PRELIMINARY RESULTS FOR THE YEAR END 31 MARCH 2024

About this update from Accsys Technologies Plc

[{"type":"text","content":"\n \n   \n   \n   \n AIM: AXS \n Euronext Amsterdam: AXS \n   \n 26 June 2024 \n   \n THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION \n   \n   \n Accsys Technologies PLC \n (\"Accsys\", the \"Group\" or the \"Company\") \n   \n Preliminary results for the year ended 31 March 2024 \n   \n Resilient Q4 performance with strategic progress on Accoya USA and operational transformation programme \n   \n   \n \n \n \n \n \n \n \n   \n \n \n Year to             31 March 2024  \n \n \n   \n Year to            31 March 2023 \n   \n \n \n   \n Year to \n 31 March 2022 \n \n \n   \n % 23-24 Change       \n   \n \n \n \n \n Revenue \n   \n \n \n   \n \n \n €136.2m \n \n \n €162.0m \n \n \n € 120.9m \n \n \n (16%) \n \n \n \n \n Gross profit \n   \n \n \n   \n \n \n €40.9m \n \n \n €55.2m \n \n \n € 36.0m \n \n \n (26%) \n \n \n \n \n Gross margin \n \n \n   \n \n \n 30% \n \n \n 34% \n \n \n 30% \n \n \n \n \n \n \n \n Adjusted EBITDA 1 \n   \n \n \n   \n \n \n €4.8m \n \n \n €22.9m \n \n \n €10.4m \n \n \n (€18.1m) \n \n \n \n \n Period end net debt \n \n \n   \n \n \n (€37.1m) \n \n \n (€44.1m) \n \n \n (€27.2m) \n \n \n (€7.0m) \n \n \n \n \n Accoya sales volume \n \n \n   \n \n \n 56,568m 3 \n \n \n 63,344m 3 \n \n \n 59,649m 3 \n \n \n (11%) \n \n \n \n \n   \n   \n Financial overview \n   \n ·      F Y24 results ahead of FY24 ² consensus - A s a result of resilient trading in Q4 FY24 and cost saving initiatives, adjusted EBITDA at €4.8m. \n o  Full year adjusted EBITDA adversely impacted by: lower sales volumes, increased mix of lower margin sales, a €3m proportional increase in our US Joint venture's EBITDA loss as it progresses its pre-operational activities and a change in accounting method for Hull, with ongoing running costs being treated as operating expenditure. \n o  Good sales pricing discipline maintained through the year against competitors in a challenging market, resulting in maintenance of high ASP. \n ·      Revenues at €136.2m - Impacted by lower sales volumes due to high customer inventory levels at the beginning of the financial year combined with a challenging macroeconomic trading environment for the construction and building materials sector, particularly in Q3. Revenues were also impacted by lower volumes and lower average sales prices for acetic acid and nonrecurrence of the energy price premium.  \n o  Resilient trading in Q4, driven by increased investment in sales and marketing and the addition of new distribution channels. \n ·      Double digit year on year growth in sales volumes for Accoya Color and Accoya for Tricoya - Strong demand for Accoya Color decking; 14% year-on-year Accoya for Tricoya sales growth. \n   \n Notes \n 1 Adjusted EBITDA is defined as Operating profit/(loss) before exceptional items, depreciation and amortisation, and includes the Group's attributable share of the USA joint venture's underlying EBITDA (see note 3 to the financial statements). \n ² Accsys considers consensus FY24 Adjusted EBITDA to be €2.5 million as of 01 May 2024. \n ·      Business transformation programme and working capital initiatives showing encouraging results - The Group's business transformation programme realised more than €3.0m annualised savings. Tight working capital management through FY24, including a €4.2m decrease in inventory levels during the year. \n o  On a half yearly basis, H2 operating costs decreased €2.7m, 19% reduction on the prior year period reflecting management cost actions.  \n ·      Reduction in net debt - Net debt of €37.1m at 31 March 2024, a reduction of €7.0m from 31 March 2023 (€44.1m), following the successful capital raise in November 2023, with €5.0m invested into our US Joint venture during the year. \n Strategic highlights \n ·      Accoya USA JV - Plant completed with commissioning underway and first batches expected to be produced in the coming weeks, adding 43,000m³ of additional production capacity. \n ·      Transformation and reshaping of the business under new leadership to simplify operational processes, drive cost efficiencies, and focus on commercial and operational performance improvements. \n ·      Sales and marketing acceleration to drive demand creation, including the addition of seven new distributors (four in EMEA and three in the USA) and three direct manufacturing customers (one in North America and two in Central and Eastern Europe).   \n ·      Focus on maximising returns on existing assets with our 'Solid Roots' operational reliability programme in Arnhem targeting efficiency improvements ³. \n ·      During FY24 the Company engaged a financial advisor to assist us in seeking a strategic and/or financing partner to complete the Hull plant. Accsys is on track to come to a resolution within H1 FY25 as previously outlined in the May trading update. \n ·      The Group has set four operational targets for the year ahead: (1) Kingsport to be commercially operational by the end of summer 2024; (2) Improved incentive plans; (3) Deliver €3m operating cost savings in the year; (4) Solid Roots 500 bps reliability improvement in (Overall Equipment Effectiveness) OEE for key equipment in Arnhem. \n ·      The Senior Leadership Team is undertaking a thorough review of the Company's strategy. An investor event will be held in H2 FY25 providing a full update on strategy. \n   \n   \n Outlook \n   \n The Company has made a good start to FY25. While market headwinds in the building materials and construction industry persist and are expected until the end of the calendar year, Q1 sales for the Company are in line with expectations. \n   \n Starting in Q2, our North American sales will gradually transition from being supplied by our Arnhem, NL plant to our Kingsport plant (USA joint venture). To support this shift and the ramp up of sales from Kingsport, we will continue to accelerate our commercial efforts and invest in our sales and marketing, adopting a targeted approach by segment and geography. The Company has set a target to refill the lost capacity at Arnhem within 12 months of migrating to Kingsport on a run rate basis, which equates to double digit growth in underlying sales volume outside of North America during the period. \n   \n FY25 will continue to be transformative for the Company with our successful expansion in North America and resolution of Hull. In the coming year, we expect to leverage the benefits from greater economies of scale associated with the ramp-up of Accoya USA in Kingsport. \n   \n The Board remains confident about the long-term potential of Accsys and sees the opportunity to deliver approximately 100,000m³ production volume across Arnhem and Kingsport by the end of FY2027.  With the Company's focus on driving operational excellence and maximising the potential of two production facilities, the Company is well placed to demonstrate long-term value creation and sustainable cash generation. \n   \n Notes \n ³At our main production site in Arnhem, the 'Solid Roots' programme is focused on developing Arnhem into a performance driven, mature manufacturing facility. The programme has set performance KPIs for metrics including the operational efficiency of key equipment. \n   \n \n \n   \n Jelena Arsic van Os, Executive Chair of Accsys, commented : \n   \n \"FY24 has been challenging with recessionary forces impacting demand in the construction and building materials market. We took decisive steps to counter these challenges and delivered a more resilient fourth quarter, with our full year results coming in ahead of updated market expectations. We have streamlined the business, begun to remove complexity, driven operational efficiencies, and invested in sales and marketing. These transformational measures make Accsys a leaner, more agile organisation with a greater focus on profitable and sustainable growth. \n   \n Operationally we have made significant strides. We are hugely excited to have completed the construction of the Accoya USA plant with commissioning well underway and production expected to commence this summer. The addition of a second Accoya production plant marks a significant step forward for our Company. It strategically positions production nearer to our key North American market, ensuring customers reliable supply and deepening our operational resilience. \n   \n In the coming year we expect to take advantage of having two Accoya production plants. With our increased production flexibility and capacity, we will continue to invest and professionalise our commercial activities, particularly in North America. As inflation steadies and the construction market recovers, we are in a strong position to capitalise on demand and drive growth.\" \n   \n Ends \n This announcement comprises inside information for the purposes of EU MAR and UK MAR. The person responsible for making this announcement is Nick Hartigan, General Counsel and Company Secretary, Accsys Technologies PLC. \n For further information, please contact: \n \n \n \n \n Dr Jelena Arsic Van Os, CEO \n Hans Pauli, Interim CFO \n \n \n +44 (0) 20 7421 4300 \n \n \n \n \n Accsys Technologies PLC \nInvestor Relations \n \n \n [email protected] \n \n \n \n \n Deutsche Numis (London) Oliver Hardy (NOMAD), Ben Stoop \n \n \n \n+44 (0) 20 7260 1000 \n \n \n \n \n ABN Amro (Amsterdam) Dennis van Helmond \n \n \n +31 20 344 2000 \n \n \n \n \n Huijskens Sassen Communications (The Netherlands) \nClemens Sassen \n \n \n \n+31 20 685 5955 \n \n \n \n \n   \n   \n   \n There will be a presentation relating to these results at 10.00am UK time on 26 June 2024. The presentation will take the form of a webcast and conference call, details of which are below: \n   \n Webcast link (for audio and visual presentation): \n Click on the link below or copy and paste ALL of the following text into your browser: \n https://edge.media-server.com/mmc/p/n2mv8tvv \n   \n Phone Participants: for those participants who would like to ask a question live over the phone lines, please register on the following link. You will then be sent a confirmation email with a link to dial-in numbers. \n https://register.vevent.com/register/BIfc9564bbac1244568f650bd0a860bb8d \n   \n \n \n \n Accsys Technologies PLC \n   \n CEO Review \n   \n Overview of the year   \n   \n In FY24, our industry faced significant challenges, with macroeconomic pressures impacting on demand for construction and building materials. Our financial performance for the year did not meet our expectations. We informed the market about this in our September 2023 trading update. Amidst these difficulties, we took decisive steps to re-set and transform. Firstly, focusing on demand creation and, secondly, focusing on a leaner and more fit-for-purpose organisational set-up. Though it is still early days to see the full impact of these initiatives, they have shown good results so far.    \n   \n Alongside the re-set of the business, we have made significant strategic progress in the establishment of two production centres, located in our core end markets of Europe and the USA.  I am pleased to report that our Kingsport plant in the USA is in the final stages of commissioning and commercial production is expected later this summer. \n   \n During FY24 we engaged a financial advisor to assist us in seeking a strategic and/or financing partner to complete the Hull plant. The Company is on track to come to a resolution within H1 FY25 as previously outlined in the May trading update. \n   \n Our balance sheet was strengthened through improvement in working capital management and via our successful capital raise in November raising new gross proceeds of circa €24m. I would like to thank our new and existing shareholders for their belief in our strategic vision and for their support.   \n   \n Demand creation   \n   \n The Company has stepped-up investment in sales and marketing, including new recruits in North America, the addition of seven new distribution partners globally and a comprehensive commercial review, leading to a refreshed approach by geography and product segments. This activation resulted in a demand turnaround in Q4, with a resilient performance in the quarter, and overall results for FY24 were ahead of consensus expectations. Despite challengin g market conditions we were resilient on pricing and held a high average sales price (ASP) throughout the year.    \n   \n Reset and transformation   \n   \n During the year, the Company underwent leadership changes to reduce overhead costs and simplify the organisational setup. Major efforts were directed towards creating a leaner, more effective operating model, reshaping the business to capitalise on long-term opportunities.   \n   \n A business transformation programme has delivered savings of more than €3.0m annually. This has been achieved through overhead and opex reductions across our international operations. \n   \n At our main production site in Arnhem, the 'Solid Roots' programme was launched, focused on developing Arnhem into a performance driven, mature manufacturing facility. The programme has set performance KPIs for metrics including the operational efficiency of key equipment. \n   \n As part of the Group's transformation, we are introducing a set of four operational targets for the year ahead: \n   \n (1)   Kingsport to be commercially operational by the end of summer 2024; (2) Improved incentive plans; (3) Deliver €3m operating cost savings in the year; (4) Solid Roots 500 bps reliability improvement in (Overall Equipment Effectiveness) OEE for key equipment in Arnhem. \n   \n In addition, the Senior Leadership Team is undertaking a thorough review of our strategy. We have already begun to implement some near-term tactical actions focused on maximising the returns from existing assets. A full update on our strategy will be provided in H2 FY25. \n \n \n \n   \n International expansion   \n   \n A key priority during FY24 has been the construction of our Accoya USA plant in Kingsport, Tennessee, our joint-venture with Eastman Chemical Company, a world leader in the production of acetyls.  This plant adds 43,000m3 of capacity. Accsys holds a 60% interest in the joint-venture and Eastman 40%.  Commissioning of the new plant is well on its way. North America is a highly attractive market for Accsys. With the new plant Accsys will be closer to North American Accoya customers and have a higher degree of product availability and supply flexibility globally .  The combination of our recent expansion of Arnhem and the addition of the Kingsport plant doubles the Company's capacity compared to two years ago. This is a huge milestone and significant growth enabler for the business. \n   \n Summary of financial performance   \n   \n Accsys delivered revenues of €136.2m, a 16% decrease on FY23. Macroeconomic conditions proved challenging during FY24 for the building materials, construction and residential housing markets globally, with high inflation and high interest rates depressing demand. Our customers entered the financial year with higher-than-average stock levels, having taken the opportunity to build up inventory following the recent expansion of Arnhem. This, combined with uncertain market conditions, adversely affected our sales volumes, particularly in Q3.   \n   \n While market conditions remained challenging, our performance considerably improved in Q4, as we started to benefit from our increased investment in sales and marketing, new distributor relationships, strategic review of our organisational structure and our distributers' stock levels reverting to healthier levels.   \n   \n Adjusted Group EBITDA at €4.8m for the year, a decrease of €18.1m on the prior year reflects the lower sales volumes, increased mix of lower margin sales for Accoya for Tricoya and a €3m proportional increase in the US joint venture's EBITDA loss as it progresses its pre-operational activities.  As a result of cost savings measures put in place and improved trading in Q4, Adjusted EBITDA for FY24 was ahead of market consensus set at the time of our interim results.  \n   \n Group gross margin was 30% (FY23: 34%), supported by pricing resilience in the tougher macroeconomic conditions and our strong product proposition. \n   \n Net debt of €37.1m at 31 March 2024, a reduction of €7.0m from 31 March 2023 (€44.1m), reflects the successful capital raise in November 2023 . \n   \n Sales review   \n   \n New distribution and increased investment in sales and marketing   \n The Company is once again proud to have had its products featured in many high-profile global projects throughout FY24, including featuring on buildings for brands such as ABB, Starbucks and Lidl. \n   \n In a strategic move to accelerate growth, we have significantly boosted our investment in sales and marketing and consolidated our sales, marketing and customer service functions, enhancing our capabilities and expanding our reach. We have expanded our distribution network and markets, adding seven new distributors globally, including two in Belgium, one each in Greece and Italy, and three in the USA.   \n   \n To stimulate global product demand, we are actively developing our Approved Manufacturer Programme (AMP), forging strong partnerships with key manufacturers in the window, door, decking, and cladding sectors.   \n We have strengthened our North America commercial footprint by appointing a new Sales Director for North America and salespeople in the region. Alongside these appointments, the Company has continued to drive lead generation and brand awareness campaigns to promote our products to key audiences and support the sell-through of materials downstream.   \n   \n Accoya Color   \n Accoya Color was launched in 2020 and since then we have seen good growth in demand. The product is manufactured at our site in Barry and Accsys has rights to IP on the colouring process.   \n   \n Accoya Color's unique proposition is proving to be very attractive to Accsys and customers in our target markets, particularly in the decking category where the surface-to-core grey colour has a strong design appeal as well as being low maintenance. The product has gained popularity in Central Europe, North America, France and Australia and New Zealand. This year it was launched into the UK.   \n   \n Accoya's high level of performance and sustainability was recognised in several prestigious global industry awards in FY24, including The Architect's Newspaper Best of Products award for Accoya Color. \n   \n   \n Accoya for Tricoya   \n We saw continued good demand for Accoya for Tricoya. Year on year we saw a 14% increase in demand for Accoya for Tricoya, driven primarily by demand for doors, windows and outdoor joinery. \n   \n Tricoya panels   \n We have revitalized the distribution of the Tricoya panels produced by Finsa and Medite in North America and APAC, generating €4.1m in FY24 and tripling last year's revenue.    \n   \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Sales volume by end market \n \n \n FY24 \n \n \n FY23 \n \n \n Change \n \n \n \n \n \n \n \n m 3 \n \n \n m 3 \n \n \n % \n \n \n \n \n UK & Ireland \n \n \n  11,837 \n \n \n  14,667 \n \n \n (19%) \n \n \n \n \n Rest of Europe \n \n \n  13,233 \n \n \n  16,584 \n \n \n (20%) \n \n \n \n \n Americas \n \n \n  9,285 \n \n \n  10,574 \n \n \n (12%) \n \n \n \n \n Rest-of-World \n \n \n  4,866 \n \n \n  6,326 \n \n \n (23%) \n \n \n \n \n Accoya for Tricoya \n \n \n  17,347 \n \n \n  15,193 \n \n \n 14% \n \n \n \n \n Total \n \n \n 56,568 \n \n \n 63,344 \n \n \n \n \n \n \n \n   \n   \n Sustainability   \n Our commitment to responsible sourcing and manufacturing is recognised by leading accreditation bodies. We continue to focus on our goal of zero deforestation and this year we continued to source 100% of our raw wood from FSC ® certified sources. We successfully recertified Cradle to Cradle® (C2C) gold certification for Accoya, as well as being awarded 'Platinum' level (the highest level) for 'Material Health'. Accoya, has held C2C certified status since 2010.   \n   \n C2C certification is the global standard for products that are safe, circular, and responsibly made. Accoya wood is one of the very few building products to have acquired C2C certification on the stringent Gold-level.    \n   \n Employee development     \n Our Company's success is driven by the skills, experience, and dedication of our team. Recognising this, we are deeply committed to investing in our people and their professional growth. In FY24, we are proud to have provided an average of 30.5 training hours per employee, underscoring our commitment to continuous development.   \n   \n Additionally, we have created valuable career development opportunities for our senior operators through a temporary exchange program between our Kingsport and Arnhem facilities. This initiative not only supports the successful start-up of the Kingsport plant but also facilitates a crucial exchange of skills and knowledge between the regions.   \n   \n Health & Safety (HSE)   \n Accsys has set 'Zero Harm' as a key target for our operations and is committed to developing best practice HSE across the Company. Health & Safety is a top priority for the Board. In FY24, we strengthened our HSE management by forming dedicated site-level HSE committees under the management of the Site Directors. These committees are actively engaged in implementing best practices that protect our people and environment and ensure rigorous compliance.     \n   \n Innovation and supply chain    \n To build resilience and mitigate risk in our supply chain, our R&D and supply chain teams have been exploring alternative wood species to Radiata pine that will be suited to our manufacturing processes. This year we are in the final testing stages of Accoya Color made from fast growing FSC® certified Taeda pine from Argentina and Uruguay. We have also significantly increased our sourcing of FSC® certified Spanish and Chilean radiata pine for Tricoya production.    \n   \n We are innovating to minimise our environmental impact across our operations, in accordance with our Environmental and Climate Change Policy. The Accoya USA facility will operate a closed loop system with acetic anhydride, reducing emissions and ensuring circularity.   \n   \n   \n   \n   \n Outlook   \n   \n The Company has made a good start to FY25. While market headwinds in the building materials and construction industry persist and are expected until the end of the calendar year, Q1 sales for the Company are in line with expectations. \n   \n Starting in Q2, our North American sales will gradually transition from being supplied by our Arnhem, NL plant to our Kingsport plant (USA joint venture). To support this shift and the ramp up of sales from Kingsport, we will continue to accelerate our commercial efforts and invest in our sales and marketing, adopting a targeted approach by segment and geography. The Company has set a target to refill the lost capacity at Arnhem within 12 months of migrating to Kingsport on a run rate basis, which equates to double digit growth in underlying sales volume outside of North America during the period. \n   \n FY25 will continue to be transformative for the Company with our successful expansion in North America and resolution of Hull. In the coming year, we expect to leverage the benefits from greater economies of scale associated with the ramp-up of Accoya USA in Kingsport. \n   \n The Board remains confident about the long-term potential of Accsys and sees the opportunity to deliver approximately 100,000m3 production volume across Arnhem and Kingsport by the end of FY2027.  With the Company's focus on driving operational excellence and maximising the potential of two production facilities, the Company is well placed to demonstrate long-term value creation and sustainable cash generation. \n   \n   \n   \n Jelena Arsic van Os \n Chief Executive Officer \n 25 June 2024 \n \n \n \n Accsys Technologies PLC \n   \n Finance Review \n   \n \n \n \n \n \n \n \n FY24 \n \n \n FY23 \n \n \n Change % \n \n \n \n \n Group Revenue \n \n \n €136.2m \n \n \n €162.0m \n \n \n (16%) \n \n \n \n \n Gross Profit \n \n \n €40.9m \n \n \n €55.2m \n \n \n (26%) \n \n \n \n \n Adjusted EBITDA \n \n \n €4.8m \n \n \n €22.9m \n \n \n (€18.1m) \n \n \n \n \n Statutory (loss) before tax \n \n \n (€17.1m) \n \n \n (€67.1m) \n \n \n €50.0m \n \n \n \n \n Free cashflow \n \n \n €3.7m \n \n \n (€13.6m) \n \n \n €17.3m \n \n \n \n \n Cash \n \n \n €27.4m \n \n \n €26.6m \n \n \n \n \n \n \n \n Net debt \n \n \n (€37.1m) \n \n \n (€44.1m) \n \n \n \n \n \n \n \n Accoya Sales volume \n \n \n 56,568m 3 \n \n \n 63,344m 3 \n \n \n (11%) \n \n \n \n \n   \n   \n Statement of comprehensive income \n   \n Revenue for the year decreased by 16% to €136.2m (2023: €162.0m), primarily due to a 11% decrease in sales volume, lower average sales prices for Acetic acid and the Energy price premium (€3.9m) which was added as a surcharge to sales prices in the prior year to offset the significant increase in net acetyls costs. \n Accoya sales volumes decreased by 11% to 56,568m 3 , impacted by a challenging macroeconomic trading environment for the construction and building materials sector, particularly in Q3 . Trading improved in Q4 and this positive momentum has continued into the new financial year. \n Accoya for Tricoya sales volumes increased by 14%, with revenues increasing by 13% to €23.9m. Accoya sales to our customers for the manufacture of Tricoya panels are currently used to develop the market for Tricoya products and now represent 31% of total Accoya sales volumes (2023: 24%). Tricoya panel revenue also increased by €2.7m during the year to €4.1m (2023: €1.4m), representing Accsys purchasing and selling Tricoya panels produced by our Accoya for Tricoya customers. \n Other revenue, which predominantly relates to the sale of our acetic acid by-product into the acetyls market, decreased by 48% to €8.8m (2023: €16.8m), reflecting lower acetic acid sales prices and volumes. These sales act as a partial hedge to acetic anhydride costs which also decreased during the year. Net acetyls costs (proportional combination of acetic anhydride cost and acetic acid sales price) decreased on the prior year. \n Raw wood input costs were higher year on year, with higher wood mix costs in addition to moderately higher average wood prices.  \n Cost of sales decreased by 11%, with 11% lower sales volumes and higher raw wood costs being partially offset by lower acetic anhydride costs. \n Gross profit of €40.9m was 26% lower than in the prior year (2023: €55.2m) and gross profit margin fell by four percentage points to 30%. The lower gross margin reflects an increased proportion of lower margin Accoya for Tricoya sales and our use of higher-cost appearance grade wood for Accoya for Tricoya production during H1 FY24 as we have sought to continue to lower inventory levels which increased during 2022 in anticipation of the start-up of reactor 4. In H2 FY24 we returned to using less expensive Spanish radiata pine and other wood chip grade wood for Accoya for Tricoya production. \n Underlying other operating costs (excluding depreciation and amortisation) increased from €31.6m to €32.3m. This is due to an increase in Tricoya UK's operating costs compared to the prior year (€0.9m) due to ongoing running costs being treated as operating expenditure in the year following the introduction of Tricoya UK's hold period in H2 FY23. It is also the result of increased investment in sales & marketing partially offset by lower administrative operating costs as a result of the business transformation programme. \n Depreciation and amortisation charges increased by €1.3m to €9.6m following commercial production from reactor 4 in September 2022. \n Underlying finance expenses increased €1.2m to €4.4m due to higher interest rates agreed during the November 2023 fundraise (explained further below), higher market interest rates on the variable rate borrowings during the year, primarily before the November 2023 fundraise and interest on Tricoya UK's NatWest facility not being capitalised post the introduction of the hold period for Tricoya UK in H2 FY23. \n An impairment loss (exceptional non-cash item) of €7.0m was recognised in the first half relating to the Tricoya segment (2023: €86.0m) due to an increase in the discount rate used following an increase in market interest rates and the Company specific market volatility factor.   \n An exceptional operating cost of €1.2m has been recognised in the year for restructuring costs relating to the business transformation programme. \n An exceptional financial income of €0.2m has been recognised related to US dollars held as cash for investment into Accoya USA, following the Fundraise in November 2023. This treatment did not meet the requirements for hedge accounting under IFRS 9, Financial Instruments, and therefore the foreign exchange gain on the revaluation of the US dollars has been accounted for in Finance Expenses as an Exceptional item. This treatment is similar to the prior year where an exceptional income of €1.4m was recognised. \n An exceptional financial gain of €0.3m has been recognised in relation to the revaluation of the Value Recovery Instrument (''VRI'') (see note 23). \n Accsys' share of its US joint venture (Accoya USA LLC) net loss, which is accounted for using the equity method, increased by €3.1m to €4.1m (2023 loss: €1.0m) as the entity increased its pre-operating activity through the year as it progresses towards commercial operations in summer 2024. \n Adjusted EBITDA (Group EBITDA before exceptional items and including 60% of the US Joint venture's EBITDA) decreased by €18.1m to €4.8m due to the lower gross profit generated, referred to above and a €3m proportional increase in the US Joint venture's EBITDA loss as it progresses its pre-operational activities. \n Underlying loss before tax increased by €20.4m to €9.4m (2023: profit of €11.0m). After taking into account exceptional items (including the impairment loss and restructuring cost), loss before tax amounted to €17.1m (2023: €67.1m). \n The tax charge of €0.8m was lower than the prior year (€2.8m) in line with the lower profitability during the year. \n   \n Underlying loss per share increased to €0.04 per share (2023: profit of €0.05 per share). A statutory loss per share was recognised of €0.08 per share (2023: €0.19 per share). \n   \n Cash flow \n   \n Cash flows generated from operating activities before changes in working capital decreased by €13.8m to €8.9.m (2023: €22.7m), following the lower EBITDA generated during the year. Free cashflow (net cash from operating activities less capex) improved to €3.7m inflow (2023: €13.6m outflow) following a decrease in capex spend in the year, partially offset by lower cash generated from operating activities. \n Inventory levels decreased by €4.2m with management action taken to decrease raw material levels during the year. \n In November 2023, the Group completed a successful fundraise, raising new gross proceeds of circa €24m and agreed an amendment and extension to its bank facilities with ABN Amro. The proceeds from the fundraising allow Accsys to complete delivery of the Accoya plant in Kingsport, USA, strengthen its balance sheet and increase working capital headroom during the challenging macro trading environment experienced during the year. The fundraise included: \n -       A placing and subscription of new ordinary shares raising gross proceeds of approximately €13 million. \n -       The issue of approximately €21 million new Convertible Loan Notes and the refinancing and discharge of the existing 2022 €10 million convertible loan with De Engh BV Limited, the net raise of €11 million of new gross proceeds. The new convertible loan notes have a 6 year term, carry a fixed coupon of 9.5%, with interest rolled up and deferred for the first 2.5 years (see note 29 for further details). \n -       The ABN Amro facilities (€40.5 million term loan and €25 million revolving credit facility(RCF)) were extended by 18 months to 31 March 2026, and the $10 million cash collateral previously provided to ABN Amro was released, with €7.5 million utilised to repay the term loan. The amended facilities included an amortisation holiday until 30 June 2025, with rolled up interest of 3% on the delayed repayments. The term loan interest rates were amended to vary between 4.34% to 5.34% and the RCF margin to vary between 3% and 4%. The amendment included certain minimum liquidity covenants, in addition to the net leverage covenants and interest covenants previously contracted (see note 29 for further details). \n At 31 March 2024, the Group held cash balances of €27.4m, a €0.8m increase in the year, attributable to the successful fundraise in November 2023 detailed above and positive operating cash generated during the year partially offset by loan repayments on the ABN Amro term loan (€12m) which included scheduled repayments of €4.5m and a repayment of €7.5m referred to above, the repayment of the €5m previously drawn on the ABN Amro RCF and €5m was invested into our US joint venture with Eastman (Accoya USA) during the year. \n Financial position \n   \n Plant and machinery additions of €1.8m (2023: €21.4m) consisted primarily of maintenance capex for the Arnhem plant.   \n Trade and other receivables were at a similar level to the prior year at €17.6m (2023: €18.1m).  \n Trade and other payables reduced by €7.1m to €18.8m (2023: €25.9m), attributable to a decrease in operational creditors, and capex payables following the completion of the Arnhem expansion project and lower activity at the Tricoya UK plant in Hull. \n Amounts payable under loan agreements decreased to €60.2m during the year (2023: €65.9m) following loan repayments on the ABN Amro loan (€12m), the net increase in convertible loans of €11m and following the capital raise, the repayment of the €5m drawn on the ABN Amro Revolving credit facility which remains available headroom. \n Net debt decreased by €7m in the year to €37.1m (2023: €44.1m) following the successful capital raise in November 2023, with €5m invested into our US Joint venture during the year. \n Going concern \n   \n The consolidated financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future, and at least for the 12 months from the date these financial statements are approved (the 'going concern period'). As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital and liquidity requirements, and bank facility covenant compliance for the going concern period under a base case scenario and a severe but plausible downside scenario. \n   \n The cash flow forecasts used for the going concern assessment represent the Directors' best estimate of trading performance and cost implications in the market based on current agreements, market experience and consumer demand expectations. These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving a certain level of performance relating to the production and sale of Accoya, and the management of its working capital. \n   \n In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya UK plant in Hull unless the Board definitively determines to proceed with the project and appropriate levels of funding arrangements are obtained to do so. In the base scenario, financial support is included for ongoing care & maintenance costs, whilst in the downside scenario, it is assumed that the Group discontinues its financial support in relation to the Tricoya UK plant. \n   \n The Directors' have also considered the possible quantum and timing of funding required to complete the plant currently being commissioned by Accoya USA LLC, and for the initial operational working capital requirements of the entity. Notwithstanding that the construction project benefits from certain contractual measures in place with the lead engineering, construction and procurement contractor, Accsys has a contractual obligation to fund its 60% share of Accoya USA LLC on a pro rata basis with its joint venture partner (Eastman Chemicals Company). \n   \n The Group is also dependent on the Group's financial resources including its existing cash position, banking and finance facilities (see note 29 for details). \n   \n The Directors considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes and increased funding into Accoya USA LLC and a reverse stress test was performed to determine the decrease in Accoya sales volume from the Arnhem plant required to breach banking covenants. The Directors do not expect the assumptions in the severe but plausible downside scenario or the reverse stress test scenario to materialise, but should they unfold, the Group has several mitigating actions it can implement to manage its going concern risk, such as deferring discretionary capital expenditure and implementing further cost reductions to maintain a sufficient level of liquidity and covenant headroom during the going concern period. The combined impact of the above downside scenarios and mitigations does not trigger a minimum liquidity breach or covenant breach at any point in the going concern period. In the reverse stress test, a decrease of approximately 10% on Accoya sales volume from the Arnhem plant compared to an equivalent prior year period or a decrease of approximately 20% compared to the equivalent base scenario period (both excluding North American sales which move to the Kingsport site once operational) was required to reach the banking covenant breach point. \n   \n The Directors believe that while some uncertainty always inherently remains in achieving the budget, in particular in relation to market conditions outside of the Group's control, after carefully considering all the factors explained in this statement, there is sufficient liquidity and covenant headroom such that there is no material uncertainty with respect to going concern and have prepared the financial statements on this basis. \n Hans Pauli \n Interim Chief Financial Officer \n 25 June 2024 \n \n \n \n Accsys Technologies PLC \n   \n Consolidated statement of comprehensive income for the year ended 31 March 2024 \n   \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n 2024 \n \n \n 2024 \n \n \n 2023 \n \n \n 2023 \n \n \n 2023 \n \n \n \n \n \n \n \n   \n \n \n €'000 \n \n \n €'000 \n \n \n €'000 \n \n \n €'000 \n \n \n €'000 \n \n \n €'000 \n \n \n \n \n \n \n \n Note \n \n \n Underlying \n \n \n Exceptional items* \n \n \n Total \n \n \n Underlying \n \n \n Exceptional items* \n \n \n Total \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Accoya wood revenue \n \n \n \n \n \n 123,139 \n \n \n - \n \n \n 123,139 \n \n \n 143,493 \n \n \n - \n \n \n 143,493 \n \n \n \n \n Tricoya panel revenue \n \n \n \n \n \n 4,134 \n \n \n - \n \n \n 4,134 \n \n \n 1,374 \n \n \n - \n \n \n 1,374 \n \n \n \n \n Licence revenue \n \n \n \n \n \n 77 \n \n \n - \n \n \n 77 \n \n \n 329 \n \n \n - \n \n \n 329 \n \n \n \n \n Other revenue \n \n \n \n \n \n 8,820 \n \n \n - \n \n \n 8,820 \n \n \n 16,822 \n \n \n - \n \n \n 16,822 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total revenue \n \n \n 3 \n \n \n 136,170 \n \n \n - \n \n \n 136,170 \n \n \n 162,018 \n \n \n - \n \n \n 162,018 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cost of sales \n \n \n \n \n \n (95,287) \n \n \n - \n \n \n (95,287) \n \n \n (106,852) \n \n \n - \n \n \n (106,852) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gross profit \n \n \n \n \n \n 40,883 \n \n \n - \n \n \n 40,883 \n \n \n 55,166 \n \n \n - \n \n \n 55,166 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Other operating costs \n \n \n 4 \n \n \n (41,927) \n \n \n (8,200) \n \n \n (50,127) \n \n \n (39,878) \n \n \n (87,453) \n \n \n (127,331) \n \n \n \n \n Operating (loss)/ profit \n \n \n 8 \n \n \n (1,044) \n \n \n (8,200) \n \n \n (9,244) \n \n \n 15,288 \n \n \n (87,453) \n \n \n (72,165) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Finance income \n \n \n 9 \n \n \n 138 \n \n \n - \n \n \n 138 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Finance expense \n \n \n 10 \n \n \n (4,418) \n \n \n 530 \n \n \n (3,888) \n \n \n (3,224) \n \n \n 9,350 \n \n \n 6,126 \n \n \n \n \n Share of net loss from joint venture accounted for using the equity method \n \n \n 28 \n \n \n (4,100) \n \n \n - \n \n \n (4,100) \n \n \n (1,036) \n \n \n - \n \n \n (1,036) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Loss)/ Profit before taxation \n \n \n \n \n \n (9,424) \n \n \n (7,670) \n \n \n (17,094) \n \n \n 11,028 \n \n \n (78,103) \n \n \n (67,075) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Tax expense \n \n \n 11 \n \n \n (765) \n \n \n - \n \n \n (765) \n \n \n (2,787) \n \n \n - \n \n \n (2,787) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Loss)/ Profit from continuing operations \n \n \n \n \n \n (10,189) \n \n \n (7,670) \n \n \n (17,859) \n \n \n 8,241 \n \n \n (78,103) \n \n \n (69,862) \n \n \n \n \n Items that may be reclassified to profit or loss \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Loss)/ gain arising on translation of foreign operations \n \n \n \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n (61) \n \n \n - \n \n \n (61) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gain/(loss) arising on foreign currency cash \nflow hedges \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n 42 \n \n \n - \n \n \n 42 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total other comprehensive (loss)/gain \n \n \n \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n (19) \n \n \n - \n \n \n (19) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive gain/(loss) for the year \n \n \n   \n \n \n (10,187) \n \n \n (7,670) \n \n \n (17,857) \n \n \n 8,222 \n \n \n (78,103) \n \n \n (69,881) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive gain/(loss) for the year \nis attributable to: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Owners of Accsys Technologies PLC \n \n \n \n \n \n (10,187) \n \n \n (7,670) \n \n \n (17,857) \n \n \n 9,509 \n \n \n (48,566) \n \n \n (39,057) \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n (1,287) \n \n \n (29,537) \n \n \n (30,824) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive gain/(loss) for the year \n \n \n \n \n \n (10,187) \n \n \n (7,670) \n \n \n (17,857) \n \n \n 8,222 \n \n \n (78,103) \n \n \n (69,881) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic profit/(loss) per ordinary share \n \n \n 13 \n \n \n €(0.04) \n \n \n \n \n \n €(0.08) \n \n \n €0.05 \n \n \n \n \n \n €(0.19) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Diluted profit/(loss) per ordinary share \n \n \n 13 \n \n \n - \n \n \n \n \n \n - \n \n \n €0.04 \n \n \n \n \n \n - \n \n \n \n \n   \n   \n The notes form an integral part of these financial statements. \n   \n * See note 5 for details of exceptional items . \n \n \n \n Accsys Technologies PLC \n   \n Consolidated statement of financial position as at 31 March 2024 \n   \n   \n Registered Company 05534340 \n   \n \n \n \n \n \n \n \n Note \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n   \n \n \n €'000 \n \n \n €'000 \n \n \n \n \n Non-current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Intangible assets \n \n \n 15 \n \n \n 10,048 \n \n \n 10,491 \n \n \n \n \n Investment accounted for using the equity method \n \n \n 28 \n \n \n 31,685 \n \n \n 30,859 \n \n \n \n \n Property, plant and equipment \n \n \n 16 \n \n \n 93,474 \n \n \n 106,051 \n \n \n \n \n Right of use assets \n \n \n 17 \n \n \n 3,736 \n \n \n 4,044 \n \n \n \n \n Financial asset at fair value through profit or loss \n \n \n 18 \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 138,943 \n \n \n 151,445 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Inventories \n \n \n 21 \n \n \n 25,743 \n \n \n 29,946 \n \n \n \n \n Trade and other receivables \n \n \n 22 \n \n \n 17,612 \n \n \n 18,075 \n \n \n \n \n Cash and cash equivalents \n \n \n 29 \n \n \n 27,427 \n \n \n 26,593 \n \n \n \n \n Corporation tax receivable \n \n \n \n \n \n 250 \n \n \n 459 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 71,032 \n \n \n 75,073 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 24 \n \n \n (18,797) \n \n \n (25,896) \n \n \n \n \n Obligation under lease liabilities \n \n \n 17 \n \n \n (690) \n \n \n (980) \n \n \n \n \n Short term borrowings \n \n \n 29 \n \n \n - \n \n \n (9,500) \n \n \n \n \n Corporation tax payable \n \n \n \n \n \n (6,719) \n \n \n (6,082) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (26,206) \n \n \n (42,458) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net current assets \n \n \n \n \n \n 44,826 \n \n \n 32,615 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Obligation under lease liabilities \n \n \n 17 \n \n \n (3,648) \n \n \n (3,755) \n \n \n \n \n Other long term borrowings \n \n \n 29 \n \n \n (60,204) \n \n \n (56,420) \n \n \n \n \n Financial guarantee \n \n \n 31 \n \n \n - \n \n \n - \n \n \n \n \n Financial liability at amortised cost \n \n \n 23 \n \n \n (1,102) \n \n \n (1,383) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (64,954) \n \n \n (61,558) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 118,815 \n \n \n 122,502 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share capital \n \n \n 25 \n \n \n 11,976 \n \n \n 10,963 \n \n \n \n \n Share premium account \n \n \n \n \n \n 262,394 \n \n \n 250,717 \n \n \n \n \n Other reserves \n \n \n 26 \n \n \n 114,743 \n \n \n 114,743 \n \n \n \n \n Accumulated loss \n \n \n \n \n \n (270,421) \n \n \n (254,042) \n \n \n \n \n Own shares \n \n \n \n \n \n (8) \n \n \n (8) \n \n \n \n \n Foreign currency translation reserve \n \n \n \n \n \n 131 \n \n \n 129 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Capital value attributable to owners of Accsys Technologies PLC \n \n \n \n \n \n 118,815 \n \n \n 122,502 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-controlling interest in subsidiaries \n \n \n 27 \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total equity \n \n \n \n \n \n 118,815 \n \n \n 122,502 \n \n \n \n \n   \n   \n The financial statements were approved by the Board of Directors on 25 June 2024 and signed on its behalf by \n   \n   \n Jelena Arsic van Os                                                              \n   \n Roland Waibel                                                                                 Directors \n   \n   \n The notes form an integral part of these financial statements. \n   \n \n \n \n Accsys Technologies PLC \n   \n Consolidated statement of changes in equity for the year ended 31 March 2024 \n   \n   \n \n \n \n \n   \n \n \n Share capital Ordinary \n \n \n Share premium \n \n \n Other reserves \n \n \n Own Shares \n \n \n Foreign currency trans- \nlation reserve \n \n \n Accumula-ted Loss \n \n \n Total equity attributable to equity shareholders of the company \n \n \n Non-Controlling interests \n \n \n Total Equity \n \n \n \n \n \n \n \n €000 \n \n \n €000 \n \n \n €000 \n \n \n €000 \n \n \n €000 \n \n \n €000 \n \n \n  €000 \n \n \n  €000 \n \n \n  €000 \n \n \n \n \n Balance at \n31 March 2022 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 9,638 \n \n \n 223,326 \n \n \n 114,701 \n \n \n (6) \n \n \n 190 \n \n \n (210,505) \n \n \n 137,344 \n \n \n 35,526 \n \n \n 172,870 \n \n \n \n \n Loss for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (39,038) \n \n \n (39,038) \n \n \n (30,824) \n \n \n (69,862) \n \n \n \n \n Other comprehensive gain/ (loss) for the year \n \n \n - \n \n \n - \n \n \n 42 \n \n \n - \n \n \n (61) \n \n \n - \n \n \n (19) \n \n \n - \n \n \n (19) \n \n \n \n \n Share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 366 \n \n \n 366 \n \n \n - \n \n \n 366 \n \n \n \n \n Shares issued \n \n \n 731 \n \n \n - \n \n \n - \n \n \n (2) \n \n \n - \n \n \n (22) \n \n \n 707 \n \n \n - \n \n \n 707 \n \n \n \n \n Premium on shares issued \n \n \n - \n \n \n 19,526 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 19,526 \n \n \n - \n \n \n 19,526 \n \n \n \n \n Share issue costs \n \n \n - \n \n \n (1,086) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (1,086) \n \n \n - \n \n \n (1,086) \n \n \n \n \n Aquisition of subsidiary shares from non-controlling interests \n \n \n 594 \n \n \n 8,951 \n \n \n - \n \n \n - \n \n \n - \n \n \n (4,843) \n \n \n 4,702 \n \n \n (4,702) \n \n \n - \n \n \n \n \n Balance at \n31 March 2023 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 10,963 \n \n \n 250,717 \n \n \n 114,743 \n \n \n (8) \n \n \n 129 \n \n \n (254,042) \n \n \n 122,502 \n \n \n - \n \n \n 122,502 \n \n \n \n \n Loss for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (17,859) \n \n \n (17,859) \n \n \n - \n \n \n (17,859) \n \n \n \n \n Other comprehensive gain/ (loss) for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n \n \n Share based payments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1,480 \n \n \n 1,480 \n \n \n - \n \n \n 1,480 \n \n \n \n \n Shares issued \n \n \n 1,013 \n \n \n - \n \n \n - \n \n \n \n \n \n - \n \n \n \n \n \n 1,013 \n \n \n - \n \n \n 1,013 \n \n \n \n \n Premium on shares issued \n \n \n \n \n \n 12,319 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 12,319 \n \n \n - \n \n \n 12,319 \n \n \n \n \n Share issue costs \n \n \n - \n \n \n (642) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (642) \n \n \n - \n \n \n (642) \n \n \n \n \n Aquisition of subsidiary shares from non-controlling interests \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Balance at \n31 March 2024 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 11,976 \n \n \n 262,394 \n \n \n 114,743 \n \n \n (8) \n \n \n 131 \n \n \n (270,421) \n \n \n 118,815 \n \n \n - \n \n \n 118,815 \n \n \n \n \n   \n Share capital is the amount subscribed for shares at nominal value (note 25). \n   \n Share premium account represents the excess of the amount subscribed for share capital over the nominal value of these shares, net of share issue expenses. Share issue expenses comprise the costs in respect of the issue by the Company of new shares. \n   \n See note 26 for details concerning Other reserves. \n   \n Non-controlling interests relate to the previous investment of various parties into Tricoya Technologies Limited and Tricoya UK Limited. The Group purchased the remaining shareholding in the Tricoya entities in the prior year (see note 27). \n   \n 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. \n   \n Accumulated losses represent the cumulative loss of the Group attributable to the owners of the parent. \n   \n The notes form an integral part of these financial statements. \n   \n   \n   \n   \n \n \n \n Accsys Technologies PLC \n   \n Consolidated statement of cash flows for the year ended 31 March 2024 \n   \n \n \n \n \n \n \n \n   \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n \n \n \n   \n \n \n €'000 \n \n \n €'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Loss)/ profit before taxation \n \n \n \n \n \n (17,094) \n \n \n (67,075) \n \n \n \n \n Adjustments for: \n \n \n \n \n \n \n \n \n \n \n \n \n \n Amortisation of intangible assets \n \n \n \n \n \n 828 \n \n \n 780 \n \n \n \n \n Depreciation of property, plant and equipment, and right of use assets \n \n \n \n \n \n 8,751 \n \n \n 7,512 \n \n \n \n \n Impairment loss \n \n \n \n \n \n 7,000 \n \n \n 86,000 \n \n \n \n \n Net finance expense / (income) \n \n \n \n \n \n 3,750 \n \n \n (6,126) \n \n \n \n \n Equity-settled share-based payment expenses \n \n \n \n \n \n 1,480 \n \n \n 366 \n \n \n \n \n Accsys portion of Licence fee received from joint venture \n \n \n \n \n \n - \n \n \n 300 \n \n \n \n \n Share of net loss of joint venture \n \n \n \n \n \n 4,100 \n \n \n 1,036 \n \n \n \n \n Currency translation losses / (gains) \n \n \n \n \n \n 108 \n \n \n (70) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash inflows from operating activities before changes in working capital \n \n \n \n \n \n 8,923 \n \n \n 22,723 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (Increase) / decrease in trade and other receivables \n \n \n \n \n \n 393 \n \n \n (1,154) \n \n \n \n \n (Increase) / decrease in inventories \n \n \n \n \n \n 4,203 \n \n \n (9,596) \n \n \n \n \n Increase / (decrease) in trade and other payables \n \n \n \n \n \n (6,403) \n \n \n 4,673 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net cash from operating activities before tax \n \n \n \n \n \n 7,116 \n \n \n 16,646 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Tax received \n \n \n \n \n \n 81 \n \n \n 87 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net cash from operating activities \n \n \n \n \n \n 7,197 \n \n \n 16,733 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Investment in property, plant and equipment \n \n \n \n \n \n (3,090) \n \n \n (29,773) \n \n \n \n \n Foreign exchange deal settlement related to hedging of Hull Capex \n \n \n \n \n \n - \n \n \n (81) \n \n \n \n \n Investment in intangible assets \n \n \n \n \n \n (385) \n \n \n (437) \n \n \n \n \n Investment in joint venture \n \n \n \n \n \n (4,926) \n \n \n (28,979) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net cash (used in) investing activities \n \n \n \n \n \n (8,401) \n \n \n (59,270) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Proceeds from loans \n \n \n \n \n \n 9,901 \n \n \n 10,000 \n \n \n \n \n Other finance costs \n \n \n \n \n \n (36) \n \n \n (250) \n \n \n \n \n Interest Paid \n \n \n \n \n \n (2,774) \n \n \n (2,429) \n \n \n \n \n Repayment of lease liabilities \n \n \n \n \n \n (1,044) \n \n \n (940) \n \n \n \n \n Repayment of loans/rolled up interest \n \n \n \n \n \n (17,000) \n \n \n - \n \n \n \n \n Proceeds from issue of share capital \n \n \n \n \n \n 13,332 \n \n \n 20,258 \n \n \n \n \n Share issue costs \n \n \n \n \n \n (642) \n \n \n (1,086) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net cash from financing activities \n \n \n \n \n \n 1,737 \n \n \n 25,553 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net decrease in cash and cash equivalents \n \n \n \n \n \n 533 \n \n \n (16,984) \n \n \n \n \n Effect of exchange rate changes on cash and cash equivalents \n \n \n \n \n \n 301 \n \n \n 1,523 \n \n \n \n \n Opening cash and cash equivalents \n \n \n   \n \n \n 26,593 \n \n \n 42,054 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Closing cash and cash equivalents \n \n \n \n \n \n 27,427 \n \n \n 26,593 \n \n \n \n \n   \n   \n   \n The notes form an integral part of these financial statements. \n   \n \n \n \n Accsys Technologies PLC \n   \n Notes to the financial statements for the year ended 31 March 2024 \n   \n 1.         Accounting Policies \n   \n General Information \n   \n The financial information set out in these preliminary results does not constitute the company's statutory accounts for the years ended 31 March 2024 or 31 March 2023. Statutory accounts for the year ended 31 March 2023 have been filed with the Registrar of Companies and those for the year ended 31 March 2024 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 year ended 31 March 2023 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 year ended 31 March 2024 is unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. \n   \n Basis of accounting \n   \n 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 UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. In addition, the financial statements are also prepared in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and the Dutch Financial Markets Supervision Act. \n Going Concern \n   \n The consolidated financial statements are prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future, and at least for the 12 months from the date these financial statements are approved (the 'going concern period'). As part of the Group's going concern review, the Directors have assessed the Group's trading forecasts, working capital and liquidity requirements, and bank facility covenant compliance for the going concern period under a base case scenario and a severe but plausible downside scenario. \n   \n The cash flow forecasts used for the going concern assessment represent the Directors' best estimate of trading performance and cost implications in the market based on current agreements, market experience and consumer demand expectations. These forecasts indicate that, in order to continue as a going concern, the Group is dependent on achieving a certain level of performance relating to the production and sale of Accoya, and the management of its working capital. \n   \n In both scenarios, the Directors have assumed no commitment will be made to complete the construction and start-up of the Tricoya UK plant in Hull unless the Board definitively determines to proceed with the project and appropriate levels of funding arrangements are obtained to do so. In the base scenario, financial support is included for ongoing care & maintenance costs, whilst in the downside scenario, it is assumed that the Group discontinues its financial support in relation to the Tricoya UK plant. \n   \n The Directors' have also considered the possible quantum and timing of funding required to complete the plant currently being commissioned by Accoya USA LLC, and for the initial operational working capital requirements of the entity. Notwithstanding that the construction project benefits from certain contractual measures in place with the lead engineering, construction and procurement contractor, Accsys has a contractual obligation to fund its 60% share of Accoya USA LLC on a pro rata basis with its joint venture partner (Eastman Chemicals Company). \n   \n The Group is also dependent on the Group's financial resources including its existing cash position, banking and finance facilities (see note 29 for details). \n   \n The Directors considered a severe but plausible downside scenario against the base case with reduced Accoya sales volumes and increased funding into Accoya USA LLC and a reverse stress test was performed to determine the decrease in Accoya sales volume from the Arnhem plant required to breach banking covenants. The Directors do not expect the assumptions in the severe but plausible downside scenario or the reverse stress test scenario to materialise, but should they unfold, the Group has several mitigating actions it can implement to manage its going concern risk, such as deferring discretionary capital expenditure and implementing further cost reductions to maintain a sufficient level of liquidity and covenant headroom during the going concern period. The combined impact of the above downside scenarios and mitigations does not trigger a minimum liquidity breach or covenant breach at any point in the going concern period. In the reverse stress test, a decrease of approximately 10% on Accoya sales volume from the Arnhem plant compared to an equivalent prior year period or a decrease of approximately 20% compared to the equivalent base scenario period (both excluding North American sales which move to the Kingsport site once operational) was required to reach the banking covenant breach point. \n   \n The Directors believe that while some uncertainty always inherently remains in achieving the budget, in particular in relation to market conditions outside of the Group's control, after carefully considering all the factors explained in this statement, there is sufficient liquidity and covenant headroom such that there is no material uncertainty with respect to going concern and have prepared the financial statements on this basis. \n Exceptional Items \n   \n Exceptional items are events or transactions that fall outside the ordinary activities of the Group and which by virtue of their size or incidence, have been separately disclosed in order to improve a reader's understanding of the financial statements. These include items relating to the restructuring of a significant part of the Group, impairment losses (or the reversal of previously recorded exceptional impairments), expenditure relating to the integration and implementation of significant acquisitions and other one-off events or transactions, such as re-financing of Group borrowings. See note 5 for details of exceptional items. \n   \n Business combinations \n   \n A subsidiary is an entity over which the Group has control. Control is evident where the Group is exposed to, or has rights to, variable returns from its involvement with that entity and has the ability to affect those returns through its power over that entity. The consolidated financial statements present the results of the Group including the results of Accsys Technologies plc and its subsidiaries and joint venture. All Intra-group transactions and balances are eliminated in full. \n   \n The consolidated financial statements incorporate the results of business combinations using the acquisition method.  In the consolidated statement of financial position, the acquirer's identifiable assets, liabilities, and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of operations acquired or disposed are included in the consolidated statement of comprehensive income from the effective date of acquiring control or up to the effective date of disposal. \n   \n 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. \n   \n Non-controlling interests are measured, at initial recognition, as the non-controlling proportion of the fair values of the assets and liabilities recognised at acquisition. \n   \n After initial recognition, non-controlling interests are measured as the aggregate of the value at initial recognition and their subsequent proportionate share of profits and losses less any distributions made. Changes in the Group's interests in subsidiaries that do not result in a change in control are accounted for as equity transactions. Any resulting difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration payable or receivable is recognised directly in equity and attributed to the shareholders. \n   \n When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. \n   \n Revenue from contracts with customers \n   \n Revenue is measured at the fair value of the consideration receivable. Revenue is recognised to the extent that it is highly probable that a significant reversal will not occur based on the consideration in the contract. The following specific recognition criteria must also be met before revenue is recognised. \n   \n Manufacturing revenue \n Revenue is recognised from the sale of goods at a point in time and is measured at the amount of the transaction price received in exchange for transferring goods. The transaction price is the expected consideration to be received, to the extent that it is highly probable that there will not be a significant reversal of revenue in the future. Revenue is recognised when the Group's performance obligations under the relevant customer contract have been satisfied. Manufacturing revenue includes the sale of Accoya wood, Tricoya panels. \n   \n Licensing fees \n Licence fees are 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 satisfaction of the performance obligations set out in the contract such as 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 received but not recognised as income is included in the financial statements as deferred income and shown as a liability. \n   \n Other revenue \n Included within other revenue are raw wood and acetic acid sales. Revenue is recognised from the sale of goods at a point in time and is measured at the amount of the transaction price received in exchange for transferring goods. Revenue is recognised when the Group's performance obligations have been satisfied. \n   \n Finance income \n   \n 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. \n   \n Finance expenses and borrowing costs \n   \n Finance expenses include the fees, interest and other finance charges associated with the Group's loan notes, credit facilities and leases, which are expensed over the period that the Group has access to the loans, facilities and leases. \n   \n Foreign exchange gains or losses on the loan notes are included within finance expenses. \n   \n Interest on borrowings directly relating to the construction or production of qualifying assets are capitalised until such time as the assets are substantially ready for their intended use or sale. Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. \n   \n Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the construction period. The capitalisation of borrowing costs is suspended during extended periods in which it suspends active development of a qualifying asset. \n   \n Share based payments \n   \n The Company awards nil cost options to acquire ordinary shares in the capital of the Company to certain Directors and employees. The Company has also previously awarded bonuses to certain employees in the form of the award of deferred shares of the Company. \n   \n In addition the Company has established an Employee Share Participation Plan under which employees subscribe for new shares which are held by a trust for the benefit of the subscribing employees. The shares are released to employees after one year, together with an additional, matching share on a 1 for 1 basis. \n   \n The fair value of options and deferred shares granted are recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and is charged to the consolidated statement of comprehensive income over the vesting period during which the employees become unconditionally entitled to the options or shares. \n   \n The fair value of share options granted is measured using a modified Black Scholes model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest only where vesting is dependent upon the satisfaction of service and non-market vesting conditions. \n   \n 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. \n   \n Dividends \n   \n 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. \n   \n Pensions \n   \n The Group contributes to certain defined contribution pension and employee benefit schemes on behalf of its employees. These costs are charged to the consolidated statement of comprehensive income on an accruals basis. \n   \n Taxation \n   \n Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the consolidated statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. \n   \n Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date together with any adjustment to tax payable in respect of previous years. Current tax includes the expected impact of claims submitted by the Group to tax authorities in respect of enhanced tax relief for expenditure on research and development. \n   \n 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: \n   \n ·      the initial recognition of goodwill; \n ·      the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; \n ·      differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. \n   \n 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 reporting date. Recognition of deferred tax assets is restricted to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. \n Foreign currencies \n   \n The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (the functional currency). For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed in Euro, which is the functional currency of the parent Company, and the presentation currency of the consolidated financial statements. \n   \n 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 date of the transactions.  At each reporting 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. \n   \n Exchange differences are recognised in profit or loss in the period in which they arise. \n   \n   \n   \n 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 reporting 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 accumulated in the foreign currency translation reserve. Such translation differences are reclassified to profit and loss only on disposal or partial disposal of the overseas operation. \n   \n Foreign exchange hedging \n   \n The Group has adopted IFRS 9 hedge accounting in respect of the cash flow hedging instruments that it uses to manage the risk of foreign exchange movements impacting on future cash flows and profitability. \n   \n The Group has prospectively assessed the effectiveness of its cash flow hedging using the 'hedge ratio' of quantities of cash held in the same currency as future foreign exchange cash flow quantities related to committed investment in plant and equipment. The Group has undertaken a qualitative analysis to confirm that an 'economic relationship' exists between the hedging instrument and the hedged item. It is also satisfied that credit risk will not dominate the value changes that result from that economic relationship. \n   \n At the end of each reporting period the Group measures the effectiveness of its cash flow hedging and recognises the effective cash flow hedge results in Other Comprehensive Income and the Hedging Effectiveness Reserve within Equity, together with its ineffective hedge results in Profit and Loss. Amounts are reclassified from the Hedging Effectiveness Reserve to property, plant and equipment once construction has been completed or Profit and Loss when the associated hedged transaction affects Profit and Loss. Further details are included in note 5. \n Government grants \n   \n Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group will comply with the attached conditions. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset they are credited to a deferred income account and released to the statement of comprehensive income over the expected useful life of the relevant asset on a straight line basis. \n   \n Goodwill \n   \n 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 consolidated statement of comprehensive income. Where the fair value of the identifiable assets and liabilities acquired is greater than the fair value of consideration paid, the resulting amount is treated as a gain on a bargain purchase and is recognised in the consolidated statement of comprehensive income. \n   \n Joint venture \n   \n The Group has entered into a joint venture agreement with Eastman Chemical Company, forming Accoya USA LLC. The Group applies IFRS 11 for this joint arrangement, and following assessment of the nature of this joint arrangement, has determined it to be a joint venture. Interest in the joint venture is accounted for using the equity method, after initially being recognised at cost. \n   \n Further details concerning the Accoya USA LLC joint venture with Eastman Chemical Company are included in note 28. \n   \n Other intangible assets \n   \n Intellectual property rights, including patents, which cover a portfolio of novel processes and products, are shown in the financial statements at cost less accumulated amortisation and any amounts by which the carrying value is assessed during an annual review to have been impaired. At present, the useful economic life of the intellectual property is considered to be 20 years.  \n   \n Internal development costs are incurred as part of the Group's activities including new processes, process improvements, identifying new species and improving the Group's existing products. Research costs are expensed as incurred. Development costs are capitalised when all of the criteria set out in IAS 38 'Intangible Assets' (including criteria concerning technical feasibility, ability and intention to use or sell, ability to generate future economic benefits, ability to complete the development and ability to reliably measure the expenditure) have been met. These internal development costs are amortised on a straight line basis over their useful economic life, between 8 and 20 years. \n   \n Property, plant and equipment \n   \n Property, plant and equipment are stated at cost less accumulated depreciation and any impairment charged. Cost includes the original purchase price of the asset as well as costs of bringing the asset to the working condition and location of its intended use. The capitalisation of costs is suspended during extended periods in which it suspends active development of a qualifying asset. 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: \n   \n Plant and machinery                           These assets comprise pilot plants and production facilities.  These facilities are depreciated from the date they become available for use over their useful lives of between 5 and 20 years \n Office equipment                                Useful life of between 3 and 5 years \n Leased land and buildings                Land held under a finance lease is depreciated over the life of the lease \n   \n   \n   \n   \n Impairment of non-financial assets \n   \n The carrying amount of non-current non-financial assets of the Group is compared to the recoverable amount of the assets whenever events or changes in circumstances indicate that the net book value may not be recoverable, or in the case of goodwill, annually.  The recoverable amount is the higher of value in use and the fair value less cost to sell. In assessing the value in use, the expected future cash flows from the assets are determined by applying a discount rate to the anticipated pre-tax future cash flows.  An impairment charge is recognised in the consolidated statement of comprehensive income to the extent that the carrying amount exceeds the assets' recoverable amount.  The revised carrying amounts are amortised or depreciated in line with Group accounting policies. A previously recognised impairment loss, other than on goodwill, is reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the impairment.  This reversal is recognised in the consolidated statement of comprehensive income and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years. Assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units) for purposes of assessing impairment.  \n   \n Leases \n   \n To the extent that a right-of-control exists over an asset subject to a lease, a right-of-use asset, representing the Group's right to use the underlying leased asset, and a lease liability, representing the Group's obligation to make lease payments, are recognised in the consolidated statement of financial position at the commencement of the lease. \n   \n The right-of-use asset is measured initially at cost and includes the amount of initial measurement of the lease liability, any initial direct costs incurred, including advance lease payments, and an estimate of the dismantling, removal and restoration costs required in terms of the lease. Depreciation is charged to the consolidated income statement so as to depreciate the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease term shall include the period of an extension option where it is reasonably certain that the option will be exercised. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably certain that the purchase option will be exercised. \n   \n The lease liability is measured at the present value of the future lease payments, including variable lease payments that depend on an index and the exercise price of purchase options where it is reasonably certain that the option will be exercised, discounted using the interest rate implicit in the lease, if readily determinable. If the implicit interest rate cannot be readily determined, the lessee's incremental borrowing rate is used. Finance charges are recognised in the consolidated statement of comprehensive income over the period of the lease. \n   \n Lease expenses for leases with a duration of one year or less and low-value assets are not recognised in the consolidated statement of financial position, and are charged to the consolidated income statement when incurred. Low-value assets are determined based on quantitative criteria. \n   \n The Group has used the following practical expedients permitted by the standard: \n -      The use of a single discount rate to a portfolio of leases with reasonably similar characteristics \n -      Reliance on previous assessments on whether leases are onerous \n -      The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease. \n   \n Inventories \n   \n Raw materials, which consist of unprocessed timber and chemicals used in manufacturing operations, are valued at the lower of cost and net realisable value. The basis on which cost is derived is a first-in, first-out basis. \n   \n Finished goods, comprising processed timber, are stated at the lower of weighted average cost of production or net realisable value.  Costs include direct materials, direct labour costs and production overheads (excluding the depreciation/depletion of relevant property and plant and equipment) absorbed at an appropriate level of capacity utilisation.  Net realisable value represents the estimated selling price less all expected costs to completion and costs to be incurred in selling and distribution. \n   \n Fair value measurement \n Assets and liabilities that are measured at fair value, or where the fair value of financial instruments has been disclosed in notes to the \n financial statements, are based on the following fair value measurement hierarchy: \n - level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; \n - level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as  prices) or indirectly (that is, derived from prices); and \n - level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). \n   \n Specific valuation methodologies used to value financial instruments include other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments. \n   \n Financial assets \n   \n Financial assets and financial liabilities are recognised in the Group's consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument. \n Financial assets are initially measured at fair value and in the case of investments not at fair value through profit or loss, fair value plus directly attributable transaction costs. \n   \n Except where a reliable fair value cannot be obtained, unlisted shares held by the Group are classified as fair value through other comprehensive income and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, with dividends recognised in profit or loss. Where it is not possible to obtain a reliable fair value, these investments are held at cost less provision for impairment. \n 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. \n   \n Trade and other receivables \n Trade receivables are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairments. The Group has elected to apply the IFRS 9 practical expedient option to measure the value of its trade receivables at transaction price, as they do not contain a significant financing element. The Group applies IFRS 9's 'simplified' approach that requires companies to recognise the lifetime expected losses on its trade receivables. At the date of initial recognition, the credit losses expected to arise over the lifetime of a trade receivable are recognised as an impairment and are adjusted, over the lifetime of the receivable, to reflect objective evidence reflecting whether the Group will not be able to collect its debts. \n   \n Cash and cash equivalents \n Cash and cash equivalents in the consolidated statement of financial position comprise cash at bank and in hand and short-term deposits, including liquidity funds, with an original maturity of three months or less. For the purpose of the statement of consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. In the prior year, Cash and cash equivalents included cash pledged to ABN Amro as collateral for the $20million Letter of credit provided to FHB. See note 31. \n   \n Financial liabilities \n   \n Other financial liabilities \n Trade payables and other financial liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. \n   \n Loans and other borrowings are initially recognised at the fair value of amounts received net of transaction costs and subsequently measured at amortised cost using the effective interest method. \n   \n Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. \n   \n Financial guarantee contracts \n Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. \n The liability is initially measured at fair value, which is determined based on the present value of the difference in cash flows between the contractual payments required under the FHB borrowing (provided to the Company's joint venture - Accoya USA) and the payments that are estimated to be required without the guarantee being provided by Accsys to FHB. To calculate the fair value of the guarantee, the present value calculation is then weighted by the probability of the guarantee being called by FHB. \n Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment. \n   \n Share capital \n   \n 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. \n   \n Segmental Reporting \n   \n Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer. The Chief Executive Officer is responsible for allocating resources and assessing performance of the operating segments and has been identified as steering the committee that makes strategic decisions. \n   \n Alternative Performance Measures \n   \n The Group presents certain measures of financial performance, position or cash flows in the Annual Report and financial statements that are not defined or specified according to IFRS (International financial reporting standards). These measures, referred to as Alternative Performance Measures (APMs), are prepared on a consistent basis for all periods presented in this report. \n   \n The most significant APMs are: \n   \n Net debt \n A measure comprising short term and long-term borrowings (including lease obligations) less cash and cash equivalents. Net debt provides a measure of the Group's net indebtedness or overall leverage. \n   \n Underlying EBITDA \n Operating profit/(loss) before Exceptional items and other adjustments, depreciation and amortisation and includes the Group's attributable share of our USA joint venture's underlying EBITDA. Underlying EBITDA provides a measure of the cash-generating ability of the business that is comparable from year to year. \n   \n   \n Underlying EBIT \n Operating profit/(loss) before Exceptional items and other adjustments and includes the Group's attributable share of our USA joint venture's underlying EBIT. Underlying EBIT provides a measure of the operating performance that is comparable from year to year. \n   \n Adjusted EBITDA \n Underlying EBITDA plus the Group's attributable share of our USA joint venture's underlying EBITDA. Adjusted EBITDA provides a measure of the cash-generating ability of the business that is comparable from year to year. \n   \n Adjusted EBIT \n Underlying EBIT plus the Group's attributable share of our USA joint venture's underlying EBIT. Adjusted EBIT provides a measure of the operating performance that is comparable from year to year. \n   \n Net Debt / Underlying EBITDA \n Net debt divided by trailing 12-month underlying EBITDA. A measure of the Group's net indebtedness relative to its cash-generating ability. \n   \n Accoya Manufacturing margin \n Accoya segmental underlying gross profit excluding Accoya underlying licence revenue and marketing services expressed as a percentage over Accoya segmental total revenue excluding Accoya underlying licence revenue and marketing services. Accoya Manufacturing margin provides a measure of the profitability of the Accoya operations relative to revenue. \n   \n Adjusted Cash \n Cash & cash equivalents less restricted cash. See note 29. \n   \n Free cashflow \n Net cash from operating activities less investment in property, plant and equipment. See note 29. \n   \n 2.         Accounting judgements and estimates \n   \n Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. \n   \n Accounting estimates \n   \n Goodwill \n 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 judgements in relation to discount rates and future forecasts (See note 15 & 16). The recoverability of these balances is dependent upon the level of future licence fees and manufacturing revenues. While the scope and timing of the production facilities to be built under the Group's existing and future agreements remains uncertain, the Directors remain confident that revenue from own manufacturing, existing licensees, new licence or consortium agreements will be generated, demonstrating the recoverability of these balances. \n   \n Intellectual property rights (IPR) and property, plant and equipment \n 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. Within this process, the Group makes a number of key assumptions including operating margins, production volumes, discount rates, terminal growth rates and forecast cash flows. Additional information is disclosed in note 15 & 16, which highlights the estimates applied in the value-in-use calculations for those CGUs that are considered most susceptible to changes in key assumptions and the sensitivity of these estimates. The Group also reviews the estimated useful lives at the end of each annual reporting period (See note 15 & 16). The price of Accoya wood and the raw materials and other inputs vary acco...

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