April 29, 2022
CLEANTECH BUILDING MATERIALS PLC, NASDAQ FIRST NORTH GROWTH MARKET, COPENHAGEN
Cleantech Building Materials plc
Preliminary unaudited Results as of December 31, 2021
Cleantech Building Materials plc (CBM or the Company or the Group) reports its results for the twelve months ended 31 December 2021. Unaudited financial statements are attached to this announcement.
These results are unaudited as our auditors, Crowe UK LLP, are unable to finalize the audit procedures on the Group’s subsidiaries due to the unprecedented restrictions related to the Covid-19 pandemic in China. The directors of CBM believe that the final audited results will not differ materially from these unaudited results. These accounts were prepared in accordance with the rules and standards applicable at that time. It is possible that these rules will be modified in view of the situation related to Covid-19, before our auditors sign their audit report, which may require an amendment to these accounts. We will announce our audited results as they become available and highlight any differences to these results.
The Directors are not proposing the payment of a dividend.
Despite the logistical challenges posed by the pandemic in 2021, CBM is now in a stronger position for transformative growth in the years to come. In 2021, the subsidiary of CBM Diamond Wood China Limited (DWC) was able to advance on its strategy of building an Accoya® acetylated wood (Accoya® Wood) in China, with its joint venture (JV) partner, Nantong Acetic Acid Company (NTAAC). NTAAC is one of China’s leading specialty chemical companies, serving global food and beverage producers in the United States and Europe. NTAAC is listed on the Shanghai Stock Exchange with a market capitalization of 515 million euros. As indicated in the 2020 report and accounts dated March 31, 2021, DWC and NTAAC signed the investment agreement forming the JV.
Since then, and through consultation with local authorities in Jiangsu Province, DWC and NTAAC have established the timeline and milestones for the Accoya® Wood factory project. There is a schedule for building the Accoya® Wood factory and corresponding financing. The plant will be built in Jiangsu Rudong Yangkou Port Economic Development Zone.
Under the investment agreement between the two parties, DWC is the majority shareholder of the JV company, Jiangsu Dragon Wood Limited (JDW). In addition, DWC will receive a royalty from JDW’s profits. DWC’s equity investments in JDW are being funded by CBM, which previously entered into a €15 million underwriting agreement with a private family office. During 2021, the family office subscribed for CBM shares under the subscription agreement linked to the achievement of major milestones in the Accoya® Wood factory project.
The following is a brief update of the JDW Accoya® Wood mill developments in China:
- The Accoya® technology licensor, Titan Wood, transferred the Accoya® Information on basic engineering design at DWC in 2020 and 2021.
- In 2021, Accsys subsidiary Titan Wood provided technical assistance to DWC for the preparation of the Nantong Accoya® Engineering of the wood factory and selection of equipment.
- A letter of intent with a major Chinese bank was signed with JDW on April 29, 2021 regarding a €26 million debt financing to JDW.
- JDW’s registration was completed and the business license was issued on May 18, 2021.
- JDW concluded the signing of the project investment agreement with the local Chinese government authority regarding land, utilities and taxes on May 18, 2021.
- The Milestone 1 and 2 capital injections into JDW were completed by the two shareholders, NTAAC and DWC, in 2021.
- All DWC wholesaler agreements were officially transferred to JDW in September 2021. DWC sales staff were also transferred to JDW.
- The approval of the feasibility study report was granted to JDW on November 15, 2021 by the Chinese government, and the certificate of registration of the investment project of Jiangsu province was obtained. The JDW project is now officially published on the government website (http://18.104.22.168:8075).
- Approval of the Social Stability Assessment Report was granted for the JDW project on November 30, 2021 by the Chinese government.
- JDW finalized the front-end engineering design with an engineering, procurement and construction (EPC) company, LBT Shanghai in November 2021.
- The energy conservation assessment application was approved on February 24, 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 building the Accoya® Wood factory. Key JDW activities are undertaken by Group employees in the region, so international travel restrictions have had minimal impact on the progress of the project.
Accoya® The wood is produced using state-of-the-art patented technology, allowing it to resist rot, defy the elements and remain strong for decades. Guaranteed 50 years above ground and 25 years below ground or in fresh water, the performance and properties associated with Accoya® are sought after by millwork manufacturers, architects and builders around the world.
In 2021, the Group invested in expanding its marketing and sales operations in China and ASEAN countries, which resulted in the addition of a new offtake agreement to the growing list of manufacturers and wholesalers in the region committing to purchase large volumes of Accoya® Drink. These agreements, and ongoing business with the company’s existing channel partner base, demonstrate strong and growing demand for Accoya.® Wood in the area.
The Group increased its turnover in 2021 to €1,014,000 (2020: €857,000). The Group increased its loss for the 12 months ended December 31, 2021 to €4,891,000 (€4,116,000 in 2020). The increase in loss is largely explained by the additional loss related to the Group’s share in the joint venture and the increase in share-based payment costs.
I would like to take this opportunity to once 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 main strategic objectives for 2022 are:
- Engage a leading engineering, procurement and construction company to lead the construction of an Accoya® Wood manufacturing factory in China.
- In collaboration with NTAAC, the Group’s partner in the chemical industry, to ensure that Accoya® The wood manufacturing plant is built on time and within budget and is operated efficiently.
- Build relationships with high-volume wood product manufacturers through testing and trials in anticipation of Accoya® The wood is produced in the Group’s own factory.
- Develop the Group’s marketing and sales initiatives to further expand market channels and collection agreements.
Company financial review
Group revenues for the year ended 31 December 2021 increased to €1,014,000 (2020: €857,000) and consisted mainly of Accoya® Timber sales to customers in China, Thailand, Vietnam, Singapore, Indonesia and Malaysia.
The Group realized a net loss of €4,891,000 for the year to 31 December 2021 (2020: €4,116,000). As of December 31, 2021, the Group had cash and cash equivalents of €158,000 (2020: €25,000) as well as an available facility of approximately €3.4 million and an equity commitment to finance the JV.
Once the Group produces its own Accoya® Wood, the Board believes that the financial performance of the Group will be radically transformed.
CBM plans to hold the AGM on June 24, 2022 and publish its audited accounts before that date. However, the realization of these plans is dependent on the continued impact of the current COVID restrictions in China. Should these ongoing restrictions change these plans, the Company will inform the market accordingly.
We expect to publish the Company’s next financial report which will be its unaudited accounts for the six months to June 30, 2022 in September 2022.
THE DIRECTORS OF CLEANTECH BUILDING MATERIALS PLC ACCEPT RESPONSIBILITY FOR THE CONTENT OF THIS ANNOUNCEMENT
Further information can be found on the company’s website at www.cbm-plc.com
|Cleantech Building Materials plc
+44 20 3934 6630
|Keswick Global AG (certified advisor)||[email protected]
+43 1 740 408045
|IFC Advisory Limited (Financial PR)
|+44 20 3934 6630|
The information disclosed in this announcement is “inside information” within the meaning of Rule 4 of the Nasdaq First North Nordic Rulebook.
CBM Unaudited accounts for the year up to December 2021 280422 Final