Preliminary Results for the year ended 31 March 21

Revenue from contracts with customers

 

Revenue is measured at the fair value of the consideration receivable. Revenue is recognised to the extent that it is highly probable that a significant reversal will not occur based on the consideration in the contract. The following specific recognition criteria must also be met before revenue is recognised.

 

Manufacturing revenue

Revenue is recognised from the sale of goods and is measured at the amount of the transaction price received in exchange for transferring goods. The transaction price is the expected consideration to be received, to the extent that it is highly probable that there will not be a significant reversal of revenue in the future. Revenue is recognised when the Group's performance obligations under the relevant customer contract have been satisfied. Manufacturing revenue includes the sale of Accoya^® wood, Tricoya^® panels and other revenue, principally relating to the sale of acetic acid.

 

Licensing fees and Marketing income

Licence fees and marketing income are 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 satisfaction of the performance obligations set out in the contract such as 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 expenses and borrowing costs

 

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 borrowings directly relating to the construction or production of qualifying assets are capitalised until such time as the assets are substantially ready for their intended use or sale. Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the construction period.

 

Share based payments

 

The Company awards nil cost options to acquire ordinary shares in the capital of the Company to certain Directors and employees. The Company has also previously awarded bonuses to certain employees in the form of the award of deferred shares of the Company.

 

In addition the Company has established an Employee Share Participation Plan under which employees subscribe for new shares which are held by a trust for the benefit of the subscribing employees. The shares are released to employees after one year, together with an additional, matching share on a 1 for 1 basis.

 

The fair value of options and deferred 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 consolidated 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 consolidated 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 consolidated 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 reporting 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;

·      differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

 

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Recognition of deferred tax assets is restricted to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Foreign currencies

 

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (the functional currency). For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed in Euro, which is the functional currency of the parent Company, and the presentation currency of the consolidated financial statements.

 

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currencies are recognised at the rates of exchange prevailing on the dates of the transactions.  At each reporting 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 reporting 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 and accumulated in the foreign currency translation reserve. Such translation differences are reclassified to profit and loss only on disposal or partial disposal of the overseas operation.

 

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.

 

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.

 

Government grants

 

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group will comply with the attached conditions. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset they are credited to a deferred income account and released to the statement of comprehensive income over the expected useful life of the relevant asset on a straight line basis.

 

 

Goodwill

 

Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair value of the identifiable assets and liabilities acquired. It is capitalised, and is subject to annual impairment reviews by the Directors. Any impairment arising is charged to the consolidated 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 is recognised in the consolidated statement of comprehensive income.

 

Joint venture

 

The Group has entered into a joint venture agreement with Eastman Chemical Company, forming Accoya USA LLC. The Group applies IFRS 11 for this joint arrangement, and following assessment of the nature of this joint arrangement, has determined it to be a joint venture. Interest in the joint venture is accounted for using the equity method, after initially being recognised at cost.

 

Further details concerning the Accoya USA LLC joint venture with Eastman Chemical Company are included in note 28.

 

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 8 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 over their useful lives of between 5 and 20 years

Office equipment                                Useful life of between 3 and 5 years

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 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 consolidated 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 consolidated 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

 

To the extent that a right-of-control exists over an asset subject to a lease, a right-of-use asset, representing the Group's right to use the underlying leased asset, and a lease liability, representing the Group's obligation to make lease payments, are recognised in the consolidated statement of financial position at the commencement of the lease.

 

The right-of-use asset is measured initially at cost and includes the amount of initial measurement of the lease liability, any initial direct costs incurred, including advance lease payments, and an estimate of the dismantling, removal and restoration costs required in terms of the lease. Depreciation is charged to the consolidated income statement so as to depreciate the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease term shall include the period of an extension option where it is reasonably certain that the option will be exercised. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably certain that the purchase option will be exercised.

 

The lease liability is measured at the present value of the future lease payments, including variable lease payments that depend on an index and the exercise price of purchase options where it is reasonably certain that the option will be exercised, discounted using the interest rate implicit in the lease, if readily determinable. If the implicit interest rate cannot be readily determined, the lessee's incremental borrowing rate is used. Finance charges are recognised in the consolidated income statement over the period of the lease.

 

Lease expenses for leases with a duration of one year or less and low-value assets are not recognised in the consolidated statement of financial position, and are charged to the consolidated income statement when incurred. Low-value assets are determined based on quantitative criteria.

 

The Group has used the following practical expedients permitted by the standard:

-      The use of a single discount rate to a portfolio of leases with reasonably similar characteristics

-      Reliance on previous assessments on whether leases are onerous

-      The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

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.

 

Fair value measurement

Assets and liabilities that are measured at fair value, or where the fair value of financial instruments has been disclosed in notes to the

financial statements, are based on the following fair value measurement hierarchy:

- level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

- level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as  prices) or indirectly (that is, derived from prices); and

- level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 

Specific valuation methodologies used to value financial instruments include:

- the fair values of foreign exchange contracts are calculated as the present value of expected future cash flows  based on observable yield curves and exchange rates; and

- other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments

 

Financial assets

 

Financial assets and financial liabilities are recognised in the Group's consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument.

Financial assets are initially measured at fair value and in the case of investments not at fair value through profit or loss, fair value plus directly attributable transaction costs.

 

Except where a reliable fair value cannot be obtained, unlisted shares held by the Group are classified as fair value through other comprehensive income and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, with dividends recognised in profit or loss. 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

Trade receivables are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairments. The Group has elected to apply the IFRS 9 practical expedient option to measure the value of its trade receivables at transaction price, as they do not contain a significant financing element. The Group applies IFRS 9's 'simplified' approach that requires companies to recognise the lifetime expected losses on its trade receivables. At the date of initial recognition, the credit losses expected to arise over the lifetime of a trade receivable are recognised as an impairment and are adjusted, over the lifetime of the receivable, to reflect objective evidence reflecting whether the Group will not be able to collect its debts.

 

Cash and cash equivalents

Cash and cash equivalents in the consolidated 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 Officer. The Chief Executive Officer is responsible for allocating resources and assessing performance of the operating segments and has been identified as steering the committee that makes strategic decisions.

 

Alternative Performance Measures

 

The Group presents certain measures of financial performance, position or cash flows in the Annual Report and financial statements that are not defined or specified according to IFRS (International financial reporting standards). These measures, referred to as Alternative Performance Measures (APMs), are prepared on a consistent basis for all periods presented in this report.

The most significant APMs are:

 

Net debt

A measure comprising short term and long-term borrowings (including lease obligations) less cash and cash equivalents. Net debt provides a measure of the Group's net indebtedness or overall leverage.

 

Underlying EBITDA

Operating profit/(loss) before Exceptional items and other adjustments, depreciation and amortisation and includes the Group's attributable share of our USA joint venture's underlying EBITDA. Underlying EBITDA provides a measure of the cash-generating ability of the business that is comparable from year to year.

 

Underlying EBIT

Operating profit/(loss) before Exceptional items and other adjustments and includes the Group's attributable share of our USA joint venture's underlying EBIT. Underlying EBIT provides a measure of the operating performance that is comparable from year to year.

 

Effective interest rate

Net interest expense (excluding capitalisation of interest) expressed as a percentage of trailing 13-month average net debt provides a measure of the cost of borrowings.

 

Net Debt / Underlying EBITDA

Net debt divided by trailing 12-month underlying EBITDA. A measure of the Group's net indebtedness relative to its cash-generating ability.

 

Accoya^® Manufacturing margin

Accoya^® segmental underlying gross profit excluding Accoya^® underlying licence revenue and marketing services expressed as a percentage over Accoya^® segmental total revenue excluding Accoya^® underlying licence revenue and marketing services. Accoya^® Manufacturing margin provides a measure of the profitability of the Accoya^® operations relative to revenue.

 

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

 

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 & 17). 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 (IPR) 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. Within this process, the Group makes a number of key assumptions including operating margins, discount rates, terminal growth rates and forecast cash flows. Additional information is disclosed in note 16 & 17, which highlights the estimates applied in the value-in-use calculations for those CGUs that are considered most susceptible to changes in key assumptions and the sensitivity of these estimates. The Group also reviews the estimated useful lives at the end of each annual reporting period (See note 16 & 17). The price of 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.

 

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 reassessed 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.

 

Commercial negotiations

The Group is party to a number of commercial negotiations in the ordinary course of business, including with relation to construction of the Hull plant. Management consults with internal and external experts, and utilises its best estimate to account for any relevant financial effect from these negotiations (including the value of amounts to be capitalised and any payables or provisions required to settle such negotiations), when they become apparent.

 

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 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 satisfaction of the performance obligations set out in the contract such as 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. Revenue is recognised to the extent that it is highly probable that a significant reversal will not occur.

 

Financial asset at fair value through profit or loss

The Group has an investment in listed equity shares carried at nil fair value 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 determine the fair value (See note 19).

 

Consolidation of subsidiaries

The Group considers all relevant facts and circumstances when assessing whether it meets the IFRS 10 requirements to consolidate Tricoya Technologies Limited (TTL) and Tricoya UK Limited (Tricoya UK). The Group has consolidated the results of TTL and Tricoya UK as subsidiaries, as it exercises the power to govern the entities in accordance with IFRS 10. See note 9.

 

Joint venture

The Group considers all relevant facts and circumstances when assessing whether it meets the IFRS 11 requirements to account for Accoya USA LLC as a joint venture. The Group has equity accounted for Accoya USA LLC within these financial statements. See note 28.

 

 

New standards and interpretations in issue at the date of authorisation of these financial statements:
 

New standards, amendments and interpretations

The following amendments to Standards and a new Interpretation have been adopted for the financial year beginning on 1 April 2020:

 

•              Definition of Material - Amendments to IAS 1 and IAS 8;

•              Definition of Business - Amendments to IFRS 3;

•              Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7; and

•              Revised Conceptual Framework for Financial Reporting

 

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

 

New standards, amendments and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2021 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

 

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.

 

Accoya^®

	Accoya® Segment
	Year ended 31 March 2021 Underlying	Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021 TOTAL	Year ended 31 March 2020 Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020 TOTAL
	€'000	€'000	€'000	€'000	€'000	€'000
Accoya® wood revenue	91,095	-	91,095	82,836	-	82,836
Licence revenue	400	-	400	5	3,200	3,205
Other revenue	6,142		6,142	7,187	-	7,187
Total Revenue	97,637	-	97,637	90,028	3,200	93,228
Cost of sales	(64,713)	-	(64,713)	(62,878)	-	(62,878)
Gross profit	32,924	-	32,924	27,150	3,200	30,350
Other operating costs	(15,725)	-	(15,725)	(14,527)	-	(14,527)
Other Gain	-	-	-	-	-	-
Profit from operations	17,199	-	17,199	12,623	3,200	15,823
Profit from operations	17,199	-	17,199	12,623	3,200	15,823
Accoya® USA EBITDA	(144)	-	-	-	-	-
EBIT	17,055	-	17,199	12,623	3,200	15,823
Depreciation and amortisation	4,371	-	4,371	4,323	-	4,323
EBITDA	21,426	-	21,570	16,946	3,200	20,146

 

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 all 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.

Average headcount = 140 (2020: 130)

 

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.

 

					2021	2020
					€'000	€'000
Accoya® segmental underlying EBITDA					21,426	16,946
Accoya® underlying Licence revenue					(400)	(5)
Other income, predominantly for marketing services					-	(168)
Accoya® segmental underlying EBITDA (excluding. Licence Income)					21,026	16,773
Accoya® segmental underlying gross profit					32,924	27,150
Accoya® underlying Licence revenue					(400)	(5)
Other income, predominantly for marketing services					-	(168)
Accoya® manufacturing gross profit					32,524	26,977
Accoya® Manufacturing Margin					33.4%	30.0%

 

Tricoya^®

	Tricoya® Segment
	Year ended 31 March 2021 Underlying	Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021 TOTAL	Year ended 31 March 2020 Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020 TOTAL
	€'000	€'000	€'000	€'000	€'000	€'000
Tricoya® panel revenue	2,091	-	2,091	512	-	512
Licence revenue	19	-	19	288	-	288
Other revenue	56	-	56	81	-	81
Total Revenue	2,166	-	2,166	881	-	881
Cost of sales	(2,001)	-	(2,001)	(524)	-	(524)
Gross profit	165	-	165	357	-	357
Other operating costs	(3,668)	103	(3,565)	(3,607)	(165)	(3,772)
Loss from operations	(3,503)	103	(3,400)	(3,250)	(165)	(3,415)
Loss from operations	(3,503)	103	(3,400)	(3,250)	(165)	(3,415)
Depreciation and amortisation	563	-	563	397	-	397
EBITDA	(2,940)	103	(2,837)	(2,853)	(165)	(3,018)

 

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.

 

Average headcount = 22 (2020: 17), 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.

Corporate 

 

	Corporate Segment
	Year ended 31 March 2021 Underlying	Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021 TOTAL	Year ended 31 March 2020 Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020 TOTAL
	€'000	€'000	€'000	€'000	€'000	€'000
Accoya® wood revenue	-	-	-	-	-	-
Licence revenue	-	-	-	-	-	-
Other revenue	-	-	-	-	-	-
Total Revenue	-	-	-	-	-	-
Cost of sales	-	-	-	-	-	-
Gross result	-	-	-	-	-	-
Other operating costs	(8,048)	-	(8,048)	(6,786)	-	(6,786)
Other Gain	-	-	-	-	-	-
Loss from operations	(8,048)	-	(8,048)	(6,786)	-	(6,786)
Loss from operations	(8,048)	-	(8,048)	(6,786)	-	(6,786)
Depreciation and amortisation	715	-	715	731	-	731
EBITDA	(7,333)	-	(7,333)	(6,055)	-	(6,055)

 

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.

 

Average headcount = 29 (2020: 23)

 

 

Research and Development

 

	Research & Development Segment
	Year ended 31 March 2021 Underlying	Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021 TOTAL	Year ended 31 March 2020 Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020 TOTAL
	€'000	€'000	€'000	€'000	€'000	€'000
Accoya® wood revenue	-	-	-	-	-	-
Licence revenue	-	-	-	-	-	-
Other revenue	-	-	-	-	-	-
Total Revenue	-	-	-	-	-	-
Cost of sales	-	-	-	-	-	-
Gross result	-	-	-	-	-	-
Other operating costs	(1,118)	-	(1,118)	(1,223)	-	(1,223)
Loss from operations	(1,118)	-	(1,118)	(1,223)	-	(1,223)
Loss from operations	(1,118)	-	(1,118)	(1,223)	-	(1,223)
Depreciation and amortisation	88	-	88	152	-	152
EBITDA	(1,030)	-	(1,030)	(1,071)	-	(1,071)

 

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). 

Average headcount = 9 (2020: 9)

 

 

Total

 

	Total
	Year ended 31 March 2021 Underlying	Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021 TOTAL	Year ended 31 March 2020 Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020 TOTAL
	€'000	€'000	€'000	€'000	€'000	€'000
Accoya®/Tricoya® revenue	93,186	-	93,186	83,348	-	83,348
Licence revenue	419	-	419	293	3,200	3,493
Other revenue	6,198	-	6,198	7,268	-	7,268
Total Revenue	99,803	-	99,803	90,909	3,200	94,109
Cost of sales	(66,714)	-	(66,714)	(63,402)	-	(63,402)
Gross profit	33,089	-	33,089	27,507	3,200	30,707
Other operating costs	(28,559)	103	(28,456)	(26,143)	(165)	(26,308)
Profit from operations	4,530	103	4,633	1,364	3,035	4,399
Finance income	1	-	1	-	-	-
Finance expense	(3,250)	(900)	(4,150)	(3,517)	626	(2,891)
Investment in joint venture	(144)	-	(144)	-	-	-
Profit/(Loss) before taxation	1,137	(797)	340	(2,153)	3,661	1,508

 

 

See note 5 for details of Exceptional items and other adjustments.

 

 

Reconciliation of underlying earnings
				Year ended 31 March 2021   Underlying		Year ended 31 March 2021 Exceptional items & Other Adjustments	Year ended 31 March 2021   TOTAL	Year ended 31 March 2020   Underlying	Year ended 31 March 2020 Exceptional items & Other Adjustments	Year ended 31 March 2020   TOTAL
				€'000		€'000	€'000	€'000	€'000	€'000
Profit from operations				4,530		103	4,633	1,364	3,035	4,399
Accoya® USA EBITDA				(144)		-	-	-	-	-
EBIT				4,386		103	4,633	1,364	3,035	4,399
Depreciation and amortisation				5,737		-	5,737	5,603	-	5,603
EBITDA				10,123		103	10,370	6,967	3,035	10,002

 

 

 

 

Analysis of Revenue by geographical area of customers:					2021	2020
					€'000	€'000
UK and Ireland					41,890	39,208
Rest of Europe					27,187	24,962
Americas					13,170	10,949
Benelux					9,701	8,510
Asia-Pacific					7,360	6,293
Rest of World					495	987
					99,803	90,909

 

Revenue generated from two customers exceeded 10% of Group revenue of 2021. These two customers represented 36% & 40% of the revenue from the United Kingdom and Ireland, relating to Accoya^® revenue. Revenue generated from three customers exceeded 10% of Group revenue of 2020. This included 62% of the revenue from the rest of Europe and relates to a mixture of Accoya^®, Licensing, and Other Revenue. In addition, two other customers represented 33% and 35% respectively, of the revenue from the United Kingdom and Ireland and relate to Accoya^® revenue.

 

Assets and liabilities on a segmental basis:

 

	Accoya®	Tricoya®	Corporate	R&D	TOTAL		Accoya®	Tricoya®	Corporate	R&D	TOTAL
	2021	2021	2021	2021	2021		2020	2020	2020	2020	2020
	€'000	€'000	€'000	€'000	€'000		€'000	€'000	€'000	€'000	€'000
Non-current assets	64,994	85,696	4,620	297	155,607		62,143	70,638	4,773	91	137,645
Current assets	34,752	13,134	19,567	5,038	72,491		38,777	10,896	15,330	4,758	69,761
Current liabilities	(16,706)	(18,933)	(6,576)	(70)	(42,285)		(11,692)	(9,407)	(2,833)	(29)	(23,961)
Net current assets/(liabilities)	18,046	(5,799)	12,991	4,968	30,206		27,085	1,489	12,497	4,729	45,800
Non-current liabilities	(21,798)	(9,990)	(17,262)	(160)	(49,210)		(27,740)	(8,727)	(19,843)	-	(56,310)
Net assets/(liabilities)	61,242	69,907	349	5,105	136,603		61,488	63,400	(2,573)	4,820	127,135

 

 

 

Analysis of non-current assets (Other than financial assets and deferred tax):					2021	2020
					€'000	€'000
UK					90,344	75,435
Other countries					61,032	57,979
Un-allocated - Goodwill					4,231	4,231
					155,607	137,645

 

 

The segmental assets in the current year were predominantly held in the UK and mainland Europe (Prior Year UK and mainland Europe). Additions to property, plant, equipment and intangible assets in the current year were predominantly incurred in the UK and mainland Europe (Prior Year UK and mainland 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:

			2021	2020
			€'000	€'000
Sales and marketing			3,847	3,295
Research and development			1,030	1,071
Other operating costs			6,013	6,742
Administration costs			11,932	9,432
Exceptional Items and other adjustments			(103)	165
Other operating costs excluding depreciation and amortisation			22,719	20,705
Depreciation and amortisation			5,737	5,603
Total other operating costs			28,456	26,308

 

Administrative costs include costs 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 €22,719,000 in the current period includes €3,002,000 in respect of the Tricoya® segment, compared to €3,375,000 in the previous year.

 

Group average headcount increased from 179 in the year to 31 March 2020, to 199 in the year to 31 March 2021.

 

During the period, €682,000 (2020: €860,000) of internal development & patent related costs were capitalised and included in intangible fixed assets, including €524,000 (2020: €701,000) which were capitalised within Tricoya Technologies Limited ('TTL'). In addition €336,000 of internal costs have been capitalised in relation to our current Arnhem Accoya^® plant expansion project (2020: €204,000) and €38,000 of internal costs have been capitalised in relation to our plant build in Hull, UK (2020: €44,000). Both are included within tangible fixed assets.

 

5.         Exceptional items and other adjustments

			2021	2020
			€'000	€'000
Cerdia contract termination fee - Licence revenue			-	3,200
Total exceptional items			-	3,200
Foreign exchange differences arising on Tricoya® & Corporate cash held - Operating costs			103	(165)
Foreign exchange differences arising on Loan Notes - incl. in Finance expense			(900)	626
Foreign exchange differences on Tricoya® & Corporate cash held - Other comprehensive income/(loss)			18	(96)
Revaluation of FX forwards used for cash-flow hedging - Other comprehensive income/(loss)			174	(184)
Total other adjustments			(605)	181
Tax on exceptional items and other adjustments			-	(177)
Total exceptional items and other adjustments			(605)	3,204

 

Exceptional Items

 

During the year, the Group received Government grants relating to the COVID-19 response, of which €460,000 was received in the Netherlands (Netherlands NOW scheme), and €135,000 in the UK (UK Coronavirus job retention scheme). In the interim results, these amounts were recognised as Exceptional income. It was decided before the reporting date, given the overall performance of the Group in the year, to repay both of the Government grants received, with the exceptional income reversed.

 

In the prior year, the exceptional licence fee revenue of €3.2m resulted from the early termination of the Cerdia commercial agreements. This amount previously included in receivables was recorded as a reduction to net debt from 1st April 2020, with the fee offset against our loan held with Cerdia which continues.

 

Other Adjustments

 

Foreign exchange differences in the Tricoya^® segment have occurred due to pounds sterling held within the consortium for the ongoing Hull plant build and to a lesser extent, pounds sterling held within the Corporate segment for future sterling corporate costs. The Group has mitigated this currency exchange risk by adopting hedge accounting under IFRS 9, Financial Instruments. The effective portion of the foreign exchange movement is recognised in other comprehensive income, with the ineffective portion recognised in Operating costs.

 

Foreign exchange differences also arise on the pounds sterling denominated loan notes, entered into in a prior period (see note 29). These exchange rate differences are included as finance expenses.

 

6.         Employees

 

				2021	2020
				€'000	€'000
Staff costs (including Directors) consist of:
Wages and salaries				14,394	12,249
Social security costs				2,206	1,768
Other pension costs				1,008	894
Share based payments				869	537
				18,477	15,448

 

The average monthly number of employees, including Executive Directors, during the year was as follows:
				2021	2020
Sales and marketing, administration, research and engineering				112	99
Operating				87	80
				199	179

 

7.         Directors' remuneration

				2021	2020
				€'000	€'000
Directors' remuneration consists of:
Directors' emoluments				1,187	1,443
Company contributions to money purchase pension schemes				41	49
				1,228	1,492

 

Compensation of key management personnel included the following amounts:

		Salary, bonus and short term benefits		Share based payments charge
					2021	2020
			Pension		Total	Total
		€'000	€'000	€'000	€'000	€'000
Rob Harris		553	26	33	612	224
William Rudge		314	15	61	390	306
Paul Clegg1		-	-	-	-	680
		867	41	94	1,002	1,210

 

 

The Group made contributions to 1 (2020: 2) Director's personal pension plan, with Robert Harris receiving cash in lieu of pension.

 

The figures in the above table are impacted by foreign exchange noting that the remuneration for R Harris and W Rudge are denominated in Pounds Sterling.

 

¹ Paul Clegg's amounts above for 2020 represent the remuneration received for the period to 31 December 2019, when he resigned as a Director.

 

 

 

 

 

8.         Operating profit

 

 

				2021	2020
				€'000	€'000
This has been arrived at after charging/(crediting):
Staff costs				18,477	15,448
Depreciation of property, plant and equipment, and right of use assets				4,934	4,939
Amortisation of intangible assets				803	664
Operating lease rentals				32	28
Foreign exchange (gains)				110	(81)
Research & Development (excluding staff costs)				524	624
Fees payable to the Company's auditors for the audit of the Group's annual financial statements				73	78
Fees payable to the Company's auditors for other services:
- audit of the Company's subsidiaries pursuant to legislation				84	71
- audit related assurance services				34	26
Fees payable to Component auditor for audit of subsidiaries:				98	93
- other audit related services				14	-
Total audit and audit related services:				303	268

 

 

In addition to the above, in the year ended 31 March 2020, fees of €273,000 related to the working capital review for the December 2019 equity fundraise were paid to the Company's external auditors. These fees were accounted for in Share Premium as Share issue costs.

 

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 a targeted production capacity of 30,000 metric 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 2017. TTL has then invested, alongside BP Chemicals and MEDITE, in Tricoya UK Limited ("Tricoya UK"), a special purpose subsidiary of TTL that will construct, own and operate the Hull Plant. The company changed its name from Tricoya Ventures UK Limited to Tricoya UK Limited on 3rd September 2020.

 

INEOS Acetyls Investments Limited ("INEOS") acquired BP Ventures' share capital of TTL and BP Chemicals share capital of Tricoya UK on 31 December 2020.

 

INEOS (through acquiring BP's share of TTL & Tricoya UK) have invested €31.8 million in the Tricoya^® Project, including €23.3 million as equity in Tricoya UK and €8.5 million as equity in TTL. All funding was received by 31 March 2021, with €2.4m being received in the year ended 31 March 2021.

 

MEDITE have invested €15.0 million in the Tricoya^® Project, including €8.4 million as equity in TTL and €6.6 million as equity in Tricoya UK. All funding was received by 31 March 2021, with €3.0m being received in the year ended 31 March 2021. A further 495,310 TTL shares were issued as a result of MEDITE continuing to seed the market with Tricoya^® panels ensuring continued market development ahead of the completion of the Hull Plant.

 

In the period to 31 March 2021, the Group's shareholding in TTL decreased from 77.8% to 76.5% which included a further investment of €4.5m.

 

In the year ended 31 March 2017, BGF and Volantis invested an aggregate of £19.0 million 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 £19.0 million total.

 

In the year ended 31 March 2017, Tricoya UK entered a six-year €17.2 million finance facility agreement with Natwest Bank plc (formerly called The Royal Bank of Scotland PLC) in respect of the construction and operation of the Hull Plant. As at 31 March 2021 the Group have utilised €9.3m (2020: €8.7m) of the facility.

 

The Group has consolidated the results of TTL and Tricoya UK 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 Tricoya UK, are set out below:

 

TTL Group income statement:

	Consolidated	Consolidated
	2021	2020
	€'000	€'000
Revenue	2,178	881
Cost of sales	(1,999)	(538)
Gross profit	179	343
Operating costs:
Staff costs	(2,582)	(2,879)
Research & development (excluding staff costs)	(217)	(228)
Intellectual Property	(255)	(203)
Sales & marketing	(122)	(388)
Depreciation & Amortisation	(563)	(397)
EBIT	(3,560)	(3,752)
EBIT attributable to Accsys shareholders	(2,172)	(2,214)

 

TTL Group balance sheet:

	2021	2020
	€'000	€'000
Non-current assets
Intangible assets	4,376	4,216
Property, plant and equipment	79,999	65,557
Right of use assets	1,321	865
	85,696	70,638
Current assets
Receivables due within one year	1,232	2,378
Inventory	-	53
Cash and cash equivalents	11,464	8,399
FX Derivative Asset	134	-
	12,830	10,830
Current liabilities
Trade and other payables	(20,159)	(10,419)
FX Derivative Liability	-	(330)
Net current assets	(7,329)	82
Non-current liabilities
Other long term borrowing	(8,955)	(8,284)
	(8,955)	(8,284)
Net assets	69,412	62,435
Value attributable to Accsys Technologies	32,246	27,993
Value attributable to Non-controlling interest	37,166	34,442

 

TTL Group cash flows:
	2021	2020
	€'000	€'000
Cash flows from operating activities	(841)	(2,417)
Cash flows from investing activities	(6,400)	(19,178)
Cash flows from financing activities	10,306	23,104
Net increase/(decrease) in cash and cash equivalents	3,065	1,509

 

10.       Finance income

 

 

				2021	2020
				€'000	€'000
Interest receivable on bank and other deposits*				1	-

 

*€5,000 interest received in the year ended 31 March 2021 (31 March 2020: €19,000) in relation to cash balances held in Tricoya UK Ltd was netted off with borrowing costs incurred, with the net borrowing cost amount related to the Hull project capitalised and included within property, plant and equipment. 

 

11.       Finance expense

				2021	2020
				€'000	€'000
Arnhem land and buildings lease finance charge				187	200
Foreign exchange loss/(gain) on loan notes				900	(626)
Interest on loans				2,767	3,108
Interest on lease liabilities				296	209
				4,150	2,891

 

12.       Tax expense

 

				2021	2020
				€'000	€'000
(a) Tax recognised in the statement of comprehensive income comprises:
Current tax charge
UK Corporation tax on losses for the year				-	-
Research and development tax expense in respect of current year				24	28
				24	28
Overseas tax at rate of 15%				11	(30)
Overseas tax at rate of 25%				1,216	633
Deferred Tax
Utilisation of deferred tax asset				-	-
Total tax charge reported in the statement of comprehensive income				1,251	631
				2021	2020
				€'000	€'000
(b) The tax charge for the period is higher than the standard rate of
corporation tax in the UK (2021 & 2020: 19%) due to:
Profit/(Loss) before tax				340	1,508
Expected tax charge at 19% (2020 - 19%)				65	287
Expenses not deductible in determining taxable profit				153	116
Over provision in respect of prior years				-	(41)
Tax losses for which no deferred income tax asset was recognised				880	135
Effects of overseas taxation				130	106
Research and development tax charge in respect of prior years				79	129
Research and development tax (credit) in respect of current year				(56)	(101)
Total tax charge reported in the statement of comprehensive income				1,251	631

 

Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.

 

 

13.       Dividends Paid

 

				2021	2020
				€'000	€'000
Final Dividend €Nil (2020: €Nil) per Ordinary share proposed
and paid during year relating to the previous year's results				-	-

 

14.       Basic and diluted profit/(loss) per ordinary share

 

The calculation of profit per ordinary share is based on profit after tax and the weighted average number of ordinary shares in issue during the year.      

 

 

			2021	2021	2020	2020
			Underlying	Total	Underlying	Total
Basic earnings per share
Weighted average number of Ordinary shares in issue ('000)			164,890	164,890	132,721	132,721
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC (€'000)			1,274	477	(1,069)	2,415
Basic profit/(loss) per share			€ 0.01	€ 0.00	€ (0.01)	€ 0.02
Diluted earnings per share
Weighted average number of Ordinary shares in issue ('000)			164,890	164,890	132,721	132,721
Equity options attributable to Volantis			-	-	4,656	4,656
Equity options attributable to BGF			8,449	8,449	8,449	8,449
Weighted average number of Ordinary shares in issue and potential ordinary shares ('000)			173,339	173,339	145,826	145,826
Profit/(Loss) for the year attributable to owners of Accsys Technologies PLC (€'000)			1,274	477	(1,069)	2,415
Diluted profit/(loss) per share			€ 0.01	€ 0.00	€ (0.01)	€ 0.02

 

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 costs options under the LTIP in 2013, the recipients relinquished all share options that they held which had been awarded under the 2005 and 2008 Share Option plans. Other employees continue to hold options awarded under these earlier schemes.

 

Options - total

 

The following figures take into account options awarded under the LTIP, together with share options awarded in previous years under the 2008 Share Option schemes.

 

Outstanding options granted are as follows:

 

 

	Number of outstanding		Weighted average remaining
	options at 31 March		contractual life, in years
Date of grant	2021	2020	2021	2020
1 August 2011	90,000	90,000	0.3	1.3
19 September 2013 (LTIP)	918,226	2,177,675	2.5	3.5
24 June 2016 (LTIP)	482,827	482,827	5.3	6.3
20 June 2017 (LTIP)	326,999	338,275	6.3	7.3
18 June 2018 (LTIP)	185,840	829,882	7.3	8.3
25 June 2019 (LTIP)	541,049	593,376	8.3	9.3
20 November 2019 (LTIP)	105,699	105,699	8.7	9.7
23 December 2019 (LTIP)	41,468	41,468	8.8	9.8
15 July 2020 (LTIP)	1,267,657	-	9.3	-
Total	3,959,765	4,659,202	6.5	5.8

 Movements in the weighted average values are as follows:

 

				Weighted
				average
				exercise
				price	Number
Outstanding at 1 April 2019				€ 0.10	4,935,421
Granted during the year				€ 0.00	810,520
Forfeited during the year				€ 0.00	(1,086,739)
Exercised during the year				€ 0.00	-
Expired during the year				€ 0.00	-
Outstanding at 31 March 2020				€ 0.10	4,659,202
Granted during the year				€ 0.00	1,326,966
Forfeited during the year				€ 0.00	(766,954)
Exercised during the year				€ 0.00	(1,259,449)
Expired during the year				€ 0.00	-
Outstanding at 31 March 2021				€ 0.12	3,959,765

 

The exercise price of options outstanding at the end of the year ranged between €nil (for LTIP options) and €0.50 (2020: €nil and €0.50) and their weighted average contractual life was 6.5 years (2020: 5.8 years).

 

Of the total number of options outstanding at the end of the year 1,818,052 (2020: 2,750,502) had vested and were exercisable at the end of the year.

 

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.

 

2013 LTIP Award performance conditions and 2016 outcome

 

The LTIP in 2013 awarded 4,103,456 nil cost options and 2,472,550 vested in the financial year end 31 March 2017. 918,226 nil cost options remain as at 31 March 2021 after allowing for forfeitures and options exercised in the year.

 

2016 LTIP Award performance conditions and 2016 outcome

 

The LTIP in 2016 awarded 1,070,255 nil cost options and 482,827 vested in the financial year end 31 March 2020. 482,827 nil cost options remain as at 31 March 2021 after allowing for forfeitures and options exercised in the year.

 

2017 LTIP Award performance conditions and 2016 outcome

 

The LTIP in 2017 awarded 1,087,842 nil cost options and 326,999 vested in the financial year end 31 March 2021. 326,999 nil cost options remain as at 31 March 2021 after allowing for forfeitures and options exercised in the year.

 

Awards made in June 2018 and LTIP Award performance conditions

 

During the year ended March 2019, a total of 1,170,160 LTIP awards were made primarily to members of the Senior Management team including the Executive Directors:

 

The performance targets for 993,220 of these awards are as follows:

 

Metric	Weighting (% of award)	Threshold	Maximum
Vesting (% of maximum)		25%	100%
EBITDA per share in FY21	60%	€0.05	€0.13
Total sales volume (subject to Group EBITDA being breakeven or positive)	40%	70,000	85,000

 

·          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 excluding licensing income. Appropriate adjustments may be made to the EBITDA per share metric 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.

·      Sales Volume is defined as combined sales volume (in cubic metres, or equivalent) of Accoya^® and Tricoya^®.

Element	Element A (EBITDA per share)	Element B (Sales volume growth)
Grant date	19 Jun 18	19 Jun 18
Share price at grant date (€)	0.91	0.91
Exercise price (€)	0.00	0.00
Expected life (years)	3	3
Contractual life (years)	10	10
Vesting conditions (Details set out above)	EBITDA	Sales volume growth
Risk free rate	-0.55%	-0.55%
Expected volatility	20%	20%
Expected dividend yield	0%	0%
Fair value of option	€ 0.842	€ 0.842

 

 

The remaining 176,940 of the awards made in summer 2018 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 were €0.842 on their Grant date.

 

All of the above awards, made in summer 2018 are subject to a three year performance period (i.e. year end March 2021) and a further two year holding period. In addition, awards are also subject to malus/ claw-back provisions. As at 31 March 2021, the expected vesting amount is estimated to be 185,840 share options.

 

Awards made in year ended 31 March 2020 and LTIP Award performance conditions

 

During the prior year, a total of 810,520 LTIP awards were made primarily to members of the Senior Management team including the Executive Directors:

 

The performance targets for 686,049 of these awards are as follows:

 

Metric	Weighting (% of award)	Threshold	Target	Maximum
Vesting (% of maximum)		25%	70%	100%
EBITDA per share in FY22	60%	€0.10	€0.14	€0.22
Total sales volume in FY22 (m3)	40%	82,000	86,000	100,000

 

·             Vesting is on a straight-line basis between the above points.

·             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^®.

 

Element	Element A (EBITDA per share)	Element B (Sales volume growth)
Grant date	25 Jun 19	25 Jun 19
Share price at grant date (€)	1.32	1.32
Exercise price (€)	0.00	0.00
Expected life (years)	3	3
Contractual life (years)	10	10
Vesting conditions (Details set out above)	EBITDA	Sales volume growth
Risk free rate	-0.74%	-0.74%
Expected volatility	20%	20%
Expected dividend yield	0%	0%
Fair value of option	€ 1.221	€ 1.221

 

 

On 20^th November 2019 and 23^rd December 2019, a total of 147,167 LTIP awards (included in the 686,049 LTIP awards above) were made to 2 new employees with the same performance targets as illustrated above. The fair value of these awards were €1.05 per option.

 

The remaining 124,471 of the awards made in summer 2019 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 were €1.221 on their Grant date.

 

All of the above awards, made in the year ended 31 March 2020 are subject to a three year performance period (i.e. year end March 2022) and a further two year holding period. In addition, awards are also subject to malus/ claw-back provisions.

 

Awards made in July 2020 and LTIP Award performance conditions

 

During the year, a total of 1,326,966 LTIP awards were made primarily to members of the Senior Management team including the Executive Directors:

 

The performance targets for 1,255,829 of these awards are as follows:

 

Metric	Weighting (% of award)	Threshold	Stretch	Maximum
Vesting (% of maximum)		25%	70%	100%
EBITDA per share in FY23	60%	€0.14	€0.19	€0.24
Total sales volume in FY 23 (m3)	40%	90,000	105,000	112,720

 

·          Vesting is on a straight-line basis between points in the schedule.

·          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

 

Element	Element A (EBITDA per share)	Element B (Sales volume growth)
Grant date	15 July 20	15 July 20
Share price at grant date (€)	1.00	1.00
Exercise price (€)	0.00	0.00
Expected life (years)	3	3
Contractual life (years)	10	10
Vesting conditions (Details set out above)	EBITDA	Sales volume growth
Risk free rate	-0.69%	-0.69%
Expected volatility	20%	20%
Expected dividend yield	0%	0%
Fair value of option	€ 0.998	€ 0.998

 

The remaining 71,137 of the awards made in summer 2020 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 were €0.998 on their Grant date.

 

All of the above awards, made in summer 2020 are subject to a three year performance period (i.e. year end March 2023) and a further two year holding period. In addition, awards are also subject to malus/ claw-back provisions.

 

2008 Share Option schemes

 

Awards made in earlier years had no impact on the income statement in the current or prior year and given the smaller number of options remaining, no details have been disclosed.

 

Employee Benefit Trust - Share bonus award

 

Following a share issue on 23 June 2020 as part of the annual bonus, in connection with the employee remuneration and incentivisation arrangements for the period from 1 April 2019 to 31 March 2020, 727,250 (2020: nil)  new Ordinary shares were held by an Employee Benefit Trust, the beneficiaries of which are primarily senior employees. Such new Ordinary shares vest if the employees remain in employment with the Company at the vesting date, being 1 July 2021 (subject to certain other provisions including regulations, good-leaver, take-over and Remuneration Committee discretion provisions). As at 31 March 2021, the Employment Benefit Trust was consolidated by the Company and the 727,250 shares are recorded as Own Shares within equity.

 

Employee Share Participation Plan

During the prior year, the Company re-introduced the Employee Share Participation Plan (the 'Plan') for subscription. The Plan is intended to promote the long term growth and profitability of Accsys by providing employees with an opportunity to acquire an ownership interest in new Ordinary shares ('Shares') in the Company as an additional benefit of employment. Under the terms of the Plan, the Company issues these Shares to a trust for the benefit of the subscribing employees. The Shares are released to employees after one year, together with an additional Share on a 1 for 1 matched basis provided the employee has remained in the employment of Accsys at that point in time (subject to good leaver provisions). The Plan is in line with industry approved employee share plans and is open for subscription by employees once a year following release of the interim financial results. The maximum amount available for subscription by any employee is €5,000 per annum. In February 2021 various employees subscribed for a total of 195,524 Shares at an acquisition price of €1.43 per Share. 

Also during the year, 1 for 1 Matching shares were awarded in respect of subscriptions that were made in the previous year as a result of the participants continuing to remain in employment at the point of vesting. 198,219 matching shares were issued to employees in February 2021.

 

16.       Intangible assets

 

		Internal	Intellectual
		Development	property
		costs	rights	Goodwill	Total
		€'000	€'000	€'000	€'000
Cost
At 1 April 2019		6,796	73,582	4,231	84,609
Additions		391	469	-	860
At 31 March 2020		7,187	74,051	4,231	85,469
Additions		277	405	-	682
At 31 March 2021		7,464	74,456	4,231	86,151
Accumulated amortisation
At 1 April 2019		1,796	72,023	-	73,819
Amortisation		350	314	-	664
At 31 March 2020		2,146	72,337	-	74,483
Amortisation		364	439	-	803
At 31 March 2021		2,510	72,776	-	75,286
Net book value
At 31 March 2021		4,954	1,680	4,231	10,865
At 31 March 2020		5,041	1,714	4,231	10,986
At 31 March 2019		5,000	1,559	4,231	10,790

 

 

 

Refer to note 17 for the recoverability assessment of these intangible assets.

 

 

 

17.       Property, plant and equipment

		Land and	Plant and	Office
		buildings	machinery	equipment	Total
		€'000	€'000	€'000	€'000
Cost or valuation
At 01 April 2019		17,976	103,676	2,685	124,337
Additions		-	22,015	555	22,570
Foreign currency translation profit		-	-	3	3
At 31 March 2020		17,976	125,691	3,243	146,910
Additions		-	20,742	651	21,393
Foreign currency translation (loss)		-	-	(9)	(9)
At 31 March 2021		17,976	146,433	3,885	168,294
Accumulated depreciation
At 01 April 2019		279	19,409	1,244	20,932
Charge for the year		358	3,287	207	3,852
Foreign currency translation profit		-	-	3	3
At 31 March 2020		637	22,696	1,454	24,787
Charge for the year		358	3,249	351	3,958
Foreign currency translation (loss)		-	-	(8)	(8)
At 31 March 2021		995	25,945	1,797	28,737
Net book value
At 31 March 2021		16,981	120,488	2,088	139,557
At 31 March 2020		17,339	102,995	1,789	122,123
At 1 April 2019		17,697	84,267	1,441	103,405

 

Plant and machinery assets with a net book value of €80,853,000 are held as assets under construction and are not depreciated, relating to the Hull Plant, and €5,716,000 relating to the further expansion of the Arnhem Plant (31 March 2020: €66,409,000 relating to the Hull Plant, €725,000 relating to the Arnhem Plant).

 

The carrying value of the property, plant and equipment, internal development costs and intellectual property rights are split between two cash generating units (CGUs), representing the Accoya^® and Tricoya^® segments and the carrying value of Goodwill is allocated to the Accoya^® segment. The recoverable amount of these CGUs are determined based on a value-in-use calculations which uses cash flow projections based on latest board approved financial budgets. Cash flows have been projected for a period of 12 years, including a five year forecast and seven years of 1.8% growth rate plus assumptions concerning a terminal value discounted at a pre-tax discount rate of 10.5% (2020: 10.0%) to determine their present value.

The key assumptions used in the value in use calculations are:

-       the manufacturing revenues, operating margins & future licence fees estimated by management,

-       the completion of construction of additional facilities on time (and associated output),

-       the long term growth rate and

-       the discount rate.

 

The Directors have determined that there has been no impairment to either CGU. The Directors have considered whether a reasonably possible change in assumptions may result in an impairment.  The CGU most susceptible to an impairment given a change in assumptions is the Tricoya^® CGU. Key assumptions applied to this CGU were as follows:

-       a discount rate of 10.5%,

-       a long-term sales growth rate of 1.8%, and

-       Gross margin of approximately 40%.

The headroom in the value-in-use model for this CGU would be reduced to nil if the following adverse changes to those key assumptions were made in isolation:

-       a 2.1% increase to the discount rate,

-       a 1.2% reduction in the long-term sales growth rate and

-       a 5% decrease to Gross margin.

-       an increase of 130% above assumed remaining costs to complete the plant

 

 

18.       Leases

 

(i) Amounts recognised in the statement of financial position

 

The statement of financial position shows the following amounts relating to leases:

				Right-of-use assets
				2021	2020
				€'000	€'000
Right-of-use assets
Properties				4,113	3,708
Equipment				671	745
Motor Vehicles				75	83
				4,859	4,536
				Minimum lease payments
				2021	2020
				€'000	€'000
Amounts payable under lease liabilities:
Within one year				1,208	1,044
In the second to fifth years inclusive				2,631	2,787
After five years				4,369	3,441
Less: future finance charges				(2,676)	(2,151)
Present value of lease obligations				5,532	5,121

 

Additions to the right-of-use assets during the financial year were €1,303,000 (2020: €1,542,000).

 

(ii) Amounts recognised in the statement of profit and loss

 

The statement of profit and loss shows the following amounts relating to leases:

 

The Group's leasing activities and how these are accounted for:

				2021	2020
				€'000	€'000
Depreciation charge of right-of-use assets
Properties				664	783
Equipment				279	258
Motor Vehicles				33	26
				976	1,067
Interest expense (included in finance cost)				483	408
Expense relating to short-term leases (included in cost of goods sold and administrative expenses)				30	27
Expense relating to leases of low-value assets that are not shown above as short-term leases (included in administrative expenses)				2	1
Expense relating to variable lease payments not included in lease liabilities (included in administrative expenses)				-	-
The total cash outflow for leases in 2021 was €1,308,000 (2020: €1,022,000)

 

The Group leases various offices, land, equipment and cars. Rental contracts are typically made for fixed periods of 1-10 years, although, if appropriate, a longer term may be entered into. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

 

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right of use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

 

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

-      Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

-      Variable lease payments that are based on an index or a rate;

-      Amounts expected to be payable by the lessee under residual value guarantees;

-      The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

-      Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

 

The lease payments are discounted using the Group's incremental borrowing rate, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar economic environment within similar terms and conditions.

Right of use assets are measured at cost comprising the following:

-      The amount of initial measurement of lease liability;

-      Any lease payments made at or before the commencement date less any lease incentives received;

-      Any initial direct costs; and

-      Restoration costs.

 

Payments associated with short-term leases and leases of low value are recognised on a straight-line basis as an expense in the statement of comprehensive income. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise of small items of office furniture and equipment.

 

19.       Financial asset at fair value through profit or loss

 

				2021	2020
				€'000	€'000
Shares held in Cleantech Building Materials PLC				-	-

 

 

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.

 

There continues to be no active market for these shares as at 31 March 2021, and there is significant uncertainty over the future of Cleantech Building Materials PLC. As such a reliable fair value cannot be calculated and the investment is carried at a nil fair value (2020: nil).                                                                                                                                                                                                                                                                                                                         

 

The carrying value is similar to the previous accounting treatment under IAS 39, under which the historical cost of the listed shares of €10m was offset by a provision for impairment of the entire balance of €10m, resulting in a nil carrying value.

 

A total of 498,522 shares were held at 31 March 2021.

 

20.       Deferred taxation

 

The Group has a deferred tax asset of €nil (2020: €nil) relating to trading losses brought forward.

 

The Group also has an unrecognised deferred tax asset of €30m (2020: €26m) which is largely in respect of trading losses of the UK subsidiaries. The deferred tax asset has been recognised only to the extent of the deferred tax liability, 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.

 

21.       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.

 

 

 

22.       Inventories

 

				2021	2020
				€'000	€'000
Raw materials and work in progress				7,339	10,660
Finished goods				4,923	6,272
				12,262	16,932

 

The amount of inventories recognised as an expense during the year was €60,907,693 (2020: €57,167,975). The cost of inventories recognised as an expense includes a net credit of €2,739 (2020: credit of €47,982) in respect of the inventories sold in the period which had previously been written down to net realisable value.

 

23.       Trade and other receivables

				2021	2020
				€'000	€'000
Trade receivables				9,836	8,611
Other receivables				575	3,520
VAT receivable				1,013	2,552
Prepayments				890	625
				12,314	15,308

 

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 €1,597,056 of the trade and other receivables denominated in US Dollars (2020: €1,246,000).

 

The age of receivables past due but not impaired is as follows:

				2021	2020
				€'000	€'000
Up to 30 days overdue				409	806
Over 30 days and up to 60 days overdue				6	18
Over 60 days and up to 90 days overdue				-	-
Over 90 days overdue				49	5
				464	829

 

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 €25,002,000 (2020: €25,002,000) due from Diamond Wood.

 

Movement in provision for doubtful debts:

				2021	2020
				€'000	€'000
Balance at the beginning of the year				25,239	25,002
Net (decrease)/increase of impairment				(237)	237
Balance at the end of the year				25,002	25,239

 

24.       Trade and other payables

 

				2021	2020
				€'000	€'000
Trade payables				9,451	7,827
Other taxes and social security payable				1,104	779
Accruals and deferred income				19,255	8,261
				29,810	16,867

 

The increase in Trade and other payables primarily relates to the timing of accruals associated with the construction of the Hull plant with actual cash payments being lower, reflecting the timing of milestone payments in relation to construction.

 

25.       Share capital

 

 

				2021	2020
				€'000	€'000
Allotted - Equity share capital
169,324,264 Ordinary shares of €0.05 each (2020: 162,288,155 Ordinary shares of €0.05 each)				8,466	8,114
				8,466	8,114

In year ended 31 March 2020:

 

On 23 December 2019, 27,239,764 Firm Placing Shares and 16,855,474 Open Offer Shares were issued as part of the capital raise to fund the Arnhem plant expansion, completion of the Tricoya^® plant in Hull, preliminary work in the United States and working capital requirements related to these activities. The Shares were issued at a price of €1.05 per Ordinary share, raising gross proceeds of €46.3 million (before expenses).

 

During the year, the Group re-introduced the Employee Share Participation Plan (see note 15 for further details). In February 2020 various employees subscribed for a total of 204,612 Shares at an acquisition price of €1.095 per Share, with these shares issued to a trust, to be released to the employees after one year, together with an additional share on a matched basis (subject to continuing employment within the Group).

 

In the prior year, 173,915 Shares were issued to the Employee Benefit Trust ('EBT') with these vesting on 1 July 2019. Of these Shares, beneficiaries elected to sell 106,448 Shares in the market, with a sale date of 31 July 2019.

 

In the year ended 31 March 2021:

 

1,259,449 shares were issued on 12 May 2020 following the exercise of nil cost options, granted under the Company's 2013 Long Term Incentive Plan ('LTIP').

 

727,250 shares were issued to an Employee Benefit Trust ('EBT') on 29 June 2020 at nominal value, in lieu of cash bonuses for the year ended 31 March 2020. These shares will vest on 1 July 2021, subject to the employees continuing employment within the Group.

 

In February 2021, following the subscription by employees in the prior year for shares under the Employee Share Participation Plan (the 'Plan'), 198,219 shares were issued as "Matching Shares" at nominal value under the Plan.

 

In addition, various employees newly subscribed under the Plan for 195,524 Shares at an acquisition price of €1.43 per share, with these shares issued to a trust, to be released to the employees after one year, together with an additional share on a matched basis (subject to continuing employment within the Group).

 

On 26 March 2021, the Company announced that Lombard Odier Asset Management (USA) Corp on behalf of 1798 Volantis Catalyst Fund II Ltd ('Volantis') exercised options over a total of 4,655,667 ordinary shares in the Company for a total consideration of £2,779,898.77 (exercise price of £0.5971 per ordinary share) (see note 30 to the financial statements).

 

26. Other reserves

	Capital redemp- tion reserve	Merger reserve	Hedging Effective-ness reserve	Other reserve	Total Other reserves
	€000	€000	€000	€000	€000
Balance at 01 April 2019	148	106,707	317	2,349	109,521
Total comprehensive (expense) for the period	-	-	(280)	-	(280)
Issue of subsidiary shares to non-controlling interests	-	-	-	3,310	3,310
Balance at 31 March 2020	148	106,707	37	5,659	112,551
Total comprehensive income for the period		-	192	-	192
Issue of subsidiary shares to non-controlling interests	-	-	-	1,892	1,892
Balance at 31 March 2021	148	106,707	229	7,551	114,635

 

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^® & Corporate segments (see note 1).

 

The other reserve represents the amounts received for subsidiary share capital from non-controlling interests net with the carrying amount of non-controlling interests issued (see note 27).

 

27.       Transactions with non-controlling interests

 

In the year ended 31 March 2020:

 

On 25 May 2019, TTL issued 252,464 shares to Titan Wood Limited. On 25 November 2019, TTL issued 238,024 shares to Titan Wood Limited for a consideration of €0.5m. An additional 61,976 shares were issued to non-controlling interests for a consideration of €0.1m. On 23 December 2019, TTL issued 4,620,156 shares to Titan Wood Limited for a consideration of €9.2m, and an additional 1,401,523 shares were issued in consideration for continued provision of discounted Accoya^® to MEDITE for market seeding purposes. 887,643 shares were issued to non-controlling interests for a consideration of €1.8m. As a result the non-controlling interests' shareholdings were amended to:

               

BP Ventures (8.6%), MEDITE (10.2%), BGF (2.2%), Volantis (1.2%)

 

On 23 December 2019, Tricoya UK issued 11,015,599 Ordinary shares to Tricoya Technologies Ltd for a consideration of €11.0m, and an additional 4,322,394 shares were issued in consideration for continued provision of discounted Accoya^® to MEDITE for market seeding purposes. 7,268,573 shares were issued to non-controlling interests for consideration of €7.3 million. As a result the non-controlling interests' shareholdings were amended to:

 

                               BP Chemicals (30.9%, MEDITE 6.2%)

 

In the year ended 31 March 2021:

 

On 15 June 2020, TTL issued 281,919 shares to Titan Wood Limited for a consideration of €0.6m. An additional 68,081 shares were issued to non-controlling interests for a consideration of €0.1m.  On 2 July 2020, TTL issued 90,956 shares to Titan Wood Limited for a consideration of €0.2m. An additional 416,694 shares were issued to non-controlling interests for a consideration of €0.8m and an additional 495,310 shares were issued in consideration for continued provision of discounted Accoya^® to MEDITE for market seeding purposes. On 29 October 2020, TTL issued 1,862,356 shares to Titan Wood Limited for a consideration of €3.7m. An additional 498,987 shares were issued to non-controlling interests for a consideration of €1.0m. On 31 December 2020, BP Ventures' share capital of TTL was acquired by INEOS Acetyls Investments Limited ("INEOS"). As a result the non-controlling interests' shareholdings were amended to:

               

INEOS (8.5%), MEDITE (11.3%), BGF (2.6%), Volantis (1.1%)

 

On 17 July 2020, Tricoya UK issued 486,572 Ordinary shares to Tricoya Technologies Ltd for a consideration of €1.0m. An additional 1,600,530 shares were issued to non-controlling interests for consideration of €1.6m. On 29 October 2020, Tricoya UK issued 3,972,686 Ordinary shares to Tricoya Technologies Ltd for a consideration of €4.0m. An additional 2,452,798 shares were issued to non-controlling interests for consideration of €2.5m. On 31 December 2020, BP Chemicals' share capital of Tricoya UK was acquired by INEOS. As a result the non-controlling interests' shareholdings were amended to:

 

                               INEOS (30.0%, MEDITE 8.2%)

 

The total carrying amount of the non-controlling interests in TTL and Tricoya UK at 31 March 2021 was €37.17m (2020: €34.44m).

 

The Group recognised an increase in other reserves as summarised below.

				2021	2020
				€'000	€'000
Opening Balance				6,235	2,925
Carrying amount of non-controlling interests issued				(4,112)	(5,857)
Consideration paid by non-controlling interests				6,004	9,167
Share issue costs relating to non-controlling interests				-	-
Excess of consideration paid recognised in Group's equity				8,127	6,235

 

 

 

28.       Investment in Joint Venture

 

In August 2020, Accsys together with Eastman Chemical Company formed a new company, Accoya USA LLC, with the intention to construct and operate an Accoya^® wood production plant to serve the North American market.

 

The new company has been formed with Accsys having a 60% equity interest and Eastman having a 40% equity interest, with the two parties assessed to jointly control the entity as defined under IFRS 11 - Joint arrangements. Accoya USA is accounted for as a joint venture and equity accounted for within the financial statements. A technology licence has also been entered into with Accoya USA LLC so that front-end engineering and design for the proposed plant in the USA can be completed.

 

The plant is being designed to initially produce approximately 40,000 cubic metres of Accoya^® per annum and to allow for cost-effective expansion.

 

A decision whether to proceed to the next stage with plant construction, and as to funding, is targeted for summer 2021, following the completion of the initial engineering and design work.

 

The carrying amount of the equity-accounted investment is as follows:

				2021	2020
				€'000	€'000
Investment in Accoya® USA				1,070	-
Less: Accsys proportion (60%) of Licence fee received				(600)	-
Loss for the year				(144)	-
Closing balance				326	-

 

29.       Commitments under loan agreements

				2021	2020
				€'000	€'000
Amounts payable under loan agreements:
Within one year				9,664	5,265
In the second to fifth years inclusive				44,626	50,967
In greater than five years				-	1,081
Present value of loan obligations				54,290	57,313
Within one year				12,012	5,644
In the second to fifth years inclusive				49,714	61,855
After five years				-	1,120
Less future finance charges				(7,436)	(11,306)
Present value of loan obligations				54,290	57,313

 

The change in total borrowings in the year of €3m primarily related to the €3.2m termination fee associated with the early termination of the Cerdia commercial agreements, which was deducted from the Cerdia loan on 1 April 2020.

 

Facilities relating to purchase of Arnhem land and buildings:

On 1 August 2018 the Group entered into a package of facilities to fully finance the purchase of the land and buildings in Arnhem. The partially amortising package of loans includes the following:

-       €14.0m loan with ABN Amro Bank. The loan is partially repayable over a five year term with a final payment of €9.25m. Interest is fixed at 3% and the loan is secured on the land and buildings.

-       €5.0m lease loan with ABN Asset Based Finance is repayable over a five year term with an implied interest rate of approximately 3%. The loan is secured on the first two Accoya® reactors.

-       €4.0m loan with Bruil, the seller and previous landlord. The balance is repayable from July 2021 to July 2023 with interest fixed at 5%. The loan is unsecured.

 

Loan Notes:

On 29 March 2017 the Group issued £16.3 million (€18.4 million) of unsecured fixed rate loan notes. £10.5 million of Loan Notes in principal were issued to Business Growth Fund ('BGF'), with £5.8 million in principal issued to Volantis. The BGF loan notes are subject to a 7% fixed interest rate for the duration of their term and the Volantis loan notes are subject to a 7% fixed interest rate until 31 December 2018, with the interest rate fixed at 9% thereafter. Interest is rolled up until 31 December 2018 on both loans, with further roll up of interest on the Volantis loan until six-monthly redemption payments of both loans commence on 31 December 2021 and end on 30 June 2023.

 

BGF is an investment company that provides long-term equity funding to growing UK companies to enable them to execute their strategic plans. Volantis is a global asset management firm specialising in alternative investment strategies and is owned by Lombard Odier.

 

Cerdia Production Facility:

 

The €9.5 million term loan facility with Cerdia Production GmbH was used to design, procure and build the Arnhem plant's third reactor. This facility is secured against the third reactor of the Arnhem chemical plant and associated assets and is subject to interest at 7.5% per annum. At 31 March 2021, the Group had €4.2m (2020: €8.3m) borrowed under this facility. Quarterly repayments of the loan commenced on 21 December 2018 until November 2025. 

In a prior year, the Group entered into an agreement with Cerdia Producktions GmbH ("Cerdia") under which Accsys took on responsibility for commercial activities under agreements with Cerdia relating to Accoya^® wood, which terminated as of 1 April 2020 (the "Termination Agreement"). Under the terms of the Termination Agreement, payments to Accsys included fees of €3.2 million, which was recognised as an exceptional item in the year ended 31 March 2020. The €3.2 million was deducted from the loan balance on 1 April 2020, with subsequent repayments for the remaining term of the loan being reduced accordingly.

 

Tricoya^® facility:

 

On 29 March 2017 the Company's subsidiary, Tricoya UK Limited entered into a six-year €17.2 million finance facility agreement with Natwest Bank 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 UK Limited. At 31 March 2021, the Group had €9.3m (2020: €8.7m) borrowed under the facility. The facility is to be drawn down as required, and 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

The working capital facility with ABN Commercial Finance is a €6.0m credit facility secured upon the receivables and inventory of the Accoya^® manufacturing business committed for a period of 5 years. At 31 March 2021, the facility was undrawn (2020: undrawn). 

 

Bank guarantee facility

The facility with ABN AMRO Bank N.V. is a contingent liability facility enabling the Group to issue bank guarantees in order to support the working capital and other operational commitments of the Group with a limit of €1.5m.

 

Both facilities are subject to interest at 2% above the ABN AMRO base rate.  

 

Reconciliation to net debt:

 

				2021	2020
				€'000	€'000
Cash and cash equivalents				47,598	37,238
Less:
Amounts payable under loan agreements				(54,290)	(57,313)
Amounts payable under lease liabilities (note 18)				(5,532)	(5,121)
Net debt				(12,224)	(25,196)

  

 

 

 

 

		Liabilities from financing activities			Other assets
		Borrowings	Leases	Sub-total	Cash	Total
		€'000	€'000	€'000	€'000	€'000
Net debt as at 31 March 2019		(56,909)	(2,021)	(58,930)	8,857	(50,073)
Adjustment on initial application of IFRS 16		-	(2,247)	(2,247)	-	(2,247)
Net debt as at 01 April 2019		(56,909)	(4,268)	(61,177)	8,857	(52,320)
Cash flows		267	1,022	1,289	28,416	29,705
New leases		-	(1,542)	(1,542)	-	(1,542)
Foreign exchange adjustments		626	4	630	(35)	595
Other changes		(1,297)	(337)	(1,634)	-	(1,634)
Net debt as at 31 March 2020		(57,313)	(5,121)	(62,434)	37,238	(25,196)
Cash flows		2,474	1,308	3,782	10,294	14,076
Decrease in Cerdia Loan from Termination fee		3,200	-	3,200	-	3,200
New leases		-	(1,303)	(1,303)	-	(1,303)
Foreign exchange adjustments		(900)	(76)	(976)	66	(910)
Other changes		(1,751)	(340)	(2,091)	-	(2,091)
Net debt as at 31 March 2021		(54,290)	(5,532)	(59,822)	47,598	(12,224)

 

30.       Equity options

 

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 had been converted to Options.

 

On 26 March 2021, the Company announced the Options issued to Volantis had been exercised in full for a total consideration of £2,779,898.77 payable to the Company, representing an exercise price per Ordinary Share of £0.62 as agreed on 29 March 2017 (adjusted to £0.5971 following a subsequent share issuance in April 2017).

 

At 31 March 2021 a total 8,449,172 Options exist attributable to BGF. This represents 5.0% (2020: 8.1%) of the issued share capital of the Company as at 31 March 2021.

 

 

31.       Financial instruments

 

Financial instruments

 

Lease liabilities

 

Lease creditors of €5,532,000 as at 31 March 2021 (2020: €5,121,000) relates to various offices, land, equipment and cars that the Group leases (see note 18).

 

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 2021 (2020: €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. 

 

Financial Instruments by category
2021/ € '000	Fair value hierarchy	At amortised cost	At fair value though profit or loss	At fair value through OCI	Total
Financial assets
Trade and other receivables		10,411	-	-	10,411
Financial asset investments	Level 2	-	-	-	-
Derivative financial instruments (FX forward)	Level 2	-	134	-	134
Cash and cash equivalents		47,598	-	-	47,598
Total		58,009	134	-	58,143
2020/ € '000	Fair value hierarchy	At amortised cost	At fair value though profit or loss	At fair value through OCI	Total
Financial assets
Trade and other receivables		12,131	-	-	12,131
Financial asset investments	Level 2	-	-	-	-
Derivative financial instruments (FX forward)	Level 2	-	-	-	-
Cash and cash equivalents		37,238	-	-	37,238
Total		49,369	-	-	49,369
2021/ € '000	Fair value hierarchy	At amortised cost	At fair value though profit or loss	At fair value through OCI	Total
Financial liabilities
Borrowings - loans		(54,290)	-	-	(54,290)
Lease liabilities		(5,532)	-	-	(5,532)
Trade and other payables		(9,451)	-	-	(9,451)
Derivative financial instruments (FX forward)	Level 2	-	-	-	-
Total		(69,273)	-	-	(69,273)
2020/ € '000	Fair value hierarchy	At amortised cost	At fair value though profit or loss	At fair value through OCI	Total
Financial liabilities
Borrowings - loans		(57,313)	-	-	(57,313)
Lease liabilities		(5,121)	-	-	(5,121)
Trade and other payables		(7,827)	-	-	(7,827)
Derivative financial instruments (FX forward)	Level 2	-	(330)	-	(330)
Total		(70,261)	(330)	-	(70,591)

 

Money market deposits are held at financial institutions with high credit ratings (Standard & Poor's rating of A).

 

All assets and liabilities mature within one year except for the lease liabilities, for which details are given in note 18 and loans, for which details are given in note 29.

 

Trade payables are payable on various terms, typically not longer than 30 to 60 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 and has purchased fx forward contracts with a nominal amount of £5.85m (2020: nominal amount of £5.85m) to reflect the expected costs associated with the construction of the plant in Hull and are accordingly 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, Cerdia, ABN Amro and Bruil, together with the remaining Arnhem finance lease and the lease of the office fit out and furniture in London. The interest rate in respect of the loan facility agreed with Natwest 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 interest rate hedging arrangements, although will review the need to do so in respect of the variable interest rate loan facility with Natwest Bank.

 

Credit risk management

 

The Group is exposed to credit risk due to its trade receivables receivable 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 23). 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 23.

 

The Group has credit risk from financial institutions. Cash deposits are placed with a group of financial institutions with suitable credit ratings in order to manage credit risk with any one financial institution.

 

Liquidity risk management

 

Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profile of financial assets and liabilities.

 

Fair value of financial instruments

 

In the opinion of the Directors, there is no material difference between the book value and the fair value of all financial assets and financial liabilities.

 

 

32.       Capital Commitments

				2021	2020
				€'000	€'000
Contracted but not provided for in respect of property, plant and equipment				10,808	10,859

 

Included in the above, are amounts relating to the Engineering, Procurement and Construction contracts relating to the Tricoya^® plant under construction in Hull and committed items related to the Reactor 4 expansion project in Arnhem.

 

33.       Events occurring after 31 March 2021

 

Capital raise

In May 2021, Accsys completed a successful Placing and open offer for an issue of shares in the company, raising gross proceeds of approximately €37 million. The net proceeds are to be used primarily to fund the Group's investment in expanding its Accoya^® business into North America through the construction of a new Accoya^® USA plant, through its joint venture with Eastman Chemical Company, as well as to provide additional capital to support the Company's continued growth and ongoing development.

 

Termination letter received from Lead contractor on Tricoya Hull plant construction

 

In early June 2021, we received a notice from the lead contractor responsible for the delivery of the plant, Engie Fabricom UK Limited, purporting to terminate the engineering, procurement and construction (EPC) agreement for the project by reason of force majeure arising out of the COVID-19 pandemic.

 

With the contract now terminated, Engie Fabricom has spent the last two weeks demobilising from the site, ensuring that the handover of the site to Accsys is completed safely and securely. Work has commenced to develop the detailed plans necessary to complete the remaining items of construction and commissioning of the plant. Given the relatively advanced status of the project, we are now evaluating the potential to project manage the final works directly and may not need to appoint another lead contractor.  Our team is conducting a comprehensive GAP analysis which will be completed following obtaining full access to the site, which is expected this week, together with receipt of the project documentation held by Engie Fabricom. This will enable us to validate the remaining works, costs, timeline and people required to complete construction and for commissioning required for full operation of the plant to be carried out. Once this evaluation has been completed, we shall update the market with our expectations for the start-up of the plant and likely remaining associated costs to completion.