary. The
Directors believe that while some uncertainty always inherently remains in
achieving the budget, in particular in relation to market conditions outside
of the Group's control, under both the base scenario and severe but plausible
downside scenario, there is sufficient liquidity and covenant headroom such
that there is no material uncertainty with respect to going concern and have
prepared the financial statements on this basis.
Exceptional Items
Exceptional items are events or transactions that fall outside the ordinary
activities of the Group and which by virtue of their size or incidence, have
been separately disclosed in order to improve a reader's understanding of the
financial statements. These include items relating to the restructuring of a
significant part of the Group, impairment losses (or the reversal of
previously recorded exceptional impairments), expenditure relating to the
integration and implementation of significant acquisitions and other one-off
events or transactions, such as re-financing of Group borrowings. See note 5
for details of exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The
consolidated financial statements present the results of the Group as if they
formed a single entity. Inter-company transactions and balances between Group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated statement of
financial position, the acquirer's identifiable assets, liabilities, and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on which control
is obtained.
As allowed under IFRS 1, some business combinations effected prior to
transition to IFRS, were accounted for using the merger method of accounting.
Under this method, assets and liabilities are included in the consolidation at
their book values, not fair values, and any differences between the cost of
investment and net assets acquired were taken to the merger reserve. The
majority of the merger reserve arose from a corporate restructuring in the
year ended 31 March 2006 which introduced Accsys Technologies PLC as the new
holding Company.
The Group treats transactions with non-controlling interests that do not
result in a loss of control as transactions with equity owners of the Group. A
change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their
relative interests in the subsidiary. Any difference between the amount of the
adjustment to non-controlling
interests and any consideration paid or received is recognised within equity
attributable to Accsys Technologies PLC.
When the Group ceases to consolidate or equity account for an investment
because of a loss of control, joint control or significant influence, any
retained interest in the entity is remeasured to its fair value, with the
change in carrying amount recognised in profit or loss.
Revenue from contracts with customers
Revenue is measured at the fair value of the consideration receivable. Revenue
is recognised to the extent that it is highly probable that a significant
reversal will not occur based on the consideration in the contract. The
following specific recognition criteria must also be met before revenue is
recognised.
Manufacturing revenue
Revenue is recognised from the sale of goods at a point in time and is
measured at the amount of the transaction price received in exchange for
transferring goods. The transaction price is the expected consideration to be
received, to the extent that it is highly probable that there will not be a
significant reversal of revenue in the future. Revenue is recognised when the
Group's performance obligations under the relevant customer contract have been
satisfied. Manufacturing revenue includes the sale of Accoya wood, Tricoya
panels and other revenue, principally relating to the sale of acetic acid.
Licensing fees
Licence fees are recognised over the period of the relevant agreements
according to the specific terms of each agreement or the quantities and/or
values of the licensed product sold. The accounting policy for the recognition
of licence fees is based upon satisfaction of the performance obligations set
out in the contract such as an assessment of the work required before the
licence is signed and subsequently during the design, construction and
commissioning of the licensees' plant, with an appropriate proportion of the
fee recognised upon signing and the balance recognised as the project
progresses to completion. The amount of any cash received but not recognised
as income is included in the financial statements as deferred income and shown
as a liability.
Finance income
Interest accrues using the effective interest method, i.e. the rate that
discounts estimated future cash receipts through the expected life of the
financial instrument to the net carrying amount of the financial asset.
Finance expenses and borrowing costs
Finance expenses include the fees, interest and other finance charges
associated with the Group's loan notes, credit facilities and leases, which
are expensed over the period that the Group has access to the loans,
facilities and leases.
Foreign exchange gains or losses on the loan notes are included within finance
expenses.
Interest on borrowings directly relating to the construction or production of
qualifying assets are capitalised until such time as the assets are
substantially ready for their intended use or sale. Where funds have been
borrowed specifically to finance a project, the amount capitalised represents
the actual borrowing costs incurred. Where the funds used to finance a project
form part of general borrowings, the amount capitalised is calculated using a
weighted average of rates applicable to relevant general borrowings of the
Group during the construction period. The capitalisation of borrowing costs is
suspended during extended periods in which it suspends active development of a
qualifying asset.
Share based payments
The Company awards nil cost options to acquire ordinary shares in the capital
of the Company to certain Directors and employees. The Company has also
previously awarded bonuses to certain employees in the form of the award of
deferred shares of the Company.
In addition the Company has established an Employee Share Participation Plan
under which employees subscribe for new shares which are held by a trust for
the benefit of the subscribing employees. The shares are released to employees
after one year, together with an additional, matching share on a 1 for 1
basis.
The fair value of options and deferred shares granted are recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and is charged to the consolidated statement of
comprehensive income over the vesting period during which the employees become
unconditionally entitled to the options or shares.
The fair value of share options granted is measured using a modified Black
Scholes model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to
reflect the actual number of share options that vest only where vesting is
dependent upon the satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based
on the number of options which eventually vest. Market vesting conditions
are factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting condition.
Dividends
Equity dividends are recognised when they become legally payable. Interim
equity dividends are recognised when paid. Final equity dividends are
recognised when approved by the shareholders at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension and employee
benefit schemes on behalf of its employees. These costs are charged to the
consolidated statement of comprehensive income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the consolidated statement of comprehensive income except to
the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the reporting date
together with any adjustment to tax payable in respect of previous years.
Current tax includes the expected impact of claims submitted by the Group to
tax authorities in respect of enhanced tax relief for expenditure on research
and development.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for:
· the initial recognition of goodwill;
· the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business combination;
· differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the reporting date.
Recognition of deferred tax assets is restricted to the extent that it is
probable that future taxable profits will be available against which the
temporary differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (the
functional currency). For the purposes of the consolidated financial
statements, the results and financial position of each Group company are
expressed in Euro, which is the functional currency of the parent Company, and
the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currencies are
recognised at the rates of exchange prevailing on the date of the
transactions. At each reporting date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing
at that date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which
they arise.
For the purposes of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the reporting date. Income and expense items are
translated at the average monthly exchange rates prevailing in the month in
which the transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in the foreign
currency translation reserve. Such translation differences are reclassified to
profit and loss only on disposal or partial disposal of the overseas
operation.
Foreign exchange hedging
The Group has adopted IFRS 9 hedge accounting in respect of the cash flow
hedging instruments that it uses to manage the risk of foreign exchange
movements impacting on future cash flows and profitability.
The Group has prospectively assessed the effectiveness of its cash flow
hedging using the 'hedge ratio' of quantities of cash held in the same
currency as future foreign exchange cash flow quantities related to committed
investment in plant and equipment. The Group has undertaken a qualitative
analysis to confirm that an 'economic relationship' exists between the hedging
instrument and the hedged item. It is also satisfied that credit risk will not
dominate the value changes that result from that economic relationship.
At the end of each reporting period the Group measures the effectiveness of
its cash flow hedging and recognises the effective cash flow hedge results in
Other Comprehensive Income and the Hedging Effectiveness Reserve within
Equity, together with its ineffective hedge results in Profit and Loss.
Amounts are reclassified from the Hedging Effectiveness Reserve to property,
plant and equipment once construction has been completed or Profit and Loss
when the associated hedged transaction affects Profit and Loss. Further
details are included in note 5.
Government grants
Government grants are recognised at their fair value where there is reasonable
assurance that the grant will be received and the Group will comply with the
attached conditions. When the grant relates to an expense item, it is
recognised as income over the period necessary to match the grant on a
systematic basis to the costs that it is intended to compensate. Where the
grant relates to an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected useful
life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the
difference between the fair value of the consideration paid and the fair value
of the identifiable assets and liabilities acquired. It is capitalised, and is
subject to annual impairment reviews by the Directors. Any impairment arising
is charged to the consolidated statement of comprehensive income. Where the
fair value of the identifiable assets and liabilities acquired is greater than
the fair value of consideration paid, the resulting amount is treated as a
gain on a bargain purchase and is recognised in the consolidated statement of
comprehensive income.
Joint venture
The Group has entered into a joint venture agreement with Eastman Chemical
Company, forming Accoya USA LLC. The Group applies IFRS 11 for this joint
arrangement, and following assessment of the nature of this joint arrangement,
has determined it to be a joint venture. Interest in the joint venture is
accounted for using the equity method, after initially being recognised at
cost.
Further details concerning the Accoya USA LLC joint venture with Eastman
Chemical Company are included in note 29.
Other intangible assets
Intellectual property rights, including patents, which cover a portfolio of
novel processes and products, are shown in the financial statements at cost
less accumulated amortisation and any amounts by which the carrying value is
assessed during an annual review to have been impaired. At present, the useful
economic life of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's activities
including new processes, process improvements, identifying new species and
improving the Group's existing products. Research costs are expensed as
incurred. Development costs are capitalised when all of the criteria set out
in IAS 38 'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to generate future
economic benefits, ability to complete the development and ability to reliably
measure the expenditure) have been met. These internal development costs are
amortised on a straight line basis over their useful economic life, between 8
and 20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any impairment charged. Cost includes the original purchase price of the
asset as well as costs of bringing the asset to the working condition and
location of its intended use. The capitalisation of costs is suspended during
extended periods in which it suspends active development of a qualifying
asset. Depreciation is provided at rates calculated to write off the cost less
estimated residual value of each asset, except freehold land, over its
expected useful life on a straight line basis, as follows:
Plant and machinery These
assets comprise pilot plants and production facilities. These facilities are
depreciated from the date they become available for use over their useful
lives of between 5 and 20 years
Office equipment
Useful life of between 3 and 5 years
Leased land and buildings Land held under a
finance lease is depreciated over the life of the lease
Freehold
land
Freehold land is not depreciated
Impairment of non-financial assets
The carrying amount of non-current non-financial assets of the Group is
compared to the recoverable amount of the assets whenever events or changes in
circumstances indicate that the net book value may not be recoverable, or in
the case of goodwill, annually. The recoverable amount is the higher of
value in use and the fair value less cost to sell. In assessing the value in
use, the expected future cash flows from the assets are determined by applying
a discount rate to the anticipated pre-tax future cash flows. An impairment
charge is recognised in the consolidated statement of comprehensive income to
the extent that the carrying amount exceeds the assets' recoverable amount.
The revised carrying amounts are amortised or depreciated in line with Group
accounting policies. A previously recognised impairment loss, other than on
goodwill, is reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the impairment. This
reversal is recognised in the consolidated statement of comprehensive income
and is limited to the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised in prior years. Assets
are grouped at the lowest levels for which there are separately identifiable
cash flows (cash generating units) for purposes of assessing impairment.
Leases
To the extent that a right-of-control exists over an asset subject to a lease,
a right-of-use asset, representing the Group's right to use the underlying
leased asset, and a lease liability, representing the Group's obligation to
make lease payments, are recognised in the consolidated statement of financial
position at the commencement of the lease.
The right-of-use asset is measured initially at cost and includes the amount
of initial measurement of the lease liability, any initial direct costs
incurred, including advance lease payments, and an estimate of the
dismantling, removal and restoration costs required in terms of the lease.
Depreciation is charged to the consolidated income statement so as to
depreciate the right-of-use asset from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease
term. The lease term shall include the period of an extension option where it
is reasonably certain that the option will be exercised. Where the lease
contains a purchase option the asset is written off over the useful life of
the asset when it is reasonably certain that the purchase option will be
exercised.
The lease liability is measured at the present value of the future lease
payments, including variable lease payments that depend on an index and the
exercise price of purchase options where it is reasonably certain that the
option will be exercised, discounted using the interest rate implicit in the
lease, if readily determinable. If the implicit interest rate cannot be
readily determined, the lessee's incremental borrowing rate is used. Finance
charges are recognised in the consolidated statement of comprehensive income
over the period of the lease.
Lease expenses for leases with a duration of one year or less and low-value
assets are not recognised in the consolidated statement of financial position,
and are charged to the consolidated income statement when incurred. Low-value
assets are determined based on quantitative criteria.
The Group has used the following practical expedients permitted by the
standard:
- The use of a single discount rate to a portfolio of leases with
reasonably similar characteristics
- Reliance on previous assessments on whether leases are onerous
- The use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
Inventories
Raw materials, which consist of unprocessed timber and chemicals used in
manufacturing operations, are valued at the lower of cost and net realisable
value. The basis on which cost is derived is a first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the lower of
weighted average cost of production or net realisable value. Costs include
direct materials, direct labour costs and production overheads (excluding the
depreciation/depletion of relevant property and plant and equipment) absorbed
at an appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to completion
and costs to be incurred in selling and distribution.
Fair value measurement
Assets and liabilities that are measured at fair value, or where the fair
value of financial instruments has been disclosed in notes to the
financial statements, are based on the following fair value measurement
hierarchy:
- level 1 - quoted prices (unadjusted) in active markets for identical assets
or liabilities;
- level 2 - inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices); and
- level 3 - inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
Specific valuation methodologies used to value financial instruments include:
- the fair values of foreign exchange contracts are calculated as the present
value of expected future cash flows based on observable yield curves and
exchange rates; and
- other techniques, including discounted cash flow analysis, are used to
determine the fair values of other financial instruments
Financial assets
Financial assets and financial liabilities are recognised in the Group's
consolidated statement of financial position when the Group becomes party to
the contractual provisions of the instrument.
Financial assets are initially measured at fair value and in the case of
investments not at fair value through profit or loss, fair value plus directly
attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted shares held by
the Group are classified as fair value through other comprehensive income and
are stated at fair value. Gains and losses arising from changes in fair value
are recognised directly in other comprehensive income, with dividends
recognised in profit or loss. Where it is not possible to obtain a reliable
fair value, these investments are held at cost less provision for impairment.
Loans and receivables, which comprise non-derivative financial assets with
fixed and determinable payments that are not quoted on an active market, are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently carried at
amortised cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
Trade receivables are initially recognised at fair value and are subsequently
measured at amortised cost using the effective interest rate method, less
allowance for impairments. The Group has elected to apply the IFRS 9 practical
expedient option to measure the value of its trade receivables at transaction
price, as they do not contain a significant financing element. The Group
applies IFRS 9's 'simplified' approach that requires companies to recognise
the lifetime expected losses on its trade receivables. At the date of initial
recognition, the credit losses expected to arise over the lifetime of a trade
receivable are recognised as an impairment and are adjusted, over the lifetime
of the receivable, to reflect objective evidence reflecting whether the Group
will not be able to collect its debts.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of financial position
comprise cash at bank and in hand and short-term deposits, including liquidity
funds, with an original maturity of three months or less. For the purpose of
the statement of consolidated cash flow, cash and cash equivalents consist of
cash and cash equivalents as defined above, net of outstanding bank
overdrafts. Cash and cash equivalents includes cash pledged to ABN Amro as
collateral for the $20million Letter of credit provided to FHB. See note 30.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially recognised at
fair value and subsequently carried at amortised cost using the effective
interest method.
Loans and other borrowings are initially recognised at the fair value of
amounts received net of transaction costs and subsequently measured at
amortised cost using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the
carrying amount of a financial liability that has been extinguished or
transferred to another party and the consideration paid, including any noncash
assets transferred or liabilities assumed, is recognised in profit or loss as
other income or finance costs.
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the
time the guarantee is issued.
The liability is initially measured at fair value, which is determined based
on the present value of the difference in cash flows between the contractual
payments required under the FHB borrowing (provided to the Company's joint
venture - Accoya USA) and the payments that are estimated to be required
without the guarantee being provided by Accsys to FHB. To calculate the fair
value of the guarantee, the present value calculation is then weighted by the
probability of the guarantee being called by FHB.
Where guarantees in relation to loans or other payables of associates are
provided for no compensation, the fair values are accounted for as
contributions and recognised as part of the cost of the investment.
Share capital
Financial instruments issued by the Group are treated as equity only to the
extent that they do not meet the definition of a financial liability. The
Group's shares are classified as equity instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Executive Officer. The Chief Executive Officer
is responsible for allocating resources and assessing performance of the
operating segments and has been identified as steering the committee that
makes strategic decisions.
Alternative Performance Measures
The Group presents certain measures of financial performance, position or cash
flows in the Annual Report and financial statements that are not defined or
specified according to IFRS (International financial reporting standards).
These measures, referred to as Alternative Performance Measures (APMs), are
prepared on a consistent basis for all periods presented in this report.
The most significant APMs are:
Net debt
A measure comprising short term and long-term borrowings (including lease
obligations) less cash and cash equivalents. Net debt provides a measure of
the Group's net indebtedness or overall leverage.
Underlying EBITDA
Operating profit/(loss) before Exceptional items and other adjustments,
depreciation and amortisation and includes the Group's attributable share of
our USA joint venture's underlying EBITDA. Underlying EBITDA provides a
measure of the cash-generating ability of the business that is comparable from
year to year.
Underlying EBIT
Operating profit/(loss) before Exceptional items and other adjustments and
includes the Group's attributable share of our USA joint venture's underlying
EBIT. Underlying EBIT provides a measure of the operating performance that is
comparable from year to year.
Net Debt / Underlying EBITDA
Net debt divided by trailing 12-month underlying EBITDA. A measure of the
Group's net indebtedness relative to its cash-generating ability.
Accoya Manufacturing margin
Accoya segmental underlying gross profit excluding Accoya underlying licence
revenue and marketing services expressed as a percentage over Accoya segmental
total revenue excluding Accoya underlying licence revenue and marketing
services. Accoya Manufacturing margin provides a measure of the profitability
of the Accoya operations relative to revenue.
Adjusted Cash
Cash & cash equivalents less restricted cash and cash raised through an
equity raise to be invested into Accoya USA Joint Venture. See note 30.
2. Accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Accounting estimates
Goodwill
The Group tests annually whether goodwill has suffered any impairment in
accordance with the accounting policy stated above. The recoverable amounts of
cash-generating units have been determined based on value in use calculations.
These calculations require the use of judgements in relation to discount rates
and future forecasts (See note 15 & 16). The recoverability of these
balances is dependent upon the level of future licence fees and manufacturing
revenues. While the scope and timing of the production facilities to be built
under the Group's existing and future agreements remains uncertain, the
Directors remain confident that revenue from own manufacturing, existing
licensees, new licence or consortium agreements will be generated,
demonstrating the recoverability of these balances.
Intellectual property rights (IPR) and property, plant and equipment
The Group tests the carrying amount of the intellectual property rights and
property, plant and equipment whenever events or changes in circumstances
indicate that the net book value may not be recoverable. These calculations
require the use of estimates in respect of future cash flows from the assets
by applying a discount rate to the anticipated pre-tax future cash flows.
Within this process, the Group makes a number of key assumptions including
operating margins, production volumes, discount rates, terminal growth rates
and forecast cash flows. Additional information is disclosed in note 15 &
16, which highlights the estimates applied in the value-in-use calculations
for those CGUs that are considered most susceptible to changes in key
assumptions and the sensitivity of these estimates. The Group also reviews the
estimated useful lives at the end of each annual reporting period (See note 15
& 16). The price of Accoya(®) wood and the raw materials and other inputs
vary according to market conditions outside of the Group's control. Should
the price of the raw materials increase greater than the sales price or in a
way which no longer makes Accoya(®) competitive, then the carrying value of
the property, plant and equipment or IPR may be in doubt and become impaired.
The Directors consider that the current market and best estimates of future
prices mean that this risk is limited.
Valuation of value recovery instrument ("VRI")
These calculations require the use of estimates in respect of future cash
flows and by applying a discount rate to the anticipated future cash flows.
The same future cashflows modelled in Property, plant and equipment testing
are used for this calculation. Additional information is disclosed in note 16
& 23.
Accounting judgements
In preparing the Consolidated Financial Statements, management has to make
judgments on how to apply the Group's accounting policies and make estimates
about the future. The critical judgements that have been made in arriving at
the amounts recognised in the Consolidated Financial Statements and the key
sources of uncertainty that have a significant risk of causing a material
adjustment to the carrying value of assets and liabilities in the next
financial year are discussed below:
Financial asset at fair value through profit or loss
The Group has an investment in listed equity shares carried at nil fair value
as a reliable fair value cannot be obtained since there is no active market
for the shares and there is currently uncertainty around the future funding of
the business. The Group makes appropriate enquiries and considers all of the
information available to it in order to determine the fair value (See note
18).
New standards and interpretations in issue at the date of authorisation of
these financial statements:
New standards, amendments and interpretations
The following amendments to Standards and a new Interpretation have been
adopted for the financial year beginning on 1 April 2022:
• Onerous Contracts - Cost of Fulfilling a
Contract - Amendments to IAS 37;
• Annual Improvements to IFRS Standards 2018-2020;
· Reference to the Conceptual Framework -
Amendments to IFRS 3;
· Deferred Tax related to Assets and Liabilities
arising from a Single Transaction - amendments to
IAS 12; and
• Disclosure of Accounting Policies - Amendments
to IAS 1 and IFRS Practice Statement 2.
The amendments listed above did not have any impact on the amounts recognised
in prior periods and are not expected to significantly affect the current or
future periods.
New standards, amendments and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 March 2023 reporting periods and have not been early
adopted by the Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods and on
foreseeable future transactions.
3. Segmental reporting
The Group's business is the manufacturing of and development,
commercialisation and licensing of the associated proprietary technology for
the manufacture of Accoya wood, Tricoya wood elements and related acetylation
technologies. Segmental reporting is divided between corporate activities,
activities directly attributable to Accoya, to Tricoya or research and
development activities.
Accoya(®)
Accoya Segment
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying
TOTAL
Underlying
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue 143,494 - 143,494 105,053 - 105,053
Licence revenue 300 - 300 400 - 400
Other revenue 16,773 - 16,773 13,879 - 13,879
Total Revenue 160,567 - 160,567 119,332 - 119,332
Cost of sales (105,608) - (105,608) (83,435) - (83,435)
Gross profit 54,959 - 54,959 35,897 - 35,897
Other operating costs (22,621) - (22,621) (19,116) (133) (19,249)
Profit from operations 32,338 - 32,338 16,781 (133) 16,648
Profit from operations 32,338 - 32,338 16,781 (133) 16,648
Accoya USA EBIT (912) - - (261) - -
EBIT 31,426 - 32,338 16,520 (133) 16,648
Depreciation and amortisation 6,832 - 6,832 4,787 - 4,787
Accoya USA Depreciation and amortisation 211 - - - - -
EBITDA 38,469 - 39,170 21,307 (133) 21,435
Revenue includes the sale of Accoya, licence income and other revenue,
principally relating to the sale of acetic acid and other licensing related
income. Revenue also includes sales of lower visual grade Accoya to Tricoya
customers for the purposes of producing Tricoya(®) panels as a temporary
work-around until the dedicated Tricoya Hull plant is operational.
All costs of sales are allocated against manufacturing activities in Arnhem
and in Barry (Wales) unless they can be directly attributable to a licensee.
Other operating costs include all costs associated with the operation of the
Arnhem and Barry manufacturing sites, including directly attributable
administration, sales and marketing costs.
See note 5 for explanation of Exceptional items and other adjustments.
Average headcount = 175 (2022: 162)
The below table shows details of reconciling items to show both Accoya EBITDA
and Accoya Manufacturing gross profit, both including and excluding licence
and licensing related income, which has been presented given the inclusion of
items which can be more variable or one-off.
2023 2022
€'000 €'000
Accoya segmental underlying EBITDA 38,469 21,307
Accoya® underlying Licence revenue (300) (400)
Accoya segmental underlying EBITDA (excluding. Licence Income) 38,169 20,907
Accoya segmental underlying gross profit 54,959 35,897
Accoya underlying Licence revenue (300) (400)
Accoya manufacturing gross profit 54,659 35,497
Accoya Manufacturing Margin 34.1% 29.8%
2023 2022
Accoya Manufacturing gross profit - €'000 54,659 35,497
Accoya sales volume - m3 63,344 59,649
Accoya manufacturing gross profit per m3 863 595
Tricoya
Tricoya Segment
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying
TOTAL
Underlying
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Tricoya panel revenue 1,373 - 1,373 1,459 - 1,459
Licence revenue 29 - 29 16 - 16
Other revenue 49 - 49 45 - 45
Total Revenue 1,451 - 1,451 1,520 - 1,520
Cost of sales (1,244) - (1,244) (1,417) - (1,417)
Gross profit 207 - 207 103 - 103
Other operating costs (5,823) (86,000) (91,823) (3,811) (3) (3,814)
Loss from operations (5,616) (86,000) (91,616) (3,708) (3) (3,711)
Loss from operations (5,616) (86,000) (91,616) (3,708) (3) (3,711)
Depreciation and amortisation 527 - 527 505 - 505
Impairment - 86,000 86,000 - - -
EBITDA (5,089) - (5,089) (3,203) (3) (3,206)
Revenue and costs are those attributable to the business development of the
Tricoya process and establishment of Tricoya Hull Plant.
Other operating costs include pre-operating costs for the Tricoya(®) Hull
Plant.
See note 5 for explanation of Exceptional items and other adjustments.
Average headcount = 23 (2022: 36), noting a substantial proportion of the
costs to date have been incurred via recharges from other parts of the Group
or have resulted from contractors.
Corporate
Corporate Segment
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying
TOTAL
Underlying
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (9,976) (1,453) (11,429) (7,430) - (7,430)
Loss from operations (9,976) (1,453) (11,429) (7,430) - (7,430)
Loss from operations (9,976) (1,453) (11,429) (7,430) - (7,430)
Depreciation and amortisation 866 - 866 805 - 805
EBITDA (9,110) (1,453) (10,563) (6,625) - (6,625)
Corporate costs are those costs not directly attributable to Accoya, Tricoya
or Research and Development activities. This includes management and the
Group's corporate and general administration costs including the head office
in London. See note 5 for explanation of Exceptional items and other
adjustments.
Average headcount = 33 (2022: 37)
Research and Development
Research & Development Segment
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying
TOTAL
Underlying
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (1,458) - (1,458) (1,184) - (1,184)
Loss from operations (1,458) - (1,458) (1,184) - (1,184)
Loss from operations (1,458) - (1,458) (1,184) - (1,184)
Depreciation and amortisation 67 - 67 68 - 68
EBITDA (1,391) - (1,391) (1,116) - (1,116)
Research and Development costs are those associated with the Accoya(®) and
Tricoya(®) processes. Costs exclude those which have been capitalised in
accordance with IFRS (see note 15).
Average headcount = 13 (2022: 9)
Total
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying
TOTAL
Underlying
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya/Tricoya revenue 144,867 - 144,867 106,512 - 106,512
Licence revenue 329 - 329 416 - 416
Other revenue 16,822 - 16,822 13,924 - 13,924
Total Revenue 162,018 - 162,018 120,852 - 120,852
Cost of sales (106,852) - (106,852) (84,852) - (84,852)
Gross profit 55,166 - 55,166 36,000 - 36,000
Other operating costs (39,878) (87,453) (127,331) (31,541) (136) (31,677)
Profit/ (loss) from operations 15,288 (87,453) (72,165) 4,459 (136) 4,323
Finance income - - - - - -
Finance expense (3,224) 9,350 6,126 (2,893) 544 (2,349)
Investment in joint venture (1,036) - (1,036) (261) - (261)
Profit/(Loss) before taxation 11,028 (78,103) (67,075) 1,305 408 1,713
See note 5 for details of Exceptional items and other adjustments.
Reconciliation of Underlying EBIT and EBITDA
Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2022 Year ended 31 March 2022 Year ended 31 March 2022
Exceptional items & Other Adjustments
Exceptional items & Other Adjustments
Underlying Underlying
TOTAL TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Profit/ (loss) from operations 15,288 (87,453) (72,165) 4,459 (136) 4,323
Accoya USA EBIT (912) - - (261) - -
EBIT 14,376 (87,453) (72,165) 4,198 (136) 4,323
Depreciation and amortisation 8,292 - 8,292 6,164 - 6,164
Accoya USA Depreciation and amortisation 211 - - - - -
Impairment - 86,000 86,000 - - -
EBITDA 22,879 (1,453) 22,127 10,362 (136) 10,487
Analysis of Revenue by geographical area of customers: 2023 2022
€'000 €'000
UK and Ireland 55,395 43,053
Rest of Europe 63,635 45,980
Americas 29,778 21,069
Rest of World 13,210 10,750
162,018 120,852
Revenue generated from two customers exceeded 10% of Group revenue of 2023.
These two customers represented 35% & 34% of the revenue from the United
Kingdom and Ireland, relating to Accoya revenue. Revenue generated from two
customers exceeded 10% of Group revenue of 2022. This included 37% & 34%
of the revenue from the United Kingdom and Ireland, relating to Accoya
revenue.
Assets and liabilities on a segmental basis:
Accoya Tricoya Corporate R&D TOTAL Accoya Tricoya Corporate R&D TOTAL
2023 2023 2023 2023 2023 2022 2022 2022 2022 2022
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Non-current assets 120,459 27,047 3,777 162 151,445 91,278 99,718 4,119 228 195,343
Current assets 52,699 3,872 13,630 4,872 75,073 36,899 4,425 33,452 5,021 79,797
Current liabilities (22,947) (4,156) (15,299) (56) (42,458) (19,399) (21,112) (5,156) (75) (45,742)
Net current assets/(liabilities) 29,752 (284) (1,669) 4,816 32,615 17,500 (16,687) 28,296 4,946 34,055
Non-current liabilities (2,545) (8,665) (50,289) (59) (61,558) (2,826) (1,252) (52,339) (111) (56,528)
Net assets/(liabilities) 147,666 18,098 (48,181) 4,919 122,502 105,952 81,779 (19,924) 5,063 172,870
The Investment accounted for using the equity method (Investment in Accoya
USA) is included in the Accoya segment. See note 29.
Analysis of non-current assets (Other than financial assets and deferred tax): 2023 2022
€'000 €'000
UK 30,485 107,861
Other countries 116,729 83,251
Un-allocated - Goodwill 4,231 4,231
151,445 195,343
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) incurred in USA. There are no significant
intersegment revenues.
4. Other operating costs
Other operating costs consist of the operating costs, other than the cost of
sales, associated with the operation of the plant in Arnhem, Barry, the
offices in Dallas and London and certain pre-operating costs associated with
the plant in Hull:
2023 2022
€'000 €'000
Sales and marketing 5,219 5,121
Research and development 990 1,116
Other operating costs 9,720 6,856
Administration costs 15,657 12,284
Exceptional Items 1,453 136
Other operating costs excluding depreciation and amortisation 33,039 25,513
Depreciation and amortisation 8,292 6,164
Impairment loss - exceptional item 86,000 -
Total other operating costs 127,331 31,677
Administrative costs include costs associated with Business Development and
Legal departments, Intellectual Property as well as Human Resources, IT,
Finance, Management and General Office and includes the costs of the Group's
head office costs in London and the US Office in Dallas.
Group average headcount increased from 244 in the year to 31 March 2022, to
245 in the year to 31 March 2023.
During the period, €437,000 (2022: €714,000) of internal development &
patent related costs were capitalised and included in intangible fixed assets,
including €287,000 (2022: €488,000) which were capitalised within Tricoya
Technologies Limited ('TTL'). In addition €171,000 of internal costs have
been capitalised in relation to our current Arnhem Accoya plant expansion
project (2022: €375,000) and €566,000 of internal costs have been
capitalised in relation to our plant build in Hull, UK (2022: €739,000).
Both are included within tangible fixed assets.
The impairment loss is in relation to Tricoya assets, refer to note 5 and 16.
5. Exceptional items and other adjustments
2023 2022
€'000 €'000
Redundancy costs in relation to purchase of assets to grow Accoya Color - (133)
production
Early termination of loans - redemption fee & accelerated amortisation of - (1,619)
transaction costs
Advisor fees in relation to Tricoya consortium reorganisation (1,453) -
Impairment of the Tricoya segment assets (86,000) -
Partial net derecogition of NatWest loan 9,353 -
Recognition of Valuation Recovery Instrument 'VRI' liability (1,383) -
Foreign exchange differences on Corporate USD cash held for investment into 1,380 2,080
USA JV- incl. in Finance expense
Total exceptional items (78,103) 328
Foreign exchange differences arising on Tricoya & Corporate cash held - - (3)
Operating costs
Foreign exchange differences arising on Loan Notes - incl. in Finance expense - 231
Foreign exchange differences on Tricoya - Other comprehensive income/(loss) - 8
Revaluation of USD cash pledged to ABN Amro - incl. in Finance expense - (148)
Revaluation of FX forwards used for cash-flow hedging - Other comprehensive - 58
income/(loss)
Total other adjustments - 146
Tax on exceptional items and other adjustments - -
Total exceptional items and other adjustments (78,103) 474
Exceptional Items
In November 2022, Accsys agreed to acquire full ownership of TUK (Tricoya UK
Limited) and TTL (Tricoya Technologies Limited), from its Consortium Partners
(see note 28). The advisor fees are associated with advising Accsys on options
and resulting corporate restructuring of the Tricoya consortium.
In November 2022, NatWest agreed to restructure its TUK debt facility,
reducing the principal amount by €9.4m to €6m, under a new 7-year term
(see note 30). 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 will be
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 Hull plant once operational. The contingent
payments to NatWest are based upon free cash-flow generated by the Hull plant.
A financial liability has been recognised of €1.4m (see note 23) in respect
of the VRI.
The impairment of the Tricoya segment assets is caused by
i. As reported in November 2022, Identification of additional time
and costs (€35m) to complete the plant;
ii. A decrease in the production volume forecast for the plant to
24,000MT (from 30,000MT);
iii. Update to the discount rate applied, 13.5% (increased from 10.5% at
31 March 2022). Refer to note 16 for
review of impairment.
Foreign exchange differences recognised due to US dollars held for investment
into the Accoya USA Joint Venture. 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.
In the prior year, Accsys purchased certain assets, equipment, technology and
its manufacturing plant in Barry, Wales from Lignia Wood Company Limited and
its administrators for a consideration of €1.2m, including €0.5m for raw
wood inventory. As part of this purchase, redundancy costs of €133,000 were
incurred in relation to staff at the Barry site.
In the prior year, Accsys completed the refinance of its Group debt
facilities, with a new bilateral agreement with ABN Amro. Loans previously
held with ABN Amro, Cerdia Produktions GmbH, Bruil, Volantis and Business
Growth Fund (BGF) were repaid. Early redemption fees totalling €1.4m were
paid, and the amortisation of previously capitalised transaction fees related
to these repaid loans was accelerated.
Other Adjustments
Other adjustments included in the prior year are no longer disclosed for the
year ended 31 March 2023.
In the prior year, foreign exchange differences in the Tricoya segment have
occurred during the year due to pounds sterling held for the Hull plant build
and to a lesser extent, pounds sterling held within the Corporate segment for
future sterling corporate costs. The effective portion of the foreign exchange
movement is recognised in other comprehensive income, with the ineffective
portion recognised in Operating costs.
In the prior year, foreign exchange differences also arise on the pounds
sterling denominated loan notes, entered into in a prior period (see note 30).
These exchange rate differences are included as finance expenses.
6. Employees
2023 2022
€'000 €'000
Staff costs (including Directors) consist of:
Wages and salaries 18,584 17,007
Social security costs 2,838 2,620
Other pension costs 1,573 1,381
Share based payments 201 140
23,196 21,148
Pension costs relate to defined contribution plan contributions.
The average monthly number of employees, including Executive Directors, during
the year was as follows:
2023 2022
Sales and marketing, administration, research and engineering 142 134
Operating 103 110
245 244
7. Directors' remuneration
2023 2022
€'000 €'000
Directors' remuneration consists of:
Directors' emoluments 1,170 1,168
Company contributions to money purchase pension schemes 38 43
1,208 1,211
Compensation of key management personnel included the following amounts:
Salary, bonus and short-term benefits Share based payments charge
2023 2022
Pension Total Total
€'000 €'000 €'000 €'000 €'000
Rob Harris 642 30 (53) 619 568
William Rudge 102 8 (10) 100 308
744 38 (63) 719 876
The Group made contributions to one (2022: one) Director's personal pension
plan, with Robert Harris receiving cash in lieu of pension.
William Rudge stepped down from the Board following the AGM on 23 September
2022. In the table above, his remuneration is included up to 23 September
2022.
The figures in the above table are impacted by foreign exchange noting that
the remuneration for R Harris and W Rudge are denominated in Pounds Sterling.
8. Operating profit
2023 2022
€'000 €'000
This has been arrived at after charging/(crediting):
Staff costs 23,196 21,148
Depreciation of property, plant and equipment, and right of use assets 7,512 5,419
Impairment 86,000 -
Amortisation of intangible assets 780 745
Operating lease rentals 77 103
Foreign exchange (gains) (70) (171)
Research & Development (excluding staff costs) 469 416
Fees payable to the Company's auditors for the audit of the Group's annual 183 145
financial statements
Fees payable to the Company's auditors for other services:
- audit of the Company's subsidiaries pursuant to legislation 205 110
- audit related assurance services - 36
Fees payable to Component auditor for audit of subsidiaries: 182 117
Total audit and audit related services: 570 408
Additional audit fees were agreed for the 2022 audit of €170,000 which are
not included in the table above, including €80,000 for fees payable for the
audit of the Group's annual financial statements and €90,000 for fees
payable for the audit of subsidiaries.
9. Finance income
2023 2022
€'000 €'000
Interest receivable on bank and other deposits* - -
*€1,000 interest received in the year ended 31 March 2023 (31 March 2022:
€8,000) in relation to cash balances held in Tricoya UK Ltd was netted off
with borrowing costs incurred, with the net borrowing cost amount related to
the Hull project capitalised and included within property, plant and
equipment.
10. Finance expense
2023 2022
€'000 €'000
Arnhem land and buildings lease finance charge 179 183
Interest on loans 2,500 2,282
Interest on lease liabilities 115 139
Other finance expenses 430 289
Total underlying finance expenses 3,224 2,893
Exceptional items and other adjustments
Foreign exchange (gain)/loss on loan notes - (231)
Revaluation of USD cash pledged to ABN Amro - 148
Early termination of loans - redemption fee & accelerated amortisation of - 1,619
transaction costs
Foreign exchange (gain)/loss on Corporate USD cash held for investment into (1,380) (2,080)
USA JV
Partial derecogition of NatWest loan (9,353) -
Recognition of Valuation Recovery Instrument 'VRI' 1,383 -
Total Finance expense (6,126) 2,349
11. Tax expense
2023 2022
€'000 €'000
(a) Tax recognised in the statement of comprehensive income comprises:
Current tax charge
UK Corporation tax on losses for the year - -
Research and development tax (credit)/ expense in respect of current year (121) (314)
(121) (314)
Overseas tax at rate of 15% 32 24
Overseas tax at rate of 25% 2,876 1,305
Deferred Tax
Utilisation of deferred tax asset - -
Total tax charge reported in the statement of comprehensive income 2,787 1,015
2023 2022
€'000 €'000
(b) The tax charge for the period is higher than the standard rate of
corporation tax in the UK (2023 & 2022: 19%) due to:
Profit/(Loss) before tax (67,075) 1,713
Expected tax charge at 19% (2022 - 19%) (12,744) 325
Expenses not deductible in determining taxable profit 148 142
Tricoya segment assets impairment 16,340 -
Tax (income)/losses for which no deferred income tax asset was (1,654) 541
(utilised)/recognised
Effects of overseas taxation 818 320
Research and development tax charge/ (credit) in respect of prior years 3 (190)
Research and development tax (credit) in respect of current year (124) (123)
Total tax charge reported in the statement of comprehensive income 2,787 1,015
Deferred tax assets Deferred tax liabilities
€ '000 2023 2022 2023 2022
At 1 April 484 - (484) -
Credited/ (charged) to the consolidated income statement 137 484 (137) (484)
At 31 March 621 484 (621) (484)
Deferred taxes at the balance sheet date have been measured using these
enacted tax rates and reflected in these financial statements. See note 19.
12. Dividends Paid
2023 2022
€'000 €'000
Final Dividend €Nil (2022: €Nil) per Ordinary share proposed
and paid during year relating to the previous year's results - -
13. Basic and diluted profit/(loss) per ordinary share
The calculation of profit per ordinary share is based on profit after tax and
the weighted average number of ordinary shares in issue during the
year.
2023 2023 2022 2022
Underlying Total Underlying Total
Basic earnings per share
Weighted average number of Ordinary shares in issue ('000) 210,693 210,693 190,446 190,446
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC 9,528 (39,038) 1,930 2,338
(€'000)
Basic profit/(loss) per share € 0.05 € (0.19) € 0.01 € 0.01
Diluted earnings per share
Weighted average number of Ordinary shares in issue ('000) 210,693 - 190,446 190,446
Equity options attributable to BGF (see note 31) 8,449 - * 8,449 8,449
Weighted average number of Ordinary shares in issue and potential ordinary 219,142 - 198,895 198,895
shares ('000)
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC 9,528 - 1,930 2,338
(€'000)
Diluted profit/(loss) per share € 0.04 - * € 0.01 € 0.01
* Diluted loss per share is not disclosed for Total diluted loss per share.
IAS 33 "Earning per share" defines Dilutive share options as share options
which would decrease profit per share or increase loss per share. Equity
options to BGF are disclosed in Note 31, which if exercised, would decrease
Total loss per share. As a result, these are anti-dilutive and therefore shown
as nil.
14. Share based payments
The Group operates a number of share schemes which give rise to a share based
payment charge. The Group operates a Long-Term Incentive Plan ('LTIP') in
order to reward certain members of staff including the Senior Management team
and the Executive Directors.
Options - total
The following figures take into account options awarded under the LTIP,
together with share options awarded in previous years under the 2008 Share
Option schemes.
Outstanding options granted are as follows:
Number of outstanding Weighted average remaining
options at 31 March contractual life, in years
Date of grant 2023 2022 2023 2022
19 September 2013 (LTIP) 443,675 599,880 0.5 1.5
24 June 2016 (LTIP) 130,099 183,320 3.3 4.3
20 June 2017 (LTIP) 100,651 326,999 4.3 5.3
18 June 2018 (LTIP) 185,840 185,840 5.3 6.3
25 June 2019 (LTIP) - 475,258 6.3 7.3
20 November 2019 (LTIP) - 105,699 6.7 7.7
23 December 2019 (LTIP) - 41,468 6.8 7.8
15 July 2020 (LTIP)(1) 850,540 1,172,290 7.3 8.3
23 June 2021 (LTIP) 511,112 868,889 8.3 9.3
12 July 2022 (LTIP) 352,486 - 9.3 -
Total 2,574,403 3,959,643 6.1 6.8
1 - 850,540 nil cost options are outstanding in the 2020 LTIP award at 31
March 2023 but no options are estimated to vest on the relevant vesting dates
in the 2023 calendar year.
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at 01 April 2021 € 0.01 3,971,371
Granted during the year € 0.00 918,659
Forfeited during the year € 0.00 (210,928)
Exercised during the year € 0.00 (629,459)
Expired during the year € 0.50 (90,000)
Outstanding at 31 March 2022 € 0.00 3,959,643
Granted during the year € 0.00 620,698
Forfeited during the year € 0.00 (1,570,164)
Exercised during the year € 0.00 (435,774)
Expired during the year € 0.00 -
Outstanding at 31 March 2023 € 0.00 2,574,403
The exercise price of options outstanding at the end of the year was €nil
(for LTIP options) (2022: €nil) and their weighted average contractual life
was 6.1 years (2022: 6.8 years).
Of the total number of options outstanding at the end of the year 860,265
(2022: 1,296,039) had vested and were exercisable at the end of the year.
Long Term Incentive Plan ('LTIP')
In 2013, the Group established a Long-Term Incentive Plan, the participants of
which are key members of the Senior Management Team, including Executive
Directors. The establishment of the LTIP was approved by the shareholders at
the AGM in September 2013.
2013 LTIP Award performance conditions and 2016 outcome
The LTIP in 2013 awarded 4,103,456 nil cost options and 2,472,550 vested in
the financial year ended 31 March 2017. 443,675 nil cost options remain as at
31 March 2023 after allowing for forfeitures and options exercised in the
year.
2016 LTIP Award performance conditions and 2019 outcome
The LTIP in 2016 awarded 1,070,255 nil cost options and 494,433 vested in the
financial year ended 31 March 2020. 130,099 nil cost options remain as at 31
March 2023 after allowing for forfeitures and options exercised in the year.
2017 LTIP Award performance conditions and 2020 outcome
The LTIP in 2017 awarded 1,087,842 nil cost options and 326,999 vested in the
financial year ended 31 March 2021. 100,651 nil cost options remain as at 31
March 2023 after allowing for forfeitures and options exercised in the year.
2018 LTIP Award performance conditions and 2021 outcome
The LTIP in 2018 awarded 1,170,160 nil cost options and 185,840 vested in the
financial year ended 31 March 2022. 185,840 nil cost options remain as at 31
March 2023 after allowing for forfeitures and options exercised in the year.
2019 LTIP Award performance conditions and 2022 outcome
The LTIP in 2019 awarded 810,520 nil cost options and no options vested in the
financial year ended 31 March 2023.
Awards made in July 2020 and LTIP Award performance conditions
During the prior year, a total of 1,326,966 LTIP awards were made primarily to
members of the Senior Management team including the Executive Directors:
The performance targets for 1,255,829 of these awards are as follows:
Metric Weighting (% of award) Threshold Stretch Maximum
Vesting (% of maximum) 25% 70% 100%
EBITDA per share in FY23 60% €0.14 €0.19 €0.24
Total sales volume in FY 23 (m(3)) 40% 90,000 105,000 112,720
· Vesting is on a straight-line basis between points in the
schedule.
· Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in line with
the business plan and intended stretch of the targets at the point of award.
· EBITDA per share targets are set and determined so as to
exclude licensing income.
· Sales Volume is defined as combined sales volume (in
cubic metres, or equivalent) of Accoya and Tricoya.
· Vesting of the Sales Volume component will be subject to
the achievement of a threshold level of EBITDA
Element Element A Element B
(EBITDA per share)
(Sales volume growth)
Grant date 15 July 20 15 July 20
Share price at grant date (€) 1.00 1.00
Exercise price (€) 0.00 0.00
Expected life (years) 3 3
Contractual life (years) 10 10
Vesting conditions (Details set out above) EBITDA Sales volume growth
Risk free rate -0.69% -0.69%
Expected volatility 20% 20%
Expected dividend yield 0% 0%
Fair value of option € 1.00 € 1.00
The remaining 71,137 of the awards made in summer 2020 were specific to
individuals dedicated to the Tricoya consortium with performance measures
linked to progress and development of the Tricoya plant and its subsequent
operation. The fair value of these options were €0.998 on their Grant date.
All of the above awards, made in summer 2020 are subject to a three-year
performance period (i.e. year end March 2023) and a further two-year holding
period. In addition, awards are also subject to malus/ claw-back provisions.
As at 31 March 2023, no share options are estimated to vest.
Awards made in July 2021 and LTIP Award performance conditions
During the year, a total of 918,659 LTIP awards were made primarily to members
of the Senior Management team including the Executive Directors:
The performance targets for 863,624 of these awards are as follows:
Metric Weighting (% of award) Threshold Maximum
Vesting (% of maximum) 25% 100%
EBITDA per share in FY24 60% €0.15 €0.24
Cumulative Sales Volume (FY22 to FY24) (m(3)) 30% 267,000 297,000
ESG - improvement in reporting ratings 10% 33% on attaining each of the 3 year milestones:
Y1 - Attain investor ESG external rating/score
Y2 - Improve or at least maintain ESG external rating/score
Y3 - Improve or at least maintain ESG external rating/score
· Vesting is on a straight-line basis between points in the
schedule.
· Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in line with
the business plan and intended stretch of the targets at the point of award.
· EBITDA per share targets are set and determined so as to
exclude licensing income.
· Sales Volume is defined as combined sales volume (in
cubic metres, or equivalent) of Accoya and Tricoya.
Element Element A Element B Element C
(EBITDA per share)
(Sales volume growth)
(ESG Reporting Metrics)
Grant date 23 Jun 21 23 Jun 21 23 Jun 21
Share price at grant date (€) 2.06 2.06 2.06
Exercise price (€) 0.00 0.00 0.00
Expected life (years) 3 3 3
Contractual life (years) 10 10 10
Vesting conditions (Details set out above) EBITDA Sales volume growth ESG reporting metrics
Risk free rate -0.67% -0.67% -0.67%
Expected volatility 20% 20% 20%
Expected dividend yield 0% 0% 0%
Fair value of option € 2.06 € 2.06 € 2.06
The remaining 55,035 of the awards made in summer 2021 were specific to
individuals dedicated to the Tricoya(®) consortium with performance measures
linked to progress and development of the Tricoya(®) plant and its subsequent
operation.
The fair value of these options were €2.06 on their Grant date.
All of the above awards, made in summer 2021 are subject to a three-year
performance period (i.e. year end March 2024) and a further two-year holding
period. In addition, awards are also subject to malus/ claw-back provisions.
Awards made in July 2022 and LTIP Award performance conditions
During the year, a total of 620,698 LTIP awards were made primarily to members
of the Senior Management team including the Executive Directors:
The performance targets for these awards are as follows:
Metric Weighting (% of award) Threshold Maximum
Vesting (% of maximum) 25% 100%
Cumulative Sales Volume (FY23 to FY25) (m(3)) 25% 206,000 232,000
Average Gross contribution (%) 25% 49.60% 55%
Share performance compared to AIM Index 40% Median Upper quartile
ESG - improvement in reporting ratings 10% 15% improvement in 20% improvement in S&P ESG score over the three-year period
S&P ESG score over
the three-year period
· Vesting is on a straight-line basis between points in the
schedule.
· Appropriate adjustments may be made to ensure fair and
consistent performance measurement over the performance period in line with
the business plan and intended stretch of the targets at the point of award.
· Gross contribution defined as Revenue from sale of
Accoya/Tricoya less Net acetyls and raw wood cost
· Sales Volume is defined as combined sales volume (in
cubic metres, or equivalent) of Accoya and Tricoya.
· Share performance is compared to AIM Index performance
excluding Financial services and natural resource stocks
Element Element A Element B Element C Element D
(Sales volume growth)
(Gross Contribution %)
(Share price growth)
(ESG Reporting Metrics)
Grant date 12 Jul 22 12 Jul 22 12 Jul 22 12 Jul 22
Share price at grant date (€) 1.21 1.21 1.21 1.21
Exercise price (€) 0.00 0.00 0.00 0.00
Expected life (years) 3 3 3 3
Contractual life (years) 10 10 10 10
Vesting conditions (Details set out above) Sales volume Gross Contribution % Share price ESG reporting metrics
Risk free rate 0.45% 0.45% 0.45% 0.45%
Expected volatility 20% 20% 20% 20%
Expected dividend yield 0% 0% 0% 0%
Fair value of option € 1.21 € 1.21 € 0.90 € 1.21
All of the above awards, made in summer 2022 are subject to a three-year
performance period (i.e. year end March 2025) and a further two-year holding
period. In addition, awards are also subject to malus/ claw-back provisions.
Employee Benefit Trust - Share bonus award
137,665 new Ordinary shares are held by an Employee Benefit Trust 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, the beneficiaries of which are primarily senior employees. Such new
Ordinary shares vest if the employees remain in employment with the Company at
the vesting date, being 1 July 2023 (subject to certain other provisions
including regulations, good-leaver, take-over and Remuneration Committee
discretion provisions). As at 31 March 2023, the Employment Benefit Trust was
consolidated by the Company and the 137,665 shares are recorded as Own Shares
within equity.
Employee Share Participation Plan
The Employee Share Participation Plan (the 'Plan') is intended to promote the
long-term growth and profitability of Accsys by providing employees with an
opportunity to acquire an ownership interest in new Ordinary shares ('Shares')
in the Company as an additional benefit of employment. Under the terms of the
Plan, the Company issues these Shares to a trust for the benefit of the
subscribing employees. The Shares are released to employees after one year,
together with an additional Share on a 1 for 1 matched basis provided the
employee has remained in the employment of Accsys at that point in time
(subject to good leaver provisions). The Plan is in line with industry
approved employee share plans and is open for subscription by employees once a
year following release of the interim financial results. The maximum amount
available for subscription by any employee is €5,000 per annum. In January
2023 various employees subscribed for a total of 203,906 Shares at an
acquisition price of €0.81 per Share.
Also during the year, 1 for 1 Matching Shares were awarded in respect of
subscriptions that were made in the previous year as a result of the
participants continuing to remain in employment at the point of vesting.
174,144 matching shares were issued to employees in January 2023.
15. Intangible assets
Internal Intellectual Goodwill Total
Development property
costs rights
€'000 €'000 €'000 €'000
Cost
At 01 April 2021 7,464 74,456 4,231 86,151
Additions 178 536 - 714
At 31 March 2022 7,642 74,992 4,231 86,865
Additions 57 380 - 437
At 31 March 2023 7,699 75,372 4,231 87,302
Accumulated amortisation
At 01 April 2021 2,510 72,776 - 75,286
Amortisation 384 361 - 745
At 31 March 2022 2,894 73,137 - 76,031
Amortisation 385 395 - 780
At 31 March 2023 3,279 73,532 - 76,811
Net book value
At 31 March 2023 4,420 1,840 4,231 10,491
At 31 March 2022 4,748 1,855 4,231 10,834
At 31 March 2021 4,954 1,680 4,231 10,865
Refer to note 16 for the recoverability assessment of these intangible assets.
16. Property, plant and equipment
Land and Plant and Office Total
buildings machinery equipment
€'000 €'000 €'000 €'000
Cost or valuation
At 01 April 2021 17,976 146,433 3,885 168,294
Additions - 41,012 461 41,473
Foreign currency translation gain - - 7 7
At 31 March 2022 17,976 187,445 4,353 209,774
Additions - 21,376 341 21,717
Foreign currency translation gain - - 3 3
At 31 March 2023 17,976 208,821 4,697 231,494
Accumulated depreciation
At 01 April 2021 995 25,945 1,797 28,737
Charge for the year 358 3,550 461 4,369
Foreign currency translation gain - - 7 7
At 31 March 2022 1,353 29,495 2,265 33,113
Charge for the year 358 5,397 572 6,327
Foreign currency translation gain - - 3 3
Impairment loss - 86,000 - 86,000
At 31 March 2023 1,711 120,892 2,840 125,443
Net book value
At 31 March 2023 16,265 87,929 1,857 106,051
At 31 March 2022 16,623 157,950 2,088 176,661
At 1 April 2021 16,981 120,488 2,088 139,557
Plant and machinery assets with a net book value of €24,851,000 are held as
assets under construction and are not depreciated, relating to the Hull Plant
(31 March 2022: €93,560,000).
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 13.5% (31 March 2022:
10.5%) 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 €86 million
should be recognised in the Tricoya CGU.
The impairment of the Tricoya segment assets is caused by:
(i) As reported in November 2022, Identification of
additional time and costs (€35m) to complete the plant;
(ii) A decrease in the production volume forecast for the
plant to 24,000MT (from 30,000MT)l
(iii) Update to the discount rate applied to 13.5%
(increased from 10.5% at 31 March 2022).
Key assumptions applied to the Tricoya CGU were as follows:
• a discount rate of 13.5%;
• 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 31 March 2023 (period in which no
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 €7m
• a 1% decrease in the long-term growth rate : increase of €4m
• a 12-month extension in the hold period : increase of €9m
• a 1,000MT increase in the production capacity : decrease of €4m
• a €10m increase in the capital costs to bring the plant into commercial
operation : increase of €7m
17. Leases
(i) Amounts recognised in the statement of financial position
The statement of financial position shows the following amounts relating to
leases:
Right-of-use assets
2023 2022
€'000 €'000
Right-of-use assets
Properties 2,880 4,023
Equipment 1,148 569
Motor Vehicles 16 40
4,044 4,632
Minimum lease payments
2023 2022
€'000 €'000
Amounts payable under lease liabilities:
Within one year 1,132 1,250
In the second to fifth years inclusive 2,085 2,390
After five years 3,502 3,972
Less: future finance charges (1,984) (2,395)
Present value of lease obligations 4,735 5,217
Additions to the right-of-use assets during the financial year were €590,000
(2022: €801,000).
(ii) Amounts recognised in the statement of profit and loss
The statement of comprehensive income shows the following amounts relating to
leases:
2023 2022
€'000 €'000
Depreciation charge of right-of-use assets
Properties 893 807
Equipment 255 209
Motor Vehicles 34 34
1,182 1,050
Interest expense (included in finance cost) 294 322
Expense relating to short-term leases (included in cost of goods sold and 60 83
administrative expenses)
Expense relating to leases of low-value assets that are not shown above as 18 20
short-term leases (included in administrative expenses)
Expense relating to variable lease payments not included in lease liabilities - -
(included in administrative expenses)
The total cash outflow for leases in 2023 was €940,000 (2022: €1,089,000)
The Group's leasing activities and how these are accounted for:
The Group leases various offices, land, equipment and cars. Rental contracts
are typically made for fixed periods of 1-10 years, although, if appropriate,
a longer term may be entered into. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as
security for borrowing purposes. Lease extension options and lease termination
options are only included in the calculation of the lease liability if there
is reasonable certainty that they will be exercised. Some of the Group's
leases have extension and termination options attached to them.
Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to the statement of comprehensive income over the
lease period to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right of use asset is
depreciated over the shorter of the asset's useful life and the lease term on
a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- Fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
- Variable lease payments that are based on an index or a rate;
- Amounts expected to be payable by the lessee under residual value
guarantees;
- The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the Group's incremental borrowing
rate, being the rate that the Group would have to pay to borrow the funds
necessary to obtain an asset of similar economic environment within similar
terms and conditions.
Right of use assets are measured at cost comprising the following:
- The amount of initial measurement of lease liability;
- Any lease payments made at or before the commencement date less
any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Payments associated with short-term leases and leases of low value are
recognised on a straight-line basis as an expense in the statement of
comprehensive income. Short-term leases are leases with a lease term of 12
months or less. Low-value assets comprise of small items of office furniture
and equipment.
18. Financial asset at fair value through profit or loss
2023 2022
€'000 €'000
Shares held in Cleantech Building Materials PLC - -
Accsys Technologies PLC has previously purchased a total of 21,666,734
unlisted ordinary shares in Diamond Wood China. On 23 December 2016, Cleantech
Building Materials PLC acquired Diamond Wood China. On 19 April 2017 Cleantech
Building Materials acquired the 21,666,734 shares previously owned by the
Company and in return the Company has been issued with 520,001 shares in
Cleantech Building Materials PLC, a listed Company trading on the Nasdaq First
North market in Copenhagen.
There continues to be no active market for these shares as at 31 March 2023.
As such a reliable fair value cannot be calculated and the investment is
carried at a nil fair value (2022: nil).
A total of 498,522 shares were held at 31 March 2023.
19. Deferred taxation
The Group has a recognised deferred tax asset of €621,000 (2022: €484,000)
offsetting a recognised deferred tax liability of €621,000 (2022:
€484,000). See note 11.
The Group also has an unrecognised deferred tax asset of €62m (2022: €42m)
which is largely in respect of trading losses of the UK subsidiaries and has
been calculated using the tax rate which is expected to be applicable when the
tax losses are expected to be utilised The deferred tax asset has been
recognised only to the extent of the deferred tax liability, due to the
uncertainty of the timing of future expected profits of the related legal
entities which is dependent on the profits attributable to licensing and
future manufacturing income.
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
2023 2022
€'000 €'000
Raw materials and work in progress 24,220 16,978
Finished goods 5,726 3,393
29,946 20,371
The amount of inventories recognised as an expense during the year was
€89,357,000 (2022: €67,698,000). The cost of inventories recognised as an
expense includes a net credit of €9,000 (2022: credit of €20,000) in
respect of the inventories sold in the period which had previously been
written down to net realisable value.
22. Trade and other receivables
2023 2022
€'000 €'000
Trade receivables 14,398 13,162
Other receivables 1,154 736
VAT receivable 1,472 2,203
Prepayments 1,051 833
18,075 16,934
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value. Trade and other receivables in the
above table are stated net of provision for doubtful debts. The majority of
trade and other receivables is denominated in Euros, with €1,633,000 of the
trade and other receivables denominated in US Dollars (2022: €3,342,000).
The age of receivables past due but not impaired is as follows:
2023 2022
€'000 €'000
Up to 30 days overdue 1,361 1,248
Over 30 days and up to 60 days overdue 290 -
Over 60 days and up to 90 days overdue - -
Over 90 days overdue 14 24
1,665 1,272
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 are
trade receivables and accrued income with a balance of €25,002,000 (2022:
€25,002,000).
Movement in provision for doubtful debts:
2023 2022
€'000 €'000
Balance at the beginning of the year 25,002 25,002
Net (decrease)/increase of impairment - -
Balance at the end of the year 25,002 25,002
23. Financial liability at amortised cost
2023 2022
€'000 €'000
Value Recovery Instrument ("VRI") 1,383 -
In November 2022, NatWest agreed to restructure its TUK debt facility,
reducing the principal amount by €9.4m to total €6m, under a new 7-year
term (see note 30). Separate to, and in addition to the amended €6m loan,
under the Value Recovery Instrument ('VRI') agreement, NatWest will be
entitled to obtain recovery of up to approximately €9.4m, on a contingent
basis, depending on the profitability of the Tricoya Hull plant once
operational.
The valuation of the VRI was calculated on the same future cashflows modelled
for the Tricoya impairment. See note 16 for a list of the key assumptions.
24. Trade and other payables
2023 2022
€'000 €'000
Trade payables 17,942 16,655
Other taxes and social security payable 1,083 1,754
Accruals and deferred income 6,871 11,471
25,896 29,880
The decrease in trade and other payables primarily relates to the timing of
accruals associated with the construction of the Hull plant.
25. Share capital
2023 2022
€'000 €'000
Allotted - Equity share capital
219,381,693 Ordinary shares of €0.05 each (2022: 192,761,322 Ordinary Shares 10,963 9,638
of €0.05 each)
10,963 9,638
All ordinary shares are called up, allotted and fully paid.
In the year ended 31 March 2022:
In May 2021, 20,005,325 Placing Shares and 2,418,918 Open Offer Shares were
issued as part of the capital raise to fund the Company's investment in
expanding its Accoya(®) business into North America through the construction
of a new Accoya plant in the USA through its joint venture, Accoya USA LLC,
with Eastman Chemical Company (see note 29), as well as to provide additional
capital to support the Company's continued growth. The Shares were issued at a
price of €1.65 (£1.40) per ordinary share, raising gross proceeds of
€36.7 million (before expenses).
Between June and September 2021, a total of 629,460 shares were issued
following the exercise of nil cost options, granted under the Company's 2013
Long-Term Incentive Plan ('LTIP').
In February 2022, following the subscription by employees in the prior year
for shares under the Employee Share Participation Plan (the 'Plan'), 189,931
shares were issued as "Matching Shares" at nominal value under the Plan.
In addition, various employees newly subscribed under the Plan for 193,424
Shares at an acquisition price of €2.015 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 year ended 31 March 2023:
In May 2022, 13,793,103 Placing and Subscription 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 Shares were issued at a price of €1.45
(£1.23) per ordinary share, raising gross proceeds of €20 million (before
expenses).
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 July 2022, 137,665 shares were issued to an Employee Benefit Trust (EBT) 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 will vest in July 2023, subject to the
employees continuing employment within the Group.
In November 2022, 11,875,801 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 Sales Purchase Agreement with the Tricoya
Consortium Partners whereby Accsys acquired the remaining 38.2% holding in TUK
that TTL did not already own and the 23.5% holding in TTL that it did not
already own. See note 28.
In January 2023, following the subscription by employees in the prior year for
shares under the Employee Share Participation Plan (the 'Plan'), 174,144
shares were issued as "Matching Shares" at nominal value under the Plan.
In addition, various employees newly subscribed under the Plan for 203,906
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).
26. Other reserves
Capital redemp- Merger reserve Hedging Effective-ness reserve Other reserve Total Other reserves
tion reserve
€000 €000 €000 €000 €000
Balance at 01 April 2021 148 106,707 229 7,551 114,635
Total comprehensive income for the period - - 66 - 66
Balance at 01 March 2022 148 106,707 295 7,551 114,701
Total comprehensive income for the period - - 42 - 42
Balance at 31 March 2023 148 106,707 337 7,551 114,743
The closing balance of the capital redemption reserve represents the amounts
transferred from share capital on redemption of deferred shares in a previous
year.
The merger reserve arose prior to transition to IFRS when merger accounting
was adopted.
The hedging effectiveness reserve reflects the total accounted for under IFRS
9 in relation to the Tricoya(®) segment (see note 1).
The other reserve represents the amounts received for subsidiary share capital
from non-controlling interests net with the carrying amount of non-controlling
interests issued (see note 27).
27. Transactions with non-controlling interests
In the year ended 31 March 2022:
No shares were issued in the year ended 31 March 2022.
The total carrying amount of the non-controlling interests in TTL and Tricoya
UK at 31 March 2022 was €35.5m (2021: €37.2m).
In November 2021, Accsys agreed a new €17m loan to Tricoya UK to be used
towards the Hull plant construction project alongside existing funding in
place for Tricoya UK. The loan accrues interest, which is rolled up, at a rate
between 5.25 and 6.75% above EURIBOR. The loan is secured and is repayable by
30 September 2023. At 31 March 2022, the Group had lent to Tricoya UK €8.8m
under the facility.
In the year ended 31 March 2023:
In November 2022, Accsys purchased the remaining ownership of TTL and Tricoya
UK which it did not previously own via a Sales Purchase Agreement ('SPA') with
the Tricoya consortium partners. See note 28 for further details.
28. Business combinations
In November 2022, Accsys reached agreement to acquire full ownership of TUK
(Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from its
Consortium Partners (INEOS, MEDITE , BGF & Volantis). Under the agreement
Accsys acquired the remaining 38.2% holding in TUK that TTL did not already
own and the 23.5% holding in TTL that it did not already own.
Consideration of 11.9 million new ordinary Accsys shares was provided to the
other Tricoya Consortium Partners valued at €9.5m (€0.81 per share).
INEOS and MEDITE's respective supply and offtake agreements for the Hull plant
will continue on their current terms.
Tricoya UK and TTL were consolidated in the Group results in the prior year
and continue to be consolidated following this purchase. The below table
reflects the accounting for this acquisition, whereby the difference between
the consideration paid and the Non-controlling interest balance at the end of
October 2022 has been allocated to accumulated loss.
2023
€'000
Non-controlling interest balance as at 31 March 2022 35,526
NCI share of losses during the year ended 31 March 2023 (30,824)
Accsys Technologies PLC share issue as consideration (9,545)
Difference recognised as attributable to the Accsys Technologies PLC 4,843
Non-controlling interest balance as at 31 March 2023 -
29. 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 is accounted for as a joint venture and
equity accounted for within the financial statements.
At 31 March 2023, Accsys and Eastman have contributed equity of $61m to Accoya
USA LLC, with a further $5m committed to be contributed.
An eight-year term loan of $70 million has been provided by First Horizon Bank
('FHB') of Tennessee, USA. FHB are also providing a further $10 million
revolving line of credit to be utilised to fund working capital. The FHB term
loan is secured on the assets of Accoya USA and will be supported by Accoya
USA's shareholders, including $50 million through a limited guarantee provided
on a pro-rata basis, with Accsys' 60% share representing $30 million (see note
32). The interest rate varies between 1.3% to 2.1% over USD LIBOR . Principal
repayments commence one year following the completion and start-up of the
facility, and are calculated on a ten-year amortisation period.
The carrying amount of the equity-accounted investment is as follows:
2023 2022
€'000 €'000
Opening balance 3,216 326
Investment in Accoya USA 28,979 3,751
Less: Accsys proportion (60%) of Licence fee received (300) (600)
Loss for the year (1,036) (261)
Closing balance 30,859 3,216
The Group has equity accounted for the joint venture in these consolidated
accounts.
The income statement, balance sheet and cashflows for Accoya USA LLC, are set
out below:
Accoya USA LLC recorded a loss from operations of €1,727,000 for the year
ended 31 March 2023, (€435,000 for the period ended 31 March 2022). The loss
attributable to Accsys Technologies PLC was €1,036,000 for the year ended 31
March 2023, (€261,000 for the period ended 31 March 2022).
Balance Sheet:
2023 2022
€'000 €'000
Non-current assets
Property, plant and equipment 69,327 17,589
Right of use assets 6,242 6,403
75,569 23,992
Current assets
Trade and other receivables 236 -
Cash and cash equivalents 8,701 235
8,937 235
Current liabilities
Trade and other payables (14,682) (10,412)
Obligation under lease liabilities (455) (345)
Net current liabilities (6,200) (10,522)
Non-current liabilities
Obligation under lease liabilities (5,875) (5,993)
Other long term borrowing (9,781) 243
(15,656) (5,750)
Net assets 53,713 7,720
Cash flows:
2023 2022
€'000 €'000
Cash flows from operating activities (1,147) (209)
Cash flows from investing activities (49,568) (7,310)
Cash flows from financing activities 59,181 7,753
Net increase in cash and cash equivalents 8,466 234
30. Commitments under loan agreements
2023 2022
€'000 €'000
Loan obligations
Within one year 9,500 11,654
In the second to fifth years inclusive 50,288 52,335
In greater than five years 6,132 -
Present value of loan obligations 65,920 63,989
Amounts payable under loan agreements - undiscounted cashflows:
Within one year 10,312 12,973
In the second to fifth years inclusive 52,976 59,506
After five years 9,962 -
Less future finance charges (7,330) (8,490)
Present value of loan obligations 65,920 63,989
ABN Debt Facilities
In October 2021 Accsys completed the refinance of its Group debt facilities
through a new bilateral agreement with ABN Amro. The new €60m 3-year
bilateral facilities agreement with ABN Amro comprised a
- €45m Term Loan Facility and,
- €15m Revolving Credit Facility ('RCF') .
- The Term Loan is partially amortising, with 5% of the
principal repayable per annum after 18 months.
- The applicable interest rate for the Term Loan varies between
an all in cost of 1.75% and 3.25% depending on net leverage.
- The RCF interest rate varies between 2.0% and 3.5% above EURIBOR.
The RCF was subsequently increased to €25 million as part of the Accoya USA
financing referred to below, with approximately €20 million utilised for the
Letter of credit provided by ABN Amro to FHB in support of the Accoya USA JV
funding arrangements, the remaining €5million was drawn at 31 March 2023.
The new facilities are secured against the assets of the Group which are 100%
owned by the Company and include customary covenants such as net leverage and
interest cover which are based upon the results and assets which are 100%
owned by the Company.
Tricoya(®) Natwest facility:
In March 2017 the Company's subsidiary, Tricoya UK Limited entered into a
six-year €17.2 million finance facility agreement with NatWest Bank plc in
respect of the construction and operation of the Hull Plant. The facility is
secured by fixed and floating charges over all assets of Tricoya UK Limited.
In November 2022, as part of the Tricoya consortium restructure (see note 28)
NatWest agreed to restructure its TUK debt facility, reducing the principal
amount by €9.4m to total €6m, under a new 7-year term. Interest will
accrue and be rolled up at Euribor plus a margin, with the margin ranging from
325 to 475 basis points. No repayments are due until the facility maturity
date.
At 31 March 2023, the Group had €6.0m (2022: €9.9m) borrowed under the
facility.
Separate to, and in addition to the amended €6m loan, NatWest will be
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 Hull plant once operational. (See note 23)
Accoya USA facility & De Engh facility:
In March 2022 the Company's joint venture, Accoya USA agreed an eight-year $70
million loan from First Horizon Bank ('FHB') of Tennessee, USA in respect of
the construction and operation of the Accoya USA plant. FHB are also providing
a further $10 million revolving line of credit to be utilised 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 $50 million through a
limited guarantee provided on a pro-rata basis, with Accsys' 60% share
representing $30 million (see note 29 & 32). The interest rate varies
between 1.3% to 2.1% over USD LIBOR. Principal repayments commence one year
following the completion and start-up of the facility, and are calculated on a
ten-year amortisation period. Accoya USA is equity accounted for in these
financial statements, therefore this Borrowing is not included in the Group's
borrowings. (See note 29)
To support Accsys' limited guarantee, Accsys provided a $20 million Letter of
Credit ('LC') to FHB. The LC is issued by ABN Amro, utilising part of the
revolving credit facility agreed in October 2021. To further support the LC,
Accsys agreed a €10 million convertible loan with De Engh BV Limited ('De
Engh') in March 2022, an investment company based in the Netherlands (the
'Convertible Loan'). The Convertible Loan proceeds were placed with ABN Amro
solely as cash collateral to enable ABN Amro to grant the $20 million LC to
FHB.
The Convertible Loan is unsecured and carries an interest margin of 6.25%
above Euribor. If the Convertible Loan is not repaid within two years, De Engh
has an option (from the end of year two) to convert the outstanding loan
balance to ordinary shares in Accsys at €2.30 per share, otherwise the
interest rate increases by 2% in year three and by a further 2% the following
year if the loan has not been repaid or converted after 3 years. The maximum
term of the Convertible Loan is 3.5 years from March 2022.
Reconciliation to net debt:
2023 2022
€'000 €'000
Cash and cash equivalents 26,593 42,054
Less:
Amounts payable under loan agreements (65,920) (63,989)
Amounts payable under lease liabilities (note 18) (4,735) (5,217)
Net debt (44,062) (27,152)
Restricted cash
The cash and cash equivalents disclosed above and in the Consolidated
statement of cash flow includes $10 million which is pledged to ABN Amro as
collateral for the $20million Letter of credit provided to FHB (see note 29
& 32).
Reconciliation to adjusted cash:
2023 2022
€'000 €'000
Cash and cash equivalents 26,593 42,054
Less: Remaining cash raised through May 2021 equity raise to be contributed to - (27,857)
Accoya USA
Less: Cash pledged to ABN for Letter of Credit (9,828) (9,852)
Adjusted Cash 16,765 4,345
Liabilities from financing activities Other assets
Borrowings Leases Sub-total Cash Total
€'000 €'000 €'000 €'000 €'000
Net debt as at 01 April 2021 (54,290) (5,532) (59,822) 47,598 (12,224)
Cash flows (7,561) 1,089 (6,472) (7,879) (14,351)
New leases - (801) (801) - (801)
Foreign exchange adjustments 231 (7) 224 2,335 2,559
Other changes (2,369) 34 (2,335) - (2,335)
Net debt as at 31 March 2022 (63,989) (5,217) (69,206) 42,054 (27,152)
Cash flows (8,445) 940 (7,505) (16,984) (24,489)
New leases - (590) (590) - (590)
Foreign exchange adjustments - 67 67 1,523 1,590
Other changes 6,514 65 6,579 - 6,579
Net debt as at 31 March 2023 (65,920) (4,735) (70,655) 26,593 (44,062)
31. Equity options
On the 29 March 2017, the Company announced the formation of the Tricoya
Consortium and as part of this, funding was agreed with BGF Business Growth
Fund). In addition to the issue of the Loan Notes, which have since been
repaid as part of the Group re-finance in October 2021 (see note 30), the
Company issued 8,449,172 options over Ordinary Shares of the Company to BGF
exercisable at a price of £0.62 per Ordinary Share at any time until 31
December 2026 (the 'Options').
At 31 March 2023 a total 8,449,172 Options exist attributable to BGF. This
represents 3.9% (2022: 4.4%) of the issued share capital of the Company as at
31 March 2023.
See notes 30 & 35 for details on the convertible loan agreed with De Engh
BV Limited.
32. Guarantee provided to FHB
In March 2022 the Company's joint venture, Accoya USA agreed an eight-year
$70million loan from First Horizon Bank ('FHB') of Tennessee, USA in respect
of the construction and operation of the Accoya USA plant and a further $10
million revolving line of credit to be utilised to fund working capital (see
note 28 & 29). The FHB term loan is supported by Accoya USA's
shareholders, including $50 million through a limited guarantee provided on a
pro-rata basis, with Accsys' 60% share representing $30 million (see note 28).
To support Accsys' limited guarantee, Accsys provided a $20 million Letter of
Credit, issued by ABN Amro, to FHB (see note 30).
The $30 million limited guarantee provided to FHB is held at a fair value of
€ nil, representing a present value calculation of €8.2 million weighted
by the estimated probability of FHB calling on the guarantee being 0%.
33. Financial instruments
Financial instruments
Lease liabilities
Lease creditors of €4,735,000 as at 31 March 2023 (2022: €5,217,000)
relates to various offices, land, equipment and cars that the Group leases
(see note 17).
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.
The Group's strategy is to maintain a Net Debt / EBITDA ratio of below 2.5x
over the longer term while remaining within covenant levels set in its ABN
Amro loan facility. One of the key covenants under the ABN Amro facility
is the Net Debt/EBITDA ratio based upon the results and assets which are 100%
owned by the Company, with the covenant test reducing over time from an
initial maximum of 4x to 2.5x. On this basis, Net Debt/EBITDA ratio was
calculated at 1.3 for the year ending 31 March 2023.
No final dividend is proposed in 2023 (2022: €nil). The Board deems it
prudent for the Company to protect as strong a statement of financial position
as possible during the current phase of the Company's growth strategy.
Financial Instruments by category
2023/ € '000 Fair value hierarchy At amortised cost At fair value though profit or loss At fair value through OCI Total
Financial assets
Trade and other receivables 15,552 - - 15,552
Financial asset investments Level 2 - - - -
Derivative financial instruments (FX forward) Level 2 - - - -
Cash and cash equivalents 26,593 - - 26,593
Total 42,145 - - 42,145
2022/ € '000 Fair value hierarchy At amortised cost At fair value though profit or loss At fair value through OCI Total
Financial assets
Trade and other receivables 13,898 - - 13,898
Financial asset investments Level 2 - - - -
Derivative financial instruments (FX forward) Level 2 - 3 - 3
Cash and cash equivalents 42,054 - - 42,054
Total 55,952 3 - 55,955
2023/ € '000 Fair value hierarchy At amortised cost At fair value though profit or loss At fair value through OCI Total
Financial liabilities
Borrowings - loans (65,920) - - (65,920)
Lease liabilities (4,735) - - (4,735)
Trade and other payables (17,942) - - (17,942)
Value Recovery Instrument ("VRI") Level 2 (1,383) - - (1,383)
Derivative financial instruments (FX forward) Level 2 - -
Total (89,980) - - (89,980)
2022/ € '000 Fair value hierarchy At amortised cost At fair value though profit or loss At fair value through OCI Total
Financial liabilities
Borrowings - loans (63,989) - - (63,989)
Lease liabilities (5,217) - - (5,217)
Trade and other payables (16,655) - - (16,655)
Derivative financial instruments (FX forward) Level 2 - - - -
Total (85,861) - - (85,861)
Money market deposits are held at financial institutions with high credit
ratings (Standard & Poor's rating of A).
All assets and liabilities mature within one year except for the lease
liabilities, for which details are given in note 17 and loans, for which
details are given in note 30.
Trade payables are payable on various terms, typically not longer than 30 to
60 days with the exception of some major capex items.
Market risk
The Group's activities expose it primarily to the financial risks of changes
in foreign currency exchange rates and interest rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that adequate financial
resources are available for the development of its business whilst managing
its currency, interest rate, counterparty credit and liquidity risks. The
Group's treasury strategy and policy are developed centrally and approved by
the Board.
Foreign currency risk management
The Group's functional currency is the Euro with the majority of operating
costs and balances denominated in Euros. An increasing proportion of costs
will be incurred in pounds sterling as the Group's activities associated with
the Tricoya(®) plant in Hull increase, although future revenues will be in
Euros or other currencies. Equity contributions into Accoya USA and a smaller
proportion of revenue and expenditure are incurred in US dollars and
expenditure is also incurred in 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.
If exchange rates changed by 5% from exchange rates at 31 March 2023, the
effect on the P&L from the revaluation of:
- Trade Receivables - P&L impact would not be material. The
details of the Trade receivables per Currency is disclosed in note 22 with the
US Dollar receivables held in Titan Wood Inc, which has a US Dollar reporting
currency.
- Trade payables - P&L impact would be approximately
€211,000.
Interest rate risk management
Some of the Group's borrowings have variable interest rates based on a
relevant benchmark (ie. EURIBOR) plus an agreed margin. Surplus funds are
invested in short term interest rate deposits to reduce exposure to changes in
interest rates. The Group does not currently enter into any interest rate
hedging arrangements, although will review the need to do so in respect of the
variable interest rate loan facilities.
Credit risk management
The Group is exposed to credit risk due to its trade receivables 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. All Financial
institutions utilised by the Group, and with which the Group holds cash
balances have investment grade credit ratings.
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. See note 17 & 30.
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.
34. Capital Commitments
2023 2022
€'000 €'000
Contracted but not provided for in respect of property, plant and equipment - 8,327
Included in the above, are amounts relating to the Tricoya plant under
construction in Hull and committed items related to the Reactor 4 expansion
project in Arnhem.
The above table excludes the remaining cash committed to be contributed to
Accoya USA. See note 29 & 30.
35. Related party transactions
Loan from De Engh BV Limited
As part of the Accoya USA JV funding arrangements, Accsys provided a $20
million Letter of Credit ('LC') to FHB. (see note 30 & 32). To support the
LC, Accsys agreed a €10 million convertible loan with De Engh BV Limited
('De Engh') in March 2022, an investment company based in the Netherlands (the
'Convertible Loan') and a Accsys shareholder holding 10.57% of Accsys' issued
share capital at 31 March 2023. The Convertible Loan proceeds were placed with
ABN Amro solely as cash collateral to enable ABN Amro to grant the $20 million
LC to FHB.
The Convertible Loan is unsecured and carries an interest margin of 6.75%
above Euribor. If the Convertible Loan is not repaid within two years, De Engh
has an option (from the end of year two) to convert the outstanding loan
balance to ordinary shares in Accsys at €2.30 per share, otherwise the
interest rate increases by 2% in year three and by a further 2% the following
year if the loan has not been repaid or converted after 3 years. The maximum
term of the Convertible Loan is 3.5 years from March 2022.
36. Events occurring after 31 March 2023
There have been no material reportable events since 31 March 2023.
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