Accsys, the\nfast-growing and eco-friendly company that combines chemistry and technology to\ncreate high performance, sustainable wood building products, announces the\nfollowing trading update in advance of its Annual General Meeting, to be held at\n10.30 a.m. (UK time) today.<\/p>\n\n\n\n
Sales\nlevels have continued to recover strongly following the previously reported impact\nto sales volumes in April resulting from COVID-19 disrupting our distribution\nchannels. In May we successfully carried out our annual maintenance stop for\nour Accoya\u00ae<\/sup> plant. This was accomplished slightly earlier than\ninitially planned, to position the business to maximise uptime once pandemic\nlockdown measures eased.<\/p>\n\n\n\n Following\nthis, all three Accoya\u00ae<\/sup> reactors have been on stream and sales\norders have increased notably following the return to and reopening of business\nby our customers and end-users. As a\nresult, Accoya\u00ae<\/sup> sales volumes of 20,952 cubic metres for the five\nmonths to 31 August 2020 represent only a 9% reduction compared to the same\nperiod last year despite a 35% year on year reduction in total volume sold experienced\nin April. <\/p>\n\n\n\n Unaudited group\nrevenue for the period was \u20ac33.7m, a 6%\nreduction compared to the same period last year. In addition to the strong\nrecovery in sales in recent months as lock-down measures have eased, the Group\nhas benefited from full priced sales to the former Cerdia region following the\ntermination of the Accoya\u00ae<\/sup> licence with Cerdia effective from 1\nApril 2020. Production levels in Arnhem have also now returned to their\npre-COVID-19 levels. <\/p>\n\n\n\n We expect\nthe recovery in sales levels to continue\nassuming no further significant disruption from COVID-19.<\/p>\n\n\n\n Following\nthe initial disruption caused by COVID-19 through April and May, construction\nwork for the Tricoya\u00ae<\/sup> plant in Hull has progressed with activity\nlevels continuing to increase. New on-site working protocols take into account revised\nHealth and Safety and social distancing requirements resulting in an associated\nreduction in productivity levels. However, overall activity levels are now at a\nhigher level than at any previous time on the project, with monthly working\nhours now over three times those from a year ago. <\/p>\n\n\n\n The new Covid-19 working protocols are resulting in some inefficiencies in the build programme and we are working with our construction contractors to ensure that all possible measures are taken to meet the project schedule. We are working towards the completion of the construction of the plant in the first quarter of the new calendar year with commissioning to follow thereafter.\u00a0 However, the situation is being closely monitored and the impact on the project schedule remains dynamic and under review. <\/p>\n\n\n\n Following\nthe resumption of full construction activities in Hull and improved Accoya\u00ae<\/sup>\nsales volumes, all UK employees who had previously been furloughed had returned\nto work by August and all salaries, including those of the senior management\nteam and the Board, have returned to their pre-COVID-19 levels. Our application\nfor compensation for payroll costs in the Netherlands under the NOW scheme applies\nonly to the first quarter of the new financial year, given the subsequent\nincrease in Accoya\u00ae<\/sup> revenue.<\/p>\n\n\n\n Our focus\non cost control and working capital has been successful in the period and, as we\nhave incurred less capital expenditure on the Hull plant than expected due to\nthe delays with construction, this has enabled a reduction in net debt compared\nto 31 March 2020. Operating costs are therefore expected to show a relative increase\nin the second half of the financial year as we focus on our growth strategy.<\/p>\n\n\n\n Work is\nprogressing with the expansion of the Accoya\u00ae<\/sup> plant in Arnhem by the\naddition of a fourth Accoya\u00ae<\/sup> reactor, which will increase the\ncapacity to 80,000 cubic metres. The reactor vessel has been ordered and an\nengineering, procurement and construction management contract has been entered\ninto with detailed engineering now being undertaken. The project is expected to\nbe complete by March 2022 as previously reported. <\/p>\n\n\n\n In August\nwe were very pleased to announce the formation of Accoya USA LLC, a new joint venture\nwith Eastman Chemical Company which intends to construct and operate an Accoya\u00ae<\/sup>\nwood production plant to serve the North American market, a key target region\nwith, which we estimate to be, the largest market potential for Accoya\u00ae<\/sup>.<\/p>\n\n\n\n The new\ncompany has been formed and a technology licence entered into to enable\nfront-end engineering and design for the proposed initial 40,000 cubic metres\nplant to be completed. A decision whether\nto proceed to the next stage of plant construction, and as to funding, is\nexpected to be made following the initial engineering and design work, which is\nexpected to be completed in the first quarter of the 2021 calendar year.<\/p>\n\n\n\n We have\ncontinued to progress our full review of how we assess ESG issues and\nopportunities. Working with an expert consultancy, we have completed a materiality\nstudy with input from many stakeholders, including interviews, focus groups,\nand a survey of over 1,600 relevant individuals. We have identified the most\nimportant and relevant ESG topics to Accsys and are currently developing a more\ndetailed strategy that will be presented in an ESG and Sustainability Report in\ndue course. <\/p>\n\n\n\n As\npreviously announced, Stephen Odell will assume the position as Chairman\nimmediately following today\u2019s AGM and Patrick Shanley will step down as\nChairman and as a non-executive director following nearly 10 years\u2019 service to\nthe Company. Alexander Wessels\nappointment as a non-executive director will also become effective immediately\nfollowing today\u2019s AGM. <\/p>\n\n\n\n Stephen and Alexander will add to the Board\u2019s international experience as we continue our ambitious growth strategy. Accsys will remain forever grateful for Patrick\u2019s dedication and significant contribution to our success so far and the Board would like to put on record their heartfelt thanks.<\/p>\n\n\n\nTricoya\u00ae<\/sup>\nHull plant construction progress<\/strong><\/h3>\n\n\n\n
COVID-19 mitigating\nactions update <\/strong><\/h3>\n\n\n\n
Progress\nwith Accoya\u00ae<\/sup> capacity increase <\/strong><\/h3>\n\n\n\n
Arnhem<\/h4>\n\n\n\n
Joint Venture with Eastman Chemical Company<\/h4>\n\n\n\n
Governance and\nsustainability <\/strong><\/h3>\n\n\n\n