Report Analyzing The Performance And Operations Of Accsys Technologies Plc Case Study

Section A

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Introduction: Report Analyzing The Performance And Operations Of Accsys Technologies Plc

In this research "Accsys Technologies Plc." operation performance has been considered as to consider its financial statements the financial and non-financial ratios are calculated. Based on the efficiency, profitability, gearing and liquidity ratios the research process has undertaken. The annual report for 2017-2021 has been undertaken to analyze the financial condition of the company. Along with that, the competitors, equity holdings, corporate governance compliance, and proposed financial strategies have going to be considered to evaluate the performance of the company. The evaluation of different ratios has provided a brief idea regarding the performance of the company and its improvement over the last five years.

Company Overview

Accsys Technologies plc is a UK company that deals with chemical technology to focus on the acetylating of wood (Zelinka et al. 2022). As the company has founded in 2005 it is engaged in the commercialization, development, and licensing of proprietary technologies associated with products including "Tricoya and Accoya wood". Along with that, the primary industry of the company is"forestry processing" and after that the other industries related to hard or wood products (Accsysplc.com, 2021). Based on the public-held ownership the company offers Accoya woods used in decking, external doors, siding, cladding, and civil engineering projects.

On the other hand, Tricoya woods are used in the wet interior, window, and door components, wall linings, and door skins. The company generate more sales from Accoya woods in the regions of Ireland and UK customers (Traversari et al. 2022). The capacity of Accoya is 80,000 cubic meters per annum and Tricoya's capacity is 30,000 metric tonnes per annum. In 2022 the company generate group revenue of £104 million with a profit of £30m on that the Accoya margin is 30%. As per the analysis of the concerned company products it provides acetylated wood for sustainable, durable and stable products (Accsysplc.com, 2021). Based on the propriety process of manufacturing the high-quality wood elements have provided excellent performance with a freshwater warranty.

Equity Holdings

In 2022 the shares of the company are218,772,510 based on the capital for trading g business as the organisation is aware of 69.4m shares is AIM Securities not in the hands of the public is 31.73% (Accsysplc.com, 2021). Along with that, the company's total issued share capital is 11,608,259 with its partner Tricoya Consortium partners. After that, 3% of the ordinary shares are divided among the shareholders. The shareholder's analysis is important to analyze the equity holdings position by them as it helps to evaluate the ordinary shares that are free for the public and IPO process (Tahir et al. 2021). Based on that the different percentage has considered the rate of the amount that they received in the share price and the amount holds for considering shareholders equity.

Name	Percentage
Teslin Capital Management	15.51%
De Engh B.V.	10.57%
BGF	7.53%
VP Capital NV	4.86%
Decico (Maasgard) BV	4.73%
Janus Henderson Investors	4.73%
The London & Amsterdam Trust Company Limited s	4.48%
ABN AMRO Private Banking	3.46%
INEOS Acetyls Investments Limited*	3.43%
Saxo Bank	3.34%

Table 1: Equity Holdings by shareholders

Statement

The significant shareholder as per the CEO "Rob Harris" of the company is issued to the "INEOS Acetyls Investments Limited” that holds the treasury shares (Palanti et al. 2022). Along with that, the beneficial interest brings into the authorization of the"Financial Services and Markets Act 2000" to deal with UK financial advisors. Based on listing shares in the stock exchange“AIM (LSE: AXS) and NYSE Euronext (AS: AXS)" are the two major recognized stock exchanges. As per the evaluation of company equity holders, the major investor of ordinary shares is"Teslin Capital Management" with 15.51% of shares (Accsysplc.com, 2020). The analysis of shareholders' equity holdings helps to evaluate the listing shares in the stock exchange as the company financial statements it has represented

Competitor

The company's major competitors involve Sureserve Group (SUR), Lords Group Trading (LORD), Water Intelligence (WATR), Supreme (SUP), Anexo Group (ANX), Amiad Water Systems (AFS), Braemar (BMS), Avingtrans (AVG),Manolete Partners (MANO), andCostain Group (COST) (Schmitt and Hansen, 2018). As per the analysis in the UK market, the company has to deal with its competitors as there is a large range of competitors thus to maintain quality and superior performance it helps to stay competitive in the market (Accsysplc.com, 2020). Based on the market research and competitors' initiative towards innovation the concerned organisation has to be updated for better competitive advantage.

Theoretical Basis

The fast-growing business and changing wood-to-change world formula is effective as the concerned organisation has focused on wood products based on creating new opportunities. Along with that, dealing with the durable and stable performance of the technology for transforming the environment leads to a focus on carbon-polluting alternatives. Based on the "Accoya and Tricoya" woods' performance it benefitted from completely sustainable performance as for sustainable forests through the acetylating process (Niero et al. 2018). Reducing the absorption of water into the wood helps to durable products' performance. Thus, the company is committed to a sustainable world through usingAccsys’ products for the bio-cycle of the circular economy.

The company has also been certified with "Cradle to Cradle Certified" for better materials quality along with executing strategy for business potentiality to commit to the values of changing world (Molina, 2020). Employing 250 employees in different production and plant sites helps in effective global reach by increasing the capacity of wood products.

Financial Ratios Analysis

The financial ratio analysis process has been effective to evaluate the financial condition of the company in order to deal with the last five years' annual report of“Accsys Technologies Plc.". It brings a major focus on the financial statements such as the income statements, balance sheets, and cash flow positions of the company (Mohammed et al. 2021). Along with that, the equity and debt balance have also been focused on in the data for 2017-2021. Based on the calculation of profitability, efficiency, gearing and liquidity ratios in order to calculate the gross profit, net profit, return on assets and return on equity.

It shows the profitability condition of the firm. In the efficiency ratio, the efficient process handling of the company has measures through enabling inventory turnover ratio, asset turnover, and receivable turnover ratio to consider the management of stock items, collection of amount from customers and asset management process. After that, the earnings ratios help to understand the financial risks of the company through debt equity, debt to assets, and interest coverage ratios (Jones et al. 2019). Along with that, the liquidity ratios analyse the working capital management and cash flow position of the company by calculating the acid ratio, cash ratio, and current ratio.

Profitability Ratios

2017	2018	2019	2020	2021
Gross profit ratio	25.39	22.39	24.79	32.62	33.15
Net profit ratio	-8.88	-16.66	-9.18	0.93	-0.91
Return on assets	0.72	0.59	0.68	0.57	0.49
Return on equity	0.41	0.82	1.02	0.74	0.73

Table 2: Profitability Ratios Analysis

The profitability ratios of the company involve gross profit, net profit; return on equity and return on assets. Based on the analysis of five years ratios of the company in 2017-2021 it shows deviations. As per the analysis of the gross profit ratio in 2017, it is 25.39% that is good however after deducting all expenses net loss is -8.88%. After that, the return on assets and return on equity also not achieved the idle position. In 2018 the gross profit ratio decreases to 22.39% and the net profit ratio again shows a loss with an increasing percentage that is -16.66.

The 2019 statement shows an increasing gross profit ratio and decreasing net loss percentage after that in 2020 the loss recovered an increasing gross profit of 32.62% with a 0.93% net profit ratio. However, in 2021 it again reduces and net loss by -0.91% as gross profit increased value by 33.15. The return on assets and equity ratios shows deviation as return on assets in 2017, 2018, 2019, 2020, and 2021 shows 0.72, 0.59, 0.68, 0.57, and 0.49. The return on equity shows 0.41, 0.82, 1.02, 0.74, and 0.73 in 2017, 2018, 2019, 2020, and 2021 through the analysis of profitability performance.

Efficiency Ratios

2017	2018	2019	2020	2021
Inventory turnover ratio	2.64	2.48	2.74	2.64	3.21
Asset turnover ratio	0.72	0.59	0.68	0.57	0.49
Receivable turnover ratio	1.23	0.71	0.68	0.70	0.61

Table 2: Efficiency Ratios Analysis

(Source: Self-developed)

The efficiency ratios involve inventory turnover, asset turnover, and receivable turnover ratios in 2017-2021 based on the analysis of annual reports of the company the above calculation has undertaken. As per the analysis, it has been found that inventory turnover shows positive sign thus strong sales have represented the company's operation (Hansen and Schmitt, 2021). The company has sales faster through increasing operating profit and helping to increase income. In 2021 it's highest that is 3.21 thus the growth of the company has initiated on the other hand asset turnover first increased in 2017 it is 0.72.

After that, it reduced to 0.59 and then increase to 0.68 that is a good sign for generating the company's revenue through the business operation. After that, from 2020 to 2020 it creates from 0.57 to 0.49 indicating the company has not efficiently used the assets to generate more sales. The receivable turnover ratio shows that the company is less efficient to collect the amount from customers (Bongers and Uphill, 2019). As based on dealing with credit sales the debtors have to pay the due amount thus the company has not efficiently collected the due amount from its debtors that create a negative impact on its cash flow and maintaining working capital in the organisation.

Liquidity ratios

2017	2018	2019	2020	2021
Current ratio	4.19	2.96	1.38	2.91	1.71
Acid test ratio	3.38	2.35	0.85	2.20	1.42
Cash ratio	2.82	1.85	0.33	1.55	1.12

Table 3: Liquidity Ratios Analysis

The liquidity ratios involve the current ratio, acid ratio, and cash ratio to analyze the cash flow and working g capital management in the organisation the company has to evaluate its liquidity ratios. Dealing with 5-year annual reports it has found that the current ratio is high as the idle ratio is 2:1 however in 2017 it shows 4.19:1 after that in 2018, 2.96:1 is good. After that, it decreases in 2019 to 1.38:1 and again increases to 2.91:1 thus the management of current assets to current liability is considered some deviation. In 2021 the decreasing ratio is 1.71:1 thus the company has to manage its working capital effectively and collect the due amount from debtors to manage cash flow and idle current ratio.

The idle acid test ratio is 1:1 however it shows more than that, in 2019, 0.85:1 and 2021, 1.42:1 has the idle position for the company to remain in that range for effective liquidity management in the organisation. The cash ratio represents the availability of cash in the company in 2019 it is the lowest at 0.33 however in 2021 it maintained the range of 1.12. Based on the deviation of the cash position in the company creates challenges to managing liquidity conditions and negative cash flow position in the organisation.

Gearing Ratios

2017	2018	2019	2020	2021
Debt equity ratio	0.40	0.54	0.71	0.44	0.36
Interest coverage ratio	-8.53	4.01	-2.11	-1.58	-1.94
Debt to assets ratio	0.40	0.54	0.71	0.44	0.36

Table 4: Gearing Ratios Analysis

The gearing ratios involve debt to assets, debt to equity and interest coverage ratios to analyze the financial risk associated with the company it has to be prepared. Managing the debt and equity balance is important as too much debt creates a financial burden. Analyzing the company's financial condition in 2017-2021 it has found that the financial condition of the company is not good. Evaluating the debt-equity ratio the deviation from 0.40, 0.54, 0.71, 0.44, and 0.36 in 2017, 2018, 2019, 2020, and 2021 creates a major impact on the financial condition of the company.

The deviation and reduced value affect the business and create a financial burden as per the analysis of interest coverage it shows negative. Based on that, it has been considered that the company's existing revenues have not adequate to party to its debt that exists (Bongers and Uphill 2019). On the other hand, the prospects of continuous burden create a huge financial risk for the business. The debt to assets ratio also shows a declining value that represents the company's debt is higher than its assets creating major challenges to pay out the company's existing debt and the debt burden has transferred to the next financial year.

Section B

Corporate Governance Compliance

Corporate governance has considered collective social responsibility as the company's major focus on developing technology it also focuses on climate change and pollution. Dealing with health and safety measures, the sustainable environment it has focuses oninnovative acetylating technologyto deal with the effective manufacturing process of wood products. Corporate governance based on technological development has focused on social responsibility (Accsysplc.com, 2022). As per the analysis of high-performance wood products the company has to focus on a wide spectrum. Along with that, the characteristics of building fast-growing sustainability-certified wood product materials have created a better advantage through altering the fossil fuels and man-made products.

The company drives revenue growth as through developing market opportunities it creates major capacity to deal with the IP programmes and manage risks. The environment-friendly committed organisation has a focus on innovative food processing technology that is applied in solid woods and panel products (Anintyarini and Utama, 2019). After that, the supply chain has managed the governance compliance based on intellectual expertise for innovative products to robust the protection process and engage in brand value management of Accsys' Accoya and Tricoya for long-term strategic targets process. As per the analysis of the R&D development process the innovation and long-term growth have focused on optimizing the acetylating process.

Based on the shareholder's needs and expectations social responsibility has focused on long-term success through a risk management approach. Maintaining a well-functioning balanced team the updated capabilities, skills, experience, and knowledge helps in continuous improvement (Bach et al. 2018). Along with, fulfilling the objectives for maintaining ethical issues and corporate culture behaviour practices to support decision-making and follow the governance structure.

Compliance

As per the evaluation of material differences, it brings the difference in durability and stability dimensions for effective advantage alteration in fossil fuels. Along with that, man-made products have the vision for creating opportunities for providing employees, stakeholders, licensees, and distributors with a better vision. Ensuring the business commercial process brings advancement of technologies with a quote of "Changing wood to change the world". Based on this initiative the board believes in strategic aims through focusing on the compliance of social responsibility (Accsysplc.com, 2020). The key governance changes for executing the business model in long-term success. Drive revenue for increasing the sales volume of Accoya and tricoya products. As the manufacturing capacity develops IP programmes and technological development processes.

Proposed financial strategies

The financial strategies of the company has consider through analysis of investor relations based on a sustainable future. Dealing with the changing world commitment through wood products the organisation has focused on growing the revenue in the group as compared to 23021 the revenue has increased by 21%. Thus the strategy of financial improvement leads to comparing gross profit increment by 9% from 2021 to 2022 (Bgf.co.uk, 2020). Along with that, the EBIDTA underlying in the company has also followed the same pattern of growing 3% hence the accsys' technology and products have been effective for the market suitability.

This helps to increase demand and encourage for using sustainable materials for expanding the growth goals set to 5 times more expansion in 2025. As per the analysis the green economy set by the "London Stock Exchange" has been considered a better world. Based on the products of Accoya and Tricoya the architecture manufacturing process has offered to build sustainable development (Finance.yahoo.com, 2021).The company has been awarded by the London stock exchange for its sustainable product initiative. Along with that, the strong social belief leads to consider investment propositions in technology, management team, sustainability, market opportunity and leadership in wood technology.

References

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