TIDMAXS
RNS Number : 4294J
Accsys Technologies PLC
30 June 2011
AIM: AXS
NYSE Euronext Amsterdam: AXS
30 June 2011
ACCSYS TECHNOLOGIES PLC
("Accsys" or the "Company")
Preliminary Announcement of Results for the year ended 31 March
2011
Leading producer and licensor of sustainable and highly durable
modified wood products positioned for growth
Operational Highlights:
-- 36% increase in sales volume of Accoya(R) (to 11,935m(3) )
compared to last year;
-- 62% increase in sales volume of Accoya(R) compared to last
year excluding sales to Diamond Wood (following postponement of
orders pending finalisation of their fund-raising);
-- Nine further distribution, agency and supply agreements
signed, making a total of 27, covering most of Europe, Australia,
Canada, Chile, China, India, Morocco, New Zealand, parts of South
East Asia and the USA;
-- Licence option signed with a major multinational corporation
in January 2011;
-- On-going process improvements including approximately 10%
reduction in production cycle times over last 12 months; and
-- Positive progress with Medite Tricoya(R) with significant
technology developments, three successful industrial production
trials and independent verification by Building Research
Establishment (BRE) confirming an expected service life of 60 years
when used in exterior applications.
Financial Highlights
-- 38% increase in revenue from sales of Accoya(R) wood to
EUR12.6m (2010: EUR9.1m);
-- Total revenue of EUR13.7m (2010: EUR16.7m) was less than the
previous year as a result of a reduction in licensing income.
EUR0.5m of cash received from our licensee and potential licensee
resulted in a partial reversal of the impairment charge relating to
Diamond Wood which was originally recorded in 2010;
-- Gross manufacturing margin improved to a negative 4% from
negative 27% last year and from negative 66% in 2009 as a result of
improved efficiency and the economies of scale resulting from our
higher sales volumes;
-- Other operating costs reduced by 27% to EUR13.7m (2010:
EUR18.6m) following continuing focus on reducing costs and
increasing efficiency. Staff numbers have been reduced by 22% over
the last two years;
-- Reduction in loss from operations to EUR13.8m (2010: loss of
EUR51.9m) as a result of improved manufacturing gross margin and
reduced other operating costs together with no further impairment
charges relating to Diamond Wood; and
-- Cash of EUR27.6m at the end of the period (2010: EUR18.3m).
Cash out-flow significantly reduced following period of high cash
out-flow due to postponement of orders from Diamond Wood.
Business Highlights:
-- Patrick Shanley and Nick Meyer joined as Non-Executive
Directors bringing significant experience in the chemical and wood
industries respectively; and
-- New heads of Business Development, Product Development,
Technology, Legal and Marketing are now in place as well as the
appointment of Hans Pauli as CFO and COO;
-- Successful EUR28m (net of fees) fundraising providing
platform for growth.
Post Year-end Highlights:
-- Heads of Agreement on sale and leaseback for approximately
EUR4m allowing for expansion of the plant and capacity when
appropriate to meet increasing demand.
-- Diamond Wood reported that, together with its bankers, it is
in an advanced stage of preparing for an Initial Public Offering on
the junior market of the Malaysian Stock exchange in October 2011.
However this is still subject to regulatory review and formal due
diligence also needs to be completed.
There will be a presentation relating to these results at
12:00am BST on Thursday 30 June 2011. The presentation will take
the form of a web based conference call, details of which are
below:
Webcast link: Click Here or copy and paste ALL of the following
text into your browser:
http://www.media-server.com/m/p/tr82s9dr
Conference call details for participants:
Participant Telephone Number: +44 (0)20 7136 2053 UK Toll
Confirmation Code: 1612412
Participants will have to quote the above code when dialling
into the conference.
Paul Clegg, CEO of Accsys, commented:
"Following a year of considerable change and challenges, in
which steady progress has been made, I am optimistic about the
future growth of the company. A strong management team is now in
place and we have continued to expand our network of distribution
agreements with the goal of becoming a truly global brand. Demand
for Accoya(R) is increasing and I am confident that sales will
continue to increase in the next few years.
The progress in negotiating new licence agreements has been
steady and I am particularly pleased by the signing of an option
agreement relating to Accoya(R) and the advances being made with
Medite which demonstrate the significant further potential of our
technology. We are very confident that Medite Tricoya(R) will play
a significant part in the MDF marketplace and we will continue to
work with Medite with the aim of bringing this into production.
Our recent successful fundraising has put us in a stable
financial position and has provided the resources we need in order
to satisfy increasing demand and enable the Group to become
profitable without reliance on licensing income.
Whilst wider economic conditions remain challenging and progress
on licensing agreements has been steady, we are confident that the
changes and improvements we continue to introduce have put Accsys
in a strong position to achieve our strategic goals and deliver
long term shareholder value."
The financial statements for the year ended 31 March 2011
follow:
Chairman's Statement
Introduction
The Group has continued to undergo significant change during the
year and, despite the challenges, I believe we are now well
positioned to achieve our short and longer term goals.
The increasing demand for Accoya(R) being experienced resulted
in our prediction that we will reach our maximum capacity (of
approximately 35,000m(3) ) in the next two to three years. As a
result, part of the net proceeds of EUR28m generated from a
fund-raising completed in February 2011 is intended for the
expansion of the Arnhem plant by adding a third reactor in order to
satisfy this demand. We expect to carry out this expansion in
stages at appropriate times, which will enable the Group to become
profitable without reliance upon licence income. The first stage
involves the creation of new storage facilities and the improvement
of wood handling logistics and in this respect we have recently
agreed in principle to the sale and leaseback of a portion of the
land and all of the buildings relating to the Arnhem plant which
will enable us to progress with this expansion.
We have made changes to the wider management team and achieved
further improvements in our production processes at our Arnhem
plant as well as reducing operating costs, which is evidenced by
our achieving a 23% improvement in our gross manufacturing margin
and a reduction in operating costs of 27%.
During the year we saw acceleration in demand for Accoya(R)
worldwide, resulting in an increase in sales of Accoya(R) by 36%
(to 11,935m(3)). Taking account of the previously announced
postponement of orders by Diamond Wood, the sales volumes increased
by 62%.
We have added nine new distribution agreements to our global
network of customers including in countries such as New Zealand,
Australia and Chile making a total of 27 distribution, agency and
supply agreements. Our existing distributors have started to sell
to new sub-distributors which present significant opportunities for
us. We have increased our sales to all existing countries with the
exception of sales to China and the South-East Asian countries
covered by Diamond Wood.
I am pleased by the progress being made by the business
development team demonstrated by an Accoya(R) licence option
agreement that was entered into in January 2011 with a major
multinational corporation. While detailed agreements still need to
be finalised and due diligence completed, this marks an important
step towards meeting our longer term objective of licensing the
Company's technology.
Diamond Wood continues to work towards completing their required
fund-raising which is expected to be completed in 2011. We received
EUR0.4m from Diamond Wood in respect of licence fees due to us
resulting in the partial reversal of the impairment recorded in
last year's financial statements. We are continuing to work with
Diamond Wood management to ensure that Accoya(R) can be sold into
the China and South-East Asia region ahead of the completion of
their production plant.
Limited progress has been made during the year in respect of our
second licensee Al Rajhi, partly due to recent unrest in Bahrain.
However while uncertainty remains as to when the licence will
proceed, we are confident it will progress and look forward to
continuing to work with Al Rajhi in respect of their planning and
other activities.
Following the unveiling of Medite Tricoya(R) at the Ecobuild
exhibition in London in March in 2010, we have made steady progress
with Medite, our joint development partner, concerning product and
process development leading to further successful industrial scale
production trials. The resulting tests and commercial analysis of
the world's first medium density fibreboard (MDF) which uses our
acetylation technology, confirmed Tricoya(R) to be a superior,
commercially competitive, high performance panel suitable for
external use.
Summary of financial results
Revenue from the sales of Accoya(R) increased by 38% to EUR12.6m
(2010: EUR9.1m) reflecting the continuing growth in demand.
However, total revenue of EUR13.7m (2010: EUR16.7m) was less than
the previous year as a result of a reduction in licence income. The
reduction in licence income to EUR0.1m (2010: EUR6.7m) reflects the
delays experienced by our licensees.
The gross manufacturing margin has improved from negative 27% to
negative 4% as a result of improved efficiency and the economies of
scale resulting from our higher sales volumes.
Other operating costs have decreased by 27% to EUR13.7m (2010:
EUR18.6m) following continued focus to reduce costs and increase
efficiency and value for money in all parts of the Company. This
has included a reduction in staff numbers from 107 at the start of
the financial year to 98 by 31 March 2011.
Our cash balance at 31 March 2011 was EUR27.6m compared to
EUR18.3m last year. However during the year there was significant
cash out-flow of EUR17.8m (2010: EUR14.0m) attributable to
operating activities. This was higher than expected as a result of
Diamond Wood postponing their orders part way through the year
which resulted in significantly higher inventory levels than
expected. As a result we are currently unwinding our inventory
balance and expect our cash out-flow to be significantly reduced in
the forthcoming year. The overall increase in cash was wholly
attributable to the fund-raising completed in February 2011 which
raised EUR28m net of fees. In addition, we have also entered into a
new finance facility secured on our trade receivables and our
inventory which will enable us to draw down up to approximately
EUR4m in the future. Accsys currently has no debt.
Board and management
Hans Pauli joined the board on 1 April 2010 as Chief Financial
Officer and Chief Operations Officer. Primarily based in the
Netherlands, he has made a substantial impact on the operations in
Arnhem and has led the changes implemented there. Kevin Wood, our
former Chief Finance Officer, remained on the board as a
non-executive director until 18 November 2010.
On 30 September I took over as Chairman of the Board from Willy
Paterson-Brown who also stepped down as a non-executive director
following his years of service since the Company's inception in
2005.
Patrick Shanley joined the Board on 18 November 2010 as an
independent non-executive director, bringing extensive board room
experience in the chemicals sector. Patrick has taken over from me
as Chairman of the Audit Committee.
Most recently, on 17 May 2011, Nick Meyer joined the board as an
independent non-executive director. Nick has significant experience
in the timber industry including as a former President of the
Timber Trade Federation of the United Kingdom.
Following these changes, I am confident that Accsys will benefit
from the additional experience the Board now brings, in particular
from the broader range of industries that the directors
collectively have worked in.
Dividend
No final dividend is proposed in respect of 2011. This reflects
the loss we have reported in the last financial year together with
the Board's decision to preserve as strong a balance sheet as
possible while the Group continues to develop long term business
opportunities.
Prospects
The fund-raising has provided us a stable financial position
following on from the last two years of change, and as a result, I
am confident that Accsys can build on the steady progress that has
been achieved in all areas over the last twelve months. We are
confident that we can build upon the progress that has been made
despite the challenging global economy, in particular in the
construction industry.
Our short term plan is to continue to increase sales of
Accoya(R) such that the plant is operating at a break-even level.
The continued feedback we obtain from customers, distributors and
potential licensees, as well as independent tests, confirms our
belief that we offer a genuinely superior product. Together with
further product development by ourselves and our partners, I am
confident that we will continue to increase sales in the next few
years. We expect to utilise part of the proceeds from the
fund-raising to finance the expansion of the plant in order to meet
this demand and at the same time we expect to move into a position
of sustained profitability.
The additional sales and capacity will enable us to seed markets
with Accoya(R) to create a demand for the licensing of our
technologies which remains our longer term objective. In this
respect we will continue to progress existing licence and option
agreements as well as seeking to secure other opportunities.
We are very confident that Medite Tricoya(R) will play a
significant part in the MDF marketplace and we will continue to
work with Medite with the aim of bringing this into production.
Our more stable financial position, strengthened operational and
management team and increased global demand for our specialist wood
products, gives us confidence for the future prospects of the
Group.
Gordon Campbell
Non-executive Chairman
29 June 2011
Chief Executive's Report
Accoya(R) wood
The Group markets its acetylated solid wood product under the
brand name Accoya(R) . Accsys' proprietary acetylation technology
modifies sustainable wood to create a timber with the following key
features:
-- Outstanding durability - class 1, surpassing even teak and is
indigestible to a wide range of insects including termites;
-- Dimensionally stable - swelling and shrinkage reduced by 75%
or more and accepts wide range of industry standard coatings which
typically last 3 to 4 times longer;
-- Excellent machinability, hardness and retained strength;
-- UV resistance and natural beauty together with improved
thermal insulation;
-- Sustainably sourced, non-toxic and recyclable.
These attributes make Accoya(R) wood a highly effective solution
for a wide range of external applications, including doors,
windows, cladding, decking, shutters, louvers, civil works,
landscaping, outdoor furniture, canal sidings, boat decks products
and more.
Continuing change
Last year I reported that we had made substantial changes to
increase effectiveness and reduce costs, including a 15% reduction
in headcount. Over the last year we have continued to make
significant changes throughout the Company and I now believe we are
in a stronger position, capable of taking full advantage of our
technology and superior product offering.
The global economy and in particular the construction industry
has continued to prove challenging. However, we have increased
manufacturing revenue by 36%, reduced other operating costs by 27%
and improved gross manufacturing margin by 23%.
We have made significant internal staff changes. Hans Pauli
joined us as CFO and COO on 1 April 2010 and following this we
appointed new heads of Business Development, Product Development,
Technology, Legal and Marketing. These new appointments to the
Accsys Senior Management Team have enabled us to start to make
significant progress towards achieving our short and longer term
objectives.
The successful completion of the fund-raising in February 2011
generating EUR30m, followed our announcement that we intend to
expand our Arnhem plant by adding a third reactor in order to meet
the accelerating demand for Accoya(R) in order for the Group to
become profitable without reliance on licence income.
Technology development and projects
We have built upon the progress made last year in improving and
optimising the performance of our Arnhem plant. These further
developments have enabled us to increase the capacity of the
current two reactors such that when demand requires it, we will be
able to manufacture approximately 35,000m(3) per annum.
The improvements have resulted in a reduction in the production
cycle times by up to 10% over the last 12 months as a result of the
installation of a new system. In addition, we have made engineering
design improvements which have increased production reliability and
reduced energy consumption. We also developed the production of
non-standard dimension Accoya(R) to meet a specific customer
order.
While significant improvements have been made, the Technology
team has also identified a number of further areas which, with
additional development work, are expected to result in yet more
improvements (including reduction in production cycle time) in the
future. New species development has continued and we are
particularly pleased with the progress being made such that we
expect to start commercial production of acetylated hard-wood
species to open up new application uses for Accoya(R) in the next
year.
I am pleased by the progress made in the on-going development of
Medite Tricoya(R) . Medite Tricoya(R) is a ground-breaking new
composite panel product being developed by Accsys with its joint
development partner, Medite Europe Limited, which delivers a new
degree of reliability in exterior and wet interior applications.
Significantly, BRE (Building Research Establishment) carried out
independent testing that concluded Medite Tricoya(R) could meet
demands for a desired service life of 60 years when used in
exterior applications. We are pleased with the significant amount
of technology development that has now been completed together
culminating in a positive independent market assessment. Three
industrial production trials have also successfully been carried
out over the last year and we are confident that following further
production and market trials, the commercial feasibility stage of
the development will be concluded.
Global sales and distribution of Accoya(R) wood
We sold 36% more Accoya(R) wood by volume in the year ended 31
March 2011 compared to the previous year. This increase is also an
improvement on the 19% year on year increase recorded last year.
However, while we are pleased with this increase, it is less than
we previously expected due to the delays experienced by Diamond
Wood in finalising their fund-raising. This delay resulted in sales
to the regions in which Diamond Wood distributes to largely ceasing
from August 2010 onwards. Overall sales volumes increased by 62%
when excluding sales to Diamond Wood from both years. We expect to
start selling to these regions again imminently.
The increase in sales was achieved despite the global economy
continuing to prove challenging, in particular in the construction
industry. The increase resulted from new customers and distributors
as well as increased demand from existing customers. We have
continued to build the global Accoya(R) brand and the on-going
expansion of our network of customers and distributors enabled us
to generate sales in new territories which we expect to grow
further into the future.
We added a further nine new distribution, agency and supply
agreements across the globe compared to a year ago making a total
of 27 agreements. We now have a network which covers most of
Europe, Australia, Canada, Chile, India, Morocco, New Zealand,
China, parts of South-East Asia, and the USA.
We have continued to obtain independent recognition of the
superior benefits of Accoya(R) wood. BRE (Building Research
Establishment) completed a 13 year field test resulting in a report
which found that because Accoya(R) wood is transformed all the way
through and holds Class 1 durability, it is one of the finest
choices for use as a window frame. It also concluded that Accoya(R)
can deliver a 60 year working life window making a more financially
viable option for timber windows than other joinery materials.
An on-going 32-month study conducted by the Timber Research and
Development Association (TRADA) showed that Accoya(R) outperforms
competing cladding boards, even when coated with challenging
dark-pigmented wood stains, with Accoya(R) having changed little
from the day it was installed. In September 2010, Scion (formerly
known as the New Zealand Forest Research Institute) published a
report concluding that Accoya(R) is more durable than four of the
most naturally durable species and CCA treated wood which has been
treated to ground contact specification. The study also proved that
our acetylation process is a superior treatment to alternative
methods of wood modification.
These findings all build on the prestigious Cradle to Cradle
Gold certification awarded last year together with the approval
under Germany's prestigious RAL system. We were also particularly
pleased by the installation of a second heavy-traffic road bridge
in the Netherlands in November 2010, following the first in 2008
which was the first uncovered wooden bridge in the world able to
support the heaviest load class of 60 tonnes. Accoya(R) continues
to be used for many different purposes including for windows,
doors, shutters, cladding, decking, walkways, canals and
marinas.
Licensing activity
In January 2011 we entered a licence option agreement with a
major multinational corporation relating to the production and sale
of Accoya(R) . We extended this option agreement in May 2011 to
allow for further detailed due diligence and licence agreement
negotiations to be completed. We are very pleased with the progress
that is being made in this respect but note that, at the current
stage, there can be no certainty that a licence agreement will be
entered into.
I am pleased with the progress that has been made in respect of
a number of other negotiations with other potential licensees and
strategic partners and we will continue to progress these
relationships while at the same time seeking new licensees.
Progress with our two existing licensees, Diamond Wood and Al
Rajhi, has been disappointingly slow. Diamond Wood has not yet
completed its planned fund raising having previously informed us
that it would be completed by the end of 2010. Diamond Wood
recently reported that they are, together with its bankers and
professional advisors, now in an advanced stage in preparing the
submission for the listing of Diamond Wood on the junior market of
the Malaysian Stock Exchange, and subject to regulatory review and
formal due diligence processes, that they hope to be able to
undertake an Initial Public Offering during October 2011. In the
meantime we have been working with Diamond Wood management in order
to re-commence sales of Accoya(R) as soon as its funding issues
have been resolved to meet the continuing demand of customers in
the China and South-East Asia region.
Last year-end we recorded an impairment of EUR25.5m relating to
our Diamond Wood net receivables and an impairment of EUR10m
relating to our equity investment. This followed a change in their
business plan in which Diamond Wood stated they intended to build a
smaller plant than previously envisaged.
We continue to work with Al Rajhi in respect of planning and
other activities and we remain confident that the licence will
progress. However, a degree of uncertainty remains over the timing
of their investment, partly due to the recent unrest in Bahrain. We
note that Accsys holds net assets of EUR2.9m in respect of this
licence and if the licence were not to proceed as expected, a
non-cash charge would be recorded relating to the write-off of
these balances.
However, we are confident that new licence opportunities are
progressing well and overall we are increasingly optimistic about
the long term potential of our technology and our ability to
generate value from it through long term licence agreements.
Outlook
Following a year of considerable change and challenges, I am
optimistic about the future. We now have the right team in place
that is focused on delivering increased sales and further
improvements to our technology and processes. We continue to target
the signing of a additional distribution, agency or supply
agreements and establishing a truly global brand. Together these
are expected to deliver the level of sales which will result in the
plant breaking even and ultimately moving into overall
profitability, even without taking account of any licence
income.
The progress in negotiating new licence agreements has been
steady and we strongly believe the longer term value of Accsys
continues to be in its ability to licence our technology. The
advances being made with Medite have also demonstrated the
significant further potential of our technology and we look forward
to being able to report further progress in the development of
Tricoya(R) in the near future.
While wider economic conditions remain challenging, we are
confident that Accsys is well placed and in particular, we believe
the longer term trend to move away from unsustainable tropical
hardwoods will lead to ever growing demand for Accsys' superior,
environmentally focused products.
Paul Clegg
Chief Executive Officer
29 June 2011
Financial Review
Income statement
Revenue
Total manufacturing revenue increased by 36% to EUR13.6m (2010:
EUR10.0m). Within manufacturing revenue, sales from Accoya(R) wood
increased by 38% to EUR12.6m, reflecting increased demand and
production volumes at our Arnhem facility. However total Group
revenue of EUR13.7m (2010: EUR16.7m) was a decrease of 18%. Revenue
from licensing activities was substantially less than last year at
EUR0.1m (2010: EUR6.7m) as a result of delays experienced by our
licensees, especially Diamond Wood, in completing their production
facilities combined with no new licence agreements having been
entered into. The EUR6.7m licence income recorded in 2010 was prior
to the impairment of Diamond Wood net receivables recorded at the
31 March 2010, described below.
Cost of sales
Cost of sales has decreased to EUR14.2m (2010: EUR14.6m). The
cost of producing Accoya(R) wood increased by 12% to EUR14.2m as a
result of increased production levels. The resulting gross margin
improved to a 4% loss (2010: 27% loss) as a result of the economies
of scale resulting from the increased production levels, price
increases and due to further process improvements. Cost of sales
attributable to licence revenue decreased to EURnil, in line with
the reduction in licence revenue.
Impairment of licence related assets
In June 2010 the Company agreed an amended licence agreement
with Diamond Wood. Under Diamond Wood's revised business plan
(which is subject to the completion of their fundraising) the
capacity of the plant to be built in the first phase is
significantly smaller than the previously expected 300,000m(3)
.
As a result, in the year ended 31 March 2010, it was considered
that net receivables (consisting of trade receivables, accrued
income, prepayments and deferred income) of EUR25.5m relating to
Diamond Wood were no longer recoverable and were provided for. This
provision reflected the expected change to Diamond Wood's business
plan in respect of both the timing and the total capacity of the
plant that Diamond Wood may now build compared to that previously
expected.
In addition, pending the conclusion of Diamond Wood finalising
its funding arrangements, a provision for the impairment of the
entire balance of the equity investment of EUR10m was recorded as
at 31 March 2010. As at 31 March 2011, the funding had not been
secured and accordingly the provision for 100% of the historical
cost continues to be recognised. In the event Diamond Wood
completes the fund raising, the balance may be revalued.
The reversal of the impairment of EUR0.4m recorded in the year
ended March 2011 represents money received from Diamond Wood under
the licence agreement which had previously been impaired.
Other operating costs
Other operating costs decreased by 27% to EUR13.7m (2010:
EUR18.6m). This was attributable to a significant focus on cost
reduction together with reduced headcount. Included within other
operating costs are restructuring costs of EUR0.2m (2010: EUR0.8m)
relating to the termination payments made to staff. This helped the
Group reduce headcount by 22% over two years. Headcount reduced
from 126 at the start of the previous year to 107 at 31 March 2010
and then to 98 as at 31 March 2011.
Loss from operations
The reduction in loss from operations to EUR13.8m (2010: loss of
EUR51.9m) is as a result of improved manufacturing gross margin and
reduced other operating costs. The previous year included
significant charges (EUR36.3m) relating to the impairment of
licence related assets and investments together with higher
restructuring costs.
Finance income
Finance income of EUR18,000 (2010: EUR18,000) represents
interest receivable on bank deposits.
Finance expense
The finance expense of EUR0.1m (2010: EUR0.3m) is primarily due
to the equity line of credit with GEM Global Yield Fund
Limited.
Taxation
There is no UK corporation tax liability for the year (2010:
EURNil) due to the availability of losses within the Group.
Dividends
No final dividend is proposed in 2011 (2010 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 EUR0.06 (2010 basic and
diluted loss per share was EUR0.32).
Balance sheet
Property, plant and equipment
Property, plant and equipment additions of EUR1.0m (2010:
EUR1.6m) predominantly relate to technology improvements and
significant items of maintenance equipment at our Arnhem production
facility. The installation of new equipment to reduce overall
production cycle times was the most significant investment during
the year at EUR0.5m.
Available for sale investments
The Company holds 21,666,734 Ordinary shares (2010: 21,666,734
Ordinary shares) in Diamond Wood, at a cost of EUR10m (2010:
EUR10m). A full provision for impairment for this amount was made
in the prior period for the reasons described above and continues
to be recorded given Diamond Wood had not secured the required
funding as at 31 March 2011.
Inventory
The Group had total inventory balances of EUR8.4m (2010:
EUR3.8m). Finished goods consisting of Accoya(R) represented
EUR4.4m (2010: EUR2.5m) and raw materials consisting of unprocessed
lumber represented EUR4.0m (2010: EUR1.2m) with the remainder of
the balance being work in progress. The significant increase is
attributable in large to Diamond Wood postponing orders from August
onwards, for which raw materials, often for their unique market
needs, had already been ordered or received. The inventory balance
is expected to decrease throughout the financial year-ending 31
March 2012.
Cash and cash equivalents
The Group had cash and bank deposits of EUR27.6m at the end of
the period (2010: EUR18.3m). The increase in the year is the result
of EUR28m of new equity (net of expenses) raised in February 2011.
This was off-set by EUR18.0m of cash out-flows from operating
activities, (including EUR4.6m net increase in inventory largely
resulting from Diamond Wood postponing its orders), and EUR1m of
capital expenditure.
New equity
On 22 February 2011, the Company completed a fund-raising. The
Firm Placing and Placing and Open Offer resulted in the issue of
200,000,000 new Ordinary shares at EUR0.15 each to various new and
existing institutional and private investors as well as members of
management. This generated cash of EUR28.1m after expenses of
EUR1.9m (EUR253,000 of which was paid after 31 March 2011).
Trade and other receivables
Trade and other receivables have increased to EUR9.6m (2010:
EUR8.7m) primarily as the result of increased trade receivables
attributable to higher sales than the prior year and EUR0.6m of
overdue trade receivables due from Diamond Wood.
Trade and other payables
Trade and other payables have decreased marginally to EUR6.3m
(2010:EUR6.4m). Payables balance has remained consistent compared
to the prior year with the larger activity levels being off-set by
reduced expenditure in respect of other operating expenses.
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 22. 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.
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 13. No
person has any special rights of control over the Company's share
capital and all issued shares are fully paid.
Risks and uncertainties
The net assets as at 31 March 2011 of EUR75m contain balances in
relation to the Group's goodwill and intellectual property rights
of EUR7.3m. 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 other new licence
agreements. While the scope and timing of the production facilities
to be built by the Group's existing licensees remains uncertain, in
particular as Diamond Wood has not yet completed its planned fund
raising, the Directors continue to remain confident that revenue
from either existing licensees or new licensees will be generated,
demonstrating the recoverability of these balances.
In addition, the carrying value of the EUR26.4m of property,
plant and equipment, which primarily relate to the Arnhem plant,
are largely dependent upon the future profitable sales of Accoya(R)
wood made there. The price of the Accoya(R) wood and the raw
materials and other inputs vary according to market conditions
outside of our control. Should the price of the raw materials
increase by more than the sales price or in a way which no longer
makes Accoya(R) wood as competitive, then the carrying value of the
property, plant and equipment may be in doubt and become impaired.
The Directors are comfortable that the current market and best
estimates of future prices means that this risk is limited.
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, which is deemed to be 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. No
assumptions have been made concerning the collection of licence
income from existing or new licensees.
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.
Hans Pauli
Chief Financial Officer
29 June 2011
Directors Report for the year ended 31 March 2011
The Directors present their report together with the financial
statements for the year ended 31 March 2011.
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, sale and
licensing of Accoya(R) solid wood and Tricoya(R) wood elements
technologies. Manufactured through the Group's proprietary
acetylation process, these products exhibit superior dimensional
stability and durability compared with other natural and treated
timber and wood elements (wood chips, fibres and particles). The
Group is also engaged in the development of other related process
technologies with potential applications in the wood and chemicals
industries. A review of the business is set out in the Chairman's
statement and the Chief Executive's report on pages 1 to 5.
Financial instruments
Details of the use of financial instruments by the Company and
its subsidiary undertakings are set out in Note 24 of the financial
statements.
Share issues
On 22 February 2011, following the publication of a prospectus
for the Firm Placing and Placing and Open Offer, the Company issued
200,000,000 new Ordinary shares for EUR0.15 each. Proceeds of
EUR28,061,000 were received net of expenses of EUR1,939,000. At the
same time, 2,500,000 new Ordinary shares were issued to an Employee
Benefit Trust, the beneficiaries of which are the Executive
Directors and Senior Managers (see note 13).
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 do so 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.
In the current economic climate, the potential to enter into
additional licence agreements may be lower than originally
anticipated.
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.
The Group has Intellectual Property Rights and Goodwill
amounting to EUR7.3m. The carrying values of these assets are
dependent on the raising of funds by Diamond Wood or other
licensees to build their production plants and execute their
business plans. See the Financial Review for more details.
(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 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.
Key performance indicators
The Directors consider the following to be key performance
indicators by which progress in the development of the business may
be assessed:
-- Sales values of Accoya(R) wood and the geographic spread of
these sales;
-- Annual nameplate capacity of the Accoya(R) wood production
facility in Arnhem - see the Chief Executive's report for more
information;
-- Process improvements to reduce progressively the direct cost
per m(3) to produce Accoya(R) wood, optimising the utilisation of
direct materials, utilities and capacity utilised in the wood
modification process; and
-- The volume in m(3) of licensee's production facilities in
use. There are currently no licensee production facilities in
use.
-- Break-even of the Arnhem plant
Future developments
The Directors' priorities for the Group's future development
include:
-- Creating a worldwide user community - building a global
network to sell, support, provide feedback and licence our
products;
-- Product excellence - perfecting our engineering process to
increase efficiencies, maximise product quality and demonstrate the
operating platform to future potential licensees;
-- Protecting our knowledge - developing and promoting the
Accoya(R) Technology Centre;
-- Building the Accoya(R) and Tricoya(R) brands - marketing the
many superior benefits of Accoya(R) and Tricoya(R) internationally;
and
-- Being first and maintaining leadership - continual
development of new species testing and creation of new
products.
Directors
The Directors of the Company during the year were:
Paul Clegg
Hans Pauli appointed 1 April 2010
Gordon Campbell
The Rt. Hon. Lord Sanderson of
Bowden, Kb, D.L.
Patrick Shanley appointed 18 November 2010
Kevin Wood resigned 18 November 2010
Willy Paterson-Brown resigned 30 September 2010
Tim Paterson-Brown resigned 1 April 2010
Thomas Priday resigned 1 April 2010
On 17 May 2011, Nick Meyer was appointed as a Director of the
Company.
Directors' interests in the Ordinary shares of the Company
The Directors' interests in the Ordinary shares at the year-end
were as follows:
Direct holdings Beneficial interests
31 March 2011 31 March 2010 31 March 2011 31 March 2010
Gordon
Campbell 173,333 100,000 - -
Paul Clegg 341,110 41,110 750,000 -
Hans Pauli 200,000 - 500,000 -
Lord
Sanderson 15,761 1,095 - -
Patrick 166,666 - - -
Shanley
Directors' indemnities
The Company maintains directors' and officers' liability
insurance which gives appropriate cover for legal action brought
against its Directors.
Charitable donations
Charitable donations of EUR2,000 (2010: EURnil) were made during
the year.
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.
Health and safety
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.
Creditor payment policy
The Group's policy, in relation to all of its suppliers, is to
negotiate terms of payment when agreeing the terms of transactions,
to ensure that those suppliers are made aware of the terms of
payment and to abide by those terms provided that it is satisfied
that the supplier has provided the goods or services in accordance
with the agreed terms and conditions. The Group does not follow any
universal code or standard on payment practice but subsidiary
companies are expected to establish and adhere to payment terms
consistent with local procedures, custom and practice. For the year
ended 31 March 2011, the average payment period for trade creditors
for the Group was 29 days (2010: 33 days) and for the Company was
90 days (2010: 80 days).
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% as at 31 March
2011:
-- Royal Bank of Canada 5.73%
-- OP-Pohjola Group Central Cooperative 5.55%
-- FIL Limited (formerly known as Fidelity International
Limited) 5.38%
-- The London & Amsterdam Trust Company Limited 5.13%
-- Invesco Limited 5.05%
-- Saad Investments Company Limited 3.92%
-- Legal & General Group Plc (L&G) 3.21%
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 foreseeable future. Further details
are set out in Note 1 to these financial statements.
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.
Auditors
BDO LLP resigned as auditors on 31 March 2011 under s.516 of the
Companies Act 2006. BDO LLP did not indicate any circumstances
connected with their resignation which they or the Company
considered should be brought to the attention of the members or
creditors of Accsys.
PricewaterhouseCoopers LLP were appointed by the Board as
auditors on 1 April 2011. 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
29 June 2011
Corporate and Social Responsibility
Our Corporate Vision
Advancing technologies for a better world
Accsys Technologies is an environmental science and technology
company, focused on the licensing and production of environmentally
friendly and sustainable acetylated wood products. A focus on
corporate and social responsibility lies at the very core of our
business. Our technologies not only enable us to manufacture wood
products that offer 'best in class' durability, dimensional
stability and a wide spectrum of environmental advantages over
alternative environmentally threatened or compromised products, but
also provide attractive opportunities for licensees and our other
stakeholders. We want to ensure that our business is not only a
commercial success, but that we also continue to advance
technologies for a better world.
Our products and the environment
The main environmental benefit of our Accoya(R) and Tricoya(R)
acetylated wood products is their use as a substitute for other
environmentally damaging products including chemically treated
woods that use toxic preservatives, unsustainably sourced tropical
timbers and materials produced from energy intensive or
non-renewable resources such as metals (for example, steel and
aluminium) and plastics (such as PVC).
Carbon footprint
During their growth, trees convert carbon dioxide (CO(2) )
through photosynthesis into cellulose and lignin and emit oxygen in
the process. As a result, during their lifespan trees act as carbon
sinks, since CO(2) is captured from the atmosphere and makes up
approximately half of the dry weight stored in the wood of the
tree. The carbon is stored in the living tree, but will also remain
stored once the tree is felled and the wood of the tree is used for
products such as Accoya(R) and Tricoya(R) . As a consequence, CO(2)
is locked out of the natural carbon cycle during the lifespan of
the wood or wood product. Through decay or incineration, the carbon
will eventually be released again into the atmosphere in the form
of CO(2) . This means that the use of renewable materials such as
wood can be perceived as CO(2) neutral (if CO(2) emitted during
production and transport of wood products is not taken into
account).
In producing Accoya(R) wood, we improve this carbon capture
mechanism in two ways. Firstly by using fast growing softwood
species, such as radiata pine, as input for our acetylation
process. Per hectare, more cubic metres of radiata pine can be
grown (20-28 m3/ha/yr) compared to slower growing wood species such
as teak (6 m3/ha/yr) or even most bamboo (10 m3/ha/yr).
Consequently, a larger amount of carbon is sequestered compared to
slow growing wood species.
Secondly, through the acetylation process the dimensional
stability and durability (durability class 1 according to EN
standard 350-1) of a wood species are improved considerably,
lengthening the product lifespan. Thus Accoya(R) wood is able to
act as a longer term carbon sink that needs less additional care,
as compared to other woods. These unique properties allow us to
warrant Accoya(R) wood for 50 years above ground and 25 years below
ground (please see our Certificates of Warranty for full
details).
Life cycle assessment
Besides having a low carbon footprint, Accoya(R) wood provides
additional environmental advantages in the use phase, such as lower
maintenance requirements due to its higher dimensional stability, a
longer lifespan and a high value for thermal insulation which means
improved energy efficiency. This has been shown in Life Cycle
Analysis (LCA) work carried out by various independent research
institutes following recognised norms such as ISO 14010. These
include EMPA and the Swiss Institute 2007. EMPA confirmed that the
application of Accoya(R) wood in window frames over a life span of
60 years gives a 19-26% better performance compared to window frame
material alternatives such as wood, PVC and aluminium.
Non-toxic
In contrast to wood products that achieve durability via
treatment processes (such as chromate copper arsenate (CCA) or
alkaline copper quat (ACQ) treatments), our product is 100%
non-toxic and does not leach harmful substances into the
environment. Since Accoya(R) wood is modified to the core it has
outstanding durability and there is no need to field treat the wood
with additional toxins when it is cut or drilled as with envelope
treated woods. Accoya(R) wood offers a real alternative to these
types of products.
Camco carbon footprint report
In 2009 we commissioned Camco, a leading independent
environmental consultancy group, to report on the carbon footprint
of Accoya(R) wood so that we could better understand our product,
its impact on the environment and identify where further
improvements were possible. Camco's report resoundingly supports
Accoya(R) wood's carbon sequestration credentials and contrasts
Accoya(R) wood with other woods and man-made construction materials
that it can replace, such as aluminium, PVC and steel. These
materials do not sequester carbon and during production emit a
considerably higher amount of carbon dioxide. Camco reported that,
for example, in the production of aluminium over 140 times more
CO(2) is released into the atmosphere per cubic metre than in the
production of Accoya(R) wood. Copies of Camco's report are
available upon request from our offices.
The Camco report figures show the annual greenhouse gas
emissions per cubic metre of Accoya(R) wood, published in kg CO(2)
equivalent, and translated into real life applications in order to
account for the use-phase aspects. They take into account that over
50% of the minimal energy required to make Accoya(R) wood comes
from renewable sources.
In this application-based cradle to grave assessment, aspects
such as material use, durability, carbon sequestration and
maintenance were taken into account for a fair comparison with
other building materials. The figures exclude the end-of-life
phase, which could provide additional carbon advantages to wood
products, including Accoya(R) , in the case of incineration for
energy production (substitute for fossil fuels). It can be
concluded that Accoya(R) wood is one of the very few man-made
construction materials verified by an independent environmental
consultancy group to have such an advantageous carbon
footprint.
By understanding this, one can begin to appreciate the impact
that Accoya(R) wood and Tricoya(R) wood elements can have in
slowing the accumulation of CO(2) in the atmosphere that
contributes to climate change.
In the case of Sneek Bridge I, Camco reported that 210 tons of
CO(2) is sequestered by Accoya(R) wood (calculation based on use of
acetic anhydride produced through carbonylation). This number
includes the emissions required to produce Accoya(R) wood. This
shows that Accoya(R) wood may act as a true carbon sink, and in
some cases can even act as a carbon negative material. This stands
in strong contrast with engineered materials such as steel and
concrete which are unable to sequester CO(2) and emit a large
amount of greenhouse gases during production (13884 kg CO(2)
equivalent / m3 for steel and 495 kg CO(2) equivalent / m3 for
concrete produced).
Sustainable forestry
Wood sourced from sustainably managed forests and plantations is
an environmentally responsible resource, which is, in theory
inexhaustible. Nevertheless, the demand for durable wood from
certified forests is higher than the supply, as Greenpeace
International (2007) confirms: "Support for the FSC label is high
among major purchasers and retailers of forest products, but the
tens of billions of dollars in market demand for FSC products still
far exceeds supply".
Our products therefore offer an "in demand" sustainable
alternative to tropical hardwoods. The fast growing, high yield
renewable softwoods used in producing Accoya(R) wood can be grown
and harvested in 25 years, unlike tropical hardwoods that take over
100 years to mature. The wood we use is harvested from FSC, PEFC
and other certified sources giving ourselves, our customers and our
investors comfort that our supply forests are managed in a
sustainable way and are sensitive to the needs of the local
environment. We oblige all our licensees to adhere to our
requirements in this regard.
Our procedures and practices are assessed annually by the
independent certification body Control Union (www.controlunion.com)
to ensure that we meet FSC and PEFC Chain of Custody guidelines.
Directives and procedures regarding FSC and PEFC regulations are an
integral part of Accsys Technologies' quality management
system.
Continuing Research
Through our research and development group we are continually
looking for ways to develop our technologies and products to make
them more energy efficient and to reduce as far as possible any
adverse impact on the environment. One such area is that of timber
sourcing. Radiata pine, sourced from a variety of locations, is the
species currently used to produce most Accoya(R) wood. Research
shows that, although the intercontinental transport distance may be
high, in many instances the annual transport emissions of
acetylated radiata pine are competitive when compared with various
continentally sourced timber species. This is due to the efficient
low emissions per tonne per km transport used (sea transport), low
weight, and lifespan improvement through acetylation. For more
detailed background information please refer to the Timber
Transport Emissions Calculator available in the Sustainability
section of our website.
Nevertheless, we are currently engaged in comprehensive species
testing with the end goal of being able to commercially acetylate
the species that are most local to any of our current and potential
licensees, wherever they may be in the world. That means reducing
the need for transporting raw wood and therefore reducing our
carbon footprint further still. Improving efficiency within our
plant in Arnhem in order to achieve higher batch volumes, shorter
batch times, lower energy consumption and improved renewable energy
content is an ongoing goal. We are also investigating ways to
directly recycle by-product acetic acid and upgrade it to acetic
anhydride on site, for a closed loop system.
Engaging with local communities
We actively engage with local community projects as far as
possible on a pro-bono basis. By so doing we hope to:
showcase the high performance of our products;
- draw attention to the viability of "green" products;
- assist local communities in reaching their goals.
Examples of these efforts include the construction of the Sneek
Bridges in the Netherlands, and the Green Life Smart Life Project,
a green home building project in the US.
In support of the London Capital Clean Up campaign, Accsys
Technologies also donated Accoya(R) wood to The Rosemary Works
Community Association. Accoya(R) wood was used to make raised
planters, which have been installed on the edge of Regent's Canal,
London as part of its regeneration.
We are also proud to have supported the London homelessness
charity, St Mungo's. Accoya(R) wood products, including decking,
compost bins and outdoor furniture have been crafted in St Mungo's
wood workshop in London, where homeless people develop new skills
that will enable them to move on to further training and
qualifications to help turn their lives around long-term. The items
that St Mungo's made were showcased at The Eden Project's 'Places
of Change' garden at the 2010 RHS Chelsea Flower Show in London.
The 'Places of Change' garden was an ambitious collaboration
between a national housing and regeneration delivery agency, The
Eden Project and frontline homelessness agencies. Its aim was to
use a sustainably constructed, high profile garden to challenge
stereotypes around homelessness.
Accsys Technologies sponsored the University of Florida's
International Solar Decathlon entry in 2010. This award winning
program helps educate current and future building industry
practitioners in the use of sustainable materials and energy
efficient designs.
Reconstruction efforts in Haiti
Accsys Technologies partnered with non-profit organization
Architecture for Humanity to raise funds for sustainable
reconstruction in Haiti. For every Greenbuild 2010 Expo attendee
who participated, Accsys Technologies donated $10 towards the
group's Earthquake Reconstruction Program in Haiti.
The funds raised were used to sponsor an architect working in
Haiti under Architecture for Humanity's Design Fellowship Program,
enabling the organisation to continue its efforts to rebuild the
infrastructure in Haiti that was destroyed in the January 2010
earthquake. The nonprofit design services firm is running several
reconstruction programs in Haiti, including an initiative focused
on the design and construction of primary and secondary schools.
Designs will emphasise hurricane and earthquake-proof construction,
climate sensitive/passive cooling techniques, community-centred
design and development, local materials and the stimulation of
local economies.
Accoya(R) helps kids have the holiday of a lifetime
In summer 2010 we were the proud sponsor of a group of young
cyclists who participated in Holland's 'Ome Joop's Tour'. This
annual event aims to give 180 elementary school children from
deprived backgrounds and who would not otherwise have a holiday an
unforgettable and fulfilling ten day break. Thirty teams of six
children cycled in a colourful procession through the beautiful
Dutch countryside, participating in different events and activities
along the way, making new friends and enjoying companionship and
teamwork. Sporting yellow t-shirts and big smiles 'Team Accoya'
pedalled hard and had a wonderful time.
Health and safety
Accsys Technologies is committed to maintaining a healthy and
safe environment for all its group employees, licensees, business
partners, customers and the communities in which we operate. Our
plant in Arnhem, the Netherlands, uses acetic anhydride in the
production of Accoya(R) wood and generates acetic acid as a
by-product of acetylation.
We mitigate any marginal health and safety risk associated with
these chemicals and the production process as a whole by regular
inspections to ensure our plant is fully compliant with legal and
regulatory health and safety requirements. Our wholly owned
subsidiary company, Titan Wood BV, ensures operation of the
facilities meet the highest health and safety standards and are in
accordance with our bespoke Health and Safety Policy.
The Health and Safety Policy provides for:
- monthly staff meetings to discuss health and safety
matters;
- the promotion of knowledge of our employees and their input in
the field of health and safety;
- the promotion of a safety conscious attitude amongst
employees;
- reducing as far as possible the use and exposure of employees
to harmful substances;
- encouraging the development of better, safer and healthier
working methods and equipment to prevent distress and/ or material
damage arising from work and work related accidents;
- addressing the root causes of potential dangers, preventing
situations that may otherwise lead to accidents;
- the proper design of our production facility;
- regular maintenance and inspection of our facility;
- selecting suppliers according to our requirements for health
and safety in addition to quality and environmental concerns.
The health and safety measures taken by Titan Wood BV have
helped ensure there have been no material health and safety issues
in any part of the business.
Our employees and office
Our employees are vital to achieving our corporate vision. We
strive to build real collaborative team spirit, where each employee
feels valued and their individual needs are listened to.
We are committed to upholding the basic principles of equality
and fairness by treating all of our employees with respect and
doing our best to ensure that all of our business partners adhere
to the same code. We do not tolerate the harassment or intimidation
of any of our employees, and all employees are encouraged to bring
any such issues to the attention of either senior management or
their Human Resources contact.
We will seek out and employ the best qualified personnel
regardless of race, religion, belief, ethnic background,
nationality, age, marital status, sex, sexual orientation or
disability. We believe that diversity should be encouraged and
inclusion should be the norm.
Each of our groups' offices in the United Kingdom, the
Netherlands and the United States promote an environmentally
friendly policy. We believe even small actions contribute to our
overall goals. For example, we use either 100% recycled paper or
paper produced from wood pulp harvested from sustainable forests
and encourage a policy of recycling by providing recycling bins in
the office. Our employees are expected to switch off computers,
lights and other electrical goods when not in use to conserve
energy. Our offices are also being fitted with energy efficient
light bulbs.
Our business partners
We want our own activities and also those of our licensees,
suppliers and other business partners to be socially and
environmentally responsible. We are committed to a policy of
minimising any negative social and environmental impact that may
flow from our activities and expect the same high standards from
our business partners.
In particular, we expect our business partners:
- to provide a healthy and safe environment for their staff,
customers and visitors, and to comply with all applicable local
environmental, safety and health regulations;
- not to engage in or support the use of child labour;
- not to use forced labour (for example prison, indentured,
bonded) and subject to local legislation, allow all employees the
right to free assembly and collective bargaining;
- to provide an equality of opportunity and not discriminate
against any worker on any grounds of age, sex, marital status,
disability, colour, race, religion, nationality or ethnic
origin;
- not to engage in harassment or intimidation of employees or
support the use of corporal punishment, mental, physical, sexual or
verbal abuse;
- to comply with all applicable wage and hour laws and
regulations in their relevant jurisdiction, including minimum wage,
overtime and maximum hours.
Recognition and endorsements
Accsys Technologies received the overall Dutch National Award
for Sustainability Innovation, "The Columbus Egg", and the Award
for Sustainable Production Technology for Accoya(R) wood. These
awards are granted by the Dutch Government and are designed to
reward sustainability innovation within businesses operating in the
Netherlands.
For the South-East Asian market we have attained the highly
regarded Green Label of the Singapore Environment Council. The
Singapore Environment Council (SEC) was set up to promote
environmental awareness in South East Asia. The 'Green Label' was
set up to reward environmentally friendly products sold within the
region with eco-labels that can only be obtained by compliance with
the strict eco standards specified by the SEC's scheme.
The awarding body of the prestigious Debokeur(R) certification,
Nederlands Instituut voor Bouwbiologie, issues certificates only to
the most environmentally friendly products within a particular
application, taking into account a range of stringent factors. This
certification is of particular significance to our Dutch customers,
unequivocally positioning Accoya(R) wood as an outstanding
environmental choice for window frames according to Dutch
sustainable building regulations.
Accoya(R) wood won the prestigious International Wood Products
Association award (IWPA) for Innovative excellence in April 2011 at
the annual conference in New Orleans.
Accoya(R) wood is one of the very few building products to have
acquired Cradle to Cradle SM Gold Certification by MBDC. Cradle to
Cradle Certification provides a means to tangibly and credibly
measure achievement in environmentally-intelligent design and helps
customers purchase and specify products that are pursuing a broader
definition of quality. This includes using environmentally safe and
healthy materials and instituting strategies for social
responsibility.
The Future Build is a green building materials portal that helps
architects, engineers and contractors - particularly in the United
Arab Emirates and wider region - confidently select and source
environmentally sustainable, third party certified products to meet
their projects' environmental objectives. Only products that have
been assessed and selected according to standards and criteria set
by Masdar City, Abu Dhabi, are listed. Accoya(R) wood was rated as
excellent or A in 2011.
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 Combined Code on Corporate
Governance issued by the Financial Reporting Council. The Combined
Code is not 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
Throughout the period, the Board comprised a non-executive
Chairman, two executive Directors and a minimum of two
non-executive directors.
The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the framework
of internal controls. The Board has a formal schedule of matters
specifically reserved to it for decision. 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. Additional board
meetings were held in the run up to the fund-raising that was
completed on 22 February 2011.
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 Management board
of which the Chief Executive Officer and the Chief Financial
Officer are members.
Audit Committee
The Audit Committee consists of Patrick Shanley (Chairman),
Gordon Campbell and Lord Sanderson. Prior to Patrick Shanley
joining the board on 18 November 2010, Gordon Campbell acted as
Chairman. Nick Meyer joined the Audit Committee on 17 May 2011. 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 an 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 Lord
Sanderson (Chairman), Gordon Campbell and Patrick Shanley. Prior to
Patrick Shanley joining the board on 18 November 2010, Kevin Wood
was also a member. Nick Meyer joined the Nominations and
Remuneration Committee on 17 May 2011. 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. In framing the Company's remuneration
policy, the Nominations & Remuneration Committee has given full
consideration to Section B of The Combined 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. An on-going review
of the effectiveness of the system of internal financial control
operating across the group is on-going and has resulted in changes
which Management has been putting in place to improve the
effectiveness.
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. 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 Serving Attended Serving Attended Serving
Gordon Campbell 14 17 4 4 7 7
Paul Clegg 16 17 4 - 3 -
Tim
Paterson-Brown
(1) 1 1 1 1 1 1
Willy
Paterson-Brown
(2) 4 4 2 - 2 -
Hans Pauli (3) 16 15 4 - 4 -
Thomas Priday
(4) - 1 - - - -
Lord Sanderson 11 17 4 4 7 7
Patrick Shanley
(5) 9 10 2 1 3 2
Kevin Wood (6) 5 7 2 - 3 3
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) Resigned as a Director on 1 April 2010
(2) Resigned as a Director on 30 September 2010
(3) Appointed as a Director on 1 April 2010 (classed as in
attendance but not serving on date of appointment)
(4) Resigned as a Director on 1 April 2010
(5) Appointed as a Director on 18 November 2010 (classed as in
attendance but not serving on date of appointment)
(6) Resigned as a Director on 18 November 2010
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.
Consolidated statement of comprehensive income for the year
ended 31 March 2011
Note 2011 2011 2011 2010 2010 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Before Diamond Wood Before Diamond Wood
Diamond Wood adjustments Diamond Wood adjustments
adjustments and adjustments and
and restructuring and restructuring
restructuring costs (Notes restructuring costs (Notes
costs 3 and 7) Total costs 3 and 7) Total
Accoya(R) wood
revenue 12,567 - 12,567 9,136 - 9,136
Licence revenue 70 - 70 6,688 - 6,688
Other revenue 1,063 - 1,063 899 - 899
----------------- ---- ------------- ------------- --------- ------------- ------------- ---------
Total revenue 13,700 - 13,700 16,723 - 16,723
Total cost of
sales (14,209) - (14,209) (14,572) - (14,572)
Gross (loss) /
profit (509) - (509) 2,151 - 2,151
Other operating
costs before
restructuring
costs 3 (13,486) - (13,486) (17,772) - (17,772)
Restructuring
costs 3 - (202) (202) - (862) (862)
----------------- ---- ------------- ------------- --------- ------------- ------------- ---------
Total other
operating costs (13,486) (202) (13,688) (17,772) (862) (18,634)
Release of
impairment/
(impairment) of
licensee
receivables 6 - 394 394 - (25,458) (25,458)
Impairment of
equity
investment 6 - - - - (10,000) (10,000)
Loss from
operations 7 (13,995) 192 (13,803) (15,621) (36,320) (51,941)
Finance income 8 18 - 18 18 - 18
Finance expense 9 (66) - (66) (291) - (291)
Loss before
taxation (14,043) 192 (13,851) (15,894) (36,320) (52,214)
Tax
(charge)/credit 10 (553) - (553) 75 - 75
Loss for the
period (14,596) 192 (14,404) (15,819) (36,320) (52,139)
============= ============= ========= ============= ============= =========
Gain arising on
translation of foreign
operations (14) - (14) 23 - 23
Total comprehensive
loss
for the period (14,610) 192 (14,418) (15,796) (36,320) (52,116)
============= ============= ========= ============= ============= =========
Basic and diluted
loss per
ordinary share 12 EUR(0.06) EUR(0.32)
The notes on pages 24 to 43 form part of these financial
statements.
Consolidated statement of financial position at 31 March
2011
Registered Company 05534340
Note 2011 2010
EUR'000 EUR'000
Non-current assets
Intangible assets 14 7,576 7,588
Property, plant and equipment 15 26,427 26,972
Available for sale investments 16 - -
Deferred tax 17 2,095 2,644
36,098 37,204
---------- ----------
Current assets
Inventories 19 8,420 3,755
Trade and other receivables 20 9,589 8,741
Cash and cash equivalents 27,576 18,258
Corporation tax 8 36
45,593 30,790
---------- ----------
Current liabilities
Trade and other payables 21 (6,317) (6,437)
Corporation tax - -
(6,317) (6,437)
---------- ----------
Net current assets 39,276 24,353
Total net assets 75,374 61,557
========== ==========
Equity and reserves
Share capital - Ordinary shares 22 4,031 2,006
Share premium account 124,809 98,748
Capital redemption reserve 148 148
Warrants reserve 82 82
Merger reserve 106,707 106,707
Retained earnings (160,387) (146,157)
Own shares (25) -
Foreign currency translation reserve 9 23
Total equity 75,374 61,557
========== ==========
The financial statements were approved by the Board and
authorised for issue on 29 June 2011
Paul Clegg )
) Directors
Hans Pauli )
The notes on pages 24 to 43 form part of these financial
statements.
Consolidated statement of changes in equity for the year ended
31 March 2011
Foreign
Capital currency
Share redem- 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 2009 1,556 78,191 148 82 106,707 - - (94,345) 92,339
Total
comprehensive
income for
the period - - - - - - 23 (52,139) (52,116)
Share based
payments - - - - - - - 327 327
Shares issued 450 - - - - - - - 450
Premium on
shares
issued - 21,633 - - - - - - 21,633
Share issue
costs - (1,076) - - - - - - (1,076)
Balance at
31 March 2010 2,006 98,748 148 82 106,707 - 23 (146,157) 61,557
--------- -------- -------- -------- -------- ------- --------- ---------- ---------
Total
comprehensive
income for
the period - - - - - - (14) (14,404) (14,418)
Share based
payments - - - - - - - 174 174
Shares issued 2,025 - - - - (25) - - 2,000
Premium on
shares
issued - 28,000 - - - - - - 28,000
Share issue
costs - (1,939) - - - - - - (1,939)
Balance at
31 March 2011 4,031 124,809 148 82 106,707 (25) 9 (160,387) 75,374
========= ======== ======== ======== ======== ======= ========= ========== =========
Share capital is the amount subscribed for shares at nominal
value (note 22).
Share premium 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.
Warrant reserve represents the costs associated with the issue
of warrants, calculated using a Black-Scholes model.
Merger reserve arose prior to transition to IFRS when merger
accounting was adopted.
Own shares represents 2,500,000 shares issued to an Employee
Benefit Trust at nominal value on 22 February 2011. See note
13.
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.
Retained earnings represent the cumulative loss of the group
attributable to the owners of the parent.
The notes on pages 24 to 43 form part of these financial
statements.
Consolidated statement of cash flow for the year ended 31 March
2011
2011 2010
EUR'000 EUR'000
(Loss)/profit before taxation (13,851) (52,214)
Adjustments for:
Amortisation of intangible assets 264 264
Depreciation of property, plant and equipment 1,630 1,609
Loss on disposal of property, plant and
equipment 8 999
Finance (income)/expense 48 229
Reversal of impairment/(impairment) of receivables
and investment (394) 35,458
Equity-settled share-based payment expenses 174 327
Cash flows from operating activities before
changes in working capital (12,121) (13,328)
(Increase)/decrease in trade and other receivables (468) 5,592
(Increase)/decrease in inventories (4,661) 1,144
Decrease in trade and other payables (480) (7,307)
Net cash absorbed by operating activities
before tax (17,730) (13,899)
Tax received/(paid) 24 (103)
Net cash flows from operating activities (17,706) (14,002)
========= =========
Cash flows from investing activities
Interest received 18 18
Purchase of available for sale investments - (4,000)
Expenditure on capitalised internal development (252) -
Disposal of property, plant and equipment 22 2
Purchase of property, plant and equipment (1,073) (2,029)
Net cash absorbed by investing activities (1,285) (6,009)
========= =========
Cash flows from financing activities
Proceeds from loans - 4,000
Finance expenses - (246)
Dividends paid - -
Proceeds from issue of share capital 30,000 17,167
Share issue costs (1,686) (160)
Net cash from financing activities 28,314 20,761
========= =========
Effect of exchange rate changes on cash
and cash equivalents (5) 5
Net increase in cash and cash equivalents 9,323 750
Opening cash and cash equivalents 18,258 17,503
Closing cash and cash equivalents 27,576 18,258
========= =========
The notes on pages 24 to 43 form part of these financial
statements.
Notes to the financial statements for the year ending 31 March
2011
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 2011 or 31 March 2010. Statutory accounts
for the period ended 31 March 2010 have been filed with the
Registrar of Companies and those for the period ended 31March 2011
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 2010
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 2011 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.
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 and with those parts of the
Companies Act 2006 applicable to companies preparing their accounts
under adopted IFRS.
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, which is deemed to be 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. No
assumptions have been made concerning the collection of licence
income from existing or new licensees.
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.
Risks and uncertainties
The net assets as at 31 March 2011 of EUR75m contain balances in
relation to the Group's goodwill and intellectual property rights
of EUR7.3m. 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 other new licence
agreements. While the scope and timing of the production facilities
to be built by the Group's existing licensees remains uncertain, in
particular as Diamond Wood has not yet completed its planned fund
raising, the Directors remain confident that revenue from either
existing licensees or new licensees will be generated,
demonstrating the recoverability of these balances.
In addition, the carrying value of the EUR26.4m of tangible
fixed assets, which primarily relate to the Arnhem plant, are
dependent upon the future profitable sales of Accoya(R) wood made
there. The price of the Accoya(R) wood and the raw materials and
other inputs vary according to market conditions outside of our
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 tangible fixed assets
may be in doubt and become impaired. The Directors are comfortable
that the current market and best estimates of future prices means
that this risk is limited.
Changes in accounting policies
The Group has adopted IAS 1 "Presentation of Financial
Statements" (Revised) in the previous financial year.
The following accounting standards, amendments and
interpretations issued by the IASB and the IFRIC are effective for
the year ended 31 March 2011 but have had no material effect on the
results or financial position of the Company disclosed within these
financial statements:
-- Amendment to IFRS 1 - 'First-Time Adoption of IFRSs'
-- Amendment to IFRS 2 - 'Group Cash-Settled Share-Based Payment
Transactions'
-- Amendments to IFRS 3 - 'Business Combinations' and IAS 27 -
'Consolidated and Separate Financial Statements'
-- Amendment to IAS 32 - 'Classification of Rights Issues'
-- Amendment to IAS 39 - 'Eligible Hedged Items'
-- IFRIC 17 - 'Distributions of Non-cash Assets to Owners'
-- IFRIC 18 - 'Transfers of Assets from Customers'
-- Various Improvements to IFRSs published in April 2009
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 balance sheet, 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.
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 income
Licence fee 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. 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.
Share based payments
The Company awards share options to acquire shares of the
Company to certain directors and employees. In addition the Company
awards bonuses to certain directors and employees in the form of
the award of deferred shares of the Company. The fair value of
options and deferred shares granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is
measured at grant date and is charged to the comprehensive income
statement over the vesting period during which the employees become
unconditionally entitled to the options.
The fair value of the 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 comprehensive income statement on an
accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the comprehensive income
statement 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.
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 those instances where it is probable that
taxable profit will be available against which the difference 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 Company, and the presentational 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 where there is reasonable
assurance that the grant will be received and all attaching
conditions will be complied with. 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, the
fair value is credited to a deferred income account and is released
to the income statement over the expected useful life of the
relevant asset by equal annual instalments.
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
comprehensive income statement. As the Group has taken advantage of
the exemption from re-stating all pre-transition acquisitions under
IFRS 1 'First-time Adoption of International Financial Reporting
Standards', goodwill includes intangible assets arising on those
acquisitions that are separately identifiable.
Other intangible assets
Intellectual property rights, including patents, which cover a
portfolio of novel chemical processes and products, are shown in
the financial statements at cost less 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 expenses 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. Previously the Group has not been able to reliably
measure the expenditure incurred on individual development
activities and such costs had not been capitalised. 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
depreciation and any impairment charged. 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%.
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 is recognised in the comprehensive income
statement to the extent that the carrying amount exceeds the
assets' recoverable amount. The revised carrying amounts are
amortised 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 comprehensive income statement 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
comprehensive income statement on a straight-line basis over the
lease term.
Inventories
Raw materials, which consist of unprocessed timber, chemicals
and various materials 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 (including 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, 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 with an
original maturity of three months or less. For the purpose of the
consolidated cash flow statement, 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 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.
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.
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.
Available for sale investments
The group has an investment in unlisted equity shares. 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.
Licence related assets
The Group continues to work with Al Rajhi in respect of planning
and other activities and remains confident that the licence will
progress. However, a degree of uncertainty remains over the timing
of their investment, partly due to the recent unrest in Bahrain.
Accsys holds net assets of EUR2.9m (2010: EUR2.9m) in respect of
this licence and if the licence were not to proceed as expected, a
non-cash charge would be recorded relating to the write-off of
these balances.
New standards and interpretations in issue but not yet effective
at the date of authorisation of these financial statements:
-- IFRS 9 - 'Financial Instruments: Classification and
Measurement'
-- IFRS 10 - 'Consolidated Financial Statements'
-- IFRS 11 - 'Joint Arrangements'
-- IFRS 12 - 'Disclosure of Interests in Other Entities'
-- IFRS 13 - 'Fair Value Measurement'
-- IFRIC 14 - 'Prepayments of a Minimum Funding Requirement'
-- IFRIC 19 - 'Extinguishing Financial Liabilities with Equity
Instruments'
-- Various Amendments to IFRSs published in May 2010
-- Amendment to IAS 12 - 'Deferred tax - Recovery of Underlying
Assets'
-- Amendments to IAS 24 - 'Related Party Disclosures'
-- Amendments to IFRS 1 - 'Removal of Fixed Dates for First-Time
Adopters' and 'Severe Hyperinflation'
Entities in EU Member States can only apply IFRS or IFRIC that
have been endorsed by the European Union. Of the standards and
interpretations listed above IFRSs 9, 10, 11, 12 and 13 and the
Amendment to IAS 12 had not yet been endorsed by the European Union
at the date these financial statements were authorised for issue.
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on
the financial statements of the Group. Other standards and
interpretations that have been issued but which are not yet
effective are not expected to have any impact on the Group.
2. Segmental reporting
The Group's business is the development, commercialisation and
licensing of proprietary technology for the manufacture of
Accoya(R) wood and related acetylation technologies. Segmental
reporting is divided between licensing activities, the
manufacturing and sale of Accoya(R) and research and development
activities. Licensing revenue includes revenue attributable to fees
received or receivable in relation to the licensing of the Group's
technology to third parties. Manufacturing revenue includes the
sale of Accoya(R) wood and other revenue, principally relating to
the sale of acetic acid. Revenue is allocated between licence fees
and the product manufactured at the Group's Arnhem facility. All
costs of sales are allocated against the manufacturing activities
in Arnhem unless they can be directly attributable to a licensee.
Administrative expenses incurred in the Netherlands are attributed
to the manufacturing segment unless they can be directly
attributable to research and development, with all other
administrative costs allocated to licensing. Assets and liabilities
cannot be readily allocated to the three segments and therefore no
additional segmental information has been disclosed.
Research
Licensing Manufacturing and Development Total
2011 2010 2011 2010 2011 2010 2011 2010
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Revenue 70 6,688 13,630 10,035 - - 13,700 16,723
Cost of sales - (1,857) (14,209) (12,715) - - (14,209) (14,572)
Gross profit/(loss) 70 4,831 (579) (2,680) - - (509) 2,151
Other operating costs (6,550) (8,992) (5,448) (7,447) (1,488) (1,333) (13,486) (17,772)
Restructuring costs (202) (818) - (44) - - (202) (862)
------------------------- -------- --------- --------- --------- -------- -------- --------- ---------
Total other operating
costs (6,752) (9,810) (5,448) (7,491) (1,488) (1,333) (13,688) (18,634)
Release of
impairment/(impairment)
of licensee
receivables 394 (25,458) - - - - 394 (25,458)
Impairment of equity
investment - (10,000) - - - - - (10,000)
Loss from operations (6,288) (40,437) (6,027) (10,171) (1,488) (1,333) (13,803) (51,941)
Finance income 18 18
Finance expense (66) (291)
Loss before taxation (13,851) (52,214)
========= =========
Analysis of Revenue by
geographical area: 2011 2010
EUR'000 EUR'000
Netherlands 4,371 3,112
Germany 2,495 1,375
United Kingdom 2,095 1,639
China 1,530 9,129
North America 1,295 776
Switzerland 453 98
Italy 301 187
Ireland 221 128
Greece 213 82
India 210 -
Other 516 197
13,700 16,723
========= =========
Analysis of non-current assets (Other than
financial assets and deferred tax): 2011 2010
EUR'000 EUR'000
UK 3,136 3,383
Other countries 26,636 26,946
Un-allocated - Goodwill 4,231 4,231
34,003 34,560
========= =========
Revenue generated from two customers exceeded 10% of Group
revenue in 2011, represented by 100% of the revenue from Germany
and China respectively and relates to manufacturing revenue.
Revenue generated from one customer exceeded 10% of Group revenue
in 2010 and all of this revenue is included within the China region
above, and relates to licensing and manufacturing revenue.
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.
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 London:
2011 2010
EUR'000 EUR'000
Sales and marketing 2,331 3,569
Research and development 1,488 1,333
Depreciation and amortisation 1,894 1,873
Other operating costs 2,287 4,312
Administration costs 5,486 6,683
Restructuring costs 202 862
13,688 18,634
======== ========
Restructuring costs of EUR0.2m were recorded in the year (2010:
EUR0.9m) relating to the termination payments made to staff. This
helped the Group headcount reduce by 22% over two years. Headcount
reduced from 126 at the start of the previous year to 107 at 31
March 2010 and then to 98 as at 31 March 2011. The restructuring
has enabled the Group to focus on improving production and sales at
the Arnhem facility while continuing to develop the licensing
activities.
4. Employees
2011 2010
EUR'000 EUR'000
Staff costs (including Directors)
consist of:
Wages and salaries 5,996 7,571
Social security costs 727 930
Other pension costs 309 652
Share based payments 174 327
7,206 9,480
======== ========
The average number of employees, including
executive Directors, during
the year was as follows: Number Number
Administration, research and
engineering 70 75
Operating 31 37
101 112
======== ========
5. Directors' remuneration
2011 2010
EUR'000 EUR'000
Directors' remuneration consists
of:
Directors' emoluments 682 1,045
Compensation for loss of office 109 384
Company contributions to money purchase
pension schemes 40 20
831 1,449
======== ========
Compensation of key management personnel included the following
amounts:
Fees,
Salary Share
& short based
term Loss payments
benefits Pension of office charge 2011 2010
Total Total
Paul Clegg 283 28 - 145 456 411
Hans Pauli 208 12 - 34 254 -
Kevin Wood
(2010 only) - - - - - 234
Finlay
Morrison
(part year
2010) - - - - - 569
491 40 - 179 710 1,214
========== ======== =========== ========== ====== ======
The Group made contributions to 2 (2010: 2) Directors' personal
pension plans.
6. Impairment of Assets
In June 2010 the Company agreed an amended licence agreement
with Diamond Wood. Under Diamond Wood's revised business plan
(which is subject to the completion of their fundraising) the
capacity of the plant to be built in the first phase is
significantly smaller than that previously expected (300,000m(3)
).
As a result, in the year ended 31 March 2010, it was considered
that net receivables (consisting of trade receivables, accrued
income, prepayments and deferred income) of EUR25.5m relating to
Diamond Wood may no longer be recoverable and were therefore
provided for. This provision reflected the expected change to
Diamond Wood's business plan in respect of both the timing and the
total capacity of the plant that Diamond Wood may now build
compared to previously expected. The impairment included EUR17.2m
of net receivables (trade receivables, accrued income and deferred
income), which was attributable to 48% of the total revenue we have
recognised in respect of our previous contract with Diamond Wood to
date. The remaining 52% has been received in cash.
In addition, pending conclusion of Diamond Wood finalising its
funding arrangements, a provision for the impairment of the entire
balance of the equity investment of EUR10m was recorded as at 31
March 2010. As at 31 March 2011, the funding had not been secured
and accordingly the provision for 100% of the historical cost
continues to be recognised. In the event Diamond Wood completes the
fund raising, the balance may be re-valued.
The reversal of the impairment of EUR0.4m recorded in the year
ended March 2011 represents money received from Diamond Wood under
the licence agreement which had previously been impaired.
Summary of (release of impairment)/impairment charges relating
to Diamond Wood balances:
2011 2010
EUR'000 EUR'000
Trade Receivables and accrued
income (394) 25,966
Deferred income - (8,800)
Prepayments - Licensing commission - 7,467
Prepayments - Basic engineering
plan - 825
(394) 25,458
-------- --------
Equity Investment - 10,000
Total impairment (394) 35,458
======== ========
7. Loss from operations
2011 2010
EUR'000 EUR'000
This has been arrived at after
charging:
Staff costs (including restructuring costs
of EUR195,000 (2010: EUR799,000) 7,206 9,480
Other restructuring costs 7 63
Depreciation of property,
plant and equipment 1,630 1,609
Amortisation of intangible
assets 264 264
Operating lease rentals 431 359
Fees payable to the Company's auditors for the
audit of the Company's annual accounts 60 65
Fees payable to the Company's auditors and
its associates for other services:
- audit of the Company's subsidiaries 78 71
- other services persuant
to legislation 21 55
- tax services 70 34
Foreign exchange (gains)/losses 81 (74)
Research & Development (excluding
staff costs) 714 800
Loss on sale of assets 8 999
EUR90,000 (2010: EUR106,000) of fees payable to the Company's
previous auditors in respect of corporate finance services were
credited to the share premium account.
8. Finance income
2011 2010
EUR'000 EUR'000
Interest receivable on bank
and other deposits 18 18
9. Finance expense
2011 2010
EUR'000 EUR'000
Loan issue costs - 246
Equity line of credit costs 66 45
66 291
======== ========
10. Tax expense
2011 2010
EUR'000 EUR'000
(a) Tax recognised in the
income statement comprises:
Current tax expense
UK Corporation tax on profits
for the year - -
Under/(over) provision in
respect of prior years 1 (101)
1 (101)
Overseas tax at rate of 15% 3 40
Overseas tax at rate of 25.5% - -
Deferred Tax
Recognition of deferred tax asset
on trading losses - prior year - (14)
Utilisation of deferred tax
asset 549 -
Total tax charge/(credit) reported
in the income statement 553 (75)
========= =========
2011 2010
EUR'000 EUR'000
(b) The tax credit for the period
is lower than the standard rate of
corporation tax in the UK (2011:
28%, 2010: 28%) due to:
Loss before tax (13,851) (52,214)
Expected tax credit at 28%
(2010 - 28%) (3,878) (14,620)
Expenses not deductible in
determining taxable profit 123 2,935
Under/(Over) provision in
respect of prior years 1 (101)
Losses transferred to deferred tax
asset but not recognised 4,363 12,303
Recognition of deferred tax
asset on trading losses - (14)
Utilisation of previously unrecognised
losses at local tax rate - (563)
Effects of overseas taxation (56) (15)
Total tax charge/(credit) reported
in the income statement 553 (75)
========= =========
11. Dividends Paid
2011 2010
EUR'000 EUR'000
Final Dividend EURNil (2010: EURNil)
per Ordinary share proposed
and paid during year relating to - -
the previous year's results
12. Earnings per share
The calculation of earnings per ordinary share is based on
earnings after tax and the weighted average number of ordinary
shares in issue during the year.
Basic and diluted earnings per share 2011 2010
Weighted average number of Ordinary shares
in issue ('000) 221,696 162,237
Loss for the year (EUR'000) (14,404) (52,139)
Basic and diluted loss per share EUR(0.06) EUR(0.32)
========== ==========
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.
13. Share based payments
Share Options
The exercise prices and number of outstanding share options were
adjusted at the same time that the Company completed the issue of
401m new shares on 22 February 2011. This adjustment was carried
out under the anti-dilutive provisions of both the 2005 and 2008
Unapproved Share Option Scheme rules. The adjustment resulted in
the exercise price reducing to 71% of the previous exercise price
while the number of share options increased by 42%:
Options granted on 1 March 2005 at an exercise price of EUR0.46
per Ordinary share fully vested during the prior year. These
options may be exercised until 30 March 2015. At 31 March 2011,
2,339,067 of these options were outstanding with an exercise price
of EUR0.32.
Options granted on 14 June 2006 at an exercise price of EUR1.20
per Ordinary share vested immediately but are not exercisable
before 14 June 2009. These options may be exercised until 14 June
2016. At 31 March 2011, 11,333 of these options were outstanding
with an exercise price of EUR0.85.
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 2011, 3,444,666 of these options were outstanding at an
exercise price of EUR1.83.
Options granted on 15 May 2007 at an exercise price of EUR3.84
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 15 May 2017.
At 31 March 2011, 944,391 of these options were outstanding at an
exercise price of EUR2.71.
Options granted on 11 October 2007 at an exercise price of
EUR3.80 per Ordinary share vest to one third of the options granted
upon achievement of each of the following:
-- Cumulative EUR15 million revenue from sales of Accoya(R)
wood
-- Announcement of annual Group distributable earnings exceeding
EUR15 million
-- Cumulative EUR75 million gross licence revenue recognised
under Group accounting policies
Once vested these options may be exercised until 11 October
2017. At 31 March 2011, 1,416,586 of these options were outstanding
at an exercise price of EUR2.68.
Options granted on 20 November 2007 at an exercise price of
EUR3.65 per Ordinary share 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 2011, 477,390 of these options were outstanding
at an exercise price of EUR2.58.
Options granted on 18 June 2008 at an exercise price of EUR2.80
per Ordinary share 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 2011, 417,893 of these options were outstanding at an
exercise price of EUR1.98.
Options granted on 8 December 2008 at an exercise price of
EUR1.38 per Ordinary share 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 2011, 1,333,008 of these options were outstanding
at an exercise price of EUR0.97.
Options granted on 19 November 2009 at an exercise price of
EUR0.50 per Ordinary share vest to 30% of the options granted upon
achievement of median Total Shareholder Return ('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 19 November 2019. At 31 March
2011, 2,557,424 of these options were outstanding at an exercise
price of EUR0.35.
Options granted on 1 April 2010 at an exercise price of EUR0.46
per Ordinary share vest to 30% of the options granted upon
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 April 2020. At 31 March 2011, 1,017,354 of these options
were outstanding at an exercise price of EUR0.32.
Options granted on 27 July 2010 at an exercise price of EUR0.34
per Ordinary share vest to 30% of the options granted 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 27 July 2020. At 31 March 2011, 6,414,985 of these options
were outstanding at an exercise price of EUR0.24.
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.
Outstanding options granted under the share option scheme are as
follows:
Weighted average Post Pre
Number of outstanding remaining Dilution Dilution
contractual
options at 31 March life, in years Option Option
Date of
grant 2011 2010 2011 2010 price price
1 March
2005 2,339,067 2,051,200 3.9 4.9 EUR0.32 EUR0.46
14 June
2006 11,333 23,000 5.2 6.2 EUR0.85 EUR1.20
28 March
2007 3,444,666 3,825,000 6 7 EUR1.83 EUR2.59
15 May
2007 944,391 1,000,000 6.1 7.1 EUR2.71 EUR3.84
11
October
2007 1,416,586 1,000,000 6.5 7.5 EUR2.68 EUR3.80
20
November
2007 477,390 337,000 6.6 7.6 EUR2.58 EUR3.65
18 June
2008 417,893 305,000 7.3 8.3 EUR1.98 EUR2.80
8
December
2008 1,333,008 1,383,000 7.7 8.7 EUR0.97 EUR1.38
19
November
2009 2,557,424 1,805,343 8.6 9.6 EUR0.35 EUR0.50
1 April
2010 1,017,354 - 9 - EUR0.32 EUR0.46
27 July
2010 6,414,985 - 9.3 - EUR0.24 EUR0.34
Movements in the weighted average values are as follows:
average
exercise
price Number
Outstanding at 31 March
2009 EUR2.25 11,736,000
========== ============
Granted during
the year EUR0.50 1,805,343
Exercised during
the year EUR0.46 (80,000)
Forfeited during
the year EUR2.22 (1,731,800)
Outstanding at 31 March
2010 EUR2.00 11,729,543
========== ============
Granted during the period from 1
April 2010 to 21 February 2011 EUR 0.36 5,246,655
Exercised during the period from
1 April 2010 to 21 February 2011 EUR 0.00 -
Forfeited during the period from
1 April 2010 to 21 February 2011 EUR 2.21 (2,578,666)
Outstanding at 22 February
2011 EUR1.36 14,397,532
========== ============
Impact of anti-dilution adjustment
on 22 February 2011 (EUR0.40) 5,997,814
Outstanding at 22 February
2011 EUR0.96 20,395,346
========== ============
Forfeited in period from 23 February
to 31 March 2011 EUR 2.59 (21,249)
Outstanding at 31 March
2011 EUR0.96 20,374,097
========== ============
The exercise price of options outstanding at the end of the year
ranged between EUR0.24 and EUR2.71 (2010: EUR0.46 and EUR3.84) and
their weighted average contractual life was 7.5 years (2010: 7.3
years).
Of the total number of options outstanding at the year-end,
5,784,634 (2010: 5,624,200) had vested and were exercisable at the
end of the year.
No options were exercised in the year. The weighted average
share price (at the date of exercise) of options exercised during
the prior year was EUR1.01.
The weighted average fair value of each option granted during
the year was EUR0.11 (2010: EUR0.50).
The fair value of executive share options granted during the
current and previous years is calculated based on a modified
Black-Scholes model assuming inputs shown below:
November
Grant date July 2010 April 2010 2010
Share price
at grant date EUR0.34 EUR0.46 EUR0.50
Exercise price EUR0.34 EUR0.46 EUR0.50
Expected life 3 3 3
Contractual
life 10 10 10
Risk free rate 2.30% 2.00% 2.00%
Expected volatility 60% 60% 60%
Expected dividend
yield 0.0% 0.0% 0.0%
Fair value of
option EUR0.106 EUR0.143 EUR0.156
Volatility has been 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. The anti-dilutive adjustment described above did not result
in any change in the total fair value of the share based payments,
with the reduction in the fair value in the individual being offset
by the increase in the number of outstanding options.
Employee Benefit Trust
In connection with employee remuneration and incentivisation
arrangements, and in respect of the period from 31 March 2010 to 31
December 2010, 2,500,000 new Ordinary shares were issued to an
Employee Benefit Trust on 22 February 2011, the beneficiaries of
which will be the Executive Directors and Senior Managers. Such new
Ordinary Shares will vest if the employees remain in employment
with the Company to the vesting date, being 31 December 2011
(subject to certain other provisions including good-leaver,
take-over and nomination and remuneration committee discretion
provisions).
The Employment Benefit Trust is consolidated by the Company and
the 2,500,000 shares are recorded as Own Shares within equity as at
31 March 2011.
At 31 March 2011, all of the relevant Executive Directors and
Senior Managers continued to be employed by the Company. The fair
value of the awards is expensed over the vesting period (from 22
February 2011 to 31 December 2011).
14. Intangible assets
Internal Intellectual
Development property
costs rights Goodwill Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost
At 1 April 2009 - 73,200 4,231 77,431
Additions - - - -
At 31 March 2010 - 73,200 4,231 77,431
Additions 252 - - 252
At 31 March 2011 252 73,200 4,231 77,683
============ ============= ========= ========
Amortisation
At 1 April 2009 - 69,579 - 69,579
Amortisation - 264 - 264
At 31 March 2010 - 69,843 - 69,843
Amortisation - 264 - 264
At 31 March 2011 - 70,107 - 70,107
============ ============= ========= ========
Net book value
At 31 March 2011 252 3,093 4,231 7,576
At 31 March 2010 - 3,357 4,231 7,588
The carrying value of internal development costs, intellectual
property rights and goodwill on consolidation have been allocated
for impairment testing purposes to one cash generating unit being
the Group's licensing operations. The recoverable amount of
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 financial budgets. Cash flows
have been projected for a period of 20 years corresponding with the
expected minimum life of the intellectual property rights and based
on a pre tax discount rate of 20% per annum. 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. A
reasonable change in assumptions used in the impairment testing
would not change the outcome.
Internal development costs have been capitalised in the current
period for the first time as a result of meeting all of the
criteria set out in IAS 38 'Intangible Assets'. Previously the
Group has not been able to reliably measure the expenditure
incurred on individual development activities and such costs had
not been capitalised.
15. Property, plant and equipment
Plant
Freehold and Office
land machinery equipment Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost or valuation
At 1 April 2009 6,815 24,708 373 31,896
Additions - 1,547 22 1,569
Disposals - (1,151) (1) (1,152)
At 31 March 2010 6,815 25,104 394 32,313
Additions - 1,040 72 1,112
Disposals - (36) - (36)
Foreign currency translation
gain/(loss) - - (4) (4)
At 31 March 2011 6,815 26,108 462 33,385
========= ========== ========== ========
Depreciation
At 1 April 2009 - 3,614 269 3,883
Charge for the year - 1,516 93 1,609
Disposals - (150) (1) (151)
At 31 March 2009 - 4,980 361 5,341
Charge for the year - 1,586 44 1,630
Disposals - (6) - (6)
Foreign currency translation
gain/(loss) - - (7) (7)
At 31 March 2011 - 6,560 398 6,958
========= ========== ========== ========
Net book value
At 31 March 2011 6,815 19,548 64 26,427
At 31 March 2010 6,815 20,124 33 26,972
16. Other financial assets
2011 2010
EUR'000 EUR'000
Available for sale investments - -
During the previous period Accsys Technologies PLC purchased an
additional 8,333,334 unlisted ordinary shares in Diamond Wood China
Limited for EUR0.48 each. This investment brought Accsys
Technologies PLC's holdings in Diamond Wood to 21,666,734 shares,
which represented a holding of 6.2% at 31 March 2011.
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 potential fundraising efforts of Diamond Wood,
and as such a reliable fair value cannot be calculated.
The Group does not currently have an intention to dispose of its
investment in Diamond Wood in the foreseeable future.
The historical cost of the unlisted shares at 31 March 2011 is
EUR10m (2010: EUR10m). However, a provision for the impairment of
the entire balance of EUR10m continues to be recorded, as at 31
March 2011 the conclusion of Diamond Wood finalising its funding
arrangements was still pending. In the event Diamond Wood completes
the fund-raising, the balance may be re-valued.
17. Deferred Taxation
The Group has a deferred tax asset of EUR2,095,000 (2010:
EUR2,644,000) relating to trading losses brought forward. The
deferred tax asset has been recognised on the basis that trading
profits are expected to be recorded in the related legal entities
in the foreseeable future. These expected trading profits are
attributable to the production of Accoya(R) wood and the recharge
of research and development activities to other group
companies.
The Group also has an unrecognised deferred tax asset of
EUR18,306,000 (2010: EUR13,664,000) 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.
Movements in recognised deferred tax asset:
2011 2010
EUR'000 EUR'000
Opening balance 2,644 2,630
Recognition of deferred tax
asset - 1,404
Derecognition of deferred
tax asset - (1,390)
Utilisation of deferred tax
asset (549) -
Closing balance 2,095 2,644
======== ========
18. 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.
19. Inventories
2011 2010
EUR'000 EUR'000
Materials and work in progress 4,014 1,281
Finished goods 4,406 2,474
8,420 3,755
======== ========
The amount of inventories recognised as an expense during the
year was EUR11,716,000 (2010: EUR8,617,000). The cost of
inventories recognised as an expense includes EURnil (2010:
EUR199,000) in respect of the write down of inventories to net
realisable value.
20. Trade and other receivables
2011 2010
EUR'000 EUR'000
Trade receivables - due in
less that one year 3,531 1,882
Other receivables 159 240
Prepayments 5,899 6,619
9,589 8,741
======== ========
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
The age of receivables past due but not impaired is as
follows:
2011 2010
EUR'000 EUR'000
Up to 30 days overdue 287 250
Over 30 days and up to 60
days overdue 243 185
Over 60 days and up to 90
days overdue - -
Over 90 days overdue 899 59
1,429 494
======== ========
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 EUR25,990,000 (2010: EUR25,966,000) due from Diamond
Wood (see Note 6).
Movement in provision for doubtful debts:
2011 2010
EUR'000 EUR'000
Balance at the beginning of
the period 26,188 -
(Release of impairment)/impairment
recognised (418) 26,188
Balance at the end of the
period 25,770 26,188
======== ========
Summary of Receivable Impairments:
2011 2010
EUR'000 EUR'000
Trade receivables - Accoya(R)
wood ** (24) 222
Trade receivables - Diamond
Wood Licensing* (394) 12,860
Accrued income - Diamond Wood - 13,106
Prepayments - Diamond Wood - 8,291
(418) 34,479
======== ========
* The impairment of Diamond Wood trade receivables in 2010 was
partially offset by the release of EUR8.8m of Deferred income (see
note 7) and has been included separately on the face of the
Consolidated Statement of Comprehensive Income. This impairment was
partially reversed in 2011.
** The impairment of Accoya(R) wood receivables has been
included in other operating costs.
21. Trade and other payables
2011 2010
EUR'000 EUR'000
Trade payables 2,092 2,409
Other taxes and social security
payable 192 159
Accruals and deferred income 4,033 3,869
6,317 6,437
======== ========
22. Share capital
2011 2010
EUR'000 EUR'000
Allotted - Equity share capital
403,102,528 (2010: 200,602,528) Ordinary
shares of EUR0.01 each 4,031 2,006
4,031 2,006
======== ========
Options over 80,000 ordinary shares were exercised during the
previous year at a price of EUR0.46 each. Details of outstanding
options granted over ordinary shares in the Company are set out in
Note 13.
On 30 June 2009, the Company completed the first drawdown under
the equity line of credit with GEM Global Yield Fund Limited, with
the issue of 700,000 Ordinary shares at EUR0.753 per share, raising
EUR527,100.
On 10 February 2010, following the publication of a prospectus,
the Company issued 44,232,226 new Ordinary shares for EUR0.4865
each. Proceeds of EUR16,603,073 were received net of expenses of
EUR1,076,000 (EUR139,000 of which were paid in cash with the
remainder paid by way of issue of new Ordinary shares). In
addition, at the same time, EUR4,000,000 relating to an existing
loan was converted to the new Ordinary shares.
On 22 February 2011, following the publication of a prospectus
for the Firm Placing and Placing and Open Offer, the Company issued
200,000,000 new Ordinary shares for EUR0.15 each. Proceeds of
EUR28,061,000 were received net of expenses of EUR1,939,000. At the
same time, 2,500,000 new Ordinary shares were issued to an Employee
Benefit Trust, the beneficiaries of which will be the Executive
Directors and Senior Managers (see note 13).
23. 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:
2011 2010
EUR'000 EUR'000
Operating lease payments due
Within one year 544 150
In the second to fifth years
inclusive 1,637 109
In greater than five years - -
2,181 259
======== ========
The majority of commitments under operating leases relate to the
Group's offices in the UK, the Netherlands and U.S.A.
24. Financial instruments
Financial instruments
Equity line of credit and warrants
The Company secured an equity line of credit for up to EUR20m,
with GEM Global Yield Fund Limited, on 30 March 2009. This is a
three year agreement, which allows the Company to issue shares at a
price per share which represents a 10% discount to the average
closing price over a 15 day period prior to the draw down. Each
draw down is based on the share price over a 15 day period, with
GEM having the option to subscribe for between 50% and 200% of the
number of shares requested by the Company. The Company controls the
timing of any draw down under this credit line and is not obliged
to draw on the equity line.
The Company also issued 3,000,000 warrants to GEM and 120,000
warrants to Montrose Partners LLP on 30 June 2009, and the warrants
will be exercisable for a period of three years from the issue date
at an exercise price of EUR1.00 each as adjusted following the Firm
Placing and Placing and Placing and Open Offer.
On 30 June 2009, the Company completed the first drawdown under
the equity line of credit, with the issue of 700,000 Ordinary
shares at EUR0.753 per share, raising EUR527,100.
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 to equity holders of the parent
Company, comprising share capital, reserves and retained
earnings.
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 2011 (2010 final dividend:
EURNil). The Board deems it prudent for the Company to protect as
strong a balance sheet as possible during the current phase of the
Company's growth strategy.
Categories of financial instruments 2011 2010
EUR'000 EUR'000
Available for Sale investments - -
Loans and receivables
Trade receivables 3,531 1,882
Other receivables 159 240
Money market deposits in Euro 26,000 14,003
Money at call in Euro 1,126 3,367
Money at call in US dollars 54 170
Money at call in Sterling 396 718
Financial liabilities at amortised
cost
Trade payables (2,092) (2,409)
Accruals (1,482) (1,319)
27,692 16,650
======== ========
Money market deposits have interest rates fixed for less than
nine months at a weighted average rate of 0.40% (2010: 0.24%).
Money market deposits are held at financial institutions with high
credit ratings (Standard & Poor's rating of AA).
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. There is also a risk associated with the available for sale
investment.
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 and
counterparty credit risks. The Group's treasury strategy and policy
are developed centrally and approved by the Board. The Group had no
debt as at 31 March 2011 and as a result the Group has recently
entered a new finance facility secured on our trade receivables and
our inventory which will enable us to draw down up to approximately
EUR4m in the future.
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.
Interest rate risk management
The Group has no borrowings 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 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 20). 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 notes 6 and 20.
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.
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.
25. Related party transactions
Mr William Paterson-Brown is a director of Khalidiya Investments
SA. During the year the Group recorded total expenses of EUR288,380
(2010: EUR946,320) from Khalidiya Investments SA consisting of
EUR213,534 (2010: EUR326,969) in respect of directors services,
EUR5,346 (2010: EUR230,313) in respect of expenses for a number of
employees, and EUR69,501 (2010: EUR389,038) in respect of office
staff and related costs in Geneva.
As at 31 March 2011 the Group had outstanding payables due to
Khalidiya Investments SA of EURnil (2010: EUR151,169). During the
year the Group recorded revenue of EUR7,426.88 (2010: EURNil) in
respect of sales of Accoya(R) to Mr William Paterson-Brown. As at
31 March 2011 the Group had outstanding receivables due from Mr
William Paterson-Brown of EURNil (2010: EURNil).
Mr Paul Clegg is a director of Clegg Enterprises Ltd. During the
year the Group recorded expenses from Clegg Enterprises Ltd
consisting of EURNil (2010: EUR39,000) in respect of directors
services and EURNil (2010: EUR7,120) in respect of travel expenses.
As at 31 March 2011 the Group had outstanding payables due to Clegg
Enterprises Ltd of EURNil (2010: EURNil). During the year the Group
recorded revenue of EUR4,093.42 (2010: EURNil) in respect of sales
of Accoya(R) to Mr Paul Clegg. As at 31 March 2011 the Group had
outstanding receivables due from Mr Paul Clegg of EURNil (2010:
EURNil).
26. Capital Commitments
2011 2010
EUR'000 EUR'000
Contracted but not provided 190 -
for
27. Post balance sheet events
On 23 June 2011 Accsys signed a Heads of Terms with a third
party in respect of the sale and leaseback of a portion of the land
and all of the buildings relating to the Arnhem plant, the first
part of which is expected to be completed in the summer of
2011.
END
For further information, please contact:
Accsys Technologies Paul Clegg, CEO via Citigate Dewe
PLC Hans Pauli, CFO Rogerson
Matrix Corporate Capital Stephen Mischler
LLP Nick Stone +44 20 3206 7000
Numis Securities Limited Christopher Wilkinson +44 20 7260 1347
Ben Stoop +44 20 7260 1410
Citigate Dewe Rogerson Chris Gardner +44 20 7282 2995
Malcolm Robertson +44 20 7282 2867
Suzanne Bakker +31 20 575 4023
Notes to editors:
Accsys Technologies PLC (www.accsysplc.com) is an environmental
science and technology company whose primary focus is on the
production of Accoya(R) wood and technology licensing via its 100%
owned subsidiary, Titan Wood Limited, which has manufacturing
operations in Arnhem, the Netherlands, a European office in London
and an Americas office in Dallas, Texas. Accsys Technologies'
operations comprise three principal business units: (i) the
Accoya(R) wood production facility located in Arnhem, The
Netherlands; (ii) technology development, focused on a programme of
continuous improvements to the process engineering and operating
protocols for the acetylation of wood which are currently under
development and the development of technology for the acetylation
of wood fibre; and (iii) the licensing of technology for the
production of Accoya(R) wood and Tricoya(R) wood elements across
the globe.
Accoya(R) Wood (www.accoya.info) is produced by using a
proprietary, non-toxic process that effectively converts
sustainably grown softwoods and non-durable hardwoods into what is
best described as a "high technology wood" via acetylation.
Distinguished by its durability, dimensional stability and, perhaps
most importantly of all, its reliability (in terms of consistency
of both supply and quality), Accoya(R) wood is particularly suited
to exterior applications where performance and appearance are
valued. Unlike most woods, its colour does not degrade when exposed
to sunlight. Moreover, the Accoya(R) wood production process does
not compromise the wood's strength or machinability. The
combination of UV resistance, dimensional stability, increased
coatings life, durability and retained strength means that
Accoya(R) wood offers a wealth of new opportunities to architects,
designers and specifiers. Leading applications include external
doors and windows, shutters/shading, siding and cladding, decking,
outdoor furniture/equipment and glulam beams for structural
use.
Tricoya(R) Wood Elements (www.tricoya.com) is Accsys
Technologies' proprietary technology for the acetylation of wood
fibres, chips, and particles for use in the fabrication of wood
based composites, including panel products. These composites
demonstrate enhanced durability and dimensional stability which
allow them to be used in a variety of applications which were once
limited to solid wood or man-made products. Tricoya(R) Wood
Elements is lauded as the first major innovation in the wood
composites industry in more than 30 years.
Wood Acetylation is a process, which increases the amount of
'acetyl' molecules in wood, thereby changing its physical
properties. The environmentally responsible process protects wood
from rot by making it "inedible" to most micro-organisms and
insects, without - unlike conventional treatments - making it
toxic. It also greatly reduces the wood's tendency to swell and
shrink, making it less prone to cracking and ensuring that, when
painted, it requires dramatically reduced maintenance. Acetylated
wood's increased durability offers major carbon sequestration
advantages, compared to other woods and man-made building materials
such as steel, vinyl, and plastic.
Wood Composites include a range of derivative wood products
which are manufactured by binding together the strands, particles,
fibres, or veneers of wood together with adhesives to form
composite materials. These products are engineered to precise
design specifications which are tested to meet national or
international standards.
Accsys Technologies is the trading name of Titan Wood Limited.
ACCOYA(R) , TRICOYA(R) and the Trimarque Device are registered
trademarks owned by Titan Wood Limited and may not be used or
reproduced without written permission.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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