Accsys Technologies PLC

Good day and thank you for standing by. Welcome to the Access Technologies PLC four year results presentation. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question over the telephones you'll need to press star and one on your keypad and you can also submit questions via the web. Please be advised today's conference is being recorded. If you require any further assistance please press star zero.

like to hand the conference over to your first speaker today rob harris chief executive please go ahead thank you good morning everyone and welcome to our full year results presentation for the 2021 financial year and firstly i hope you're all safe and well and before we start as always i'd like to pause for a photo moment of our akoya product In this photo, we have a Koya decking showing its strength against the elements up on Banff Mountain in the Canadian Rocky Mountains. It's also a very symbolic choice of photo, as it's in the North American region where we are making good strategic progress. I'll give you more about that later. Moving on, we have the usual disclaimers that I know will be familiar to you, and thank you for adhering to that. In terms of this morning's agenda, firstly, I'm going to give you a quick initial overview of the results. Then Will Rudge is going to take you through the financials in more detail. I will then give an update on the whole Tricoya plant since the early June update. I know this is a key focus for analysts, shareholders, and many stakeholders on the call today. I'll then walk through the business review to update you on our strategic development and the Tricoya segment's positive tactical and strategic momentum. So looking across today's results, we have delivered a strong set of numbers for FY 2021. We've delivered a 4.5% increase in sales and a 10% growth in revenue. This is a really good performance given the backdrop of COVID-19 this year and given the fact that we are capacity constrained with greater demand than we can actually supply. Our sales and revenue result shows the business's resilience and that strong market demand for our product continues. Our sales, manufacturing and supply teams continue to do an outstanding job for Axis. These results are another step up in our profitability. We have grown gross margin by 290 basis points to 33% and are reporting a 44% growth in underlying EBITDA today to 10.1 million euros. We're also benefiting from good cash generation in the Akoya segment and margin gains through diligent pricing of this high-value, sustainable product for the construction sector. Beyond the financials, 2021 has been a year of strategic progress as well. We are moving ahead in our plans to expand in North America, the largest single market for Akoya, and are expanding capacity at Arnhem for Akoya production by 33%. While we have faced ongoing challenges in completing our new Tricoya plant at Hull, we have progressed the construction during the year to the final stages, but more about this later. Finally, and very importantly, we are investing in our organisational capability, people, talent, and our business processes to manage it and deliver the growth ahead, and importantly, providing a platform to grow sustainably. This is important. really important in our path to increase production capacity to 200,000 metres cubed by 2025 in our 5x growth target. I'll now hand over to Will for the financial results, please.

Thank you, Rob. Good morning, everyone. The first image you can see here is a great image of Akoya being used as a floating boat platform in Canada, a great example of Akoya's durability and stability in action. But I'll move quickly on to the next slide, the financial highlights. Rob's already touched on some of these. This first slide summarizes what we believe is a strong financial performance, and this is for the year to 31st of March, 2021. Revenue increased by 10%. The COIA sales volume is up 4.5%. The sales volume has recovered strongly with demand exceeding our production capacity following the impact of sales in the first quarter due to COVID-19. Revenue growth was supported by an increase in average sales prices. Price increases were implemented for all Accora customers from January 2020, the end of the previous year. In addition, from 1st of April 2020, the European markets were successfully transitioned into our direct sales and marketing channels from their previous exclusive license to Sardia, ending the previous discounted sales arrangements. A further price increase took effect from November 2020, including to address an expected increase in raw material costs. These increases have helped the acquire manufacturing margin increase by 340 basis points to 33.4%. We have seen a marginal increase in other operating costs in the second half of the year as we increase our investment in our organizational capability. However, with the gross margin improvements, this has overall resulted in a 44% increase in underlying group EBITDA to 10.1 million. This represents our third consecutive year of positive group underlying EBITDA and our second consecutive year of positive group underlying EBIT. The strong performance of the ECOI business has helped drive a 61% increase in group operating cash flow, and that has helped ensure we have maintained a robust balance sheet with a €13 million reduction in net debt. Moving on to the next slide, which looks at our sales mix in a bit more detail, The underlying demand from resulting sales here have helped demonstrate the resilience of the business. The chart on the right-hand side helps explain the year-on-year movement in acquire revenue split by region. In Q1, sales were disrupted, in particular in the UK and North America, due to COVID-19 impacting our customers' supply chains. We were able to focus efforts in other regions to stimulate additional sales, in particular in mainland Europe, the Nordic region, while also increasing sales to our Tricoya partners. From Q2, sales volumes recovered quickly in all regions, and we saw pickup in sales to North America in particular being a key region for us to target in the longer term, given the substantial market opportunity which we have confirmed exists there. The chart on the left-hand side shows the split of volumes by market. The Tricoya segment, with 26% of the total sales volumes, represent sales of lower price decoyer to our tri-coyer partners, with these volumes expected to be transferred to the hull plant once it is operational, and that will free up volume in Arnhem for full price decoyer sales. The rest of Europe region, just for confirmation, represents sales which in the previous year had been sold at discounted prices under the previous arrangement, Srdia, but during the year we're reporting upon, those were at normal prices. We'll move on to the next slide, please, which sets out our EBITDA progression in a bit more detail. This sets out how change in the ECOI business have helped drive the increase in the group underlying EBITDA from 7 million last year to 10.1 million this year. 4.8 million was an improvement due to high average sales prices. This is split across a few areas. First of all, the effect of the termination of the third-year contract and the end of the pricing discount that was previously in place, that was effective for the whole of the financial year compared to the previous year. In addition, there was an increase in material sold for the tri-coir production. But lastly, the largest component was the price increase to all the coir customers, firstly from 1st of January 2020, and then again a price increase from November 2020, helping improve our overall margins. 1.3 million of the improvement was attributable to increased sales volumes for the year as a whole, a 4.5% volume increase I mentioned earlier. This was offset by raw material prices, including wood and our net acetals costs, which increased marginally compared to the previous year. There was a more significant increase in acetic anhydride costs seen in the final quarter of the financial year, and that has continued into the into the beginning of the new financial year. However, we do also continue to benefit from the partial natural hedge we get due to the sale of the acetic acid byproduct, such that the impact on overall raw material costs has been more marginal. The increase in ACOIA operating costs reflects an increase in headcount for the year and an increase in spend on sales and marketing costs in preparation for the support of our capacity expansion plans. Increase in other group operating costs largely also reflects a higher headcount. We completed the recruitment of the majority of the remaining Hull operating team for the Triquoia plant in the second half of the year. In addition, we are investing in our overall organisational capability and have added a number of experienced new roles to reflect our growth in scale and our ambitions for growth. This has included new group heads of health and safety, for our technology centre, as well as for engineering, IT, CTARs management, and investor relations. Moving on to the next page, and looking a little bit more detail at profitability progression, both charts here show our longer-term trend over five years. Group EBITDA on the left-hand side, and the acquire segmental EBITDA and margin on the right-hand side. While the progression of the Akoya business has clearly driven the improvements in the group overall, I would like to highlight a couple of points. We had previously said that we believed a 30% gross manufacturing margin for the Akoya business was achievable. We have now achieved this for 18 months, and in particular, this was seen following the step-up of volume in FY20, which resulted from the benefit of the third Akoya reactor coming on stream and the associated economies of scale, which flowed from that 50% increase in capacity. However, over that same period, margins have also benefited from the higher sales prices. Looking ahead, we will continue to keep sales prices under review so that we are at least able to maintain these margin levels. However, we will also target further margin improvement, seeking to take advantage of further economies of scale as we benefit from additional capacity, in particular with the completion of the fourth aqua reactor due to be operational by the end of this new financial year. In addition, when the hull plant turns on for tri-coir, this will free up additional capacity in Arnhem for higher price to coir sales. Group profitability is then expected to benefit from the increase in overall sales volumes, as well as the higher 40% anticipated gross margin, which we continue to believe is achievable from the hull plant once it's operational. Moving on to the next chart, which looks at our cash flow, The net debt bridge in this slide shows that strong cash flow generation has helped to decrease net debt from €25 million to €12.2 million at the end of the year. As explained earlier, the Akoya business drove most of this, with a 27% increase in EBITDA resulting in €21.4 million of cash inflow. The TriKoya EBITDA reflects its pre-operating position, and that's expected to become positive following the start-up of the Hull plant. The R&D and corporate costs did increase compared to the prior year, reflecting the investment and organizational capability. However, we don't expect that to increase in line with revenue as we continue to grow. The decrease in operation working capital by 5.1 million is largely due to a decrease in inventory during the year, including the impact of some supply chain disruption as a result of COVID-19 and subsequent to that. Year-end inventory levels were lower than planned, and as a result, are being rebuilt in the new financial year, with a further increase expected ahead of new production capacity coming on stream. The CAPEX investment of €21 million includes €14.4 million for progress in the tricoil plant at Hull and €5 million for the fourth reactor in Arnhem. This investment was partially offset by CAPEX accruals of €9 million, reflecting the milestone nature of our construction contracts. The $3.2 million third-year termination fee was reported in the first half of the year, offset against our third-year loan at the start of the year. And then, finally, the Tricoya equity issuance reflects shares issued to our Tricoya consortium partners. If we move on to the balance sheet, and just note a couple of more points in respect of our overall position. Overall, we believe our balance sheet remains robust, In addition to the reduction in net debt I've just explained and the resulting net debt to EBITDA ratio, the group had cash balances of £47.6 million at the end of March. This cash balance, together with positive operating cash flow from the Akoya business and further undrawn banking facilities, ensure the group is well positioned looking ahead, including taking into account that much of this cash is expected to be invested in our key additional production capacity projects in Arnhem Hull. In addition, subsequent to the year end, we raised a further 35 million euros through a successful placing and open offer. The proceeds of this are principally intended to fund our 60% equity share of the planned Akoya plant in North America. Rob's got some further details on this a little bit later, and at this point I'll pass back to Rob.