IMPACT REPORT YEAR 4OCTOBER 2016

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Table of Contents Unless otherwise stated, Impact Report reporting year is from September 2015 to August 2016

Disclaimer .................................................................................................................................................................... 2 1. CEO Overview .................................................................................................................................................... 3

a) Impact delivered and changes since last report ............................................................................................... 3 b) Impact management ........................................................................................................................................ 4 c) Opportunities and risks.................................................................................................................................... 4 d) Board members ............................................................................................................................................... 5

2. Social Purpose and context .............................................................................................................................. 7 3. Who benefits .................................................................................................................................................... 10 4. Activities and Operations ................................................................................................................................ 17 5. Stakeholders..................................................................................................................................................... 27 6. Evidencing Social Value .................................................................................................................................. 30

a) Evidence ........................................................................................................................................................ 30 b) Current management ..................................................................................................................................... 31 c) Future Plans ................................................................................................................................................... 31

7. Risk / opportunities analysis, negative externalities & other issues ....................................................................... 32 a) Risk / Opportunities analysis ......................................................................................................................... 32 b) Negative externalities & other issues ............................................................................................................ 32

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Disclaimer

The purpose of this document is to provide general information about Accsys Technologies PLC, its subsidiary companies, (“Accsys”) and its operations solely to the addressee. This document is for the exclusive use of the persons to whom it is addressed and their advisers and shall not be copied or reproduced or distributed, communicated or disclosed in whole or in part by recipients to any other person nor should any other person act on it. The information in this document has not been independently verified by Accsys. Except in the case of fraudulent misrepresentation, no responsibility, liability or obligation is accepted by Accsys or by any of its officers, employees, advisers or agents as to or in relation to this document or sufficiency of information contained herein or any other written or oral information made available to any interested party or its advisers and any such liability is expressly disclaimed save as may be expressly agreed in writing by Accsys and any third party. In particular, but without limitation, no representation or warranty, express or implied, is given by Accsys or any of its officers, employees or agents as to the achievement or reasonableness of, and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects or returns contained herein. Any projections, estimates, forecasts, targets, prospects or returns contained herein are not a reliable indicator of future performance. Nothing in these materials should be relied upon as a promise or representation as to the future. Accsys gives no undertaking and is under no obligation to provide the recipient with access to any additional information and it reserves the right, without giving reasons, at any time and in any respect to amend anything described in this document. This document does not constitute in any jurisdiction an invitation or inducement to engage in investment activities or an offer by Accsys or any of its officers, employees, advisers or agents for the sale or purchase of securities or of any of the assets, business or undertaking of Accsys. If you require any investment advice, please consult with a professional financial adviser. By accepting this document the recipient agrees to be bound by the foregoing limitations.

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1. CEO Overview Accsys is a chemical technology group focused on the development and commercialisation of a range of transformational technologies based upon the acetylation of solid wood and wood elements (wood chips, fibres and particles) for use as class leading, environmentally sustainable, construction materials. The primary focus is on the production, sale and licensing of Accoya® solid wood and the licensing of Tricoya® wood elements technology. Manufactured through the Company’s proprietary acetylation wood modification process, these solid wood and wood element products exhibit superior dimensional stability, durability and other important benefits compared with alternative natural, treated and modified woods as well as more resource intensive man-made materials. We believe our products offer a significant benefit when considering the global desire to reduce the negative impacts on our environment. Our products are the most environmentally friendly building solutions over their full life cycle, made from abundantly available, fast growing, sustainably sourced, renewable resources, yet with durability and dimensional stability exceeding the best performing tropical hardwoods. They are natural building materials with low maintenance and consistent qualities of the highest performing non-sustainable man-made materials; while benefitting from all positive attributes of wood (sustainability, strength, beauty) without the downfalls (poor durability & stability). Accoya®’s carbon footprint significantly outperforms most other commonly used building materials such as concrete, PVC, MDF and plywood as well as a range of tropical hardwoods such as azobe and red meranti. Through the photosynthesis process trees absorb CO2 and as a result 1m³ of wood may store over 1 ton of CO2 for its lifetime. Our process takes fast growing, sustainably sourced wood and converts into a long last construction material, which can be incinerated for energy production at the end of its life. This has enabled us to demonstrate that Accoya® is carbon negative over its extended life cycle.

a) Impact delivered and changes since last report Accsys remains committed to creating social value through our operations, and to improving our disclosure of this in our annual Impact Report. Since our last report: Financial highlights:

x Total revenue increased by 15% to €52.8m (2015: €46.1m), driven by higher prices and increased licensing income;

x Significant gross margin growth, up 700bps to 34% as a result of higher revenue;

x First full year of positive EBITDA since restructuring in 2010 and 2011; x Loss before tax improved to almost break-even, to €0.5m from €7.7m in

2015; x Manufacturing segment profitability continues to improve, recording EBITDA

of €8.3m (2015: €6.9m); gross manufacturing profit margin increased from 25% to 27%;

Strategic and Operational Highlights:

x Significant steps taken to increase manufacturing capacity;

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x Capacity utilisation successfully managed through process optimisation and pricing; expect to be operating at full capacity in run up to expanded plant being completed;

x 50% increase in capacity of Accoya plant in Arnhem on track for production in 2017 with pre-construction engineering and design work completed; Enhanced collaboration with Solvay; transition of Accoya customers completed; Solvay committed to Accoya with 76,000m3 off -take over five year period ahead of their own plant being constructed;

x Proposals announced for a consortium with BP and Medite to fund, construct and operate first dedicated Tricoya plant in Hull with pre -construction engineering and design work completed; significant progress made towards full agreements and funding which is expected to be completed later in 2016 and which will have a substantial positive impact on the Accsys Group.

b) Impact management A focus on corporate and social responsibility lies at the very core of our business. Our technologies not only enable us to manufacture wood products that offer ‘best in class’ durability, dimensional stability and a wide spectrum of other performance and environmental advantages over alternative environmentally threatened or compromised products, but also provide attractive opportunities for our employees, distributors, business partners and other stakeholders. We want to ensure that our business is not only a commercial success, but also run in a responsible fashion as we continue to advance technologies for a better world. Through our research and development group we are continually looking for ways to develop our technologies and products to make them more energy efficient and to reduce as far as possible any adverse impact on the environment. These activities remain the responsibility of the Accsys board and the senior management team. The company employs an environmental consultant to assist and advise on a range of environmental matters and including measurements.

c) Opportunities and risks We believe the potential market for Accoya® and Tricoya® is in excess of 2.5 million m3 annually. To put this into perspective, during the year to 31 March 2016 we sold 33,847m3, however the total global solid wood market is understood to exceed 400 million m3 annually. The global wood based panel sector is approximately 290 million m3 annually. Consistent with most growth companies, Accsys faces a number of opportunities and risks; further details of which are set out in our Annual Report.

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d) Board members Patrick Shanley – Non-Executive Chairman

Patrick, born April 1954, has extensive board room experience in the chemicals sector, having previously been Chief Financial Officer of Courtaulds plc and Acordis bv, Chief Executive Officer of Corsadi bv, Chairman of Cordenka Investments bv. and Chairman of Finacor bv. With effect from 2nd December 2015, Patrick has been appointed Non-Executive Chairman of Matchtech Group plc. Patrick began his career working for British Coal where he qualified as a Chartered Management Accountant. He has a strong operational, restructuring, merger and acquisition background within a manufacturing environment.

Paul Clegg – Chief Executive Officer

Paul, born May 1960, assumed the role of Chief Executive Officer on 1 August 2009. Paul had been a Non-Executive Director of the Group since April 2009 and had been working with the Group as part of the Chairman’s Office since mid 2008. Prior to this, he was CEO of Cowen International, subsequent to its sale by Société Générale in 2006. Before this, he ran SG Cowen International, part of the Société Générale Group, from 2000 to 2006. Paul started in investment banking in 1981 at The First Boston Corporation. Since then he has held senior positions at various investment banks including James Capel and Schroders. Paul is also a Non-Executive Director at Synairgen Plc and Peel Hunt LLP as well as being Chairman of Tricoya Technologies Limited.

William Rudge – Finance Director

William, born February 1977, had been the Financial Controller for Accsys since joining the Company in January 2010 before being appointed Financial Director on 1 October 2012. Prior to this he qualified as a chartered accountant with Deloitte in 2002 and subsequently gained a further six years’ experience in their audit and assurance department, focusing on technology companies including small growth companies and multinational groups. William spent a year working at Cadbury plc, including as financial controller at one of their business units, before joining Accsys in 2010.

Hans Pauli – Executive Director, Corporate Development

Hans, born March 1960, has held senior financial positions across the banking and bio-tech sectors and has significant experience in investment, manufacturing, licensing and distribution. Hans holds a BA in Business Administration and has completed an MA in Fiscal Economics from the University of Amsterdam. His commercial career began in the banking sector where he worked for various institutions including Barclays, where he gained investment and M&A experience. He then

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worked for a number of bio-tech companies, including, most recently, Euronext listed OctoPlus N.V.. Hans is a non-executive director of BioTech VC, MedSciences. Hans now divides his time between the Group’s Arnhem plant and its London headquarters.

Nick Meyer – Non-Executive Director

Nick, born December 1944, has extensive board room experience in the timber industry, having previously been Chairman of Montague L Meyer Limited, Deputy Chairman and Chief Executive of Meyer International PLC. Nick is currently Executive Chairman of Consolidated Timber Holdings Limited, an innovative and substantial group of companies which imports, distributes and processes sustainable timber and timber products. Nick is also a former president of the Timber Trade Association of the United Kingdom.

Sue Farr – Non-Executive Director

Sue, born Leap Year Day 1956 is a highly experienced marketing and communications professional who joined the Accsys Board in November 2014. Sue has been part of the executive management team at Chime Communications plc since 2003. Prior to that she was Europe MD of leading PR firm Golin Harris, the BBC’s first ever Director of Marketing and Communications, and Director of Corporate Affairs for Thames Television. She is a Non-Executive Director of British American Tobacco plc, Dairy Crest Group plc and Millennium & Copthorne Hotels plc. She was a Non-Executive Director of Motivcom plc from 2008-2014 and a Trustee of the Historic Royal Palaces from 2007-2013. She has been Chairman of both the Marketing Group of Great Britain and The Marketing Society. A previous Advertising Woman of the Year, she was awarded a Honorary Doctorate by the University of Bedfordshire in 2010.

Sean Christie – Non-Executive Director

Sean, born October 1957 is currently a Non-Executive Director of Applied Graphene Materials Plc and Turner and Townsend Ltd. He was Group Finance Director of Croda International plc from 2006-2015, a global manufacturer of speciality chemicals. Prior to joining Croda in 2006, Sean was Group Finance Director of Northern Foods plc. He also served as a Non-Executive Director of KCOM Group plc until 2007, of Eminate Limited, a wholly owned subsidiary of The University of Nottingham and of Cherry Valley Farms Limited until its sale in 2010. He is a Fellow of both the Chartered Institute of Management Accountants and the Association of Corporate Treasurers. Sean has extensive knowledge of all aspects of finance and strategy in major businesses and is an experienced Audit Committee Chairman.

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2. Social Purpose and context

a) Our aim Accsys aims to reduce the use of environmentally unfriendly building materials and products by the utilisation of our propriety technology and the introduction of our products throughout the world. The planet continues to consume endangered materials like tropical hardwood and non-renewable, high emitting building materials such as plastics, concrete and metals at an alarming rate. Our products offer alternative, sustainable new materials that resolve many of the limitations that wood and these other materials have. Accsys has already developed and is commercially producing Accoya®, solid acetylated wood. We have developed the process for the production of Tricoya®, acetylated wood elements used for the production of panel products such as MDF. We are committed to increase the use of these products globally through sales from our manufacturing facility, and on a substantially larger scale by licensing our technologies to and working with other companies to manufacture these products. We are also committed to continuing research and development concerning our products (uses and new wood species) and of our processes. This on-going development is designed to increase the use, applicability and improve the efficiency and environmental benefits which in turn will benefit many of our stakeholders.

b) Context – the issue An increasing global population and consumption has resulted in our planet being overexploited with a depletion of resources, mass deforestation of tropical forests, waste problems, toxic emissions and global warming. Therefore it seems unimaginable to remain consuming endangered materials like tropical hardwood and non-renewable, high emitting building materials such as plastics, concrete and metals at an alarming rate. Our current consumption pattern shows an addiction to non-renewable materials and resources while deforestation of tropical rainforests continues. The ugly landscape of degraded land through mining and deforestation also results in extra releases of greenhouse gases further enhancing the global warming problem. Although from a resource and carbon sequestration perspective wood seems like the ideal material, there is an important reason why it has not been adopted as the main building material in modern markets: mediocre performance in use (poor durability and dimensional stability leading to short life-spans and frequent maintenance). While tropical hardwoods represent some of the best performing and most beautiful woods available, there is simply not enough to sustainably harvest anymore with depletion of tropical rainforest as a catastrophic consequence. Man-made materials based on metals, plastics and concrete, but also chemical wood preservation with toxic substances, solved some durability issues, but the environmental damage in the

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production and waste phase are no longer tolerable (landscape deterioration, depletion, toxic waste). Man-made materials as well as wood treated with toxic chemicals provides serious problems in the end of life phase; whereas wood is biodegradable, these materials often end up in landfills and pollute the soil and surroundings. Overconsumption of fossil fuels such as coal, oil, gas - causing global warming – means that reserves of fossil fuels are quickly depleting, showing the urgent need to focus on energy based on renewable sources such as sun, hydro, wind and biomass.

c) Context - our solution Our products, Accoya® and Tricoya®, are the most environmentally friendly building solutions over their full life cycle of production1, use and final retirement. Made from abundantly available, typically fast growing sustainably sourced, renewable resources, yet with durability and dimensional stability exceeding the best performing tropical hardwoods. They are natural building materials with low maintenance and consistent qualities of the highest performing non-sustainable man-made materials; while benefitting from all positive attributes of wood (sustainability, strength, beauty) without the downfalls (poor durability & stability), and able to take full advantage of the complete resource, including low quality and waste material in the production of Tricoya2 wood elements. The environmental performance of Accoya® is thoroughly tested and published following uncompromising leading independent international methodologies. For example, carbon footprint studies show that Accoya® significantly outperforms most other building materials, including a wide range of sustainably sourced hardwoods; and that Accoya® window frames are now classified by the Delft University of Technology as carbon negative over their lifetime cycle3. Accsys confirm that Accoya®

x Is non-toxic: Accoya & Tricoya wood elements = wood plus acetyls4 x Wood is modified to its core x The acetylation process is fixed x The process swells the wood to its “green” size, permanently x Durability achieved by moisture resistance

1 Eg. http://www.accoya.com/wp-content/uploads/2013/01/Accoya-wood-2012-cradle-to-gate-carbon-footprint-update.pdf and http://www.accoya.com/wp-content/uploads/2011/05/Life-cycle.pdf 2 Tricoya wood elements are currently not in production. First Tricoya chip plant build expected to break ground in 2016. 3 http://www.accoya.com/wp-content/uploads/2013/02/Carbon-footprint-cradle-to-grave-report-window-frame-FINAL.pdf 4 Acetyl groups naturally occur in all wood

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Accsys Technologies PLC reaffirms its commitment to its purpose outlined above, which has not changed since its last Impact Report. Responsibility for oversight of the organisation's social objectives remains with the senior management team and is discharged by a number of key staff who report to the senior management team.

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3. Who benefits The beneficiaries are split into two broad groups:

a) the global community as a result of the overall environmental impact; and b) those that benefit directly from our products and involvement with Accsys.

a) The global community

Our products are an alternative to tropical hardwoods and other high impact, carbon intensive materials such as plastics, concrete and metals. A natural solution for the problem of landscape deterioration and global warming is wood from well managed sources. The forests we appreciate for their beauty and function as natural ecological habitat, are actually an important carbon sink by filtering CO2 out of the air and absorbing this in the biomass of the tree. Although there are many misconceptions about this issue, for the sake of climate protection, the best approach is to preserve the forest through responsible management, while harvesting as much wood as sustainable for the production of durable products such as furniture or construction products, which will act as additional carbon stores while providing the forest the opportunity to regenerate and produce new biomass. As wood is a renewable resource, this is a very effective way to absorb carbon in the forest as well as in durable products. In fact, while in the tropical regions deforestation is still continuing, in temperate regions such as in Europe and North America the net forest area has been increasing steadily for several decades. To produce Accoya® and Tricoya®, only abundantly available, typically fast growing wood species such as Radiata Pine are being used from certified, sustainably managed forests and plantations, including FSC (Forestry Stewardship Council), PEFC (Programme for the Endorsement of Forest Certification) and other regionally certified woods. Furthermore, the improved durability qualities that Accsys introduces to the wood, result in a longer life material which further improves the carbon sequestration properties. Together with a number of other properties and benefits (described in more detail below and in section 4) our products clearly provide a unique way to reduce the impact of the environmental issues including deforestation of tropical forests, waste and toxic emissions and global warming.

b) Specific beneficiaries

Government – local, national and international

Governments at all levels are now looking to either promote the use of environmentally sustainable materials or are enforcing their use. For example many local authorities around the world frequently have specific requirements for building materials to meet environmental as well as performance requirements. Our products provide a clear alternative to the materials previously used but which may no longer be acceptable. While this list of potential alternative

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materials is likely to grow, Accsys has been able to clearly demonstrate the benefits of our products in respect of the environment, performance and costs benefits, in particular when looking over the life-cycle of the required application.

At a higher level, national and international governing bodies are seeking to limit the environmental impact of deforestation and global warming. This is being done in a number of ways, such as the targeting of national CO2 emissions and by targeting a reduction in tropical forest deforestation. For example in 2013 the European Union implemented a new Timber Regulation which seeks to prohibit illegally harvested timber and timber products from being placed on the EU market which up to now has been considered to have a significant negative social and economic impact5. Our products provide a new way of enabling targets and regulations such as these of being met.

The products which Accsys has introduced to the market place increase the options available to users of building materials which help meet the various targets and objectives set by local, national and international governments, thus demonstrating that their policies are achievable. Distributors/Accsys customers

Our products provide a number of key performance advantages over existing materials which offer our customers (i.e. distributors) a new premium product to sell onto their customer base (including manufacturers and building material suppliers). Accsys has built up a network of 60 distribution or agency agreements which now sell Accoya to over 40 countries worldwide. as of 31 August 2016. These distributors benefit in a number of ways:

x Enabling sales growth by selling a new, profitable, high performance product in tough economic climate;

x Introduction of a high performance, sustainable product into an organisations own product listing enables distributors to provide a more complete service and product offering to their own customers; and

x On-going relationship with Accsys which includes product and marketing support.

x Under the distributor agreements, the distributors, who typically have extensive experience selling timber, undertake to market and promote our products. In return, they receive on-going support from Accsys.

Accsys holds quarterly distributor seminars. These seminars are to provide updates, training and sales and marketing presentations to distributors. Further support includes the provision of marketing support and guidance as well as benefitting from the various training and certification programmes described in Section 4(b).

5 http://ec.europa.eu/environment/eutr2013/_static/files/facts-and-figures/eu-timber-regulation-facts-and-figures_v01_en.pdf

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Business Partners

Accsys has previously stated, we believe the potential market for Accoya® and Tricoya® is in excess of 2.5 million m ³ annually. Last year we sold 33,847 m3 of Accoya, however the total global solid wood market is understood to exceed 400 million m3 annually and we believe sales in excess of 1 million m3 annually are ultimately achievable. While it may take some time for Accoya to reach its full market potential, we are confident that continued strong sales growth can be generated. The majority of our Accoya sales is to a network of timber distributors which in turn supply a variety of industries, principally for joinery (windows and doors) and for decking and cladding. As we expand, we expect that new opportunities will also be developed as we become able to meet the demands of larger scale manufacturers and also as we continue to develop our product and its applications. Tricoya panels’ enhanced performance and moisture resistance makes them particularly suited to external applications including facades and cladding, soffits and eaves, exterior joinery, wet interiors, door skins, flooring, signage and marine uses. Tricoya displaces alternative more expensive or less easily handled products and opens up major new market opportunities in the construction sector. The global market for Tricoya panel products is estimated in excess of 1.6 million m3 and up to approximately 4.5 million m3 per annum. This would occupy around 1% of global MDF manufacturing capacity. Tricoya panels were introduced to the market by Medite in 2012, manufactured using chipped Accoya. Sales have roughly doubled each year since, and total panel sales to date exceed 12,500m3 / 1,000,000m2, representing a sales value of approximately €18m.According to the Food and Agriculture Organization of the United Nations, Global production and trade of forest products in 2014, the global annual production of roundwood exceeds 3.6 billion m3; the European, North American and Asian production of sawn timber and panel products totalled 224, 165 and 356 million m3 in 2014 respectively. More specifically, the Freedonia Group states that the 2014 global demand for siding and cladding was 4.8 billion m2 and for windows and doors the demand was US$175 billion. As stated above, Accsys believes that a global volume for Accoya® and Tricoya® in excess of 2.5 million cubic metres is potentially achievable. While it is expected to take a number of years to reach this impact, progress has already been made. The most significant developments are: x Licence agreement with Solvay for the production and sale of Accoya® wood.

The licence provides for the grant to Solvay of exclusive rights for an initial 15 year period to produce and sell Accoya® within the Council of Europe save for Belgium, Ireland, Luxemburg, the Netherlands and the United Kingdom in return for Solvay paying Accsys licence and royalty fees. x In addition, in November 2015 Accsys and Solvay Acetow have entered into

a new agreement to refine the relationship between the two parties for the licensing, marketing and manufacturing of Accoya®. This new agreement provides the framework and funding for a significant increase in the

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manufacturing capacity in Arnhem. Solvay will purchase a minimum 76,000 cubic metres of Accoya from the Arnhem plant over the period from 2016 to 2020 (the “offtake commitment”) and as a result of the increased manufacturing capacity in Arnhem and consequent greater sales capacity, under the new agreement Solvay will review the optimal timing to construct its 63,000 cubic metres Accoya manufacturing plant.

x Accsys made considerable advances with its proprietary Tricoya® wood elements

acetylation technology and processes. This technology is designed for use within MDF, particle board and wood plastic composites in a worldwide panel products market estimated to be worth more than €60 billion annually. Working with Medite, Accsys’ joint development partner, has enable sales of “Medite Tricoya” exterior durable fibreboard to increase over the past year, with sales in excess of 14,700 m³ of panels now sold in Europe; Masisa Tricoya Super MDF has also been successfully launched in South America.

x Tricoya Technologies Limited (“TTL”) was formed to exploit IP surrounding Tricoya® wood elements acetylation technology and processes. In February 2016 we were very pleased to announce BP’s participation in the proposed consortium to fund, build and operate the world’s first Tricoya wood elements acetylation plant. BP Ventures acquired an initial 3% equity interest in our Tricoya business, implying a valuation of €35m. The investment was a first step by Accsys and with BP and Medite, is expected to result in the creation of a new operating business in which Accsys will retain a substantial shareholding. Considerable progress has been made by the parties and we look forward to the full consortium being finalised later in 2016 with additional funding necessary to build the plant in Hull, UK. It is expected that the first full-scale production plant for Tricoya wood elements will commence operations in late 2018.

We have established relationships with third parties that have contributed to our success so far and which we believe will help us in meeting our long term strategic targets. As set out above, the potential market for Accsys’ products is considerable and Accsys believe that being able to fulfil this demand ourselves by building and operating manufacturing facilities offers the greatest long term rewards. However, we have and will continue to work with appropriate third parties in order to help achieve our long term objectives and in particular where such parties have resources or technologies which are not available to Accsys. Our ambition to retain a direct interest in manufacturing is characterised by our developing relationship with our licensee, Solvay, and in respect of Tricoya, with the proposed consortium with BP and Medite, to build the first Tricoya plant in which Accsys would take the lead. Accsys would benefit from yields directly from the manufacturing plant and royalty fees through the technology licence.

Employees

As at 31st August 2016, Accsys had 121 employees. Employees benefit from their involvement with Accsys in a number of ways. This includes the prospect of working

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as part of team involved with growing a small and ambitious company into a successful and sustainably profitable company. Benefits include discounted products for staff that have been keen to undertake their own projects incorporating Accoya. A positive culture is further promoted throughout the company and Accsys employees take great pride in the development and success of the products and company. This positive approach is extended to other important aspects such as the focus on health and safety. (Please see Section 5; Activities and Operations below for details). Accsys has a communication plan for employees, including monthly global sales and marketing meetings attended by all of the sales and marketing teams. This event is motivating and provides an overview of the current month and future plans of the business and sales territories. The meeting is led by the sales director and head of marketing. The exercise of the meeting is to share ideas and opportunities amongst the group and take away new information. Regular employee meetings with the CEO and COO are held on company progress against strategy, where an open question and answer session also takes place. A newsletter is sent out to every employee frequently to keep all up to date with developments on the business, sales and marketing results and projects. Feedback and employee engagement is encouraged. Quarterly Senior Management meetings also take place with other team updates and departmental updates occurring more regularly.

Suppliers

Suppliers such as key certified timber suppliers (currently largely based in New Zealand) benefit from a new and expanding sales route and additional demand. Accsys suppliers include wood and chemical supply chain. Communication with these parties is the same as those listed under “End users” below. As part of our focus on social responsibility, we are committed to improving our practices to combat slavery and human trafficking. As part of our initiative to mitigate risk in our business and supply channels, we purchase goods and services from suppliers, and sell and licence our Accoya® and Tricoya® products, for and to third parties that we believe take the same stance as us against slavery and human trafficking. Further details including the company’s full statement can be found on our website at https://www.accsysplc.com/wp-content/uploads/sites/2/2015/08/slavery-document.pdf.

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End users

Constructions using man made materials such as metals, plastics and concrete can cause environmental damage and fall into disrepair more quickly. Accoya wood and Tricoya based panels provide several environmental gains and cost savings due to the improved properties of Tricoya and Accoya. The following are the key benefits of Accoya which end users benefit from: x Outstanding durability – lasts 50 years above ground and 25 years below. Class

1 durability, surpassing even teak. Virtually rot proof;

x Dimensional stability – swelling is reduced by 75% or more; doors and windows open effortlessly year round; paints and varnishes last for 3 or 4 times longer, greatly reducing maintenance costs;

x Insect barrier – indigestible to a wide range of insects including termites;

x From sustainable sources;

x Consistent quality throughout – from surface to core. No need to apply preservatives when cut or planed;

x Retained strength and hardness;

x Perfect for coating – Improved stability means coatings last 3 or 4 times longer; easier to coat, less preparation and sanding required;

x Excellent machinability – easy to machine and process – no special tools required;

x Naturally insulating – offers improved insulation in comparison with commonly used wood species; ideal for applications where energy conservation is important;

x Naturally beautiful wood – the process does not compromise the wood’s natural beauty; and

x Non-toxic and recyclable – protects the environment from the harmful effects of common treatments; may be safely reused and recycled.

End users are able to benefit from these attributes in a many number of different ways including from improved costs over the lifetime of the product and new opportunities for product development (which in turn provides higher margin opportunities).

Communication to end users is carried out in a number of ways including:

x A quarterly newsletter ‘Round up’ is issued to share any new and relevant information. Read by distributors, end users, investors and partners this is a good communication tool that encourages and has enabled Accsys and its products to generate a positive reputation in the market place;

x Up to date corporate and product websites including all news; corporate issues, brand and product information;

x Product awareness is also available by social media sites including, facebook and twitter;

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x Accsys also has contact forms on all our websites where anyone can contact us with questions, feedback etc. They can also opt-in to receive marketing material from us;

x Brand and Financial PR firms – report relevant activities, progress in local newspapers, magazines and online; and

x Contact details for relevant Accsys personal and third party PR firms are included on the company websites.

During the 12 months to 31 August 2016 Accsys undertook the following related activities with its stakeholders:

Stakeholder Group Activity # of sessions # engaged Topics of engagement Distributors New websites

created 30 30 Brand awareness

Training seminars for distributors

4 40

Customers/End users Worldwide Tradeshows

25 2500 Brand awareness

Customers/Joineries UK, USA, NL, AU – Joinery Certification Scheme

242 500 Accoya training

Brochures created for customers

250 1000s

Customers/Architects Online architectural course Accoya Academy

2 3524 The superiority of wood over other higher impact building materials

Global Community Standardisation committee

2 10 Dutch standardisation committee in respect to wood. Active participation on standards on modified wood.

European COST actions

1 15 COST Action FP 1407. Active discussion on sustainability of wood products

Conferences 1 1250 World Conference on Timber Engineering (WCTE), Vienna, Austria. Paper and presentation: “Environmental impact of constructions made of acetylated wood” (authors: P. v. d. Lugt, F. Bongers, J. Vogtländer)

1 250 International Research Group on Wood Protection, IRG 47, Lisbon, Portugal. Paper and presentation: “Evaluation of field test data” (authors: F Bongers, C Brischke, J Van den Bulcke, W Gard, I De Windt, H Militz). IRG/WP 16-20594.

Shareholders RNS, Results 24 Update on Accsys; company

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release, webcasts and Roadshows

progress and future plans report. Stakeholder impact report.

4. Activities and Operations

a) Production Phase

Procurement To produce Accoya® and Tricoya, only abundantly available, typically fast growing wood species such as Radiata Pine are being used from certified, sustainably managed forests and plantations, including FSC, PEFC and other regionally certified woods. To maximise resource efficiency from the forest, logs are used to produce Accoya®, while the smaller stems and branches may be used as input material for production of Tricoya. Furthermore, waste wood from construction projects may earn a high quality second life as input material for Tricoya, thus even increasing the carbon sink effect.

Through the photosynthesis process trees absorb CO2 and solar energy in their creation of wood, while releasing oxygen in return. Depending on the density of the wood (the denser, the more carbon is stored), 1 m3 of wood may store over 1 ton of CO2 for its lifetime6.

Fast growing softwood species such as Radiata Pine are primarily used to produce Accoya®. The use of wood species that produce larger volumes of wood over the same time span for the same area of land offers obvious environmental advantages. Radiata Pine even outperforms giant bamboo – known to grow incredibly fast – in terms of annual yield. This means that there is an ample supply of timber from certified sources for the production of Accoya® wood to replace scarcely available certified tropical hardwood in demanding exterior applications.

6 Source – Building with wood = The active form of climate protection (2011) Centre of Life and Food Sciences WeihenstephanTechnische Universitat Munchen.

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Production Accoya is currently produced at our manufacturing plant in Arnhem, The Netherlands.

Accoya production is based upon our patented acetylated wood technology, a process that has previously been studied by scientists around the world for more than 90 years but not previously at a commercial level. This method of improving wood has been proven to deliver such superior performance that it has long been used as the “gold standard” against which other methods are measured.

The physical properties of any material are determined by its chemical structure. Wood contains an abundance of chemical groups called “free hydroxyls”. Free hydroxyl groups adsorb and release water according to changes in the climatic conditions to which the wood is exposed. This is the main reason why wood swells and shrinks. It is also believed that the digestion of wood by enzymes initiates at the free hydroxyl sites – which is one of the principal reasons why wood is prone to decay.

Acetylation effectively changes the free hydroxyls within the wood into acetyl groups. This is done by reacting the wood with acetic anhydride, which comes from acetic acid. When the free hydroxyl group is transformed to an acetyl group, the ability of the wood to absorb water is greatly reduced, rendering the wood more dimensionally stable and, because it is no longer digestible, extremely durable.

The process requires the input of acetic anhydride, and results in a valuable bi-product called acetic acid. This acid is either recycled (by conversion back into acetic anhydride) or sold into the market as it has a number of uses including in the production of a number of other chemicals widely used in industry. This therefore allows for an improved carbon footprint.

Production and product improvements and species development Accsys has continued to invest in developing our technology in order to increase the productivity and efficiency of our plant and for the potential benefit of our business partners. This has included research, testing and implementation of process changes and the installation of new equipment which has also helped reduce maintenance, increase reliability and to reduce as far as possible any adverse impact on the environment.

Significant work has been carried out developing analytical methods and mathematical models which have further increased our knowledge of both our processes and products which have created opportunities to improve our capacity, product uniformity as well as production cycle time and energy consumption. In addition we have continued to carry out research which will lead to improved product quality.

One specific area of improvement concerns the sourcing of timber. Radiata pine, largely sourced from New Zealand, is currently used to produce Accoya wood. Although

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the intercontinental transport distance may be high, in many instances the annual transport emissions of acetylated radiata pine, per product lifespan, are competitive when compared with various continentally sourced timber species. This is due to the efficient low emissions transport used (sea transport), low weight, and lifespan improvement through acetylation.

Nevertheless, we are continuously engaged in comprehensive species testing with the end goal of being able to commercially acetylate the species that are most local to any of our current and potential licensees, wherever they may be in the world. That means reducing the need for transporting raw wood and therefore reducing our carbon footprint further still7. As a result we have successfully introduced Accoya Alder made from certified North American and European sources.

Accsys endeavors to improve our impact on wider communities through product development. Accsys is continually looking for new ways and applications for Accoya and Tricoya. Existing applications for Accoya® include windows, doors, cladding, decking, shutters, louvres, civil works, landscaping, outdoor furniture and structural. The possibilities for the use of Tricoya® wood elements as the key component with panel products are ever expanding but include façade cladding, fascia and soffit panels and other secondary exterior applications, window components, wet interiors, specialty furniture, signage and automotive parts and sports equipment. There are so many more applications that would benefit from the use of these products. Accsys allocates a significant amount of resources to identifying the most relevant application that would have the biggest positive social impact and work closely with our suppliers and other business partners in this respect.

We continue to invest in Research and Development, including further development of new species to generate new applications and increased revenue. Our ongoing programme includes progression of acetylated Beech, which has been used in a number of projects around the world. Development of supplemental species to increase supply options as manufacturing capacity increases will aid long-term growth.

Health and Safety Accsys Technologies is committed to maintaining a healthy and safe environment for all its group employees, licensees, business partners, customers and the communities in which we operate. The plant is subject to regular inspections, certifications and quality assurance undertaken by Accsys’ staff and accredited certification bodies. Accsys has established operational procedures to minimise production safety and environmental risks. The plant has an official environmental permit and meets the strict manufacturing criteria of Cradle to Cradle certification on the elusive Gold level.

7 http://accoya.com/wp-content/uploads/2015/09/Verco-Cradle-to-gate-carbon-footprint-update-2012.pdf

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Our employees and offices Accsys strives to build real collaborative team spirit, where each employee feels valued and their individual needs are listened to. We are committed to upholding the basic principles of equality and fairness. We do our best to ensure that all of our business partners adhere to the same code.

Each of our offices promotes an environmentally friendly policy. We believe even small actions contribute to our overall goals. For example, we use either 100% recycled paper or paper produced from wood pulp harvested from sustainable forests and encourage a policy of recycling by providing recycling bins in the office. Employees are expected to turn off any electrical devices when not in use and our offices are also fitted with energy efficient light bulbs.

We also offer employees the opportunity to buy shares in the company through an attractive employee share participation plan. Employee share options and employee ownership schemes attract and motivate staff and help align their interests with shareholders. To encourage employees to embrace the product more fully, Accsys also offers employees discounted pricing on Accoya® purchases.

Accsys also run an incentive scheme designed to reward employees who come up with new technical or commercial ideas of benefit to Accsys.

Business Partners See Business Partner section in 3(b).

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b) Use Phase – Long life

Environmental impact The downsides of wood – such as the poor durability, low dimensional stability and susceptibility to UV degradation are overcome by acetylation. Due to these improved properties, Accoya® wood and Tricoya® based panels provide several environmental gains during the use phase. First of all, the durability of Accoya and Tricoya is Class 1, the highest durability class possible, and both materials have several quality certifications (KOMO, RAL, BBA, WDMA, etc8) and are guaranteed to last at least 50 years above ground and at least 25 years in direct soil contact. This facilitates a longer lifespan which enables lower material consumption (less replacement!) over the same period compared to most other materials. This also means that Accoya and Tricoya have carbon sequestration advantages as they lock CO2 for a longer time from the atmosphere, therefore building with Accoya and Tricoya can be perceived as “active climate protection”.

Fig 1: Comparison of cradle-to-gate embodied emissions

Secondly, the superior dimensional stability of Accoya and Tricoya means they require less frequent coatings and hence maintenance with the subsequent environmental benefits (and lower costs). If left uncoated, durable species degrade aesthetically rather than physically, showing a ‘greying’ of the surface. Leaving the wood uncoated is acceptable for some applications but coating is still a fundamental requirement for many applications, such as windows and doors, no matter how durable the wood, and thus coatings life is a major factor in their overall performance.

8 KOMO = Quality mark for the building industry in the Netherlands; RAL = German Institute for Quality Assurance and Certification; BBA = British Board of Agrément; WDMA = Window & Door Manufacturers Association.

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Fig 2: Accoya and Tricoya field test results

Finally, compared to other durable wood species, Accoya and Tricoya offer superior thermal insulation, which yields energy conservation advantages in applications such as window frames.

Business partners We also want our own activities and those of our licensees, suppliers and other business partners to be socially and environmentally responsible. We are committed to a policy of minimising any negative social and environmental impact that may result from our activities and expect the same high standards from our business partners. Accordingly we are committed to identifying and working with third parties to ensure they maintain or exceed our same high standards.

Training and certification programs Accsys allocates a significant amount of resources to educating stakeholders. Accsys both provides and participates in a significant number of educational programs and events around the world. We use these opportunities to educate the audience of not only the product and how to use it, but also to educate the audience on the bigger environment and social issues and how products like ours could make for a better world.

Programs offered:

x Accoya Joinery Certification Program:

This program is offered to joinery companies that use or would like to use our Accoya® products. The Accoya® Joinery Certification Scheme adds creditability to manufacturers as it improves participants’ understanding of Accoya® wood. The free of charge education process that is offered by

Non- Decayed vs Decayed Wood

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Accsys Technologies involves a presentation with a Q&A session aimed at key production staff at the joiners’ premises.

By the end of the session the joiners are fully versed in the intricacies of using Accoya® and have a greater understanding of the manufacturing process and the correct use of ancillary materials and become a trained user of Accoya. The joiners are then presented with a certificate to acknowledge the successful completion of the training. On completion of the joinery certification scheme joiners are offered free marketing support. This includes Accoya web pages for inclusion on a joiners own website, co-branded leaflet designed and printed and branded benefits sheets. This can be used to promote Accoya to consumers, architects and clients. Over the last 12 months, Accsys has carried out 242 training courses in the UK, Ireland, the USA, and Australia.

x Online architectural course:

Our architectural courses cover the superiority of wood over other higher impact building materials and then how modified wood can overcome the limitations for wood use in demanding applications. The course also shows how to save tropical hardwoods and the importance of using certified sustainable wood. The on-line versions of the course, AIA and RIBA certified, can be taken by anyone and, upon completion of the course, can be used to receive continued education points for Architects.

x Accoya Academy:

The Accoya Academy is an on-line learning resource providing extensive information and details about the world-leading modified wood. The training tool is free and easy to use and at the end of the short course participants will have an in-depth understanding of Accoya and the acetylation process used to produce it. The Accoya Academy has been designed to give distributors, architects and designers a better understanding of the revolutionary product and the benefits it can bring.

x Conferences and Seminars:

Accsys also presents to selected audiences who will influence adoption of our technology, including architects, government agencies, academics and other parties (e.g. research institutes - BRE, invited representatives of relevant agencies / ministries, e.g. ministry of transport & BRANZ in New Zealand; World Conference of Timber Engineering). We also present at conferences to

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wider audiences with a possible interest (e.g. at the World Methanol Conference, Spain, which addresses the broader chemicals and acetyls industries and other scientific groups). The presentations typically provide an overview of the material and how it compares to other wood and non-wood materials, including its ecological credentials; a brief review of the history of the science since the first published data (in the 1920s); examples of how the Accoya® and Tricoya® products are being used and some concepts on how the materials are being tested (down to -196°C) and how they may be used in the future (e.g. electricity pylons).

x Student and University programs

Accsys maintains effective links to a number of universities and will continue to build on these with 3 formal programs

- Intern student working – Over the last 6+ years, Accsys has sponsored intern students working at their Arnhem facilities. These students come from multiple universities in Europe and the USA. In the last 12 months, Accsys has supported 4 interns.

- Supporting employees through further education studies. - Napier University Scholarship program – Accsys is very proud to support

the Edinburgh Napier University scholarship program for MSC Timber Engineering, which addresses the growing appetite for more sustainable building practices. This initiative is aiming to address a long-acknowledged skills-gap in the sector.

Warranties Accoya® has a 50 year warranty when used in above ground applications and 25 years when used in below ground applications. Longer life means lower material consumption and because Accoya and Tricoya have carbon sequestration advantages that lock CO2 for a longer time from the atmosphere, they may be perceived as ”active climate protection”.

Engaging local communities We actively engage with local community projects as far as possible on a pro-bono basis. By so doing we hope to showcase the high performance of our products; draw attention to the viability of "green" products; and assist local communities in reaching their goals. An example of support includes sponsorship of “Make a wish in wood” where Accoya was used for a porch swing and door frame. The project was for a guest house for children with intellectual disabilities. Over the last 12 months, Accoya wood has also been subsidised to help a charity with the creation of a boardwalk in Brecon Beacons and for a community project that transformed an abandoned, overgrown area of Bristol into a thriving pocket park designed for storytelling. By designing this park,

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the student architects have inspired the community to engage with and maintain a unique area of green space within the urban street scape of Bedminster which would otherwise remain overgrown and trashed with building waste.

Fig 3: Accoya Bench

c) End of life phase Accoya® is non-toxic and is therefore fully biodegradable. As a result, Accoya can be handled in the same manner as untreated natural wood at the end of its life. It comes as no surprise that Accoya fits perfectly in the biological cycle of the Cradle to Cradle design philosophy and has thus been awarded the Gold certification.

Following the “preferential sequence for waste management” (Dutch: “Ladder van Lansink”) issued by the Dutch government in the National Waste Management Plan, for more efficient use of our limited resources available, and optimum carbon sequestration effect, Accoya and Tricoya can be re-used in applications with the same or even higher added value (up-cycling).

The design of products/projects with ease of disassembly and re-use is therefore worthy of consideration. As wood products are in essence stored solar energy, they can be used for green clean energy production (releasing only the CO2 absorbed during growth) thus saving emissions caused by burning oil, gas or coal, including the ecosystem deterioration that use of these fossil fuels causes. The renowned German research institute Wilhelm-Klauditz-Istitut (WKI) has confirmed that Accoya® wood may be incinerated for energy production in the same manner as untreated wood and that no additional toxic substances will be released upon incineration.

Accsys Technologies plc continues to operate via the activities described above and it was determined that there were no material changes to the outcomes achieved by the beneficiaries of Accsys’ activities during the year.

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5. Stakeholders Stakeholders are those individuals, groups of individuals or organisations that affect and/or could be affected by an organisation’s activities, products or services and associated performance.

In addition to the beneficiaries listed above, Accsys has identified that the following groups of people are key stakeholders:

a) Other business partners Accsys has and continues to develop a network of relationships with a number of individuals, companies and other organisations which have an interest in our products, technologies, processes or environmental credentials, for example research and testing bodies and coatings companies. These relationships assist Accsys with further developing the market place as well as product and process development. Communications with these parties are the same as those listed under “End customers” above.

b) Tricoya Technologies Ltd

The Accsys subsidiary, Tricoya Technologies Limited (“TTL”), is developing and exploiting Accsys' Tricoya technology for use within MDF, particle board and wood plastic composites in a worldwide panel products market estimated to be worth more than €60 billion annually. The Tricoya technology gives engineered wood products, such as MDF, a level of durability and dimensional stability that is comparable with or superior to non-wood products, while offering all of the advantages of wood – including a high strength to weight ratio and excellent mechanical and machining properties. Independent verification by Building Research Establishment (BRE) confirmed an expected service life of 60 years when used in exterior applications. Significantly, Tricoya® enables MDF wood to be competitive with non-wood materials, opening up markets in a huge number of new applications which have hitherto been the preserve of plastics, metals, resin and cement based products. The Joint Development Agreement with Medite led to the first commercial production batch processed by Medite on October 2011 and the first commercial sales of Medite Tricoya®. Proposals were announced in February 2016 for a consortium with BP and Medite to fund, construct and operate the first dedicated Tricoya® plant in Hull with pre-construction engineering and design work completed; significant progress made towards full agreements and funding which is expected to be completed later in 2016 and which will have a substantial impact on the Accsys Group. TTL has also signed a licence option agreement with Masisa which, if exercised, will grant Masisa exclusive production and distribution rights for Tricoya® for Latin America,

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excluding Brazil (which is non-exclusive). Masisa has industrial facilities in Chile, Argentina, Brazil, Venezuela and Mexico as well as commercial operations in over 40 countries. Masisa is currently carrying out evaluation of Tricoya® including market testing following launch of Masisa Tricoya® Super MDF.

c) Board

The Board meets regularly and is responsible for strategy, performance, approval of major capital projects and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to the advice and services of the Company Secretary. The appointment and removal of the Company Secretary is a matter for the Board as a whole. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition to scheduled meetings there is frequent contact between all the Directors in connection with the Company’s business including Audit and Nomination and Remuneration committee meetings which are held as required, but as a minimum twice per annum. Additional board meetings are held during the year as may be required in connection with certain specific matters. Directors are subject to re-election by the shareholders at Annual General Meetings. The Articles of Association provide that Directors will be subject to re-election at the first opportunity after their appointment and the Board submit to re-election at intervals of three years. Day to day operating decisions are made by the Management board of which the Chief Executive Officer, the Chief Operating Officer and Finance Director are members.

d) Shareholders Accsys is listed on the London Stock Exchange AIM and also NYSE Euronext Amsterdam. Communication with shareholders is given high priority. There is regular dialogue with shareholders including presentations after company’s preliminary announcements of the year-end results and six monthly results. The Board uses the Annual General Meeting to communicate with investors and welcomes their participation. The Chairman aims to ensure that the Directors are available at the Annual General Meetings to answer questions. The Accsys Annual Report and Financial Statements include a detailed Sustainability section containing much of the information included in this Impact Report. As further progress against our objectives is made, we are committed to increasing the level of disclosure surrounding our environmental and social impact. Communication also takes place by Investor alerts – e-mails to communicate major progress made by the company that does not need to be communicated as a formal Regulatory News Story (RNS).

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During the year Accsys Technologies PLC reviewed its stakeholders and determined that, besides the change in ownership of TTL from being solely owned by Accsys to including a minority interest held by BP Ventures, there have been no material changes to its key stakeholder groups.

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6. Evidencing Social Value

a) Evidence Stakeholder

Group Outcome Indicator 31 March

2015 (actual)

31 March 2016

(actual)

Comment

Global Community

Reduced greenhouse gas emissions

Emissions per m³ Accoya produced

88 88 Emissions have been calculated following the GHG Protocol

Carbon Storage impact

Total tons of CO2 stored for Accoya produced

114,184 32,275

145,470 31,286

Cumulative figures since production began Annual figures lower in 2016 as production is lower

Certifications Eco labels 13 15 As established by reputable organisations worldwide

Government European Timber Regulation compliant

100% 100% Policy goals assisted through reduced carbon and sustainable forestry – see above

Distributors/ Customers

Market opportunities

Number of distributors and agents Sales (€m) of Accoya

56 40.7

60 43.5

Sales of Accoya (€m) include price increases

Licensees Intellectual property

Operational Licensees

0 0 See section 3: Licensees

Accoya products manufactured under licence (m³)

0

0

Employees Staff commitment to sustainability-oriented company

% staff members participating in the Employee Share Plan

27% 31%

Suppliers Growth of new sales channel

Wood species commercialised

2 2 Radiata Pine and Alder

Additional demand

Change in Sales (% change from prior yr)

32% 1% Sales volumes have increased from 2015 to 2016.

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End users Increased durability of items using Accoya

Replacement costs (€’000) avoided per yr

314.1 298.5 Assumption that this replaces 100% tropical hardwood windows (Red Meranti)

b) Current management The majority of the disclosures in this Impact Report are based on Accsys’ experience over several years. Some of the disclosures are based on a combination of recent research with our stakeholders underpinned by third party research of outcomes experienced by similar stakeholders involved in similar activities. Accsys aims to report on progress against these disclosures on an annual basis. Accsys collects data on the outcomes experienced by key stakeholder groups. The indicators described above are based on data obtained from internal and third party research and testing reports. Since our understanding of outcomes is based on discussions with stakeholders, we will continue to enhance and update our understanding in on-going discussions. This may result in amendments and extensions to existing data collection. Accsys acknowledges that there are a number of alternative impact measurements that could be included in this report but, because of commercial reasons, these measurements cannot be disclosed.

c) Future Plans Manufacturing:

1. Increased production of Accoya® at our Arnhem plant to supply our clients, develop new markets and drive demand for Accoya as well as for use as a feedstock in the production of Tricoya®

2. Continued focus on reducing cycle time to increase Arnhem capacity and profitability

3. Desire to retain equity interest in manufacturing of our products where possible. Meeting global demand:

1. Ongoing licensing of Accoya® acetylation technology to achieve multiple licence agreements, including Solvay, to satisfy global demand for solid wood

2. Development of extended global distributor Network 3. Establishing and further development of detailed engineering documents,

engagement of 3rd party engineering experts 4. Development of a model to benefit further from our expertise by assisting 3rd

parties in areas including sales, marketing, product and technical development, operations and maintenance.

5. Continued close cooperation between Accsys and 3rd parties to further develop and facilitate the licensing of Tricoya®

Research and Development:

1. Continued R&D and product development activities to generate future value via development of additional and enhanced applications

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2. Further development of new species to aid licensing discussions and maximise value through reduced costs as well as generate new applications and increased revenue

3. Strengthened protection of intellectual property Brand:

1. Continued development, advancement and protection of globally established Accoya® and Tricoya® brands

7. Risk / opportunities analysis, negative externalities & other issues

a) Risk / Opportunities analysis Accsys Technologies Plc has identified the following risks and opportunities:

x Short term risk: Sales impacted by manufacturing capacity limitations resulting in the inability to meet or manage demand compared to potential demand, leading to negative market reaction. To address this risk, Accsys continues to focus on process improvements to increase capacity out of our Arnhem Plant. Also, expansion of the Arnhem plant is underway with first phase to be completed at the end of 2017

x Long term risk: Additional applications and new species development remains uncertain given the inherent nature of R&D. An element of the Group’s strategy for growth envisages existing or new products being sold into new markets such that slower development could impact longer-term growth. Accsys continues to put emphasis on R&D and product development. Accsys has found that working with third party partners to develop and test products has allowed for faster and more efficient adoption of Accoya® and Tricoya®

b) Negative externalities & other issues x Consumers of Accoya® predominantly use the product for applications were a

clear (no knots) quality is expected. Pruned pine from New Zealand is a prominent source for clear wood needs of manufacturers worldwide, including Accsys. The consequences of this is that Accsys has to ship wood from New Zealand to the production facility in the Netherlands, which has a negative effect on CO2 emissions and results in long lead times. Despite the distance to the production facilities, New Zealand is actually a low impact choice for a number of reasons:

a. Most wood from New Zealand, including all bought by Accsys, comes from certified sustainable sources, per the FSC certification required of Accsys suppliers.

b. The Radiata pine used for most of the Arnhem production has leading carbon absorption credentials, sequestering more per hectare than almost all alternatives and certainly more than the tropical hardwoods it is often replacing: www.accoya.com/sustainability/production/

c. Transport from New Zealand is via ship and thus its carbon footprint is lower than all but the most local of sources that utilize truck transport and other low efficiency options as we and our customers can confirm via our carbon footprint calculator: www.accoya.com/sustainability/the-timber-transport-co2-calculator/

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d. As the production of Accoya® and Tricoya® matures, and use of lower grade woods is accepted, additional wood species including more local options will be used for production by Accsys and future licensees. The feasibility of many of these sources has already been proven. For example, once Tricoya source production moves to a dedicated facility it will be able to use wood chips sourced within region using high efficiency transport.

x Acetic Anhydride is the key chemical used in the production of Accoya® and Tricoya® and, like any chemical, the sourcing, use and disposal of these chemicals presents a challenge, due to the corrosive and combustible nature of this raw material. We use care in the sourcing, use and recycling of this material for minimal impact. Acetic Anhydride can be produced via a number of methods and our major supplier uses the lowest CO2 impact method feasible. We have invested in on-site distillation equipment for reuse of the chemical as possible and then send the majority of the by-product acetic acid we produce to be converted back into acetic anhydride for closed loop supply. Beyond this need, we also sell our excess by-product acetic acid into the market as a low impact alternative to new acetic acid production, and it is being adopted by an increasingly wide range of users. Thus, overall, we are providing a durable high performance material to the market in a low impact manner that typically replaces very high impact materials.

x Another external risk is the development of competing and superior products. Accsys monitors the competitive market very closely to try to stay ahead of the curve. Accsys also puts a high emphasis, and budget, on the development and improvement of the Accoya® and Tricoya® products.

x Climate change is a long term risk to Accsys, as this could affect the future supply of Radiate Pine, the raw wood used to manufacture Accoya®. However this is a low risk and would only impact long term supply.

x Certifications are important to Accsys, and are provided by organisations throughout the world. There is a risk that one of these certifications may be undermined by fraudulent activity, however this is mitigated but ensuring we use a wide range of reputable organisations.

x As out distributor network expands, so too does the number of countries that we are shipping our product too. This increases out carbon footprint throughout the world. However, outside of the work we do to minimise our carbon footprint detailed above, we also have long term plans for future licensees to build their own plants throughout the world. Therefore the current sales into these markets will in the future be provided for locally, reducing our overall carbon footprint.

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Social Stock Exchange Impact Reporting

Year Four Impact Report

Disclosure Checklist

Version 1.3

Page 2 of 5

Disclosure Statements

Governance

1.1. Name of SSX Member Organisation: Accsys Technologies Plc

1.2. Please provide the name of the entity (team/governing body) responsible for oversight of the organisation’s social objectives (as referenced in Section 2 of the Impact Report):

Senior Management Team

1.3. How many times did this entity meet during the year? 5 times

Stakeholder engagement

1.5. Please provide a summary of the engagement activities the organisation has undertaken with the organisation’s core stakeholder groups during the year (which are impacted by its operations). You can add additional rows if necessary:

Stakeholder Group Activity # of sessions # engaged Topics of engagement Distributors New websites created 30 30 Brand awareness

Training seminars for distributors

4 40

Customers/End users Worldwide Tradeshows

25 2500 Brand awareness

Customers/Joineries UK, USA, NL, AU – Joinery Certification Scheme

242 500 Accoya training

Brochures created for customers

250 1000s

Customers/Architects Online architectural course Accoya Academy

2 3524 The superiority of wood over other higher impact building materials

Global Community Standardisation committee

2 10 Dutch standardisation committee in respect to wood. Active participation on standards on modified wood.

European COST actions

1 15 COST Action FP 1407. Active discussion on sustainability of wood products

Conferences 1 1250 World Conference on Timber Engineering (WCTE), Vienna, Austria. Paper and presentation: “Environmental impact of constructions made of acetylated wood” (authors: P. v. d. Lugt, F. Bongers, J. Vogtländer)

1 250 International Research Group on Wood Protection, IRG 47, Lisbon, Portugal. Paper and presentation: “Evaluation of field test data” (authors: F Bongers, C Brischke, J Van den Bulcke, W Gard, I De Windt, H

# Disclosure Statement Confirm 1.3 During the year, the core mission and social purpose of the organisation was reviewed by the entity

described in statement 1.1 above.

1.4 The entity described in statement 1.1 above was satisfied that the organisation is continuing to achieve its mission and is working towards its stated social purpose.

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Militz). IRG/WP 16-20594. Shareholders RNS, Results release,

webcasts and Roadshows

24 Update on Accsys; company progress and future plans report. Stakeholder impact report.

1.6. Please provide a summary of actions the organisation has taken as a result of this engagement (no more than 500 words):

Click here to enter text. You can add additional lines if necessary.

Material changes

For the following statements, please answer ‘yes’ if any material changes have occurred during the year, and provide details of the change on the following page:

# Report Section Decision Point Yes No

2.1 Social Purpose and Context Has the organisation materially changed or updated its social purpose or mission?

2.2 Social Purpose and Context Has responsibility for oversight of the organisation's social objectives, mission or social purpose changed?

3.1 Who Benefits Have any of the organisation’s core stakeholder groups changed?

3.2 Who Benefits Has the policy, regulatory or market context of the organisation materially changed?

4.1 Activities and Operations Has the organisation changed its core activities and/or core operations, or acquired or divested of businesses which affect its core purpose?

4.2 Activities and Operations Have any of the outcomes experienced by the organisation’s core stakeholder groups changed (described by the organisation as resulting from its activities)?

5.1 Stakeholders Has the organisation changed its methods of stakeholder engagement?

5.2 Stakeholders Have relationships with any key partners of the organisation changed (i.e. those partners that are critical to delivery)?

Page 4 of 5

Further Detail

In the table below, please provide further details where you answered ‘yes’ to the decision points listed above. Note that you will need to submit updated versions of all sections which have material changes in them as defined by this table. You should also include details of any updates you have made to sections of your Impact Report to evidence the Year Two requirements, such as proportionality, materiality or stakeholder engagement.

# Report Section Decision Point Detail

2.1 Social Purpose and Context

Has the organisation materially changed or updated its social purpose or mission?

2.2 Social Purpose and Context

Has responsibility for oversight of the organisation's social objectives, mission or social purpose changed?

3.1 Who Benefits Have any of the organisation’s core stakeholder groups changed?

3.2 Who Benefits Has the policy, regulatory or market context of the organisation materially changed?

4.1 Activities and Operations

Has the organisation changed its core activities and/or core operations, or acquired or divested of businesses which affect its core purpose?

4.2 Activities and Operations

Have any of the outcomes experienced by the organisation’s core stakeholder groups changed (described by the organisation as resulting from its activities)?

5.1 Stakeholders Has the organisation changed its methods of stakeholder engagement?

5.2 Stakeholders Have relationships with any key partners of the organisation changed (i.e. those partners that are critical to delivery)?

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Document sign-off

This document should be signed off by a representative of the entity (team/governing body) responsible for oversight of the organisation’s social objectives, as referenced in statement 1.1 below and Section 2 of the Impact Report, to verify the accuracy of the disclosures presented by the Member Organisation:

The Impact Report submitted by our organisation is: A new Impact Report

An update to our Year Two Impact Report, by exception

I certify that this document, when considered in conjunction with my organisation’s SSX Year One and Year Two Impact Report submissions, provides a fair representation of the changes in the social and/or environmental impact of my organisation. I further certify that all material information relevant to the impact performance of my organisation in the year since the publication of my organisation’s SSX Year Two Impact Report has been included in either this document and/or my organisation’s SSX Year Three Impact Report.

Signature: ______________________________________

Name: _______William Rudge___________________

Role: _______Financial Director_________________

Date: _______08/11/2016______________________

Accoya® and the Trimarque Device are registered trademarks owned by Titan Wood Limited, a wholly owned subsidiary of Accsys Technologies PLC, and may not be used or reproduced without written permission.

Accoya® wood should always be installed and used in accordance with the written instructions and guidelines of Accsys Technologies and/or its agents (available upon request). Accsys Technologies accepts no liability for any defect, damage or loss that may occur where such written instructions and guidelines are not adhered to.

The information contained within this document has not been independently verified, and no warranty (express or implied) or representation is given in respect of the same, including without limitation as to its accuracy, completeness or fitness for any purpose. Accsys Technologies and its affiliates, officers, employees or advisers expressly disclaim any liability to the fullest extent permitted by law for any loss or damage whatsoever arising in respect of such information or the result of having acted upon it.

www.accsysplc.com