REG - Itaconix PLC - Final Results
05/06/2023 07:00
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RNS Number : 5716B Itaconix PLC 05 June 2023
Strictly embargoed until 07.00, 5 June 2023
Itaconix plc
("Itaconix" or "the Company")
Final Results
Itaconix plc (AIM: ITX) (OTCQB: ITXXF), a leading innovator in sustainable
plant-based polymers used to decarbonise everyday consumer products, announces
its Final Results for the year ended 31 December 2022.
Commenting on the results, John R. Shaw, CEO of Itaconix, said:
"We achieved major steps in FY2022 toward our financial goal of building a
large, high gross margin, capital efficient specialty ingredients business. We
have delivered revenues in line with previously upgraded market expectations
at $5.6m, as our products are now used as performance ingredients in over 145
different consumer brands and are found in major retailers across Europe and
North America. These revenues represent 115.7% growth over FY 2021 revenues of
$2.6m and highlight both the potential for our proprietary technology platform
and our pathway to profitability."
"Our FY2022 financial results also reflect progress toward safer and more
sustainable consumer products that contribute to a new low-carbon economy. We
use the safety, functionality, and plant-based content of itaconic acid to
make proprietary polymers that enable consumer products with new levels of
performance, safety, and sustainability. Growth in our base of recurring
revenues from more brands shows that everyday products can both decarbonise
and remain competitive."
"In February 2023, after the reported period, we took a further step toward
our goal when we successfully raised gross proceeds of $12.7m through a
placing, subscription, and open offer. The funding allows us to advance more
product and application revenue opportunities within our technology platform
and support our general working capital needs for continued revenue growth.
Our stronger balance sheet also offers us the ability to improve some of
our gross profit margins, as we restructure customer and vendor arrangements
and build up inventory in Europe."
Financial and Operational Highlights
2022 2021 2020 2019 2018
$'000 $'000 $'000 $'000 $'000
Revenue 5,600 2,596 3,292 1,288 881
Gross profit 1,487 700 1,154 450 140
Gross profit margin 26.6% 27.0% 35.1% 34.9% 15.9%
Adjusted EBITDA(( 1 )) (1,395) (1,640) (993) (2,457) (5,370)
Cash used from operating activities (219) (2,023) (1,157) (1,831) (6,973)
Net cash at year-end 597 683 1,448 765 2,655
(( 1 )) Adjusted for interest, tax, depreciation, amortization, share based
payment charge, and exceptional items.
· Increased revenues by 115.7% driven by success in the cleaning
segment in North America and Europe
o revenues from 2019 to 2022 growing at a compound annual growth rate of
63.1%
· Much improved balance sheet with two successful fundraises
o gross proceeds of $0.4m in April 2022 and $12.7m in February 2023
· Expanded commercial base with more uses in more brands sold in
more retail outlets
o polymers are key functional ingredients for new generations of consumer
products in cleaning, beauty, and hygiene
o products are now found in over 145 different consumer brands and in major
retailers across both North America and Europe
· Sixteen families of patents including an important new patent
filing in 2022 for uses in advanced composites
· Awarded a Frost & Sullivan 2022 Enabling Technology
Leadership Award
· Renewed supply agreement for our ZINADOR™ polymers sold through
Croda for odour neutralisation to extend a supply collaboration that began in
2017
· Entered new marketing agreement with Brenntag North America to
promote sustainable cleaning in household, industrial, and institutional
cleaning applications to over 2,000 customers in the US and Canada
· Itaconix® TSI® 322 driving new generation of non-phosphate
dishwashing detergents and now found in growing number of brands in Europe and
North America
· Polymers for hairstyling sold through Nouryon as Amaze® SP and
by Itaconix as VELASOFT® NE 100 are gaining use through excellent curl
retention, novel soft feel for "weightless" hairstyling, and high plant-based
content
· Appointed new directors to support the next stage of growth and
development:
o Peter Nieuwenhuizen, as non-executive Chair,
o Laura Denner as executive director; and
o Paul LeBlanc as non-executive director.
Commenting on the outlook, John R. Shaw, CEO, added:
"I have spoken in the past about Itaconix emerging into a new stage of
development in our plans to build a large specialty ingredient company around
our itaconate technology platform. We are now in that new stage. With more
customers, more opportunities, and more resources than we have ever had, we
are in position to both fulfil the promise of our current products and pursue
larger opportunities. We are putting new growth initiatives into place while
maintaining our focus on growing near-term revenues, improving some gross
profit margins, and managing operating expenses. As we make commercial
progress in line with Board expectations for 2023, we approach the future with
more potential and more optimism than ever before."
Enquiries:
Itaconix plc +1 603 775 4400
John R. Shaw / Laura Denner
Belvedere Communications +44 (0) 20 3008 6864
John West / Llew Angus
finnCap +44 (0) 20 7220 0500
Nominated Adviser & Joint Broker
Ed Frisby / Abigail Kelly / Milesh Hindocha (Corporate Finance)
Andrew Burdis / Sunila de Silva (ECM)
Canaccord Genuity +44 (0) 20 7523 8000
Joint Broker
Adam James / Patrick Dolaghan
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.
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 $8.0m in the year ending 31 December 2023 and $10.5m in
2024.
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 (http://www.robinsonpackaging.com) ) and posted to
shareholders on 5 June 2023. 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 11:00am on 28 June 2023 at Fieldfisher LLP, 9th Floor, Riverbank House, 2
Swan Lane, London EC4R 3TT, United Kingdom.
CHAIRMAN'S STATEMENT
Our purpose
Itaconix plc is using the ingenuity of nature to make the world a safer and
better place.
We see innovations in biology and chemistry that we can harness to offer new
answers for improving the health of our environment and rebalancing the
planet's carbon cycle. We believe many of these answers do not have to depend
on government actions or costly burdens to consumers.
We are dedicated to finding plant-based solutions that create new generations
of cutting-edge consumer products that are safer and more sustainable without
compromising on performance or cost.
Our Vision
We are using nature's ingenuity to lead a shift away from chemicals that have
poor toxicity profiles and are made from fossil-based feedstocks.
Itaconic acid is a natural ingredient produced in the human and plant world
that is at the core of our technology platform. We want to harness the broad
functional, safety, and sustainability advantages of itaconic acid to displace
acrylic acid or styrene across $20B of potential applications ranging from
cleaning and beauty to paints and composites.
Our Business Plan
Our goal is to build a large, highly profitable specialty ingredients company.
We are using our technology platform to create a steady stream of new
plant-based ingredients that meet specific customer needs or opportunities for
better and more competitive consumer products. Increasing usage in everyday
products, particularly in the 360 million North American and European
households, will form a broad growing base of recurring revenues from consumer
brands that rely on our ingredients for safety, performance, cost, and
sustainability.
Our Progress
Before joining as a Non-Executive Director and Interim Chair in July 2022 and
becoming Chair in January 2023, I followed Itaconix with great interest and
excitement as a scientist, as an advocate for a new low-carbon economy, and as
a shareholder. From all these vantage points, I am pleased to report a year of
sustained progress for Itaconix, validating the technology platform and
setting the stage for further growth.
We have sixteen families of patents that protect key competitive aspects of
our technology platform, including an important new patent filing in 2022 for
uses in advanced composites.
Our polymers are key functional ingredients for new generations of consumer
products in cleaning, beauty, and hygiene. From detergents and air fresheners
to pet care and hair sprays, our products are found in over 145 different
consumer brands and in major retailers across both North America and Europe.
Where 2021 was marked by pandemic related challenges, 2022 delivered on the
promise of our technology. New and recurring orders from our growing customer
base increased our revenues to $5.6m in 2022 and form a strong foundation for
continued growth toward profitability. Notably, with our successful fundraise
in early 2023, we have the resources to create even more new products and to
extend into new applications, while maintaining strong operations.
Corporate Governance
We made several changes to our corporate structure in 2022 and plan to add at
least one additional non-executive director to further build our governance.
Dr Bryan Dobson stepped down, and Charlean Gmunder was appointed as
Non-Executive Director of the Board, in April 2022. John Snow was not
re-elected and Charlean Gmunder was not elected as Non-Executive Directors at
the Company's Annual General Meeting in July 2022. Dr James Barber stepped
down as Chair and Non-Executive Director of the Board, and I was appointed
Interim Chair and Non-Executive Director in July 2022, becoming Chair in
January 2023. The Company's CFO Laura Denner was appointed to the Board as an
Executive Director in July 2022.
Dr Barber and Dr Dobson each served the Company as Chairs and each provided
valuable guidance and direction to the development and commercial progress of
the Company for over a decade. Mr Snow served as our Audit Chair since 2018
and provided steady guidance through the financial and operating challenges of
the Covid-19 pandemic. The Board greatly appreciates the years of service
and many contributions that they all made to Itaconix. The Board also thanks
Ms Gmunder for her time on the Board.
Ms Denner has assumed increasing finance, accounting, and operations
responsibilities since joining us in 2013 and has served as the Company's
Chief Financial Officer since 2018. She has played a key role in developing
Itaconix together with John Shaw and Dr Yvon Durant, and has valuable
financial experience, knowledge, and acumen for our next stage of growth.
Paul LeBlanc was appointed on 5 January 2023 as an independent Non-Executive
Director and Chair of the Audit Committee. Paul has valuable operating
experience for the Company's next stage of growth from his role as Chief
Financial Officer and Treasurer of Bemis Associates, a global manufacturer of
specialty films and adhesives for the apparel and industrial markets.
Summary
In summary, 2022 was a pivotal period for Itaconix's entry into a new stage of
development and growth. We have validated our vision and business plan with a
technology platform that generates valuable products, a broad base of
recurring revenues, and attractive applications for far higher revenues. With
funding in place and a strong pipeline of opportunities, we are on an exciting
path to continue our growth and reaching profitability, becoming a large
highly-profitable specialty ingredients business, and making the world a
better and safer place.
Peter Nieuwenhuizen
Chair
2 June 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Solutions for performance, cost, and sustainability in consumer products
Introduction
FY2022 was the year when we validated both our technology and our pathway to
growth. We have delivered revenues in line with previously upgraded market
expectations at $5.6m, representing 115.7% growth when compared to revenues of
$2.6m in the year to 31 December 2021. We also made improvements in gross
margin percentage in the second half of the year. Alongside this we made
substantial operational progress as outlined below.
We have been growing at 60%+ compound annual growth over the last three years,
and we are confident that we will continue to grow. Growing revenues and
controlling costs will allow us to cross into profitability. That is an
important goal and we looking to achieve that. We have built the foundations
for a large, high gross margin, specialty ingredients business.
Products using Itacoix Ingredients
Our balance sheet now aligns with the high revenue growth from our current
ingredients and the opportunities for us to develop new ingredients and higher
revenues from our itaconate technology platform.
Major, purpose-driven, and private label brands are using our ingredients from
itaconic acid to formulate new products or reformulate existing products to
boost the sustainability credentials of their products. We estimate that use
of Itaconix ingredients in brands has grown from fewer than 30 in 2015 to over
145 at the end of 2022, ranging from dishwashing detergents and carpet
cleaners to curl sprays and dog shampoos. These brands form a broad base of
recurring revenues that can generate further revenue growth as they secure
placements in more retailers.
Technology Platform
The material at the core of our platform, itaconic acid, is a natural
metabolite found in the human and plant world. Itaconic acid has been
recognized for decades as a valuable plant-based material due to its versatile
functionality and its safety profile. It is produced for commercial purposes
by fermentation using plant-based feedstock and is widely available on the
open market. We purchase and process it into key ingredients used in a wide
range of consumer products. The long-term potential for our business is based
on our proprietary technology platform for turning itaconic acid into
functional polymers that have high performance, safety, and sustainability
value in consumer products. Our capabilities are protected by 16 patent
families.
Advantages of Itaconic Acid
Not only is itaconic acid a safe natural metabolite, but it is also highly
valuable as a versatile building block for a range of chemistries. We have
now harnessed the unique functionality of itaconic acid that scientists have
searched for, and that is the reason why our ingredients continue to gain
popularity and receive traction. Our technology platform allows us to pursue
the replacement of acrylic acid and styrene, which combined are estimated to
be worth more than $20bn in annual global demand.
Itaconic acid is independently considered to be a top value-added natural
product. 20 years ago, the US Department of Energy already identified
itaconic acid as one of the top 12 value added chemistries from biomass.
That finding, with significant research behind it, is what we have pursued,
and we have demonstrated its value in a range of consumer products.
The environmentally sound aspect of itaconic acid and the polymers we create
is an additional and important benefit of those materials. The natural
fermentation process through which itaconic acid is produced uses plant-based
feedstocks that sequester carbon dioxide in the atmosphere, placing our
business squarely within the low carbon economy.
Importantly, our polymer products compete primarily on performance, efficacy,
and cost. Our technology shows that there is no need to sacrifice
performance for the sake of sustainability, and no need to increase prices of
products which deliver on those metrics either. We are the solution to
creating consumer products with efficacy and which are sustainable without an
increase in price. Our goal is to create products that deliver on performance,
cost, and on sustainability, without charging consumers more money.
Market Potential
2022 was a breakthrough year for us, and with our ingredients now used in an
estimated 145 brands around the world, we have generated 63% compound annual
revenue growth since 2019. We have firmly established the value of the
Itaconix technology platform and are positioned to lead a new generation of
sustainable consumer products in the global low-carbon economy with
competitive performance and costs for years to come.
The market potential for our technology platform is broadly defined by the
$20B in current uses for acrylic acid and styrene in consumer care, hygiene,
water solutions, agriculture, composites, and coatings. We currently have a
portfolio of 12 ingredients for formulators to use in a new generation of
consumer products, and we continuously develop new ingredients. Our products
are protected by 16 patent families covering proprietary processes,
compositions, and applications.
Product Application Use
Cleaning
Itaconix® DSP 2K™ Manage water hardness
Itaconix® TSI™ 322 Manage water hardness
Itaconix® TSI™ 122 Manage water hardness
Itaconix® ONZ 100 Manage water hardness and odour
Itaconix® ONZ 400 Manage water hardness and odour
Itaconix® ONZ 075 Manage water hardness and odour
Hygiene
ZINADOR™ (Croda) Odour neutralisation
VELAFRESH™ ZP20/30 Odour neutralisation
VELAFRESH™ SAP80 Superabsorbent (to be launched)
Beauty
Amaze™ SP (Nouryon) Hair styling
VELASOFT™ NE 100 Hair styling
VELASOFT™ BR 300 Repair damaged hair (to be launched)
Operating Review
Cleaning
We continued to make substantial progress in cleaning, most notably announcing
a new distribution agreement with Brenntag North America to promote
sustainable cleaning in household, industrial and institutional cleaning
applications. Brenntag is a global market leader in chemical and ingredients
distribution, and an important commercial partner for us. Under the terms of
the distribution program, together with Brenntag North America we are
promoting the performance, safety, and sustainability benefits of our cleaning
polymers to an existing Brenntag client base of over 2,000 customers in the
United States, Canada, and Mexico.
Currently one of most important polymers on our platform is Itaconix® TSI®
322. Its functionality reduces total ingredient costs in a more compact
dosage, by replacing two or more water conditioning materials. This polymer
also increases the plant-based content to improve the sustainability of the
end-product. This combination is generating use across premium, value, and
sustainable dishwasher detergent brands in North America. A key ingredient in
these detergents, it manages water hardness and assures glasses, dishes, and
utensils shine and do not have any spots or filming, by reducing mineral
deposits. The multifunctional value of Itaconix® TSI® 322, is driving a
new generation of non-phosphate dishwashing detergents and can now be found in
an estimated 19 different products across a broad range of retailers in both
North America and Europe, where usage is also starting to grow.
We estimate that Itaconix® TSI® 322 alone has a $260m addressable market
from 30 billion dishwasher detergent tablets and sachets sold annually in
Europe and North America.
Beauty
Itaconix produces polymers for hairstyling that are sold through Nouryon as
Amaze® SP and by Itaconix as VELASOFT® NE 100. These ingredients are gaining
use in hair care products as alternatives to fossil-based fixatives based on
excellent curl retention, novel soft feel for "weightless" hairstyling, and
high plant-based content.
We estimate that Itaconix hair fixatives have a $180m addressable market and
another $20m as foam enhancers.
We have plans to launch additional new technologies and products to expand our
position as a leader in plant-based beauty, particularly in hair care.
Hygiene
Itaconix produces polymers for odour neutralisation that are sold through
Croda Inc. ("Croda") as ZINADOR® 22L and 35L and by Itaconix as VELAFRESH®
ZP20 and ZP30. These ingredients have comparable odour control performance to
incumbent ingredient, zinc ricinoleate, while offering the advantages of not
leaving residues, ease of formulating into products, and plant-based
content.
During the course of the year, we renewed our important supply agreement for
sustainable odour control with Croda. Our relationship with Croda is an
important collaboration for us, that has been running successfully since
2017. Under the terms of the extended supply agreement, Itaconix continues
to produce and supply its proprietary ZINADOR® odour neutralizing ingredients
for Croda to market and sell globally in home care applications. The
agreement also added a new product to the collaboration and updated the terms
and arrangements in line with ongoing market developments. We expect continued
progress in brand usage and new applications through our joint efforts.
Increasing consumer interest in odour control and more sustainable hygiene
products is generating new addressable markets for Itaconix's polymers. Our
VELAFRESH® technologies offer potential benefits to meet these needs and
become key ingredients in a new generation of plant-based hygiene products.
Innovation
We announced that we are extending our technology platform into potential uses
in composite materials, and that we had filed a new patent application, which
if granted would protect innovative intellectual property for expected
applications in this new area. The extension of the Itaconix technology
platform is part of our work to engage with potential customers to identify
unmet needs that we can address with our plant-based solutions.
We estimate that a $600m per annum addressable market exists for potential
Itaconix products based on this new technology; and although the usual steps
remain to advance a new product to market, we are very excited that our
plant-based solutions have the potential to address major customer needs which
are not being fulfilled. The patent filing marked a significant milestone in
our efforts to deliver safety and sustainability to new categories of consumer
products, and product research based on this patent filing has now entered the
next stage of commercial development.
Board Changes and New Chair
Peter Nieuwenhuizen has already outlined the changes we made during the year,
but I would like to add my thanks and appreciation for the work and
substantial contributions that outgoing Directors Dr Barber and Dr Dobson
made. I wish them well for the future. I am also delighted to welcome
Laura, Paul and of course Peter to the Board.
Peter is a strong addition to our team and his expertise dovetails well with
our business. He was a Founding Partner of the European Circular Bioeconomy
Fund (ECBF), a €300m venture capital fund dedicated to the circular
bioeconomy and also serves as Chair of the Green Chemistry and Commerce
Council. Prior to co-founding ECBF, Peter was CTO & Corporate Director
RD&I & Sustainability for AkzoNobel Specialty Chemicals and VP
Technology Deployment at Enerkem Inc in Canada. He earned his Ph.D. in
Chemistry from Leiden University. He also sits on the Boards of a number of
companies making important contributions to the low carbon economy. I look
forward to working with him and the rest of the team.
We now have a strong leadership proposition with complimentary skills and
experience to help navigate us through our next phase of growth.
Funding
In April 2022, we announced a small funding of $0.4m by way of direct
subscription with existing institutional shareholder IP Group entities, and
certain management. Far more significantly in February 2023, after the
reported period, we announced that we had successfully raised gross proceeds
of $12.7m through a placing, subscription, and open offer. The placing and
subscription were oversubscribed from new and existing institutional investors
and in the open offer, we received tremendous support from existing
shareholders.
The Fundraising will be used for general working capital purposes to support
continued revenue growth. But importantly we will also deploy some of the
capital to accelerate the development of new products and applications. We
will also spend capital to support continuous improvements in our processes.
With a stronger balance sheet we are better placed to improve some of our
profit margins, as we restructure customer and vendor arrangements and build
up inventory in Europe. The ability to place much larger amounts of product
on the ground in Europe, ready to be delivered to locations on the continent
and in the UK, will give a significant boost to our business, avoiding high
spot logistics costs.
The funding also allows us to accelerate new products and new application
development. We can also make improvements to our production line in our US
manufacturing facility, enhancing production efficiencies, and driving costs
down. We have substantial capacity at our existing facility and have no
current plans to invest in a European production facility which would be
capital intensive and consume valuable management time.
This fundraise is a game changer for our Company and I am extremely pleased to
welcome new shareholders. They, like us, clearly recognise that we are now
entering a new stage of development, as we execute on our plan to become a
much larger sustainable ingredient company.
Outlook
We are focused on building a large, high gross margin, capital efficient,
specialty ingredients business. Our technology platform, and our current
products are all well-positioned to play significant roles in enabling a new
generation of consumer products that offer performance, safety, and
sustainability. We expect 2023 revenues to ramp up in line with market
expectations. We are continuing to focus on improving gross margins and
maintaining modest increases in operating expenses, as we commercialise more
of our technology platform.
Our balance sheet now gives us the opportunity to target higher revenue growth
from our current ingredients. There are many exciting opportunities for us to
develop new ingredients and increase revenues from our substantial itaconate
technology platform. We approach the future with more commercial progress,
more resources, more potential, and more optimism than ever before.
John R. Shaw
Chief Executive Officer
2 June 2023
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
As the leader in itaconate polymer technology, 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 broader use,
Itaconix is working on new products to emerge from its technology platform.
Progress in 2022
The Group focused on improving supply chain cost and reliability, recovery of
gross profit margins, managing working capital, and increased sales volumes.
As the pandemic related supply constraint issues started to ease, the Group
worked with suppliers to improve reliability by increasing US warehoused raw
materials and communicating projected order volumes. These actions and
increased availability of ocean freight have improved the global supply chain
cost and reliability.
The work done to improve the Group's supply chain has supported and stabilized
the gross profit margin which is expected to improve in the coming periods.
While addressing the cost component of the gross profit recovery, the Group
has also issued several pricing increases throughout the year to customers to
offset the overall increase in raw material costs.
During the year, the Group completed a small fundraise of $0.4m to support
working capital needs in Europe. Inventory demand in EU were increasing
faster than anticipated from the new and existing customer using Itaconix®
TSI™ 322 in cleaning.
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.
Key Performance Indicators (KPIs)
The Directors believe there are financial and non-financial key performance
indicators for the Group. These KPIs are critical for management's aim to
monetise its technology platform through revenues generated by a growing
number of commercial products. Non-financial KPI's are detailed above in the
Chief Executive Officer's Statement.
Financial:
· Revenues
· Adjusted EBITDA, the earnings before interest, tax, depreciation,
amortization, share based payments, and exceptional items
· Cash
Non-Financial:
· Increased volumes in North America cleaning
· Traction in Europe cleaning
· New hygiene applications
· New patent applications
FINANCIAL REVIEW
Revenues for the year increased by 115.7% from 2021. Adjusted EBITDA improved
by 14% from a loss of $1.6m in 2021 to a loss of $1.4m in 2022. Cash used in
operations improved from $2.0m used in 2021 to $0.2m used in 2022. Cash use
in operation consisted of approximately $1.4m used to fund operating expense
which were offset by $1.2m reduction in working capital. This was supported by
the Group's successful fundraise in April 2022. Below is a table showing the
Group's key performance metrics:
2022 2021 2020 2019 2018
$'000 $'000 $'000 $'000 $'000
Revenue 5,600 2,596 3,292 1,288 881
Gross profit 1,487 700 1,154 450 140
Gross profit margin 26.6% 27.0% 35.1% 34.9% 15.9%
Adjusted EBITDA 1 (#_ftn1) (1,395) (1,640) (993) (2,457) (5,370)
Cash used from operating activities (219) (2,023) (1,157) (1,831) (6,973)
Net cash at year-end 597 683 1,448 765 2,655
Financial Performance
Revenue
Total revenues for the 12-month period ended 31 December 2022 were $5.6m,
representing a 115.7% increase from 2021 revenues of $2.6m. Revenues since
2019 have a compounding annual growth rate of 63.1%. Revenues growth was
driven by cleaning, while hygiene and beauty experienced lag. Cleaning
increased by 173.8% from 2021, the increase was primarily due to strong
increase in volumes in North America and faster than anticipated adoption of
Itaconix® TSI™ 322 in Europe. An increase with more brands and more uses
continued strong in the second half of 2022.
1 Adjusted for interest, tax, depreciation, amortization, share based
payment charge, and exceptional items.
(2) Unaudited revenue by reporting period.
Hygiene decreased by 36.3% from 2021, due to slower reorder volumes in the
second half of 2022. However, there are more new brands in North America,
Europe and Asia using Itaconix ingredients in odour neutralization products.
Beauty decreased by 37.7% from 2021, which was due to a large stocking order
fulfilled in November 2020 and slower order volumes in Europe.
Revenues in all geographical regions increased. North America represents 90.7%
of the Group's revenue and increase of 110.7%. North America revenue driven
significantly by the cleaning segment. Europe represents 9.3% of the Group's
revenue and increased by 180.6%. European revenue improved largely due to the
launch of several formulas using Itaconix® TSI™ 322 in Europe.
Gross Profit and Adjusted EBITDA(1)
Gross profit margin was 26.6% in 2022 compared to 27.0% in 2021. There was a
slight decrease in gross profit margin due to the increased raw materials
costs and logistics costs and increase in Formulation Solutions. Costs of
ocean freight remained high through the end of 2022 and in the early 2023.
The logistics costs have continued to lower as availability of shipping
containers and boat space improve.
The increase in the Group's Formulation Solutions, which provides technical
services and ingredient supplies for formulated products developed for
customers based on Performance Ingredients, has impacted the gross profit
margin. Formulated Solutions made up 17.7% of the Group's total revenues in
2022. Gross profit margins on Formulated Solutions are roughly 8%, which are
lower than the Group's targeted gross profit margins of 35%. These are not
products that are manufactured at Itaconix but are specified in formulation to
support excellent performance in products developed for Itaconix Performance
Ingredients.
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 $1.4m in 2022 (2021: loss $1.6m) which improved
by 14.4%. The Group actively monitor administrative expenses and make prudent
spending decisions to support the Group's strategic objective.
Below is a reconciliation of Loss for the Year to Adjusted EBITDA:
2022 2021 2020 2019 2018
$'000 $'000 $'000 $'000 $'000
Loss after tax (2,463) (455) (1,646) (1,358) (9,868)
Taxation 8 7 7 1 (187)
Depreciation 161 167 200 223 296
Amortization 202 201 198 198 -
Exceptional revaluation of contingent consideration 138 (1,560) 339 (1,474) 3,323
Share based payments 559 - - - -
Exceptional organizational restructuring - - (91) - 1,190
Finance income - - - (1) (4)
Movement on investment in nicotine gum investment - - - (46) (120)
Adjusted EBITDA (1,395) (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 $3.8m in 2022 up from $2.9m in 2021. 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 2022, the Group held cash of $0.6m. Net Cash outflows from
operating activities of $0.2m in 2022 were used to support the Group's growth
plan while managing working capital needs compared to $2.0m in 2021. The Group
successfully completed a $0.4m placing with a large shareholder, IP Group
entities and executive management in April 2022.
Working capital
At year end, working capital had decreased and the most significant change was
trade and other payables. Trade and other payables increased to $1.8m in 2022
from $1.0m in 2021. Inventories decreased to $1.1m in 2022 from $1.4m in 2021
and were adequate to support current customer demand. Working capital as a
percentage of revenues decreased to 0.3% in 2022 from 50.5% in 2021.
Financial Position
At 31 December 2022, the Group had equity of ($0.8m) as compared to $0.6m in
2021, primarily as result of operating losses, a significant increase in the
share-based payment reserve, and a share issuance.
Revaluation of Contingent Consideration
As a result of revaluing contingent consideration related to the acquisition
of Itaconix Corporation in 2016, per note 17, there was an exceptional
non-cash expense of $0.1m in 2022, which offsets the exceptional non-cash
income of $1.6m (excluding foreign exchange) from 2021. In addition to the
revaluation of the liability the Group settled the contingent consideration on
8 February 2023 at a value of $1.1m.
Financial Reporting
There were no new reporting standards adopted for the year end 31 December
2022 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 current inflationary
environment and macro-economic uncertainties together with the impact of 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 as the pandemic moved into an endemic stage, 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 note 1 to this announcement, the Directors have
reviewed the Group's cash flow forecasts, which take account of gross proceeds
of $12.7m capital raised in February 2023, 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 customers continuing to purchase
our products to increase revenues and profits.
Shareholdings and Earnings per Share
Itaconix had 450,129,425 shares in issue as at 31 December 2022. The
undiluted weighted average number of shares for the period to 31 December 2022
was 448,096,458. The difference in the two numbers is the result of an
issuance of new shares in April 2022. 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 limited availability for ocean
freight from North America to Europe, increased costs of raw materials 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, as disclosed in note 22.
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, now decreasing, 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
continued into early 2023 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 as the pandemic transitions to an endemic. 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 April 2022, the Group completed a $0.4m fundraise to support
general working capital in Europe. In addition, short-term flexibility is
achieved by holding significant cash balances in Itaconix's functional
currencies, notably UK Sterling and US Dollars.
Management of risk: The Group monitors bank balances held in established
financial institutions and maintains adequate cash balances in its functional
currencies.
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 2022, there were no significant credit risk
balances.
Management of risk: The Group's control environment requires new customers to
establish credit terms through providing credit references and a credit
review. Trade receivables are actively monitored for collection history.
Inflation and Foreign Currency Risk
Global economies have experienced significant inflation during 2022. 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.
Selling price to international customers in foreign currencies has increased
in 2022. This is offset by the ability to increase pricing to these
customers and the Group has the ability to receive various foreign currencies
in Bank accounts and convert them as market conditions are favourable.
Management of risk: The Group active monitors raw material costs and works
with vendors to manage these costs. Costs increases are periodically passed
onto customers through pricing increases.
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.
Management of risk: The Group manages foreign exchange risk by maintaining
bank balances in major functional currencies to control the impact on
transaction costs for operational expenses. The Group will continue to monitor
appropriateness of reporting in US Dollars.
Government Risk
The Group has potential exposure to government activities related to the war
in Ukraine and US-China trade relations.
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.
Management of risk: The Group continues to monitor international impact of the
war in Ukraine and legislation affecting the US imports of Chinese goods on
the overall business.
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 100 100% √ √
Itaconix® ONZ 400 >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 plant-based
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. The amount of
net amount of carbon dioxide that is sequestered depends on the growth
efficiency of the plant used as the feedstock for fermentation, the
agricultural practices used to grow the plant, and the resources used to
produce and transport itaconic acid to Itaconix's production facility.
Itaconix is committed to work with its suppliers and partners to continuously
improve the net sequestration in its products, and to develop transparent
supply chains.
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)
2022 2021 2022 2021
Direct and indirect emissions 453,082 394,475 236.18 212.32
Intensity ratio: tCO2e per $m Net Revenue 42.18 81.66
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 increased
in 2022, the intensity ratio decreased due to higher 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 2022, saving approximately 70% the annual usage from the
prior year.
Water consumption
(gal)
2022 2021
Direct consumption 102,870 336,540
Intensity ratio: gallons per $m Net Revenue 18.37 129.44
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 93% of our 2022 revenues (2021: 95%) were derived
from advanced sustainable materials. This means that 93% 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:
· 2022 Fundraise - The Directors assessed the placement by direct
subscription with existing institutional shareholder IP Group entities and the
executive management, to support the Group's accelerated working capital needs
in Europe.
· Appointment of new Non-Executive and Executive Directors - The
Directors continually assess the evolving needs of the Group. The Group
interviewed several Directors to determine the best fit for the Group and
appointed three new directors to support the strategic view of the growing
business.
Approved by the Board of Directors on 2 June 2023 and signed on behalf of the
Board of Directors by:
Peter
Nieuwenhuizen
John R. Shaw
Chair
Chief Executive
Officer
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
2022 2021
$'000 $'000
Revenue 5,600 2,596
Cost of sales (4,113) (1,896)
Gross profit 1,487 700
Other operating income - 203
Administrative expenses (3,804) (2,911)
Group operating loss before exceptional items (2,317) (2,008)
Exceptional income / (expense) on revaluation of contingent consideration (138) 1,560
Operating loss before tax from operations (2,455) (448)
Finance income (expense) - -
Loss before tax (2,455) (448)
Taxation (8) (7)
Loss after tax (2,463) (455)
Basic and diluted loss per share (0.5) (0.1)
Diluted loss per share (0.5) (0.1)
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2022
2022 2021
$'000 $'000
Loss for the year (2,463) (455)
Items that will be reclassified subsequently to profit or loss
Exchange gains in translation of foreign operations 93 17
Total comprehensive loss for the year, net of tax (2,370) (438)
Attributable to:
Equity holders of parent (2,370) (438)
CONSOLIDATED BALANCE SHEET
At 31 December 2022
31 Dec 31 Dec
2022 2021
$'000 $'000
Non-current assets
Property, plant and equipment 301 402
Right-of-use assets 343 545
Investment in subsidiary undertakings - -
644 947
Current assets
Inventories 1,119 1,369
Trade and other receivables 164 280
Cash and cash equivalents 597 683
1,880 2,332
Total assets 2,524 3,279
Financed by
Equity shareholders' funds
Equity share capital 5,959 5,873
Equity share premium 47,942 47,641
Own shares reserve (5) (5)
Merger reserve 31,343 31,343
Share based payment reserve 643 10,386
Foreign translation reserve (101) (194)
Retained deficit (86,556) (94,395)
Total equity (775) 649
Non-current liabilities
Contingent consideration - 1,116
Note payable - -
Lease liabilities 119 348
119 1,464
Current liabilities
Trade and other payables 1,866 1,020
Contingent consideration 1,134 -
Lease liabilities 180 146
3,180 1,166
Total liabilities 3,299 2,680
Total equity and liabilities 2,524 3,279
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 31 December 2022
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
At 1 January 2021 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
Loss for the year - - - - - - (2,463) (2,463)
Share issuance proceeds 86 301 - - - - - 387
Exchange differences on translation of foreign operations - - - - - 93 - 93
Plan termination - - - - (10,302) - 10,302 -
Share based payments - - - - 559 - - 559
At 31 December 2022 5,959 47,942 (5) 31,343 643 (101) (86,556) (775)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
2022 2021
$'000 $'000
Net cash outflow from operating activities (219) (2,023)
- -
------ ------
Proceeds from sale of property, plant and equipment - 20
Purchase of property, plant and equipment (59) (68)
Cash loaned to subsidiary undertakings - -
Net cash (outflow) / inflow from investing activities (59) (48)
Cash received from issue of shares 387 1,557
Transactions costs paid on the issue of shares - (42)
Proceeds from government secured debt - -
Repayment of lease liability (138) (167)
Interest paid - leases (57) (42)
Net cash inflow from financing activities 192 1,306
Net (outflow) / inflow in cash and cash equivalents (86) (765)
Cash and cash equivalents at beginning of year 683 1,448
Cash and cash equivalents at end of year 597 683
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 2021 or 2022.
Statutory accounts for the years ended 31 December 2021 and 31 December 2022,
which were approved by the directors on 2 June 2023, have been reported on by
the Independent Auditors. The Independent Auditor's Reports on the Annual
Report and Financial Statements for 2022 was unqualified and unmodified (2021
was unqualified and did draw attention to a matter by way of emphasis,
being going concern) and neither year did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2021 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2022 will be delivered to the Registrar of Companies in due
course and will be posted to shareholders on 5 June 2023, 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 2021, except for
those that relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 January 2022. 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 Group's financial statements have been prepared on a going concern basis.
The Directors have reviewed 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 $2,317k, had
Net Operating Assets at the period end of $359k and a Net Cash Outflow from
Operating Activities of $219k. 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
$597k.
During the year, the Group maintain a flat cost base of expenditures and
successfully raised gross proceeds of $0.4m. Post year end, the Group
successfully raised gross proceeds of $12.7m to enable the Company to continue
to execute its growth plans and for general working capital purposes.
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 customers continuing
to purchase our products in order to increase revenue and profit growth and
continuing to control the Group's cost base.
The Directors believe that, taken as a whole, the factors described above
enable the Group to be and continue as a going concern for the foreseeable
future. The financial statements do not include the adjustments that would be
required if the Group were unable to continue as a going concern.
2. Revenue
Revenue recognised in the Group income statement is analysed as follows:
Geographical information
Revenues Net assets
2022 2021 2022 2021
$'000 $'000 $'000 $'000
North America 5,078 2,410 104 1,106
Europe 522 186 (879) (457)
5,600 2,596 (775) 649
The revenue information is based on the location of the customer. Net assets
of the Group (being total assets less total liabilities) are attributable to
geographical locations.
End Market information
Revenue for the Group are comprised of three primary end market segments, as
identified below:
2022 2021
$'000 $'000
Cleaning 5,070 1,812
Hygiene 324 509
Beauty 137 220
Other 69 55
5,600 2,596
Segment information
The Group has two business segments. Performance Ingredients develops,
produces and sells proprietary specialty polymers that are used as functional
ingredients to meet customers' needs in cleaning, beauty and hygiene products.
Formulation Solutions provides technical services and ingredient supplies for
formulated products developed for customers based on Performance Ingredients.
These segments make up the continuing operations above. Core Operations
include development expense, general and administrative expense, professional
fees, and governance costs to progress and grow the Groups operations.
Performance Ingredients Formulation Solutions Core Operations 2022
$'000 $'000 $'000 $'000
Revenue
Sale of goods 4,608 992 - 5,600
Results:
Depreciation and amortisation (286) - - (286)
Cost of sales (2,914) (913) - (3,827)
Gross profit 1,408 79 - 1,487
Administrative expense - - (3,804) (3,804)
Exceptional expense - - (138) (138)
Taxation charge - - (8) (8)
Segment performance 1,408 79 (3,950) (2,463)
Operating assets 1,825 - 699 2,524
Operating liabilities (1,244) (1) (920) (2,165)
Other disclosure:
Capital expenditure* 59 - - 59
Performance Ingredients Formulation Solutions Core Operations 2021
$'000 $'000 $'000 $'000
Revenue
Sale of goods 2,254 342 - 2,596
Results:
Depreciation and amortisation (280) - - (280)
Cost of sales (1,290) (326) - (1,616)
Gross profit 684 16 - 700
Other operating income - - 203 203
Administrative expense - - (2,911) (2,911)
Exceptional income - - 1,560 1,560
Taxation charge - - (7) (7)
Segment performance 684 16 (1,155) (455)
Operating assets 2,460 - 819 3,279
Operating liabilities (877) - (637) (1,514)
Other disclosure:
Capital expenditure* 68 - - 68
*Capital expenditure consists of additions of property, plant and equipment.
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.
2022 2021
Loss $'000 $'000
Loss for the purposes of basic and diluted loss per share (2,463) (455)
Weighted average number of ordinary shares for the purposes of basic and 448,096 438,808
diluted loss per share ('000)
Basic and diluted loss per share (0.5)¢ (0.1)¢
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 2022
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.
(#_ftnref1)
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