ACCSYS TECHNOLOGIES PLC
DOUBLING OF CAPACITY
TO MEET DEMAND
ANNUAL REPORT AND
FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2018
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.
CONTENTS
Overview
01 Highlights
02 At a Glance
04
Our History
06 Tricoya® – One Year On
09 Accoya® – Arnhem Expansion
10 Our Investment Proposition
Strategic Report
14 Chairman’s Statement
16 Our Market
18 Our Business Model
20 Our Strategy
24
Chief Executive’s Report
30 Financial Review
34 Sustainability Report
Corporate Governance
40 Board of Directors
42 Senior Management Team
44 Directors’ Report
47 Remuneration Report
61 Corporate Governance
63
Statement of Directors’
Responsibilities
Financial Statements
Group Independent
66
Auditors’ Report
72 Consolidated Statement
of Comprehensive Income
73 Consolidated Statement
of Financial Position
74 Consolidated Statement
of Changes in Equity
75 Consolidated Statement
of Cash Flow
76
Notes to the Financial
Statements
111 Company Independent
Auditors’ Report
116 Condensed Company Balance Sheet
117 Notes to the Company
Financial Statements
Shareholder Information
Shareholder Information
125
Delta Millworks used our sustainable product
Accoya® to manufacture the siding for this unique
home in New York state. Using a Japanese finishing
technique called ‘shou sugi ban’ the Accoya® was
charred to give the house’s façade a modern,
weathered texture.
Image © Delta Millworks
HIGHLIGHTS
Doubling of capacity in manufacturing footprint
on track to meet strong demand
Major capacity expansion and strategic progress
• Accoya® plant expansion completed and in operation from June 2018
to increase annual capacity by 50% to at least 60,000 cubic metres;
• Strong demand continues for Accoya®, large proportion is repeat
business, expected to generate significant increase in sales and margins;
• Construction of transformational Tricoya® plant in Hull remains on track
for completion mid 2019 calendar year, supported by strong sales of
Tricoya® panels which have increased by 26% compared to last year
reflecting increased demand; and
• Hull plant, with capacity of 30,000 metric tonnes, expected to become
cash flow generative sooner, as a result of the new Tricoya® licence
with FINSA.
Financial highlights
• Total revenue up by 8% against last year, with Accoya® revenue up
11% offset by reduced licensing income;
• Accoya® sales volumes up by 7% to 42,676 cubic metres with a 15%
increase in the second half;
• Accoya® gross margin improved to 24% in the second half reflecting
price increases, significant volumes sold to MEDITE and Rhodia Acetow
at lower prices and no Accoya® licence income;
• Underlying EBITDA improved to a ¤0.7m loss in the second half of the
year compared to ¤2.8m loss in first half;
• 30% gross margin from the manufacturing of Accoya® continues to
achievable; and
• Increase in net debt reflects significant investment in capacity increases
for both Accoya® and Tricoya®.
Accoya® wood sales revenue
¤56.3m
¤50.7m
¤43.5m
¤40.6m
¤29.3m
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
¤16.5m
¤13.5m
¤12.5m
¤9.1m
¤6.9m
¤2.9m
*
Underlying figures excludes exceptional items and other remeasurements.
See note 5 of the Group financial statements for details
Total Group Revenue
€60.9m
2017: ¤56.5m
Gross profit
€13.6m
2017: ¤14.4m
EBITDA
Underlying*
(€3.5m)
2017: (¤1.5m)
Loss before tax
Underlying*
(€8.8m)
2017: (¤4.5m)
Statutory
(€5.7m)
2017: (¤1.2m)
Statutory
(€10.4m)
2017: (¤4.5m)
Year end cash balance
Statutory
€39.7m
2017: ¤41.2m
Year end net (debt)/cash balance
Statutory
(€3.8m)
2017: ¤18.0m
01
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
AT A GLANCE
Accsys' operations
Our business consists of the following:
Accoya® solid wood and Tricoya® wood
elements, which are the feedstock for Tricoya®
panels, are manufactured through our
proprietary low emission acetylation wood
modification process. The superior dimensional
stability and durability exhibited by our products
compared to other natural, treated and modified
woods as well as more resource intensive/
fossil fuel based man-made materials such as
plastics mean that Accoya® and Tricoya® offer
consumers and specifiers the opportunity to be
more sustainable and consider the environment
in every decision.
Our technologies and brands are internationally
protected by strict confidentiality, granted
patents, patent applications and trademarks as
well as being supported by strong sustainability
certifications and many regulatory certifications
for building codes. Many have been technically
validated at full commercial production level and
through long-term use, and others are in pilot-
scale or are subject to independent validation
by experts. Our products offer a sustainable
alternative to the use of man-made materials, in
particular plastics, in construction and have been
certified for use by various building regulation
bodies around the world.
Commercial scale Accoya® wood
production, distribution centre and
sales facility in Arnhem
Image © BRUIL
Building and operating of Tricoya®
wood chip acetylation plant in Hull
Accoya® and Tricoya® technology
business development and licensing
Image © Sportfoto Photoagency
Technology and product development
Image © Katja Effting
Distribution network
and market
The market for Accoya® and
Tricoya® has been estimated
as in excess of 2.6 million cubic
metres annually. Last year we
sold 42,676 cubic metres of
Accoya® and MEDITE sold 7,328
cubic metres of Tricoya® panels,
representing year growth
for the year of 7% and 26%
respectively.
64 Accoya® distributor, supply
and agency agreements in
place covering most of Europe,
Australia, Canada, Chile, China,
India, Japan, New Zealand,
South Korea, parts of the
Middle-East and South-East
Asia and the USA.
Two Tricoya® licence agreements in place for producers of Tricoya® MDF
panels based in Ireland and Spain. These licences provide patented intellectual
property and know-how for the production of Tricoya® panels and confer
certain geographic and volume rights for the sale of Tricoya® branded
products. Under the licensed rights, Tricoya® panels have now been delivered
to all seven continents.
Read more on page 17
Our Products
In today’s world of heightened concern over the effects of man-made and fossil based materials in our
environment, Accsys’ products offer compelling alternatives, being high performance products with significant
sustainability credentials.
Image © Katja Effting
Image © MEDITE® TRICOYA®EXTREME
Accoya®
Accoya® is the world's leading high performance
sustainable wood. It is stable, durable and resists rot.
Guaranteed for 50 years for use above ground and
25 years in ground or freshwater, Accoya® is hard
and strong enough to stand up to every application
challenge; in summary its performance is remarkable.
Accoya®’s properties match or exceed those of the
best tropical hardwoods and it is manufactured from
abundantly available wood species that are FSC®
certified. It is the only Cradle to Cradle™ (‘C2C’) certified
structural building material which has achieved the
overall Gold Level Certification and Platinum Level
recognition for Material Health. C2C certification
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.
The high durability of Accoya® facilitates a longer
lifespan and therefore enables lower material
consumption over the same period compared to
most other materials. This means Accoya® has carbon
sequestration advantages as it locks CO2 away for
a longer time from the atmosphere. In fact, the low
emissions during our production processes combined
with the increased lifespan and fully recyclable nature
of Accoya®, mean that a window made from Accoya®
is assessed to be CO2 neutral over its full lifecycle.
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.
Tricoya®
Tricoya® wood elements are used to manufacture
Tricoya® panel products by our licensees. When in panel
form, 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 allowing
specifiers such as architects, designers and joineries
greater flexibility and scope when designing. Our
licensees have seen Tricoya® panels used in a wide
variety of applications such as window components
and door skins, façade cladding, wet interiors, kitchen
carcasses, art installations and much more.
The raw wood material that is used for Tricoya®
production is sourced from sustainable FSC® certified
forests and Tricoya® wood chips exhibit the same
sustainable qualities such as longer life-span and CO2
sequestration, as its sister product Accoya® solid wood.
Tricoya® is also guaranteed for 50 years above ground
and 25 years in ground or freshwater; its performance
and properties are outstanding.
Future production from the world’s first Tricoya® wood
chip acetylation plant in Hull 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.
Read more on page 09
www.accoya.com
Read more on page 06
www.tricoya.com
02
03
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CONTINUING OUR
TRANSFORMATION
AND GROWTH
"We continue to see the demand for Accoya® and Tricoya® increasing and believe this is
due to a combination of factors. We have developed a strong brand, distribution network
and other key relationships in the industry. I also believe that there is an increasing
realisation in the industry that products such as Accoya® and Tricoya® will serve a long-
term role in replacing environmentally damaging man-made products while crucially
being able to offer all of the attributes of a high performance product.”
Paul Clegg
Chief Executive Officer
“We look forward to fulfilling that excess demand over the coming months as we once
again look for double digit growth in the year ending 31 March 2019.”
Patrick Shanley
Chairman
The Conrad is a street in the centre of Amsterdam which
has undergone a monumental renovation of 30 housing
association properties. Accoya® was selected to renovate
the windows and doors for each of the houses. Accoya®
was chosen because it is a low maintenance material which
also offers excellent stability. Accoya® provided the perfect
solution to a high quality, low maintenance frame that also
offered the authentic look which was integral to maintain.
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®
EXTREME;
Joint venture
with Ineos
concerning
Tricoya®
business
2012
Licence
agreement
entered into
with Solvay
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
2018
Expanded
Arnhem plant
operational;
with capacity
of 60,000
cubic metres
of Accoya®
2017
New Tricoya®
Consortium
formed with BP,
MEDITE, BGF
and Volantis;
fund raising
completed with
project finance
from RBS;
construction
commenced
in Hull
04
ACCSYS TECHNOLOGIES PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2018
OVERVIEW
01–11
STRATEGIC REPORT
12–37
GOVERNANCE
38–63
FINANCIAL STATEMENTS
64–124
05
ONE YEAR ON
ARNHEM EXPANSION
INCREASED ACCOYA® CAPACITY FROM 40,000 CUBIC METRES TO
80,000 CUBIC METRES IN TWO STAGES.
The Accoya® opportunity
• Increasing trend of consumer
Arnhem expansion
• Arnhem plant is profitable
• Gross margin of 30%
achievable
and industry demand for
sustainable high performance
construction materials
• Pent up demand worldwide for
Accoya® across all applications
• Record production from
the Arnhem Accoya® plant
of 39,148 cubic metres, an
increase of 3% compared to
last year
• Strong sales with an increase of
7% compared to last year,
to 42,676 cubic metres
• Growth has been constrained
by capacity
• Estimated annual sales in
excess of 1 million cubic metres
believed to be achievable
over time
• This represents a fraction of the
400 million cubic metres total
annual global solid wood market
today
− Profitable since 2013
− Gross manufacturing margin
of 24.5% in the second half
of FY18
− Accoya® underlying EBITDA
(excluding licensing) of FY18
¤4.4m (¤4.1m in FY17)
• Chemical infrastructure for
a fourth reactor already in
place which would add an
additional 20,000 cubic
metres of capacity
• 80,000 cubic metres total
capacity enables revenue in
excess of ¤120m and Accoya®
EBITDA in excess of ¤30m
• Addition of a third reactor
has increased our capacity
by 50% to 60,000 cubic
metres in the first part of a
two part expansion
• Production volumes to ramp
up over the next few months
to meet demand
• Potential for revenue in
excess of ¤90m per annum
to be generated
• The additional capacity will
result in further improved
economies of scale
New facilities
• Improved efficiencies with new
warehouse and distribution
centre in the same location
as production
• Research and development
laboratory
• Maintenance workshops
• Corporate and sales offices
• Arnhem employees now at
a single location
The formation of the Tricoya®
Consortium on the 29 March
2017 was a transformational
moment for Accsys that
facilitated the Company’s
strategic priority to develop
manufacturing capacity with
the world’s first Tricoya®
chip acetylation plant.
The Tricoya® Consortium
members include Accsys
Technologies, BP Chemicals,
BP Ventures, MEDITE Europe
DAC, BGF and Volantis, with
project finance debt provided by
RBS and with strategic benefits
offered through the participation
of BP and MEDITE, in particular
via supply and sales off-take
agreements respectively.
The Consortium will build, operate
and run the Tricoya® plant at
Saltend Chemicals Park, Hull on
a site selected for its adjacency
to BP’s acetic anhydride plant.
Pre-construction, engineering
and design work was completed
in 2016 and Engie Fabricom
appointed as Engineering,
Procurement and Construction
(‘EPC’) contractor.
Plant progress
• Site cleared and prepared
• Breaking ground ceremony
held 12 July 2017
• Piling and foundation work
completed
• Key equipment ordered and
the production infrastructure
is well underway
• Acetylation tower now at full
height at over 50m
• Plant manager recruited and
a further ten new members of
staff in the progress of being
recruited
• Second phase of recruitment
planned with the full team of
30 permanent staff members
to be in place in early 2019
• Safe site – 100,000 hours of
construction without accident
The Tricoya® opportunity
• Global market for Tricoya®
panels estimated in excess of
1.6 million cubic metres per
annum
• Equating to approximately 1.5%
of global MDF manufacturing
capacity
• MEDITE® TRICOYA® EXTREME
panel sales to date limited to
market seeding using chipped
Accoya® at higher cost
• Sales of Tricoya® panels by
MEDITE grown from 949 cubic
metres per annum in FY12 to
7,328 cubic metres in FY18
The Hull plant capacity and
forecasted performance
• Total expected capex of ¤59m
• 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
metres of Tricoya® panels
• Wholesale price of Tricoya®
• Second Tricoya® licensee
panels above that of Accoya®
reflecting its exceptional
properties and that it is a
unique offering in the market
FINSA secured in March 2018
with exclusive Tricoya® panel
manufacturing rights in Spain
and Portugal
• Construction of the Hull plant
is expected to address the
increased global demand and
promote increased supply
• Tricoya Ventures UK Ltd
(TVUK) formed to operate the
Tricoya® plant and manufacture
the Tricoya® wood chips
• Tricoya Technologies Ltd (TTL)
formed to pursue additional
licence or consortium
agreements worldwide
• Together with the existing
off-take agreement with
MEDITE, the plant is expected
to be significantly loaded
and as a consequence cash
generative at an earlier point
• Full capacity expected to
be reached in approximately
four years
The wood chip silos nearing
completion at the Hull Tricoya®
plant
The expanded Arnhem Plant
Image © BRUIL
06
ACCSYS TECHNOLOGIES PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2018
OVERVIEW
01–11
STRATEGIC REPORT
12–37
GOVERNANCE
38–63
FINANCIAL STATEMENTS
64–124
09
Image © Katja Effting
GLOBAL ADOPTION OF OUR SUSTAINABLE PRODUCTS
We aim to reduce the use of environmentally unfriendly building materials and products through the utilisation of
our proprietary acetylation technology and the introduction of our sustainable products around the world. We are
committed to increasing the global use of our products, Accoya® and Tricoya®, through our own sales efforts and
on a substantially larger scale by licensing our technologies to other companies so that they too can manufacture
our products with the long-term aim of ensuring they are in every building, on every street, all over the world.
Håhammaren Bridge – Hafrsfjord, Norway
The Stavanger Boardwalk comprises two bridges and paths
that connect neighbouring coastal villages in Håhammaren,
Norway. Accoya® was used for its superior durability, salt
resistance and high slip-resistance. An integrated bench has
also been made using Accoya® allowing visitors to sit, rest and
gaze beyond to the Hafrsfjord.
Sleeve House – Taghkanic, USA
Delta Millworks manufactured
the Accoya® siding for this
unique home in New York state.
Using the Japanese finishing
technique called ‘shou sugi ban’
the Accoya® was charred to give
the house’s façade a modern,
weathered texture.
Image © Delta Millworks
Milwaukee Art Museum
Research Centre – Milwaukee,
USA
The porch posts, arches, post
railings and capitals of this
Victorian Gothic Arts Centre
are all made from Accoya®
because it can stand up to the
varying climate changes of the
upper Midwest.
Dillon Kyle Architects Office – Houston, USA
An abstract leaf-like pattern is carved into 2,500
Accoya® wood boards wrapping the new Dillon
Kyle Architects’ office building in Houston, Texas,
USA. See page 64 for more detail.
Louis Vuitton – Santiago, Chile
Louis Vuitton has completed five store façades
in Central and South America with Accoya®,
using it to recreate the brand’s famous
quatrefoil pattern.
Cormac’s Chapel – Cashel, Ireland
When selecting the material for the new flooring of the
chapel, it was crucial to take into consideration the high
footfall the location is consistently subjected to; therefore,
choosing a strong and durable material was critical. Accoya®
was specified for the flooring because a high performance
wood was required to ensure it did not warp, split or swell.
Image © Abbey Woods
07
Takaosanguchi Station –
Tokyo, Japan
Designed by renowned
architect Kengo Kuma,
the Takaosanguchi Station
building is intended as a
relaxation spot for both tired
hikers and area residents.
Accoya® has been used for
the cladding and exposed
roof area of the two-storey
railway terminus.
Barangaroo House –
Sydney, Australia
Barangaroo House is a
three-tier restaurant clad
with charred Accoya® in
the globally-renowned
Barangaroo development,
Sydney, Australia. See page
38 for more detail.
Image © Rory Gardiner
Harbour Bridge walkway –
Auckland, New Zealand
A site of cultural and
historical importance
in Auckland, Te
Onewa Pa – a long
neglected spot
boasting spectacular
views over the
harbour – has utilised
Accoya® wood in a decade long,
three-stage restoration project.
The stunning transformation
includes a new raised walkway
and platform to encourage
visitors to remain on the path and
experience the impressive vista,
using 17.5m3 Accoya® wood.
08
Eccleston Place,
London, UK
MEDITE® TRICOYA®
EXTREME was
selected for the
shopfronts of 30
high-end retail and
design spaces at the
new Eccleston Place
hub near Victoria
station, central
London, UK.
Image © MEDITE®
TRICOYA® EXTREME
MahaSamutr –
Hua Hin, Thailand
Accoya® was selected by
Japanese Architects Kengo
Kuma and Associates for
the cladding, fencing, eaves,
landscaping and decking
throughout this development
of 88 luxury villas, a country
club house, a sports complex
and a boat house.
Hillary’s Hut – Scott Base, Antarctica
The Antarctic Heritage Trust selected Tricoya® panels
to replace the asbestos interior wall and ceiling linings
within the historic Hillary’s Hut in 2017. One of the key
considerations was the product’s durability to withstand
extreme temperature and humidity levels.
Image © Antarctic Heritage Trust, nzaht.org
OUR INVESTMENT PROPOSITION
SUBSTANTIAL
MARKET
OPPORTUNITY
Our products provide a sustainable
solution to the increasing
problem facing the substantial
and growing 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 and fossil
based materials including plastics.
In addition, they benefit from all
positive attributes of wood (such
as sustainability, strength, beauty)
without the downfalls (of 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 metres 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 42,676
cubic metres of Accoya® and our
licensee MEDITE sold 7,328 cubic
metres of Tricoya® panels.
SUSTAINABILITY
Consumers and specifiers are
increasingly aware of the threats
to the environment and to human
health through pollution as
evidenced by the current global
support for reducing plastic
pollution in the world’s oceans.
Demand is growing for sustainable
alternatives from every sector of
manufacturing reflecting the desire
to live more sustainably.
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.
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 in
Arnhem is in the process of being
doubled in size in two equal stages,
with the first stage now complete.
The new Tricoya® plant in Hull is
being constructed with a view to
further significant expansion.
Our joint venture with MEDITE and
BP is a good example of what we
can do with the right partners. The
Accsys business development team
is developing relationships with
other potential partners around the
world to ensure new manufacturing
capacity can be developed to meet
the long-term global demand.
WORLD LEADERS
IN WOOD
TECHNOLOGY
We have developed innovative
proprietary and protected
technologies which chemically
modify wood through a low
emissions acetylation process.
The resulting products benefit
from exceptional dimensional
stability, durability and many
other qualities as well as being
environmentally sustainable.
Our products are first in class
and leading the revolution of
modified woods in a growing
building industry which is starting
to recognise and adopt to the
significant long-term benefits
of such materials.
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 expanded
in the last year to reflect the needs
of the growing Group and they
remain committed to its on-going
future and success.
See Chairman's Statement
on page 14
See Sustainability Report
on page 34
See pages 06 and 09 for
further details of current
expansions
See page 28 in the
Chief Executive’s Report
See pages 40 to 43 for
details of the team
10
ACCSYS TECHNOLOGIES PLC
ANNUAL REPORT & FINANCIAL STATEMENTS 2018
Visit our Investor Relations hub at
www.accsysplc.com/investor-relations
100m3 of Accoya® was used on the Pompejus
Tower, a new 25 metre high landmark on the
restored Fort de Roovere in Bergen op Zoom,
the Netherlands. See page 12 for full details of
the project.
Image © Katja Effting
11
STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 STRATEGIC
REPORT
14 Chairman’s Statement
16 Our Market
18 Our Business Model
20 Our Strategy
24
Chief Executive’s Report
30 Financial Review
34 Sustainability Report
RO&AD Architects have designed and created
several projects on the Brabant Water Line,
including the Mozesbrug and Ravelijnbrug. Ad
Kil, Co-Owner of RO&AD: “We have selected
Accoya® in all of our projects along the waterline.
This consistent specification unites the projects
and makes it a kind of family. We always choose
Accoya® because we are big fans of the wood and
its performance. We do not want to use tropical
hardwood because of the long growth cycle of 150
years. Whereas Accoya® is made of a fast-growing
type of wood and also has durability class 1; and
with a 50 year guarantee above ground and 25
year guarantee in ground/freshwater, it can be
used outdoors in challenging applications without
any problems. From an aesthetic point of view,
the wood is naturally beautiful, making it the ideal
choice for many of our projects.”
" WE ALWAYS CHOOSE ACCOYA®
BECAUSE WE ARE BIG FANS OF THE
WOOD AND ITS PERFORMANCE."
POMPEJUS TOWER
Opened in March 2018, Pompejus Tower is a new
25 metre high landmark on the restored Fort de
Roovere in Bergen op Zoom, the Netherlands.
Named after the first commander of the fortress,
the viewpoint boasts views of the entire Brabant
Water Line. Created by RO&AD Architects,
Accoya® wood was specified because of its
durability, stability and low maintenance benefits
in external applications.
The main construction consists of steel
triangles and has been designed according to
a mathematical design principle which allowed
for windows and openings to be formed in the
façade. This construction is virtually invisible as
Accoya® wood plates were mounted on the cutting
faces of the steel. This created the recognisable
mathematical Voronoi pattern which occurs in
nature on the neck of giraffes and shields of turtles.
An exhibition space and an open-air theatre is
situated at the bottom of the tower, with a stand
made of Accoya®. The grandstand also serves
as the start of the stairs, with all 129 made of
Accoya®. In total, 100m3 of Accoya® was used
for this project, supplied by Accoya® distributor
Boogaerdt Hout.
" ACCOYA® WOOD WAS SPECIFIED
BECAUSE OF ITS DURABILITY,
STABILITY AND LOW MAINTENANCE
BENEFITS IN EXTERNAL
APPLICATIONS."
12
13
All Images © Katja Effting
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
CHAIRMAN'S STATEMENT
" WE CONTINUE TO ADD EXPERIENCE AND
BREADTH TO THE ORGANISATION AS WE
LOOK FORWARD TO THE NEXT PERIOD OF
MORE ACCELERATED GROWTH."
one which becomes more relevant in
today’s world which is seeking ever
more environmentally-friendly, yet high
performance construction products.
We are also seeing more interest from
partners who see the market potential
and wish to support the growth of
both Accoya® and Tricoya® in both
North America and Asia.
We continue to add experience and
breadth to the organisation as we
look forward to the next period of
more accelerated growth. This has
included the appointment of Trudy
Schoolenberg to the Board as Senior
Independent Director, who brings
with her significant operational and
corporate experience. We have also
strengthened our management
capability with new appointments
in Human Resources and Marketing
following the appointment last year
of our Head of Group Operations.
We continue to believe the total
market for Accoya® and Tricoya® is in
excess of 2.6 million cubic metres per
annum, based upon detailed market
assessments. This figure represents
a small fraction of the overall solid
wood and wood panel industries but
should also be seen as a longer-term
aspiration given the requirement for
new manufacturing capacity.
Additional manufacturing capacity
The addition of a third reactor to our
Accoya® plant in Arnhem increases
our capacity by 50% to in excess of
60,000 cubic metres per annum, with
the potential to generate revenue in
excess of ¤90m annually, at today’s
prices. The first commercial batches
are anticipated this month and
we expect to ramp up production
volumes over the next few months
to meet demand for both Accoya®
and Tricoya®.
Sales and production
Sales volumes grew by 7% to 42,676
cubic metres for the year, reflecting
that we have been operating at
capacity levels which have limited
our ability to grow further in the year
and resulted in pent up demand.
Production volumes were impacted by
two planned shut downs in the first half
of the year, one more than usual as a
result of work relating to the expansion.
Sales of Tricoya® panels by MEDITE
increased by 26% compared to last
year, reflecting increasing demand.
The additional capacity has been
completed on budget and the
expansion includes the infrastructure
for a fourth reactor to be added at
a later date to add a further 20,000
cubic metres of capacity. As part of
our expansion programme, we now
have a significant new warehouse
and distribution centre and new
offices. This means that all of our
key operations in relation to Accoya ®
are housed in a single location in
Arnhem, which is expected to result
in greater efficiency.
Demand for Accoya® and Tricoya®
has increased, and despite the
capacity constraints, growth was
recorded in most regions, in particular
the USA although this was from
relatively low volumes.
I am also pleased to report that 15
months following the formation of the
Tricoya® Consortium, real progress
has been made with the construction
of the dedicated Tricoya® wood chip
acetylation plant in Hull, which will
have an initial design capacity of
30,000 metric tonnes. Significant
Introduction
This year the focus has been on
ensuring our two key capacity
expansion projects are on schedule
and within budget, whilst maintaining
momentum in sales growth despite the
challenges of operating at maximum
production capacity for much of
the year. It is a true credit to all our
employees who have supported our
development whilst ensuring we
operate to the very highest standards
for Health and Safety.
The construction of the third reactor
in Arnhem is now complete and we are
on schedule for it to produce its first
batches of Accoya® this month.
In the last twelve months our
customers have been exceptionally
patient as demand continues to
outstrip supply. We look forward to
fulfilling that excess demand over the
coming months as we once again look
for double digit growth in the year
ending 31 March 2019.
Following the finalisation of the
Tricoya® Consortium at the end of
the last financial year, substantial
progress has been made with the
construction of the new Tricoya®
chip acetylation plant in Hull, which
remains on track for completion in
mid-2019 calendar year.
We are once again looking forward
to a period of significant growth and
being able to satisfy the increasing
and pent up demand for Accoya®.
This will help us to take advantage
of a substantial market opportunity;
construction work has been completed
on site, key equipment ordered, staff
recruitment is ongoing and we remain
on track for the construction of the
plant to be completed in mid-2019
calendar year.
During the year we entered a Tricoya®
brand and panel manufacturing
licence agreement with FINSA,
which is expected to become a
significant new customer purchasing
Tricoya® chips from the Hull plant.
The anticipated future demand
for Tricoya® chips indicated by
FINSA, together with the existing
off-take agreement with MEDITE, is
expected to result in the Hull plant
being significantly loaded, and as a
consequence, cash generative at an
earlier point. We continue to expect
the plant to be EBITDA positive
operating at 40% capacity.
Financial results
Revenue for the year ended 31 March
2018 increased by 8% to ¤60.9m
(2017: ¤56.5m). Within this total,
Accoya® wood revenue increased by
11% to ¤56.3m (2017: ¤50.7m) as a
result of a 7% increase in sales volume
and the effect of price increases,
while licence income decreased from
¤1.6m to ¤0.2m, reflecting progress
in reaching milestones in the period
under our agreement with our
Accoya® licensee, Rhodia Acetow.
Gross profit margin decreased from
25% to 22% for a number of reasons
including lower licensing income, as
expected, and a number of largely
one-off matters which impacted the
first half of the year, including an
additional maintenance stop and a
reduction in our inventory of lower
grade (B-grade) material. However,
the gross margin in the second half of
the year increased to 24.5% compared
to 20% in the first half as a result of a
price increase implemented in January
2018, and without some of the one-off
items experienced in the first half.
Gross margin should increase further
in the year ending 31 March 2019 as we
benefit from the additional capacity.
Other operating costs (excluding
exceptional items) increased by 9% to
¤20.2m largely as a result of increased
activity following the formation of the
Tricoya® Consortium, wage inflation
and activities to support the expected
significant growth in Accoya® volumes.
This resulted in a ¤2.0m increase in
underlying Group EBITDA loss to
¤3.5m (2017: underlying EBITDA loss
of ¤1.5m). However underlying Group
EBITDA improved from a ¤2.8m loss
in the first half of the year to a ¤0.7m
loss in the second half. This was
largely due to an improvement in the
Accoya® segment where underlying
EBITDA improved from ¤1.2m profit
in the first half of the year to ¤3.4m
profit in the second half of the year
as a result of higher Accoya® volumes
and price increases.
Balance sheet
The increase in net debt to ¤3.8m
(2017: net cash of ¤18m) largely
reflects ¤29.5m of capital expenditure
incurred in the year in respect of the
Hull plant and Arnhem expansion, and
¤1.8m cash out-flow attributable to
operating activities after changes in
working capital.
During the year we raised ¤12.3m net
proceeds from the Firm Placing and
Open Offer (completed in April 2017)
and a further ¤14.4m was raised from
BP Chemicals and MEDITE in respect
of the Hull plant, through the issue of
new shares in our Tricoya® subsidiary.
We also drew down ¤7.5m under our
facility with Rhodia Acetow in respect
of the Arnhem expansion.
The net debt balance is expected to
increase in the new financial year as
further significant capital expenditure
is incurred in respect of the Hull plant
and the Arnhem expansion is finalised.
However Group operating cash-flow
is expected to be positive in the new
financial year.
Outlook
The additional capacity from the third
reactor in Arnhem will meet the pent
up and new demand for Accoya® and
Tricoya®. We expect sales volumes to
grow significantly in the new financial
year, although much of this will be in
the second half.
The start-up of the Hull plant in mid-
2019 will provide further additional
capacity to meet demand. This also
means we will no longer have to
supply Accoya® for the manufacture
of Tricoya®, which in conjunction with
the capacity expansion in Arnhem
would allow Accoya® capacity to
approximately double in comparison
to last year.
The new user licence agreement with
FINSA is a great endorsement and an
indication of the interest and demand
for Tricoya®, for which we also expect
sales to increase ahead of the Hull
plant becoming operational. We are
also in discussions with a number of
large MDF manufacturers regarding
potential licensing arrangements
similar to the FINSA agreement.
There is a high level of interest in
developing new capacity for Accoya®
and Tricoya® both in North America
and Asia. These are likely to involve
new partnership arrangements similar
to the Tricoya® Consortium in Hull.
In summary, this is an exciting period
for our Company. I am confident
that we are very well placed to take
advantage of our strong IP by utilising
our increased asset base to ensure
we can maximise growth and returns
going forward in both the short and
longer-term.
Patrick Shanley
Non-executive Chairman
18 June 2018
14
15
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 OUR MARKET
EVER INCREASING CONCERNS OVER POLLUTION RELATED TO PLASTICS AND
OTHER MAN-MADE MATERIALS MEANS THAT THE SUPERIOR QUALITIES OF OUR
PRODUCTS ARE DRIVING CUSTOMERS TO CHOOSE OUR ENVIRONMENTALLY-
FRIENDLY MATERIALS OVER ESTABLISHED WOOD AND MAN-MADE MATERIALS
INCLUDING FOSSIL BASED PRODUCTS. THIS GIVES ENORMOUS SCOPE TO
INCREASE OUR PENETRATION OF THIS VAST GLOBAL MARKET.
Our technology
Accoya® and Tricoya® are 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.
Market
We believe the potential market for
Accoya® and Tricoya® is in excess of
2.6 million cubic metres annually.
Last year we sold 42,676 cubic metres
of Accoya® and our licensee MEDITE
sold 7,328 cubic metres of Tricoya®
panels, however the total global solid
wood market is understood to exceed
400 million cubic metres annually and
we believe sales in excess of 1 million
cubic metres annually are ultimately
achievable. While it may take some
time for Accoya® and Tricoya® to reach
their full market potential and may be
limited by availability of manufacturing
capacity, 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. We
focus 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 are
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 other opportunities
will be developed as we become
able to meet the demands of larger
scale manufacturers and 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
façades 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 metres and up
to approximately 4.5 million cubic
metres 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 completed. Sales
of Tricoya® panels have increased
significantly each year since MEDITE
introduced them to the market in
2012, and total panel sales to date are
approximately 25,000 cubic metres /
2.3 million square metres, representing
a sales value of approximately ¤39m.
Last year sales grew by 26% to 7,328
cubic metres.
Both products offer environmental
advantages which enable them to
compete with a variety of other less
sustainable wood and man-made
products. We believe this will become
more important as global attention
increases in respect of the potential
harm that other products, such as
plastics and microplastics can cause.
16
17
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124Potential market for Accoya® and Tricoya® is in excess of 2.6m m3Increase in Tricoya® panel sales during 201826% OUR BUSINESS MODEL
SUSTAINABILITY
Pollution is not a new problem, but increased risk to
human health and the environment is now driving
specifiers and consumers to consider the environment
in every decision. Through our innovative technological
acetylation platform, we are committed to
manufacturing high performance materials – Accoya®
and Tricoya® – which are environmentally-friendly
solutions for the construction industry. Accoya®
and Tricoya® 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
including plastics.
They are natural building materials with low maintenance
and consistent qualities of the highest performing non-
sustainable man-made materials. They benefit from all
the positive attributes of wood such as sustainability,
strength and beauty without the downfalls of poor
durability and stability.
OUR KEY STRENGTHS
Branding
Intellectual property
(‘IP’), expertise and
Our brands Accoya®
innovation
wood and Tricoya® are
registered trademarks
Our IP is protected
in over 50 countries
at different levels
worldwide.
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.
Strong branding and
trade mark 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.
Our people
Our people are key to
our success, with high
staff retention and a
commitment to the future
of the Company.
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 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.
Velodrome specialists SDA from the Netherlands
handpicked Accoya® as the ideal wood for the 250
metre cycling track at the velodrome in Apeldoorn, the
Netherlands. Due to the acetylation process, it will not
splinter which was a critical requirement for the project.
18
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.
OUR
TECHNOLOGY
Our innovative 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 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.
HOW WE CREATE VALUE
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 are expected to be further improved
with the benefit of the new capacity in the new
financial year. 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 relationships with BP
and MEDITE in respect of Tricoya®, where the new
Consortium builds upon a broader level of experience
and capabilities in the acetyls and panel industries.
Investment in R&D, People and Partnerships
19
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
OUR STRATEGY
DEVELOPING
MARKET AND
DRIVING GROWTH
Ambition
To develop market opportunities into
core business to drive revenue growth.
KPIs:
• Accoya® and Tricoya® volume sold
• Number of distributors
DEVELOPING
MANUFACTURING
CAPACITY
Ambition
To grow manufacturing position in
Europe and establish new platforms in
key markets in support of, and to enable,
demand growth.
KPIs:
• Operational manufacturing capacity
• Manufacturing capacity under
construction
Our licensee and joint venture partner MEDITE manufactured
MEDITE® TRICOYA® EXTREME (MTX) panels that were milled into
intricate patterns for use along the outer walls of the Hjältarnas
Hus (House of Heroes) in Norrland, Sweden.
Image © MEDITE SMARTPLY and Åke Eson Lindman,
Lindman photography
Our approach
Progress in year ended March 2018
• Focus on significant and
• Total volume sold increased by 7% to
growth markets, for example
the USA and the joinery market
• Building brand and developing
critical mass within markets
42,676 cubic metres, however:
• Accoya® sales volumes (excluding to
MEDITE) increased by 10% to 34,617
cubic metres
• Developing the substantial
• Tricoya® panel sales by MEDITE increased
environmental advantages that
our products offer
• Development of partnerships
to allow the above in cost
effective manner
• Product development focused
on significant volume and value
propositions
by 26% to 7,328 cubic metres
• 64 Accoya® distribution and agency
agreements in place (2017: 61)
• Sales volumes have been capacity
constrained with customers on allocation
• USA identified as key growth market –
sales volumes increased by 43%
• Second Tricoya® user licence sold, expected
to increase sales into new European markets
Priorities for year
ending March 2019
• Meeting pent up
demand for Accoya®
from expanded
capacity following a
significant period of
customers being on
sales allocation
• Increase market
seeding of Tricoya®
in core European
region and develop
sales into new key
markets elsewhere
globally
Risks
Manufacturing capacity may be limited should sales grow faster than capacity allows. Our ability to manage demand
should we operate at or near capacity levels could result in negative market reaction. A delay in expansion of the Tricoya®
plant in Hull may result in uncertainty with our customers impacting sales in the shorter term.
The Group expects to sell 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.
Our approach
• Develop and optimise existing
sites to benefit from existing
skills and leverage operational
and financial scale
• Identify new international
locations and appropriate
partners to develop additional
capacity in order to meet
longer-term growth potential
in global markets
Our third Accoya® reactor will increase our capacity by
approximately 20,000 cubic metres at our Arnhem plant.
Progress in year ended
March 2018
• Record production from
Arnhem plant of 39,148 cubic
metres
Priorities for year ending
March 2019
• Commissioning of construction
and ramp up of operations of
third Accoya® reactor
• Third Accoya® reactor
• Tricoya® plant construction
construction significantly
progressed as expected,
which will increase capacity by
approximately 20,000 cubic
metres per annum
• Tricoya® plant construction
commenced, which will have
a capacity of approximately
30,000 metric tonnes of
Tricoya® wood chips per annum
expected to be near complete
ahead of operation in mid-2019
calendar year
• Development of initial plans
for ensuring additional
manufacturing capacity
• Development of key supply
chain relationships and options
in order to support longer-term
ambition
Risks
Accoya® process improvements are likely to be more difficult to achieve with no certainty that capacity from existing assets
can be increased further. The Tricoya® process is based on our core acetylation knowledge but may present unexpected
design issues requiring more complex engineering.
The Group’s Intellectual Property (‘IP’) 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 IP 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 IP.
The cost and availability of key inputs affects the profitability of 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.
20
21
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 OUR STRATEGY CONTINUED
RESEARCH AND
TECHNOLOGY
DEVELOPMENT
Ambition
To develop technology and IP
programmes to focus on value and
growth, and to manage risk.
Our approach
• Optimisation of existing
products and technologies
• Pursuit of focused technology
solutions which materially
enhance productivity and cost
of production
Our customers believe in our products and technology.
Delta Millworks use burning techniques to achieve a durable
and attractive charred finish on Accoya®, as seen on this
unique home in New York state.
Image © Delta Millworks
Progress in year ended
March 2018
Priorities for year ending
March 2019
• Significant progress made
• Finalisation of development of
in development of potential
coloured Accoya® and
other potential end product
developments which would
lead to new applications
coloured Accoya®
• Continued development of
application of acetylation to
other solid wood applications
• Fully define detailed
and focused technology
development programme for
implementation from 2019,
based on existing assets,
know-how and development
programmes
Risks
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.
22
ORGANISATIONAL
DEVELOPMENT
Ambition
To develop our people and
organisational capability to enable
us to meet our growth objectives.
Our success depends on our ability to continue to attract,
motivate and retain highly qualified employees. As well as
increasing our overall head count, this financial year we
marked the ten year anniversary of more than 30 employees.
Progress in year ended
March 2018
• New heads of HR and
Communications joined senior
management team; new Non-
Executive Director joined board
with significant operational
experience
• Undertaken review of many HR
related functions to identify
areas for development
Priorities for year ending
March 2019
• Review of organisational
structure and detailed
resource plans
• Develop values programme
Our approach
• Development of Group culture
and values
• Build Group’s organisation
capability to meet growth
objectives
• Focus resource strategy and
organisational development
based on strategic plan
milestones with appropriate
training and development
Risks
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.
Further details of risks and uncertainties are set out below:
(a) Regulatory, legislative and reputational risks
(b) Movements in foreign exchange
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.
The Group’s functional currency is the Euro. There is the risk that
movements in the Euro exchange rate against other currencies
may result in significant, unexpected, financial gains and losses.
The Group’s risk management strategy is to minimise the financial
risk associated with exchange rate movements by using foreign
exchange hedging. Where possible, the Group will use natural
hedges where assets and liabilities exist in the same currency,
otherwise it will use foreign exchange derivatives such as forward
contracts to minimise the risk.
The Group aims to hedge certain of its key foreign exchange
risk, taking account of the affordability of appropriate foreign
exchange derivatives.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CHIEF EXECUTIVE’S REPORT
" THE OVERALL INCREASE IN SALES VOLUME IN
THE YEAR REFLECTS THE CONTINUED INCREASE
IN DEMAND FOR OUR ENVIRONMENTALLY-
FRIENDLY PRODUCTS."
which has seen all parts of the
business operate at higher levels
than before. We have strengthened
our Senior Management Team,
with the addition of Heads of
Communications and HR as well as
the Head of Group Operations earlier
in the year. I believe the team is in
an excellent position to manage our
next significant growth phase.
Accoya® global performance
Total Accoya® sales volume for the
year ended 31 March 2018 increased
by 7% to 42,676 cubic metres (2017:
39,790 cubic metres) and total
Accoya® revenue increased by 11% to
¤56.3m (2017: ¤50.7m). The larger
increase in revenue compared to
volume was attributable to the effect
of price increases and a small change
in sales mix. Excluding sales to MEDITE
for Tricoya® panels, sales volumes
increased by 10% to 34,617 cubic
metres (2017: 31,532 cubic metres).
At the time of the justifiable increased
awareness of the critical importance
of sustainable alternatives to man-
made and fossil based materials, the
overall increase in sales volume in the
year reflects the continued increase
in demand for our environmentally-
friendly products, although growth
has been limited given production
volumes have been at capacity
level. Our customers have been on
allocation for much of the year and
we are grateful for their co-operation
as we have worked closely with
them through this challenging time
in order to manage demand. As a
result, we are well placed to meet
pent up demand, as well as new
opportunities now that potential
capacity is increasing by 50%. We
expect sales volumes to increase
during the remaining part of the new
financial year, as production volumes
ramp up following the completion of
commissioning this month.
The 10% growth in Accoya® volumes
(excluding to MEDITE) continues to
be driven by repeat business and
has been fulfilled by our network
of global distributors which has
remained largely consistent over
the last year. Demand is fuelled by
an ever increasing track record and
acceptance in our target markets
together with the drive by the industry
for high performance yet sustainable
building materials. We continue to
develop new sales opportunities as
we demonstrate Accoya®’s more
entrenched position in the market.
Introduction
We have made considerable progress
over the last year and I am particularly
pleased that we are now expecting
the first output from the third
Accoya® reactor this month, after
the completion of a substantial and
successful construction project.
The first year of the Tricoya®
Consortium has been transformational,
with significant progress made in the
construction of the world’s first wood
chip acetylation plant in Hull and
success in securing an important
new partnership with FINSA.
Safety continues to be our priority and
I am pleased to report that we have
had no lost time incidents in the year.
We are continuing a safety awareness
programme involving all of our
employees and will continue to
target best practice in this area.
I would again like to thank all of our
staff who have worked with continued
dedication towards achieving the
Group’s objectives, during a period
Accoya® sales volume growth
UK and Ireland remains our largest
region, where sales volumes remained
level at 11,994 cubic metres, excluding
sales to MEDITE for Tricoya® panels
(2017: 12,021 cubic metres). Use
of Accoya® for door and window
production remains the largest
application in this market and the use
of Accoya® for façades has increased
significantly. The inventory levels of
our distributors reduced during this
period under allocations. As a result
of strong demand together with
inventory replenishment, we anticipate
significant growth as production from
the additional capacity increases in
the new financial year.
9,464 cubic metres of Accoya® were
sold to Rhodia Acetow (2017: 8,531
cubic metres). This represented
an 11% increase and reflected our
arrangements with them as an
Accoya® licensee under which Rhodia
Acetow has responsibility for most
countries in central Europe and
Scandinavia. Subsequent to the year-
end we have agreed an amendment
to our off-take agreement with
Rhodia Acetow which has reduced
the minimum volume Accsys is
obliged to supply to Rhodia Acetow
for the remaining three years of the
agreement. The minimum volume
for the three years ending December
2020 has been reduced from 55,000
cubic metres to 44,990 cubic metres,
reflecting both our recent and
potential future production
capacity constraints.
Sales in the Americas increased by
43% to 5,494 cubic metres from
relatively small volumes last year,
reflecting our focus on the largest
potential market for Accoya®.
Our sales team has made significant
progress in developing short and
longer-term opportunities and I
believe this region will also represent
a significant area of growth following
the availability of new production
capacity. While sales volumes
increased, margins in the region
were impacted by weaker US Dollar
exchange rates, with North America
being the only region where we
invoice customers in local currency
rather than Euros.
Sales to the Benelux area decreased
by 8% to 3,405 cubic metres, as a
result of lower sales in Belgium. This
was attributable to the prior year
including one-off projects and a
change in our distribution structure.
We have secured an additional
distribution partner for Belgium,
with a strong project pipeline for the
new year. Sales to the Netherlands
increased by 15% despite customers
being on allocation for much of the
year, reflecting changes we made to
our sales and marketing approach as
well as to the sales team last year. As a
result I am confident sales will continue
to grow for this region with the new
production capacity.
Sales to the Asia-Pacific region
increased by 26% to 3,540 cubic
metres. Sales outside of Diamond
Wood’s exclusive region, including to
Japan, Australia, New Zealand and
India increased by 25%, reflecting
particularly strong growth in Australia
and Japan from both positive
collaboration with distributors
and the benefit of repeat business
manufacturing companies increasing
use of Accoya®.
Sales to customers elsewhere,
including Eastern Europe and the
Middle East continue to be relatively
small with growth restricted by
production capacity. However, we
continue to develop relationships with
distributors and believe that many
of these regions represent excellent
longer-term markets.
Volumes of Accoya® sold to MEDITE for
the manufacture of MEDITE® TRICOYA®
EXTREME remained relatively flat,
at 8,059 cubic metres. While prices
increased slightly in the year the margin
for this material continues to be lower
than sales to our regular Accoya®
customers. This reflects our investment
in the Tricoya® project resulting in
our shareholding in the Consortium
increasing by 0.5%. Sales are expected
to grow significantly in the new
financial year and ahead of the Hull
Tricoya® plant becoming operational
in mid-2019 calendar year. Sales by
MEDITE of Tricoya® panels increased
by 26% to 7,328 cubic metres in the
year to 31 March 2018, reflecting use
of MEDITE’s inventory.
We have 64 Accoya® distributor,
supply and agency agreements
in place covering most of Europe,
Australia, Canada, Chile, China, India,
Japan, New Zealand, South Korea,
parts of the Middle-East and South-
East Asia, and North America.
No Accoya® licence related income
was reported in the year (2017: ¤1.6m)
reflecting the contractual milestones
in place with our licensee Rhodia
Acetow, however further milestones
are expected to be achieved in the
new financial year.
24
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124Accoya® global sales growth10%Accoya® NA sales growth43%Accoya® APAC sales growth26%Total sales volume 42,676m32017: 39,790m3Sales volume excluding MEDITE34,617m32017: 31,532m3
CHIEF EXECUTIVE’S REPORT CONTINUED
Accoya® pricing and margin
The gross manufacturing margin
(which excludes licensing income)
decreased from 22.7% to 21.8%
reflecting a number of one-off matters
reported with the half year results.
The gross manufacturing margin
improved from 19.5% in the first half
of the year to 23.8%, with the second
half of the year also benefiting in part
from a price increase effective from
January 2018.
The lower gross margin in the first
half of the year was attributable to the
following, largely one-off factors:
In May 2017 we carried out an extra
maintenance stop, in addition to our
annual maintenance stop completed
in September 2017. The May stoppage
related to the expansion however
lasted longer than expected, and
resulted in lower production volumes
and ¤0.2m of additional costs.
The proportion of sales to MEDITE and
Rhodia Acetow increased to represent
41.6% of total sales volumes in the
first half of the year. Lower priced
and lower margin Accoya® is sold to
MEDITE reflecting our investment in
Tricoya® market seeding and Rhodia
Acetow receives discounted prices
reflecting their on-going commitment
under their off-take agreement. The
proportion of sales to MEDITE and
Rhodia Acetow decreased marginally
to 40.6% in the second half of the year.
We expect the new financial year
to benefit from the full effect of the
price increase implemented from 1
January 2018 and we will continue to
keep prices under review as the year
progresses. We also expect to benefit
from economies of scale arising from
operating the third reactor and we
continue to believe that a gross
margin of 30% is achievable in the
longer-term.
Raw material prices increased in the
first half of the year, with the cost of
acetyls increasing in the first quarter
although this subsequently reduced.
The cost of raw wood also increased in
the first half of the year. As a result, we
implemented a price increase for all of
our customers from January 2018.
Expansion of Accoya®
manufacturing plant
I am very pleased to report that the
construction of the third reactor has
recently been completed and is now
operational. Full commissioning is
underway with the benefit of additional
Accoya® expected later this month.
We also reported a one-off cost
attributable to a quantity of lower
grade wood sold in the first half of
the year which reduced gross margin
by ¤0.5m, but which assisted in the
relocation of inventory to our new
warehousing facilities in the second
half. Inventory levels had built up
following some challenges in securing
the right mix of raw wood from our
suppliers in New Zealand. We have
improved the balance of material
being supplied from New Zealand
and factored in the remaining related
cost into the new customer prices
implemented from January 2018.
The expansion has been completed
successfully as expected and the
50% additional production capacity,
to in excess of 60,000 cubic metres,
will allow us to grow sales volumes
significantly in the remaining part of
the new financial year.
At the same time, we completed the
chemical infrastructure for the fourth
reactor which means that we can
increase capacity by an additional
20,000 cubic metres both more
quickly and at a lower cost, when
demand requires.
To support the additional
manufacturing capacity, we have
recruited some additional shift staff
and are in the process of adding to
these teams further as we expect to
ramp up operations. The additional
capacity is expected to result in
improved economies of scale when
operating at higher volumes given
the overlap of some functions and
shared overheads with the existing
two reactors.
In October 2017 we completed the
move into new facilities adjacent
to the plant which includes a new
warehouse and distribution centre,
R&D laboratory, maintenance
workshops and office. These facilities
were previously spread over a number
of different rented buildings. The
new facility has been constructed by
Bruil under the sale and leaseback
arrangements we originally entered
into in 2016. We are already seeing
the benefits of working at a single site,
with efficiencies expected to be gained
from improved logistics between the
warehouse and the processing plant as
well as having our Arnhem employees
at a single location.
Subsequent to the year-end we have
purchased the majority of the Arnhem
land and buildings back from Bruil for
a total of ¤23m, enabling us to benefit
from greater flexibility over the use
of the site as well as any potential
value appreciation. The acquisition
remains conditional upon Accsys
finalising finance terms to fund the
purchase price of ¤23m (plus VAT).
Should satisfactory financing terms
not be agreed, the transaction will be
unwound, the property transferred
back to Bruil and the previous lease
arrangements will re-commence, all
without liability to Accsys.
The construction of key structures is
progressing well at the Hull Tricoya® plant
“ THE HULL PLANT IS EXPECTED TO REACH EBITDA BREAKEVEN AT
APPROXIMATELY 40% OF ITS CAPACITY."
Tricoya® Consortium
I am very pleased to report substantial
progress by the Tricoya® Consortium
since its formation in March 2017.
Detailed engineering by the main
contractor, Engie Fabricom, had
commenced prior to the start of the
year and this enabled work to begin
on site immediately following the
site clearance and remediation work
which was completed in June 2017.
Ground works have been completed
and the construction of key structures
is progressing well, including the
acetylation tower.
Approximately 90% of key equipment
orders have been placed, including all
long lead time items, with the first such
items having been delivered to site.
Co-operation with our Consortium
partners, BP and MEDITE, has been
excellent at all levels of the organisation,
including ensuring that the Consortium
benefits from BP’s experience at the
Saltend Site and MEDITE’s experience
with wood handling.
The plant manager for the new plant
started in January 2018 and we are
building a team of approximately
30 staff to operate the plant. These
staff will be recruited during the new
financial year with the early task of
developing the operational protocols
and then commissioning the plant in
2019 calendar year.
MEDITE has continued to develop
the market, and sales of MEDITE®
TRICOYA® EXTREME panels by
MEDITE have increased by 26%
compared to the same period
last year.
Demand for Tricoya® panels continues
to increase allowing MEDITE to
increase prices. Growth has more
recently been limited as a result of
the production capacity in Arnhem
restricting the amount of Accoya®
that can be sold to MEDITE. Sales
are expected to increase now that
additional Accoya® manufacturing
capacity is available ahead of the
dedicated Tricoya® plant becoming
operational in 2019.
MEDITE has been responsible for the
majority of sales, however we have
commenced sales and marketing
activities in regions outside of
MEDITE’s licensed region in order to
further increase ultimate demand for
the Hull plant and to seed new markets
in respect of potential additional
Tricoya® licensees.
26
27
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CHIEF EXECUTIVE’S REPORT CONTINUED
Sales of MEDITE® TRICOYA® EXTREME panels by MEDITE
2018
2017
2016
7,328m3
5,806m3
26%
4,430m3
31%
We agreed an acceleration of the
remaining ¤14.4m of equity funding
due from BP Chemicals and MEDITE
into Tricoya Ventures UK. This enables
us to better manage the foreign
exchange risks associated with the
project given much of the construction
cost is denominated in pounds Sterling.
Intellectual property
We continue to focus on and invest
heavily in the generation and
protection of intellectual property
(‘IP’) relating to the innovation
associated with our acetylation
processes and products, to ensure
ongoing differentiation and
competitive advantage in the market
place. Recent attention has been
given to conducting thorough reviews
of those processes for Accoya® and
Tricoya® wood products to ensure
strong protection is in place.
Protection opportunities are also
being considered for the next
generation of technologies associated
with our acetylation process to
further improve efficiency, and
complementary technologies for
our products.
Patenting and/or maintaining
valuable know-how as a trade secret
remains the typical route through
which our innovation is protected.
Applications filed now number 288,
in 43 countries. To date, 98 patents
have been granted in various
countries throughout the world.
In March 2018 we announced a new
Tricoya® user licence agreement
with FINSA, one of Europe’s
longest established MDF and
chipboard manufacturers. FINSA
has been granted exclusive rights for
manufacturing panels from Tricoya®
wood elements in Spain and Portugal,
with non-exclusive distribution rights
in other territories. FINSA will sell
the panels under the Tricoya® brand
and pay a combination of royalty
and licence fees to the Tricoya®
Consortium, with the first instalment of
the licence fee having been paid in the
financial year ended 31 March 2018.
The supply of acetylated material for
the production of Tricoya® panels by
FINSA will initially be met from the
Accoya® plant in Arnhem and then in
the form of Tricoya® chips from the
new Tricoya® plant in Hull.
The anticipated future demand for
Tricoya® chips indicated by FINSA
together with the existing off-
take agreement with MEDITE, is
expected to result in the Hull plant
being significantly loaded and as
a consequence cash generative
at an earlier point. The Hull plant
is expected to be EBITDA break-
even at approximately 40% of its
production capacity.
¤17m of capital expenditure has been
invested in the year in respect of
the Hull plant (2017: ¤1.4m), out of
a total estimated ¤59m. Operating
costs increased to ¤3.2m (2017:
¤1.5m) reflecting the expected
increase in activity levels ahead of
the completion of the Tricoya®
plant. This has included business
development with an increase in global
interest for Tricoya® and progress with
potential new partnerships.
Management of our know-how,
including increasing Company-wide
awareness of the importance of
protecting and controlling that 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.
Particular focus is placed on minimising
risks when engaging with third parties,
by ensuring Accsys know-how is only
shared when absolutely necessary.
Controls are also placed on receiving
confidential information, to prevent
protection associated with our internal
research efforts being compromised.
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 Arabic, Chinese
and Japanese. All of our key brands
have now been registered in over
50 countries, becoming valuable
household names in the timber and
panel industries. Recent activity has
focused on additional trademark
filings to further protect the Company
brands and to support new products,
as well as providing evidence of use to
maintain the validity of our trademarks
throughout the world.
Accsys continues to maintain an
active watch on the commercial and
IP activity of third parties to monitor
and take action 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 acquisition, and to
We continue to see the demand for
Accoya® and Tricoya® increasing and
believe this is due to a combination
of factors. We have developed a
strong brand, distribution network
and other key relationships in the
industry. I also believe that there is an
increasing realisation in the industry
that products such as Accoya® and
Tricoya® will serve a long-term role in
replacing environmentally damaging
man-made products while crucially
being able to offer all of the attributes
of a high performance product.
We are on track to complete the
Tricoya® plant in Hull in mid-2019
calendar year and I believe this will
free up additional Accoya® capacity in
Arnhem which will be required given
the expected increase in sales. For the
longer-term, we continue to explore
options to add further additional
capacity to meet expected demand on
a global scale and I am very pleased
by some of the discussions we are now
having with potential new partners.
Paul Clegg
Chief Executive Officer
18 June 2018
obtain an early insight into any IP
which could potentially hinder our
commercial activity. The scope of the
IP watch is under regular review, and
has recently been expanded to align
with the increased diversity of our
research programmes.
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 maintained and
protected, and grown in a cost-
effective manner, adding value to
our manufacturing and licensing
businesses. The IP portfolio continues
to be regularly reviewed to ensure
alignment with the Company
objectives, and to confirm fulfilment
of obligations to current and potential
future licensees.
Outlook
We are very well positioned to take
advantage of the additional capacity
from the expanded Arnhem plant
which is now available, and as result,
for our customers to make positive
material choices.
I expect Accoya® sales volumes will
grow significantly in the remaining
part of the new financial year as
production volumes ramp up. This will
also result in an improvement in our
profitability with the Group operating
at an EBITDA positive level in the
foreseeable future.
28
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 FINANCIAL REVIEW
" 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."
of a one-off ¤0.5m loss on low grade
wood, increased material costs for
raw wood and acetyls, together with
an additional maintenance stop in
the period due to tie-ins for the plant
expansion in Arnhem. This was offset
by an increase in pricing as noted
above from January 2018.
Following the additional capacity from
the third reactor becoming available
in advance of the Hull plant being
completed, our percentage gross
margin will depend on our customer
sales mix, in particular with sales to
MEDITE and Rhodia Acetow, which
are at a lower margin. We continue
to expect a gross margin from the
manufacture of Accoya® of 30% to be
achievable thereafter as we benefit
from the additional manufacturing
capacity and improved sales mix.
Other operating costs (excluding
exceptional items)
Other operating costs (excluding
exceptional items) increased by 9% to
¤20.2m (2017: ¤18.6m). The increase
in operating costs is largely due an
increase in headcount in the year to
an average of 138 (2017: 124), with
staff costs excluding foreign exchange
movements increasing by ¤0.8m.
This included a share based payment
charge of ¤0.3m (2017: ¤0.9m). ¤0.7m
(4%) of the increase in staff costs are
included in the Tricoya® segment,
reflecting the increased activities as
the Hull plant is built.
Income statement
Revenue
Total revenue for the year ended
31 March 2018 increased by 8% to
¤60.9m (2017: ¤56.5m). Within
this total Accoya® wood revenue
increased by 11% to ¤56.3m (2017:
¤50.7m) as a result of sales volumes
increasing by 7%, and price increases
implemented in the period. Accoya®
revenue includes ¤7.8m of sales
to MEDITE for the manufacture
of Tricoya® panels (2017: ¤7.8m),
noting allocations due to capacity
constraints in the current year.
Licence income decreased from
¤1.6m to ¤0.2m, where revenue in
2017 reflected the agreements with
our Accoya® licensee, Rhodia Acetow,
which given the milestone nature of
the agreements were not repeated
in 2018. The current period licence
income relates to Tricoya®.
Other revenue of ¤4.4m (2017: ¤4.3m)
included ¤0.3m relating to the Sales
and Marketing agreement with Rhodia
Acetow. The remainder is largely
attributable to sales of acetic acid and
remained consistent with prior year
given similar production levels.
Gross margin
Gross profit margin reduced from
25% to 22%, as a result of lower
licence revenue as set out above,
and an increase in cost of sales. The
Accoya® gross manufacturing margin
decreased from 23% to 22% as a result
We have seen a further increase of
¤0.2m in staff costs and ¤0.1m in
other operating costs attributable
to foreign exchange resulting from
the strengthening of Sterling during
the year. In addition depreciation
increased by ¤0.3m due to increased
charges in Arnhem for the completed
infrastructure works and an increase in
office and facility costs of ¤0.2m due
to increasing costs for our expanded
plant in Arnhem. Sales and marketing
costs have risen by ¤0.2m during
the year as the Group prepares for
increased sales of Accoya® from the
expanded Arnhem facility and the new
sales of Tricoya® chips from the plant
in Hull.
Loss from operations
The underlying loss from operations
increased to ¤6.6m (2017: loss of
¤4.2m) due to the reduction in gross
margin and the increase in operating
costs, as explained above. Loss from
operations also includes other gains
included as an exceptional item
(see following page).
Finance income
Finance income of ¤nil (2017: ¤2,000)
represents interest receivable on bank
deposits. In addition interest was
received in relation to Tricoya® cash
held in respect of the new plant in
Hull. This has been capitalised and is
included in fixed asset additions.
Finance expense
Finance expense (before exceptional
items) of ¤2.2m (2017: ¤0.3m) 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 majority of the
balance represents interest and other
finance charges relating to the Loan
Notes issued to in the prior period to
Business Growth Fund and Volantis
relating to the Tricoya® project (¤1.0m)
(see note 29). The total charge also
includes any finance charges payable
in respect of the Group’s working
capital facilities.
Exceptional items and other
adjustments
Underlying operating cost adjustments
include:
• ¤1.4m annual bonus paid in the
current year which was attributable
to the year ended 31 March 2017.
The accrual for the current year
bonus is included in underlying
operating costs. This double
charge in the year results from
a re-alignment of the timing of
recognition of bonuses reflecting
the more structured annual bonus
scheme now in place compared
to previous years. In addition the
bonus paid in the current year
relating to the year ended 31 March
2017 included one-off targets
relating to the formation of the
Tricoya® Consortium.
• ¤0.2m of exceptional restructuring
charge has been recorded following
necessary staff changes following
the formation of the Tricoya®
Consortium.
Underlying total comprehensive loss
for the year adjustments also include:
• ¤0.5m of finance expenses relating
to foreign exchange differences
arising on the Sterling denominated
loan notes, entered into in the
prior year.
• ¤0.2m of other comprehensive
income in relation to the Group’s
adoption of cash flow hedge
accounting in respect of the
Tricoya® plant construction under
IFRS 9, Financial Instruments
(see note 1).
Research & Development expenditure
¤1.6m was incurred on research and
development activities in the year
(2017: ¤1.8m). ¤0.1m (2017: ¤0.2m)
has been capitalised as an intangible
asset (see note 16).
Taxation
The net tax credit of ¤0.3m compares
to a ¤0.7m net charge in the prior year.
The tax charge for the year ended
31 March 2018 has reduced compared
to the prior year as a result of a change
to the Group’s transfer pricing policy
to more accurately reflect the Group’s
business model.
• ¤0.6m foreign exchange loss
Dividends
arose from holding cash in pounds
Sterling which was held primarily
as a cash flow hedge against future
Sterling project expenditure on the
new plant in Hull. This has been
impacted by the volatility of the
Sterling/Euro exchange rate
(see note 5).
No final dividend is proposed in 2018
(2017 final dividend: ¤nil). The Board
deems it prudent for the Group to
maintain as strong a balance sheet as
possible during the current phase of its
growth strategy.
Earnings per share
Basic and diluted loss per share was
¤0.08 (2017 basic and diluted loss
per share was ¤0.06).
Balance sheet
Intangible assets
Intangible asset additions of ¤0.4m
(2017: ¤0.4m) predominantly relate
to capitalised internal development
costs for both Accoya® and Tricoya®
related activities.
Property, plant and equipment
Property, plant and equipment balance
increased by ¤39.1m to ¤60.8m (2017:
increase of ¤1.4m). The increase was
due to additions of ¤13.6m relating
to the project to expand the Arnhem
Accoya® plant through the addition
of the third reactor, including ¤0.4m
of capitalised internal staff costs. A
further ¤10.4m is attributable to a new
Arnhem warehouse and office facility
finance lease arrangement (see note
28). ¤17.0m relates to the construction
of the Tricoya® plant in Hull and ¤1.0m
relates to technology improvements
and significant maintenance items at
the 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,
which in 19 April 2017 were converted
to 520,001 shares in Cleantech
Building Materials PLC. During
the year Accsys sold 21,479 shares
such that a total of 498,522 shares
were held at 31 March 2018.
30
31
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124Total revenue€60.9m2017: ¤56.5mAccoya® wood revenue €56.3m2017: ¤50.7m FINANCIAL REVIEW CONTINUED
The historical cost of the unlisted
shares held at 31 March 2018 is ¤10m
(2017: ¤10m). However, a provision for
the impairment of the entire balance of
¤10m continues to be recorded as at
31 March 2018 (see note 18).
Inventory
The Group had total inventory of
¤13.1m (2017: ¤11.8m), including
finished goods consisting of Accoya®
¤2.8m (2017: ¤5.3m) and raw materials
and work in progress, primarily
consisting of unprocessed lumber,
being ¤10.3m (2017: ¤6.5m).
The ¤2.5m decrease in finished goods
is attributable to higher sales in the
current year, whilst constrained by
capacity in our plant in Arnhem. This is
off-set by an increase in raw materials,
attributable to the planned increase in
production in the new financial year
to prepare for the start-up of the third
reactor in Arnhem.
Cash and cash equivalents
The Group held cash of ¤39.7m at
31 March 2018 (2017: ¤41.2m). The
decrease in the year is mainly due
to cash out-flows from operating
activities before changes in working
capital of ¤4.5m including exceptional
items, and expenditure on property,
plant and equipment of ¤29.5m. This
is partly offset by ¤12.3m net proceeds
from the issue of share capital in
Accsys, ¤14.4m from the issue of
share capital in Tricoya Ventures UK
(‘TVUK’) Limited to non-controlling
interests (see note 9), and ¤7.5m
from the drawdown of our loan with
Rhodia Acetow for the expansion of
the plant in Arnhem. (¤34.8m of total
Group cash balance relates to the
Tricoya® Consortium and is not directly
available for other Group purposes).
¤2.9m of cash out-flow was
attributable to cash flows from
operating activities before changes in
working capital (excluding exceptional
items) (2017: ¤0.7m out-flow), as
a result of the increase in the loss
before taxation to ¤8.8m (excluding
exceptional items).
¤2.8m of cash in-flow was attributable
to changes in working capital (2017:
¤0.5m out-flow), including the ¤3.9m
increase in trade and other payables
and a ¤0.2m decrease in trade and
other receivables partly offset by a
¤1.3m increase in inventory.
¤29.9m out-flow in respect of
investing activities (2017: ¤2.6m),
included ¤0.4m in respect of
capitalised development costs (2017:
¤0.4m) and ¤29.5m in respect of
tangible fixed assets (2017: ¤6.4m)
including in respect of the expansion
of the plant in Arnhem and for the new
plant in Hull.
Trade and other receivables
Trade and other receivables have
increased to ¤9.3m (2017: ¤7.6m).
Within this, trade receivables
increased from ¤4.1m to ¤6.7m due
to high sales in March and with VAT
receivable increased from ¤0.6m to
¤1.5m in line with the increased trade
payables, largely for the plant build in
Hull. This was off-set by a decrease in
prepayments from ¤3.3m to ¤2.5m,
after an increase last year 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 ¤18.0m (2017: ¤12.5m). Included
within this, trade payables increased
to ¤9.5m (2017: ¤6.6m), 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 ¤4.5m to ¤7.1m due largely
to ¤4.1m of accruals relating to the
Tricoya® plant in Hull (2017: ¤1.0m).
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
2018 the Group had ¤1.7m as lease
commitments over the remaining life
of the lease (2017: ¤1.9m) (see note
28). The second part of the previous
sale and leaseback of the land in
Arnhem was completed in February
2013 and is 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, have constructed and leased
to Accsys new warehouse and office
facilities. The construction is now
complete, with a new asset and
liability of ¤10.4m being recognised
as at 31 March 2018. A further lease
agreement with Bruil was entered into
in the period relating 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 ¤1.9m
being recognised as at 31 March 2018
(2017: ¤0.9m).
Long term borrowing
Amounts payable under loan
agreements increased to ¤29.3m
(2017: ¤20.1m). This increase was
largely due to the drawdown of the
remaining Rhodia Acetow loan facility
of ¤7.5m in the period, which has been
utilised to fund the costs of the third
reactor. The remaining ¤1.7m increase
relates to the roll up of interest and
fees on all facilities, as no repayments
were due in the year (see note 29).
Non-controlling interests
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 year a total of
¤14.4m of equity was issued by TVUK
to BP and MEDITE. This has resulted
in an increase in the non-controlling
interest of ¤30.3m as at 31 March 2018
(2017: ¤12.6m). In the prior year, the
difference between the cash received
and non-controlling interest recorded
was due to the Tricoya® Consortium
agreements recognising Accsys’
contribution of IP and historical
development work, with an implied
pre-funding valuation of ¤35m.
Tricoya® chips from the new plant
in Hull, with the collection of on-
going working capital items in line
with internally agreed budgets. The
Group is also dependent upon certain
banking and finance facilities which
are in place.
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.
William Rudge
Finance Director
18 June 2018
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
Tricoya Technologies Limited (‘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.
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. 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 eventually, of
32
33
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 SUSTAINABILITY REPORT
OUR INNOVATIVE ACETYLATION TECHNOLOGY ENABLES US TO SUSTAINABLY
MANUFACTURE WOOD PRODUCTS THAT MAKE A MATERIAL DIFFERENCE TO THE
ENVIRONMENT AS WELL AS OFFER ‘BEST IN CLASS’ DURABILITY, DIMENSIONAL STABILITY
AND A WIDE SPECTRUM OF OTHER ADVANTAGES OVER ALTERNATIVE FOSSIL FUEL
DEPENDENT OR MAN-MADE PRODUCTS.
Our Corporate Vision
A strong belief that we have a
collective social responsibility to use
and develop our technology to tackle
climate change and pollution lies at
the very core of our business. Our
innovative acetylation technology
enables us to sustainably manufacture
wood products that make a material
difference to the environment as
well as offer ‘best in class’ durability,
dimensional stability and a wide
spectrum of other advantages over
alternative fossil fuel dependent or
man-made products. This values-
led vision also provides an attractive
opportunity 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 facilities, and on a
substantially larger scale by licensing
our technologies to other companies
so that they too can manufacture
these sustainable products.
Accsys aims to reduce the use
of environmentally unfriendly
building materials and products by
the utilisation of our proprietary
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 techno-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 and improve the
environmental and efficiency benefits
of our products. This will ensure we
continue to respond to the growing
global ambition of consumers to live
sustainably, reduce the growth of
plastic pollution and tackle climate
change and 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 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.
CIRCULAR ECONOMY BASED ON RENEWABLE MATERIALS (BIOLOGICAL CYCLE)
Composting
WASTE
SOURCING
Endlessly renewable
PRODUCTION
Reduced Energy
consumption
RECYCLING
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 techno-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 man-made world.
In producing Accoya®, 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® 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® 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 three minute movie – Accoya® –
the sustainable building solution.
http://www.youtube.com/
watch?v=92j0_6WaQJU
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 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® was rated as
excellent or A.
Declare
The International Living Future
Institute manages the highly
acclaimed and most rigorous proven
performance-based standard for
green buildings, the Living Building
Challenge. The Declare label shows
that Accoya® consists of greater than
99.5% of FSC® certified fast growing
Radiata Pine, provides no problems in
the End of Life phase and is fully safe
regarding ingredients proven through
the ‘Red List Free’ statement.
SUSTAINABILITY REPORT CONTINUED
Accreditations
FSC® (CO12330)
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® 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 Cradle™
Accoya® is one of the very few
building products to have acquired
Cradle to Cradle™ Certification on
the elusive 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® also
received Platinum status for Material
Health meaning manufacturers are
trusted with the way to communicate
their work towards chemically
optimised products.
BREEAM & LEED worldwide
BREEAM (mainly used in Europe) and
LEED (mainly used in North America)
are 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® 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 rigour 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.
Singapore Green Label
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
36
37
Two semi-open passive houses – Zele, Belgium
Energy efficiency and a low ecological footprint were key
determining factors when joinery company Schrijnwerkerij
Michiels were specifying materials for these two semi-
open passive houses in Zele, Belgium. As Accoya® offers
improved insulation in comparison with commonly used
hardwood and softwood species, it was the ideal material
for the windows and façades. In total, 10m3 of Accoya®
wood, supplied by Hout Bois van Steenberge, was used for
the construction of the two half-open passive houses.
Another key feature of Accoya® is its dimensional stability
and durability, making it a long-term solution for windows
and doors, ensuring they open effortlessly all year around,
with the added benefits of reduced maintenance costs for
homeowners and a lower carbon footprint. In fact, the low
emissions during our production processes combined with
the increased lifespan and fully recyclable nature of Accoya®,
means that a window frame made from Accoya® is assessed
to be CO2 neutral over its full lifecycle.
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 Andrew Elston, Commercial Specifications Account
Manager at Britton Timbers, commented: “In the
Australian sun and surrounding elements of wind
and salt air, we knew Accoya® was a material we
could really rely on. It provided complete peace of
mind with regards to its performance, its stability
and its durability factors.”
Huw Turner, Director of Collins and Turner, said:
“It was wholeheartedly agreed that Accoya®
would be the best solution for a long term
outcome due to its hardwearing, versatile nature.
Utilising shou sugi ban was ideal to help create a
unique, contemporary building embracing the true
Japanese craftsmanship and traditions we admire.
Along with the low maintenance requirements, the
sustainability factor of Accoya® also significantly
appealed to us.”
" IT WAS WHOLEHEARTEDLY AGREED
THAT ACCOYA® WOULD BE THE
BEST SOLUTION FOR A LONG TERM
OUTCOME"
BARANGAROO HOUSE
Situated in the heart of Barangaroo, a major
commercial and residential precinct on the
edge of Sydney Harbour, Barangaroo House – a
freestanding, three-storey restaurant – opened in
December 2017 and is the latest venture by one of
Australia’s most celebrated chefs, Matt Moran.
Inspired by stacked kitchen bowls, the unique
split level restaurant was designed by architects,
Collins and Turner, taking on a remarkable organic
form clad in charred Accoya®. Supplied by timber
experts and Accoya® distributor Britton Timbers,
the Accoya® was laminated into a set radius with
a shou sugi ban (medium char) finish applied to
create a striking charcoal appearance.
To further enhance the project, a layer of ‘Anthracite’
(a WOCA coating from Denmark) was applied to
compliment the overall design aesthetic. Specialists
in the shou sugi ban technique find that the
stability of Accoya® provides a more rigid char
through the extremes of the flame treatment, and
this significantly enhances the appearance and
maintenance interval.
Located on a prominent waterfront site, Accoya®
was the ideal choice for this stunning project
thanks to its exceptional durability, reliability and
stability properties. With a guarantee of 50 years
above ground, Accoya® wood can withstand the
harshest of external environments while resisting
distortion and warping over its lifetime.
" ACCOYA® WAS THE IDEAL CHOICE FOR
THIS STUNNING PROJECT THANKS
TO ITS EXCEPTIONAL DURABILITY,
RELIABILITY AND STABILITY
PROPERTIES."
38
CORPORATE
GOVERNANCE
40 Board of Directors
42 Senior Management Team
44 Directors’ Report
47 Remuneration Report
61 Corporate Governance
63
Statement of Directors’
Responsibilities
Image © courtesy of Rory Gardiner
39
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 BOARD OF DIRECTORS
Patrick Shanley
Paul Clegg
William Rudge
Hans Pauli
Nick Meyer
Sue Farr
Sean Christie
Trudy Schoolenberg
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. 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 Financial
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.
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
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 Group
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 and
Turner & Townsend Ltd. 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, of Cherry
Valley Farms Limited
until its sale in 2010 and
of Produce Investments
Plc. 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 became
part of the executive
management team at Chime
Communications plc in 2003
and in 2017 was appointed
as Special Advisor. 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
and Millennium & Copthorne
Hotels plc. 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.
Trudy has nearly 30 years’
experience working for
blue-chip companies in
the chemicals, engineering
and high performance
product sectors, including
over twenty years with
Royal Dutch Shell where
she led business strategy
and growth plans for Shell
Chemicals, a business unit
with a multi-billion dollar
turnover. She joined the
Accsys Board on the 1 April
2018. As well as strategy
and growth experience, Dr
Schoolenberg has strong
operational knowledge,
gained both during her
time at Shell and thereafter
at Akzo Nobel, where
following supply chain and
research and development
roles on Akzo’s $4 billion
decorative paints Board,
she subsequently had
responsibility for delivering
a new manufacturing plant
in Newcastle. Trudy is
currently a Non-Executive
Director of The Netherlands
Petroleum Stockpiling
Agency (COVA), Spirax-
Sarco Engineering PLC and
a Non-Executive Director of
high performance material
producer, Low & Bonar PLC,
where she became Senior
Independent Director
in 2017.
40
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
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:
Angus Dodwell
Eddie Pratt
Hal Stebbins
John Alexander
Karlijn Rademakers
Martin Robinson
Natalia Bikkenina
Pierre Lasson
Sarah Harding
Legal Counsel and
Company Secretary
Director of Business
Development
Director of Supply
Chain and Customer
Service
Director of Sales and
Product Development
Director of
Engineering and
Manufacturing
Head of Group
Operations
Head of Human
Resources
General Manager
Tricoya Technologies
Limited
Head of Corporate
Communications
and Marketing
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.
Eddie has been
with Accsys since
its inception in
2003 and uses his
in depth experience
and knowledge of
Accsys to develop
new markets 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.
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.
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.
With a background 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.
Before joining Accsys
in April 2017, Martin
enjoyed a very
successful career with
BP. He has spent most
of his 30 year career
in the petrochemicals
industry, during
which time he has
led businesses of
material scale in
Europe, US and Asia,
and developed deep
expertise in Acetyls.
He now oversees
all operational and
project activities of
the Group as well as
actively supporting
the Group’s broader
growth agenda.
Natalia is responsible
for all aspects of
global HR, including
responsibility
for developing a
comprehensive
global HR strategy
which supports
business growth and
expansion, attracts
and retains top talent
and drives high
performance. Natalia
joined the Accsys
Group in October
2017 having worked
in a number of
international industrial
and technology
businesses. In her
role, Natalia will also
use her experience of
working for start-
ups and high growth
companies to facilitate
Group expansion
plans. Natalia has a
degree in Languages
and an MBA.
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.
Sarah joined Accsys
in May 2017 and
oversees all global
communication and
marketing activities
of the Group. After
gaining experience
in advertising and
marketing roles,
Sarah spent over
ten years working
in and running
communications
agencies advising
brands and companies
on strategic
communications
and marketing.
She is responsible
for leading the five
year marketing
strategy across all
brands, driving the
development of the
company values, and
helping to build the
Group’s capability for
growth through clear
and consistent internal
communications.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
DIRECTORS' REPORT
For the year ended 31 March 2018
The Directors present their report
together with the audited consolidated
financial statements for the year
ended 31 March 2018.
Results and dividends
The consolidated statement of
comprehensive income for the year
is set out on page 72, 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 14 and the Chief
Executive’s report on page 24.
Accsys Technologies PLC is a public
limited company, which is listed
on London Stock Exchange AIM
and Euronext Amsterdam, and
incorporated and domiciled in the UK.
The address of its registered office is
set out on page 125.
Business model and Strategy
The Business model and Strategy
section, from page 18, sets out the
Company’s strategy, business model
and key performance indicators.
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 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.
97,720 shares were issued on 23 June
2017 to an Employee Benefit Trust
(‘EBT’) at nominal value.
198,154 shares were issued on 27
September 2017 to an Employee
Benefit Trust (‘EBT’) at nominal value.
106,189 shares were issued on 27
September 2017 to an employee
following the exercise of nil cost
options, granted in 2013 under the
Company's 2013 Long Term Incentive
Plan (‘LTIP’).
143,511 shares were issued on 26
February 2018 to an ex-employee.
118,511 of these shares were issued
following the exercise of nil cost
options, granted in 2013 under the
Company's 2013 Long Term Incentive
Plan (‘LTIP’), with the balance of
25,000 shares issued as part of the
individual’s severance terms.
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 in the Strategic
Report. 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 set out in the Strategic Report.
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
Trudy Schoolenberg
(appointed 1 April 2018)
Directors’ indemnities
The Company maintains Directors’
and officers’ liability insurance which
gives appropriate cover for legal
action brought against its Directors.
The policy was in force throughout the
period and at the date of the approval
of these financial statements.
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.
19% of employees in the year ended
31 March 2018 were female. 25% 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.
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.
• Decico BV 5.07%
• Majedie UK Equity Fund 5.06%
• Invesco Limited 4.87%
• The London & Amsterdam Trust
Company Limited 4.51%
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%:
• FIL Limited (formerly known as
Fidelity International Limited) 4.26%
• Saad Investments Company
Limited 3.92%
• Zurab Lysov 3.71%
There are no restrictions in respect
of voting rights.
The avoidance of occupational
accidents and illnesses is given a
high priority. Detailed policies and
• Teslin Participaties Cooperatief
U.A. 12.22%
• Henderson Group PLC 5.94%
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 year 1 April 2017 to 31 March 2018
2017-2018
kg CO2eq
2016-2017
kg CO2eq
2015-2016
kg CO2eq
Electricity, heat, steam and cooling for own use – GROSS
3,234,185
2,804,839
3,309,630
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
1,941,139
1,511,794
1,651,470
3,117,809
3,109,664
2,726,868
6,351,994
5,914,503
6,036,498
External carbon offsets (Voluntary Carbon Offsetting through BP Target Neutral)
(1,524,000)
(1,524,000)
(1,420,000)
TOTAL – NET (including Renewable Energy Credits/ Carbon off-sets)
3,534,948
3,097,458
2,958,338
Chosen intensity measurement: Emissions per cubic metre Accoya®
produced – GROSS
Chosen intensity measurement: Emissions per cubic metre Accoya® produced –
NET (including Renewable Energy Credits/ Carbon offsets)
162
90
155
81
181
88
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 off-sets 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.
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®.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 DIRECTORS' REPORT CONTINUED
For the year ended 31 March 2018
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
18 June 2018
Going concern
The Directors have formed a
judgement, at the time of approving
the financial statements that there is a
reasonable expectation that the Group
has access to adequate resources to
continue in operational existence for
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 61 and 62 of these financial
statements. The corporate governance
report forms part of this Directors’
report and is incorporated into it by
cross-reference.
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.
REMUNERATION REPORT
On behalf of the Board, I am pleased
to present our Remuneration Report
for the year ending 31 March 2018.
We last obtained shareholder approval
for our Remuneration Policy at the
2015 AGM. Therefore, in line with
the three year renewal cycle set out
in the UK remuneration reporting
regulations, we will be seeking
approval for a new Remuneration
Policy at the 2018 AGM. Ahead of
this renewal, we undertook a review
of the remuneration framework and
are proposing limited change, as
discussed below. The Remuneration
Policy is set out on pages 49 to 55
of the report and will be subject to a
binding vote at the AGM.
The remainder of the report (pages
56 to 60) sets out how we propose
to implement the Policy for the year
ahead and summarises the outcomes
in respect of the year ending 31 March
2018. This part of the report will be
subject to advisory vote at our AGM.
Remuneration outcomes for the
year ended 31 March 2018
As discussed in detail on pages 06
to 33 of this annual report, the Group
made excellent progress in the year
with the two key capacity expansion
projects whilst maintaining momentum
in sales growth despite the challenges
of operating at production capacity
for much of the year.
The annual bonus for the year
was based on a combination of
financial and operational objectives,
with targets set at the start of the
year. Group EBITDA fell below the
stretching threshold and therefore
none of this component was awarded.
Sales of Accoya® and strong progress
in the execution of our expansion
programmes resulted in a payout
on those operational components
together with sales growth which was
constrained by production capacity.
Overall, and taking into account
personal performance, the bonus
outcomes were between 50–55%
of the maximum (50–55% of salary)
for the executive Directors. The
Committee believes this outcome is an
appropriate reflection of performance
in the year.
Further detail on the individual
outcomes and performance against
the targets is set out on page 58 of
this report.
Note that there was no LTIP
award which vested in respect of
performance measured to 31 March
2018. The first LTIP award made on a
rolling annual basis was made in 2016
and will vest in respect of performance
over the three years to 31 March 2019
(and will therefore be reported on in
next year’s report).
Remuneration Policy review
During the year, the Remuneration
Committee conducted a review of the
remuneration framework to ensure
that it continues to support the
delivery of our strategy.
This review concluded that the overall
framework remains appropriate. As
such, we are proposing to renew
our Policy with minimal change,
including making no changes to
current maximum incentive award
sizes. The normal annual award size
will remain at 100% of salary for both
bonus and LTIP, and which are market
competitive and not excessive.
As a reminder, we retain a simple
and transparent overall structure
with key components and features
of our framework as follows:
Salary
• Market competitive and not
excessive.
• Any percentage increase to salaries
is normally in line with those
awarded to the wider workforce.
Benefits and pension
• Benefits consist of car allowance,
private medical insurance, life
insurance and travel.
• Pension allowance of up to 10%
of salary (CEO) and 5% (Other
Directors), the latter being broadly
aligned with other employees in
the business.
Annual Bonus
• Annual maximum (for FY19)
of 100% of salary.
• Based on a mix of financial, strategic
and operational objectives, with
stretching targets.
• Clawback provisions apply.
LTIP
• Award sizes (for FY19) of 100%
of salary (CEO) and 50 to 75%
of salary (Other Directors).
• Based on stretching three year
performance targets (see below).
• Vested awards are subject to
an additional two year holding
period, aligned with best practice
for UK-listed companies and in
excess of typical practice for AIM-
listed companies.
• Malus and clawback provisions
apply.
Shareholding guidelines
• Executive Directors are expected to
build up and retain a shareholding
of at least 200% of salary.
Our new Policy will retain the flexibility
to offer incentive award opportunities
above those set out above if
appropriate in the circumstances. It
retains the discretions which already
exist in our current Policy for the
Committee to provide a maximum
bonus opportunity up to the formal
cap of 200% of salary in respect of
a particular financial year or to make
annual LTIP awards of up to 300%
of salary.
LTIP awards for 2018 – Improving
strategic alignment
Our LTIP has evolved significantly
over recent years. We have moved
from irregular one-off grants to
rolling annual awards in line with best
practice. We introduced clawback
provisions and then a post-vesting
holding period, again to align with
evolving best practice for UK-
listed companies and noting that
this is beyond typical practice for
AIM companies.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
REMUNERATION REPORT CONTINUED
As part of the remuneration review
this year, the Committee concluded
that this underlying LTIP structure
remained appropriate, but that
we could do more to improve the
alignment of performance measures
to our the delivery of our long-term
strategy. Our business has clearly
defined strategic objectives to execute
over the coming years and we believe
that increasing alignment of our
incentives to the delivery of these
objectives is right for the business
and our shareholders.
The majority of the LTIP (60%) will
continue to be based on Group
EBITDA per share. This is designed to
ensure our LTIP drives and rewards
long-term profit delivery from our
expansion plans.
The remainder (40%) will be based
on Sales Volume, which will replace
total shareholder return (TSR). Sales
Volume is a performance measure
directly linked to the successful
execution of our ambitious capacity
expansion plans over the coming
years, which the Board has identified
as the critical strategic objective
to which we should be aligning
incentives throughout the senior
team. Recognising that this is a
non-financial performance measure,
vesting of this component will be
subject to meeting a threshold level of
financial performance, to provide an
affordability safeguard for investors.
In addition to sales Volume
improving strategic alignment, the
Committee also concluded that
relative TSR outcomes against a
wide equity market may ultimately
be 'arbitrary', driven more by the
relative performance of certain
sectors within their cycle than the
underlying execution of the strategy
or performance of the business. A TSR
Group based on companies exposed
to similar economic factors or cycles
(e.g. a Group of companies in the same
sector) could mitigate this but it not
feasible for Accsys given the unique
nature of the company’s activities. As
a result, the Committee is comfortable
removing TSR from the LTIP.
This change was discussed with
our major shareholders during
consultation and, while we received
a range of views, most understood
the difficulty in constructing a
reasonable peer Group and could
therefore appreciate the rationale
for the proposal.
The LTIP award to be made during
2018 will be subject to stretching
performance targets for both
performance measures, as described
in full on page 56. Maximum vesting
requires EBITDA per share of ¤0.13
and Sales Volume of 85,000m3 to be
achieved in the year ending 31 March
2021, which are very challenging
targets requiring exceptional execution
of our expansion plans.
Award sizes for LTIP awards to be
made in 2018 will be 100% of salary for
the CEO, 75% of salary for the Finance
Director and 50% of salary for our
Corporate Development Executive
Director, in line with our Policy.
Shareholding guidelines
In response to the feedback we
received during engagement with our
investors, we will also be introducing
a shareholding guideline into our
framework. Executive Directors will
be expected to build up and retain
shareholdings of at least 200% of
basic salary. This will include shares
beneficially held and also any vested
but unexercised LTIP awards (on
a net of tax basis). We understand
shareholder comment that this is likely
to ensure even closer alignment of
Executive Director and shareholder
interests and it is therefore a valuable
addition to our framework.
Salaries and fees for the year
ending 31 March 2019
The salaries of Paul Clegg, Chief
Executive Officer, Hans Pauli,
Executive Director, Corporate
Development and William Rudge,
Finance Director will be adjusted in
the current financial year, to reflect
an inflationary increase of 2% in line
with all other staff.
This 2% inflationary increase shall also
be applied to the fees of each Non-
Executive Director, with effect from
1 July 2018. We have also simplified
the fee structure for the Chairman role
into one single fee (rather than the
previous split between a NED base fee
and an additional uplift in respect of
the Chairman role).
Investor engagement and the
2018 AGM
We are committed to engagement
and dialogue with our investors on
the issue of executive remuneration.
During the year, we engaged with our
major investors on the renewal of our
Policy and the changes to the LTIP
and in general received good support
from those consulted. Feedback we
received was taken into account by the
Committee in finalising the proposals
(for example, the introduction of
shareholding guidelines).
The Remuneration Committee remains
committed to operating remuneration
arrangements which align with our
strategic priorities and the best
interests of our shareholders. I believe
the approach we have adopted is
appropriate and responsible and I look
forward to receiving your support at
our AGM.
Yours sincerely
Sue Farr
Remuneration Committee Chairman
18 June 2018
*Context for executive pay
This report is prepared in accordance with
the UK regulations for reporting executive
pay. Our dual listing on AIM in the UK
and NYSE Euronext in the Netherlands,
combined with our UK incorporated status,
means that we come within the definition of
a ‘quoted company’ in the UK Companies
Act. Accordingly, and exceptionally
amongst AIM companies, we are legally
required to comply with the regulations
for reporting and approval of Directors’
remuneration by companies listed on the
main market, including a binding vote on
the Directors’ remuneration policy.
Directors’ Remuneration Policy
The Directors’ Remuneration Policy is effective for all payments made to Directors from 18 September 2018, being the
date of the AGM in which it was approved.
Policy Table for Executive Directors
Element and purpose
Policy and operation
Maximum
Performance measures
Base salary
Benefits
Pension
An appropriate level of fixed
remuneration to reflect the
individual’s skills and experience.
Salaries are normally reviewed
annually by the Committee,
taking into account relevant
factors that may include:
individual performance, corporate
performance, changes to an
individual’s role and responsibilities,
and appropriate market data.
There is no prescribed maximum.
N/A
Any percentage increase to salaries
would normally be in line with those
awarded to the wider workforce.
Larger increases may be awarded
in circumstances considered
appropriate by the Committee,
such as an increase in the size of
the business or the responsibilities
of the role, or changes in the
competitive marketplace.
There is no prescribed maximum.
N/A
The level of benefits is set at an
appropriate market rate.
To provide a market competitive
benefits package.
Benefits may comprise a car
allowance, private medical
insurance, and life insurance and
reimbursed business expenses
(including any associated tax
liability) incurred when travelling
in performance of duties.
The Committee may determine
that other benefits be provided
where appropriate (for example –
relocation costs).
Contributions to the Company’s
pension scheme, or an equivalent
cash supplement is provided.
Current contributions are 10% of
salary (CEO) and 5–6% of salary for
other Executive Directors.
N/A
The maximum allowable
contribution is 15% of base salary.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 REMUNERATION REPORT CONTINUED
Element and purpose
Policy and operation
Maximum
Performance measures
Notes to the Policy table:
Annual Incentive Plan
To drive and reward the delivery
of business objectives for the
financial year.
The bonus is discretionary and
any pay-out is determined
by the Committee based on
performance. Targets are set
and assessed by the Committee
each year.
Amounts may be satisfied in
cash, or at the Committee’s
discretion, shares.
Clawback provisions apply.
The current maximum
annual opportunity for all
Executive Directors is 100%
of salary.
The Committee retains
discretion to provide a
maximum opportunity
of up to 200% of salary
in respect of a particular
financial year.
Awards will normally be based on a
combination of financial and non-
financial goals measured over one
financial year, with at least 50%
normally assessed against financial
metrics.
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
initially set.
Long Term Incentive Plan (LTIP)
To reward Executive Directors
for the delivery of long-term
performance and align their
interests with shareholders.
Award levels in respect of a
financial year are currently
up to 100% of salary for
Executive Directors.
Awards are made under, and
subject to the terms of, the 2013
LTIP approved by shareholders at
the 2013 AGM.
The Committee retains
discretion to make annual
awards of up to 300% of
salary.
Awards may be in the form of
nil or nominal cost options, or
any other form allowed by the
Plan rules.
Awards vest over a period of
at least three years, subject to
performance. Vested shares are
subject to an additional holding
period of at least two years.
Clawback and dividend equivalent
provisions apply (see notes to
the table).
Performance targets are measured over
a period of at least three financial years,
using performance measures aligned to
the delivery of the strategy and long-
term shareholder value. Performance
targets for awards in 2018 are
• Group EBITDA per share (60%), and
• Group sales volume (40%).
25% of awards vests for attaining
threshold level of performance.
The Committee retains discretion to
use different or additional performance
measures or weightings to ensure that
awards remain appropriately aligned to
the business strategy and objectives.
Non-financial performance measures
will normally be subject to a financial
underpin.
The Committee will consider the
Group’s overall performance before
determining the final vesting level.
Shareholding guidelines
To increase long-term alignment
between executives and
shareholders. Executive Directors
are expected to build up and
retain a beneficial holding of at
least 200% of base salary.
N/A
N/A
1.
2.
LTIP awards which vest following the approval of this Policy may benefit from the right to receive an amount equal
to the value of, if applicable, any dividends which would have been paid on vested shares up to the time of vesting
(or where the award is subject to a holding period, up to the time of release).
The Annual Incentive Plan and LTIP contain clawback provisions in the event of a material misstatement of results,
censure by a regulatory authority or any other serious damage to the Company reputation, or fraud or gross
misconduct. The cash and, if applicable, share elements of the Annual Incentive may be clawed back for a period
of three years from the date on which the annual incentive plan payment is made. Awards under the LTIP may be
cancelled or reduced (prior to vesting), or clawed back for a period of three years post vesting.
3. The remuneration framework for other employees is based on broadly consistent principles used to determine the
policy for Executive Directors. All executives and senior managers are generally eligible to participate in some form
of annual incentive arrangement. Participation in the LTIP is extended to executives and senior managers, with LTIP
performance conditions generally consistent across all levels. Individual salary and pension levels and incentive award
sizes vary according to the level of seniority and responsibility.
4. The choice of the performance measures applicable to the Annual Incentive Plan (currently EBITDA, sales volume,
and operational measures) reflects the Committee’s view that incentives should be aligned to the Group’s key annual
financial and strategic objectives. For the LTIP, the measures for the 2018 award (EBITDA per share and sales volume)
provide a suitable balance between incentivising the execution of the Company’s long-term capacity expansion
programme and ensuring the delivery of profit growth alongside that operational delivery. For both the Annual
Incentive Plan and the LTIP, the Committee sets challenging targets taking into account the Board’s objectives for the
business. Performance conditions may be amended or substituted by the Committee if an event occurs which causes
the Committee to determine an amended or substituted performance condition would be more appropriate and not
materially more or less difficult to satisfy.
5. The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including
exercising any discretion available to it in connection with such payments) notwithstanding that they are not in line
with the Policy set out above where the terms of the payment either agreed: (i) prior to the Policy set out above came
into effect; (ii) during the term of, and were consistent with, any previous policy approved by shareholders; or (iii)
at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the
payment was not in consideration for the individual becoming a Director of the Company.
6. Under the rules of the LTIP, the terms of any award may be adjusted to take account of a Company reorganisation,
such as a variation of capital, rights issue, demerger or special dividend.
7.
In respect of the shareholding guideline, vested but unexercised LTIP shares will count towards the guideline (on a
net of tax basis). It is anticipated that the level of shareholding set out in the guideline will normally be met within
five years of appointment as an Executive Director (or from the approval of this Policy). The Committee will take into
account LTIP vesting levels and personal circumstances when assessing progress against the guideline.
8. There are no material changes from the previous remuneration policy approved by shareholders at the 2015 AGM.
As part of the review minor amendments have been made to reflect evolving practice.
50
51
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 REMUNERATION REPORT CONTINUED
Application of the Remuneration Policy
The charts below show the potential pay-out under the Policy for each Executive Director under three different
illustrative performance scenarios.
s
0
0
0
€
1,000
800
600
400
200
–
Notes:
€923k
€632k
€341k
€555k
€394k
€232k
€459k
€317k
€174k
Fixed
Mid
Max
Fixed
Mid
Max
Fixed
Mid
Max
Paul Clegg
Hans Pauli
William Rudge
Base salary, benefits and pension
Annual bonus
LTIP
1
2
3
'Fixed' includes the value of fixed pay components (base salary, benefits and pension in place as at 1 April 2018).
'Mid' includes fixed pay, a payout of 50% (of maximum) under both the Annual Incentive Plan and the LTIP awards.
'Maximum' includes fixed pay and the maximum annual incentive plan award (100% of salary for all roles) and full vesting of the LTIP
awards (CEO: 100% of salary, 75% for the Finance Director and 50% of salary for the Executive Director, Corporate Development).
Recruitment remuneration policy
The Company’s recruitment 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.
The recruitment package for a new Executive Director would normally be set in accordance with the terms of the
Policy Table for Executive Directors. Salaries would be set at an appropriately competitive level to reflect the skills and
experience of the individual and the scope of their role. The Committee may agree that the Company will meet certain
relocation expenses as it considers appropriate.
Where an individual forfeits remuneration with a previous employer as a result of appointment to the Company, the
Committee may offer compensatory payments or awards to facilitate recruitment. Any such payments or awards would
be in such form as the Committee considers appropriate and would normally reflect the nature, time horizons, and
performance requirements attaching to that remuneration. There is no limit on the value of such compensatory awards,
but the Committee’s intention is that the value awarded would be, in the view of the Committee, no higher than the
amount forfeited.
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.
Directors’ service contracts
The notice periods under the service contracts of the current Executive Directors are summarised in the following table:
Name
Paul Clegg
Hans Pauli
William Rudge
52
Notice period
from individual
(months)
Notice period
from company
(months)
12
3
6
12
6
6
Executive Directors’ service contracts, which do not contain expiry dates, provide that compensation provisions for
termination without notice will include salary, certain fixed benefits, and pension. In the case of William Rudge and Hans
Pauli, 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. The
inclusion of a component in respect of annual bonus reflects the legacy contractual terms of this agreement and would
not be in included in the service contract for a new appointment.
The Company’s general policy on recruiting a new Executive Director is to provide a service contract terminable after six
months. However the Committee reserves the right to introduce a longer notice period (of up to twelve months) which
would reduce to six months over time. Provisions for compensation for termination would normally follow that described
above for William Rudge and Hans Pauli.
Outside appointments
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.
Termination policy summary
In addition to a payment in lieu of notice referred to above, a departing Executive Director may be eligible for incentive
awards, which will be treated in accordance with the rules of the relevant plan, as summarised in the table below:
Incentive Plan
Summary of leaver provisions
Annual Incentive Plan
In certain 'good leaver'1 circumstances, an individual may remain eligible for an annual bonus with
respect to the financial year of cessation (pro-rated for time, unless the Committee determines
otherwise). Any payment will remain subject to performance (as determined by the Committee)
and is normally payable after the end of the financial year.
LTIP
Unvested awards normally lapse on cessation of employment.
However, in certain 'good leaver'1 circumstances as defined in the Plan rules, awards will vest.
In such circumstances:
• awards will normally vest on their original vesting date;
• the Committee will determines the extent of vesting based on the satisfaction of the performance
conditions; and
• awards will be reduced pro-rata to reflect the proportion of the vesting period that has elapsed
at cessation.
Vested awards will normally remain subject to any Holding Period.
1 Death, injury, ill-health, disability, redundancy, retirement or the sale of their employing entity out of the Group, or for any other
reason at the Committee’s discretion.
The Committee reserves the right to make any other payments in connection with a Director’s cessation of office or
employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of
damages for breach of such an obligation) or by way of settlement of any claim arising in connection with the cessation
of a Director’s office or employment or for any fees for outplacement assistance and/or the Director’s legal and/or
professional advice fees in connection with his cessation of office or employment.
53
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 REMUNERATION REPORT CONTINUED
Change of control
In the event of a change of control of the Company:
• A payment under the Annual Incentive Plan shall be determined by applying the performance targets (on such basis
as the Committee considers appropriate) and calculated on an appropriate time pro-rata basis.
• LTIP awards will vest. The proportion of the award which shall vest will be determined at the discretion of the
Committee having regard to the extent to which the performance targets have been achieved and the proportion of
the vesting period that has elapsed. Any holding period will cease to apply. Alternatively, the Committee may permit
or require awards to be rolled-over into equivalent awards from the acquiring company.
Policy Table for Non-Executive Directors ('NEDs')
Consideration of shareholder views
The Committee undertook a consultation exercise with major shareholders in respect of the development of this
Remuneration Policy, and the feedback received was taken into account in finalising the Policy.
During each year, the Committee considers shareholder feedback received in relation to the AGM, plus any additional
feedback received through other means of dialogue. The Committee also regularly reviews the Policy in the context of
published shareholder guidelines.
Implementation of the Remuneration Policy for the year ending 31 March 2019
A summary of how the Directors’ Remuneration Policy will be applied during the year ending 31 March 2019 is set
out below.
Element and purpose
Policy and operation
Maximum
Performance measures
Base salary
Chairman and NEDs
The Remuneration Committee has determined that base salaries for the Executive Directors will increase as follows with
effect from 1 July 2018:
Fees for the Chairman and for the NEDs are set by the
Board (excluding the NEDs).
Fees are based on the responsibilities and time
commitment of the role. The Chairman receives a
single fee. NED fees include a base fee and may include
additional fees for other Board or Committee duties.
Fees are paid in cash. NEDs are not eligible to
participate in incentive arrangements or receive
pension provision or other benefits.
Non-Executive Directors may be reimbursed for
business expenses (and any associated tax liabilities)
incurred when travelling in performance of duties.
There is no prescribed
maximum annual increase
or fee level.
N/A
Fee levels are reviewed
on a periodic basis, with
reference to the time
commitment of the role
and market levels in
companies of comparable
size and complexity.
NED contracts
The NEDs, including the Chairman, have letters of appointment which set out their duties and responsibilities.
Appointment is for a fixed term of three years, terminated by three months’ notice on either side.
Name
Nick Meyer
Patrick Shanley
Sean Christie
Sue Farr
Trudy Schoolenberg
Appointment end date
Unexpired term (months)
17 May 2020
18 November 2019
27 November 2020
27 November 2020
1 April 2021
22
16
29
29
33
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. The Committee did not consult with employees
in preparing the Directors’ Remuneration Policy.
Paul Clegg
Hans Pauli
William Rudge
2018
2017
% increase
£262,060
£256,922
¤222,373
¤218,013
£147,116
£144,232
2%
2%
2%
The Group’s employees are, in general, receiving salary increases averaging approximately 2%.
Pension arrangements
In accordance with the Policy, Executive Directors will continue to receive pension contributions (or cash supplements) of
10% of base salary for the CEO and 5 to 6% of base salary for the other Executive Directors.
Annual bonus
For the year ending 31 March 2019, the maximum annual bonus opportunity will be 100% of salary in accordance with the
Policy. Payouts will be determined based on the delivery of stretching financial, operational and personal objectives with
the weightings for the various components as follows:
Group EBITDA (excluding Tricoya®)
Capacity expansion (Arnhem expansion & construction of Hull)
Sales Volume (total Accoya® volumes sold)
Personal objectives
Weighting
(% of bonus)
Other Directors
37.5%
22.5%
15%
25%
CEO
50%
30%
20%
–
The Committee believes that the underlying targets are commercially sensitive and cannot be disclosed at this stage.
54
55
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 REMUNERATION REPORT CONTINUED
Long-term incentives
For the year ending 31 March 2019, annual LTIP awards will be made in line with the Policy, as shown in the following table:
Remuneration received by Directors in the year ended 31 March 2018 (audited)
Directors’ remuneration for the year ended 31 March 2018 (and for the prior year ended 31 March 2017) is shown in the
following tables:
Name
Paul Clegg
Hans Pauli
William Rudge
2018
(% of salary)
100%
50%
75%
The extent to which 2019 LTIP awards will vest after three years will be dependent on two independent performance
conditions as follows:
Metric
Vesting (% of maximum)
EBITDA per share in FY21
Sales Volume in FY21 (m3)
Weighting
(% of salary)
60%
40%
Threshold
Maximum
25%
0.05
100%
0.13
70,000
85,000
• Vesting is on a straight-line basis between threshold and maximum.
• Appropriate adjustments may be made to ensure fair and consistent performance measurement over the performance period in line
with the business plan and intended stretch of the targets at the point of award.
• EBITDA per share targets are set and determined so as to exclude licensing income.
• Sales Volume is defined as combined sales volume (in cubic metres, or equivalent) of Accoya® and Tricoya®.
• Vesting of the Sales Volume component will be subject to the achievement of a threshold level of EBITDA.
In line with the Policy, upon vesting, the 2019 LTIP awards will be subject to an additional holding period which expires
on the fifth anniversary of the date of grant together with the claw-back provisions as set out in further detail in the
Remuneration Policy.
Non-Executive Directors
The fees for the Non-Executive Directors with effect from 1 July 2018 are shown in the table below. Note that for 2018,
the structure of the Chairman fee has been simplified in to one single fee of £76,715. Previously, the Chairman received
a NED base fee (in £) and an additional fee for Chairman duties (in ¤). On review, it was agreed that a single fee for the
Chairman was preferable as it is more simple and transparent, and aligns with conventional practice.
Executive Directors:
Paul Clegg
Hans Pauli5
William Rudge
Non-Executive Directors:
Sean Christie
Sue Farr
Montague John 'Nick' Meyer
Patrick Shanley5
Executive Directors:
Paul Clegg
Hans Pauli5
William Rudge
Non-Executive Directors:
Sean Christie
Sue Farr
Montague John 'Nick' Meyer
Patrick Shanley5
Currency
Salary/
Fees
Benefits
in Kind1
Annual
bonus2
LTIPs
vested3
Pension4
2018
Total
2018
Total EUR
£'000
¤'000
£'000
£'000
£'000
£'000
£'000
256
215
144
45
45
40
75
19
5
2
–
–
–
–
141
109
79
–
–
–
–
–
–
–
–
–
–
–
26
12
7
–
–
–
–
442
341
232
45
45
40
75
502
341
264
51
51
46
86
Currency
Salary/
Fees
Benefits
in Kind1
Annual
bonus2
LTIPs
vested3
Pension4
2017
Total
2017
Total EUR
£'000
¤'000
£'000
£'000
£'000
£'000
£'000
252
209
142
45
45
40
74
19
6
2
–
–
–
–
253
213
142
–
–
–
–
855
194
108
–
–
–
–
25
12
8
–
–
–
–
1,405
1,632
634
401
45
45
40
74
634
471
54
54
48
87
2018
£76,715
2017
% increase
£75,211
2%
£40,800
£40,000
Figures are shown in the currency in which the majority of remuneration received. The final column converts remuneration into the
Company’s reporting currency using the monthly exchange rate when the costs are incurred. The table for 2017 has been restated
compared to the report published in last year’s Remuneration Report as a result of the Company now accruing the bonus awards in to
the year to which they relate and to report in the currency in which remuneration is received.
Chairman fee
Base NED fee
Additional fees:
Senior independent Director
Committee membership fee per committee
£5,100
£5,100
£5,000
£5,000
2%
2%
1.
Taxable benefits for the Executive Directors in the year included a car allowance (for the CEO only), private medical insurance, life
insurance and reimbursed business expenses.
2. Represents annual bonus paid in cash in respect of the relevant financial year (further detail for the year ended 31 March 2018 is
shown below).
3. There was no LTIP award vesting by reference to performance to 31 March 2018 and therefore there is no value to report for 2018.
For 2017, the value shown represents the vesting of the 2013 LTIP.
4. Paul Clegg receives cash in lieu of pension.
5. Hans Pauli & Patrick Shanley amounts include actual amounts paid in both GBP and EUR.
56
57
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 REMUNERATION REPORT CONTINUED
Annual bonus for the year ending 31 March 2018 (audited)
For the year ending 31 March 2018, the maximum annual bonus opportunity was 100% of salary in accordance with
the Policy. Payouts were determined based on performance, taking into account the delivery of stretching financial
and operational objectives with the weightings for the various components as follows:
Payments for loss of office (audited)
There were no payments for loss of office during the year.
Statement of Directors’ shareholding and share interests (audited)
Weighting
(% of bonus)
Maximum
Outcome
Group EBITDA (excluding Tricoya®)
Tricoya® EBITDA
Capacity expansion (Arnhem expansion & construction of Hull)
Sales Volume (total Accoya® volumes sold)
35%
15%
30%
20%
0%
15%
27%
13%
The actual performance targets remain commercially sensitive and cannot be disclosed at this time.
Group EBITDA fell below the stretching threshold and therefore none of this component was awarded. Sales of
Accoya® and strong progress in the execution of our expansion programmes resulted in a payout on those operational
components together with sales growth which was constrained by production capacity. Overall, taking into account
personal performance, the bonus outcomes were between 50–55% of the maximum (50–55% of salary) for the Executive
Directors, with the amounts awarded shown in the single figure table on page 57. The Committee believes this outcome
is an appropriate reflection of the performance of the business and Executives in the year.
LTIP vesting in respect of performance to the year ending 31 March 2018 (audited):
There were no LTIP awards vesting in respect to performance to the year ending 31 March 2018.
The 2016 LTIP awards (see table below) vest by reference to performance over a three year period ending 31 March 2019
and the vesting of these awards will therefore be described in next year’s report.
Scheme interests awarded during the year (audited)
During the year, the following LTIP awards were made to the Executive Directors:
Paul Clegg
Hans Pauli
William Rudge
Type of Award
Basis of
award granted
100% of salary
Nil cost options
50% of salary
50% of salary
Face value
of award
€'000
% of maximum
vesting for threshold
performance
Performance
period
297
107
83
25%
25%
25%
Three years to
20 June 2020
Face value determined using share price determined two days prior to date of grant.
The performance targets for these awards are as follows:
Metric
Vesting (% of maximum)
EBITDA per share in FY20
Share Price Growth vs Comparator Group
Weighting
(% of salary)
50%
50%
Threshold
25%
¤0.04
Median
Target
50%
¤0.06
Maximum
100%
¤0.08
N/A Upper Quartile
• Vesting is on a straight-line basis between points in the schedule. There is no vesting for performance below Threshold.
• EBITDA based on total Group EBITDA including licensing income. Appropriate adjustments may be made to the EBITDA per share
metric ensure fair and consistent performance measurement over the performance period in line with the business plan and intended
stretch of the targets at the point of award.
• Comparator Group is the constituent companies of the FTSE AIM All Share Index (excluding the Resource and Financial
Services Sectors).
Payments to past Directors (audited)
There were no payments to past Directors during the year.
Paul Clegg
Hans Pauli
William Rudge
Sean Christie
Sue Farr
Montague John 'Nick' Meyer
Patrick Shanley
*Includes shares held by connected persons
Shares beneficially
held* as at
31 March 2018
716,432
376,527
192,000
72,258
–
29,745
70,981
Vested but
unexercised
LTIPs
1,259,449
286,069
159,173
Unvested
LITP awards
709,019
249,956
199,015
–
–
–
–
–
–
–
–
There has been no change in the beneficial holding of the Directors between the year end and the date of this report.
The unvested LTIP awards consist of 2016 and 2017 LTIP awards. The performance condition for the 2017 award is
summarised in the section above and for the 2016 award in the table below:
Metric
Vesting (% of maximum)
EBITDA per share in FY19
Share Price Growth vs Comparator Group
Weighting
(% of salary)
50%
50%
Threshold
25%
¤0.06
Median
Target
50%
¤0.08
Maximum
100%
¤0.10
N/A
Upper Quartile
• Vesting is on a straight-line basis between points in the schedule. There is no vesting for performance below Threshold.
• EBITDA based on total Group EBITDA including licensing income. Appropriate adjustments may be made to the EBITDA per share
metric ensure fair and consistent performance measurement over the performance period in line with the business plan and intended
stretch of the targets at the point of award.
• Comparator Group is the constituent companies of the FTSE AIM All Share Index (excluding the Resource and Financial Services Sectors).
Relative importance of spend on pay
During the year ended 31 March 2018, the total pay for all Group employees increased by 29% to ¤11,293,000
(2017: ¤8,783,000). There were no dividends or share buybacks in either year.
Performance graph and CEO remuneration
The following graph shows the Company’s performance for the past ten 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.
Accsys TSR Index
FTSE AIM All Share TSR Index
t
n
e
m
t
s
e
v
n
i
t
i
n
u
0
0
1
a
f
o
e
u
a
V
l
9
0
0
2
h
c
r
a
M
1
3
n
o
e
d
a
m
1000
100
10
1
58
59
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
31 March 2018
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
REMUNERATION REPORT CONTINUED
CORPORATE GOVERNANCE
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 of Total
% Bonus of Cap
% vested LTIPs of maximum
2010
€'000
386
36%
N/A
N/A
2011
€'000
283
0%
N/A
N/A
2012
€'000
604
46%
N/A
N/A
2013
€'000
627
46%
N/A
N/A
2014
€'000
676
51%
N/A
N/A
2015
€'000
783
54%
56%
N/A
2016
€'000
613
36%
63%
N/A
2017
€'000
1,632
18%
37%
58%
2018
€'000
502
32%
50%
N/A
The table above has been re-presented to reflect that 2018 is the first year that bonuses have been accrued into the
year which they relate. The previous years’ bonus have therefore been allocated into the respective years in order to
provide consistency.
As no formal cap or maximum bonus existed before 2015, no figure has been disclosed setting out this percentage.
Consideration of matters relating to Director’s remuneration
The Nomination 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.
Until 9 January 2018, FIT Remuneration Consultants LLP was engaged by the Committee to provide it with remuneration
consultancy services. Fees charged by FIT for advice provided to the Committee for the year ended 31 March 2018 were
£3,675 (plus VAT). The Committee was satisfied as to the independence of the advice provided by FIT.
Following a review of remuneration advisers in late 2017, which consisted of a full competitive tender process, Deloitte
LLP (Deloitte) was appointed by the Committee as independent adviser to the Committee with effect from 9 January
2018. The Committee is satisfied that Deloitte remains independent of the Company and that the advice provided
is impartial and objective. Deloitte is a founding member and signatory of the Code of Conduct for Remuneration
Consultants, details of which can be found at www.remunerationconsultantsgroup.com. Their total fees for the provision
of remuneration services to the Committee since appointment to 31 March 2018 were £20,425 (plus VAT).
Statement of voting at general meeting
The AGM held on 21 September 2017 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 2017. 40,872,175 (91.93%) votes were cast for the resolution, 3,588,163
against and 2,851 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.
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
(FRC) in 2016. The FRC’s UK Corporate Governance Code is not currently compulsory for AIM listed or Euronext listed
companies however, during the past year, the Board has applied its principles as far as practicable and appropriate for
a relatively small public company. The Board is now reviewing the most appropriate recognised code for it to apply in
advance of AIM rule 26 becoming effective in September 2018.
The Board of Directors
During the year the Board comprised a Non-executive Chairman, three Non-executive Directors and three Executive
Directors, with an additional Non-executive Director, Trudy Schoolenberg, being appointed on the 1 April 2018 who is
also the Senior Independent Director.
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.
Audit Committee
The Audit Committee consisted of Sean Christie (Chairman), Patrick Shanley, Nick Meyer and Sue Farr, with Trudy
Schoolenberg being appointed on the 1 April 2018. 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, with Trudy Schoolenberg being appointed on the 1 April 2018. 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.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CORPORATE GOVERNANCE CONTINUED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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
Michael ‘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
7
10
9
8
8
6
10
10
10
10
10
10
10
10
3
3
3
3
3
2
3
3
–
3
–
3
3
–
5
1
5
1
5
4
1
5
–
5
–
5
5
–
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 eight full board meetings, of which two meetings were convened on an ad hoc basis. In addition, two ad
hoc meetings of a committee of the board were convened. Patrick Shanley and Hans Pauli attended all eight full board meetings, Sue
Farr attended all eight board meetings and one committee meeting. Sean Christie attended seven out of eight full board meetings,
being unable to attend one ad hoc meeting. Nick Meyer attended six out of eight full board meetings, being unable to attend one ad
hoc meeting. William Rudge and Paul Clegg attended all full board and committee meetings.
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.
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, comprising FRS 101 “Reduced
Disclosure Framework”, 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 parent Company and of
the profit or loss of the Group and parent company for that period. In preparing these financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable IFRSs as adopted by the European Union have been followed for the Group financial
statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the company
financial statements, subject to any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of
the Company and the Group and parent company 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.
The Directors are also responsible for safeguarding the assets of the Group and parent company 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.
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group and parent company’s performance, business
model and strategy.
Each of the Directors, whose names and functions are listed in Corporate Governance confirm that, to the best of
their knowledge:
• the company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”,
and applicable law), give a true and fair view of the assets, liabilities, financial position and loss of the company;
• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European
Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and
• the Strategic Report (including but not limited to Chairman's Statement, Chief Executive's Report and Financial
Review) includes a fair review of the development and performance of the business and the position of the Group
and company, together with a description of the principal risks and uncertainties that it faces.
2. Messrs Clegg, Pauli and Rudge attended for part of the three audit committee meetings held on 14 June 2017, 16 November 2017 and
In the case of each Director in office at the date the Directors’ Report is approved:
13 March 2018.
3. Messrs Clegg, Pauli and Rudge attended for part of the Nomination & Remuneration Committee meeting held on 2 February 2018.
• so far as the Director is aware, there is no relevant audit information of which the Group and company’s auditors are
unaware; and
• they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Group and company’s auditors are aware of that information.
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STATEMENTS
66
Group Independent
Auditors’ Report
72 Consolidated Statement
of Comprehensive Income
73 Consolidated Statement
of Financial Position
74 Consolidated Statement
of Changes in Equity
75 Consolidated Statement
of Cash Flow
76
Notes to the Financial
Statements
111 Company Independent
Auditors’ Report
116 Condensed Company
Balance Sheet
117 Notes to the Company
Financial Statements
DILLON KYLE ARCHITECTS' OFFICE BUILDING
When Dillon Kyle Architects (DKA) set out to
design their new office space in the lively art
district of Montrose, Houston, they came up with
a creative solution to fit an aesthetically distinct
5,000 square foot building plus parking on their
lot’s small unique space.
The three-storey building takes the form of
an inverted L, a configuration that allows for
maximised parking on the narrow corner plot. The
cantilever space was built to shade the cars from
the hot Texas sun, while also creating a semi-public
place that invites pedestrians to interact with the
space and peer inside as they walk through the
neighbourhood. The exterior has a commercial
boxy look, so the team looked for creative cladding
finishes to wrap the building. The team settled on
Accoya® wood. “The idea was to use a material
where you couldn’t tell where the patterns started
and stopped, just one big continuous object,” said
Peter Klein, architect at DKA.
An abstract leaf-like pattern is carved into
2,500 Accoya® wood boards wrapping the
entire building. The leaf pattern serves as a
gentle reference to the live oak trees that line
the neighbourhood. “We settled on wood, and
specifically Accoya®, because it is easy to mill, and
we knew we were going to leave it unsealed,” said
Klein. “Even left untreated, it didn’t warp, and that
let us know we were on the right path,” added
Klein. The neutral grey tones coupled with its long
term durability, resistance to rot and insects made
Accoya® the ideal material for this project.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
GROUP INDEPENDENT AUDITORS’ REPORT
to the members of Accsys Technologies PLC
REPORT ON THE AUDIT OF THE GROUP FINANCIAL STATEMENTS
Opinion
In our opinion, Accsys Technologies PLC’s Group financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s affairs as at 31 March 2018 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 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual
Report”), which comprise: the consolidated statement of financial position as at 31 March 2018; the consolidated
statement of comprehensive income, the consolidated statement of cash flow, and the consolidated statement of
changes in equity for the year then ended; and the notes to the financial statements, which include a description
of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group.
We have provided no non-audit services to the Group in the period from 1 April 2017 to 31 March 2018.
Our audit approach
Overview
• Overall Group materiality: ¤609,000 (2017: ¤540,000), based on 1% of revenue.
Materiality
• We performed audit work over the complete financial information for reporting 3 units
which accounted for approximately 87% (2016: 91%) of the Group’s revenue. These
operating reporting units comprised the operating business in the Netherlands, UK and
centralised functions.
Audit Scope
Key audit
matters
• We identified 5 reporting units, two of which were significant due to their size. This
comprised the operating businesses in the Netherlands and the UK.
• We conducted specific audit procedures on certain balances and transactions in respect
of the remaining 2 reporting units. These procedures related to elimination of interGroup
/ investment balances as well as substantive procedures over property plant and
equipment in one unit.
• Going concern.
• Impairment of non-current assets.
• Cost capitalisation of Property, Plant and Equipment.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the Directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain.
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it
operates, and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including
fraud. We designed audit procedures at Group and significant component level to respond to the risk, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through
collusion. We focused on laws and regulations that could give rise to a material misstatement in the Group and company
financial statements, including, but not limited to, the Companies Act 2006, the Listing Rules, Pensions legislation, UK
tax legislation and equivalent local laws and regulations applicable to significant component teams and testing particular
classes of transactions. Our tests included, but were not limited to, review of correspondence with the regulators,
enquiries of management including internal legal counsel, review of significant component auditors' work. There are
inherent limitations in the audit procedures described above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we would become
aware of it.
As in all our audits we also addressed the risk of management override of controls, including evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters,
and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Going concern
As the Group continues to develop
and expand there are a number of
factors that potentially impact on
its ability to function as a Going
Concern. These include:
• Continued loss making
performance as the Group looks
to increase production capacity to
leverage continuing investments
being made; and
• Significant planned capital
expenditure over the next 12
months at both Arnhem and Hull
(for the Accoya® and Tricoya®
businesses respectively) as part
of that investment.
As a result of this continued
investment the balances available
to the Group over the next 12–18
months are forecast by management
to reduce significantly from the
balances held at 31 March 2018.
As such we have included Going
Concern as a significant risk.
Our audit work has included a number of procedures including:
• Obtaining and auditing management’s own Going Concern assessment.
This included:
− Recalculating the arithmetic accuracy of management’s model;
− Ensuring that the model covered an appropriate period and included correct
cash balances in the opening position and subsequent movements;
− Challenged the key assumptions included in the model, namely (i) the trading
position agreed to the board approved forecast, (ii) challenged management
on the extent and timing of future expenditure of capital amounts including
the appropriateness of contingencies held given the current state of progress
of projects, (iii) considered mitigants available to management should they be
required and their amount and timing; and
− Obtaining and reading the details of the new facility with ABN Amro secured after
31 March 2018 and ensuring that this was appropriately reflected in the model.
• Ensured that the disclosure in the Annual Report is consistent with our work and
understanding;
• Debated the position with management and reviewed board minutes to ensure that
the position in the model could be corroborated to other supporting information from
the board; and
• Reported our approach and findings to the Audit Committee in our written report.
Based on the procedures performed we did not identify any matters that would indicate
the financial accounts being prepared on a Going Concern not being appropriate.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 GROUP INDEPENDENT AUDITORS’ REPORT CONTINUED
to the members of Accsys Technologies PLC
Key audit matter
How our audit addressed the key audit matter
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls,
and the industry in which it operates.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
¤609,000 (2017: ¤540,000).
How we determined it
1% of revenue.
Rationale for benchmark applied
Given the relative ‘start up’ nature of the business and low levels of profit / loss,
revenue was considered the most appropriate measure used, and is a generally
accepted auditing benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is no more than our overall Group
materiality. The range of materiality allocated across components was between ¤206,000 and ¤609,000. Certain
components were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
¤30,000 (2017: ¤25,000) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Impairment of non-current assets
At 31 March 2018 the Group carried
¤4.2m of goodwill (2017: ¤4.2m),
¤6.4m of other intangible assets
(2017: ¤6.6m), and ¤60.8m of
tangible fixed assets (2017: ¤20.7m).
Management is required to perform
an annual impairment review of
goodwill held within intangible
assets in accordance with IAS 36. In
addition management should assess
for impairment indicators in respect
of other assets held.
We focused on this as a significant
risk principally due to the significant
size of these balances and the
fact that there is an element of
judgement behind some of the
assumptions that support the
carrying value of the goodwill
and other intangibles.
Our audit included a number of specific procedures including those set out below:
• Assessing the appropriateness and consistency of the identification of Cash
Generating Units, (“CGUs”);
• Understanding and auditing management’s impairment calculations (value-in-use)
for each of the two CGUs. This included:
− Verifying that the basis for the value-in-use calculations was a board approved
budget for FY19;
− Recalculating the carrying value of each of the CGU’s by agreeing balances back
to the financial records;
− Debating and challenging management’s key assumptions used in the model for
future years (Revenue growth, EBITDA margin, WACC). We obtained supporting
documentation for key assumptions such as recalculating WACC rates, validating
future revenue expectations given knowledge of the capacity of the plant in future
years, consideration and challenge of margins based on previous and expected
performance.
• Performed a sensitivity analysis on the key assumptions in the impairment model
prepared by management and debated and challenged management on the
likelihood of those sensitivities;
• Reviewed compliance with the disclosure requirements of IAS 36 given the
outcome reached;
• Reviewed for indicators of impairment on other assets currently being depreciated
/ amortised utilising our knowledge of the business, Board minute review and
discussions with management; and
• Reported our approach and findings to the Audit Committee in our written report.
Based on our procedures we consider management’s key assumptions to be within a
reasonable range and concur with their position of no impairment charge in the year
to 31 March 2018.
Cost capitalisation of Property, Plant and Equipment
During the year the Group has
capitalised ¤24.0m of costs relating
to the Arnhem expansion and a
further ¤16.7m of costs on the
construction of a Tricoya® plant
in Hull.
While the majority of the costs are
external (c ¤0.4m of internal costs
have been capitalised) there is a risk
with such large amounts that some
inappropriate costs are incorrectly
capitalised and disclosed.
Our audit procedures included the following tests:
• Substantively verified a sample of external costs capitalised to external supporting
documentation to ensure they meet the capitalisation criteria of IAS 16;
• Challenging management’s assessment to ensure costs sampled (both internal and
external) were directly attributable to the expansion project. We confirmed that the
majority of costs capitalised were external and the value of internal costs capitalised
was ¤0.4m;
• Discussions with the finance team but also the operational staff which not only
improved our understanding of the overall project but also helped us audit the
accounting given the type and stage of completion of the projects;
• The Group audit team performed site visits to both Arnhem and Hull during Apr / May
2018. This allowed us to physically verify a sample of the assets being verified as well
as increase our knowledge of the projects;
• We considered the overall capitalisation and the accounting thereof in light of
what we know from our reading of the board minutes as well as discussions with
management; and
• Reported our approach and findings to the Audit Committee in our written report.
Based on our procedures we consider the capitalisation during the year to 31 March
2018 to be appropriate.
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
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
• certain disclosures of Directors’ remuneration specified by law are not made.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the Directors on 1 April 2011 to audit the
financial statements for the year ended 31 March 2011 and subsequent financial periods. The period of total uninterrupted
engagement is eight years, covering the years ended 31 March 2011 to 31 March 2018.
OTHER MATTERS
We have reported separately on the company financial statements of Accsys Technologies PLC for the year ended
31 March 2018 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
18 June 2018
GROUP INDEPENDENT AUDITORS’ REPORT CONTINUED
to the members of Accsys Technologies PLC
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us
also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 31 March 2018 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of
the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair
view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
70
71
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2018
2018
€'000
Before
exceptional
items & other
adjustments*
2018
€'000
Exceptional
items
and other
adjustments*
Note
2018
€'000
Total
2017
€'000
Before
exceptional
items & other
adjustments*
2017
€'000
Exceptional
items
and other
adjustments*
Accoya® wood revenue
Licence revenue
Other revenue
56,331
200
4,380
Total revenue
3
60,911
–
–
–
–
–
–
56,331
50,655
200
1,576
4,380
4,298
60,911
56,529
(47,270)
(42,175)
13,641
14,354
–
–
–
–
–
–
(47,270)
13,641
2017
€'000
Total
50,655
1,576
4,298
56,529
(42,175)
14,354
4
5
8
10
11
12
(20,218)
(2,184)
(22,402)
(18,551)
(343)
(18,894)
–
32
32
–
(6,577)
(2,152)
(8,729)
(4,197)
–
–
–
2
635
292
–
635
(3,905)
2
(2,174)
502
(1,672)
(302)
(258)
(560)
(8,751)
(1,650)
(10,401)
(4,497)
251
–
251
(8,500)
(1,650)
(10,150)
(666)
(5,163)
34
–
34
(4,463)
(666)
(5,129)
(56)
–
(56)
(108)
–
(108)
–
202
202
–
104
104
(56)
202
146
(108)
104
(4)
(8,556)
(1,449)
(10,004)
(5,271)
138
(5,133)
Cost of sales
Gross profit
Other operating costs
Other gains
Operating (loss)/gain
Finance income
Finance expense
(Loss)/Gain before taxation
Tax credit/(expense)
(Loss)/gain for the year
Loss arising on translation of foreign
operations, which could subsequently
be reclassified into profit or loss
Gain arising on foreign currency hedging,
which will not be reclassified into
profit or loss
Total other comprehensive
(loss)/income
Total comprehensive (loss)/
gain for the year
Total comprehensive (loss)/gain
for the year is attributable to:
Total comprehensive (loss)/gain
for the year
Basic and diluted loss
per ordinary share
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
Other Long Term Borrowing
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
Note
2018
€'000
16
17
18
21
22
23
28
29
28
29
24
25
2017
€'000
(restated)
10,839
21,681
–
10,653
60,835
–
71,488
32,520
13,125
9,335
39,698
1,347
63,505
(18,012)
(1,323)
(2,062)
(17)
(21,414)
11,796
7,612
41,173
687
61,268
(12,524)
(455)
–
(1,620)
(14,599)
42,091
46,669
(12,849)
(27,235)
(40,084)
(2,621)
(20,097)
(22,718)
73,495
56,471
5,576
140,036
109,425
4,531
128,792
113,460
(211,830)
(202,944)
(15)
(11)
43,181
30,314
73,495
(33)
45
43,851
12,620
56,471
Owners of Accsys Technologies PLC
(7,592)
(1,449)
(9,040)
(5,058)
Non-controlling interests
(964)
–
(964)
(213)
68
70
(4,990)
(143)
Foreign currency translation reserve
Capital value attributable to owners of Accsys Technologies PLC
(8,556)
(1,449)
(10,004)
(5,271)
138
(5,133)
Non-controlling interest in subsidiaries
Total equity
14
¤(0.07)
¤(0.08)
¤(0.05)
¤(0.06)
The financial statements on pages 72 to 110 were approved by the Board of Directors on 18 June 2018 and signed on its
behalf by
Prior year has been restated to reflect the adoption of IFRS 9 and to represent exceptional and other adjustments on a
consistent basis (see note 5).
The notes on pages 76 to 110 form an integral part of these financial statements.
* See note 5 for details of exceptional items and other adjustments
Paul Clegg
William Rudge
Director
Director
The notes on pages 76 to 110 form an integral part of these financial statements.
72
73
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
CONSOLIDATED STATEMENT OF CASH FLOW
for the year ended 31 March 2018
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
Balance at 31 March 2016
4,495
128,792
107,441
(47)
153
(198,842)
41,992
61
42,053
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
–
–
36
–
–
–
–
–
–
–
104
–
–
–
–
6,491
–
(576)
–
–
14
–
–
–
(108)
(4,986)
(4,990)
(143)
(5,133)
884
884
50
–
–
–
–
884
50
–
–
–
–
–
–
–
–
–
–
6,491
12,702
19,193
(576)
–
(576)
Balance at 31 March 2017
4,531
128,792
113,460
(33)
45
(202,944)
43,851
12,620
56,471
Total comprehensive
income/(expense) for
the period
Share based payments
–
–
Shares issued
1,045
Premium on shares issued
Share issue costs
Issue of subsidiary
shares to non-controlling
interests
–
–
–
–
–
–
13,007
(1,763)
202
–
–
–
–
–
–
18
–
–
–
(4,237)
–
(56)
(9,186)
(9,040)
(964)
(10,004)
–
–
–
–
–
300
–
–
–
300
1,063
13,007
(1,763)
–
–
–
–
300
1,063
13,007
(1,763)
–
(4,237)
18,658
14,421
Balance at 31 March 2018
5,576
140,036
109,425
(15)
(11)
(211,830)
43,181
30,314
73,495
Prior year has been restated to reflect the adoption of IFRS 9 (see note 5).
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 97,720 and 198,154 shares issued to an Employee Benefit Trust (‘EBT’) at nominal value
on 23 June 2017 and 27 September 2017 respectively. These shares shall vest if the employees, remain in employment
with the Company to the vesting date, being 1 July 2018 (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 76 to 110 form an integral part of these financial statements.
Loss before taxation before exceptional items and other adjustments
Adjustments for:
Amortisation of intangible assets
Depreciation of land, property, plant and equipment
Net loss on disposal of property, plant and equipment
Net finance expense
Equity-settled share based payment expenses
Currency translation losses/(gains)
Cash flows used in operating activities before changes in working capital
and exceptional items
Exceptional Items in operating activities (see note 5)
Cash outflows from operating activities before changes in working capital
Decrease/(Increase) in trade and other receivables
Increase in inventories
Increase in trade and other payables
Net cash used in operating activities before tax
Tax (paid)
Net cash absorbed by 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
Net cash from financing activities
Net (decrease)/increase 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
The notes on pages 76 to 110 form an integral part of these financial statements.
2018
€'000
2017
€'000
(8,751)
(4,497)
582
2,496
–
2,174
300
268
556
2,157
55
302
884
(129)
(2,931)
(672)
(1,617)
(4,548)
(517)
(1,189)
215
(2,936)
(1,331)
3,908
(1,756)
(2,013)
(3,769)
45
32
(29,530)
(397)
(29,850)
(3,322)
5,737
(1,710)
(745)
(2,455)
2
4,223
(6,416)
(415)
(2,606)
7,500
20,736
(325)
(716)
(322)
14,079
14,420
(1,771)
32,865
(754)
(721)
41,173
39,698
(954)
(250)
(173)
50
19,122
(805)
37,726
32,665
322
8,186
41,173
74
75
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 NOTES TO THE FINANCIAL STATEMENTS
for the year ending 31 March 2018
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. 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 eventually, of Tricoya® chips from the new plant in Hull, with the
collection of on-going working capital items in line with internally agreed budgets. The Group is also dependent upon
certain banking and finance facilities which are in place.
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 has any impact
on these financial statements, other than noted below.
The accounting policies and methods of computation are consistent with those applied in the 31 March 2017 annual
financial statements, other than during the period IFRS9, Financial Instruments has been adopted together with hedge
accounting in respect of the future currency exposures in respect of the Tricoya® plant construction. The previous year’s
figures have been restated and represented accordingly. An assessment was carried out to identify all areas impacted
under the adoption of IFRS 9 and currently there is no other impact for the year ending 31 March 2018.
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.
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 £16.25m unsecured fixed rate loan notes issued to Business Growth Fund (‘BGF’) and Volantis has been
expensed. Interest on the ¤9.5m term loan drawn down from Rhodia Acetow GmBH, to part-finance capital expenditure
at the Arnhem plant, has been capitalised as it is directly attributable to the expansion. In addition interest and other
charges on the ¤17.2m facility with Royal Bank of Scotland Plc, to part-finance capital expenditure at the Hull plant, has
been capitalised as it is directly attributable to the plant build.
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.
76
77
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
1. Accounting Policies continued
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 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.
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
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.
Foreign exchange hedging
The Group has adopted IFRS 9 hedge accounting in respect of the cash flow hedging instruments that it uses to manage
the risk of foreign exchange movements impacting on future cash flows and profitability. In adopting IFRS 9 the Group
has retrospectively applied the standard to restate prior period comparatives.
The Group has prospectively assessed the effectiveness of its cash flow hedging using the ‘hedge ratio’ of quantities
of cash held in the same currency as future foreign exchange cash flow quantities related to committed investment in
plant and equipment. The Group has undertaken a qualitative analysis to confirm that an ‘economic relationship’ exists
between the hedging instrument and the hedged item. It is also satisfied that credit risk will not dominate the value
changes that result from that economic relationship.
At the end of each reporting period the Group measures the effectiveness of its cash flow hedging and recognises the
effective cash flow hedge results in Other Comprehensive Income and the Hedging Effectiveness Reserve within Equity,
together with its ineffective hedge results in Profit and Loss. Amounts are reclassified from the Hedging Effectiveness
Reserve to Profit and Loss when the associated hedged transaction affects Profit and Loss. Further details are included
in Note 5.
Apart from the above, the Directors do not anticipate that the application of the IFRS 9 hedge accounting requirements
have had a material impact on the Group’s consolidated financial statements.
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.
• differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
Goodwill
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.
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.
78
79
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 1. Accounting Policies continued
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.
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 is 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.
The Group has elected to apply the IFRS 9 practical expedient option to measuring the value of its trade receivables
at transaction price, as they do not contain a significant financing element. The Group’s trade receivables do not have
a significant financing element, as the expected term is less than one year. Consequently, the Group applies IFRS 9’s
‘simplified’ approach that requires companies to recognise the lifetime expected losses on its trade receivables when
they do not contain a significant financing element.
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. There have been no modifications to
the terms of the Group’s loan agreements requiring disclosure under IFRS 9.
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, and
has been identified as steering the committee that makes strategic decisions.
80
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018
2. Accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Accounting estimates
Useful economic lives of property, plant and equipment
The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful
economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed
annually. They are amended when necessary to reflect current estimates, based on technological advancement,
future investments, economic utilisation and the physical condition of the assets. See note 17 for the carrying amount
of the property plant and equipment, and note 1 for the useful economic lives for each class of assets.
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.
Accounting 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 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.
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.
Available for sale investments
The Group has an investment in listed 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).
Taxation
The tax charge for the year ended 31 March 2018 has reduced compared to the prior year as a result of a change to
the Group’s transfer pricing policy to more accurately reflect the business model.
New standards and interpretations in issue at the date of authorisation of these financial statements
New standards, amendments and interpretations
No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or
after 1 April 2017, have had a material impact on the Group or parent company other than IFRS 9 which has been early
adopted as set out above.
New standards, amendments and interpretations not yet adopted
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 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 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 above standards are expected to be adopted when they become mandatorily effective. An initial assessment in
respect of the possible impact of IFRS 15 has been undertaken and is not expected to have a material impact on the
financial statements in future periods. An assessment of IFRS 16 is being undertaken however, and is likely to have a
material impact given the Group holds a number of significant lease arrangements.
The Directors do not expect that the adoption of any of the remaining Standards and Interpretations listed above will
have a material impact on the financial statements of the Group in future periods.
82
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018
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 to separately reflect exceptional
items and other adjustments within each segment for the prior year.
Accoya®
Year ending 31 March 2018
Year ending 31 March 2017
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
TOTAL
€’000
Accoya® wood revenue
Licence revenue
Other revenue
Total revenue
Cost of sales
Gross profit
Other operating costs
Other Gain
Profit/(Loss) from operations
Profit/(Loss) from operations
Depreciation and amortisation
EBITDA
56,331
–
4,380
60,711
(47,270)
13,441
(11,458)
–
1,983
1,983
2,661
4,644
–
–
–
–
–
–
56,331
50,655
–
4,380
60,711
(47,270)
13,441
1,576
4,268
56,499
(42,175)
14,324
(348)
(11,806)
(10,648)
–
–
(348)
1,635
(348)
–
1,635
2,661
(348)
4,296
–
3,676
3,676
2,357
6,033
TOTAL
€’000
50,655
1,576
4,268
56,499
(42,175)
14,324
(10,648)
635
4,311
4,311
2,357
–
–
–
–
–
–
–
635
635
635
–
635
6,668
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.
See note 5 for explanation of Exceptional Items and other adjustments.
Headcount = 105 (2017: 96)
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
Gross Accoya® manufacturing margin
Tricoya®
2018
€'000
4,644
–
(253)
4,391
2017
€'000
6,033
(1,576)
(338)
4,118
13,441
14,324
–
(253)
13,188
22%
(1,576)
(338)
12,410
23%
Year ending 31 March 2018
Year ending 31 March 2017
Tricoya® 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
–
200
–
200
–
200
(2,653)
(2,453)
(2,453)
197
(2,256)
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
TOTAL
€’000
–
200
–
200
–
200
(3,416)
(3,216)
–
–
–
–
–
–
(763)
(763)
(763)
(3,216)
–
197
(763)
(3,019)
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
–
–
30
30
–
30
(1,795)
(1,765)
(1,765)
171
(1,594)
–
–
–
–
–
–
173
173
173
–
173
TOTAL
€’000
–
–
30
30
–
30
(1,622)
(1,592)
(1,592)
171
(1,421)
Revenue and costs are those attributable to the business development of the Tricoya® process and establishment of
Tricoya® Hull plant.
See note 5 for explanation of Exceptional Items and other adjustments.
Headcount = 4 (2017: 4), 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.
84
85
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 3. Segmental reporting continued
Corporate
Total
Year ending 31 March 2018
Year ending 31 March 2017
Year ending 31 March 2018
Year ending 31 March 2017
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
€’000
–
–
–
–
–
–
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
€’000
–
–
–
–
–
–
Accoya® wood revenue
Licence revenue
Other revenue
Total revenue
Cost of sales
Gross result
Other operating costs
Other Gain
(4,703)
–
(918)
32
(5,621)
32
(4,343)
(517)
(4,860)
–
–
–
Loss from operations
(4,703)
(886)
(5,589)
(4,343)
(517)
(4,860)
Loss from operations
Depreciation and amortisation
EBITDA
(4,703)
166
(4,537)
(886)
(5,589)
–
166
(886)
(5,423)
(4,343)
133
(4,210)
(517)
(4,860)
–
133
(517)
(4,727)
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.
See note 5 for explanation of Exceptional Items and other adjustments.
Headcount = 19 (2017: 15)
Research and Development
Year ending 31 March 2018
Year ending 31 March 2017
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
TOTAL
€’000
Accoya® wood revenue
Licence revenue
Other revenue
Total revenue
Cost of sales
Gross result
Other operating costs
Loss from operations
Loss from operations
Depreciation and amortisation
EBITDA
–
–
–
–
–
–
(1,404)
(1,404)
(1,404)
54
(1,350)
–
–
–
–
–
–
–
–
–
–
–
–
(155)
(155)
(1,559)
(1,559)
(155)
(1,559)
–
54
(155)
(1,505)
–
–
–
–
–
–
(1,763)
(1,763)
(1,763)
52
(1,711)
–
–
–
–
–
–
–
–
–
–
–
TOTAL
€’000
–
–
–
–
–
–
(1,763)
(1,763)
(1,763)
52
(1,711)
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 = 10 (2017: 9)
86
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
Before
exceptional
items & other
adjustments
€’000
Exceptional
items & other
adjustments
€’000
Accoya®/Tricoya® wood revenue
Licence revenue
Other revenue
Total revenue
Cost of sales
Gross profit
Other operating costs
Other Gain
56,331
200
4,380
60,911
(47,270)
13,641
(20,218)
TOTAL
€’000
56,331
200
4,380
60,911
(47,270)
13,641
–
–
–
–
–
–
50,655
1,576
4,298
56,529
(42,175)
14,354
(18,551)
–
(2,184)
(22,402)
–
32
32
Profit/(Loss) from operations
(6,577)
(2,152)
(8,729)
(4,197)
Finance income
Finance expense
Loss before taxation
Profit/(Loss) from operations
Depreciation and amortisation
EBITDA
–
(2,174)
(8,751)
(6,577)
3,078
(3,499)
–
–
502
(1,672)
(1,650)
(10,401)
(2,152)
(8,729)
–
3,078
(2,152)
(5,651)
2
(302)
(4,497)
(4,197)
2,712
(1,485)
TOTAL
€’000
50,655
1,576
4,298
56,529
(42,175)
14,354
–
–
–
–
–
–
(343)
(18,894)
635
292
–
635
(3,905)
2
(258)
(560)
34
(4,463)
292
(3,905)
–
292
2,712
(1,193)
Other adjustments included within finance expenses related to the revaluation of loan notes with Business Growth Fund
(‘BGF’) and 1798 Volantis Catalyst Fund II (‘Volantis’), which are denominated in pounds Sterling.
Analysis of Revenue by geographical area of customers:
UK and Ireland
Rest of Europe
Americas
Benelux
Asia-Pacific
Rest of World
2018
€'000
25,799
15,273
8,153
5,998
5,252
436
60,911
2017
€'000
25,307
12,984
5,810
7,992
4,009
427
56,529
Revenue generated from three customers exceeded 10% of Group revenue of 2018. This included 79% of the revenue
from the rest of Europe and relates to a mixture of Accoya® and Other Revenue. In addition two other customers
represented 37% and 30% 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 2017 (93% of the revenue from
the rest of Europe, and 33% and 31% respectively, of the revenue from the United Kingdom and Ireland).
87
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 3. Segmental reporting continued
Assets and liabilities on a segmental basis:
Accoya®
2018
€'000
Tricoya®
2018
€'000
Corporate
2018
€'000
R&D
2018
€'000
TOTAL
2018
€'000
Accoya®
2017
€'000
Tricoya®
2017
€'000
Corporate
2017
€'000
R&D
2017
€'000
TOTAL
2017
€'000
Non-current assets
46,411
21,521
3,485
71
71,488
24,140
4,685
3,580
115
32,520
Current assets
25,112
36,095
(2,084)
4,382
63,505
21,893
36,998
(2,202)
4,579
61,268
Current liabilities
(14,034)
(8,318)
983
(45)
(21,414)
(7,845) (3,900)
(2,732)
(122) (14,599)
Net current assets
11,078
27,777
(1,101)
4,337
42,091
14,048
33,098
(4,934)
4,457
46,669
Non-current liabilities
(21,974)
(334) (17,776)
– (40,084)
(4,488)
– (18,230)
–
(22,718)
Net assets
35,515
48,964
(15,392)
4,408
73,495
33,700
37,783
(19,584)
4,572
56,471
Analysis of non-current assets (Other than financial assets and deferred tax):
UK
Other countries
Un-allocated – Goodwill
2018
€'000
26,780
40,475
4,231
71,488
2017
€'000
7,775
20,513
4,231
32,520
The segmental assets in the current year were predominantly held in the UK and mainland Europe (Prior Year Europe).
Additions to property, plant, equipment and intangible assets in the current year were predominantly incurred in the UK
and mainland Europe (Prior Year 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, the offices in Dallas and London and certain pre-operating costs associated with the plant in Hull:
Sales and marketing
Research and development
Depreciation and amortisation
Other operating costs
Administration costs
Exceptional Items and other adjustments
2018
€'000
3,967
1,404
3,078
4,135
7,635
2,184
2017
€'000
3,773
1,711
2,713
3,243
6,833
343
22,402
18,894
Administrative costs include cost associated with Business Development and Legal departments, Intellectual Property as
well as Human Resources, IT, Finance, Management and General Office and includes the costs of the Group’s head office
costs in London and the US Office in Dallas.
The total cost of ¤22,402,000 in the current period includes ¤3,416,000 in respect of the Tricoya® segment, compared to
¤1,622,000 in the previous period.
Group average headcount increased from 124 in the period to 31 March 2017, to 138 in the period to 31 March 2018.
During the period, ¤397,000 (2017: ¤525,000) of development costs were capitalised and included in intangible fixed
assets, including ¤337,000 (2017: ¤462,000) which were capitalised within Tricoya Technologies Limited (‘TTL’). In
addition ¤446,000 of internal costs have been capitalised in relation to the expansion of our plant in Arnhem, Netherlands
(2017: ¤637,000) and ¤109,000 of internal costs have been capitalised in relation to our plant build in Hull, UK (2017:
¤110,000). Both are included within tangible fixed assets.
5. Exceptional items and other adjustments
Bonuses paid relating to year ending 31 March 2017
Restructuring costs
Gain from disposal of assets
Business Development advisory fees
Total exceptional items
Foreign exchange differences arising on Tricoya® cash held – Operating costs
Foreign exchange differences arising on Loan Notes – including in Finance expense
Foreign exchange differences on Tricoya® cash held – Other comprehensive income*
Total other adjustments
Tax on exceptional items and other adjustments
Total exceptional items and other adjustments
Audited
Year ended
31 March 2018
€’000
Audited
Year ended
31 March 2017
€’000
(1,386)
(231)
32
–
(1,585)
(567)
502
202
137
–
(1,448)
–
–
635
(517)
118
174
(258)
104
20
–
138
Prior year has been restated to reflect the adoption of IFRS 9 and to represent exceptional and other adjustments on a
consistent basis.
* Note:
Items stated above as recorded in Other comprehensive income have been restated such that in the financial statements for the year
ended 31 March 2017 the ¤104,000 of foreign exchange gains had been recorded within Operating costs. The restatement has resulted
in a corresponding restatement of the opening balance of Other Reserves as stated in the Statement of Changes in Equity.
Exceptional Items
¤1,386,000 relates to the annual bonus paid in the current year which was attributable to the year ended 31 March 2017.
Separately the accrual for the current year bonus is included in underlying operating costs. This double charge in the year
results from a re-alignment of the timing of recognition of bonuses reflecting the more structured annual bonus scheme
now in place compared to previous years. In addition the bonus paid in the current year relating to the year ended
31 March 2017 included one-off targets relating to the formation of the Tricoya® Consortium. The charge is split between
all segments, including ¤293,000 in Accoya®, ¤124,000 in Tricoya®, ¤901,000 Corporate and ¤67,000 in R&D.
Other restructuring costs relate to changes required following the completion of the Tricoya® Consortium in March
2017. This is split between all segments, including ¤54,000 in Accoya®, ¤67,000 Tricoya®, ¤18,000 Corporate and
¤92,000 R&D.
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 prior period. A resulting gain of ¤635,000 was recognised in the previous year as a result of the
book value of the land being lower than the sale price. The full amount relates to the Accoya® segment.
Business Development advisory fees were incurred during the prior year as the Group pursued a one-off long-term
opportunity. The full amount relates to the corporate segment.
Other Adjustments
Foreign exchange differences in the Tricoya® segment have occurred due to pounds Sterling held within the consortium in
preparation for the Hull plant build. The Group has mitigated this currency exchange risk by adopting hedge accounting in
respect of the Tricoya® plant construction under IFRS 9, Financial Instruments. The prior year has also been represented
and restated to highlight the comparative impact in the prior year. The result of adopting IFRS 9 is that all of the amount
included in Other Comprehensive Income relates to such foreign exchange gain or losses in both periods.
Foreign exchange differences also arise on the pounds Sterling denominated loan notes, entered into in the prior year.
These exchange rate differences are included as finance expenses. The prior year has also been represented to reflect the
comparative impact in the prior year.
88
89
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 6. Employees
8. Operating (loss)/gain
Staff costs (including Directors) consist of:
Wages and salaries
Social security costs
Other pension costs
Share based payments
2018
€'000
11,293
1,509
739
258
2017
€'000
8,783
1,186
617
908
This has been arrived at after charging:
Staff costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
13,799
11,494
Foreign exchange losses/(gains)
2018
€'000
2017
€'000
13,799
2,496
582
1,306
834
997
3
85
147
25
257
–
–
–
11,494
2,157
556
1,351
(403)
873
79
65
112
22
199
87
289
376
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:
* Note:
Other services payable to the Company’s auditors excludes ¤0.3m attributable to the Firm Placing and Open offer which completed in
the financial year, and has been deducted from share premium.
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
473
329
256
1,058
Pension
€'000
Share based
payments charge
€'000
29
12
8
49
14
10
8
32
2018
85
53
138
2018
€'000
1,291
49
1,340
2018
Total
€'000
516
351
272
1,139
2017
78
46
124
2017
€'000
1,625
51
1,676
2017
Total
€'000
726
425
333
1,484
The Group made contributions to 2 (2017: 2) 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 Paul Clegg and
William Rudge are denominated in pounds Sterling. Their total remuneration decreased by 38% and 54% respectively,
when excluding the impact of foreign exchange.
90
91
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 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 (sufficient to manufacture 40,000
cubic metres of panels) and scope to expand.
Structurally, Accsys, BP Ventures, MEDITE, BGF and Volantis have invested into TTL in the prior year. 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 have invested ¤20.3m in the Tricoya® Project, including ¤13.7m as equity in TVUK by BP Chemicals and
¤6.6m as equity in TTL by BP Ventures. All funding was received by 31 March 2018, with ¤11.3m being received in
the year ended 31 March 2018.
MEDITE have invested ¤11m in the Tricoya® Project, including ¤7m as equity in TTL and ¤4m as equity in TVUK. All funding
was received by 31 March 2018, with ¤3.1m being received in the year ended 31 March 2018.
The Group is expected to increase its total equity interest in TTL to 75.9% over the next two years as a result of its
continued supply of lower priced Accoya® to MEDITE to enable continued market development ahead of the completion
of the Hull plant. During the year the Group increased its shareholding from 74.6% to 75.1% from the issue of 780,287
shares related to this market seeding activity.
In the prior year, BGF and Volantis invested an aggregate of £19m as financial investors into both the Group and TTL.
BGF and Volantis invested on similar terms but are investing separately, with BGF accounting for 65% of the £19m total.
Also in the prior year, TVUK entered a six-year ¤17.2m (¤15m net) finance facility agreement with The Royal Bank of
Scotland Plc in respect of the construction and operation of the Hull plant. As at 31 March 2018 the Group have utilised
¤334k of the facility in relation to fees incurred.
The Group has consolidated the results of TTL and TVUK as subsidiaries, as it exercises the power to govern the
entities in accordance with IFRS 10. The non-controlling interests in both entities have been recognised in these
Group financial statements.
The ‘TTL Group’ income statement and balance sheet, consisting of TTL and its subsidiary TVUK, are set out below:
TTL Group income statement:
Revenue
Costs:
Staff costs
Research & development (excluding staff costs)
Intellectual Property
Sales & marketing
Depreciation & Amortisation
EBIT
EBIT attributable to Accsys shareholders
Consolidated
2018
€'000
Consolidated
2017
€'000
200
–
(1,898)
(223)
(381)
(376)
(197)
(1,145)
(200)
(606)
(12)
(171)
(2,875)
(2,133)
(1,911)
(1,920)
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
2018
€'000
2017
€'000
3,390
18,119
21,509
1,340
34,754
36,094
(8,639)
27,455
48,964
3,246
1,440
4,686
612
36,386
36,998
(3,900)
33,098
37,783
Value attributable to Accsys Technologies
18,649
25,163
10. Finance income
Interest receivable on bank and other deposits
11. Finance expense
Arnhem land and buildings lease finance charge
Foreign exchange (gain)/loss on loan notes
Loan note related finance expenses
Other finance expenses
2018
€'000
–
2018
€'000
575
(502)
1,540
59
1,672
2017
€'000
2
2017
€'000
173
257
13
117
560
92
93
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 12. Tax expense
13. Dividends Paid
(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
(b) The tax credit for the period is lower than the standard rate
of corporation tax in the UK (2018: 19%, 2017: 20%) due to:
Loss before tax
Expected tax credit at 19% (2017: 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
2018
€'000
2017
€'000
–
(248)
(248)
(9)
6
–
(251)
2018
€'000
–
(274)
(274)
12
928
–
666
2017
€'000
(10,401)
(4,463)
(1,976)
(893)
110
(29)
1,860
38
(2)
15
(263)
(251)
176
(114)
1,593
40
138
(34)
(240)
666
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.
Final Dividend ¤Nil (2017: ¤Nil) per Ordinary share proposed
and paid during year relating to the previous year's results
2018
€'000
–
2017
€'000
–
14. Loss per share
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
2018
Before
exceptional
items and other
adjustments
111,250
(7,536)
2017
Before
exceptional
items and other
adjustments
2018
Total
2017
Total
111,250
90,442
90,442
(9,185)
(4,950)
(4,986)
¤ (0.07)
¤ (0.08)
¤ (0.05)
¤ (0.06)
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 certain members of staff including the senior management team
and the executive Directors. As part of the award of nil cost 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.
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
20 November 2007
18 June 2008
8 December 2008
27 July 2010
1 August 2011
19 September 2013 (LTIP)
24 June 2016 (LTIP)
20 June 2017 (LTIP)
Total
Number of outstanding
options at 31 March
Weighted average remaining
contractual life, in years
2018
–
8,498
25,211
2017
48,444
8,498
25,211
–
164,321
115,000
140,000
2,247,850
2,472,550
1,015,030
1,070,255
1,087,842
–
4,499,431
3,929,279
2018
–
0.3
0.7
2.3
3.3
5.5
8.3
9.3
6.9
2017
0.6
1.3
1.7
3.3
4.3
6.5
9.3
–
6.9
94
95
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 15. Share based payments continued
Movements in the weighted average values are as follows:
Outstanding at 31 March 2016
Granted during the year
Forfeited during the year
Expired during the year
Outstanding at 31 March 2017
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 31 March 2018
Weighted average
exercise price
Number
¤ 0.51
4,617,415
¤ 0.00
1,070,255
¤ 0.04
(1,642,805)
¤ 9.15
¤ 0.31
(115,586)
3,929,279
¤ 0.00
1,087,842
¤ 2.15
(245,044)
¤ 0.00
¤ 0.00
(249,700)
(22,946)
¤ 0.15
4,499,431
The exercise price of options outstanding at the end of the year ranged between ¤nil (for LTIP options) and ¤12.90
(2017: ¤nil and ¤12.90) and their weighted average contractual life was 6.9 years (2017: 6.9 years).
Of the total number of options outstanding at the end of the year, 126,236 (2017: 183,532) had vested and were
exercisable at the end of the year. 106,189 options were exercised in the current year (2017: Nil).
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.
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.
2.
Vesting was on a straight line basis between the respective EBITDA and share price targets
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.
Of the 4,103,456 nil cost options awarded in 2013 2,472,550 vested in the previous period as a result of meeting the
performance conditions set out above, with the remaining 1,630,906 being forfeited. 2,247,850 remain as at 31 March
2018 after allowing for forfeitures and options exercised in the year.
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.
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)
Element B
(EBITDA
per Share)
27 Jun 16
27 Jun 16
0.81
0.00
3
10
Share Price
-0.64%
20%
0%
0.81
0.00
3
10
EBITDA
-0.64%
20%
0%
¤ 0.187
¤ 0.749
96
97
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018
15. Share based payments continued
Awards made in June 2017 and LTIP Award performance conditions
During the year, a total of 1,087,842 LTIP awards were made primarily to members of the senior management team
including the executive Directors:
The performance targets for 937,014 of these awards are as follows:
Metric
Vesting (% of maximum)
EBITDA per share in FY20
Share Price Growth vs Comparator Group
Weighting
(% of award)
50%
50%
Threshold
25%
¤0.04
Median
Target
50%
¤0.06
N/A
Maximum
100%
¤0.08
Upper Quartile
•
•
Vesting is on a straight-line basis between points in the schedule. There is no vesting for performance below Threshold.
EBITDA based on total Group EBITDA including licensing income. Appropriate adjustments may be made to the EBITDA per share metric
ensure fair and consistent performance measurement over the performance period in line with the business plan and intended stretch of the
targets at the point of award.
•
Comparator Group is the constituent companies of the FTSE AIM All Share Index (excluding the Resource and Financial Services Sectors).
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
(Total shareholder
return)
Element B
(EBITDA
per Share)
20 Jun 17
20 Jun 17
0.88
0.00
3
10
Share Price
-0.60%
20%
0%
0.88
0.00
3
10
EBITDA
-0.60%
20%
0%
¤ 0.203
¤ 0.814
The remaining 158,828 of the awards made in summer 2017 were specific to individuals dedicated to the Tricoya®
Consortium with performance measures linked to progress and development of the Tricoya® plant and its
subsequent operation.
The fair value of these options varied between ¤0.81 and ¤0.12.
All of the above awards, made in summer 2017 are subject to a three year performance period (i.e. year end March 2020)
and a further two year holding period. In addition, awards are also subject to malus/claw-back provisions.
2005 and 2008 Share Option schemes
Awards made in earlier years had no impact on the income statement in the current or prior period and given the smaller
number of options remaining, no details have been disclosed.
Employee Benefit Trust – Share bonus award
Following a share issue on 20 June 2017 as part of the annual bonus, in connection with the employee remuneration and
incentivisation arrangements for the period from 1 April 2016 to 31 March 2017, 295,873 (2017: 679,435) new Ordinary
shares were held by an Employee Benefit Trust, the beneficiaries of which are primarily other senior employees. Such
new Ordinary shares vest if the employees remain in employment with the Company at the vesting date, being 1 July
2018 (subject to certain other provisions including regulations, good-leaver, take-over and nomination and remuneration
committee discretion provisions). As at 31 March 2018, the Employment Benefit Trust was consolidated by the Company
and the 295,873 shares are recorded as Own Shares within equity. During the period, 679,435 Ordinary shares awarded
in the prior year vested.
16. Intangible assets
Cost
At 31 March 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated amortisation
At 31 March 2016
Amortisation
At 31 March 2017
Amortisation
At 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
At 31 March 2016
5,527
415
5,942
396
6,338
607
556
1,163
307
Internal
Development
costs
€'000
Intellectual
property
rights
€'000
Goodwill
€'000
Total
€'000
73,292
4,231
83,050
–
–
415
73,292
4,231
83,465
–
–
396
73,292
4,231
83,861
71,463
–
71,463
275
1,470
71,738
–
–
–
–
–
4,868
4,779
4,920
1,554
1,829
1,829
4,231
4,231
4,231
72,070
556
72,626
582
73,208
10,653
10,839
10,980
The carrying value of internal development costs, intellectual property rights and goodwill on consolidation are split
between two cash generating units, representing the Accoya® and Tricoya® segments. The recoverable amount of
internal development costs, intellectual property rights and goodwill relating to each unit 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 10 years, including a five year forecast and five years of 2% growth plus assumptions concerning
a terminal value and based on a pre-tax discount rate of 12% per annum (2017: 13%). 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 total
volume of forecast Accoya® and Tricoya® manufactured is lower than projected sales in future years. Amortisation is
included in Other operating costs within the Statement of Comprehensive Income.
98
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 17. Property, plant and equipment
Cost or valuation
At 31 March 2016
Additions
Disposals
Foreign currency translation (loss)
At 31 March 2017
Additions
Disposals
Foreign currency translation (loss)
At 31 March 2018
Accumulated depreciation
At 31 March 2016
Charge for the year
Disposals
Foreign currency translation (loss)
At 31 March 2017
Charge for the year
Disposals
Foreign currency translation (loss)
At 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
At 31 March 2016
Land and
buildings
€'000
Plant and
machinery
€'000
Office
equipment
€'000
5,251
30,725
–
7,102
(3,606)
–
(71)
–
1,238
133
–
8
Total
€'000
37,214
7,235
(3,677)
8
1,645
37,756
1,379
40,780
10,433
31,104
–
–
–
–
116
–
(19)
41,653
–
(19)
12,078
68,860
1,476
82,414
541
117
–
–
15,568
1,869
(9)
–
833
171
–
9
16,942
2,157
(9)
9
658
17,428
1,013
19,099
275
2,024
–
–
3
–
933
19,455
11,145
987
4,710
49,405
20,328
15,157
197
–
(19)
1,191
285
366
405
2,496
3
(19)
21,579
60,835
21,681
20,273
Included within property, plant and equipment are assets with an initial cost of ¤18,962,000 and a net book value at 31
March 2018 of ¤15,141,000 which has been accounted for as a finance lease (See note 28). Assets with a net book value of
¤17.1m are subject to security agreements associated with the Rhodia Acetow loan facility. See note 29. In addition, plant
and machinery assets with a net book value of ¤19,326,000 and ¤14,768,000 are held as assets under construction and
are not depreciated, relating to the Hull Plant and the Arnhem plant expansion respectively.
18. Other financial assets
Available for sale investments
2018
€'000
–
2017
€'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 and the Wiener Boise of the Vienna Stock Exchange.
However, the carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair
value, as there continues to be no active market for these shares as at 31 March 2018, and there is significant uncertainty
over the future of Cleantech Building Materials PLC, and as such a reliable fair value cannot be calculated.
The historical cost of the listed shares held at 31 March 2018 is ¤10m (2017: ¤10m). However, a provision for the
impairment of the entire balance of ¤10m continues to be recorded as at 31 March 2018.
During the year Accsys sold 21,479 shares at ¤1.50 per share resulting in a gain of ¤32,000 such that a total of 498,522
shares were held at 31 March 2018.
19. Deferred Taxation
The Group has a deferred tax asset of ¤nil (2017: ¤nil) relating to trading losses brought forward.
The Group also has an unrecognised deferred tax asset of ¤26m (2017: ¤24m) 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
2018
€'000
10,285
2,840
13,125
2017
€'000
6,447
5,349
11,796
The amount of inventories recognised as an expense during the year was ¤42,893,599 (2017: ¤39,030,867). The cost
of inventories recognised as an expense includes a net credit of ¤31,402 (2017: debit of ¤15,549) in respect of the
inventories sold in the period which had previously been written down to net realisable value.
100
101
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 22. Trade and other receivables
Trade receivables
Other receivables
Prepayments
Accrued income
2018
€'000
6,659
136
2,519
21
9,335
2017
€'000
4,133
180
3,269
30
7,612
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 ¤714,000 of the trade and other receivables
denominated in US Dollars (2017: ¤637,000).
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
2018
€'000
350
–
–
3
353
2017
€'000
251
–
–
98
349
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 (2017: ¤25,001,000) due
from Diamond Wood.
24. Share capital
Allotted – Equity share capital
111,513,145 Ordinary shares of ¤0.05 each (2017: 90,643,585 Ordinary shares of ¤0.05 each)
2018
€'000
5,576
5,576
2017
€'000
4,531
4,531
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.
In year ended 31 March 2018:
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.
97,720 shares were issued on 23 June 2017 to an Employee Benefit Trust (‘EBT’) at nominal value.
198,154 shares were issued on 27 September 2017 to an Employee Benefit Trust (‘EBT’) at nominal value.
106,189 shares were issued on 27 September 2017 to an employee following the exercise of nil cost options, granted in
2013 under the Company's 2013 Long Term Incentive Plan (‘LTIP’).
143,511 shares were issued on 26 February 2018 to an ex-employee. 118,511 of these Shares were issued and allotted
following the exercise of nil cost options, granted in 2013 under the Company's 2013 Long Term Incentive Plan (‘LTIP’),
with the balance of 25,000 Shares issued as part of the individual’s severance terms.
Movement in provision for doubtful debts:
25. Other reserves
Balance at the beginning of the year
Net increase/(release) of impairment if not required
Balance at the end of the year
Summary of Receivable Impairments:
Trade receivables – Accoya® wood
23. Trade and other payables
Trade payables
Other taxes and social security payable
Accruals and deferred income
2018
€'000
2017
€'000
25,001
25,002
1
(1)
25,002
25,001
2018
€'000
–
2018
€'000
9,458
228
8,326
18,012
2017
€'000
–
2017
€'000
6,618
201
5,705
12,524
Balance at 31 March 2017
Total comprehensive income/(expense) for the period
Issue of subsidiary shares to non-controlling interests
148
106,707
–
–
–
–
104
202
Capital
redemption
reserve
€'000
Merger
reserve
€'000
Hedging
Effectiveness
reserve
€'000
Other
reserve
€'000
Total Other
reserves
€'000
6,501
113,460
–
202
–
(4,237)
(4,237)
Balance at 31 March 2018
148
106,707
306
2,264
109,425
The closing balance of the capital redemption reserve represents the amounts transferred from share capital on
redemption of deferred shares in a previous year.
The merger reserve arose prior to transition to IFRS when merger accounting was adopted.
The hedging effectiveness reserve reflects the total accounted for under IFRS 9 in relation to the Tricoya® segment
(see note 1).
The other reserve represents the amounts received for subsidiary share capital from non-controlling interests (see
note 26).
102
103
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 26. Transactions with non-controlling interests
In the year ended 31 March 2017:
On 29 March 2017 and earlier in the same financial year, TTL issued further Series A Preference shares and
transferred Ordinary shares to non-controlling interests for consideration of ¤15.79m, 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 ¤3.26m, resulting in the following shareholdings:
BP Chemicals (30%), MEDITE (8.2%)
In the year ended 31 March 2018:
On 5 September 2017, TTL issued 284,716 shares to Titan Wood Limited. On 9 February 2018, TTL issued 495,571
shares to Titan Wood Limited. As a result the non-controlling interests shareholdings were amended to:
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 a 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 prior 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 have constructed and then leased to Accsys new
warehouse and office facilities. The construction is now complete and therefore an increase in lease commitments has
been recognised in the period. This has been accounted for as a finance lease, with the new asset and liability of ¤10.4m
being recognised as at 31 March 2018 (2017: ¤nil).
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 ¤1.9m being recognised as at 31 March 2018 (2017: ¤1.0m).
BP Ventures (8.8%), MEDITE (11.9%), BGF (2.7%), Volantis (1.5%)
These transactions have resulted in a finance lease creditor of ¤14.2m as at 31 March 2018.
On 20 September 2017, TVUK issued Ordinary shares to non-controlling interests for consideration of ¤11.50m.
In addition on the 6 October 2017, TVUK issued Ordinary shares to non-controlling interests for consideration of
¤2.92m. As a result the non-controlling interests shareholdings remained unchanged at:
BP Chemicals (30%), MEDITE (8.2%)
The total carrying amount of the non-controlling interests in TTL and TVUK at 31 March 2018 was ¤30.31m (2017: ¤12.62m).
The Group recognised a decrease 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
2018
€'000
7,077
2017
€'000
885
(18,658)
(12,702)
14,420
1
2,840
19,123
(229)
7,077
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
2018
€'000
1,063
2,428
5,339
8,830
2017
€'000
1,391
3,194
7,332
11,918
The majority of commitments under operating leases relate to the Group’s offices in the UK and USA, together with land
in The Netherlands associated with our warehouse and offices and the land in Hull used for the Tricoya® plant.
During the prior period the Group entered agreements which resulted 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 have been constructed by Bruil. The building element has been accounted for as a finance lease
– see note 28.
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
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
Minimum lease payments
2018
€'000
2017
€'000
1,390
5,317
15,702
(8,237)
14,172
496
1,770
3,016
(2,206)
3,076
2018
€'000
2017
€'000
2,062
18,097
9,138
–
5,407
14,690
29,297
20,097
The change in total borrowings in the period of ¤9.2m consisted of an increase of a ¤7.5m cash-flow arising from the
draw-down of the Rhodia Acetow facility, ¤2.2m of accrued finance charges, offset by ¤0.5m foreign exchange gain
arising on the Loan Notes.
104
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018
29. Commitments under loan agreements continued
Loan Notes
On 29 March 2017 the Group issued £16.25m (¤18.38m) of unsecured fixed rate loan notes, due 2021. £10.48m of Loan
Notes in principal were issued to Business Growth Fund (‘BGF’), with £5.77m 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 ¤2m of its ¤9.5m term loan facility with Rhodia Acetow GmBH. The Group
has since drawn down ¤5.5m on 03 November 2017 and ¤2m on 29 March 2018. 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 secured against existing Arnhem chemical plant and
associated assets and is subject to interest at 7.5% per annum. At 31 March 2018, the Group had ¤9.9m (2017: ¤2.0m)
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 ¤17.2m (¤15m 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 ¤334,000 (2017: ¤nil) borrowed under the facility. The majority of the facility 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
Working capital facility
In May 2018 the Group amended its working capital facility with ABN Commercial Finance, initially agreed in 2011.
The facility is now a ¤6.0m credit facility secured upon the receivables and inventory of the Accoya® manufacturing
business committed for a period of 5 years.
Bank guarantee 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 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 3.4% as at 31 March 2018 (2017: 3.5%).
At 31 March 2018, the Group had ¤nil (2017: ¤nil) borrowed under both of the facilities.
Reconciliation to net debt/(cash)
Cash and cash equivalents
Less:
Amounts payable under loan agreements
Amounts payable under finance leases (note 28)
Net debt/(cash)
2018
€'000
39,698
2017
€'000
41,173
(29,297)
(20,097)
(14,172)
(3,771)
(3,076)
18,000
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 the 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 have been converted to Options, such that at 31 March 2018 a total 13,104,839 Options 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 as at 31 March 2018.
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 year. 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 constructed a new warehouse and office building
which is connected to Accsys’ existing manufacturing site. This building was 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: ¤1,725,000 as at 31 March 2018 (2017: ¤1,869,000) relates to the sale and leaseback of land
and buildings in Arnhem in 2011 and 2012, ¤10,315,000 as at 31 March 2018 (2017: ¤nil) relates to the new warehouse
and office building in Arnhem completed in the year ended 31 March 2018; and ¤1,947,000 as at 31 March 2018 (2017:
¤948,000) relates to the infrastructure work for the chemical plant in Arnhem. All of the above have a 20 year lease
period with the ability to extend further. A further ¤185,000 (2017: ¤255,000) relates to the fit-out 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 2018 (2017: ¤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.
106
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018
31. Financial instruments continued
Categories of financial instruments
Available for Sale investments
Loans and receivables
Trade receivables
Other receivables
Money market deposits in Euro
Money market deposits in Sterling
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
2018
€'000
–
6,659
136
1,325
17,067
7,506
165
2017
€'000
–
4,133
180
1,326
–
18,134
77
13,635
21,635
–
1
(9,458)
(14,172)
–
(6,618)
(3,076)
–
(29,297)
(20,097)
(6,434)
15,695
Money market deposits have interest rates fixed for less than three months at a weighted average rate of 0.36% (2017:
0.14%). 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 with the exception of some major
capex items.
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 holds a proportion of the cash associated with the Tricoya® Consortium in pounds Sterling to reflect
the expected costs associated with the construction of the plant in Hull and accordingly is accounted for as a cash-flow
hedge (see note 5).
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.
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.
108
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124NOTES TO THE FINANCIAL STATEMENTS CONTINUEDfor the year ending 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2018
COMPANY INDEPENDENT AUDITORS’ REPORT
to the members of Accsys Technologies PLC
32. Capital Commitments
Contracted but not provided for in respect of property, plant and equipment
34,461
38,424
2018
€'000
2017
€'000
REPORT ON THE AUDIT OF THE COMPANY FINANCIAL STATEMENTS
Opinion
In our opinion, Accsys Technologies PLC’s Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Company’s affairs as at 31 March 2018;
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.
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
33. Post Balance Sheet Events
On 1 May 2018 Accsys announced that it had agreed to purchase the land and buildings associated with its Accoya® plant
and logistics centre in Arnhem from its current landlord, Bruil, having retained a first right to buy back the property from
Bruil in the event that a third party offered to purchase it, which has now occurred. The transaction remains conditional
upon Accsys finalising finance terms to fund the purchase price of ¤23m (plus VAT).
Accsys is currently in discussions in this respect with a third party bank and will provide a further update in due course.
Whilst the property has been transferred to Accsys, should satisfactory financing terms not be agreed, the transaction
will be unwound, the property transferred back to Bruil and the previous lease arrangements will re-commence, all
without liability to Accsys.
The acquisition reflects Accsys’ ambition to improve overall financing arrangements. The financing terms, if agreed, are
expected to result in a comparable financial commitment to the lease, although the asset and corresponding liability will
increase given part of the existing lease arrangement was recognised as an operating lease.
The arrangement is expected to result in a lower overall income statement charge over the next 20 years, reflecting the
ownership of the freehold. Ownership of the land is also expected to provide greater flexibility in respect of the use of the
land as well as any potential value appreciation.
Separately, in May 2018 the Group amended its working capital facility with ABN Commercial Finance, initially agreed in
2011. The facility is now a ¤6.0m credit facility secured upon the receivables and inventory of the Accoya® manufacturing
business committed for a period of 5 years.
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual
Report”), which comprise: the Company balance sheet as at 31 March 2018; and the notes to the financial statements,
which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group or the company.
We have provided no non-audit services to the Group and its subsidiaries in the period from 1 April 2017 to 31 March 2018.
Our audit approach
Overview
Materiality
• Overall materiality: ¤434,000 (2017: ¤540,000). For holding companies such as the plc
we often use a benchmark based on the asset base, however, as we constrained by the
Group materiality and allocation to our components an amount of ¤434,000 was judged
to be appropriate.
Audit Scope
• We have performed a full scope audit of the financial statements of the parent company.
• Recoverability of investments in Group subsidiaries.
Key audit
matters
• Going concern.
110
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 COMPANY INDEPENDENT AUDITORS’ REPORT CONTINUED
to the members of Accsys Technologies PLC
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the Directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which
it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulations,
including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on
laws and regulations that could give rise to a material misstatement in the company’s financial statements, including,
but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included, but were not limited to, review of
correspondence with the regulators, enquiries of management including internal legal counsel and testing of particular
classes of transactions. There are inherent limitations in the audit procedures described above and the further removed
non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we would become aware of it.
As in all our audits we also addressed the risk of management override of controls, including evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters,
and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Recoverability of investments in Group subsidiaries
The parent company held assets
in subsidiaries of ¤176.6m (2017:
¤165.0m) at 31 March 2018
comprising ¤14.8m (2017: ¤14.5m)
of investment in subsidiaries and
¤161.8m (2017: ¤150.5m) of amounts
owed from Group undertakings.
An impairment may be required if
there are indicators which reflect a
permanent decline in value. Should
such indicators exist management
are required to carry out an
impairment review. The current
market value of the Group being
less than the carrying value of
the assets at 31 March 2018 is one
such indicator and as a result an
impairment analysis was carried out.
Our audit included a number of specific procedures including those set out below:
• Understanding and auditing management’s impairment calculations (value-in-use)
for the overall asset of ¤176.6m. This included:
− Verifying that the basis for the value-in-use calculations was a board approved
budget for FY19;
− Recalculating the carrying value of the investment assets by agreeing balances
back to the financial records;
− Debating and challenging management’s key assumptions used in the model
for future years (Revenue growth, EBITDA margin, WACC). We also obtained
supporting documentation for key assumptions such as recalculating WACC rates,
validating future revenue expectations given knowledge of the capacity of the
plant in future years, consideration and challenge of margins based on previous
performance.
• Obtained and analysed other data points such as Broker valuations;
• Performed a sensitivity analysis on the key assumptions in the impairment model and
debated and challenged management on the likelihood of those sensitivities;
• Review of compliance with the disclosure requirements of FRS101 given the outcome
reached; and
• Reported our approach and findings to the Audit Committee in our written report.
Based on our procedures we consider management’s key assumptions to be within a
reasonable range. We note however that minor changes in assumptions could lead to an
impairment and consequently management have disclosed those key assumptions and
sensitivities in note 16.
Key audit matter
How our audit addressed the key audit matter
Going concern
As the Group continues to develop
and expand there are a number of
factors that potentially impact on
its ability to function as a Going
Concern. These include:
• Continued loss making
performance as the Group looks
to increase production capacity to
leverage continuing investments
being made; and
• Significant planned capital
expenditure over the next 12
months at both Arnhem and Hull
(for the Accoya® and Tricoya®
businesses respectively) as part
of that investment.
As a result of this continued
investment the balances available
to the Group over the next 12–18
months are forecast by management
to reduce significantly from the
balances held at 31 March 2018.
As such we have included Going
Concern as a significant risk.
How we tailored the audit scope
Our audit work has included a number of procedures including:
• Obtaining and auditing management’s own Going Concern assessment. This included:
− Recalculated the arithmetic accuracy of management’s model;
− Ensuring that the model covered an appropriate period and included correct cash
balances in the opening position and subsequent movements;
− challenged the key assumptions included in the model, namely (i) the trading
position agreed to the board approved forecast, (ii) challenged management
on the extent and timing of future expenditure of capital amounts including
the appropriateness of contingencies held given the current state of progress
of projects, (iii) considered mitigants available to management should they be
required and their amount and timing; and
− Obtaining and reading the details of the new facility with ABN Amro secured after
31 March 2018 and ensuring that this was appropriately reflected in the model.
• Ensured that the disclosure in the Annual Report is consistent with our work and
understanding;
• Debated the position with management and reviewed board minutes to ensure that
the position in the model could be corroborated to other supporting information from
management; and
• Reported our approach and findings to the Audit Committee in our written report.
Based on the procedures performed we did not identify any matters that would indicate
a material risk of Going Concern not being appropriate.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the company, the accounting processes and controls,
and the industry in which it operates.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
¤434,000 (2017: ¤540,000).
How we determined it
Allocation of Group materiality.
Rationale for benchmark applied
Accsys Technology PLC (the Company) is not a revenue generating entity
within the Group, it is ultimate parent holding company. We have considered the
materiality level typically used for such companies (e.g. 2% of total assets) and the
amount which would be allocated for Group purposes as a reporting component of
the Accsys Technologies PLC Group. We have used the lower of these measures.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
¤30,000 (2017: ¤25,000) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
112
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 COMPANY INDEPENDENT AUDITORS’ REPORT CONTINUED
to the members of Accsys Technologies PLC
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to
you when:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
company’s ability to continue as a going concern.
Use of this report
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act
2006 and ISAs (UK) require us also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 31 March 2018 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation
of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic
alternative but to do so.
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.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
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 company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law are not made; 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.
Appointment
Following the recommendation of the audit committee, we were appointed by the Directors on 1 April 2011 to audit the
financial statements for the year ended 31 March 2011 and subsequent financial periods. The period of total uninterrupted
engagement is 8 years, covering the years ended 31 March 2011 to 31 March 2018.
OTHER MATTER
We have reported separately on the Group financial statements of Accsys Technologies PLC for the year ended
31 March 2018.
Darryl Phillips (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
18 June 2018
114
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 CONDENSED COMPANY BALANCE SHEET
for the year ended 31 March 2018
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ending 31 March 2018
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
Note
2018
€'000
2017
€'000
4
6
5
7
8
14,842
14,542
114
–
156
–
14,956
14,698
161,870
151,890
1,373
1,338
163,243
153,228
(13,578)
(13,469)
149,665
139,759
Creditors: amounts falling due after more than one year
9/10
(17,720)
(18,153)
Total assets less current liabilities
146,901
136,304
Capital and reserves
Called up Share capital
Share premium account
Reserve for own shares
Capital redemption reserve
Profit and loss account
Total shareholders' funds
11
12
12
12
12
13
5,576
4,531
140,036
128,792
(15)
148
1,156
(33)
148
2,866
146,901
136,304
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 2018. 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 ¤2,008,000 (2017: loss of ¤1,268,000). The results of the parent Company
are disclosed in the reserves reconciliation in note 12.
Going concern
After making enquiries, 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.
The financial statements were approved by the Board and authorised for issue on 18 June 2018 and signed on its
behalf by
Investments
Paul Clegg
William Rudge
Director
Director
The notes on pages 117 to 124 form an integral part of the parent Company financial statements.
Except where a reliable fair value cannot be obtained, listed shares held by the Company 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.
116
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2018
1. Accounting policies continued
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.
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.
Accounting judgements
In preparing the Consolidated Financial Statements, management has to make judgments on how to apply the Group’s
accounting policies and make estimates about the future. The critical judgments that have been made in arriving at
the amounts recognised in the Consolidated Financial Statements and the key sources of 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:
Available for sale investments
The Group has an investment in listed 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.
Carrying value of intercompany receivables and investments in subsidiaries
The recoverable amounts of these balances have been determined based on value in use calculations. These
calculations require the use of judgements in relation to discount rates and future forecasts. The recoverability of these
balances is dependent upon the level of future licence fees and manufacturing revenues relating to Group companies.
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.
2. Profit and loss account
A loss of ¤2,008,000 (2017: loss of ¤1,268,000) 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 ¤85,000 (2017: ¤65,000). Fees payable to the Company’s
auditors for the audit of the Company’s subsidiaries was ¤150,000 (2017: ¤112,000) and fees payable for other services
were ¤nil (2017: ¤110,000).
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 (2018: 3 and 2017: 3) during the current or prior
year. Non-executive Directors received emoluments in respect of their services to the Company of ¤233,000 (2017:
¤242,000). Details have been included in the Remuneration Report. The Company did not operate any pension schemes
during the current or preceding year.
4.
Investments
Cost
At 31 March 2016
Share based payments
At 31 March 2017
Share based payments
At 31 March 2018
Impairment
At 1 April 2016 and 1 April 2017 and 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
At 31 March 2016
€'000
18,338
884
19,222
300
19,522
4,680
14,842
14,542
13,658
The Directors believe that the carrying value of the investments are supported by the underlying net assets and
future profitability.
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
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 financial statements)
2018
% shares
and voting
rights held
2017
% shares
and voting
rights held
100
100
100
100
75
46
100
100
100
100
75
46
118
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2018
Investments continued
4.
The principal activities of these companies were as follows:
6. Property, plant and equipment
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
2018
€'000
–
2017
€'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, Wiener Boise of the Vienna Stock Exchange.
However, the carrying value of the investment is carried at cost less any provision for impairment, rather than at its fair
value, as there continues to be no active market for these shares as at 31 March 2018, and there is significant uncertainty
over the future of Cleantech Building Materials PLC, and as such a reliable fair value cannot be calculated.
The historical cost of the listed shares held at 31 March 2018 is ¤10m (2017: ¤10m). However, a provision for the
impairment of the entire balance of ¤10m continues to be recorded as at 31 March 2018.
During the year Accsys Technologies PLC sold 21,479 shares at ¤1.50 per share resulting in a gain of ¤32,000 such that a
total of 498,522 shares were held at 31 March 2018.
Cost or valuation
At 31 March 2016
Additions
At 31 March 2017
Additions
At 31 March 2018
Accumulated depreciation
At 31 March 2016
Charge for the year
At 31 March 2017
Charge for the year
At 31 March 2018
Net book value
At 31 March 2018
At 31 March 2017
At 31 March 2016
Office
equipment
€'000
208
–
208
–
208
11
41
52
42
94
114
156
197
Total
€'000
208
–
208
–
208
11
41
52
42
94
114
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
2018
€'000
2017
€'000
161,775
150,480
95
1,410
161,870
151,890
The balance of amounts owed by Group undertakings increased in the year largely as a result of the proceeds of the
Firm Placing and Open Offer proceeds being invested by way of intercompany loans to the Company’s subsidiaries.
The amounts owed by Group undertakings currently have no repayment plans in place, however the intention is for the
Group’s subsidiaries to repay this balance in the future. The loan will only be recalled when the subsidiaries have surplus
cash and the Group requires cash for other purposes. The Company does not expect any such events to occur in the
foreseeable future. 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. The recoverable amount 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 10 years, including a five year
forecast and five years of 2% growth plus assumptions concerning a terminal value and based on a pre-tax discount rate
of 12% per annum (2017: 13%). The key assumption used in the value in use calculations is the level of future licence fees
and manufacturing revenues prudently estimated by management over the budget period. These have been based on
past experience and expected future revenues but limited to existing assets and those under construction.
The Directors have considered whether a reasonably possible change in assumptions may result in an impairment.
An impairment would arise if either the discount rate increased by 1% or the revenue growth rate decreased by 1%.
Accordingly a degree of risk remains over the carrying value given the relative uncertainty of the future results.
120
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ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2018
8. Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Obligation under finance lease
Other Long Term Borrowing
Accruals and deferred income
2018
€'000
154
11,719
31
1,446
228
13,578
2017
€'000
338
11,694
56
–
1,382
13,469
The amounts owed to Group undertakings are payable upon demand and are unsecured.
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 ¤102,000 as at 31 March 2018
(2017: ¤150,000).
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Minimum lease payments
2018
€'000
2017
€'000
54
54
–
(6)
68
97
–
(15)
Present value of lease obligations
102
150
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
2018
€'000
2017
€'000
1,446
12,829
4,820
–
4,515
13,544
19,095
18,059
The balance relates to Loan Notes issued to BGF and Volantis. Further details can be found in note 29 of the Group
financial statements.
11. Called up Share capital
Allotted – Equity share capital
111,513,145 Ordinary shares of ¤0.05 each (2017: 90,643,585 Ordinary shares of ¤0.05 each)
2018
€'000
5,576
5,576
2017
€'000
4,531
4,531
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 1 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.
In year ended 31 March 2018:
Own shares represents 295,873 Ordinary shares issued to an Employee Benefit Trust (‘EBT’) at nominal value. This
includes 97,720 shares issued on 23 June 2017 to an Employee Benefit Trust (‘EBT’) at nominal value and 198,154 shares
issued on 27 September 2017 to an Employee Benefit Trust (‘EBT’) at nominal value.
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.
679,435 ¤0.05 Ordinary shares had been issued to the EBT at nominal value on 27 June 2016 of which 679,435 Ordinary
shares vested on 1 July 2017. 106,189 shares were issued on 27 September 2017 have been issued and allotted to an
employee following the exercise of nil cost options, granted in 2013 under the Company's 2013 Long Term Incentive Plan
(‘LTIP’). 143,511 shares were issued on 26 February 2018 to an ex-employee. 118,511 of these Shares have been issued and
allotted following the exercise of nil cost options, granted in 2013 under the Company's 2013 Long Term Incentive Plan
(‘LTIP’), with the balance of 25,000 Shares issued as part of the individual’s severance terms.
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 ¤8,350,000 of non-
distributable reserves relating to share based payments.
Called up
Share capital
€'000
Share premium
account
€'000
Capital
redemption
Reserve
€'000
Own Shares
€'000
Profit and loss
account
€'000
Balance at 1 April 2017
4,531
128,792
148
(33)
Loss for the financial year
Share based payments
Shares issued
Premium on shares issued
Share issue costs
–
–
1,045
–
–
–
–
–
13,007
(1,763)
–
–
–
–
–
–
–
18
–
–
2,866
(2,010)
300
–
–
–
Total
Shareholders
Funds
€'000
136,304
(2,010)
300
1,063
13,007
(1,763)
Balance at 31 March 2018
5,576
140,036
148
(15)
1,156
146,901
122
123
STRATEGIC REPORT 12–37GOVERNANCE 38–63FINANCIAL STATEMENTS 64–124ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018OVERVIEW01–11 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ending 31 March 2018
SHAREHOLDER INFORMATION
13. Reconciliation of movements in shareholders’ funds
Accsys Technologies PLC is a public limited company incorporated in the United Kingdom
Loss for the financial year
Share based payments charged to subsidiaries
Proceeds from issue of shares
Share issue costs
Net increase in shareholders' funds
Opening shareholders' funds
Closing shareholders' funds
14. Dividends paid
Final Dividend ¤nil (2017: ¤Nil) per Ordinary Share proposed
and paid during year relating to the previous year's results
2018
€'000
(2,010)
300
14,070
(1,763)
10,597
2017
€'000
(1,268)
884
50
–
(334)
136,304
136,638
146,901
136,304
2018
€'000
–
2017
€'000
–
15. Deferred taxation
The Company has an unrecognised deferred tax asset of ¤1.7m (2017: ¤1.2m) 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.
Directors
Sean Christie
Paul Clegg
Sue Farr
Nick Meyer
Hans Pauli
Non-Executive Director
Chief Executive Officer
Non-Executive Director
Non-Executive Director
Executive Director, Corporate Development
William Rudge
Finance Director
Trudy Schoolenberg
Non-Executive Director
Patrick Shanley
Non-Executive Chairman
Company Secretary
Angus Dodwell
Company Number
5534340
Registered Office
Bankers
Registrars
Independent Auditors
Lawyers
Broker and Nomad
Investor Relations
Brettenham House
19 Lancaster Place
London, WC2E 7EN
Barclays Bank
50 Pall Mall
London, SW1A 1QJ
Rabobank
Croeselaan 18
Utrecht
3521 CB
The Netherlands
ABN AMRO Bank
Velperweg 37
6824 BM Arnhem
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
MHP Communications
6 Agar Street
London, WC2N 4HN
124
FINANCIAL STATEMENTS
64–124
125
ACCSYS TECHNOLOGIES PLCANNUAL REPORT & FINANCIAL STATEMENTS 2018STRATEGIC REPORT 12–37OVERVIEW01–11GOVERNANCE 38–63