Cleantech Building Materials: Unaudited Preliminary Results to 31 December 2021
29 April 2022
CLEANTECH BUILDING MATERIALS PLC, NASDAQ FIRST NORTH GROWTH MARKET, COPENHAGEN
Cleantech Building Materials plc
Unaudited Preliminary Results to 31 December 2021
Cleantech Building Materials plc (CBM or the Company or the Group) presents its results for the twelve months ended 31 December 2021.The unaudited financial statements are appended to this announcement.
These results are unaudited because our auditors, Crowe U.K. LLP, are unable to finalise audit procedures on the Group’s subsidiary companies as a consequence of the unprecedented Covid-19 pandemic restrictions in China. The CBM Directors believe the final audited results will not diverge materially from these unaudited results. These accounts have been prepared in accordance with the rules and standards applicable at this time. It is possible that these rules may be changed in light of the Covid-19 situation, before our auditors sign their Audit Report, which may require a change in these accounts. We will announce our audited results, as soon as they are available and highlight any differences from these results.
The Directors are not proposing the payment of a dividend.
Despite the logistical challenges arising from the pandemic in 2021, CBM is now in a stronger position for transformative growth in the coming years. In 2021, CBM’s subsidiary company Diamond Wood China Limited (DWC) was able to progress on its strategy to build an Accoya® acetylated wood (Accoya® Wood) factory in China, with its Joint Venture (JV) partner, Nantong Acetic Acid Company (NTAAC). NTAAC is amongst China’s top speciality chemical companies, serving global multinational food and beverage producers in the US and Europe. NTAAC is listed on the Shanghai Stock Exchange with a market capitalisation of €515 million. As reported in the 2020 Report & Accounts on 31 March 2021, DWC and NTAAC signed the investment agreement constituting the JV.
Since then, and through consultation with local government officials in Jiangsu province, DWC and NTAAC have established the timing and key milestones of the Accoya® Wood factory project. There is a schedule for the construction of the Accoya® Wood factory and the corresponding financing. The factory will be built in the Jiangsu Rudong Yangkou Port Economic Development Zone.
Under the investment agreement between the two parties, DWC is the majority shareholder in the JV company, Jiangsu Dragon Wood Limited (JDW). Additionally, DWC will receive a royalty on profits from JDW. DWC’s equity investments into JDW is being financed through CBM, which previously entered into a subscription agreement for €15m euros with a private family office. During 2021, the family office subscribed for CBM shares under the subscription agreement related to the achievement of milestones in the Accoya® Wood factory project.
The following is a brief update of the JDW Accoya® Wood factory developments in China:
- The Accoya® technology licensor, Titan Wood, transferred the Accoya® Basic Engineering Design information to DWC during 2020 and 2021.
- During 2021 Accsys’ subsidiary, Titan Wood, provided technical assistance to DWC for the preparation of the Nantong Accoya® Wood factory engineering and equipment selection.
- An LOI with a leading Chinese bank was signed with JDW on 29 April 2021 regarding a €26m debt financing to JDW.
- Registration of JDW was completed and the business license issued on 18 May 2021.
- JDW completed the signing of the Project Investment Agreement with local Chinese government authority regarding land, utilities and taxes on 18 May 2021.
- Milestone 1 and Milestone 2 capital injections into JDW were completed by both shareholders, NTAAC and DWC, in year 2021.
- All DWC’s wholesaler agreements have been officially transferred to JDW during September 2021. The DWC sales staff have also been transferred to JDW.
- The Feasibility Study Report approval was granted to JDW on 15 November 2021 by the Chinese government, and the Registration Certificate of Investment Project of Jiangsu Province obtained. The JDW Project is now officially posted on the government web site (http://18.104.22.168:8075).
- The approval of Social Stability Assessment Report was granted for the JDW project on 30 November 2021 by the Chinese government.
- JDW finalized the Front-End Engineering Design with an engineering, procurement and construction (EPC) firm, LBT Shanghai in November 2021.
- The Energy Conservation Assessment application was approved on 24 February 2022 by the Chinese government.
- The Environmental Impact Assessment report has been submitted for final approval by the end of April 2022.
These are material developments towards the construction of the Accoya® Wood factory. The key JDW activities are being undertaken by the Group’s people in the region, so international travel restrictions have had minimal impact on the progress of the project.
Accoya® Wood is produced using a cutting-edge patented technology, enabling it to resist rot, defy the elements and stay strong for decades. Guaranteed for 50 years above ground and 25 years in ground or freshwater, the performance and properties associated with the Accoya® brand are sought by joinery manufacturers, architects and builders worldwide.
In 2021 the Group invested in the development of its marketing and sales operations in China and the ASEAN countries, which resulted in a new offtake agreement being added to the growing list of manufacturers and wholesalers in the region committing to purchase significant volumes of Accoya® Wood. These agreements, and the ongoing business with the Company’s existing base of distribution partners, attest to a strong and increasing demand for Accoya® Wood in the region.
The Group increased revenues in 2021 to €1,014,000 (2020: €857,000). The Group increased its loss for the 12 months ended 31 December 2021 to €4,891,000 (€4,116,000 in 2020). The increased loss is largely due to the additional loss from the Group’s share of the JV, and higher share-based payment charge.
I would like to take this opportunity to again express my sincere gratitude to my fellow Directors and staff for their hard work and commitment over the past year.
I look forward to providing you with further updates at our next Annual General Meeting in June 2022.
Strategy and Objectives
The Group’s primary strategic objectives for 2022 are:
- To engage a leading engineering, procurement and construction firm to lead the building of an Accoya® Wood manufacturing facility in China.
- Together with the Group’s chemical industry joint venture partner, NTAAC, to ensure that the Accoya® Wood manufacturing facility is constructed on time and on budget, and operated efficiently.
- To build relationships with large-volume wood product manufacturers through testing and trials in anticipation of Accoya® Wood being produced in the Group’s own factory.
- To develop the Group’s marketing and sales initiatives to further expand market channels and offtake agreements.
Financial Review of the Business
The Group’s revenues for the year ended 31 December 2021 increased to €1,014,000 (2020: €857,000) and consisted mainly of Accoya® Wood sales to customers in China, Thailand, Vietnam, Singapore, Indonesia, and Malaysia.
The Group realised a net loss of €4,891,000 for the year to 31 December 2021 (2020: €4,116,000). As at 31 December 2021, the Group had cash and cash equivalents of €158,000 (2020: €25,000) as well as an available facility of approximately €3.4m, and an equity commitment to finance the JV.
Once the Group is producing its own Accoya® Wood, the Board believes the financial performance of the Group will be radically transformed.
CBM plans to hold the AGM on 24 June 2022 and publish its audited accounts before that date. However, the achievement of these plans is dependent on the ongoing impact of current COVID restrictions in China. Should these ongoing restrictions cause these plans to change, the Company will inform the market accordingly.
We plan to publish the Company’s next financial report which will be its unaudited accounts for the six months to 30 June 2022 in September 2022.
THE DIRECTORS OF CLEANTECH BUILDING MATERIALS PLC ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Further information may be found at the Company's website at www.cbm-plc.com
|Cleantech Building Materials plc|
+44 20 3934 6630
|Keswick Global AG (Certified Adviser)||firstname.lastname@example.org|
+43 1 740 408045
|IFC Advisory Limited (Financial PR)|
|+44 20 3934 6630|
The information communicated in this announcement is “inside information” for the purposes of Rule 4 of the Nasdaq First North Nordic Rulebook.
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