Accsys Technologies (LSE:AXS) — Preliminary Results Presentation

0:01 Good afternoon, ladies and gentlemen. Welcome to the AXS Technologies PLC Investor Presentation. Your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet company platform.

0:31 Before we begin, we would just like to submit the following poll. If you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from ACCSYS TECHNOLOGIES PLC. Yelena, good afternoon. Hello, good afternoon, and thank you very much for your kind introduction. And welcome, everybody, to our financial year twenty five results presentation. Of course, because we are talking now with a broader investor community, we are also going to take a little bit of time to introduce our company to the people who are maybe new to AXS technologies and AXS technology is new to them. Today, we will start with a short introduction of our company.

1:18 We will give the overview of the financial year. Then Sam is going to talk a little bit deeper about the financial results we delivered, and then, I will give you more business review and outlook, going forward. This is me and Sam. You had an opportunity to see us in in person. And starting with the introduction of our company, AXS TECHNOLOGIES successfully developed a unique building material. We see ourselves as an industry disruptor. We are producing high performance premium sustainable wood products that are having quite a unique position in the materials in the wood materials and building material space.

2:03 ACCOIA wood is manufactured through a proprietary process called acetylation, which has a quite robust IP protection. We have over 300 patents in 45 countries that are protecting our technology. And this process significantly enhance the wood durability, stability, and resist resistance to the to the environmental factors. Today, we are giving a guarantee to our outdoor performance of our products for fifty years above the ground and twenty five years if the product is in the ground of in the water. So the aqua starts with a fast growing sustainably sourced soft wood, primarily radiata pine, and these trees are harvest from the FSC certified resources.

2:59 So we are only using sustainable forestry practices to be our primarily suppliers. Now the core of a coya transformation is process called acetylation. That is the chemical process that modifies wood on its cellular level, and this process basically introduce a soaking of the wood in a vinegar vinegar like chemicals called acetic anhydride. So this process will change the chemical structure or cellular structure of the wood and make it reducing its ability to absorb water. So making it much more dimensionally stable and also rot and insect resistance.

3:45 Today, we are making three products, aqua, aqua color, and trachea, and those products are used to build, basically, windows and doors, cladding, decking, fencing, some other outdoor application. You can make outdoor furniture, etcetera. So the product is is very sustainable, is very stable. So that means if you are going to put a paint on the on the window because window is not moving, is not the wood is not shrinking and expanding because of the ability to absorb the water, your maintenance cycles are significantly reduced. So the full product, if you if if you want the the cost of ownership is very, very favorable and one of the key value proposition for for our for our products.

4:44 Acoia is this very lighted light wood. Acoia color is colored within a color gray through the core, and trichoia is a satellite that chips that are used and put together with a specific resin to make a trichoia plates that can be further used basically also to make windows, doors, and cladding or outside furniture with the same guarantees like like our ACCOIA and ACCOIA product. Today, we have three manufacturing facilities. AXS Technologies own 100% our manufacturing facilities in Arnhem in The Netherlands and Barrie in Wales.

5:32 We are using those facilities to sell aqua and trachea and aqua color within the Europe, UK, and the rest of the world, while our Kingsport facility in The US is a joint venture with a a chemical company, Eastman Chemicals, and it is operational since September last year. When you look at the other two facilities that we have, Armen facility is operational since 2007. It has four reactors, and it is capable of operating and producing 80,000 cubic meters of the of the yearly capacity. And this facility has been increasing the efficiencies over the over the last few years.

6:18 Berry Whales was acquired in 2021. It is only it is our only coloring facility that we have today. It is capable of producing, we we say here, 6,000 cubic meters current warm capacity. We are increasing this capacity as as we are speaking today by introducing the second shift and improving the the kilns. So we do expect that Berry will be able to produce at least 10,000 cubic meters in this running financial year. Kingsport US, as I said, joint venture with ACCOIA USA. We invested $136,000,000 to mechanically finish this facility, and it started to to produce commercially in September 2024.

7:10 It has two reactors with a 43,000 capacity, and it is really we have a place in Kingsport to expand to six new reactors if and if when it proves to be necessary. Kingsport facility is focusing to to sell the product within the North America, so that means Canada, US, and Mexico. When we look what is the unique value proposition of of of AXS, well, the company, we do believe that we have a genuinely unique innovative product in the in the marketplace with this unmatched fifty year guarantee on the performance that no no other material and let alone wood material is offering today.

8:03 So we have the quite a a strong product differentiation, very strong IP protection, so more than 300 patents around 45 countries. We do have a very recognized and unique brand among the good products that is that is recognized as being industry leading. And not to forget, we do have established manufacturing footprint, looking at how much CapEx is necessary to put actually and build the manufacturing plant, having the plant available and producing this unique product creates quite high barriers to entry to any potential of our competitors.

8:49 Just to be clear, acetylation process as a process is known for a very, very, very long time, but no other company in the industry space in the world was able and capable to actually produce the high quality commercialized products like AXS is doing today. So we are quite feeling confident that the value value proposition that we are having is quite unique in the in the material in the material space. With this, I'm going to give you the the the the, basically, overview of our financial year that we are quite quite proud. Financial year '25 that ended on 03/31/2025 was a pivotal year for AXS and certainly an inflection point in our transformation journey.

9:46 It was marked by the strategic clarity, operational delivery, and the very robust commercial momentum. This year delivered significant financial performance ahead of pre prior year. And you can see here on the bullet points and on the on the right side, we our EBITDA basically showed 125% improvements. It is not only improvements in absolute values. It is significant improvement also in a percentage wise, so that the quality of earnings is improved quite a lot. Sen is going to walk you through the through the details of those numbers. We also delivered significant volume growth across all the region, 13% across the globe with 16% in in North America.

10:41 But if you look in a specific markets like UK or like like DACH or rest of the Europe, you're going to see that that UK delivered even higher percentage, double percentage with what we are showing here for the for the global global progress. We as one of the highlights was, of course, the successful startup of ACCSYS. This is the first international expansion of AXS. And, of course, having that local fruit footprint in The U US is helping us to to to mitigate multiple risks. The first risk by finishing the project, we are actually reducing the exposure of the company of our size to the exposure of unfinished long term capital intensive project.

11:32 Also, in a in a light of the trade tensions that we witnessed very recently, having a local production in The US is very, very beneficial.

11:44 Wood and timber products are at the moment exempt from the tariffs in the use US. We are following the the this pros progress quite quite with a lot of attention, you as you can imagine. But we are very pleased that our timely start up actually provided us with the with this benefit to be present locally in the largest and the most profitable wood material market in the world. Company also delivered significant operational cost savings of 4,600,000 compared to the previous year. This is on the back of our transformation program, big reorganizational realignment that we started at the end of last year, And then we had some benefits last year, but, really, we reached this full benefit in this year, and we expect to keep at least 3,000,000 of this benefit going forward to the next financial year as well.

12:43 We have leaner, streamlined, more fit for person organizational structure in place, more stable leadership, much more focused, if you like, and and strengthen local organizational structure. And, of course, by discontinuation of our TRICOIA project in Hull last year and finalization of our American plant, we derisk business significantly, as I said, with the exposure to the large capital projects. And, of course, Sam is going to to walk you through the details on the net debts and and the and the leverage. But by increasing of our profitability, the leverage ratio dropped from 4.4 times in financial '24 to 2.5 times in this financial year, and this also includes CLNs that we actually got to during our fundraising in FY 2024.

13:48 With this, I'm going to give Sam a word to walk us through the financial results of this. That's great. Thank you very much, Elena, and good afternoon, everyone. Pleased to be able to talk to you about our financial results. So what what what we have here is just a summary of the strong financial performance for the year. I'll go into a lot more detail about some of these metrics in terms of revenue, gross margin, EBITDA, and also net debt on the on the coming slides and explain more through waterfalls as to what's what's changed year on year in these. But just really highlighting some of the financial metrics now. So as Elena mentioned, sales volumes overall total increased by 13% year on year, which is a very strong position, and it shows the overall global market demand for ACCOIA products.

14:42 Revenues were up 1% for the group, about 8% on an aggregated basis, which includes a share of the JV's revenue, and I'll walk you through the the revenue bridge shortly. Our gross profit margin was 30 basis points higher than the previous year at 30.3%, and this was higher than the target that we set ourselves on maintaining a 30% gross profit margin. Elena already mentioned the underlying operating cost improvements of 4,600,000, which came from our business transformation program and our solid roots efficiency initiative in Arnhem to improve overall profitability. And as a result of the gross margin improvements, the and the operating cost reduction, our underlying EBITDA for the group, which excludes the joint joint venture, nearly doubled from 8,500,000 to 16,800,000, which is a really pleasing performance.

15:43 The the margin increased by 610 basis points to 12.3%. And then when we include the results from the joint venture, of which we have 60%, so we we equity account for that. The adjusted EBITDA increased from £4,800,000 to £10,800,000 up 125% with a more than doubling of the margin to 7.3%. Our net debt was 42,600,000 and the lever with a leverage ratio of 2.5 times, as Helena mentioned, and I'll talk you through the net debt bridge in a in a in a few moments. So really moving on to our volumes performance. And here, you can really see the 13% increase in total sales volumes made up by end markets.

16:35 13% was really a very strong performance, particularly when you consider the that against the backdrop of a challenging building materials market, which has really been impacted by macroeconomic challenges in the in the last year when there's been slower growth in the global macro economy, higher inflation resulting in high interest rates, and a lot of talk in the last several months about the potential impact of tariffs. So double digit growth in in for the group, but also across all of our key markets is a is a very strong performance. And just picking out some of those areas, UK and Ireland was up 27% year on year. North America was up 16% year on year, and that that included the effect of North America sales transferring from our Arnhem facility to the joint venture following its commercial start up in September 2024.

17:32 Rest of Europe showed a 16% increase with particularly good growth in France and and Northern Europe as well. And then when we think about the product mix, I call it color, which is the gray colored product that you saw earlier, really strong momentum there. This is a premium product, which achieves a high premium price, and we saw a 34% increase in demand for that product during the year. And with that with that high premium price and higher margin, that gives a favorable mix variance for our for our overall gross margin and profitability. A COI for Tricoia sales volumes were in line with the previous year at just over 17,300 cubic meters per year, which represents 27% of total sales volumes for the year.

18:21 And, really, TRIKOIA paddles remain a very key product offering for us as and and it reaffirms our belief in the long term market potential for these panel products. Not only does it utilize capacity in the plants, but we're also able to use a lower

18:40 grade wood to produce a a koi for tricoia. And, also, it means that we can offset wastage from from the the two plants by using offcuts, stickers, and beams, and other and and other types of wood from the from the manufacturing process. And Yulaina will talk about the end markets in more detail slightly later on.

19:07 So when we look at revenue, group revenue, as I mentioned, increased by 1% to a 136,600,000, but that really masks the the transfer of sales from Arnhem to North America. So in f y twenty four, the previous financial year, North America sales were €25,000,000. And in f y twenty five, prior to the commencement of operations of the joint venture, it was approximately €10,000,000. So we saw a 14,900,000

19:39 shift in revenue from AXS Group to the joint venture. But the pleasing thing is that that lost revenue and volume associated with transferring volumes to North America was more than fully offset and recovered by Arnhem during the year. So we saw a 16,700,000 improvement in volume and mix as a result of that.

20:04 Whilst it looks like pricing reduced by €2,100,000 year on year, which is a 1.7% decrease, that again is a feature because of the transfer of volume to North America. In North America, we can we we do achieve a much higher price than the the rest of Europe, about a 20 to 25% price premium. So by transferring the volume to the joint venture, we're giving away a higher priced product. So that has an a knock on effect on the sales price for the AXS group.

20:38 But this is just a one one year feature because of that transition. When we look at total ACCOIA sales in the across the joint venture and and Arnhem, our average selling price was up 1.2% year on year, showing that maintenance of the high premium price is is very key and very strong for us. The low licensing and royalties that you can see there, 1,300,000, is really from the joint venture. We we we received license fees as part of the the build and construction of the plants, and royalties represent a percentage of sales that we get from from the joint venture as it as it sells products.

21:21 And then acetic anhydride is is the chemical that that is used in the acetylation process. And what we have effectively did through operational efficiencies, we were able to reduce our anhydride usage in production, which had a favorable impact on production cost and, hence, gross margin. But the byproduct from the acetylation process is acetic acid, which we then sell on. And really because that lower anhydride usage meant we had lower acetic acid sales volumes and with a slightly lower market price for acetic acid, that led to a 0.2 reduction in revenue for acetic acid.

22:07 So then in terms of gross margin, as I mentioned before, the gross margin went up by 30 basis points to 30.3%. You can see there's pricing and license fee movements there as I just talked about on the previous slide. But, really, from an overall cost perspective, 60% of our cost of sales comes from raw materials, which is really wood and the chemicals. And we saw in the year a favorable wood purchase pricing variance, particularly on wood chip grade, where the the purchase price was lower than the previous year. So we had a a benefit from there. And really that improved anhydride usage in production combined with that wood purchase price favorable variance led to an improvement in the gross margin of about €1,000,000.

22:58 Labor costs represent the annual staff pay rises that we give to our our staff, and then we had a slight favorable benefit from lower maintenance costs during the year, and that was really following the CapEx investments that we've made in previous years. So really when we think about the progression of our adjusted EBITDA, which is our key profitability measure, that increased from 4,800,000 to 10,800,000 with a margin improving from 3.5% to 7.3%. I mentioned the gross margin improvement of €05,000,000 on the previous slide, but the the one of the big driver behind that profitability increase was the €4,600,000 of operational cost savings that we saw during the year. And that really came from our business transformation program and also the Solid Roots operational efficiency initiative.

23:54 And that £4,600,000 exceeded the target that we'd set ourselves. Tracore UK was the plant associated with Hull, and the decision was made in September of last year to discontinue that plant with that business being placed into voluntary liquidation in December 2024. So costs associated with Hull in FY '25 were 2,100,000, which is 3,200,000 lower than the previous year. So you can see the 3,000,000, 3,200,000 benefit that we are seeing year on year from from the closure of Hull. And then the the joint venture in North America, because it was in its pre revenue phase and also due to costs associated with the ramp up of production since September 2024, our share of the loss of the joint venture for the year amounted to €6,000,000, which was €2,300,000 higher than the previous year. So the combination of all of those effects, upside and the JV downside, takes you to the 10,800,000 adjusted EBITDA and doubling of the margin to 7.3%.

25:03 So if I look at the segmental breakdown, starting from the left hand side, you can see that the ACCOIA segment, which is really the Arnhem and Barry operations, is very healthy heavily profitable, generating and contributing €22,700,000 of EBITDA to the business with a margin of 16.6, and that margin was three percentage points higher than the previous year. Costs associated with hiring the year were 2,100,000 and corporate costs, which represents, I think, the the London head office and the cost of being listed was were 3,800,000, but we reduced those corporate costs by 900,000 in the year.

25:51 Hence, underlying EBITDA for that AXS group amounted to 16,800,000 in the year with a margin of 12.3%. And that improvement in the margin of 610 basis points was very, very pleasing. You can see the effect of the joint venture there, and we what we always said is that in the first full year of operations, commence following the commencement of the the the JV in September, you would expect that to go through start up losses. But really, this new financial year we're we're in, we expect that joint venture to be profitable. And then you can really see the the adjusted EBITDA. So it's a good waterfall to show how the the adjusted EBITDA is built up, but I think the key thing to really understand here is that overall ACCOIA segment profitability at 22,700,000.

26:48 And then really moving on to on to on onto net debt. And this slide shows the evolution of net debt. We have a we have a continued strong focus on operational cash flow improvements and really focus on deleveraging the balance sheet, which is in line with our strategy. So net debt at the end of the year amounted to 42,600,000, which is a 5,500,000 increase on year on year. But, really, the leverage ratio reduced to two and a half times, really driven by that big improvement in underlying profitability. We saw a big increase in free cash flow improvement, which improved to 8,800,000, up from 3,700,000. We saw a working capital outflow in the year of 7,000,000, which is really driven by higher inventory levels of 5,000,000 in the year. But this was planned by the company because we wanted to ensure that we had product had enough inventory to support product availability and the strong demand and customer service that we're seeing in the in the business.

27:53 Going forward, what we what we target is to maintain about three and a half months of raw wood in stock for the business and also about one and a half months of finished goods in stock to really ensure that product availability for our customers. As the JV completed its construction phase and associated with the ramp up, we we spent 14,500,000 in in at the JV, and that was all planned. Maintenance CapEx amounted to 1,900,000, which was in line with phase one of our strategy. Interest paid and also accrued on our banking facilities amounted to 4,300,000, of which 2,000,000 related to accrued interest in our convertible loan dates.

28:42 And with tax payments, which really comes from the profitable plant in The Netherlands, that took our leverage to 42,600,000. And with our with our with our capital structure, we we recently extended our main primary ABN AMRO debt facility by a further eighteen months out to September 2027. So just from a summary perspective and bringing bringing a close to the finance section, we saw a really strong financial performance in FY '25. Total sales volumes growth of 13% was particularly pleasing against the challenging billing materials backdrop impacted by macroeconomic challenges. The 125% improvement in adjusted EBITDA to 10,800,000 was a very strong performance, and really that growth in free cash flow generation was really pleasing, and it really highlights our continued focus on deleveraging the balance sheet.

29:38 And with that, so I'm gonna pass back to you, Elena, who's gonna talk you through the business review. Thank you, Sam. We unveiled in early twenty twenty five at the end of January at our investor strategy day our new strategy. And in this financial year, we have a new company strategy in place with a clearly defined road map and targets. We call it a focus strategy. It is transforming AXS to a fundamentally strong, more operationally efficient, more customer centric, united safe and sustainable business. And when we talk about fundamentally strong, we refer to continuous progress on the financial and operational targets.

30:24 And as a first step in building that credibility, we were very pleased to present the financial year '25 results progress. Operationally efficient is all about getting our plans and functions to operate what I like to call a Swiss clock. Customer centric is the story of growth. As a premium product, we will focus to deliver premium service and also premium experience to our customers. And united team of highly skilled professionals and performance driven teams is going to be there and is there to execute on this plan. And finally, safe and sustainable as we want really to lead a progress in sustainability sector.

31:11 Now our strategy is going to be executed along three phases. The first phase that we are call is basically resetting and transformation of the company that started last year, and it will last until the end of financial year '27. It is focusing on resetting operationally, maximizing return from the existing assets, and also maximizing cash flow from the operation. So we already put quite a lot of capital and metal in the ground in the last couple of years of AXS history. So in this phase, we are really focusing on getting returns on that capital.

31:57 Second phase is about getting all the plants to their maximum capacity, extracting further efficiencies with the really minimum investments. We also expect to look at the COIA color and to be produced in The US, seeing that this product is growing with 34% this year, and we expect that that con that that that trajectory is going to accelerate. We do believe that in a phase two or maybe even at the at the end of phase one, we are going to look on introducing a coir color facility in The US so that we free up the spacing wells to to for the growth in the rest of the world. And we will here also be laser focused to deliver to deleverage further.

32:44 Now after the phase one and two, company is going to be in the position of strength, in a better position of financial strength to fund the future growth that we expect to be much more modular than in the past. In the past, we basically were focusing to build a new plans every couple of years. Now building every new plans building a new plans every few years, you need, as I said, in The US, we spent 136,000,000 to build two reactor and all the all the facilities around it. Now moving for more modular growth, in The US, we can add six additional reactors. We can add them one at a time or in pairs, and it is going to request significantly lower investment.

33:35 And we already paved the foundation for the next reactor, so it can be just plugged in and with some pipe pipeline connected to the rest of the plant. So so that means that moving from this big large CapEx project to more modular growth is going to be quite fundamental and more also digestible for the company of our side. For each stage, as you see, we put a very strong targets. And in next slide, we are just kind of following on how did we extract on the targets, on the strategy that we put in place in January. With this year financial performance, we are quite happy that that we are very, very well on track. And for the volume try target on 100,000 cubic meters, what we saw in the financial year '25 and what we are seeing now in the q one and also the book for the q two, we are quite confident that we can deliver on on it.

34:37 Looking at adjusted EBITDA margin, Sam just mentioned and you saw in the bridge, our core assets, so core of AXS is already performing at this level. So at the moment, when we bring ACCOIA USA to the to the profitability, we do believe that it is very, very much possible to to achieve, to achieve both adjusted EBITDA, but also operating cash flow, conversion. Our core assets are, free cash flow generative, so and already now for the second year. So so we are going to continue to have this very, very strict cost and operating working capital discipline in order to extract as much value as possible from the units that we have under our management.

35:30 Now looking a little bit more on the what's happening in in Arnhem. As we said, in Arnhem, we have 80,000 cubic meters of capacity. It is this unit is is producing very well on a very high quality. We have reliability. Availability of the plant was very good in a financial year behind us. Underlying EBITDA, as we said, is already increased from 5,100,000 to 18,900,000 in a financial year. So that was really with the transfer of the sales that were exported from Ireland to The US now to be produced in The US. We are very, very happy with the, with the delivery that, that teams made happen during this year. We have a good, operational efficiency program that we started, last year called Solid Roots that is really focusing on getting the maximum efficiency from the plant. It showed also good progress.

36:30 And as a innovation leader, we do we continue investing. And this year, we also invested 1,200,000 in r and d predominantly looking at different species of wood that can be used for the acetylation and also fire retardancy and color different colors of akoya to be to be produced in the future. Berry had a fantastic year, 34% year on year sales volume growth. We invested in a planer, so we are now capable of producing more finished products so we can produce a finished decking in Berry, and we introduced it in France this year to test the market with a very, very good success. And by adding a second shift, we basically doubled capacity from what we had last year.

37:18 So we do expect that the Coil Collar is going to be one of our best performing products in a in a year ahead. We also invested quite a lot in marketing and sales. Sam was talking to you about the different regional performance. Everywhere more than double digit growth. We also, launched a new branding, with a new color portfolio, and the new finished decking product is coming in this financial year. US expansion was one of our major successes, I would say, in the in The US. As I said, first international expansion for ACCOIA. It was a dream for many years. And and finally, with, of course, our partners, Eastern Chemicals, and very capable team in in The US, we the the factory is producing well. The quality of the product is coming is is is exactly the same like it is from.

38:17 We are giving the same warranties like like ACCOIA is doing in Europe and the rest of the world. And as I said, we are, at this moment, exempt from tariffs. So the timing of this production facility was actually really perfect. What we are how we have so the most of our success actually in the coming two years depends on the it is really all about sales and the commercial success in The US. We do have enough capacity in both plants to to funeral and to feed the growth in the next two years. In America, we are focusing on areas of flare Florida, California, Texas, and New York and East Coast, where most of the premium product has a big market.

39:06 American market is estimated to 8,400,000 cubic meters of of wood products of which we today have less than 1%. And this is US is by far the most profitable and the fast growing wood market in the world. So we are very happy to be present and to offer the better customer service and availability in the region. And we are seeing in our sales, but picking up and making another step change in the beginning of this in the first financial quarter of this financial year. Now here, we are very much and very proud to showcase couple of very nice project we we delivered this year.

39:53 For those for those of you who are living, for instance, in in in London, if you go to to King's Cross Train Station and and see the Google office, that was our big project last year, ACCOA looks amazingly on the on the facade of this. This year, we had the New York, New York, in the in the New York Central Parks. We have a a Bow Bridge that is made of ACCOIA, and we also have plenty of benches in Central Park this year and paths are done by ACCOIA, so so very nice. We have a new Molly Hotel in Aspen, Colorado. We have the hotel in Switzerland that also use the decking of ACCOIA, ABB Building in Switzerland, the Wilburn Retail Park in The UK, and also plenty of private homes that were that that wanted to have the quality on the outside, and they were using our products like this very beautiful chart decking and cladding of the of the house in New Zealand.

40:59 Now we we also had another very nice project for for our listeners from Amsterdam. Nemo Roof Terrace was now decked by by a COIA. So next time when you go and take your kids to Nemo Museum, please pay attention, and you can also witness how very well our product can sustain weather and all kind of environmental conditions. So not only looking at the at the at the planet at the planet and the profit, we also look at our people. So this year, company had a fantastic increase in our S and P corporate sustainability score. We did the assessment and reached 11 points increase.

41:46 So that is putting us in a 20% of the companies in our sector. Now looking at the size of AXS, this is, of course, a significant achievement. And, of course, sustainability is in the heart of every single employee in our organization. We are a 100% sourcing from responsible sources, so so certified sources for the wood and with the with the with the very responsible forestry practices, and we will not move away from that under any circumstances. We also did this year not only that we are looking at the planet in a profit, we also we are listening to our employers employees.

42:32 This year, we did employment engagement survey, and 73%, of our employees are satisfied and very proud of working for AXS. We also started with the well-being initiative in Arnhem, investment in the learning and development. And we also take with the with our colleagues, we took a part in the mega bundle marathon in Arnhem that was organized for the kids and people with handi handicap, and it was really quite amazing fun time we had and very proud to be part and cannot wait to be part of it next year as well. With with this, we are coming to our outlook. So we are quite encouraged by the positive start of the year. And while we have to be a little bit cautious with the continued macroeconomic challenges, we are quite confident that we will continue to deliver sales growth and execute on our strategic priorities like we lined them out in the beginning of the year.

43:31 The we do have and we rely on resilient premium pricing and operational leverage that we have across the globe. And in the in this financial year result, we have demonstrated the benefits of our ACCSYS strategic plan and disciplined execution. So we will continue to be disciplined. We will continue to be on this path to really prove again and again the credibility of, actually, of me and Sam and our management team. But having successfully expanded our geographic footprint, we will focus now primarily on accelerating our sales and capacity utilization that is going to bring us further driving, further profitability improvements, and drive to a much better returns.

44:21 With this, I would like to come to the last to the last page that is basically reiterated why AXS is a a substantial growth opportunity from the show shareholder, perspective. So this year, financially, is is pivotal year for AXS and inflection point on our transformation journey. It was marked by the strategic clarity, as I said, operational delivery, and robust commercial momentum. We are not just selling wood for making this beautiful windows and doors decking and cladding. We are enabling the shift in the industry. So we see ourself as a really industry disruptor, and we are recognized also by our competitors as an industry disruptor.

45:10 Our markets are large, and our demand is growing. Our technology is proven, and it is very well protected with this with the strong IP that the company is having. Our plans plants are operational. We have them in the major markets in the world, and they are scaling, and our efficiencies are very much improving. So while we are continuing and noting these macro and geopolitical challenges, we remain very, very positive about the future. And last but and but not least, we do have a capable teams in place in both US and Europe to further drive us us and the company forwards and upwards. With this, I would like to thank you for your for your attention, and we will open the floor for the questions.

46:04 Perfect. Yelena, Sam, if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But, Yelena, Sam, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. If And I pick up from you at the end, that would be great. Thank you. Thank you very much.

46:50 So the first question that I can read is say, could you provide more detail on your route to market in North America? So our route to market in in in North America is we are selling most of our products through the distribution channel. So 90% of our sales would go through the distribution. We are having partners in the region that are very covering all of these areas of interest that I show in our presentation. Now, of course, those primary distributors are then connected to the secondary distribute distribution in the in the countries, and then, they are even providing even more spread of our product through the country.

47:38 Now we do have we have grown our, own commercial team from three three people from couple of two years ago to 13 today, and they are predominantly focusing on helping new distributors to generate a business, to educate about COIA and also to spend time on a specification selling with the architects and architects firms. So so we do have, basically, our own Salesforce. We do use the Salesforce of our distributors, and we are choosing our our partners very, very carefully so that they have a very good coverage, that they can hold a substantial inventory so that service levels are are good to the to the OEMs.

48:25 And we are also helping them to grow that business by providing technical support and by providing specification presentations when necessary and in collaboration with our partners. Right. So the next question, how do you expect the sales split between the group and the JV to evolve over the next two to three years? So when we early this year in January, we did a investor strategy day, and the slides and the video recording are available on the ACCSYS website for you to have a look at. And this is one of the areas that we that that we showed at so you later mentioned the phase one, phase two, phase three of our strategy. So at the end of phase one, we said we would have a run rate of a 100,000 cubic meters, and that will be broadly made up of 70 to 75,000 cubic meters coming from Arnhem and 20 to 25,000 coming from the JV. And then as we move to the end of phase two, so end of f y thirty, we said we would have a run rate of a 120,000 cubic meters with 80 to 85,000 cubic meters coming from Arnhem and 35 to 40,000 coming from the joint venture.

49:46 So the next question is, is the process patented? Is there much competition or others coming into the market as competition? Well, I think we we mentioned couple of times in the presentation, the process is patented. Not only the process, the product is also patented as well. So we we we do have over 300 patents in covering more than 45 countries. There are other mod would modify technologies available in the marketplace, but none of them is actually covering the performance and the quality of ACCOIA. So we are really we are really recognized as a market leader in that premium segment.

50:35 Okay. The question here is about how certain is lowering debt. While you could see from our performance in FY twenty five, our leverage reduced from 4.4 times to 2.5 times as we really grew that underlying profitability. And then, really, that that that debt reduction, again, I I I laid it out in our investor strategy day in in January. At the end of FY thirty, the end of our phase two of our strategy, we will have zero net debt. So that that is predicated on executing our strategy and delivering that sales volume growth that we've talked about, improving the the the profitability, delivering operational efficiency, maintaining that high average sales price, and maintaining that gross margin.

51:28 But for us, you know, we FY twenty five results has been the first touch point in terms of x show the strategy execution. And, really, as we continue to deliver on that strategy, the company's balance sheet will strengthen, and we do deleverage very, very quickly. There was a question. Will the spare capacity at Arnhem allow the company retain the full market opportunity which you were expecting to gain from the abundant hull plant? Is the profit margin for trichoia similar for that to a koia? And will Kingsport be producing trichoia, I I guess, was the was the question. So we do trichoia today, and as you saw from the presentation, it's representing between, depending on the year, between 2530% of our product mix.

52:21 We do have a long standing partners that are actually using a saturated wood from us and produce trichoia panels. And we will continue to keep this product in our portfolio because it is quite important. It it it offers us opportunity to build this, to build this market and continue introduction in the marketplace. It gives us the flexibility to use, lower, quality, ACCOIA planks, to use all kind of offcut and wood that we normally would have to throw away. So we are working with the zero waste for for wood in in in our plant. And the the so tracoia is going to continue to be a product for us. The margins of tracoia are lower.

53:11 The margins are similar, but the selling price is lower. So so at the absolute terms, we we earn more on ACCOIA than what we earn on TRIKOIA if we sell per cubic meter. Kingsport is not going to be producing TRIKOIA in the first place, but we are working in the in the with the partners in US, finding the MDF producer, local MDF producer that would like to trial and and start producing the trichoia plates. So so the the trachea boards are today being exported by Medite and by Finsa to all the all the other parts of the world from from Europe. Of course, it would be beneficial if we could find a local business model for this. But for us, in Kingsport, Akoya is in focus. Akoya and Akoya color in the first place.

54:10 Let me see. Not a huge. So let me see what is spare capacity. Why is the ACCOIA product worth the huge price premium over the other types of timber? Is there a market resistance to the high price? Our product is a premium products product. And seeing it, our growth percentages in this year, but also over the last year since the access is is is is existing, There is a specific marketplace for our product. We are giving by far the the the we are the company that is giving by longest warranty on the environmental exposures outside and in the ground and in the water.

54:56 We have proved over the for so many years that we are existing that we do have a premium quality in place, and that premium quality is, having its, average selling selling price. But we do not like to talk about price that much. We like to talk about total cost of ownership. And as a total cost of ownership and as we presented in our investor day presentations, if you're interested, you can go to our website and look at it. If you take windows and doors, and if you look at the windows and doors made from the traditional hardwood that is you know, you you cut the tree that took two hundred years to grow, you make the window. It the price of the hardwood can be sometimes depending on the period of the year, be two times less than a COIA.

55:46 But when you look at the total cost of ownership when that window is made, a COIA premium comes only to 10% to that one of the hardwoods. So in that sense, we do we build build our market on a very, very proper and strong value proposition, and we will continue to do do that going forward. And then there there there are a couple of questions in which were similar in relation to the Tricoia plant. So as I as I mentioned before, the the decision was taken in September 2024 to discontinue the whole plant. And then in in in December of last year, that plant was placed into voluntary liquidation.

56:34 So it is now no longer part of the group. It is up to the liquidator to dispose of that or or to dismantle that plant and take it down. We incurred exceptional costs in FY '25 of 11,000,000 in relation to that whole plant, but the the whole plant is no longer part of the part of the group. It's up to the liquidator to to manage that business now. Guys, if I may just jump back in there, thank you very much indeed for being so generous of your time there and addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Elena, perhaps before really now, just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company.

57:27 If I could please just ask you for a few closing comments just to wrap up with, that'd be great. So, yes, so thank you very much. So, again, we are seeing our company at the inflection point. And as I said, our markets are huge and our demand is growing. Our technology is proven and it is protected. Our plants are scaling. Our efficiencies are improving. We are very, very much ready to continue to on this very, very nice transformation path for AXS. Thank you very much for your attention today. Thank you. Elena, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations?

58:16 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of AXS Technologies PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.