REG - Itaconix PLC - Preliminary Results and Notice of AGM
15/04/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240415:nRSO5312Ka&default-theme=true
RNS Number : 5312K Itaconix PLC 15 April 2024
Itaconix plc
("Itaconix" or the "Company")
Preliminary Results for the Year Ended 31 December 2023
Notice of AGM
Itaconix (AIM: ITX) (OTCQB: ITXXF), a leading innovator in sustainable
plant-based polymers used to decarbonise everyday consumer products, announces
its Preliminary Results for the year ended 31 December 2023.
Commenting on the results, John R. Shaw, CEO of Itaconix said:
"FY2023 marked another year that validated both our technology and our growth
potential. We have delivered revenues in line with market expectations at
$7.9m, representing 40.5% growth when compared to revenues of $5.6m in FY2022.
We also continued to improve our gross margin percentage, reduce our
Adjusted EBITDA losses, and make substantial operational and financial
progress. In 2023, we continued to build the foundations for a large, high
gross margin, specialty ingredients business.
"Our balance sheet now gives us freedom to drive revenue growth from our
current ingredients, the opportunity for us to develop new ingredients, and
the ability to grow revenues from our itaconate technology platform.
"Major purpose-driven and private label brands use our ingredients to both
formulate new products and reformulate existing ones. These new formulations
boost the performance and reduce the cost of their product while also
increasing their sustainability claims. From dishwashing detergents and
carpet cleaners to curl sprays and dog shampoos, these brands form a broad
base of recurring revenues which should continue to grow as they secure
placements in more retailers."
Financial and Operational Highlights
2023 2022 2021 2020 2019
$'000 $'000 $'000 $'000 $'000
Revenue 7,866 5,600 2,596 3,292 1,288
Gross profit 2,437 1,487 700 1,154 450
Gross profit margin 31.0% 26.6% 27.0% 35.1% 34.9%
Adjusted EBITDA(( 1 )) (925) (1,395) (1,640) (993) (2,457)
Cash used from operating activities (1,923) (219) (2,023) (1,157) (1,831)
Net cash and investments at year-end 10,023 597 683 1,448 765
(( 1 )) Adjusted for interest, tax, depreciation, amortization, share based
payment charge, and exceptional items.
· Gross profits increased by 63.9%, driven by improved volumes and
margin, and higher production utilization.
· New and recurring orders increased revenues to $7.9m in 2023, from
$5.6m in 2022.
· Revenue growth from 2019 to 2023 grew at a compound annual growth
rate of 57.2%.
· Revenues increased by 40.5%, as all segments of our end market
increased but primarily driven by success in the cleaning segment in North
America and Europe.
· Substantial progress in cleaning was notably advanced by Itaconix
detergent polymers in Europe. Itaconix® TSI® 322 is driving a new and
exciting cohort of non-phosphate dishwashing detergents.
· In beauty, Itaconix ingredients are gaining use in hair care
products based on excellent curl retention, novel soft feel for "weightless"
hairstyling, and high plant-based content. These ingredients are sold through
Nouryon as Amaze® SP and by Itaconix as VELASOFT® NE 100.
· In hygiene, continued production of polymers for odour
neutralisation that are sold through Croda Inc. as ZINADOR® 22L and 35L and
by Itaconix as VELAFRESH® ZP20 and ZP30.
· In innovation, continued work to extend the technology platform
with new applications and new ingredients.
o Polymers generated increased interest for use in leather tanning as a
plant-based replacement for acrylic acid polymers.
o Production and testing of prototypes for plant-based artist paints.
o Advanced the performance of a plant-based superabsorbent to match current
acrylic acid superabsorbent polymers more closely.
· In February 2023 gross proceeds of $12.7 million raised through
fundraise.
· In August 2023 a share consolidation 50:1 was completed in efforts
to improve share trading dynamics.
· Products, resources, and customer pipeline in place for continued
growth.
· Paul LeBlanc was appointed as an independent Non-Executive Director
and Chair of the Audit Committee. Paul has valuable operating experience
from his role as CFO and Treasurer of Bemis Associates, a global manufacturer
of specialty films and adhesives for the apparel and industrial markets.
· After the period end, Jonathan Brooks was appointed as independent
Non-Executive Director and Chair of the Nomination Committee. Jonathan had a
distinguished career as a corporate lawyer in the City of London and brings
extensive capital markets and growth company experience.
Commenting on the outlook, John R. Shaw, CEO, added:
"As already announced on 2 April, we expect lower 2024 revenues due to not
reaching satisfactory commercial terms with an existing North American
customer. We are pursuing growth from other existing customers and from new
accounts with a view to replenishing this revised expectation with higher
margin revenues.
"Our balance sheet provides us with new opportunities to target higher revenue
growth. There are many exciting opportunities for us to develop new
ingredients and increase revenues and we are positioning ourselves to better
capture the commercial value of our performance ingredients with new customer
wins, new volumes in non-detergent uses, and important new product development
initiatives."
-Ends-
Itaconix plc +1 603 775-4400
John R. Shaw / Laura Denner
Belvedere Communications +44 (0)20 7653 8702
John West / Llewellyn Angus
Canaccord Genuity - Nominated Adviser and Sole Broker +44 (0) 20 7523 8000
Adam James / Harry Pardoe
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)
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 19 April 2024. 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 2:00 pm BST on 20 May 2024 at Fieldfisher LLP, 9th Floor, Riverbank House,
2 Swan Lane, London EC4R 3TT, United Kingdom.
CHAIR'S STATEMENT
For Nature With Nature
Everyday consumer products can exist in balance and harmony with nature and
protect the safety and health of our environment.
We believe that new generations of consumer products will make the world a
better and safer place by how they are produced, how they are transported, how
they are used, and how they are disposed of. They will be less toxic to humans
and the environment. They will not persist in the environment. They will
contribute to rebalancing the planet's carbon cycle to maintain the continuity
of all lifeforms.
We believe nature offers opportunities to make the world a better and safer
place without placing costly new burdens on consumers and society.
Itaconic acid is a natural ingredient produced in the human and plant world.
We believe that itaconic acid has the potential as an ingredient to displace
acrylic acid or styrene across $20B of possible applications ranging from
cleaning and hygiene to paints and composites.
Our innovations in the production and use of consumer product ingredients
using itaconic acid as a starting material are enabling new generations of
safer consumer products with improved levels of performance, affordability,
and sustainability.
With sixteen (16) patent families, we have by far the broadest proprietary
technology platform for harnessing the value of itaconic acid within this $20B
of possible uses.
With a product line of 12 ingredients used in consumer products in households
around the world, we are pursuing the largest new market opportunities for
itaconic acid.
We are dedicated to further developing the unique functionality of itaconic
acid as a base for plant-based solutions that that are safer and more
sustainable without compromising on performance or cost.
Our Business Plan
Our goal is to build a large, profitable company with recurring
attractive-margin revenues from a large and broad base of customers which
purchase Itaconix products as key enabling ingredients in new generations of
consumer products.
We employ our technology platform to create new itaconic acid-based
ingredients that meet specific customer needs or opportunities in leading
consumer product categories such as cleaning, beauty and hygiene.
Our primary focus is on selling our products directly to consumer product
brands and manufacturers in North America and Europe. We work directly with
customers and collaborate with category leaders on broader opportunities.
Increasing usage in everyday products, particularly in the 360 million North
American and European households, will form a broad growing base of recurring
revenues with attractive margins from consumer brands that rely on our
ingredients for safety, performance, cost, and sustainability credentials.
Our Progress
I am pleased to report another year of sustained progress for Itaconix,
validating the technology platform and setting the stage for further growth.
Our polymers continue to be incorporated as key functional ingredients in
cleaning, beauty, and hygiene products. From detergents and air fresheners to
pet care and hair sprays, our products are found in consumer brands and major
retailers across both North America and Europe.
New and recurring orders from our growing customer base increased our revenues
to $7.9m in 2023 from $5.6m in 2022. We generate a loss at these levels of
revenues and need to grow gross profits while continuing to manage our
operating expenses in order to achieve profitability. With our successful
fundraise in early 2023, we have the products, resources, and customer
pipeline for continued growth towards profitability.
Corporate Governance
We continued to evolve our corporate structure in 2023.
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.
Jonathan Brooks was appointed on 9 February 2024 as an independent
Non-Executive Director and Chair of the Nomination Committee. Jonathan
retired as Equity Capital Markets Partner at Fieldfisher LLP following a
distinguished career as a corporate lawyer in the City of London. He adds
extensive capital markets and growth company experience to the Company.
Summary
With funding in place and continued growth, 2023 marked Itaconix's first year
into a new stage of development and growth. We have validated our vision and
business plan, developed a technology platform that generates valuable
products, established a base of recurring revenues, and started expansion
efforts into new applications with higher revenue potentials. As before, we
will grow with leaps and bounds but we are on an exciting path to become a
large profitable specialty ingredients business and make the world a better
and safer place.
Peter Nieuwenhuizen
Chair
CHIEF EXECUTIVE OFFICER'S STATEMENT
Safer solutions for performance, cost, and sustainability in consumer products
Introduction
FY2023 marked another year that validated both our technology and our growth
potential. We have delivered revenues in line with market expectations at
$7.9m, representing 40.5% growth when compared to revenues of $5.6m in FY2022.
We also continued to improve our gross margin percentage, reduce our
Adjusted EBITDA losses, and make substantial operational and financial
progress as outlined below.
Growing revenues at higher gross margins and controlling costs will allow us
to cross into profitability. That is an important goal for us to achieve.
In 2023, we have built the foundations for a large, high gross margin,
specialty ingredients business.
Our balance sheet now gives us freedom to drive revenue growth from our
current ingredients, the opportunity for us to develop new ingredients and the
ability to grow revenues and margins from our itaconate technology platform.
Major purpose-driven and private label brands use our ingredients to both
formulate new products and reformulate existing ones. These new formulations
boost the performance and reduce the cost of their product while also
increasing their sustainability claims. From dishwashing detergents and carpet
cleaners to curl sprays and dog shampoos, these brands form a broad base of
recurring revenues which should continue to grow as they secure placements in
more retailers.
Itaconix Technology Platform
Itaconix has created a broad technology platform around the versatility and
safety of itaconic acid as a building block for ingredients that can replace
acrylic acid or styrene polymers.
Itaconic acid is a natural metabolite found in the human and plant world. 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.
Our ingredients compete primarily on performance, efficacy, and cost. Our
technology demonstrates that consumer brands do not need to sacrifice
performance for the sake of sustainability, and do not 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 the need for charging consumers higher
prices.
The market potential for our technology platform is broadly defined by the
$20B in current uses for acrylic acid and styrene polymers 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.
Operating Review
Cleaning
We continued to make substantial progress in cleaning, most notably by
advancing the use of our detergent polymers in Europe. The leading cleaning
polymer in 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 and Europe. A key ingredient in these detergents, by
reducing mineral deposits it manages water hardness and assures glasses,
dishes, and utensils shine without spots or filming. The multifunctional
value of Itaconix® TSI® 322 is driving a new and exciting cohort of
non-phosphate dishwashing detergents and can now be found in consumer products
across a broad range of retailers in both North America and Europe.
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.
Hygiene
Itaconix produces polymers for odour neutralisation that are sold through
Croda Inc. 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.
Innovation
We are continuing our work to extend our technology platform with new
applications and new ingredients. Our polymers are generating increased
interest for use in leather tanning as a plant-based replacement for acrylic
acid polymers. We have produced and are testing our prototypes for plant-based
artist paints. Importantly, we have advanced the performance of our
plant-based superabsorbent to match current acrylic acid superabsorbent
polymers more closely. We believe some of these advances may offer
opportunities to extend our patent portfolio even further. 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.
Funding
In February 2023, 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 has been put to use for general working capital purposes and
supporting continued revenue growth. We have also deployed capital to
accelerate the development of new products and applications. Furthermore, we
are supporting continuous improvements in our processes.
With a stronger balance sheet we are better placed to improve our profit
margin, 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.
We have also made and will continue to make improvements to our production
line in our US manufacturing facility to enhance production efficiencies. We
continue to have sufficient capacity at our existing facility and have no
current plans to invest in an additional production facility.
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 excellent performance, safety, and
sustainability.
We are focussed on structuring and building our customer base for long-term
success by improving our gross profit margins and diversifying our revenues
across a broader range of customers and applications. Our raw material prices
are generally decreasing, which is offering better profitability but also a
need to selectively reduce prices in line with industry trends.
We announced on 2 April 2024 that we expect lower 2024 revenues due to not
reaching satisfactory commercial terms with an existing North American
detergent merchandizing customer following extensive negotiations. We are
pursuing growth from other existing detergent customers and from new accounts
in new application areas with a view to replenishing this revised expectation
with higher margin revenues.
Despite this, our balance sheet provides us with new opportunities 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 are positioning ourselves to
better capture the commercial value of our performance ingredients with new
customer wins, new volumes in non-detergent uses, and important new product
development initiatives.
We approach the future with more commercial progress, more resources, more
potential, and more optimism than ever before.
John R. Shaw
Chief Executive Officer
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,
efficacy 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, which is 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 completed 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 continues to work on new products to emerge from its technology
platform.
Progress in 2023
In February, the Group completed a fundraise of gross proceeds of $12.7m to
strengthen the Group's balance sheet and position the Group for growth. The
fundraise was oversubscribed and supported by existing and new institutional
and retail investors. Funds will be used for working capital, select capital
spending, and continued investment in new revenue opportunities for the
Company's next chapter of growth.
The Group focused on growing revenue volumes in North America and Europe
cleaning and recovery of gross profit margins. As supply constraints related
to the pandemic 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 the 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.
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.
In August, the Company completed a 50:1 share consolidation, to support share
trading through the Company's US OTC listing, with a more manageable number of
issued ordinary shares and corresponding share price. The consolidation
supports the liquidity and accessibility to all of the Company's shareholders.
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:
· Revenue
· Adjusted EBITDA, the earnings before interest, tax, depreciation,
amortization, share based payments, and exceptional items
· Cash
Non-Financial:
· Volumes in North America cleaning
· Volumes in Europe cleaning
· New applications
Revenues for the year increased by 40.5% when compared to 2022. Adjusted
EBITDA improved from a loss of $1.4m in 2022 to a loss of $0.9m in 2023. Cash
used in operations increased from $0.2m used in 2022 to $1.9m used in 2023.
Cash use in operations consisted of approximately $0.5m of operating loss
and an increase in working capital of $1.4m. This was supported by the Group's
successful fundraise in February 2023. Below is a table showing the Group's
key performance metrics and financial highlights:
2023 2022 2021 2020 2019
$'000 $'000 $'000 $'000 $'000
Revenue 7,866 5,600 2,596 3,292 1,288
Gross profit 2,437 1,487 700 1,154 450
Gross profit margin 31.0% 26.6% 27.0% 35.1% 34.9%
Adjusted EBITDA 2 (925) (1,395) (1,640) (993) (2,457)
Cash used from operating activities (1,923) (219) (2,023) (1,157) (1,831)
Net cash and investments at year-end 10,023 597 683 1,448 765
Financial Performance
Revenue
Total revenues for the 12-month period ended 31 December 2023 were $7.9m,
representing a 40.5% increase from 2022 revenues of $5.6m. Revenues since 2019
have a compounding annual growth rate of 57.2%. Revenues grew across all end
markets of cleaning, beauty, and hygiene. Cleaning increased by 42.2% from
2022, with the increase primarily due to strong volumes in North America and
Europe. An increase with more brands and more uses continued strong in the
second half of 2023.
Hygiene revenues improved by 8.6% from 2022, with the increase in sales
attributable to more new brands in North America using Itaconix ingredients in
odour neutralization products.
Beauty revenues improved by 85.4% from 2022, with sales in North America
driving the growth in the year.
Revenues in all geographical regions increased. North America represented
87.4% of the Group's revenue in 2023 and increased by 35.4%. Revenue in North
America largely consists of revenue generated in the cleaning segment. Europe
represents 12.6% of the Group's revenue and increased by 89.3% compared to
2022. The growth in European revenue was largely due to the 2022 launch of
several formulas using Itaconix® TSI™ 322 in Europe.
Gross Profit and Adjusted EBITDA(1)
The gross profit margin was 31.0% in 2023 compared to 26.6% in 2022. There was
an improvement due to the reduction in raw materials costs and logistics
costs. Logistics costs have continued to lower as availability of shipping
containers and boat space improve throughout the year.
1 Adjusted for interest, tax, depreciation, amortization, share based
payment charge, and exceptional items.
(2) Unaudited revenue by reporting period.
The increase in the Group's Formulation Solutions, which provide 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 24.3% of the Group's total revenues in
2023. Gross profit margins on Formulated Solutions are roughly 9.4%, 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 $0.9m in 2023 (2022: loss $1.4m) which improved
by 33.7%. The Group actively monitor administrative expenses and makes prudent
spending decisions to support the Group's strategic objective.
Below is a reconciliation of Loss for the Year to Adjusted EBITDA:
2023 2022 2021 2020 2019
$'000 $'000 $'000 $'000 $'000
Loss after tax (1,536) (2,463) (455) (1,646) (1,358)
Taxation 27 8 7 7 1
Depreciation 194 161 167 200 223
Amortization 202 202 201 198 198
Share based payments 229 559 - - -
Exceptional revaluation of lease liability 21 - - - -
Interest income (141) - - - (1)
Interest expense 79 - - - -
Exceptional revaluation of contingent consideration - 138 (1,560) 339 (1,474)
Exceptional organizational restructuring - - - (91) -
Movement on investment in nicotine gum entity - - - - (46)
Adjusted EBITDA (925) (1,395) (1,640) (993) (2,457)
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 $4.1m in 2023 up from $3.8m in 2022. The increase
in administrative expenses was largely due to increased staffing to support
the Group's growth plans.
Costs and Available Cash
As at 31 December 2023, the Group held cash of $2.6m and investments in term
deposits of $7.5m. Net Cash outflows from operating activities of $1.9m in
2023 were used to support the Group's growth plan while managing working
capital needs, compared to $0.2m in 2022. In February 2023, the Company
completed an equity raise with gross proceeds of $12.7 million for working
capital, select capital spending, and continued investment in new revenue
opportunities for the Company's next chapter of growth.
Working capital
At year end, working capital had increased driven largely by the equity raise
in February 2023. Trade and other receivables increased to $1.3m in 2023 from
$0.2m in 2022. Working capital as a percentage of revenues decreased to 43.5%
in 2023 from 0.3% in 2022.
Financial Position
At 31 December 2023, the Group had equity of $11.2m as compared to ($0.8m) in
2022, primarily as result of share issuance, settlement of contingent
consideration, operating losses, and share-based payment reserve.
Financial Reporting
The Group and parent company financial statements have been prepared in
accordance with UK adopted International Accounting Standards ("IFRS") and the
provisions of the Companies Act 2006. There were no new reporting standards
adopted for the year ended 31 December 2023 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 of its current business activities, budgeted
performance and the factors likely to affect its future development set out in
the Annual Report. Also taken account of are 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 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 the Directors' Report on page 25 and note 2 to the
Annual Report, the Directors have reviewed the Group's cash flow forecasts,
which take account of gross proceeds of $12.7m capital raised in February
2023. This covers 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 13,486,122 shares in issue as at 31 December 2023. Effective 22
August 2023, the Company consolidated the outstanding share capital in a 50:1
consolidation. The undiluted weighted average number of shares for the period
to 31 December 2023 was 12,862,802. The difference in the two numbers is the
result of an issuance of new shares in February 2023. The undiluted weighted
average number of shares was used to calculate the loss per share presented in
note 3.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is exposed to several risks in its markets and business. The
Directors have overall responsibility for the Group's risk management process
but have delegated responsibility for its implementation, for the system of
controls which reduce risk and for reviewing their effectiveness to the
management team. As the uncertainties that the Group face evolve over time,
the management team reviews emerging risks and updates mitigation measures.
The results are reported to the Board.
Commercialisation Activities
The commercial activity in North America and Europe continues to progress.
Meeting customer demand both domestically and globally has remained a key
focus of the Group. Forecasting volumes is important for managing customer
demand and balancing working capital needs to the business. Ultimately the
success of the business relies upon Itaconix products reaching sufficient
sales volumes 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.
Retention of Key Staff
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.
Recruiting of Key Staff
Our continued growth and success is dependent on attracting key staff with the
appropriate skills. The Group manages this by regular benchmarking and paying
competitive salaries and benefits. It has invested in its talent acquisition
to provide the best opportunity to attract the right talent and partners with
specialist external search firms and agencies when necessary. It offers an
attractive talent acquisition referral plan for employees.
Management of risk: The Group continues to assess the employment market to
offer competitive compensation and benefits. Management added new benefits for
employees to be an attractive employer to work for.
Customer Concentration and Retention
The ability to retain key customers at attractive gross profit margins is
critical to maintaining revenue streams. The loss of key customers or
excessive dependence on a limited number of customers could impact business
results adversely.
Management of risk: We engage regularly with current and prospective customer
on the estimated value of our ingredients in their end-product formulations
and the pricing of our ingredients relative to competitive alternatives. We
monitor that our ingredients deliver the desired value, that our pricing
reflects the estimated value of our ingredients, and that our pricing achieves
our target profitability for each customer. As we enter a new stage of
development, we also seek to diversify our customer base so that no
concentration of customers limits our ability to price our ingredients based
on their competitive value.
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.
Manufacturing Risk
Itaconix has one production facility in North America, that supports the
Group's revenues. Key raw materials are sourced globally can result in
extended supply chain.
Management of risk: The Group holds additional finished goods and raw material
inventories off site at a warehouse in North America and in Europe. Suppliers
also hold additional raw materials in North America.
Liquidity Risk
Itaconix plc seeks to manage financial risk by ensuring adequate liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. In February 2023, the Group completed a $12.7m 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 2023, 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 2023. 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 2023. 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 and Geopolitical 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.
Cyber and Information Risk
There is a growing risk of fraudulent attacks on the business, such attack
could have the potential to significantly disrupt the Group's operations and
result in loss to the business.
Management of risk: The Group monitor IT systems in place to ensure they are
up to date and regularly updated with the latest security protection.
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 four decisions taken during the year fall into this
category, and engaged with internal and external stakeholders on these
decisions:
· Appointment of new Non-Executive Directors - The Directors
continually assess the evolving needs of the Group and appoint individuals
that will support the Group's strategic needs.
· 2023 Fundraise - The Directors assessed the placement by placement,
direct subscription and open offer with new and existing institutional
shareholders, the Directors, and existing retail shareholders, to support the
Group's general working capital purposes to support revenue growth, accelerate
the development of new products and applications, and for capital spending to
support continuous process improvements.
· Share consolidation - The Directors consider that it is in the best
interests of the Company's long-term development as a public quoted company to
support share trading through the Company's US OTC listing, with a more
manageable number of issued ordinary shares and corresponding share price.
· 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 January 2024.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2023
2023 2022
$'000 $'000
Revenue 7,866 5,600
Cost of sales (5,429) (4,113)
Gross profit 2,437 1,487
Other operating income - -
Administrative expenses (4,066) (3,804)
Operating loss before exceptional items (1,629) (2,317)
Loss on modification of lease (21)
Exceptional income / (expense) on revaluation of contingent consideration - (138)
Operating loss before tax from operations (1,650) (2,455)
Finance income (expense) 141 -
Loss before tax (1,509) (2,455)
Taxation (27) (8)
Loss after tax (1,536) (2,463)
Basic and diluted loss per share (0.12) (0.50)
Diluted loss per share (0.12) (0.50)
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2023
2023 2022
$'000 $'000
Loss for the year (1,536) (2,463)
Items that will be reclassified subsequently to profit or loss
Exchange gain in translation of foreign operations 530 93
Total comprehensive loss for the year (1,006) (2,370)
Attributable to:
Equity holders of parent (1,006) (2,370)
CONSOLIDATED BALANCE SHEET
At 31 December 2023
31 Dec 31 Dec
2023 2022
$'000 $'000
Non-current assets
Intangible assets 24 -
Property, plant and equipment 337 301
Right-of-use assets 2,236 343
Investments 1,273 -
Investment in subsidiary undertakings - -
3,870 644
Current assets
Inventories 1,096 1,119
Trade and other receivables 1,421 164
Investments 6,183 -
Cash and cash equivalents 2,567 597
11,267 1,880
Total assets 15,137 2,524
Financed by
Equity shareholders' funds
Equity share capital 8,665 5,959
Equity share premium 58,012 47,942
Own shares reserve (5) (5)
Merger reserve 31,343 31,343
Share based payment reserve 872 643
Foreign translation reserve 429 (101)
Retained deficit (88,092) (86,556)
Total equity 11,224 (775)
Non-current liabilities
Lease liabilities 1,957 119
1,957 119
Current liabilities
Trade and other payables 1,677 1,866
Contingent consideration - 1,134
Lease liabilities 279 180
1,956 3,180
Total liabilities 3,913 3,299
Total equity and liabilities 15,137 2,524
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 31 December 2023
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 2022 5,873 47,641 (5) 31,343 10,386 (194) (94,395) 649
Loss for the year - - - - - - (2,463) (2,463)
Contingent consideration - - - - - - - -
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)
Loss for the year - - - - - - (1,536) (1,536)
Share issuance proceeds 2,488 10,195 - - - - - 12,683
Share issuance expenses - (1,014) - - - - - (1,014)
Contingent consideration 218 915 - - - - - 1,133
Share consolidation - (26) - - - - - (26)
Exchange differences on translation of foreign operations - - - - - 530 - 530
Share based payments - - - - 229 - - 229
At 31 December 2023 8,665 58,012 (5) 31,343 872 429 (88,092) 11,224
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
2023 2022
$'000 $'000
Net cash outflow from operating activities (1,923) (219)
- -
------ ------
Interest received 141 -
Proceeds from sale of property, plant and equipment - -
Purchase of securities (7,456)
Purchase of property, plant and equipment (226) (59)
Development of website (29)
Cash loaned to subsidiary undertakings - -
Net cash outflow from investing activities (7,570) (59)
Cash received from issue of shares 12,683 387
Transactions costs paid on the issue of shares (1,014) -
Transactions costs paid on the share consolidation (26) -
Repayment of lease liability (108) (138)
Interest paid - leases (72) (57)
Net cash inflow from financing activities 11,463 192
Net inflow / (outflow) in cash and cash equivalents 1,970 (86)
Cash and cash equivalents at beginning of year 597 683
Cash and cash equivalents at end of year 2,567 597
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 2022 or 2023. The
Independent Auditor's Report on the Annual Report and Financial Statements for
2023 is yet to be signed but is expected to be unqualified and unmodified
(2022 was unqualified and did draw attention to a matter by way of emphasis,
being going concern) and neither expected to nor did contain a statement under
498(2) or 498(3) of the Companies Act 2006 for either year respectively.
Statutory accounts for the year ended 31 December 2022 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2023 will be delivered to the Registrar of Companies in due course
and will be posted to shareholders on 19 April 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 2022, except for
those that relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 January 2023. 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 for the year of $1.5m, had Net Operating Assets at the
period end of $11.2m and a Net Cash Outflow from Operating Activities of
$1.9m. Primarily, the Group meets its day to day working capital requirements
through existing cash resources and had on hand cash, cash equivalents and
investments at the balance sheet date of $10.0m.
During the year, the Group successfully raised gross proceeds of $12.7m to
enable the Group and Parent 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 and Parent Company's cost base.
The Directors believe that, taken as a whole, the factors described above
enable the Parent Company and 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 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:
Geographical information
Revenues Net assets
2023 2022 2023 2022
$'000 $'000 $'000 $'000
North America 6,898 5,078 1,504 104
Europe 968 522 9,720 (879)
7,866 5,600 11,224 (775)
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:
2023 2022
$'000 $'000
Cleaning 7,207 5,070
Hygiene 351 324
Beauty 254 137
Other 54 69
7,866 5,600
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. 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 2023
$'000 $'000 $'000 $'000
Revenue
Sale of goods 5,958 1,908 - 7,866
Results:
Depreciation and amortisation (294) - - (294)
Cost of sales (3,406) (1,729) - (5,135)
Gross profit 2,258 179 - 2,437
Administrative expense - - (4,066) (4,066)
Exceptional income - - 120 120
Taxation charge - - (27) (27)
Segment performance 2,258 179 (3,972) (1,536)
Operating assets 4,381 284 2,992 7,657
Operating liabilities (2,381) (308) (1,224) (3,913)
Other disclosure:
Capital expenditure* 48 - 178 226
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
*Capital expenditure consists of additions of property, plant and equipment.
Customer concentration information
The Group has revenue concentration in two customers of 63%.
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.
2023 2022
Loss $'000 $'000
Loss for the purposes of basic and diluted loss per share (1,536) (2,463)
Weighted average number of ordinary shares for the purposes of basic and 12,863 448,096
diluted loss per share ('000)
Basic and diluted loss per share (11.9)¢ (0.5)¢
Basic and diluted loss per share (post consolidation comparison) (11.9)¢ (27.5)¢
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 2023
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR EAELLFDELEAARecent news on Itaconix
See all newsREG - Itaconix PLC - Grants of Options & PDMR dealings
AnnouncementREG - Itaconix PLC - Preliminary Results and Notice of AGM
AnnouncementREG - Itaconix PLC - Notice of Results
AnnouncementREG - Itaconix PLC - Trading Statement
AnnouncementREG - Itaconix PLC - Trading Update
Announcement