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Edited Transcript of AXS.L earnings conference call or presentation 25-Jun-19 8:30am GMT

Full Year 2019 Accsys Technologies PLC Earnings Call

Jun 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Accsys Technologies PLC earnings conference call or presentation Tuesday, June 25, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Paul Hugh Anthony Clegg

Accsys Technologies PLC - CEO & Director

* William Bickerton Rudge

Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director

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Conference Call Participants

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* Christen David Hjorth

Numis Securities Limited, Research Division - Analyst

* Toby Russell Thorrington

Edison Investment Research Limited - Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Accsys Technologies PLC Preliminary Results for the Year Ended 31st of March 2019 Conference Call. (Operator Instructions)

I must advise you that this conference is being recorded today, Tuesday, 25th of June 2019. I would now like to hand the conference over to your speaker today, Mr. Paul Clegg. Please go ahead, sir.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [2]

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Good morning, everybody, and welcome to the results call for the 31st of March 2019. You have in the room here myself, Paul Clegg, the CEO; and Will Rudge, the Finance Director. I think that if you are looking at the screen, you'll see that there is a disclaimer, which I think that as always we have to go through, so please have a -- take a chance to have a look at it.

And then I will switch straight through to Page 4. And I think those seeing this who are on the call, I don't think this is really necessary. But it is there as a reminder of who we are and what we do. But in summary, we are a company that combines chemistry, technology and ingenuity to make a highly sustainable product for the built environment, which of course, is very pertinent to today's environment.

If I ask you to switch to the next slide, if you have that. We've had a very strong year given where we are. The demand [we make] continues to exceed supply. Capacity was running at full capacity with all the production that we could produce. And this has resulted in a revenue of EUR 75.2 million, which is up 23%. This is also followed by a gross profit number of up to EUR 18.6 million, which is up 37%, which is very encouraging, and this will be further examined by Will later on. And this has produced for the first time an operating or an underlying EBITDA of positive -- of EUR 900,000 versus a loss of EUR 3.5 million in 2018, so quite a turn.

The expansion in Arnhem was completed as expected and as you probably know is running at full capacity now. The Hull Tricoya plant had a delay that we announced in early -- in March and is now expected to be operational in mid-2020. We've had a very significant period of CapEx and as I've mentioned earlier, positive cash flow. So a very good start to the new financial year with the Board's expectations unchanged.

If I ask you to go to the next slide. This is something that's slightly more information about what we see and how do we see the market and where we are at the moment. We believe that the -- through a bit of luck and design, our product is extremely well positioned for this time and age. It is a highly sustainable and ecologically responsible product, and these trends remain very strong across the world and particularly in the built environment. They -- the -- our products outperform most man-made, if not all man-made, products that are competitive, and we are not a polluter in a way that aluminum and PVC are. We sell material through our distributors, both the Accoya, which is directly sold by Accsys as well as the Tricoya panels that are manufactured by MEDITE and FINSA are sold through their distribution networks.

We have put on the right-hand side here where we see our current volumes sold of 49,716 cubes and where we believe in the long run, as we've stated before, that the ultimate potential market is for the company of 2.6 million cubic meters, which is a significant increase from where we are today.

Again, just to focus a little bit on sustainability before we get into the more -- into the numbers. Sustainability remains very, very important for us. We run the company as sustainably consciously as we can do. We are a cradle to -- the product is Cradle to Cradle Gold and Platinum for Material Health, which is extremely important. The bar to get that certification rises every year. The product as a process has no waste, as I think many of you know. And the product fits very well into the sustainable circular economy bio-cycle, whilst it outperforms the non-renewable techno-cycle products. And clearly, this is an aim that us and the industry, in general, should try to achieve. As an example, an Accoya window made out of Accoya is now regarded to be a carbon-negative application.

As far as strategic progress is concerned, there's a picture on the next slide of Hull, which shows the big silos, both the raw material silo on the left and the finished product silo on the right. The construction is progressing. We have had some hiccups, as we've discussed before, on the civil works and their remedial action. I'm pleased to say it is progressing and will be completed fairly shortly. Nonetheless, it means that the manufacturing -- or the operations at that site won't be completed until the middle of next calendar year.

As far as Arnhem is concerned, third reactor is on stream. This has increased our capacity to about 60,000 cubic meters, up from 40,000 cubic meters. What is very encouraging is that the -- it is running at full capacity. And basically, it was running at full capacity within 9 months of the start-up, which is very encouraging. And we are already underway of planning the fourth reactor, of which some of the basic infrastructure had already been included in the construction of the third reactor.

We will be adding additional capacity as far as storage facilities are concerned and updated wood handling equipment as we go increase our volumes. And this is very important in being able to take advantage of the increase in volumes of the company to take the -- to fully benefit from the economies of scale. We are making progress to -- with our U.S. discussions. But like all of these discussions, there's -- there aren't -- we can't announce it until it's completed. And until it's completed, it is not completed. But I'm very encouraged by the progress both as far as the relationship with the partner who we've known for a long time as well as from the market's response to potential capacity being built in the U.S.

As I mentioned earlier on the Tricoya, the construction -- if I flip to page -- Slide 10 now, we've invested about EUR 28 million in the year. It will be operational in the middle of next year. I think the only additional point is to say is that MEDITE, who is our key partner on this and an offtake partner, will take up to 40% of the capacity and has an option to go up to 60%. And their final demand reflection has been very good. We have shown 49% increase in sales of Accoya for Tricoya purposes, which shows the strong final demand. But we've also added FINSA as a key partner during this period of time. And again, I'm very encouraged by the initial work that FINSA has done, and we are very grateful and excited about the future with them.

And lastly, progression with the PETRONAS Chemical Group, PCG, is going well. We are in a feasibility period, which will last at least another year. But we have both got encouraging feedback from the final demand market as well as the technical aspects of the construction of the plant and also the possibility of an acetyl or a cracker on site, which is part of the original plan. So good progress but quite a way to go on that.

So with that, I will now turn it over to my colleague, Will Rudge, the Finance Director, who will take us through the financial numbers.

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [3]

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Good morning, everybody.

You can look at the financial highlights. These figures, we think, represent our best set of results so far. And key to this is the -- are 3 things: 23% increase in revenue, EUR 75.2 million for the year, and this was driven by demand but limited by our production capacity as well as higher pricing and EUR 1.6 million of licensed income in the period. Secondly, 37% increase in our gross profit to EUR 18.6 million for the year. This enabled ultimately us to report an EBITDA-positive figure for the year of EUR 0.9 million, as Paul mentioned earlier. But importantly, this also reflected a progression within the year with us reporting EUR 2.3 million of EBITDA in the second half of the year compared to the EUR 1.4 million lost in the first half of the year. Lastly, our net debt has increased. But the underlying operating cash flow was positive in the period with a net debt increase being driven by CapEx, and I'll come on to detail on all of this in a bit more.

Overall, this means that we are well positioned and expect to benefit from the further increase in the profitability and revenue in the next period of time, in the medium to longer term. We will benefit from the significant CapEx investment, first of all, the full year benefit of the third reactor as we then move into the new financial year, and then in the following financial year from the Hull plant when that becomes operational in mid-2020 calendar year. Ultimately, this means that we think that a 30% Accoya gross margin is still achievable, noting that 46% of our volumes sold in the period was at discounted or lower prices, which is only for a period of time. And secondly, the -- when the Hull plant turns on, we expect this to have higher margins than that. Our corporate costs and R&D costs remained relatively stable, a small increase. And we do expect that to increase a little bit as our activity levels increase. But that is relative to our overall performance.

If I move on to the next slide to look at the revenue growth in a bit more detail. Revenue increased in all regions. This was driven by Accoya sales, up 16% by volume, but within that, the 33% increase in the second half of the year compared to the first half of the year as we benefited from the third reactor. The third reactor, which started partway through the year, ramped up production. It was only in the final quarter of the year that it was operating near its full capacity. And to put that into perspective, in the final quarter of the year, we sold 14,926 cubic meters to give an indication of what we should be able to achieve going forward.

The higher volume was also coupled with higher average selling prices, and that resulted in the Accoya wood revenue increasing by 19% to EUR 66.9 million. So the increase in sales volumes was attributable to consistent and growing demand across the regions and driven by repeat business. However, the volumes were limited by capacity, and that's throughout the year even with the addition of the third reactor. As a result of that, we have concentrated our sales volume allocation on our core customers, focused on developing our relationship with that core distributor base. And as a result, you have seen the number of distributors reduced by 12 from 64.

Moving into the new financial year. We have started that as we finished the old one. Demand remains very strong throughout the regions, including particularly the USA in what continues to be a priority market for us.

Moving on to the next slide and with a little bit more detail on our profitability. Through -- in the year, our profitability was driven by the Accoya business ahead of the Hull plant coming operational in the following year. The Accoya segmental EBITDA almost doubled to EUR 9 million from EUR 4.6 million last year. The chart on the bottom left there sets out the Accoya EBITDA excluding licensing income, and that shows a 77% increase to EUR 7.8 million last year. This was driven by a couple of things. One is that we continue to benefit from economies of scale. And as we said, we've really started to see the benefits of the third reactor in the last quarter. And that has enabled our second -- the manufacturing gross margin in the second half of the year to increase to 24.7% compared to 23.8% the year -- the same period the year before.

Looking at our pricing and our costs. Our raw wood cost price saw relatively small increases during the period. Our acetyl costs, however, increased more significantly early in the financial year before decreasing a bit towards the end of the year. And looking forward, we expect overall material prices to be relatively stable in the -- throughout the new financial year. However, we did implement a price increase to our customers in January 2019, and that was to take account of the net increase in costs that we are seeing. But that price increase also -- we do also expect that to have some margin benefit into the 2019 calendar year. The combination of all of those matters meant that the -- our EBITDA did improve significantly to EUR 2.3 million in the second half of the year, as I mentioned before.

And so in summary, looking ahead to the full year, benefit of the third reactor will result in higher volumes. We would -- should also benefit from the price increases implemented from January 2019. Our Tricoya volumes, which represented a significant proportion of our volumes, we expect to -- while we expect to remain, will not increase in the same proportion that it has done in the past. And as a result, we do expect further profitability improvement into the medium and longer term, and in particular, when the Hull plant turns on in the following financial year.

If we move on to the next slide and looking at net debt. The bridge here reflects the 3 sort of key movements. Firstly is the operating cash flow positive figure of EUR 0.3 million, and that's made up of few areas. Firstly, there is EUR 9 million EBITDA generated by the Accoya business despite the fact that the third reactor was only at capacity in the final quarter. Offset -- that was offset by EUR 1.9 million cash outflow for the Tricoya business, and that's reflecting its preoperating phase ahead of the Hull plant start-up as well as costs associated with the broader Tricoya business, which is focused on building future plants. The EUR 6.2 million cash outflow for corporate costs and R&D increased only marginally compared to the previous year. That means that the overall increase in net debt, which ultimately has increased from EUR 3.8 million to EUR 50.1 million, was driven by EUR 48 million of CapEx for the period. And that reflects our significant investments in our production facilities. EUR 8.4 million was for the final costs associated with the third reactor for the Accoya plant in Arnhem, EUR 27.8 million spent in the Hull plant during the period. The remaining cost will be incurred in the new financial year and into the year after that. And then finally, EUR 12 million -- the remaining EUR 12 million of CapEx predominantly related to the purchase of the land and building in Arnhem, which we purchased from our -- the previous landlord, Bruil, in the first half of the year, and that replaced a finance lease arrangement.

The net debt is increased to fund the new capacity. But to do that, we have taken on some new facilities in the year, and that has enabled us to reduce our effective interest rate from the year, down to 7.3% from 9.3% the year before.

And with that, I shall pass it back to Paul to look at the outlook

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [4]

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Thank you, Will. And as you can imagine, just to pick up from what Will said that we will continue to try and improve our cost of capital as time goes on.

So as far as the outlook is concerned, as you flip to the last chart, I don't know what page it is, but I hope that you can see it. Positive -- we've had a very strong start to the financial year. Demand continued to exceed capacity. Fourth reactor is working very well. EBITDA continues to grow, which I think is extremely encouraging for us as a company.

I think that what I would like to just concentrate on, which -- because most of this is otherwise a repetition, is that if I could ask you to look at the bar graph on the right-hand side. What we've tried to do here is to show where we are on production. You'll see that in the second half of '18, we had 40,000 cubic meters of production. Second half of '19, we are at 60,000. Once Hull turns on, which is the next step, that will add the equivalent of 40,000 cubic meters in capacity. The additional reactor in Arnhem, if that happens, that'll add another 20,000. The capacity in Malaysia would add equivalent of 40,000 cubic meters of capacity. And adding to that, the U.S., if that goes ahead, that would add another 40,000, making a total of 200,000 cubic meters of total capacity if all of our plans are executed.

I would add that in addition to that, the Hull site has always had the capacity and the intention to expand to further -- to a second train and possibly even a third train, which would double -- and therefore double the size of Hull. So we believe that at this time, we are entering into a very intense period of construction and expansion around the world, which I think will underpin the success of our technology and the commercialization of that technology.

And to conclude, the final statement is that the Board also made an announcement early on today where it says that I will be -- as CEO will be stepping down at the end of this year in order to really drive the company to increase its expertise in manufacturing and production around the world. And I look forward to helping the company during this transition process, and I am sure that we will find a very capable person to take on the mantle after 10 years of working at this company.

So with that, I will turn it over to questions. And I think that we turn it over back to the moderator, who will give the instructions of how to ask questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question is coming from the line of Christen Hjorth from Numis.

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Christen David Hjorth, Numis Securities Limited, Research Division - Analyst [2]

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Just a couple from me, really. First of all, it sounds like with -- at Arnhem, everything is going on very well currently with the third reactor. As you say, you are planning for a fourth reactor. I just want to get a bit more sense of timing and how soon can construction around that fourth reactor actually start. And then just maybe a bit more color on timing in terms of when production could start from that as well. And then maybe just a bit more on the PETRONAS Malaysia opportunity, just since you last updated, what work has been done? And how does this reflect in their thinking, and just really progress with that work would be much appreciated.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [3]

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Christen, I'll answer -- I'll take both questions. The planning process at the moment is the following. We will aim to complete what is called a FEED study, or Front End Engineering Design study, by the end of this year. That will allow us to then turn that information to detailed engineering, which will then allow construction to happen. The process to get the FEED study done is underway. We have yet to choose a partner to do that FEED study, but the expectation is that the contractor who will help build this will both -- will do both the FEED study and the full construction.

The second part of it is, as I'm sure, is that before we can start construction, we will have to be clear on how we finance this. And I think again, that will be addressed in due course.

As far as PETRONAS is concerned, we have had, I think, now 3 steering group sessions since we signed agreement in Malaysia. I have regular contact with the CEO of PCG, and PCG is a quoted subsidiary of the PETRONAS Group, Datuk Sazali, and I hope to see him again in the next couple of weeks. We have done an extensive market work where we have visited multiple panel manufacturers, door/skin door manufacturers, window manufacturers, panel operators. Recently, we have engaged in a full third-party market study, which will start fairly shortly with one of the world's leading agencies in that world, which is called [Pure]. We have had several detailed exchanges on engineering and engineering design. And to be clear, the engineering design is split really into 2 pieces. PETRONAS has a big chemical site on the east peninsula of Malaysia in a city called Kerteh -- or a place called Kerteh where they have an acid plant. The aim is that we would build a chip acetylating plant there as well as a ketene cracker to convert the acid into anhydride. So there are several work streams that are fully engaged. As you can imagine, PCG is a much larger organization than us, and they will have many more engineers to throw at us. And we asked -- we sometimes struggle a little bit with bandwidth. But progress is being made, and milestones have been hit so much so that the initial payment from PCG was done on time for the milestones that were set.

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Operator [4]

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Your next question is coming from the line of Toby Thorrington, Edison Investments.

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Toby Russell Thorrington, Edison Investment Research Limited - Analyst [5]

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Couple of questions. Couple of questions from me, one, on sort of current market agreements in Accoya, and the second one is just a follow-up on the internationally -- potentially international new plants that you've been referring to. So first of all, I was just curious with regard to Accoya because I think, the -- well, it's actually Tricoya space through the Arnhem plant, what the FINSA experience has been to the extent that they're relatively new customer? And the follow-on related to the company currently known as Cerdia, I think there is a reference in the statement to the offtake agreement with them ending in 2020. Perhaps if you could give a more detail around that as well, please?

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [6]

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So the experience with FINSA has been really good, in fact. FINSA is about 4x the size of MEDITE, for -- just for clarity's sake. FINSA also has multiple manufacturing sites. It also has a distribution. It has a very large distribution network across the -- Spain and all the Balearics. And they have -- I believe, it's 12 centers. In each center, they have architectural support practices. They have run, I think, 5 campaigns now, so i.e., 5 batches of it. Batch 1 was a huge success. Batch 2 had some learning difficulties, 3, 4 and 5 had been very successful. Their major issue is that we can't supply them with enough material. And so they have been very supportive because frankly, we've had to tell them that we can't give them as much as we'd originally hoped. And that is largely because of the delay in Hull.

But from all other aspects, they are very creative, very innovative, looking at in a multiple ways of optimizing the Tricoya chips and pines for their panel products, whether it's going to go into flooring applications or traditional windows and panels, so as good as we could have hoped for. They are a partner that we have known for a long time. And just to show you how enthused they are about it, they have covered their headquarters in Accoya in the last 18 months.

Regarding Cerdia, formerly known as Rhodia, they have made -- and it might be worth looking at, they made a restructuring announcement yesterday where -- about their other businesses. They do -- the license agreement that we have with them does have an ultimate drop-dead date of November of next year with a preliminary date of -- in May of next year. And their obligation under the license agreement was that they need to build a plant in order to maintain that. There is no evidence of them building a plant. So it is highly likely that there will be a change. We are very close to them. They are a good customer of ours. I think that they took 12,000 cubes of material over the last 24 -- 12 months. They have a 5-man sales team and 1 or 2 marketing teams. So we have very good relationship with them, and it is one of those things that the next step will be revealed when the next step will be revealed. And that will be done at some stage.

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Toby Russell Thorrington, Edison Investment Research Limited - Analyst [7]

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Okay. Is there any further conversations ongoing there already, Paul?

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [8]

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Yes. Yes. We have -- again, I think we have a quarterly steering group on a -- the business front. We have -- I have very regular contact with Philippe Rosier, who is the CEO. So -- and in fact, I was in Basel, which is their new headquarters, only 2 weeks ago or 3 weeks ago. So there are ongoing discussions, but I wouldn't -- I don't want you to read into that any near-term expectations.

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Toby Russell Thorrington, Edison Investment Research Limited - Analyst [9]

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Understood. Okay. And sorry, my other question related to -- follow-up to questions I think relating to the Malaysia and U.S. discussions, which are underway, obviously. I think Malaysia is probably more than a discussion. But just wondering how the costs associated with those 2 sort of projects are being treated or are they being expensed as we go? Or are they being put through the corporate line? Or are they being treated differently?

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [10]

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Will, do you know the answer to that?

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [11]

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So I think expenses relating to the -- any pre-work will be put through the respective divisional costs for Tricoya into Tricoya and the Accoya plant in the U.S in Accoya. Now clearly, if anything progresses to a later stage, we may start to capitalize costs. But we're not at that point yet. And so costs are expensed in the relative -- respective divisions.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [12]

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But there is some income that is coming from the PETRONAS discussions into the...

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [13]

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Tricoya.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [14]

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In to the Tricoya division, yes.

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [15]

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Correct.

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Toby Russell Thorrington, Edison Investment Research Limited - Analyst [16]

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Sorry, I didn't quite catch that. Into Tricoya, did you say?

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [17]

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So for the -- there is some income relating to that relationship, which is being reported in the Tricoya segment as well.

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Toby Russell Thorrington, Edison Investment Research Limited - Analyst [18]

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And final question unrelated to the previous 2. When are you planning the maintenance shutdown at Arnhem this year, please? And how long is that going to take?

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [19]

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So we've had the maintenance shutdown in May, [Andrew]. So it's an annual stop that is usually -- it's 2 weeks of shutdown and a couple of days of start-up. And so that is included in this first quarter's activity.

Okay, I did see a written question on that. Oh, that was Andrew. Should I -- there is a question here. "Can you talk about the sourcing of radiata pine as your volumes ramp up to 200,000 cubic meters in the long term? Can New Zealand supply this and (inaudible) more volume?"

So the 200,000 cubic meters is split between Accoya and Tricoya. Can I -- just to remind everybody that Tricoya does -- would -- does not necessarily have to use radiata pine, and Hull will be sourcing its chips from local chip manufacturers. So they will be multiple species, primarily Scots pine but possibly even some spruce in there. So the Tricoya aspect of sourcing material or availability of material is not the issue.

From Accoya point of view, the New Zealand's harvest cycle is going through an extended increase in harvestable forest over the next 15 years. So we do not believe that there are any issues from -- of supply from New Zealand, in addition to which we are looking at other materials, particularly geared towards the U.S. In the long run, we expect the U.S. to be using indigenous U.S. species and/or a mix of radiata and indigenous U.S. species. Radiata is already known in the market. So if you go into Home Depot and you look at the high-end, the best whiteboard, clear offering, it is radiata pine that is supplied by -- from New Zealand. But it is built -- and is accepted. But we are looking at taeda. We're looking at ponderosa pine. We're looking at various other materials that would be able to be used in the U.S. So we -- at this stage, we feel very comfortable that as far as the supply material is concerned, that we are comfortable on the wood element of that.

To the next question.

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Operator [20]

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(Operator Instructions) And your next question is coming from the line of Rudolph (inaudible) from (inaudible).

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Unidentified Analyst, [21]

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Paul, first of all, my compliments for what you performed in the past 10 years. I regret that you are stepping down, and I hope you find a good successor.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [22]

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Thank you, Rudolph.

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Unidentified Analyst, [23]

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I have 3 short questions. The one is will the next -- this coming year will show a net profit? And the second question with your expansion, how are you going to do the funding? And the third is, is it possible to pay a visit to Arnhem?

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [24]

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So Rudolph, there is -- I'll answer the last question first. Of course, it is possible to visit Arnhem. And if you can either drop me an e-mail so I -- that we can arrange that. I think Hans Pauli, locally, who I think that you may have met, will -- we can arrange that.

To the second question as far as capital raise is concerned, all of capital is needed for expansion. I think it is -- that's an open question, and I think that it is often discussed that how we would fund that. We have always said that if we have to do the fourth reactor early, and I believe that we're doing it early, that we would have to look for outside sources of capital. And we will do that. As Will suggested earlier, we will do that as cost-effectively as we possibly can do. And then to the first question, when will we report a net profit, I will pass it over to Finance Director, Will Rudge.

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [25]

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Thank you, Paul. On our net profit -- on net profit, I think not in this next -- in this new financial year. I think net profit will follow on from the Hull plant turning on and becoming operational and starting to ramp up volumes. So it's a following financial year at earliest before net profit, and it's likely to be reported.

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Paul Hugh Anthony Clegg, Accsys Technologies PLC - CEO & Director [26]

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Thank you, Rudolph. And don't forget to e-mail me and we'll arrange for you to go and visit Arnhem.

There's a question here from -- which says, "Please could you describe the actions taken to improve the repeatability of volume sales of Accoya to give more visibility?"

Thank you. That's almost a prompted question, but I'm very grateful for it. It is very important to recognize that most of our business is repeat order business. Most of our customers are joinery companies around the world who are making doors and windows on a regular basis. They buy their material from the distributors, and they buy that on a month-in, month-out basis. So we continue to press on that. We believe that this -- we've -- I've always believed that this repeat business of doors and windows and decking and cladding is core to our business. It may not be as showy as wonderful iconic project, but it is extremely important to recognize that, that is our core driver.

We work extensively with our distributors to make sure that they do focus on that core repeat business, to make sure that they understand the ordering patterns, the ordering visibility patterns that we need to have for the fast-moving items that serve this market. So it is very much front and center of our business relationship with our distributors. And that's why we also have a very strong relationship with their customers, the machinery -- the joinery companies and often their final customers who may be assembling the building companies. But it is very important that -- a very important part of our business model.

Well, I'm very glad to say that it looks as if I have exhausted all the questions or we have exhausted all the questions. So it only leads me to thank everybody for taking the time and look forward to -- as we're looking forward to a very good year. Thank you very much, everybody.

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William Bickerton Rudge, Accsys Technologies PLC - Executive Finance Director, Financial Controller & Director [27]

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Thank you.

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Operator [28]

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That concludes our conference for today. Thank you for participating. You may all disconnect.