Cleantech Building Materials: Unaudited Preliminary Results To 31 December 2019

Date : 26/03/2020 @ 14:31
Source : UK Regulatory (RNS & others)

Cleantech Building Materials: Unaudited Preliminary Results To 31 December 2019

   26 March 2020 
   Cleantech Building Materials plc 
   Unaudited Preliminary Results to 31 December 2019 
   Cleantech Building Materials plc ("CBM" or the "Company" or the "Group"), 
presents its results for the twelve months ended 31 December 2019.  The 
unaudited financial statements are appended to this announcement. 
   These results are unaudited because as a consequence of the Covid-19 
pandemic our auditors, Crowe U.K. LLP, are presently unable to sign the 
Audit Report on these financial statements, whilst they consider the 
impact of these circumstances on going concern and subsequent events. 
These accounts have been prepared in accordance with the rules and 
standards applicable at this time. It is possible that these rules may 
be changed in light of the Covid-19 situation, before our auditors sign 
their Audit Report, which may require a change in these accounts. We 
will announce our audited results, as soon as they are available and 
highlight any differences from these results. 
   The Directors are not proposing the payment of a dividend. 
   Chairman's Statement 
   2019 has been a breakthrough year for CBM and its strategy to build an 
Accoya(R) wood factory in China. 
   On 9 July 2019, CBM's subsidiary company Diamond Wood China Limited 
("DW") signed a legally binding Investment Framework Agreement with 
Nantong Acetic Acid Company ("NTAAC") to provide circa US $50m in equity 
and debt financing for the first Accoya(R) wood factory in China. DW 
will be the majority shareholder in the joint venture, and will 
additionally receive a substantial royalty on profits. NTAAC is amongst 
China's top speciality chemical companies, serving global clients in the 
US and Europe. The company is listed on the Shanghai Stock exchange. 
   On 10 July 2019, we announced the signing of a subscription agreement 
with a family office for EUR15m euros ("Investor"). These funds will be 
used to finance the Group's share of the equity financing for the joint 
venture with NTAAC. 
   In November 2019, the Bank of Jiangsu provided DW and NTAAC with a 
signed MOU committing to provide EUR22m euros of debt financing. In 
China, such a signed commitment document is unusual, and attests to the 
strength of the Accoya(R) wood factory project, and the long 
relationship between NTAAC and Bank of Jiangsu. 
   On 12 December 2019, the Administration Committee of Jiangsu Rudong 
Yangkou Port Economic Development Zone provided DW and NTAAC with a 
signed commitment letter identifying the plot of land reserved for the 
Diamond Wood Accoya(R) wood factory. 
   During the course of 2019 we continued to invest in the development of 
our marketing and sales operations in China and the ASEAN countries, 
which resulted in new offtake agreements being added to the growing list 
of manufacturers and wholesalers in the region committing to purchase 
significant volumes of Accoya(R) wood from the Group. These agreements, 
and the ongoing business with our existing base of distribution partners, 
attest to a strong and increasing demand for Accoya(R) wood in the 
   It is the Board's view that there is sufficient demand in China and the 
ASEAN territories to warrant the construction of our own Accoya(R) wood 
factory. DW previously purchased the exclusive licence to sell and 
produce Accoya(R) wood in those regions from Accsys' subsidiary Titan 
Wood Limited ("TW") for circa EUR20m euros. 
   The recent 2019 agreement with NTAAC, and the subscription agreement 
signed by CBM with the Investor, are the foundations for the build out 
of DW's strategy to manufacture and sell its own Accoya(R) wood. DW's 
wholesalers and manufacturers are demanding such a stable and 
cost-competitive source of Accoya(R) wood. 
   At this time, the Covid-19 outbreak has not impacted our timetable, as 
we have been able to progress discussions and planning for the joint 
venture. However, if there is a prolonged travel ban, then there will 
inevitably be some delays, and we will work to keep any such delays to a 
minimum. The Worldwide spread of Covid-19 is clearly very concerning and 
will have an impact on the World Economy. Our business is focussed on 
China and at the time of writing the rate of infection in China is 
falling. Our team and our partners NTACC have worked well remotely and 
we have not experienced any delays. At this time we do not currently 
expect restrictions to combat the Covid-19 virus in China to impact our 
timetable for moving forward with NTACC. We are an English company, with 
a majority of the Board based in the UK. As our CEO and CFO are based in 
Shanghai, our meetings are held remotely and accordingly the impact of 
the disruption to normal business caused by measures to combat the 
Covid-19 virus is anticipated to have limited impact on how the Board of 
the Company manages its business. 
   Simon Allocca joined the Board this year.  Simon's many years as a 
senior banker have added to the Board's skill sets and he has made an 
immediate contribution. 
   The Group reported a loss of EUR4,490,000 for the 12 months ended 31 
December 2019 (2018: EUR4,661,000), which reflects the fact that the 
Group has borne the cost of its infrastructure and staff. 
   I would like to take this opportunity to again express my sincere 
gratitude to my fellow Directors and staff for their hard work and 
commitment over the past year. 
   I look forward to providing you with further updates at our next Annual 
General Meeting ("AGM"). The timing of that AGM and the release of our 
audited Annual Report for 2019 is subject to uncertainty due to the 
impact of the Covid-19 virus. We will inform the market further once we 
are able to provide definitive dates. 
   Strategy and Objectives 
   The Group's primary strategic objectives for 2020 are to: 
   1. To engage a leading engineering, procurement and construction firm to 
      lead the construction of an Accoya(R) wood manufacturing facility in 
   2. Together with the Group's chemical industry joint venture partner, NTAAC, 
      to ensure that the Accoya(R) wood manufacturing facility is constructed 
      on time and on budget, and operated efficiently. 
   3. To grow sales of Accoya(R) wood to regional wholesalers. 
   4. To build relationships with large-volume wood product manufacturers 
      through testing and trials in anticipation of Accoya(R) wood being 
      produced in the Group's own factory. 
   5. To develop the Group's marketing and sales initiatives to further expand 
      market channels and offtake agreements in the Chinese and ASEAN markets. 
   Financial Overview 
   The Group's revenues for the 12 months ended 31 December 2019 remained 
steady at EUR927,000 (2018: EUR703,000) and consisted mainly of 
Accoya(R) wood sales to customers in Thailand, Vietnam, Singapore, 
Indonesia and Malaysia. 
   The Group realised a net loss of EUR4,490,000 for the year to 31 
December 2019 (2018: EUR4,661,000). As at 31 December 2019, the Group 
had cash and cash equivalents of EUR283,000 (2018: EUR8,000) as well as 
an available facility of approximately EUR2.5m, and an equity commitment 
to finance the Joint Venture of an additional EUR15m euros. The Company 
has significantly reduced its outstanding debts during 2019, and now has 
net current liabilities of EUR588,000 (2018: EUR1,531,000). 
   We did not see any increase in the amount of Accoya(R) wood we received 
this year and as a consequence of this shortage, DW's channel partners 
have been unable to tender large-volume construction projects, and our 
manufacturing customers have had to delay their market launch plans. 
This inability to serve the growing demand in the region has been a 
frustrating development for all concerned 
   Once the Group is producing its own Accoya(Ò) wood, the Board 
believes the financial performance of the Group will be radically 
   Future Developments 
   The Group continues to advance its discussions with potential partners 
to significantly grow its business and to construct and operate its own 
Accoya(Ò) wood manufacturing facility. The Group expects to 
commence construction of its own Accoya(R) wood manufacturing facility 
during 2020. 
   The Company's next financial report will be unaudited accounts for the 
six months to 30 June 2020 which we plan to publish in August 2020. We 
will inform the market accordingly should the impact of the Covid-19 
virus cause this date to change. 
   Further information may be found at the Company's website at 
   Further Enquiries: 
Cleantech Building Materials plc 
 Adrian Wyn-Griffiths                             +44 20 3934 6630 
Keswick Global AG (Certified          
Adviser)                                          +43 1 740 408045 
IFC Advisory Limited (Financial 
 Tim Metcalfe 
 Zach Cohen                                                   +44 20 3934 6630 
   The information communicated in this announcement is "inside 
information" for the purposes of article 7 of the Market Abuse 
Regulation 596/2014. 
   -- CBM Unaudited Financial Statements 311219 FINAL 

(END) Dow Jones Newswires

March 26, 2020 10:31 ET (14:31 GMT)

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