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Accsys

Preliminary Results for the year ended 31 March 2021

June 22, 2021

Profitability progression and strategic progress

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 year ended 31 March 2021.

  Year to 31 March 2021 Year to 31 March 2020
Underlying Statutory Underlying Statutory
Total Group Revenue €99.8m €99.8m €90.9m €94.1m
Gross profit €33.1m €33.1m €27.5m €30.7m
EBITDA2 €10.1m €10.4m €7.0m €10.0m
EBIT3 €4.4m €4.6m €1.4m €4.4m
Profit/(loss) before tax €1.1m €0.3m (€2.2m) €1.5m
Period end net (debt) (€12.2m) (€25.2m)
Accoya® sales volume 60,466m3 57,842m3

Key highlights:

  • Revenue up 10% and sales volumes up 4.5% with a rapid recovery after the initial impact of COVID-19 in the first quarter.
  • Strong profitability progression: Group underlying EBITDA2 up 44% to €10.1m and Accoya® Manufacturing margin1 up 340bps to 33.4%, driven by higher sales prices. Our second consecutive year of positive EBIT.
  • Accoya® performance drove a 61% increase in Group Operating cashflow5, with continuing significant market demand in excess of production capacity.
  • Robust balance sheet with €13.0m reduction in Group Net Debt4 with strong Accoya® cash generation.
  • Strategic progress towards 2025 target of increasing production capacity five-fold6:
    • World-first Tricoya® (Hull) plant construction in final stages of completion despite ongoing challenges. The Group is taking over the project and is evaluating the most effective way to complete the construction following termination of the EPC contract.
    • Accoya® Arnhem plant fourth reactor on track to be operational Q4 FY22.
    • Accoya® USA JV on track for investment decision in summer 2021 following successful Accsys’ €35m net capital raise in May 2021 to fund Accsys’ equity share of JV.
  • Living our purpose of “Changing wood to change the world”: formal sustainability strategy first Sustainability Report published during the year and increased operational safety commitments.

Notes:

  1. Accoya® Manufacturing margin is defined as Accoya® segmental underlying gross profit (excluding Licence income and marketing services) divided by Accoya® segmental revenue (excluding Licence income and marketing services) (See note 3 to the financial statements)
  2. Underlying EBITDA is defined as Operating profit/(loss) before Exceptional items and other adjustments, depreciation and amortisation, and includes the Group’s attributable share of our USA joint venture’s underlying EBITDA. (See note 3 to the financial statements).
  3. Underlying EBIT is defined as Operating profit/(loss) before Exceptional items and other adjustments and includes the Group’s attributable share of our USA joint venture’s underlying EBIT. (See note 3 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 29 to the financial statements).
  5. Group operating cashflow is Cash inflows from operating activities before changes in working capital and exceptional items.
  6. Accsys has set a ‘5x’ production capacity growth target, to achieve 200k m3 equivalent production capacity by 2025, from the 2019 level of 40k m3

Robert Harris, CEO commented:

“This has been a year of clear progress for the Group. We managed the initial challenges presented by the pandemic and have delivered growth in revenues, profits and margins, alongside progress on our sustainability agenda; Changing Wood to Change the World. We have also increased our commitment to safety and the wellbeing of our people and the environment during the year.

As focus on sustainability grows, demand continues to exceed supply for our sustainable products and underpins our strategic growth plans which progressed well during the year. We are finalising the construction of our Hull plant and the fourth reactor at Arnhem, which will double our capacity as a Group. Additionally, following the close of our year, we announced a successful equity raise to support our joint venture with Eastman Chemical Company to build an Accoya® USA plant. This raise was significantly oversubscribed and will allow us to address the substantial North American market where demand continues to grow.

We expect revenue growth as the additional capacity at Arnhem becomes operational. Further to our update earlier this month regarding the status of the Hull plant, we are taking over the project and are evaluating the most effective way to complete the construction following termination of the EPC contract, and are in the process of validating the remaining works, costs and timeline for completing the project.

Group overheads will increase next year given the investment in our organisation for growth and ahead of the planned Hull plant start-up.

Longer term, for Accsys as a whole, we expect to continue to achieve improving profitability as each step in our growth journey allows us to significantly increase the level of sales and take advantage of economies of scale associated with higher operating levels. As the focus on the carbon footprint of the built environment continues to sharpen, we expect significant demand for our high-performance and sustainable products and remain on track to meet this demand through increasing our capacity fivefold by 2025.

I remain confident in the significant long-term growth opportunities ahead and in our ability to execute our strategy in pursuit of sustainable growth for our world-leading high performance, sustainable construction products.”