Accsys Technologies : 21 July - Annual Report and Financial Statements 2023 as

CHANGING WOOD TO CHANGE THE WORLD

Annual Report and Financial Statements 2023

|  Accsys Technologies PLC|  Annual Report and Financial Statements 2023

WHAT'S	HOW WE ENHANCE
NATURE
INSIDE	Our acetylation
process
06
	ACCOYA COLOR
	08

01

Accsys is a fast-growing business with a purpose:
CHANGING WOOD TO	OVERVIEW
CHANGE THE WORLD

We combine technology and ingenuity to enhance the properties of wood to create products that are extremely durable and stable, presenting new opportunities for the built environment.

		OUR GLOBAL
		TECHNOLOGY
OUR BUSINESS MODEL		CENTRE		BUSINESS REVIEW
	10
26			34
OUR STRATEGY				SUSTAINABILITY
28				56

FY23 has been a year of significant progress and change for the Accsys business. It has also been a year that has produced some well documented challenges.

The underlying health of the business has never been stronger. We delivered our highest volume production ever in FY23 post the installation and start-up of reactor 4, and the global demand for both Accoya and Tricoya continues to grow.

Post the year end, and with a new management team in place, including the appointment of Dr. Jelena Arsic van Os as CEO Designate and Steven Salo as Group CFO, the business is now well placed to capitalise on this customer demand and execute against our ambitious capital projects.

We have made significant progress in growing production capacity through the completion of a fourth reactor

at our plant in Arnhem, enabling us to produce record volumes of Accoya in Q4.

We have also made good progress on the construction of our plant in Tennessee. However, the project has experienced some delays and cost inflation and, as a result, commercial operations are now expected to commence in mid-2024.

Construction of the world's first Tricoya plant in the UK has been more challenging, with the project in a hold period while we assess its capabilities and funding options. Our new management team is well positioned to decide how to move forward in the best way for the business.

The future growth opportunity for Accsys is clear and we are focused on delivering against our strategic growth plans.

STRATEGIC REPORT

E

Overview	Corporate Governance
02	Key Highlights	74	Board of Directors
04	Our Business at a Glance	76	Senior Leadership Team
06	Case Study - How We Enhance Nature	78	Chair's Statement of Governance
08	Case Study - Accoya Color	80	Corporate Governance
10	Case Study - Our Global	82	The QCA Corporate Governance
	Technology Centre		Code (the 'QCA Code') Statement
12	Reasons to Invest		of Compliance 2023
88	Audit Committee Report
14	Executive Chair's Statement
90	Nomination Committee Report

Financial Statements

116 Independent Auditors' Report to the members of Accsys Technologies PLC

125	Consolidated Statement
	of Comprehensive Income
126	Consolidated Statement
	of Financial Position
127	Consolidated Statement
	of Changes in Equity
128	Consolidated Statement
	of Cash Flow

34%	6%
GROWTH IN REVENUE	GROWTH IN ACCOYA
AT €162.0m	SALES VOLUMES AT
	63,344m3

120%

GROWTH IN UNDERLYING EBITDA1 AT €22.9m

GOVERNANC

Strategic Report	92	Health, Safety and Environment ('HSE')
20	Our Products		Committee Report
22	Our Market	93	Remuneration Report
26	Our Business Model	108	Directors' Report
28	Our Strategy	112	Statement of Directors' Responsibilities

1. Business Review

1. Finance Review

1. Risk Management

1. Sustainability

1. Stakeholder Engagement

129 Notes to the Financial Statements

1. Company Statement of Financial Position
2. Company Statement of Changes in Equity
3. Notes to the Company Financial Statements

Shareholder Information

175 Shareholder Information

FY23 has been a year of significant progress
and change for the Accsys business. It has	STATEMENTS
also been a year that has produced some
well-documented challenges."
Stephen Odell
Executive Chair
FINANCIAL

View the latest results online at | www.accsysplc.com

Cover: Accoya cladding, windows and doors and shutters. Architect: Good Architecture. Builder: Winchester Construction Co., Inc.

Window & Door Manufacturer: Dover Windows & Doors. Landscape Architect: Lila Fendrick. Photography: Erik Kvalsvik. Interior Designer: Mona Hajj Interiors

For more information, please see the Executive Chair's Statement | Page 14

1. On an underlying basis, including the Group's attributable share of our USA joint venture

02 |  Accsys Technologies PLC|  Annual Report and Financial Statements 2023

Key Highlights

Financial highlights

2023	€162.0m		2023		€55.2m		2023	€22.9m
2022	€120.9m			2022	€36.0m			2022	€10.4m

GROUP REVENUE

GROSS PROFIT

UNDERLYING EBITDA1

€162.0m €55.2m

€22.9m

+34%

+53%

+120%

2023

34%

2023

€11.0m

2023

€(44.1)m

2022

30%

2022  €1.3m

2022

€(27.2)m

GROSS PROFIT

UNDERLYING PROFIT

MARGIN

BEFORE TAX

NET DEBT

34%

€11.0m

€(44.1)m

1. On an underlying basis, including the Group's attributable share of our USA joint venture

More financial highlights | Page 44

For our Alternative Performance Measures details | Page 136

Project: Villa Harmony, Ibiza,

Balearic Islands, Spain

Distributor: Grupo Gámiz

Architect: Paco Candel

Carpentry: Carpintería Gil Almansa

For more Accoya projects go online at |

www.accoya.com/uk/projects

Operational and ESG highlights

ACCOYA	ACCOYA	ACCOYA
SALES VOLUME	SALES GROWTH	SALES GROWTH H2 ON H1
63,344	+6%	+64%
CUBIC METRES
See our Business Review  | Page 34
	INCREASED RENEWABLE
	ELECTRICITY USAGE AS	CERTIFIED SUSTAINABLE
	A PROPORTION OF TOTAL	(I.E. FSC® (CO12330)
HEALTH AND SAFETY	ELECTRICITY TO	WOOD SOURCES
0.9	63%	100%
LOST-TIME INCIDENT	OF THE OVERALL MIX,	(2022: 100%)
RATE	INCLUDING RECS
	(2022: 39%)
See our ESG highlights  |  Page 56

03

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

04 |  Accsys Technologies PLC|  Annual Report and Financial Statements 2023

Our Business at a Glance

Our purpose

CHANGING WOOD TO CHANGE THE WORLD

'Changing wood' is what we do, and 'to change the world' is why we do it. Our purpose gives us a common, aspirational goal to work towards and is embraced by our stakeholders: making the world a better, more sustainable place.

Our products

Accoya is the world's leading high performance	Tricoya wood chips are a feedstock for our licensees to
sustainable wood. Manufactured from abundantly	manufacture high performance Tricoya panel products
available, FSC® certified wood species, it is sustainable,	suitable for outdoor use.
durable, resistant to rot and Cradle to Cradle Certified®.

05

OVERVIEW

REPORT

Who we are

We combine technology and ingenuity to enhance the properties of wood to create products that are durable and stable, presenting new opportunities for the built environment.

Our sustainable business model

Through our sustainable business model we give the world a choice to build sustainability and create value for all our stakeholders.

Our	Responsible	Proprietary
activities	sourcing	manufacturing
Working with		Research and
business partners	development (R&D)

Global sales and distribution

Building new plants	Investing
and optimising	in our
existing sites	future

Read more  | 

Page 26

STRATEGIC

OVERNANCE

Our values

Our footprint

G

Our values represent what we believe in as a company. We use them to guide our strategy and actions for the long term and on a daily basis. Our values are:

1	2	3
Be ambitious - the world	Respect and value all	Be committed to safety,
depends on us	stakeholders	quality and sustainability
Our ambition is to change the world	Everyone we work with is important	Safety is of the utmost importance
- it doesn't get much bigger than	- our colleagues, customers,	in everything we do. We all share
that. We must be bold, agile and	partners, suppliers, shareholders	responsibility for protecting people,
committed to our goals. We have	and more. We act with integrity	property and the environment at all
to be 'all in' and move quickly and	and authenticity, encourage	times. We strive to fulfil our brand
decisively. To achieve our ambitions	collaboration, and build trust	promise and delight our customers.
we may make mistakes, but we must	through inclusion and mutual	We commit to delivering consistently
not be afraid to try. We will always	respect. As a team, we will succeed.	high quality.
learn from the experience.

  Hull Tricoya site

  Barry Accoya Color site

  London Accsys head office

• Kingsport Accoya site
• • Dallas sales office

Key

Accsys Locations

Product Distribution

Under Construction

• Arnhem Accoya site & office
• Freiburg Accsys sales office

FINANCIAL STATEMENTS

06 |  Accsys Technologies PLC | Annual Report and Financial Statements 2023

Case Study | INNOVATION IN ACTION

HOW WE ENHANCE NATURE

07

OVERVIEW

Reactor in Arnhem plant

33%

ADDITIONAL CAPACITY

IN ARNHEM IN FY23

Find out more online | www.accsysplc.com/

products/what-is-acetylation/

Our proprietary acetylation process

As Accoya and Tricoya grow as global brands, the outstanding qualities of our ultra-high performance and sustainable wood products is becoming more widely recognised by customers, manufacturers and distributors. Our expertise in innovation has enabled us to transform fast- growing softwood into some of the most durable, stable and low maintenance wood products in the world.

Accoya and Tricoya undergo a process called acetylation through which the structure of natural wood is permanently modified, giving it the same durable properties as more carbon-intensiveman-made materials.

The chemistry utilised in the acetylation process involves changing the molecular structure of wood cell walls. Free hydroxyls within these cell walls are responsible for the absorption and retention of moisture, causing swelling and eventual decay of the wood. Acetylation solves this problem by replacing these free hydroxyls with stable acetyl groups (already present in the wood), thereby reducing its ability to retain moisture and making it dimensionally stable and durable.

Thorough real-world testing has been conducted over many years on Accoya, which means we can confidently provide industry-leading warranties of up to 50 years. Successfully commercialising this technology allows Accoya and Tricoya to become ideal wood products for a number of applications including joinery (windows and doors), cladding and decking.

Innovation in technology allows us to truly enhance what nature gives us so that we can change wood, to change the world.

STRATEGIC REPORT

GOVERNANCE

Lourens Van As, Project Engineer in Arnhem

Where other companies have tried and failed

over the years to commercialise what is often

described by those working in the industry

as a 'wonder wood', we have perfected the

Scan here for more on our acetylation process

process, which is protected with extensive	STATEMENTS
intellectual property including c.388 patents
and patent applications in 45 countries."
FINANCIAL
Pablo Steenwinkel
Group Head of Technology