Aim-listed Accsys Technologies is a chemical technology company specialising in the acetylation of wood, a process that makes the wood stronger and prevents decay. Their primary focus is the production of Accoya solid wood and Tricoya wood elements, used for windows, doors, decking, cladding and other construction products.
Towards the end of last month (September 21), Accsys made a pre-AGM statement on recent progress, ahead of the interim financial report for the six months ended September 30 2017, which are expected to be released on November 22, 2017. There was mixed news on sales and production but this does not belie the notion that the company’s short and medium term plans for expansion are on track.
The update reports an increase in revenue from sales of Accoya to euros 22.5million an increase of 20 per cent in the five months to August 31 2017 compared to the same period last year (2016: euros 18.7m) .This represented 16,970 cubic metres of Accoya sold (2016: 14,187 cubic metres).The Accoya is manufactured at the company’s plant at Arnhem in the Netherland’s.
The statement, however, adds: “Demand continues to be strong, but as previously stated, we are now operating at full capacity. Further growth will therefore be constrained until the third reactor is complete”. The ‘third reactor’ refers to expansion at the Arnhem plant. The company reports that work in respect of the first phase of the expansion of Arnhem is progressing well. Full commissioning of the third reactor is expected later in this financial year. The new capacity should be available from the beginning of the next financial year (April 2018).
This should increase the company’s Accoya capacity to approximately 60,000 cubic metres, representing a significant increase on the 31,532 cubic metres of Accoya sold in the last financial year. (This excludes material sold to Medite for Tricoya)). The Tricoya plant in Hull is the other part of Accsys’s ambitious expansion plans. Described as the world’s first dedicated chip acetylation plant for the manufacture of Tricoya, it involved a deal with Medite, BP and financial partners BGF and Volantis, resulting in an increase of euros 41.2m to cash balances towards the end of financial year 2017. The Tricoya plant in Hull should be operational in the first half of 2019
According to broker Numis, the Tricoya agreement was ‘transformational’ for Accsys since it put the company on a sound financial footing. While the constraints on capacity have been a problem for Accsys, the company clearly believes they are now on their way to resolution.
However, according to the pre-AGM update the capacity contraints were not the only blips in progress in the post 2017 financial year end period. Production of Accoya decreased marginally to 16,124 cubic metres in the five months to August 31.Output was impacted in May by a one–off shut down relating to the expansion project. Also raw material costs increased in the four months to August 31 2017 compared to last year.
But these blips are relatively minor. The update does not predict profits and losses for the interims. Numis, however, is forecasting losses before interest, taxation, depreciation and amortisation (EBITDA) of euros 1.2m in the year ended on March 31 2017, which should fall to euros 1m in financial 2018 and go into the black to the tune of Euros 4.4m in financial 2019.
Shares in the £87.70m company were up 2.8 per cent at 82 pence on the day of the update and closed at 79p last evening.