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Accsys

Preliminary Results for the year ended 31 March 2020

June 23, 2020

Accsys, the fast-growing and eco-friendly company that combines chemistry and technology to create high performance, sustainable wood building products, announces its preliminary results for the financial year ended 31 March 2020 (“FY 20”).

Accsys Technologies PLC Preliminary Results 2020 table image
  1. Underlying revenue excludes €3.2m Cerdia licence termination fee payable to Accsys. (See note 5 to the financial statements)
  2. Underlying EBITDA is defined as Operating profit/(loss) before Exceptional items and other adjustments, depreciation and amortisation. (See note 5 to the financial statements).
  3. Underlying EBIT is defined as Operating profit/(loss) before Exceptional items and other adjustments. (See note 5 to the financial statements).
  4. Net debt is defined as short term and long term borrowings (including lease obligations) less cash and cash equivalents. (See note 28 to the financial statements).
  5. FY 20 results reflect the adoption of IFRS 16, which resulted in an increase in Underlying EBITDA by €0.9m and a corresponding increase in depreciation of €0.9m and finance expense of €0.1m. (See note 27 to the financial statements).

Key highlights:

  • Underlying gross margin up to 30% (2019: 25%) as a result of higher sales volumes, an improved product mix and higher selling prices;
  • Third sequential half year period of EBITDA growth and Group now also profitable at EBIT level;
  • Accoya® segment underlying EBIT increased by 130% to €12.6m (EBIT margin of 14% (2019: 7%));
  • Cash-flow generated from operations continued to improve with a positive cash inflow for the year of €2.4m (FY 19: €0.3m);
  • €25m reduction in net debt to €25.2m resulting from proceeds from December 2019 equity issue offset by €22m strategic investment in property, plant and equipment.

Operational update

  • 16% increase in Accoya® volume sold, to 57,842 cubic meters, with the increase due to ongoing demand in the year being met by the expanded Accoya® plant being operational for the full year.
  • Progressing Arnhem expansion by addition of fourth reactor:
    • Initial engineering and design work completed;
    • Commenced the detailed engineering and procurement phases;
    • Further milestones and timing of capital commitment being monitored in light of continued COVID-19 uncertainty.
  • Continued progress with our other strategic projects: working towards the construction of an Accoya® plant in the USA in a joint venture with Eastman, and a Tricoya® plant in Malaysia with PETRONAS Chemicals Group Berhad.

COVID-19 – update

Health and safety of our people:

  • Accsys remains committed to the health and well-being of the Group’s staff and the wider communities in which we operate. We continue to follow government guidelines to keep  workplaces safe for our employees and contractors.

Accoya® sales:

  • As previously announced, the Group saw a significant reduction in demand at the start of the new financial year as a result of the restrictions affecting our customers’ operations. Sales volumes in April were nearly half our original expectations.  
  • We have seen differences in demand between regions, with the UK being most impacted, and we are actively adjusting our Accoya® production output to meet demand as necessary.
  • More recently, we have seen orders start to increase again as government restrictions are eased and as we reallocate resources to meet the increasing activity levels across our geographic markets in particular the USA and mainland Europe.
  • These improvements are at an early stage however, and we continue to monitor the on-going situation closely and take appropriate measures to carefully manage our cash balance and inventory during this uncertain time;
  • We remain confident of the strong underlying demand for Accoya® wood despite current market difficulties.

Tricoya® Hull plant construction:

  • All work has safely resumed on the construction site following the easing of restrictions by the UK government and the implementation of new protective work procedures.
  • The combination of time lost together with new working practices means that the plant is now expected to be completed in the first quarter of the new calendar year.  
  • The delay caused by COVID-19 is also likely to result in some additional costs however these have not yet been fully quantified and we are working to ensure the additional costs and delays are minimised and do not become material in the context of the project as a whole.

Robert Harris, CEO commented:

“We made excellent progress in FY 20 with increased Accoya® production capacity matched with increased sales, driven by continuing strong demand for our products. By combining outstanding sustainability credentials with performance that matches or improves on the alternatives, we provide a compelling value proposition for our distributors, manufacturers, specifiers, architects and end users. As sustainability continues to grow in importance across markets and societies, so does the strong appetite and enthusiasm for Accoya® and Tricoya®.

The COVID-19 pandemic had a very limited impact on the FY 20 financial year. We realised almost all of the benefits of our expansion of the Arnhem plant over the course of the year, achieving record production and sales. Our customers’ ability to operate at the beginning of the new financial year was affected however, and we have managed our operations to preserve resources while still supporting our customers. We are well-positioned to resume growth plans and strategic advancement as and when market conditions further improve.

Our Accoya® expansion plan has progressed well, with planning and engineering design for the fourth reactor at an advanced stage. Progress in our Tricoya® Hull facility had accelerated in the latter part of FY2019/20. Some unavoidable delays were caused by working restrictions to prevent the spread of COVID-19, however careful planning and prioritisation allowed us to quickly restart full construction operations and will help minimise impacts on our timeline.  Demand for Tricoya®, and the unique benefits it offers in design and building, remains very strong as reflected in continued sales growth to our Tricoya® panel manufacturing partners MEDITE and FINSA.

In addition to our UK and Netherlands operations, progress in our work with Eastman Chemicals in the USA and PETRONAS Chemicals Group Berhad in Malaysia continue to show the promising, scalable and global potential for our growth ambitions.

We remain excited about the future long-term prospects for the Group and are endeavouring to come out of COVID-19 as a stronger and better placed business.”