Accsys Technologies PLC (AIM: AXS), hard-hit by the economic downturn, reported a drop in revenues for the first half and swung to a pretax loss, but said it is seeing increasing demand for its proprietary Accoya wood and that it is confident that the continued expansion of its global distributor network will pay off.
Accsys’ primary focus is on the production of Accoya acetylated wood and technology licensing via its wholly owned subsidiary, Titan Wood Ltd.
The company booked revenue of €9.3 million in the six months to end-September 2009, down from €17.9 million a year earlier, and it swung to a pretax loss of €8.0 million compared with a profit of €0.2 million previously.
Headcount was reduced to 102 from 126 during the period with associated restructuring costs of €0.9 million. Administrative costs before restructuring costs of €8.9 million are 21 percent higher than the same period last year, but will reduce during the second half as a result of the headcount reductions.
In July Accsys appointed non-executive director Paul Clegg as new chief executive officer after Finlay Morrison stepped down with immediate effect. Executive chairman Willy Paterson-Brown will assume a non-executive role at the end of November.
CEO Clegg commented on today’s interim figures: "Whilst the economic climate has clearly affected the timing of our licensing revenue, we have successfully continued the expansion of our global network of distributors and it is encouraging to see the increasing demand for our Accoya wood. In addition, the recent changes to management and operations have given us a clear focus and a more appropriate cost base from which to grow the business."
Sales of Accoya wood produced at the Arnhem processing facility were up 51 percent in the first quarter. Second quarter sales were affected by a temporary shutdown of the plant, which was required to implement further process improvements and an automated wood logistics system. These improvements resulted in the plant being shut down for almost all July and August, with production being resumed in September. Total sales of Accoya wood for the six months to 30 September 2009 were up 17 percent on the same period last year, and have increased significantly since the period end. October sales are at a record level for the company.
The company now has 12 distribution agreements and 2 agency agreements in place, the latest one being the distribution agreement signed with Universal Forest Products Inc (Nasdaq: UFPI) for North America which was announced in mid-October.
Accsys said it made very good progress with its panel business during the period. Following the signing of the joint development agreement with Medite Europe Ltd in June, the first 20 cubic metres of medium density fibreboard, incorporating Tricoya wood elements, was produced on September 30.
As at September 30, the group held cash balances of €9.5 million and had trade receivables of €29.8 million, with the latter amount having increased further since that date. Accsys noted that it is dependent on the timely repayment of a significant proportion of these debts. If funds are not received in line with the group's timing requirements, the directors will need to raise alternative funding in order to continue as a going concern.
“There is a definite increase in business development activity and we are well placed to take advantages of the opportunities that will arise,” chairman Patterson-Brown added.