Accsys Technologies Share Discussion Threads

[asmodeus] 04/8/2010 14:24

tbone - i agree entirely that the Company should be marketing (promoting) the product, and are so-doing, in fact. But that's different from actually selling it (to the end user, or retailer)if, by that you mean literally invoicing it, delivering it, chasing payment etc.

[brightontrader] 04/8/2010 12:51

Distributors of timber are a valuable market, especially for outside timbers, as that is where builders get their timber from. As distributors have to buy in stock too it does generate cash and gets the name out there. whether the distributor's salepeople then sell it to their punters is another matter and always the most perplexing problem for product manufacturers.

Only marketing can get what a distributor will always say to a manufacturer, "my customers do/don't ask for this" . If the product is too expensive for what it does then yo will get the don't bit.

I don't know what the split is that Accsys look for between distributors and product manufacturers that will use the treated timber, or what is is generally in the timber market but I would suspect that in soft woods its proportionately with distributors. Hardwood the other way around, ie: furniture makers, shutters etc made in large factories.

So they are doing the right thing presumably, it comes down to price again.

This recession has caused a lot of businesses to look at their operating margins, mine for instance, on one product area I liked to double up, now I am contemplating reducing to say 35% from 50% to take remaining share and am looking again at reducing overheads to compensate. Better to have 35% of a lot...

[tbow112] 04/8/2010 11:52

Asmodeus,

I had not intended to suggest that AXS should be selling direct to the public, but merely that there appears to be something wrong with this emphasis on more distributors, and that this emphasis appears to be symptomatic of failure rather than success.

However, going on from there it is notable that the model of distribution which you (and apparently they) envisage, probably does not work in the markets which I have suggested as most suitable for the product. In these sort of places the product does have to be marketed to the end user in one way or another, for things tend to be bought by brand name (because in a difficult environment there is a lot of stuff which simply does not work).

There needs to be some sort of outlet or salesman pushing the particular product until it becomes sufficiently established to be sold by word of mouth.

Tbow

[asmodeus] 03/8/2010 19:04

Keep away from TNT, though :)

[brightontrader] 03/8/2010 18:18

Well I understand distribution more than anything else as effectively I am one, so I agree with asmodus, I have to;=)

I have been in the process of setting up a meeting to see if there is further progress we can make and also had more discussions with my manufacturer in China and the story is thus:

They feel that the product is only interesting for external applications (which its undoubtably designed for) although we have some interest for waterproof internal apps such as bathroom products, but these are relatively low volume, for us.

However the process is relatively easy to emulate should you wish to, and any close contact with them would bring on law suits quicker than if you developed a similar product totally independently of them. Ie: less risk of accidental infringement of patents, like a song writer not wanting to get too inspired by someone else I guess.

Of course a chinese large manufacturer would only think like this if it was cheaper to produce this material themselves and invest in the process if the other route was too expensive, ie: buying licenses or even raw material. And trust me, this is exactly how large Chinese manufacturers think.

So once again it comes down to price and if the material is too expensive to produce right now against alternatives, and you cannot add the marketing "green" element onto the products price then you have a problem.

I would love to have a product made in this material as it would help me in a number of ways and the timbers we use now are only 7 to 9% of a shutters cost, but there is a large cost in changing even a timber when you guaranteee the products stability for 3 years due to lifecycle testing, machine changes etc, not to mention buying a large enough qty to make it worthwhile.

Of course these is also the mdf product, this may in fact be the one that flies. We use huge quantities of MDf now and its problem has always been moisture take up and swelling. Also the strength in mdf is in the skin largely, when you machine it you get a very porous surface, and rough too with fibre nibs, whether this is negated or not I have yet to discover.

I play around with a large SIPP and some I gamble and some I stick in Centrica and the like for divis. I would only put money I was prepared to completely lose in this one right now on the information I have got so far. Hence my presence on this board.

For those locals, I just moved from bn3 to tn22....its a different climate out here.

[asmodeus] 03/8/2010 15:10

I beg to differ, tbow (1225). It would be a bad move to try selling direct to users. Far better to have, say, 20 Distributors (wholesalers), and let them have the responsibility to run a delivery service and hundreds of relatively small accounts. It would certainly be disastrous for Accsys to sell direct to users on the same terms as to distributors - or to start selling to users and then having to change their terms after appointing distyributors.

[tbow112] 03/8/2010 13:41

Also most poeple do not buy timber to last 50 years, they move house every few years and don't want to pay more than they have to.

It certainly seems that AXS have failed to locate a market where their product has a significant competitive advantage.

It seems to me that there are regions in the world (eg mountainous parts of France, West coast of Scotland) where the weather may ensure that the virtues of Accoya (particularly dimensional stability) make it superior to any other product and that it would be worthwhile paying a premium price. However AXS seem to have set up their distribution so that the product does not even get to these markets.

In particular I do not understand the emphasis on signing up distributors; it seems simply to illustrate a failure to sell the product to the end user.

[kramch] 02/8/2010 20:39

Interesting discussion. damanko - I know "Clegg the Elder", he's a great guy and would appreciate the product feedback. (Critical comment often gets diluted by management before it reaches the top!) K.

[asmodeus] 02/8/2010 20:26

And I live in BN6 !

[damanko] 02/8/2010 19:54

brightontrader,

Excellent posts, thanks for taking the time, every potential investor needs some education, especially if they think long term (as I tend to).

Funnily enough, I'm in BN1, and I think you're based in RH15, so just around the corner.

Take your point about people and houses, however I imagine their target market is the housebuilders, not the DIY market.

I'm minded to send some of this stuff to Clegg The Elder, if you have no objections?

AXS (should) need to know what potential customers think of their product, and their pricing policy. With this stuff marketing is key, and if they are fobbing customers off in the way you write, then something is wrong.

[brightontrader] 02/8/2010 14:41

Where did you read the price was competitive?

Last time we looked it was expensive compared with tropical FSC hardwoods which have almost the same life cycle. When you make products telling the customer they have to pay more for eco doesn't work. Also most poeple do not buy timber to last 50 years, they move house every few years and don't want to pay more than they have to.

The reason this is interesting is that the default on Diamond licenses has made them sit up and smell the coffee, or should have done.

[ell1ot] 02/8/2010 14:15

I too liked the Sunday Times piece and was interested to read that the price is competitive. If you are comparing it to balsa wood I would imagine that it is pricey, people are obviously buying the product - the fact that it is guaranteed for 50 yrs is a bit more compelling. In terms of an investment, I like the messages coming out of this one and will dip in and watch.

[damanko] 02/8/2010 09:10

I never invested in this, but have a holding in a private, unlisted company that did. Now wondering if, after all the hype and un-hype, whether it might be worth a punt.

At this level it may be a good time to get in, and forget it for a while. Any idea what Clegg The Elder's background is?

[asmodeus] 02/8/2010 08:33

Many thanks, Damanko.

[damanko] 02/8/2010 07:00

Interesting and sizeable write-up in yesterday's Sunday Times, in the "Green" section of the Business. Won't attempt a link, as I believe this stuff is paid for these days.

Clegg The Elder came across as well regarded, and gave the impression he was on top of things, a few (normal) remarks about conkers, vinegar etc.

Curiously there was no mention that the company is in trouble or cash strapped, nor the share price behaviour over the past couple of years.

The whole thing was geared toward the future of the product, the manufacturing plant in Holland, and the growing number of license agreements, worldwide.

[asmodeus] 28/7/2010 15:25

By overwhelming demand, abbreviated report of above presentation:
Co. was burning too much cash. Clegg brought in to sort out; had to raise money;and had to convert Arnhem from R & D into production.

Now have 19 Distributors throughout world, and 14 more in prospect. Production was 8,000 cu.m - mow 20,000. Owing to world fimnancial collapse, Diamond wood reduced 4 (I think) "reactors" to 2, but with intention to expand, when market picks up. (Accsys own 15% of DW). I understand a video describing a reactor, is on website. We saw samples of Accoya "MDF". It looks just the same, but will withstand exterior use for 25 years. But about 4 x price of MDF. However -cheaper than marine ply, so I said surely immense potential for all the hoardings and screens round building sites etc. Also saw samples of Accoya "decking". Obvious potential if price tolerable.

Altogether, we thought his confident attitude and obvious thorough knowledge of the products etc. very reassuring.

But- still can't see the paranoia about allowing us into the AGM ! Actually, we were allowed into the room by an employeee, after strong protestations and demands, but were physically ejected before getting to sit down! If the Trust of which I am chairman was not showing a loss of over 90% on the shares, I would have arranged to sell the lot! However - am happy to keep my own small holding, and would happily increase it now, having met Clegg - if funds were available.

[asmodeus] 28/7/2010 08:57

Thought that would happen! Will try and do something a bit later today.

[horneblower] 27/7/2010 21:29

Bravo, asmodeus.
Can you give a little detail to Cleggy's ad hoc, pavement presentation?

[asmodeus] 27/7/2010 16:23

First, the bad news: I got up an hour earlier than usual this morning, and paid about £36 for a ticket which, with my senior-citizen's permit,requiring departure after 9.00 a.m normally costs me about £12, and arrived at No.66 Hammersmith Road, soaked in sweat,at exactly 30 seconds after starting tine 9.00, to be told I coould not attend the AGM! A few seconds later, a non-British gentleman arrived, also denied entry, who told me he had endured a 7-hour flight to attend - and represented a shareholding amounting to 15% of the Company! We both protested very strongly, but the minion delegated to keep us out could not be persuaded to let us in! I attend quite a lot of AGMs, and, although rarely late, have never experienced anything like this before!

However - the good news is that after the formal business had finished, Mr Clegg himself came out to see us, and delayed a subsequent Board meeting to give the two of us, plus one more late arrival, a personal 15 minute presentation, with which I, for one was very impressed, and left confident that the corner has been turned, and the future for the Company is good. Afterwards, I requested that, in future,it should be made plain in advance that no entry after starting time will be allowed (why?). Also, please could the meetings be held at about 11.00 and not 9.00.

[ebomber] 25/7/2010 09:52

TELEGRAPH ARTICLE IN FEB 2010

Nick Clegg faces a challenge persuading the electorate to believe in the Liberal Democrats as a party of government.

But his elder brother Paul faces a similarly daunting challenge. He needs to rebuild the belief of investors who have lost large sums in Accsys Technologies while he steers the company to profitability.

Warning signs on nuclear powerConkers provide a clue to Accsys' original appeal to investors. When soaked in vinegar and oven baked, conkers become extra hard.

Accsys uses a similar patented process called acetylation to change softwoods at a molecular level, making them more stable, durable and strong than teak and other precious hardwoods.

Investors were excited by the prospect of turning abundant, fast-growing softwood from certified sustainable forests into a high performance material called Accoya with a 50-year guarantee.

With reputable customers specifying timber from sustainable sources and legislators clamping down on chemical treatments, Accoya offered an attractive solution.

Having originally been created through Dutch government funding of a university research project, Accsys raised €27m (£24m) through a listing on Aim in October 2005. This funded an acetylation plant in Arnhem.

The company was listed on Euronext in September 2007 and corporate investors rushed in. The share price grew to €4.58, giving a market capitalisation of more than €600m.

"Everyone in Accsys felt like they could walk on water," says Clegg, "and shared the investors' vision of royalties flooding in from licensees".

It got off to a good start. A Saudi group bought licences for the Gulf states and an American entrepreneur called Greg Lee formed a new company called Diamond Wood to produce Accoya in China.

"People assumed Accoya would sell itself," says Clegg. This led to "some bad management decisions" including a structure with an executive chairman in Geneva and a chief executive who managed the Arnhem plant and the Hammersmith central offices from premises in Dallas.

As the global economy deteriorated, sales of licences dried up completely. Potential licensees were unable to raise the necessary funds to invest in production plants that would typically take two years to come on stream. The problem was compounded by a drop in hardwood prices.

Accsys was slow to react. "The company over-committed on expenditure before achieving the sales it needed," says Clegg, especially when the business was losing an average of €2.7m a month.

The share price sank to €0.51 as investors realised the firm would run out of money if the cash-burn continued.

Clegg joined the board in April 2009, after years running European operations for an American investment bank, with a mission to restructure the business and cut costs.

Urgent action was essential. In one dramatic month the workforce was cut from 150 to 102, the travel bill was slashed by €100,000 per month and costs reduced by 25pc.

Instead of waiting for big licence deals to arrive, Accsys focused its sales effort onto distribution agreements for the Accoya wood produced in Arnhem.

A dozen distributors in countries as diverse as China and Scandinavia now sell Accoya.

Some successes have been achieved, including its use for a 32 metre road bridge and canal lining in Holland, and all the walkways and kiosks at Disneyland in Hong Kong.

But there is no "landmark" project yet, with most of the uses for Accoya being "bread and butter" applications such as door and window frames.

Clegg has also succeeded in raising a further €17m from institutional investors but unless Accsys can start generating income quickly, its share value will drop further and the company risks being snapped up by a private equity company.

Much will depend upon the success of Greg Lee in raising €80m for his production plant in Nanjing.

If he is successful, Accsys receives a lump sum payment of €4m and €750k per month until the royalties kick in. This will give a positive cash flow.

Accsys is also working on a joint development project with Medite, one of Europe's biggest producers of MDF (medium-density fibreboard).

Acetylated wood fibres and chips can be used in long-lasting wood panel products that can be used outdoors. Some observers believe the potential for the Tricoya panels will be even greater than that for Accoya wood.

The number of live discussions with potential licensees has grown three-fold since September, but despite "life coming back to the market", no extra licence sales have been achieved yet.

"We have taken Accsys from a wood acetylation R&D company with the world's largest wood modification plant," says Clegg, "into a commercially focused company selling licences in wood acetylation."

2010 is going to be a crucial year. "It is all about sales and business development now," says Clegg.

"If we get it right our market capitalisation will be between €1bn to €2bn within five to six years." If they get it wrong, there will be a lot of very disappointed investors.

[ebomber] 21/7/2010 14:23

19 July 2010
ACCSYS TECHNOLOGIES PLC
("Accsys" or "the Company")
Interim Management Statement
- Benefits from process improvements start to be seen;
- Accoya wood revenue record of EUR3.2m in the last quarter, a 46%
increase compared to same quarter last year;
- Staff costs reduced by 23% in the quarter, equivalent to annualised
saving of EUR2.8m; and
- Introduction of Accoya wood at the American Institute of Architects
exhibition in USA.
In the first quarter of the financial year, Accsys has started to see the
benefits of the process improvements implemented over the course of the previous
12 months. In the three months to 30 June 2010, the Company achieved record
Accoya wood sales and record production volumes at the production plant in
Arnhem.
Accoya wood revenue of EUR3.2m for the quarter ended 30 June 2010 is a 46%
increase compared to the same quarter of last year. Production volumes have
increased by 76% from 2,161m3 to 3,805m3 for the same period, reflecting forward
sales.
The improving performance of the Arnhem plant continues to be supported by the
growing international network of distribution, supply and agency agreements with
two agreements being signed since 31 March 2010, making a total of 19. In
addition, Accsys continues to have a working relationship with a further 14
distributors and agents in key markets which have enabled the Company to sell
Accoya wood in 17 countries.
While Accsys continues to focus on decreasing costs and generating efficiencies,
the benefits of last year's improvements and headcount reduction have had a
positive impact on operating costs. Staff costs for the quarter ended 30 June
2010 were 23% less than the same quarter last year, which is equivalent to an
annualised saving of EUR2.8m.
In June 2010, the American Institute of Architects national exhibition in Miami,
USA was the premier event to introduce Accoya wood to American architects. The
event combined product and brand exposure to the most significant architecture
firms in the USA, resulting in a significant number of sales leads. Moreover,
considerable media interest and coverage is expected over the next few weeks.
Accsys was also proud of the use of Accoya wood in the Florida International
University's Solar Decathlon competition entry, with the team's award-winning
design utilising sustainable materials in the zero-energy house.
The Company is extremely pleased with the outcome of negotiations that resulted
in an amended Licence Agreement with Diamond Wood China Limited ('Diamond Wood')
which we announced on 21 June 2010. The amended Licence Agreement now reflects
Diamond Wood's new business plan, which has been re-modelled to reflect their
proposed funding arrangements. The amended Licence Agreement includes, inter
alia, revised licence fee and royalty terms, with benefits for both parties.
On 30 June 2010, following Diamond Wood's AGM, Accsys announced that they were
in advanced discussions with two independent parties who were interested in
investing sufficient funds for the construction of the first Accoya wood
manufacturing facility in Nanjing, China. Diamond Wood had received an
acceptable terms sheet from one of these parties and were continuing discussions
with the other party. Since then, the Company has continued to work with Diamond
Wood in anticipation of the fundraising being completed in the near future.
The core business strategy remains the licensing of the Company's
transformational technologies and the business development team has continued
positive discussions with a number of other companies with a view to forming
commercial alliances.
Paul Clegg, CEO, commented: "I am pleased by the progress that has been made at
our Arnhem plant with the record sales and production figures in the first
quarter having been possible as a result of the improvements made last year. We
continue to look forward to the completion of Diamond Wood's fundraising and
continue to make progress in identifying other companies with whom we are having
constructive discussions concerning potential agreements to use our technology."
Ends

[damanko] 05/7/2010 12:03

asmodeus - agree with the points in your post. Travel well, pay as little as possible, and I hope the day goes well. I reckon the news you'll receive will not be the best, but we all have to hope that it will - at least - be honest.

Detailed report? Don't worry, just post your gut feeling.

Regards
damanko

[asmodeus] 05/7/2010 08:28

I am going, if only to complain strongly about the diabolical 9.00 a.m. starting time. I wrote to them about this before last year's, ponting out that holding AGMs at inconvenoent times is sometimes believed to be a ploy to minimise attendance by shareholders, and thought they had takrn this in! (Apart from having to get up at about 6.00 a.m., my cost of travel is trebled if travelling before 9.00 a.m., and suspect this applies to other shareholders with senior travelcards). But - is anyone else going? (Please don't expect a detailed report from me).

[spudders] 04/7/2010 16:55

Anyone going to the AGM. Almost had it with AXS after 3 years, need some good news to keep the faith :(