Chief Executive’s statement
Solvay and new manufacturing capacity in Arnhem
We recently announced details of a new agreement with Solvay Acetow Gmbh (“Solvay”), to refine the relationship between the two parties for the licensing, marketing and manufacturing of Accoya®. This new agreement provides the framework and funding for a significant increase in the manufacturing capacity in Arnhem.
Solvay will purchase a minimum 76,000m3 of Accoya from the Arnhem plant over the period from 2016 to 2020 (the “offtake commitment”) and as a result of the increased manufacturing capacity in Arnhem and consequent greater sales capacity, under the new agreement Solvay will review the optimal timing to construct its 63,000 m3 Accoya manufacturing plant.
The enhanced relationship with Solvay will benefit both parties, with the increased manufacturing capacity and resulting sales expected to be achieved for Accoya in a faster timescale than would otherwise have been possible.
Accsys will double the existing manufacturing capacity at its Arnhem site in stages, up to 80,000m3 per annum from 40,000m3. The initial incremental 20,000m3 capacity is expected to come on stream in mid-2017.
The licence agreement covering Europe has been amended to provide increased royalties to Accsys and the return to Accsys of the selling rights for more than 20 European countries.
Accsys will provide sales and marketing services to Solvay on agreed terms in respect of Solvay’s exclusive European territories.
A combination of loans and fees from Solvay, in addition to those due under the offtake commitment, will fund the majority of the initial increase in manufacturing capacity at Arnhem, with the balance to be met by Accsys’ own resources, including the possible sale and leaseback of land at Arnhem.
These agreements allow the market development of Accoya to continue and optimise the roll out of manufacturing capacity under its partnering program with Solvay, increasing the certainty of supply for Accoya customers and users. It also enables Accsys to continue to develop global markets effectively, building on the expertise that it has developed over the last few years.
Tricoya® Technologies Limited (‘TTL’)
In March 2015 we announced our intention to form a consortium to fund, construct and then operate the world’s first Tricoya® chip acetylation plant, following Accsys’s acquisition of the remaining 50% share in TTL from our former joint venture partner, Ineos.
Since then, we have progressed detailed discussions with the proposed consortium partners, being the Chemical Group, with whom we signed a Memorandum of Understanding (MoU) in March 2015, and Medite, TTL’s joint development partner since 2009. A site feasibility study has been undertaken to determine that the proposed plant can be located on one of the Chemical Group’s existing production sites, which is expected to provide significant operational and construction benefits to the consortium.
TTL engaged an engineering house to complete the Front End Engineering and Design study which will enable the next stage of detailed design and construction to commence, immediately after the consortium is formally put in place.
During this period, Medite Tricoya® has continued to be manufactured using Accoya sold by Accsys to Medite using a temporary process, pending construction of the dedicated Tricoya plant. However this has enabled sales of Medite Tricoya to grow, with sales volumes of Medite Tricoya panels increasing by 14% in the calendar year to October .
Masisa, TTL’s licence option holder in Latin America, has also continued to progress its market development activities, with Masisa Tricoya XB being specified in an increasing number of projects.
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Accsys Technologies PLC Chief Executive’s statement Intellectual property
Accsys has considerably increased its number of patent applications in the recent period by expanding its patent families to 22, including those relating to Tricoya®. Applications filed now number 191, filed in 43 countries. To date 42 patents have been granted in various countries throughout the world.
Our principal trademark portfolio remains unchanged with our brands Accoya®, Tricoya®, the Trimarque device and Accsys®, including transliterations in Arabic, Chinese and Japanese, protected by registration in 56 countries. The Company’s patents and trademarks cover the products we and our distributors and licensees sell, and the processes by which these products are made, throughout the world.
In addition to Accsys’s extensive patent and trade-mark portfolio, the Company continues to invest in the generation and protection of valuable know-how and confidential information relating to its products and processes, protected by way of confidentiality protocols and contractual agreements.
Outlook
We are pleased to be able to cement our relationship with Solvay to expand our Accoya manufacturing capacity and Solvay’s commitment to purchase significant volumes from Accsys over the coming years. This is an exciting step in the development of our business and is further evidence of the execution of our strategy to maximise returns from our technology platform and our innovative products.
The proposed consortium with the Chemical Group and Medite, for the funding, construction and operation of the first Tricoya® chip acetylation plant is progressing well and I remain confident that Tricoya® remains a substantial and exciting opportunity for us.
Both developments represent a way for Accsys to participate directly in the manufacture of higher volumes of our products than we have previously envisaged. I believe this model, where we seek to obtain a greater share of manufacturing margins while continuing to work with strong industry partners through licensing and joint venture activities puts us in a strong position to be able to grow shareholder value.
In the immediate future, we will continue to carefully manage operations to ensure optimal management of our existing manufacturing capacity, working capital and costs such that we maintain sufficient resources to meet the demands of the next exciting period of our development.
Paul Clegg
Chief Executive
27 November 2015