A
C
C
S
Y
S
T
E
C
H
N
O
L
O
G
E
S
P
L
C
I
ACCSYS TECHNOLOGIES PLC
2017 ANNUAL REPORT
AND FINANCIAL
STATEMENTS
Cover images
1 Accoya boardwalk – Norway
2 Tricoya exterior lighting – New Zealand
3 Accoya cladding, fast food chain – North America
4 Accoya cladding, fast food chain – United Kingdom
5 Accoya cladding, private residence – New Zealand
6 Accoya boardwalk – Switzerland
7 Accoya floor, indoor velodrome – the Netherlands
8 Accsys guitar – United Kigdom
Accsys Group
Brettenham House
19 Lancaster Place
London
WC2E 7EN
+44 (0)207 4214300
Accsys Technologies 2016, Accsys Technologies is a trading name of Titan Wood Limited. Accoya®, Tricoya® and the Trimarque Device are registered
trademarks owned by Titan Wood Limited (‘TWL’), a wholly owned subsidiary of Accsys Technologies PLC, and may not be used or reproduced without
written permission from TWL, or in the case of the Tricoya® registered trademark, from Tricoya Technologies Limited, who have exclusive rights to exploit
the Tricoya® brand. © Accsys Technologies PLC 2017
www.accsysplc.com
www.accoya.com
www.tricoya.com
I
A
N
N
U
A
L
R
E
P
O
R
T
&
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
2
0
1
7
I
A YEAR OF
TRANSFORMATION
AND GROWTH
Accsys Technologies PLC (‘Accsys’ or the ‘Company’)
is a chemical technology group focused on the
development and commercialisation of a range
of transformational technologies based upon the
acetylation of solid wood and wood elements
(wood chips, fibres and particles) for use as
high performance, environmentally sustainable,
construction materials.
Tricoya Consortium
A transformational deal for
Accsys – construction of the
world’s first Tricoya® plant
Arnhem
Development
Increasing Accoya capacity from
40,000 to 80,000 cubic meters
Accoya
10 years on
10th anniversary of Accoya wood
being produced commercially
Page 10
Page 18
Page 26
Overview
01
2017 Highlights
02 Accsys at a Glance
Strategic Report
08 Chairman’s Statement
10 Tricoya Consortium
04
Our Investment Proposition
12 Our Market
14 Our Business Model
16 Our Strategy
18 Arnhem Expansion
20
Chief Executive’s Report
26 Accoya 10 Years On
28 Financial Review
34 Sustainability Report
Corporate Governance
40 Board of Directors
44 Directors’ Report
48 Remuneration Report
63 Corporate Governance
65
Statement of Directors’ Responsibilities
Financial Statements
Group Independent
68
Auditors’ Report
70 Consolidated Statement
of Comprehensive Income
71 Consolidated Statement
of Financial Position
72 Consolidated Statement
of Changes in Equity
73 Consolidated Statement
of Cash Flow
74
Notes to the Financial Statements
103 Company Independent
Auditors’ Report
105 Condensed Company
Balance Sheet
106 Notes to the Company
Financial Statements
Shareholder Information
Shareholder Information
112
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
01
2017
HIGHLIGHTS
Total Group revenue
Gross profit
€56.5m
7%
(2016: €52.8m)
€14.4m
(2016: €18.2m)
Period end cash balance
€41.2m
(2016: €8.2m)
Accoya revenue
Underlying EBITDA*
Period end net cash balance
€50.7m
17%
(2016: €43.4m)
(€1.2)m
(2016: €2.4m)
€20.1m
(2016: €8.2m)
*
Underlying EBITDA excludes exceptional items. See note 3 of the Group financial statements for reconciliation
of Operating profit to EBITDA
Strategic highlights
Financial and Operational highlights
• Transformational, fully funded
• Total revenue increased by 7% notwithstanding the
production capacity expansions
underway:
previous year reflected a greater contribution from one-
off licensing income; Accoya revenue increased by 17%;
− Agreements to build and operate
• Accoya sales volumes have grown by 18% to 39,790
new 30,000 metric tonne
Tricoya chip plant in Hull; work
has commenced with the plant
expected to be operational in
early 2019;
− Expansion of Arnhem Accoya
plant continues to progress with
completion of the first stage
of expansion to 60,000 cubic
meters capacity expected by
the end of 2017;
• Future success of the projects
is reinforced by minimum off-
take agreements with Medite in
addition to existing agreement with
Rhodia Acetow (formerly Solvay
Acetow); and
• Sale and leaseback of land in
Arnhem completed, with significant
new warehouse facilities under
construction by our landlord to
improve our operating environment.
cubic meters in the year and strong performance in the
second half with volumes up 31%;
• Gross margin decreased as expected from 34% to 25%
for a number of reasons including prior year one-off
licensing income, full year of discounted prices to Rhodia
Acetow, higher sales to Medite for Tricoya and a small
increase in raw wood prices;
• 30% gross margin from the manufacturing of Accoya
continues to be achievable;
• Positive underlying EBITDA of €0.4m in second half of
the year, resulting in underlying EBITDA loss of €1.2m for
the full year;
• Balance sheet significantly strengthened through €82m
of funding in transformational deal:
− €68m of equity and debt from Medite , BP, Business
Growth Fund, Volantis and RBS to fund the building
of the world’s first Tricoya wood chip acetylation plant
in Hull; €37m of this was received in the financial
period; and
− €12m (net) from a Placing and Open Offer providing
additional working capital in the context of the two
significant capital projects, with proceeds received
post year-end.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 02
AT
A GLANCE
Accsys’ operations
Our business consists of the following:
Commercial scale
Accoya® wood
production and sales
facility in Arnhem
Building and
operating of Tricoya®
wood chip acetylation
plant in Hull
Accoya and Tricoya
technology licensing
and business
development
Technology and
product development
Accoya solid wood and Tricoya wood elements,
which is the feedstock for Tricoya panels, are
manufactured through the Company’s proprietary
acetylation wood modification process. These solid
wood and wood element products exhibit superior
dimensional stability, durability and other important
benefits compared with alternative natural, treated
and modified woods as well as more resource
intensive man-made materials and panels.
The Company’s technologies and brands are
internationally protected by strict confidentiality,
granted patents, patent applications and trademarks
as well as being supported by strong sustainability
certifications. Many have been technically validated
at full commercial production level and long term
use, and others are in pilot-scale or are subject to
independent validation by experts. Our products have
been certified for use by various building regulations
around the world.
Distribution network and market
The market for Accoya and Tricoya has been estimated as in excess of 2.6 million cubic meters
annually. Last year we sold 39,790 cubic meters of Accoya and Medite sold 5,806 cubic meters of
Tricoya panels, representing year growth for the year of 18% and 31% respectively.
61 Accoya distributor, supply and agency agreements in place covering most of Europe, Australia,
Canada, Chile, China, India, Israel, Mexico, Morocco, New Zealand, South Africa, parts of the
Middle-East and South-East Asia and the USA.
61
Accoya distributor, supply
and agency agreements
in place
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 03
Our History
2005
Accsys Technologies listed on
London Stock Exchange AIM
market
2007
Construction of full scale
proof of concept production
plant in Arnhem in 2007; First
commercial sales of Accoya;
cross-listed on Euronext
Amsterdam
2009
Current CEO joins – restructuring
the Group; Joint Development
Agreement with Medite
concerning development of
Tricoya
2010
Completed fund raising; wrote off
significant amounts from balance
sheet
2011
Completed further fund raising;
stable management team
established
2012
First commercial sales of Medite
Tricoya; Joint venture with Ineos
concerning Tricoya business
Licence agreement entered into
with Solvay (now Rhodia Acetow)
2014
Arnhem plant improvements and
increased sales result in positive
manufacturing EBITDA
2015
Strengthening of Board; End
of joint venture with Ineos and
MoU agreed with BP concerning
Tricoya
2016
Expansion of Arnhem plant
commenced and proposed new
Tricoya Consortium announced
2017
New Tricoya consortium formed
with BP, Medite, BGF and Volantis;
fund raising announced
Our Products
Accoya is the world-leading high
performance sustainable wood.
It is stable, durable, resists rot,
is harder and stronger. It is
guaranteed for 50 years for use
above ground and 25 years in
ground or freshwater; in summary
its performance is remarkable.
Accoya has properties that match
or exceed those of the best tropical
hardwoods, yet is manufactured from
sustainable FSC® certified wood. It is the
only Cradle to Cradle (‘C2C’) certified
structural building material which has
achieved the Gold Level Certification
and Platinum level for Material Health.
C2C is a design philosophy developed
by William McDonough and Michael
Braungart, inspired by the circular
economy concept.
C2C certification now also results in
additional credits for leading green
building certification systems such
as LEED and BREEAM with Accoya
specified in many LEED and BREEAM
projects around the world.
In 2015 Google adopted C2C Material
Health as one of the certification
schemes for Portico, Google’s
healthy building material assessment
software. Accoya has been certified
at the highest, Platinum level for C2C
Material Health and it is now one of
the most highly rated products in
Google’s Portico.
Accoya is the material of choice for
a wide range of demanding outdoor
applications, from windows and doors,
decking to cladding, bridges to exterior
structures and applications that are
presently only feasible with non–
sustainable or man-made materials.
www.accoya.com
Tricoya wood elements are used
in the manufacturing of Tricoya
panel products. Tricoya is opening
new markets where wood based
panels would never have been
considered before.
Tricoya panels demonstrate
significantly enhanced durability and
exceptional dimensional stability which
allow Tricoya panels to be used in a
wide variety of applications such as
window components and door skins,
façade cladding, wet interiors and
much much more.
The raw wood material that is used
for Tricoya production is sourced from
FSC® certified forests. Production
will be extremely resource-efficient
using chips from locally grown pine,
including the parts of trees which are
not used to make any other wood-
based product and would otherwise
be sent to waste streams.
Tricoya is also guaranteed for 50 years
above ground and 25 years in ground
or freshwater; its performance and
properties are outstanding.
www.tricoya.com
NEW TRICOYA
CONSORTIUM
FORMED
See our focus story
on pages 10 to 11
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
04
OUR
INVESTMENT
PROPOSITION
WORLD
LEADERS IN WOOD
TECHNOLOGY
Proprietary and protected
technologies which chemically
modify wood through a proprietary
process. The resulting products
benefit from exceptional
dimensional stability, durability
and many other qualities.
Our products are first in class and
leading the revolution of modified
woods in a building industry which
is starting to recognise and adopt to
the significant long term benefits of
such materials.
SUSTAINABILITY
By significantly enhancing the
durability and dimensional stability
of fast growing, abundantly
available FSC® certified wood
species, our products provide
compelling environmental
advantages over scarce slow
growing hardwoods, woods
treated with toxic chemicals, and
non-renewable carbon-intensive
materials such as plastics, steel
and concrete.
We have obtained numerous
certifications and accreditations
including Accoya being Cradle to
Cradle Gold certified.
SUBSTANTIAL
MARKET
OPPORTUNITY
Our products provide a solution
to an increasing problem facing
the substantial building materials
industry. They are natural building
materials with low maintenance
and consistent qualities with at
least the performance properties
of the highest performing, non-
sustainable man-made materials.
In addition, they benefit from
all positive attributes of wood
(sustainability, strength, beauty)
without the downfalls (poor
durability and stability).
As a result, our estimates, based
upon expert advice and detailed
market studies, are that in excess of
2.6 million cubic meters per annum
of Accoya® and Tricoya® can be
sold. This would be a small fraction
of the global solid wood industry.
This represents a long-term and
substantial growth opportunity,
noting last year we sold 39,790
cubic meters of Accoya.
See Our Market
on page 12
See Sustainability report
on page 34
See page 25 in the
Chief Executive’s report
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
05
Accoya boardwalk – Norway
Visit our Investor Relations site at
www.accsysplc.com/investor-relations
STRONG
MANAGEMENT TEAM
Our Board and Senior Management
team are highly committed
and experienced, with varied
backgrounds including from
the wood, chemical and finance
industries. The team has remained
largely unchanged over the last
few years as we have transformed
the Company and they remain
committed to its on going future
and success.
SCALABLE GROWTH
Our manufacturing process and
modular industrial design is based
upon confidential and protected
IP which can be expanded and
replicated worldwide.
Our existing Accoya site is in the
process of being doubled in size in
two equal stages. The new Tricoya
plant in Hull is being constructed
with a view to further significant
expansion.
Our business development
team works to identify locations
and partners to ensure new
manufacturing capacity
can be developed to meet the
long term global demand.
See pages 10 and 18 for further
details of current additions to
manufacturing capacity
See pages 40 to 43 for
details of the team
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
06
ARCHITECT CHOOSES
MEDITE TRICOYA
EXTREME FOR FLOATING
HOUSE AND OFFICE-ARK
First discovered during an exhibition in London, designer,
Julius Taminiau, has created a floating house equipped
with office space using Medite Tricoya Extreme.
The boat covers 100 square metres and consists of two floors
with the rooftop being half filled with solar panels.
The floating house idea had to fulfil two key objectives that the
architect had in mind: ingenuity and sustainability.
The budget for this project was tight and therefore Julius decided
to rationalise the design and make it as clever as possible. The
solution was found in a design with a fixed grid basis on the size
of panel material. The sizes of the rooms, cladding, windows and
other materials had to match precisely and be well proportioned.
This reduced the amount of waste material, avoiding unnecessary
impact on the environment while also reducing costs.
The lay-out of the Medite Tricoya facades follows a tatami grid
system and is applied in a fish-scale pattern. By emulating
nature’s time-tested pattern, the architect underlines the
secondary key principle of sustainability, which played such
an important role in the design.
As the facade of the floating house will be continuously exposed
to wet and damp conditions the durable Medite Tricoya Extreme
was the ideal material to be used for the facades.
The floating house and office were built by Oranje Arkenbouw
in Hardenber, the Netherlands and Medite Tricoya Extreme was
supplied by RET in Utrecht.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
07
STRATEGIC
REPORT
08 Chairman’s Statement
10 Tricoya Consortium
12 Our Market
14 Our Business Model
16 Our Strategy
18 Arnhem Expansion
20
Chief Executive’s Report
26 Accoya 10 Years On
28 Financial Review
34 Sustainability Report
“This has been a transformational year
for the Group. We have received great
support from existing and new industry
and financial partners, including our
shareholders to increase our manufacturing
capacity to meet demand from the growing
markets for Accoya® and Tricoya®.”
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 08
CHAIRMAN’S
STATEMENT
2017
2016
2015
39,790
33,847
33,483
€82m
Total new financing secured
31%
Growth in sales volumes in the
second half of the financial year
compared to the same period last year
A transformational year
This has been a transformational year for Accsys, with
capacity expansion agreed for both Accoya® and Tricoya®,
a total of €82m of new financing secured and a continued
growth in demand for our products. Partnerships and
commercial terms with BP, Medite and Rhodia Acetow
(formerly Solvay Acetow) also endorse Accsys’ patented
Accoya and Tricoya technology and our prospects for
the future.
The expanded Group and the Accsys team are now very
well positioned to take advantage of the opportunities that
we have been nurturing since the Company’s inception.
I have confidence that the market opportunity remains
substantial and conclude that the additional capacity, new
financing and partnerships have put us in a strong position
to exploit this in the most efficient way possible for the
benefit of our shareholders.
As a small company the increased workload of negotiating
and finalising the Tricoya Consortium and expanding our
Accoya facility in Arnhem fell on a small management
team. At the same time, our employees were being tasked
with maximising the output from our existing facilities. They
were all unwavering in their determination to deliver the
best result for Accsys. My colleagues and I on the Board
wish to thank all our employees for the diligence and
commitment they have shown throughout the year.
Sales growth
10 years have passed since our existing Accoya
manufacturing facility in Arnhem started operations.
Since then we have carried out many improvements to
our process which enabled us to increase capacity from
the same two chemical reactors. As a result this year,
we sold 39,790 cubic meters of Accoya, an 18% increase
compared to last year, and 60% more than was even
thought possible 10 years ago. Sales by Medite of Tricoya
panels increased by 32% to 5,806 cubic meters last year.
Sales volumes in the second half of the financial year
grew by 31% compared to the same period last year. This
increase was possible following the resolution of the supply
chain bottleneck issues in the first half of the year which we
had highlighted in November.
We continue to believe the total market for Accoya and
Tricoya is in excess of 2.6 million cubic meters per annum,
based upon detailed market assessments. This figure still
represents a small fraction of the overall solid wood and
wood panel industries.
Additional manufacturing capacity
In March we formed the Tricoya Consortium, with
agreements to build, operate and fund a new Tricoya
chip acetylation plant in Hull. This includes €68m of
comprehensive financing arrangements including debt
and equity from BP, Medite, BGF and Volantis and debt
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017Accoya Sales Volume m3 09
“ I BELIEVE WE HAVE NOW REACHED A
SOLID PLATFORM FOR FUTURE GROWTH”
from RBS. In addition, these transformational agreements
have recognised a pre-funding valuation of the Tricoya
business of €35m with Accsys retaining a 74.6% interest
in the Tricoya licensing business and a 46% interest in the
new Tricoya plant.
The plant will have an initial design capacity of 30,000
metric tonnes and is expected to be operational in the first
half of 2019. Medite has signed an off-take agreement to
purchase a minimum of 20% of the capacity in the first
year, rising to a minimum of 40% after the fourth year
of commercial production. The plant is expected to be
EBITDA positive operating at 40% capacity.
During the year we have also made significant progress
with the expansion of our Accoya plant in Arnhem, from its
current capacity of approximately 40,000 cubic meters to
60,000 cubic meters per annum in the first of a two part
expansion, with a further 20,000 cubic meters to follow.
The sale and leaseback of the land in Arnhem has been
completed. Detailed engineering work has progressed and
continues on site, with the third reactor itself having been
delivered to site on 8 June 2017. We continue to expect the
construction to be complete by the end of the calendar
year 2017, with the benefit of the additional capacity and
resulting sales growth expected in the financial year ending
March 2019.
The fourth reactor will be added at a later date to meet
demand, increasing capacity to 80,000 cubic meters,
with the potential to generate in excess of €120m of
Accoya revenue and Accoya manufacturing EBITDA in
excess of €30m.
Financial Results
Revenue for the year ended 31 March 2017 increased by 7%
to €56.5m (2016: €52.8m). Within this total, Accoya wood
revenue increased by 17% to €50.7m (2016: €43.5m) as a
result of an 18% increase in sales volume, while licence and
licensing related income decreased from €5.3m to €1.9m
as expected, following the receipt of higher one-off fees
in the prior year, including those from our Accoya licensee
Rhodia Acetow.
Gross profit margin decreased from 34% to 25% for a
number of reasons including one-off licensing income in
the previous year, together with the full year impact of
discounted prices to Rhodia Acetow, a higher proportion
of sales to Medite in respect of Tricoya (also at a lower
sales price) and a small increase in raw material prices.
Other operating costs (excluding exceptional items)
remained consistent at €18.5m.
The above resulted in a €3.8m decrease in underlying
Group EBITDA to €1.2m loss (2016: EBITDA profit of
€2.4m). Underlying EBITDA improved from €1.6m loss in
the first half of the year to €0.4m profit in the second half
as a result of higher licensing income and sales volumes.
Balance sheet
The increase in the cash balance to €41.2m at 31 March
2017 (2016: €8.2m) reflects the first part of the funding
received in respect of the Tricoya Consortium, including
€18.6m proceeds of Loan Notes issued to BGF and
Volantis and net €18.3m received in respect of equity in
the Tricoya subsidiary companies issued to the investors
in the Tricoya Consortium.
During the period €2m was drawn down under the Rhodia
Acetow loan facility and €4.2m was received in respect
of the sale of the land in Arnhem. €6.2m was invested in
property plant and equipment including both the Tricoya
project and Arnhem expansion. The balance was principally
attributable to the €1.1m EBITDA loss in the period and a
€1.5m increase in working capital.
The net cash balance was €20.1 million (2016: €8.2 million).
The balance excludes €12.4m net proceeds of the Firm
Placing and Open Offer which was completed after the
year-end in April 2017.
Outlook
I believe we have now reached a solid platform for future
growth, both in respect of our products and intellectual
property but also in respect of our business model,
reflecting our ambition to retain a direct interest in
manufacturing as we continue to grow to maximise returns
for our shareholders.
By building on our achievements so far we are now well
positioned to focus on bringing the new manufacturing
capacity on-line and growing sales and demand for our
products globally.
The Firm Placing and Open Offer, which was launched
successfully and completed in April, with the Open Offer
having been four times oversubscribed has also put the
Group in a firm financial position. I am confident that as we
continue to invest in growth, and as we benefit from the
additional manufacturing capacity, we will become cash-
flow generative.
The new financial year has started well, with growth in
Accoya sales being comparable to growth seen in the
second half of last year. Sales growth will be temporarily
restricted for the year as a whole until the new capacity
becomes available in early 2018 calendar year. Demand for
Accoya continues to increase and we expect sales to grow
further thereafter.
Patrick Shanley
Non-executive Chairman
19 June 2017
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 10
TRANSFORMATION
The formation of the Tricoya Consortium
is transformational for our business.
FOCUS STORY –
TRICOYA CONSORTIUM
On 29 March 2017 Accsys announced the entering into agreements
for the formation of the Tricoya Consortium.
The Tricoya opportunity:
The Hull plant:
• Global market for Tricoya® panels estimated in
excess of 1.6 million cubic meters per annum
• Tricoya Consortium established to build,
operate and run Tricoya plant in Saltend, Hull
• Equating to approximately 1.5% of global MDF
• Planning allows for future expansion
manufacturing capacity
• Medite Tricoya sales to date limited to market
seeding using chipped Accoya® at higher cost
• Growth in sales constrained by a lack of
production capacity, nonetheless, sales of
Tricoya panel by Medite have grown from 949
cubic meters per annum in 2012 to 5,806 cubic
meters in the year to March 2017, despite price
increases, and representing a 32% increase on
the previous year
• Wholesale price of Tricoya panels is currently
approximately €1,500 per cubic meter, with
the price above that of Accoya reflecting its
exceptional properties and that it is a unique
offering in the market
• Construction of the Hull plant is expected
to address these constraints and promote
increased supply
• Pre-construction, engineering and design
work completed in 2016
• Engie Fabricom appointed as Engineering,
Procurement and Construction ('EPC')
contractor
• Tricoya chips to be manufactured on a
commercial scale and sold globally
• Plant construction expected to be completed
by early 2019
• Medite off-take agreement for a minimum of
20% capacity in first year, rising to a minimum
40% after the fourth year of production
• Plant expected to be EBITDA positive
operating at 40% capacity
• Initial capacity of 30,000 tonnes of chip per
annum, sufficient to produce approximately
40,000 cubic meters of Tricoya panel
• Full capacity expected to be reached in
approximately 4 years
• Total capex of €59m
• Tricoya Technologies Limited to continue to
pursue additional licence or consortium
agreements worldwide
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 Tricoya wood panel
11
Highlights:
• Transformational deal for Accsys
– construction of world’s first
Tricoya plant
• Strategic benefits from BP’s and
Medite’s participation
• Project reinforced by a significant long-
term off-take agreement with Medite
• Enables increased global demand to
be addressed and additional user and
manufacturing licensing agreements;
plus ability to expand at Hull site
• Attractive capital structure to enhance
returns through financing arrangements
and partnerships with BP, Medite, BGF,
Volantis and RBS
The Tricoya Consortium structure:
The Tricoya Consortium is based on
two entities:
• Tricoya Technologies Limited ('TTL')
will continue to benefit from all Tricoya
related intellectual property
• A new entity, Tricoya Ventures
UK Limited ('TVUK') has been
incorporated as TTL’s subsidiary and
will own and operate the Tricoya plant
in Hull
• TTL will benefit from all other future
Tricoya related revenues generated
outside the Hull plant
MEDITE
€7.0m
BP
VENTURES
€6.6m
ACCSYS
TECHNOLOGIES
€18.4m cash
+ IP (€35m)
€18.9m loan notes
equity option
BGF/VOLANTIS
€18.9m loan notes
(Accsys) +€3.2m equity
directly into TTL
12.1%
9.0%
74.6%
4.3%
MEDITE
€4.0m
TRICOYA
TECHNOLOGIES LTD
(Owner of Tricoya IP)
BP CHEMICALS
€13.7m
8.2%
61.8%
30.0%
TRICOYA
VENTURES UK
(Hull plant operator)
€15m
bank facility
ROYAL BANK OF
SCOTLAND
• €31m of funding contributed by
long term partners BP and Medite
Accsys:
• Accsys’ economic interest in TTL
at 74.6%
• Consortium has attributed a €35m
pre-funding value as well as value
from historical Accoya supply
• BGF and Volantis loan notes are
unsecured
• Interest on the loan notes (at 7–9%)
accrued, with no capital or interest
payments until January 2019
• BGF and Volantis granted options
over 14% issued share capital at
59.7p exercise price (being 11.8% of
issued share capital following issue
of new shares on 24 April 2017)
• Project finance debt provided
by RBS
• 74.6% total equity interest
• Contributed all of its Tricoya
intellectual property and
historical development into TTL
in October 2012
• Accsys will generate up to approx
1.5% additional equity in TTL over
the next two years as a result of
the continued subsidised supply
of Accoya
BP:
• BP will invest a total of €20.3m in
the Consortium
• €13.7m as equity in TVUK, aligning its
interest with the plant it is supplying
• BP’s venture capital arm, has
invested €6.6m as equity into TTL
• BP Chemicals will be the sole
supplier of acetic anhydride to the
plant in Hull through a minimum six
year supply contract
Medite:
BGF & Volantis:
• Medite has invested €7m as equity
into TTL and will invest a total of
€4m as equity into TVUK
• Medite has agreed an off-take
agreement under which it has
committed to purchase a minimum
capacity of 40% of the capacity of
the plant (allowing for a ramp up)
by year six of plant operations
• BGF (65%) and Volantis (35%)
have invested a total of £22m as
financial investors
• BGF and Volantis have in aggregate
subscribed for a total of €18.9m of
loan notes in Accsys Technologies
PLC (the ‘Loan Notes’)
• €18.4m of the proceeds, after fees,
have been invested by Accsys as
equity into TTL
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 12
OUR
MARKET
The superior qualities that our technology brings are driving customers to choose
our materials over established wood and non-wood products giving enormous scope
to increase our penetration of this vast global market.
Our technology
Accoya® is based upon our proprietary wood
acetylation technology.
The physical properties of any material are
determined by its chemical structure. Wood contains
an abundance of chemical groups called 'free
hydroxyls'. Free hydroxyl groups absorb and release
water according to changes in the climatic conditions
to which the wood is exposed. This is the main reason
why wood shrinks and swells. It is also believed that
the digestion of wood by enzymes initiates at the free
hydroxyl sites – which is one of the principal reasons
why wood is prone to decay.
Acetylation effectively changes the free hydroxyls
within the wood into acetyl groups, which already
naturally exist in wood at lower levels. This is done by
reacting the wood with acetic anhydride, which comes
from acetic acid (commonly known as vinegar when
in its dilute form). When the free hydroxyl group is
transformed to an acetyl group, boosting the acetyl
level, the ability of the wood to absorb water is greatly
reduced, rendering the wood more dimensionally
stable and, because it is no longer digestible,
extremely durable.
2.6million m3
The potential market for Accoya
and Tricoya is in excess of annually
2.6 million m3
32%
Last year, sales of Tricoya panel
products grew to 5,806m3
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 13
Market
We believe the potential market for Accoya
and Tricoya® is in excess of 2.6 million cubic
meters annually.
Last year we sold 39,790 cubic meters of Accoya,
however the total global solid wood market is
understood to exceed 400 million cubic meters
annually and we believe sales in excess of 1 million
cubic meters annually are ultimately achievable. While
it may take some time for Accoya to reach its full
market potential, we are confident that continued
strong sales growth can be generated.
Accoya captures the market share in those
applications which require rot, insect and water
resistance, i.e. primarily outdoor products. The
Group is focused on the higher-value end of these
applications, where the dual qualities of durability
and dimensional stability offered by Accoya are most
highly valued.
The majority of our Accoya sales is to a network of
timber distributors which in turn supply a variety of
industries, principally for joinery (windows and doors)
and for decking and cladding. As we expand, we
expect that new opportunities will also be developed
as we become able to meet the demands of larger
scale manufacturers and also as we continue to
develop our product and its applications.
Tricoya panels’ enhanced performance and moisture
resistance makes them particularly suited to external
applications including facades and cladding, soffits
and eaves, exterior joinery, wet interiors, door
skins, flooring, signage and marine uses. Tricoya
displaces alternative more expensive or less easily
handled products and opens up major new market
opportunities in the construction sector.
The global market for Tricoya panel products is
estimated in excess of 1.6 million cubic meters and
up to approximately 4.5 million cubic meters per
annum. This would equate to around 1% of global
MDF manufacturing capacity. Tricoya panels
were introduced to the market by Medite in 2012,
manufactured using chipped Accoya as a production
solution in the period before the dedicated wood
chip acetylation plant is built. Sales have increased
significantly each year since, and total panel sales to
date exceed 17,200m3 / 1,585,000m2, representing a
sales value of approximately €26m. Last year sales
grew by 32% to 5,806m3.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 14
OUR
BUSINESS MODEL
SUSTAINABILITY
Accoya® and Tricoya® are high performance building solutions which are environmentally friendly over their
full life cycle. They are made from abundantly available, fast growing, sustainable, renewable resources with
durability and dimensional stability exceeding the best performing tropical and temperate hardwoods and
manufactured wood and non-wood panels.
OUR KEY STRENGTHS
OUR TECHNOLOGY
Intellectual property, expertise and innovation
Our IP is protected on different levels and is exploited in
different ways. We have developed families of patents
relating to our products and processes which provide
robust protection and enable us to market to third parties.
Equally important is know-how and trade secrets covering
our process, raw materials, equipment and products which
provide commercial protection and value generation as well
as a basis for on-going innovation.
Branding
Our brands Accoya wood and Tricoya are registered
trademarks in over 50 countries worldwide.
Strong branding and trademark protection is vital and has
enabled our products to generate a significant presence
in a relatively short time in what is otherwise a fragmented
market place. We portray that our products are high
performance, class leading and sustainable while offering
value for money when considering performance benefits
and the product lifecycle.
Business partners
Third parties have contributed to our success and help us
meet our long term strategic targets.
Particular importance is placed upon those which help
develop our technology, products and their place in the
market including equipment manufacturers, wood suppliers,
the acetyls industry, testing and certification bodies as well as
wood coating, adhesives and other system supply specialists.
We will continue to work with others to ensure we develop
larger scale manufacturing capacity.
Our people
Our people are key to our success, with high staff retention
and a commitment to the future of the Company.
Our focus on R&D, innovation and developing long-
term growth market opportunities to exploit our first
mover advantage is dependent on our employees. Value
is generated from know-how; from working with wood
products, understanding our brand on a global basis, to
optimising the acetylation process. We develop, motivate and
retain a committed team with necessary skills to help us meet
our objectives.
SOLID WOOD
WOOD ELEMENTS
Our wood processing technology is a platform
with application for use on different solid woods
and multiple different panel products.
We believe wood acetylation is applicable to
multiple wood products and species and that we
have established a platform technology that can
be developed to generate additional products and
uses. Different species of wood will enable Accoya
to be used for new purposes while opening up
greater supply chain opportunities. Our Tricoya
process also has the potential to be used for
particle board manufacture.
Investment in R&D, People and Partnerships
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 15
They are natural building materials with low maintenance and consistent qualities of the highest performing non-
sustainable man-made materials. They benefit from all positive attributes of wood (sustainability, strength, beauty)
without the downfalls (poor durability and stability).
HOW WE CREATE VALUE
OUTCOME
Increasing revenue and returns
enable continued investment in R&D,
people and partnerships in order to
take advantage of the substantial
opportunity which we believe exists.
Manufacturing
Accsys’ Accoya plant has been improved and had capacity increased
through constant process improvements. This has demonstrated our
process works on an industrial scale and has confirmed the commercial
viability of Accoya and Tricoya.
The plant returns will be further improved as capacity is improved and
expanded. In addition it is a centre for carrying out commercial level R&D
and for evaluating further improvements to our processes.
Working with third parties
Working with third parties provides the greatest prospect for taking
advantage of a substantial global market opportunity.
Manufacturing our products provides the greatest opportunity
for generating profit given the value added via our process,
and manufacturing directly ourselves offers significant long term
rewards. We will continue to work with appropriate third parties in
order to achieve our objective of expanding the production footprint
globally, in particular where such parties have resources or technologies
which complement our own.
Our ambition to retain a direct interest in manufacturing whilst fully
exploiting the value of our IP is characterised by our relationship with
Rhodia Acetow in Europe and in respect of Tricoya, where the new
consortium builds upon a broader level of experience and capabilities
in the acetyls and panel industries.
Manufacturing in our own plant
38,084
Cubic meters produced in 2017
SUSTAINABILITY
Investment in R&D, People and Partnerships
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 16
OUR
STRATEGY
Ambition
Progress in year ended March 2017
Priorities for year ending March 2018
Risks
Strategic Priority
Manufacturing
Meeting
global
demand
Increased production of Accoya® at our
Arnhem plant to supply our clients, develop
new markets and drive demand for Accoya as
well as for use as a feedstock in the production
of Tricoya®.
Continued focus on reducing cycle time to
increase Arnhem capacity and profitability.
Desire to retain equity interest in manufacturing
of our products where possible through
partnership or consortium arrangements.
Ongoing licensing of Accoya acetylation
technology to achieve multiple licence
agreements, including Rhodia Acetow,
to satisfy global demand for solid wood.
Development of extended global distributor
network.
Establishing and further development of
detailed engineering documents, engagement
of third party engineering experts.
Development of model to benefit from our
expertise by assisting third parties in areas
including sales, marketing, product and
technical development, operations and
maintenance.
Continued close cooperation between Accsys
and third parties to further develop and
facilitate the licensing of Tricoya.
Research and
Development
Continued R&D and product development
activities to generate future value via
development of additional and enhanced
applications.
Further development of new species to aid
licensing discussions and maximise value
through reduced costs as well as to generate
new applications and increased revenue.
Strengthened protection of intellectual
property.
Production increased from 33,431m3 to 38,084m3 as a result of a
continued focus to maximise the capacity of the existing two reactors
to meet demand.
later date.
Completion of expansion of Arnhem plant by addition of third reactor
Sales impacted by inability to meet or manage demand given our
with chemical backbone to be put in place for future fourth reactor at
relatively small current capacity compared to potential demand.
Further equipment and other process improvements implemented
have increased reliability and capacity such that actual production
levels now demonstrate the previously estimated capacity of
approximately 40,000m3.
Further reliability and maximising of output from existing Arnhem facilities
Process improvements likely to be ever harder to achieve with
in order to meet demand.
no certainty that capacity from existing plant will be increased
further.
The Tricoya Consortium has been finalised resulting in Accsys retaining
a 74.6% interest, and an indirect interest in the Hull plant of 46.1%.
plant in Hull.
Commencement of construction of world’s first dedicated chip acetylation
The Tricoya process is based on our core acetylation knowledge
but may present unexpected design issues requiring more
complex engineering.
Rhodia Acetow progressing with five year off-take commitment and
developing market which is now subject to their exclusivity, with sales
volumes having grown by 17%.
61 distribution agreements in place around the globe.
Commenced conversion of previously completed Front End Engineering
and Design studies for expansion in Arnhem and the proposed Tricoya
plant in Hull, into full detailed engineering packages in conjunction with
appointed contractor, Engie Fabricom.
Further development with Rhodia Acetow to develop new opportunities
Manufacturing capacity in the short term is limited and our
in their exclusive region in Europe.
ability to manage demand at near capacity levels could result
in negative market reaction.
Focus is on working closely with existing distributor base and optimising
European economic climate may reduce the number of new
sales and marketing methods and developing opportunities for when new
sales opportunities resulting in lower than expected sales.
capacity becomes available.
Formally working with Rhodia Acetow on sales and marketing activities
in their exclusive region.
Acceleration of market and business development work relating to
A delay in expansion of Arnhem plant or the Tricoya plant in Hull
Tricoya, following formation of the Consortium.
may result in uncertainty with our customers impacting sales in
Accsys lead the formation of the Tricoya Consortium with BP, Medite and
financial partners, BGF and Volantis.
Certification for use of Accoya in public and private decking installations
obtained in France and structural certification of Accoya in Germany
substantially progressed.
Progressed value added market opportunities for Accoya with large
industrial counterparts.
Extensive field trials of pre- commercial products creating options for
wider species use consideration when capacity is increased.
Establishment of joint Accoya and Tricoya sales approach
the shorter term.
Finalise high performance value added approaches for Accoya which
Additional applications and new species development remains
further enhance market penetration and widen opportunities.
uncertain given the inherent nature of R&D. An element of the
Group’s strategy for growth envisages existing or new products
being sold into new markets such that slower development could
impact longer term growth.
Commercial review for implementation of additional species for defined
As our products and IP becomes increasingly valuable, an
market channels.
increased risk of third parties challenging our IP or seeking to
copy or use it without authorisation develops.
Now over 60 granted patents and over 170 pending patent applications.
See CEO’s report (on page 20) for further details.
Brand and
Sustainability
Continued development, advancement and
protection of globally established Accoya and
Tricoya brands.
In country marketing campaigns ongoing, tailored
for select audiences to increase brand loyalty.
Roll out corporate brand messaging through all communications to grow
Our brands are an increasingly valuable asset for the Group,
awareness of the Accsys Group and its sustainable vision.
however as we operate on a global basis the risk of damage to
our brand also increases. As with our technical IP, our brands are
carefully managed via our qualified in house IP manager working
with external trademark attorneys where appropriate.
Desire to grow awareness of the Accsys Group
and our corporate vision to reduce the use of
environmentally unfriendly building materials
and products, whilst also developing a brand
platform that will ensure our business is a
commercial success.
New consumer facing website targeting homeowners; Accoya window
enquiries sent to joinery companies.
Maximise opportunities with existing partnerships to reach new audiences
and drive brand loyalty.
Consumer online presence supported by Accoya digital campaign focused
on new audiences.
Increased focus on creating brand awareness for Tricoya globally by
developing new markets and identifying opportunities to reach new
audiences.
Ongoing development of new markets for Accoya and Tricoya brands with
more users creating products with the two products.
Building upon the introduction of Accoya consumer online marketing and
developing a PR campaign to complement the consumer focus.
Initiated a brand messaging and identity project including feedback from
stakeholders, and a programme of corporate communications focused
around our core vision of sustainability.
Extend the successful PR strategy in the UK to our core markets globally.
Retain and improve our sustainability accreditations and recognition.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 17
Ambition
Progress in year ended March 2017
Priorities for year ending March 2018
Risks
Completion of expansion of Arnhem plant by addition of third reactor
with chemical backbone to be put in place for future fourth reactor at
later date.
Sales impacted by inability to meet or manage demand given our
relatively small current capacity compared to potential demand.
Continued focus on reducing cycle time to
Further equipment and other process improvements implemented
increase Arnhem capacity and profitability.
have increased reliability and capacity such that actual production
Further reliability and maximising of output from existing Arnhem facilities
in order to meet demand.
Commencement of construction of world’s first dedicated chip acetylation
plant in Hull.
Further development with Rhodia Acetow to develop new opportunities
in their exclusive region in Europe.
Process improvements likely to be ever harder to achieve with
no certainty that capacity from existing plant will be increased
further.
The Tricoya process is based on our core acetylation knowledge
but may present unexpected design issues requiring more
complex engineering.
Manufacturing capacity in the short term is limited and our
ability to manage demand at near capacity levels could result
in negative market reaction.
Focus is on working closely with existing distributor base and optimising
sales and marketing methods and developing opportunities for when new
capacity becomes available.
European economic climate may reduce the number of new
sales opportunities resulting in lower than expected sales.
Strategic Priority
Manufacturing
Increased production of Accoya® at our
Production increased from 33,431m3 to 38,084m3 as a result of a
Arnhem plant to supply our clients, develop
continued focus to maximise the capacity of the existing two reactors
new markets and drive demand for Accoya as
to meet demand.
well as for use as a feedstock in the production
of Tricoya®.
levels now demonstrate the previously estimated capacity of
approximately 40,000m3.
Desire to retain equity interest in manufacturing
The Tricoya Consortium has been finalised resulting in Accsys retaining
a 74.6% interest, and an indirect interest in the Hull plant of 46.1%.
of our products where possible through
partnership or consortium arrangements.
Ongoing licensing of Accoya acetylation
Rhodia Acetow progressing with five year off-take commitment and
developing market which is now subject to their exclusivity, with sales
volumes having grown by 17%.
61 distribution agreements in place around the globe.
Meeting
global
demand
technology to achieve multiple licence
agreements, including Rhodia Acetow,
to satisfy global demand for solid wood.
Development of extended global distributor
network.
Establishing and further development of
Commenced conversion of previously completed Front End Engineering
detailed engineering documents, engagement
and Design studies for expansion in Arnhem and the proposed Tricoya
of third party engineering experts.
plant in Hull, into full detailed engineering packages in conjunction with
appointed contractor, Engie Fabricom.
Development of model to benefit from our
expertise by assisting third parties in areas
including sales, marketing, product and
technical development, operations and
maintenance.
Continued close cooperation between Accsys
Formally working with Rhodia Acetow on sales and marketing activities
and third parties to further develop and
in their exclusive region.
facilitate the licensing of Tricoya.
Accsys lead the formation of the Tricoya Consortium with BP, Medite and
Establishment of joint Accoya and Tricoya sales approach
financial partners, BGF and Volantis.
Acceleration of market and business development work relating to
Tricoya, following formation of the Consortium.
Research and
Development
Continued R&D and product development
Certification for use of Accoya in public and private decking installations
activities to generate future value via
obtained in France and structural certification of Accoya in Germany
Finalise high performance value added approaches for Accoya which
further enhance market penetration and widen opportunities.
development of additional and enhanced
substantially progressed.
applications.
Progressed value added market opportunities for Accoya with large
industrial counterparts.
Further development of new species to aid
Extensive field trials of pre- commercial products creating options for
licensing discussions and maximise value
wider species use consideration when capacity is increased.
Commercial review for implementation of additional species for defined
market channels.
through reduced costs as well as to generate
new applications and increased revenue.
Brand and
Sustainability
property.
Tricoya brands.
Strengthened protection of intellectual
Now over 60 granted patents and over 170 pending patent applications.
See CEO’s report (on page 20) for further details.
Continued development, advancement and
In country marketing campaigns ongoing, tailored
protection of globally established Accoya and
for select audiences to increase brand loyalty.
Roll out corporate brand messaging through all communications to grow
awareness of the Accsys Group and its sustainable vision.
A delay in expansion of Arnhem plant or the Tricoya plant in Hull
may result in uncertainty with our customers impacting sales in
the shorter term.
Additional applications and new species development remains
uncertain given the inherent nature of R&D. An element of the
Group’s strategy for growth envisages existing or new products
being sold into new markets such that slower development could
impact longer term growth.
As our products and IP becomes increasingly valuable, an
increased risk of third parties challenging our IP or seeking to
copy or use it without authorisation develops.
Our brands are an increasingly valuable asset for the Group,
however as we operate on a global basis the risk of damage to
our brand also increases. As with our technical IP, our brands are
carefully managed via our qualified in house IP manager working
with external trademark attorneys where appropriate.
Desire to grow awareness of the Accsys Group
New consumer facing website targeting homeowners; Accoya window
and our corporate vision to reduce the use of
enquiries sent to joinery companies.
Maximise opportunities with existing partnerships to reach new audiences
and drive brand loyalty.
environmentally unfriendly building materials
and products, whilst also developing a brand
platform that will ensure our business is a
commercial success.
Consumer online presence supported by Accoya digital campaign focused
on new audiences.
Increased focus on creating brand awareness for Tricoya globally by
developing new markets and identifying opportunities to reach new
audiences.
Ongoing development of new markets for Accoya and Tricoya brands with
more users creating products with the two products.
Building upon the introduction of Accoya consumer online marketing and
developing a PR campaign to complement the consumer focus.
Initiated a brand messaging and identity project including feedback from
stakeholders, and a programme of corporate communications focused
around our core vision of sustainability.
Extend the successful PR strategy in the UK to our core markets globally.
Retain and improve our sustainability accreditations and recognition.
Further considerations of Risks can be found in the Directors’ report on page 44.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 18
GROWTH
We are expanding our operations to capture
global growth opportunities.
FOCUS STORY –
ARNHEM EXPANSION
Increased Accoya® capacity from 40,000 cubic meters
to 80,000 cubic meters in two stages
The Accoya opportunity:
• Current Arnhem capacity 40,000 cubic meters
• Demand is growing
− Strong sales with an increase of 18% in year to
31 March 2017 to 39,790 cubic meters
− Demand means growth is constrained by capacity
• Estimated annual sales in excess of 1 million cubic meters
believed to be achievable
− This represents a fraction of the 400 million cubic meters
total annual global solid wood market
• Expansion enables growth and continued market seeding
18%
sales growth
50%
capacity increase
with 1st stage
of expansion
“ STRONG SALES WITH AN INCREASE OF 18% IN
YEAR TO 31 MARCH 2017 TO 39,790 CUBIC METERS”
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 19
Highlights:
• Higher manufacturing EBITDA margin
driven by operational efficiencies and
economies of scale
• Success of the project reinforced by
off-take agreement with Rhodia
Acetow
• Greater flexibility to target new
markets and support Tricoya®
market seeding
• Enables Accsys to capitalise on
substantial market opportunity
Arnhem plant expansion
Arnhem plant expansion
Funding and off-take agreements
• Arnhem plant is profitable today
• Approximate €22m capital cost of first stage
− Profitable since 2013
− Gross manufacturing margin of 23% in FY17
− Accoya EBITDA (excluding licencing) of €4.8m
in FY17 (€4.9m in FY16)
• Work has begun to increase capacity from 40,000
cubic meters to 60,000 cubic meters
per annum in the first of a two part expansion
• First stage includes third reactor and chemical
infrastructure for the fourth
• Construction expected by the end of calendar
year 2017
• The additional capacity will result in further
improved economies of scale
• Gross margin of 30% achievable
• Fourth reactor to be added at later date, increasing
capacity to 80,000 cubic meters per annum
• 80,000 cubic meters total capacity enables
revenue in excess of €120m and Accoya EBITDA
in excess of €30m
of expansion (3rd reactor)
• €4.2m from the sale and leaseback of the Arnhem
plant completed in 2016
− Landlord investing further in respect of
new warehousing and office facilities
• €9.5m loan (now partially drawn down) and €5.0m
fees from the Group’s European Accoya licensee,
Rhodia Acetow
• Balance and working capital funded from
existing cash resources
• Interest rolled up for two years, post construction
of the plant
• Success of project reinforced by the Rhodia
Acetow off-take agreement
• Rhodia Acetow has agreed to purchase a minimum
of 76,000 cubic meters of Accoya in aggregate
from the Arnhem facility between 2016 to 2020
(inclusive)
• Annual minimum volumes increasing each year
in this period
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
20
CHIEF EXECUTIVE’S
REPORT
Introduction
I am very pleased to report upon what has been a truly
transformational year for Accsys which I believe has put
us in an excellent position to continue to grow and take
advantage of our unique assets.
The new Tricoya Consortium agreed on 29 March 2017, which
will lead to the Group’s second commercial acetylation plant,
marks a major step forward in our objective of establishing
acetylated wood as the leading modified wood technology in
the building materials sector.
Our focus on safety remains our top priority and during the
year we commenced an extensive new safety awareness
programme involving all of our employees.
I would like to thank all of our staff for their hard work and
continued dedication, which has helped make last year a
truly transformational year. I would also like to welcome
Martin Robinson, who joined our Senior Management Team
in April 2017 as Head of Group Operations. I believe his
wealth of experience from a career at BP will be invaluable
during our next period of growth.
Accoya® sales growth
Total Accoya sales volume for the year ended March 2017
increased by 18% to 39,790 cubic meters (2016: 33,847
cubic meters) and total Accoya revenue increased by 17%
to €50.7m (2016: €43.4m). The smaller increase in revenue
compared to volume was attributable to the full year
impact of sales to Rhodia Acetow (formerly Solvay Acetow)
which are at a discount, reflecting Rhodia Acetow’s
marketing and sales commitment and responsibility for
their region. Excluding sales to Medite for Tricoya®, sales
volumes increased by 18% to 31,532 cubic meters
(2016: 26,789 cubic meters).
The overall increase in sales volume in the year reflects
the continued increase in demand for our products.
The strength of demand has reconfirmed the need for
additional manufacturing capacity and until the additional
capacity becomes available early next calendar year, we
are operating at or near capacity utilisation. As a result
we are seeking to manage demand and our customers’
expectations during this challenging period, during which
we have seen an increase in forward orders.
The increase in sales, particularly in the second half of the
year which saw an increase of 31% compared to the same
period the year before, continues to be very encouraging.
We expect growth to be effected by the timing of the
commissioning of the third reactor. We are increasingly
focused on the longer term market and new opportunities
expected to result from the increased capacity. We
also expect to benefit from potential customers gaining
greater confidence of Accoya’s enduring position in the
market place.
2017
2016
2015
31,532
26,789
26,775
“ WE ARE INCREASINGLY
FOCUSED ON THE LONGER
TERM MARKET AND
NEW OPPORTUNITIES
EXPECTED TO RESULT
FROM THE INCREASED
CAPACITY”
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017Accoya® wood revenue (excl. licensing)€50.7m 17% (2016: €43.4m)Sales Volume excluding Medite m3 21
“ THE OVERALL INCREASE IN SALES VOLUME IN THE YEAR REFLECTS
THE CONTINUED INCREASE IN DEMAND FOR OUR PRODUCTS“
The overall increase in sales is largely due to repeat
business driven by the joinery industry’s need for
high performance material, by greater acceptance
of Accoya in our target markets as well as resulting
from the direct activities undertaken by our sales and
marketing teams where our resources are relatively
limited compared to the overall market opportunity.
UK and Ireland remains our largest region, with sales
volumes increasing by 24% to 12,021 cubic meters,
excluding sales to Medite for Tricoya. All of this
growth has been driven through existing distributors.
Over the last few years we have developed a
successful model of working with these distributors
to develop marketing campaigns together with
indirect sales methods such as architect briefings
and a detailed and on-going campaign to target and
inform the fragmented joinery market. This success
has led us to estimate Accoya now represents
approximately 12% of the UK wooden window market.
Demand was unaffected by the strengthening of the
Euro against sterling following the Brexit vote, noting
also that the weakening of sterling also impacted all
timber imports.
We sold 8,531 cubic meters to Rhodia Acetow in the
financial year, following Rhodia Acetow assuming
responsibility for their exclusive region in January
2016. This represented a 17% increase compared to
sales to customers in the equivalent region in the
previous year. The increase masks that sales in their
region decreased immediately following the transition
and therefore I am very pleased that the transition has
progressed well since with the deployment of Rhodia
Acetow’s sales team and I look forward to further
future growth. As a reminder, Rhodia Acetow agreed
a five year, 76,000 cubic meter off-take agreement
effective from January 2016, with the annual minimum
volumes increasing each calendar year and in total
representing approximately €100m of Accoya.
Sales in the Americas increased by 38% to 3,846 cubic
meters. North America in particular represents the
largest potential market for Accoya, and I am pleased
that the changes made to the sales team over the last
two years has resulted in an increase in momentum
ahead of the new manufacturing capacity becoming
available. We will continue to focus on this region
applying where possible the same successful sales and
marketing techniques that we have developed in the
UK market.
Sales to the Benelux area increased 10% to 3,682
cubic meters, however sales in the Netherlands were
disappointing, recording a decrease compared to the
prior year. As a result, we have reviewed our approach
to the Netherlands and have made changes to the
sales team, launched a new marketing campaign
and commenced a new approach to the key housing
association market. As a result, I am confident that
we will be in a good position to take advantage of the
additional Accoya manufacturing capacity when it
becomes available.
Sales to the Asia-Pacific region decreased by 16% to
2,812 cubic meters. Within this, sales to customers
within Diamond Wood’s exclusive region decreased
by 31% and sales outside of this, including to Japan,
Australia, New Zealand and India decreased by 7%,
reflecting several larger projects in the previous
year, noting that we continue to believe this region
has the potential for substantial sales growth in the
longer term.
Sales to customers elsewhere, including Eastern
Europe and the Middle East remain relatively small
at this time, however we continue to develop
relationships with distributors so as to increase
awareness of Accoya generally, ahead of additional
capacity becoming available and with a belief that
many of these regions also represent excellent longer
term markets.
Accoya sold to Medite for the manufacture of Medite
Tricoya increased by 17% to €7.8m (2016: €6.6m). The
margin for this material continues to be below that
achieved for the majority of Accoya we sell, reflecting
our investment in the Tricoya project and that the
current manufacturing process is in place only until
the first dedicated Tricoya plant is operational. We
continue to expect volumes sold to Medite for the
manufacture of Tricoya panels to increase marginally
in the new financial year, given temporary capacity
limitations in Arnhem, noting that sales by Medite
of Tricoya panels increased by 31% to 5,806 cubic
meters in the year to 31 March 2017.
We have 61 Accoya distributor, supply and agency
agreements in place covering most of Europe,
Australia, Canada, Chile, China, India, Israel, Mexico,
Morocco, New Zealand, South Africa, parts of South-
East Asia and Middle-East and the USA.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 22
CHIEF EXECUTIVE’S
REPORT CONTINUED
Accoya® pricing and margin
The marginally smaller increase in Accoya revenue
(17%) compared to volume (18%) reflects a full year
of sales to Rhodia Acetow, who receive a discount
as a result of its obligations under the committed
off-take agreement and to reflect the sales and
marketing expenditure that it incurs directly. This
was partly off-set by a small increase in prices to UK
customers earlier in the year. A similar price increase
to the majority of remaining customers is being
implemented in the first half of the new financial year.
The Accoya gross margin, excluding licencing income,
decreased from 27% to 23% as a result of full year
impact of the Rhodia Acetow discount, the volume of
lower margin material sold to Medite and the higher
cost of raw wood. Part of this higher raw wood cost
was due to an increase in prices from New Zealand
“ THE HULL PLANT IS EXPECTED TO
REACH EBITDA BREAKEVEN AT
APPROXIMATELY 40% OF ITS CAPACITY
AND TO TAKE APPROXIMATELY FOUR
YEARS TO REACH FULL CAPACITY
FOLLOWING COMPLETION."
suppliers and part was attributable to short term
changes to the product mix used in production
resulting from supply chain issues, but which enabled
us to maintain production volumes.
Expansion of Accoya manufacturing plant
I am very pleased by the progress made in the year
in respect of our project to expand the production
capacity of the Arnhem plant from the current levels
of approximately 40,000 cubic meters per annum
to 80,000 cubic meters in a two-stage expansion
programme. We expect to invest approximately €22m
towards the capital costs of the first stage, which
includes the installation of a third reactor, increasing
the capacity to 60,000 cubic meters, together with
the back-bone infrastructure for a fourth reactor.
Work has progressed well in respect of the first
stage of the expansion which comprises two key
phases: the first, which involved the reconfiguring of
chemical infrastructure stations, has been completed.
Significant work has also been completed in respect
of detailed engineering and ground works, and all
key items of equipment have been ordered. The third
reactor itself was delivered on 8 June 2017 enabling
the remainder of the chemical construction work
to progress. Detailed engineering is now underway
by the Engineering, Procurement and Construction
contractor Engie Fabricom with the construction due
to be completed by the end of 2017 calendar year,
ahead of a period of commissioning.
During the year we also completed the sale and
leaseback of the remaining freehold land in Arnhem
to Bruil, the same group to which we sold land and
buildings in 2011. Bruil in turn, have made excellent
progress in the construction of a significant new
warehouse and office facilities which will be adjacent
to the chemical plant and are due to be completed
in the same timeframe. These facilities, which will
improve and contribute to better logistics and should
improve productivity, will be leased to Accsys once
the expansion is complete.
The fourth reactor is expected to be added at a
later date, as demand requires. As this will use the
same back-bone infrastructure as is currently being
constructed for the third reactor, it is expected to
be added at relatively low cost, funded from internal
resources.
Tricoya Consortium
Introduction
I was delighted that we announced in March 2017
the completion of agreements in respect of the
construction, operation and financing of the world’s
first dedicated Tricoya® wood chip acetylation plant,
to be located in Hull. Under the new agreements,
Accsys owns 74.6% of Tricoya Technologies Limited
which in turn owns 62% of the Hull plant.
We have established the Tricoya Consortium to exploit
Tricoya globally and to fund, build and operate the
Hull plant. This is expected to have an initial capacity
of 30,000 metric tonnes of acetylated Tricoya chips
per annum, enough to produce approximately 40,000
cubic meters of Tricoya panels.
Sales of Tricoya to date have been relatively small
scale for market development and based upon
Accoya manufactured in Arnhem. The new plant
will produce acetylated wood chips as feedstock
for Tricoya panels which will be approximately 35%
cheaper than the current market seeding production
from Arnhem.
The total funding requirements for the Tricoya
project are expected to be approximately €68m.
Pre-construction engineering work was completed
in 2016, land clearance of the plot at the Saltend
Chemicals Park is expected to be shortly completed
and detailed engineering work has commenced. The
plant is expected to be completed in early 2019.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 23
The Hull plant is expected to reach EBITDA breakeven
at approximately 40% of its capacity and to take
approximately four years to reach full capacity
following completion. The designs and the plot
allow for expansion at a later date.
Tricoya Consortium structure
The Tricoya Consortium members and funding is
set out below.
The investment into the Tricoya Consortium has been
split between two entities, Tricoya Technologies
Limited (‘TTL’) and Tricoya Ventures UK Limited
(‘TVUK’). TVUK will own and operate the Hull plant
and TTL will continue to exploit all Tricoya related
intellectual property and benefit from any future
Tricoya related revenues outside of the Hull plant.
a) BP has been a key supplier of acetic anhydride,
the key chemical raw material for acetylation,
for a number of years. Under the Consortium
arrangements, they will be the sole supplier to
the Hull plant from its adjacent acetic anhydride
production facility under a minimum six year
supply agreement.
BP will invest a total of €20.3m, with BP Chemicals
investing €13.7m into TVUK aligning its interest
with the plant it is supplying. BP Ventures, BP’s
venture capital arm, has invested €6.6m into TTL
to benefit from the long term Tricoya opportunity.
b) Medite, part of the Coillte group, has been working
with Accsys on Tricoya since 2009 and has been
successfully selling Tricoya panels since 2012. Sales
to date exceed 17,200 cubic meters.
Medite has agreed an off-take agreement which
includes a minimum obligation to purchase 20% of
the plant capacity in the first year of production,
ramping up to 40% after the fourth year of
production.
Medite will invest €11m of equity into the Tricoya
Consortium, with €7m having been invested
into TTL in the year and €4m to be invested
in total into TVUK, aligning its interests with
the manufacturing and longer term success of
Tricoya.
c) Accsys has contributed all of the Tricoya
intellectual property and work undertaken
previously, which has been attributed a pre-money
value of €35m under the Tricoya Consortium
arrangements.
In addition, Accsys has contributed €18.4m of
equity into TTL, which was achieved by issuance
of €18.9m of Loan Notes to the Business
Growth Fund and Volantis, details of which
are set out below.
Together the pre-money value and cash
investment has resulted in Accsys retaining a
74.6% equity interest in TTL and therefore Accsys
has continued to control and fully consolidate TTL,
and in turn TVUK.
d) Business Growth Fund (‘BGF’) and Volantis have
invested a total of €22m as financial investors.
BGF and Volantis have in aggregate subscribed
for a total of €18.9m of Loan Notes in Accsys
Technologies PLC (the ‘Loan Notes’). In
turn, €18.4m of the proceeds, after fees, has
been invested by Accsys as equity into TTL,
as described above. The Loan Notes are
unsecured and with no interest repayments
due until January 2019.
In addition BGF and Volantis have invested a total
of €3.2m directly as equity into TTL. As part of the
overall financing package (which has been divided
65%/35% between BGF and Volantis respectively),
BGF and Volantis have also been granted options
over 14% of the issued share capital of Accsys.
In addition, the Tricoya Consortium has agreed a six
year, €17.2m (€15m net) finance facility with The Royal
Bank of Scotland (‘RBS’). Interest payments due
under the facility are rolled up until the Hull plant is
expected to be cash-flow generative.
Global exploitation
TTL has granted TVUK a sub-licence to
manufacture Tricoya at the Hull plant and sell the
same on an exclusive basis in the UK and non-
exclusive basis in certain other countries (the
‘Production Licence’), but only when customers
have also first entered into a licence agreement
with TTL for the use of Tricoya in the production
and marketing of panels (the ‘User Licence’).
TTL will therefore receive up-front licence fees and
ongoing royalties from TVUK under the Production
Licence as well as royalties under the User Licence
from third party customers buying Tricoya chips
from TVUK.
TTL is expected to agree additional licence
agreements in the future elsewhere in the world to
exploit the market which is believed to be in excess of
1.6 million cubic meters per annum.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
24
CHIEF EXECUTIVE’S
REPORT CONTINUED
Intellectual Property
We continue to focus on and invest heavily in the
generation and protection of intellectual property
relating to the innovation associated with our
acetylation processes and products to ensure
ongoing differentiation and competitive advantage
in the market place. Whilst each new innovation is
carefully considered, patenting and/or maintaining
valuable know-how as a trade secret remains
the typical route through which our innovation
is protected.
Accsys has an extensive and growing patent
portfolio with over 60 granted patents in various
countries throughout the world and over 170
pending patent applications across more than 20
patent families covering all major markets, with
particular emphasis having recently been placed on
extending the geographic spread of the Tricoya®
patent portfolio. Significant R&D resources are
employed to maximise the scope of our patent
rights to not only cover the products we and our
distributors and licensees sell, and the processes by
which these products are made, but also to prevent
competitors from commercialising similar products
and processes.
“ THE NEW FINANCIAL YEAR HAS
STARTED WELL, WITH ACCOYA® SALES
GROWTH COMPARABLE TO THE SECOND
HALF OF THE LAST FINANCIAL YEAR“
Management of Company know-how remains an
essential element of safeguarding our innovation,
with confidentiality protocols in place to prevent
unauthorised access to such know-how and to
place strict contractual obligations on third parties
collaborating with Accsys. Increasing Company-
wide awareness of the importance of protecting
and controlling our know-how is a key initiative
with particular focus on minimising risks when
collaborating with third parties.
Our well established trademark portfolio continues
to grow geographically and covers the key distinctive
brands Accoya, Tricoya and the Trimarque Device
under which products are marketed, alongside the
corporate Accsys brand, including transliterations
in Dutch, Arabic, Chinese and Japanese. All of our
key brands have now been registered in over 50
countries, and have become valuable household
names in the timber and panel industries.
Accsys continues to maintain an active watch on the
commercial and IP activity of third parties to monitor
and take actions if its IP rights are being infringed,
to identify potentially valuable third party IP which
could be exploited via a strategic alliance, in-licence
or purchase of third party IP and to obtain an early
insight into third party IP which could potentially
hinder our proposed commercial activity.
Both the patent and trademark portfolios, together
with other protected IP, including material under
copyright and domain names, continue to be
regularly reviewed to ensure alignment with the
Company objectives and to confirm obligations to
licensees are being fulfilled.
Careful IP management, effected via our qualified in-
house IP manager working in close conjunction with
our technology, engineering, product development,
marketing and commercial groups, and supported
where appropriate by external patent and trademark
attorneys, ensures our IP portfolio is not only
maintained and protected, but is grown in a cost
effective manner, adding value to our manufacturing
and licensing businesses.
Outlook
The creation of the Tricoya Consortium and
expansion of the plant in the Netherlands are both
substantial and hugely exciting projects for Accsys.
In total, they will enable the Accsys Group to grow
significantly over the next few years to meet the
increasing demand for Tricoya and Accoya, which
we continue to believe, having undertaken detailed
market assessments, is in excess of 2.6 million cubic
meters per annum.
The new financial year has started well, with Accoya
sales growth comparable to the second half of
the last financial year, although growth will be
temporarily constrained as the year progresses now
that we will be operating at or near our capacity.
Our immediate focus is therefore on ensuring the
expansion in Arnhem is completed and in this
respect, we continue to expect the construction
to be completed by the end of 2017 calendar year.
Following a period of commissioning, we expect
the full benefit of the expansion to be obtained in
the financial year ending March 2019, with demand
expected to result in further sales growth.
Paul Clegg
Chief Executive Officer
19 June 2017
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 25
MEDITE® TRICOYA®
EXTREME
AND ACCOYA®
SELECTED FOR
STUNNING
ORANGERY IN
YORKSHIRE
Manufactured by S.Taylor and Son, Accoya
was chosen because the joinery company
had previously specified Accoya to the
same client who were delighted with its
appearance and performance. Accoya was
used for all the framing, doors and fascia,
plus, Medite Tricoya Extreme was selected
for the pilasters. Accoya and Medite Tricoya
Extreme were also selected for their long
lasting durability and stability, which is ideal
for the Yorkshire weather. Since creating
this orangery and circulating photos of the
finished project, S.Taylor and Son have taken
orders for two more orangeries and have
several others in the pipeline.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 26
ESTABLISHED
Over the last 10 years we have established Accoya®
as a major presence in the market.
FOCUS STORY –
ACCOYA 10 YEARS ON
This year we celebrate the 10th anniversary of Accoya wood being produced commercially
We were introducing Accoya into a very traditional
market at a particularly tricky time – a business
environment where the world was close to financial
catastrophe and where the construction industry, which
ultimately provides the demand for our product, was in
meltdown.
The world’s first Accoya project is now over 10 years old
and Accoya’s decade of durability has been marked with
a successful review of the home of architectural designer
Gordon Atiken, located near Glenrothes in Fife, Scotland.
During the decade, Scotland has experienced a lot of harsh
weather conditions ranging from rain, sleet and snow and
even some piercing sunshine, with the north façade being
particularly exposed. However in the last 10 years, Gordon
has only maintained the cladding once by cleaning with
a mild soapy water solution, restoring it to an ‘as new’
appearance, a truly remarkable testimony to Accoya’s now
proven properties.
Following this, we started to supply Accoya for the first
heavy traffic road-bridge in Sneek, the Netherlands.
The designers, builders and governmental bodies were
convinced about Accoya's extraordinary performance and
they selected it to make this specially designed wooden
bridge. Another bridge followed and together they were
the only wooden bridges with such a span for heavy traffic
use in the world.
10 year old Accoya cladding looks as good as new
The first of two heavy road traffic bridges
in Sneek made from Accoya
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 27
Accoya® selected for a unique Otemachi bench in Tokyo, Japan
Demand for Accoya has significantly grown since with
the addition of new distributors. By working closely
with our distributors, direct customers and joinery
companies we are now seeing consumers specifying
Accoya too.
Accoya is repeatedly ordered for a wide variety of
applications from cladding and decking to windows
and doors. In the UK, Accoya has seen a positive
acceptance with joineries, with a market share today
estimated at 12% of the wooden window market.
North America is currently our fastest growing
market for Accoya with increased specifications and
manufacturers adoption of Accoya as the material
of choice.
The years of testing by the Group before 2007 made
the start-up of commercial production successful.
The worldwide wood industry, particularly in Europe,
was watching very closely but since then Accoya
has become the benchmark for wood modification
globally. Today, even natural wood species are
benchmarked against Accoya on performance.
“ NORTH AMERICA IS
CURRENTLY OUR FASTEST
GROWING MARKET.”
Accoya represents
approximately
12%
of UK wooden
window market
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSUK & Ireland Sales (excl. sales to Medite for Tricoya)12,021m3 24% on 2016Americas Sales 3,846m3 38% on 2016Benelux Sales3,682m3 10% on 2016 28
FINANCIAL
REVIEW
Income statement
Revenue
Total revenue for the year ended 31 March 2017 increased
by 7% to €56.5m (2016: €52.8m). Within this total,
Accoya® wood revenue increased by 17% to €50.7m (2016:
€43.5m) as a result of sales volumes increasing by 18%.
Accoya revenue includes €7.8m of sales to Medite for the
manufacture of Tricoya®, a 18% increase (2016: €6.6m).
Licence income decreased from €2.8m to €1.6m, where the
higher revenue in 2016 reflected the new agreements with
our Accoya licensee Rhodia Acetow in the prior period.
Other revenue of €4.3m (2016: €6.5m) included €0.3m
relating to the Sales & Marketing agreement with Rhodia
Acetow, which was agreed at the same time as the 76,000
cubic meter off-take agreement. The remainder is largely
attributable to sales of acetic acid, a by-product from
the acetylation process. The prior year included €1.3m in
respect of the expired Global Marketing agreement with
Rhodia Acetow, with a further €0.9m of income recorded
in respect of monies received attributable to the Tricoya
project, neither of which was repeated in the current
period, as expected.
Gross margin
Gross profit margin reduced from 34% to 25%, as a result
of lower licence and other revenue as set out above, and an
increase in cost of sales. The Accoya gross manufacturing
margin decreased from 27% to 23% as a result of full year
impact of the Rhodia Acetow discount, the volume of lower
margin material sold to Medite and the higher cost of raw
wood. Part of this higher raw wood cost was due to an
increase in prices from New Zealand suppliers and part was
attributable to short term changes to the product mix used
in production resulting from supply chain issues but which
enabled us to maintain production volumes.
18%
sales volume
increase
Revenue from Accoya wood sales (€ ‘000’s)
Accoya EBITDA excl. Licence Income (€ ‘000’s)
60
50
40
30
20
10
0
6,000
4,000
2,000
0
(2,000)
(4,000)
(6,000)
2010 2011 2012 2013 2014 2015
2016
2017
2012
2013
2014
2015
2016
2017
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017Total revenue€56.5m 7% (2016: €52.8m) 29
Following the additional capacity from the third
reactor becoming available but in advance of the
Hull plant being completed, our percentage gross
margin will depend on our customer sales mix.
We continue to expect a gross margin from the
manufacture of Accoya of 30% to be achievable
as we benefit from the additional manufacturing
capacity and improved sales mix.
Other operating costs
Other operating costs (excluding exceptional
items) reduced by 1% to €18.3m (2016: €18.5m). The
reduction in operating costs is largely due to foreign
exchange movements, with a €0.3m decrease in staff
costs and a further €0.4m decrease in other operating
costs attributable to foreign exchange resulting from
the weakening of sterling following the Brexit vote
in June 2016. This is off-set by increased office and
facility costs of €0.5m due to the head office move to
London and increasing costs for our expanding plant
in Arnhem. In addition, payroll, intellectual property
(‘IP’) and legal costs increased as a result of higher
activity levels, including increased Tricoya related
IP costs in the period. Headcount increased to an
average of 124 (2016: 121), with staff costs excluding
the impact of foreign exchange, increasing by 3% to
€11.3m. This included a share based payment charge
of €0.9m (2016: €1.0m).
Finance income
Finance income of €2,000 (2016: €10,000) represents
interest receivable on bank deposits.
Finance expense
The finance expense of €0.6m (2016: €0.2m)
includes the interest element arising on the payments
attributable to the sale and leaseback of part of the
Group’s land and buildings in Arnhem, together with
finance charges arising on the London office fit-out
lease. The balance also includes interest and other
finance charges relating to the Loan Notes issued in
the period to Business Growth Fund and Volantis,
relating to the Tricoya project (€0.3m) (see note 29).
This also includes any finance charges payable in
respect of the Group’s working capital facilities.
Research & Development expenditure
€1.8m was incurred on research and development
activities in the period (2016: €2.0m). €0.2m (2016:
€0.1m) has been capitalised as an intangible asset (see
note 16).
Taxation
The net tax charge of €0.7m (2016: €0.4m) primarily
represents a tax charge arising from manufacturing
offset by R&D tax credits of €0.2m (2016: €0.2m)
attributable to activities carried out in the current year.
Exceptional items
Dividends
No final dividend is proposed in 2017 (2016 final
dividend: €Nil). The Board deems it prudent for the
Company to maintain as strong a balance sheet as
possible during the current phase of the Company’s
growth strategy.
Earnings per share
Basic and diluted loss per share was €0.05 (2016 basic
and diluted loss per share was €0.01).
An exceptional gain of €0.6m arose on the sale of the
land in Arnhem for €4.2m, which had a book value
of €3.6m. The sale to Bruil was subject to a lease
arrangement. See note 5.
An exceptional expense of €0.5m also recorded
in the period, relates to advisory fees for business
development activities as the Group pursued a one-
off long-term opportunity.
Loss from operations
The loss from operations increased to €3.8m (2016:
loss of €0.3m) due to the reduction in gross margin
described above, offset by the decrease in operating
costs, as explained above. Excluding exceptional
items, the loss from operations increased to €3.9m
(2016: €0.3m).
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 30
FINANCIAL
REVIEW CONTINUED
Balance sheet
Intangible assets
Intangible asset additions of €0.4m (2016: €1.5m)
predominantly relate to capitalised internal
development costs for both Accoya® and Tricoya®
related activities. The prior period included €1.0m
relating to the Front End Engineering Design package
for the construction of the world’s first Tricoya plant.
Property, plant and equipment
Property, plant and equipment balance increased
by €1.4m to €21.7m (2016: increase of €2.8m). The
increase was due to additions of €4.1m relating to
the on-going project to expand the Arnhem Accoya
plant through the addition of the third reactor,
including €0.6m relating to capitalised internal staff
costs. A further €1m is attributable to new finance
lease arrangement (see note 28). €1.4m relates to the
construction of the Tricoya plant in Hull and €0.5m
relates to technology improvements and significant
maintenance items at the Arnhem plant.
This is off-set by €3.6m relating to the disposal of
the land in Arnhem to Bruil for proceeds of €4.2m,
which resulted in an exceptional gain of €0.6m. Bruil
has also agreed to construct and lease a significant
new warehouse and office facility which is expected
to be completed in the new financial year. The total
depreciation charge in the year of €2.1m relates
predominantly to the existing Arnhem plant.
Available for sale investments
Accsys Technologies PLC has previously purchased
a total of 21,666,734 unlisted ordinary shares in
Diamond Wood China Limited. The historical cost
of the unlisted shares held at 31 March 2017 is €10m
(2016: €10m). However, a provision for the impairment
of the entire balance of €10m continues to be
recorded as at 31 March 2017 (see note 18).
Inventory
The Group had total inventory balances of €11.8m
(2016: €8.3m). Finished goods consisting of Accoya
represented €5.3m (2016: €5.8m) and raw materials
and work in progress, primarily consisting of
unprocessed lumber, being €6.5m (2016: €2.5m).
The increase is attributable to the planned increase
in inventory in light of the bottleneck issues reported
in the first half of the year, together with the planned
increase in sales in the new financial year.
Cash and cash equivalents
The Group had cash of €41.2m at 31 March 2017 (2016:
€8.2m). The increase in the year is mainly due to
€19.8m net proceeds from the issue of Loan Notes
and borrowings (see note 29), €18.3m net proceeds
from issue of share capital in Tricoya Technologies
Limited and Tricoya Ventures UK Limited to non-
controlling interests (see note 9) and €4.2m proceeds
from the sale and leaseback of land in Arnhem as part
of our plant expansion project.
42%
increase in inventory
to support future sales
and growth
2017
2016
2015
2,909
910
7,235
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017Property, Plant & Equipment Spend €’000 31
ACCOYA® CHOSEN
FOR THE
RENOVATION
OF 30 DUTCH
HOUSING
ASSOCIATION
PROPERTIES IN
AMSTERDAM
The Conrad is a street in the centre of
Amsterdam which has recently undergone
a monumental renovation of 30 housing
association properties. Accoya was selected
to renovate the windows and doors for each
of the houses. Known for their high quality
urban renovation work, Wesselink were
tasked with carrying out this project.
Accoya was chosen because it is a low
maintenance material which also offers
excellent stability.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
32
FINANCIAL
REVIEW CONTINUED
€0.3m of cash out-flow was attributable to cash-flows
from operating activities before changes in working
capital (excluding exceptional items) (2016: €3.5m
in-flow), as a result of the increase in operating loss to
€3.9m (excluding exceptional items).
€0.5m of cash-outflow was attributable to changes
in working capital (2016: €3.0m out-flow), including
€3.3m increase in inventories, €2.9m increase
in trade and other receivables off-set by €5.7m
increase in trade and other payables.
€2.6m out-flow in respect of investing activities
(2016: €4.0m), included €0.4m in respect of
capitalised development costs (2016: €0.4m) and
€4.7m in respect of tangible fixed assets (2016:
€2.6m) including in respect of the expansion of
plant in Arnhem and initial work for the plant in
Hull, off-set by €4.2m proceeds from the sale of
the land in Arnhem.
Trade and other receivables
Trade and other receivables have increased to €7.6m
(2016: €5.6m). Within this, prepayments increased
from €0.7m to €3.3m, in part due to costs being
incurred in respect of the Company’s Firm Placing and
Open Offer which completed in April 2017.
Trade and other payables
Trade and other payables increased to €12.5m
(2016: €8.1m). Included within this, trade payables
increased to €6.6m (2016: €4.7m), due to an increase
in expenditure on tangible fixed assets for both the
Accoya® plant in Arnhem, and the Tricoya® plant in
Hull. In addition accruals increased from €2.1m to
€4.7m due in part to the costs associated with the
Company’s capital raise.
Finance lease creditor
The Group has previously entered into a sale and
leaseback agreement for part of the Arnhem land
and buildings. The first phase resulted in proceeds
of €2.2m which has been accounted for as a finance
lease. At 31 March 2017 there are €1.9m of payments
committed to over the remaining life of the lease
(2016: €2.0m) (see note 28). The second part of the
previous sale and leaseback of the land in Arnhem
was completed in February 2013 and accounted for
as an operating lease.
The sale of the remaining plot of land completed
in August 2016 and under the agreement with the
purchaser, Bruil, they will construct and then lease
to Accsys new warehouse and office facilities. The
construction is not expected to complete until later
in the new financial year and therefore no lease
has been recognised in the period. A further lease
agreement with Bruil was entered into in the period
relating directly to infrastructure work associated
with the expansion of the chemical plant. This has
been accounted for as a finance lease, with a new
asset and liability of €0.9m being recognised as at
31 March 2017.
Long Term Borrowing
Amounts payable under loan agreements increased to
€20.1m (2016: €nil). The Group has entered into loan
arrangements during the period:
A €17.2m project finance facility with the Royal
Bank of Scotland Plc was entered into but
remained undrawn as at 31 March 2017. The facility
has been agreed at the Tricoya Consortium level
and is secured upon the Tricoya plant, with the
proceeds to be applied to the construction of the
Tricoya plant and working capital.
€18.1m net proceeds were received in respect of
Loan Notes issued by Accsys Technologies PLC
to Business Growth Fund (‘BGF’) and Volantis.
The loan notes are unsecured, with interest of
7-9% payable after two years. The net proceeds
have been applied by the Group within the Tricoya
Consortium, enabling Accsys to retain a 74.6%
interest in TTL.
€2.0m was drawn down in the period under the
Rhodia Acetow loan facility, which was entered
into in the previous period. The loan facility is
secured upon the Arnhem plant, with interest of
7.5%, expected to be payable after the expected
start-up of the third reactor. A further €7.5m of
the facility remains available and is expected to
be utilised to fund the remaining cost of the
third reactor.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
33
Non-controlling interests
Going concern
Part of the agreements relating to the formation of the
Tricoya Consortium on 29 March 2017 included equity
investment by the consortium members. During
the period a total of €19.1m of equity was issued by
TTL and TVUK to BP, Medite, BGF and Volantis. (see
CEO’s report for further details). This has resulted in
an increase in the non-controlling interest of €12.6m
as at 31 March 2017 (2016: €0.1m). The difference
between the cash received and non-controlling
interest recorded arises from the Tricoya Consortium
agreements recognising Accsys’s contribution of IP
and historical development work, with an implied
pre-funding valuation of €35m.
Capital structure
Details of the issued share capital, together with
the details of the movements in the Company’s
issued share capital in the year are included in note
24. The Company has one class of ordinary shares
which carry no right to fixed income. Each share
carries the right to one vote at general meetings of
the Company. Details of non-controlling interests
associated with TTL and TVUK are summarised
above and set out in note 9.
There are no specific restrictions on the size of a
holding nor on the transfer of the Company’s shares,
which are both governed by the general provisions of
the Articles of Association and prevailing legislation.
The Directors are not aware of any agreements
between holders of the Company’s shares that may
result in restrictions on the transfer of securities or
on voting rights.
Details of employee share schemes are set out in note
15. No person has any special rights of control over
the Company’s share capital and all issued shares are
fully paid.
The 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 12 months from the date these
financial statements are approved.
As part of the Group’s going concern review, the
Directors have reviewed the Group’s trading forecasts
and working capital requirements for the foreseeable
future, including taking into account the proceeds
from the Firm Placing and Open offer which was
successfully completed on 23 April 2017. These
forecasts indicate that, in order to continue as a going
concern, the Group is dependent on the achievement
of certain operating performance measures relating
to the production and sales of Accoya wood from the
plant in Arnhem and the collection of ongoing working
capital items in line with internally agreed budgets.
The Directors have considered the internally agreed
budgets and performance measures and believe that
appropriate controls and procedures are in place or
will be in place to make sure that these are met. The
Directors believe, while some uncertainty inherently
remains in achieving the budget, in particular in
relation to market conditions outside of the Group’s
control, that there are a sufficient number of
alternative actions and measures that can be taken
in order to achieve the Group’s medium and long
term objectives.
Therefore, the Directors believe that the going
concern basis is the most appropriate on which
to prepare the financial statements.
William Rudge
Finance Director
19 June 2017
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 34
SUSTAINABILITY
REPORT
Our Corporate Vision
A focus on corporate and social responsibility lies
at the very core of our business. Our technologies
not only enable us to manufacture wood products
that offer ‘best in class’ durability, dimensional
stability and a wide spectrum of other performance
and environmental advantages over alternative
environmentally threatened or compromised
products, but also provide attractive opportunities
for our employees, distributors, licensees and other
stakeholders. We want to ensure that our business
is not only a commercial success, but also run in
a responsible fashion as we continue to advance
technologies for a better world.
Accsys has already developed and is commercially
producing Accoya®, solid acetylated wood. We have
developed the process for the production of Tricoya®,
acetylated wood elements used for the production
of panel products. We are committed to increase the
use of these products globally through sales from
our manufacturing facility, and on a substantially
larger scale by licensing our technologies to other
companies so that they too can manufacture
these products.
Accsys aims to reduce the use of environmentally
unfriendly building materials and products by the
utilisation of our propriety technology and the
introduction of our products around the world. The
planet continues to consume endangered materials
like tropical hardwood and non-renewable, high
emitting building materials such as plastics, concrete
and metals at an alarming rate. Our acetylated wood
products offer alternative, sustainable new materials
that resolve many of the environmental limitations
that commonly used building materials have, whilst
not compromising on performance. In fact, Accoya is
the only building product perfectly fitting in the bio-
cycle of the circular economy while having the same
performance as typical building products such as
plastics and metals which cannot be renewed and
are from the techo-cycle.
Accsys is also committed to continuing R&D
concerning our products (applications and new wood
species) and processes. This ongoing development
is designed to increase the use, applicability and
improve the efficiency and environmental benefits
which in turn will benefit many of our stakeholders.
Our products and the environment
The main environmental benefit of our Accoya and
Tricoya acetylated wood products is their use as
a substitute for other environmentally damaging
products including chemically treated woods that
use toxic preservatives, unsustainably sourced
tropical timbers and materials produced from energy
intensive or non- renewable resources such as metals
(for example, steel and aluminium) and plastics
(such as PVC).
Carbon footprint
During their growth, trees convert carbon dioxide
(CO2) through photosynthesis into cellulose and
lignin, and emit oxygen in the process. As a result,
during their lifespan trees act as carbon sinks, as
CO2 is captured from the atmosphere and makes up
approximately half of the dry weight stored in the
wood of the tree. The carbon is stored in the living
OUR ACETYLATED WOOD PRODUCTS OFFER
ALTERNATIVE, SUSTAINABLE NEW MATERIALS
THAT RESOLVE MANY OF THE ENVIRONMENTAL
LIMITATIONS THAT COMMONLY USED BUILDING
MATERIALS HAVE, WHILST NOT COMPROMISING
ON PERFORMANCE.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 35
Circular Economy Based on Renewable Materials (Biological Cycle)
Composting
SOURCING
Endlessly renewable
WASTE
PRODUCTION
RECYCLING
Reduced Energy
consumption
USE
PRODUCT
A circular economy is one that is restorative and regenerative by design, and which aims to keep products,
components and materials at their highest utility and value at all times, distinguishing between technical and
biological cycles.
Source: Ellen MacArthur Foundation
Bio-cycle and techo-cycle are the two cycles within the circular economy principles. Materials from the Bio-cycle
are organic whereas products from the techno-cycle are defined as from the manmade world.
tree, but will also remain stored once the tree is felled
and the wood of the tree is used for products such as
Accoya and Tricoya. As a consequence, CO2 is locked
out of the natural carbon cycle during the lifespan
of the wood or wood product. Through decay or
incineration, the carbon will eventually be released
again into the atmosphere in the form of CO2.
In producing Accoya wood, we improve this carbon
capture mechanism in two ways. Firstly by using fast
growing softwood species, such as radiata pine, as
input for our acetylation process. Per hectare, more
cubic metres of radiata pine can be grown (20–28m3/
ha/year) compared to slower growing wood species
such as teak (6m3/ha/ year) or even most bamboo
(10m3/ha/year). Consequently, a larger amount of
carbon is sequestered compared to slow growing
wood species.
Secondly, through the acetylation process the
dimensional stability and durability (durability class 1
according to EN standard 350-1) of a wood species
are improved considerably, lengthening the product
lifespan. Thus Accoya wood is able to act as a longer
term carbon sink that needs less additional care, as
compared to other woods. These unique properties
allow us to guarantee Accoya wood for 50 years
above ground and 25 years below ground (please see
our Certificates of Warranty for full details).
For the complete story please watch our 3 minute
movie – Accoya – the sustainable building solution.
http://www.youtube.com/watch?v=92j0_6WaQJU
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 36
SUSTAINABILITY
REPORT CONTINUED
Accreditations
FSC®
Of the various schemes for sustainability forestry
available, the Forest Stewardship Council (FSC®) is
regarded as the leading and most comprehensive
certification program available. Accoya® wood and
Medite Tricoya® Extreme are FSC® certified. FSC
certification is focused on benign environmental
performance but also safeguards social interests for
all stakeholders involved.
Cradle to CradleTM
Accoya wood is one of the very few building products
to have acquired Cradle to Cradle Certification
on the elusive C2C Gold Level. Cradle to Cradle
(C2C) provides a means to tangibly and credibly
measure achievement in environmentally-intelligent
design including the use of environmentally safe
healthy materials and instituting strategies for
social responsibility. Accoya wood also recently
received Platinum status for Material Health
meaning manufacturers are trusted with the way
to communicate their work towards chemically
optimised products.
Cradle to Cradle certified product
scorecard for Accoya®
BREEAM & LEED worldwide
BREEAM (mainly used in Europe) and LEED (mainly
used in North America) are most widely adopted
and recognised. Both are based on various building
related environmental indicators including sustainable
energy, water and material use. For the latter
category the application of Accoya can contribute
to several credits in both schemes (BREEAM: MAT 1,
MAT 5, LEEDv4: MR1, MR2, MR3, MR4, I1).
Dubokeur the Netherlands
The awarding body of the prestigious Dubokeur®
certification, Nederland’s Institute for Building
Ecology (NIBE), issues certificates only to the most
environmentally friendly products within a particular
application, taking into account a range of stringent
factors based on LCA methodology. This certification
is of particular significance to our Dutch customers,
unequivocally positioning Accoya wood as an
outstanding environmental choice for window frames
according to Dutch sustainable building regulations.
Svanen Label Nordic Nations
The outstanding green credentials of Accoya,
have been officially recognised by Europe’s Nordic
nations with the award of the Svanen Ecolabel. The
label, renowned for its rigor and transparency is
the internationally recognised ecolabel for Norway,
Sweden, Denmark, Iceland and Finland and was
established in 1989 by the Nordic Council of Ministers.
Material Health
Platinum
Singapore Green Label
Material Reutilisation
Renewable Energy & Carbon Management
Water Stewardship
Social Fairness
Overall Certification Level
see full scorecard and certificate at
www.c2ccertified.org
Gold
Gold
Gold
Gold
Gold
For the South East Asian market we have attained
the highly regarded Green label of the Singapore
Environment Council. The Singapore Environment
Council (SEC) was set up to promote environmental
awareness in South East Asia.
Future Build UAE
The Future Build is a green building materials portal
that helps architects, engineers and contractors –
particularly in the United Arab Emirates and wider
region – confidently select and source environmentally
sustainable, third party certified products to meet
their projects’ environmental objectives. Only
products that have been assessed and selected
according to standards and criteria set by Masdar
City, Abu Dhabi, are listed. Accoya wood was rated
as excellent or A.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
37
Our sustainable wood features
in an award winning bathroom
remodel project, São Paulo, Brazil
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 38
ACCOYA® WOOD
RESTORES HISTORIC
WINDOWS IN MINNESOTA
STATE CAPITOL
The majestic State Capitol building in St. Paul,
Minnesota was in a state of deterioration: on the
outside the regal marble exterior design, completed
in 1905, was crumbling.
The state embarked on a $272 million, four-phase restoration plan
in 2013, with tasks including replacing plumbing and electrical
systems, boosting energy efficiency, improving access, replacing
the roof and repairing all of the crumbling stone.
Another major part of the project was restoring the building’s
original wood windows, which had been covered over with
aluminium windows 30 years ago. The aging units – 242 in total
– had seriously suffered from fogging, failing glass, air leakage,
and broken balances that rendered them inoperable. Window
replacement manufacturer Re-View, was selected to restore the
windows and bring the Capitol building back to life.
Re-View removed the aluminium replacements, revealing the
original wood window frames, which were then restored using
restoration epoxies and replicated Accoya wood parts. Re-view
used an original complete wood window that still remained in the
building as the basis for the designs and to help replicate all the
new sashes with Accoya wood. Re-view chose Accoya due to its
durability and 50 year guarantee.
Since some of the individual double-hung windows are about
2 meters (6 feet) wide by 4 meters (13 feet) tall, the sashes weigh
in excess of 115 kilograms (250 pounds). This resulted in the
Re-view team engineering a system of weights and pulleys to
make the massive windows easy to open. Many of the Accoya
installed windows were tested for air and water infiltration by
an independent testing agency and it was determined that
they were twice as tight as the published ratings for modern
replacement windows.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
39
GOVERNANCE
40 Board of Directors
44 Directors’ Report
48 Remuneration Report
63 Corporate Governance
65
Statement of Directors’
Responsibilities
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 40
BOARD OF
DIRECTORS
Patrick Shanley
Paul Clegg
William Rudge
Chairman
Chief Executive Officer
Finance Director
Patrick, born April 1954,
has extensive board room
experience in the chemicals
sector, having previously
been Chief Financial
Officer of Courtaulds
plc and Acordis bv, Chief
Executive Officer of
Corsadi bv, Chairman of
Cordenka Investments bv.
and Chairman of Finacor
bv. With effect from 2nd
December 2015, Patrick
has been appointed
Non-Executive Chairman
of Gattaca plc (formerly
Matchtech Group plc).
Patrick began his career
working for British Coal
where he qualified as a
Chartered Management
Accountant. He has a strong
operational, restructuring,
merger and acquisition
background within a
manufacturing environment.
Paul, born May 1960,
assumed the role of Chief
Executive Officer on 1
August 2009. Paul had been
a Non-Executive Director
of the Group since April
2009 and had been working
with the Group as part
of the Chairman’s Office
since mid 2008. Prior to
this, he was CEO of Cowen
International, subsequent to
its sale by Société Générale
in 2006. Before this, he ran
SG Cowen International,
part of the Société Générale
Group, from 2000 to 2006.
Paul started in investment
banking in 1981 at The
First Boston Corporation.
Since then he has held
senior positions at various
investment banks including
James Capel and Schroders.
Paul is also a Non-Executive
Director at Synairgen Plc
and Peel Hunt LLP.
William, born February
1977, had been the Financial
Controller for Accsys
since joining the Company
in January 2010 before
being appointed Finance
Director on 1 October 2012.
Prior to this he qualified
as a chartered accountant
with Deloitte in 2002 and
subsequently gained a
further six years’ experience
in their audit and assurance
department, focusing on
technology companies
including small growth
companies and multinational
groups. William spent a
year working at Cadbury
plc, including as financial
controller at one of their
business units, before
joining Accsys in 2010.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
41
Hans Pauli
Nick Meyer
Sue Farr
Sean Christie
Executive Director,
Corporate Development
Hans, born March 1960,
has held senior financial
positions across the banking
and bio-tech sectors and
has significant experience in
investment, manufacturing,
licensing and distribution.
Hans holds a BA in Business
Administration and has
completed an MA in Fiscal
Economics from the
University of Amsterdam.
His commercial career
began in the banking
sector where he worked
for various institutions
including Barclays, where
he gained investment and
M&A experience. He then
worked for a number of bio-
tech companies, including,
most recently, Euronext
listed OctoPlus N.V.. Hans is
a non-executive director of
BioTech VC, MedSciences.
Non-Executive Director
Non-Executive Director
Non-Executive Director
Nick, born December
1944, has extensive board
room experience in the
timber industry, having
previously been Chairman
of Montague L Meyer
Limited, Deputy Chairman
and Chief Executive of
Meyer International PLC.
Nick is currently Executive
Chairman of Consolidated
Timber Holdings Limited, an
innovative and substantial
group of companies which
imports, distributes and
processes sustainable
timber and timber products.
Nick is also a former
president of the Timber
Trade Association of the
United Kingdom.
Sean, born October 1957 is
currently a Non-Executive
Director of Applied
Graphene Materials Plc,
Turner and Townsend Ltd
and Produce Investments
Plc. He was Group
Finance Director of Croda
International plc from
2006 to 2015, a global
manufacturer of speciality
chemicals. Prior to joining
Croda in 2006, Sean was
Group Finance Director
of Northern Foods plc.
He also served as a Non-
Executive Director of KCOM
Group plc until 2007, of
Eminate Limited, a wholly
owned subsidiary of The
University of Nottingham
and of Cherry Valley Farms
Limited until its sale in
2010. He is a Fellow of both
the Chartered Institute of
Management Accountants
and the Association of
Corporate Treasurers. Sean
has extensive knowledge of
all aspects of finance and
strategy in major businesses
and is an experienced Audit
Committee Chairman.
Sue, born Leap Year
Day 1956 is a highly
experienced marketing
and communications
professional who joined
the Accsys Board in
November 2014. Sue has
been part of the executive
management team at
Chime Communications
plc since 2003. Prior to
that she was Europe MD
of leading PR firm Golin
Harris, the BBC’s first ever
Director of Marketing and
Communications, and
Director of Corporate Affairs
for Thames Television. She
is a Non-Executive Director
of British American Tobacco
plc, Dairy Crest Group plc,
Millennium & Copthorne
Hotels plc and Dolphin
Capital Investors. She was
a Non-Executive Director
of Motivcom plc from
2008-2014 and a Trustee of
the Historic Royal Palaces
from 2007-2013. She has
been Chairman of both the
Marketing Group of Great
Britain and The Marketing
Society. A previous
Advertising Woman of the
Year, she was awarded an
Honorary Doctorate by the
University of Bedfordshire
in 2010.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
42
SENIOR
MANAGEMENT TEAM
We believe that our employees are key to our success and our high staff retention is reflective of their commitment to
the future of the Company. Group activities are driven and managed by a Senior Management Team of which we are
particularly proud. Experts in their fields, the Senior Management Team boasts a broad range of sector knowledge and
specialism. Committed to ensure we deliver on our plans for growth and commercial success; it’s their hard work and
advice that has supported Accsys Technologies PLC’s growth.
The Senior Management Team includes the three Executive directors and the following individuals:
John Alexander
Angus Dodwell
Pierre Lasson
Director of Sales
and Product Development
Legal Counsel and
Company Secretary
General Manager Tricoya
Technologies Limited
John is responsible for
Group sales and product
development, managing
a team across the globe.
Following degrees in
Forestry and Forest
Products plus an MSc in
Timber Engineering, John’s
career in the wood product
industry started at Jeld-
Wen, USA, the world’s
largest manufacturer
of windows and doors.
He then moved to BSW
Timber, the largest forestry
and sawmilling group in the
UK before joining Accsys
in 2010 as Head of Product
Development. In 2015
John took on his current
role and joined the Group
Operations Committee.
Angus is responsible for
all legal matters with
the Accsys Group and
is Company Secretary.
Angus qualified as a
corporate solicitor with
international law firm
Ashurst Morris Crisp (now
known as Ashurst LLP) in
September 2002. After
gaining further experience
in private practice, he
has since spent over ten
years working in-house
for growth companies,
advising on a broad range
of corporate, commercial
and other business matters.
Angus joined the Group
in September 2008 and is
based in London.
Pierre holds a PhD in
chemical engineering
and has more than 30
years’ experience in the
petrochemical industry.
Before joining Accsys
in 2015, Pierre has held
various positions in
research, production,
product development,
business management,
and sales and marketing
for global petrochemical
companies such as Solvay,
BP Solvay Polyethylene,
BP, Innovene, and Ineos.
He was appointed General
Manager of Tricoya
Technologies in 2012 and
has led the company since
its inception. He is also
the General Manager of
the newly formed Tricoya
Ventures UK Limited.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
43
Hal Stebbins
Eddie Pratt
Karlijn Rademakers
Martin Robinson
Director of Supply Chain
and Customer Service
Director of Business
Development
Director of Engineering
and Manufacturing
Head of Group Operations
Hal has spent most of
his career leading global
sales operations and
marketing activities for
a variety of businesses
including IBM. When he
joined Accsys in 2007, Hal
was initially responsible
for executing the first
worldwide marketing
strategy for the Group.
Since then, Hal has led the
growth of our international
distributorship, worldwide
licensing management and
is currently responsible for
the management of supply
and procurement critical to
production, including wood
and chemicals.
Eddie has been with
Accsys since its inception
in 2003 and uses his
in-depth experience and
knowledge of Accsys
to lead all activities to
develop new markets,
attract new investors and
secure partnerships for
Accsys and its branded
products via licensing
and distributorships.
With a background
in corporate financing and
asset management, Eddie’s
inherent understanding of
business growth stages
means he is well placed
to support the Group’s
expansion.
With a PhD in chemical
engineering and plant
design, as well as an MBA,
Karlijn has the skills and
experience to manage all
production and engineering
teams at the Arnhem plant.
Karlijn has been an essential
part of the process and
engineering team since
she joined the Group in
2006 and is currently
overseeing the expansion
of the Arnhem plant
including management of
all facets of the day to day
manufacturing, production
and processes.
Martin joined Accsys in April
2017 and oversees all the
manufacturing activities of
the Group, both in Arnhem
and Hull. He brings a wealth
of experience gained
during a very successful
career at BP most recently
as President Director BP
Petrochemicals Indonesia.
In his role, Martin will use his
experience to help with this
period of growth with the
expansion of the Arnhem
plant, as well as the build of
the new Tricoya® chip plant
in Hull.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
44
DIRECTORS’ REPORT
for the year ended 31 March 2017
The Directors present their report together with the
audited consolidated financial statements for the year
ended 31 March 2017.
Results and dividends
The consolidated statement of comprehensive income
for the year is set out on page 70, and shows the loss for
the year.
The Directors do not recommend the proposal of a final
dividend in respect of the current year, consistent with the
prior year.
Principal activities and review of the business
The principal activities of the Group are the production and
sale of Accoya® solid wood and Tricoya® wood elements,
technology and product development as well as the
licensing of technology for the production and sale of
Accoya and Tricoya via the Company’s subsidiaries, Titan
Wood Limited, Titan Wood B.V., Titan Wood Technology
B.V., Titan Wood Inc., Tricoya Technologies Limited and
Tricoya Ventures UK Limited (collectively the ‘Group’).
Manufactured through the Group’s proprietary acetylation
processes, these products exhibit superior dimensional
stability and durability compared with alternative natural,
treated and modified woods as well as more resource
intensive man-made materials. A review of the business is
set out in the Chairman’s statement on page 08 and the
Chief Executive’s report on page 20. Accsys Technologies
PLC is incorporated in the United Kingdom.
Business model and Strategy
The Business model and Strategy section, from page 14,
sets out the Company’s strategy, business model and key
performance indicators.
Principal risks and uncertainties
The business, financial condition or results of operations
of the Group could be adversely affected by any of the
risks set out below. The Group’s systems of control and
protection are designed to help manage and control risks to
an appropriate level rather than to eliminate them.
The Directors consider that the principal risks to achieving
the Group’s objectives are those set out below.
(a) Economic and market conditions
The Group’s operations comprise the manufacture of
Accoya wood and Tricoya wood elements, technology
and product development and licensing the technology to
manufacture and sell Accoya and Tricoya wood elements
to third parties. The cost and availability of key inputs
affects the profitability of the Group’s own manufacturing
whilst also impacting the potential profitability of third
parties interested in licensing the Group’s technology. The
price of key inputs and security of supply are managed by
the Group, partly through the development of long term
contractual supply agreements.
An element of the Group’s strategy for growth envisages
the Group selling new or existing products and services
into other countries or into new markets. However, there
can be no assurance that the Group will successfully
execute this strategy for growth. The development of a
mass market for a new product or process is affected by
many factors, many of which are beyond the control of
the Group, including the emergence of newer and more
competitive products or processes and the future price of
raw materials. If a mass market fails to develop or develops
more slowly than anticipated, the Group may fail to achieve
sustainable profitability.
Financial instruments
Details of the use of financial instruments by the Company
and its subsidiary undertakings are set out in Note 31 of the
financial statements.
Share issues
On 4 July 2016, a total of 673,355 of ¤0.05 Ordinary shares
were issued to an Employee Benefit Trust (‘EBT’).
(b) Regulatory, legislative and reputational risks
The Group’s operations are subject to extensive regulatory
requirements, particularly in relation to its manufacturing
operations and employment policies. Changes in laws and
regulations and their enforcement may adversely impact
the Group’s operations in terms of costs, changes to
business practices and restrictions on activities which could
damage the Group’s reputation and brand.
On 15 August 2016, a total of 63,909 of ¤0.05 Ordinary
shares were issued and released to employees together
with 63,909 of ¤0.05 Ordinary shares issued to an
employee trust on 14 August 2015.
On 9 February 2017, a total of 16,302 of ¤0.05 Ordinary
shares were issued and released to employees together
with 16,302 of ¤0.05 Ordinary shares issued to an
employee trust on 26 January 2016.
A further 20,323,986 ¤0.05 Ordinary shares were
issued after the year end, on 24 April 2017, following the
Company successfully completing a Firm Placing and
Open Offer, raising ¤14m (before fees).
(c) Employees
The Group’s success depends on its ability to continue
to attract, motivate and retain highly qualified
employees. The highly qualified employees required by
the Group in various capacities are sometimes in short
supply in the labour market. There are risks associated
with operating a chemical plant and accordingly the
health and safety of our staff is made a priority. We
continuously seek improvements to exceed industry
expectations by challenging our methods, improving
our reporting and continuing to learn.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 45
(d) Intellectual property
The Group’s strategy of exploiting its technology via manufacturing, partnerships and licensing depends upon
maintaining effective protection of its intellectual properties worldwide. Protection is afforded by a combination
of trademarks, patents, confidentiality agreements and the structuring of legal contracts relating to key licensing,
engineering and supply arrangements. Unauthorised use of the Group’s intellectual property may adversely impact its
ability to exploit the technology and lead to additional expenditure to enforce legal rights. The wide geographical spread
of our products increases this risk due to the increasingly varied and complex laws and regulations in which we seek to
protect the Group’s intellectual property.
Further details of how risks and uncertainties relate to our strategy and performance in the year are shown on page 16.
Greenhouse gas (‘GHG’) emissions
The table below represents all the emission sources required under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013 for our manufacturing facility in Arnhem, the Netherlands.
Global GHG emissions data for period 1 April 2016 to 31 March 2017
Electricity, heat, steam and cooling for own use – GROSS
Electricity, heat, steam and cooling for own use – NET (including Renewable
Energy Credits)
Combustion of fuel & operation of production facility (MP4), in Arnhem,
the Netherlands
Total – Gross
External carbon offsets (VCS 2015)
TOTAL – NET (including Renewable Energy Credits)
Chosen intensity measurement: Emissions per cubic meter Accoya
produced – GROSS
Chosen intensity measurement: Emissions per cubic meter
Accoya produced – NET (including Renewable Energy Credits)
2017
kg CO2eq
2,804,839
2016
kg CO2eq
3,309,630
2015
kg CO2eq
3,135,167
1,511,794
1,651,470
88,714
3,109,664
2,726,868
2,939,167
5,914,503
6,036,498
6,074,334
(1,524,000)
(1,420,000)
–
3,097,458
2,958,338
3,027,882
155
81
181
88
178
89
Notes:
–
We have reported on all the emission sources required under the Companies Act 2006 (Strategic Report and Directors'
Reports) Regulations 2013 for our manufacturing facility in Arnhem, the Netherlands.
– Due to unavailability of data, GHG emissions related to our offices and staff travel are not included in the figures above.
–
–
–
–
–
Emissions have been calculated following the GHG Protocol - Corporate Accounting and Reporting (revised edition) using the
following databases: IPCC 2006 Guidelines for National Greenhouse Gas Inventories, 2007 IPCC Fourth Assessment Report
and Eco-Invent v3.3.
Note that following Environmental Reporting Guidelines of Defra (2013), carbon offsets may be accounted for separately as a
‘NET’ figure, while the original electricity consumption figures should be presented as a ‘GROSS’ figure.
Following the same (Defra 2013) guidelines, the emissions associated with our supply chain (inputs and outputs) are not
included in the figures above, for readers that are interested in the supply chain related figures we refer to our publicly
available carbon footprint report: http://www.accoya.com/wp-content/uploads/2013/09/Verco-Cradle-to-gate-carbon-
footprint-update-2012.pdf and Environmental Product Declaration (EN 15804): https://www.accoya.com/wp-content/
uploads/2015/06/NEPD-376-262-EN-Accsys-Technologies-Accoya-Wood.pdf.
For 2014, following Environmental Reporting Guidelines of Defra (2013), carbon offsets due to e.g. purchase of Renewable
Energy Credits may be accounted for separately as a ‘NET’ figure, while the original electricity consumption figures are
presented as a ‘GROSS’ figure.
In the current and prior year, Accsys has offset its CO2 emissions mainly through investing in verified carbon offset projects
instead of through Renewable Energy Credits (see external carbon offsets) resulting in an amended presentation as
recommended under the Defra guidelines.
Further details concerning the environmental impact of our products as a whole are detailed in the Sustainability
Report, including an assessment of the overall life cycle of Accoya.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 46
DIRECTORS’ REPORT CONTINUED
for the year ended 31 March 2017
Significant shareholdings
So far as the Company is aware (further to formal
notification), the following shareholders held legal or
beneficial interests in ordinary shares of the Company
exceeding 3%:
• Todlin N.V.
• Henderson Group PLC
• Royal Bank of Canada
• Majedie UK Equity Fund
• Invesco Limited
• The London & Amsterdam
Trust Company Limited
• FIL Limited (formerly known as
Fidelity International Limited)
• INEOS
• Saad Investments Company Limited
• Zurab Lysov
6.50%
5.94%
5.73%
5.06%
4.87%
4.51%
4.26%
4.24%
3.92%
3.71%
There are no restrictions in respect of voting rights.
Going concern
The Directors have formed a judgement, at the time of
approving the financial statements, including taking into
account the proceeds from the Firm Placing and Open
offer which was successfully completed on 23 April 2017,
that there is a reasonable expectation that the Group has
access to adequate resources to continue in operational
existence for at least the next 12 months. Further details are
set out in note 1 to these financial statements.
Corporate Governance
The Company’s statement on corporate governance can
be found in the corporate governance report on pages
63 to 64 of these financial statements. The corporate
governance report forms part of this directors’ report
and is incorporated into it by cross-reference.
Directors
The Directors of the Company during the year and up
to the date of signing the financial statements were:
Sean Christie
Paul Clegg
Sue Farr
Montague John ‘Nick’ Meyer
Hans Pauli
William Rudge
Patrick Shanley
Directors’ indemnities
The Company maintains directors’ and officers’ liability
insurance which gives appropriate cover for legal action
brought against its Directors.
Employment policies
The Group operates an equal opportunities policy
from recruitment and selection, through training and
development, appraisal and promotion to retirement.
It is our policy to promote an environment free from
discrimination, harassment and victimisation, where
everyone will receive equal treatment regardless of
gender, colour, ethnic or national origin, disability, age,
marital status or sexual orientation. All decisions relating to
employment practises will be objective, free from bias and
based solely upon work criteria and individual merit.
17% of employees in the period were female. 10% of the
senior management team were female and one of the
Board of Directors was female.
Health and safety
Health and safety is the priority at all levels of the Group,
in particular taking into account the chemical industry
in which Accsys operates. Group companies have a
responsibility to ensure that all reasonable precautions
are taken to provide and maintain working conditions for
employees and visitors alike, which are safe, healthy and in
compliance with statutory requirements and appropriate
codes of practice.
The avoidance of occupational accidents and illnesses is
given a high priority. Detailed policies and procedures are
in place to minimise risks and ensure appropriate action is
understood in the event of an incident. A dedicated health
and safety officer is retained at the Group’s manufacturing
facilities in Arnhem and Hull.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
47
Disclosure of information to auditors
Each of the persons who is a Director at the date of the
approval of the Annual Report confirms that:
• So far as the Director is aware, there is no relevant
audit information of which the Company’s Auditors
are unaware; and
• The Director has taken all the steps that he ought to
have taken as a Director in order to make himself aware
of any relevant audit information and to establish that
the Company’s Auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
Independent Auditors
PricewaterhouseCoopers LLP have expressed their
willingness to continue in office as auditors and a
resolution to re appoint them will be proposed at the
annual general meeting.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
• The Group financial statements have been prepared
in accordance with International Financial Reporting
Standards (‘IFRSs’) as adopted by the European Union
and Article 4 of the IAS Regulation and give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Group.
• The annual report includes a fair review of the
development and performance of the business and the
financial position of the Group and the parent Company,
together with a description of the principal risks and
uncertainties that they face.
By order of the Board
Angus Dodwell
Company Secretary
19 June 2017
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
48
REMUNERATION REPORT
I am pleased to present our 2017 Remuneration Report in
which we have summarised the Company’s remuneration
policy, described how the policy was implemented in the
year to 31 March 2017 and how it will be implemented in the
year ending March 2018 and over the following years.
Year ended 31 March 2017 – Performance and Pay
The year ended 31 March 2017 was a transformational year
for Accsys, as set out in the Chairman’s statement at the
beginning of this Annual Report. This included the entry
into the Tricoya Consortium to build, operate and finance
the world’s first dedicated wood chip acetylation plant,
significant progress with the expansion of the Accoya®
plant in Arnhem, together with continued sales growth.
Remuneration policy considerations for 2017
Last year the Accsys Board undertook a review of
executive remuneration, using an independent adviser, to
ensure it reflected market and shareholder expectations.
One year on, the Board believes the changes made last
year continue to be appropriate and that the remuneration
structure and mechanisms should continue.
The purpose of last year’s review was to put the Company
on a clear journey to a more conventional remuneration
framework with the clear focus on continuing to improve
financial performance.
In particular the changes we made last year to introduce
more structure to the Annual Bonus opportunity continue
to provide the Committee with necessary measures to
incentivise and reward management at a time when the
Group is undergoing significant growth and change.
In summary, the key features and how these have been
reflected in the year are set out below, noting that these
have remained within the approved Remuneration Policy:
• The salaries of Paul Clegg, Chief Executive Officer,
Hans Pauli, Executive Director, Corporate Development
and William Rudge, Finance Director other than a 1.5%
increase applied earlier in the year for all staff, have
remained unchanged.
• The annual bonus opportunity was moved to a more
formal policy, however it has continued to be satisfied
through a mix of cash and shares:
− Absent extraordinary exceptional circumstances, the
bonus opportunity will operate within a normal cap
of 100% of salary for each Executive Director (the
formal cap in the shareholder approved policy of up
to 200% of salary remains although we would not
envisage exceeding 100% other than in extraordinary
exceptional cases).
− The awards are anticipated to be wholly satisfied in
cash following the year-end although the option to
substitute shares will be retained.
− Formal claw-back provisions permit recoupment within
3 years for an act of gross misconduct or if an error in
the calculation/underlying assumptions is found.
− For the awards made in summer 2016 in respect of
performance for the year ended 31 March 2016, the
bonus was determined by suitably challenging EBITDA
targets subject to limited Committee discretion to
adjust for changes in corporate strategy.
− For the awards to be made in summer 2017 in
respect of performance for the year ended 31
March 2017, the bonus has again been determined
by suitably challenging targets which included a
combination of EBITDA, sales growth and progress
in respect of the Arnhem expansion. In addition,
the Executive Directors were also eligible for an
extraordinary exceptional bonus award of up to a
further 50% of the basic salary, dependent upon
the successful completion of the Tricoya® project
within the financial year. Following the Company’s
announcement of the completion of the project
on 29 March 2017, this was awarded in full. The
annual bonus remains subject to limited Committee
discretion to make adjustments.
• For the Long Term Incentive Plan (‘LTIP’), it is intended
to continue the award structure introduced last year:
− Annual awards will be made, the first such award
having been made in the summer of 2016, with a
further award to be made in summer 2017, and each
subsequent year.
− The award to the CEO will be over shares worth 100%
of his then prevailing salary and over shares worth
50% of salary for other Executive Directors.
− Awards are subject to a 3 year performance period
(i.e. year end March 2019) and a further 2 year
holding period.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 49
Our policy, as set out in this report, focuses on our actual
approach to pay which we believe is in our shareholders’
best interests. It includes the required formal caps (which
we have set at higher levels than we envisage needing and
which are not in any way an aspiration) but also retains
appropriate, but limited, flexibility to address changing
circumstances in the 3-year period in which it is planned to
operate the policy.
Yours sincerely
Sue Farr
Remuneration Committee Chairman
19 June 2017
− A malus/claw-back provision was introduced.
− Consistent with awards made in summer 2016, 50%
of the 2017 awards will be subject to a relative TSR
condition with 25% of that part vesting at median
and 100% at upper quartile. The precise comparator
group remains to be finalised but the comparator
group selected in for the 2016 award was constituent
companies of the FTSE AIM All Share Index (excluding
the Resource and Financial Services Sectors).
− The other 50% will be subject to an EBITDA per share
target. EBITDA has been selected over the more
common EPS given the Company’s current focus on
EBITDA growth.
Format of the report and context of our policy
The Remuneration Report is prepared under the UK regime
for the reporting of executive pay which was first adopted
in 2014 as a result of our quote on AIM in the UK, our cross-
listing on NYSE Euronext in the Netherlands and our UK
incorporated status which means that we come within the
definition of a ‘quoted company’ in the UK Companies Act.
Accordingly, and exceptionally amongst AIM companies,
we are therefore legally required to comply with regime
for the reporting and approval of directors’ remuneration
by UK quoted companies, including a binding vote on the
directors’ remuneration policy. The policy as set out in the
2015 Annual Report and Accounts was approved by our
shareholders at the AGM held on 17 September 2015 and
reflected an amendment to the section concerning Non-
executive pay.
We have remained committed to pay at appropriate,
but not excessive, levels and to reflect market practice
amongst AIM companies.
Over the following pages we have set out:
• Details of the implementation of our reward policy for
the year ended 31 March 2017, within the Remuneration
Report.
• The Group’s forward-looking Directors’ Remuneration
Policy which was approved by shareholders at our 2015
AGM and is therefore binding. All payments made to
directors from that time have been consistent with
this policy.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
50
REMUNERATION REPORT CONTINUED
Introduction
The following section contains the material required to be set out as the directors’ remuneration policy for the purposes
of Part 4 of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2013, which amended The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
At our 2017 AGM we will be holding one vote on remuneration matters:
1)
a vote on the this Remuneration Report, excluding the Remuneration Policy (included in part B)
The auditors have reported on certain parts of the Remuneration Report and stated whether, in their opinion,
those parts of the Remuneration Report have been properly prepared in accordance with the Companies Act 2006.
Those sections of the Report which have been subject to audit are clearly indicated.
Part A: Directors’ Remuneration
Directors’ remuneration
Directors’ remuneration for the year ended 31 March 2017:
Sean Christie4
Paul Clegg6, 7
Sue Farr
Montague John ‘Nick’ Meyer
Hans Pauli
William Rudge
Patrick Shanley
Fees/
Basic
Salary
€’000
54
300
54
48
209
169
87
921
Benefits
in kind
€’000
Cash
bonus1
€’000
Share
bonus2
€’000
LTIPs
vested3
€’000
Pension
€’000
–
23
–
–
6
2
–
31
–
163
–
–
111
91
–
365
–
58
–
–
40
32
–
130
–
990
–
–
225
125
–
1,340
–
30
–
–
12
9
–
51
Directors’ remuneration for the year ended 31 March 2016:
Sean Christie
Paul Clegg5
Sue Farr4
Montague John ‘Nick’ Meyer4
Hans Pauli
William Rudge
Patrick Shanley
Fees/
Basic
Salary
€’000
61
339
56
58
213
173
104
Benefits
in kind
€’000
Cash
bonus1
€’000
Share
bonus2
€’000
LTIPs
vested3
€’000
Pension
€’000
–
20
–
–
7
3
–
–
173
–
–
55
40
–
–
251
–
–
113
77
–
–
–
–
–
–
–
–
–
–
34
–
–
12
9
–
55
1,004
30
268
442
2017
Total
€’000
54
1,564
54
48
603
428
87
2017
Total
GBP4
£’000
45
1,340
45
40
502
362
74
2,838
2,408
2016
Total
€’000
61
817
56
58
400
302
104
1,798
2016
Total
GBP4
£’000
45
587
42
43
282
217
76
1,292
1 Represents annual bonus paid in cash in the period, relating to performance for the previous financial year.
2
3
Represents annual bonus awarded in form of Ordinary shares, relating to performance for the previous financial year. Shares
are held in an Employment Benefit Trust and will fully transfer to the individual after a period of 1 year, assuming still employed
or a good leaver and subject to regulation, for example the AIM rules.
During the period, 1,704,691 of LTIPs awarded to Executive Directors in 2013 vested with a further 1,175,309 forfeited as a result of
not all performance targets having been met. The value included in the table represents the market value of the vested shares only
at the date of vesting. No LTIPs vested in the prior year. None of the vested LTIPs have been exercised. See below for further details.
4 The total figures have also been presented in Pounds Sterling in order to help provide a more relevant comparison between the two
years as the majority of Directors’ remuneration, including 100% of the CEO’s and FD’s remuneration is denominated in Sterling.
5
Sue Farr was appointed chairman of the Remuneration Committee on 19 November 2015 replacing Nick Meyer.
6 Paul Clegg received an increase in benefits from January 2016 to reflect additional travel costs following the move of the head
office from Windsor to London
7 Paul Clegg received cash in lieu of pension from 1 April 2016
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 51
Bonuses awarded in the form of cash and shares were determined by the Committee having taken into account of a
broad range of financial and operational performance measures and also taking into account a degree of discretion,
reflecting the longer term and strategic objectives of the Company. Given the competitive nature of the Company’s
sector these performance measures have been considered to be commercially sensitive and that comparable AIM
companies are not subject to equivalent disclosure obligations and accordingly are not disclosed.
Pension entitlements relate to Company contributions to personal pension schemes. The Company does not operate
any defined benefit pension scheme.
The above section has been audited.
Directors’ share options
Directors’ share options for the year ended 31 March 2017:
At 1 April
2016
Granted
during year
Forfeited
during year At 31 March 2017
Paul Clegg
2013 Vested – LTIP Element A (nil cost)
2013 Vested – LTIP Element B (nil cost)
2013 Vested – LTIP Element C (nil cost)
2016 Unvested – LTIP Element A (nil cost)
2016 Unvested – LTIP Element B (nil cost)
Total
Hans Pauli
2013 Vested – LTIP Element A (nil cost)
2013 Vested – LTIP Element B (nil cost)
2013 Vested – LTIP Element C (nil cost)
2016 Unvested – LTIP Element A (nil cost)
2016 Unvested – LTIP Element B (nil cost)
Total
William Rudge
2013 Vested – LTIP Element A (nil cost)
2013 Vested – LTIP Element B (nil cost)
2013 Vested – LTIP Element C (nil cost)
2016 Unvested – LTIP Element A (nil cost)
2016 Unvested – LTIP Element B (nil cost)
Total
700,000
1,040,000
440,000
–
–
2,180,000
200,000
160,000
80,000
–
–
440,000
100,000
110,000
50,000
–
–
–
–
–
–
(480,551)
(440,000)
–
–
700,000
559,449
–
189,607
189,607
(920,551)
1,638,663
–
(73,931)
(80,000)
–
–
200,000
86,069
–
65,314
65,314
(153,931)
416,696
–
(50,827)
(50,000)
–
–
100,000
59,173
–
53,221
53,221
189,607
189,607
379,214
–
–
–
65,314
65,314
130,627
–
–
–
53,221
53,221
260,000
106,442
(100,827)
265,615
Options awarded under the Company’s Long Term Incentive Plan (‘LTIP’) are nil priced options.
The Company’s share price on the day on which the LTIP Award of 19 September 2013 became effective following
approval of the new LTIP scheme at the AGM (20 September 2013) was ¤0.14 (noting this is the price prior to the 5 for 1
share consolidation on 12 September 2014), and thus the face value of the vested awards made to the Executive Directors
was as follows: Paul Clegg ¤881,515, Hans Pauli ¤200,248, William Rudge ¤111,421.
The Company’s share price on the day on which the LTIP Award of 24 June 2016 became effective was ¤0.81, and thus
the face value of the unvested awards made to the Executive Directors was as follows: Paul Clegg ¤307,163, Hans Pauli
¤105,808, William Rudge ¤86,218.
The above table has been audited.
Awards granted under the LTIP are subject to continued employment and satisfaction of the performance conditions.
Performance will be measured at the end of a three year performance period (following the grant date) for each Element.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 52
REMUNERATION REPORT CONTINUED
Part A: Directors’ Remuneration continued
2013 LTIP Award performance conditions and 2016 outcome
Element A – Vesting was contingent upon continued employment for three years and share price not falling below ¤0.65
at the end of the performance period, being the three years ending 20 August 2016. 100% of this element vested.
Element B – was measured against two equally weighted performance conditions:
EBITDA
(50% of Element B)
Share price growth
50% of Element B)
Threshold
¤0m
Target
¤1.6m
Maximum
¤4m
Median of the
constituents of the
MSCI Europe Index
60th percentile of
the constituents of
the MSCI Europe
Index
Upper quartile of the
constituents of the
MSCI Europe Index
2016 Outcome
¤2.38m equated to 78% of
this element vesting2
Share price growth of 14%
was between the 50th and
60th percentile equating to
29.5% of this element vesting
Potential Vesting level1 25%
60%
100%
Notes:
1. Vesting is on a straight line basis between the respective EBITDA and share price targets.
2. Includes ¤0.3m adjustment made to reflect circumstances not foreseen at time of award grant
Element C – This element was to vest in full if the share price is at or above ¤1.30 at the end of the performance period.
This was not met and nil awards vested.
2016 LTIP Award performance conditions
The LTIP plan rules were amended in November 2015 such that awards made in summer 2016 are subject to a 3 year
performance period (i.e. year end March 2019) and a further 2 year holding period. In addition, awards are also subject to
malus/claw-back provisions.
Element A (Share price element)
In relation to 50% of award, the performance target will be achieved in relation to:
• 25% for this Element if the share price growth is greater than the median of the comparator group; and
• 100% for this Element if the share price growth is greater than the upper quartile of the comparator group with
straight-line vesting between these points.
Element B (EBITDA element)
In relation to 50% of award, the performance target will be achieved in relation to:
• 25% for this Element if EBITDA is greater than or equal to ¤0.06 per Share;
• 50% for this Element if EBITDA is greater than or equal to ¤0.08 Share; and
• 100% for this Element if EBITDA is greater than or equal to ¤0.10 Share with straight-line vesting between
these points.
The comparator group for the purposes of Element A is the constituent companies of the FTSE AIM All Share Index
(excluding the Resource and Financial Services Sectors) as determined by the Remuneration Committee.
The above section in respect of 2016 LTIP Award performance conditions has been audited.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 53
Share Bonus Award – Employee Benefit Trust
On 15 July 2016 in connection with employee remuneration and incentivisation arrangements for the period from 1 April
2015 to 31 March 2016, 673,355 ¤0.05 new ordinary shares were issued to an Employee Benefit Trust. The beneficiaries of
these shares included the Executive Directors as set out below, with the awards reflecting the share element awarded as
part of the overall annual bonus, as set out above.
Paul Clegg
Hans Pauli
William Rudge
€0.05 Ordinary Shares
75,842
52,250
42,576
Such new ordinary shares shall vest if the Directors remain in employment with the Company at the vesting date, being
1 July 2017 (subject to certain other provisions including regulatory requirements, good-leaver, take-over and nomination
and remuneration committee discretion provisions). The above shares correspond to the total figure of ¤130,000
disclosed in the remuneration table for the year ended 31 March 2017 in respect of the share bonus.
Employee Share Participation Plan
Details of the Employee Share Participation Plan (the ‘Plan’) are set out in Note 15. During the year, none of the Directors
participated in the Plan.
Relative importance of spend on pay
During the year ended 31 March 2017, the total pay for all Group employees increased by 4.5% to ¤8,783,000
(2016: ¤8,403,000). This compared to a total of nil (2016: ¤nil) in respect of dividends and share buybacks.
Consideration of matters relating to directors’ remuneration
The Nominations and Remuneration Committee consisted of Sue Farr (Chairman), Patrick Shanley, Nick Meyer
and Sean Christie. All Non- executive directors (including the Chairman on appointment) are considered
to be independent.
The Committee’s adviser is FIT Remuneration Consultants LLP which was appointed by the Committee in 2011 and which
the Committee is satisfied remains independent and objective. It provided ¤14,000 (2016: ¤31,000) of services to the
Committee or the Company more generally during the financial year.
Directors’ interests in the Ordinary shares of the Company
The Directors’ interests in the Ordinary shares at the year-end were as follows:
Sean Christie
Paul Clegg1
Sue Farr
Montague John ‘Nick’ Meyer
Hans Pauli
William Rudge
Patrick Shanley
Legal Holdings
Beneficial interests2
31 March 2017
31 March 2016
31 March 2017
31 March 2016
70,000
592,692
–
29,285
350,527
172,594
68,763
70,000
492,692
–
29,285
300,527
131,820
68,763
–
–
142,542
333,249
–
–
52,250
42,576
–
–
–
119,788
87,547
–
1
Beneficial interests at 31 March 2017 include 66,700 (2016: 66,700) shares held directly or indirectly by other members of Paul
Clegg’s immediate family.
2 Beneficial interests include shares awarded as part of the annual bonus and held in the Employment Benefit Trust.
The above table has been audited.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 54
REMUNERATION REPORT CONTINUED
Part A: Directors’ Remuneration continued
CEO’s relative remuneration
Since joining in 2009, the CEO’s total remuneration together with the proportion attributable to bonus or vested
incentives is as set out in the table below:
Total remuneration
Bonus
Vested LTIP
% Bonus of Total
% Bonus of Cap
% vested LTIPs of maximum
2010
€’000
341
94
–
28%
N/A
N/A
2011
€’000
421
139
–
33%
N/A
N/A
2012
€’000
325
–
–
0%
N/A
N/A
2013
€’000
619
280
–
45%
N/A
N/A
2014
€’000
616
288
–
47%
N/A
N/A
2015
€’000
706
348
–
49%
56%
N/A
2016
€’000
817
424
–
52%
63%
N/A
2017
€’000
1,563
221
990
14%
37%
58%
As no formal cap or maximum bonus existed before 2015, no figure has been disclosed setting out this percentage.
2017 is the first financial year in which any share options have vested and therefore no figure has been reported in respect
of the change compared to the previous financial year. Excluding the vested LTIP, the CEO’s total salary, taxable benefits
and annual bonus decreased by 30% in the period compared to the prior year (2016 increase: 16%) in Euros, as a result
of a lower annual bonus. This equated to an 18% decrease in Pounds sterling, being the currency the CEO’s salary is
denominated in. Excluding Directors, the average Group salary, benefits and bonus increased by 3% (2016: 7%).
Performance graph
The following graph shows the Company’s performance for the past eight years on the London Stock Exchange AIM
compared with the performance of the FTSE AIM All Share index. The FTSE AIM All Share index has been selected
for this comparison as it is a broad based index which the Directors believe most closely reflects the performance of
companies with similar characteristics as the Company’s. A logarithmic scale has been used in order to more clearly set
out the performance of Accsys’ shares in more recent periods.
9
0
0
2
h
c
r
a
M
1
3
n
o
e
d
a
m
t
n
e
m
t
s
e
v
n
i
t
i
n
u
0
0
1
a
f
o
e
u
l
a
V
1000
100
10
1
31 March
2009
31 March
2010
31 March
2011
31 March
2012
31 March
2013
31 March
2014
31 March
2015
31 March
2016
31 March
2017
Accsys Technologies
FTSE AIM All Share Index
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
55
Statement of voting at general meeting
The AGM held on 21 September 2016 included the following resolutions:
An ordinary resolution was passed in respect of the approval of the Directors’ remuneration report (excluding the
Remuneration policy) for the year ending 31 March 2016. 25,325,939 (89.2%) votes were cast for the resolution,
3,065,943 against and nil withheld.
The AGM held on 17 September 2015 included the following resolution:
An ordinary resolution was passed to approve an increase to the aggregate of fees payable to the Chairman and Non-
Executive Directors in any year, as provided for in a revised Directors’ Remuneration Policy. 30,763,367 (99.0%) votes
were cast for the resolution, 306,400 against and 1,742 withheld.
Auditable part of the remuneration report
In their audit opinion on pages 103 and 104, PricewaterhouseCoopers LLP refer to their audit of the disclosures required
by the Companies Act 2006. These comprise the following disclosures in this Report:
• The table on page 50 showing total remuneration received by Directors during the year ended 31 March 2017;
• The table on page 50 showing total pension contributions made on behalf of the Directors during the year to
31 March 2017; and
• The share options table for the year ended 31 March 2017 on page 51.
Further details of the share option awards are set out in note 15 of the financial statements.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 56
REMUNERATION REPORT CONTINUED
Part B: Directors’ Remuneration Policy
The Directors’ Remuneration Policy as set out in this section of the Remuneration Report is effective for all payments
made to Directors from 17 September 2015, being the date of the AGM in which it was approved, and is available on
the Company’s website within the Annual Report and Accounts. The policy has remained as approved at the 2015
AGM. To assist the reader, the footnotes have been updated to explain how the policy is expected to be implemented.
Remuneration policy
The Company’s remuneration policy has been designed to attract, retain and motivate Executive Directors of the calibre
required to deliver the business strategy. Individual remuneration packages are structured to align rewards with the
performance of the Company and the interests of shareholders. The main principles are to:
• ensure that salaries are set at a market competitive level by benchmarking against appropriate
external comparators,
• support high performance culture by rewarding upper quartile performance with upper quartile reward,
• maintain an appropriate balance between fixed and performance related pay,
• align long-term rewards with shareholders; and
• ensure that the overall package reflects market practice and takes account of remuneration elsewhere in the Group.
Policy Table
Element and purpose
Policy and operation
Maximum
Performance measures
Base salary
This is the core
element of pay and
reflects the individual’s
role and position within
the Group with some
adjustment to reflect
their capability and
contribution.
Base salaries are reviewed against
suitable external comparators,
although the Committee does not
strictly follow data but uses it as a
reference point in considering, in
its judgment, the appropriate level
of salary having regard to other
relevant factors including corporate
and individual performance and any
changes in an individual’s role and
responsibilities.
Base salary is paid monthly in cash.
N/A
In the normal course of events, the
executive directors’ salaries would
not normally be increased by more
than the average awarded to staff
generally and, in any event, no
increase from current salary levels
would be made that would take an
executive directors’ salary above a
limit of ¤400,000 p.a.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 57
Element and purpose
Policy and operation
Maximum
Performance measures
Benefits
To provide benefits
valued by recipient.
Pension
To provide retirement
benefits and remain
competitive within the
market place.
Annual Bonus Plan
Provide market competitive
benefits in kind. Details of the
benefits provided are set out in
the section above. The Committee
reserves discretion to introduce
new benefits where it concludes
that it is in the interests of Accsys
to do so, having regard to the
particular circumstances and to
market practice.
Where appropriate, the Company
will meet certain costs relating to
Executive Director relocations.
N/A
It is not possible to prescribe the
likely change in the cost of insured
benefits or the cost of some of the
other reported benefits year-to-
year, but the provision of benefits
will operate within an annual limit of
20% of an Executive Director’s base
salary (plus a further 100% in the
case of relocations).
The Committee will monitor the
costs in practice and ensure that
the overall costs do not increase
by more than the Committee
considers to be appropriate in all
the circumstances.
Accsys contributes to personal
pension arrangements and/ or
offers a salary supplement in lieu.
A contribution limit of 15% of base
salary p.a. per Executive Director
has been set for the duration of
this policy.
N/A
To motivate employees
and incentivise delivery
of annual performance
targets.
Annual bonus levels and the
appropriateness of measures are
reviewed annually to ensure they
continue to support the strategy.
Annual bonus is delivered primarily
in shares although the Committee
proposes to pay annual bonuses
substantially or entirely in cash
once the business sustains a
constant and steady level of
working capital to support the
Company’s growth strategy.
Shares awarded as bonus vest
one year after the date of award.
Share awards attract dividends,
should the Company award
any dividends.
To date, the annual bonus has
operated on an uncapped ad hoc
basis without a formal cap although
the Committee has, in practice,
remained within 120%.
To comply with the legislation, a
cap of 200% of base salary p.a. has
been introduced but it should be
particularly noted that this is not
an aspiration.
The performance
measures applied
may be financial or
non-financial and
corporate, divisional
or individual and in
such proportions
as the Committee
considers appropriate.
Attaining the
threshold level
of performance
produces a nil
pay-out.
The Committee
retains discretion to
adjust performance
measures and
targets during the
year to take account
of events outside
of management
control which were
unforeseen when the
measures and targets
were originally set.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 58
REMUNERATION REPORT CONTINUED
Element and purpose
Policy and operation
Maximum
Performance measures
Long-Term Incentives
To motivate and
incentivise delivery of
sustained performance
over the long-term,
and to promote
alignment with
shareholders’ interests,
the Group operates the
Accsys Technologies
2013 Long-Term
Incentive Plan.
The LTIP allows for the grant of
awards over up to 10% of issued
share capital over a 10 year period
(including outstanding awards
under all other share plans but
excluding shares issued in respect
of annual bonus arrangements,
any options or awards which have
lapsed and any awards to be
satisfied by shares purchased by an
employees’ shares trust).
The Company will apply an internal
limit such that no Executive Director
will receive an award under the LTIP
of more than 300% of base salary in
any given financial year. In practice,
the Company had not envisaged
and continues not to envisage
awards at even this level.
The Committee expressly reserves
discretion to make such awards as
it considers appropriate within
these limits.
The Committee may
set such performance
conditions on LTIP
awards as it considers
appropriate (whether
financial or non-
financial and whether
corporate, divisional
or individual).
Once set,
performance
measures and
targets will generally
remain unaltered
unless events
occur which, in the
Committee’s opinion,
make it appropriate
to substitute,
vary or waive
the performance
conditions in such
manner as the
Committee thinks
fit. Performance
periods may be over
such periods as the
Committee selects
at grant.
No less than 25%
of awards vest for
attaining the threshold
level of performance
conditions.
Awards under the LTIP may be
granted as nil-cost options.
Given the current absence of
distributable reserves, it may not be
possible to allot shares as fully paid
so the Company reserves the right
to require participants to pay par
value and, in turn, allot further shares
at par value which will generate a
gain equal to the par value on shares
subject to the award.
Malus provisions apply to
unvested awards on the discovery
of deficient performance, or
alternatively, award cash bonuses
to the equivalent amount.
Clawback of vested awards apply
in the event of mis-booking of
reserves, misstatement of earnings,
censure by a regulatory authority
or any other serious damage to
Company reputation.
Three types of awards can be
granted:
• Retention based awards,
not subject to performance
conditions but subject to
continued employment for
3 years
• Performance based awards,
subject to performance
conditions
• Exceptional multiplier awards,
subject to performance
conditions which require the
creation of significant value for
shareholders
Employee Share Participation Plan
To encourage
share ownership by
employees, thereby
allowing them to
share in the long-term
success of the Group
and align their interests
with those of the
shareholders.
Executive Directors are able to
participate in all-employee share
plans on the same terms as other
Group employees.
The Employee Share Participation
Plan allows for individuals to
subscribe for shares on two
occasions during the year up to a
limit of ¤5,000 per annum.
Consistent with
normal practice, such
awards are not subject
to performance
conditions.
On each occasion a 1:1 match for
shares subscribed is offered subject
to still being employed by the
Company after one year.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 59
Element and purpose
Policy and operation
Maximum
Performance measures
Chairman and
Non-Executive
Director fees
The fees paid to the Chairman and the
fees of the other Non-executive directors
are set to be competitive with other
listed companies of equivalent size and
complexity.
The aggregate fees of the
Chairman and Non-executive
directors will not exceed
¤500,000 (increased from
¤250,000) p.a. in aggregate.
N/A
Fee levels are periodically reviewed.
The Company does not adopt a
quantitative approach to pay positioning
and exercises judgment as to what it
considers to be reasonable in all the
circumstances as regards quantum.
The Company reserves the right
to vary the structure of fees within
this limit including, for example,
introducing time-based fees or
reflecting the establishment of
new Board Committees.
Fees are paid quarterly in cash.
Non-Executive Directors are not eligible
to participate in incentive arrangements
or receive pension provision or other
benefits such as private medical
insurance and life insurance.
Notes to the policy table
1. Annual bonus performance measures for year ended March 2018
As set out in Part 1, it is intended to operate the annual bonus plan more formally as in the prior year.
• Absent extraordinary exceptional circumstances, the bonus opportunity will operate within a normal cap of 100% of salary for each
Executive Director (the formal cap in the shareholder approved policy of up to 200% of salary remains although we would not
envisage exceeding 100% other than in extraordinary exceptional cases).
• The awards are anticipated to be wholly satisfied in cash following the year-end although the option to substitute shares will be retained.
• Formal claw-back provisions exist which permits recoupment within 3 years for an act of gross misconduct or if an error in the
calculation/underlying assumptions is found.
For the awards to be made in summer 2017 in respect of performance for the year ended 31 March 2017, the bonus has been determined
by suitably challenging targets which included a combination of EBITDA, sales growth and progress in respect of the Arnhem expansion.
In addition, the Executive Directors were also eligible for an extraordinary exceptional bonus award of up to a further 50% of the
basic salary, dependent upon the successful completion of the Tricoya project within the financial year. Following the Company’s
announcement of the completion of the project on 29 March 2017, this was awarded in full. The annual bonus remains subject to limited
Committee discretion to make adjustments.
2. Performance conditions for LTIP awards in the year ending March 2018
It is expected that LTIP awards will be made in the summer of 2017 for the reasons set out in the section ‘Remuneration policy
considerations for 2017’. It is expected that:
• The award to the CEO will be over shares worth 100% of his then prevailing salary and over shares worth 50% of salary for other
Executive Directors.
• Awards will be subject to a three year performance period (i.e. year end March 2020) and a further 2 year holding period.
• A malus/claw-back provisions will apply.
• 50% of the first awards will be subject to a relative TSR condition with 25% of that part vesting at median and 100% at upper quartile.
The precise comparator group remains to be finalised but is likely to be a variant of the constituents of FTSE AIM companies.
• The other 50% will be subject to an EBITDA per share target. EBITDA has been selected over the more common EPS given the
Company focus on EBITDA growth.
3. Differences between the policy on remuneration for Directors from the policy on remuneration of other employees
Where Accsys’ pay policy for Directors differs to its pay policies for groups of employees, this reflects the appropriate market rate
position for the relevant roles.
4. Stating maximum amounts for the remuneration policy
UK regulations and related investor guidance encourages companies to disclose a cap within which each element of Remuneration
Policy will operate. Where maximum amounts for elements of remuneration have been set within the Directors’ Remuneration Policy,
these will operate simply as caps and are not indicative of any aspiration.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 60
REMUNERATION REPORT CONTINUED
Notes to the policy table continued
5. Travel and hospitality
While the Committee does not consider it to form part of benefits in the normal usage of that term, it has been advised that corporate
hospitality (whether paid for by the Company or another) and business travel for directors (and exceptionally their families) may
technically come within the applicable rules and so the Committee expressly reserves the right for the Committee to authorise such
activities within its agreed policies.
6. Employee Share Participation plan
While the directors have participated in the Employee Share Participation plan in previous years, and it has remained part of the formal
policy, in practice the Directors do not participate in the plan. The plan was not open for subscription during the year ended March 2017.
Recruitment remuneration policy
The Company’s recruitment remuneration policy aims to give the Committee sufficient flexibility to secure the
appointment and promotion of high-calibre executives to strengthen the management team and secure the skill sets to
deliver our strategic aims. However, as an external recruitment has not taken place for a considerable period of time, the
preparation of this policy is challenging as it provides for an event which has not been the Company’s practice.
In terms of the principles for setting a package
for a new Executive Director, the starting point
for the Committee will be to apply the general
policy for Executive Directors as set out above
and structure a package in accordance with
that policy.
Consistent with the new UK regulations, the
caps contained within the policy for fixed pay
do not apply to new recruits, although the
Committee would not envisage exceeding
these caps in practice.
The annual bonus and long-term incentive
compensation arrangements will operate
(including the maximum award levels) as
detailed in the general policy in relation to any
newly appointed Executive Director. For an
internal appointment, any variable pay element
awarded in respect of the prior role may either
continue on its original terms or be adjusted to
reflect the new appointment as appropriate.
For external and internal appointments, the
Committee may agree that the Company
will meet certain relocation expenses as it
considers appropriate.
For external candidates, it may be necessary to make additional
awards in connection with the recruitment to buy-out awards forfeited
by the individual on leaving a previous employer.
For the avoidance of doubt, buy-out awards are not subject to a formal
cap. Any recruitment-related awards which are not buy-outs will be
subject to the limits for incentive pay as stated in the general policy.
For any buy-outs the Company will not pay more than is, in the view of
the Committee, necessary and will in all cases seek, in the first instance,
to deliver any such awards under the terms of the existing incentive pay
structure. It may, however, be necessary in some cases to make buy-out
awards on terms that are more bespoke than the existing annual and
equity-based pay structures. Details of any recruitment-related awards
will be appropriately disclosed.
All buy-outs, whether under the annual bonus plan, LTIP or otherwise,
will take account of the service obligations and performance
requirements for any remuneration relinquished by the individual
when leaving a previous employer. The Committee will seek to make
buy-outs subject to what are, in its opinion, comparable requirements
in respect of, service and performance. However, the Committee may
choose to relax this requirement in certain cases (such as where the
service and/or performance requirements are materially completed),
and where the Committee considers it to be in the interests of
shareholders, or where such factors are, in the view of the Committee,
reflected in some other way, such as a significant discount to the face
value of the awards forfeited.
A new Non-Executive Director would be recruited on the terms explained above in respect of the main policy for such
Directors.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 61
Potential rewards under different scenarios
The charts below show the potential pay-out under the proposed arrangements for each Executive Director under
different scenarios.
Paul Clegg
Hans Pauli
William Rudge
800
s
0
0
0
€
’
600
400
200
0
Notes:
450
300
353
353
353
800
s
0
0
0
€
’
600
400
200
0
313
209
232
232
232
800
s
0
0
0
€
’
600
400
200
0
254
169
186
186
186
Fixed
Threshold Maximum
Fixed
Threshold Maximum
Fixed
Threshold Maximum
Fixed
Annual Variable
Long-term incentives
1 Fixed pay out reflects basic salaries, benefits in kind and pension allowances in place at the start of the year ending 31 March 2018.
2
The threshold pay-out levels are based upon the actual performance against the targets as measured based upon the results
for the year ended 31 March 2017 giving rise to 100% award. The maximum is based on a payment of 150%, being the maximum
target, including a 50% extraordinary exceptional bonus award dependent upon the successful completion of the Tricoya
project (noting the policy allows for a 200% cap which remains in place in exceptional circumstances rather than representing
a realistic estimate).
3
The graphs above reflects that none of the options previously granted under the LTIP plan in the year ended 31 March 2017 are
expected to vest (in whole or in part) or become exercisable in the year ended 31 March 2018. New options are expected to be
granted in the year ended 31 March 2018 as set out in the introduction to the Remuneration Report.
Directors’ service contracts
The Company’s general approach on recruiting a new Executive Director would be to follow the terms of the contracts of
Mr Pauli and Mr Rudge. However, it is difficult to be definitive regarding a currently unforeseen event and the Company
reserves the right to introduce a longer initial notice period (of up to 2 years) reducing over time.
Executive Director service contracts, which do not contain expiry dates, provide that compensation provisions for
termination without notice will only extend to salary, certain fixed benefits and pension. In the case of William Rudge and
Hans Pauli such sums may be paid in instalments and cease if the individual finds an alternative role.
Following a change of control, if the Company terminates Paul Clegg’s employment in breach of or in accordance with
the terms of his service contract or if Paul Clegg terminates the employment in response to a fundamental breach of
contract by the Company or in accordance with the terms of his service contract, then he will be entitled to a termination
payment comprising 12 months base pay and benefits, plus an amount in respect of bonus of at least the level of
the average of historic bonus levels (or a higher discretionary amount awarded in respect of Company and personal
performance in the financial year of termination), unpaid expenses and the value of accrued holiday entitlement.
Name
Paul Clegg
Hans Pauli
William Rudge
Date of contract
2 September 2009
1 March 2010
1 October 2012
Notice period from either party (months)
12
6
6
Subject to Board approval, Executive Directors are permitted to accept (and retain the fees from) outside appointments
on external boards as long as these are not deemed to interfere with the business of the Group.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 62
REMUNERATION REPORT CONTINUED
Termination policy summary
In practice, the facts surrounding any termination do not always fit neatly into defined categories for good or bad leavers.
Therefore, it is appropriate for the Committee to consider the suitable treatment on a termination having regard to all of
the relevant facts and circumstances available at that time. This policy applies both to any negotiations linked to notice
periods on a termination and any treatment which the Committee may choose to apply under the discretions available
to it under the terms of the annual bonus and LTIP plans. The potential treatments on termination under these plans are
summarised below.
Incentives
Good leaver
Bad leaver
Exceptional events
If a leaver is deemed to be a ‘good leaver’;
i.e. leaving through redundancy, retirement,
ill health, disability or death, sale of part
of the Group or otherwise at the discretion
of the Remuneration Committee
If a leaver is deemed to
be a ‘bad leaver’; typically
voluntary resignation or
leaving for disciplinary
reasons
For example change in control or
winding up of the Company
Annual
bonus
Pro-rated bonus. Pro-rating to
reflect only the period worked.
Performance metrics determined
by the Remuneration Committee.
LTIP
Annual bonus awarded in shares,
but still held in the Employee Benefit
Trust for a year, will fully vest.
Will receive a pro-rated award subject
to the application of the performance
conditions at the normal
measurement date.
No awards made.
All awards will normally
lapse.
Either the annual bonus will continue
for the year or there will be a pro-
rated bonus.
Performance metrics determined by
the Remuneration Committee.
Awards vest after taking into
account both the application of the
performance conditions at the date
of the event and the period of time
served (other than in the respect of
retention based awards).
The Company has power to enter into settlement agreements with Executives and to pay compensation to settle potential
legal claims. In addition, and consistent with market practice, in the event of termination of an Executive Director, the
Company may pay a contribution towards the individual’s legal fees and fees for outplacement services as part of a
negotiated settlement. Any such fees would be disclosed as part of the detail of termination arrangements. For the
avoidance of doubt, the policy does not include an explicit cap on the cost of termination payments.
Non-Executive Directors’ contracts
The Non-Executive Directors, including the Chairman, have letters of appointment which set out their duties and
responsibilities. Appointment is for a fixed term of three years, terminable by three months’ notice on either side.
Name
Patrick Shanley
Nick Meyer
Sean Christie
Sue Farr
Date of letter of appointment1
Appointment end date
Unexpired term (months)
18 November 2010
18 November 2019
17 May 2011
17 May 2020
27 November 2014
27 November 2017
27 November 2014
27 November 2017
27
35
5
5
1.
As amended by agreements dated 21 November 2013, 10 February 2015 and 14 June 2017 in respect of N Meyer and on
21 November 2013, 10 June 2014, 10 February 2015 and 16 November 2016 in respect of P Shanley.
Consideration of employment conditions elsewhere in the Group
As explained in the general policy section of the Remuneration policy, the Committee takes into account Group-wide
pay and employment conditions. The Committee reviews the average Group-wide base salary increase and bonus costs
and is responsible for all discretionary and all-employee share arrangements.
Consistent with normal practice, the Committee did not consult with employees in preparing the Directors’
Remuneration Policy.
Consideration of shareholders’ views
Each year the Committee takes into account the approval levels of remuneration related matters at our annual general
meeting in determining that the current Directors’ remuneration policy remains appropriate for the Company.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 63
CORPORATE GOVERNANCE
Audit Committee
The Audit Committee consisted of Sean Christie
(Chairman), Patrick Shanley, Nick Meyer and Sue Farr.
The Audit Committee meets at least twice a year and is
responsible for monitoring compliance with accounting and
legal requirements and for reviewing the annual and interim
financial statements prior to their submission for approval
by the Board. The Committee also discusses the scope of
the audit and its findings and considers the appointment
and fees of the external auditors. The Audit Committee
continues to believe that it is not currently appropriate
for the Company to maintain a dedicated internal audit
function due to its size.
The Audit Committee considers the independence and
objectivity of the external auditors on an annual basis,
with particular regard to non- audit services. The non-
audit fees are considered by the Board not to affect the
independence or objectivity of the auditors. The Audit
Committee monitors such costs in the context of the audit
fee for the period, ensuring that the value of non-audit
service does not increase to a level where it could affect
the auditors’ objectivity and independence. The Board also
receives an annual confirmation of independence from the
auditors.
Nominations & Remuneration Committee
The Nominations and Remuneration Committee consists
of Sue Farr (Chairman), Patrick Shanley, Sean Christie
and Nick Meyer. The Committee’s role is to consider and
approve the nomination of Directors and the remuneration
and benefits of the Executive Directors, including the
award of share options and bonus share awards. In framing
the Company’s remuneration policy, the Nominations &
Remuneration Committee has given full consideration to
Section D of The UK Corporate Governance Code.
The Committee seeks to build an active and productive
dialogue with investors on developments in the
remuneration aspects of corporate governance generally
and any changes to the Company’s executive pay
arrangements in particular.
Details of the Company’s corporate governance
arrangements are set out below. The Board of Directors
acknowledges the importance of the Principles set out
in The UK Corporate Governance Code issued by the
Financial Reporting Council. Neither the 2010 or 2012
UK Corporate Governance Code are compulsory for AIM
listed or Euronext listed companies. The Board has applied
the principles as far as practicable and appropriate for a
relatively small public company.
The Board of Directors
During the period the Board comprised a Non-executive
Chairman, three Non-executive Directors and three
Executive Directors.
The Board meets regularly and is responsible for strategy,
performance, approval of major capital projects and the
framework of internal controls. To enable the Board to
discharge its duties, all Directors receive appropriate and
timely information. Briefing papers are distributed to all
Directors in advance of Board meetings. All Directors
have access to the advice and services of the Company
Secretary. The appointment and removal of the Company
Secretary is a matter for the Board as a whole. In addition,
procedures are in place to enable the Directors to obtain
independent professional advice in the furtherance of their
duties, if necessary, at the Company’s expense.
During the year, all serving Directors attended the
quarterly Board meetings that were held. In addition to the
scheduled meetings there is frequent contact between all
the Directors in connection with the Company’s business
including Audit and Nomination and Remuneration
committee meetings which are held as required, but as a
minimum twice per annum.
Directors are subject to re-election by the shareholders
at Annual General Meetings. The Articles of Association
provide that Directors will be subject to re-election at the
first opportunity after their appointment and the Board
submit to re-election at intervals of three years.
Day to day operating decisions are made by the Senior
Management Team of which the Chief Executive Officer,
the Executive Director, Corporate Development and
Finance Director are members.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 64
CORPORATE GOVERNANCE CONTINUED
Internal Financial Control
The Board is responsible for establishing and maintaining the Company’s system of internal financial control and places
importance on maintaining a strong control environment. The key procedures which the Directors have established with a
view to providing effective internal financial control are as follows:
• The Company’s organisational structure has clear lines of responsibility;
• The Company prepares a comprehensive annual budget that is approved by the Board. Monthly results are reported
against the budget and variances are closely monitored by the Directors; and
• The Board is responsible for identifying the major business risks faced by the Company and for determining
the appropriate courses of action to manage those risks.
The Directors recognise, however, that such a system of internal financial control can only provide reasonable,
not absolute, assurance against material misstatement or loss.
Relations with shareholders
Communications with shareholders are given high priority.
There is regular dialogue with shareholders including presentations after the Company’s preliminary announcement of
the year-end results and six monthly results. The Board uses the Annual General Meeting to communicate with investors
and welcomes their participation. The Chairman aims to ensure that the Directors are available at Annual General
Meetings to answer questions.
Directors’ attendance record
The attendance of individual Directors at meetings of the Board and its committees in the year under review was
as follows:
Number of meetings
Sean Christie
Paul Clegg
Sue Farr
Hans Pauli
Patrick Shanley
Montague John ‘Nick’ Meyer
William Rudge
Board
Audit Committee
Nomination &
Remuneration Committee
Attended
Serving1
Attended2
Serving
Attended3
Serving
9
13
8
10
10
8
13
13
13
13
13
13
13
13
3
1
3
1
3
3
1
3
–
3
–
3
3
–
5
2
6
–
6
5
–
6
–
6
–
6
6
–
Whilst all Directors are not members of the Board Committees they attend by invitation.
Figures in the left hand column denote the number of meetings attended and figures in the right hand column denote the
number of meetings held whilst the individual held office.
Notes
1.
During the year there were 9 full board meetings and 4 meetings of a committee of the board. Patrick Shanley attended
all 9 board meetings and 1 committee meeting. Hans Pauli attended 9 board meetings and 1 committee meeting.
Nick Meyer attended 8 out of 9 board meetings as did Sue Farr. Sean Christie attended 8 out of 9 board meetings and
1 committee meeting.
2. Messrs Clegg, Pauli and Rudge attended part of an audit committee meeting on 7 June 2016, 16 November 2016 and
8 March 2017.
3. Paul Clegg was in attendance for part of 2 meetings of the Nomination and Remuneration Committee.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 65
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Directors’ responsibilities
The directors are responsible for preparing the annual
report, the directors’ remuneration report and the
financial statements in accordance with applicable
law and regulations.
English company law requires the directors to prepare
financial statements for each financial year. Under that law
the directors have prepared the Group financial statements
in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union, and
the parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law). Under company law the directors must not
approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs
of the Group and the Company and of the profit or loss
of the Group for that period. In preparing these financial
statements, the directors are required to:
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and the Group and enable them to ensure that
the financial statements and the directors’ remuneration
report comply with the Companies Act 2006 and,
as regards the Group financial statements, Article 4
of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and the Group
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance
and integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the directors, whose names and functions are
listed on pages 40 to 41 of this annual report, confirm that:
• select suitable accounting policies and then apply
them consistently;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information; and
• to the best of their knowledge, the consolidated financial
statements, which have been prepared in accordance
with IFRS as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position
and profit of the Group;
• provide additional disclosures when compliance
• to the best of their knowledge, the strategic report
with the specific requirements of IFRS as adopted
by the European Union and the applicable UK
Accounting Standards is insufficient to enable users to
understand the impact of particular transactions, other
events and conditions on the financial position and
financial performance.
In preparing both the Group and the Company financial
statements, suitable accounting policies have been used
and applied consistently, and reasonable and prudent
judgements and estimates have been made. Applicable
accounting standards have been followed. The financial
statements have been prepared on the going concern basis
as disclosed in the Statutory Information section of the
Directors’ Report and Business Review.
includes a fair review of the development and
performance of the business and the position of the
Group, together with a description of principal risks and
uncertainties that it faces; and
• they consider the annual report, taken as a whole, to
be fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 66
ACCOYA® CLADS
EXTERIOR OF TASHJIAN
BEE POLLINATOR
DISCOVERY CENTER
The University of Minnesota’s newly constructed
Tashjian Bee and Pollinator Discovery Center at The
Minnesota Landscaped Arboretum is coupling bee
research, with hands-on learning for the public.
The 7,530-square foot center, the first building in
a master planned farm to table campus, combines
educational programming and public outreach into one
thoughtful structure.
All of the exterior cladding on the center is Accoya wood,
in charred and stained finishes. The design team wanted to
use Accoya wood and had reached out to Delta Millworks
in Austin, Texas to see if they could char it as part of the
exterior cladding. At that time, Delta Millworks had just started
working with Accoya wood and obliged, adding that it is now
its preferred charred wood due to its even char finish.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
FINANCIAL
STATEMENTS
67
68
70
71
72
73
Group Independent Auditors’
Report
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement of
Cash Flow
74 Notes to the Financial Statements
103 Company Independent Auditors’
Report
105 Condensed Company
Balance Sheet
106 Notes to the Company
Financial Statements
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 68
GROUP INDEPENDENT AUDITORS’ REPORT
to the members of Accsys Technologies PLC
Report on the Group financial statements
Our opinion
In our opinion, Accsys Technologies PLC’s Group
financial statements (the ‘financial statements’):
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
•
•
•
give a true and fair view of the state of the Group’s
affairs as at 31 March 2017 and of its loss and cash
flows for the year then ended;
have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs)
as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual
Report and Financial Statements (the ‘Annual Report’),
comprise:
•
•
•
•
•
the consolidated statement of financial position as
at 31 March 2017;
the consolidated statement of other comprehensive
income for the year then ended;
the consolidated statement of cash flow for the year
then ended;
the consolidated statement of changes in equity for
the year then ended; and
the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
The financial reporting framework that has been applied
in their preparation of the financial statements is IFRSs
as adopted by the European Union, and applicable law.
In applying the financial reporting framework,
the directors have made a number of subjective
judgements, for example in respect of significant
accounting estimates. In making such estimates, they
have made assumptions and considered future events.
•
•
the information given in the Strategic Report and
the Directors’ Report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
In addition, in light of the knowledge and understanding
of the group and its environment obtained in the
course of the audit, we are required to report if we have
identified any material misstatements in the Strategic
Report and the Directors’ Report. We have nothing to
report in this respect.
Other matters on which we are required to report
by exception
Adequacy of information and explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion, we have not received
all the information and explanations we require for our
audit. We have no exceptions to report arising from this
responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures of
directors’ remuneration specified by law are not made.
We have no exceptions to report arising from this
responsibility.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
69
Responsibilities for the financial statements
and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 65, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable
law and International Standards on Auditing (UK and
Ireland) (‘ISAs (UK & Ireland)’). Those standards require
us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared
for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this
report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK
& Ireland). An audit involves obtaining evidence about
the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial
statements are free from material misstatement,
whether caused by fraud or error.
This includes an assessment of:
•
•
whether the accounting policies are appropriate to
the Group’s circumstances and have been
consistently applied and adequately disclosed;
the reasonableness of significant accounting
estimates made by the Directors; and
•
the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing
the directors’ judgements against available evidence,
forming our own judgements, and evaluating the
disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures or
a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements
and to identify any information that is apparently
materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course
of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we
consider the implications for our report.
Other matter
We have reported separately on the parent Company
financial statements of Accsys Technologies PLC for
the year ended 31 March 2017 and on the information in
the Directors’ Remuneration Report that is described as
having been audited.
Darryl Phillips (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 June 2017
(a) The maintenance and integrity of the Accsys Technologies
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration
of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
financial statements since they were initially presented on
the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
70
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2017
Accoya® wood revenue
Licence revenue
Other revenue
Total revenue
Cost of sales
Gross profit
Before
exceptional
items
2017
€’000
Exceptional
items
Note 5
2017
€’000
Note
50,655
1,576
4,298
3
56,529
(42,175)
14,354
–
–
–
–
–
–
Total
2017
€’000
Total
2016
€’000
50,655
43,466
1,576
4,298
2,849
6,454
56,529
52,769
(42,175)
(34,597)
14,354
18,172
Other operating costs
4
(18,273)
(517)
(18,790)
(18,460)
Other gains
Operating loss
Finance income
Finance expense
Loss before taxation
Tax expense
Loss for the year
Loss arising on translation of foreign operations, which
could subsequently be reclassified into profit or loss
Total comprehensive loss for the year
Total comprehensive loss for the year is attributable to:
Owners of Accsys Technologies PLC
Non–controlling interests
Total comprehensive loss for the year
8
10
11
12
–
(3,919)
2
(560)
(4,477)
(666)
(5,143)
(108)
(5,251)
(5,108)
(143)
(5,251)
635
118
–
–
118
–
118
–
118
118
–
118
635
(3,801)
2
(560)
(4,359)
(666)
(5,025)
(108)
(5,133)
(4,990)
(143)
(5,133)
–
(288)
13
(191)
(466)
(402)
(868)
(27)
(895)
(885)
(10)
(895)
Basic and diluted loss per ordinary share
14
€(0.06)
–
€(0.05)
€(0.01)
The figures for the year ended 31 March 2017 include exceptional costs (see note 5).
The notes on pages 74 to 102 form an integral part of these financial statements.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2017
71
Registered Company 05534340
Non–current assets
Intangible assets
Property, plant and equipment
Available for sale investments
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Corporation tax receivable
Current liabilities
Trade and other payables
Obligation under finance lease
Corporation tax payable
Net current assets
Non–current liabilities
Obligation under finance lease
Other Long Term Borrowing
Net assets
Equity
Share capital
Share premium account
Other Reserves
Accumulated loss
Own shares
Foreign currency translation reserve
Capital value attributable to owners of Accsys Technologies PLC
Non–controlling interest in subsidiaries
Total equity
Note
2017
€’000
2016
€’000
16
17
18
21
22
23
28
28
29
10,839
21,681
–
10,980
20,272
–
32,520
31,252
11,796
7,612
41,173
687
8,345
5,647
8,186
412
61,268
22,590
(12,524)
(8,063)
(455)
(1,620)
(14,599)
(354)
(1,425)
(9,842)
46,669
12,748
(2,621)
(1,947)
(20,097)
–
(22,718)
(1,947)
56,471
42,053
24
4,531
128,792
25
113,356
4,495
128,792
107,441
(202,840)
(198,842)
(33)
45
43,851
12,620
56,471
(47)
153
41,992
61
42,053
The financial statements were approved by the Board and authorised for issue on 19 June 2017, and signed on its
behalf by:
Paul Clegg
William Rudge
Director
Director
The notes on pages 74 to 102 form an integral part of these financial statements.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
72
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Share
capital
Ordinary
€000
Share
premium
€000
Other
reserves
€000
Own
Shares
€000
Foreign
currency
translation
reserve
€000
Accumulated
Loss
€000
Total equity
attributable
to equity
shareholders of
the Company
€000
Non–
Controlling
interests
€000
Total
Equity
€000
4,440
128,714 106,855
(39)
180
(199,022)
41,128
–
41,128
–
–
55
–
–
–
–
–
78
–
–
–
–
–
586
–
–
(8)
–
–
(27)
(858)
(885)
(10)
(895)
1,038
1,038
47
78
–
–
–
1,038
47
78
–
–
–
–
–
–
–
586
71
657
4,495
128,792
107,441
(47)
153
(198,842)
41,992
61
42,053
–
–
36
–
–
–
–
–
–
–
–
–
–
–
–
–
6,491
(576)
–
–
14
–
–
–
(108)
(4,882)
(4,990)
(143)
(5,133)
–
–
–
–
–
884
–
–
–
–
884
50
–
–
–
–
884
50
–
6,491
12,702
19,193
(576)
–
(576)
4,531
128,792 113,356
(33)
45
(202,840)
43,851
12,620
56,471
Balance at
31 March 2015
Total
comprehensive
income/
(expense) for
the period
Share based
payments
Shares issued
Premium on
shares issued
Issue of
subsidiary
shares to non-
controlling
interests
Balance at
31 March 2016
Total
comprehensive
income/
(expense) for
the period
Share based
payments
Shares issued
Premium on
shares issued
Issue of
subsidiary
shares to non-
controlling
interests
Issue of
subsidiary
shares to Group
companies
Balance at
31 March 2017
Share capital is the amount subscribed for shares at nominal value (note 24).
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.
See note 25 for details concerning Other reserves.
Non-controlling interests relates to the investment of various parties into Tricoya Technologies Limited and Tricoya
Ventures UK Limited (notes 9 and 25).
Own shares represents a total of 673,355 shares issued to an Employee Benefit Trust (‘EBT’) at nominal value on
4 July 2016 and 6,080 shares issued to the EBT at nominal value on 6 July 2015. These shares shall vest if the employees,
including the Executive Directors, remain in employment with the Company to the vesting date, being 1 July 2017 (subject
to certain other provisions including good-leaver, take-over and committee discretion provisions) (note 15).
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.
Accumulated losses represent the cumulative loss of the Group attributable to the owners of the parent.
The notes on pages 74 to 102 form an integral part of these financial statements.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CASH FLOW
for the year ended 31 March 2017
Loss before taxation
Adjustments for:
Amortisation of intangible assets
Depreciation of land, property, plant and equipment
Net (gain)/loss on disposal of property, plant and equipment
Net finance expense
Equity–settled share–based payment expenses
2017
€’000
(4,359)
556
2,157
(580)
558
884
Cash flows generated (used in)/from operating activities before changes in working capital
(784)
Increase in trade and other receivables
Decrease in deferred income
Increase in inventories
Increase/(Decrease) in trade and other payables
Net cash generated (used in)/from operating activities before tax*
Tax (paid)/received
Net cash flows generated (used in)/from operating activities
Cash flows from investing activities
Interest received
Proceeds from disposal of property, plant and equipment
Expenditure on property, plant and equipment
Expenditure on intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from loans
Other financing costs
Interest paid
Repayment of finance lease
Proceeds from issue of share capital
Proceeds from issue of subsidiary shares to non–controlling interests
Share issue costs (relating to issue of subsidiary shares)
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
73
2016
€’000
(466)
524
2,148
35
177
1,038
3,456
(714)
(1,661)
(453)
(176)
452
229
681
5
3
(2,565)
(1,490)
(4,047)
–
–
(191)
(106)
124
1,000
(44)
783
(2,936)
–
(3,322)
5,737
(1,305)
(745)
(2,050)
2
4,223
(6,416)
(415)
(2,606)
20,736
(954)
(250)
(173)
50
19,122
(805)
37,726
33,070
(2,583)
(83)
(17)
8,186
41,173
10,786
8,186
*
Cash out-flows from operating activities after changes in working capital included €128,000 in respect of exceptional costs
(2016: €nil).
The notes on pages 74 to 102 form an integral part of these financial statements.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 74
NOTES TO THE FINANCIAL STATEMENTS
for the year ending 31 March 2017
1. Accounting Policies
Basis of accounting
The Group’s financial statements have been prepared under the historical cost convention (except for certain
financial instruments and equity investments which are measured at fair value), in accordance with International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as endorsed by the
European Union, interpretations issued by the IFRS Interpretations Committee (IFRS IC) and with those parts of the
Companies Act 2006 applicable to companies preparing their financial statements under adopted IFRS.
Going Concern
The financial statements are prepared on a going concern basis, which assumes that the Group will continue in
operational existence for the foreseeable future, and at least 12 months from the date these financial statements are
approved.
As part of the Group’s going concern review, the Directors have reviewed the Group’s trading forecasts and
working capital requirements for the foreseeable future, including taking into account the proceeds from the Firm
Placing and Open offer which was successfully completed on 23 April 2017. These forecasts indicate that, in order
to continue as a going concern, the Group is dependent on the achievement of certain operating performance
measures relating to the production and sales of Accoya® wood from the plant in Arnhem and the collection of
ongoing working capital items in line with internally agreed budgets.
The Directors have considered the internally agreed budgets and performance measures and believe that
appropriate controls and procedures are in place or will be in place to make sure that these are met. The Directors
believe that while some uncertainty inherently remains in achieving the budget, in particular in relation to market
conditions outside of the Group’s control, that there are a sufficient number of alternative actions and measures
that can be taken in order to achieve the Group’s medium and long term objectives.
Therefore the Directors believe that the going concern basis is the most appropriate on which to prepare the
financial statements.
Changes in accounting policies
No new accounting standards, amendments or interpretations have been adopted in the period which have any
impact on these financial statements.
Exceptional Items
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. See note 5 for details of
exceptional items.
Business combinations
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of
another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Group as if they formed a single entity. Inter-company transactions
and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method.
In the consolidated 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 acquired operations are
included in the consolidated income statement from the date on which control is obtained.
As allowed under IFRS 1, some business combinations effected prior to transition to IFRS, were accounted for using
the merger method of accounting. Under this method, assets and liabilities are included in the consolidation at their
book values, not fair values, and any differences between the cost of investment and net assets acquired were taken
to the merger reserve. The majority of the merger reserve arose from a corporate restructuring in the year ended
31 March 2006 which introduced Accsys Technologies PLC as the new holding company.
Further details concerning the Tricoya Consortium are included in note 9.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 75
Revenue recognition
Revenue is measured at the fair value of the consideration receivable. Revenue is recognised to the extent that it
is probable that the economic benefit will flow to the Group and that the revenue can be reliably measured. The
following specific recognition criteria must also be met before revenue is recognised.
Manufacturing revenue
Revenue is recognised in respect of the sale of goods when the significant risks and rewards of ownership of the
goods have been passed to the buyer, the timing of which is dependent on the particular shipment terms. When
a customer provides untreated wood to be processed by the Group in order to produce Accoya®, revenue
is recognised when the Group’s obligations under the relevant customer contract have been substantially
completed, which is before the finished Accoya® has been collected by the customer. Manufacturing revenue
includes the sale of Accoya® wood and other revenue, principally relating to the sale of acetic acid.
Licensing fees and Marketing income
Licence fee and marketing income is recognised over the period of the relevant agreements according to the
specific terms of each agreement or the quantities and/or values of the licensed product sold. The accounting
policy for the recognition of licence fees is based upon an assessment of the work required before the licence
is signed and subsequently during the design, construction and commissioning of the licensees’ plant, with
an appropriate proportion of the fee recognised upon signing and the balance recognised as the project
progresses to completion. Marketing revenue when the company acts as principal is recognised based on the
actual work completed in the period. The amount of any cash or billings received but not recognised as income
is included in the financial statements as deferred income and shown as a liability.
Finance income
Interest accrues using the effective interest method, i.e. the rate that discounts estimated future cash receipts
through the expected life of the financial instrument to the net carrying amount of the financial asset.
Finance expense
Finance expenses include the fees, interest and other finance charges associated with the Group’s loan notes and
credit facilities, which are expensed over the period that the Group has access to the loans and facilities.
Foreign exchange gains or losses on the loan notes are included within finance expenses.
Interest on the £16.25 million unsecured fixed rate loan notes issued to Business Growth Fund (‘BGF’) and Volantis on
29 March 2017 has been expensed. Interest on the €2 million term loan drawn down from Solvay Acetow GmBH (now
known as Rhodia Acetow GmBH) on 29 December 2016, to part-finance capital expenditure at the Arnhem plant, has
been capitalised as it is directly attributable to the expansion.
Finance expenses also include an allocation of finance charges in respect of the sale and leaseback of the Arnhem
land and buildings, and the lease of London Office fit out and furniture, accounted for as a finance lease. The total
finance charge (calculated as the difference between the total minimum lease payments and the liability at the
inception of the lease) is allocated over the life of the lease using the sum-of-digits method.
Share based payments
The Company awards nil cost options to acquire shares of the Company to certain Directors and employees. The
Company also awards bonuses to certain Directors and employees in the form of the award of deferred shares of
the Company.
The fair value of options, deferred shares and matching 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 statement of
comprehensive income over the vesting period during which the employees become unconditionally entitled to the
options or shares.
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.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options which eventually vest. Market vesting conditions are factored into the fair value of
the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when
paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 76
1. Accounting Policies continued
Pensions
The Group contributes to certain defined contribution pension and employee benefit schemes on behalf of its
employees. These costs are charged to the statement of comprehensive income on an accruals basis.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the 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.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date together with any adjustment to tax payable in respect of previous years.
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.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
not provided for:
•
•
•
the initial recognition of goodwill,
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a
business combination, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
Recognition of deferred tax assets is restricted to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (the functional currency). For the purposes of the consolidated financial
statements, the results and financial position of each Group company are expressed in Euro, which is the functional
currency of the parent Company, and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currencies are recognised at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated
at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are
translated at the average monthly exchange rates prevailing in the month in which the transaction took place.
Exchange differences arising, if any, are recognised in other comprehensive income, finance expense and the
foreign currency translation reserve.
Government grants
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.
Goodwill
Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the
consideration paid and the fair value of the identifiable assets and liabilities acquired. It is capitalised, and is
subject to annual impairment reviews by the Directors. Any impairment arising is charged to the 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 has been
recognised in the income statement.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 77
Other intangible assets
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.
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 10 and 20 years.
Property, plant and equipment
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. Depreciation is provided at rates calculated to write off the cost less estimated residual
value of each asset, except freehold land, over its expected useful life on a straight line basis, as follows:
Plant and machinery
These assets comprise pilot plants and production facilities. These facilities are
depreciated from the date they become available for use at rates applicable to the
asset lives expected for each class of asset, with rates between 5% and 20%.
Office equipment
Between 20% and 50%.
Leased land and buildings
Land held under a finance lease is depreciated over the life of the lease.
Freehold land
Freehold land is not depreciated.
Impairment of non–financial assets
The carrying amount of the non-current non-financial assets of the Group is compared to the recoverable amount
of the assets whenever events or changes in circumstances indicate that the net book value may not be recoverable,
or in the case of goodwill, annually. The recoverable amount is the higher of value in use and the fair value less cost
to sell. In assessing the value in use, the expected future cash flows from the assets are determined by applying a
discount rate to the anticipated pre-tax future cash flows. An impairment charge is recognised in the 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 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.
Leases
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-
line basis over the lease term.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to
the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between
finance expenses and reduction of lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability.
Inventories
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.
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.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 78
1. Accounting Policies continued
Financial assets
Financial assets are classified as cash and cash equivalents, available for sale investments and loans and
receivables, depending on the purpose for which the asset was acquired. When financial assets are recognised
initially, they are measured at fair value plus, in the case of investments not at fair value, through profit or loss
directly attributable transaction costs.
Except where a reliable fair value cannot be obtained, unlisted shares held by the Group are classified as available
for sale investments and are stated at fair value. Gains and losses arising from changes in fair value are recognised
directly in equity, with the exception of impairment losses which are recognised directly in profit or loss. Where an
investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the
profit or loss in the year. Where it is not possible to obtain a reliable fair value, these investments are held at cost
less provision for impairment.
Loans and receivables, which comprise non-derivative financial assets with fixed and determinable payments
that are not quoted on an active market are initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted on an
active market. They arise principally from the provision of goods and services to customers. Trade receivables
are initially recognised at fair value less an allowance for any uncollectible amounts. A provision for impairment
is made when there is objective evidence that the Group will not be able to collect debts. Bad debts are written
off when identified.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-
term deposits, 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.
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
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.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the
definition of a financial liability. The Group’s shares are classified as equity instruments.
Segmental Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive.
The chief executive is responsible for allocating resources and assessing performance of the operating segments,
has been identified as steering the committee that makes strategic decisions.
2. Accounting estimates and judgements
In preparing the Consolidated Financial Statements, management has to make judgements on how to apply the
Group’s accounting policies and make estimates about the future. The critical judgements that have been made in
arriving at the amounts recognised in the Consolidated Financial Statements and the key sources of estimation and
uncertainty that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities
in the next financial year are discussed below:
Revenue recognition
The Group has considered the criteria for the recognition of fee income from licensees over the period of
the agreement and is satisfied that the recognition of such revenue is appropriate. The recognition of fees
is based upon an assessment of the work required before the licence is signed and subsequently during the
construction and commissioning of the licensees’ plant, with an appropriate proportion of the fee recognised
upon signing and the balance recognised as the project progresses to completion. The Group also considers the
recoverability of amounts before recognising them as income.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 79
Goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting
policy stated above. The recoverable amounts of cash–generating units have been determined based on value
in use calculations. These calculations require the use of judgements in relation to discount rates and future
forecasts (See note 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.
Intellectual property rights and property, plant and equipment
The Group tests the carrying amount of the intellectual property rights and property, plant and equipment
whenever events or changes in circumstances indicate that the net book value may not be recoverable. These
calculations require the use of estimates in respect of future cash–flows from the assets by applying a discount
rate to the anticipated pre–tax future cash–flows. The Group also reviews the estimated useful lives at the end of
each annual reporting period (See note 16 & 17). The price of the Accoya wood and the raw materials and other
inputs vary according to market conditions outside of the Group’s control. Should the price of the raw materials
increase greater than the sales price or in a way which no longer makes Accoya competitive, then the carrying
value of the property, plant and equipment or IPR may be in doubt and become impaired. The Directors consider
that the current market and best estimates of future prices mean that this risk is limited.
Inventories
The Group reviews the net realisable value of, and demand for, its inventory on a monthly basis to provide
assurance that recorded inventory is stated at the lower of cost and net realisable value after taking into
account the age and condition of inventory.
Available for sale investments
The Group has an investment in unlisted equity shares carried at nil value. The investment is valued at cost less
any impairment as a reliable fair value cannot be obtained since there is no active market for the shares and
there is currently uncertainty around the future funding of the business. The Group makes appropriate enquiries
and considers all of the information available to it in order to assess whether any impairment has occurred
(See note 18).
New standards and interpretations in issue but not yet effective at the date of authorisation of these financial statements:
At the date of authorisation of these financial statements, the following Standards and Interpretations which have
not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet
been adopted by the EU).
•
•
•
•
•
•
•
•
•
•
•
•
•
IFRS 9 ‘Financial Instruments’
IFRS 11 (amendments) ‘Joint arrangements’
IFRS 14 ‘Regulatory deferral accounts’
IFRS 15 ‘Revenue from contracts with customers’
IFRS 16 ‘Leases’
IAS 1 (amendments) ‘presentation of financial statements’
IAS 7 (amendments) ‘Cash flow statements’
IAS 12 (amendments) ‘Income taxes’
IAS 19 (amendments) ‘Employee contributions’
IAS 16 (amendments) ‘property plant and equipment’
IAS 38 (amendments) ‘Intangible assets’
IAS 27 (amendments) ‘Separate financial statements’
IAS 28 (amendments) ‘Associates and joint ventures’
The Directors do not expect that the adoption of the Standards and Interpretations listed above will have a material
impact on the financial statements of the Group in future periods.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 80
3. Segmental reporting
The Group’s business is the manufacturing of and development, commercialisation and licensing of the associated
proprietary technology for the manufacture of Accoya® wood, Tricoya® wood elements and related acetylation
technologies. Segmental reporting is divided between corporate activities, activities directly attributable to Accoya,
to Tricoya or research and development activities. This note has been represented and restated following the
formation of the Tricoya Consortium to more appropriately reflect costs associated with Accoya and Tricoya.
Accoya wood revenue
Licence revenue
Other revenue
Total Revenue
Cost of sales
Gross profit
Other operating costs
Exceptional items
Other operating costs (net)
Profit/(Loss) from operations
Profit/(Loss) from operations
Depreciation and amortisation
EBITDA
EBITDA (before exceptional items)
Accoya wood revenue
Licence revenue
Other revenue
Total Revenue
Cost of sales
Gross profit
Other operating costs
Profit/(Loss) from operations
Profit/(Loss) from operations
Depreciation and amortisation
EBITDA
EBITDA (before exceptional items)
Accoya
€’000
50,655
1,576
4,268
56,499
(42,175)
14,324
(10,648)
635
(10,013)
4,311
4,311
2,357
6,668
6,033
Accoya
€’000
43,466
2,774
5,451
51,691
(34,597)
17,094
(10,273)
6,821
6,821
2,398
9,219
9,219
2017
Tricoya
€’000
Corporate
€’000
Research &
Development
€’000
–
–
–
–
–
–
(4,344)
(517)
(4,861)
(4,861)
(4,861)
133
(4,728)
(4,211)
–
–
–
–
–
–
(1,763)
–
(1,763)
(1,763)
(1,763)
52
(1,711)
(1,711)
2016
Corporate
€’000
Research &
Development
€’000
–
–
–
–
–
–
–
–
–
–
–
–
(4,998)
(4,998)
(1,939)
(1,939)
TOTAL
€’000
50,655
1,576
4,298
56,529
(42,175)
14,354
(18,273)
118
(18,155)
(3,801)
(3,801)
2,713
(1,088)
(1,206)
TOTAL
€’000
43,466
2,849
6,454
52,769
(34,597)
18,172
(18,460)
(288)
(4,998)
(1,939)
(288)
84
(4,914)
(4,914)
47
(1,892)
(1,892)
2,672
2,384
2,384
–
–
30
30
–
30
(1,518)
–
(1,518)
(1,488)
(1,488)
171
(1,317)
(1,317)
Tricoya
€’000
–
75
1,003
1,078
–
1,078
(1,250)
(172)
(172)
143
(29)
(29)
Note in respect of restatement of segmental reporting note: In the previous year the results had been allocated between
Manufacturing, R&D and Administation/Business Development segments. Following the formation of the Tricoya Consortium,
results have been allocated to reflect the business more appropriately. As a result €1.9m of Accoya related licence and other
revenue previously included in the Licensing, Management and Business Development segment has been included the Accoya
segment (2016: €4.3m). In addition all Accoya specific costs previously included in the Licensing, Management and Business
Development segment including €3.5m of Sales & Marketing, Information Technology and Intellectual Property costs have been
allocated to the Accoya segment (2016: €3.4m).
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 81
Corporate
Corporate costs are those costs not directly attributable to Accoya, Tricoya or Research and Development activities.
This includes management and the Group’s corporate and general administration costs including the head office in
London. Headcount = 15 (2016: 14)
Accoya
Revenue includes the sale of Accoya, licence income and other revenue, principally relating to the sale of acetic acid
and other licensing related income.
All costs of sales are allocated against manufacturing activities in Arnhem unless they can be directly attributable
to a licensee. Other operating costs include depreciation of the Arnhem property, plant and equipment together
with all other costs associated with the operation of the Arnhem manufacturing site, including directly attributable
administration, sales and marketing costs. Headcount = 96 (2016: 92)
The below table shows details of reconciling items to show both Accoya EBITDA and Accoya Manufacturing gross
profit, both including and excluding licence and licensing related income, which has been presented given the
inclusion of items which can be more variable or one-off.
Accoya segmental underlying EBITDA
Accoya Licence Income
Other income, predominantly for marketing services
Accoya segmental underlying EBITDA (excluding Licence Income)
Accoya segmental gross profit
Accoya Licence Income
Other income, predominantly for marketing services
Accoya manufacturing gross profit
2017
€’000
6,033
(1,576)
(338)
4,118
14,324
(1,576)
(338)
12,410
2016
€’000
9,219
(2,774)
(1,570)
4,875
17,094
(2,774)
(1,570)
12,750
Tricoya
Revenue and costs are those attributable to the business development of the Tricoya® process and establishment
of Tricoya Hull Plant. Headcount = 4 (2016: 3), noting a substantial proportion of the costs to date have been
incurred via recharges from other parts of the Group or have resulted from contractors.
Research and Development
Research and Development costs are those associated with the Accoya® and Tricoya® processes. Costs exclude
those which have been capitalised in accordance with IFRS. (see note 16). Headcount = 9 (2016: 12)
Assets and liabilities cannot be readily allocated to the three segments and therefore no additional segmental
information has been disclosed.
Analysis of Revenue by geographical area of customers:
UK and Ireland
Rest of Europe
Benelux
Americas
Asia–Pacific
Rest of World
2017
€’000
25,307
12,984
7,992
5,810
4,009
427
2016
€’000
21,426
14,085
7,764
4,846
4,382
266
56,529
52,769
Revenue generated from three customers exceeded 10% of Group revenue of 2017. This included 93% of the
revenue from the rest of Europe and relates to a mixture of Accoya and licensing revenue. In addition two other
customers represented 33% and 31% respectively, of the revenue from the United Kingdom and Ireland and
relates to Accoya revenue. Revenue generated from three customers exceeded 10% of Group revenue in 2016.
(47% of the revenue from the rest of Europe, and 38% and 32% respectively, of the revenue from the United
Kingdom and Ireland).
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 82
3. Segmental reporting continued
Analysis of non–current assets (Other than financial assets and deferred tax):
UK
Other countries
Un-allocated – Goodwill
2017
€’000
7,776
20,513
4,231
32,520
2016
€’000
7,806
19,215
4,231
31,252
The segmental assets in the current year and the previous year were predominantly held in Europe. Additions to
property, plant, equipment and intangible assets in the current year and the previous year were predominantly
incurred in Europe. There are no significant intersegment revenues.
4. Other operating costs
Other operating costs consist of the operating costs, other than the cost of sales, associated with the operation of
the plant in Arnhem and the offices in Dallas and London (pre December 2015 Windsor):
Sales and marketing
Research and development
Depreciation and amortisation
Other operating costs
Administration costs
Exceptional Items
2017
€’000
3,773
1,711
2,713
3,243
6,833
517
2016
€’000
3,745
1,892
2,672
3,752
6,399
–
18,790
18,460
Note: allocation of operating costs includes representing of 2016 numbers in line with the updated segmental analysis as per note 3.
During the period, €525,000 (2016: €420,000) of development costs were capitalised and included in intangible
fixed assets, including €462,000 (2016: €282,000) which were capitalised within Tricoya Technologies Limited
(‘TTL’). In addition €637,000 of internal costs have been capitalised and are included within tangible fixed assets in
relation to the expansion of our plant in Arnhem, Netherlands (2016: €367,000).
Other operating costs largely relate to costs associated with the Group’s manufacturing office in the Netherlands,
excluding research & development costs.
Administration costs also include the costs associated with the Group’s head office in London, the US office in
Dallas together with business development and management costs. Exceptional costs in the current year are set
out in note 5.
5. Exceptional items
Agreements were reached in August 2016 for the sale and leaseback for the land in Arnhem, resulting in proceeds
of €4.2m received in the period and a gain of €0.6m as a result of the book value of the land being lower. Under the
arrangements, the landlord has agreed to construct a new warehouse and office building which will be connected
to the Group’s existing manufacturing site. This building will be built by the landlord and leased to the Group over
a 20 year period with further option to renew. The landlord is the same landlord that the Group sold land and
buildings to in 2011 and 2012 associated with the existing manufacturing plant.
The above exceptional gain was partly offset by €0.5m of costs incurred in the period in relation to advisory fees
for business development activities as the Group pursued a one-off long-term opportunity.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 6. Employees
Staff costs (including Directors) consist of:
Wages and salaries
Social security costs
Other pension costs
Share based payments
83
2017
€’000
2016
€’000
8,783
1,186
617
908
11,494
8,403
1,144
567
1,009
11,123
The average monthly number of employees, including Executive Directors, during the year was as follows:
Sales and marketing, administration, research and engineering
Operating
7. Directors’ remuneration
Directors’ remuneration consists of:
Directors' emoluments
Company contributions to money purchase pension schemes
Compensation of key management personnel included the following amounts:
Paul Clegg
Hans Pauli
William Rudge
Salary, bonus
and short
term benefits
€’000
Share based
payments
charge
€’000
Pension
€’000
486
326
262
1,074
30
12
9
51
210
87
62
359
Number
Number
78
46
124
2017
€’000
1,317
51
1,368
2017
Total
€’000
726
425
333
1,484
75
46
121
2016
€’000
1,302
55
1,357
2016
Total
€’000
1,020
426
322
1,768
The Group made contributions to 2 (2016: 3) Directors’ personal pension plans, with Paul Clegg receiving cash in
lieu of pension from 1 April 2016.
The figures in the above table are impacted by foreign exchange noting that the remuneration for P Clegg and
W Rudge are denominated in Pounds Sterling. Their total remuneration decreased by 18% and increased by 17%
respectively, when excluding the impact of foreign exchange.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 84
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
8. Operating loss
This has been arrived at after charging:
Staff costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
Foreign exchange (gains)/losses
Research & Development (excluding staff costs)
Loss on disposal of property, plant and equipment
Fees payable to the Company's auditors for the audit of the Company's annual financial
statements
Fees payable to the Company’s auditors for other services:
– audit of the Company's subsidiaries pursuant to legislation
– audit related assurance services
Total audit and audit related services:
– tax compliance services
– all other services*
Total tax and other services:
2017
€’000
2016
€’000
11,494
2,157
556
1,239
(403)
873
79
65
112
22
199
87
289
376
11,123
2,148
524
933
47
634
35
74
106
27
207
107
10
117
* Note: Other services payable to the Company’s auditors excludes €0.3m attributable to the Firm Placing and Open offer which
completed in the subsequent financial year, and will be deducted from share premium.
9. Tricoya Technologies Limited
Tricoya Technologies Limited (‘TTL’) was incorporated in order to develop and exploit the Group’s Tricoya®
technology for use within the worldwide panel products market, which is estimated to be worth more than €60
billion annually.
On 29 March 2017 the Group announced the entry into and successful completion of its agreements for the
financing, construction and operation of the world’s first Tricoya wood elements acetylation plant in Hull with its
TTL consortium investors, being BP, Medite, BGF and Volantis.
The Hull plant will have an initial production capacity of 30,000 tonnes per annum (tpa) (sufficient to manufacture
40,000 cubic meters of panels) and scope to expand. Approximately 40% of the plant’s output is expected to be
sold or paid for under an off-take agreement with Medite; cash flow break-even is at approximately 40% production
capacity. The plant is expected to cost approximately €61m, with a further approximately €15m required for
continued market seeding, marketing, IP development and engineering functions to cash break-even.
Structurally, Accsys, BP Ventures, Medite, BGF and Volantis have invested into TTL. TTL has then invested,
alongside BP Chemicals and Medite, in Tricoya Ventures UK Limited (‘TVUK’), a special purpose subsidiary of TTL
that will construct, own and operate the Hull Plant.
BP will invest a total of €20.3 million in the Tricoya Project. BP Ventures, BP’s venture capital arm, invested
€6.6 million as equity into TTL by 31 March 2017 to benefit from the long-term opportunity that the Tricoya
Consortium believes exists in respect of exploiting Tricoya globally. BP Chemicals will contribute up to €13.7
million as equity in TVUK, aligning its interest with the plant it is supplying. €2.3 million of the €13.7 million TVUK
equity funding had been received by 31 March 2017, with the remaining €11.4 million to be invested during the
construction of the Hull plant.
Medite’s investment in the Tricoya Project will be €11 million, with €7 million invested as equity into TTL and up to
€4 million as equity into TVUK, thereby aligning its interest in both the manufacturing and the longer term global
success of Tricoya. At 31 March 2017 all €7 million of TTL equity funding and €0.9 million of the TVUK equity
funding had been received, with the remaining €3.1 million to be invested during the construction of the Hull plant.
TTL will invest €28.5 million in TVUK, having invested €5.2m in March 2017 and committed to contribute a further
€23.3m during construction of the Hull plant.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 85
In October 2012 the Group contributed all of its Tricoya intellectual property and historical development into TTL
by way of exclusive licence, with rights for TTL to exploit the same on a global basis.
The Group agreed and funded a further €18.4 million of cash investment in March 2017 by way of equity
subscription in TTL, resulting in a total equity interest of 74.6%. This equity subscription is funded by the Group’s
issue of Loan Notes to BGF and Volantis.
The Group is expected to increase its total equity interest in TTL to 75.9% over the next two years as a result of the
continued supply by the Group of lower priced Accoya® to Medite to enable continued market development ahead
of the completion of the Hull Plant.
BGF and Volantis have invested an aggregate of £19 million as financial investors into both the Group and TTL. BGF
and Volantis have agreed to invest on similar terms but are investing separately, with BGF accounting for 65% of
the £19 million total.
In addition, TVUK has entered a six-year €17.2 million (€15 million net) finance facility agreement with The Royal
Bank of Scotland Plc in respect of the construction and operation of the Hull Plant.
The Group has consolidated the results of both TTL and TVUK (TTL Group) as subsidiaries, as it exercises the power
to govern the entities, as required by IFRS 10 guidance. The non-controlling interests in both entities has been
recognised in these Group financial statements.
The TTL Group consists of Tricoya Technologies Limited and its subsidiary, Tricoya Ventures UK Limited. The TTL
Group income statement and balance sheet are set out below:
TTL Group income statement:
Revenue
Costs
Staff costs
Research & development (excluding staff costs)
Intellectual Property
Sales & marketing
Amortisation
EBIT
EBIT attributable to Accsys shareholders
TTL Group balance sheet:
Non–current assets
Intangible assets
Property, plant and equipment
Current assets
Receivables due within one year
Cash and cash equivalents
Current liabilities
Trade and other payables
Net current assets
Net assets
Value attributable to Accsys Technologies
Consolidated
2017
€’000
Consolidated
2016
€’000
–
318
(1,145)
(200)
(606)
(12)
(171)
(864)
(142)
(303)
(214)
(143)
(2,134)
(1,348)
(1,991)
(1,338)
2017
€’000
2016
€’000
3,246
1,440
4,686
612
36,386
36,998
3,065
–
3,065
230
1,519
1,749
(3,900)
(2,220)
33,098
37,784
25,164
(471)
2,594
2,533
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
86
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
10. Finance income
Interest receivable on bank and other deposits
11. Finance expense
Arnhem land sale and leaseback finance charge
Foreign exchange loss on loan notes
Other loan note related finance expenses
Other finance expenses
12. Tax expense
(a) Tax recognised in the statement of comprehensive income comprises:
Current tax expense
UK Corporation tax on profits for the year
Research and development tax credit in respect of current year
Overseas tax at rate of 15%
Overseas tax at rate of 25%
Deferred Tax
Utilisation of deferred tax asset
Total tax charge reported in the statement of comprehensive income
2017
€’000
2
2017
€’000
173
257
13
117
560
2016
€’000
13
2016
€’000
181
–
–
10
191
2017
€’000
2016
€’000
–
(274)
(274)
12
928
–
666
–
(256)
(256)
(29)
687
–
402
(b) The tax credit for the period is lower than the standard rate of corporation tax in the UK (2017: 20%, 2016: 20%) due to:
Loss profit before tax
Expected tax credit at 20% (2016 – 20%)
Expenses not deductible in determining taxable profit
(Over)/Under provision in respect of prior years
Tax losses for which no deferred income tax asset was recognised
Effects of overseas taxation
Other temporary differences
Research and development tax credit in respect of prior years
Research and development tax credit in respect of current year
Total tax charge reported in the statement of comprehensive income
2017
€’000
(4,359)
(872)
176
(114)
1,593
40
117
(34)
(240)
666
2016
€’000
(466)
(93)
120
183
294
145
9
(58)
(198)
402
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 (on 26 October 2015)
and Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to reduce the rate to 19% from
1 April 2017 and to 17% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these
enacted tax rates and reflected in these financial statements.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 13. Dividends Paid
Final Dividend €Nil (2016: €Nil) per Ordinary share proposed
and paid during year relating to the previous year’s results
14. Loss per share
87
2017
€’000
2016
€’000
–
–
The calculation of loss per ordinary share is based on loss after tax and the weighted average number of ordinary
shares in issue during the year.
Basic and diluted earnings per share
Weighted average number of Ordinary shares in issue ('000)
Loss for the year (€'000)
Basic and diluted loss per share
Before
exceptional
item
2017
Total
2017
Total
2016
90,442
90,442
89,568
(5,000)
(4,882)
(858)
€(0.06)
€(0.05)
€ (0.01)
Basic and diluted losses per share are based upon the same figures. There are no dilutive share options as these
would increase the loss per share.
15. Share based payments
The Group operates a number of share schemes which give rise to a share based payment charge. The Group
operates a Long Term Incentive Plan (‘LTIP’) in order to reward members of the senior management team and the
executive directors. As part of the award of nil costs options under the LTIP in 2013, the recipients relinquished
all share options that they held which had been awarded under the 2005 and 2008 Share Option plans. Other
employees continue to hold options awarded under these earlier schemes.
In addition, the Group operated an Employee Share Participation Plan, which was available to all employees, and
also made awards under the Employee Benefit Trust. Details of all these schemes are given below.
Options – total
The following figures take into account options awarded under the LTIP, together with share options awarded in
previous years under the 2005 and 2008 Share Option schemes.
Outstanding options granted are as follows:
Date of grant
28 March 2007
20 November 2007
18 June 2008
8 December 2008
27 July 2010
1 August 2011
19 September 2013 (LTIP)
24 June 2016 (LTIP)
Total
Number of outstanding
options at 31 March
Weighted average remaining
contractual life, in years
2017
2016
2017
2016
–
48,444
8,498
25,211
115,586
48,444
8,498
37,110
164,321
164,321
140,000
140,000
2,472,550
4,103,456
1,070,255
–
3,929,279
4,617,415
–
0.6
1.3
1.7
3.3
4.3
6.5
9.3
6.9
1.0
1.6
2.3
2.7
4.3
5.3
7.5
–
6.9
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 88
15. Share based payments continued
Options - total continued
Movements in the weighted average values are as follows:
Outstanding at 31 March 2015
Forfeited during the year
Exercised during the year
Outstanding at 31 March 2016
Granted during the year
Forfeited during the year
Expired during the year
Outstanding at 31 March 2017
Weighted
average
exercise
price
Number
€0.48
4,812,589
€0.00
(175,174)
€0.50
(20,000)
€0.50
4,617,415
€0.00
1,070,255
€0.04 (1,642,805)
€9.15
(115,586)
€0.30 3,929,279
The exercise price of options outstanding at the end of the year ranged between €nil (for LTIP options) and €12.90
(2016: €nil and €12.90) and their weighted average contractual life was 6.9 years as per table (2016: 6.9 years).
Of the total number of options outstanding at the end of the year, 183,532 (2016: 183,532) had vested and were
exercisable at the end of the year. No options were exercised in the current year (2016: 20,000).
Long Term Incentive Plan (‘LTIP’)
In 2013, the Group established a Long Term Incentive Plan, the participants of which are key members of the Senior
Management Team, including Executive Directors. The establishment of the LTIP was approved by the shareholders
at the AGM in September 2013.
A prerequisite of participation in the LTIP in 2013 was for the beneficiaries to agree to the cancellation of their entire
outstanding share options, providing the Company with a 5% reduction in the level of dilution to make the new
awards. A cancellation was agreed as the most appropriate action as it would focus the management team on the
new LTIP and not on historical awards or arrangements.
LTIP overview
Under the LTIP, awards can be granted on a discretionary basis to key members of the management team.
In 2013, an initial ‘one off’ grant was made in order to focus the management team on the growth of the
Company over the next three years. Awards were granted in the form of nil–cost options and consist of the
following ‘elements’:
Element
Objective
Description
A
B
C
Retention based
award to lock-in
executives who
have contributed to
the turnaround
In consideration to agreeing to the cancellation of the participant’s existing
options, a proportion of the new share awards were to vest on continuity of
employment over the next three years.
To ensure there is no value shift to the participants via the cancellation, this
element required an additional three years of services from the participant and
were to be forfeited if the share price at the end of the performance period was
below €0.65.
Performance based
share award
This element aligned the participant to the future success of the Company
by linking the level of vesting to EBITDA and share price growth against the
constituents of the MSCI Europe Index (or another other broad based European
index as deemed appropriate by the Remuneration Committee).
Exceptional
performance
multiplier
This element ensured that if significant value was created for shareholders
then participants would be entitled to receive an appropriate proportion of this
value.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
89
2013 LTIP Award performance conditions and 2016 outcome
Element A – Vesting was contingent upon continued employment for three years and share price not falling
below €0.65 at the end of the performance period, being the three years ending 20 August 2016. 100% of this
element vested.
Element B – was measured against two equally weighted performance conditions:
EBITDA
(50% of Element B)
Threshold
€0m
Target
€1.6m
Maximum
€4m
Share price growth
(50% of Element B)
Median of the
constituents of the
MSCI Europe Index
60th percentile of the
constituents of the
MSCI Europe Index
Upper quartile of the
constituents of the
MSCI Europe Index
2016 Outcome
€2.38m2 equated to
78% of this element
vesting
Share price growth
of 14% was between
the 50th and 60th
percentile equating
to 29.5% of this
element vesting
Potential Vesting
level1
25%
60%
100%
Notes:
1. Vesting is on a straight line basis between the respective EBITDA and share price targets
2. Includes €0.3m adjustment made to reflect circumstances not foreseen at time of award grant
Element C – This element was to vest in full if the share price is at or above €1.30 at the end of the performance
period. This was not met and nil awards vested.
4,103,456 nil cost options awarded in 2013 were unvested as at 1 April 2016. Of these, 2,472,550 vested in
the period as a result of meeting the performance conditions set out above, with the remaining 1,630,906
being forfeited.
Awards made in June 2016 and LTIP Award performance conditions
Following the vesting of the LTIPs awarded in September 2013, a further award was made to members of the
Senior Management Team, including Executive Directors. A total of 1,070,255 nil cost options were awarded.
The LTIP plan rules were amended in November 2015 such that awards made in summer 2016 are subject to a 3
year performance period (i.e. year end March 2019) and a further 2 year holding period. In addition, awards are
also subject to malus/ claw–back provisions.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 90
15. Share based payments continued
Long Term Incentive Plan (‘LTIP’) continued
Element A (Share price element)
In relation to 50% of award, the performance target will be achieved in relation to:
• 25% for this Element if the share price growth is greater than the median of the comparator group; and
• 100% for this Element if the share price growth is greater than the upper quartile of the comparator group
with straight–line vesting between these points.
Element B (EBITDA element)
In relation to 50% of award, the performance target will be achieved in relation to:
• 25% for this Element if EBITDA is greater than or equal to €0.06 per Share;
• 50% for this Element if EBITDA is greater than or equal to €0.08 Share; and
• 100% for this Element if EBITDA is greater than or equal to €0.10 Share with straight–line vesting between
these points.
The comparator group for the purposes of Element A is the constituent companies of the FTSE AIM All Share
Index (excluding the Resource and Financial Services Sectors) as determined by the Remuneration Committee.
Element
Grant date
Share price at grant date (€)
Exercise price (€)
Expected life (years)
Contractual life (years)
Vesting conditions (Details set out above)
Risk free rate
Expected volatility
Expected dividend yield
Fair value of option
Element A
(Share price growth)
27 Jun 16
Element B
(EBITDA per Share)
27 Jun 16
0.81
0.00
3
10
Share Price
-0.64%
20%
0%
€0.187
0.81
0.00
3
10
EBITDA
-0.64%
20%
0%
€0.749
2005 and 2008 Share Option schemes
The following share options awarded under the Group’s 2005 and 2008 Share Option schemes continued to exist.
No options were granted under the 2005 or 2008 Share Option schemes in the current or previous period.
Options granted on 20 November 2007 vest to one third of the options granted upon achievement of each
of the following:
• Annual Accoya® wood production exceeds 23,000m3 in a financial year
• Annual Accoya® wood sales revenue exceeds €26 million in financial year
• The second pair of reactors in the wood modification plant are processing more than 25 batches per month
Once vested these options may be exercised until 20 November 2017. At 31 March 2016, 48,444 (2015: 48,444)
of these options were outstanding at an exercise price of €12.90.
Options granted on 18 June 2008 vest to one third of the options granted upon achievement of each of
the following:
• Announcement of audited Annual Accoya® wood sales revenue exceeds €20 million in financial year
• Announcement of audited annual Group distributable earnings exceeding €15 million
• Announcement of audited cumulative €75 million gross licence revenue recognised under Group
accounting policies
Once vested these options may be exercised until 18 June 2018. At 31 March 2016, 8,498 (2015: 8,498) of these
options were outstanding at an exercise price of €9.90.
Options granted on 8 December 2008 vest to one third of the options granted upon achievement of each of
the following:
• Announcement of audited Annual Accoya® wood sales revenue exceeds €20 million in financial year
• Announcement of audited annual Group distributable earnings exceeding €15 million
• Announcement of audited Cumulative €75 million gross licence revenue recognised under Group
accounting policies
Once vested these options may be exercised until 8 December 2018. At 31 March 2016, 37,110 (2015: 37,110) of these
options were outstanding at an exercise price of €4.85.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
91
Options granted on 27 July 2010 were partially exchanged in the period for new awards issued under the LTIP. 30% of
the options vest on achievement of median TSR. Once vested, these options may be exercised until 27 July 2020. Full
vesting of the options granted occurs upon achievement of upper quartile TSR measured over the three year period.
At 31 March 2016, 164,321 (2015: 164,321) of these options were outstanding at an exercise price of €1.20.
Options granted on 1 August 2011 were partially exchanged in the period for new awards issued under the
LTIP. 30% of the options vest on achievement of median TSR. Full vesting of the options granted occurs upon
achievement of upper quartile TSR measured over the three year period. Once vested, these options may be
exercised until 1 August 2021. At 31 March 2016, 140,000 (2015: 160,000) of these options were outstanding at an
exercise price of €0.50.
TSR is measured on a relative basis compared to the FTSE Small Cap index over a three year period from grant
date. Unless discretion is exercised by the Nomination & Remuneration Committee, all options are forfeit following
an option holder’s termination of contract.
The fair value of share options granted under the 2005 and 2008 Share Option Schemes during the previous years
was calculated based on a modified Black-Scholes model assuming inputs shown below for more recent awards:
Grant date
Share price at grant date (€)
Exercise price (€)
Expected life (years)
Contractual life (years)
Risk free rate
Expected volatility
Expected dividend yield
Fair value of option
August 2011
July 2010
0.50
0.50
3
10
1.54%
85%
0%
1.70
1.70
3
10
2.30%
60%
0%
€0.200
€0.532
The figures in the table and notes above have been adjusted to reflect the 5 for 1 share consolidation which
became effective on 12 September 2014. Volatility was estimated by reference to the historic volatility since
October 2005 when the Company’s shares were listed on AIM. The resulting fair value is expensed over the
vesting period of the options on the assumption that a proportion of options will lapse over the service period
as employees leave the Group.
Employee Benefit Trust – Share bonus award
Following a share issue on 4 July 2016 as part of the annual bonus, in connection with the employee remuneration
and incentivisation arrangements for the period from 1 April 2015 to 31 March 2016, 679,435 (2016: 951,295) new
Ordinary shares were held by an Employee Benefit Trust, the beneficiaries of which are primarily the Executive
Directors and Senior Managers. Such new Ordinary shares vest if the employees remain in employment with the
Company at the vesting date, being 1 July 2017 (subject to certain other provisions including regulations, good-
leaver, take-over and nomination and remuneration committee discretion provisions). As at 31 March 2017, the
Employment Benefit Trust was consolidated by the Company and the 679,435 shares are recorded as Own Shares
within equity. During the period, 938,449 Ordinary shares awarded in the prior year vested.
Employee Share Participation Plan
During the prior year, the Company operated the Employee Share Participation Plan (the ‘Plan’). The Plan
was intended to promote the long term growth and profitability of Accsys by providing employees with an
opportunity to acquire an ownership interest in new ordinary shares (‘Shares’) in the Company as an additional
benefit of employment.
Under the terms of the Plan, the Company issues these Shares to a trust for the benefit of the subscribing
employees. The Shares are released to employees after one year, together with an additional Share on a 1 for 1
matched basis provided the employee has remained in the employment of Accsys at that point in time (subject
to good leaver provisions). The Plan is in line with industry approved employee share plans and was open for
subscription by employees twice in the year following release of annual and half yearly financial results. The
maximum amount available for subscription by any employee is €5,000 per annum.
During the year ended 31 March 2017 the plan was not open for subscription. However during the year, 1 for 1
Matching shares were awarded in respect of subscriptions that were made in the previous year as a result of all
participants continuing to remain in employment at the point of vesting. 63,909 Matching shares were issued to
employees in July 2016 and 16,302 shares were issued in January 2017.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 92
16. Intangible assets
Cost
At 31 March 2015
Additions
At 31 March 2016
Additions
At 31 March 2017
Accumulated amortisation
At 31 March 2015
Amortisation
At 31 March 2016
Amortisation
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
Internal
Development
costs
€’000
Intellectual
property
rights
€’000
Goodwill
€’000
Total
€’000
4,037
1,490
5,527
415
5,942
358
249
607
556
1,163
4,779
4,920
3,679
73,292
–
73,292
–
73,292
71,188
275
71,463
–
71,463
1,829
1,829
2,104
4,231
–
4,231
–
4,231
–
–
–
–
–
4,231
4,231
4,231
81,560
1,490
83,050
415
83,465
71,546
524
72,070
556
72,626
10,839
10,980
10,014
The carrying value of internal development costs, intellectual property rights and goodwill on consolidation are
considered part of a single cash generating unit which incorporates the manufacturing and licensing operations
given the manufacturing reliance on IP of the Group. The recoverable amount of internal development costs,
intellectual property rights and goodwill relating to this operation is determined based on a value in use calculation
which uses cash flow projections based on board approved financial budgets. Cash flows have been projected
for a period of 6 years plus assumptions concerning a terminal value and based on a pre-tax discount rate of 13%
per annum (2016: 20%). The key assumption used in the value in use calculations is the level of future licence fees
and manufacturing revenues estimated by management over the budget period. These have been based on past
experience and expected future revenues. The Directors have considered whether a reasonably possible change in
assumptions may result in an impairment. An impairment would arise if the Group failed to secure future licence or
licence related income and if the total volume of forecast Accoya and Tricoya manufactured is lower than projected
sales in future years.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 93
Land and
buildings
€’000
Plant and
machinery
€’000
Office
equipment
€’000
5,251
–
–
–
28,365
2,474
(114)
–
822
435
(10)
(9)
Total
€’000
34,438
2,909
(124)
(9)
5,251
30,725
1,238
37,214
–
7,102
(71)
–
133
–
8
7,235
(3,677)
8
(3,606)
–
1,645
424
117
–
–
541
117
–
–
658
37,756
1,379
40,780
13,732
1,912
(76)
–
734
119
(12)
(8)
14,890
2,148
(88)
(8)
15,568
833
16,942
1,869
(9)
–
171
–
9
2,157
(9)
9
17,428
1,013
19,099
987
4,710
4,827
20,328
15,157
14,633
366
405
88
21,681
20,272
19,548
17. Property, plant and equipment
Cost or valuation
At 31 March 2015
Additions
Disposals
Foreign currency translation (loss)
At 31 March 2016
Additions
Disposals
Foreign currency translation gain
At 31 March 2017
Accumulated depreciation
At 31 March 2015
Charge for the year
Disposals
Foreign currency translation (loss)
At 31 March 2016
Charge for the year
Disposals
Foreign currency translation gain
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
Included within property, plant and equipment are assets with an initial cost of €7,544,000 and a net book
value at 31 March 2017 of €4,442,000 which has been accounted for as a finance lease. (See note 28). Assets
with a net book value of €18.8m are subject to security agreements associated with the Rhodia Acetow loan
facility. See note 30.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 94
18. Other financial assets
Available for sale investments
2017
€’000
–
2016
€’000
–
Accsys Technologies PLC has previously purchased a total of 21,666,734 unlisted ordinary shares in Diamond Wood
China. On 23 December 2016, Cleantech Building Materials PLC acquired Diamond Wood China. After the year-end,
on 19 April 2017 Cleantech Building Materials acquired the 21,666,734 shares previously owned by the Company
and in return the Company has been issued with 520,001 shares in Cleantech Building Materials PLC, a listed
company trading on the Nasdaq First North market in Copenhagen.
The carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair value,
as there was no active market for these shares as at 31 March 2017, and there is significant uncertainty over the
future of Diamond Wood, and as such a reliable fair value cannot be calculated.
The historical cost of the listed shares held at 31 March 2017 is €10m (2016: €10m). However, a provision for the
impairment of the entire balance of €10m continues to be recorded as at 31 March 2017.
19. Deferred Taxation
The Group has a deferred tax asset of €nil (2016: €nil) relating to trading losses brought forward.
The Group also has an unrecognised deferred tax asset of €24.0m (2016: €23.2m) which is largely in respect of
trading losses of the UK subsidiaries. The deferred tax asset has not been recognised due to the uncertainty of
the timing of future expected profits of the related legal entities which is dependent on the profits attributable to
licensing and future manufacturing income.
20. Subsidiaries
A list of subsidiary investments, including the name, country of incorporation and proportion of ownership interest
is given in note 4 to the Company’s separate financial statements.
21. Inventories
Raw materials and work in progress
Finished goods
2017
€’000
6,447
5,349
11,796
2016
€’000
2,534
5,811
8,345
The amount of inventories recognised as an expense during the year was €39,030,867 (2016: €30,985,787). The
cost of inventories recognised as an expense includes a net debit of €15,549 (2016: credit of €203,129) in respect of
the inventories sold in the period which had previously been written down to net realisable value.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 22. Trade and other receivables
Trade receivables
Other receivables
Prepayments
Accrued income
95
2017
€’000
4,133
180
3,269
30
7,612
2016
€’000
4,051
180
916
500
5,647
Prepayments increased as at 31 March 2017 to €3.3m, due in large part to costs associated with the Company’s
capital raise, which completed post year end (see note 33).
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair
value. The majority of trade and other receivables is denominated in Euros, with €637,000 of the trade and other
receivables denominated in US Dollars (2016: €380,000).
The age of receivables past due but not impaired is as follows:
Up to 30 days overdue
Over 30 days and up to 60 days overdue
Over 60 days and up to 90 days overdue
Over 90 days overdue
2017
€’000
251
–
–
36
288
2016
€’000
258
61
–
4
323
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the
trade receivables from the date credit was initially granted up to the reporting date. Included in the provision for
doubtful debts are individually impaired trade receivables and accrued income with a balance of €25,001,000
(2016: €25,001,000) due from Diamond Wood.
Movement in provision for doubtful debts:
Balance at the beginning of the period
Net increase/(release) of impairment if not required
Balance at the end of the period
Summary of Receivable Impairments:
Trade receivables – Accoya® wood*
* The impairment of Accoya® wood receivables related to two Accoya® customers.
2017
€’000
2016
€’000
25,002
25,021
(1)
(19)
25,001
25,002
2017
€’000
2016
€’000
–
–
1
1
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 96
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
23. Trade and other payables
Trade payables
Other taxes and social security payable
Other payables
Accruals and deferred income
24. Share capital
Allotted – Equity share capital
90,643,585 Ordinary shares of €0.05 each (2016: 89,890,019 Ordinary shares of €0.05 each)
2017
€’000
6,618
201
–
5,705
12,524
2016
€’000
4,301
321
402
3,039
8,063
2017
€’000
2016
€’000
4,531
4,531
4,495
4,495
In year ended 31 March 2016:
891,044 shares issued on 6 July 2015 and 16,123 shares issued on 10 December 2015 to an Employee Benefit Trust
(‘EBT’) at nominal value.
On 6 July 2015, a total of 20,000 of €0.05 Ordinary shares were released to an employee following the exercise of
options granted in a prior year.
On 14 August 2015, a total of 27,825 of €0.05 Ordinary shares were issued and released to employees together with
27,825 of €0.05 Ordinary shares issued to trust on 18 August 2014.
On 14 August 2015, a total of 63,909 of €0.05 Ordinary shares were issued to a trust under the terms of the
Employee Share Participation Plan. On 11 December 2015, a total of 16,302 of €0.05 Ordinary shares were issued to
a trust under the terms of the Employee Share Participation Plan.
On 20 January 2016, a total of 53,922 of €0.05 Ordinary shares were issued and released to employees together
with 53,922 of €0.05 Ordinary shares issued to trust on 19 January 2015.
In year ended 31 March 2017:
673,355 shares were issued on 4 July 2016 to an Employee Benefit Trust (‘EBT’) at nominal value.
On 15 August 2016, a total of 63,909 of €0.05 Ordinary shares were issued and released to employees together
with 63,909 of €0.05 Ordinary shares issued to an employee trust on 14 August 2015.
On 9 February 2017, a total of 16,302 of €0.05 Ordinary shares were issued and released to employees together
with 16,302 of €0.05 Ordinary shares issued to an employee trust on 26 January 2016.
Post year–ended 31 March 2017:
On 24 April 2017 a total of 20,323,986 of €0.05 Ordinary shares were issued at €0.69 per share, in accordance with
the Company’s capital raise announced on the 29 March 2017 (see note 33).
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 97
25. Other reserves
Balance at 31 March 2016
Share Warrants issued
Issue of subsidiary shares to
non–controlling interests
Issue of subsidiary shares to
Group companies
Balance at 31 March 2017
Capital
redemption
reserve
€000
Warrant
reserve
€000
(151)
–
299
–
148
–
–
–
–
–
Merger
reserve
€000
106,707
–
–
–
Other
reserve
€000
885
–
Total Other
reserves
€000
107,441
–
6,192
6,491
(576)
(576)
106,707
6,501
113,356
The closing balance of the capital redemption reserve represents the amounts transferred from share capital on
redemption of deferred shares in a previous period. The movement in the current period reflects obligations ceasing
from the investment by BP Ventures into Tricoya Technologies Limited upon the finalisation of the full consortium.
The merger reserve arose prior to transition to IFRS when merger accounting was adopted.
The other reserve represents the amounts received for subsidiary share capital from non-controlling interests (see
note 26).
26. Transactions with non–controlling interests
On 3 February 2016, Tricoya Technologies Limited (‘TTL’) issued 500,000 Series A Preference shares for the
consideration of €1m for 3% equity share capital of TTL.
On 29 March 2017 and earlier in the financial year, TTL issued further Series A Preference shares and transferred
Ordinary shares to non-controlling interests for consideration of €15.79 million, resulting in the following non-
controlling shareholdings:
BP Ventures (9%), Medite (12.1%), BGF (2.8%), Volantis (1.5%)
On 29 March 2017, Tricoya Ventures UK Limited (‘TVUK’) issued Ordinary shares to non-controlling interests for
consideration of €3.26 million, resulting in the following shareholdings:
BP Chemicals (30%), Medite (8.2%)
The total carrying amount of the non-controlling interests in TTL and TVUK at 31 March 2017 was €12.62 million.
The Group recognised an increase in other reserves as summarised below.
Transactions with non–controlling interests
Opening Balance
Carrying amount of non–controlling interests issued
Consideration paid by non–controlling interests
Share issue costs relating to non–controlling interests
Excess of consideration paid recognised in Group's equity
2017
€’000
885
(12,702)
2016
€’000
–
(71)
19,123
1,000
(229)
7,077
(44)
885
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 98
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
27. Commitments under operating leases
The Group leases land, buildings and machinery under non-cancellable operating lease agreements. The total
future value of the minimum lease payments that are due is as follows:
Operating lease payments due
Within one year
In the second to fifth years inclusive
In greater than five years
2017
€’000
2016
€’000
1,019
1,625
173
2,817
1,075
2,901
1,205
5,181
The majority of commitments under operating leases relate to the Group’s offices in the UK, The Netherlands and
U.S.A. and land in The Netherlands which is adjacent to our plant.
During the period the Group entered agreements which are expected to result in new lease agreements
commencing in the year ended 31 March 2018. This includes a lease relating to the land at the Tricoya plant Saltend
site in Hull and a lease over land in Arnhem, following the sale to Bruil in the period. This lease agreement also
includes substantial new warehouse and office facilities which are currently being constructed by Bruil. The building
element will be accounted for as a finance lease – see note 28.
28. Commitments under finance leases
Agreements were reached in August 2011 for the sale and leaseback of the land and buildings in Arnhem for a total
of €4m. €2.2m was received in 2011 with the remaining amount received in the following year, but accounted for as
an operating lease.
In addition, during the prior period agreements were entered into for the lease of office fit-out and furniture for the
London head office for a total of €0.4m.
In addition, in the current period agreements were entered into for the sale of the remaining plot of land completed
in August 2016. Under the agreement with the purchaser, Bruil, they will construct and then lease to Accsys new
warehouse and office facilities. The construction is not expected to complete until later in the new financial year
and therefore no lease has been recognised in the period. A further lease agreement with Bruil was entered into
in the period relating directly to infrastructure work associated with the expansion of the chemical plant. This has
been accounted for as a finance lease, with a new asset and liability of €1.0m being recognised as at 31 March 2017.
These transactions have resulted in a finance lease creditor of €3.1m as at 31 March 2017.
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Present value of lease obligations
Minimum lease payments
2017
€’000
2016
€’000
496
1,770
3,016
375
1,403
1,490
(2,206)
(967)
3,076
2,301
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 29. Commitments under loan agreements
Amounts payable under loan agreements:
Within one year
In the second to fifth years inclusive
In greater than five years
Present value of loan agreements
Loan Notes:
99
2017
€’000
2016
€’000
–
5,407
14,690
20,097
–
–
–
–
On 29 March 2017 the Group issued £16.25 million (€18.38 million) of unsecured fixed rate loan notes, due 2021.
£10.48 million of Loan Notes in principal were issued to Business Growth Fund (‘BGF’), with £5.77 million in
principal issued to Volantis. The BGF loan notes are subject to a 7% fixed interest rate for the duration of their term
and the Volantis loan notes are subject to a 7% fixed interest rate until 31 December 2018, with the interest rate
fixed at 9% thereafter. Interest is rolled up until 31 December 2018 on both loans, with further roll up of interest on
the Volantis loan until six–monthly redemption payments of both loans commence on 31 December 2021 and end
on 30 June 2023.
BGF is an investment company that provides long–term equity funding to growing UK companies to enable them
to execute their strategic plans. Volantis is a global asset management firm specialising in alternative investment
strategies and is owned by Lombard Odier.
Rhodia Acetow Facility:
On 29 December 2016 the Group drew down €2 million of its €9.5 million term loan facility with Rhodia Acetow
GmBH (formerly known as Solvay Acetow GmBH). The facility is to be used to design, procure and build an
extension to the capacity of the Arnhem Plant, with a new reactor for the manufacture of Accoya at a design
capacity of approximately 20,000m3. This facility is secured against existing Arnhem chemical plant and
associated assets and is subject to interest at 7.5% per annum. At 31 March 2017, the Group had €2m (2016:
€nil) borrowed under this facility. Interest is rolled up until quarterly repayment of the loan commences on
29 December 2018.
Tricoya facility:
On 29 March 2017 the Company’s subsidiary (Tricoya Ventures UK Limited) entered into a six–year €17.2 million
(€15 million net) finance facility agreement with the Royal Bank of Scotland Plc in respect of the construction
and operation of the Hull Plant. The facility is secured by fixed and floating charges over all assets of Tricoya
Ventures UK Limited. At 31 March 2017, the Group had €nil (2016: €nil) borrowed under the facility which will be
drawn down, as required, once the funds provided by shareholders have been fully utilised. Facility repayments
will commence 12 months after practical completion of the Hull Plant. Interest will accrue at Euribor plus a
margin, with the margin ranging from 325 to 475 basis points.
Trade receivable and inventory facilities:
Trade receivables facility
In August 2016 the Group amended its working capital facility with ABN Commercial Finance, initially agreed
in 2011. The facility is now a €3.0m credit facility secured upon the receivables and inventory of the Accoya
manufacturing business.
Inventories facility
In August 2016 the Group amended its credit facility agreement with ABN AMRO Bank N.V., which had been
initially agreed in 2013. The facility is a contingent liability facility enabling the Group to issue bank guarantees in
order to support the working capital and other operational commitments of the Group with a limit of €1.5m.
Both facilities are subject to interest at 2% above the ABN AMRO base rate of 3.5% as at 31 March 2017 (2016:
3.6%). At 31 March 2017, the Group had €nil (2016: €nil) borrowed under both of the facilities.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 100
30. Equity options
On 2 February 2016 the Company’s subsidiary, Tricoya Technologies Limited, issued Warrants to subscribe for up
to 175,000 of its Series A Preference Shares in favour of BP Ventures Limited (100,000) and Titan Wood Limited
(75,000) at a price of €2.00 per Warrant Share during the ‘Exercise Period’, which started on 2 February 2016 and
runs to the earlier of either (i) 2 February 2021; (ii) the date of an Exit; and (iii) exercise of the Option.
On 29 March 2017, the Company announced the formation of the Tricoya Consortium and as part of this, funding
was agreed with BGF and Volantis (see note 29). In addition to the issue of the Loan Notes the Company granted
options over Ordinary Shares of the Company to BGF and Volantis exercisable at a price of £0.62 per Ordinary
Share at any time until 31 December 2026 (the ‘Options’).
5,838,954 Options were issued to BGF and 3,217,383 Options were issued to Volantis. In addition, the Company
agreed to use its reasonable endeavours to obtain shareholder authority at the subsequent General Meeting to grant
to BGF a further option in respect of 2,610,218 Ordinary Shares and to grant to Volantis a further option in respect of
1,438,284 Ordinary Shares (the ‘Additional Options’).
The necessary resolutions were passed at the General Meeting held on 21 April 2017 and accordingly the Additional
Options are expected to be converted to Options, such that in total 13,104,839 Options will exist (with 8,449,172
attributable to BGF and 4,655,667 attributable to Volantis). This represents 11.8% of the enlarged issued share
capital of the Company, following the Firm Placing and Open offer having been completed in April 2017.
In addition, following the issue of Ordinary Shares by the Company resulting from the Firm Placing and Open offer
the exercise price was adjusted to £0.5971 per Ordinary Share.
31. Financial instruments
Finance lease
Agreements were reached in August 2016 for the sale and leaseback for the land in Arnhem resulting in proceeds
of €4.2m received in the period. A resulting gain of €635,000 was recognised as a result of the book value of
the land being lower than the sale price. Under the arrangements, the landlord has agreed to construct a new
warehouse and office building which will be connected to Accsys’ existing manufacturing site. This building
will be built by the landlord and leased to Accsys over a 20 year period with further option to renew. The
landlord is the same landlord that Accsys sold land and buildings to in 2011 and 2012 associated with the
existing manufacturing plant.
Finance lease creditors of: €1,869,000 as at 31 March 2017 (2016: €1,977,000) relates to the sale and leaseback of
land and buildings in Arnhem in 2011 and 2012 over 15 year lease terms and €255,000 as at 31 March 2017 (2016:
€325,000) relates to a lease of the London head office.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to shareholders.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to owners of the
parent Company, comprising share capital, reserves and accumulated losses.
The Board reviews the capital structure on a regular basis. As part of that review, the Board considers the cost of
capital and the risks associated with each class of capital. Based on the review, the Group will balance its overall
capital structure through new share issues and the raising of debt if required.
No final dividend is proposed in 2017 (2016: €nil). The Board deems it prudent for the Company to protect as
strong a statement of financial position as possible during the current phase of the Company’s growth strategy.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 Categories of financial instruments
Available for Sale investments
Loans and receivables
Trade receivables
Other receivables
Money market deposits in Euro
Money at call in Euro
Money at call in US dollars
Money at call in Sterling
Money at call in New Zealand dollars
Financial liabilities at amortised cost
Trade payables
Finance lease payable
Other Payables
Loan notes and other long term borrowings
101
2017
€’000
–
4,133
180
1,326
18,134
77
21,635
1
2016
€’000
–
4,051
180
2,621
5,210
175
95
85
(6,618)
(4,301)
(3,076)
(2,301)
–
(402)
(20,097)
–
15,695
5,413
Money market deposits have interest rates fixed for less than three months at a weighted average rate of 0.14%
(2016: 0.59%). Money market deposits are held at financial institutions with high credit ratings (Standard & Poor’s
rating of AA).
All assets and liabilities mature within one year except for the finance leases, for which details are given in note 28
and loans, for which details are given in note 29.
Trade payables are payable on various terms, typically not longer than 30 days.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
Financial risk management objectives
The Group’s treasury policy is structured to ensure that adequate financial resources are available for the
development of its business whilst managing its currency, interest rate, counterparty credit and liquidity risks.
The Group’s treasury strategy and policy are developed centrally and approved by the Board.
Foreign currency risk management
The Group’s functional currency is the Euro with the majority of operating costs and balances denominated in
Euros. An increasing proportion of costs will be incurred in pounds sterling as the Group’s activities associated
with the Tricoya plant in Hull increase, although future revenues will be in Euros or other currencies. The group’s
Loan Notes, which were issued to fund these UK based operations, are denominated in pounds sterling. A smaller
proportion of expenditure is incurred in US dollars and pounds sterling. In addition some raw materials, while
priced in Euros, are sourced from countries which are not within the Eurozone. The Group monitors any potential
underlying exposure to other exchange rates. The Group does not currently enter into any hedging arrangements,
although will continue to monitor appropriateness of doing so.
Interest rate risk management
The Group’s borrowings are limited to fixed rate loans with BGF, Volantis and Rhodia Acetow, together with the
sale and leaseback of the Arnhem land and buildings, and the lease of the office fit out and furniture in London.
The interest rate in respect of the unused loan facility agreed with RBS Bank is variable, based on Euribor plus a
variable margin. Therefore the Group is not significantly exposed to interest rate risk in relation to financial liabilities.
Surplus funds are invested in short term interest rate deposits to reduce exposure to changes in interest rates. The
Group does not currently enter into any hedging arrangements, although will review the need to do so in respect of
the variable interest rate loan facility with RBS Bank.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 102
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
31. Financial instruments continued
Credit risk management
The Group is exposed to credit risk due to its trade receivables due from customers and cash deposits with
financial institutions. The Group’s maximum exposure to credit risk is limited to their carrying amount recognised at
the balance sheet date.
The Group ensures that sales are made to customers with an appropriate credit history to reduce the risk where
this is considered necessary. The Directors consider the trade receivables at year end to be of good credit quality
including those that are past due (see note 22). The Group is not exposed to any significant credit risk exposure
in respect of any single counterparty or any group of counterparties with similar characteristics other than the
balances which are provided for as described in note 22.
The Group has credit risk from financial institutions. Cash deposits are placed with a group of financial institutions
with suitable credit ratings in order to manage credit risk with any one financial institution.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity
risk management framework for the management of the Group’s short, medium and long term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and
banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profile
of financial assets and liabilities.
Fair value of financial instruments
In the opinion of the Directors, there is no material difference between the book value and the fair value of all
financial assets and financial liabilities.
32. Capital Commitments
Contracted but not provided for in respect of property, plant and equipment
2017
€’000
38,424
2016
€’000
695
Included in the above, are amounts relating to the Engineering, Procurement and Construction contracts relating
to both the Tricoya plant and the Arnhem expansion project. In addition, the figure includes further commitments
relating to the Arnhem expansion project.
33. Post Balance Sheet Events
On 29 March 2017, Accsys announced the details of a proposed Firm Placing and Open Offer to raise proceeds of
up to approximately €14,023,550 (before expenses) through the issue of 17,400,000 Firm Placing Shares and up to
2,923,986 Open Offer Shares, at the Offer Price of €0.69 per New Ordinary Share.
The Open Offer closed for acceptances on 20 April 2017. Accsys received valid acceptances under the Open
Offer and its Excess Application Facility in respect of 12,965,475 New Ordinary Shares, representing an over-
subscription in excess of four times the 2,923,986 New Ordinary Shares available under the Open Offer and Excess
Application Facility. As applications under the Excess Application Facility could not be satisfied in full, such New
Ordinary Shares available were allocated in such manner as the Directors determined, in their absolute discretion in
accordance with the terms set out in the Prospectus.
The gross proceeds raised under the Open Offer were therefore the maximum amount of €2.0m. Accordingly, the
aggregate amount raised pursuant to the Firm Placing and Open Offer was €14.0m before expenses, being €12.3m
net of expenses.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 103
INDEPENDENT AUDITORS’ REPORT
to the members of Accsys Technologies PLC
Report on the parent company financial statements
Our opinion
In our opinion the Accsys Technologies PLC’s
parent company financial statements (the ‘financial
statements’):
In our opinion, based on the work undertaken in the
course of the audit:
•
the part of the Directors’ Remuneration Report
to be audited has been properly prepared in
accordance with the Companies Act 2006.
•
•
•
give a true and fair view of the state of the parent
company’s affairs as at 31 March 2017;
have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual
Report and Financial Statements (the ‘Annual Report’)
comprise:
•
•
the Company balance sheet as at 31 March 2017;
the notes to the Company financial statements,
which include a summary of significant accounting
policies and other explanatory information.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-
referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been
applied in their preparation of the financial statements
is United Kingdom Accounting Standards, comprising
FRS 101 ‘Reduced Disclosure Framework’, and
applicable law (United Kingdom Generally Accepted
Accounting Practice).
In applying the financial reporting framework,
the Directors have made a number of subjective
judgements, for example in respect of significant
accounting estimates. In making such estimates, they
have made assumptions and considered future events.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
•
the information given in the Strategic Report and
the Directors’ Report for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
In addition, in light of the knowledge and understanding
of the parent company and its environment obtained
in the course of the audit, we are required to report if
we have identified any material misstatements in the
Strategic Report and the Directors’ Report. We have
nothing to report in this respect.
Other matters on which we are required
to report by exception
Adequacy of accounting records and information and
explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
•
•
•
we have not received all the information and
explanations we require for our audit; or
adequate accounting records have not been kept
by the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the financial statements and the part of the
Directors’ Remuneration Report to be audited
are not in agreement with the accounting records
and returns.
We have no exceptions to report arising from this
responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures of
directors’ remuneration specified by law are not made.
We have no exceptions to report arising from this
responsibility.
Responsibilities for the financial statements
and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’
Responsibilities set out on page 65, the directors
are responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable
law and International Standards on Auditing (UK and
Ireland) (‘ISAs (UK & Ireland)’). Those standards require
us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared
for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this
report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 104
INDEPENDENT AUDITORS’ REPORT CONTINUED
to the members of Accsys Technologies PLC
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK
and Ireland). An audit involves obtaining evidence about
the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial
statements are free from material misstatement,
whether caused by fraud or error. This includes an
assessment of:
•
•
whether the accounting policies are appropriate to
the parent company’s circumstances and have been
consistently applied and adequately disclosed;
the reasonableness of significant accounting
estimates made by the directors; and
•
the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing
the directors’ judgements against available evidence,
forming our own judgements, and evaluating the
disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures or
a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements
and to identify any information that is apparently
materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course
of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we
consider the implications for our report.
Other matter
We have reported separately on the Group financial
statements of Accsys Technologies PLC for the year
ended 31 March 2017.
Darryl Phillips (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 June 2017
a) The maintenance and integrity of the Accsys Technologies
PLC website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration
of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to
the financial statements since they were initially presented
on the website.
b) Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 CONDENSED COMPANY BALANCE SHEET
as at 31 March 2017
105
Registered Company 05534340
Fixed assets
Investments in subsidiaries
Property, plant and equipment
Other investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Creditors: amounts falling due after more than one year
Total assets less current liabilities
Capital and reserves
Called up Share capital
Share premium account
Reserve for own shares
Capital redemption reserve
Profit and loss account
Total shareholders' funds
Note
2017
€’000
2016
€’000
4
6
5
14,542
13,658
156
–
197
–
14,698
13,855
7
151,890
130,612
1,338
2,748
153,228
133,360
8
(13,469)
(10,440)
139,759
122,920
9,10
(18,153)
(137)
136,304
136,638
11
12
12
12
12
13
4,531
4,495
128,792
128,792
(33)
148
(47)
148
2,866
3,250
136,304
136,638
The financial statements were approved by the Board and authorised for issue on 19 June 2017 and signed on its
behalf by:
Paul Clegg
William Rudge
Director
Director
The notes on pages 106 to 111 form an integral part of the parent Company financial statements.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
106
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ending 31 March 2017
1. Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The separate financial statements of Accsys Technologies PLC (‘the Company’) have been prepared in accordance
with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101) for the year ended 31 March 2017.
The financial statements have been prepared under the historical cost convention, as modified by the revaluation
of land and buildings and derivative financial assets and financial liabilities measured at fair value through profit or
loss, and in accordance with the Companies Act 2006.
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in note 3 of the Group financial statements.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial
statements, in accordance with FRS 101:
•
•
•
The Company has taken advantage of the exemption in FRS 101, and has not disclosed information required
by the standard as the consolidated financial statements, in which the Company is included, provide
equivalent disclosures for the Group under IFRS 7 ‘Financial instruments: disclosures’.
The Company has taken advantage of the exemption available under FRS 101 and not disclosed related party
transactions with wholly owned subsidiary undertakings.
The Company has taken advantage of the exemption available under FRS 101 and the requirements of IAS 7
to not disclose a Statement of Cash Flows.
As permitted under section 408 of the Act the Company has elected not to present its own profit and loss account
for the year. The loss for the financial year was €1,268,000 (2016: loss of €970,000). The results of the parent
Company are disclosed in the reserves reconciliation in note 12.
Going concern
After making enquiries, and taking into account the proceeds from the Firm Placing and Open offer which was
successfully completed on 23 April 2017, the directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at least the next 12 months. For this reason, they
continue to adopt the going concern basis in the financial statements.
Investments
Except where a reliable fair value cannot be obtained, unlisted shares held by the Group are stated at historical
cost less any provision for impairment. Gains and losses arising from changes in fair value are recognised directly
in equity, with the exception of impairment losses which are recognised directly in the profit or loss. Where
investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the
profit or loss in the year. Where it is not possible to obtain a reliable fair value, these investments are held at cost
less provision for impairment.
Share based payments
When the parent entity grants options over equity instruments directly to the employees of a subsidiary
undertaking, then in the parent company financial statements the effect of the share based payment is capitalised
as part of the investment in the subsidiary as a capital contribution, with a corresponding increase in equity.
The fair value of the options granted is measured using a modified Black Scholes model, taking into account the
terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted
to reflect the actual number of share options that vest only where vesting is dependent upon the satisfaction of
service and non-market vesting conditions.
Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options which eventually vest. Market vesting conditions are factored into the fair value of
the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Deferred taxation
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment
of certain items for taxation and accounting purposes except for deferred tax assets which are only recognised to
the extent that the Company anticipates making sufficient taxable profits in the future to absorb the reversal of the
underlying timing differences. Deferred tax balances are not discounted.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 107
Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when
paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Property, plant and equipment
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. 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:
Office equipment:
Between 20% and 50%
Financial liabilities
Other financial liabilities
Trade payables and other financial liabilities are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
2. Profit and loss account
A loss of €1,268,000 (2016: loss of €970,000) is dealt with in the Company financial statements of Accsys
Technologies PLC. The Directors have taken advantage of the exemption available under section 408 of the
Companies Act 2006 and not presented a profit and loss account for the Company. Fees payable to the
Company’s auditors for the audit of the Company’s annual financial statements was €65,000 (2016: €74,000).
Fees payable to the Company’s auditors for the audit of the Company’s subsidiaries was €112,000 (2016: €106,000)
and fees payable for other services were €110,000 (2016: €134,000).
The information disclosed in the Group’s consolidated financial statements under IFRS2 ‘Share-based payment’
is within note 15, providing further information regarding the Company’s equity settled share based payment
arrangements.
3. Employees
The Company had no employees other than Executive Directors (2017: 3 and 2016: 3) during the current or prior
year. Non-executive Directors received emoluments in respect of their services to the Company of €242,000 (2016:
€280,000). Details have been included in the Remuneration Report. The Company did not operate any pension
schemes during the current or preceding year.
4.
Investments in subsidiaries
Cost
At 31 March 2015
Share based payments
At 31 March 2016
Share based payments
At 31 March 2017
Impairment
At 1 April 2016 and 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
€’000
17,300
1,038
18,338
884
19,222
4,680
14,542
13,658
12,620
The Directors believe that the carrying value of the investments are supported by the underlying net assets and
future profitability.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 108
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2017
4.
Investments in subsidiaries continued
The following were the principal subsidiary undertakings at the end of the year and have all been included in the
financial statements:
Subsidiary undertakings
Titan Wood Technology BV (Netherlands)
Titan Wood BV (Netherlands)
Titan Wood Limited (UK)
Titan Wood Inc (USA)
Tricoya Technologies Limited (UK)1
Tricoya Ventures UK Limited (UK)1, 2
2017
% shares
and voting
rights held
2016
% shares
and voting
rights held
100
100
100
100
75
46
100
100
100
100
97
97
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
The shares in Titan Wood BV and Titan Wood Inc. are held indirectly by the Company.
1. Shareholdings issued to Non–controlling interests (See note 9 & 26 of Group accounts)
2. Subsidiary of Tricoya Technologies Limited (UK) incorporated on 29 March 2016
The principal activities of these companies were as follows:
Titan Wood Technology B.V.*
The provision of technical and engineering services to licensees, and the
technical development of acetylation opportunities.
Titan Wood B.V.*
The manufacture and sale of Accoya®, acetylated wood.
Titan Wood Limited **
Establishing global market penetration of Accoya and Tricoya® as the premium
wood and wood elements brands respectively for external applications requiring
durability, stability and reliability through the licensing of the Group’s proprietary
process for wood acetylation.
Titan Wood Inc. ***
Provision of Sales, Marketing and Technical services.
Tricoya Technologies Limited ** Engaged in the commercialisation of technology for the production of Tricoya
Wood Elements around the world.
Tricoya Ventures UK Limited ** The construction and expected future operation of manufacturing plant
for Tricoya wood chips as the premium wood elements brand for external
applications requiring durability, stability and reliability.
Registered office of subsidiaries:
* P.O. Box 2147, 6802 CC, Arnhem, The Netherlands
** Brettenham House, 19 Lancaster Place, London, WC2E 7EN, United Kingdom
*** 5000 Quorum Drive, Suite 620, Dallas, Texas 75254, U.S.A
5. Other investments
Unlisted securities available for resale
2017
€’000
–
2016
€’000
–
Accsys Technologies PLC has previously purchased a total of 21,666,734 unlisted ordinary shares in Diamond
Wood China. On 23 December 2016, Cleantech Building Materials PLC acquired Diamond Wood China. On
19 April 2017 Cleantech Building Materials acquired the 21,666,734 shares previously owned by the Company
and in return the Company has been issued with 520,001 shares in Cleantech Building Materials PLC, a listed
company trading on the Nasdaq First North market in Copenhagen.
The carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair value,
as there was no active market for these shares as at 31 March 2017, and there is significant uncertainty over the
future of Diamond Wood, and as such a reliable fair value cannot be calculated.
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017 6. Property, plant and equipment
Cost or valuation
At 31 March 2015
Additions
At 31 March 2016
Additions
At 31 March 2017
Accumulated depreciation
At 31 March 2015
Charge for the year
At 31 March 2016
Charge for the year
At 31 March 2017
Net book value
At 31 March 2017
At 31 March 2016
At 31 March 2015
109
Office
equipment
€’000
–
208
208
–
208
–
11
11
41
52
156
197
–
Total
€’000
–
208
208
–
208
–
11
11
41
52
156
197
–
Included within property, plant and equipment are assets which have been accounted for as a finance lease
(see note 9).
7. Debtors
Amounts owed by Group undertakings
Prepayments and accrued income
2017
€’000
2016
€’000
150,480
130,426
1,410
151,890
186
130,612
The balance of amounts owed by Group undertakings increased in the period largely as a result of the proceeds
of the Loan Notes from BGF and Volantis which were invested by way of intercompany loans to the Company’s
immediate subsidiary, Titan Wood Limited, which invested the net proceeds in Tricoya Technologies Limited. See
note 9 of the Group financial statements.
The amounts owed by Group undertakings are payable on demand, however the Company has indicated it has no
intention of demanding payment within the next twelve months. The Directors have considered the recoverability
of the balances, taking into account the net assets as well as the long term expected performance of the
subsidiaries and do not consider that any impairment is currently required. However, a degree of risk remains over
the carrying value given the relative uncertainty of the future results.
8. Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Obligation under finance lease
Accruals and deferred income
2017
€’000
338
11,694
56
1,382
13,469
2016
€’000
407
9,866
60
107
10,440
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 110
9. Commitments under finance lease
Agreements were entered into in the previous period for the lease of office furniture and fit-out for the London
head office for a total of €244,000. The transaction resulted in a finance lease creditor of €150,000 as at 31 March
2016 (2016: €197,000).
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Present value of lease obligations
10. Commitments under loan agreements
Amounts payable under loan agreements:
Within one year
In the second to fifth years inclusive
After five years
Present value of loan agreements
Minimum lease payments
2017
€’000
2016
€’000
68
97
–
(15)
150
63
162
–
(28)
197
2017
€’000
2016
€’000
–
4,515
13,544
18,059
–
–
–
–
The balance relates to Loan Notes issued to BGF and Volantis. Further details can be found in note 29 of the Group
accounts.
11. Called up Share capital
Allotted – Equity share capital
90,643,585 Ordinary shares of €0.05 each (2016: 89,890,019 Ordinary shares
of €0.05 each)
2017
€’000
2016
€’000
4,531
4,531
4,495
4,495
In year ended 31 March 2016:
Own shares represents 944,529 €0.05 Ordinary shares issued to an Employee Benefit Trust (‘EBT’) at nominal
value. This includes 891,044 shares issued on 6 July 2015 and 16,123 shares issued on 10 December 2015. 783,597
€0.05 Ordinary shares had been issued to the EBT at nominal value on 18 August 2014 of which 746,241 Ordinary
shares vested on 1st July 2015. On 13 August 2015, a total of 63,909 of €0.05 Ordinary shares were issued to a trust
under the terms of the Employee Share Participation Plan. On 14 August 2015, a total of 27,825 of €0.05 Ordinary
shares were issued and released to employees together with the 27,825 of €0.05 Ordinary shares issued to trust on
18 August 2014. On 22 January 2016, a total of 16,302 €0.05 Ordinary shares were issued to a trust under the terms
of the Employee Share Participation Plan. On 20 January 2016, a total of 53,922 €0.05 Ordinary shares were issued
and released to employees together with the 53,922 of €0.05 Ordinary shares issued to trust on 19 January 2015.
In year ended 31 March 2017:
Own shares represents 679,435 €0.05 Ordinary shares issued to an Employee Benefit Trust (‘EBT’) at nominal value.
This includes 673,355 shares issued on 27 June 2016. 891,044 €0.05 Ordinary shares had been issued to the EBT
at nominal value on 6 July 2015, and 16,123 shares issued on 10 December 2015 of which 938,449 Ordinary shares
vested on 1st July 2016. On 15 August 2016, a total of 63,909 of €0.05 Ordinary shares were issued and released to
employees together with the 63,909 of €0.05 Ordinary shares issued to trust on 13 August 2015. On 9 February 2017,
a total of 16,302 €0.05 Ordinary shares were issued and released to employees together with the 16,302 of €0.05
Ordinary shares issued to trust on 22 January 2016.
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2017ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
111
12. Reserves
The profit and loss account includes €8,010,000 of non-distributable reserves arising from the liquidation of
Accsys Chemicals Limited in the year ended 31 March 2007. The profit and loss account also includes €8,050,000
of non-distributable reserves relating to share based payments.
Balance at 1 April 2016
Loss for the financial year
Share based payments
Shares issued
Called up
Share capital
€000
Share
premium
account
€000
Capital
redemption
Reserve
€000
Own
Shares
€000
Profit and
loss
account
€000
Total
Shareholders’
Funds
€000
4,495
128,792
148
(47)
3,250
136,638
–
–
36
–
–
–
–
–
–
–
–
14
(1,268)
(1,268)
884
–
884
50
Balance at 31 March 2017
4,531
128,792
148
(33)
2,866
136,304
13. Reconciliation of movements in shareholders’ funds
Loss for the financial year
Share based payments charged to subsidiaries
Proceeds from issue of shares
Net increase in shareholders' funds
Opening shareholders' funds
Closing shareholders' funds
14. Dividends Paid
Final Dividend €Nil (2016: €Nil) per Ordinary share proposed
and paid during year relating to the previous year’s results
15. Deferred taxation
2017
€’000
(1,268)
884
50
(334)
2016
€’000
(970)
1,038
125
193
136,638
136,304
136,445
136,638
2017
€’000
–
2016
€’000
–
The Company has an unrecognised deferred tax asset of €1.2m (2016: €1.1m) which is largely in respect of trading
losses. The deferred tax asset has not been recognised due to the uncertainty of the timing of future expected
profits of the fellow subsidiary (in which the Company is in the same tax group) attributable to licensing activities.
16. Post Balance Sheet Events
On 29 March 2017, Accsys announced the details of a proposed Firm Placing and Open Offer to raise proceeds of
up to approximately €14,023,550 (before expenses) through the issue of 17,400,000 Firm Placing Shares and up to
2,923,986 Open Offer Shares, at the Offer Price of €0.69 per New Ordinary Share.
The Open Offer closed for acceptances on 20 April 2017. Accsys received valid acceptances under the Open
Offer and its Excess Application Facility in respect of 12,965,475 New Ordinary Shares, representing an over-
subscription in excess of four times the 2,923,986 New Ordinary Shares available under the Open Offer and Excess
Application Facility. As applications under the Excess Application Facility could not be satisfied in full, such New
Ordinary Shares available were allocated in such manner as the Directors determined, in their absolute discretion in
accordance with the terms set out in the Prospectus.
The gross proceeds raised under the Open Offer were therefore the maximum amount of €2.0m. Accordingly, the
aggregate amount raised pursuant to the Firm Placing and Open Offer was €14.0m before expenses, being €12.3m
net of expenses.
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS 112
SHAREHOLDER INFORMATION
Accsys Technologies PLC is a public limited company incorporated in England
Directors
Sean Christie
Paul Clegg
Sue Farr
Nick Meyer
Hans Pauli
William Rudge
Patrick Shanley
Non-Executive Director
Chief Executive Officer
Non-Executive Director
Non-Executive Director
Executive Director, Corporate Development
Finance Director
Non-Executive Chairman
Company Secretary
Angus Dodwell
Company Number
5534340
Registered Office
Bankers
Registrars
Independent Auditors
Lawyers
Broker and Nomad
Brettenham House
19 Lancaster Place
London, WC2E 7EN
Barclays Bank
50 Pall Mall
London, SW1A 1QJ
ABN AMRO Bank
Velperweg 37
6824 BM Arnhem
The Netherlands
Rabobank
Croeselaan 18
3521 CB Utrecht
The Netherlands
SLC Registrars
42-50 Hersham Road
Walton-on-Thames
Surrey, KT12 1RZ
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory auditors
1 Embankment Place
London, WC2N 6RH
Slaughter & May
One Bunhill Row
London, EC1Y 8YY
Numis Securities Ltd
The London Stock Exchange Building
10 Paternoster Square
London, EC4M 7LT
Investor Relations
MHP Communications
6 Agar Street
London, WC2N 4HN
ACCSYS TECHNOLOGIES PLC ANNUAL REPORT 2017
A
C
C
S
Y
S
T
E
C
H
N
O
L
O
G
E
S
P
L
C
I
ACCSYS TECHNOLOGIES PLC
2017 ANNUAL REPORT
AND FINANCIAL
STATEMENTS
Cover images
1 Accoya boardwalk – Norway
2 Tricoya exterior lighting – New Zealand
3 Accoya cladding, fast food chain – North America
4 Accoya cladding, fast food chain – United Kingdom
5 Accoya cladding, private residence – New Zealand
6 Accoya boardwalk – Switzerland
7 Accoya floor, indoor velodrome – the Netherlands
8 Accsys guitar – United Kigdom
Accsys Group
Brettenham House
19 Lancaster Place
London
WC2E 7EN
+44 (0)207 4214300
Accsys Technologies 2016, Accsys Technologies is a trading name of Titan Wood Limited. Accoya®, Tricoya® and the Trimarque Device are registered
trademarks owned by Titan Wood Limited (‘TWL’), a wholly owned subsidiary of Accsys Technologies PLC, and may not be used or reproduced without
written permission from TWL, or in the case of the Tricoya® registered trademark, from Tricoya Technologies Limited, who have exclusive rights to exploit
the Tricoya® brand. © Accsys Technologies PLC 2017
www.accsysplc.com
www.accoya.com
www.tricoya.com
I
A
N
N
U
A
L
R
E
P
O
R
T
&
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
2
0
1
7
I
A YEAR OF
TRANSFORMATION
AND GROWTH