A first licence deal – signed for a whopping €100m (£72m) – indicates the great potential of wood hardening group Accsys.

The deal with Hong-Kong based Diamond Wood China involves €9.5m in cash upfront, with the remaining €90m to be paid over the course of the next three years and a further €11m a year for Accsys in royalties. Chairman Willy Paterson-Brown says he expects this amount ‘to increase’, adding that the deal is a great validation of the product and should help encourage other would-be licensees.

There are currently five customers with option agreements, as Diamond Wood had, to build plants employing the Accsys patented process. One recent option signatory is Al Rajhi – also a 5.8% shareholder – for 100,000 cubic metres in five Gulf countries.

After the Diamond deal and a recent €18.5m placing on Amsterdam’s Euronext, Accsys has €53m cash in its coffers to fund expansion and is unfettered by debt. Paterson-Brown has poached fellow Scotsman Finlay Morrison from US chemicals giant Celanese (a recent $22m investor) and installed him as chief executive, as well as investing in the sales force, in new products and in a doubling of capacity at the Arnham production facility.

Sales of Accoya from Arnhem and initial options payments contributed to the first revenues for the group, with results for the half-year to September showing €3.8m and an increased pre-tax loss of €5m. A ‘strong’ second half is expected, with the possibility of a dividend.

Investors who followed Growth Company Investor’s recommendation at €1.19 in March last year have enjoyed a threefold gain and might bank some profits. Be sure to retain some exposure, however, as we expect the shares to go much further.

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