REG - Accsys Technologies - Preliminary Results for year ended 31 March 2015 <Origin Href="QuoteRef">ACCS.L</Origin> - Part 4
16/07/2015 11:05
- Part 4: For the preceding part double click ID:nRSP2327Qc
3 3 3
Contractual life (years) 10 10 10
Vesting conditions (Details set out above) EBITDA Share Price Exceptional Multiplier
Risk free rate 0.48% 0.48% 0.48%
Expected volatility 40% 40% 40%
Expected dividend yield 0% 0% 0%
Fair value of option E0.647 E0.388 E0.220
The figures in the table above have been adjusted to reflect the 5 for 1 share consolidation which became effective on 12
September 2014. No LTIP options vested in the period and no new awards were made in the period.
2005 and 2008 Share Option schemes
The following share options awarded under the group's 2005 and 2008 Share Option schemes impacted the current or preceding
financial year;
Options granted on 1 March 2005 fully vested during 2011. These options may be exercised until 30 March 2015. At 31 March
2015, nil (2014: 53,850) of these options were outstanding with an exercise price of E1.60.
Options granted on 28 March 2007 at an exercise price of E2.59 per Ordinary share vest to one third of the options granted
upon achievement of each of the following:
· Cumulative E5 million licence income recognised under Group accounting policies
· Cumulative E20 million revenue from sales of Accoya® wood
· Announcement of annual Group distributable earnings exceeding E5 million
Once vested, these options may be exercised until 31 March 2017. At 31 March 2015, 115,586 (2014: 149,584) of these
options were outstanding at an exercise price of E9.15.
Options granted on 20 November 2007 vest to one third of the options granted upon achievement of each of the following:
· Annual Accoya® wood production exceeds 23,000m3 in a financial year
· Annual Accoya® wood sales revenue exceeds E26 million in financial year
· The second pair of reactors in the wood modification plant are processing more than 25 batches per month
Once vested these options may be exercised until 20 November 2017. At 31 March 2015, 48,444 (2014: 48,444) of these options
were outstanding at an exercise price of E12.90.
Options granted on 18 June 2008 vest to one third of the options granted upon achievement of each of the following:
· Announcement of audited Annual Accoya® wood sales revenue exceeds E20 million in financial year
· Announcement of audited annual Group distributable earnings exceeding E15 million
· Announcement of audited cumulative E75 million gross licence revenue recognised under Group accounting
policies
Once vested these options may be exercised until 18 June 2018. At 31 March 2015, 8,498 (2014: 8,498) of these options were
outstanding at an exercise price of E9.90.
Options granted on 8 December 2008 vest to one third of the options granted upon achievement of each of the following:
· Announcement of audited Annual Accoya® wood sales revenue exceeds E20 million in financial year
· Announcement of audited annual Group distributable earnings exceeding E15 million
· Announcement of audited Cumulative E75 million gross licence revenue recognised under Group accounting
policies
Once vested these options may be exercised until 8 December 2018. At 31 March 2015, 37,110 (2014: 41,359) of these options
were outstanding at an exercise price of E4.85.
Options granted on 27 July 2010 were partially exchanged in the period for new awards issued under the LITP. 30% of the
options vest on achievement of median TSR. Once vested, these options may be exercised until 27 July 2020. Full vesting of
the options granted occurs upon achievement of upper quartile TSR measured over the three year period. At 31 March 2015,
164,321 (2014: 164,321) of these options were outstanding at an exercise price of E1.20.
Options granted on 1 August 2011 were partially exchanged in the period for new awards issued under the LITP. 30% of the
options vest on achievement of median TSR. Full vesting of the options granted occurs upon achievement of upper quartile
TSR measured over the three year period. Once vested, these options may be exercised until 1 August 2021. At 31 March 2015,
160,000 (2014: 160,000) of these options were outstanding at an exercise price of E0.50.
TSR is measured on a relative basis compared to the FTSE Small Cap index over a three year period from grant date. Unless
discretion is exercised by the Nomination & Remuneration Committee, all options are forfeit following an option holder's
termination of contract.
The weighted average fair value of each option granted during the prior year was E0.30. No options were granted under the
2005 or 2008 Share Option schemes in the current or previous period.
The fair value of share options granted under the 2005 and 2008 Share Option Schemes during the previous years was
calculated based on a modified Black-Scholes model assuming inputs shown below for more recent awards:
Grant date August 2011 July 2010
Share price at grant date (E) 0.50 1.70
Exercise price (E) 0.50 1.70
Expected life (years) 3 3
Contractual life (years) 10 10
Risk free rate 1.54% 2.30%
Expected volatility 85% 60%
Expected dividend yield 0% 0.0%
Fair value of option E0.200 E0.532
The figures in the table and notes above have been adjusted to reflect the 5 for 1 share consolidation which became
effective on 12 September 2014. Volatility was estimated by reference to the historic volatility since October 2005 when
the Company's shares were listed on AIM. The resulting fair value is expensed over the vesting period of the options on the
assumption that a proportion of options will lapse over the service period as employees leave the Group.
Employee Benefit Trust - Share bonus award
On 11 August 2014, in connection with the employee remuneration and incentivisation arrangements for the period from 1
April 2013 to 31 March 2014, 783,597 (2014: 953,133) new Ordinary shares were issued to an Employee Benefit Trust, the
beneficiaries of which are primarily the Executive Directors and Senior Managers. Such new Ordinary shares vest if the
employees remain in employment with the Company at the vesting date, being 1 July 2015 (subject to certain other provisions
including regulations, good-leaver, take-over and nomination and remuneration committee discretion provisions). As at 31
March 2015, the Employment Benefit Trust was consolidated by the Company and the 783,597 shares are recorded as Own Shares
within equity. During the period, 945,133 Ordinary shares awarded in the prior year vested.
Employee Share Participation Plan
During the year, the Company continued to operate the Employee Share Participation Plan (the 'Plan') that was initiated in
a prior year. The Plan is intended to promote the long term growth and profitability of Accsys by providing employees with
an opportunity to acquire an ownership interest in new ordinary shares ('Shares') in the Company as an additional benefit
of employment.
Under the terms of the Plan, the Company issues these Shares to a trust for the benefit of the subscribing employees. The
Shares are released to employees after one year, together with an additional Share on a 1 for 1 matched basis provided the
employee has remained in the employment of Accsys at that point in time (subject to good leaver provisions). The Plan is in
line with industry approved employee share plans and is open for subscription by employees twice a year following release
of annual and half yearly financial results. The maximum amount available for subscription by any employee is E5,000 per
annum.
During the year ended 31 March 2015 the plan was open for subscription twice. In July 2014 various employees subscribed for
a total of 27,819 Shares at an acquisition price of E1.15 per Share. In December 2014 various employees subscribed for a
total of 53,922 Shares at an acquisition prices of E0.79 per Share.
Also during the year, 1 for 1 Matching shares were awarded in respect of subscriptions that were made in the previous year
as a result of all participants continuing to remain in employment at the point of vesting. 99,559 Matching shares were
issued to employees in July 2014.
15. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
E'000 E'000 E'000 E'000
Cost
At 31 March 2013 1,396 73,292 4,231 78,919
Additions 459 - - 459
At 31 March 2014 1,855 73,292 4,231 79,378
Additions 201 - - 201
Addition on acquisition of subsidiary 1,981 1,981
At 31 March 2015 4,037 73,292 4,231 81,560
Accumulated amortisation
At 31 March 2013 55 70,638 - 70,693
Amortisation 77 275 - 352
At 31 March 2014 132 70,913 - 71,045
Amortisation 100 275 - 375
Addition on acquisition of subsidiary 126 - - 126
At 31 March 2015 358 71,188 - 71,546
Net book value
At 31 March 2015 3,679 2,104 4,231 10,014
At 31 March 2014 1,723 2,379 4,231 8,333
At 31 March 2013 1,341 2,654 4,231 8,226
The carrying value of internal development costs, intellectual property rights and goodwill on consolidation are considered
part of a single cash generating unit which incorporates the manufacturing and licensing operations. The recoverable amount
of internal development costs, intellectual property rights and goodwill relating to this operation is determined based on
a value in use calculation which uses cash flow projections based on board approved financial budgets. Cash flows have been
projected for a period of 10 years plus assumptions concerning a terminal value, corresponding with the expected minimum
life of the intellectual property rights and based on a pre-tax discount rate of 20% per annum (2014: 20%). The key
assumption used in the value in use calculations is the level of future licence fees estimated by management over the
budget period. These have been based on past experience and expected future revenues. The Directors have considered whether
a reasonably possible change in assumptions may result in an impairment. An impairment would arise if the total volume of
forecast Accoya manufactured is 95% lower than projected sales in future years.
16. Property, plant and equipment
Land and Plant and Office
buildings machinery equipment Total
E'000 E'000 E'000 E'000
Cost or valuation
At 31 March 2013 5,208 27,190 656 33,054
Additions 43 444 85 572
Disposals - (116) - (116)
Foreign currency translation gain/(loss) - - (9) (9)
At 31 March 2014 5,251 27,518 732 33,501
Additions - 847 63 910
Foreign currency translation gain/(loss) - - 27 27
At 31 March 2015 5,251 28,365 822 34,438
Accumulated depreciation
At 31 March 2013 192 10,057 534 10,783
Charge for the year 115 1,818 91 2,024
Disposals - (39) - (39)
Foreign currency translation gain/(loss) - - (7) (7)
At 31 March 2014 307 11,836 618 12,761
Charge for the year 117 1,896 87 2,100
Foreign currency translation gain/(loss) - - 29 29
At 31 March 2015 424 13,732 734 14,890
Net book value
At 31 March 2015 4,827 14,633 88 19,548
At 31 March 2014 4,944 15,682 114 20,740
At 31 March 2013 5,016 17,133 122 22,271
Included within property, plant and equipment are assets with an initial cost of E6,252,000 and a net book value at 31
March 2015 of E3,409,000 which has been accounted for as a finance lease under the terms of the sale and leaseback
agreement entered into in a prior year. (See note 25).
17. Other financial assets
2015 2014
E'000 E'000
Available for sale investments - -
Accsys Technologies PLC has previously purchased a total of 21,666,734 unlisted ordinary shares in Diamond Wood China. The
Group does not currently have an intention to dispose of its investment in Diamond Wood in the foreseeable future.
The carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair value,
as there is no active market for these shares, and there is significant uncertainty over the future of Diamond Wood, and as
such a reliable fair value cannot be calculated.
The historical cost of the unlisted shares held at 31 March 2015 is E10m (2014: E10m). However, a provision for the
impairment of the entire balance of E10m continues to be recorded as at 31 March 2015. (See note 4).
18. Deferred Taxation
The Group has a deferred tax asset of Enil (2014: Enil) relating to trading losses brought forward. E0.9m of deferred tax
was utilised in the prior year.
The Group also has an unrecognised deferred tax asset of E23,200,000 (2014: E23,087,000) which is largely in respect of
trading losses of the UK subsidiary. The deferred tax asset has not been recognised due to the uncertainty of the timing of
future expected profits of the related legal entity attributable to licensing activities.
19. 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.
20. Inventories
2015 2014
E'000 E'000
Materials and work in progress 3,068 3,492
Finished goods 4,826 2,561
7,894 6,053
The amount of inventories recognised as an expense during the year was E30,158,361 (2014: E23,969,284). The cost of
inventories recognised as an expense includes a net debit of E157,836 (2014: credit of E409,412) in respect of the
inventories sold in the period which had previously been written down to net realisable value.
21. Trade and other receivables
2015 2014
E'000 E'000
Trade receivables 3,024 3,060
Other receivables 1,086 385
Prepayments 888 1,031
4,998 4,476
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
The majority of trade and other receivables is denominated in Euros, with E600,000 of the trade receivables denominated in
US$ (2014: E355,000).
The age of receivables past due but not impaired is as follows:
2015 2014
E'000 E'000
Up to 30 days overdue 466 183
Over 30 days and up to 60 days overdue 13 136
Over 60 days and up to 90 days overdue 21 (14)
Over 90 days overdue 2 3
502 308
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the reporting date. Included in the provision for doubtful
debts are individually impaired trade receivables and accrued income with a balance of E25,001,000 (2014: E25,001,000) due
from Diamond Wood.
Movement in provision for doubtful debts:
2015 2014
E'000 E'000
Balance at the beginning of the period 25,019 25,051
Net increase/(release) of impairment if not required 2 (32)
Balance at the end of the period 25,021 25,019
Summary of Receivable Impairments:
2015 2014
E'000 E'000
Trade receivables - Accoya wood * 20 18
20 18
* The impairment of Accoya® wood receivables relates to a number of Accoya® customers.
22. Trade and other payables
2015 2014
E'000 E'000
Trade payables 3,847 3,790
Other taxes and social security payable 202 110
Other payables 1,000 -
Accruals and deferred income 4,576 1,657
9,625 5,557
* Accruals and deferred income includes £1.4m of deferred income resulting from the acquisition of Tricoya
Technologies Limited.
23. Share capital
2015 2014
E'000 E'000
Allotted - Equity share capital
88,792,894 Ordinary shares of E0.05 each (2014: 439,219,864 Ordinary shares of E0.01 each) 4,440 4,392
4,440 4,392
Further to the passing of all resolutions at the Company's AGM held on 11 September 2014, the entire issued share capital
of the Company was consolidated on a 5:1 basis with effect from 12 September 2014. Accordingly, all figures concerning the
number of shares stated below represent the new E0.05 Ordinary Shares. (Shares issued prior to this date have been restated
accordingly).
In year ended 31 March 2014:
On 5 July 2013, a total of 953,133 shares were issued to an Employment Benefit Trust, the beneficiaries of which were to be
the Executive Directors and Senior Managers (see note 14).
On 13 September 2013, a total of 83,066 of Ordinary shares were issued and released to employees together with the 99,570
of Ordinary shares issued to a trust on 12 August 2013. (See note 14).
On 20 January 2014, a total of 73,884 of Ordinary shares were issued and released to employees.
In year ended 31 March 2015:
Own shares represents 783,597 E0.05 Ordinary Shares issued to an Employee Benefit Trust ('EBT') at nominal value on 18
August 2014.
953,133 E0.05 Ordinary Shares had been issued to the EBT at nominal value on 9 July 2013 of which 945,133 Ordinary Shares
vested on 8 August 2014.
On 18 August 2014, a total of 27,819 of E0.05 Ordinary shares were issued to a trust under the terms of the Employee Share
Participation Plan.
On 12 August 2014, a total of 99,559 of E0.05 Ordinary shares were issued and released to employees together with the
99,559 of E0.05 Ordinary shares issued to trust on 12 August 2013.
In 19 January 2015, a total of 53,922 of E0.05 ordinary shares were issued to a trust under the terms of the Employee Share
Participation Plan.
24. Commitments under operating leases
The Group leases land, buildings and machinery under non-cancellable operating lease agreements. The total future value of
the minimum lease payments that are due is as follows:
2015 2014
E'000 E'000
Operating lease payments due
Within one year 963 1,003
In the second to fifth years inclusive 1,067 1,210
In greater than five years 1,477 1,477
3,507 3,690
The majority of commitments under operating leases relate to the Group's offices in the UK, The Netherlands and U.S.A. and
land in The Netherlands which is adjacent to our plant.
25. Commitments under finance leases
Agreements were reached in August 2011 for the sale and leaseback of the land and buildings in Arnhem for a total of E4m.
E2.2m was received in 2011 with the remaining amount received in the following year, but accounted for as an operating
lease. The transaction has resulted in a finance lease creditor of E2.1m as at 31 March 2015:
Minimum lease payments
2015 2014
E'000 E'000
Amounts payable under finance leases:
Within one year 280 280
In the second to fifth years inclusive 1,120 1,120
After five years 1,773 2,053
Less: future finance charges (1,110) (1,318)
Present value of lease obligations 2,063 2,135
26. Financial instruments
Financial instruments
Finance lease
Agreements were reached in August 2011 for the sale and leaseback of the land and buildings in Arnhem under which a total
of E4m was to received. E2.2m was received in 2011 with the remaining amount received in the following. Subject to the
terms of the agreement, the buyer has committed to build new storage facilities which will also allow for an improvement in
wood handling logistics. The transaction has resulted in a finance lease creditor of E2,063,000 as at 31 March 2015 (2014:
E2,135,000). The total lease term is 15 years. (See note 24 and 25).
Warrants
In 2012 the Company executed a warrant instrument in favour of Ineos, allowing Ineos the opportunity to purchase up to a
further 3,293,647 shares at a price of E1.05 per share at certain times up until 19 October 2016. All 3,293,647 warrants
lapsed on 31 March 2015.
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 owners of the parent
Company, comprising share capital, reserves and accumulated losses.
The Board reviews the capital structure on a regular basis. As part of that review, the Board considers the cost of
capital and the risks associated with each class of capital. Based on the review, the Group will balance its overall
capital structure through new share issues and the raising of debt if required.
No final dividend is proposed in 2015 (2014: ENil). The Board deems it prudent for the Company to protect as strong a
statement of financial position as possible during the current phase of the Company's growth strategy.
Categories of financial instruments 2015 2014
E'000 E'000
Available for Sale investments - -
Loans and receivables
Trade receivables 3,024 3,060
Other receivables 1,086 385
Money market deposits in Euro 5,348 11,791
Money at call in Euro 3,807 2,483
Money at call in US dollars 781 602
Money at call in Sterling 635 114
Money at call in New Zealand dollars 215 195
Financial liabilities at amortised cost
Trade payables (3,847) (3,790)
Accruals (1,577) (1,149)
Finance lease payable (2,063) (2,135)
Other Payables (1,000) -
6,409 11,556
Money market deposits have interest rates fixed for less than three months at a weighted average rate of 0.86% (2014:
1.58%). Money market deposits are held at financial institutions with high credit ratings (Standard & Poor's rating of
AA).
All assets and liabilities mature within one year except for the finance lease, for which details are given in note 25.
Trade payables are payable on various terms, typically not longer than 30 days.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that adequate financial resources are available for the development of
its business whilst managing its currency, interest rate, counterparty credit and liquidity risks. The Group's treasury
strategy and policy are developed centrally and approved by the Board.
Foreign currency risk management
Currency exposures are limited as the Group's functional currency is the Euro with the majority of operating costs and
balances denominated in Euros. A smaller proportion of expenditure is incurred in US dollars and pounds sterling. In
addition some raw materials, while priced in Euros, are sourced from countries which are not within the Eurozone. The Group
monitors any potential underlying exposure to other exchange rates.
Interest rate risk management
The Group's borrowings are limited to the sale and leaseback of the Arnhem land and buildings and therefore it is not
exposed to interest rate risk in relation to financial liabilities. Surplus funds are invested in short term interest rate
deposits to reduce exposure to changes in interest rates. The Group does not enter into any hedging arrangements.
Credit risk management
The Group is exposed to credit risk due to its trade receivables due from customers and cash deposits with financial
institutions. The Group's maximum exposure to credit risk is limited to their carrying amount recognised at the balance
sheet date.
The Group ensures that sales are made to customers with an appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables at year end to be of good credit quality including those
that are past due (note 21). 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 21.
The Group has credit risk from financial institutions. Cash deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk
management framework for the management of the Group's short, medium and long term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profile of financial assets and liabilities.
In addition to the sale and leaseback of the Arnhem land and buildings described above, the Group has finance facilities
available which are secured on trade receivables and inventories:
Trade receivables facility
On 28 February 2011 the Group entered a trade receivable financing and credit management agreement with Fortis Commercial
Banking for a period of at least two years from the closing date and with a facility limit of E1.5m. After two years the
agreement renews for rolling one year periods. The facility is secured upon the Group's trade receivable.
Inventories facility
On 17 January 2013 the Group entered a credit facility agreement with ABN AMRO Bank N.V. with a facility limit of E3.0m for
the financing of the Group's operating activities. The facility is secured against the inventories of the Group.
Both facilities are subject to interest at 1.5% above the ABN AMRO base rate of 3.8% as at 31 March 2015 (2014: 4.0%). At
31 March 2015, the Group had Enil (2014: Enil) borrowed under both of the facilities.
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.
27. Related party transactions
In the year ended 31 March 2015, there were a number of related party transaction with the Tricoya Technologies Limited
joint venture, all of which arose in the normal course of business, totalling E1,391,000 (2014: E1,070,000). At the end of
the period E792,308 (2014: E298,404) of the total amount was payable from TTL to Accsys group companies.
28. Capital Commitments
2015 2014
E'000 E'000
Contracted but not provided for in respect of property, plant and equipment - -
This information is provided by RNS
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