Source - LSE Regulatory
RNS Number : 1164U
Accsys Technologies PLC
21 November 2023
 

AIM: AXS

 

Euronext Amsterdam: AXS

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

21 November 2023

Accsys Technologies PLC

("Accsys", "the Group" or the "Company")

 

Interim results for the six months ended 30 September 2023

 

Accsys, the fast-growing company that enhances the natural properties of wood to make high performance and sustainable building products, today announces its unaudited interim results for the six months to 30 September 2023 (H1 FY24).

 

 


 

Six months to 30 Sep 2023  

 

Six months to  30 Sep 2022

 

 

% Change      

 

Revenue


€71.2m

€58.9m

21%

Gross profit

 

€20.3m

€18.1m

12%

Underlying EBITDA1

 

€1.6m

€4.5m

(64%)

Period end net debt3

 

(€48.2m)

(€61.4m)


Adjusted cash4

 

€10.8m

€7.2m



 

 



 

Highlights

 

·      21% growth in revenue at €71.2m, driven by good product demand, higher average sales prices and increased production capacity following reactor 4 start-up in September 2022

·      20% growth in Accoya sales volumes at 28,807m3:

Strong growth of Accoya in Rest of World and Rest of Europe markets, up 42% and 28% respectively

30% growth in Accoya for Tricoya production at 8,393m3, supporting our belief in Tricoya market potential 

·      2 percentage points decline in gross profit margin to 29%, reflecting higher raw material costs and wood inventory optimisation

·      64% decrease in underlying EBITDA at €1.6m: volume growth and higher average Accoya prices offset by:

Increased pre-operational costs in Accoya plant in Kingsport, US, ahead of completion in mid-2024 and Tricoya UK plant operating costs, due to a change in accounting treatment5

Increased operating expenditure on sales & marketing, executive recruitment and engineering costs

·                      Strategic growth projects:

Arnhem - plant performing well; efficiency improvements ongoing   

Accoya plant in Kingsport, US - construction of new 43,000m3 plant progressing well and in line with plan; on-track for completion and commercial operation in mid-2024

·      Tricoya UK plant project - while Accsys continues to believe in the market potential for Tricoya, in view of the current operating environment and shift of Company focus on the Accoya plant in Kingsport, US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull. The review will be conducted in early calendar year 2024

·      Exceptional item2 of €1.2m in relation to organisational re-alignment and cost savings initiatives: Actions being taken to deliver annual cost savings of €3.0m+. Impairment loss (non-cash) of €7.0m recognised in the period relating to the Tricoya segment due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor

·      Net debt at 30 September 2023 of €48.2m, an increase of €4.1m since the FY23 year end, reflecting capex of €2.0m, increase in working capital and inventory position and scheduled loan interest payments partially offset by EBITDA generation during the period

·      Fundraising: The Company today announces a fundraising to raise gross new proceeds of approximately €24m and an extension of its debt facilities. The proceeds of the fundraising will allow Accsys to complete the delivery of its Accoya plant in Kingsport, US, in mid-2024, strengthen its balance sheet and increase working capital headroom in the face of a challenging macro trading environment. Decisive action has been taken to secure the fundraising and a debt extension package to ensure the Company has the funding platform necessary to execute its growth strategy

Notes

1 Underlying EBITDA is defined as operating profit/(loss) before exceptional items and other adjustments, depreciation and amortisation, and includes the Group's attributable share of our USA joint venture's underlying EBITDA. (See note 2 to the financial statements).

2 Other exceptional items recognised in the prior year include €58m for the impairment of Tricoya segment assets and €0.5m related to advisor fees related to the Tricoya consortium reorganisation.

Net debt at 31 March 2023 was €44.1m.

4 Adjusted cash excludes cash pledged for the Letter of Credit provided to FHB of €10m.

5 Tricoya UK's ongoing running costs are being treated as operating expenditure in the first half of FY24 following the introduction of Tricoya UK's hold period in H2 FY23.


 

Dr. Jelena Arsic Van Os, Chief Executive Officer of Accsys, commented:

 

"In navigating the challenging macro-economic conditions of the first half of the year, our new management team has shown unwavering commitment in reshaping Accsys towards a less complex business model with increased execution focus. As we reflect on our business performance, we acknowledge and proactively address short-term obstacles. However, our confidence in our innovative product range remains unshaken, with the conviction that our Accoya and Tricoya premium offerings set us apart in the market, representing substantial untapped potential. To ensure delivery on this potential, the Company has raised today approximately €24m of new proceeds from our shareholders to improve near-term liquidity and enable us to finalise the construction of our Accoya plant in Kingsport, US, which alongside our wider operations, strengthens Accsys's position for growth in both the medium and longer term."

 

Current trading and outlook 

Current market conditions remain challenging, reflecting ongoing difficult macro conditions across our markets, with sales volumes under continued pressure as distributors reduce their inventory levels ahead of the upcoming holiday period. Sales performance by region remains mixed. Despite the economic environment, we have continued to maintain our premium price point on both our Accoya and Tricoya products, reflecting their sustainable, durable and high-performance qualities.

The Board does not expect trading conditions to improve materially until the middle of the 2024 calendar year. The second half of the financial year is typically stronger than H1, due to increased sales in the Northern Hemisphere in anticipation of the peak construction season. Accordingly, the Board believes there will be an improvement in product demand in Q4 FY24, aided by the unwind of distributor destocking that has taken place in recent months. However, despite these factors, given the current market backdrop and expected sales volume for the remainder of this financial year, the Board believes that the FY24 results will be below current market expectations.

The remainder of the current financial year will see continued focus on completion of the Kingsport plant and on building demand for Accoya globally, as FY24 will see an increase in Company's capacity in conjunction with the transfer of volumes from Arnhem to Kingsport. The Company will also focus on delivering continuous operational improvements at Arnhem. With its unique product portfolio set in a growth industry, increased capacity at Arnhem and future capacity coming from the new plant in Kingsport, we believe Accsys is well positioned for future growth. We are broadening our global distributor network, developing our Approved Manufacturers Programme ("AMP") and accelerating sales & marketing activity, particularly in the US, which will support our regional growth. While Accsys continues to believe in the attractive market and growth potential for Tricoya, in view of the current operating environment and shift of company focus on the Accoya plant in Kingsport, US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.

 

This announcement comprises inside information for the purposes of EU MAR and UK MAR. The person responsible for making this announcement is Nick Hartigan, General Counsel and Company Secretary, Accsys Technologies PLC.

 

Enquiries:

 

Investor Relations / Analysts: Katharine Rycroft, Accsys Technologies PLC                       ir@accsysplc.com

 

Media: Matthew O'Keeffe, Alex Le May, FTI Consulting (UK)                                                    +44 (0) 20 3727 1340

 

Media:  Clemens Sassen, Tessa Nelissen, Huijskens Sassen Communications (NL)        +31 (0) 20 68 55 955

 

Deutsche Numis (London):  Oliver Hardy (NOMAD), Ben Stoop                                             +44 (0) 20 7260 1000        

 

ABN AMRO (Amsterdam):  Julie Wakkie, Diederik Berend                                                       +31 20 628 5789


 

Accsys Technologies PLC

 

Chief Executive's Report

 

Overview of H1 FY24

Revenue and volumes in H1 FY24 were 20% ahead of the prior year. However, demand for our products softened in some of our markets towards the end of the half, reflecting exceptionally difficult trading conditions in the building materials, construction and residential housing markets globally.  

Demand for Accsys' premium wood products has, up until the late summer of this year, always exceeded supply. The quality and desirability of Accoya and Tricoya continues to be widely recognised throughout the industry and has allowed us to implement a disciplined pricing strategy. With increased capacity at Arnhem, we have been able to give our customers and distributors the opportunity to purchase and hold more products than in recent years. As the global construction industry has slowed, customers have been holding inventory and experiencing slowing order books. Correspondingly, new orders for our products began to slow over the summer as distributors worked down their stock levels. 

In view of this trading environment, we announced on 1 September 2023 that sales volumes and revenues for FY24 were likely to be below market expectations. We took immediate and decisive steps to reduce operating costs, optimise working capital and implement cost saving initiatives and have made good progress on this over the last few months, details of which can be found on page 5. In parallel, we are taking actions to accelerate our sales approach to stimulate demand and achieve greater market penetration.   

Our plant in Arnhem performed well in H1 FY24. During the period we have continued to focus on its efficiency, including further work on optimising reactor 4 to reduce cycle times and deliver more capacity and also implement other operational improvement programmes across the site, focusing on cost, safety and reliability.

We have also made good progress with our Accoya USA JV in Kingsport, Tennessee. Construction is now c.78% complete and equipment setting c.87% complete. The project remains on track for commercial operation in mid-2024.

Accsys continues to believe in the attractive market and growth potential for Tricoya, with product demand remaining strong. In view of the current operating environment and shift of company focus on the Accoya USA project, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.

Summary of financial performance

Accsys delivered revenues of €71.2m in H1 FY24, a 21% increase on the prior year, driven by good product demand, higher average sales prices and increased production capacity following the start-up of reactor 4 in September 2022.

Despite good revenue growth, Underlying EBITDA decreased by €2.9m to €1.6m. Volume growth and higher average Accoya prices were offset by higher average wood prices, partially offset by lower net acetyls cost. Increased pre-operational costs in the Kingsport plant ahead of completion, higher Tricoya UK plant operating costs due to a change in accounting treatment5, and increased operating expenditure on sales & marketing, executive recruitment and engineering costs also contributed.

Gross margin weakened by two percentage points to 29% (H1 FY23: 31%), reflecting higher raw material costs and wood inventory optimisation.

Underlying loss before tax was €5.0m (H1 FY23: loss of €0.6m). Statutory loss before tax was €13.1m (H1 FY23: €56.3m).

Net debt increased by €4.1m to €48.2m since the FY23 year end, reflecting capex payments of €2.0m, an increase in working capital and scheduled loan interest payments, partially offset by EBITDA generation during the period.

An exceptional operating cost of €1.2m has been recognised in the period in relation to organisational realignment and cost savings initiatives, including headcount reductions, which are expected to deliver annual savings of more than €3.0m. An impairment loss (exceptional non-cash item) of €7.0m has been recognised in the period relating to the Tricoya segment (H1 FY23: €58.0m) due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor.

 


Summary of product financial performance - Accoya and Tricoya

           

 

 

H1 FY24

Growth on PY

Accoya revenue

€68.2m

 

+16%

 

Accoya sales volumes

28,807m3

 

+20%

 




Sales volume by end market

 

H1 FY24

m3

Growth on PY

UK & Ireland

6,165

 

+6%

Rest of Europe

7,385

 

+28%

North America

 

4,218

+4%

Rest of World

 

2,646

+42%

Tricoya

8,393

 

+30%

 

Revenues from Accoya grew by 16% in the first half of FY24 to €68.2m, driven by good product demand and increased production capacity following the commercial start-up of reactor 4 in Arnhem in September 2022. Accoya volumes grew by 20% to 28,807m3. Sales volumes in all our end markets grew year on year, with particularly strong performances recorded in the Rest of World (+42%) and Rest of Europe (+28%) regions.

Revenues from Accoya for Tricoya as a percentage of total sales volumes increased in H1 FY24 and now represent 29% of total sales volumes, versus 24% at the end of the FY23. Accoya for Tricoya revenues in H1 FY24 grew by 31% to €11.4m, driven by continued strong product demand. Our Accoya for Tricoya partners remain committed and supportive. Tricoya panel revenue also increased to €2.9m in H1 FY24.   

Update on strategic growth projects - Accoya and Tricoya

Accoya

In September 2022, we completed the expansion of our plant in Arnhem, adding a new fourth reactor with capacity for an additional 20,000 cubic metres, and enabling the site's maximum annual capacity to increase to 80,000 cubic metres. A large proportion of current capacity is being used to seed the US market, with 16% of FY23 sales volumes going to North America. 

In addition to the aforementioned operational improvement programmes across the plant, other self-help measures to reduce costs and improve manufacturing quality include improved target operating models that will drive simplification within operations. As we look to minimise wastage, we will also introduce new scanning technology which will allow us to identify any material flaws in Accoya wood prior to being converted into Accoya Color.   

Under our joint venture with Eastman, a world leader in the production of acetyls, we are building an Accoya plant in the US at Eastman's Kingsport, Tennessee site. The plant has been designed with scalability in mind and is being built to enable future rapid expansion. Under the joint venture, Accsys holds a 60% interest and Eastman a 40% interest. Both joint venture partners continue to be fully engaged in delivering this strategically important project, which will replicate the proven technology of our successful plant in Arnhem but with additional improvements, most notably relating to integration of Eastman's acetyls supply to the new plant - not only is this a safer process, but it will significantly reduce logistical expense, storage costs and working capital.

We have continued to make good progress with the construction of the plant during H1 FY24. Key milestones include the completion of ground works, ongoing steelwork and main warehouse construction, installation of the reactors on site, placement of multiple large sub-contracts and procurement of major equipment. As we move towards completion of the plant, we have commenced execution of the resourcing plan along with increasing operational readiness activities which will, in the short term, lead to increased costs being incurred. The total cost of completion of Kingsport is now estimated to be c.15% higher than previously communicated at approximately $160m.   

Our Accoya Color manufacturing plant in Barry, Wales, has increased our ability to convert Accoya wood into Accoya Color. In H1 FY24 we produced 2,434m3 of Accoya Color (H1 FY23: 2,937m3), with volumes impacted by current market weakness. Average sales prices were, however, c.10% higher than in the prior year - a highly credible performance given the current market backdrop. Although sales fell by 16% in the Germany, Switzerland and Austria region (DACH) in H1 FY24, our other markets - including North America - delivered sales growth of 10% on the prior year. Post 30 September 2023, product sales have continued to gain momentum in North America, with current orders indicating higher volume growth in H2 FY24 than in H1 FY24.

As we increase our Accoya production capacity, we continue to expect increased Accoya Color sales in the medium term.  In addition to the product's existing markets, Accoya Color was launched in the UK in November 2023 with further market launches in development.      

Tricoya

Demand for our Tricoya products remains strong despite limited production and we are continuing to grow the market with both existing and new customers. In addition, we will continue our R&D on sourcing alternative wood species for Tricoya which have a shorter supply chain. 

Accsys stopped site activity at the Tricoya UK plant in Hull in November 2022, placing the project into a hold period to mitigate the risk of weaker economics on start-up and to allow the Board time to assess the economics and capability of the plant and its potential returns on investment. The Company is using modest levels of internally generated cash (c.€0.5m per month) to maintain the plant and progress certain pre-construction works. These include mechanical preservation works, detailed construction work scoping, planning and cost estimating, completion of minor construction packages, software programming and documentation validation. The remaining costs relate to employee & office, landlord and insurance costs. 

Accsys continues to believe in the attractive market and growth potential for Tricoya, with product demand remaining strong. In view of the current operating environment and shift of company focus to the Kingsport project in the US, the Board is undertaking a review of the viability, strategic interest and financial capabilities of its Tricoya UK plant in Hull.

Reducing operating costs and optimising working capital

In our trading statement on 1 September 2023, we announced that we are taking immediate and decisive actions to reduce operating costs and optimise working capital. Our aim is to re-set and implement a lean operating business model and to right-size the business, delivering annual cost savings of more than €3.0m. This is being achieved through organisational alignment, including headcount reductions - all of which are in non-operational areas - both centrally (London head office) and locally across our international operations. In this way Accsys is creating cleaner reporting lines and a simplified business structure. In addition, we have reduced the use of interim labour and manual stacking in our Arnhem plant and have significantly scaled back on the use of third party consultants. Other actions taken during the period include implementing additional cost controls across all of our operations, cutting non-discretionary spend and eventually moving to automated functions and controls.

Going forward, a key focus for the Company will be the effective management of our supply chain. We are in the process of reducing our wood buying to return to normalised inventory levels and are looking at options in respect of anhydride supply to reduce costs.

Accelerating our sales approach

In our September statement, we stated that we would accelerate our sales approach to stimulate demand and achieve greater market penetration in our core and emerging markets. Since then, we have accelerated our sales & marketing activity by adding necessary distribution in key markets. During the period we appointed six new distributors; two in Belgium, and one each in Greece, Italy, the UK and the USA. The Company now has 67 distributors of its products and 661 AMPs worldwide, of which 111 AMPs and eight distributors are in the Americas. In H1 FY24, the Company added 56 AMPs to its global network, bringing a total of 85 AMPs in the year to date.

With room to progress further and develop new markets to help build further global product demand, Accsys continues to  establish key window, door, decking and cladding manufacturing partners through its AMPs and broad network. Lead generation and brand awareness campaigns continue to promote Accoya to its key audiences and support the sell through of materials downstream.

As part of the organisational alignment, the Company is appointing additional heads in the US and France and engaging with multiple partners in the growing Middle East region. This year we appointed our first Marketing Coordinator and Sales Manager in France to execute our sales & marketing strategy. The new team is focusing on developing the AMP programme in France as well as working on an Approved Installer Programme. It has made significant progress this year to date, on-boarding 22 new AMPs with training and best practice in the production and use of Accoya, to help guarantee high-quality products for end users. During the period we also appointed a new Marketing Manager in the DACH region.

 

Capital Raise

We have today announced a fundraising to raise gross new proceeds of approximately €24m and an extension of our debt facilities. The proceeds of the fundraising allow us to complete the delivery of our US plant in Kingsport in mid-2024, strengthen our balance sheet and increase working capital headroom in the face of a challenging macro trading environment.

 

 

Dr. Jelena Arsic Van Os

Chief Executive Officer

21 November 2023


 

 


Accsys Technologies PLC

 

Finance Review

 

Statement of comprehensive income

 

H1 FY24 revenue increased by 21% to €71.2m in H1 FY24 (H1 FY23: €58.9m), driven by continuing demand for our products, higher average sales prices and increased production capacity following the start-up of reactor 4 in Arnhem in September 2022.

Accoya sales volumes increased by 20% to 28,807m3, reflecting additional capacity and also a weaker comparable period last year following production downtime in Arnhem during the tie-in and installation of reactor 4 in 2022. While demand for both Accoya and Tricoya has been good in H1, demand has softened across some of our regions towards the end of H1 FY24 and into H2 FY24 as our distributors began to experience a softening in the global construction and building materials markets.

Accoya for Tricoya sales volumes increased by 30%, with revenues increasing by 31% to €11.4m. Accoya sales to our customers for the manufacture of Tricoya panels are currently used to develop the market for Tricoya products and now represent 29% of total Accoya sales volumes (H1 FY23: 27%).

Other Revenue, which predominantly relates to the sale of our acetic acid by-product into the acetyls market, decreased by 36% to €4.9m (H1 FY23: €7.6m), reflecting lower acetic acid sales prices. These sales act as a partial hedge to acetic anhydride costs which also decreased during the period. Net acetyls costs decreased on the prior year.

Raw wood input costs were higher year on year, with higher wood mix costs in addition to moderately higher average wood prices. 

Cost of sales increased by 25%, with 20% higher sales volumes and higher raw wood costs being partially offset by lower acetic anhydride costs.

While gross profit of €20.3m was 12% higher than in the prior year (H1 FY23: €18.1m), gross profit margin fell by two percentage points to 29%. This reflects our use of higher-cost appearance grade wood for Accoya for Tricoya production during H1 FY24 as we have sought to continue to lower inventory levels which increased during 2022 in anticipation of the start-up of reactor 4. In H2 FY24 we will return to using less expensive Spanish radiata pine and other wood chip grade wood for Accoya for Tricoya production.

Underlying other operating costs (excluding depreciation and amortisation) increased from €13.3m to €17.7m. This is due to Tricoya UK's ongoing running costs being treated as operating expenditure in the first half following the introduction of Tricoya UK's hold period in H2 FY23. It is also the result of increased investment in sales & marketing, higher engineering costs and greater spend on executive recruitment.

Depreciation and amortisation charges increased by €1.3m to €4.8m following commercial production from reactor 4 in September 2022.

Underlying finance expenses increased €0.1m to €1.6m following the interest on Tricoya UK's NatWest facility not being capitalised post the introduction of the hold period for Tricoya UK in H2 FY23, higher market interest rates on the variable rate borrowings held partially offset by a foreign exchange gain on the cash pledged to ABN AMRO which is held in US dollars (see note 11).

An impairment loss (exceptional non-cash item) of €7.0m has been recognised in the period relating to the Tricoya segment (H1 FY23: €58.0m) due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor.

 

An exceptional operating cost of €1.2m has been recognised in the period for restructuring costs relating to reducing Accsys' administrative operating cost base.

No other adjustments have been recognised in the current period which were previously also excluded from underlying results. These other adjustments related to foreign exchange differences on the US dollar cash pledged to ABN AMRO and other foreign exchange differences on cash held in the prior year period. See note 4 for further details.

Accsys' share of its US joint venture (Accoya USA LLC) net loss, which is accounted for using the equity method, increased by €0.8m to €1.2m (H1 FY23: €0.4m) as the entity increases its pre-operating activity as it progresses towards completion in mid-2024.

Underlying loss before tax increased by €4.4m to €5.0m (H1 FY23: €0.6m). After taking into account exceptional items (including the impairment loss and restructuring cost) and other adjustments in the prior year period, loss before tax amounted to €13.1m (FY23: €56.3m).

The tax charge of €0.4m in the first half was in line with the prior year. 

 

Underlying loss per share increased to €0.02 per share (H1 FY23: € nil per share). A statutory loss per share was recognised of €0.06 per share (H1 FY23: €0.13 per share).

 

Cash flow

 

Cash flows generated from operating activities before changes in working capital decreased by €2.9m to €1.8m (H1  FY23: €4.7m), reflecting the operational cash flow generated by our plant in Arnhem, partly offset by the change in treatment on operating costs for the Tricoya UK plant following the introduction of the hold period in H2 FY23.

Inventory levels increased by €1.9m during the period with higher finished good levels partially offset by lower raw material levels which are being closely managed.

At 30 September 2023, the Group held cash balances of €20.8m, a €5.8m decrease in the period, attributable to capex payments of €2.0m, the first scheduled loan repayment of €2.25m on the Group's ABN AMRO term loan, and the increase in inventory referred to above. This was partially offset by cash flow generated from operating activities. When adjusting for the cash pledged to ABN AMRO of $10.0m (see note 11), adjusted cash decreased by €6.0m during the period to €10.8m.

Financial position

 

Plant and machinery additions of €1.1m (H1 FY23: €20.5m) consisted primarily of maintenance capex for the Arnhem plant.  

Trade and other receivables increased to €13.6m (H1 FY23: €11.3m), primarily due to higher sales than in H1 FY23. 

Trade and other payables reduced by €5.2m to €21.4m (H1 FY23: €26.6m), attributable to a decrease in creditors following the completion of the Arnhem expansion project and lower activity at the Tricoya UK plant in Hull.

Amounts payable under loan agreements decreased to €64.2m during the period (FY23: €65.9m) following the first scheduled loan repayment of €2.25m on the Group's ABN AMRO term loan partially offset by interest capitalised on the Tricoya NatWest €6.0m facility (€0.3m) and interest accrued on the ABN AMRO and De Engh loans payable in October 2023.

Net debt increased by €4.1m in the period to €48.2m (FY23: €44.1m) due to capex investments of €2.0m and the increase in inventory and loan interest payments partially offset by EBITDA generation during the period.

Risks and uncertainties

As described on page 50 to 55 of the Accsys 2023 Annual Report, the business, financial condition or results of operations of the Group could be adversely affected by a number of risks. The Group's systems of control and protection are designed to help manage and control risks to an appropriate level rather than to eliminate them. These specific principal risks and related mitigations - as currently identified by Accsys' risk management process - have not changed significantly since the publication of the 2023 Annual Report in July of this year. 

These risks relate to the following areas: finance, health, safety & environment; Tricoya UK plant; Kingsport plant; licensing/partnering and protection of intellectual property; market and supply chain disruption; manufacturing; talent; sale of products; environmental, social & governance (ESG) and sustainability; IT; reputational risk and governance, compliance & law.

Going concern

 

The condensed consolidated financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future, and at least for the 12 months from the date these financial statements are approved (the 'going concern period'). As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital and liquidity requirements, and bank facility covenant compliance for the going concern period under a base case scenario and a severe but plausible downside scenario.

 

The cash flow forecasts used for the going concern assessment represent the Directors' best estimate of trading performance and cost implications in the market based on current agreements, market experience and consumer demand expectations. The economic environment has remained challenging throughout the financial year (explained further in the management discussion of the results) and it is not known how long this will continue to directly impact the business and customer behaviour. For the purposes of the Group's going concern assessment, the Directors have therefore made assumptions on the likely future cash flows. These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving a certain level of performance relating to the production and sale of Accoya, and the management of its working capital.

 

In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya UK plant in Hull unless the Board definitively determines to proceed with the project and appropriate levels of funding arrangements are obtained to do so. In the downside scenario, it is assumed that the Group discontinues its financial support in relation to the Tricoya UK plant.

 

The Directors' have also considered the possible quantum and timing of funding required to complete the plant currently under construction by Accoya USA LLC, and for the initial operational working capital requirements of the entity. Notwithstanding that the construction project benefits from certain contractual measures in place with the lead engineering, construction and procurement contractor, Accsys has a contractual obligation to fund its 60% share of Accoya USA LLC on a pro rata basis with its joint venture partner (Eastman Chemicals Company).

 

The Group is also dependent on the Group's financial resources including its existing cash position, banking and finance facilities, and the proceeds from the fundraise, and the amended bank facilities announced today (see note 14 for details) which are assumed in both scenarios.

 

Capital Raise

 

The gross proceeds from the fundraise of approximately €34m (which includes approximately €24m of gross new proceeds for the Company) include:

 

1)    An equity Placing of between approximately €13m and €15m which will be settled on 23 November 2023. Certain of the Company's major shareholders have committed to provide approximately €13m of new equity through the equity Placing.

 

2)    The issue of between approximately €9m and €11m new 6 year term convertible loan notes and the repricing and reissue of the existing €10m De Engh convertible loan note (see note 11) have also been arranged on 21 November 2023, subject to the completion of the equity cash Placing.

 

On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO debt facilities referenced in note 11 and extend these by a further 18 months to March 2026. The facilities have also been amended to provide for the release of €10m of cash collateral held by ABN AMRO, €7.5m of which will be used to repay a portion of the term loan with the balance providing the Group with additional liquidity. The amendment of the facilities also allows for an 18-month amortisation holiday. The extension is subject to the completion of the equity Placing (see note 14 for further details).

 

The Directors have also considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes. The Directors do not expect the assumptions in the severe but plausible downside scenario to materialise, but should they unfold, the Group has several mitigating actions it can implement to manage its going concern risk, such as deferring discretionary capital expenditure and implementing further cost reductions to maintain a sufficient level of liquidity and covenant headroom during the going concern period. The combined impact of the above downside scenarios and mitigations does not trigger a minimum liquidity breach or covenant breach at any point in the going concern period.

 

The Directors are confident that the equity Placing will be completed on 21 November 2023. However, in the unlikely situation that the capital raise was not to be completed, the Group would need to obtain alternate financing in an expedited fashion, in order to be able to discharge its liabilities. It is not certain that the Group would be able to obtain any such financing on commercially acceptable terms. This would give rise to a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

 

After carefully considering all the factors explained in this statement, the Directors believe that it is most appropriate to prepare these financial statements on the going concern basis. These financials statements therefore do not include the adjustments that would result if the Group was unable to continue as a going concern.

Steven Salo

Chief Financial Officer

21 November 2023


Accsys Technologies PLC

 

Condensed consolidated statement of comprehensive income for the six months ended 30 September 2023

 


Note

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Audited

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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 Sept

30 Sept

30 Sept

30 Sept

30 Sept

30 Sept

31 March

31 March

31 March



2023

2023

2023

2022

2022

2022

2023

2023

2023



€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000



Underlying

Exceptional items & other adjustments*



Total

Underlying

Exceptional items & other adjustments*



Total

Underlying


Exceptional
items & other adjustments*



Total











 

Accoya wood revenue


63,313

-

63,313

51,088

-

51,088

143,493

-

143,493

Tricoya panel revenue


2,918

-

2,918

201

-

201

1,374

-

1,374

Licence revenue


46

-

46

11

-

11

329

-

329

Other revenue


4,930

-

4,930

7,584

-

7,584

16,822

-

16,822

 

Total revenue

2

71,207

-

71,207

58,884

-

58,884

162,018

-

162,018

 

Cost of sales


(50,865)

-

(50,865)

(40,742)

-

(40,742)

(106,852)

-

(106,852)

 

Gross profit


20,342

-

20,342

18,142

-

18,142

55,166

-

55,166

Other operating costs

3

(22,482)

(8,200)

(30,682)

(16,773)

(58,481)

(75,254)

(39,878)

(87,453)

(127,331)





 



 



 

Operating (loss)/profit


(2,140)

(8,200)

(10,340)

1,369

(58,481)

(57,112)

15,288

(87,453)

(72,165)





 



 



 

Net finance expense


(1,610)

89

(1,521)

(1,530)

2,699

1,169

(3,224)

9,350

6,126

Share of net loss of joint venture accounted for using the equity method

13

(1,211)

-

(1,211)

(403)

-

(403)

(1,036)

-

(1,036)











 

(Loss)/profit before taxation


(4,961)

(8,111)

(13,072)

(564)

(55,782)

(56,346)

11,028

(78,103)

(67,075)

 










 

Tax expense

5

(420)

-

(420)

(357)

-

(357)

(2,787)

-

(2,787)











 

(Loss)/profit for the period


(5,381)

(8,111)

(13,492)

(921)

(55,782)

(56,703)

8,241

(78,103)

(69,862)











 

Items that may be reclassified to profit or loss









 

Gain/(loss) arising on
 translation of foreign operations


22

-

22

67

-

67

(61)

-

(61)

Gain arising on foreign currency cash flow hedges


-

-

-

-

90

90

42

-

42





 



 



 

Total other comprehensive income/(expense)


22

-

22

67

90

157

(19)

-

(19)











 

Total comprehensive
(loss)/gain for the period


(5,359)

(8,111)

(13,470)

(854)

(55,692)

(56,546)

8,222

(78,103)

(69,881)

 










 

Total comprehensive (loss)/gain for the year is attributable to:

 










 

Owners of Accsys Technologies PLC


(5,359)

(8,111)

(13,470)

(214)

(26,155)

(26,369)

9,509

(48,566)

(39,057)

Non-controlling interests


-

-

-

(640)

(29,537)

(30,177)

(1,287)

(29,537)

(30,824)











 

Total comprehensive
(loss)/gain for the period


 (5,359)

 (8,111)

 (13,470)

 (854)

 (55,692)

 (56,546)

                8,222

 (78,103)

 (69,881)











 

Basic (loss)/profit per ordinary share

6

€(0.02)


€(0.06)

€(0.00)


€(0.13)

€0.05


€(0.19)

Diluted (loss)/profit per ordinary share

6

-


-

-


-

€0.04


-

 

 

The notes form an integral part of these condensed financial statements.

 

* See note 4 for details of exceptional items and other adjustments.

 

Accsys Technologies PLC

 

Condensed consolidated statement of financial position at 30 September 2023

 



Unaudited

Unaudited

Audited



6 months

6 months

Year



ended

ended

ended


 

30 Sept

30 Sept

31 March


Note

2023

2022

2023


 

€'000

€'000

€'000






Non-current assets





Intangible assets

7

10,369

6,852

10,491

Investment accounted for using the equity method

13

29,648

31,942

30,859

Property, plant and equipment

8

96,612

140,422

106,051

Right of use assets


4,210

4,087

4,044

Financial asset at fair value through profit or loss


-

-

-








140,839

183,303

151,445

Current assets





Inventories


31,812

32,354

29,946

Trade and other receivables


13,643

11,333

18,075

Cash and cash equivalents


20,780

18,123

26,593

Corporation tax receivable


460

503

459








66,695

62,313

75,073






Current liabilities





Trade and other payables


(21,411)

(26,620)

(25,896)

Obligation under lease liabilities


(943)

(790)

(980)

Short term borrowings

11

(9,500)

(19,686)

(9,500)

Corporation tax payable


(6,500)

(3,615)

(6,082)

Derivative financial instrument


-

(77)

-








(38,354)

(50,788)

(42,458)






Net current assets


28,341

11,525

32,615






Non-current liabilities





Obligation under lease liabilities


(3,845)

(3,806)

(3,755)

Other long term borrowing

11

(54,680)

(55,210)

(56,420)

Financial guarantee


-

-

-

Financial liability at amortised cost


(1,293)

-

(1,383)








(59,818)

(59,016)

(61,558)











Total net assets


109,362

135,812

122,502











Equity





Share capital

9

11,002

10,343

10,963

Share premium account


250,717

241,662

250,717

Other reserves

10

114,743

114,791

114,743

Accumulated loss


(267,243)

(236,584)

(254,042)

Own shares


(8)

(6)

(8)

Foreign currency translation reserve


151

257

129






Capital value attributable to owners of Accsys Technologies PLC


 

109,362

 

130,463

 

122,502

 





Non-controlling interest in subsidiaries


-

5,349

-











Total equity


109,362

135,812

122,502






 

 

The notes form an integral part of these condensed financial statements.

 

 

Accsys Technologies PLC

 

Condensed consolidated statement of changes in equity for the six months ended 30 September 2023

 

 

 

Ordinary share capital

Share premium

Other reserves

Own Shares

Foreign currency trans-
lation reserve

Accumulated loss

 Total equity attributable to equity shareholders of the company

 Non-Controlling interests

 Total Equity



€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

Balance at
31 March 2022

 

9,638

223,326

114,701

(6)

190

(210,505)

137,344

35,526

172,870

 

 










(Loss) for the year

 

-

-

-

-

-

(26,526)

(26,526)

(30,177)

(56,703)

Other comprehensive income for the year

 

-

-

90

-

67

-

157

-

157

Share based payments

 

-

-

-

-

-

462

462

-

462

Shares issued

 

705

-

-

-

-

(15)

690

-

690

Premium on shares issued

 

-

19,422

-

-

-

-

19,422

-

19,422

Share issue costs

 

-

(1,086)

-

-

-

-

(1,086)

-

(1,086)


 










Balance at
30 Sept 2022
(unaudited)

 

10,343

241,662

114,791

(6)

257

(236,584)

130,463

5,349

135,812

 

 










 (Loss) for the year

 

-

-

-

-

-

(12,512)

(12,512)

(647)

(13,159)

Other comprehensive income for the year

 

-

-

(48)

-

(128)

-

(176)

-

(176)

Share based payments

 

-

-

-

-

-

(96)

(96)

-

(96)

Shares issued

 

26

-

-

(2)

-

(7)

17

-

17

Premium on shares issued

 

-

104

-

-

-

-

104

-

104

Share issue costs

 

-

-

-

-

-

-

-

-

-

 

Acquisition of subsidiary shares from non-controlling interests

 

594

8,951

-



(4,843)

4,702

(4,702)

(0)


 










Balance at
31 March 2023

 

10,963

250,717

114,743

(8)

129

(254,042)

122,502

-

122,502

 

 










Profit/(Loss) for the year

 

-

-

-

-

-

(13,492)

(13,492)

-

(13,492)

Other comprehensive income for the year

 

-

-

-

-

22

-

22

-

22

Share based payments

 

-

-

-

-

-

330

330

-

330

Shares issued

 

39

-

-

-

-

(39)

-

-

-

Share issue costs

 

-

-

-

-

-

-

-

-

-


 










Balance at
30 Sept 2023
(unaudited)

 

11,002

250,717

114,743

(8)

151

(267,243)

109,362

-

109,362

 

Ordinary share capital is the amount subscribed for shares at nominal value (note 9).

 

Share premium represents the excess of the amount subscribed for ordinary share capital over the nominal value of these shares, net of share issue expenses.

 

See note 10 for details concerning other reserves.

 

Non-controlling interests relate to the previous investment of various parties into Tricoya Technologies Limited and Tricoya UK Limited. The Group purchased the remaining shareholding in the Tricoya entities in the year ended 31 March 2023.

 

Foreign currency translation reserve arises on the re-translation of the Group's USA subsidiary's net assets which are denominated in a different functional currency, being US dollars.

 

Accumulated losses represent the cumulative loss of the Group attributable to the owners of the parent.

 

The notes form an integral part of these condensed financial statements.

 

 

Accsys Technologies PLC

 

Condensed consolidated statement of cash flow for the six months ended 30 September 2023

 



Unaudited

Unaudited

Audited



6 months

6 months

Year



ended

ended

ended



30 Sept

30 Sept

31 March



2023

2022

2023



€'000

€'000

€'000






(Loss) before taxation

 

(13,072)

(56,346)

(67,075)

Adjustments for:

 

 

 


Amortisation of intangible assets


391

389

780

Depreciation of property, plant and equipment and right of use assets


4,378

3,095

7,512

Impairment loss


7,000

58,000

86,000

Net (gain) on disposal of property, plant and equipment


-

(3)

-

Net finance expense/(income)


1,521

(1,169)

(6,126)

Equity-settled share-based payment expenses


330

462

366

Accsys portion of licence fee received from joint venture


-

-

300

Share of net loss of joint venture


1,211

403

1,036

Currency translation gain/(loss)


66

(156)

(70)






Cash inflows from operating activities before changes in working capital

 

1,825

4,675

22,723

 

 




Decrease/(increase) in trade and other receivables


4,451

5,550

(1,154)

(Increase) in inventories


(1,868)

(11,982)

(9,596)

(Decrease)/Increase in trade and other payables


(3,778)

(515)

4,673






Net cash from operating activities before tax

 

630

(2,272)

16,646






Tax received

 

0

6

87






Net cash from operating activities

 

630

(2,266)

16,733






Cash flows from investing activities

 




Investment in property, plant and equipment


(2,023)

(22,595)

(29,773)

Foreign exchange deal settlement related to hedging of Hull capex


-

-

(81)

Investment in intangible assets


(268)

(207)

(437)

Investment in joint venture


-

(29,132)

(28,979)






Net cash used in investing activities

 

(2,291)

(51,934)

(59,270)






Cash flows from financing activities

 




Proceeds from loans


-

10,000

10,000

Other finance costs


(36)

(173)

(250)

Interest paid


(1,311)

(992)

(2,429)

Repayment of lease liabilities


(706)

(538)

(940)

Repayment of loans


(2,250)

-

-

Proceeds from issue of share capital


-

20,112

20,258

Share issue costs


-

(1,086)

(1,086)






Net cash from financing activities

 

(4,303)

27,323

25,553

 

 




Net (decrease) in cash and cash equivalents

 

(5,964)

(26,877)

(16,984)

Effect of exchange gain on cash and cash equivalents


151

2,946

1,523

Opening cash and cash equivalents

 

26,593

42,054

42,054






Closing cash and cash equivalents

 

20,780

18,123

26,593

 

The notes form an integral part of these condensed financial statements.




 

Accsys Technologies PLC

 

Notes to the financial statements for the six months ended 30 September 2023

 

1.       Accounting policies

 

General Information

 

The principal activity of the Group is the production and sale of Accoya solid wood and exploitation of technology for the production and sale of Accoya wood and Tricoya wood chips. Manufactured through the Group's proprietary acetylation processes, these products exhibit superior dimensional stability and durability compared with alternative natural, treated and modified woods as well as more resource intensive man-made materials.

 

The Company is a public limited company, which is listed on AIM in the United Kingdom and Euronext in the Netherlands, and is domiciled in the United Kingdom. The registered office is 4th Floor, 3 Moorgate Place, London EC2R 6EA.

 

The condensed consolidated financial statements were approved on 21 November 2023. These condensed consolidated financial statements have not been audited.

 

Basis of accounting                                                                                                            

 

The Group's condensed consolidated financial statements in these interim results have been prepared in accordance with IFRS issued by the International Accounting Standards Board as endorsed by the European Union and as adopted for use in the United Kingdom, in particular International Accounting Standard (IAS) 34 "interim financial reporting" and the AIM Rules for Companies and the Dutch Financial Markets Supervision Act.

 

The financial information for the six months ended 30 September 2023 and the six months ended 30 September 2022 is unaudited. The comparative financial information for the full year ended 31 March 2023 does not constitute the Group's statutory financial statements for that period although it has been derived from the statutory financial statements for the year then ended. A copy of those statutory financial statements has been delivered to the Registrar of Companies and which were approved by the Board of Directors on 26 June 2023. The auditors' report on those accounts was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. This financial information is to be read in conjunction with the annual report for the year ended 31 March 2023, which has been prepared in accordance with both International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2023.

 

Accounting policies

 

No new accounting standards, amendments or interpretations have been adopted in the period which have any impact on these condensed financial statements, or are expected to affect the Group's annual report for the year ended 31 March 2024. The accounting policies applied for preparation of condensed consolidated financial statements are consistent with those of the annual financial statements for the year ended 31 March 2023, as described in those financial statements.

 

Going concern

 

The condensed consolidated financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future, and at least for the 12 months from the date these financial statements are approved (the 'going concern period'). As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital and liquidity requirements, and bank facility covenant compliance for the going concern period under a base case scenario and a severe but plausible downside scenario.

 

The cash flow forecasts used for the going concern assessment represent the Directors' best estimate of trading performance and cost implications in the market based on current agreements, market experience and consumer demand expectations. The economic environment has remained challenging throughout the financial year (explained further in the management discussion of the results) and it is not known how long this will continue to directly impact the business and customer behaviour. For the purposes of the Group's going concern assessment, the Directors have therefore made assumptions on the likely future cash flows. These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving a certain level of performance relating to the production and sale of Accoya, and the management of its working capital.


 

 

 

 

 



 

 

1.         Accounting policies (continued)

 

Going concern (continued)

 

In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya UK plant in Hull unless the Board definitively determines to proceed with the project and appropriate levels of funding arrangements are obtained to do so. In the downside scenario, it is assumed that the Group discontinues its financial support in relation to the Tricoya UK plant.

 

The Directors' have also considered the possible quantum and timing of funding required to complete the plant currently under construction by Accoya USA LLC, and for the initial operational working capital requirements of the entity. Notwithstanding that the construction project benefits from certain contractual measures in place with the lead engineering, construction and procurement contractor, Accsys has a contractual obligation to fund its 60% share of Accoya USA LLC on a pro rata basis with its joint venture partner (Eastman Chemicals Company).

 

The Group is also dependent on the Group's financial resources including its existing cash position, banking and finance facilities, and the proceeds from the fundraise, and the amended bank facilities announced today (see note 14 for details) which are assumed in both scenarios.

 

Capital Raise

 

The gross proceeds from the fundraise of approximately €34m (which includes approximately €24m of gross new proceeds for the Company) include:

 

1)     An equity Placing of between approximately €13m and €15m which will be settled on 23 November 2023. Certain of the Company's major shareholders have committed to provide approximately €13m of new equity through the equity Placing.

 

2)     The issue of between approximately €9m and €11m new 6 year term convertible loan notes and the repricing and reissue of the existing €10m De Engh convertible loan note (see note 11) have also been arranged on 21 November 2023, subject to the completion of the equity cash Placing.

 

On 21 November 2023, ABN AMRO and the Company agreed to amend the ABN AMRO debt facilities referenced in note 11 and extend these by a further 18 months to March 2026. The facilities have also been amended to provide for the release of €10m of cash collateral held by ABN AMRO, €7.5m of which will be used to repay a portion of the term loan with the balance providing the Group with additional liquidity. The amendment of the facilities also allows for an 18-month amortisation holiday. The extension is subject to the completion of the equity Placing (see note 14 for further details).

 

The Directors have also considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes. The Directors do not expect the assumptions in the severe but plausible downside scenario to materialise, but should they unfold, the Group has several mitigating actions it can implement to manage its going concern risk, such as deferring discretionary capital expenditure and implementing further cost reductions to maintain a sufficient level of liquidity and covenant headroom during the going concern period. The combined impact of the above downside scenarios and mitigations does not trigger a minimum liquidity breach or covenant breach at any point in the going concern period.

 

The Directors are confident that the equity Placing will be completed on 21 November 2023. However, in the unlikely situation that the capital raise was not to be completed, the Group would need to obtain alternate financing in an expedited fashion, in order to be able to discharge its liabilities. It is not certain that the Group would be able to obtain any such financing on commercially acceptable terms. This would give rise to a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

 

After carefully considering all the factors explained in this statement, the Directors believe that it is most appropriate to prepare these financial statements on the going concern basis. These financials statements therefore do not include the adjustments that would result if the Group was unable to continue as a going concern.



 

2.       Segmental reporting

 

 

Accoya


Accoya Segment


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

Accoya wood revenue

63,313

-

63,313

51,088

-

51,088

143,494

-

143,494

Licence revenue

-

-

-

-

-

-

300

-

300

Other revenue

4,885

-

4,885

7,584


7,584

16,773

-

16,773

Total revenue

68,198

-

68,198

58,672

-

58,672

160,567

-

160,567

 



 



 



 

Cost of sales

(48,132)

-

(48,132)

(40,580)

-

(40,580)

(105,608)

-

(105,608)

 



 



 



 

Gross profit

20,066

-

20,066

18,092

-

18,092

54,959

-

54,959

 



 



 



 

Other operating costs

(13,527)

-

(13,527)

(10,035)

-

(10,035)

(22,621)

-

(22,621)

Profit from operations

6,539

-

6,539

8,057

-

8,057

32,338

-

32,338




 



 



 




 



 



 

Profit from operations

6,539

-

6,539

8,057

-

8,057

32,338

-

32,338

Share of Accoya USA EBIT

(1,150)

-

-

(403)

-

-

(912)

-

-

EBIT

5,389

-

6,539

7,654

-

8,057

31,426

-

32,338

Depreciation and amortisation

4,137

-

4,137

2,786

-

2,786

6,832

-

6,832

Accoya USA Depreciation and amortisation

104

-

-

-

-

-

211

-

-

EBITDA

9,630

-

10,676

10,440

-

10,843

38,469

-

39,170

 

See note 4 for explanation of Exceptional Items and other adjustments.

 

Average headcount = 196 (H1 FY23: 184)


6 months ended 30 September 2023

6 months ended 30 September 2022

Year

ended 31

March

2023

 


€'000

€'000

€'000

 

Accoya segmental underlying EBITDA

9,630

10,440

38,469

 

    Accoya underlying licence Income

-

-

(300)

 

Accoya segmental manufacturing EBITDA (excluding licence income)

9,630

10,440

38,169

 





 

Accoya segmental gross profit

20,066

18,092

54,959

 

    Accoya licence Income

-

-

(300)

 

Accoya manufacturing gross profit

20,066

18,092

54,659

 

Gross Accoya manufacturing margin

29.4%

30.8%

34.1%

 





 


6 months ended 30 September 2023

6 months ended 30 September 2022

Year ended 31 March 2023


Accoya® Manufacturing gross profit - €'000

20,066

18,092

54,659





Accoya® sales volume - m3

28,807

23,957

63,344





Accoya® manufacturing gross profit per m3

697

755

863

 



 

 

2.         Segmental reporting (continued)

 

Tricoya





Tricoya Segment


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000










 

Tricoya panel revenue

2,918

-

2,918

201

-

201

1,373

-

1,373

Licence revenue

46

-

46

11

-

11

29

-

29

Other revenue

45

-

45

-

-

-

49

-

49

Total revenue

3,009

-

3,009

212

-

212

1,451

-

1,451

 



 



 



 

Cost of sales

(2,733)

-

(2,733)

(162)

-

(162)

(1,244)

-

(1,244)

 



 



 



 

Gross profit

276

-

276

50

-

50

207

-

207

 



 



 



 

Other operating costs

(3,796)

(7,000)

(10,796)

(1,733)

(57,997)

(59,730)

(5,823)

(86,000)

(91,823)

 



 



 




Loss from operations

(3,520)

(7,000)

(10,520)

(1,683)

(57,997)

(59,680)

(5,616)

(86,000)

(91,616)




 



 



 

Loss from operations

(3,520)

(7,000)

(10,520)

(1,683)

(57,997)

(59,680)

(5,616)

(86,000)

(91,616)

Depreciation and amortisation

267

-

267

258

-

258

527

-

527

Impairment

-

7,000

7,000

-

58,000

58,000

-

86,000

86,000

EBITDA

(3,253)

-

(3,253)

(1,425)

3

(1,422)

(5,089)

-

(5,089)

 

Revenue includes direct Tricoya panel sales made by the Company, which are purchased from our Tricoya Customers. The sale of Accoya to customers who produce the Tricoya panels are included within the Accoya segment.

 

Other operating costs include pre-operating costs for the Tricoya UK plant.

 

See note 4 for explanation of Exceptional Items and other adjustments.

 

Average headcount = 10 (H1 FY23: 31)

 

 

Corporate 

 

 

 

 

Corporate Segment


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000




 



 



 

Total revenue

-

-

-

-

-

-

-

-

-

 



 



 



 

Cost of sales

-

-

-

-

-

-

-

-

-

 



 



 



 

Gross result

-

-

-

-

-

-

-

-

-

 



 



 



 

Other operating costs

(4,269)

(1,200)

(5,469)

(4,277)

(484)

(4,761)

(9,976)

(1,453)

(11,429)

 



 



 




Loss from operations

(4,269)

(1,200)

(5,469)

(4,277)

(484)

(4,761)

(9,976)

(1,453)

(11,429)




 



 



 

(Loss) from operations

(4,269)

(1,200)

(5,469)

(4,277)

(484)

(4,761)

(9,976)

(1,453)

(11,429)

Depreciation and amortisation

332

-

332

406

-

406

866

-

866

EBITDA

(3,937)

(1,200)

(5,137)

(3,871)

(484)

(4,355)

(9,110)

(1,453)

(10,563)

 

See note 4 for explanation of Exceptional items and other adjustments.

 

Average headcount = 16 (H1 FY23: 16).

 

2.         Segmental reporting (continued)

 

Research and Development

 

 

 

 

Research & Development Segment


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000




 



 



 

Total revenue

-

-

-

-

-

-

-

-

-

 



 



 



 

Cost of sales

-

-

-

-

-

-

-

-

-

 



 



 



 

Gross result

-

-

-

-

-

-

-

-

-

 



 



 



 

Other operating costs

(890)

-

(890)

(728)

-

(728)

(1,458)

-

(1,458)

 



 



 




Loss from operations

(890)

-

(890)

(728)

-

(728)

(1,458)

-

(1,458)




 



 



 

Loss from operations

(890)

-

(890)

(728)

-

(728)

(1,458)

-

(1,458)

Depreciation and amortisation

33

-

33

34

-

34

67

-

67

EBITDA

(857)

-

(857)

(694)

-

(694)

(1,391)

-

(1,391)

 

Costs exclude those which have been capitalised in accordance with IAS 38. (see note 7). 

 

See note 4 for explanation of Exceptional items and other adjustments.

 

Average headcount = 13 (H1 FY23: 14).

 



 

2.         Segmental reporting (continued)

 

Total





TOTAL


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000




 



 



 

Accoya wood revenue

63,313

-

63,313

51,088

-

51,088

143,493

-

143,493

Tricoya panel revenue

2,918

-

2,918

201

-

201

1,374

-

1,374

Licence revenue

46

-

46

11

-

11

329

-

329

Other revenue

4,930

-

4,930

7,584

-

7,584

16,822

-

16,822

Total revenue

71,207

-

71,207

58,884

-

58,884

162,018

-

162,018

 



 



 



 

Cost of sales

(50,865)

-

(50,865)

(40,742)

-

(40,742)

(106,852)

-

(106,852)

 



 



 



 

Gross profit

20,342

-

20,342

18,142

-

18,142

55,166

-

55,166

 



 



 



 

Other operating costs

(22,482)

(8,200)

(30,682)

(16,773)

(58,481)

(75,254)

(39,878)

(87,453)

(127,331)




 



 



 

(Loss)/Profit from operations

(2,140)

(8,200)

(10,340)

1,369

(58,481)

(57,112)

15,288

(87,453)

(72,165)




 



 



 

Finance expense

(1,610)

89

(1,521)

(1,530)

2,699

1,169

(3,224)

9,350

6,126

Investment in joint venture

(1,211)

-

(1,211)

(403)

-

(403)

(1,036)

-

(1,036)




 



 



 

(Loss)/Profit before taxation

(4,961)

(8,111)

(13,072)

(564)

(55,782)

(56,346)

11,028

(78,103)

(67,075)

 

 

See note 4 for explanation of Exceptional Items and other adjustments.

 

 

Reconciliation of underlying earnings

 





Reconciliation of underlying earnings


6 months ended 30 September 2023

Underlying

6 months ended 30 September 2023

Exceptional items & other adjustments

6 months ended 30 September 2023

TOTAL

6 months ended 30 September 2022

Underlying

6 months ended 30 September 2022

Exceptional items & other adjustments

6 months ended 30 September 2022

TOTAL

12 months ended 31 March
2023

Underlying

12 months ended 31 March
2023

Exceptional items & other adjustments

12 months ended 31 March
 2023

TOTAL


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000




 



 



 

(Loss)/Profit from operations

(2,140)

(8,200)

(10,340)

1,369

(58,481)

(57,112)

15,288

(87,453)

(72,165)

Share of Accoya USA EBIT

(1,150)

-

-

(403)

-

-

(912)

-

-

EBIT

(3,290)

(8,200)

(10,340)

966

(58,481)

(57,112)

14,376

(87,453)

(72,165)

 



 



 



 

Depreciation and amortisation

4,769

-

4,769

3,484

-

3,484

8,292

-

8,292

Accoya USA depreciation and amortisation

104

-

-

-

-

-

211

-

-

Impairment

-

7,000

7,000

-

58,000

58,000

-

86,000

86,000

 



 



 



 

EBITDA

1,583

(1,200)

1,429

4,450

(481)

4,372

22,879

(1,453)

22,127

 

 

 

 

 

 

 

 

 

 

 

 

 

2.         Segmental reporting (continued)

 

 

Segmental reporting continued

 

Assets and liabilities on a segmental basis:


Accoya

Tricoya

Corporate

R&D

TOTAL


Sept 2023

Sept 2023

Sept 2023

Sept 2023

Sept 2023


€'000

€'000

€'000

€'000

€'000

Non-current assets

115,770

19,969

4,971

129

140,839






 

Current assets

37,680

3,581

19,823

5,611

66,695






 

Current liabilities

(12,063)

(12,925)

(13,314)

(52)

(38,354)






 

Net current assets/(liabilities)

25,617

(9,344)

6,509

5,559

28,341






 

Non-current liabilities

(2,240)

(7,514)

(50,025)

(39)

(59,818)






 

Net assets

139,147

3,111

(38,545)

5,649

109,362

 





 


Accoya

Tricoya

Corporate

R&D

TOTAL


Sept 2022

Sept 2022

Sept 2022

Sept 2022

Sept 2022


€'000

€'000

€'000

€'000

€'000

Non-current assets

122,915

55,803

4,390

195

183,303






 

Current assets

35,276

3,827

23,141

69

62,313






 

Current liabilities

(10,998)

(32,006)

(7,718)

(66)

(50,788)






 

Net current assets/(liabilities)

24,278

(28,179)

15,423

3

11,525






 

Non-current liabilities

(2,547)

(1,174)

(55,210)

(85)

(59,016)






 

Net assets

144,646

26,450

(35,397)

113

135,812

 





 


Accoya

Tricoya

Corporate

R&D

TOTAL


March 2023

March 2023

March 2023

March 2023

March 2023


€'000

€'000

€'000

€'000

€'000

Non-current assets

120,459

27,047

3,777

162

151,445






 

Current assets

52,699

3,872

13,630

4,872

75,073






 

Current liabilities

(22,947)

(4,156)

(15,299)

(56)

(42,458)






 

Net current assets/(liabilities)

29,752

(284)

(1,669)

4,816

32,615






 

Non-current liabilities

(2,545)

(8,665)

(50,289)

(59)

(61,558)






 

Net assets

147,666

18,098

(48,181)

4,919

122,502

 

 

The segmental assets in the current year were predominantly held in the UK, USA and mainland Europe (Prior Year UK and mainland Europe). Additions to property, plant, equipment and intangible assets in the current year were predominantly incurred in the UK and mainland Europe (Prior Year UK and mainland Europe). The increase in Investment accounted for using the equity method (investment into Accoya USA LLC) incurred in USA. There are no significant intersegment revenues.



 

2.         Segmental reporting (continued)

 

Segmental reporting continued

 

Analysis of revenue by geographical destination:

                                    

 

Unaudited

Unaudited

Audited


6 months

6 months

Year


ended

ended

ended


30 Sept

30 Sept

31 March


2023

2022

2023


€'000

€'000

€'000





 UK & Ireland

23,292

21,182

55,395

 Rest of Europe

28,638

22,400

63,635

 Americas

13,296

11,084

29,778

 Rest of World

5,981

4,218

13,210


71,207

58,884

162,018

               

                   

Sales to UK and Ireland include the sales to MEDITE.

 

3.         Other operating costs

 

Other operating costs consist of the operating costs, other than the cost of sales, associated with the operation of the plant in Arnhem, the site in Barry, the offices in Dallas and London and certain pre-operating costs associated with the plant in Hull:

 

 




Unaudited

Unaudited

Audited




6 months

6 months

Year




ended

ended

ended




30 Sept

30 Sept

31 March




2023

2022

2023




€'000

€'000

€'000







Sales and marketing


3,136

2,200

5,219

Research and development


857

694

990

Other operating costs


6,858

4,491

9,720

Administration costs


6,862

5,904

15,657

Exceptional Items and other adjustments (refer to note 4)

1,200

481

1,453







Other operating costs excluding depreciation and amortisation

18,913

13,770

33,039







Depreciation and amortisation


4,769

3,484

8,292

Impairment loss



7,000

58,000

86,000







Total other operating costs


30,682

75,254

127,331

 

 

Administrative costs include costs associated with Human Resources, IT, Legal, Business Development, Finance, Management and General Office and include the costs of the Group's London and Dallas offices.

 

Group average employee headcount decreased to 235 in the period to 30 September 2023, from 245 in the period to 30 September 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

4.         Exceptional Items and Other Adjustments

 

 

 



Unaudited

Unaudited

Audited




6 months

6 months

Year




ended

ended

ended




30 Sept

30 Sept

31 March




2023

2022

2023




€'000

€'000

€'000

Advisor fees in relation to Tricoya consortium reorganisation



-

(484)

(1,453)

Impairment of the Tricoya segment assets



(7,000)

(58,000)

(86,000)

Partial net derecogition of NatWest loan



-

-

9,353

Revaluation of Valuation Recovery Instrument "VRI" liability



89

-

(1,383)

Foreign exchange differences on USD cash held for investment into USA JV- incl. in Finance expense



-

1,380

1,380

Restructuring costs



(1,200)

-

-







Total exceptional items



(8,111)

(57,104)

(78,103)







Foreign exchange differences arising on Tricoya cash held - Operating costs (loss)/profit



-

3

-

Foreign exchange differences on cash held - Other comprehensive profit/(loss)



-

167

-

Revaluation of USD cash pledged to ABN Amro - incl. in Finance expense



-

1,319

-

Revaluation of FX forwards used for cash-flow hedging - Other comprehensive (loss)/profit



-

(77)

-







Total other adjustments



-

1,412

-







Tax on exceptional items and other adjustments



-

-

-







Total exceptional items and other adjustments



(8,111)

(55,692)

(78,103)

 

 

Exceptional Items

 

In the period:

-       an exceptional operating cost of €1.2m has been recognised for restructuring costs relating to decreasing the Group's administrative operating cost base.

-       An impairment loss (non-cash item) of €7.0m has been recognised in the period relating to the Tricoya segment              (FY23: €86.0m) due to an increase in the discount rate to 14.5% used following an increase in market interest rates and the Company specific market volatility factor. In the prior year, an impairment of the Tricoya segment assets was recognised, due to identification of additional time and costs (€35m) to complete the plant; a decrease in the estimated maximum production capacity of the plant once commercially operational from 30,000MT to 24,000MT; and the discount rate applied was updated to 13.5%.

 

In the prior year:

-       an exceptional operating cost was recognised for advisor fees associated with advising Accsys on acquiring the full ownership of TUK (Tricoya UK Limited) and TTL (Tricoya Technologies Limited), from its previous Tricoya Consortium Partners.

-       NatWest also agreed to restructure its TUK debt facility, reducing the principal amount by €9.4m to €6m, under a new 7-year term. This resulted in the derecognition of the balance drawn on the NatWest loan on the date of the restructure of €15.4m and recognition of the new €6m loan.

-       Separate to, and in addition to the amended €6m loan, NatWest is entitled to obtain recovery, via the Value Recovery Instrument ("VRI") agreement, of up to approximately €9.4m, on a contingent basis, depending on profitability of the Tricoya UK plant once operational. A financial liability was recognised of €1.4m in the prior year in respect of the VRI.

-       Foreign exchange differences were recognised due to US dollars held for investment into Accoya USA LLC. Following the May 2021 equity raise, the amount raised to invest into Accoya USA was translated into US dollars and held in cash ensuring that foreign exchange movements did not decrease the amount raised below the US dollar investment into Accoya USA. This treatment did not meet the requirements for hedge accounting under IFRS 9, Financials instruments, and therefore the foreign exchange gain on the revaluation of the US dollars has been accounted for in Finance expenses.

 

Other Adjustments

 

Other adjustments included in the prior year are no longer disclosed for the period ended 30 September 2023.

 

 

 



 

5.         Tax expense



Unaudited

Unaudited

Audited



6 months

6 months

Year



ended

ended

ended



30 Sept

30 Sept

31 March



2023

2022

2023



€'000

€'000

€'000

(a) Tax recognised in the condensed consolidated statement of comprehensive income comprises:




Current tax expense/(credit)





UK Corporation tax on losses for the period


-

-

-

Research and development tax credit in respect of current period


-

(68)

(121)



-

(68)

(121)






Overseas tax at rate of 15%


19

6

32

Overseas tax at rate of 25%


401

419

2,876






Deferred Tax





Utilisation of deferred tax asset


-

-

-






Total tax expense reported in the condensed consolidated statement of comprehensive income


420

357

2,787

 

 

6.         Basic and diluted profit/ (loss) per ordinary share

 


Unaudited

Unaudited

Unaudited

Unaudited

Audited

Audited


6 months

6 months

6 months

6 months

Year

Year


ended

ended

ended

ended

ended

ended


30 Sept
2023

30 Sept
2023

30 Sept
2022

30 Sept
2022

31 March
2023

31 March
2023

Basic earnings per share

Underlying

Total

Underlying

Total

Underlying

Total








Weighted average number of
ordinary shares in issue ('000)

218,395

218,395

204,358

204,358

210,693

210,693

Profit/(Loss) for the period attributable to owners of Accsys Technologies PLC (€'000)

(5,381)

(13,492)

(281)

(26,526)

9,528

(39,038)








Basic profit/(loss) per share

€(0.02)

€(0.06)

€(0.00)

€(0.13)

€0.05

€(0.19)

Diluted earnings per share














Weighted average number of ordinary shares in issue ('000)

-

-

-

-

210,693

-

Equity options attributable to BGF

-*

-*

-*

-*

8,449

-*

Weighted average number of ordinary shares in issue and potential ordinary shares ('000)

-

-

-

-

219,142

-








Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC (€'000)

-

-

-

-

9,528

-








Diluted profit/(loss) per share

-*

-*

-*

-*

€0.04

-*

 

* IAS 33 "Earning per share" defines Dilutive share options as share options which would decrease profit per share or increase loss per share. 8,449,000 equity options held by BGF if exercised would decrease the Loss per share. As a result, these are anti-dilutive and therefore shown as nil.

 

 

 

 

 

 

 

 

 

 

7.         Intangible assets


Internal

Intellectual


 

 

development

property

 

 


costs

rights

Goodwill

Total


€'000

€'000

€'000

€'000

Cost





At 31 March 2022

7,642

74,992

4,231

86,865






Additions

27

180

-

207






At 30 September 2022

7,669

75,172

4,231

87,072






Additions

30

200

-

230






At 31 March 2023

7,699

75,372

4,231

87,302






Additions

35

234

-

269






At 30 September 2023

7,734

75,606

4,231

87,571






Accumulated amortisation





At 31 March 2022

2,894

73,137

-

76,031






Amortisation

197

192

-

389






Impairment loss

2,855

945

-

3,800






At 30 September 2022

5,946

74,274

-

80,220






Amortisation

188

203

-

391






Impairment loss

(2,855)

(945)

-

(3,800)






At 31 March 2023

3,279

73,532

-

76,811






Amortisation

198

193

-

391






At 30 September 2023

3,477

73,725

-

77,202






Net book value





At 31 March 2022

4,748

1,855

4,231

10,834











At 30 September 2022

1,723

898

4,231

6,852











At 31 March 2023

4,420

1,840

4,231

10,491











At 30 September 2023

4,257

1,881

4,231

10,369






 

Refer to note 8 for the recoverability assessment of these intangible assets.



 

8.         Property, plant and equipment


Land and buildings

Plant and machinery

Office equipment

Total


€'000

€'000

€'000

€'000

Cost or valuation





Opening balance at 31 March 2022

17,976

187,445

4,353

209,774






Additions

-

20,476

15

20,491

Foreign currency translation

-

-

19

19






At 30 September 2022

17,976

207,921

4,387

230,284






Additions

-

900

326

1,226

Foreign currency translation

-

-

(16)

(16)






Opening balance at 31 March 2023

17,976

208,821

4,697

231,494






Additions

-

1,142

206

1,348

Foreign currency translation

-

-

4

4






At 30 September 2023

17,976

209,963

4,907

232,846






Depreciation





Opening balance at 31 March 2022

1,353

29,495

2,265

33,113






Charge for the period

179

2,104

247

2,530

Foreign currency translation

-

-

19

19

Impairment loss

-

54,200

-

54,200






At 30 September 2022

1,532

85,799

2,531

89,862






Charge for the period

179

3,293

302

3,774

Foreign currency translation

-

-

7

7

Impairment loss

-

31,800

-

31,800






Opening balance at 31 March 2023

1,711

120,892

2,840

125,443






Charge for the period

179

3,342

266

3,787

Foreign currency translation

-

-

4

4

Impairment loss

-

7,000

-

7,000






At 30 September 2023

1,890

131,234

3,110

136,234






Net book value










At 31 March 2022

16,623

157,950

2,088

176,661











At 30 September 2022

16,444

122,122

1,856

140,422











At 31 March 2023

16,265

87,929

1,857

106,051











At 30 September 2023

16,086

78,729

1,797

96,612






 

 

Plant and machinery assets with a net book value of €17,851,000 relating to the Tricoya UK plant are held as assets under construction and are not depreciated (31 March 2023: €24,851,000).



 

8.    Property, plant and equipment (continued)

 

Impairment review

The carrying value of the property, plant and equipment, internal development costs and intellectual property rights are split between two cash generating units (CGUs), representing the Accoya and Tricoya segments and the carrying value of Goodwill is allocated to the Accoya segment. The recoverable amount of these CGUs are determined based on a value-in-use calculation which uses cash flow projections for a period of 5 to 7 years based on latest financial budgets and discounted at a pre-tax discount rate of 14.5% (31 March 2023: 13.5%) to determine their present value. A cash flow projection period of 7 years was used for the Tricoya segment calculation to reflect the future cashflows of the plant, considering the estimated hold period, remaining completion activities and production ramp-up.

 

The key assumptions used in the value in use calculations are:

- the manufacturing revenues, operating margins and future licence fees estimated by management;

- the timing of completion of the Tricoya Hull plant;

- the timing of completion of construction of additional facilities (and associated output);

- forecast UK natural gas prices;

- the long term growth rate; and

- the discount rate.

 

The Directors have determined that an impairment totalling €93m should be recognised in the Tricoya CGU, of which €7m was recognised in the period ending 30 September 2023.

 

The increase in the impairment of the Tricoya segment assets is caused by an increase in market indicators & interest rates used to calculate the discount rate utilised in the value in use calculation. The discount rate increased by 1% to 14.5% (13.5% at 31 March 2023).

 

Key assumptions applied to the Tricoya CGU were as follows:

• a discount rate of 14.5%;

• project capital costs to bring the plant into commercial operation of €35m;

• a production capacity of 24,000MT

• a "hold period" of 2 years from 30 September 2023 (period in which limited construction activities is performed); and

• a long-term growth rate of 2.5%.

 

The impact the following changes to these key assumptions would have, if made in isolation, on the impairment calculated for

the Tricoya CGU is as follows:

 

• a 1% increase in the discount rate: increase of €6m;

• a 1% decrease in the long-term growth rate: increase of €3m;

• a 12-month extension in the hold period: increase of €9m;

• a 6,000MT increase in the production capacity: decrease of €18m; and

• a €10m increase in the capital costs to bring the plant into commercial operation: increase of €7m.

 

 

9.         Share capital

 

 

In the period ended 30 September 2022:

 

In May 2022, 13,798,103 ordinary shares were issued as part of the capital raise to strengthen the Company's balance sheet, increase liquidity headroom and fund additional costs to complete the Arnhem Plant Reactor 4 capacity expansion. The ordinary shares were issued at a price of €1.45 (£1.23) per ordinary share, raising gross proceeds of €20m (before expenses).

 

In July 2022, 137,665 shares were issued to an Employee Benefit Trust at nominal value, as part of the annual bonus, in connection with the employee remuneration and incentivisation arrangements for the period from 1 April 2021 to 31 March 2022. These shares vested in July 2023, subject to the employees continuing employment within the Group.

 

 

In the period ended 31 March 2023:

 

Between August and December 2022, 435,774 Shares were issued following the exercise of nil cost options, granted under the Company's 2013 Long Term Incentive Plan ('LTIP').

 

In November 2022, 11,875,801 ordinary shares were issued to the tricoya consortium partners (INEOS, MEDITE , BGF & Volantis) at a price of €0.80 (£0.71) per share. This formed part of a sale and purchase agreement with the Tricoya Consortium Partners whereby Accsys acquired the remaining 38.2% holding in Tricoya UK Ltd that Tricoya Technologies Ltd did not already own and the 23.5% holding in Tricoya Technologies Ltd that it did not already own.

 

In January 2023, following the subscription by employees in the prior year for shares under the Employee Share Participation Plan (the 'Plan'), 174,144 ordinary shares were issued as "Matching Shares" at nominal value under the Plan.

 

 

9.        Share capital (continued)

 

 

In addition, various employees newly subscribed under the Plan for 203,906 ordinary shares at an acquisition price of €0.81 per share, with these shares issued to a trust, to be released to the employees after one year, together with an additional share on a matched basis (subject to continuing employment within the Group).

 

 

In the period ended 30 September 2023:

 

Between July and August 2023, 775,191 shares were issued following the exercise of nil cost options, granted under the Company's 2013 LTIP.

 

In July 2023, 222,232 ordinary shares were issued to an Employee Benefit Trust at nominal value, as part of the annual bonus, in connection with the employee remuneration and incentivisation arrangements for the period from 1 April 2022 to 31 March 2023. These ordinary shares will vest in July 2024, subject to the employees continuing employment within the Group.

 

10.        Other Reserves


Capital redemp-
tion reserve

Warrant reserve

Merger reserve

Hedge Effective-ness reserve

Other reserve

Total Other reserves


€000

€000

€000

€000

€000

€000

Balance at 30 September 2022

148

-

106,707

385

7,550

114,791








Total Comprehensive income for the period

-

-

-

(48)

-

(48)








Balance at 31 March 2023

148

-

106,707

337

7,550

114,743








Total Comprehensive income for the period

-

-

-

-

-

-








Balance at 30 September 2023

148

-

106,707

337

7,550

114,743

 

 

The closing balance of the capital redemption reserve represents the amounts transferred from share capital on redemption of deferred shares in a prior period.

 

The merger reserve arose prior to transition to IFRS when merger accounting was adopted.

 

The hedge effectiveness reserve reflects the total accounted for under IFRS 9 in relation to the Tricoya segment.

 

The other reserve represents the amounts received for subsidiary share capital from non-controlling interests net with the carrying amount of non-controlling interests issued.

 

 

 

11.        Commitments under loan agreements

 


 

Unaudited

Unaudited

Audited



6 months

6 months

Year



ended

ended

ended


 

30 Sept 2023

30 Sept 2022

31 March 2023

Amounts payable under loan agreements - undiscounted cashflows:




Within one year


11,462

20,133

10,312

In the second to fifth years inclusive


48,841

61,210

52,976

After five years


10,519

-

9,962






Less future finance charges


(6,642)

(6,447)

(7,330)






Present value of loan obligations


64,180

74,896

65,920

 

 



 

11. Commitments under loan agreements (continued)

 

ABN AMRO Debt Facilities

 

In October 2021 Accsys entered a 3-year bilateral facilities agreement with ABN which comprises of a

-        €45m term loan facility and,

-        €25m Revolving Credit Facility ('RCF') .

-        The term loan has bi-annual payments of €2.25m from April 2023.  

-        Term loan interest varies between 1.75% and 3.25% depending on net leverage.

-        RCF interest rate varies between 2.0% and 3.5% above EURIBOR.

 

Approximately €20m of the RCF was utilised to provide a letter of credit to FHB in support of the Accoya USA JV funding arrangements, and the remaining €5m was drawn at 30 September 2023.

 

The ABN AMRO facilities are secured against the assets of the Group which are 100% owned by the Company (excluding the Tricoya companies) and €10m of cash collateral, and include net leverage and interest cover covenants which are based upon the results and assets of these entities.

 

NatWest facility:

 

In November 2022, Tricoya UK Limited (the Company's subsidiary) agreed with NatWest Bank plc to restructure its debt facility, reducing the principal amount to a €6m loan with a 7 year term. The facility is secured by fixed and floating charges over all assets of Tricoya UK Limited.

 

Interest is calculated with the margin ranging from 325 to 475 basis points plus Euribor and capitalised during the 7 year term. No repayments are due until the facility maturity date.

 

At 30 September 2023, the Group had €6.4m (31 March 2023: €6.2m) borrowed under the facility.

 

Tricoya UK Limited also provided a Value Recovery Instrument ("VRI") agreement to NatWest, to recover up to approximately €9.4m, on a contingent basis, depending on profitability of the Tricoya UK plant once operational. The contingent payments to NatWest are based upon free cash-flow generated by the Tricoya UK plant.

 

 

First Horizon Bank facility:

 

In March 2022 the Company's joint venture, Accoya USA LLC agreed an eight-year $70m loan from First Horizon Bank ('FHB') of Tennessee, USA in respect of the construction and operation of the Accoya USA plant and a $10m RCF to fund working capital. The FHB term loan is secured on the assets of Accoya USA and is supported by Accoya USA's shareholders, including $50m through a limited guarantee provided on a pro-rata basis, with Accsys' 60% share representing $30m, supported by a $20m Letter of Credit ('LC') provided by ABN AMRO to FHB.

 

The interest rate varies between 1.3% to 2.1% over USD LIBOR.

 

Accoya USA LLC is equity accounted for in these financial statements, therefore this Borrowing is not included in the Group's borrowings. (See note 13)

 

 

De Engh convertible loan:

 

In March 2022, Accsys agreed a 3.5 year, €10m convertible loan with De Engh BV Limited ('De Engh'), an investment company based in the Netherlands (the 'Convertible Loan'), and shareholder in Accsys Technologies PLC.

 

The Convertible Loan is unsecured and carries an interest margin of 6.25% above Euribor, increasing by 2% in year three and a further 2% in the following year. Interest is payable quarterly and there are no principal payments during the term of the loan. The Convertible Loan is convertible from the end of year two to ordinary shares in the Company Accsys at €2.30 per share.



 

 

11.  Commitments under loan agreements (continued)

 

 

Reconciliation to net (debt)/cash:

 




Unaudited

Unaudited

Audited




6 months

6 months

Year




ended

ended

ended




30 Sept 2023

30 Sept 2022

31 March 2023




 

 

 

Cash and cash equivalents


20,780

18,123

26,593

Less:






Amounts payable under loan agreements

 (64,180)

(74,896)

(65,920)

Amounts payable under lease liabilities

 (4,788)

(4,596)

(4,735)






Net (debt)/cash



(48,188)

(61,369)

(44,062)

 

 

 

Restricted cash

The cash and cash equivalents disclosed above and in the condensed consolidated statement of cash flow includes $10m which is pledged to ABN AMRO as collateral.

 

 

Reconciliation to adjusted cash:




Unaudited

Unaudited

Audited




6 months

6 months

Year




ended

ended

ended




30 Sept 2023

30 Sept 2022

31 March 2023







Cash and cash equivalents


20,780

18,123

26,593

Less:






Cash pledged to ABN AMRO


 (10,016)

(10,949)

(9,828)







Adjusted cash



10,764

7,174

16,765

 

 

 

 

12.  Transactions with non-controlling interests

 

In the period ended 30 September 2022:

 

No shares were issued in the period to 30 September 2022.

 

The total carrying amount of the non-controlling interests in Triocya Technologies Ltd and Tricoya UK Ltd at 30 September 2022 was €36.2m. 

 

In the period ended 31 March 2023:

 

In November 2022, Accsys purchased the remaining ownership of Tricoya Technologies Ltd and Tricoya UK Ltd which it did not previously own via a Sales Purchase Agreement ('SPA') with the Tricoya consortium partners.

 

 



 

 

13.  Investment in Joint Venture

 

In August 2020, Accsys together with Eastman Chemical Company formed a new company, Accoya USA LLC, 60% owned by Accsys and 40% owned by Eastman. Accoya USA LLC is constructing and will operate an Accoya plant in Kingsport, Tennessee (USA) to serve the North American market. The plant is designed to initially produce approximately 43,000 cubic metres of Accoya per annum and to allow for cost-effective expansion.

 

Under IFRS 11 - Joint arrangements, the two parties are assessed to jointly control the entity and Accoya USA LLC is accounted for as a joint venture and equity accounted for within the financial statements.

 

At 30 September 2023, Accsys and Eastman have contributed equity of $61m to Accoya USA LLC, with a further $5m committed to be contributed. There were no equity injections during the period ending 30 September 2023.

 

See note 11 for details of debt funding.

 

The carrying amount of the equity-accounted investment is as follows:

 

Unaudited

Unaudited

Audited


6 months ended

6 months ended

Year ended


30 Sept 2023

30 Sept 2022

31 March 2023


€'000

€'000

€'000

Opening balance

30,859

3,216

3,216

Investment in Accoya USA LLC

-

29,129

28,979

Less: Accsys proportion (60%) of licence fee received

-

-

(300)

Loss for the period

(1,211)

(403)

(1,036)





Closing balance

29,648

31,942

30,859

 

The Group has equity accounted for the joint venture in these condensed consolidated financial statements.

 

The income statement, balance sheet and cashflows for Accoya USA LLC, are set out below:

 

Accoya USA LLC recorded a loss from operations of €2,019,000 for the period ended 30 September 2023 (€963,000 for the period ended 30 September 2022). The loss attributable to Accsys Technologies PLC was €1,211,000 for the period ended 30 September 2023 (€403,000 for the period ended 30 September 2022).

 

 

 

Balance Sheet:




Unaudited

Unaudited

Audited

 




6 months ended

6 months ended

Year ended

 




30 Sept 2023

30 Sept 2022

31 Mar 2023





€'000

€'000

€'000

Non-current assets







Property, plant and equipment




101,629

37,963

69,327

Right of use assets




6,242

7,084

6,242





107,871

45,047

75,569

Current assets







Debtors




149

578

236

Cash and cash equivalents




10,385

31,628

8,701












10,534

32,206

8,937

Current liabilities







Trade and other payables




(12,562)

(11,194)

(14,682)

Obligation under lease liabilities




(408)

(416)

(455)

Short term borrowings




-

-

-








Net current liabilities




(2,436)

20,596

(6,200)

 







Non-current liabilities







Obligation under lease liabilities




(5,951)

(6,604)

(5,875)

Other long term borrowing




(46,304)

1,457

(9,781)








 




(52,255)

(5,147)

(15,656)








Net assets




53,180

60,496

53,713

 

 

 

 

13. Investment in Joint Venture (continued)

 

Cash flows:




Unaudited

Unaudited

Audited

 




6 months ended

6 months ended

Year ended

 




30 Sept 2023

30 Sept 2022

31 Mar 2023

 




€'000

€'000

€'000








Cash flows from operating activities




1,378

239

(1,147)

Cash flows from investing activities




(33,829)

(19,022)

(49,568)

Cash flows from financing activities




33,844

48,426

59,550

Net increase in cash and cash equivalents




1,393

29,643

8,835

Foreign exchange gain/(loss)




291

1,750

(369)

Net increase in cash and cash equivalents




1,684

31,393

8,466

 

14.  Post Balance Sheet Events

 

The Company has today announced a Fundraising to raise new gross proceeds of approximately €24m and an extension of its debt facilities.

 

The Fundraise is proposed to include:

 

·      A Placing to raise gross proceeds of approximately €13m to €15m

·      The issue of between €9 and €11m new convertible loan notes alongside the repricing and reissue of the existing De Engh €10m convertible loan (see note 11) in-line with the terms of the new convertible loan notes. Together, the convertible loan notes amount to between €19 and €21m. The convertible loan notes terms are proposed as following:

6 year term

fixed rate coupon of 9.5% which will be rolled up for the first 2.5 years, deferred and paid in cash over the remaining 3.5 years

convertible into ordinary shares of the Company at a price of 83.22 euro cents per share

unsecured and non-transferrable

Amendments to ABN AMRO borrowing facilities

·      The Company has reached an agreement with ABN AMRO to extend the Company's main €40.5m term loan facility and €25m revolving credit facility ('RCF') by 18 months from October 2024 to 31 March 2026. The new agreement will have a repayment holiday to July 2025, quarterly repayments of €1.125m thereafter and a release of the existing cash collateral of €10m, with €7.5m utilised to repay a portion of the term loan facility and the remaining €2.5m being utilised for general liquidity purposes. Borrowing costs will range between 3 - 4% over Euribor for the RCF and over 1.34% in respect of the term loan facility.

·      The net debt / EBITDA covenant will increase to 2.75x over three quarters ending 30 September 2024, 31 December 2024 and 31 March 2025. All other financial covenants will remain the same. 

·      This amendment agreement with ABN AMRO is conditional on the Company raising €24m through the Fundraising and will become effective upon completion of the proposed Fundraising.

Use of Fundraising proceeds

The use of the Fundraising proceeds is as follows:

·      Approximately €22m will be used to fund Accsys's share of Accoya USA. The total construction cost for the US plant is now expected to be approximately $160m. It is expected that approximately €15.5m of the Fundraising proceeds will be used to complete construction and approximately €6.5m to fund operations as the US plant targets a steady ramp up in volume and operations.

·      Approximately €2.0m will be used for general liquidity and working capital purposes.

 

The Directors are of the belief that the issue of the convertible loan notes along with the proposed Placing and amendments to the ABN AMRO borrowing facilities are in the best interests of the Company and strengthens the Company's funding position during a key period of investment.

 

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