Currency in GBP
Last close As at 07/06/2023
GBP0.75
▲ 2.00 (2.74%)
Market capitalisation
GBP160m
Research: Industrials
FY19 performance at the Arnhem Accoya facility has been robust with successful delivery of higher volumes from raised capacity. Construction delays at the new Hull Tricoya facility outside Accsys’s control are a near-term frustration and dampen EBITDA progression over our forecast horizon. That said, achieving a positive group EBITDA outturn in FY19 is a significant milestone. The current valuation is underpinned by Arnhem.
Written by
Toby Thorrington
Accsys Technologies |
EBITDA milestone achieved, Hull build delay |
FY19 year end |
General industrials |
23 April 2019 |
Share price performance
Business description
Next event
Analyst
Accsys Technologies is a research client of Edison Investment Research Limited |
FY19 performance at the Arnhem Accoya facility has been robust with successful delivery of higher volumes from raised capacity. Construction delays at the new Hull Tricoya facility outside Accsys’s control are a near-term frustration and dampen EBITDA progression over our forecast horizon. That said, achieving a positive group EBITDA outturn in FY19 is a significant milestone. The current valuation is underpinned by Arnhem.
Year end |
Revenue (€m) |
EBITDA* |
PBT* |
EPS* |
P/E |
EV/EBITDA |
03/17 |
56.5 |
(1.5) |
(4.5) |
(0.05) |
N/A |
N/A |
03/18 |
60.9 |
(3.5) |
(8.8) |
(0.07) |
N/A |
N/A |
03/19e |
72.4 |
2.0 |
(6.0) |
(0.04) |
N/A |
90.6 |
03/20e |
87.5 |
4.7 |
(4.0) |
(0.04) |
N/A |
41.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Arnhem achieving higher throughput rates
Selling 49,500m3 of Accoya volumes in FY19 infers that H2 production exceeded 28,000m3. The average monthly run rate then was not far short of the 5,000m3 required to reach the stated 60,000m3 pa capacity level. This trading performance has moved the group into an EBITDA positive position overall, consistent with our FY19 estimates. Although we have raised our Arnhem volume assumptions beyond FY19 to reflect this run rate, a higher Tricoya mix and slightly lower Tricoya volume overall (see below) cause us to moderate the rate of EBITDA increase for the next two years. At the PBT level, the impact is negligible in FY20 and now generates a small loss in FY21 (where we had a small profit previously). We remain encouraged by the supportive demand indicators following capacity expansion.
Six-month push back to Tricoya plant commissioning
The expected commissioning of the new Hull Tricoya facility and its associated revenue generation has been pushed back around six months into Q121 owing to the need for reinforcement work previously unforeseen by the main contractor. While disappointing, it is understood that there are no process or performance implications for the plant once operational. With capacity management, we believe that Arnhem is be able to substantially cover Tricoya volume requirements over this time, albeit at a lower gross contribution margin versus Accoya solid wood sales.
Valuation: Accoya benchmark, Tricoya upside
The company’s share price broke up through 100p in November, remaining above this level subsequently and is currently in the middle of its 2019 ytd trading range of 104–123p. Notwithstanding the near-term newsflow, our last valuation comments remain valid; rolling forward the 10-year time horizon by one year, the current share price is consistent with our DCF model for Arnhem/Accoya with an assumption of c 6% inflation (in prices and opex). In other words, the market is currently attributing no value to the Hull/Tricoya activities, which clearly provide upside potential. With Hull volume now expected to ramp up in FY21, Accsys is valued at 1.8x revenue and 19.3x EV/EBITDA in that year on our estimates.
Exhibit 1: Financial summary
€m |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019e |
2020e |
2021e |
|||
Year end 31 March |
UK GAAP |
UK GAAP |
UK GAAP |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
15.002 |
18.822 |
33.512 |
46.077 |
52.769 |
56.529 |
60.911 |
72.378 |
87.529 |
109.972 |
|
Cost of Sales |
|
|
(15.050) |
(15.474) |
(25.753) |
(33.842) |
(34.597) |
(42.175) |
(47.270) |
(52.765) |
(63.844) |
(77.468) |
|
Gross Profit |
|
|
(0.048) |
3.348 |
7.759 |
12.235 |
18.172 |
14.354 |
13.641 |
19.613 |
23.685 |
32.504 |
|
EBITDA |
|
|
(10.386) |
(7.944) |
(4.111) |
(1.275) |
2.384 |
(1.484) |
(3.500) |
1.998 |
4.708 |
10.366 |
|
Operating Profit (before GW and except.) |
(12.545) |
(10.200) |
(6.488) |
(3.750) |
(0.288) |
(4.197) |
(6.577) |
(2.616) |
(0.127) |
2.331 |
|||
Intangible Amortisation |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Exceptionals |
|
|
(2.281) |
0.000 |
(0.726) |
(2.670) |
0.000 |
0.033 |
(1.650) |
0.000 |
0.000 |
0.000 |
|
Other |
|
|
0.000 |
(0.430) |
(0.905) |
(1.098) |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Operating Profit |
|
|
(14.826) |
(10.630) |
(8.119) |
(7.518) |
(0.288) |
(4.164) |
(8.227) |
(2.616) |
(0.127) |
2.331 |
|
Net Interest |
|
|
(0.086) |
(0.038) |
(0.071) |
(0.135) |
(0.178) |
(0.300) |
(2.174) |
(3.400) |
(3.900) |
(4.700) |
|
Profit Before Tax (norm) |
|
|
(12.631) |
(10.238) |
(6.559) |
(3.885) |
(0.466) |
(4.497) |
(8.751) |
(6.016) |
(4.027) |
(2.369) |
|
Profit Before Tax (FRS 3) |
|
|
(14.912) |
(10.668) |
(8.190) |
(7.653) |
(0.466) |
(4.463) |
(10.401) |
(6.016) |
(4.027) |
(2.369) |
|
Tax |
|
|
0.536 |
(0.355) |
(0.699) |
(0.607) |
(0.402) |
(0.666) |
0.251 |
0.195 |
(1.509) |
(1.704) |
|
Profit After Tax (norm) |
|
|
(12.095) |
(11.023) |
(8.163) |
(5.590) |
(0.868) |
(5.163) |
(8.500) |
(5.821) |
(5.536) |
(4.072) |
|
Profit After Tax (FRS 3) |
|
|
(14.376) |
(11.023) |
(8.889) |
(8.260) |
(0.868) |
(5.129) |
(10.150) |
(5.821) |
(5.536) |
(4.072) |
|
|
|
|
|
|
|
|
|
4.990 |
|
|
|
|
|
Average number of shares outstanding (m) |
|
80.7 |
83.9 |
87.5 |
88.5 |
89.6 |
90.4 |
111.2 |
116.3 |
117.9 |
117.9 |
||
EPS - normalised (€) |
|
|
(0.15) |
(0.13) |
(0.09) |
(0.06) |
(0.01) |
(0.05) |
(0.07) |
(0.04) |
(0.04) |
(0.03) |
|
EPS - FRS 3 (€) |
|
|
(0.18) |
(0.13) |
(0.10) |
(0.09) |
(0.01) |
(0.05) |
(0.08) |
(0.04) |
(0.04) |
(0.03) |
|
Dividend per share (€) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.00 |
0.00 |
0.00 |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (%) |
|
|
-0.32 |
17.8 |
23.2 |
26.6 |
34.4 |
25.4 |
22.4 |
27.1 |
27.1 |
29.6 |
|
EBITDA Margin (%) |
|
|
-69.2 |
-42.2 |
-12.3 |
-2.8 |
4.5 |
-2.6 |
-5.7 |
2.8 |
5.4 |
9.4 |
|
Operating margin (before GW and except.) (%) |
-83.6 |
-54.2 |
-19.4 |
-8.1 |
-0.5 |
-7.4 |
-10.8 |
-3.6 |
-0.1 |
2.1 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets |
|
|
34.715 |
31.425 |
29.413 |
29.562 |
31.252 |
32.520 |
71.488 |
111.416 |
120.499 |
121.882 |
|
Intangible Assets |
|
|
7.579 |
8.226 |
8.333 |
10.014 |
10.980 |
10.839 |
10.657 |
10.436 |
10.219 |
10.002 |
|
Tangible Assets |
|
|
25.614 |
22.271 |
20.740 |
19.548 |
20.272 |
21.681 |
60.831 |
100.980 |
110.280 |
111.880 |
|
Investments |
|
|
1.522 |
0.928 |
0.340 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Current Assets |
|
|
32.387 |
29.638 |
26.161 |
24.066 |
22.590 |
61.268 |
63.505 |
40.714 |
39.096 |
37.363 |
|
Stocks |
|
|
3.120 |
4.860 |
6.053 |
7.894 |
8.345 |
11.796 |
13.125 |
14.651 |
13.727 |
12.656 |
|
Debtors |
|
|
3.000 |
3.439 |
4.091 |
3.912 |
4.967 |
7.402 |
9.178 |
10.432 |
13.588 |
17.926 |
|
Cash |
|
|
24.574 |
20.467 |
15.185 |
10.786 |
8.186 |
41.173 |
39.698 |
12.003 |
7.003 |
2.003 |
|
Current Liabilities |
|
|
(3.649) |
(3.621) |
(5.821) |
(10.701) |
(9.842) |
(14.599) |
(21.414) |
(27.214) |
(30.980) |
(34.813) |
|
Creditors |
|
|
(3.385) |
(3.357) |
(5.557) |
(10.437) |
(9.488) |
(14.144) |
(18.029) |
(20.521) |
(24.287) |
(28.120) |
|
Short term borrowings |
|
|
(0.264) |
(0.264) |
(0.264) |
(0.264) |
(0.354) |
(0.455) |
(3.385) |
(6.693) |
(6.693) |
(6.693) |
|
Long Term Liabilities |
|
|
(1.960) |
(1.924) |
(1.871) |
(1.799) |
(1.947) |
(22.718) |
(40.084) |
(51.313) |
(60.548) |
(60.438) |
|
Long term borrowings |
|
|
(1.960) |
(1.924) |
(1.871) |
(1.799) |
(1.947) |
(22.718) |
(40.084) |
(51.313) |
(60.548) |
(60.438) |
|
Other long term liabilities |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Net Assets |
|
|
61.493 |
55.518 |
47.882 |
41.128 |
42.053 |
56.471 |
73.495 |
73.603 |
68.067 |
63.994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow |
|
|
(3.717) |
(8.938) |
(3.257) |
(3.873) |
0.452 |
(1.304) |
(1.756) |
0.746 |
5.471 |
10.710 |
|
Net Interest |
|
|
(0.019) |
(0.038) |
(0.102) |
(0.138) |
(0.186) |
(0.248) |
(0.671) |
(3.200) |
(4.300) |
(4.500) |
|
Tax |
|
|
0.000 |
0.795 |
0.344 |
0.263 |
0.229 |
(0.745) |
(2.013) |
0.815 |
(1.509) |
(1.704) |
|
Capex |
|
|
0.888 |
0.501 |
(1.054) |
(1.108) |
(4.052) |
(2.608) |
(29.895) |
(44.952) |
(13.897) |
(9.397) |
|
Acquisitions/disposals |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.956 |
18.317 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Financing |
|
|
(0.178) |
3.597 |
(1.130) |
0.461 |
0.124 |
0.050 |
26.728 |
5.718 |
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 |
|
|
(3.026) |
(4.083) |
(5.199) |
(4.395) |
(2.477) |
13.462 |
(7.607) |
(40.873) |
(14.235) |
(4.890) |
|
Opening net debt/(cash) |
|
|
(27.596) |
(22.350) |
(18.279) |
(13.050) |
(8.723) |
(5.885) |
(18.000) |
3.771 |
46.003 |
60.238 |
|
HP finance leases initiated |
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Other |
|
|
(2.220) |
0.012 |
(0.030) |
0.068 |
(0.361) |
(1.347) |
(14.164) |
(1.359) |
(0.000) |
(0.000) |
|
Closing net debt/(cash) |
|
|
(22.350) |
(18.279) |
(13.050) |
(8.723) |
(5.885) |
(18.000) |
3.771 |
46.003 |
60.238 |
65.128 |
Source: Accsys Technologies accounts, Edison Investment Research
|
|
Research: Real Estate
In FY18, publity managed to post a rebound from the weak FY17, with an almost 50% y-o-y increase in revenues, PBT and net income (close to record-high FY16 figures). The company has also been moving closer to resolving its dispute with convertible bondholders, with a new share issue and partial bond repurchase that will continue in FY19. As the covenant limiting the increase in financial liabilities beyond €5m was recently waived, publity continues to review options for a potential new bond issue, which would support further business development, including further property purchases by publity Investor GmbH.
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