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Accsys goes to Hull and back

Tricoya impairment triggers €56.3mn pre-tax loss
November 22, 2022
  • Work on completing €100mn-plus plant on hold
  • Company anticipates 50 per cent volume growth in H2

To suggest that the investment case for Accsys Technologies (AXS) has weakened since we tipped the company as a buy last December would be an understatement. 

Back then, Accsys was forecasting a fivefold increase in production of its flagship Accoya and Tricoya modified wood products within five years, based initially on the expansion of its Accoya plant at Arnhem in the Netherlands, the completion of its delayed Tricoya plant in Hull and the construction of a second Accoya site in the US and a Tricoya site in Malaysia.

Defective equipment delayed the Arnhem expansion and then the Hull project (originally slated for completion in 2019) was eventually put on hold. 

Despite completing a €20mn (£17.4mn) placing in May, the issue seems to be a lack of cash. As Tricoya’s costs ballooned (a reassessment found it could take €35mn more to complete), consortium partners decided against stumping up. A restructuring swapped their stakes for new Accsys shares but the company paused work for six months while it reassessed funding options.

Its half-year figures look brutal as a result. Revenue increased by 5 per cent to €58.9mn but a €58mn impairment on Tricoya assets meant the company recorded a pre-tax loss of €56.3mn. Although it was keen to stress the impairment was a non-cash charge, its cash position looked no better – an outflow of €26.8mn left it with €18.1mn after pumping money into Hull, inventories and its US joint venture.

Although demand for its product remains strong, and the company is forecasting a 50 per cent hike in second-half volumes, delays and higher gas prices mean the anticipated growth in earnings will take much longer to deliver than anticipated. Even after a 64 per cent year-to-date decline, the shares look fairly priced at 22 times broker Investec’s 2024 forecast earnings of 3.4¢. Hold.

Last IC View: Buy, 110p, 30 Jun 2022

ACCSYS TECHNOLOGIES (AXS)  
ORD PRICE:65pMARKET VALUE:£142mn
TOUCH:63.6-66p12-MONTH HIGH:184pLOW: 54p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:60¢NET DEBT:45%
Half-year to 30 Sep Turnover (€mn)Pre-tax profit (€mn)Earnings per share (¢)Dividend per share (¢)
202156.20.661.00nil
202258.9-56.3-13.0nil
% change+5---
Ex-div:-   
Payment:-   
£1 = €1.15