Welcome everyone to Accsys Technologies PLC preliminary results presentation for year ended 31st of March 2026. Today's speakers are Dr. Jelena Arsic van Os, Chief Executive Officer of Accsys Technologies, and Sameet Vohra, the company's Chief Financial Officer. Jelena and Sam will take you through an overview of the business and financial performance for the year before we open the floor for questions. Please note that we will be prioritizing questions from analysts. We will be showing some video during the presentation. You have the option to click on the enlarge button to make the video larger. With this, I would like to pass over to our speakers.
Good morning, everyone, and thank you for joining us. Before we begin, I would like to draw your attention to this image. It shows soon-to-open Google headquarters in London, featuring an Accoya facade. This is one of our largest projects to date, and we are incredibly proud to have been specified for such a landmark development. Financial year 2026 was an excellent year in which Accsys delivered strong strategic and financial progress, marked with robust growth and a significant improvement in profitability.
Against the challenging macroeconomic backdrop, we delivered record global Accoya sales volumes that increased by 21%, with growth across all our key regions and a particularly strong performance in North America. We significantly increased group revenue by 20% on like-for-like basis, reflecting resilient demand for our premium products, continuing pricing discipline, and the increasing strength of our commercial platform. We are expanding our reach.
During the year, we broadened our distribution network and expanded our product offering. In its first full financial year of trading, the joint venture achieved EBITDA profitability and volume increase of 60%. This performance reinforces the strategic importance of local manufacturing in North America, our key growth market. The most encouraging aspect of FY 2026 is the quality of the growth we delivered. Adjusted EBITDA increased by 96% to EUR 21.2 million, and adjusted EBITDA margin improved to 11.6%, bringing us very close to our Phase I FOCUS target of 12%. Gross profit margin also remained strong at 30.9%, above our 30% target. Underlying basic earnings per share were EUR 0.021, a material improvement compared to a loss per share of EUR 0.05 in the prior year, all driven by the significant improvement in profitability.
Financial year 2026 was a year of disciplined capital and balance sheet management, with improved leverage ratio and operating cash flow at target level. In October 2025, we completed refinancing on improved terms, strengthening our capital structure and enhancing our financial flexibility to support the future growth. All in all, Financial year 2026 was a year of strong operational execution, market share gains, and a step change in profitability while de-risking the balance sheet and building momentum in North America.
The first phase of the FOCUS strategy concludes in March 2027 and was designed to be transformational for the business, with ambitious targets established at the time in the response to the trading environment of FY 2024. This slide highlights significant progress made against our key strategic metrics over the past three years. During this period, our sales run rate increased from 65,000 to 97,000 cubic meters.
Adjusted EBITDA margin improved from 3.5% to 11.6%, and gross profit was sustained consistently above 30%. Net debt leverage ratio reduced from 4.4 to below 2x , and cash flow conversion is on 75% target. Most importantly, FY 2026 demonstrated that Accsys has evolved into a fundamentally stronger business. The company has a clear and achievable strategy and a de-risked profile vis-à-vis unfinished large capital projects.
Today, Accoya is produced at three production sites localized in the key markets for wood building materials. Finally, our customers are at the center of everything we do. We continue to elevate our sales, marketing, and customer support. Our teams are standing behind this fantastic progress, and I am taking this opportunity to thank all our colleagues across the globe for their efforts and dedication. As we look ahead, our priorities remain clear: innovation, higher capacity utilization, further improvement in profitability and returns, and continuing deleveraging.
With this, I will pass now over to Sam to provide a detailed overview of our financial performance.
Thank you, Jelena. Over the next few slides, I am going to talk you through the financial results for the year in more detail. This slide summarizes the strong financial performance for the financial year. I will go into more detail on the financial performance in the next couple of slides, but highlighting some of them now. Starting with sales volumes. Group sales volumes were up 6% to 60,384 cubic meters compared to the prior year.
When you exclude the 3,802 cubic meters of sales made by the group to North America in the prior year before the Accoya USA JV commenced operations, the group sales volumes were up by 13% on a like-for-like basis, with strong demand in all regions. Total sales volumes, which includes all of the sales volumes from the JV and more clearly shows global demand for Accoya, increased by 21% to 77,237 cubic meters.
Accoya USA saw 60% like-for-like sales volume growth to 16,853 cubic meters. A standout result. Group revenue increased by 12% to EUR 153 million on a reported basis and 20% on a like-for-like basis. Aggregated revenue, which includes 60% of the revenue of the JV, was up 24% to EUR 183 million. Gross profit was EUR 6 million higher than the prior year at EUR 47.4 million, and the gross profit margin increased by 130 basis points on a like-for-like basis to 30.9% and remained above our target level of 30%.
Underlying EBITDA, which excludes the results from the joint venture, increased by 26% to EUR 21.1 million compared to EUR 16.8 million in the prior year, with a 110 basis points increase in the underlying EBITDA margin to 16.1%. This reflects the strong sales volume and revenue growth, maintaining a gross margin above 30% and the cost control discipline we have over operating costs.
It was really pleasing to see that the Accoya USA joint venture was EBITDA profitable in its first full financial year of trading, compared to a loss of EUR 6 million in the prior year. Adjusted EBITDA, our main profitability performance measure, was up by 96% to EUR 21.2 million, with an impressive 430 basis points increase in the margin to 11.6%, which is just below the 12% target that we have set for the end of Phase I of our strategy. Statutory profit after tax was EUR 6.5 million after the recognition of a tax credit of EUR 7 million in the year following approval from the tax authorities of the advanced pricing agreement that was in place for the years FY 2017 to 2025. Accordingly, underlying earnings per share was EUR 0.021 compared to a loss per share of EUR 0.05 in the prior year.
Turning to cash flow, operating cash flow was EUR 15.8 million, up EUR 5.1 million on the prior year, with a cash conversion of 75%, in line with our strategic target level and up 11 percentage points compared to the prior year. After CapEx of EUR 5.5 million, free cash flow was EUR 10.3 million, up 17% year-on-year. Net debt at 31st of March 2026 stood at EUR 41.4 million, EUR 1.2 million lower than the prior year, with the leverage ratio improving significantly to below 2x . I'll discuss the changes in revenue, profitability, and net debt in more detail in the coming slides. Going into more detail on our revenue performance for the year. As I previously mentioned, group revenue increased by 12% on a reported basis to EUR 153 million.
Excluding the EUR 10.3 million of revenue from sales made to North America from Arnhem before the JV started operations, which equated to 7% of the volume for the prior year, like-for-like revenue growth was 20%. The sales growth that we've seen during the year across all regions has fully replaced the North America volumes transferred to the JV. Despite the challenging macroeconomic environment, we have maintained strong pricing discipline with a 1.7% increase in average Accoya sales price for the year. We saw a favorable sales mix benefit to revenue in the year across our product range. We experienced substantial growth for our premium Accoya Color product, with global sales volumes up 51%, supported by capacity expansion and operational improvements at our Barry coloring facility. Color now makes up a higher proportion of group sales volumes than the prior year.
Sales to the JV increased by EUR 7.4 million during the year, and this is primarily made up of Color tolling that the Barry facility undertakes for the JV. Licensee and royalty income from the JV was EUR 2.6 million higher than the prior year, as the group receives a royalty based on sales made by the JV. The final licensee payment was also received during the year following successful completion of the performance test of the Kingsport plant, thereby granting exclusivity for the North American market to the joint venture. Other revenue represents Tricoya panel sales and sales of acetic acid, which were broadly in line with the prior year. Aggregated revenue, which includes 60% of the joint venture's revenue, increased by 24% to EUR 183 million.
On a constant currency basis, aggregated revenue grew by 26%, given the weakness of the U.S. dollar against the euro, with the U.S. dollar weakening by 7% over the course of the year. On the face of it, the reported gross profit margin increased by 60 basis points to 30.9% for the year. However, the prior year includes sales that were made to North America from Arnhem prior to the joint venture commencing commercial operations. These sales amounted to 3,802 cubic meters, which represented 7% of group sales volumes. They contributed EUR 4 million of gross margin in the prior year and EUR 2.9 million to EBITDA, as the average sales price in North America is higher than all other regions.
A more representative way to look at gross margin progression in the prior year is to exclude the EUR 4 million from the comparator, resulting in the like-for-like gross margin improving by EUR 10 million to EUR 47.4 million at 130 basis points to 30.9%. This EUR 4 million gross margin reduction from transferred volumes has been more than offset by group sales volume growth, favorable sales mix and higher average sales prices, together with the receipt of royalties and licensees from the JV. Our main production costs relate to raw material spend on raw wood and acetyls, which, when combined, represent approximately 61% of the bill of materials cost. Raw wood costs are slightly higher than the prior year, as higher appearance- grade raw wood costs were partly offset by lower wood- grade chip costs.
We saw an improvement in gross margin arising on net acetyls from improved utilization of acetic anhydride in the production process, a change in the supply mix and favorable FX as the U.S. dollar weakened against the euro. The gross margin at 30.9% continues to remain above our strategic target level of 30%. This slide shows the adjusted EBITDA progression during the year, reflecting the strong financial performance. We saw a 96% increase in adjusted EBITDA from EUR 10.8 million to EUR 21.2 million, and a 430 basis points increase in the adjusted EBITDA margin to 11.6%, which is closer to the 12% target we set for the end of Phase I of our FOCUS strategy, and it's very encouraging to see.
Operating costs increased by EUR 3.7 million during the year, which is primarily driven by strategic headcount additions in our commercial and operational organization to support growth, and we have also strengthened local management teams in key areas. Following on from the business transformation program that was undertaken in FY 2024, the average number of staff in the group for FY 2026 is at the same level as that in FY 2024, but we have rebalanced the mix, adding commercial revenue- generating FTEs and strengthening operations, while at the same time reducing corporate headcounts.
We have still retained EUR 0.8 million of savings from the FY 2024 business transformation program, with operating costs representing 17% of revenue in FY 2026 compared to 20% in FY 2024, and we continue to maintain our disciplined approach to cost control. During FY 2026, there were no further costs associated with Hull after the business was placed into liquidation in December 2024.
The joint venture was EBITDA profitable for the year, with our 60% share of the EBITDA profits amounting to EUR 0.1 million in its first full financial year of trading, despite the imposition of tariffs on wood imports into the U.S.A., which commenced in October 2025. This is a substantial improvement in EBITDA profitability of EUR 6.1 million year-on-year, compared to the EUR 6 million loss recorded in the prior year. From a segmental perspective, EBITDA from our Accoya segment increased from EUR 20.5 million to EUR 24.7 million, with a healthy margin of 16.1%, up from 15% in the prior year. This growth is primarily due to the strong sales growth, the improvement in gross margin, and cost control discipline. Corporate costs amounted to EUR 3.6 million and were EUR 0.1 million lower than the prior year, but importantly, EUR 1 million lower than in FY 2024.
Corporate costs now amount to 2.3% of revenue, compared to 2.7% in FY 2025 and 3.4% in FY 2024. Therefore, underlying EBITDA, excluding the JV, increased by 26% from EUR 16.8 million to EUR 21.1 million. The margin improved by 150 basis points to 13.8%, reflecting the stronger underlying profitability of the group.
As I mentioned before, adjusted EBITDA increased by 96%, from EUR 10.8 million to EUR 21.2 million, with a 430 basis points increase in margin to 11.6%. This slide shows the evolution of net debt during the year. Net debt at the end of March 2026 stood at EUR 41.4 million, a decrease of EUR 1.2 million compared to the start of the financial year. Debt reduction and deleveraging the balance sheet remains our key priority from a capital allocation perspective, and the net leverage ratio reduced from 2.52x to 1.96x at the end of March 2026.
Excluding the EUR 26 million of convertible loan notes and associated accrued interest within the net debt total, then the leverage ratio is 0.74x . Subsequent to year-end in June 2026, following the end of the PIK interest period for the convertible loan note, EUR 2.5 million of accrued CLN interest will be converted into equity, thereby reducing net debt further in FY 2027. We experienced an increase in net working capital of EUR 8.8 million in the year, which is primarily related to higher inventory levels within the group and amounts owed by the JV. The increase in inventory was planned to ensure product availability to support strong demand, particularly in Accoya Color, following the expansion of capacity at Barry. Accordingly, operating cash flow conversion was 75% in line with our Phase I target.
CapEx was EUR 5.5 million during the year, and this included expansionary growth CapEx of EUR 2.6 million on increasing our acetyl storage in Arnhem and making health, safety, and environmental improvements in the Arnhem stacker hall of EUR 0.6 million. Free cash flow increased by 17% to EUR 10.3 million, and the free cash flow margin improved by 20 basis points to 6.7%. We also invested EUR 3 million into the joint venture to support its ramp-up, given the substantial growth seen during the year. Net interest paid and accrued amounted to EUR 5 million, of which EUR 2.2 million relates to interest accrued on the convertible loan notes. During the year, we also finalized the APA agreements with the Dutch and U.K. tax authorities covering the years FY 2017 to 2025. This resulted in tax received of EUR 0.7 million in respect of previous tax years.
In October 2025, we completed the refinancing of our debt facility with a new EUR 55 million facility with ABN AMRO and HSBC on improved financial terms, which will save the group approximately EUR 2 million in cash annually. The refinancing strengthens our capital structure, enhances financial flexibility, and further de-risks our profile, positioning us to execute our strategy and growth plans with greater confidence and resilience. In summary, we are very pleased with the FY 2026 financial performance and are well- positioned as we enter the final year of Phase I of the FOCUS strategy. I'll now hand you back to Jelena, who will take you through the business review.
Thank you, Sam. I want to spend a few minutes to look at the specific market dynamics in FY 2026. It has been a challenging period for the construction and building material sector, even before the current Middle East conflict began. Persistently higher costs and interest rates have delayed recovery and constrained overall construction activities, while geopolitical developments have added further uncertainty. In the U.S., tariffs have added another layer of pressure. These factors are especially impacting the new build sector. The renovation, refurbishment, and infrastructure sectors, on the other hand, have been more robust. Against this backdrop, luxury sector and timber construction, which helps support Accoya adoption, has continued to show good momentum, reflecting long-term sustainability drivers and the growth preference for the natural materials in design. In Europe, the new legislations like EUDR, EU Deforestation Regulation, increases demand for verified, traceable, FSC-certified wood.
This reduces the availability of high-risk tropical hardwood, limiting growth of competitive material mid to long term. As mentioned on earlier slide, refurbishment and renovation have been among the more resilient segments on the market. Accoya performance on durability and dimensional stability makes it a superior choice for doors and windows versus other wood alternatives. We have an extraordinary strong reputation for these applications in the U.K. and Ireland. We are also growing our North America presence with expanded partnership amongst leading window and door manufacturers. Demand for Accoya is also supported by the premium residential and luxury segments, which tend to be less sensitive to borrowing costs and operate with different dynamics to the broader housing market. In the U.S., we are also seeing a clear structural shift towards modified wood over traditional timber, driven by performance, durability, and reliability.
In the U.S., modified wood is growing at around 14% annually, while traditional wood categories are in decline. Accoya is outperforming both, with growth of around 16% as we continue to take share. Looking in more detail on our regional performance, Accoya continued to gain share across all geographies in FY 2026. North America remains our largest addressable market at approximately 8.6 million cubic meters. Europe and the U.K. combined have an addressable market of 1.9 million cubic meters. We achieved 12% growth in the U.K. and Ireland, our most established market, as we continued to build our strong reputation for door applications as well as gain for facade specifications. Europe grew 21% with a good performance in Germany, driven primarily by good demand in the outdoor living market for decking, outdoor furniture, and playgrounds.
We had positive momentum in Belgium after onboarding a recent distributor, where we are regaining presence in windows and doors market. Across the rest of the world, we saw 9% growth with bright spots in Australia and New Zealand as our partnership with our distributors continued to develop. Accoya for Tricoya sales grew at a more moderate pace, 8% year-on-year, due to overall market dynamics. Accoya had outstanding growth in the U.S., with 60% volume growth year-to-year. This was largely driven by premium residential projects. Looking ahead, we see opportunity to build our presence and specification in the commercial sector, where construction starts are up 10% on a rolling basis as of April 2026. We received highest growth from our existing customer base, who know and work with Accoya for longer, while we intensified support and onboarding of new 10 distributors.
To further support sales, we also increased availability of Accoya Color and introduced our first finished Accoya decking range. These actions supported 51% growth in our Accoya Color product. Last but not least, average sales price showed increase of 1.7% in FY 2026. This includes price increases in the U.S. to manage the impact of tariffs. A few words specifically on Accoya USA on standalone basis. Accoya USA is Accsys' joint venture with Eastman Chemical, where Accsys holds 60% in equity share. Reflecting the 60% volume growth, revenue increased by 178% from EUR 18.1 million to EUR 50.5 million versus previous year. JV delivered EBITDA profitability with EUR 10.2 million year-on-year improvement. This trend was encouraging, and we have another significant volume target in front of us for financial year 2027, with focus to bring joint venture to cash breakeven.
We have added three new distributors in FY 2026 and intensified relationship with direct U.S. windows and doors manufacturers. Volume and revenue growth is the most impacting lever on the performance of the joint venture. Significant effort was put in the new business development. We have increased commercial headcount in the U.S. and added dedicated specification selling in New York, focusing on the most prominent architectural firms in the country. Tariff impacts were managed actively by pricing and negotiations with the sawmills. We continue to see Accoya specified for incredible projects worldwide. In the North America, we are seeing strong demand in premium and luxury residential, as illustrated by this beautiful Accoya-clad home in Canada. Accoya is also being used on growing number of high-profile public sectors projects, including the Edelman Fossil Museum in the U.S. and the Tinside Lido in England.
In Europe, Accoya continues to be selected for design-led commercial applications, such as the new STUA headquarters in Spain. Our presence in landscaping projects is also strengthening, particularly in the U.K. From the Parkinson's UK garden at the Chelsea Flower Show, which received the BBC People's Choice Award, to the Queen Elizabeth Memorial Park in London's Regent's Park, where Accoya was chosen for the benches. These projects are all made possible by support of our distribution network and approved manufacturers. I would like now to share a short video of our longest-standing North American partner, Spitz Group, who have more than 15 years of experience with Accoya and have been a significant contributor to the outstanding sales growth of Accoya in North America this year. Let's hear their reflections on our partnerships.
We're the Spitz Group. In Canada, we're Upper Canada Forest Products, Sierra Forest Products in the U.S., and we operate internationally as Atlas Imports. Our business is wholesale distribution, catering to both commercial and residential applications. Our customers manufacture a variety of products from cabinetry, to furniture to flooring, all the way down to windows and doors, as well as decking and siding. We've been working with Accoya for over 15 years. We were the first distributor to import Accoya into North America. The attraction for us was the uniqueness of the product. It was brand-new science. Nothing else in the marketplace even came close. Accoya is being utilized everywhere from mountaintops to seasides to deserts for its durability, for its longevity, for its low maintenance, most of all for its beauty.
Demand for Accoya is being driven by homeowners, architects, and designers who are looking for socially responsible solutions that encompass durability, low maintenance, long lifespan, really beauty.
Reflecting on our operational capabilities, we made substantial progress over the past two years in transforming Accsys into a leaner and more efficient organization. This work has strengthened our foundations and given us a stronger platform for growth. As previously mentioned, the gross profit margin increased by 130 basis points to 30.9%. We also maintained savings delivered through the FY 2024 transformation program, even after investing in headcount to support the growth.
We continue to invest in our assets as well. As additional storage capacity for acetic anhydride and acetic acid was commissioned in Arnhem, which has enabled simultaneous reactor feeding, increasing our flexibility and enabling a 5% increase in available production capacity. We also improved gas efficiency across our operations, contributing to an 8% reduction in Scope 1 carbon emissions. At our Barry facility, we expanded capacity and improved heating efficiencies to support the growth of Accoya Color.
As a technology-led company, we continue to focus on innovation, developing enhanced fire-resistant Accoya solutions, extending our product range and exploring new wood species to support customer adaptation and long-term growth. IP protection remains a priority. This year, we had 13 granted patents, adding further protection to our core acetylation process and further improvements on Accoya and Tricoya technologies. IP was also obtained for cleaning up of post-acetylation acid streams. Both in Accoya and Accoya Color wall panel have achieved U.S. WUI, Wildland-Urban Interface compliance, enabling their use in the areas at high risk of wildfire. In parallel, through collaboration with external coating partners, we have advanced EU fire class D solutions for Accoya. Our durability performance remains a clear differentiator.
A growing number of coatings were approved with industry-leading warranties of up to 15 years on Accoya for both opaque and translucent finishes, something that remains unique within the wood sector. This brings us to the outlook. Looking ahead, the group remains focused on innovation, market share gains, increasing capacity utilization, and driving further sustainable improvements in profitability. While macroeconomic conditions remain uncertain, with some inflationary pressures arising from the conflicts in the Middle East, we are well-positioned to manage the potential impact through the product differentiation, geographical diversification and pricing discipline. The board will continue to monitor developments closely and respond as appropriate. While mindful of the dynamic macroeconomic backdrop, trading is in line with the board expectations for FY 2027, and the group is on track to deliver against its Phase I FOCUS targets.
With the milestones passed in 2026, Accsys is now entering a new phase of growth, with a substantial potential to deliver further significant shareholder value through our market-leading sustainable products, proprietary IP, large addressable growing markets, and established manufacturing footprint. Accsys is transforming, we are growing, and we are delivering. Thank you very much for your attention. We are open now for the question.
Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please note that we will be prioritizing questions from analysts. We will now take the first question. One moment, please. From the line of Adrian Kearsey from Panmure Liberum Limited. Please go ahead.
Morning, guys. Fantastic result this morning. A couple of questions, if I may. In terms of you signed up some new distributor clients over the period, they required a degree of education. How quickly do they typically take before you sign up a distributor, before they start generating a meaningful contribution to the top line?
Hi, Adrian. I will take this answer, if you don't mind. Thank you very much for your question. As you've rightly said, we did put in new distributors this year, 10 of them, and it takes usually 6 to 12 months to really get them going and get their sales out to outpace the stock build. When you get a new distributor, the first thing they do is they buy a stock. Then they are trying to get their new business development growing because Accoya is a technical product. You need to educate also the manufacturers, who are their customers how to use it, how to actually benefit maximally on the fantastic performance of Accoya.
It does take them a little bit of time to get used to it. We put most of our attention of our technical support and salespeople to pass that onboarding period, as they call it.
Okay. A sort of technical question on the balance sheet, if I may. The convertible loan notes, they are now in the money. Can you remind us of the key conversion terms and also the interest rate benefit that you will see once they get converted?
Yeah. Okay. Thanks, Adrian. The convertible loan notes were issued as part of the November 2023 equity raise, and the principal value at the time was EUR 21 million. They go from November 2023 to November 2029 at a fixed coupon rate of 9.5% per year. The first 2.5 years, no interest was payable. It was a payment in kind, a PIK interest period, so the interest just accrued. That interest period, the 2.5- year period, ended just a couple of weeks ago. Then the loan note holders, who are amongst our largest shareholders, and have been long-term investors in the company and very, very supportive of the business, could make a choice between letting us take their interest in either cash or equity.
Given there's a significant increase in share price for us, effectively more than doubled since we've done our capital market sale last year. You're right, the CLNs are in the money. The conversion strike price is EUR 0.8322 per share, and we're about EUR 0.90, EUR 0.91 per share. Some of the loan note holders decided to take EUR 2.5 million of that interest in equity. So when the shares are issued in effectively July, that will reduce our net debt by EUR 2.5 million and then save us EUR 2.5 million at 9.5% of interest just on that single decision made.
Thanks, Sam.
Bye .
Thank you. We will now take the next question from the line of Martijn den Drijver from ABN AMRO ODDO BHF. Please go ahead. Martijn, your line is open. Okay. Due to no response, we will go with the next question. Our next question comes from the line of Alex Brooks from Canaccord Genuity, London. Please go ahead.
Yeah. Good morning. Thank you for taking my question. Very interested in hearing a bit more about your move to your own product, the decking collection, through will be the first time you've gone directly to end customers and what the impact of that is.
Hi, Alex. Thank you very much for your question. Indeed, the decking collection by Accoya is our first attempt, and if you like, this year we tested the approach in Australia with our long-term distributors there; also, we are continuing to test it in Germany and Switzerland as well. This allow us to actually provide Accoya to be closer to the end consumer so that the project developers can go to the retail distribution place and pick up already profiled and finished decking that you can install. We are trying to move a little bit further, keeping the portion of the value that is now being given away. Also, at the same time, trying not to fiercely compete with some of our distributors who are actually doing decking themselves.
It was very important to have a specific branding for our new decking program and also to do the phased, if you like, roll out so that we can accommodate market and do not have a competition with our direct customers.
Okay. Thank you. I guess the competition was the obvious question. My second question is really about the annual profile in Accoya USA. For the year, you have the EBITDA, but that it's growing very rapidly. Can you just talk a little about the kind of seasonal profile of that business, which I think is a bit different to ?
Well, U.S. wood building material markets, it's massive. It is one of the largest and most profitable in the world. If you drive around U.S., you see all of these houses being built in wood, which is not necessarily the case if you are in U.K. or Europe or somewhere else. It is a very specific market. Our Accoya is targeting premium sector. As you saw in the presentation, most of our projects are either luxury private villa, residential villas or big industrial or commercial projects, where specification selling is a very important selling step. It starts, certainly year or two years before you even build something. That's why it is very important that you have a pipeline of projects in your portfolio and a specific specification effort to take care that you continue having those beautiful projects in the pipeline.
As I said, we had a significant growth with our existing distributors because they are working with Accoya for a very long time, and also they are approved manufacturers. Manufacturers of cladding or decking with whom they are working, their customers, they had already years of experience, and they are broadening and winning the market share because of fantastic performance of the product. If the architect will use it once, he see how it perform, and he wants to use it again. I think from the dynamics perspective, U.S. is much more dynamic than Europe or U.K. In the U.S., it's much more dynamic, and size-wise is much bigger.
60% growth was needed for us as well in the U.S., and we also need to do another one, almost the same per cent in this financial year, because we are focusing to bring Accoya USA as fast as possible from this EBITDA breakeven position to the cash breakeven position as soon as possible, so to say, for next year.
Wonderful. Thank you very much.
Thank you. We will now go to the next question from the line of Martijn den Drijver from ABN AMRO ODDO BHF. Please go ahead. Your line is open.
Yes, thank you. Operator, can you hear me now?
Yes, we can, Martijn.
Okay, great. I could hear you guys in the previous attempt as well. Anyway, good morning, Sam. Good morning, Jelena. Congrats with the results.
Thank you.
I listened to the answer on the new distributors, which obviously makes sense. Can you talk a little bit, this is specifically Accoya USA, the existing distribution partners? Can you talk a little bit about how far they are in terms of adoption, penetration, relative to your own targets to get a bit of sense how these could contribute to growth in fiscal 2027?
As I already mentioned, Hi, Martijn. Good to hear you. As I already mentioned to Alex, the most growth we saw this year in the U.S. was coming from our existing distributors, not necessarily from the new ones. We did introduce quite a lot of new ones. They bought initial stock, and they are working with that stock and reordering again. It does take some time to really get them going and not competing with another Accoya project, but building their own market share in the area where we pick for them. For the existing distributors, I will just give you an example of our largest distributor, Spitz Group, which you heard in the video as well. They would have a very large OEMs that are one of the largest companies in America to do the Accoya decking or Accoya cladding on a project.
They will be present worldwide. Delta is one of our largest customers that is direct customer of Accoya. I believe last year we had a video of Delta explaining why do they believe in our project. Delta is now building a second factory, so they are doubling their capacity and they are probably one of the largest promoters of Accoya product range. We continue. What we are also seeing is that manufacturers who believe in Accoya are also expanding their presence in the market because they are very satisfied how the products are performing in the place.
In a general sense, you are just very happy with how the existing distributors are doing. Is there some sort of level that you can share with us about where they should be going and where they are today? Are they at 60% of your target? Are they at 30% of your target? Just perhaps a bit more color on such a metric.
If you see our target for the next year, we said that we want to be at around 100,000 run rate in volume. Of this, 30% was for Accoya USA run rate in the last quarter, for the Accsys, 70%. That position would allow joint venture to be on a breakeven cash position, and it would give us utilization of the plant around 60%-65%. If you would see what does it mean for the existing customers, existing distributors, longstanding distributors, they would probably utilize more than half of that capacity, then the rest would pick up the other half. They are also focusing on the areas of big luxury, high-end construction, focused on natural materials. Usually, you see that in California, you see that in the areas of Eastern Coast of U.S., so New York.
You see it in the Colorado space, in Texas and Chicago area. Canada is also important market for us. As we now have a new distributor in Mexico, we started to see some new projects coming from Caribbean and Mexico that are quite helpful with that volume build.
That's very helpful. Moving back to Arnhem, if I may. You mentioned specifically the acetyls storage, the stacker capacity, some other efficiency improvements. How should we think of that gross profit margin then in 2027? You did 130 basis points underlying in 2026. Is that achievable again in 2027? If not, why not?
Let me pick that one up. Yes, absolutely right. We made quite a lot of significant operational improvements in Arnhem. I mean, the expansion of the acetyls storage added 500% storage initial capacity to our anhydride and 300% to our acetic acid, that results in about a 5% increase in our production capacity, plus other projects that we are continuously working on, working on black belt initiatives, Lean Six Sigma, all of these. I think when you look at it, our target is a gross margin of above 30%, and we would fully expect to be above the 30.9% that we just achieved for FY 2026 in FY 2027. When you do look at it, 61% of our cost base for the bill of material is the raw material cost, so woods and the acetyls cost.
To the extent that there is inflationary pressure on that, you can't just keep on increasing your pricing to offset that. We would expect to be above the 30.9% in FY 2027, probably not 130 basis points leap, because a lot of that was to do with the prior year, the normalization effect of the volume being transferred to North America. We will be above 30.9%.
Understood. Moving on to Color. You've doubled capacity now to 14,000 cubic meters by adding a second shift. Can you share with us roughly what was the actual output of Barry in 2026, and where do you see that going in 2027? Can you maybe remind us what the price premium was in 2026, or is in 2026, that Color demands over normal Accoya?
The Color output was around 8,000 cubic meters in FY 2026, compared with the 5,400 cubic meters in FY 2025. The price premium is around 25%, in the U.S. a little bit more. This is certainly one of the nicest and fastest-growing product ranges we have today.
Just to come back to that. You did 2,600 cubic meters more in one year. Is that the type of growth rate that would be reasonable to assume in 2027?
Well, we do expect Accoya Color to continue to grow. If it is going to do exactly the same, we are going to see, but it is certainly one of our fastest-growing ranges we have.
Understood. One more question and then I'll move back into queue. On your Phase II, the segment optimize, given that you've almost achieved your 2027 targets in fiscal 2026, how do you feel about the timeline of that Phase II optimize strategy? It requires between brackets, only 20,000 cubic meters of volume increases in four years.
Yes.
Relatively cautious. Can you share your thoughts please?
Yeah. I just wanted to remind you that all of the phases of FOCUS strategies were defined at the time when the only business reality we saw was the financial year 2024. At that time, when you set those targets in place, they look extremely aggressive. Now, if you look at it from perspective today, because a lot of hard work was put in it and the company did progress and transform reasonably, it is needed to review it. If you look in a little bit more detail, what we say, what we wanted to do in the optimized stage was to review the Color locations. You see, we are selling quite a lot of Color now in the U.S. from Barry. There is an option of localizing production in the U.S., which is one of the things that we are quite busy at the moment.
When we are looking at the KPIs that needs to be achieved, and you are saying it takes you only so little to get there, that is true. In the sense to get the targets from a Phase II we probably are going to change those as we go forward. We are now in our strategy review for the Phase II and Phase III in order to present again in a new Capital Market Day that we are planning in September of FY 2027, changes on the Phase II and Phase III of our strategy. There are a couple of things from the Phase II that we are already started to do now. KPI targets are almost on the target, we still have the improvement in profitability significant, because we said Phase II is around 15%. The volume growth there is big.
We will certainly start thinking about when new capacity should come. When we are talking about new capacity, we assume that new reactor would be in U.S., and we certainly have to start somewhere middle of next year, with the design and plans for that expansion to come in year 2030 in America.
Understood. I have some more questions, I'll go back into queue for now. Thank you.
Yes. Thanks.
Thank you. We will now take the next question. From the line of Toby Thorrington from Equity Development. Please go ahead.
Yeah. Morning all. Coming through loud and clear?
Yes.
Yes. All good.
Great. Thank you. Just a supplementary question, first of all, on Color, please. I think you mentioned around 8,000 cube total production in FY 2026. Just curious to know how much of that would've gone to the U.S., please.
Of that, Toby, just over 2,000 went to the USA.
Yeah.
That was over 100% growth year-over-year for the North American market.
Great. Thank you. On the restated royalty and license income line, obviously increased year-over-year quite a bit. I think, Sam, you mentioned there was a one-off figure in there as well. Can you help us out a bit, in terms of how you would expect that to move? Is there a base number which is flat, and then there's an amount linked to U.S. volumes? How should we think of the development of that?
Yeah. The return that Accsys got from the joint venture was a one-off license fee, which was EUR 5 million, and that was effectively done in three installments. The first one was effectively on signing the JV agreement. The second one was after construction of the plant. The third one was effectively after the final performance test was done. Of that EUR 5 million, it was split into three equal tranches. The last tranche from, say, EUR 1.6 million, was then recognized in FY 2026. There's no more license fee income in terms of the acetylation plant to come, and then we get an ongoing percentage royalty of every dollar that they sell is effectively our return. It's just a single-digit royalty.
Right. It would jag down by, I don't know, EUR 1.75 million year-on-year because of the exclusion of the one-off, and then it will increase with the underlying volume in the U.S.
Correct.
Does that broadly right? Yeah.
Yes. That's correct.
Okay. Thank you. Just on tax to P&L and the cash question, please, can you give us some sort of guidance what you'd expect the underlying tax rate to be through the P&L and the cash?
Yeah. You saw there is a one-off tax credit in the accounts because we finalized the APA agreements. Going forward, I'd expect the Netherlands operation is highly profitable. We effectively have the corporate cost in the U.K., plus also the profitability for the Barry operation in the U.K. I'd expect a blended effective rate of 20% on PBT for the group, excluding the JV.
Yeah.
Cash, just slightly lower, probably around 15%, because we do have some tax losses in the Netherlands that we can utilize going forward.
Perfect. Thank you very much. Lastly, an operational one. Can you tell us what the expectation is for maintenance shutdowns, timing thereof, in the U.K. and the U.S. and possibly Barry this year?
Usually, we have our big maintenance shutdowns in Arnhem in October. It was October last year. It will be October this year as well. We are planning to be down for the most of the month. Maybe there will be one week of manufacturing, and then the rest is really all repairs and maintenance work that we have. Barry already had, in the beginning, a phased shutdown to replace some of the heat exchangers in the kilns. We are not expecting a big shutdown in Barry. In the U.S., they had their maintenance stop in June. They are not expecting to have any other maintenance stop until end of the year.
Fingers crossed for that. Thank you very much.
Thanks.
Thanks.
Thank you. We will now take the next question from the line of Edward Prest from Berenberg. Please go ahead.
Thank you for the presentation. Just one in relation to Germany, where I know you noted the strong growth. Have you got a sense of what has been driving this from a sort of high level? Is it a growing market for wood products? I don't know, maybe regulatory changes or something like that that's supporting demand. Is it a case that Accsys has actually just been growing share and taking it from competitors? Thanks.
As I said, in Germany, we had quite a lot of pull from that outdoor living space, predominantly from decking, outdoor furniture, and playgrounds. If you see in this space, Accsys or Accoya is gaining significant share because the space, it is becoming quite popular, especially in Switzerland, but also in Germany, to have natural materials, to have good- performing materials, long-lasting materials being used in those applications. We do gain share from the tropical hardwoods. They are getting more difficult to source in those countries. Going forward, it is going to become even more difficult with all of these regulations that are now being put in place.
Cool. Thank you. That's helpful.
Thank you. We will now take the next question f rom the line of Alastair Stewart from Progressive Equity Research. Please go ahead.
Pardon me. Good morning, both of you. Thanks very much. Just a few questions. Actually, most of mine have been answered already. Looking at slide 18, a few questions on the sales growth by geographical markets. You've just covered the question of Germany being strong. Stripping out Germany, have you got a rough idea how much lower that +21% year-on-year growth would be? That's the first question. On U.K. and Ireland, I'm not looking for precise figures, but I imagine Ireland was stronger than the 12% growth between the two. The housing market's been very strong there. Rest of the world, it's a smaller market, obviously, 9% growth. Is that a market you're going to concentrate much on for growth? Obviously, your prime target is North America, but do you see the rest of the world catching up with the other non-North America markets?
I think that's about it. Yep.
Yeah. Thank you, Alastair. Just for your understanding, let's start with the U.K., because that's closest to home.
Yeah.
12% growth is really coming predominantly from the windows and doors application in the U.K.
Yeah.
This is our largest, most established market, and U.K. for us is larger than, if you like, Ireland, because we do see a bulk of our business going into the joinery segment.
Yeah.
There we saw 12% as a result. We are selling a lot of Tricoya into Ireland to Medite. That is not being calculated in those numbers that we are giving for Ireland.
Yeah.
When you look at Germany was growing 41%.
Goodness
Year on year. Yes. Germany was.
That's for a country under economic pressure. Imagine if they're doing better.
Yes. For us, we look at it not as Germany only. We look-
Yeah
At it as a DACH region, it is Germany, Austria, and Switzerland.
All right.
If you see, in that cluster, we did show significant growth of 41%. The rest of the world, and when we look at specifically Asia-Pacific, was around 7%, and then the rest of the world was in a slight decline. For us, the rest of the world is usually Middle East, and Middle East was, as we know, not really the right place to be in the last few months. In Asia-Pacific, we were growing 7%. That was slightly under our target and expectations because we had two of our distributors basically merging together, so they were optimizing the stock they had. We are now seeing now that their development, that they kind of did that exercise, and they are now back to business. We are getting orders again, and they look good.
There is some reshuffling in the per- country or per- region, but overall good demand.
On that basis, it sounds like with seeking a further distributor and hopefully the Middle East situation improving, that 9% could improve in the next couple of years?
Well, we are expecting to beat the underlying market.
That is so-so. Our target is to go double-digit growth.
Yeah
Across our regions. That is in basic what we are focusing on. It will all depend, as you can imagine, how long. Underlying demand is going to be driven by consumer confidence and interest rates, and how long this conflict is going to sustain. You also can notice that our distributors, as the uncertainty comes, everybody's also very careful with the stocks. They are careful how much money they have invested sitting there. They want to see how fast the situation. Everybody's optimizing whatever, optimizing their cash flows as much as they can. We have information that sales outflow of Accoya, for instance, for the U.K. and the first of 10 of our distributors, is higher than what they are buying. That means that their sell-through is higher than sell-in. That means that they are destocking a little bit.
This is normal, and we see this regularly. Hopefully, if deal comes through on Friday and there is more certainty on the macroeconomics, that can have a positive impact on consumer confidence, and hopefully later on the overall demand. As I said, we are focusing on the long-term projects, long-term specification selling, luxury sector, that is a little bit less exposed. You can imagine we are not completely shielded by macroeconomy. We do what we can do, and we control what we can control. The rest, we leave it to the markets to regulate.
Great. All right. Thanks very much indeed.
Thank you. As a reminder, to ask a question, please press star one and one. We will now take the next question from the line of Martijn den Drijver from ABN AMRO ODDO BHF. Please go ahead.
Yes, thank you, operator. I have three more. Jelena, can you talk a little bit about what you're going to do in terms of your sales and marketing for 2027? Are you still adding FTEs? How should we think about those two aspects of OpEx here for 2027?
Well, if you want to make a sales increase or accelerate sales in 2027, we already put the people in place to deliver that. I'm not expecting that we will be adding significant number of people now. We have people who we already added in FY 2026 who are now being fully trained. They are being exposed to the market and expected to deliver that revenue to us. I'm expecting one or two here and there, but a very limited number is going to be added in FY 2026. Sorry, FY 2027. Yeah.
Good. Then two questions for Sam, if I may. On the working capital, you made substantial investments in inventory to facilitate growth and have a buffer in relation to trade wars or how that may develop. How should we think of working capital in 2027? Will that buffer decline? I know there's still going to be growth. How should we think about working capital? Then my second question-
I think you're right. You saw in FY 2026 there was a net working capital outflow, which is driven by inventory and also just amounts from the JV. I think really the expansion of the coloring is the large driver behind that increase where we saw 51% Color growth in FY 2026, we're expecting to see significant double-digit Color growth in FY 2027. The coloring production process is quite different from the acetylation process. With coloring, the impregnation time is very short, a couple of hours, but it's actually the drying time, which can be up to two weeks. Your work in progress with Color is quite substantial. Also, as Barry does the coloring for Accoya USA as well, it effectively buys the wood from Accoya USA, processes it, and then sells it back to Accoya USA.
I would still expect to see a working capital outflow in terms of higher inventory levels, really two reasons. One is to support that significant growth, which we're expecting to see in FY 2027 from a volume perspective as we go to that 100,000 cubic meter run rate. Also because of the strong demand for Accoya Color, I would expect to see a working capital outflow in relation to Accoya Color inventory levels. Probably around a EUR 3 million to EUR 5 million working capital outflow on inventory for FY 2027.
That's very helpful. Thank you. My final question is also for you, Sam. You made a EUR 3 million investment into the JV. Should we take anything into account for 2027 as well, given the high growth?
I think what we did, with the JV partner, Eastman, who are a very supportive JV partner. 60% volume growth that we saw last year, and again, we're expecting very substantial double-digit volume growth next year. We decided we had to ramp up, mainly in terms of higher levels of inventory. That was a combination of equity plus some also working capital outflow. If we're going to see significant double-digit growth that we're expecting, I would probably expect low EUR millions, maybe again, EUR 2 million to EUR 3 million investment in the JV again. It's really there to support that growth in FY 2027.
All right. Understood. Thank you very much for all the answers and clarifications.
Okay. Bye, Martijn.
Thank you very much. That would be, I think, the last question we are going to have today. Please let me just close this call. Financial year 2026 was a year to be proud of for Accsys. We are very determined to continue on this journey. Thank you very much, this call is being over.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.