TIDMITX
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(TM) 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(R) TSI(R) 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(R) SP
and by Itaconix as VELASOFT(R) 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
Joint Broker
Adam James / Patrick Dolaghan +44 (0) 20 7523 8000
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
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 ) 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(R) DSP Manage water hardness
2K(TM)
Itaconix(R) TSI(TM) Manage water hardness
322
============================ ==========================================
Itaconix(R) TSI(TM) Manage water hardness
122
Itaconix(R) ONZ Manage water hardness and odour
100
============================ ==========================================
Itaconix(R) ONZ Manage water hardness and odour
400
Itaconix(R) ONZ Manage water hardness and odour
075
============================ ==========================================
Hygiene
ZINADOR(TM) (Croda) Odour neutralisation
============================ ==========================================
VELAFRESH(TM) ZP20/30 Odour neutralisation
VELAFRESH(TM) SAP80 Superabsorbent (to be launched)
============================ ==========================================
Beauty
Amaze(TM) SP (Nouryon) Hair styling
============================ ==========================================
VELASOFT(TM) NE Hair styling
100
VELASOFT(TM) BR Repair damaged hair (to be launched)
300
============================ ==========================================
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(R) TSI(R) 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(R) TSI(R) 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(R) TSI(R) 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(R) SP and by Itaconix as VELASOFT(R) 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(R) 22L and 35L and by
Itaconix as VELAFRESH(R) 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(R) 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(R) 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 EUR300m 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(R) TSI(TM) 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] (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(R) TSI(TM)
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(R) TSI(TM) 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(TM)
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 Decarbonisation Energy Lighter
Carbon Efficiency Products
Cleaning
Itaconix(R)
DSP 2K(TM) 100%
Itaconix(R) >75%
TSI(TM) 322
Itaconix(R) >80%
TSI(TM) 122
Itaconix(R)
ONZ 100 100%
Itaconix(R) >80%
ONZ 400
Itaconix(R) >99%
ONZ 075
Hygiene
ZINADOR(TM)
(Croda) 80-100%
VELAFRESH(TM)
ZP20/30 80-100%
VELAFRESH(TM) >98%
SAP80
Beauty
Amaze(TM) SP
(Nouryon) 100%
VELASOFT(TM)
NE 100 100%
VELASOFT(TM)
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
Share
Equity Equity Own based Foreign
share share shares Merger payment translation Retained
capital premium reserve reserve reserve reserve 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
--------------------------------------- --- -------- -------
(219) (2,023)
Net cash outflow from operating - -
activities ------ ------
---------------------------------------------------- ------- -------
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/
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, 317 k, 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 Formulation
Ingredients 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 Formulation
Ingredients 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 diluted loss
per share ('000) 448,096 438,808
------- -------
Basic and diluted loss per share (0.5)c (0.1)c
------- -------
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.
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END
FR LZLFBXQLXBBQ
(END) Dow Jones Newswires
June 05, 2023 02:00 ET (06:00 GMT)
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