Accsys Technologies : 20/11/2018 - Interim results for the six months ending 30 September 2018

Company TIDM

Accsys Technologies PLC AXS

Headline

Interim Results for the six months ended 30 September 2018

Released Number

20 November 2018 07:00 GMT 8329H

AIM: AXS

Euronext Amsterdam: AXS

20 November 2018

ACCSYS TECHNOLOGIES PLC

("Accsys" or "the Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

Accsys, the chemical technology group, focused on the acetylation of wood, today announces interim results for the consolidated group for the six months ended 30 September 2018.

6 months ended 30 Sept 2018

6 months ended 30 Sept 2017

Underlying*	Statutory	Underlying*	Statutory
Total Revenue	€31.6m	€31.6m	€28.3m	€28.3m
Accoya® EBITDA	€2.8m	€2.8m	€1.2m	€0.9m
EBITDA	€(1.4m)	€(1.4m)	€(2.8m)	€(4.9m)
Loss before taxation	€(4.5m)	€(5.4m)	€(5.2m)	€(6.8m)
Period end cash balance	€46.9m
Net Debt	€23.1m

€22.0m€(34.2m)

*Excludes exceptional costs and other adjustments. See note 4 for details and note 2 for reconciliation of EBITDA and Accoya® EBITDA.

Financial highlights

•  Revenue increased by 12% driven by higher volumes, pricing and licence income;

•  8% increase in Accoya® sales volume significantly restricted by continued capacity constraints - third Accoya® reactor now operational;

•  Underlying EBITDA progression reflects increase in sales and production volumes together with price increases;

•  Net debt of €34.2m at 30 September 2018 (31 March 2018: €3.8m) reflects significant investment in Tricoya® plant construction, completion of third Accoya® reactor and purchase of Arnhem land and buildings; and

•  Operating activities generated positive cash-flow during the period.

Operational highlights

•  First part of Accoya® plant expansion completed and operational with benefits expected in second half of the year;

•  Output increasing over remainder of financial year to a run rate reflecting a 50% increase in production volume;

•  All customers remain on allocation with demand continuing to exceed supply;

•  Price increase effective from 1 January 2019;

•  Construction of the first dedicated Tricoya® wood chip acetylation plant in Hull expected to be completed around mid-2019 calendar year with operations to commence following a subsequent period of commissioning; and

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•  Ongoing discussions with potential partners concerning new Accoya® and Tricoya® plants in USA and Asia.

Paul Clegg, Chief Executive commented:

"These results show continued and exciting progress for the Group at a time when we are making significant investments in our future growth. We are seeing increased demand in all regions, driven by the outstanding performance characteristics of our products as well as their sustainability credentials, which are becoming ever more important in a world which is increasing its awareness of the potential benefits of making more sustainable building material choices.

The market opportunity is substantial and the demand for Accoya® and Tricoya® remains at a level which exceeds our current production rates. As a result, we expect revenue to increase significantly in the second half of the year as we benefit from the new Accoya® reactor in Arnhem which is now operational, with improvement to profitability. We continue to explore opportunities for new manufacturing plants in USA and Asia with partners in those regions."

There will be a presentation relating to these results at 10:00 GMT on 20 November 2018. The presentation will take the form of a web-based conference call, details of which are below:

Webcast link (for audio and visual presentation):

Click on the link below or copy and paste ALL of the following text into your browser:https://edge.media-server.com/m6/p/u4289rmw

Conference call details (audio only presentation - do not use in conjunction with the webcast link):

Confirmation Code: 4193173

Local - United Kingdom: [phone]

National free phone - United Kingdom: 0800 358 6377

Local - Amsterdam, Netherlands: [phone]

National free phone - Netherlands: 0800 023 1436

ACCSYS TECHNOLOGIES PLC ("Accsys" of "de Vennootschap")

TUSSENTIJDSE RESULTATEN VOOR DE PERIODE VAN ZES MAANDEN EINDIGEND

OP 30 SEPTEMBER 2018

Accsys, de chemische technologie groep, gericht op de acetylering van hout, publiceert vandaag de geconsolideerde tussentijdse resultaten voor de periode van zes maanden eindigend op 30 September 2018.

Totale groepsomzet Accoya® EBITDA EBITDA

Verlies voor belastingen

Zes maanden eindigend op 30 sept 2018

Zes maanden eindigend op 30 sept 2017

Onderliggend* €31.6m €2.8m €(1.4m) €(4.5m)

Statuair €31.6m €2.8m €(1.4m) €(5.4m)

Onderliggend*Statuair

• €28.3m €28.3m

• €1.2m €0.9m

• €(2.8m) €(4.9m)

• €(5.2m) €(6.8m)

Liquide middelen per einde half jaar

€22.0m€46.9m

Saldo liquide middelen (netto-schuld) per einde half jaar

€(34.2m)€23.1m

*Exclusief de uitzonderlijke kosten en overige aanpassingen. Zie noot 4 voor meer informatie en aantekening 2 voor afstemming van EBITDA en Accoya® EBITDA.

Financiële hoogtepunten

•  De inkomsten stegen met 12% door hogere volumes, prijsstijgingen en licentie-inkomsten;

•  De totale omzet van Accoya® is met 8% gestegen maar de groei werd aanzienlijk beperkt door aanhoudende capaciteitsbeperkingen - de derde Accoya® reactor is inmiddels in gebruik genomen;

•  De stijging van de onderliggende EBITDA weerspiegelt de stijging van de verkoop en de productievolumes samen met de prijsverhogingen;

•  De nettoschuld van € 34,2 mln op 30 september 2018 (31 maart 2018 € 3,8 mln) weerspiegelt de aanzienlijke investeringen in de bouw van de Tricoya®-fabriek, de voltooiing van de derde Accoya® reactor en aankoop van het terrein en de gebouwen in Arnhem; en

•  De operationele activiteiten hebben tijdens deze periode een positieve kasstroom gegenereerd.

Operationele hoogtepunten

•  Het eerste deel van de uitbreiding van de Accoya®-fabriek is voltooid en operationeel, de revenuen worden in de tweede helft van het jaar verwacht;

•  In het resterende deel van het boekjaar zal deproductie toenemen naar een run-rate die een toename van 50% weerspiegelt;

•  Alle klanten blijven op allocate, de vraag naar Accoya® blijft de productie overschrijden;

•  Prijsverhoging vanaf 1 januari 2019;

•  De bouw van de eerste speciale Tricoya®-geacetyleerde houtsnipperfabriek in Hull wordt naar verwachting afgerond omstreeks medio 2019, productie zal aanvangen na de inbedrijfstelling; en

•  Lopende besprekingen met potentiële partners betreffende nieuwe Accoya® en Tricoya® fabrieken in de VS en Azië.

Paul Clegg, CEO licht toe:

"Deze resultaten geven de voortdurende en spannende vooruitgang weer voor de Groep op een moment waarop we aanzienlijke investeringen doen in onze toekomstige groei. We zien toenemende vraag in alle regio's, gedreven door de uitstekende prestatiekenmerken van onze producten en hun duurzaamheidsreferenties, die steeds belangrijker worden in een wereld die zich meer en meer bewust wordt van de potentiële voordelen van het maken van duurzamere bouwmateriaalkeuzes.

De marktperspectieven zijn gunstig en de vraag naar Accoya® en Tricoya® blijft op een niveau dat onze huidige productiecapaciteit overschrijdt. Derhalve verwachten we dat de inkomsten aanzienlijk zullen toenemen in de tweede helft van het jaar gezien het feit dat we profiteren van de nieuwe Accoya®-reactor in Arnhem die inmiddels operationeel is, waardoor de winstgevendheid wordt verbeterd. Wij blijven mogelijkheden verkennen voor nieuwe fabrieken in de VS en Azië met partners in die regio's."

Op dinsdag 20 november 2018 vindt om 10.00 uur (GMT) een presentatie plaats van deze resultaten. De presentatie vindt plaats via een online conference call, waarvan de details hieronder staan:

Link naar webcast:

Klik hier of kopieer en plak de volgende tekst VOLLEDIG in uw browser:http://bit.ly/AXSIntswebcast2018

Informatie over conference call voor deelnemers: Telefoonnummer deelnemers:

Bevestigingscode: 4193173

Verenigd Koninkrijk Nederland

[phone] [phone]

Deelnemers moeten de bovenstaande code gebruiken bij het inbellen naar de vergadering.

For further information, please contact:Accsys Technologies PLCNumis SecuritiesMHP Communications

Ends

Paul Clegg, CEO Will Rudge, FD

Hans Pauli, Executive Director, Corporate Development

Nominated Adviser: Jamie Lillywhite

Corporate Broking: Christopher Wilkinson Ben Stoop

Tim Rowntree Kelsey Traynorvia MHP Communications

[phone]

[phone]

Off the Grid (The Netherlands)

Frank Neervoort Yvonne Derkse

[phone] [phone]

Accsys Technologies PLC

Chairman's statement

Introduction

I am pleased to report continued progress in delivering growth, additional capacity and improved profitability. During the period we have commenced operation of our third Accoya® reactor in Arnhem and as a result Accoya® production will increase substantially in the second half of the year.

We are seeing increased demand in all regions, driven by the outstanding performance characteristics of our products as well as sustainability credentials which are becoming ever more important in a world which is increasing its awareness of the potential benefits of making more sustainable building material choices.

We remain very confident that the market opportunity is substantial and the demand for Accoya® and Tricoya® remains at a level which exceeds our current production rates. As a result we expect revenue to increase significantly in the second half of the year as we benefit from the additional production volumes from Arnhem.

We have continued to make very good progress with the construction of the Tricoya® plant in Hull. Construction is expected to be completed around mid-2019 calendar year with operations to commence following a subsequent period of commissioning.

In September Accsys confirmed our adoption and compliance with the QCA's Corporate Governance Code by publishing a comprehensive statement explaining the Company's full compliance with the Code. We recognise that strong corporate governance is vital as we pursue the Group's ambitious global growth strategy and we are committed to on-going review and development of our governance culture, structures and processes, which will provide us with the necessary platform and safeguards to promote success and deliver value for all our shareholders.

Summary of results

Total revenue for the six months ended 30 September 2018 grew by 12% to €31.6m (2017: €28.3m) driven by an 8% increase in Accoya® sales volumes to 21,379 cubic metres compared to the same period last year. We also benefited from price increases implemented at the start of the 2018 calendar year and received €0.5m of licensing income.

Group underlying EBITDA loss of €1.4m compares to €2.8m loss last year with the improvement due to higher licence income, sales volumes and higher gross margin from Accoya® manufacturing. The gross manufacturing margin increased to 21% from 20% as a result of price increases and without the one-off items reported last year. However, the gross margin continued to be impacted by the proportion of sales used for the production of Tricoya® which increased significantly in the period from 17% to 25% of the total volume sold. This proportion is expected to reduce in the second half of the financial year when we will benefit from both the expected higher overall sales volumes and a further price increase from January 2019.

Net debt increased to €34.2m at 30 September 2018 from €3.8m as at 31 March 2018. The increase in net debt was principally to invest in capacity expansion in Arnhem and Hull and €23m of new loans to fund the acquisition of the Arnhem land and buildings, offset by the reduction in the related finance lease liability. We generated positive cash from operating activities of €0.7m for the six month period compared to €9.6m cash out-flow from operating activities in the same period last year. €5.7m of new equity was issued in the period.

Outlook

We expect Accoya® production and sales volumes to increase significantly over the course of the second half of the year as we continue to ramp up the production from the third reactor. The increased volumes, improved product mix and higher prices are expected to result in further improvements to profitability.

Demand for Tricoya® panels continues to develop but sales will be constrained until the Hull plant commences operation. This will free-up further capacity at Arnhem for higher margin Accoya® sales with the Tricoya® chips manufactured via the dedicated process also expected to generate a higher gross margin.

The combination of the third Accoya® reactor and the Hull plant becoming fully operational will enable total annual manufacturing capacity to reach an equivalent of 100,000 cubic metres, being more than double that at the start of the current financial year.

As our production volumes increase, we will continue to manage demand from our customers carefully and expect all customers to remain on allocation in the immediate future. The strength of demand means that we are

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