REG - Itaconix PLC - Final Results
08/06/2022 07:00
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RNS Number : 0731O Itaconix PLC 08 June 2022
For release: 07.00, 8 June 2022
Itaconix plc
("Itaconix" or "the Company")
Final Results
Itaconix plc (AIM: ITX) (OTCQB: ITXXF), a leading innovator in plant-based
specialty polymers used as essential ingredients in everyday consumer
products, announces its Final Results for the year ended 31 December 2021.
Commenting on the results, John R. Shaw, CEO of Itaconix, said:
"Itaconix has a deep, diverse IP-protected technology platform that enables
new generations of consumer products which are more environmentally
sustainable without compromising on performance or cost. Our core business
model is to use the competitive value of our technology platform to build a
broad base of recurring revenues from brands that rely on our ingredients for
the success of their products. We are currently focused on three key retail
areas with large and growing market potential: cleaning, hygiene, and beauty.
"We added major new customers and retained existing customers to expand our
commercial base in 2021. With new successes across all applications in North
American and Europe, our plant-based polymers are now essential ingredients in
an estimated 130 brands around the world. Most of the largest brands that we
work with are growing as they expand into more retailers. Brands that rely on
our ingredients are found in many of the largest retail groups across North
America and Europe.
"We are just starting to tap into the potential of our proprietary plant-based
technologies to accelerate the transition of brands and consumers to a low
carbon economy, with over 95% of our 2021 revenues derived from plant-based
products. The London Stock Exchange's Green Economy Mark is an important
recognition for our work and will support our efforts to communicate our green
credentials."
Financial Highlights
2021 2020 2019 2018
$'000 $'000 $'000 $'000
Revenue 2,596 3,292 1,288 881
Gross profit 700 1,154 450 140
Gross profit margin 27.0% 35.1% 34.9% 15.9%
Adjusted EBITDA(( 1 )) (1,640) (993) (2,457) (5,370)
Cash used from operating activities (2,023) (1,157) (1,831) (6,973)
Net cash at year-end 683 1,448 765 2,655
(( 1 )) Adjusted for interest, tax, depreciation, amortization, and
exceptional items.
Further Highlights
· Expanded commercial base with more uses in more brands sold in
more retail outlets.
· Revenues were lower in 2021 than in 2020 due to order cycles from
the stocking and rebalancing of customer inventories in response to the
Covid-19 pandemic.
· Revenues from 2018 to 2021 grew at a compound annual growth rate
of 43.4%.
· Revenues recovered in late 2021 and are continuing to grow in H1
2022.
· Fundraises with gross proceeds of $1.6m in June 2022 and $0.4m in
April 2022.
· In early 2021, a major North American brand launched a new
dishwashing detergent containing the Itaconix® TSI™ 322 polymer that drew
attention to the potential to have high bio-based content without compromising
on performance. By late 2021, we added two additional North American
dishwashing detergent brands.
· In December 2021, we announced our first European order for
Itaconix® TSI™ 322 with an established and well-respected European brand
that is recognized by both the dishwashing detergent industry and consumers as
a leader in product innovation, performance, and sustainability.
· We completed development of our new Itaconix® ONZ 075 product by
combining the cleaning performance of our Itaconix® DSP 2K™ polymer with
our odour neutralising technology. We are launching this product in 2022 for
use in laundry applications.
· In homecare odour control, our ZINADOR™ polymers sold through
Croda, a global specialty chemicals leader, continue to be used widely.
· We are working on broadening the applications addressed by our
Itaconix® DSP 2K™ polymer beyond its current use in cleaning. An
important milestone in these efforts was our first order for use in
sustainable fashion, which we view as a new and potentially major application.
· Completed a production trial and announced customer development
work on VELAFRESH™ SAP 80, our plant-based superabsorbent (SAP).
· Awarded the London Stock Exchange's Green Economy Mark in May
2021 to recognise our contributions to the global green economy.
Commenting on the outlook, John R. Shaw, CEO, added:
"Even with a growing commercial base and expanding technology platform, 2021
showed that we are not immune to the macro forces affecting consumer product
industries. Customer inventory cycles accelerated as companies overstocked
leading to an extended destocking period. Incoming raw materials and outgoing
customer shipments had longer delivery times and higher costs. The supply of
other ingredients into our customers' products had major supply disruptions
that delayed the use of our products.
"The most exciting change and opportunity we face is the increased urgency
that consumers, retailers, and brands place on climate change and the global
low-carbon economy. The spotlight is now firmly on the need for more
sustainable products, which is exactly where we stand with our plant-based
ingredients."
Enquiries:
Itaconix +1 (603) 775 4400
John R. Shaw/Laura Denner
Belvedere Communications +44 (0) 20 3687 2754
John West/Llew Angus
finnCap +44 (0) 20 7220 0500
Ed Frisby/Abigail Kelly/Milesh Hindocha - Corporate Finance
Andrew Burdis/Sunila de Silva - ECM
About Itaconix
Itaconix uses its proprietary plant-based polymer technology platform to
produce and sell specialty ingredients that improve the safety, performance,
and sustainability of consumer products. The Company's current ingredients are
enabling and leading new generations of products in cleaning, hygiene, and
beauty. Itaconix's contributions to the global low carbon economy are
recognised by the London Stock Exchange's Green Economy Mark.
www.itaconix.com (http://www.itaconix.com)
Itaconix plc's broker, finnCap Limited, provides equity research on the
Company, and the Company considers finnCap's revenue forecast to represent
market expectations of $4.7m in the year ending 31 December 2022 and $7.6m in
2023.
Report & Accounts and Notice of AGM
The Company's statutory accounts, together with a Notice of Annual General
Meeting, are due to be made available on the Company's website
(www.itaconix.com ) on 8 June 2022 and posted to shareholders on 8 June 2022.
Copies will also be available at the Company's registered office, Fieldfisher
LLP, 9th Floor, Riverbank House, 2 Swan Lane, London EC4R 3TT, United Kingdom.
The Annual General Meeting is due to be held at 1:00pm on 1 July 2022 at
Fieldfisher LLP, 9th Floor, Riverbank House, 2 Swan Lane, London EC4R 3TT,
United Kingdom.
CHAIRMAN'S STATEMENT
Polymers for Better Living™
2021 was a year of marked and important progress for Itaconix. We retained our
current customers, added new customers, found new applications for our
products, expanded our technology platform, and built a broader base of
recurring revenues.
These advances continue to strengthen our ability to contribute meaningfully
to the decarbonization of consumer products. Our polymers' commercial base is
now well-established, and they are currently used in over 130 consumer
products. Our patent-protected processes, used to produce the plant-based
polymers we sell, are unique and valuable. In simple terms: they use and
sequester carbon dioxide. Through our large technology platform, we continue
to monetize our intellectual property in three core areas: cleaning, hygiene,
and beauty.
Our progress on these many fronts, however, did not translate into higher
revenues and our financial results did not meet our plans for 2021. As
detailed in our Chief Executive Officer's statement, cleaning customer
ordering patterns in late 2020 and early 2021 responded to the Covid-19
pandemic, creating high demand and overstocking, followed in the middle of
2021 by rebalancing of inventories and consequently low order volumes.
Although volumes did recover and are continuing to grow nicely, this temporary
decline in cleaning revenues caused a 21.1% decline in revenues overall.
As our technology platform and polymers lead to new generations of more
sustainable everyday products, our efforts are recognised by the London Stock
Exchange. Itaconix was awarded the LSE's Green Economy Mark in May 2021, which
identifies companies that are contributing to environmental objectives. We are
very proud of this achievement, and this pride is shared by all our employees.
I would like to extend special thanks to them for their valuable work and
devotion to our mission of decarbonising the planet with proprietary
plant-based products that enhance consumer products.
In 2021, we continued to strengthen the foundation of our business through new
customers, applications, and products. This progress is already manifesting
itself in the current financial year and we look forward to the rest of the
year and beyond with continued confidence and optimism. Thank you to all our
stakeholders for your ongoing support. Together we are making a real
difference.
James Barber
Chairman
7 June 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview
Itaconix has a deep, diverse IP-protected technology platform that enables new
generations of consumer products which are more environmentally sustainable
without compromising on performance or cost. Our core business model is to use
the competitive value of our technology platform to build a broad base of
recurring revenues from brands that rely on our ingredients for the success of
their products. We are currently focused on three key retail areas with large
and growing market potential: cleaning, hygiene, and beauty.
We added major new customers and retained existing customers to expand our
commercial base in 2021. With new successes across all applications in North
American and Europe, our plant-based polymers are now essential ingredients in
an estimated 130 brands around the world. Most of the largest brands that we
work with are growing as they expand into more retailers. Brands that rely on
our ingredients are found in many of the largest retail groups across North
America and Europe.
2021 was a challenging year for translating this momentum in our customer base
into growth in revenues. While our hygiene revenues grew substantially, lower
cleaning and beauty sales resulted in a 21.1% decline in overall revenues.
While we believe underlying consumer demand grew, customers ordered
substantial volumes of our cleaning polymers in late 2020 and early 2021 to
ensure supply during the Covid-19 pandemic and restock depleted retail
shelves, then followed with lower monthly volumes from July through October
2021 as they rebalanced their inventories. Despite these months of lower
volumes, we continued to add new customers and expand our base of recurring
revenues as brands looked to us to improve the competitive position of their
products with new performance and sustainability claims.
As we grow our customer base with our existing products, we are selectively
reaching into and expanding our proprietary technology platform in response to
new customer needs. We completed a production trial for our plant-based
superabsorbent (SAP) in 2021 and supplied a customer with materials in early
2022 for an initial consumer product trial and testing. Additionally, we filed
two patent applications for new plant-based ingredients. One is for a new
biodegradable hair care ingredient that we expect to launch in 2022. The other
is to increase the plant-based content in composites. This product is early
stage and will take several years of further development and testing. We
believe these initiatives increase our potential addressable market from $750
million to $2.3 billion, and that significant opportunity exists within our
technology platform to further expand our addressable market.
We were extremely proud that our work at decarbonising everyday products is
acknowledged by the London Stock Exchange, who awarded us its Green Economy
Mark in May 2021 to recognise our contributions to the global green economy
with over 95% of our 2021 revenues derived from plant-based products. The
Green Mark, first introduced in 2019, was created to highlight companies and
investment funds listed on all segments of the London Stock Exchange's Main
Market and AIM, that are driving the global green economy. We are just
starting to tap into the potential of our proprietary plant-based technologies
to accelerate the transition of brands and consumers to a low carbon
economy. The Green Economy Mark is an important recognition for our work and
will support our efforts to communicate our green credentials to investors and
other stakeholders. It is a real honour and achievement for Itaconix to be
recognised as an early leader for the Mark in the Advanced Materials industry
sector.
Funding
We continued to strengthen our balance sheet and broaden our shareholder base.
In June 2021 we announced a successful placing to raise $1.6 million by way of
direct subscription with a new institutional investor together with existing
institutional shareholder, IP Group plc.
Recently, and after the reporting period, we announced the placement of new
ordinary shares to raise approximately $0.4 million by way of a direct
subscription with IP Group plc and our management. The proceeds of the
fundraise are being used for general growth working capital, predominantly to
strengthen finished goods inventories held in the EU to assure reliable and
ready delivery times to our expanding base of EU customers.
Financial Overview
Revenues for the year were $2.6m, representing a compound annual growth rate
of 43.4% over the last 4 years. These revenues were a 21.1% decrease year over
year from 2020, mainly due to large stocking orders for our cleaning and
beauty products in late 2020 combined with slow reorders in the middle of
2021. We believe this order pattern reflected customer and retailer
uncertainty in managing inventories during the pandemic. We retained current
customers and added new customers while underlying consumer demand remained
strong.
Despite a rise in our operating expenses and raw material costs, we managed to
maintain an overall gross margin of 27.0% (2020: 35.1%). The increase in
operating expenses was mainly due to growing our executive team as we
positioned the Company for broader revenue potential and growth from our
proprietary technology platform. While these additional costs had a direct
impact on adjusted EBITDA, we believe the operating losses of the business
remain manageable and that development spending on new revenue potential will
deliver attractive returns and profitability in the future.
Net cash balances as at year end were $0.7m. As noted above, the Group
successfully completed a placing of $1.6m during the year.
Although the Company did not experience overall revenue growth in 2021, the
Group is well positioned for its next phase of growth with an expanded
customer base, a sizeable pipeline of customer projects, and key personnel in
place.
Operating Review
Growing our customer base and developing new applications for our technology
platform were essential in 2021. We were successful at retaining our current
customers, adding significant new customers, and increasing our addressable
market with new products and applications. This expansion in our customer base
did not immediately translate into overall revenue growth due to the specific
order cycle conditions described above. Overall revenues were $2.6m in 2021
compared to $3.3m in 2020 and $1.3m in 2019.
Cleaning
Cleaning revenues were $1.8 million in 2021 compared to $2.6 million in 2020,
representing a 29.5% decline.
As previously discussed, orders were strong in late 2020 and early 2021 to
ensure supply and build customer and retailer inventories. Volumes declined
from July through October as customers and retailers adjusted their
inventories as previous uncertainties around the Covid-19 pandemic receded. In
addition, some customers delayed deliveries on their orders while they
overcame supply disruptions for other needed detergent ingredients, such as
surfactants.
We did add new brands to our profitable base of recurring revenues and made
significant progress in establishing Itaconix® TSI™ 322 polymer as the new
standard for performance, cost, and sustainability in non-phosphate
dishwashing detergents. In early 2021, a major North American brand launched
a new dishwashing detergent that drew attention to the potential to have high
bio-based content without compromising on performance. By late 2021, we added
two additional North American dishwashing detergent brands. We expect this
momentum to continue into Europe in 2022. In September, we announced our
first European order for Itaconix® TSI™ 322 with an established and
well-respected European brand that is recognized by both the dishwashing
detergent industry and consumers as a leader in product innovation,
performance, and sustainability. The new product is expected to be on retail
shelves in H2 2022.
We completed development of our new Itaconix® ONZ 075 product by combining
the cleaning performance of our Itaconix® DSP 2K™ polymer with our odour
neutralising technology. We are launching this product in 2022 for use in
laundry applications.
Order volumes for our cleaning polymers recovered in late 2021 and have
continued to grow in the first half of 2022.
Hygiene
Hygiene revenues were $0.5 million in 2021 compared to $0.3 million in 2020,
representing a 70.2% increase.
Order volumes were particularly strong and ahead of expectations from new
odour control customers and applications in North America, Europe, and Asia.
We have placed an emphasis on expanding usage into new applications, including
development work with a major North American pulp and paper company.
In homecare odour control, our ZINADOR™ polymers, sold through Croda the
global specialty chemicals leader, continue to be used widely. Building on the
progress we reported last year, demand for this product has continued to grow
with expanding adoption in existing brands and initial usage by new brands. We
continue to see increased focus on home odour control and growing demand.
In personal odour control, our VELAFRESH™ polymers are also continuing to
gain important initial adoption as key ingredients in personal care and pet
care. While volumes are not yet substantial, the ground is set for
meaningful growth in the coming years.
As described above, we expanded our addressable market in hygiene applications
with our new plant-based superabsorbent polymer (SAP), VELAFRESH® SAP80.
The worldwide market for superabsorbent polymers was estimated at $9.0 billion
in 2020 and is supplied almost entirely by fossil-based polymers due to the
high cost or poor performance of current plant-based polymers. We believe that
VELAFRESH® SAP80 offers a superior level of performance, cost, and
availability for consumers that are seeking more sustainable hygiene products.
Although VELAFRESH® SAP80 revenues are not expected until 2023, we are
achieving important milestones. We completed an initial trial to produce the
polymer in 2021. In February this year, post the reporting period, we
announced that we had supplied product from this first production trial for
testing by a potential customer for possible use in baby diapers, feminine
hygiene products, adult diapers, and industrial absorption products.
Beauty
Beauty revenues were $0.2 million in 2021 compared to $0.4 million in 2020,
representing a 48.2% decline.
Year-to-year revenues for the Company's hair styling ingredient sold through
Nouryon were skewed by a large re-stocking order delivered in late 2020 that
met a significant portion of Nouryon's needs for much of 2021. Orders began to
recover in late 2021 and early 2022.
Pressure from consumers for more sustainable products continues to grow and
create opportunities for our ingredients. As described above, we see an
attractive market in hair care for our technology platform and have filed a
patent application for new plant-based hair care technology that we plan to
launch as VELASOFT® BR 300 later in 2022.
Intermediates
We did not have any meaningful revenues in 2021 from our intermediates.
We do see opportunities to develop our BIO*Asterix™ line of functional
additives into sizable new revenue potential based on new bio-based
chemistries derived from itaconic acid. These additives address a wide range
of applications, from composites to additives in biodegradable plastics. We
expect the potential from our technology platform to grow in line with the
need for more sustainable solutions across many consumer markets, but expect
that we will need several years and collaboration partners to realise major
revenues.
After the reporting period, we announced a major new patent filing in
composite applications. Market and materials research led by Dr. Yvon Durant,
Itaconix's CTO, have created a path to making certain composite materials that
may allow a safer process for products that also have higher plant-based
content. If granted, the patent will protect a new family of intellectual
property for Itaconix. The review process for the filing is expected to take
at least two years and the next steps would be to ensure product safety and
efficacy.
We continue to develop and test potential additives for biodegradable
packaging. Although we see some specific opportunities emerging, we expect
that progress will remain slow without any revenue expectation to at least
2024.
Innovation
We are working on broadening the applications addressed by our Itaconix® DSP
2K™ polymer beyond its current use in cleaning. An important milestone in
these efforts was our first order for use in sustainable fashion, which we
view as a new and potentially major application. The customer is a leading
European supplier to companies that produce materials for the fashion and
related industries. As a plant-based alternative to fossil-based polymers
currently used in the production process, Itaconix® DSP 2K™ is expected to
create new opportunities for consumers to buy more sustainable products.
Although the initial order in 2021 was small and intended only for consumer
sampling, we have already received a large reorder in early 2022. We expect to
set new standards for performance and sustainability in other new generations
of consumer products.
Intellectual Property
We have increased our addressable market for our current and new products from
$750 million to $2.3 billion. VELAFRESH® SAP80 is our new plant-based SAP
for more sustainable hygiene applications. We filed new patent applications
for plant-based composites in 2021 and for plant-based hair care in early
2022.
Covid-19
The broad effects of the Covid-19 pandemic continue to be a factor in our
operations. We have maintained our production capabilities and customer
deliveries but have faced extended transport times for incoming raw materials
and outgoing customer shipments. We work closely with our customers to
overcome Covid-related disruptions.
Ukraine
In March 2022, we reviewed all activity with the Russian Federation and
Republic of Belarus. We do not have direct customers in these regions nor in
Ukraine, and do not expect the war to have a direct impact on our business. As
with all manufacturers, we do expect and are closely monitoring secondary
effects of the war on energy prices, other commodity prices, supply chains,
capital markets, and overall economic activity.
Shareholder Engagement
We work closely with our advisers to update current and potential shareholders
regularly on our commercial progress and potential, including through virtual
meeting providers. We resumed direct meetings in March 2022, but plan to
continue to also use virtual meetings for ready access and engagement with our
shareholders.
A significant portion of our shares are held by US-based investors. Despite
our listing on the US OTC market, US securities regulations and practices
create obstacles for the free trading of low-priced shares such as ours. We
are working to improve access to share trading in the US, which we believe
will benefit all shareholders.
Outlook
Even with a growing commercial base and expanding technology platform, 2021
showed that we are not immune to the macro forces affecting consumer product
industries. Customer inventory cycles accelerated as companies overstocked
leading to an extended destocking period. Incoming raw materials and outgoing
customer shipments had longer delivery times and higher costs. The supply of
other ingredients into our customers' products had major supply disruptions
that delayed the use of our products.
We worked hard in 2021 to mitigate these factors and entered 2022 in a much
better position to succeed in this new environment. We prepared our major
customers for price increases needed as a result of the higher raw material
costs, whilst also assisting them to maintain strong competitive positions. We
have implemented these increases and plan to continue to do so should our
costs continue to increase. We also prepared our customers for the lead times
needed to ensure supply of their products. As supply chain disruptions
persist, availability of consumer products on the actual or virtual retail
shelf is a key emerging competitive advantage.
The most exciting change and opportunity we face is the increased urgency that
consumers, retailers, and brands place on climate change and the global
low-carbon economy. The spotlight is now firmly on the need for more
sustainable products, which is exactly where we stand with our plant-based
ingredients.
Our current products are winning new customers that are in turn expanding our
base of recurring revenues. Our success with new customers is also generating
interest in our ingredients from other brands that is improving the size and
quality of our customer pipeline. At the same time, continued innovation
within our technology platform is expanding our revenue horizons into new
larger applications that have pushed our current addressable market to over
$2.3 billion.
Although market volatility will continue in 2022, our achievements on major
customer projects in 2021, are generating substantial commercial progress in
2022 that will add to our expanding base of recurring revenues.
We look forward to continued success at commercialising the Itaconix
technology platform.
John R. Shaw
Chief Executive Officer
7 June 2022
OUR STRATEGY
Principal Activities
Itaconix plc is a leading innovator in plant-based ingredients for improving
the safety and performance of consumer and industrial products. Its
proprietary polymer technologies generate a growing range of new specialty
ingredients with unique functionalities that meet consumer demands for value
and sustainability.
The Group's principal activities are the development of plant-based polymers
and the production and sale of these materials globally, both directly and
through partners as ingredients in product formulations.
Most of the Group's efforts are focused on home and personal care applications
where consumer interest and desires for safer and more sustainable products
are particularly high.
Proprietary Ingredients with Unique Functionality
The Group has conducted many years of exploratory research and holds an
extensive patent portfolio related to the production and use of polymers made
from itaconic acid. The commercial potential for these materials as
ingredients in consumer products stems from the unique functionalities
available through the chemical structure of itaconic acid and from the
production of itaconic acid through fermentation using plant-based sugar.
The Group's technology platform has commercial momentum in cleaning, hygiene,
and beauty as a result of the process of identifying a market need and then
developing a product to meet that need. As these products gain success,
Itaconix is working on new products to emerge from its technology platform.
Progress in 2021
The Group advanced its development and commercial activities in its core
cleaning, beauty, and hygiene applications, as detailed in the Chief Executive
Officer's Statement.
The Group's products are formulated as key ingredients in a growing range of
consumer product. They are now used in over 130 brands worldwide across a
widening variety of uses and sold in more retailers. This increase in use,
however, did not translate into higher revenues in 2021. Hygiene revenues
increased but revenues in cleaning and beauty declined. The most significant
issue was in the cleaning segment, where the impact of pandemic-driven
inventory stocking by customers in late 2020 and early 2021 was followed by
rebalancing of inventories later in 2021. These actions created low monthly
volumes in the middle of 2021, which have since recovered as more regular
order patterns have returned.
While revenues lagged for the year, the Group continued to add important new
brands and new uses to its commercial base. A major North American consumer
brand launched a new dishwashing detergent that set a new level for
sustainability and performance. A leading European sustainable dishwashing
detergent brand is using Itaconix® TSI™ 322 in its new formulation that
will launch in 2022. New uses for Itaconix polymers include initial orders in
a sustainable fashion application to replace fossil-based polymers. Although
2021 revenues were down, the Group is well positioned for growth in the coming
years.
Key Performance Indicators (KPIs)
The Directors believe that the key performance indicators for the Group are:
· Revenues
· Adjusted EBITDA, the earnings before interest, tax, depreciation,
amortization, and exceptional items
· Cash
The Group seeks to monetise its technology platform through revenues generated
by a growing number of commercial products. Revenue performance is detailed
above in the Chief Executive Officer's Statement.
The Directors measure these commercial activities against the Group's rate of
cash expenditure and its effect on cash resources. Cash used for operating
activities in 2021 was $2.0m compared to $1.2m in 2020. Details of cash flows
are set out in the Group's Consolidated Cash Flow Statement on page 46 and
note 21 on page 67 to the Annual Report.
FINANCIAL REVIEW
Key performance metrics were impacted by temporary interruption in revenues
due to short-term external issues in consumer supply chains, as noted above.
Revenues for the year decreased by 21.1% from 2020. The gross profit margin
was 27.0% in 2021 compared to 35.1% in 2020 as cost of goods sold was affected
by higher production overhead costs from lower volumes and some increases in
raw material costs that were not passed through to customers until early 2022.
Cash used in operations increased from $1.2m in 2020 to $2.0m in 2021, with
approximately $0.7m of the increase for current year operations and
approximately $0.2m for working capital. This was supported by the Group's
successful fundraise in June 2021. Below is a table showing the Group's key
performance metrics:
2021 2020 2019 2018
$'000 $'000 $'000 $'000
Revenue 2,596 3,292 1,288 881
Gross profit 700 1,154 450 140
Gross profit margin 27.0% 35.1% 34.9% 15.9%
Adjusted EBITDA 1 (#_ftn1) (1,640) (993) (2,457) (5,370)
Cash used from operating activities (2,023) (1,157) (1,831) (6,973)
Net cash at year-end 683 1,448 765 2,655
1 Adjusted for interest, tax, depreciation, amortization, and exceptional
items.
Financial Performance
Revenue
Total revenues for the 12-month period ended 31 December 2021 were $2.6m,
representing a 21.1% decrease from 2020 revenues of $3.3m. Although there was
a decrease year over year, revenues over the last four years have a
compounding annual growth rate of 43.4%. Revenues lagged across cleaning and
beauty, while hygiene experienced considerable growth. Cleaning decreased by
29.5% from 2020, the decrease being due to exceptionally large orders in late
2020 and early 2021 to build customer stocks and rebalancing of customer and
retailer inventories in the middle of 2021. While this reduction in orders
caused lower cleaning revenues in the second half of 2021, the base of
customers and brands using Itaconix ingredients continued to grow, and
cleaning polymers remain the largest area for near-term growth
potential.
Beauty decreased by 48.2% from 2020, which was due to a large stocking order
fulfilled in November 2020.
Hygiene increased by 70.2% from 2020, due to both recurring orders and new
orders in new uses and new brands. New brands in Europe and Asia used Itaconix
ingredients in odour neutralization products. New uses included fabric
refreshers and pet care.
Revenues in all geographical regions decreased. North America represents 92.8%
of the Group's revenue and decreased by 16.0%. North America revenue
contracted largely due to the external issues of customer supply chains.
Europe represents 7.2% of the Group's revenue and decreased by 56.0%. European
revenue suffered largely due to the large stocking order placed in November
2020 for the Group's hair styling polymers.
Gross Profit and Adjusted EBITDA(1)
Gross profit margin was 27.0% in 2021 compared to 35.1% in 2020. There were
significant increases in the raw material costs due to inflation, increased
shipping costs, prices of corn stock in China, and energy restrictions placed
on Chinese companies. These global factors affected many companies including
Itaconix. The Group was able to implement pricing increases to offset these
factors and protect the Group's gross margins while selectively supporting
initial uses in new applications and the competitive position of a major
cleaning customer to gain future volumes.
Adjusted EBITDA is a non-IFRS measure but is widely recognised in financial
markets and it is used within the Group as a key performance indicator.
Adjusted EBITDA was a loss of $1.6m in 2021 (2020: loss $1.0m) which was worse
by 65.2%. Since the 2018 Group reorganization, the Group's EBITDA trajectory
has improved.
Below is a reconciliation of Loss for the Year to Adjusted EBITDA:
2021 2020 2019 2018
$'000 $'000 $'000 $'000
Loss for the year (455) (1,646) (1,358) (9,868)
Taxation 7 7 1 (187)
Depreciation 167 200 223 296
Amortization 201 198 198 -
Exceptional revaluation of contingent consideration (1,560) 339 (1,474) 3,323
Exceptional organizational restructuring - (91) - 1,190
Finance income - - (1) (4)
Movement on investment in associate - - (46) (120)
Adjusted EBITDA (1,640) (993) (2,457) (5,370)
Administrative Expenses
Administrative expenses consist of sales, marketing, operations, research and
development, and public company costs such as legal, finance and the Group
Board. These expenses were $2.9m in 2021 up from $2.6m in 2020. The increase
in administrative expense was largely due to increased staffing to support the
Group's growth plans.
Costs and Available Cash
As at 31 December 2021, the Group held cash of $0.7m. Net Cash outflows from
operating activities of $2.0m in 2021 were used to add key personnel and
support working capital needs compared to $1.2m in 2020 as the Group built
inventories to support new customer product volumes. The Group successfully
completed a $1.6m placing with a large shareholder, IP Group entities and a
new institutional investor in June 2021.
Working capital
At year end, working capital had decreased and the most significant change in
working capital was trade and other payables. Trade and other payables
decreased to $1.0m in 2021 from $1.4m in 2020. Inventories remained flat at
$1.4m in 2021 and 2020 to support current customer demand. Working capital as
a per cent of revenues decreased to 50.5% in 2021 from 56.7% in 2020.
Financial Position
At 31 December 2021, the Group had equity of $0.6m as compared to ($0.6m) in
2020, primarily as a result of a revaluation of the deferred consideration
(note 17) net of the equity raise.
Revaluation of Deferred Consideration
As a result of revaluing deferred consideration related to the acquisition of
Itaconix Corporation in 2016, per note 17, there was an exceptional non-cash
income of $1.6m in 2021, which offsets the exceptional non-cash expense of
$0.3m (excluding foreign exchange) from 2020. In addition to the revaluation
of the liability the Group issued 1,923,389 shares to certain Sellers of
Itaconix Corporation on 12 April 2021 in settlement of the contingent
consideration payment for 2020.
Financial Reporting
There were no new reporting standards adopted for the year end 31 December
2021 that have a material impact on the financial statements.
Going Concern
The financial statements have been prepared on a going concern basis. The
Directors have reviewed the Parent Company's and the Group's going concern
position taking account its current business activities, budgeted performance
and the factors likely to affect its future development, set out in the Annual
Report, and including the Group's objectives, policies and processes for
managing its working capital, its financial risk management objectives and its
exposure to credit and liquidity risks.
The Directors have also taken into consideration the impact of the Covid-19
pandemic and the war in Ukraine on the Group's revenues and supply chain.
While there has not been a significant negative impact through the report date
on the Group revenues or supply chain due to the pandemic, the Directors have
applied sensitivities to the timing, quantum, and growth of new customer
projects in revenue models and have assessed alternate supply chains that have
been developed by the Group to mitigate any issues in deliveries to our
customers.
As further detailed in the Directors' Report on page 29 and note 2 to the
Annual Report, the Directors have reviewed the Group's cash flow forecasts
covering a period of at least 12 months from the date of approval of the
financial statements, which foresee that the Group will be able to meet its
liabilities as they fall due. However, the success of the business is
dependent on customer adoption of our products to increase revenues and
profits. Inability to deliver this could result in the requirement to raise
additional funds.
Shareholdings and Earnings per Share
Itaconix had 443,462,757 shares in issue as at 31 December 2021. The
undiluted weighted average number of shares for the period to 31 December 2021
was 438,808,097. The difference in the two numbers is the result of an
issuance of new shares in satisfaction of the contingent consideration in
April 2021 (see note 17) and an issuance of new shares in June 2021. The
undiluted weighted average number of shares was used to calculate the loss per
share presented in note 3.
PRINCIPAL RISKS AND UNCERTAINTIES
Effective risk management is a priority for the Group to sustain the future
success of the business. Therefore, the Directors have overall responsibility
for the Group's risk management process but have delegated responsibility for
its implementation, the system of controls which reduce risk and for reviewing
their effectiveness to the management team. The risk of uncertainties that the
Group face evolve over time, therefore the management team review and monitor
the emerging risks and update mitigation effort. The results are reported to
the Board.
Commercialisation Activities
There were some challenges due to the lingering pandemic that affect the
Group's commercial activities. These included over stocked supply chains of
consumer goods, limited supplies of certain other detergent components due to
emergency plant shutdowns in Texas and Delaware, and shipping delays from Asia
to North America. These challenges were temporary and ultimately the success
of the business relies upon Itaconix products reaching sufficient quantities
for the Group to generate an overall profit.
Management of risk: The Group has sought to manage this commercialisation risk
by partnering with market leaders for the worldwide promotion of our leading
products, continued development of end-user formulas to provide customers with
packaged solutions, and continuous review of the market needs for Itaconix
products.
Dependence on Key Personnel
The Group depends on its ability to retain highly qualified managerial and
scientific personnel. There are a limited number of candidates with the
experience and skills to replace these key personnel. Attracting the best
candidates can be highly competitive. While the Group has conventional
employment arrangements with key personnel aimed at securing their services
for minimum terms, their retention cannot be guaranteed.
Management of risk: The Group expanded its management team to support
operations and has service contracts in place for John R. Shaw as Chief
Executive Officer and Dr. Yvon Durant as Chief Technology Officer. In
addition, the Group seeks to retain key personnel in the US using an Equity
Incentive Plan for share option grants.
Customer Retention
The ability to retain key customers is critical to maintaining revenue
streams. The loss of key customers could impact business results adversely.
Management of risk: Acceptance of our products in our customers' end-product
formulations is monitored and managed. Our customer service includes regular
engagement on the performance of both our products and the end-products to
ensure our ingredients are delivering the desired value to our customers and
end-users.
Regulatory and Legislation
Regulatory bans on the use of phosphates as ingredients in detergents have
transformed the consumer detergent markets in Europe and North America over
the last ten years. Phosphates are known to enter waterways through detergent
effluent and act as a nutrient for algae growth that subsequently cuts oxygen
levels in water and harms aquatic life. We believe that phosphates are likely
to be phased out in other jurisdictions around the world over time. Itaconix
polymers are effective replacements for phosphates in detergents and are used
in numerous detergent products in North America and Europe for this purpose.
Management of risk: The Group closely monitors regulatory developments in the
use of ingredients in consumer and industrial products to assure compliance
and find new revenue potential for Itaconix polymers. Further, the Group
regularly assesses the relative performance and cost efficacy of Itaconix
polymers to current and emerging phosphate replacements to identify revenue
risks and opportunities.
Competition and Technology
The production and use of Itaconix polymers are subject to technological
change over time. There can be no assurance that developments by others will
not render the Group's product offerings and research activities obsolete or
otherwise uncompetitive.
Management of risk: The Group employs experienced and highly-trained polymer
chemists to develop and protect the Group's intellectual property. These
efforts include continuous work on the performance and cost advantages of
Itaconix polymers. In addition, the staff monitors technologies and patents
through publications, scientific conferences, and collaborations with other
organisations to identify new risks and opportunities.
Covid-19 Risk
The Group faces continued volatility due to Covid-19 related disruptions in
the demand for its products, the supply of raw materials, and the supply of
other ingredients going into customer products. Our operations continued to
operate while implementing recommended CDC guidance to protect our employees
and provide a safe work environment. Supply chain issues emerged in early 2021
due to extended shipping times and the availability of other ingredients going
into customer products.
Management of risk: Management closely monitors Covid-19 regulatory
developments and expected demand from customers. Management and staff actively
communicate with all major suppliers and customers about upcoming demand and
reliability of the supply chain. We also hold significant stock of long lead
time raw materials from Asia.
Liquidity Risk
Itaconix seeks to manage financial risk by ensuring adequate liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. In June 2021, the Group completed a $1.5m fundraise to support
general working capital and new product development to further the Company's
commercial progress. In addition, short-term flexibility is achieved by
holding significant cash balances in Itaconix's functional currencies, notably
UK Sterling and US Dollars.
Credit Risk
The principal credit risk for Itaconix arises from its trade receivables. To
manage credit risk, new customers are subject to credit review and all
customer accounts are regularly reviewed for debt aging and collection
history. As at 31 December 2021, there were no significant credit risk
balances.
Inflation Risk
Global economies have experienced significant inflation during 2021. The cost
of raw materials increased as costs for shipping, energy and ingredients
increased. These increases were partially recovered in selling price increases
to customers.
Foreign Exchange Risk
Itaconix Plc is a publicly traded holding company on the London Stock
Exchange. The Group's primary operations are in the US. These US based
operations transact trades with customers in North America and
internationally. Revenue and costs are exposed to variations in exchange rates
and therefore reported losses. In 2019, the Group elected to convert the
reporting currency from UK Sterling to US Dollars. The US Dollar transactions
represent a significant portion of the functional currency transactions and
therefore reduces the Group's overall exposure to translation exchange risk.
Government Risk
The Group has potential exposure to government activities related to Covid-19,
the war in Ukraine, and US-China trade relations. Risks related to Covid-19
are detailed above.
Regarding the war in Ukraine, we reviewed all activity with the Russian
Federation and Republic of Belarus. We have no direct customers in these
regions nor in Ukraine and do not expect the war to have a material direct
impact on our business other than the overall supply chain and economic
effects experienced by manufacturers.
Limited availability and extended delivery times have combined to trigger
major increases to certain raw material costs and may continue to cause
volatility. These disruptions have created a steady need to monitor raw
material sourcing, assess alternative suppliers, and adjust the pricing of the
Group's products.
SUSTAINABILITY
Polymers for Better Living™
Our polymers are advanced sustainable materials that can make the world a
better and safer place to live as essential ingredients in the next generation
of consumer products.
The composition of our polymers, our patented process to produce them, their
performance as ingredients in consumer product formulas, and how these
formulas are packaged and delivered to consumers contribute to the fight
against climate change with plant-based carbon, sequestering carbon, energy
efficiency, and lighter consumer products.
Itaconix Ingredient Benefits as Advanced Sustainable Materials
Product Plant-Based Carbon Decarbonisation Energy Lighter
Efficiency Products
Cleaning
Itaconix® DSP 2K™ 100% √ √ √
Itaconix® TSI™ 322 >75% √ √ √
Itaconix® TSI™ 122 >80% √ √ √
Itaconix® ONZ 075 >99% √ √
Hygiene
ZINADOR™ (Croda) 80-100% √ √
VELAFRESH™ ZP20/30 80-100% √ √
VELAFRESH™ SAP80 >98% √ √
Beauty
Amaze™ SP (Nouryon) 100% √ √
VELASOFT™ NE 100 100% √ √
VELASOFT™ BR 300 100% √ √
Plant-based carbon
The renewable carbon in the itaconic acid we use to make Itaconix products is
captured as carbon dioxide by plants. Corn plants convert carbon dioxide into
carbon in sugars that are used to produce itaconic acid via fermentation. We
bring this itaconic acid into our patented process at our US operations to
produce polymers that have 75-100% plant-based carbon.
Decarbonisation
The increase of carbon dioxide as a greenhouse gas in our atmosphere is a
major cause of climate change. Carbon dioxide is sequestered as carbon in
Itaconix products for a period of time until, depending on the circumstances,
they degrade. During this period, the amount of carbon held contributes to a
reduction of carbon dioxide in the atmosphere.
Energy efficiency
Improving energy consumption is a major sustainability goal for Itaconix and
within the chemical industry.
Itaconix's efforts start with its patented polymer production process, which
is efficient in its use of energy and capital equipment. Less energy use
translates into less direct and indirect GHG emissions.
Itaconix is working to extend its energy efficiency efforts across all of its
operations and practices with the development of reporting under the
Streamlined Energy & Carbon Reporting (SECR) framework. We began in 2020
with the direct and indirect emissions from the purchase of electricity and
natural gas. The table below shows the energy consumption and estimated GHG
emissions at our US operations for the 12-month period ending 31 December 2020
from these activities.
Energy consumption GHG emissions
(kWh) (tCO2e)
2021 2020 2021 2020
(Restated) (Restated)
Direct and indirect emissions 394,475 408,296 212.32 218.13
Intensity ratio: tCO2e per $m Net Revenue 81.66 66.10
We have selected an intensity metric based on tonnes of carbon dioxide
emissions (tCO2e) per $m Net Revenue. We will use this ratio to monitor and
extend our energy efficiency efforts further into our operations and
practices. Although our estimated direct and indirect GHG emissions declined
in 2021, the intensity ratio increased due to lower overall production levels.
Water efficiency
Improving water consumption is a major sustainability goal for Itaconix and
within the chemical industry. Itaconix was able to reduce its water
consumption in production through re-engineering its facilities cooling
operations in early 2021, saving over half the annual usage from the prior
year.
Water consumption
(gal)
2021 2020
Direct consumption 336,540 829,312
Intensity ratio: gallons per $m Net Revenue 129.44 251.31
Lighter products
The multifunctional performance of Itaconix ingredients offers the potential
for more compact consumer products, particularly in detergents. Compact
products are lighter and can reduce greenhouse gas emissions by using less
chemicals, less packaging, and more efficient transportation.
Revenues from Advanced Sustainable Materials
Itaconix plc is dedicated to reducing the planet's carbon footprint and
addressing climate change with plant-based polymers that are essential
ingredients in a new generation of safer, more sustainable consumer products.
Our financial results demonstrate that commercial and environmental progress
can advance equally through the value and adoption of our ingredients. We are
pleased to announce that 95% of our 2021 revenues (2020: 96%) were derived
from advanced sustainable materials. This means that 95% of our revenues are
related specifically to the design, development, and manufacture of materials
that during their manufacture or through their use allow for considerable
increases in the efficiency of resource usage.
SECTION 172 STATEMENT
Statement of Compliance with Section 172 of the Companies Act 2006
The Directors are required to include a separate statement in the Annual
Report that explains how they have considered broader stakeholder needs when
performing their duty under Section 172(1) of the Companies Act 2006. This
duty requires that a director of a company must act in the way he or she
considers, in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to:
· the likely consequences of any decision in the long term;
· the interests of the company's employees;
· the need to foster the company's business relationships with
suppliers, customers, and others;
· the impact of the company's operations on the community and the
environment;
· the desirability of the company to maintain a reputation for high
standards of business conduct; and
· the need to act fairly between members of the company.
In connection with its statement, the Board describes in general terms how key
stakeholders, as well as issues relevant to key decisions are identified, and
also the processes for engaging with key stakeholders including employees and
suppliers, and understanding those issues. It is the board's view that these
requirements are predominantly addressed in the corporate governance
disclosures we have made in the directors' report, which are themselves
discussed more extensively on the company's website.
A more detailed description is limited to matters that are of strategic
importance in order to remain meaningful and informative for shareholders. The
Board believes that three decisions taken during the year fall into this
category, and engaged with internal and external stakeholders on these
decisions:
· 2021 Fundraise - The Directors, along with the Group's NOMAD and
broker, assessed the placement by direct subscription with a new institutional
shareholder together with existing institutional shareholder IP Group
entities, to support the Group's fundraising efforts. The proceeds of the
fundraise were used for general working capital purposes and new product
development to further the Company's commercial progress.
· Appointment of New Nominated Advisor and Broker - The Directors
continually assess the evolving needs of the Group. The Group interviewed
several NOMAD and brokers to determine the best fit for the Group and made the
ultimate decision to change to a new NOMAD and broker in August 2021.
· Covid-19 - The Group continually assesses the impact Covid-19 has on
customer orders, supply chain and employees. Efforts have been put in place to
support customer demand, ensure safety stock, and safeguard employees'
wellness as the pandemic continues and perhaps is entering an endemic stage.
The Strategic Report encompassed on pages 8 through 15 was approved by the
Board of Directors on 7 June 2022 and signed on behalf of the Board of
Directors by:
James
Barber
John R. Shaw
Chairman
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
2021 2020
$'000 $'000
Revenue 2,596 3,292
Cost of sales (1,896) (2,138)
Gross profit 700 1,154
Other operating income 203 50
Administrative expenses (2,911) (2,595)
Group operating loss before exceptional items (2,008) (1,391)
Exceptional income / (expense) on revaluation of contingent consideration 1,560 (339)
Exceptional income on organizational restructuring - 91
Finance income - -
Operating loss before tax from operations (448) (1,639)
Taxation (7) (7)
Loss for the year from operations (455) (1,646)
Loss for the year (455) (1,646)
Basic and diluted loss per share (0.1) (0.5)
Diluted loss per share (0.1) (0.5)
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
$'000 $'000
Loss for the year (455) (1,646)
Items that will be reclassified subsequently to profit or loss
Exchange gains in translation of foreign operations 17 8
Total comprehensive loss for the year, net of tax (438) (1,638)
Attributable to:
Equity holders of parent (438) (1,638)
CONSOLIDATED BALANCE SHEET
At 31 December 2021
31 Dec 31 Dec
2021 2020
$'000 $'000
Non-current assets
Property, plant and equipment 402 501
Right-of-use assets 545 746
Investment in subsidiary undertakings - -
947 1,247
Current assets
Inventories 1,369 1,361
Trade and other receivables 280 463
Cash and cash equivalents 683 1,448
2,332 3,272
Total assets 3,279 4,519
Financed by
Equity shareholders' funds
Equity share capital 5,873 5,718
Equity share premium 47,641 46,135
Own shares reserve (5) (5)
Merger reserve 31,343 31,343
Share based payment reserve 10,386 10,335
Foreign translation reserve (194) (211)
Retained deficit (94,395) (93,940)
Total equity 649 (625)
Non-current liabilities
Contingent consideration 1,116 2,707
Note payable - 51
Lease liabilities 348 476
1,464 3,234
Current liabilities
Trade and other payables 1,020 1,404
Notes payable - 132
Contingent consideration - 146
Lease liabilities 146 228
1,166 1,910
Total liabilities 2,680 5,144
Total equity and liabilities 3,279 4,519
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 31 December 2021
Equity share capital Equity share premium Own shares reserve Merger reserve Share based payment reserve Foreign translation reserve Retained deficit Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
As at 1 January 2020 3,677 46,135 (5) 31,343 10,317 (219) (92,245) (997)
Loss for the year – – – – – – (1,646) (1,646)
Share issuance proceeds 2,041 205 – – – – – 2,246
Share issuance expenses – (205) – – – – (49) (254)
Exchange differences on translation of foreign operations – – – – – 8 – 8
Share based payments – – – – 18 – – 18
At 31 December 2020 5,718 46,135 (5) 31,343 10,335 (211) (93,940) (625)
Loss for the year – – – – – – (455) (455)
Contingent consideration 26 120 – – – – – 146
Share issuance proceeds 129 1,428 – – – – – 1,557
Share issuance expenses – (42) – – – – – (42)
Exchange differences on translation of foreign operations – – – – – 17 – 17
Share based payments – – – – 51 – – 51
At 31 December 2021 5,873 47,641 (5) 31,343 10,386 (194) (94,395) 649
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
$'000 $'000
Net cash outflow from operating activities (2,023) (1,157)
Proceeds from sale of property, plant and equipment 20 20
Purchase of property, plant and equipment (68) -
Cash loaned to subsidiary undertakings - -
Net cash (outflow) / inflow from investing activities (48) 20
Cash received from issue of shares 1,557 2,246
Transactions costs paid on the issue of shares (42) (254)
Proceeds from government secured debt - 183
Repayment of lease liability (167) (327)
Interest paid - leases (42) (28)
Net cash inflow from financing activities 1,306 1,820
Net (outflow) / inflow in cash and cash equivalents (765) 683
Cash and cash equivalents at beginning of year 1,448 765
Cash and cash equivalents at end of year 683 1,448
NOTES TO THE FINANCIAL INFORMATION
1. Accounting policies
Basis of presentation
The financial information set out in this document does not constitute the
Group's statutory accounts for the years ended 31 December 2020 or 2021.
Statutory accounts for the years ended 31 December 2020 and 31 December 2021,
which were approved by the directors on 7 June 2022, have been reported on by
the Independent Auditors. The Independent Auditor's Reports on the Annual
Report and Financial Statements for each of 2020 and 2021 were unqualified,
did draw attention to a matter by way of emphasis, being going concern and
did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2020 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2021 will be delivered to the Registrar of Companies in due
course and will be posted to shareholders on 8 June 2022, and thereafter will
be available from the Group's registered office at Fieldfisher Riverbank
House, 2 Swan Lane, London, United Kingdom, EC4R 3TT and from the Group's
website https://itaconix.com/investor/reports-documents/
(https://itaconix.com/investor/reports-documents/)
The financial information set out in these results has been prepared using the
recognition and measurement principles of International Accounting Standards,
International Financial Reporting Standards and Interpretations in accordance
of UK adopted International Accounting Standards ('IFRS'). The accounting
policies adopted in these results have been consistently applied to all the
years presented and are consistent with the policies used in the preparation
of the financial statements for the year ended 31 December 2020, except for
those that relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 January 2021. There are deemed to
be no new standards, amendments and interpretations to existing standards,
which have been adopted by the Group, that have had a material impact on the
financial statements.
The Group's financial information has been presented in US Dollars (USD).
Going concern
The financial statements have been prepared on a going concern basis. The
Directors have reviewed the Company's and the Group's going concern position
taking account its current business activities, budgeted performance and the
factors likely to affect its future development, set out in the Annual Report,
and including the Group's objectives, policies and processes for managing its
working capital, its financial risk management objectives and its exposure to
credit and liquidity risks.
The Group made a loss before exceptional items for the year of $2,008k, had
Net Current Assets at the period end of $1,262k and a Net Cash Outflow from
Operating Activities of $2,023k. Primarily, the Group meets its day to day
working capital requirements through existing cash resources and had on hand
cash, cash equivalents and short-term deposits at the balance sheet date of
$683k.
During the year, the Group maintain a flat cost base of expenditures and
successfully raised funds of $1.5m. Post year end, the Group successfully
raised funds of $0.4m to support European inventories.
The Directors have reviewed the Group's cash flow forecasts covering a period
of at least 12 months from the date of approval of the financial statements,
which foresee that the Group will be able to meet its liabilities as they fall
due. However, the success of the business is dependent on customer adoption of
our products in order to increase revenue and profit growth and continuing to
control the Group and Parent Company's cost base. Inability to deliver this
could result in the requirement to raise additional and external working
capital.
The Directors have also taken into consideration the continued impact of the
Covid-19 pandemic and the war in Ukraine on the Group's revenues and supply
chain. While the Group experienced some temporary negative impacts on revenues
in 2021 due to the pandemic, these issues are not expected to persist in the
near-term. The Directors have applied sensitivities to the revenue and cost
models and have assessed alternate supply chains that have been developed by
the Group to mitigate any issues to our customers.
The Directors have concluded that the circumstances set forth above represent
a material uncertainty, which may cast significant doubt about the Parent
Company and Group's ability to continue as a going concern. However, they
believe that, taken as a whole, the factors described above enable the Parent
Company and Group to continue as a going concern for the foreseeable future.
The financial statements do not include the adjustments that would be required
if the Parent Company and the Group were unable to continue as a going
concern.
2. Revenue
Revenue recognised in the Group income statement is analysed as follows:
2021 2020
$'000 $'000
Sale of goods 2,596 3,292
2,596 3,292
Geographical information
2021 2020
$'000 $'000
North America 2,410 2,869
Europe 186 423
2,596 3,292
The revenue information is based on the location of the customer.
Segmental information
2021 2020
$'000 $'000
Cleaning 1,812 2,572
Hygiene 509 299
Beauty 220 426
Other/Reserve 55 (5)
2,596 3,292
Net assets of the Group (being total assets less total liabilities) are
attributable to geographical locations as at 31 December 2021 as follows:
2021 2020
$'000 $'000
North America 1,106 932
Europe (457) (1,557)
649 (625)
3. Loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the year.
2021 2020
Loss $'000 $'000
Loss for the purposes of basic and diluted loss per share (455) (1,646)
Weighted average number of ordinary shares for the purposes of basic and 438,808 344,970
diluted loss per share ('000)
Basic and diluted loss per share (0.1)¢ (0.5)¢
The loss for the period and the weighted average number of ordinary shares for
calculating the diluted earnings per share for the period to 31 December 2021
are identical to those used for the basic earnings per share. This is because
the outstanding share options would have the effect of reducing the loss per
ordinary share and would therefore not be dilutive.
4. Cautionary Statement
This document contains certain forward-looking statements relating to Itaconix
plc (the "Group"). The Group considers any statements that are not historical
facts as "forward-looking statements". They relate to events and trends that
are subject to risk and uncertainty that may cause actual results and the
financial performance of the Company to differ materially from those contained
in any forward-looking statement. These statements are made by the Directors
in good faith based on information available to them and such statements
should be treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying any such forward-looking
information.
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