TIDMAXS
RNS Number : 2327Q
Accsys Technologies PLC
16 June 2015
AIM: AXS
NYSE Euronext Amsterdam: AXS
16 June 2015
ACCSYS TECHNOLOGIES PLC
("Accsys" or "the Company")
Preliminary Results for the year ended 31 March 2015
Accsys, the chemical technology group, focused on the
acetylation of wood, today announces preliminary results for the
twelve months ended 31 March 2015.
Year to Year to
31 March 31 March
2015 2014 Change
Total Group Revenue EUR46.1m EUR33.5m +38%
Gross profit EUR12.2m EUR7.8m +56%
Improved
Underlying EBITDA (EUR2.4m) (EUR5.0m) 52%
Improved
Underlying loss before tax (EUR5.0m) (EUR7.5m) 33%
Improved
Loss before tax (EUR7.7m) (EUR8.2m) 6%
Period end cash balance EUR10.8m EUR15.2m
Highlights:
-- Accoya(R) wood revenue increased by 39% to EUR40.7m (2014:
EUR29.3m), driven by a 32% increase in volumes
-- Significant gross margin growth, up 400bps to 27%, due to the
combined impact of increased Accoya(R) volumes, price increases and
operating efficiencies
-- Continued momentum towards EBITDA breakeven with EBITDA loss
reduced to EUR0.4m in the second half and underlying EBITDA loss of
EUR2.4m for the year (2014: EUR5.0m loss)
-- Underlying loss before tax, excluding exceptional items,
improved by 33% to EUR5.0m loss (2014: EUR7.5m loss)
-- Significant improvement in Group cash-flow with an underlying
cash out-flow of only EUR1.3m during the period (2014: EUR4.8m)
-- Solvay progressing towards their first Accoya(R) plant in
Freiburg, Germany; EUR2m prepaid in respect of conditional
Accoya(R) Marketing Agreement with EUR0.7m recognised as revenue in
the period
-- MoU with large international chemical group to build and operate new Tricoya(R) plant
-- Evolution of business model continues - Accsys moving beyond
licensing model towards royalty and manufacturing based
business
Paul Clegg, Chief Executive commented:
"The excellent progress made over the last year has left us in a
very strong position to take advantage of the opportunities we now
face and the Group is well equipped to build on its achievements to
date as we enter the next phase of our development.
"I am encouraged by the progress during the year and the steps
we have recently taken in respect of the first Tricoya plant. In
addition, we remain committed to making further improvements to
both our existing plant, and reviewing our requirements for further
increases in manufacturing capacity, as we seek to meet the
expected long term demand for our products.
"Our position now is stronger than at any point in our history
and we continue to evolve our business model as we build towards
becoming cash-flow positive in the year ahead and, longer term,
achieving profitability."
Webcast link:
Click here or copy and paste ALL of the following text into your
browser:
http://edge.media-server.com/m/p/kz3ng8op
Conference call details for participants:
Participant Telephone Number: +44 (0)20 3427 1916 (UK Toll)
Confirmation Code: 7095197
Participants will have to quote the above code when dialling
into the conference.
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via MHP Communications
PLC Hans Pauli, COO
Will Rudge, FD
Nominated Adviser: Oliver
Cardigan
Corporate Broking: Christopher
Wilkinson +44 (0) 20 7260
Numis Securities Ben Stoop 1000
Tim Rowntree
James White +44 (0) 20 3128
MHP Communications Tess Harris 8100
Frank Neervoort +31 681 734 236
Off the Grid (The Netherlands) Giedo Van Der Zwan +31 624 212 238
Accsys Technologies PLC
Chairman's Statement
Introduction
I am pleased to report Accsys has delivered another encouraging
year of progress with continued improvements in revenue and
profitability whilst making significant steps towards fully
leveraging our range of transformational technologies, building on
the momentum we have generated to date and equipping the Group for
the next phase of growth. We are making excellent headway in
realising Accsys's substantial potential over the longer term and I
am confident that the group will be cash-flow positive over the
year ahead.
Financial Summary
Total revenue for the year ended 31 March 2015 increased by 38%
to EUR46.1m (2014: EUR33.5m). In the same period, Accoya(R) wood
revenue increased by 39% to EUR40.7m (2014: EUR29.3m). Total
revenue included EUR1.1m of income recorded in the second half of
the year reflecting continued progress with our Accoya(R) licensee,
Solvay (2014: EUR1.1m) with EUR0.7m arising from the Global
Marketing agreement signed in the year.
Gross profit margin for the Group improved from 23% to 27%,
resulting from increased Accoya(R) volumes, price increases and
operating efficiencies. Other operating costs increased by 12.7% to
EUR16.0m (2014: EUR14.2m) largely due to an increase in staff
costs, including the impact of foreign exchange, and we recorded
exceptional costs of EUR2.9m resulting from the arbitration process
with Diamond Wood (2014: EUR0.7m).
The improved performance resulted in underlying EBITDA loss
reducing by 52% to a EUR2.4m loss (2014: EUR5.0m loss). The
on-going improvement during the year, including the implementation
of a price increase, enabled the EBITDA loss to reduce to EUR0.4m
in the second half of the financial year.
The manufacturing facility generated a positive EBITDA of
EUR6.9m, a 188% increase compared to last year (2014: EUR2.4m),
continuing to illustrate the potential returns achievable when
manufacturing at higher volume levels.
The cash balance of EUR10.8m at 31 March 2015 (2014: EUR15.2m)
reflects a significant improvement in our cash-flow. Excluding
exceptional costs, the cash out-flow of EUR1.3m is a 73%
improvement compared to the prior year (2014: EUR4.8m).
Operational progress
Accoya(R) wood sales volumes increased by 32% to 33,483m(3)
(2014: 25,391m(3) ), reflecting further improvement in market
acceptance and our on-going investment in our brand and marketing
activities. The demand has been met by the continued focus on
increasing the efficiency and manufacturing capacity of our plant
in Arnhem which is now in excess of 40,000m(3) per annum.
This increased output has been achieved without undermining the
Group's health and safety record and our commitment to operational
improvements remains a central focus going forward.
We continue to make progress in our objective of increasing the
manufacturing capacity for our products in the longer term. In
November 2014, our Accoya licensee Solvay, confirmed it was to
proceed to the next stage of preparation of their plant in
Freiburg, Germany, and has since completed the site clearance,
appointed a EPCM contractor and placed orders for key
equipment.
We have received EUR2m non-refundable resulting from the Accoya
Marketing Agreement entered into with Solvay in December 2014 to
help fund marketing activities focussing on North America. The
continuation of this agreement remains conditional upon on Solvay
and Accsys completing full agreements in respect of further global
co-operation for which discussions are on-going.
In March 2015, we made an important step towards the
construction of the first Tricoya plant. We agreed a Memorandum of
Understanding ('MoU') with a large international chemical group
(the 'Chemical Group') under which it is envisaged that Accsys will
lead the creation of a new consortium, including the Chemical
Group, to fund, build and then operate the new plant, with
production envisaged to commence in 2017. A detailed site
feasibility review is examining whether the plant should be
optimally located on one of the Chemical Group's sites and the
terms of the MoU include funding, technical and other operational
support in respect of the next stage of the project. We are now in
detailed discussions with other parties, including the Chemical
Group, which are expected to lead to the creation of the new
consortium.
In March 2015 we also acquired the remaining 50% share in
Tricoya Technologies Limited ('TTL') owned by Ineos, giving us 100%
ownership and control until the new consortium structure is
established. Sales of Medite Tricoya have continued to grow, with
sales having increased by 73% compared to the year before.
We have recorded exceptional costs of EUR2.9m (2014: EUR0.7m)
relating to the previously reported arbitration ruling concluded in
the period in respect of the dispute with Diamond Wood. We have
since recommenced our working relationship with Diamond Wood and we
continue to believe that the China and South-East Asia region
offers substantial opportunities for Accoya in the long term.
Board of Directors
We have completed a review of the composition of the Board
following the death of Gordon Campbell in April 2014. Gordon had
been instrumental in shaping Accsys and it is an honour to succeed
him as Chairman. We subsequently increased the strength and
diversity of the Board by appointing Sean Christie and Sue Farr in
November 2014, bringing with them extensive corporate experience
particularly in, respectively, the speciality chemicals and
marketing industries.
Outlook
Our recent growth and progress with key third parties leaves us
well positioned to take advantage of the substantial opportunity
that exists for our products and technologies. I expect demand for
Accoya wood to continue to grow, as has been evidenced in the start
of the new financial year with positive trading against an
improving market backdrop resulting in further sales growth.
We will make further improvements to our plant to help meet this
challenge however ultimately the expected longer term demand for
Accoya(R) and Tricoya(R) can only be met by new manufacturing
facilities and we are exploring all options in this respect. Solvay
is making steady progress towards their first plant in Freiburg and
I am encouraged by the steps we have taken recently in respect of
the first Tricoya(R) plant. We continue to consider additional
opportunities and how best to participate in the returns we believe
are achievable from manufacturing.
Patrick Shanley
Non-executive Chairman
15 June 2015
Accsys Technologies PLC
Chief Executive's Report
Another record year for Accoya(R) sales
We had another strong year with Accoya(R) wood revenue of
EUR40.7m representing a 39% increase (2014: EUR29.3m). We have
focussed on developing our existing customers and geographies and I
am pleased with the continued progress in most regions, with the UK
increasing by 54%; 56% in Solvay's region and 59% in the Americas.
However, trading in the Benelux has remained disappointing with the
construction and timber industries significantly impacted by poor
economic conditions resulting in a number of bankruptcies which
have impacted our customers in the year.
Sales are driven by many different end-use applications, however
we believe focussing on the joinery sector, for windows and doors,
and decking provides the business with the best prospect of further
sales growth whilst simultaneously ensuring Accoya(R) obtains wider
recognition in the market place. We will therefore continue to
expand our technical sales efforts in these areas which have proved
so successful in the UK over the last two years, to other regions
focussing initially on USA and Benelux.
Accoya(R) sold to Medite for the manufacture of Medite
Tricoya(R) increased by 90% to EUR5.5m (2014: EUR2.9m). The margin
for this material remains below that achieved for the majority of
Accoya(R) we sell, reflecting our investment in the Tricoya(R)
project and that the current manufacturing process is in place only
until the first dedicated Tricoya(R) plant is operational. We
expect volumes sold to Medite to increase in the new financial
year, but at a lower rate given potential capacity limitations in
Arnhem.
We now have a total of 56 Accoya(R) distributor, supply and
agency agreements in place covering most of Europe, Australia,
Canada, Chile, China, India, Israel, Mexico, Morocco, New Zealand,
South Africa, parts of South-East Asia and the USA.
We implemented an approximate 5% price increase for our Accoya
customers during the third quarter of the financial year which will
continue to improve our margins on a comparable basis in the first
half of the new financial year. We increased prices as a result of
the overall state of the market, to help offset some increase in
raw material prices but primarily due to our ambition to achieve
overall profitability. We will continue to adjust our prices when
the market allows and taking into account our goal for long term
sales growth and other changes to our cost base.
Accoya(R) manufacturing plant increases capacity and
profitability
33,483m(3) of Accoya(R) wood was sold in the year, a 32%
increase compared to last year and a 149% increase compared to two
years ago. The higher volumes resulted in improved economies of
scale, which together with the price increases, helped the
manufacturing gross margin improve from 20% to 25% and in turn, the
manufacturing segment EBITDA to increase by 188% to EUR6.9m (2014:
EUR2.4m). This improvement is despite a 33% increase in the
proportion of the material sold to Medite, which achieved a lower
margin.
The 34,156m(3) of Accoya produced in the year represents a 42%
increase compared to last year and a 282% increase compared to
three years ago. The improvement in volume was again achieved by
improving our capacity and efficiency and optimising our existing
processes and equipment without the need of significant capital
investment and only a limited increase in headcount whilst
simultaneously maintaining our quality control and health and
safety processes. For example, our production cycle time has
reduced by approximately 30% over the last year which in turn has
contributed to our actual capacity now being in excess of
40,000m(3) per annum.
We continue to believe the manufacturing plant provides an
illustration of the possible returns which can be achieved when
producing Accoya(R) on a larger scale. We expect the economies of
scale resulting from operating near full capacity, or those
achievable from production at even greater volumes, to result in a
gross manufacturing margin exceeding the 27% which was recorded in
the second half of the financial year.
We will continue to implement additional improvements to
optimise the process and increase the capacity of the plant. While
such increases in the capacity of the existing two acetylation
reactors in Arnhem are likely to be incremental we are exploring
further options to increase production.
Solvay progressing with plant
Progress has been made with Solvay over the course of the
financial year, following the Accoya(R) wood licence agreement
becoming fully effective in December 2013. The licence agreement
grants Solvay exclusive rights for a minimum 15 years to produce
and to sell Accoya(R) within the Council of Europe (excluding UK,
Ireland and Benelux) from an initial plant.
In November 2014 Solvay confirmed it was progressing to the next
stage of the preparation of their Accoya plant and has since
completed the clearance of the prospective Freiburg site, engaged a
leading Engineering, Procurement and Construction Management
contractor for the project and orders have been placed for key
equipment.
In December 2014 we entered into a conditional Accoya(R)
Marketing Agreement under which Accsys is carrying out agreed
targeted marketing activities outside of Europe. Solvay will fund
the agreed activities which are initially focusing on North America
and have made a non-refundable pre-payment of EUR2m with EUR0.7m of
this having been recognised as revenue in the period. In addition
Accsys is carrying out certain marketing activities on behalf of
Solvay in Europe which includes work with major new manufacturers
and retailers.
The continuation of the Accoya(R) Marketing Agreement outside of
the Council of Europe is conditional on Solvay and Accsys
completing full agreements in respect of further global
co-operation for which discussions are on-going.
During the financial year, Accoya(R) revenue in respect of the
region under Solvay's licence has increased by 56%.
Tricoya project takes a major step forward
In March 2015 we made a number of key changes in respect of
Tricoya(R) Technologies Limited ('TTL') and the Tricoya(R) project,
central to which was the agreement of a Memorandum of Understanding
('MoU') with a large international chemical group (the 'Chemical
Group') to replace our joint venture partner, Ineos.
The changes are expected to optimise our participation in the
building and operation of the world's first Tricoya(R) wood
elements acetylation plant, including allowing Accsys to derive
revenue from both licensing and manufacturing in the future.
We also acquired the 50% share in TTL previously owned by Ineos,
giving Accsys 100% ownership and control of TTL until a new
ownership structure is established. We are now in detailed
discussions with other parties which are expected to lead to the
creation of a new consortium, including the Chemical Group, to
fund, build and then operate the Tricoya(R) production plant.
Accsys and the Chemical Group are now jointly undertaking a
detailed site feasibility review to examine whether the plant
should be optimally located on one of the Chemical Group's existing
sites. This feasibility review and related detailed study and
engineering work are expected to be completed by the end of 2015
with the plant expected to be operational by the end of 2017. The
Chemical Group is contributing both financial and technical support
during this period.
Medite, our founding Tricoya(R) joint development partner, also
confirmed its interest in participating in the new consortium and
on-going engagement with TTL to realise Tricoya's(R) full
potential. It is anticipated Medite will remain a key partner in
respect of the Tricoya(R) production plant which is expected to
replace Medite's own Tricoya(R) production plant in Ireland under
their existing joint development, production and distribution
licence agreement with TTL.
Following Accsys acquiring Ineos's share in TTL and Ineos
relinquishing its obligations as a TTL shareholder, Ineos is
continuing to provide key engineering and technical personnel to
TTL on a contractual basis in the near term. As a result of the
agreement with Ineos, TTL is fully consolidated by Accsys as at 31
March 2015.
The above changes have been made at the end of a year that has
seen sales of Medite Tricoya(R) increased by approximately 73%
compared to the year before. Growth was across Medite's key markets
and being used in façade cladding, siding, trim, outdoor furniture
and wet interior applications. In addition to the business
developing through distributors, growth was also realised with
industrial customers, such as producers of exterior doors.
Intellectual Property
Accsys has considerably increased its number of pending patent
applications in the recent period by expanding its patent families
to 19, including those relating to Tricoya(R) . Applications filed
now number 157, filed in 50 countries. To date 27 patents have been
granted in various countries throughout the world.
Our principal trademark portfolio remains unchanged with our
brands Accoya(R) , Tricoya(R) , the Trimarque device and Accsys(R)
, including transliterations in Arabic, Chinese and Japanese,
protected by registration in 56 countries.
The Company's patents and trademarks cover the products we and
our distributors and licensees sell, and the processes by which
these products are made, throughout the world.
In addition to Accsys's extensive patent and trade-mark
portfolio, the Company continues to invest in the generation and
protection of valuable know-how and confidential information
relating to its products and processes, protected by way of
confidentiality protocols and contractual agreements.
Diamond Wood
The arbitration proceedings concerning our dispute with Diamond
Wood were concluded in the period resulting in an exceptional cost
of EUR2.9m (2014: EUR0.7m). We sought to terminate our licence
agreement with Diamond Wood in 2013, following legal advice that
they were in breach of contract however the tribunal concluded that
the licence agreement should continue.
As a result, we have recommenced our working relationship with
Diamond Wood and they remain obliged to resume endeavours towards
the construction of an Accoya(R) plant in the Far East, together
with the promotion, marketing and selling of Accoya to customers in
China and the Far East. We continue to believe that the China and
South-East Asia region offers substantial opportunities for
Accoya(R) in the long term.
Outlook
The excellent progress made over the last year has left us in a
very strong position to take advantage of the opportunities we now
face and the Group is well equipped to build on its achievements to
date as we enter the next phase of our development. In the medium
term, we face a period which presents new challenges as we seek to
ensure that the increasing demand can be met in advance of new
manufacturing facilities commencing operation. We will also
continue to develop our relationship with the acetyls industry.
We will continue to invest in the longer term as I remain
confident that the overall opportunity for our products and
technologies remains substantial. We have successfully demonstrated
how to commercialise Accoya(R) and will increasingly focus on how
to extract the maximum value from our combined assets including
through directly exploiting our IP, maximising our involvement in
the manufacturing and through the wider experience and knowledge we
have developed and believe is unique in the industry.
The new financial year has started well with further growth in
Accoya(R) sales. We expect to be cash-flow positive over the year
ahead as we look towards the next key milestone in our development.
I am confident that our overall position is stronger than at any
point in our history and I am excited about our long term growth
prospects.
Paul Clegg
Chief Executive Officer
15 June 2015
Accsys Technologies PLC
Strategy and Business model
Products
Manufactured through Accsys's highly sustainable proprietary
acetylation processes, Accoya(R) wood and Tricoya(R) wood elements
exhibit superior dimensional stability, durability and other
important benefits when compared with alternative natural, treated
and modified woods as well as more resource intensive and
environmentally impactful man-made materials.
The attributes of Accoya(R) wood make it a highly effective
solution for a wide range of external applications including doors,
windows, cladding, decking, shutters, louvres, civil works,
landscaping, outdoor furniture and more.
The possibilities for the use of Tricoya(R) wood elements as the
key component with panel products are ever expanding but include
facade cladding, fascia and soffit panels and other secondary
exterior applications, window components; wet interiors, including
wall linings in swimming pools, bathrooms, wet rooms, changing
rooms; speciality furniture including lockers, cubicles, chairs and
tables, play frames, tree houses and exterior composite furniture;
signage; automotive parts and sports equipment.
Market
We believe the potential market for Accoya(R) and Tricoya(R) is
in excess of 2.5 million m(3) annually. To put this into
perspective, during the last year we sold 33,483m(3) , however the
total global solid wood market is understood to exceed 400 million
m(3) annually. While it may take some time for Accoya to reach its
full market potential, we are confident that continued strong sales
growth can be generated. In respect of Tricoya(R) , we note the
global wood based panel sector is approximately 290 million m(3)
annually.
Strategy
Our strategy is best explained in the following three phases.
Phases one and two have been completed and are included below to
provide context and to summarise our history. Our reported
performance is therefore concerning Phase three.
Phase 1 (2003 to 2009)
Construction and operation of proof of concept acetylation
plant:
-- Acquired the pilot production plant assets and all associated
IP following years of R&D into acetylation of wood species
-- Construction of full scale proof of concept production plant
in Arnhem in 2007; a culmination of 16 years R&D
-- Completed first commercial production trial runs and carried
out stringent product scoping and testing
-- Established comprehensive global brand strategy for Accoya(R) and Tricoya(R)
-- 1(st) commercial sales of Accoya(R)
Phase 2 (2008 to 2013)
The transition of Arnhem proof of concept plant to stand-alone
commercial manufacturing facility was completed during the global
economic recession. During this time Accsys completed two fund
raisings and wrote off significant amounts from our balance
sheet:
-- Formed a stable and experienced management team
-- Created and developed worldwide market and brand for Accoya(R)
-- Created brand and marketing strategy including web and
digital mediums
-- Carried out extensive 3(rd) party testing and validated
Accoya(R) performance benefits
-- Established and expanded global distribution network to
increase sales capacity and prove demand
-- Enabled the provision of technical sales, marketing and
operational support
-- Continuous manufacturing improvement
-- Carried out R&D focusing on quality and efficiencies to
reduce cycle time and increase capacity
-- Expanded Arnhem site from an R&D project to a
commercially viable facility
-- Streamlined support activities such as procurement,
maintenance and logistics
-- Financial stability via generation of positive EBITDA at Arnhem manufacturing Company
-- Increased capacity utilisation
-- Improved gross margin through reduction of unit production
costs and market sensitive price increases
-- Focused operating cost control and active working capital
management
-- Protection of IP - Established world-wide patent portfolio to
cover both core acetylation and enabling technologies
-- Development of Tricoya(R) acetylation feedstock principles and market testing of Tricoya(R)
-- Establish value adding relationships with key industry players
-- Formed joint venture with Ineos for the exploitation
Tricoya(R) wood elements acetylation technology and processes
-- Key commercial and technical relationships developed with
wood suppliers, coatings manufacturers and research institutes on a
global basis
-- Strategic relationships with companies such as BP
Phase 3 (2013 onwards)
Ambition Progress
--------------------------------------------------------------------- -------------------------------------------------------------
Manufacturing
* Increased production of Accoya(R) at Arnhem plant to * Production increased by 42% to 34,156m(3)
supply our clients, develop new markets and drive
demand for Accoya(R) as well as for use as a
feedstock in the production of Tricoya(R)
* Cycle time reductions (approximately 30%) and other
* Continued focus on reducing cycle time to increase improvements have increased Arnhem capacity from
Arnhem capacity and profitability 35,000m(3) to in excess of 40,000m(3)
--------------------------------------------------------------------- -------------------------------------------------------------
Meeting global demand
* Ongoing licensing of Accoya(R) acetylation technology
to achieve multiple licence agreements, including * Solvay progressing with development of Accoya plant
Solvay, to satisfy global demand for solid wood in Freiburg, Germany
* Development of extended global distributor network * 56 distribution agreements in place covering 56
countries around the globe
* Establishing and further development of detailed * Engineering work underway in respect of first Tricoya
engineering documents, engagement of third party plant (Solvay also progressing with detailed
engineering experts engineering in respect of their plant, following
provision of process design package last year).
* Development of model to benefit from our expertise by
assisting 3rd parties in areas including sales, * Binding term sheet agreed with Solvay includes option
marketing, product and technical development, for Accsys to acquire substantial minority interest
operations and maintenance in Solvay's Accoya operations.
* Continued close co-operation between Accsys and third * Accsys in discussions to create and lead a new
parties to further develop and facilitate the consortium to fund, build and operate the first
licensing of Tricoya(R) Tricoya plant, having signed an MoU with a large
international chemical group.
--------------------------------------------------------------------- -------------------------------------------------------------
Research and Development
* Continued R&D and product development activities to * Pre-commercial sales of over 150m(3) of species with
generate future value via development of additional potential to supplement existing radiata pine offer,
and enhanced applications and presenting long term purchasing range and further
increased market options
* Further development of new species to aid licencing
discussions and maximise value through reduced costs
as well as generate new applications and increased
revenue * 157 patent applications filed in 41 countries; 27
patents granted
* Strengthened protection of intellectual property
--------------------------------------------------------------------- -------------------------------------------------------------
Brand
* Continued development, advancement and protection of * Commenced focussed marketing campaign in North
globally established Accoya(R) and Tricoya(R) brands America targeting key audiences such as Architects,
Joinery Manufacturers and supporting distributors
--------------------------------------------------------------------- -------------------------------------------------------------
Business model
In order to achieve our strategy, the Group has established a
business model which seeks to derive benefit from and further
develop our core assets while ensuring that Health and Safety is
made our first priority. Our segmental reporting on page 30 sets
out how our different business areas have performed financially,
however in practice the Group's strategy is more closely
interdependent and based upon the following:
Intellectual property and innovation
The Group's acetylation technologies have been developed over
many years and have enabled us to develop the unique Accoya(R) and
Tricoya(R) products. Our IP exists on a number of different levels
and is exploited in different ways.
Accsys has developed a number of families of registered and
pending patents relating to our products and processes which
provide robust protection and enable us to market our unique
products and processes to third parties. Equally important is the
extensive know-how and trade secrets which the Group has developed
covering our process, raw materials, equipment and products which
together provide commercial protection, the ability to generate
value from third parties and a basis for on-going innovation.
Our commitment to R&D and innovation is based on the belief
that wood acetylation is applicable to multiple wood products and
species and that we have established a platform technology that can
be developed to generate additional products and uses. For example,
we believe different species of wood will enable Accoya(R) to be
used for even more purposes while opening up greater supply chain
opportunities; we also believe that our Tricoya(R) process, which
is initially expected to be used by manufacturers of MDF boards,
has the potential to be used for particle board manufacture.
Strong branding and trade mark protection is vital and has
enabled our products to generate a significant presence in a
relatively short time in what is otherwise a fragmented market
place. We seek to portray that our products are revolutionary,
class leading and sustainable while offering value for money when
considering performance benefits and the product lifecycle.
Business partners
We have established relationships with third parties that have
contributed to our success so far and which we believe will help us
in meeting our long term strategic targets.
As set out above, the potential market for our products is
considerable. We believe that being able to fulfil this demand
ourselves by building and operating manufacturing facilities offers
the greatest long term rewards. However, we have and will continue
to work with appropriate third parties in order to help us achieve
our long term objectives and in particular where such parties have
resources or technologies which are not available to Accsys.
Our ambition to retain a direct interest in manufacturing is
characterised by our relationship with Solvay and in respect of
Tricoya(R) , where our recent MoU with the Chemical Group envisages
a consortium to build the first Tricoya(R) plant in which Accsys
would take the lead.
While the development of third party relationships is important
at every level of the business, particular importance is placed
upon those which help develop our technology, products and their
place in the market including equipment manufacturers, wood
suppliers, the acetyls industry, testing and certification bodies
as well as wood coating, adhesives and other system supply
specialists. Our product development team seeks to co-develop new
applications directly with other companies.
Our people
Our focus on R&D, innovation and fulfilling the full
potential of our products and technologies is dependent on our
employees. As noted above, a significant amount of value is
generated from know-how; from working with wood products,
understanding our brand on a global basis to optimising the
acetylation process. Therefore, despite being a relatively young
company, we have focussed on developing, motivating and retaining a
committed team with the necessary skills and experience to help the
Group meet its objectives and to continue to add to Accsys's
overall ability to generate value.
All staff are given the opportunity to become shareholders in
Accsys via the Employee Share Participation plan (see page 41),
with approximately 50% having taken up this offer since its
introduction.
Manufacturing
Accsys's manufacturing site in Arnhem brings together all of the
above. The plant was built as a proof of concept facility and since
then has been improved and its capacity increased in order to
demonstrate that our acetylation process works on an industrial
scale and to confirm the commercial viability of Accoya(R) and
Tricoya(R) .
The plant has significant value to Accsys on many levels: In
addition to now generating a substantial profit; it is a centre for
carrying out commercial level R&D, a tool for evaluating
further improvements to our processes and a home to the majority of
our workforce. We will continue to develop and optimise the plant
to generate greater financial returns, further add to our IP and
therefore our ability to generate value in the future. Consistent
with our belief that manufacturing our products offers the greatest
potential returns, we have retained space at Arnhem to allow for
additional manufacturing capacity.
Environment
Our products offer a significant benefit in reducing the
negative impacts on our environment. They are the most
environmentally friendly building solutions over their full life
cycle, made from abundantly available, fast growing, sustainably
sourced, renewable resources, yet with durability and dimensional
stability exceeding the best performing tropical hardwoods. They
are natural building materials with low maintenance and consistent
qualities of the highest performing non-sustainable man-made
materials; while benefitting from all positive attributes of wood
(sustainability, strength, beauty) without the downfalls (poor
durability & stability).
Accoya(R) 's carbon footprint significantly outperforms most
other commonly used building materials such as concrete, PVC, MDF
and plywood as well as a range of tropical hardwoods such as azobe
and red meranti. Through the photosynthesis process trees absorb
CO(2) and as a result 1m(3) of wood may store over 1 ton of CO(2)
for its lifetime. Our process takes fast growing, sustainably
sourced wood and converts into a long last construction material,
which can be incinerated for energy production at the end of its
life. This has enabled us to demonstrate that Accoya(R) can be
carbon negative over its extended life cycle.
Further details are included in the Sustainability report and
our annual GHG emissions are detailed in the Director's report.
Principal risks and uncertainties
The principal risks and uncertainties are set out in the
Directors' Report.
Accsys Technologies PLC
Financial Review
Income statement
Revenue
Total revenue for the year ended 31 March 2015 increased by 38%
to EUR46.1m (2014: EUR33.5m). In the same period, Accoya(R) revenue
increased by 33%, excluding sales to Medite for the manufacture of
Tricoya(R) , to EUR35.2m (2014: EUR26.4m). We sold EUR5.5m of
Accoya(R) to Medite for the manufacture of Tricoya(R) , a 90%
increase (2014: EUR2.9m). Total revenue included EUR1.1m of income
recorded in the second half of the year reflecting continued
progress with our Accoya(R) licensee, Solvay (2014: EUR1.1m).
EUR0.7m of this arose from the Global Marketing agreement signed in
the year and was recorded within Other revenue. Other revenue which
also includes the sale of acetic acid increased by 38% to EUR4.2m
(2014: EUR3.1m).
Gross margin
Gross profit margin improved from 23% to 27%, resulting from
increased Accoya(R) sales, price increases and improved operating
efficiencies. The gross manufacturing margin increased from 20% to
25%.
Other operating costs
Other operating costs increased by 12.6% to EUR16.0m (2014:
EUR14.2m). This increase was attributable to higher administration
and other operating costs which in turn were largely due to
increased payroll costs. Headcount increased to an average of 111
(2014: 101), with staff costs increasing by 12.5% to EUR10.1m. This
included a share based payment charge of EUR1.4m (2014: EUR1.2m).
EUR0.3m of the increase in staff costs is attributable to foreign
exchange. Other operating costs also included EUR3.2m of sales and
marketing (2014: EUR2.9m), reflecting an on-going investment in
expected long term growth in sales of Accoya.
An exceptional item of EUR2.9m was also recorded in respect of
the arbitration with Diamond Wood which concluded in the period
(2014: EUR0.7m). (See note 4)
Loss from operations
The loss from operations decreased by 7% to EUR6.7m (2014: loss
of EUR7.2m) due to the improvement in gross margin described above,
offset by the increase in operating costs and exceptional costs
explained above. Excluding exceptional costs, the loss from
operations decreased by 42% to EUR3.8m (2014: EUR6.5m)
Share of joint venture loss and gain on acquisition of
subsidiary
On 5 October 2012, Accsys entered into a 50:50 joint venture
with Ineos to exploit Accsys' intellectual property surrounding its
proprietary Tricoya(R) wood elements acetylation technology and
processes, with the intention of accelerating the global deployment
of Tricoya(R) . The company, Tricoya Technologies Limited ('TTL'),
has been developing and exploiting Accsys' Tricoya(R) technology
for use within MDF, particle board and wood plastic composites in a
worldwide panel products market estimated to be worth more than
EUR60 billion annually.
During the period TTL has been accounted for in the Accsys Group
accounts using the equity method. TTL recorded revenue of EUR0.5m
(2014: EUR0.2m) and total costs of EUR2.7m (2014: EUR2.0m)
resulting in Accsys' share of loss of EUR1.1m (2014: EUR0.9m).
On 31 March 2015, Accsys acquired the remaining 50% equity
interest in TTL held by Ineos and as a result owned 100% at the end
of the period. The acquisition was accounted for as an acquisition
of a subsidiary and the assets and liabilities recorded at fair
value. A gain of EUR0.3m was recorded as a result of the difference
between the consideration paid, the investment in joint venture
immediately prior to the acquisition and the fair value of the net
assets acquired. (See note 8 for further details.)
Finance income
Finance income of EUR0.1m (2014: EUR0.2m) represents interest
receivable on bank deposits.
Finance expense
The finance expense of EUR0.2m (2014: EUR0.2m) is primarily due
to interest element arising on the payments attributable to the
sale and leaseback of part of the Group's land and buildings in
Arnhem together with interest payable upon the group's finance
facilities.
Research & Development Spend
EUR1.4m was incurred on research & development in the period
(2014: EUR1.6m). EUR0.2m (2014: EUR0.5m) has been capitalised as an
intangible asset (see note 1).
Taxation
The net tax charge of EUR0.6m (2014: EUR0.7m) primarily
represents a tax charge arising from manufacturing offset by
research and development tax credits of EUR0.2m (2014: EUR0.2m)
attributable to activities carried out in the current year.
Dividends
No final dividend is proposed in 2015 (2014 final dividend:
EURNil). The Board deems it prudent for the Company to maintain as
strong a balance sheet as possible during the current phase of the
Company's growth strategy.
Earnings per share
Basic and diluted loss per share was EUR0.09 (2014 basic and
diluted loss per share was EUR0.10, restated to account for 1 for 5
share consolidation in the period).
Balance sheet
Intangible assets
Intangible asset additions of EUR0.2m (2014: EUR0.5m)
predominantly relate to capitalised internal development costs.
Acquisitions of EUR1.9m relates to TTL's net capitalised
development costs incurred since TTL's incorporation in October
2012, including EUR0.6m of additions in the period relating to the
Tricoya process (2014: EUR1.4m).
Property, plant and equipment
Property, plant and equipment additions of EUR0.9m (2014:
EUR0.6m) predominantly relate to technology improvements and items
of maintenance equipment at our Arnhem production facility.
Available for sale investments
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China Limited.
The historical cost of the unlisted shares held at 31 March 2015 is
EUR10m (2014: EUR10m). However, a provision for the impairment of
the entire balance of EUR10m continues to be recorded as at 31
March 2015. See note 4.
Inventory
The Group had total inventory balances of EUR7.9m (2014:
EUR6.1m). Finished goods consisting of Accoya(R) represented
EUR3.1m (201: EUR3.5m) and raw materials and work in progress,
primarily consisting of unprocessed lumber, being EUR4.8m (2014:
EUR2.6m). The increase is attributable to the increased sales
levels compared to the previous year.
Cash and cash equivalents
The Group had cash and bank deposits of EUR10.8m at the end of
the period (2014: EUR15.2m). The decrease in the year is mainly the
result of EUR2.9m of cash out-flows from operating activities
before changes in working capital, a 19% decrease compared to the
previous year (2014: EUR3.6m). However, this included EUR3.2m in
respect of the exceptional costs associated with the Diamond Wood
arbitration (2014: EUR0.5m), such that the underlying cash flow
from operating activities before changes in working capital was
EUR0.3m in-flow compared to EUR3.1m out-flow in the prior year.
EUR1.0m of cash out-flow was attributable to changes in working
capital (2014: EUR0.3m in-flow), as a result of an increase in
inventories and trade and other receivables. Further cash out-flows
were attributable to EUR0.2m expenditure in respect of capitalised
development costs (2014: EUR0.5m), EUR0.9m in respect of tangible
fixed assets (2014: EUR0.6m) and EUR1.0m investment in Tricoya
Technologies Limited (2014: EUR1.2m), which was accounted as a
joint venture during the period.
EUR1.3m of cash was recorded as a result of fully consolidating
TTL as at 31 March 2015, with TTL having received a second tranche
of funding in March 2015 from the EC for the Life + subsidy in
respect of the Tricoya project.
Trade and other receivables
Trade and other receivables have increased to EUR5.0m (2014:
EUR4.5m). Within this, trade receivables decreased marginally from
EUR3.1m to EUR3.0m despite the significantly higher sales levels,
mostly due to vigorous working capital management.
Trade and other payables
Trade and other payables have increased to EUR9.6m (2014:
EUR5.6m). Included within this, trade payables remained consistent
at EUR3.8m (2014: EUR4.8m) largely as a result of the increased
activity levels. In addition, accruals and deferred income
increased from EUR1.7m to EUR4.6m as a result of EUR2m of funding
received from Solvay in the period in respect of the Global
Marketing Agreement agreed in December 2014 and due to the
inclusion of balances of TTL which reflect funding received from
the European Community in respect of a Life+ subsidy relating to
the Medite Tricoya(R) project which included the second tranche of
EUR0.9m received in March 2015.
Finance lease creditor
The Group has previously entered into a sale and leaseback
agreement for part of the Arnhem land and buildings. The first
phase was resulted in proceeds of EUR2.2m which has been accounted
for as a finance lease. At 31 March 2015 there are EUR2.1m of
payments committed to over the remaining life of the lease (2014:
EUR2.1m) (see note 25). The second part of the sale and leaseback
of the land in Arnhem was completed in February 2013, however this
has been accounted for as an operating lease (see note 24).
Capital structure
Details of the issued share capital, together with the details
of the movements in the Company's issued share capital in the year
are included in note 23. The Company has one class of ordinary
shares which carry no right to fixed income. Each share carries the
right to one vote at general meetings of the Company.
Further to the passing of all resolutions at the Company's AGM
held on 11 September 2014, the entire issued share capital of the
Company was consolidated on a 5:1 basis with effect from 12
September 2014.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights.
Details of employee share schemes are set out in Note 14. No
person has any special rights of control over the Company's share
capital and all issued shares are fully paid.
Going concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, and at least 12 months from the date
these financial statements are approved.
As part of the Group's going concern review, the Directors have
reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate
that, in order to continue as a going concern, the Group is
dependent on the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and the collection of on-going working
capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe, while some uncertainty inherently
remains in achieving the budget, in particular in relation to
market conditions outside of the Group's control, that there are a
sufficient number of alternative actions and measures that can be
taken in order to achieve the Group's medium and long term
objectives.
Therefore, the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
William Rudge
Finance Director
15 June 2015
Accsys Technologies PLC
Directors Report for the year ended 31 March 2015
The Directors present their report together with the audited
consolidated financial statements for the year ended 31 March
2015.
Results and dividends
The consolidated statement of comprehensive income for the year
is set out on page 20, and shows the loss for the year.
The Directors do not recommend the proposal of a final dividend
in respect of the current year, consistent with the prior year.
Principal activities and review of the business
The principal activity of the Group is the production and sale
of Accoya(R) solid wood and licensing of technology for the
production and sale of Accoya(R) wood and Tricoya(R) wood elements
via the Company's 100% owned subsidiaries, Titan Wood Limited,
Titan Wood B.V., Titan Wood Technology B.V. and Titan Wood Inc and
Tricoya Technologies Limited (collectively the 'Group').
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. A
review of the business is set out in the Chairman's statement and
the Chief Executive's report on pages 1 to 5. Accsys Technologies
PLC is incorporated in the United Kingdom.
Strategy and business model
The Strategy and Business model section, on page 6, sets out the
Company's strategy, business model and key performance
indicators.
Financial instruments
Details of the use of financial instruments by the Company and
its subsidiary undertakings are set out in Note 26 of the financial
statements.
Share issues
Further to the passing of all resolutions at the Company's AGM
held on 11 September 2014, the entire issued share capital of the
Company was consolidated on a 5:1 basis with effect from 12
September 2014. Accordingly, all figures concerning the number of
shares stated below represent the new EUR0.05 Ordinary Shares.
On 18 August 2014, a total of 27,819 of EUR0.05 Ordinary shares
were issued to a trust under the terms of the Employee Share
Participation Plan.
On 12 August 2014, a total of 99,559 of EUR0.05 Ordinary shares
were issued and released to employees together with the 99,559 of
EUR0.05 Ordinary shares issued to trust on 12 August 2013.
In 19 January 2015, a total of 53,922 of EUR0.05 ordinary shares
were issued to a trust under the terms of the Employee Share
Participation Plan.
Principal risks and uncertainties
The business, financial condition or results of operations of
the Group could be adversely affected by any of the risks set out
below. 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.
The Directors consider that the principal risks to achieving the
Group's objectives are those set out below.
(a) Economic and market conditions
The Group's operations comprise the manufacture of Accoya(R)
wood and licensing the technology to manufacture Accoya(R) and
Tricoya(R) wood elements to third parties. The cost and
availability of key inputs affects the profitability of the Group's
own manufacturing whilst also impacting the potential profitability
of third parties interested in licensing the Group's technology.
The price of key inputs and security of supply are managed by the
Group, partly through the development of long term contractual
supply agreements.
An element of the Group's strategy for growth envisages the
Group selling new or existing products and services into other
countries or into new markets. However, there can be no assurance
that the Group will successfully execute this strategy for growth.
The development of a mass market for a new product or process is
affected by many factors, many of which are beyond the control of
the Group, including the emergence of newer and more competitive
products or processes and the future price of raw materials. If a
mass market fails to develop or develops more slowly than
anticipated, the Group may fail to achieve profitability.
(b) Regulatory, legislative and reputational risks
The Group's operations are subject to extensive regulatory
requirements, particularly in relation to its manufacturing
operations and employment policies. Changes in laws and regulations
and their enforcement may adversely impact the Group's operations
in terms of costs, changes to business practices and restrictions
on activities which could damage the Group's reputation and
brand.
(c) Employees
The Group's success depends on its ability to continue to
attract, motivate and retain highly qualified employees. The highly
qualified employees required by the Group in various capacities are
sometimes in short supply in the labour market.
(d) Intellectual property
The Group's strategy of licensing technology depends upon
maintaining effective protection of its intellectual properties
worldwide. Protection is afforded by a combination of trademarks,
patents, secrecy, confidentiality agreements and the structuring of
legal contracts relating to key licensing, engineering and supply
arrangements. Unauthorised use of the Group's intellectual property
may adversely impact its ability to license the technology and lead
to additional expenditure to enforce legal rights. The wide
geographical spread of our products increases this risk due to the
increasingly varied and complex laws and regulations in which we
seek to protect the Group's intellectual property.
(e) Litigation
During the period the arbitration process with Diamond Wood
which commenced in the previous period was resolved. Further
details are provided in note 4.
Greenhouse gas ('GHG') emissions
The table below represents all the emission sources required
under the Companies Act 2006 (Strategic Report and Directors'
Reports) Regulations 2013 for our manufacturing facility in Arnhem,
the Netherlands.
2015 2014 2013
Kg CO(2) Kg CO(2) Kg CO(2)
eq eq eq
Electricity, heat, steam and cooling
for own use - GROSS 3,135,167 2,800,294 2,292,045
Electricity, heat, steam and cooling
for own use NET (including Renewable
Energy Credits) 88,714 40,211 49,128
Combustion of fuel & operation of
production facility (MP4), in Arnhem,
the Netherlands 2,939,167 2,263,107 2,194,196
TOTAL - GROSS 6,074,334 5,063,401 4,486,241
TOTAL - NET (including Renewable
Energy Credits) 3,027,882 2,303,318 2,243,324
Chosenintensitymeasurement:EmissionspercubicmeterAccoyaproduced-GROSS 178 210 303
Chosen intensity measurement: Emissions
per cubic meter Accoya produced -
NET (including Renewable Energy Credits) 89 95 151
Notes:
- Due to unavailability of data, GHG emissions related to our
offices and staff travel are not included. Emissions have been
calculated following the GHG Protocol - Corporate Accounting and
Reporting (revised edition) using the following databases: IPCC
2006 Guidelines for National Greenhouse Gas Inventories, 2007 IPCC
Fourth Assessment Report and Eco-Invent v3.
- Following Environmental Reporting Guidelines of Defra (2013),
carbon offsets due to e.g. purchase of Renewable Energy Credits may
be accounted for separately as a "NET" figure, while the original
electricity consumption figures are presented as a "GROSS"
figure.
- Following the same (Defra 2013) guidelines, the emissions
associated with our supply chain (inputs and outputs) are not
included in the figures above, for readers that are interested in
the supply chain related figures we refer to our publicly available
carbon footprint report:
http://www.accoya.com/wp-content/uploads/2013/09/Verco-Cradle-to-gate-carbon-footprint-update-2012.pdf.
Further details concerning the environmental impact of our
products as a whole are detailed in the Sustainability Report,
including an assessment of the overall life cycle of Accoya.
Directors
The Directors of the Company during the year and up to the date
of signing the financial statements were:
Gordon Campbell (Died, 26 April 2014)
Sean Christie (Appointed 27 November 2014)
Paul Clegg
Sue Farr (Appointed 27 November 2014)
Montague John 'Nick' Meyer
Hans Pauli
William Rudge
Patrick Shanley
Directors' indemnities
The Company maintains directors' and officers' liability
insurance which gives appropriate cover for legal action brought
against its Directors.
Employment policies
The Group operates an equal opportunities policy from
recruitment and selection, through training and development,
appraisal and promotion to retirement. It is our policy to promote
an environment free from discrimination, harassment and
victimisation, where everyone will receive equal treatment
regardless of gender, colour, ethnic or national origin,
disability, age, marital status or sexual orientation. All
decisions relating to employment practises will be objective, free
from bias and based solely upon work criteria and individual
merit.
17% of employees in the period were female. 10% of the senior
management team were female and one of the Board of Directors was
female.
Health and safety
Health and safety is the priority at all levels of the Group, in
particular taking into account the chemical industry in which
Accsys operates. Group companies have a responsibility to ensure
that all reasonable precautions are taken to provide and maintain
working conditions for employees and visitors alike, which are
safe, healthy and in compliance with statutory requirements and
appropriate codes of practice.
The avoidance of occupational accidents and illnesses is given a
high priority. Detailed policies and procedures are in place to
minimise risks and ensure appropriate action is understood in the
event of an incident. A dedicated health and safety officer is
retained at the Group's manufacturing facility.
Significant shareholdings
So far as the Company is aware (further to formal notification),
the following shareholders held legal or beneficial interests in
ordinary shares of the Company exceeding 3%:
-- Royal Bank of Canada 5.73%
-- OP-Pohjola Group Central Cooperative 5.55%
-- INEOS 5.43%
-- OP-Henderson Global Investors 5.16%
-- The London & Amsterdam Trust Company Limited 5.13%
-- Majedie UK Equity Fund 5.06%
-- FIL Limited (formerly known as Fidelity International Limited) 4.93%
-- Invesco Limited 4.87%
-- Saad Investments Company Limited 3.92%
-- Zurab Lysov 3.71%
There are no restrictions in respect of voting rights.
Going concern
The Directors have formed a judgement, at the time of approving
the financial statements, that there is a reasonable expectation
that the Group has access to adequate resources to continue in
operational existence for the next 12 months. Further details are
set out in Note 1 to these financial statements.
Corporate Governance
The company's statement on corporate governance can be found in
the corporate governance report on pages 17 to 18 of these
financial statements. The corporate governance report forms part of
this directors' report and is incorporated into it by
cross-reference
Disclosure of information to auditors
Each of the persons who is a Director at the date of the
approval of the Annual Report confirms that:
-- So far as the Director is aware, there is no relevant audit
information of which the Company's Auditors are unaware; and
-- The Director has taken all the steps that he ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's Auditors are
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their willingness to
continue in office as auditors and a resolution to re--appoint them
will be proposed at the annual general meeting.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- The Group financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Group.
-- The annual report includes a fair review of the development
and performance of the business and the financial position of the
Group and the parent Company, together with a description of the
principal risks and uncertainties that they face.
By order of the Board
Angus Dodwell
Company Secretary
15 June 2015
Accsys Technologies PLC
Corporate Governance
Details of the Company's corporate governance arrangements are
set out below. The Board of Directors acknowledges the importance
of the Principles set out in The UK Corporate Governance Code
issued by the Financial Reporting Council. Neither the 2010 or 2012
UK Corporate Governance Code are compulsory for AIM listed or
Euronext listed companies. The Board has applied the principles as
far as practicable and appropriate for a relatively small public
company.
The Board of Directors
During the period up until 26 April, the Board comprised a
Non-executive Chairman, two Non-executive Directors and three
Executive Directors. Gordon Campbell, the Non-executive Chairman in
the period, very sadly died on 26 April 2014. Patrick Shanley was
appointed Chairman and a review of the composition of the Board was
undertaken. On 20 November 2014 Patrick was confirmed as
Non-executive Chairman and on 27 November Sean Christie and Sue
Farr were appointed as Non-executive Directors.
The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the framework
of internal controls. To enable the Board to discharge its duties,
all Directors receive appropriate and timely information. Briefing
papers are distributed to all Directors in advance of Board
meetings. All Directors have access to the advice and services of
the Company Secretary. The appointment and removal of the Company
Secretary is a matter for the Board as a whole. In addition,
procedures are in place to enable the Directors to obtain
independent professional advice in the furtherance of their duties,
if necessary, at the Company's expense.
During the year, all serving Directors attended the quarterly
Board meetings that were held. In addition to the scheduled
meetings there is frequent contact between all the Directors in
connection with the Company's business including Audit and
Nomination and Remuneration committee meetings which are held as
required, but as a minimum twice per annum.
Directors are subject to re-election by the shareholders at
Annual General Meetings. The Articles of Association provide that
Directors will be subject to re-election at the first opportunity
after their appointment and the Board submit to re-election at
intervals of three years.
Day to day operating decisions are made by the Senior Management
Team of which the Chief Executive Officer, the Chief Operating
Officer and Finance Director are members.
Audit Committee
The Audit Committee consisted of Patrick Shanley (Chairman),
Nick Meyer and up until 26 April 2014, Gordon Campbell. From 27
November Sean Christie and Sue Farr were also appointed and Sean
Christie was appointed Chairman of the Committee. The Audit
Committee meets at least twice a year and is responsible for
monitoring compliance with accounting and legal requirements and
for reviewing the annual and interim financial statements prior to
their submission for approval by the Board. The Committee also
discusses the scope of the audit and its findings and considers the
appointment and fees of the external auditors. The Audit Committee
continues to believe that it is not currently appropriate for the
Company to maintain a dedicated internal audit function due to its
size.
The Audit Committee considers the independence and objectivity
of the external auditors on an annual basis, with particular regard
to non-audit services. The non-audit fees are considered by the
Board not to affect the independence or objectivity of the
auditors. The Audit Committee monitors such costs in the context of
the audit fee for the period, ensuring that the value of non-audit
service does not increase to a level where it could affect the
auditors' objectivity and independence. The Board also receives an
annual confirmation of independence from the auditors.
Nominations & Remuneration Committee
The Nominations and Remuneration Committee consists of Nick
Meyer (Chairman), Patrick Shanley and, until April 2014, Gordon
Campbell. Sean Christie and Sue Farr were appointed on 27 November.
The Committee's role is to consider and approve the nomination of
Directors and the remuneration and benefits of the Executive
Directors, including the award of share options and bonus share
awards. In framing the Company's remuneration policy, the
Nominations & Remuneration Committee has given full
consideration to Section D of The UK Corporate Governance Code.
Internal Financial Control
The Board is responsible for establishing and maintaining the
Company's system of internal financial control and places
importance on maintaining a strong control environment. The key
procedures which the Directors have established with a view to
providing effective internal financial control are as follows:
-- The Company's organisational structure has clear lines of responsibility;
-- The Company prepares a comprehensive annual budget that is
approved by the Board. Monthly results are reported against the
budget and variances are closely monitored by the Directors;
and
-- The Board is responsible for identifying the major business
risks faced by the Company and for determining the appropriate
courses of action to manage those risks.
The Directors recognise, however, that such a system of internal
financial control can only provide reasonable, not absolute,
assurance against material misstatement or loss.
Relations with shareholders
Communications with shareholders are given high priority.
There is regular dialogue with shareholders including
presentations after the Company's preliminary announcement of the
year-end results and six monthly results. The Board uses the Annual
General Meeting to communicate with investors and welcomes their
participation. The Chairman aims to ensure that the Directors are
available at Annual General Meetings to answer questions.
Directors' attendance record
The attendance of individual Directors at meetings of the Board
and its committees in the year under review was as follows:
Nominations
& Remuneration
Board Audit Committee Committee
Number of meetings Attended(1) Serving Attended Serving Attended Serving
Sean Christie 2 2 1 - 1 -
Paul Clegg 11 13 2 - 3 -
Sue Farr 2 2 1 - 1 -
Montague John
'Nick' Meyer 8 13 2 2 3 3
Hans Pauli 11 13 2 - 1 -
Patrick Shanley 9 13 2 2 3 3
William Rudge 11 13 2 - 1 -
Whilst all Directors are not members of the Board Committees
they attend by invitation.
Figures in the left hand column denote the number of meetings
attended and figures in the right hand column denote the number of
meetings held whilst the individual held office.
Notes
1 A number of board committee meetings were held in the year in
addition to the scheduled board meetings in order to address
certain routine matters such as the issue of shares in respect of
the Employee Share Scheme.
Accsys Technologies PLC
Statement of Directors' responsibilities
Directors' responsibilities
The Directors are responsible for preparing the Annual Report,
the Remuneration Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, and the parent company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the company and of
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether IFRSs as adopted by the European Union and
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the Group and
parent company financial statements respectively;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and the Group and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Accsys Technologies PLC
Consolidated statement of comprehensive income for the year
ended 31 March 2015
2015 2015 2015 2014 2014 2014
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Exceptional Exceptional
Before items Before items
exceptional Note 4 exceptional Note
Note items Total items 4 Total
(Restated) (Restated)
Accoya(R) wood revenue 40,661 - 40,661 29,293 - 29,293
Licence revenue 389 - 389 1,134 - 1,134
Other revenue 5,027 - 5,027 3,085 - 3,085
----------------------------- ----- ------------- ------------ ---------- ------------- ------------ ----------
Total revenue 2 46,077 - 46,077 33,512 - 33,512
Total cost of sales (33,842) - (33,842) (25,753) - (25,753)
Gross profit 12,235 - 12,235 7,759 - 7,759
Other operating costs 3 (15,985) (2,937) (18,922) (14,247) (726) (14,973)
Operating loss 7 (3,750) (2,937) (6,687) (6,488) (726) (7,214)
Share of joint venture
loss 8 (1,098) - (1,098) (905) - (905)
Gain on acquisition of
subsidiary 4 - 267 267 - - -
Finance income 9 73 - 73 155 - 155
Finance expense 10 (208) - (208) (226) - (226)
Loss before taxation (4,983) (2,670) (7,653) (7,464) (726) (8,190)
Tax charge 11 (607) - (607) (699) - (699)
Loss for the year (5,590) (2,670) (8,260) (8,163) (726) (8,889)
============= ============ ========== ============= ============ ==========
158 - 158 (36) - (36)
Gain/(Loss) arising on
translation of foreign
operations, which could
subsequently be reclassified
into profit or loss
Total comprehensive loss
for the year
attributable to owners
of the parent (5,432) (2,670) (8,102) (8,199) (726) (8,925)
============= ============ ========== ============= ============ ==========
Basic and diluted loss
per ordinary share 13 EUR(0.06) EUR(0.09) EUR(0.09) EUR(0.10)
The comparative figures for the year ended 31 March 2014 have
been restated to reflect the exceptional costs (see note 4).
The notes on pages 24 to 49 form part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of financial position at 31 March
2015
Registered Company 05534340
Note 2015 2014
EUR'000 EUR'000
Non-current assets
Intangible assets 15 10,014 8,333
Investment in joint venture 8 - 340
Property, plant and equipment 16 19,548 20,740
Available for sale investments 17 - -
29,562 29,413
---------- ----------
Current assets
Inventories 20 7,894 6,053
Trade and other receivables 21 4,998 4,477
Cash and cash equivalents 10,786 15,185
Corporation tax 388 446
24,066 26,161
---------- ----------
Current liabilities
Trade and other payables 22 (9,625) (5,557)
Obligation under finance lease 26 (264) (264)
Corporation tax (812) -
(10,701) (5,821)
---------- ----------
Net current assets 13,365 20,340
Non-current liabilities
Obligation under finance lease 26 (1,799) (1,871)
(1,799) (1,871)
---------- ----------
Net assets 41,128 47,882
========== ==========
Equity and reserves
Share capital - Ordinary shares 23 4,440 4,392
Share premium account 128,714 128,648
Capital redemption reserve 148 148
Warrants reserve - 235
Merger reserve 106,707 106,707
Accumulated loss (199,022) (192,223)
Own shares (39) (47)
Foreign currency translation reserve 180 22
Total equity 41,128 47,882
========== ==========
The financial statements on pages 20 to 49 were approved by the
Board and authorised for issue on 15(th) June 2015, and signed on
its behalf by
Paul Clegg
William Rudge Directors
The notes on pages 24 to 49 form part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of changes in equity for the year ended
31 March 2015
Foreign
Capital currency
Share redemp- trans-
capital Share tion Warrant Merger Own lation Retained
Ordinary premium reserve reserve reserve Shares reserve earnings Total
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
Balance at
31 March 2013 4,332 128,587 148 235 106,707 (39) 58 (184,511) 55,518
========== ========= ========= ========= ========= ======== ========== ========== ========
Total
comprehensive
income/(expense)
for the period - - - - - - (36) (8,889) (8,925)
Share based
payments - - - - - - - 1,177 1,177
Shares issued 60 - - - - (8) - - 52
Premium on shares
issued - 60 - - - - - - 60
Share Warrants
issued - - - - - - - - -
Balance at
31 March 2014 4,392 128,648 148 235 106,707 (47) 22 (192,223) 47,882
========== ========= ========= ========= ========= ======== ========== ========== ========
Total
comprehensive
income/(expense)
for the period - - - - - - 158 (8,260) (8,102)
Expiry of
warrants - - - (235) - - - 235 -
Share based
payments - - - - - - - 1,226 1,226
Shares issued 48 - - - - 8 - - 56
Premium on shares
issued - 66 - - - - - - 66
Balance at
31 March 2015 4,440 128,714 148 - 106,707 (39) 180 (199,022) 41,128
========== ========= ========= ========= ========= ======== ========== ========== ========
Share capital is the amount subscribed for shares at nominal
value (note 23).
Share premium account represents the excess of the amount
subscribed for share capital over the nominal value of these
shares, net of share issue expenses. Share issue expenses comprise
the costs in respect of the issue by the Company of new shares.
Capital redemption reserve represents the amounts transferred
from share capital on redemption of deferred shares.
Merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
Own shares represents 783,597 shares issued to an Employee
Benefit Trust at nominal value on 11 August 2014. These shares
shall vest if the employees, including the Executive Directors,
remain in employment with the Company to the vesting date, being 1
July 2015 (subject to certain other provisions including
good-leaver, take-over and committee discretion provisions). (note
14).
On 31 March 2015, Accsys agreed to acquire the remaining 50%
equity in Tricoya Technologies Limited from Ineos. As a result of
this agreement and the termination of the joint venture agreement,
all of the warrant instruments which had been executed in 2012 in
favour of Ineos lapsed.
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 on pages 24 to 49 form part of these financial
statements.
Accsys Technologies PLC
Consolidated statement of cash flow for the year ended 31 March
2015
2015 2014
EUR'000 EUR'000
Loss before taxation (7,653) (8,190)
Adjustments for:
Amortisation of intangible assets 375 352
Depreciation of land, property, plant and
equipment 2,100 2,024
Recognition of reduction of investment in
joint venture 1,172 922
Net loss/(gain) on disposal of property,
plant and equipment - 77
Net finance expense 135 71
Equity-settled share-based payment expenses 1,226 1,177
Gain on acquisition of subsidiary (267) -
Cash flows from operating activities before
changes in working capital (2,912) (3,567)
Increase in trade and other receivables (1,566) (253)
Increase in deferred income 1,556 -
(Increase) in inventories (1,860) (1,194)
Increase in trade and other payables 909 1,757
Net cash used in operating activities before
tax* (3,873) (3,257)
Tax received 263 344
Net cash flows used in operating activities (3,610) (2,913)
======== ========
Cash flows from investing activities
Interest received 70 124
Expenditure on capitalised internal development (201) (459)
Purchase of property, plant and equipment (907) (572)
Purchase of intangible assets - (23)
Investments in joint ventures (1,000) (1,200)
Cash generated in acquisition of subsidiary,
net of consideration 1,338 -
Net cash used in investing activities (700) (2,130)
======== ========
Cash flows from financing activities
Interest paid (208) (226)
Repayment of finance lease (72) (54)
Proceeds from issue of share capital 123 70
Net cash used in financing activities (157) (210)
======== ========
Net decrease in cash and cash equivalents (4,467) (5,253)
Effect of exchange rate changes on cash
and cash equivalents 68 (29)
Opening cash and cash equivalents 15,185 20,467
Closing cash and cash equivalents 10,786 15,185
======== ========
*Note: Cash out-flows from operating activities after changes in
working capital included EUR3,159,000 in respect of Exceptional
Costs (2014: EUR498,000)
The notes on pages 24 to 49 form part of these financial
statements.
Accsys Technologies PLC
Notes to the financial statements for the year ending 31 March
2015
1. Accounting Policies
General information
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for the
periods ended 31 March 2015 or 31 March 2014. Statutory accounts
for the period ended 31 March 2014 have been filed with the
Registrar of Companies and those for the period ended 31 March 2015
will be delivered to the Registrar in due course; both have been
reported on by the auditors. The auditors' report on the Annual
Report and Financial Statements for the period ended 31 March 2014
was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The auditors' report on the Annual Report and Financial
Statements for the period ended 31 March 2015 is unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Basis of accounting
The Group's financial statements have been prepared under the
historical cost convention (except for certain financial
instruments and equity investments which are measured at fair
value), in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards
Board as endorsed by the European Union, interpretations issued by
the IFRS Interpretations Committee (IFRS IC) and with those parts
of the Companies Act 2006 applicable to companies preparing their
financial statements under adopted IFRS. The Company has elected to
prepare its parent company financial statements in accordance with
UK Generally Accepted Accounting Practice (UK GAAP).
Going Concern
The financial statements are prepared on a going concern basis,
which assumes that the Group will continue in operational existence
for the foreseeable future, and at least 12 months from the date
these financial statements are approved.
As part of the Group's going concern review, the Directors have
reviewed the Group's trading forecasts and working capital
requirements for the foreseeable future. These forecasts indicate
that, in order to continue as a going concern, the Group is
dependent on the achievement of certain operating performance
measures relating to the production and sales of Accoya(R) wood
from the plant in Arnhem and the collection of on-going working
capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and
performance measures and believe that appropriate controls and
procedures are in place or will be in place to make sure that these
are met. The Directors believe that while some uncertainty
inherently remains in achieving the budget, in particular in
relation to market conditions outside of the Group's control, that
there are a sufficient number of alternative actions and measures
that can be taken in order to achieve the Group's medium and long
term objectives.
Therefore the Directors believe that the going concern basis is
the most appropriate on which to prepare the financial
statements.
Changes in accounting policies
No new accounting standards, amendments or interpretations have
been adopted in the period which have any impact on these financial
statements other than as noted below:
Exceptional Items
Exceptional items are events or transactions that fall outside
the ordinary activities of the Group and which by virtue of their
size or incidence, have been separately disclosed in order to
improve a reader's understanding of the financial statements. These
include items relating to the restructuring of a significant part
of the Group, impairment losses (or the reversal of previously
recorded exceptional impairments), expenditure relating to the
integration and implementation of significant acquisitions and
other one-off events or transactions. See note 4 for details of
exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Group as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirer's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected
prior to transition to IFRS, were accounted for using the merger
method of accounting. Under this method, assets and liabilities are
included in the consolidation at their book values, not fair
values, and any differences between the cost of investment and net
assets acquired were taken to the merger reserve. The majority of
the merger reserve arose from a corporate restructuring in the year
ended 31 March 2006 which introduced Accsys Technologies PLC as the
new holding company.
Joint ventures
A jointly controlled entity is an entity in which the Group
holds a long term interest and shares joint control over strategic,
financial and operating decisions with one or more other ventures
under a contractual arrangement. The Group's share of the assets,
liabilities, income, expenditure and cash flows of such jointly
controlled entities are accounted for using the equity method. The
equity method records the Group's share of the results of the joint
venture entity on a separate line in the Group's financial
statements.
The total carrying values of investments in joint ventures
represent the cost of each investment including the carrying value
of any goodwill, the share of post-acquisition retained earnings,
any other movements in reserves and any long term debt interests
which in substance form part of the Group's net investment. The
carrying values of joint ventures are reviewed on a regular basis
and if an impairment in value has occurred, the carrying value is
impaired in the period in which the relevant circumstances are
identified. The Group's share of a joint venture's losses in excess
of its interest in that associate is not recognised unless the
Group has an obligation to fund such losses.
Unrealised gains arising from transactions with associates are
eliminated against the investment to the extent of the Group's
interest in the investee. Unrealised losses are eliminated in the
same way, but only to the extent that there is no evidence of
impairment.
Revenue recognition
Revenue is measured at the fair value of the consideration
receivable. Revenue is recognised to the extent that it is probable
that the economic benefit will flow to the Group and that the
revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is
recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the
significant risks and rewards of ownership of the goods have been
passed to the buyer, the timing of which is dependent on the
particular shipment terms. When a customer provides untreated wood
to be processed by the Group in order to produce Accoya(R) ,
revenue is recognised when the Group's obligations under the
relevant customer contract have been substantially completed, which
is before the finished Accoya(R) has been collected by the
customer. Manufacturing revenue includes the sale of Accoya(R) wood
and other revenue, principally relating to the sale of acetic
acid.
Licence fee and Marketing income
Licence fee and marketing income is recognised over the period
of the relevant agreements according to the specific terms of each
agreement or the quantities and/or values of the licensed product
sold. The accounting policy for the recognition of licence fees is
based upon an assessment of the work required before the licence is
signed and subsequently during the design, construction and
commissioning of the licensees' plant, with an appropriate
proportion of the fee recognised upon signing and the balance
recognised as the project progresses to completion. Marketing
revenue when the company acts as principal is recognised based on
the actual work completed in the period. The amount of any cash or
billings received but not recognised as income is included in the
financial statements as deferred income and shown as a
liability.
Finance income
Interest accrues using the effective interest method, i.e. the
rate that discounts estimated future cash receipts through the
expected life of the financial instrument to the net carrying
amount of the financial asset.
Finance expense
Finance expenses include the fees associated with the Group's
credit facilities which are expensed over the period which the
Group has access to the facilities.
Finance expenses also include an allocation of finance charges
in respect of the sale and leaseback of the Arnhem land and
buildings accounted for as a finance lease. The total finance
charge (calculated as the difference between the total minimum
lease payments and the liability at the inception of the lease) is
allocated over the life of the lease using the sum-of-digits
method.
Share based payments
The Company awards share options and nil cost options to acquire
shares of the Company to certain Directors and employees. The
Company also awards bonuses to certain Directors and employees in
the form of the award of deferred shares of the Company.
In addition the Company has established an Employee Share
Participation Plan under which employees subscribe for new shares
which are held by a trust for the benefit of the subscribing
employees. The Shares are released to employees after one year,
together with an additional, matching share on a 1 for 1 basis.
The fair value of options, deferred shares and matching shares
granted are recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and is
charged to the statement of comprehensive income over the vesting
period during which the employees become unconditionally entitled
to the options or shares.
The fair value of share options granted is measured using a
modified Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of share options that vest only where vesting is dependent upon the
satisfaction of service and non-market vesting conditions.
Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options which eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Dividends
Equity dividends are recognised when they become legally
payable. Interim equity dividends are recognised when paid. Final
equity dividends are recognised when approved by the shareholders
at an annual general meeting.
Pensions
The Group contributes to certain defined contribution pension
and employee benefit schemes on behalf of its employees. These
costs are charged to the statement of comprehensive income on an
accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the balance sheet date together with any adjustment to tax payable
in respect of previous years. Current tax includes the expected
impact of claims submitted by the Group to tax authorities in
respect of enhanced tax relief for expenditure on research and
development.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for:
-- the initial recognition of goodwill,
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business
combination, and
-- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Recognition of deferred tax
assets is restricted to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (the functional currency). For the purposes of
the consolidated financial statements, the results and financial
position of each Group company are expressed in Euro, which is the
functional currency of the parent Company, and the presentation
currency of the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currencies are recognised at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average monthly exchange rates prevailing in the month in which the
transaction took place. Exchange differences arising, if any, are
recognised in other comprehensive income and the foreign currency
translation reserve.
Government grants
Government grants are recognised at their fair value where there
is reasonable assurance that the grant will be received and the
Group will comply with the attached conditions. When the grant
relates to an expense item, it is recognised as income over the
period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. Where the grant relates to
an asset they are credited to a deferred income account and
released to the statement of comprehensive income over the expected
useful life of the relevant asset on a straight line basis.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration paid
and the fair value of the identifiable assets and liabilities
acquired. It is capitalised, and is subject to annual impairment
reviews by the Directors. Any impairment arising is charged to the
statement of comprehensive income. Where the fair value of the
identifiable assets and liabilities acquired is greater than the
fair value of consideration paid, the resulting amount is treated
as a gain on a bargain purchase and has been recognised in the
income statement.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel processes and products, are shown in the
financial statements at cost less accumulated amortisation and any
amounts by which the carrying value is assessed during an annual
review to have been impaired. At present, the useful economic life
of the intellectual property is considered to be 20 years.
Internal development costs are incurred as part of the Group's
activities including new processes, process improvements,
identifying new species and improving the Group's existing
products. Research costs are expensed as incurred. Development
costs are capitalised when all of the criteria set out in IAS 38
'Intangible Assets' (including criteria concerning technical
feasibility, ability and intention to use or sell, ability to
generate future economic benefits, ability to complete the
development and ability to reliably measure the expenditure) have
been met. These internal development costs are amortised on a
straight line basis over their useful economic life, between 10 and
20 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment charged. Cost includes
the original purchase price of the asset as well as costs of
bringing the asset to the working condition and location of its
intended use. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset, except
freehold land, over its expected useful life on a straight line
basis, as follows:
Plant and machinery These assets comprise pilot plants and
production facilities. These facilities are depreciated from the
date they become available for use at rates applicable to the asset
lives expected for each class of asset, with rates between 5% and
20%.
Office equipment Between 20% and 50%.
Leased land and buildings Land held under a finance lease is
depreciated over the life of the lease.
Freehold land Freehold land is not depreciated.
Impairment of non-financial assets
The carrying amount of the non-current non-financial assets of
the Group is compared to the recoverable amount of the assets
whenever events or changes in circumstances indicate that the net
book value may not be recoverable, or in the case of goodwill,
annually. The recoverable amount is the higher of value in use and
the fair value less cost to sell. In assessing the value in use,
the expected future cash flows from the assets are determined by
applying a discount rate to the anticipated pre-tax future cash
flows. An impairment charge is recognised in the statement of
comprehensive income to the extent that the carrying amount exceeds
the assets' recoverable amount. The revised carrying amounts are
amortised or depreciated in line with Group accounting policies. A
previously recognised impairment loss, other than on goodwill, is
reversed if the recoverable amount increases as a result of a
reversal of the conditions that originally resulted in the
impairment. This reversal is recognised in the statement of
comprehensive income and is limited to the carrying amount that
would have been determined, net of depreciation, had no impairment
loss been recognised in prior years. Assets are grouped at the
lowest levels for which there are separately identifiable cash
flows (cash generating units) for purposes of assessing
impairment.
Leases
Operating lease payments are recognised as an expense in the
statement of comprehensive income on a straight-line basis over the
lease term.
Assets held under finance leases are recognised as assets of the
Group at their fair value or, if lower, at the present value of the
minimum lease payments, each determined at the inception of the
lease. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are
apportioned between finance expenses and reduction of lease
obligation so as to achieve a constant rate of interest on the
remaining balance of the liability.
Inventories
Raw materials, which consist of unprocessed timber and chemicals
used in manufacturing operations are valued at the lower of cost
and net realisable value. The basis on which cost is derived is a
first-in, first-out basis.
Finished goods, comprising processed timber, are stated at the
lower of weighted average cost of production or net realisable
value. Costs include direct materials, direct labour costs and
production overheads (excluding the depreciation/depletion of
relevant property and plant and equipment) absorbed at an
appropriate level of capacity utilisation. Net realisable value
represents the estimated selling price less all expected costs to
completion and costs to be incurred in selling and
distribution.
Financial assets
Financial assets are classified as cash and cash equivalents,
available for sale investments and loans and receivables, depending
on the purpose for which the asset was acquired. When financial
assets are recognised initially, they are measured at fair value
plus, in the case of investments not at fair value, through profit
or loss directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted
shares held by the Group are classified as available for sale
investments and are stated at fair value. Gains and losses arising
from changes in fair value are recognised directly in equity, with
the exception of impairment losses which are recognised directly in
profit or loss. Where an investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously recognised
in the profit or loss in the year. Where it is not possible to
obtain a reliable fair value, these investments are held at cost
less provision for impairment.
Loans and receivables, which comprise non-derivative financial
assets with fixed and determinable payments that are not quoted on
an active market are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Trade and other receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. They
arise principally from the provision of goods and services to
customers. Trade receivables are initially recognised at fair value
less an allowance for any uncollectible amounts. A provision for
impairment is made when there is objective evidence that the Group
will not be able to collect debts. Bad debts are written off when
identified.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand and short-term deposits,
including liquidity funds, with an original maturity of three
months or less. For the purpose of the statement of consolidated
cash flow, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank
overdrafts.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially
recognised at fair value and subsequently carried at amortised cost
using the effective interest method.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's shares are classified as equity
instruments.
Accounting estimates and judgements
In preparing the Consolidated Financial Statements, management
has to make judgments on how to apply the Group's accounting
policies and make estimates about the future. The critical
judgments that have been made in arriving at the amounts recognised
in the Consolidated Financial Statements and the key sources of
estimation and uncertainty that have a significant risk of causing
a material adjustment to the carrying value of assets and
liabilities in the next financial year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of
licence fee income over the period of the agreement and is
satisfied that the recognition of such revenue is appropriate. The
recognition of licence fees is based upon an assessment of the work
required before the licence is signed and subsequently during the
construction and commissioning of the licensees' plant, with an
appropriate proportion of the fee recognised upon signing and the
balance recognised as the project progresses to completion. The
Group also considers the recoverability of amounts before
recognising them as income.
Goodwill
The Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated above.
The recoverable amounts of cash-generating units have been
determined based on value in use calculations. These calculations
require the use of judgments in relation to discount rates and
future forecasts. (See note 15). The recoverability of these
balances is dependent upon the Group's existing licensees
progressing with the completion of their manufacturing facilities
or the signing of new licence or consortium agreements. While the
scope and timing of the production facilities to be built under the
Group's existing and future agreements remains uncertain, the
Directors remain confident that revenue from either existing
licensees or under new license or consortium agreements will be
generated, demonstrating the recoverability of these balances.
Intellectual property rights and property, plant and
equipment
The Group tests the carrying amount of the intellectual property
rights and property, plant and equipment whenever events or changes
in circumstances indicate that the net book value may not be
recoverable. These calculations require the use of estimates in
respect of future cash-flows from the assets by applying a discount
rate to the anticipated pre-tax future cash-flows. The Group also
reviews the estimated useful lives at the end of each annual
reporting period. (See note 15 & 16). The price of the
Accoya(R) wood and the raw materials and other inputs vary
according to market conditions outside of the Group's control.
Should the price of the raw materials increase greater than the
sales price or in a way which no longer makes as Accoya(R)
competitive, then the carrying value of the property, plant and
equipment or IPR may be in doubt and become impaired. The Directors
consider that the current market and best estimates of future
prices mean that this risk is limited.
Inventories
The Group reviews the net realisable value of, and demand for,
its inventory on a monthly basis to provide assurance that recorded
inventory is stated at the lower of cost and net realisable value
after taking into account the age and condition of inventory. (See
note 20).
Available for sale investments
The Group has an investment in unlisted equity shares carried at
nil value. The investment is valued at cost less any impairment as
a reliable fair value cannot be obtained since there is no active
market for the shares and there is currently uncertainty around the
future funding of the business. The Group makes appropriate
enquiries and considers all of the information available to it in
order to assess whether any impairment has occurred. (See note
17).
New standards and interpretations in issue but not yet effective
at the date of authorisation of these financial statements:
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU).
-- IFRS 9 'Financial Instruments'
-- IFRS 10 'Consolidated Financial Statements'
-- IFRS 12 'Disclosure of Interests in Other Entities'
-- IAS 27 (amendments) 'Separate financial statements'
-- IAS 28 (amendments) 'Associates and joint ventures'
-- IAS 32 (amendments) 'Financial instruments presentation'
-- IAS 36 (amendments) 'Recoverable Amount Disclosures for Non-Financial Assets'
The Directors do not expect that the adoption of the Standards
and Interpretations listed above will have a material impact on the
financial statements of the Group in future periods.
2. Segmental reporting
The Group's business is the development, commercialisation and
licensing of proprietary technology for the manufacture of
Accoya(R) wood, Tricoya(R) wood elements and related acetylation
technologies. Segmental reporting is divided between licensing and
business development activities, the manufacturing and sale of
Accoya(R) and research and development activities.
Licensing, Management
Result by Segment: and Business Development
2015 2014
EUR'000 EUR'000
Revenue 1,051 1,134
Cost of sales - -
Gross profit 1,051 1,134
Other operating
costs (8,527) (6,954)
Exceptional Items (2,937) (726)
---------------------------- ------------- -------------
Other operating
costs (11,464) (7,680)
Loss from operations (10,413) (6,546)
Loss from Operations (10,413) (6,546)
Depreciation and
amortisation 430 412
------------- -------------
EBITDA (9,983) (6,134)
---------------------------- ------------- -------------
Manufacturing
Revenue 45,026 32,378
Cost of sales (33,842) (25,753)
Gross profit 11,184 6,625
Other operating
costs (6,253) (6,142)
Profit/(loss) from
operations 4,931 483
Profit/(loss) from
Operations 4,931 483
Depreciation and
amortisation 2,004 1,910
------------- -------------
EBITDA 6,935 2,393
---------------------------- ------------- -------------
Research and Development
Revenue - -
Cost of sales - -
Gross result - -
Other operating
costs (1,205) (1,151)
Loss from operations (1,205) (1,151)
Loss from Operations (1,205) (1,151)
Depreciation and
amortisation 41 54
------------- -------------
EBITDA (1,164) (1,097)
---------------------------- ------------- -------------
Total
Revenue 46,077 33,512
Cost of sales (33,842) (25,753)
Gross profit 12,235 7,759
Other operating
costs (15,985) (14,247)
Exceptional Items (2,937) (726)
---------------------------- ------------- -------------
Other operating
costs (18,922) (14,973)
Loss from operations (6,687) (7,214)
Share of joint venture
loss (1,098) (905)
Finance income 73 155
Finance expense (208) (226)
Exceptional gain
on acquisition of
subsidiary 267 -
Loss before taxation (7,653) (8,190)
Loss from Operations (6,687) (7,214)
Share of joint venture
loss (1,098) (905)
Depreciation and
amortsation 2,475 2,377
------------- -------------
EBITDA (5,310) (5,742)
------------- -------------
EBITDA (before exceptional
items) (2,372) (5,017)
---------------------------- ------------- -------------
Licensing, Management and Business Development
Revenue is attributable to fees from licensees of the Group's
technology to third parties.
Other operating costs include all remaining costs unless they
are directly attributable to Manufacturing or Research and
Development. This includes marketing, business development,
management and the majority of the Group's administration costs
including the head office in Windsor as well as the US office.
Headcount = 21 (2014: 21)
Manufacturing
Revenue includes the sale of Accoya(R) and other revenue,
principally relating to the sale of acetic acid.
All costs of sales are allocated against manufacturing
activities in Arnhem unless they can be directly attributable to a
licensee.
Other operating costs include depreciation of the Arnhem
property, plant and equipment together will all other costs
associated with the operation of the Arnhem manufacturing site,
including directly attributable administration costs.
Headcount = 77 (2014: 67)
Research and Development
Costs are associated with various R&D activities associated
with Accoya(R) and processes. The costs are reported excluding
EUR201,000 of costs which have been capitalised in accordance with
IFRS. (2014: EUR455,000).
Headcount = 13 (2014: 13)
Assets and liabilities cannot be readily allocated to the three
segments and therefore no additional segmental information has been
disclosed.
Analysis of Revenue by geographical
area of customers: 2015 2014
EUR'000 EUR'000
UK and Ireland 17,760 11,300
Benelux 8,431 8,822
Rest of Europe 10,704 7,501
Americas 5,522 3,377
Asia-Pacific 3,151 1,901
Rest of World 509 612
46,077 33,512
======== ========
Revenue generated from two customers exceeded 10% of Group
revenue of 2015, represented by 34% and 31% respectively, of the
revenue from the United Kingdom and Ireland and relates to
manufacturing revenue. Revenue generated from one single customer
exceeded 10% of Group revenue in 2014. (43% of United Kingdom).
Analysis of non-current assets (Other than
financial assets and deferred tax): 2015 2014
EUR'000 EUR'000
UK 5,803 4,491
Other countries 19,528 20,690
Un-allocated - Goodwill 4,231 4,231
29,562 29,412
======== ========
The segmental assets in the current year and the previous year
were predominantly held in Europe. Additions to property, plant,
equipment and intangible assets in the current year and the
previous year were predominantly incurred in Europe. There are no
significant intersegment revenues.
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 and the offices in Dallas and Windsor:
2015 2014
EUR'000 EUR'000
Sales and marketing 3,191 2,882
Research and development 1,205 1,151
Depreciation and amortisation 2,475 2,377
Other operating costs 2,395 2,243
Administration costs 6,719 5,594
Exceptional Items 2,937 726
18,922 14,973
======== ========
During the period, EUR201,000 (2014: EUR459,000) of development
costs were capitalised and included in intangible fixed assets.
This includes nil in respect of the Accoya(R) licence Process
Design Package (2014: EUR152,000).
Administration costs also include the costs associated with the
Group's head office in Windsor, the US office in Dallas together
with business development and management costs.
Exceptional costs relate to the arbitration with Diamond Wood -
see note 4.
4. Exceptional items
On 25 July 2014 Accsys announced that the arbitration tribunal
(the "Tribunal") appointed in relation to the dispute between
Accsys and Diamond Wood China Limited ("Diamond Wood") had
delivered a 'First Partial Final Award' (the "Award").
In response to Diamond Wood's claim against Accsys, namely for
damages in excess of EUR140 million as previously published by
Diamond Wood, and for the continuation of the Licence Agreement,
the Tribunal ruled that Diamond Wood could only claim for limited
damages (if any) up to a maximum of EUR250,000. However, the
Tribunal also ruled that the licence agreement between the two
parties is to continue.
On 19 September 2014 Accsys announced that the Tribunal issued a
final award in respect of costs relating to the Ruling which are
payable to Diamond Wood, being approximately GBP1.6m.
The Exceptional item therefore includes EUR2.4m in respect of
the awards for damages and Diamond Wood's costs. In addition,
Accsys has incurred a further EUR0.5m in respect of its own legal
costs in the period. This is in addition to EUR0.7m incurred in the
previous financial year which has also been represented as an
exceptional item.
In addition there is also an exceptional item gain of EUR267,000
recorded in the period relating to the acquisition of the remaining
50% of Tricoya Technologies Limited - see note 8.
5. Employees
2015 2014
EUR'000 EUR'000
Staff costs (including Directors)
consist of:
Wages and salaries 7,138 6,469
Social security costs 1,051 926
Other pension costs 516 434
Share based payments 1,427 1,177
10,131 9,006
======== ========
The average monthly number of employees, including Executive
Directors, during the year was as follows:
Number Number
Administration, research and engineering 67 67
Operating 44 34
111 101
======== =======
6. Directors' remuneration
2015 2014
EUR'000 EUR'000
Directors' remuneration consists
of:
Directors' emoluments 992 894
Company contributions to money purchase
pension schemes 50 47
1,042 941
================== ========
Compensation of key management personnel included the following
amounts:
2015 2014
Salary, Share
bonus based
and short payments
term benefits Pension charge Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Paul Clegg 403 31 482 916 826
Hans Pauli 266 12 154 432 393
William Rudge 179 7 83 269 232
848 50 719 1,617 1,451
=============== ======== ========== ======== ========
The Group made contributions to 3 (2014: 3) Directors' personal
pension plans.
7. Operating loss
2015 2014
EUR'000 EUR'000
This has been arrived at after
charging:
Staff costs 10,131 9,006
Legal costs - Diamond Wood
arbitration (note 4) 2,937 726
Depreciation of property,
plant and equipment 2,100 2,024
Amortisation of intangible
assets 375 352
Operating lease rentals 1,030 1,011
Foreign exchange (gains)/losses (31) 65
Research & Development (excluding
staff costs) 658 535
Loss on disposal of property,
plant and equipment - 77
Fees payable to the Company's auditors for the
audit of the Company's annual financial statements 72 63
Fees payable to the Company's auditors
for other services:
- audit of the Company's subsidiaries
pursuant to legislation 91 80
- audit related assurance
services 27 24
--------------- ---------------
Total audit and audit related
services: 190 167
- tax compliance services 71 53
- all other services 15 27
--------------- ---------------
Total tax and other services: 86 80
8. Joint venture and business combination
On 5 October 2012, Accsys entered into a 50:50 joint venture
with Ineos to exploit Accsys' intellectual property surrounding its
proprietary Tricoya(R) wood elements acetylation technology and
processes, which is expected to lead to the accelerated global
deployment of Tricoya. The company, Tricoya Technologies Limited
('TTL'), will develop and exploit Accsys' Tricoya technology for
use within MDF, particle board and wood plastic composites in a
worldwide panel products market estimated to be worth more than
EUR60 billion annually.
As part of the transaction, TTL was granted rights to exploit
Accsys' Tricoya(R) technology and also benefited from a licence of
any intellectual property held by Ineos that may assist the joint
venture in maximising the value of the Tricoya(R) proposition.
Results generated by TTL were to be shared between Accsys and Ineos
in a way that reflected each party's interest, which was 50% during
the period.
TTL has been accounted for during the period using the equity
method reflecting that it was a joint venture. On 31 March 2015,
Accsys agreed to acquire Ineos's 50% equity interest as part of
terms which included the termination of the joint venture agreement
and for consideration of EUR1. Therefore as at 31 March 2015,
Accsys owned 100% of the share capital of TTL and its balance sheet
has been fully consolidated.
The fair value of the assets and liabilities acquired was
determined to be the same as the book value held in TTL's own books
(as below) and no additional assets or liabilities were identified
in the business combination. A resulting gain of EUR267,000 has
been recorded in the period as a gain on acquisition of subsidiary
due to this bargain purchase, and is shown as an exceptional
item.
Income statement of TTL joint venture:
2015 2014
EUR'000 EUR'000
Revenue 483 153
Costs:
Staff costs 1,346 1,230
Research & development (excluding staff costs) 515 278
Intellectual Property 242 133
Sales & marketing 576 322
Joint venture loss 2,196 1,810
======== ========
Group share of joint venture loss 1,098 905
======== ========
Investment in joint venture at 1 April 340 62
Group share of loss reported (1,098) (905)
Less elimination of mark-up on recharged costs 29 (17)
Investments in joint venture 1,600 1,200
Disposal of investment in joint venture on acquisition (871) -
of investment in subsidiary
Carrying value of joint venture at 31 March - 340
======== ========
Tricoya Technologies Limited statement of financial position at
31 March 2015:
2015 2014
EUR'000 EUR'000
Non-current assets
Intangible assets 1,855 1,382
Current assets
Receivables due within one year 71 150
Cash and cash equivalents 1,338 499
1,409 649
-------- --------
Current liabilities
Trade and other payables (2,229) (1,302)
Net current assets (820) (653)
Net assets 1,035 729
======== ========
100% attributable to Accsys Technologies (2014:
50%) 1,035 365
Less elimination of mark-up on recharged costs 29 (17)
======== ========
Equity and reserves
Share capital 5,900 3,400
Accumulated loss (4,865) (2,671)
Total equity 1,035 729
======== ========
9. Finance income
2015 2014
EUR'000 EUR'000
Interest receivable on bank
and other deposits 73 155
10. Finance expense
2015 2014
EUR'000 EUR'000
Arnhem land sale and leaseback
finance charge 208 226
11. Tax expense
2015 2014
EUR'000 EUR'000
(a) Tax recognised in the statement of comprehensive
income comprises:
Current tax expense
UK Corporation tax on profits
for the year - -
Research and development tax credit
in respect of current year (190) (169)
(190) (169)
Overseas tax at rate of 15% 39 2
Overseas tax at rate of 25% 758 -
Deferred Tax
Utilisation of deferred tax
asset - 866
Total tax charge reported in the
statement of comprehensive income 607 699
================= ====================
2015 2014
EUR'000 EUR'000
(b) The tax credit for the period
is lower than the standard rate of
corporation tax in the UK (2015:
21%, 2014: 23%) due to:
Loss profit before tax (7,653) (8,190)
Expected tax credit at 21%
(2014 - 23%) (1,607) (1,884)
Expenses not deductible in
determining taxable profit 79 367
Under/(over) provision in
respect of prior years 802 (383)
Losses transferred to deferred tax
asset but not recognised 1,042 2,420
Effects of overseas taxation 109 67
Other temporary differences (8) (57)
Research and development tax credit
in respect of prior years (29) -
Research and development tax credit
in respect of current year 219 169
Total tax charge reported in the
statement of comprehensive income 607 699
================= ====================
12. Dividends Paid
2015 2014
EUR'000 EUR'000
Final Dividend EURNil (2014: EURNil)
per Ordinary share proposed
and paid during year relating to
the previous year's results - -
13. Loss per share
The calculation of loss per ordinary share is based on loss
after tax and the weighted average number of ordinary shares in
issue during the year.
Basic and diluted earnings per
share 2015 2015 2014 2014
Before Before
exceptional exceptional
items Total items Total
Weighted average number of Ordinary
shares in issue ('000) 88,538 88,538 87,482 87,482
Loss for the year (EUR'000) (5,590) (8,260) (8,163) (8,889)
Basic and diluted loss per share EUR(0.06) EUR(0.09) EUR(0.09) EUR(0.10)
============= ========== ============= ==========
Basic and diluted losses per share are based upon the same
figures. There are no dilutive share options as these would
increase the loss per share.
The weighted average number of shares has been represented for
all periods to take account of the 5 to 1 share consolidation which
became effective on 12(th) September 2014.
14. Share based payments
The group operates a number of share schemes which give rise to
a share based payment charge. During the prior period, the group
introduced a Long Term Incentive Plan ('LTIP') in order to reward
members of the senior management team and the executive directors.
As part of the award of nil costs options under the LTIP, the
recipients relinquished all share options that they held which had
been awarded under the 2005 and 2008 Share Option plans. Other
employees continue to hold options awarded under these earlier
schemes.
In addition, the group operates an Employee Share Participation
Plan, which is available to all employees, and also makes annual
awards under the Employee Benefit Trust. Details of all these
schemes are given below.
Options - total
The following figures take into account options awarded under
the LTIP in the period together with share options awarded in
previous years under the 2005 and 2008 Share Option schemes.
Outstanding options granted are as follows:
Weighted average
Number of outstanding remaining
contractual life,
options at 31 March in years
Date of grant 2015 2014 2015 2014
1 March 2005 - 269,265 - 0.9
28 March 2007 115,586 747,958 2 3
20 November 2007 48,444 242,236 2.6 3.6
18 June 2008 8,498 42,498 3.3 4.3
8 December 2008 37,110 206,821 3.7 4.7
27 July 2010 164,321 821,620 5.3 6.3
1 August 2011 160,000 800,000 6.3 7.3
19 September
2013 (LTIP) 4,278,630 21,393,185 8.5 9.5
Total 4,812,589 24,523,583 7.9 8.9
----------- ----------- --------- ---------
Movements in the weighted average values are as follows:
Weighted
average
exercise
price Number
Outstanding at
31 March 2013 EUR0.38 25,448,374
========= ======================
Granted during the year
- LTIP EUR 0.00 21,393,185
Cancellation of options
(in relation to LTIP) EUR 0.32 (22,281,145)
Forfeited during
the year EUR1.66 (36,831)
Outstanding at
31 March 2014 EUR0.10 24,523,583
========= ======================
Forfeited before 12 September
2014 EUR 0.97 (21,248)
Oustanding 11 September
2014 EUR 0.11 24,502,335
========= ======================
Adjustment for 12 September 2014
share consolidation EUR 0.45 (19,601,898)
Outstanding - after impact of 2014
share consolidation EUR 0.56 4,900,437
--------- ----------------------
Forfeited after 12 September
2014 EUR 9.15 (33,998)
Expired during
the year EUR1.60 (53,850)
Outstanding at
31 March 2015 EUR0.48 4,812,589
========= ======================
The exercise price of options outstanding at the end of the year
ranged between EURnil (for LTIP options) and EUR12.90 (2014: NIL
and EUR12.90) and their weighted average contractual life was 8.1
years (2014: 8.9 years).
Of the total number of options outstanding at the end of the
year, 77,057 (2014: 202,500) had vested and were exercisable at the
end of the year. No options were exercised in the current or
previous year.
Long Term Incentive Plan ('LTIP')
During the prior period, the group established a Long Term
Incentive Plan, the participants of which are key members of the
management team. The establishment of the LTIP was approved by the
shareholders at the AGM in September 2013.
A prerequisite of participation in the LTIP was for the
management team to agree to the cancellation of their entire
outstanding share
options, providing the Company with a 5% reduction in the level
of dilution to make the new awards. A cancellation was agreed as
the most appropriate action as it would focus the management team
on the new LTIP and not on historical awards or arrangements.
Details of the cancellation of the share options in the prior
period (previously awarded under the 2005 and 2008 Share Option
schemes) are set out further below.
LTIP overview
Under the LTIP, awards can be granted on a discretionary basis
to key members of the management team. During the prior period, an
initial 'one off' grant was made in order to focus the management
team on the growth of the Company over the next three years. Awards
were granted in the form of nil-cost options and consist of the
following 'elements':
Element Objective Description
-------- ------------------------ --------------------------------------------------
A Retention based In consideration to agreeing to the cancellation
award of the participant's existing options,
to lock-in executives a proportion of the new share award vests
who on continuity of employment over the next
have contributed three years.
to the To ensure there is no value shift to the
turnaround participants via the cancellation, this
element requires an additional three years
of services from the participant and will
be forfeited if the share price at the
end of the performance period is below
EUR0.65.
-------- ------------------------ --------------------------------------------------
B Performance based This element aligns the participant to
share the future success of the Company by linking
award the level of vesting to EBITDA and share
price growth against the constituents
of the MSCI Europe Index (or another other
broad based European index as deemed appropriate
by the Remuneration Committee).
-------- ------------------------ --------------------------------------------------
C Exceptional performance This element ensures that if significant
multiplier value is created for shareholders then
participants will be entitled to receive
an appropriate proportion of this value.
-------- ------------------------ --------------------------------------------------
Performance conditions
Awards granted under the LTIP are subject to continued
employment and satisfaction of the performance conditions.
Performance will be measured at the end of a three year performance
period for each Element.
Element A - Vesting is contingent upon continued employment for
three years and share price not falling below EUR0.65 at the end of
the performance period.
Element B - Measured against two equally weighted performance
conditions:
Threshold Target Maximum
-------------------- ----------------- ----------------- -----------------
EBITDA
(50% of Element
B) EUR0m EUR1.6m EUR4m
-------------------- ----------------- ----------------- -----------------
Share price growth Median of the 60th percentile Upper quartile
(50% of Element constituents of of the of the
B) the MSCI Europe constituents of constituents of
Index the MSCI the MSCI
Europe Index Europe Index
-------------------- ----------------- ----------------- -----------------
Vesting level(1) 25% 60% 100%
-------------------- ----------------- ----------------- -----------------
Notes:
1. Vesting is on a straight line basis between the respective
EBITDA and share price targets.
Element C - This element vests in full if the share price is at
or above EUR1.30 at the end of the performance period.
Awards made in prior period
Immediately following the establishment of the new LTIP in
September 2013, awards were made to members of the management team.
A total of 4,278,630 nil cost options were awarded. 1,593,331 were
allocated as Element A, 1,837,572 as Element B and 847,727 were
allocated as Element C. At the same time, a total of 4,456,229 of
old options were cancelled.
All recipients were still employed by the Group as at 31 March
2015.
Element A was designed to recognise the contribution made by
individuals to the turnaround of the Company and the cancellation
of the existing options was a prerequisite for participation in the
LTIP. The quantum of Element A for each participant was linked to
the expected value of the existing options which were cancelled
where there was a reasonable probability of pay out. As a result,
under IFRS 2, the award of Element A was accounted for as a
modification of the existing share options and as the award was
designed to avoid any transfer of value, the resulting share based
payment charge is the same as if the existing options had not been
cancelled.
Elements B and C have been accounted for as new awards with the
fair value calculated based on a modified Black-Scholes model
assuming inputs described below:
Element B
Element B (Share price
Element (EBITDA) growth) Element C
Grant date 19Sep13 19Sep13 19Sep13
Share price at grant
date (EUR) 0.70 0.70 0.70
Exercise price (EUR) 0.00 0.00 0.00
Expected life (years) 3 3 3
Contractual life (years) 10 10 10
Vesting conditions Exceptional
(Details set out above) EBITDA Share Price Multiplier
Risk free rate 0.48% 0.48% 0.48%
Expected volatility 40% 40% 40%
Expected dividend
yield 0% 0% 0%
Fair value of option EUR0.647 EUR0.388 EUR0.220
The figures in the table above have been adjusted to reflect the
5 for 1 share consolidation which became effective on 12 September
2014. No LTIP options vested in the period and no new awards were
made in the period.
2005 and 2008 Share Option schemes
The following share options awarded under the group's 2005 and
2008 Share Option schemes impacted the current or preceding
financial year;
Options granted on 1 March 2005 fully vested during 2011. These
options may be exercised until 30 March 2015. At 31 March 2015, nil
(2014: 53,850) of these options were outstanding with an exercise
price of EUR1.60.
Options granted on 28 March 2007 at an exercise price of EUR2.59
per Ordinary share vest to one third of the options granted upon
achievement of each of the following:
-- Cumulative EUR5 million licence income recognised under Group accounting policies
-- Cumulative EUR20 million revenue from sales of Accoya(R) wood
-- Announcement of annual Group distributable earnings exceeding EUR5 million
Once vested, these options may be exercised until 31 March 2017.
At 31 March 2015, 115,586 (2014: 149,584) of these options were
outstanding at an exercise price of EUR9.15.
Options granted on 20 November 2007 vest to one third of the
options granted upon achievement of each of the following:
-- Annual Accoya(R) wood production exceeds 23,000m(3) in a financial year
-- Annual Accoya(R) wood sales revenue exceeds EUR26 million in financial year
-- The second pair of reactors in the wood modification plant
are processing more than 25 batches per month
Once vested these options may be exercised until 20 November
2017. At 31 March 2015, 48,444 (2014: 48,444) of these options were
outstanding at an exercise price of EUR12.90.
Options granted on 18 June 2008 vest to one third of the options
granted upon achievement of each of the following:
-- Announcement of audited Annual Accoya(R) wood sales revenue
exceeds EUR20 million in financial year
-- Announcement of audited annual Group distributable earnings exceeding EUR15 million
-- Announcement of audited cumulative EUR75 million gross
licence revenue recognised under Group accounting policies
Once vested these options may be exercised until 18 June 2018.
At 31 March 2015, 8,498 (2014: 8,498) of these options were
outstanding at an exercise price of EUR9.90.
Options granted on 8 December 2008 vest to one third of the
options granted upon achievement of each of the following:
-- Announcement of audited Annual Accoya(R) wood sales revenue
exceeds EUR20 million in financial year
-- Announcement of audited annual Group distributable earnings exceeding EUR15 million
-- Announcement of audited Cumulative EUR75 million gross
licence revenue recognised under Group accounting policies
Once vested these options may be exercised until 8 December
2018. At 31 March 2015, 37,110 (2014: 41,359) of these options were
outstanding at an exercise price of EUR4.85.
Options granted on 27 July 2010 were partially exchanged in the
period for new awards issued under the LITP. 30% of the options
vest on achievement of median TSR. Once vested, these options may
be exercised until 27 July 2020. Full vesting of the options
granted occurs upon achievement of upper quartile TSR measured over
the three year period. At 31 March 2015, 164,321 (2014: 164,321) of
these options were outstanding at an exercise price of EUR1.20.
Options granted on 1 August 2011 were partially exchanged in the
period for new awards issued under the LITP. 30% of the options
vest on achievement of median TSR. Full vesting of the options
granted occurs upon achievement of upper quartile TSR measured over
the three year period. Once vested, these options may be exercised
until 1 August 2021. At 31 March 2015, 160,000 (2014: 160,000) of
these options were outstanding at an exercise price of EUR0.50.
TSR is measured on a relative basis compared to the FTSE Small
Cap index over a three year period from grant date. Unless
discretion is exercised by the Nomination & Remuneration
Committee, all options are forfeit following an option holder's
termination of contract.
The weighted average fair value of each option granted during
the prior year was EUR0.30. No options were granted under the 2005
or 2008 Share Option schemes in the current or previous period.
The fair value of share options granted under the 2005 and 2008
Share Option Schemes during the previous years was calculated based
on a modified Black-Scholes model assuming inputs shown below for
more recent awards:
Grant date August 2011 July 2010
Share price at
grant date (EUR) 0.50 1.70
Exercise price
(EUR) 0.50 1.70
Expected life
(years) 3 3
Contractual life
(years) 10 10
Risk free rate 1.54% 2.30%
Expected volatility 85% 60%
Expected dividend
yield 0% 0.0%
Fair value of
option EUR0.200 EUR0.532
The figures in the table and notes above have been adjusted to
reflect the 5 for 1 share consolidation which became effective on
12 September 2014. Volatility was estimated by reference to the
historic volatility since October 2005 when the Company's shares
were listed on AIM. The resulting fair value is expensed over the
vesting period of the options on the assumption that a proportion
of options will lapse over the service period as employees leave
the Group.
Employee Benefit Trust - Share bonus award
On 11 August 2014, in connection with the employee remuneration
and incentivisation arrangements for the period from 1 April 2013
to 31 March 2014, 783,597 (2014: 953,133) new Ordinary shares were
issued to an Employee Benefit Trust, the beneficiaries of which are
primarily the Executive Directors and Senior Managers. Such new
Ordinary shares vest if the employees remain in employment with the
Company at the vesting date, being 1 July 2015 (subject to certain
other provisions including regulations, good-leaver, take-over and
nomination and remuneration committee discretion provisions). As at
31 March 2015, the Employment Benefit Trust was consolidated by the
Company and the 783,597 shares are recorded as Own Shares within
equity. During the period, 945,133 Ordinary shares awarded in the
prior year vested.
Employee Share Participation Plan
During the year, the Company continued to operate the Employee
Share Participation Plan (the 'Plan') that was initiated in a prior
year. The Plan is intended to promote the long term growth and
profitability of Accsys by providing employees with an opportunity
to acquire an ownership interest in new ordinary shares ('Shares')
in the Company as an additional benefit of employment.
Under the terms of the Plan, the Company issues these Shares to
a trust for the benefit of the subscribing employees. The Shares
are released to employees after one year, together with an
additional Share on a 1 for 1 matched basis provided the employee
has remained in the employment of Accsys at that point in time
(subject to good leaver provisions). The Plan is in line with
industry approved employee share plans and is open for subscription
by employees twice a year following release of annual and half
yearly financial results. The maximum amount available for
subscription by any employee is EUR5,000 per annum.
During the year ended 31 March 2015 the plan was open for
subscription twice. In July 2014 various employees subscribed for a
total of 27,819 Shares at an acquisition price of EUR1.15 per
Share. In December 2014 various employees subscribed for a total of
53,922 Shares at an acquisition prices of EUR0.79 per Share.
Also during the year, 1 for 1 Matching shares were awarded in
respect of subscriptions that were made in the previous year as a
result of all participants continuing to remain in employment at
the point of vesting. 99,559 Matching shares were issued to
employees in July 2014.
15. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 31 March 2013 1,396 73,292 4,231 78,919
Additions 459 - - 459
At 31 March 2014 1,855 73,292 4,231 79,378
============ ============= ========= ========
Additions 201 - - 201
Addition on acquisition of
subsidiary 1,981 1,981
At 31 March 2015 4,037 73,292 4,231 81,560
============ ============= ========= ========
Accumulated amortisation
At 31 March 2013 55 70,638 - 70,693
Amortisation 77 275 - 352
At 31 March 2014 132 70,913 - 71,045
============ ============= ========= ========
Amortisation 100 275 - 375
Addition on acquisition of
subsidiary 126 - - 126
At 31 March 2015 358 71,188 - 71,546
============ ============= ========= ========
Net book value
At 31 March 2015 3,679 2,104 4,231 10,014
At 31 March 2014 1,723 2,379 4,231 8,333
At 31 March 2013 1,341 2,654 4,231 8,226
The carrying value of internal development costs, intellectual
property rights and goodwill on consolidation are considered part
of a single cash generating unit which incorporates the
manufacturing and licensing operations. The recoverable amount of
internal development costs, intellectual property rights and
goodwill relating to this operation is determined based on a value
in use calculation which uses cash flow projections based on board
approved financial budgets. Cash flows have been projected for a
period of 10 years plus assumptions concerning a terminal value,
corresponding with the expected minimum life of the intellectual
property rights and based on a pre-tax discount rate of 20% per
annum (2014: 20%). The key assumption used in the value in use
calculations is the level of future licence fees estimated by
management over the budget period. These have been based on past
experience and expected future revenues. The Directors have
considered whether a reasonably possible change in assumptions may
result in an impairment. An impairment would arise if the total
volume of forecast Accoya manufactured is 95% lower than projected
sales in future years.
16. Property, plant and equipment
Land Plant
and and Office
buildings machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 31 March 2013 5,208 27,190 656 33,054
Additions 43 444 85 572
Disposals - (116) - (116)
Foreign currency translation
gain/(loss) - - (9) (9)
At 31 March 2014 5,251 27,518 732 33,501
========== ========== ========== ========
Additions - 847 63 910
Foreign currency translation
gain/(loss) - - 27 27
At 31 March 2015 5,251 28,365 822 34,438
========== ========== ========== ========
Accumulated depreciation
At 31 March 2013 192 10,057 534 10,783
Charge for the year 115 1,818 91 2,024
Disposals - (39) - (39)
Foreign currency translation
gain/(loss) - - (7) (7)
At 31 March 2014 307 11,836 618 12,761
========== ========== ========== ========
Charge for the year 117 1,896 87 2,100
Foreign currency translation
gain/(loss) - - 29 29
At 31 March 2015 424 13,732 734 14,890
========== ========== ========== ========
Net book value
At 31 March 2015 4,827 14,633 88 19,548
At 31 March 2014 4,944 15,682 114 20,740
At 31 March 2013 5,016 17,133 122 22,271
Included within property, plant and equipment are assets with an
initial cost of EUR6,252,000 and a net book value at 31 March 2015
of EUR3,409,000 which has been accounted for as a finance lease
under the terms of the sale and leaseback agreement entered into in
a prior year. (See note 25).
17. Other financial assets
2015 2014
EUR'000 EUR'000
Available for sale investments - -
Accsys Technologies PLC has previously purchased a total of
21,666,734 unlisted ordinary shares in Diamond Wood China. The
Group does not currently have an intention to dispose of its
investment in Diamond Wood in the foreseeable future.
The carrying value of the investment is carried at cost less any
provision for impairment, rather than at its fair value, as there
is no active market for these shares, and there is significant
uncertainty over the future of Diamond Wood, and as such a reliable
fair value cannot be calculated.
The historical cost of the unlisted shares held at 31 March 2015
is EUR10m (2014: EUR10m). However, a provision for the impairment
of the entire balance of EUR10m continues to be recorded as at 31
March 2015. (See note 4).
18. Deferred Taxation
The Group has a deferred tax asset of EURnil (2014: EURnil)
relating to trading losses brought forward. EUR0.9m of deferred tax
was utilised in the prior year.
The Group also has an unrecognised deferred tax asset of
EUR23,200,000 (2014: EUR23,087,000) which is largely in respect of
trading losses of the UK subsidiary. The deferred tax asset has not
been recognised due to the uncertainty of the timing of future
expected profits of the related legal entity attributable to
licensing activities.
19. Subsidiaries
A list of subsidiary investments, including the name, country of
incorporation and proportion of ownership interest is given in note
4 to the Company's separate financial statements.
20. Inventories
2015 2014
EUR'000 EUR'000
Materials and work in progress 3,068 3,492
Finished goods 4,826 2,561
7,894 6,053
======== ========
The amount of inventories recognised as an expense during the
year was EUR30,158,361 (2014: EUR23,969,284). The cost of
inventories recognised as an expense includes a net debit of
EUR157,836 (2014: credit of EUR409,412) in respect of the
inventories sold in the period which had previously been written
down to net realisable value.
21. Trade and other receivables
2015 2014
EUR'000 EUR'000
Trade receivables 3,024 3,060
Other receivables 1,086 385
Prepayments 888 1,031
4,998 4,476
======== ========
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value. The
majority of trade and other receivables is denominated in Euros,
with EUR600,000 of the trade receivables denominated in US$ (2014:
EUR355,000).
The age of receivables past due but not impaired is as
follows:
2015 2014
EUR'000 EUR'000
Up to 30 days overdue 466 183
Over 30 days and up to 60
days overdue 13 136
Over 60 days and up to 90
days overdue 21 (14)
Over 90 days overdue 2 3
502 308
======== ========
In determining the recoverability of a trade receivable the
Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the
reporting date. Included in the provision for doubtful debts are
individually impaired trade receivables and accrued income with a
balance of EUR25,001,000 (2014: EUR25,001,000) due from Diamond
Wood.
Movement in provision for doubtful debts:
2015 2014
EUR'000 EUR'000
Balance at the beginning of
the period 25,019 25,051
Net increase/(release) of
impairment if not required 2 (32)
Balance at the end of the
period 25,021 25,019
======== ========
Summary of Receivable Impairments:
2015 2014
EUR'000 EUR'000
Trade receivables - Accoya(R)
wood * 20 18
20 18
======== ========
* The impairment of Accoya(R) wood receivables relates to a
number of Accoya(R) customers.
22. Trade and other payables
2015 2014
EUR'000 EUR'000
Trade payables 3,847 3,790
Other taxes and social security
payable 202 110
Other payables 1,000 -
Accruals and deferred income 4,576 1,657
9,625 5,557
======== ========
* Accruals and deferred income includes GBP1.4m of deferred
income resulting from the acquisition of Tricoya Technologies
Limited.
23. Share capital
2015 2014
EUR'000 EUR'000
Allotted - Equity share capital
88,792,894 Ordinary shares of EUR0.05 each (2014:
439,219,864 Ordinary shares of EUR0.01 each) 4,440 4,392
4,440 4,392
================ ================
Further to the passing of all resolutions at the Company's AGM
held on 11 September 2014, the entire issued share capital of the
Company was consolidated on a 5:1 basis with effect from 12
September 2014. Accordingly, all figures concerning the number of
shares stated below represent the new EUR0.05 Ordinary Shares.
(Shares issued prior to this date have been restated
accordingly).
In year ended 31 March 2014:
On 5 July 2013, a total of 953,133 shares were issued to an
Employment Benefit Trust, the beneficiaries of which were to be the
Executive Directors and Senior Managers (see note 14).
On 13 September 2013, a total of 83,066 of Ordinary shares were
issued and released to employees together with the 99,570 of
Ordinary shares issued to a trust on 12 August 2013. (See note
14).
On 20 January 2014, a total of 73,884 of Ordinary shares were
issued and released to employees.
In year ended 31 March 2015:
Own shares represents 783,597 EUR0.05 Ordinary Shares issued to
an Employee Benefit Trust ('EBT') at nominal value on 18 August
2014.
953,133 EUR0.05 Ordinary Shares had been issued to the EBT at
nominal value on 9 July 2013 of which 945,133 Ordinary Shares
vested on 8 August 2014.
On 18 August 2014, a total of 27,819 of EUR0.05 Ordinary shares
were issued to a trust under the terms of the Employee Share
Participation Plan.
On 12 August 2014, a total of 99,559 of EUR0.05 Ordinary shares
were issued and released to employees together with the 99,559 of
EUR0.05 Ordinary shares issued to trust on 12 August 2013.
In 19 January 2015, a total of 53,922 of EUR0.05 ordinary shares
were issued to a trust under the terms of the Employee Share
Participation Plan.
24. Commitments under operating leases
The Group leases land, buildings and machinery under
non-cancellable operating lease agreements. The total future value
of the minimum lease payments that are due is as follows:
2015 2014
EUR'000 EUR'000
Operating lease payments due
Within one year 963 1,003
In the second to fifth years
inclusive 1,067 1,210
In greater than five years 1,477 1,477
3,507 3,690
======== ========
The majority of commitments under operating leases relate to the
Group's offices in the UK, The Netherlands and U.S.A. and land in
The Netherlands which is adjacent to our plant.
25. Commitments under finance leases
Agreements were reached in August 2011 for the sale and
leaseback of the land and buildings in Arnhem for a total of EUR4m.
EUR2.2m was received in 2011 with the remaining amount received in
the following year, but accounted for as an operating lease. The
transaction has resulted in a finance lease creditor of EUR2.1m as
at 31 March 2015:
Minimum lease
payments
2015 2014
EUR'000 EUR'000
Amounts payable under finance
leases:
Within one year 280 280
In the second to fifth years
inclusive 1,120 1,120
After five years 1,773 2,053
Less: future finance charges (1,110) (1,318)
Present value of lease obligations 2,063 2,135
======== ========
26. Financial instruments
Financial instruments
Finance lease
Agreements were reached in August 2011 for the sale and
leaseback of the land and buildings in Arnhem under which a total
of EUR4m was to received. EUR2.2m was received in 2011 with the
remaining amount received in the following. Subject to the terms of
the agreement, the buyer has committed to build new storage
facilities which will also allow for an improvement in wood
handling logistics. The transaction has resulted in a finance lease
creditor of EUR2,063,000 as at 31 March 2015 (2014: EUR2,135,000).
The total lease term is 15 years. (See note 24 and 25).
Warrants
In 2012 the Company executed a warrant instrument in favour of
Ineos, allowing Ineos the opportunity to purchase up to a further
3,293,647 shares at a price of EUR1.05 per share at certain times
up until 19 October 2016. All 3,293,647 warrants lapsed on 31 March
2015.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity attributable owners of the parent Company,
comprising share capital, reserves and accumulated losses.
The Board reviews the capital structure on a regular basis. As
part of that review, the Board considers the cost of capital and
the risks associated with each class of capital. Based on the
review, the Group will balance its overall capital structure
through new share issues and the raising of debt if required.
No final dividend is proposed in 2015 (2014: EURNil). The Board
deems it prudent for the Company to protect as strong a statement
of financial position as possible during the current phase of the
Company's growth strategy.
Categories of financial instruments 2015 2014
EUR'000 EUR'000
Available for Sale investments - -
Loans and receivables
Trade receivables 3,024 3,060
Other receivables 1,086 385
Money market deposits in
Euro 5,348 11,791
Money at call in Euro 3,807 2,483
Money at call in US dollars 781 602
Money at call in Sterling 635 114
Money at call in New Zealand
dollars 215 195
Financial liabilities at amortised
cost
Trade payables (3,847) (3,790)
Accruals (1,577) (1,149)
Finance lease payable (2,063) (2,135)
Other Payables (1,000) -
6,409 11,556
======== ========
Money market deposits have interest rates fixed for less than
three months at a weighted average rate of 0.86% (2014: 1.58%).
Money market deposits are held at financial institutions with high
credit ratings (Standard & Poor's rating of AA).
All assets and liabilities mature within one year except for the
finance lease, for which details are given in note 25.
Trade payables are payable on various terms, typically not
longer than 30 days.
Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
Financial risk management objectives
The Group's treasury policy is structured to ensure that
adequate financial resources are available for the development of
its business whilst managing its currency, interest rate,
counterparty credit and liquidity risks. The Group's treasury
strategy and policy are developed centrally and approved by the
Board.
Foreign currency risk management
Currency exposures are limited as the Group's functional
currency is the Euro with the majority of operating costs and
balances denominated in Euros. A smaller proportion of expenditure
is incurred in US dollars and pounds sterling. In addition some raw
materials, while priced in Euros, are sourced from countries which
are not within the Eurozone. The Group monitors any potential
underlying exposure to other exchange rates.
Interest rate risk management
The Group's borrowings are limited to the sale and leaseback of
the Arnhem land and buildings and therefore it is not exposed to
interest rate risk in relation to financial liabilities. Surplus
funds are invested in short term interest rate deposits to reduce
exposure to changes in interest rates. The Group does not enter
into any hedging arrangements.
Credit risk management
The Group is exposed to credit risk due to its trade receivables
due from customers and cash deposits with financial institutions.
The Group's maximum exposure to credit risk is limited to their
carrying amount recognised at the balance sheet date.
The Group ensures that sales are made to customers with an
appropriate credit history to reduce the risk where this is
considered necessary. The Directors consider the trade receivables
at year end to be of good credit quality including those that are
past due (note 21). The Group is not exposed to any significant
credit risk exposure in respect of any single counterparty or any
group of counterparties with similar characteristics other than the
balances which are provided for as described in note 21.
The Group has credit risk from financial institutions. Cash
deposits are placed with a group of financial institutions with
suitable credit ratings in order to manage credit risk with any one
financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board, which has built an appropriate liquidity risk management
framework for the management of the Group's short, medium and long
term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash
flows and matching the maturity profile of financial assets and
liabilities.
In addition to the sale and leaseback of the Arnhem land and
buildings described above, the Group has finance facilities
available which are secured on trade receivables and
inventories:
Trade receivables facility
On 28 February 2011 the Group entered a trade receivable
financing and credit management agreement with Fortis Commercial
Banking for a period of at least two years from the closing date
and with a facility limit of EUR1.5m. After two years the agreement
renews for rolling one year periods. The facility is secured upon
the Group's trade receivable.
Inventories facility
On 17 January 2013 the Group entered a credit facility agreement
with ABN AMRO Bank N.V. with a facility limit of EUR3.0m for the
financing of the Group's operating activities. The facility is
secured against the inventories of the Group.
Both facilities are subject to interest at 1.5% above the ABN
AMRO base rate of 3.8% as at 31 March 2015 (2014: 4.0%). At 31
March 2015, the Group had EURnil (2014: EURnil) borrowed under both
of the facilities.
Fair value of financial instruments
In the opinion of the Directors, there is no material difference
between the book value and the fair value of all financial assets
and financial liabilities.
27. Related party transactions
In the year ended 31 March 2015, there were a number of related
party transaction with the Tricoya Technologies Limited joint
venture, all of which arose in the normal course of business,
totalling EUR1,391,000 (2014: EUR1,070,000). At the end of the
period EUR792,308 (2014: EUR298,404) of the total amount was
payable from TTL to Accsys group companies.
28. Capital Commitments
2015 2014
EUR'000 EUR'000
Contracted but not provided for in respect
of property, plant and equipment - -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGMVNKVGKZM
Accsys Technologies (LSE:AXS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Accsys Technologies (LSE:AXS)
Historical Stock Chart
From Apr 2023 to Apr 2024
