REG - Accsys Technologies - PRELIMINARY RESULTS FOR THE YEAR END 31 MARCH 2024
26/06/2024 07:00
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RNS Number : 8682T Accsys Technologies PLC 26 June 2024
AIM: AXS
Euronext Amsterdam: AXS
26 June 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Preliminary results for the year ended 31 March 2024
Resilient Q4 performance with strategic progress on Accoya USA and operational
transformation programme
Year to 31 March 2024
Year to 31 March 2023 Year to % 23-24 Change
31 March 2022
Revenue €136.2m €162.0m €120.9m (16%)
Gross profit €40.9m €55.2m €36.0m (26%)
Gross margin 30% 34% 30%
Adjusted EBITDA(1) €4.8m €22.9m €10.4m (€18.1m)
Period end net debt (€37.1m) (€44.1m) (€27.2m) (€7.0m)
Accoya sales volume 56,568m(3) 63,344m(3) 59,649m(3) (11%)
Financial overview
· FY24 results ahead of FY24² consensus - As a result of resilient
trading in Q4 FY24 and cost saving initiatives, adjusted EBITDA at €4.8m.
o Full year adjusted EBITDA adversely impacted by: lower sales volumes,
increased mix of lower margin sales, a €3m proportional increase in our US
Joint venture's EBITDA loss as it progresses its pre-operational activities
and a change in accounting method for Hull, with ongoing running costs being
treated as operating expenditure.
o Good sales pricing discipline maintained through the year against
competitors in a challenging market, resulting in maintenance of high ASP.
· Revenues at €136.2m - Impacted by lower sales volumes due to
high customer inventory levels at the beginning of the financial year combined
with a challenging macroeconomic trading environment for the construction and
building materials sector, particularly in Q3. Revenues were also impacted by
lower volumes and lower average sales prices for acetic acid and nonrecurrence
of the energy price premium.
o Resilient trading in Q4, driven by increased investment in sales and
marketing and the addition of new distribution channels.
· Double digit year on year growth in sales volumes for Accoya
Color and Accoya for Tricoya - Strong demand for Accoya Color decking; 14%
year-on-year Accoya for Tricoya sales growth.
Notes
(1)Adjusted EBITDA is defined as Operating profit/(loss) before exceptional
items, depreciation and amortisation, and includes the Group's attributable
share of the USA joint venture's underlying EBITDA (see note 3 to the
financial statements).
²Accsys considers consensus FY24 Adjusted EBITDA to be €2.5 million as of
01 May 2024.
· Business transformation programme and working capital initiatives
showing encouraging results - The Group's business transformation programme
realised more than €3.0m annualised savings. Tight working capital
management through FY24, including a €4.2m decrease in inventory levels
during the year.
o On a half yearly basis, H2 operating costs decreased €2.7m, 19%
reduction on the prior year period reflecting management cost actions.
· Reduction in net debt - Net debt of €37.1m at 31 March 2024, a
reduction of €7.0m from 31 March 2023 (€44.1m), following the successful
capital raise in November 2023, with €5.0m invested into our US Joint
venture during the year.
Strategic highlights
· Accoya USA JV - Plant completed with commissioning underway and
first batches expected to be produced in the coming weeks, adding 43,000m³ of
additional production capacity.
· Transformation and reshaping of the business under new leadership
to simplify operational processes, drive cost efficiencies, and focus on
commercial and operational performance improvements.
· Sales and marketing acceleration to drive demand creation,
including the addition of seven new distributors (four in EMEA and three in
the USA) and three direct manufacturing customers (one in North America and
two in Central and Eastern Europe).
· Focus on maximising returns on existing assets with our 'Solid
Roots' operational reliability programme in Arnhem targeting efficiency
improvements³.
· During FY24 the Company engaged a financial advisor to assist us
in seeking a strategic and/or financing partner to complete the Hull plant.
Accsys is on track to come to a resolution within H1 FY25 as previously
outlined in the May trading update.
· The Group has set four operational targets for the year ahead:
(1) Kingsport to be commercially operational by the end of summer 2024; (2)
Improved incentive plans; (3) Deliver €3m operating cost savings in the
year; (4) Solid Roots 500 bps reliability improvement in (Overall Equipment
Effectiveness) OEE for key equipment in Arnhem.
· The Senior Leadership Team is undertaking a thorough review of
the Company's strategy. An investor event will be held in H2 FY25 providing a
full update on strategy.
Outlook
The Company has made a good start to FY25. While market headwinds in the
building materials and construction industry persist and are expected until
the end of the calendar year, Q1 sales for the Company are in line with
expectations.
Starting in Q2, our North American sales will gradually transition from being
supplied by our Arnhem, NL plant to our Kingsport plant (USA joint venture).
To support this shift and the ramp up of sales from Kingsport, we will
continue to accelerate our commercial efforts and invest in our sales and
marketing, adopting a targeted approach by segment and geography. The Company
has set a target to refill the lost capacity at Arnhem within 12 months of
migrating to Kingsport on a run rate basis, which equates to double digit
growth in underlying sales volume outside of North America during the period.
FY25 will continue to be transformative for the Company with our successful
expansion in North America and resolution of Hull. In the coming year, we
expect to leverage the benefits from greater economies of scale associated
with the ramp-up of Accoya USA in Kingsport.
The Board remains confident about the long-term potential of Accsys and sees
the opportunity to deliver approximately 100,000m³ production volume across
Arnhem and Kingsport by the end of FY2027. With the Company's focus on
driving operational excellence and maximising the potential of two production
facilities, the Company is well placed to demonstrate long-term value creation
and sustainable cash generation.
Notes
³At our main production site in Arnhem, the 'Solid Roots' programme is
focused on developing Arnhem into a performance driven, mature manufacturing
facility. The programme has set performance KPIs for metrics including the
operational efficiency of key equipment.
Jelena Arsic van Os, Executive Chair of Accsys, commented:
"FY24 has been challenging with recessionary forces impacting demand in the
construction and building materials market. We took decisive steps to counter
these challenges and delivered a more resilient fourth quarter, with our full
year results coming in ahead of updated market expectations. We have
streamlined the business, begun to remove complexity, driven operational
efficiencies, and invested in sales and marketing. These transformational
measures make Accsys a leaner, more agile organisation with a greater focus on
profitable and sustainable growth.
Operationally we have made significant strides. We are hugely excited to have
completed the construction of the Accoya USA plant with commissioning well
underway and production expected to commence this summer. The addition of a
second Accoya production plant marks a significant step forward for our
Company. It strategically positions production nearer to our key North
American market, ensuring customers reliable supply and deepening our
operational resilience.
In the coming year we expect to take advantage of having two Accoya production
plants. With our increased production flexibility and capacity, we will
continue to invest and professionalise our commercial activities, particularly
in North America. As inflation steadies and the construction market recovers,
we are in a strong position to capitalise on demand and drive growth."
Ends
This announcement comprises inside information for the purposes of EU MAR and
UK MAR. The person responsible for making this announcement is Nick Hartigan,
General Counsel and Company Secretary, Accsys Technologies PLC.
For further information, please contact:
Dr Jelena Arsic Van Os, CEO +44 (0) 20 7421 4300 (tel:02074214300)
Hans Pauli, Interim CFO
Accsys Technologies PLC IR@accsysplc.com (mailto:IR@accsysplc.com)
Investor Relations
Deutsche Numis (London) +44 (0) 20 7260 1000
Oliver Hardy (NOMAD), Ben Stoop
ABN Amro (Amsterdam) +31 20 344 2000
Dennis van Helmond
Huijskens Sassen Communications (The Netherlands) +31 20 685 5955
Clemens Sassen
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Accsys Technologies PLC
CEO Review
Overview of the year
In FY24, our industry faced significant challenges, with macroeconomic
pressures impacting on demand for construction and building materials. Our
financial performance for the year did not meet our expectations. We informed
the market about this in our September 2023 trading update. Amidst these
difficulties, we took decisive steps to re-set and transform. Firstly,
focusing on demand creation and, secondly, focusing on a leaner and more
fit-for-purpose organisational set-up. Though it is still early days to see
the full impact of these initiatives, they have shown good results so far.
Alongside the re-set of the business, we have made significant strategic
progress in the establishment of two production centres, located in our core
end markets of Europe and the USA. I am pleased to report that our Kingsport
plant in the USA is in the final stages of commissioning and commercial
production is expected later this summer.
During FY24 we engaged a financial advisor to assist us in seeking a strategic
and/or financing partner to complete the Hull plant. The Company is on track
to come to a resolution within H1 FY25 as previously outlined in the May
trading update.
Our balance sheet was strengthened through improvement in working capital
management and via our successful capital raise in November raising new gross
proceeds of circa €24m. I would like to thank our new and existing
shareholders for their belief in our strategic vision and for their support.
Demand creation
The Company has stepped-up investment in sales and marketing, including new
recruits in North America, the addition of seven new distribution partners
globally and a comprehensive commercial review, leading to a refreshed
approach by geography and product segments. This activation resulted in a
demand turnaround in Q4, with a resilient performance in the quarter, and
overall results for FY24 were ahead of consensus expectations. Despite
challenging market conditions we were resilient on pricing and held a high
average sales price (ASP) throughout the year.
Reset and transformation
During the year, the Company underwent leadership changes to reduce overhead
costs and simplify the organisational setup. Major efforts were directed
towards creating a leaner, more effective operating model, reshaping the
business to capitalise on long-term opportunities.
A business transformation programme has delivered savings of more than €3.0m
annually. This has been achieved through overhead and opex reductions across
our international operations.
At our main production site in Arnhem, the 'Solid Roots' programme was
launched, focused on developing Arnhem into a performance driven, mature
manufacturing facility. The programme has set performance KPIs for metrics
including the operational efficiency of key equipment.
As part of the Group's transformation, we are introducing a set of four
operational targets for the year ahead:
(1) Kingsport to be commercially operational by the end of summer 2024;
(2) Improved incentive plans; (3) Deliver €3m operating cost savings in the
year; (4) Solid Roots 500 bps reliability improvement in (Overall Equipment
Effectiveness) OEE for key equipment in Arnhem.
In addition, the Senior Leadership Team is undertaking a thorough review of
our strategy. We have already begun to implement some near-term tactical
actions focused on maximising the returns from existing assets. A full update
on our strategy will be provided in H2 FY25.
International expansion
A key priority during FY24 has been the construction of our Accoya USA plant
in Kingsport, Tennessee, our joint-venture with Eastman Chemical Company, a
world leader in the production of acetyls. This plant adds 43,000m3 of
capacity. Accsys holds a 60% interest in the joint-venture and Eastman 40%.
Commissioning of the new plant is well on its way. North America is a highly
attractive market for Accsys. With the new plant Accsys will be closer to
North American Accoya customers and have a higher degree of product
availability and supply flexibility globally. The combination of our recent
expansion of Arnhem and the addition of the Kingsport plant doubles the
Company's capacity compared to two years ago. This is a huge milestone and
significant growth enabler for the business.
Summary of financial performance
Accsys delivered revenues of €136.2m, a 16% decrease on FY23. Macroeconomic
conditions proved challenging during FY24 for the building materials,
construction and residential housing markets globally, with high inflation and
high interest rates depressing demand. Our customers entered the financial
year with higher-than-average stock levels, having taken the opportunity to
build up inventory following the recent expansion of Arnhem. This, combined
with uncertain market conditions, adversely affected our sales volumes,
particularly in Q3.
While market conditions remained challenging, our performance considerably
improved in Q4, as we started to benefit from our increased investment in
sales and marketing, new distributor relationships, strategic review of our
organisational structure and our distributers' stock levels reverting to
healthier levels.
Adjusted Group EBITDA at €4.8m for the year, a decrease of €18.1m on the
prior year reflects the lower sales volumes, increased mix of lower margin
sales for Accoya for Tricoya and a €3m proportional increase in the US joint
venture's EBITDA loss as it progresses its pre-operational activities. As a
result of cost savings measures put in place and improved trading in Q4,
Adjusted EBITDA for FY24 was ahead of market consensus set at the time of our
interim results.
Group gross margin was 30% (FY23: 34%), supported by pricing resilience in the
tougher macroeconomic conditions and our strong product proposition.
Net debt of €37.1m at 31 March 2024, a reduction of €7.0m from 31 March
2023 (€44.1m), reflects the successful capital raise in November 2023.
Sales review
New distribution and increased investment in sales and marketing
The Company is once again proud to have had its products featured in many
high-profile global projects throughout FY24, including featuring on buildings
for brands such as ABB, Starbucks and Lidl.
In a strategic move to accelerate growth, we have significantly boosted our
investment in sales and marketing and consolidated our sales, marketing and
customer service functions, enhancing our capabilities and expanding our
reach. We have expanded our distribution network and markets, adding seven new
distributors globally, including two in Belgium, one each in Greece and Italy,
and three in the USA.
To stimulate global product demand, we are actively developing our Approved
Manufacturer Programme (AMP), forging strong partnerships with key
manufacturers in the window, door, decking, and cladding sectors.
We have strengthened our North America commercial footprint by appointing a
new Sales Director for North America and salespeople in the region. Alongside
these appointments, the Company has continued to drive lead generation and
brand awareness campaigns to promote our products to key audiences and support
the sell-through of materials downstream.
Accoya Color
Accoya Color was launched in 2020 and since then we have seen good growth
in demand. The product is manufactured at our site in Barry and Accsys has
rights to IP on the colouring process.
Accoya Color's unique proposition is proving to be very attractive to Accsys
and customers in our target markets, particularly in the decking category
where the surface-to-core grey colour has a strong design appeal as well as
being low maintenance. The product has gained popularity in Central Europe,
North America, France and Australia and New Zealand. This year it was launched
into the UK.
Accoya's high level of performance and sustainability was recognised in
several prestigious global industry awards in FY24, including The Architect's
Newspaper Best of Products award for Accoya Color.
Accoya for Tricoya
We saw continued good demand for Accoya for Tricoya. Year on year we saw a 14%
increase in demand for Accoya for Tricoya, driven primarily by demand for
doors, windows and outdoor joinery.
Tricoya panels
We have revitalized the distribution of the Tricoya panels produced by Finsa
(https://www.bing.com/ck/a?!&&p=3c37878490673357JmltdHM9MTcxNjE2MzIwMCZpZ3VpZD0zYjk4Y2Q2Zi0xYmRlLTZkMjUtMTU5My1kZWE2MWFiZDZjMzEmaW5zaWQ9NTY4NA&ptn=3&ver=2&hsh=3&fclid=3b98cd6f-1bde-6d25-1593-dea61abd6c31&psq=finsa+maderera+sa&u=a1aHR0cHM6Ly9lcy53aWtpcGVkaWEub3JnL3dpa2kvRmluc2E&ntb=1)
and Medite in North America and APAC, generating €4.1m in FY24 and tripling
last year's revenue.
Sales volume by end market FY24 FY23 Change
m(3) m(3) %
UK & Ireland 11,837 14,667 (19%)
Rest of Europe 13,233 16,584 (20%)
Americas 9,285 10,574 (12%)
Rest-of-World 4,866 6,326 (23%)
Accoya for Tricoya 17,347 15,193 14%
Total 56,568 63,344
Sustainability
Our commitment to responsible sourcing and manufacturing is recognised by
leading accreditation bodies. We continue to focus on our goal of zero
deforestation and this year we continued to source 100% of our raw wood from
FSC(®) certified sources. We successfully recertified Cradle to Cradle®
(C2C) gold certification for Accoya, as well as being awarded 'Platinum' level
(the highest level) for 'Material Health'. Accoya, has held C2C certified
status since 2010.
C2C certification 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.
Employee development
Our Company's success is driven by the skills, experience, and dedication of
our team. Recognising this, we are deeply committed to investing in our people
and their professional growth. In FY24, we are proud to have provided an
average of 30.5 training hours per employee, underscoring our commitment to
continuous development.
Additionally, we have created valuable career development opportunities for
our senior operators through a temporary exchange program between our
Kingsport and Arnhem facilities. This initiative not only supports the
successful start-up of the Kingsport plant but also facilitates a crucial
exchange of skills and knowledge between the regions.
Health & Safety (HSE)
Accsys has set 'Zero Harm' as a key target for our operations and is committed
to developing best practice HSE across the Company. Health & Safety is a
top priority for the Board. In FY24, we strengthened our HSE management by
forming dedicated site-level HSE committees under the management of the Site
Directors. These committees are actively engaged in implementing best
practices that protect our people and environment and ensure rigorous
compliance.
Innovation and supply chain
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 that will be suited to our manufacturing processes. This year we are in
the final testing stages of Accoya Color made from fast growing FSC®
certified Taeda pine from Argentina and Uruguay. We have also significantly
increased our sourcing of FSC® certified Spanish and Chilean radiata pine for
Tricoya production.
We are innovating to minimise our environmental impact across our operations,
in accordance with our Environmental and Climate Change Policy. The Accoya USA
facility will operate a closed loop system with acetic anhydride, reducing
emissions and ensuring circularity.
Outlook
The Company has made a good start to FY25. While market headwinds in the
building materials and construction industry persist and are expected until
the end of the calendar year, Q1 sales for the Company are in line with
expectations.
Starting in Q2, our North American sales will gradually transition from being
supplied by our Arnhem, NL plant to our Kingsport plant (USA joint venture).
To support this shift and the ramp up of sales from Kingsport, we will
continue to accelerate our commercial efforts and invest in our sales and
marketing, adopting a targeted approach by segment and geography. The Company
has set a target to refill the lost capacity at Arnhem within 12 months of
migrating to Kingsport on a run rate basis, which equates to double digit
growth in underlying sales volume outside of North America during the period.
FY25 will continue to be transformative for the Company with our successful
expansion in North America and resolution of Hull. In the coming year, we
expect to leverage the benefits from greater economies of scale associated
with the ramp-up of Accoya USA in Kingsport.
The Board remains confident about the long-term potential of Accsys and sees
the opportunity to deliver approximately 100,000m3 production volume across
Arnhem and Kingsport by the end of FY2027. With the Company's focus on
driving operational excellence and maximising the potential of two production
facilities, the Company is well placed to demonstrate long-term value creation
and sustainable cash generation.
Jelena Arsic van Os
Chief Executive Officer
25 June 2024
Accsys Technologies PLC
Finance Review
FY24 FY23 Change %
Group Revenue €136.2m €162.0m (16%)
Gross Profit €40.9m €55.2m (26%)
Adjusted EBITDA €4.8m €22.9m (€18.1m)
Statutory (loss) before tax (€17.1m) (€67.1m) €50.0m
Free cashflow €3.7m (€13.6m) €17.3m
Cash €27.4m €26.6m
Net debt (€37.1m) (€44.1m)
Accoya Sales volume 56,568m(3) 63,344m(3) (11%)
Statement of comprehensive income
Revenue for the year decreased by 16% to €136.2m (2023: €162.0m),
primarily due to a 11% decrease in sales volume, lower average sales prices
for Acetic acid and the Energy price premium (€3.9m) which was added as a
surcharge to sales prices in the prior year to offset the significant increase
in net acetyls costs.
Accoya sales volumes decreased by 11% to 56,568m(3), impacted by a challenging
macroeconomic trading environment for the construction and building materials
sector, particularly in Q3. Trading improved in Q4 and this positive momentum
has continued into the new financial year.
Accoya for Tricoya sales volumes increased by 14%, with revenues increasing by
13% to €23.9m. Accoya sales to our customers for the manufacture of Tricoya
panels are currently used to develop the market for Tricoya products and now
represent 31% of total Accoya sales volumes (2023: 24%). Tricoya panel revenue
also increased by €2.7m during the year to €4.1m (2023: €1.4m),
representing Accsys purchasing and selling Tricoya panels produced by our
Accoya for Tricoya customers.
Other revenue, which predominantly relates to the sale of our acetic acid
by-product into the acetyls market, decreased by 48% to €8.8m (2023:
€16.8m), reflecting lower acetic acid sales prices and volumes. These sales
act as a partial hedge to acetic anhydride costs which also decreased during
the year. Net acetyls costs (proportional combination of acetic anhydride cost
and acetic acid sales price) decreased on the prior year.
Raw wood input costs were higher year on year, with higher wood mix costs in
addition to moderately higher average wood prices.
Cost of sales decreased by 11%, with 11% lower sales volumes and higher raw
wood costs being partially offset by lower acetic anhydride costs.
Gross profit of €40.9m was 26% lower than in the prior year (2023: €55.2m)
and gross profit margin fell by four percentage points to 30%. The lower gross
margin reflects an increased proportion of lower margin Accoya for Tricoya
sales and our use of higher-cost appearance grade wood for Accoya for Tricoya
production during H1 FY24 as we have sought to continue to lower inventory
levels which increased during 2022 in anticipation of the start-up of reactor
4. In H2 FY24 we returned to using less expensive Spanish radiata pine and
other wood chip grade wood for Accoya for Tricoya production.
Underlying other operating costs (excluding depreciation and amortisation)
increased from €31.6m to €32.3m. This is due to an increase in Tricoya
UK's operating costs compared to the prior year (€0.9m) due to ongoing
running costs being treated as operating expenditure in the year following the
introduction of Tricoya UK's hold period in H2 FY23. It is also the result of
increased investment in sales & marketing partially offset by lower
administrative operating costs as a result of the business transformation
programme.
Depreciation and amortisation charges increased by €1.3m to €9.6m
following commercial production from reactor 4 in September 2022.
Underlying finance expenses increased €1.2m to €4.4m due to higher
interest rates agreed during the November 2023 fundraise (explained further
below), higher market interest rates on the variable rate borrowings during
the year, primarily before the November 2023 fundraise and interest on Tricoya
UK's NatWest facility not being capitalised post the introduction of the hold
period for Tricoya UK in H2 FY23.
An impairment loss (exceptional non-cash item) of €7.0m was recognised in
the first half relating to the Tricoya segment (2023: €86.0m) due to an
increase in the discount rate used following an increase in market interest
rates and the Company specific market volatility factor.
An exceptional operating cost of €1.2m has been recognised in the year for
restructuring costs relating to the business transformation programme.
An exceptional financial income of €0.2m has been recognised related to US
dollars held as cash for investment into Accoya USA, following the Fundraise
in November 2023. 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. This treatment is similar to the
prior year where an exceptional income of €1.4m was recognised.
An exceptional financial gain of €0.3m has been recognised in relation to
the revaluation of the Value Recovery Instrument (''VRI'') (see note 23).
Accsys' share of its US joint venture (Accoya USA LLC) net loss, which is
accounted for using the equity method, increased by €3.1m to €4.1m (2023
loss: €1.0m) as the entity increased its pre-operating activity through the
year as it progresses towards commercial operations in summer 2024.
Adjusted EBITDA (Group EBITDA before exceptional items and including 60% of
the US Joint venture's EBITDA) decreased by €18.1m to €4.8m due to the
lower gross profit generated, referred to above and a €3m proportional
increase in the US Joint venture's EBITDA loss as it progresses its
pre-operational activities.
Underlying loss before tax increased by €20.4m to €9.4m (2023: profit of
€11.0m). After taking into account exceptional items (including the
impairment loss and restructuring cost), loss before tax amounted to €17.1m
(2023: €67.1m).
The tax charge of €0.8m was lower than the prior year (€2.8m) in line with
the lower profitability during the year.
Underlying loss per share increased to €0.04 per share (2023: profit of
€0.05 per share). A statutory loss per share was recognised of €0.08 per
share (2023: €0.19 per share).
Cash flow
Cash flows generated from operating activities before changes in working
capital decreased by €13.8m to €8.9.m (2023: €22.7m), following the
lower EBITDA generated during the year. Free cashflow (net cash from operating
activities less capex) improved to €3.7m inflow (2023: €13.6m outflow)
following a decrease in capex spend in the year, partially offset by lower
cash generated from operating activities.
Inventory levels decreased by €4.2m with management action taken to decrease
raw material levels during the year.
In November 2023, the Group completed a successful fundraise, raising new
gross proceeds of circa €24m and agreed an amendment and extension to its
bank facilities with ABN Amro. The proceeds from the fundraising allow Accsys
to complete delivery of the Accoya plant in Kingsport, USA, strengthen its
balance sheet and increase working capital headroom during the challenging
macro trading environment experienced during the year. The fundraise included:
- A placing and subscription of new ordinary shares raising gross
proceeds of approximately €13 million.
- The issue of approximately €21 million new Convertible Loan
Notes and the refinancing and discharge of the existing 2022 €10 million
convertible loan with De Engh BV Limited, the net raise of €11 million of
new gross proceeds. The new convertible loan notes have a 6 year term, carry a
fixed coupon of 9.5%, with interest rolled up and deferred for the first 2.5
years (see note 29 for further details).
- The ABN Amro facilities (€40.5 million term loan and €25
million revolving credit facility(RCF)) were extended by 18 months to 31 March
2026, and the $10 million cash collateral previously provided to ABN Amro was
released, with €7.5 million utilised to repay the term loan. The amended
facilities included an amortisation holiday until 30 June 2025, with rolled up
interest of 3% on the delayed repayments. The term loan interest rates were
amended to vary between 4.34% to 5.34% and the RCF margin to vary between 3%
and 4%. The amendment included certain minimum liquidity covenants, in
addition to the net leverage covenants and interest covenants previously
contracted (see note 29 for further details).
At 31 March 2024, the Group held cash balances of €27.4m, a €0.8m increase
in the year, attributable to the successful fundraise in November 2023
detailed above and positive operating cash generated during the year partially
offset by loan repayments on the ABN Amro term loan (€12m) which included
scheduled repayments of €4.5m and a repayment of €7.5m referred to above,
the repayment of the €5m previously drawn on the ABN Amro RCF and €5m was
invested into our US joint venture with Eastman (Accoya USA) during the year.
Financial position
Plant and machinery additions of €1.8m (2023: €21.4m) consisted primarily
of maintenance capex for the Arnhem plant.
Trade and other receivables were at a similar level to the prior year at
€17.6m (2023: €18.1m).
Trade and other payables reduced by €7.1m to €18.8m (2023: €25.9m),
attributable to a decrease in operational creditors, and capex payables
following the completion of the Arnhem expansion project and lower activity at
the Tricoya UK plant in Hull.
Amounts payable under loan agreements decreased to €60.2m during the year
(2023: €65.9m) following loan repayments on the ABN Amro loan (€12m), the
net increase in convertible loans of €11m and following the capital raise,
the repayment of the €5m drawn on the ABN Amro Revolving credit facility
which remains available headroom.
Net debt decreased by €7m in the year to €37.1m (2023: €44.1m) following
the successful capital raise in November 2023, with €5m invested into our US
Joint venture during the year.
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 for the 12 months from the date these
financial statements are approved (the 'going concern period'). As part of the
Group's going concern review, the Directors have assessed the Group's trading
forecasts, working capital and liquidity requirements, and bank facility
covenant compliance for the going concern period under a base case scenario
and a severe but plausible downside scenario.
The cash flow forecasts used for the going concern assessment represent the
Directors' best estimate of trading performance and cost implications in the
market based on current agreements, market experience and consumer demand
expectations. These forecasts indicate that, in order to continue as a going
concern, the Group is dependent on achieving a certain level of performance
relating to the production and sale of Accoya, and the management of its
working capital.
In both scenarios, the Directors have assumed no commitment will be made to
complete the construction and start-up of the Tricoya UK plant in Hull unless
the Board definitively determines to proceed with the project and appropriate
levels of funding arrangements are obtained to do so. In the base scenario,
financial support is included for ongoing care & maintenance costs, whilst
in the downside scenario, it is assumed that the Group discontinues its
financial support in relation to the Tricoya UK plant.
The Directors' have also considered the possible quantum and timing of funding
required to complete the plant currently being commissioned by Accoya USA LLC,
and for the initial operational working capital requirements of the entity.
Notwithstanding that the construction project benefits from certain
contractual measures in place with the lead engineering, construction and
procurement contractor, Accsys has a contractual obligation to fund its 60%
share of Accoya USA LLC on a pro rata basis with its joint venture partner
(Eastman Chemicals Company).
The Group is also dependent on the Group's financial resources including its
existing cash position, banking and finance facilities (see note 29 for
details).
The Directors considered a severe but plausible downside scenario against the
base case with reduced Accoya sales volumes and increased funding into Accoya
USA LLC and a reverse stress test was performed to determine the decrease in
Accoya sales volume from the Arnhem plant required to breach banking
covenants. The Directors do not expect the assumptions in the severe but
plausible downside scenario or the reverse stress test scenario to
materialise, but should they unfold, the Group has several mitigating actions
it can implement to manage its going concern risk, such as deferring
discretionary capital expenditure and implementing further cost reductions to
maintain a sufficient level of liquidity and covenant headroom during the
going concern period. The combined impact of the above downside scenarios and
mitigations does not trigger a minimum liquidity breach or covenant breach at
any point in the going concern period. In the reverse stress test, a decrease
of approximately 10% on Accoya sales volume from the Arnhem plant compared to
an equivalent prior year period or a decrease of approximately 20% compared to
the equivalent base scenario period (both excluding North American sales which
move to the Kingsport site once operational) was required to reach the banking
covenant breach point.
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, after carefully considering all the factors explained
in this statement, 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.
Hans Pauli
Interim Chief Financial Officer
25 June 2024
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year ended 31 March
2024
2024 2024 2024 2023 2023 2023
€'000 €'000 €'000 €'000 €'000 €'000
Note Underlying Exceptional items* Total Underlying Exceptional items* Total
Accoya wood revenue 123,139 - 123,139 143,493 - 143,493
Tricoya panel revenue 4,134 - 4,134 1,374 - 1,374
Licence revenue 77 - 77 329 - 329
Other revenue 8,820 - 8,820 16,822 - 16,822
Total revenue 3 136,170 - 136,170 162,018 - 162,018
Cost of sales (95,287) - (95,287) (106,852) - (106,852)
Gross profit 40,883 - 40,883 55,166 - 55,166
Other operating costs 4 (41,927) (8,200) (50,127) (39,878) (87,453) (127,331)
Operating (loss)/ profit 8 (1,044) (8,200) (9,244) 15,288 (87,453) (72,165)
Finance income 9 138 - 138 - - -
Finance expense 10 (4,418) 530 (3,888) (3,224) 9,350 6,126
Share of net loss from joint venture accounted for using the equity method 28 (4,100) - (4,100) (1,036) - (1,036)
(Loss)/ Profit before taxation (9,424) (7,670) (17,094) 11,028 (78,103) (67,075)
Tax expense 11 (765) - (765) (2,787) - (2,787)
(Loss)/ Profit from continuing operations (10,189) (7,670) (17,859) 8,241 (78,103) (69,862)
Items that may be reclassified to profit or loss
(Loss)/ gain arising on translation of foreign operations 2 - 2 (61) - (61)
Gain/(loss) arising on foreign currency cash - - - 42 - 42
flow hedges
Total other comprehensive (loss)/gain 2 - 2 (19) - (19)
Total comprehensive gain/(loss) for the year (10,187) (7,670) (17,857) 8,222 (78,103) (69,881)
Total comprehensive gain/(loss) for the year
is attributable to:
Owners of Accsys Technologies PLC (10,187) (7,670) (17,857) 9,509 (48,566) (39,057)
Non-controlling interests - - - (1,287) (29,537) (30,824)
Total comprehensive gain/(loss) for the year (10,187) (7,670) (17,857) 8,222 (78,103) (69,881)
Basic profit/(loss) per ordinary share 13 €(0.04) €(0.08) €0.05 €(0.19)
Diluted profit/(loss) per ordinary share 13 - - €0.04 -
The notes form an integral part of these financial statements.
* See note 5 for details of exceptional items.
Accsys Technologies PLC
Consolidated statement of financial position as at 31 March 2024
Registered Company 05534340
Note 2024 2023
€'000 €'000
Non-current assets
Intangible assets 15 10,048 10,491
Investment accounted for using the equity method 28 31,685 30,859
Property, plant and equipment 16 93,474 106,051
Right of use assets 17 3,736 4,044
Financial asset at fair value through profit or loss 18 - -
138,943 151,445
Current assets
Inventories 21 25,743 29,946
Trade and other receivables 22 17,612 18,075
Cash and cash equivalents 29 27,427 26,593
Corporation tax receivable 250 459
71,032 75,073
Current liabilities
Trade and other payables 24 (18,797) (25,896)
Obligation under lease liabilities 17 (690) (980)
Short term borrowings 29 - (9,500)
Corporation tax payable (6,719) (6,082)
(26,206) (42,458)
Net current assets 44,826 32,615
Non-current liabilities
Obligation under lease liabilities 17 (3,648) (3,755)
Other long term borrowings 29 (60,204) (56,420)
Financial guarantee 31 - -
Financial liability at amortised cost 23 (1,102) (1,383)
(64,954) (61,558)
Net assets 118,815 122,502
Equity
Share capital 25 11,976 10,963
Share premium account 262,394 250,717
Other reserves 26 114,743 114,743
Accumulated loss (270,421) (254,042)
Own shares (8) (8)
Foreign currency translation reserve 131 129
Capital value attributable to owners of Accsys Technologies PLC 118,815 122,502
Non-controlling interest in subsidiaries 27 - -
Total equity 118,815 122,502
The financial statements were approved by the Board of Directors on 25 June
2024 and signed on its behalf by
Jelena Arsic van Os
Roland Waibel
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 2024
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
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
Loss for the year - - - - - (17,859) (17,859) - (17,859)
Other comprehensive gain/ (loss) for the year - - - - 2 - 2 - 2
Share based payments - - - - - 1,480 1,480 - 1,480
Shares issued 1,013 - - - 1,013 - 1,013
Premium on shares issued 12,319 - - - - 12,319 - 12,319
Share issue costs - (642) - - - - (642) - (642)
Aquisition of subsidiary shares from non-controlling interests - - - - - - - - -
Balance at
31 March 2024
11,976 262,394 114,743 (8) 131 (270,421) 118,815 - 118,815
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 prior year (see note
27).
Foreign currency translation reserve arises on the re-translation of the
Group's USA subsidiary's net assets which are denominated in a different
functional currency, being US dollars.
Accumulated losses represent the cumulative loss of the Group attributable to
the owners of the parent.
The notes form an integral part of these financial statements.
Accsys Technologies PLC
Consolidated statement of cash flows for the year ended 31 March 2024
2024 2023
€'000 €'000
(Loss)/ profit before taxation (17,094) (67,075)
Adjustments for:
Amortisation of intangible assets 828 780
Depreciation of property, plant and equipment, and right of use assets 8,751 7,512
Impairment loss 7,000 86,000
Net finance expense / (income) 3,750 (6,126)
Equity-settled share-based payment expenses 1,480 366
Accsys portion of Licence fee received from joint venture - 300
Share of net loss of joint venture 4,100 1,036
Currency translation losses / (gains) 108 (70)
Cash inflows from operating activities before changes in working capital 8,923 22,723
(Increase) / decrease in trade and other receivables 393 (1,154)
(Increase) / decrease in inventories 4,203 (9,596)
Increase / (decrease) in trade and other payables (6,403) 4,673
Net cash from operating activities before tax 7,116 16,646
Tax received 81 87
Net cash from operating activities 7,197 16,733
Cash flows from investing activities
Investment in property, plant and equipment (3,090) (29,773)
Foreign exchange deal settlement related to hedging of Hull Capex - (81)
Investment in intangible assets (385) (437)
Investment in joint venture (4,926) (28,979)
Net cash (used in) investing activities (8,401) (59,270)
Cash flows from financing activities
Proceeds from loans 9,901 10,000
Other finance costs (36) (250)
Interest Paid (2,774) (2,429)
Repayment of lease liabilities (1,044) (940)
Repayment of loans/rolled up interest (17,000) -
Proceeds from issue of share capital 13,332 20,258
Share issue costs (642) (1,086)
Net cash from financing activities 1,737 25,553
Net decrease in cash and cash equivalents 533 (16,984)
Effect of exchange rate changes on cash and cash equivalents 301 1,523
Opening cash and cash equivalents 26,593 42,054
Closing cash and cash equivalents 27,427 26,593
The notes form an integral part of these financial statements.
Accsys Technologies PLC
Notes to the financial statements for the year ended 31 March 2024
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 2024
or 31 March 2023. Statutory accounts for the year ended 31 March 2023 have
been filed with the Registrar of Companies and those for the year ended 31
March 2024 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 2023 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 2024 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
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 for the 12 months from the date these
financial statements are approved (the 'going concern period'). As part of the
Group's going concern review, the Directors have assessed the Group's trading
forecasts, working capital and liquidity requirements, and bank facility
covenant compliance for the going concern period under a base case scenario
and a severe but plausible downside scenario.
The cash flow forecasts used for the going concern assessment represent the
Directors' best estimate of trading performance and cost implications in the
market based on current agreements, market experience and consumer demand
expectations. These forecasts indicate that, in order to continue as a going
concern, the Group is dependent on achieving a certain level of performance
relating to the production and sale of Accoya, and the management of its
working capital.
In both scenarios, the Directors have assumed no commitment will be made to
complete the construction and start-up of the Tricoya UK plant in Hull unless
the Board definitively determines to proceed with the project and appropriate
levels of funding arrangements are obtained to do so. In the base scenario,
financial support is included for ongoing care & maintenance costs, whilst
in the downside scenario, it is assumed that the Group discontinues its
financial support in relation to the Tricoya UK plant.
The Directors' have also considered the possible quantum and timing of funding
required to complete the plant currently being commissioned by Accoya USA LLC,
and for the initial operational working capital requirements of the entity.
Notwithstanding that the construction project benefits from certain
contractual measures in place with the lead engineering, construction and
procurement contractor, Accsys has a contractual obligation to fund its 60%
share of Accoya USA LLC on a pro rata basis with its joint venture partner
(Eastman Chemicals Company).
The Group is also dependent on the Group's financial resources including its
existing cash position, banking and finance facilities (see note 29 for
details).
The Directors considered a severe but plausible downside scenario against the
base case with reduced Accoya sales volumes and increased funding into Accoya
USA LLC and a reverse stress test was performed to determine the decrease in
Accoya sales volume from the Arnhem plant required to breach banking
covenants. The Directors do not expect the assumptions in the severe but
plausible downside scenario or the reverse stress test scenario to
materialise, but should they unfold, the Group has several mitigating actions
it can implement to manage its going concern risk, such as deferring
discretionary capital expenditure and implementing further cost reductions to
maintain a sufficient level of liquidity and covenant headroom during the
going concern period. The combined impact of the above downside scenarios and
mitigations does not trigger a minimum liquidity breach or covenant breach at
any point in the going concern period. In the reverse stress test, a decrease
of approximately 10% on Accoya sales volume from the Arnhem plant compared to
an equivalent prior year period or a decrease of approximately 20% compared to
the equivalent base scenario period (both excluding North American sales which
move to the Kingsport site once operational) was required to reach the banking
covenant breach point.
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, after carefully considering all the factors explained
in this statement, 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
A subsidiary is an entity over which the Group has control. Control is evident
where the Group is exposed to, or has rights to, variable returns from its
involvement with that entity and has the ability to affect those returns
through its power over that entity. The consolidated financial statements
present the results of the Group including the results of Accsys Technologies
plc and its subsidiaries and joint venture. All Intra-group transactions and
balances are eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the acquisition 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 operations acquired or disposed are included
in the consolidated statement of comprehensive income from the effective date
of acquiring control or up to the effective date of disposal.
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.
Non-controlling interests are measured, at initial recognition, as the
non-controlling proportion of the fair values of the assets and liabilities
recognised at acquisition.
After initial recognition, non-controlling interests are measured as the
aggregate of the value at initial recognition and their subsequent
proportionate share of profits and losses less any distributions made. Changes
in the Group's interests in subsidiaries that do not result in a change in
control are accounted for as equity transactions. Any resulting difference
between the amount by which the non-controlling interests are adjusted and the
fair value of the consideration payable or receivable is recognised directly
in equity and attributed to the shareholders.
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.
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.
Other revenue
Included within other revenue are raw wood and acetic acid sales. 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.
Revenue is recognised when the Group's performance obligations have been
satisfied.
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 28.
Other intangible assets
Intellectual property rights, including patents, which cover a portfolio of
novel processes and products, are shown in the financial statements at cost
less accumulated amortisation and any amounts by which the carrying value is
assessed during an annual review to have been impaired. At present, the useful
economic life of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's activities
including new processes, process improvements, identifying new species and
improving the Group's existing products. Research costs are expensed as
incurred. Development costs are capitalised when all of the criteria set out
in IAS 38 'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to generate future
economic benefits, ability to complete the development and ability to reliably
measure the expenditure) have been met. These internal development costs are
amortised on a straight line basis over their useful economic life, between 8
and 20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any impairment charged. Cost includes the original purchase price of the
asset as well as costs of bringing the asset to the working condition and
location of its intended use. 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
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
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. In the prior year, Cash and cash equivalents included cash pledged
to ABN Amro as collateral for the $20million Letter of credit provided to FHB.
See note 31.
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.
Adjusted EBITDA
Underlying EBITDA plus the Group's attributable share of our USA joint
venture's underlying EBITDA. Adjusted EBITDA provides a measure of the
cash-generating ability of the business that is comparable from year to year.
Adjusted EBIT
Underlying EBIT plus the Group's attributable share of our USA joint venture's
underlying EBIT. Adjusted 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. See note 29.
Free cashflow
Net cash from operating activities less investment in property, plant and
equipment. See note 29.
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).
Investment in joint venture
The Group, together with Eastman Chemical Company formed a new Company, Accoya
USA LLC, 60% owned by Accsys and 40% owned by Eastman. The two parties are
assessed to jointly control the entity, due to the operating agreement
requiring both joint venture partners to approve key business decisions. See
note 28 for further details.
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 2023:
• IFRS 17 insurance contracts;
• Definition of Accounting Estimates - Amendments
to IAS 8;
· OECD Pillar Two Rules
· 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 2024 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 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
Underlying Exceptional items
TOTAL
Underlying Exceptional items
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue 123,139 - 123,139 143,494 - 143,494
Licence revenue - - - 300 - 300
Other revenue 8,770 - 8,770 16,773 - 16,773
Total Revenue 131,909 - 131,909 160,567 - 160,567
Cost of sales (91,393) - (91,393) (105,608) - (105,608)
Gross profit 40,516 - 40,516 54,959 - 54,959
Other operating costs (28,859) (1,000) (29,859) (27,912) - (27,912)
Profit from operations 11,657 (1,000) 10,657 27,047 - 27,047
Profit from operations / EBIT 11,657 (1,000) 10,657 27,047 - 27,047
Depreciation and amortisation 8,947 - 8,947 7,695 - 7,695
EBITDA 20,604 (1,000) 19,604 34,742 - 34,742
Reconciliation of Accoya Adjusted EBIT and EBITDA
Year ended 31 March 2024 Year ended 31 March 2023
€'000 €'000
Profit / (loss) from operations / Underlying EBIT 11,657 27,047
Accoya USA EBIT (3,993) (911)
Adjusted EBIT 7,664 26,136
Year ended 31 March 2024 Year ended 31 March 2023
€'000 €'000
Underlying EBITDA 20,604 34,742
Accoya USA EBITDA (3,724) (700)
Adjusted EBITDA 16,880 34,042
Revenue includes the sale of Accoya, licence income and other revenue,
principally relating to the sale of acetic acid. 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.
Average headcount = 166 (2023: 175)
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.
2024 2023
€'000 €'000
Accoya segmental underlying EBITDA 20,604 34,742
Accoya underlying Licence revenue - (300)
Accoya segmental underlying EBITDA (excluding. Licence Income) 20,604 34,442
Accoya segmental underlying gross profit 40,516 54,959
Accoya underlying Licence revenue - (300)
Accoya manufacturing gross profit 40,516 54,659
Accoya Manufacturing Margin 30.7% 34.1%
2024 2023
Accoya Manufacturing gross profit - €'000 40,516 54,659
Accoya sales volume - m3 56,568 63,344
Accoya manufacturing gross profit per m3 716 863
Tricoya
Tricoya Segment
Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
Underlying
Underlying
TOTAL
TOTAL
Exceptional items Exceptional items
€'000 €'000 €'000 €'000 €'000 €'000
Tricoya panel revenue 4,134 - 4,134 1,373 - 1,373
Licence revenue 77 - 77 29 - 29
Other revenue 50 - 50 49 - 49
Total Revenue 4,261 - 4,261 1,451 - 1,451
Cost of sales (3,894) - (3,894) (1,244) - (1,244)
Gross profit 367 - 367 207 - 207
Other operating costs (6,961) (7,200) (14,161) (5,823) (86,000) (91,823)
Loss from operations (6,594) (7,200) (13,794) (5,616) (86,000) (91,616)
Loss from operations (6,594) (7,200) (13,794) (5,616) (86,000) (91,616)
Depreciation and amortisation 566 - 566 527 - 527
Impairment - 7,000 7,000 - 86,000 86,000
EBITDA (6,028) (200) (6,228) (5,089) - (5,089)
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.
Average headcount = 6 (2023: 23), 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 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
Underlying TOTAL Underlying TOTAL
Exceptional items Exceptional items
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (4,617) - (4,617) (4,681) (1,453) (6,134)
Loss from operations (4,617) - (4,617) (4,681) (1,453) (6,134)
Loss from operations (4,617) - (4,617) (4,681) (1,453) (6,134)
Depreciation and amortisation - - - - - -
EBITDA (4,617) - (4,617) (4,681) (1,453) (6,134)
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. The corporate
segment has been adjusted in line with how it is reflected in internal
reporting with some operating costs being reclassified to the Accoya segment.
The prior year has also been amended to reflect the change in internal
reporting.
Average headcount = 49 (2023: 33)
Research and Development
Research & Development Segment
Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
Underlying TOTAL Underlying TOTAL
Exceptional items Exceptional items
€'000 €'000 €'000 €'000 €'000 €'000
Accoya wood revenue - - - - - -
Licence revenue - - - - - -
Other revenue - - - - - -
Total Revenue - - - - - -
Cost of sales - - - - - -
Gross result - - - - - -
Other operating costs (1,490) - (1,490) (1,458) - (1,458)
Loss from operations (1,490) - (1,490) (1,458) - (1,458)
Loss from operations (1,490) - (1,490) (1,458) - (1,458)
Depreciation and amortisation 66 - 66 67 - 67
EBITDA (1,424) - (1,424) (1,391) - (1,391)
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 = 15 (2023: 13)
Total
Total
Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
Underlying Exceptional items
TOTAL
Underlying Exceptional items
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Accoya/Tricoya revenue 127,273 - 127,273 144,867 - 144,867
Licence revenue 77 - 77 329 - 329
Other revenue 8,820 - 8,820 16,822 - 16,822
Total Revenue 136,170 - 136,170 162,018 - 162,018
Cost of sales (95,287) - (95,287) (106,852) - (106,852)
Gross profit 40,883 - 40,883 55,166 - 55,166
Other operating costs (41,927) (8,200) (50,127) (39,878) (87,453) (127,331)
Profit/ (loss) from operations (1,044) (8,200) (9,244) 15,288 (87,453) (72,165)
Finance income 138 - 138 - - -
Finance expense (4,418) 530 (3,888) (3,224) 9,350 6,126
Investment in joint venture (4,100) - (4,100) (1,036) - (1,036)
Profit/(Loss) before taxation (9,424) (7,670) (17,094) 11,028 (78,103) (67,075)
See note 5 for details of Exceptional items.
Reconciliation of Underlying EBIT and EBITDA
Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2024 Year ended 31 March 2023 Year ended 31 March 2023 Year ended 31 March 2023
TOTAL Exceptional items
Exceptional items
TOTAL
€'000 €'000 €'000 €'000 €'000 €'000
Profit / (loss) from operations / EBIT (1,044) (8,200) (9,244) 15,288 (87,453) (72,165)
Depreciation and amortisation 9,579 - 9,579 8,292 - 8,292
Impairment - 7,000 7,000 - 86,000 86,000
EBITDA 8,535 (1,200) 7,335 23,580 (1,453) 22,127
Reconciliation of Adjusted EBIT and EBITDA
Year ended 31 March 2024 Year ended 31 March 2023
€'000 €'000
Profit / (loss) from operations / Underlying EBIT (1,044) 15,288
Accoya USA EBIT (3,993) (911)
Adjusted EBIT (5,037) 14,377
Year ended 31 March 2024 Year ended 31 March 2023
€'000 €'000
Underlying EBITDA 8,535 23,580
Accoya USA EBITDA (3,724) (700)
Adjusted EBITDA 4,811 22,880
Analysis of Revenue by geographical area of customers: 2024 2023
€'000 €'000
UK and Ireland 46,903 55,395
Rest of Europe 47,364 63,635
Americas 28,878 29,778
Rest of World 13,025 13,210
136,170 162,018
Revenue generated from two customers exceeded 10% of Group revenue of 2024.
These two customers represented 36% (€16,717,000) & 33% (€15,461,000)
of the revenue from the United Kingdom and Ireland, relating to Accoya
revenue. Revenue generated from two customers exceeded 10% of Group revenue of
2023. This included 35% (€19,230,000) & 33% (€18,547,000) 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
2024 2024 2024 2024 2024 2023 2023 2023 2023 2023
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Non-current assets 118,134 19,697 1,016 96 138,943 123,705 27,047 531 162 151,445
Current assets 43,552 3,162 18,711 5,607 71,032 52,699 3,872 13,630 4,872 75,073
Current liabilities (10,344) (11,705) (4,101) (56) (26,206) (23,413) (4,156) (14,833) (56) (42,458)
Net current assets/(liabilities) 33,208 (8,543) 14,610 5,551 44,826 29,286 (284) (1,203) 4,816 32,615
Non-current liabilities (1,979) (7,803) (55,137) (35) (64,954) (2,545) (8,665) (50,289) (59) (61,558)
Net assets/(liabilities) 149,363 3,351 (39,511) 5,612 118,815 150,446 18,098 (50,961) 4,919 122,502
The Investment accounted for using the equity method (Investment into Accoya
USA) is included in the Accoya segment. See note 28.
Analysis of non-current assets (other than financial assets and deferred tax):
2024 2023
€'000 €'000
UK 23,129 30,485
Other countries 111,583 116,729
Unallocated - Goodwill 4,231 4,231
138,943 151,445
The segmental assets in the current year were predominantly held in the UK ,
USA and mainland Europe (prior year UK, USA 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:
2024 2023
€'000 €'000
Sales and marketing 6,044 5,219
Research and development 1,490 1,458
Other operating costs 11,731 10,675
Administration costs 13,083 14,234
Exceptional Items 1,200 1,453
Other operating costs excluding depreciation and amortisation 33,548 33,039
Depreciation and amortisation 9,579 8,292
Impairment loss - exceptional item 7,000 86,000
Total other operating costs 50,127 127,331
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.
Other operating costs are those costs directly attributable to Accoya. This
includes staff costs for the Arnhem and Barry sites and support functions not
captured in Corporate, Sales and Marketing or general administrative costs for
the Arnhem and Barry sites.
During the period, €384,000 (2023: €437,000) of internal development &
patent related costs were capitalised and included in intangible fixed assets.
No internal costs have been capitalised in relation to strategic capex
projects in the current year. In the prior year, €171,000 of internal costs
were capitalised in relation to Arnhem's Accoya plant expansion project and
€566,000 of internal costs were capitalised in relation to our plant build
in Hull, UK. Both were included within tangible fixed assets.
Refer to Note 5 for description of exceptional costs.
The impairment loss is in relation to Tricoya assets, refer to note 5 and 16.
5. Exceptional items
2024 2023
€'000 €'000
Advisor fees in relation to Tricoya consortium reorganisation - (1,453)
Impairment of the Tricoya segment assets (7,000) (86,000)
Partial net derecogition of NatWest loan - 9,353
Revaluation / recognition of Valuation Recovery Instrument "VRI" liability 281 (1,383)
Foreign exchange differences on Corporate USD cash held for investment in to 249 1,380
USA JV- incl. in Finance expense
Restructuring costs (1,200) -
Total exceptional items (7,670) (78,103)
Exceptional Items
In the year:
- an exceptional operating cost of €1.2m (€1m in Accoya and
€0.2m in Tricoya) has been recognised for Restructuring costs relating to
decreasing the Group's Administrative operating cost base.
- An impairment loss (non-cash item) of €7.0m has been
recognised in the year relating to the Tricoya segment (FY23: €86.0m) due to
an increase in the discount rate to 14.25% used following an increase in
market interest rates and the Company specific market volatility factor. In
the prior year, an impairment of the Tricoya segment assets was recognised,
due to identification of additional time and costs (€35m) to complete the
plant; a decrease in the estimated maximum production capacity of the plant
once commercially operational from 30,000MT to 24,000MT; and the discount rate
applied was updated to 13.5%.
- Foreign exchange differences were recognised due to US dollars
held for investment into Accoya USA LLC. Following the November 2023 capital
raise (and in the prior year, 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 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.
- €0.3m relates to the revaluation of the Value Recovery
Instrument (''VRI''). See note 29 for further details.
In the prior year:
- an exceptional operating cost was recognised for advisor fees
associated with advising Accsys on acquiring the full ownership of TUK
(Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from its previous
Tricoya Consortium Partners.
- NatWest also agreed to restructure its TUK debt facility,
reducing the principal amount by €9.4m to €6m, under a new 7-year term.
This resulted in the derecognition of the balance drawn on the NatWest loan on
the date of the restructure of €15.4m and recognition of the new €6m loan.
- Separate to, and in addition to the amended €6m loan, NatWest is entitled
to obtain recovery, via the Value Recovery Instrument ("VRI") agreement, of up
to approximately €9.4m, on a contingent basis, depending on profitability of
the Tricoya UK plant once operational. A financial liability was recognised of
€1.4m in the prior year in respect of the VRI.
6. Employees
2024 2023
€'000 €'000
Staff costs (including Directors) consist of:
Wages and salaries 18,508 18,584
Social security costs 3,044 2,838
Other pension costs 1,357 1,573
Share based payments 1,494 201
24,403 23,196
Pension costs relate to defined contribution plan contributions.
The average monthly number of employees, including Executive Directors, during
the year was as follows:
2024 2023
Sales and marketing, administration, research and engineering 122 142
Operating 114 103
236 245
7. Directors' remuneration
2024 2023
€'000 €'000
Directors' remuneration consists of:
Directors' emoluments 1,450 1,170
Company contributions to money purchase pension schemes 52 38
1,502 1,208
Compensation of key management personnel included the following amounts:
Salary, bonus and short term benefits Share based payments charge
2024 2023
Pension Total Total
€'000 €'000 €'000 €'000 €'000
Jelena Arsic van Os 477 27 171 675 -
Steven Salo 401 25 27 453 -
Rob Harris - - - - 619
William Rudge - - - - 100
878 52 198 1,128 719
The Group made contributions to one (2023: one) Director's personal pension
plan, with Jelena Arsic van Os receiving cash in lieu of pension.
The figures in the above table are impacted by foreign exchange noting that
the remuneration for J Arsic van Os and S Salo are denominated in Pounds
Sterling.
The compensation in the above table for J Arsic Van Os represents the period
in which she was appointed as a director and not a full year.
The compensation also includes a LTIP buy-out award in respect of remuneration
at her former employer that she forfeited as a result of joining Accsys, of
131,557 shares which vests on 27 June 2024.
Key management personnel includes the executive directors.
8. Operating profit
2024 2023
€'000 €'000
This has been arrived at after charging/(crediting):
Staff costs 24,403 23,196
Depreciation of property, plant and equipment, and right of use assets 8,751 7,512
Impairment 7,000 86,000
Amortisation of intangible assets 828 780
Operating lease rentals 40 77
Foreign exchange losses / (gains) 108 (70)
Research & Development (excluding staff costs) 700 469
Fees payable to the Company's auditors for the audit of the Group's annual 193 183
financial statements
Fees payable to the Company's auditors for other services:
- audit of the Company's subsidiaries pursuant to legislation 212 205
- audit related assurance services - -
Fees payable to Component auditor for audit of subsidiaries: 190 182
Total audit and audit related services: 595 570
9. Finance income
2024 2023
€'000 €'000
Interest receivable on bank and other deposits 138 -
10. Finance expense
2024 2023
€'000 €'000
Arnhem land and buildings lease finance charge 159 179
Interest on loans 3,536 2,500
Interest on lease liabilities 133 115
Other finance expenses 590 430
Total underlying finance expenses 4,418 3,224
Exceptional items
Foreign exchange (gain) on Corporate USD cash held for investment in to USA JV (249) (1,380)
Partial derecogition of NatWest loan - (9,353)
Revaluation / recognition of Valuation Recovery Instrument "VRI" (281) 1,383
Total Finance expense / (income) 3,888 (6,126)
11. Tax expense
2024 2023
€'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 expense in respect of prior years 121 -
Research and development tax (credit) in respect of current year - (121)
121 (121)
Overseas tax at rate of 15% 8 32
Overseas tax at rate of 25% 636 2,876
Deferred Tax
Utilisation of deferred tax asset - -
Total tax charge reported in the statement of comprehensive income 765 2,787
2024 2023
€'000 €'000
(b) The tax charge for the period is higher than the standard rate of
corporation tax in the UK (2024: 25%, 2023: 19%) due to:
Profit/(Loss) before tax (17,094) (67,075)
Expected tax charge at 25% (2023 - 19%) (4,273) (12,744)
Expenses not deductible in determining taxable profit - 148
Tricoya segment assets impairment 1,750 16,340
Tax (income)/losses for which no deferred income tax asset was 3,159 (1,654)
(utilised)/recognised
Effects of overseas taxation 8 818
Research and development tax charge/ (credit) in respect of prior years 121 3
Research and development tax (credit) in respect of current year - (124)
Total tax charge reported in the statement of comprehensive income 765 2,787
Deferred tax assets Deferred tax liabilities
€ '000 2024 2023 2024 2023
At 1 April 621 484 (621) (484)
Credited/ (charged) to the consolidated income statement (112) 137 112 (137)
At 31 March 509 621 (509) (621)
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
2024 2023
€'000 €'000
Final Dividend €Nil (2023: €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.
2024 2024 2023 2023
Underlying Total Underlying Total
Basic earnings per share
Weighted average number of Ordinary shares in issue ('000) 227,911 227,911 210,693 210,693
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC (10,189) (17,859) 9,528 (39,038)
(€'000)
Basic profit/(loss) per share €(0.04) €(0.08) €0.05 €(0.19)
Diluted earnings per share
Weighted average number of Ordinary shares in issue ('000) - - 210,693 -
Equity options attributable to BGF (see note 30) - -* 8,449 -*
Equity options attributable to convertible loan note issued (see note 29) - - - -
Weighted average number of Ordinary shares in issue and potential ordinary - - 219,142 -
shares ('000)
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC - - 9,528 -
(€'000)
Diluted profit/(loss) per share - -* €0.04 -*
* 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 and convertible loan notes in note 29,
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 2024 2023 2024 2023
19 September 2013 (LTIP) - 443,675 - 0.5
24 June 2016 (LTIP) 130,099 130,099 2.3 3.3
20 June 2017 (LTIP) 100,651 100,651 3.3 4.3
18 June 2018 (LTIP) 61,407 185,840 4.3 5.3
15 July 2020 (LTIP) - 850,540 6.3 7.3
23 June 2021 (LTIP)(1) 415,079 511,112 7.3 8.3
12 July 2022 (LTIP) 263,182 352,486 8.3 9.3
28 July 2023 (LTIP) 1,343,091 - 9.3 -
Total 2,313,509 2,574,403 8.0 6.1
1 - 415,079 nil cost options are outstanding in the 2021 LTIP award at 31
March 2024 but 38,546 options are estimated to vest on the vesting date in the
2024 calendar year.
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at 01 April 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
Granted during the year €0.00 1,438,216
Forfeited during the year €0.00 (1,131,001)
Exercised during the year €0.00 (568,109)
Expired during the year €0.00 -
Outstanding at 31 March 2024 €0.00 2,313,509
The exercise price of options outstanding at the end of the year was €nil
(for LTIP options) (2023: €nil) and their weighted average contractual life
was 8.0 years (2023: 6.1 years).
Of the total number of options outstanding at the end of the year 292,157
(2023: 860,265) 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. No nil cost options remain as at 31
March 2024 after allowing for 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 2024 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 2024 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. 61,407 nil cost options remain as at 31
March 2024 after allowing for forfeitures and options exercised in the year.
2020 LTIP Award performance conditions and 2021 outcome
The LTIP in 2020 awarded 1,326,966 nil cost options and no share options
vested in the financial year ended 31 March 2024.
Awards made in July 2021 and LTIP Award performance conditions
During the financial year ended 31 March 2022, 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 prior year, a total of 620,698 LTIP awards were made 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.
Awards made in July 2023 and LTIP Award performance conditions
During the year, a total of 1,438,216 LTIP awards were made to members of the
Senior Management team including the Executive Directors:
The performance targets for 1,306,659 of these awards are as follows:
Metric Weighting (% of award) Threshold Maximum
Vesting (% of maximum) 25% 100%
Cumulative Sales Revenue (FY24 to FY26) (€) 45% €500m €600m
Underlying EBITDA per share (€) 45% 0.18 0.20
ESG - improvement in reporting ratings 10% 6% improvement in 9% 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.
· Sales Revenue excludes revenue from Accoya USA LLC.
The remaining 131,557 of these awards related to a buy-out award granted to
Jelena Arsic van Os, the Group's CEO, in respect of remuneration forfeited at
her former employer as a result of joining Accsys. The awards vest on 27 June
2024 and have no other vesting criteria. The fair value of these options were
€1.22 on their Grant date.
Element Element A Element B Element D
(Cumulative sales revenue)
(Underlying EBITDA per share)
(ESG Reporting Metrics)
Grant date 28 Jul 23 28 Jul 23 28 Jul 23
Share price at grant date (€) 1.24 1.24 1.24
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) Sales revenue EBITDA per share ESG reporting metrics
Risk free rate 2.755% 2.755% 2.755%
Expected volatility 20% 20% 20%
Expected dividend yield 0% 0% 0%
Fair value of option € 1.24 € 1.24 € 1.24
All of the above awards, made in summer 2023 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.
Employee Benefit Trust - Share bonus award
190,492 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 2022 to 31 March
2023, 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 2024 (subject to certain other provisions
including regulations, good-leaver, take-over and Remuneration Committee
discretion provisions). As at 31 March 2024, the Employment Benefit Trust was
consolidated by the Company and the 190,492 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 the maximum amount available for
subscription by any employee is €5,000 per annum. 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. 202,059 matching shares were issued to
employees in January 2024. No new subscription was opened during the year
ended 31 March 2024.
15. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
€'000 €'000 €'000 €'000
Cost
At 01 April 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
Additions 50 335 - 385
At 31 March 2024 7,749 75,707 4,231 87,687
Accumulated amortisation
At 01 April 2022 2,894 73,137 - 76,031
Amortisation 385 395 - 780
At 31 March 2023 3,279 73,532 - 76,811
Amortisation 399 429 - 828
At 31 March 2024 3,678 73,961 - 77,639
Net book value
At 31 March 2024 4,071 1,746 4,231 10,048
At 31 March 2023 4,420 1,840 4,231 10,491
At 31 March 2022 4,748 1,855 4,231 10,834
Refer to note 16 for the recoverability assessment of these intangible assets.
16. Property, plant and equipment
Land and Plant and Office
buildings machinery equipment Total
€'000 €'000 €'000 €'000
Cost or valuation
At 01 April 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
Additions - 1,779 333 2,112
Reclassification - (3,669) (451) (4,120)
At 31 March 2024 17,976 206,931 4,579 229,486
Accumulated depreciation
At 01 April 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
Charge for the year 358 6,847 482 7,687
Foreign currency translation gain - - 2 2
Impairment loss - 7,000 - 7,000
Reclassification - (3,669) (451) (4,120)
At 31 March 2024 2,069 131,070 2,873 136,012
Net book value
At 31 March 2024 15,907 75,861 1,706 93,474
At 31 March 2023 16,265 87,929 1,857 106,051
At 31 March 2022 16,623 157,950 2,088 176,661
Plant and machinery assets with a net book value of €17,851,000 are held as
assets under construction and are not depreciated, relating to the Hull Plant
(31 March 2023: €24,851,000).
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 14.25% (31 March 2023:
13.5%) to determine their present value. A cash flow projection period of 7
years was used for the Tricoya segment calculation to reflect the future
cashflows of the plant, considering the estimated hold period, remaining
completion activities and production ramp-up.
The key assumptions used in the value in use calculations are:
- the manufacturing revenues, operating margins and future licence
fees estimated by management;
- the timing of completion of the Tricoya Hull plant;
- the timing of completion of construction of additional
facilities (and associated output);
- forecast UK natural gas prices;
- the long term growth rate; and
- the discount rate.
The Directors have determined that an impairment of €93 million should be
recognised in the Tricoya CGU, of which €7 million was recognised in the
year ended 31 March 2024.
The remaining recoverable amount of the Tricoya CGU at 31 March 2024 is
€20m.
The increase in the impairment of the Tricoya segment assets is caused by an
increase in market indicators & interest rates used to calculate the
discount rate utilised in the value in use calculation. The discount rate
increased by 0.75% to 14.25% (13.5% at 31 March 2023).
Key assumptions applied to the Tricoya CGU were as follows:
• a discount rate of 14.25%;
• 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 2024 (period in which no
construction activities is performed); and
• a long-term growth rate of 2%.
The impact the following changes to these key assumptions would have, if made
in isolation, on the impairment calculated for
the Tricoya CGU is as follows:
• a 1% increase in the discount rate: increase of €6m
• a 1% decrease in the long-term growth rate : increase of €3m
• a 12-month extension in the hold period : increase of €8m
• a 6,000MT increase in the production capacity : decrease of €18m
• 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
2024 2023
€'000 €'000
Right-of-use assets
Properties 2,762 2,880
Equipment 973 1,148
Motor Vehicles 1 16
3,736 4,044
Additions to the right-of-use assets during the financial year were €757,000
(2023: €590,000).
Minimum lease payments
2024 2023
€'000 €'000
Amounts payable under lease liabilities:
Within one year 771 1,132
In the second to fifth years inclusive 2,364 2,085
After five years 3,242 3,502
Less: future finance charges (2,039) (1,984)
Present value of lease obligations 4,338 4,735
(ii) Amounts recognised in the statement of profit and loss
The statement of comprehensive income shows the following amounts relating to
leases:
2024 2023
€'000 €'000
Depreciation charge of right-of-use assets
Properties 428 893
Equipment 625 255
Motor Vehicles 11 34
1,064 1,182
Interest expense (included in finance cost) 292 294
Expense relating to short-term leases (included in cost of goods sold and 22 60
administrative expenses)
Expense relating to leases of low-value assets that are not shown above as 18 18
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 2024 was €1,044,000 (2023: €940,000)
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
2024 2023
€'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.
There continues to be no active market for these shares as at 31 March 2024.
As such a reliable fair value cannot be calculated and the investment is
carried at a nil fair value (2023:
nil).
A total of 498,522 shares were held at 31 March 2024.
19. Deferred taxation
The Group has a recognised deferred tax asset of €509,000 (2023: €621,000)
offsetting a recognised deferred tax liability of €509,000 (2023:
€621,000). See note 11.
The Group also has an unrecognised deferred tax asset of €71m (2023: €62m)
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
2024 2023
€'000 €'000
Raw materials and work in progress 18,214 24,220
Finished goods 7,529 5,726
25,743 29,946
The amount of inventories recognised as an expense during the year was
€75,018,000 (2023: €89,357,000).
22. Trade and other receivables
2024 2023
€'000 €'000
Trade receivables 14,044 14,398
Other receivables 1,616 1,154
VAT receivable 874 1,472
Prepayments 1,078 1,051
17,612 18,075
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 €1,765,000 of the
trade and other receivables denominated in US Dollars (2023: €1,633,000).
The age of receivables past due but not impaired is as follows:
2024 2023
€'000 €'000
Up to 30 days overdue 714 1,361
Over 30 days and up to 60 days overdue 117 290
Over 60 days and up to 90 days overdue 17 -
Over 90 days overdue - 14
848 1,665
The Group over the past couple of years has not experienced any bad debt.
Based on the current debtor profile the Group does not expect any bad debts to
occur. As a result of this, no material expected credit losses are expected
and therefore no ECL provision has been provided for within these financial
statements.
23. Financial liability at amortised cost
2024 2023
€'000 €'000
Value Recovery Instrument ("VRI") 1,102 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 29). 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
2024 2023
€'000 €'000
Trade payables 11,824 17,942
Other taxes and social security payable 847 1,083
Accruals and deferred income 6,126 6,871
18,797 25,896
25. Share capital
2024 2023
€'000 €'000
Allotted - Equity share capital
239,518,372 Ordinary shares of €0.05 each (2023: 219,381,693 Ordinary shares 11,976 10,963
of €0.05 each)
11,976 10,963
All ordinary shares are called up, allotted and fully paid.
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).
In the year ended 31 March 2024:
Between July and February, 790,339 Shares were issued following the exercise
of nil cost options, granted under the Company's 2013 Long Term Incentive Plan
('LTIP').
In November 2023, 19,144,281 ordinary shares were issued as part of the
capital raise along with a debt extension package (see note 29) to allow
Accsys to commence commercial operations of its North American Accoya plant in
Kingsport, USA, strengthen its balance sheet and increase working capital in
the face of a challenging macro trading environment.
In January 2024, following the subscription by employees in the prior year for
shares under the Employee Share Participation Plan (the 'Plan'), 202,059
shares were issued as "Matching Shares" at nominal value under the Plan.
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 1 April 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
Total comprehensive income for the period - - - - -
Balance at 31 March 2024 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
The total carrying amount of the non-controlling interests in TUK (Tricoya UK
Limited) and TTL (Tricoya Technologies Limited) at 31 March 2022 was €35.5m
(2021: €37.2m).
In November 2022, Accsys reached agreement to acquire full ownership of TUK
and TTL, 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).
TUK and TTL were consolidated in the Group results in the prior year and
continue to be consolidated following this purchase.
28. 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, due to the operating agreement requiring both joint
venture partners to approve key business decisions. Accoya USA is accounted
for as a joint venture and equity accounted for within the financial
statements.
At 31 March 2024, Accsys and Eastman have contributed combined equity of $70m
to Accoya USA LLC.
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
31). 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:
2024 2023
€'000 €'000
Opening balance 30,859 3,216
Investment in Accoya USA 4,926 28,979
Less: Accsys proportion (60%) of Licence fee received - (300)
Loss for the year (4,100) (1,036)
Closing balance 31,685 30,859
The Group has equity accounted for the joint venture in these consolidated
accounts.
Reconciliation of investment in Accoya USA:
2024 2023
€'000 €'000
Net assets of Accoya USA (USD) 60,002 58,425
60% of net assets of Accoya USA (EUR) 33,359 32,229
Less: Accsys proportion (60%) of Licence fee received to date (1,500) (1,500)
Foreign exchange movements (174) 130
Closing balance 31,685 30,859
The income statement, balance sheet and cashflows for Accoya USA LLC, are set
out below:
Accoya USA income statement: 2024 2023
€'000 €'000
Operating costs (6,653) (1,519)
Operating loss (6,653) (1,519)
Interest payable (179) (207)
Loss before taxation (6,832) (1,726)
Tax expense - -
Total comprehensive loss for the financial year (6,832) (1,726)
Accsys proportion (60%) of US JV EBITDA (3,724) (700)
Accsys proportion (60%) of US JV EBIT (3,993) (911)
Accsys proportion (60%) of US JV total loss from operations (4,100) (1,036)
Balance Sheet:
2024 2023
€'000 €'000
Non-current assets
Property, plant and equipment 122,662 69,327
Right of use assets 6,919 6,242
129,581 75,569
Current assets
Inventories 1,201 -
Trade and other receivables 114 236
Cash and cash equivalents 6,089 8,701
7,404 8,937
Current liabilities
Trade and other payables (10,508) (14,682)
Obligation under lease liabilities (491) (455)
Net current liabilities (3,595) (6,200)
Non-current liabilities
Obligation under lease liabilities (6,635) (5,875)
Other long term borrowing (63,701) (9,781)
(70,336) (15,656)
Net assets 55,650 53,713
2024 2023
€'000 €'000
Cash flows from operating activities (4,679) (1,147)
Cash flows from investing activities (56,553) (49,568)
Cash flows from financing activities 58,620 59,181
Net increase in cash and cash equivalents (2,612) 8,466
29. Commitments under loan agreements
2024 2023
€'000 €'000
Loan obligations
Within one year - 9,500
In the second to fifth years inclusive 32,446 50,288
In greater than five years 27,758 6,132
Present value of loan obligations 60,204 65,920
Amounts payable under loan agreements - undiscounted cashflows:
Within one year 1,646 10,312
In the second to fifth years inclusive 34,294 52,976
After five years 43,917 9,962
Less future finance charges (19,653) (7,330)
Present value of loan obligations 60,204 65,920
ABN Debt Facilities
In November 2023, Accsys and ABN Amro agreed to amend and extend the Company's
main borrowing facilities by 18 months to a maturity date of 31 March 2026.
The facilities agreement with ABN Amro comprise a
- €33m remaining Term Loan Facility and,
- €25m Revolving Credit Facility ('RCF').
- The Term Loan has no scheduled repayments of the term loan
until 30 June 2025, quarterly payments of €1.125m thereafter.
- Term Loan interest varies between 4.34% and 5.34% with
additional rolled up interest of 3% accruing on €2.25 million for the period
from 5 April 2024 to 4 October 2024, €4.5 million for the period from 5
October 2024 to 4 April 2025 and €6.75 million from 5 April 2025,
representing the Term Loan Facility amortisation payments that were deferred
under the amortisation holiday.
- RCF interest rate varies between 3.0% and 4% above EURIBOR.
Approximately €20m of the RCF was utilised to provide a Letter of credit by
ABN Amro to FHB in support of the Accoya USA JV funding arrangements, and the
remaining €5 million was undrawn at 31 March 2024.
The facilities are secured against the assets of the Group which are 100%
owned by the Company and include covenants such as net leverage, interest
cover which are based upon the results and assets which are 100% owned by the
Company and minimum liquidity covenants.
Convertible Loan notes
In the November 2023 capital raise, new unsecured, non-transferable
convertible loan notes were issued totalling €21 million (including the
refinancing and discharge of the existing €10 million 2022 Convertible
Loan).
The convertible loans have a 6 year term and carry a fixed rate coupon of
9.5%. For the first 2.5 years the coupon is rolled up and deferred and
following the 2.5 year period, the deferred interest can either be converted
into ordinary shares of the Company or paid in cash over the remaining 3.5
years at the option of the holders of the convertible loan notes. Following
that 2.5 year period, interest shall be payable in cash.
The convertible loan note holders will have the right to convert the
convertible loan notes they hold into Ordinary Shares of the Company at a
price of 83.22 Euro cents per share.
Tricoya Natwest facility:
In November 2022, Tricoya UK Limited (the Company's subsidiary) agreed with
Natwest Bank plc to restructure its TUK debt facility, reducing the principal
amount to a €6m loan with a 7 year term. The facility is secured by fixed
and floating charges over all assets of Tricoya UK Limited.
Interest is calculated with the margin ranging from 325 to 475 basis points
plus Euribor and capitalised during the 7 year term. No repayments are due
until the facility maturity date.
At 31 March 2024, the Group had €6.7m (31 March 2023: €6.0m) borrowed
under the facility.
Tricoya UK Limited also provided a Value Recovery Instrument ("VRI") agreement
to Natwest, to recover up to approximately €9.4m, on a contingent basis,
depending on profitability of the Tricoya Hull plant once operational. The
contingent payments to NatWest are based upon free cash-flow generated by the
Hull plant (see note 23).
Accoya USA 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 28 & 31). 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 28).
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.
Reconciliation to net debt:
2024 2023
€'000 €'000
Cash and cash equivalents 27,427 26,593
Less:
Amounts payable under loan agreements (60,204) (65,920)
Amounts payable under lease liabilities (note 17) (4,338) (4,735)
Net debt (37,115) (44,062)
Reconciliation of free cashflow:
2024 2023
€'000 €'000
Net cash from operating activities 7,197 16,733
Investment in property, plant and equipment (3,475) (30,291)
Free cashflow 3,722 (13,558)
Restricted cash
In the prior year, 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 28 & 31). In the current year, this cash pledged was released as
part of the funding arrangements agreed with ABN Amro in November 2023.
Reconciliation to adjusted cash:
2024 2023
€'000 €'000
Cash and cash equivalents 27,427 26,593
Less: Cash pledged to ABN for Letter of Credit - (9,828)
Adjusted Cash 27,427 16,765
Liabilities from financing activities Other assets
Borrowings Leases Sub-total Cash Total
€'000 €'000 €'000 €'000 €'000
Net debt as at 31 March 2022 (63,989) (5,217) (69,206) 42,054 (27,152)
Cash flows (10,000) 940 (9,060) (16,984) (26,044)
New leases - (590) (590) - (590)
Foreign exchange adjustments - 67 67 1,523 1,590
Other changes 8,069 65 8,134 - 8,134
Net debt as at 31 March 2023 (65,920) (4,735) (70,655) 26,593 (44,062)
Cash flows 17,000 1,044 18,044 533 18,577
New leases - (757) (757) - (757)
Foreign exchange adjustments - 40 40 301 341
New loans (9,901) - (9,901) - (9,901)
Other changes (1,383) 70 (1,313) - (1,313)
Net debt as at 31 March 2024 (60,204) (4,338) (64,542) 27,427 (37,115)
Other changes relate to accrued interest and other financing costs. In the
prior year, the majority of other changes related to the Tricoya restructure
which has been detailed above within this note and accrued interest.
30. 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, 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 2024 a total 8,449,172 Options exist attributable to BGF. This
represents 3.5% (2023: 3.9%) of the issued share capital of the Company as at
31 March 2024.
See note 29 for details on the convertible loan notes issued during the
November 2023 capital raise.
31. 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 29).
The $30 million limited guarantee provided to FHB is accounted for under IFRS
9 'Financial instruments' and held at a fair value of € nil, representing a
present value calculation of €8.6 million weighted by the estimated
probability of FHB calling on the guarantee being close to 0%, and therefore
any remaining value being close to € nil. This probability has been assessed
due the requirements in place under the Joint venture operating agreement to
fund cost over runs on the project, should they arise.
32. Financial instruments
Financial instruments
Lease liabilities
Lease creditors of €4,338,000 as at 31 March 2024 (2023: €4,735,000)
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 at 2.5x, increasing to 2.75x for
the covenant tests for the 12 months ending 30 September 2024, 31 December
2024 and 31 March 2025, and then returning to 2.5x. On this basis, Net
Debt/EBITDA ratio was calculated at 0.6 for the year ending 31 March 2024.
No final dividend is proposed in 2024 (2023: €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
2024/ € '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 15,660 - - 15,660
Financial asset investments Level 2 - - - -
Cash and cash equivalents 27,427 - - 27,427
Total 43,087 - - 43,087
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 - - - -
Cash and cash equivalents 26,593 - - 26,593
Total 42,145 - - 42,145
2024/ € '000 Fair value hierarchy At amortised cost At fair value though profit or loss At fair value through OCI Total
Financial liabilities
Borrowings - loans (60,204) - - (60,204)
Lease liabilities (4,338) - - (4,338)
Trade and other payables (11,824) - - (11,824)
Value Recovery Instrument ("VRI") Level 2 (1,102) - - (1,102)
Total (77,468) - - (77,468)
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") (1,383) - - (1,383)
Total (89,980) - - (89,980)
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 29.
Trade payables are payable on various terms, typically not longer than 30 to
60 days with the exception of some major capex items.
Market risk
The Group's activities expose it primarily to the financial risks of changes
in foreign currency exchange rates and interest rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that adequate financial
resources are available for the development of its business whilst managing
its currency, interest rate, counterparty credit and liquidity risks. The
Group's treasury strategy and policy are developed centrally and approved by
the Board.
Foreign currency risk management
The Group's functional currency is the Euro with the majority of operating
costs and balances denominated in Euros. An increasing proportion of costs
will be incurred in pounds sterling as the Group's activities associated with
the Tricoya 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 2024, 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
€144,000.
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.
If the interest rate changed by 5% on loans which have a variable interest
element, the P&L impact would be approximately €341,000.
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 & 29.
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.
33. Capital Commitments
2024 2023
€'000 €'000
Contracted but not provided for in respect of property, plant and equipment - -
34. Related party transactions
Loan from De Engh BV Limited
As part of the Accoya USA JV funding arrangements, in the prior year, Accsys
provided a $20 million Letter of Credit ('LC') to FHB. (see note 29 & 31).
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.
In November 2023, the convertible loan with De Engh BV was discharged and
refinanced. New convertible loans totalling €21 million were issued to
current shareholders (see note 29).
There have been no other related party transactions in the year.
35. Events occurring after 31 March 2024
On 16 May 2024, Steven Salo stepped down from his role as Chief Financial
Officer. A search is underway for a replacement. During this period, Hans
Pauli will act as Interim CFO. Hans has been with the Group for over 14 years
in various roles, amongst others as CFO from 2010 to 2012.
There have been no other material events since 31 March 2024.
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