Growing and investing

Accsys Technologies 26 November 2021 Update
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Accsys Technologies

Growing and investing

H122 results

General industrials

26 November 2021

Price

161p

Market cap

£310m

€1.19/£

Core net cash (€m) at end September 2021 excluding leases

8.1

Shares in issue

192.4m

Free float

99.3%

Code

AXS

Primary exchange

LSE

Secondary exchange

Euronext Amsterdam

Share price performance

%

1m

3m

12m

Abs

2.7

1.9

52.8

Rel (local)

1.5

0.8

32.3

52-week high/low

188p

106p

Business description

Accsys Technologies is a chemical technology company focused on the development and commercialisation of a range of transformational technologies based on the acetylation of solid wood and wood elements for use as high-performance, environmentally sustainable construction materials.

Next event

FY22 year end

March 2022

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Accsys Technologies is a research client of Edison Investment Research Limited

Ongoing strong demand remains encouraging for Accsys and investment to support future growth is also an indicator of confidence in the outlook, in our view. The broader strategic plan – including well-flagged and material capacity expansion – is intact and our earnings expectations are materially as before. Accsys is at a key business development stage and poised to enter a significant earnings growth phase.

Year end

Revenue (€m)

EBITDA*
(€m)

PBT*
(€m)

EPS*
(€)

P/E
(x)

EV/EBITDA
(x)

03/20

90.9

5.9

(2.2)

(0.01)

N/M

47.9

03/21

99.8

9.3

1.1

0.01

N/M

30.1

03/22e

114.0

10.4

0.3

0.00

N/M

39.6

03/23e

151.3

27.6

12.3

0.04

44.5

13.4

Note: *EBITDA (pre IFRS 16 from FY21), PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Controlled progress in H122

Accoya wood volumes rose by c 12% in H122 (against a COVID-dampened H121) and Arnhem effectively operated at full capacity throughout. The 31% group revenue uplift clearly benefited from firmer pricing, although the manufacturing margin (at 31%) was diluted by mix effects. The 20% uplift in gross profit was reinvested into opex – especially staff at all levels – with an eye on future growth leaving H1 EBIT unchanged y-o-y. Period-end net cash (pre IFRS 16) was c €8m after fresh net equity of c €35 and an investment-led underlying outflow of c €22m. The funds raised in May are largely for a new US JV investment while capex spend and working capital absorption are also to support business growth. Accsys held c €61m gross cash at the period end, providing liquidity to progress projects further, complemented by newly refinanced bank facilities, as announced in October.

Outlook confidence

Management expectations for FY21 are unchanged and the Arnhem expansion (fourth reactor) and Hull plant commissioning (new Tricoya facility) are on track for Q422 and July 2022 respectively. We also believe that the decision to proceed with a new US Accoya facility is imminent. Hence and as trailed in our September note, Accsys is well placed operationally and strategically to pursue its growth aspirations with a firm demand backdrop. While we expect net debt (pre IFRS16) to rise to c €46m by the end of FY22, the underlying assets created are to progressively feed into materially higher profitability, starting in FY23.

Valuation: Building momentum

Accsys’s share price has followed a steady upward trend in 2021 punctuated by periods of sharp outperformance/reversion to trend; it now stands c 15% up on the year (versus c 10% for the FTSE All-Share Index). Consistent with our previous note, we believe that the current share price can be justified by earnings and cash flows from the Arnhem/Accoya operations on a standalone basis. For the record, on our estimates (which include Arnhem and Hull profit contributions), Accsys is trading on FY24e P/E and EV/EBITDA multiples of 24.5x and 8.4x respectively.

Exhibit 1: Financial summary

€m

2015

2016

2017

2018

2019

2020

2021

2022e

2023e

2024e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

46.077

52.769

56.529

60.911

75.153

90.909

99.803

113.960

151.339

193.223

Cost of Sales

 

 

(33.842)

(34.597)

(42.175)

(47.270)

(56.517)

(63.402)

(66.715)

(77.034)

(95.887)

(122.105)

Gross Profit

 

 

12.235

18.172

14.354

13.641

18.636

27.507

33.089

36.927

55.451

71.118

EBITDA*

 

 

(1.275)

2.384

(1.484)

(3.500)

0.903

5.880

9.291

10.383

27.608

41.300

Operating Profit (before GW and except.)

 

(3.750)

(0.288)

(4.197)

(6.577)

(3.063)

1.364

4.530

4.149

17.166

29.945

Intangible Amortisation

 

 

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

Exceptionals

 

 

(2.670)

0.000

0.033

(1.650)

(1.440)

3.661

(0.797)

0.080

0.000

0.000

Other

 

 

(1.098)

0.000

0.000

0.000

0.000

0.000

(0.144)

(0.246)

(0.364)

(2.014)

Operating Profit

 

 

(7.518)

(0.288)

(4.164)

(8.227)

(4.503)

5.025

3.589

3.983

16.802

27.932

Net Interest

 

 

(0.135)

(0.178)

(0.300)

(2.174)

(3.117)

(3.517)

(3.249)

(3.596)

(4.546)

(4.546)

Profit Before Tax (norm)

 

 

(3.885)

(0.466)

(4.497)

(8.751)

(6.180)

(2.153)

1.137

0.307

12.256

23.386

Profit Before Tax (statutory)

 

 

(7.653)

(0.466)

(4.463)

(10.401)

(7.620)

1.508

0.340

0.387

12.256

23.386

Tax

 

 

(0.607)

(0.402)

(0.666)

0.251

0.782

(0.631)

(1.251)

(1.554)

(4.053)

(6.445)

Profit After Tax (norm)

 

 

(5.590)

(0.868)

(5.163)

(8.500)

(5.397)

(2.784)

(0.114)

(1.247)

8.202

16.941

Profit After Tax (statutory)

 

 

(8.260)

(0.868)

(5.129)

(10.150)

(6.837)

0.877

(0.911)

(1.167)

8.202

16.941

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

88.5

89.6

90.4

111.2

116.3

132.7

164.9

189.3

192.4

192.4

EPS - normalised (€)

 

 

(0.06)

(0.01)

(0.05)

(0.07)

(0.04)

(0.01)

0.01

(0.00)

0.04

0.08

EPS - statutory (€)

 

 

(0.09)

(0.01)

(0.05)

(0.08)

(0.05)

0.02

0.00

(0.00)

0.04

0.08

Dividend per share (€)

 

 

0.0

0.0

0.0

0.00

0.00

0.00

0.00

0.00

0.00

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

26.6

34.4

25.4

22.4

24.8

30.3

33.2

32.4

36.6

36.8

EBITDA Margin (%)

 

 

-2.8

4.5

-2.6

-5.7

1.2

6.5

9.3

9.1

18.2

21.4

Operating Margin (before GW and except.) (%)

 

-8.1

-0.5

-7.4

-10.8

-4.1

1.5

4.5

3.6

11.3

15.5

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

29.562

31.252

32.520

71.488

116.062

137.645

155.607

216.184

219.679

216.160

Intangible Assets

 

 

10.014

10.980

10.839

10.657

10.790

10.986

10.865

10.697

10.289

9.881

Tangible Assets

 

 

19.548

20.272

21.681

60.831

105.272

126.659

144.416

174.097

178.145

175.280

Investments

 

 

0.000

0.000

0.000

0.000

0.000

0.000

0.326

31.390

31.246

31.000

Current Assets

 

 

24.066

22.590

61.268

63.505

36.524

69.761

72.491

38.392

49.819

78.100

Stocks

 

 

7.894

8.345

11.796

13.125

14.008

16.932

12.262

16.159

16.113

20.519

Debtors

 

 

3.912

4.967

7.402

9.178

12.198

9.236

10.726

13.621

19.297

25.891

Cash

 

 

10.786

8.186

41.173

39.698

8.857

37.238

47.598

6.494

10.484

27.632

Current Liabilities

 

 

(10.701)

(9.842)

(14.599)

(21.414)

(26.419)

(23.961)

(42.285)

(42.355)

(49.074)

(56.897)

Creditors

 

 

(10.437)

(9.488)

(14.144)

(18.029)

(19.997)

(18.696)

(32.621)

(26.086)

(32.805)

(40.628)

Short term borrowings

 

 

(0.264)

(0.354)

(0.455)

(3.385)

(6.422)

(5.265)

(9.664)

(16.269)

(16.269)

(16.269)

Long Term Liabilities

 

 

(1.799)

(1.947)

(22.718)

(40.084)

(52.508)

(56.310)

(49.210)

(41.165)

(41.165)

(41.165)

Long term borrowings

 

 

(1.799)

(1.947)

(22.718)

(40.084)

(52.508)

(52.048)

(44.626)

(36.535)

(36.535)

(36.535)

Other long-term liabilities

 

 

0.000

0.000

0.000

0.000

0.000

(4.262)

(4.584)

(4.630)

(4.630)

(4.630)

Net Assets

 

 

41.128

42.053

56.471

73.495

73.659

127.135

136.603

171.056

179.258

196.199

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

(3.873)

0.452

(1.304)

(1.756)

(1.374)

2.213

20.130

6.326

26.271

35.821

Net Interest

 

 

(0.138)

(0.186)

(0.248)

(0.671)

(1.180)

(2.250)

(4.380)

(3.596)

(4.546)

(4.546)

Tax

 

 

0.263

0.229

(0.745)

(2.013)

1.674

0.165

0.071

(1.554)

(4.053)

(6.445)

Capex

 

 

(1.108)

(4.052)

(2.608)

(29.895)

(48.915)

(22.901)

(12.356)

(43.682)

(12.682)

(6.682)

Acquisitions/disposals

 

 

0.000

0.956

18.317

0.000

0.000

0.000

0.000

0.000

0.000

0.000

Financing

 

 

0.461

0.124

0.050

26.728

6.619

52.658

8.395

3.590

0.000

0.000

Dividends

 

 

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.000

Net Cash Flow

 

 

(4.395)

(2.477)

13.462

(7.607)

(43.176)

29.885

11.860

(38.916)

4.990

18.148

Opening net debt/(cash)

 

 

(13.050)

(8.723)

(5.885)

(18.000)

3.771

50.073

20.075

6.692

46.310

42.320

Finance leases

 

 

0.000

0.000

0.000

0.000

0.000

0.000

(1.308)

(1.000)

(1.000)

(1.000)

Other

 

 

0.068

(0.361)

(1.347)

(14.164)

(3.126)

0.113

2.831

0.298

(0.000)

0.000

Closing net debt/(cash)

 

 

(8.723)

(5.885)

(18.000)

3.771

50.073

20.075

6.692

46.310

42.320

25.172

IFRS 16 Leases

 

 

 

 

 

 

 

5.121

5.532

5.738

5.738

5.738

Source: Company accounts, Edison Investment Research. Note: *EBITDA is pre-IFRS 16. FY21 financing of €3.590m includes €34.590m receipts from new equity funding net of an expected €31.0m investment in a new US JV.


General disclaimer and copyright

This report has been commissioned by Accsys Technologies and prepared and issued by Edison, in consideration of a fee payable by Accsys Technologies. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Accsys Technologies and prepared and issued by Edison, in consideration of a fee payable by Accsys Technologies. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

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1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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