Interim Results - Replacement
Accsys Technologies PLC
13 December 2006
Accsys Technologies PLC
46 Berkeley Square, London, W1J 5AT, United Kingdom
Telephone: +44 (20) 7598 4040 Facsimile: +44 (20) 7598 4050
Please find the revised announcement which includes the Consolidated Balance
Sheet and the Consolidated Cash Flow Statement which were omitted on the
original release of the announcement this morning at 7:00 am under RNS number
7644N.
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2006
ACCSYS TECHNOLOGIES PLC ('Accsys' or 'the Company')
Highlights
• The world's first commercial AccoyaTM production plant being built by
Accsys subsidiary Titan Wood is nearing completion in Arnhem, the
Netherlands.
• Commissioning of the plant began in November and the first production
batches are expected within a few weeks.
• Two thirds of planned 2007 production is already committed to early
customers. Among the larger sales contracts are those with BSW Timber
(www.bsw.co.uk), the UK's largest sawmilling company, and the Enno Roggemann
Group (www.roggemann.de), the leading German timber trader.
• Titan Wood, which has had expressions of interest more than covering the
remainder of its planned volume, intends to allocate its remaining available
capacity for premium customers, the development of new product applications
and trials for prospective licensees.
• BSW Timber is one of several companies holding options for the production
of AccoyaTM in their domestic markets. Two other options have been granted
which establish priority and or a degree of exclusivity. Discussions are
currently underway with a number of interested parties, which are expected
to lead to further agreements in 2007.
• Results for the 6 month period show capital expenditure of €8.4 million
and a pre tax loss of €3.7 million (2005: loss of €2.2 million) in line with
business plans.
• Following Accsys's share placement in November, substantial cash resources
remain available to support the solid AccoyaTM wood business and to finance
the further development of next generation products and technologies, in
particular acetylated fibre products (such as MDF).
CHAIRMAN'S STATEMENT
Introduction
2006 has seen the group established as a public company, enjoying strong
shareholder support. We have successfully achieved market recognition of
AccoyaTM, our brand symbolising the stability, durability and reliability of
acetylated wood, and have been very encouraged by the reaction to our business
proposition around the globe. The period covered by this report has seen the
physical construction of our new wood acetylation plant in Arnhem. The
commissioning of our plant is now underway and the first commercial sales of
AccoyaTM are anticipated next month.
Plant construction
Since our financial year end in March, the physical construction of the wood
acetylation plant has proceeded and despite various challenges has been
completed within the projected time frame utilising contingencies incorporated
in the planning. This plant will prove the group's proprietary AccoyaTM
production process at full commercial scale, generate local sales for the
company and provide seed material to our licensees. Larger capacity production
facilities that potential licensees are expected to construct are expected to
use the modular reactor designs now being commissioned in series.
The completion of construction within the year is a testament to the
determination and motivation of both Accsys' own team and of its many partners,
suppliers and the local and regional government agencies. The site onto which
the plant was relocated was not available for construction until March 2006,
with parts only released several months later. This necessitated extremely
complicated project scheduling, which was ably achieved by the local Titan Wood
management and Akzo Nobel Engineering teams, to whom enormous credit must be
given. The scheduling would not have been possible without the cooperation of
the municipal Arnhem government and the provincial authorities of Gelderland,
who acted swiftly in responding to permit and approval requests, as well as
fairly and reasonably in the resolution of the various issues that inevitably
arise in a project of this complexity. This business-like responsiveness bodes
well for our future expansion plans, as well as for other companies considering
Gelderland, and Arnhem in particular, as a future base for their businesses.
Certain challenges have caused costs to increase, with additional investment
required in respect of utilities and storage. These situations are being
resolved and are not expected to undermine our prospects.
In parallel with the construction of the wood acetylation plant, we have been
commissioning our acetic acid recycling technology (the ketene cracker). This
revolutionary technology is the first of its kind and involves a radical
re-thinking of the standard methodologies used in conventional plants. We
consider the safety of our staff and the community as the Company's first
responsibility, accordingly every effort has been made to minimise operational
risk. We have faced a number of challenges as certain new strategies were
adopted during commissioning and, most significantly, the control systems were
substantially revised during the year, with safety at the top of the agenda.
The lessons learned during this period confirm the principles of the core
reactor (our proprietary system) and our engineering and operating teams are
confident of future success.
Product and customer development
The exceptional progress achieved in the construction of the wood acetylation
plant has been matched or even exceeded by the progress made in both product and
customer development. Perhaps the best evidence is the commitment by our
customers to the product: we have now announced sales contracts which cover more
than 60% of our 'base case' planned production for the next 12 months. The
remaining volumes are more than covered by expressions of interest, many of
which are presently being finalised into sales agreements and indeed we are
already examining the expansion of the Arnhem plant.
Licensing
The primary goal of the business is to maximise returns through licensing the
Group's production technology. Good progress has been made with process testing
programmes undertaken with potential licensees. Following the signing of our
first agreement providing geographical exclusivity for a potential production
licensee, two further agreements have been signed granting limited duration
geographical or product exclusivity to potential licensees in return for option
payments. In anticipation of becoming a manufacturing licensee, one of the
holders of such a license has recently entered into a trading agreement for the
provision of substantial volumes of AccoyaTM over the period it is expected to
take for negotiations to be completed and a their own production facility to be
built and commissioned. We continue to develop licensing opportunities across
the world, and are confident of good progress in the coming year after our
production plant comes online.
Post balance sheet event - share placing
On 8 November 2006, the Company completed the placing of 6,623,172 new Ordinary
shares at a price of €1.48 each, raising €9,557,000 net of expenses. These
shares were issued under the dis-application authority vested in the directors
by the shareholders to issue additional shares up to 5% of the shares then in
issue.
Dividends
The directors do not intend to pay a dividend until the Company has established
strong cash flow and reported satisfactory profitability.
Willy Paterson-Brown
Executive Chairman
12 December 2006
INTERIM FINANCIAL STATEMENTS TO 30 SEPTEMBER 2006
Consolidated profit and loss account
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 Sept 2006 30 Sept 2005 31 March 2006
€'000 €'000 €'000
Turnover - - 80
Administrative expenses (3,487) (2,327) (5,860)
_________ _________ _________
Operating loss (3,487) (2,327) (5,780)
Interest receivable/(payable) and
similar income/(expense) (242) 111 782
_________ _________ _________
Loss on ordinary activities before
and after taxation (3,729) (2,216) (4,998)
_________ _________ _________
Retained loss for the period/year (3,729) (2,216) (4,998)
_________ _________ _________
Basic and diluted loss per share €(0.03) €(0.02) €(0.04)
All amounts relate to continuing activities
All recognised gains and losses are included in the profit and loss account.
The notes set out on pages 7 to 10 form part of these interim financial
statements
Consolidated Balance Sheet
Unaudited Unaudited Audited
6 months ended 30 Sept 6 months ended 30 Sept Year ended 31
2006 2005 March 2006
Notes €'000 €'000 €000
Fixed assets
Intangible assets 13,709 14,246 13,715
Tangible assets 18,889 4,655 10,693
32,598 18,901 24,408
Current assets
Stock 237 - -
Debtors 3,322 9,288 8,411
Other investments 7,154 - 15,513
Cash at bank 5,518 921 4,577
Creditors: amounts falling
Due within one year (1,533) (1,178) (1,984)
Net current assets 14,698 9,031 26,517
Net assets 47,296 27,932 50,925
Capital and reserves
Called up share capital 1,473 1,202 1,473
Share premium account 25,504 - 25,504
Merger reserve 2 87,816 106,707 106,707
Profit and loss account 2 (67,497) (79,977) (82,759)
Shareholders' funds 47,296 27,932 50,925
The notes set out on page 7 to 10 form part of these interim financial
statements
Consolidated cash flow statement
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 Sept 2006 30 Sept 2005 31 March 2006
€'000 €'000 €'000
Net cash outflow from 3 (3,550) (1,802) (4,468)
Operating activities
Returns on investments and servicing of finance
Interest received and other income 117 111 269
Capital expenditure and Financial investment
Purchase of intangible fixed assets (200) - -
Purchase of tangible fixed assets (8,358) (1,842) (7,872)
Cash outflow before use of Liquid resources and financing
Decrease/(increase) in short term deposits 4,932 (3,110) (1,690)
Decrease/(increase) in other investments 8,000 - (15,000)
Financing
Issue of share capital - - 27,000
Expenses of issue of share capital - - (1,226)
Shares issued by subsidiary - 3,000 3,000
Increase/(decrease) in cash 941 (3,643) 13
The notes set out on pages 7 to 10 form part of these interim financial
statements
Notes forming part of the interim financial statements for the period ended 30
September 2006
1. Accounting policies
Basis of Preparation
Accsys Technologies PLC was incorporated on 11 August 2005 and acquired Accsys
Chemicals PLC by means of a share for share exchange, with Accsys Chemicals PLC
becoming wholly owned on 22 November 2005.
Accordingly, the consolidated results for the comparative period, the six months
to 30 September 2005, reflect the results and position of the group as if the
Company had already acquired Accsys Chemicals PLC at that date.
These interim financial statements for Accsys Technologies PLC have been
prepared on a basis consistent with the accounting policies that will be adopted
in the Company's annual report and accounts for the year ended 31 March 2007.
The figures for the year ended 31 March 2006 have been extracted from the
Company's annual report and accounts for that period which have been filed with
the Registrar of Companies. The independent auditors' report on the 2006 Accsys
Technologies PLC accounts was unqualified and did not contain any statement
under section 237(2) or (3) of the Companies Act 1985. The financial
information in this document does not constitute statutory financial statements
within the meaning of section 240 of the Companies Act 1985.
Share based payments
Effective 1 April 2006, the Group adopted FRS20 Share Based Payments. A fair
value for the share options awarded is measured at the date of grant. The
aggregate amount of the cumulative charge in respect of all periods to 30
September 2006 is €100,000. This includes an amount of €66,000 in respect of
prior periods which is considered immaterial in the context of the prior period
results. Accordingly, the results for the prior period have not been restated
and the entire amount has been charged in arriving at the result for the period
to 30 September 2006.
2. Reconciliation of movements in reserves
Profit & Loss
Merger Reserve Account
€'000 €'000
Opening balance 106,707 (82,759)
Share based payment charges - 100
Transfer to Merger Reserve on
liquidation of former holding company (18,891) 18,891
Loss for the period - (3,729)
_________ _________
Closing balance 87,816 (67,497)
_________ _________
Notes forming part of the interim financial statements for the period ended 30
September 2006
3. Reconciliation of operating loss to net cash outflow from operating activities
6 months ended 6 months ended Year ended
30 September 2006 30 September 2005 31 March 2006
€'000 €'000 €'000
Operating loss (3,487) (2,327) (5,780)
Share based payment charges 100 - -
Depreciation of tangible fixed assets 162 29 21
Amortisation of intangible fixed assets 206 - 531
(Increase) in stock (237) - -
Decrease/(increase) in debtors 158 46 (497)
(Decrease)/increase in creditors (452) 450 1,257
_________ _________ _________
Net cash flow from operating activities (3,550) (1,802) (4,468)
_________ _________ _________
4. Reconciliation of net cash flow to movement in net funds
6 months ended 6 months ended Year ended
30 September 2006 30 September 2005 31 March 2006
€'000 €'000 €'000
Increase/(decrease) in cash in the period/year 941 (3,643) 13
Shares issued in settlement of debt - 1,195 1,195
_________ _________ _________
Movement in net funds in the period/year 941 (2,448) 1,208
Opening net funds 4,577 3,369 3,369
_________ _________ _________
Closing net funds 5,518 921 4,577
_________ _________ _________
Notes forming part of the interim financial statements for the period ended 30
September 2006
5. Analysis of net funds
Opening Cash Non-cash Closing
Balance Flow Changes Balance
€'000 €'000 €'000 €'000
Period ended 30 September 2006
Cash in hand and at bank 4,577 941 - 5,518
_______ _______ _______ _______
Period ended 30 September 2005
Cash in hand and at bank 4,564 (3,643) - 921
Debt due within one year (1,195) - 1,195 -
_______ _______ _______ _______
Total 3,369 (3,643) 1,195 921
_______ _______ _______ _______
Year ended 31 March 2006
Cash in hand and at bank 4,564 13 - 4,577
Debt due within one year (1,195) - 1,195 -
_______ _______ _______ _______
Total 3,369 13 1,195 4,577
_______ _______ _______ _______
Notes forming part of the interim financial statements for the period ended 30
September 2006
6. Loss per share
The loss per share is shown below. The loss per share for the six months to 30
September 2005 is based upon the notional number of Accsys Technologies shares
that would have been in issue if the Company had completed its Offer for the
entire issued share capital of Accsys Chemicals PLC on the same terms but at the
earlier date.
6 months ended 6 months ended Year ended
30 September 2006 30 September 2005 31 March 2006
€'000 €'000 €'000
Weighted average number of
Ordinary shares in issue 132,463,447 105,260,799 116,975,026
Loss for the period/year
€'000
Loss per share 3,729 1,716 4,998
€(0.03) €(0.02) €(0.04)
Since none of the Company's potential Ordinary shares are dilutive, there is no
difference between basic and fully diluted loss per share.
7 Post balance sheet events
On 8 November 2006, the Company completed the placing of 6,623,172 new Ordinary
shares at a price of €1.48 each raising approximately €9,557,000 after expenses.
Independent review report to ACCSYS TECHNOLOGIES plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 4 to 10 for the six months ended 30 September 2006 which has been
prepared on the basis set out in 'Basis of Preparation'. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom by auditors
of fully listed companies. A review consists principally of making enquiries of
group management and applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2006.
BDO STOY HAYWARD LLP
Chartered Accountants
London
12 December 2006
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