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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.70 | 1.24% | 57.00 | 54.20 | 59.00 | 58.00 | 55.20 | 55.20 | 35,127 | 16:35:22 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Manufacturing Industries,nec | 162.02M | -69.86M | -0.3173 | -1.76 | 123.29M |
From Apr 2022 to Apr 2024
TIDMAXS
RNS Number : 1297H
Accsys Technologies PLC
22 November 2022
AIM: AXS
Euronext Amsterdam: AXS
22 November 2022
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Interim Results for the six months ended 30 September 2022
Continued strong product demand - Accoya capacity expanded
Accsys, the fast-growing and eco-friendly company that combines chemistry and technology to create high performance, sustainable wood building products, announces its interim results for the six months ended 30 September 2022 ("H1 FY 23").
Hot Features
Premium
H1 FY H1 FY Change
23 22
Total Group revenue EUR58.9m EUR 56.2m 5%
Underlying gross
profit EUR18.1m EUR 17.2m 5%
Accoya(R) Manufacturing
margin(1) 30.8% 31.0% (20bps)
Accoya Manufacturing
gross profit/m (2) EUR755 EUR581 30%
Underlying EBITDA(3) EUR4.5m EUR 4.5m -
Underlying EBIT(4) EUR1.0m EUR 1.5m (33%)
Underlying (loss)
before tax (EUR0.6m) (EUR0.3m)
(Loss)/profit before
tax (EUR56.3m) EUR 0.7m
Period end net (debt)/
cash(5) (EUR61.4m) EUR 2.4m
Accoya(R) sales
volume 23,957m(3) 29,555m(3) (19%)
Key highlights:
-- Good growth in Group revenue, up 5% to EUR58.9m driven by increased average sales prices and product mix, despite lower volumes.
-- Customer demand for Accoya(R) remains strong and in excess of production capacity, with a strong customer order book over the next 3 months and beyond.
-- Accoya(R) sales volumes limited by production capacity, down 19% to 23,957m(3) due to the previously reported and now resolved shutdown at the Arnhem plant in April/May 2022 around the installation of the fourth reactor (R4).
-- Robust Accoya(R) profit with gross profit per cubic metre of Accoya up 30% to EUR755/m(3) :
o Group Gross Profit, up 5% supported by Accoya(R) sales price increases offsetting higher raw material costs.
o Accoya(R) manufacturing margin of 30.8% remaining above target level of 30%.
o Underlying EBITDA flat year-on-year, with higher sales prices offsetting lower sales volumes and higher raw material costs.
-- Strategic growth projects:
o Accoya(R) (Arnhem) plant - R4 expansion commenced commercial operation in September 2022, with production now ramping up over two years.
o Accoya(R) USA JV - Construction of new 43,000m(3) plant progressing in-line with expectations towards commercial operation due by March 2024.
o World-first Tricoya(R) (Hull) plant:
o Discussions and validation work across the period led to a restructuring of the Tricoya consortium in November 2022 with Accsys obtaining 100% control and ability to complete construction on our terms at the right time.
o Up to EUR35m additional capital costs identified being key reason for EUR58m exceptional non-cash impairment of Tricoya assets recorded in H1 FY23.
o Construction Hold period of at least 6 months during which remaining construction work and costs will be validated while nature and extent of any required funding will be examined and the full range of potential options considered.
-- Group Net Debt(5) increased by EUR34.2m to EUR61.4m, includes transfer of EUR29.1m cash raised in 2021 equity issuance into US JV as previously reported
-- Strong start to H2 FY 23, with October sales of 6,600m(3) , and targeting H2 sales volumes to be c.50% higher than H1.
-- H2 FY 23 focus on cost and cash management and expected reduction in inventory levels.
Notes
(1) Accoya(R) Manufacturing margin is defined as Accoya(R) segmental underlying gross profit (excluding Licence income) divided by Accoya(R) segmental revenue (excluding Licence income and marketing services) (See note 2 to the financial statements)
(2) Accoya(R) Manufacturing gross profit per m(3) margin is defined as Accoya(R) segmental underlying gross profit (excluding Licence income) divided by Accoya(R) sales volume (See note 2 to the financial statements)
(3) 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).
(4) Underlying EBIT is defined as Operating profit/(loss) before Exceptional items and other adjustments, and includes the Group's attributable share of our USA joint venture's underlying EBIT. (See note 2 to the financial statements).
(5) Net cash/(debt) is defined as short term and long-term borrowings (including lease obligations) less cash and cash equivalents. (See note 12 to the financial statements). Net Debt at 31 March 2022 was EUR27.2m.
Robert Harris, CEO, commented :
"We delivered a resilient Accoya(R) performance for the half. We continue to see strong demand for our Accoya(R) and Tricoya(R) products as customers focus on higher performance materials and sustainability in their procurement decisions.
With this demand, which continues to exceed supply, we have been able to substantially offset the wider market pressures from raw materials costs and supply chain disruption through price increases.
We continued to progress our growth ambitions during the half as we completed the construction of a fourth Accoya(R) reactor in Arnhem and we expect to see the benefit of this in sales and volumes now coming through in the second half of FY23. We reported on challenges at our Hull plant in the period and I am pleased we have recently taken 100% control of the Tricoya project giving us the ability to complete the construction on our terms, at the right time. We have also made continued good progress on our US plant construction with Eastman.
As we move into the second half of the year, demand for our products remains strong, and production levels at Arnhem (reactors 1-3) have been at capacity, while R4 production is ramping up. Conversations with our customers and their orders continue to indicate that customer demand remains in excess of our production capacity. Customers are also pleased to be seeing the benefit of gradually increasing volumes with R4 now producing Accoya(R) . We remain confident in both the near-term and longer-term demand and growth opportunity for our market-leading products."
Analyst presentation
There will be a presentation relating to these results for analysts at 10:00am UK time (11:00am CET) today. The presentation will take the form of a webcast and conference call, details of which are below:
Webcast URL for Participants: (for audio and visual presentation):
Click on the link below or copy and paste ALL of the following text into your browser:
https://edge.media-server.com/mmc/p/wrfcy3w9
Questions / Phone Participants : for those participants who would like to ask a question live over the phone lines, please register on the following link. You will then be sent a confirmation email with a link to dial-in numbers.
Click on the link below or copy and paste ALL of the following text into your browser to register and obtain audio details:
https://register.vevent.com/register/BIaa80734c70ab433791a4030f76ebe15e
For further information, please contact:
Accsys Technologies PLC +44 20 7421 4322 Investor Relations ir@accsysplc.com Numis Securities (London) Oliver Hardy (NOMAD), Ben Stoop +44 (0) 20 7260 1000 Investec Bank plc (London) Carlton Nelson, Alex Wright +44 (0) 20 7597 5970 ABN Amro (Amsterdam) Richard van Etten, Dennis van Helmond +31 20 344 2000 FTI Consulting (UK) +44 (0) 20 3727 1340 Matthew O'Keeffe, Alex Le May, Cally Accsys@fticonsulting.com Billimore Off the Grid (The Netherlands) Frank Neervoort, Yvonne Derske +31 681 734 236
Accsys Technologies PLC
Chief executive's statement
Introduction
During the first half of the 2023 financial year, demand for our high-performance sustainable wood products has remained strong. Our customers continued to seek more product from us than we had capacity to produce in the period.
While our production capacity at Arnhem remained constrained during the period, we have been able to deliver 5% growth in Group revenue through increased average sales prices. This is despite a 19% decline in Accoya(R) sales volumes due to previously reported production outages linked to the completion of the Fourth Reactor in Arnhem during April and May.
Overall profitability remained resilient due to increased average sales prices and an energy price surcharge mechanism which have successfully offset raw material cost increases, including the impact of volatile and elevated acetyl and energy prices in Europe.
During the period we progressed two of our key strategic capacity expansion projects. We completed the expansion of our Accoya(R) plant at Arnhem, in which a fourth reactor (R4) has been added with commercial operations commencing in September and with production and sales volumes increasing as planned since then. In the USA, we commenced construction of a new 43,000m3 per annum capacity Accoya plant in Kingsport Tennessee in April, under our JV with Eastman Chemical Corporation which remains on track to be completed by March 2024.
Our Tricoya facility at Hull, UK, encountered further delays in the final construction and commissioning schedule. This led to a slow-down in work while trying to agree the funding of these associated cost overruns with our consortium partners in H1 FY23. Whilst these further delays and costs have been disappointing, we were pleased to subsequently announce a resolution to the challenges within the consortium in November 2022.
We continue to see strong customer traction and support for our product with leading industry partners and multinational companies, such as Google where Accoya(R) has been specified on the large new Google HQ building in Kings Cross, London. Accoya's outstanding performance has also been recognised through prestigious award wins, including the Green Building Product of the year from EmiratesGBC and the Best of Products from The Architect's Newspaper USA.
Summary of results
Accoya (R) segment Six months Six months Change
- summary of results ended ended 30 - %
30 September September
2022 2021
-------------- ----------- -------
Accoya(R) sales volume
- cubic metres 23,957 29,555 (19%)
-------------- ----------- -------
Accoya(R) segmental
revenue EUR58.7m EUR55.4m +6%
-------------- ----------- -------
Accoya(R) wood revenue EUR51.1m EUR48.5m +5%
-------------- ----------- -------
Licence income - -
-------------- ----------- -------
Acetic acid sales EUR7.4m EUR6.8m +9%
-------------- ----------- -------
Manufacturing margin
- % 30.8% 31.0% (0.2%)
-------------- ----------- -------
Manufacturing gross
profit/m3 755 581 +30%
-------------- ----------- -------
Underlying EBITDA EUR10.4m EUR10.3m +1%
-------------- ----------- -------
Underlying EBIT EUR7.7m EUR8.0m (4%)
-------------- ----------- -------
The Accoya(R) business produced lower sales volumes (-19%) in H1 FY23, due to the April-May plant shutdown during the completion of the R4 capacity expansion.
Accoya(R) segment revenue growth of 6% comprised wood revenue growth of 5% and acetic acid sales growth of 9%. The increase in wood revenue was driven by increased average sales prices, reflecting the continuing strong demand from customers and increased sales prices to offset higher raw material costs during the period. Price rises were implemented during the summer of 2022. An energy price premium was also introduced in the period which, in addition to the sales price increase, has mitigated the impact of high and volatile prices for acetic anhydride, the raw material we use in our acetylation process to acetylate the raw wood. Acetic anhydride prices have increased and become volatile in the period, with a corresponding trend in gas market pricing in Europe during the period due to wider macro-economic and geopolitical events.
Our sales of acetic acid, which is a by-product of our use of acetic anhydride for our acetylation process, increased by 9% driven by higher market pricing linked to the same macro-trend impacting our raw material purchase pricing. The business therefore has a part natural hedge against volatile acetic anhydride pricing.
As set out in further detail in the Financial Review, underlying Accoya segment EBITDA grew by 1% and the segment's manufacturing margin was 30.8%. While margin was down by 20 bps, it remains above our target level of over 30%. These profit outcomes reflect the impact of lower sales volumes while maintaining fixed operating costs, but where increased pricing has successfully mitigated the higher raw material costs in the period. As a result, profitability at the Accoya(R) product level has improved significantly and for each cubic metre of product sold in the segment, gross profit increased from EUR581/m(3) to EUR755/m(3) representing a 30% increase compared to the same period last year. We expect further good progress over time on this metric through operating with greater economies of scale and product mix.
We have continued to see strong underlying demand for Accoya(R) across our regions and with our Tricoya(R) panel manufacturing partners. The reduction in sales volumes by 19% overall, was reflective of the reduced production level following the shut down in April and May connected with the R4 project.
The year-on-year sales movements across our geographic regions reflect the lower volumes available to those regions due to the limited supply as we remained at capacity production levels while the Arnhem plant was operational. We expect sales volumes in these markets to improve as increased volumes become available from Arnhem with the new capacity from the new fourth reactor now online and ramping up to capacity over the next two years.
Unaudited Unaudited
6 months 6 months
ended ended
30 Sept 30 Sept
Sales volume by end market 2022 2021
m(3) m(3)
UK & Ireland 6,383 8,373
Rest of Europe 5,362 7,871
Tricoya(R) 6,452 7,092
Americas 4,049 3,909
Rest of World 1,711 2,310
23,957 29,555
========== ==========
Accoya(R)
Strategic progress
During the period, we were pleased to complete the expansion of our Accoya plant in Arnhem which adds a new 20,000m(3) reactor, enabling the site's annual capacity to increase to 80,000 cubic metres.
As reported in May 2022, we experienced some unplanned delays in the final installation, tie-ins and supply of certain equipment, which led to a delay in the expected operational start-up earlier in H1. This also resulted in an unexpected second shutdown across the plant in April/May 2022. Subsequently, during commissioning and testing of the new expansion in June, defects were identified in certain installed items of equipment which required remedial work to repair. This was repaired over the following eight weeks. The remedial works costs were around EUR1m, and we continue to establish whether part of this may be recoverable.
In September, the new reactor commenced commercial operation. We have since started the operational ramp up of the reactor, where we are gradually increasing the reactor's output to full capacity over a two-year period. We continue to work closely with our customers who have been waiting patiently for more product and remain strong proponents of Accoya(R) .
North America represents the largest potential regional market for our product, with an achievable market for Accoya(R) of up to almost 1,000,000 cubic metres per annum. Under our joint venture with Eastman Chemical Company (Eastman), a world leader in the production of acetyls, we are building an Accoya(R) plant in USA with an initial approximately 43,000 cubic metres capacity at Eastman's Kingsport, Tennessee site. The plant will replicate our existing Accoya(R) technology at Arnhem. Under the JV, Accsys holds a 60% interest and Eastman a 40% interest.
In March 2022 we reached a final investment decision to proceed with the project and commenced construction with ground broken in April 2022.
During H1 FY23 we have made good progress together with Eastman in progressing the construction of the plant in line with our expected timeline and budget. The plant is expected to take around two years to build and to be operational by March 2024.
In the first part of the period, ground works and deep drilling were successfully completed. This has been followed by the commencement of steelwork. Construction of the main warehouse building is underway and progressing well. Photographs of this can be found in our H1 FY23 results presentation on our website in the investor relations section of the Accsys website.
Accsys and Eastman teams are working together seamlessly, reflecting the joint and complementary expertise and strong project leadership. The construction is managed by an EPC contractor, with Eastman taking a lead role within the JV in overseeing the EPC contractor and construction project management. A strong focus on project and cost management continues by the JV. All major equipment has now been procured and multiple large sub-contracts, including piping, have now been placed. A small site team was put in place in the period as the construction continues across the site.
Safety has been established as a key priority for Accoya USA LLC at the site. Around the end of H1 FY23 we were able to celebrate 50,000 hours worked without accident.
In July 2021 we acquired a business in which to establish an Accoya Colour manufacturing plant in Barry, Wales. The 50,000 square foot (4,650 square metre) manufacturing plant has increased our ability to convert Accoya(R) wood into Accoya(R) Color - a product which combines the benefits of Accoya(R) wood with colour all the way through the wood from surface to core, through a patented process.
During the period, we have continued to increase production of Accoya(R) Color at the site compared to the end of the FY22, however the rate of increase has been moderated by the lower Accoya production volumes from Arnhem in the period.
The site is able to produce up to 12,500 cubic metres of Accoya(R) Color per annum, with future expansion being possible to support global demand. Accoya(R) Color generates higher gross profit per cubic metre than Accoya(R) , and will support our product-level margin over time. As we increase our Accoya production capacity, we continue to expect increased Accoya(R) Color sales in the medium term with its unique proposition proving attractive to customers in our target markets, particularly in the decking category where the surface-to-core grey colour will require less maintenance to retain over the long term.
Tricoya(R)
Strategic progress
Accsys and its former consortium partners in Tricoya UK Limited (TUK) have been building and looking to commission the world's first Tricoya(R) plant in Hull.
The construction of the plant was in its final stages across the period. .During the early part of H1 FY23 the project moved into the commissioning stage for the plant, with a small amount of construction work being completed concurrently during the commissioning process. Based on third party specialist reports, as at November 2022, the construction of the plant is substantially complete.
During the period, the commissioning process identified that unplanned time and costs would be required in order for the plant to be brought into commercial operation. A number of factors have been identified which are relevant to this unplanned time and cost, including rework of certain areas - such as the plant's control system, the unique and 'world first' nature of the plant and its technologies and being unable to mitigate certain third-party costs, including in relation to mechanical, electrical, instrumentation, control and piping subcontractor work, to the extent previously forecast. The construction challenges and rework extended the timeline to completion and the project team costs required to oversee this, have also led to higher costs than expected.
From June 2022, Accsys moved into discussion with its consortium partners regarding the consortium's funding options for the additional costs. In September 2022, Accsys agreed to provide a further bridging loan facility of up to EUR8m (on a then uncommitted basis), to enable TUK to continue progressing a reduced level of commissioning activities whilst funding discussions continued. At this time, Accsys also reported that it had reduced the level of activity on site in order to reduce costs, during these discussions. These costs were lowered from a level of around EUR4m per month to EUR0.5m per month going forward. The company reported that commercial operation of Hull was unlikely to occur before the end of calendar year 2022, and that the project costs would be higher than previous estimates.
In November 2022 Accsys announced a resolution of these discussions which involved Accsys acquiring 100% of the Tricoya entities, including the Tricoya Hull plant, in exchange for issuing shares in Accsys representing 5.74% of its issued share capital.
At the same time, the debt arrangements between TUK and Natwest have been restructured, resulting in the principal debt being reduced to EUR6m and put onto new 7-year terms, with no capital repayments during this period.
The solvent solution allows for the continuation of Ineos and Medite's supply and off-take agreements. The reorganisation provides Accsys the option to take the Tricoya Hull Project forward on its own terms and to benefit from 100% of the long-term returns from Tricoya(R) wood including any future licencing in respect of the global Tricoya market opportunity.
Initially, we have stopped current site activity for at least six months (the "Hold Period"), to mitigate the
risk of weaker economics on start-up due to current high and volatile acetyls raw material prices in Europe.
Third party reports have been concluded confirming up to around EUR35m for the remaining project capital costs to bring the plant into commercial operation, with further reviews ongoing. This would bring the expected total capital costs for the project to up to around EUR138m compared to the previously announced maximum of EUR103m reported in June 2022. However, the final total project costs will remain subject to the timeline that the project is completed over and excludes up to EUR0.5m monthly costs anticipated during the Hold Period.
At normalised acetyls prices the Company expects that gross margins for the Hull plant of up to 40% continue to be achievable once operating at target capacity.
Further details of this agreement, the resulting restructure of the Tricoya project, and the Company's most recent outlook for the plant in terms of costs and the timing of the Hold Period, can be found in the Company's announcement of 2 November 2022 and in the notes to the financial statements.
Group Strategic Development
In the period we have continued to focus on maintaining a strong organisational platform on which to grow and develop our operating process.
We conducted a strategic review of our engineering capabilities and other actions to drive improved capital project delivery. This has led to the establishment of a Global Engineering Centre of Excellence within the Group, and further development of our R&D function. We have increased our skills and talent in key areas including project management in addition to engineering.
Accsys also continues to invest in developing and protecting its valuable portfolio of intellectual property and confidential information. Our technology covers not only the physical equipment and engineering that underpins our manufacturing and production, but also the processes and methodology we follow in our entire supply and production chain, from the way we prepare our wood to the way we market and sell Accoya(R) and Tricoya(R) in the market.
Accsys' patent portfolio totals 402 patent family members, covering 28 distinct inventions in 45 countries with 75% of the patent family members now granted. The core technologies associated with our current and future plants for the production of Accoya(R) and Tricoya(R) wood products continue to be protected by using a combination of patenting and trade secrets to maintain our differentiation in the marketplace.
Our principal trademark portfolio covers our brands Accoya(R) , Tricoya(R) , the Trimarque device and Accsys(R) , protected by registrations in over 60 countries, with continued activity focused on increasing the strength of those brands. Accsys continues to maintain an active watch on the commercial and IP activity of third parties to ensure its IP rights are not infringed, and to identify any IP which could potentially hinder our commercial activity.
ESG
With its stated purpose of 'Changing wood to change the world', Accsys is committed to growing and operating its business in a responsible and sustainable way. Aligned with our values and business strategy, our ESG framework outlines the 10 key material issues and impact areas that we are focussed on, and how they line up against the 5 main UN Sustainable Development Goals that we look to contribute towards.
Having completed stage one of our 2020 sustainability strategy roadmap, we have moved into the second stage where we are focused on establishing specific development plans, including the setting of a site-based carbon intensity reduction target at our Arnhem facilities. We plan to have a target in place in time for the start of FY24.
Building on our commitment to transparency, Accsys is currently undergoing the re-submission process for year two of the S&P Global Corporate Sustainability Assessment (CSA). This third-party rating of ESG credentials benchmarks Accsys alongside forest and paper products industry companies, the strong majority of which are large companies with a market capitalisation of over EUR1bn. We intend to build on our baseline inaugural score of 38 (industry average 37) in parallel with our own internal performance metrics.
Safety
The Group has set 'Zero Harm' as a key target for our operations and is committed to developing best practice Health & Safety (HSE) across Accsys.
H1 FY23 has seen some positive HSE improvements. Our performance is improving as can be shown via our leading and lagging HSE metric indicators and also through discussions with our teams. The awareness around safety is growing day by day enabling us to develop a safety-first culture across our organisation.
Within H1 FY23 we have increased safety observation card reporting (SOC) to over 900, which is greater than our prior year total of 811. In addition, we have seen a significant increase in leadership safety tours to almost 500 tours within the first half of the year. We continue to hold monthly safety briefings for all staff and send out regular safety communications to help raise awareness.
In H1 FY23 our Lost Time Incident Rate (LTIR) per 200,000 hours worked has increased slightly from 0.5 to 0.7 (our interim target is 0.5), in part reflecting a reduction in contractor working hours from both the R4 and Hull construction projects. Our Total Recordable Incidence Rates (TRIR) has improved from 4.9 to 3.5 per 200,000 hours worked.
Outlook
We continue to see strong demand for our Accoya(R) and Tricoya(R) products as customers focus on higher performance materials and sustainability in their procurement decisions.
With this demand, we have been able to substantially offset the wider market pressures from raw materials costs and supply chain disruption through price increases.
Construction of a fourth Accoya(R) reactor in Arnhem is complete and we expect to see the benefit of this with additional volumes now coming through. We reported on challenges at our Hull plant in the period and I am pleased we have recently taken 100% control of the Tricoya project giving the option to complete the plant on our terms and at the right time. We have also made continued progress on our US plant construction with Eastman.
As we move into the second half of the year, demand for our products remains strong, and production levels at Arnhem (reactors 1-3) have been at capacity, while R4 production is ramping up. We recorded sales of 6,600 cubic meters in October 2022, which benefitted from R4 and some unwinding of higher inventory (work in progress) levels and are now targeting sales for the second half of the year to be approximately 50% higher than the first half.
The Hold period of at least six months for the Hull plant will allow us to focus on cash generation from Accoya(R) sales. Together with careful cost management and an expected reduction in inventory levels, this will help strengthen the balance sheet now that the Accoya fourth reactor has been completed.
Expectations for customer orders, as we plan over the next three months and beyond, continue to indicate customer demand remains in excess of our production capacity, while customers are also pleased to be seeing the benefit of gradually increasing volumes with R4 now producing Accoya. We remain confident both in the near term and longer-term demand and growth opportunity for our market-leading products.
Rob Harris
Chief Executive
22 November 2022
Accsys Technologies PLC
Financial review
Introduction
Accsys has delivered a good performance in the first half of the 2023 financial year, with 5% revenue growth, on lower sales volumes, driven by increased sales prices and strong ongoing demand for our products.
Accoya(R) manufacturing margin per cubic metre increased 30% to EUR755/m(3) with increased sales prices and the energy price premium implemented during the first half more than offsetting the increase in variable input costs during the first half. Gross profit increased 5% to EUR18.1m, with the increased margin per cubic metre offsetting the 19% decrease in sales volumes, due to the previously reported shutdown at the Arnhem Accoya(R) plant in April/May 2022 for the final fourth reactor expansion project tie-ins.
Underlying EBITDA was in line with the prior year at EUR4.5m.
Net debt increased by EUR34.2m in the period to EUR61.4m due to Capex investments of EUR22.6m into our Accoya(R) Arnhem reactor 4 project, our Tricoya(R) Hull project and the planned investment into Accoya USA following the final investment decision in March 2022 (EUR29.1m). This was partially offset by a successful Placing in May 2022 raising net proceeds of approximately EUR19m to strengthen the Group's balance sheet, increase liquidity headroom, provide additional working capital and fund additional costs to complete Arnhem's fourth reactor expansion project.
As detailed in the CEO report, on-going challenges have been experienced on the Tricoya(R) Hull project during the first half, with additional work and re-work being identified during the commissioning process to complete the project, resulting in additional costs.
Following discussions with its Tricoya(R) consortium partners regarding the consortium's funding options for the additional costs, Accsys agreed to provide a further bridging loan facility of up to EUR8m (on an uncommitted basis) in addition to the EUR17m loan already provided to TUK, to enable TUK to continue progressing a reduced level of commissioning activities whilst funding discussions continued. The level of activity on site was also reduced in order to decrease costs with Accsys reporting that commercial operation of Hull was unlikely to occur before the end of calendar year 2022, and that the project costs would be higher than previous estimates.
After the end of the period in November 2022, Accsys announced a resolution in the discussions with our Tricoya(R) consortium partners which has since resulted in Accsys agreeing to acquire 100% of the Tricoya(R) entities, including the Tricoya(R) Hull plant. Further details of this agreement, the resulting restructure of the Tricoya(R) project, and the Company's most recent outlook for the plant in terms of costs and the timing of the Hold Period are included in the CEO report and can be found in the Company's announcement of 2 November 2022.
Following these events, an impairment assessment was required to be performed under IAS 36 (Impairment of Assets) on the Tricoya(R) segment's Gross assets with an impairment loss of EUR58m being recognised as an exceptional item in the first half. The calculated impairment was impacted by:
1) An increase in the capex to complete the construction of the Tricoya(R) Hull plant of EUR35m, as reported on 2 November 2022
2) A higher pre-tax WACC rate (used for the discount rate) increasing by 2.3% to 12.8% principally due to higher market interest rates
3) An adverse impact on future operational cashflows as assessed at the end of September 2022 due to higher market acetyl prices
The impairment loss recognised is a non-cash item.
Statement of comprehensive income
Group revenue increased by 5% to EUR58.9m for the period ended 30 September 2022 (H1 FY22: EUR56.2m). Group revenue growth was driven by continuing strong market demand for Accoya(R) and Tricoya(R) and increases in average product sales prices for both wood and acetic acid during the year and the effect of increases introduced in the prior year, which were implemented to address rising raw material costs. An energy price premium , a surcharge added to the sales price to customers, was also successfully introduced during the first half, to offset the significant increase in acetyl prices. This resulted in revenue from Accoya(R) wood increasing by 5% to EUR51.1m.
Accoya(R) sales volumes of 23,957m(3) were 19% lower than the prior year period due to the previously reported shutdown at the Arnhem Accoya(R) plant in April/May 2022 for the final fourth reactor expansion project tie-ins. The fourth reactor has since been successfully commissioned and operational from the start of September 2022.
Included within Accoya(R) wood revenue, in the Accoya(R) segment, are sales to Medite and Finsa for the manufacture of Tricoya(R) panels used to develop the market for Tricoya(R) products ahead of the start-up of the Tricoya(R) plant. This revenue was in-line with the prior year at EUR8.7m (H1 FY22: EUR8.5m), with the associated volume representing 27% of Accoya(R) sales volumes (H1 FY22: 24%).
Tricoya(R) panel revenue of EUR0.2m (H1 FY22: EUR0.9m), in the Tricoya(R) segment, represented sales of Tricoya(R) panels, purchased from our Tricoya(R) licensees, to sell into other geographies in order to provide initial market seeding material for the global Tricoya(R) market.
Other Revenue, which predominantly relates to the sale of our acetic acid by-product, increased by 10% to EUR7.6m (H1 FY22: EUR6.9m) due to higher acetyls market pricing.
Group gross profit of EUR18.1m was 5% higher than the prior year (H1 FY22: EUR17.2m).
Cost of sales increased by 4%, on 19% lower sales volumes, driven primarily by higher cost of raw materials, with the largest raw material cost increase in acetic anhydride. Accsys sells its acetic acid by-product back into the same acetyls market, which continued to act as a partial hedge to these higher costs. The net acetyls cost, increased by 49% in H1 FY23 compared to H1 FY22.
Raw wood input costs were also moderately higher however the cost of this raw material overall remains more stable than the wider lumber market as we purchase appearance-grade wood under long term supply contracts with many of our partners.
Underlying Gross Profit margin was in-line with the prior year at 31% with Accoya(R) manufacturing margin per cubic metre of Accoya(R) sold increasing by 30% to EUR755/m(3) . Looking forward, there is opportunity for further growth as we expect to benefit from economies of scale from the expanded Accoya(R) plant and further changes to product mix after the Tricoya(R) plant in Hull commences operation.
Underlying other operating costs excluding depreciation and amortisation, increased from EUR12.6m to EUR13.3m due primarily to higher insurance and audit fee costs.
Depreciation and amortisation charges increased by EUR0.5m to EUR3.5m following the purchase of assets in Barry, UK to grow production of Accoya(R) Color in July 2021, and the fourth reactor commencing operational production from the start of September 2022.
Underlying finance expenses decreased EUR0.2m to EUR1.5m, following the refinance of Group Debt Facilities in October 2021 which decreased the average interest rate payable on the Group's borrowings, partially offset by interest payable on the Convertible loan agreed with De Engh in March 2022 related to the funding agreements for Accoya USA JV.
An impairment loss (exceptional item) of EUR58m has been recognised in the period relating to the Tricoya(R) segment. Following the project challenges detailed in the CEO report, an impairment assessment was performed on the Tricoya(R) segment. The calculated impairment is described above in the Introduction and has been recognised as a non-cash exceptional item.
An exceptional item of EUR0.5m was also recognised representing advisory fees incurred in relation to the Tricoya(R) Consortium reorganisation completed subsequent to the period end. In the prior year period, redundancy costs of EUR0.1m were recognised in relation to the purchase of assets in Barry, UK utilised to manufacture Accoya(R) Color.
Other adjustments for the year, which are also excluded from Underlying results, include a foreign
exchange gain of EUR1.4m related to US dollars held as Cash for investment into Accoya USA. 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 future US dollar investment into Accoya USA. This treatment did not meet the requirements for hedge accounting under IFRS 9, Financial instruments and therefore the foreign exchange gain on the revaluation of the US dollars has been accounted for in Finance Expenses as an Other adjustment. Also included in Other adjustments is a foreign exchange gain of EUR1.3m related to USD cash pledged to ABN Amro for the Letter of credit provided to FHB as part of the Accoya USA funding arrangements. See note 12 for further details.
Underlying loss before tax increased to EUR0.6m (H1 FY22: EUR0.3m). After taking into account exceptional items (including the impairment loss) and other adjustments, loss before tax increased to EUR56.3m (H1 FY22 profit: EUR0.7m).
The tax charge decreased by EUR0.2m to EUR0.4m (H1 FY22: EUR0.6m).
Cash flow
Cash flows generated from operating activities before changes in working capital and exceptional items increased by EUR0.2m to EUR5.2m (H1 FY22: EUR5.0m) reflecting continued good operational cash flow generated by the Arnhem Accoya(R) plant.
Inventory levels increased by EUR12m during the period with higher raw material levels held due to the expected ramp-up of the fourth reactor, which increases production capacity by 33% but which was also partially impacted by the delay in start-up of the fourth reactor and the long lead time for raw material purchases from New Zealand. There was also a temporary build up in WIP & finished goods balances following the commercial start-up of the fourth reactor and wood automation equipment. The inventory balance is expected to decrease significantly in the second half of the financial year.
In May 2022, Accsys completed a successful Placing for an issue of shares in the Company, raising net proceeds of approximately EUR19.0 million. The net proceeds have been used primarily to strengthen the Group's balance sheet, increase liquidity headroom, provide additional working capital and fund additional costs to complete Arnhem's fourth reactor expansion project.
At 30 September 2022, the Group held cash balances of EUR18.1m, representing a EUR24m decrease in the period. The cash decrease in the period is attributable to construction progress made on the Arnhem plant expansion project (EUR6.3) and our Tricoya(R) plant construction in Hull (EUR16.3m), planned investment into Accoya USA following the final investment decision in March 2022 (EUR29.1m) and the increase in inventory referred to above. This was partially offset by the successful Placing and, proceeds from loans (EUR10m, explained further below) and cash flow generated from operating activities referred to above. When adjusting for the Cash pledged for the Letter of Credit provided to First Horizon Bank ('FHB') ($11m - see note 12) and in the prior year adjusting for the cash earmarked to be invested into Accoya USA, Adjusted Cash increased during the period to EUR7.2m (see note 12).
Financial position
Plant and machinery additions of EUR20.5m (H1 FY22: EUR7.5m) in the period largely consisted of the construction of the fourth reactor expansion project in Arnhem and the Tricoya(R) plant in Hull. The prior year primarily related to construction on the Tricoya(R) plant build in Hull and the fourth Reactor expansion project in Arnhem.
Trade and other receivables decreased to EUR11.3m (H1 FY22: EUR12.5m) primarily due to a EUR1m decrease in trade receivables relating to close working capital management.
Trade and other payables increased EUR4.8m to EUR26.6m (H1 FY22: EUR21.8m) with an increase in trade payables due to the timing of payments on our expansion projects in Hull and Arnhem.
Amounts payable under loan agreements increased to EUR74.9m (FY22: EUR64.0m) due to the drawdown of EUR5m on the ABN Revolving credit facility and EUR5m on the Tricoya(R) Natwest EUR17.2m facility.
Net debt increased by EUR34.2m in the period to EUR61.4m (FY22: EUR27.2m) due to Capex investments of EUR22.6m, investment into Accoya USA (EUR29.1m) and the increase in inventory partially offset by the successful Placing (net proceeds of EUR19.0m). Net debt is expected to reduce in H2 as a result of the amended agreement with Natwest associated with the Hull plant, which has resulted in the principal debt being reduced by approximately EUR9m, together with cash expected to be generated from the Accoya business including reduction in inventory levels.
Tricoya (R) consortium restructuring
As detailed in the CEO report, after the end of the period in November 2022, Accsys agreed to acquire 100% of the two Tricoya (R) entities (Tricoya UK Limited and Tricoya Technologies Limited), including the Tricoya (R) Hull plant. Further details of this agreement, the resulting restructure of the Tricoya (R) project, and the Company's most recent outlook for the plant in terms of costs and the timing of the Hold Period can be found in the CEO's report, and in note 15.
Risks and uncertainties
As described on page 42 to 48 of the 2022 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 described in the 2022 Annual report) as currently identified by Accsys' risk management process, have not changed significantly since the publication of the last Annual Report.
These risks relate to the following areas:
Finance, Health, Safety & Environment; Hull plant; Supply chain stability; Manufacturing; Licensing/Partnering; Litigation & disputes; Expansion; Development and Supply of Raw Materials; Personnel; Sale of Products; Protection of Intellectual Property & trade secrets; Environmental, Social & Governance (ESG) and Sustainability; IT; Reputational risk and Governance, Compliance & Law.
Going concern
These 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 12 months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital requirements and covenant compliance for the foreseeable future under a base case scenario, taking into account the Group's financial resources including the current cash position and banking and finance facilities which are currently in place. The Directors have also assessed a severe but plausible downside scenario with reduced sales volumes and lower gross margin, also reflecting the possible impact of volatile raw material costs.
These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving certain operating performance measures relating to the production and sales of Accoya(R) wood from the plant in Arnhem with the collection of on-going working capital items in line with internally agreed budgets. In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya(R) plant in Hull until appropriate funding arrangements have been put in place.
The Directors' have taken into account the reorganisation of the Tricoya(R) consortium and restructuring of its bank debt completed in November 2022 which resulted in Accsys becoming the 100% owner of the Tricoya(R) plant and with a commitment to fund the balance of the EUR8m loan which was previously put in place.
The Directors' have also considered the possible amount and timing of capital expenditure required to complete the Accoya(R) plant in the USA, noting that notwithstanding that the construction project benefits from certain contractual measures in place with the lead construction contractor, Accsys has guaranteed to fund its 60% share of cost overruns, should they arise.
The Directors believe there are a sufficient number of alternative actions and measures within the control of the Group that can and would be taken in order to ensure on-going liquidity including reducing/deferring costs in some discretionary areas as well as larger capital projects if necessary.
The Directors believe that while some uncertainty always inherently remains in achieving the budget, in particular in relation to market conditions outside of the Group's control, under both the base scenario and severe but plausible downside scenario, there is sufficient liquidity and covenant headroom such that there is no material uncertainty with respect to going concern and have prepared the financial statements on this basis.
William Rudge
Finance Director
22 November 2022
Accsys Technologies PLC
Directors responsibility statement
The Directors confirm to the best of their knowledge that:
-- the condensed set of financial statements has been prepared in accordance with the AIM Rules for Companies and IAS 34 Interim Financial Reporting as endorsed by the European Union and as adopted for use in the United Kingdom and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and its subsidiaries;
-- the interim management report for the six months ended 30 September 2022 gives a fair review of the information required under the Dutch Financial Markets Supervision Act.
By order of the Board
Nick Hartigan
Company Secretary
22 November 2022
Accsys Technologies PLC
Condensed consolidated s tatement of comprehensive income for the six months ended 30 September 2022
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
6 months 6 months 6 months 6 months 6 months 6 months Year Year Year
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
2022 2022 2022 2021 2021 2021 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Exceptional Exceptional Exceptional
Underlying items Total Underlying items Total Underlying items Total
& other & other & other
adjustments* adjustments* adjustments*
Accoya(R) wood
revenue 51,088 - 51,088 48,465 - 48,465 105,053 - 105,053
Tricoya(R)
panel revenue 201 - 201 860 - 860 1,459 - 1,459
Licence revenue 11 - 11 9 - 9 416 - 416
Other revenue 7,584 - 7,584 6,901 - 6,901 13,924 - 13,924
----------------- ----- ----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- ---------
Total revenue 2 58,884 - 58,884 56,235 - 56,235 120,852 - 120,852
Cost of sales (40,742) - (40,742) (39,032) - (39,032) (84,852) - (84,852)
Gross profit 18,142 - 18,142 17,203 - 17,203 36,000 - 36,000
Other operating
costs 3 (16,773) (58,481) (75,254) (15,655) (151) (15,806) (31,541) (136) (31,677)
Operating
profit/(loss) 1,369 (58,481) (57,112) 1,548 (151) 1,397 4,459 (136) 4,323
Finance expense (1,530) 2,699 1,169 (1,722) 1,078 (644) (2,893) 544 (2,349)
Share of net
loss of joint
venture
accounted
for using the
equity method 14 (403) - (403) (91) - (91) (261) - (261)
(Loss)/profit
before taxation (564) (55,782) (56,346) (265) 927 662 1,305 408 1,713
Tax expense 5 (357) - (357) (622) - (622) (1,015) - (1,015)
(Loss)/profit
for the period (921) (55,782) (56,703) (887) 927 40 290 408 698
----------- ------------- ---------- ----------- ------------- ---------- ----------- ------------- ---------
Items that may
be reclassified
to profit or loss
Gain arising
on
translation
of foreign
operations 67 - 67 213 - 213 153 - 153
Gain arising
on foreign
currency cash
flow hedges - 90 90 - (268) (268) - 66 66
Total other
comprehensive
income 67 90 157 213 (268) (55) 153 66 219
Total
comprehensive
(loss)/gain
for the period (854) (55,692) (56,546) (674) 659 (15) 443 474 917
=========== ============= ========== =========== ============= ========== =========== ============= =========
Total
comprehensive
(loss)/gain
for the year
is attributable
to:
Owners of Accsys
Technologies
PLC (214) (26,155) (26,369) 219 692 911 2,083 474 2,557
Non-controlling
interests (640) (29,537) (30,177) (893) (33) (926) (1,640) - (1,640)
Total
comprehensive
(loss)/gain
for the period (854) (55,692) (56,546) (674) 659 (15) 443 474 917
=========== ============= ========== =========== ============= ========== =========== ============= =========
Basic
(loss)/profit
per ordinary
share 6 EUR(0.00) EUR(0.13) EUR0.00 EUR0.01 EUR0.01 EUR0.01
Diluted
(loss)/profit
per ordinary
share 6 EUR(0.00) EUR(0.12) EUR0.00 EUR0.00 EUR0.01 EUR0.01
The notes set out on pages 20 to 40 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 2022
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
Note 2022 2021 2022
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 8 6,852 10,962 10,834
Investment accounted for
using the equity method 14 31,942 1,421 3,216
Property, plant and equipment 9 140,422 145,206 176,661
Right of use assets 4,087 5,120 4,632
Financial asset at fair
value through profit or
loss - - -
183,303 162,709 195,343
----------- ----------- -----------
Current assets
Inventories 32,354 18,105 20,371
Trade and other receivables 11,333 12,540 16,934
Cash and cash equivalents 18,123 60,921 42,054
Corporation tax receivable 503 153 435
Derivative financial instrument - 106 3
62,313 91,825 79,797
----------- ----------- -----------
Current liabilities
Trade and other payables (26,620) (21,767) (29,880)
Obligation under lease liabilities (790) (1,108) (1,024)
Short term borrowings 12 (19,686) (16,269) (11,654)
Corporation tax payable (3,615) (2,514) (3,184)
Derivative financial instrument (77) - -
(50,788) (41,658) (45,742)
----------- ----------- -----------
Net current assets 11,525 50,167 34,055
Non-current liabilities
Obligation under lease liabilities (3,806) (4,630) (4,193)
Other long term borrowing 12 (55,210) (36,535) (52,335)
Financial guarantee - - -
(59,016) (41,165) (56,528)
----------- ----------- -----------
Total net assets 135,812 171,711 172,870
Equity
Share capital 10 10,343 9,619 9,638
Share premium account 241,662 223,035 223,326
Other reserves 11 114,791 114,367 114,701
Accumulated loss (236,584) (211,795) (210,505)
Own shares (6) (5) (6)
Foreign currency translation
reserve 257 250 190
Capital value attributable
to owners of Accsys Technologies
PLC 130,463 135,471 137,344 Non-controlling interest in subsidiaries 5,349 36,240 35,526 Total equity 135,812 171,711 172,870
The notes set out on pages 20 to 40 form an integral part of these condensed financial statements.
Accsys Technologies PLC
Condensed consolidated statement of changes in equity for the six months ended 30 September 2022
Total
equity
Foreign attributable
currency to equity
Share trans- shareholders
capital Share Other Own lation Accumulated of the Non-Controlling Total
Ordinary 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 2021 8,466 189,598 114,635 (36) 37 (213,263) 99,437 37,166 136,603
========= ========= ========= ======== ========= ============ ============== ================= =========
Profit/(Loss)
for the
year - - (268) - - 966 698 (926) (228)
Other
comprehensive
income for the
year - - - - 213 - 213 - 213
Share based
payments - - - - - 533 533 - 533
Shares issued 1,153 - - 31 - (31) 1,153 - 1,153
Premium on
shares issued - 35,531 - - - - 35,531 - 35,531
Share issue
costs - (2,094) - - - - (2,094) - (2,094)
Balance at
30 Sept
2021(unaudited) 9,619 223,035 114,367 (5) 250 (211,795) 135,471 36,240 171,711
========= ========= ========= ======== ========= ============ ============== ================= =========
Profit/(Loss)
for the
year - - - - - 1,372 1,372 (714) 658
Other
comprehensive
income for the
year - - 334 - (60) - 274 - 274
Share based
payments - - - - - (70) (70) - (70)
Shares issued 19 - - (1) - (12) 6 - 6
Premium on
shares issued - 391 - - - - 391 - 391
Share issue
costs - (100) - - - - (100) - (100)
Balance at
31 March 2022 9,638 223,326 114,701 (6) 190 (210,505) 137,344 35,526 172,870
========= ========= ========= ======== ========= ============ ============== ================= =========
Profit/(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
========= ========= ========= ======== ========= ============ ============== ================= =========
Share capital is the amount subscribed for shares at nominal value (note 10).
Share premium account represents the excess of the amount subscribed for share capital over the nominal value of these shares, net of share issue expenses. Share issue expenses comprise the costs in respect of the issue by the Company of new shares.
See note 11 for details concerning other reserves.
Non-controlling interests relates to the investment of various parties into Tricoya Technologies Limited and Tricoya UK Limited (note 7).
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 set out on pages 20 to 40 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 2022
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
(Loss)/profit before taxation before exceptional
items and other adjustments (564) (265) 1,305
Adjustments for:
Amortisation of intangible assets 389 366 745
Depreciation of property, plant and equipment
and right of use assets 3,095 2,643 5,419
Net (gain) on disposal of property, plant and
equipment (3) - -
Net finance expense 1,493 1,722 2,891
Equity-settled share-based payment expenses 462 533 463
Accsys portion of Licence fee received from
joint venture - - 600
Share of net loss of joint venture 403 91 261
Currency translation gain/(loss) (116) (93) (171)
Cash inflows from operating activities before
changes in working capital and exceptional
items 5,159 4,997 11,513
Exceptional Items in operating activities (see
note 4) (484) (133) (133)
Cash inflows from operating activities before
changes in working capital 4,675 4,864 11,380
========== ========== ==========
Decrease/(increase) in trade and other receivables 5,550 255 (5,058)
(Decrease) in deferred income - - (33)
(Increase) in inventories (11,982) (5,843) (8,110)
(Decrease)/Increase in trade and other payables (515) 1,186 4,034
Net cash from operating activities before
tax (2,272) 462 2,213
Tax received 6 59 56
Net cash from operating activities (2,266) 521 2,269
========== ========== ==========
Cash flows from investing activities
Investment in property, plant and equipment (22,595) (17,196) (44,612)
Foreign exchange deal settlement related to
hedging of Hull capex - - 190
Investment in intangible assets (207) (463) (714)
Investment in joint venture (29,132) (1,186) (3,751)
Net cash used in investing activities (51,934) (18,845) (48,887)
========== ========== ==========
Cash flows from financing activities
Proceeds from loans 10,000 - 54,500
Other finance costs (173) (36) (392)
Interest Paid (992) (1,251) (2,241)
Repayment of lease liabilities (538) (504) (1,089)
Repayment of loans/rolled up interest - (2,097) (46,939)
Proceeds from issue of share capital/sale of
own shares 20,112 36,684 37,094
Share issue costs (1,086) (2,094) (2,194)
Net cash from financing activities 27,323 30,702 38,739
========== ========== ==========
Net (decrease)/increase in cash and cash equivalents (26,877) 12,378 (7,879)
Effect of exchange gain/(loss) on cash and
cash equivalents 2,946 945 2,335
Opening cash and cash equivalents 42,054 47,598 47,598
Closing cash and cash equivalents 18,123 60,921 42,054
========== ========== ==========
The notes set out on pages 20 to 40 form an integral part of these condensed financial statements.
Accsys Technologies PLC
Notes to the financial statements for the six months ended 30 September 2022
1. Accounting policies
General Information
The principal activity of the Group is the production and sale of Accoya(R) solid wood and exploitation of technology for the production and sale of Accoya(R) wood and Tricoya(R) 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 Brettenham House, 19 Lancaster Place, London, WC2E 7EN.
The condensed consolidated financial statements were approved for release on 22 November 2022. 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.
On 31 December 2020, IFRS as adopted by the European Union at that date, was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 April 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.
The financial information for the six months ended 30 September 2022 and the six months ended 30 September 2021 is unaudited. The comparative financial information for the full year ended 31 March 2022 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 30 June 2022. 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 2022, 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 2022. The results for the six months ended 30 September 2021 have been restated to show a reclassification of an other adjustment of EUR847,000 from the Hedge effectiveness reserve to Finance Expenses. This amount relates to a foreign exchange gain on Cash held for investment into our USA Joint Venture and has been reclassed following the accounting treatment followed in the results for the year ended 31 March 2022. (see note 4).
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 2023 Annual Report. 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 2022, as described in those financial statements.
1. Accounting policies (continued)
Going concern
These 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 12 months from the date these financial statements are approved.
As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital requirements and covenant compliance for the foreseeable future under a base case scenario, taking into account the Group's financial resources including the current cash position and banking and finance facilities which are currently in place. The Directors have also assessed a severe but plausible downside scenario with reduced sales volumes and lower gross margin, also reflecting the possible impact of volatile raw material costs.
These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving certain operating performance measures relating to the production and sales of Accoya(R) wood from the plant in Arnhem with the collection of on-going working capital items in line with internally agreed budgets. In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya(R) plant in Hull until appropriate funding arrangements have been put in place.
The Directors' have taken into account the reorganisation of the Tricoya consortium and restructuring of its bank debt completed in November 2022 which resulted in Accsys becoming the 100% owner of the Tricoya plant and with a commitment to fund the balance of the EUR8m loan which was previously put in place.
The Directors' have also considered the possible amount and timing of capital expenditure required to complete the Accoya(R) plant in the USA, noting that notwithstanding that the construction project benefits from certain contractual measures in place with the lead construction contractor, Accsys has guaranteed to fund its 60% share of cost overruns, should they arise.
The Directors believe there are a sufficient number of alternative actions and measures within the control of the Group that can and would be taken in order to ensure on-going liquidity including reducing/deferring costs in some discretionary areas as well as larger capital projects if necessary.
The Directors believe that while some uncertainty always inherently remains in achieving the budget, in particular in relation to market conditions outside of the Group's control, under both the base scenario and severe but plausible downside scenario, there is sufficient liquidity and covenant headroom such that there is no material uncertainty with respect to going concern and have prepared the financial statements on this basis.
2. Segmental reporting
The Group's business is the manufacturing of and development, commercialisation and licensing of the associated proprietary technology for the manufacture of Accoya(R) wood, Tricoya(R) wood chips and related acetylation technologies. Segmental reporting is divided between corporate activities, activities directly attributable to Accoya (R) , to Tricoya (R) or research and development activities. The Group's operating segments are reported in a manner consistent with the internal reporting provided to the executive committee, the chief operating decision-making body.
Accoya (R)
Accoya(R) 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 2022 2022 31 March
2022 2022 2022 2021 2021 2021 2022
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
Accoya(R)
wood
revenue 51,088 - 51,088 48,465 - 48,465 105,053 - 105,053
Licence
revenue - - - - - - 400 - 400
Other revenue 7,584 7,584 6,895 6,895 13,879 - 13,879
Total Revenue 58,672 - 58,672 55,360 - 55,360 119,332 - 119,332
Cost of sales (40,580) - (40,580) (38,184) - (38,184) (83,435) - (83,435)
Gross profit 18,092 - 18,092 17,176 - 17,176 35,897 - 35,897
Other
operating
costs (10,035) - (10,035) (9,097) (133) (9,230) (19,116) (133) (19,249)
Profit from
operations 8,057 - 8,057 8,079 (133) 7,946 16,781 (133) 16,648
Profit from
operations 8,057 - 8,057 8,079 (133) 7,946 16,781 (133) 16,648
Share of
Accoya(R)
USA EBITDA (403) - - (91) - - (261) - -
EBIT 7,654 - 8,057 7,988 (133) 7,946 16,520 (133) 16,648
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Depreciation
and
amortisation 2,786 - 2,786 2,297 - 2,297 4,787 - 4,787
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
EBITDA 10,440 - 10,843 10,285 (133) 10,243 21,307 (133) 21,435
-------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Revenue includes the sale of Accoya(R) , licence income and other revenue, principally relating to the sale of acetic acid and other licensing related income.
All costs of sales are allocated against manufacturing activities in Arnhem and in Barry (Wales) unless they can be directly attributable to a licensee. Other operating costs include depreciation of the Arnhem and Barry property, plant and equipment together with all other costs associated with the operation of the Arnhem and Barry manufacturing site, including directly attributable administration, sales and marketing costs.
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 168 (H1 FY22: 159)
The below table shows details of reconciling items to show both Accoya (R) EBITDA and Accoya (R) Manufacturing gross profit, both including and excluding licence and licensing related income, which has been presented given the inclusion of items which can be more variable or one-off.
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Accoya(R) segmental underlying EBITDA 10,440 10,285 21,307
-------------- -------------- ----------
Accoya(R) underlying Licence Income - - (400)
Accoya(R) segmental manufacturing EBITDA
(excluding licence income) 10,440 10,285 20,907
============== ============== ==========
Accoya(R) segmental gross profit 18,092 17,176 35,897
-------------- -------------- ----------
Accoya(R) Licence Income - - (400)
Accoya(R) Manufacturing gross profit 18,092 17,176 35,497
============== ============== ==========
Gross Accoya(R) Manufacturing Margin 30.8% 31.0% 30.0%
2. Segmental reporting (continued)
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
EUR EUR EUR
Accoya(R) Manufacturing gross profit
- EUR'000 18,092 17,176 35,497
Accoya(R) sales volume - m(3) 23,957 29,555 59,649
Accoya(R) manufacturing gross profit
per m(3) 755 581 595
============== ============== ==========
Tricoya(R)
Tricoya(R) 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 2022 2022 31 March
2022 2022 2022 2021 2021 2021 2022
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(R)
panel
revenue 201 - 201 860 - 860 1,459 - 1,459
Licence
revenue 11 - 11 9 - 9 16 - 16
Other revenue - - - 6 - 6 45 - 45
Total Revenue 212 - 212 875 - 875 1,520 - 1,520
Cost of sales (162) - (162) (848) - (848) (1,417) - (1,417)
Gross profit 50 - 50 27 - 27 103 - 103
Other
operating
costs (1,733) (57,997) (59,730) (2,028) (18) (2,046) (3,811) (3) (3,814)
Loss from
operations (1,683) (57,997) (59,680) (2,001) (18) (2,019) (3,708) (3) (3,711)
Loss from
operations (1,683) (57,997) (59,680) (2,001) (18) (2,019) (3,708) (3) (3,711)
Depreciation
and
amortisation 258 58,000 58,258 262 - 262 505 - 505
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
EBITDA (1,425) 3 (1,422) (1,739) (18) (1,757) (3,203) (3) (3,206)
--------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Revenue and costs are those attributable to the business development of the Tricoya(R) process and establishment of Tricoya(R) Hull Plant.
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 31 (H1 FY22: 36), noting a substantial proportion of the costs to date have been incurred via recharges from other parts of the Group or have resulted from contractors.
2. Segmental reporting (continued)
Corporate
Corporate 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 2022 2022 2022
2022 2022 2022 2021 2021 2021
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
Total Revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other
operating
costs (4,277) (484) (4,761) (3,908) - (3,908) (7,430) - (7,430)
Loss from
operations (4,277) (484) (4,761) (3,908) - (3,908) (7,430) - (7,430)
Profit/(Loss)
from
operations (4,277) (484) (4,761) (3,908) - (3,908) (7,430) - (7,430)
Depreciation
and
amortisation 406 - 406 416 - 416 805 - 805
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
EBITDA (3,871) (484) (4,355) (3,492) - (3,492) (6,625) - (6,625)
--------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Corporate costs are those costs not directly attributable to Accoya(R) , Tricoya(R) or Research and Development activities. This includes management and the Group's corporate and general administration costs including the head office in London.
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 32 (H1 FY22: 36).
Research and Development
Research & Development 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 2022 2022 2022
2022 2022 2022 2021 2021 2021
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
Total Revenue - - - - - - - - -
Cost of sales - - - - - - - - -
Gross result - - - - - - - - -
Other
operating
costs (728) - (728) (621) - (621) (1,184) - (1,184)
Loss from
operations (728) - (728) (621) - (621) (1,184) - (1,184)
Loss from
operations (728) - (728) (621) - (621) (1,184) - (1,184)
Depreciation
and
amortisation 34 - 34 34 - 34 68 - 68
----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
EBITDA (694) - (694) (587) - (587) (1,116) - (1,116)
-------------- ----------- ------------ ---------- ----------- ------------ ---------- ----------- ------------ ----------
Research and Development costs are those associated with the Accoya(R) and Tricoya(R) processes. Costs exclude those which have been capitalised in accordance with IAS 38. (see note 8).
See note 4 for explanation of Exceptional Items and other adjustments.
Average headcount = 14 ( H1 FY22 : 9).
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 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 2022 2022 2022
2022 2022 2022 2021 2021 2021
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(R) wood
revenue 51,088 - 51,088 48,465 - 48,465 105,053 - 105,053
Tricoya(R)
panel
revenue 201 - 201 860 - 860 1,459 - 1,459
Licence
revenue 11 - 11 9 - 9 416 - 416
Other revenue 7,584 - 7,584 6,901 - 6,901 13,924 - 13,924
Total Revenue 58,884 - 58,884 56,235 - 56,235 120,852 - 120,852
Cost of sales (40,742) - (40,742) (39,032) - (39,032) (84,852) - (84,852)
Gross profit 18,142 - 18,142 17,203 - 17,203 36,000 - 36,000
Other
operating
costs (16,773) (58,481) (75,254) (15,655) (151) (15,806) (31,541) (136) (31,677)
Profit from
operations 1,369 (58,481) (57,112) 1,548 (151) 1,397 4,459 (136) 4,323
Finance
expense (1,530) 2,699 1,169 (1,722) 1,078 (644) (2,893) 544 (2,349)
Investment in
joint venture (403) - (403) (91) - (91) (261) - (261)
Profit/(Loss)
before
taxation (564) (55,782) (56,346) (265) 927 662 1,305 408 1,713
=========== ============ ========== =========== ============ ==========
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
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 2022 2022 31 March
2022 2022 2022 2021 2021 2021 2022
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
Profit from
operations 1,369 (58,481) (57,112) 1,548 (151) 1,397 4,459 (136) 4,323
Share of
Accoya(R)
USA EBITDA (403) - - (91) - - (261) - -
EBIT 966 (58,481) (57,112) 1,457 (151) 1,397 4,198 (136) 4,323
Depreciation
and
amortisation 3,484 58,000 61,484 3,009 - 3,009 6,164 - 6,164
EBITDA 4,450 (481) 4,372 4,466 (151) 4,406 10,362 (136) 10,487
2. Segmental reporting (continued)
Segmental reporting continued
Assets and liabilities on a segmental basis:
Accoya(R) Tricoya(R) 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 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(R) Tricoya(R) Corporate R&D TOTAL
Sept Sept Sept Sept
2021 2021 Sept 2021 2021 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 78,153 79,895 4,399 262 162,709
Current assets 44,766 9,425 34,194 3,440 91,825
Current liabilities (19,198) (10,766) (11,599) (95) (41,658)
Net current assets 25,568 (1,341) 22,595 3,345 50,167
Non-current liabilities (20,006) (10,188) (10,836) (135) (41,165)
Net assets 83,715 68,366 16,158 3,472 171,711
Accoya(R) Tricoya(R) Corporate R&D TOTAL
March March March March March
2022 2022 2022 2022 2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Non-current assets 91,278 99,718 4,119 228 195,343
Current assets 36,899 4,425 33,452 5,021 79,797
Current liabilities (19,399) (21,112) (5,156) (75) (45,742)
Net current assets 17,500 (16,687) 28,296 4,946 34,055
Non-current liabilities (2,826) (1,252) (52,339) (111) (56,528)
Net assets 105,952 81,779 (19,924) 5,063 172,870
The segmental assets in the current year were predominantly held in the UK 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). 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
2022 2021 2022
EUR'000 EUR'000 EUR'000
UK & Ireland 21,182 21,484 43,053
Rest of Europe 22,400 22,557 45,980
Americas 11,084 7,940 21,069
Rest of World 4,218 4,254 10,750
58,884 56,235 120,852
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
2022 2021 2022
EUR'000 EUR'000 EUR'000
Sales and marketing 2,200 2,483 5,121
Research and development 694 587 1,116
Other operating costs 4,491 3,907 6,856
Administration costs 5,904 5,669 12,284
Exceptional Items and other adjustments
(refer to note 4) 481 151 136
Other operating costs excluding
depreciation and amortisation 13,770 12,797 25,513
Depreciation and
amortisation 3,484 3,009 6,164
Impairment
loss 58,000 - -
Total other operating
costs 75,254 15,806 31,677
Administrative costs include costs associated with Business Development and Legal departments, Intellectual Property as well as Human Resources, IT, Finance, Management and General Office and include the costs of the Group's head office costs in London and the US office in Dallas.
The total cost of EUR75.3m in the current period includes EUR1.7m in respect of Tricoya(R) segment (H1 FY22: EUR2.0m) and EUR58m related to the impairment of the Tricoya segment assets, see note 4.
Group average employee headcount increased to 245 in the period to 30 September 2022, from 241 in the period to 30 September 2021.
During the period, EUR207,000 (H1 FY22: EUR408,000) of internal development & patent related costs were capitalised and included in intangible fixed assets, including EUR154,000 (H1 FY22: EUR301,000) which were capitalised within Tricoya Technologies Limited ('TTL'). In addition, EUR114,000 of internal costs have been capitalised in relation to our Arnhem Accoya(R) plant expansion project (H1 FY22: EUR187,000) and EUR566,000 of internal costs have been capitalised in relation to our plant build in Hull, UK (H1 FY22: EUR389,000). Both are included within tangible fixed assets.
4. Exceptional Items and Other Adjustments
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Redundancy costs in relation to purchase of assets to grow Accoya(R) Color production - (133) (133) Early termination of loans - redemption fee & accelerated amortisation of transaction costs - - (1,619) Advisor fees in relation to Tricoya consortium reorganisation (484) - - Impairment of the Tricoya segment assets (58,000) - - Total exceptional items (58,484) (133) (1,752) Foreign exchange differences arising on Tricoya(R) cash held - Operating costs (loss)/profit 3 (18) (3) Foreign exchange differences arising on Loan Notes - incl. in Finance expense profit/(loss) - 231 231 Foreign exchange differences on cash held - Other comprehensive profit/(loss) 167 (240) 8 Foreign exchange differences on Corporate USD cash held for investment in to USA JV- incl. in Finance expense 1,380 847 2,080 Revaluation of USD cash pledged to ABN Amro - incl. in Finance expense 1,319 - (148) Revaluation of FX forwards used for cash-flow hedging - Other comprehensive (loss)/profit (77) (28) 58 Total other adjustments 2,792 792 2,226 Tax on exceptional items and other adjustments - - - Total exceptional items and other adjustments (55,692) 659 474
Exceptional Items
The advisor fees are associated with advising Accsys on options and resulting corporate restructuring of the Tricoya consortium, as described in the CEO's report and note 15, Post balance sheet events.
The impairment of the Tricoya segment assets is caused by
(i) Identification of additional time and costs (EUR35m) to complete the plant following a third party expert review of the project;
(ii) The increase in UK gas prices, and the impact these have on future operational cashflows post startup of the plant
(iii) Update to the discount rate applied, 12.8% (increased from 10.5% at 31 March 2022). Refer to note 9 for review of impairment and note 15 for post balance sheet events
In the prior year, Accsys purchased certain assets, equipment, technology and its manufacturing plant in Barry, Wales from Lignia Wood Company Limited and its administrators for a consideration of EUR1.2m, including EUR0.5m for raw wood inventory. As part of this purchase, redundancy costs of EUR133,000 were incurred in relation to staff at the Barry site.
In the prior year, Accsys completed the refinance of its Group debt facilities, with a new bilateral agreement with ABN Amro. Loans previously held with ABN Amro, Cerdia Produktions GmbH, Bruil, Volantis and Business Growth Fund (BGF) were repaid. Early redemption fees totalling EUR1.4m were paid, and the amortisation of previously capitalised transaction fees related to these repaid loans was accelerated.
Other Adjustments
Foreign exchange differences in the Tricoya(R) segment have occurred due to pounds sterling held within the consortium for the Hull plant build. The effective portion of the foreign exchange movement is recognised in other comprehensive income, with the ineffective portion recognised in Operating costs.
Foreign exchange differences in the Corporate segment have also occurred due to US dollars held for investment into the Accoya USA Joint Venture. 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 future 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.
Foreign exchange differences in the Corporate segment have also occurred due to USD cash pledged to ABN Amro for the Letter credit provided to FHB as part of the Accoya USA funding arrangements. See note 12 for further details.
5. Tax expense
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
(a) Tax recognised in the statement
of comprehensive income comprises:
Current tax expense/(credit)
UK Corporation tax on losses for the
period - - -
Research and development tax (credit)/expense
in respect of current period (68) (31) (314)
(68) (31) (314)
Overseas tax at rate of 15% 6 9 24
Overseas tax at rate of 25% 419 644 1,305
Deferred Tax
Utilisation of deferred tax asset - - -
Total tax expense reported in the statement
of comprehensive income 357 622 1,015
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 30 Sept 30 31 March 31
2022 Sept 2021 Sept 2022 March
2022 2021 2022
Basic earnings per share Underlying Total Underlying Total Underlying Total
Weighted average number of
Ordinary shares in issue ('000) 204,358 204,358 188,322 188,322 190,446 190,446
Profit/(Loss) for the period attributable
to owners of Accsys Technologies PLC
(EUR'000) (281) (26,526) 6 966 1,930 2,338
EUR EUR EUR EUR EUR EUR
Basic profit/(loss) per share (0.00) (0.13) 0.00 0.01 0.01 0.01
Diluted earnings per share
Weighted average number of Ordinary shares
in issue ('000) 204,358 204,358 188,322 188,322 190,446 190,446
Equity options attributable to BGF 8,449 8,449 8,449 8,449 8,449 8,449
Weighted average number of Ordinary shares
in issue and potential ordinary shares
('000) 212,807 212,807 196,771 196,771 198,895 198,895
Profit/(Loss) for the year attributable
to owners of Accsys Technologies PLC
(EUR'000) (281) (26,526) 6 966 1,930 2,338
EUR EUR EUR EUR EUR EUR
Diluted profit/(loss) per share (0.00) (0.12) 0.00 0.00 0.01 0.01
7. Tricoya Technologies Limited
Tricoya Technologies Limited ("TTL") was incorporated in order to develop and exploit the Group's Tricoya(R) technology for use within the worldwide panel products market, which is estimated to be worth more than EUR60 billion annually.
The Tricoya(R) Consortium was formed on 29th March 2017, with its members currently comprising Accsys Technologies, INEOS Acetyls Investments Ltd, MEDITE Europe DAC, BGF & Volantis (Lombard Odier) and with project finance debt provided by NatWest.
Tricoya UK Limited is constructing and will own and operate the world's first Tricoya(R) wood elements acetylation plant in Hull (UK), which will have a targeted production capacity of 30,000 metric tonnes per annum (sufficient to manufacture 40,000 cubic metres of panels) and scope to expand.
INEOS Acetyls Investments Limited ("INEOS") acquired BP Ventures' share capital of TTL and BP Chemicals share capital of Tricoya UK on 31 December 2020.
INEOS (through acquiring BP's share of TTL & Tricoya UK) have invested EUR31.8 million in the Tricoya(R) Project, including EUR23.3 million as equity in Tricoya UK and EUR8.5 million as equity in TTL. All funding was received by 31 March 2021, with no funding received subsequently to 30 September 2022.
MEDITE have invested EUR15.0 million in the Tricoya(R) Project, including EUR8.4 million as equity in TTL and EUR6.6 million as equity in Tricoya UK. All funding was received by 31 March 2021, with no funding received subsequently to 30 September 2022.
In the period to 30 September 2022, the Group's shareholding in TTL remained unchanged at 76.5%.
Tricoya UK entered a six-year EUR17.2 million finance facility agreement with Natwest Bank plc in March 2017 in respect of the construction and operation of the Hull Plant. As at 30 September 2022 the Group has utilised EUR15.3m (31 March 2022: EUR9.9m) of the facility.
Accsys has agreed a EUR17m loan & EUR8m loan to Tricoya UK to be used towards the Hull plant construction project alongside existing funding in place for Tricoya UK. The loans accrue interest, which is rolled up, at a rate between 5.25 and 6.75% above EURIBOR. At 30 September 2022, the Group had lent to Tricoya UK EUR19.4m (31 March 2022: EUR8.8m) under these facilities. As Accsys consolidates Tricoya UK, these loans are eliminated within the Accsys Group balance sheet.
The Group has consolidated the results of TTL and Tricoya UK as subsidiaries, as it exercises the power to govern the entities in accordance with IFRS 10. The non-controlling interests in both entities have been recognised in these Group financial statements.
On 2 November 2022, Accsys announced the reorganisation of the Tricoya(R) Consortium whereby Accsys agreed to acquire 100% ownership of the Tricoya group entities in return for 11.9m new Accsys shares for the Consortium Partners. Refer to note 15 for post balance sheet events.
7. Tricoya Technologies Limited (continued)
The "TTL Group" income statement and balance sheet, consisting of TTL and its subsidiary Tricoya UK Ltd, are set out below:
TTL Group income statement:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Revenue 214 875 1,552
Cost of Sales Tricoya(R) panel (158) (848) (1,449)
Gross profit 56 27 103
Costs:
Staff costs (932) (1,440) (2,592)
Research & development (excluding
staff costs) (85) (115) (207)
Intellectual Property & legal fees (406) (106) (214)
Other Operating costs (258) (256) (639)
Depreciation & Amortisation (276) (262) (505)
Impairment loss (58,000) - -
EBIT (59,901) (2,152) (4,054)
EBIT attributable to Accsys shareholders (29,724) (1,226) (2,414)
Tricoya(R) panel revenue represents panels purchased by Tricoya Technologies Ltd from MEDITE, sold to customers in other regions as market seeding.
7. Tricoya Technologies Limited (continued)
TTL Group balance sheet at 30 September 2022:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Non-current assets
Intangible assets 711 4,517 4,534
Property, Plant and Equipment 54,489 74,106 94,061
Right of use assets 1,195 1,271 1,232
56,395 79,894 99,827
Current assets
Trade and other receivables 508 687 1,088
Cash and cash equivalents 287 7,900 912
Derivative financial instrument - 106 3
795 8,693 2,003
Current liabilities
Trade and other payables (16,025) (12,208) (17,646)
Derivative financial instrument (77) - -
(16,102) (12,208) (17,646)
Non-current liabilities
Other long term borrowing (35,279) (9,306) (18,585)
(35,279) (9,306) (18,585)
Net assets 5,809 67,073 65,599
Value attributable to Accsys Technologies 460 30,832 30,073
Value attributable to Non-controlling
interest 5,349 36,241 35,526
TTL Group cash flows at 30 September 2022:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Cash flows (used in)/ from operating
activities (148) 863 2,618
Cash flows (used in)/ from investing
activities (16,408) (4,299) (21,860)
Cash flows (used in)/ from financing
activities 15,931 (127) 8,691
Net (decrease)/increase in cash and
cash equivalents (625) (3,563) (10,551)
8. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 31 March 2021 7,464 74,456 4,231 86,151
Additions 118 345 - 463
At 30 September 2021 7,582 74,801 4,231 86,614
Additions 60 191 - 251
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
Accumulated amortisation
At 31 March 2021 2,510 72,776 - 75,286
Amortisation 321 45 - 366
At 30 September 2021 2,831 72,821 - 75,652
Amortisation 63 316 - 379
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
Net book value
At 31 March 2021 4,954 1,680 4,231 10,865
At 30 September 2021 4,751 1,980 4,231 10,962
At 31 March 2022 4,748 1,855 4,231 10,834
At 30 September 2022 1,723 898 4,231 6,852
Refer to note 9 for the recoverability assessment of these intangible assets.
9. 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 2021 17,976 146,433 3,885 168,294
Additions - 7,491 324 7,815
Foreign currency translation
(loss) - - 2 2
At 30 September 2021 17,976 153,924 4,211 176,111
Additions - 33,521 137 33,658
Foreign currency translation
(loss) - - 5 5
At 31 March 2022 17,976 187,445 4,353 209,774
Additions - 20,476 15 20,491
Foreign currency translation
(loss) - - 19 19
At 30 September 2022 17,976 207,921 4,387 230,284
Depreciation
Opening balance at 31
March 2021 995 25,945 1,797 28,737
Charge for the period 179 1,730 257 2,166
Foreign currency translation
gain - - 2 2
At 30 September 2021 1,174 27,675 2,056 30,905
Charge for the period 179 1,820 204 2,203
Foreign currency translation
(loss) - - 5 5
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
gain - - 19 19
Impairment loss - 54,200 - 54,200
At 30 September 2022 1,532 85,799 2,531 89,862
Net book value
At 31 March 2021 16,981 120,488 2,088 139,557
At 30 September 2021 16,802 126,249 2,155 145,206
At 31 March 2022 16,623 157,950 2,088 176,661
At 30 September 2022 16,444 122,122 1,856 140,422
Plant and machinery assets with a net book value of EUR53,547,000 relating to the Hull Plant are held as assets under construction and are not depreciated, (31 March 2022: EUR93,560,000)
9. 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(R) and Tricoya(R) segments and the carrying value of Goodwill is allocated to the Accoya(R) segment. The recoverable amount of these CGUs are determined based on a value-in-use calculation which uses cash flow projections based on latest financial budgets and discounted at a pre-tax discount rate of 12.8% (31 March 2022: 10.5%) to determine their present value.
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 EUR58 million should be recognised in the Tricoya CGU.
The impairment of the Tricoya segment assets is caused by:
(i) Identification of additional time and costs (EUR35m) to complete the plant following a third party expert review of the project;
(ii) The increase in UK gas prices, and the impact these have on future operational cashflows post start-up of the plant; and
(iii) Update to the discount rate applied, 12.8% (increased from 10.5% at 31 March 2022).
Refer to note 15 for post balance sheet events and further details on the restructure of the Tricoya(R) Consortium.
Key assumptions applied to the Tricoya(R) CGU were as follows:
-- a discount rate of 12.8%;
-- Project capital costs to bring the plant into commercial operation of EUR35m;
-- A "hold period" of 9 months (period in which no construction activities is performed);
-- a long-term growth rate of 2.5%; and
-- Ultimate gross margin of approximately 40%.
The impact the following changes to these key assumptions would have, if made in isolation, on the impairment calculated for the Tricoya(R) CGU is as follows:
-- a 1% increase in the market interest rates (through increasing the discount rate): EUR10m
-- a 1% decrease in the long-term growth rate : EUR7m
-- a 1% decrease to Gross margin : EUR4m
-- a 3 month extension in the hold period : EUR2m
-- a EUR5m increase in the capital costs to bring the plant into commercial operation : EUR4m
10. Share capital
In the period ended 30 September 2021:
In May 2021, 20,005,325 Placing Shares and 2,418,918 Open Offer Shares were issued as part of the capital raise to fund the Company's investment in expanding its Accoya(R) business into North America through the construction of a new Accoya(R) plant in the USA through its joint venture, Accoya USA LLC, with Eastman Chemical Company (see note 15), as well as to provide additional capital to support the Company's continued growth. The Shares were issued at a price of EUR1.65 (GBP1.40) per ordinary share, raising gross proceeds of EUR36.7 million (before expenses).
629,460 Shares were issued between June to September 2021 for the benefit of current and former employees following the exercise of nil cost options, granted under the Company's 2013 Long Term Incentive Plan ("LTIP").
In the period ended 31 March 2022:
Between June and September 2021, a total of 629,460 shares were issued following the exercise of nil cost options, granted under the Company's 2013 Long Term Incentive Plan ('LTIP').
In February 2022, following the subscription by employees in the prior year for shares under the Employee Share Participation Plan (the 'Plan'), 189,931 shares were issued as "Matching Shares" at nominal value under the Plan.
In addition, various employees newly subscribed under the Plan for 193,424 Shares at an acquisition price of EUR2.015 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).
10. Share capital (continued)
In the period ended 30 September 2022:
In May 2022, 13,798,103 Placing and Subscription Shares were issued as part of the capital raise to strengthen the Company's balance sheet, increase liquidity headroom and fund additional costs to complete the Arnhem Plant Reactor 4 capacity expansion. The Shares were issued at a price of EUR1.45 (GBP1.23) per ordinary share, raising gross proceeds of EUR20 million (before expenses).
In August 2022, 306,329 Shares were issued following the exercise of nil cost options, granted under the Company's 2013 Long Term Incentive Plan ('LTIP').
11. Other Reserves
Capital
redemp- Hedge Total
tion Merger Effective-ness Other Other
reserve reserve reserve reserve reserves
EUR000 EUR000 EUR000 EUR000 EUR000
Balance at 30 September 2021 148 106,707 (39) 7,551 114,367
Total Comprehensive income for
the period - - 334 - 334
Balance at 31 March 2022 148 106,707 295 7,551 114,701
Total Comprehensive income for
the period - - 90 - 90
Balance at 30 September 2022 148 106,707 385 7,551 114,791
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(R) and Corporate segments.
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.
12. Commitments under loan agreements
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
Amounts payable under
loan agreements:
Within one year 20,133 17,358 12,973
In the second to fifth years
inclusive 61,210 40,726 59,506
Less future finance charges (6,447) (5,280) (8,490)
Present value of loan obligations 74,896 52,804 63,989
The increase in total borrowings in the period since 31 March 2022 of EUR10m relates to the drawdown of the ABN revolving credit facility (EUR5m) and the additional drawdown of the Natwest facility (EUR5m).
In October 2021 Accsys completed the refinance of its Group debt facilities through a new bilateral agreement with ABN AMRO, one of Accsys' existing relationship banks. The new EUR60m 3-year bilateral facilities agreement with ABN AMRO comprised a
- EUR45m Term Loan Facility and,
- EUR15m Revolving Credit Facility ('RCF') .
12. Commitments under loan agreements (continued)
The EUR45m Term Loan was fully utilised to repay all of the Group's existing debt, with the exception of the NatWest facility held by the Tricoya(R) consortium which remains in place.
- The Term Loan is partially amortising, with 5% of the principal repayable per annum after 18 months.
- The applicable interest rate for the Term Loan varies between an all in cost of 1.75% and 3.25% depending on net leverage, resulting in a significant improvement compared to the previous facilities which had a weighted average cost of approximately 6%.
- The RCF interest rate will similarly vary, but between 2.0% and 3.5% above EURIBOR.
The RCF was subsequently increased to EUR25 million as part of the Accoya USA financing referred to below, with approximately EUR20 million utilised for the Letter of credit provided by ABN Amro to First Horizon Bank ("FHB") in support of the Accoya USA JV funding arrangements, leaving approximately EUR5 million available as headroom on the facility. The EUR5m remaining headroom was drawn in April 2022, and remained drawn at 30 September 2022.
The new facilities are secured against the assets of the Group which are 100% owned by the Company (and excluding Tricoya) and include customary covenants such as net leverage and interest cover which are based upon the results and assets which are 100% owned by the Company (excluding Tricoya).
Tricoya(R) facility:
In March 2017 the Company's subsidiary, Tricoya UK Limited entered into a six-year EUR17.2 million finance facility agreement with Natwest Bank plc in respect of the construction and operation of the Hull Plant. The facility is secured by fixed and floating charges over all assets of Tricoya UK Limited. At 30 September 2022, the Group had EUR15.3m (31 March 2022: EUR9.9m) borrowed under the facility. Interest will accrue at Euribor plus a margin, with the margin ranging from 325 to 475 basis points.
This facility has been amended and restructured post period end, refer to note 15 for details.
Accoya USA facility & De Engh facility:
In March 2022 the Company's joint venture, Accoya USA agreed an eight-year $70 million loan from First Horizon Bank ('FHB') of Tennessee, USA in respect of the construction and operation of the Accoya(R) USA plant. FHB are also providing a further $10 million revolving line of credit to be utilised to fund working capital. The FHB term loan is secured on the assets of Accoya USA and is supported by Accoya USA's shareholders, including $50 million through a limited guarantee provided on a pro-rata basis, with Accsys' 60% share representing US$30 million. The interest rate varies between 1.3% to 2.1% over USD LIBOR. Principal repayments commence one year following the completion and start-up of the facility, and are calculated on a ten-year amortisation period. Accoya USA is equity accounted for in these financial statements, therefore this Borrowing in not included in the Group's borrowings. The FHB loan remains undrawn as at 30 September 2022.
To support Accsys' limited guarantee, Accsys provided a $20 million Letter of Credit ('LC') to FHB. The LC is issued by ABN AMRO, utilising part of the revolving credit facility agreed in October 2021. To further support the LC, Accsys agreed a EUR10 million convertible loan with De Engh BV Limited ('De Engh'), an investment company based in the Netherlands (the 'Convertible Loan'). The Convertible Loan proceeds were placed with ABN AMRO solely as cash collateral to enable ABN AMRO to grant the $20 million LC to FHB.
The Convertible Loan is unsecured and carries an interest margin of 6.75% above Euribor. Accsys expects to fully repay the Convertible Loan within two years. If the Convertible Loan is not repaid within this period, De Engh has an option (from the end of year two) to convert the outstanding loan balance to ordinary shares in Accsys at EUR2.30 per share (representing a 31% premium to the closing share price on 3 March 2022), otherwise the interest rate increases by 2% in year three and by a further 2% the following year if the loan has not been repaid or converted after 3 years. The maximum term of the Convertible Loan is 3.5 years.
Reconciliation to net (debt)/cash:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
Cash and cash equivalents 18,123 60,921 42,054
Less:
Amounts payable under loan
agreements (74,896) (52,804) (63,989)
Amounts payable under lease
liabilities (4,596) (5,738) (5,217)
Net (debt)/cash (61,369) 2,379 (27,152)
Restricted cash
The cash and cash equivalents disclosed above and in the Consolidated statement of cash flow includes $10 million which is pledged to ABN Amro as collateral for the $20million Letter of credit provided to FHB.
Reconciliation to adjusted cash:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
Cash and cash
equivalents 18,123 60,921 42,054
Less:
Earmarked cash initially committed
to be contributed to Accoya USA - - (27,857)
Cash pledged to ABN Letter
of Credit (10,949) - (9,852)
Adjusted
cash 7,174 60,921 4,345
13. Transactions with non-controlling interests
In the period ended 30 September 2021:
No shares were issued in the period to 30 September 2021.
The total carrying amount of the non-controlling interests in TTL and Tricoya UK at 30 September 2021 was EUR36.24m (2020: EUR34.42m).
In the year ended 31 March 2022:
No shares were issued in the year ended 31 March 2022.
The total carrying amount of the non-controlling interests in TTL and Tricoya UK at 31 March 2022 was EUR36.24m (2021: EUR34.42m).
In November 2021, Accsys agreed a new EUR17m loan to Tricoya UK to be used towards the Hull plant construction project alongside existing funding in place for Tricoya UK. The loan accrues interest, which is rolled up, at a rate between 5.25 and 6.75% above EURIBOR. The loan is secured and is repayable by 30 September 2023. At 30 September 2022, the Group had lent to Tricoya UK EUR17m under the facility.
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 TTL and Tricoya UK at 30 September 2022 was EUR36.24m.
On 12 September 2022, Accsys agreed to a further loan facility of up to EUR8m to enable Tricoya UK to continue progressing the activities whilst funding discussions were ongoing. The loan facility was uncommitted, and all loan utilisation requests require Accsys approval. At 30 September, the Group had lent to Tricoya UK EUR2.4m under the facility, following the full utilisation of the EUR17m facility previously provided to Tricoya UK (referred to above).
On 2 November 2022, Accsys announced the reorganisation of the Tricoya(R) Consortium whereby Accsys agreed to acquire 100% ownership of the Tricoya group entities in return for 11.9m new Accsys shares for the Consortium Partners. Refer to note 15 for post balance sheet events.
Transactions with non-controlling Unaudited Unaudited Audited
interests
6 months 6 months Year
ended ended ended
30 30 Sept 31 March
Sept
2022 2021 2022
EUR'000 EUR'000 EUR'000
Opening balance 8,127 8,127 8,127
Carrying amount of non-controlling
interests issued - - -
Consideration paid by non-controlling
interests - - -
Excess of consideration paid
recognised in Group's equity 8,127 8,127 8,127
14. Investment in Joint Venture
In August 2020, Accsys together with Eastman Chemical Company formed a new company, Accoya USA LLC to construct and operate an Accoya(R) wood production plant to serve the North American market.
The new company has been formed with Accsys having a 60% equity interest and Eastman having a 40% equity interest, with the two parties assessed to jointly control the entity as defined under IFRS 11 - Joint arrangements. Accoya USA is accounted for as a joint venture and equity accounted for within the financial statements.
The plant is designed to initially produce approximately 40,000 cubic metres of Accoya(R) per annum and to allow for cost-effective expansion.
In March 2022, the final investment decision was made to proceed with the construction of the US facility.
The total construction and start-up costs for the facility, including the initial two reactors, are expected to be approximately $136 million ('Total project cost').
$66 million of the Total Project cost will be funded by equity contributions from Accsys (60%) and Eastman (40%). Accsys' pro-rata share is $39.6 million (EUR34.9 million) of which $36.6 million has already been contributed to Accoya USA by 30 September 2022. Eastman has contributed $24.4 million to Accoya USA by 30 September 2022.
$70 million of the Total Project cost, will be funded through an eight-year term loan to Accoya USA, LLC from First Horizon Bank ('FHB') of Tennessee, USA. FHB are also providing a further $10 million revolving line of credit to be utilised to fund working capital. The FHB term loan is secured on the assets of Accoya USA and will be supported by Accoya USA's shareholders, including $50 million through a limited guarantee provided on a pro-rata basis, with Accsys' 60% share representing $30 million. The interest rate varies between 1.3% to 2.1% over USD LIBOR . Principal repayments commence one year following the completion and start-up of the facility, and are calculated on a ten-year amortisation period.
The carrying amount of the equity-accounted investment is as follows:
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended
30 Sept 30 Sept 31 March
2022 2021 2022
EUR'000 EUR'000 EUR'000
Opening balance 3,216 326 326
Investment in Accoya(R) USA 29,129 1,186 3,751
Less: Accsys proportion (60%)
of Licence fee received - - (600)
Loss for the period (403) (91) (261)
Closing balance 31,942 1,421 3,216
15. Post Balance Sheet Events
Tricoya(R) consortium restructure
Accsys has reached agreement to acquire full ownership of TUK (Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from its Consortium Partners. The consideration for this has been satisfied by the issue of 11.9 million new ordinary Accsys shares to the other Tricoya Consortium Partners (the "Restructure"). The Share Issuance represents 5.74% of the current issued share capital of Accsys and based on the Accsys share price at close of trading on 1 November 2022 it represents a value of EUR9.8m (based on the Euronext closing price) or
GBP8.4m (based on the London Stock Exchange closing price).
Under the agreement Accsys has acquired the remaining 38.2% holding in TUK that TTL does not already own and the 23.5% holding in TTL that it does not already own.
INEOS and Medite's respective supply and offtake agreements for the Hull plant will continue on their current terms.
NatWest has agreed to restructure its TUK debt facility, reducing the principal amount by approximately EUR9m to total EUR6m, under a new 7-year term. The NatWest facility remains ringfenced from the Accsys Group, the Accoya(R) plant at Arnhem and other joint ventures. No repayments are due until the facility maturity date
Benefits of the restructure
Accsys' Board believes the Restructure is in the best interests of Accsys shareholders and provides greater certainty and full control of the Hull plant and Tricoya overall, with benefits to Accsys including:
-- Control and optionality over the completion of the Hull plant, including the timing, cost, and basis of funding for the Tricoya Hull Project plant.
-- Discretion over future development of the Tricoya proposition including licencing.
-- No commitment to invest further capital now and time to assess options in regard to funding any future capital requirements.
-- Simplifies the Group's structure and will streamline internal governance.
Accsys share issuance
-- Under the Restructuring, Consortium Partners each received Accsys shares in return for transferring their full shareholdings in TTL and TUK to Accsys. The Share Issuance for 11,608,259 ordinary shares, which will rank pari passu in all respects with the existing ordinary shares of the Company, to be admitted to the regulated market operated by Euronext Amsterdam N.V. ("Euronext Amsterdam") and to the London Stock Exchange's AIM market, which was expected to occur on or around 8.00 am UK time on 7 November 2022 ("Admission"). A separate application for the remaining 267,542 ordinary shares was made shortly following Admission.
-- Upon Admission, the total number of issued shares and the total number of voting rights in the Company will be 218,504,968. This figure should be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.
-- The Accsys shares to be issued to consortium parties are subject to lock up restrictions on the disposal of these shares, for up to 9 months following completion (with partial release of tranches during the lock-up period), subject to customary exceptions and orderly market provisions during the 9 month period.
-- Under the Restructuring INEOS and Medite will receive 7,500,000 and 3,500,000 Accsys shares respectively.
-- INEOS and Medite are related parties to Accsys under the AIM Rules for Companies. The arrangements with INEOS and Medite as part of the Restructure are related party transactions under the AIM Rules for Companies. The Directors consider, having consulted with Numis as Nominated Advisor, that the terms of the arrangements with INEOS and Medite as part of the Restructure are fair and reasonable insofar as shareholders of the Company are concerned.
Tricoya restructure
-- The amended NatWest loan of EUR6m will accrue interest which will be rolled up until the Hull plant is operational. The floating interest rate remains in line with the previous loan terms. The loan has no financial covenants.
-- Separate to, and in addition to the amended EUR6m loan, NatWest will be entitled to obtain recovery of up to approximately EUR9.5m, on a contingent basis, depending on profitability of the Tricoya Hull plant once operational. The contingent payments to NatWest are based upon free cash-flow generated by the Hull plant.
-- Accsys' recent bridging loan to TUK of EUR8m issued in August 2022 has now been committed and rank joint first with the NatWest Senior Loan. Accsys' second ranked loan facility to TUK of EUR17m issued in 2021 will remain and rank behind the other two loans.
Notes to editors:
Accsys (Accsys Technologies PLC) is a fast-growing business with a purpose: changing wood to change the world. The company combines chemistry, technology and ingenuity to make Accoya(R) wood and Tricoya(R) wood elements: high performance wood products that are extremely durable and stable, opening new opportunities for the built environment and giving the world a choice to build sustainably. Accsys transforms fast-growing, certified sustainable wood into building materials with an up to 50-year warranty, locking carbon stored in the wood into useful products for decades, with performance characteristics that match or better those of non-renewable, resource-depleting and polluting alternatives. Accsys is listed on the London Stock Exchange AIM market and on Euronext Amsterdam, under the symbols 'AXS'. Visit www.accsysplc.com
Accoya(R) solid wood is sustainable, durable, and stable with exceptional performance, finish and sustainability. Accsys' proprietary acetylation process makes the wood more dimensionally stable and because it is no longer easily digestible, extremely durable. It is one of very few building materials to be Cradle to Cradle Certified(TM) at the Gold level, with a Platinum rating for Material Health, confirming that no harmful or toxic additives or chemicals are present to leach out into the environment. Primary applications for Accoya(R) wood include windows, doors, cladding and decking, where the combination of performance and sustainability benefits compete favorably against hardwoods, plastics, metals and concrete. Visit www.accoya.com
Tricoya(R) acetylated wood elements are produced for use in the fabrication of panel products such as medium density fibreboard (MDF). Panel products made with Tricoya(R) wood elements are truly durable and stable enough for use outdoors and in wet environments, unlocking new possibilities for design and construction. They have been lauded as the first major innovation in the wood composites industry in more than 30 years and bring the flexibility of traditional panel products and sustainability benefits of wood to a whole new range of applications. Visit www.tricoya.com
Any references in this announcement to agreements with Accsys shall mean agreements with either Accsys or its subsidiary entities unless otherwise specified. 'Accsys' and 'Accsys Technologies' are trading names of Titan Wood Limited ("TWL"), a wholly-owned subsidiary of Accsys Technologies PLC. Accoya (R) , Tricoya (R) and the Trimarque Device are registered trademarks owned by TWL, and may not be used or reproduced without written permission from TWL, or in the case of the Tricoya (R) registered brand trademark, from Tricoya Technologies Limited, a subsidiary of TWL with exclusive rights to exploit the Tricoya(R) brand.
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