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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Accsys Technologies Plc | LSE:AXS | London | Ordinary Share | GB00BQQFX454 | ORD EUR0.05 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.00 | 1.74% | 58.50 | 57.20 | 59.80 | 59.80 | 58.00 | 58.00 | 114,371 | 16:35:02 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Manufacturing Industries,nec | 162.02M | -69.86M | -0.3173 | -1.88 | 131.65M |
TIDMAXS
RNS Number : 1164U
Accsys Technologies PLC
21 November 2023
AIM: AXS
Euronext Amsterdam: AXS
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
21 November 2023
Accsys Technologies PLC
("Accsys", "the Group" or the "Company")
Interim results for the six months ended 30 September 2023
Accsys, the fast-growing company that enhances the natural properties of wood to make high performance and sustainable building products, today announces its unaudited interim results for the six months to 30 September 2023 (H1 FY24).
Six months to 30 Sep Six months % Change 2023 to 30 Sep 2022 Revenue EUR71.2m EUR58.9m 21% Gross profit EUR20.3m EUR18.1m 12% Underlying EBITDA(1) EUR1.6m EUR4.5m (64%) Period end net debt(3) (EUR48.2m) (EUR61.4m) Adjusted cash(4) EUR10.8m EUR7.2m
Highlights
-- 21% growth in revenue at EUR71.2m, driven by good product demand, higher average sales prices and increased production capacity following reactor 4 start-up in September 2022
-- 20% growth in Accoya sales volumes at 28,807m(3) :
o Strong growth of Accoya in Rest of World and Rest of Europe markets, up 42% and 28% respectively
o 30% growth in Accoya for Tricoya production at 8,393m(3) , supporting our belief in Tricoya market potential
-- 2 percentage points decline in gross profit margin to 29%, reflecting higher raw material costs and wood inventory optimisation
-- 64% decrease in underlying EBITDA at EUR1.6m: volume growth and higher average Accoya prices offset by:
o Increased pre-operational costs in Accoya plant in Kingsport, US, ahead of completion in mid-2024 and Tricoya UK plant operating costs, due to a change in accounting treatment(5)
o Increased operating expenditure on sales & marketing, executive recruitment and engineering costs
-- Strategic growth projects:
o Arnhem - plant performing well; efficiency improvements ongoing
o Accoya plant in Kingsport, US - construction of new 43,000m(3) plant progressing well and in line with plan; on-track for completion and commercial operation in mid-2024
-- Tricoya UK plant project - while Accsys continues to believe in the market potential for Tricoya, in view of the current operating environment and shift of Company focus on the Accoya plant in Kingsport, US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull. The review will be conducted in early calendar year 2024
-- Exceptional item(2) of EUR1.2m in relation to organisational re-alignment and cost savings initiatives: Actions being taken to deliver annual cost savings of EUR3.0m+. I mpairment loss (non-cash) of EUR7.0m recognised in the period relating to the Tricoya segment due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor
-- Net debt at 30 September 2023 of EUR48.2m, an increase of EUR4.1m since the FY23 year end, reflecting capex of EUR2.0m, increase in working capital and inventory position and scheduled loan interest payments partially offset by EBITDA generation during the period
-- Fundraising: The Company today announces a fundraising to raise gross new proceeds of approximately EUR24m and an extension of its debt facilities. The proceeds of the fundraising will allow Accsys to complete the delivery of its Accoya plant in Kingsport, US, in mid-2024, strengthen its balance sheet and increase working capital headroom in the face of a challenging macro trading environment. Decisive action has been taken to secure the fundraising and a debt extension package to ensure the Company has the funding platform necessary to execute its growth strategy
Notes
(1) Underlying EBITDA is defined as operating profit/(loss) before exceptional items and other adjustments, depreciation and amortisation, and includes the Group's attributable share of our USA joint venture's underlying EBITDA. (See note 2 to the financial statements).
(2) Other exceptional items recognised in the prior year include EUR58m for the impairment of Tricoya segment assets and EUR0.5m related to advisor fees related to the Tricoya consortium reorganisation.
(3) Net debt at 31 March 2023 was EUR44.1m.
(4) Adjusted cash excludes cash pledged for the Letter of Credit provided to FHB of EUR10m.
(5) Tricoya UK's ongoing running costs are being treated as operating expenditure in the first half of FY24 following the introduction of Tricoya UK's hold period in H2 FY23.
Dr. Jelena Arsic Van Os, Chief Executive Officer of Accsys, commented :
"In navigating the challenging macro-economic conditions of the first half of the year, our new management team has shown unwavering commitment in reshaping Accsys towards a less complex business model with increased execution focus. As we reflect on our business performance, we acknowledge and proactively address short-term obstacles. However, our confidence in our innovative product range remains unshaken, with the conviction that our Accoya and Tricoya premium offerings set us apart in the market, representing substantial untapped potential. To ensure delivery on this potential, the Company has raised today approximately EUR24m of new proceeds from our shareholders to improve near-term liquidity and enable us to finalise the construction of our Accoya plant in Kingsport, US, which alongside our wider operations, strengthens Accsys's position for growth in both the medium and longer term."
Current trading and outlook
Current market conditions remain challenging, reflecting ongoing difficult macro conditions across our markets, with sales volumes under continued pressure as distributors reduce their inventory levels ahead of the upcoming holiday period. Sales performance by region remains mixed. Despite the economic environment, we have continued to maintain our premium price point on both our Accoya and Tricoya products, reflecting their sustainable, durable and high-performance qualities.
The Board does not expect trading conditions to improve materially until the middle of the 2024 calendar year. The second half of the financial year is typically stronger than H1, due to increased sales in the Northern Hemisphere in anticipation of the peak construction season. Accordingly, the Board believes there will be an improvement in product demand in Q4 FY24, aided by the unwind of distributor destocking that has taken place in recent months. However, despite these factors, given the current market backdrop and expected sales volume for the remainder of this financial year, the Board believes that the FY24 results will be below current market expectations.
The remainder of the current financial year will see continued focus on completion of the Kingsport plant and on building demand for Accoya globally, as FY24 will see an increase in Company's capacity in conjunction with the transfer of volumes from Arnhem to Kingsport. The Company will also focus on delivering continuous operational improvements at Arnhem. With its unique product portfolio set in a growth industry, increased capacity at Arnhem and future capacity coming from the new plant in Kingsport, we believe Accsys is well positioned for future growth. We are broadening our global distributor network, developing our Approved Manufacturers Programme ("AMP") and accelerating sales & marketing activity, particularly in the US, which will support our regional growth. While Accsys continues to believe in the attractive market and growth potential for Tricoya, in view of the current operating environment and shift of company focus on the Accoya plant in Kingsport, US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.
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.
Enquiries:
Investor Relations / Analysts : Katharine Rycroft, Accsys Technologies PLC ir@accsysplc.com
Media : Matthew O'Keeffe, Alex Le May, FTI Consulting (UK) +44 (0) 20 3727 1340
Media: Clemens Sassen, Tessa Nelissen, Huijskens Sassen Communications (NL) +31 (0) 20 68 55 955
Deutsche Numis (London): Oliver Hardy (NOMAD), Ben Stoop +44 (0) 20 7260 1000
ABN AMRO (Amsterdam ): Julie Wakkie, Diederik Berend +31 20 628 5789
Accsys Technologies PLC
Chief Executive's Report
Overview of H1 FY24
Revenue and volumes in H1 FY24 were 20% ahead of the prior year. However, demand for our products softened in some of our markets towards the end of the half, reflecting exceptionally difficult trading conditions in the building materials, construction and residential housing markets globally.
Demand for Accsys' premium wood products has, up until the late summer of this year, always exceeded supply. The quality and desirability of Accoya and Tricoya continues to be widely recognised throughout the industry and has allowed us to implement a disciplined pricing strategy. With increased capacity at Arnhem, we have been able to give our customers and distributors the opportunity to purchase and hold more products than in recent years. As the global construction industry has slowed, customers have been holding inventory and experiencing slowing order books. Correspondingly, new orders for our products began to slow over the summer as distributors worked down their stock levels.
In view of this trading environment, we announced on 1 September 2023 that sales volumes and revenues for FY24 were likely to be below market expectations. We took immediate and decisive steps to reduce operating costs, optimise working capital and implement cost saving initiatives and have made good progress on this over the last few months, details of which can be found on page 5. In parallel, we are taking actions to accelerate our sales approach to stimulate demand and achieve greater market penetration.
Our plant in Arnhem performed well in H1 FY24. During the period we have continued to focus on its efficiency, including further work on optimising reactor 4 to reduce cycle times and deliver more capacity and also implement other operational improvement programmes across the site, focusing on cost, safety and reliability.
We have also made good progress with our Accoya USA JV in Kingsport, Tennessee. Construction is now c.78% complete and equipment setting c.87% complete. The project remains on track for commercial operation in mid-2024.
Accsys continues to believe in the attractive market and growth potential for Tricoya, with product demand remaining strong. In view of the current operating environment and shift of company focus on the Accoya USA project, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.
Summary of financial performance
Accsys delivered revenues of EUR71.2m in H1 FY24, a 21% increase on the prior year, driven by good product demand, higher average sales prices and increased production capacity following the start-up of reactor 4 in September 2022.
Despite good revenue growth, Underlying EBITDA decreased by EUR2.9m to EUR1.6m. Volume growth and higher average Accoya prices were offset by higher average wood prices, partially offset by lower net acetyls cost. Increased pre-operational costs in the Kingsport plant ahead of completion, higher Tricoya UK plant operating costs due to a change in accounting treatment(5) , and increased operating expenditure on sales & marketing, executive recruitment and engineering costs also contributed.
Gross margin weakened by two percentage points to 29% (H1 FY23: 31%), reflecting higher raw material costs and wood inventory optimisation.
Underlying loss before tax was EUR5.0m (H1 FY23: loss of EUR0.6m). Statutory loss before tax was EUR13.1m (H1 FY23: EUR56.3m).
Net debt increased by EUR4.1m to EUR48.2m since the FY23 year end , reflecting capex payments of EUR2.0m, an increase in working capital and scheduled loan interest payments, partially offset by EBITDA generation during the period.
An exceptional operating cost of EUR1.2m has been recognised in the period in relation to organisational realignment and cost savings initiatives, including headcount reductions, which are expected to deliver annual savings of more than EUR3.0m. An impairment loss (exceptional non-cash item) of EUR7.0m has been recognised in the period relating to the Tricoya segment (H1 FY23: EUR58.0m) due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor.
Summary of product financial performance - Accoya and Tricoya
H1 FY24 Growth on PY Accoya revenue EUR68.2m +16% ----------- ---------- Accoya sales volumes 28,807m(3) +20% ----------- ---------- Sales volume H1 FY24 Growth on by end market m3 PY ----------- ---------- UK & Ireland 6,165 +6% ----------- ---------- Rest of Europe 7,385 +28% ----------- ---------- North America 4,218 +4% ----------- ---------- Rest of World 2,646 +42% ----------- ---------- Tricoya 8,393 +30% ----------- ----------
Revenues from Accoya grew by 16% in the first half of FY24 to EUR68.2m, driven by good product demand and increased production capacity following the commercial start-up of reactor 4 in Arnhem in September 2022. Accoya volumes grew by 20% to 28,807m(3) . Sales volumes in all our end markets grew year on year, with particularly strong performances recorded in the Rest of World (+42%) and Rest of Europe (+28%) regions.
Revenues from Accoya for Tricoya as a percentage of total sales volumes increased in H1 FY24 and now represent 29% of total sales volumes, versus 24% at the end of the FY23. Accoya for Tricoya revenues in H1 FY24 grew by 31% to EUR11.4m, driven by continued strong product demand. Our Accoya for Tricoya partners remain committed and supportive. Tricoya panel revenue also increased to EUR2.9m in H1 FY24.
Update on strategic growth projects - Accoya and Tricoya
Accoya
In September 2022, we completed the expansion of our plant in Arnhem, adding a new fourth reactor with capacity for an additional 20,000 cubic metres, and enabling the site's maximum annual capacity to increase to 80,000 cubic metres. A large proportion of current capacity is being used to seed the US market, with 16% of FY23 sales volumes going to North America.
In addition to the aforementioned operational improvement programmes across the plant, other self-help measures to reduce costs and improve manufacturing quality include improved target operating models that will drive simplification within operations. As we look to minimise wastage, we will also introduce new scanning technology which will allow us to identify any material flaws in Accoya wood prior to being converted into Accoya Color.
Under our joint venture with Eastman, a world leader in the production of acetyls, we are building an Accoya plant in the US at Eastman's Kingsport, Tennessee site. The plant has been designed with scalability in mind and is being built to enable future rapid expansion. Under the joint venture, Accsys holds a 60% interest and Eastman a 40% interest. Both joint venture partners continue to be fully engaged in delivering this strategically important project, which will replicate the proven technology of our successful plant in Arnhem but with additional improvements, most notably relating to integration of Eastman's acetyls supply to the new plant - not only is this a safer process, but it will significantly reduce logistical expense, storage costs and working capital.
We have continued to make good progress with the construction of the plant during H1 FY24. Key milestones include the completion of ground works, ongoing steelwork and main warehouse construction, installation of the reactors on site, placement of multiple large sub-contracts and procurement of major equipment. As we move towards completion of the plant, we have commenced execution of the resourcing plan along with increasing operational readiness activities which will, in the short term, lead to increased costs being incurred. The total cost of completion of Kingsport is now estimated to be c.15% higher than previously communicated at approximately $160m.
Our Accoya Color manufacturing plant in Barry, Wales, has increased our ability to convert Accoya wood into Accoya Color. In H1 FY24 we produced 2,434m(3) of Accoya Color (H1 FY23: 2,937m(3) ), with volumes impacted by current market weakness. Average sales prices were, however, c.10% higher than in the prior year - a highly credible performance given the current market backdrop. Although sales fell by 16% in the Germany, Switzerland and Austria region (DACH) in H1 FY24, our other markets - including North America - delivered sales growth of 10% on the prior year. Post 30 September 2023, product sales have continued to gain momentum in North America, with current orders indicating higher volume growth in H2 FY24 than in H1 FY24.
As we increase our Accoya production capacity, we continue to expect increased Accoya Color sales in the medium term. In addition to the product's existing markets, Accoya Color was launched in the UK in November 2023 with further market launches in development.
Tricoya
Demand for our Tricoya products remains strong despite limited production and we are continuing to grow the market with both existing and new customers. In addition, we will continue our R&D on sourcing alternative wood species for Tricoya which have a shorter supply chain.
Accsys stopped site activity at the Tricoya UK plant in Hull in November 2022, placing the project into a hold period to mitigate the risk of weaker economics on start-up and to allow the Board time to assess the economics and capability of the plant and its potential returns on investment. The Company is using modest levels of internally generated cash (c.EUR0.5m per month) to maintain the plant and progress certain pre-construction works. These include mechanical preservation works, detailed construction work scoping, planning and cost estimating, completion of minor construction packages, software programming and documentation validation. The remaining costs relate to employee & office, landlord and insurance costs.
Accsys continues to believe in the attractive market and growth potential for Tricoya, with product demand remaining strong. In view of the current operating environment and shift of company focus to the Kingsport project in the US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.
Reducing operating costs and optimising working capital
In our trading statement on 1 September 2023, we announced that we are taking immediate and decisive actions to reduce operating costs and optimise working capital. Our aim is to re-set and implement a lean operating business model and to right-size the business, delivering annual cost savings of more than EUR3.0m. This is being achieved through organisational alignment, including headcount reductions - all of which are in non-operational areas - both centrally (London head office) and locally across our international operations. In this way Accsys is creating cleaner reporting lines and a simplified business structure. In addition, we have reduced the use of interim labour and manual stacking in our Arnhem plant and have significantly scaled back on the use of third party consultants. Other actions taken during the period include implementing additional cost controls across all of our operations, cutting non-discretionary spend and eventually moving to automated functions and controls.
Going forward, a key focus for the Company will be the effective management of our supply chain. We are in the process of reducing our wood buying to return to normalised inventory levels and are looking at options in respect of anhydride supply to reduce costs.
Accelerating our sales approach
In our September statement, we stated that we would accelerate our sales approach to stimulate demand and achieve greater market penetration in our core and emerging markets. Since then, we have accelerated our sales & marketing activity by adding necessary distribution in key markets. During the period we appointed six new distributors; two in Belgium, and one each in Greece, Italy, the UK and the USA. The Company now has 67 distributors of its products and 661 AMPs worldwide, of which 111 AMPs and eight distributors are in the Americas. In H1 FY24, the Company added 56 AMPs to its global network, bringing a total of 85 AMPs in the year to date.
With room to progress further and develop new markets to help build further global product demand, Accsys continues to establish key window, door, decking and cladding manufacturing partners through its AMPs and broad network. Lead generation and brand awareness campaigns continue to promote Accoya to its key audiences and support the sell through of materials downstream.
As part of the organisational alignment, the Company is appointing additional heads in the US and France and engaging with multiple partners in the growing Middle East region. This year we appointed our first Marketing Coordinator and Sales Manager in France to execute our sales & marketing strategy. The new team is focusing on developing the AMP programme in France as well as working on an Approved Installer Programme. It has made significant progress this year to date, on-boarding 22 new AMPs with training and best practice in the production and use of Accoya, to help guarantee high-quality products for end users. During the period we also appointed a new Marketing Manager in the DACH region.
Capital Raise
We have today announced a fundraising to raise gross new proceeds of approximately EUR24m and an extension of our debt facilities. The proceeds of the fundraising allow us to complete the delivery of our US plant in Kingsport in mid-2024, strengthen our balance sheet and increase working capital headroom in the face of a challenging macro trading environment.
Dr. Jelena Arsic Van Os
Chief Executive Officer
21 November 2023
Accsys Technologies PLC
Finance Review
Statement of comprehensive income
H1 FY24 revenue increased by 21% to EUR71.2m in H1 FY24 (H1 FY23: EUR58.9m), driven by continuing demand for our products, higher average sales prices and increased production capacity following the start-up of reactor 4 in Arnhem in September 2022.
Accoya sales volumes increased by 20% to 28,807m(3) , reflecting additional capacity and also a weaker comparable period last year following production downtime in Arnhem during the tie-in and installation of reactor 4 in 2022. While demand for both Accoya and Tricoya has been good in H1, demand has softened across some of our regions towards the end of H1 FY24 and into H2 FY24 as our distributors began to experience a softening in the global construction and building materials markets.
Accoya for Tricoya sales volumes increased by 30%, with revenues increasing by 31% to EUR11.4m. Accoya sales to our customers for the manufacture of Tricoya panels are currently used to develop the market for Tricoya products and now represent 29% of total Accoya sales volumes (H1 FY23: 27%).
Other Revenue, which predominantly relates to the sale of our acetic acid by-product into the acetyls market, decreased by 36% to EUR4.9m (H1 FY23: EUR7.6m), reflecting lower acetic acid sales prices. These sales act as a partial hedge to acetic anhydride costs which also decreased during the period. Net acetyls costs 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 increased by 25%, with 20% higher sales volumes and higher raw wood costs being partially offset by lower acetic anhydride costs.
While gross profit of EUR20.3m was 12% higher than in the prior year (H1 FY23: EUR18.1m), gross profit margin fell by two percentage points to 29%. This reflects 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 will return 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 EUR13.3m to EUR17.7m. This is due to Tricoya UK's ongoing running costs being treated as operating expenditure in the first half following the introduction of Tricoya UK's hold period in H2 FY23. It is also the result of increased investment in sales & marketing, higher engineering costs and greater spend on executive recruitment.
Depreciation and amortisation charges increased by EUR1.3m to EUR4.8m following commercial production from reactor 4 in September 2022.
Underlying finance expenses increased EUR0.1m to EUR1.6m following the interest on Tricoya UK's NatWest facility not being capitalised post the introduction of the hold period for Tricoya UK in H2 FY23, higher market interest rates on the variable rate borrowings held partially offset by a foreign exchange gain on the cash pledged to ABN AMRO which is held in US dollars (see note 11).
An impairment loss (exceptional non-cash item) of EUR7.0m has been recognised in the period relating to the Tricoya segment (H1 FY23: EUR58.0m) 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 EUR1.2m has been recognised in the period for restructuring costs relating to reducing Accsys' administrative operating cost base.
No other adjustments have been recognised in the current period which were previously also excluded from underlying results. These other adjustments related to foreign exchange differences on the US dollar cash pledged to ABN AMRO and other foreign exchange differences on cash held in the prior year period. See note 4 for further details.
Accsys' share of its US joint venture (Accoya USA LLC) net loss, which is accounted for using the equity method, increased by EUR0.8m to EUR1.2m (H1 FY23: EUR0.4m) as the entity increases its pre-operating activity as it progresses towards completion in mid-2024.
Underlying loss before tax increased by EUR4.4m to EUR5.0m (H1 FY23: EUR0.6m). After taking into account exceptional items (including the impairment loss and restructuring cost) and other adjustments in the prior year period, loss before tax amounted to EUR13.1m (FY23: EUR56.3m).
The tax charge of EUR0.4m in the first half was in line with the prior year.
Underlying loss per share increased to EUR0.02 per share (H1 FY23: EUR nil per share). A statutory loss per share was recognised of EUR0.06 per share (H1 FY23: EUR0.13 per share).
Cash flow
Cash flows generated from operating activities before changes in working capital decreased by EUR2.9m to EUR1.8m (H1 FY23: EUR4.7m), reflecting the operational cash flow generated by our plant in Arnhem, partly offset by the change in treatment on operating costs for the Tricoya UK plant following the introduction of the hold period in H2 FY23.
Inventory levels increased by EUR1.9m during the period with higher finished good levels partially offset by lower raw material levels which are being closely managed.
At 30 September 2023, the Group held cash balances of EUR20.8m, a EUR5.8m decrease in the period, attributable to capex payments of EUR2.0m, the first scheduled loan repayment of EUR2.25m on the Group's ABN AMRO term loan, and the increase in inventory referred to above. This was partially offset by cash flow generated from operating activities. When adjusting for the cash pledged to ABN AMRO of $10.0m (see note 11), adjusted cash decreased by EUR6.0m during the period to EUR10.8m.
Financial position
Plant and machinery additions of EUR1.1m (H1 FY23: EUR20.5m) consisted primarily of maintenance capex for the Arnhem plant.
Trade and other receivables increased to EUR13.6m (H1 FY23: EUR11.3m), primarily due to higher sales than in H1 FY23.
Trade and other payables reduced by EUR5.2m to EUR21.4m (H1 FY23: EUR26.6m), attributable to a decrease in creditors 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 EUR64.2m during the period (FY23: EUR65.9m) following the first scheduled loan repayment of EUR2.25m on the Group's ABN AMRO term loan partially offset by interest capitalised on the Tricoya NatWest EUR6.0m facility (EUR0.3m) and interest accrued on the ABN AMRO and De Engh loans payable in October 2023.
Net debt increased by EUR4.1m in the period to EUR48.2m (FY23: EUR44.1m) due to capex investments of EUR2.0m and the increase in inventory and loan interest payments partially offset by EBITDA generation during the period.
Risks and uncertainties
As described on page 50 to 55 of the Accsys 2023 Annual Report, the business, financial condition or results of operations of the Group could be adversely affected by a number of risks. The Group's systems of control and protection are designed to help manage and control risks to an appropriate level rather than to eliminate them. These specific principal risks and related mitigations - as currently identified by Accsys' risk management process - have not changed significantly since the publication of the 2023 Annual Report in July of this year.
These risks relate to the following areas: finance, health, safety & environment; Tricoya UK plant; Kingsport plant; licensing/partnering and protection of intellectual property; market and supply chain disruption; manufacturing; talent; sale of products; environmental, social & governance (ESG) and sustainability; IT; reputational risk and governance, compliance & law.
Going concern
The condensed 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. The economic environment has remained challenging throughout the financial year (explained further in the management discussion of the results) and it is not known how long this will continue to directly impact the business and customer behaviour. For the purposes of the Group's going concern assessment, the Directors have therefore made assumptions on the likely future cash flows. 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 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 under construction 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, and the proceeds from the fundraise, and the amended bank facilities announced today (see note 14 for details) which are assumed in both scenarios.
Capital Raise
The gross proceeds from the fundraise of approximately EUR34m (which includes approximately EUR24m of gross new proceeds for the Company) include:
1) An equity Placing of between approximately EUR13m and EUR15m which will be settled on 23 November 2023. Certain of the Company's major shareholders have committed to provide approximately EUR13m of new equity through the equity Placing.
2) The issue of between approximately EUR9m and EUR11m new 6 year term convertible loan notes and the repricing and reissue of the existing EUR10m De Engh convertible loan note (see note 11) have also been arranged on 21 November 2023, subject to the completion of the equity cash Placing.
On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO debt facilities referenced in note 11 and extend these by a further 18 months to March 2026. The facilities have also been amended to provide for the release of EUR10m of cash collateral held by ABN AMRO, EUR7.5m of which will be used to repay a portion of the term loan with the balance providing the Group with additional liquidity. The amendment of the facilities also allows for an 18-month amortisation holiday. The extension is subject to the completion of the equity Placing (see note 14 for further details).
The Directors have also considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes. The Directors do not expect the assumptions in the severe but plausible downside 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.
The Directors are confident that the equity Placing will be completed on 21 November 2023. However, in the unlikely situation that the capital raise was not to be completed, the Group would need to obtain alternate financing in an expedited fashion, in order to be able to discharge its liabilities. It is not certain that the Group would be able to obtain any such financing on commercially acceptable terms. This would give rise to a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.
After carefully considering all the factors explained in this statement, the Directors believe that it is most appropriate to prepare these financial statements on the going concern basis. These financials statements therefore do not include the adjustments that would result if the Group was unable to continue as a going concern.
Steven Salo
Chief Financial Officer
21 November 2023
Accsys Technologies PLC
Condensed consolidated statement of comprehensive income for the six months ended 30 September 2023
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited 6 months 6 months 6 6 months 6 months 6 Year Year Year months months ended ended ended ended ended ended ended ended ended 30 30 31 March 31 March 31 30 Sept 30 Sept Sept 30 Sept 30 Sept Sept March 2023 2023 2023 2022 2022 2022 2023 2023 2023 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Underlying Underlying Underlying Exceptional Exceptional Exceptional items Total items Total items Total & other & other & other adjustments* adjustments* adjustments* Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,493 - 143,493 Tricoya panel revenue 2,918 - 2,918 201 - 201 1,374 - 1,374 Licence revenue 46 - 46 11 - 11 329 - 329 Other revenue 4,930 - 4,930 7,584 - 7,584 16,822 - 16,822 --------------------- --- ----------- ------------- ---------- ----------- ------------- ---------- --------------------- ------------- ----------
Total revenue 2 71,207 - 71,207 58,884 - 58,884 162,018 - 162,018 Cost of sales (50,865) - (50,865) (40,742) - (40,742) (106,852) - (106,852) ----------- ------------- ---------- ----------- ------------- ---------- --------------------- ------------- ---------- Gross profit 20,342 - 20,342 18,142 - 18,142 55,166 - 55,166 Other operating costs 3 (22,482) (8,200) (30,682) (16,773) (58,481) (75,254) (39,878) (87,453) (127,331) Operating (loss)/profit (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165) Net finance expense (1,610) 89 (1,521) (1,530) 2,699 1,169 (3,224) 9,350 6,126 Share of net loss of joint venture accounted for using the equity method 13 (1,211) - (1,211) (403) - (403) (1,036) - (1,036) (Loss)/profit before taxation (4,961) (8,111) (13,072) (564) (55,782) (56,346) 11,028 (78,103) (67,075) Tax expense 5 (420) - (420) (357) - (357) (2,787) - (2,787) (Loss)/profit for the period (5,381) (8,111) (13,492) (921) (55,782) (56,703) 8,241 (78,103) (69,862) ----------- ------------- ---------- ----------- ------------- ---------- --------------------- ------------- ---------- Items that may be reclassified to profit or loss Gain/(loss) arising on translation of foreign operations 22 - 22 67 - 67 (61) - (61) Gain arising on foreign currency cash flow hedges - - - - 90 90 42 - 42 Total other comprehensive income/(expense) 22 - 22 67 90 157 (19) - (19) Total comprehensive (loss)/gain for the period (5,359) (8,111) (13,470) (854) (55,692) (56,546) 8,222 (78,103) (69,881) =========== ============= ========== =========== ============= ========== ===================== ============= ========== Total comprehensive (loss)/gain for the year is attributable to: Owners of Accsys Technologies PLC (5,359) (8,111) (13,470) (214) (26,155) (26,369) 9,509 (48,566) (39,057) Non-controlling interests - - - (640) (29,537) (30,177) (1,287) (29,537) (30,824) Total comprehensive (loss)/gain for the period (5,359) (8,111) (13,470) (854) (55,692) (56,546) 8,222 (78,103) (69,881) =========== ============= ========== =========== ============= ========== ===================== ============= ========== Basic (loss)/profit per ordinary share 6 EUR(0.02) EUR(0.06) EUR(0.00) EUR(0.13) EUR0.05 EUR(0.19) Diluted (loss)/profit per ordinary share 6 - - - - EUR0.04 -
The notes form an integral part of these condensed financial statements.
* See note 4 for details of exceptional items and other adjustments.
Accsys Technologies PLC
Condensed consolidated s tatement of financial position at 30 September 2023
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March Note 2023 2022 2023 EUR'000 EUR'000 EUR'000 Non-current assets Intangible assets 7 10,369 6,852 10,491 Investment accounted for using the equity method 13 29,648 31,942 30,859 Property, plant and equipment 8 96,612 140,422 106,051 Right of use assets 4,210 4,087 4,044 Financial asset at fair value through profit or loss - - - 140,839 183,303 151,445 ---------- ---------- ---------- Current assets Inventories 31,812 32,354 29,946 Trade and other receivables 13,643 11,333 18,075 Cash and cash equivalents 20,780 18,123 26,593 Corporation tax receivable 460 503 459 66,695 62,313 75,073 ---------- ---------- ---------- Current liabilities Trade and other payables (21,411) (26,620) (25,896) Obligation under lease liabilities (943) (790) (980) Short term borrowings 11 (9,500) (19,686) (9,500) Corporation tax payable (6,500) (3,615) (6,082) Derivative financial instrument - (77) - (38,354) (50,788) (42,458) ---------- ---------- ---------- Net current assets 28,341 11,525 32,615 Non-current liabilities Obligation under lease liabilities (3,845) (3,806) (3,755) Other long term borrowing 11 (54,680) (55,210) (56,420) Financial guarantee - - - Financial liability at amortised cost (1,293) - (1,383) (59,818) (59,016) (61,558) ---------- ---------- ---------- Total net assets 109,362 135,812 122,502 Equity Share capital 9 11,002 10,343 10,963 Share premium account 250,717 241,662 250,717 Other reserves 10 114,743 114,791 114,743 Accumulated loss (267,243) (236,584) (254,042) Own shares (8) (6) (8) Foreign currency translation reserve 151 257 129 Capital value attributable to owners of Accsys Technologies PLC 109,362 130,463 122,502 Non-controlling interest in subsidiaries - 5,349 - Total equity 109,362 135,812 122,502
The notes form an integral part of these condensed financial statements.
Accsys Technologies PLC
Condensed consolidated s tatement of changes in equity for the six months ended 30 September 2023
Total equity Foreign attributable currency to equity Ordinary trans- shareholders share Share Other Own lation Accumulated of the Non-Controlling Total capital premium reserves Shares reserve loss company interests Equity EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'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 - - - - - (26,526) (26,526) (30,177) (56,703) Other comprehensive income for the year - - 90 - 67 - 157 - 157 Share based payments - - - - - 462 462 - 462
Shares issued 705 - - - - (15) 690 - 690 Premium on shares issued - 19,422 - - - - 19,422 - 19,422 Share issue costs - (1,086) - - - - (1,086) - (1,086) Balance at 30 Sept 2022 (unaudited) 10,343 241,662 114,791 (6) 257 (236,584) 130,463 5,349 135,812 ========= ======== ========= ======== ========= ============ ============== ================= ========= (Loss) for the year - - - - - (12,512) (12,512) (647) (13,159) Other comprehensive income for the year - - (48) - (128) - (176) - (176) Share based payments - - - - - (96) (96) - (96) Shares issued 26 - - (2) - (7) 17 - 17 Premium on shares issued - 104 - - - - 104 - 104 Share issue costs - - - - - - - - - Acquisition of subsidiary shares from non-controlling interests 594 8,951 - (4,843) 4,702 (4,702) (0) Balance at 31 March 2023 10,963 250,717 114,743 (8) 129 (254,042) 122,502 - 122,502 ========= ======== ========= ======== ========= ============ ============== ================= ========= Profit/(Loss) for the year - - - - - (13,492) (13,492) - (13,492) Other comprehensive income for the year - - - - 22 - 22 - 22 Share based payments - - - - - 330 330 - 330 Shares issued 39 - - - - (39) - - - Share issue costs - - - - - - - - - Balance at 30 Sept 2023 (unaudited) 11,002 250,717 114,743 (8) 151 (267,243) 109,362 - 109,362 ========= ======== ========= ======== ========= ============ ============== ================= =========
Ordinary share capital is the amount subscribed for shares at nominal value (note 9).
Share premium represents the excess of the amount subscribed for ordinary share capital over the nominal value of these shares, net of share issue expenses.
See note 10 for details concerning other reserves.
Non-controlling interests relate to the previous investment of various parties into Tricoya Technologies Limited and Tricoya UK Limited. The Group purchased the remaining shareholding in the Tricoya entities in the year ended 31 March 2023.
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 condensed financial statements.
Accsys Technologies PLC
Condensed consolidated statement of cash flow for the six months ended 30 September 2023
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 (Loss) before taxation (13,072) (56,346) (67,075) Adjustments for: Amortisation of intangible assets 391 389 780 Depreciation of property, plant and equipment and right of use assets 4,378 3,095 7,512 Impairment loss 7,000 58,000 86,000 Net (gain) on disposal of property, plant and equipment - (3) - Net finance expense/(income) 1,521 (1,169) (6,126) Equity-settled share-based payment expenses 330 462 366 Accsys portion of licence fee received from joint venture - - 300 Share of net loss of joint venture 1,211 403 1,036 Currency translation gain/(loss) 66 (156) (70) Cash inflows from operating activities before changes in working capital 1,825 4,675 22,723 ========== ========== ========= Decrease/(increase) in trade and other receivables 4,451 5,550 (1,154) (Increase) in inventories (1,868) (11,982) (9,596) (Decrease)/Increase in trade and other payables (3,778) (515) 4,673 Net cash from operating activities before tax 630 (2,272) 16,646 Tax received 0 6 87 Net cash from operating activities 630 (2,266) 16,733 ========== ========== ========= Cash flows from investing activities Investment in property, plant and equipment (2,023) (22,595) (29,773) Foreign exchange deal settlement related to hedging of Hull capex - - (81) Investment in intangible assets (268) (207) (437) Investment in joint venture - (29,132) (28,979) Net cash used in investing activities (2,291) (51,934) (59,270) ========== ========== ========= Cash flows from financing activities Proceeds from loans - 10,000 10,000 Other finance costs (36) (173) (250) Interest paid (1,311) (992) (2,429) Repayment of lease liabilities (706) (538) (940) Repayment of loans (2,250) - - Proceeds from issue of share capital - 20,112 20,258 Share issue costs - (1,086) (1,086) Net cash from financing activities (4,303) 27,323 25,553 ========== ========== ========= Net (decrease) in cash and cash equivalents (5,964) (26,877) (16,984) Effect of exchange gain on cash and cash equivalents 151 2,946 1,523 Opening cash and cash equivalents 26,593 42,054 42,054 Closing cash and cash equivalents 20,780 18,123 26,593 ========== ========== =========
The notes form an integral part of these condensed financial statements.
Accsys Technologies PLC
Notes to the financial statements for the six months ended 30 September 2023
1. Accounting policies
General Information
The principal activity of the Group is the production and sale of Accoya solid wood and exploitation of technology for the production and sale of Accoya wood and Tricoya wood chips. Manufactured through the Group's proprietary acetylation processes, these products exhibit superior dimensional stability and durability compared with alternative natural, treated and modified woods as well as more resource intensive man-made materials.
The Company is a public limited company, which is listed on AIM in the United Kingdom and Euronext in the Netherlands, and is domiciled in the United Kingdom. The registered office is 4(th) Floor, 3 Moorgate Place, London EC2R 6EA.
The condensed consolidated financial statements were approved on 21 November 2023. These condensed consolidated financial statements have not been audited.
Basis of accounting
The Group's condensed consolidated financial statements in these interim results have been prepared in accordance with IFRS issued by the International Accounting Standards Board as endorsed by the European Union and as adopted for use in the United Kingdom, in particular International Accounting Standard (IAS) 34 "interim financial reporting" and the AIM Rules for Companies and the Dutch Financial Markets Supervision Act.
The financial information for the six months ended 30 September 2023 and the six months ended 30 September 2022 is unaudited. The comparative financial information for the full year ended 31 March 2023 does not constitute the Group's statutory financial statements for that period although it has been derived from the statutory financial statements for the year then ended. A copy of those statutory financial statements has been delivered to the Registrar of Companies and which were approved by the Board of Directors on 26 June 2023. The auditors' report on those accounts was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. This financial information is to be read in conjunction with the annual report for the year ended 31 March 2023, which has been prepared in accordance with both International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2023.
Accounting policies
No new accounting standards, amendments or interpretations have been adopted in the period which have any impact on these condensed financial statements, or are expected to affect the Group's annual report for the year ended 31 March 2024. The accounting policies applied for preparation of condensed consolidated financial statements are consistent with those of the annual financial statements for the year ended 31 March 2023, as described in those financial statements.
Going concern
The condensed 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. The economic environment has remained challenging throughout the financial year (explained further in the management discussion of the results) and it is not known how long this will continue to directly impact the business and customer behaviour. For the purposes of the Group's going concern assessment, the Directors have therefore made assumptions on the likely future cash flows. 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.
1. Accounting policies (continued)
Going concern (continued)
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 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 under construction 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, and the proceeds from the fundraise, and the amended bank facilities announced today (see note 14 for details) which are assumed in both scenarios.
Capital Raise
The gross proceeds from the fundraise of approximately EUR34m (which includes approximately EUR24m of gross new proceeds for the Company) include:
1) An equity Placing of between approximately EUR13m and EUR15m which will be settled on 23 November 2023. Certain of the Company's major shareholders have committed to provide approximately EUR13m of new equity through the equity Placing.
2) The issue of between approximately EUR9m and EUR11m new 6 year term convertible loan notes and the repricing and reissue of the existing EUR10m De Engh convertible loan note (see note 11) have also been arranged on 21 November 2023, subject to the completion of the equity cash Placing.
On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO debt facilities referenced in note 11 and extend these by a further 18 months to March 2026. The facilities have also been amended to provide for the release of EUR10m of cash collateral held by ABN AMRO, EUR7.5m of which will be used to repay a portion of the term loan with the balance providing the Group with additional liquidity. The amendment of the facilities also allows for an 18-month amortisation holiday. The extension is subject to the completion of the equity Placing (see note 14 for further details).
The Directors have also considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes. The Directors do not expect the assumptions in the severe but plausible downside 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.
The Directors are confident that the equity Placing will be completed on 21 November 2023. However, in the unlikely situation that the capital raise was not to be completed, the Group would need to obtain alternate financing in an expedited fashion, in order to be able to discharge its liabilities. It is not certain that the Group would be able to obtain any such financing on commercially acceptable terms. This would give rise to a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.
After carefully considering all the factors explained in this statement, the Directors believe that it is most appropriate to prepare these financial statements on the going concern basis. These financials statements therefore do not include the adjustments that would result if the Group was unable to continue as a going concern.
2. Segmental reporting
Accoya
Accoya Segment ------------------------------------------------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months ended ended ended ended ended ended ended ended ended 30 30 30 30 30 30 31 March 31 March 31 March September September September September September September 2023 2023 2023 2023 2023 2023 2022 2022 2022 Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL items items items & other & other & other adjustments adjustments adjustments
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,494 - 143,494 Licence revenue - - - - - - 300 - 300 Other revenue 4,885 - 4,885 7,584 7,584 16,773 - 16,773 Total revenue 68,198 - 68,198 58,672 - 58,672 160,567 - 160,567 Cost of sales (48,132) - (48,132) (40,580) - (40,580) (105,608) - (105,608) Gross profit 20,066 - 20,066 18,092 - 18,092 54,959 - 54,959 Other operating costs (13,527) - (13,527) (10,035) - (10,035) (22,621) - (22,621) Profit from operations 6,539 - 6,539 8,057 - 8,057 32,338 - 32,338 Profit from operations 6,539 - 6,539 8,057 - 8,057 32,338 - 32,338 Share of Accoya USA EBIT (1,150) - - (403) - - (912) - - EBIT 5,389 - 6,539 7,654 - 8,057 31,426 - 32,338 Depreciation and amortisation 4,137 - 4,137 2,786 - 2,786 6,832 - 6,832 Accoya USA Depreciation and amortisation 104 - - - - - 211 - - ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ---------- EBITDA 9,630 - 10,676 10,440 - 10,843 38,469 - 39,170 -------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 196 (H1 FY23: 184)
Year 6 months 6 months ended ended ended 31 30 September 30 September March 2023 2022 2023 EUR'000 EUR'000 EUR'000 Accoya segmental underlying EBITDA 9,630 10,440 38,469 -------------- -------------- -------- Accoya underlying licence Income - - (300) Accoya segmental manufacturing EBITDA (excluding licence income) 9,630 10,440 38,169 ============== ============== ======== Accoya segmental gross profit 20,066 18,092 54,959 -------------- -------------- -------- Accoya licence Income - - (300) Accoya manufacturing gross profit 20,066 18,092 54,659 ============== ============== ======== Gross Accoya manufacturing margin 29.4% 30.8% 34.1% 6 months 6 months ended ended Year ended 30 September 30 September 31 March 2023 2022 2023 EUR EUR EUR Accoya(R) Manufacturing gross profit - EUR'000 20,066 18,092 54,659 Accoya(R) sales volume - m(3) 28,807 23,957 63,344 Accoya(R) manufacturing gross profit per m(3) 697 755 863 ============== ============== =============== 2. Segmental reporting (continued)
Tricoya
Tricoya Segment --------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 ended ended ended ended ended ended ended ended months 30 30 30 30 30 30 31 March 31 March ended September September September September September September 2023 2023 31 March 2023 2023 2023 2022 2022 2022 2023 Underlying Exceptional Underlying Exceptional TOTAL Underlying Exceptional TOTAL items TOTAL items items & other & other & other adjustments adjustments adjustments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Tricoya panel revenue 2,918 - 2,918 201 - 201 1,373 - 1,373 Licence revenue 46 - 46 11 - 11 29 - 29 Other revenue 45 - 45 - - - 49 - 49 Total revenue 3,009 - 3,009 212 - 212 1,451 - 1,451 Cost of sales (2,733) - (2,733) (162) - (162) (1,244) - (1,244) Gross profit 276 - 276 50 - 50 207 - 207 Other operating costs (3,796) (7,000) (10,796) (1,733) (57,997) (59,730) (5,823) (86,000) (91,823) Loss from operations (3,520) (7,000) (10,520) (1,683) (57,997) (59,680) (5,616) (86,000) (91,616) Loss from operations (3,520) (7,000) (10,520) (1,683) (57,997) (59,680) (5,616) (86,000) (91,616) Depreciation and amortisation 267 - 267 258 - 258 527 - 527 Impairment - 7,000 7,000 - 58,000 58,000 - 86,000 86,000 EBITDA (3,253) - (3,253) (1,425) 3 (1,422) (5,089) - (5,089) -------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------
Revenue includes direct Tricoya panel sales made by the Company, which are purchased from our Tricoya Customers. The sale of Accoya to customers who produce the Tricoya panels are included within the Accoya segment.
Other operating costs include pre-operating costs for the Tricoya UK plant.
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 10 (H1 FY23: 31)
Corporate
Corporate Segment ---------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 ended ended ended ended ended ended ended ended months 30 30 30 30 30 30 31 March 31 March ended September September September September September September 2023 2023 31 March 2023 2023 2023 2022 2022 2022 2023 Underlying Exceptional Underlying Exceptional TOTAL Underlying Exceptional TOTAL items TOTAL items items & other & other & other adjustments adjustments adjustments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Total revenue - - - - - - - - - Cost of sales - - - - - - - - - Gross result - - - - - - - - - Other operating costs (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429) Loss from operations (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429) (Loss) from operations (4,269) (1,200) (5,469) (4,277) (484) (4,761) (9,976) (1,453) (11,429) Depreciation and amortisation 332 - 332 406 - 406 866 - 866 ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ---------- EBITDA (3,937) (1,200) (5,137) (3,871) (484) (4,355) (9,110) (1,453) (10,563) -------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
See note 4 for explanation of Exceptional items and other adjustments.
Average headcount = 16 (H1 FY23: 16).
2. Segmental reporting (continued)
Research and Development
Research & Development Segment ---------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 months September September September September September September March March ended 2023 2023 2023 2022 2022 2022 2023 2023 31 March 2023 Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional items & items & items & TOTAL other other other adjustments adjustments adjustments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Total revenue - - - - - - - - - Cost of sales - - - - - - - - - Gross result - - - - - - - - - Other operating costs (890) - (890) (728) - (728) (1,458) - (1,458) Loss from operations (890) - (890) (728) - (728) (1,458) - (1,458) Loss from operations (890) - (890) (728) - (728) (1,458) - (1,458) Depreciation and amortisation 33 - 33 34 - 34 67 - 67 ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ---------- EBITDA (857) - (857) (694) - (694) (1,391) - (1,391) -------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Costs exclude those which have been capitalised in accordance with IAS 38. (see note 7).
See note 4 for explanation of Exceptional items and other adjustments.
Average headcount = 13 ( H1 FY23 : 14).
2. Segmental reporting (continued)
Total
TOTAL ---------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31 September September September September September September March March March 2023 2023 2023 2022 2022 2022 2023 2023 2023 Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL items & items & items & other other other adjustments adjustments adjustments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Accoya wood revenue 63,313 - 63,313 51,088 - 51,088 143,493 - 143,493 Tricoya panel revenue 2,918 - 2,918 201 - 201 1,374 - 1,374 Licence revenue 46 - 46 11 - 11 329 - 329 Other revenue 4,930 - 4,930 7,584 - 7,584 16,822 - 16,822 Total revenue 71,207 - 71,207 58,884 - 58,884 162,018 - 162,018 Cost of sales (50,865) - (50,865) (40,742) - (40,742) (106,852) - (106,852) Gross profit 20,342 - 20,342 18,142 - 18,142 55,166 - 55,166 Other operating costs (22,482) (8,200) (30,682) (16,773) (58,481) (75,254) (39,878) (87,453) (127,331) (Loss)/Profit from operations (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165) Finance expense (1,610) 89 (1,521) (1,530) 2,699 1,169 (3,224) 9,350 6,126 Investment in joint venture (1,211) - (1,211) (403) - (403) (1,036) - (1,036) (Loss)/Profit before taxation (4,961) (8,111) (13,072) (564) (55,782) (56,346) 11,028 (78,103) (67,075) =========== ============ ========== =========== ============ ========== =========== ============ ==========
See note 4 for explanation of Exceptional Items and other adjustments.
Reconciliation of underlying earnings
Reconciliation of underlying earnings --------------------------------------------------------------------------------- 6 months 6 months 6 months 6 months 6 months 6 months 12 months 12 months 12 months ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 ended 31 ended 31 ended 31 March September September September September September September March March 2023 2023 2023 2023 2022 2022 2022 2023 2023 TOTAL Underlying Exceptional TOTAL Underlying Exceptional TOTAL Underlying Exceptional items & items & items & other other other adjustments adjustments adjustments EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 (Loss)/Profit from operations (2,140) (8,200) (10,340) 1,369 (58,481) (57,112) 15,288 (87,453) (72,165) Share of Accoya USA EBIT (1,150) - - (403) - - (912) - - EBIT (3,290) (8,200) (10,340) 966 (58,481) (57,112) 14,376 (87,453) (72,165) Depreciation and amortisation 4,769 - 4,769 3,484 - 3,484 8,292 - 8,292 Accoya USA depreciation and amortisation 104 - - - - - 211 - - Impairment - 7,000 7,000 - 58,000 58,000 - 86,000 86,000 EBITDA 1,583 (1,200) 1,429 4,450 (481) 4,372 22,879 (1,453) 22,127 2. Segmental reporting (continued)
Segmental reporting continued
Assets and liabilities on a segmental basis:
Accoya Tricoya Corporate R&D TOTAL Sept Sept Sept Sept 2023 2023 Sept 2023 2023 2023 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Non-current assets 115,770 19,969 4,971 129 140,839 --------- --------- ---------- -------- --------- Current assets 37,680 3,581 19,823 5,611 66,695 --------- --------- ---------- -------- --------- Current liabilities (12,063) (12,925) (13,314) (52) (38,354) --------- --------- ---------- -------- --------- Net current assets/(liabilities) 25,617 (9,344) 6,509 5,559 28,341 Non-current liabilities (2,240) (7,514) (50,025) (39) (59,818) --------- --------- ---------- -------- --------- Net assets 139,147 3,111 (38,545) 5,649 109,362 ========= ========= ========== ======== ========= Accoya Tricoya Corporate R&D TOTAL Sept Sept Sept Sept 2022 2022 Sept 2022 2022 2022 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Non-current assets 122,915 55,803 4,390 195 183,303 --------- --------- ---------- -------- --------- Current assets 35,276 3,827 23,141 69 62,313 --------- --------- ---------- -------- --------- Current liabilities (10,998) (32,006) (7,718) (66) (50,788) --------- --------- ---------- -------- --------- Net current assets/(liabilities) 24,278 (28,179) 15,423 3 11,525 Non-current liabilities (2,547) (1,174) (55,210) (85) (59,016) --------- --------- ---------- -------- --------- Net assets 144,646 26,450 (35,397) 113 135,812 ========= ========= ========== ======== ========= Accoya Tricoya Corporate R&D TOTAL March March March March March 2023 2023 2023 2023 2023 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 Non-current assets 120,459 27,047 3,777 162 151,445 --------- --------- ---------- -------- --------- Current assets 52,699 3,872 13,630 4,872 75,073 --------- --------- ---------- -------- --------- Current liabilities (22,947) (4,156) (15,299) (56) (42,458) --------- --------- ---------- -------- --------- Net current assets/(liabilities) 29,752 (284) (1,669) 4,816 32,615 Non-current liabilities (2,545) (8,665) (50,289) (59) (61,558) --------- --------- ---------- -------- --------- Net assets 147,666 18,098 (48,181) 4,919 122,502 ========= ========= ========== ======== =========
The segmental assets in the current year were predominantly held in the UK, USA and mainland Europe (Prior Year UK and mainland Europe). Additions to property, plant, equipment and intangible assets in the current year were predominantly incurred in the UK and mainland Europe (Prior Year UK and mainland Europe). The increase in Investment accounted for using the equity method (investment into Accoya USA LLC) incurred in USA. There are no significant intersegment revenues.
2. Segmental reporting (continued)
Segmental reporting continued
Analysis of revenue by geographical destination:
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 UK & Ireland 23,292 21,182 55,395 Rest of Europe 28,638 22,400 63,635 Americas 13,296 11,084 29,778 Rest of World 5,981 4,218 13,210 71,207 58,884 162,018 ========== ========== =========
Sales to UK and Ireland include the sales to MEDITE.
3. 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, the site in Barry, the offices in Dallas and London and certain pre-operating costs associated with the plant in Hull:
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 Sales and marketing 3,136 2,200 5,219 Research and development 857 694 990 Other operating costs 6,858 4,491 9,720 Administration costs 6,862 5,904 15,657 Exceptional Items and other adjustments (refer to note 4) 1,200 481 1,453 Other operating costs excluding depreciation and amortisation 18,913 13,770 33,039 ========== ========== ========= Depreciation and amortisation 4,769 3,484 8,292 Impairment loss 7,000 58,000 86,000 Total other operating costs 30,682 75,254 127,331 ========== ========== =========
Administrative costs include costs associated with Human Resources, IT, Legal, Business Development, Finance, Management and General Office and include the costs of the Group's London and Dallas offices.
Group average employee headcount decreased to 235 in the period to 30 September 2023, from 245 in the period to 30 September 2022.
4. Exceptional Items and Other Adjustments Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 Advisor fees in relation to Tricoya consortium reorganisation - (484) (1,453) Impairment of the Tricoya segment assets (7,000) (58,000) (86,000) Partial net derecogition of NatWest loan - - 9,353 Revaluation of Valuation Recovery Instrument "VRI" liability 89 - (1,383) Foreign exchange differences on USD cash held for investment into USA JV- incl. in Finance expense - 1,380 1,380 Restructuring costs (1,200) - - Total exceptional items (8,111) (57,104) (78,103) ---------- ---------- --------- Foreign exchange differences arising on Tricoya cash held - Operating costs (loss)/profit - 3 - Foreign exchange differences on cash held - Other comprehensive profit/(loss) - 167 - Revaluation of USD cash pledged to ABN Amro - incl. in Finance expense - 1,319 - Revaluation of FX forwards used for cash-flow hedging - Other comprehensive (loss)/profit - (77) - Total other adjustments - 1,412 - ---------- ---------- --------- Tax on exceptional items and other adjustments - - - Total exceptional items and other adjustments (8,111) (55,692) (78,103) ========== ========== =========
Exceptional Items
In the period:
- an exceptional operating cost of EUR1.2m has been recognised for restructuring costs relating to decreasing the Group's administrative operating cost base.
- An impairment loss (non-cash item) of EUR7.0m has been recognised in the period relating to the Tricoya segment (FY23: EUR86.0m) due to an increase in the discount rate to 14.5% 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 (EUR35m) 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%.
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 EUR9.4m to EUR6m, 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 EUR15.4m and recognition of the new EUR6m loan.
- Separate to, and in addition to the amended EUR6m loan, NatWest is entitled to obtain recovery, via the Value Recovery Instrument ("VRI") agreement, of up to approximately EUR9.4m, on a contingent basis, depending on profitability of the Tricoya UK plant once operational. A financial liability was recognised of EUR1.4m in the prior year in respect of the VRI.
- Foreign exchange differences were recognised due to US dollars held for investment into Accoya USA LLC. Following the May 2021 equity raise, the amount raised to invest into Accoya USA was translated into US dollars and held in cash ensuring that foreign exchange movements did not decrease the amount raised below the US dollar investment into Accoya USA. This treatment did not meet the requirements for hedge accounting under IFRS 9, Financials instruments, and therefore the foreign exchange gain on the revaluation of the US dollars has been accounted for in Finance expenses.
Other Adjustments
Other adjustments included in the prior year are no longer disclosed for the period ended 30 September 2023.
5. Tax expense Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 (a) Tax recognised in the condensed consolidated statement of comprehensive income comprises: Current tax expense/(credit) UK Corporation tax on losses for the period - - - Research and development tax credit in respect of current period - (68) (121) - (68) (121) Overseas tax at rate of 15% 19 6 32 Overseas tax at rate of 25% 401 419 2,876 Deferred Tax Utilisation of deferred tax asset - - - Total tax expense reported in the condensed consolidated statement of comprehensive income 420 357 2,787 ========== ========== ========= 6. Basic and diluted profit/ (loss) per ordinary share Unaudited Unaudited Unaudited Unaudited Audited Audited 6 months 6 months 6 months 6 months Year Year ended ended ended ended ended ended 30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March 2023 2023 2022 2022 2023 2023 Basic earnings per share Underlying Total Underlying Total Underlying Total Weighted average number of ordinary shares in issue ('000) 218,395 218,395 204,358 204,358 210,693 210,693 Profit/(Loss) for the period attributable to owners of Accsys Technologies PLC (EUR'000) (5,381) (13,492) (281) (26,526) 9,528 (39,038) Basic profit/(loss) per share EUR(0.02) EUR(0.06) EUR(0.00) EUR(0.13) EUR0.05 EUR(0.19) =========== ========== =========== ========== =========== ========== Diluted earnings per share Weighted average number of ordinary shares in issue ('000) - - - - 210,693 - Equity options attributable to BGF -* -* -* -* 8,449 -* Weighted average number of ordinary shares in issue and potential ordinary shares ('000) - - - - 219,142 - ----------- ---------- ----------- ---------- ----------- ---------- Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC (EUR'000) - - - - 9,528 - Diluted profit/(loss) per share -* -* -* -* EUR0.04 -* =========== ========== =========== ========== =========== ==========
* IAS 33 "Earning per share" defines Dilutive share options as share options which would decrease profit per share or increase loss per share. 8,449,000 equity options held by BGF if exercised would decrease the Loss per share. As a result, these are anti-dilutive and therefore shown as nil.
7. Intangible assets Internal Intellectual development property costs rights Goodwill Total EUR'000 EUR'000 EUR'000 EUR'000 Cost At 31 March 2022 7,642 74,992 4,231 86,865 ============ Additions 27 180 - 207 At 30 September 2022 7,669 75,172 4,231 87,072 Additions 30 200 - 230 At 31 March 2023 7,699 75,372 4,231 87,302 ============ Additions 35 234 - 269 At 30 September 2023 7,734 75,606 4,231 87,571 Accumulated amortisation At 31 March 2022 2,894 73,137 - 76,031 Amortisation 197 192 - 389 Impairment loss 2,855 945 - 3,800 At 30 September 2022 5,946 74,274 - 80,220 Amortisation 188 203 - 391 Impairment loss (2,855) (945) - (3,800) At 31 March 2023 3,279 73,532 - 76,811 Amortisation 198 193 - 391 At 30 September 2023 3,477 73,725 - 77,202 Net book value At 31 March 2022 4,748 1,855 4,231 10,834 At 30 September 2022 1,723 898 4,231 6,852 At 31 March 2023 4,420 1,840 4,231 10,491 At 30 September 2023 4,257 1,881 4,231 10,369
Refer to note 8 for the recoverability assessment of these intangible assets.
8. Property, plant and equipment Land Plant Office and buildings and machinery equipment Total EUR'000 EUR'000 EUR'000 EUR'000 Cost or valuation Opening balance at 31 March 2022 17,976 187,445 4,353 209,774 Additions - 20,476 15 20,491 Foreign currency translation - - 19 19 At 30 September 2022 17,976 207,921 4,387 230,284 Additions - 900 326 1,226 Foreign currency translation - - (16) (16) Opening balance at 31 March 2023 17,976 208,821 4,697 231,494 Additions - 1,142 206 1,348 Foreign currency translation - - 4 4 At 30 September 2023 17,976 209,963 4,907 232,846 Depreciation Opening balance at 31 March 2022 1,353 29,495 2,265 33,113 Charge for the period 179 2,104 247 2,530 Foreign currency translation - - 19 19 Impairment loss - 54,200 - 54,200 At 30 September 2022 1,532 85,799 2,531 89,862 Charge for the period 179 3,293 302 3,774 Foreign currency translation - - 7 7 Impairment loss - 31,800 - 31,800 Opening balance at 31 March 2023 1,711 120,892 2,840 125,443 Charge for the period 179 3,342 266 3,787 Foreign currency translation - - 4 4 Impairment loss - 7,000 - 7,000 At 30 September 2023 1,890 131,234 3,110 136,234 Net book value At 31 March 2022 16,623 157,950 2,088 176,661 At 30 September 2022 16,444 122,122 1,856 140,422 At 31 March 2023 16,265 87,929 1,857 106,051 At 30 September 2023 16,086 78,729 1,797 96,612
Plant and machinery assets with a net book value of EUR17,851,000 relating to the Tricoya UK plant are held as assets under construction and are not depreciated (31 March 2023: EUR24,851,000).
8. Property, plant and equipment (continued)
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 14.5% (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 totalling EUR93m should be recognised in the Tricoya CGU, of which EUR7m was recognised in the period ending 30 September 2023.
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 1% to 14.5% (13.5% at 31 March 2023).
Key assumptions applied to the Tricoya CGU were as follows:
-- a discount rate of 14.5%;
-- project capital costs to bring the plant into commercial operation of EUR35m;
-- a production capacity of 24,000MT
-- a "hold period" of 2 years from 30 September 2023 (period in which limited construction activities is performed); and
-- a long-term growth rate of 2.5%.
The impact the following changes to these key assumptions would have, if made in isolation, on the impairment calculated for
the Tricoya CGU is as follows:
-- a 1% increase in the discount rate: increase of EUR6m;
-- a 1% decrease in the long-term growth rate: increase of EUR3m;
-- a 12-month extension in the hold period: increase of EUR9m;
-- a 6,000MT increase in the production capacity: decrease of EUR18m; and
-- a EUR10m increase in the capital costs to bring the plant into commercial operation: increase of EUR7m.
9. Share capital
In the period ended 30 September 2022:
In May 2022, 13,798,103 ordinary 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 ordinary shares were issued at a price of EUR1.45 (GBP1.23) per ordinary share, raising gross proceeds of EUR20m (before expenses).
In July 2022, 137,665 shares were issued to an Employee Benefit Trust 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 vested in July 2023, subject to the employees continuing employment within the Group.
In the period ended 31 March 2023:
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 November 2022, 11,875,801 ordinary shares were issued to the tricoya consortium partners (INEOS, MEDITE , BGF & Volantis) at a price of EUR0.80 (GBP0.71) per share. This formed part of a sale and purchase agreement with the Tricoya Consortium Partners whereby Accsys acquired the remaining 38.2% holding in Tricoya UK Ltd that Tricoya Technologies Ltd did not already own and the 23.5% holding in Tricoya Technologies Ltd that it did not already own.
In January 2023, following the subscription by employees in the prior year for shares under the Employee Share Participation Plan (the 'Plan'), 174,144 ordinary shares were issued as "Matching Shares" at nominal value under the Plan.
9. Share capital (continued)
In addition, various employees newly subscribed under the Plan for 203,906 ordinary shares at an acquisition price of EUR0.81 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 period ended 30 September 2023:
Between July and August 2023, 775,191 shares were issued following the exercise of nil cost options, granted under the Company's 2013 LTIP.
In July 2023, 222,232 ordinary shares were issued to an Employee Benefit Trust at nominal value, 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. These ordinary shares will vest in July 2024, subject to the employees continuing employment within the Group.
10. Other Reserves Hedge Capital redemp- Effective-ness Total Other tion reserve Warrant reserve Merger reserve reserve Other reserve reserves EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 Balance at 30 September 2022 148 - 106,707 385 7,550 114,791 Total Comprehensive income for the period - - - (48) - (48) Balance at 31 March 2023 148 - 106,707 337 7,550 114,743 Total - - - - - Comprehensive income for the period - Balance at 30 September 2023 148 - 106,707 337 7,550 114,743
The closing balance of the capital redemption reserve represents the amounts transferred from share capital on redemption of deferred shares in a prior period.
The merger reserve arose prior to transition to IFRS when merger accounting was adopted.
The hedge effectiveness reserve reflects the total accounted for under IFRS 9 in relation to the Tricoya segment.
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.
11. Commitments under loan agreements Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 2023 30 Sept 2022 31 March 2023 Amounts payable under loan agreements - undiscounted cashflows: Within one year 11,462 20,133 10,312 In the second to fifth years inclusive 48,841 61,210 52,976 After five years 10,519 - 9,962 Less future finance charges (6,642) (6,447) (7,330) Present value of loan obligations 64,180 74,896 65,920
11. Commitments under loan agreements (continued)
ABN AMRO Debt Facilities
In October 2021 Accsys entered a 3-year bilateral facilities agreement with ABN which comprises of a
- EUR45m term loan facility and, - EUR25m Revolving Credit Facility ('RCF') . - The term loan has bi-annual payments of EUR2.25m from April 2023. - Term loan interest varies between 1.75% and 3.25% depending on net leverage. - RCF interest rate varies between 2.0% and 3.5% above EURIBOR.
Approximately EUR20m of the RCF was utilised to provide a letter of credit to FHB in support of the Accoya USA JV funding arrangements, and the remaining EUR5m was drawn at 30 September 2023.
The ABN AMRO facilities are secured against the assets of the Group which are 100% owned by the Company (excluding the Tricoya companies) and EUR10m of cash collateral, and include net leverage and interest cover covenants which are based upon the results and assets of these entities.
NatWest facility:
In November 2022, Tricoya UK Limited (the Company's subsidiary) agreed with NatWest Bank plc to restructure its debt facility, reducing the principal amount to a EUR6m 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 30 September 2023, the Group had EUR6.4m (31 March 2023: EUR6.2m) borrowed under the facility.
Tricoya UK Limited also provided a Value Recovery Instrument ("VRI") agreement to NatWest, to recover up to approximately EUR9.4m, on a contingent basis, depending on profitability of the Tricoya UK plant once operational. The contingent payments to NatWest are based upon free cash-flow generated by the Tricoya UK plant.
First Horizon Bank facility:
In March 2022 the Company's joint venture, Accoya USA LLC agreed an eight-year $70m loan from First Horizon Bank ('FHB') of Tennessee, USA in respect of the construction and operation of the Accoya USA plant and a $10m RCF 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 $50m through a limited guarantee provided on a pro-rata basis, with Accsys' 60% share representing $30m, supported by a $20m Letter of Credit ('LC') provided by ABN AMRO to FHB.
The interest rate varies between 1.3% to 2.1% over USD LIBOR.
Accoya USA LLC is equity accounted for in these financial statements, therefore this Borrowing is not included in the Group's borrowings. (See note 13)
De Engh convertible loan:
In March 2022, Accsys agreed a 3.5 year, EUR10m convertible loan with De Engh BV Limited ('De Engh'), an investment company based in the Netherlands (the 'Convertible Loan'), and shareholder in Accsys Technologies PLC.
The Convertible Loan is unsecured and carries an interest margin of 6.25% above Euribor, increasing by 2% in year three and a further 2% in the following year. Interest is payable quarterly and there are no principal payments during the term of the loan. The Convertible Loan is convertible from the end of year two to ordinary shares in the Company Accsys at EUR2.30 per share.
11. Commitments under loan agreements (continued)
Reconciliation to net (debt)/cash:
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 Cash and cash equivalents 20,780 18,123 26,593 Less: Amounts payable under loan agreements (64,180) (74,896) (65,920) Amounts payable under lease liabilities (4,788) (4,596) (4,735) Net (debt)/cash (48,188) (61,369) (44,062)
Restricted cash
The cash and cash equivalents disclosed above and in the condensed consolidated statement of cash flow includes $10m which is pledged to ABN AMRO as collateral.
Reconciliation to adjusted cash:
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 Cash and cash equivalents 20,780 18,123 26,593 Less: Cash pledged to ABN AMRO (10,016) (10,949) (9,828) Adjusted cash 10,764 7,174 16,765 ========== ==========
12. Transactions with non-controlling interests
In the period ended 30 September 2022:
No shares were issued in the period to 30 September 2022.
The total carrying amount of the non-controlling interests in Triocya Technologies Ltd and Tricoya UK Ltd at 30 September 2022 was EUR36.2m.
In the period ended 31 March 2023:
In November 2022, Accsys purchased the remaining ownership of Tricoya Technologies Ltd and Tricoya UK Ltd which it did not previously own via a Sales Purchase Agreement ('SPA') with the Tricoya consortium partners.
13. Investment in Joint Venture
In August 2020, Accsys together with Eastman Chemical Company formed a new company, Accoya USA LLC, 60% owned by Accsys and 40% owned by Eastman. Accoya USA LLC is constructing and will operate an Accoya plant in Kingsport, Tennessee (USA) to serve the North American market. The plant is designed to initially produce approximately 43,000 cubic metres of Accoya per annum and to allow for cost-effective expansion.
Under IFRS 11 - Joint arrangements, the two parties are assessed to jointly control the entity and Accoya USA LLC is accounted for as a joint venture and equity accounted for within the financial statements.
At 30 September 2023, Accsys and Eastman have contributed equity of $61m to Accoya USA LLC, with a further $5m committed to be contributed. There were no equity injections during the period ending 30 September 2023.
See note 11 for details of debt funding.
The carrying amount of the equity-accounted investment is as follows:
Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2023 2022 2023 EUR'000 EUR'000 EUR'000 Opening balance 30,859 3,216 3,216 Investment in Accoya USA LLC - 29,129 28,979 Less: Accsys proportion (60%) of licence fee received - - (300) Loss for the period (1,211) (403) (1,036) Closing balance 29,648 31,942 30,859
The Group has equity accounted for the joint venture in these condensed consolidated financial statements.
The income statement, balance sheet and cashflows for Accoya USA LLC, are set out below:
Accoya USA LLC recorded a loss from operations of EUR2,019,000 for the period ended 30 September 2023 (EUR963,000 for the period ended 30 September 2022). The loss attributable to Accsys Technologies PLC was EUR1,211,000 for the period ended 30 September 2023 (EUR403,000 for the period ended 30 September 2022).
Balance Sheet: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 Sept 2023 30 Sept 2022 31 Mar 2023 EUR'000 EUR'000 EUR'000 Non-current assets Property, plant and equipment 101,629 37,963 69,327 Right of use assets 6,242 7,084 6,242 107,871 45,047 75,569 Current assets Debtors 149 578 236 Cash and cash equivalents 10,385 31,628 8,701 10,534 32,206 8,937 Current liabilities Trade and other payables (12,562) (11,194) (14,682) Obligation under lease liabilities (408) (416) (455) Short term borrowings - - - Net current liabilities (2,436) 20,596 (6,200) Non-current liabilities Obligation under lease liabilities (5,951) (6,604) (5,875) Other long term borrowing (46,304) 1,457 (9,781) (52,255) (5,147) (15,656) Net assets 53,180 60,496 53,713
13. Investment in Joint Venture (continued)
Cash flows: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 Sept 2023 30 Sept 2022 31 Mar 2023 EUR'000 EUR'000 EUR'000 Cash flows from operating activities 1,378 239 (1,147) Cash flows from investing activities (33,829) (19,022) (49,568) Cash flows from financing activities 33,844 48,426 59,550 Net increase in cash and cash equivalents 1,393 29,643 8,835 Foreign exchange gain/(loss) 291 1,750 (369) Net increase in cash and cash equivalents 1,684 31,393 8,466
14. Post Balance Sheet Events
The Company has today announced a Fundraising to raise new gross proceeds of approximately EUR24m and an extension of its debt facilities.
The Fundraise is proposed to include:
-- A Placing to raise gross proceeds of approximately EUR13m to EUR15m
-- The issue of between EUR9 and EUR11m new convertible loan notes alongside the repricing and reissue of the existing De Engh EUR10m convertible loan (see note 11) in-line with the terms of the new convertible loan notes. Together, the convertible loan notes amount to between EUR19 and EUR21m. The convertible loan notes terms are proposed as following:
o 6 year term
o fixed rate coupon of 9.5% which will be rolled up for the first 2.5 years, deferred and paid in cash over the remaining 3.5 years
o convertible into ordinary shares of the Company at a price of 83.22 euro cents per share
o unsecured and non-transferrable
Amendments to ABN AMRO borrowing facilities
-- The Company has reached an agreement with ABN AMRO to extend the Company's main EUR40.5m term loan facility and EUR25m revolving credit facility ('RCF') by 18 months from October 2024 to 31 March 2026. The new agreement will have a repayment holiday to July 2025, quarterly repayments of EUR1.125m thereafter and a release of the existing cash collateral of EUR10m, with EUR7.5m utilised to repay a portion of the term loan facility and the remaining EUR2.5m being utilised for general liquidity purposes. Borrowing costs will range between 3 - 4% over Euribor for the RCF and over 1.34% in respect of the term loan facility.
-- The net debt / EBITDA covenant will increase to 2.75x over three quarters ending 30 September 2024, 31 December 2024 and 31 March 2025. All other financial covenants will remain the same.
-- This amendment agreement with ABN AMRO is conditional on the Company raising EUR24m through the Fundraising and will become effective upon completion of the proposed Fundraising.
Use of Fundraising proceeds
The use of the Fundraising proceeds is as follows:
-- Approximately EUR22m will be used to fund Accsys's share of Accoya USA. The total construction cost for the US plant is now expected to be approximately $160m. It is expected that approximately EUR15.5m of the Fundraising proceeds will be used to complete construction and approximately EUR6.5m to fund operations as the US plant targets a steady ramp up in volume and operations.
-- Approximately EUR2.0m will be used for general liquidity and working capital purposes.
The Directors are of the belief that the issue of the convertible loan notes along with the proposed Placing and amendments to the ABN AMRO borrowing facilities are in the best interests of the Company and strengthens the Company's funding position during a key period of investment.
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