Preliminary results for the year ended 31 March 2023
Year to 31 March 2023
Year to 31 March 2022
Underlying profit before tax2
Period end net debt
Accoya sales volume
· 34% growth in revenue at €162.0m, driven by continuing strong product demand, higher average sales prices and implementation of Energy Price Premium (EPP)
· 6% growth in Accoya sales volumes at 63,344m3:
o H2 sales volumes of 39,387m3 (H1: 23,957m3), representing growth of 64% on H1, and in excess of our targeted 50% increase
o Record production levels in Q4 reflecting reactors 1-3 returning to production following Arnhem plant shutdown in April and May and additional production from new fourth reactor from September 2022
· 4% points improvement in gross profit margin to 34%, remaining above target level of 30%
· 120% growth in underlying EBITDA at €22.9m, ahead of previous guidance, reflecting higher revenues and average sales prices offsetting increased raw material costs
· Strategic growth projects:
o Arnhem plant - commercial operation of reactor 4 commenced in September 2022, increasing Arnhem capacity by 33% and generating record volume production in Q4; production from the plant ramping up over two years
o Accoya USA JV - construction of new 43,000m3 plant progressing well but, as previously announced, has experienced some delay and cost inflation; commercial operation now expected mid-2024
o The Board has made good progress on the review of the Tricoya (Hull) plant and continues to believe in the underlying economics associated with completing the construction of Hull and will therefore continue to explore financing options to complete the plant's construction, including strategic partners and lending institutions
1Underlying EBITDA is defined as 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. (See note 3 to the financial statements).
2 Underlying profit before tax is defined as profit before tax and exceptionals and other adjustments
· Exceptional non-cash item of €86m in relation to Hull impairment and restructure of the Tricoya consortium
· Net debt increased by €16.9m in the year to €44.1m due to the planned investment into Accoya USA (€29m), capex investments of €29.8m into the Arnhem reactor 4 and Tricoya Hull projects (partially offset by a placing in May 2022 which raised net proceeds of approximately €19m), the reduction in the NatWest loan (€9.4m) and EBITDA generation during the year. The Company's net debt to EBITDA ratio has improved significantly on the prior year, now 1.9x (FY22: 2.6x)
· Outlook: The Group has made a good start to FY24, with performance in line with the Board's expectations
Stephen Odell, Executive Chair of Accsys, commented:
"Overall, I am pleased with our performance in FY23. Demand for Accoya and Tricoya has been strong throughout the year as our customers continue to seek products that deliver outstanding performance, durability and sustainability. This has enabled us to substantially offset the wider market pressures from raw materials costs and supply chain disruption through price increases.
"The year has not been without its challenges, however. In November we announced that while we had taken 100% control of the world-first Tricoya project in Hull, we also put the project into a hold period to assess future capability and funding options. The Board has made good progress on its review, details of which are given in this statement. In addition, while we have made good progress with our USA JV with Eastman, as previously communicated, construction of the plant at Kingsport has seen some delays and cost inflation. Both Accsys and Eastman remain fully committed to delivering the project, which will replicate the proven technology of our successful plant in Arnhem.
"In the coming year we expect to leverage the benefits from greater economies of scale associated with higher production volumes at our plants. FY24 will be a year during which we will implement actions to ensure the future sustainable growth of the business and to drive value creation for our shareholders. These actions include moving towards completion of the Kingsport plant, which will incur higher costs this year as we invest in people and infrastructure in readiness for start-up and making key investments in the core business to support higher volume production. In view of our increased capacity from the expansion of Arnhem and future capacity from Kingsport, and in light of some softening of price and demand in the global construction industry, we are dedicating more resource to our sales and marketing activity globally, particularly in the US, to prepare for a greater level of supply as this project comes online.
"We have made a good start to FY24, with performance in line with our expectations. With our new executive management team in place to drive the business forward in its next phase of growth, we are confident in delivering further financial and operational progress in the coming year, and in the longer-term demand and growth opportunity for Accoya and Tricoya."