TIDMITX
RNS Number : 3528Z
Itaconix PLC
14 September 2022
Itaconix plc
("Itaconix" or the "Company")
Half year results for the period ended 30 June 2022
Itaconix (LSE: ITX) (OTCQB: ITXXF), a leading innovator in
sustainable plant-based polymers used to decarbonise everyday
consumer products, is pleased to announce its unaudited interim
results for the six months ended 30 June 2022.
A copy of the Interim Report & Accounts is available for
download on Itaconix's website at www.itaconix.com.
John R. Shaw, CEO of Itaconix, commented:
"We reached a new level of success for our proprietary
plant-based technology platform in the first half of 2022 with
record half-year revenues from new and recurring orders generated
out of our growing customer base. These customers are increasingly
relying on our ingredients for competitive advantages in everyday
products used for cleaning, beauty, and hygiene. From detergents
and air fresheners to shampoos and underarm deodorants, our
ingredients add safety, performance, and sustainability to new
generations of existing and new products used by millions of
consumers every day."
Financial Highlights
-- First half revenues of $3.1 million were 124% higher than the
first half of 2021, 148% higher than the second half of 2021, and
40% higher than our prior record half-year revenues of $2.2 million
in the second half of 2020.
-- Gross profits were $0.8 million, representing an increase of
45% over the first half of 2021 and an increase of 332% over the
second half of 2021.
-- Gross profit margin was 25% compared to 27% for the full year
of 2021 This slight decline in gross profit margin was due to a
higher percentage of revenues from large detergent customers and
price support for two large customers. The Company has implemented
three price increases since January 2022 to keep pace with higher
raw material costs but held to 2021 pricing for two customers in
early 2022 to support major marketing campaigns that started in
late 2021.
-- Adjusted EBITDA(1) was a loss of $0.6 million, compared to a
loss of $0.7 million for the first half of 2021 and a loss of $0.9
million for the second half of 2021, including continued investment
spending on major new revenue opportunities.
-- Cash and Cash Equivalents as at 30 June 2022 was $0.9
million, compared to $0.7 million as at 31 December 2021.
-- I n April 2022, the Company completed an equity raise with
gross proceeds of $0.4 million for working capital, predominantly
to strengthen finished goods inventories held in the EU to assure
reliable and ready delivery times to EU customers.
Company Milestones:
-- Cleaning revenues were $2.7 million for the first half of
2022 compared to $0.9 million in the first half of 2021 and $0.9
million in the second half of 2021, reflecting increased market
share for Itaconix(R) TSI(TM) 322 as the key ingredient in a new
generation of non-phosphate dishwashing detergents. Continued
growth is expected as current customers gain market share, new
customers go into full production in Europe and North America, and
additional customers emerge in 2023 from the current pipeline of
new cleaning projects.
-- Combined hygiene, beauty, and BIO*Asterix revenues remained
steady at $0.4 million for the first half of 2022 compared to $0.5
million in the first half of 2021 and $0.3 million in the second
half of 2021. New growth is expected as post-Covid formulation
activity increases and more projects in the Company's customer
pipeline advance to commercial launch.
-- The Company advanced further new revenue opportunities for
2023 with a new development effort announced with a major pulp and
paper company for odour control in hygiene products.
-- Iaconix's addressable market increased from $750 million to
$2.3 billion with three new commercial opportunities emerging from
the Company's proprietary technology platform in hygiene with a
plant-based superabsorbent, in composites with a new plant-based
intermediate, and in beauty with a new hair care product.
-- Replacement of fossil-based acrylate superabsorbents with
Itaconix's VELAFRESH(R) SAP80 plant-based superabsorbent is a major
new revenue opportunity. The Company announced early commercial
work with a potential hygiene customer in January. Testing and
further development with this and other potential customers are
expected to continue through 2023 for initial use in consumer
products in 2024.
-- One new patent application filing was announced in February
2022 for a plant-based ingredient with potential use in
composites.
-- An additional new patent application filing was announced in
April 2022 for a new plant-based hair care ingredient that the
Company will introduce in the second half of 2022.
-- Following the period end, Dr. Peter Nieuwenhuizen was
appointed in July 2022 as Non-Executive Director and Interim Chair.
As the former CTO of AkzoNobel Specialty Chemicals and current
Founding Partner of the European Circular Bioeconomy Fund as well
as Chair of the Green Chemistry & Commerce Council, Peter is a
recognised business and technical leader in advancing plant-based
chemistries across supply chains to create the Low-Carbon
Economy.
-- Also following period end, Laura Denner, CFO since 2018, was
appointed in July 2022 as an Executive Director of the Company.
Commenting on the outlook John R. Shaw, CEO added:
"The immediate and long-term prospects for Itaconix are
progressing very well as existing customers expand into more
retailers, new customers bring new formulations to market, and
potential major new customer projects advance in our pipeline. We
expect to see at least one new EU detergent product on the market
this year, a new hair care ingredient launched in the coming
months, and major new potential in hygiene applications.
The Company remains on course to deliver full year 2022 revenues
ahead of current market expectations based on progress in
commercial volumes and success in passing on increases in direct
costs. Adjusted EBITDA(1) loss for full year 2022 is expected to be
an improvement on 2021, but below previous market expectations,
reflecting continued investment in the growth of the business."
(1) Adjusted EBITDA is defined and reconciled to Operating loss
in Note 4 of the Interim Report.
For further information please contact:
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
Ed Frisby / Abigail Kelly / Milesh Hindocha
(Corporate Finance)
Andrew Burdis / Sunila de Silva (ECM)
About Itaconix
Itaconix uses its proprietary plant-based polymer technology
platform to produce and sell specialty ingredients that improve the
safety, performance, and sustainability of consumer products. The
Company's current ingredients are enabling and leading new
generations of products in cleaning, hygiene, and beauty.
Itaconix's contributions to the global low carbon economy are
recognised by the London Stock Exchange's Green Economy Mark.
www.itaconix.com
Chief Executive's Statement
Overview
Itaconix is leading the development of the Low-Carbon Economy
for consumer products with a growing line of sustainable
ingredients generating from the Itaconix plant-based technology
platform.
We are using our technology and products to build a large,
high-gross-margin, capital-efficient company that produces and
sells key ingredients for decarbonising everyday products based on
their performance, value, safety, and sustainability.
We achieved major advances in the first half of 2022 towards
realizing the large revenue potential in every household for our
plant-based technologies. With record half-year revenues, we
continue to make great strides in developing a diverse and growing
base of customers that are using our ingredients to launch new
generations of consumers products. From detergents and air
fresheners to shampoos and underarm deodorants, our ingredients are
increasingly being used to add efficacy and sustainability to
existing and new products used by millions of consumers every
day.
We are also continuing to invest in our technology platform to
generate new plant-based solutions for emerging consumer needs in
the Low-Carbon Economy. With the announcements we made on initial
commercial efforts for our plant-based superabsorbent and the
filing of new patent applications in hair care and composites, we
expanded our addressable market potential from $750 million to $2.3
billion.
Financial Results
First half revenues of $3.1 million were 124% higher than the
first half of 2021, 148% higher than the second half of 2021, and
40% higher than our prior record half-year revenues of $2.2 million
in the second half of 2020. In addition, they are 118% of the full
year revenues for 2021 and 93% of the full year revenues for 2020.
Revenue growth came from increased demand from current customers,
new recurring orders from new 2021 customers, and initial orders
from new 2022 customers. The Company is in a strong position to
deliver 2022 revenues ahead of current market expectations and is
making major progress towards building the customer base to meet
market expectations for revenues in 2023.
Gross profits were $0.8 million, representing an increase of 45%
over the first half of 2021 and an increase of 332% over the second
half of 2021.
Gross profit margin was 25% compared to 27% for the full year of
2021, which is below our overall gross profit margin goal of at
least 35%. The Company has had overall success in keeping pace with
higher raw material prices through three price increases since
January 2022. There are little or no direct replacements for
Itaconix's ingredients in customer products without extensive
reformulation, and Itaconix is the sole producer in the world of
its proprietary ingredients. The lower gross profit margin was due
to a higher percentage of overall revenues from cleaning volumes,
continuation of 2021 pricing commitments into early 2022 to support
marketing campaigns for a large detergent customer and a new
customer in sustainable leather, and the effects of some price
inflation on production overhead expenses. With the most recent
price increases taking effect in September, raw material costs
stabilizing, and more beauty and hygiene revenues, the Company
expects significant improvements to gross margins in the second
half of 2022.
Adjusted EBITDA(1) was at a loss of $0.6 million, compared to a
loss of $0.7 million for the first half of 2021 and a loss of $0.9
million for the second half of 2021. As noted above, the Company
continues to make judicious investments in the research and
development for new product and applications that are adding new
addressable markets and major new revenue opportunities.
Loss for the period was $1.1 million, compared to a loss of $0.2
million in the first half of 2021 and a loss of $0.3 million in the
second half of 2021. Revaluation of the contingent consideration
liability as a non-cash item reduced the loss in the first half of
2021 by $0.5 million and in the second half of 2021 by $1.0
million. Loss for the period without revaluation of contingent
liability was $0.9 million in the first half of 2022, $1.3 million
in the second half of 2021, and $0.7 million in the first half of
2021.
Cash and Cash Equivalents as at 30 June 2022 was $0.9 million,
compared to $0.7 million as at 31 December 2021.
In April 2022, the Company completed an equity raise with net
proceeds of $0.4 million to fund working capital, predominantly to
strengthen finished goods inventories held in the EU to assure
reliable and ready delivery times to EU customers.
Commercial Progress
The Company is leading the introduction of new generations of
products in major consumer care applications, particularly within
the 360 million households across Europe and North America. As
brands and retailers face increased pressure from consumers to act
on climate change, Itaconix's plant-based ingredients have the
functional value to decarbonise everyday products with performance,
safety, cost, and sustainability.
Used as key ingredients in over 130 consumer brands, Itaconix
products are found in cleaning, hygiene, and beauty products in
major retailers across North America and Europe. With new products
continuing to emerge from its technology platform and over $30
million in new revenue potential currently in its customer project
pipeline, the Company expects sustained high growth in new and
recurring orders.
Cleaning
Cleaning revenues were $2.7 million for the first half of 2022
compared to $0.9 million in the first half of 2021 and $0.9 million
in the second half of 2021. A new generation of non-phosphate
dishwashing detergents based on the multifunctional value of
Itaconix(R) TSI(TM) 322 is gaining market share in North America
and initial traction in Europe. Itaconix(R) TSI(TM) 322 is the key
ingredient in this new generation of detergents for managing water
hardness and assuring shiny, spotless glasses and dishes. When
formulated correctly into a detergent, our plant-based polymer
provides these detergents with excellent shine performance, lower
overall cost, and industry-leading bio-based content.
The acceleration in revenues is partly due to the technical and
production solutions that the Company offers to transition brands
quickly and effectively to formulations that realise the full value
of Itaconix(R) TSI(TM) 322. From performance and shelf-life testing
to validating label claims and assuring the supply and cost of
other key ingredients, current and potential customers in North
America are increasingly looking to Itaconix for full formulation
solutions. The Company generated $0.6 million in revenues in the
first half of 2022 from providing these solutions, up from $0.3
million for the full year in 2021. These revenues fund our
technical support capabilities while also speeding the adoption
rate for Itaconix(R) TSI(TM) 322 and assuring the supply of other
key ingredients.
While these turn-key formulation solutions are effective in
North America, transitioning to new detergent formulations in
Europe has required customer product development teams to return to
their laboratories after the Covid pandemic. The Company's direct
selling efforts to major detergent producers in Europe had already
established strong interest in Itaconix(R) TSI(TM) 322, so the
renewed product development efforts are creating new traction for
major revenue growth in Europe. Itaconix is delivering increased
order volumes in Europe, has one brand launching a new dishwashing
product this fall, and has other potential customers completing
production trials for new products. The Company is rebuilding
finished goods inventories in Europe to shorten delivery times and
assure reliable fulfillment as customer commitments to Itaconix
products grow.
The Company currently generates new customers from its direct
selling efforts to major consumer detergent producers in North
America and Europe. New efforts are underway to access smaller
accounts through distributors, with a particular focus on
institutional detergent suppliers and new emerging consumer
brands.
Hygiene
Hygiene revenues from direct sales of VELAFRESH(R) products and
through Croda for ZINADOR(R) products were $0.2 million for the
first half of 2022 compared to $0.3 million in the first half of
2021 and $0.2 million in the second half of 2021. Similar to
European detergents, new formulation and reformulation efforts were
delayed in many product categories for the Company's odour control
ingredients as potential customers focused on disinfectants and
surface cleaners. Although current revenues remain relatively flat,
the end of the Covid pandemic is generating new activity on odour
control products. The Company is also expanding its direct odour
control sales efforts into new applications, which has already
produced a development program with a major pulp and paper company
on a new application in hygiene.
The most important new revenue opportunity for Itaconix is the
Company's VELAFRESH(R) SAP80 plant-based superabsorbent. Initial
commercial efforts are underway to selectively replace fossil-based
acrylate superabsorbents in baby diapers, adult incontinence pads,
and feminine hygiene products. The Company announced early
commercial work with a potential hygiene customer in January. Since
some design modifications to hygiene products are likely needed to
accommodate for the differences in the absorption profile of
VELAFRESH(R) SAP80 compared to current acylate products, testing
and further development are expected to continue through 2023 for
initial use in consumer products in 2024.
Beauty
Beauty revenues from direct sales of VELASOFT(R) products and
through Nouryon for its Amaze(R) SP product were $0.1 million for
the first half of 2022 compared to $0.1 million in the first half
of 2021 and $0.1 million in the second half of 2021. Renewed beauty
sales and formulation activity coming out of the Covid pandemic are
expected to reinvigorate sales of these current products.
The Company announced the filing of an important patent
application in April for new plant-based technology to maintain the
natural health and shine of hair. A new VELASOFT(R) product will
launch this fall based on this proprietary technology for use as a
key ingredient in consumer and professional products to prevent or
repair damaged hair.
BIO*Asterix
BIO*Asterix revenues were $0.1 million for the first half of
2022 compared to $0.0 million in the first half of 2021 and $0.1
million in the second half of 2021. These revenues are for Itaconix
products that are sold to specialty chemical producers to use as
intermediates or components in their ingredients. The Company has
initial sales into ingredients used in sustainable leather and
expects attractive growth as current customers gain traction and
new potential customers begin production trials.
The Company announced the filing of an important patent
application in February for the use of Itaconix technology for
ingredients in the production of materials used in composites.
Similar to the Company's efforts in additives to biodegradable
packaging, the commercial development for these products will take
several years before new revenues are possible, with some risk that
the ingredients do not make it to commercial launch. For example,
progress on additives to biodegradable packaging is delayed as
focus in the industry has shifted more towards new blends of
existing biodegradable materials.
Operational Review
The Company met all customer orders in the first half of 2022
and has the capacity and capabilities in place to meet customer
needs in the second half of 2022. Management worked successfully to
address increasing raw material prices, extended deliver times for
incoming and outgoing shipments, and growing demand in Europe. With
raw material prices stabilizing, new finished goods inventory in
Europe to meet new order volumes, declining effects from the Covid
pandemic, and no increase in instability from global economic
factors and the Russia-Ukraine war, the Company is expecting fewer
challenges in the second half of 2022.
Low unemployment in New Hampshire, wage inflation, and
difficulty in hiring new employees present potential operating
challenges for 2023. Although the Company has very low employee
turnover and has good results hiring new employees, management has
proactively implemented and continues to review measures to retain
current employees and attract new employees with current
compensation and long-term incentives.
Governance
The Company announced several Board changes to date in 2022. 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 Dr. Peter J. Nieuwenhuizen was appointed
Interim Chair and Non-Executive Director in July 2022. The
Company's CFO Laura Denner was appointed to the Board as an
Executive Director in July. The Board is actively working to
further expand the Board to meet the Company's needs in its next
stage of development.
Dr. Barber and Dr. Dobson each served the Company as current or
past 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 assisted
the Company through the financial challenges of the Covid pandemic.
The Board greatly appreciates the years of service and many
contributions that they all made to Itaconix.
Dr. Nieuwenhuizen is a recognized international leader in the
business, technical, and environmental aspects of sustainability
and has devoted much of his career to developing products and
businesses for the Low-Carbon Economy. He also has a deep
understanding of Itaconix, the value of its products, and the
commercial potential for the technology platform.
Current Trading and Outlook
The Company is experiencing increased traction for its
plant-based cleaning ingredients as existing customers expand into
more retailers and important new customers bring new formulations
to market. The Board expects to see at least one new European
detergent product on the market this year, and possibly even
more.
Continued growth is expected as current customers gain market
share, new customers go into full production in Europe and North
America, and additional customers emerge in 2023 from the current
pipeline of new cleaning projects.
As the revenues and success of current products become more
certain, the Company is setting its sights on bigger and broader
ingredient opportunities from the technology platform.
With all these factors in mind, breakthroughs in new product
areas, and steady advances in North America and Europe the Board
expects continued progress with a target to increase revenues
substantially and achieve Adjusted EBITDA breakeven in 2023.
The Company remains on course to deliver full year 2022 revenues
ahead of current market expectations based on progress in
commercial volumes and success in passing on increases in direct
costs. Adjusted EBITDA loss for full year 2022 is expected to be an
improvement on 2021, but below previous market expectations,
reflecting continued investment in the growth of the business.
John R. Shaw
Chief Executive Officer
13 September 2022
Condensed consolidated income statement and statement of
comprehensive income
For the six months ended 30 June 2022
Unaudited Unaudited
6 Months 6 Months
to to
30 June 30 June
2022 2021
Notes $000 $000
Revenue 5 3,057 1,366
Cost of sales (2,296) (842)
--------- ---------
Gross profit 761 524
Other income 4 - 183
Administrative expenses (1,701) (1,399)
--------- ---------
Group operating loss (940) (692)
Exceptional (expense) / income on
movement of contingent consideration 6 (174) 514
--------- ---------
Loss before tax (1,114) (178)
Taxation expense (6) (1)
--------- ---------
Loss for the period (1,120) (179)
Other comprehensive income, net
of income tax
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translated
foreign operations 97 (93)
--------- ---------
Total comprehensive loss for the
period (1,023) (272)
========= =========
Basic and diluted loss per share
(GBP) 7 (0.20p) (0.04p)
========= =========
Condensed consolidated statement of financial position
As at 30 June 2022
Unaudited Audited
As at As at
30 June 31 December
2022 2021
Notes $000 $000
Non-current assets
Property, plant and equipment 360 402
Right-of-use asset 444 545
--------- -----------
804 947
Current assets
Inventories 1,052 1,369
Trade and other receivables 640 280
Cash and cash equivalents 3 921 683
--------- -----------
2,613 2,332
--------- -----------
Total assets 3,417 3,279
========= ===========
Financed by
Equity shareholders' funds
Equity share capital 8 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 9 276 10,386
Foreign translation reserve (97) (194)
Retained losses (85,213) (94,395)
--------- -----------
Total equity 205 649
Non-current liabilities
Contingent consideration 6 - 1,116
Long-term lease liability 193 348
--------- -----------
193 1,464
--------- -----------
Current liabilities
Trade and other payables 1,642 1,020
Contingent consideration 6 1,175 -
Short-term lease liability 202 146
--------- -------------
3,019 1,166
--------- -------------
Total liabilities 3,212 2,630
--------- -------------
Total equity and liabilities 3,417 3,279
========= =============
Interim condensed consolidated statement of cash flows
For the six months ended 30 June 2022
Unaudited Unaudited
6 Months 6 Months
to to
30 June 30 June
2022 2021
$000 $000
Cash flows from operating activities
Operating loss before tax (1,114) (178)
Adjustments for:
Depreciation of property, plant and
equipment 79 86
Depreciation of right-of-use asset 101 101
Share based payment charge 192 31
Revaluation of deferred consideration 59 (478)
Gain on foreign exchange 97 (93)
Taxation (6) (1)
Decrease in inventories 317 4
(Increase) / decrease in receivables (361) 189
(Decrease) / increase in payables 622 (1,091)
--------- ---------
Net cash outflow from operating activities (14) (1,430)
--------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (36) (42)
--------- ---------
Net cash outflow from investing activities (36) (42)
--------- ---------
Cash flows from financing activities
Cash received from issuing share of
stock, net 387 1,509
Lease payments (72) (88)
Interest expense on lease payments (27) (19)
--------- ---------
Net cash inflow from financing activities 288 1,402
--------- ---------
Net inflow / (outflow) in cash and
cash equivalents 238 (70)
Cash and cash equivalents at beginning
of the period 683 1,448
--------- ---------
Cash and cash equivalents at end
of the period 921 1,378
========= =========
Notes of non-cash items
In April 2021, the Company issued 1,923,389 shares of stock to
satisfy the 2020 contingent consideration payment of $146k.
In April 2021, the Group received forgiveness from the US Small
Business Administration in the amount of $183k for the Covid-19
relief loan to support US employees.
Notes to the interim condensed consolidated financial
statements
1. General information
These unaudited interim condensed financial statements of
Itaconix plc for the six months ended 30 June 2022 were approved
for issue in accordance with a resolution of the Board on 13
September 2022. Itaconix plc is a public limited company
incorporated in the United Kingdom whose shares are traded on the
AIM Market of the London Stock Exchange.
This half-yearly financial report is also available on the
Group's website at https://itaconix.com/investor/reports-documents/
.
2. Accounting policies
These interim consolidated financial statements have been
prepared in accordance with UK adopted International Accounting
Standards (collectively "IFRS") . They do not include all
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the 31
December 2021 ('2021') Annual Report. The financial information for
the half years ended 30 June 2022 and 30 June 2021 does not
constitute statutory accounts within the meaning of Section 434 (3)
of the Companies Act 2006 and both periods are unaudited.
The annual financial statements of Itaconix Plc ('the Group')
are prepared in accordance with IFRS . The comparative financial
information for the year ended 31 December 2021 included within
this report does not constitute the full statutory Annual Report
for that period. The statutory Annual Report and Financial
Statements for 2021 have been filed with the Registrar of
Companies. The Independent Auditors' Report on the Annual Report
and Financial Statements for the year ended 31 December 2021 was
unqualified, did draw attention to a matter by way of emphasis,
being going concern, and did not contain a statement under 498(2) -
(3) of the Companies Act 2006.
The interim condensed consolidated financial statements are
presented in US dollars and all values are rounded to the nearest
thousand ($'000) except when otherwise indicated. The interim
condensed consolidated financial statements are prepared on the
historical cost basis except for contingent consideration which has
been measured at fair value.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 31 December 2021 annual financial statements, except for
those that relate to new standards and interpretations effective
for the first time for periods beginning on (or after) 1 January
2022 and will be adopted in the 2022 financial statements. There
are deemed to be no new and amended standards and/or
interpretations that will apply for the first time in the next
annual financial statements that are expected to have a material
impact on the Group.
Going concern
This Interim Report has been prepared on the assumption that the
business is a going concern. In reaching their assessment, the
Directors have considered a period extending at least 12 months
from the date of approval of this half-yearly financial report.
This assessment has included consideration of the forecast
performance of the business for the foreseeable future and the cash
available to the Group. As such, the Directors have concluded that
there exists a material uncertainty which may cast doubt as to the
Group's ability to continue as a going concern. However, taking
account of the Group's working capital at the date of this report,
the Group's current revenues, and current shareholder authority to
raise capital if needed, the Directors believe the Group will
continue as a going concern for the foreseeable future. The interim
financial statements do not include the adjustments that would be
required if the Group were unable to continue as a going
concern.
Risks and uncertainties
The principal risks and uncertainties facing the Group remain
broadly consistent with the Principal Risks and Uncertainties
reported in Itaconix plc's 31 December 2021 Annual Report.
3. Cash and cash equivalents
Unaudited Audited
As at As at
30 June 31 December
2022 2021
$000 $000
Cash at bank and in hand 921 683
--------- -----------
921 683
========= ===========
4. Reconciliation of Operating Loss to Adjusted EBITDA
The detail below shows the reconciliation of operating loss to
earnings before change in value of contingent consideration, share
based payment charge (non-cash), government loan forgiveness for
Covid-19 relief, interest, taxes, depreciation and amortisation
(Adjusted EBITDA).
Unaudited Unaudited
6 Months 6 Months
to to
30 June 30 June
2022 2021
$000 $000
Loss for the period (1,120) (179)
Revaluation of contingent consideration 174 (514)
Share based payment charge 192 31
Other Income - government loan forgiveness - (183)
Taxes 6 1
Depreciation and amortisation 180 187
--------- ---------
Adjusted EBITDA (568) (657)
========= =========
5. Segmental analysis
Revenue by business segments:
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.
Net assets of the Group are attributable solely to Europe and
North America.
Six months ended 30 June 2022
Unaudited
6 months
to
Performance Formulation 30 June
Ingredients Solutions 2022
$000 $000 $000
Revenue
Sale of goods 2,452 605 3,057
------------ ----------- ---------
Segment revenue 2,452 605 3,057
------------ ----------- ---------
Results
Depreciation and amortisation 180 - 180
Segment (loss) / gain (1,164) 44 (1,120)
------------ ----------- ---------
Operating assets 3,354 63 3,417
------------ ----------- ---------
Operating liabilities 3,014 198 3,212
------------ ----------- ---------
Other disclosure:
Capital expenditure* 36 nil 36
------------ ----------- ---------
Six months ended 30 June 2021
Unaudited
6 months
to
Performance Formulation 30 June
Ingredients Solutions 2021
$000 $000 $000
Revenue
Sale of goods 1,260 106 1,366
------------ ----------- ---------
Segment revenue 1,260 106 1,366
------------ ----------- ---------
Results
Depreciation and amortisation 187 - 187
Segment (loss) / gain (212) 2 (210)
------------ ----------- ---------
Operating assets 4,112 - 4,112
------------ ----------- ---------
Operating liabilities 3,325 - 3,325
------------ ----------- ---------
Other disclosure:
Capital expenditure* 42 nil 42
------------ ----------- ---------
*Capital expenditure consists of additions of property, plant
and equipment, and intangible assets.
Segmental information
Revenues
Unaudited Unaudited
Six Months Six Months
to to
30 June 2022 30 June 2021
$000 $000
Cleaning 2,691 899
Hygiene 183 326
Beauty 72 86
Other 111 55
3,057 1,366
============= =============
Geographical information
Revenues Net assets
Unaudited Unaudited Unaudited Audited
Six Months Six Months Six Months Year to
to to to 31 December
30 June 2022 30 June 2021 30 June 2022 2021
$000 $000 $000 $000
Europe 192 64 (629) (457)
North America 2,865 1,302 834 1,106
3,057 1,366 205 649
============= ============= ============= ============
The revenue information above is based on the location of the
customer.
6. Contingent consideration
$'000
As at 31 December 2021 (Audited) 1,116
Movement in fair value and discounting 174
Movement in foreign exchange (115)
As at 30 June 2022 (Unaudited) 1,175
=====
During 2018, in conjunction with the fund raise, a restructuring
of the contingent consideration was executed. The contingent
consideration was restructured into two components:
-- A one-time issue of 15 million new Itaconix plc shares to the Sellers.
-- The continuation of the previous contingent consideration
mechanism (i.e. up to $6m in shares), but with the window of time
for potential achievement expanded to the end of 2022 (from the end
of 2020) and including all the revenues of the Group (which are
primarily from products based on the acquired technology in any
event).
It should also be noted that the second component summarised
above was intended to serve as an incentive programme for the two
members of management (John Shaw and Yvon Durant) who were also
Sellers and are entitled to 63% of the total contingent
consideration. Accordingly, they were not eligible for any cash
bonus or other share incentive programme until the end of 2020.
Simultaneously, the merger agreement with the former shareholders
of Itaconix Corporation and related agreements were amended to
remove various restrictive clauses, including minimum funding
requirements and employment terms.
Based on the share price at the execution of the restructuring
agreement in 2018, the 15m shares had a value of GBP0.3m which was
expensed immediately.
In respect of 2022, the deferred consideration for the period
was valued using a discounted cash flow-based assessment of the
expected sales of the relevant products extracted from a recent
management prepared forecast, consistent with the approach in prior
years. A discount rate of 10.9% was used in both periods. The
valuation includes elements which are unobservable and which have a
significant impact on the fair value. Accordingly, contingent
consideration is classified as Level 3 fair value measurement.
The value of the adjusted contingent component using a recent
management prepared forecast and assumptions as above is $1.2m (31
December 2021 - $1.1m)
As a result of the changed revenue forecasts, earn out period,
and discount rate from the original value assessments, the
contingent consideration at 30 June 2022 was increased to $1.2m.
Sensitivity analysis was also performed, summarised as follows:
-- If the sales in the period 2022 were reduced by $1.0m, the
fair value would be reduced by approximately $0.5m
-- If the sales in the period 2022 were increased by $1.0m, the
fair value would be increased by approximately $0.5m
-- A 1% increase in the discount rate would reduce the fair value by $8k
Since the forecasts used were a conservative base case, the
computed fair value was deemed appropriate.
7. Weighted-average number of ordinary shares
Unaudited Unaudited
6 Months 6 Months
to to
30 June 30 June
2022 2021
No No
Weighted average number of ordinary shares
for the
purposes of basic and diluted loss per
share ('000) 446,018 434,050
========= =========
8. Share capital
On 22 April 2022, the Company issued 6,666,668 ordinary shares
with a nominal value of 1p per share for 4.5p per share. The
consideration was received in cash.
9. Share based payment reserve
$'000
As at 31 December 2021 (Audited) 10,386
Termination of UK LTIP and EMI scheme (10,302)
Share based payment charge 192
As at 30 June 2022 (Unaudited) 276
========
On 28 June 2022, the Itaconix LTIP ("Long Term Incentive Plan")
and EMI ("Employee Options") scheme expired such that no further
options could be issued. At that date, $10.3m of historically
charged share based payments expenses (for options previously
issued but not exercised) were held in the share based payment
reserve in respect of the terminated scheme. They have been
reclassified to retained losses in the period.
10. Events after the reporting period
There were no material post balance sheet events .
11. Cautionary statement
This document contains certain forward-looking statements
relating to Itaconix plc. The Company 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
IR EANNDFSDAEFA
(END) Dow Jones Newswires
September 14, 2022 02:01 ET (06:01 GMT)
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