REG - Accsys Technologies - Preliminary Results for year ended 31 March 2015 <Origin Href="QuoteRef">ACCS.L</Origin> - Part 2
16/07/2015 11:05
- Part 2: For the preceding part double click ID:nRSP2327Qa
Combustion of fuel & operation of production facility (MP4), in Arnhem, the Netherlands 2,939,167 2,263,107 2,194,196
TOTAL - GROSS 6,074,334 5,063,401 4,486,241
TOTAL - NET (including Renewable Energy Credits) 3,027,882 2,303,318 2,243,324
Chosenintensitymeasurement:EmissionspercubicmeterAccoyaproduced-GROSS 178 210 303
Chosen intensity measurement: Emissions per cubic meter Accoya produced - NET (including Renewable Energy Credits) 89 95 151
Notes:
- Due to unavailability of data, GHG emissions related to our offices and staff travel are not included. Emissions
have been calculated following the GHG Protocol - Corporate Accounting and Reporting (revised edition) using the following
databases: IPCC 2006 Guidelines for National Greenhouse Gas Inventories, 2007 IPCC Fourth Assessment Report and Eco-Invent
v3.
- Following Environmental Reporting Guidelines of Defra (2013), carbon offsets due to e.g. purchase of Renewable
Energy Credits may be accounted for separately as a "NET" figure, while the original electricity consumption figures are
presented as a "GROSS" figure.
- Following the same (Defra 2013) guidelines, the emissions associated with our supply chain (inputs and outputs) are
not included in the figures above, for readers that are interested in the supply chain related figures we refer to our
publicly available carbon footprint report:
http://www.accoya.com/wp-content/uploads/2013/09/Verco-Cradle-to-gate-carbon-footprint-update-2012.pdf.
Further details concerning the environmental impact of our products as a whole are detailed in the Sustainability Report,
including an assessment of the overall life cycle of Accoya.
Directors
The Directors of the Company during the year and up to the date of signing the financial statements were:
Gordon Campbell (Died, 26 April 2014)
Sean Christie (Appointed 27 November 2014)
Paul Clegg
Sue Farr (Appointed 27 November 2014)
Montague John 'Nick' Meyer
Hans Pauli
William Rudge
Patrick Shanley
Directors' indemnities
The Company maintains directors' and officers' liability insurance which gives appropriate cover for legal action brought
against its Directors.
Employment policies
The Group operates an equal opportunities policy from recruitment and selection, through training and development,
appraisal and promotion to retirement. It is our policy to promote an environment free from discrimination, harassment and
victimisation, where everyone will receive equal treatment regardless of gender, colour, ethnic or national origin,
disability, age, marital status or sexual orientation. All decisions relating to employment practises will be objective,
free from bias and based solely upon work criteria and individual merit.
17% of employees in the period were female. 10% of the senior management team were female and one of the Board of Directors
was female.
Health and safety
Health and safety is the priority at all levels of the Group, in particular taking into account the chemical industry in
which Accsys operates. Group companies have a responsibility to ensure that all reasonable precautions are taken to provide
and maintain working conditions for employees and visitors alike, which are safe, healthy and in compliance with statutory
requirements and appropriate codes of practice.
The avoidance of occupational accidents and illnesses is given a high priority. Detailed policies and procedures are in
place to minimise risks and ensure appropriate action is understood in the event of an incident. A dedicated health and
safety officer is retained at the Group's manufacturing facility.
Significant shareholdings
So far as the Company is aware (further to formal notification), the following shareholders held legal or beneficial
interests in ordinary shares of the Company exceeding 3%:
· Royal Bank of Canada 5.73%
· OP-Pohjola Group Central Cooperative 5.55%
· INEOS 5.43%
· OP-Henderson Global Investors 5.16%
· The London & Amsterdam Trust Company Limited 5.13%
· Majedie UK Equity Fund 5.06%
· FIL Limited (formerly known as Fidelity International Limited) 4.93%
· Invesco Limited 4.87%
· Saad Investments Company Limited 3.92%
· Zurab Lysov 3.71%
There are no restrictions in respect of voting rights.
Going concern
The Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable
expectation that the Group has access to adequate resources to continue in operational existence for the next 12 months.
Further details are set out in Note 1 to these financial statements.
Corporate Governance
The company's statement on corporate governance can be found in the corporate governance report on pages 17 to 18 of these
financial statements. The corporate governance report forms part of this directors' report and is incorporated into it by
cross-reference
Disclosure of information to auditors
Each of the persons who is a Director at the date of the approval of the Annual Report confirms that:
· So far as the Director is aware, there is no relevant audit information of which the Company's Auditors are
unaware; and
· The Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of
any relevant audit information and to establish that the Company's Auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their willingness to continue in office as auditors and a resolution to
re-appoint them will be proposed at the annual general meeting.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The Group financial statements have been prepared in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group.
· The annual report includes a fair review of the development and performance of the business and the financial
position of the Group and the parent Company, together with a description of the principal risks and uncertainties that
they face.
By order of the Board
Angus Dodwell
Company Secretary
15 June 2015
Accsys Technologies PLC
Corporate Governance
Details of the Company's corporate governance arrangements are set out below. The Board of Directors acknowledges the
importance of the Principles set out in The UK Corporate Governance Code issued by the Financial Reporting Council. Neither
the 2010 or 2012 UK Corporate Governance Code are compulsory for AIM listed or Euronext listed companies. The Board has
applied the principles as far as practicable and appropriate for a relatively small public company.
The Board of Directors
During the period up until 26 April, the Board comprised a Non-executive Chairman, two Non-executive Directors and three
Executive Directors. Gordon Campbell, the Non-executive Chairman in the period, very sadly died on 26 April 2014. Patrick
Shanley was appointed Chairman and a review of the composition of the Board was undertaken. On 20 November 2014 Patrick was
confirmed as Non-executive Chairman and on 27 November Sean Christie and Sue Farr were appointed as Non-executive
Directors.
The Board meets regularly and is responsible for strategy, performance, approval of major capital projects and the
framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely
information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to
the advice and services of the Company Secretary. The appointment and removal of the Company Secretary is a matter for the
Board as a whole. In addition, procedures are in place to enable the Directors to obtain independent professional advice in
the furtherance of their duties, if necessary, at the Company's expense.
During the year, all serving Directors attended the quarterly Board meetings that were held. In addition to the scheduled
meetings there is frequent contact between all the Directors in connection with the Company's business including Audit and
Nomination and Remuneration committee meetings which are held as required, but as a minimum twice per annum.
Directors are subject to re-election by the shareholders at Annual General Meetings. The Articles of Association provide
that Directors will be subject to re-election at the first opportunity after their appointment and the Board submit to
re-election at intervals of three years.
Day to day operating decisions are made by the Senior Management Team of which the Chief Executive Officer, the Chief
Operating Officer and Finance Director are members.
Audit Committee
The Audit Committee consisted of Patrick Shanley (Chairman), Nick Meyer and up until 26 April 2014, Gordon Campbell. From
27 November Sean Christie and Sue Farr were also appointed and Sean Christie was appointed Chairman of the Committee. The
Audit Committee meets at least twice a year and is responsible for monitoring compliance with accounting and legal
requirements and for reviewing the annual and interim financial statements prior to their submission for approval by the
Board. The Committee also discusses the scope of the audit and its findings and considers the appointment and fees of the
external auditors. The Audit Committee continues to believe that it is not currently appropriate for the Company to
maintain a dedicated internal audit function due to its size.
The Audit Committee considers the independence and objectivity of the external auditors on an annual basis, with particular
regard to non-audit services. The non-audit fees are considered by the Board not to affect the independence or objectivity
of the auditors. The Audit Committee monitors such costs in the context of the audit fee for the period, ensuring that the
value of non-audit service does not increase to a level where it could affect the auditors' objectivity and independence.
The Board also receives an annual confirmation of independence from the auditors.
Nominations & Remuneration Committee
The Nominations and Remuneration Committee consists of Nick Meyer (Chairman), Patrick Shanley and, until April 2014, Gordon
Campbell. Sean Christie and Sue Farr were appointed on 27 November. The Committee's role is to consider and approve the
nomination of Directors and the remuneration and benefits of the Executive Directors, including the award of share options
and bonus share awards. In framing the Company's remuneration policy, the Nominations & Remuneration Committee has given
full consideration to Section D of The UK Corporate Governance Code.
Internal Financial Control
The Board is responsible for establishing and maintaining the Company's system of internal financial control and places
importance on maintaining a strong control environment. The key procedures which the Directors have established with a view
to providing effective internal financial control are as follows:
· The Company's organisational structure has clear lines of responsibility;
· The Company prepares a comprehensive annual budget that is approved by the Board. Monthly results are reported
against the budget and variances are closely monitored by the Directors; and
· The Board is responsible for identifying the major business risks faced by the Company and for determining the
appropriate courses of action to manage those risks.
The Directors recognise, however, that such a system of internal financial control can only provide reasonable, not
absolute, assurance against material misstatement or loss.
Relations with shareholders
Communications with shareholders are given high priority.
There is regular dialogue with shareholders including presentations after the Company's preliminary announcement of the
year-end results and six monthly results. The Board uses the Annual General Meeting to communicate with investors and
welcomes their participation. The Chairman aims to ensure that the Directors are available at Annual General Meetings to
answer questions.
Directors' attendance record
The attendance of individual Directors at meetings of the Board and its committees in the year under review was as
follows:
Board Audit Committee Nominations & Remuneration Committee
Number of meetings Attended1 Serving Attended Serving Attended Serving
Sean Christie 2 2 1 - 1 -
Paul Clegg 11 13 2 - 3 -
Sue Farr 2 2 1 - 1 -
Montague John 'Nick' Meyer 8 13 2 2 3 3
Hans Pauli 11 13 2 - 1 -
Patrick Shanley 9 13 2 2 3 3
William Rudge 11 13 2 - 1 -
Whilst all Directors are not members of the Board Committees they attend by invitation.
Figures in the left hand column denote the number of meetings attended and figures in the right hand column denote the
number of meetings held whilst the individual held office.
Notes
1 A number of board committee meetings were held in the year in addition to the scheduled board meetings in order to
address certain routine matters such as the issue of shares in respect of the Employee Share Scheme.
Accsys Technologies PLC
Statement of Directors' responsibilities
Directors' responsibilities
The Directors are responsible for preparing the Annual Report, the Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the company and of the profit or loss of the Group for that period. In preparing these financial
statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the Group and parent company financial statements
respectively;
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and
enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act
2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year ended 31 March 2015
2015 2015 2015 2014 2014 2014
E'000 E'000 E'000 E'000 E'000 E'000
Note Before exceptional items Exceptional items Note 4 Total Before exceptional items Exceptional items Total
Note 4
(Restated) (Restated)
Accoya wood revenue 40,661 - 40,661 29,293 - 29,293
Licence revenue 389 - 389 1,134 - 1,134
Other revenue 5,027 - 5,027 3,085 - 3,085
Total revenue 2 46,077 - 46,077 33,512 - 33,512
Total cost of sales (33,842) - (33,842) (25,753) - (25,753)
Gross profit 12,235 - 12,235 7,759 - 7,759
Other operating costs 3 (15,985) (2,937) (18,922) (14,247) (726) (14,973)
Operating loss 7 (3,750) (2,937) (6,687) (6,488) (726) (7,214)
Share of joint venture loss 8 (1,098) - (1,098) (905) - (905)
Gain on acquisition of subsidiary 4 - 267 267 - - -
Finance income 9 73 - 73 155 - 155
Finance expense 10 (208) - (208) (226) - (226)
Loss before taxation (4,983) (2,670) (7,653) (7,464) (726) (8,190)
Tax charge 11 (607) - (607) (699) - (699)
Loss for the year (5,590) (2,670) (8,260) (8,163) (726) (8,889)
Gain/(Loss) arising on translation of foreign operations, which could subsequently be reclassified into profit or loss 158 - 158 (36) - (36)
Total comprehensive loss for the year (5,432) (2,670) (8,102) (8,199) (726) (8,925)
attributable to owners of the parent
Basic and diluted loss per ordinary share 13 E(0.06) E(0.09) E(0.09) E(0.10)
The comparative figures for the year ended 31 March 2014 have been restated to reflect the exceptional costs (see note 4).
The notes on pages 24 to 49 form part of these financial statements.
Accsys Technologies PLC
Consolidated statement of financial position at 31 March 2015
Registered Company 05534340
Note 2015 2014
E'000 E'000
Non-current assets
Intangible assets 15 10,014 8,333
Investment in joint venture 8 - 340
Property, plant and equipment 16 19,548 20,740
Available for sale investments 17 - -
29,562 29,413
Current assets
Inventories 20 7,894 6,053
Trade and other receivables 21 4,998 4,477
Cash and cash equivalents 10,786 15,185
Corporation tax 388 446
24,066 26,161
Current liabilities
Trade and other payables 22 (9,625) (5,557)
Obligation under finance lease 26 (264) (264)
Corporation tax (812) -
(10,701) (5,821)
Net current assets 13,365 20,340
Non-current liabilities
Obligation under finance lease 26 (1,799) (1,871)
(1,799) (1,871)
Net assets 41,128 47,882
Equity and reserves
Share capital - Ordinary shares 23 4,440 4,392
Share premium account 128,714 128,648
Capital redemption reserve 148 148
Warrants reserve - 235
Merger reserve 106,707 106,707
Accumulated loss (199,022) (192,223)
Own shares (39) (47)
Foreign currency translation reserve 180 22
Total equity 41,128 47,882
The financial statements on pages 20 to 49 were approved by the Board and authorised for issue on 15th June 2015, and
signed on its behalf by
Paul Clegg
William Rudge Directors
The notes on pages 24 to 49 form part of these financial statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended 31 March 2015
Share capital Ordinary Share premium Capital redemp- Warrant reserve Merger reserve Own Shares Foreign currency trans- Retained earnings Total
tion reserve lation reserve
E000 E000 E000 E000 E000 E000 E000 E000 E000
Balance at
31 March 2013
4,332 128,587 148 235 106,707 (39) 58 (184,511) 55,518
Total comprehensive income/(expense) for the period - - - - - - (36) (8,889) (8,925)
Share based payments - - - - - - - 1,177 1,177
Shares issued 60 - - - - (8) - - 52
Premium on shares issued - 60 - - - - - - 60
Share Warrants issued - - - - - - - - -
Balance at
31 March 2014
4,392 128,648 148 235 106,707 (47) 22 (192,223) 47,882
Total comprehensive income/(expense) for the period - - - - - - 158 (8,260) (8,102)
Expiry of warrants - - - (235) - - - 235 -
Share based payments - - - - - - - 1,226 1,226
Shares issued 48 - - - - 8 - - 56
Premium on shares issued - 66 - - - - - - 66
Balance at
31 March 2015
4,440 128,714 148 - 106,707 (39) 180 (199,022) 41,128
Share capital is the amount subscribed for shares at nominal value (note 23).
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.
Capital redemption reserve represents the amounts transferred from share capital on redemption of deferred shares.
Merger reserve arose prior to transition to IFRS when merger accounting was adopted.
Own shares represents 783,597 shares issued to an Employee Benefit Trust at nominal value on 11 August 2014. These shares
shall vest if the employees, including the Executive Directors, remain in employment with the Company to the vesting date,
being 1 July 2015 (subject to certain other provisions including good-leaver, take-over and committee discretion
provisions). (note 14).
On 31 March 2015, Accsys agreed to acquire the remaining 50% equity in Tricoya Technologies Limited from Ineos. As a result
of this agreement and the termination of the joint venture agreement, all of the warrant instruments which had been
executed in 2012 in favour of Ineos lapsed.
Foreign currency translation reserve arises on the re-translation of the Group's USA subsidiary's net assets which are
denominated in a different functional currency, being US dollars.
Accumulated losses represent the cumulative loss of the Group attributable to the owners of the parent.
The notes on pages 24 to 49 form part of these financial statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March 2015
2015 2014
E'000 E'000
Loss before taxation (7,653) (8,190)
Adjustments for:
Amortisation of intangible assets 375 352
Depreciation of land, property, plant and equipment 2,100 2,024
Recognition of reduction of investment in joint venture 1,172 922
Net loss/(gain) on disposal of property, plant and equipment - 77
Net finance expense 135 71
Equity-settled share-based payment expenses 1,226 1,177
Gain on acquisition of subsidiary (267) -
Cash flows from operating activities before changes in working capital (2,912) (3,567)
Increase in trade and other receivables (1,566) (253)
Increase in deferred income 1,556 -
(Increase) in inventories (1,860) (1,194)
Increase in trade and other payables 909 1,757
Net cash used in operating activities before tax* (3,873) (3,257)
Tax received 263 344
Net cash flows used in operating activities (3,610) (2,913)
Cash flows from investing activities
Interest received 70 124
Expenditure on capitalised internal development (201) (459)
Purchase of property, plant and equipment (907) (572)
Purchase of intangible assets - (23)
Investments in joint ventures (1,000) (1,200)
Cash generated in acquisition of subsidiary, net of consideration 1,338 -
Net cash used in investing activities (700) (2,130)
Cash flows from financing activities
Interest paid (208) (226)
Repayment of finance lease (72) (54)
Proceeds from issue of share capital 123 70
Net cash used in financing activities (157) (210)
Net decrease in cash and cash equivalents (4,467) (5,253)
Effect of exchange rate changes on cash and cash equivalents 68 (29)
Opening cash and cash equivalents 15,185 20,467
Closing cash and cash equivalents 10,786 15,185
*Note: Cash out-flows from operating activities after changes in working capital included E3,159,000 in respect of
Exceptional Costs (2014: E498,000)
The notes on pages 24 to 49 form part of these financial statements.
Accsys Technologies PLC
Notes to the financial statements for the year ending 31 March 2015
1. Accounting Policies
General information
The financial information set out in these preliminary results does not constitute the company's statutory accounts for the
periods ended 31 March 2015 or 31 March 2014. Statutory accounts for the period ended 31 March 2014 have been filed with
the Registrar of Companies and those for the period ended 31 March 2015 will be delivered to the Registrar in due course;
both have been reported on by the auditors. The auditors' report on the Annual Report and Financial Statements for the
period ended 31 March 2014 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The auditors' report on the Annual Report and Financial Statements for the period ended 31 March 2015 is unqualified, did
not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Basis of accounting
The Group's financial statements have been prepared under the historical cost convention (except for certain financial
instruments and equity investments which are measured at fair value), in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board as endorsed by the European Union, interpretations
issued by the IFRS Interpretations Committee (IFRS IC) and with those parts of the Companies Act 2006 applicable to
companies preparing their financial statements under adopted IFRS. The Company has elected to prepare its parent company
financial statements in accordance with UK Generally Accepted Accounting Practice (UK GAAP).
Going Concern
The financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational
existence for the foreseeable future, and at least 12 months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate that, in order to continue as a going concern, the Group
is dependent on the achievement of certain operating performance measures relating to the production and sales of Accoya®
wood from the plant in Arnhem and the collection of on-going working capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and performance measures and believe that appropriate controls
and procedures are in place or will be in place to make sure that these are met. The Directors believe that while some
uncertainty inherently remains in achieving the budget, in particular in relation to market conditions outside of the
Group's control, that there are a sufficient number of alternative actions and measures that can be taken in order to
achieve the Group's medium and long term objectives.
Therefore the Directors believe that the going concern basis is the most appropriate on which to prepare the financial
statements.
Changes in accounting policies
No new accounting standards, amendments or interpretations have been adopted in the period which have any impact on these
financial statements other than as noted below:
Exceptional Items
Exceptional items are events or transactions that fall outside the ordinary activities of the Group and which by virtue of
their size or incidence, have been separately disclosed in order to improve a reader's understanding of the financial
statements. These include items relating to the restructuring of a significant part of the Group, impairment losses (or the
reversal of previously recorded exceptional impairments), expenditure relating to the integration and implementation of
significant acquisitions and other one-off events or transactions. See note 4 for details of exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another
entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Group as if they formed a single entity. Inter-company transactions and
balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's identifiable assets, liabilities, and contingent liabilities
are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in
the consolidated income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected prior to transition to IFRS, were accounted for using the
merger method of accounting. Under this method, assets and liabilities are included in the consolidation at their book
values, not fair values, and any differences between the cost of investment and net assets acquired were taken to the
merger reserve. The majority of the merger reserve arose from a corporate restructuring in the year ended 31 March 2006
which introduced Accsys Technologies PLC as the new holding company.
Joint ventures
A jointly controlled entity is an entity in which the Group holds a long term interest and shares joint control over
strategic, financial and operating decisions with one or more other ventures under a contractual arrangement. The Group's
share of the assets, liabilities, income, expenditure and cash flows of such jointly controlled entities are accounted for
using the equity method. The equity method records the Group's share of the results of the joint venture entity on a
separate line in the Group's financial statements.
The total carrying values of investments in joint ventures represent the cost of each investment including the carrying
value of any goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long term
debt interests which in substance form part of the Group's net investment. The carrying values of joint ventures are
reviewed on a regular basis and if an impairment in value has occurred, the carrying value is impaired in the period in
which the relevant circumstances are identified. The Group's share of a joint venture's losses in excess of its interest in
that associate is not recognised unless the Group has an obligation to fund such losses.
Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the
Group's interest in the investee. Unrealised losses are eliminated in the same way, but only to the extent that there is no
evidence of impairment.
Revenue recognition
Revenue is measured at the fair value of the consideration receivable. Revenue is recognised to the extent that it is
probable that the economic benefit will flow to the Group and that the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the significant risks and rewards of ownership of the goods have
been passed to the buyer, the timing of which is dependent on the particular shipment terms. When a customer provides
untreated wood to be processed by the Group in order to produce Accoya®, revenue is recognised when the Group's obligations
under the relevant customer contract have been substantially completed, which is before the finished Accoya® has been
collected by the customer. Manufacturing revenue includes the sale of Accoya® wood and other revenue, principally relating
to the sale of acetic acid.
Licence fee and Marketing income
Licence fee and marketing income is recognised over the period of the relevant agreements according to the specific terms
of each agreement or the quantities and/or values of the licensed product sold. The accounting policy for the recognition
of licence fees is based upon an assessment of the work required before the licence is signed and subsequently during the
design, construction and commissioning of the licensees' plant, with an appropriate proportion of the fee recognised upon
signing and the balance recognised as the project progresses to completion. Marketing revenue when the company acts as
principal is recognised based on the actual work completed in the period. The amount of any cash or billings received but
not recognised as income is included in the financial statements as deferred income and shown as a liability.
Finance income
Interest accrues using the effective interest method, i.e. the rate that discounts estimated future cash receipts through
the expected life of the financial instrument to the net carrying amount of the financial asset.
Finance expense
Finance expenses include the fees associated with the Group's credit facilities which are expensed over the period which
the Group has access to the facilities.
Finance expenses also include an allocation of finance charges in respect of the sale and leaseback of the Arnhem land and
buildings accounted for as a finance lease. The total finance charge (calculated as the difference between the total
minimum lease payments and the liability at the inception of the lease) is allocated over the life of the lease using the
sum-of-digits method.
Share based payments
The Company awards share options and nil cost options to acquire shares of the Company to certain Directors and employees.
The Company also awards bonuses to certain Directors and employees in the form of the award of deferred shares of the
Company.
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, deferred shares and matching shares granted are recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and is charged to the statement of comprehensive
income over the vesting period during which the employees become unconditionally entitled to the options or shares.
The fair value of share options granted is measured using a modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual
number of share options that vest only where vesting is dependent upon the satisfaction of service and non-market vesting
conditions.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting condition.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension and employee benefit schemes on behalf of its employees.
These costs are charged to the statement of comprehensive income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of
comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date together with any adjustment to tax payable in respect of previous years. Current tax
includes the expected impact of claims submitted by the Group to tax authorities in respect of enhanced tax relief for
expenditure on research and development.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
· the initial recognition of goodwill,
· the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a
business combination, and
· differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Recognition of deferred
tax assets is restricted to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment
in which it operates (the functional currency). For the purposes of the consolidated financial statements, the results
and financial position of each Group company are expressed in Euro, which is the functional currency of the parent Company,
and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average monthly exchange rates prevailing in the month in which the transaction took place. Exchange differences
arising, if any, are recognised in other comprehensive income and the foreign currency translation reserve.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received
and the Group will comply with the attached conditions. When the grant relates to an expense item, it is recognised as
income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.
Where the grant relates to an asset they are credited to a deferred income account and released to the statement of
comprehensive income over the expected useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the
consideration paid and the fair value of the identifiable assets and liabilities acquired. It is
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